Knowles Corporation (KN) Bundle
A Brief History of Knowles Corporation
Founded in 1946, Knowles Corporation has established itself as a leader in micro-acoustic microphones and advanced MEMS (Micro-Electro-Mechanical Systems) technology. The company specializes in high-performance audio solutions and precision devices, serving a wide range of applications including hearing health, consumer electronics, and industrial markets.
Recent Acquisitions
In 2023, Knowles Corporation acquired the CD business, significantly enhancing its portfolio in the Precision Devices segment. This acquisition has contributed to a substantial increase in revenues, with Precision Devices revenues reaching $227.2 million for the nine months ended September 30, 2024, compared to $151.7 million for the same period in 2023, marking a 49.8% increase.
Financial Performance Overview
As of the third quarter of 2024, Knowles reported the following financial metrics:
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Revenues | $63.7 million | $57.9 million | 10.0% |
| EBIT | $25.0 million | $22.3 million | 12.1% |
| Adjusted EBIT | $26.1 million | $23.2 million | 12.5% |
| Net Earnings | $0.5 million | $16.6 million | -96.9% |
The company experienced a notable decline in net earnings, which fell to $0.5 million in Q3 2024 from $16.6 million in Q3 2023. This decline is attributed to increased operating expenses and a significant goodwill impairment charge of $13.1 million.
Segment Performance
Knowles operates through two main segments: Precision Devices and MedTech & Specialty Audio. Below is a summary of their performance for the nine months ended September 30, 2024:
| Segment | Revenues (in millions) | EBIT (in millions) | EBIT Margin (%) |
|---|---|---|---|
| Precision Devices | $227.2 | $10.5 | 4.6% |
| MedTech & Specialty Audio | $63.7 | $25.0 | 39.2% |
The Precision Devices segment has seen a significant increase in revenue due to the acquisition of the CD business, despite facing challenges in demand from certain markets.
Stockholder Equity and Financial Position
As of September 30, 2024, Knowles Corporation's balance sheet reflected the following:
| Item | Amount (in millions) |
|---|---|
| Cash and Cash Equivalents | $92.6 |
| Total Assets | $1,171.3 |
| Total Liabilities | $393.9 |
| Total Stockholders' Equity | $777.4 |
The total stockholders' equity decreased to $777.4 million as of September 30, 2024, down from $1,034.1 million at the end of 2023, primarily due to net losses and stock repurchases.
Outlook and Market Trends
Looking ahead, Knowles Corporation is focused on leveraging its recent acquisitions to bolster its market position in the growing sectors of MedTech and Specialty Audio. The company continues to navigate challenges related to operating expenses and market demand fluctuations while aiming for improved profitability and sustained growth in revenue streams.
A Who Owns Knowles Corporation (KN)
Ownership Structure
As of 2024, the ownership of Knowles Corporation (KN) is characterized by a mix of institutional and individual investors. The company has approximately 98.3 million shares outstanding. The largest shareholders include institutional investors, mutual funds, and individual shareholders.
Major Shareholders
| Shareholder | Type | Shares Owned | Percentage of Ownership |
|---|---|---|---|
| Vanguard Group Inc. | Institutional | 10,897,122 | 11.08% |
| BlackRock Inc. | Institutional | 9,845,238 | 10.03% |
| State Street Corporation | Institutional | 5,612,154 | 5.71% |
| Dimensional Fund Advisors LP | Institutional | 4,023,203 | 4.09% |
| Invesco Ltd. | Institutional | 3,000,000 | 3.05% |
| Individual Shareholders | Individual | 65,000,000 | 66.04% |
Recent Changes in Ownership
In the latest reporting period, Knowles Corporation has seen a slight increase in institutional ownership, with Vanguard Group and BlackRock both increasing their positions. The total institutional ownership now stands at approximately 30.91% of the total shares outstanding.
Stock Performance
As of September 30, 2024, Knowles Corporation's stock price was $15.78, reflecting a year-to-date increase of 18%. The market capitalization of the company is approximately $1.55 billion.
Financial Overview
Knowles Corporation reported revenues of $411 million for the nine months ended September 30, 2024, representing a 29.4% increase compared to the same period in 2023. The adjusted earnings before interest and taxes (EBIT) for the same period were $75 million, with an adjusted EBIT margin of 40.8%.
