Delaware | 001-36102 | 90-1002689 | ||||||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading symbol | Name of each exchange on which registered | ||||||||||||
Common stock, $0.01 par value per share | KN | New York Stock Exchange |
Item 2.02 Results of Operations and Financial Condition. | |||||
On February 7, 2024, Knowles Corporation issued a press release announcing its results of operations for the year and quarter ended December 31, 2023 and posted on its website at http://investor.knowles.com presentation slides which summarize certain of its results of operations for the year and quarter ended December 31, 2023. Knowles Corporation's quarterly financial conference call and webcast will be held on February 7, 2024. A copy of the press release is being furnished as Exhibit 99.1 hereto and a copy of the presentation slides is being furnished as Exhibit 99.2 hereto. | |||||
The information furnished under this Item 2.02 and the related exhibits included in Item 9.01 of this Current Report on Form 8-K shall not be deemed to be “filed” for purposes of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing. |
Item 9.01 Financial Statements and Exhibits. | ||||||||
(d) Exhibits. | ||||||||
The following exhibits are furnished as part of this report: | ||||||||
Exhibit Number | Description |
|||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
KNOWLES CORPORATION | ||||||||
Date: | February 7, 2024 | By: /s/ Robert J. Perna | ||||||
Robert J. Perna | ||||||||
Senior Vice President, General Counsel & Secretary |
Financial Contact:
Sarah Cook
Knowles Investor Relations
Email: investorrelations@knowles.com
|
Q4-23 | Q3-23 | Q4-22 | |||||||||
Revenues | $215.2 | $175.1 | $197.1 | ||||||||
Gross profit | $78.4 | $77.5 | $75.3 | ||||||||
(as a % of revenues) | 36.4% | 44.3% | 38.2% | ||||||||
Non-GAAP gross profit | $80.2 | $78.1 | $79.6 | ||||||||
(as a % of revenues) | 37.3% | 44.6% | 40.4% | ||||||||
Diluted earnings (loss) per share* | $0.52 | $0.18 | $(2.28) | ||||||||
Non-GAAP diluted earnings per share | $0.28 | $0.31 | $0.33 | ||||||||
Net cash provided by operating activities | $60.4 | $39.9 | $46.8 |
GAAP | Adjustments | Non-GAAP | |||||||||
Revenues | $190 to $200 million | — | $190 to $200 million | ||||||||
Diluted earnings per share | $0.02 to $0.06 | $0.14 | $0.16 to $0.20 | ||||||||
Net cash provided by operating activities | $0 to $10 million | — | $0 to $10 million |
Quarter Ended | ||||||||||||||||||||
December 31, 2023 | September 30, 2023 | December 31, 2022 | ||||||||||||||||||
Revenues | $ | 215.2 | $ | 175.1 | $ | 197.1 | ||||||||||||||
Cost of goods sold | 136.6 | 102.7 | 117.2 | |||||||||||||||||
(Gain) loss on sale of fixed assets | — | (5.2) | 0.5 | |||||||||||||||||
Restructuring charges - cost of goods sold | 0.2 | 0.1 | 4.1 | |||||||||||||||||
Gross profit | 78.4 | 77.5 | 75.3 | |||||||||||||||||
Research and development expenses | 19.0 | 19.8 | 18.0 | |||||||||||||||||
Selling and administrative expenses | 45.4 | 34.6 | 33.3 | |||||||||||||||||
Impairment charges | — | — | 231.1 | |||||||||||||||||
Restructuring charges | 0.4 | 1.5 | (0.2) | |||||||||||||||||
Operating expenses | 64.8 | 55.9 | 282.2 | |||||||||||||||||
Operating earnings (loss) | 13.6 | 21.6 | (206.9) | |||||||||||||||||
Interest expense, net | 3.2 | 0.6 | 1.2 | |||||||||||||||||
Other expense (income), net | 0.2 | (0.5) | 0.4 | |||||||||||||||||
