Alrighty, up next we have Knowles Corporation, traded on the NYSE under symbol KN. On behalf of the company, we have Jeffrey Niew, CEO.
Thank you very much. I know we're getting towards the end of the conference here, the last couple hours of the last day. What I'll try to do is go through these slides in kind of a reasonable, quick way, reasonably quick way, and if we can answer any questions for you at the end, we'll be happy to do that. Most of these slides, in fact, all these slides were taken from our Investor Day, which we had in May, so there's actually a much more condensed, obviously, deck of what we talked about on our Investor Day. I think the first thing, just to say who we are, last year we were about $554 million in revenue, made very nice margins in our continuing operations, which I'll spend a little bit of time on in a few minutes.
We've made a major transformation in our business over the last five years to where we are today. We pride ourselves on higher margin products. Our gross margin this year will probably end up in the 45% range, EBITDA margins in the mid 20s in terms of EBITDA margins. Have a lot of engineering talent. I think we have two segments that we report under: the Precision Devices segment, which is primarily comprised of electrolytic, film, and ceramic capacitors, as well as RF filters. Then we have our MedTech and Specialty Audio, which is primarily microphones and speakers, as well as audio solutions into the hearing health market. That's the primary markets that we're in. I think it's important to talk about, like for people who maybe have followed the story of Knowles over the last five to seven years, we are a very different company.
We were well known for many years of being a big supplier into the consumer electronics market. For many years, our largest customer was Apple. At one point, Apple comprised about 40%- 50% of our revenue. As of 2024 or 2025, with the divestitures we've done, we are no longer in the consumer electronics market, and Apple's not a customer of ours anymore. We've really transformed this business. With that said, I think what I would like to talk about in this meeting just a little bit and kind of describe what I'm going to talk about. First, I want to go through the strategic transformation. The relevance of the strategic transformation is of where we were and where we are today is to show people some of the data of what our business looked like on a continuing operational basis over a cycle.
We showed the data you'll see in a moment over a seven-year cycle, 2017- 2024, in what these businesses that we currently own in our portfolio have done. That's the number two of the historical performance. Third, we'll talk a little bit about why we win. Simply put, and I'll go in more detail about this, we have very differentiated technologies. Second, we have strong customer intimacy and application intimacy, meaning we understand very well how our customers use our products and what that needs to be designed to do it. We can customize our solutions and bring them to production in a world-class supply chain and manufacturing footprint. We have a proven M&A strategy to supplement organic growth over the last cycle. It added pretty significantly to our growth and has been very successful, and we continue to believe that it will be successful in the future.
I think the other thing that's changed for anyone who's followed Knowles over the years is we started as a public company with a challenged balance sheet, and that balance sheet has been cleaned up. Our leverage is very low right now, sub- 1. We generate a lot of cash as well on an annual basis, which I'll talk a little bit about. That's the detail I'll go through. This was the pillars of our transformation. For me, I feel like this is really old news. For people who have not followed the story, it's probably relatively new. First, we really focused on higher margin products and markets. It started around 2017 or 2018, where we started looking at our product portfolio and saying, where do we make our money? Where's the best ROIC?
The business, we came to the conclusion the consumer business was not giving us the type of return on invested capital we wanted. Our first step in that was to start refocusing our team on EBIT margins as well as cash flow margins. We started doing that in 2018. What that drove at the corporate level in terms of capital allocation was our consumer business started, we started spending less money on CapEx, reduced our R&D spend in that space, with a real focus on MedTech, defense, and industrial end markets. We then repositioned our portfolio. We've done four acquisitions since 2017, the largest of which we'll talk about, which was Cornell which we did right about two years ago. We also divested two businesses.
We divested roughly at the time of the sale about almost $400 million of revenue in that period of time, getting out of what I would call commodity lower margin businesses. One was, of course, the consumer business. We also got out of a crystal oscillator business that was highly focused on the telecom market that didn't have very great margins. I think we also started talking about what we wanted to do in terms of financial performance, expanding our margin within our existing businesses, as well as generating robust cash flow, which I think I talked about already, and really making sure the balance sheet, I think at our size, you know, as a small cap stock, it's important to our shareholders and to us that we have a good balance sheet. I think we've succeeded in doing that.
