PART I — FINANCIAL INFORMATION This section encompasses the company's unaudited consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements of Knowles Corporation, including statements of earnings, comprehensive earnings, balance sheets, stockholders' equity, and cash flows, along with detailed notes explaining the basis of presentation, recent accounting standards, discontinued operations, and other financial details [Consolidated Statements of Earnings (unaudited)](index=4&type=section&id=Consolidated%20Statements%20of%20Earnings%20(unaudited)) This statement presents the company's revenues, gross profit, operating earnings, and net earnings for the specified periods | Metric | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Revenues | **$ 145.9** | **$ 135.2** | **$ 278.1** | **$ 268.5** | | Gross profit | **$ 60.6** | **$ 57.8** | **$ 113.9** | **$ 111.0** | | Operating earnings | **$ 14.7** | **$ 12.7** | **$ 18.7** | **$ 17.7** | | Earnings from continuing operations | **$ 7.8** | **$ 4.8** | **$ 7.4** | **$ 3.8** | | Net earnings (loss) | **$ 7.8** | **$ (259.3)** | **$ 5.8** | **$ (256.8)** | | Diluted EPS from continuing operations | **$ 0.09** | **$ 0.05** | **$ 0.08** | **$ 0.04** | | Diluted Net EPS (loss) | **$ 0.09** | **$ (2.88)** | **$ 0.07** | **$ (2.84)** | [Consolidated Statements of Comprehensive Earnings (unaudited)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Earnings%20(unaudited)) This statement details net earnings and other comprehensive earnings, leading to total comprehensive earnings for the periods | Metric | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net earnings (loss) | **$ 7.8** | **$ (259.3)** | **$ 5.8** | **$ (256.8)** | | Other comprehensive earnings (loss), net of tax | **$ 6.6** | **$ (4.0)** | **$ 9.3** | **$ (7.6)** | | Comprehensive earnings (loss) | **$ 14.4** | **$ (263.3)** | **$ 15.1** | **$ (264.4)** | [Consolidated Balance Sheets (unaudited)](index=6&type=section&id=Consolidated%20Balance%20Sheets%20(unaudited)) This statement provides a snapshot of the company's assets, liabilities, and stockholders' equity at specific dates | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------------------- | :---------------------------- | :------------------------------ | | Total current assets | **$ 334.8** | **$ 361.4** | | Total assets | **$ 1,088.3** | **$ 1,118.2** | | Total current liabilities | **$ 167.2** | **$ 197.6** | | Total liabilities and stockholders' equity | **$ 1,088.3** | **$ 1,118.2** | | Total stockholders' equity | **$ 746.1** | **$ 756.0** | [Consolidated Statements of Stockholders' Equity (unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity%20(unaudited)) This statement tracks changes in total stockholders' equity, including net earnings, stock repurchases, and stock-based compensation | Metric | Balance at March 31, 2025 (in millions) | Balance at June 30, 2025 (in millions) | | :-------------------------------- | :-------------------------------------- | :------------------------------------- | | Total Stockholders' Equity | **$ 755.8** | **$ 746.1** | | Net earnings | **$ 7.8** | **$ 7.8** | | Repurchase of common stock | **$ (30.0)** | **$ (30.0)** | | Stock-based compensation expense | **$ 6.3** | **$ 6.3** | | Metric | Balance at December 31, 2024 (in millions) | Balance at June 30, 2025 (in millions) | | :-------------------------------- | :--------------------------------------- | :------------------------------------- | | Total Stockholders' Equity | **$ 756.0** | **$ 746.1** | | Net earnings | **$ 5.8** | **$ 5.8** | | Repurchase of common stock | **$ (35.0)** | **$ (35.0)** | | Stock-based compensation expense | **$ 16.5** | **$ 16.5** | [Consolidated Statements of Cash Flows (unaudited)](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) This statement summarizes cash flows from operating, investing, and financing activities for the specified periods | Activity | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Net cash provided by operating activities | **$ 37.7** | **$ 42.2** | | Net cash (used in) provided by investing activities | **$ (8.6)** | **$ 0.6** | | Net cash used in financing activities | **$ (56.5)** | **$ (46.0)** | | Net decrease in cash and cash equivalents | **$ (26.9)** | **$ (3.3)** | | Cash and cash equivalents at end of period | **$ 103.2** | **$ 84.0** | [Notes to Consolidated Financial Statements (unaudited)](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(unaudited)) This section provides detailed explanations and disclosures supporting the consolidated financial statements [1. Basis of Presentation](index=11&type=section&id=1.%20Basis%20of%20Presentation) This note outlines the company's business focus, recent divestitures, and accounting adjustments - **Knowles Corporation** is a **leading manufacturer** of specialty electronic components, focusing on medtech, defense, and industrial markets after divesting its **Consumer MEMS Microphones (CMM)** segment[22](index=22&type=chunk)[100](index=100&type=chunk) - The company **completed** the sale of its **CMM segment** to **Syntiant Corp.** on December 27, 2024, reclassifying **CMM's** results as **discontinued operations**[25](index=25&type=chunk)[99](index=99&type=chunk) - The company **identified and corrected errors** related to stock-based compensation expense and the gain on disposal of the **CMM** business, which were deemed **immaterial**[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk) - The Board of Directors **authorized** an **increase** of up to **$150.0 million** in **additional** aggregate value for the **share repurchase program** on February 13, 2025, with **$159.0 million** **remaining** at June 30, 2025[35](index=35&type=chunk)[36](index=36&type=chunk)[170](index=170&type=chunk) [2. Recent Accounting Standards](index=13&type=section&id=2.%20Recent%20Accounting%20Standards) This note discusses the adoption and evaluation of new accounting standards and their expected impact - The company retroactively adopted **ASU 2023-07** (segment disclosure) for annual reporting in 2024 and interim reporting in **Q1 2025**[39](index=39&type=chunk) - **ASU 2023-09** (income tax disclosures) is **effective** for the company's annual reporting for the year ended December 31, 2025, with **no significant expected impact**[40](index=40&type=chunk) - **ASU 2024-03** (expense categories) is **effective** for annual reporting in 2027 and interim reporting in **Q1 2028**, and the company is currently evaluating its **impact**[41](index=41&type=chunk) [3. Discontinued Operations](index=13&type=section&id=3.%20Discontinued%20Operations) This note details the sale of the CMM segment, related financial adjustments, and impairment charges - The **CMM segment** was sold to **Syntiant** for approximately **$141.9 million**, comprising **$63.6 million** cash, **$77.2 million** in **Syntiant** Series D-2 preferred stock, and **$1.1 million** for purchase price adjustments[42](index=42&type=chunk) - Post-transaction adjustments resulted in net adjustments of **$1.6 million** to the loss on disposal of the **CMM** business during the six months ended June 30, 2025[43](index=43&type=chunk) - The company recorded **goodwill impairment charges** of **$249.4 million** for **CMM** during the three and six months ended June 30, 2024[46](index=46&type=chunk) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Revenues | **$ —** | **$ 71.1** | **$ —** | **$ 136.1** | | Loss from discontinued operations, net | **$ —** | **$ (264.1)** | **$ (1.6)** | **$ (260.6)** | [4. Inventories](index=15&type=section&id=4.%20Inventories) This note provides a breakdown of inventory components and associated reserves | Component | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :---------------- | :---------------------------- | :------------------------------ | | Raw materials | **$ 99.4** | **$ 94.2** | | Work in progress | **$ 28.3** | **$ 26.1** | | Finished goods | **$ 38.9** | **$ 35.5** | | Subtotal | **$ 166.6** | **$ 155.8** | | Less reserves | **$ (46.9)** | **$ (37.8)** | | Total | **$ 119.7** | **$ 118.0** | [5. Property, Plant, and Equipment, net](index=15&type=section&id=5.%20Property,%20Plant,%20and%20Equipment,%20net) This note details the composition of property, plant, and equipment, including depreciation and impairment charges | Component | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------------- | :---------------------------- | :------------------------------ | | Land | **$ 14.3** | **$ 14.1** | | Buildings and improvements | **$ 99.2** | **$ 117.2** | | Machinery, equipment, and other | **$ 276.3** | **$ 276.7** | | Subtotal | **$ 389.8** | **$ 408.0** | | Less accumulated depreciation | **$ (262.6)** | **$ (277.9)** | | Total | **$ 127.2** | **$ 130.1** | - The company recorded an **impairment charge** of **$3.6 million** for certain machinery and equipment during the three and six months ended June 30, 2025[52](index=52&type=chunk) [6. Goodwill and Other Intangible Assets](index=15&type=section&id=6.