Knowles (NYSE: KN) Reports Q4 Earnings Below Analyst Estimates, Stock Drops

Key Highlights

* Revenue: $142.5 million (missed estimates by 2.4%)
* Adjusted EPS: $0.27 (missed estimates by 4.4%)
* Adjusted EBITDA: $34.7 million (missed estimates by 5.2%)
* Revenue Guidance for Q1 CY2025: $129 million (below estimates)
* Adjusted EPS Guidance for Q1 CY2025: $0.18 (below estimates)
* Operating Margin: 10.8% (in line with previous year)
* Free Cash Flow Margin: 21.3% (down from 25.7% in Q4 CY2023)

Company Overview

Knowles (NYSE: KN) is an industrial technology company specializing in acoustics components for various industries, including consumer electronics, telecommunications, and healthcare.

Sales Growth

Knowles has experienced weak demand in recent years, with annual sales declining by 2.7% over the past four years and 5.3% over the past two years. This quarter, revenue missed estimates by 33.8%, and management guides for a 34.3% decline next quarter. Analysts forecast a 14.3% revenue decline over the next 12 months.

Operating Margin

Knowles has maintained a stable operating margin of 10.1% over the past five years, rising by 1.8 percentage points. In Q4, the operating margin remained at 10.8%.

Earnings Per Share (EPS)

Knowles' full-year EPS has declined by 11.1% over the past five years. In the past two years, EPS has dropped by 12.3%. In Q4, EPS came in at $0.27, missing estimates. Analysts expect EPS of $0.97 over the next 12 months, representing a 14.2% growth.

Analyst Commentary

Analysts were underwhelmed by Knowles' Q4 results due to missed estimates, weak revenue guidance, and poor demand outlook. The stock price declined by 10% following the release.

Investment Considerations

Knowles faces challenges in the current market environment. However, the company's long-term business strategy and potential for growth in emerging markets could present an opportunity for investors.