Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - Knowles Corp | exhibit991q42017.htm |
| 8-K - 8-K - Knowles Corp | a201712318-k.htm |
February 7, 2018
Q4 & Full Year 2017
Supplemental Information
Non-GAAP Disclaimer
2
The financial results disclosed in this presentation include certain measures calculated and
presented in accordance with GAAP. In addition to the GAAP results included in this
presentation, Knowles has presented supplemental, non-GAAP gross profit, earnings before
interest and income taxes, adjusted earnings before interest and income taxes and non-
GAAP diluted earnings per share to facilitate evaluation of Knowles’ operating performance.
These non-GAAP financial measures exclude certain amounts that are included in the most
directly comparable GAAP measure. In addition, these non-GAAP financial measures 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 performance, and its management team primarily focuses on non-GAAP items in
evaluating Knowles’ performance for business planning purposes. Knowles 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. 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
tables included in the fourth quarter and full year 2017 earnings release.
Q4 ‘17 Financial Results
(continuing operations*)
3
Quarter over year ago period Q4FY17 Q4FY16
Revenues $215.5 million $212.9 million
Gross Profit $89.6 million $85.2 million
Non-GAAP Gross Profit $92.2 million $85.5 million
Diluted Earnings Per Share $0.35 $0.18
Non-GAAP Diluted Earnings Per
Share
$0.40 $0.32
* 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. Current period results include $13.6 million in revenue and $5.6 million related to recovered legal expenses associated with the settlement of
a royalty dispute. Management estimates that $13.0 million of the settlement proceeds relate to years prior to 2017.
Revenues
(Cont. Ops.)
4
$212.9
$168.3 $164.4
$196.0
$215.5
$0
$50
$100
$150
$200
$250
Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17
Q4 ’17 Revenues by Segment
Cont. Ops. (% of revenue)
5
Audio
87%
Precision
Devices
13%
Q1 ‘18 Projections
(non-GAAP, cont. ops.)*
6
Q1FY18E
Revenues $170 million - $190 million
Gross Margin 37 percent – 39 percent
EPS (diluted) $0.10 - $0.14
*Projections as of 2/7/18; Q1 2018 GAAP results for continuing operations are expected to include approximately $0.05 per share in stock-based
compensation, $0.03 per share from a higher effective tax rate, $0.02 per share in amortization of debt discount, $0.01 per share in production
transfer costs, and $0.01 per share in amortization of intangibles. Expected Q1 2018 GAAP results exclude potential restructuring items.
Historical Segment Data
Audio / Precision Devices
7
(Cont. Ops.; in $ millions)
7
December 31,
2017
September 30,
2017
June 30,
2017
March 31,
2017
December 31,
2016
December 31,
2017
September 30,
2017
June 30,
2017
March 31,
2017
December 31,
2016
Revenues 187.3$ 167.8$ 138.1$ 144.2$ 190.3$ 28.2$ 28.2$ 26.3$ 24.1$ 22.6$
Gross Profit 78.7$ 64.1$ 54.2$ 50.6$ 77.8$ 11.3$ 10.6$ 9.4$ 9.1$ 7.8$
Stock-Based Compensation Expense 0.4 0.3 0.3 0.3 0.3 - -$ - - -
Impairment charges - - 1.4 - - - - - - -
Restructuring Charges 0.1 0.2 (0.6) 4.3 - - - - - 0.1
Production Transfers Costs 2.0 1.4 1.7 1.1 - - 0.2 0.2 0.1 0.1
Non-GAAP Gross Profit 81.2$ 66.0$ 57.0$ 56.3$ 78.1$ 11.3$ 10.8$ 9.6$ 9.2$ 8.0$
Non-GAAP Gross Profit as % of Revenues 43.4% 39.3% 41.3% 39.0% 41.0% 40.1% 38.3% 36.5% 38.2% 35.4%
Research and Development Expenses 21.5$ 20.7$ 23.5$ 23.3$ 22.6$ 1.2$ 1.2$ 1.1$ 0.7$ 0.6$
Stock-Based Compensation Expense (1.6) (1.6) (1.5) (1.4) (1.2) - - - - -
Non-GAAP Research and Development Expenses 19.9$ 19.1$ 22.0$ 21.9$ 21.4$ 1.2$ 1.2$ 1.1$ 0.7$ 0.6$
