Abstract

Knowles Corporation will release fiscal second-quarter results on July 23, 2026 after market close (Post-Mkt), and investors are watching for confirmation of a mid-teens revenue run-rate and improving earnings leverage into the second half.

Market Forecast

Consensus for the current quarter points to revenue of 156.98 million US dollars, up 12.33% year over year, with adjusted EPS at 0.31, up 31.18% year over year; the latest models also imply EBIT around 33.66 million US dollars, a 21.31% year-over-year gain. Forecasts do not explicitly include gross margin or net margin targets, so investors are likely to benchmark these against the prior quarter’s levels when results arrive. The main business mix remains anchored by Precision Devices and Specialty Audio; momentum is expected where commercial execution and product mix were accretive last quarter, while management commentary will likely emphasize execution against near-term backlog and program ramps. The most promising segment this quarter remains Precision Devices, which delivered 85.10 million US dollars last quarter; YoY growth by segment was not specified, but management incentives tied to this unit’s revenue and adjusted EBIT underscore near-term growth emphasis.

Last Quarter Review

In the previous quarter, Knowles Corporation reported revenue of 153.10 million US dollars (up 15.81% year over year), gross profit margin of 45.20%, GAAP net profit attributable to the parent company of 9.70 million US dollars with a net profit margin of 6.34%, and adjusted EPS of 0.27 (up 50.00% year over year). A key financial highlight was the clean beat versus market expectations on both revenue and adjusted EPS, demonstrating operating leverage amid disciplined expense control. By business, Precision Devices contributed 85.10 million US dollars and Specialty Audio contributed 68.00 million US dollars; while segment-level YoY growth was not disclosed, mix favored areas where product breadth and pricing supported gross margin resilience.

Current Quarter Outlook

Main business: revenue cadence, margins, and earnings leverage

Knowles Corporation enters the quarter with consensus modeling revenue of 156.98 million US dollars and adjusted EPS of 0.31, implying a stronger earnings conversion than the prior quarter’s 0.27 on 153.10 million US dollars. The implied EBIT of 33.66 million US dollars equates to an operating margin in the low 20% range, a step up from the prior quarter’s EBIT margin inferred from 28.60 million US dollars on 153.10 million US dollars. This setup suggests that a similar revenue base with incremental mix benefits and operating discipline could translate into a higher proportion of earnings, reinforcing the trajectory seen last quarter. Gross margin is the pivot. With the last quarter at 45.20%, even modest improvements from mix (for example, a higher share of high-value components within Precision Devices or a richer SKU mix in Specialty Audio) could meaningfully raise gross profit dollars. As a rough sensitivity check, holding revenue at 156.98 million US dollars: a flat gross margin at 45.20% would yield roughly 70.65 million US dollars of gross profit; a 50-basis-point improvement would add nearly 0.78 million US dollars, while a 50-basis-point compression would subtract a similar amount. These increments can materially influence adjusted EPS given the operating margin implied by the EBIT estimate. Operating expenses are the second lever. The spread between gross profit and the implied EBIT points to a tight focus on spending efficiency. If the company maintains expense growth below the rate of gross profit growth, operating margins should expand. Investors will scrutinize commentary on variable costs tied to production volumes, engineering programs that ramped in the quarter, and any one-time items that may have benefited or weighed on last quarter’s margin line. A reiteration of expense discipline would support the modeled step-up in EBIT and EPS.

Most promising business: Precision Devices execution and signals from management incentives

Precision Devices delivered 85.10 million US dollars last quarter, representing the largest share of the revenue base, and remains the focal point for incremental growth and margin improvement into the current print. Management’s recently disclosed performance share unit structure for the chief operating officer explicitly ties payouts to the revenue and adjusted EBIT performance of the Cornell Dubilier business unit through 2027, signaling continued emphasis on scaling and profitably integrating this franchise. From a near-term perspective, such incentives align operating goals with sustained revenue capture, pricing discipline, and mix optimization within Precision Devices. Operationally, the segment’s product exposure favors higher value components where execution on lead-time, reliability, and qualification can support premium pricing and recurring program orders. A favorable mix within this portfolio can lift average selling prices and gross margin, bolstering the company-level EBIT improvement modeled by consensus. The company’s presence at technical gatherings during the quarter and early July helped showcase high-performance capacitor technology, which can aid pipeline visibility and reinforce product positioning for ongoing and upcoming design-ins. In the context of the quarter under review, successful conversion of active quotes and backlog into shipped revenue would be the clearest confirmation of momentum. Any commentary suggesting follow-through from late-quarter orders, initial wins on new programs, or contribution from refreshed product variants could justify the consensus view that adjusted EPS growth outpaces revenue growth. Conversely, if shipment timing pushes into the following quarter, the revenue cadence could skew, leaving the absolute margin picture intact but shifting the timing of earnings recognition. The balance of these factors makes Precision Devices the swing factor for upside versus the current top-line and EPS estimates.