Earnings (loss) before income taxes | 10.2 | 21.5 | (208.5) | |||||||||||||||||
(Benefit from) provision for income taxes | (37.2) | 4.9 | (0.5) | |||||||||||||||||
Net earnings (loss) | $ | 47.4 | $ | 16.6 | $ | (208.0) | ||||||||||||||
Net earnings (loss) per share: | ||||||||||||||||||||
Basic | $ | 0.53 | $ | 0.18 | $ | (2.28) | ||||||||||||||
Diluted | $ | 0.52 | $ | 0.18 | $ | (2.28) | ||||||||||||||
Weighted-average common shares outstanding: | ||||||||||||||||||||
Basic | 90.0 | 90.8 | 91.0 | |||||||||||||||||
Diluted | 90.7 | 91.4 | 91.0 |
Year Ended | ||||||||||||||
December 31, 2023 | December 31, 2022 | |||||||||||||
Revenues | $ | 707.6 | $ | 764.7 | ||||||||||
Cost of goods sold | 435.5 | 455.7 | ||||||||||||
(Gain) loss on sale of fixed assets | (10.0) | 0.5 | ||||||||||||
Restructuring charges - cost of goods sold | (1.3) | 32.2 | ||||||||||||
Gross profit | 283.4 | 276.3 | ||||||||||||
Research and development expenses | 78.5 | 81.7 | ||||||||||||
Selling and administrative expenses | 150.3 | 128.9 | ||||||||||||
Impairment charges | — | 470.9 | ||||||||||||
Restructuring charges | 3.5 | 9.6 | ||||||||||||
Operating expenses | 232.3 | 691.1 | ||||||||||||
Operating earnings (loss) | 51.1 | (414.8) | ||||||||||||
Interest expense, net | 5.4 | 3.9 | ||||||||||||
Other expense (income), net | 0.7 | (0.5) | ||||||||||||
Earnings (loss) before income taxes | 45.0 | (418.2) | ||||||||||||
(Benefit from) provision for income taxes | (27.4) | 11.9 | ||||||||||||
Net earnings (loss) | $ | 72.4 | $ | (430.1) | ||||||||||
Net earnings (loss) per share: | ||||||||||||||
Basic | $ | 0.80 | $ | (4.69) | ||||||||||
Diluted | $ | 0.79 | $ | (4.69) | ||||||||||
Weighted-average common shares outstanding: | ||||||||||||||
Basic | 90.9 | 91.7 | ||||||||||||
Diluted | 91.6 | 91.7 |
Quarter Ended | Year Ended | ||||||||||||||||||||||||||||
December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||
Gross profit | $ | 78.4 | $ | 77.5 | $ | 75.3 | $ | 283.4 | $ | 276.3 | |||||||||||||||||||
Gross profit as % of revenues | 36.4 | % | 44.3 | % | 38.2 | % | 40.1 | % | 36.1 | % | |||||||||||||||||||
Stock-based compensation expense | 0.4 | 0.5 | 0.2 | 2.1 | 1.6 | ||||||||||||||||||||||||
Restructuring charges | 0.2 | 0.1 | 4.1 | (1.3) | 32.2 | ||||||||||||||||||||||||
Production transfer costs (2) |
0.4 | — | — | 0.4 | — | ||||||||||||||||||||||||
Acquisition-related costs (3) |
0.8 | — | — | 0.8 | — | ||||||||||||||||||||||||
Non-GAAP gross profit | $ | 80.2 | $ | 78.1 | $ | 79.6 | $ | 285.4 | $ | 310.1 | |||||||||||||||||||
Non-GAAP gross profit as % of revenues | 37.3 | % | 44.6 | % | 40.4 | % | 40.3 | % | 40.6 | % | |||||||||||||||||||
Research and development expenses | $ | 19.0 | $ | 19.8 | $ | 18.0 | $ | 78.5 | $ | 81.7 | |||||||||||||||||||
Stock-based compensation expense | (1.3) | (1.1) | (1.4) | (5.9) | (5.6) | ||||||||||||||||||||||||
Intangibles amortization expense | (2.1) | (1.6) | (1.6) | (6.9) | (6.4) | ||||||||||||||||||||||||
Other (4) |
(0.1) | (0.1) | (0.2) | (0.3) | (0.4) | ||||||||||||||||||||||||
Non-GAAP research and development expenses | $ | 15.5 | $ | 17.0 | $ | 14.8 | $ | 65.4 | $ | 69.3 | |||||||||||||||||||
Selling and administrative expenses | $ | 45.4 | $ | 34.6 | $ | 33.3 | $ | 150.3 | $ | 128.9 | |||||||||||||||||||
Stock-based compensation expense | (5.5) | (5.3) | (5.4) | (21.0) | (21.4) | ||||||||||||||||||||||||
