Welcome!

News Feed Item

Knowles Reports Q1 2014 Financial Results

Knowles Corporation (NYSE: KN), a market leader and global supplier of advanced micro-acoustic solutions and specialty components today announced results for the first quarter ended March 31, 2014.

“We delivered first quarter earnings that were in line with our prior analyst day projections provided on February 19, 2014,” said Jeffrey Niew, President and CEO of Knowles. “Revenue from both our Mobile Consumer Electronics and Specialty Components segments exceeded our expectations in the first quarter. Within Mobile Consumer, we experienced stronger than expected demand from a North American OEM customer. Sales of Precision Devices were also better than we expected fueled by improved communications infrastructure spending as 4G/LTE rollouts continue throughout the world.

“We continue to believe that 2014 will be another year of revenue growth for Knowles, driven by new product launches weighted to the second half of the year in our Mobile Consumer segment, and continued strength in the Specialty Components segment. With the projected top line growth and the continuing optimization of our global manufacturing footprint, we expect to drive year-over-year margin expansion beginning in the fourth quarter of 2014.”

Business Highlights

Significant achievements relative to business performance, innovation and operational excellence are as follows:

  • Drove a 12 percent year-over-year increase in Mobile Consumer Electronics revenue in the first quarter, excluding sales to Nokia and Blackberry.
  • Shipped approximately 2 million Integrated Audio Solution modules during the quarter.
  • Released and shipped 30 million units of the world's first digital multimode microphone which features 3 times lower power consumption relative to other digital microphones and performance matching to enable longer battery life and always-on listening functionality.
  • Selected as main microphone supplier for GN ReSound’s LiNX and First products. The ReSound LiNX and Beltone First are the world’s first Made for iPhone (MFi) hearing aids.
  • Announced plan to close our Vienna, Austria manufacturing facility and transfer production to existing facilities in Asia by mid-year 2014.

Financial Highlights

The following highlights the Company’s financial performance on both a GAAP and supplemental non-GAAP basis. The Company provides supplemental information regarding its gross margin, operating expenses, earnings before interest and income taxes and adjusted earnings before interest and income taxes on a non-GAAP basis that excludes stock compensation as well as certain intangibles amortization expense, production transfer costs, and other charges which management considers to be outside our core operating results. Non-GAAP results are not presented in accordance with GAAP and may not be comparable to similarly titled non-GAAP information provided by other companies. Non-GAAP information should be considered a supplement to, and not a substitute for, financial statements prepared in accordance with GAAP. A reconciliation of GAAP to non-GAAP results is attached to this press release.

  • Revenue for the first quarter of 2014 was $273.4 million compared with $276.1 million reported in the same period one year ago.
  • Gross profit for the first quarter of 2014 was $83.1 million compared with gross profit of $94.5 million reported in the same period one year ago. Non-GAAP gross profit for the first quarter of 2014 was $89.0 million compared with non-GAAP gross profit of $97.4 million, reported in the same period one year ago.
  • Net earnings for the first quarter of 2014 was $7.6 million compared with $11.9 million reported in the same period one year ago. Non-GAAP net earnings for the first quarter of 2014 was $27.5 million compared with $26.6 million reported in the same period one year ago.
  • Earnings before interest and income taxes for the first quarter of 2014 were $10.8 million compared with $24.0 million in the year ago period. Current period results include $10.7 million from amortization of intangibles, $9.1 million in production transfer costs and spin related charges and $1.5 million in stock-based compensation.
  • Adjusted earnings before interest and income taxes for the first quarter of 2014 were $32.1 million compared with $40.8 million reported in the same period one year ago.
  • EPS for the first quarter of 2014 was $0.09 per diluted share compared with $0.14 per diluted share in the year ago period.
  • Non-GAAP EPS for the first quarter of 2014 was $0.32 per diluted share compared with $0.31 in the year ago period.

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.

Investors can also listen to the live call at 3:30 p.m. Central time today by calling (877) 359-9508 (United States) or (224) 357-2393 (International). The conference call replay will be available after 7:00 p.m. Central time on April 28, 2014 through 11:59 p.m. Central time on May 5, 2014 at (855) 859-2056 (United States) or (404) 537-3406 (International). The access code is 13873943.

