Earnings release
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CTS Announces Third Quarter 2026 Results 10/27/2026 2026 Outlook Raised on Record Profitability; Millar Acquisition Advances DiversificationLISLE, Ill., Oct. 27, 2026 (GLOBE NEWSWIRE) -- CTS Corporation (NYSE: CTS), a leading global designer and manufacturer of highly engineered solutions that “Sense, Connect and Move,” today announced results for the third quarter of 2026. “CTS delivered another strong quarter, with sales increasing 5% year over year, driven by continued strength across our increasingly diversified portfolio. Diversified end-market sales grew 7% and now represent 60% of total sales, while Transportation sales also posted modest growth,” said Pratik Trivedi, CEO of CTS Corporation. “Our disciplined execution is delivering profitable growth, record margins and strong cash generation. The acquisition of Millar further advances our diversification strategy, especially in the medical end market, and enhances our opportunity to create sustainable long-term value.” Third Quarter 2026 Results Sales were $149.6 million in the third quarter of 2026, up 5% year-over-year. Sales to diversified end-markets increased 7%. Sales to the transportation market increased 2%. Net income was $17.8 million, or 11.9% of sales, compared to $13.7 million, or 9.6% of sales in the third quarter of 2025. Diluted EPS was $0.61, up 15 cents from $0.46 in the third quarter of 2025. Adjusted Gross margin was 42.2%, up 330 bps from 38.9% in the third quarter of 2025. Adjusted EBITDA margin was 24.7%, up 90 bps from 23.8% in the third quarter of 2025. Adjusted diluted EPS was $0.77, up 17 cents from $0.60 in the third quarter of 2025. Operating cash flow was $43.5 million, up $14.5 million from $29.0 million in the third quarter of 2025. 2026 Guidance Assuming the continuation of current market conditions, CTS is increasing its previous guidance of 2026 sales from a range of $565-$585 million to $580-$590 million and adjusted diluted EPS from a range of $2.55-$2.70 to $2.78-$2.88. CTS does not provide reconciliations of forward-looking non-GAAP financial measures, such as estimated adjusted diluted earnings per share, to the most comparable GAAP financial measures on a forward-looking basis because CTS is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of certain items, such as, but not limited to, restructuring costs, environmental remediation costs, acquisition-related costs, foreign exchange rates and other non- routine costs. Each of such adjustments has not yet occurred, are out of CTS' control and/or cannot be reasonably predicted. For the same reasons, CTS is unable to address the probable significance of the unavailable information. Conference Call and Supplemental Materials As previously announced, CTS has scheduled a conference call for 10:00 a.m. (ET) today. The conference call can be accessed by registering online at CTS Corporation Q3 2026 Earnings Call, at which time registrants will receive dial-in information as well as a conference ID. In addition, CTS will be using a supplemental slide presentation that will be referred to during the call. The presentation and a live audio webcast of the conference call will be available and can be accessed directly from CTS’ website at https://investors.ctscorp.com/news-events/events-and-presentations/. Any replay, rebroadcast, transcript or other reproduction or transmission of this conference call, other than the replay accessible through the website noted above, has not been authorized by CTS and is strictly prohibited. Investors should be aware that any unauthorized reproduction of this conference call may not be an accurate reflection of its contents. About CTS