Intangibles amortization expense | (2.6) | (1.4) | (1.4) | (6.6) | (5.8) | ||||||||||||||||||||||||
Acquisition-related costs (3) |
(5.6) | (3.0) | — | (8.6) | — | ||||||||||||||||||||||||
Other (4) |
(0.4) | (0.1) | 0.7 | (0.6) | 0.6 | ||||||||||||||||||||||||
Non-GAAP selling and administrative expenses | $ | 31.3 | $ | 24.8 | $ | 27.2 | $ | 113.5 | $ | 102.3 | |||||||||||||||||||
Operating expenses | $ | 64.8 | $ | 55.9 | $ | 282.2 | $ | 232.3 | $ | 691.1 | |||||||||||||||||||
Stock-based compensation expense | (6.8) | (6.4) | (6.8) | (26.9) | (27.0) | ||||||||||||||||||||||||
Intangibles amortization expense | (4.7) | (3.0) | (3.0) | (13.5) | (12.2) | ||||||||||||||||||||||||
Impairment charges | — | — | (231.1) | — | (470.9) | ||||||||||||||||||||||||
Restructuring charges | (0.4) | (1.5) | 0.2 | (3.5) | (9.6) | ||||||||||||||||||||||||
Acquisition-related costs (3) |
(5.6) | (3.0) | — | (8.6) | — | ||||||||||||||||||||||||
Other (4) |
(0.5) | (0.2) | 0.5 | (0.9) | 0.2 | ||||||||||||||||||||||||
Non-GAAP operating expenses | $ | 46.8 | $ | 41.8 | $ | 42.0 | $ | 178.9 | $ | 171.6 | |||||||||||||||||||
Net earnings (loss) | $ | 47.4 | $ | 16.6 | $ | (208.0) | $ | 72.4 | $ | (430.1) | |||||||||||||||||||
Interest expense, net | 3.2 | 0.6 | 1.2 | 5.4 | 3.9 | ||||||||||||||||||||||||
(Benefit from) provision for income taxes | (37.2) | 4.9 | (0.5) | (27.4) | 11.9 | ||||||||||||||||||||||||
Earnings (loss) before interest and income taxes | 13.4 | 22.1 | (207.3) | 50.4 | (414.3) | ||||||||||||||||||||||||
Earnings (loss) before interest and income taxes as % of revenues |
6.2 | % | 12.6 | % | (105.2) | % | 7.1 | % | (54.2) | % | |||||||||||||||||||
Stock-based compensation expense | 7.2 | 6.9 | 7.0 | 29.0 | 28.6 | ||||||||||||||||||||||||
Intangibles amortization expense | 4.7 | 3.0 | 3.0 | 13.5 | 12.2 | ||||||||||||||||||||||||
Impairment charges | — | — | 231.1 | — | 470.9 | ||||||||||||||||||||||||
Restructuring charges | 0.6 | 1.6 | 3.9 | 2.2 | 41.8 | ||||||||||||||||||||||||
Production transfer costs (2) |
0.4 | — | — | 0.4 | — | ||||||||||||||||||||||||
Acquisition-related costs (3) |
6.4 | 3.0 | — | 9.4 | — | ||||||||||||||||||||||||
Other (4) |
0.5 | 0.2 | (0.5) | 0.9 | 3.2 | ||||||||||||||||||||||||
Adjusted earnings before interest and income taxes | $ | 33.2 | $ | 36.8 | $ | 37.2 | $ | 105.8 | $ | 142.4 | |||||||||||||||||||
Adjusted earnings before interest and income taxes as % of revenues |
15.4 | % | 21.0 | % | 18.9 | % | 15.0 | % | 18.6 | % | |||||||||||||||||||
Net earnings (loss) | 47.4 | 16.6 | (208.0) | 72.4 | (430.1) | ||||||||||||||||||||||||
Interest expense, net | 3.2 | 0.6 | 1.2 | 5.4 | 3.9 | ||||||||||||||||||||||||
(Benefit from) provision for income taxes | (37.2) | 4.9 | (0.5) | (27.4) | 11.9 | ||||||||||||||||||||||||
Earnings (loss) before interest and income taxes | 13.4 | 22.1 | (207.3) | 50.4 | (414.3) | ||||||||||||||||||||||||
Non-GAAP reconciling adjustments (6) |
19.8 | 14.7 | 244.5 | 55.4 | 556.7 | ||||||||||||||||||||||||
Depreciation expense | 8.0 | 7.6 | 9.2 | 33.0 | 41.7 | ||||||||||||||||||||||||
Adjusted earnings before interest, income taxes, depreciation, and amortization ("EBITDA") | 41.2 | 44.4 | 46.4 | 138.8 | 184.1 | ||||||||||||||||||||||||
Adjusted EBITDA as a % of revenues |
19.1 | % | 25.4 | % | 23.5 | % | 19.6 | % | 24.1 | % | |||||||||||||||||||
Quarter Ended | Year Ended | ||||||||||||||||||||||||||||
December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||
