Loading...
01/11 16:21
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong revenue growth, improved gross margins, and strategic expansion in specialty films, with optimistic guidance for MedTech and Precision Devices. While there are some uncertainties in M&A timelines and industrial segment growth, the overall sentiment remains positive due to high demand, operational improvements, and robust bookings. The Q&A session reinforced confidence in future growth and margin improvements, leading to a positive outlook for stock price movement.
Revenue $153 million, up 7% year-over-year. The increase is attributed to the company's focus on markets and products with significant competitive advantages.
Earnings Per Share (EPS) $0.33, up 22% year-over-year. This growth reflects strong operational performance and demand for the company's products.
Cash from Operations $29 million, above the midpoint of the guided range. This was driven by lower-than-expected net working capital.
Medtech & Specialty Audio Revenue $65 million, up 2% year-over-year. Growth was driven by increased demand in the specialty audio market.
Precision Devices Revenue $88 million, up 12% year-over-year. Growth was driven by increased demand across all end markets, including medtech, defense, industrial, and EV and energy.
Gross Margins (Medtech & Specialty Audio) 53%, flat year-over-year but improved more than 200 basis points sequentially. This reflects operational improvements.
Gross Margins (Precision Devices) 41.5%, up 150 basis points year-over-year. Improvements were due to higher demand and production volumes in ceramic capacitors and RF microwave product lines, partially offset by higher production costs and lower yields in the specialty film product line.
R&D Expense $9 million, flat year-over-year.
SG&A Expense $26 million, up $2 million year-over-year. The increase was driven by annual merit increases and higher incentive compensation costs.
Interest Expense $2 million, down $2 million year-over-year. This reduction reflects the company's efforts to reduce debt levels.
Medtech & Specialty Audio: Revenue was $65 million, up 2% year-over-year. Growth driven by new product adoption and cutting-edge technology. Gross margins expected to remain above 50% for 2025.
Precision Devices: Revenue was $88 million, up 12% year-over-year. Growth driven by design wins and robust trends in medtech, defense, industrial, EV, and energy markets. Specialty film production ramp-up showing positive trends.
Defense Market: Strong growth with design wins and bookings outpacing other markets. Products like RF filters and capacitors are in high demand for military applications, supported by increased defense spending on electronic warfare.
Specialty Film Expansion: Investments in specialty film production capacity are expected to support future growth.
Revenue Growth: Total revenue for Q3 2025 was $153 million, up 7% year-over-year. EPS grew by 22% year-over-year to $0.33. Cash from operations was $29 million.
Operational Efficiency: Improved factory capacity utilization in ceramic capacitors and RF microwave product lines. Sequential improvement in specialty film production output and gross margins.
Organic Growth Strategy: Focus on leveraging unique technologies and creating custom products for markets with strong secular growth trends. Expected organic growth rates at the high end of 4%-6% range for 2025.
Financial Strategy: Repurchased $20 million in shares and reduced bank borrowings by $15 million. Strong balance sheet with liquidity over $350 million to support growth and acquisitions.
Specialty Film Product Line Ramp-Up: Higher production costs and lower-than-expected yields during the ramp-up of the specialty film product line have impacted gross margins. While trends are improving, this remains a challenge.
Tariff Exposure: Exposure to tariffs is less than 5% of revenue and 3% of cost of goods sold. The company has managed to pass these costs to customers, but the situation remains fluid and could pose risks.
Debt Management: The company has $176 million in debt, including a seller note maturing soon. While manageable, this requires careful cash flow management to avoid financial strain.
Increased SG&A Expenses: Selling, general, and administrative expenses increased by $2 million year-over-year, driven by merit increases and higher incentive compensation costs, which could pressure margins.
Tax Rate Increase in 2026: The effective tax rate is expected to increase significantly from 7%-11% in 2025 to 15%-19% in 2026, which could impact net earnings.
Medtech & Specialty Audio Revenue Growth: Expected revenue growth within the range of 2% to 4% for the year 2025, supported by operational excellence and new product adoption.
Precision Devices Segment Growth: Anticipated revenue growth at the high end of the 6% to 8% range in 2025, driven by strong demand in defense, industrial, EV, and energy markets, as well as robust secular trends.
Defense Market Performance: Defense spending is increasing, with a focus on electronic warfare, benefiting the company's RF filters and capacitors used in military applications. Design wins and bookings in this market are strong.
Organic Growth Projections: The company expects organic growth rates at the high end of the 4% to 6% range for 2025, supported by new design wins, a healthy backlog, and secular growth trends.
Specialty Film Production Expansion: Expansion of specialty film production is expected to contribute to growth in 2025 and beyond.
Q4 2025 Revenue and EPS Guidance: Revenues projected between $151 million and $161 million, up 9% year-over-year at the midpoint. EPS expected to range from $0.33 to $0.37 per share.
Q4 2025 Cash Flow and Capital Spending: Cash generated by operating activities projected to be $30 million to $40 million. Capital spending expected to be $12 million, with full-year capital spending at approximately 5% of revenues.
Tax Rate Outlook: Effective tax rate expected to increase to 15% to 19% in 2026, up from 7% to 11% in Q4 2025.
Share Repurchase: Cash generation from operations continued to be robust in the third quarter, allowing Knowles to purchase $20 million in shares and reduce outstanding bank borrowings by $15 million. During the third quarter, we purchased 940,000 shares at a total cost of $20 million.
The earnings call highlights strong revenue growth, improved gross margins, and strategic expansion in specialty films, with optimistic guidance for MedTech and Precision Devices. While there are some uncertainties in M&A timelines and industrial segment growth, the overall sentiment remains positive due to high demand, operational improvements, and robust bookings. The Q&A session reinforced confidence in future growth and margin improvements, leading to a positive outlook for stock price movement.
The company reported strong financial performance with an 8% revenue increase and a 20% EPS rise. While SG&A expenses increased, the company maintained manageable debt levels and reduced interest expenses. Share repurchases of $30 million reflect confidence in cash flow. Positive guidance and strong bookings further support a positive outlook. Despite some margin pressures, the overall sentiment is positive, especially with expected margin improvements and continued revenue growth.
The earnings call reveals a mixed but generally positive outlook. Financial performance is stable with strong cash flow and debt reduction, despite slight revenue decline and margin pressure. Optimistic guidance for Q2 and beyond, along with strategic customer commitments, suggests future growth. Share repurchase and debt reduction enhance shareholder value. The Q&A indicates potential market share gains and improved margins. Tariff impacts are minimal, and customer demand remains solid. Overall, these factors suggest a potential positive stock price movement over the next two weeks.
The earnings call presents a mixed picture: strong cash flow and debt reduction are positives, but revenue and EPS are flat or slightly down YoY, with declining gross margins. The Q&A reveals management's cautious optimism about demand and gross margin improvement but also highlights production challenges and economic uncertainties. The share repurchase and debt reduction are positive, but the lack of clear guidance on market share gains and the impact of tariffs tempers enthusiasm. Overall, these factors suggest a neutral stock price reaction in the short term.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