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CTS Corporation (NYSE: CTS) is a leading designer and manufacturer of products that Sense, Connect and Move. CTS manufactures sensors, actuators and electronic components in North America, Europe and Asia, and provides engineered products to customers in the aerospace & defense, industrial, medical and transportation markets. For more information, visit www.ctscorp.com/. Diversified end markets, previously referred as the “non-transportation” market, includes the industrial, aerospace & defense, and medical end markets. Cautionary Statement Regarding Forward-Looking Statements Readers are cautioned that the statements contained in this document regarding expectations of our performance or other matters that may affect our business, results of operations, or financial condition are, or may be deemed to be, “forward-looking statements” as defined by the “safe harbor” provisions in the Private Securities Litigation Reform Act of 1995. Such statements are made in reliance on the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, included or incorporated in this document, including statements regarding our strategy, financial position, guidance, funding for continued operations, cash reserves, liquidity, projected costs, plans, projects, awards and contracts, and objectives of management, among others, are forward- looking statements. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “continued,” “project,” “plan,” “goals,” “opportunity,” “appeal,” “estimate,” “potential,” “predict,” “demonstrates,” “may,” “will,” “might,” “could,” “intend,” “shall,” “possible,” “would,” “approximately,” “likely,” “outlook,” “schedule,” “on track,” “poised,” “pipeline,” and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements are not guarantees of future performance, conditions or results. Forward-looking statements are based on management’s expectations, certain assumptions, and currently available information. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and are based on various assumptions as to future events, the occurrence of which necessarily are subject to uncertainties. These forward-looking statements are made subject to certain risks, uncertainties, and other factors, which could cause CTS’ actual results, performance, or achievements to differ materially from those presented in the forward-looking statements. Examples of factors that may affect future operating results and financial condition include, but are not limited to: supply chain disruptions (including, but not limited to, the availability and cost of rare earth elements, minerals and metals); changes in the economy generally, including inflationary and/or recessionary conditions and increased tariffs, and in respect to the businesses in which CTS operates; unanticipated issues in integrating acquisitions; the funding of contracts by the U.S. Government; the results of actions to reposition CTS’ business; rapid technological change; general market conditions in the transportation, as well as conditions in the industrial, aerospace and defense, and medical markets; reliance on key customers; unanticipated public health crises, natural disasters or other events; environmental compliance and remediation expenses; the ability to protect CTS’ intellectual property; pricing pressures and demand for CTS’ products; risks associated with CTS’ international operations, including trade and tariff barriers, trade pacts, including the future of the USMCA, exchange rates and political and geopolitical risks (including, without limitation, the impact of tariffs on