Q3 Financial Results Above the High End of Projections
MCE Revenue Up Over 70 Percent Sequentially
Revenue from Chinese OEMs Doubles from Year Ago Period
ITASCA, Ill.--(BUSINESS WIRE)--Oct. 24, 2016--
Knowles Corporation (NYSE: KN), a market leader and global supplier of
advanced micro-acoustic, audio processing, and specialty component
solutions, today announced results for the third quarter ended September
30, 2016.
“Q3 revenue and earnings were above the high end of our guidance range,”
said Jeffrey Niew, president and CEO of Knowles. “In our mobile consumer
electronics segment, sales were up over 70 percent sequentially driven
by stronger than anticipated demand from a North American OEM and
continued strength from Chinese OEMs. Revenue from our specialty
components segment was lower due to delays with a customer’s new product
introduction and weaker capacitor sales. Higher sales volume in MCE
combined with our continued reductions in operating expenses across the
company resulted in EPS that was above the high end of our projected
range.”
“As we look to Q4 and 2017, we will continue to leverage our acoustics
capabilities and focus on emerging audio solutions that we expect will
drive long term profitable growth, particularly in handsets, wearables
and IoT devices. We believe these key applications will serve as
platforms for growth as we drive multi mic adoption, increase content
per device and expand into new markets,” continued Niew.
Financial Highlights
The following highlights the Company’s financial performance on both a
GAAP and supplemental non-GAAP basis for continuing operations* (in
millions except for per share data):
|
|
|
Q3FY16
|
|
Q2FY16
|
|
Q3FY15
|
|
Sequential
|
|
Year Ago
|
|
|
|
|
|
|
|
|
|
Change
|
|
Period Change
|
|
Revenue
|
|
$243.1
|
|
$190.3
|
|
$246.7
|
|
28%
|
|
(1)%
|
|
Gross Profit
|
|
$94.9
|
|
$72.9
|
|
$97.3
|
|
30%
|
|
(2)%
|
|
(as % of revenue)
|
|
39.0%
|
|
38.3%
|
|
39.4%
|
|
|
|
|
|
Non-GAAP Gross Profit
|
|
$95.7
|
|
$75.1
|
|
$102.1
|
|
27%
|
|
(6)%
|
|
(as % of revenue)
|
|
39.4%
|
|
39.5%
|
|
41.4%
|
|
|
|
|
|
Diluted Earnings (Loss) per
|
|
$0.24
|
|
$(0.08)
|
|
$0.05
|
|
NM***
|
|
380%
|
|
share**
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Diluted
|
|
$0.37
|
|
$0.13
|
|
$0.29
|
|
185%
|
|
28%
|
|
Earnings Per Share
|
|
|
|
|
|
|
|
|
|
|
* Continuing operations excludes the results of our speaker and receiver
product line which was sold on July 7, 2016.
** Current period results include $5.6 million from amortization of
intangibles, $5.2 million in stock-based compensation, $2.1 million in
restructuring charges, and $0.4 million in production transfer costs.
*** Not Meaningful
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 (loss) earnings per share, 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 uses non-GAAP measures as supplements
to its GAAP results of operations in evaluating certain aspects of its
business, and its executive management team focuses 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 including, for
example, stock-based compensation, certain intangibles amortization
expense, fixed asset 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.
Fourth Quarter 2016 Outlook
The forward looking guidance for the quarter ending December 31, 2016 on
a continuing operations basis is as follows:
|
|
|
GAAP
|
|
Adjustments
|
|
Non-GAAP
|
|
Revenue
|
|
$225 to $245 million
|
|
-
|
|
$225 to $245 million
|
|
Gross Profit Margin
|
|
38 to 41%
|
|
-
|
|
38 to 41%
|
|
EPS
|
|
$0.19 to $0.25
|
|
$0.10
|
|
$0.29 to $0.35
|
Q4 2016 GAAP results for continuing operations are expected to include
approximately $0.05 per share in stock-based compensation, $0.03 per
share in amortization of intangibles, $0.01 per share in amortization of
debt discount, $0.01 per share in production transfer costs. Expected Q4
2016 GAAP results exclude potential restructuring items.
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 on October 24
through 11:59 p.m. Central time on April 30, 2017.
Investors can also listen to the conference 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 October 24, 2016 through 11:59 p.m. Central time on
October 31, 2016 at (855) 859-2056 (United States) or (404) 537-3406
(International). The access code is 97863639.
