Third Quarter Revenues from Continuing
Operations increased 32% on a year over year basis to $143M, at the
high end of the guided range
Net Cash from Operations of $53 million;
exceeding the high end of the guided range
Knowles Corporation (NYSE: KN) (“Knowles” or the “Company” ), a
leading global supplier of high-performance electronics for
demanding applications, including capacitors and radio frequency
(“RF”) filters, advanced medtech microphones, and balanced armature
speakers, today announced results for the quarter ended September
30, 2024.
“I am pleased that we delivered revenues from continuing
operations and cash provided by operating activities at or above
the high end of our guided range, with non-GAAP diluted EPS from
continuing operations at the mid-point of our guided range,”
commented Jeffrey Niew, President, and CEO of Knowles. “Total
Company revenues from continuing operations increased by 32%
compared with the prior year driven by the Cornell acquisition and
organic growth of 4%. We delivered both sequential and year over
year revenue growth in our Medtech & Specialty Audio and
Precision Devices segments in the third quarter and expect to see
sequential revenue growth again in the fourth quarter of 2024.”
In the third quarter, the Company signed a definitive agreement
to sell the Consumer MEMS Microphones business, culminating a year
long process. This furthers the Company's strategic transition from
low margin to higher value markets and products that benefit from
our strengths in product design and process technology to create
solutions for our customers’ most complex problems. Mr. Niew added,
“This divestiture and our third quarter results highlight the
higher margin profile of our remaining businesses. We believe that
by positioning ourselves in segments that offer both attractive
growth prospects and more defensible margins, we can drive
sustainable cash flow growth and better returns to shareholders.”
The transaction is expected to close late in the fourth quarter of
this year.
Financial Highlights
The following table highlights the Company’s financial
performance on both a GAAP and supplemental non-GAAP basis for
continuing operations* with the exception of Net cash provided by
operating activities (in millions, except per share data):
Q3-24
Q2-24
Q3-23
Revenues
$142.5
$135.2
$108.1
Gross profit
$62.9
$57.8
$50.4
(as a % of revenues)
44.1%
42.8%
46.6%
Non-GAAP gross profit
$64.8
$59.8
$50.9
(as a % of revenues)
45.5%
44.2%
47.1%
Diluted earnings per share**
$0.10
$0.05
$0.17
Non-GAAP diluted earnings per share
$0.26
$0.20
$0.20
Net cash provided by operating
activities
$52.8
$24.9
$39.9
* Continuing operations excludes the
results of our Consumer MEMS Microphones reporting business for
which a definitive agreement for its sale was signed on September
18, 2024.
** Current period results include $0.06
per share in stock-based compensation expense, $0.04 per share in
intangibles amortization expense, $0.01 per share in
acquisition-related costs, $0.01 per share in production transfer
costs, $0.02 in other, and $0.02 per share for differences related
to the GAAP effective tax rate excluded from non-GAAP results.
Fourth Quarter 2024 Outlook
The forward looking guidance for the quarter ending December 31,
2024 on a continuing operations basis with the exception of Net
cash provided by operating activities is as follows:
GAAP
Adjustments
Non-GAAP
Revenues from continuing
operations
$141 to $151 million
—
$141 to $151 million
Diluted earnings per share from
continuing operations
$0.12 to $0.16
$0.14
$0.26 to $0.30
Net cash provided by operating
activities
$30 to $40 million
—
$30 to $40 million
Q4 2024 GAAP results from continuing operations are expected to
include approximately $0.06 per share in stock-based compensation
expense, $0.04 per share in intangibles amortization expense, and
$0.03 per share for differences related to the GAAP effective tax
rate and $0.01 per share in acquisition-related costs. These items
are excluded from non-GAAP results.
Q4 2024 Net cash provided by operating activities is expected to
include $5 to $10 million of cash used by discontinued
operations.
