Slide 1: Q4 & Full Year 2015 Earnings Call Investor Slides
Q4 & Full Year 2015 Earnings Call Investor Slides February 11, 2016
Slide 2: Non-GAAP Disclaimer
1 Non-GAAP Disclaimer The financial results disclosed in this presentation include certain measures calculated and presented in accordance with GAAP. In addition to the GAAP results included in this presentation, Knowles has presented supplemental, non-GAAP gross profit, earnings before interest and
Slide 3: Knowles Strategic Outlook
2 Intend to sell low-margin mobile consumer electronics speaker/receiver product line Continuing operations expected to generate significant earnings and cash flow, with reduced exposure to the handset market Intelligent Audio investment enables long-term growth through dollar content increases and
Slide 4: Knowles 2016 Key Priorities
3 Knowles 2016 Key Priorities Investing for Long-Term GrowthOptimizing the Portfolio Performance Audio • Microphone leadership • Multi-mic adoption • Leverage microphone scale Intelligent Audio • Software and digital signal processing capabilities • Integrated acoustic + software solutions shipping
Slide 5: Selling Mobile Consumer Electronics Speaker/Receiver Product Line
4 Selling Mobile Consumer Electronics Speaker/Receiver Product Line Rationale • Limited ability to improve profitability • Lack of scale and associated volatility with being #3 supplier • Purely electro-mechanical in nature, lack of synergy with our semiconductor design and software capabilities • C
Slide 6: Investing for Long-Term Growth in Existing Market
Knowles well positioned to deliver increased content 5 MARKET DRIVERS Higher-performance mics, smart mics, multi-mic integration Acoustics + Intelligent Audio software solutions Microphone performance leadership and scale Leader in smart mics Best-in-class audio software TYPES OF APPLICATIONS OUR OF
Slide 7: Investing for Growth Beyond Smartphones
6 Voice is re-defining the relationship between consumers and technology Investing for Growth Beyond Smartphones Knowles is leveraging enhanced audio capabilities to drive growth
Slide 8: Q1 FY 2016 Guidance
7 Revenue lower • Exit from speaker/receiver product line • Normal seasonality • Inventory correction at major customer Significant gross margin improvement ex-speaker/receiver, despite seasonally low Q1 OpEx • Impact of speaker and receiver in discontinued operations • Rationalized non-core R&D spe
Slide 9: Full Year 2016 Outlook (Cont. Ops.)
8 Full Year 2016 Outlook (Cont. Ops.) Modest full-year revenue increase • Smartphone growth • Share gains in MEMS mics • Multi-mic adoption • Intelligent audio • Specialty components • Expect 40% in 1H; 60% in 2H Full year non-GAAP gross margin of 38% - 40% • Sequential improvement throughout the ye
Slide 10: Leading Provider of High Performance Audio Solutions
9 Leverage core high performance, low power acoustic expertise Deliver fully integrated audio solutions with software and signal processing Increase device content with disruptive products and software Drive audio adoption in new markets Acoustics Software Signal Processor / Audio Silicon Our Value
Slide 11: Appendix
10 Appendix
Slide 12: Revenue (Cont. Ops.)
11 Revenue (Cont. Ops.) $186.6 $192.8 $246.7 $223.5 $0 $50 $100 $150 $200 $250 $300 Q1FY15 Q2FY15 Q3FY15 Q4FY15 $ M i l l i o n s
Slide 13: Adjusted EBIT (Cont. Ops.)
12 Adjusted EBIT (Cont. Ops.) $ M i l l i o n s $0 $10 $20 $30 $40 Q1FY15 Q2FY15 Q3FY15 Q4FY15 $23.3 $31.2 $36.0 $25.6
Slide 14: Revenue by Segment – Cont. Ops.
Revenue by Segment – Cont. Ops. (% of revenue) 2015 Mobile Consumer Electronics 50% Specialty Components 50% 13
Slide 15: Historical Segment Data – As Reported
14 Historical Segment Data – As Reported December 31, 2015 September 30, 2015 June 30, 2015 March 31, 2015 December 31, 2014 December 31, 2015 September 30, 2015 June 30, 2015 March 31, 2015 December 31, 2014 Revenues 200.5$ 189.2$ 132.3$ 134.7$ 170.9$ 110.0$ 105.4$ 108.6$ 103.9$ 115.2$ Gross Profit
Slide 16: Reconciliation of Segment EBIT to Consolidated Net Loss – As Reported
15 Reconciliation of Segment EBIT to Consolidated Net Loss – As Reported (in $ millions) December 31, 2015 September 30, 2015 June 30, 2015 March 31, 2015 December 31, 2014 (Loss) earnings before interest and income taxes Mobile Consumer Electronics (197.7)$ (15.9)$ (15.2)$ (12.0)$ (12.2)$ Specialty
Slide 17: Reconciliation of Revenue and Adjusted EBIT to Continuing Operations
16 Reconciliation of Revenue and Adjusted EBIT to Continuing Operations (in $ millions) Consolidated S/R Cont. Ops. Consolidated S/R Cont. Ops. Consolidated S/R Cont. Ops. Consolidated S/R Cont. Ops. Revenue 238.6 52.0 186.60 240.9 48.1 192.80 294.6 47.9 246.70 310.5 87.0 223.50 Adjusted Earnings (L
Slide 18: Forward Looking Statements
17 Forward Looking Statements This presentation contains forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “project,” “estimate,” “budget,” “continue,” “could
Slide 19: Thank You
4« knowles Thank You