%20Goodwill%20and%20Other%20Intangible%20Assets) This note presents the balances and amortization of goodwill and other intangible assets by segment and component | Segment | Balance at December 31, 2024 (in millions) | Foreign currency translation (in millions) | Balance at June 30, 2025 (in millions) | | :------------------------ | :--------------------------------------- | :----------------------------------------- | :------------------------------------- | | **Precision Devices** | **$ 132.1** | **$ 0.3** | **$ 132.4** | | **MedTech & Specialty Audio** | **$ 137.7** | **$ —** | **$ 137.7** | | Total | **$ 269.8** | **$ 0.3** | **$ 270.1** | | Component | June 30, 2025 Gross Carrying Amount (in millions) | June 30, 2025 Accumulated Amortization (in millions) | December 31, 2024 Gross Carrying Amount (in millions) | December 31, 2024 Accumulated Amortization (in millions) | | :---------------------- | :------------------------------------------------ | :--------------------------------------------------- | :---------------------------------------------------- | :---------------------------------------------------- | | Amortized intangible assets: | | | | | | Trademarks | **$ 15.2** | **$ 2.3** | **$ 15.2** | **$ 1.7** | | Customer relationships | **$ 118.5** | **$ 33.4** | **$ 118.5** | **$ 27.3** | | Developed technology | **$ 26.3** | **$ 7.4** | **$ 26.3** | **$ 6.0** | | Other | **$ 0.8** | **$ 0.4** | **$ 0.8** | **$ 0.4** | | Total | **$ 160.8** | **$ 43.5** | **$ 160.8** | **$ 35.4** | | Unamortized intangible assets: | | | | | | Trademarks | **$ 32.0** | | **$ 32.0** | | | Total intangible assets, net | **$ 149.3** | | **$ 157.4** | | - Amortization expense for the three months ended June 30, 2025, was **$4.1 million** (vs. **$4.2 million** in 2024), and for the six months, it was **$8.1 million** (vs. **$8.6 million** in 2024)[55](index=55&type=chunk) [7. Restructuring and Related Activities](index=16&type=section&id=7.%20Restructuring%20and%20Related%20Activities) This note outlines restructuring charges incurred, primarily due to headcount reductions - The company recorded **$2.9 million** in **restructuring charges** during the six months ended June 30, 2025, **primarily for headcount reductions** post-**CMM** business sale[57](index=57&type=chunk) - **No restructuring charges** were recorded for the three months ended June 30, 2025[57](index=57&type=chunk) | Segment | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | | :------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | **Precision Devices** | **$ —** | **$ 0.2** | **$ 1.4** | **$ 2.7** | | **MedTech & Specialty Audio** | **$ —** | **$ —** | **$ 0.3** | **$ —** | | Corporate | **$ —** | **$ —** | **$ 1.2** | **$ —** | | Total | **$ —** | **$ 0.2** | **$ 2.9** | **$ 2.7** | [8. Borrowings](index=17&type=section&id=8.%20Borrowings) This note details the company's revolving credit facility and seller note, along with compliance with debt covenants | Type | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------------- | :---------------------------- | :------------------------------ | | **$400.0 million Revolving Credit Facility** | **$ 119.0** | **$ 134.0** | | Seller Note | **$ 71.0** | **$ 68.5** | | Total | **$ 190.0** | **$ 202.5** | | Less current maturities of Seller Note | **$ 71.0** | **$ 68.5** | | Total long-term debt | **$ 119.0** | **$ 134.0** | - The company was in **compliance** with all **debt covenants** (**Interest Coverage Ratio**, **Total Net Leverage Ratio**, **Senior Secured Net Leverage Ratio**) as of June 30, 2025[65](index=65&type=chunk) - The weighted-average interest rate on the Credit Facility **decreased** to **6.18%** for the six months ended June 30, 2025, from **7.22%** in the prior year[67](index=67&type=chunk) - The **remaining** **$72.7 million** balance of the Seller Note is **due** on November 1, 2025[68](index=68&type=chunk) [9. Other Comprehensive Earnings](index=19&type=section&id=9.%20Other%20Comprehensive%20Earnings) This note presents the components of other comprehensive earnings and changes in accumulated other comprehensive loss | Period | 2025 (in millions) | 2024 (in millions) | | :----------------------------- | :----------------- | :----------------- | | Three Months Ended June 30, | **$ 6.6** | **$ (4.0)** | | Six Months Ended June 30, | **$ 9.3** | **$ (7.6)** | - Accumulated other comprehensive loss **improved** from **$(138.1) million** at December 31, 2024, to **$(128.8) million** at June 30, 2025[71](index=71&type=chunk) [10. Income Taxes](index=21&type=section&id=10.%20Income%20Taxes) This note provides effective tax rates and explains the primary drivers of changes in income tax provision | Period | 2025 ETR | 2024 ETR | | :----------------------------- | :------- | :------- | | Three Months Ended June 30, | **31.0%** | **38.5%** | | Six Months Ended June 30, | **38.8%** | **56.8%** | - The change in ETR was **primarily due to** the mix of earnings and losses by taxing jurisdictions and net discrete items, **mainly attributable to stock-based compensation**[73](index=73&type=chunk) [11. Equity Incentive Program](index=21&type=section&id=11.%20Equity%20Incentive%20Program) This note details stock-based compensation expense and unrecognized compensation expense for equity awards | Period | 2025 (in millions) | 2024 (in millions) | | :----------------------------- | :----------------- | :----------------- | | Three Months Ended June 30, | **$ 6.3** | **$ 5.9** | | Six Months Ended June 30, | **$ 16.5** | **$ 11.0** | - At June 30, 2025, **$23.9 million** of **unrecognized compensation expense** related to RSUs is **expected to be recognized** over **1.9 years**[78](index=78&type=chunk) - At June 30, 2025, **$12.7 million** of **unrecognized compensation expense** related to PSUs is **expected to be recognized** over **1.7 years**[81](index=81&type=chunk) [12. Earnings per Share](index=23&type=section&id=12.%20Earnings%20per%20Share) This note presents basic and diluted earnings per share from continuing and discontinued operations | Metric | 3 Months Ended June 30, 2025 (in millions, except per share amounts) | 3 Months Ended June 30, 2024 (in millions, except per share amounts) | 6 Months Ended June 30, 2025 (in millions, except per share amounts) | 6 Months Ended June 30, 2024 (in millions, except per share amounts) | | :---------------------------------- | :------------------------------------------------------------------- | :------------------------------------------------------------------- | :------------------------------------------------------------------ | :------------------------------------------------------------------ | | Earnings from continuing operations | **$ 7.8** | **$ 4.8** | **$ 7.4** | **$ 3.8** | | Loss from discontinued operations, net | **$ —** | **$ (264.1)** | **$ (1.6)** | **$ (260.6)** | | Net earnings (loss) | **$ 7.8** | **$ (259.3)** | **$ 5.8** | **$ (256.8)** | | Basic EPS from continuing operations | **$ 0.09** | **$ 0.05** | **$ 0.08** | **$ 0.04** | | Diluted EPS from continuing operations | **$ 0.09** | **$ 0.05** | **$ 0.08** | **$ 0.04** | | Basic weighted-average shares outstanding | **86.9** | **89.4** | **87.3** | **89.5** | | Diluted weighted-average shares outstanding | **87.6** | **89.9** | **88.3** | **90.4** | [13. Commitments and Contingent Liabilities](index=23&type=section&id=13.%20Commitments%20and%20Contingent%20Liabilities) This note discusses the company's involvement in legal proceedings and contractual indemnities - The company is involved in various legal proceedings and claims, **primarily related to commercial, warranty, employment, and intellectual property matters**[83](index=83&type=chunk) - Management believes the disposition of these legal proceedings will **not have a material adverse effect** on cash flow, results of operations, or financial condition[83](index=83&type=chunk) - The company provides contractual indemnities for intellectual property infringement claims, but historically has **not made significant payments** under such arrangements[85](index=85&type=chunk) [14. Segment Information](index=24&type=section&id=14.%20Segment%20Information) This note provides financial information for the Precision Devices and MedTech & Specialty Audio segments, including revenues and adjusted EBIT - The company's two reportable segments are **Precision Devices (PD)** and **MedTech & Specialty Audio (MSA)**[86](index=86&type=chunk) | Segment | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | | :------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | **Precision Devices** | **$ 78.5** | **$ 74.1** | **$ 151.0** | **$ 148.4** | | **MedTech & Specialty Audio** | **$ 67.4** | **$ 61.1** | **$ 127.1** | **$ 120.1** | | Total | **$ 145.9** | **$ 135.2** | **$ 278.1** | **$ 268.5** | | Segment | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | | :------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | **Precision Devices** | **$ 13.9** | **$ 11.8** | **$ 24.6** | **$ 21.6** | | **MedTech & Specialty Audio** | **$ 26.1** | **$ 25.1** | **$ 47.4** | **$ 48.9** | | Total | **$ 40.0** | **$ 36.9** | **$ 72.0** | **$ 70.5** | | Region | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | | :-------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | United States | **$ 58.7** | **$ 57.9** | **$ 114.0** | **$ 116.3** | | Asia | **$ 58.5** | **$ 43.3** | **$ 106.5** | **$ 85.8** | | Europe | **$ 24.0** | **$ 26.9** | **$ 48.2** | **$ 53.1** | | Other Americas | **$ 2.5** | **$ 2.5** | **$ 4.9** | **$ 5.1** | | Other | **$ 2.2** | **$ 4.6** | **$ 4.5** | **$ 8.2** | | Total | **$ 145.9** | **$ 135.2** | **$ 278.1** | **$ 268.5** | [Forward-Looking Statements](index=28&type=section&id=Forward-Looking%20Statements) This section highlights that the report contains forward-looking statements based on current expectations and estimates, which are subject to risks and uncertainties that could cause actual results to differ materially - The report contains **forward-looking statements** subject to **risks and uncertainties** that could cause actual outcomes to **differ materially** from projections[92](index=92&type=chunk) - **Key risks** include the ability to achieve **strategic benefits** from the **CMM divestiture**, fluctuations in stock price and operating results, global economic instability, and **increasing competition**[94](index=94&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, including an overview of the business, recent developments, a detailed analysis of financial performance for the three and six months ended June 30, 2025 and 2024, and discussions on liquidity, capital resources, and accounting estimates [Overview](index=29&type=section&id=Overview) This section provides a general description of Knowles' business and market focus - **Knowles** is a **leading manufacturer** of specialty electronic components for medtech, defense, and industrial markets[96](index=96&type=chunk) - The company **sells products directly** to OEMs, contract manufacturers, suppliers, and distributors globally[97](index=97&type=chunk) [Recent Developments](index=29&type=section&id=Recent%20Developments) This section highlights recent events such as new tariffs, the CMM business divestiture, and increased bookings in Precision Devices - New U.S. tariffs of **10%** plus country-specific tariffs were announced on April 2, 2025, but are **not anticipated to have a material impact** on operations[98](index=98&type=chunk) - The sale of the **CMM business** to **Syntiant Corp.