About Knowles:

Knowles Corporation (NYSE: KN) is a market leader and global supplier of advanced micro-acoustic solutions and specialty components serving the mobile communications, consumer electronics, medical technology, military, aerospace and industrial markets. Knowles has a leading position in micro-electro-mechanical systems microphones, speakers and receivers which are used in smartphones, tablets and mobile handsets. Knowles is also a leading manufacturer of transducers used in hearing aids and other medical devices and has a strong position in oscillators (timing devices) and capacitor components which enable various types of communication. Knowles’ focus on the customer, combined with unique technology, rigorous testing and global scale, helps to deliver innovative solutions and consistently dependable and precise products. Founded in 1946 and headquartered in Itasca, Illinois, Knowles has more than 10,000 employees in 36 locations around the world. For more information, visit www.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. The words “believe,” “project,” “expect,” and similar expressions, among others, generally identify forward-looking statements. The statements in this news release are based on current plans, expectations, forecasts and assumptions involving 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. These risks and uncertainties include, but are not limited to: the pace and success of achieving the cost savings from our announced restructurings; fluctuations in our stock's market price; fluctuations in operating results and cash flows; unexpected technological obsolescence and the emergence of new technologies; changes in macroeconomic conditions, both in the U.S. and internationally; our financial performance during and after the current economic conditions; foreign currency exchange rate fluctuations; our ability to maintain and improve costs, quality and delivery for our customers; our ability to qualify our products and facilities with customers; risks and costs inherent in litigation; our ability to obtain, protect, defend or monetize our intellectual property rights; whether our announced restructurings will adversely affect our cost structure; increases in the costs of critical raw materials and components; availability of raw materials and components; competition; anticipated growth for us and adoption of our technologies and solutions that may not occur; managing rapid growth; managing rapid declines in customer demand for certain of our products or solutions and other related customer challenges that may occur; our ability to successfully consummate acquisitions and divestitures; our obligations and risks under various transaction agreements that were executed as part of our spin-off from our former parent company, Dover Corporation; managing the integration of our businesses which were included in our recent spin-off from Dover Corporation; managing new product ramps and introductions for our customers; risks associated with international sales and operations; retaining key personnel; our dependence on a limited number of large customers; business and competitive factors generally affecting the advanced micro-acoustic solutions and specialty components industry, our customers and our business; other factors that we may not have currently identified or quantified; and other risks, relevant factors and uncertainties identified in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, subsequent Reports on Forms 10-Q and 8-K and our other filings we make with the SEC. 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.

Supplemental Information

The financial results disclosed in this release include certain measures calculated and presented in accordance with GAAP. 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 and non-GAAP diluted earnings per share to facilitate evaluation of Knowles’ operating performance. These non-GAAP financial measures exclude certain amounts that are included in the most directly comparable GAAP measure. In addition, these non-GAAP financial measures do not have standard meanings and may vary from similarly titled non-GAAP financial measures used by other companies. Knowles uses non-GAAP measures as supplements to its GAAP results of operations in evaluating certain aspects of its business, and its Board of Directors and executive management team focus on non-GAAP items as key measures of Knowles’ performance for business planning purposes. These measures assist Knowles in 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 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 tables included elsewhere in this release.

 

INVESTOR SUPPLEMENT - FIRST QUARTER 2014

           
KNOWLES CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(in millions except share and per share amounts)
(unaudited)
 
