Knowles (KN) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue was $132.2 million, at the high end of guidance, with non-GAAP diluted EPS of $0.18 at the midpoint of guidance and strong cash from operations exceeding expectations.

• Net cash from operations exceeded guidance, with $5 million in share repurchases and $15 million in debt reduction completed in Q1.

• Precision Devices segment saw increased order activity and backlog, while MedTech and Specialty Audio performed as expected with slight year-over-year growth.

• Sale of the Consumer MEMS Microphones business was completed, impacting cash flow and resulting in discontinued operations and restructuring charges.

• Minimal direct tariff exposure and stable end markets in medtech and defense support confidence in year-over-year growth.

Financial highlights

• Q1 2025 revenue was $132.2 million, down 1% year-over-year, with non-GAAP gross margin of 41.6% and adjusted EBITDA of $26.7 million (20.2% margin).

• Non-GAAP diluted EPS was $0.18, flat year-over-year and at the midpoint of guidance.

• Adjusted free cash flow was $18.3 million (13.8% of revenue), up from $13.3 million (10.0%) year-over-year.

• Cash and cash equivalents were $101.9 million at March 31, 2025, with net debt leverage ratio at 0.7x trailing 12-month adjusted EBITDA.

• Net loss was $2.0 million, primarily due to discontinued operations and restructuring costs.

Outlook and guidance

• Q2 2025 revenue expected between $135 million and $145 million, with non-GAAP diluted EPS guidance of $0.21 to $0.25.

• Net cash from operations for Q2 2025 projected at $10–$20 million.

• Full-year capital spending to be 4–6% of revenues, focused on specialty film line expansion.

• Sequential and year-over-year growth anticipated in both revenue and earnings starting Q2.