** for approximately **$150.0 million** in **total consideration** was **completed** on December 27, 2024, **supporting Knowles' transformation** into an industrial technology company[99](index=99&type=chunk)[100](index=100&type=chunk) - The **Precision Devices segment** has **experienced increased bookings and backlog** for capacitor products for the past three quarters **due to normalizing inventory levels** in industrial markets[101](index=101&type=chunk) [Non-GAAP Financial Measures](index=29&type=section&id=Non-GAAP%20Financial%20Measures) This section explains the purpose and utility of non-GAAP financial measures in supplementing GAAP results - **Non-GAAP measures** are used to **supplement GAAP results**, **evaluate business aspects**, and **compare performance consistently** by **removing items not reflecting core operating performance**[102](index=102&type=chunk)[103](index=103&type=chunk) [Results of Operations for the Three Months Ended June 30, 2025 compared with the Three Months Ended June 30, 2024](index=31&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20June%2030,%202025%20compared%20with%20the%20Three%20Months%20Ended%20June%2030,%202024) This section analyzes the company's financial performance for the three-month period, comparing current and prior year results [Revenues](index=31&type=section&id=Revenues_3M) This section details the revenue performance for the period, highlighting segment-specific drivers | Period | 2025 (in millions) | 2024 (in millions) | Change (in millions) | % Change | | :----------------------------- | :----------------- | :----------------- | :------------------- | :------- | | Three Months Ended June 30, | **$ 145.9** | **$ 135.2** | **$ 10.7** | **7.9%** | - **MSA revenues increased** by **$6.3 million** **due to higher shipping volumes** of metal cans to **Syntiant** and **increased demand** in **specialty audio** and hearing health markets[106](index=106&type=chunk) - **PD revenues increased** by **$4.4 million** **due to higher demand** in **electrification** and **defense markets** and **higher average pricing**[106](index=106&type=chunk) [Cost of Goods Sold](index=31&type=section&id=Cost%20of%20Goods%20Sold_3M) This section analyzes the changes in cost of goods sold and their contributing factors for the period | Period | 2025 (in millions) | 2024 (in millions) | Change (in millions) | % Change | | :----------------------------- | :----------------- | :----------------- | :------------------- | :------- | | Three Months Ended June 30, | **$ 81.7** | **$ 77.1** | **$ 4.6** | **6.0%** | - **Increase driven by higher shipping volumes**, **unfavorable product mix**, **production inefficiencies** in the CD business, and **unfavorable inventory reserve adjustments**[107](index=107&type=chunk) [Impairment Charges](index=31&type=section&id=Impairment%20Charges_3M) This section reports impairment charges recorded during the period - An **impairment charge** of **$3.6 million** was recorded in **Q2 2025** for certain machinery and equipment[108](index=108&type=chunk) [Restructuring Charges](index=31&type=section&id=Restructuring%20Charges_3M) This section outlines restructuring charges incurred or not incurred during the period - **No restructuring charges** were recorded in **Q2 2025**[109](index=109&type=chunk) - In **Q2 2024**, **$0.3 million** in **restructuring charges** (Gross profit) and a **$0.1 million** credit (Operating expenses) were recorded in the **PD segment**[109](index=109&type=chunk) [Gross Profit and Non-GAAP Gross Profit](index=32&type=section&id=Gross%20Profit%20and%20Non-GAAP%20Gross%20Profit_3M) This section presents gross profit and non-GAAP gross profit, along with margin analysis for the period | Metric | 2025 (in millions) | 2024 (in millions) | Change (in millions) | % Change | | :---------------- | :----------------- | :----------------- | :------------------- | :------- | | Gross Profit | **$ 60.6** | **$ 57.8** | **$ 2.8** | **4.8%** | | Gross Profit Margin | **41.5%** | **42.8%** | **-1.3%** | | | Non-GAAP Gross Profit | **$ 64.5** | **$ 59.8** | **$ 4.7** | **7.9%** | | Non-GAAP Gross Profit Margin | **44.2%** | **44.2%** | **0.0%** | | - **Gross profit margin decreased due to impairment charges**, **unfavorable product mix**, **inventory reserve adjustments**, and CD business **production inefficiencies**[110](index=110&type=chunk) [Research and Development Expenses](index=32&type=section&id=Research%20and%20Development%20Expenses_3M) This section details research and development expenses and their percentage of revenues for the period | Period | 2025 (in millions) | 2024 (in millions) | Change (in millions) | % Change | | :----------------------------- | :----------------- | :----------------- | :------------------- | :------- | | Three Months Ended June 30, | **$ 10.0** | **$ 9.6** | **$ 0.4** | **4.2%** | | As % of Revenues | **6.9%** | **7.1%** | **-0.2%** | | [Selling and Administrative Expenses](index=32&type=section&id=Selling%20and%20Administrative%20Expenses_3M) This section presents selling and administrative expenses and their percentage of revenues for the period | Period | 2025 (in millions) | 2024 (in millions) | Change (in millions) | % Change | | :----------------------------- | :----------------- | :----------------- | :------------------- | :------- | | Three Months Ended June 30, | **$ 35.9** | **$ 35.6** | **$ 0.3** | **0.8%** | | As % of Revenues | **24.6%** | **26.3%** | **-1.7%** | | [Interest Expense, net](index=32&type=section&id=Interest%20Expense,%20net_3M) This section reports net interest expense for the period | Period | 2025 (in millions) | 2024 (in millions) | Change (in millions) | | :----------------------------- | :----------------- | :----------------- | :------------------- | | Three Months Ended June 30, | **$ 2.5** | **$ 4.6** | **$ (2.1)** | [Other Expense, net](index=32&type=section&id=Other%20Expense,%20net_3M) This section details other net expenses for the period | Period | 2025 (in millions) | 2024 (in millions) | Change (in millions) | | :----------------------------- | :----------------- | :----------------- | :------------------- | | Three Months Ended June 30, | **$ 0.9** | **$ 0.3** | **$ 0.6** | [Provision for Income Taxes and Non-GAAP Provision for Income Taxes](index=33&type=section&id=Provision%20for%20Income%20Taxes%20and%20Non-GAAP%20Provision%20for%20Income%20Taxes_3M) This section provides GAAP and non-GAAP effective tax rates for the period | Period | 2025 ETR | 2024 ETR | | :----------------------------- | :------- | :------- | | Three Months Ended June 30, | **31.0%** | **38.5%** | | Non-GAAP ETR | **15.9%** | **10.7%** | [Earnings from Continuing Operations](index=33&type=section&id=Earnings%20from%20Continuing%20Operations_3M) This section presents earnings from continuing operations for the period | Period | 2025 (in millions) | 2024 (in millions) | Change (in millions) | | :----------------------------- | :----------------- | :----------------- | :------------------- | | Three Months Ended June 30, | **$ 7.8** | **$ 4.8** | **$ 3.0** | [Earnings and Adjusted Earnings from Continuing Operations Before Interest and Income Taxes](index=33&type=section&id=Earnings%20and%20Adjusted%20Earnings%20from%20Continuing%20Operations%20Before%20Interest%20and%20Income%20Taxes_3M) This section details GAAP and adjusted EBIT and their margins for the period | Metric | 2025 (in millions) | 2024 (in millions) | Change (in millions) | | :---------------- | :----------------- | :----------------- | :------------------- | | EBIT | **$ 13.8** | **$ 12.4** | **$ 1.4** | | EBIT Margin | **9.5%** | **9.2%** | **0.3%** | | Adjusted EBIT | **$ 27.7** | **$ 25.2** | **$ 2.5** | | Adjusted EBIT Margin | **19.0%** | **18.6%** | **0.4%** | [Loss from Discontinued Operations, net](index=33&type=section&id=Loss%20from%20Discontinued%20Operations,%20net_3M) This section reports the loss from discontinued operations for the period, including primary drivers - **No activity** for **Q2 2025**[122](index=122&type=chunk) - **Q2 2024 loss** of **$264.1 million** was **primarily due to goodwill impairment** and **CMM business sale expenses**[122](index=122&type=chunk) [Diluted Earnings per Share from Continuing Operations and Non-GAAP Diluted Earnings per Share from Continuing Operations](index=33&type=section&id=Diluted%20Earnings%20per%20Share%20from%20Continuing%20Operations%20and%20Non-GAAP%20Diluted%20Earnings%20per%20Share%20from%20Continuing%20Operations_3M) This section presents GAAP and non-GAAP diluted EPS from continuing operations for the period | Metric | 2025 | 2024 | Change | | :----------------------------- | :----- | :----- | :----- | | Diluted EPS (GAAP) | **$ 0.09** | **$ 0.05** | **$ 0.04** | | Diluted EPS (Non-GAAP) | **$ 0.24** | **$ 0.20** | **$ 0.04** | [Results of Operations for the Six Months Ended June 30, 2025 compared with the Six Months Ended June 30, 2024](index=35&type=section&id=Results%20of%20Operations%20for%20the%20Six%20Months%20Ended%20June%2030,%202025%20compared%20with%20the%20Six%20Months%20Ended%20June%2030,%202024) This section analyzes the company's financial performance for the six-month period, comparing current and prior year results [Revenues](index=35&type=section&id=Revenues_6M) This section details the revenue performance for the period, highlighting segment-specific drivers | Period | 2025 (in millions) | 