Knowles Corp
For the period ended Mar 31, 2026. Filed Apr 28, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed Apr 28, 2026
KN$31.27+3.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-10-28.
0001587523-25-000079
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-04-28.
0001587523-26-000018
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 131 previous paragraphs and 83 current paragraphs.
44 unchanged; 28 reworded; 11 added; 56 removed; 3 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
In 2025, the United States government implemented a series of trade tariffs on goods imported into the U.S. from various other countries. On February 20, 2026, a Supreme Court ruling invalidated certain tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA"). Following that decision, the U.S. Court of International Trade directed Customs and Border Protection to develop a process to administer potential refunds. Knowles has historically paid IEEPA duties, and we are currently pursuing the opportunity for potential tariff refunds. However, the amount and timing of any potential recovery is uncertain. Further, following the Supreme Court's ruling invalidating IEEPA tariffs, the administration implemented a new temporary 10% global tariff under Section 122 of the Trade Act of 1974, and indicated a desire to extend tariffs under other statutes. The scope and durability of the administration's efforts to preserve a broader tariff regime remain uncertain.
Current report
Selling and administrative expenses for the first quarter of 2026 were $39.4 million, compared with $37.2 million for the first quarter of 2025, an increase of $2.2 million or 5.9%. Selling and administrative expenses as a percentage of revenues for the first quarter of 2026 and 2025 were 25.7% and 28.1%, respectively. The increase in expenses was primarily driven by higher commissions and additional headcount within the PD segment to support future growth. The decrease in expenses as a percentage of revenues was driven by higher revenues.
Current report
The non-GAAP ETR for the first quarter of 2026 and 2025 was 16.8% and 14.7%, respectively. The non-GAAP ETR includes no discrete impact for the first quarter of 2026 or 2025. The change in the non-GAAP ETR was primarily due to decreased utilization of foreign tax credits and the increase in income compared to the prior year.
Current report
Earnings (Loss) from Continuing Operations
Current report
Earnings from continuing operations for the first quarter of 2026 was $11.3 million, compared with a loss of $0.4 million for the first quarter of 2025, an improvement of $11.7 million. As described above, the improvement is primarily due to higher gross profit, a tax benefit in 2026 compared to tax expense in 2025, and lower interest expense, partially offset by higher other expense and operating expenses.
Current report
We recorded a loss of $1.6 million for both the first quarter of 2026 and the first quarter of 2025. The loss from discontinued operations for the first quarter of 2026 was driven by updates to estimates regarding certain tax liabilities related to CMM's historical operations. The loss from discontinued operations for the first quarter of 2025 was primarily driven by unfavorable working capital adjustments for the disposal of CMM. For additional information, refer to Note 3. Discontinued Operations to our Consolidated Financial Statements.
Current report
Diluted earnings per share from continuing operations was $0.13 for the first quarter of 2026, compared with nil for the first quarter of 2025, an improvementof $0.13. As described above, the improvement is primarily due to higher gross profit, a tax benefit in 2026 compared to tax expense in 2025, and lower interest expense, partially offset by higher other expense and operating expenses.
Current report
MSA revenues were $68.0 million for the first quarter of 2026, compared with $59.7 million for the first quarter of 2025, an increase of $8.3 million or 13.9%. Revenues increased primarily due to higher shipping volumes into the hearing health market.
Current report
MSA EBIT was $26.0 million for the first quarter of 2026, compared with $19.3 million for the first quarter of 2025, an increase of $6.7 million. EBIT margin for the first quarter of 2026 was 38.2%, compared with 32.3% for the first quarter of 2025. The increases in EBIT and EBIT margin were primarily due to higher gross profit. The increase in gross profit was driven by higher shipping volumes, favorable product mix, product cost reductions, and increased factory capacity utilization, partially offset by higher factory costs.
Current report
MSA Adjusted EBIT was $27.7 million for the first quarter of 2026, compared with $21.3 million for the first quarter of 2025, an increase of $6.4 million. Adjusted EBIT margin for the first quarter of 2026 was 40.7%, compared to 35.7% for the first quarter of 2025. The increases in adjusted EBIT and adjusted EBIT margin were primarily due to higher non-GAAP gross profit. Higher non-GAAP gross profit was driven by higher shipping volumes, favorable product mix, product cost reductions and increased factory capacity utilization, partially offset by higher factory costs.
Current report
The increase in cash used in investing activities during 2026 was driven by higher capital expenditures. Our increased capital expenditures in 2026 were due to capacity expansion in our PD segment, including our specialty film product line.
Removed paragraphs (56)
Previous report
On April 2, 2025, the U.S. announced a new universal baseline tariff of 10%, plus an additional country-specific tariff for select trading partners, on all U.S. imports. These actions, and retaliatory tariffs imposed by foreign jurisdictions, have resulted in market volatility and uncertainty regarding the ultimate effect of the tariffs on global economic conditions. We do not anticipate that these factors will have a material impact on our operations; however, we continue to monitor changes in international trade relations and trade policy, including those related to tariffs, which could adversely impact our results. We are optimizing operations and leveraging existing programs and strategies to reduce the impact from tariffs. Additionally, we are taking measures to control costs and implementing pricing actions designed to mitigate the risk these policies may have on our revenues and operations.
Previous report
On December 27, 2024, the Company consummated the sale and assignment of certain assets and liabilities of the Company’s Consumer MEMS Microphones ("CMM") segment to Syntiant Corp. ("Syntiant") for approximately $150.0 million in total consideration, consisting of $70.0 million cash ($58.0 million in net cash received) as adjusted for agreed deductions for indebtedness, and working capital and $80.0 million in Syntiant Series D-2 preferred stock (with a fair value of $77.2 million), par value $0.0001. The Company provided $6.4 million in financing, which was utilized to fund Syntiant's requirement to have $40.0 million of cash on its balance sheet at closing. The Company will also share in certain separation costs pursuant to a credit, which Syntiant may apply to specified separation costs post-closing. For additional information, refer to Note 3. Discontinued Operations to our Consolidated Financial Statements under Part I, Item 1, "Financial Statements."
