Hello, and welcome to the CTS Corporation third quarter 2023 conference call. My name is Alex. I'll be coordinating the call today. If you'd like to ask a question at the end of the presentation, you can press star, followed by one on your telephone keypad. If you'd like to remove your question, you may press star, followed by two. I'll now hand it over to your host, Kieran O'Sullivan, CEO, to begin. Please go ahead. Thanks, Alex. Good morning, and thank you for joining our third quarter 2023 earnings call. We continue to see weak demand in industrial and distribution markets, impacting sales as elevated inventories at our customers slowly correct. We are also seeing softening in commercial vehicle demand. Across the light vehicle transportation market, the impact of the UAW strike was low for the third quarter. We continue to expand our customer base in industrial and medical markets, where we had several product wins. We also secured our first development award for a motor position sensor with application in electrified vehicles. Our focus on profitable growth, driving diversification through our advanced materials capability and growth through electrification in mobility markets with innovative new products remain our highest priorities. I am pleased with our team's prudent management of operating expenses during the quarter, given the current sales softness. We remain focused on achieving our long-term strategic growth goals while also improving our operational performance. For the third quarter 2023, sales were $135 million, down 11% compared to the same period last year. Adjusted gross margin was 34.5%, down 210 basis points from the same period in 2022. Adjusted diluted earnings per share of $0.54, down $0.08 compared to the third quarter of 2022. We added 8 new customers in the quarter. I already mentioned the first motor position development award, which opens a new product line opportunity, enabling us to capture additional growth through the electrification mega trend and builds momentum beyond the first eBrake win last quarter. Ashish will take us through the Safe Harbor statement. Ashish? 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 in the Investors section of the CTS website. I will now turn the discussion back over to our CEO, Kieran O'Sullivan. Thank you, Ashish. We continue to experience challenging demand dynamics, driven primarily by higher levels of customer inventory. Sales were $135 million, down 11% from the same period last year. While the UAW strike had a low sales impact in the quarter, we expect it will pressure sales further in the fourth quarter. Operationally, with the reduced volume, we continue to focus on cost reductions. As communicated, we will have some temporary cost increases as we complete our previously announced Mexico site consolidation. Work is progressing on the site consolidation, and we are on track to complete the transition next year. Inflationary impacts are improving but continue to be a challenge in some areas. We are adjusting pricing and partnership with our customers as we are still experiencing certain raw material cost increases and continued wage inflation, especially in Mexico and certain other countries. We are also prioritizing our organic growth projects and new product investments while focusing on disciplined management of operating expenses during the softer short-term sales environment. We added eight new customers in the quarter with new production orders and through qualification progress on sample orders. In addition, we are partnering with 5 new customers in industrial, 2 in medical, and one in transportation to qualify our products in different applications. We had solid new business awards, especially for electrification platforms. We had a book-to-bill rate in the quarter of 0.93. Non-transportation sales declined 20% in the third quarter compared to the prior year period. In the industrial market, sales continued to be soft, driven by decreased demand for micro actuators used in industrial printing applications, due primarily to softness in China. We're also seeing softness across other industrial sensing applications and distribution as inventory levels continue to correct. We were successful with several wins, sales wins, securing a production order for kitchen appliances, with wins for EMC, two-wheel, and RF applications. We also had wins for multiple temperature applications, ranging from HVAC and compressor monitoring to refrigeration applications. We are engaged with new customers for potential sensing applications, varying from pro audio, industrial printing, tunable optics, and home appliances to tractor controls and wheel balancing. In medical markets where sales continue on an improving trend, we are seeing stronger demand. We had multiple wins in the quarter for traditional medical ultrasound, intravascular ultrasound, and therapeutic applications. Our targeted business development efforts are progressing as we engage with new customers across multiple sample qualifications, with applications in traditional ultrasound, therapeutics, optical encoders, and an application deploying ultrasound for precise tissue destruction used for cancer treatment. We expect the long-term prospects for aerospace and defense end market