What changed in this filing

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Item 1. Business

2025-02-26 compared with 2024-02-23 · 159 added, 126 removed, 517 unchanged (36% of the section changed)

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Our principal executive offices are located in Lisle, Illinois.

We design, manufacture, and sell a broad line of sensors, connectivity components, and actuators primarily to original equipment manufacturers ("OEMs") and tier one suppliers for the aerospace and defense, industrial, medical, and transportation markets.

We design, manufacture, and sell a broad line of sensors, connectivity components, and actuators primarily to original equipment manufacturers ("OEMs"), tier one suppliers for the aerospace and defense, industrial, medical, and transportation markets, and the U.S.

Our vision is to be a leading provider of sensing and motion devices as well as connectivity components, enabling an intelligent and seamless world.

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We operate manufacturing facilities in North America, Asia, and Europe.

Sales and marketing are accomplished through our sales engineers while also using independent manufacturers' representatives and distributors as an extension of our sales capability.

Sales and marketing are accomplished through our sales engineers.

We also utilize independent manufacturers' representatives and distributors to extend our sales capability.

See the Consolidated Financial Statements and Notes included in Part II, Item 8 of this Annual Report on Form 10-K for financial information regarding the Company.

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The following table identifies major products by industry.

Products are sold to several industry OEMs, tier one suppliers, and distributors.

Products are sold to industry OEMs, tier one suppliers, distributors and the U.S.

Product Description

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% of consolidated net sales

In the above table, net sales to the telecommunications and information technology end markets are included in the industrial end-market for all periods presented.

The end-market sales for 2022 were adjusted by immaterial amounts to align the classification of certain customers in connection with our recent acquisitions with our enterprise-level end market information.

The end market sales for 2022 were adjusted by immaterial amounts to align the classification of certain customers in connection with our acquisitions during that year with our enterprise-level end market information.

MARKETING AND DISTRIBUTION

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In addition, we also utilize the services of independent manufacturers' representatives for customers not serviced directly by our sales engineers.

Independent manufacturers' representatives receive commissions from us.

Independent manufacturers' representatives receive commissions from us in exchange for their services.

During 2024, approximately 4% of net sales were attributable to independent manufacturers' representatives.

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Occasionally, we may need to order raw materials in greater quantities and at higher prices to compensate for the variability of lead times for delivery.

The price and availability of raw materials and manufactured components is subject to change due to, among other things, new laws and regulations, global economic and political events including strikes, and public health and safety concerns.

PATENTS, TRADEMARKS, AND LICENSES

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CTS’s patents cover inventions relating to products that its engineers have designed, as well as for methods and technology related to CTS’s manufacturing processes.

CTS obtained 23 patents in 2023, including four U.S.

patents, 13 patents in Asia, and six patents in Europe.

CTS obtained 21 patents in 2024, including six U.S.

patents, nine patents in Asia, and six patents in Europe.

CTS currently owns approximately 275 patents worldwide including 134 active U.S.

We own seven registered U.S.

CTS also has 57 existing patent applications that are currently being examined in the U.S., Europe, and Asia.

Furthermore, CTS owns seven registered U.S.

trademarks, most of which are also registered in jurisdictions throughout the world.

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Years Ended December 31,

Cummins, Inc.

Toyota Motor Corporation

Cummins, Inc.

We sell parts to these two transportation customers for certain vehicle platforms under purchase agreements that have program lifetime volume estimates and are subject to purchase orders issued from time to time.

No other customer accounted for 10% or more of total net sales during these periods.

We continue to focus on broadening our customer base to diversify our exposure.

Changes in the level of our customers' orders have, in the past, had a significant impact on our operating results.

We continue to focus on broadening our customer base to diversify our business.

Changes in the level of our customers' orders may have a significant impact on our operating results.

If a major customer reduces the amount of business it transacts with us, or substantially changes the terms of that business, there could be an adverse impact on our operating results.

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Most of our product lines encounter significant global competition.

The number of competitors varies from product line to product line.

The number of competitors varies across product line.

No one competitor competes with us in every product line, but some competitors are larger and more diversified than we are.

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operations, though substantial, are normal risks for global businesses.

These risks include currency controls and changes in currency exchange rates, longer collection cycles, political and fulfilment risks, economic downturns and inflation, government regulations, and expropriation.

See “Item 1A.

These risks include currency controls and changes in currency exchange rates, longer collection cycles, political and fulfillment risks, economic downturns and inflation, government regulations, and expropriation.

"Risk Factors” for additional discussion of these and other risks that our business faces.

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HUMAN CAPITAL MANAGEMENT AND OUR CULTURE

CTS is a leading provider of sensing and motion devices as well as connectivity components and we believe our employees are a critical asset to meeting our mission of enabling an intelligent and seamless world.

CTS is a leading provider of sensing and motion devices as well as connectivity components and we believe our employees are a critical asset to supporting our mission of enabling an intelligent and seamless world.

We take great pride in the products we build, and the manner in which we operate as a company and as individuals.

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• Solution Oriented – staying curious and resourceful, understanding and embracing challenges, finding new and better ways to work together

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We have a global business, and our employees reflect the diversity of our geographic footprint.

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North America

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CTS strives to foster an environment where all employees are respected and treated equally.

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This includes the identification of key positions, assessment of internal talent and potential successors and plans for talent acquisition and development.

Each year, employees are expected to have defined performance objectives so that they focus time and resources appropriately, understand their impact to the success of our strategy, and understand how their performance will be assessed.

Each year managers are expected to complete a mid-year and year-end performance evaluations with their employees.