Previous report
We have reclassified the results of operations and financial position of CMM to discontinued operations for all periods presented. Unless otherwise noted, our results of operations discussed below relate to continuing operations and will be impacted by the CMM divestiture.
Previous report
This divestiture supports Knowles' continued transformation into an industrial technology company, consisting of its Precision Devices ("PD") and MedTech & Specialty Audio ("MSA") segments, primarily serving the defense, medtech, industrial, and electrification markets. We have incurred some amount of dis-synergies following the sale of CMM due to the reduced size of our company and, as a result, we have undertaken actions to help ensure that our cost structure is appropriate to support our remaining businesses.
Previous report
As inventory levels in the industrial markets have recently begun to normalize, our Precision Devices segment has experienced increased bookings for the past four quarters. In addition, with bookings increasing we have seen backlog across our capacitor products increase for the past four quarters.
Previous report
During the third quarter of 2025, we recorded restructuring charges of $0.3 million related primarily to headcount reductions across the Company to rightsize expenses subsequent to the sale of CMM. During the third quarter of 2024, we recorded restructuring charges of $0.2 million for headcount reductions and costs to transfer certain capacitors manufacturing to existing facilities to further optimize operations. For additional information, refer to Note 8. Restructuring and Related Activities to our Consolidated Financial Statements.
Previous report
Research and development expenses for the third quarter of 2025 were $10.0 million, compared with $10.2 million for the third quarter of 2024, a decrease of $0.2 million or 2.0%. Research and development expenses as a percentage of revenues for the third quarter of 2025 and 2024 were 6.5% and 7.2%, respectively. The decreases in expenses were primarily driven by the timing of some development activities. The decrease in expenses as a percentage of revenues was driven by higher revenues.
Previous report
Selling and administrative expenses for the third quarter of 2025 were $34.0 million, compared with $33.9 million for the third quarter of 2024, an increase of $0.1 million or 0.3%. Selling and administrative expenses as a percentage of revenues for the third quarter of 2025 and 2024 were 22.2% and 23.8%, respectively. The increase in expenses was primarily driven by higher incentive compensation, partially offset by a reduction of CD related acquisition costs and the benefits of restructuring actions. The decrease in expenses as a percentage of revenues was driven by higher revenues.
Previous report
Non-GAAP ETR for the third quarter of 2025 and 2024 was 10.2% and 7.3%, respectively. The non-GAAP ETR includes discrete items totaling $0.1 million of tax expense and $0.9 million of tax benefit for the three months ended September 30, 2025 and 2024, respectively. Absent the discrete items, the non-GAAP ETR for the third quarter of 2025 and 2024 was 9.9% and 10.7%, respectively. The change in the non-GAAP ETR was mainly due to the mix of earnings and losses by taxing jurisdictions and net discrete items.
Previous report
On July 4, 2025, the One Big Beautiful Bill Act was signed into U.S. federal law. Based on our analysis of the law, we do not anticipate the One Big Beautiful Bill Act having a material impact on the financial statements of Knowles in 2025 or subsequent years.
Previous report
Earnings from Continuing Operations
Previous report
Earnings from continuing operations for the third quarter of 2025 was $18.0 million, compared with $9.2 million for the third quarter of 2024, an improvement of $8.8 million. As described above, the improvement is primarily due to higher gross profit and lower interest expense, partially offset by higher income tax expense.
Previous report
We recorded a loss of $0.6 million for the third quarter of 2025, primarily driven by a change in tax expense. We recorded a loss of $8.7 million for the third quarter of 2024, primarily driven by our goodwill impairment and loss on disposal of business related to the divestiture of CMM, partially offset by favorable income tax changes. For additional information, refer to Note 3. Discontinued Operations to our Consolidated Financial Statements.
Previous report
Diluted earnings per share from continuing operations was $0.21 for the third quarter of 2025, compared with $0.10 for the third quarter of 2024, an improvementof $0.11. As described above, the improvement is primarily due to higher gross profit, lower interest expense and reduced share count, partially offset by higher income tax expense.
Previous report
Results of Operations for the Nine Months Ended September 30, 2025 compared with the Nine Months Ended September 30, 2024
Previous report
Revenues for the nine months ended September 30, 2025 were $431.0 million, compared with $411.0 million for the nine months ended September 30, 2024, an increase of $20.0 million or 4.9%. PD revenues increased $12.0 million due to higher demand from the medtech, electrification, and defense markets, as well as higher average pricing, partially offset by lower demand from the industrial market. MSA revenues increased $8.0 million, primarily due to higher shipping volumes of metal cans within the specialty audio market that we manufacture and sell to Syntiant as part of our supply agreement associated with the sale of CMM and additional higher shipping volumes into the specialty audio market, partially offset by lower average pricing on mature products and lower shipping volumes into the hearing health market.
Previous report
Cost of Goods Sold
Previous report
COGS for the nine months ended September 30, 2025 was $242.9 million, compared with $235.7 million for the nine months ended September 30, 2024, an increase of $7.2 million or 3.1%. This increase was primarily due to higher shipping volumes, unfavorable product mix, lower than expected yields in our CD business as we ramp up our specialty film product line, and unfavorable inventory reserve adjustments, partially offset by company-wide product cost reductions, increased factory capacity utilization in our ceramic capacitor and RF filter businesses, a reduction of CD related acquisition and production transfer costs, and lower precious metal costs.
