Knowles 2025 Q1 Earnings Misses Targets as Net Income Drops 180%

Knowles Corporation reported its fiscal 2025 Q1 earnings, showing a revenue decrease of 0.8% and a net income drop of 180.0% compared to 2024 Q1. The results fell short of expectations as net income swung to a loss. Despite uncertainty due to tariffs, the company maintains confidence in year-over-year growth for 2025. Guidance for Q2 2025 projects sequential revenue growth of 6% and year-over-year growth of 4%, suggesting potential improvement in performance.

Revenue

In the first quarter of 2025, Knowles Corporation's revenue experienced a slight decline of 0.8% compared to the same period in 2024. The Precision Devices segment generated $72.50 million, reflecting strong order activity and backlog. Meanwhile, the MedTech & Specialty Audio segment contributed $59.70 million, performing as expected. Overall, Knowles achieved total revenues of $132.20 million for Q1 2025.

Earnings/Net Income

Knowles experienced a significant downturn in its earnings for Q1 2025, swinging to a loss of $0.02 per share from a profit of $0.03 per share in Q1 2024. This downturn resulted in a net loss of $2 million, marking a 180.0% decline from the previous year's net income of $2.50 million. The EPS figures indicate a challenging quarter for Knowles.

Post-Earnings Price Action Review

Following Knowles Corporation's Q1 2025 earnings release, the stock exhibited varied performance based on key metrics such as revenue, net income, and EPS. The 3-day win rate for revenue was 61.90%, suggesting short-term price increases post-earnings. However, longer-term trends were less consistent, with 10-day and 30-day win rates at 52.38% and 42.86%, respectively. Net income showed a similar pattern, with medium-term performance more promising than short-term. EPS also indicated medium-term strength but variability in short-term and longer-term outcomes. Overall, these metrics suggest that Knowles' stock tends to benefit in the short to medium term following earnings announcements, though longer-term performance remains uncertain.

CEO Commentary

“I am pleased we completed the first quarter of 2025 with revenues at the high end of our guided range, cash provided by operating activities above our guided range, and non-GAAP diluted EPS from continuing operations at the mid-point of our guided range,” commented Jeffrey Niew, President, and CEO of Knowles. The Precision Devices segment continues to experience increased order activity and backlog in most end markets while the MedTech and Specialty Audio business continues to perform at expectations. Despite macro level uncertainty due to tariffs, demand remains strong, leading to increasing confidence in year-over-year growth across our businesses for 2025.

Guidance

For Q2 2025, Knowles expects revenues from continuing operations to be between $135 million and $145 million, with diluted earnings per share projected at $0.21 to $0.25. Additionally, net cash provided by operating activities is anticipated to range from $10 million to $20 million. The company’s revenue outlook reflects a sequential growth of 6% and a year-over-year growth of 4%.

Additional News

Knowles Corporation has announced a strategic increase in its stock repurchase program, with its Board of Directors authorizing an additional $150 million. This move, designed to enhance shareholder value, adds to the existing program launched in February 2020. As of February 13, 2025, approximately $194 million is available for share repurchases. Additionally, Knowles received a multi-year, $75 million order for high-performance capacitors in the Energy market, boosting its confidence in organic growth moving forward. The company's upcoming Investor Day on May 13th will further outline strategic plans for growth and development.