Knowles Corporation ((KN)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The latest earnings call from Knowles Corporation paints a picture of robust performance and a positive outlook for the future. The company reported strong revenue and EPS growth, which exceeded expectations, and expressed optimism about market trends. While challenges such as gross margin pressure and existing debt levels were acknowledged, the overall sentiment was decidedly upbeat, with the highlights significantly outweighing the lowlights.
Strong Revenue Growth
Knowles Corporation reported a notable 8% year-over-year increase in revenue for Q2 2025, reaching $146 million. This figure not only marks a significant growth but also exceeds the high end of the company’s guidance, showcasing the company’s successful execution of its strategic initiatives.
EPS Increase
The company’s earnings per share (EPS) saw a remarkable 20% increase year-over-year, reaching $0.24. This performance surpassed the midpoint of the guidance, reflecting the company’s strong financial management and operational efficiency.
Cash Flow and Share Buybacks
Knowles generated $36 million in cash from operations, exceeding the high end of their guidance. Additionally, the company repurchased $30 million in shares, demonstrating a strategic focus on capital allocation and shareholder value.
MedTech & Specialty Audio Growth
Revenue from the MedTech and Specialty Audio segments grew by 13% sequentially and 10% year-over-year, driven by strong demand in Hearing Health and Specialty Audio. This growth underscores the company’s strength in these high-demand markets.
Precision Devices Performance
Precision Devices reported revenue of $79 million, marking an 8% sequential and 6% year-over-year growth. The segment has shown positive booking trends for three consecutive quarters, indicating sustained demand and market strength.
Positive Market Outlook
The company expressed a positive market outlook, anticipating continued growth both sequentially and year-over-year for the remainder of 2025. With a strong backlog and active order activity, Knowles is well-positioned to capitalize on market opportunities.
New Product Lines
Knowles is expanding its specialty film production and introducing a new inductor line, which are expected to drive future growth. These initiatives highlight the company’s commitment to innovation and market expansion.
Gross Margin Pressure
Despite the positive results, Knowles faced gross margin pressure, with Q2 margins at 50.6%, down 280 basis points year-over-year. This was attributed to an unfavorable product mix and higher factory costs.
Debt Levels
The company reported carrying $190 million of debt, including borrowings under a revolving credit facility. While this is a challenge, the company’s strong cash flow generation provides a buffer against these liabilities.
Forward-Looking Guidance
Looking ahead, Knowles Corporation provided optimistic guidance for Q3 2025, with expected revenue between $144 million and $154 million and EPS ranging from $0.29 to $0.33. The company anticipates maintaining strong cash generation and improving gross margins, driven by higher production volumes. With an adjusted EBIT margin projection of 22% to 24%, Knowles remains confident in its organic growth prospects, supported by new design wins and capacity expansions.
In conclusion, Knowles Corporation’s earnings call reflects a strong performance and a positive outlook for the future. The company has demonstrated robust revenue and EPS growth, with strategic initiatives in place to drive further success. While challenges such as gross margin pressure and debt levels exist, the company’s strong cash flow and strategic focus on innovation and market expansion position it well for continued growth.