Knowles Corporation (KN): Business Model Canvas [10-2024 Updated]

Discover how Knowles Corporation (KN) leverages its innovative business model to dominate the electronic components market. By focusing on strategic partnerships, cutting-edge research and development, and a commitment to sustainability, Knowles crafts tailored solutions for diverse industries. Dive into the details of their Business Model Canvas to understand the key elements that drive their success and how they create value for their customers.

Knowles Corporation (KN) - Business Model: Key Partnerships

Collaborations with OEMs for Product Development

Knowles Corporation partners with various Original Equipment Manufacturers (OEMs) to enhance product development and innovation. These collaborations enable Knowles to integrate advanced technology into their products, particularly in the audio and precision device segments. For instance, the acquisition of Cornell Dubilier Electronics (CD) in November 2023 for $259.8 million has expanded Knowles' capabilities in the precision devices market.

Partnerships with Distributors for Global Reach

Knowles maintains strategic partnerships with distributors worldwide to bolster its market reach. In the third quarter of 2024, Knowles reported revenues of $142.5 million, a 31.8% increase from $108.1 million in the same period in 2023, largely attributed to enhanced distribution channels. The company’s distribution network encompasses a range of geographies, ensuring that their products are accessible to a global customer base.

Alliances with Technology Firms for Innovation

Knowles has established alliances with leading technology firms to drive innovation in its product offerings. These partnerships focus on developing cutting-edge audio technologies and improving manufacturing processes. For example, the company has invested in research and development, with R&D expenses amounting to $10.1 million in Q3 2024. Such collaborations are crucial for sustaining competitive advantage in the rapidly evolving tech landscape.

Relationships with Suppliers for Raw Materials

Strong relationships with suppliers are vital for Knowles' operations, ensuring a steady supply of raw materials necessary for production. The company's inventory as of September 30, 2024, totaled $124.9 million, reflecting effective supply chain management. This inventory includes raw materials worth $99.1 million, indicating the importance of maintaining robust supplier partnerships to meet production demands efficiently.

Partnership Type	Details	Financial Impact
OEM Collaborations	Integration of advanced technologies	Acquisition of CD for $259.8 million
Distributor Partnerships	Global distribution network	Q3 2024 revenues of $142.5 million
Technology Alliances	Focus on innovation and R&D	R&D expenses of $10.1 million in Q3 2024
Supplier Relationships	Steady supply of raw materials	Inventory of $124.9 million as of September 30, 2024

Knowles Corporation (KN) - Business Model: Key Activities

Manufacturing of high-performance electronic components

Knowles Corporation focuses on the manufacturing of precision components, particularly in the fields of MedTech and Specialty Audio, and Precision Devices. For the nine months ended September 30, 2024, Knowles reported revenues of $411.0 million, a 29.4% increase from $317.6 million in the same period of 2023. The Precision Devices segment generated $227.2 million in revenues, reflecting a significant increase of 49.8% compared to $151.7 million in the prior year.

Cost of Goods Sold (COGS) for the nine months ended September 30, 2024, was $235.7 million, up from $172.2 million in 2023, marking a 36.9% increase.

Research and development for new technologies

Research and development (R&D) expenses for Knowles Corporation totaled $10.2 million for the third quarter of 2024, compared to $8.1 million in the same quarter of 2023, representing a 25.9% increase. This increase reflects the company's commitment to innovation and the development of new technologies within its product lines, particularly following the acquisition of Cornell Dubilier Electronics, which expanded its capabilities in the Precision Devices segment.

R&D expenses as a percentage of revenues were 7.2% for the third quarter of 2024, slightly down from 7.5% in 2023.

Quality control and product testing

Quality control is critical to Knowles Corporation's operations, ensuring that the high-performance electronic components meet stringent industry standards. The gross profit for the third quarter of 2024 was $62.9 million, compared to $50.4 million in the same quarter of 2023, indicating a gross profit margin of 44.1%. However, the gross profit margin has seen a decline from 46.6% year-over-year, primarily due to lower average pricing on mature products and the impact of the recent acquisition.

