Knowles Corp Q1 FY2026 earnings call

• Jeff mentioned started 2026 with solid financial results in Q1, revenue of $153 million, up 16% year-over-year, EPS of 27 cents, up 50% year-over-year. - Strategy of leveraging unique technologies to design custom engineered solutions and deliver at scale for blue chip customers in high growth markets is working. - MedTech and specialty audio growth driven by customers' new product introductions. - Precision device growth across multiple end markets, including defense, industrial. - R&D and SG&A expenses increased. - Repurchased shares in first quarter.

MedTech and specialty audio: Q1 revenue was $68 million, up 14% year-over-year. Projected to grow within 2% to 4% range for full year 2026. Precision device: Q1 revenues was $85 million, up 17% year-over-year. Driven by broad-based strength across medtech, defense, and industrial end markets. Book-to-bill in precision devices was 1.19, sixth consecutive quarter above one.

• Q2 2026 revenues expected to be between $152 and $162 million, up 8% year-over-year at midpoint. - R&D expenses expected to be between 9 and 11 million. - Selling and administrative expenses expected to be within 26 to 28 million. - Adjusted EBIT margin expected to be within 20 to 22%. - Interest expense in Q2 estimated at 2 million, effective tax rate 15 to 19%. - EPS expected to be within $0.28 to $0.32 per share. - Cash from operating activities expected to be within $20 to $30 million. - Capital spending expected to be $8 million, full-year capital spending approximately 4% to 5% of revenues. - Confident in delivering increase in 2026 adjusted EBITDA above 10 to 14% cumulative annual growth target.

• Risks and uncertainties in SEC filings, including annual report on Form 10-K for fiscal year ended December 31st, 2025, periodic reports, and risks identified in earnings release. - Potential differences between actual results and forward-looking statements due to various risks and uncertainties. - Input cost increases, although currently nominal, could impact if more substantial.

Q: In press release mentioned numerous design wins across multiple end markets, highlight products, applications, lifetime value.

A: Energy order ramping up, broad-based in medical, industrial, defense. Defense orders up, 2027 looks better. Built engineering team to customize for hard problems and scale production.

Q: Gross margin expansion, pricing increases, drivers beyond pricing.

A: MSA gross margins expected flat around 51% for full year. PD has margin expansion opportunity, ramping specialty film line, capacity utilization improvement in back half.

Q: Update on specially filmed pilot programs, progress, conversion to larger programs, new pilots in quarter.

A: Reviewing pilots regularly, on track with energy order ramp, everything heading right direction for specialty film line.

Q: Tailwinds from war in defense, headwinds.

A: Input costs, mainly transportation low, some resin-based products modest increases.

Q: Pricing power, gross margins and pricing in 2027.

A: PD expects 2% to 4% price increase per year, MSA no significant pricing increases. 2027 gross margins likely above 2026.

Q: Energy ramp technical hurdles, production setup.

A: Equipment on site, matter of bringing up, qualifying, running high volume.

Q: RF side, exposure to satellite.

A: Have some satellite business, provide super high-performance RF filters, more mix in satellite business with commercially available vs specialized.

Q: Precision devices front-end utilization rates, impact on gross margin from energy order production ramp.

A: Utilization rates average 80 range, energy order weighing on PD segment, expected to drive margin expansion in back half.

Q: Appetite from customers to secure capacity into 27, LTSs discussion.

A: In OEM business, more discussion in defense about larger orders, 97% of book-to-bill will be shipped within 12 months