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Knowles Reports Q3 2015 Financial Results And Provides Outlook For Q4 2015

The following excerpt is from the company's SEC filing.

Q3 Organic Mobile Consumer Segment Revenue Up Over 30% Q/Q

Q3 Gross Margins and EPS Above High-End of Prior Projections

- Knowles Corporation (NYSE: KN), a market leader and global supplier of advanced micro-acoustic solutions and specialty components, today announced results for the third quarter ended September 30, 2015.

“We are pleased to report Q3 revenues were up over 20 percent sequentially, with gross margin and earnings per share coming in at the high-end of our expectations,” said Jeffrey Niew, President and CEO of Knowles. “In our mobile consumer segment, we saw a strong sequential sales increase driven by significant growth at a North American OEM, new product launches from a Korean OEM and normal seasonality. This growth was partially offset by lower sales to Chinese OEMs. Sales of specialty components were down slightly due to softer-than-expected timing device demand and lower hearing health sales following a very strong second quarter.”

“For Q4, we anticipate a solid finish to the year with the midpoint of guidance highlighting sequential revenue growth in both of our business segments and improved operating margins. Our core microphone business has improved significantly from the beginning of the year, and we look forward to continued multi mic adoption and increased traction with intelligent audio solutions to fuel future growth.”

Financial Highlights

The following highlights the Company’s financial performance on both a GAAP and supplemental non-GAAP basis. The Company provides supplemental information regarding its gross profit, operating expenses, loss before interest and income taxes, adjusted earnings before interest and income taxes, net earnings and diluted earnings per share, as well as other metrics, on a non-GAAP basis that excludes stock-based compensation as well as certain intangibles amortization expense, restructuring, production transfer costs, and other charges which management considers to be outside our core operating results. Non-GAAP results are not presented in accordance with GAAP and may not be comparable to similarly titled non-GAAP information provided by other companies. Non-GAAP information should be considered a supplement to, and not a substitute for, financial statements prepared in accordance with GAAP. A reconciliation of GAAP to non-GAAP results is attached to this press release.

Revenue for the third quarter of 2015 was $294.6 million compared with $300.8 million reported in the same period one year ago.

Gross profit for the third quarter of 2015 was $88.7 million compared with $52.2 million reported in the same period one year ago. Non-GAAP gross profit for the third quarter of 2015 was $94.5 million, or 32.1 percent, compared with $94.4 million, or 31.4 percent, reported in the same period one year ago.

Loss before interest and income taxes for the third quarter of 2015 was $14.6 million compared with $14.1 million in the year ago period. Current period results include $11.1 million from amortization of intangibles, $9.4 million in restructuring charges, $5.0 million in stock-based compensation, $4.6 million in acquisition related expenses, and $3.6 million in production transfer costs.

Adjusted earnings before interest and income taxes for the third quarter of 2015 were $19.6 million compared with $42.2 million reported in the same period one year ago.

Net loss for the third quarter of 2015 was $14.9 million compared with $14.6 million reported in the same period one year ago. Non-GAAP net earnings for the third quarter of 2015 was $14.3 million compared with $32.7 million reported in the same period one year ago.

Loss per diluted share for the third quarter of 2015 was $0.17, flat from the same period one year ago.

Non-GAAP EPS for the third quarter of 2015 was $0.16 per diluted share compared with $0.38 reported in the same period one year ago.

Fourth Quarter 2015 Outlook

The forward looking guidance for the quarter ending December 31, 2015 is as follows:

$290 to $310 million

Non-GAAP Gross Margin

31 to 34 Percent

Adjusted EBIT Margin

7 to 9 Percent

$0.18 to $0.24

Q4 2015 GAAP results for the company are expected to include approximately $11 million in amortization of intangibles, $5 million in stock-based compensation, $5 million in production and restructuring related costs, and related tax effects on these 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.

Investors can also listen to the conference call at 3:30 p.m. Central time today by calling (877) 359-9508 (United States) or (224) 357-2393 (International). The conference call replay will be available after 7:00 p.m. Central time on October 26, 2015 through 11:59 p.m. Central time on November 2, 2015 at (855) 859-2056 (United States) or (404) 537-3406 (International). The access code is 56285113.

About Knowles

Knowles Corporation (NYSE: KN) is a market leader and global supplier of advanced micro-acoustic, audio processing, and specialty component solutions, serving the mobile consumer electronics, communications, medical, military...


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