Quarter Ended
March 31, % of December 31, % of March 31, % of
2014 Revenues 2013 Revenues 2013 Revenues
Revenues $ 273.4 $ 330.3 $ 276.1
Cost of goods and services   190.3   216.2   181.6  
Gross profit 83.1 30.4 % 114.1 34.5 % 94.5 34.2 %
Research and development 19.2 7.0 % 20.6 6.2 % 20.9 7.6 %
Selling and administrative expenses   52.7 19.3 %   52.4 15.9 %   51.6   18.7 %
Operating expenses   71.9 26.3 %   73.0 22.1 %   72.5   26.3 %
Operating earnings 11.2 4.1 % 41.1 12.4 % 22.0 8.0 %
Interest expense, net 0.7 5.8 11.9
Other expense (income), net   0.4     (2.0 )
Earnings before income taxes 10.1 3.7 % 35.3 10.7 % 12.1 4.4 %
Provision for income taxes   2.5   2.3   0.2  
Net earnings $ 7.6 2.8 % $ 33.0 10.0 % $ 11.9   4.3 %
 
Earnings per share:
Basic earnings per share (1) $ 0.09 $ 0.39 $ 0.14
Diluted earnings per share (1) $ 0.09 $ 0.39 $ 0.14
 
Weighted average common shares:
Basic (1) 85,023,862 85,019,159 85,019,159
Diluted (1) 85,126,796 85,019,159 85,019,159
 
(1) On February 28, 2014, Dover shareholders of record as of the close of business on February 19, 2014 received one share of Knowles common stock for every two shares of Dover's common stock held as of the record date. The computation of basic and diluted earnings per common share for all periods through December 31, 2013 is calculated using the shares distributed on February 28, 2014.
 
KNOWLES CORPORATION
GAAP FINANCIAL MEASURES AND NON-GAAP FINANCIAL MEASURES (1)
(in millions)
(unaudited)
     
Quarter Ended
March 31, December 31, March 31,
2014 2013 2013
Revenues $ 273.4 $ 330.3 $ 276.1
 
Non-GAAP Gross Profit 89.0 124.9 97.4
Non-GAAP Operating Expenses   56.5   61.7   58.6  
Non-GAAP Operating Earnings $ 32.5 $ 63.2 $ 38.8
Other Expense (Income), net   0.4   -   (2.0 )
Adjusted Earnings Before Interest and Income Taxes $ 32.1 $ 63.2 $ 40.8  
 
(1) In addition to the GAAP financial measures included herein, Knowles has presented certain non-GAAP financial measures. Knowles uses non-GAAP measures as supplements to its GAAP results of operations in evaluating certain aspects of its business, and its Board of Directors and executive management team focus on non-GAAP items as key measures of Knowles' performance for business planning purposes. These measures assist Knowles in 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.
 
KNOWLES CORPORATION
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
(in millions, except for share and per share amounts)
(unaudited)
     
Quarter Ended
March 31, December 31, March 31,
2014 2013 2013
Gross Profit $ 83.1 $ 114.1 $ 94.5
Asset Impairment and Related Inventory Charges 0.8 6.0 0.5
Restructuring Charges - 1.0 1.8
Production Transfers Costs (1)   5.1     3.8     0.6  
Non-GAAP Gross Profit $ 89.0   $ 124.9   $ 97.4  
Non-GAAP Gross Profit as % of Revenues 32.6 % 37.8 % 35.3 %
 
Research and Development $ 19.2 $ 20.6 $ 20.9
Selling and Administrative Expenses   52.7     52.4     51.6  
Operating Expenses $ 71.9 $ 73.0 $ 72.5
Stock-Based Compensation Expense (1.5 ) (0.3 ) (0.5 )
Intangibles Amortization Expense (10.7 ) (10.5 ) (11.6 )
Restructuring Charges (0.2 ) (0.4 ) (1.6 )
Production Transfers Costs (1) (0.7 ) (0.1 ) (0.2 )
Other   (2.3 )   -     -  
Non-GAAP Operating Expenses (2) $ 56.5   $ 61.7   $ 58.6  
Non-GAAP Operating Expenses as % of Revenues 20.7 % 18.7 % 21.2 %
 