Non-GAAP Financial Measures
In addition to the GAAP results included in this press release,
Knowles has presented supplemental non-GAAP gross profit, earnings
before interest and income taxes, adjusted earnings before interest
and income taxes, non-GAAP diluted earnings per share, free cash
flow, as well as other metrics on a non-GAAP basis that exclude
certain amounts that are included in the most directly comparable
GAAP measure to facilitate evaluation of Knowles’ operating
performance. Non-GAAP results are not presented in accordance with
GAAP. Non-GAAP information should be considered a supplement to,
and not a substitute for, financial statements prepared in
accordance with GAAP. In addition, the non-GAAP financial measures
included in this press release do not have standard meanings and
may vary from similarly titled non-GAAP financial measures used by
other companies. Knowles believes that non-GAAP measures are useful
as supplements to its GAAP results of operations to evaluate
certain aspects of its operations and financial performance, and
its management team primarily focuses on non-GAAP items in
evaluating Knowles’ performance for business planning purposes.
Knowles also believes that these measures assist it with comparing
its performance between various reporting periods on a consistent
basis, as these measures remove from operating results the impact
of items that, in Knowles’ opinion, do not reflect its core
operating performance including, for example, stock-based
compensation, certain intangibles amortization expense, impairment
charges, restructuring, production transfer costs, and other
charges which management considers to be outside our core operating
results. Knowles believes that its presentation of these 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. For a reconciliation of these non-GAAP financial
measures to the most directly comparable GAAP financial measures,
see the reconciliation table accompanying this release.
Webcast and Conference Call Information
Investors can listen to a live or replay webcast of the
Company’s quarterly financial conference call at http://investor.knowles.com. The live webcast will
begin today at 3:30 p.m. Central time. The webcast replay will be
available after 7:00 p.m. Central time today.
A conference call replay will be available after 7:00 p.m.
Central time on October 24 through 11:59 p.m. Central time on
October 31 at (800) 770-2030 (Toll-Free Dial-In); (609) 800-9909
(Toll Dial-In). The conference ID is 8193117. A webcast replay will
also be accessible via the Knowles website at http://investor.knowles.com for a limited
time.
About Knowles
Knowles is a market leader and global provider of
high-performance capacitors and radio frequency ("RF") filtering
products, and advanced micro-acoustic microphones and balanced
armature speakers, serving the medtech, defense, electric vehicle,
and industrial markets. Knowles' focus on the customer, combined
with unique technology, proprietary manufacturing techniques, and
global operational expertise, enables us to deliver innovative
solutions across multiple applications. Founded in 1946 and
headquartered in Itasca, Illinois, Knowles is a global organization
with employees in 11 countries. The Company continues to invest in
high value solutions to diversify its revenue and increase exposure
to high growth markets. For more information, visit knowles.com.
Forward-Looking Statements
This news release contains forward-looking statements within the
meaning of the safe harbor provisions of the United States Private
Securities Litigation Reform Act of 1995, such as statements about
our future plans, objectives, expectations, financial performance,
and continued business operations. The words "believe," "expect,"
"anticipate," "project," "estimate," "budget," "continue," "could,"
"intend," "may," "plan," "potential," "predict," "seek," "should,"
"will," "would," "objective," "forecast," "goal," "guidance,"
"outlook," "effort," "target," and similar expressions, among
others, generally identify forward-looking statements, which speak