2024 (in millions) | Change (in millions) | % Change | | :----------------------------- | :----------------- | :----------------- | :------------------- | :------- | | Six Months Ended June 30, | **$ 278.1** | **$ 268.5** | **$ 9.6** | **3.6%** | - **MSA revenues increased** by **$7.0 million** **due to higher shipping volumes** of metal cans to **Syntiant** and **increased demand** in **specialty audio** and hearing health markets[127](index=127&type=chunk) - **PD revenues increased** by **$2.6 million** **due to higher demand** from medtech and **electrification markets** and **higher average pricing**, partially offset by **lower demand** from industrial and **defense markets**[127](index=127&type=chunk) [Cost of Goods Sold](index=35&type=section&id=Cost%20of%20Goods%20Sold_6M) This section analyzes the changes in cost of goods sold and their contributing factors for the period | Period | 2025 (in millions) | 2024 (in millions) | Change (in millions) | % Change | | :----------------------------- | :----------------- | :----------------- | :------------------- | :------- | | Six Months Ended June 30, | **$ 160.1** | **$ 156.2** | **$ 3.9** | **2.5%** | - **Increase driven by higher shipping volumes**, **unfavorable product mix**, **production inefficiencies** in the CD business, and **unfavorable inventory reserve adjustments**[128](index=128&type=chunk) [Impairment Charges](index=35&type=section&id=Impairment%20Charges_6M) This section reports impairment charges recorded during the period - An **impairment charge** of **$3.6 million** was recorded in the six months ended June 30, 2025, for certain machinery and equipment[129](index=129&type=chunk) [Restructuring Charges](index=35&type=section&id=Restructuring%20Charges_6M) This section outlines restructuring charges incurred during the period for headcount reductions - **Restructuring charges** of **$2.9 million** were recorded in the six months ended June 30, 2025, for **headcount reductions**[130](index=130&type=chunk) - In the six months ended June 30, 2024, **$2.7 million** in **restructuring charges** were recorded for **facility transfers** and **headcount reductions** in the **PD segment**[131](index=131&type=chunk) [Gross Profit and Non-GAAP Gross Profit](index=36&type=section&id=Gross%20Profit%20and%20Non-GAAP%20Gross%20Profit_6M) This section presents gross profit and non-GAAP gross profit, along with margin analysis for the period | Metric | 2025 (in millions) | 2024 (in millions) | Change (in millions) | % Change | | :---------------- | :----------------- | :----------------- | :------------------- | :------- | | Gross Profit | **$ 113.9** | **$ 111.0** | **$ 2.9** | **2.6%** | | Gross Profit Margin | **41.0%** | **41.3%** | **-0.3%** | | | Non-GAAP Gross Profit | **$ 119.5** | **$ 117.7** | **$ 1.8** | **1.5%** | | Non-GAAP Gross Profit Margin | **43.0%** | **43.8%** | **-0.8%** | | - **Gross profit margin decreased due to impairment charges**, **unfavorable product mix**, **inventory reserve adjustments**, and CD business **production inefficiencies**[132](index=132&type=chunk) [Research and Development Expenses](index=36&type=section&id=Research%20and%20Development%20Expenses_6M) This section details research and development expenses and their percentage of revenues for the period | Period | 2025 (in millions) | 2024 (in millions) | Change (in millions) | % Change | | :----------------------------- | :----------------- | :----------------- | :------------------- | :------- | | Six Months Ended June 30, | **$ 19.7** | **$ 19.0** | **$ 0.7** | **3.7%** | | As % of Revenues | **7.1%** | **7.1%** | **0.0%** | | [Selling and Administrative Expenses](index=36&type=section&id=Selling%20and%20Administrative%20Expenses_6M) This section presents selling and administrative expenses and their percentage of revenues for the period | Period | 2025 (in millions) | 2024 (in millions) | Change (in millions) | % Change | | :----------------------------- | :----------------- | :----------------- | :------------------- | :------- | | Six Months Ended June 30, | **$ 73.1** | **$ 72.9** | **$ 0.2** | **0.3%** | | As % of Revenues | **26.3%** | **27.2%** | **-0.9%** | | [Interest Expense, net](index=36&type=section&id=Interest%20Expense,%20net_6M) This section reports net interest expense for the period | Period | 2025 (in millions) | 2024 (in millions) | Change (in millions) | | :----------------------------- | :----------------- | :----------------- | :------------------- | | Six Months Ended June 30, | **$ 5.2** | **$ 9.0** | **$ (3.8)** | [Other Expense (Income), net](index=37&type=section&id=Other%20Expense%20(Income),%20net_6M) This section details other net expenses or income for the period | Period | 2025 (in millions) | 2024 (in millions) | Change (in millions) | | :----------------------------- | :----------------- | :----------------- | :------------------- | | Six Months Ended June 30, | **$ 1.4** | **$ (0.1)** | **$ 1.5** | [Provision for Income Taxes and Non-GAAP Provision for Income Taxes](index=37&type=section&id=Provision%20for%20Income%20Taxes%20and%20Non-GAAP%20Provision%20for%20Income%20Taxes_6M) This section provides GAAP and non-GAAP effective tax rates for the period | Period | 2025 ETR | 2024 ETR | | :----------------------------- | :------- | :------- | | Six Months Ended June 30, | **38.8%** | **56.8%** | | Non-GAAP ETR | **15.4%** | **10.4%** | [Earnings from Continuing Operations](index=37&type=section&id=Earnings%20from%20Continuing%20Operations_6M) This section presents earnings from continuing operations for the period | Period | 2025 (in millions) | 2024 (in millions) | Change (in millions) | | :----------------------------- | :----------------- | :----------------- | :------------------- | | Six Months Ended June 30, | **$ 7.4** | **$ 3.8** | **$ 3.6** | [Earnings and Adjusted Earnings from Continuing Operations Before Interest and Income Taxes](index=37&type=section&id=Earnings%20and%20Adjusted%20Earnings%20from%20Continuing%20Operations%20Before%20Interest%20and%20Income%20Taxes_6M) This section details GAAP and adjusted EBIT and their margins for the period | Metric | 2025 (in millions) | 2024 (in millions) | Change (in millions) | | :---------------- | :----------------- | :----------------- | :------------------- | | EBIT | **$ 17.3** | **$ 17.8** | **$ (0.5)** | | EBIT Margin | **6.2%** | **6.6%** | **-0.4%** | | Adjusted EBIT | **$ 49.4** | **$ 48.5** | **$ 0.9** | | Adjusted EBIT Margin | **17.8%** | **18.1%** | **-0.3%** | [Loss from Discontinued Operations, net](index=37&type=section&id=Loss%20from%20Discontinued%20Operations,%20net_6M) This section reports the loss from discontinued operations for the period, including primary drivers | Period | 2025 (in millions) | 2024 (in millions) | Change (in millions) | | :----------------------------- | :----------------- | :----------------- | :------------------- | | Six Months Ended June 30, | **$ 1.6** | **$ 260.6** | **$ (259.0)** | - The **2025 loss** was **primarily due to unfavorable working capital adjustments**, while the **2024 loss** was **driven by goodwill impairment** and **CMM business sale expenses**[143](index=143&type=chunk) [Diluted Earnings per Share from Continuing Operations and Non-GAAP Diluted Earnings per Share from Continuing Operations](index=38&type=section&id=Diluted%20Earnings%20per%20Share%20from%20Continuing%20Operations%20and%20Non-GAAP%20Diluted%20Earnings%20per%20Share%20from%20Continuing%20Operations_6M) This section presents GAAP and non-GAAP diluted EPS from continuing operations for the period | Metric | 2025 | 2024 | Change | | :----------------------------- | :----- | :----- | :----- | | Diluted EPS (GAAP) | **$ 0.08** | **$ 0.04** | **$ 0.04** | | Diluted EPS (Non-GAAP) | **$ 0.41** | **$ 0.38** | **$ 0.03** | [Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures](index=39&type=section&id=Reconciliation%20of%20GAAP%20Financial%20Measures%20to%20Non-GAAP%20Financial%20Measures) This section provides detailed reconciliations between GAAP and non-GAAP financial measures | Adjustment | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | | :---------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Gross profit (GAAP) | **$ 60.6** | **$ 57.8** | **$ 113.9** | **$ 111.0** | | Stock-based compensation expense | **$ 0.3** | **$ 0.4** | **$ 0.8** | **$ 0.8** | | Impairment charges | **$ 3.6** | **$ —** | **$ 3.6** | **$ —** | | Restructuring charges | **$ —** | **$ 0.3** | **$ 0.5** | **$ 1.3** | | Production transfer costs | **$ 0.2** | **$ 0.7** | **$ 0.3** | **$ 1.5** | | Acquisition-related costs | **$ —** | **$ 0.6** | **$ —** | **$ 2.0** | | Transition services credit | **$ (0.2)** | **$ —** | **$ (0.4)** | **$ —** | | Other | **$ —** | **$ —** | **$ 0.8** | **$ 1.1** | | Non-GAAP gross profit | **$ 64.5** | **$ 59.8** | **$ 119.5** | **$ 117.7** | | Adjustment | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | | :---------------------------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Earnings from continuing operations before interest and income taxes (GAAP) | **$ 13.8** | **$ 12.4** | **$ 17.3** | **$ 17.8** | | Stock-based compensation expense | **$ 6.3** | **$ 5.9** | **$ 16.5** | **$ 11.0** | | Intangibles amortization expense | **$ 4.1** | **$ 4.2** | **$ 8.1** | **$ 8.6** | | Impairment charges | **$ 3.6** | **$ —** | **$ 3.6** | **$ —** | | Restructuring charges | **$ —** | **$ 0.2** | **$ 2.9** | **$ 2.7** | | Production transfer costs | **$ 0.2** | **$ 0.8** | **$ 0.4** | **$ 1.6** | | Acquisition-related costs | **$ 0.2** | **$ 2.0** | **$ 0.7** | **$ 6.2** | | Transition services credit | **$ (0.5)** | **$ —** | **$ (1.2)** | **$ —** | | Other | **$ —** | **$ (0.3)** | **$ 1.1** | **$ 0.6** | | Adjusted earnings from continuing operations before interest and income taxes | **$ 27.7** | **$ 25.2** | **$ 49.4** | **$ 48.5** | [Segment Results of Operations for the Three Months Ended June 30, 2025 compared with the Three Months Ended