Each year, employees are expected to have defined performance objectives so that they focus time and resources appropriately, understand their impact on the success of our strategy, and understand how their performance will be assessed.

Each year managers are expected to complete mid-year and year-end performance evaluations with their employees.

Employee Compensation

We strive to align compensation with an external group of peer companies in our industry and/or similar to our size while also maintaining consistency and equity within our organization.

We strive to align employee compensation with the median compensation of an external group of peer companies in our industry and/or similar to our size while also maintaining consistency and equity within our organization.

In addition, we offer a broad range of company-paid benefits, which we believe are competitive in our industry.

Our compensation programs are designed to align the compensation of our employees with their performance and to provide the proper incentives to attract, retain and motivate employees to achieve superior results.

We engage with outside consulting firms to benchmark all of our employee compensation and benefits aligning to market median.

Training and Development

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At CTS, we focus our learning and development activities on areas that we believe will most effectively support the achievement of our business objectives.

In the competitive environment in which we operate, employees need to replenish their knowledge and acquire new skills to do their jobs better.

In the competitive environment in which we operate, employees need to replenish their knowledge and acquire new skills.

CTS provides growth and development opportunities through programs such as Education Reimbursement, Situational Leadership, Leadership Essentials, and the Accelerated Leadership Program.

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We recognize that we have a responsibility to be a positive influence in the communities in which we do business around the world, and CTS Cares is the platform that connects CTS employees to the causes that we care about.

We have a rich history of philanthropy and

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community involvement.

We have a rich history of philanthropy and community involvement.

Our employees routinely leverage their individual skills and capabilities to give back to their local communities.

We value and are proud of the contributions that our employees make.

CTS Cares supports our global community.

EXECUTIVE OFFICERS OF THE COMPANY

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President, Chief Executive Officer and Chairman of the Board

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Ashish Agrawal

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Scott D’Angelo

Vice President, General Counsel and Secretary

Vice President, Chief Legal and Administrative Officer and Secretary

Martin Baumeister

Senior Vice President

Pratik Trivedi

Senior Vice President

Kieran O’Sullivan – 62 – President, Chief Executive Officer and Chairman of the Board.

O’Sullivan joined CTS on January 7, 2013.

Before joining CTS, Mr.

O’Sullivan served as Executive Vice President of Continental AG’s Global Infotainment and Connectivity Business and led the NAFTA Interior Division, having joined Continental AG, a global automotive supplier, in 2006.

O’Sullivan is a member of the board of directors of LCI Industries, a supplier of engineered components for manufacturers of recreational vehicles, manufactured homes, marine applications, and for the related aftermarkets, serving as the chairperson of the risk committee, and as a member of the corporate governance, nominating and sustainability and audit committees.

O’Sullivan joined CTS on January 7, 2013 as President and Chief Executive Officer and was appointed Chairman of the Board in May 2014.

Before joining CTS, from 2006 until 2012, Mr.

O’Sullivan served in several executive-level roles with Continental A.G., a global business focused on technology solutions and products for the transportation and mobility industries, first serving as Executive Vice President of the Global Infotainment and Connectivity business and later adding responsibility for its NAFTA Interior Division.

From 2004 until 2006, Mr.

O’Sullivan served as Corporate Vice President of Motorola’s Automotive business.

Since 2015, Mr.

O’Sullivan has been a member of the board of directors of LCI Industries (NYSE:

LCII), a supplier of engineered components for manufacturers of recreational vehicles, manufactured homes, marine applications, and for related aftermarkets, and currently serves as the chair of the risk committee, and as a member of the corporate governance, nominating and sustainability and audit committees.

Ashish Agrawal – 54 – Vice President and Chief Financial Officer.

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Prior to that, Mr.

Agrawal was with General Electric Co.

in various positions beginning in December 1994.

Scott D’Angelo – 53 – Vice President, General Counsel and Secretary.

Agrawal was with General Electric Company in various positions beginning in December 1994.

Scott D’Angelo – 54 – Vice President, Chief Legal and Administrative Officer and Secretary.

D’Angelo joined CTS in February 2021 and was elected General Counsel and Secretary on February 11, 2021.

Prior to joining CTS, Mr.

D’Angelo was a member of the International Commercial and Trade Practice Group of Baker McKenzie, LLP from March 2019, and served as Vice President, Deputy General Counsel & Chief Compliance Officer of Fortune Brands Home & Security, Inc., a leading home and security products company, from May 2015 and, prior to that, served in several senior roles with McDonald’s Corporation.

D’Angelo was a member of the International Commercial and Trade Practice Group of Baker McKenzie, LLP, an international law firm, from March 2019, and served as Vice President, Deputy General Counsel & Chief Compliance Officer of Fortune Brands Home & Security, Inc., a leading home and security products company, from May 2015 and, prior to that, served in several senior roles with McDonald’s Corporation.

Martin Baumeister – 58 – Senior Vice President.

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Immediately prior to joining CTS, Mr.

Baumeister served as Executive Director - Product Line Electronics Americas at Vitesco Technologies since October 2019.

Baumeister served as Executive Director - Product Line Electronics Americas at Vitesco Technologies Group AG, an automotive supplier, since October 2019.

Prior to that role, Mr.

Baumeister served as Executive Director Electronics Americas when Continental separated that subsidiary into an independent entity from July 2018, and served as Executive Director - Global Customer Head from February 2015.

Baumeister served as Executive Director Electronics Americas when Continental AG separated that subsidiary into an independent entity from July 2018, and served as Executive Director - Global Customer Head from February 2015.

