CTSコーポレーション 2026年第3四半期決算説明会：過去最高の利益率とガイダンスの上方修正

主要なポイント

• 2026年第3四半期の売上高は、多様化エンド市場での7%の成長と輸送機器市場での2%の成長に支えられ、前年同期比5%増、前四半期比3%増の1億4,960万ドルとなりました。
• 調整後売上総利益率は前年同期比330ベース・ポイント上昇し、過去最高となる42.2%に達しました。調整後EBITDA利益率は前年同期比で約90ベース・ポイント上昇し、24.7%となりました。
• 調整後希薄化後EPSは、2025年第3四半期の0.60ドルから過去最高の0.77ドルに増加しました。為替変動の寄与度は1株あたり約0.04ドルでした。
• 多様化エンド市場が売上高の60%を占めました。医療関連の売上高は21%増の2,700万ドル、産業用関連の売上高は7%増の4,000万ドルとなりました。
• CTSは現在の市場環境が継続すると仮定し、2026年通期の業績予想を売上高5億8,000万ドル〜5億9,000万ドル、調整後希薄化後EPS 2.78ドル〜2.88ドルに引き上げました。
• Millar社の買収により、年間売上高が約3,000万ドル追加されるとともに、医療、産業、先進圧力センシング分野でのCTSの事業が拡大します。経営陣は2027年後半からのEPS押し上げ（増益効果）を見込んでいます。

主要財務データ

為替変動の影響により四半期売上高は約50万ドル押し上げられ、調整後売上総利益率には約140万ドルのプラス効果をもたらしました。

事業および業績の動向

医療関連

医療関連の売上高は前年同期比21%増の2,700万ドルとなりましたが、主に受注タイミングの影響で前四半期比では4%減少しました。需要は、先進的な診断や治療用途に使われるセンシングおよびアクチュエーション技術全般にわたり広範に推移しました。

医療関連のBBレシオは0.66でした。CTSは全地域において、植込み型心臓ペースメーカー、超音波診断、治療用途での受注を獲得しました。

航空・防衛関連

航空・防衛関連の売上高は前年同期比7%減、前四半期比30%増の2,400万ドルとなりました。政府の契約受注およびプログラム予算に支えられ、BBレシオは1.91に達しました。

CTSは、米海軍の水中戦アプリケーション向け重要センシングソリューションの生産を拡大しました。また同社は、海軍用ソナー、水中戦、セキュア通信向けのより高付加価値なセンシングソリューションや統合サブシステムへの展開を拡大しています。

産業用関連

産業用関連の売上高は前年同期比7%増、前四半期比1%増の4,000万ドルとなりました。同部門のBBレシオは1.36を記録し、産業用印刷、データセンター、冷凍・冷蔵、HVAC（空調）システム、および産業用自動化分野でデザインウィン（採用決定）を獲得しました。

CTSは、産業用蒸気および復水システム向け温度センシングの新規顧客を獲得しました。経営陣は、自動化、接続性、デジタル化、データセンター用途、省エネ化が引き続き需要を後押しすると予想しています。

輸送機器関連

輸送機器関連の売上高は前年同期比2%増の6,000万ドルとなりました。商用車の改善が穏やかな成長に寄与した一方、乗用車（ライトビークル）市場は当四半期中に横ばいからわずかな減少にとどまりました。

新規受注には、フットコントロールやセンシング用途が含まれます。CTSは日本のOEM向けにシートトラック市場へ新規参入し、フロアヒンジペダル事業を中国へ拡大しました。四半期末時点の受注残高合計は約12億ドルでした。

ターボ用スマートアクチュエータについて、CTSは2027年半ば頃に追加のエンジンプラットフォームでの主要な承認獲得を目指しています。経営陣は、承認から1〜2四半期後に納入を開始できる可能性があると述べました。

Millar社の買収

CTSはMillar社の買収対価として現金約5,000万ドルを支払いました。買収した事業は年間約3,000万ドルの売上高を生み出す見込みであり、カテーテルベース技術とともに、圧力、化学、電気化学センシング技術を拡充します。

経営陣によると、Millar社の買収はCTSの売上総利益率向上に寄与する見通しです。EBITDAへの貢献はプラスとなるものの、当初は利益率の向上に直結しない可能性があります。CTSは売上成長とシナジー効果の追求により、2027年後半にはEPS増益効果を見込んでいます。

