KN - Earnings call transcript Q4 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Knowles Corporation Fourth Quarter and Full Year 2024 Earnings Conference Call. Today's conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Sarah Cook. ahead. go Please

Sarah Cook

Niew, welcome XXXX and of fourth and Vice are quarter Relations, John CEO; Thank our Anderson, call. to I'm year Senior Jeffrey today me earnings presenting and President President Sarah full and and and CFO. you, President with our our Cook, Investor Vice

securities which harbor include for purposes statements will today expectations, provisions call forward-looking applicable about future plans the constitute safe laws. and Our remarks prospects under federal for Knowles, of

including, include a comments to trends that will demand risks Forward-looking for expenses on December anticipated statements call XX, actual differ from the in urges risks to uncertainties current products, about in and ended company uncertainties the this results and cause Form fiscal could The profits number to, sales, materially year review company's investors and company the involve of annual not XX-K but limited SEC for report in expectations. filings, XXXX. and the company's

and with date of by Periodic reports forward-looking statements, to the such made of filed and SEC release. as earnings in statements required from and time except update are All this law. time the identified today's as uncertainties disclaims the duty any Knowles to call, risks

current during SEC. Reg on non-GAAP the G, our addition, in In to Form pursuant call with financial today's measures X-K today can press posted report any knowles.com, at in at and referenced release conference filed our found be our website

selective With on references over let unless non-GAAP section to be basis our reconciliation who found financial provide to me Jeff? details of which this continuing turn a slides, our the include directly in webcast made call be can GAAP indicated. Investor All in results. will most will on a We've Jeff, information the otherwise Relations that, on This comparable website. measures. call will the financial operations available

Jeffrey Niew

you all today. for and joining Sarah, of thanks us to Thanks,

are what as financial John seeing for QX QX XXXX in to turn will also with then revenue over the and our EPS For QX and in on will another as cash in beyond. prepared confidence normal we markets provide some which well us XXXX guidance strong call QX growth highlights commentary I we and provide the results with remarks, for of we have being some our summarize details going exciting gives and flow. year continued close on on, things and to

of historical released I also think well to providing there the This MEMS it's operations the slides for completion information, being in earnings as time note business growth both XX-K associated with late this as we first the business. with is microphone financial continuing demonstrates the sale information be of our that revenue of call. and it the amount important of our and supplemental significant the is in XXXX, this the Consumer a

Now turning results. to

midpoint section. challenges $XX new the we For driven and I orders. diluted quarter, was operations guided CMM. from in of our provide was production ramping challenges Device film detail QX will specialty Precision plant by more line, lack shippable from of within products entirely on and a consolidation my not a capacitor these commentary the within $XXX to shortfall $X.XX of fourth cash and within range, delivered the of of also Non-GAAP range. earnings EPS in the revenue guided million within million, revenue the to The was inclusive of

and For of mica the driven grew EPS non-GAAP grew levels XX% the portfolio. operations XXXX addition electrolytic our capacitors in XX% Medtech and diluted basis, Specialty and year, revenue from Audio film, on the from strength continuing product and full Cornell by a to

our XXXX customers was growth. X% by flat revenues continue but year-over-year X% adjusted from by and it create of Audio drive Medtech grew solutions, by sequentially Specialty Now EBIT grew we to and products, partnering basis. innovative to XX% for our segments. enhancing a the In their with performance on QX, revenue XXXX levels

growth fixed EBIT ability year close adjusted our world-class XXXX we'll core in leverage expect of ahead the solutions of year This, our we design and by the to see to with markets, about new wins. as our we growth. MSA custom overhead us new and to in later be opportunities customers I of coupled these We're to leveraging share to on segment a opportunities new this also competencies and have drop as introduce be innovative very products. growth another manufacturer we continue excited in medical continue beginning this XXXX to accelerate more beyond

QX Precision Device X% year-over-year. grew revenues segment, the In

specialty stated earlier, million a I plans. greater causes. shortfall As in in X were resulted shipment film challenges our $X in products with There capacitor shipments than

part an and the synergies challenges. resulted of to shipment from transfer though of expected, in we completed longer acquisition specialty were from the Cornell, facilities as acquisition First, consolidating improve Even took production in QX, our -- it than film margins. for was

the first team have in I'm these Shipments the to film specialty of demand production of once, and transfers the expected film the very in our new With at custom and fell numerous ramping excited half resolve shipment throughout book production improve of for products short the challenges, products. we confidence targets. are XXXX. will order custom specialty about delays I have consisting in we

beyond. in received sector. new will this significant in the market for more are What new me and in that this product the a for that growth $XX to products for order and XXXX an significant drive and is coming month this gives X in We to XXXX. drive growth line category growth expect confidence product than a all meaningful with customers We in energy prepayment million particular customer sizable

to We XXXX. $XX ship in expect million this least at of order

exciting quarter the We us and of additional the of XXXX. about this provide ahead details will opportunities rest throughout

the was signs of acceleration medical For channeled quarter PD QX, noticeable QX orders seeing finally excess as both the noteworthy in of the a book-to-bill in of bookings strongest year. distribution with QX was our inventory end in -- we're Device markets markets. having that strong their positive revenue line abatement the industrial It's booking and trend from expectation. rest driven with segment, of demonstrated Precision in In by defense

