Knowles Reports Q4 & Full Year 2018 Financial Results and Provides Outlook for Q1 2019
ITASCA, Ill.--(BUSINESS WIRE)--Feb 7, 2019--Knowles Corporation (NYSE: KN), a market leader and global provider of advanced micro-acoustic, audio processing, and precision device solutions, today announced results for the fourth quarter and year ended December 31, 2018.
“We reported year over year revenue growth in Q4 as we continue to diversify our markets and focus on higher value solutions,” said Jeffrey Niew, president and CEO of Knowles. “For 2018, we were pleased to deliver 11 percent top line growth, ahead of the expectations we had earlier in the year and above the growth rates of most of the end markets we serve. We saw strong MEMS microphone demand and higher-than-expected sales of Intelligent Audio solutions across Mobile, Ear, and IoT markets. Sales into the Hearing Health market were also higher. In Precision Devices, strong demand for our differentiated products across multiple end markets drove record sales.”
“As we enter 2019, we are well positioned to drive revenue and earnings growth for the full year in the Audio and Precision Devices segments. While we expect our first quarter of 2019 to be impacted by an inventory correction in the handset market, we anticipate returning to year-over-year growth in the second quarter. I believe that our focus on higher value solutions will enable us to continue to outpace growth in our end markets,” continued Niew.
The following table highlights the Company’s financial performance on both a GAAP and supplemental non-GAAP basis for continuing operations* (in millions, except per share data):
* Continuing operations excludes the results of our speaker and receiver product line which was sold on July 7, 2016 and our timing device business which was sold on November 28, 2017.
** Q4 2017 results included $11.4 million in revenue and $5.6 million related to recovered legal expenses associated with the settlement of a royalty dispute that related to periods prior to Q4 2017.
*** Current period results include $6.2 million in stock-based compensation, $1.6 million from amortization of intangibles, and $1.0 million in production transfer costs and restructuring charges.
**** Not meaningful.
During the fourth quarter of 2018, the Company finalized its accounting for new tax provisions pursuant to the U.S. Tax Cuts and Jobs Act of 2017 (the “Tax Reform Act”) under Securities and Exchange Commission Staff Accounting Bulletin No. 118. As a result of a U.S. taxing authority approval for an entity classification election received during the fourth quarter of 2018, the Company recognized a $36.0 million tax benefit related to the release of an uncertain tax position. The discrete net tax benefit for the fourth quarter of 2018 also includes a $17.8 million reduction to the transition tax liability. The finalized Tax Reform Act impacts and uncertain tax position, which are excluded from the calculation of Non-GAAP diluted earnings per share, are subject to further adjustment based on potential changes in the interpretation of the Tax Reform Act, its supporting regulations, and subsequent guidance that may be issued.
In addition to the GAAP results included in this press release, Knowles has presented supplemental non-GAAP gross profit, earnings before interest and income taxes, adjusted earnings before interest and income taxes, non-GAAP diluted earnings per share, as well as other metrics on a non-GAAP basis that exclude certain amounts that are included in the most directly comparable GAAP measure to facilitate evaluation of Knowles’ operating performance. Non-GAAP results are not presented in accordance with GAAP. Non-GAAP information should be considered a supplement to, and not a substitute for, financial statements prepared in accordance with GAAP. In addition, the non-GAAP financial measures included in this press release do not have standard meanings and may vary from similarly titled non-GAAP financial measures used by other companies. Knowles believes that non-GAAP measures are useful as supplements to its GAAP results of operations to evaluate certain aspects of its operations and financial performance, and its management team primarily focuses on non-GAAP items in evaluating Knowles’ performance for business planning purposes. Knowles also believes that these measures assist it with comparing its performance between various reporting periods on a consistent basis, as these measures remove from operating results the impact of items that, in Knowles’ opinion, do not reflect its core operating performance including, for example, stock-based compensation, certain intangibles amortization expense, fixed asset impairment charges, restructuring, production transfer costs, and other charges which management considers to be outside our core operating results. Knowles believes that its presentation of these non-GAAP financial measures is useful because it provides investors and securities analysts with the same information that Knowles uses internally for purposes of assessing its core operating performance. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, see the reconciliation table accompanying this release.
First Quarter 2019 Outlook
The forward looking guidance for the quarter ending March 31, 2019 on a continuing operations basis is as follows:
Q1 2019 GAAP results for continuing operations are expected to include approximately $0.07 per share in stock-based compensation, $0.01 per share in amortization of intangibles and debt discount, and $0.01 per share related to production transfer costs. Expected Q1 2019 GAAP results exclude potential discrete income tax and restructuring items.