経営陣の業績予想（ガイダンス）

CTSは、現在の市場環境が継続すると仮定し、2026年通期の業績予想を引き上げました。

経営陣は多様化市場の需要が引き続き堅調に推移すると予想しています。医療分野の勢いはMillar社によって後押しされ、航空・防衛関連の売上高は受注残により第4四半期も力強さを維持する見込みであり、産業用需要も引き続き健全に推移すると予想されています。

世界の乗用車生産について経営陣は、関税、地政学的要因、消費者需要の不確実性を背景に、横ばいからゆるやかな減少になると予測しています。

リスクおよび注視事項

• 第3四半期は非常に好都合なエンド市場ミックス、プロジェクトのタイミング、為替効果の恩恵を受けたため、経営陣は今後数四半期で収益性が正常化すると予想しています。
• 医療関連の受注は発注タイミングの影響を受け、BBレシオは0.66となりました。
• 航空・防衛関連の注文は、プログラムの予算や契約締結が一度にまとまって発生するため、不均衡になる場合があります。
• 関税、地政学的状況、消費者需要の不確実性は、輸送機器市場にとって引き続きリスクとなっています。
• ターボ用スマートアクチュエータの出荷量は、CTSと競合他社との間の顧客の調達配分に一部依存するため、顧客の生産量がCTSの出荷量に直接連動するわけではありません。
• Millar社には一部顧客への集中度が見られますが、経営陣はこの買収によってCTS全体の顧客集中傾向が大きく変化したり、主要顧客リストに入ったりすることはないと説明しています。

アナリスト質疑応答の要点

• Millar社の収益性：経営陣は、本買収が連結売上総利益率の改善に寄与すると見込んでいます。EBITDAはプラスとなりますが当初は利益率の押し上げに至らない可能性があり、EPSへの増益効果は2027年後半に見込まれています。
• 買収資金の調達：CTSはMillar社の買収費用を全額現金で賄っており、買収した事業のオペレーション構造に大幅な変更を加える予定はありません。
• 防衛関連の受注残：売上高は一般に工事進行基準（進捗度）に応じて期間にわたり認識されます。健全な受注残が第4四半期を支えるものの、今後の成長の勢いは追加の予算獲得にかかっています。
• 売上総利益率の持続可能性：経営陣は今後の四半期でも堅調な利益率を見込んでいますが、第3四半期の42.2%という結果は非常に良好な製品ミックスによる恩恵を受けており、すぐに再現されるものではない可能性があると注意を促しました。
• 資本配分：CTSは当四半期中に約340万ドルで5万7,000株の自社株買いを実施し、自社株買い枠の残高は7,500万ドルとなっています。

決算説明会トランスクリプト全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Hello, everyone. Thank you for joining us, and welcome to CTS Corporation's Third Quarter 2026 Earnings Call.

[Operator Instructions]

I will now hand the conference over to Pratik Trivedi. Pratik, please go ahead.

Pratik Trivedi

Good morning, and thank you for joining us. We delivered a strong third quarter with revenue growing 5% to $150 million. Our diversified end markets increased 7% year-over-year and represented 60% of total sales. Strong execution drove record profitability and robust cash generation with gross margin of 42.2%, adjusted EBITDA margin of 24.7% and adjusted diluted EPS of $0.77. While transportation sales increased modestly, continued growth across our diversified end markets enabled strong financial results and improved the quality of our earnings.

As announced last Friday, we are excited about the acquisition of Millar, a highly complementary business that strengthens our position in diversified end markets, primarily medical, and expands our portfolio in advanced pressure sensing technologies.

Ashish Agrawal, our CFO, will take us through the safe harbor statement. Ashish?

Ashish Agrawal

I would like to remind our listeners that this conference call contains forward-looking statements. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Additional information regarding these risks and uncertainties is contained in the press release issued today and more information can be found in the company's SEC filings.

To the extent that today's discussion refers to any non-GAAP measures under Regulation G, the required explanations and reconciliations are available with today's earnings press release and the supplemental slide presentation, which can be found in the Investors section of the CTS website.

I will now turn the discussion back over to Pratik.

Pratik Trivedi

Thank you, Ashish. We finished the third quarter with sales of $150 million, representing a 5% increase compared to the third quarter of 2025 and up 3% sequentially from the second quarter. Our diversified end markets were up 7% year-over-year, while transportation sales were up 2%. Diversified end market sales were 60% of overall company revenue in the quarter, up from 59% in the prior year period.

