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Basis of Presentation | 9 Months Ended
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Sep. 30, 2025
Accounting Policies [Abstract] |
Basis of Presentation | NOTE 1 - Basis of Presentation The accompanying condensed consolidated financial statements have been prepared by CTS Corporation (“CTS”, “we”, “our”, “us” or the “Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. The unaudited condensed consolidated financial statements should be read in conjunction with the financial statements, notes thereto, and other information included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2024. The accompanying unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments (consisting of normal recurring items) necessary for a fair statement, in all material respects, of the financial position and results of operations for the periods presented. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ materially from those estimates. The results of operations for the interim periods are not necessarily indicative of the results for the entire year. There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Immaterial Correction of Prior Period Error As reported in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, the Company identified immaterial prior period errors in the consolidated financial statements related to the acquisition of SyQwest, LLC (“SyQwest”) as well as the foreign currency impact on certain long-term debt payments. The errors related to the SyQwest acquisition were due to errors with the calculation of revenue and cost of goods sold both prior to and subsequent to the acquisition date of July 29, 2024. The Company assessed the materiality of this change on prior period consolidated financial statements in accordance with SEC Staff Accounting Bulletin No. 99, “Materiality” (ASC Topic 250, Accounting Changes and Error Corrections). Based on this assessment, the Company concluded that these error corrections were material in the first quarter of 2025, but are not material to any previously presented consolidated financial statements. Accordingly, the Company corrected the previously reported immaterial errors for the year ended December 31, 2024 and the three and nine months ended September 30, 2024 in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025. The financial reporting periods affected by this error include the Company’s previously reported audited consolidated financial statements for the fiscal year ended December 31, 2024 and the Company’s previously reported interim unaudited consolidated financial statements for the three and nine months ended September 30, 2024. The Company is presenting the corrected interim 2024 amounts in this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2025 on a year-to-date basis as a correction to applicable 2024 periods. A summary of the immaterial corrections to the Company’s previously reported audited and unaudited consolidated financial statements follows. Corrected Consolidated Statement of Earnings for the Year Ended December 31, 2024 (in thousands):
|  | Year Ended |  |  |  |  |  | Year Ended |
|  | December 31, 2024 |  |  |  |  |  | December 31, 2024 |
|  | Previously Reported |  |  | Corrections |  |  | As Corrected |
Net sales |  | $ | 515,771 |  |  | $ | (1,015 | ) |  | $ | 514,756 |
Cost of goods sold |  |  | 326,621 |  |  |  | 580 |  |  |  | 327,201 |
Gross margin |  |  | 189,150 |  |  |  | (1,595 | ) |  |  | 187,555 |
Operating earnings |  |  | 72,780 |  |  |  | (1,595 | ) |  |  | 71,185 |
Other income (expense): |  |  |  |  |  |  |  |  |
Other income (expense), net |  |  | (1,603 | ) |  |  | (1,047 | ) |  |  | (2,650 | )
Total other expense, net |  |  | (1,557 | ) |  |  | (1,047 | ) |  |  | (2,604 | )
Earnings before income taxes |  |  | 71,223 |  |  |  | (2,642 | ) |  |  | 68,581 |
Net earnings |  | $ | 58,114 |  |  | $ | (2,642 | ) |  | $ | 55,472 |
Earnings per share: |  |  |  |  |  |  |  |  |
Basic |  | $ | 1.91 |  |  |  |  |  | $ | 1.82 |
Diluted |  | $ | 1.89 |  |  |  |  |  | $ | 1.81 |
Basic weighted – average common shares outstanding: |  |  | 30,408 |  |  |  |  |  |  | 30,408 |
Effect of dilutive securities |  |  | 309 |  |  |  |  |  |  | 309 |
Diluted weighted – average common shares outstanding: |  |  | 30,717 |  |  |  |  |  |  | 30,717 |
Corrected Consolidated Balance Sheet as of December 31, 2024 (in thousands):
|  | December 31, 2024 |  |  |  |  |  | December 31, 2024 |
|  | Previously Reported |  |  | Corrections |  |  | As Corrected |
ASSETS |  |  |  |  |  |  |  |  |
Current Assets |  |  |  |  |  |  |  |  |
Inventories, net |  | $ | 53,578 |  |  | $ | (1,266 | ) |  | $ | 52,312 |