Previous report
Impairment Charges
Previous report
During the nine months ended September 30, 2025, we recorded an impairment charge of $3.6 million to write down the carrying value of certain machinery and equipment to fair value. For additional information, refer to Note 1. Basis of Presentation to our Consolidated Financial Statements.
Previous report
Restructuring Charges
Previous report
During the nine months ended September 30, 2024, we recorded restructuring charges of $1.8 million related to headcount reductions and $1.1 million for costs associated with transferring certain capacitors manufacturing to existing facilities to further optimize operations within our PD segment. These actions resulted in restructuring charges of $1.4 million within Gross profit and $1.5 million within Operating expenses. For additional information, refer to Note 8. Restructuring and Related Activities to our Consolidated Financial Statements.
Previous report
Gross profit for the nine months ended September 30, 2025 was $183.8 million, compared with $173.9 million for the nine months ended September 30, 2024, an increase of $9.9 million or 5.7%. Gross profit margin for the nine months ended September 30, 2025 was 42.6%, compared with 42.3% for the nine months ended September 30, 2024. The increases in gross profit and gross profit margin were primarily due to higher shipping volumes, company-wide product cost reductions, increased factory capacity utilization in our ceramic capacitor and RF filter businesses, a reduction of CD related acquisition and production transfer costs, lower precious metal costs and restructuring charges, partially offset by unfavorable product mix, lower than expected yields in our CD business as we ramp up our specialty film product line, lower average pricing on mature products in the MSA business, impairment charges in 2025, and unfavorable inventory reserve adjustments.
Previous report
Non-GAAP gross profit for the nine months ended September 30, 2025 was $190.2 million, compared with $182.5 million for the nine months ended September 30, 2024, an increase of $7.7 million or 4.2%. Non-GAAP gross profit margin for the nine months ended September 30, 2025 was 44.1%, compared with 44.4% for the nine months ended September 30, 2024. The increase in non-GAAP gross profit was primarily due to higher shipping volumes, company-wide product cost reductions, increased factory capacity utilization in our ceramic capacitor and RF filter businesses, and lower precious metal costs, partially offset by unfavorable product mix, lower than expected yields in our CD business as we ramp up our specialty film product line, lower average pricing on mature products in the MSA business, and unfavorable inventory reserve adjustments. The decrease in non-GAAP gross profit margin is primarily due to unfavorable product mix, lower than expected yields in our CD business as we ramp up our specialty film product line, lower average pricing on our mature products in the MSA business, and unfavorable inventory reserve adjustments, partially offset by company-wide product cost reductions, increased factory capacity utilization in our ceramic capacitor and RF filter businesses, and lower precious metals costs.
Previous report
Research and Development Expenses
Previous report
Selling and Administrative Expenses
Previous report
Selling and administrative expenses for the nine months ended September 30, 2025 were $107.1 million, compared with $106.8 million for the nine months ended September 30, 2024, an increase of $0.3 million or 0.3%. Selling and administrative expenses as a percentage of revenues for the nine months ended September 30, 2025 and 2024 were 24.8% and 26.0%, respectively. The increase in expenses was primarily driven by the acceleration of stock-based compensation expense for employees who are nearing or have reached retirement eligibility and higher incentive compensation, partially offset by a reduction of CD related acquisition costs, the benefits of restructuring actions, and reduced intangible amortization costs. The decrease in expenses as a percentage of revenues was driven by higher revenues.
Previous report
Interest Expense, net
Previous report
Interest expense for the nine months ended September 30, 2025 was $7.5 million, compared with $12.9 million for the nine months ended September 30, 2024, a decrease of $5.4 million. The decrease is due to a lower outstanding revolving credit facility balance during the nine months ended September 30, 2025 and lower imputed interest expense on our Seller Note from the CD acquisition. For additional information on borrowings and interest expense, refer to Note 9. Borrowings to our Consolidated Financial Statements.
Previous report
Other Expense, net
Previous report
Other expense for the nine months ended September 30, 2025 was $2.6 million, compared with expense of $2.5 million for the nine months ended September 30, 2024, a change of $0.1 million. The change is primarily due to unfavorable foreign currency exchange rate changes.
Previous report
Non-GAAP ETR for the nine months ended September 30, 2025 and 2024 was 13.2% and 9.1%, respectively. The non-GAAP ETR includes discrete items totaling $0.1 million of tax expense and $0.9 million of tax benefit for the nine months ended September 30, 2025 and 2024, respectively. Absent the discrete items, the non-GAAP ETR for the nine months ended September 30, 2025 and 2024 was 13.1% and 10.5%, respectively. The change in the non-GAAP ETR was mainly due to the mix of earnings and losses by taxing jurisdictions and net discrete items.
Previous report
Earnings from Continuing Operations
Previous report
Earnings from continuing operations for the nine months ended September 30, 2025 was $25.4 million, compared with $13.0 million for the nine months ended September 30, 2024, an improvement of $12.4 million. As described above, the improvement is primarily due to higher gross profit and lower interest expense, partially offset by higher operating expenses and income tax expense.
Previous report
EBIT for the nine months ended September 30, 2025 was $41.9 million, compared with $33.9 million for the nine months ended September 30, 2024, an increase of $8.0 million. EBIT margin for the nine months ended September 30, 2025 was 9.7%, compared with 8.2% for the nine months ended September 30, 2024. The increase in EBIT and EBIT margin was primarily due to higher gross profit, partially offset by higher operating expenses.
Previous report
Adjusted EBIT from continuing operations for the nine months ended September 30, 2025 was $83.9 million, compared with $78.5 million for the nine months ended September 30, 2024, an increase of $5.4 million. Adjusted EBIT margin for the nine months ended September 30, 2025 was 19.5%, compared with 19.1% for the nine months ended September 30, 2024. The increase in Adjusted EBIT and Adjusted EBIT margin was primarily due to higher non-GAAP gross profit, partially offset by higher non-GAAP operating expenses.
