KN earnings analysis
What we found in KN's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Knowles posted a strong Q2: revenue grew 14.3% year over year to $166.8 million, gross margin rose 320 basis points to 44.7%, and GAAP diluted EPS from continuing operations increased to $0.21 from $0.09. Precision Devices led growth with 25.2% revenue expansion, while MSA modestly grew revenue and retained a 40.3% adjusted EBIT margin. The principal offset is cash conversion: first-half adjusted free cash flow dropped $38.1 million year over year to $19.8 million amid working-capital usage and elevated capacity-expansion capex; the filing contains no updated revenue or EPS guidance.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue accelerated sequentially and year over year
- Q2 revenue was $166.8 million, up $20.9 million (14.3%) from $145.9 million a year earlier and up $13.7 million (8.9%) from Q1 2026 revenue of $153.1 million.
- Margins expanded materially
- GAAP gross margin expanded to 44.7% from 41.5% a year ago and 43.8% in Q1 2026. GAAP EBIT margin rose to 14.6% from 9.5% year over year, supported by volume, pricing, utilization, and the absence of the prior-year $3.6 million impairment.
- EPS more than doubled year over year
- GAAP diluted EPS from continuing operations increased to $0.21 from $0.09 a year earlier and $0.11 in Q1 2026; non-GAAP diluted EPS was $0.33, up from $0.24.
- Precision Devices was the growth engine
- Precision Devices delivered $98.3 million of revenue, up $19.8 million (25.2%), while adjusted EBIT increased to $20.3 million from $13.9 million and adjusted margin rose to 20.7% from 17.7%.
- MSA held growth and strong profitability
- MedTech & Specialty Audio revenue increased to $68.5 million from $67.4 million, while adjusted EBIT rose to $27.6 million from $26.1 million and adjusted margin reached 40.3%.
- Substantial repurchase capacity remains
- The company has $106.5 million remaining under its repurchase authorization after repurchasing $22.5 million, or 692,369 shares, in the first six months of 2026.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Cash conversion weakened sharply
- Six-month adjusted free cash flow fell to $19.8 million, or 6.2% of revenue, from $57.9 million, or 20.8%, a year earlier. Management attributed the decline to working-capital investment, loss of a prior-year customer prepayment, and higher capex.
- Higher capex and working-capital use pressure cash
- Six-month operating cash flow declined to $27.5 million from $37.7 million while capital expenditures increased to $17.3 million from $9.1 million, reflecting PD capacity expansion.
- Ceramic transfer costs and mix remain headwinds
- Q2 production-transfer costs in the ceramic-capacitor business were $0.8 million versus $0.2 million a year ago; management also cited unfavorable product mix and increased transfer costs as COGS headwinds.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $0.21
- Gross margin
- 44.7%
- Operating margin
- 14.6%
- Segment
- Precision Devices revenue: $98.3 million, up $19.8 million (25.2%) year over year.
- Segment
- MedTech & Specialty Audio revenue: $68.5 million, up $1.1 million (1.6%) year over year.
What they said about what is next.
The 10-Q provides no revenue or EPS guidance. Management expects 2026 capital expenditures to be approximately 5% of revenue, driven by Precision Devices capacity expansion, including the specialty-film product line.
The filing reads better than the one before it.
What came before.
- 10-Q · April 28, 2026
- Knowles reported Q1 2026 revenue of $153.1 million, up $20.9 million or 15.8% versus Q1 2025, with gross profit of $67.1 million and gross margin expanding to 43.8% from 40.3% year-over-year. GAAP diluted EPS from…
- 10-Q · April 29, 2025
- Knowles reported Q1 2025 revenue of $132.2 million, roughly flat (-$1.1M) versus Q1 2024 ($133.3M), but swung to a net loss of $2.0 million (diluted EPS $(0.02)) compared with net earnings of $2.5 million (EPS $0.03) in…
- 10-K · February 13, 2025
- Knowles positions itself as a specialty electronic components leader focused on higher-value PD (capacitors, RF filters) and MSA (balanced armature speakers, microphones) markets and completed the divestiture of its…
- 10-Q · July 31, 2024
- Knowles reported Q2 revenue of $204.7M, up $31.7M (+18.3%) versus $173.0M a year ago, but reported a large GAAP net loss and non-cash goodwill impairment. Management recorded a $249.4M goodwill impairment related to the…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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