Knowles Corp Q4 FY2025 earnings call

• 2025 was a breakthrough year with portfolio transformation completed, transitioning to an industrial technology company. Q4 2025 revenue was $162 million (up 14% YOY), EPS $0.36 (up 33% YOY), and cash from operations $47 million. Full-year revenue was $593 million (up 7% YOY), EPS $1.11 (up 21% YOY).
• Medtech and specialty audio: Q4 revenue up 4% YOY, full-year up 4% from 2024. Hearing health sees opportunities for increased content in next-gen products.
• Precision Devices: Q4 revenue up 23% YOY, full-year up 10% YOY. Strength across key end markets (medtech, defense, industrial, EV, energy) with normalized channel inventory levels. Book-to-bill greater than one in Q4.
• End-market details: Medtech has new design wins and repeat orders; defense business strong with increasing spending; industrial inventory normalized; energy market has new specialty film line ramping up.

In Q4 2025, medtech and specialty audio revenue was $73 million, up 4% year over year. Full-year revenue for this segment was $264 million, up 4% from 2024, representing 44.5% of full-year total revenue. The Precision Devices segment had Q4 2025 revenue of $90 million, up 23% year over year. Full-year revenue for this segment was $593 million, up 10% year over year, accounting for the majority of the total revenue.

• Q1 2026 revenue expected to be between $143 and $153 million, up 12% YOY at midpoint.
• Adjusted EBIT margin for Q1 expected to be within 18% to 20%.
• EPS projected to be within $0.22 to $0.26 per share.
• Cash from operating activities projected to be between negative $5 million and $5 million.
• Capital spending expected to be $10 million, with full-year capital spending at 4% to 5% of revenues.

• Supply chain constraints and production inefficiencies related to the specialty film line.
• Uncertainties in market demand and potential impact on revenue and margins.
• Risks associated with achieving expected growth rates and operational targets.

Q: Update on large energy order, capacity addition plans, and new customers for specialty film products?

A: The energy order is expected to be north of $25 million revenue this year, ramping up by end of Q2. Specialty film line has a broadening customer base across medical, defense, industrial applications. Expect $50 to $65 million revenue from this product category in 2026.

Q: Gross margin guide and outlook for 2026?

A: Full-year 2025 gross margin was 45.5%. MSA margins above 50% and expected to hold, with potential for margin expansion in back half of 2026 as specialty film line ramps up.

Q: Supply-demand dynamics in industrial and impact of component shortages?

A: Industrial shipments strong in first half, back half expected to be flattish YOY. Component shortages are a factor, with book-to-bill still strong, and concerns about being prepared for incoming orders.