Previous report
Loss from Discontinued Operations, net
Previous report
Loss from discontinued operations for the nine months ended September 30, 2025 was $2.2 million, compared with a loss of $269.3 million for the nine months ended September 30, 2024. Loss from discontinued operations for the nine months ended September 30, 2025 was primarily driven by an unfavorable working capital adjustment and tax expense. Loss from discontinued operations for the nine months ended September 30, 2024 was primarily driven by goodwill impairment and loss on disposal of business related to the divestiture of CMM, partially offset by favorable income tax changes. For additional information, refer to Note 3. Discontinued Operations to our Consolidated Financial Statements.
Previous report
Diluted earnings per share from continuing operations was$0.29 for thenine months ended September 30, 2025, compared with$0.14 for thenine months ended September 30, 2024, an improvementof $0.15. As described above, the improvement is primarily due to higher gross profit, lower interest expense and reduced share count, partially offset by by higher operating expenses and income tax expense.
Previous report
Non-GAAP diluted earnings per share from continuing operations was $0.75 for the nine months ended September 30, 2025 and $0.65 for the nine months ended September 30, 2024, an improvement of $0.10. As described above, the improvement is primarily due to higher non-GAAP gross profit, lower interest expense, and reduced share count, partially offset by higher non-GAAP income tax expense and non-GAAP operating expenses.
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Reworded paragraphs (28)
Previous wording
We are a leading manufacturer of specialty electronic components. We design parts that perform unique and critical functions for innovative technologies. Through extreme reliability, custom engineering, and scalable manufacturing, we enable businesses to succeed in the most demanding applications across medtech, defense, industrial, and electrification markets. Our high performance capacitors, radio frequency ("RF") and microwave filters, advanced medtech microphones, and balanced armature speakers, enhance the performance of our customers products to change, improve, and save lives. Our focus on the customer, combined with unique technology, proprietary manufacturing techniques, and global operational expertise, enables us to deliver innovative solutions across multiple applications. References to "Knowles," the "Company," "we," "our," or "us" refer to Knowles Corporation and its consolidated subsidiaries, unless the context otherwise requires.
Current wording
We are a leading manufacturer of specialty electronic components. We design parts that perform unique and critical functions for innovative technologies. Through extreme reliability, custom engineering, and scalable manufacturing, we enable businesses to succeed in the most demanding applications across medtech, defense, industrial, and electrification markets. Our high performance capacitors, radio frequency ("RF") filters, advanced medtech microphones, and balanced armature speakers enable and enhance the performance of technologies with the power to change, improve, and save lives. Our focus on the customer, combined with unique technology, proprietary manufacturing techniques, and global operational expertise, enables us to deliver customized solutions across multiple applications. References to "Knowles," the "Company," "we," "our," or "us" refer to Knowles Corporation and its consolidated subsidiaries, unless the context otherwise requires.
Previous wording
Revenues for the third quarter of 2025 were $152.9 million, compared with $142.5 million for the third quarter of 2024, an increase of $10.4 million or 7.3%. PD revenues increased $9.4 million due to higher demand in the defense, electrification, medtech, and industrial markets, as well as higher average pricing. MSA revenues increased $1.0 million, primarily due to higher shipping volumes of metal cans within the specialty audio market that we manufacture and sell to Syntiant as part of our supply agreement associated with the sale of CMM and higher shipping volumes into the specialty audio market, partially offset by lower shipping volumes into the hearing health market.
Current wording
Revenues for the first quarter of 2026 were $153.1 million, compared with $132.2 million for the first quarter of 2025, an increase of $20.9 million or 15.8%. PD revenues increased $12.6 million due to higher demand in the industrial, defense, electrification, and medtech markets, as well as higher average pricing. MSA revenues increased $8.3 million, primarily due to higher shipping volumes into the hearing health market.
Previous wording
Cost of goods sold ("COGS") for the third quarter of 2025 was $82.8 million, compared with $79.5 million for the third quarter of 2024, an increase of $3.3 million or 4.2%. This increase was primarily due to higher shipping volumes, unfavorable product mix, and lower than expected yields in our CD business as we ramp up our specialty film product line, partially offset by company-wide product cost reductions, increased factory capacity utilization in our ceramic capacitor and RF filter businesses, favorable inventory reserve adjustments, a reduction of CD related production transfer costs, and lower precious metal costs.
Current wording
Cost of goods sold ("COGS") for the first quarter of 2026 was $85.9 million, compared with $78.4 million for the first quarter of 2025, an increase of $7.5 million or 9.6%. This increase was primarily due to higher shipping volumes, higher factory costs in our MSA business, higher costs in our CD business specialty film line as we ramp up production capacity to support our growth in the electrification market, and increased production transfer costs in our ceramic capacitor business, partially offset by company-wide product cost reductions, favorable product mix in our MSA business, and increased factory capacity utilization.
Previous wording
Gross Profit and Non-GAAP Gross Profit
Current wording
During the first quarter of 2026, we recorded restructuring charges of $0.1 million within Gross profit and $0.1 million within Operating expenses related primarily to headcount reductions within our PD segment.
Previous wording
During the nine months ended September 30, 2025, we recorded restructuring charges of $0.7 million within Gross profit and $2.5 million within Operating expenses primarily related to headcount reductions across the Company to rightsize operating expenses subsequent to the sale of CMM. For additional information, refer to Note 8. Restructuring and Related Activities to our Consolidated Financial Statements.
Current wording
During the first quarter of 2025, we recorded restructuring charges of $0.5 million within Gross profit and $2.4 million within Operating expenses related to headcount reductions across the Company to rightsize operating expenses subsequent to the sale of CMM. For additional information, refer to Note 8. Restructuring and Related Activities to our Consolidated Financial Statements.