This slide, a lot of data on this slide, but I think this is to demonstrate for potential shareholders or people who are looking at why they should invest in Knowles is if you take our continuing ops, the portfolio of businesses that we own today and we intend to own going forward, this is the performance we've delivered from 2017 to 2024. You can see we got about 4% organic growth over the period, and we got about 4% growth through acquisition. That got us to $554 million. If you look at the consensus that's out there today with one quarter to go, really in terms of guide, you know, people are expecting about $585 million of revenue this year. You can see the EBITDA has also improved dramatically. We've more than doubled the EBITDA over that period of time.
It's very interesting, you know, the last year and a half for our businesses have been a little bit challenged. You can see we got to that at $142 million. That was artificially high coming out of COVID. A lot of people were over-ordering in MedTech and defense, took a lot of inventory and industrial as well, and that had to be worked down. We're back on our right path. If you look at the consensus out there this year, we'll be in the $140 million- $145 million of EBITDA this year. Over a cycle, these businesses are super resilient, they're high margin, and generate a lot of cash. When we put out our targets for the next five years, you know, we don't want to do something that people couldn't look at and say, is that really doable?
This is a summary of what we've done in the past from the previous page. We had 8% CAGR in revenues, I said, 11% CAGR in EBITDA, and we've improved our EBITDA margins by 400 basis points. We now are looking at for the next five years, we think we can improve revenue CAGR by a little bit, going 8%- 10%. I'll talk about what's organic verses inorganic in a moment. I think the reason we think we can do better than we did in the past is our slowest growing business or segment is the MSA compared to Precision Devices. That business grows at 2 %- 4%. It's becoming a smaller and smaller percentage of our total, both through acquisitions. All the acquisitions were done in the faster growing segment.
We think it's very doable to get to 8%- 10% CAGR over the next five years. If you look at our adjusted EBITDA CAGR, we think we can grow based on leveraging overhead as well as improving margins. We can grow EBITDA faster, significantly faster, and then we're going to grow revenue. Over the period, we expect another 400 basis points of EBITDA improvement in terms of EBITDA margins, mostly through two things. One would be leverage on factory on overhead, just better capacity utilization. Secondly, we're doing a lot of things in terms of value creation, pricing in order to improve the margins as well. We don't think this is like a big leap to get to from where we've been to where we are today.
Now, if you look at the components of the revenue growth, as I said, the MedTech and Specialty Audio business, which is primarily to the hearing health market, is a very steady business. I can show you data. You can look up data in the hearing health market. Over the last 25- 30 years, through the internet bubble, through the 2008, 2009 crisis, through COVID, there's usually one quarter, maybe two, where we see a dip in revenue, and then it gets right back on the track of 3% growth. Very, very steady growth. We're high share in this market. We do very well. It's a very green ocean for people thinking about business school terms. When I say that, we make over 50% gross margin in this business. Our customers who sell the hearing aids, manufacture them, make 80% gross margins.
The retailers, the audiologists who dispense them, in some places, in some, most of them are making 80% - 90% margins on selling the hearing aids. It's a very lucrative market. There's been a lot of talk in these markets about, you know, can we grow this faster? I think there is opportunity to grow faster in this segment. I'm not necessarily sure it'll get much faster in the hearing aid market. Just remember, stigma is a big problem in the hearing aid market. You know, people who have mild hearing loss, everyone knows someone who's got mild hearing loss who sits there and goes, "What? Can you repeat that? Can you repeat that? Can you repeat that?" At some point, they get to a point where they're in a room and they just go, "Uh-huh, uh-huh." You know they're not hearing what's been said.
