The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements and related Notes included elsewhere in this Quarterly Report on Form 10-Q. Overview 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. We sell our products directly to original equipment manufacturers ("OEMs") and to their contract manufacturers and suppliers and through distributors worldwide. Recent Developments 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. Non-GAAP Financial Measures In addition to the GAAP financial measures included in this item, we have presented certain non-GAAP financial measures. We use non-GAAP measures as supplements to our GAAP results of operations in evaluating certain aspects of our business, and our executive management team and Board of Directors focus on non-GAAP items as key measures of our performance for business planning purposes. These measures assist us in comparing our performance between various reporting periods on a consistent basis, as these measures remove from operating results the impact of items that, in our opinion, do not reflect our core operating performance. We believe that our presentation of non-GAAP financial measures is useful because it provides investors and securities analysts with the same information that we use internally for purposes of assessing our core operating performance. The Company does not consider these non-GAAP financial measures to be a substitute for the information provided by GAAP financial results. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, see the reconciliation included herein. Results of Operations for the Three Months Ended June 30, 2026 compared with the Three Months Ended June 30, 2025 Three Months Ended June 30, (in millions, except per share amounts) 2026 2025 Revenues $ 166.8 $ 145.9 Gross profit $ 74.6 $ 60.6 Non-GAAP gross profit $ 75.7 $ 64.5 Earnings from continuing operations before interest and income taxes $ 24.3 $ 13.8 Adjusted earnings from continuing operations before interest and income taxes $ 36.1 $ 27.7 Provision for income taxes $ 4.2 $ 3.5 Non-GAAP provision for income taxes $ 5.8 $ 4.0 Net earnings from continuing operations $ 18.4 $ 7.8 Non-GAAP net earnings from continuing operations $ 28.6 $ 21.2 Earnings per share from continuing operations - diluted $ 0.21 $ 0.09 Non-GAAP diluted earnings per share $ 0.33 $ 0.24 Revenues 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. Cost of Goods Sold 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. Impairment Charges 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. Restructuring Charges 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. Gross Profit and Non-GAAP Gross Profit 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. 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. Research and Development Expenses 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. Selling and Administrative Expenses 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. Interest Expense, net 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. Other Expense, net 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. Provision for Income Taxes and Non-GAAP Provision for Income Taxes 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. 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. Earnings from Continuing Operations 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. Earnings and Adjusted Earnings from Continuing Operations Before Interest and Income Taxes 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. 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. Earnings from Discontinued Operations, net 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. Diluted Earnings per Share from Continuing Operations and Non-GAAP Diluted Earnings per Share from Continuing Operations 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 improvement of $0.12. As described above, the improvement is primarily due to higher gross profit, partially offset by higher operating expenses. 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. 24 Table of Contents Results of Operations for the Six Months Ended June 30, 2026 compared with the Six Months Ended June 30, 2025 Six Months Ended June 30, (in millions, except per share amounts) 2026 2025 Revenues $ 319.9 $ 278.1 Gross profit $ 141.7 $ 113.9 Non-GAAP gross profit $ 145.4 $ 119.5 Earnings from continuing operations before interest and income taxes $ 36.8 $ 17.3 Adjusted earnings from continuing operations before interest and income taxes $ 66.2 $ 49.4 Provision for income taxes $ 3.9 $ 4.7 Non-GAAP provision for income taxes $ 10.6 $ 6.8 Net earnings from continuing operations $ 29.7 $ 7.4 Non-GAAP net earnings from continuing operations $ 52.4 $ 37.4 Earnings per share from continuing operations - diluted $ 0.34 $ 0.08 Non-GAAP diluted earnings per share $ 0.60 $ 0.42 Revenues 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. Cost of Goods Sold 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. Impairment Charges 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 Restructuring Charges 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. 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. 25 Table of Contents Gross Profit and Non-GAAP Gross Profit 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. 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. Research and Development Expenses 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. Selling and Administrative Expenses 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. Interest Expense, net 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. Other Expense, net 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. Provision for Income Taxes and Non-GAAP Provision for Income Taxes 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. 