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Press Release: Knowles Reports Q4 & Full Year -3-

· 02/04/2021 16:05
---------- ---------- ---------- ---------- ---------- Non-GAAP research and development expenses $ 20.2 $ 19.3 $ 22.0 $ 81.2 $ 89.2 ========== ========== ========== ========== ========== Selling and administrative expenses $ 32.2 $ 32.0 $ 34.6 $ 131.5 $ 145.7 Stock-based compensation expense (3.3) (3.2) (3.9) (9.4) (16.0) Intangibles amortization expense (1.9) (1.9) (1.7) (7.5) (7.0) Other (3) (0.4) (0.4) (0.4) (1.2) (5.6) ---------- ---------- ---------- ---------- ---------- Non-GAAP selling and administrative expenses $ 26.6 $ 26.5 $ 28.6 $ 113.4 $ 117.1 ========== ========== ========== ========== ========== Operating expenses $ 54.4 $ 61.6 $ 58.8 $ 242.0 $ 246.8 Stock-based compensation expense (4.5) (4.4) (5.6) (15.6) (23.6) Intangibles amortization expense (3.2) (3.3) (1.7) (13.0) (7.0) Impairment charges - (7.6) - (7.6) - Restructuring charges 0.5 (0.1) (0.5) (10.0) (4.3) Other (3) (0.4) (0.4) (0.4) (1.2) (5.6) ---------- ---------- ---------- ---------- ---------- Non-GAAP operating expenses $ 46.8 $ 45.8 $ 50.6 $ 194.6 $ 206.3 ========== ========== ========== ========== ========== Earnings from continuing operations $ 29.6 $ 5.6 $ 21.1 $ 2.9 $ 49.7 Interest expense, net 3.9 4.7 3.6 16.4 14.5 Provision for income taxes 2.8 2.3 5.6 8.4 16.6 ---------- ---------- ---------- ---------- ---------- Earnings from continuing operations before interest and income taxes 36.3 12.6 30.3 27.7 80.8 Earnings from continuing operations before interest and income taxes as % of revenues 14.9% 6.1% 13.0% 3.6% 9.5% Stock-based compensation expense 4.9 4.8 6.0 17.3 25.2 Intangibles amortization expense 3.2 3.3 1.7 13.0 7.0 Impairment charges - 7.6 - 7.6 - Restructuring charges (0.5) 0.1 1.2 12.3 6.0 Production transfer costs (2) 0.1 - 0.2 0.2 2.3 Other (3) 0.4 0.4 0.4 1.2 5.6 ---------- ---------- ---------- ---------- ---------- Adjusted earnings from continuing operations before interest and income taxes $ 44.4 $ 28.8 $ 39.8 $ 79.3 $ 126.9 ========== ========== ========== ========== ========== Adjusted earnings from continuing operations before interest and income taxes as % of revenues 18.3% 14.0% 17.0% 10.4% 14.8% Interest expense, net $ 3.9 $ 4.7 $ 3.6 $ 16.4 $ 14.5 Interest expense, net non-GAAP reconciling adjustments (4) 1.9 1.9 1.7 7.4 6.8 ---------- ---------- ---------- ---------- ---------- Non-GAAP interest expense $ 2.0 $ 2.8 $ 1.9 $ 9.0 $ 7.7 ========== ========== ========== ========== ========== Provision for income taxes $ 2.8 $ 2.3 $ 5.6 $ 8.4 $ 16.6 Income tax effects of non-GAAP reconciling adjustments (5) 0.7 1.4 (1.0) (1.3) 1.0 ---------- ---------- ---------- ---------- ---------- Non-GAAP provision for income taxes $ 3.5 $ 3.7 $ 4.6 $ 7.1 $ 17.6 ========== ========== ========== ========== ========== Earnings from continuing operations $ 29.6 $ 5.6 $ 21.1 $ 2.9 $ 49.7 Non-GAAP reconciling adjustments (6) 8.1 16.2 9.5 51.6 46.1 Interest expense, net non-GAAP reconciling adjustments (4) 1.9 1.9 1.7 7.4 6.8 Income tax effects of non-GAAP reconciling adjustments (5) 0.7 1.4 (1.0) (1.3) 1.0 ---------- ---------- ---------- ---------- ---------- Non-GAAP net earnings $ 38.9 $ 22.3 $ 33.3 $ 63.2 $ 101.6 ========== ========== ========== ========== ========== Diluted earnings per share from continuing operations $ 0.32 $ 0.06 $ 0.22 $ 0.03 $ 0.53 Earnings per share non-GAAP reconciling adjustment 0.09 0.18 0.13 0.64 0.54 ---------- ---------- ---------- ---------- ---------- Non-GAAP diluted earnings per share $ 0.41 $ 0.24 $ 0.35 $ 0.67 $ 1.07 ========== ========== ========== ========== ========== Diluted average shares outstanding 92,957,686 92,473,318 95,742,308 92,883,138 93,439,023 Non-GAAP adjustment (7) 1,181,431 1,574,586 181,222 1,477,156 1,449,627 ---------- ---------- ---------- ---------- ---------- Non-GAAP diluted average shares outstanding (7) 94,139,117 94,047,904 95,923,530 94,360,294 94,888,650 ========== ========== ========== ========== ========== Notes: ------------------------------------------------------------------------------ (1) In addition to the GAAP financial measures included herein, Knowles has presented certain non-GAAP financial measures that exclude certain amounts that are included in the most directly comparable GAAP measures. Knowles believes that non-GAAP measures are useful as supplements to its GAAP results of operations to evaluate certain aspects of its operations and financial performance, and its management team primarily focuses on non-GAAP items in evaluating Knowles' performance for business planning purposes. Knowles also 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 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. (2) Production transfer costs represent duplicate costs incurred to migrate manufacturing to facilities primarily in Asia. These amounts are included in the corresponding Gross profit and Earnings from continuing operations before interest and income taxes for each period presented. (3) In 2020, Other expenses represent the ongoing net lease cost (income) related to facilities not used in operations and expenses related to shareholder activism. In 2019, Other expenses of $4.4 million represent expenses related to shareholder activism and the remaining Other expenses relate to the acquisition of the MEMS Microphone Application-specific integrated circuit Design Business from ams AG by the Audio segment and the acquisition of DITF Interconnect Technology, Inc. by the Precision Devices segment. (4) Under GAAP, certain convertible debt instruments that may be settled in cash (or other assets) upon conversion are required to be separately accounted for as liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer's nonconvertible debt borrowing rate. Accordingly, for GAAP purposes we are required to recognize imputed interest expense on the Company's $172.5 million of convertible senior notes due 2021 that were issued in a private placement in May 2016. The imputed interest rate is 8.12% for the convertible notes due 2021, while the

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February 04, 2021 16:05 ET (21:05 GMT)