June 30, 2024](index=41&type=section&id=Segment%20Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20June%2030,%202025%20compared%20with%20the%20Three%20Months%20Ended%20June%2030,%202024) This section analyzes the financial performance of the Precision Devices and MedTech & Specialty Audio segments for the three-month period [Precision Devices](index=41&type=section&id=Precision%20Devices_3M_Segment) This section details the revenue and adjusted EBIT performance of the Precision Devices segment for the period | Metric | 2025 (in millions) | 2024 (in millions) | Change (in millions) | % Change | | :---------------- | :----------------- | :----------------- | :------------------- | :------- | | Revenues | **$ 78.5** | **$ 74.1** | **$ 4.4** | **5.9%** | | Adjusted EBIT | **$ 13.9** | **$ 11.8** | **$ 2.1** | **17.8%** | | Adjusted EBIT Margin | **17.7%** | **15.9%** | **1.8%** | | - Revenue **increase driven by higher demand** in **electrification** and **defense markets** and **higher average pricing**[152](index=152&type=chunk) - **Adjusted EBIT increase due to higher non-GAAP gross profit** from **higher shipping volumes**, **increased factory capacity utilization**, product cost reductions, and **higher average pricing**[154](index=154&type=chunk) [MedTech & Specialty Audio](index=42&type=section&id=MedTech%20&%20Specialty%20Audio_3M_Segment) This section details the revenue and adjusted EBIT performance of the MedTech & Specialty Audio segment for the period | Metric | 2025 (in millions) | 2024 (in millions) | Change (in millions) | % Change | | :---------------- | :----------------- | :----------------- | :------------------- | :------- | | Revenues | **$ 67.4** | **$ 61.1** | **$ 6.3** | **10.3%** | | Adjusted EBIT | **$ 26.1** | **$ 25.1** | **$ 1.0** | **4.0%** | | Adjusted EBIT Margin | **38.7%** | **41.1%** | **-2.4%** | | - Revenue **increase primarily due to higher shipping volumes** of metal cans to **Syntiant** and **increased demand** in **specialty audio** and hearing health markets[156](index=156&type=chunk) - **Adjusted EBIT margin decrease due to lower average pricing** on **mature products**, **unfavorable product mix**, **higher factory costs**, and **impact of higher shipping volumes** of **lower margin metal can products** to **Syntiant**[158](index=158&type=chunk) [Segment Results of Operations for the Six Months Ended June 30, 2025 compared with the Six Months Ended June 30, 2024](index=43&type=section&id=Segment%20Results%20of%20Operations%20for%20the%20Six%20Months%20Ended%20June%2030,%202025%20compared%20with%20the%20Six%20Months%20Ended%20June%2030,%202024) This section analyzes the financial performance of the Precision Devices and MedTech & Specialty Audio segments for the six-month period [Precision Devices](index=43&type=section&id=Precision%20Devices_6M_Segment) This section details the revenue and adjusted EBIT performance of the Precision Devices segment for the period | Metric | 2025 (in millions) | 2024 (in millions) | Change (in millions) | % Change | | :---------------- | :----------------- | :----------------- | :------------------- | :------- | | Revenues | **$ 151.0** | **$ 148.4** | **$ 2.6** | **1.8%** | | Adjusted EBIT | **$ 24.6** | **$ 21.6** | **$ 3.0** | **13.9%** | | Adjusted EBIT Margin | **16.3%** | **14.6%** | **1.7%** | | - Revenue **increase driven by higher demand** from medtech and **electrification markets** and **higher average pricing**, partially offset by **lower demand** from industrial and **defense markets**[160](index=160&type=chunk) - **Adjusted EBIT increase due to higher non-GAAP gross profit** from product cost reductions, **increased factory capacity utilization**, and **higher average pricing**[162](index=162&type=chunk) [MedTech & Specialty Audio](index=44&type=section&id=MedTech%20&%20Specialty%20Audio_6M_Segment) This section details the revenue and adjusted EBIT performance of the MedTech & Specialty Audio segment for the period | Metric | 2025 (in millions) | 2024 (in millions) | Change (in millions) | % Change | | :---------------- | :----------------- | :----------------- | :------------------- | :------- | | Revenues | **$ 127.1** | **$ 120.1** | **$ 7.0** | **5.8%** | | Adjusted EBIT | **$ 47.4** | **$ 48.9** | **$ (1.5)** | **-3.1%** | | Adjusted EBIT Margin | **37.3%** | **40.7%** | **-3.4%** | | - Revenue **increase primarily due to higher shipping volumes** of metal cans to **Syntiant** and **increased demand** in **specialty audio** and hearing health markets[164](index=164&type=chunk) - **Adjusted EBIT decrease due to lower non-GAAP gross profit** from **lower average pricing** on **mature products**, **unfavorable product mix**, **higher factory costs**, and **impact of higher shipping volumes** of **lower margin metal can products** to **Syntiant**[166](index=166&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, expected cash generation, and capital allocation strategies - The company **expects to generate positive cash flow from operations** and has **access to capital markets** and a **revolving line of credit** for liquidity[167](index=167&type=chunk) | Period | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------------- | :---------------------------- | :------------------------------ | | Total Cash and Cash Equivalents | **$ 103.2** | **$ 130.1** | | Non-U.S. Operations Cash | **$ 31.8** | **$ 92.4** | - The company has **$159.0 million** **remaining** under its **share repurchase program** as of June 30, 2025[170](index=170&type=chunk) | Activity | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Operating activities | **$ 37.7** | **$ 42.2** | | Investing activities | **$ (8.6)** | **$ 0.6** | | Financing activities | **$ (56.5)** | **$ (46.0)** | | Net decrease in cash and cash equivalents | **$ (26.9)** | **$ (3.3)** | | Metric | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Adjusted free cash flow | **$ 57.9** | **$ 36.5** | | Adjusted free cash flow as a % of revenues | **20.8%** | **13.6%** | - The **increase in adjusted free cash flow** in 2025 was **primarily due to customer prepayments** of **$19.8 million** and **lower incentive compensation payments**, partially offset by **higher restructuring payments**[177](index=177&type=chunk) [Contingent Obligations](index=47&type=section&id=Contingent%20Obligations) This section refers to legal contingencies and confirms no new material information - Legal contingencies are discussed in Note 13, with **no new material information provided** in this section[178](index=178&type=chunk) [Critical Accounting Estimates](index=47&type=section&id=Critical%20Accounting%20Estimates) This section confirms no material changes to critical accounting estimates from the prior annual report - **No material changes** to **critical accounting estimates** from the Annual Report on Form 10-K for the year ended December 31, 2024[180](index=180&type=chunk) [Recent Accounting Standards](index=47&type=section&id=Recent%20Accounting%20Standards_MD&A) This section states that recent accounting standards are not expected to significantly impact financial results - **Recent accounting standards** are **not expected to have a significant impact** on revenue, earnings, or liquidity[181](index=181&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there were no material changes to the market risk exposure information previously disclosed in the company's Annual Report on Form 10-K - **No material changes** to **market risk exposure** from the Annual Report on Form 10-K for the year ended December 31, 2024[182](index=182&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the company's disclosure controls and procedures, confirms no material changes in internal control over financial reporting, and acknowledges the inherent limitations of control systems [Evaluation of Disclosure Controls and Procedures](index=48&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures as of June 30, 2025 - **CEO and CFO concluded** that **disclosure controls and procedures** were **effective** as of June 30, 2025[183](index=183&type=chunk) [Changes in Internal Control Over Financial Reporting](index=48&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports no material changes in internal control over financial reporting during the quarter - **No material changes in internal control over financial reporting** occurred during **Q2 2025**[184](index=184&type=chunk) [Inherent Limitations on Effectiveness of Controls](index=48&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls) This section acknowledges the inherent limitations of control systems, including human error and fraud - **Control systems** provide reasonable, not absolute, assurance and are subject to **inherent limitations** like **human error**, **fraud**, **collusion**, or **management override**[185](index=185&type=chunk) PART II — OTHER INFORMATION This section covers legal proceedings, risk factors, equity security sales, other information, and exhibits [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 13 for a discussion of legal proceedings and confirms that there have been no material developments since the last annual report - Legal proceedings are discussed in Note 13, with **no material developments noted**[186](index=186&type=chunk)[187](index=187&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - **No material changes** to **risk factors** from the Annual Report on Form 10-K for the year ended December 31, 2024[188](index=188&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section provides details on the company's share repurchase program, including recent authorization increases and a summary of shares repurchased during the second quarter of 2025 - The Board of Directors **authorized** an **additional** **$150.0 million** for the **share repurchase program** on February 13, 2025[189](index=189&type=chunk) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares That May Yet Be Purchased Under The Program (in millions) | | :--------- | :------------------------------- | :--------------------------- | :--------------------------------------------------------------------------------------- | | April 2025 | **702,765** | **$ 14.23** | **$ 179.0** | | May 2025 | **514,416** | **$ 16.68** | **$ 170.4** | | June 2025 | **664,513** | **$ 17.19** | **$ 159.0** | | Total | **1,881,694** | **$ 15.94** | | [Item 5. Other Information](index=49&type=section&id=Item%205.%20Other%20Information) This section states that no director or officer adopted, modified, or terminated any Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025 - **No director or officer adopted, modified, or terminated Rule 10b5-1 trading arrangements** in **Q2 2025**[191](index=191&type=chunk) [Item 6. Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including various certifications and financial information presented in Inline XBRL format - **Exhibits** include **CEO and CFO certifications** (31.1, 31.2, 32.1), **financial statements** in Inline XBRL (101), and the **cover page** in Inline XBRL (104)[192](index=192&type=chunk) SIGNATURES This section contains the official signatures certifying the accuracy and completeness of the report - The report was signed by **John S. Anderson**, Senior Vice President & Chief Financial Officer, on July 29, 2025[194](index=194&type=chunk)

