CTS delivered a second quarter that exceeded Wall Street’s revenue and profit expectations, with the market responding positively to the results. Management attributed the quarter’s performance to strong growth in diversified end markets—particularly medical, aerospace and defense, and industrial—while transportation sales faced headwinds from China market dynamics and softer commercial vehicle demand. CEO Kieran O’Sullivan highlighted the company’s ongoing diversification strategy, noting, “Our teams continue to execute on our diversification strategy to increase growth in diversified medical, industrial, aerospace and defense markets.”
Is now the time to buy CTS? Find out in our full research report (it’s free).
CTS (CTS) Q2 CY2025 Highlights:
- Revenue: $135.3 million vs analyst estimates of $132.7 million (4% year-on-year growth, 2% beat)
- Adjusted EPS: $0.57 vs analyst estimates of $0.55 (3.6% beat)
- Adjusted EBITDA: $31.1 million vs analyst estimates of $29.01 million (23% margin, 7.2% beat)
- The company reconfirmed its revenue guidance for the full year of $535 million at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $2.28 at the midpoint
- Operating Margin: 17%, up from 14.6% in the same quarter last year
- Market Capitalization: $1.19 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions CTS’s Q2 Earnings Call
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John Edward Franzreb (Sidoti): asked about the split in medical market performance between therapeutics and diagnostics. CEO Kieran O’Sullivan explained therapeutics growth was order-driven while diagnostic ultrasound softness was linked to lower spending in Asia and some tariff impact.
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John Edward Franzreb (Sidoti): inquired about the impact of tariffs on results and future expectations. CFO Ashish Agrawal responded that tariff effects were “very, very minimal” in Q2, but the company is closely monitoring potential changes, especially regarding the USMCA agreement.
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John Edward Franzreb (Sidoti): questioned when transportation market weakness might bottom out. O’Sullivan said commercial vehicle softness was most pronounced in China and the situation may have stabilized, but underlying conditions remain mixed and tenuous.
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Hendi Susanto (Gabelli Funds): sought details on the sustainability of large medical orders and duration of diagnostic softness. O’Sullivan expects therapeutics strength to continue through the year, with diagnostics recovering over the next quarter or two.
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John Edward Franzreb (Sidoti): asked about the pace and focus of future acquisitions. O’Sullivan stated the company is most interested in advancing diversified end markets, and aims to balance organic and inorganic growth over the next year.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will watch closely for (1) sustained growth in medical, aerospace and defense, and industrial markets as new products and the SyQwest acquisition ramp, (2) progress on operational efficiency and margin expansion amid inflationary and tariff-related pressures, and (3) any signs of stabilization or recovery in transportation sales, especially in China. The pace and nature of future acquisitions will also be a key area of focus.
CTS currently trades at $40.47, in line with $40.42 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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