For Precision grew of our John more addition revenue Devices XXXX capacitor into is An compared our the highlights, cash XX% on will portfolio full go as about additional to operations. which detail, year Cornell. expanded XXXX basis, with from a

our Our sheet, gives opportunities continued M&A coupled robust share capital through buybacks. cash generation, us strong with of balance on capitalizing and optionality returning

additional supportive to $XXX continues of buyback authorizing repurchase The in Board million program an stock. share to capacity our be

on, about. like Before the so fluid would much all touch on hearing moving situation I are to we tariff

well On a continuing reduced China footprint the basis, to Mexico. markets. be as of of sale the manufacturing goods in tariffs our either or could China exposure CMM to First, significantly on our from approximately operation subject importing X% China XXXX, in as revenue

Well, is these the we understand to continue will mitigate today as we tariffs. limited, explore alternatives exposure, impact of the to

to the over After will quarterly detail to XXXX and QX thoughts results provide turn call from me John hearing John, I beyond. our to let Now guidance. share my on

John Anderson

increased We QX up $X.XX XX% quarter $XXX guidance million, period $X.XX X% year Medtech Jeff. X% was On driven also fourth in and hearing range. the quarter, full year revenue Specialty EPS guidance QX shipments of prior ago from ago range. the million, revenue by into or up in basis, a In within health of with our year over from increased XXXX, was the $XX period. and year segment, Audio and Thanks, market. Audio revenues reported flat the levels, Medtech the by within our Specialty compared the segment

mature of and due QX by quarter period ramp-up segment a up high-performance ago gross revenues X% products lower product average ago pricing down XXX Shipments driven million, higher expected specialty versus slower-than-expected to $XX capacitors film line. basis our of on were The from cost. Devices fourth points year period. than margins lower XX.X% the Precision the year factory of were delivered

throughout expect As for a total to Jeff quarter. earnings second driving have of in the growth line, revenue output year to we the and noted, a strong first beginning return product half we company and the production this increase backlog

XX%, $X Precision legacy QX XXXX Medtech, million cost both offset as On by productivity quarter total were scrap up in were by up basis production of from points Audio of Device in the driven levels, increased in up business partially cost. prior product company fourth the basis, margins was the year we XXX and Device the segments. ramp from as film up million, lines. gross higher and by $X expenses $XX SG&A compensation our expense R&D $X higher Specialty Precision specialty million from investments XXXX million, inefficiencies driven factory quarter were incentive improvements a Segment

expense was with the $X Interest quarter the flat prior and year. million in

balance our at to cash turn our quarter, in the cash I'll fourth generated million of Now the we flow. In guidance. and from operating activities $XX midpoint sheet

that the Note MEMS we of For $XX $X cash December generated months million for XX cash operations X includes activities Consumer XXXX, business. million. and the from ended respectively, million, $XXX from operating generated by XX, full and microphone year

Capital in spending was the $X quarter. million

During the in interest-free million and that and with note revolving issued quarter Cornell of reduced cost of repurchased total million our includes of fourth $XX and under borrowings a $XXX by we exited facility million shares acquisition. the with quarter, million. debt connection million at cash seller $XX We credit an balance X.X our $XXX debt the

adjusted net on months leverage based X.Xx. ratio our was XX Lastly, trailing EBITDA

year, full total cost of shares at $XX X a the million we For million. repurchased

stock recently Directors increase purchase the our authorized Board of million addition, In $XXX a plan. to

guidance. our to Moving

expected to expenses the $XXX to down fixed operations. and in For million our be to $X the the needs taken R&D XXXX within million. range Selling expected on cost million. first order be reduce expenses million of are million and continuing million, our $XX of between million be are support year-over-year quarter revenues $XXX to to actions $XX $X base to are between expected $X of and administrative