It's been linked now to dementia. People are becoming more acutely aware of hearing loss and how it can affect people's lives. We do think there will be some marginal increase in growth rates going forward compared to historical. We also are starting to apply the technologies that we have in hearing health into other medical markets, which should start providing some growth in 2027 or 2028. In the Precision Devices segment, we're expecting 6%- 8% organic growth. We think this is very doable from the perspective this is what we've done over the last seven years. Lots of applications in medical, defense, industrial, super exciting in terms of the products that we're offering. We can go into a lot more detail. We're not going to do that today. We don't have the time to go into that, but our products are very differentiated.
I can give a couple of examples. If you know defibrillators that are used to shock a person's heart back into rhythm, when on TV they go, "Charging," that's our capacitor that's being charged and then releases that energy into your body. If you look at anybody who has a pacemaker, it's highly likely that pacemaker has a bunch of our capacitors in it that are high reliability, very specialized capacitors. If you know any of the major defense programs for electronic warfare, radar, we sell RF filters into those applications. Very sticky, very long-term applications. We also expect to get 4% growth from acquisitions. We can say that's a random number, right? 4% from acquisitions. That's what we did over the last seven years. We got 4% growth from acquisitions. The last acquisition we did was Cornell Dubilier almost two years ago today.
We paid $260 million for it, about 10x trailing EBITDA. That is our fastest growing business, our product category now. We're bringing it, we brought it into the fold, integrated it. It's been a great acquisition for us. Remember, when we started this transition, 2017- 2018, we were not starting with a great balance sheet. We now have a great balance sheet. We think, you know, doing one or two Cornell acquisitions over the next five years is very doable. That's how we get to the 8%- 10% growth. I think what's of note is that we're projecting on an organic basis, 4%- 6% organic growth from this business. As far as EBITDA, we expect EBITDA to grow significantly faster than our revenue is growing.
If you look at our last quarterly results, which of course is not indicative of the future, our revenue growth organically, all organic, was 7% in our Q2 report. We grew EPS by 20% on that. We generate a fair amount of cash. We think this is very doable. We have a lot of leverage on our overhead. We're very vertically integrated. It's one of our competitive differentiators, which we'll talk about in a moment. We think we can grow at this rate. First, we're going to drive it through organic revenue growth. We've kind of detailed that. Margin expansion, continue to work on higher value products, productivity, and capacity utilization. I mentioned that already. As far as operating expenses, we don't anticipate significant increases in SG&A in order to grow at these rates. We should get good leverage off our SG&A.
Of course, we'll do, as we mentioned, accretive acquisitions. Our goal is to have any acquisition we do to be accretive within 12 months of the acquisition. Now, why do we win? Just to spend a few moments on this. Why we win? First, all of our businesses have differentiated technology. We have subject matter experts. If you look like in our audio business, we have people on staff there who are world-renowned people in terms of audio and understand audio products like microphones and speakers. Second, we have super strong customer intimacy and application intimacy. If you see the list, it's on our website. We probably should have put it in here, our list of customers. It's a who's who of blue chip customers. I mean, you'd recognize almost every name is our customers. We know what they're asking for. We understand their applications in detail.
That's a really important point because they're asking us to solve really hard problems and customize the products in order to meet their next generation products. The last piece, which I think is important to the other two, is when we have that unique technology and that intimacy to customize to fit an application, our customers rely on us in a lot of applications to be sole source and to be able to ramp this into production with high quality, reliably, over anything that could go wrong. To give you an example, through COVID, we delivered a lot of product through COVID. In fact, we saved a lot of our customers from some of the competitors they were doing business with that weren't able to supply due to COVID. I think that's why we win. That's our secret sauce. Just a little bit on acquisitions. I think it's important.
We talked about this in our Investor Day. First, divestitures over to on the bottom. Consumer MEMS microphone business, just to kind of give you an idea, our gross margin now as a company is 45%. Our consumer MEMS microphone business gross margin was like 22%, 23%, 24%. You can see why we divested. It was highly capital intensive. We weren't really willing to make the investment. The crystal oscillator business that we had was servicing the telecom market, super cyclical, where they need, like we're implementing 4G or 5G. We need tons of crystal oscillators. Oh, now we're done. We don't need anything for three years. Very hard to manage that business. Very hard, difficult business. We divested both of these businesses. We bought four different businesses: the Integrated Microwave, DITF, and Compax. Very small. Those were the first ones that we did.
