Knowles Corp Reports Strong Q2 Growth and Focuses on Acquisitions

Knowles Corporation Reports Strong Q2 2024 Results

Knowles Corporation, a leader in advanced sound and communication solutions, recently announced impressive financial results for the second quarter of 2024. The company achieved revenues of $205 million, reflecting an 18% year-over-year increase.

Notably, the Medtech & Specialty Audio segment experienced a sequential growth of 4%, while the Precision Devices segment achieved a remarkable 55% revenue increase compared to the previous year. Additionally, the Consumer MEMS Microphone business reported a 9% growth year-over-year.

Knowles executed a financial strategy during the quarter that included repurchasing $25 million worth of shares and reducing its debt by $34 million. Looking forward, the company projects Q3 revenues to range between $210 million and $220 million, which would represent a 23% increase year-over-year.

Key Takeaways:

• Q2 2024 revenue reached $205 million, an 18% increase compared to last year.
• Precision Devices segment reported a staggering 55% year-over-year revenue growth.
• The Medtech & Specialty Audio segment saw a sequential growth of 4%.
• The Consumer MEMS Microphone division grew by 9% year-over-year.
• Knowles repurchased shares worth $25 million and decreased debt by $34 million.
• Q3 revenue expectations are projected to be between $210 million and $220 million, reflecting a 23% year-over-year increase.
• The company is exploring a potential sale or restructuring of its CMM business and recorded a $249 million goodwill impairment charge.
• Knowles is pursuing acquisitions while maintaining modest debt levels.

Company Outlook:

• Continuous cash generation is expected throughout 2024.
• Anticipation for improved conditions among OEM customers and modest distribution growth in the latter half of the year.
• Commitment to maintaining a strong balance sheet and low debt levels.

Challenges and Opportunities:

Bearish Highlights:

• Inventory challenges are being faced in some Medtech markets.
• The industrial sector continues to decline, although there are signs of modest recovery.
• The CMM business did not exhibit significant sequential growth in Q3 after a robust Q2.

Bullish Highlights:

• Anticipated strong growth in the defense and Medtech sectors.
• Expected sequential growth in both the Precision Devices and Medtech & Specialty Audio segments.
• Greater-than-expected synergies from a recent acquisition, along with faster improving margins.

Misses:

• Defense sector growth was lower than anticipated.
• A significant goodwill impairment charge of $249 million was noted in the CMM business.

Q&A Highlights:

• The company is nearing the conclusion of its strategic review for the CMM business.
• Knowles is actively seeking acquisition opportunities, leveraging strong cash flow for share buybacks.
• Stable pricing has been observed in most segments, excluding mobile markets, which remain challenged.

Knowles Corporation’s second-quarter results and strategic moves signal a pivotal phase for the company as it focuses on growth and operational efficiency. While the CMM business faces its hurdles, the overall solid financial performance and proactive management strategies indicate Knowles’ dedication to enhancing shareholder value and preparing for future advancements in the sound and communication technology arena.

As Knowles continues to adapt to market dynamics and implement its strategies, investors and industry observers will closely watch the company’s upcoming actions in this evolving landscape.