Knowles (KN) investor relations material

Strategic positioning and business transformation

• Focused on MedTech, defense, and industrial markets, leveraging long-term secular growth trends for top-line growth and margin expansion.

• Divested low-margin, commoditized businesses and acquired high-growth, high-margin specialty component businesses, notably Cornell Dubilier.

• Portfolio now consists of Precision Device (PD) and MedTech & Specialty Audio (MSA) segments, both emphasizing customization and high-performance technology.

• Custom solutions and deep customer relationships drive differentiation, with a customer base including major MedTech and defense firms.

• Vertically integrated manufacturing footprint across Asia and North America supports rapid, high-mix production and quality control.

Financial performance and outlook

• Achieved 8% revenue CAGR and 11% EBITDA CAGR from 2017–2025, with recent organic growth rates exceeding historical averages.

• EBITDA margins have expanded, with a clear path to 30% over the next 36 months, driven by price, productivity, and capacity utilization.

• Capital expenditures have increased to 5% of revenue in response to strong demand and capacity expansion.

• Net leverage ratio near zero, with significant cash generation enabling share buybacks, debt reduction, and strategic acquisitions.

• Future guidance targets 8–10% revenue growth and 10–14% EBITDA growth, with recent performance exceeding these targets.

Segment and market dynamics

• PD segment targets 6–8% organic growth, with 2023 growth north of 15%; MSA segment maintains steady 2–4% growth at high margins.

• More than 50% gross margins and over 40% EBITDA margins in core businesses; Cornell Dubilier acquisition has driven significant margin expansion.

• Defense market outlook is robust, with RF filters (98% defense) expected to accelerate due to increased government and allied spending.

• Medical market growth is stable, with potential for faster growth from new applications and content gains in hearing health by 2028.

• Industrial growth has been rapid but is expected to normalize; overall, PD segment's 6–8% growth is seen as sustainable.