to be solid, given our enhanced capabilities and new material formulations. Aerospace and defense sales are expected to be solid through the end of the year. We received multiple orders in the quarter for defense sonar and RF applications, and secured underwater unmanned vehicle contracts. Additionally, we had wins for temperature sensing in communication satellites and for piezo material in aircraft emergency location beacons. Looking ahead for the balance of 2023 in non-transportation end markets, we expect continued softness in the industrial end market and distribution as customer inventory levels continue to correct. For defense and medical markets, we anticipate a stable environment and solid progress on the qualification of our products for prospective new customers. Long term, we expect our material formulations and in-house know-how to continue to support our growth in key, high-quality, non-transportation end markets in line with our diversification strategy. Additionally, we anticipate the mega trends of automation, connectivity, and efficiency, as well as growth in minimally invasive medical procedures, will provide us momentum as we continue expansion in these markets. Transportation sales were $76 million in the third quarter. Sales were down approximately 3% from the same period last year. We have now entered a softer demand environment for commercial vehicle products and anticipate fourth quarter sales to be lower, driven by a decrease in aftermarket demand that had been stronger post-COVID for restocking. On the light vehicle front, we continue to track market share dynamics in China, given the competition between local and transplant OEMs. In the third quarter, we had solid wins across all product categories and continued to gain momentum in electrification. In accelerator modules, we secured wins with OEMs in North America and Europe, and were awarded a haptic module for a European OEM that provides the driver feedback on speed, distance, and other information as customized by the vehicle manufacturer. We added a new product win for an accelerometer sensor with a North American OEM, where we expect a shorter than normal development period, as well as additional opportunities as we go forward. Total booked business was $1.4 billion at the end of the quarter. We are driving to achieve our goal of having more than 25% of our light vehicle revenue come from electrified platforms by 2025. Progress on securing electric vehicle business continued as we added 11 electric vehicle wins in the quarter, including accelerator modules and haptics, chassis ride height sensors, accelerometers, and current sensors, where we continue to gain momentum in the market, benefiting from maglab's strong pipeline of new opportunities. As we look to our future, we are excited by the opportunity the transition to electrification offers us. We continue to see the footwell in the vehicle as a space where we expect to expand our product offering with traditional accelerator modules, haptic modules, new eBrake products offering weight and cost advantages, and the future introduction of our Drive Pad technology, a low travel accelerator product that enables driver interface customization and increases the footwell design flexibility for our customers. We expect these and other sensor applications will increase our ability to grow content with a potential SAM of greater than $1 billion. Summarizing our outlook for full year 2023, the North American light vehicle market is expected to be in the 15 million unit range, subject to the impact of the UAW strike. European production is forecasted in the 16-17 million unit range. China volumes are expected in the 26 million unit range. While my earlier comments focused on a reduction in commercial vehicle demand in the fourth quarter, we also expect this softness to continue in 2024. For non-transportation markets, in line with our diversification strategy, we aim to expand the customer base and range of applications in the industrial, medical, and defense end markets. Inventory levels continue to correct to more normal levels, especially in certain industrial applications and in distribution. We estimate this demand softness to remain at reduced levels into early 2024. Demand in defense and medical markets is expected to remain solid. In terms of guidance for full year 2023, we previously communicated that we expected sales in the range of $565 million-$585 million, and adjusted diluted earnings per share in the range of $2.20-$2.40. Given the continued softness in distribution and the industrial markets during the second half of the year, the impact of the UAW strike and the softening commercial vehicle market, we are now updating the guidance for sales in the range of $545 million-$555 million, and adjusted diluted earnings per share in the range of $2.15-$2.25. Now I'll turn it over to Ashish, who will walk us through the financial results in more detail. Thank you, Kieran. Third quarter sales were $135 million, down 11% compared to the third quarter of 2022. Sales to the transportation end market decreased 3% year-over-year, driven by softness in sales of smart actuators for commercial vehicles. Sales to other end markets declined by approximately 20% year-over-year due to