About Knowles
Knowles Corporation (NYSE: KN) is a market leader and global supplier of
advanced micro-acoustic, audio processing, and specialty component
solutions, serving the mobile consumer electronics, communications,
medical, military, aerospace, and industrial markets. Knowles uses its
leading position in MEMS (micro-electro-mechanical systems) microphones
and strong capabilities in audio processing technologies to optimize
audio systems and improve the user experience in smartphones, tablets,
and wearables. Knowles is also the leader in acoustics components used
in hearing aids and has a strong position in high-end oscillators
(timing devices) and capacitors. Knowles’ focus on the customer,
combined with unique technology, proprietary manufacturing techniques,
rigorous testing and global scale, enables it to deliver innovative
solutions that optimize the user experience. Founded in 1946 and
headquartered in Itasca, Illinois, Knowles operates in 15 countries
around the world. 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. 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
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: MEMS microphone demand
from our largest customers, in particular, a large North American OEM
customer and Chinese OEMs; factory capacity utilization in our MCE
segment; the pace and success of achieving the cost savings from our
announced restructurings, acquisitions and operating expense reduction
efforts; 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; customer
purchasing behavior in light of current and anticipated mobile phone
launches; downward pressure on the average selling prices for our
products; risks associated with increasing our inventories in advance of
anticipated orders by customers; macroeconomic conditions, both in the
U.S. and internationally; foreign currency exchange rate fluctuations;
our ability to achieve continued reductions in our operating expenses ;
our ability to qualify our products and facilities with customers; risks
and costs inherent in litigation; our ability to obtain, enforce, defend
or monetize our intellectual property rights; increases in the costs of
critical raw materials and components; availability of raw materials and
components; anticipated growth for us and adoption of our technologies
and solutions that may not occur; the success and rate of multi
microphone adoption and our “intelligent audio” solutions; managing
rapid declines in customer demand for certain of our products or
solutions, delays in customer product introductions and other related
customer challenges that may occur; our ability to successfully
consummate acquisitions and divestitures, and our ability to integrate
acquisitions following consummation; our obligations and risks under a
tax matters agreement that was executed as part of our spin-off from our
former parent company; 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; our ability to maintain and expand our existing relationships
with leading OEMs and to establish relationships with new OEMs in order
to maintain and increase our revenue; business and competitive factors
generally affecting the advanced micro-acoustic solutions and specialty