Pratik Trivedi – 46 – Senior Vice President.

Trivedi joined CTS on April 29, 2024.

Immediately prior to joining CTS, Mr.

Trivedi served as Vice President, North America for the mobility business of Eaton Corporation plc, a global power management company, since 2017.

Prior to that role, Mr.

Trivedi served in several key roles with Cummins, Inc.

Information with respect to the Company’s Directors and corporate governance policies and practices may be found in our definitive proxy statement to be delivered to shareholders in connection with our 2025 Annual Meeting of Shareholders.

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Investors and others should note that we announce material financial information to our investors using the Investors section of our website ( ctscorp.com/investors ), SEC filings, press releases, public conference calls and webcasts.

We use these channels as well as social media and blogs to communicate with our investors and the public about the Company, our services and other issues.

We use these channels as well as social media and blogs to communicate with our investors and the public about the Company, our services and other matters.

It is possible that the information we post on social media and blogs could be deemed to be material information.

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Although the risks are organized by headings, and each risk is discussed separately, many are interrelated.

You should not interpret the disclosure of any risk factor to imply that the risk has not already materialized.

The risks that are highlighted below are not the only ones that we face.

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Anticipated orders may not materialize, and delivery schedules may be deferred as a result of changes in demand for our products or our customers' products.

We often increase staffing and capacity and incur other expenses to meet the anticipated demand of our customers, which causes reductions in our gross margins if customer orders are delayed or canceled.

On occasion, customers may require rapid increases in production, which may stress our

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resources and reduce margins.

We often increase staffing and capacity and incur other expenses to meet the anticipated demand of our customers, which causes reductions in our gross margin if customer orders are delayed or canceled.

On occasion, customers may require rapid increases in production, which may stress our resources and reduce margins.

We may not have sufficient capacity at any given time to meet our customers' demands.

In addition, because many of our costs and operating expenses are relatively fixed over the short-term, a reduction in customer demand could harm our gross margin and operating income until such time as adjustments can be made to activity and operating levels or to structural costs.

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because many of our costs and operating expenses are relatively fixed over the short term, a reduction in customer demand could harm our gross margin and operating income until such time as adjustments can be made to activity and operating levels or to structural costs.

Deterioration of general economic, political, credit and/or capital market conditions could adversely affect our financial performance, our ability to grow or sustain our business, financial condition and results of operations, and our ability to access the capital markets.

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We may also be required to pay higher prices for raw materials or electronic components due to inflationary trends regardless of supply.

In addition, current proposed or future governmental policies may increase the risk of inflation, which could further increase the costs of raw materials and other components for our business.

The supply and price of our key raw materials and electronic components can be affected by a number of factors beyond our control, including market demand, inflation, alternative sources for suppliers, global geopolitical events, global or regional disease outbreaks or pandemics, trade agreements among producing and consuming nations and governmental regulations (including tariffs).

Similarly, if the costs of goods continue to increase, our suppliers may seek price increases from us.

In addition, current proposed or future governmental policies (including tariffs) may increase the risk of inflation, which could further increase the costs of raw materials and other components for our business.

Similarly, if the cost of goods continue to increase, our suppliers may seek price increases from us.

If we are unable to mitigate the impact of these matters through price increases, cost savings to offset cost increases, hedging arrangements, or other measures, our

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results of operations and financial condition could be adversely impacted.

If our competitors maintain or substantially lower their prices, we may lose customers and mark down prices.

Our profitability may be impacted by prices that do not offset the inflationary pressures, which may impact our gross margins.

If our competitors maintain or substantially lower their prices, we may lose customers or have to reduce prices.

Our profitability may be impacted by prices that do not offset the inflationary pressures, which may impact our gross margin.

Even if we are able to raise the prices of our products, we may not be able to sustain such price increases.

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We sell products to customers in cyclical industries that have experienced economic and industry downturns.

The markets for our products have softened in the past and may again soften in the future.

The markets for our products have softened in the past and may soften in the future.

We may face reduced end-customer demand, underutilization of our manufacturing capacity, changes in our revenue mix and other factors that could adversely affect our results.

A portion of our revenue is derived from the sale of defense-related products through various contracts and subcontracts.

These contracts may be suspended, canceled, or delayed, which could have an adverse impact on our revenues.

We sell products to customers in the aerospace and defense end market.

A portion of these customers operate under contracts with the U.S.

Government, which are vulnerable to termination at any time, for convenience or default.

Some of the reasons for cancellation include, but are not limited to, budgetary constraints or re-appropriation of government funds, timing of contract awards, violations of legal or regulatory requirements, and changes in political agenda.

If cancellations were to occur, it would result in a reduction in our revenue.

Furthermore, significant reductions to defense spending could occur over the next several years due to government spending cuts, which could have a significant adverse impact on us.

For example, delays in sales of products for defense applications and/or push-outs may adversely impact our results of operations, including quarterly earnings.

We are susceptible to trends and factors affecting industries that we serve.

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the degree to which we are able to utilize our available manufacturing capacity;

changes in the cost and availability of components, which often occur in the electronics manufacturing industry and which affect our margins and our ability to meet delivery schedules;

changes in the cost and availability of components, which may occur in the electronics manufacturing industry and which affect our margins and our ability to meet delivery schedules;

general economic and served industry conditions;

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On an ongoing basis we explore opportunities to buy other businesses or technologies that could complement, enhance or expand our current business or product lines or that might otherwise offer us growth opportunities.

