Knowles Q3 2025 presentation slides: Revenue up 7.3%, EPS jumps 22.2%

Knowles Corporation (NASDAQ:KN) reported strong third-quarter results on October 23, 2025, with revenue and earnings exceeding guidance and showing significant year-over-year growth. The company's stock rose 3.58% in after-hours trading following the announcement, closing at $23.16.

Quarterly Performance Highlights

Knowles delivered revenue of $152.9 million in the third quarter of 2025, representing a 7.3% increase from $142.5 million in the same period last year. Non-GAAP diluted earnings per share reached $0.33, up 22.2% year-over-year from $0.27, exceeding analyst expectations of $0.31. The company noted that these results came in at the high end of their guidance range.

As shown in the following chart of quarterly performance metrics:

Despite the strong revenue and earnings growth, net cash provided by operating activities declined to $29.1 million, down 44.9% from $52.8 million in Q3 2024. This cash flow reduction represents a potential area of concern amid otherwise positive results.

Segment Analysis

Knowles operates through two main business segments: MedTech & Specialty Audio and Precision Devices. The Precision Devices segment was the primary growth driver in Q3, while MedTech & Specialty Audio showed more modest improvement.

The MedTech & Specialty Audio segment generated revenue of $64.7 million, a 1.6% increase year-over-year. However, the segment's adjusted EBITDA margin declined slightly to 43.7%, down 40 basis points from 44.1% in Q3 2024. The company attributed this margin compression to an unfavorable product mix but still expects adjusted EBITDA margins to remain in the low 40% range for the full year 2025.

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

The Precision Devices segment demonstrated significantly stronger growth, with revenue increasing 11.9% year-over-year to $88.2 million. More impressively, adjusted EBITDA margin expanded by 200 basis points to 25.7%, up from 23.7% in Q3 2024. Management attributed this growth to strong demand and design wins across various end markets, with higher production volumes contributing to the margin improvement.

As shown in the following chart of Precision Devices performance:

CEO Jeffrey Niew emphasized the company's strategic focus during the earnings call, stating, "We are laser-focused on what we do best, designing custom-engineered products and delivering them at scale." This approach appears to be yielding results, particularly in the Precision Devices segment where the company's custom-engineered solutions and U.S.-based manufacturing provide competitive advantages.

Forward Guidance

Looking ahead to the fourth quarter of 2025, Knowles provided guidance that suggests continued momentum. The company expects revenue from continuing operations to range between $151 million and $161 million, with non-GAAP diluted earnings per share projected between $0.33 and $0.37.

The following table details the company's Q4 2025 guidance:

For the full year, Knowles anticipates organic growth of 2-4% in its MedTech and Specialty Audio segment and 6-8% in Precision Devices. Management also highlighted a significant energy order expected to commence delivery in Q2 2026, which should boost the Specialty Film product line.

The company's Q4 GAAP results are expected to include approximately $0.06 per share in stock-based compensation, $0.05 per share in amortization of intangibles, and $0.01 in production transfer costs.

Balance Sheet and Financial Position

Knowles maintains a strong balance sheet with manageable debt levels. As of September 30, 2025, the company reported total debt of $176.3 million, offset by $92.5 million in cash and cash equivalents, resulting in a net debt position of $83.8 million.

The company's trailing 12-month adjusted EBITDA stands at $133.6 million, yielding a net debt leverage ratio of 0.6x, which indicates significant financial flexibility for potential acquisitions or capital returns to shareholders.

The following table provides a detailed breakdown of the company's debt position:

During the earnings call, analysts inquired about the company's M&A strategy, with management indicating they remain focused on disciplined acquisitions. The company's strong balance sheet and low leverage ratio position it well to pursue strategic opportunities.

While Knowles faces some challenges, including potential supply chain disruptions and expected tax rate increases to 15-19% in 2026, its overall financial health appears robust. According to available market data, the stock is currently trading near its 52-week high of $24.54, reflecting strong investor confidence in the company's strategy and execution.

The diverse end markets served by Knowles, illustrated in the company's presentation materials, provide both growth opportunities and risk diversification as the company continues to execute its strategy of developing custom-engineered solutions across multiple industries.

Full presentation:

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