components industry, our customers and our business; fluctuations in
demand by our telecom and other customers and telecom end markets; our
ability to enter new end-user product markets; 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; changes in tax laws
or our ability to utilize our tax structure and any net operating losses
and 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, 2015, 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 2016
|
|
|
|
|
|
|
|
|
|
KNOWLES CORPORATION
|
|
CONSOLIDATED STATEMENTS OF EARNINGS
|
|
(in millions except share and per share amounts)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
September 30, 2016
|
|
June 30, 2016
|
|
September 30, 2015
|
|
Revenues
|
|
$
|
243.1
|
|
|
$
|
190.3
|
|
|
$
|
246.7
|
|
|
Cost of goods sold
|
|
|
148.2
|
|
|
|
117.2
|
|
|
|
149.0
|
|
|
Restructuring charges - cost of goods sold
|
|
|
-
|
|
|
|
0.2
|
|
|
|
0.4
|
|
|
Gross profit
|
|
|
94.9
|
|
|
|
72.9
|
|
|
|
97.3
|
|
|
Research and development expenses
|
|
|
23.3
|
|
|
|
25.8
|
|
|
|
28.4
|
|
|
Selling and administrative expenses
|
|
|
43.0
|
|
|
|
45.2
|
|
|
|
50.2
|
|
|
Restructuring charges
|
|
|
2.1
|
|
|
|
3.7
|
|
|
|
8.7
|
|
|
Operating expenses
|
|
|
68.4
|
|
|
|
74.7
|
|
|
|
87.3
|
|
|
Operating earnings (loss)
|
|
|
26.5
|
|
|
|
(1.8
|
)
|
|
|
10.0
|
|
|
Interest expense, net
|
|
|
5.6
|
|
|
|
5.8
|
|
|
|
3.6
|
|
|
Other (income) expense, net
|
|
|
-
|
|
|
|
(2.2
|
)
|
|
|
1.7
|
|
|
Earnings (loss) before income taxes and discontinued operations
|
|
20.9
|
|
|
|
(5.4
|
)
|
|
|
4.7
|
|
|
Provision for (benefit from) income taxes
|
|
|
-
|
|
|
|
1.4
|
|
|
|
(0.1
|
)
|
|
Earnings (loss) from continuing operations
|
|
|
20.90
|
|
|
|
(6.80
|
)
|
|
|
4.8
|
|
|
Loss from discontinued operations, net
|
|
|
(28.50
|
)
|
|
|
(17.80
|
)
|
|
|
(19.7
|
)
|
|
Net loss
|
|
$
|
(7.6
|
)
|
|
$
|
(24.6
|
)
|
|
$
|
(14.9
|
)
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share from continuing operations:
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.24
|
|
|
$
|
(0.08
|
)
|
|
$
|
0.05
|
|
|
Diluted
|
|
$
|
0.24
|
|
|
$
|
(0.08
|
)
|
|
$
|
0.05
|
|
|
|
|
|
|
|
|
|
|
Loss per share from discontinued operations:
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.32
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.22
|
)
|
|
Diluted
|
|
$
|
(0.32
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.22
|
)
|
|
|
|
|
|
|
|
|
|
Net loss per share:
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.08
|
)
|
|
$
|
(0.28
|
)
|
|
$
|
(0.17
|
)
|
|
Diluted
|
|
$
|
(0.08
|
)
|
|
$
|
(0.28
|
)
|
|
$
|
(0.17
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
|
|
88,720,888
|
|
|
|
88,652,453
|
|
|
|
88,429,627
|
|
|
Diluted
|
|
|
89,317,806
|
|
|
|
88,652,453
|
|
|
|
88,614,973
|
|
|
KNOWLES CORPORATION
|
|
CONSOLIDATED STATEMENTS OF EARNINGS
|
|
(in millions except share and per share amounts)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
September 30, 2016
|
|
September 30, 2015
|
|
Revenues
|
|
$
|
618.7
|
|
|
$
|
626.1
|
|
|
Cost of goods sold
|
|
|
382.7
|
|
|
|
395.0
|
|
|
Restructuring charges - cost of goods sold
|
|
|
1.4
|
|
|
|
(0.1
|
)
|
|
Gross profit
|
|
|
234.6
|
|
|
|