For example, during 2022 and 2023, we acquired TEWA Temperature Sensors SP.

(“TEWA”), Meggitt A/S (a/k/a Ferroperm Piezoceramics A/S, “Ferroperm”) and maglab AG ("Maglab").

For example, over the last few years, we have acquired TEWA Temperature Sensors SP.

(“TEWA”), Meggitt A/S (a/k/a Ferroperm Piezoceramics A/S, “Ferroperm”), maglab AG ("Maglab"), and SyQwest, LLC ("SyQwest").

We may have difficulty finding suitable acquisition opportunities or, if we do identify these opportunities, we may not be able to complete the transactions for any number of reasons including a failure to secure financing.

In addition, we may not be able to successfully or profitably integrate, operate, maintain and manage newly acquired businesses such as TEWA, Ferroperm and Maglab, including their operations or employees.

In addition, we may not be able to successfully or profitably integrate, operate, maintain and manage newly acquired businesses such as

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TEWA, Ferroperm, Maglab, and SyQwest including their operations or employees.

Any transactions that we are able to identify and complete may involve a number of risks, including:

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These and other factors could harm our ability to achieve anticipated levels of profitability from acquired operations or realize other anticipated benefits of an acquisition and could adversely affect our business and operating results.

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We have in the past, and may in the future, consider divesting certain business operations.

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We may be unable to compete effectively against competitors.

The industries in which we operate are highly competitive and characterized by price erosion and rapid technological change.

The industries in which we operate are highly competitive and characterized by price erosion and technological change.

We compete against many domestic and foreign companies, some of which have substantially greater manufacturing, financial, research and development, and marketing resources than we do.

If any customer becomes dissatisfied with our prices, quality, or timeliness of delivery, among other things, it could award business to our competitors.

If any customer becomes dissatisfied with our prices, quality, or timeliness of delivery, among other things, they could award business to our competitors.

Moreover, some of our customers could choose to manufacture and develop particular products themselves rather than purchase them from us.

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The introduction of products embodying new technologies and the emergence of new industry standards could render our existing products obsolete and unmarketable before we can recover any or all of our research, development and commercialization expenses, or our capital investments.

Furthermore, the life cycles of our products and the products we manufacture for others vary, may change, and are difficult to estimate.

Furthermore, the life cycles of our products may change and are difficult to estimate.

We may experience difficulties that could delay or prevent the successful development, introduction and marketing of new products or product enhancements and our new products or product enhancements may not adequately meet the requirements of the marketplace or achieve market acceptance.

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Products we manufacture may contain design or manufacturing defects that could result in reduced demand for our products or services and liability claims against us.

Despite our quality control and quality assurance efforts, defects may occur in the products we manufacture due to design or manufacturing errors, supplier quality issues, or component failure.

We maintain high quality control and quality assurance processes.

However, defects may occur in the products we manufacture due to design or manufacturing errors, supplier quality issues, or component failure.

Product defects could result in delayed shipments and reduced demand for our products.

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Product defects could result in product liability claims against us where defects cause, or are alleged to cause, property damage, bodily injury or death.

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As we grow our business, the risk of exposure to product liability litigation increases.

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Our operations are regulated by a number of federal, state, local and foreign government regulations, including those pertaining to environmental, health, and safety (“EHS”) that govern, among other things, air and water emissions, worker protection, and the handling, storage and disposal of hazardous materials.

Compliance with EHS laws and regulations is a major consideration for us because we use

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hazardous materials in our manufacturing processes.

If we violate EHS laws and regulations, we could be liable for substantial fines, penalties, and costs of mandated remedial actions and we could suffer reputational damage due to any such violations.

Compliance with EHS laws and regulations is a major consideration for us because we use hazardous materials in our manufacturing processes.

If we are found to be in violation of EHS laws and regulations, we could be liable for substantial fines, penalties, and costs of mandated remedial actions and we could suffer reputational damage due to any such violations.

Our environmental permits could also be revoked or modified, which could require us to cease or limit production at one or more of our facilities, thereby materially adversely affecting our business, financial condition and operating results.

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Future events, such as the notification of potential liability at new sites, the discovery of additional contamination or changes to an approved remedy at an existing site, changes to existing EHS laws and regulations or their interpretation, and more rigorous regulatory action by government authorities, may require additional expenditures by us, which could have a negative impact on our operations.

Changes in tax, environmental, trade or other regulations or failure to comply with existing licensing, trade and other regulations could cause volatility or have a material adverse effect on our business and financial results.

Future changes to U.S.

or foreign tax and trade policies, impositions of new or increased tariffs, other trade restrictions or other government actions, including any government shutdown, may lead to the continuation or escalation of such risks and uncertainty.

In addition, changes to existing tax laws or the adoption of new tax laws, particularly in the U.S.

and the E.U., could have a material adverse impact on our effective tax rate, future cash tax liabilities and the ability to utilize deferred tax assets.

Changes in tax laws could cause volatility or have a material adverse effect on our business and financial results.

Changes to existing tax laws or the adoption of new tax laws could have a material adverse impact on our effective tax rate, future tax liabilities and the ability to utilize deferred tax assets.

The current economic and political environment may result in significant tax law changes in the numerous jurisdictions in which we operate.

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The final resolution of tax audits and any related litigation can differ from our historical provisions and accruals, resulting in an adverse effect on our financial performance.

Additionally, modifications of laws and policies governing foreign trade and investment, including trade agreements and tariffs such as the United States-Mexico-Canada Agreement, or the European Union-United Kingdom Trade and Cooperating Agreement, could adversely affect our supply chain, business and results of operations.

