Summary of Dover Corporation Conference Call Industry and Company Overview - **Company**: Dover Corporation - **Industry**: U.S. Industrial Economy Key Points and Arguments 1. **Economic Outlook**: The U.S. industrial economy shows optimism with strong PMIs, and there is an acceleration in orders leading into 2026 compared to the previous year, indicating a positive setup for the year ahead [2][4] 2. **Impact of Tariffs**: The company experienced a significant loss of time from February to September last year due to tariffs, which affected capital expenditures (CapEx) and project timelines [3][4] 3. **Order Backlog**: Dover Corporation enters 2026 with a strong backlog, which is expected to support growth in the upcoming quarters [2] 4. **Segment Growth**: The clean energy and climate sustainability segments are projected to contribute the most to top-line and profit growth, with significant transformations and acquisitions in the clean energy portfolio [7][8] 5. **Cryogenic Components**: The company has made substantial investments in cryogenic components, anticipating a three-year upcycle in fueling solutions, driven by increased CapEx in the gas complex [9][10] 6. **Retail Refrigeration**: The retail refrigeration segment is expected to grow significantly due to deferred CapEx from the previous year and the introduction of CO2 systems, which have generated over $300 million in revenue in 18 months [13] 7. **Engineered Products Concerns**: The vehicle aftermarket segment is a concern due to its reliance on the European market, which is currently facing challenges [15] 8. **Price-Cost Metrics**: Dover has maintained a healthy price-cost position, with unit volume expected to drive revenue growth rather than price increases, marking a shift from previous years [17] 9. **Operating Margins**: Incremental margins are expected to be lower this year due to a broader mix of revenue across the portfolio, although total portfolio margins are projected to improve [19][20] 10. **M&A Strategy**: The company remains cautious about M&A due to high multiples in the current market, preferring to maintain liquidity and consider share buybacks if necessary [55][61] 11. **Pumps and Process Segment**: This segment has high margins, but future M&A may be dilutive due to the scarcity of available assets with similar margins [66][70] 12. **Long-term Growth Algorithm**: Dover aims for 4-6% organic growth annually, supported by a cash-generative legacy portfolio that funds CapEx and M&A opportunities [74][77] Additional Important Insights - **Data Center Exposure**: Dover's exposure in the data center market is primarily through thermal connectors and brazed plate heat exchangers, which are expected to grow, although the company does not see itself as a major supplier in this space [29][31] - **Heat Pump Market**: The heat pump market is expected to recover, but growth rates will not return to the highs of 2022 and 2023 due to regulatory influences [40][41] - **Portfolio Management**: The company has strategically exited lower-performing segments to focus on higher growth and margin potential, ensuring that remaining businesses are not structurally impaired [45][46] This summary encapsulates the key insights from the Dover Corporation conference call, highlighting the company's strategic outlook, segment performance, and market conditions.

Core Insights - Knowles Corporation (NYSE:KN) is a key player in the audio technology sector, serving global OEMs and recognized for its innovative solutions [1] - Recent insider transactions, particularly by top executives, have drawn investor attention [6] Insider Transactions - On February 10, 2026, Robert J. Perna sold 3,166 shares at $27.09 each, following a sale by CEO Jeffrey Niew of 50,000 shares for approximately $1.2 million on January 15, 2026, at a weighted average price of $24.75 [2] - Niew's sale represented 5.62% of his direct holdings, significantly higher than the median insider sell size of 2.73%, marking the largest open-market sale since December 2024 [3] Financial Metrics - Knowles has a price-to-earnings (P/E) ratio of 52.76, indicating high investor confidence, with a price-to-sales ratio of 3.90 and an enterprise value to sales ratio of 4.06 [4] - The company maintains a low debt-to-equity ratio of 0.19, reflecting a conservative debt approach, and a current ratio of 2.75, indicating strong liquidity [5] - The financial metrics highlight Knowles' solid financial health and favorable market position [6] Market Performance - Knowles' share price increased by 24% around the time of the insider sales, reflecting strong market performance [3][6]

