Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $153 million, representing a 7% year-over-year increase, while EPS was $0.33, up 22% year-over-year [4][11] - Cash from operations was $29 million, exceeding the midpoint of the guidance range [4][11] - Year-to-date revenue growth was 5% and EPS growth was 15% year-over-year [8] Business Line Data and Key Metrics Changes - MedTech and specialty audio revenue was $65 million, up 2% year-over-year, with gross margins at 53% [5][11] - Precision Devices segment revenue was $88 million, up 12% year-over-year, with gross margins at 41.5% [5][12] - The company expects MedTech and specialty audio revenue growth to be in the range of 2%-4% for 2025, while Precision Devices is expected to grow at the high end of 6%-8% [5][7] Market Data and Key Metrics Changes - The defense market showed particularly strong growth, with design wins outpacing other end markets [6][12] - Channel inventories are now at normalized levels, matching orders to end market demand [7] Company Strategy and Development Direction - The company is focused on leveraging unique technologies to design custom-engineered solutions and deliver them at scale [4][10] - There is a strong emphasis on organic growth, with expectations for growth rates at the high end of 4%-6% for the total company in 2026 [8][9] - The company is pursuing synergistic acquisitions while maintaining a disciplined approach to M&A [33][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to continue growing revenue in the fourth quarter and beyond, supported by a healthy backlog of orders [8][9] - The company anticipates strong revenue and EPS growth in the second half of 2025, driven by new design wins and robust demand across all markets [8][9] Other Important Information - The company purchased $20 million in shares and reduced outstanding bank borrowings by $15 million during the quarter [9][13] - The net leverage ratio based on trailing 12 months adjusted EBITDA was 0.6 times, with liquidity exceeding $350 million [14] Q&A Session Summary Question: Update on specialty film capacity and demand outlook - Management indicated that specialty film revenue is expected to be in the $25 million-$30 million range this year, with potential growth to $55 million-$60 million next year due to increased capacity [20][21] Question: Design activity and growth expectations - Management expects MedTech and specialty audio growth in 2026 to be in the 2%-4% range, while Precision Devices may exceed the high end of the 6%-8% growth range [23][24] Question: M&A environment and opportunities - The M&A environment has improved, with more assets available and lower interest rate expectations, but the company remains disciplined in its approach [33][34] Question: Impact of palladium prices on gross margins - Management has pre-buys in place to mitigate the impact of rising palladium prices, and does not foresee a negative impact on gross margins at this time [38][39] Question: Specialty film gross margin improvements - Management expects sequential improvement in specialty film gross margins, with significant benefits anticipated by late Q2 2026 as production ramps up [45][46]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $153 million, representing a 7% increase year over year, with EPS of $0.33, up 22% year over year, and cash from operations at $29 million, all exceeding the midpoint of the guidance range [4][12][10] - Gross margins for the MedTech and specialty audio segment were 53%, flat compared to the previous year, while Precision Devices segment gross margins improved to 41.5%, up 150 basis points year over year [12][13] Business Line Data and Key Metrics Changes - MedTech and specialty audio revenue was $65 million, up 2% year over year, driven by increased demand in the specialty audio market [12][5] - Precision Devices segment revenue was $88 million, up 12% year over year, with growth across all end markets including MedTech, defense, industrial, and EV and energy [5][13] Market Data and Key Metrics Changes - The defense market showed particularly strong growth, with design wins outpacing other end markets, driven by increased defense spending and demand for electronic warfare solutions [6][7] - Channel inventories are now at normalized levels, matching orders to end market demand, indicating a healthy market environment [8] Company Strategy and Development Direction - The company is focused on leveraging unique technologies to design custom-engineered solutions and deliver them at scale, positioning itself well for growth in 2025 and beyond [10][11] - The strategy includes expanding specialty film production and pursuing synergistic acquisitions while maintaining a strong balance sheet [10][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in organic growth rates at the high end of the stated range of 4% to 6% for the total company, supported by strong secular growth trends and a healthy backlog of orders [9][10] - The company anticipates strong revenue and EPS growth in the second half of 2025, driven by new design wins and increased order activity [9][18] Other Important Information - The company purchased $20 million in shares and reduced outstanding bank borrowings by $15 million, maintaining a strong balance sheet with cash of $93 million and $176 million in debt [10][15] - The company expects to generate operating cash flow of 16% to 20% of revenues for the full year 2025 [15] Q&A Session Summary Question: Update on specialty film capacity and demand outlook - Management indicated that the specialty film line is expected to generate $55 to $60 million in revenue next year, with a backlog of $25 to $30 million [20][22] Question: Design activity and growth expectations for segments - Management expects MedTech and specialty audio growth in the range of 2% to 4%, while Precision Devices may exceed the high end of the 6% to 8% growth range due to strong design win activity [24][25] Question: M&A environment and focus - The company remains focused on acquisitions but is being selective, ensuring any acquisition makes strategic sense [35][36] Question: Impact of palladium prices on gross margins - Management noted that current palladium prices are not expected to negatively impact gross margins due to pre-buys and monitoring of market conditions [40][41] Question: Specialty film gross margin improvements - Management anticipates sequential improvement in specialty film gross margins, with significant improvements expected by mid to late Q2 2026 as production ramps up [46][47]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $153 million, up 7% year over year, with EPS of $0.33, an increase of 22% year over year, and cash from operations at $29 million, all exceeding the midpoint of guidance [5][13][19] - Gross margins for Q3 were 53%, flat compared to the previous year, with expectations to remain above 50% for the full year 2025 [14][19] Business Line Data and Key Metrics Changes - MedTech and Specialty Audio segment revenue was $65 million, up 2% year over year, driven by increased demand in the specialty audio market [5][13] - Precision Devices segment revenue was $88 million, up 12% year over year, with strong growth across all end markets including medtech, defense, industrial, and EV [6][14] Market Data and Key Metrics Changes - The defense market showed particularly strong performance, with design wins and bookings outpacing other end markets [8][9] - Bookings in the Precision Devices segment remained strong, particularly in defense and with distribution partners, indicating normalized channel inventories [9][44] Company Strategy and Development Direction - The company is focused on leveraging unique technologies to design custom engineered solutions and deliver them at scale, positioning itself well for future growth [4][10] - The strategy includes expanding specialty film production and pursuing synergistic acquisitions while maintaining manageable debt levels [11][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in entering a period of accelerated organic growth, supported by strong design wins and a healthy backlog of orders [10][12] - The company expects organic growth rates at the high end of the stated range of 4% to 6% for the total company in 2025, driven by robust secular growth trends [10][19] Other Important Information - Cash generation from operations was robust, allowing for share repurchases of $20 million and a reduction in bank borrowings by $15 million [11][16] - The company has a strong balance sheet with liquidity exceeding $350 million, and exposure to tariffs is less than 5% of revenue [17][18] Q&A Session Summary Question: Specialty film capacity and demand outlook - Management indicated that specialty film revenue is expected to be in the range of $55 million to $60 million next year, with a backlog of $25 million to $30 million [21][23] Question: Design activity and growth expectations - Management expects MedTech and Specialty Audio growth in the range of 2% to 4%, while Precision Devices may exceed the high end of the 6% to 8% growth range [25][26] Question: Specialty film applications and follow-up orders - Specialty film is focused on pulse power applications, with emerging applications in defibrillators and radiotherapy, indicating strong future demand [32][33] Question: M&A environment and strategy - The company remains focused on acquisitions but is being disciplined, ensuring any acquisition makes strategic sense [37][38] Question: Book to bill ratio and palladium prices - The book to bill ratio for the Precision Devices segment was one for the quarter, with strong bookings and a high backlog [44] - Palladium prices have increased, but the company has pre-buys in place to mitigate impact on gross margins [41][42]