231.2
|
|
|
Research and development expenses
|
|
|
75.2
|
|
|
|
62.9
|
|
|
Selling and administrative expenses
|
|
|
131.3
|
|
|
|
122.8
|
|
|
Restructuring charges
|
|
|
9.3
|
|
|
|
8.9
|
|
|
Operating expenses
|
|
|
215.8
|
|
|
|
194.6
|
|
|
Operating earnings
|
|
|
18.8
|
|
|
|
36.6
|
|
|
Interest expense, net
|
|
|
15.1
|
|
|
|
9.1
|
|
|
Other income, net
|
|
|
(1.7
|
)
|
|
|
(0.3
|
)
|
|
Earnings before income taxes and discontinued operations
|
|
|
5.4
|
|
|
|
27.8
|
|
|
Provision for income taxes
|
|
|
3.8
|
|
|
|
4.7
|
|
|
Earnings from continuing operations
|
|
|
1.60
|
|
|
|
23.1
|
|
|
Loss from discontinued operations, net
|
|
|
(63.20
|
)
|
|
|
(69.9
|
)
|
|
Net loss
|
|
$
|
(61.6
|
)
|
|
$
|
(46.8
|
)
|
|
|
|
|
|
|
|
Earnings per share from continuing operations:
|
|
|
|
|
|
Basic
|
|
$
|
0.02
|
|
|
$
|
0.27
|
|
|
Diluted
|
|
$
|
0.02
|
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
Loss per share from discontinued operations:
|
|
|
|
|
|
Basic
|
|
$
|
(0.71
|
)
|
|
$
|
(0.81
|
)
|
|
Diluted
|
|
$
|
(0.71
|
)
|
|
$
|
(0.81
|
)
|
|
|
|
|
|
|
|
Net loss per share:
|
|
|
|
|
|
Basic
|
|
$
|
(0.69
|
)
|
|
$
|
(0.54
|
)
|
|
Diluted
|
|
$
|
(0.69
|
)
|
|
$
|
(0.54
|
)
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
Basic
|
|
|
88,637,001
|
|
|
|
86,239,337
|
|
|
Diluted
|
|
|
88,997,050
|
|
|
|
86,419,027
|
|
|
KNOWLES CORPORATION
|
|
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL
MEASURES (1)
|
|
(in millions, except for share and per share amounts)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
June 30,
|
|
September 30,
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2016
|
|
2016
|
|
2015
|
|
|
2016
|
|
2015
|
|
Gross profit
|
|
$
|
94.9
|
|
|
$
|
72.9
|
|
|
$
|
97.3
|
|
|
|
$
|
234.6
|
|
|
$
|
231.2
|
|
|
Gross profit as % of revenues
|
|
|
39.0
|
%
|
|
|
38.3
|
%
|
|
|
39.4
|
%
|
|
|
|
37.9
|
%
|
|
|
36.9
|
%
|
|
Stock-based compensation expense
|
|
|
0.4
|
|
|
|
0.5
|
|
|
|
0.4
|
|
|
|
|
1.4
|
|
|
|
0.9
|
|
|
Fixed asset and related inventory charges
|
|
|
-
|
|
|
|
0.3
|
|
|
|
-
|
|
|
|
|
0.3
|
|
|
|
-
|
|
|
Restructuring charges
|
|
|
-
|
|
|
|
0.2
|
|
|
|
0.4
|
|
|
|
|
1.4
|
|
|
|
(0.1
|
)
|
|
Production transfer costs (2)
|
|
|
0.4
|
|
|
|
1.2
|
|
|
|
3.2
|
|
|
|
|
2.9
|
|
|
|
12.1
|
|
|
Other (3)
|
|
|
-
|
|
|
|
-
|
|
|
|
0.8
|
|
|
|
|
-
|
|
|
|
0.8
|
|
|
Non-GAAP gross profit
|
|
$
|
95.7
|
|
|
$
|
75.1
|
|
|
$
|
102.1
|
|
|
|
$
|
240.6
|
|
|
$
|
244.9
|
|
|
Non-GAAP gross profit as % of revenues
|
|
|
39.4
|
%
|
|
|
39.5
|
%
|
|
|
41.4
|
%
|
|
|
|
38.9
|
%
|
|
|
64.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses
|
|
$
|
23.3
|
|
|
$
|
25.8
|
|
|
$
|
28.4
|
|
|
|
$
|
75.2
|
|
|
$
|
62.9
|
|
|
Stock-based compensation expense
|
|
|
(1.3
|
)
|
|
|
(1.3
|
)
|
|
|
(0.7
|
)
|
|
|
|
(3.5
|
)
|
|
|
(1.0
|
)
|
|
Fixed asset and related inventory charges
|
|
|
-
|
|
|
|
(0.1
|
)
|
|
|
-
|
|
|
|
|
(0.2
|
)
|
|
|
-
|
|
|
Non-GAAP research and development expenses
|
|
$
|
22.0
|
|
|
$
|
24.4
|
|
|
$
|
27.7
|
|
|
|
$
|
71.5
|
|
|
$
|
61.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and administrative expenses
|
|
$
|
43.0
|
|
|
$
|
45.2
|
|
|
$
|
50.2
|
|
|
|
$
|
131.3
|
|
|
$
|
122.8
|
|
|