Revenue Segments - MSA segment accounted for 45% of consolidated revenues for fiscal 2025, with top five customers contributing approximately 76% of MSA's revenues [51]. - WS Audiology A/S represented about 24% of MSA's revenues and 11% of the consolidated Company revenues for fiscal 2025 [51]. - PD segment contributed 55% of consolidated revenues for fiscal 2025, with TTI, Inc. accounting for approximately 19% of PD's revenues and 10% of consolidated revenues [53]. Strategic Investments and Market Expansion - Company expanded the reach of film capacitors into new energy sectors in 2025, indicating a strategic investment in adjacent markets [56]. - Company’s growth strategies involve significant risks, including operational delays and higher production costs [56]. Supply Chain and Operational Risks - Company relies on highly specialized suppliers for critical components, which poses risks of supply disruptions impacting operations [55]. - The company's foreign operations and supply chain are subject to risks that could negatively impact financial results [68]. - Global economic conditions, including inflation and geopolitical uncertainties, may adversely affect customer orders and demand for products [67]. Regulatory and Compliance Risks - Effective tax rate may fluctuate due to changes in tax regulations, potentially affecting future financial results [60]. - Changes in U.S. and international trade policies, including tariffs, could materially affect the company's business and financial position [69]. - Compliance with global privacy legislation is complex and may result in fines and reputational damage in the event of a data breach [85]. Financial and Debt Risks - The company's credit agreement includes financial covenants that, if not complied with, could have a material adverse effect on business and financial condition [87]. - The company's outstanding indebtedness poses risks that could adversely affect its financial condition, including the ability to make principal and interest payments [88]. - Future performance, which is influenced by economic conditions and industry cycles, will determine the company's ability to generate sufficient cash flow to service its debt [88]. - The company’s ability to obtain additional financing for various purposes may be limited due to its current indebtedness [90]. Market and Stock Price Volatility - The stock price has shown significant volatility, ranging from a high of $24.41 to a low of $12.76 per share during 2025, which may impact investor confidence [93]. - The market price of the company's common stock could fluctuate significantly due to various factors, including divergence between actual financial results and market expectations [93]. Legal and Governance Risks - The company may face increased legal expenses and operational distractions due to potential shareholder activism, which could hinder the execution of its business strategy [89]. - Provisions in the company's bylaws and Delaware law may delay or prevent acquisitions, potentially affecting the trading price of its common stock [91]. - The company believes that its governance provisions protect stockholders from coercive takeover tactics, although they may delay beneficial acquisitions [92]. Cybersecurity and Intellectual Property Risks - Cybersecurity incidents and unauthorized disclosures could lead to significant financial and reputational harm [81][82]. - The company faces risks related to protecting intellectual property, which could adversely affect competitive positioning and operating results [77]. Competitive and Product Development Risks - Competitive market dynamics necessitate continuous product development to avoid loss of market share [66]. - Strategic acquisitions and divestitures may not yield expected benefits, impacting financial results [57]. - The company faces risks related to product defects, which could lead to significant costs and harm to business reputation [64]. Commodity and Currency Risks - Fluctuations in commodity prices and foreign currency rates could have a substantial adverse effect on financial condition and operating results [75][76]. - The company is vulnerable to interest rate fluctuations, particularly if a portion of its debt has variable interest rates, which could limit financial flexibility [90].

