CTS Corp (CTS) 2026 Q1 法說會逐字稿

Hello, everyone. Thank you for joining us, and welcome to the CTS Corporation first -quarter 2026 earnings call. (Operator Instructions)

各位好。感謝各位加入我們，歡迎參加 CTS Corporation 2026 年第一季財報電話會議。(接線員指示)

I will now hand the conference over to Kieran O'Sullivan. Kieran, please go ahead.

我現在把會議交給 Kieran O'Sullivan。Kieran，請開始。

Good morning, and thank you for joining us today. I'm pleased to report a solid first quarter of 2026 for CTS with diversified sales up double digits as we continue to execute our diversification strategy. We also saw strong bookings momentum in the Industrial and Medical markets. In Transportation, we see stability in revenue with modest growth in the first quarter. Overall, with growth in key end markets and solid execution, we believe the company is well positioned to deliver on its strategic objectives.

各位早安，感謝今天與會。我很高興向各位報告，CTS 2026 年第一季表現穩健；在我們持續執行多元化策略之際，多元化業務銷售額以兩位數成長。我們也看到工業與醫療市場的接單動能強勁。在運輸領域，我們看到營收保持穩定，第一季呈現溫和成長。整體而言，隨著關鍵終端市場成長與穩健執行，我們相信公司已具備良好條件，可達成其策略目標。

Ashish Agrawal, our CFO, will take us through the safe harbor statement and later through our financials. Pratik Trivedi, our COO, will provide an update on the progress in each of our end markets. Ashish?

我們的財務長 Ashish Agrawal 將帶領我們說明安全港聲明，並在稍後說明財務表現。我們的營運長 Pratik Trivedi 將就各終端市場的進展提供最新資訊。Ashish？

I would like to remind our listeners that this 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.

我想提醒各位聽眾，本次電話會議包含前瞻性陳述。這些陳述受到多項風險與不確定性影響，可能導致實際結果與前瞻性陳述所表達者出現重大差異。

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 with today's earnings press release and the supplemental slide presentation, which can be found in the Investors section of the CTS website.

關於這些風險與不確定性的更多資訊，已載於今日發布的新聞稿；更多內容亦可在公司向 SEC 提交的文件中查閱。若今日討論涉及《Regulation G》下的任何非 GAAP 指標，所需之說明與調節表已隨今日的財報新聞稿及補充簡報投影片一併提供，可於 CTS 官網的投資人專區查閱。

I will now turn the discussion back over to our CEO, Kieran O'Sullivan.

我現在把討論交回給我們的執行長 Kieran O'Sullivan。

Thank you, Ashish. We finished the first quarter with sales of $139 million, representing a solid 11% increase compared to the first quarter of 2025. Our diversified end markets were up 18%. Transportation sales grew 3%. Our book-to-bill ratio for the first quarter was 1.1, up 4% compared to the first quarter of 2025.

謝謝你，Ashish。我們以 1.39 億美元的銷售額結束第一季，較 2025 年第一季穩健成長 11%。我們的多元化終端市場成長 18%。運輸業務銷售成長 3%。第一季的接單出貨比為 1.1，較 2025 年第一季提升 4%。

Looking at bookings performance, Industrial bookings were strong, driven by stabilized OEM demand and the recovery in distribution. Medical bookings showed robust growth, driven by continued strength in diagnostics and therapeutic applications.

就接單表現而言，工業市場接單強勁，主要受 OEM 需求趨於穩定以及通路分銷復甦所帶動。醫療市場接單呈現強勁成長，主要受診斷與治療應用持續強勢所驅動。

In Aerospace & Defense, we continue to have a robust pipeline of opportunities even as bookings were down compared to last year as funding on various programs is expected to improve in the second half. We added two new customers in the defense market.

在航太與國防方面，儘管接單較去年下滑（預期多項計畫的資金在下半年改善），我們仍持續擁有強勁的機會管線。我們在國防市場新增了兩家新客戶。

In Transportation, we secured several new business awards, including current sensing in Europe and a larger award for foot controls with a European OEM in early April. We also added a new customer in the Transportation market. Our operational execution was evident as we expanded gross margin by 250 basis points in the first quarter.

在運輸領域，我們取得多項新業務獎項，包括歐洲的電流感測案，以及 4 月初與一家歐洲 OEM 的腳踏控制器較大型得標案。我們也在運輸市場新增了一家新客戶。我們的營運執行成效明顯，第一季毛利率擴大 250 個基點。

We maintained strong cash flow generation, supporting our balanced capital allocation approach that includes strategic investments in growth and returning cash to shareholders. First-quarter adjusted diluted earnings were $0.62 per share, up from $0.44 in the first quarter of 2025 as we continue to focus on driving profitable growth. Ashish will add further color on our financial performance later in today's call.

