Knowles Corp
For the period ended Jun 30, 2024. Filed Jul 31, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 31, 2024
KN$31.27+3.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-01.
0001587523-24-000040
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-31.
0001587523-24-000071
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 90 previous paragraphs and 134 current paragraphs.
43 unchanged; 35 reworded; 49 added; 11 removed; 1 previous and 7 current paragraphs rearranged.
Tables are not compared: 6 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (49)
Current report
Revenues for the second quarter of 2024 were $204.7 million, compared with $173.0 million for the second quarter of 2023, an increase of $31.7 million or 18.3%. PD revenues increased$26.3 million due to our acquisition of the CD business and higher demand from the medtech market in our legacy PD business, partially offset by lower demand from the industrial and communication markets in our legacy PD business as a result of continued demand weakness associated with excess customer and channel inventory. CMM revenues increased $6.5 million, primarily due to higher demand in the mobile, ear, and IoT markets, partially offset by lower average pricing on mature products. MSA revenues decreased $1.1 million, primarily due to lower shipping volumes into the specialty audio market, partially offset by higher shipping volumes of hearing health products driven by stronger end market demand.
Current report
Gain on Sale of Fixed Assets
Current report
As a result of transitioning to our next generation of MEMS wafer manufacturing technology, we sold certain machinery and equipment related to the CMM segment in the second quarter of 2023 and recorded a gain of $4.8 million. During the second quarter of 2024, we recorded an additional gain on the sale of these assets of approximately $1.1 million. For additional information, refer to Note 5. Property, Plant, and Equipment, net to our Consolidated Financial Statements.
Current report
During the second quarter of 2023, we recorded a $0.9 million gain on the sale of certain machinery and equipment that was previously written off through restructuring charges and a $0.8 million reversal of restructuring charges related to a change in estimate, all within Gross profit and the CMM segment. We also recorded restructuring charges of $0.6 million in Operating expenses for severance pay and benefits to rationalize our CMM segment. For additional information, refer to Note 7. Restructuring and Related Activities to our Consolidated Financial Statements.
Current report
Gross profit for the second quarter of 2024 was $77.6 million, compared with $73.7 million for the second quarter of 2023, an increase of $3.9 million or 5.3%. Gross profit margin (gross profit as a percentage of revenues) for the second quarter of 2024 was 37.9%, compared with 42.6% for the second quarter of 2023. The increase in gross profit was primarily due to our acquisition of CD, product cost reductions, higher shipping volumes, and favorable foreign currency changes, partially offset by lower average pricing on mature products primarily shipped into the mobile market, the decrease in gain on sale of fixed assets, and restructuring charges. The decrease in gross profit margin was primarily due to lower average pricing on mature products shipped into the mobile market, the decrease in gain on sale of fixed assets, impacts of the acquisition of CD, and restructuring charges, partially offset by product cost reductions and favorable foreign currency changes.
Current report
Non-GAAP gross profit for the second quarter of 2024 was $79.7 million, compared with $72.7 million for the second quarter of 2023, an increase of $7.0 million or 9.6%. Non-GAAP gross profit margin (non-GAAP gross profit as a percentage of revenues) for the second quarter of 2024 was 38.9%, compared with 42.0% for the second quarter of 2023. The increase in non-GAAP gross profit was primarily due to our acquisition of CD, product cost reductions, higher shipping volumes, and favorable foreign currency changes, partially offset by lower average pricing on mature products primarily shipped into the mobile market, and the decrease in gain on sale of fixed assets. The decrease in non-GAAP gross profit margin was primarily due to lower average pricing on mature products shipped into the mobile market, the decrease in gain on sale of fixed assets, and impacts of the acquisition of CD, partially offset by product cost reductions, and favorable foreign currency changes.
Current report
Selling and administrative expenses for the second quarter of 2024 were $43.0 million, compared with $36.5 million for the second quarter of 2023, an increase of $6.5 million or 17.8%. Selling and administrative expenses as a percentage of revenues for the second quarter of 2024 and 2023 were 21.0% and 21.1%, respectively. The increase in expenses was primarily driven by our acquisition of CD, partially offset by lower professional service fees. The decrease in expenses as a percentage of revenues was driven by higher revenues.
Current report
Goodwill Impairment
Current report
In the second quarter of 2024, we recorded a goodwill impairment charge of $249.4 million within the CMM segment. For additional information related to this impairment charge, refer to Note 6. Goodwill and Other Intangible Assets to our Consolidated Financial Statements.
Current report
Other Expense (Income), net
Current report
Other expense for the second quarter of 2024 was $0.3 million, compared with income of $1.3 million for the second quarter of 2023, a change of $1.6 million. Expense in 2024 primarily represents unfavorable foreign currency changes. Income in the second quarter of 2023 represents favorable foreign currency changes and the unrealized gains in our investment balances.
Current report
Net (Loss) Earnings
Current report
Net loss for the second quarter of 2024 was $259.3 million, compared with earnings of $13.6 million for the second quarter of 2023, a decrease of $272.9 million. As described above, the decrease is primarily due to the goodwill impairment charge recorded in 2024 and higher income tax expense, operating expenses, and interest expense, partially offset by higher gross profit.
Current report
Diluted loss per share was $2.90 for the second quarter of 2024, compared with earnings per share of $0.15 for the second quarter of 2023, a decrease of $3.05. As described above, the decrease is primarily due to the goodwill impairment charge recorded in 2024 and higher income tax expense, operating expenses, and interest expense, partially offset by higher gross profit.
Current report
Non-GAAP diluted earnings per share was $0.24 for the second quarter of 2024, compared with $0.23 for the second quarter of 2023, an increase of $0.01. As described above, the increase was due to higher non-GAAP gross profit and lower non-GAAP income tax expense, partially offset by higher non-GAAP operating expenses and interest expense.
Current report
Results of Operations for the Six Months Ended June 30, 2024 compared with the Six Months Ended June 30, 2023
Current report
Cost of Goods Sold
Current report
COGS for the six months ended June 30, 2024 was $253.4 million, compared with $196.2 million for the six months ended June 30, 2023, an increase of $57.2 million or 29.2%. This increase was primarily due to our acquisition of CD, higher shipping volumes, and lower factory capacity utilization in our legacy PD business, partially offset by product cost reductions and favorable foreign currency changes.
Current report
Gain on Sale of Fixed Assets
Current report
As a result of transitioning to our next generation of MEMS wafer manufacturing technology, we sold certain machinery and equipment related to the CMM segment in the six months ended June 30, 2023 and recorded a gain of $4.8 million. During the six months ended June 30, 2024, we recorded an additional gain on the sale of these assets of approximately $1.1 million. For additional information, refer to Note 5. Property, Plant, and Equipment, net to our Consolidated Financial Statements.
