CTS (NYSE:CTS) reported fourth-quarter 2025 results that management said reflected continued progress in its diversification strategy, with strong growth in medical and industrial markets offsetting a softer transportation environment. The company also issued its outlook for 2026, calling for higher revenue and earnings amid solid demand across diversified end markets and a cautious view on vehicle production volumes.
Fourth-quarter and full-year results
CEO Kieran O’Sullivan said CTS delivered fourth-quarter sales of $137 million, up 9% from the prior-year period. Diversified end markets grew 16% year over year in the quarter, while transportation sales were described as essentially flat. For the full year, revenue totaled $541 million, up 5% from $515 million in 2024.
Margins, earnings, and cash generation
Management emphasized improved profitability, with O’Sullivan noting gross margin expansion of 150 basis points in both the fourth quarter and full year. CFO Ashish Agrawal said adjusted gross margin was 39.1% in the fourth quarter, up 150 basis points year over year, and 38.5% for full-year 2025, also up 150 basis points. Agrawal attributed the improvement to operational progress and favorable end-market mix.
Fourth-quarter earnings were $0.67 per diluted share, compared with $0.38 a year earlier. On an adjusted basis, fourth-quarter diluted EPS was $0.62, up from $0.50. For the full year, earnings were $2.19 per diluted share, and adjusted diluted EPS was $2.23, compared with $2.12 in 2024. Agrawal said U.S. tax legislation changes reduced 2025 adjusted EPS by about $0.03.
CTS generated $29 million in operating cash flow in the fourth quarter and $102 million for the full year. The company ended 2025 with $82 million in cash and $58 million of borrowings on its credit facility. CTS repurchased 398,000 shares in the fourth quarter for about $17 million, and approximately 1.4 million shares in 2025 for $57 million. In total, CTS returned $62 million to shareholders through dividends and buybacks during 2025, and Agrawal said the company had $90 million remaining under its current repurchase authorization.
End-market performance: medical, defense, industrial, transportation
Medical was a key driver of growth. O’Sullivan said fourth-quarter medical sales increased 41% year over year, with strength “particularly in therapeutic applications.” For the full year, medical sales were $85 million, up 21% from $70 million in 2024. Bookings in the quarter rose 37%, and the 2025 medical book-to-bill ratio was 1.07. Management highlighted momentum in therapeutic products, wins in medical ultrasound across regions, a large therapeutic win, and a pacemaker application win. The company said it expects increased therapeutic volumes in 2026 and longer-term growth in portable ultrasound diagnostics as healthcare shifts toward point-of-care solutions.
Aerospace and defense sales for full-year 2025 were $83 million, up 20% from $69 million in 2024, though fourth-quarter sales declined 4% due to program timing. O’Sullivan said SyQwest fourth-quarter revenue was $6 million as the business navigated government funding cycles, which CTS expects to improve in 2026. While defense bookings were down in the fourth quarter, full-year bookings were up 15%, and management said backlog supported future growth. CTS cited orders for naval sonar and hydrophones, RF filter wins for anti-jamming and drones, and new awards using frequency, vibration, and temperature sensing capabilities, along with three new defense customers.
Industrial results reflected what management called a continued recovery. Fourth-quarter industrial sales rose 16% year over year, while full-year sales increased to $140 million from $125 million, up 12%. Bookings were up 22% in the quarter, and the 2025 industrial book-to-bill ratio was 1.11 versus 1.0 in 2024. The company described wins across distribution components, industrial printing, electromagnetic compatibility applications, and temperature sensing for heat pumps, pool and spa, and commercial appliances.
Transportation remained pressured, with 2025 transportation sales of $234 million compared with $250 million in 2024, a 7% decline attributed to market dynamics in China and commercial vehicles. Fourth-quarter transportation sales were $56 million, essentially flat year over year. Despite that, CTS said it secured approximately $100 million of new transportation business awards in the quarter and ended the period with about $1 billion of total book business. Wins included accelerator modules across China, Japan, Europe, and North America; passive safety, braking, and transmission position sensing; and an advanced development contract for DrivePad tied to software-defined vehicle architectures. CTS also said it added floor-hinged accelerator technology to its portfolio, with revenue expected in 2028 due to the development cycle.
2026 outlook and commentary from Q&A
For full-year 2026, CTS guided to sales of $550 million to $580 million and adjusted diluted EPS of $2.30 to $2.45, assuming current market conditions continue. Management said demand across diversified end markets is expected to be solid, citing therapeutic momentum in medical (including expanded capacity), expected growth in aerospace and defense supported by backlog and a normalization of government funding, and solid industrial and distribution demand.
In transportation, management expects production volumes to be “flat to marginally down,” citing tariff impacts and consumer demand, and said CTS is monitoring potential supply chain effects related to rare earths, metals, and semiconductors but is not seeing significant immediate impact. The company also expects softness in commercial vehicle demand in the first half of 2026, with potential improvement in the second half. During the Q&A, O’Sullivan said CTS is continuing development on both its legacy smart actuator platform and the new platform launched last year, with additional cost and production efforts expected in the second half of 2026.
Management also discussed SyQwest, with O’Sullivan explaining that 2025 revenue was lighter than expected due to the timing of government funding rather than a specific shift from the fourth quarter into the first. On M&A, O’Sullivan said CTS is actively working its pipeline, with a focus on further diversification and niche transportation technologies, but added that valuations remain high and there was “nothing to report today.”
Closing the call, O’Sullivan reiterated that diversification remains a strategic priority to drive growth and margin expansion, alongside expanding vehicle powertrain-agnostic solutions under the company’s “Evolution 2030” initiative.
About CTS (NYSE:CTS)
CTS Corporation (NYSE:CTS) is a global manufacturer and supplier of electronic components and sensors, headquartered in Lisle, Illinois. Established in 1896 as the Chicago Telephone Supply Company, the firm has evolved over more than a century to become a diversified provider of high-precision products for a wide range of end markets.
The company’s core business encompasses the design, development and production of sensors and actuators, frequency control devices such as quartz crystals and filters, multilayer ceramic capacitors, and inductive components.
