CTS CORP 10-K

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section of this Annual Report on Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Annual Report on Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Overview CTS Corporation ("CTS", "we", "our" or "us") is a leading designer and manufacturer of products that Sense, Connect and Move. Our vision is to be a leading provider of sensing and motion devices as well as connectivity components, enabling an intelligent and seamless world. These devices are categorized by their ability to Sense, Connect or Move. Sense products provide vital inputs to electronic systems. Connect products allow systems to function in synchronization with other systems. Move products ensure required movements are effectively and accurately executed. We are committed to achieving our vision by continuing to invest in the development of products, technologies and talent within these categories. We manufacture sensors, actuators and connectivity components in North America, Europe, and Asia. CTS provides highly engineered products to OEMs and tier one suppliers in the aerospace and defense, industrial, medical, and transportation markets, and the U.S. Government. There is an increasing proliferation of sensing and motion applications within various markets we serve. In addition, the increasing connectivity of various devices to the internet results in greater demand for communication bandwidth and data storage, increasing the need for our connectivity products. Our success is dependent on the ability to execute our strategy to support these trends. We are subject to challenges including periodic market softness, competition from other suppliers, changes in technology, and the ability to add new customers, launch new products or penetrate new markets. Results of Operations: Year Ended December 31, 2025 versus Year Ended December 31, 2024 (Amounts in thousands, except percentages and per share amounts): The following table highlights changes in significant components of the Consolidated Statements of Earnings for the years ended December 31, 2025, and December 31, 2024: Years Ended December 31, Percent of Net Sales 2025 2024 Percent Change 2025 2024 Net sales $ 541,318 $ 514,756 5.2 % 100 % 100 % Cost of goods sold 333,292 327,201 1.9 61.6 63.6 Gross margin 208,026 187,555 10.9 38.4 36.4 Selling, general and administrative expenses 98,720 88,285 11.8 18.2 17.2 Research and development expenses 25,268 23,388 8.0 4.7 4.5 Restructuring charges 1,396 4,697 (70.3 ) 0.3 0.9 Total operating expenses 125,384 116,370 7.7 23.2 22.6 Operating earnings 82,642 71,185 16.1 15.3 13.8 Total other income (expense), net 1,129 (2,604 ) (143.4 ) 0.2 (0.5 ) Earnings before taxes 83,771 68,581 22.1 15.5 13.3 Income tax expense 18,454 13,109 40.8 3.4 2.5 Net earnings $ 65,317 $ 55,472 17.7 % 12.1 % 10.8 % Diluted earnings per share: Diluted net earnings per share $ 2.19 $ 1.81 Net sales were $541,318 for the year ended December 31, 2025, an increase of $26,562, or 5.2%, from 2024. Net sales to the diversified end markets increased $42,998, or 16.3%. We achieved growth in the aerospace & defense and medical end markets and saw continued recovery in the industrial end market. The acquisition of SyQwest, LLC ("SyQwest") added net sales of $22,329 and $13,433 in 2025 and 2024, respectively. Net sales to the transportation end market decreased $16,436 or 6.6%, primarily driven by lower volumes of our commercial vehicle related products and our customers' loss of market share in China. Gross margin was $208,026 for the year ended December 31, 2025, an increase of $20,471, or 10.9%, from the year ended December 31, 2024. The increase in gross margin was primarily driven by continued operational improvements and an improved mix of sales by end market. CTS CORPORATION 26 Table of Contents Selling, general and administrative ("SG&A") expenses were $98,720, or 18.2% of sales for the year ended December 31, 2025, versus $88,285 or 17.2% of sales in 2024. The increase in SG&A expenses was primarily driven by higher amortization expense in 2025 from the SyQwest acquisition and a one-time charge related to the potential settlement of prior period costs with the U.S. Environmental Protection Agency (the "EPA"). Research and development expenses were $25,268, or 4.7% of sales in 2025, compared to $23,388, or 4.5% of sales in 2024. We continue to invest in research and product development to drive long-term organic growth. Restructuring charges were $1,396, or 0.3% of net sales in 2025, compared to $4,697, or 0.9% of net sales in 2024. The restructuring charges in the year ended December 31, 2025 were primarily related to changes to adjust our business in response to demand changes across certain locations and products. See Note 9, “Costs Associated with Exit and Restructuring Activities,” in the Notes to the Consolidated Financial Statements in this Annual Report on Form 10-K for further information. Other income and expense items are summarized in the following table: Years Ended December 31, 2025 2024 Interest expense $ (4,309 ) $ (4,236 ) Interest income 2,134 4,282 Other income (expense), net 3,304 (2,650 ) Total other income (expense), net $ 1,129 $ (2,604 ) Interest income decreased due to lower investments of available cash as a result of the SyQwest acquisition. Other income for 2025 is driven by foreign currency translation gains primarily related to the Euro and Mexican Peso, and a prior period adjustment recorded related to the SyQwest acquisition. See Note 1 “Summary of Significant Accounting Policies” in the Notes to the Condensed Consolidated Financial Statements in this Annual Report on Form 10-K for further information. Years Ended December 31, 2025 2024 Effective tax rate 22.0% 18.4% The effective income tax rate in 2025 was 22.0% compared to 18.4% in the prior year. The increase in the effective income tax rate is primarily attributable to a change in mix of earnings taxed at higher rates and the impact of the One Big Beautiful Bill Act (the "OBBBA"). See Note 19 “Income Taxes” in the Notes to the Condensed Consolidated Financial Statements in this Annual Report on Form 10-K for further information. Liquidity and Capital Resources We have historically funded our capital and operating needs primarily through cash flows from operating activities, supported by available credit under our Revolving Credit Facility (as defined below). We believe that cash flows from operating activities and available borrowings under our Revolving Credit Facility will be adequate to fund our working capital needs, capital expenditures, investments, and debt service requirements for at least the next twelve months and for the foreseeable future thereafter. However, we may choose to pursue additional equity and debt financing to provide additional liquidity or to fund acquisitions. Cash and cash equivalents were $82,295 at December 31, 2025 and $94,334 at December 31, 2024, of which $75,943 and $92,944, respectively, were held in our foreign affiliates. Total debt as of December 31, 2025 and December 31, 2024 was $57,500 and $92,300, respectively. Cash Flows from Operating Activities Net cash provided by operating activities was $102,105 during the year ended December 31, 2025. Components of net cash provided by operating activities included net earnings of $65,317, depreciation and amortization expense of $34,538, other net non-cash items totaling $750, and a net cash inflow from changes in assets and liabilities of $3,694 primarily driven by increases in accrued expenses and other liabilities, accounts payable and accrued payroll partially offset by an increase in accounts receivable. Net cash provided by operating activities was $98,242 during the year ended December 31, 2024. Components of net cash provided by operating activities included net earnings of $55,472, depreciation and amortization expense of $30,922, other net non-cash items totaling $2,907, and a net cash inflow from changes in assets and liabilities of $8,941 primarily driven by reductions in inventories. CTS CORPORATION 27 Table of Contents Cash Flows from Investing Activities Net cash used in investing activities for the year ended December 31, 2025 was $18,514, driven by capital expenditures of $15,731 and contributions to short-term investments of $2,783. Net cash used in investing activities for the year ended December 31, 2024 was $140,556, driven by $121,912 of acquisition payments for the SyQwest acquisition and capital expenditures of $18,644. See Note 3, "Business Acquisitions," in the Notes to the Consolidated Financial Statements in this Annual Report on Form 10-K. Cash Flows from Financing Activities Net cash used by financing activities for the year ended December 31, 2025, was $98,438. The net cash outflow was the result of debt payments net of borrowings of $34,800, treasury stock purchases of $56,178, dividend payments of $4,750, and taxes paid on behalf of equity award participants of $2,710. Net cash used by financing activities for the year ended December 31, 2024, was $26,888. The net cash outflow was the result of treasury stock purchases of $42,596, dividend payments of $4,885, and taxes paid on behalf of equity award participants of $3,131 and contingent consideration payments of $1,076, partially offset by borrowings net of payments of $24,800. Capital Resources Long-term debt was comprised of the following: As of December 31, 2025 2024 Total credit facility availability $ 300,000 $ 400,000 Balance outstanding 57,500 92,300 Standby letters of credit 1,640 1,640 Amount available, subject to covenant restrictions $ 240,860 $ 306,060 Weighted-average interest rate 5.48 % 6.41 % On November 24, 2025, we entered into a new five-year revolving credit agreement (the “Revolving Credit Facility”) with a group of banks for a total credit facility availability of $300,000 which may be increased by up to $125,000, subject to the administrative agent's approval. The new Revolving Credit Facility matures on November 24, 2030 and modified the financial and non-financial covenants to provide the Company additional flexibility. The new Revolving Credit Facility is unsecured and replaced the prior $400,000 revolving credit facility, which would have expired on December 15, 2026. Borrowings in U.S. dollars under the Revolving Credit Facility bear interest, at a per annum rate equal to the applicable Term SOFR rate (but not less than 0.0%), plus the Term SOFR adjustment, and plus an applicable margin, which ranges from 1.00% to 1.75%, based on our net leverage ratio. Similarly, borrowings of alternative currencies under the Revolving Credit Facility bear interest equal to a defined risk-free reference rate, plus the applicable risk-free rate adjustment and plus an applicable margin, which ranges from 1.00% to 1.75%, based on our net leverage ratio. We use interest rate swaps to convert a portion of our Revolving Credit Facility's outstanding balance from a variable rate of interest to a fixed rate. The contractual rate of these arrangements ranges from 1.49% to 2.45%. The Revolving Credit Facility includes a swing line sublimit of $20,000, a letter of credit sublimit of $20,000 and an alternative currency sublimit of $150,000. We also pay a quarterly commitment fee on the unused portion of the Revolving Credit Facility. The commitment fee ranges from 0.175% to 0.25% based on our net leverage ratio. We were in compliance with all debt covenants at December 31, 2025. Our liquidity, access to capital, and borrowing costs could be adversely impacted by declines in our credit quality, our financial performance, and global credit market conditions, as well as a broad range of other factors. In addition, we have $75,943 of foreign cash balances and our ability to repatriate these funds timely and in a tax efficient manner may be restricted. See Item 1A. "Risk Factors” for additional discussion of risks that our business faces. As of December 31, 2025, our material cash requirements for our known contractual and other obligations were as follows: • Long-term debt, including interest – Outstanding principal on our Revolving Credit Facility was $57,500 at December 31, 2025, with no amounts payable within 12 months. Additionally, we have minimum contractual future interest payments on our hedged borrowings under our Revolving Credit Facility estimated to be $12,035 through maturity, with approximately $2,721 payable within 12 months based on the December 31, 2025 exchange rate. We may paydown certain portions of these obligations early. As of December 31, 2025, we had interest rate swaps that fix interest costs on $50,000 of our long-term debt through December 2026 and a cross-currency swap on $7,500 of our long-term debt through June 2027. See Note 13, “Debt,” and Note 14, “Derivatives,” in the Notes to the Consolidated Financial Statements in this Annual Report on Form 10-K for further details of our debt and hedging activities. CTS CORPORATION 28 Table of Contents • Operating lease payments – We enter into various noncancelable lease agreements for land, buildings and equipment used in our operations. Operating lease obligations were $25,294 with $3,453 payable within 12 months. See Note 12, “Leases,” in the Notes to the Consolidated Financial Statements in this Annual Report on Form 10-K for further detail of our obligations and the timing of expected future payments. • Retirement obligations – Expected future contributions relating to our defined benefit postretirement plans were $3,178, with $421 payable in 12 months. See Note 7, “Retirement Plans,” in the Notes to the Consolidated Financial Statements in this Annual Report on Form 10-K for further detail of our obligations and the timing of expected future payments. We have no off-balance sheet arrangements that have a material current effect or are reasonably likely to have a material future effect on our financial condition or changes in our financial condition. Acquisitions On July 29, 2024, we acquired 100% of the outstanding membership interests of SyQwest for $121,912 in cash subject to additional earnout payments based on future performance. The acquisition was funded from both cash on hand and borrowings under our previous revolving credit facility. Critical Accounting Policies and Estimates The Securities and Exchange Commission ("SEC") has defined a company’s critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and results of operations, and which require a company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified the critical accounting policies and judgments addressed below. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates. Goodwill, Intangibles and Other Long-Lived Assets Purchase Accounting We use the acquisition method of accounting to allocate costs of acquired businesses to the assets acquired and liabilities assumed based on their estimated fair values at the dates of acquisition. The excess costs of acquired businesses over the fair values of the assets acquired and liabilities assumed are recognized as goodwill. The valuations of the acquired assets and liabilities assumed will impact the determination of future operating results. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, revenue growth rates, discount rates, customer attrition rates, asset lives, contributory asset charges, and market multiples, among other items. We determine the fair values of intangible assets acquired generally in consultation with third-party valuation advisors. Intangible assets other than goodwill are recognized if the benefit of the intangible asset is obtained through contractual or other legal rights, or if the intangible asset can be sold, transferred, licensed or exchanged, regardless of the Company’s intent to do so. Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. Impairment Assessment – Goodwill Goodwill of a reporting unit is tested for impairment on the first day of its fiscal fourth quarter, or more frequently if an event occurs or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying amount. Examples of such events or circumstances include, but are not limited to, the following: • Significant decline in market capitalization relative to net book value, • Significant adverse change in regulatory factors or in the business climate, • Unanticipated competition, • More-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or otherwise disposed of, • Testing for recoverability of a significant asset group within a reporting unit, and • Allocation of a portion of goodwill to a business to be disposed. If we believe that one or more indicators of impairment have occurred, we perform an impairment test. CTS CORPORATION 29 Table of Contents We have the option to perform a qualitative assessment (commonly referred to as a "step zero" test) to determine whether further quantitative analysis for impairment of goodwill and indefinite-lived intangible assets is necessary. The qualitative assessment includes a review of macroeconomic conditions, industry and market considerations, internal cost factors, and our own overall financial and share price performance, among other factors. If, after assessing the totality of events or circumstances we determine that it is not more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, we do not need to perform a quantitative analysis. If a quantitative assessment is required, we estimate the fair value of each reporting unit using a combination of discounted cash flow analysis and market-based valuation methodologies. Determining fair value using a quantitative approach requires significant judgment, including judgments about projected revenues, cash flows over a multi-year period, discount rates and estimated valuation multiples. The discount rate applied to our forecasts of future cash flows is based on our estimated weighted average cost of capital. In assessing the reasonableness of our determined fair values, we evaluate our results against our market capitalization. Changes in these estimates and assumptions could materially affect the determination of fair value and impact the goodwill impairment assessment. For 2025, we elected to perform the qualitative assessment on two of our reporting units, and the quantitative assessment on our third reporting unit. Based upon our latest assessment, we determined that our goodwill was not impaired as of October 1, 2025. We will monitor future results and will perform a test if indicators trigger an impairment review. Impairment Assessment – Other Intangible Assets and Other Long-Lived Assets We evaluate the impairment of identifiable intangibles and other long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors considered that may trigger an impairment review consist of, but are not limited to, the following: • Significant decline in market capitalization relative to net book value, • Significant underperformance relative to expected historical or projected future operating results, • Significant changes in the manner of use of the acquired assets or the strategy for the overall business, and • Significant negative industry or economic trends. If we believe that one or more indicators of impairment have occurred, we perform a recoverability test by comparing the carrying amount of an asset or asset group to the sum of the undiscounted cash flows expected to result from the use and the eventual disposition of the asset or asset group. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value. Income Taxes Our income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect management’s best estimate of current and future taxes to be paid. We are subject to income taxes in the United States and numerous foreign jurisdictions. Significant judgments and estimates are required in the determination of our consolidated income tax provision. Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. In evaluating our ability to recover our deferred tax assets in the jurisdictions from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations. The assumptions about future taxable income require the use of significant judgment and are consistent with the plans and estimates we are using to manage our underlying businesses. The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across our global operations. Accounting Standards Codification (“ASC”) 740 states that a tax benefit from an uncertain tax position may be recognized when it is more-likely-than-not that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, on the basis of its technical merits. We record unrecognized tax benefits as liabilities in accordance with ASC 740 and adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available. Revenue Recognition We recognize revenue in accordance with the Financial Accounting Standards Board’s (“FASB”) ASC 606, Revenue from Contracts with Customers, net of estimated reserves. Our revenue reserves contain uncertainties because they require management to make assumptions and to apply judgment to estimate the value of future credits to customers for price adjustments. We base these estimates on the most likely value method considering all reasonably available information, including our historical experience and current expectations, and are reflected in the transaction price when sales are recorded. CTS CORPORATION 30 Table of Contents Revenue is recognized as performance obligations are satisfied and the customer obtains control of the products. A portion of our contracts allow the customers to unilaterally terminate the contract for convenience, take control of any work in process, and pay us for costs incurred plus a reasonable profit. Revenue from these contracts is generally recognized over time as the work progresses, either as products are produced or services are rendered, because we generally do not have an alternative use for the completed assets produced and we have an enforceable right to payment for performance completed to date. Significant estimates and assumptions are made in estimating total revenues, costs, and profit for each performance obligation. We generally estimate revenue for these contracts using the costs incurred by the Company as we have determined that this method is the most representative of the Company's cumulative efforts relative to the total expected efforts to satisfy the performance obligations. These estimates require significant judgment and are subject to change during the performance of the contract and may affect contract profitability. Product Warranties Provisions for estimated warranty expenses are made at the time products are sold. The expense and corresponding accrual primarily relate to our products sold to our transportation market. These estimates are established using a quoted industry rate and are based on customer specific circumstances. We adjust our warranty reserve for any known or anticipated warranty claims as new information becomes available. We evaluate our warranty obligations at least quarterly and adjust our accruals if it is probable that future costs will be different than our current reserve. Over the last three years, product warranty reserves have ranged from 0.3% to 0.4% of net sales. We believe our reserve level is appropriate considering all facts and circumstances surrounding any outstanding quality claims and our historical experience selling our products to our customers. Inventories We value our inventories at the lower of the actual cost to purchase or manufacture using the first-in, first-out ("FIFO") method, or net realizable value. We review inventory quantities on hand and record a provision for excess and obsolete inventory based on historical consumption trends as well as forecasts of product demand including related production requirements. Once reserves are established, write-downs of inventory are considered permanent adjustments to the cost basis of inventory. Our reserves contain uncertainties because the calculation requires management to make assumptions and to apply judgment regarding historical experience, market conditions, and product life cycles. Changes in actual demand or market conditions could adversely impact our reserve calculations. Over the last three years, our reserves for excess and obsolete inventories have ranged from 17.4% to 20.7% of gross inventory. We believe our reserve level is appropriate considering the quantities and quality of the inventories. Environmental Contingencies U.S. GAAP requires a liability to be recorded for contingencies when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. We record environmental contingent loss accruals on an undiscounted basis. Significant judgment is required to determine the existence and amounts of our environmental liabilities. We regularly consult with attorneys and consultants to determine the relevant facts and circumstances before we record a liability. Changes in the estimates on which the accruals are based, unanticipated government enforcement action, or changes in health, safety, environmental, and chemical control regulations and testing requirements could, and have, resulted in higher or lower costs. Recent Accounting Pronouncements The information set forth under Note 1, "Summary of Significant Accounting Policies," in the Notes to the Consolidated Financial Statements in this Annual Report on Form 10-K is incorporated herein by reference. Item 7A. Quantitative and Qualita tive Disclosures About Market Risk (in thousands, except percentages) Our cash flows and earnings are subject to fluctuations resulting from changes in foreign currency exchange rates, interest rates and commodity prices. We manage our exposure to these market risks through internally established policies and procedures and, when deemed appropriate, through the use of derivative financial instruments. Our policies do not allow speculation in derivative instruments for profit or execution of derivative instrument contracts for which there are no underlying exposures. We do not use financial instruments for trading purposes, and we are not a party to any leveraged derivatives. We monitor our underlying market risk exposures on an ongoing basis and believe that we can modify or adapt our hedging strategies as needed. CTS CORPORATION 31 Table of Contents Interest Rate Risk We are exposed to risk of changes in interest rates on our Revolving Credit Facility. There was $57,500 and $92,300 outstanding under our Revolving Credit Facility at December 31, 2025 and 2024, respectively. As of December 31, 2025, we had interest rate swaps that fix interest costs on $50,000 of our long-term debt through December 2026 and a cross-currency interest rate swap on $7,500 of our long-term debt through June 2027. A 100-basis point change in interest rates would not materially impact our total interest expense. Foreign Currency Risk We are exposed to foreign currency exchange rate risks. Our significant foreign subsidiaries are located in China, Czech Republic, Denmark, Mexico, and Taiwan. During 2025, net sales from outside the U.S. were approximately 44% of total net sales. During 2024, net sales from outside the U.S. were approximately 42% of total net sales. The Company’s foreign exchange exposures result primarily from the sale of products in foreign currencies, foreign currency denominated purchases, and employee-related and other costs of running operations in foreign countries. Changes in foreign exchange rates could affect the Company’s sales, costs, balance sheet values and earnings; therefore, we have entered into foreign currency forward contracts with notional values of $17,239 and $45,331 as of December 31, 2025 to hedge our exposure against the Euro and Mexican Peso, respectively. In addition, we entered into a cross-currency interest rate swap agreement on June 27, 2022 that synthetically swapped $25,000 of variable rate debt to Krone denominated variable rate debt. Upon completion of the Ferroperm acquisition on June 30, 2022, the transaction was designated as a net investment hedge for accounting purposes and will mature on June 30, 2027. Accordingly, any gains or losses on this derivative instrument will be included in the foreign currency translation component of other comprehensive income until the net investment is sold, diluted or liquidated. Interest payments received for the cross currency-swap interest rate swap are excluded from the net investment hedge effectiveness assessment and are recorded in interest expense in the Condensed Consolidated Statements of Earnings. The assumptions used in measuring fair value of the cross-currency interest rate swap are considered level 2 inputs, which are based upon the Krone to United States Dollar exchange rate market. At December 31, 2025, we had a net unrealized loss of $1,719 in accumulated other comprehensive income (loss). Commodity Price Risk Many of our products require the use of raw materials that are produced in only a limited number of regions around the world or are available from only a limited number of suppliers. Our most significant raw materials and purchased components include conductive inks and contactors, passive connectivity components, integrated circuits and semiconductors, certain rare earth elements ("REEs"), ceramic powders, plastic components, molding compounds, printed circuit boards and assemblies, quartz blanks and crystals, wire harness assemblies, copper, brass, silver, gold, platinum, lead, aluminum, titanium and steel-based raw materials and components. Our results of operations may be materially and adversely affected if we have difficulty obtaining these raw materials, the quality of available raw materials deteriorates, or there are significant price increases for these raw materials. For periods in which the prices of these raw materials are rising, we may be unable to pass on the increased cost to our customers, which would result in decreased margins for the products in which they are used. For periods in which the prices are declining, we may be required to write down our inventory carrying cost of these raw materials, since we record our inventory at the lower of cost or net realizable value. As the Company is exposed to significant changes in these commodity prices, we actively monitor these exposures and may take various actions from time to time to mitigate any negative impacts relating thereto. CTS CORPORATION 32 Table of Contents Item 8. Financial Stateme nts and Supplementary Data REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Shareholders CTS Corporation Opinion on the financial statements We have audited the accompanying consolidated balance sheets of CTS Corporation (an Indiana corporation) and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of earnings, comprehensive earnings, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedules included under Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 24, 2026 expressed an unqualified opinion. Basis for opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical audit matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or are required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Over time revenue recognition – estimation of costs at completion As described in Note 2 to the consolidated financial statements, the Company has certain customer contracts that allow the customers to unilaterally terminate the contract for convenience, take control of any work in process, and pay the Company for costs incurred plus a reasonable profit. Revenue from these contracts is generally recognized over time as the work progresses, either as products are produced or services are rendered, because the Company does not have an alternative use for the completed assets produced, and the Company has an enforceable right to payment for performance completed to date. The accounting for these contracts requires significant management judgment with respect to the estimation of costs at completion for each performance obligation. We have identified the Company’s estimation of costs at completion for its over time revenue contracts as a critical audit matter. The principal consideration for our determination that the estimation of costs at completion is a critical audit matter is the significant degree of management judgment required to evaluate the estimated labor and material costs for each contract, which are assumptions with a high level of estimation uncertainty and susceptibility to potential management bias. CTS CORPORATION 33 Table of Contents Our audit procedures related to the critical audit matter included the following, among others. We tested the Company’s assumptions for labor hours and materials to be incurred for a selection of in-process contracts as follows: • Inspected a sample of underlying contracts to obtain an understanding of the contractual requirements and deliverables and the nature of the costs necessary to fulfill those contracts; • Agreed a sample of actual labor and material costs incurred to supporting documentation, verifying the costs were accurate and classified to the appropriate contracts; • Recalculated revenue recognized to date through comparison of actual costs incurred to date as a percentage of the estimated total contract costs at completion, and applied that percentage to the underlying contract price; and • Evaluated the Company’s ability to accurately estimate costs at completion through 1) an evaluation of the competence and experience of the key operational executive who is responsible for developing the estimated costs at completion and 2) the selection of completed contracts in order to compare the Company’s initial estimated costs and profit margin to the actual costs and profit margin at the completion of the contracts. Quantitative goodwill impairment assessment The Company’s consolidated goodwill balance was $209.6 million as of December 31, 2025. As described in Note 1 and Note 8 to the consolidated financial statements, the Company evaluates goodwill for impairment at the reporting unit level annually. A quantitative impairment assessment was performed as of October 1, 2025 for one of the Company’s three reporting units. The goodwill balance for this reporting unit amounts to $48.8 million. The quantitative impairment assessment involves the comparison of the fair value of a reporting unit to its carrying value. The Company determines the fair value of the reporting unit using a combination of discounted cash flow analysis and a market-based valuation methodology, which requires significant management judgment. We have identified the quantitative goodwill impairment assessment as a critical audit matter. The principal consideration for our determination that the quantitative goodwill impairment assessment is a critical audit matter is the significant auditor judgment required to evaluate the reporting unit’s forecasted revenues and EBITDA and the Company’s selection of the discount rate. Our audit procedures related to the critical audit matter included the following, among others: • Tested the design and operating effectiveness of the key controls over the Company’s quantitative goodwill impairment assessment, including controls over the development of the significant assumptions such as the forecasted revenues, EBITDA, and the discount rate; • Evaluated a selection of the customer contracts to support the reasonableness of the reporting unit’s forecasted revenues that pertain to recurring contracts; • Corroborated management’s probability evaluation of future contract awards by inspecting correspondence with third parties, evaluating publicly available information, and reviewing subsequent information to identify evidence consistent with management’s forecasted revenues for the future contract awards; • Evaluated the forecasted revenues and EBITDA for the reporting unit by comparing the forecasted growth assumptions to both current and historical results, as well as forecasted industry trends; and • Assessed the Company’s discount rate for the reporting unit by comparing it against a discount rate independently developed using publicly available market data for comparable peers and evaluating management’s sensitivity analysis over the selected company specific risk premium. Specialists were involved in evaluating the valuation methodology and significant assumptions such as the discount rate. /s/ GRANT THORNTON LLP We have served as the Company’s auditor since 2005. Chicago, Illinois February 24, 2026 CTS CORPORATION 34 Table of Contents CTS CORPORATION AND SUBSIDIARIES Consolidated State ments of Earnings (in thousands, except per share amounts) Years Ended December 31, 2025 2024 2023 Net sales $ 541,318 $ 514,756 $ 550,422 Cost of goods sold 333,292 327,201 359,563 Gross margin 208,026 187,555 190,859 Selling, general and administrative expenses 98,720 88,285 83,816 Research and development expenses 25,268 23,388 24,918 Restructuring charges 1,396 4,697 7,074 Operating earnings 82,642 71,185 75,051 Other income (expense): Interest expense ( 4,309 ) ( 4,236 ) ( 3,331 ) Interest income 2,134 4,282 4,625 Other income (expense), net 3,304 ( 2,650 ) ( 1,192 ) Total other income (expense), net 1,129 ( 2,604 ) 102 Earnings before taxes 83,771 68,581 75,153 Income tax expense 18,454 13,109 14,621 Net earnings $ 65,317 $ 55,472 $ 60,532 Net earnings per share: Basic $ 2.21 $ 1.82 $ 1.93 Diluted $ 2.19 $ 1.81 $ 1.92 Basic weighted-average common shares outstanding 29,508 30,408 31,359 Effect of dilutive securities 298 309 220 Diluted weighted-average common shares outstanding 29,806 30,717 31,579 Cash dividends declared per share $ 0.16 $ 0.16 $ 0.16 The accompanying notes are an integral part of the consolidated financial statements. CTS CORPORATION 35 Table of Contents CTS CORPORATION AND SUBSIDIARIES Consolidated Statements o f Comprehensive Earnings (in thousands) Years Ended December 31, 2025 2024 2023 Net earnings $ 65,317 $ 55,472 $ 60,532 Other comprehensive earnings (loss) : Changes in fair market value of