我們維持強勁的現金流創造能力，支持我們均衡的資本配置方針，包括策略性成長投資以及回饋股東現金。第一季調整後稀釋每股盈餘為 0.62 美元，高於 2025 年第一季的 0.44 美元；我們持續聚焦推動獲利性成長。Ashish 將在今日稍後的電話會議中，進一步補充我們的財務表現細節。

Turning to the outlook for 2026. For our diversified end markets, demand is expected to be solid. In the Medical market, we see continued momentum in therapeutics, where we have expanded capacity. In Aerospace & Defense, revenue is expected to grow given our backlog and the normalization of government funding. Industrial OEM and distribution sales are expected to be solid. We continue to monitor the potential economic impact of the current geopolitical conflicts for the second half of the year.

接著談 2026 年展望。就我們的多元化終端市場而言，預期需求將維持穩健。在醫療市場，我們看到治療領域動能延續，且我們已擴充產能。在航太與國防方面，基於我們的在手訂單以及政府資金回歸常態，預期營收將成長。工業 OEM 與通路分銷銷售預期將維持穩健。我們持續關注當前地緣政治衝突在下半年可能對經濟造成的影響。

Longer term, we expect our material formulations supported by three leading technologies and their derivatives to continue to drive our growth in key high-quality end markets in line with our diversification strategy. Across Transportation markets, production volumes are expected to be down given the current geopolitical uncertainties and the potential impact on the economy.

從更長期來看，我們預期由三項領先技術及其衍生技術所支撐的材料配方，將持續推動我們在關鍵高品質終端市場的成長，並與我們的多元化策略一致。在各運輸市場方面，鑑於目前地緣政治不確定性及其對經濟的潛在影響，預期產量將下滑。

Global light vehicle volumes from IHS were recently forecasted to soften. The North American light vehicle market is expected to be in the 15 million unit range. European production is forecasted to be in the 16 million to 17 million unit range. China volumes are expected to be in the 32 million unit range. We continue to monitor potential impact from the geopolitical situation, supply chain issues related to petroleum products, especially resin and other components such as rare earth, metals, and semiconductors.

IHS 近期預測全球輕型車產量將趨於疲弱。北美輕型車市場預期約在 1,500 萬輛的區間。歐洲產量預測約在 1,600 萬至 1,700 萬輛的區間。中國產量預期約在 3,200 萬輛的區間。我們持續監控地緣政治情勢的潛在影響、與石油產品相關的供應鏈問題（尤其是樹脂），以及稀土、金屬與半導體等其他零組件。

We anticipate commercial vehicle demand to improve in the second half of the year. We are closely evaluating the Section 232 tariff changes and focusing on agility in adapting to cost and price adjustments in close collaboration with our customers and suppliers. Our strong balance sheet, healthy cash generation and experienced teams provide us with the tools necessary to manage these headwinds while continuing to invest in growth opportunities and also advancing innovation.

我們預期商用車需求將在下半年改善。我們正密切評估《第 232 條》關稅變更，並在與客戶及供應商緊密合作下，著重於敏捷調整成本與價格。我們強健的資產負債表、健康的現金創造能力與經驗豐富的團隊，讓我們具備必要工具以管理這些逆風，同時持續投資成長機會並推進創新。

Our increasingly diversified business model continues to enhance our growth and quality of earnings. Assuming the continuation of current market conditions, for full year 2026, we are narrowing our sales guidance in the range of $560 million to $580 million and adjusted diluted EPS to be in the range of $2.35 to $2.45.

我們日益多元化的商業模式持續提升我們的成長與獲利品質。在假設目前市場狀況延續的前提下，針對 2026 全年，我們將營收指引區間收斂至 5.6 億至 5.8 億美元，調整後稀釋每股盈餘（EPS）預期為 2.35 至 2.45 美元。

Now I'll turn it over to Pratik, who will walk us through the end market performance. Pratik?

接下來我把時間交給 Pratik，他將帶領我們回顧各終端市場的表現。Pratik？

Thank you, Kieran. Our Medical end market delivered strong performance in the first quarter with sales of $25 million, up 28% versus the prior year period, reflecting a sustained growth momentum across our Medical portfolio, particularly in therapeutic applications where we see robust demand. Bookings in the quarter were up 18% compared to the prior year period.

謝謝你，Kieran。我們的醫療終端市場在第一季表現強勁，銷售額為 2,500 萬美元，較去年同期成長 28%，反映我們醫療產品組合持續的成長動能，尤其是在我們看到需求強勁的治療應用領域。本季接單較去年同期成長 18%。

The book-to-bill ratio for the first quarter was 1.2, reflecting continued momentum in this market. We continue to see growth prospects in diagnostic imaging, aesthetics and minimally invasive surgical systems where there is an increased demand for precision, reliability and patient monitoring.

第一季接單出貨比為 1.2，反映該市場動能持續。我們持續看好診斷影像、美學以及微創手術系統的成長前景，這些領域對精準度、可靠性與病患監測的需求正在提升。

Our precision sensors and transducers enable high-resolution imaging and precise energy delivery in applications such as ultrasound and intravascular diagnostics, supporting early detection, better visualization and more targeted patient treatments. In patient and medical equipment monitoring, our temperature and position sensors provide high accuracy and stability, supporting reliable vital sign measurement and device performance over extended life cycles.