For 2026 year-to-date, diversified sales were up 12% and transportation sales remained flat over the same period last year. Our book-to-bill ratio for the third quarter was 1.18, reflecting sustained customer demand across our portfolio. Diversified bookings were particularly strong with a book-to-bill of 1.3.

We added one new customer in the industrial end market and one in the transportation end market. The strength of our operational execution and favorable product mix was evident as we expanded gross margin to a record 42.2%, up 330 basis points compared to the third quarter of 2025.

Adjusted EBITDA margin reached 24.7%, an improvement of approximately 90 basis points year-over-year. Third quarter adjusted diluted earnings were a record $0.77 per share, up from $0.60 in the third quarter of 2025. We maintained strong cash generation, supporting our balanced capital allocation approach that includes strategic investments in growth and returning cash to shareholders. Ashish will add further color on our financial performance later in today's call.

The recently completed acquisition of Millar represents another important step in our strategy to reshape CTS towards a more diversified portfolio of high-value differentiated technologies serving attractive end markets. The acquisition meaningfully increases our exposure to medical and industrial markets while expanding our capabilities into pressure, chemical and electrochemical sensing and differentiated catheter-based technologies. Millar's vertically integrated capabilities, spanning design, microfabrication and precision manufacturing enable differentiated solutions for demanding applications.

Beyond the strategic fit, we see compelling opportunities to accelerate growth by leveraging complementary technologies, expanding customer relationships and bringing CTS' broader engineering and commercial capabilities to the Millar platform. We expect Millar to generate revenues of approximately $30 million on an annual basis. The acquisition is expected to be accretive in the second half of 2027.

The medical end market continued to be a significant growth driver in the third quarter, generating revenue of $27 million, an increase of 21% year-over-year and a decrease of 4% sequentially, mainly due to timing of orders. Performance was fueled by broad-based demand across our sensing and actuation technologies, particularly in applications supporting advanced diagnostics and therapeutic treatments.

New business wins were impacted by timing of orders in the quarter, resulting in a book-to-bill ratio of 0.66. During the quarter, we had key wins in implantable pacemaker applications, ultrasound diagnostics and therapeutic applications across all regions. We continue to partner with leading global medical OEMs on next-generation programs across diagnostic imaging, therapeutics and several emerging applications. These opportunities, combined with favorable demographics and continued medical innovation, reinforce our confidence in the long-term growth of the market.

Aerospace and defense sales were $24 million in the third quarter, 7% below prior year, but 30% higher quarter-over-quarter, reflecting the flow of program funding and government contract orders. Orders remained very healthy as reflected in our 1.91 book-to-bill ratio, providing strong support for future growth. We continue to move up the value chain, expanding from components to higher-value sensing solutions and integrated subsystems for naval sonar, undersea warfare and secure communications applications.

During the quarter, we achieved an important win by successfully scaling production of a critical sensing solution for a U.S. Navy undersea warfare application. Increasing investments in traditional defense infrastructure as well as our customer engagements in modern warfare applications position us well for the long-term growth in this end market. Our industrial end market continued its strong momentum in the third quarter with sales of $40 million, increasing 7% year-over-year and 1% sequentially, further extending the recovery trend that began in 2025. Growth was broad-based across OEM customers and distribution partners and bookings remained healthy with a book-to-bill ratio of 1.36.

During the quarter, we secured multiple design wins across a diverse set of applications, including distribution components, industrial printing, data center applications, refrigeration, HVAC systems and industrial automation. We added one new customer during the quarter, expanding our presence for temperature sensing in industrial steam and condensate systems.

Looking ahead, we expect industrial demand to remain healthy, supported by favorable secular trends, including data center applications, automation, connectivity, digitalization and the increasing focus on energy efficiency. These trends continue to expand the addressable market for our industrial portfolio, positioning us well for sustained growth.

Transportation sales in the third quarter were $60 million, up 2% versus the prior year and up 1% sequentially. We secured important new business wins across our transportation portfolio, particularly in foot controls and sensing applications. These wins expand our presence across global vehicle platforms, establish our entry into the seat track market with Japanese OEMs and extend our floor-hinged pedal business into China, creating additional opportunities for future growth.

Total booked business was approximately $1.2 billion at the end of the quarter. We added one new Tier 1 customer during the quarter. We continue to build momentum around our e-brake technology with multiple customer opportunities progressing across future hybrid and electric vehicle platforms. Positive customer feedback, continued product development and upcoming vehicle demonstrations are building customer momentum and positioning e-brake for broader adoption.

