Robert Labick

Robert Labick followed up on specialty film products, asking about specific applications, potential for follow-on orders, new emerging applications like downhole, and requested an update on the M&A environment and the company's focus.

Answer

Jeffrey Niew, President and CEO, explained that specialty film focuses on pulse power applications such as defibs, railguns, radiotherapy, and emerging downhole applications, emphasizing new applications rather than market share capture. John Anderson, SVP and CFO, and Jeffrey Niew also discussed the M&A environment, noting an improved pipeline but a disciplined approach to ensure synergistic acquisitions.

Robert Labick followed up on the specialty film business, seeking more details on the specific products and applications, potential for follow-on orders beyond the large energy contract, and long-term progression. He also requested an update on the M&A environment, including any impact from tariffs and the company's current focus on acquisition opportunities.

Answer

President and CEO Jeffrey Niew explained that specialty film focuses on pulse power applications, storing and rapidly releasing energy for new applications like defibs, railguns, radiotherapy, and emerging downhole technologies. He emphasized that these are new applications, not market share gains, leveraging Knowles' unique technology and U.S. manufacturing. Regarding M&A, Mr. Niew stated a continued focus on synergistic acquisitions, aiming for 'one plus one equals three' scenarios, while being disciplined in selection. SVP and CFO John Anderson added that the M&A environment has improved with more assets and lower interest rate expectations, and the company maintains a good pipeline.

Robert Labick asked Scott Uzzell (CEO) about the strategies and challenges involved in revitalizing leading brands that have experienced slower growth or market share declines. He also questioned Brian Grass (CFO) on the optimal leverage and capital structure for the business, and expectations regarding discussions with lenders about credit agreement covenants.

Answer

Scott Uzzell (CEO) highlighted the importance of consumer obsession, innovation, and streamlining decision-making processes, emphasizing management philosophy and discipline. Brian Grass (CFO) stated an optimal leverage target closer to two times, expressed confidence in ongoing supportive discussions with banking partners for covenant flexibility, anticipating a 'holiday' with associated fees but no major structural changes to interest costs.

Robert Labick asked CEO Scott Uzzell about his experience in revitalizing leading brands that have experienced slowing growth or market share loss, inquiring about the necessary steps and biggest challenges to restoring growth. He then asked CFO Brian Grass about the optimal leverage and capital structure for the business, as well as expectations regarding discussions with lenders for potential covenant relief.

Answer

CEO Scott Uzzell emphasized obsessing over consumer insights, driving innovation, and streamlining the operating model for faster decision-making. He highlighted the importance of management philosophy, discipline, and role modeling, praising the team's recent efforts to bring resources closer to the marketplace and consumers. CFO Brian Grass stated an optimal leverage target closer to two times. He expressed confidence in ongoing supportive and constructive discussions with banking partners, anticipating covenant relief with associated amendment fees but no major structural changes to interest costs.