Current report
Restructuring Charges
Current report
During the six months ended June 30, 2023, we recorded a $0.9 million gain on the sale of certain machinery and equipment that was previously written off through restructuring charges and a $0.8 million reversal of restructuring charges related to a change in estimate, all within Gross profit and the CMM Segment. We also recorded restructuring charges of $1.4 million in Operating expenses for severance pay and benefits to rationalize our CMM segment, and $0.3 million for other costs. For additional information, refer to Note 7. Restructuring and Related Activities to our Consolidated Financial Statements.
Current report
Research and Development Expenses
Current report
Selling and Administrative Expenses
Current report
Selling and administrative expenses for the six months ended June 30, 2024 were $86.5 million, compared with $70.3 million for the six months ended June 30, 2023, an increase of $16.2 million or 23.0%. Selling and administrative expenses as a percentage of revenues for the six months ended June 30, 2024 and 2023 were 21.6% and 22.2%, respectively. The increase in expenses was primarily driven by our acquisition of CD, partially offset by lower professional service fees. The decrease in expenses as a percentage of revenues was driven by higher revenues.
Current report
Goodwill Impairment
Current report
In the six months ended June 30, 2024, we recorded a goodwill impairment charge of $249.4 million within the CMM segment. For additional information related to this impairment charge, refer to Note 6. Goodwill and Other Intangible Assets to our Consolidated Financial Statements.
Current report
Interest Expense, net
Current report
Net (Loss) Earnings
Current report
Net loss for the six months ended June 30, 2024 was $256.8 million, compared with earnings of $8.4 million for the six months ended June 30, 2023, a decrease of $265.2 million. As described above, the decrease is primarily due to the goodwill impairment charge recorded in 2024 and higher operating expenses, income tax expense, and interest expense, partially offset by higher gross profit and the gain on sale of asset.
Current report
Loss before interest and income taxes for the six months ended June 30, 2024 was $225.8 million, compared with earnings of $14.9 million for the six months ended June 30, 2023, a decrease of $240.7 million. The change is is primarily due to the goodwill impairment charge recorded in 2024 and higher operating expenses, partially offset by higher gross profit and the gain on sale of asset.
Current report
Adjusted EBIT for the six months ended June 30, 2024 was $55.2 million, compared with $35.8 million for the six months ended June 30, 2023, an increase of $19.4 million. Adjusted EBIT margin for the six months ended June 30, 2024 was 13.8%, compared with 11.3% for the six months ended June 30, 2023. The increases were primarily due to higher non-GAAP gross profit, partially offset by higher non-GAAP operating expenses.
Current report
Diluted loss per share was $2.87 for the six months ended June 30, 2024, compared with earnings per share of $0.09 for the six months ended June 30, 2023, a decrease of $2.96. As described above, the decrease is primarily due to the goodwill impairment charge recorded in 2024 and higher operating expenses, income tax expense, and interest expense, partially offset by higher gross profit and the gain on sale of asset.
Current report
Non-GAAP diluted earnings per share was $0.44 for the six months ended June 30, 2024, compared with $0.28 for the six months ended June 30, 2023, an increase of $0.16. As described above, the increase was primarily due to higher non-GAAP gross profit, partially offset by higher non-GAAP operating expenses and interest expense.
Current report
PD revenues were $74.1 million for the second quarter of 2024, compared with $47.8 million for the second quarter of 2023, an increase of $26.3 million or 55.0%. Revenues increased due to our acquisition of the CD business and higher demand from the medtech market in our legacy PD business, partially offset by lower demand from the industrial and communication markets in our legacy PD business as a result of continued demand weakness associated with excess customer and channel inventory.
Current report
PD Adjusted EBIT was $11.8 million for the second quarter of 2024, compared with $7.3 million for the second quarter of 2023, an increase of $4.5 million. Adjusted EBIT margin for the second quarter of 2024 was 15.9%, compared with 15.3% for the second quarter of 2023. The increases were primarily due to higher non-GAAP gross profit, partially offset by increased non-GAAP operating expenses. The non-GAAP gross profit increase was primarily driven by our acquisition of CD, partially offset by lower non-GAAP gross profit margins. The lower non-GAAP gross profit margins were impacted by the acquisition of CD. The increase in non-GAAP operating expenses was primarily driven by the acquisition of the CD business.
Current report
MSA revenues were $59.5 million for the second quarter of 2024, compared with $60.6 million for the second quarter of 2023, a decrease of $1.1 million or 1.8%. Revenues decreased primarily due to lower shipping volumes into the specialty audio market, partially offset by higher shipping volumes of hearing health products driven by stronger end market demand.
Current report
MSA EBIT was $24.0 million for the second quarter of 2024, compared with $23.6 million for the second quarter of 2023, an increase of $0.4 million or 1.7%. EBIT margin for the second quarter of 2024 was 40.3%, compared with 38.9% for the second quarter of 2023. The increases were primarily due to higher gross profit margins and lower operating expenses, partially offset by lower revenues. The higher gross profit margin was driven by favorable mix, product cost reductions, and favorable foreign currency changes.
Current report
MSA Adjusted EBIT was $25.0 million for the second quarter of 2024, compared with $24.4 million for the second quarter of 2023, an increase of $0.6 million. Adjusted EBIT margin for the second quarter of 2024 was 42.0%, compared to 40.3% for the second quarter of 2023. The increases were primarily due to higher non-GAAP gross profit margins and lower operating expenses, partially offset by lower revenues. The higher non-GAAP gross profit margin was driven by favorable mix, product cost reductions, and favorable foreign currency changes.
Current report
CMM revenues were $71.1 million for the second quarter of 2024, compared with $64.6 million for the second quarter of 2023, an increase of $6.5 million or 10.1%. Revenues increased primarily due to higher demand in the mobile, ear, and IoT markets, partially offset by lower average pricing on mature products.
Showing the first 40 of 49 passages. Open the source sections for the rest.
Removed paragraphs (11)
Previous report
Selling and administrative expenses for the first quarter of 2024 were $43.5 million, compared with $33.8 million for the first quarter of 2023, an increase of $9.7 million or 28.7%. Selling and administrative expenses as a percentage of revenues for the first quarter of 2024 and 2023 were 22.1% and 23.4%, respectively. The increase in expenses was primarily driven by our acquisition of CD. The decrease in expenses as a percentage of revenues was driven by higher revenues.
Previous report
Net Earnings (Loss)
Previous report
Net earnings for the first quarter of 2024 were $2.5 million, compared with a $5.2 million loss for the first quarter of 2023, an increase of $7.7 million. As described above, the increase is primarily due to higher gross profit and the gain on sale of asset, partially offset by higher operating expenses and interest expense.
