CTS Raises Outlook as Margins Reach Record
The sensor and components maker lifted its 2026 adjusted earnings forecast to $2.55 to $2.70 a share.
CTS Corporation (CTS), a maker of sensors, connectivity components and actuators, posted record adjusted gross margin in the second quarter as stronger medical and industrial demand offset a transportation decline.
Sales rose 7% from a year earlier to $144.8 million, slowing from 11% growth in the first quarter while increasing 4% sequentially. Adjusted diluted earnings rose to $0.74 a share from $0.57 a year earlier and $0.62 in the first quarter; favorable foreign-exchange movements and customer reimbursements contributed $0.07 a share.
The results widened the split between CTS's end markets. Diversified-market sales grew 15% from a year earlier, easing from 18% growth in the first quarter, while transportation sales declined 2% after rising 3% in the previous period.
Medical sales rose 45% from a year earlier and 14% sequentially, while industrial sales increased 16% and 6%, respectively. Aerospace-and-defense sales declined 15% because of the timing of contract awards, though they rose 4% from the first quarter.
Adjusted gross margin expanded to 41.5% from 39.5% in the first quarter and 38.7% a year earlier, driven by operations, sales mix and foreign exchange. Adjusted EBITDA margin reached 25.4%, up 240 basis points both sequentially and from a year earlier.
CTS raised its 2026 sales guidance to $565 million to $585 million, lifting both ends of its previous range by $5 million. Its adjusted diluted earnings forecast is now $2.55 to $2.70 a share, up from $2.35 to $2.45.
Bookings exceeded revenue, producing a book-to-bill ratio of 1.1, while aerospace-and-defense bookings rose 48% from a year earlier. Transportation booked business stood at $1.2 billion after $163 million of new wins during the quarter, including a North American auto-sensing award and the addition of an electric-vehicle customer.