Financial Performance - Q3 2025 - Revenue reached $152.9 million, a 7.3% increase compared to $142.5 million in Q3 2024[5] - Non-GAAP Diluted EPS increased to $0.33, a 22.2% increase compared to $0.27 in Q3 2024[5] - Net cash provided by operating activities decreased to $29.1 million, a 44.9% decrease compared to $52.8 million in Q3 2024[5] - Gross profit margin increased to 45.7% from 44.1% in Q3 2024[18] - Adjusted EBITDA margin increased to 25.8% from 24.6% in Q3 2024[21] Segment Performance - **MedTech & Specialty Audio:** Revenue increased by 1.6% to $64.7 million compared to $63.7 million in Q3 2024, while adjusted EBITDA margin decreased by 40 bps to 43.7%[10] - **Precision Devices:** Revenue increased by 11.9% to $88.2 million compared to $78.8 million in Q3 2024, and adjusted EBITDA margin increased by 200 bps to 25.7%[14] Q4 2025 Guidance - Revenue from continuing operations is projected to be between $151 million and $161 million[16] - Diluted earnings per share from continuing operations is expected to be between $0.33 and $0.37 on a non-GAAP basis[16] - Net cash provided by operating activities is guided to be between $30 million and $40 million[16] Debt and Leverage - Net debt leverage ratio is 0.6x, with net debt at $83.8 million and trailing 12-month adjusted EBITDA at $133.6 million[28]