Previous report
Earnings (Loss) and Adjusted Earnings Before Interest and Income Taxes
Previous report
Diluted earnings per share was $0.03 for the first quarter of 2024, compared with loss per share of $0.06 for the first quarter of 2023, an increase of $0.09. As described above, the increase is primarily due to higher gross profit and the gain on sale of asset, partially offset by operating expenses and interest expense.
Previous report
Non-GAAP diluted earnings per share was $0.20 for the first quarter of 2024, compared with $0.05 for the first quarter of 2023, an increase of $0.15. As described above, the increase was primarily due to higher non-GAAP gross profit partially offset by higher non-GAAP operating expenses and interest expense.
Previous report
(Loss) Earnings and Adjusted Earnings Before Interest and Income Taxes
Previous report
PD Adjusted EBIT was $9.8 million for the first quarter of 2024, compared with $13.0 million for the first quarter of 2023, a decrease of $3.2 million. Adjusted EBIT margin for the first quarter of 2024 was 13.2%, compared with 24.2% for the first quarter of 2023. The decreases were primarily due to lower non-GAAP gross profit margin, partially offset by higher revenues. The non-GAAP gross profit margin decrease was primarily driven by lower factory capacity utilization in our legacy PD business and the acquisition of CD.
Previous report
Earnings and Adjusted Earnings Before Interest and Income Taxes
Previous report
Earnings (Loss) and Adjusted Earnings (Loss) Before Interest and Income Taxes
Previous report
CMM EBIT was $5.3 million for the first quarter of 2024, compared with a $8.2 million loss for the first quarter of 2023, an increase of $13.5 million. EBIT margin for the first quarter of 2024 was 8.2%, compared with (18.2)% for the first quarter of 2023. The increase was primarily due to higher revenues, the gain on sale of asset, and higher gross profit margins. The higher gross profit margin was driven by product cost reductions, favorable foreign currency changes, and increased factory capacity utilization, partially offset by lower average pricing on mature products shipped into the mobile market and unfavorable product mix.
Reworded paragraphs (35)
Previous wording
We are a market leader and global provider of high performance capacitors and radio frequency ("RF") filtering products, balanced armature speakers, advanced micro-acoustic microphones, and audio solutions, serving the medtech, defense, electric vehicle, industrial, communications, and consumer electronics markets. Our focus on the customer, combined with unique technology, proprietary manufacturing techniques, and global operational expertise, enables us to deliver innovative solutions across multiple applications. References to "Knowles," the "Company," "we," "our," or "us" refer to Knowles Corporation and its consolidated subsidiaries, unless the context otherwise requires.
Current wording
We are a market leader and global provider of high performance electronics for demanding applications, including ceramic capacitors and radio frequency ("RF") filters, advanced medtech microphones, balanced armature speakers, advanced micro-acoustic microphones, and audio solutions, serving the medtech, defense, electric vehicle, industrial, communications, and consumer electronics markets. Our focus on the customer, combined with unique technology, proprietary manufacturing techniques, and global operational expertise, enables us to deliver innovative solutions across multiple applications. References to "Knowles," the "Company," "we," "our," or "us" refer to Knowles Corporation and its consolidated subsidiaries, unless the context otherwise requires.
Previous wording
On September 18, 2023, we announced that we are reviewing strategic alternatives for the CMM business. This includes a range of possibilities, such as: a potential sale, restructuring the business, as well as continuing to operate the business as is. No assurance can be given that any transaction or other strategic outcomes will result from the review. Further, there can be no assurance that the outcome of the strategic alternative review will result in our being able to recover the carrying value of the CMM segment. While the review is progressing, we have not set a timetable for the conclusion of the strategic review and do not intend to comment on or provide updates regarding these matters unless and until we determine that further disclosure is appropriate or required.
Current wording
On September 18, 2023, we announced that we are reviewing strategic alternatives for the CMM business. This review includes a range of possibilities, such as: a potential sale, restructuring the business, as well as continuing to operate the business as is. No assurance can be given that any transaction or other strategic outcomes will result from the review. However, in connection with our strategic alternatives review, in the second quarter of 2024 we determined that it was more likely than not that the fair value of the CMM reporting unit was below its carrying value, resulting in a goodwill impairment charge. While the review continues to progress, we have not set a timetable for its conclusion and do not intend to comment on or provide updates regarding these matters unless and until we determine that further disclosure is appropriate or required. For additional information about the goodwill impairment charge, refer to Note 6. Goodwill and Other Intangible Assets to our Consolidated Financial Statements under Part I, Item 1, "Financial Statements."
Previous wording
Cost of goods sold ("COGS") for the first quarter of 2024 was $125.5 million, compared with $90.4 million for the first quarter of 2023, an increase of $35.1 million or 38.8%. This increase was primarily due to our acquisition of CD, higher shipping volumes, and lower factory capacity utilization in our legacy PD business, partially offset by product cost reductions and favorable foreign currency changes.
Current wording
Cost of goods sold ("COGS") for the second quarter of 2024 was $127.9 million, compared with $105.8 million for the second quarter of 2023, an increase of $22.1 million or 20.9%. This increase was primarily due to our acquisition of CD and higher shipping volumes, partially offset by product cost reductions and favorable foreign currency changes.
Previous wording
During the first quarter of 2024, we recorded restructuring charges of $1.8 million related to headcount reductions and $0.7 million for costs associated with transferring certain capacitors manufacturing to existing facilities to further optimize operations, all within our PD segment. For additional information, refer to Note 7. Restructuring and Related Activities to our Consolidated Financial Statements.
Current wording
During the second quarter of 2024, we recorded restructuring charges of $0.3 million within Gross profit for costs associated with transferring certain capacitors manufacturing to existing facilities to further optimize operations, and a credit of $0.1 million within Operating expenses related to previous headcount reductions, all within the PD segment. For additional information, refer to Note 7. Restructuring and Related Activities to our Consolidated Financial Statements.
Previous wording
Research and development expenses for the first quarter of 2024 were $20.6 million, compared with $20.0 million for the first quarter of 2023, an increase of $0.6 million or 3.0%. Research and development expenses as a percentage of revenues for the first quarter of 2024 and 2023 were 10.5% and 13.9%, respectively. The increase in expenses was primarily driven by our acquisition of the CD business that increased expenses in our PD segment and additional development activities in our MSA segment, partially offset by reduced spending in our CMM segment driven by the benefits of prior year restructuring actions as we continue to shift our focus and spending to our higher margin businesses. The decrease in expenses as a percentage of revenues was driven by our higher revenues.