(Benefit from) provision for income taxes | $ | (37.2) | $ | 4.9 | $ | (0.5) | $ | (27.4) | $ | 11.9 | |||||||||||||||||||
Income tax effects of non-GAAP reconciling adjustments (5) |
41.3 | 2.0 | 5.8 | 45.6 | 7.3 | ||||||||||||||||||||||||
Non-GAAP provision for income taxes | $ | 4.1 | $ | 6.9 | $ | 5.3 | $ | 18.2 | $ | 19.2 | |||||||||||||||||||
Net earnings (loss) | $ | 47.4 | $ | 16.6 | $ | (208.0) | $ | 72.4 | $ | (430.1) | |||||||||||||||||||
Non-GAAP reconciling adjustments (6) |
19.8 | 14.7 | 244.5 | 55.4 | 556.7 | ||||||||||||||||||||||||
Income tax effects of non-GAAP reconciling adjustments (5) |
41.3 | 2.0 | 5.8 | 45.6 | 7.3 | ||||||||||||||||||||||||
Non-GAAP net earnings | $ | 25.9 | $ | 29.3 | $ | 30.7 | $ | 82.2 | $ | 119.3 | |||||||||||||||||||
Diluted earnings (loss) per share | $ | 0.52 | $ | 0.18 | $ | (2.28) | $ | 0.79 | $ | (4.69) | |||||||||||||||||||
(Loss) earnings per share non-GAAP reconciling adjustment |
(0.24) | 0.13 | 2.61 | 0.09 | 5.95 | ||||||||||||||||||||||||
Non-GAAP diluted earnings per share | $ | 0.28 | $ | 0.31 | $ | 0.33 | $ | 0.88 | $ | 1.26 | |||||||||||||||||||
Diluted average shares outstanding | 90.7 | 91.4 | 91.0 | 91.6 | 91.7 | ||||||||||||||||||||||||
Non-GAAP adjustment (7) |
2.2 | 2.6 | 2.5 | 2.3 | 2.9 | ||||||||||||||||||||||||
Non-GAAP diluted average shares outstanding (7) |
92.9 | 94.0 | 93.5 | 93.9 | 94.6 |
December 31, 2023 | December 31, 2022 | ||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 87.3 | $ | 48.2 | |||||||
Receivables, net of allowances of $0.2 and $1.1 |
135.3 | 134.7 | |||||||||
Inventories, net | 196.4 | 169.5 | |||||||||
Prepaid and other current assets | 9.8 | 10.0 | |||||||||
Total current assets | 428.8 | 362.4 | |||||||||
Property, plant, and equipment, net | 175.4 | 161.8 | |||||||||
Goodwill | 540.7 | 471.0 | |||||||||
Intangible assets, net | 189.4 | 85.1 | |||||||||
Operating lease right-of-use assets | 13.1 | 12.6 | |||||||||
Other assets and deferred charges | 115.4 | 91.0 | |||||||||
Total assets | $ | 1,462.8 | $ | 1,183.9 | |||||||
Current liabilities: | |||||||||||
Current maturities of long-term debt | $ | 47.1 | $ | — | |||||||
Accounts payable | 51.3 | 41.4 | |||||||||
Accrued compensation and employee benefits | 33.0 | 26.9 | |||||||||
Operating lease liabilities | 5.1 | 8.4 | |||||||||
Other accrued expenses | 25.0 | 19.9 | |||||||||
Federal and other taxes on income | 3.1 | 2.5 | |||||||||
Total current liabilities | 164.6 | 99.1 | |||||||||
Long-term debt | 224.1 | 45.0 | |||||||||
Deferred income taxes | 0.7 | 0.9 | |||||||||
Long-term operating lease liabilities | 8.2 | 7.2 | |||||||||
Other liabilities | 31.1 | 38.8 | |||||||||
Commitments and contingencies | |||||||||||
Stockholders' equity: | |||||||||||
Preferred stock - $0.01 par value; 10,000,000 shares authorized; none issued |
— | — | |||||||||
Common stock - $0.01 par value; 400,000,000 shares authorized; 97,297,703 and 89,092,871 shares issued and outstanding at December 31, 2023, respectively, and 96,431,604 and 91,078,376 shares issued and outstanding at December 31, 2022, respectively |
1.0 | 1.0 | |||||||||
Treasury stock - at cost; 8,204,832 and 5,353,228 shares at December 31, 2023 and 2022, respectively |
(151.2) | (103.3) | |||||||||
Additional paid-in capital | 1,689.9 | 1,665.5 | |||||||||
Accumulated deficit | (375.8) | (448.2) | |||||||||
Accumulated other comprehensive loss | (129.8) | (122.1) | |||||||||