derivatives, net of tax 5,525 ( 3,836 ) ( 505 ) Changes in unrealized pension cost, net of tax 69 575 120 Cumulative translation adjustment, net of tax 12,420 ( 5,269 ) 5,320 Other comprehensive earnings (loss) $ 18,014 $ ( 8,530 ) $ 4,935 Comprehensive earnings $ 83,331 $ 46,942 $ 65,467 The accompanying notes are an integral part of the consolidated financial statements. CTS CORPORATION 36 Table of Contents CTS CORPORATION AND SUBSIDIARIES Consolidated B alance Sheets (in thousands) December 31, 2025 2024 ASSETS Current Assets Cash and cash equivalents $ 82,295 $ 94,334 Accounts receivable, net of allowances of $910 and $730, respectively 88,096 77,649 Inventories, net 52,854 52,312 Other current assets 29,461 17,879 Total current assets 252,706 242,174 Property, plant and equipment, net 89,741 94,357 Operating lease assets, net 22,542 22,939 Other assets Goodwill 209,611 201,304 Other intangible assets, net 153,562 163,882 Deferred income taxes 25,110 27,591 Other assets 11,039 13,180 Total other assets 399,322 405,957 Total Assets $ 764,311 $ 765,427 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable $ 48,220 $ 42,629 Operating lease obligations 3,453 4,719 Accrued payroll and benefits 20,732 15,754 Accrued expenses and other liabilities 37,283 35,361 Total current liabilities 109,688 98,463 Long-term debt 57,500 92,300 Long-term operating lease obligations 21,841 21,120 Long-term pension obligations 3,698 3,931 Deferred income taxes 12,800 12,743 Other long-term obligations 6,998 8,662 Total Liabilities 212,525 237,219 Commitments and Contingencies (Note 11) Shareholders' Equity Common stock 324,982 321,979 Additional contributed capital 43,303 44,662 Retained earnings 713,467 652,851 Accumulated other comprehensive income (loss) 13,748 ( 4,266 ) Total shareholders' equity before treasury stock 1,095,500 1,015,226 Treasury stock ( 543,714 ) ( 487,018 ) Total shareholders' equity 551,786 528,208 Total Liabilities and Shareholders' Equity $ 764,311 $ 765,427 The accompanying notes are an integral part of the consolidated financial statements. CTS CORPORATION 37 Table of Contents CTS CORPORATION AND SUBSIDIARIES Consolidated Statem ents of Cash Flows (in thousands) Years Ended December 31, 2025 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 65,317 $ 55,472 $ 60,532 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 34,538 30,922 28,710 Non-cash inventory charges — 2,087 — Pensions and other post-retirement plan expense 168 302 135 Stock-based compensation 4,889 5,650 5,181 Restructuring non-cash charges — — 1,484 Deferred income taxes ( 412 ) ( 2,792 ) ( 4,046 ) Change in fair value of contingent consideration liability ( 3,575 ) ( 1,765 ) 200 (Gain) loss on foreign currency hedges, net of cash ( 320 ) ( 575 ) 154 Goodwill prior period adjustment ( 2,194 ) — — Changes in assets and liabilities, net of acquisitions: Accounts receivable ( 7,444 ) 27 12,590 Inventories 1,378 12,473 2,353 Operating lease assets 397 4,150 ( 3,723 ) Other assets ( 2,657 ) 1,737 767 Accounts payable 4,183 ( 1,771 ) ( 9,751 ) Accrued payroll and benefits 3,388 1,813 ( 6,518 ) Operating lease liabilities ( 545 ) ( 4,184 ) 3,668 Accrued expenses and other liabilities 5,141 ( 5,077 ) ( 2,815 ) Pension and other post-retirement plans ( 147 ) ( 227 ) ( 110 ) Net cash provided by operating activities 102,105 98,242 88,811 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ( 15,731 ) ( 18,644 ) ( 14,738 ) Payments for acquisitions, net of cash acquired — ( 121,912 ) ( 3,359 ) Short-term investments ( 2,783 ) — — Net cash used in investing activities ( 18,514 ) ( 140,556 ) ( 18,097 ) CASH FLOWS FROM FINANCING ACTIVITIES: Payments of long-term debt ( 1,138,451 ) ( 890,800 ) ( 774,529 ) Proceeds from borrowings of long-term debt 1,103,651 915,600 758,359 Purchase of treasury stock ( 56,178 ) ( 42,596 ) ( 40,926 ) Dividends paid ( 4,750 ) ( 4,885 ) ( 5,040 ) Taxes paid on behalf of equity award participants ( 2,710 ) ( 3,131 ) ( 3,263 ) Contingent consideration payments — ( 1,076 ) — Net cash used in financing activities ( 98,438 ) ( 26,888 ) ( 65,399 ) Effect of exchange rate on cash and cash equivalents 2,808 ( 340 ) 1,651 Net (decrease) increase in cash and cash equivalents ( 12,039 ) ( 69,542 ) 6,966 Cash and cash equivalents at beginning of year 94,334 163,876 156,910 Cash and cash equivalents at end of year $ 82,295 $ 94,334 $ 163,876 Supplemental cash flow information: Cash paid for interest $ 3,996 $ 4,230 $ 3,126 Cash paid for income taxes, net $ 16,754 $ 16,599 $ 20,235 Non-cash financing and investing activities: Capital expenditures incurred not paid $ 1,726 $ 2,332 $ 2,038 Excise taxes on purchase of treasury stock incurred not paid $ 517 $ 382 $ 359 The accompanying notes are an integral part of the consolidated financial statements. CTS CORPORATION 38 Table of Contents CTS CORPORATION AND SUBSIDIARIES Consolidated Statements of Shareholders' Equity (in thousands, except share and per share amounts) Common Stock Additional Contributed Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Balances at January 1, 2023 $ 316,803 $ 46,144 $ 546,703 $ ( 671 ) $ ( 402,755 ) $ 506,224 Net earnings — — 60,532 — — 60,532 Changes in fair market value of derivatives, net of tax — — — ( 505 ) — ( 505 ) Changes in unrealized pension cost, net of tax — — — 120 — 120 Cumulative translation adjustment, net of tax — — — 5,320 — 5,320 Cash dividends of $ 0.16 per share — — ( 5,003 ) — — ( 5,003 ) Acquired 970,109 shares of treasury stock — — — — ( 41,285 ) ( 41,285 ) Issued shares on vesting of restricted stock units 2,466 ( 5,729 ) — — — ( 3,263 ) Stock compensation — 4,682 — — — 4,682 Balances at December 31, 2023 $ 319,269 $ 45,097 $ 602,232 $ 4,264 $ ( 444,040 ) $ 526,822 Net earnings — — 55,472 — — 55,472 Changes in fair market value of derivatives, net of tax — — — ( 3,836 ) — ( 3,836 ) Changes in unrealized pension cost, net of tax — — — 575 — 575 Cumulative translation adjustment, net of tax — — — ( 5,269 ) — ( 5,269 ) Cash dividends of $ 0.16 per share — — ( 4,853 ) — — ( 4,853 ) Acquired 897,939 shares of treasury stock — — — — ( 42,978 ) ( 42,978 ) Issued shares on vesting of restricted stock units 2,710 ( 5,896 ) — — — ( 3,186 ) Stock compensation — 5,461 — — — 5,461 Balances at December 31, 2024 $ 321,979 $ 44,662 $ 652,851 $ ( 4,266 ) $ ( 487,018 ) $ 528,208 Net earnings — — 65,317 — — 65,317 Changes in fair market value of derivatives, net of tax — — — 5,525 — 5,525 Changes in unrealized pension cost, net of tax — — — 69 — 69 Cumulative translation adjustment, net of tax — — — 12,420 — 12,420 Cash dividends of $ 0.16 per share — — ( 4,701 ) — — ( 4,701 ) Acquired 1,352,313 shares of treasury stock — — — — ( 56,696 ) ( 56,696 ) Issued shares on vesting of restricted stock units 3,003 ( 5,713 ) — — — ( 2,710 ) Stock compensation — 4,354 — — — 4,354 Balances at December 31, 2025 $ 324,982 $ 43,303 $ 713,467 $ 13,748 $ ( 543,714 ) $ 551,786 The accompanying notes are an integral part of the consolidated financial statements. CTS CORPORATION 39 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except for share and per share data) NOTE 1 — Summary of Significant Accounting Policies Description of Business: CTS Corporation ("CTS", "we", "our", "us" or the "Company") is a global manufacturer of sensors, connectivity components, and actuators operating as a single reportable business segment. We operate manufacturing facilities located throughout North America, Asia and Europe and service major markets globally. Principles of Consolidation: The consolidated financial statements include the accounts of CTS and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Use of Estimates: The preparation of financial statements in conformity with the accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. Cash and Cash Equivalents: All highly liquid investments with maturities of three months or less at the date of purchase are considered to be cash equivalents. Accounts Receivable and Allowance for Credit Losses: Accounts receivable consists primarily of amounts due from normal business activities. We maintain an allowance for credit losses for estimated uncollectible accounts receivable. Our reserves for estimated credit losses are based upon historical experience, specific customer collection issues, current conditions and reasonable and supportable forecasts that affect the collectability of the remaining cash flows over the contractual terms of our receivables and other financial assets. Accounts are written off against the allowance account when they are determined to no longer be collectible. Concentration of Credit Risk: Financial instruments that potentially subject us to concentrations of credit risk consist of cash and cash equivalents and trade receivables. Our cash and cash equivalents, at times, may exceed federally insured limits. Cash and cash equivalents are deposited primarily in banking institutions with global operations. We have not experienced any losses in such accounts. We believe we are not exposed to any significant credit risk related to cash and cash equivalents. Trade receivables subject us to the potential for credit risk with major customers. We sell our products to customers principally in the aerospace and defense, industrial, medical, and transportation markets, primarily in North America, Europe, and Asia. We perform ongoing credit evaluations of our customers to minimize credit risk. We do not require collateral. Our net sales to significant customers as a percentage of total net sales were as follows: Year Ended December 31, 2025 2024 2023 Toyota Motor Corporation 11.2 % 12.2 % 12.5 % Cummins, Inc. 8.4 % 11.7 % 15.0 % No other customer accounted for 10% or more of total net sales during these periods. Inventories: We value our inventories at the lower of the actual cost to purchase or manufacture using the first-in, first-out ("FIFO") method, or net realizable value. We review inventory quantities on hand and record a provision for excess and obsolete inventory based on historical consumption trends as well as forecasts of product demand including related production requirements. Once reserves are established, write-downs of inventory are considered permanent adjustments to the cost basis of inventory. Our reserves contain uncertainties because the calculation requires management to make assumptions and to apply judgment regarding historical experience, market conditions, and product life cycles. Changes in actual demand or market conditions could adversely impact our reserve calculations. CTS CORPORATION 40 Table of Contents Property, Plant and Equipment: Property, plant and equipment is stated at cost, less accumulated depreciation. Depreciation is computed primarily over the estimated useful lives of the various classes of assets using the straight-line method. Useful lives for buildings and improvements range from 10 to 45 years , machinery and equipment from three to 15 years , and software from two to 15 years . Depreciation on leasehold improvements is computed over the lesser of the lease term or estimated useful lives of the assets. Amounts expended for maintenance and repairs are charged to expense as incurred. Major overhauls that extend the useful lives of existing assets are capitalized. Upon disposition, any related gains or losses are included in operating earnings. Income Taxes: We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We recognize deferred tax assets to the extent that we believe that these assets are more-likely-than-not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. We record uncertain tax positions in accordance with Accounting Standards Codification ("ASC") Topic 740 on the basis of a two-step process in which (1) we determine whether it is more-likely-than-not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. We recognize interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying Consolidated Statements of Earnings. Accrued interest and penalties are included in the related tax liability line in the Consolidated Balance Sheets. See Note 19, "Income Taxes," for further information. Goodwill and Indefinite-lived Intangible Assets: Goodwill represents the excess of the purchase price over the fair values of the net assets acquired in a business combination. In accordance with ASC 350, Intangibles—Goodwill and Other , goodwill is not amortized, but instead is tested for impairment annually or more frequently if circumstances indicate a possible impairment may exist. Absent any interim indicators of impairment, the Company tests for goodwill impairment as of the first day of its fourth fiscal quarter of each year. Based upon our latest assessment, we determined that our goodwill was no t impaired as of October 1, 2025. Other Intangible Assets and Long-lived Assets: We account for long-lived assets (excluding indefinite-lived intangible assets) in accordance with the provisions of ASC 360, Property, Plant, and Equipment . This statement requires that long-lived assets, which includes fixed assets and finite-lived intangible assets, be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an impairment test is warranted, recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the sum of the undiscounted cash flows expected to result from the use and the eventual disposition of the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount in which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Intangible assets (excluding indefinite-lived intangible assets) consist primarily of technology, customer lists and relationships, patents, and trade names. These assets are recorded at cost and are usually amortized on a straight-line basis over their estimated lives. We assess useful lives based on the period over which the asset is expected to contribute to cash flows. Revenue Recognition: Product revenue is recognized upon the transfer of promised goods to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods net of reserves. We follow the five step model to determine when this transfer has occurred: 1) identify the contract(s) with the customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations in the contract; and 5) recognize revenue when (or as) the entity satisfies a performance obligation. CTS CORPORATION 41 Table of Contents Research and Development: Research and development ("R&D") costs include expenditures for search and investigation aimed at discovery of new knowledge to be used to develop new products or processes or to significantly enhance existing products or production processes. R&D costs also include the implementation of new knowledge through design, testing of product alternatives, or construction of prototypes. We expense all R&D costs as incurred, net of customer reimbursements for sales of prototypes and non-recurring engineering charges. We create prototypes and tools related to R&D projects. A prototype is defined as a constructed product not intended for production resulting in a commercial sale. We also incur engineering costs related to R&D activities. Such costs are incurred to support activities to improve the reliability, performance and cost-effectiveness of our existing products and to design and develop innovative products that meet customer requirements for new applications. Furthermore, we may engage in activities that develop tooling machinery and equipment for our customers. We occasionally enter into agreements with our customers whereby we receive a contractual guarantee based on achieving milestones to be reimbursed for the costs we incur in the product development process or to construct molds, dies, and other tools that are used to make many of the products we sell. The costs we incur are included in other current assets on the Consolidated Balance Sheets until reimbursement is received from the customer. Reimbursements received from customers are netted against such costs and included in our Consolidated Statements of Earnings if the amount received is in excess of the costs that we incur. The following is a summary of amounts to be received from customers as of December 31, 2025 and 2024: As of December 31, 2025 2024 Cost of molds, dies and other tools included in other current assets $ 3,514 $ 3,178 Financial Instruments: We use forward contracts to mitigate currency risk related to forecasted foreign currency revenue and costs. These forward contracts are designed as cash flow hedges. At least quarterly, we assess the effectiveness of these hedging relationships based on the total change in their fair value using regression analysis. In addition, we use interest rate swaps to convert a portion of our revolving credit facility's variable rate of interest into a fixed rate. As a result of the use of these derivative instruments, the Company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. To mitigate the counterparty credit risk, the Company has a policy of only entering into contracts with carefully selected major financial institutions based upon their credit ratings and other factors and by using netting agreements. Our established policies and procedures for mitigating credit risk on principal transactions include reviewing and establishing limits for credit exposure and continually assessing the creditworthiness of counterparties. We estimate the fair value of our cash, cash equivalents, accounts receivable and accounts payable at cost due to the short-term nature of these instruments. Please refer to Note 13, "Debt," and Note 15, "Accumulated Other Comprehensive Income (Loss) ," for information on the method of determining fair value for our debt and financial derivatives, respectively. Stock-Based Compensation: We recognize expense related to the fair value of stock-based compensation awards, consisting of restricted stock units ("RSUs"), cash-settled restricted stock units, and performance share units ("PSUs") in the Consolidated Statements of Earnings. The grant date fair values of our service-based and performance-based RSUs are the closing price of our common stock on the date of grant. Our RSU awards primarily have a graded vesting schedule. We recognize expense on a straight-line basis over the requisite service period for each separately vesting tranche of the award as if the award was, in substance, multiple awards. Compensation expense for PSUs is measured by determining the fair value of the award using the closing share price on the grant date and is recognized ratably from the grant date to the vesting date for the number of awards expected to vest. The amount of compensation expense recognized for PSUs is dependent upon a quarterly assessment of the likelihood of achieving the performance conditions and is subject to adjustment based on management's assessment of the Company's performance relative to the target number of shares performance criteria. Forfeitures are recorded as they occur. See Note 17, "Stock-Based Compensation," for further information. Earnings Per Share: Basic earnings per share excludes