10q10k10q10k.net

What changed in Knowles Corp's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of Knowles Corp's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+232 added−290 removedSource: 10-K (2026-02-09) vs 10-K (2025-02-13)

Top changes in Knowles Corp's 2025 10-K

232 paragraphs added · 290 removed · 181 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

28 edited+13 added−19 removed13 unchanged
Biggest changeThe Company's customers that accounted for 10% or more of total revenues were as follows: Revenues Years Ended December 31, 2024 2023 2022 WS Audiology A/S 14 % 16 % 13 % Sonova Holding AG * * 12 % * Less than 10% of total revenues. 4 Table of Contents We manufacture and develop our products as well as maintain sales and technical customer support offices in North America, Europe, and Asia.
Biggest changeOur worldwide sales force provides geographically specific support to our customers and specialized selling of product lines to various customer bases. 4 Table of Contents The Company's customers that accounted for 10% or more of total revenues in 2025 were WS Audiology A/S and TTI, Inc.
In our Medtech & Specialty Audio ("MSA") segment, our primary focus is to deliver high reliability and industry leading balanced armature speakers and microphones to leading hearing health manufacturers and premium audio markets. We work collaboratively with customers to ensure that our solutions meet their size, broad frequency response, and low power or custom acoustic module requirements.
In our Medtech & Specialty Audio ("MSA") segment, our primary focus is to deliver high reliability and industry leading balanced armature speakers and microphones to leading hearing health manufacturers and specialty audio markets. We work collaboratively with customers to ensure that our solutions meet their size, broad frequency response, and low power or custom acoustic module requirements.
We do not anticipate any material effect on our business due to any patents expiring in 2025, and we continue to obtain new patents through our ongoing research and development. We have maintained U.S. federal trademark registrations for KNOWLES and Knowles logo designs, along with various other trademarks.
We do not anticipate any material effect on our business due to any patents expiring in 2026, and we continue to obtain new patents through our ongoing research and development. We have maintained U.S. federal trademark registrations for KNOWLES and Knowles logo designs, along with various other trademarks.
In our Precision Devices ("PD") segment, our high-performance capacitors and RF filtering solutions enable some of the most demanding applications in the defense, medtech, and electrification markets. Our capacitor portfolio includes products with highly specialized requirements including high voltage, high temperature, and high reliability.
In our Precision Devices ("PD") segment, our high-performance capacitors and RF filtering solutions enable some of the most demanding applications in the defense, industrial, medtech, and electrification/energy markets. Our capacitor portfolio includes products with highly specialized requirements including high voltage, high temperature, and high reliability.
Our future success is highly dependent upon our ability to develop complex new products, transfer new products to volume production, introduce them into the marketplace in a timely fashion, and have them selected for design into our customers’ products at competitive prices.
Our future success is highly dependent upon our ability to develop complex new products, having them selected for design into our customers’ products at competitive prices, transfer new products to volume production, and introduce them into the marketplace in a timely fashion.
PD has sales, support, and engineering facilities in North America, Europe, and Asia as well as manufacturing facilities in North America and Asia. • MSA Segment Our MSA segment designs and manufactures balanced armature speakers and microphones used in applications that serve the hearing health and premium audio markets.
PD has sales, support, and engineering facilities in North America, Europe, and Asia as well as manufacturing facilities in North America and Asia. • MSA Segment Our MSA segment designs and manufactures balanced armature speakers and microphones used in hearing health and specialty audio applications that serve the medtech and industrial markets.
Through extreme reliability, custom engineering, and scalable manufacturing, we enable businesses to succeed in the most demanding applications across medtech, defense, and industrial markets. Our high-performance capacitors, radio frequency ("RF") and microwave filters, advanced medtech microphones, balanced armature speakers, and miniaturization products enable and enhance the performance of technologies with the power to change, improve, and save lives.
Through extreme reliability, custom engineering, and scalable manufacturing, our high-performance capacitors, radio frequency (“RF”) filters, advanced microphones, and balanced armature speakers enable and enhance the most demanding applications across medtech, defense, industrial, and electrification/energy markets with the power to change, improve, and save lives.
To complement our own research and development efforts, we have also licensed and expect to continue to license, a variety of intellectual property and technologies important to our business from third parties. See Item 1A. Risk Factors for additional information regarding risks related to our business. Cybersecurity We regularly perform risk assessments relating to cybersecurity and technology risks.
To complement our own research and development efforts, we have also licensed and expect to continue to license, a variety of intellectual property and technologies important to our business from third parties. See Item 1A.
Our total rewards program includes market-competitive base pay, broad-based short-term and long-term incentive plans, healthcare benefits, retirement plans, paid time off, family leave, and employee assistance programs. 6 Table of Contents We believe it is important to provide a healthy and safe workplace for our employees.
To attract and retain top talent, we offer a competitive total rewards program aligned with our pay‑for‑performance philosophy. Our offerings include base pay, short‑ and long‑term incentive plans, healthcare benefits, retirement plans, paid time off, family leave, and employee assistance programs. We believe it is important to provide a healthy and safe workplace for our employees.
Our reportable segments are as follows: • PD Segment Our PD segment specializes in the design and delivery of high performance capacitor products and RF solutions primarily serving the defense, medtech, electrification, and industrial markets.
The segments are aligned around similar product applications serving our key end markets to enhance focus on end market growth strategies. Our reportable segments are as follows: • PD Segment Our PD segment specializes in the custom design and delivery of high performance capacitor products and RF solutions primarily serving the defense, industrial, medtech, and electrification/energy markets.
Additional information regarding Knowles' activities related to its people and sustainability, as well as workforce diversity data, can be found in the Knowles 2024 Corporate Sustainability Report, which is located on our website. The contents of our website and our Corporate Sustainability Report are referenced for general information only and are not incorporated into this Annual Report on Form 10-K.
Additional information regarding Knowles' activities related to its people and sustainability, as well as workforce data, can be found in the Knowles 2025 Corporate Sustainability Report, which is located on our website.
Knowles, founded in 1946 and headquartered in Itasca, Illinois, has grown into a global organization with approximately 5,500 employees at facilities located in 11 countries around the world. Our Strategy The Company is focused on delivering high value, differentiated solutions to a diverse set of end markets.
Founded in 1946 and headquartered in Itasca, Illinois, Knowles has grown into a global organization with approximately 5,200 employees at facilities located in 11 countries around the world. Our Strategy The Company is focused on leveraging its unique technologies to design custom engineered solutions and then deliver them at scale for customers in high growth markets that value our solutions.
Although some cost increases may be recovered through increased prices to customers, if commodity prices trend upward, we attempt to control such costs through fixed-price contracts with suppliers and various other programs.
Commodity pricing for various metals, such as palladium, gold, brass, stainless steel, and copper, fluctuates. As a result, our operating results are exposed to such fluctuations. Although some cost increases may be recovered through increased prices to customers, if commodity prices trend upward, we attempt to control such costs through fixed-price contracts with suppliers and various other programs.
Intellectual Property and Intangible Assets We rely on patent, copyright, trademark, and trade secret laws to protect our intellectual property, products, and technology. Our U.S. patents expire in calendar years 2025 through 2044. While our patents are an important element of our success, our business as a whole is not dependent on any one patent or group of patents.
Our U.S. patents expire in calendar years 2026 through 2045. While our patents are an important element of our success, our business as a whole is not dependent on any one patent or group of patents.
We continue to partner with local organizations to help bridge the gender gap in STEM and shape the next generation of women who aspire to be leaders in the new era of technology. For example, Knowles is the perennial sponsor of the University of Illinois at Chicago's ("UIC") Women in Engineering Summer Program.
To help bridge the gender gap and shape the next generation of women technology leaders, we partner with local organizations and universities. For example, Knowles is the perennial sponsor of the University of Illinois at Chicago’s Women in Engineering Summer Program and has supported UIC’s women engineering students through academic scholarships, summer internships, mentorship opportunities, and full‑time employment pathways.
Our future success may also depend on increasing content in our customers’ products including assisting our customers with integration of our products and software into their new products and providing support from the concept stage through design, launch, and production ramp.
We may benefit from increasing content in our customers’ products, including assisting our customers with integration of our products into their new products and providing support from the concept stage through design, launch, and production ramp. Intellectual Property and Intangible Assets We rely on patent, copyright, trademark, and trade secret laws to protect our intellectual property, products, and technology.
Our Business Segments We have two reportable segments - Precision Devices ("PD") and MedTech & Specialty Audio ("MSA"). These segments were determined in accordance with Financial Accounting Standards Board Accounting Standards Codification 280 - Segment Reporting. The segments are aligned around similar product applications serving our key end markets to enhance focus on end market growth strategies.
We continue to focus on sales growth and improved margins by leveraging our core strengths in manufacturing and research and development. Our Business Segments We have two reportable segments - Precision Devices ("PD") and MedTech & Specialty Audio ("MSA"). These segments were determined in accordance with Financial Accounting Standards Board Accounting Standards Codification 280 - Segment Reporting.
Key competitors of our PD segment include: Kyocera AVX, Yageo Corporation's Kemet products, Vishay Intertechnology, and a broad range of specialty companies and brands. Our MSA segment's primary competitor is Sonion. In the PD segment, the end markets tend to have less pricing pressure.
Through our deep engineering expertise we are positioned to offer our customers uniquely customized components, rooted in the standards of exceptional quality and reliability. Key competitors of our PD segment include: Kyocera AVX, Yageo Corporation's Kemet products, Vishay Intertechnology, and a broad range of specialty companies and brands. Our MSA segment's primary competitor is Sonion.
Other Information The address of our principal executive offices is 1151 Maplewood Drive, Itasca, Illinois 60143. Our telephone number is 630-250-5100.
The contents of our website and our Corporate Sustainability Report are referenced for general information only and are not incorporated into this Annual Report on Form 10-K. 6 Table of Contents Other Information The address of our principal executive offices is 1151 Maplewood Drive, Itasca, Illinois 60143. Our telephone number is 630-250-5100.
Segment Information to our Consolidated Financial Statements under Item 8, "Financial Statements and Supplementary Data." Raw Materials We use a wide variety of raw materials, primarily metals, ceramic powder, and semi-processed or finished components. Commodity pricing for various metals, such as palladium, gold, brass, stainless steel, and copper, fluctuates. As a result, our operating results are exposed to such fluctuations.
For further detail and for additional disclosures regarding sales and long-lived assets by geographic location, see Note 17. Segment Information to our Consolidated Financial Statements under Item 8, "Financial Statements and Supplementary Data." Raw Materials We use a wide variety of raw materials, primarily metals, ceramic powder, and semi-processed or finished components.
Our customers are adopting these high-value microphones and balanced armature speakers to improve the overall audio performance of their devices which in turn improves the end user experience. For products that were introduced in prior years, we strive to offset anticipated price erosion through bill of material cost reductions, productivity improvements, and equipment efficiency.
For products that were introduced in prior years, we strive to offset anticipated price erosion through bill of material cost reductions, productivity improvements, and equipment efficiency. Customers, Sales, and Distribution We serve customers in the medtech, defense, industrial, and electrification/energy markets. Our customers include some of the largest OEMs and operators in these markets.
We see a fragmented set of competitors across high end capacitors and filters for a diverse set of end markets including defense, medtech, industrial, and electrification. In the MSA segment, our leading technology and our investments in research and development enable us to introduce new products focused on high reliability, size, broad frequency response, and low power.
In the PD segment, the end markets tend to have less pricing pressure. We see a fragmented set of competitors across high end capacitors and RF filters for a diverse set of end markets including defense, medtech, industrial, and electrification/energy.
We have a risk-based cybersecurity program, dedicated to protecting our data as well as data belonging to our customers and partners. We utilize a defensive in-depth strategy, with multiple layers of security controls to protect our data and solutions.
We utilize a defensive in-depth strategy, with multiple layers of security controls to protect our data and solutions. We mitigate cybersecurity risks by employing extensive measures, including employee training, systems monitoring and testing, and maintenance of protective systems and contingency plans.
We sell our products directly to original equipment manufacturers ("OEMs"), their contract manufacturers and suppliers, and through sales representatives and distributors worldwide. 3 Table of Contents Market Trends In our PD segment, we sell high reliability, high voltage and high temperature ceramic, film, mica and electrolytic capacitors, and RF filters across diverse end markets.
We sell our products directly to original equipment manufacturers ("OEMs") and through sales representatives and distributors worldwide. 3 Table of Contents Market Trends In our PD segment, global conflict has given rise to increasing defense spending on electronic warfare, including an increasing array of new technologies to address rapidly evolving threats and adversaries.
An important component of achieving this goal is fostering a workplace environment that embraces diversity and inclusion. Our Chief Human Resources Officer is responsible for developing and executing on our human capital strategy, with oversight by the Compensation Committee of our Board of Directors. We understand that our most important resource is our people.
Our ability to attract, develop, and retain a high‑performing workforce is essential to executing our business strategy and driving sustainable growth. Oversight of our human capital strategy resides with our Chief Human Resources Officer and the Compensation Committee of the Board of Directors. We recognize that our people are our most valuable asset.
We mitigate cybersecurity risks by employing extensive measures, including employee training, systems monitoring and testing, and maintenance of protective systems and contingency plans. We continually evaluate ourselves for appropriate business continuity and disaster recovery planning, with test scenarios that include simulations and penetration tests.