26 Table of Contents 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. Earnings from Continuing Operations 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. Earnings and Adjusted Earnings from Continuing Operations Before Interest and Income Taxes 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. 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. Loss from Discontinued Operations, net 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. Diluted Earnings per Share from Continuing Operations and Non-GAAP Diluted Earnings per Share from Continuing Operations Diluted earnings per share from continuing operations was $0.34 for the six months ended June 30, 2026, compared with $0.08 for the six months ended June 30, 2025, an improvement of $0.26. As described above, the improvement is primarily due to higher gross profit, partially offset by higher operating expenses. 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. 27 Table of Contents Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures (1) Three Months Ended Six Months Ended June 30, June 30, (in millions, except per share amounts) 2026 2025 2026 2025 Gross profit $ 74.6 $ 60.6 $ 141.7 $ 113.9 Stock-based compensation expense 0.4 0.3 0.9 0.8 Impairment charges — 3.6 — 3.6 Restructuring charges 0.1 — 0.2 0.5 Production transfer costs (2) 0.8 0.2 1.7 0.3 Transition services credit (3) (0.2) (0.2) (0.5) (0.4) Other (4) — — 1.4 0.8 Non-GAAP gross profit $ 75.7 $ 64.5 $ 145.4 $ 119.5 Net earnings from continuing operations $ 18.4 $ 7.8 $ 29.7 $ 7.4 Interest expense, net 1.7 2.5 3.2 5.2 Provision for income taxes 4.2 3.5 3.9 4.7 Earnings from continuing operations before interest and income taxes 24.3 13.8 36.8 17.3 Stock-based compensation expense 6.2 6.3 16.6 16.5 Intangibles amortization expense 4.0 4.1 8.0 8.1 Impairment charges — 3.6 — 3.6 Restructuring charges 0.2 — 0.4 2.9 Production transfer costs (2) 0.8 0.2 1.7 0.4 Acquisition-related costs (5) — 0.2 — 0.7 Transition services credit (3) (0.3) (0.5) (0.8) (1.2) Other (4) 0.9 — 3.5 1.1 Adjusted earnings from continuing operations before interest and income taxes $ 36.1 $ 27.7 $ 66.2 $ 49.4 Provision for income taxes $ 4.2 $ 3.5 $ 3.9 $ 4.7 Income tax effects of non-GAAP reconciling adjustments (6) 1.6 0.5 6.7 2.1 Non-GAAP provision for income taxes $ 5.8 $ 4.0 $ 10.6 $ 6.8 Net earnings from continuing operations $ 18.4 $ 7.8 $ 29.7 $ 7.4 Non-GAAP reconciling adjustments (7) 11.8 13.9 29.4 32.1 Income tax effects of non-GAAP reconciling adjustments (6) 1.6 0.5 6.7 2.1 Non-GAAP net earnings $ 28.6 $ 21.2 $ 52.4 $ 37.4 Diluted earnings per share from continuing operations $ 0.21 $ 0.09 $ 0.34 $ 0.08 Earnings per share non-GAAP reconciling adjustment (6) (7) (8) 0.12 0.15 0.26 0.34 Non-GAAP diluted earnings per share (8) $ 0.33 $ 0.24 $ 0.60 $ 0.42 Diluted average shares outstanding 87.9 87.6 87.9 88.3 Non-GAAP adjustment (8) (9) (0.4) 1.3 (0.5) 1.0 Non-GAAP diluted average shares outstanding (8) (9) 87.5 88.9 87.4 89.3 28 Table of Contents (1) In addition to the GAAP financial measures included herein, Knowles has presented certain non-GAAP financial measures that exclude certain amounts that are included in the most directly comparable GAAP measures. Knowles believes that non-GAAP measures are useful as supplements to its GAAP results of operations to evaluate certain aspects of its operations and financial performance, and its management team primarily focuses on non-GAAP items in evaluating Knowles' performance for business planning purposes. Knowles also believes that these measures assist it with comparing its performance between various reporting periods on a consistent basis, as these measures remove from operating results the impact of items that, in Knowles' opinion, do not reflect its core operating performance. Knowles believes that its presentation of non-GAAP financial measures is useful because it provides investors and securities analysts with the same information that Knowles uses internally for purposes of assessing its core operating performance. (2) Production transfer costs represent duplicate costs incurred to migrate manufacturing to existing facilities. (3) Transition services represent amounts charged to Syntiant in connection with post-closing transition and separation costs. (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. (5) These expenses include ongoing costs to facilitate integration of the CD acquisition by the PD segment. (6) Income tax effects of non-GAAP reconciling adjustments are calculated using the applicable tax rates in the jurisdictions of the underlying adjustments. (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. (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. (9) The number of shares used in the diluted average shares outstanding calculations on a non-GAAP basis excludes the impact of stock-based compensation expense expected to be incurred in future periods and not yet recognized in the financial statements, which would otherwise be assumed to be used to repurchase shares under the GAAP treasury stock method. Non-GAAP diluted average shares outstanding also excludes the impact of certain equity awards that are not yet earned. 