Market analysis to identify customer needs

Market analysis is a vital activity for Knowles Corporation, allowing the company to adapt to changing customer demands. The MedTech & Specialty Audio segment generated revenues of $183.8 million for the nine months ended September 30, 2024, an increase of 10.8% from $165.9 million in the previous year. This growth is largely attributed to increased shipping volumes of hearing health products driven by stronger end-market demand. However, the segment also faced challenges due to lower average pricing on mature products.

Activity	Q3 2024 Revenue (in millions)	Q3 2023 Revenue (in millions)	Change (%)
Precision Devices	$78.8	$50.2	57.0%
MedTech & Specialty Audio	$63.7	$57.9	10.0%
Total Revenues	$142.5	$108.1	31.8%

During the nine months ended September 30, 2024, Knowles Corporation recorded an adjusted EBIT of $75.0 million, reflecting an increase of 25.3% from $60.0 million in the same period of 2023. This data underscores the company's ongoing efforts in market analysis to stay aligned with customer needs and preferences.

Knowles Corporation (KN) - Business Model: Key Resources

Advanced manufacturing facilities

Knowles Corporation operates advanced manufacturing facilities that are crucial for its production capabilities. As of September 30, 2024, the total cost of machinery, equipment, and other manufacturing assets amounted to approximately $268.2 million, while buildings and improvements were valued at about $107.3 million . The total net value of property, plant, and equipment was reported at $134.4 million .

Skilled workforce in engineering and production

The company boasts a skilled workforce, particularly in engineering and production roles. Research and development (R&D) expenses for the nine months ended September 30, 2024, were approximately $29.2 million, reflecting a 21.7% increase from $24.0 million in the same period of the previous year . This increase signifies Knowles' commitment to enhancing its workforce capabilities and fostering innovation in product development.

Intellectual property portfolio

Knowles Corporation has a robust intellectual property portfolio that supports its competitive edge. As of September 30, 2024, the gross carrying value of amortized intangible assets, including customer relationships and developed technology, was approximately $164.9 million . The amortization expense for these intangible assets was about $12.8 million for the nine months ended September 30, 2024 . This portfolio is vital for protecting the company's innovations and market position.

Strong brand reputation in the electronics industry

Knowles has established a strong brand reputation within the electronics industry, particularly in the sectors of precision devices and specialty audio. The company reported revenues of $411.0 million for the nine months ended September 30, 2024, representing a 29.4% increase from $317.6 million during the same period in 2023 . This growth is indicative of the brand's strength and recognition in the market.

Key Resource	Value/Details
Advanced Manufacturing Facilities	Machinery, Equipment, and Other: $268.2 million; Buildings and Improvements: $107.3 million; Total Net Property, Plant, and Equipment: $134.4 million .
Skilled Workforce	R&D Expenses: $29.2 million for the nine months ended September 30, 2024, up 21.7% from $24.0 million in 2023 .
Intellectual Property Portfolio	Gross Carrying Value of Amortized Intangible Assets: $164.9 million; Amortization Expense: $12.8 million for the nine months ended September 30, 2024 .
Brand Reputation	Revenues: $411.0 million for the nine months ended September 30, 2024, a 29.4% increase from $317.6 million in 2023 .

Knowles Corporation (KN) - Business Model: Value Propositions

High-quality, reliable electronic components

Knowles Corporation is recognized for its production of high-quality electronic components, particularly in the MEMS microphone segment. The company reported revenues of $411.0 million for the nine months ended September 30, 2024, an increase of 29.4% compared to $317.6 million in the same period of 2023. The Precision Devices segment, which includes high-quality components, generated revenues of $227.2 million for the nine months ended September 30, 2024, up from $151.7 million in 2023, reflecting a growth of 49.8%.

