Knowles (NYSE:KN) reported first-quarter financial results on Thursday. The transcript from the company’s first-quarter earnings call has been provided below.
This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation.
Access the full call at https://events.q4inc.com/attendee/904835360
Summary
Knowles reported strong Q1 2026 results with revenue of $153 million, up 16% year-over-year, and EPS of $0.27, up 50% year-over-year, both exceeding guidance.
MedTech and Specialty Audio (MSA) revenue grew by 14% year-over-year to $68 million, driven by new product introductions, with full-year 2026 growth expected in the 2-4% range.
Precision Devices segment saw a 17% year-over-year revenue increase to $85 million, with strong demand across MedTech, defense, industrial, and electrification markets.
The company anticipates continued strong organic growth and margin expansion throughout 2026, with revenues projected to exceed the high end of their 4-6% organic growth target.
Q2 2026 guidance includes revenues between $152 and $162 million, EPS between $0.28 and $0.32, and cash from operating activities of $20 to $30 million.
Management highlighted robust demand in defense markets, particularly driven by ongoing OEM investments and replenishment needs related to geopolitical conflicts.
The company is executing on a strategy to leverage unique technologies for custom solutions, enabling it to command premium margins across high-growth markets.
Full Transcript
OPERATOR
Thank you for standing by. My name is Prayla and I will be your conference operator today. At this time I would like to welcome everyone to The Knowles Corporation Q1 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After this speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press STAR followed by the number one on your telephone keypad. If you would like to withdraw your question, please press STAR followed by the number one again. Thank you. I would now like to turn the conference over to Sarah Cook. You may begin.
Sarah Cook (Vice President of Investor Relations)
Thank you and welcome to our first quarter 2026 earnings call. I’m Sarah Cook, Vice President of Investor Relations and presenting with me today are Jeffrey New, our President and CEO, and John Anderson, our Senior Vice President and cfo. Our call today will include remarks about future expectations, plans and prospects for Knowles, which constitute forward looking statements for purposes of the safe harbor provisions under applicable federal security laws. Forward looking statements in this call will include comments about demand for company products, anticipated trends in company sales, expenses and profits, and involve a number of risks and uncertainties that could cause actual results to differ materially from current expectations. The Company urges investors to review the risks and uncertainties in the Company’s SEC filings, including but not limited to the annual report on Form 10K for the fiscal year ended December 31, 2025, periodic reports filed from time to time with the SEC, and the risks and uncertainties identified in today’s earnings release. All forward looking statements are made as of the date of this call and NOLS disclaims any duty to update such statements except as required by law. In addition, pursuant to Regulation G, any non GAAP financial measures referenced during today’s conference call can be found in our press release posted on our website@knowles.com and in our current report on Form 8K filed today with the SEC. This will include a reconciliation to the most directly comparable GAAP measure. All financial references on this call will be on a non GAAP continuing operations basis with the exception of cash from operations or unless otherwise indicated. We’ve made select financial information available in webcast slides which can be found in the Investor Relations section of our website. With that, let me turn the call over to Jeff who will provide details on our results.