We continually evaluate ourselves for appropriate business continuity and disaster recovery planning, with test scenarios that include tabletop exercise simulations and penetration tests. We also install and regularly update antivirus software on all Company-managed systems to detect and prevent malicious code from impacting our systems.
We supplement our direct sales force with external sales representatives and distributors. Our global distribution center is located in Penang, Malaysia. Our worldwide sales force provides geographically specific support to our customers and specialized selling of product lines to various customer bases. For further detail and for additional disclosures regarding sales and long-lived assets by geographic location, see Note 17.
In addition, many of our OEM customers outsource to contract manufacturers. We manufacture and develop our products as well as maintain sales and technical customer support offices in North America, Europe, and Asia. We supplement our direct sales force with external sales representatives and distributors. Our global distribution center is located in Penang, Malaysia.
In 2024, we continued our partnership with PEAK (Partnership to Educate and Advance Kids), a Chicago-based nonprofit that is focused on providing academically average students from the city's most challenging and under-served neighborhoods with financial, educational, and personal support through their high school years.
We are also deeply committed to supporting our communities. In 2025, Knowles continued its support of PEAK (Partnership to Educate and Advance Kids), a Chicago‑based nonprofit that provides educational and personal support to underserved students. Knowles pledges $10,000 annually to fund a PEAK student’s high‑quality high school education.
Removed
Our expertise in the traditional hearing aid market enables us to capitalize on emerging markets like Over the Counter ("OTC") hearing aids. We continue to focus on sales growth and improved margins by leveraging our core strengths in manufacturing and research and development.
Added
Many suppliers that provide technical, engineering, and manufacturing services for the defense sector are located in, or have facilities located in, countries that are viewed as potential strategic adversaries. As a result, there is a rising demand for supply partners throughout the value chain that can reliably and rapidly deliver custom solutions with strong domestic manufacturing footprints.
Removed
Portions of this segment face much greater exposure to capital investment cycles and government spending, both direct and indirect, as some of these end markets are largely dependent on project upgrades, expansion, and government contracts. We have been experiencing increased demand for our products driven by the upgrading of large rotary radar and deployment of communication satellites.
Added
Within PD, the demand for high performance capacitors, including specialty film, is seeing potentially large growth as alternative technologies emerge to address the accelerating demand for power.
Removed
In addition, demand has increased as a result of the expansion of small implantable devices to monitor and correct a host of chronic health issues. In our MSA segment, sales within the hearing aid market are largely driven by aging demographics, healthcare spending, increasing affluence in emerging markets, and government subsidies.
Added
The trend toward domestic manufacturing footprints in the PD segment is amplified and extends across many of the markets we serve by the recent rise of trade barriers, including tariffs, as companies seek to mitigate the effect on their costs and the prices passed through to their customers.
Removed
Our microphones and balanced armature speakers are also utilized to produce high-definition audio for higher performance True Wireless Stereo ("TWS"). Geographic Trends We strive to maintain our manufacturing facilities in close proximity to our direct customers.
Added
In our MSA segment, as life expectancy rates increase and the aging population grows, the correlating health care expenditures are increasing. These demographic changes and the expansion of hearing health care access in emerging markets is expected to drive volume growth for hearing aids.
Removed
In PD, we operate 8 facilities in North America and 1 facility in Asia for the manufacturing of products that support our global customers, as well as their suppliers and contract manufacturers. In MSA, we currently operate 4 facilities in Asia to serve the leading hearing health manufacturers largely based in Europe, China, and North America.
Added
In addition, recent U.S. government regulations have enabled people with mild hearing loss to buy hearing aids over-the-counter. This opens new channels for individuals in a demographic with extremely low hearing aid adoption, and may serve to reduce the stigma associated with hearing aids. Competitive Landscape Success in the specialty electronic components industry is primarily driven by innovation and customization.
Removed
Although end-user demand for hearing aids is global and marketing activities occur globally, the majority of our manufacturing is located in the Philippines and Malaysia. Competitive Landscape Success in the electronic components industry is primarily driven by innovation and flexibility. We compete across consumer platforms to deliver superior acoustic performance through customized products.
Added
Our customers drive innovation and change, and with our strong intimacy of customer applications, we are able to produce solutions that are critical for the success and creation of their products. Another of our differentiators is our ability to customize at scale.
Removed
Our investments in research and development enable us to capture new design wins across consumer OEMs. Our ability to balance and shift between full and semi-automation is key to our ability to optimize our operations and operating expenses. Additionally, it is important for suppliers to have flexibility and quick time-to-market to meet clients’ needs.
Added
In the MSA segment, our leading technology and our investments in research and development enable us to introduce new products focused on high reliability, size, broad frequency response, and low power. Our customers are adopting these high-value microphones and balanced armature speakers to improve the overall audio performance of their devices which in turn improves the end user experience.
Removed
Customers, Sales, and Distribution We serve customers in the medtech, defense, electrification, and industrial markets. Our customers include some of the largest OEMs and operators in these markets. In addition, many of our OEM customers outsource to contract manufacturers.
Added
WS Audiology is a hearing aid manufacturer and TTI is a distributor of electromechanical components. They each represented the following percentages of total Company revenues: Years Ended December 31, 2025 2024 2023 WS Audiology A/S 11 % 14 % 16 % TTI Inc. 10 % * * * Less than 10% of total revenues.
Removed
We also install and regularly update antivirus software on all Company-managed systems to detect and prevent malicious code from impacting our systems. 5 Table of Contents Seasonality Our PD segment is not typically subject to seasonality, while our MSA segment tends to have stronger revenues in the fourth quarter of each fiscal year.
Added
Risk Factors for additional information regarding risks related to our business. 5 Table of Contents Cybersecurity We regularly perform risk assessments relating to cybersecurity and technology risks. We have a risk-based cybersecurity program, dedicated to protecting our data as well as data belonging to our customers and partners.
Removed
Talent, Development, and Culture As of December 31, 2024, Knowles had approximately 5,500 employees at facilities located in 11 countries around the world. Approximately 68% of our employees are in Asia and approximately 69% of our employees globally identify as female.
Added
Seasonality Our PD segment is not typically subject to seasonality, while our MSA segment tends to have stronger revenues in the fourth quarter of each fiscal year in connection with our customers' new product introductions. Human Capital Management As of December 31, 2025, Knowles employed approximately 5,200 employees across facilities located in 11 countries around the world.
Removed
In the United States, approximately 46% of our employees identify as female and approximately 39% of our employees self-identified as belonging to a racial/ethnic minority group. We believe our success is dependent upon attracting, developing, and retaining high performing employees at all levels of the organization.
Added
To successfully execute our strategy, we implement targeted recruitment efforts to attract top talent with the skills and experience necessary to advance our business objectives.
Removed
We utilize a variety of recruitment strategies to source top talent who possess the required competencies and experience to execute our strategy. We also invest in the ongoing training and development of our employees by offering tuition and continuous education reimbursement, leveraging an e-learning platform, and implementing formal mentorship programs.
Added
This includes positioning Knowles as an employer of choice through digital platforms, industry events, and university partnerships; leveraging regional talent networks across 11 countries; and utilizing technology‑driven hiring solutions that expand candidate reach, enhance engagement, and accelerate hiring timelines. We invest in continuous learning and career development to ensure employees have the skills and opportunities to thrive.
Removed
Knowles has a formal Succession Planning program with the primary objective of identifying and developing our next generation leaders. Our Chief Human Resources Officer annually reviews with the Board of Directors our overall talent management strategy and progress.
Added
This includes tuition reimbursement and education assistance programs, structured training focused on technical skills, leadership development and compliance, robust succession planning to prepare future leaders, and mentorship and coaching programs that foster knowledge sharing and career progression. Knowles is committed to the advancement of women in engineering and the broader representation of women in STEM careers.
Removed
We believe our diverse teams, with their unique ideas, thoughts, and perspectives, form the building blocks for our culture of innovation at Knowles. We strive to create and maintain a workplace environment that embraces the diversity of thoughts, ideas, beliefs, and experiences, brought by our team members.
Removed
We recognize that nurturing an inclusive workplace enables us to attract, develop, and retain our team members regardless of their race, color, gender identity, language, national origin, religion, orientation, or age. We have commemorated and celebrated numerous diversity, cultural, and historical events throughout the year.
Removed
Knowles is also committed to the advancement of women in the workplace and representation in engineering careers. We strive to be an employer of choice for women in engineering. We understand the importance of diverse representation and with it, the need for advancing women in Science, Technology, Engineering, and Mathematics ("STEM") careers.
Removed
We have also supported UIC's women engineering students with programs such as academic scholarships, summer internship programs, mentorship programs, and full-time employment opportunities. We have also worked to increase underrepresented groups in our candidate pool, among our new hires, and in leadership positions.
Removed
For our 2024 summer internship program, approximately 55% of our corporate intern class consisted of minority and/or women students, and approximately 20% of our corporate tech interns were women. In addition, in 2024 approximately 46% of our new hires in the United States were women. We are fully committed to supporting our communities.
Removed
Knowles has pledged $10,000 annually to provide a PEAK student the opportunity to pursue a high-quality high school education. In addition, Knowles piloted the PEAK Student Tutoring Program, where our employees assist students with STEM-related subjects. To be able to attract and retain the best employees, Knowles provides a competitive total rewards program that incorporates our pay for performance philosophy.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

34 edited+13 added−19 removed96 unchanged
Biggest changeCompetition for such experienced technical personnel in our industry and where we are located is intense, and we cannot assure that we can continue to recruit and retain such personnel. For example, there is substantial competition for experienced engineers in Asia and technical personnel in the U.S., which may make it difficult for us to recruit and retain key employees.
Biggest changeFor example, there is substantial competition for experienced engineers in Asia and technical personnel in the U.S., which may make it difficult for us to recruit and retain key employees. If we are unable to attract and retain such qualified employees, our business and our ability to execute our business strategies may be materially impaired.
Further, we might have financial exposure in the divested business, such as through our minority equity ownership in Syntiant, our provision of financing to Syntiant, and certain financial or performance guarantees, indemnities, or other obligations, such that conditions outside of our control might negate the expected benefits of the disposition.
Further, we might have financial exposure in the divested business, such as through our minority equity ownership of Syntiant, our provision of financing to Syntiant, and certain financial or performance guarantees, indemnities, or other obligations, such that conditions outside of our control might negate the expected benefits of the disposition.
Further, concentration of market share among a few companies and the corresponding increase in purchasing power of these companies may result in lower prices for our products which, if not offset by a sufficient increase in the volume, or favorable changes in the mix, of purchases of our products, could have a material adverse effect on our revenues and margins.
Concentration of market share among a few companies and the corresponding increase in purchasing power of these companies may result in lower prices for our products which, if not offset by a sufficient increase in the volume, or favorable changes in the mix, of purchases of our products, could have a material adverse effect on our revenues and margins.
We cannot, therefore, provide assurance that each of our acquisitions or strategic investments will be accretive or generate anticipated financial returns. If, for any of these or for unforeseen reasons, our strategic acquisitions or investments fail to meet our expectations or forecasts, our business and results of operations may be materially adversely affected.
We cannot, therefore, provide assurance that each of our strategic investments will be accretive or generate anticipated financial returns. If, for any of these or for unforeseen reasons, our strategic investments fail to meet our expectations or forecasts, our business and results of operations may be materially adversely affected.
Risks Related to Intellectual Property and Cybersecurity Our revenues and operating results could be materially adversely affected if we are unable to protect or obtain patent and other intellectual property rights or if intellectual property litigation is successful against us.
Risks Related to Intellectual Property, Cybersecurity, and Technology Our revenues and operating results could be materially adversely affected if we are unable to protect or obtain patent and other intellectual property rights or if intellectual property litigation is successful against us.
We have had and may in the future have difficulty in certain circumstances in protecting or enforcing our intellectual property rights, including collecting royalties for use of certain patents included in our patent portfolio in certain foreign jurisdictions due to, among other things: policies of foreign governments; challenges to our licensing practices under such jurisdictions’ competition laws; failure of foreign courts to recognize and enforce judgments of contract breach and damages issued by courts in the United States; and/or 14 Table of Contents challenges pending before foreign patent authorities as to the validity of our patents and those owned by competitors and other parties.
We have had and may in the future have difficulty in certain circumstances in protecting or enforcing our intellectual property rights, including collecting royalties for use of certain patents included in our patent portfolio in certain foreign jurisdictions due to, among other things: policies of foreign governments; challenges to our licensing practices under such jurisdictions’ competition laws; failure of foreign courts to recognize and enforce judgments of contract breach and damages issued by courts in the United States; and/or challenges pending before foreign patent authorities as to the validity of our patents and those owned by competitors and other parties.
These risks include: o labor unrest and strikes, particularly in Asia, where the majority of our manufacturing operations are located; o earthquakes, tsunamis, floods, and other natural disasters, or catastrophic events (which may occur with more frequency or greater intensity due to climate change), particularly in Asia, where the majority of our manufacturing operations and suppliers are located; o health crises, including epidemics and pandemics, such as the COVID-19 pandemic, and governmental responses thereto, including by resulting in quarantines, closures, or other disruptions; o acts of terrorism or armed conflicts; o political or economic instability; o government embargoes, trade restrictions, and import and export controls; and o transportation delays and interruptions.
