Knowles Corporation

Knowles reported Q2 revenue of $167 million, up 14% year over year, and EPS of $0.33, up 38% year over year. Cash from operations was $28 million, and the company ended the quarter with $50 million of cash, $131 million of borrowings, and net leverage of 0.5x. Segment revenue was $69 million in Medtech & Specialty Audio, up 2% year over year, and $98 million in Precision Devices, up 25% year over year. Gross margin was 53.1% in MSA, up 250 basis points year over year, and 40.1% in PD, up 140 basis points year over year. For Q3, management guided revenue to $167 million to $177 million, EPS to $0.34 to $0.38, adjusted EBIT margin to 22% to 24%, and cash from operations to $35 million to $45 million. Full-year 2026 revenue growth is now expected to be 10% to 12%, and adjusted EBITDA growth is expected to be 20% to 24% over 2025 levels.

Jeffrey Niew said the company is seeing “strong broad-based organic growth” and believes Knowles has entered a period of accelerated organic growth. He emphasized that the core strategy of serving high-value products in secular-growth markets is working, and said new growth platforms like Micro Solutions and energy could add more growth in 2027 and beyond. His tone was confident, especially on defense and industrial, where he said demand and order intake are stronger than previously expected.

John Anderson highlighted the quarter’s financial outperformance: revenue of $167 million, EPS of $0.33, and $28 million of cash from operations. He pointed to higher gross margins in both segments, with MSA at 53.1% and PD at 40.1%, and said PD margins should improve further in the second half on pricing, mix, and better factory utilization. He also noted $7 million of capex, $15 million of share repurchases, $50 million of cash, $131 million of revolver borrowings, liquidity above $315 million, and said full-year capex should be about 5% of revenue.

Analysts focused on why full-year growth guidance implies a softer Q4, and management said Q4 should still grow sequentially, but MSA will be a headwind after strong first-half inventory build while PD continues to grow. Questions also centered on whether the broader passive-component market tightness is helping pricing; management said pricing is stronger than last year and should be more favorable in PD, though their products are not commodity-like. On defense, management said visibility is improving, citing a $15 million-plus radar order received in July that begins shipping in 2027 and could take 36 months to complete.