Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported July 23, 2026 · Beat 2 of last 5 quarters
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Knowles' strong growth in Precision Devices, driven by defense and industrial demand, signals continued investment in high-reliability components for electronic warfare and industrial automation, which are part of broader infrastructure buildout. The company's capacity expansion and multiyear orders indicate sustained demand for specialized components in these end markets.
Knowles delivered Q2 revenue of $167M, up 14% YoY, with EPS of $0.33, up 38%. Precision Devices grew 25% to $98M, driven by broad-based strength across medtech, defense, industrial, and electrification, with book-to-bill of 1.4 and orders near $140M. Medtech & Specialty Audio grew 2% to $69M, with gross margins up 250 bps to 53.1%. The company received a $15M+ multiyear radar order in July and shipped over $5M against the energy order, which is now fully ramped.
Management raised full-year 2026 revenue growth guidance to 10%–12%, well above the 4%–6% organic target from Investor Day, and expects adjusted EBITDA growth of 20%–24%. Q3 revenue guidance is $167M–$177M (up 12.5% YoY at midpoint) with EPS of $0.34–$0.38. Precision Devices gross margins are expected to improve further in H2 to the low 40% range on pricing, mix, and factory utilization. Defense demand is expected to accelerate in 2027–2028 on increased spending, stock replenishment, and ally purchases. Management sees a path to EBITDA margins near 30% over the next 2–3 years.
“We are seeing more defense customers coming to us, wanting to place multiyear orders to secure capacity.”
on Defense demand
“I believe Knowles has entered a period of accelerated organic growth.”
on Growth outlook
“We see a path over the next 2 to 3 years to get EBITDA margins close to 30%.”
on Margin trajectory
Can you talk about the moving parts for Q4 and any color on September?
Jeffrey Niew said Q4 will see sequential growth, but MSA will be slower due to inventory building in H1; PD will continue growing at similar rates. He noted the 10%–12% full-year guidance is comfortable.
What were the big drivers of PD growth ex-energy, and what's the cadence for the rest of the year?
Jeffrey Niew said growth was broad-based across markets, products, and channels, with orders near $140M in Q2, up from ~$100M in Q1. July bookings are also strong, and the energy order is fully ramped.
Can you provide more color on the defense business, including the split between RF filters and capacitors?
Jeffrey Niew said filters are a larger portion (~$80M, 90% defense) and capacitors add ~$40M–$50M in defense. He cited three drivers for acceleration: increased defense budgets, stock replenishment, and ally purchases, with visibility extending into 2027–2028.