Turning to the outlook for 2026. For our diversified end markets, demand is expected to remain solid. In medical, we see continued momentum, especially with the acquisition of Millar. In aerospace and defense, revenue is expected to remain strong in the fourth quarter given our robust order backlog. In industrial, OEM and distribution demand is expected to remain healthy. Across transportation markets, global light vehicle production volumes are forecasted to be flat to modestly down given ongoing tariff, geopolitical and consumer demand uncertainties.

We continue to closely monitor and evaluate the tariff and geopolitical environment. Our focus remains on agility in adapting to cost and price adjustments in close collaboration with our customers and suppliers. Assuming the continuation of current market conditions for the full year 2026, we are raising our guidance with sales now expected in the range of $580 million to $590 million and adjusted diluted EPS in the range of $2.78 to $2.88.

Now I'll turn it over to Ashish, who will walk us through the financial results in more details.

Ashish Agrawal

Thank you, Pratik. Third quarter sales were $149.6 million, up 5% compared to the third quarter of 2025 and up 3% sequentially from the second quarter of 2026. Sales to diversified end markets increased 7% year-over-year, while sales to transportation customers were up 2%. Foreign currency changes impacted sales favorably by approximately $0.5 million in the quarter.

Our adjusted gross margin was a record 42.2%, up 330 basis points compared to the third quarter of 2025 and up approximately 70 basis points sequentially. The year-over-year improvement was driven by operational execution, a favorable impact of approximately $1.4 million from foreign currency changes and an above-normal favorable impact of end market mix driven by timing of certain projects. We expect some normalization in profitability in the next few quarters.

Gross margin from the Millar acquisition is expected to be accretive to our overall gross margin. Adjusted EBITDA margin was 24.7%, an improvement of approximately 90 basis points versus the prior year period. Our effective tax rate for the quarter was 18.9%, excluding discrete items. For the full year, we continue to expect our tax rate to be in the range of 20% to 22%, excluding discrete items. Adjusted earnings for the third quarter were a record $0.77 per diluted share, up from $0.60 per diluted share in the third quarter of 2025. Our EPS this quarter includes foreign currency favorability of approximately $0.04.

Moving to cash generation and the balance sheet. We generated strong operating cash flow of $44 million in the third quarter. Capital expenditures were $2.4 million in the quarter and free cash flow was approximately $41 million. Our balance sheet strengthened further with a cash balance of $144 million and borrowings of $55 million at the end of the quarter. In October, we deployed approximately $50 million in cash towards the acquisition of Millar.

During the quarter, we repurchased 57,000 shares of CTS stock for approximately $3.4 million. We have $75 million remaining under our current share repurchase program. We remain focused on strong cash generation and disciplined capital allocation and will continue to support organic growth, strategic acquisitions and returning cash to shareholders.

This concludes our prepared comments. We would like to open the line for questions at this time.

Operator

[Operator Instructions] Your first question comes from the line of Gary Prestopino with Barrington.

質疑応答

Gary Prestopino

I wanted to ask you a question on Millar. You kind of answered it partially. The gross margin is going to be accretive. What about the adjusted EBITDA margin? Is that accretive as well?

Ashish Agrawal

So, Gary, we are talking about on the call, like you heard us say, the gross margin is accretive. The EBITDA will be positive, obviously, but maybe not quite accretive at the beginning. But as we work through the synergies and sales growth in the business, we expect it to be very healthy as we move forward. And we also expect EPS accretion in the second half of 2027.

Gary Prestopino

Could you maybe talk about what their historic sales growth rate has been and where you think you can take it and what you have to do to get the growth higher?

Ashish Agrawal

So, Gary, the historical sales, we generally don't get into that with the acquisitions. What I would say to you is that they have a very strong play in advanced medical treatment with a strong base amongst the customers that are providing that kind of facilities. And we expect good growth. Their technology is well respected in the industry. And the primary driver for us to be looking at Millar is to drive revenue growth as we look ahead.

Operator

Your next question comes from the line of Jaeson Schmidt with Lake Street.

Jaeson Schmidt

Just sticking with the acquisition, curious if you could comment if Millar has any significant customer concentration?

Ashish Agrawal

Mostly in the medical market, Jaeson, we expect -- they've got a good profile of customers. They do have some customer concentration. But when you look at the total CTS level, that concentration will not look materially different from what we have today. It will not make it to our top customer list.

Jaeson Schmidt

Okay. That's helpful. And then just as a follow-up, really nice to see the rebound in the transportation market. Curious if that growth here in Q3 was driven by 1 or 2 particular customers or if it was more broad-based?