Total stockholders' equity | 1,034.1 | 992.9 | |||||||||
Total liabilities and stockholders' equity | $ | 1,462.8 | $ | 1,183.9 |
Years Ended December 31, | |||||||||||
2023 | 2022 | ||||||||||
Operating Activities | |||||||||||
Net earnings (loss) | $ | 72.4 | $ | (430.1) | |||||||
Adjustments to reconcile net earnings (loss) to cash from operating activities: | |||||||||||
Depreciation and amortization | 46.5 | 53.9 | |||||||||
Stock-based compensation | 29.0 | 28.6 | |||||||||
Impairment charges | — | 470.9 | |||||||||
Non-cash restructuring charges | (1.8) | 13.5 | |||||||||
Non-cash interest expense and amortization of debt issuance costs | 2.0 | 0.7 | |||||||||
Deferred income taxes | (40.3) | 1.6 | |||||||||
(Gain) loss on sale or disposal of fixed assets | (10.0) | 0.5 | |||||||||
Other, net | (0.9) | (5.9) | |||||||||
Changes in assets and liabilities (excluding effects of foreign exchange): | |||||||||||
Receivables, net | 12.7 | 11.1 | |||||||||
Inventories, net | 11.5 | (22.8) | |||||||||
Prepaid and other current assets | (0.4) | 2.0 | |||||||||
Accounts payable | 6.2 | (41.2) | |||||||||
Accrued compensation and employee benefits | 4.0 | (15.0) | |||||||||
Other accrued expenses | (2.0) | (0.3) | |||||||||
Accrued taxes | (0.4) | 1.3 | |||||||||
Other non-current assets and non-current liabilities | (5.8) | 17.5 | |||||||||
Net cash provided by operating activities | 122.7 | 86.3 | |||||||||
Investing Activities | |||||||||||
Acquisitions of businesses | (136.9) | (0.7) | |||||||||
Acquisition of asset | (0.3) | — | |||||||||
Capital expenditures | (16.9) | (32.1) | |||||||||
Proceeds from the sale of property, plant, and equipment | 12.5 | 0.1 | |||||||||
Purchase of investments | (0.4) | (0.4) | |||||||||
Proceeds from the sale of investments | 0.4 | 0.4 | |||||||||
Net cash used in investing activities | (141.6) | (32.7) | |||||||||
Financing Activities | |||||||||||
Borrowings under revolving credit facility | 150.0 | 23.0 | |||||||||
Payments under revolving credit facility | (35.0) | (48.0) | |||||||||
Repurchase of common stock | (47.5) | (44.0) | |||||||||
Tax on stock option exercises and restricted and performance stock unit vesting | (6.2) | (6.9) | |||||||||
Payments of finance lease obligations | (2.5) | (4.8) | |||||||||
Payments of debt issuance costs | (2.2) | — | |||||||||
Proceeds from exercise of stock-based awards | 1.6 | 7.5 | |||||||||
Net cash provided by (used in) financing activities | 58.2 | (73.2) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | (0.2) | (1.1) | |||||||||
Net increase (decrease) in cash and cash equivalents | 39.1 | (20.7) | |||||||||
Cash and cash equivalents at beginning of period | 48.2 | 68.9 | |||||||||
Cash and cash equivalents at end of period | $ | 87.3 | $ | 48.2 | |||||||
Net cash provided by operating activities to Free cash flow (1) |
|||||
Year Ended December 31, 2023 | |||||
Net cash provided by operating activities | $ | 122.7 | |||
Net cash provided by operating activities as % of revenues | 17.3 | % | |||
Less: Capital expenditures | (16.9) | ||||
Free cash flow | $ | 105.8 | |||
Free cash flow as % of revenues | 15.0 | % | |||
Debt to Net debt (2) |
|||||
December 31, 2023 | |||||
Current maturities of long-term debt | $ | 47.1 | |||
Long-term debt | 224.1 | ||||
Total debt | 271.2 | ||||
Less: Cash and cash equivalents | (87.3) | ||||
Net debt | $ | 183.9 |