Other current assets |  |  | 18,716 |  |  |  | (837 | ) |  |  | 17,879 |
Total current assets |  |  | 244,277 |  |  |  | (2,103 | ) |  |  | 242,174 |
Other Assets |  |  |  |  |  |  |  |  |
Goodwill |  |  | 199,886 |  |  |  | 1,418 |  |  |  | 201,304 |
Total other assets |  |  | 404,539 |  |  |  | 1,418 |  |  |  | 405,957 |
Total Assets |  | $ | 766,112 |  |  | $ | (685 | ) |  | $ | 765,427 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |  |  |  |  |  |
Current Liabilities |  |  |  |  |  |  |  |  |
Accrued expenses and other liabilities |  |  | 34,451 |  |  |  | 910 |  |  |  | 35,361 |
Total current liabilities |  |  | 97,553 |  |  |  | 910 |  |  |  | 98,463 |
Long-term debt |  |  | 91,253 |  |  |  | 1,047 |  |  |  | 92,300 |
Total Liabilities |  |  | 235,262 |  |  |  | 1,957 |  |  |  | 237,219 |
Shareholders’ Equity |  |  |  |  |  |  |  |  |
Retained earnings |  |  | 655,493 |  |  |  | (2,642 | ) |  |  | 652,851 |
Total shareholders’ equity before treasury stock |  |  | 1,017,868 |  |  |  | (2,642 | ) |  |  | 1,015,226 |
Total shareholders’ equity |  |  | 530,850 |  |  |  | (2,642 | ) |  |  | 528,208 |
Total Liabilities and Shareholders’ Equity |  | $ | 766,112 |  |  | $ | (685 | ) |  | $ | 765,427 |
Corrected Consolidated Statement of Cash Flows for the Year Ended December 31, 2024 (in thousands):
|  | Year Ended |  |  |  |  |  | Year Ended |
|  | December 31, 2024 |  |  |  |  |  | December 31, 2024 |
|  | Previously Reported |  |  | Corrections |  |  | As Corrected |
CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |  |  |  |  |  |  |
Net earnings |  | $ | 58,114 |  |  | $ | (2,642 | ) |  | $ | 55,472 |
Changes in assets and liabilities, net of acquisitions: |  |  |  |  |  |  |  |  |
Inventories |  |  | 11,893 |  |  |  | 580 |  |  |  | 12,473 |
Other assets |  |  | 900 |  |  |  | 837 |  |  |  | 1,737 |
Accrued expenses and other liabilities |  |  | (5,255 | ) |  |  | 178 |  |  |  | (5,077 | )
Net cash provided by operating activities |  |  | 99,289 |  |  |  | (1,047 | ) |  |  | 98,242 |
CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |  |  |  |  |  |  |
Payments of long-term debt |  |  | (891,847 | ) |  |  | 1,047 |  |  |  | (890,800 | )
Net cash (used in) provided by financing activities |  | $ | (27,935 | ) |  | $ | 1,047 |  |  | $ | (26,888 | )
Corrected Consolidated Statement of Earnings for the Three and Nine Months Ended September 30, 2024 (in thousands):
|  | Three Months Ended |  |  |  |  |  | Three Months Ended |  |  | Nine Months Ended |  |  |  |  |  | Nine Months Ended |
|  | September 30, 2024 |  |  |  |  |  | September 30, 2024 |  |  | September 30, 2024 |  |  |  |  |  | September 30, 2024 |
|  | Previously Reported |  |  | Corrections |  |  | As Corrected |  |  | Previously Reported |  |  | Corrections |  |  | As Corrected |
Net sales |  | $ | 132,424 |  |  | $ | (40 | ) |  | $ | 132,384 |  |  | $ | 388,336 |  |  | $ | (40 | ) |  | $ | 388,296 |
Cost of goods sold |  |  | 82,636 |  |  |  | 559 |  |  |  | 83,195 |  |  |  | 247,086 |  |  |  | 559 |  |  |  | 247,645 |
Gross margin |  |  | 49,788 |  |  |  | (599 | ) |  |  | 49,189 |  |  |  | 141,250 |  |  |  | (599 | ) |  |  | 140,651 |
Operating earnings |  |  | 21,475 |  |  |  | (599 | ) |  |  | 20,876 |  |  |  | 53,775 |  |  |  | (599 | ) |  |  | 53,176 |
Earnings before income taxes |  |  | 22,447 |  |  |  | (599 | ) |  |  | 21,848 |  |  |  | 53,872 |  |  |  | (599 | ) |  |  | 53,273 |
Net earnings |  | $ | 18,683 |  |  | $ | (599 | ) |  | $ | 18,084 |  |  | $ | 44,508 |  |  | $ | (599 | ) |  | $ | 43,909 |
Earnings per share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | 0.62 |  |  |  |  |  | $ | 0.60 |  |  | $ | 1.46 |  |  |  |  |  | $ | 1.44 |
Diluted |  | $ | 0.61 |  |  |  |  |  | $ | 0.59 |  |  | $ | 1.45 |  |  |  |  |  | $ | 1.43 |
Basic weighted – average common shares outstanding: |  |  | 30,300 |  |  |  |  |  |  | 30,300 |  |  |  | 30,517 |  |  |  |  |  |  | 30,517 |
Effect of dilutive securities |  |  | 236 |  |  |  |  |  |  | 236 |  |  |  | 230 |  |  |  |  |  |  | 230 |
Diluted weighted – average common shares outstanding: |  |  | 30,536 |  |  |  |  |  |  | 30,536 |  |  |  | 30,747 |  |  |  |  |  |  | 30,747 |
Corrected Consolidated Balance Sheet as of September 30, 2024 (in thousands):
|  | September 30, 2024 |  |  |  |  |  | September 30, 2024 |
|  | Previously Reported |  |  | Corrections |  |  | As Corrected |
ASSETS |  |  |  |  |  |  |  |  |
Current Assets |  |  |  |  |  |  |  |  |
Inventories, net |  | $ | 57,288 |  |  | $ | (1,246 | ) |  | $ | 56,042 |
Total current assets |  |  | 255,561 |  |  |  | (1,246 | ) |  |  | 254,315 |
Other Assets |  |  |  |  |  |  |  |  |
Goodwill |  |  | 194,821 |  |  |  | 1,418 |  |  |  | 196,239 |
