CTS Corp (CTS) 2025 Q1 法說會逐字稿

Hello everyone and thank you for joining the CTS Corporation first quarter 2025 earnings call. My name is Marie, and I will be co-ordinating your call today. (Operator Instructions)

大家好，感謝您參加 CTS Corporation 2025 年第一季財報電話會議。我叫瑪麗，今天我將負責協調您的通話。（操作員指示）

I will now hand over to your host, Kieran O'Sullivan, Chairman, President and CEO to begin. Please go ahead.

現在我將把主持人、董事長、總裁兼執行長 Kieran O'Sullivan 交給他開始發言。請繼續。

Good morning and thank you for joining us today for our first quarter 2025 results. We continue to execute on our diversification strategy to increase growth in our diversified medical, industrial, aerospace and defense markets while also progressing on electrification and transportation.

早安，感謝您今天參加我們的 2025 年第一季業績發表會。我們繼續執行多元化策略，以增加多元化醫療、工業、航空航太和國防市場的成長，同時在電氣化和交通運輸方面取得進展。

Revenue from our diversified markets grew 14% in the quarter. We also achieved strong bookings with a Book-to-bill ratio of 1.28 for the diversified and markets in April, we added a win for a new product line in transportation, expanding our presence in the vehicle foot well.

本季度，我們多元化市場的營收成長了 14%。4 月份，我們在多元化市場也取得了強勁的訂單量，訂單出貨比達到 1.28，我們在運輸領域的新產品線又獲得了勝利，擴大了我們在車輛腳部領域的影響力。

Current bookings for the second quarter indicate an improving trend while we are cautious on second half demand given current levels of uncertainty due to tariffs and the geopolitical environment.

目前第二季的訂單量呈現改善趨勢，但考慮到關稅和地緣政治環境造成的當前不確定性，我們對下半年的需求持謹慎態度。

Ashish will take us through the safe harbor statement.

Ashish 將向我們介紹安全港聲明。

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.

我想提醒我們的聽眾，本次電話會議包含前瞻性陳述。這些聲明受到許多風險和不確定性的影響。這可能導致實際結果與前瞻性陳述中表達的結果有重大差異。有關這些風險和不確定性的更多資訊包含在今天發布的新聞稿中，更多資訊可以在公司的美國證券交易委員會文件中找到。

To the extent that today's discussion refers to any non-GAAP measures under regulation G, the required explanations and reconciliations. Are available with today's earnings press release and supplemental slide presentation which can be found in the investors section of the CTS website.

如果今天的討論涉及 G 條例下的任何非 GAAP 指標，則需要進行解釋和調整。可在今天的收益新聞稿和補充幻燈片演示中找到，這些可在 CTS 網站的投資者部分找到。

I'll now turn the discussion back over to our CEO, Karen O'Sullivan.

現在我將討論交還給我們的執行長凱倫·奧沙利文 (Karen O'Sullivan)。

Thank you, Ashish. We finished the first quarter with sales of $126 million, essentially flat from the first quarter of 2024. For the quarter, diversified and market sales, including sales to medical, aerospace and defense and industrial and markets were up 14%, while transportation sales were down 12% from the same period last year.

謝謝你，阿希什。我們第一季的銷售額為 1.26 億美元，與 2024 年第一季基本持平。本季度，多元化和市場銷售額（包括醫療、航空航太和國防以及工業和市場的銷售額）成長了 14%，而運輸銷售額較去年同期下降了 12%。

Diversified and market sales were 53% of overall company revenue in the quarter. Our Book-to-bill ratio for the first quarter was 1.17 compared to 1.07 in the first quarter of 2024. Bookings for our diversified and markets were strong, with a Book-to-bill ratio of 1.28.

多元化和市場銷售額佔本季公司總收入的 53%。我們第一季的訂單出貨比為 1.17，而 2024 年第一季為 1.07。我們多元化市場的預訂量強勁，訂單出貨比為 1.28。

First quarter adjusted diluted earnings were $0.44 per share. Ashish will add further color on a financial performance later in today's call. In the medical and market, first quarter sales were up 13% compared to the same period in 2024.

第一季調整後稀釋收益為每股 0.44 美元。Ashish 將在今天稍後的電話會議上進一步介紹財務表現。在醫療和市場方面，第一季銷售額與2024年同期相比成長了13％。

The Book-to-bill ratio in the first quarter was 1.3 compared to 1.0 in the first quarter of 2024. This significant increase in the book-to-bill ratio represents new orders beyond the next quarter.

第一季的訂單出貨比為 1.3，而 2024 年第一季為 1.0。訂單出貨比的大幅提升意味著下個季度之後的新訂單將會增加。

We are excited about the prospects for growth in minimally invasive applications where our products help deliver enhanced ultrasound images, making it easier for medical professionals to detect artery restrictions and deliver treatment medications. We are proud to highlight that our product support solutions that help save lives.

我們對微創應用的成長前景感到興奮，我們的產品有助於提供增強的超音波影像，使醫療專業人員更容易檢測動脈限制並提供治療藥物。我們很自豪地強調，我們的產品支援有助於拯救生命的解決方案。

During the first quarter, we had wins for medical ultrasound across all regions and secured purchase orders for increased volumes in medical therapeutics. Additionally, we had wins for programs with application in kidney stone treatment and for intelligent imaging.