The largest one, Integrated Microwave, was about $80 million purchase price. We moved on as our balance sheet improved. We bought Cornell Dubilier, as I said, for $260 million. This is a very successful acquisition so far for us. As we look forward, we see three different types of acquisitions. One is consolidation. In other words, is somebody does exactly what we do. It is a target-rich environment of family-owned companies that are smaller than us that we could acquire and integrate it in. The exciting thing about that is that there will be a lot of synergies on the cost side. The less exciting part about it is it doesn't really expand our TAM or our SAM. Then there's extensions. That's where Cornell would fall. We make ceramic capacitors today. They make electrolytic and film. It's the same markets, different applications. Not quite as much cost synergy.
Some cost synergy, but not like manufacturing cost synergies, more SG&A, OpEx synergies. It also expands our TAM, significantly expands our TAM. The last one is adjacencies. If anybody follows us, you know, we are looking very aggressively. We make capacitors. Right next to our capacitors, which hold an electrical charge, are inductors that hold a magnetic charge. We just introduced our own organic line of inductors about a month ago, and we'll start selling that. We could see that also being an area for acquisition: inductors, resistors, magnetics, but all trying to service the same markets: MedTech, defense, and industrial. Capital allocation, John Anderson, if you want to talk to him after the meeting here, I'm sure he'd be available, our CFO. First on capital, you know, we used to be running, when we had that consumer business, we used to be running in the 8%- 10% CapEx.
Quite frankly, we haven't changed what we are allocating to the businesses that we have today. We just eliminated the 5% or so, 5%, 6% that we were doing on the consumer business. We think we're trending right now towards the higher end of that range, but our growth rates are actually, our organic growth rates are trending towards the higher end of our stated range of 4%- 6% right now, really focused on new products that support our customers and their markets. Second will be M&A. We are focused on that. I went through the detail on that. I think it's very important to state that we've been very clear. We're not going to do anything that gets our balance sheet in a disorder. We've been there. We've done that. Don't want to do that again. We would not intend to take on any more than 2.75.
That would be the absolute max of leverage that we'd be willing to take out. Our leverage ratio currently is like 0.7, so we have very little net debt at this moment. Lastly, in the absence of M&A, we'll do share repurchases. We do think our stock's undervalued. Giving an example, last quarter, Q2, we generated $36 million of free cash flow last quarter. We spent $30 million on stock repurchases. In the absence, with our balance sheet, in the absence of M&A, we can afford to essentially not keep a ton of cash on our balance sheet because we don't have a lot of debt that we need to pay back. I think that's kind of the summary on capital allocation. Just to summarize, before we get, we can answer some questions. You know, the strategic transformation is done.
We've spent a lot of time, we've acquired, my guess would be, if I look at it, we've acquired close to $200 million, maybe a little less, $175 million of revenue over the last seven years. We've divested probably closer to $500 million of revenue over the last few years. We're done divesting. Our historical financial performance of the continuing ops demonstrates over a cycle the capability of these businesses to generate cash and margins and EPS growth. We differentiate ourselves through unique technologies with customer intimacy that we can customize at scale for a distinct competitive advantage. We've proven we can do M&A. We've done it a number of times now. We have a good M&A team. We have the balance sheet and the cash generation with a very disciplined capital allocation strategy to drive shareholder return. With that, I will open it up, I guess, to some questions.
Any questions? If there's no questions, I will close out by saying, if there's anything, Sarah Cook is here, who is the VP of Investor Relations. She'd be more than happy to spend time with you. I'd encourage you to look at our Investor Deck. This is obviously 12 slides of, I think we had about 60, 70 slides in our Investor Day that we did. It's a full audio replay. You can listen to the whole thing where, and it's not just me speaking at this and John speaking. I actually had the business unit leader speaking at it as well. They can really talk in more detail about the applications and where we win and why we win. It's really important, I think, to hear that, but it's a lot to cover in a short period of time. All right, thank you very much.