CTS Corporation (CTS)

Return on total capital

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	78,484	81,508	79,414	80,040	82,929	76,741	-30,204	-47,821	-58,769	-54,040	50,358	57,253	48,750	42,476	35,395	45,009	52,914	56,531	63,363	59,089
Long-term debt	US$ in thousands	67,500	76,665	77,040	80,261	83,670	85,478	91,027	50,000	50,000	50,000	50,000	50,000	54,600	106,300	141,300	151,200	99,700	112,700	50,000	50,000
Total stockholders’ equity	US$ in thousands	526,822	522,667	521,395	514,136	506,224	490,612	485,947	480,178	463,578	457,374	454,309	435,716	423,682	413,966	400,892	397,466	405,219	395,194	395,545	386,893
Return on total capital		13.21%	13.60%	13.27%	13.47%	14.06%	13.32%	-5.23%	-9.02%	-11.44%	-10.65%	9.99%	11.79%	10.19%	8.16%	6.53%	8.20%	10.48%	11.13%	14.22%	13.52%

December 31, 2023 calculation

Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $78,484K ÷ ($67,500K + $526,822K)
= 13.21%

CTS Corp.'s return on total capital has shown a downward trend over the past eight quarters, starting at 16.21% in Q1 2022 and decreasing to 13.82% in Q4 2023. The return on total capital peaked at 16.09% in Q4 2022 but has generally been on a decline since then.

While the return on total capital has been fluctuating, it remained above 13% throughout the period, indicating that the company has been effectively generating profits from its total capital investments. However, the decreasing trend suggests that the company may be becoming less efficient in utilizing its total capital to generate returns.

It is important for CTS Corp. to closely monitor this trend and identify the factors contributing to the decline in return on total capital. By addressing any inefficiencies or optimizing its capital allocation strategies, the company may be able to improve its overall profitability and financial performance in the future.