The implementation of additional tariffs and retaliatory tariffs from trade partners or related uncertainties could further increase the cost of certain of our imported materials, thereby adversely affecting our profitability.

Failure to comply with existing laws and regulations or changes in these laws, regulations, or interpretations thereof, specifically tax and environmental laws or any other laws or regulations could result in the loss, revocation or suspension of our licenses, permits or approvals and could have a material adverse effect on our business, financial condition and results of operations.

Failure to comply with existing laws and regulations or changes in these laws, regulations, or interpretations thereof, specifically tax laws could result in the loss, revocation or suspension of our licenses, permits or approvals and could have a material adverse effect on our business, financial condition and results of operations.

Additionally, uncertainties exist with respect to the interpretation of, and potential future developments in, complex domestic and international tax laws and regulations, the amount and timing of future taxable income and the interaction of such laws and regulations among jurisdictions.

Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded.

Risks Related to Technology and Data Privacy

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Uncertainty over global tariffs and trade policies, or the financial impact of tariffs and trade policies, may negatively affect our results.

Protectionist trade legislation in the United States, the E.U., the U.K., Canada, China or Mexico, such as a change in current tariff structures, export or import compliance laws, or other trade policies could adversely affect our supply chain, business and results of operations.

Similarly, further changes to United States and foreign trade and tax policies, including heightened import restrictions, import and export licenses, new tariffs, trade embargoes, government sanctions, and trade barriers could have a similar impact.

Increased tariffs could require us to increase our prices, which could decrease demand for our products.

In addition, other countries may limit their trade with the United States or retaliate through their own restrictions and/or increased tariffs, which could affect our ability to export products and therefore adversely affect our sales.

Many of these challenges, particularly tariffs, are present, or may arise in commerce with the E.U., China, and Mexico markets in which we operate and with which we do business.

While we believe we have taken steps to mitigate their potential effects, our mitigation activities may prove to be ineffective or detrimental to our business.

There exists substantial uncertainty as to whether such tariffs will be fully implemented or sustained.

There can be no assurances that such tariffs will not be implemented or increased in the future, with the previously mentioned countries or additional countries with which we do business.

The degree to which these changes in U.S.

tariff structures or other trade policy affect our business and results of operations will be influenced by the specific details of the changes in tariffs or other trade policies, their timing and duration, and our effectiveness in deploying tools and strategies to address these issues.

Risks Related to Technology and Data Privacy

We are exposed to, and may be adversely affected by, cybersecurity threats, incidents or other disruptions to our information technology systems and data.

We rely on our information technology systems and networks, including cloud-based systems, in connection with many of our business activities, some of which are managed directly by us, while others are managed by third-party service providers and are not under our direct control.

We rely on information technology systems and networks, including cloud-based systems, in connection with many of our business activities, some of which are managed directly by us, while others are managed by third-party service providers and are not under our direct control.

Our operations routinely involve receiving, storing, processing and transmitting information pertaining to our business, customers, suppliers, employees, and other operations.

We have both an increasing reliance on information technology systems and an increasing digital footprint as a result of changing technologies, connected devices and digital offerings, as well as expanded remote work policies.

If these technologies, systems, products or services are threatened, disputed, damaged, cease to function properly, are compromised due to employee or third-party contractor error, user error, malfeasance, system errors, or other vulnerabilities, technology malfunction, or as the result of events or circumstances of broader geographic impact (e.g., earthquake, storm, flood, epidemic, strike, act of war, civil unrest or terrorist act), or are subject to cybersecurity incidents, such as those involving denial-of-service attacks, ransomware, phishing or social engineering, unauthorized access, malicious software, or other intrusions or disruptions, including by criminals, nation states or insiders, our business may be adversely impacted.

The impacts of any such circumstances could include production downtimes, operational delays, and other impacts on our operations and ability to provide products and services to our customers;

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financial losses from fraudulent transactions, remedial actions, loss of business or potential liability;

adverse media coverage;

and legal claims or legal proceedings, including regulatory investigations, actions and fines;

adverse media coverage or publicity;

legal claims or legal proceedings, including class action and commercial litigation, ransom payments, regulatory investigations, actions and fines;

and damage to our reputation and, as a result, have a material adverse effect on our business operations and financial performance.

Cybersecurity incidents could have a disruptive effect on our business.

From time to time, we and the service providers that we depend on to host our data and support our systems and business operations, are the target of, and periodically respond to, cybersecurity threats, including phishing and denial-of-service attacks, which, if successful, could result in a loss of business or customer information, systems interruption or the disruption of our operations.

From time to time, we and the service providers or other business partners that we depend on to host our data and support or provide our systems and business operations, are the target of, and periodically respond to, cybersecurity threats, including phishing and denial-of-service attacks, which, if successful, could result in a loss of business or customer information, systems interruption or the disruption of our operations, among other things.

The techniques that are used to obtain unauthorized access, disable or degrade service or sabotage systems and data change frequently, have continued to increase in recent years and such efforts may be difficult to detect for long periods of time.

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We have in the past been subject to cybersecurity incidents which have not had a material impact on our business or financial condition and expect that we will be subject to additional cybersecurity incidents in the future.

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We are exposed to risks and costs associated with complying with privacy laws and protecting personal data and other sensitive information.

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and foreign data protection and privacy laws and other contractual obligations, as well as risks associated with the compromise of our systems collecting such information.

Many jurisdictions, including the E.U., the U.K., China and certain states within the U.S., have passed laws that require companies to meet specific requirements regarding the processing, use, and disclosure of personal data.