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Financial Data and Key Metrics Changes - Revenue for Q4 was $162 million, up 14% year-over-year, exceeding the high end of the guidance range [4][10] - EPS for Q4 was $0.36, up 33% from the previous year [4][10] - Full year revenue was $593 million, up 7% year-over-year, also above the high end of the guidance range [10][14] - Adjusted EBITDA from continuing operations was $140 million, up 9% from 2024 [14] Business Segment Data and Key Metrics Changes - MedTech and Specialty Audio revenue for Q4 was $73 million, up 4% year-over-year, with full year revenue at $264 million, also up 4% [5][10] - Precision Devices segment revenue for Q4 was $90 million, up 23% year-over-year, with full year revenue growing 10% [6][10] - Gross margins for MedTech and Specialty Audio were 51.9% for Q4, while Precision Devices had gross margins of 40.1% [10][11] Market Data and Key Metrics Changes - The company reported strong demand across key end markets including MedTech, Defense, Industrial, EV, and Energy, with revenue growth in all segments [6][8] - Book-to-bill ratio was greater than 1x, indicating healthy bookings and demand [8] Company Strategy and Development Direction - The company is focused on leveraging unique technologies to design custom-engineered solutions for high-growth markets [4] - There is a strong emphasis on organic growth and potential acquisitions to enhance market position [9][22] - The company aims to maintain strong organic revenue growth above historic levels, with expectations for continued growth in 2026 and beyond [9][16] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to achieve revenue, earnings, and cash flow growth, supported by a robust backlog and increased order activity [16] - The company anticipates strong year-over-year growth in the first quarter of 2025, despite it being seasonally low [9] - Management highlighted the importance of collaboration with customers to drive new design wins and revenue growth [8] Other Important Information - Cash generated from operations was $47 million in Q4, with capital spending at $15 million [13] - The company exited the quarter with $54 million in cash and $114 million in borrowings under its revolving credit facility [13] Q&A Session Summary Question: Update on energy order and thin-film capacitor products - Management expects the energy order ramp-up to fully commence by the end of Q2 2025, with revenue expectations in the $50 million-$65 million range for 2026 [18][21] Question: Prospects for future organic growth and acquisitions - Management indicated a positive outlook for organic growth opportunities and a strong pipeline for potential acquisitions [22] Question: Gross margin guidance for March and June quarters - Management moved away from specific gross margin guidance, focusing instead on revenue, but indicated potential for margin expansion in the back half of 2026 [29] Question: Supply-demand dynamics in Industrial - Management expects strong Industrial shipments in the first half of 2026, with overall growth anticipated for the full year [46][48] Question: Impact of component shortages on demand - Management acknowledged concerns about capacity and pricing dynamics but noted strong bookings and demand [49]

Financial Data and Key Metrics Changes - Revenue for Q4 was $162 million, up 14% year-over-year, exceeding the high end of guidance [4][10] - EPS for Q4 was $0.36, up 33% from the previous year [4][10] - Full year revenue was $593 million, up 7% year-over-year, also exceeding guidance [10][14] - Cash from operations was $47 million in Q4, above the high end of guidance [10][14] Business Segment Data and Key Metrics Changes - MedTech and specialty audio revenue for Q4 was $73 million, up 4% year-over-year, with full year revenue at $264 million, also up 4% [5][10] - Precision devices segment revenue for Q4 was $90 million, up 23% year-over-year, with full year revenue growing 10% [6][10] - Gross margins for MedTech and specialty audio were 51.9% in Q4, while precision devices had gross margins of 40.1% [10][11] Market Data and Key Metrics Changes - Strong demand was noted across key end markets including MedTech, defense, industrial, EV, and energy [6][8] - Book-to-bill ratio was reported at 1.06, indicating healthy demand [32] Company Strategy and Development Direction - The company is focused on leveraging unique technologies to design custom-engineered solutions for high-growth markets [4][9] - Plans for continued organic revenue growth above historic levels were emphasized, with a focus on synergistic acquisitions and share buybacks [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to achieve revenue, earnings, and cash flow growth, supported by a robust backlog and increased order activity [16] - The company anticipates strong year-over-year growth in Q1, despite it being a seasonally low quarter [9][15] Other Important Information - The company is transitioning to an industrial