Knowles Corp
For the period ended Jun 30, 2026. Filed Jul 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.
Jun 30, 2026 · Filed Jul 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 2026-03-31; filed 2026-04-28.
0001587523-26-000018
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-07-28.
0001587523-26-000030
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 83 previous paragraphs and 125 current paragraphs.
46 unchanged; 28 reworded; 46 added; 9 removed; 0 previous and 5 current paragraphs rearranged.
Tables are not compared: 6 previous and 9 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 (46)
Current report
The tariff environment remains highly dynamic. On February 20, 2026, a Supreme Court ruling invalidated certain tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA"). Knowles submitted refund requests and has, to date, received a portion of previously paid IEEPA tariffs. However, as a relatively small percentage of our products were subject to IEEPA tariffs, cash refunds received were not material. We will continue to monitor developments on tariff policy and evaluate any changes to the applicability of tariffs to our business as the occur.
Current report
Impairment Charges
Current report
During the second quarter of 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.
Current report
During the second 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. No restructuring charges were recorded during the second quarter of 2025. For additional information, refer to Note 8. Restructuring and Related Activities to our Consolidated Financial Statements.
Current report
Earnings from Continuing Operations
Current report
Earnings from continuing operations for the second quarter of 2026 was $18.4 million, compared with $7.8 million for the second quarter of 2025, an improvement of $10.6 million. As described above, the improvement is primarily due to higher gross profit, lower interest expense, and lower other expense, partially offset by higher operating expenses and higher income tax expense.
Current report
Earnings from Discontinued Operations, net
Current report
We recorded earnings from discontinued operations of $1.0 million for the second quarter of 2026, which was driven by final adjustments to the CMM sale transaction. There was no activity for discontinued operations for the second quarter of 2025. For additional information, refer to Note 3. Discontinued Operations to our Consolidated Financial Statements.
Current report
Diluted earnings per share from continuing operations was$0.21 for the second quarter of 2026, compared with$0.09 for the second quarter of 2025, an improvementof $0.12. As described above, the improvement is primarily due to higher gross profit, partially offset by higher operating expenses.
Current report
Results of Operations for the Six Months Ended June 30, 2026 compared with the Six Months Ended June 30, 2025
Current report
Revenues for the six months ended June 30, 2026 were $319.9 million, compared with $278.1 million for the six months ended June 30, 2025, an increase of $41.8 million or 15.0%. PD revenues increased $32.4 million due to higher demand in the industrial, electrification, defense, and medtech markets, as well as higher average pricing. MSA revenues increased $9.4 million, primarily due to higher shipping volumes into the hearing health market, partially offset by lower shipping volumes into the specialty audio market.
Current report
Cost of Goods Sold
Current report
COGS for the six months ended June 30, 2026 was $178.0 million, compared with $160.1 million for the six months ended June 30, 2025, an increase of $17.9 million or 11.2%. This increase was primarily due to higher shipping volumes and higher production transfer costs in our ceramic capacitor business, partially offset by favorable product mix in our MSA segment.
Current report
Impairment Charges
Current report
During the six months ended June 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
Current report
Restructuring Charges
Current report
Gross profit for the six months ended June 30, 2026 was $141.7 million, compared with $113.9 million for the six months ended June 30, 2025, an increase of $27.8 million or 24.4%. Gross profit margin for the six months ended June 30, 2026 was 44.3%, compared with 41.0% for the six months ended June 30, 2025. The increases in gross profit and gross profit margin were primarily due to higher shipping volumes, impairment charges in 2025 that did not recur in 2026, increased factory capacity utilization, pricing in the PD segment, and favorable product mix in our MSA segment, partially offset by higher production transfer costs in our ceramic capacitor business.
Current report
Non-GAAP gross profit for the six months ended June 30, 2026 was $145.4 million, compared with $119.5 million for the six months ended June 30, 2025, an increase of $25.9 million or 21.7%. Non-GAAP gross profit margin for the six months ended June 30, 2026 was 45.5% compared with 43.0% for the six months ended June 30, 2025. The increases in non-GAAP gross profit and non-GAAP gross profit margin were primarily due to higher shipping volumes, increased factory capacity utilization, pricing in the PD segment, and favorable product mix in our MSA segment.
Current report
Research and Development Expenses
Current report
Research and development expenses for the six months ended June 30, 2026 were $22.3 million, compared with $19.7 million for the six months ended June 30, 2025, an increase of $2.6 million or 13.2%. Research and development expenses as a percentage of revenues for the six months ended June 30, 2026 and 2025 were 7.0% and 7.1%, respectively. The increase in expenses was primarily driven by increased development activities related to new products and applications.