only as of the date the statements were made. The statements in
this news release are based on currently available information and
the current expectations, forecasts, and assumptions of Knowles’
management concerning risks and uncertainties that could cause
actual outcomes or results to differ materially from those outcomes
or results that are projected, anticipated, or implied in these
statements. Other risks and uncertainties include, but are not
limited to: the occurrence of any event, change, or other
circumstance that could give rise to the termination of the
Transaction; the possibility that various closing conditions
associated with the Transaction may not be satisfied or waived; the
possibility of a failure to obtain, delays in obtaining or adverse
conditions contained in regulatory or other required approvals;
unanticipated difficulties or expenditures relating to the
Transaction; legal proceedings that may be instituted against
Knowles and others following announcement of the Transaction;
disruptions of current plans and operations caused by the
announcement and pendency of the Transaction; potential
difficulties in employee retention as a result of the announcement
and pendency of the Transaction; the response of customers,
distributors, suppliers and competitors to the announcement of the
Transaction; incurrence of additional impairment charges and a
significant charge to earnings due to future events or factors,
such as the Company’s inability to realize expected synergies from
its acquisitions; fluctuations in our stock's market price;
fluctuations in operating results and cash flows; our ability to
prevent or identify quality issues in our products or to promptly
remedy any such issues that are identified; the timing of OEM
product launches; risks associated with increasing our inventories
in advance of anticipated orders by customers; global economic
instability, including due to inflation, rising interest rates,
negative impacts caused by pandemics and public health crises, or
the impacts of geopolitical uncertainties; the impact of changes to
laws and regulations that affect the Company’s ability to offer
products or services to customers in different regions; our ability
to achieve reductions in our operating expenses; the ability to
qualify our products and facilities with customers; our ability to
obtain, enforce, defend or monetize our intellectual property
rights; disruption caused by a cybersecurity incident, including a
cyber-attack, cyber breach, theft, or other unauthorized access;
increases in the costs of critical raw materials and components;
availability of raw materials and components; managing new product
ramps and introductions for our customers; our dependence on a
limited number of large customers; our ability to maintain and
expand our existing relationships with leading OEMs in order to
maintain and increase our revenue; increasing competition and new
entrants in the market for our products; our ability to develop new
or enhanced products or technologies in a timely manner that
achieve market acceptance; our reliance on third parties to
manufacture, assemble, and test our products and sub-components;
escalating international trade tensions, new or increased tariffs
and trade wars among countries; financial risks, including risks
relating to currency fluctuations, credit risks and fluctuations in
the market value of the Company; a sustained decline in our stock
price and market capitalization may result in the impairment of
certain intangible or long-lived assets; market risk associated
with fluctuations in commodity prices, particularly for various
precious metals used in our manufacturing operation, changes in tax
laws, changes in tax rates and exposure to additional tax
liabilities; and other risks, relevant factors, and uncertainties
identified in our Annual Report on Form 10-K for the fiscal year
ended December 31, 2023, subsequent Reports on Forms 10-Q and 8-K
and our other filings we make with the U.S. Securities and Exchange