technology focus, moving away from traditional gross margin guidance [28] - Capital spending for Q1 is expected to be $10 million, with continued investments in capacity expansion related to energy orders [15] Q&A Session Summary Question: Update on energy order and thin-film capacitor products - Management expects full ramp-up of energy orders by the end of Q2, with revenue expectations in the $50-$65 million range for 2026 [21][38] Question: Gross margin guidance for March and June quarters - Management indicated a focus on revenue guidance rather than gross margin, with expectations of 45%-50% gross margins for the full year 2025 [28][29] Question: Fastest growing markets for 2026 - Key markets identified include defense, MedTech, industrial, EV, and energy, with strong bookings supporting growth [32][33] Question: Production buildout for energy orders - The company is on track to ramp up production significantly in the next five months, with a focus on low-mix production for energy orders [38][39] Question: Supply-demand dynamics in industrial - Management expects strong industrial shipments in the first half of 2026, with growth anticipated for the full year [46][48]

Financial Data and Key Metrics Changes - In Q4 2025, revenue was $162 million, up 14% year-over-year, exceeding the high end of the guidance range [4][11] - EPS for Q4 was $0.36, up 33% from the previous year [4][11] - Full year revenue reached $593 million, a 7% increase year-over-year, surpassing the high end of the organic growth target [11][14] - Adjusted EBITDA from continuing operations was $140 million, up 9% from 2024 [14] Business Segment Data and Key Metrics Changes - MedTech and specialty audio revenue in Q4 was $73 million, up 4% year-over-year, with full year revenue at $264 million, also up 4% [5][11] - Precision devices segment revenue in Q4 was $90 million, up 23% year-over-year, with full year revenue growing 10% [6][11] - Segment gross margins for MedTech and specialty audio were 51.9%, while precision devices had gross margins of 40.1% [11][12] Market Data and Key Metrics Changes - The defense market is experiencing increased order volumes, with a focus on electronic warfare applications [8][9] - The energy market is identified as a significant growth opportunity for 2026 and beyond [9] - Industrial markets are seeing a rebound, with expectations of strong shipments in the first half of 2026 [45][48] Company Strategy and Development Direction - The company is focused on leveraging unique technologies to design custom-engineered solutions for high-growth markets [4][10] - There is a commitment to pursuing synergistic acquisitions and share buybacks to enhance shareholder value [10][14] - The company aims to maintain strong organic revenue growth above historic levels, with a target of 4%-6% organic growth [10][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to achieve revenue, earnings, and cash flow growth, supported by a robust backlog and increased order activity [16] - The first quarter of 2026 is expected to show strong year-over-year growth despite being seasonally low [10] - Management highlighted the positive momentum in defense spending and the potential for margin expansion in the second half of 2026 [30][32] Other Important Information - Cash generated from operations in Q4 was $47 million, with capital spending at $15 million [13] - The company exited the quarter with $54 million in cash and $114 million in borrowings under its revolving credit facility [13] Q&A Session Summary Question: Update on energy order and thin-film capacitor products - Management expects the energy order ramp-up to be fully operational by the end of Q2 2026, with projected revenue in the $50-$65 million range for this product category [20][38] Question: Prospects for future organic growth and acquisitions - Management indicated a promising pipeline for organic growth and acquisitions, with a focus on expanding into new medical applications and defense spending [22][24] Question: Gross margin guidance for upcoming quarters - Management moved away from specific gross margin guidance, focusing instead on revenue, but indicated potential for margin expansion in the back half of 2026 [29] Question: Supply-demand dynamics in industrial markets - Management expects strong industrial shipments in the first half of 2026, with growth anticipated for the full year [45][48] Question: Component shortages impacting demand - Management acknowledged concerns about capacity and pricing dynamics but noted strong bookings and demand trends [49]

Earnings Q42025 F E B R U A R Y 5 , 2 0 2 6 Safe Harbor Forward Looking Statements This presentation contains forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995, such as statements about our future plans, objectives, expectations, financial performance, and continued business operations. The words "believe," "expect," "anticipate," "project," "estimate," "budget," "continue," "could," "intend," "may," "plan," "pot ...