Net Earnings $ 7.6 $ 33.0 $ 11.9
Interest Expense, net 0.7 5.8 11.9
Provision for Income Taxes   2.5     2.3     0.2  
Earnings Before Interest and Income Taxes 10.8 41.1 24.0
Stock-Based Compensation Expense 1.5 0.3 0.5
Intangibles Amortization Expense 10.7 10.5 11.6
Asset Impairment and Related Inventory Charges 0.8 6.0 0.5
Restructuring Charges 0.2 1.4 3.4
Production Transfers Costs (1) 5.8 3.9 0.8
Other   2.3     -     -  
Adjusted Earnings Before Interest and Income Taxes $ 32.1   $ 63.2   $ 40.8  
Adjusted Earnings Before Interest and Income Taxes as % of Revenues 11.7 % 19.1 % 14.8 %
 
Net Earnings $ 7.6 $ 33.0 $ 11.9
Non-GAAP Reconciling Adjustments 21.3 22.1 16.8
Income Tax Effects of Non-GAAP Reconciling Adjustments   (1.4 )   (2.3 )   (2.1 )
Non-GAAP Net Earnings $ 27.5   $ 52.8   $ 26.6  
Non-GAAP Net Earnings as % of Revenues 10.1 % 16.0 % 9.6 %
 
Non-GAAP Diluted Earnings per Share (3) $ 0.32 $ 0.62 $ 0.31
 
Diluted Average Shares Outstanding (3) 85,126,796 85,019,159 85,019,159
Non-GAAP Adjustment (4)   121,919     -     -  
Non-GAAP Diluted Average Shares Outstanding (3) (4)   85,248,715     85,019,159     85,019,159  
 
(1) Production Transfer Costs represent one-time and duplicate costs incurred to migrate manufacturing to new and existing facilities in Asia, primarily for speakers, hearing health products, and capacitors. These amounts are included in the corresponding Gross Profit, Operating Expenses and Earnings Before Interest and Income Taxes for each period presented.
 
(2) All reconciling adjustments between Operating Expenses and non-GAAP Operating Expenses impact Selling and Administrative Expenses. Research and Development did not have any non-GAAP reconciling adjustments during the periods presented above.
 
(3) On February 28, 2014, Dover shareholders of record as of the close of business on February 19, 2014 received one share of Knowles common stock for every two shares of Dover's common stock held as of the record date. The computation diluted earnings per common share for all periods through December 31, 2013 is calculated using the shares distributed on February 28, 2014.
 
(4) 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 for share and per share amounts)
   
March 31, 2014 December 31, 2013
(unaudited)
Current assets:
Cash and cash equivalents $ 51.4 $ 105.6
Receivables, net of allowances of $1.0 and $1.7 188.5 224.6
Inventories, net 154.2 149.2
Prepaid and other current assets 15.6 11.8
Deferred tax assets   12.6   10.7
Total current assets 422.3 501.9
Property, plant and equipment, net 350.9 361.0
Goodwill 964.3 961.9
Intangible assets, net 312.5 318.3
Other assets and deferred charges   32.3   27.1
Total assets $ 2,082.3 $ 2,170.2
 
Current liabilities:
Current maturities of long-term debt 3.8 -
Accounts payable 129.1 143.8
Accrued compensation and employee benefits 29.2 40.9
Other accrued expenses 23.3 25.2
Federal and other taxes on income   12.2   -
Total current liabilities 197.6 209.9
Long-term debt 396.3 0
Deferred income taxes 49.1 45.9
Other liabilities 35 27.1
Commitments and contingencies
 
Equity:
Net parent company investment in Knowles Corporation, prior to separation - 1,850.8
 
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; 85,027,624 shares issued at March 31, 2014 0.9 -
Additional paid-in capital 1,365.6 -
Retained earnings 10.6 -
Accumulated other comprehensive earnings   27.2   36.5
Total Stockholders' Equity 1,404.3 36.5
Total equity   1,404.3   1,887.3
Total liabilities and equity $ 2,082.3 $ 2,170.2
 