我們的精密感測器與換能器可在超音波與血管內診斷等應用中，實現高解析度成像與精準能量傳遞，支持更早期的偵測、更佳的可視化，以及更具針對性的病患治療。在病患與醫療設備監測方面，我們的溫度與位置感測器提供高精度與高穩定性，支持可靠的生命徵象量測與設備在延長生命週期內的效能表現。

Our therapeutic products enhance skin lifting and tightening through noninvasive aesthetic treatments that significantly improve patient experience over alternative procedures. During the first quarter, we had multiple wins across all regions for medical ultrasound and a large win for noninvasive aesthetics application. Demand remains robust for ultrasound imaging and strong for therapeutic products. Knowing that our products support technologies used to save lives is central to our purpose in the Medical market.

我們的治療產品透過非侵入式美學療程提升拉提與緊緻效果，相較替代性療程可顯著改善病患體驗。第一季期間，我們在各區域的醫療超音波業務取得多項勝出，並在非侵入式美學應用取得一項大型得標案。超音波影像需求仍然強勁，治療產品需求亦維持強勢。我們的產品支援用於拯救生命的技術，這是我們在醫療市場使命的核心。

These mission-critical health care applications demand uncompromising quality and reliability, reinforcing our commitment to continuous innovation and operational excellence. With an aging population and innovations in health care supported by CTS products, the Medical market will continue to enhance our growth profile.

這些攸關任務成敗的醫療保健應用對品質與可靠性有著毫不妥協的要求，進一步強化我們對持續創新與卓越營運的承諾。隨著人口老化，以及在 CTS 產品支持下的醫療保健創新，醫療市場將持續提升我們的成長動能。

Aerospace & Defense sales for the first quarter were $17 million, up 11% compared to previous year. Book-to-bill ratio was less than 1. We expect the defense bookings to pick up during the rest of the year. Our pipeline of new opportunities remains strong with backlog levels supporting future growth. Undersea warfare and surveillance are critical elements of modern defense strategy, requiring advanced sensing technologies to detect, track and classify increasingly quiet and sophisticated underwater threats.

航太與國防第一季銷售額為 1,700 萬美元，較去年同期成長 11%。接單出貨比低於 1。我們預期國防接單在今年其餘期間將回升。我們的新機會管線仍然強勁，積壓訂單水位支撐未來成長。水下作戰與監視是現代國防策略的關鍵要素，需要先進的感測技術來偵測、追蹤並分類日益安靜且更精密的水下威脅。

CTS supports this domain through high-performance piezoelectric sensors, transducers and subsystems that convert acoustic signals into actionable intelligence. Our RF and EMC filters are mission-critical components in defense electronics, ensuring signal integrity and electromagnetic compatibility in secure communications, radar, missile control and avionics systems.

CTS 透過高性能壓電感測器、換能器與子系統支援此領域，將聲學訊號轉化為可採取行動的情報。我們的 RF 與 EMC 濾波器是國防電子中的攸關任務成敗之關鍵元件，可確保在安全通訊、雷達、飛彈控制與航電系統中的訊號完整性與電磁相容性。

Our products also support unmanned systems and satellite platforms that rely on highly efficient lightweight technologies to operate in extreme environments with limited power. During the quarter, we were awarded a significant underwater hull penetrator business win with a potential contract value of around $20 million over a five-year period. We also registered multiple wins in the quarter for naval sonar and filter applications with several customers.

我們的產品亦支援無人系統與衛星平台；這些平台仰賴高效率、輕量化技術，在電力受限的情況下於極端環境中運作。本季我們獲得一項重要的水下船體穿透器（hull penetrator）業務訂單，潛在合約價值約為 2,000 萬美元，期間為五年。本季我們也在海軍聲納與濾波器應用方面，與多家客戶取得多項得標。

In the quarter, we added two new customers for RF filters, specializing in providing secure communications, SATCOM connectivity and anti-jamming applications. We are deeply engaged across multiple customer platforms and expect the government funding cycles to start to normalize in the second half of 2026 and the funds to flow through with the enactment of the full year appropriations bill in February.

本季我們新增兩家 RF 濾波器新客戶，專注於提供安全通訊、衛星通訊（SATCOM）連線與反干擾應用。我們在多個客戶平台上深度參與，並預期政府資金週期將於 2026 年下半年開始趨於正常化，且隨著 2 月通過全年撥款法案，資金將逐步到位。

Industrial end market performance remained strong with first-quarter sales of $37 million, representing 14% year-over-year growth and supporting the broader recovery trend underway since 2025. Bookings in the quarter were up 28% from the same period last year, reflecting stable growth from our OEM customers as well as distribution partners. The book-to-bill ratio was 1.29 compared to 1.15 in the first quarter of 2025.

工業終端市場表現依然強勁，第一季銷售額為 3,700 萬美元，年增 14%，並支撐自 2025 年以來更廣泛的復甦趨勢。本季接單較去年同期成長 28%，反映我們 OEM 客戶以及通路夥伴的穩健成長。接單出貨比為 1.29，高於 2025 年第一季的 1.15。

We were successful with multiple wins across a diverse range of industrial applications in the quarter, including distribution components, industrial printing and flow meter applications where our products help in accurately measuring the flow of liquids and gases in industrial systems. We also saw solid momentum in temperature sensing with wins in heat pumps, pool and spa systems and commercial appliances.

