Knowles Corporation · NYSE:KN
Knowles — Jefferies Industrials Conference 2022
20 slides from Knowles's conference presentation, Aug 9, 2022
Slide 1: Jefferies Industrials Conference
Jefferies Industrials Conference August 9, 2022
Slide 2: Safe Harbor
Safe Harbor 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, such as statements about our future plans, objectives, expectations, financial performa
Slide 3: Our Company
« knowles Our Company
Slide 4: Who We Are
Who We Are A global technology leader and manufacturer. Knowles develops advanced micro-acoustic microphones and speakers, audio solutions, Founded: 1946 high performance capacitors and RF filters for the world’s leading technology providers. HQ: Itasca, IL NYSE: KN 2021 Revenue Precision Devices 10
Slide 5: Leadership Team
Leadership Team Experienced management team. Chris Dugan Greg Doll Peter Vancorenland Jon Kiachian Shehab Albahri President, Vice President, Senior Vice President, Vice President, Sr. Director, Precision Devices Audio MEMS R&D, Audio MEMS Audio R&D, Audio 10 18 19 28 16 Years Years Years Years Years
Slide 6: Investment Thesis
Investment Thesis Repositioned to drive improved financial performance. Over the past five years, we have optimized our product and market portfolio to deliver higher growth, earnings and cash flow. We have built a highly sustainable business with unique capabilities in solving customers’ most compl
Slide 7: Market Shift
Market Shift Shift in mix of markets drives higher gross margins. We have expanded the markets we serve beyond the smartphone industry. Today, our business is more diversified across the markets that yield higher gross margins. Electric Vehicle 1% Electric Vehicle 2% Defense 5% Defense 10% Industria
Slide 8: Product Portfolio
Product Portfolio Two platforms with industry-leading performance in every market. PRECISION DEVICES CAPACITORS SAM $1.0B 1 RF Filtering High Performance Capacitors Solutions RF & MICROWAVE High voltage, temp, reliability and High frequency filtering capacitance/size. for next generation communicati
Slide 9: Our Financials
« knowles Our Financials
Slide 10: Financial Performance
Financial Performance Track record of improved financial performance. REVENUE Non-GAAP Non-GAAP OPERATING EXPENSE ADJUSTED EBIT Non-GAAP DILUTED GROSS PROFIT MARGIN* MARGIN* MARGIN* EPS* ($M) (%) (%) (%) ($) 25.4 20.1 1.53 41.7 868.1 40.3 22.0 14.9 0.88 744.2 3.9% +1.4% -3.4% +5.2% 14.8% CAGR CAGR 2
Slide 11: Cash Generation
Cash Generation Proven ability to deliver strong free cash flow. Gross Margin Expansion FREE CASH FLOW * FREE CASH FLOW • Focused on markets that value our technology and manufacturing differentiation ($M) MARGIN* (%) • Implemented a more disciplined approach to pricing 133.5 15.4 • Divested lower g
Slide 12: Capital Deployment
Capital Deployment Strong cash flow generation and debt reduction enables shift in future capital allocation priorities. Organic Growth • Continued investment of R&D spend to markets with optimal growth trends and products with better profit potential 2 • Deploying Capital Expenditures to markets an
Slide 13: Outlook
Outlook Q3 2022 Guidance. • Weak consumer electronics demand coupled with excess channel inventory • Continued strength in Precision Devices and Hearing Health • Restructuring charges in mobile consumer electronics business, announced in Q3 2022, with expected annualized savings of $25 - $30 million
Slide 14: Strong Sequential Improvement in EPS
Strong Sequential Improvement in EPS Expect 15% – 25% Q3 to Q4 sequential revenue growth on continued strength in Precision Devices and Hearing Health with modest recovery in consumer electronics. Projected Drivers $0.05 - $0.09 $0.01+ $0.35+ Restructuring Benefits $0.02 - $0.04 • Announced Mobile C
Slide 15: Near Term Market Outlook
Near Term Market Outlook Diversified portfolio with continuing shift beyond consumer segments. Projected Company Specific End Market Growth Trends • EV - Double-digit growth for our high-performance capacitors for on-board battery charging applications 2022E • Defense - High single-digit to low doub
Slide 16: Financial Outlook
Financial Outlook Accelerating achievement of mid-term financial targets announced in November 2021. PROJECTED DRIVERS TARGETS Revenue Growth • Precision Devices high single digit CAGR% Adjusted EBIT • Audio mid single digit CAGR% Margin* • Overall growth in the mid to high single digit CAGR% 22–24%
Slide 17: Key Takeaways
Key Takeaways We have built a highly sustainable business with unique capabilities in solving customers’ most complex technical challenges. Innovating across complex customer needs to Unparalleled product performance maximize differentiation Focusing on market segments with the most favorable tailwi
Slide 18: Appendix
« knowles Appendix 18
Slide 19: Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures
Reconciliation of GAAP Financial Measures to Non- GAAP Financial Measures Year Ended December 31, Notes: (in millions, except per share amounts) 2021 2017 (1) Production transfer costs represent duplicate costs incurred to migrate manufacturing to facilities primarily in Asia. Gross profit $ 359.5 $
Slide 20: Free Cash Flow and Free Cash Flow Margin
Free Cash Flow and Free Cash Flow Margin Years Ended December 31, (in millions) 2021 2020 2019 2018 2017 Cash provided by operating activities $ 182.1 $ 128.1 $ 123.9 $ 98.5 $ 92.9 Less: Capital expenditures (48.6) (31.9) (41.2) (80.1) (51.6) Free cash flow (1) $ 133.5 $ 96.2 $ 82.7 $ 18.4 $ 41.3 Fr