Current report
Selling and Administrative Expenses
Current report
Selling and administrative expenses for the six months ended June 30, 2026 were $78.6 million, compared with $73.1 million for the six months ended June 30, 2025, an increase of $5.5 million or 7.5%. Selling and administrative expenses as a percentage of revenues for the six months ended June 30, 2026 and 2025 were 24.6% and 26.3%, respectively. The increase in expenses was primarily driven by higher commissions, additional headcount within the PD segment to support future growth, annual merit increases, higher incentive compensation, and a change in our deferred compensation liability. The decrease in expenses as a percentage of revenues was driven by higher revenues.
Current report
Interest Expense, net
Current report
Other Expense, net
Current report
Other expense for the six months ended June 30, 2026 was $3.8 million, compared with expense of $1.4 million for the six months ended June 30, 2025, a change of $2.4 million. Expense in 2026 and 2025 is primarily due to unfavorable foreign currency changes, partially offset by unrealized gains in our investment balances.
Current report
The non-GAAP ETR from continuing operations for the six months ended June 30, 2026 and 2025 was 16.8% and 15.4%, respectively. The non-GAAP ETR from continuing operations includes discrete items totaling $0.1 million of tax benefit and no discrete impact for the six months ended June 30, 2026 and 2025, respectively. Absent the discrete items, the non-GAAP ETR from continuing operations for six months ended June 30, 2026 and 2025 was 17.0% and 15.4%, respectively. The change in the non-GAAP ETR was primarily due to decreased utilization of foreign tax credits and the mix of earnings and losses by taxing jurisdictions.
Current report
Earnings from Continuing Operations
Current report
Earnings from continuing operations for the six months ended June 30, 2026 was $29.7 million, compared to $7.4 million for the six months ended June 30, 2025, an improvement of $22.3 million. As described above, the improvement is primarily due to higher gross profit, lower interest expense, and lower income tax expense, partially offset by higher operating expenses and higher other expense.
Current report
Earnings from continuing operations before interest and income taxes for the six months ended June 30, 2026 was $36.8 million, compared with $17.3 million for the six months ended June 30, 2025, an increase of $19.5 million. EBIT margin for the six months ended June 30, 2026 was 11.5%, compared with 6.2% for the six months ended June 30, 2025. The increases in EBIT and EBIT margin were primarily due to higher gross profit, partially offset by higher operating expenses.
Current report
Adjusted earnings before interest and income taxes from continuing operations for the six months ended June 30, 2026 was $66.2 million, compared with $49.4 million for the six months ended June 30, 2025, an increase of $16.8 million. Adjusted EBIT margin for the six months ended June 30, 2026 was 20.7%, compared with 17.8% for the six months ended June 30, 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.
Current report
Diluted earnings per share from continuing operations was$0.34 for thesix months ended June 30, 2026, compared with$0.08 for thesix months ended June 30, 2025, an improvementof $0.26. As described above, the improvement is primarily due to higher gross profit, partially offset by higher operating expenses.
Current report
Non-GAAP diluted earnings per share from continuing operations was $0.60 for the six months ended June 30, 2026, compared with $0.42 for the six months ended June 30, 2025, an improvement of $0.18. As described above, the improvement is primarily due to higher non-GAAP gross profit, partially offset by higher non-GAAP operating expenses.
Current report
PD revenues were $98.3 million for the second quarter of 2026, compared with $78.5 million for the second quarter of 2025, an increase of $19.8 million or 25.2%. Revenues increaseddue to higher demand in the industrial, electrification, medtech, and defense markets, as well as higher average pricing.
Current report
PD EBIT was $13.9 million for the second quarter of 2026, compared with $8.2 million for the second quarter of 2025, an increase of $5.7 million. EBIT margin for the second quarter of 2026 was 14.1%, compared to 10.4% for the second quarter of 2025. The increases were due to higher gross profit, partially offset by higher operating expenses driven by higher commissions, additional headcount to support future growth, and higher incentive compensation. The gross profit increase was primarily driven by higher shipping volumes and pricing, partially offset by increased production transfer costs in our ceramic capacitor business.