These risks include: o labor unrest and strikes, particularly in Asia, where the majority of our manufacturing operations are located; o earthquakes, tsunamis, floods, and other natural disasters, or catastrophic events (which may occur with more frequency or greater intensity due to climate change), particularly in Asia, where the majority of our manufacturing operations and suppliers are located; o health crises, including epidemics and pandemics, and governmental responses thereto, including by resulting in quarantines, closures, or other disruptions; o acts of terrorism or armed conflicts; o political or economic instability; o government embargoes, trade restrictions, and import and export controls; and o transportation delays and interruptions.
Our business and results of operations have in the past been, and may continue to be, adversely affected by changes in global economic conditions including inflation, consumer spending rates, rising interest rates, the negative impacts caused by pandemics and public health crises, such as the COVID-19 pandemic, as well as the potential impacts of geopolitical uncertainties (including the ongoing conflict between Russia and Ukraine, and China-Taiwan relations).
Our business and results of operations have in the past been, and may continue to be, adversely affected by changes in global economic conditions including inflation, consumer spending rates, rising interest rates, the negative impacts caused by pandemics and public health crises, as well as the potential impacts of geopolitical uncertainties (including the ongoing conflict between Russia and Ukraine, and China-Taiwan relations).
The loss of any one of our top customers or a reduction in the purchases of our products by such customers would reduce our total revenues and may have a material adverse effect on our operating results, and any delay of a significant volume of purchases by any one of our top customers, even if only temporary, would reduce our revenues in the period of the delay and may have a material adverse effect on our operating results.
The loss of any one of our top customers or reduction in the purchases of our products by such customers or our large distribution partners would reduce our total revenues and may have a material adverse effect on our operating results, and any delay of a significant volume of purchases by any one of our top customers or distributors, even if only temporary, would reduce our revenues in the period of the delay and may have a material adverse effect on our operating results.
Potential events or occurrences which could cause business or supply disruptions or affect the ability or willingness of a supplier or foundry to continue to supply us include changes in market strategy, the acquisition of, sale, or other change in control or ownership structure of a supplier or foundry, strategic divestiture, bankruptcy, insolvency or other financial difficulties, business disruptions (including COVID-19-related supplier plant shutdowns or slowdowns, governmental regulatory and enforcement actions, and work stoppages), operational issues, or capacity constraints at a supplier or foundry.
Potential events or occurrences which could cause business or supply disruptions or affect the ability or willingness of a supplier or foundry to continue to supply us include changes in market strategy, the acquisition of, sale, or other change in control or ownership structure of a supplier or foundry, strategic divestiture, bankruptcy, insolvency or other financial difficulties, business disruptions (including governmental regulatory and enforcement actions and work stoppages), operational issues, or capacity constraints at a supplier or foundry.
Additional risks and uncertainties not presently known to us or that we currently consider immaterial may also impair our business operations. If any of these risks occur, our business and financial results could be harmed. In that case, the trading price of our common stock could decline.
Additional risks and uncertainties not presently known to us or that we currently consider immaterial may also impair our business operations. If any of these risks occur, our business and financial results could be harmed.
Our effective tax rate is highly dependent upon the geographic composition of our worldwide earnings as we are subject to income taxes in both the U.S. and various foreign jurisdictions.
Our effective tax rate may fluctuate which will impact our future financial results. Our effective tax rate is highly dependent upon the geographic composition of our worldwide earnings as we are subject to income taxes in both the U.S. and various foreign jurisdictions.
Failure to comply with these laws and regulations could result in an interruption or termination of our government contractor status, which could have a adverse impact on our results of operation. 8 Table of Contents We must comply with and are affected by U.S.
Failure to comply with these laws and regulations could result in an interruption or termination of our government contractor status, which could have a adverse impact on our results of operation. We must comply with and are affected by U.S. Federal, state, local, and foreign laws and regulations relating to the formation, administration, and performance of U.S. government contracts.
We rely on highly specialized suppliers for a variety of highly engineered or specialized components, and other inputs for which we may not be able to readily identify alternatives or substitutes in the event of a supply disruption or capacity constraint at or by any of these suppliers, which could have a material adverse impact on our results of operations.
The termination of a U.S. government contract or relationship as a result of any of these acts could have an adverse impact on our operations and could have an adverse effect on our standing and eligibility for future U.S. government contracts. 8 Table of Contents We rely on highly specialized suppliers for a variety of highly engineered or specialized components, and other inputs for which we may not be able to readily identify alternatives or substitutes in the event of a supply disruption or capacity constraint at or by any of these suppliers, which could have a material adverse impact on our results of operations.
Moreover, to the extent a defect in one of our products is caused by a defective component supplied to us by a third party, we may, nonetheless, be liable to the customer and be unsuccessful in seeking indemnification from that third party. We are subject to potentially material liability for breaches of confidentiality agreements with certain of our top customers.
Moreover, to the extent a defect in one of our products is caused by a defective component supplied to us by a third party, we may, nonetheless, be liable to the customer and be unsuccessful in seeking indemnification from that third party.
The expense of protecting, defending, and enforcing our intellectual property, or defending claims that our products, technology, or manufacturing processes infringe the intellectual property rights of others, can vary significantly period to period and, in any given period, could have a material adverse effect on our operating results.
The expense of protecting, defending, and enforcing our intellectual property, or defending claims that our products, technology, or manufacturing processes infringe the intellectual property rights of others, can vary significantly period to period and, in any given period, could have a material adverse effect on our operating results. 14 Table of Contents Our business and operations could suffer in the event of security breaches, cybersecurity incident, other unauthorized disclosures, or network disruptions.
Our future success depends largely on the continued service and efforts of our executive officers and other key management and technical personnel and on our ability to continue to identify, attract, retain, and motivate them, particularly in an environment of cost reductions and a general move toward more performance-based compensation for executives and key management. 9 Table of Contents Implementing our business strategy also requires specialized engineering and other talent, as our revenues are highly dependent on technological and product innovations.
Our future success depends largely on the continued service and efforts of our executive officers and other key management and technical personnel and on our ability to continue to identify, attract, retain, and motivate them, particularly in an environment of cost reductions and a general move toward more performance-based compensation for executives and key management.
A warranty or product liability claim against us in excess of our available insurance coverage and established reserves, or a determination that we have liability or an obligation to cover the costs of a customer product recall, could have a material adverse effect on our business, results of operations, and financial condition. 10 Table of Contents In addition, our products are typically sold to customers at prices that are significantly lower than the cost of the customer’s products in which they are incorporated.
A warranty or product liability claim against us in excess of our available insurance coverage and established reserves, or a determination that we have liability or an obligation to cover the costs of a customer product recall, could have a material adverse effect on our business, results of operations, and financial condition.
Further, the internal control environment of an acquired entity may not be consistent with our standards or with regulatory requirements, and may require significant time and resources to align or rectify.
Further, the internal control environment of an acquired entity may not be consistent with our standards or with regulatory requirements, and may require significant time and resources to align or rectify. In addition, we may underestimate the costs or overestimate the benefits that we expect to realize from such acquisitions.
In addition, many countries have enacted fundamental changes to the international corporate tax system, by the Organization for Economic Co-operation and Development's (the "OECD") Inclusive Framework on Base Erosion and Profit Shifting, including the implementation of a minimum tax on global income now effective for some countries, amongst other proposals.
In addition, many countries have enacted fundamental changes to the international corporate tax system, by the Organization for Economic Co-operation and Development's (the "OECD") Inclusive Framework on Base Erosion and Profit Shifting, including the implementation of a minimum tax on global income now effective for some countries, amongst other proposals. 10 Table of Contents Our products are complex and could contain defects, which could result in material costs to us and harm our business, results of operations, and financial condition.
Accordingly, if current market and industry dynamics continue, revenues will continue to depend largely upon, and be impacted by the timing, volume, and mix of future purchases by a limited number of our OEM customers.
Accordingly, if current market and industry dynamics continue, MSA's revenues will continue to depend largely upon, and be impacted by the timing, volume, and mix of future purchases by a limited number of its OEM customers. Our PD segment, which accounted for 55% of our consolidated revenues for fiscal 2025, sells through numerous distributors.
Federal, state, local, and foreign laws and regulations relating to the formation, administration, and performance of U.S. government contracts. These laws and regulations impose requirements that, while customary in U.S. government contracts, may impose additional costs on our business operations.
These laws and regulations impose requirements that, while customary in U.S. government contracts, may impose additional costs on our business operations.
During 2024, our closing stock price ranged from a high of $20.23 per share to a low of $15.09 per share.
During 2025, our closing stock price ranged from a high of $24.41 per share to a low of $12.76 per share.
Such acquisitions and strategic investments naturally entail significant risks and uncertainties, some of which are beyond our control. To the extent we are successful in making acquisitions, such as our acquisition of Cornell Dubilier, we may not realize the expected benefits of our acquisitions or strategic transactions, or be able to retain those benefits even if realized.
To the extent we are successful in making acquisitions, we may not realize the expected benefits of our acquisitions, or be able to retain those benefits even if realized.
All forward-looking statements, expressed or implied, included in this Annual Report on Form 10-K are expressly qualified in their entirety by this cautionary statement.
All forward-looking statements, expressed or implied, included in this Annual Report on Form 10-K are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we may make or persons acting on our behalf may issue.
If we are unsuccessful in implementing our investment and acquisition strategy, or integrating acquired companies, our business and financial results may be adversely effected.
If we are unsuccessful in implementing our acquisition strategy, integrating acquired companies, or managing divestitures and other significant transactions our business and financial results may be adversely effected. We engage in strategic transactions which naturally entail significant risks and uncertainties, some of which are beyond our control.
Our success depends on our ability to attract and retain key employees, and if we are unable to attract and retain such qualified employees, our business and our ability to execute our business strategies may be materially impaired.
If, for any of these or for unforeseen reasons, our strategic transactions fail to meet our expectations or forecasts, our business and results of operations may be materially adversely affected. 9 Table of Contents Our success depends on our ability to attract and retain key employees, and if we are unable to attract and retain such qualified employees, our business and our ability to execute our business strategies may be materially impaired.
Product development in the markets we serve is becoming more focused on audio signal processing for improved audio performance and to enable intelligent and more sophisticated audio solutions. The increasing complexity of our products increases the risk that we or our customers or end users could discover latent defects or subtle faults after significant volumes of product have been shipped.
Our products are complex and could contain defects, which could result in material costs to us. The increasing complexity of our products increases the risk that we or our customers or end users could discover latent defects or subtle faults after significant volumes of product have been shipped.
A significant portion of revenues for our Precision Devices segment depends on U.S. government contracts, which require us to comply with various procurement laws and regulations.
Additionally, any oversupply of inventory at our distributors, whether due to an industry or economic downturn or other causes, could result in reduced sales and cause us to carry higher levels of inventory. A significant portion of revenues for our Precision Devices segment depends on U.S. government contracts, which require us to comply with various procurement laws and regulations.
We derive a significant portion of our revenues from a limited number of OEM customers. If revenues derived from these customers decrease or the timing of such revenues fluctuates, our operating results could be adversely affected. Our MSA segment relies on a limited number of customers for a significant portion of their sales.
In that case, the trading price of our common stock could decline. 7 Table of Contents Risks Related To Our Business We derive a significant portion of our revenues from a limited number of OEM customers and distributors. If revenues derived from these partners decrease or the timing of such revenues fluctuates, our operating results could be adversely affected.
While we have taken measures to assess the requirements of, and to comply with data privacy legislation, there is the potential for fines and penalties, litigation, and reputational harm in the event of a data breach. 15 Table of Contents Risks Related to Our Indebtedness Our credit agreement requires us to comply with certain financial covenants and our failure to comply could have a material adverse effect on our business, financial condition, and results of operations.
While we have taken measures to assess the requirements of, and to comply with data privacy legislation, there is the potential for fines and penalties, litigation, and reputational harm in the event of a data breach. Issues related to the use of artificial intelligence may present business, compliance, or reputational risks.
This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we may make or persons acting on our behalf may issue. 7 Table of Contents You should consider each of the following factors as well as the other information in this Annual Report on Form 10-K, including our financial statements and the related notes, in evaluating our business and our prospects.
You should consider each of the following factors as well as the other information in this Annual Report on Form 10-K, including our financial statements and the related notes, in evaluating our business and our prospects. The risks and uncertainties described below are not the only ones we face.
Our MSA segment accounted for 46% of our consolidated revenues for fiscal 2024. For 2024, MSA's top five customers accounted for approximately 81% of its revenues. For the year ended December 31, 2024, WS Audiology A/S accounted for approximately 30% of MSA's revenues and 14% of the consolidated company revenues.
Our MSA segment, which accounted for 45% of our consolidated revenues for fiscal 2025, relies on a limited number of customers for a significant portion of their sales. For 2025, MSA's top five customers accounted for approximately 76% of its revenues, with WS Audiology A/S accounting for approximately 24% of MSA's revenues and 11% of the consolidated Company revenues.
Risks Related To Our Business The divestiture of our Consumer MEMS Microphones ("CMM") business may have material adverse effects on our financial condition, results of operations, or cash flows. On December 27, 2024 we consummated the sale of certain assets and liabilities of our CMM business to Syntiant Corp.
We have in the past, and may in the future, consider divesting certain business operations. For example, in 2024 we consummated the sale of our Consumer MEMS Microphone ("CMM") business to Syntiant Corp. Divestitures may involve a number of risks, including an impact on our revenue or profit that is larger than expected.
Removed
The risks and uncertainties described below are not the only ones we face.