Webcast and Conference Call Information
Investors can listen to a live or replay webcast of the Company’s quarterly financial conference call at http://investor.knowles.com. The live webcast will begin today at 3:30 p.m. Central time. The webcast replay will be available after 7:00 p.m. Central time today.
Investors can also listen to the conference call at 3:30 p.m. Central time today by calling (844) 589-0917 (United States) or (647) 253-8649 (International). The conference call replay will be available after 7:00 p.m. Central time today through 11:59 p.m. Central time on February 14, 2019 at (800) 585-8367 (United States) or (416) 621-4642 (International). The access code is 2595655.
Knowles Corporation (NYSE: KN) is a market leader and global provider of advanced micro-acoustic, audio processing, and precision device solutions, serving the mobile consumer electronics, communications, medical, military, aerospace, and industrial markets. Knowles uses its leading position in MEMS (micro-electro-mechanical systems) microphones and strong capabilities in audio processing technologies to optimize audio systems and improve the user experience in mobile, ear, and IoT applications. Knowles is also the leader in acoustic components used in hearing aids and has a strong position in high-end capacitors. Knowles’ focus on the customer, combined with unique technology, proprietary manufacturing techniques, rigorous testing, and global scale, enables it to deliver innovative solutions that optimize the user experience. Founded in 1946 and headquartered in Itasca, Illinois, Knowles is a global organization with employees in 11 countries. For more information, visit knowles.com.
Forward Looking Statements
This news release contains forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “project,” “estimate,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “objective,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target,” and similar expressions, among others, generally identify forward-looking statements, which speak only as of the date the statements were made. The statements in this news release are based on currently available information and the current expectations, forecasts, and assumptions of Knowles’ management concerning risks and uncertainties that could cause actual outcomes or results to differ materially from those outcomes or results that are projected, anticipated, or implied in these statements. These risks and uncertainties include, but are not limited to: unforeseen changes in MEMS microphone demand from our largest customers, in particular, two North American, a Korean, and Chinese OEM customers; the success and rate of multi-microphone and smart microphone adoption and market adoption of our “intelligent audio” solutions; our ability to stem or overcome price erosion in our segments; fluctuations in our stock’s market price; fluctuations in operating results and cash flows; our ability to prevent or identify quality issues in our products or to promptly remedy any such issues that are identified; the timing of OEM product launches; downward pressure on the average selling prices for our products; risks associated with increasing our inventories in advance of anticipated orders by customers; global economic instability including the recent economic slowdown in China; the impact of changes to laws and regulations that affect the Company’s activities, including the Company’s ability to offer products or services to customers in different regions; our ability to achieve continued reductions in our operating expenses; our ability to qualify our products and facilities with customers; our ability to obtain, enforce, defend or monetize our intellectual property rights; increases in the costs of critical raw materials and components; availability of raw materials and components; managing new product ramps and introductions for our customers; our dependence on a limited number of large customers; our ability to maintain and expand our existing relationships with leading OEMs in order to maintain and increase our revenue; increasing competition and new entrants in the market for our products; our ability to develop new or enhanced products or technologies in a timely manner that achieve market acceptance; our reliance on third parties to manufacture, assemble, and test our products and sub-components; escalating international trade tensions, new or increased tariffs and trade wars among countries; financial risks, including risks relating to currency fluctuations, credit risks and fluctuations in the market value of the Company; and changes in tax laws, changes in tax rates and exposure to additional tax liabilities; and other risks, relevant factors, and uncertainties identified in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, subsequent Reports on Forms 10-Q and 8-K and our other filings we make with the U.S. Securities and Exchange Commission. Knowles disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
View source version on businesswire.com:https://www.businesswire.com/news/home/20190207005596/en/
CONTACT: Financial Contact:
Knowles Investor Relations
Phone: (630) 238-5236
KEYWORD: UNITED STATES NORTH AMERICA ILLINOIS
INDUSTRY KEYWORD: ENTERTAINMENT MUSIC TECHNOLOGY CONSUMER ELECTRONICS HARDWARE INTERNET AUDIO/VIDEO TELECOMMUNICATIONS OTHER TECHNOLOGY SEMICONDUCTOR HEALTH MEDICAL DEVICES MOBILE/WIRELESS VOIP MANUFACTURING AEROSPACE ENGINEERING OTHER MANUFACTURING DEFENSE OTHER DEFENSE
SOURCE: Knowles Corporation
Copyright Business Wire 2019.
PUB: 02/07/2019 04:05 PM/DISC: 02/07/2019 04:05 PM