A maker of tiny electronic components, Knowles supplies high-performance capacitors and RF filters for defense and industrial gear, plus the balanced armature speakers and microphones tucked inside hearing aids. Founded in 1946 by acoustical engineer Hugh S. Knowles, the company pioneered the miniature microphone that let hearing aids shrink to nearly invisible devices. It became an independent, publicly traded company in 2014 when Dover Corporation spun it off.
Q2 FY2026 revenue rose 15.8% to $153.1M with gross margin up 3.5 points to 43.8% year over year
growth held at double digits for a second straight quarter after the CMM sale. Revenue rose 15.8% to $153.1M and widened 3.5 points to 43.8% as Precision Devices and Medtech & Specialty Audio volumes grew, though turned to a $0.7M use from $36.4M a year earlier. The post-divestiture business is growing, but cash generation swung negative while debt rose.
Key takeaways
rose 15.8% to $153.1M, with Precision Devices up $12.6M on industrial, defense, electrification, and medtech demand and Medtech & Specialty Audio up $8.3M on hearing health volumes versus Q2 2025.
expanded 3.5 points to 43.8% as grew 25.9% to $67.1M, helped by higher volumes, product cost reductions, favorable MSA mix, and better factory utilization.
rose 297.5% to $15.9M and widened 7.4 points to 10.4%, though of $9.7M and of $0.11 are not meaningful against the prior-year loss base.
Section summaries
Management's Discussion and Analysis
Q2 FY2026 revenue rose 14.3% to $166.8M, driven by Precision Devices demand and pricing; gross margin expanded to 44.7%.
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Consolidated increased $20.9M (14.3%) to $166.8M, with Precision Devices up $19.8M on higher industrial, electrification, medtech, and defense demand and pricing.
was a $0.7M use versus $36.4M generated a year earlier, and was a $11.5M use, driven by absence of a 2025 customer prepayment, higher , and increased .
Cash fell 59.8% to $41.0M and rose 10.1% to $131.0M versus a year earlier; declined 5.6% from the prior quarter's $162.2M.
The company repurchased $22.5M of stock in Q2 and drew $17.0M net on its , with $106.5M remaining authorized for repurchases.
What changed
Q2 2026 Precision Devices against the Q1 $153.1M level: the $12.6M gain continued, but total revenue dipped 5.6% from Q1's $162.2M as the prior quarter included higher MSA volumes.
Movement in $131.0M : debt rose 10.1% from $119.0M a year earlier and 14.9% from Q1's $131.0M base as the company drew on its for buybacks and .
Adjusted after the Q1 $3.1M use: Q2 free cash flow was a $11.5M use, confirming for PD capacity and did not normalize as flagged.
at 4-5% of 2026 for specialty film capacity: Q2 turned negative on increased capex, though the filing did not state the full-half percentage.
Risk factors showed no material change from the FY2025 annual report, including the AI risk factor added then; no new risks emerged in this 10-Q.
What to watch
Q3 2026 Precision Devices against the $153.1M Q2 level to see if the $12.6M gain continues or fades.
next quarter after two consecutive uses ($3.1M Q1, $11.5M Q2) to see if and normalize.
Movement in $131.0M and the $400M as $106.5M of authorization is deployed.
Cash balance after a 59.8% drop to $41.0M and a 24.4% quarterly decline.
grew 23.1% to $74.6M and margin expanded 320 to 44.7%, helped by higher volumes, pricing, capacity utilization, and absence of prior-year .
Precision Devices improved to 14.1% from 10.4%, while MedTech & Specialty Audio EBIT margin rose to 38.4% from 31.2%.
Selling and administrative expenses rose 9.2% to $39.2M on higher commissions, headcount to support PD growth, and incentive compensation.
fell to $19.8M from $57.9M in the prior-year period, driven by higher , absence of a customer prepayment, and increased .
The company repurchased $22.5M of common stock and drew $17.0M net on its ; $106.5M remains authorized for repurchases.
Quantitative and Qualitative Disclosures About Market Risk
During the six months ended June 30, 2026, there were no material changes to the information on market risk exposure disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025. For a discussion of our exposure to market risk as of December 31, 2025, refer t…
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During the six months ended June 30, 2026, there were no material changes to the information on market risk exposure disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025. For a discussion of our exposure to market risk as of December 31, 2025, refer to Item 7A, Quantitative and Qualitative Disclosures about Market Risk, contained in our Annual Report on Form 10-K for the year ended December 31, 2025.
For a discussion of contingencies related to legal proceedings, see Note 14. Commitments and Contingent Liabilities to our Consolidated Financial Statements, which is incorporated herein by reference. Except as otherwise noted above, there have been no material developments in l…
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For a discussion of contingencies related to legal proceedings, see Note 14. Commitments and Contingent Liabilities to our Consolidated Financial Statements, which is incorporated herein by reference.
Except as otherwise noted above, there have been no material developments in legal proceedings.
There have been no material changes from the risk factors previously disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025.
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There have been no material changes from the risk factors previously disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025.