China, Canada and Mexico, and other nations, the potential impact of U.S./China relations and the impact of geopolitical conflicts may have on our business, results of operations and financial condition; write offs of goodwill on our balance sheet; changes in existing tax laws or adoption of new tax laws; the amount and timing of any share repurchases; and the effect of any cybersecurity incidents on our business. Many of these, and other risks and uncertainties, are discussed in further detail in Item 1A. of CTS's most recent Annual Report on Form 10-K and other filings made with the SEC. CTS undertakes no obligation to publicly update CTS’ forward-looking statements to reflect new information or events or circumstances that arise after the date hereof, including market or industry changes. Contact Ashish Agrawal Vice President and Chief Financial Officer CTS Corporation 4925 Indiana Avenue Lisle, IL 60532 USA +1 (630) 577-8800 ashish.agrawal@ctscorp.com
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CTS CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED(In thousands, except per share amounts) Three Months Ended Nine Months Ended September30,2026 September30,2025 September30,2026 September30,2025 Net sales $ 149,583 $ 142,970 $ 433,593 $ 404,047 Cost of goods sold 86,431 87,629 255,407 249,727 Gross margin 63,152 55,341 178,186 154,320 Selling, general and administrative expenses 30,812 27,222 85,185 73,922 Research and development expenses 6,333 6,901 17,730 19,416 Restructuring charges 468 280 948 1,028 Operating earnings 25,539 20,938 74,323 59,954 Other (expense) income: Interest expense (630) (1,110) (2,042) (3,398)Interest income 782 535 1,832 1,603 Other income (expense), net 12,534 (643) 12,023 665 Total other income (expense), net 12,686 (1,218) 11,813 (1,130)Earnings before income taxes 38,225 19,720 86,136 58,824 Income tax expense 20,468 6,033 32,018 13,243 Net earnings $ 17,757 $ 13,687 $ 54,118 $ 45,581 Earnings per share: Basic $ 0.62 $ 0.47 $ 1.89 $ 1.53 Diluted $ 0.61 $ 0.46 $ 1.87 $ 1.52 Basic weighted – average common shares outstanding: 28,547 29,348 28,605 29,698 Effect of dilutive securities 370 279 342 281 Diluted weighted – average common shares outstanding: 28,917 29,627 28,947 29,979 Cash dividends declared per share $ 0.04 $ 0.04 $ 0.12 $ 0.12 CTS CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(In thousands of dollars) (Unaudited)September 30,2026 December 31,2025 ASSETS Current Assets Cash and cash equivalents $ 143,880 $ 82,295 Accounts receivable, net of allowances of $584 and $910, respectively 93,007 88,096 Inventories, net 62,355 52,854 Other current assets 29,704 29,461 Total current assets 328,946 252,706 Property, plant and equipment, net 86,637 89,741 Operating lease assets, net 31,016 22,542 Other Assets Goodwill 207,395 209,611 Other intangible assets, net 139,535 153,562 Deferred income taxes 17,739 25,110 Other assets 10,826 11,039 Total other assets 375,495 399,322 Total Assets $ 822,094 $ 764,311 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Accounts payable $ 50,582 $ 48,220 Operating lease obligations 4,355 3,453 Accrued payroll and benefits 22,699 20,732 Accrued expenses and other liabilities 49,205 37,283 Total current liabilities 126,841 109,688 Long-term debt 55,000 57,500 Long-term operating lease obligations 29,412 21,841 Long-term pension obligations 3,656 3,698 Deferred income taxes 13,163 12,800 Other long-term obligations 7,298 6,998 Total Liabilities 235,370 212,525 Commitments and Contingencies Shareholders’ Equity Common stock 326,888 324,982
