EX-99.2 3 exhibit992q32017.htm EXHIBIT 99.2
October 25, 2017 Q3 2017 Supplemental Information

Non-GAAP Disclaimer 2 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 income taxes, adjusted earnings before interest and income taxes and non- GAAP diluted earnings per share to facilitate evaluation of Knowles’ operating performance. These non-GAAP financial measures exclude certain amounts that are included in the most directly comparable GAAP measure. In addition, these non-GAAP financial measures do not have standard meanings and may vary from similarly titled non-GAAP financial measures used by other companies. Knowles believes that non-GAAP measures are useful as supplements to its GAAP results of operations to evaluate certain aspects of its operations and performance, and its management team primarily focuses on non-GAAP items in evaluating Knowles’ performance for business planning purposes. Knowles 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 these 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. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, see the reconciliation tables included in the third quarter 2017 earnings release.

Q3 ‘17 Financial Results (continuing operations) 3 Quarter over year ago period Q3FY17 Q3FY16 Revenues $221.7 million $243.1 million Gross Profit $82.5 million $94.9 million Non-GAAP Gross Profit $84.9 million $95.7 million Diluted Earnings Per Share $0.17 $0.24 Non-GAAP Diluted Earnings Per Share $0.28 $0.37

Revenues (Cont. Ops.) 4 $243.1 $240.6 $193.7 $190.2 $221.7 $0 $50 $100 $150 $200 $250 $300 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17

Q3 ’17 Revenues by Segment Cont. Ops. (% of revenues) 5 Audio 76% Precision Devices 24%

Q4 ‘17 Projections (non-GAAP, cont. ops.)* 6 Q4FY17E Revenues $225 million - $260 million Gross Margin 39 percent – 41 percent EPS (diluted) $0.33 - $0.39 *Projections as of 10/25/17; Q4 2017 GAAP results for continuing operations are expected to include approximately $0.08 per share from a higher effective tax rate, $0.05 per share in stock-based compensation, $0.03 per share in production transfer costs, $0.01 per share in amortization of intangibles, and $0.01 per share in amortization of debt discount. Expected Q4 2017 GAAP results exclude potential restructuring items.