本季我們在多元工業應用領域取得多項得標，包括通路元件、工業印刷，以及流量計應用；在這些應用中，我們的產品可協助精準量測工業系統中液體與氣體的流量。我們也在溫度感測方面看到良好動能，於熱泵、泳池與 SPA 系統，以及商用家電等領域取得得標。

These applications underscore our role in enabling more energy-efficient and optimized industrial systems. Industrial demand is expected to remain strong in 2026, supported by secular tailwinds, including automation, connectivity and digitization. At the same time, the push for higher energy efficiency and continued manufacturing automation is expanding the addressable opportunity for our advanced sensing technologies.

這些應用凸顯我們在促成更節能、最佳化的工業系統方面所扮演的角色。在自動化、連網與數位化等長期趨勢推動下，預期 2026 年工業需求將維持強勁。同時，對更高能源效率的追求與製造自動化的持續推進，正擴大我們先進感測技術的可服務機會。

Transportation sales in the first quarter at $60 million represents a 3% growth over the same period last year and a 7% sequential growth quarter over quarter, which appears to demonstrate early signs of stability. Qualification of our next-generation smart actuator across our customers' platforms is progressing, and we plan to implement further product enhancements later in 2026.

運輸業務第一季銷售額為 6,000 萬美元，較去年同期成長 3%，較前一季（季對季）成長 7%，似乎顯示出初步的穩定跡象。我們次世代智慧致動器在客戶平台上的認證進展順利，並計畫於 2026 年稍晚進一步導入產品強化。

Our new business wins in the quarter were a good mix of sensors and foot control solutions across a diverse set of customers. We added accelerometer to our sensors product portfolio with an award from a North American OEM supporting safety, dynamics control, ride comfort and advanced driver assistance systems. We gained a new customer with our current sensing solution where our products measure the flow of electrical current in vehicle systems to enable safe, efficient and reliable operation.

本季我們的新業務得標在感測器與腳部控制解決方案之間分布均衡，涵蓋多元客戶群。我們透過一項來自北美 OEM 的得標，將加速度計納入感測器產品組合，用於支援安全、動態控制、乘坐舒適性與先進駕駛輔助系統（ADAS）。我們也以電流感測解決方案取得一位新客戶；我們的產品可量測車輛系統中的電流流量，以實現安全、高效率且可靠的運作。

As vehicles become more electrified and software controlled, current sensing has become a core enabling technology across higher voltage platforms. In the quarter, we secured multiple wins across the foot controls portfolio with OEMs in China, Japan, Europe and North America.

隨著車輛日益電動化並由軟體控制，電流感測已成為更高電壓平台上的核心使能技術。本季我們在腳部控制產品組合方面，與中國、日本、歐洲與北美的 OEM 取得多項得標。

Overall, we continue to strengthen our footwell presence while broadening our sensing portfolio with powertrain-agnostic capabilities that support multiple vehicle architectures. Total booked business was approximately $1.1 billion at the end of the quarter. Over the long term, electronic braking remains a compelling opportunity as ADAS, vehicle electrification and autonomous capabilities continue to advance.

整體而言，我們持續強化在腳踏空間（footwell）的布局，同時以與動力系統無關（powertrain-agnostic）的能力擴展感測產品組合，以支援多種車輛架構。截至本季末，累計已簽約／已預訂業務總額約為 11 億美元。長期來看，隨著 ADAS、車輛電動化與自動駕駛能力持續推進，電子煞車仍是極具吸引力的機會。

Our products deliver meaningful cost and weight benefits, which are increasingly important for OEMs managing performance, efficiency and affordability trade-offs. We remain confident in the long-term growth outlook for our footwell products, along with our expanding sensor portfolio.

我們的產品帶來顯著的成本與重量效益，對於在性能、效率與可負擔性之間進行取捨管理的 OEM 而言，這些效益愈發重要。我們對腳踏空間產品以及持續擴張的感測器產品組合之長期成長展望仍具信心。

Based on recent IHS forecast, global light vehicle market is expected to be slightly down for 2026. The commercial vehicle market is expected to grow based on rising freight rates, improving spot and contract pricing and prebuy related to emission regulation changes in 2027. Now I'll turn it over to Ashish, who will walk us through the financials in details.

根據近期 IHS 預測，2026 年全球輕型車市場預期將小幅下滑。商用車市場預期將成長，受惠於運價上升、現貨與合約價格改善，以及因 2027 年排放法規變更所帶動的提前採購（prebuy）。接下來我把時間交給 Ashish，他將帶領我們更詳細地說明財務狀況。

Thank you, Pratik. First-quarter sales were $139 million, up 11% compared to the first quarter of 2025 and up 1% sequentially from the fourth quarter of 2025. Sales to diversified end markets increased 18% year over year, and the sales to Transportation customers were up 3%. Foreign currency changes impacted sales favorably by $3 million in the first quarter. Our adjusted gross margin was 39.5%, up 250 basis points compared to the first quarter of 2025 and up 40 basis points compared to the fourth quarter of 2025.