Innovative solutions tailored for specific industries

Knowles focuses on providing innovative solutions tailored to specific industries, such as MedTech and Specialty Audio. For example, the MedTech & Specialty Audio segment revenues reached $183.8 million for the nine months ended September 30, 2024, compared to $165.9 million for the same period in 2023, marking an increase of 10.8%. This growth is attributed to higher shipping volumes of hearing health products, showcasing the company's ability to adapt to market demands and innovate accordingly.

Expertise in acoustic technology for diverse applications

With a strong emphasis on acoustic technology, Knowles Corporation has established itself as an expert in the field. The company has leveraged its expertise to provide solutions across various applications, including consumer electronics, medical devices, and industrial markets. The adjusted EBIT for the MedTech & Specialty Audio segment was $75.0 million for the nine months ended September 30, 2024, representing a margin of 40.8%, compared to 36.2% in 2023. This demonstrates the effectiveness of their innovative acoustic technologies in driving profitability.

Commitment to sustainability and responsible sourcing

Knowles Corporation emphasizes sustainability and responsible sourcing within its operations. The company has implemented practices to reduce its environmental footprint and ensure that its supply chain adheres to ethical standards. As of September 30, 2024, Knowles reported total stockholders' equity of $777.4 million, reflecting a commitment to long-term sustainability and responsible financial management.

Metric	Q3 2024	Q3 2023	Change (%)
Revenues (MedTech & Specialty Audio)	$63.7 million	$57.9 million	10.0%
Revenues (Precision Devices)	$78.8 million	$50.2 million	57.0%
Adjusted EBIT (MedTech & Specialty Audio)	$75.0 million	$60.0 million	25.0%
Adjusted EBIT Margin (MedTech & Specialty Audio)	40.8%	36.2%	4.6%
Total Stockholders' Equity	$777.4 million	$993.3 million	-21.8%

Knowles Corporation (KN) - Business Model: Customer Relationships

Direct engagement with OEMs for tailored solutions

Knowles Corporation maintains strong relationships with Original Equipment Manufacturers (OEMs) by providing customized solutions tailored to their specific needs. This direct engagement allows Knowles to integrate its products into OEM designs, enhancing product offerings and customer satisfaction. For example, the company's Precision Devices segment reported revenues of $227.2 million for the nine months ended September 30, 2024, a notable increase of 49.8% compared to the previous year, largely attributed to tailored solutions for OEMs.

Customer support and after-sales services

Knowles offers comprehensive customer support and after-sales services to bolster customer relationships. The company has invested in enhancing its service capabilities, ensuring that clients receive timely assistance and support. For the nine months ended September 30, 2024, Knowles reported adjusted earnings from continuing operations before interest and income taxes of $78.5 million, reflecting its commitment to maintaining high service standards and customer satisfaction.

Feedback mechanisms for product improvement

Knowles Corporation actively implements feedback mechanisms to gather insights from customers. This approach not only aids in product development but also fosters a customer-centric culture within the organization. The company reported a gross profit of $173.9 million for the nine months ended September 30, 2024, indicating effective utilization of customer feedback to enhance product offerings and operational efficiency.

Long-term contracts with key clients

Knowles has established long-term contracts with key clients, which provide stability and predictability in revenue streams. These contracts often involve ongoing collaboration and innovation, ensuring that Knowles remains aligned with customer needs. The company's total revenues for the nine months ended September 30, 2024, reached $411.0 million, highlighting the impact of these strategic partnerships.

Customer Relationship Aspect	Details	Financial Impact
Direct Engagement with OEMs	Customized solutions for OEMs	PD revenues: $227.2 million (9M 2024)
Customer Support	Comprehensive after-sales services	Adjusted EBIT: $78.5 million (9M 2024)
Feedback Mechanisms	Active customer feedback implementation	Gross Profit: $173.9 million (9M 2024)
Long-term Contracts	Strategic partnerships with key clients	Total Revenues: $411.0 million (9M 2024)

Knowles Corporation (KN) - Business Model: Channels

Direct sales to OEMs and contract manufacturers

Knowles Corporation engages in direct sales primarily targeting Original Equipment Manufacturers (OEMs) and contract manufacturers. This channel is essential for their Precision Devices and MedTech & Specialty Audio segments. In the third quarter of 2024, Knowles reported revenues of $78.8 million from the Precision Devices segment, reflecting a significant increase driven by direct sales efforts and the acquisition of Cornell Dubilier Electronics, which has expanded their customer base.