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Additional contributed capital 46,043 43,303 Retained earnings 764,156 713,467 Accumulated other comprehensive income 8,701 13,748 Total shareholders’ equity before treasury stock 1,145,788 1,095,500 Treasury stock (559,064) (543,714)Total shareholders’ equity 586,724 551,786 Total Liabilities and Shareholders’ Equity $ 822,094 $ 764,311 CTS CORPORATION AND SUBSIDIARIESOTHER SUPPLEMENTAL INFORMATION - UNAUDITED(In millions of dollars, except percentages and per share amounts) Non-GAAP Financial Measures From time to time, CTS may use non-GAAP financial measures in discussing CTS’ business. These measures are intended to supplement, not replace, CTS’ presentation of its financial results in accordance with U.S. GAAP. CTS believes that the non- GAAP financial measures presented are commonly used by financial analysts and others in the industries in which CTS operates, and thus further provide useful information to investors. CTS’ definitions of these non-GAAP financial measures may differ from those terms as defined or used by other companies. Non-GAAP measures should not be used by investors or third parties as the sole basis for formulating investment decisions, as they may exclude a number of important cash and non-cash recurring items. CTS has presented these non-GAAP financial measures as it believes that the presentation of its financial results that exclude (1) restructuring charges; (2) restructuring-related charges; (3) environmental charges; (4) acquisition-related adjustments; (5) inventory fair value step-up costs; (6) foreign exchange (gains) losses; (7) non-cash pension expenses (income); (8) non- recurring insurance recovery proceeds and (9) certain discrete tax items are useful and assist in comparing CTS’ current operating results with past periods and with the operational performance of other companies in its industry. Included below is a description of the expenses that CTS has determined are not normal, recurring cash operating expenses necessary to operate its business and the rationale for why providing financial measures for its business with such expenses excluded or adjusted is useful to investors as a supplement to the U.S. GAAP measures. Restructuring charges – costs primarily relating to workforce reduction costs, building and equipment relocation costs, asset impairment charges and other facility closure costs in connection with our continued optimization of our organization. Restructuring-related charges – costs related to restructuring actions that do not qualify as direct restructuring charges under US GAAP. These include duplicative expenses incurred due to the plant consolidation related transition activities such as excess rent, utilities, personnel related and other costs prior to start of production at the new location. Environmental charges – costs associated with our non-operating facilities that are unrelated to ongoing operations. Currently, none of these costs and accruals relate to sites that provide revenue generating activities for the Company. Acquisition-related adjustments – diligence and transaction costs related to acquisitions including related contingent earnout and other adjustments. Inventory fair value step-up costs – purchase accounting-related inventory costs from acquisitions. Foreign exchange (gains) losses – remeasurement income and expenses for non-U.S. subsidiaries with the U.S. dollar as the functional currency. Non-cash pension expenses (income) – pension income and expenses relating to the non-operating U.S. pension and post- retirement life insurance plans, including historical plan settlement activities. Insurance recovery – recovery relating to non-recurring insurance claims Discrete tax items – non-recurring, infrequent, or