Commission. Knowles disclaims any intention or obligation to update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, except as required by
law.
INVESTOR
SUPPLEMENT - THIRD QUARTER 2024
KNOWLES CORPORATION
CONSOLIDATED STATEMENTS OF
EARNINGS
(in millions, except per share
amounts)
(unaudited)
Quarter Ended
September 30,
2024
June 30, 2024
September 30,
2023
Revenues
$
142.5
$
135.2
$
108.1
Cost of goods sold
79.5
77.1
57.5
Restructuring charges - cost of goods
sold
0.1
0.3
0.2
Gross profit
62.9
57.8
50.4
Research and development expenses
10.2
9.6
8.1
Selling and administrative expenses
33.9
35.6
29.4
Restructuring charges
0.1
(0.1
)
1.5
Operating expenses
44.2
45.1
39.0
Operating earnings
18.7
12.7
11.4
Interest expense, net
3.9
4.6
0.6
Other expense (income), net
2.6
0.3
(0.5
)
Earnings before income taxes and
discontinued operations
12.2
7.8
11.3
Provision for (benefit from) income
taxes
3.0
3.0
(3.9
)
Earnings from continuing
operations
9.2
4.8
15.2
(Loss) earnings from discontinued
operations, net
(8.7
)
(264.1
)
1.4
Net earnings (loss)
$
0.5
$
(259.3
)
$
16.6
Earnings per share from continuing
operations:
Basic
$
0.10
$
0.05
$
0.17
Diluted
$
0.10
$
0.05
$
0.17
(Loss) earnings per share from
discontinued operations:
Basic
$
(0.09
)
$
(2.95
)
$
0.01
Diluted
$
(0.09
)
$
(2.93
)
$
0.01
Net earnings (loss) per share:
Basic
$
0.01
$
(2.90
)
$
0.18
Diluted
$
0.01
$
(2.88
)
$
0.18
Weighted-average common shares
outstanding:
Basic
88.7
89.4
90.8
Diluted
89.7
89.9
91.4
KNOWLES CORPORATION
CONSOLIDATED STATEMENTS OF
EARNINGS
(in millions, except per share
amounts)
(unaudited)
Nine Months Ended
September 30,
2024
September 30,
2023
Revenues
$
411.0
$
317.6
Cost of goods sold
235.7
172.2
Restructuring charges - cost of goods
sold
1.4
0.2
Gross profit
173.9
145.2
Research and development expenses
29.2
24.0
Selling and administrative expenses
106.8
87.3
Restructuring charges
1.5
1.8
Operating expenses
137.5
113.1
Operating earnings
36.4
32.1
Interest expense, net
12.9
2.2
Other expense, net
2.5
0.5
Earnings before income taxes and
discontinued operations
21.0
29.4
Provision for (benefit from) income
taxes
8.0
(9.6
)
Earnings from continuing
operations
13.0
39.0
Loss from discontinued operations, net
(269.3
)
(14.0
)
Net (loss) earnings
$
(256.3
)
$
25.0
Earnings per share from continuing
operations:
Basic
$
0.15
$
0.43
Diluted
$
0.14
$
0.42
Loss per share from discontinued
operations:
Basic
$
(3.02
)
$
(0.16
)
Diluted
$
(2.98
)
$
(0.15
)
Net (loss) earnings per share:
Basic
$
(2.87
)
$
0.27
Diluted
$
(2.84
)
$
0.27
Weighted-average common shares
outstanding:
Basic
89.2
91.2
Diluted
90.2
91.9
KNOWLES CORPORATION
RECONCILIATION OF GAAP
FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (1)
(in millions, except per share
amounts)
(unaudited)
Quarter Ended
Nine Months Ended
September 30,
2024
June 30, 2024
September 30,
2023
September 30,
2024
September 30,
2023
Gross profit
$
62.9
$
57.8
$
50.4
$
173.9
$
145.2
Gross profit as % of revenues
44.1
%
42.8
%
46.6
%
42.3
%
45.7
%
Stock-based compensation expense
0.3
0.4
0.3
1.1
1.3
Restructuring charges
0.1
0.3
0.2
1.4
0.2
Production transfer costs (2)
1.3
0.7
—
2.8
—
Acquisition-related costs (3)
0.2
0.6
—
2.2
—
Other (4)
—
—
—
1.1
—
Non-GAAP gross profit
$
64.8
$
59.8
$
50.9
$
182.5
$
146.7
Non-GAAP gross profit as % of revenues
45.5
%
44.2
%
47.1
%
44.4
%
46.2
%
Research and development
expenses
$
10.2
$
9.6
$
8.1
$
29.2
$
24.0
Stock-based compensation expense
(0.6
)
(0.5
)
(0.5
)
(1.6
)
(1.5
)
Intangibles amortization expense
(0.6
)
(0.6
)
(0.1
)
(1.8
)
(0.3
)
Acquisition-related costs (3)
(0.1
)
(0.1
)
—
(0.5
)
—
Non-GAAP research and development
expenses
$
8.9
$
8.4
$
7.5
$
25.3
$
22.2
Selling and administrative
expenses
$
33.9
$
35.6
$
29.4
$
106.8
$
87.3
Stock-based compensation expense
(4.9
)
(5.0
)
(4.9
)
(14.1
)
(14.2
)
Intangibles amortization expense
(3.6
)
(3.6
)
(1.4
)
(11.0
)
(4.0
)
Production transfer costs (2)
(0.1
)
(0.1
)
—
(0.2
)
—
Acquisition-related costs (3)
(1.0
)
(1.3
)
(3.0
)
(4.8
)
(3.0
)
Other (4)
(0.3
)
(0.1
)
(0.8
)
(0.5
)
(1.6
)
Non-GAAP selling and administrative
expenses
$
24.0
$
25.5
$
19.3
$
76.2
$
64.5
Operating expenses
