Knowles Corp

Previous 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.

Current wording

Cost of goods sold ("COGS") for the third quarter of 2024 was $79.5 million, compared with $57.5 million for the third quarter of 2023, an increase of $22.0 million or 38.3%. This increase was primarily due to our acquisition of CD and lower factory capacity utilization in our legacy PD business, partially offset by product cost reductions and factory productivity improvements in the legacy PD business.

Previous 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.

Current wording

During the third quarter of 2024, we recorded restructuring charges of $0.1 million within Gross profit for costs associated with transferring certain capacitors manufacturing to existing facilities to further optimize operations, and $0.1 million within Operating expenses related to headcount reductions within the PD segment. For additional information, refer to Note 8. Restructuring and Related Activities to our Consolidated Financial Statements.

Previous wording

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 wording

During the third quarter of 2023, we recorded restructuring charges of $1.3 million for severance pay and benefits related to headcount reductions within our PD segment and $0.4 million in other charges, primarily in Operating expenses. For additional information, refer to Note 8. Restructuring and Related Activities to our Consolidated Financial Statements.

Previous wording

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 wording

Gross profit for the third quarter of 2024 was $62.9 million, compared with $50.4 million for the third quarter of 2023, an increase of $12.5 million or 24.8%. Gross profit margin (gross profit as a percentage of revenues) for the third quarter of 2024 was 44.1%, compared with 46.6% for the third quarter of 2023. The increase in gross profit was primarily due to our acquisition of CD. The decrease in gross profit margin was primarily due to the impacts of the acquisition of CD. Excluding the impacts of CD, gross profit margins increased primarily due to product cost reductions and factory productivity improvements in our legacy PD business, partially offset by lower factory capacity utilization in our legacy PD business and lower average pricing on mature products in our MSA business.

Previous 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.

Current wording

Research and development expenses for the third quarter of 2024 were $10.2 million, compared with $8.1 million for the third quarter of 2023, an increase of $2.1 million or 25.9%. Research and development expenses as a percentage of revenues for the third quarter of 2024 and 2023 were 7.2% and 7.5%, respectively. The increase in expenses was primarily driven by our acquisition of the CD business that increased expenses in our PD segment. The decrease in expenses as a percentage of revenues was driven by our acquisition of the CD business.

Previous 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.

Current wording

Interest expense for the third quarter of 2024 was $3.9 million, compared with $0.6 million for the third quarter of 2023, an increase of $3.3 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 third quarter of 2024. For additional information on borrowings and interest expense, refer to Note 9. Borrowings to our Consolidated Financial Statements.

Previous wording

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 wording

Other expense for the third quarter of 2024 was $2.6 million, compared with income of $0.5 million for the third quarter of 2023, a change of $3.1 million. Expense in 2024 primarily represents unfavorable foreign currency changes. Income in the third quarter of 2023 represents favorable foreign currency changes.

Previous wording

Provision for Income Taxes and Non-GAAP Provision for Income Taxes

Current wording

Provision for (Benefit from) Income Taxes and Non-GAAP Provision for Income Taxes

Previous 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.

Current wording

The effective tax rate ("ETR") from continuing operations for the third quarter of 2024 and 2023 was 24.6% and (34.5)%, respectively. The ETR from continuing operations for the third quarter of 2024 includes discrete items totaling $0.7 million of tax benefit primarily attributable to stock-based compensation and the deferred tax impact of a tax rate change. The ETR from continuing operations for the third quarter of 2023 includes discrete items totaling $0.3 million of tax benefit primarily attributable to stock-based compensation and the recognition of foreign tax credits resulting from the release of IRS Notice 2023-55. Absent the discrete items, the ETR from continuing operations for the third quarter of 2024 and 2023 was 30.3% and (31.9)%, 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 and benefit for the third quarter of 2024 and 2023, respectively. The change in the ETR was mainly due to the impact of intangible property transfers in 2023, the mix of earnings and losses by taxing jurisdictions, and net discrete items.

Previous 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.

Current wording

The non-GAAP ETR from continuing operations for the third quarter of 2024 and 2023 was 7.3% and 21.7%, respectively. The non-GAAP ETR from continuing operations includes discrete items totaling $0.9 million of tax benefit and no discrete impact for the three months ended September 30, 2024 and 2023, respectively. Absent the discrete items, the non-GAAP ETR from continuing operations for the third quarter of 2024 and 2023 was 10.7% and 21.7%, 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

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.