謝謝你，Pratik。第一季銷售額為 1.39 億美元，較 2025 年第一季成長 11%，較 2025 年第四季序列成長 1%。多元終端市場的銷售額年增 18%，對運輸客戶的銷售額成長 3%。第一季外匯變動對銷售額帶來 300 萬美元的正面影響。我們的調整後毛利率為 39.5%，較 2025 年第一季提升 250 個基點，較 2025 年第四季提升 40 個基點。

The year-over-year improvement in gross margin was driven by operational improvements and the favorable impact of end market mix. Gross margin was also favorably impacted by $700,000 due to foreign currency changes. We are monitoring the impact of Section 232 tariff changes on steel and aluminum, inflation in precious metals and cost increases due to the higher oil prices.

毛利率的年對年改善主要來自營運改善，以及終端市場組合帶來的有利影響。外匯變動亦對毛利率帶來 70 萬美元的正面影響。我們正密切關注《232 條款》對鋼鐵與鋁的關稅變動、貴金屬通膨，以及油價上升所導致的成本增加。

Our teams are already working to mitigate these impacts and are partnering with customers and suppliers towards the goal of keeping the effect on our margins cost neutral. Our tax rate for the quarter was 20.7%, slightly better than expected due to the mix of earnings and certain discrete items.

我們的團隊已著手降低這些影響，並與客戶及供應商合作，目標是使對我們毛利率的影響在成本上保持中性。本季稅率為 20.7%，由於獲利組合以及若干一次性項目，略優於預期。

For the full year, we expect our tax rate to be in the range of 21% to 23%. Earnings per diluted share for the first quarter were $0.59 compared to $0.44 for the same period last year. Adjusted earnings for the first quarter were $0.62 per diluted share compared to $0.44 per diluted share for the same period last year. Moving to cash generation and the balance sheet. We generated $17 million in operating cash flow for the first quarter of 2026.

就全年而言，我們預期稅率將落在 21% 至 23% 的區間。第一季稀釋後每股盈餘為 0.59 美元，去年同期為 0.44 美元。第一季調整後稀釋後每股盈餘為 0.62 美元，去年同期為 0.44 美元。接著談現金創造與資產負債表。2026 年第一季我們創造了 1,700 萬美元的營運現金流。

Our cash balance was $91 million and borrowings were $63 million from our credit facility at the end of Q1 2026. During the quarter, we purchased 177,000 shares of CTS stock totaling approximately $9 million. In total, we returned $10 million to shareholders through dividends and share buybacks in the first quarter of 2026. We have another $82 million remaining under our current share repurchase program. We remain focused on strong cash generation and appropriate capital allocation.

截至2026年第一季末，我們的現金餘額為9,100萬美元，並自我們的信用額度融資中借款6,300萬美元。本季期間，我們回購了177,000股CTS股票，總額約900萬美元。2026年第一季，我們透過股利與股票回購合計向股東返還1,000萬美元。在目前的股票回購計畫下，我們尚餘8,200萬美元額度可用。我們仍專注於強勁的現金創造能力與適當的資本配置。

With a strong balance sheet, we continue to support organic growth, strategic acquisitions and returning cash to shareholders. This concludes our prepared comments. We would like to open the line for questions at this time.

憑藉強健的資產負債表，我們持續支持有機成長、策略性併購，並向股東返還現金。以上為我們預先準備的發言。現在我們想開放電話線進行提問。

(Operator Instructions) John Franzreb, Sidoti & Co.

(接線員指示) John Franzreb，Sidoti & Co.

Congratulations on another great quarter. I'd like to start with actually the quarter itself that we just completed. A couple of really quick questions here. The revenue was better than I expected. I'm curious if any jobs revenue that pulled forward into the first quarter from the second. Anything like that happened in the period?

恭喜又交出一個很棒的季度。我想先從我們剛結束的這一季談起。這裡有幾個很快的問題。營收比我預期的更好。我想了解是否有任何專案收入從第二季提前到第一季入帳。本期是否發生了類似的情況？

No, John, it was a really good quarter, nothing pulled forward.

沒有，John，這一季表現非常好，沒有任何提前認列。

Got it. Well, then looking back at maybe some of these numbers, I'm curious if the gross margin profile differential between some of the diversified end markets, and I guess we can include the Transportation end market. Is it significant that we should really be something cognizant of if Medical is sizably better versus A&D? And how should we think about the puts and takes by end market?

了解。那回頭看這些數字，我想了解多元化終端市場之間的毛利率結構差異，並且我想也可以把運輸終端市場納入。這個差異是否顯著到我們需要特別留意，例如醫療是否明顯優於航太與國防（A&D）？我們應該如何看待各終端市場之間的增減因素？

Yes, John, in previous discussions, we have talked about our margin profile. In the diversified end markets, we have much better margin profile compared to Transportation. And as we have talked about, we have pretty good margins on the Transportation side as well, but the diversified markets are better. Within the diversified markets, it's more, I would say, less evenly -- it's not as widely spread.