在第一季度，我們在所有地區的醫療超音波領域都取得了成功，並獲得了增加醫療治療數量的採購訂單。此外，我們在腎結石治療和智慧成像應用計畫方面也獲得了勝利。

We added one new custom in the quarter for an AI-driven ultrasound application. Over time, we expect the volume increases in portable ultrasound diagnostics and therapeutics will enhance our growth profile.

本季度，我們為人工智慧驅動的超音波應用程式增加了一個新客戶。隨著時間的推移，我們預計便攜式超音波診斷和治療的銷售成長將增強我們的成長前景。

As I mentioned earlier, we are already seeing strengthening in demand for therapeutic products. Aerospace and defense sales for the first quarter were up 39% from the first quarter of 2024. Excluding sales from the SyQwest acquisition, sales were up 8%. The SyQwest revenue reflects the seasonality expected in the business.

正如我之前提到的，我們已經看到對治療產品的需求正在增強。第一季航空航太和國防銷售額較 2024 年第一季成長 39%。不計收購 SyQwest 帶來的銷售額，銷售額成長了 8%。SyQwest 的收入反映了業務預期的季節性。

Bookings in the first quarter were up 32% from the prior year period as we maintain a healthy backlog. Our strategy is focused on moving from a component supplier to a supplier of sensors, transducers and subsystems. We also expect to expand our product range and market opportunity after a period of integration.

由於我們保持了健康的積壓訂單量，第一季的預訂量比去年同期增加了 32%。我們的策略重點是從零件供應商轉向感測器、換能器和子系統的供應商。我們也希望經過一段時間的整合來擴大我們的產品範圍和市場機會。

We received multiple orders in the quarter for sonar, non-destructive testing, temperature sensing, and a larger order for an RF anti-jamming application. The integration of the SyQwest business is progressing, and the business continues to drive a strong pipeline of opportunities.

本季我們收到了多個聲納、無損檢測、溫度感測的訂單，以及一個更大的射頻抗干擾應用訂單。SyQwest 業務的整合正在取得進展，該業務繼續帶來強大的機會。

In the industrial market, we continue to see a gradual recovery in distribution as well as with OEMs. Sales in the first quarter were up 3% sequentially and up 4% compared to the prior year period, underscoring our expectation of a gradual recovery.

在工業市場，我們繼續看到分銷和原始設備製造商的逐步復甦。第一季銷售額較上季成長 3%，年增 4%，凸顯了我們對逐步復甦的預期。

Bookings in the quarter were up 19% from the same period last year. Inventory levels remain more normalized. We were successful with multiple wins in the quarter for EMC filters, industrial printing, switches and controls, distribution products, and temperature sensing applications.

本季的預訂量比去年同期成長了 19%。庫存水準保持更加正常化。本季度，我們在 EMC 濾波器、工業印刷、開關和控制、配電產品和溫度感測應用方面取得了多項成功。

We added two new customers in the quarter, one for a flow meter application and the other for temperature sensing. Demand across the industrial market is expected to rebound in 2025. However, we are also carefully monitoring for potential demand softening due to uncertainty related to tariffs.

我們在本季增加了兩位新客戶，一個是流量計應用客戶，另一個是溫度感測客戶。預計2025年整個工業市場的需求將會反彈。然而，我們也密切監測因關稅不確定性而導致的潛在需求疲軟。

The mega trends of automation, connectivity, and efficiency enhance our longer-term growth prospects. Transportation sales were $58 million in the first quarter, down approximately 12% from the same period last year due to the impacts of China market dynamics and competition for commercial vehicle products.

自動化、連結性和效率的大趨勢增強了我們的長期成長前景。第一季運輸銷售額為 5,800 萬美元，受中國市場動態和商用車產品競爭的影響，較去年同期下降約 12%。

In the first quarter, we had awards across various product groups, including accelerator module wins with customers in North America, Europe, and Asia. We also added a new customer in electrification for a passive safety application.

第一季度，我們在各個產品組都獲得了獎項，包括北美、歐洲和亞洲客戶的加速器模組獎項。我們也在電氣化領域增加了一個被動安全應用的新客戶。

In addition, in April, we added a new product line for vehicle foot integration with a North American OEM. The new term growth rates for ice versus EVs and hybrids are less of a concern for us given our light vehicles products are mostly agnostic to the drivetrain technology. Total book business was approximately $1 billion at the end of the quarter. OEMs continue to delay sourcing decisions as tariffs and business uncertainty evolve.

此外，4月份，我們與北美一家OEM廠商合作，增加了一條用於車輛腳部整合的新產品線。由於我們的輕型車輛產品與動力傳動系統技術基本無關，因此我們不太擔心冰雪與電動車和混合動力車的新增長率。本季末，圖書業務總額約 10 億美元。隨著關稅和商業不確定性的演變，原始設備製造商繼續推遲採購決策。

Going forward, we expect hybrid sales to increase. Interest in our e-break product offering weight and cost advantages continues across OEMs, and our team is proceeding with samples and design customizations.