29 Table of Contents Segment Results of Operations for the Three Months Ended June 30, 2026 compared with the Three Months Ended June 30, 2025 The following is a summary of the results of operations of our two reportable segments: Precision Devices and Medtech & Specialty Audio. See Note 15. Segment Information to the Consolidated Financial Statements for (i) a reconciliation of segment revenues to our consolidated revenues and (ii) a reconciliation of segment adjusted earnings before interest and income taxes to our consolidated earnings before income taxes and discontinued operations. Precision Devices Three Months Ended June 30, (in millions) 2026 Percent of Revenues 2025 Percent of Revenues Revenues $ 98.3 $ 78.5 Earnings from continuing operations before interest and income taxes $ 13.9 14.1% $ 8.2 10.4% Stock-based compensation expense 1.4 1.2 Intangibles amortization expense 4.0 4.1 Restructuring charges 0.2 — Production transfer costs (1) 0.8 0.2 Acquisition-related costs (2) — 0.2 Adjusted earnings from continuing operations before interest and income taxes $ 20.3 20.7% $ 13.9 17.7% (1) Production transfer costs represent costs incurred to migrate manufacturing to existing facilities. (2) These expenses include ongoing costs to facilitate integration of the CD acquisition. Revenues 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 increased due to higher demand in the industrial, electrification, medtech, and defense markets, as well as higher average pricing. Earnings and Adjusted Earnings from Continuing Operations Before Interest and Income Taxes 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. 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. 30 Table of Contents MedTech & Specialty Audio Three Months Ended June 30, (in millions) 2026 Percent of Revenues 2025 Percent of Revenues Revenues $ 68.5 $ 67.4 Earnings from continuing operations before interest and income taxes $ 26.3 38.4% $ 21.0 31.2% Stock-based compensation expense 1.3 1.5 Impairment charges — 3.6 Adjusted earnings from continuing operations before interest and income taxes $ 27.6 40.3% $ 26.1 38.7% Revenues 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. Earnings and Adjusted Earnings from Continuing Operations Before Interest and Income Taxes 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. 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. 31 Table of Contents Segment Results of Operations for the Six Months Ended June 30, 2026 compared with the Six Months Ended June 30, 2025 Precision Devices Six Months Ended June 30, (in millions) 2026 Percent of Revenues 2025 Percent of Revenues Revenues $ 183.4 $ 151.0 Earnings from continuing operations before interest and income taxes $ 21.5 11.7% $ 11.4 7.5% Stock-based compensation expense 3.6 2.6 Intangibles amortization expense 8.0 8.1 Restructuring charges 0.6 1.4 Production transfer costs (1) 1.7 0.4 Acquisition-related costs (2) — 0.7 Adjusted earnings from continuing operations before interest and income taxes $ 35.4 19.3% $ 24.6 16.3% (1) Production transfer costs represent costs incurred to migrate manufacturing to existing facilities. (2) These expenses include ongoing costs to facilitate integration of the CD acquisition. Revenues 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. Earnings and Adjusted Earnings from Continuing Operations Before Interest and Income Taxes PD EBIT was $21.5 million for the six months ended June 30, 2026, compared with $11.4 million for the six months ended June 30, 2025, an increase of $10.1 million. EBIT margin for the six months ended June 30, 2026 was 11.7%, compared to 7.5% for the six months ended June 30, 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, pricing, and increased factory capacity utilization, partially offset by higher production transfer costs in our ceramic capacitor business and unfavorable product mix. PD Adjusted EBIT was $35.4 million for the six months ended June 30, 2026, compared with $24.6 million for the six months ended June 30, 2025, an increase of $10.8 million. Adjusted EBIT margin for the six months ended June 30, 2026 was 19.3%, compared with 16.3% for the six months ended June 30, 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 future growth, and higher incentive compensation. The non-GAAP gross profit increase was driven by higher shipping volumes, pricing, and increased factory capacity utilization, partially offset by unfavorable product mix. 32 Table of Contents MedTech & Specialty Audio Six Months Ended June 30, (in millions) 2026 Percent of Revenues 2025 Percent of Revenues Revenues $ 136.5 $ 127.1 Earnings from continuing operations before interest and income taxes $ 52.3 38.3% $ 40.3 31.7% Stock-based compensation expense 3.0 3.2 Impairment charges — 3.6 Restructuring charges — 0.3 Adjusted earnings from continuing operations before interest and income taxes $ 55.3 40.5% $ 47.4 37.3% Revenues MSA revenues were $136.5 million for the six months ended June 30, 2026, compared with $127.1 million for the six months ended June 30, 2025, an increase of $9.4 million or 7.4%. Revenues increased primarily due to higher shipping volumes into the hearing health market, partially offset by lower shipping volumes into the specialty audio market. Earnings and Adjusted Earnings from Continuing Operations Before Interest and Income Taxes MSA EBIT was $52.3 million for the six months ended June 30, 2026, compared with $40.3 million for the six months ended June 30, 2025, an increase of $12.0 million. EBIT margin for the six months ended June 30, 2026 was 38.3%, compared with 31.7% 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 expense driven by higher incentive compensation. The increase in gross profit was driven by higher shipping volumes, impairment charges in 2025 that did not recur in 2026, favorable product mix, and increased factory capacity utilization, partially offset by lower average pricing. MSA Adjusted EBIT was $55.3 million for the six months ended June 30, 2026, compared with $47.4 million for the six months ended June 30, 2025, an increase of $7.9 million. Adjusted EBIT margin for the six months ended June 30, 2026 was 40.5%, compared to 37.3% 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 expense driven by higher incentive compensation. The increase in gross profit was driven by higher shipping volumes, favorable product mix, and increased factory capacity utilization, partially offset by lower average pricing. 