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
SYS-CON Events announced today that Nihon Micron will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Nihon Micron Co., Ltd. strives for technological innovation to establish high-density, high-precision processing technology for providing printed circuit board and metal mount RFID tags used for communication devices. For more inf...
SYS-CON Events announced today that Massive Networks, that helps your business operate seamlessly with fast, reliable, and secure internet and network solutions, has been named "Exhibitor" of SYS-CON's 21st International Cloud Expo ®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. As a premier telecommunications provider, Massive Networks is headquartered out of Louisville, Colorado. With years of experience under their belt, their team of...
SYS-CON Events announced today that Suzuki Inc. will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Suzuki Inc. is a semiconductor-related business, including sales of consuming parts, parts repair, and maintenance for semiconductor manufacturing machines, etc. It is also a health care business providing experimental research for...
"Our strategy is to focus on the hyperscale providers - AWS, Azure, and Google. Over the last year we saw that a lot of developers need to learn how to do their job in the cloud and we see this DevOps movement that we are catering to with our content," stated Alessandro Fasan, Head of Global Sales at Cloud Academy, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
Enterprises are moving to the cloud faster than most of us in security expected. CIOs are going from 0 to 100 in cloud adoption and leaving security teams in the dust. Once cloud is part of an enterprise stack, it’s unclear who has responsibility for the protection of applications, services, and data. When cloud breaches occur, whether active compromise or a publicly accessible database, the blame must fall on both service providers and users. In his session at 21st Cloud Expo, Ben Johnson, C...
21st International Cloud Expo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Me...
Many organizations adopt DevOps to reduce cycle times and deliver software faster; some take on DevOps to drive higher quality and better end-user experience; others look to DevOps for a clearer line-of-sight to customers to drive better business impacts. In truth, these three foundations go together. In this power panel at @DevOpsSummit 21st Cloud Expo, moderated by DevOps Conference Co-Chair Andi Mann, industry experts will discuss how leading organizations build application success from all...
SYS-CON Events announced today that mruby Forum will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. mruby is the lightweight implementation of the Ruby language. We introduce mruby and the mruby IoT framework that enhances development productivity. For more information, visit http://forum.mruby.org/.
Cloud-based disaster recovery is critical to any production environment and is a high priority for many enterprise organizations today. Nearly 40% of organizations have had to execute their BCDR plan due to a service disruption in the past two years. Zerto on IBM Cloud offer VMware and Microsoft customers simple, automated recovery of on-premise VMware and Microsoft workloads to IBM Cloud data centers.
Why Federal cloud? What is in Federal Clouds and integrations? This session will identify the process and the FedRAMP initiative. But is it sufficient? What is the remedy for keeping abreast of cutting-edge technology? In his session at 21st Cloud Expo, Rasananda Behera will examine the proposed solutions: Private or public or hybrid cloud Responsible governing bodies How can we accomplish?
Today traditional IT approaches leverage well-architected compute/networking domains to control what applications can access what data, and how. DevOps includes rapid application development/deployment leveraging concepts like containerization, third-party sourced applications and databases. Such applications need access to production data for its test and iteration cycles. Data Security? That sounds like a roadblock to DevOps vs. protecting the crown jewels to those in IT.
SYS-CON Events announced today that Cedexis will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Cedexis is the leader in data-driven enterprise global traffic management. Whether optimizing traffic through datacenters, clouds, CDNs, or any combination, Cedexis solutions drive quality and cost-effectiveness.
Elon Musk is among the notable industry figures who worries about the power of AI to destroy rather than help society. Mark Zuckerberg, on the other hand, embraces all that is going on. AI is most powerful when deployed across the vast networks being built for Internets of Things in the manufacturing, transportation and logistics, retail, healthcare, government and other sectors. Is AI transforming IoT for the good or the bad? Do we need to worry about its potential destructive power? Or will we...
SYS-CON Events announced today that B2Cloud will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. B2Cloud specializes in IoT devices for preventive and predictive maintenance in any kind of equipment retrieving data like Energy consumption, working time, temperature, humidity, pressure, etc.
In his session at @ThingsExpo, Greg Gorman is the Director, IoT Developer Ecosystem, Watson IoT, will provide a short tutorial on Node-RED, a Node.js-based programming tool for wiring together hardware devices, APIs and online services in new and interesting ways. It provides a browser-based editor that makes it easy to wire together flows using a wide range of nodes in the palette that can be deployed to its runtime in a single-click. There is a large library of contributed nodes that help so...