Total other assets |  |  | 416,677 |  |  |  | 1,418 |  |  |  | 418,095 |
Total Assets |  | $ | 789,392 |  |  | $ | 172 |  |  | $ | 789,564 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |  |  |  |  |  |
Current Liabilities |  |  |  |  |  |  |  |  |
Accrued expenses and other liabilities |  |  | 37,249 |  |  |  | 771 |  |  |  | 38,020 |
Total current liabilities |  |  | 103,799 |  |  |  | 771 |  |  |  | 104,570 |
Total Liabilities |  |  | 258,586 |  |  |  | 771 |  |  |  | 259,357 |
Shareholders’ Equity |  |  |  |  |  |  |  |  |
Retained earnings |  |  | 643,088 |  |  |  | (599 | ) |  |  | 642,489 |
Total shareholders’ equity before treasury stock |  |  | 1,009,937 |  |  |  | (599 | ) |  |  | 1,009,338 |
Total shareholders’ equity |  |  | 530,806 |  |  |  | (599 | ) |  |  | 530,207 |
Total Liabilities and Shareholders’ Equity |  | $ | 789,392 |  |  | $ | 172 |  |  | $ | 789,564 |
Corrected Consolidated Statement of Cash Flows for the Nine Months Ended September 30, 2024 (in thousands):
|  | Nine Months Ended |  |  |  |  |  | Nine Months Ended |
|  | September 30, 2024 |  |  |  |  |  | September 30, 2024 |
|  | Previously Reported |  |  | Corrections |  |  | As Corrected |
CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |  |  |  |  |  |  |
Net earnings |  | $ | 44,508 |  |  | $ | (599 | ) |  | $ | 43,909 |
Changes in assets and liabilities, net of acquisitions: |  |  |  |  |  |  |  |  |
Inventories |  |  | 11,346 |  |  |  | 559 |  |  |  | 11,905 |
Accrued expenses and other liabilities |  |  | (2,645 | ) |  |  | 40 |  |  |  | (2,605 | )
Net cash provided by operating activities |  | $ | 73,335 |  |  | $ | - |  |  | $ | 73,335 |
Corrected Fair Value of SyQwest Assets Acquired and Liabilities Assumed:
|  | Fair Values at July 29, 2024 |
Accounts receivable |  | $ | 770 |
Inventory |  |  | 7,939 |
Other current assets |  |  | 1,475 |
Property, plant and equipment |  |  | 985 |
Other assets |  |  | 684 |
Goodwill |  |  | 46,600 |
Intangible assets |  |  | 76,100 |
Fair value of assets acquired |  |  | 134,553 |
Less fair value of liabilities acquired |  |  | (6,536 | )
Purchase price |  | $ | 128,017 |
Accounting Pronouncements Recently Adopted ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure” In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments' significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as existing segment disclosures and reconciliation required under ASC 280 on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for the interim periods beginning after December 15, 2024, with early adoption permitted. We adopted the guidance in our Annual Report on Form 10-K for the year ended December 31, 2024. See Note 18, “Segment Information,” for further information. Recently Issued Accounting Pronouncements Not Yet Adopted ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the reconciliation of the effective tax rate, as well as disclosure of income taxes paid, disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The adoption of this ASU is expected to impact our income tax disclosures beginning with the consolidated financial statements included in the annual report on Form 10-K for the fiscal year ending December 31, 2025, but will have no impact on our results of operations, cash flows, or financial condition. We will adopt the guidance when it becomes effective on a prospective basis. ASU No. 2024-03, “Income Statement (Subtopic 220-40): Disaggregation of Income Statement Expenses” In November 2024, the FASB issued ASU 2024-03, Income Statement (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires additional information about certain expenses in the notes to the financial statements. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03. We will adopt the guidance when it becomes effective on a prospective basis. ASU No. 2025-05, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets” In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which allows for a practical expedient election to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset in the development of a reasonable and supportable forecast as part of estimating expected credit losses. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, with early adoption permitted. The Company is currently evaluating the impact of electing the practical expedient under ASU 2025-05. ASU No. 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software” In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which is intended to improve the operability and application of guidance related to capitalized software development costs. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-06.

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