Added
However, one distributor (through whom many end customers purchase our products) represented a significant portion of PD's sales in 2025. For the year ended December 31, 2025, TTI, Inc. accounted for approximately 19% of PD's revenues and 10% of the consolidated Company revenues. No other distributor (or customer) represented more than 5% of PD's revenues for fiscal 2025.
Removed
While we believe the divestiture of our CMM business will place us in a better position to focus on higher value markets, we may not achieve some or all of the strategic and financial benefits that we expect to achieve, which could result in a material adverse effect to our financial condition, results of operations, or cash flows.
Added
The loss of one of PD's key distributors or of a substantial number of its other distributors, or an increase in the distributors' sales of competitors' products to our customers could have a material adverse impact on our operating results.
Removed
We might experience greater dis-synergies than expected. For example, specialized suppliers may be unwilling or unable to fulfill post-divestiture reduced volumes that do not benefit from economies of scale. In addition, the impact of the divestiture on our revenue or profit might be larger than we expected.
Added
Implementation of our growth strategies may not be successful, which could adversely impact our results of operations. Our growth strategy includes making strategic investments, including developing new products, adding new programs within our existing markets, and entering new and adjacent markets.
Removed
The separation of certain shared services following the divestiture of our CMM business will continue to require the attention of our management and place demands on other internal resources. We cannot be certain that we will be successful in managing these or any other significant risks that we encounter as a result of divesting the CMM business.
Added
For example, in 2025 we expanded the reach of our film capacitors into energy sectors we have not supported historically. Such strategic investments naturally entail significant risks and uncertainties, some of which are beyond our control. We may experience operational delays or encounter higher than expected production costs.
Removed
For example, in fiscal 2022 we experienced customer purchasing adjustments due to excess inventory in the supply chain, which were partially offset by financial incentives offered to customers during the fourth quarter.
Added
In addition, some of our strategic investments depend on relationships with one or a small number of customers that are from particular industries.
Removed
The termination of a U.S. government contract or relationship as a result of any of these acts could have an adverse impact on our operations and could have an adverse effect on our standing and eligibility for future U.S. government contracts.
Added
Any disruption in those customers' businesses, whether as a result of changes in demand for the customers' services, adverse changes in the customer's industry generally, or other challenges, could materially harm the implementation of our investment strategy with regard to a new or adjacent market or technology.
Removed
We engage in strategic transactions and make strategic investments, including investments in emerging technology companies and intellectual property, which are focused on growth by positioning the Company for expansion into new markets, territories or technologies, exploiting new or growing customer or market opportunities, and developing new technologies and products.
Added
We cannot, therefore, provide assurance that each of our acquisitions, divestitures, or other significant transactions will be accretive or generate anticipated financial returns.
Removed
In addition, due to our inexperience with certain adjacent or complimentary technologies and doing business in certain geographic regions that may be served by acquired businesses, we may underestimate the costs or overestimate the benefits that we expect to realize from such acquisitions or investments, and we may not achieve them.
Added
Implementing our business strategy also requires specialized engineering and other talent, as our revenues are highly dependent on technological and product innovations. Competition for such experienced technical personnel in our industry and where we are located is intense, and we cannot assure that we can continue to recruit and retain such personnel.
Removed
If we are unable to attract and retain such qualified employees, our business and our ability to execute our business strategies may be materially impaired. Our effective tax rate may fluctuate which will impact our future financial results.
Added
In addition, our products are typically sold to customers at prices that are significantly lower than the cost of the customer’s products in which they are incorporated.
Removed
Our products are complex and could contain defects, which could result in material costs to us and harm our business, results of operations, and financial condition. Our products are complex and could contain defects, which could result in material costs to us.
Added
Recent technological advances in artificial intelligence ("AI") and machine-learning technology present new opportunities for innovation and efficiency, but also pose new risks. As the field of AI is rapidly developing, the global regulatory and legal landscape is evolving.
Removed
We have entered into non-disclosure agreements with several of our top customers which require us not to disclose and to protect certain information regarding, among other things, aspects of those customers’ businesses plans, products, and technology.
Added
As we introduce these technologies into our internal processes, we seek to use AI responsibly and to manage the ethical and legal issues associated with it. We may be unsuccessful in managing these issues, which could present business, compliance, or reputational risks.
Removed
These confidentiality agreements, in some cases, impose strict liability on us in the event of any breach of these agreements by us or our employees or agents and, should such a breach occur, any resulting damage award or settlement could have a material adverse effect on our operating results and financial condition.
Added
In addition, our competitors may be more effective at using AI in their operations, products and services, which may put us at a competitive disadvantage. 15 Table of Contents Risks Related to Our Indebtedness Our credit agreement requires us to comply with certain financial covenants and our failure to comply could have a material adverse effect on our business, financial condition, and results of operations.
Removed
Evolving social and environmental responsibility regulations, as well as demands from investors, customers and other stakeholders, could result in additional costs, harm to our reputation and a loss of customers.
Added
UNRESOLVED STAFF COMMENTS None. 17 Table of Contents
Removed
Increasing focus on environmental, social, and governance ("ESG") responsibility, as well as customer and investor demands, may make our supply chain more complex and may adversely affect our relationships with customers and investors.
Removed
Some of our customers have adopted, or may adopt, procurement policies that include ESG provisions or requirements that their suppliers should comply with, or they may seek to include such provisions or requirements in their procurement terms and conditions. Also, an increasing number of investors are requiring companies to disclose corporate ESG policies, practices, and metrics.
Removed
Legal and regulatory requirements, as well as investor expectations, on corporate ESG practices and disclosure, are subject to change, can be unpredictable, and may be difficult and expensive for us to comply with, given the complexity of our supply chain and manufacturing.
Removed
If we are unable to comply, or are unable to cause our suppliers or contract manufacturers to comply, with such policies or provisions or meet the requirements of our customers and our investors, a customer may stop purchasing products from us or an investor may sell their shares, which could have a material adverse effect on our results of operations and our reputation.
Removed
In addition, we have publicly announced certain corporate responsibility goals, which reflect our current plans and aspirations based on known conditions. Any failure to achieve such goals (or achieve the goals within the set timeframe) or the perception by stakeholders of such failure may result in reputational or financial harm.
Removed
Our business and operations could suffer in the event of security breaches, cybersecurity incident, other unauthorized disclosures, or network disruptions.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+1 added−1 removed9 unchanged
Biggest changeWe designed and assess our cybersecurity risk management program based on the National Institute of Standards and Technology Cybersecurity Framework (the "NIST Cybersecurity 17 Table of Contents Framework"). This does not imply compliance with specific technical standards, specifications or requirements of the NIST Cybersecurity Framework, but signifies its use as a guiding principle.
Biggest changeThis does not imply compliance with specific technical standards, specifications or requirements of the NIST Cybersecurity Framework, but signifies its use as a guiding principle. Our commitment extends to various programs and processes to stay informed about and monitor the prevention, detection, mitigation and remediation of cybersecurity incidents.
Our head of Internal Audit reports directly to the Audit Committee and is responsible reviewing with the Committee our company-wide enterprise risk assessment, which includes an evaluation of cybersecurity risks and threats.
Our head of Internal Audit reports directly to the Audit Committee and is responsible for reviewing with the Committee our company-wide enterprise risk assessment, which includes an evaluation of cybersecurity risks and threats.
Our CIO has extensive cybersecurity knowledge and skills gained from various roles in information technology and security for over 31 years, including serving as the Chief Information Officer at two large public companies. Our CIO is supported by a team of enterprise information system and security risk professionals.
Our CIO has extensive cybersecurity knowledge and skills gained from various roles in information technology and security for over 30 years, including serving as the Chief Information Officer at two large public companies. Our CIO is supported by a team of enterprise information system and security risk professionals.
ITEM 1C. CYBERSECURITY Risk Management and Strategy As part of our overall risk management program, we have implemented processes to assess, identify, and manage the material risks facing the Company, including from cybersecurity threats.
ITEM 1C. CYBERSECURITY Risk Management and Strategy As part of our overall risk management program, we have implemented processes to assess, identify, and manage the material risks facing the Company, including from cybersecurity threats. We designed and assess our cybersecurity risk management program based on the National Institute of Standards and Technology Cybersecurity Framework (the "NIST Cybersecurity Framework").
We have a well-defined cybersecurity incident response plan aimed at facilitating an effective response and handling of cybersecurity incidents. The incident response plan outlines roles and responsibilities, criteria for measuring the severity of a cybersecurity incident, and provides for Audit Committee and Board briefings as appropriate.
The incident response plan outlines roles and responsibilities, criteria for measuring the severity of a cybersecurity incident, and provides for Audit Committee and Board briefings as appropriate.
We also conduct "tabletop" exercises to simulate cybersecurity incidents to enhance our readiness and resilience in the face of potential cybersecurity threats. These exercises are conducted at both the technical level and senior management level. We have engaged external service providers, where appropriate, including leading cybersecurity firms, to assess, test or otherwise assist with aspects of our security processes.
This includes regular scans, penetration tests, and vulnerability assessments to identify any potential threats or vulnerabilities in our systems. We also conduct "tabletop" exercises to simulate cybersecurity incidents to enhance our readiness and resilience in the face of potential cybersecurity threats. These exercises are conducted at both the technical level and senior management level.
Removed
Our commitment extends to various programs and processes to stay informed about and monitor the prevention, detection, mitigation and remediation of cybersecurity incidents. This includes regular scans, penetration tests, and vulnerability assessments to identify any potential threats or vulnerabilities in our systems.
Added
We have engaged external service providers, where appropriate, including leading cybersecurity firms, to assess, test or otherwise assist with aspects of our security processes. We have a well-defined cybersecurity incident response plan aimed at facilitating an effective response and handling of cybersecurity incidents.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeOur material properties used in connection with manufacturing, sales, research and development, and corporate administrative operations, and the segments served at that facility, are as follows: Location Principal Function(s) Owned or Leased Segment Square Footage (in thousands) Suzhou, China (1) Manufacturing and administrative Leased PD, MSA 284 Cebu, the Philippines Manufacturing and administrative Owned MSA 215 Mexicali, Baja California, Mexico Manufacturing and administrative Leased PD 165 Liberty, South Carolina Manufacturing, sales, and administrative Owned PD 155 Cazenovia, New York Manufacturing, research and development, sales, and administrative Owned PD 133 New Bedford, Massachusetts Distribution center Leased PD 110 Penang, Malaysia (1) Manufacturing and administrative Owned MSA 96 Itasca, Illinois (1) Corporate headquarters, research and development, sales, and administrative Owned PD, MSA 74 (1) Subsequent to the sale of the Consumer MEMS Microphones business to Syntiant Corp. on December 27, 2024, we lease space in these facilities to the buyer.
Biggest changeOur material properties used in connection with manufacturing, sales, research and development, and corporate administrative operations, and the segments served at that facility, are as follows: Location Principal Function(s) Owned or Leased Segment Square Footage (in thousands) Suzhou, China (1) Manufacturing and administrative Leased PD, MSA 284 Cebu, the Philippines Manufacturing and administrative Owned MSA 215 Liberty, South Carolina Manufacturing, sales, and administrative Owned PD 167 Mexicali, Baja California, Mexico Manufacturing and administrative Leased PD 165 Cazenovia, New York Manufacturing, research and development, sales, and administrative Owned PD 133 New Bedford, Massachusetts Manufacturing and distribution center Leased PD 124 Penang, Malaysia (1) Manufacturing and administrative Owned MSA 96 Itasca, Illinois Corporate headquarters, research and development, sales, and administrative Owned PD, MSA 95 (1) The total square footage (in thousands) for our facilities in China and Malaysia is 495 and 187, respectively.
The square footage above reflects the space in each facility that is occupied by Knowles. We believe that the owned and leased facilities we utilize are well-maintained and suitable for our operations.
Subsequent to the sale of the Consumer MEMS Microphones business to Syntiant Corp. on December 27, 2024, we lease space in these facilities to the buyer. The square footage above reflects the space in each facility that is occupied by Knowles. We believe that the owned and leased facilities we utilize are well-maintained and suitable for our operations.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

3 edited+0 added−0 removed0 unchanged
Biggest changeITEM 4. MINE SAFETY DISCLOSURES Not applicable. INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following sets forth information regarding our executive officers, as of February 13, 2025. Name Age Positions Held Jeffrey S. Niew 58 President & Chief Executive Officer (since September 2013), member of our Board of Directors (since February 2014), and Director of Syntiant Corp.
Biggest changeITEM 4. MINE SAFETY DISCLOSURES Not applicable. INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following sets forth information regarding our executive officers, as of February 9, 2026. Name Age Positions Held Jeffrey S. Niew 59 President & Chief Executive Officer (since September 2013), member of our Board of Directors (since February 2014) John S.
Perna 61 Senior Vice President, General Counsel & Secretary (since May 2019) 19 Table of Contents PART II
Perna 62 Senior Vice President, General Counsel & Secretary (since May 2019) 19 Table of Contents PART II
(since December 2024) John S. Anderson 61 Senior Vice President & Chief Financial Officer (since December 2013) Raymond D. Cabrera 58 Senior Vice President & Chief Human Resources Officer (since February 2014) Daniel J. Giesecke 57 Senior Vice President & Chief Operating Officer (since February 2014) Robert J.
