kn-20230331

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023.

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-36102

Knowles Corporation

(Exact name of registrant as specified in its charter)


Delaware			90-1002689
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

1151 Maplewood Drive, Itasca, IL

(Address of Principal Executive Offices)

60143

(Zip Code)

(630) 250-5100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of each exchange on which registered

Common stock, $0.01 par value per share

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

The number of shares outstanding of the registrant’s common stock as of April 28, 2023 was 91,379,296.

Table of Contents

Knowles Corporation

Form 10-Q

Table of Contents


		Page
PART I — FINANCIAL INFORMATION		1
Item 1.	Financial Statements	1
	Consolidated Statements of Earnings (unaudited) for the three months ended March 31 , 202 3 and 20 2 2	1
	Consolidated Statements of Comprehensive Earnings (unaudited) for the three months ended March 31, 2023 and 2022	2
	Consolidated Balance Sheets (unaudited) at March 3 1 , 202 3 and December 31, 202 2	3
	Consolidated Statements of Stockholders' Equity (unaudited) for the three months ended March 31, 2023 and 2022	4
	Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2023 and 2022	5
	Notes to Consolidated Financial Statements (unaudited)	6
Forward-Looking Statements		17
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29

PART II — OTHER INFORMATION		29
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30


Item 6.	Exhibits	30
SIGNATURES		31

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

KNOWLES CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

(in millions, except per share amounts)

(unaudited)


	Three Months Ended March 31,
	2023		2022
Revenues	$	144.3	$	201.4
Cost of goods sold	90.4		118.1

Restructuring charges - cost of goods sold	0.1		—
Gross profit	53.8		83.3
Research and development expenses	20.0		23.1
Selling and administrative expenses	33.8		32.3

Restructuring charges	1.0		6.6
Operating expenses	54.8		62.0
Operating (loss) earnings	(1.0)		21.3
Interest expense, net	0.8		0.8
Other expense (income), net	2.3		(0.5)
(Loss) earnings before income taxes	(4.1)		21.0
Provision for income taxes	1.1		2.9


Net (loss) earnings	$	(5.2)	$	18.1









Net (loss) earnings per share:
Basic	$	(0.06)	$	0.20
Diluted	$	(0.06)	$	0.19

Weighted-average common shares outstanding:
Basic	91.4		92.3
Diluted	91.4		94.3

See accompanying Notes to Consolidated Financial Statements

Table of Contents

KNOWLES CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(in millions)

(unaudited)


	Three Months Ended March 31,
	2023		2022
Net (loss) earnings	$	(5.2)	$	18.1

Other comprehensive earnings (loss), net of tax



Foreign currency translation	3.6		(2.2)

Employee benefit plans:


Amortization or settlement of actuarial losses and prior service costs	0.2		0.1
Net change in employee benefit plans	0.2		0.1

Changes in fair value of cash flow hedges:
Unrealized net gains arising during period	0.1		—
Net losses (gains) reclassified into earnings	0.1		(0.3)
Total cash flow hedges	0.2		(0.3)

Other comprehensive earnings (loss), net of tax	4.0		(2.4)

Comprehensive (loss) earnings	$	(1.2)	$	15.7

See accompanying Notes to Consolidated Financial Statements

Table of Contents

KNOWLES CORPORATION

CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share amounts)

(unaudited)


	March 31, 2023		December 31, 2022
Current assets:
Cash and cash equivalents	$	52.0	$	48.2

Receivables, net of allowances of $0.1 and $1.1	109.5		134.7
Inventories, net	208.6		169.5
Prepaid and other current assets	12.9		10.0

Total current assets	383.0		362.4
Property, plant, and equipment, net	158.5		161.8
Goodwill	471.0		471.0
Intangible assets, net	82.2		85.1
Operating lease right-of-use assets	12.3