Stock-based compensation expense
|
|
|
(3.5
|
)
|
|
|
(3.8
|
)
|
|
|
(3.6
|
)
|
|
|
|
(11.3
|
)
|
|
|
(8.7
|
)
|
|
Intangibles amortization expense
|
|
|
(5.6
|
)
|
|
|
(5.6
|
)
|
|
|
(5.5
|
)
|
|
|
|
(16.8
|
)
|
|
|
(14.1
|
)
|
|
Other (3)
|
|
|
(0.1
|
)
|
|
|
(0.3
|
)
|
|
|
(3.8
|
)
|
|
|
|
(0.4
|
)
|
|
|
(6.6
|
)
|
|
Non-GAAP selling and administrative expenses
|
|
$
|
33.8
|
|
|
$
|
35.5
|
|
|
$
|
37.3
|
|
|
|
$
|
102.8
|
|
|
$
|
93.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
$
|
68.4
|
|
|
$
|
74.7
|
|
|
$
|
87.3
|
|
|
|
$
|
215.8
|
|
|
$
|
194.6
|
|
|
Stock-based compensation expense
|
|
|
(4.8
|
)
|
|
|
(5.1
|
)
|
|
|
(4.3
|
)
|
|
|
|
(14.8
|
)
|
|
|
(9.7
|
)
|
|
Intangibles amortization expense
|
|
|
(5.6
|
)
|
|
|
(5.6
|
)
|
|
|
(5.5
|
)
|
|
|
|
(16.8
|
)
|
|
|
(14.1
|
)
|
|
Fixed asset and related inventory charges
|
|
|
-
|
|
|
|
(0.1
|
)
|
|
|
-
|
|
|
|
|
(0.2
|
)
|
|
|
-
|
|
|
Restructuring charges
|
|
|
(2.1
|
)
|
|
|
(3.7
|
)
|
|
|
(8.7
|
)
|
|
|
|
(9.3
|
)
|
|
|
(8.9
|
)
|
|
Impairment of intangible assets
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.4
|
)
|
|
|
|
-
|
|
|
|
(0.4
|
)
|
|
Other (3)
|
|
|
(0.1
|
)
|
|
|
(0.3
|
)
|
|
|
(3.8
|
)
|
|
|
|
(0.4
|
)
|
|
|
(6.6
|
)
|
|
Non-GAAP operating expenses
|
|
$
|
55.8
|
|
|
$
|
59.9
|
|
|
$
|
64.6
|
|
|
|
$
|
174.3
|
|
|
$
|
154.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations
|
|
$
|
20.9
|
|
|
$
|
(6.8
|
)
|
|
$
|
4.8
|
|
|
|
$
|
1.6
|
|
|
$
|
23.1
|
|
|
Interest expense, net
|
|
|
5.6
|
|
|
|
5.8
|
|
|
|
3.6
|
|
|
|
|
15.1
|
|
|
|
9.1
|
|
|
Provision for (benefit from) income taxes
|
|
|
-
|
|
|
|
1.4
|
|
|
|
(0.1
|
)
|
|
|
|
3.8
|
|
|
|
4.7
|
|
|
Earnings (loss) from continuing operations before interest and
income taxes
|
|
|
26.5
|
|
|
|
0.4
|
|
|
|
8.3
|
|
|
|
|
20.5
|
|
|
|
36.9
|
|
|
Earnings (loss) from continuing operations before interest and
income taxes as % of revenues
|
|
|
10.9
|
%
|
|
|
20.0
|
%
|
|
|
3.4
|
%
|
|
|
|
3.3
|
%
|
|
|
5.9
|
%
|
|
Stock-based compensation expense
|
|
|
5.2
|
|
|
|
5.6
|
|
|
|
4.7
|
|
|
|
|
16.2
|
|
|
|
10.6
|
|
|
Intangibles amortization expense
|
|
|
5.6
|
|
|
|
5.6
|
|
|
|
5.5
|
|
|
|
|
16.8
|
|
|
|
14.1
|
|
|
Fixed asset and related inventory charges
|
|
|
-
|
|
|
|
0.4
|
|
|
|
-
|
|
|
|
|
0.5
|
|
|
|
-
|
|
|
Restructuring charges
|
|
|
2.1
|
|
|
|
3.9
|
|
|
|
9.1
|
|
|
|
|
10.7
|
|
|
|
8.8
|
|
|
Impairment of intangible assets
|
|
|
-
|
|
|
|
-
|
|
|
|
0.4
|
|
|
|
|
-
|
|
|
|
0.4
|
|
|
Production transfer costs (2)
|
|
|
0.4
|
|
|
|
1.2
|
|
|
|
3.2
|
|
|
|
|
2.9
|
|
|
|
12.1
|
|
|
Other loss (gain) (4)
|
|
|
0.1
|
|
|
|
(1.7
|
)
|
|
|
4.6
|
|
|
|
|
(1.6
|
)
|
|
|
7.4
|
|
|
Adjusted earnings from continuing operations before interest and
income taxes
|
|
$
|
39.9
|
|
|
$
|
15.4
|
|
|
$
|
35.8
|
|
|
|
$
|
66.0
|
|
|
$
|
90.3
|
|
|
Adjusted earnings before interest and income taxes as % of
revenues
|
|
|
16.4
|
%
|
|
|
8.1
|
%
|
|
|
14.5
|
%
|
|
|
|
10.7
|
%
|
|
|
23.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
$
|
5.6
|
|
|
$
|
5.8
|
|
|
$
|
3.6
|
|
|
|
$
|
15.1
|
|
|
$
|
9.1
|
|
|
Interest expense, net non-GAAP reconciling adjustments (5)
|
|
|
1.4
|
|
|
|
1.6
|
|
|
|
-
|
|
|
|
|
3.0
|
|
|
|
-
|
|