Anderson 62 Senior Vice President & Chief Financial Officer (since December 2013) Raymond D. Cabrera 59 Senior Vice President & Chief Human Resources Officer (since February 2014) Daniel J. Giesecke 58 Senior Vice President & Chief Operating Officer (since February 2014) Robert J.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+1 added−0 removed6 unchanged
Biggest changeBelow is a summary of share repurchases for the three months ended December 31, 2024: (in millions, except share and per share amounts) Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares That May Yet Be Purchased Under The Program October 2024 425,663 $ 17.62 425,663 $ 60.7 November 2024 536,827 $ 18.63 536,827 $ 50.7 December 2024 338,954 $ 19.80 338,954 $ 44.0 Total Activity 1,301,444 $ 18.60 1,301,444 On February 13, 2025, the Company announced that its Board of Directors had increased its share repurchase authorization by an additional $150 million in additional aggregate value. 20 Table of Contents Performance Graph This performance graph does not constitute soliciting material, is not deemed filed with the SEC, and is not incorporated by reference in any of our filings under the Securities Act or the Exchange Act, whether made before or after the date of this Annual Report on Form 10-K and irrespective of any general incorporation language in any such filing, except to the extent we specifically incorporate this performance graph by reference therein.
Biggest changeBelow is a summary of share repurchases for the three months ended December 31, 2025: (in millions, except share and per share amounts) Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares That May Yet Be Purchased Under The Program November 2025 451,291 $ 22.16 451,291 $ 129.0 20 Table of Contents Performance Graph This performance graph does not constitute soliciting material, is not deemed filed with the SEC, and is not incorporated by reference in any of our filings under the Securities Act or the Exchange Act, whether made before or after the date of this Annual Report on Form 10-K and irrespective of any general incorporation language in any such filing, except to the extent we specifically incorporate this performance graph by reference therein.
Issuer Purchases of Equity Securities On February 24, 2020, the Company announced that its Board of Directors had authorized a share repurchase program of up to $100 million of the Company's common stock. On April 28, 2022, the Company announced that its Board of Directors had increased the authorization by up to $150 million in additional aggregate value.
Issuer Purchases of Equity Securities On February 24, 2020, the Company announced that its Board of Directors had authorized a share repurchase program of up to $100.0 million of the Company's common stock. On April 28, 2022, the Company announced that its Board of Directors had increased the authorization by up to $150.0 million in additional aggregate value.
Data Source: NYSE *Total return assumes reinvestment of dividends. The graph assumes $100 invested on December 31, 2019 in Knowles Corporation common stock, the Dow Jones U.S. Electrical Components & Equipment Index, and the Russell 2000 index. ITEM 6. [RESERVED] 21 Table of Contents
Data Source: NYSE *Total return assumes reinvestment of dividends. The graph assumes $100 invested on December 31, 2020 in Knowles Corporation common stock, the Dow Jones U.S. Electrical Components & Equipment Index, and the Russell 2000 index. ITEM 6. [RESERVED] 21 Table of Contents
Our ability to pay dividends will depend on our ongoing ability to generate cash from operations and access to the capital markets. Holders The number of holders of record of our common stock as of February 11, 2025 was approximately 658. Recent Sales of Unregistered Securities None.
Our ability to pay dividends will depend on our ongoing ability to generate cash from operations and access to the capital markets. Holders The number of holders of record of our common stock as of February 5, 2026 was approximately 607. Recent Sales of Unregistered Securities None.
Added
On February 13, 2025, the Company announced another authorization increase of up to $150.0 million in additional aggregate value.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

104 edited+23 added−70 removed42 unchanged
Biggest changeAs described above, the decrease was primarily due to lower non-GAAP gross profit, higher non-GAAP operating expenses, increased interest expense, and unfavorable foreign currency exchange rate impacts. 29 Table of Contents Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures (1) Years Ended December 31, (in millions, except per share amounts) 2024 2023 2022 Gross profit $ 234.8 $ 203.8 $ 227.0 Stock-based compensation expense 1.5 1.6 1.1 Restructuring charges 1.9 1.1 — Production transfer costs (2) 3.8 0.4 — Acquisition-related costs (3) 2.3 0.8 — Other (4) 1.1 — — Non-GAAP gross profit $ 245.4 $ 207.7 $ 228.1 Net earnings from continuing operations $ 23.4 $ 65.6 $ 66.4 Interest expense, net 16.3 5.4 3.5 Provision for (benefit from) income taxes 11.3 (28.3) 21.3 Earnings from continuing operations before interest and income taxes 51.0 42.7 91.2 Stock-based compensation expense 22.2 22.8 22.4 Intangibles amortization expense 17.0 7.5 5.8 Restructuring charges 3.4 3.3 0.6 Production transfer costs (2) 4.2 0.4 — Acquisition-related costs (3) 8.4 9.4 — Other (4) 1.7 2.1 3.4 Adjusted earnings from continuing operations before interest and income taxes $ 107.9 $ 88.2 $ 123.4 Provision for (benefit from) income taxes $ 11.3 $ (28.3) $ 21.3 Income tax effects of non-GAAP reconciling adjustments (5) (3.6) 46.6 (0.9) Non-GAAP provision for income taxes $ 7.7 $ 18.3 $ 20.4 Net earnings from continuing operations $ 23.4 $ 65.6 $ 66.4 Non-GAAP reconciling adjustments (6) 56.9 45.5 32.2 Income tax effects of non-GAAP reconciling adjustments (5) (3.6) 46.6 (0.9) Non-GAAP net earnings $ 83.9 $ 64.5 $ 99.5 Diluted earnings per share from continuing operations $ 0.26 $ 0.72 $ 0.72 Earnings per share non-GAAP reconciling adjustment (5)(6) 0.65 (0.03) 0.33 Non-GAAP diluted earnings per share $ 0.91 $ 0.69 $ 1.05 Diluted average shares outstanding 90.1 91.6 92.8 Non-GAAP adjustment (7) 2.4 2.3 1.8 Non-GAAP diluted average shares outstanding (7) 92.5 93.9 94.6 30 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.
Biggest changeAs described above, the improvement is primarily due to higher non-GAAP gross profit, lower interest expense, and reduced share count, partially offset by higher non-GAAP income tax expense, non-GAAP operating expenses, and other expense. 27 Table of Contents Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures (1) Years Ended December 31, (in millions, except per share amounts) 2025 2024 2023 Gross profit $ 256.3 $ 234.8 $ 203.8 Stock-based compensation expense 1.5 1.5 1.6 Impairment charges 3.6 — — Restructuring charges 0.8 1.9 1.1 Production transfer costs (2) 1.6 3.8 0.4 Acquisition-related costs (3) — 2.3 0.8 Transition services credit (4) (0.9) — — Other (5) 0.8 1.1 — Non-GAAP gross profit $ 263.7 $ 245.4 $ 207.7 Net earnings from continuing operations $ 50.9 $ 23.4 $ 65.6 Interest expense, net 9.3 16.3 5.4 Provision for (benefit from) income taxes 13.1 11.3 (28.3) Earnings from continuing operations before interest and income taxes 73.3 51.0 42.7 Stock-based compensation expense 28.4 22.2 22.8 Intangibles amortization expense 16.2 17.0 7.5 Impairment charges 3.6 — — Restructuring charges 3.8 3.4 3.3 Production transfer costs (2) 1.7 4.2 0.4 Acquisition-related costs (3) 0.8 8.4 9.4 Transition services credit (4) (2.0) — — Dividend income (6) (6.2) — — Other (5) 0.5 1.7 2.1 Adjusted earnings from continuing operations before interest and income taxes $ 120.1 $ 107.9 $ 88.2 Provision for (benefit from) income taxes $ 13.1 $ 11.3 $ (28.3) Income tax effects of non-GAAP reconciling adjustments (7) — (3.6) 46.6 Non-GAAP provision for income taxes $ 13.1 $ 7.7 $ 18.3 Net earnings from continuing operations $ 50.9 $ 23.4 $ 65.6 Non-GAAP reconciling adjustments (8) 46.8 56.9 45.5 Income tax effects of non-GAAP reconciling adjustments (7) — (3.6) 46.6 Non-GAAP net earnings $ 97.7 $ 83.9 $ 64.5 Diluted earnings per share from continuing operations $ 0.58 $ 0.26 $ 0.72 Earnings per share non-GAAP reconciling adjustment (7) (8) (9) 0.53 0.66 (0.03) Non-GAAP diluted earnings per share (9) $ 1.11 $ 0.92 $ 0.69 Diluted average shares outstanding 88.0 90.1 91.6 Non-GAAP adjustment (9) (10) 0.4 1.3 1.5 Non-GAAP diluted average shares outstanding (9) (10) 88.4 91.4 93.1 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.
Foreign Currency Exposure We conduct business through our subsidiaries in many different countries and fluctuations in currency exchange rates could have a significant impact on the reported results of operations, which are presented in U.S. dollars. A significant and growing portion of our products are manufactured in lower-cost locations and sold in various countries.
Foreign Currency Exposure We conduct business through our subsidiaries in many different countries and fluctuations in currency exchange rates could have a significant impact on the reported results of operations, which are presented in U.S. dollars. A significant portion of our products are manufactured in lower-cost locations and sold in various countries.
Our Business 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, and industrial markets.
Our Business 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/energy markets.
Commitments under the Credit Facility will terminate, and loans outstanding thereunder will mature, on February 8, 2028. For additional information, refer to Note 11. Borrowings to our Consolidated Financial Statements. 36 Table of Contents On February 24, 2020, we announced that our Board of Directors had authorized a share repurchase program of up to $100 million of our common stock.
Commitments under the Credit Facility will terminate, and loans outstanding thereunder will mature, on February 8, 2028. For additional information, refer to Note 11. Borrowings to our Consolidated Financial Statements. 32 Table of Contents 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.
Rebates are recognized over the contract period based on expected revenue levels. Estimation of variable consideration requires judgment and actual results may differ from estimated amounts, which could result in adjustments to revenue. Inventories: Inventories are stated at the lower of cost or net realizable value, determined on the first-in, first-out ("FIFO") basis.
Rebates are recognized over the contract period based on expected revenue levels. Estimation of variable consideration requires judgment and actual results may differ from estimated amounts, which could result in adjustments to revenue. 36 Table of Contents Inventories: Inventories are stated at the lower of cost or net realizable value, determined on the first-in, first-out ("FIFO") basis.
Potential circumstances that could have a negative effect on the fair value of our reporting units include, but are not limited to, lower than forecasted revenue and terminal growth rates, decreased profit margins, higher income taxes, increased capital expenditures, higher working capital requirements, and changes in the weighted average cost of capital.
Potential circumstances that could have a negative effect on the fair value of our reporting units include, but are not limited to, lower than forecasted revenue and terminal growth rates, decreased profit margins, higher income taxes, increased capital expenditures, higher working capital requirements, and an increase in the weighted average cost of capital.
In 2023, consistent with the above process, we evaluated the need for a valuation allowance against our deferred tax assets for 41 Table of Contents U.S. foreign tax credits and certain of our U.S. state tax attributes and determined that it was more likely than not that the deferred tax assets for these attributes would be realized.
In 2023, consistent with the above process, we evaluated the need for a valuation allowance against our deferred tax assets for U.S. foreign tax credits and certain of our U.S. state tax attributes and determined that it was more likely than not that the deferred tax assets for these attributes would be realized.
At December 31, 2024, consistent with the above process, we evaluated the need for a valuation allowance against our deferred tax assets and determined that it was more likely than not that the deferred tax asset established for a current year net operating loss in Luxembourg would not be realized.
In 2024, consistent with the above process, we evaluated the need for a valuation allowance against our deferred tax assets and determined that it was more likely than not that the deferred tax asset established for a current year net operating loss in Luxembourg would not be realized.
The remaining segments are aligned around similar product applications serving our key end markets to enhance focus on end market growth strategies. • PD Segment Our PD segment specializes in the design and delivery of high performance capacitor products and RF solutions primarily serving the defense, medtech, electrification, and industrial markets.
These segments are aligned around similar product applications serving our key end markets to enhance focus on end market growth strategies. • PD Segment Our PD segment specializes in the custom design and delivery of high performance capacitor products and RF solutions primarily serving the defense, industrial, medtech, and electrification/energy markets.
Our 2024, 2023, and 2022 capital expenditures attributable to continuing operations as a percentage of revenues (see Adjusted free cash flows below) were 2.1%, 2.7%, and 3.1%, respectively. In 2025, we expect capital expenditures to be in the range of 3% to 5% of revenues.
Our 2025, 2024, and 2023 capital expenditures attributable to continuing operations as a percentage of revenues (see Adjusted free cash flows below) were 5.4%, 2.1%, and 2.7%, respectively. In 2026, we expect capital expenditures to be in the range of 4% to 5% of revenues.
Non-GAAP gross profit margin (non-GAAP gross profit as a percentage of revenues) for the year ended December 31, 2024 was 44.3%, compared with 45.5% for the year ended December 31, 2023.
Non-GAAP gross profit margin (non-GAAP gross profit as a percentage of revenues) for the year ended December 31, 2025 was 44.5%, compared with 44.3% for the year ended December 31, 2024.
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 attributable to discontinued operations.
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 utilized in or provided by discontinued operations.
In the quantitative impairment assessment, fair value is estimated using a discounted cash flow model that includes market participant assumptions, forecasted future cash flows based on historical performance and future estimated results, determination of appropriate discount rates, and other assumptions which are considered reasonable in the discounted cash flow analysis.
In the quantitative impairment assessment, fair value is estimated using a discounted cash flow model that includes market participant assumptions, forecasted future cash flows based on historical performance and future estimated results, and other assumptions which are considered reasonable in the discounted cash flow analysis.