any dilution and is computed by dividing net earnings available to common shareholders by the weighted-average number of common shares outstanding for the period. CTS CORPORATION 42 Table of Contents Diluted earnings per share is calculated by dividing net earnings by the weighted average shares outstanding assuming dilution. Dilutive common shares outstanding is computed using the Treasury Stock Method and reflects the additional shares that would be outstanding if dilutive stock options were exercised, and restricted stock units were settled for common shares during the period. In addition, dilutive shares include any shares issuable related to performance share units for which the performance conditions would have been met as of the end of the period and therefore would be considered contingently issuable. If the common stock equivalents have an anti-dilutive effect, they are excluded from the computation of diluted earnings per share. If there is a net loss for the period, then basic earnings per share equals diluted earnings per share. Our antidilutive securities consist of the following: Years Ended December 31, (units) 2025 2024 2023 Antidilutive securities — 19,844 18,486 Foreign Currencies: The financial statements of the majority of our non-U.S. subsidiaries are remeasured into U.S. dollars using the U.S. dollar as the functional currency with all remeasurement adjustments included in the determination of net earnings. Foreign currency gains / losses recorded in the Consolidated Statements of Earnings includes the following: Years Ended December 31, 2025 2024 2023 Foreign currency gain / (loss) $ 1,275 $ ( 1,689 ) $ ( 1,982 ) The assets and liabilities of our non-U.S. dollar functional subsidiaries are translated into U.S. dollars at the current exchange rate at period end, with the resulting translation adjustments made directly to the "accumulated other comprehensive income (loss)" component of shareholders' equity. Our Consolidated Statements of Earnings accounts are translated at the average rates during the period. Shipping and Handling: All fees billed to the customer for shipping and handling are classified as a component of net sales. All costs associated with shipping and handling are classified as a component of cost of goods sold or operating expenses, depending on the nature of the underlying purchase. Sales Taxes: When applicable, we classify sales taxes on a net basis in our consolidated financial statements. Immaterial Correction of Prior Period Errors As reported in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, the Company identified immaterial prior period errors in the consolidated financial statements related to the acquisition of SyQwest, LLC (“SyQwest”) as well as the foreign currency impact on certain long-term debt payments. The errors related to the SyQwest acquisition were due to errors with the calculation of revenue and cost of goods sold both prior to and subsequent to the acquisition date of July 29, 2024. The Company assessed the materiality of this change on prior period consolidated financial statements in accordance with SEC Staff Accounting Bulletin No. 99, “Materiality” (ASC Topic 250, Accounting Changes and Error Corrections). Based on this assessment, the Company concluded that these error corrections were material in the first quarter of 2025, but were not material to any previously presented consolidated financial statements. Accordingly, the Company corrected the previously reported immaterial errors for the year ended December 31, 2024 in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025. The financial reporting periods affected by this error include the Company’s previously reported audited consolidated financial statements for the fiscal year ended December 31, 2024 and the Company’s previously reported interim unaudited consolidated financial statements for the three and nine months ended September 30, 2024. The Company is presenting the corrected 2024 amounts in this Annual Report on Form 10-K on a year-to-date basis. A summary of the immaterial corrections to the Company’s previously reported audited and unaudited consolidated financial statements follows. CTS CORPORATION 43 Table of Contents Corrected Consolidated Statement of Earnings for the Year Ended December 31, 2024 (in thousands): Year Ended Year Ended December 31, 2024 December 31, 2024 Previously Reported Corrections As Corrected Net sales $ 515,771 $ ( 1,015 ) $ 514,756 Cost of goods sold 326,621 580 327,201 Gross margin 189,150 ( 1,595 ) 187,555 Operating earnings 72,780 ( 1,595 ) 71,185 Other income (expense): Other income (expense), net ( 1,603 ) ( 1,047 ) ( 2,650 ) Total other expense, net ( 1,557 ) ( 1,047 ) ( 2,604 ) Earnings before income taxes 71,223 ( 2,642 ) 68,581 Net earnings $ 58,114 $ ( 2,642 ) $ 55,472 Earnings per share: Basic $ 1.91 $ 1.82 Diluted $ 1.89 $ 1.81 Basic weighted – average common shares outstanding: 30,408 30,408 Effect of dilutive securities 309 309 Diluted weighted – average common shares outstanding: 30,717 30,717 Corrected Consolidated Balance Sheet as of December 31, 2024 (in thousands): December 31, 2024 December 31, 2024 Previously Reported Corrections As Corrected ASSETS Current Assets Inventories, net $ 53,578 $ ( 1,266 ) $ 52,312 Other current assets 18,716 ( 837 ) 17,879 Total current assets 244,277 ( 2,103 ) 242,174 Other Assets Goodwill 199,886 1,418 201,304 Total other assets 404,539 1,418 405,957 Total Assets $ 766,112 $ ( 685 ) $ 765,427 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Accrued expenses and other liabilities 34,451 910 35,361 Total current liabilities 97,553 910 98,463 Long-term debt 91,253 1,047 92,300 Total Liabilities 235,262 1,957 237,219 Shareholders’ Equity Retained earnings 655,493 ( 2,642 ) 652,851 Total shareholders’ equity before treasury stock 1,017,868 ( 2,642 ) 1,015,226 Total shareholders’ equity 530,850 ( 2,642 ) 528,208 Total Liabilities and Shareholders’ Equity $ 766,112 $ ( 685 ) $ 765,427 CTS CORPORATION 44 Table of Contents Corrected Consolidated Statement of Cash Flows for the Year Ended December 31, 2024 (in thousands): Year Ended Year Ended December 31, 2024 December 31, 2024 Previously Reported Corrections As Corrected CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 58,114 $ ( 2,642 ) $ 55,472 Changes in assets and liabilities, net of acquisitions: Inventories 11,893 580 12,473 Other assets 900 837 1,737 Accrued expenses and other liabilities ( 5,255 ) 178 ( 5,077 ) Net cash provided by operating activities 99,289 ( 1,047 ) 98,242 CASH FLOWS FROM FINANCING ACTIVITIES: Payments of long-term debt ( 891,847 ) 1,047 ( 890,800 ) Net cash (used in) provided by financing activities $ ( 27,935 ) $ 1,047 $ ( 26,888 ) Corrected Fair Value of SyQwest Assets Acquired and Liabilities Assumed: Fair Values at July 29, 2024 Accounts receivable $ 770 Inventory 7,939 Other current assets 1,475 Property, plant and equipment 985 Other assets 684 Goodwill 46,600 Intangible assets 76,100 Fair value of assets acquired 134,553 Less fair value of liabilities acquired ( 6,536 ) Purchase price $ 128,017 During the fourth quarter of 2025, the Company identified additional immaterial prior period errors related to the acquisition of SyQwest. The errors related to the calculation of revenue and cost of goods sold that originated prior to the acquisition date of July 29, 2024 and continued through 2025. The Company assessed the materiality of this change on prior period consolidated financial statements in accordance with SEC Staff Accounting Bulletin No. 99, “Materiality” (ASC Topic 250, Accounting Changes and Error Corrections). Based on this assessment, the Company concluded that these error corrections are not material to the current or previously presented consolidated financial statements. Accordingly, the Company corrected the immaterial errors during the period ending December 31, 2025 impacting Revenue, Cost of goods sold, Other income (expense) and Goodwill resulting in decreased earnings before taxes of $ 893 . The correction includes a $ 2,194 adjustment to Goodwill related to errors originating prior to the acquisition date. Accounting Pronouncements Recently Adopted ASU No. 2023-09, “ Income Taxes (Topic 740): Improvements to Income Tax Disclosures” In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the reconciliation of the effective tax rate, as well as disclosure of income taxes paid, disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The adoption of this ASU impacts our income tax disclosures, but has no impact on our results of operations, cash flows, or financial condition. We adopted the guidance in our 2025 annual reporting on a retrospective basis. See Note 19, "Income Taxes," for further information. CTS CORPORATION 45 Table of Contents Recently issued accounting pronouncements not yet adopted ASU No. 2024-03, “ Income Statement (Subtopic 220-40): Disaggregation of Income Statement Expenses” In November 2024, the FASB issued ASU 2024-03, Income Statement (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires additional information about certain expenses in the notes to the financial statements. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The standard can be applied either prospectively or retrospectively. The Company is currently evaluating the impact of adopting ASU 2024-03. ASU No. 2025-05, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets” In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which allows for a practical expedient election to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset in the development of a reasonable and supportable forecast as part of estimating expected credit losses. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, with early adoption permitted. The Company is currently evaluating the impact of electing the practical expedient under ASU 2025-05. ASU No. 2025-06, “ Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software” In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which is intended to improve the operability and application of guidance related to capitalized software development costs. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-06. NOTE 2 – Revenue Recognition CTS designs and manufactures sensors, actuators, and electronic components for original equipment manufacturers and the U.S. Government. For each contract with a customer, we determine the transaction price based on the consideration expected to be received by the Company in exchange for performing its obligations under the applicable contract. We allocate the transaction price to each distinct performance obligation to deliver a good or service, or a collection of goods and/or services, based on the relative standalone selling prices. We usually expect payment from our customers within 30 to 90 days from the shipping date or invoicing date, depending on our terms with the customer. None of our contracts as of December 31, 2025 or 2024 contained a significant financing component. Differences between the amount of revenue recognized and the amount invoiced, collected from, or paid to our customers are recognized as contract assets or liabilities. Contract assets will be reviewed for impairment when events or circumstances indicate that they may not be recoverable. To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the transaction price utilizing the most likely value method based on an analysis of historical experience and current facts and circumstances, which may require significant judgment. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Our revenue reserves contain uncertainties because they require management to make assumptions and to apply judgment to estimate the value of future credits to customers for product returns, price adjustments, and stock rotation adjustments. We base these estimates on the most likely value method considering all reasonably available information, including our historical experience and current expectations, and are reflected in the transaction price when sales are recorded. Approximately 96 % of our revenue is derived from contracts for sales of commercial products, which generally contain a single performance obligation. We generally recognize revenue at a point in time on the delivery date based on the shipping terms stipulated in the contract. We also design, manufacture, and test products for certain customers under contracts that allow the customers to unilaterally terminate the contract for convenience, take control of any work in process, and pay us for costs incurred plus a reasonable profit. Revenue from these contracts is generally recognized over time as the work progresses, either as products are produced or services are rendered, because we generally do not have an alternative use for the completed assets produced and we have an enforceable right to payment for performance completed to date. These contracts may contain a single or multiple performance obligations. The accounting for these contracts involves applying significant judgment with respect to estimating total revenues, costs and profit for each performance obligation. We generally estimate revenue for these contracts using the costs incurred by the Company as we have determined that this method is the most representative of the Company's cumulative efforts relative to the total expected efforts to satisfy the performance obligations. Approximately 4 % of the Company's revenue is recognized over time. CTS CORPORATION 46 Table of Contents At December 31, 2025, we estimated that $ 8,628 in revenue is expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period for contracts greater than one year. We expect to recognize 6,072 and 2,556 of the Company's unsatisfied (or partially unsatisfied) performance obligations as revenue in 2026 and 2027 , respectively. See Note 11, "Commitments and Contingencies" for information about our product warranties. Contract Assets and Liabilities Contract assets and liabilities included in our Condensed Consolidated Balance Sheets are as follows: As of December 31, 2025 2024 2023 Contract Assets Unbilled customer receivables included in Other current assets $ 6,688 $ 4,104 $ — Total Contract Assets $ 6,688 $ 4,104 $ — Contract Liabilities Customer advance payments included in Accrued expenses and other liabilities $ ( 1,633 ) $ ( 910 ) $ — Total Contract Liabilities $ ( 1,633 ) $ ( 910 ) $ — The Company recognized $ 478 of revenue that was included in the contract liability balance at December 31, 2024. Disaggregated Revenue The following table presents revenues disaggregated by the major end markets we serve: Years Ended December 31, 2025 2024 2023 Transportation $ 233,938 $ 250,374 $ 301,451 Industrial 140,057 125,396 129,440 Medical 84,569 69,967 68,252 Aerospace & Defense 82,754 69,019 51,279 Total $ 541,318 $ 514,756 $ 550,422 NOTE 3 - Business Acquisitions Maglab AG Acquisition On February 6, 2023, we acquired 100 % of the outstanding shares of maglab AG ("Maglab"). Maglab has deep expertise in magnetic system design and current measurement solutions for use in e-mobility, industrial automation, and renewable energy applications. Maglab's domain expertise coupled with CTS’ commercial, technical and operational capabilities position us to advance our status as a recognized innovator in current sensing. The final purchase price of $ 7,717 was allocated to the fair values of assets and liabilities acquired as of February 6, 2023. The purchase price was increased by $ 3 for the final settlement of net working capital during the second quarter of 2023. CTS CORPORATION 47 Table of Contents The following table summarizes the final consideration paid, the fair values of the assets acquired and the liabilities assumed as of the date of acquisition: Consideration Paid Cash paid, net of cash acquired of $ 14 $ 4,153 Contingent consideration 3,564 Purchase price $ 7,717 Fair Values at February 6, 2023 Accounts receivable $ 348 Inventory 43 Other current assets 41 Property, plant and equipment 35 Goodwill 4,997 Intangible assets 2,860 Fair value of assets acquired 8,324 Less fair value of liabilities acquired ( 607 ) Purchase price $ 7,717 Goodwill represents value the Company expects to be created by combining the operations of the acquired business with the Company's operations, including the expansion of customer relationships, access to new customers, and potential cost savings and synergies. Goodwill related to the acquisition is expected to be deductible for tax purposes. The following table summarizes the carrying amounts and weighted average lives of the acquired intangible assets: Carrying Value Weighted Average Amortization Period Customer lists/relationships $ 2,800 13.0 Technology and other intangibles 60 3.0 Total $ 2,860 All contingent consideration is payable in cash and is based on success factors related to the integration process as well as upon the achievement of annual revenue and customer order targets through the fiscal year ending December 31, 2025. The Company recorded $ 3,564 as the acquisition date fair value of the contingent consideration based on the estimate of the probability of achieving the performance targets. This amount was also reflected as an addition to the purchase price. The contingent consideration had a maximum payout of $ 6,300 . See Note 18, "Fair Value Measurements," for more information on contingent consideration. Supplemental pro forma disclosures are not included as the amounts are deemed to be immaterial. SyQwest, LLC Acquisition On July 29, 2024, we acquired 100 % of the outstanding membership interests of SyQwest, a leading designer and manufacturer of a broad set of sonar and acoustic sensing solutions primarily for naval applications. The SyQwest acquisition is expected to strengthen our strategy and scale in the defense end market. The purchase price of $ 128,017 , which includes changes in working capital, was allocated to the fair values of assets and liabilities acquired as of July 29, 2024. The following tables summarize the purchase price, the fair values of the assets acquired and the liabilities assumed as of the date of the acquisition of SyQwest: Consideration Paid Cash paid, net of cash acquired of $ 1,410 $ 121,912 Contingent consideration 6,105 Purchase price $ 128,017 CTS CORPORATION 48 Table of Contents Fair Values at July 29, 2024 Accounts receivable $ 770 Inventory 7,939 Other current assets 1,475 Property, plant and equipment 985 Other assets 684 Goodwill 46,600 Intangible assets 76,100 Fair value of assets acquired 134,553 Less fair value of liabilities acquired ( 6,536 ) Purchase price $ 128,017 Goodwill represents the value the Company expects to be created by combining the operations of the acquired business with the Company’s operations, including the expansion of customer relationships, access to new customers, and potential cost savings and synergies. Goodwill related to the acquisition is expected to be deductible for tax purposes. The following