Non-GAAP Research and Development Expenses as % of Revenues 10.6% 11.4% 15.9% 15.2% 11.2% 4.3% 4.3% 4.2% 2.9% 2.7%
Selling and Administrative Expenses 9.8$ 15.3$ 16.4$ 17.0$ 16.3$ 4.7$ 4.5$ 4.3$ 3.9$ 3.8$
Stock-Based Compensation Expense (1.1) (0.9) (1.1) (1.0) (1.1) (0.2) (0.1) (0.1) - -
Intangibles Amortization Expense (1.2) (1.1) (1.7) (2.5) (2.4) (0.2) (0.2) (0.2) (0.2) (0.1)
Production Transfers Costs (0.1) - - - - - - - - -
Other - - - - - - - (0.1) - -
Non-GAAP Selling and Administrative Expenses 7.4$ 13.3$ 13.6$ 13.5$ 12.8$ 4.3$ 4.2$ 3.9$ 3.7$ 3.7$
Non-GAAP Selling and Administrative Expenses as % of Revenues 4.0% 7.9% 9.8% 9.4% 6.7% 15.2% 14.9% 14.8% 15.4% 16.4%
Operating Expenses 33.3$ 36.4$ 61.1$ 40.7$ 38.9$ 5.9$ 5.7$ 5.4$ 4.7$ 4.4$
Stock-Based Compensation Expense (2.7) (2.5) (2.6) (2.4) (2.3) (0.2) (0.1) (0.1) - -
Intangibles Amortization Expense (1.2) (1.1) (1.7) (2.5) (2.4) (0.2) (0.2) (0.2) (0.2) (0.1)
Impairment charges - - (19.9) - - - - - - -
Restructuring Charges (2.0) (0.4) (1.3) (0.4) - - - - (0.1) -
Production Transfers Costs (0.1) - - - - - - - - -
Other - - - - - - - (0.1) - -
Non-GAAP Operating Expenses 27.3$ 32.4$ 35.6$ 35.4$ 34.2$ 5.5$ 5.4$ 5.0$ 4.4$ 4.3$
Non-GAAP Operating Expenses as % of Revenues 14.6% 19.3% 25.8% 24.5% 18.0% 19.5% 19.1% 19.0% 18.3% 19.0%
Operating Earnings (Loss) 45.4$ 27.7$ (6.9)$ 9.9$ 38.9$ 5.4$ 4.9$ 4.0$ 4.4$ 3.4$
Other (Income) Expense, net (0.8) (0.4) 0.2 1.0 0.7 (0.2) (0.2) (0.2) 0.1 0.1
Earnings (Loss) Before Interest and Income Taxes 46.2 28.1 (7.1) 8.9 38.2 5.6 5.1 4.2 4.3 3.3
Stock-Based Compensation Expense 3.1 2.8 2.9 2.7 2.6 0.2 0.1 0.1 - -
Intangibles Amortization Expense 1.2 1.1 1.7 2.5 2.4 0.2 0.2 0.2 0.2 0.1
Impairment charges - - 21.3 - - - - - - -
Restructuring Charges 2.1 0.6 0.7 4.7 - - - - 0.1 0.1
Production Transfers Costs 2.1 1.4 1.7 1.1 - - 0.2 0.2 0.1 0.1
Other loss - - - - - - - 0.1 - -
Adjusted Earnings Before Interest and Income Taxes 54.7$ 34.0$ 21.2$ 19.9$ 43.2$ 6.0$ 5.6$ 4.8$ 4.7$ 3.6$
Adjusted Earnings Before Interest and Income Taxes as % of
Revenues 29.2% 20.3% 15.4% 13.8% 22.7% 21.3% 19.9% 18.3% 19.5% 15.9%
Quarter Ended Quarter Ended
Audio Precision Devices
Reconciliation of Segment EBIT to
Consolidated Net Earnings
Audio / Precision Devices
8
(Cont. Ops.; in $ millions)
8
December 31, September 30, June 30, March 31, December 31,
2017 2017 2017 2017 2016
Earn ngs (l ss) before interest and income taxes
Au io 46.2$ 28.1$ (7.1)$ 8.9$ 38.2$
Preci ion Devices 5.6 5.1 4.2 4.3 3.3
Total segments 51.8 33.2 (2.9) 13.2 41.5
Corporate expense / other 12.4 13.2 16.2 13.5 13.0
Interest expense, net 5.2 5.1 5.1 5.2 5.3
Earnings (loss) before income taxes 34.2 14.9 (24.2) (5.5) 23.2
Provision for (benefit from) income taxes 2.3 4.4 6.7 (0.5) 6.8
Net earnings (loss) 31.9$ 10.5$ (30.9)$ (5.0)$ 16.4$
Quarter Ended
Reconciliation of Revenues and Adjusted
EBIT to Continuing Operations
9
(in $ millions)
9
Consolidated Timing Devices
Consolidated
Without Timing
Devices Consolidated Timing Devices
Consolidated
Without Timing
Devices Consolidated Timing Devices
Consolidated
Without Timing
Devices Consolidated Timing Devices
Consolidated
Without Timing
Devices
Revenues 193.7 25.4 168.3 190.2 25.8 164.4 221.7 25.7 196.0 230.7 15.2 215.5
Adjusted Earnings (Loss) Before Interest and Income Taxes 15.8 1.4 14.4 16.4 1.9 14.5 31.7 1.6 30.1 113.0 61.4 51.6
Consolidated Timing Devices
Consolidated
Without Timing
Devices Consolidated Timing Devices
Consolidated
Without Timing
Devices
Revenues 859.3 103.6 755.7 836.3 92.1 744.2
Adjusted Earnings (Loss) Before Interest and Income Taxes 106.1 6.4 99.7 176.9 66.3 110.6
Full Year 2017
Q1 2017 Q2 2017 Q3 2017
Full Year 2016
Q4 2017