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Knowles(KN) - 2024 Q1 - Earnings Call Transcript
KNKnowles(KN)2024-05-01 23:07
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Financial Data and Key Metrics Changes - The company reported Q1 2024 revenue of 196million,exceedingthemidpointofguidanceandup36196 million, exceeding the midpoint of guidance and up 36% year-over-year [5][31] - Earnings per share (EPS) for the quarter was 0.20, at the high end of guidance and 0.15abovetheprioryear[5][31]−Cashfromoperationswas0.15 above the prior year [5][31] - Cash from operations was 17 million, surpassing the high end of guidance, driven by higher customer collections and lower inventory levels [12][31] - Gross margins were 36.1%, down 1,100 basis points from the previous year due to lower factory capacity utilization and the acquisition of Cornell [32] Business Line Data and Key Metrics Changes - Precision Devices revenue increased by 38% year-over-year to 74million,primarilyduetotheacquisitionofCornell[6][10]−MedTechandspecialtyaudiosegmentrevenuewas74 million, primarily due to the acquisition of Cornell [6][10] - MedTech and specialty audio segment revenue was 57 million, up 26% year-over-year, with gross margins improving to 54.8% [10][27] - Consumer MEMS microphone revenue reached 65million,a4465 million, a 44% increase from the previous year, attributed to increased consumer demand and market share gains [32] Market Data and Key Metrics Changes - The company noted robust demand in the hearing health market, driven by favorable market dynamics such as aging populations and improved hearing aid penetration [27] - The industrial and distribution end markets faced challenges with elevated inventory levels, impacting shipments [10][28] Company Strategy and Development Direction - The company is focused on high-growth end markets with differentiated solutions, indicating a strategic transformation [26] - Management expressed excitement about the synergistic opportunities and market expansion brought by the Cornell acquisition [7][18] - The company plans to explore acquisition opportunities, repurchase shares, and maintain manageable debt levels [9][40] Management Comments on Operating Environment and Future Outlook - Management anticipates a recovery in the second half of 2024, with expectations of double-digit revenue and adjusted EBIT growth in the Precision Devices segment [29] - The company remains cautiously optimistic about sequential growth in the MedTech and specialty audio segment, particularly in Q4 [37][63] - Management highlighted the stable pricing environment in the MedTech and defense markets, which supports their pricing power [44][68] Other Important Information - The company is progressing towards a conclusion regarding strategic alternatives, considering all stakeholders involved [8][58] - The projected adjusted EBIT margin for Q2 2024 is expected to be between 14% and 16% [13] Q&A Session Summary Question: Insights on back half recovery expectations - Management expects sequential growth in the Precision Devices segment from Q1 to Q2 and continuing into Q3 and Q4, with cautious optimism regarding industrial and distribution growth [15][16] Question: Update on CMM business and M&A - Management indicated that the CMM business is performing well, with expectations for continued revenue growth, and they are exploring M&A opportunities [38][60] Question: Competitive environment and pricing dynamics - Management noted stable pricing in the MedTech and specialty audio segments, with some pricing increases expected in the Precision Devices segment [44][67] Question: Revenue expectations for Cornell acquisition - Management projected revenue for the Cornell acquisition to be slightly below previous expectations, estimating between 135 million and $140 million for the year [65][66]