是的，John，在先前的討論中，我們談過我們的毛利率結構。在多元化終端市場中，我們的毛利率結構相較於運輸市場要好得多。如同我們先前所說，運輸端的毛利率也相當不錯，但多元化市場更好。在多元化市場內部，我會說相對更平均——差距沒有那麼大。

So Medical is definitely the strongest end market in terms of margin profile, but we do good in pretty much all the diversified end markets.

因此，就毛利率結構而言，醫療確實是最強的終端市場，但我們在幾乎所有多元化終端市場的表現都不錯。

Okay. So Industrial is relatively close to Medical as --

好的。所以工業相對接近醫療，對吧——--

There's not a big variation in the margin profile among the diversified end markets. Medical is definitely the strongest one, yes.

多元化終端市場之間的毛利率結構差異不大。醫療確實是最強的，沒錯。

Okay. And the reason I'm kind of getting to all these questions here is I looked at the incremental operating contribution in the quarter, and it came to roughly 44%, if I did the back of the envelope math right. I thought that was rather astonishing. And I'm looking at the revenue profile to me, it kind of lent itself that Medical was the primary driver.

好的。我之所以問這些問題，是因為我看了本季的增量營業貢獻，若我用粗略心算估算，約為44%。我覺得這相當驚人。而我看營收結構，感覺醫療是主要驅動因素。

And I just want to make sure if I was thinking about this properly and I'm thinking about the incremental margin profile properly. I'm wondering any thoughts about my conclusions here.

我只是想確認我是否理解正確，以及我對增量毛利率結構的判讀是否正確。想請問您對我這些結論有什麼看法。

No, John, I think the way to look at it, and Ashish gave you the color on Medical. The way to look at it is with our strategy, we've always said as we grow diversified markets, the quality of the earnings will improve, and that's what you're seeing here.

沒有，John，我認為應該這樣看；Ashish已就醫療提供了一些補充說明。我們的策略一直強調，隨著我們擴大多元化市場的規模，獲利品質會提升，而你現在看到的就是這一點。

Right, right. Okay. Another quick question. It looked like debt ticked up in the quarter. Why was that the case?

對，對。好的。再一個快問。看起來本季負債略有上升。為什麼會這樣？

So John, in the first quarter, we typically have lower operating cash flow as we do incentive comp payments and those types of things. We also continued our buybacks in the first quarter. So the combination of those two things and a slightly higher CapEx than we expect -- we were normally expecting, those were the key drivers. The debt was up by about $5 million. But compared to where we are overall, we are continuing to make good progress.

John，第一季我們的營運現金流通常較低，因為會支付獎酬薪酬等項目。我們在第一季也持續進行回購。因此，這兩項因素加上資本支出略高於我們原先預期——通常的預期——是主要驅動原因。負債約增加了500萬美元。但就我們整體狀況而言，我們仍持續取得良好進展。

We have almost fully paid down the borrowings from the SyQwest acquisition at this point.

截至目前，我們幾乎已完全償還SyQwest併購案相關的借款。

Hendi Susanto, Gabelli Funds.

Hendi Susanto，Gabelli Funds。

Congrats on good results. My first question is you mentioned capacity expansion in Medical. And I would like to get more color in terms of how much more and if there's any statistics like up to how much sales you can take that would be -- I think that would be helpful.

恭喜有不錯的成果。我的第一個問題是，你提到醫療領域的產能擴充。我想請你提供更多細節，例如擴充多少，以及是否有任何統計數據（例如可支撐到多少銷售額）——我想這會很有幫助。

Sure. Thank you, Hendi, for the question. So the capacity in our Medical end market primarily refers to our aesthetics application. And we've got strong partnership with some of the customers here where they give us a long-term forecast, and we are able to install capacity ahead of the demand here. We continue to see strong momentum in this end market, and we are expecting a double-digit growth year over year.

當然。謝謝你，Hendi，提出這個問題。我們在醫療終端市場的產能主要是指醫美（aesthetics）應用。我們與部分客戶建立了強健的合作關係，他們會提供長期預測，使我們能在需求到來之前先行建置產能。我們持續看到該終端市場的強勁動能，並預期年增率將達到兩位數成長。

Double-digit growth in capacity or in sales?

兩位數成長是指產能還是銷售？

In the sales, which means that we would need to have that capacity installed ahead of it.

是銷售，這也意味著我們需要在此之前先把相應產能裝設到位。

And we are not seeing any concerns in our capability to meet the demand profile that we are seeing in that space.

而就我們在該領域所看到的需求型態而言，我們不認為自身滿足需求的能力會有任何疑慮。

I see. And then, Ashish, I have a question on the gross margin. So there's some mix benefit and the non-transportation or the diversified end market is a favorable tailwind. On the other hand, there's also the challenge of high oil prices, component costs. How sustainable is the strong gross margin that we are seeing in Q1?