Previous wording
Gross profit for the third quarter of 2025 was $69.9 million, compared with $62.9 million for the third quarter of 2024, an increase of $7.0 million or 11.1%. Gross profit margin (gross profit as a percentage of revenues) for the third quarter of 2025 was 45.7%, compared with 44.1% for the third quarter of 2024. The increases in gross profit and gross profit margin were primarily due to higher shipping volumes, company-wide product cost reductions, increased factory capacity utilization in our ceramic capacitor and RF filter businesses, partially offset by unfavorable product mix and lower than expected yields in our CD business as we ramp up our specialty film product line.
Current wording
Gross profit for the first quarter of 2026 was $67.1 million, compared with $53.3 million for the first quarter of 2025, an increase of $13.8 million or 25.9%. Gross profit margin (gross profit as a percentage of revenues) for the first quarter of 2026 was 43.8%, compared with 40.3% for the first quarter of 2025. The increases in gross profit and gross profit margin were primarily due to higher shipping volumes, company-wide product cost reductions, favorable product mix in our MSA business, and increased factory capacity utilization, partially offset by higher factory costs in our MSA business, higher costs in our CD business specialty film line as we ramp production capacity to support our growth in the electrification market, and increased production transfer costs in our ceramic capacitor business.
Previous wording
Non-GAAP gross profit for the third quarter of 2025 was $70.7 million, compared with $64.8 million for the third quarter of 2024, an increase of $5.9 million or 9.1%. Non-GAAP gross profit margin (non-GAAP gross profit as a percentage of revenues) for the third quarter of 2025 was 46.2% compared with 45.5% for the third quarter of 2024. The increases in non-GAAP gross profit and non-GAAP gross profit margin were primarily due to higher shipping volumes, company-wide product cost reductions, increased factory capacity utilization in our ceramic capacitor and RF filter businesses, partially offset by unfavorable product mix and lower than expected yields in our CD business as we ramp up our specialty film product line.
Current wording
Non-GAAP gross profit for the first quarter of 2026 was $69.7 million, compared with $55.0 million for the first quarter of 2025, an increase of $14.7 million or 26.7%. Non-GAAP gross profit margin (non-GAAP gross profit as a percentage of revenues) for the first quarter of 2026 was 45.5% compared with 41.6% for the first quarter of 2025. The increases in non-GAAP gross profit and non-GAAP gross profit margin were primarily due to higher shipping volumes, company-wide product cost reductions, favorable product mix in our MSA business, and increased factory capacity utilization, partially offset by higher factory costs in our MSA business and higher costs in our CD business specialty film line as we ramp production capacity to support our growth in the electrification market.
Previous wording
Research and development expenses for the nine months ended September 30, 2025 were $29.7 million, compared with $29.2 million for the nine months ended September 30, 2024, an increase of $0.5 million or 1.7%. Research and development expenses as a percentage of revenues for the nine months ended September 30, 2025 and 2024 were 6.9% and 7.1%, respectively. The increase in expenses was primarily driven by increased development activities as we continue to invest in our businesses. The decrease in expenses as a percentage of revenues was driven by higher revenues.
Current wording
Research and development expenses for the first quarter of 2026 were $11.7 million, compared with $9.7 million for the first quarter of 2025, an increase of $2.0 million or 20.6%. Research and development expenses as a percentage of revenues for the first quarter of 2026 and 2025 were 7.6% and 7.3%, respectively. The increase in expenses was primarily driven by increased development activities related to new products and applications.
Previous wording
Interest expense for the third quarter of 2025 was $2.3 million, compared with $3.9 million for the third quarter of 2024, a decrease of $1.6 million. The decrease is due to a lower outstanding revolving credit facility balance during the third quarter of 2025 and lower imputed interest expense on our Seller Note from the CD acquisition. For additional information on borrowings and interest expense, refer to Note 9. Borrowings to our Consolidated Financial Statements.
Current wording
Interest expense for the first quarter of 2026 was $1.5 million, compared with $2.7 million for the first quarter of 2025, a decrease of $1.2 million. The decrease is primarily due to no imputed interest expense in 2026 on our Seller Note from the CD acquisition, which was paid in full in 2025. For additional information on borrowings and interest expense, refer to Note 9. Borrowings to our Consolidated Financial Statements.
Previous wording
Other expense for the third quarter of 2025 was $1.2 million, compared with expense of $2.6 million for the third quarter of 2024, a change of $1.4 million. Expense in both 2025 and 2024 is primarily due to unfavorable foreign currency exchange rate changes.
Current wording
Other expense for the first quarter of 2026 was $3.4 million, compared with expense of $0.5 million for the first quarter of 2025, a change of $2.9 million. Expense in 2026 is primarily due to unfavorable foreign currency exchange rate changes. Expense in 2025 primarily represents unrealized losses in our investment balances.
Previous wording
Effective tax rate ("ETR") for the third quarter of 2025 and 2024 was 19.3% and 24.6%, respectively. The ETR for the third quarter of 2025 and 2024 includes discrete items totaling $0.2 million of tax expense and $0.7 million of tax benefit, respectively. The discrete items impacting the tax provision for 2025 and 2024 are primarily attributable to stock-based compensation and the deferred tax impact of a tax rate change. Absent the discrete items, the ETR for the third quarter of 2025 and 2024 was 18.4% and 30.3%, respectively. The Company accrues taxes in various countries where it generates income and applies a valuation allowance in other jurisdictions, which resulted in the provisions for the third quarter of 2025 and 2024, respectively. The change in the ETR was due to the mix of earnings and losses by taxing jurisdictions and net discrete items.
