Knowles (KN) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue reached $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 guidance.

• Net cash from operations was $1.3 million, supporting $5 million in share repurchases and $15 million in debt reduction.

• Minimal direct (less than 5%) and indirect (less than 3%) tariff exposure, with most impacts expected to be recoverable through pricing.

• Strong backlog and order activity in medtech, defense, and industrial markets, with normalized distributor inventory levels.

• Sale of Consumer MEMS Microphones business completed; results reclassified as discontinued operations.

Financial highlights

• Q1 2025 revenue was $132.2 million, down 1% year-over-year but at the high end of guidance.

• Non-GAAP gross margin was 41.6%, up from 39.9% in Q1 2024 but down from 43.4% year-over-year.

• Adjusted EBITDA was $26.7 million (20.2% margin), compared to $28.5 million (21.4%) last year.

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

• Exited Q1 with $101.9 million in cash and $119 million in long-term debt; net leverage ratio at 0.7x trailing 12-month adjusted EBITDA.

Outlook and guidance

• Q2 2025 revenue expected between $135–$145 million, representing 4% year-over-year and 6% sequential growth at the midpoint.

• Q2 non-GAAP diluted EPS projected at $0.21–$0.25; adjusted EBIT margin expected at 19–21%.

• Net cash from operations for Q2 2025 expected between $10–$20 million.

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

• Gross margin expected to exit 2025 in the 45–47% range.