展望未來，我們預計混合動力汽車的銷售將會成長。原始設備製造商 (OEM) 對我們具有重量和成本優勢的電子煞車產品的興趣持續增加，我們的團隊正在進行樣品和設計客製化。

Our first e-break customer has moved out the timing of the product launch, and the timing of revenues is currently not clear. We remain confident in the long-term prospects for this product line, given the cost and weight benefits for our customers, as well as the sentiment in the market from OEMs and tier one chassis system suppliers. We expect our e-break, other football products, and sensor applications will increase our ability to grow content.

我們的第一個電子中斷客戶已經推遲了產品上市的時間，且收益時間目前尚不明確。考慮到我們為客戶帶來的成本和重量優勢，以及來自原始設備製造商和一級底盤系統供應商的市場情緒，我們對該產品系列的長期前景仍然充滿信心。我們希望我們的電子突破、其他足球產品和感測器應用將增強我們增加內容的能力。

For our diversified markets in line with our strategy, we aim to expand the customer base and range of applications, subject to the evolving trade tariffs and associated economic uncertainty. Demand in the medical and market is expected to remain solid. Driven primarily by medical ultrasound and therapeutic volume growth.

對於符合我們策略的多元化市場，我們的目標是擴大客戶群和應用範圍，但要考慮到不斷變化的貿易關稅和相關的經濟不確定性。預計醫療和市場的需求將保持強勁。主要受醫療超音波和治療量成長的推動。

In aerospace and defense, revenue is expected to remain strong given our backlog of orders and momentum from the SyQwest acquisition with stronger sales in the second half of 2025. Industrial and distribution sales are expected to improve gradually, though we continue to monitor the potential impact of tariffs.

在航空航太和國防領域，鑑於我們積壓的訂單和收購 SyQwest 帶來的動力，預計收入將保持強勁，2025 年下半年的銷售將更加強勁。儘管我們將繼續監測關稅的潛在影響，但工業和分銷銷售額預計將逐步改善。

Longer term, we expect our material formulation, supported by three leading technologies to continue to drive our growth in key high quality and markets in line with our diversification strategy. Across transportation markets, production volumes are expected to decrease in 2025, given the recent tariff announcements.

從長遠來看，我們預計，在三大領先技術的支持下，我們的材料配方將繼續推動我們在關鍵高品質市場的成長，符合我們的多元化策略。鑑於最近的關稅公告，預計 2025 年運輸市場的產量將會下降。

The North American light vehicle market was expected to be in the 15 million to 16 million units range. If vehicle tariffs of 25% remain in place, and market demand could be impacted. European production is now forecasted in the 16 million units range and showing some increased softness due to overcapacity pressure from Chinese OEMs. China volumes are expected to be in the 29 million units range.

北美輕型車市場預計銷量在1500萬至1600萬輛之間。如果25%的汽車關稅持續維持，市場需求可能會受到影響。目前預測歐洲產量將在 1,600 萬輛左右，並且由於中國原始設備製造商的產能過剩壓力，產量將有所下降。預計中國銷量將在 2,900 萬台左右。

Electric vehicle penetration rates have softened in some regions, while hybrid adoption continues to improve. Overall, we are monitoring the potential for headwinds in our transportation revenue due to trade tariffs, the China market dynamics, and other regional factors. We expect our next generation commercial vehicle actuator to go into production later in the second quarter. We anticipate softness in commercial vehicle revenue throughout 2025.

一些地區的電動車普及率下降，而混合動力車的普及率則持續提高。總體而言，我們正在監測貿易關稅、中國市場動態和其他區域因素可能對我們的運輸收入造成的阻力。我們預計下一代商用車執行器將在第二季稍後投入生產。我們預計 2025 年商用車收入將持續疲軟。

As I mentioned previously, revenue from the SyQwest acquisition will introduce some seasonality where the timing of revenue may be influenced by the approval of funding by the US government. We expect the revenues for the SyQwest acquisition will strengthen in the next quarter and be stronger in the second half of 2025.

正如我之前提到的，收購 SyQwest 的收入將帶來一些季節性，收入的時間可能會受到美國政府資金批准的影響。我們預計，收購 SyQwest 帶來的營收將在下一季增強，並在 2025 年下半年更加強勁。

The impact of tariffs and the geopolitical environment are creating uncertainty. We continue to closely monitor and evaluate the situation and are focused on agility and adapting to cost and price adjustments in close collaboration with our customers and suppliers.

關稅和地緣政治環境的影響正在產生不確定性。我們將繼續密切監控和評估形勢，並與客戶和供應商密切合作，注重靈活性並適應成本和價格調整。

Assuming the continuation of current market conditions, we are maintaining our guidance of sales in the range of $520 million to $550 million and adjusted diluted EPS to be in the range of $2.20 to $2.35.

假設當前市場狀況持續下去，我們將維持銷售額在 5.2 億美元至 5.5 億美元之間的預期，並將調整後的稀釋每股收益維持在 2.20 美元至 2.35 美元之間。

Now I'll turn it over to Ashish, who will walk us through the financial results in more detail. I.

現在我將把時間交給 Ashish，他將向我們更詳細地介紹財務結果。我。

Thank you, Karen. First quarter sales were $126 million similar to the first quarter and fourth quarter of 2024. Sales to diversified end markets increased 14% year over year. SyQwest added $3 million in revenue during the quarter. Organic revenue growth for diversified end markets was 8%. Sales to transportation customers were down 12% from the first quarter of last year due to the softness in sales related to commercial vehicle products and reduced volumes due to China market dynamics.