the inventory reduction related slowdown, primarily in the industrial and distribution end market. Adjusted gross margin was 34.5% in the third quarter, down 210 basis points compared to the third quarter of 2022. As expected, margins were impacted by an unfavorable end market mix. Foreign exchange rates also impacted gross margin unfavorably by approximately $1.8 million. We are seeing continued pressure on wage costs in some of the countries we operate in. On the material side, we are still experiencing cost increases in some specific areas, and we are working with our customers to share these cost increases. As Kieran highlighted, we remain focused on making operational improvements and driving cost reductions to enable long-term gross margin expansion. In light of the market conditions, we implemented temporary cost reduction measures to flex our cost structure in the second half of this year. In the third quarter, our operating expenses were lower, also due to a reversal of approximately $2.5 million in reserves related to incentive plans. We expect our fourth quarter total operating expenses, excluding restructuring costs, to be slightly higher than the third quarter. In the third quarter, we reported earnings of $0.44 per diluted share. Our adjusted earnings were $0.54 per diluted share, compared to $0.62 per diluted share in the same period last year. Next, discussing our cash flow and balance sheet. We generated $22 million in operating cash flow during the third quarter of 2023. Free cash flow was $19 million as we carefully managed capital expenditures. Year to date, operating cash flow was $57 million and free cash flow was $46 million. Controllable working capital was 19.5%, compared to 15.6% in the same period last year. As mentioned on prior calls this year, we are transitioning from our Juárez facility, with activity picking up in the second half of 2023. We have built up some safety stock to facilitate the transition and are expecting a further increase in the fourth quarter. Our goal is to work through the safety stock quickly in 2024. In the third quarter, we repurchased 188,700 shares of CTS stock for approximately $8.3 million. Year to date, we have returned approximately $30 million to shareholders through buybacks and dividends. Our balance sheet remains healthy. We had a cash balance of $160 million at the end of September 2023, up from $151 million in June 2023, supported by healthy operating cash generation in the third quarter. Our long-term debt balance was $77 million on our total $400 million facility. Our robust balance sheet and strong cash flow generation give us a strong foundation, enabling us to make strategic acquisitions and drive long-term growth for CTS. This concludes our prepared comments. We would like to open the line for questions at this time. Thank you. As a reminder, if you'd like to ask a question, you can press star, followed by one on your telephone keypad. If you'd like to remove your question, you may press star followed by two. Please ensure you're unmuted locally when asking your question. Our first question for today comes from Joshua Buchalter from TD Cowen. Joshua, your line is now open. Please go ahead. Hey, guys. Thanks for taking my question. I appreciate you called out the UAW as an impact, the UAW strike as an impact in the third quarter of the year, and also recognize, like, this is literally happening in real time. But is there any way you can quantify how much of an impact that was in the third quarter and the fourth quarter outlook? And is there any reason to think that this wouldn't what you know, whatever was lost because of the strike, wouldn't be made up in the next couple quarters as well? Thank you. Joshua, thanks for your question. So for the third quarter, the UAW impact was pretty minimal. But as we go forward, we see it. We've already been impacted in the fourth quarter, and we see that impact probably in the $2 million-$4 million range. I also mentioned softness in commercial vehicle. We would see that somewhere maybe in the 10 million unit range for the fourth quarter. Got it. Thank you. And then, thanks for all the details on the site consolidation. Is there any way to kind of quantify or help like for like, how much of a margin tailwind that could be once you get fully up and running in your steady state in Mexico? Yeah, Josh, what we have called out for that is it's a Mexico to Mexico transition. So we are not expecting a significant change in profitability, just from the move itself. We are looking to have more stability in our production processes, and that'll enable us to do more business with the customers that we have at our existing Juárez location. Got it. And then last one for me. It was interesting you called out China domestic competition in the prepared remarks. Is that something new that you're seeing? Is that changing materially? Is it any specific products or end markets where you're feeling that the most? Thank you, and I'll be quiet now. Yeah, Josh, on that one, we've spoken about it in the last few quarters. We have two larger customers over there, Toyota and Honda. They've lost some share, short term, so that's something we're keeping a close eye on, and it obviously impacts us. Got it. That's helpful