Knowles(US:KN)2025-10-28 20:02Financial Performance - Revenues for Q3 2025 were $152.9 million, an increase of $10.4 million or 7.3% compared to Q3 2024's $142.5 million[108] - Gross profit for Q3 2025 was $69.9 million, up $7.0 million or 11.1% from $62.9 million in Q3 2024, with a gross profit margin of 45.7%[111] - Earnings from continuing operations for Q3 2025 were $18.0 million, an increase of $8.8 million compared to $9.2 million in Q3 2024[120] - Adjusted earnings before interest and income taxes (Adjusted EBIT) for Q3 2025 were $34.5 million, an increase of $4.5 million from $30.0 million in Q3 2024[122] - Non-GAAP diluted earnings per share from continuing operations were $0.33 for Q3 2025, compared to $0.27 for Q3 2024, an improvement of $0.06[125] - Revenues for the nine months ended September 30, 2025 were $431.0 million, an increase of $20.0 million or 4.9% compared to $411.0 million in 2024[127] - Gross profit for the nine months ended September 30, 2025 was $183.8 million, reflecting an increase of $9.9 million or 5.7% from $173.9 million in 2024[132] - Non-GAAP gross profit for the same period was $190.2 million, up $7.7 million or 4.2% from $182.5 million in 2024[133] - Earnings from continuing operations improved to $25.4 million for the nine months ended September 30, 2025, compared to $13.0 million in 2024, an increase of $12.4 million[140] - Diluted earnings per share from continuing operations increased to $0.29 for the nine months ended September 30, 2025, up from $0.14 in 2024[144] - Adjusted EBIT for the nine months ended September 30, 2025 was $83.9 million, an increase of $5.4 million from $78.5 million in 2024[142] Expenses - Research and development expenses for Q3 2025 were $10.0 million, a decrease of $0.2 million or 2.0% from $10.2 million in Q3 2024[113] - Selling and administrative expenses for Q3 2025 were $34.0 million, a slight increase of $0.1 million or 0.3% from $33.9 million in Q3 2024[114] - Research and development expenses rose to $29.7 million, a $0.5 million increase or 1.7% from $29.2 million in 2024[134] - Selling and administrative expenses were $107.1 million, a slight increase of $0.3 million or 0.3% compared to $106.8 million in 2024[135] - Interest expense decreased significantly to $7.5 million, down $5.4 million from $12.9 million in 2024[136] Taxation - The effective tax rate for Q3 2025 was 19.3%, down from 24.6% in Q3 2024, primarily due to the mix of earnings and losses by taxing jurisdictions[117] - The effective tax rate (ETR) for the nine months ended September 30, 2025 was 26.2%, a decrease from 38.1% in 2024[138] Segment Performance - Revenues for the Precision Devices segment were $88.2 million in Q3 2025, an increase of $9.4 million or 11.9% from $78.8 million in Q3 2024[152] - Adjusted earnings from continuing operations before interest and income taxes for the Precision Devices segment were $20.2 million in Q3 2025, up from $16.1 million in Q3 2024, an increase of 25.5%[154] - Revenues for the MedTech & Specialty Audio segment were $64.7 million in Q3 2025, an increase of $1.0 million or 1.6% from $63.7 million in Q3 2024[156] - Adjusted earnings from continuing operations before interest and income taxes for the MedTech & Specialty Audio segment were $26.2 million in Q3 2025, slightly up from $26.1 million in Q3 2024[158] - Precision Devices (PD) revenues increased by $12.0 million or 5.3% to $239.2 million for the nine months ended September 30, 2025, compared to $227.2 million in 2024[160] - PD's earnings before interest and income taxes (EBIT) rose to $25.7 million with a margin of 10.7%, up from $10.5 million and 4.6% in the prior year[161] - Adjusted EBIT for PD was $44.8 million, reflecting a $7.1 million increase and an adjusted EBIT margin of 18.7%, compared to 16.6% in 2024[162] - MedTech & Specialty Audio (MSA) revenues grew by $8.0 million or 4.4% to $191.8 million for the nine months ended September 30, 2025[164] - MSA's EBIT decreased by $6.6 million to $65.3 million, with a margin of 34.0%, down from 39.1% in the previous year[165] Cash Flow and Shareholder Returns - Adjusted free cash flow increased to $81.2 million in 2025, representing 18.8% of revenues, compared to $63.5 million or 15.5% in 2024[177] - Cash and cash equivalents totaled $92.5 million as of September 30, 2025, down from $130.1 million at the end of 2024[168] - The company repurchased 3,120,574 shares for $55.0 million during the nine months ended September 30, 2025, compared to 1,686,253 shares for $29.5 million in 2024[170] - Cash flows from operating activities were $66.8 million in 2025, a decrease from $95.0 million in 2024, primarily due to supplier obligations and separation costs[171] Corporate Actions and Legal Matters - The divestiture of the Consumer MEMS Microphones segment supports the company's transformation into an industrial technology company focused on defense, medtech, and industrial markets[102] - The company completed the sale of the CMM segment to Syntiant for approximately $141.9 million on December 27, 2024[169] - The company is involved in various legal proceedings, claims, and investigations as part of its ordinary business operations[178] Accounting and Risk - The financial statements are prepared in accordance with U.S. GAAP, requiring estimates and assumptions related to assets, liabilities, revenues, and expenses[179] - There are no material changes in the company's previously reported critical accounting estimates[180] - Recent accounting standards are not expected to significantly impact the company's revenue, earnings, or liquidity[181] - There were no material changes to the market risk exposure information disclosed in the Annual Report for the year ended December 31, 2024[182]