Jeffrey New (President and CEO)
Jeff thanks Sarah. Thanks to all of you for joining us today. We started 2026 with solid financial results in Q1 and great momentum entering the rest of the year. Our strategy of leveraging our unique technologies to design custom engineered solutions and then delivering them at scale for blue chip customers and in high growth markets. That value our solutions is proving to be a powerful combination. We had strong organic growth in the first quarter as we delivered revenue of 153 million up 16% year over year at the high end of our guided range. EPS of $0.27, up 50% year over year exceeded the high end of our guided range and cash utilized in operations of 1 million was within our guided range. Now on to our Segment results in Q1, MedTech and Specialty Audio revenue was 68 million up 14% year over year. Our customers new product introductions coupled with our position on these platforms have led to stronger than expected growth in the first quarter. Knowles continues to demonstrate our ability to deliver unique solutions with superior technology and reliability. Our customers have come to depend on MSA’s first quarter revenue grew well above our annual organic growth target of 2 to 4%. However, the hearing health end market is expected to continue to grow at normal historical rates in 2026. Therefore, we are projecting Medtech and Specialty Audio will grow within the 2 to 4% range for the full year 2026. Beyond 2026 we are positioned well to win next generation designs for MEMS microphones and balanced armature speakers. As I said during our year end call we also see the prospect to increase our content for device in next generation hearing health products and expand our reach with our microsolutions group which provides the opportunity in the future to increase growth rates above the historical rates. In the precision device segment, Q1 revenues was 85 million up 17% year over year. With all our end markets we serve MedTech, Defense, Industrial and electrification growing on a year over year basis. Let me share a couple highlights driving growth in our end markets this quarter we saw strength in the defense market across our product families. Our capacitors were in demand supporting ongoing OEM investments in defense programs, new products, starting production and share gains. We also saw broad based orders our RF microwave products as we continue to be a sole supplier on a number of key defense programs. Additionally, we do expect increasing demand in 2027 and beyond driven by the replenishment of stocks in connection with the Iran conflict. In the industrial market, demand continued to grow with strong order activity across a wide range of our capacitor products supporting a multitude of applications and industries at both our distribution partners and OEMs. As an example, our ceramic capacitors were in high demand in the semiconductor equipment market and also for use in downhole applications. Additionally, with inventory challenges we saw behind saw last year behind us, we believe our distributor partners orders are aligned with end market demand. In addition to the strong shipments we saw in the first quarter, our book to build in precision devices was very strong at 1.19. This ordering pattern was broad based and this marked the sixth consecutive quarter where the book to build was greater than one. We see ordering strength across all our end markets both at OEMs and with our distribution partners. A robust pipeline of new design wins coupled with favorable secular trends gives me confidence in our ability to continue to grow revenue and above the high end of the organic growth target of 6 to 8% for Precision Devices in 2026. I continue to be excited by the strength of our business and the momentum we exited the first quarter with. We are well positioned for continued strong organic revenue growth and margin expansion through 2026. We believe this momentum is sustainable for two key reasons. First, our portfolio of businesses are well positioned to in markets with strong secular growth trends. Whether it be defense, medical, industrial or electrification. The secular drivers of growth in these markets is forecasted to be positive for the foreseeable future. Second, we design high performance customized solutions for our customers that have demanding applications and we have the manufacturing capabilities that allow us to ramp up these solutions quickly and efficiently. This combination differentiates us, allowing us to garner premium margins for the products we produce. This is proving to be a winning combination. Before I turn the call over to John to cover our financial results and provide our Q2 guidance, I would like to reiterate what I’ve said on previous calls. I believe Knowles has entered a period of accelerated organic growth with a very healthy backlog of existing orders. We now expect our revenue growth in 2026 to to be above the high end of our target organic revenue target of 4 to 6% that we provided at our Investor Day in May of last year. Our strategy of leveraging our unique technologies to design custom engineered solutions and then deliver them at scale for blue chip customers in high growth markets. That value our solutions is proving to be a powerful combination driving revenue growth, expanding margins and strong cash flow to drive shareholder value. Now let me turn the call over to John for our financial results and our Q2 guidance.
John Anderson (Senior Vice President and CFO)
Thanks Jeff. We reported first quarter revenues of 153 million 16% from the year ago period and at the high end of our guidance range. EPS was $0.27, in the quarter, up $0.09 or 50% from the year ago period and above the midpoint of our guidance range. Cash utilized by operating activities was 1 million within our guidance range in the MedTech and Specialty Audio segment Q1 revenue was 68 million, up 14% compared with a year ago period driven by increased hearing health shipments associated with our customers successful new product introductions. Q1 gross margins were 53.5%, up 480 basis points from the year ago period driven by both increased federal factory capacity utilization and favorable mix. For full year 2026, we expect MSA gross margins to be in line with 2025 margins of …
This post was originally published here