Specialty Audio: mix, pricing, and contribution to margin stability

Specialty Audio contributed 68.00 million US dollars last quarter. While consensus expectations do not break out this segment for the current quarter, the company-level forecast of 12.33% revenue growth and 31.18% EPS growth year over year implies healthy incremental margin contribution somewhere in the portfolio. Within Specialty Audio, execution depends on continued mix of balanced armature transducers and microphone solutions into demand pockets where the company has established relationships and technical integration pathways. The path to margin expansion here centers on both product mix—prioritizing solutions with higher value content—and sustained cost control in manufacturing and logistics. A stable to upward mix within Specialty Audio can underpin company-wide gross margin resilience around the 45% context from the prior quarter. If Specialty Audio’s unit volumes track plan, fixed-cost absorption helps protect margins even if pricing is steady. Should product mix tilt toward higher-end components or bundled solutions, there could be incremental gross profit that amplifies the consensus EBIT improvement even if revenue contribution remains proportionally similar to last quarter. Investors will look for commentary that clarifies whether ASPs and product mix within this segment moved favorably relative to last quarter. The second lever for Specialty Audio is design-win traction that feeds the second-half pipeline. Any color on new design ramps, supply chain readiness for anticipated orders, and cycle times can provide useful context for the sustainability of current-quarter outperformance. If management indicates that the backlog and new program ramp schedules are tracking as planned, Specialty Audio may provide a stabilizing margin base that allows Precision Devices to be the primary driver of upside relative to consensus.

Key near-term stock drivers: delivery versus consensus, margin inflection, and segment mix

The first and most immediate determinant of share reaction is the degree to which reported revenue and adjusted EPS clear or miss the 156.98 million US dollars and 0.31 consensus marks. The last quarter demonstrated the company’s capacity to deliver above expectations on both lines; a repeat would support the view that current estimates do not fully capture operational momentum. Conversely, a narrow miss paired with constructive guidance could still be received favorably if management offers credible visibility on the next leg of growth. Margin commentary is the second determinant. Investors will compare reported gross margin with last quarter’s 45.20% benchmark and look for signs that mix and cost actions are sustaining or expanding the margin base. The consensus-implied step-up in EBIT suggests operating leverage is present; confirming that this leverage is structural—via cost programs, procurement improvements, and mix—would underpin confidence in EPS durability through the back half of the year. If gross margin is flat but EBIT still improves, that would infer strong opex control and reinforce the company’s operating discipline. Finally, segment mix and signals on Precision Devices are likely to shape the narrative. A higher contribution from Precision Devices tends to be margin-accretive at the company level; thus, even modest shifts in mix can swing gross profit and EBIT. The recent management incentive alignment around the Cornell Dubilier unit underscores internal focus on that part of the portfolio. Investors will parse any commentary about order patterns, program execution, and the pace of product adoption to infer the trajectory into the next two quarters. If Precision Devices outperforms while Specialty Audio holds steady, the combination should support the consensus view for a faster EPS growth rate than revenue growth.

Analyst Opinions

Bullish opinions dominate among the previews reviewed in the current cycle, with the prevailing view anticipating year-over-year revenue growth of approximately 12.33% and adjusted EPS growth of approximately 31.18% for the quarter ending in July. The tone of these previews frames the setup as constructive, grounded in the perspective that last quarter’s beat on both revenue and adjusted EPS established a stronger baseline for incremental operating leverage. On the bullish side, the core case emphasizes three pillars. First, top-line momentum is projected to continue at roughly a low-double-digit pace year over year, consistent with the 156.98 million US dollars revenue estimate. Second, the earnings conversion profile is expected to improve, with the 0.31 adjusted EPS estimate reflecting better operating margin than the prior quarter’s outturn on a comparable revenue base. Third, confidence is supported by visible drivers within Precision Devices, where management incentives directly link performance to revenue and adjusted EBIT, and where recent product marketing activity has helped showcase the capabilities that support pricing and mix. Supporters of the constructive view also focus on what they see as a favorable near-term balance of risks. They argue that even if gross margin lands close to last quarter’s 45.20% level, the consensus EBIT improvement to 33.66 million US dollars indicates that fixed-cost absorption and expense discipline can still yield a higher level of profitability. They also underscore that last quarter’s 15.81% revenue growth and 50.00% adjusted EPS growth year over year provide a clear comparator: if fiscal Q2 maintains a similar operational cadence, the company could again deliver a positive surprise versus published expectations. The bullish majority further highlights the importance of segment contributions. With Precision Devices contributing 85.10 million US dollars last quarter and Specialty Audio at 68.00 million US dollars, the blended mix already supported a 45.20% gross margin. If the current quarter skews even slightly toward higher-value components within Precision Devices, adjusted operating margins implied by the consensus EBIT could prove conservative. Under that scenario, the models calling for 0.31 adjusted EPS could still be beatable without a dramatic change in top-line trajectory. These positive views also look for qualitative confirmation on the earnings call. In particular, the street will look for management to reaffirm the durability of demand within the core portfolio, update on the execution milestones linked to the Cornell Dubilier unit, and provide color on order timing that can influence quarter-to-quarter revenue cadence. If management’s tone signals continuity with the prior quarter’s momentum and outlines concrete steps to extend margin stability, the bullish case anticipates favorable share reaction even in a “meet or slight beat” scenario. Overall, the majority bullish stance is anchored by clear numeric thresholds—156.98 million US dollars in revenue and 0.31 adjusted EPS—that already embed prudent assumptions for mix and expense, and by a belief that Precision Devices can continue to compound on last quarter’s contributions. As such, the prevailing expectation entering July 23, 2026 is that Knowles Corporation can deliver an in-line to better-than-expected print and maintain a constructive trajectory for the remainder of the year.