News Details

Q4 Revenue Growth of 8 Percent Y/Y At High End of Guidance

Q4 EPS of $0.19; $0.35 Non-GAAP

Achieved Full Year 2016 Financial Targets

ITASCA, Ill.--(BUSINESS WIRE)--Feb. 6, 2017-- 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 fourth quarter and year ended December 31, 2016.

“We delivered Q4 revenue growth of 8 percent that was at the high end of our guidance range, and record cash flow,” said Jeffrey Niew, president and CEO of Knowles. “Mobile consumer sales were better than expected driven by stronger MEMS microphone demand from North American and Chinese OEMs, and specialty components revenues were in line with expectations. Overall, I am pleased with our financial performance in 2016 as well as our ability to deliver on our prior full year financial targets; including year over year revenue growth, non-GAAP gross margins of 39 percent, and exiting 2016 at a non-GAAP SG&A run rate of less than $140 million per year.”

“As we look to 2017, we believe that improved voice and audio quality and voice as a user interface are two important trends in the market that are driving the need for our audio solutions. Our capabilities in acoustics, signal processing and software are enabling us to deliver audio solutions for the Mobile, Ear and IoT markets. While we are conservative with our Q1 expectations due to the timing of a major customer product launch, we expect that multi-mic adoption, new customer platforms and higher value solutions will drive full year 2017 revenue growth in the mid-single digit range, expand operating margins, and increase EPS over 2016 levels,” 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):

* Continuing operations excludes the results of our speaker and receiver product line which was sold on July 7, 2016.

** Current period results include $5.3 million in stock-based compensation, $2.8 million from amortization of intangibles, $1.1 million in restructuring charges, and $0.2 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 earnings (loss) 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.

First Quarter 2017 Outlook

The forward looking guidance for the quarter ending March 31, 2017 on a continuing operations basis is as follows:

Q1 2017 GAAP results for continuing operations are expected to include approximately $0.07 per share in stock-based compensation, $0.02 per share in amortization of intangibles, $0.02 per share in production transfer costs, $0.02 adjustment for tax items, and $0.01 per share in amortization of debt discount. Expected Q1 2017 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 today through 11:59 p.m. Central time on August 7, 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 today through 11:59 p.m. Central time on February 13, 2017 at (855) 859-2056 (United States) or (404) 537-3406 (International). The access code is 48457539.

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 12 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, a large Korean OEM customer and Chinese OEMs; the success and rate of multi-microphone adoption and market adoption of our “intelligent audio” solutions; the pace and success of achieving the cost savings from our announced restructurings and acquisitions; our ability to slow and offset price erosion in certain of our microphone products; 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; 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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20170206005918/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