assumes diluted within $X.XX $X on in the and million. the projecting of We're effective million for XX%. we operating $X and XX% range within of XX is includes to XX% utilized a XX%. million weighted to to within spending quarter range We're $X noncash range the million per expense of imputed $XX basis. projecting quarter fully We're be margin million outstanding estimated $X tax projecting the to this $X.XX to expect of of QX cash EPS shares expected during rate an in be interest, adjusted be average to Interest to to and at activities share, to EBIT million be is a capital

supplier used million settle activities in to the business. operating MEMS includes Consumer related to microphone Cash obligations $XX

to expect additional operating business. to expect the share represent of CMM his million turn recent We growth cash supplier related revenues 'XX of These remaining existing year year Jeff expect in substantially QX. to all trends the on year-over-year of earnings Jeff? we of payment resume flow back I'll $XX and from continuing obligations and operations revenue second payments In backlog, beginning based on conclusion, XX% for the an in and quarter now beyond. than thoughts to over this full and deliver more call to XXXX. order

Jeffrey Niew

John. Thanks,

me the close on with the of Now strategic positioning company. let thoughts some

forward, activity higher look has As never I design company. for been the

a market continued growth. for ramping end opportunities our offering have into business Starting our with of MSA our and hearing expanding remains end XXXX to markets. healthy customers strong, the the positioning our We across pipeline product is production product for Medtech, new in health them

XXXX. defense these XXXX. in our of capacitor orders growth energy products new shipments even is expanding capacitors million-plus $XX through is for in the specialty for business sector, acceleration and the In market, we our further this for significant high growth expect programs. order seeing high-performance with film new expecting Demand With orders and

As our and we in energy operation deliveries both increase in markets expect and industrial XXXX. film, in the see teams to growth output customer specialty

all strategic partners grow ended the sale we activities are and the have a MEMS closing started experiencing, again I'm The distribution our been levels believe the end stabilized decline. Further, inventory in ability we business confident XXXX. we of have our number on to profitability the has of embarking a We late Based XXXX to transformation Consumer in years. markets microphone as within December. sale industrial on for with revenue culminates

market portfolio invested our in vectors. businesses have where high that and we balance provided serviceable an our We growth new and completed our strengthened sheet, returns, acquisition core expanded our

we through to Knowles built as capital transformation guided buybacks. shareholders forward. pillars several and move this stock been returned us on will that us we through Lastly, has guide

difficult engineering that new deep application customer our create real solve high-performance the through drive in us we expertise First, and products world. as problems technologies

a create technologies trusted, world-class our after these to supplier we customize through manufacturing be to Second, of operations leverage customers. a we set solutions, high-quality blue-chip

customers niche use we applications energy. and Finally, for serve such to defense, industrial, shareholders. fundamental our our pillars organization, as our within growing large expertise our electrification Medtech, create markets, value These and

of CAGR on of as revenue the we presented and Slide over through achieved operations, growth in today. X continued For combination years XX% a the a supplemental materials past acquisitions X organic

forward in our investor of leverage differentiate achieve same made QX adjusted the overheads our coupled will in Our forum, date host our our allow growth. of period. detail There, plans over future. I excited ability which I to XX% with products progress go and our we've EBITDA about into to ability to look further to future this the us to to expect CAGR we on for year. strategy I'm

Now let me operator the the Operator? Q&A call to the turn for over session.

Operator

from take Instructions] [Operator We'll Anthony our question at first Stoss Craig-Hallum.

Anthony Stoss

but Or questions. the of -- particular a it in lines on you said about then starting a you I many I kind I it just months all have give product it pricing know inventory, others. still Jeff, for of can to is. focusing how pressure. to down, maybe wanted couple segment? X X of sense come and the commented John, Is terms maybe And is in you across or then of a us it's

Jeffrey Niew

Yes.

pricing So and I'd on speaking, Precision the is first I'd pressure. say net-net Device pricing sit positive. say, a segment, generally there

Cornell overly we've in I I mainly that say, $X Cornell maybe the XXXX. about of It's business of $X worried. about would really how to would expect got price Precision say that in MSA a me increase acquisition, $X in I $X about to we XXXX. million talked on about net-net It's in Devices, products. pricing. more bit little we have It's sit I there then neighborhood million mature And not Nothing been and think there's would product million probably the gets on rest products. mix. of positive. in million pricing would new pressure the the

margin And MSA so XX% it's past. we are north think as just been confident the going business that will gross forward, I still be the in of very

about think say bookings We strong what say. I of had talked about to the quarter worth number pretty of end what inventory, now the inventory in at here's that there inventory to the look I X last come back think the of channel. the On we X.X. being is I'd end X in kind I -- down When distribution quarter, QX of we And has down a QX, about at would months' QX.