Revenue and Earnings Performance - Third quarter revenues from continuing operations increased by 7% year over year to $153 million[1] - The company expects year-over-year revenue growth of 9% in the fourth quarter[1] - Revenues for the nine months ended September 30, 2025, increased to $431.0 million, up from $411.0 million in the same period of 2024, representing a growth of 4.9%[21] - For Q4 2025, the revenue guidance is set between $151 million and $161 million[6] - The company anticipates organic revenue growth of 6% for the full year 2025[3] Profitability Metrics - Non-GAAP diluted earnings per share for Q3 2025 was $0.33, compared to $0.24 in Q2 2025[4] - Gross profit for Q3 2025 was $69.9 million, representing 45.7% of revenues[4] - Operating earnings rose to $44.5 million for the nine months ended September 30, 2025, compared to $36.4 million in 2024, marking a significant increase of 22.3%[21] - Net earnings for the nine months ended September 30, 2025, were $23.2 million, a substantial recovery from a net loss of $256.3 million in the same period of 2024[21] - Earnings per share from continuing operations increased to $0.29 for the nine months ended September 30, 2025, compared to $0.15 in 2024, representing a growth of 93.3%[21] Cash Flow and Financial Management - Net cash from operations was $29 million, at the high end of the guided range[2] - For the quarter ended September 30, 2025, net cash provided by operating activities was $29.1 million, a decrease from $36.4 million in the previous quarter[35] - Non-GAAP net cash attributable to continuing operations for the same quarter was $31.0 million, compared to $44.7 million in the previous quarter[35] - Adjusted free cash flow for the quarter was $23.3 million, representing 15.2% of revenues, down from 27.1% in the previous quarter[35] - For the nine months ended September 30, 2025, non-GAAP net cash attributable to continuing operations totaled $98.0 million, up from $72.9 million in the same period of 2024[35] Expenses and Cost Management - Research and development expenses for the nine months ended September 30, 2025, were $29.7 million, slightly up from $29.2 million in 2024[21] - Selling and administrative expenses increased to $107.1 million for the nine months ended September 30, 2025, compared to $106.8 million in 2024[21] - Interest expense, net, decreased to $7.5 million for the nine months ended September 30, 2025, down from $12.9 million in 2024, indicating improved financial management[21] Shareholder Actions and Debt Management - The company plans to repurchase $20 million in shares and reduce debt by $15 million[2] - The company repurchased $55.0 million of common stock during the nine months ended September 30, 2025, compared to $29.5 million in the same period of 2024[33] - Total liabilities decreased to $336.4 million as of September 30, 2025, from $358.4 million at the end of 2024[30] - The company’s accumulated deficit improved to $(590.4) million as of September 30, 2025, from $(613.6) million at the end of 2024[30] Overall Financial Health - The gross profit margin as a percentage of revenues improved to 42.6% for the nine months ended September 30, 2025, compared to 42.3% in 2024[21] - Non-GAAP net earnings for the same quarter were $28.9 million, compared to $21.2 million in the prior quarter, reflecting a 36.5% increase[25] - Diluted earnings per share from continuing operations rose to $0.21, up from $0.09 in the previous quarter, marking a 133.3% increase[25] - The company utilized $1.9 million from discontinued operations in the latest quarter, compared to $8.3 million in the previous quarter[35] - Adjusted free cash flow for the nine months ended September 30, 2025, was $81.2 million, compared to $63.5 million in the same period of 2024[35] - Knowles Corporation emphasizes that adjusted free cash flow is a key measure for assessing cash available for debt repayment, acquisitions, and stock repurchases[35]

Group 1 - The article does not provide any specific content related to a company or industry [1]

Core Insights - Syntiant Corp. has been awarded the High Tech Award for "Deal of the Year" by Octane for its acquisition of Knowles Corporation's Consumer MEMS Microphone business, highlighting a significant financial transaction that impacts the business landscape [2] Company Overview - Syntiant, founded in 2017 and headquartered in Irvine, California, specializes in ultra-low-power edge AI solutions, delivering efficient processors, sensors, and software [3] - The company has deployed over 100 million purpose-built silicon and machine learning models, along with billions of MEMS microphones and sensors, powering edge AI applications globally [3] Acquisition Details - The acquisition of Knowles' CMM business is recognized for its bold strategy, allowing Syntiant to enhance its technology and market presence [2] - This deal provides Syntiant with immediate entry into the multi-billion-dollar MEMS microphone market and a highly skilled team along with proven technology and a strong customer base [4] Strategic Impact - The integration of Knowles' sensors and microphones into Syntiant's edge AI platform enables the delivery of a full, turnkey solution that simplifies product development and accelerates time-to-market [2] - Syntiant's solutions cater to various applications, including consumer electronics, smart home devices, automotive, and industrial use cases, aligning with the growing trend of AI-enabled microphones [4]