$
44.2
$
45.1
$
39.0
$
137.5
$
113.1
Stock-based compensation expense
(5.5
)
(5.5
)
(5.4
)
(15.7
)
(15.7
)
Intangibles amortization expense
(4.2
)
(4.2
)
(1.5
)
(12.8
)
(4.3
)
Restructuring charges
(0.1
)
0.1
(1.5
)
(1.5
)
(1.8
)
Production transfer costs (2)
(0.1
)
(0.1
)
—
(0.2
)
—
Acquisition-related costs (3)
(1.1
)
(1.4
)
(3.0
)
(5.3
)
(3.0
)
Other (4)
(0.3
)
(0.1
)
(0.8
)
(0.5
)
(1.6
)
Non-GAAP operating expenses
$
32.9
$
33.9
$
26.8
$
101.5
$
86.7
Net earnings from continuing
operations
$
9.2
$
4.8
$
15.2
$
13.0
$
39.0
Interest expense, net
3.9
4.6
0.6
12.9
2.2
Provision for (benefit from) income
taxes
3.0
3.0
(3.9
)
8.0
(9.6
)
Earnings from continuing operations
before interest and income taxes
16.1
12.4
11.9
33.9
31.6
Earnings from continuing operations before
interest and income taxes as % of revenues
11.3
%
9.2
%
11.0
%
8.2
%
9.9
%
Stock-based compensation expense
5.8
5.9
5.7
16.8
17.0
Intangibles amortization expense
4.2
4.2
1.5
12.8
4.3
Restructuring charges
0.2
0.2
1.7
2.9
2.0
Production transfer costs (2)
1.4
0.8
—
3.0
—
Acquisition-related costs (3)
1.3
2.0
3.0
7.5
3.0
Other (4)
1.0
(0.3
)
0.8
1.6
1.6
Adjusted earnings from continuing
operations before interest and income taxes
$
30.0
$
25.2
$
24.6
$
78.5
$
59.5
Adjusted earnings from continuing
operations before interest and income taxes as % of revenues
21.1
%
18.6
%
22.8
%
19.1
%
18.7
%
Net earnings from continuing
operations
$
9.2
$
4.8
$
15.2
$
13.0
$
39.0
Interest expense, net
3.9
4.6
0.6
12.9
2.2
Provision for (benefit from) income
taxes
3.0
3.0
(3.9
)
8.0
(9.6
)
Earnings from continuing operations
before interest and income taxes
16.1
12.4
11.9
33.9
31.6
Non-GAAP reconciling adjustments (6)
13.9
12.8
12.7
44.6
27.9
Depreciation expense
5.0
5.1
4.5
15.3
13.7
Adjusted earnings from continuing
operations before interest, income taxes, depreciation, and
amortization ("Adjusted EBITDA")
$
35.0
$
30.3
$
29.1
$
93.8
$
73.2
Adjusted EBITDA as a % of revenues
24.6
%
22.4
%
26.9
%
22.8
%
23.0
%
Quarter Ended
Nine Months Ended
September 30,
2024
June 30, 2024
September 30,
2023
September 30,
2024
September 30,
2023
Provision for (benefit from) income
taxes
$
3.0
$
3.0
$
(3.9
)
$
8.0
$
(9.6
)
Income tax effects of non-GAAP reconciling
adjustments (5)
(1.1
)
(0.8
)
9.1
(2.0
)
22.8
Non-GAAP provision for income
taxes
$
1.9
$
2.2
$
5.2
$
6.0
$
13.2
Net earnings from continuing
operations
$
9.2
$
4.8
$
15.2
$
13.0
$
39.0
Non-GAAP reconciling adjustments (6)
13.9
12.8
12.7
44.6
27.9
Income tax effects of non-GAAP reconciling
adjustments (5)
(1.1
)
(0.8
)
9.1
(2.0
)
22.8
Non-GAAP net earnings
$
24.2
$
18.4
$
18.8
$
59.6
$
44.1
Diluted earnings per share from
continuing operations
$
0.10
$
0.05
$
0.17
$
0.14
$
0.42
Earnings per share non-GAAP reconciling
adjustment (5)(6)
0.16
0.15
0.03
0.50
0.05
Non-GAAP diluted earnings per
share
$
0.26
$
0.20
$
0.20
$
0.64
$
0.47
Diluted average shares
outstanding
89.7
89.9
91.4
90.2
91.9
Non-GAAP adjustment (7)
2.6
3.3
2.6
2.6
2.5
Non-GAAP diluted average shares
outstanding (7)
92.3
93.2
94.0
92.8
94.4
Notes:
(1)
In addition to the GAAP financial measures
included herein, Knowles has presented certain non-GAAP financial
measures that exclude certain amounts that are included in the most
directly comparable GAAP measures. Knowles believes that non-GAAP
measures are useful as supplements to its GAAP results of
operations to evaluate certain aspects of its operations and
financial performance, and its management team primarily focuses on
non-GAAP items in evaluating Knowles' performance for business
planning purposes. Knowles also believes that these measures assist
it with comparing its performance between various reporting periods
on a consistent basis, as these measures remove from operating
results the impact of items that, in Knowles' opinion, do not
reflect its core operating performance. Knowles believes that its
presentation of non-GAAP financial measures is useful because it
provides investors and securities analysts with the same
information that Knowles uses internally for purposes of assessing
its core operating performance.