了解。另外，Ashish，我有一個關於毛利率的問題。一方面，產品組合帶來一些正面效益，且非運輸（或多元化）終端市場是一個有利的順風。但另一方面，也有高油價、零組件成本等挑戰。我們在第一季看到的強勁毛利率有多可持續？

Should we expect some headwinds because of those challenges? Or do you anticipate that Q1 gross margin can serve as a baseline that is sustainable?

我們是否應該預期因這些挑戰而出現一些逆風？或者你是否認為第一季毛利率可以作為可持續的基準？

Hendi, that's a good question. That's something that we look at very, very carefully. In addition to the topics that you mentioned, we also had a slight impact from favorable currency changes, which was about $700,000. So the currency can go in multiple different directions. So we'll just continue watching the markets for that.

Hendi，這是個好問題。這也是我們非常、非常仔細檢視的事項。除了你提到的因素之外，我們也受到匯率有利變動的些微影響，約為70萬美元。而匯率可能往多個方向變動。因此，我們會持續觀察相關市場。

We are experiencing cost pressures related to precious metals that has been going on since late last year, and we have been working closely with our customers to manage through the impact of that with pricing changes, with material substitutions, those types of things. More recently, we are also seeing inflation related to oil-derived products like resin, epoxy, transportation costs, those types of things.

我們正面臨與貴金屬相關的成本壓力，這自去年年底以來一直存在；我們一直與客戶密切合作，透過調價、材料替代等方式來管理其影響。近期我們也看到與石油衍生產品相關的通膨，例如樹脂、環氧樹脂、運輸成本等。

That we are expecting to see more margin -- or sorry, cost pressures to late Q1 going into Q2. And our teams are already working with customers to manage through that and as well as suppliers to manage through that. So we will see some headwinds.

我們預期在第一季後段延續到第二季，會看到更多的毛利率——抱歉，是成本壓力。我們的團隊已在與客戶合作以因應，同時也與供應商合作以共同管理這些影響。因此，我們將會面臨一些逆風。

But at the same time, we are very, very focused on making sure that we can make the impact cost neutral on our margins. Now there can be some timing differences, which could impact margins in the short term, but we expect to be able to work through it as we have in the past several years.

但同時，我們也非常、非常專注於確保能將影響控制在對我們毛利率成本中性的水準。當然，時點上可能會有一些差異，短期內可能影響毛利率，但我們預期能像過去幾年一樣加以消化並克服。

Okay. And then may I ask more insight into the Aerospace & Defense expectations of funding of various programs will improve in the second half, booking will pick up. And then considering that the government fiscal calendar of, let's say, like end of September, how should we expect, let's say, like new bookings, new funding to materialize in sales? I assume there would be some lag. I don't know whether Q4 starting point is somewhat a reasonable expectation.

好的。接著我想再請教一下航太與國防（Aerospace & Defense）方面的看法：各項計畫的資金挹注預期在下半年會改善、接單（booking）會回升。另外，考量政府的財政年度，例如 9 月底結束，我們應該如何預期新接單、新資金挹注轉化為銷售？我想應該會有一些滯後。我不確定以第四季作為起點是否算是合理的預期。

Yes, Andy, I mean, if you look at for the Aerospace & Defense end market and just looking at the broader macro trend, right, overall, the defense spendings will continue to remain elevated due to the current geopolitical unrest as well as investments in the infrastructure, primarily around the naval side of defense. What we are seeing right now is we are actively engaged in multiple platform discussions with a wide range of customers.

是的，Andy，我的意思是，如果你看航太與國防終端市場，以及更廣泛的總體趨勢，整體而言，因目前地緣政治動盪，以及對基礎建設的投資（主要在海軍防務相關），國防支出將持續維持在高檔。我們目前看到的是，我們正積極參與與多元客戶、針對多個平台的討論。

However, what we've experienced in the first quarter is a delay in the government funding. But towards the end of the quarter, with the passage of the appropriations bill, we expect that funding pace to pick up in the second half of this year. The other point to note here is that we usually also have a bit of a lumpiness in terms of how we get the orders on the defense side.

不過，我們在第一季所經歷的是政府資金撥付延遲。但在季末，隨著撥款法案（appropriations bill）通過，我們預期今年下半年資金撥付速度會加快。另外一點要注意的是，在國防端，我們取得訂單的節奏通常也會有些不均勻（lumpiness）。

So you could potentially have a quarter where our book-to-bill might be less than 1. However, then it makes it up in the remainder of the year.

因此，你可能會看到某一季我們的接單出貨比（book-to-bill）低於 1。不過之後在年度其餘時間會補回來。

Yes. And then last question for me. Any update on the smart actuator and then potential change in allocation by the customer?

了解。那我最後一個問題。關於智慧致動器（smart actuator），以及客戶在分配（allocation）上可能的變動，有沒有最新進展？

Hendi, we continue to be on track with launching the revised version of the actuator with our customer. And we expect normalized modest growth in that particular product line for this year.

Hendi，我們仍按計畫與客戶一起推出該致動器的修訂版本。我們預期今年該產品線將回到正常化的溫和成長。

John Franzreb, Sidoti & Co.

John Franzreb，Sidoti & Co.。

Yes. I'm actually curious about the growth that you saw in the Transportation market in the first quarter. I guess, first, were you surprised by that?