We collect internal and customer data and other information, including personally identifiable information for a variety of business purposes, including managing our workforce and providing requested products and services.

We could be exposed to investigations, fines, penalties, restrictions, litigation, reputational harm or other expenses, or other adverse effects on our business, due to failure to protect personal data or other sensitive information or failure to maintain compliance with the various U.S.

We collect internal and customer data and other information, including personal data for a variety of business purposes, including managing our workforce and providing requested products and services.

We could be exposed to investigations and regulatory actions, fines, penalties, restrictions, individual, class action, and commercial litigation, reputational harm or other expenses, or other adverse effects on our business, due to failure to protect personal data or other sensitive information or failure to maintain compliance with the various U.S.

and foreign data collection and privacy laws or applicable data security standards.

Failure to keep pace with developments in technology could adversely affect our operations or competitive position.

Failure to keep pace with developments in technology could adversely affect our operations or competitive position and we may be exposed to risks and incur costs associated with maintaining or upgrading our technology and systems.

The technologies and systems we use to operate our business may require refinements and upgrades, and third parties may cease support of systems that are currently in use.

The development and maintenance of these technologies may require significant investment by us.

As various systems and technologies become outdated or new technology is required, we may not be able to replace or introduce them as quickly as needed or in a cost-effective and timely manner.

As various systems and technologies become outdated or new technology is required, we may not be able to replace or introduce them as quickly as needed or in a cost-effective manner.

As a result, our business operations could be disrupted and we could be exposed to cybersecurity threats, adversely affecting our business operations and financial performance.

Because third parties provide us with a number of operational and technical services, third-party cybersecurity incidents could expose us to liability, harm our reputation, damage our competitiveness and adversely affect our financial performance.

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Third parties provide us with certain operational and technical services.

These third parties may have access to our systems, provide hosting services, or otherwise process data about or on behalf of us, our employees or partners.

Any third-party cybersecurity incident could compromise the security, integrity or availability of or result in the theft, unauthorized access or processing, or disruption of access to data, which could negatively impact our operations.

We rely on the internal processes and controls of third-party software and application vendors to maintain the security of all software code, systems, and data provided to or used by or on behalf of the Company.

These third parties may have access to our systems, provide hosting services or other services to support our business, or otherwise process data about or on behalf of us, our employees or partners.

Any cybersecurity incident impacting a third party business partner or service provider could compromise the security, integrity or availability of systems or data, or result in the theft, unauthorized access or processing, or disruption of access to data, which could negatively impact our operations.

We rely on the internal processes and controls of third-party software, systems, and application vendors to maintain the security of all software code, systems, and data provided to or used by or on behalf of the Company.

Any cybersecurity incidents involving third parties on which we rely could negatively affect our reputation, our competitive position and our financial performance, and we could face regulatory scrutiny, investigations, lawsuits and further potential liability .

As we integrate artificial intelligence technologies into our processes, these technologies may present business, compliance and reputational risks.

Recent technological advances in artificial intelligence (“AI”) and machine-learning technology present new opportunities and also pose new risks.

Our introduction of these technologies into our internal processes may result in new or expanded risks and liabilities.

Such risks and liabilities include enhanced governmental or regulatory scrutiny, litigation, compliance issues, ethical concerns, confidentiality or security risks, as well as other factors that could adversely affect our business, reputation, and financial results.

The utilization of AI could also result in loss of intellectual property and subject us to heightened risks related to intellectual property infringement or misappropriation.

The use of AI can lead to unintended consequences, including generating content that is inaccurate, misleading or otherwise flawed, or that results in unintended biases and discriminatory outcomes, which could harm our reputation and expose us to risks related to inaccuracies or errors in the output of such technologies.

Risks Related to Indebtedness and Financing

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Our credit facility contains provisions that could materially restrict our business.

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Our revolving credit facility contains restrictions limiting our ability to:

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Loss, operational disruptions or closure of a key facility, including those of our suppliers, due to unforeseen or catastrophic events or otherwise, could have a material adverse effect on our business and financial results.

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pandemics, and other natural disasters or catastrophic events that damage, disrupt or destroy one of our key facilities or the key facilities of our significant suppliers.

Our business could be interrupted and our financial results could be materially adversely impacted by physical risks such as earthquakes, fires, hurricanes, floods, acts of war, terrorist attacks, cyberattacks and other disruptions in information systems, disease outbreaks or pandemics, and other natural disasters or catastrophic events that damage, disrupt or destroy one of our key facilities or the key facilities of our significant suppliers.

If any of our key facilities or the key facilities of our significant suppliers experience a significant operational disruption or catastrophic loss, it could delay, disrupt or reduce production, shipments and revenue, and result in potentially significant expenses to repair or replace these properties.

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• illness to our employees or their families or governmental restrictions on such employees' ability to travel or perform necessary business functions;

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• as a result of the need for us or our suppliers to operate our respective businesses with substantial modifications to employee travel and employee work locations.

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Unfavorable outcomes of legal or regulatory matters may adversely affect our business and financial condition and damage our reputation.

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We are from time to time involved in or subject to a variety of litigation, claims, legal or regulatory proceedings or matters related to our business, warranty claims, our intellectual property rights, alleged infringement or misappropriation by us of intellectual property rights of others, tax, environmental, privacy, insurance, ERISA and employment matters.

Such matters, even those that are ultimately non-meritorious, can be complex, costly, and highly disruptive to business operations by diverting the attention and energies of management and other key personnel, and may generate adverse publicity that damages our reputation.

