Knowles (KN) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue increased 18.3% year-over-year to $204.7M, driven by the Cornell Dubilier acquisition and higher demand in key markets, meeting guidance and reflecting strong operational execution.

• Non-GAAP diluted EPS was $0.24, up from $0.23 in Q2 2023, in line with expectations.

• Net cash from operations was $24.9M, supporting share repurchases and debt reduction.

• A $249.4M goodwill impairment charge in Consumer MEMS Microphones led to a GAAP net loss of $259.3M for the quarter.

• The company continues to review strategic alternatives for the CMM business, including a potential sale or restructuring.

Financial highlights

• Adjusted EBIT for Q2 2024 was $29.5M (14.4% margin), up from $27.7M in Q2 2023; adjusted EBITDA was $37.2M (18.2% margin).

• Gross profit for Q2 2024 was $77.6M (37.9% margin); non-GAAP gross margin was 38.9%.

• Net loss of $259.3M in Q2 2024, primarily due to a $249.4M goodwill impairment.

• Interest expense increased to $4.6M in Q2 2024, mainly due to the Cornell Dubilier acquisition financing.

• Six-month 2024 revenues were $401.1M, up from $317.3M in the prior year period.

Outlook and guidance

• Q3 2024 revenue expected between $210M and $220M, with non-GAAP EPS guidance of $0.29–$0.33 and GAAP EPS of $0.20–$0.24.

• Net cash from operating activities projected at $35M–$45M for Q3 2024.

• Capital expenditures for 2024 are projected at 2.0% to 3.0% of revenues.

• Management expects continued growth in MedTech, Specialty Audio, and Precision Devices segments.

• Management expects to reduce cash balances in the second half of 2024, primarily due to Seller Note payment and debt reduction.