Current report
PD Adjusted EBIT was $20.3 million for the second quarter of 2026, compared with $13.9 million for the second quarter of 2025, an increase of $6.4 million. Adjusted EBIT margin for the second quarter of 2026 was 20.7%, compared with 17.7% for the second 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, additional headcount to support new product initiatives, and higher incentive compensation. The non-GAAP gross profit increase was primarily driven by higher shipping volumes and pricing.
Current report
MSA EBIT was $26.3 million for the second quarter of 2026, compared with $21.0 million for the second quarter of 2025, an increase of $5.3 million. EBIT margin for the second quarter of 2026 was 38.4%, compared with 31.2% for the second quarter of 2025. The increases in EBIT and EBIT margin were primarily due to higher gross profit, partially offset by higher operating expenses driven by higher incentive compensation. The increase in gross profit was driven by impairment charges recorded in 2025 that did not recur in 2026, increased factory capacity utilization, and higher shipping volumes, partially offset by unfavorable product mix.
Current report
MSA Adjusted EBIT was $27.6 million for the second quarter of 2026, compared with $26.1 million for the second quarter of 2025, an increase of $1.5 million. Adjusted EBIT margin for the second quarter of 2026 was 40.3%, compared to 38.7% for the second 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 operating expenses driven by higher incentive compensation. Higher non-GAAP gross profit was driven by increased factory capacity utilization and higher shipping volumes, partially offset by unfavorable product mix.
Current report
Segment Results of Operations for the Six Months Ended June 30, 2026 compared with the Six Months Ended June 30, 2025
Current report
Precision Devices
Current report
PD revenues were $183.4 million for the six months ended June 30, 2026, compared with $151.0 million for the six months ended June 30, 2025, an increase of $32.4 million or 21.5%. Revenues increased due to higher demand in the industrial, electrification, defense, and medtech markets, as well as higher average pricing.
Showing the first 40 of 46 passages. Open the source sections for the rest.
Removed paragraphs (9)
Previous 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.
Previous report
Earnings (Loss) from Continuing Operations
Previous 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.
Previous 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.
Previous report
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 report
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 report
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 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.
Previous 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.
Reworded paragraphs (28)
Previous 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.
Current wording
Revenues for the second quarter of 2026 were $166.8 million, compared with $145.9 million for the second quarter of 2025, an increase of $20.9 million or 14.3%. Precision Devices ("PD") revenues increased $19.8 million due to higher demand in the industrial, electrification, medtech, and defense markets, as well as higher average pricing. MedTech & Specialty Audio ("MSA") revenues increased $1.1 million, primarily due to higher shipping volumes into the hearing health market, partially offset by lower shipping volumes into the specialty audio market.
Previous 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.
Current wording
Cost of goods sold ("COGS") for the second quarter of 2026 was $92.1 million, compared with $81.7 million for the second quarter of 2025, an increase of $10.4 million or 12.7%. This increase was primarily due to higher shipping volumes, unfavorable product mix, and increased production transfer costs in our ceramic capacitor business.
Previous 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.
Current wording
Gross profit for the second quarter of 2026 was $74.6 million, compared with $60.6 million for the second quarter of 2025, an increase of $14.0 million or 23.1%. Gross profit margin (gross profit as a percentage of revenues) for the second quarter of 2026 was 44.7%, compared with 41.5% for the second quarter of 2025. The increases in gross profit and gross profit margin were primarily due to higher shipping volumes, impairment charges in 2025 that did not recur in 2026, pricing, and increased factory capacity utilization, partially offset by unfavorable product mix and increased production transfer costs in our ceramic capacitor business.
Previous 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.
Current wording
Non-GAAP gross profit for the second quarter of 2026 was $75.7 million, compared with $64.5 million for the second quarter of 2025, an increase of $11.2 million or 17.4%. Non-GAAP gross profit margin (non-GAAP gross profit as a percentage of revenues) for the second quarter of 2026 was 45.4% compared with 44.2% for the second quarter of 2025. The increases in non-GAAP gross profit and non-GAAP gross profit margin were primarily due to higher shipping volumes, pricing, and increased factory capacity utilization, partially offset by unfavorable product mix.
Previous 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.
Current wording
Research and development expenses for the second quarter of 2026 were $10.6 million, compared with $10.0 million for the second quarter of 2025, an increase of $0.6 million or 6.0%. Research and development expenses as a percentage of revenues for the second quarter of 2026 and 2025 were 6.4% and 6.9%, respectively. The increase in expenses was primarily driven by increased development activities related to new products and applications.