是的。我其實很好奇你們第一季在運輸（Transportation）市場看到的成長。我想先問，你們對此感到意外嗎？

John, I would say we were pleased with how we performed in the light vehicle demand and saw a little bit more positiveness in the commercial vehicle. And we think, as Pratik said, that's going to extend into the second half of the year.

John，我會說我們對於輕型車需求的表現感到滿意，而商用車方面也看到更正面的跡象。而且我們認為，如 Pratik 所說，這會延續到今年下半年。

As I'm sure you've seen the commercial truck market has seen a strong bookings profile over the last few months. A lot of people are suggesting that the benefits from those order profiles of a second half event. I'm curious if you -- if that's how you see it playing out? Or is it -- or does it affect you in any different way?

如你所見，商用卡車市場在過去幾個月的接單表現很強。很多人認為這些訂單結構帶來的效益會在下半年顯現。我想了解你們是否也認為會是這樣發展？或者對你們而言會有不同的影響？

No, we do see it playing out the same way, John. I mean, as you can -- in the market right now, we are seeing cautious optimism here, primarily related to the rising freight rates, just improved pricing.

不，我們確實也看到會以同樣方式發展，John。我的意思是，就目前市場而言，我們看到的是審慎的樂觀，主要與運價上升、定價改善有關。

And then we've got in the second half of the year, the prebuy event due to EPA 2027. So we expect it to play out in a very similar manner.

此外，下半年還有因 EPA 2027 而出現的提前採購（prebuy）事件。所以我們預期整體走勢會非常相似。

Okay. So second half, got you. So then the expectation for the Transportation to be down for the full year, I'm gathering that suggests you expect the global vehicle market to be continually to weaken for the balance of the year. Is that also a fair assessment?

好的。所以是下半年，了解。那麼你們對運輸業務全年仍預期下滑，我的理解是這表示你們預期全球車市在今年剩餘期間會持續走弱。這樣的解讀也合理嗎？

John, what we would say on the light vehicle market is performing well so far. But in our prepared remarks, we said IHS had forecasted some softness in the second half of the year. And with the geopolitical situation, that's how we're thinking about it at the moment that some softness in the light vehicles, but strength on the commercial vehicle side, so balancing it out a little bit.

John，我們會說輕型車市場目前為止表現良好。但在我們事先準備的發言中提到，IHS 預測下半年會有一些疲軟。再加上地緣政治情勢，我們目前的看法是：輕型車可能略有走弱，但商用車端較強，因此可在一定程度上相互抵銷。

Got it. Okay. And one last question about capital allocation. You really -- you're buying back stock.

了解。好的。最後一個關於資本配置的問題。你們確實在回購股票。

As Ashish pointed out, you are paying down debt, albeit there was working capital needs in the first quarter. What is the outlook right now on the M&A side of the business? Are you in a period of consolidation and working on organic growth? Or are you still looking at acquisitions? Can you kind of discuss maybe the size of the markets that you're looking at?

如 Ashish 所指出，你們也在償還債務，儘管第一季有營運資金需求。目前在併購（M&A）方面的展望如何？你們是否處於整合期並專注於有機成長？還是仍在尋找收購機會？能否談談你們正在關注的市場規模大概是什麼？

Yes, John, just the key points for us from a capital allocation, first of all, is supporting the organic growth investments, which we have some nice opportunities, which Pratik touched on as well in Medical. We're still pursuing strategic acquisitions to advance our diversification and quality of earnings. And while we have nothing to report today, we're very active in that area and then returning cash to shareholders is how we're approaching it.

是的，John，就資本配置而言，我們的重點首先是支持有機成長投資；我們有一些不錯的機會，Pratik 也在醫療（Medical）方面提到過。我們仍在尋求策略性收購，以推進我們的多元化並提升獲利品質。雖然今天沒有可報告的事項，但我們在這方面非常積極；同時也會以回饋股東、返還現金作為我們的做法。

There are no further questions at this time. I will now turn the call back to Kieran O'Sullivan for closing remarks.

目前沒有其他問題。我現在把電話交回給 Kieran O'Sullivan 作結語。

Thank you all for your time today. Diversification remains a strategic priority to drive growth and margin expansion. In addition, we are expanding in-vehicle powertrain agnostic solutions. We are guided by our Evolution 2030 strategic initiative to enhance our emphasis on growth, operational rigor, employee engagement while also giving back to the communities where we operate. We look forward to updating you on our second-quarter 2026 results in July.

感謝各位今天撥冗參與。多元化仍是推動成長與毛利率擴張的策略優先事項。此外，我們也在擴展車內與動力系統無關（powertrain agnostic）的解決方案。我們以「Evolution 2030」策略倡議為指引，強化我們對成長、營運紀律與員工投入的重視，同時也回饋我們營運所在的社區。我們期待在 7 月向各位更新 2026 年第二季的業績。

This concludes our call.

本次電話會議到此結束。

This concludes today's call. Thank you for attending. You may now disconnect.

今天的電話會議到此結束。感謝各位出席。您現在可以掛線。