謝謝你，凱倫。第一季的銷售額為 1.26 億美元，與 2024 年第一季和第四季持平。多元化終端市場的銷售額較去年同期成長14%。SyQwest 本季增加了 300 萬美元的營收。多元化終端市場的有機收入成長率為 8%。由於商用車產品銷售疲軟以及中國市場動態導致銷售減少，對運輸客戶的銷售額較去年第一季下降了 12%。

Our adjusted gross margin was 37% in the first quarter, up 77 basis points compared to the first quarter of 2024, and down 63 basis points compared to the fourth quarter of 2024. Exchange rate changes had a favorable impact of $1.1 million on gross margin.

我們第一季的調整後毛利率為 37%，與 2024 年第一季相比上升了 77 個基點，與 2024 年第四季相比下降了 63 個基點。匯率變動對毛利率產生了 110 萬美元的有利影響。

During the first quarter, we saw a very small impact from tariffs in early March and have focused on collaborating with our customers to pass on the additional cost burden. As a result, there was minimal impact on our gross margin from tariffs in the quarter.

在第一季度，我們看到 3 月初關稅的影響非常小，我們專注於與客戶合作以轉嫁額外的成本負擔。因此，本季關稅對我們的毛利率影響甚微。

We are closely monitoring as the situation evolves and are in constant communication with our customers and suppliers. We are working with customers to ensure that we can keep the impact of tariffs on our business cost neutral, as Kieran indicated, we had strong bookings in our diversified end markets in the first quarter. However, we are continuing to carefully monitor the potential impact of tariffs on the overall demand situation in the rest of 2025.

我們正在密切關注事態發展，並與我們的客戶和供應商保持持續溝通。我們正在與客戶合作，以確保關稅對我們業務成本的影響保持中性，正如 Kieran 所指出的，我們在第一季在多元化終端市場中獲得了強勁的預訂量。不過，我們將持續密切監控關稅對 2025 年剩餘時間內整體需求狀況的潛在影響。

Earnings were $0.44 per diluted share for the first quarter. Adjusted earnings for the first quarter were $0.44 per diluted share compared to $0.47 per diluted share for the same period last year. Our net interest cost increased by more than $0.03 in the first quarter compared to the first quarter of 2024 due to the acquisition of SyQwest. We expect solid growth from this acquisition and are working on a robust pipeline of potential contracts.

第一季每股收益為 0.44 美元。第一季調整後每股攤薄收益為 0.44 美元，去年同期每股攤薄收益為 0.47 美元。由於收購 SyQwest，我們第一季的淨利息成本與 2024 年第一季相比增加了 0.03 美元以上。我們預計此次收購將帶來穩健的成長，並且正在努力建立大量潛在合約。

Moving to cash generation in the balance sheet, we generated $16 million in operating cash flow for the first quarter of 2025 compared to $18 million in the first quarter of 2024.

轉向資產負債表中的現金產生，我們在 2025 年第一季產生了 1,600 萬美元的營運現金流，而 2024 年第一季為 1,800 萬美元。

Our balance sheet remains strong with a cash balance of $90 million at the end of the quarter. Our long-term debt balance was $87 million leaving us good liquidity to support strategic acquisitions. During the quarter, we repurchased 144,000 shares of CTS stock for approximately $7 million.

我們的資產負債表依然強勁，本季末的現金餘額為 9,000 萬美元。我們的長期債務餘額為 8,700 萬美元，為我們提供了良好的流動性來支持策略性收購。本季度，我們以約 700 萬美元回購了 144,000 股 CTS 股票。

In total, we returned $8 million to shareholders through dividends and share buybacks in the first quarter of 2025. We have another $55 million remaining under our current share repurchase program.

總體而言，我們在 2025 年第一季透過股利和股票回購向股東返還了 800 萬美元。我們目前的股票回購計畫還剩餘 5,500 萬美元。

And our focus remains on strong cash generation and appropriate capital allocation, and we continue to support organic growth, strategic acquisitions, and returning cash to shareholders.

我們的重點仍然是強勁的現金創造和適當的資本配置，我們將繼續支持有機成長、策略性收購和向股東返還現金。

This concludes our prepared comments. We would like to open the line for questions at this time.

我們的準備評論到此結束。我們現在想開通熱線來回答問題。

Thank you, Ashish. (Operator Instructions)

謝謝你，阿希什。（操作員指示）

John Franzreb, Sidoti & Company, LLC.

約翰‧弗蘭茲雷布 (John Franzreb)，Sidoti & Company, LLC。

Good morning, guys, and thanks for taking the questions.

大家早安，感謝你們回答問題。

I got a here I guess. The booking profile was surprisingly strong, especially in the non-transportation side of the business. I'm curious about two things. One, in your prepared remarks, it sounds like that trend continued into April, if that's the case. I'm just curious, is there any pre-buying or pre-ordering that you that you're hearing in the customer base as you want to maybe get ahead of tariff costs.