Current wording
Effective tax rate ("ETR") for the first quarter of 2026 and 2025 was (2.7)% and 150.0%, respectively. The ETR for the first quarter of 2026 and 2025 includes discrete items totaling $3.8 million and $0.5 million of tax benefit, respectively. The discrete items impacting the tax benefit and provision for 2026 and 2025 are primarily attributable to stock-based compensation. Absent the discrete items, the ETR for the first quarter of 2026 and 2025 was 31.8% and 212.5%, respectively. The Company accrues taxes in various countries where it generates income and applies a valuation allowance in other jurisdictions, which resulted in the benefit and provision for the first quarter of 2026 and 2025, respectively. The change in the ETR was due to the mix of earnings and losses by taxing jurisdictions and net discrete items.
Previous wording
Earnings from continuing operations before interest and income taxes ("EBIT") for the third quarter of 2025 was $24.6 million, compared with $16.1 million for the third quarter of 2024, an increase of $8.5 million. EBIT margin (EBIT as a percentage of revenues) for the third quarter of 2025 was 16.1%, compared with 11.3% for the third quarter of 2024. The increase in EBIT and EBIT margin was primarily due to higher gross profit.
Current wording
Earnings from continuing operations before interest and income taxes ("EBIT") for the first quarter of 2026 was $12.5 million, compared with $3.5 million for the first quarter of 2025, an increase of $9.0 million. EBIT margin (EBIT as a percentage of revenues) for the first quarter of 2026 was 8.2%, compared with 2.6% for the first quarter of 2025. The increases in EBIT and EBIT margin were primarily due to higher gross profit, partially offset by higher other expense and operating expenses.
Previous wording
Adjusted earnings before interest and income taxes ("Adjusted EBIT") from continuing operations for the third quarter of 2025 was $34.5 million, compared with $30.0 million for the third quarter of 2024, an increase of $4.5 million. Adjusted EBIT margin (Adjusted EBIT from continuing operations as a percentage of revenues) for the third quarter of 2025 was 22.6%, compared with 21.1% for the third quarter of 2024. The increase in Adjusted EBIT and Adjusted EBIT margin was primarily due to higher non-GAAP gross profit, partially offset by higher non-GAAP operating expenses.
Current wording
Adjusted earnings before interest and income taxes ("Adjusted EBIT") from continuing operations for the first quarter of 2026 was $30.1 million, compared with $21.7 million for the first quarter of 2025, an increase of $8.4 million. Adjusted EBIT margin (Adjusted EBIT from continuing operations as a percentage of revenues) for the first quarter of 2026 was 19.7%, compared with 16.4% for the first quarter of 2025. The increases in Adjusted EBIT and Adjusted EBIT margin were primarily due to higher non-GAAP gross profit, partially offset by higher non-GAAP operating expenses and other expense.
Previous wording
Non-GAAP diluted earnings per share from continuing operations was $0.33 for the third quarter of 2025, compared with $0.27 for the third quarter of 2024, an improvement of $0.06. As described above, the improvement is primarily due to higher non-GAAP gross profit, lower interest expense, and reduced share count, partially offset by higher non-GAAP operating expenses and higher non-GAAP income tax expense.
Current wording
Non-GAAP diluted earnings per share from continuing operations was $0.27 for the first quarter of 2026, compared with $0.18 for the first quarter of 2025, an improvement of $0.09. As described above, the improvement is primarily due to higher non-GAAP gross profit and lower interest expense, partially offset by higher non-GAAP operating expenses, other expense, and non-GAAP income tax expense.
Previous wording
(2) Production transfer costs represent duplicate costs incurred to migrate manufacturing to existing facilities. These amounts are included in the corresponding Gross profit and Earnings from continuing operations before interest and income taxes for each period presented.
Current wording
(2) Production transfer costs represent duplicate costs incurred to migrate manufacturing to existing facilities.
Previous wording
(5) Other expenses include non-recurring professional service fees related to the execution of various reorganization projects and foreign currency exchange rate impacts on restructuring balances.
Current wording
(4) Other expenses include foreign currency exchange rate impacts on restructuring balances and non-recurring professional service fees related to the execution of various reorganization projects. Other expenses for the first quarter of 2026 also includes foreign currency exchange rate adjustments related to certain balances retained subsequent to the disposal of CMM; these adjustments were not deemed material for prior periods.
Previous wording
(3) These expenses are related to the acquisition of CD by the PD segment. These expenses include ongoing costs to facilitate integration, the amortization of fair value adjustments to inventory, and costs incurred by the Company to carry out this transaction.
Current wording
(5) These expenses include ongoing costs to facilitate integration of the CD acquisition by the PD segment.
Previous wording
(8) In the third quarter of 2025, the Company modified its calculation method of Non-GAAP diluted average shares outstanding to exclude the potential dilution impact from performance share units ("PSUs") as these equity awards have not yet been earned. Our PSUs are market-based awards and have fluctuated based on the Company's total shareholder return performance relative to the Russell 2000 during the measurement period. The calculation methodology change in Non-GAAP diluted average shares outstanding increased Non-GAAP diluted earnings per share by $0.01 for both the three months ended September 30, 2025 and 2024, $0.02 for the nine months ended September 30, 2025, and $0.01 for the nine months ended September 30, 2024.
Current wording
(8) In the third quarter of 2025, the Company modified its calculation method of non-GAAP diluted average shares outstanding to exclude the potential dilution impact from performance share units ("PSUs") as these equity awards have not yet been earned. Our PSUs are market-based awards and have fluctuated based on the Company's total shareholder return performance relative to the Russell 2000 during the measurement period. The calculation methodology change in non-GAAP diluted average shares outstanding had no impact on non-GAAP diluted earnings per share for the historical periods presented.
Previous wording
PD revenues were $88.2 million for the third quarter of 2025, compared with $78.8 million for the third quarter of 2024, an increase of $9.4 million or 11.9%. Revenues increaseddue to higher demand in the defense, electrification, medtech, and industrial markets, as well as higher average pricing.