(2)
Production transfer costs represent
duplicate costs incurred to migrate manufacturing to facilities
primarily within the United States. These amounts are included in
the corresponding Gross profit and Earnings from continuing
operations before interest and income taxes for each period
presented.
(3)
These expenses are related to the
acquisition of Cornell Dubilier by the Precision Devices segment.
These expenses include ongoing costs to facilitate integration, the
amortization of fair value adjustments to inventory, and costs
incurred by the Company to carry out this transaction.
(4)
Other expenses include non-recurring
professional service fees related to the execution of various
reorganization projects, foreign currency exchange rate impacts on
restructuring balances, and the ongoing net lease cost (income)
related to facilities not used in operations.
(5)
Income tax effects of non-GAAP reconciling
adjustments are calculated using the applicable tax rates in the
jurisdictions of the underlying adjustments.
(6)
The non-GAAP reconciling adjustments are
those adjustments made to reconcile Earnings from continuing
operations before interest and income taxes to Adjusted earnings
from continuing operations before interest and income taxes.
(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.
KNOWLES CORPORATION
CONSOLIDATED BALANCE
SHEETS
(in millions, except share and
per share amounts)
(unaudited)
September 30, 2024
December 31, 2023
Current assets:
Cash and cash equivalents
$
92.6
$
87.3
Receivables, net of allowances of $0.1 and
$0.2
105.7
90.7
Inventories
124.9
127.0
Prepaid and other current assets
9.8
6.9
Current assets of discontinued
operations
103.0
116.9
Total current assets
436.0
428.8
Property, plant, and equipment,
net
134.4
141.9
Goodwill
270.4
270.5
Intangible assets, net
162.3
175.6
Operating lease right-of-use
assets
7.8
10.2
Other assets and deferred
charges
115.6
113.7
Non-current assets of discontinued
operations
44.8
322.1
Total assets
$
1,171.3
$
1,462.8
Current liabilities:
Current maturities of long-term debt
$
49.5
$
47.1
Accounts payable
34.2
27.0
Accrued compensation and employee
benefits
27.0
23.2
Operating lease liabilities
2.3
3.1
Other accrued expenses
18.5
20.9
Federal and other taxes on income
16.4
2.8
Current liabilities of discontinued
operations
38.0
40.5
Total current liabilities
185.9
164.6
Long-term debt
175.5
224.1
Deferred income taxes
0.8
0.7
Long-term operating lease
liabilities
5.5
6.1
Other liabilities
24.0
29.3
Non-current liabilities of discontinued
operations
2.2
3.9
Commitments and contingencies
Stockholders' equity:
Preferred stock - $0.01 par value;
10,000,000 shares authorized; none issued
—
—
Common stock - $0.01 par value;
400,000,000 shares authorized; 98,271,587 and 88,380,502 shares
issued and outstanding at September 30, 2024, respectively, and
97,297,703 and 89,092,871 shares issued and outstanding at December
31, 2023, respectively
1.0
1.0
Treasury stock - at cost; 9,891,085 and
8,204,832 shares at September 30, 2024 and December 31, 2023,
respectively
(180.8
)
(151.2
)
Additional paid-in capital
1,707.0
1,689.9
Accumulated deficit
(632.1
)
(375.8
)
Accumulated other comprehensive loss
(117.7
)
(129.8
)
Total stockholders' equity
777.4
1,034.1
Total liabilities and stockholders'
equity
$
1,171.3
$
1,462.8
KNOWLES CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in millions)
(unaudited)
Nine Months Ended September
30,
2024
2023
Operating Activities
Net (loss) earnings
$
(256.3
)
$
25.0
Adjustments to reconcile net (loss)
earnings to cash from operating activities:
Goodwill impairment
262.5
—
Depreciation and amortization
40.7
33.8
Stock-based compensation
21.4
21.8
Non-cash interest expense and amortization
of debt issuance costs
6.4
0.6
Impairment of disposal group
2.3
—
Deferred income taxes
0.7
1.6
Non-cash restructuring charges
0.3
(1.8
)
Gain on sale of fixed assets
(1.1
)
(10.0
)
Gain on sale of asset
(7.2
)
—
Other, net
7.4
(2.4
)
Changes in assets and liabilities
(excluding effects of foreign exchange):
Receivables, net