我想我在這裡得到了一個。預訂情況出乎意料地強勁，尤其是在非運輸業務方面。我對兩件事很好奇。首先，從您準備好的發言來看，如果事實確實如此，那麼這種趨勢似乎持續到了四月。我只是好奇，您是否聽說客戶群中有預購或預訂的情況，因為您可能想降低關稅成本。

So, John, the improvement in bookings in the diversified medical, industrial aerospace and defense, that really was in the first quarter. The comment on the second quarter was just when we had the new product line in transportation. So, to give you a little color around that, I would say the medical area was the strongest, and we've seen quite a growth in medical therapeutics the volume looks strong. And that's why I also highlighted that the bookings there typically for a quarter out, but they're for a larger part of the year. So, we're seeing a very solid increase in there.

因此，約翰，多元化醫療、工業航空航太和國防領域的訂單量確實在第一季有所改善。對第二季的評論正值我們在運輸領域推出新的產品線。因此，為了讓大家對此有一點了解，我想說醫療領域是最強大的，而且我們已經看到醫療治療領域取得了相當大的增長，其數量看起來很強勁。這就是為什麼我還強調，那裡的預訂通常是四分之一的預訂，但它們涵蓋了一年中的大部分時間。因此，我們看到了非常穩健的成長。

And on the defense side, we feel really good about the bookings, especially with sonar and other applications, and the SyQwest acquisition obviously brings in some seasonality into the business, which is, we're indicating in terms of improved sales in the second quarter.

在國防方面，我們對訂單感到非常滿意，特別是聲納和其他應用程式的訂單，而 SyQwest 的收購顯然為業務帶來了一些季節性，也就是說，我們在第二季度的銷售額有所提高。

And on the industrial side, we've seen a nice gradual rebound and obviously we're monitoring all of this with the tariff situation, but we haven't seen pre-buy in that area.

在工業方面，我們看到了良好的逐步反彈，顯然我們正在監控所有關稅情況，但我們還沒有看到該領域的預購。

Yes, John, there may be some very small instances of their customers are accelerating purchases, but it's not broad-based.

是的，約翰，他們的客戶可能有一些非常小的例子正在加速購買，但這並不是普遍現象。

Okay, thanks Ashish. Thanks, Kieran. Well, which I guess brings me to the transportation side of the business. Has there been any change in your internal assumptions in the transportation market, today versus the beginning of the year.

好的，謝謝 Ashish。謝謝，基蘭。嗯，我想這就牽涉到業務的運輸方面了。與年初相比，今天您對運輸市場的內部假設有什麼變化嗎？

John, we continue to monitor there's we think there is some pre-buy going on the transportation side of the market, but in relation to our guide, we haven't factored in any demand drop that's why we said assuming current conditions, and you'll see also that we've added a new product line going forward as well with the vehicle and football integration, which is nice for us to step into.

約翰，我們將繼續監測，我們認為市場在交通運輸方面存在一些預購，但就我們的指南而言，我們尚未考慮任何需求下降，這就是為什麼我們說假設當前條件，並且您還會看到，我們還增加了一條新的產品線，包括車輛和足球整合，這對我們來說是很好的介入。

Okay, so then regarding the guidance, Kieran, what is the cadence of the profit profile look like for the balance of the year. You just reported the first quarter, which is actually down on a year to year basis, but your guidance suggests still an up year. Can you kind of walk us through how the quarters lay out in order to achieve that scenario.

好的，那麼關於指導，Kieran，今年剩餘時間的利潤狀況節奏是如何的。您剛剛報告了第一季的業績，實際上與去年同期相比有所下降，但您的指引表明今年的業績仍將上升。您能否向我們介紹如何規劃各個季度以實現這一目標？

Yes, John, not surprised with that question. A few things I'd point out. Number one, obviously our revenue profile is increasing throughout the year. Hence, we get a few, we don't really add color on the next quarter, but we get some indications on that. And then also that's helped by the side quest seasonality that we talked about in the last earnings call. So that'll get increased revenue in the second quarter and increased in the second half.

是的，約翰，對這個問題並不感到驚訝。我想指出幾點。首先，顯然我們的收入狀況全年都在成長。因此，我們得到了一些訊息，我們並沒有真正為下一季增添色彩，但我們得到了一些跡象。這也得益於我們在上次收益電話會議上討論的支線任務季節性。因此，第二季和下半年的收入都會增加。

And the other thing I'd point out, John, is the mixed change. With the mixed change in the diversified markets and SyQwest, you'll see an improvement in profitability as well. So there's some of the things. Obviously, John, the big watch for us is really the second half of the year with the whole tariff environment. So, we're still monitoring that and if something changes there, that would cause us to adjust.

約翰，我想指出的另一件事是混合變化。隨著多元化市場和 SyQwest 的混合變化，您還會看到獲利能力的提高。所以有一些事情。顯然，約翰，我們真正需要關注的是下半年的整個關稅環境。因此，我們仍在監控這一點，如果出現任何變化，我們就會進行調整。

Got it. With that said, gentlemen, I'll actually bounce back into key and let somebody else get on.

知道了。先生們，話雖如此，我實際上還是會回到原來的狀態，讓其他人繼續演奏。

Thank you.

謝謝。

Okay.

好的。

(Operator Instructions)

（操作員指示）

Hendi Susanto, Gabelli Funds, LLC.

Hendi Susanto，Gabelli 基金有限責任公司。

Good morning, Kieran and Ashish.

