Summary of Knowles Corporation Q1 2026 Earnings Call

1Key Financial Results and Metrics

Revenue: $153 million, up 16% year-over-year, at the high end of guidance.

Earnings Per Share (EPS): $0.27, a 50% increase year-over-year, exceeding guidance.

Cash Utilization: $1 million used in operations, within guided range.

Segment Performance:

Medtech & Specialty Audio (MSA): Revenue of $68 million, up 14% year-over-year.

Precision Devices (PD): Revenue of $85 million, up 17% year-over-year.

Gross Margins: MSA at 53.5%, up 480 basis points; PD at 39.2%, up 350 basis points.

Book-to-Bill Ratio: 1.19, marking the sixth consecutive quarter above 1.

2Strategic Updates and Business Highlights

Knowles is focusing on leveraging unique technologies to create custom-engineered solutions for blue-chip customers in high-growth markets.

The company is experiencing strong organic growth, particularly in the defense and industrial sectors.

Anticipated growth in the hearing health market, with expectations to increase content per device in next-generation products.

The Precision Devices segment is expected to benefit from increasing demand driven by defense and industrial applications.

3Forward Guidance and Outlook

Q2 2026 Revenue Guidance: Expected between $152 million and $162 million, representing an 8% year-over-year increase at the midpoint.

EPS Guidance: Projected between $0.28 and $0.32, up 25% year-over-year at the midpoint.

Full-Year 2026 Revenue Growth: Expected to exceed the high end of the previous organic growth target of 4% to 6%.

Capital Spending: Anticipated to be around 4% to 5% of revenues, focusing on capacity expansion.

4Bad News, Challenges, or Points of Concern

The hearing health market is expected to grow at historical rates, limiting growth potential in that segment to 2% to 4% for the full year.

Rising input costs, particularly for resin-based products, could pose challenges, although transportation costs remain low.

The company is ramping up production for a significant energy order, which is currently weighing on margins but is expected to improve in the second half of 2026.

5Notable Q&A Insights

Design Wins: The company is seeing broad-based design wins across various sectors, including medical and defense, with a focus on customized solutions.

Pricing Power: Pricing strategy is becoming increasingly important, particularly in the PD segment, with expected annual price increases of 2% to 4%.

Energy Order: The ramp-up for the energy order is on track, with expectations for improved margins as production scales.

Long-Term Agreements (LTAs): Discussions about larger, multi-year orders are increasing, particularly in the defense sector, indicating a shift towards securing longer-term capacity commitments. Overall, Knowles Corporation reported strong financial results for Q1 2026, driven by growth in both the Medtech & Specialty Audio and Precision Devices segments. The company is optimistic about future growth, although it faces challenges related to market growth rates and input costs.