Core Insights - Knowles reported Q2 2025 earnings with revenue of $145.9 million and non-GAAP EPS of $0.24, both exceeding analyst expectations of $139.75 million and $0.23 respectively [1][2] - The company demonstrated strong cash generation with adjusted free cash flow increasing by 70.7% year-over-year to $39.6 million [6] - The Precision Devices segment showed robust demand, contributing to the overall revenue outperformance [5] Financial Performance - Non-GAAP EPS increased by 20.0% from $0.20 in Q2 2024 to $0.24 in Q2 2025 [2] - Revenue grew by 7.9% year-over-year from $135.2 million in Q2 2024 to $145.9 million in Q2 2025 [2] - Non-GAAP gross profit reached $64.5 million, up from $59.8 million in Q2 2024, reflecting a 7.9% increase [2] Business Segments - Knowles operates primarily in two segments: Precision Devices, focusing on critical components for medtech and defense, and MedTech and Specialty Audio, providing audio solutions [3][4] - The Precision Devices segment experienced increased order activity and backlog, particularly in medtech and defense applications [5] Strategic Focus - The company is concentrating on high-value end markets, particularly in medtech and defense, to ensure business stability [4] - Strategic investments in R&D and a global manufacturing footprint are key to mitigating risks from tariffs and supply chain disruptions [4] Cash Flow and Profitability - Net cash from operations was $36.4 million, supporting $30 million in share repurchases, indicating a strong cash position of $103.2 million as of June 30, 2025 [6] - Non-GAAP gross margin remained steady at 44.2%, while GAAP gross margin slightly decreased to 41.5% [7] Future Outlook - Management projects Q3 2025 revenue between $144 million and $154 million, with non-GAAP EPS expected to be between $0.29 and $0.33 [9] - Leadership anticipates improvements in gross margins as production mix shifts and capacity utilization increases [9][10]

Financial Data and Key Metrics Changes - In Q2 2025, the company reported revenue of $146 million, an increase of 8% year over year, and cash from operations of $36 million, both exceeding the high end of the guided range [8][14] - Earnings per share (EPS) for the quarter was $0.24, up 20% year over year [8][14] - Gross margins for the MedTech and Specialty Audio segment were 50.6%, down 280 basis points year over year, but improved 200 basis points sequentially [14][15] Business Line Data and Key Metrics Changes - MedTech and Specialty Audio revenue was $67 million, up 10% year over year, driven by increased demand in hearing health and specialty audio [9][14] - Precision Devices segment revenue was $79 million, up 6% year over year, with gross margins at 38.7%, an increase of 150 basis points from the previous year [10][16] Market Data and Key Metrics Changes - The primary end markets served, including medtech, defense, and industrial sectors, are expected to remain insulated from tariff impacts, with demand gaining strength [6][10] - Bookings trends in the Precision Device segment have shown positive growth for three consecutive quarters, indicating strong demand across various end markets [11][22] Company Strategy and Development Direction - The company is focused on leveraging unique technologies and creating custom products, aiming for organic growth acceleration in 2025 and beyond [12][13] - New product initiatives, such as the inductor line and specialty film production line, are expected to expand the total addressable market (TAM) and drive future growth [12][38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the hearing health business and the overall strength of demand across segments, anticipating year-over-year growth for the full year 2025 [10][25] - The company is closely monitoring the industrial market, which has shown sensitivity to recessions but currently exhibits stable demand [6][10] Other Important Information - The company repurchased $30 million worth of shares in Q2, funded by strong cash generation from operations [12][18] - The net leverage ratio based on trailing twelve months adjusted EBITDA was 0.7x, with liquidity exceeding $350 million [18][42] Q&A Session Summary Question: What is providing the upside in guidance? - Management noted strong bookings in the Precision Device segment, with a book-to-bill ratio above 1.15, indicating broad-based demand across medical, defense, and industrial markets [22][25] Question: Any early thoughts on Q4? - While not providing specific guidance, management expects year-over-year and sequential growth in Q4 based on strong order activity [27][28] Question: Expectations for gross margin expansion? - Management anticipates gross margins to improve by at least 100 basis points in Q3, driven by capacity utilization in high-performance products [29] Question: Insights on M&A opportunities? - The M&A pipeline remains strong, with management being disciplined in pursuing opportunities that align with corporate strategy [39][40]

0 7 . 2 4 . 2 5 2 nd Quarter 2025 Earnings Release Supplemental Information 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 ...

[Executive Summary & Outlook](index=1&type=section&id=Executive%20Summary%20%26%20Outlook) [Q2 2025 Financial Highlights](index=1&type=section&id=Q2%202025%20Financial%20Highlights) Knowles Corporation delivered strong Q2 2025 performance, exceeding the high end of guidance for revenue and cash flow from operating activities, with non-GAAP diluted EPS above the midpoint of guidance; the company repurchased $30 million of stock - Q2 2025 **revenue** and **cash flow from operating activities** exceeded the high end of guidance, with **non-GAAP diluted EPS** above the midpoint of guidance[3](index=3&type=chunk) - The company repurchased **$30 million of stock** in Q2[2](index=2&type=chunk)[3](index=3&type=chunk) | Metric (Millions USD) | Q2-25 | Q1-25 | Q2-24 | | :---------------- | :---- | :---- | :---- | | **Revenue (Millions USD)** | $145.9 | $132.2 | $135.2 | | **Gross Profit (Millions USD)** | $60.6 | $53.3 | $57.8 | | *(as % of Revenue)* | 41.5% | 40.3% | 42.8% | | **Non-GAAP Gross Profit (Millions USD)** | $64.5 | $55.0 | $59.8 | | *(as % of Revenue)* | 44.2% | 41.6% | 44.2% | | **Diluted (Loss) EPS (USD)** | $0.09 | $— | $0.05 | | **Non-GAAP Diluted EPS (USD)** | $0.24 | $0.18 | $0.20 | | **Net Cash Provided by Operating Activities (Millions USD)** | $36.4 | $1.3 | $24.9 | [Management Commentary](index=1&type=section&id=Management%20Commentary) Knowles' President and CEO, Jeffrey Niew, expressed satisfaction with Q2 performance, noting increased order activity in Precision Devices and consistent performance in MedTech and Specialty Audio, anticipating continued sequential and year-over-year growth - Precision Devices segment experienced continued increases in **order activity** and **backlog**, covering a broad range of end markets[4](index=4&type=chunk) - MedTech and Specialty Audio businesses performed as expected[4](index=4&type=chunk) - Anticipates continued **sequential and year-over-year growth** for Q3 and the remainder of 2025, driven by strong secular growth trends in MedTech, defense, and industrial markets, and a differentiated product portfolio to fuel revenue growth beyond 2025[4](index=4&type=chunk) [Q3 2025 Outlook](index=2&type=section&id=Q3%202025%20Outlook) The company provided Q3 2025 financial guidance, projecting revenue between $144 million and $154 million, non-GAAP diluted EPS of $0.29 to $0.33, and cash flow from operating activities of $20 million to $30 million | Metric | GAAP (Millions USD) | Adjustments (Millions USD) | Non-GAAP (Millions USD) | | :----------------------- | :---------------- | :---------------- | :---------------- | | **Revenue from Continuing Operations (Millions USD)** | $144 to $154 | — | $144 to $154 | | **Diluted EPS from Continuing Operations (USD)** | $0.18 to $0.22 | $0.11 | $0.29 to $0.33 | | **Net Cash Provided by Operating Activities (Millions USD)** | $20 to $30 | — | $20 to $30 | - Q3 2025 GAAP results are expected to include approximately **$0.06 per share** for stock-based compensation, **$0.04 per share** for intangible asset amortization, and **$0.01 per share** for production transfer costs, which will be excluded from non-GAAP results[7](index=7&type=chunk) [Company Information](index=2&type=section&id=Company%20Information) [About Knowles](index=2&type=section&id=About%20Knowles) Knowles Corporation is a leading manufacturer of specialized electronic components, designing and producing mission-critical products for MedTech, defense, and industrial markets, known for high reliability, custom engineering, and