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- **Revenue & Profit Growth**: Q3 revenue up 7% YoY to $153 million, EPS up 22% to $0.33, driven by Precision Devices (12% YoY) and specialty film expansion.
- **Specialty Film Momentum**: 2025 revenue expected $55-60 million, with $25 million from new energy order. Sequential margin improvement Q3-Q4, full ramp in Q3 2026.
- **2026 Outlook**: Organic growth at high end of 4-6%, with Precision Devices targeting 6-8% growth. Medtech segment to grow 2-4%.
- **Cash Management**: $20 million share buyback and $15 million debt reduction, with net leverage ratio of 0.6x.
- **Strategic Initiatives**: Expanding specialty film capacity, pursuing accretive M&A, and maintaining disciplined cost management.

**【CEO Summary Section】**
- **Revenue Growth**: Q3 2025 revenue of $153 million, up 7% YoY, with EPS of $0.33, up 22% YoY. Cash from operations was $29 million.
- **Segment Performance**: 
  - Medtech & Specialty Audio: $65 million (2% YoY growth), driven by operational excellence and new product adoption.
  - Precision Devices: $88 million (12% YoY growth), with strong defense and EV market demand. Defense bookings outpaced other segments.
- **Specialty Film Expansion**: Q3 bookings exceeded $25 million, with expected 2025 revenue of $55-60 million. Capacity expansion underway to meet demand.
- **Cash Management**: $20 million share buyback and $15 million debt reduction. Net leverage ratio of 0.6x with $350 million liquidity.
- **2026 Outlook**: Organic growth at high end of 4-6% range, driven by defense, EV, and specialty film. Medtech segment expected to grow 2-4%, Precision Devices 6-8%.

**【CFO Financial Commentary】**
- **Financial Highlights**: GAAP EPS of $0.33, at high end of guidance. Medtech gross margin 53%, Precision Devices 41.5% (up 150bps YoY due to higher capacity utilization).
- **Cost Management**: R&D flat YoY at $9 million; SG&A up $2 million due to merit and incentive costs. Interest expense down $2 million YoY.
- **Q4 Guidance**: Revenue $151-161 million (9% YoY midpoint), EPS $0.33-0.37. Operating cash flow 16-20% of revenue. Capital spending ~5% of revenue for capacity expansion.
- **Tax Outlook**: 7-11% for Q4, rising to 15-19% in 2026.

**【Q&A Key Highlights】**
- **Specialty Film**: 2025 revenue expected $55-60 million, with $25 million from energy order ramping in Q2 2026. Sequential margin improvement Q3-Q4, full benefit in Q3 2026.
- **M&A Strategy**: Focused on accretive acquisitions with clear strategic fit. Pipeline active but disciplined in execution.
- **Palladium Impact**: Prebuy positions mitigate near-term cost increases. No immediate margin impact, but monitoring for 2026 discussions.
- **Book-to-Bill**: Q3 PD segment at 1.0, second-highest bookings in 4 quarters. Defense and distribution channels strong.
- **Gross Margin Leverage**: 35-40% drop-through on incremental revenue, with specialty film driving 2026 margin expansion.

Knowles Corporation (KN) Q3 2025 Earnings Call Transcript

- **Revenue Growth**: Q2 up 8% YoY to $146 million, driven by Hearing Health rebound and Precision Devices bookings momentum.
- **Profitability**: EPS of $0.24 (+20% YoY), with gross margin improvement expected in Q3.
- **Cash Flow Strength**: $36 million cash from operations, enabling $30 million share buybacks and M&A flexibility.
- **Strategic Initiatives**: Specialty film expansion and new inductor line to drive future growth, with Q4 revenue growth anticipated.
- **M&A Pipeline**: Active pipeline with focus on disciplined, value-accretive opportunities.

**【Management Opening Remarks】**
- Sarah Cook emphasized the company's adherence to non-GAAP financial measures and highlighted the exclusion of discontinued operations from all financial references.
- Forward-looking statements were noted, with a reminder of risks outlined in SEC filings.

**【CEO Commentary】**
- **Revenue Performance**: Q2 revenue of $146 million (+8% YoY) exceeded guidance, driven by both MedTech & Specialty Audio (+10% YoY) and Precision Devices (+6% YoY).
- **Segment Strengths**: Hearing Health rebounded sequentially, while Precision Devices bookings-to-bill ratio exceeded 1.15 for the third consecutive quarter.
- **Growth Initiatives**: Expansion of specialty film production and new inductor line expected to boost TAM; Q3 and Q4 revenue growth anticipated.
- **Share Repurchases**: $30 million in Q2, with plans to continue buybacks using strong cash flow.

**【CFO Financial Commentary】**
- **Financial Highlights**: GAAP EPS of $0.24 (+20% YoY), cash from operations of $36 million, and net leverage ratio of 0.7x.
- **Segment Margins**: MedTech gross margin 50.6% (down 280bps YoY due to product mix), Precision Devices at 38.7% (up 150bps YoY from higher utilization).
- **Expense Management**: R&D and SG&A up slightly YoY, offset by $2 million reduction in interest expense.
- **Q3 Guidance**: Revenue $144-154 million, EPS $0.29-0.33, and operating cash flow 16-20% of revenue.

