CTS Corporation

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 e-brake win last quarter.

Ashish will take us through the Safe Harbor Statement. Ashish? I would like to remind our listeners that this conference call contains forward-looking statements. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Additional information regarding these risks and uncertainties is contained in the press release issued today. and more information can be found in the company's SEC filings. To the extent that today's discussion refers to any non-GAAP measures under Regulation G, the required explanations and reconciliations are available in the Investors section of the CTS website. I will now turn the discussion back over to our CEO, Kiran O'Sullivan.

Thank you, Ashish. We continue to experience challenging demand dynamics driven primarily by higher levels of customer inventory. Sales were 135 million, down 11% from the same period last year. While the UAW strike had a low sales impact in the quarter, we expect it will pressure sales further in the fourth quarter. Operationally, with the reduced volume, we continue to focus on cost reductions. As communicated, we will have some temporary cost increases as we complete our previously announced Mexico site consolidation. Work is progressing on the site consolidation and we are on track to complete the transition next year. Inflationary impacts are improving but continue to be a challenge in some areas. We are adjusting pricing in partnership with our customers as we are still experiencing certain raw material cost increases and continued wage inflation, especially in Mexico and certain other countries. We are also prioritizing our organic growth projects and new product investments while focusing on disciplined management of operating expenses during the softer short-term sales environment. We added eight new customers in the quarter with new production orders and through qualification progress on sample orders. In addition, we are partnering with five new customers in industrial, two in medical and one in transportation to qualify our products in different applications. We had solid new business awards, especially for electrification platforms. We had a book-to-bill rate in the quarter of 0.93. Non-transportation sales declined 20% in the third quarter compared to the prior year period. In the industrial market, sales continued to be soft, driven by decreased demand for microactuators used in industrial printing applications due primarily to softness in China. We're also seeing softness across other industrial sensing applications and distribution as inventory levels continue to correct. We were successful with several wins, sales wins, securing a production order for kitchen appliances with wins for EMC, two-wheel, and RF applications. We also had wins for multiple temperature applications ranging from HVAC and compressor monitoring to refrigeration applications. We are engaged with new customers for potential sensing applications varying from pro audio, industrial printing, tunable optics and home appliances to tractor controls and wheel balancing. In medical markets where sales continue on an improving trend, we are seeing stronger demand. We had multiple wins in the quarter for traditional medical ultrasound, intravascular ultrasound, and therapeutic applications. Our targeted business development efforts are progressing as we engage with new customers across multiple sample qualifications with applications in traditional ultrasound, therapeutics, optical encoders, and an application deploying ultrasound for precise tissue destruction used for cancer treatment. We expect the long-term prospects for aerospace and defense and market to be solid given our enhanced capabilities and new material formulations. Aerospace and defense sales are expected to be solid through the end of the year. We received multiple orders in the quarter for defense sonar and RF applications and secured underwater unmanned vehicle contracts. Additionally, we had wins for temperature sensing in communication satellites, and for piezo material in aircraft emergency location beacons. Looking ahead for the balance of 2023 in non-transportation end markets, we expect continued softness in the industrial end market and distribution as customer inventory levels continue to correct. For defense and medical markets, we anticipate a stable environment and solid progress on the qualification of our products for prospective new customers. Long-term, we expect our material formulations and in-house know-how to continue to support our growth in key high-quality non-transportation and markets in line with our diversification strategy. Additionally, we anticipate the megatrends of automation, connectivity, and efficiency, as well as growth in minimally invasive medical procedures will provide us momentum as we continue expansion in these markets. Transportation sales were 76 million in the third quarter. Sales were down approximately 3% from the same period last year. We have now entered a softer demand environment for commercial vehicle products and anticipate four quarter sales to be lower, driven by a decrease in aftermarket demand that had been stronger post COVID for restocking. On the light vehicle front, we continue to track market share dynamics in China given the competition between local and transplant OEMs. In the third quarter, we had solid wins across all product categories and continue to gain momentum in electrification. In accelerator modules, we secured wins with OEMs in North America and Europe and were awarded a haptic module for a European OEM that provides the driver feedback on speed, distance and other information is customized by the vehicle manufacturer. We added a new product win for an accelerometer sensor with a North American OEM where we expect a shorter than normal development period as well as additional opportunities as we go forward. Total book business was 1.4 billion at the end of the quarter. We are driving to achieve our goal of having more than 25% of our light vehicle revenue come from electrified platforms by 2025. Progress on securing electric vehicle business continued as we added 11 electric vehicle wins in the quarter, including accelerator modules and haptics, chassis ride height sensors, accelerometers, and current sensors, where we continue to gain momentum in the market, benefiting from MagLab's strong pipeline of new opportunities. As we look to our future, We are excited by the opportunity the transition to electrification offers us. We continue to see the footwell in the vehicle as a space where we expect to expand our product offering with traditional accelerator modules, haptic modules, new e-brake products offering weight and cost advantages, and the future introduction of our DrivePad technology, a low travel accelerator product that enables driver interface customization and increases the footwell design flexibility for our customers. We expect these and other sensor applications will increase our ability to grow content with a potential SAM of greater than 1 billion. Summarizing our outlook for full year 2023, the North American light vehicle market is expected to be in the 15 million unit range. subject to the impact of the UAW strike. European production is forecasted in the 16 to 17 million unit range. China volumes are expected in the 26 million unit range. While my earlier comments focused on a reduction in commercial vehicle demand in the fourth quarter, we also expect this softness to continue in 2024. For non-transportation markets, in line with our diversification strategy, We aim to expand the customer base and range of applications in the industrial, medical, and defense end markets. Inventory levels continue to correct to more normal levels, especially in certain industrial applications and in distribution. We estimate this demand softness to remain at reduced levels into early 2024. Demand in defense and medical markets is expected to remain solid. In terms of guidance for full year 2023, we previously communicated that we expected sales in the range of 565 to 585 million and adjusted diluted earnings per share in the range of $2.20 to $2.40. Given the continued softness in distribution and the industrial markets during the second half of the year, the impact of the UAW strike and the softening commercial vehicle market We are now updating the guidance for sales in the range of 545 to 555 million and adjusted diluted earnings per share in the range of $2.15 to $2.25. Now I'll turn it over to Ashish who will walk us through the financial results in more detail.