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 consolidate or migrate manufacturing to facilities primarily within the United States.
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.
Cash flows are summarized in the following table: Years Ended December 31, (in millions) 2024 2023 2022 Net cash flows provided by (used in): Operating activities $ 130.1 $ 122.7 $ 86.3 Investing activities 45.2 (141.6) (32.7) Financing activities (132.0) 58.2 (73.2) Effect of exchange rate changes on cash and cash equivalents (0.5) (0.2) (1.1) Net increase (decrease) in cash and cash equivalents $ 42.8 $ 39.1 $ (20.7) Operating Activities 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.
Cash flows are summarized in the following table: Years Ended December 31, (in millions) 2025 2024 2023 Net cash flows provided by (used in): Operating activities $ 114.0 $ 130.1 $ 122.7 Investing activities (31.6) 45.2 (141.6) Financing activities (158.9) (132.0) 58.2 Effect of exchange rate changes on cash and cash equivalents 0.6 (0.5) (0.2) Net (decrease) increase in cash and cash equivalents $ (75.9) $ 42.8 $ 39.1 Operating Activities 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, dividend income, and the effects of changes in operating assets and liabilities.
Investing Activities The cash provided by investing activities in 2024 is driven by the proceeds from the sale of our CMM business and proceeds from the sale of intellectual property, partially offset by capital expenditures and payments to finance the seller loan to Syntiant in conjunction with the sale of our CMM business.
The cash provided by investing activities in 2024 is driven by the proceeds from the sale of CMM and proceeds from the sale of technology, partially offset by capital expenditures and payments to finance the seller loan to Syntiant in conjunction with the sale of CMM.
Restructuring Charges 2024 During the year ended December 31, 2024, we recorded restructuring charges of $2.0 million related to headcount reductions and $1.4 million for costs associated with transferring certain capacitors manufacturing to existing facilities to further optimize operations within our PD segment.
Restructuring and Related Activities to our Consolidated Financial Statements. 24 Table of Contents During the year ended December 31, 2024, we recorded restructuring charges of $2.0 million related to headcount reductions and $1.4 million for costs associated with transferring certain capacitors manufacturing to existing facilities to further optimize operations within our PD segment.
Our high performance capacitors, radio frequency ("RF") and microwave filters, advanced medtech microphones, and balanced armature speakers, enhance the performance of our customers products to change, improve, and save lives. Our focus on the customer, combined with unique technology, proprietary manufacturing techniques, and global operational expertise, enables us to deliver innovative solutions across multiple applications.
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.
Acquisition to our Consolidated Financial Statements under Item 8, "Financial Statements and Supplementary Data." On September 25, 2023, the Company amended its Amended and Restated Credit Agreement (the "A&R Credit Agreement") to, among other things, (a) permit the Company in connection with the acquisition of Cornell Dubilier, to incur senior priority seller financing indebtedness (the “Seller Note”) in an aggregate principal amount of $122.9 million secured by certain assets (including equity interests) acquired in connection with such acquisition and the capital stock of Cornell Dubilier, LLC (the “Acquisition Assets”), which shall mature two years after the effective date of such Seller Note (the “Seller Note Maturity Date”), (b) extends the requirement to pledge the Acquisition Assets that would otherwise constitute collateral under the Credit Agreement to the date that is 90 days after the Seller Note Maturity Date, and (c) restricts, until the Seller Note Maturity Date, the amount of dispositions and investments from the Company and certain of its subsidiaries into Cornell Dubilier, LLC and the acquired subsidiaries that constitute Acquisition Assets from exceeding $80.0 million in the aggregate.
Acquisition to our Consolidated Financial Statements under Item 8, "Financial Statements and Supplementary Data." On September 25, 2023, the Company amended its Amended and Restated Credit Agreement (the "A&R Credit Agreement") to, among other things, (a) permit the Company in connection with the acquisition of Cornell Dubilier, to incur senior priority seller financing indebtedness (the “Seller Note”) in an aggregate principal amount of $122.9 million secured by certain assets (including equity interests) acquired in connection with such acquisition and the capital stock of Cornell Dubilier, LLC (the “Acquisition Assets”), which matured two years after the effective date of such Seller Note (the “Seller Note Maturity Date”) and (b) extend the requirement to pledge the Acquisition Assets that would otherwise constitute collateral under the Credit Agreement to the date that is 90 days after the Seller Note Maturity Date.
Based on our current sales and manufacturing activity, a sustained 10% weakening of the U.S. dollar for a period of one year would reduce our pre-tax earnings by approximately $19.4 million, excluding the impact of our hedging program. See Note 10.
Based on our current manufacturing activity and to a lesser extent sales, a sustained 10% weakening of the U.S. dollar for a period of one year would reduce our pre-tax earnings by approximately $14.8 million, excluding the impact of our hedging program. See Note 10.
The following table reconciles our adjusted free cash flow to cash flow provided by operating activities: Years Ended December 31, 2024 2023 2022 Net cash provided by operating activities $ 130.1 $ 122.7 $ 86.3 Less: amounts attributable to discontinued operations (24.4) (43.6) 9.8 Non-GAAP net cash attributable to continuing operations 105.7 79.1 96.1 Capital expenditures (13.6) (16.9) (32.1) Less: amounts attributable to discontinued operations 1.7 4.7 17.2 Non-GAAP capital expenditures attributable to continuing operations (11.9) (12.2) (14.9) Non-GAAP net cash attributable to continuing operations 105.7 79.1 96.1 Non-GAAP capital expenditures attributable to continuing operations (11.9) (12.2) (14.9) Adjusted free cash flow $ 93.8 $ 66.9 $ 81.2 Adjusted free cash flow as a % of revenues 16.9 % 14.6 % 17.0 % In 2024, we generated adjusted free cash flow of $93.8 million compared to adjusted free cash flow in 2023 of $66.9 million.
The following table reconciles our adjusted free cash flow to cash flow provided by operating activities: Years Ended December 31, (in millions) 2025 2024 2023 Net cash provided by operating activities $ 114.0 $ 130.1 $ 122.7 Amounts utilized in (provided by) discontinued operations 32.5 (24.4) (43.6) Non-GAAP net cash attributable to continuing operations 146.5 105.7 79.1 Capital expenditures (32.1) (13.6) (16.9) Amounts attributable to discontinued operations — 1.7 4.7 Non-GAAP capital expenditures attributable to continuing operations (32.1) (11.9) (12.2) Non-GAAP net cash attributable to continuing operations 146.5 105.7 79.1 Non-GAAP capital expenditures attributable to continuing operations (32.1) (11.9) (12.2) Adjusted free cash flow $ 114.4 $ 93.8 $ 66.9 Adjusted free cash flow as a % of revenues 19.3 % 16.9 % 14.6 % In 2025, we generated adjusted free cash flow of $114.4 million compared to adjusted free cash flow in 2024 of $93.8 million.
A hypothetical 100 basis point increase in interest rates affecting our external variable rate borrowings as of December 31, 2024 would increase our annual interest expense by approximately $1.3 million. Critical Accounting Estimates Our Consolidated Financial Statements are based on the application of GAAP.
Interest Rates Borrowings under our Revolving Credit Facility are at variable interest rates. A hypothetical 100 basis point increase in interest rates affecting our external variable rate borrowings as of December 31, 2025 would increase our annual interest expense by approximately $1.1 million. Critical Accounting Estimates Our Consolidated Financial Statements are based on the application of GAAP.
Commitments and Contingent Liabilities to our Consolidated Financial Statements under Item 8, "Financial Statements and Supplementary Data." Contractual Obligations and Off-Balance Sheet Arrangements A summary of our significant contractual obligations and commitments as of December 31, 2024 and the years when these obligations are expected to be due is as follows: Payments Due by Period (in millions) Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years Debt (1) $ 206.7 $ 72.7 $ 134.0 $ — $ — Operating leases (2) 10.6 4.3 5.0 1.2 0.1 Purchase obligations (3) 61.5 61.5 — — — Finance leases (2) 0.9 0.4 0.5 — — Total obligations $ 279.7 $ 138.9 $ 139.5 $ 1.2 $ 0.1 (1) Relates to the maturity of indebtedness under our Revolving Credit Facility and the Seller Note; does not give effect to any early repayment of or future amounts which may be drawn under the Revolving Credit Facility.
Commitments and Contingent Liabilities to our Consolidated Financial Statements under Item 8, "Financial Statements and Supplementary Data." Contractual Obligations and Off-Balance Sheet Arrangements A summary of our significant contractual obligations and commitments as of December 31, 2025 and the years when these obligations are expected to be due is as follows: Payments Due by Period (in millions) Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years Debt (1) $ 114.0 $ — $ 114.0 $ — $ — Operating leases (2) 25.0 5.2 7.9 4.2 7.7 Purchase obligations (3) 50.2 50.2 — — — Finance leases (2) 0.7 0.4 0.3 — — Total obligations $ 189.9 $ 55.8 $ 122.2 $ 4.2 $ 7.7 (1) Relates to the maturity of indebtedness under our Revolving Credit Facility; does not give effect to any early repayment of or future amounts which may be drawn under the Revolving Credit Facility.
PD has sales, support, and engineering facilities in North America, Europe, and Asia, as well as manufacturing facilities in North America and Asia. • MSA Segment Our MSA segment designs and manufactures balanced armature speakers and microphones used in applications that serve the hearing health and premium audio markets.
PD has sales, support, and engineering facilities in North America, Europe, and Asia as well as manufacturing facilities in North America and Asia. 22 Table of Contents • MSA Segment Our MSA segment designs and manufactures balanced armature speakers and microphones used in hearing health and specialty audio applications that serve the medtech and industrial markets.
Any shares repurchased will be held as treasury stock. During the years ended December 31, 2024, 2023, and 2022 we repurchased 2,987,697, 2,851,604, and 2,339,045 shares of common stock, respectively, for a total of $53.7 million, $47.5 million, and $44.0 million, respectively.
Any shares repurchased will be held as treasury stock. During the years ended December 31, 2025, 2024, and 2023 we repurchased 3,571,865, 2,987,697, and 2,851,604 shares of common stock, respectively, for a total of $65.0 million, $53.7 million, and $47.5 million, respectively.
These actions resulted in restructuring charges of $1.9 million within Gross profit and $1.5 million within Operating expenses. For additional information, refer to Note 9.
These actions resulted in restructuring charges of $1.9 million within Gross profit and $1.5 million within Operating expenses. For additional information, refer to Note 9. Restructuring and Related Activities to our Consolidated Financial Statements.
We expect to fund these capital expenditures through our existing cash balances and cash flows from operating activities. 37 Table of Contents Financing Activities Cash used in financing activities during 2024 is primarily related to $53.7 million of repurchases of common stock, the $50.0 million payment on the CD Seller Note, $26.0 million net payments on the revolving credit facility, and $6.6 million payment of taxes related to net share settlement of equity awards, partially offset by proceeds of $5.8 million from the exercise of options.
We expect to fund these capital expenditures through our existing cash balances and cash flows from operating activities. 33 Table of Contents Financing Activities Cash used in financing activities during 2025 is primarily related to the $72.7 million payment on the CD Seller Note, $65.0 million of repurchases of common stock, $20.0 million net payments on the revolving credit facility, and $7.4 million of tax payments related to net share settlement of equity awards, partially offset by proceeds of $6.7 million from the exercise of options.
The non-GAAP ETR for the year ended December 31, 2024 was 8.4% or a $7.7 million tax provision, compared with 22.1% or a $18.3 million tax provision for the year ended December 31, 2023. The change in the non-GAAP ETR was primarily due to increased utilization of foreign tax credits compared to the prior year.
The non-GAAP ETR for the year ended December 31, 2025 was 11.8% or a $13.1 million tax provision, compared with 8.4% or a $7.7 million tax provision for the year ended December 31, 2024. The change in the non-GAAP ETR was primarily due to decreased utilization of foreign tax credits compared to the prior year.
In assessing the requirement for, and amount of, a valuation allowance in accordance with the more-likely-than-not standard, we give appropriate consideration to all positive and negative evidence related to the realization of the deferred tax assets.
The need to establish valuation allowances for deferred tax assets is assessed at each reporting date. In assessing the requirement for, and amount of, a valuation allowance in accordance with the more-likely-than-not standard, we give appropriate consideration to all positive and negative evidence related to the realization of the deferred tax assets.
For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, see the reconciliation included herein. 23 Table of Contents Results of Operations for the Year Ended December 31, 2024 compared with the Year Ended December 31, 2023 Years Ended December 31, (in millions, except per share amounts) 2024 2023 2022 Revenues $ 553.5 $ 456.8 $ 478.8 Gross profit $ 234.8 $ 203.8 $ 227.0 Non-GAAP gross profit $ 245.4 $ 207.7 $ 228.1 Earnings from continuing operations before interest and income taxes $ 51.0 $ 42.7 $ 91.2 Adjusted earnings from continuing operations before interest and income taxes $ 107.9 $ 88.2 $ 123.4 Provision for (benefit from) income taxes $ 11.3 $ (28.3) $ 21.3 Non-GAAP provision for income taxes $ 7.7 $ 18.3 $ 20.4 Earnings from continuing operations $ 23.4 $ 65.6 $ 66.4 Non-GAAP net earnings $ 83.9 $ 64.5 $ 99.5 Diluted earnings per share from continuing operations $ 0.26 $ 0.72 $ 0.72 Non-GAAP diluted earnings per share $ 0.91 $ 0.69 $ 1.05 Revenues 2024 Versus 2023 Revenues for the year ended December 31, 2024 were $553.5 million, compared with $456.8 million for the year ended December 31, 2023, an increase of $96.7 million or 21.2%.