Current wording
Research and development expenses for the second quarter of 2024 were $20.9 million, compared with $19.7 million for the second quarter of 2023, an increase of $1.2 million or 6.1%. Research and development expenses as a percentage of revenues for the second quarter of 2024 and 2023 were 10.2% and 11.4%, respectively. The increase in expenses was primarily driven by our acquisition of the CD business that increased expenses in our PD segment, partially offset by reduced spending in our CMM segment driven by the benefits of prior year restructuring actions as we continue to shift our spending to higher margin businesses. The decrease in expenses as a percentage of revenues was driven by our higher revenues.
Previous wording
Interest expense for the first quarter of 2024 was $4.4 million, compared with $0.8 million for the first quarter of 2023, an increase of $3.6 million. The increase is primarily due to imputed interest expense on our Seller Note from the CD acquisition, a higher outstanding revolving credit facility balance, and higher interest rates during the first quarter of 2024. For additional information on borrowings and interest expense, refer to Note 8. Borrowings to our Consolidated Financial Statements.
Current wording
Interest expense for the second quarter of 2024 was $4.6 million, compared with $0.8 million for the second quarter of 2023, an increase of $3.8 million. The increase is primarily due to imputed interest expense on our Seller Note from the CD acquisition and a higher outstanding revolving credit facility balance during the second quarter of 2024. For additional information on borrowings and interest expense, refer to Note 8. Borrowings to our Consolidated Financial Statements.
Previous wording
The effective tax rate ("ETR") for the first quarter of 2024 and 2023 was 56.1% and (26.8)%, respectively. The ETR for the first quarter of 2024 and 2023 includes discrete items totaling $0.8 million and $0.6 million of tax expense, respectively. The discrete items impacting the tax provision for 2024 and 2023 are primarily attributable to stock-based compensation. Absent the discrete items, the ETR for the first quarter of 2024 and 2023 was 42.1% and (12.2)%, respectively. The Company accrues taxes in various countries where it generates income and applies a valuation allowance in other jurisdictions, which resulted in the provision for the first quarter of 2024 and 2023, respectively. The change in the ETR was due to the mix of earnings and losses by taxing jurisdictions and net discrete items.
Current wording
The effective tax rate ("ETR") for the second quarter of 2024 and 2023 was (7.8)% and 21.8%, respectively. The ETR for the second quarter of 2024 and 2023 includes discrete items totaling $0.1 million of tax expense in both periods. The discrete items impacting the tax provision for 2024 and 2023 are primarily attributable to stock-based compensation. Absent the discrete items, the ETR for the second quarter of 2024 and 2023 was (7.8)% and 21.3%, respectively. The Company accrues taxes in various countries where it generates income and applies a valuation allowance in other jurisdictions, which resulted in the provision for the second quarter of 2024 and 2023. The change in the ETR was mainly due to the book goodwill impairment recorded in the second quarter of 2024, as well as the mix of earnings and losses by taxing jurisdictions and net discrete items.
Previous wording
The non-GAAP ETR for the first quarter of 2024 and 2023 was 12.7% and 30.1%, respectively. The non-GAAP ETR includes discrete items totaling $0.7 million and $0.9 million of tax expense for the first quarter of 2024 and 2023, respectively. Absent the discrete items, the non-GAAP ETR for the first quarter of 2024 and 2023 was 9.4% and 17.8%, respectively. The change in the non-GAAP ETR was primarily due to increased utilization of foreign tax credits compared to the prior year.
Current wording
The non-GAAP ETR for the second quarter of 2024 and 2023 was 9.6% and 18.6%, respectively. The non-GAAP ETR includes discrete items totaling $0.1 million of tax expense for the second quarter of 2024. Absent the discrete items, the non-GAAP ETR for the second quarter of 2024 and 2023 was 9.2% and 18.6%, respectively. The change in the non-GAAP ETR was primarily due to increased utilization of foreign tax credits compared to the prior year.
Previous wording
Earnings before interest and income taxes ("EBIT") for the first quarter of 2024 was $10.1 million, compared with a $3.3 million loss for the first quarter of 2023, an increase of $13.4 million. EBIT margin (EBIT as a percentage of revenues) for the first quarter of 2024 was 5.1%, compared with (2.3)% for the first quarter of 2023. The change is primarily due to higher gross profit and the gain on sale of asset, partially offset by higher operating expenses.
Current wording
Loss before interest and income taxes for the second quarter of 2024 was $235.9 million, compared with earnings of $18.2 million for the second quarter of 2023, a decrease of $254.1 million. The change is primarily due to the goodwill impairment charge recorded in 2024 and higher operating expenses, partially offset by higher gross profit.
Previous wording
Adjusted earnings before interest and income taxes ("Adjusted EBIT") for the first quarter of 2024 was $25.7 million, compared with $8.1 million for the first quarter of 2023, an increase of $17.6 million. Adjusted EBIT margin (Adjusted EBIT as a percentage of revenues) for the first quarter of 2024 was 13.1%, compared with 5.6% for the first quarter of 2023. The increases were primarily due to higher non-GAAP gross profit, partially offset by higher non-GAAP operating expenses.
Current wording
Adjusted earnings before interest and income taxes ("Adjusted EBIT") for the second quarter of 2024 was $29.5 million, compared with $27.7 million for the second quarter of 2023, an increase of $1.8 million. Adjusted EBIT margin (Adjusted EBIT as a percentage of revenues) for the second quarter of 2024 was 14.4%, compared with 16.0% for the second quarter of 2023. The increase in Adjusted EBIT was primarily due to higher non-GAAP gross profit, partially offset by higher non-GAAP operating expenses. The decrease in Adjusted EBIT margin was driven by higher revenues.
Previous wording
Diluted Earnings (Loss) per Share and Non-GAAP Diluted Earnings per Share
Current wording
Diluted (Loss) Earnings per Share and Non-GAAP Diluted Earnings per Share
Previous wording
Revenues for the first quarter of 2024 were $196.4 million, compared with $144.3 million for the first quarter of 2023, an increase of $52.1 million or 36.1%. PD revenues increased$20.6 million due to our acquisition of the CD business, partially offset by lower demand from the medtech, industrial, and communication markets in our legacy PD business as a result of continued demand weakness associated with excess customer and channel inventory. CMM revenues increased $19.9 million, primarily due to higher demand in the ear, mobile, and computing markets, partially offset by lower average pricing on mature products. MSA revenues increased $11.6 million, primarily due to higher shipping volumes of hearing health products driven by stronger end market demand. In addition, revenues in the first quarter of 2023 were unfavorably impacted by financial incentives offered to customers in the fourth quarter of 2022, which resulted in higher shipping volumes in the fourth quarter of 2022 and lower revenues in the first quarter of 2023.