Current wording
PD revenues were $85.1 million for the first quarter of 2026, compared with $72.5 million for the first quarter of 2025, an increase of $12.6 million or 17.4%. Revenues increaseddue to higher demand in the industrial, defense, electrification, and medtech markets, as well as higher average pricing.
Previous wording
PD EBIT was $14.3 million for the third quarter of 2025, compared with $8.4 million for the third quarter of 2024, an increase of $5.9 million. EBIT margin for the third quarter of 2025 was 16.2%, compared to 10.7% for the third quarter of 2024. The increases were due to higher gross profit primarily driven by higher shipping volumes, product cost reductions and increased factory capacity utilization in our ceramic capacitor and RF filter businesses, partially offset by unfavorable product mix and lower than expected yields in our CD business as we ramp up our specialty film product line.
Current wording
PD EBIT was $7.6 million for the first quarter of 2026, compared with $3.2 million for the first quarter of 2025, an increase of $4.4 million. EBIT margin for the first quarter of 2026 was 8.9%, compared to 4.4% for the first quarter of 2025. The increases were due to higher gross profit, partially offset by higher operating expenses driven by higher commissions and additional headcount to support future growth. The gross profit increase was primarily driven by higher shipping volumes, product cost reductions, and increased factory capacity utilization, partially offset by higher costs in our CD business specialty film line as we ramp up production capacity to support our growth in the electrification market and increased production transfer costs in our ceramic capacitor business.
Previous wording
PD Adjusted EBIT was $20.2 million for the third quarter of 2025, compared with $16.1 million for the third quarter of 2024, an increase of $4.1 million. Adjusted EBIT margin for the third quarter of 2025 was 22.9%, compared with 20.4% for the third quarter of 2024. The increases were due to higher non-GAAP gross profit. The non-GAAP gross profit increase was driven by higher shipping volumes, product cost reductions and increased factory capacity utilization in our ceramic capacitor and RF filter businesses, partially offset by unfavorable product mix and lower than expected yields in our CD business as we ramp up our specialty film product line.
Current wording
PD Adjusted EBIT was $15.1 million for the first quarter of 2026, compared with $10.7 million for the first quarter of 2025, an increase of $4.4 million. Adjusted EBIT margin for the first quarter of 2026 was 17.7%, compared with 14.8% for the first quarter of 2025. The increases were due to higher non-GAAP gross profit, partially offset by higher non-GAAP operating expenses driven by higher commissions and additional headcount to support future growth. The non-GAAP gross profit increase was driven by higher shipping volumes, product cost reductions, and increased factory capacity utilization, partially offset by higher costs in our CD business specialty film line as we ramp up production capacity to support our growth in the electrification market.
Previous wording
Historically, we have generated and expect to continue to generate positive cash flow from operations. Our ability to fund our operations and capital needs will depend on our ongoing ability to generate cash from operations and access to capital markets. We believe that our future cash flow from operations and access to capital markets will provide adequate resources to fund our working capital needs, capital expenditures, strategic investments, and share repurchases. We have secured a revolving line of credit in the United States from a syndicate of commercial banks to provide additional liquidity. Furthermore, if we were to require additional cash above and beyond our cash on the balance sheet, the free cash flow generated by the business, and availability under our revolving credit facility, we would most likely seek to raise long-term financing through the U.S. debt or bank markets.
Current wording
Historically, we have generated and expect to continue to generate positive cash flow from operations. Our ability to fund our operations and capital needs will depend on our ongoing ability to generate cash from operations and access capital markets. We believe that our future cash flow from operations and access to capital markets will provide adequate resources to fund our working capital needs, capital expenditures, strategic investments, and share repurchases. We have secured a revolving line of credit in the United States from a syndicate of commercial banks to provide additional liquidity. Furthermore, if we were to require additional cash above and beyond our cash on the balance sheet, the free cash flow generated by the business, and availability under our revolving credit facility, we would most likely seek to raise long-term financing through the U.S. debt or bank markets.
Previous wording
On December 27, 2024, we completed the sale of the CMM segment to Syntiant for approximately $141.9 million in total consideration, consisting of $63.6 million in cash ($58.0 million net of cash sold), Syntiant Series D-2 preferred stock with a fair value of $77.2 million, and $1.1 million for estimated purchase price adjustments. The purchase price adjustment amount is still being negotiated and is subject to change. For additional information, refer to Note 3. Discontinued Operations to our Consolidated Financial Statements. We will also share in certain separation costs pursuant to a credit for up to $13.5 million, which the buyer may apply to specified separation costs post-closing. As the balance of the separation credit is now below the $6.5 million contractual threshold, costs will be shared equally by the Company and Syntiant. For additional information, refer to Note 1. Basis of Presentation.
Current wording
On December 27, 2024, we completed the sale of CMM to Syntiant for approximately $141.9 million in total consideration, consisting of $63.6 million in cash ($58.0 million net of cash sold), Syntiant Series D-2 preferred stock with a fair value of $77.2 million, and $1.1 million for estimated purchase price adjustments. The purchase price adjustment is still being finalized and is subject to change. For additional information, refer to Note 3. Discontinued Operations to our Consolidated Financial Statements. The Company shares in certain separation costs pursuant to a credit for up to $13.5 million that Syntiant may apply to specified separation costs post-closing. As the balance of the separation credit is now below the $7.0 million contractual threshold, costs will be shared equally by the Company and Syntiant. For additional information, refer to Note 1. Basis of Presentation.