Historical Segment Data Audio / Precision Devices 7 (Cont. Ops.; in $ millions) 7 September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016 September 30, 2016 September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016 September 30, 2016 Revenues 167.8$ 138.1$ 144.2$ 190.3$ 193.4$ 53.9$ 52.1$ 49.5$ 50.3$ 49.7$ Gross Profit 64.1$ 54.2$ 50.6$ 77.8$ 78.9$ 18.9$ 17.9$ 17.4$ 16.6$ 17.0$ Stock-Based Compensation Expense 0.3 0.3 0.3 0.3 0.3 - - - - - Impairment charges - 1.4 - - - 0.3 - - - - Restructuring Charges 0.2 (0.6) 4.3 - - - - - 0.1 - Production Transfers Costs 1.4 1.7 1.1 - - 0.1 0.3 0.3 0.2 0.4 Non-GAAP Gross Profit 66.0$ 57.0$ 56.3$ 78.1$ 79.2$ 19.3$ 18.2$ 17.7$ 16.9$ 17.4$ Non-GAAP Gross Profit as % of Revenues 39.3% 41.3% 39.0% 41.0% 41.0% 35.8% 34.9% 35.8% 33.6% 35.0% Research and Development Expenses 20.7$ 23.5$ 23.3$ 22.6$ 20.7$ 3.2$ 3.1$ 2.9$ 2.6$ 2.6$ Stock-Based Compensation Expense (1.6) (1.5) (1.4) (1.2) (1.3) - - - - - Impairment charges - - - - - - - - - - Non-GAAP Research and Development Expenses 19.1$ 22.0$ 21.9$ 21.4$ 19.4$ 3.2$ 3.1$ 2.9$ 2.6$ 2.6$ Non-GAAP Research and Development Expenses as % of Revenues 11.4% 15.9% 15.2% 11.2% 10.0% 5.9% 6.0% 5.9% 5.2% 5.2% Selling and Administrative Expenses 15.3$ 16.4$ 17.0$ 16.3$ 21.1$ 9.3$ 9.1$ 8.7$ 9.0$ 9.1$ Stock-Based Compensation Expense (0.9) (1.1) (1.0) (1.1) (0.5) (0.2) (0.2) (0.2) (0.2) (0.3) Intangibles Amortization Expense (1.1) (1.7) (2.5) (2.4) (5.2) (0.6) (0.6) (0.5) (0.4) (0.4) Other - - - - - - (0.1) - - - Non-GAAP Selling and Administrative Expenses 13.3$ 13.6$ 13.5$ 12.8$ 15.4$ 8.5$ 8.2$ 8.0$ 8.4$ 8.4$ Non-GAAP Selling and Administrative Expenses as % of Revenues 7.9% 9.8% 9.4% 6.7% 8.0% 15.8% 15.7% 16.2% 16.7% 16.9% Operating Expenses 36.4$ 61.1$ 40.7$ 38.9$ 42.7$ 12.5$ 12.3$ 11.8$ 12.5$ 11.7$ Stock-Based Compensation Expense (2.5) (2.6) (2.4) (2.3) (1.8) (0.2) (0.2) (0.2) (0.2) (0.3) Intangibles Amortization Expense (1.1) (1.7) (2.5) (2.4) (5.2) (0.6) (0.6) (0.5) (0.4) (0.4) Impairment charges - (19.9) - - - - - - - - Restructuring Charges (0.4) (1.3) (0.4) - (0.9) - (0.1) (0.2) (0.9) - Other - - - - - - (0.1) - - - Non-GAAP Operating Expenses 32.4$ 35.6$ 35.4$ 34.2$ 34.8$ 11.7$ 11.3$ 10.9$ 11.0$ 11.0$ Non-GAAP Operating Expenses as % of Revenues 19.3% 25.8% 24.5% 18.0% 18.0% 21.7% 21.7% 22.0% 21.9% 22.1% Operating Earnings (Loss) 27.7$ (6.9)$ 9.9$ 38.9$ 36.2$ 6.4$ 5.6$ 5.6$ 4.1$ 5.3$ Other (Income) Expense, net (0.4) 0.2 1.0 0.7 (0.3) (0.2) (0.3) 0.1 - - Earnings (Loss) Before Interest and Income Taxes 28.1 (7.1) 8.9 38.2 36.5 6.6 5.9 5.5 4.1 5.3 Stock-Based Compensation Expense 2.8 2.9 2.7 2.6 2.1 0.2 0.2 0.2 0.2 0.3 Intangibles Amortization Expense 1.1 1.7 2.5 2.4 5.2 0.6 0.6 0.5 0.4 0.4 Impairment charges - 21.3 - - - 0.3 - - - - Restructuri g Charges 0.6 0.7 4.7 - 0.9 - 0.1 0.2 1.0 - Production Transfers Costs 1.4 1.7 1.1 - - 0.1 0.3 0.3 0.2 0.4 Other loss - - - - - - 0.1 - - - Adjusted Earnings Before Interest and Income Taxes 34.0$ 21.2$ 19.9$ 43.2$ 44.7$ 7.8$ 7.2$ 6.7$ 5.9$ 6.4$ Adjusted Earnings Before Interest and Income Taxes as % of Revenues 20.3% 15.4% 13.8% 22.7% 23.1% 14.5% 13.8% 13.5% 11.7% 12.9% Audio Precision Devices Quarter Ended Quarter Ended

Reconciliation of Segment EBIT to Consolidated Net Earnings Audio / Precision Devices 8 (Cont. Ops.; in $ millions) 8 September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016 September 30, 2016 Earnings (loss) before interest and income taxes Audio 28.1$ (7.1)$ 8.9$ 38.2$ 36.5$ Precision Devices 6.6 5.9 5.5 4.1 5.3 Total segments 34.7 (1.2) 14.4 42.3 41.8 Corporate expense / other 13.8 16.7 14.1 11.6 15.3 Interest expense, net 5.1 5.1 5.2 5.3 5.6 Earnings (loss) before income taxes 15.8 (23.0) (4.9) 25.4 20.9 Provision for (benefit from) income taxes 0.4 7.3 (0.2) 7.9 - Net earnings (loss) 15.4$ (30.3)$ (4.7)$ 17.5$ 20.9$ Quarter Ended