scalable manufacturing - Knowles is a **leading manufacturer of specialized electronic components**, designing unique mission-critical parts for innovative technologies[11](index=11&type=chunk) - The company enables success in the most demanding applications within MedTech, defense, and industrial markets through **high reliability, custom engineering, and scalable manufacturing**[11](index=11&type=chunk) - Key products include **high-performance capacitors, RF and microwave filters, advanced MedTech microphones, balanced armature speakers, and miniaturized products**[12](index=12&type=chunk) - Founded in **1946**, headquartered in Itasca, Illinois, with operations in **11 countries**[12](index=12&type=chunk) [Non-GAAP Financial Measures](index=2&type=section&id=Non-GAAP%20Financial%20Measures) Knowles uses non-GAAP financial measures to supplement GAAP results, assessing core operating performance and enabling consistent comparisons across reporting periods by excluding items like stock-based compensation, intangible asset amortization, and restructuring costs - Non-GAAP results are not in accordance with GAAP and should be considered a **supplement to, not a substitute for**, GAAP financial statements[8](index=8&type=chunk) - Knowles uses non-GAAP measures to evaluate **operating performance and financial results**, serving as a primary basis for business planning by eliminating items not reflective of core operating performance[8](index=8&type=chunk) - Common non-GAAP adjustments include **stock-based compensation, certain intangible asset amortization expense, impairment charges, restructuring, production transfer costs**, and other expenses management deems outside of core operating results[8](index=8&type=chunk) [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Statements of Earnings](index=4&type=section&id=Consolidated%20Statements%20of%20Earnings) Knowles Corporation's consolidated statements of earnings present the company's financial performance for quarterly and six-month periods, including revenue, gross profit, operating earnings, and net earnings from continuing operations [Quarterly Performance](index=4&type=section&id=Quarterly%20Performance) In Q2 2025, the company reported revenue of $145.9 million, gross profit of $60.6 million, net earnings from continuing operations of $7.8 million, and diluted EPS of $0.09 | Metric (Millions USD) | Q2-25 | Q1-25 | Q2-24 | | :---------------- | :---- | :---- | :---- | | **Revenue (Millions USD)** | $145.9 | $132.2 | $135.2 | | **Cost of Goods Sold (Millions USD)** | $81.7 | $78.4 | $77.1 | | **Impairment Charges (Millions USD)** | $3.6 | — | — | | **Gross Profit (Millions USD)** | $60.6 | $53.3 | $57.8 | | **Research and Development Expenses (Millions USD)** | $10.0 | $9.7 | $9.6 | | **Selling and Administrative Expenses (Millions USD)** | $35.9 | $37.2 | $35.6 | | **Operating Earnings (Millions USD)** | $14.7 | $4.0 | $12.7 | | **Earnings from Continuing Operations (Millions USD)** | $7.8 | $(0.4) | $4.8 | | **Net Earnings (Loss) (Millions USD)** | $7.8 | $(2.0) | $(259.3) | | **Diluted EPS from Continuing Operations (USD)** | $0.09 | $— | $0.05 | [Six-Month Performance](index=5&type=section&id=Six-Month%20Performance) For the six months ended June 30, 2025, the company reported revenue of $278.1 million, gross profit of $113.9 million, net earnings from continuing operations of $7.4 million, and diluted EPS of $0.08 | Metric (Millions USD) | As of June 30, 2025 | As of June 30, 2024 | | :---------------- | :----------------- | :----------------- | | **Revenue (Millions USD)** | $278.1 | $268.5 | | **Cost of Goods Sold (Millions USD)** | $160.1 | $156.2 | | **Impairment Charges (Millions USD)** | $3.6 | — | | **Gross Profit (Millions USD)** | $113.9 | $111.0 | | **Research and Development Expenses (Millions USD)** | $19.7 | $19.0 | | **Selling and Administrative Expenses (Millions USD)** | $73.1 | $72.9 | | **Operating Earnings (Millions USD)** | $18.7 | $17.7 | | **Earnings from Continuing Operations (Millions USD)** | $7.4 | $3.8 | | **Net Earnings (Loss) (Millions USD)** | $5.8 | $(256.8) | | **Diluted EPS from Continuing Operations (USD)** | $0.08 | $0.04 | [Consolidated Balance Sheets](index=9&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, Knowles reported total assets of $1,088.3 million, total liabilities of $342.0 million, and stockholders' equity of $746.1 million, with a decrease in cash and cash equivalents and a slight increase in inventories compared to December 31, 2024 | Metric (Millions USD) | June 30, 2025 | December 31, 2024 | | :---------------- | :------------ | :------------- | | **Cash and Cash Equivalents (Millions USD)** | $103.2 | $130.1 | | **Accounts Receivable, Net (Millions USD)** | $101.1 | $105.0 | | **Inventories (Millions USD)** | $119.7 | $118.0 | | **Total Current Assets (Millions USD)** | $334.8 | $361.4 | | **Property, Plant and Equipment, Net (Millions USD)** | $127.2 | $130.1 | | **Goodwill (Millions USD)** | $270.1 | $269.8 | | **Intangible Assets, Net (Millions USD)** | $149.3 | $157.4 | | **Total Assets (Millions USD)** | $1,088.3 | $1,118.2 | | **Total Current Liabilities (Millions USD)** | $167.2 | $197.6 | | **Long-Term Debt (Millions USD)** | $119.0 | $134.0 | | **Total Liabilities (Millions USD)** | $342.0 | $362.2 | | **Total Stockholders' Equity (Millions USD)** | $746.1 | $756.0 | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, Knowles reported net cash provided by operating activities of $37.7 million, net cash used in investing activities of $8.6 million, and net cash used in financing activities of $56.5 million, resulting in a net decrease in cash and cash equivalents of $26.9 million | Metric (Millions USD) | As of June 30, 2025 | As of June 30, 2024 | | :---------------- | :----------------- | :----------------- | | **Net Cash Provided by Operating Activities (Millions USD)** | $37.7 | $42.2 | | **Net Cash Used in Investing Activities (Millions USD)** | $(8.6) | $0.6 | | **Net Cash Used in Financing Activities (Millions USD)** | $(56.5) | $(46.0) | | **Effect of Exchange Rate Changes (Millions USD)** | $0.5 | $(0.1) | | **Net Decrease (Increase) in Cash and Cash Equivalents (Millions USD)** | $(26.9) | $(3.3) | | **Cash and Cash Equivalents at End of Period (Millions USD)** | $103.2 | $84.0 | - Cash flow from operating activities is primarily influenced by adjustments for **net earnings, depreciation and amortization, stock-based compensation, and deferred income taxes**[37](index=37&type=chunk) - Cash outflow from financing activities primarily due to **repayment of revolving credit facility, repurchase of common stock, and tax payments for vested restricted stock and performance share units**[37](index=37&type=chunk) [GAAP to Non-GAAP Reconciliations](index=6&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliations) [Income Statement Reconciliations](index=6&type=section&id=Income%20Statement%20Reconciliations) Knowles provides detailed reconciliations of GAAP to non-GAAP income statement items to illustrate core financial performance by excluding specific non-core operating items such as stock-based compensation, intangible asset amortization, impairment charges, and restructuring costs | Metric (Millions USD) | Q2-25 | Q1-25 | Q2-24 | As of June 30, 2025 | As of June 30, 2024 | | :---------------- | :---- | :---- | :---- | :----------------- | :----------------- | | **GAAP Gross Profit (Millions USD)** | $60.6 | $53.3 | $57.8 | $113.9 | $111.0 | | *Stock-Based Compensation Expense (Millions USD)* | 0.3 | 0.5 | 0.4 | 0.8 | 0.8 | | *Impairment Charges (Millions USD)* | 3.6 | — | — | 3.6 | — | | **Non-GAAP Gross Profit (Millions USD)** | $64.5 | $55.0 | $59.8 | $119.5 | $117.7 | | **Non-GAAP Gross Profit as % of Revenue** | 44.2% | 41.6% | 44.2% | 43.0% | 43.8% | | **GAAP Operating Expenses (Millions USD)** | $45.9 | $49.3 | $45.1 | $95.2 | $93.3 | | *Stock-Based Compensation Expense (Millions USD)* | (6.0) | (9.7) | (5.5) | (15.7) | (10.2) | | *Intangible Asset Amortization Expense (Millions USD)* | (4.1) | (4.0) | (4.2) | (8.1) | (8.6) | | **Non-GAAP Operating Expenses (Millions USD)** | $36.2 | $33.1 | $33.9 | $69.3 | $68.6 | | **Adjusted EBITDA (Millions USD)** | $32.7 | $26.7 | $30.3 | $59.4 | $58.8 | | **Adjusted EBITDA as % of Revenue** | 22.4% | 20.2% | 22.4% | 21.4% | 21.9% | | **GAAP Net Earnings from Continuing Operations (Millions USD)** | $7.8 | $(0.4) | $4.8 | $7.4 | $3.8 | | **Non-GAAP Diluted EPS (USD)** | $0.24 | $0.18 | $0.20 | $0.41 | $0.38 | - Non-GAAP adjustments include **stock-based compensation expense, intangible asset amortization expense, impairment charges, restructuring charges, production transfer costs, acquisition-related costs, and transition service credits**[32](index=32&type=chunk) [Cash Flow Reconciliations](index=11&type=section&id=Cash%20Flow%20Reconciliations) Knowles provides reconciliations of GAAP cash flow metrics to non-GAAP adjusted free cash flow, better measuring cash generated from continuing operations available for debt repayment, acquisitions, and share repurchases | Metric (Millions USD) | Q2-25 | Q1-25 | Q2-24 | As of June 30, 2025 | As of June 30, 2024 | | :---------------- | :---- | :---- | :---- | :----------------- | :----------------- | | **Net Cash Provided by Operating Activities (Millions USD)** | $36.4 | $1.3 | $24.9 | $37.7 | $42.2 | | *Less: Amounts used in discontinued operations (Millions USD)* | 8.3 | 21.0 | 1.3 | 29.3 | 0.2 | | **Non-GAAP Net Cash from Continuing Operations (Millions USD)** | $44.7 | $22.3 | $26.2 | $67.0 | $42.4 | | **Capital Expenditures (Millions USD)** | $(5.1) | $(4.0) | $(3.2) | $(9.1) | $(6.6) | | *Less: Capital expenditures from discontinued operations (Millions USD)* | — | — | 0.2 | — | 0.7 | | **Non-GAAP Capital Expenditures from Continuing Operations (Millions USD)** | $(5.1) | $(4.0) | $(3.0) | $(9.1) | $(5.9) | | **Adjusted Free Cash Flow (Millions USD)** | $39.6 | $18.3 | $23.2 | $57.9 | $36.5 | | **Adjusted