table summarizes the carrying amounts and weighted average lives of the acquired intangible assets: Carrying Value Weighted Average Amortization Period Customer lists/relationships $ 68,500 15.0 Technology and other intangibles 7,600 10.9 Total $ 76,100 The Company recorded a $ 2,087 step-up of inventory to its fair value as of the acquisition date. The step-up was amortized as a non-cash charge to cost of goods sold as the acquired inventory was sold with the entire amount recognized in the year ended December 31, 2024. All contingent consideration is payable in cash and is based on the achievement of certain project and earnings metrics through the fiscal year ending December 31, 2026. The Company recorded $ 6,105 as the acquisition date fair value of the contingent consideration based on the estimate of the probability of achieving the performance targets. This amount is also reflected as an addition to the purchase price and is recorded within other long-term obligations within the Condensed Consolidated Balance Sheets. The contingent consideration has a maximum payout of $ 15,000 . See Note 18, "Fair Value Measurements," for more information on contingent consideration . Supplemental pro forma disclosures are not included as the amounts are deemed to be immaterial. NOTE 4 — Accounts Receivable, net The components of accounts receivable, net are as follows: As of December 31, 2025 2024 2023 Accounts receivable, gross $ 89,006 $ 78,379 $ 79,500 Less: Allowance for credit losses ( 910 ) ( 730 ) ( 931 ) Accounts receivable, net $ 88,096 $ 77,649 $ 78,569 CTS CORPORATION 49 Table of Contents NOTE 5 — Inventories, net Inventories, net consist of the following: As of December 31, 2025 2024 Finished goods $ 11,390 $ 12,126 Work-in-process 24,404 22,331 Raw materials 30,726 31,818 Less: Inventory reserves ( 13,666 ) ( 13,963 ) Inventories, net $ 52,854 $ 52,312 NOTE 6 — Property, Plant and Equipment, net Property, plant and equipment, net is comprised of the following: As of December 31, 2025 2024 Land and land improvements $ 399 $ 399 Buildings and improvements 73,248 73,011 Machinery and equipment 276,416 265,950 Less: Accumulated depreciation ( 260,322 ) ( 245,003 ) Property, plant and equipment, net $ 89,741 $ 94,357 Depreciation expense recorded in the Consolidated Statements of Earnings includes the following: For the Years Ended 2025 2024 2023 Depreciation expense $ 18,378 $ 17,574 $ 17,686 NOTE 7 — Retirement Plans As of December 31, 2025 , we have two active noncontributory defined benefit pension plans ("Pension Plans") covering less than 1 % of our active employees. These Pension Plans consist of a U.S. supplemental retirement plan ("SERP") and a Taiwan pension plan. The SERP is comprised entirely of participants who are former employees of the Company. We also provide post-retirement life insurance benefits for certain retired employees. Domestic employees who were hired prior to 1982 and certain former union employees are eligible for life insurance benefits upon retirement. We fund life insurance benefits through term life insurance policies and intend to continue funding all of the premiums on a pay-as-you-go basis. We recognize the funded status of a benefit plan in our consolidated balance sheets. The funded status is measured as the difference between plan assets at fair value and the projected benefit obligation. We also recognize, as a component of other comprehensive earnings, net of tax, the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit/cost. The measurement dates for the Pension Plans for our U.S. and non-U.S. locations and the post-retirement life insurance plan were December 31, 2025 and 2024. CTS CORPORATION 50 Table of Contents The following table provides a reconciliation of the benefit obligation, plan assets, and the funded status of the pension plans for U.S. and non-U.S. locations at the measurement dates. U.S. Pension Plan Non-U.S. Pension Plan 2025 2024 2025 2024 Accumulated benefit obligation $ 645 $ 729 $ 1,123 $ 1,029 Change in projected benefit obligation: Projected benefit obligation at January 1 $ 729 $ 788 $ 1,325 $ 1,422 Service cost — — 13 13 Interest cost 35 36 24 21 Benefits paid ( 98 ) ( 103 ) ( 84 ) ( 90 ) Actuarial (gain) loss ( 21 ) 8 195 50 Foreign exchange impact — — 61 ( 91 ) Projected benefit obligation at December 31 $ 645 $ 729 $ 1,534 $ 1,325 Change in plan assets: Assets at fair value at January 1 $ — $ — $ 1,310 $ 1,199 Actual return on assets — — 114 117 Company contributions 98 103 165 161 Benefits paid ( 98 ) ( 103 ) ( 84 ) ( 90 ) Foreign exchange impact — — 61 ( 77 ) Assets at fair value at December 31 $ — $ — $ 1,566 $ 1,310 Funded status (plan assets less projected benefit obligations) $ ( 645 ) $ ( 729 ) $ 32 $ ( 15 ) The following table provides a reconciliation of the benefit obligation, plan assets, and the funded status of the post-retirement life insurance plan at those measurement dates. Post-Retirement Life Insurance Plan 2025 2024 Accumulated benefit obligation $ 3,508 $ 3,683 Change in projected benefit obligation: Projected benefit obligation at January 1 $ 3,683 $ 4,145 Service cost 1 1 Interest cost 181 190 Benefits paid ( 131 ) ( 138 ) Actuarial (gain) loss ( 226 ) ( 515 ) Projected benefit obligation at December 31 $ 3,508 $ 3,683 Change in plan assets: Assets at fair value at January 1 $ — $ — Company contributions 131 138 Benefits paid ( 131 ) ( 138 ) Other — — Assets at fair value at December 31 $ — $ — Funded status (plan assets less projected benefit obligations) $ ( 3,508 ) $ ( 3,683 ) The components of the accrued cost of the domestic and foreign pension plans are classified in the following lines in the Consolidated Balance Sheets at December 31: U.S. Pension Plan Non-U.S. Pension Plan 2025 2024 2025 2024 Accrued expenses and other liabilities ( 89 ) ( 98 ) — — Long-term pension obligations ( 556 ) ( 631 ) 32 ( 14 ) Net accrued cost $ ( 645 ) $ ( 729 ) $ 32 $ ( 14 ) The components of the accrued cost of the post-retirement life insurance plan are classified in the following lines in the Consolidated Balance Sheets at December 31: CTS CORPORATION 51 Table of Contents Post-Retirement Life Insurance Plan 2025 2024 Accrued expenses and other liabilities $ ( 422 ) $ ( 457 ) Long-term pension obligations ( 3,086 ) ( 3,226 ) Total accrued cost $ ( 3,508 ) $ ( 3,683 ) We have also recorded the following amounts to accumulated other comprehensive income (loss) for the U.S. and non-U.S. pension plans, net of tax: U.S. Pension Plan Non-U.S. Pension Plan Unrecognized Loss Unrecognized Loss Balance at January 1, 2024 $ 217 $ 1,155 Amortization of retirement benefits, net of tax ( 19 ) ( 99 ) Net actuarial gain (loss) ( 31 ) ( 38 ) Foreign exchange impact — ( 75 ) Balance at January 1, 2025 $ 167 $ 943 Amortization of retirement benefits, net of tax ( 19 ) ( 30 ) Net actuarial gain (loss) ( 1 ) — Foreign exchange impact — 63 Balance at December 31, 2025 $ 147 $ 976 We have recorded the following amounts to accumulated other comprehensive income (loss) for the post-retirement life insurance plan, net of tax: Unrecognized Gain Balance at January 1, 2024 $ ( 689 ) Amortization of retirement benefits, net of tax 48 Net actuarial gain (loss) ( 361 ) Balance at January 1, 2025 $ ( 1,002 ) Amortization of retirement benefits, net of tax 106 Net actuarial gain (loss) ( 187 ) Balance at December 31, 2025 $ ( 1,083 ) The accumulated actuarial gains and losses included in other comprehensive earnings are amortized in the following manner: The component of unamortized net gains or losses related to our non-qualified pension plan is amortized based on the future life expectancy of the plan participants (estimated to be approximately nine years at December 31, 2025), because all of the participants in those plans are former employees who are now retired. The component of unamortized net gains or losses related to our post-retirement life insurance plan is amortized based on the future life expectancy of the plan participants (estimated to be a pproximately six years at December 31, 2025), because substantially all of the participants in those plans are former employees who are now retired. The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for those pension plans with accumulated benefit obligation in excess of the fair value of plan assets is shown below: As of December 31, 2025 2024 Projected benefit obligation $ 2,179 $ 2,054 Accumulated benefit obligation $ 1,768 $ 1,758 Fair value of plan assets $ 1,566 $ 1,310 CTS CORPORATION 52 Table of Contents Net pension expense includes the following components: Years Ended December 31, Years Ended December 31, U.S. Pension Plans Non-U.S. Pension Plan 2025 2024 2023 2025 2024 2023 Service cost $ — $ — $ — $ 13 $ 13 $ 22 Interest cost 35 36 38 24 21 37 Expected return on plan assets (1) — — — ( 25 ) ( 20 ) ( 13 ) Amortization of unrecognized loss 25 25 22 122 134 172 Net expense $ 60 $ 61 $ 60 $ 134 $ 148 $ 218 Weighted-average actuarial assumptions (2) Benefit obligation assumptions: Discount rate 4.89 % 5.40 % 4.83 % 1.63 % 1.75 % 1.63 % Rate of compensation increase N/A N/A N/A 4.00 % 3.00 % 3.00 % Pension income/expense assumptions: Discount rate 5.40 % 4.83 % 5.04 % 1.75 % 1.63 % 1.75 % Expected return on plan assets (1) N/A N/A N/A 1.75 % 1.63 % 1.75 % Rate of compensation increase N/A N/A N/A 3.00 % 3.00 % 5.00 % (1) Expected return on plan assets is net of expected investment expenses and certain administrative expenses. (2) During the fourth quarter of each year, we review our actuarial assumptions in light of current economic factors to determine if the assumptions need to be adjusted. Net post-retirement expense includes the following components: Post-Retirement Life Insurance Plan Years Ended December 31, 2025 2024 2023 Service cost $ 1 $ 1 $ 1 Interest cost 181 190 192 Amortization of unrecognized gain ( 139 ) ( 62 ) ( 336 ) Net expense $ 43 $ 129 $ ( 143 ) Weighted-average actuarial assumptions (1) Benefit obligation assumptions: Discount rate 5.12 % 5.51 % 4.90 % Rate of compensation increase N/A N/A N/A Pension income/post-retirement expense assumptions: Discount rate 5.51 % 4.90 % 5.11 % Rate of compensation increase N/A N/A N/A (1) During the fourth quarter of each year, we review our actuarial assumptions in light of current economic factors to determine if the assumptions need to be adjusted. The fair value of assets in the non-U.S. pension plan are 100% categorized as cash and cash equivalents, which use Level 1 inputs in the fair value determination. We expect to make $ 89 of contributions to the U.S. plans and $ 168 of contributions to the non-U.S. plan during 2026. CTS CORPORATION 53 Table of Contents Expected benefit payments under the Pension Plans and the postretirement benefit plan, for the five years subsequent to 2025 (i.e., 2026-2030, inclusive), and in the aggregate for the five years thereafter (i.e., 2031-2035, inclusive) are as follows: U.S. Pension Plan Non-U.S. Pension Plan Post- Retirement Life Insurance Plan 2026 $ 89 $ 65 $ 421 2027 84 109 390 2028 78 70 363 2029 73 173 339 2030 68 67 318 2031-2035 257 443 1,347 Total $ 649 $ 927 $ 3,178 Defined Contribution Plans We sponsor a 401(k) plan that covers substantially all of our U.S. employees as well as offer similar defined contribution plans to employees at certain foreign locations. Contributions and costs for such plans were generally determined as a percentage of the covered employee's annual salary. Effective January 1, 2022, in connection with the U.S. plan termination process, we amended our 401(k) plan and transitioned to a non-elective contribution for all U.S. employees that is also determined as a percentage of the covered employee's salary, provides for immediate vesting and is provided regardless of whether the individual employee contributes to the applicable plan. In addition, we began offering a Roth 401(k) option to employees. Expenses related to defined contribution plans include the following: Years Ended December 31, 2025 2024 2023 401(k) and other defined contribution plan expense $ 4,040 $ 3,915 $ 3,858 NOTE 8 — Goodwill and Other Intangible Assets Other Intangible Assets Other intangible assets, net consisted of the following components: As of December 31, 2025 Gross Carrying Amount Accumulated Amortization Net Amount Weighted Average Remaining Amortization Period (in years) Other intangible assets: Customer lists / relationships $ 216,927 $ ( 86,526 ) $ 130,401 9.6 Technology and other intangibles 62,167 ( 39,006 ) 23,161 6.9 Other intangible assets, net $ 279,094 $ ( 125,532 ) $ 153,562 9.2 Amortization expense for the year ended December 31, 2025 $ 16,160 CTS CORPORATION 54 Table of Contents As of December 31, 2024 Gross Carrying Amount Accumulated Amortization Net Amount Other intangible assets: Customer lists / relationships $ 210,354 $ ( 72,500 ) $ 137,854 Technology and other intangibles 61,244 ( 35,216 ) $ 26,028 Other intangible assets, net $ 271,598 $ ( 107,716 ) $ 163,882 Amortization expense for the year ended December 31, 2024 $ 13,348 Amortization expense for the year ended December 31, 2023 $ 11,024 The changes in the gross carrying amounts of intangible assets were primarily due to foreign exchange impacts. The estimated amortization expense for the next five years and thereafter is as follows: Amortization expense 2026 $ 16,147 2027 16,087 2028 16,052 2029 14,884 2030 14,709 Thereafter 75,683 Total future amortization expense $ 153,562 Goodwill Changes in the net carrying amount of goodwill were as follows: Total Goodwill as of December 31, 2023 $ 157,638 Increase due to acquisitions 46,600 Foreign exchange impact ( 2,934 ) Goodwill as of December 31, 2024 $ 201,304 Foreign exchange impact 6,113 Increase due to prior period adjustment $ 2,194 Goodwill as of December 31, 2025 209,611 Refer to Note 3, "Business Acquisitions," for further information on the increase in the net carrying amount of goodwill due to acquisitions. Refer to Note 1, "Summary of Significant Accounting Policies," for further information on the prior period adjustment to Goodwill. We performed our annual impairment test as of October 1, 2025, our measurement date, and concluded that there was no impairment in any of our reporting units. The fair value estimates used in the goodwill impairment analysis required significant judgment. The Company's fair value estimates for the purposes of determining the goodwill impairment charge are considered Level 3 fair value measurements. The fair value estimates were based on assumptions management believes to be reasonable, but that are inherently uncertain, including estimates of future revenues and operating margins and assumptions about the overall economic climate and the competitive environment for the business. NOTE 9 — Costs Associated with Exit and Restructuring Activities Restructuring charges are reported as a separate line within operating earnings in the Consolidated Statements of Earnings. Total restructuring charges were: Years Ended December 31, 2025 2024 2023 Restructuring charges $ 1,396 $ 4,697 $ 7,074 CTS CORPORATION 55 Table of Contents During the year ended December 31, 2025 , we incurred total restructuring charges of $ 1,396 , comprised of $ 1,291 , $ 68 and $ 37 in workforce reduction, building and equipment relocation costs, and asset impairment and other charges, respectively. The remaining restructuring liability associated with these actions was $ 192 and $ 659 at December 31, 2025 and December 31, 2024, respectively. During the first quarter of 2023, we announced the closure of our Juarez manufacturing facility. As a part of this activity, operations from the Juarez plant were consolidated into our expanded Matamoros facility (collectively, the "Matamoros Consolidation"). The Matamoros Consolidation was substantially complete as of December 31, 2024. As a result, our restructuring charges decreased significantly during the year ended December 31, 2025. The following table displays the restructuring liability activity for all plans for the year ended December 31, 2025: Restructuring liability at January 1, 2025 $ 798 Restructuring charges 1,396 Cost paid ( 2,002 ) Restructuring liability at December 31, 2025 $ 192 The total liability of $ 192 is included in accrued expenses and other liabilities at December 31, 2025 . NOTE 10 — Accrued Expenses and Other Liabilities The components of accrued expenses and other liabilities are as follows: December 31, 2025 2024 Accrued product-related costs $ 1,789 $ 1,866 Accrued income taxes 7,175 5,418 Accrued property and other taxes 1,071 1,518 Accrued professional fees 1,454 1,625 Accrued customer-related liabilities 2,602 2,113 Dividends payable 1,151 1,201 Remediation reserves 16,450 12,192 Derivative liabilities 786 334 Other accrued liabilities 4,805 9,094 Total accrued expenses and other liabilities $ 37,283 $ 35,361 NOTE 11 — Commitments and Contingencies Certain processes in the manufacture of our current and past products may create by-products classified as hazardous waste. As a result, we have been notified by the U.S. Environmental Protection Agency (“EPA”), state environmental agencies and in some cases, groups of potentially responsible parties, that we may be potentially liable for environmental contamination at several sites currently or formerly owned or operated by us. Currently, none of these costs and accruals relate to sites that provide revenue generating activities for the Company. Two of those sites, Asheville, North Carolina (the "Asheville Site") and Mountain View, California, are designated National Priorities List sites under the EPA’s Superfund program. We accrue a liability for probable remediation activities, claims, and proceedings against us with respect to environmental matters if the amount can be reasonably estimated, and provide disclosures including the nature of a loss whenever it is probable or reasonably possible that a potentially material loss may have occurred but cannot be estimated. We record contingent loss accruals on an undiscounted basis. A roll-forward of remediation reserves included in accrued expenses and other liabilities in the Consolidated Balance Sheets is composed of the following: Years Ended December 31, 2025 2024 2023 Balance at beginning of period $ 12,192 $ 12,044 $ 11,048 Remediation expense 5,465 1,701 3,502 Remediation payments ( 1,213 ) ( 1,554 ) ( 2,497 ) Other activity (1) 6 1 ( 9 ) Balance at end of the period $ 16,450 $ 12,192 $ 12,044 (1) Other activity includes currency translation adjustments not recorded through remediation expense. CTS CORPORATION 56 Table of Contents The Company operates under and in accordance with a federal consent decree, dated March 7, 2017, with the EPA for the Asheville Site. On February 8, 2023, the Company received a letter from the EPA (the “EPA Letter”) seeking reimbursement of its past response costs and interest thereon relating to any release or threatened release of hazardous substances at the Asheville Site in the