Current wording

Adjusted earnings before interest and income taxes ("Adjusted EBIT") from continuing operations for the third quarter of 2024 was $30.0 million, compared with $24.6 million for the third quarter of 2023, an increase of $5.4 million. Adjusted EBIT margin (Adjusted EBIT from continuing operations as a percentage of revenues) for the third quarter of 2024 was 21.1%, compared with 22.8% for the third 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, and unfavorable foreign currency changes. The decrease in Adjusted EBIT margin was primarily due to higher non-GAAP operating expenses, the impacts of the acquisition of CD on gross margins, and unfavorable foreign currency changes, partially offset by higher gross profit.

Previous wording

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 wording

Non-GAAP diluted earnings per share from continuing operations was $0.26 for the third quarter of 2024, compared with $0.20 for the third quarter of 2023, an increase of $0.06. 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, interest expense, and unfavorable foreign currency changes.

Previous 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.

Current wording

Revenues for the nine months ended September 30, 2024 were $411.0 million, compared with $317.6 million for the nine months ended September 30, 2023, an increase of $93.4 million or 29.4%. PD revenues increased $75.5 million due to our acquisition of the CD 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. MSA revenues increased $17.9 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 and lower average pricing on mature products. In addition, revenues in the nine months ended September 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 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.

Current wording

During the nine months ended September 30, 2024, we recorded restructuring charges of $1.8 million related to headcount reductions and $1.1 million for costs associated with transferring certain capacitors manufacturing to existing facilities to further optimize operations within our PD segment. These actions resulted in restructuring charges of $1.4 million within Gross profit and $1.5 million within Operating expenses. For additional information, refer to Note 8. Restructuring and Related Activities to our Consolidated Financial Statements.

Previous wording

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 wording

During the nine months ended September 30, 2023, we recorded restructuring charges of $0.2 million within Gross profit and $1.1 million within Operating expenses for severance pay and benefits related to headcount reductions within our PD segment, and $0.7 million for other costs. For additional information, refer to Note 8. Restructuring and Related Activities to our Consolidated Financial Statements.

Previous wording

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 wording

Research and development expenses for the nine months ended September 30, 2024 were $29.2 million, compared with $24.0 million for the nine months ended September 30, 2023, an increase of $5.2 million or 21.7%. Research and development expenses as a percentage of revenues for the nine months ended September 30, 2024 and 2023 were 7.1% and 7.6%, respectively. The increase in expenses was primarily driven by our acquisition of the CD business, which increased expenses in our PD segment. The decrease in expenses as a percentage of revenues was driven by our acquisition of the CD business.

Previous wording

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 wording

Interest expense for the nine months ended September 30, 2024 was $12.9 million, compared with $2.2 million for the nine months ended September 30, 2023, an increase of $10.7 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 nine months ended September 30, 2024. For additional information on borrowings and interest expense, refer to Note 9. Borrowings to our Consolidated Financial Statements.

Previous wording

Provision for Income Taxes and Non-GAAP Provision for Income Taxes

Current wording

Provision for (Benefit from) Income Taxes and Non-GAAP Provision for Income Taxes

Previous wording

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 wording

The ETR from continuing operations for the nine months ended September 30, 2024 and 2023 was 38.1% and (32.7)%, respectively. The ETR from continuing operations for the nine months ended September 30, 2024 and 2023 includes discrete items totaling $0.3 million of tax benefit and $0.3 million of tax expense, respectively. The discrete items impacting the tax provision for the nine months ended September 30, 2024 are primarily attributable to stock-based compensation and the deferred tax impact of a tax rate change. The ETR from continuing operations for the nine months ended September 30, 2023 includes discrete items totaling $0.3 million of tax expense primarily attributable to stock-based compensation and the recognition of foreign tax credits resulting from the release of IRS Notice 2023-55 Absent the discrete items, the ETR from continuing operations for the nine months ended September 30, 2024 and 2023 was 39.5% and (33.7)%, 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 and benefit for the nine months ended September 30, 2024 and 2023, respectively. The change in the ETR was mainly due to the impact of intangible property transfers in 2023, the mix of earnings and losses by taxing jurisdictions, and net discrete items.