早安，Kieran 和 Ashish。

My first question, current analysis, would you remind us like how we should see your manufacturing footprints, and then sales, shipment with regard to like how CTS is positioned itself against, potential tariffs.

我的第一個問題是，目前的分析，您能否提醒我們如何看待您的製造足跡，然後是銷售、出貨量，以及 CTS 如何應對潛在的關稅。

Yes, Hendi, I'll start and then I'll hand over to Ashish. So First of all, when you look at our regional footprint, if you look at Asia, China, most of what we do there is for those markets. There's some small amounts that come back to other markets. Europe is primarily for Europe, and then when it comes to North America, obviously we've got manufacturing in Mexico, so. That's the footprint and to put a tariff overlay on that because I know that's where you're going with the question as well, is we've got a small amount of imports from Asia, some impact and imports from China, and then the larger watch for us is Mexico because under the current conditions, the USMCA exemption helps us. If that changed at any point in time, that would be a headwind for us.

是的，Hendi，我先開始，然後交給 Ashish。首先，當你查看我們的區域足跡時，如果你看看亞洲、中國，我們在那裡所做的大部分工作都是針對這些市場的。有少量資金回流至其他市場。歐洲主要針對歐洲，然後當談到北美時，顯然我們在墨西哥有製造業務。這就是足跡，並對其徵收關稅，因為我知道這也是你要問的問題，我們從亞洲進口了少量產品，從中國進口也有一些影響，然後我們更關注的是墨西哥，因為在目前條件下，USMCA 豁免對我們有幫助。如果這種情況在任何時候發生變化，那對我們來說都將是一個阻力。

And then maybe to give you some final color on it as well in terms of pricing, in our diversified markets, we feel good about adapting the cost and the pricing with our customers in close collaboration. And then the second part of it is when you look at the transportation side, we're working out as well as we saw on the quarter, but there are always tougher discussions, that's something we'll be working as well.

然後，也許還可以就定價方面給您一些最終說明，在我們多元化的市場中，我們很高興與客戶密切合作，調整成本和定價。第二部分是，當你看運輸方面時，我們的工作進展和本季一樣好，但總會有更艱難的討論，這也是我們會努力的事情。

So, Hendi, just to add to that, the couple of days that the tariffs were in place between Mexico and the US in early March, we had a very small impact on tariffs and that was sort of a test bed in terms of how we navigate through that with our customer base. Positive indications from those discussions, but the numbers were relatively small.

因此，Hendi，補充一點，3 月初，墨西哥和美國之間實施關稅的那幾天，我們對關稅的影響非常小，這在某種程度上是一個試驗台，可以讓我們了解我們如何與客戶群一起應對這一問題。這些討論表現出了積極的跡象，但數量相對較少。

So, as Kieran mentioned, we are actively discussing with our customer base to make sure that everybody understands how we are looking at it and so far, so good, but I'm sure the discussions will get tough as the numbers get bigger if they get bigger.

因此，正如 Kieran 所提到的，我們正在積極與我們的客戶群進行討論，以確保每個人都了解我們的看法，到目前為止，一切都很好，但我相信，隨著數字越來越大，討論會變得越來越艱難。

And Hendi, just to add a little bit more color because I know this is on everybody's mind at the moment. What are the mitigation levers we have. Obviously, pricing is one of the first things. We're also evaluating the logistics options with our customers in terms of what we're doing. We've got defense exemptions and once things stabilize here, hopefully things stabilize over time here, then we'll see if we need to re-evaluate anything, but no quick decisions here.

還有亨迪，我只是想補充一點內容，因為我知道現在每個人都在想這件事。我們有哪些緩解措施。顯然，定價是首要考慮的事情之一。我們還根據我們正在做的事情與客戶一起評估物流選擇。我們已經獲得了國防豁免，一旦情況穩定下來，希望情況隨著時間的推移而穩定下來，然後我們會看看是否需要重新評估任何事情，但這裡不會做出快速的決定。

Yes, and given one hypothetical situation, if you need to change manufacturing location let's say which one would need, re-qualification with customers across like different end markets.

是的，假設一種情況，如果您需要更改製造地點，假設需要更改哪一個，則需要對不同終端市場的客戶進行重新認證。

I think Handi, when you move any location, you're going to get qualification with all of our customers. There's always some level of qualification. Obviously, it's different than the different end markets.

我認為 Handi，當你搬到任何地方時，你都會獲得我們所有客戶的資格。總是需要一定的資格等級。顯然，它與不同的終端市場不同。

Handi, if you look at our product portfolio, largest portion of it is engineered solutions. So, whenever you have that situation, any change in manufacturing location, the customers will be looking to requalify.

Handi，如果你看一下我們的產品組合，你會發現其中最大的一部分是工程解決方案。因此，無論何時發生這種情況，製造地點發生任何變化，客戶都會尋求重新認證。

Okay, yes, and would you remind me when you ship, I think the transfer of ownership takes place, before the shipment.

好的，是的，您能在發貨時提醒我嗎，我認為所有權轉移是在發貨前發生的。

That depends. In some cases, we have X works, shipping terms, in some cases it could be different, so it depends on our specific customer by customer contract. So Yes, that will be different when you're looking at USMCA relevant products, we are the importer of record in those situations. That's the whole concept of USMCA.