aggregate amount of $ 9,955 from the three potentially responsible parties associated with the Asheville Site, including the Company. Subsequently, the Department of Justice (the "DOJ") re-evaluated the EPA's past response costs and interest thereon and adjusted the amount of the costs to $ 8,288 . On October 3, 2025, the Company presented a settlement offer as part of pre-litigation mediation and the mediation is ongoing. There can be no assurance that the matter will settle in mediation. The Company has updated its estimate of potential exposure to be between $ 6,575 and $ 7,169 . We have determined that no point within this range is more likely than another and, therefore, we have recorded a loss estimate of $ 6,575 as of December 31, 2025. Unrelated to the environmental claims described above, certain other legal claims are pending against us with respect to matters arising out of the ordinary conduct of our business. We provide product warranties when we sell our products and accrue for estimated liabilities at the time of sale. Warranty estimates are forecasts based on the best available information and historical claims experience. We accrue for specific warranty claims if we believe that the facts of a specific claim make it probable that a liability in excess of our historical experience has been incurred and provide disclosures for specific claims whenever it is reasonably possible that a material loss may be incurred which cannot be estimated. We cannot provide assurance that the ultimate disposition of environmental, legal, and product warranty claims will not materially exceed the amount of our accrued losses and adversely impact our consolidated financial position, results of operations, or cash flows. Our accrued liabilities and disclosures will be adjusted accordingly if additional information becomes available in the future. NOTE 12 — Leases We lease certain land, buildings and equipment under non-cancellable operating leases used in our operations. Operating lease assets represent our right to use an underlying asset for the lease term. Operating lease liabilities represent the present value of lease payments over the lease term, discounted using an estimate of our secured incremental borrowing rate because none of our leases contain a rate implicit in the lease arrangement. The operating lease assets and liabilities are adjusted to include the impact of any lease incentives and non-lease components. We have elected not to separate lease and non-lease components, which include taxes and common area maintenance in some of our leases. Variable lease payments that depend on an index or a rate are included in lease payments using the prevailing index or rate in effect at lease commencement. Options to extend or terminate a lease are included in the lease term when it is reasonably likely that we will exercise that option. We occasionally enter into short term operating leases with an initial term of twelve months or less. These leases are not recorded in the Consolidated Balance Sheets. We determine if an arrangement is a lease or contains a lease at its inception, which normally does not require significant estimates or judgments. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants and we currently have no material sublease agreements. Components of lease expense for the years ended December 31, 2025, 2024 and 2023 were as follows: Years Ended December 31, 2025 2024 2023 Operating lease cost $ 6,198 $ 6,361 $ 5,762 Short-term lease cost 1,855 935 1,495 Total lease cost $ 8,053 $ 7,296 $ 7,257 For the years ended December 31, 2025, 2024 and 2023 the Company recorded sublease income of $ 533 , $ 526 and $ 532 , respectively. Supplemental cash flow information related to leases was as follows: Years Ended December 31, 2025 2024 2023 Cash paid for amounts included in the measurement of lease obligations $ 6,309 $ 6,395 $ 5,797 Leased assets obtained in exchange for new operating lease obligations $ 4,663 $ 1,053 $ 7,831 CTS CORPORATION 57 Table of Contents Supplemental balance sheet information related to leases was as follows: As of December 31, 2025 2024 Operating lease obligations $ 3,453 $ 4,719 Long-term operating lease obligations 21,841 21,120 Total lease liabilities $ 25,294 $ 25,839 Weighted-average remaining lease terms (years) 5.91 5.88 Weighted-average discount rate 6.51 % 6.54 % Remaining maturity of our existing lease liabilities as of December 31, 2025 was as follows: Operating Leases (1) 2026 $ 4,887 2027 4,778 2028 4,753 2029 4,762 2030 3,401 Thereafter 9,309 Total $ 31,890 Less: interest ( 6,596 ) Present value of lease payments $ 25,294 (1) Operating lease payments include $ 2,751 of payments related to options to extend lease terms that are reasonably expected to be exercised. NOTE 13 — Debt Long-term debt was comprised of the following: As of December 31, 2025 2024 Total credit facility availability $ 300,000 $ 400,000 Balance outstanding 57,500 92,300 Standby letters of credit 1,640 1,640 Amount available, subject to covenant restrictions $ 240,860 $ 306,060 Weighted-average interest rate 5.48 % 6.41 % On November 24, 2025, we entered into a new five-year revolving credit agreement (the “Revolving Credit Facility”) with a group of banks for a total credit facility availability of $ 300,000 which may be increased by up to $ 125,000 , subject to the administrative agent's approval. The new Revolving Credit Facility matures on November 24, 2030 and modified the financial and non-financial covenants to provide the Company additional flexibility. The new Revolving Credit Facility is unsecured and replaced the prior $ 400,000 revolving credit facility, which would have expired on December 15, 2026. Borrowings in U.S. dollars under the Revolving Credit Facility bear interest, at a per annum rate equal to the applicable Term SOFR rate (but not less than 0.0 %), plus the Term SOFR adjustment, and plus an applicable margin, which ranges from 1.00 % to 1.75 %, based on our net leverage ratio. Similarly, borrowings of alternative currencies under the Revolving Credit Facility bear interest equal to a defined risk-free reference rate, plus the applicable risk-free rate adjustment and plus an applicable margin, which ranges from 1.00 % to 1.75 %, based on our net leverage ratio. We use interest rate swaps to convert a portion of our Revolving Credit Facility's outstanding balance from a variable rate of interest to a fixed rate. The contractual rate of these arrangements ranges from 1.49 % to 2.45 %. The Revolving Credit Facility includes a swing line sublimit of $ 20,000 , a letter of credit sublimit of $ 20,000 and an alternative currency sublimit of $ 150,000 . We also pay a quarterly commitment fee on the unused portion of the Revolving Credit Facility. The commitment fee ranges from 0.175 % to 0.25 % based on our net leverage ratio. The Revolving Credit Facility requires, in addition to customary representations and warranties, that we comply with a maximum net leverage ratio and a minimum interest coverage ratio. Failure to comply with these covenants could reduce the borrowing availability under the Revolving Credit Facility. We were in compliance with all debt covenants at December 31, 2025. The Revolving Credit Facility requires that we deliver quarterly financial statements, annual financial statements, auditor certifications, and compliance certificates within a specified number of days after the end of a quarter and year. Additionally, the Revolving Credit Facility contains restrictions limiting our ability to: dispose of assets; incur certain additional debt; repay other debt or amend subordinated debt instruments; create liens on assets; make investments, loans or advances; make acquisitions or engage in mergers or consolidations; engage in certain transactions with our subsidiaries and affiliates; and make stock repurchases and dividend payments. CTS CORPORATION 58 Table of Contents We have debt issuance costs related to our long-term debt that are being amortized using the straight-line method over the life of the debt. Amortization expense was approximately $ 198 for the year ended December 31, 2025 , $ 194 in 2024 and $ 194 in 2023 . These costs are included in interest expense in our Consolidated Statements of Earnings. NOTE 14 — Derivative Financial Instruments Our earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates and interest rates. We selectively use derivative financial instruments including foreign currency forward contracts and interest rate swaps to manage our exposure to these risks. The use of derivative financial instruments exposes the Company to credit risk, including the risk of nonperformance by a counterparty to the derivative contracts. We manage our credit risk by entering into derivative contracts with only highly rated financial institutions and by using netting agreements. The effective portion of derivative gains and losses are recorded in accumulated other comprehensive income (loss) until the hedged transaction affects earnings upon settlement, at which time they are reclassified to costs of goods sold or net sales. If it is probable that an anticipated hedged transaction will not occur by the end of the originally specified time period, we reclassify the gains or losses related to that hedge from accumulated other comprehensive income (loss) to other income (expense), net. We assess hedge effectiveness qualitatively by verifying that the critical terms of the hedging instrument and the forecasted transaction continue to match, and that there have been no adverse developments that have increased the risk that the counterparty will default. No recognition of ineffectiveness was recorded in our Consolidated Statements of Earnings for the year ended December 31, 2025. Foreign Currency Hedges We use forward contracts to mitigate currency risk related to a portion of our forecasted foreign currency revenues and costs. The currency forward contracts are designed as cash flow hedges and are recorded in the Consolidated Balance Sheets at fair value. We continue to monitor the Company’s overall currency exposure and may elect to add cash flow hedges in the future. At December 31, 2025 , we had a net unrealized gain of $ 5,038 in accumulated other comprehensive income (loss), of which $ 4,106 is expected to be reclassified to earnings within the next 12 months. The notional amount of foreign currency forward contracts outstanding was $ 62,570 at December 31, 2025. Interest Rate Swaps We use interest rate swaps to convert a portion of our Revolving Credit Facility's outstanding balance from a variable rate of interest to a fixed rate. As of December 31, 2025 , we have agreements to fix interest rates on $ 50,000 of long-term debt through December 2026. The difference to be paid or received under the terms of the swap agreements will be recognized as an adjustment to interest expense when settled. These swaps are treated as cash flow hedges and consequently, the changes in fair value are recorded in other comprehensive earnings (loss). The estimated net amount of the existing gains that are reported in accumulated other comprehensive income (loss) that are expected to be reclassified into earnings within the next twelve months is approximately $ 455 . Cross-Currency Swap The Company has operations and investments in various international locations and is subject to risks associated with changing foreign exchange rates. As part of the strategy to limit foreign exchange exposure, the Company entered into a cross-currency interest rate swap agreement on June 27, 2022 that synthetically swapped $ 25,000 of variable rate debt to Krone denominated variable rate debt. Upon completion of the Ferroperm acquisition on June 30, 2022, the transaction was designated as a net investment hedge for accounting purposes and will mature on June 30, 2027 . Accordingly, any gains or losses on this derivative instrument will be included in the foreign currency translation component of other comprehensive income until the net investment is sold, diluted or liquida ted. At December 31, 2025 , the variable rate debt associated with the cross-currency interest rate swap was $ 7,500 due to ongoing principle payments. Interest payments received for the cross-currency interest rate swap are excluded from the net investment hedge effectiveness assessment and are recorded in interest expense in the Condensed Consolidated Statements of Earnings. The assumptions used in measuring fair value of the cross-currency interest rate swap are considered Level 2 inputs, which are based upon the Krone to United States Dollar exchange rate market. At December 31, 2025 we had a net unrealized loss of $ 1,719 in accumulated other comprehensive income (loss). The location and fair values of derivative instruments designated as hedging instruments in the Consolidated Balance Sheets as of December 31, 2025, are shown in the following table: CTS CORPORATION 59 Table of Contents As of December 31, 2025 2024 Interest rate swaps reported in Other current assets $ 455 $ 792 Interest rate swaps reported in Other assets $ — $ 711 Cross-currency swap reported in Other current assets $ — $ 324 Cross-currency swap reported in Accrued expenses and other liabilities $ ( 786 ) $ — Foreign currency hedges reported in Other current assets $ 4,767 $ — Foreign currency hedges reported in Other current liabilities $ — $ ( 2,992 ) The Company has elected to net its foreign currency derivative assets and liabilities in the balance sheet in accordance with ASC 210-20 ( Balance Sheet, Offsetting ). On a gross basis, there were foreign currency derivative assets of $ 5,711 and foreign currency derivative liabilities of $ 944 at December 31, 2025. The effect of derivative instruments on the Consolidated Statements of Earnings is as follows: Years Ended December 31, 2025 2024 2023 Foreign Exchange Contracts: Amounts reclassified from AOCI to earnings: Net sales $ ( 844 ) $ 232 $ ( 130 ) Cost of goods sold 140 710 2,795 Total amounts reclassified from AOCI to earnings ( 704 ) 942 2,665 Total derivative (losses) gains on foreign exchange contracts recognized in earnings $ ( 704 ) $ 942 $ 2,665 Interest Rate Swaps: Income recorded in interest expense $ 905 $ 1,430 $ 1,789 Cross-Currency Swaps: Income recorded in interest expense $ 287 358 515 Total gains on derivatives $ 488 $ 2,730 $ 4,969 NOTE 15 — Accumulated Other Comprehensive Income (Loss) Shareholders’ equity includes certain items classified as accumulated other comprehensive income (loss) (“AOCI”) in the Consolidated Balance Sheets, including: • Unrealized gains (losses) on hedges relate to interest rate swaps to convert a portion of our revolving credit facility's outstanding balance from a variable rate of interest into a fixed rate and foreign currency forward contracts used to hedge our exposure to changes in exchange rates affecting certain revenues and costs denominated in foreign currencies. These hedges are designated as cash flow hedges, and we have deferred income statement recognition of gains and losses until the hedged transactions occur, at which time amounts are reclassified into earnings. Further information related to our derivative financial instruments is included in Note 14, “Derivative Financial Instruments,” and Note 18, “Fair Value Measurements.” • Unrealized gains (losses) on pension obligations are deferred from income statement recognition until the gains or losses are realized. Amounts reclassified to earnings from AOCI are included in net periodic pension income (expense). Further information related to our pension obligations is included in Note 7, “Retirement Plans.” • Cumulative translation adjustment relates to our non-U.S. subsidiary companies that have designated a functional currency other than the U.S. dollar. We are required to translate the subsidiary functional currency financial statements to U.S. dollars using a combination of historical, period-end, and average foreign exchange rates. This combination of rates creates the foreign currency translation adjustment component of other comprehensive earnings (loss). CTS CORPORATION 60 Table of Contents The components of accumulated other comprehensive income (loss) for the year ended December 31, 2025 are as follows: As of December 31, 2024 Gain (Loss) Recognized in OCI (Gain) Loss reclassified from AOCI to earnings As of December 31, 2025 Changes in fair market value of derivatives: Gross $ ( 1,730 ) $ 7,422 $ ( 200 ) $ 5,492 Income tax (expense) benefit 397 ( 1,744 ) 47 ( 1,300 ) Net ( 1,333 ) 5,678 ( 153 ) 4,192 Changes in unrealized pension cost: Gross ( 409 ) 246 ( 138 ) ( 301 ) Income tax benefit (expense) 300 ( 58 ) 19 261 Net ( 109 ) 188 ( 119 ) ( 40 ) Cumulative translation adjustment: Gross ( 2,824 ) 12,420 — 9,596 Income tax benefit (expense) — — — — Net ( 2,824 ) 12,420 — 9,596 Total accumulated other comprehensive income (loss) $ ( 4,266 ) $ 18,286 $ ( 272 ) $ 13,748 The components of accumulated other comprehensive income (loss) for the year ended December 31, 2024 are as follows: As of December 31, 2023 Gain (Loss) Recognized in OCI (Gain) Loss reclassified from AOCI to earnings As of December 31, 2024 Changes in fair market value of derivatives: Gross $ 3,256 $ ( 2,615 ) $ ( 2,371 ) $ ( 1,730 ) Income tax (expense) benefit ( 749 ) 601 545 397 Net 2,507 ( 2,014 ) ( 1,826 ) ( 1,333 ) Changes in unrealized pension cost: Gross ( 1,125 ) 555 161 ( 409 ) Income tax benefit (expense) 442 ( 126 ) ( 16 ) 300 Net ( 683 ) 429 145 ( 109 ) Cumulative translation adjustment: Gross 2,445 ( 5,269 ) — ( 2,824 ) Income tax benefit (expense) — — — — Net 2,445 ( 5,269 ) — ( 2,824 ) Total accumulated other comprehensive income (loss) $ 4,269 $ ( 6,854 ) $ ( 1,681 ) $ ( 4,266 ) NOTE 16 — Shareholders' Equity Share count and par value data related to shareholders' equity are as follows: As of December 31, 2025 2024 Preferred Stock Par value per share No par value No par value Shares authorized 25,000,000 25,000,000 Shares outstanding — — Common Stock Par value per share No par value No par value Shares authorized 75,000,000 75,000,000 Shares issued 57,628,332 57,543,964 Shares outstanding 28,758,100 30,026,045 Treasury stock Shares held 28,870,232 27,517,919 CTS CORPORATION 61 Table of Contents In February 2023, our Board of Directors approved a share repurchase program that authorized the Company to repurchase up to $ 50,000 of the Company’s common stock. The repurchase program had no set expiration date and replaced the repurchase program approved by the Board of Directors on May 13, 2021. The purchases under the program were made from time to time in the open market (including, without limitation, the use of Rule 10b5-1 plans), depending 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. The repurchase program could have been extended, modified, suspended or discontinued at any time. In February 2024, our Board of Directors approved a new share repurchase program that authorized the Company to