33 Table of Contents Liquidity and Capital Resources 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. 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. 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. Cash flows from operating, investing, and financing activities as reflected in our Consolidated Statements of Cash Flows and are presented on a consolidated basis, including discontinued operations. Cash flows are summarized in the following table: Six Months Ended June 30, (in millions) 2026 2025 Net cash flows provided by (used in): Operating activities $ 27.5 $ 37.7 Investing activities (17.3) (8.6) Financing activities (14.7) (56.5) Effect of exchange rate changes on cash and cash equivalents (0.1) 0.5 Net decrease in cash and cash equivalents $ (4.6) $ (26.9) Operating Activities 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. Investing Activities 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. 34 Table of Contents In 2026, we expect capital expenditures to be approximately 5% of revenues. Financing Activities 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. Adjusted Free Cash Flow In addition to measuring cash flow generation based on the operating, investing, and financing classifications included in the Consolidated Statement of Cash Flows (including discontinued operations), Knowles also measures adjusted free cash flow and adjusted free cash flow as a percentage of revenues. Adjusted free cash flow is defined as non-GAAP net cash attributable to continuing operations less non-GAAP capital expenditures attributable to continuing operations. Non-GAAP net cash attributable to continuing operations is defined as net cash provided by operating activities less amounts generated or utilized by discontinued operations. Non-GAAP capital expenditures attributable to continuing operations is defined as capital expenditures less amounts attributable to discontinued operations. Knowles believes these measures are helpful in measuring its cash generated from its continuing operations that is available to repay debt, fund acquisitions, and repurchase Knowles common stock. Adjusted free cash flow and adjusted free cash flow as a percentage of revenues are not presented in accordance with GAAP and may not be comparable to similarly titled measures used by other companies in our industry. As such, adjusted free cash flow and adjusted free cash flow as a percentage of revenues should not be considered in isolation from, or as an alternative to, any other liquidity measures determined in accordance with GAAP. The following table reconciles our adjusted free cash flow to cash flow provided by operating activities: Six Months Ended June 30, (in millions) 2026 2025 Net cash provided by operating activities $ 27.5 $ 37.7 Amounts utilized in discontinued operations 9.6 29.3 Non-GAAP net cash attributable to continuing operations 37.1 67.0 Capital expenditures (17.3) (9.1) Amounts attributable to discontinued operations — — Non-GAAP capital expenditures attributable to continuing operations (17.3) (9.1) Non-GAAP net cash attributable to continuing operations 37.1 67.0 Non-GAAP capital expenditures attributable to continuing operations (17.3) (9.1) Adjusted free cash flow $ 19.8 $ 57.9 Adjusted free cash flow as a % of revenues 6.2 % 20.8 % 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. Contingent Obligations We are involved in various legal proceedings, claims, and investigations arising in the ordinary course of business. Legal contingencies are discussed in Note 14. Commitments and Contingent Liabilities to our Consolidated Financial Statements. 35 Table of Contents Critical Accounting Estimates This discussion and analysis of results of operations and financial condition is based on our Consolidated Financial Statements, which have been prepared in conformity with U.S. GAAP. The preparation of these financial statements requires the use of estimates and assumptions related to the reporting of assets, liabilities, revenues, expenses, and related disclosures. In preparing these financial statements, we have made our best estimates and judgments of certain amounts included in the financial statements. Estimates are revised periodically. Actual results could differ from these estimates. The information concerning our critical accounting estimates can be found under Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission on February 9, 2026. There are no material changes in our previously reported critical accounting estimates. Recent Accounting Standards The issuance of recent accounting standards, as included in Note 2. Recent Accounting Standards to our Consolidated Financial Statements, is not expected to have a significant impact on our revenue, earnings, or liquidity.