Financial Performance - Fourth quarter revenues from continuing operations increased 14% year over year to $162 million, exceeding the high end of the guided range[1] - Full year revenues from continuing operations rose 7% year over year to $593.2 million, surpassing the high end of the five-year organic growth target[3] - Fourth quarter net cash from operations was $47 million, exceeding the high end of the guided range, with full year net cash from operations totaling $114 million or 19.2% of revenues[1][3] - Revenues for the year ended December 31, 2025, increased to $593.2 million, up from $553.5 million in 2024, representing a growth of 7.5%[20] - Operating earnings rose to $70.3 million for the year ended December 31, 2025, compared to $51.8 million in 2024, marking a significant increase of 35.5%[20] - Net earnings for the year ended December 31, 2025, were $44.2 million, a recovery from a net loss of $237.8 million in 2024[20] - Earnings per share from continuing operations increased to $0.59 (basic) and $0.58 (diluted) for the year ended December 31, 2025, compared to $0.26 for both in 2024[20] - Adjusted EBITDA for the year ended December 31, 2025, was $140.2 million, representing an increase from $128.5 million in 2024, with an adjusted EBITDA margin of 23.6%[21] - Non-GAAP net earnings for the year ended December 31, 2025, were $97.7 million, compared to $83.9 million in 2024, reflecting a growth of 16.5%[23] Profitability Metrics - Gross profit for Q4 2025 was $72.5 million, representing 44.7% of revenues, an increase from 42.7% in Q4 2024[6] - Gross profit for the year ended December 31, 2025, was $256.3 million, with a gross profit margin of 43.2%, compared to $234.8 million and 42.4% in 2024[21] - Non-GAAP diluted earnings per share for Q4 2025 was $0.36, compared to $0.27 in Q4 2024, reflecting a significant year-over-year increase[6] Cash Flow and Assets - Adjusted free cash flow for the year ended December 31, 2025, was $114.4 million, representing an increase from $93.8 million in 2024[31] - The company experienced a net cash provided by operating activities of $114.0 million in 2025, compared to $130.1 million in 2024, a decrease of 12.4%[31] - Total current assets decreased to $291.4 million in 2025 from $361.4 million in 2024, primarily due to a reduction in cash and cash equivalents[26] - Cash and cash equivalents at the end of 2025 were $54.2 million, down from $130.1 million at the end of 2024, indicating a decrease of 58.3%[28] - Total assets of the company decreased to $1,051.1 million in 2025 from $1,118.2 million in 2024, a decline of 6.0%[26] Expenses and Investments - Research and development expenses for Q4 2025 were $10.5 million, slightly up from $10.3 million in Q4 2024, reflecting ongoing investment in innovation[18] - Research and development expenses for the year ended December 31, 2025, were $40.2 million, slightly up from $39.5 million in 2024[21] - Selling and administrative expenses remained stable at $142.8 million for the year ended December 31, 2025, compared to $142.0 million in 2024[20] - Capital expenditures for 2025 were $32.1 million, up from $13.6 million in 2024, indicating a 135.3% increase[31] Liabilities and Equity - Total liabilities decreased to $275.2 million in 2025 from $335.6 million in 2024, reflecting a reduction in current liabilities[26] - Stockholders' equity increased to $775.8 million in 2025 from $756.0 million in 2024, reflecting a growth of 2.4%[26] - The company recorded impairment charges of $3.6 million for the year ended December 31, 2025, compared to none in 2024[20] Future Outlook - The company expects Q1 2026 revenues from continuing operations to be between $143 million and $153 million, with diluted earnings per share projected between $0.09 and $0.13[9] - Knowles completed the divestiture of its Consumer MEMS Microphone business in December 2024, positioning itself as a high-margin Industrial Technology company[5] - The company has a strong backlog of existing orders and new design wins expected to go into full production, indicating confidence in achieving strong revenue and earnings growth in 2026[4] - Knowles aims to leverage its unique technologies and operational capabilities to drive significant value for shareholders in the coming years[5]

Company Overview - Knowles Corporation is a leading provider of advanced micro-acoustic, audio processing, and precision device solutions, employing approximately 5,500 people globally. The company focuses on innovation and direct engagement with OEMs and contract manufacturers, leveraging a broad product offering across high-growth technology sectors [1]. Financial Performance - Knowles reported a 7% year-over-year increase in revenue for the third quarter, totaling $153 million, which was at the high end of its guidance range. Earnings per share (EPS) increased by 22% year over year to $0.33, also at the high end of the guidance range. The company effectively managed cash flow by reducing outstanding bank borrowings by $15 million and repurchasing $20 million worth of shares [7]. Insider Trading Activity - On January 15, 2026, President & CEO Jeffrey Niew sold 50,000 shares of Knowles Corporation for approximately $1,237,500, executed under a Rule 10b5-1 trading plan. This sale represented 5.62% of Niew's direct holdings, marking the largest single open-market sale since December 2024 [5][4][6]. Market Position and Outlook - Ariel Investments highlighted Knowles in its Ariel Mid Cap Value Strategy investor letter, indicating that the company is well-positioned to benefit from its focus on niche, market-leading positions in hearing health and precision devices. Knowles is set to release its fourth-quarter and full-year 2025 results on February 5 [8].