repurchase up to $ 100,000 of its common stock. The repurchase program has no set expiration date and superseded and replaced the repurchase program approved by the Board of Directors in February 2023. The purchases may be made from time to time in the open market (including, without limitation, the use of Rule 10b5-1 plans), depending 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. The repurchase program may be extended, modified, suspended or discontinued at any time. In November 2025, our Board of Directors approved a new share repurchase program authorizing the Company to repurchase up to $ 100,000 of its common stock. This program replaces the prior share repurchase program that was approved in February 2024. The program has no set expiration date and authorizes repurchases from time to time in the open market (including, without limitation, the use of Rule 10b5-1 plans), or through privately negotiated transactions, and repurchases will depend on various factors, including our evaluation of general market and economic conditions, our financial condition and the trading price of our common stock. The repurchase program may be extended, modified, suspended or discontinued at any time. During the year ended December 31, 2025 , 1,352,313 shares of common stock were repurchased for approximately $ 56,859 , pursuant to the share repurchase programs described above. As of December 31, 2025 approximately $ 90,367 was still available for future purchases under the November 2025 program. As of 2023, we are subject to a 1% excise tax on stock repurchases under the United States Inflation Reduction Act of 2022, which we include in the cost of stock repurchases as a reduction of shareholders’ equity. As of December 31, 2025 , we accrued $ 517 for repurchases within Accrued expenses and other liabilities in the Consolidated Balance Sheet. A roll forward of common shares outstanding is as follows: As of December 31, 2025 2024 Balance at beginning of the year 30,026,045 30,824,248 Repurchases ( 1,352,313 ) ( 897,939 ) Restricted stock unit issuances 84,368 99,736 Balance at end of period 28,758,100 30,026,045 NOTE 17 — Stock-Based Compensation At December 31, 2025 , we had five stock-based compensation plans: the Non-Employee Directors' Stock Retirement Plan ("Directors' Plan"), the 2004 Omnibus Long-Term Incentive Plan ("2004 Plan"), the 2009 Omnibus Equity and Performance Incentive Plan ("2009 Plan"), the 2014 Performance and Incentive Plan ("2014 Plan"), and the 2018 Equity and Incentive Compensation Plan ("2018 Plan"). Future grants can only be made under the 2018 Plan. The 2018 Plan allows for grants of stock options, stock appreciation rights, restricted stock, RSUs, performance shares, performance units, and other stock awards subject to the terms of the 2018 Plan. The following table summarizes the compensation expense included in selling, general and administrative expenses in the Consolidated Statements of Earnings related to stock-based compensation plans: Years Ended December 31, 2025 2024 2023 Service-Based RSUs $ 3,120 $ 3,788 $ 2,869 Performance-Based RSUs 1,234 1,673 1,813 Cash-settled awards 535 189 499 Total $ 4,889 $ 5,650 $ 5,181 Income tax benefit 1,149 1,300 1,192 Net $ 3,740 $ 4,350 $ 3,989 CTS CORPORATION 62 Table of Contents The fair value of all equity awards that vested during the periods ended December 31, 2025, 2024 and 2023 were $ 7,269 , $ 7,599 and $ 8,282 , respectively. We recorded a tax deduction related to equity awards that vested during the year ended December 31, 2025 , in the amount of $ 1,566 . The following table summarizes the unrecognized compensation expense related to non-vested RSUs by type and the weighted-average period in which the expense is to be recognized: Unrecognized compensation expense at December 31, 2025 Weighted- average period Service-Based RSUs $ 2,796 1.24 Performance-Based RSUs 2,901 1.80 Total $ 5,697 1.52 We recognize expense on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards. The following table summarizes the status of these plans as of December 31, 2025: 2018 Plan 2014 Plan 2009 Plan 2004 Plan Directors' Plan Awards originally available to be granted 2,500,000 1,500,000 3,400,000 6,500,000 N/A Maximum potential awards outstanding 701,842 35,100 30,000 14,545 4,722 RSUs and cash settled awards vested and released 780,474 — — — — Awards available to be granted 1,017,684 — — — — Service-Based Restricted Stock Units Service-based RSUs entitle the holder to receive one share of common stock for each unit when the unit vests. RSUs are issued to officers, key employees, and non-employee directors as compensation. Generally, the RSUs vest over a three-year period. RSUs granted to non-employee directors generally vest one year after being granted. Upon vesting, the non-employee directors may elect to either receive the stock associated with the RSU immediately or defer receipt of the stock to a future date. The fair value of the RSUs is equivalent to the trading value of our common stock on the grant date. A summary of RSU activity for the year ended December 31, 2025 is presented below: Units Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at January 1, 2025 322,847 $ 34.06 Granted 96,208 44.46 Released ( 62,764 ) 40.58 Forfeited ( 35,651 ) 44.10 Outstanding at December 31, 2025 320,640 $ 34.82 19.33 $ 13,746 Releasable at December 31, 2025 169,267 $ 26.42 28.99 $ 7,256 Years Ended December 31, 2025 2024 2023 Weighted-average fair value upon release $ 45.97 $ 45.66 $ 45.19 Intrinsic value of RSUs released $ 2,885 $ 2,682 $ 3,316 CTS CORPORATION 63 Table of Contents A summary of non-vested RSU activity for the year ended December 31, 2025 is presented below: RSUs Weighted Average Grant Date Fair Value Nonvested at January 1, 2025 160,780 $ 44.07 Granted 96,208 44.46 Vested ( 69,964 ) 44.43 Forfeited ( 35,651 ) 44.10 Nonvested at December 31, 2025 151,373 $ 44.21 Performance-Based Restricted Stock Units We grant performance-based restricted stock units ("PRSUs") to certain executives and key employees. PRSUs are usually awarded in the range from zero percent to 200 % of a targeted number of shares . The award rate for the 2023-2025, 2024-2026 and 2025-2027 PRSUs is dependent upon our achievement of targets for sales growth, cash flow, and a relative total shareholder return ("RTSR") modifier. We use a matrix based on the percentile ranking of our stock price performance compared to a peer group of companies over a three-year period to calculate the achievement of the RTSR targets. Other PRSUs are granted from time to time based on other performance criteria. The initial fair value of the PRSUs is equivalent to the trading value of the target amount of our common stock on the grant date. The fair value is subsequently adjusted quarterly based on management's assessment of the Company's performance relative to the target number of shares performance criteria. A summary of PRSU activity for the year ended December 31, 2025 is presented below: Units Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at January 1, 2025 222,344 $ 40.15 Granted 106,943 44.72 Added by performance factor 39,581 37.93 Released ( 79,162 ) 37.93 Forfeited ( 89,108 ) 37.32 Outstanding at December 31, 2025 200,598 $ 44.07 2.50 $ 8,734,677 Releasable at December 31, 2025 — $ — $ — The following table summarizes each grant of PRSUs outstanding at December 31, 2025: Description Grant Date Vesting Year Vesting Dependency Target Units Outstanding Maximum Number of Units to be Granted 2023-2025 Performance RSUs February 9, 2023 2025 60 % sales growth, 40 % operating cash flow, RTSR modifier 48,573 97,146 2024-2026 Performance RSUs February 7, 2024 2026 60 % sales growth, 40 % operating cash flow, RTSR modifier 59,403 118,806 2025-2027 Performance RSUs Varies 2027 60 % sales growth, 40 % operating cash flow, RTSR modifier 69,637 139,274 Evolution 2030 Performance RSUs June 2, 2025 2028 70 % sales target, 30 % gross margin percentage target 9,204 18,408 Evolution 2030 Performance RSUs June 2, 2025 2030 70 % sales target, 30 % gross margin percentage target 13,781 27,562 Total 200,598 401,196 CTS CORPORATION 64 Table of Contents Cash-Settled Restricted Stock Units Cash-Settled RSUs entitle the holder to receive the cash equivalent of one share of common stock for each unit when the unit vests. These RSUs are issued to key employees residing in foreign locations as direct compensation. Generally, these RSUs vest over a three-year period. Cash-settled RSUs are classified as liabilities and are remeasured at each reporting date until settled. At December 31, 2025 and 2024 , we had 39,661 and 44,127 cash-settled RSUs outstanding, respectively. At December 31, 2025 and 2024 , liabilities of $ 594 and $ 608 , respectively, were included in accrued expenses and other liabilities on our Consolidated Balance Sheets. NOTE 18 — Fair Value Measurements The table below summarizes the financial assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2025 and the gain (loss) recorded during the year ended December 31, 2025: Asset (Liability) Carrying Value at December 31, 2025 Quoted Prices in Active Markets for Identical (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Gain (Loss) for Year Ended December 31, 2025 Interest rate swap $ 455 $ — $ 455 $ — $ 905 Foreign currency hedges $ 4,767 $ — $ 4,767 $ — $ ( 704 ) Cross-currency swap $ ( 786 ) $ — $ ( 786 ) $ — $ 287 Qualified replacement plan assets $ 8,991 $ 8,991 $ — $ — $ 422 Contingent consideration $ ( 3,453 ) $ — $ — $ ( 3,453 ) $ 3,575 The table below summarizes the financial assets that were measured at fair value on a recurring basis as of December 31, 2024 and the gain recorded during the year ended December 31, 2024: Asset (Liability) Carrying Value at December 31, 2024 Quoted Prices in Active Markets for Identical (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Gain for Year Ended December 31, 2024 Interest rate swap $ 1,503 $ — $ 1,503 $ — $ 1,430 Foreign currency hedges $ ( 2,992 ) $ — $ ( 2,992 ) $ — $ 942 Cross-currency swap $ 324 $ — $ 324 $ — $ 358 Qualified replacement plan assets $ 11,380 $ 11,380 $ — $ — $ 644 Contingent consideration $ ( 7,028 ) $ — $ — $ ( 7,028 ) $ 1,765 We use interest rate swaps to convert a portion of our Revolving Credit Facility’s outstanding balance from a variable rate of interest into a fixed rate and foreign currency forward contracts to hedge the effect of foreign currency changes on certain revenues and costs denominated in foreign currencies. In addition, the Company entered into a cross currency swap agreement in order to manage its exposure to changes in interest rates related to foreign debt. These derivative financial instruments are measured at fair value on a recurring basis. The fair value of our interest rate swaps, and foreign currency hedges were measured using standard valuation models using market-based observable inputs over the contractual terms, including forward yield curves, among others. There is a readily determinable market for these derivative instruments, but that market is not active and therefore they are classified within Level 2 of the fair value hierarchy. The qualified replacement plan ("QRP") assets consist of investment funds maintained for future contributions to the Company’s U.S. 401(k) plan. The investments are Level 1 marketable securities and are recorded in Other Assets on our Consolidated Balance Sheets. Gains and losses from these investments are recorded in other income and expense in the Consolidated Statements of Earnings. Refer to Note 7, "Retirement Plans," for further information on the QRP. The fair value of the contingent consideration required significant judgment. The Company's fair value estimates used in the contingent consideration valuation are considered Level 3 fair value measurements. The fair value estimates were based on assumptions management believes to be reasonable, but that are inherently uncertain, including estimates of future revenues and customer order targets. These estimates are highly judgmental and changes to the estimate of expected future contingent consideration payments may occur, from time to time, due to various reasons, including actual results differing from estimates and/or from adjustments to the revenue or customer order target assumptions used as the basis for the liability. A roll-forward of the contingent consideration is as follows: CTS CORPORATION 65 Table of Contents Contingent Consideration Balance at December 31, 2024 $ 7,028 Change in fair value ( 3,575 ) Balance at December 31, 2025 $ 3,453 As of December 31, 2025 , $ 3,453 of contingent consideration was recorded in other long-term obligations in the Consolidated Balance Sheets. Our long-term debt consists of debt outstanding under the Revolving Credit Facility, which is recorded at its carrying value. There is a readily determinable market for our long-term debt, and it is classified within Level 2 of the fair value hierarchy as the market is not deemed to be active. The fair value of long-term debt approximates carrying value and was determined by valuing a similar hypothetical coupon bond and attributing that value to our long-term debt under the Revolving Credit Facility. NOTE 19 — Income Taxes Earnings (Loss) before income taxes consist of the following: Years Ended December 31, 2025 2024 2023 U.S. $ ( 395 ) $ 2,677 $ ( 9,265 ) Non-U.S. 84,166 65,904 84,418 Total $ 83,771 $ 68,581 $ 75,153 Significant components of income tax provision/(benefit) are as follows: Years Ended December 31, 2025 2024 2023 Current: U.S. Federal $ 12 $ ( 6 ) $ ( 676 ) U.S. State 121 109 8 Non-U.S. 16,150 14,097 16,279 Total Current 16,283 14,200 15,611 Deferred: U.S. Federal 1,343 ( 865 ) ( 1,444 ) U.S. State ( 371 ) ( 230 ) ( 31 ) Non-U.S. 1,199 4 485 Total Deferred 2,171 ( 1,091 ) ( 990 ) Total provision for income taxes $ 18,454 $ 13,109 $ 14,621 CTS CORPORATION 66 Table of Contents Total amount of income taxes paid during each period are as follows: As of December 31, 2025 2024 2023 U.S. Federal $ - $ - $ - State ( 184 ) 62 99 Total U.S. ( 184 ) 62 99 Non-U.S. China 9,584 9,734 11,148 Czech Republic 1,185 811 177 Denmark 433 936 153 Mexico 1,324 1,216 1,329 Singapore 1,124 1,835 2,915 Taiwan 2,902 1,734 3,972 All Other 386 271 442 Total Non-U.S. 16,938 16,537 20,136 Total taxes paid: $ 16,754 $ 16,599 $ 20,235 Significant components of our deferred tax assets and liabilities are as follows: As of December 31, 2025 2024 Post-retirement benefits $ 845 $ 889 Inventory reserves 1,345 1,387 Loss carry-forwards 2,007 2,378 Credit carry-forwards 18,088 15,205 Accrued expenses 6,235 4,736 Research and development expenditures 18,086 19,003 Operating lease liabilities 6,266 6,406 Stock compensation 2,375 2,537 Foreign exchange loss 67 69 Derivatives — 406 Other 482 803 Gross deferred tax assets 55,796 53,819 Depreciation and amortization 24,716 22,191 Statutory inventory adjustments 1,216 834 Qualified replacement plan 2,094 2,618 Operating lease assets 5,849 6,003 Subsidiaries' unremitted earnings 1,726 1,733 Derivatives 1,292 — Other — — Gross deferred tax liabilities 36,893 33,379 Net deferred tax assets 18,903 20,440 Deferred tax asset valuation allowance ( 6,593 ) ( 5,592 ) Total net deferred tax assets $ 12,310 $ 14,848 The deferred tax assets and deferred tax liabilities, classified as non-current, are as follows: As of December 31, 2025 2024 Non-current deferred tax assets $ 25,110 $ 27,591 Non-current deferred tax liabilities $ ( 12,800 ) $ ( 12,743 ) Total net deferred tax assets $ 12,310 $ 14,848 CTS CORPORATION 67 Table of Contents At each reporting date, we weigh all available positive and negative evidence to assess whether it is more-likely-than-not that the Company's deferred tax assets, including deferred tax assets associated with accumulated loss carry-forwards and tax credits in the various jurisdictions in which it operates, will be realized. As of December 31, 2025 and 2024 , we recorded deferred tax assets related to certain U.S. state and non-U.S. income tax loss carry-forwards of $ 2,007 and $ 2,378 , respectively, and U.S. and non-U.S. tax credits of $ 18,088 and $ 15,205 , respectively. The deferred tax assets expire in various years primarily between 2026 and 2045 . Generally, we assess if it is more-likely-than-not that our net deferred tax assets will be realized during the available carry-forward periods. As a result, we have determined that valuation allowances of $ 6,593 and $ 5,592 should be provided for certain deferred tax assets at December 31, 2025 and 2024, respectively. As of December 31, 2025, the valuation allowances relate to certain U.S. state and non-U.S. loss carry-forwards and certain U.S. state tax credits that management does not anticipate will be utilized. A valuation allowance for 2025 and 2024 of $ 158 and $ 157 was recorded against the U.S. federal foreign tax credit carry-forwards of $ 3,676 and $ 2,447 , respectively. These credits begin to expire in varying amounts between 2031 and 2035 . A valuation allowance for 2025 and 2024 of $ 947 and $ 275 was recorded against the U.S. federal research and development tax credits of $ 10,386 and $ 9,914 , respectively. These credits begin to expire in varying amounts between 2026 and 2045 . We assessed the anticipated realization of those tax credits utilizing future taxable income projections. Based on those projections, management believes it is more-likely-than-not that we will realize the benefits of these tax credit carry-forwards. CTS CORPORATION 68 Table of Contents The following table reconciles taxes at the U.S. federal statutory rate to the effective income tax rate: Years Ended December 31, 2025 2024 2023 Amount Percentage Amount Percentage Amount Percentage US Federal Statutory Rate $ 17,592 21.0 % $ 14,957 21.0 % $ 15,782 21.0 % State and local income taxes, net of federal income tax benefit (a) ( 189 ) ( 0.2 )% ( 91 ) ( 0.1 )% ( 25 ) ( 0.0 )% Foreign Tax Effects China Statutory Rate Difference 1,276 1.5 % 1,087 1.5 % 1,364 1.8 % Withholding Taxes 1,982 2.4 % 1,868 2.6 % 1,855 2.5 % Other ( 552 ) ( 0.7 )% 430 0.6 % 248 0.3 % Mexico Statutory Rate Difference ( 2,666 ) ( 3.2 )% ( 4,125 ) ( 5.8 )% ( 4,038 ) ( 5.4 )% Non-deductible expenses ( 316 ) ( 0.4 )% 794 1.1 % ( 397 ) ( 0.5 )% Other ( 8 ) ( 0.0 )% 3 0.0 % ( 1 ) ( 0.0 )% Singapore Statutory Rate Difference ( 588 ) ( 0.7 )% ( 456 ) ( 0.6 )% ( 600 ) ( 0.8 )% Non-taxable Interest ( 655 ) ( 0.8 )% ( 1,053 ) ( 1.5 )% ( 445 ) ( 0.6 )% Other ( 99 ) ( 0.1 )% 2 0.0 % 39 0.1 % Taiwan Statutory Rate Difference ( 75 ) ( 0.1 )% ( 83 ) ( 0.1 )% ( 67 ) ( 0.1 )% Withholding Taxes 1,004 1.2 % 881 1.2 % 816 1.1 % Other ( 92 ) ( 0.1 )% 142 0.2 % 37 0.0 % Other Foreign Jurisdiction 464 0.6 % 551 0.8 % 225 0.3 % Effects of Cross- Border Tax Laws SubPart F 351 0.4 % 289 0.4 % ( 50 ) ( 0.1 )% Global Intangible Low-Taxed Income (GILTI) 1,169 1.4 % ( 449 ) ( 0.6 )% 2,855 3.8 % Foreign-Derived Intangible Income (FDII) 25 0.0 % ( 26 ) ( 0.0 )% — — Withholding