Current wording
Revenues for the six months ended June 30, 2024 were $401.1 million, compared with $317.3 million for the six months ended June 30, 2023, an increase of $83.8 million or 26.4%. PD revenues increased $46.9 million due to our acquisition of the CD business, partially offset by lower demand from the industrial, communication, and medtech markets in our legacy PD business as a result of continued demand weakness associated with excess customer and channel inventory. CMM revenues increased $26.4 million, primarily due to higher demand in the mobile, ear, IoT, and computing markets, partially offset by lower average pricing on mature products. MSA revenues increased $10.5 million, primarily due to higher shipping volumes of hearing health products driven by stronger end market demand, partially offset by lower shipping volumes into the specialty audio market. In addition, revenues in the six months ended June 30, 2023 were unfavorably impacted by financial incentives offered to customers in the fourth quarter of 2022, which resulted in higher shipping volumes in the fourth quarter of 2022 and lower revenues in the first quarter of 2023.
Previous wording
During the first quarter of 2023, we recorded restructuring charges of $0.8 million related to headcount reductions in our CMM segment and $0.3 million for other costs. For additional information, refer to Note 7. Restructuring and Related Activities to our Consolidated Financial Statements.
Current wording
During the six months ended June 30, 2024, we recorded restructuring charges of $1.7 million related to headcount reductions and $1.0 million for costs associated with transferring certain capacitors manufacturing to existing facilities to further optimize operations, all within our PD segment. These actions resulted in restructuring charges of $1.3 million within Gross profit and $1.4 million within Operating expenses. For additional information, refer to Note 7. Restructuring and Related Activities to our Consolidated Financial Statements.
Previous wording
Gross profit for the first quarter of 2024 was $69.9 million, compared with $53.8 million for the first quarter of 2023, an increase of $16.1 million or 29.9%. Gross profit margin (gross profit as a percentage of revenues) for the first quarter of 2024 was 35.6%, compared with 37.3% for the first quarter of 2023. The increase in gross profit was primarily due to higher shipping volumes, product cost reductions, our acquisition of CD, favorable foreign currency changes, and higher factory capacity utilization in our CMM segment, partially offset by lower average pricing on mature products shipped into the mobile market, lower factory capacity utilization in our legacy PD business, our acquisition-related costs of CD, and increased restructuring charges. The decrease in gross profit margin was primarily due to lower average pricing on mature products shipped into the mobile market, lower factory capacity utilization in our legacy PD business, our acquisition-related costs of CD, and increased restructuring charges, partially offset by product cost reductions, favorable foreign currency changes, and higher factory capacity utilization in our CMM segment.
Current wording
Gross profit for the six months ended June 30, 2024 was $147.5 million, compared with $127.5 million for the six months ended June 30, 2023, an increase of $20.0 million or 15.7%. Gross profit margin for the six months ended June 30, 2024 was 36.8%, compared with 40.2% for the six months ended June 30, 2023. The increase in gross profit was primarily due to our acquisition of CD, higher shipping volumes, product cost reductions, favorable foreign currency changes, and higher factory capacity utilization in our CMM segment, partially offset by lower average pricing on mature products shipped primarily into the mobile market, the decrease in gain on sale of fixed assets, lower factory capacity utilization in our legacy PD business, our acquisition-related costs of CD, and restructuring charges. The decrease in gross profit margin was primarily due to lower average pricing on mature products shipped into the mobile market, impacts of the acquisition of CD, the decrease in gain on sale of fixed assets, lower factory capacity utilization in our legacy PD business, our acquisition-related costs of CD, and restructuring charges, partially offset by product cost reductions, favorable foreign currency changes, and higher factory capacity utilization in our CMM segment.
Previous wording
Non-GAAP gross profit for the first quarter of 2024 was $74.7 million, compared with $54.4 million for the first quarter of 2023, an increase of $20.3 million or 37.3%. Non-GAAP gross profit margin (non-GAAP gross profit as a percentage of revenues) for the first quarter of 2024 was 38.0%, compared with 37.7% for the first quarter of 2023. The increase in non-GAAP gross profit was primarily due to higher shipping volumes, product cost reductions, our acquisition of CD, favorable foreign currency changes, and higher factory capacity utilization in our CMM segment, partially offset by lower average pricing on mature products shipped into the mobile market and lower factory capacity utilization in our legacy PD business. The increase in non-GAAP gross profit margin was primarily due to product cost reductions, favorable foreign currency changes, and higher factory capacity utilization in our CMM segment, partially offset by lower average pricing on mature products shipped into the mobile market and lower factory capacity utilization in our legacy PD business.
Current wording
Non-GAAP gross profit for the six months ended June 30, 2024 was $154.4 million, compared with $127.1 million for the six months ended June 30, 2023, an increase of $27.3 million or 21.5%. Non-GAAP gross profit margin for the six months ended June 30, 2024 was 38.5%, compared with 40.1% for the six months ended June 30, 2023. The increase in non-GAAP gross profit was primarily due to our acquisition of CD, higher shipping volumes, product cost reductions, favorable foreign currency changes, and higher factory capacity utilization in our CMM segment, partially offset by lower average pricing on mature products primarily shipped into the mobile market, the decrease in gain on sale of fixed assets, and lower factory capacity utilization in our legacy PD business. The decrease innon-GAAP gross profit margin was primarily due to lower average pricing on mature products shipped into the mobile market, impacts of the acquisition of CD, the decrease in gain on sale of fixed assets, and lower factory capacity utilization in our legacy PD business, partially offset by product cost reductions, favorable foreign currency changes, and higher factory capacity utilization in our CMM segment.
Previous wording
Other income for the first quarter of 2024 was $0.4 million, compared with expense of $2.3 million for the first quarter of 2023, a change of $2.7 million. Income in 2024 primarily represents unrealized gains in our investment balances. Expense in 2023 primarily represents unfavorable impacts from foreign currency exchange rate changes, partially offset by the unrealized gains in our investment balances.
Current wording
Other income for the six months ended June 30, 2024 was $0.1 million, compared with expense of $1.0 million for the six months ended June 30, 2023, a change of $1.1 million. Income in 2024 primarily represents unrealized gains in our investment balances, partially offset by unfavorable foreign currency changes. Expense in 2023 represents unfavorable foreign currency changes, partially offset by the unrealized gains in our investment balances.
Previous wording
The gain on sale of asset of $5.4 million is related to the sale of intellectual property previously used in the Intelligent Audio product line, which is included the CMM segment. For additional information, refer to Note 6. Goodwill and Other Intangible Assets.
Current wording
The gain on sale of asset of $5.4 million is related to the sale of intellectual property previously used in the Intelligent Audio product line, which is included within the CMM segment. For additional information, refer to Note 6. Goodwill and Other Intangible Assets.
