On this page of StockholderLetter.com we present the latest annual shareholder letter from Knowles Corp — ticker symbol KN. Reading current and past KN letters to shareholders can bring important insights into the investment thesis.

 •  3/14/2025 Letter Continued (Full PDF)
 •  3/17/2023 KN Stockholder Letter
 •  3/15/2024 KN Stockholder Letter
 •  More "Electronic Equipment & Products" Category Stockholder Letters
 •  KN Benford's Law Stock Score = 96

KN Shareholder/Stockholder Letter Transcript:

2024 Annual Report

TO OUR STOCKHOLDERS
2024 was a pivotal year for Knowles as we completed our transformation into an industrial
technology company dedicated to providing customers with high-performance solutions for
their most demanding applications. In September 2024, we entered into a definitive agreement
to sell our consumer MEMS microphones (CMM) business and completed the sale on December
30. This transformation allows us to focus on the most demanding applications across MedTech,
Defense, and Industrial markets and significantly improves both our growth rate and margin profile.
Revenue from Continuing Operations increased 21% over 2023 levels driven by strong demand
in MedTech & Specialty Audio and increased shipments of film, mica and electrolytic capacitors
in connection with the acquisition of Cornell in the 4th quarter of 2023. Our strong balance sheet
and free cash flow generation allowed us to reduce debt and continue with our share repurchase
program by returning $54 million to shareholders.
Continued Strength in MedTech & Specialty Audio
In 2024, the MedTech & Specialty Audio segment grew revenue by 8% from 2023 levels.
Our dedication to partnering with customers to create innovative solutions that enhance the
performance of their products truly sets us apart. We are excited about the opportunities ahead
of us in the MedTech & Specialty Audio segment and expect another year of growth in 2025.
Growing Precision Devices
We are pleased that the acquisition of Cornell Dubilier has provided exciting growth opportunities
for Precision Devices. In particular, the Specialty Film product line provides an exciting new
revenue growth area. A large order from a new customer in the energy sector in early 2025
gives us confidence that the market values the differentiated products we can provide with our
specialty film solutions. Based on this order and increasing demand for specialty film products,
we will be investing to expand our capacity. Further, strong design and order activity in the
Medical and Defense markets for High Performance Capacitors and RF Filter products, coupled
with the beginning of a recovery in Industrials markets, adds to our confidence for continued
profitable growth in 2025 and beyond in Precision Devices.
Looking Ahead
As we look to the future, we are well positioned to take advantage of organic growth
opportunities driven by secular growth trends such as an aging population in North America
and Europe, expanding global defense budgets and increased energy consumption needs.
In addition, we will look to supplement our organic growth with accretive acquisitions and
continue to return capital to shareholders through our share repurchase program. We are
very excited about the progress that   s been made to date and the direction we are heading.
We believe these strategies will drive value for shareholders in 2025 and beyond.
Thank you for your investment in Knowles.
Sincerely,
Jeffrey Niew
President and CEO

We are very
excited about
the progress
that   s been made
to date and
the direction
we are heading.

2024 FINANCIAL PERFORMANCE
$554M
Revenue
MedTech
$130M
Cash from
Operating Activities
53%
$0.91
Non-GAAP Diluted EPS*
Defense 21%
2024
Market Mix by
Revenue
Electrification
4%
Industrial
Precision Devices
Core components for demanding applications
with extreme technical requirements.
MedTech & Specialty Audio
Compact, yet powerful components for hearing
health and audio applications.
22%
$300M 20%
Revenue
Adj. EBITDA Margin*
$254M 44%
Revenue
Adj. EBITDA Margin*
*For this Non-GAAP financial measure see the following page for GAAP to Non-GAAP reconciliation
FORWARD LOOKING STATEMENTS
This Annual Report contains    forward-looking statements    within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act
of 1995. Forward looking statements include all statements that pertain to future financial and business performance and conditions and other financial and business
matters other than those statement of purely historical fact. These statements are based on management   s current estimates, projections, assumptions and expectations
and are subject to numerous risks, uncertainties and other unpredictable or uncontrollable factors which may cause actual results or performance to differ materially
from the Company   s expectations. Some of the risks, uncertainties and other factors that could cause actual results to differ materially from those expressed in the
forward-looking statements are detailed in the    Risk Factors    section of, and elsewhere in, our accompanying 2024 Annual Report on Form 10-K and in our other filings
with the SEC. Knowles Corporation undertakes no obligation to update any such statements.