in at well. also was the our reports Our Precision Device bookings And accelerated QX, bookings QX quite already as in segment. a for in bit flash January looking very strong

distribution, but also And our as with that just OEM goes customers across direct not well.

growth. quite honestly XXXX So year full that's year what's giving in us of a bit of another confidence being

John Anderson

Yes. clarify, referencing our either versus Tony, inventory, to in our terms of inventory inventory. Jeff's at distributors or the OEMs just customers,

level. Our at is inventory normalized pretty

Jeffrey Niew

be need what end needs X Yes. it months be. to at months is, the again, And at to see I months of guess the X it QX say where X QX, we I'd below end is X of to

a ends into strong QX it that we're actually we this in gives seeing distribution and seeing weren't some so more January, seeing came what lot at of guess see optimism, the I me we'll from But QX, already that we're in orders. pretty quarter. where And end orders

Anthony Stoss

consumer John, specialty can just fixed? on long comment Okay. fixed. then you think a it get X? an another confidence or you maybe, And basis. us Is you that the follow-ups. And that film X still you business then annual that how remind that's on Jeff, Or ongoing? made month they'll it what before just Is revenue do have this the did

Jeffrey Niew

business, it yet where it's see So improvement be. not to on output, in QX sequential specialty going we definitely film we're want in to but

of quarter, really the catching is half start also I of we in I in we're But big we think area. a orders press a in in in near is take that's us QX. I is, And the of mean, think at. million area up. the $XX-plus already film where the end I order it think for the here what really already to Tony backlog shipment about think XXXX. and fully really to exciting it's called per applications order excited into specialty we real is a I second us got is, out what first into probably us in release going have terms positive gives This

to more doesn't start start we got closer shipment order. a prepayment get this pretty we'll We this up. But it significant dollars a shipments XXXX. the know real to big ramping about millions of I going for until But going dates. is very is to a this And talk product line be forward. as us

John Anderson

million. period $XXX in Tony, to 'XX closed revenues December Yes. when 'XX the response through on CMM roughly question your the for we January

Operator

Labick Bob [Operator Instructions] go next to CJS at We'll Securities.

Bob Labick

it, we'll Can and revenues come of So there XX% defense. are kind Medtech, biggest XX% going down. estimate a looking harder to industrial those? the call But of one us the at, is across break XX% sense of X.X, end give we from you and maybe the Knowles to trends industrial the markets

Jeffrey Niew

Yes. think kind a This it -- we business, And it's an shipping annual that story of of to like of see estimate of right? Bob, the XX,XXX is of customers. lot on we you the basis I kind this. be distribution north where

I to area. areas reliance. this the because opportunity we of that's a we we is, look pretty don't have beauties really so market customers, many where at have have we here pricing one smaller think probably And strategic to think continue in is unique of this

bookings business, of want if we say, I to think right we're we we and at, said the we're is we've yet be kind bottom sequentially what think at And yet, would industrial/distribution in rise looking And I to of starting what right see that's QX. Bob. that I And the kind look the believe kind where is see to again, in is are the I but we I of hit on trends starting what earlier What extent to our direction. stabilization. now, not

it's so And hard. really

but of one sector. can we market very large think lay these markets, lot a no that kind of there's for really in different I very, us is industrial the out like

John Anderson

that areas, there's semiconductor lot mean pumps I'd few here. downhole play like we're couple your markets in a a X, just X are I HVAC areas in I of markets not of in there's energy, or we a Yes, your automation areas, mean equipment. quite say like the but in. equipment,

Bob Labick

impact whatnot. areas Okay. what product, Great. and little on the and the quarter that give color specialty then obviously, to more in. new And investments us products, the on you products we a mentioned rolling film then that's you're forward, growth sold see Obviously, about. be talked R&D going acceleration general. out And as new in in some if going should Maybe you've

sense a is R&D being of us innovation what give So and on. the spent

Jeffrey Niew

Yes.

energy this all at So of doing feel amount energy who this significant they're going I that and can applications and lot up in then a whole the a have very a drive X XXXX. in think we're kind up. I area, bunch then lot And very we're we a shipments we require of this Again, to a we'll of releasing of we smaller a is about selling period specialty ramping ramping very once. that mean right this XXXX, we see fully ramping is that I in is And what a customer It's we customers. pulse applications. this capability call have from order. have the -- is Starting very, It's you capacitors, of big for them a now, But growth have, of in be unique charging core up. capability. confident we're power that time. applications the core film what -- into application And a short what buying

Operator

conference. you for And question-and-answer participation your the that in today's concludes Thank session.

You may now disconnect.

Knowles (KN) 13 Feb 252024 Q4 Earnings call transcript