Taxes ( 1,378 ) ( 1.6 )% ( 1,288 ) ( 1.8 )% ( 1,375 ) ( 1.8 )% Other — — 19 0.0 % ( 24 ) ( 0.0 )% Effects of Changes in Tax Laws and Rates 979 1.2 % — — ( 780 ) ( 1.0 )% Tax Credits Research & Experimental Credits ( 353 ) ( 0.4 )% ( 473 ) ( 0.7 )% ( 1,256 ) ( 1.7 )% Changes in valuation allowances 366 0.4 % ( 189 ) ( 0.3 )% 449 0.6 % Non-deductible or Non-Taxable items Stock compensation ( 306 ) ( 0.4 )% ( 358 ) ( 0.5 )% ( 549 ) ( 0.7 )% Executive compensation 924 1.1 % 856 1.2 % 769 1.0 % Contingent liabilities ( 149 ) ( 0.2 )% ( 415 ) ( 0.6 )% — — Other 192 0.2 % 333 0.5 % ( 1 ) ( 0.0 )% Change in unrecognized tax benefits ( 119 ) ( 0.1 )% ( 79 ) ( 0.1 )% ( 230 ) ( 0.3 )% Other ( 325 ) ( 0.4 )% ( 18 ) ( 0.0 )% 20 0.0 % Total 18,454 22.0 % 13,109 18.4 % 14,621 19.5 % (a) State Taxes in California, Indiana, Massachusetts, New Mexico, and Rhode Island made up the majority (greater than 50 percent) of the tax effect in this category Under current U.S. tax regulations, in general, repatriation of foreign earnings to the U.S. can be completed with no incremental U.S. tax. However, there are limited other taxes that continue to apply such as foreign withholding and certain state taxes. The Company records a deferred tax liability for the estimated foreign earnings and state tax cost associated with the undistributed foreign earnings that are not permanently reinvested. In accordance with guidance issued by the FASB staff, the Company has adopted an accounting policy to treat any Global Intangible Low-Taxed Income inclusions as an expense in the period the tax was incurred. CTS CORPORATION 69 Table of Contents We recognize the financial statement benefit of a tax position when it is more-likely-than-not, based on its technical merits, that the position will be sustained upon examination. A tax position that meets the more-likely-than-not threshold is then measured to determine the amount of benefit to be recognized in the financial statements. As of December 31, 2025 , we have approximately $ 1,951 of unrecognized tax benefits, which if recognized, would impact the effective tax rate. We anticipate reducing our unrecognized tax benefits by approximately $ 468 in the next 12 months. The One Big Beautiful Bill Act (the "OBBBA") was signed into law on July 4, 2025. The OBBBA contains significant tax law changes with various effective dates after its enactment date and made permanent the expiring tax provisions of the 2017 Tax Cuts and Jobs Act. The OBBBA also includes changes to the taxation of foreign derived intangible income, global intangible low-taxed income, interest expense, and research & developmental expenses. The impacts of these changes are reflected in the tax expense for 2025, resulting in a provisional non-cash charge of approximately $ 979 . A reconciliation of the beginning and ending unrecognized tax benefits is provided below: As of December 31, 2025 2024 Balance at January 1 $ 1,951 $ 1,943 Increase related to current year tax positions 83 86 Increase (Decrease) related to prior year tax positions — 25 Decrease related to lapse in statute of limitation ( 119 ) ( 103 ) Balance at December 31 $ 1,915 $ 1,951 Our continuing practice is to recognize interest and/or penalties related to unrecognized tax benefits as income tax expense. As of December 31, 2025 and 2024 , $ 39 and $ 39 , respectively, of interest and penalties were accrued. We are subject to taxation in the U.S., various states, and in non-U.S. jurisdictions. Our U.S. income tax returns are primarily subject to examination from 2021 through 2024 ; however, U.S. tax authorities also have the ability to review prior tax years to the extent loss carry-forwards and tax credit carry-forwards are utilized. The open years for the non-U.S. tax returns range from 2014 through 2024 based on local statutes. NOTE 20 — Segment Information The Company designs, manufactures, and sells a broad line of sensors, connectivity components, and actuators across multiple end markets in North America, Asia, and Europe. Our Chief Operating Decision Maker (“CODM”), who is our Chair, President and Chief Executive Officer , analyzes the results of our business through one reportable segment. Our CODM evaluates the operating results and performance through Net earnings, which are reported on the Consolidated Statements of Earnings. These financial metrics are used to view operating trends, perform analytical comparisons and benchmark performance between periods and to monitor budget-to-actual variances on a monthly basis. To manage operations and make decisions regarding resource allocations, our CODM is regularly provided and reviews expense information at a consolidated level for our Cost of goods sold, Selling, general, and administrative expenses and Research and development expenses, which are reported on the Consolidated Statements of Earnings. Currently, a focus is being placed on sales growth, diversification, and profitability. The measure of segment assets is reported on the Consolidated Balance Sheet as Total Assets, but the CODM does not use discrete balance sheet information in assessing performance and allocating resources. NOTE 21 — Geographic Data Financial information relating to our operations by geographic area were as follows: Years Ended December 31, Net Sales 2025 2024 2023 United States $ 304,743 $ 298,135 $ 302,530 China 87,044 89,357 108,683 Czech Republic 43,475 41,265 42,068 Denmark 41,431 29,661 29,208 Taiwan 22,392 22,186 22,619 Singapore 26,494 21,137 29,912 Other non-U.S. 15,739 13,015 15,402 Consolidated net sales $ 541,318 $ 514,756 $ 550,422 CTS CORPORATION 70 Table of Contents Sales are attributed to countries based upon the origin of the sale. Years Ended December 31, Long-Lived Tangible Assets 2025 2024 United States $ 30,659 $ 33,283 China 21,801 23,752 Mexico 19,052 19,373 Czech Republic 9,585 8,674 Taiwan 4,685 5,530 Other non-U.S 3,959 3,745 Consolidated long-lived assets $ 89,741 $ 94,357 CTS CORPORATION 71 Table of Contents CTS CORPORATION SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS (in thousands) Balance at Beginning of Period Charged to Expense Charged to Other Accounts Write-offs / Recoveries Balance at End of Period Year ended December 31, 2025 Allowance for credit losses $ 730 $ 262 $ — $ ( 82 ) $ 910 Year ended December 31, 2024 Allowance for credit losses $ 931 $ 91 $ — $ ( 292 ) $ 730 Year ended December 31, 2023 Allowance for credit losses $ 1,236 $ 125 $ — $ ( 430 ) $ 931 CTS CORPORATION 72 Table of Contents Item 9. Changes in and Disagreements with Acco untants on Accounting and Financial Disclosure Not applicable. Item 9A. Control s and Procedures (a) Evaluation of Disclosure and Controls Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K were effective in providing reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within CTS Corporation have been detected. (b) Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act). Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control—Integrated Framework (2013 framework). Based on our assessment under the framework in Internal Control—Integrated Framework (2013 framework), our management concluded that our internal control over financial reporting was effective as of December 31, 2025. The effectiveness of our internal control over financial reporting as of December 31, 2025 has been audited by Grant Thornton LLP, an independent registered public accounting firm, as stated in their report that is included herein. (c) Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting for the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. CTS CORPORATION 73 Table of Contents REPORT OF INDEPENDENT REGIST ERED PUBLIC ACCOUNTING FIRM Board of Directors and Shareholders CTS Corporation Opinion on internal control over financial reporting We have audited the internal control over financial reporting of CTS Corporation (an Indiana corporation) and subsidiaries (the “Company”) as of December 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2025, and our report dated February 24, 2026 expressed an unqualified opinion on those financial statements. Basis for opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting (“Management’s Report”). Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and limitations of internal control over financial reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ GRANT THORNTON LLP Chicago, Illinois February 24, 2026 CTS CORPORATION 74 Table of Contents Item 9B. Othe r Information During the quarter ended December 31, 2025 , no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted , modified or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as each term is defined in Item 408 of Regulation S-K). Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. PART III Item 10. Directors, Executive Of ficers and Corporate Governance Please see Part I, Item 1 of this Annual Report on Form 10-K for information about our executive officers, which is incorporated by reference herein. Information with respect to our directors and our corporate governance policies and practices, including our insider trading policy, may be found in our definitive proxy statement to be delivered to shareholders in connection with our 2026 Annual Meeting of Shareholders. Such information is incorporated herein by reference. Item 11. Execut ive Compensation Information with respect to this item may be found in our definitive proxy statement to be delivered to shareholders in connection with our 2026 Annual Meeting of Shareholders. Such information is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters Information with respect to this item may be found in our definitive proxy statement to be delivered to shareholders in connection with our 2026 Annual Meeting of Shareholders. Such information is incorporated herein by reference. EQUITY COMPENSATION PLAN INFORMATION The following table provides information about shares of CTS common stock that could be issued under all of our equity compensation plans as of December 31, 2025: Plan Category (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (2) (b) Weighted- Average Excercise Price of Outstanding Options, Warrants and Rights (2) (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column(a)) (3) Equity compensation plans approved by security holders 781,487 $ 36.48 1,017,684 Equity compensation plans not approved by security holders (1) 4,722 — — Total 786,209 1,017,684 (1) In 1990, we adopted the Stock Retirement Plan for Non-Employee Directors. Prior to December 1, 2004, we annually credited an account for each non-employee director with 800 CTS common stock units. We also annually credited each deferred stock account with an additional number of CTS common stock units representing the amount of dividends which would have been paid on an equivalent number of shares of CTS common stock for each quarter during the preceding calendar year. As of December 1, 2004, this plan was amended to preclude crediting any additional CTS common stock units under the plan. Upon retirement, a participating non-employee director is entitled to receive one share of CTS common stock for each CTS common stock unit in his deferred stock account. On December 31, 2025, the deferred stock accounts contained a total of 4,722 CTS common stock units. (2) Based on achievement of the maximum targets for performance-based equity grants. As a result, this aggregate reported number may overstate actual dilution. The weighted-average exercise price disclosed in column (b) does not take either the deferred stock account holdings or these performance-based equity grants into account. CTS CORPORATION 75 Table of Contents (3) All of these shares may be issued with respect to award vehicles other than just stock options or stock appreciation rights or other rights to acquire shares. Item 12. Security Ownership of Certain Beneficial O wners and Management and Related Shareholder Matters Information with respect to this item may be found in our definitive proxy statement to be delivered to shareholders in connection with our 2026 Annual Meeting of Shareholders. Such information is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence Information with respect to this item may be found in our definitive proxy statement to be delivered to shareholders in connection with our 2026 Annual Meeting of Shareholders. Such information is incorporated herein by reference. Item 14. Principal Accou ntant Fees and Services Information with respect to the aggregate fees billed to us by our principal accountant, Grant Thornton LLP (PCAOB ID No. 248 ), may be found in our definitive proxy statement to be delivered to shareholders in connection with our 2026 Annual Meeting of Shareholders. Such information is incorporated herein by reference. CTS CORPORATION 76 Table of Contents PART IV Item 15. Exhibits and Fina ncial Statements Schedules (a) (1) Financial Statements The financial statements are filed as part of this Annual Report on Form 10-K under “Item 8. Financial Statements and Supplementary Data.” (a) (2) Financial Statement Schedule: Schedule II: Valuation and Qualifying Accounts and Reserves Other schedules have been omitted because they are not applicable, or the required information is shown in the Consolidated Financial Statements or Notes thereto. (a) (3) Exhibits All references to documents filed pursuant to the Securities Exchange Act of 1934, including Forms 10-K, 10-Q and 8-K, were filed by CTS, File No. 1-4639. (3)(i) Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3 to the Current Report on Form 8-K, filed with the SEC on June 3, 2022). (3)(ii) Amended and Restated Bylaws of CTS Corporation (incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K, filed with the SEC on May 13, 2024). (4)( 1 ) Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.1 to the Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 24, 2023). (10)(a) CTS Corporation Stock Retirement Plan for Non-Employee Directors, effective April 30, 1990, as amended (incorporated by reference to Exhibit (10)(a) to the Quarterly Report on Form 10-Q for the quarter ended March 30, 2003, filed with the SEC on April 23, 2003).* (10)(b) Amendment to the CTS Corporation Stock Retirement Plan for Non-Employee Directors, dated as of December 1, 2004 (incorporated by reference to Exhibit (10)(j) to the Annual Report on Form 10-K for the year ended December 31, 2004, filed with the SEC on March 4, 2005). (10)(c) Prototype Individual Excess Benefit Retirement Plan (incorporated by reference to Exhibit 10(d) to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2007, filed with the SEC on October 24, 2007).* (10)(d) CTS Corporation Executive Severance Policy, effective as of September 10, 2009 (incorporated by reference to Exhibit 10 to the Quarterly Report on Form 10-Q for the quarter ended September 27, 2009, filed with the SEC on October 28, 2009).* (10)(e) Prototype Change in Control Agreement (incorporated by reference to Exhibit 10(x) to the Annual Report on Form 10-K for the year ended December 31, 2011, filed with the SEC on February 24, 2012).* (10)(f) First Amendment to the CTS Corporation Executive Severance Policy (incorporated by reference to Exhibit 10(b) to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, filed with the SEC on April 25, 2013).* (10)(g) CTS Corporation 2014 Performance and Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the Form 8-K, filed with the SEC on May 22, 2014).* (10)(h) Credit Agreement by and among CTS Corporation, and its subsidiary CTS Denmark Holding A/S, the Lenders from time to time parties thereto, and Wells Fargo Bank N.A, as L/C Issuer Swing Line Lender and Administrative Agent dated November 24, 2025 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on November 24, 2025). (10)(i) CTS Corporation Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Form 8-K, filed with the SEC on February 18, 2015) (10)(j) CTS Corporation 2018 Equity and Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the Form 8-K, filed with the SEC on May 22, 2018). CTS CORPORATION 77 Table of Contents (10)(k) Form Restricted Stock Unit Agreement (service-based) under the CTS Corporation 2018 Equity and Incentive Compensation Plan, (incorporated by reference to Exhibit 10(a) to Form 10-Q filed with the SEC on April 27, 2023). (10)(l) Form Restricted Stock Unit Agreement (performance-based) under the CTS Corporation 2018 Equity and Incentive Compensation Plan, (incorporated by reference to Exhibit 10(e) to Form 10-Q filed with the SEC on April 27, 2023). (19) Insider Trading Policy (incorporated by reference to Exhibit 19 to the Annual Report Form 10-K for the year ended December 31, 2024 filed with the SEC on February 26, 2025). (21) Subsidiaries (23) Consent of Grant Thornton LLP. (31)(a) Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (31)(b) Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (32)(a) Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (32)(b) Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97 Compensation Clawback Policy (incorporated by reference to Exhibit 97 to the Annual Report Form 10-K for the year ended December 31, 2024 filed with the SEC on February 26, 2025). 101 The following financial statements from the Company's Annual Report on Form 10-K for the year ended December 31, 2025, formatted in Inline XBRL: (i) Consolidated Statements of Earnings, (ii) Consolidated Statements of Comprehensive Earnings, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Stockholders' Equity and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags. 104 The cover page from the Company's Annual Report on Form 10-K for the year ended December 31, 2025, formatted in Inline XBRL * Management contract or compensatory plan or arrangement. ** Certain exhibits and schedules to this Exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant agrees to furnish supplementally a copy of any omitted exhibit or schedule to the SEC upon request. Item 16. Form 10-K Summary None. CTS CORPORATION 78 Table of Contents SIGNAT URES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CTS Corporation Date: February 24, 2026 By: /s/ Ashish Agrawal Ashish Agrawal Vice President and Chief Financial Officer (Principal Financial Officer & Principal Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: February 24, 2026 By: /s/ Kieran O'Sullivan Kieran O'Sullivan Chairman, President, and Chief Executive Officer (Principal Executive Officer) Date: February 24, 2026 By: /s/ Robert A. Profusek Robert A. Profusek Lead Director Date: February 24, 2026 By: /s/ William S. Johnson William S. Johnson Director Date: February 24, 2026 By: /s/ Alfonso G. Zulueta Alfonso G. Zulueta Director Date: February 24, 2026 By: /s/ Donna M. Costello Donna M. Costello Director Date: February 24, 2026 By: /s/ Randy Stone Randy Stone Director Date: February 24, 2026 By: /s/ Amy Dodrill Amy Dodrill Director Date: February 24, 2026 By: /s/ Kimberly Banks MacKay Kimberly Banks MacKay Director CTS CORPORATION 79