On October 24, 2024, Knowles Corp (KN, Financial) released its 8-K filing detailing its financial performance for the third quarter of 2024. Knowles Corp, a prominent manufacturer of micro-acoustic microphones, balanced armature speakers, high-performance capacitors, and RF filtering products, operates through three segments: Precision Devices, Medtech & Specialty Audio, and Consumer MEMS Microphones. The company reported a significant 32% year-over-year increase in revenues from continuing operations, reaching $143 million, driven by the Cornell acquisition and organic growth.
Performance and Strategic Moves
Knowles Corp's performance in Q3 2024 was marked by a strategic shift, as the company signed an agreement to sell its Consumer MEMS Microphones business. This move aligns with its strategy to transition from low-margin to higher-value markets, leveraging its strengths in product design and process technology. The divestiture is expected to close in the fourth quarter of 2024, positioning Knowles in segments with attractive growth prospects and more defensible margins.
Financial Achievements and Industry Relevance
The company's financial achievements in Q3 2024 include a net cash flow from operations of $53 million, exceeding the high end of the guided range. This robust cash flow is crucial for Knowles Corp as it supports its strategic initiatives and enhances shareholder returns. The hardware industry, characterized by rapid technological advancements and competitive pressures, values such financial stability and strategic foresight.
Key Financial Metrics
Knowles Corp reported a gross profit of $62.9 million, representing 44.1% of revenues, while non-GAAP gross profit stood at $64.8 million or 45.5% of revenues. The diluted earnings per share (EPS) from continuing operations was $0.10, below the analyst estimate of $0.14. However, the non-GAAP diluted EPS was $0.26, reflecting adjustments for stock-based compensation and other non-core expenses.
| Metric | Q3 2024 | Q2 2024 | Q3 2023 |
|---|---|---|---|
| Revenues | $142.5M | $135.2M | $108.1M |
| Gross Profit | $62.9M | $57.8M | $50.4M |
| Non-GAAP Gross Profit | $64.8M | $59.8M | $50.9M |
| Diluted EPS | $0.10 | $0.05 | $0.17 |
| Non-GAAP Diluted EPS | $0.26 | $0.20 | $0.20 |
| Net Cash from Operations | $52.8M | $24.9M | $39.9M |
Analysis and Outlook
Knowles Corp's Q3 2024 results underscore its strategic focus on high-margin segments and operational efficiency. The divestiture of the Consumer MEMS Microphones business is a pivotal step in enhancing its market position and financial performance. Despite the EPS shortfall, the company's strong revenue growth and cash flow generation highlight its resilience and adaptability in a competitive industry.
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," stated Jeffrey Niew, President, and CEO of Knowles.
As Knowles Corp continues to navigate its strategic transformation, its focus on innovation and high-value markets is expected to drive future growth and shareholder value. Investors and analysts will be keenly watching the company's performance in the upcoming quarters, particularly in light of its strategic realignment and market dynamics.
Explore the complete 8-K earnings release (here) from Knowles Corp for further details.