|
Non-GAAP interest expense
|
|
$
|
4.2
|
|
|
$
|
4.2
|
|
|
$
|
3.6
|
|
|
|
$
|
12.1
|
|
|
$
|
9.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (benefit from) income taxes
|
|
$
|
-
|
|
|
$
|
1.4
|
|
|
$
|
(0.1
|
)
|
|
|
$
|
3.8
|
|
|
$
|
4.7
|
|
|
Income tax effects of non-GAAP reconciling adjustments
|
|
|
1.6
|
|
|
|
(1.9
|
)
|
|
|
6.6
|
|
|
|
|
(3.2
|
)
|
|
|
5.4
|
|
|
Non-GAAP provision (benefit from) for income taxes
|
|
$
|
1.6
|
|
|
$
|
(0.5
|
)
|
|
$
|
6.5
|
|
|
|
$
|
0.6
|
|
|
$
|
10.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations
|
|
$
|
20.9
|
|
|
$
|
(6.8
|
)
|
|
$
|
4.8
|
|
|
|
$
|
1.6
|
|
|
$
|
23.1
|
|
|
Non-GAAP reconciling adjustments (6)
|
|
|
13.4
|
|
|
|
15.0
|
|
|
|
27.5
|
|
|
|
|
45.5
|
|
|
|
53.4
|
|
|
Interest expense, net non-GAAP reconciling adjustments (5)
|
|
|
1.4
|
|
|
|
1.6
|
|
|
|
-
|
|
|
|
|
3.0
|
|
|
|
-
|
|
|
Income tax effects of non-GAAP reconciling adjustments
|
|
|
1.6
|
|
|
|
(1.9
|
)
|
|
|
6.6
|
|
|
|
|
(3.2
|
)
|
|
|
5.4
|
|
|
Non-GAAP net earnings
|
|
$
|
34.1
|
|
|
$
|
11.7
|
|
|
$
|
25.7
|
|
|
|
$
|
53.3
|
|
|
$
|
71.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share from continuing operations
|
|
$
|
0.24
|
|
|
$
|
(0.08
|
)
|
|
$
|
0.05
|
|
|
|
$
|
0.02
|
|
|
$
|
0.27
|
|
|
Earnings per share non-GAAP reconciling adjustment
|
|
$
|
0.13
|
|
|
$
|
0.21
|
|
|
$
|
0.24
|
|
|
|
$
|
0.57
|
|
|
$
|
0.55
|
|
|
Non-GAAP diluted earnings per share
|
|
$
|
0.37
|
|
|
$
|
0.13
|
|
|
$
|
0.29
|
|
|
|
$
|
0.59
|
|
|
$
|
0.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted average shares outstanding
|
|
|
8,917,806
|
|
|
|
88,652,453
|
|
|
|
88,614,973
|
|
|
|
|
88,997,050
|
|
|
|
86,419,027
|
|
|
Non-GAAP adjustment (7)
|
|
|
1,939,319
|
|
|
|
2,394,692
|
|
|
|
981,041
|
|
|
|
|
1,764,683
|
|
|
|
738,670
|
|
|
Non-GAAP diluted average shares outstanding (7)
|
|
|
91,257,125
|
|
|
|
91,047,145
|
|
|
|
89,596,014
|
|
|
|
|
90,761,733
|
|
|
|
87,157,697
|
|
|
Notes:
|
|
|
|
|
|
(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
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.
|
|
|
|
|
|
(2) Production transfer costs represent duplicate costs incurred to
migrate manufacturing to new or existing facilities in Asia. These
amounts are included in the corresponding Gross profit, Selling and
administrative expenses, Operating expenses and Earnings (loss) from
continuing operations before interest and income taxes for each
period presented.
|
|
|
|
|
|
(3) Other primarily represents expenses related to the
Audience acquisition.
|
|
|
|
|
|
(4) In the second quarter of 2016, Other loss (gain)
primarily represents a gain on the sale of investment related to a
non-controlling interest in a MEMS timing device company partially
offset by expenses related to the Audience acquisition. In 2015,
Other loss (gain) represents expenses related to the Audience
acquisition.
|
|
|
|
|
|
(5) Under GAAP, certain convertible debt instruments that
may be settled in cash (or other assets) upon conversion are
required to be separately accounted for as liability (debt) and
equity (conversion option) components of the instrument in a manner
that reflects the issuer’s nonconvertible debt borrowing rate.