unusual tax adjustments (e.g., valuation allowances, uncertain tax position changes, unremitted assertion changes and discrete impacts associated with pre-tax non-GAAP items or due to tax law changes, etc.). At times, the reconciliations below have been intentionally rounded to the nearest thousand, or $0.01 for EPS figures, and, therefore, may not sum. Adjusted Gross Margin Three Months EndedSeptember 30, Nine Months EndedSeptember 30, Twelve Months EndedDecember 31, 2026 2025 2026 2025 2025 2024 2023 Gross margin $ 63.2 $ 55.3 $ 178.2 $ 154.3 $ 208.0 $ 187.6 $ 190.9
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Net sales $ 149.6 $ 143.0 $ 433.6 $ 404.0 $ 541.3 $ 514.8 $ 550.4 Gross margin as a % of net sales 42.2% 38.7% 41.1% 38.2% 38.4% 36.4% 34.7% Adjustments to reported grossmargin: Restructuring-related charges (b) — 0.2 — 0.2 0.2 0.7 0.6 Inventory fair value step-up (b) — — — — — 2.1 — Adjusted gross margin $ 63.2 $ 55.6 $ 178.2 $ 154.5 $ 208.2 $ 190.4 $ 191.4 Adjusted gross margin as a % ofnet sales 42.2% 38.9% 41.1% 38.2% 38.5% 37.0% 34.8% Adjusted Operating Earnings Three Months EndedSeptember 30, Nine Months EndedSeptember 30, Twelve Months EndedDecember 31, 2026 2025 2026 2025 2025 2024 2023 Operating earnings $ 25.5 $ 20.9 $ 74.3 $ 60.0 $ 82.6 $ 71.2 $ 75.1 Net sales $ 149.6 $ 143.0 $ 433.6 $ 404.0 $ 541.3 $ 514.8 $ 550.4 Operating earnings as a % of netsales 17.1% 14.6% 17.1% 14.8% 15.3% 13.8% 13.6% Adjustments to reported operatingearnings: Restructuring charges (c) 0.5 0.3 0.9 1.0 1.4 4.7 7.1 Restructuring-related charges (b) 0.1 0.4 0.2 0.4 0.7 0.7 0.6 Environmental charges (a) 0.2 4.2 0.9 4.7 5.5 1.6 3.5 Acquisition-related adjustments(a) 1.2 (1.1) 1.3 (2.6) (3.4) (0.3) 0.4 Inventory fair value step-up (b) — — — — — 2.1 — Total adjustments to reportedoperating earnings $ 2.0 $ 3.8 $ 3.3 $ 3.5 $ 4.2 $ 8.8 $ 11.5 Adjusted operating earnings $ 27.5 $ 24.8 $ 77.7 $ 63.4 $ 86.9 $ 80.0 $ 86.6 Adjusted operating earnings as a% of net sales 18.4% 17.3% 17.9% 15.7% 16.0% 15.5% 15.7% Adjusted EBITDA Margin Three Months EndedSeptember 30, Nine Months EndedSeptember 30, Twelve Months EndedDecember 31, 2026 2025 2026 2025 2025 2024 2023 Net earnings $ 17.8 $ 13.7 $ 54.1 $ 45.6 $ 65.3 $ 55.5 $ 60.5 Net sales $ 149.6 $ 143.0 $ 433.6 $ 404.0 $ 541.3 $ 514.8 $ 550.4 Net earnings margin 11.9% 9.6% 12.5% 11.3% 12.1% 10.8% 11.0% Depreciation and amortizationexpense 8.7 8.8 26.3 25.9 34.5 30.9 28.7 Interest expense 0.6 1.1 2.0 3.4 4.3 4.2 3.3 Tax expense 20.5 6.0 32.0 13.2 18.5 13.1 14.6 EBITDA 47.6 29.7 114.5 88.1 122.6 103.7 107.2 EBITDA Margin 31.8% 20.7% 26.4% 21.8% 22.6% 20.1% 19.5% Adjustments to EBITDA: Restructuring charges (c) 0.5 0.3 0.9 1.0 1.4 4.7 7.1 Restructuring-related charges (b) 0.1 0.4 0.2 0.4 0.7 0.7 0.6 Environmental charges (a) 0.2 4.2 0.9 4.7 5.5 1.6 3.5
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Acquisition-related adjustments(a) 1.2 (1.1) 1.3 (2.6) (5.6) (0.3) 0.4 Inventory fair value step-up (b) — — — — — 2.1 — Non-cash pension and relatedexpense (d) — — — 0.1 0.1 0.2 — Foreign currency loss (gain) (d) (0.1) 0.6 0.4 (0.7) (1.3) 2.7 2.0 Insurance recovery (d) (12.5) — (12.5) — — — — Total adjustments to EBITDA (10.6) 4.4 (8.7) 2.8 0.9 11.7 13.6 Adjusted EBITDA $ 37.0 $ 34.1 $ 105.7 $ 90.9 $ 123.4 $ 115.4 $ 120.7 Adjusted EBITDA Margin 24.7% 23.8% 24.4% 22.5% 22.8% 22.4% 21.9% Adjusted Net Earnings and Adjusted Diluted Earnings Per Share Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2026 2026 2025 2025 2026 2026 2025 2025 Pershare Pershare Pershare Pershare Net earnings (A) $ 17.8 $ 0.61 $ 13.7 $ 0.46 $ 54.1 $ 1.87 $ 45.6 $ 1.52 Adjustments to reported netearnings: Restructuring charges (c) 0.5 0.02 0.3 0.01 0.9 0.03 1.0 0.03 Restructuring-related charges(a) 0.1 0.00 0.4 0.01 0.2 0.01 0.4 0.01 Environmental charges (a) 0.2 0.01 4.2 0.14 0.9 0.03 4.7 0.16 Acquisition-related adjustments(a) 1.2 0.04 (1.1) (0.03) 1.3 0.05 (2.6) (0.09)Non-cash pension and relatedexpense (d) — — — — — — 0.1 — Foreign currency loss (gain) (d) (0.1) (0.00) 0.6 0.02 0.4 0.01 (0.7) (0.02)Insurance recovery (d) (12.5) (0.43) — — (12.5) (0.43) — — Total pretax adjustments toreported net earnings $ (10.6) $ (0.37) $ 4.4 $ 0.15 $ (8.7) $ (0.30) $ 2.8 $ 0.09 Income tax effect of aboveadjustments (f) 2.5 0.09 (1.0) (0.03) 2.2 0.08 (1.0) (0.03)Total adjustments, tax affected (f)(B) $ (8.1) $ (0.28) $ 3.4 $ 0.12 $ (6.5) $ (0.23) $ 1.8 $ 0.06 Tax adjustments: Other discrete tax items (e) 12.7 0.44 0.7 0.02 14.0 0.48 0.8 0.03 Total tax adjustments (C) $ 12.7 $ 0.44 $ 0.7 $ 0.02 $ 14.0 $ 0.48 $ 0.8 $ 0.03 Adjusted net earnings (A+B+C)and Adjusted net earnings pershare 22.4 0.77 17.8 0.60 61.6 2.13 48.2 1.61 Net sales $ 149.6 $ 143.0 $ 433.6 $ 404.0 Net earnings as a % of net sales 11.9% 9.6% 12.5% 11.3% Adjusted net earnings as a % ofnet sales 15.0% 12.4% 14.2% 11.9% Twelve Months EndedDecember 31, 2025 2025 2024 2024 2023 2023 Per share Per share Per share Net earnings (A) $ 65.3 $ 2.19 $ 55.5 $ 1.80 $ 60.5 $ 1.92 Adjustments to reported net earnings: Restructuring charges (c) 1.4 0.05 4.7 0.15 7.1 0.22 Restructuring-related charges (a) 0.7 0.02 0.7 0.02 0.6 0.02 Environmental charges (a) 5.5 0.18 1.6 0.05 3.5 0.11 Acquisition-related adjustments (a) (5.6) (0.19) (0.3) (0.01) 0.4 0.01
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Inventory fair value step-up (b) — — 2.1 0.07 — — Non-cash pension and related expense (d) 0.1 0.00 0.2 0.01 — — Foreign currency (gain) loss (d) (1.3) (0.04) 2.7 0.09 2.0 0.06 Total pretax adjustments to reported net earnings $ 0.9 $ 0.03 $ 11.7 $ 0.38 $ 13.5 $ 0.42 Income tax effect of above adjustments (f) (0.6) (0.02) (2.2) (0.07) (2.4) (0.07)Total adjustments, tax affected (f) (B) $ 0.3 $ 0.01 $ 9.5 $ 0.31 $ 11.1 $ 0.35 Tax adjustments: Increase in valuation allowances (e) — — — — — — Other discrete tax items (e) 0.8 0.03 0.3 0.01 (1.6) (0.05)Total tax adjustments (C) $ 0.8 $ 0.03 $ 0.3 $ 0.01 $ (1.6) $ (0.05)Adjusted net earnings (A+B+C) and Adjustednet earnings per share $ 66.3 $ 2.23 $ 65.3 $ 2.12 $ 70.0 $ 2.22 Net sales $ 541.3 $ 514.8 $ 550.4 Net earnings as a % of net sales 12.1% 10.8% 11.0% Adjusted net earnings as a % of net sales 12.3% 12.7% 12.7% (a) Reflected in Selling, general and administrative and other income (expense), net. (b) Reflected in Cost of goods sold. (c) Reflected in Restructuring charges. (d) Reflected in Other income (expense), net. (e) Reflected in Income tax expense. For 2023, discrete tax items include adjusting for tax benefits resulting from $0.6 million for research and development tax credits from prior years, $0.8 million in foreign tax credits related to prior years from a 2023 tax law change, as well as $0.2 million from the release of uncertain tax benefits. For 2024, the discrete tax items relate to items we deemed outside normal cash-generating operations including the addition of a valuation allowance for a foreign subsidiary. For 2025, the discrete tax items relate to items we deemed outside normal cash-generating operations including the addition of a valuation allowance for research and developmental credits and the tax impacts of an immaterial correction of a prior period error. For 2026, the discrete tax items relate to items we deemed outside normal cash-generating operations including the addition of a valuation allowance for foreign