ITASCA, Ill. - Knowles Corporation (NYSE: NYSE:KN), a prominent supplier of advanced electronics for high-demand applications, has agreed to sell its Consumer MEMS Microphones (CMM) business to Syntiant Corp for $150 million. This move furthers Knowles' shift towards becoming a leading industrial technology entity, focusing on aerospace, defense, medtech, industrial, and electrification markets.
The transaction, expected to close in the fourth quarter of 2024, is subject to regulatory approvals and other standard closing conditions. Knowles plans to use the proceeds from this sale, comprising $70 million in cash and $80 million in Syntiant preferred stock, to reduce debt and buy back company stock.
Knowles CEO Jeffrey Niew commented on the strategic decision, stating that it maximizes value for stakeholders and protects the intellectual property of their Hearing Health business. He also referenced the recent acquisition of Cornell Dubilier as a part of the company's transformation strategy.
In light of the pending sale, Knowles has revised its third-quarter guidance for 2024, with revenues from continuing operations expected between $139 to $143 million and non-GAAP diluted earnings per share from continuing operations projected at $0.24 to $0.28. The company anticipates that the CMM segment's results will be reported as discontinued operations starting in the third quarter of 2024.
For the fourth quarter of 2024, revenue from continuing operations is forecasted to range from $140 to $150 million.
Knowles highlighted that non-GAAP financial measures are used alongside GAAP results to offer a more comprehensive view of its operational performance, excluding certain items that may not reflect its core operations. These non-GAAP measures are meant to supplement, not replace, GAAP financial statements.
Jefferies LLC and Sidley Austin LLP served as financial advisor and legal counsel, respectively, for Knowles in this transaction. The information in this article is based on a press release statement.
In other recent news, Knowles Corporation reported a significant 18% year-over-year increase in its second-quarter revenues for 2024, reaching $205 million. The Precision Devices segment of the company saw a substantial 55% revenue surge, while the Medtech & Specialty Audio segment and the Consumer MEMS Microphone business experienced growth of 4% and 9% respectively. Additionally, Knowles Corporation announced the resignation of Erania Brackett from its Board of Directors, following a change in her principal employment.
The company also revealed its MIL-PRF-55681 capacitors have met the stringent standards of the Defense Logistics Agency for defense and aerospace applications. As a result, these capacitors will be included on the U.S. Department of Defense's Qualified Products List. Looking ahead, the company projects third-quarter revenues to be between $210 million and $220 million and is considering the potential sale or restructuring of its Consumer MEMS Microphone business. Also, Knowles Corporation is actively exploring acquisitions. These are among the recent developments for Knowles Corporation.
InvestingPro Insights
As Knowles Corporation (NYSE: KN) pivots towards a more industrially focused future, its financial health and market performance remain critical for investors. With the sale of its Consumer MEMS Microphones business, Knowles is not only streamlining its operations but also strengthening its financial position. According to InvestingPro data, Knowles has a market capitalization of $1.52 billion, which showcases the company's substantial size in the advanced electronics sector.
InvestingPro Tips indicate that management's aggressive share buyback strategy could signal confidence in the company's value, aligning with Knowles' current plans to use proceeds from the recent sale to reduce debt and repurchase stock. Additionally, the company's valuation implies a strong free cash flow yield, which is a positive sign for investors looking for companies with the potential to generate cash.
Despite not paying dividends, which is noted as one of the InvestingPro Tips, Knowles' operational performance seems promising. The company's revenue has grown by 14.27% over the last twelve months as of Q2 2024, indicating a solid trajectory in sales. Moreover, with a gross profit margin of 38.15%, Knowles appears to be maintaining profitability in its core operations.
For those interested in further insights, InvestingPro offers additional tips on Knowles Corporation. These tips could provide deeper analysis and a more nuanced understanding of the company's financial and operational outlook. As of now, there are five more InvestingPro Tips available for Knowles, which can be accessed through the dedicated InvestingPro product.
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