那要看情況。在某些情況下，我們有 X 項工作、運輸條款，在某些情況下可能會有所不同，因此這取決於我們根據客戶簽訂的特定合約。是的，當您查看 USMCA 相關產品時情況會有所不同，在這些情況下我們是記錄的進口商。這就是 USMCA 的全部概念。

Okay, I see, and then Kieran, when you talk about, like solid pipeline. In defense and SyQwest. How should we think about the timing of the ones in the pipeline. Is it for the second half of 2025 beyond 2025 it somewhat split.

好的，我明白了，然後 Kieran，當你談論的時候，就像堅固的管道。在防守和 SyQwest。我們應該如何考慮管道中的項目的時機。是針對 2025 年下半年，還是 2025 年以後，則有所分歧。

Hendi when we look at it, there's, some in the pipeline that would, impact this year, and most of it is in subsequent years.

當我們看到亨迪時，我們會發現，有些正在籌備中的項目會對今年產生影響，而且大多數都會影響到接下來的幾年。

So, Hendi, we are looking at the business from a long-term perspective. And as Kieran mentioned, there are several things in the work that will start in 2025 and continue. There are other programs that we expect to start materializing in late 205, early 206 that'll give us revenue over the following years.

所以，Hendi，我們是從長遠的角度來看這項業務的。正如基蘭所提到的，這項工作中有幾項將於 2025 年開始並持續進行。我們預計其他項目將於 205 年末或 206 年初開始實施，這些項目將為我們在接下來的幾年帶來收入。

Okay, I see and then Kieran, I think you mentioned a Is it like. Hold on, is like, what is the current situation in the commercial vehicles and then, I'm wondering whether there will be some like newer version of products, in that area that may hopefully like help during the market recovery.

好的，我明白了，然後 Kieran，我想你提到了「它是什麼樣的」。等等，商用車的現況如何？然後，我想知道在那個領域是否會有一些更新版本的產品，希望能在市場復甦期間有所幫助。

Yes, Hendi, we I think I mentioned in my prepared remarks that we will launch our next generation products, probably this quarter, and we'll see that ramp. And then over time, given the competition in the space, we'll see how the shares split out. But definitely, Yes, launching and ramping the new product this year.

是的，Hendi，我想我在準備好的發言中提到過，我們將推出下一代產品，可能是本季度，我們將看到這一增長。然後隨著時間的推移，考慮到該領域的競爭，我們將看到份額如何分配。但毫無疑問，今年我們會推出並推廣新產品。

Okay, that's it. Let me, thank you so much, Kieran.

好的，就這樣。讓我來，非常感謝你，基蘭。

Thank you so much, Ashish.

非常感謝，Ashish。

Thank you, Kieran.

謝謝你，基蘭。

We have a follow up question from John Franzreb of Sidoti & Company, LLC. Please go ahead.

我們收到了 Sidoti & Company, LLC 的 John Franzreb 的後續問題。請繼續。

Thanks again.

再次感謝。

Ashish, the SGNA number went up somewhat noticeably in the March quarter. What was driving that.

Ashish，SGNA 數字在 3 月季度有顯著上升。是什麼導致了這現象？

So, a couple of things, John, if you look at year over year, we reset our incentive and equity-based compensation plans. So, that is a part of it, but that's a smaller part of it. It's more related to the SyQwest acquisition. We've added the SGNA related to that, including the amortization of intangibles. So, that's where you'll see the biggest jump.

所以，約翰，如果你逐年回顧，你會發現我們重新設定了激勵和基於股權的薪酬計劃。所以，這是其中的一部分，但只是一小部分。這與 SyQwest 收購更相關。我們新增了與此相關的 SGNA，包括無形資產的攤銷。所以，這就是你會看到最大飛躍的地方。

So, this $23 million in change run rate is a sustainable number for the balance of the year.

因此，2300 萬美元的變更運行率對於今年的餘額來說是一個可持續的數字。

Yes, I mean, one of the things that we are doing as the tariff situation involves, we are looking at all discretionary spending, open positions, those types of things, so we'll continue to manage, Spending that is controllable as prudently as we can.

是的，我的意思是，考慮到關稅情況，我們正在做的事情之一就是，我們正在考慮所有可自由支配的支出、未平倉頭寸等等，所以我們將繼續盡可能謹慎地管理可控的支出。

We do want to continue funding the growth activities that is extremely important and critical to us for the long-term success of the business, but everything else is on the table for us to evaluate and allocate resources carefully.

我們確實希望繼續為對於我們業務的長期成功極其重要和關鍵的成長活動提供資金，但其他一切都擺在桌面上，供我們仔細評估和分配資源。

Well, that suggests on the guidance side, Kieran, you talked about the margin gross margin profile improving. It's got to improve, I guess somewhat sizeably for the balance of the year against that higher SGNA level is that a fair assessment.

嗯，這表明在指導方面，基蘭，你談到了利潤率毛利率狀況的改善。它必須有所改善，我認為，相對於更高的 SGNA 水平，今年的餘額會有相當大的改善，這是一個公平的評估。

Yes, it'll ramp during the year, John, but that's a fair assessment.