For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, see the reconciliation included herein. 23 Table of Contents Results of Operations Years Ended December 31, (in millions, except per share amounts) 2025 2024 2023 Revenues $ 593.2 $ 553.5 $ 456.8 Gross profit $ 256.3 $ 234.8 $ 203.8 Non-GAAP gross profit $ 263.7 $ 245.4 $ 207.7 Earnings from continuing operations before interest and income taxes $ 73.3 $ 51.0 $ 42.7 Adjusted earnings from continuing operations before interest and income taxes $ 120.1 $ 107.9 $ 88.2 Provision for (benefit from) income taxes $ 13.1 $ 11.3 $ (28.3) Non-GAAP provision for income taxes $ 13.1 $ 7.7 $ 18.3 Earnings from continuing operations $ 50.9 $ 23.4 $ 65.6 Non-GAAP net earnings $ 97.7 $ 83.9 $ 64.5 Diluted earnings per share from continuing operations $ 0.58 $ 0.26 $ 0.72 Non-GAAP diluted earnings per share $ 1.11 $ 0.92 $ 0.69 Revenues Revenues for the year ended December 31, 2025 were $593.2 million, compared with $553.5 million for the year ended December 31, 2024, an increase of $39.7 million or 7.2%.
We recognize reserves against the carrying value of such at-risk inventory items after considering the nature of the risk and any mitigating factors. These estimates require judgment with respect to future demand and market conditions.
We recognize reserves against the carrying value of such at-risk inventory items after considering the nature of the risk and any mitigating factors. These estimates require judgment with respect to future demand and market conditions. Additional reserves could be required if actual demand and market conditions differ from our estimates.
Gross profit margin (gross profit as a percentage of revenues) for the year ended December 31, 2024 was 42.4%, compared with 44.6% for the year ended December 31, 2023.
Gross profit margin (gross profit as a percentage of revenues) for the year ended December 31, 2025 was 43.2%, compared with 42.4% for the year ended December 31, 2024.
As of December 31, 2024, outstanding borrowings under the Credit Facility were $134.0 million.
As of December 31, 2025, outstanding borrowings under the Credit Facility were $114.0 million.
Earnings and Adjusted Earnings from Continuing Operations Before Interest and Income Taxes 2024 Versus 2023 Earnings before interest and income taxes from continuing operations ("EBIT") for the year ended December 31, 2024 was $51.0 million, compared with $42.7 million for the year ended December 31, 2023, an increase of $8.3 million or 19.4%.
Earnings and Adjusted Earnings from Continuing Operations Before Interest and Income Taxes Earnings before interest and income taxes from continuing operations ("EBIT") for the year ended December 31, 2025 was $73.3 million, compared with $51.0 million for the year ended December 31, 2024, an increase of $22.3 million or 43.7%.
Adjusted earnings before interest and income taxes ("Adjusted EBIT") from continuing operations for the year ended December 31, 2024 was $107.9 million, compared with $88.2 million for the year ended December 31, 2023, an increase of $19.7 million or 22.3%.
Adjusted earnings before interest and income taxes ("Adjusted EBIT") from continuing operations for the year ended December 31, 2025 was $120.1 million, compared with $107.9 million for the year ended December 31, 2024, an increase of $12.2 million or 11.3%.
On December 27, 2024, we completed the sale of the CMM segment to Syntiant Corp. for approximately $142.4 million in total consideration, consisting of $58.0 million in net cash received, $1.6 million for estimated working capital adjustments, and Series D-2 preferred stock of Syntiant with a fair value of $77.2 million.
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.
As a result, we recognized an income tax benefit of $15.1 million related to the reversal of our deferred tax asset valuation allowance during the fourth quarter of 2023. We did not have significant valuation allowance movement against our deferred tax assets in 2022.
As a result, we recognized an income tax benefit of $15.1 million related to the reversal of our deferred tax asset valuation allowance during the fourth quarter of 2023.
Hedging Transactions and Derivative Instruments to our Consolidated Financial Statements under Item 8, "Financial Statements and Supplementary Data" for information on the Company's hedges of foreign currency exchange rate risk. 39 Table of Contents Dependence on Key Customers; Concentration of Credit The loss of any key customer and our inability to replace revenues provided by a key customer may have a material adverse effect on our business and financial condition.
Hedging Transactions and Derivative Instruments to our Consolidated Financial Statements under Item 8, "Financial Statements and Supplementary Data" for information on the Company's hedges of foreign currency exchange rate risk. 35 Table of Contents Dependence on Key Customers; Utilization of Distributors The loss of any key customer or a reduction in the purchases of our products by such customers or our large distribution partners and our inability to replace those revenues may have a material adverse effect on our business and financial condition.
To the extent that the final outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on our financial condition and operating results.
To the extent that the final outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on our financial condition and operating results. 37 Table of Contents A valuation allowance is recorded to reduce deferred tax assets to the net amount that is more likely than not to be realized.
Additional reserves could be required if actual demand and market conditions differ from our estimates. 40 Table of Contents Goodwill: The Company tests goodwill for impairment annually as of October 1, or more frequently if there are events or circumstances indicating it is more likely than not (that is, a likelihood of more than 50 percent) that the carrying value of individual reporting units may exceed their respective fair values.
Goodwill: The Company tests goodwill for impairment annually as of October 1, or more frequently if there are events or circumstances indicating it is more likely than not (that is, a likelihood of more than 50 percent) that the carrying value of individual reporting units may exceed their respective fair values.
Our foreign currency exposure is primarily driven by changes in the Chinese renminbi (yuan), the Malaysian ringgit, the Philippine peso, and the Japanese yen.
Our foreign currency exposure is primarily driven by our manufacturing activity in lower-cost locations and changes in the Chinese renminbi (yuan), the Malaysian ringgit, the Philippine peso, and the Mexican peso.
As a result, there can be no assurance that estimates and assumptions made for purposes of the impairment assessment will prove to be an accurate prediction of the future.
Fair value measurements require considerable judgment and are sensitive to changes in underlying assumptions. As a result, there can be no assurance that estimates and assumptions made for purposes of the impairment assessment will prove to be an accurate prediction of the future.
Although some cost increases may be recovered through increased prices to customers if commodity prices trend upward, we also attempt to control such costs through fixed-price contracts with suppliers and various other programs through our global supply chain activities. Interest Rates Borrowings under our Revolving Credit Facility are at variable interest rates.
As a result, our operating results are exposed to such fluctuations. Although some cost increases may be recovered through increased prices to customers if commodity prices trend upward, we also attempt to control such costs through fixed-price contracts with suppliers and various other programs through our global supply chain activities.
Research and Development Expenses 2024 Versus 2023 Research and development expenses for the years ended December 31, 2024 and 2023 were $39.5 million and $32.4 million, respectively, an increase of $7.1 million or 21.9%. Research and development expenses as a percentage of revenues for the years ended December 31, 2024 and 2023 was 7.1%.
Research and Development Expenses Research and development expenses for the years ended December 31, 2025 and 2024 were $40.2 million and $39.5 million, respectively, an increase of $0.7 million or 1.8%. Research and development expenses as a percentage of revenues for the years ended December 31, 2025 and 2024 was 6.8% and 7.1%.
Gross Profit and Non-GAAP Gross Profit 2024 Versus 2023 Gross profit for the year ended December 31, 2024 was $234.8 million, compared with $203.8 million for the year ended December 31, 2023, an increase of $31.0 million or 15.2%.
Gross Profit and Non-GAAP Gross Profit Gross profit for the year ended December 31, 2025 was $256.3 million, compared with $234.8 million for the year ended December 31, 2024, an increase of $21.5 million or 9.2%.
If management determines it is more likely than not that the carrying value of a reporting unit might be impaired, a quantitative analysis is performed.
Management first reviews relevant qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If management determines it is more likely than not that the carrying value of a reporting unit might be impaired, a quantitative analysis is performed.
EBIT margin for the year ended December 31, 2024 was 38.5%, compared with 36.7% for the year ended December 31, 2023.
Adjusted EBIT margin for the year ended December 31, 2025 was 38.7%, compared with 40.4% for the year ended December 31, 2024.
Earnings and Adjusted Earnings from Continuing Operations Before Interest and Income Taxes 2024 Versus 2023 MSA EBIT from continuing operations was $97.5 million for the year ended December 31, 2024, compared with $86.5 million for the year ended December 31, 2023, an increase of $11.0 million or 12.7%.
Earnings and Adjusted Earnings from Continuing Operations Before Interest and Income Taxes MSA EBIT from continuing operations was $92.7 million for the year ended December 31, 2025, compared with $97.5 million for the year ended December 31, 2024, a decrease of $4.8 million or 4.9%.
The non-GAAP gross profit margin decrease was primarily driven by lower factory capacity utilization, partially offset by product cost reductions and a decrease in precious metal costs. 33 Table of Contents MedTech & Specialty Audio Years Ended December 31, (in millions) 2024 Percent of Revenues 2023 Percent of Revenues 2022 Percent of Revenues Revenues $ 253.5 $ 235.4 $ 235.9 Earnings from continuing operations before interest and income taxes $ 97.5 38.5% $ 86.5 36.7% $ 85.7 36.3% Stock-based compensation expense 4.8 3.5 2.9 Adjusted earnings from continuing operations before interest and income taxes $ 102.3 40.4% $ 90.0 38.2% $ 88.6 37.6% Revenues 2024 Versus 2023 MSA revenues were $253.5 million for the year ended December 31, 2024, compared with $235.4 million for the year ended December 31, 2023, an increase of $18.1 million or 7.7%.
The lower non-GAAP operating expenses were primarily driven by a reduction of CD acquisition-related costs, partially offset by higher incentive compensation. 30 Table of Contents MedTech & Specialty Audio Years Ended December 31, (in millions) 2025 Percent of Revenues 2024 Percent of Revenues 2023 Percent of Revenues Revenues $ 264.3 $ 253.5 $ 235.4 Earnings from continuing operations before interest and income taxes $ 92.7 35.1% $ 97.5 38.5% $ 86.5 36.7% Stock-based compensation expense 5.7 4.8 3.5 Impairment charges 3.6 — — Restructuring charges 0.4 — — Adjusted earnings from continuing operations before interest and income taxes $ 102.4 38.7% $ 102.3 40.4% $ 90.0 38.2% Revenues MSA revenues were $264.3 million for the year ended December 31, 2025, compared with $253.5 million for the year ended December 31, 2024, an increase of $10.8 million or 4.3%.
Adjusted EBIT margin for the year ended December 31, 2023 was 38.2%, compared with 37.6% for the year ended December 31, 2022. The increases were primarily due to higher non-GAAP gross profit margin, partially offset by higher non-GAAP operating expenses.
Adjusted EBIT margin for the year ended December 31, 2025 was 19.2%, compared with 16.7% for the year ended December 31, 2024. The increases were primarily due to higher non-GAAP gross profit and lower non-GAAP operating expenses.
EBIT margin (EBIT from continuing operations as a percentage of revenues) for the year ended December 31, 2024 was 9.2%, compared with 9.3% for the year ended December 31, 2023. The increase in EBIT is primarily due to higher gross profit from the acquisition of CD, partially offset by higher operating expenses from the acquisition of CD.
EBIT margin (EBIT from continuing operations as a percentage of revenues) for the year ended December 31, 2025 was 12.4%, compared with 9.2% for the year ended December 31, 2024. The increase in EBIT and EBIT margin was primarily due to improved operating leverage on higher revenues, higher gross profit, and dividend income recorded in 2025.
(7) The number of shares used in the diluted per share 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. 31 Table of Contents Segment Results of Operations for the Year Ended December 31, 2024 Compared with the Year Ended December 31, 2023 Precision Devices Years Ended December 31, (in millions) 2024 Percent of Revenues 2023 Percent of Revenues 2022 Percent of Revenues Revenues $ 300.0 $ 221.4 $ 242.9 Earnings from continuing operations before interest and income taxes $ 14.8 4.9% $ 25.0 11.3% $ 56.1 23.1% Stock-based compensation expense 2.7 3.5 2.6 Intangibles amortization expense 17.0 7.5 5.8 Restructuring charges 3.4 2.5 — Production transfer costs (1) 4.2 0.4 — Acquisition-related costs (2) 7.4 1.6 — Other (3) 0.5 — 3.4 Adjusted earnings from continuing operations before interest and income taxes $ 50.0 16.7% $ 40.5 18.3% $ 67.9 28.0% (1) Production transfer costs represent costs incurred to migrate manufacturing to existing facilities.
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 Precision Devices Years Ended December 31, (in millions) 2025 Percent of Revenues 2024 Percent of Revenues 2023 Percent of Revenues Revenues $ 328.9 $ 300.0 $ 221.4 Earnings from continuing operations before interest and income taxes $ 37.6 11.4% $ 14.8 4.9% $ 25.0 11.3% Stock-based compensation expense 4.8 2.7 3.5 Intangibles amortization expense 16.2 17.0 7.5 Restructuring charges 2.2 3.4 2.5 Production transfer costs (1) 1.7 4.2 0.4 Acquisition-related costs (2) 0.8 7.4 1.6 Other — 0.5 — Adjusted earnings from continuing operations before interest and income taxes $ 63.3 19.2% $ 50.0 16.7% $ 40.5 18.3% (1) Production transfer costs represent costs incurred to migrate manufacturing to existing facilities.
