Knowles’ first quarter results drew a positive market response, with better-than-expected revenue despite a substantial year-over-year decline. Management credited the quarter’s performance to ongoing strength in medtech and specialty audio, as well as normalization of distributor inventory levels in industrial channels. CEO Jeffrey Niew emphasized the company’s proximity manufacturing model, which limits direct tariff exposure to less than 5% of revenue, and noted, “our backlog for the medtech and specialty audio segment for Q2 is strong.” Meanwhile, the Precision Device segment benefited from improved bookings, with new products and a reduction in distributor inventories supporting a more stable demand environment.
Is now the time to buy KN? Find out in our full research report (it’s free).
Knowles (KN) Q1 CY2025 Highlights:
- Revenue: $132.2 million vs analyst estimates of $128.9 million (32.7% year-on-year decline, 2.5% beat)
- Adjusted EPS: $0.18 vs analyst estimates of $0.18 (in line)
- Adjusted EBITDA: $23.6 million vs analyst estimates of $27.8 million (17.9% margin, 15.1% miss)
- Revenue Guidance for Q2 CY2025 is $140 million at the midpoint, above analyst estimates of $135.4 million
- Adjusted EPS guidance for Q2 CY2025 is $0.23 at the midpoint, above analyst estimates of $0.22
- Operating Margin: 6.4%, up from 4.1% in the same quarter last year
- Market Capitalization: $1.5 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Knowles’s Q1 Earnings Call
- Bob Labick (CJS Securities) asked about the impact of tariffs on end-market demand and customer sentiment; CEO Jeffrey Niew responded that demand remains stable, with essential medtech and defense products relatively insulated, though industrial exposure is monitored.
- Labick (CJS Securities) also inquired about updates on the large $75 million capacitor order for the energy market; Niew confirmed customer commitment with a prepayment received and no expected delivery issues for 2026.
- Anthony Stoss (Craig Hallum Capital Group) requested details on gross margin trajectory; CFO John Anderson outlined expectations for sequential improvement throughout the year, driven by higher capacity utilization and better product mix.
- Stoss (Craig Hallum Capital Group) questioned whether Knowles could gain share from competitors less insulated from tariffs; Niew noted increased inbound interest from industrial customers seeking supply chain security, though potential upside is not yet factored into forecasts.
- Christopher Rolland (Susquehanna) probed booking trends and the outlook for the second half; Niew reported broad-based order strength, especially in Precision Devices, and highlighted normalized distributor inventories as a positive sign for sustained demand.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will be monitoring (1) the pace of revenue recovery and margin expansion as capacity utilization improves, (2) evidence of continued backlog growth and normalized inventory levels in key end markets, and (3) the impact of ongoing tariff developments on both direct and indirect costs. Progress in specialty film production and execution of potential acquisition opportunities will also be important drivers of Knowles’ performance.
Knowles currently trades at $17.21, up from $15.66 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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