Core Insights - Knowles Corporation (NYSE: KN) stock has increased by 27% since July, driven by a strong Q2 performance and signs of margin recovery [1] Financial Performance - The Q2 results met expectations, indicating a positive trend in the company's financial health [1] Analyst Background - The analysis is conducted by a financial analyst with a background in petroleum and gas engineering, focusing on technology, infrastructure, and internet services [1]

Summary of Knowles Corporation FY Conference Call Company Overview - **Company**: Knowles Corporation (NYSE: KN) - **Revenue**: $554 million in the previous year, with expectations of approximately $585 million for the current year [3][13] - **Gross Margin**: Expected to be around 45% [3] - **EBITDA Margin**: Projected in the mid-20s percentage range [3] Strategic Transformation - **Business Segments**: - Precision Device Segment: Includes electrolytic, film, and ceramic capacitors, and RF filters - MEVSA Segment: Focuses on med tech and specialty audio, primarily microphones and speakers [4] - **Shift from Consumer Electronics**: Previously reliant on consumer electronics, particularly Apple, which accounted for 40-50% of revenue. The company has divested from this market [5] - **Focus on Higher Margin Products**: Since 2017, the company has shifted focus to higher margin products and markets, reducing investment in lower-margin consumer business [9][10] Financial Performance - **Historical Performance**: - 4% organic growth and 4% growth through acquisitions from 2017 to 2024 [12] - EBITDA has more than doubled during this period [13] - **Future Projections**: - Expected revenue CAGR of 8-10% over the next five years [16] - Anticipated EBITDA growth to outpace revenue growth, with an expected 400 basis points improvement in EBITDA margins [17][28] Market Insights - **Hearing Health Market**: - Steady growth of approximately 3% annually, with high gross margins (over 50%) for Knowles and 80% for customers in this market [20][19] - Potential for increased growth due to rising awareness of hearing loss linked to dementia [23] - **Precision Device Segment**: - Expected organic growth of 6-8%, driven by applications in medical, defense, and industrial sectors [23] Acquisition Strategy - **Acquisitions**: - Completed four acquisitions since 2017, with the largest being Cornell DuBlier for $260 million [11][26] - Future acquisitions will focus on consolidation, extensions, and adjacencies to expand total addressable market (TAM) [38][40] - **Divestitures**: - Divested approximately $600 million in revenue from lower-margin businesses, including consumer MEMS microphones and crystal oscillators [36][47] Capital Allocation and Financial Health - **Balance Sheet**: - Improved significantly, with a leverage ratio below 1 [8][44] - Generated $36 million in free cash flow in the last quarter, with $30 million allocated for stock repurchases [45] - **Capital Expenditure**: - CapEx is expected to trend towards the higher end of the 8-10% range, focusing on new product development [42] Competitive Advantages - **Differentiated Technology**: Strong expertise in audio products and customer intimacy, allowing for customized solutions [32][34] - **Resilience and Reliability**: Proven ability to deliver products consistently, even during supply chain disruptions like COVID-19 [34] Conclusion - Knowles Corporation has successfully transformed its business model, focusing on higher-margin products and markets, while maintaining a strong financial position and growth outlook. The company is well-positioned for future growth through strategic acquisitions and a disciplined capital allocation strategy [47][48]

Core Viewpoint - KN is hosting an investor conference webinar on August 22, 2025, at 9:00 am (EET) to present its performance and unaudited financial results for the first half of 2025 [1]. Group 1 - The webinar will be led by KN's Chief Financial Officer, Tomas Tumėnas, who will provide insights into the company's performance [1]. - Investors are encouraged to submit questions in advance due to limited time during the webinar, with a deadline set for February 26 [2]. - The webinar will be accessible through a registration link, and participants will receive instructions on how to join [2]. Group 2 - A corporate webinar is defined as a virtual conference where company representatives share information about the company's performance, allowing for interactive communication [3]. - The webinar will be recorded and made available online on the company's website and Nasdaq Baltic's YouTube account [2].