Such matters, even those that are ultimately non-meritorious, can be complex, costly, and highly disruptive to our business operations by diverting the attention and energies of management and other key personnel, and may generate adverse publicity that damages our reputation.

The assessment of the outcome of such matters, including our potential liability, if any, is a highly subjective process that requires judgments about future events that are not within our control and are based on the information available to management at that time.

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export license requirements;

trade restrictions;

trade restrictions and tariffs;

earnings repatriation and expatriation restrictions;

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limitations on insurance coverage against geopolitical risks, natural disasters, and business operations;

and communication among and with management of international operations.

and communication among and with management of

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international operations.

In addition, these same factors may also place us at a competitive disadvantage compared to some of our foreign competitors.

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We operate in many parts of the world where strict compliance with Anti-Bribery Laws may conflict with local customs and practices.

We cannot assure you that our internal controls and procedures always will protect us from the detrimental actions by our employees or agents.

If we are found to be liable for violations of Anti-Bribery Laws (either due to our own acts or inadvertence or due to the acts or inadvertence of others), we could suffer from criminal or civil penalties or other sanctions, which could have a material adverse effect on our business.

We cannot assure you that our internal controls and procedures always will protect us from detrimental actions by our employees or agents.

If we are found to be liable for violations of Anti-Bribery Laws (either due to our own acts or inadvertence or due to the acts or inadvertence of others), we could be subjected to criminal or civil penalties or other sanctions, which could have a material adverse effect on our business.

Public health or safety concerns and governmental restrictions that impact the availability of raw materials, labor, or the movement of goods in some of the countries in which we operate could have a material adverse effect on our business, financial condition, and operating results.

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Our inability to protect our intellectual property rights could diminish or eliminate the competitive advantages that we derive from our technology, cause us to lose sales or otherwise harm our business.

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We believe that patents will continue to play an important role in our business.

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Our future success depends on our ability to identify, attract, and retain qualified personnel on a timely basis.

If we were to experience turnover of senior management or if a member of our senior management were to become ill or incapacitated, our stock price, our results of operations, our commercial and supply chain operations and our vendor or customer relationships could each be adversely impacted, and such events may make recruiting for future management positions more difficult.

If we were to experience turnover of senior management or if a member of our senior management were to become ill or incapacitated, our stock price, our results of operations,

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our commercial and supply chain operations and our vendor or customer relationships could each be adversely impacted, and such events may make recruiting for future management positions more difficult.

The labor market for many of our employees is very competitive, and wages and compensation costs continue to increase.

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We may be subject to various legal and business challenges due to actions instituted by shareholder activists or an unsolicited third-party offer.

Perceived uncertainties as to our future direction as a result of shareholder activism may lead to the perception of a change

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in the direction of the business or other instability and may affect our relationships with vendors, customers, prospective and current employees and others.

Perceived uncertainties as to our future direction as a result of shareholder activism may lead to the perception of a change in the direction of the business or other instability and may affect our relationships with vendors, customers, prospective and current employees and others.

Proposed or future laws and regulations may increase the chance we become the target of shareholder activist campaigns, including ESG-related actions.

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Under the most restrictive terms of our credit agreements, our ability to pay cash dividends on our common stock is limited, as described under “Risks Related to Indebtedness and Financing.” There can be no assurance that we will continue to pay dividends in the future.

We may not continue to repurchase our common stock or make repurchases our common stock at favorable prices.

In February 2024, our Board of Directors approved a new share repurchase program that authorizes the Company to repurchase up to $100 million of its common stock.

We may not continue to repurchase our common stock or make repurchases of our common stock at favorable prices.

In February 2024, our Board of Directors approved a share repurchase program that authorizes the Company to repurchase up to $100 million of its common stock.

Any purchases will depend on a number of factors, including our evaluation of general market and economic conditions, our financial condition and the trading price of our common stock.

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We can provide no assurance that we will repurchase our common stock at favorable prices, or at all.

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On August 16, 2022, the Inflation Reduction Act of 2022 (“Inflation Reduction Act”) was enacted.

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The Company’s cybersecurity risk management strategy is comprised of several key elements.

We assess our information technology and data management/storage systems and related policies and practices and to help guide and prioritize our cybersecurity and information technology-related investments, activities and risk management strategy.

We assess our information technology and data management/storage systems and related policies and practices to help guide and prioritize our cybersecurity and information technology-related investments, activities and risk management strategy.

We leverage a variety of technologies to attempt to mitigate the risk of cybersecurity threats and incidents.

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From time to time, we use third-party service providers and software to augment and test our technology solutions and further support our risk mitigation strategy.

Further, the Company maintains processes to oversee and identify material risks from cybersecurity threats associated with its use of third-party service providers.

CTS uses a managed security services provider (MSSP) and other technologies to collect alerts and security audit logs, monitor and assess cybersecurity threat intelligence, and take actions to help us prevent, detect, mitigate and remediate cybersecurity incidents.

We have a cybersecurity training program that covers a variety of topics designed to educate our employees about the importance of cybersecurity awareness, highlight typical cybersecurity-related risks and issues (such as phishing attacks and other methods used to attempt to infiltrate our systems) and test that awareness using knowledge assessments and simulations.

The training is administered to employees on a rolling basis, and we use a third-party provider for the content periodically update the training to incorporate new cybersecurity-related developments.

The training is administered to employees on a rolling basis, and we use a third-party provider for the content and periodically update the training to incorporate new cybersecurity-related developments.

The oversight of our cybersecurity risk is integrated into our enterprise-wide risk management process.

