Knowles Q2 2025 slides: Revenue and EPS exceed expectations with 7.9% growth

Knowles Corporation (NYSE:KN) reported strong second-quarter results on July 24, 2025, exceeding revenue expectations and showing significant year-over-year improvements across key metrics. The company’s presentation revealed a notable recovery from its disappointing first-quarter performance earlier this year.

Quarterly Performance Highlights

Knowles delivered Q2 2025 revenue of $145.9 million, representing a 7.9% increase compared to the same period last year and exceeding the high end of the company’s guided range. Non-GAAP diluted earnings per share reached $0.24, up 20% year-over-year and above the midpoint of guidance. Perhaps most impressive was the 46.2% jump in cash from operating activities, which reached $36.4 million.

As shown in the following chart of quarterly performance metrics:

This strong performance marks a significant turnaround from Q1 2025, when Knowles missed analyst expectations with revenue of $132 million and EPS of $0.18, falling short of forecasts of $135.93 million and $0.22, respectively.

Segment Analysis

Knowles’ business is divided into two main segments: MedTech & Specialty Audio and Precision Devices. Both segments contributed to the company’s overall growth, though with different margin profiles.

The MedTech & Specialty Audio segment posted revenue of $67.4 million, a 10.3% increase from Q2 2024, driven by higher demand in specialty audio products. However, adjusted EBITDA margins declined by 240 basis points year-over-year to 42.0%, which the company attributed to unfavorable product mix. On a positive note, margins improved sequentially by 280 basis points due to mix improvements and higher capacity utilization.

The following chart illustrates the MedTech & Specialty Audio segment performance:

The Precision Devices segment also performed well, with revenue increasing 5.9% year-over-year to $78.5 million. Unlike the MedTech segment, Precision Devices saw margin improvement, with adjusted EBITDA margins rising 140 basis points to 20.8%. The company cited strong demand and design wins across all end markets (Medtech, Defense, and Industrial) as key drivers, along with higher production volumes resulting in increased factory capacity utilization.

As shown in the following chart of Precision Devices performance:

The company noted that while legacy Precision Devices operations showed improved efficiency, there were some offsetting factors including higher scrap cost and factory inefficiencies as they ramp up Specialty Film product lines.

Forward Guidance

Looking ahead to Q3 2025, Knowles provided a positive outlook with revenue expected to range between $144 million and $154 million. Non-GAAP diluted earnings per share are projected to be between $0.29 and $0.33, with net cash provided by operating activities estimated at $20 million to $30 million.

The guidance details are presented in the following chart:

The company expects Q3 2025 GAAP results to include approximately $0.06 per share in stock-based compensation, $0.04 per share in amortization of intangibles, and $0.01 in production transfer costs.

For the full year 2025, Knowles expects adjusted EBITDA margins for the MedTech & Specialty Audio segment to be in the low 40% range, suggesting continued sequential improvement throughout the remainder of the year.

Financial Position

Knowles maintains a strong balance sheet with a healthy leverage profile. As of June 30, 2025, the company reported total debt of $190 million, offset by $103.2 million in cash and cash equivalents, resulting in net debt of $86.8 million. With trailing 12-month adjusted EBITDA of $129.1 million, the company’s net debt leverage ratio stands at a conservative 0.7x, providing financial flexibility for potential strategic initiatives.

This strong financial position represents an improvement from previous quarters and indicates the company’s continued focus on cash generation and disciplined capital allocation.

Market Context

Knowles’ stock closed at $19.00 on July 24, 2025, down 1.82% for the day, according to available market data. The stock has been trading in a 52-week range of $12.19 to $20.86, suggesting that despite the positive quarterly results, investors may be taking a cautious approach.

The Q2 results demonstrate a significant recovery from Q1 challenges, with revenue and earnings growth across both business segments. The company’s ability to exceed guidance and improve cash flow generation suggests operational improvements are taking hold, though margin challenges in the MedTech & Specialty Audio segment bear watching in future quarters.

With its strong balance sheet and improving operational performance, Knowles appears well-positioned to capitalize on growth opportunities across its diverse end markets in medical technology, defense, and industrial applications, as illustrated in the company’s presentation materials:

Full presentation:

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