tax credits and adjustments related to uncertain tax positions. (f) We determine the tax effect of non-GAAP adjustments by considering the tax laws and statutory income tax rates applicable in the tax jurisdictions of the underlying non-GAAP adjustments. For all periods presented, we applied the statutory income tax rates to the taxable portion of all of our adjustments. Our acquisition costs and foreign currency gains and losses included in our non-GAAP adjustments were not deductible for income tax purposes; therefore, no statutory income tax rate was applied to such costs. NOTE: CTS believes that adjusted gross margin, adjusted operating earnings, adjusted EBITDA margin, adjusted net earnings and adjusted diluted earnings per share provide useful information to investors regarding its operational performance because they enhance an investor’s overall understanding of CTS’ core financial performance and facilitate comparisons to historical results of operations, by excluding items that are not related directly to the underlying performance of CTS’ fundamental business operations (such as those items noted above in the paragraph titled “Non-GAAP Financial Measures”) or were not part of CTS’ business operations during a comparable period. Controllable Working Capital September 30, December 31, 2026 2025 2025 2024 2023 Net accounts receivable $ 93.0 $ 85.9 $ 88.1 $ 77.6 $ 78.6 Net inventory $ 62.4 $ 54.2 $ 52.9 $ 52.3 $ 60.0 Accounts payable $ (50.6) $ (48.1) $ (48.2) $ (42.6) $ (43.5) Controllable working capital $ 104.8 $ 92.0 $ 92.7 $ 87.3 $ 95.1 Quarter sales $ 149.6 $ 143.0 $ 137.3 $ 126.4 $ 124.7 Multiplied by 4 4 4 4 4 4 Annualized sales $ 598.3 $ 571.9 $ 549.1 $ 505.6 $ 498.8 Controllable working capital as a % of annualized sales 17.5% 16.1% 16.9% 17.3% 19.1%
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NOTE: CTS believes the controllable working capital ratio is a useful measure because it provides an objective measure of the efficiency with which CTS manages its short-term capital needs. Free Cash Flow Three Months EndedSeptember 30, Nine Months EndedSeptember 30, Twelve Months EndedDecember 31, 2026 2025 2026 2025 2025 2024 2023 Net cash provided by operatingactivities $ 43.5 $ 29.0 $ 94.3 $ 72.9 $ 102.1 $ 98.2 $ 88.8 Capital expenditures (2.4) (4.8) (12.0) (12.5) (15.7) (18.6) (14.7)Free cash flow $ 41.1 $ 24.2 $ 82.3 $ 60.4 $ 86.4 $ 79.6 $ 74.1 Operating cash flow as a percentageof net earnings 245% 212% 174% 160% 156% 177% 147%Free cash flow as a percentage ofadjusted net earnings 184% 136% 134% 125% 130% 122% 106% NOTE: CTS believes that free cash flow is a useful measure because it demonstrates the company’s ability to generate cash. Free cash flow is a non-GAAP measure and should be considered in addition to, but not as a substitute for, information contained in the company's condensed consolidated statement of cash flows as a measure of liquidity. Capital Expenditures Three Months EndedSeptember 30, Nine Months EndedSeptember 30, Twelve Months EndedDecember 31, 2026 2025 2026 2025 2025 2024 2023 Capital expenditures $ 2.4 $ 4.8 $ 12.0 $ 12.5 $ 15.7 $ 18.6 $ 14.7 Net sales $ 149.6 $ 143.0 $ 433.6 $ 404.0 $ 541.3 $ 514.8 $ 550.4 Capex as % of net sales 1.6% 3.4% 2.8% 3.1% 2.9% 3.6% 2.7% Additional Information The following table includes other financial information not presented in the preceding financial statements. Three Months EndedSeptember 30, Nine Months EndedSeptember 30, Twelve Months EndedDecember 31, 2026 2025 2026 2025 2025 2024 2023 Depreciation and amortizationexpense $ 8.7 $ 8.8 $ 26.3 $ 25.9 $ 34.5 $ 30.9 $ 28.7 Stock-based compensation expense $ 3.3 $ 1.2 $ 7.3 $ 3.4 $ 4.9 $ 5.7 $ 5.2