clarification. Thank you. Thank you. Our next question comes from John Franzreb of Sidoti & Company. John, your line is now open. Please go ahead. Good morning, Kieran and Ashish. Thanks for taking the questions. I'd like to go back to the change in the revenue guidance. You called out $10 million from commercial vehicle and 2-4 from UAW. But what about the balance that makes up that $25 million midpoint? It certainly seems in the second quarter you were a little bit optimistic that some of those industrial end markets would rebound. What changed? John, the inventory build-up, and if you read just industry sentiment out there on inventory levels, while it's improving in terms of burning down the inventory, we're not there at the level we'd like to be at yet. So when you look at the guide going forward in terms of where we're gonna be end of the year and the fourth quarter softness, it's a combination of that continued industrial and distribution softness. Now, the softness that we see in commercial vehicle and the UAW strike, which obviously is still impacting two of our customers directly. Okay, and then is this may be customer specific. Toyota's been a laggard in rebuilding their inventory compared to the Detroit 3. Any sense of when they're gonna catch up a little bit? What are you hearing from their production rates and what their outlook looks like? I think Toyota continues to do well in Europe and North America. Our concern, John, more is in China, where the competition and pricing has been a bit more tougher, and also the transition to electrification has been a little faster. I know Toyota has come out in recent days and said that, "Hey, now we're seeing a softness in demand for EVs, and the hybrids are going to benefit." So that's something we'll continue to track. Okay, but no sense when they're gonna rebuild their inventory here in North America, because they're at the lowest end of the curve. Yeah, John, they obviously are not communicating to us directly in terms of what their intentions are. We do see their orders as they place them a few weeks out. We are monitoring it carefully, but I wouldn't be calling out any significant uptick or downtick from there. Okay. And just again, on the end markets, the commercial vehicle end market, there's certainly some trepidation about how 2024 will look like versus 2023. Any early thoughts about what you're budgeting as far as kind of a build rate in 2024 versus 2023, as far as up or down or any kind of relative expectations? Thank you. No, John, what I would tell you is, obviously, we've got good line of sight to Q4. That's why I called out the range of $10 million as our estimate. Into 2024, just given the taper off that's been there and that catch up in the aftermarket side of it, that softness will continue into the first quarter. What the full year will be like, we'll give you a better guide in our Q1 earnings call. That's the best I can tell you at the moment. Okay. Thank you, guys. We'll get back into queue. Thanks, John. Thank you. Our next question is from Justin Long of Stephens. Justin, your line is now open. Please go ahead. Thanks, and good morning. Morning, Justin. Hi, Justin. Morning. I wanted to circle back to the comment that you made about commercial vehicle weakness driving a $10 million headwind. Were you referring to a sequential headwind in revenue relative to the third quarter, or was that a year-over-year comment? No sequential, Justin. Okay. So if I kinda run the math on the implied revenue guidance for the fourth quarter, it seems to suggest that the midpoint about $10 million of sequential pressure, 3Q to 4Q. And based on the UAW strike and commercial vehicle weakness, sounds like all of that is coming from those two items. So is that the right interpretation, and how are you thinking about non-transportation revenue sequentially in the fourth quarter? Could it look more stable? Yeah, you've characterized it correctly with the CV drop, commercial vehicle drop, and the UAW, and on the other markets getting more stable and hoping to see some improvement coming in that area. Okay, understood. Ashish, you touched on operating costs earlier a bit, but if I look at the SG&A line in particular, it was a pretty significant decrease in the third quarter relative to the second quarter, about $5 million. It million. It sounds like, you know, half of that roughly was the incentive adjustment. What drove that other half? And could you just talk about the sustainability of some of the cost cuts it sounds like you're implementing into next year? Yeah. So overall, Justin, you're looking at the numbers correctly. We have taken short-term cost improvement measures, for Q3 and for Q4. What you'll also see is that R&D expenses were slightly elevated in the third quarter because just timing of different projects. So overall, when I look at operating expenses, excluding restructuring, we are expecting a slight increase in the fourth quarter compared to Q3, but not significant. And the increase is primarily because of that reserve release that I talked about for incentive compensation. Okay. And is there a way to quantify the other temporary cost reductions? And, you know, how much longer those could last? Kinda what are the signs or the catalysts that you're