(8.4
)
15.5
Inventories, net
11.2
(19.0
)
Prepaid and other current assets
(0.3
)
(0.8
)
Accounts payable
5.8
11.3
Accrued compensation and employee
benefits
3.5
0.3
Other accrued expenses
(3.1
)
(2.7
)
Accrued taxes
15.3
(2.3
)
Other non-current assets and non-current
liabilities
(6.1
)
(8.6
)
Net cash provided by operating
activities
95.0
62.3
Investing Activities
Proceeds from the sale of asset
7.2
—
Proceeds from the sale of property, plant,
and equipment
—
12.4
Capital expenditures
(10.3
)
(11.8
)
Acquisition of asset
—
(0.3
)
Purchase of investments
(0.5
)
(0.4
)
Proceeds from the sale of investments
0.5
0.4
Net cash (used in) provided by
investing activities
(3.1
)
0.3
Financing Activities
Payments under revolving credit
facility
(130.0
)
—
Borrowings under revolving credit
facility
78.0
—
Repurchase of common stock
(29.5
)
(27.5
)
Tax on restricted and performance stock
unit vesting and stock option exercises
(6.4
)
(6.2
)
Payments of debt issuance costs
—
(1.9
)
Payments of finance lease obligations
(1.4
)
(1.3
)
Proceeds from exercise of stock
options
2.1
1.6
Net cash used in financing
activities
(87.2
)
(35.3
)
Effect of exchange rate changes on cash
and cash equivalents
0.6
(0.4
)
Net increase in cash and cash
equivalents
5.3
26.9
Cash and cash equivalents at beginning of
period
87.3
48.2
Cash and cash equivalents at end of
period
$
92.6
$
75.1
KNOWLES CORPORATION
RECONCILIATION OF GAAP CASH
FLOW MEASURES TO NON-GAAP CASH FLOW MEASURES (1)
(in millions, except per share
amounts)
(unaudited)
Quarter Ended
Nine Months Ended
September 30, 2024
June 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
Net cash provided by operating
activities
$
52.8
$
24.9
$
39.9
$
95.0
$
62.3
Less: amounts attributable to discontinued
operations
(22.3
)
1.3
(21.9
)
(22.1
)
(21.6
)
Non-GAAP net cash attributable to
continuing operations
30.5
26.2
18.0
72.9
40.7
Capital expenditures
(3.7
)
(3.2
)
(3.9
)
(10.3
)
(11.8
)
Less: amounts attributable to discontinued
operations
0.2
0.2
0.8
0.9
3.8
Non-GAAP capital expenditures
attributable to continuing operations
(3.5
)
(3.0
)
(3.1
)
(9.4
)
(8.0
)
Non-GAAP net cash attributable to
continuing operations
30.5
26.2
18.0
72.9
40.7
Non-GAAP capital expenditures attributable
to continuing operations
(3.5
)
(3.0
)
(3.1
)
(9.4
)
(8.0
)
Adjusted free cash flow
$
27.0
$
23.2
$
14.9
$
63.5
$
32.7
Adjusted free cash flow as a % of
revenues
18.9
%
17.2
%
13.8
%
15.5
%
10.3
%
(1)
In addition to measuring cash flow generation based on the
operating, investing, and financing classifications included in the
Consolidated Statement of Cash Flows, Knowles also measures
adjusted free cash flow and adjusted free cash flow as a percentage
of revenues. Adjusted free cash flow is defined as non-GAAP net
cash attributable to continuing operations less non-GAAP capital
expenditures attributable to continuing operations. Non-GAAP net
cash attributable to continuing operations is defined as net cash
provided by operating activities less amounts attributable to
discontinued operations. Non-GAAP capital expenditures attributable
to continuing operations is defined as capital expenditures less
amounts attributable to discontinued operations. Knowles believes
these measures are helpful in measuring its cash generated from its
continuing operations that is available to repay debt, fund
acquisitions, and repurchase Knowles common stock. Adjusted free
cash flow and adjusted free cash flow as a percentage of revenues
are not presented in accordance with GAAP and may not be comparable
to similarly titled measures used by other companies in our
industry. As such, adjusted free cash flow and adjusted free cash
flow as a percentage of revenues should not be considered in
isolation from, or as an alternative to, any other liquidity
measures determined in accordance with GAAP.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241024538195/en/
Financial Contact: Sarah Cook Knowles Investor Relations
Email: investorrelations@knowles.com
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