Previous wording
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 wording
Selling and administrative expenses for the second quarter of 2026 were $39.2 million, compared with $35.9 million for the second quarter of 2025, an increase of $3.3 million or 9.2%. Selling and administrative expenses as a percentage of revenues for the second quarter of 2026 and 2025 were 23.5% and 24.6%, respectively. The increase in expenses was primarily driven by higher commissions, an increase to our deferred compensation liability, higher incentive compensation, additional headcount within the PD segment to support future growth, and annual merit increases. The decrease in expenses as a percentage of revenues was driven by higher revenues.
Previous 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.
Current wording
Interest expense for the second quarter of 2026 was $1.7 million, compared with $2.5 million for the second quarter of 2025, a decrease of $0.8 million. The decrease is primarily due to the absence of 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 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.
Current wording
Other expense for the second quarter of 2026 was $0.4 million, compared with expense of $0.9 million for the second quarter of 2025, a change of $0.5 million. Expense in 2026 and 2025 is primarily due to unfavorable foreign currency exchange rate changes, partially offset by unrealized gains in our investment balances.
Previous 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.
Current wording
The effective tax rate ("ETR") from continuing operations for the second quarter of 2026 and 2025 was 18.6% and 31.0%, respectively. The ETR from continuing operations for the second quarter of 2026 and 2025 includes discrete items totaling $0.9 million of tax benefit and $0.1 million of tax expense, respectively. The discrete items impacting the tax provision for 2026 and 2025 are primarily attributable to stock-based compensation. Absent the discrete items, the ETR from continuing operations for the second quarter of 2026 and 2025 was 22.6% and 30.1%, 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 second quarter of 2026 and 2025. The change in the ETR from was due to the mix of earnings and losses by taxing jurisdictions and net discrete items, primarily stock-based compensation.
Previous wording
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 wording
The non-GAAP ETR from continuing operations for the second quarter of 2026 and 2025 was 16.9% and 15.9%, respectively. The non-GAAP ETR from continuing operations includes no discrete impact for the second quarter of 2026 or 2025. The change in the non-GAAP ETR was primarily due to decreased utilization of foreign tax credits and the mix of earnings and losses by taxing jurisdictions.
Previous 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.
Current wording
Earnings from continuing operations before interest and income taxes ("EBIT") for the second quarter of 2026 was $24.3 million, compared with $13.8 million for the second quarter of 2025, an increase of $10.5 million. EBIT margin (EBIT as a percentage of revenues) for the second quarter of 2026 was 14.6%, compared with 9.5% for the second quarter of 2025. The increases in EBIT and EBIT margin were primarily due to higher gross profit, partially offset by higher operating expenses.
Previous 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.
Current wording
Adjusted earnings before interest and income taxes ("Adjusted EBIT") from continuing operations for the second quarter of 2026 was $36.1 million, compared with $27.7 million for the second quarter of 2025, an increase of $8.4 million. Adjusted EBIT margin (Adjusted EBIT from continuing operations as a percentage of revenues) for the second quarter of 2026 was 21.6%, compared with 19.0% for the second 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.
Previous 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.
Current wording
Non-GAAP diluted earnings per share from continuing operations was $0.33 for the second quarter of 2026, compared with $0.24 for the second quarter of 2025, an improvement of $0.09. As described above, the improvement is primarily due to higher non-GAAP gross profit, partially offset by higher non-GAAP operating expenses.
Previous 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.
Current wording
During the six months ended June 30, 2026, we recorded restructuring charges of $0.2 million within Gross profit and $0.2 million within Operating expenses related primarily to headcount reductions within our PD segment.
Previous 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.
Current wording
During the six months ended June 30, 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 the CMM business. For additional information, refer to Note 8. Restructuring and Related Activities to our Consolidated Financial Statements.
Previous wording
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 wording
We recorded a loss from discontinued operations of $0.6 million for the six months ended June 30, 2026 and a loss of $1.6 million for the six months ended June 30, 2025. The loss from discontinued operations for the six months ended June 30, 2026 was driven by updates to estimates regarding certain tax liabilities related to CMM's historical operations, partially offset by final adjustments to the CMM sale transaction. The loss from discontinued operations for the six months ended June 30, 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.
Previous 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.
Current wording
(4) Other expenses include foreign currency exchange rate impacts on restructuring balances. Other expenses for the three and six months ending June 30, 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 2025 periods.
Previous wording
(5) These expenses include ongoing costs to facilitate integration of the CD acquisition by the PD segment.
Current wording
(5)These expenses include ongoing costs to facilitate integration of the CD acquisition by the PD segment.