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Like many other companies, from time to time, we detect attempts by third parties to gain access to our systems and networks, and the frequency of such attempts could increase in the future.

As of the date of this Annual Report on Form 10-K, we are not aware of any cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company, including its business strategy, results of operations or financial condition.

However, there can be no assurance that our efforts to prevent or mitigate

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cybersecurity incidents will be successful.

As of the date of this Annual Report on Form 10-K, we are not aware of any cybersecurity threats, including as a result of previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect the Company , including its business strategy, results of operations or financial condition.

However, there can be no assurance that our efforts to prevent or mitigate cybersecurity incidents will be successful.

Please see “Risks Related to Technology and Data Privacy” in “Risk Factors” in Section 1A of this Annual Report on Form 10-K.

Our cybersecurity program is overseen by a Vice President of IT & Digitization and information technology team (collectively, the “IT Team”) responsible for identifying, assessing, monitoring, managing and communicating the Company’s cybersecurity risks.

The IT team includes members with experience developing and implementing enterprise-wide cybersecurity strategies and initiatives, managing risks relating thereto, and evaluating industry standards and regulations.

Our cybersecurity program is overseen by our Vice President of IT & Digitization, who has over 14 years of experience working in various information technology roles and has managed and evolved the cybersecurity function at CTS for the past three years.

Our Vice President of IT & Digitization is supported by a team of enterprise information system and security risk professionals (collectively, the “IT Team”), who are responsible for identifying, assessing, monitoring, managing and communicating the Company’s cybersecurity risks.

The IT Team includes a cybersecurity leader with over 30 years of experience in IT infrastructure, IT operations and cybersecurity, and members who hold Certified Information Systems Security Professional (CISSP) and Certified Information System Auditor (CISA) certifications and have experience developing and implementing enterprise-wide cybersecurity strategies and initiatives, managing risks relating thereto, and evaluating industry standards and regulations.

While our Board has the ultimate oversight responsibility for the risk management process, the Audit Committee is responsible for oversight of our cybersecurity strategy and risks.

The Audit Committee is provided with quarterly and as needed updates on the Company’s cybersecurity strategy and risks.

In addition, the Board is provided with an annual cybersecurity update that addresses similar topics to those discussed with the Audit Committee on a quarterly basis.

In the event of a reported potential cybersecurity incident, our IT Team decides whether such incident triggers our Cybersecurity Threat Evaluation and Response Plan (the “Response Plan”).

The Vice President of IT & Digitization and other members of management provide t he Audit Committee with quarterly and as needed updates on the Company’s cybersecurity strategy and risks.

In addition, the Board

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is provided with an annual cybersecurity update that addresses similar topics to those discussed with the Audit Committee on a quarterly basis.

In the event of a reported potential cybersecurity incident, our IT Team decides whether such an incident triggers our Cybersecurity Threat Evaluation and Response Plan (the “Response Plan”).

If triggered, the Company’s cybersecurity response team, as needed under the circumstances (the “Cyber Response Team”), is convened.

Members of the Cyber Response Team, as appropriate and as set forth in the Response Plan, are responsible for developing, recommending and implementing measures to address the cybersecurity incident, including when appropriate, assessing, containing and mitigating its impact, notifying members of the Company’s management, the Audit Committee and the full Board of the cybersecurity incident, and coordinating external communications, in each case as appropriate under the circumstances.

The IT Team is responsible for implementing and monitoring the effectiveness of any remediation plan adopted as a result of the cybersecurity incident.

The IT Team is responsible for implementing and monitoring the effectiveness of any remediation plan adopted as a result of a cybersecurity incident.

As of December 31, 2024, we had manufacturing facilities, administrative, research and development and sales offices in the following locations:

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Calamba, Philippines

Cranston, Rhode Island

Kaohsiung, Taiwan

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(2) Land Use Rights Agreement through 2050 includes transfer, lease and mortgage rights.

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A small portion of the China, Czech Republic, and Denmark locations above also maintain sales offices.

Selected China, Czech Republic, and Denmark locations above also maintain sales offices.

Non-Manufacturing Facilities

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Brownsville, Texas

El Paso, Texas

Office and Warehouse

Elkhart, Indiana

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Farmington Hills, Michigan

Hopkinton, Massachusetts

Idle facility

Juarez, Mexico

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Matamoros, Mexico

Warehouse and administrative offices

Administrative offices

Nagoya, Japan

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Warehouse and administrative offices

Rüsselsheim, Germany

Administrative and sales office

Tecate, Mexico

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Administrative, sales and research offices

(1) These facilities relate to the ongoing restructuring activities involving the Juarez and Matamoros site consolidation..

(1) This facility relates to the ongoing restructuring activities involving the Juarez and Matamoros site consolidation.

We regularly assess our facilities for manufacturing capacity, available labor, and proximity to our markets and major customers.

Management believes our manufacturing facilities are suitable and adequate and have sufficient capacity to meet our current needs including approximately 1 million square feet of manufacturing and 750 thousand square feet of non-manufacturing spaces.

Management believes our manufacturing facilities are suitable and adequate and have sufficient capacity to meet our current needs.

The extent of utilization varies from plant to plant and with economic conditions.

We also review the operating costs of our facilities and may from time-to-time relocate a portion of our manufacturing activities in order to reduce operating costs and improve asset utilization and cash flow.

We also review the operating costs of our facilities and

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may from time-to-time relocate a portion of our manufacturing activities in order to reduce operating costs and improve asset utilization and cash flow.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business