Accordingly, for GAAP purposes we are required to recognize imputed
interest expense on the Company’s $172.5 million of convertible
senior notes due 2021 that were issued in a private placement in May
2016. The imputed interest rate was 8.12% for the convertible notes
due 2021, while the actual coupon interest rate of the notes was
3.25%. The difference between the imputed interest expense and the
coupon interest expense is excluded from management’s assessment of
the Company’s operating performance because management believes that
this non-cash expense is not indicative of its core, ongoing
operating performance.
|
|
|
|
|
|
(6) The Non-GAAP reconciling adjustments are those
adjustments made to reconcile Earnings (loss) 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 for share and per share amounts)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
September 30, 2016
|
|
December 31, 2015
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
60.0
|
|
|
$
|
63.3
|
|
|
Receivables, net of allowances of $2.2 and $1.8
|
|
|
150.9
|
|
|
|
145.2
|
|
|
Inventories, net
|
|
|
125.9
|
|
|
|
118.4
|
|
|
Prepaid and other current assets
|
|
|
12.1
|
|
|
|
9.2
|
|
|
Total current assets
|
|
|
348.9
|
|
|
|
336.1
|
|
|
Property, plant and equipment, net
|
|
|
199.7
|
|
|
|
215.3
|
|
|
Goodwill
|
|
|
917.1
|
|
|
|
925.8
|
|
|
Intangible assets, net
|
|
|
80.3
|
|
|
|
97.0
|
|
|
Other assets and deferred charges
|
|
|
33.4
|
|
|
|
29.3
|
|
|
Assets of discontinued operations
|
|
|
2.4
|
|
|
|
93.0
|
|
|
Total assets
|
|
$
|
1,581.8
|
|
|
$
|
1,696.5
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Current maturities of long-term debt
|
|
$
|
6.1
|
|
|
$
|
29.6
|
|
|
Accounts payable
|
|
|
73.2
|
|
|
|
77.2
|
|
|
Accrued compensation and employee benefits
|
|
|
31.3
|
|
|
|
31.2
|
|
|
Other accrued expenses
|
|
|
25.3
|
|
|
|
35.9
|
|
|
Federal and other taxes on income
|
|
|
5.4
|
|
|
|
1.5
|
|
|
Total current liabilities
|
|
|
141.3
|
|
|
|
175.4
|
|
|
Long-term debt
|
|
|
345.5
|
|
|
|
399.2
|
|
|
Deferred income taxes
|
|
|
21.8
|
|
|
|
18.4
|
|
|
Other liabilities
|
|
|
40.3
|
|
|
|
43.5
|
|
|
Liabilities of Discontinued Operations
|
|
|
6.2
|
|
|
|
53.2
|
|
|
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;
88,723,645 and 88,451,564 shares issued at September 30, 2016 and
December 31, 2015, respectively
|
|
|
0.9
|
|
|
|
0.9
|
|
|
Additional paid-in capital
|
|
|
1,494.7
|
|
|
|
1,449.9
|
|
|
Accumulated deficit
|
|
|
(379.4
|
)
|
|
|
(317.8
|
)
|
|
Accumulated other comprehensive loss
|
|
|
(89.5
|
)
|
|
|
(126.2
|
)
|
|
Total stockholders' equity
|
|
|
1,026.7
|
|
|
|
1,006.8
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
1,581.8
|
|
|
$
|
1,696.5
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20161024006126/en/
Source: Knowles Corporation
Financial Contact:
Mike Knapp
Knowles Investor Relations
Phone:
(630) 238-5236
Email: mike.knapp@knowles.com
or
Media
Contact:
Roxanne Pipitone
Knowles Communications
Phone:
(630) 238-5257
Email: roxanne.pipitone@knowles.com