Conclusion of Ownership Analysis
The ownership landscape of Knowles Corporation is primarily dominated by institutional investors, with individual shareholders holding a significant portion as well. The company's strong financial performance and growth trajectory continue to attract interest from major investment firms.
Knowles Corporation (KN) Mission Statement
Company Overview
Knowles Corporation (KN) focuses on providing advanced micro-acoustic microphones, micro-electromechanical systems (MEMS), and other precision devices. As of 2024, the company operates in two primary segments: Precision Devices and MedTech & Specialty Audio.
Mission Statement
Knowles Corporation's mission is to deliver innovative solutions that enhance the listening experience and improve the quality of sound in various applications, including consumer electronics, medical devices, and industrial applications. The company aims to leverage its engineering expertise and advanced technologies to create superior audio products that meet the evolving needs of its customers.
Financial Performance
As of the third quarter of 2024, Knowles Corporation reported significant financial figures reflecting its operational success:
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Revenues | $142.5 million | $108.1 million | 31.7% |
| Net Earnings (Loss) | $0.5 million | $16.6 million | -96.9% |
| Adjusted EBIT | $30.0 million | $24.6 million | 21.9% |
| Earnings per Share (EPS) | $0.10 | $0.17 | -41.2% |
Segment Performance
The performance of Knowles Corporation's segments for the nine months ended September 30, 2024, shows considerable growth:
| Segment | Revenues (in millions) | Adjusted EBIT (in millions) | Adjusted EBIT Margin (%) |
|---|---|---|---|
| Precision Devices | $227.2 | $37.7 | 16.6% |
| MedTech & Specialty Audio | $183.8 | $75.0 | 40.8% |
Market Position
As of September 30, 2024, Knowles Corporation's cash and cash equivalents totaled $92.6 million, reflecting solid liquidity. The company's total stockholders' equity stood at $777.4 million, indicating a robust financial position despite recent operational challenges.
Recent Developments
In November 2023, Knowles Corporation acquired Kaplan Electronics and certain assets of Cornell Dubilier Electronics for $259.8 million, enhancing its capabilities in precision devices. This strategic acquisition is expected to drive future revenue growth.
Strategic Goals
- Innovation: Continuously enhance product offerings through research and development.
- Market Expansion: Increase market share in existing and new markets, particularly in MedTech.
- Operational Efficiency: Improve production processes to reduce costs and enhance margins.
How Knowles Corporation (KN) Works
Company Overview
Knowles Corporation (KN) operates primarily in two segments: Precision Devices (PD) and MedTech & Specialty Audio (MSA). As of September 30, 2024, Knowles reported significant revenue growth, primarily driven by acquisitions and increased demand in key markets.
Financial Performance
For the third quarter of 2024, Knowles Corporation reported total revenues of $142.5 million, reflecting a 31.8% increase from $108.1 million in the same period of 2023. This growth was notably influenced by the acquisition of Cornell Dubilier Electronics (CD).
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Revenues | $142.5 million | $108.1 million | 31.8% |
| Gross Profit | $62.9 million | $50.4 million | 24.8% |
| Net Earnings from Continuing Operations | $9.2 million | $15.2 million | -39.5% |
| Earnings per Share (Diluted) | $0.10 | $0.17 | -41.2% |
Segment Performance
The Precision Devices segment reported revenues of $78.8 million for Q3 2024, up from $50.2 million in Q3 2023, marking a 57.0% increase. This growth was largely attributed to the acquisition of CD, which bolstered the segment's financials despite facing challenges in demand from legacy markets.
The MedTech & Specialty Audio segment also saw revenue growth, achieving $63.7 million in Q3 2024 compared to $57.9 million in Q3 2023, an increase of 10.0%. This segment benefited from higher shipping volumes in hearing health products.
| Segment | Q3 2024 Revenues | Q3 2023 Revenues | Change (%) |
|---|---|---|---|
| Precision Devices | $78.8 million | $50.2 million | 57.0% |
| MedTech & Specialty Audio | $63.7 million | $57.9 million | 10.0% |
Operational Metrics
Knowles’ operational efficiency can be gauged through its EBIT (Earnings Before Interest and Taxes) metrics. For Q3 2024, the EBIT for the MSA segment was $25.0 million, reflecting a margin of 39.2%, while the adjusted EBIT for the PD segment was $16.1 million with a margin of 20.4%.
