Knowles (KN) Q3 2024 earnings summary

Executive summary

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

• Non-GAAP diluted EPS was $0.26, up 30% year-over-year and at the midpoint of guidance.

• Net cash from operations was $53 million in Q3, exceeding guidance.

• Signed agreement to sell Consumer MEMS Microphones business for $150 million, advancing shift to higher-growth, higher-margin markets; closing expected by end of Q4 2024.

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

Financial highlights

• Q3 2024 gross profit was $62.9 million (44.1% margin), up from $50.4 million (46.6%) in Q3 2023; non-GAAP gross margin was 45.5%.

• Adjusted EBITDA margin was 24.6% in Q3 2024.

• Adjusted EBIT margin was 21.1% in Q3 2024.

• Adjusted free cash flow for Q3 2024 was $27.0 million (18.9% of revenue), up from $14.9 million (13.8%) in Q3 2023.

• Net debt at quarter-end was $132.4 million; cash and equivalents were $92.6 million.

Outlook and guidance

• Q4 2024 revenue guidance: $141–$151 million, up 5% year-over-year.

• Q4 2024 non-GAAP diluted EPS expected at $0.14; GAAP EPS $0.12–$0.16.

• Net cash from operating activities projected at $30–$40 million for Q4 2024.

• R&D and SG&A expenses expected to remain stable; effective tax rate projected at 9–13% due to foreign tax credits.

• Capital expenditures for 2024 expected to be 2.0% to 3.0% of revenues.