Free Cash Flow as % of Revenue** | 27.1% | 13.8% | 17.2% | 20.8% | 13.6% | - Adjusted free cash flow is defined as **non-GAAP net cash from continuing operations less non-GAAP capital expenditures from continuing operations**[39](index=39&type=chunk) [Additional Information](index=2&type=section&id=Additional%20Information) [Webcast and Conference Call Information](index=2&type=section&id=Webcast%20and%20Conference%20Call%20Information) Knowles provides details for investors to access the company's quarterly financial conference call webcast and replay, including timing, access links, and conference ID - Investors can listen to the company's quarterly financial conference call live or via replay at **http://investor.knowles.com**[9](index=9&type=chunk) - The live webcast begins at **3:30 p.m. Central Time**, with a replay available after **7:00 p.m. Central Time**[9](index=9&type=chunk) - Conference call replay is available by dialing **(800) 770-2030** or **(609) 800-9909**, conference ID **8193117**, valid until July 31[10](index=10&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This press release contains forward-looking statements, as defined by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, based on current information and management's expectations, forecasts, and assumptions, involving risks and uncertainties that could cause actual results to differ materially from expectations - Forward-looking statements are based on **currently available information and management's expectations, forecasts, and assumptions**, involving risks and uncertainties that could cause actual results to differ materially from expectations[15](index=15&type=chunk) - Risks and uncertainties include, but are not limited to: **failure to realize strategic and financial benefits from the CMM divestiture, stock price volatility, fluctuations in operating results and cash flows, product quality issues, inventory risks, global economic instability (inflation, rising interest rates, geopolitical uncertainties), changes in laws and regulations, ability to reduce operating expenses, customer qualifications, intellectual property, cybersecurity incidents, raw material costs and availability, new product introductions, reliance on a few large customers, increased competition, trade tensions, financial risks (currency fluctuations, credit risk, commodity price fluctuations), and changes in tax laws**[15](index=15&type=chunk) - Knowles assumes **no intention or obligation to update or revise any forward-looking statements**, unless required by law[15](index=15&type=chunk)

Core Insights - Knowles Corporation has launched High-Q Ceramic Core Inductors aimed at enhancing RF efficiency and signal integrity in critical applications within medical, defense, and industrial sectors [1][2]. Product Features - The new inductors are engineered to minimize signal loss, delivering high energy efficiency and consistent inductance across a wide frequency range, which is crucial for maintaining signal integrity in high-frequency designs [2][3]. - Key features include reduced signal loss for enhanced RF efficiency, high self-resonance frequency for excellent performance at higher frequency ranges, and high reliability suitable for rigorous operational environments [6]. Market Impact - The introduction of these inductors represents a strategic expansion of Knowles' Ceramic Capacitors portfolio, allowing for simplified circuit design and providing customers with better insights into essential applications [2][4]. - In critical markets such as medical imaging and defense, the performance characteristics of these inductors contribute to improved outcomes, including sharper diagnostic images and more reliable systems [4].

Core Insights - The article discusses the current trend of investors focusing on high-growth sectors such as AI and electric vehicles (EVs), emphasizing the importance of maximizing returns on investments [1]. Group 1: Analyst Background - The analyst has a background in petroleum and gas engineering and has transitioned into finance, driven by an interest in business growth and market reactions [1]. - The analyst holds FMVA® and BIDA® certifications from the Corporate Finance Institute, indicating a strong foundation in financial analysis [1]. - The focus areas include technology, infrastructure, and internet services, with a preference for companies that exhibit strong fundamentals and growth potential [1]. Group 2: Investment Philosophy - The article aims to foster thoughtful discussions around stocks, emphasizing long-term returns over short-term market fluctuations [1]. - The content is designed to connect with other investors who share a similar focus on sustainable investment strategies [1].

Business Transformation - Knowles is transforming into a high-reliability, high-performance industrial technology company[9, 30] - The sale of the Consumer MEMS Microphones (CMM) business changes the company's market mix, eliminating the consumer mobile market and aiming for higher growth and margins[9, 31] Financial Performance & Metrics - The company's 2023 pro forma revenue is $560 million[5] - The 2023 pro forma adjusted EBITDA margin is 21%[5] - 2023 revenue for Precision Devices is $221 million with 22% adjusted EBITDA margins[17, 18] - 2023 revenue for MedTech & Specialty Audio is $230 million with 42% adjusted EBITDA margins[19] - Q3 2024 revenue is guided at $139 to $143 million[25] - Q4 2024 revenue is expected to be in the range of $140 to $150 million[27] Capital Allocation - The company has liquidity of over $300 million to support acquisition growth[23] - Capital investments are anticipated to be 3-5% of revenues to support new business and product innovation[23]

Knowles' Strategic Transformation and Financial Performance - Knowles is transitioning into an industrial technology company with over 95% of revenue from MedTech, Defense & Industrial markets[10] - From 2017 to 2024, Knowles achieved an 8% revenue CAGR and an 11% adjusted EBITDA CAGR from continuing operations[12, 219, 221] - Knowles' adjusted EBITDA margin expanded by 400 bps from 19% in 2017 to 23% in 2024[12, 223] Segment Performance and Market Focus - In 2024, Precision Devices contributed $300 million in revenue with 20% adjusted EBITDA margins[48] - MedTech & Specialty Audio generated $254 million in revenue in 2024 with 44% adjusted EBITDA margins[167] - MedTech accounted for 48% of Knowles' total revenue in 2024[22, 33] - Defense & Aerospace represented 21% of Knowles' total revenue in 2024[22, 40] - Industrial made up 27% of Knowles' total revenue in 2024[22, 42] - Electrification/Energy contributed 4% of Knowles' total revenue in 2024[22, 44] Future Outlook and Growth Strategy - Knowles projects a revenue CAGR of 8-10% and an adjusted EBITDA CAGR of 10-14% over the next 5 years[12, 226, 231, 232] - The company anticipates organic revenue growth of 4-6% and aims for 4% growth through acquisitions[226, 229] - Knowles targets cash from operations to be 16-20% of revenue[226]

Knowles (KN) 2025 Investor Day Summary Company Overview - Knowles has transformed into a premier industrial technology company focusing on high-performance electronic components, particularly in the medtech, defense, and industrial markets [9][15][12] - The company operates two main segments: Precision Devices (54% of revenue) and MedTech and Specialty Audio (46% of revenue) [16] Financial Performance - Knowles achieved a revenue CAGR of 8% and adjusted EBITDA CAGR of 11% from 2017 to 2024 [10] - Future expectations include a revenue CAGR of 8% to 10% and adjusted EBITDA margins improving by 300 to 500 basis points, leading to an adjusted EBITDA CAGR of 10% to 14% [11] - The company anticipates organic growth to be higher than historic rates starting in 2025 [12] Market Segments and Growth Drivers MedTech - The medtech market is expected to grow at a CAGR of 4% to 6% [24] - Knowles provides capacitors for medical imaging and life-saving therapies, with a focus on implantable devices [25][21] - The aging population and increasing healthcare expenditures are driving demand [21] Defense - Over 20% of Knowles' revenue comes from defense applications, with a projected market growth of 3% to 5% CAGR [22][26] - Products include RF filters and capacitors for military applications, ensuring reliable communications and energy sources for harsh environments [22] Industrial - The industrial market is expected to grow at a CAGR of 4% to 6% [27] - Knowles' capacitors support automation solutions and energy conversion needs in manufacturing [27] Electrification and Energy - The electrification market is projected to grow at 8% to 10% [27] - Knowles is expanding its film capacitors into energy sectors, securing significant orders [28] Competitive Advantages - Knowles emphasizes deep engineering expertise, customization capabilities, and a strong supply chain [17][20] - The company has a history of strategic acquisitions to enhance its product offerings and market reach [14][13] Product Innovations - Knowles is known for high-performance ceramic capacitors and RF microwave solutions, which are critical in demanding applications [35][41] - The company is expanding its product line to include ceramic inductors, enhancing its power management capabilities [50][51] Hearing Health Market - The hearing aid market represents approximately $6.5 billion, with Knowles being a leading provider of transducers [78] - The market is expected to grow due to favorable demographics and increased access to hearing healthcare [82][84] - Knowles has a strong presence in the market, with established relationships with major manufacturers [82] Conclusion - Knowles is well-positioned for future growth through its focus on high-performance products, strategic market segments, and innovative solutions [15][53] - The company aims to leverage its strong balance sheet for organic growth and strategic acquisitions while maintaining robust cash flow [11][15]