looking for to put those costs back in the business, you know, whenever demand improves? Yeah. So, we are looking, Justin, you know, in the second half of the year is our primary objective, and then we'll keep reviewing things as we go further along. Okay, understood. And last one for me, you know, the book-to-bill was close to one times in the quarter, despite some of the demand challenges and macro environment that's uncertain. Could you just comment on the order pipeline that you're seeing today and your comfort level that, you know, we can continue to trend at around this one times book-to-bill? Justin, on winning new business in terms of that side of it, we're doing very well. You heard me mention a new motor position sensor. That's a new market for us. It opens up an opportunity with a SAM of about $700 million, growing at a double-digit percent. We see great progress in current sensing. We've got a good pipeline of opportunities, and that's just on top of what's happening in medical and in defense, where we've been doing well. So, you know, it's a tough quarter, you calling it what it is, but we feel like we've got good momentum going on winning new business. The book-to-bill, quarter to quarter going forward is gonna be a kind of more of a steady improvement, but longer term, medium to longer term, we feel good about the wins we're getting. Great. Thanks. I appreciate the time. Thanks, Justin. Thank you. Our next question comes from Hendi Susanto of CBS. Your line is now open. Please go ahead. Good morning, Kieran and Ashish. Morning, Hendy. Hi, Hendy. Yeah, Ashish, I have a question on the labor wage increase and then the raw material cost increase. Like, should we—like, is there any way where we can think about the magnitude, whether those two account for, like, let's say, single-digit percentage of the cost of goods sold, or like, just to get some insight into the magnitude of the gross margin pressure on those two ends? Yeah. So, you know, if you go back to the last two years, we were seeing some significant increases, which we called out and we quantified. The dynamic is improving. What we wanted to call out is that we are still seeing some areas of pressure. On the wage side, it's in Mexico, it's in some other countries that we operate in, in Europe. The materials is improving, but there are some places, some specific suppliers, where we still have challenges. So that's what we are trying to call out. I wouldn't be saying that it has a significant margin impact for our business, and as I mentioned on the call, we are still working with our customer base to share those cost increases as appropriate, just so that, we are managing the overall margin impact. Hendy, one thing I want to highlight is, you know, where we have those challenges, and we feel they're not best to market, we're not shy about turning on new sources. I see. And Kieran, may I seek your insight in terms of the UAW strike, whether the impact can go beyond Q4? I would hope not, Hendi. You know, the impact is big enough for us. You obviously heard last night that the Ford is up for proposed settlement at this stage. Our bigger customers are with GM and Stellantis, but given what's happening with Ford, I would hope things would converge soon and not get into next year at all. I see. Yeah. And then Kieran, congratulations on securing the first win in eBrake. May I know when the commercial sales of eBrake associated with that win may start? Hendi, it's a very new product. It's complex, that the first revenues come in either late 2026 or 2027. And the product is very popular with our customer. We've a lot of interest in it as well. We see this as a platform that can be just like our accelerator modules, a $50 million+ platform over years. Okay. Yeah. And then the awards that you have in the AC motor current sensors, what is the timing of the commercial sales? On the current sensors, in actual fact, with what we've done out of the maglab acquisition, we already have some impact in sales in industrial applications. The automotive ones take a little bit longer, but they're on a good trajectory. It's not gonna be three or four years, it's gonna be closer to two years. I see. Okay. Yeah. Okay. Thank you, Kieran. Thank you, Ashish. Thanks, Hendi. Thanks, Hendi. Thank you. At this time, we currently have no further questions, so I'll hand back to Kieran O'Sullivan for any further remarks. Thanks, Alex, and thank you all for your time. Despite the near-term headwinds, CTS is well positioned for future growth, driven by the mega trends of increased automation, connectivity, and energy efficiency. Overall, we are focused on our long-term goals to drive profitable growth. The solid wins in the quarter, expansion of customers, new development contracts, and pipeline of opportunities underscore our strong confidence in CTS's future. I want to thank our global teams for their support in driving our strategic initiatives, successfully launching several new products, and continuing to give back to those less fortunate in our communities during the quarter. We also continue to work hard to enhance our operational performance. Thank you all for joining us today. This concludes our call. Thank you for joining today's call. You may now disconnect your lines.