是的，約翰，今年它會有所增長，但這是一個公平的評估。

Okay, and is there any reason to expect normal seasonality would not play out in 2025. And by that, I mean that the fourth quarter would be the weakest.

好的，有什麼理由可以預測 2025 年不會出現正常的季節性嗎？我的意思是，第四季將是最疲軟的季度。

John, here, I would just ask you to consider the seasonality with SyQwest, as Kieran mentioned, the early part of the year is a little bit softer and then we expect based on government funding, more strength in the second half of the year.

約翰，在這裡，我只想請您考慮一下 SyQwest 的季節性，正如基蘭所提到的，今年年初的情況會稍微疲軟一些，然後我們預計，基於政府的資助，下半年的情況會更加強勁。

Okay, and just any thoughts on, you talked about funding of programs, what the CapEx budget looks like for 2025.

好的，您談到了專案資金，2025 年的資本支出預算是什麼樣的，您有什麼想法嗎？

Yes, so CapEx, John, we expect it to be in our, normal range which we have said is approximately 4% of sales. Obviously, some years we are slightly higher, some years we are slightly lower, but that's a reasonable range for you to consider.

是的，約翰，我們預期資本支出將處於正常範圍內，也就是我們所說的約佔銷售額的 4%。顯然，有些年份我們會略高一些，有些年份我們會略低一些，但這是一個合理的範圍，供您考慮。

Okay, I think I was actually using close to the five this year, so that's a good adjustment.

好的，我認為我今年實際上使用了接近五個，所以這是一個很好的調整。

Okay, and just on the tax rate, just while I got you some numbers, any change in tax rate thoughts for the year I've been sitting there 20% that's still do.

好的，就稅率而言，我剛剛給你提供了一些數字，今年的稅率有任何變化嗎？我一直認為是 20%，現在還是這樣。

That's about in the at the midpoint of what we have on the slide deck John we have 19 to 21, so you're right in the middle of it.

這大約位於幻燈片的中間位置，約翰，我們有 19 到 21，所以您正好位於中間。

Okay, that's all my follow-ups. I appreciate you taking them guys.

好的，這就是我所有的後續行動。我很感謝你們帶他們去。

Thank you.

謝謝。

Thank you.

謝謝。

We have a follow up from Hendi Susanto of Gabelli Funds, LLC, please go ahead.

我們收到了 Gabelli Funds, LLC 的 Hendi Susanto 的跟進，請繼續。

Ashish, I would like to revisit, John's, questions about the margin improvement, gradually throughout the year, what would be the main drivers of, I said like, improvement operating profitability. Is it mainly the strength of your medical, aerospace, defense and then SyQwest that will drive Higher operating profitability.

阿希什，我想重新討論約翰關於利潤率全年逐步提高的問題，我說的提高營業盈利能力的主要驅動力是什麼。主要是你們在醫療、航空航太、國防以及 SyQwest 方面的實力將推動更高的營運獲利能力嗎？

That's a reasonable assumption, and the, just overall, we expect continued improvement in the diversification ratio of the business. So, that that's the key driver, and then we always have the other pieces that we continue working on operational efficiency improvements.

這是一個合理的假設，總體而言，我們預期業務的多元化比率將繼續提高。所以，這是關鍵驅動因素，然後我們始終會繼續致力於其他部分，以提高營運效率。

And then currency can move positively or negatively impacting our gross margin favorably or unfavorably. So those are the big factors, but the biggest one that we expect in terms of margin enhancement is the growth in the diversified markets faster than the transportation market.

然後貨幣可能會發生正面或負面的變動，從而對我們的毛利率產生有利或不利的影響。這些都是重要因素，但就利潤率提升而言，我們預期最大的因素是多元化市場的成長速度快於運輸市場。

Yes, and then one last question for me, would you be able to share, how much sales go to Automotive in China.

是的，最後一個問題，您能否分享一下，中國汽車的銷售額有多少？

Hendi, I don't think we have Broken that out in our public documents but let me look at it and come back to you. If it's public information, I can provide you more specifics later on today.

亨迪，我認為我們沒有在公開文件中詳細闡述這一點，但讓我看一下然後再告訴你。如果是公開信息，我今天晚些時候可以向您提供更多具體信息。

Okay, Yes Thank you.

好的，是的，謝謝。

We currently have no further questions, so I will hand back to Kieran O'Sullivan for closing remarks.

目前我們沒有其他問題，因此我將把發言權交還給 Kieran O'Sullivan 作結束語。

Thanks, Marie, and thank you all for your time today. Despite the near-term tariffs and economic pressures, diversification remains a strategic priority for us.

謝謝，瑪麗，也謝謝大家今天抽出時間。儘管近期面臨關稅和經濟壓力，多元化仍然是我們的戰略重點。

We are focused on further growing our revenues and quality of earnings organically and through strategic acquisitions. We look forward to updating you on our second quarter 2025 performance in July.

我們專注於透過內部方式和策略性收購進一步增加我們的收入和獲利品質。我們期待在 7 月向您報告我們 2025 年第二季的業績。

Thank you. This concludes our call.

謝謝。我們的通話到此結束。

This concludes today's call.

今天的電話會議到此結束。

Thank you all for joining. You may now disconnect your lines.

感謝大家的加入。現在您可以斷開線路了。