**【Q&A Highlights】**
- **Demand Drivers**: Bookings trends in July already strong, with broad-based demand across medtech, defense, and industrial.
- **Gross Margin Expansion**: Sequential improvement of 100+bps expected in Q3, driven by higher factory utilization.
- **M&A Strategy**: Pipeline remains active, with focus on consolidation, extensions, and adjacencies; disciplined approach to valuation.
- **Thin Film Outlook**: Specialty film line to contribute growth in H2 2025, with energy-related orders ramping in 2026.

Knowles Corporation (KN) Q2 2025 Earnings Call Transcript

- **Resilient Performance Despite Tariffs**: <5% revenue directly exposed; 3% COGS impact recoverable via pricing
- **Strong Cash Generation**: $1M Q1 cash flow vs. $0.5M prior year; $35M+ FY2025 free cash flow
- **Gross Margin Recovery Path**: Sequential improvement in Q2; 41%+ by year-end
- **Growth Catalysts**: 
  - $75M energy capacitor order (first shipments 2026)
  - Specialty film line ramp-up
  - Normalizing industrial inventory levels

**【CEO Key Themes】**
- **Tariff Impact Mitigation**: Less than 5% of revenue directly exposed to tariffs; 3% of COGS indirectly impacted. Company expects to recover tariff costs via price increases/surcharges. MedTech, defense, and industrial end markets deemed 'essential' with limited demand sensitivity to macroeconomic downturns.
- **Q1 2025 Financial Highlights**: 
  - Total revenue $132M (flat YoY)
  - MedTech/Specialty Audio: $60M (+1% YoY)
  - Precision Devices: $73M (flat YoY)
  - Cash from ops exceeded high end of guidance ($1M)
- **Growth Drivers**: 
  - Specialty film line ramp-up in Precision Devices
  - $75M+ energy capacitor order (first shipments in 2026)
  - Normalizing distributor inventories in industrial markets
- **Share Repurchases & Debt Reduction**: $5M in share buybacks; $15M debt reduction

**【CFO Financial Breakdown】**
- **Gross Margin**: 41.1% (down 450bps YoY) due to: 
  - $20M+ metal can supply agreement with Syntiant (200bps drag)
  - Unfavorable customer mix
  - Absence of one-time benefit
- **Cost Management**: 
  - SG&A down $2M YoY (rightsizing post-consumer MEMS sale)
  - R&D flat YoY
- **Cash Flow**: 
  - Q1 2025: $1M (vs. $0.5M prior year)
  - FY2025 guidance: $35M+ free cash flow
- **Q2 2025 Guidance**: 
  - Revenue: $135-145M
  - EPS: $0.21-0.25
  - EBIT margin: 19-21%

**【Q&A Highlights】**
- **Industrial Market Sensitivity**: Distributor inventory levels now at 3-3.5 months (normalized from 4.5 months). Order activity increasing as customers restock
- **$75M Energy Order**: Customer prepayment in Q1; expect $25M+ shipments in 2026
- **Gross Margin Outlook**: Sequential improvement in Q2 driven by: 
  - Higher capacity utilization in both segments
  - Specialty film line ramp-up
  - Metal can supply agreement margin recovery

Knowles (KN)-24 Apr 25-2025 Q1 Earnings call transcript

- **Q4 2024 Results**: Revenue $143M (+2% YoY), EPS $0.27 (+23% YoY). Full year 2024 revenue +21%, EPS +32%.
- **Key Growth Drivers**: $75M+ energy sector order (2026+), MedTech/Specialty Audio innovation, and PD segment expansion.
- **2025 Outlook**: Resuming YoY growth in Q2 2025. Operating cash flow >15% of revenue. $150M buyback authorization.
- **Risk Mitigation**: <5% revenue exposure to China tariffs. Shifting manufacturing post-CMM sale.

**【CEO Summary Section】**
- Q4 2024 revenue: $143 million (up 2% YoY), within guided range. Full year 2024 revenue growth: 21% YoY, driven by MedTech/Specialty Audio and Cornell acquisition.
- **MSA Segment**: Q4 revenue flat YoY, but full year 2024 revenue +8% YoY. 2025 outlook: Continued growth with new custom solutions and medical market expansion.
- **Precision Devices Segment**: Q4 revenue +4% YoY, but specialty film capacitor shipments fell short by $3 million due to production delays. 2025+ growth expected from $75M+ energy sector order (2026+ shipments). Full year 2024 PD revenue +36% YoY.
- **Cash Flow & Capital Allocation**: $130M cash from operations in 2024. Board authorizes $150M share buyback increase. Net leverage ratio: 0.6x.
- **Tariff Mitigation**: <5% of revenue exposed to China/Mexico tariffs. Shifting manufacturing out of China post-CMM sale.

**【CFO Financial Commentary】**
- Q4 2024 Non-GAAP EPS: $0.27 (up 23% YoY). Full year 2024 EPS growth: 32% YoY.
- **Gross Margins**: MSA segment at 51.4% (down 130bps YoY due to mature product pricing). PD segment at 38% (up 240bps YoY from Cornell synergies). 
- **Q1 2025 Guidance**: Revenue $124-134M, EPS $0.16-0.20. Operating cash flow expected >15% of 2025 revenue. 
- **Balance Sheet**: $130M cash, $203M debt. 2024 share buybacks: 3M shares ($54M).

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