Previous wording
(7) The non-GAAP reconciling adjustments include stock-based compensation expense, intangibles amortization expense, restructuring charges, production transfer costs, acquisition-related costs, and other expenses, partially offset by a credit to transition services.
Current wording
(7) The non-GAAP reconciling adjustments include stock-based compensation expense, intangibles amortization expense, impairment charges, restructuring charges, production transfer costs, acquisition-related costs, and other expenses, partially offset by a credit to transition services.
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 had no impact on non-GAAP diluted earnings per share for the historical periods presented.
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 fluctuate 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 the six months ended June 30, 2025.
Previous wording
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 wording
MSA revenues were $68.5 million for the second quarter of 2026, compared with $67.4 million for the second quarter of 2025, an increase of $1.1 million or 1.6%. Revenues increased primarily due to higher shipping volumes into the hearing health market, partially offset by lower shipping volumes into the specialty audio market.
Previous 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.
Current wording
On December 27, 2024, we completed the sale of CMM to Syntiant for approximately $140.8 million in total consideration, consisting of $63.6 million in cash ($58.0 million net of cash sold) and Syntiant Series D-2 preferred stock with a fair value of $77.2 million. 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. 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 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.
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 June 30, 2026, we have $106.5 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 six months ended June 30, 2026 and 2025, the Company repurchased 692,369 and 2,182,462 shares of common stock, respectively, for a total of $22.5 million and $35.0 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 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.
Current wording
Cash provided by operating activities adjusts net earnings for certain non-cash items, including depreciation expense, amortization of intangible assets, stock-based compensation, changes in deferred income taxes, impairment charges, and the effects of changes in operating assets and liabilities. The decrease in cash provided by operating activities for the six months ended June 30, 2026 is primarily due to an increase in working capital in 2026 and a customer prepayment in 2025 that did not recur in 2026, partially offset by higher earnings from continuing operations and less cash used in 2026 to settle obligations related to CMM.
Previous wording
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.
Current wording
The increase in cash used in investing activities during the six months ended June 30, 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.
Previous wording
In 2026, we expect capital expenditures to be in the range of 4% to 5% of revenues.
Current wording
In 2026, we expect capital expenditures to be approximately 5% of revenues.
Previous 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.
Current wording
Cash used in financing activities during the six months ended June 30, 2026 was primarily related to $22.5 million of repurchases of common stock and $14.8 million of tax payments related to net share settlement of equity awards, partially offset by $17.0 million of net proceeds on the revolving credit facility and proceeds of $5.8 million from the exercise of options. Cash used in financing activities during the six months ended June 30, 2025 was primarily related to $35.0 million of repurchases of common stock, $15.0 million of payments on the revolving credit facility, and $6.9 million of tax payments related to net share settlement of equity awards, partially offset by proceeds of $0.6 million from the exercise of options.
Previous 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.
Current wording
During the six months ended June 30, 2026 we generated adjusted free cash flow of $19.8 million compared to $57.9 million during the six months ended June 30, 2025. The decrease in adjusted free cash flow in 2026 was primarily due to an increase in working capital, a customer prepayment in 2025 that did not recur in 2026, and higher capital expenditures, partially offset by higher earnings from continuing operations.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
Gross Profit and Non-GAAP Gross Profit
Current report — wording carried from elsewhere
Interest expense for the six months ended June 30, 2026 was $3.2 million, compared with $5.2 million for the six months ended June 30, 2025, a decrease of $2.0 million. The decrease is primarily due to the absence of 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.
Current report — wording carried from elsewhere
Provision for Income Taxes and Non-GAAP Provision for Income Taxes
Current report — wording carried from elsewhere
The ETR from continuing operations for the six months ended June 30, 2026 and 2025 was 11.6% and 38.8%, respectively. The ETR from continuing operations for the six months ended June 30, 2026 and 2025 includes discrete items totaling $4.7 million and $0.3 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 from continuing operations for the six months ended June 30, 2026 and 2025 was 25.6% and 41.3%, respectively. The Company accrues taxes in various countries where it generates income and applies a valuation allowance in other jurisdictions, which resulted in the provision for the six months ended June 30, 2026 and 2025. The change in the ETR was due to the mix of earnings and losses by taxing jurisdictions and net discrete items, primarily stock-based compensation.
Current report — wording carried from elsewhere
Diluted Earnings per Share from Continuing Operations and Non-GAAP Diluted Earnings per Share from Continuing Operations