CTS Corporation

we achieved earnings in line with our expectations, despite softness in the transportation end market. CTS is focused on future growth through continued diversification of our customer base and end markets. Yesterday, we completed the acquisition of SideQuest LLC, a leading designer and manufacturer of sonar and underwater acoustic sensing and electronic solutions, primarily for the U.S. naval defense market. SideQuest products enable the sonar systems that guide and protect our submarines and surface ships. We extend a warm welcome to Bob Torini and the SideQuest team and look forward to leveraging our combined capabilities to drive growth in defense. The acquisition is expected to be accretive in 2025. Ashish will take us to 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 with today's earnings press release and supplemental slide presentation, which can be found in the investors section of the CTS website. I will now turn the discussion back to our CEO, Kiran O'Sullivan.

Thanks, Ashish. We finished the second quarter with sales of $130 million, a decline of 10% from the second quarter of 2023. For the quarter, non-transportation sales were up 4% and transportation sales were down 22% from the same period last year. Sequentially, non-transportation sales were up 11%. Sales to the transportation end market were down 3% versus the first quarter of 2024. Non-transportation sales were 51% of overall company revenue in the second quarter. Our book-to-bill ratio was 0.99 in the second quarter, down from 1.07 in the first quarter of 2024. The book-to-bill ratio reflects some positive improvement in the industrial end market with both OEM and distribution customers on a year-over-year basis and was flat sequentially. Medical bookings were down on a year-over-year basis and up sequentially. Aerospace and defense bookings were up on a year-over-year basis and down sequentially due to the timing of orders. Overall, we continue to monitor the order intake carefully given the challenging global economic environment. While we have seen a sequential improvement in non-transportation sales in the second quarter, the growth rate in the second half of 2024 is expected to be more modest than previously communicated. Second quarter adjusted diluted earnings per share of 54 cents were down 10% euro per year and up 14% sequentially. Ashish will add further color in our financial performance later in today's call. As I mentioned in my opening comments, we acquired SideQuest, a supplier of robust acoustic sensing solutions for naval surface ships, submarines, autonomous underwater vehicles, and torpedoes. The products that SideQuest designs and manufactures include acoustic payloads, transducers, hydrophones, and outboard electronics. Located in Cranston, Rhode Island, SideQuest brings 60 new team members to CTS. This acquisition strengthens our strategy and scale in the defense end market, further advances our diversification strategy, and brings an addressable market of approximately 500 million. Our acquisition of SideQuest is estimated to add 10 to 14 million in revenue in the balance of this year. I'm delighted to welcome Bob Torini and his capable team to CTS. Non-transportation sales continued to improve, increasing 11% sequentially and up 4% in the second quarter compared to the prior year period. In medical markets, sales were up 6% sequentially and 4% from the same period in 2023. We saw mixed signals with some customers performing well and others showing some softness. Bookings in medical were also up sequentially, and we expect continued momentum in the second half. During the quarter, we had a large win for medical therapeutics, multiple wins for diagnostic ultrasound across all regions, and a win for temperature sensing. We added two new customers in the quarter. The first, an important win for a new lead-free application in drug delivery, and the second, a win for a minimally invasive optical application. Aerospace and defense sales were up 33% from the prior year period, and up 41% sequentially. We expect good momentum for the rest of 2024, given the backlog of orders. We received multiple orders for hydrophones, solar buoys, underwater unmanned applications, and RF filters. We continue to gain traction on European defense growth, securing an order for a new submarine program. We expect the long-term prospects for the aerospace and defense end market to be solid given our material formulations and the enhanced capabilities with the addition of SideQuest. In the industrial market, overall sales were up 4% sequentially, as we continue to see a gradual recovery in distribution as well as with OEM sales. Sales were down 6% from the prior year period. Bookings were up year over year and flat sequentially, which is causing us to temper our growth expectations in the second half of 2024. We were successful with several wins in the quarter for industrial printing, EMC components, temperature sensing, flow metering, RF filters, and commercial appliances. We added one new customer in the quarter in test and measurement. While we saw a small sequential improvement in distribution sales and bookings, inventories continued to return to more normal levels and distributor POS remained soft. Looking ahead for the year in non transportation and markets, we expected improvement in industrial and distribution and market revenue in the second half of 2024 but now expect more modest levels of growth. For medical markets, while we anticipate some softness with a few customers, we expect to continue growing in the second half. We also expect to make solid progress on the qualification of products for prospective new customers. Sales to the defense customers are expected to remain solid. Longer term, we expect our material formulations and in-house know-how to continue to support our growth in key high-quality end 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 64.2 million in the second quarter, down approximately 22% from the same period last year, and down 3% sequentially. We continue to experience a softer demand environment for commercial vehicle products in 2024. On the light vehicle front, as I mentioned earlier, we continue to navigate the market share dynamics in China, given the competition between local and transplant OEMs. Additionally, we see demand for light vehicles continue to soften, consistent with most market analysts forecasting reduced build rates. The near-term growth rates for ICE versus EVs and hybrids are less of a concern for us, given our products are mostly agnostic to the drivetrain technology. In the second quarter, we had wins across various product groups, including accelerator modules with OEMs in North America, Europe, and China, We had a sensor win in North America for a chassis ride height application. Across vehicle electrification, we had multiple wins for passive safety applications and a win for current sensing in an off-road application with an existing customer. We continue to see OEMs delay sourcing decisions as they work to correct our powertrain mix given market changes. Our focus on adding new customers is progressing and we expect further traction later this year. Interest in the eBREAK product, offering weight and cost advantages, continues across several OEMs. We expect the eBREAK and other sensor applications will increase our ability to grow content with a potential SAM of greater than one billion. Total booked business was approximately 1.1 billion at the end of the quarter. Turning to our outlook for this year, The North American light vehicle market is expected to be in the 15.5 to 16 million unit range with on-hand days of supply now back to more normal levels. European production is forecasted in the 17 million unit range and showing some softness. China volumes are expected to be in the 28 million unit range. Electric vehicle penetration rates have softened in some regions while hybrid adoption continues to improve. Overall, we anticipate a down market for light vehicle production due to the China market dynamics and other more recent regional build reductions. We expect softness in commercial vehicle-related revenue throughout 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 aerospace and defense end markets. The green shoots we mentioned last quarter in the form of inventory level corrections and improved bookings continue, but we anticipate a softer rate of recovery than we previously expected. Demand in the defense market is expected to remain solid, and we expect continued growth in medical. With industrial OEMs in distribution, we expect a more modest revenue improvement in the near term as inventory levels normalize and POS improves. In terms of guidance for full year 2024, we expect a more moderate growth rate in the second half and are adjusting our prior guidance. We now anticipate sales in the range of 525 million to 540 million and adjusted diluted earnings per share in the range of $2.05 to $2.25, including the expected impact from the SideQuest acquisition. Now I'll turn it over to Ashish who will walk us through the financial results in more detail.