Previous wording
On February 24, 2020, we announced that our Board of Directors had authorized a share repurchase program of up to $100.0 million of our common stock. On April 28, 2022, we announced that our Board of Directors had increased the authorization by up to $150.0 million in additional aggregate value. On February 13, 2025, the Company announced another authorization increase of up to $150.0 million in additional aggregate value, for a total of $400.0 million of aggregate value. At September 30, 2025, we have $139.0 million remaining that may yet be repurchased under our share repurchase program. The timing and amount of any shares repurchased will be determined by us based on our evaluation of market conditions and other factors, and will be made in accordance with applicable securities laws in either the open market or in privately negotiated transactions. We are not obligated to purchase any shares under the program, and the program may be suspended or discontinued at any time. Any shares repurchased will be held as treasury stock. During the nine months ended September 30, 2025 and 2024, the Company repurchased 3,120,574 and 1,686,253 shares of common stock, respectively, for a total of $55.0 million and $29.5 million, respectively.
Current wording
On February 24, 2020, we announced that our Board of Directors had authorized a share repurchase program of up to $100.0 million of our common stock. On April 28, 2022, we announced that our Board of Directors had increased the authorization by up to $150.0 million in additional aggregate value. On February 13, 2025, the Company announced another authorization increase of up to $150.0 million in additional aggregate value, for a total of $400.0 million of aggregate value. At March 31, 2026, we have $121.5 million remaining that may yet be repurchased under our share repurchase program. The timing and amount of any shares repurchased will be determined by us based on our evaluation of market conditions and other factors, and will be made in accordance with applicable securities laws in either the open market or in privately negotiated transactions. We are not obligated to purchase any shares under the program, and the program may be suspended or discontinued at any time. Any shares repurchased will be held as treasury stock. During the three months ended March 31, 2026 and 2025, the Company repurchased 276,309 and 300,768 shares of common stock, respectively, for a total of $7.5 million and $5.0 million, respectively.
Previous wording
Cash provided by operating activities adjusts net earnings for certain non-cash items, including impairment charges, depreciation expense, amortization of intangible assets, stock-based compensation, changes in deferred income taxes, and the effects of changes in operating assets and liabilities. The decrease in cash provided by operating activities in 2025 is primarily due to $31.2 million of payments in 2025 to settle supplier obligations and separation costs related to CMM and the absence of $22.1 million of cash generated by CMM in 2024. This decrease was partially offset by customer prepayments of $19.8 million, higher earnings from continuing operations, and lower interest payments in 2025.
Current wording
Cash provided by operating activities adjusts net earnings for certain non-cash items, including impairment charges, depreciation expense, amortization of intangible assets, stock-based compensation, changes in deferred income taxes, and the effects of changes in operating assets and liabilities. The decrease in cash provided by operating activities in 2026 is primarily due to a customer prepayment in 2025 that did not recur in 2026 and an increase in working capital in 2026, partially offset by less cash used in 2026 to settle obligations related to CMM and higher earnings from continuing operations.
Previous wording
In 2025, we expect capital expenditures to be in the range of 4% to 6% of revenues.
Current wording
In 2026, we expect capital expenditures to be in the range of 4% to 5% of revenues.
Previous wording
Cash used in financing activities during 2025 was primarily related to $55.0 million of repurchases of common stock, $30.0 million of payments on the revolving credit facility, and $7.1 million of tax payments related to net share settlement of equity awards, partially offset by proceeds of $3.9 million from the exercise of options. Cash used in financing activities during 2024 was primarily related to $29.5 million of repurchases of common stock, $52.0 million net payments on the revolving credit facility, and $6.4 million for payment of taxes related to net share settlement of equity awards, partially offset by proceeds of $2.1 million from the exercise of options.
Current wording
Cash used in financing activities during 2026 was primarily related to $14.2 million of tax payments related to net share settlement of equity awards and $7.5 million of repurchases of common stock, partially offset by $17.0 million of net proceeds on the revolving credit facility and proceeds of $3.0 million from the exercise of options. Cash used in financing activities during 2025 was primarily related to $15.0 million of payments on the revolving credit facility, $6.7 million of tax payments related to net share settlement of equity awards, and $5.0 million of repurchases of common stock, partially offset by proceeds of $0.6 million from the exercise of options.
Previous wording
In 2025 we generated adjusted free cash flow of $81.2 million compared to adjusted free cash flow of $63.5 million in 2024. The increase in adjusted free cash flow in 2025 was primarily due to customer prepayments of $19.8 million, higher earnings from continuing operations, and lower interest payments, partially offset by higher capital expenditures and an increase in working capital.
Current wording
In 2026 we used adjusted free cash flow of $3.1 million compared to adjusted free cash flow generated of $18.3 million in 2025. The decrease in adjusted free cash flow in 2026 was primarily due to a customer prepayment in 2025 that did not recur in 2026, an increase in working capital, and higher capital expenditures, partially offset by higher earnings from continuing operations.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Provision for Income Taxes and Non-GAAP Provision for Income Taxes
Previous report — wording carried elsewhere
ETR for the nine months ended September 30, 2025 and 2024 was 26.2% and 38.1%, respectively. The ETR for the nine months ended September 30, 2025 and 2024 includes discrete items totaling $0.1 million and $0.3 million of tax benefit, respectively. The discrete items impacting the tax provision for the nine months ended September 30, 2024 are primarily attributable to stock-based compensation and the deferred tax impact of a tax rate change. Absent the discrete items, the ETR for the nine months ended September 30, 2025 and 2024 was 26.5% and 39.5%, respectively. The Company accrues taxes in various countries where it generates income and applies a valuation allowance in other jurisdictions, which resulted in the provision for the nine months ended September 30, 2025 and 2024. The change in the ETR was mainly due to the mix of earnings and losses by taxing jurisdictions and net discrete items.
Previous report — wording carried elsewhere
Diluted Earnings per Share from Continuing Operations and Non-GAAP Diluted Earnings per Share from Continuing Operations