Previous wording
(2) Production transfer costs represent duplicate costs incurred to migrate manufacturing to facilities primarily within the United States. These amounts are included in the corresponding Gross profit and Earnings (loss) before interest and income taxes for each period presented.
Current wording
(2) Production transfer costs represent duplicate costs incurred to migrate manufacturing to facilities primarily within the United States. These amounts are included in the corresponding Gross profit and (Loss) earnings before interest and income taxes for each period presented.
Previous wording
(7) The non-GAAP reconciling adjustments are those adjustments made to reconcile Earnings (loss) before interest and income taxes to Adjusted earnings before interest and income taxes.
Current wording
(7) The non-GAAP reconciling adjustments are those adjustments made to reconcile (Loss) earnings before interest and income taxes to Adjusted earnings before interest and income taxes.
Previous wording
PD loss before interest and income taxes was $2.1 million for the first quarter of 2024, compared with earnings of $10.7 million for the first quarter of 2023, a decrease of $12.8 million. EBIT margin for the first quarter of 2024 was (2.8)%, compared to 19.9% for the first quarter of 2023. The decreases were primarily due to lower gross profit margin and increased operating expenses, partially offset by higher revenues. The gross profit margin decrease was primarily driven by lower factory capacity utilization in our legacy PD business, higher restructuring charges, and the acquisition of CD. In addition, gross profit margins decreased as a result of acquisition-related and production transfer costs associated with the CD business. The increase in operating expenses was primarily driven by the acquisition of the CD business, which includes higher intangible amortization expenses.
Current wording
PD Earnings before interest and income taxes ("EBIT") was $4.2 million for the second quarter of 2024, compared with $4.8 million for the second quarter of 2023, a decrease of $0.6 million. EBIT margin for the second quarter of 2024 was 5.7%, compared to 10.0% for the second quarter of 2023. The decreases were primarily due to increased operating expenses, partially offset by higher gross profit. The increase in operating expenses was primarily driven by the acquisition of the CD business, which includes higher intangible amortization expenses of $2.8 million. The gross profit increase was primarily driven by our acquisition of CD, partially offset by lower gross profit margins. The lower gross profit margins were impacted by the acquisition of CD, acquisition-related costs, and production transfer costs.
Previous wording
PD revenues were $74.3 million for the first quarter of 2024, compared with $53.7 million for the first quarter of 2023, an increase of $20.6 million or 38.4%. Revenues increased due to our acquisition of the CD business, partially offset by lower demand from the medtech, industrial, and communication markets in our legacy PD business as a result of continued demand weakness associated with excess customer and channel inventory.
Current wording
PD revenues were $148.4 million for the six months ended June 30, 2024, compared with $101.5 million for the six months ended June 30, 2023, an increase of $46.9 million or 46.2%. Revenues increased due to our acquisition of the CD business, partially offset by lower demand from the industrial, communication, and medtech markets in our legacy PD business as a result of continued demand weakness associated with excess customer and channel inventory.
Previous wording
MSA revenues were $57.1 million for the first quarter of 2024, compared with $45.5 million for the first quarter of 2023, an increase of $11.6 million or 25.5%. Revenues increased primarily due to higher shipping volumes of hearing health products driven by stronger end market demand. In addition, revenues in first quarter of 2023 were unfavorably impacted by financial incentives offered to customers in the fourth quarter of 2022 which resulted in higher shipping volumes in the fourth quarter of 2022 and lower revenues in the first quarter of 2023.
Current wording
MSA revenues were $116.6 million for the six months ended June 30, 2024, compared with $106.1 million for the six months ended June 30, 2023, an increase of $10.5 million or 9.9%. Revenues increased primarily due to higher shipping volumes of hearing health products driven by stronger end market demand, partially offset by lower shipping volumes into the specialty audio market. In addition, revenues in the six months ended June 30, 2023 were unfavorably impacted by financial incentives offered to customers in the fourth quarter of 2022, which resulted in higher shipping volumes in the fourth quarter of 2022 and lower revenues in the first quarter of 2023.
Previous wording
MSA EBIT was $22.7 million for the first quarter of 2024, compared with $11.4 million for the first quarter of 2023, an increase of $11.3 million or 99.1%. EBIT margin for the first quarter of 2024 was 39.8%, compared with 25.1% for the first quarter of 2023. The increases were primarily due to higher revenues and gross profit margins. The higher gross profit margin was driven by favorable product mix and product cost reductions.
Current wording
MSA EBIT was $46.7 million for the six months ended June 30, 2024, compared with $35.0 million for the six months ended June 30, 2023, an increase of $11.7 million or 33.4%. EBIT margin for the six months ended June 30, 2024 was 40.1%, compared with 33.0% for the six months ended June 30, 2023. The increases were primarily due to higher revenues and gross profit margin. The higher gross profit margin was driven by favorable product mix, product cost reductions, and favorable foreign currency changes.
Previous wording
MSA Adjusted EBIT was $23.7 million for the first quarter of 2024, compared with $12.3 million for the first quarter of 2023, an increase of $11.4 million. Adjusted EBIT margin for the first quarter of 2024 was 41.5%, compared to 27.0% for the first quarter of 2023. The increases were primarily due to higher revenues and non-GAAP gross profit margins. The higher non-GAAP gross profit margin was driven by favorable product mix and product cost reductions.
Current wording
MSA Adjusted EBIT was $48.7 million for the six months ended June 30, 2024, compared with $36.7 million for the six months ended June 30, 2023, an increase of $12.0 million. Adjusted EBIT margin for the six months ended June 30, 2024 was 41.8%, compared to 34.6% for the six months ended June 30, 2023. The increases were primarily due to higher revenues and non-GAAP gross profit margin. The higher non-GAAP gross profit margin was driven by favorable product mix, product cost reductions, and favorable foreign currency changes.
Previous wording
CMM revenues were $65.0 million for the first quarter of 2024, compared with $45.1 million for the first quarter of 2023, an increase of $19.9 million or 44.1%. Revenues increased primarily due to higher demand in the ear, mobile, and computing markets, partially offset by lower average pricing on mature products.
Current wording
CMM revenues were $136.1 million for the six months ended June 30, 2024, compared with $109.7 million for the six months ended June 30, 2023, an increase of $26.4 million or 24.1%. Revenues increased primarily due to higher demand in the mobile, ear, IoT, and computing markets, partially offset by lower average pricing on mature products.
Previous wording
CMM Adjusted EBIT was $3.0 million for the first quarter of 2024, compared with a $4.6 million loss for the first quarter of 2023, an increase of $7.6 million. Adjusted EBIT margin for the first quarter of 2024 was 4.6%, compared to (10.2)% for the first quarter of 2023. The increases in Adjusted EBIT were primarily due to higher revenues and higher non-GAAP gross profit margins. The higher non-GAAP gross profit margin was driven by product cost reductions, favorable foreign currency changes, and increased factory capacity utilization, partially offset by lower average pricing on mature products shipped into the mobile market and unfavorable product mix.
