CTS Corporation (NYSE:CTS) Q3 2023 Earnings Conference Call October 26, 2023 10:00 AM ET

Company Participants

Kieran O'Sullivan - Chief Executive Officer

Ashish Agrawal - Chief Financial Officer

Conference Call Participants

Joshua Buchalter - TD Cowen

John Franzreb - Sidoti & Company

Justin Long - Stephens

Operator

Hello, and welcome to the CTS Corporation Third Quarter 2023 Conference Call. My name is Alex, and I'll be coordinating the call today. [Operator Instructions]

I'll now hand it over to your host, Kieran O'Sullivan, CEO, to begin. Please go ahead.

Kieran O'Sullivan

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 that 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 eight 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 megatrend and builds momentum beyond the first eBrake win last quarter.

Ashish will take us through the safe harbor statement. Ashish?

Ashish Agrawal

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.