Knowles(US:KN)2026-02-09 21:06Revenue Segments - MSA segment accounted for 45% of consolidated revenues for fiscal 2025, with top five customers contributing approximately 76% of MSA's revenues [51]. - WS Audiology A/S represented about 24% of MSA's revenues and 11% of the consolidated Company revenues for fiscal 2025 [51]. - PD segment contributed 55% of consolidated revenues for fiscal 2025, with TTI, Inc. accounting for approximately 19% of PD's revenues and 10% of consolidated revenues [53]. Strategic Investments and Market Expansion - Company expanded the reach of film capacitors into new energy sectors in 2025, indicating a strategic investment in adjacent markets [56]. - Company’s growth strategies involve significant risks, including operational delays and higher production costs [56]. Supply Chain and Operational Risks - Company relies on highly specialized suppliers for critical components, which poses risks of supply disruptions impacting operations [55]. - The company's foreign operations and supply chain are subject to risks that could negatively impact financial results [68]. - Global economic conditions, including inflation and geopolitical uncertainties, may adversely affect customer orders and demand for products [67]. Regulatory and Compliance Risks - Effective tax rate may fluctuate due to changes in tax regulations, potentially affecting future financial results [60]. - Changes in U.S. and international trade policies, including tariffs, could materially affect the company's business and financial position [69]. - Compliance with global privacy legislation is complex and may result in fines and reputational damage in the event of a data breach [85]. Financial and Debt Risks - The company's credit agreement includes financial covenants that, if not complied with, could have a material adverse effect on business and financial condition [87]. - The company's outstanding indebtedness poses risks that could adversely affect its financial condition, including the ability to make principal and interest payments [88]. - Future performance, which is influenced by economic conditions and industry cycles, will determine the company's ability to generate sufficient cash flow to service its debt [88]. - The company’s ability to obtain additional financing for various purposes may be limited due to its current indebtedness [90]. Market and Stock Price Volatility - The stock price has shown significant volatility, ranging from a high of $24.41 to a low of $12.76 per share during 2025, which may impact investor confidence [93]. - The market price of the company's common stock could fluctuate significantly due to various factors, including divergence between actual financial results and market expectations [93]. Legal and Governance Risks - The company may face increased legal expenses and operational distractions due to potential shareholder activism, which could hinder the execution of its business strategy [89]. - Provisions in the company's bylaws and Delaware law may delay or prevent acquisitions, potentially affecting the trading price of its common stock [91]. - The company believes that its governance provisions protect stockholders from coercive takeover tactics, although they may delay beneficial acquisitions [92]. Cybersecurity and Intellectual Property Risks - Cybersecurity incidents and unauthorized disclosures could lead to significant financial and reputational harm [81][82]. - The company faces risks related to protecting intellectual property, which could adversely affect competitive positioning and operating results [77]. Competitive and Product Development Risks - Competitive market dynamics necessitate continuous product development to avoid loss of market share [66]. - Strategic acquisitions and divestitures may not yield expected benefits, impacting financial results [57]. - The company faces risks related to product defects, which could lead to significant costs and harm to business reputation [64]. Commodity and Currency Risks - Fluctuations in commodity prices and foreign currency rates could have a substantial adverse effect on financial condition and operating results [75][76]. - The company is vulnerable to interest rate fluctuations, particularly if a portion of its debt has variable interest rates, which could limit financial flexibility [90].