Current wording
CMM Adjusted EBIT was $9.2 million for the six months ended June 30, 2024, compared with $3.8 million for the six months ended June 30, 2023, an increase of $5.4 million. Adjusted EBIT margin for the six months ended June 30, 2024 was 6.8%, compared to 3.5% for the six months ended June 30, 2023. The incr eases in Adjusted EBIT were primarily due to higher revenues, partially offset by lower non-GAAP gross profit margin. The lower non-GAAP gross profit margin was driven by lower average pricing on mature products primarily shipped into the mobile market, the decrease in gain on sale of fixed assets, and unfavorable product mix, partially offset by product cost reductions, increased factory capacity utilization, and favorable foreign currency changes.
Previous wording
Due to the global nature of our operations, a significant portion of our cash is generated and typically held outside the United States. Our cash and cash equivalents totaled $122.1 million and $87.3 million at March 31, 2024 and December 31, 2023, respectively. Of these amounts, cash held by our non-U.S. operations totaled$88.1 million and $71.8 million as of March 31, 2024 and December 31, 2023, respectively. To the extent we repatriate these funds to the U.S., we may be required to pay U.S. state income taxes and applicable foreign withholding taxes on those amounts during the period when such repatriation occurs. Management will continue to reassess our need to repatriate the earnings of our foreign subsidiaries. We expect to reduce our cash balance in the second half of the year, primarily driven by the payment of the Seller Note related to the CD acquisition, share repurchases, and debt reduction, partially offset by cash generated from operations.
Current wording
Due to the global nature of our operations, a significant portion of our cash is generated and typically held outside the United States. Our cash and cash equivalents totaled $84.0 million and $87.3 million at June 30, 2024 and December 31, 2023, respectively. Of these amounts, cash held by our non-U.S. operations totaled $34.7 million and $71.8 million as of June 30, 2024 and December 31, 2023, respectively. To the extent we repatriate these funds to the U.S., we may be required to pay U.S. state income taxes and applicable foreign withholding taxes on those amounts during the period when such repatriation occurs. Management will continue to reassess our need to repatriate the earnings of our foreign subsidiaries. We expect to reduce our cash balance in the second half of the year, primarily driven by the payment of the Seller Note related to the CD acquisition and debt reduction, partially offset by cash generated from operations.
Previous wording
On November 1, 2023, we acquired (i) all the issued and outstanding shares of Kaplan Electronics, Inc. and (ii) certain assets of Cornell Dubilier Electronics, Inc. and CD Aero, LLC (collectively, "Cornell Dubilier" or "CD") for aggregate consideration of $259.8 million, which equated to a total fair value of consideration transferred of $246.8 million. This acquisition's operations are included in the PD segment. For additional information, refer to Note 3. Acquisitions to our Consolidated Financial Statements.
Current wording
On November 1, 2023, we acquired (i) all the issued and outstanding shares of Kaplan Electronics, Inc. and (ii) certain assets of Cornell Dubilier Electronics, Inc. and CD Aero, LLC (collectively, "Cornell Dubilier" or "CD") for aggregate consideration of $259.8 million, which equated to a total fair value of consideration transferred of $246.8 million. This acquisition's operations are included in the PD segment. For additional information, refer to Note 3. Acquisition to our Consolidated Financial Statements.
Previous wording
On February 8, 2023, we entered into the A&R Credit Agreement that amends and restates the prior Credit Agreement (the "2020 Credit Agreement"), which provides for a senior secured revolving credit facility with borrowings in an aggregate principal amount at any time outstanding not to exceed $400.0 million. As of March 31, 2024, outstanding borrowings under the Credit Facility were $180.0 million. At any time during the term of the Credit Facility, we will be permitted to increase the commitments under the Credit Facility or to establish one or more incremental term loan facilities under the New Credit Facility in an aggregate principal amount not to exceed $200.0 million for all such incremental facilities. Commitments under the Credit Facility will terminate, and loans outstanding thereunder will mature, on February 8, 2028. For additional information, refer to Note 8. Borrowings to our Consolidated Financial Statements.
Current wording
On February 8, 2023, we entered into the A&R Credit Agreement that amends and restates the prior Credit Agreement (the "2020 Credit Agreement"), which provides for a senior secured revolving credit facility with borrowings in an aggregate principal amount at any time outstanding not to exceed $400.0 million. As of June 30, 2024, outstanding borrowings under the Credit Facility were $146.0 million. At any time during the term of the Credit Facility, we will be permitted to increase the commitments under the Credit Facility or to establish one or more incremental term loan facilities under the New Credit Facility in an aggregate principal amount not to exceed $200.0 million for all such incremental facilities. Commitments under the Credit Facility will terminate, and loans outstanding thereunder will mature, on February 8, 2028. For additional information, refer to Note 8. Borrowings to our Consolidated Financial Statements.
Previous wording
On February 24, 2020, we announced that our Board of Directors had authorized a share repurchase program of up to $100 million of our common stock. On April 28, 2022, we announced that our Board of Directors had increased the authorization by up to $150 million in additional aggregate value. At March 31, 2024, we have $97.7 million remaining that may yet be repurchased under our share repurchase program. The timing and amount of any shares repurchased will be determined by us based on our evaluation of market conditions and other factors, and will be made in accordance with applicable securities laws in either the open market or in privately negotiated transactions. We are not obligated to purchase any shares under the program, and the program may be suspended or discontinued at any time. The actual timing, number, and share price of shares repurchased will depend on a number of factors, including the market price of our common stock, general market and economic conditions, and applicable legal requirements. Any shares repurchased will be held as treasury stock. During the three months ended March 31, 2023, the Company repurchased 433,759 shares of common stock for a total of $7.5 million. The Company did not repurchase any shares of its common stock during the three months ended March 31, 2024.
Current wording
On February 24, 2020, we announced that our Board of Directors had authorized a share repurchase program of up to $100 million of our common stock. On April 28, 2022, we announced that our Board of Directors had increased the authorization by up to $150 million in additional aggregate value. At June 30, 2024, we have $72.7 million remaining that may yet be repurchased under our share repurchase program. The timing and amount of any shares repurchased will be determined by us based on our evaluation of market conditions and other factors, and will be made in accordance with applicable securities laws in either the open market or in privately negotiated transactions. We are not obligated to purchase any shares under the program, and the program may be suspended or discontinued at any time. The actual timing, number, and share price of shares repurchased will depend on a number of factors, including the market price of our common stock, general market and economic conditions, and applicable legal requirements. Any shares repurchased will be held as treasury stock. During the six months ended June 30, 2024 and 2023, the Company repurchased 1,432,989 and 733,438 shares of common stock, respectively, for a total of $25.0 million and of $12.5 million, respectively.