In addition, adjusted free cash flow was lower due to higher 2023 cash payments for income taxes and interest. 38 Table of Contents Contingent Obligations From time to time, we are involved in various legal proceedings and claims arising in the ordinary course of its business. Legal contingencies are discussed in Note 14.
The increase in adjusted free cash flow was partially offset by an increase in net working capital. 34 Table of Contents Contingent Obligations From time to time, we are involved in various legal proceedings and claims arising in the ordinary course of its business. Legal contingencies are discussed in Note 14.
If an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value as determined by an estimate of discounted future cash flows. No impairment of other intangible or long-lived assets was recorded for the years ended December 31, 2024, 2023, or 2022.
If an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value as determined by an estimate of discounted future cash flows.
On April 28, 2022, we announced that our Board of Directors had increased the authorization by up to $150 million in additional aggregate value. At December 31, 2024, we have $44.0 million remaining that may yet be purchased under our share repurchase program.
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 that its Board of Directors had increased its share repurchase authorization by an additional $150.0 million in additional aggregate value.
EBIT margin for the year ended December 31, 2023 was 36.7%, compared with 36.3% for the year ended December 31, 2022. The increases were primarily due to higher gross profit margin, partially offset by higher operating expenses.
EBIT margin for the year ended December 31, 2025 was 11.4%, compared with 4.9% for the year ended December 31, 2024. The increases were primarily due to higher gross profit and lower operating expenses.
The increase was primarily due to imputed interest expense on our Seller Note and a higher outstanding revolving credit facility balance as a result of the acquisition of CD. For additional information on borrowings and interest expense, refer to Note 11.
The decrease is due to lower imputed interest expense on our Seller Note from the CD acquisition, a lower outstanding revolving credit facility balance, and lower interest rates during the year ended December 31, 2025. For additional information on borrowings and interest expense, refer to Note 11.
The decrease in earnings from discontinued operations was primarily driven by our goodwill impairment charges and unfavorable income tax changes, partially offset by the gain on sale of the CMM business and reduction in stock-based compensation expense. For additional information, refer to Note 2.
Loss from discontinued operations for the year ended December 31, 2024 was primarily driven by CMM goodwill impairment charges and tax expense, partially offset by income from CMM operations prior to disposal and a gain on sale of technology. For additional information, refer to Note 2.
Provision for (Benefit from) Income Taxes and Non-GAAP Provision for Income Taxes 2024 Versus 2023 The effective tax rate ("ETR") for the year ended December 31, 2024 was 32.6% or a $11.3 million tax provision, compared with (75.9)% or a $28.3 million tax benefit for the year ended December 31, 2023.
Provision for Income Taxes and Non-GAAP Provision for Income Taxes The effective tax rate ("ETR") for the year ended December 31, 2025 was 20.5% or a $13.1 million tax provision, compared with 32.6% or a $11.3 million tax provision for the year ended December 31, 2024. The change in the ETR was primarily related to a decrease in U.S.
The increase in adjusted free cash flow in 2024 compared to 2023 was primarily due to higher adjusted earnings from continuing operations before interest and income taxes. The increase was partially offset by higher 2024 cash payments for interest and income taxes.
The increase in adjusted free cash flow in 2025 compared to 2024 was primarily due to higher adjusted earnings from continuing operations before interest and income taxes and also due to customer prepayments received in 2025. In addition, the Company's 2025 payments for taxes, interest, incentive compensation, and restructuring charges were all lower than 2024.
At any time during the term of the Credit Facility, we will be permitted to increase the commitments under the Credit Facility or to establish one or more incremental term loan facilities under the Revolving Credit Facility in an aggregate principal amount not to exceed $200.0 million for all such incremental facilities.
At any time during the term of the Credit Facility, we may request to increase the commitments under the Credit Facility or to establish one or more incremental term loan facilities under the Credit Facility in an aggregate principal amount not to exceed the sum of $200.0 million, plus additional amounts, so long as the senior secured leverage ratio does not exceed 2.00 to 1.00.
Cash provided by financing activities during 2023 is primarily related to $115.0 million net borrowings of revolving credit facility, partially offset by $47.5 million of repurchases of common stock and $6.2 million payment of taxes related to net share settlement of equity awards.
Cash used in financing activities during 2024 is primarily related to $53.7 million of repurchases of common stock, the $50.0 million payment on the CD Seller Note, $26.0 million net payments on the revolving credit facility, and $6.6 million payment of taxes related to net share settlement of equity awards, partially offset by proceeds of $5.8 million from the exercise of options.
The Company performed a qualitative impairment assessment for its three reporting units as of October 1, 2024. No goodwill impairment charges were recorded in continuing operations during the years ended December 31, 2024, 2023, or 2022. Fair value measurements require considerable judgment and are sensitive to changes in underlying assumptions.
The Company performed a qualitative goodwill impairment test for the HPC, RFMW, and MSA reporting units and a quantitative impairment test for the CD reporting unit as of October 1, 2025. No goodwill impairment charges were recorded in continuing operations during the years ended December 31, 2025, 2024, or 2023.
Borrowings to our Consolidated Financial Statements under Item 8, "Financial Statements and Supplementary Data." Other Expense (Income), net 2024 Versus 2023 Other expense for the year ended December 31, 2024 was $0.8 million, compared with $0.7 million for the year ended December 31, 2023, a change of $0.1 million.
Borrowings to our Consolidated Financial Statements under Item 8, "Financial Statements and Supplementary Data." Dividend Income Dividend income for the year ended December 31, 2025 was $6.2 million due to a non-cash dividend on the Syntiant investment in the form of additional Series D-2 shares. 25 Table of Contents Other Expense, net Other expense for the year ended December 31, 2025 was $3.2 million, compared with $0.8 million for the year ended December 31, 2024, a change of $2.4 million.
We will also share in certain separation costs pursuant to a credit for up to $13.5 million, which the buyer may apply to specified separation costs post-closing. For additional information, refer to Note 2. Disposed and Discontinued Operations to our Consolidated Financial Statements under Item 8, "Financial Statements and Supplementary Data.
The purchase price adjustment is still being finalized and is subject to change. For additional information, refer to Note 2. 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.
Diluted Earnings per Share from Continuing Operations and Non-GAAP Diluted Earnings per Share 2024 Versus 2023 Diluted earnings per share from continuing operations was $0.26 for the year ended December 31, 2024, compared with $0.72 for the year ended December 31, 2023, a decrease of $0.46.
Discontinued Operations to our Consolidated Financial Statements. 26 Table of Contents Diluted Earnings per Share from Continuing Operations and Non-GAAP Diluted Earnings per Share Diluted earnings per share from continuing operations was $0.58 for the year ended December 31, 2025, compared with $0.26 for the year ended December 31, 2024, an increase of $0.32.
Earnings from Continuing Operations 2024 Versus 2023 Earnings from continuing operations for the year ended December 31, 2024 was $23.4 million, compared with $65.6 million for the year ended December 31, 2023, a decrease of $42.2 million.
Earnings from Continuing Operations Earnings from continuing operations for the year ended December 31, 2025 was $50.9 million, compared with $23.4 million for the year ended December 31, 2024, an increase of $27.5 million.
Selling and Administrative Expenses 2024 Versus 2023 Selling and administrative expenses for the year ended December 31, 2024 were $142.0 million, compared with $125.8 million for the year ended December 31, 2023, an increase of $16.2 million or 12.9%.
Selling and Administrative Expenses Selling and administrative expenses for the year ended December 31, 2025 were $142.8 million, compared with $142.0 million for the year ended December 31, 2024, an increase of $0.8 million or 0.6%. Selling and administrative expenses as a percentage of revenues for the years ended December 31, 2025 and 2024 were 24.1% and 25.7%, respectively.
Adjusted EBIT margin (adjusted EBIT from continuing operations as a percentage of revenues) for the year ended December 31, 2024 was 19.5%, compared with 19.3% for the year ended December 31, 2023.
Adjusted EBIT margin (adjusted EBIT from continuing operations as a percentage of revenues) for the year ended December 31, 2025 was 20.2%, compared with 19.5% for the year ended December 31, 2024. The increase in Adjusted EBIT and Adjusted EBIT margin was primarily due to improved operating leverage on higher revenues and higher non-GAAP gross profit.
While the required raw materials are generally available, commodity pricing for various precious metals, such as palladium, gold, brass, stainless steel, and copper, fluctuates. As a result, our operating results are exposed to such fluctuations.
Commodity Pricing We use a wide variety of raw materials, primarily metals and semi-processed or finished components, which are generally available from a number of sources. While the required raw materials are generally available, commodity pricing for various precious metals, such as palladium, gold, brass, stainless steel, and copper, fluctuates.
(Loss) Earnings from Discontinued Operations, net 2024 Versus 2023 Loss from discontinued operations for the year ended December 31, 2024 was $261.2 million, compared with earnings of $6.8 million for the year ended December 31, 2023.
Loss from Discontinued Operations, net Loss from discontinued operations for the year ended December 31, 2025 was $6.7 million, compared with a loss of $261.2 million for the year ended December 31, 2024. Loss from discontinued operations for the year ended December 31, 2025 was primarily driven by adjustments to the loss on sale of CMM and tax expense.
The increase in non-GAAP gross profit was primarily due to our acquisition of CD, product cost reductions, favorable MSA product mix, and higher shipping volumes, partially offset by lower factory capacity utilization in our legacy PD business and lower average pricing on mature products in our MSA business .
The increases in non-GAAP gross profit and non-GAAP gross profit margin were primarily due to higher shipping volumes, company-wide product cost reductions, increased factory capacity utilization in our ceramic capacitor and RF filter businesses, higher average pricing in PD, and lower precious metal costs, partially offset by unfavorable product mix, lower-than-expected yields in our CD business as we ramped up our specialty film product line, and lower average pricing on mature products in the MSA business.
Adjusted EBIT margin for the year ended December 31, 2023 was 19.3%, compared with 25.8% for the year ended December 31, 2022. The decreases were primarily due to lower non-GAAP gross profit, higher non-GAAP operating expenses, and unfavorable foreign currency exchange rate impacts.
EBIT margin for the year ended December 31, 2025 was 35.1%, compared with 38.5% for the year ended December 31, 2024. The decreases were primarily due to lower gross profit and higher operating expenses.
Revenues increased primarily due to higher shipping volumes of hearing health products driven by stronger end market demand, partially offset by lower shipping volumes into the specialty audio market and lower average pricing on mature products.
Revenues increased primarily due to higher shipping volumes of metal cans that we manufacture and sell to Syntiant as part of our supply agreement associated with the sale of CMM and higher shipping volumes into the specialty audio market, partially offset by lower average pricing on mature products.
Restructuring and Related Activities to our Consolidated Financial Statements. 2022 During the year ended December 31, 2022, we recorded restructuring charges of $0.6 million for other costs within Operating expenses. For additional information, refer to Note 9. Restructuring and Related Activities to our Consolidated Financial Statements.
Restructuring Charges During the year ended December 31, 2025, we recorded restructuring charges of $0.8 million within Gross profit and $3.0 million within Operating expenses, primarily related to headcount reductions across the Company to rightsize operating expenses subsequent to the sale of CMM. For additional information, refer to Note 9.
As described above, the decrease is primarily due to lower gross profit, higher operating expenses, increased interest expense, and unfavorable foreign currency exchange rate impacts, partially offset by a favorable change in income taxes.
As described above, the increase was primarily due to higher gross profit, lower interest expense, and dividend income recorded in 2025, partially offset by higher operating expenses, other expense, and income tax expense.
On February 13, 2025, the Company announced that its Board of Directors had increased its share repurchase authorization by an additional $150 million in additional aggregate value. Cash flows from operating, investing, and financing activities as reflected in our Consolidated Statements of Cash Flows are presented on a consolidated basis (including discontinued operations).
Cash flows from operating, investing, and financing activities as reflected in our Consolidated Statements of Cash Flows are presented on a consolidated basis (including discontinued operations).
MSA revenues increased $18.1 million, primarily due to higher shipping volumes of hearing health products driven by stronger end market demand, partially offset by lower shipping volumes into the specialty audio market and lower average pricing on mature products.
MSA revenues increased $10.8 million, primarily due to higher shipping volumes of metal cans that we manufacture and sell to Syntiant as part of our supply agreement associated with the sale of CMM, and higher shipping volumes into the specialty audio market, partially offset by lower average pricing on mature products.
Interest Expense, net 2024 Versus 2023 Interest expense, net for the year ended December 31, 2024 was $16.3 million, compared with $5.4 million for the year ended December 31, 2023, an increase of $10.9 million or 201.9%.
Non-GAAP gross profit for the year ended December 31, 2025 was $263.7 million, compared with $245.4 million for the year ended December 31, 2024, an increase of $18.3 million or 7.5%.
Research and development expenses as a percentage of revenues for the years ended December 31, 2023 and 2022 were 7.1% and 6.1%, respectively. The increase in expenses was primarily driven by additional development activities in both our MSA and PD segments as we continue to invest in our businesses.
The increase in expenses was primarily driven by increased development activities as we continue to invest in our businesses and higher incentive compensation. The decrease in expenses as a percentage of revenues was driven by higher revenues.

… 117 more changes not shown on this page.

Other KN 10-K year-over-year comparisons