Distribution through global partners

Knowles utilizes a robust network of global partners to distribute its products. For the nine months ended September 30, 2024, Knowles' total revenues reached $411.0 million, with significant contributions from international markets. The distribution strategy includes various partnerships that enhance their market reach, particularly in Asia and Europe, where they generated $135.9 million and $76.6 million in revenue, respectively.

Region	Revenue (in millions)
United States	$178.6
Asia	$135.9
Europe	$76.6
Other Americas	$8.6
Other	$11.3

Online platforms for product information and inquiries

Knowles Corporation maintains an online presence that serves as a crucial channel for product information and customer inquiries. This platform allows customers to access detailed product specifications and support resources. The company's digital strategy is aligned with the growing trend of online engagement, enhancing customer experience and facilitating direct communication. As of September 30, 2024, Knowles' cash and cash equivalents totaled $92.6 million, indicating a stable financial position to support digital initiatives.

Trade shows and industry conferences for visibility

Participation in trade shows and industry conferences is a key aspect of Knowles' strategy to enhance visibility and strengthen relationships with customers and partners. In 2024, Knowles is expected to showcase its innovations at major industry events, which historically have contributed to increased sales and brand recognition. The company’s proactive engagement at these events complements its direct sales and distribution strategies, helping to maintain a competitive edge in the market.

Knowles Corporation (KN) - Business Model: Customer Segments

Medical technology companies

Knowles Corporation targets medical technology companies by providing advanced microphones and audio processing solutions. In the third quarter of 2024, revenues from the MedTech & Specialty Audio segment reached $63.7 million, reflecting a 10.0% increase from $57.9 million in the same quarter of 2023. The growth was driven by higher shipping volumes of hearing health products due to stronger end market demand.

Defense and aerospace contractors

Knowles has established a significant presence in the defense and aerospace sectors, where it supplies high-performance microphones and sensors. The company reported that despite lower demand in certain industrial and communication markets, there was an increase in demand from the defense sector, contributing positively to its Precision Devices segment which generated revenues of $78.8 million in Q3 2024, up from $50.2 million in Q3 2023, marking a 57.0% increase.

Consumer electronics manufacturers

Consumer electronics manufacturers represent a key customer segment for Knowles, particularly in the smartphone and wearable device markets. The overall revenue for the Precision Devices segment was $227.2 million for the nine months ended September 30, 2024, compared to $151.7 million in the prior year, a 49.8% increase attributed to the acquisition of Cornell Dubilier Electronics and increased demand from consumer electronics.

Industrial automation sectors

Knowles serves the industrial automation sector by providing audio solutions that enhance machine communication and monitoring capabilities. For the nine months ended September 30, 2024, the company faced challenges in the industrial markets due to excess customer and channel inventory. However, the overall revenues increased to $411.0 million from $317.6 million year-over-year, indicating solid performance despite the sector's volatility.

Customer Segment	Revenue (Q3 2024)	Revenue (Q3 2023)	Growth Rate	Key Drivers
Medical Technology Companies	$63.7 million	$57.9 million	10.0%	Higher shipping volumes, stronger end market demand
Defense and Aerospace Contractors	$78.8 million	$50.2 million	57.0%	Increased demand from defense sector
Consumer Electronics Manufacturers	$227.2 million (9M)	$151.7 million (9M)	49.8%	Acquisition of Cornell Dubilier, increased demand
Industrial Automation Sectors	$411.0 million (9M)	$317.6 million (9M)	29.4%	Overall revenue growth despite inventory challenges

Knowles Corporation (KN) - Business Model: Cost Structure

Manufacturing and operational costs

Cost of Goods Sold (COGS) for the third quarter of 2024 was $79.5 million, compared with $57.5 million for the third quarter of 2023, reflecting an increase of 38.3%. For the nine months ended September 30, 2024, COGS totaled $235.7 million, up from $172.2 million in the same period of 2023, marking a 36.9% increase. This rise is primarily attributed to the acquisition of CD and lower factory capacity utilization in the legacy Precision Devices (PD) business .

