Knowles (KN) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue rose to $143 million, up 32% year-over-year, driven by the Cornell acquisition and 4% organic growth.

• Non-GAAP diluted EPS increased 30% to $0.26, at the midpoint of guidance.

• Net cash from operations was $53 million, exceeding guidance.

• Signed agreement to sell Consumer MEMS Microphones business, advancing shift to higher-growth, higher-margin markets; closing expected late Q4 2024.

• Net earnings from continuing operations were $9.2 million, down from $15.2 million in Q3 2023, due to higher expenses and interest.

Financial highlights

• Q3 2024 gross margin was 44.1%–45.5%, down year-over-year due to product mix and acquisitions.

• Adjusted EBITDA margin was 24.6%; adjusted EBIT margin was 21.1%.

• Adjusted EBITDA was $35.0 million, up from $29.1 million year-over-year.

• Cash from operations was $53 million in Q3 and $95 million for the first nine months.

• Net debt at quarter-end was $132.4 million; net leverage ratio was 1x trailing twelve months adjusted EBITDA.

Outlook and guidance

• Q4 2024 revenue expected between $141 million and $151 million, with non-GAAP diluted EPS guidance of $0.14–$0.30.

• Net cash from operations projected at $30–$40 million; capital spending at $6 million.

• Effective tax rate for Q4 projected at 9%–13% due to foreign tax credits.

• Sequential revenue growth anticipated in MedTech & Specialty Audio and Precision Devices segments.