RECONCILIATION OF GAAP FINANCIAL MEASURES
TO NON-GAAP FINANCIAL MEASURES
Year Ended
December 31, 2024
(Continuing operations, in millions,
except per share amounts)
Net earnings from continuing operations
Interest expense, net
Provision for income taxes
Earnings before interest and income taxes
Earnings before interest and income taxes as a % of revenues
Stock-based compensation expense
Intangibles amortization expense
Restructuring charges
Production transfer costs 1
Acquisition-related costs 2
Other 3
Adjusted earnings before interest and income taxes
Adjusted earnings before interest and income taxes
as a % of revenues
Net earnings from continuing operations
Interest expense, net
Provision for income taxes
Earnings before interest and income taxes
Non-GAAP reconciling adjustments 5
Depreciation expense
Adjusted earnings before interest, income taxes,
depreciation, and amortization (   EBITDA   )
Adjusted earnings as a % of revenues

23.4
16.3
11.3
51.0
9.2%
22.2
17.0
3.4
4.2
8.4
1.7
107.9


23.4
16.3
11.3
51.0
56.9
20.6

128.5
23.2%

Diluted earnings per share
Earnings per share non-GAAP reconciling adjustment 4,5
Non-GAAP diluted earnings per share

23.4
56.9
(3.6)
83.9

0.26
0.65
0.91

Diluted average shares outstanding
Non-GAAP adjustments 6
Non-GAAP diluted average shares outstanding 6
90.1
2.4
92.5
Precision
Devices
MedTech &
Specialty Audio
Revenues

300.0

253.5
Operating earnings
Other expense, net
Earnings before interest and income taxes
Earnings before interest and income taxes
margin
Stock-based compensation expense
Intangibles amortization expense
Restructuring charges
Production transfer costs 1
Acquisition-related costs 2
Other 3
Adjusted earnings before interest
and income taxes
Depreciation expense

15.0
0.2
14.8

97.5
97.5
Adjusted earnings before interest,
income taxes, depreciation, and
amortization (   EBITDA   )
Adjusted EBITDA margin



4.9%
38.5%
2.7
17.0
3.4
4.2
7.4
0.5
4.8

50.0

10.5

50.0
20.2%
1
Production transfer costs represent duplicate costs incurred to consolidate
and migrate manufacturing to facilities primarily within the United States.
These amounts are included in the corresponding Earnings from continuing
operations before interest and income taxes for each period presented.
2
These expenses are related to the acquisition of Cornell Dubilier by
the Precision Devices segment. These expenses include ongoing costs to
facilitate integration, the amortization of fair value adjustments to inventory,
and costs incurred by the Company to carry out this transaction.
3
Other expenses include non-recurring professional service fees related
to the execution of various reorganization projects and foreign currency
exchange rate impacts on restructuring balances.
4
Income tax effects of non-GAAP reconciling adjustments are calculated
using the applicable tax rates in the jurisdictions of the underlying
adjustments.
5
The non-GAAP reconciling adjustments are those adjustments made to
reconcile Earnings from continuing operations before interest and income
taxes to Adjusted earnings from continuing operations before interest and
income taxes.
6
The number of shares used in the diluted per share calculations on a
non-GAAP basis excludes the impact of stock-based compensation
expense expected to be incurred in future periods and not yet recognized
in the financial statements, which would otherwise be assumed to be used
to repurchase shares under the GAAP treasury stock method.
19.5%
Net earnings from continuing operations
Non-GAAP reconciling adjustments 5
Income tax effects of non-GAAP reconciling adjustments 4
Non-GAAP net earnings
Year Ended December 31, 2024
Notes:
102.3
8.3

110.6
43.6%

Knowles
Corporation
Form 10-K



 3/14/2025 Letter Continued (Full PDF)