R&D expenses for product innovation

Research and Development (R&D) expenses for the third quarter of 2024 were reported at $10.2 million, an increase of 25.9% from $8.1 million in the third quarter of 2023. R&D expenses as a percentage of revenues were 7.2% for Q3 2024, compared to 7.5% in Q3 2023 .

Marketing and sales expenditures

Selling and administrative expenses for the third quarter of 2024 were $33.9 million, up from $29.4 million in the third quarter of 2023, representing an increase of 15.3%. As a percentage of revenues, these expenses accounted for 23.8% in Q3 2024, down from 27.2% in Q3 2023 .

Administrative overhead and compliance costs

Administrative costs include interest expenses, which rose to $3.9 million in the third quarter of 2024, compared to $0.6 million in the same period of 2023, primarily due to the acquisition-related financing . Additionally, restructuring charges recorded during the third quarter of 2024 were $0.1 million related to operational optimization.

Cost Category	Q3 2024 (in millions)	Q3 2023 (in millions)	Change (%)
Cost of Goods Sold (COGS)	79.5	57.5	38.3
Research and Development (R&D)	10.2	8.1	25.9
Selling and Administrative Expenses	33.9	29.4	15.3
Interest Expense	3.9	0.6	550.0
Restructuring Charges	0.1	1.3	-92.3

Knowles Corporation (KN) - Business Model: Revenue Streams

Sales of electronic components and systems

For the nine months ended September 30, 2024, Knowles Corporation reported revenues of $411.0 million, which marked an increase of 29.4% compared to $317.6 million for the same period in 2023. This growth was significantly driven by the acquisition of Cornell Dubilier Electronics, contributing approximately $75.5 million to the overall revenue, particularly in the Precision Devices (PD) segment, which generated $227.2 million in revenues, up from $151.7 million in the prior year.

Licensing of proprietary technologies

Licensing revenues are an integral part of Knowles' business model. As of 2024, the company has focused on monetizing its proprietary technologies through licensing agreements. Although specific figures for licensing revenues were not disclosed in the latest financial reports, the company has been actively pursuing partnerships to leverage its technological expertise, particularly in acoustic devices and advanced sensor technologies, which are crucial for various consumer electronics.

Long-term contracts with OEMs

Knowles maintains long-term contracts with original equipment manufacturers (OEMs) across multiple sectors, including medtech and specialty audio. In the third quarter of 2024, Knowles’ MedTech & Specialty Audio (MSA) segment generated revenues of $63.7 million, reflecting a 10.0% increase from $57.9 million in the same quarter of 2023. This segment's growth is attributed to increased demand from OEMs for hearing health products and specialty audio solutions.

Service agreements for maintenance and support

Knowles also generates revenue through service agreements that include maintenance and support for its electronic components. For the nine months ended September 30, 2024, the MSA segment's adjusted earnings from continuing operations before interest and income taxes reached $75.0 million, up from $60.0 million in the previous year, indicating a 25.0% increase. This growth underscores the importance of service agreements in providing ongoing revenue and support to customers.

Revenue Stream	Q3 2024 Revenue (in millions)	Q3 2023 Revenue (in millions)	Growth Rate
Sales of Electronic Components	$142.5	$108.1	31.8%
Licensing of Proprietary Technologies	N/A	N/A	N/A
Long-term Contracts with OEMs	$63.7	$57.9	10.0%
Service Agreements for Maintenance & Support	$75.0	$60.0	25.0%

Article updated on 8 Nov 2024

Resources:

1. 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.
2. 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.