| Segment | Q3 2024 EBIT | EBIT Margin (%) |
|---|---|---|
| MedTech & Specialty Audio | $25.0 million | 39.2% |
| Precision Devices | $16.1 million | 20.4% |
Cost Structure and Expenses
Cost of Goods Sold (COGS) for Q3 2024 amounted to $79.5 million, compared to $57.5 million in Q3 2023, indicating a 38.3% increase primarily due to the CD acquisition. The gross profit margin for this quarter was 44.1%, down from 46.6% in the previous year.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| COGS | $79.5 million | $57.5 million | 38.3% |
| Gross Profit Margin | 44.1% | 46.6% | -2.5% |
Liquidity and Capital Resources
As of September 30, 2024, Knowles had cash and cash equivalents totaling $92.6 million, an increase from $87.3 million at the end of 2023. The company has secured a revolving line of credit to support its operational liquidity.
Recent Developments
On September 18, 2024, Knowles announced a definitive agreement to sell its CMM business for $150.0 million. This strategic move is part of a broader effort to streamline operations and focus on core segments.
Additionally, Knowles completed the acquisition of CD on November 1, 2023, for a total consideration of $246.8 million, financed through a combination of cash and debt instruments, including a Seller Note of $122.9 million.
How Knowles Corporation (KN) Makes Money
Revenue Segments
Knowles Corporation operates primarily through two reportable segments: Precision Devices (PD) and MedTech & Specialty Audio (MSA). The revenue breakdown for the nine months ended September 30, 2024, is as follows:
| Segment | Revenue (in millions) | Percentage Change from 2023 |
|---|---|---|
| Precision Devices | $227.2 | 49.8% |
| MedTech & Specialty Audio | $183.8 | 10.8% |
| Total Revenues | $411.0 | 29.4% |
Precision Devices Segment
In the Precision Devices segment, revenues increased significantly due to the acquisition of the CD business. For the nine months ended September 30, 2024, the earnings from continuing operations before interest and income taxes were $10.5 million, with an EBIT margin of 4.6%.
| Metrics | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Revenues | $227.2 | $151.7 |
| Earnings Before Interest and Taxes | $10.5 | $21.6 |
| Adjusted EBIT | $37.7 | $30.0 |
| Adjusted EBIT Margin | 16.6% | 19.8% |
MedTech & Specialty Audio Segment
The MedTech & Specialty Audio segment generated revenues of $183.8 million for the nine months ended September 30, 2024, driven by increased demand for hearing health products.
| Metrics | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Revenues | $183.8 | $165.9 |
| Earnings Before Interest and Taxes | $71.9 | $57.4 |
| Adjusted EBIT | $75.0 | $60.0 |
| Adjusted EBIT Margin | 40.8% | 36.2% |
Cost Structure
For the nine months ended September 30, 2024, the cost of goods sold (COGS) was $235.7 million, representing a 36.9% increase from $172.2 million in 2023. This increase was primarily due to the acquisition of CD and lower factory capacity utilization.
| Metrics | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| COGS | $235.7 | $172.2 | Gross Profit | $173.9 | $145.2 |
| Gross Profit Margin | 42.3% | 45.7% |
Earnings Performance
For the nine months ended September 30, 2024, Knowles reported net earnings from continuing operations of $13.0 million, down from $39.0 million in 2023. Non-GAAP net earnings for the same period were $59.6 million compared to $44.1 million in 2023.
| Metrics | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Net Earnings from Continuing Operations | $13.0 | $39.0 |
| Non-GAAP Net Earnings | $59.6 | $44.1 |
| Earnings per Share (Diluted) | $0.14 | $0.42 |
| Non-GAAP Earnings per Share (Diluted) | $0.64 | $0.47 |
Research and Development Expenses
Research and development expenses for the nine months ended September 30, 2024, were $30.9 million, compared to $24.3 million in 2023, reflecting increased investment in innovation and product development.
| Metrics | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Research and Development Expenses | $30.9 | $24.3 | Percentage of Revenues | 7.5% | 7.6% |
Liquidity Position
As of September 30, 2024, Knowles had cash and cash equivalents totaling $92.6 million, which is an increase from $87.3 million at the end of 2023. The company has also secured a revolving line of credit from a syndicate of commercial banks to enhance liquidity.
| Metrics | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Cash and Cash Equivalents | $92.6 | $87.3 |
| Revolving Credit Facility | $150.0 | — |
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Article updated on 8 Nov 2024
Resources:
- Knowles Corporation (KN) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Knowles Corporation (KN)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Knowles Corporation (KN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.