kn-20240331

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024.

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-36102

Knowles Corporation

(Exact name of registrant as specified in its charter)


Delaware			90-1002689
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

1151 Maplewood Drive, Itasca, IL

(Address of Principal Executive Offices)

60143

(Zip Code)

(630) 250-5100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of each exchange on which registered

Common stock, $0.01 par value per share

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

The number of shares outstanding of the registrant’s common stock as of April 29, 2024 was 89,744,345.

Table of Contents

Knowles Corporation

Form 10-Q

Table of Contents


		Page
PART I — FINANCIAL INFORMATION		1
Item 1.	Financial Statements	1
	Consolidated Statements of Earnings (unaudited) for the three months ended March 3 1 , 202 4 and 202 3	1
	Consolidated Statements of Comprehensive Earnings (unaudited) for the thre e months ended March 3 1 , 202 4 and 20 23	2
	Consolidated Balance Sheets (unaudited) at March 3 1 , 202 4 and December 31, 202 3	3
	Consolidated Statements of Stockholders' Equity (unaudited) for the three months ended March 3 1 , 202 4 and 202 3	4
	Consolidated Statements of Cash Flows (unaudited) for the three months ended March 3 1 , 202 4 and 202 3	5
	Notes to Consolidated Financial Statements (unaudited)	6
Forward-Looking Statements		19
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32

PART II — OTHER INFORMATION		32
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33


Item 5.	Other Information	33
Item 6.	Exhibits	33
SIGNATURES		34

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

KNOWLES CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

(in millions, except per share amounts)

(unaudited)


	Three Months Ended March 31,
	2024		2023
Revenues	$	196.4	$	144.3
Cost of goods sold	125.5		90.4


Restructuring charges - cost of goods sold	1.0		0.1
Gross profit	69.9		53.8
Research and development expenses	20.6		20.0
Selling and administrative expenses	43.5		33.8

Restructuring charges	1.5		1.0
Operating expenses	65.6		54.8
Operating earnings (loss)	4.3		(1.0)
Interest expense, net	4.4		0.8
Other (income) expense, net	(0.4)		2.3
Gain on sale of asset, net	(5.4)		—
Earnings (loss) before income taxes	5.7		(4.1)
Provision for income taxes	3.2		1.1


Net earnings (loss)	$	2.5	$	(5.2)









Net earnings (loss) per share:
Basic	$	0.03	$	(0.06)
Diluted	$	0.03	$	(0.06)

Weighted-average common shares outstanding:
Basic	89.6		91.4
Diluted	90.5		91.4

See accompanying Notes to Consolidated Financial Statements

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KNOWLES CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(in millions)

(unaudited)


	Three Months Ended March 31,
	2024		2023
Net earnings (loss)	$	2.5	$	(5.2)

Other comprehensive (loss) earnings, net of tax



Foreign currency translation	(3.4)		3.6

Employee benefit plans:


Amortization or settlement of actuarial losses and prior service costs	0.1		0.2
Net change in employee benefit plans	0.1		0.2

Changes in fair value of cash flow hedges:
Unrealized net (losses) gains arising during period	(1.3)		0.1
Net losses reclassified into earnings	1.0		0.1
Total cash flow hedges	(0.3)		0.2

Other comprehensive (loss) earnings, net of tax	(3.6)		4.0

Comprehensive loss	$	(1.1)	$	(1.2)

See accompanying Notes to Consolidated Financial Statements

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KNOWLES CORPORATION

CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share amounts)

(unaudited)


	March 31, 2024		December 31, 2023
Current assets:
Cash and cash equivalents	$	122.1	$	87.3

Receivables, net of allowances of $0.2	130.8		135.3
Inventories, net	203.4		196.4
Prepaid and other current assets	11.6		9.8

Total current assets	467.9		428.8
Property, plant, and equipment, net	166.3		175.4
Goodwill	540.5		540.7
Intangible assets, net	183.0		189.4
Operating lease right-of-use assets	11.3		13.1
Other assets and deferred charges	114.4		115.4

Total assets	$	1,483.4	$	1,462.8

Current liabilities:
Current maturities of long-term debt	$	48.0	$	47.1
Accounts payable	67.8		51.3
Accrued compensation and employee benefits	25.3		33.0
Operating lease liabilities	4.5		5.1
Other accrued expenses	22.7		25.0
Federal and other taxes on income	2.0		3.1
Total current liabilities	170.3		164.6

Long-term debt	245.2		224.1
Deferred income taxes	0.7		0.7
Long-term operating lease liabilities	7.3		8.2
Other liabilities	26.0		31.1

Commitments and contingencies (Note 13)
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; 97,949,177 and 89,744,345 shares issued and outstanding at March 31, 2024, respectively, and 97,297,703 and 89,092,871 shares issued and outstanding at December 31, 2023, respectively	1.0		1.0
Treasury stock - at cost; 8,204,832 shares at March 31, 2024 and December 31, 2023	(151.2)		(151.2)
Additional paid-in capital	1,690.8		1,689.9
Accumulated deficit	(373.3)		(375.8)
Accumulated other comprehensive loss	(133.4)		(129.8)

Total stockholders' equity	1,033.9		1,034.1

Total liabilities and stockholders' equity	$	1,483.4	$	1,462.8

See accompanying Notes to Consolidated Financial Statements

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KNOWLES CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions, except share amounts)

(unaudited)


	Common Stock			Treasury Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	Shares Issued	Amount		Shares	Amount
Balance at December 31, 2023	97,297,703	$	1.0	(8,204,832)	$	(151.2)	$	1,689.9	$	(375.8)	$	(129.8)	$	1,034.1
Net earnings	—	—		—	—		—		2.5		—		2.5
Other comprehensive loss, net of tax	—	—		—	—		—		—		(3.6)		(3.6)

Stock-based compensation expense	—	—		—	—		6.7		—		—		6.7




Restricted and performance stock unit settlement, net of tax	651,474	—		—	—		(5.8)		—		—		(5.8)
Balance at March 31, 2024	97,949,177	$	1.0	(8,204,832)	$	(151.2)	$	1,690.8	$	(373.3)	$	(133.4)	$	1,033.9

	Common Stock			Treasury Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	Shares Issued	Amount		Shares	Amount
Balance at December 31, 2022	96,431,604	$	1.0	(5,353,228)	$	(103.3)	$	1,665.5	$	(448.2)	$	(122.1)	$	992.9
Net loss	—	—		—	—		—		(5.2)		—		(5.2)
Other comprehensive earnings, net of tax	—	—		—	—		—		—		4.0		4.0
Repurchase of common stock	—	—		(433,759)	(7.5)		—		—		—		(7.5)
Stock-based compensation expense	—	—		—	—		7.8		—		—		7.8
Exercise of stock options	182,736	—		—	—		1.4		—		—		1.4



Restricted and performance stock unit settlement, net of tax	532,147	—		—	—		(6.0)		—		—		(6.0)
Balance at March 31, 2023	97,146,487	$	1.0	(5,786,987)	$	(110.8)	$	1,668.7	$	(453.4)	$	(118.1)	$	987.4

SEC Form 10-Q filed by Knowles Corporation