Previous wording
Cash provided by operating activities adjusts net earnings for certain non-cash items, including impairment charges, depreciation expense, amortization of intangible assets, stock-based compensation, changes in deferred income taxes, and the effects of changes in operating assets and liabilities. The decrease in cash provided by operating activities in 2024 as compared to 2023 is primarily due to higher incentive compensation and restructuring payments in 2024.
Current wording
Cash provided by operating activities adjusts net earnings for certain non-cash items, including impairment charges, depreciation expense, amortization of intangible assets, stock-based compensation, changes in deferred income taxes, and the effects of changes in operating assets and liabilities. Excluding non-cash items, the increase in cash provided by operating activities in 2024 is primarily due to an increase in net earnings driven by higher revenues and gross profit. In addition, cash provided by operating activities was favorably impacted by a reduction in working capital, partially offset by higher restructuring and incentive compensation payments in 2024.
Previous wording
The cash provided by investing activities during 2024 was primarily driven by proceeds from the sale of intellectual property. In addition, capital expenditures were lower in 2024 as compared to 2023. The cash used in investing activities during 2023 was primarily driven by capital expenditures to support product innovation and cost savings.
Current wording
The cash provided by investing activities during 2024 was primarily driven by proceeds from the sale of intellectual property. In addition, capital expenditures were lower in 2024 as compared to 2023. The cash provided by investing activities during 2023 was primarily driven by proceeds from the sale of certain machinery and equipment, partially offset by capital expenditures to support product innovation and cost savings.
Previous wording
In 2024, we expect capital expenditures to be in the range of 3.0% to 4.0% of revenues.
Current wording
In 2024, we expect capital expenditures to be in the range of 2.0% to 3.0% of revenues.
Previous wording
Cash provided by financing activities during 2024 was primarily related to the $20.0 million net borrowing of revolving credit facility, partially offset by the $5.8 million payment of taxes related to net share settlement of equity awards. Cash used in financing activities during 2023 was primarily related to the $7.5 million of repurchases of common stock, the $6.0 million payment of taxes related to net share settlement of equity awards, and the $1.6 million payment of debt issuance costs, partially offset by proceeds of $1.4 million from the exercise of options.
Current wording
Cash used in financing activities during 2024 was primarily related to the $25.0 million of repurchases of common stock, the $14.0 million net borrowings of the revolving credit facility, and the $5.9 million payment of taxes related to net share settlement of equity awards. Cash used in financing activities during 2023 was primarily related to the $12.5 million of repurchases of common stock, the $6.1 million payment of taxes related to net share settlement of equity awards, and the $1.9 million payment of debt issuance costs, partially offset by proceeds of $1.6 million from the exercise of options.
Previous wording
The information concerning our critical accounting estimates can be found under Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission on February 21, 2024. The issuance of recent accounting standards, as included in Note 2. Recent Accounting Standards to our Consolidated Financial Statements, is not expected to have a significant impact on our revenue, earnings, or liquidity.
Current wording
The information concerning our critical accounting estimates can be found under Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission on February 21, 2024. There are no material changes in our previously reported critical accounting estimates.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
Gross Profit and Non-GAAP Gross Profit
Current report — wording carried from elsewhere
Research and development expenses for the six months ended June 30, 2024 were $41.5 million, compared with $39.7 million for the six months ended June 30, 2023, an increase of $1.8 million or 4.5%. Research and development expenses as a percentage of revenues for the six months ended June 30, 2024 and 2023 were 10.3% and 12.5%, respectively. The increase in expenses was primarily driven by our acquisition of the CD business that increased expenses in our PD segment, partially offset by reduced spending in our CMM segment driven by the benefits of prior year restructuring actions as we continue to shift our spending to our higher margin businesses. The decrease in expenses as a percentage of revenues was driven by our higher revenues.
Current report — wording carried from elsewhere
Interest expense for the six months ended June 30, 2024 was $9.0 million, compared with $1.6 million for the six months ended June 30, 2023, an increase of $7.4 million. The increase is primarily due to imputed interest expense on our Seller Note from the CD acquisition and a higher outstanding revolving credit facility balance during the six months ended June 30, 2024. For additional information on borrowings and interest expense, refer to Note 8. Borrowings to our Consolidated Financial Statements.
Current report — wording carried from elsewhere
Provision for Income Taxes and Non-GAAP Provision for Income Taxes
Current report — wording carried from elsewhere
The ETR for the six months ended June 30, 2024 and 2023 was (9.4)% and 36.8%, respectively. The ETR for the six months ended June 30, 2024 and 2023 includes discrete items totaling $0.9 million and $0.7 million of tax expense, respectively. The discrete items impacting the tax provision for 2024 and 2023 are primarily attributable to stock-based compensation. Absent the discrete items, the ETR for the six months ended June 30, 2024 and 2023 was (9.0)% and 31.6%, respectively. The Company accrues taxes in various countries where it generates income and applies a valuation allowance in other jurisdictions, which resulted in the provision for the six months ended June 30, 2024 and 2023. The change in the ETR was mainly due to the book goodwill impairment recorded in the second quarter of 2024, as well as the mix of earnings and losses by taxing jurisdictions and net discrete items.
Current report — wording carried from elsewhere
The non-GAAP ETR for the six months ended June 30, 2024 and 2023 was 11.0% and 21.1%, respectively. The non-GAAP ETR includes discrete items totaling $0.8 million and $0.9 million of tax expense for the six months ended June 30, 2024 and 2023, respectively. Absent the discrete items, the non-GAAP ETR for the six months ended June 30, 2024 and 2023 was 9.3% and 18.4%, respectively. The change in the non-GAAP ETR was primarily due to increased utilization of foreign tax credits compared to the prior year.
Current report — wording carried from elsewhere
Diluted (Loss) Earnings per Share and Non-GAAP Diluted Earnings per Share
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
On November 1, 2023, we acquired (i) all the issued and outstanding shares of Kaplan Electronics, Inc. and (ii) certain assets of Cornell Dubilier Electronics, Inc. and CD Aero, LLC (collectively, "Cornell Dubilier" or "CD") for aggregate consideration of $259.8 million, which equated to a total fair value of consideration transferred of $246.8 million. The acquired business is a manufacturer of film, electrolytic, and mica capacitors used in medtech, defense, and industrial electrification applications. The acquisition's operations are included in the PD segment. For additional information, refer to Note 3. Acquisition to our Consolidated Financial Statements under Part I, Item 1, "Financial Statements."