Pratik Trivedi

Jaeson, I would say that the growth in Q3, which was a very moderate growth, was a combination of some growth in our commercial vehicle segment, but we still -- the automotive or the light vehicle market was still pretty much flat to slightly down for the quarter.

Operator

Your next question comes from the line of John Franzreb with Sidoti & Co.

John Franzreb

I guess I just want to go back to the Millar and the financing of the deal. Did I hear you properly and that was entirely cash? Or did you borrow in addition to doing that?

Ashish Agrawal

It was entirely cash, John.

John Franzreb

And another good backlog number in A&D. What does the delivery schedule look like in that business? How should we think about that on a go-forward basis?

Ashish Agrawal

So, John, in defense, we generally have an over time revenue recognition approach where we recognize revenue based on percentage of completion. So Pratik already mentioned, we have a healthy backlog going into Q4. It positions us well, and we want to see the momentum continue with additional funding.

Pratik Trivedi

Maybe just to add, it's also another reflection of the lumpiness that we've described in the previous quarters around that when we get the orders, we get in lumps and then there are quarters where the book-to-bill is below 1. So it's just a reflection of that timing of those orders.

John Franzreb

Right. I know the volatility. I just wanted to see if I could kind of expand and maybe some clarity how to model it all. And just quickly, does the acquisition require any kind of consolidation into the business or it's going to be run as a stand-alone? Does it change the spend rate maybe on your R&D?

Ashish Agrawal

No, we're not expecting any sudden changes to the structure or anything, John. It's a great business. We are excited about the team joining us. They've got a good talent pool that is running the business today, and we hope to leverage them to leverage their capabilities and our capabilities to drive growth. From an integration standpoint, we will look at some things we do very quickly in terms of cash transactions and things like that. Some things we take a little bit longer time to make sure that we are getting the right balance between cultural integration as well as systems and processes and things like that. But we are not expecting any drastic changes in how the business is being run.

Operator

Your next question comes from the line of Hendi Susanto with Gabelli Funds.

Hendi Susanto

I would like to congratulate on a very strong gross margin, 42.2%. And then any puts and takes? I know that margin is influenced by the mix. So the diversified end markets now is already like 60%. Any puts and takes that we should keep in mind when we think of gross margin coming ahead?

Ashish Agrawal

Yes. Hendi, in the prepared comments, we mentioned that we have an unusually favorable mix even within the diversified markets based on the timing of certain projects. We do expect good gross margins in the next few quarters, but maybe not quite at the same level as the 42%. We were very happy with what we were able to deliver. It reflects strong performance by our global teams on execution and also growth in the right areas. So in the mid- to long term, we will look to continue expanding gross margins. But from quarter-to-quarter, there can be changes that hold us back from straight up north movement every single quarter.

Hendi Susanto

I see. And then, Pratik, do you have any update on the turbo smart actuator business in terms of customer allocation?

Pratik Trivedi

Hendi, so, as it relates to the actuator, we continue to work towards getting approvals on additional engine platforms. And while our customer production provides a pretty important demand indicator, the volumes can vary based on the sourcing mix between CTS and the competitor. So as a result, the production volumes do not necessarily translate directly into comparable changes for CTS volumes.

Hendi Susanto

And Pratik, may I ask further, like, when you mentioned working towards like new products, what kind of timing are we looking?

Pratik Trivedi

So we are working on the products to qualify additional engine platforms, Hendi, and we are looking at somewhere around the middle of 2027 for some critical approvals.

Hendi Susanto

So approval in, let's say, like in 2027? And then how soon will, like, delivery following the approval process?

Ashish Agrawal

It should be a quarter or 2 after that.

Pratik Trivedi

A quarter or 2 after that, Hendi.

Operator

There are no further questions at this time. I will now turn the call back to Pratik Trivedi for closing remarks.

Pratik Trivedi

Thank you all for your time today. I am proud of our team's performance this quarter, and the results reflect strong execution of our strategy of driving sustainable organic growth, diversifying our portfolio, delivering consistent operational execution and deploying capital strategically. The acquisition of Millar represents another important step in our portfolio transformation, expanding our presence in the medical and industrial end markets. The CTS business system provides the foundation for how we execute these priorities with a focus on growth, operational rigor, employee engagement and supporting our communities. We look forward to updating you on our fourth quarter and full year results in February.

Thank you for joining us today.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.