Previous wording

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 wording

The non-GAAP ETR from continuing operations for the nine months ended September 30, 2024 and 2023 was 9.1% and 23.0%, respectively. The non-GAAP ETR from continuing operations includes discrete items totaling $0.9 million of a tax benefit and $0.9 million of tax expense for the nine months ended September 30, 2024 and 2023, respectively. Absent the discrete items, the non-GAAP ETR from continuing operations for the nine months ended September 30, 2024 and 2023 was 10.5% and 21.5%, 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

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 wording

Earnings from continuing operations for the nine months ended September 30, 2024 was $13.0 million, compared with $39.0 million for the nine months ended September 30, 2023, a decrease of $26.0 million. As described above, the decrease is primarily due to higher operating expenses, income tax expense in 2024 compared to a benefit in 2023, higher interest expense, and unfavorable foreign currency exchange rate changes, partially offset by higher gross profit.

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 (Loss) earnings 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 Earnings from continuing operations before interest and income taxes for each period presented.

Previous 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.

Current wording

(6) The non-GAAP reconciling adjustments are those adjustments made to reconcile Earnings from continuing operations before interest and income taxes to Adjusted earnings from continuing operations before interest and income taxes.

Previous wording

The following is a summary of the results of operations of our three reportable segments: Precision Devices, Medtech & Specialty Audio, and Consumer MEMS Microphones.

Current wording

The following is a summary of the results of operations of our two reportable segments: Precision Devices and Medtech & Specialty Audio.

Previous wording

See Note 14. Segment Information to the Consolidated Financial Statements for (i) a reconciliation of segment revenues to our consolidated revenues and (ii) a reconciliation of segment earnings before interest and income taxes to our consolidated earnings.

Current wording

See Note 15. Segment Information to the Consolidated Financial Statements for (i) a reconciliation of segment revenues to our consolidated revenues and (ii) a reconciliation of segment earnings from continuing operations before interest and income taxes to our consolidated earnings from continuing operations.

Previous 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.

Current wording

PD EBIT was $8.4 million for the third quarter of 2024, compared with $6.1 million for the third quarter of 2023, an increase of $2.3 million. EBIT margin for the third quarter of 2024 was 10.7%, compared to 12.2% for the third quarter of 2023. The increase in EBIT is primarily due to higher gross profit, partially offset by higher operating expenses. The increase in operating expenses was primarily driven by the acquisition of the CD business, which includes higher intangible amortization expenses of $2.7 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 primarily impacted by the acquisition of CD. Excluding the impacts of CD, gross profit margins increased primarily due to product cost reductions and factory productivity improvements, partially offset by lower factory capacity utilization.

Previous wording

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 wording

PD Adjusted EBIT was $16.1 million for the third quarter of 2024, compared with $9.7 million for the third quarter of 2023, an increase of $6.4 million. Adjusted EBIT margin for the third quarter of 2024 was 20.4%, compared with 19.3% for the third 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 primarily impacted by the acquisition of CD. Excluding the impacts of CD, non-GAAP gross profit margins increased primarily due to product cost reductions and factory productivity improvements, partially offset by lower factory capacity utilization.

Previous wording

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 wording

MSA revenues were $63.7 million for the third quarter of 2024, compared with $57.9 million for the third quarter of 2023, an increase of $5.8 million or 10.0%. Revenues increased primarily higher due to higher shipping volumes of hearing health products driven by stronger end market demand and higher shipping volumes into the specialty audio market, partially offset by lower average pricing on mature products.

Previous 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.

Current wording

PD revenues were $227.2 million for the nine months ended September 30, 2024, compared with $151.7 million for the nine months ended September 30, 2023, an increase of $75.5 million or 49.8%. Revenues increased due to our acquisition of the CD 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.

Previous wording

PD EBIT was $2.1 million for the six months ended June 30, 2024, compared with $15.5 million for the six months ended June 30, 2023, a decrease of $13.4 million. EBIT margin for the six months ended June 30, 2024 was 1.4%, compared to 15.3% for the six months ended June 30, 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 $5.8 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, lower factory capacity utilization in our legacy PD business, restructuring charges, and production transfer costs.

Current wording

PD EBIT was $10.5 million for the nine months ended September 30, 2024, compared with $21.6 million for the nine months ended September 30, 2023, a decrease of $11.1 million. EBIT margin for the nine months ended September 30, 2024 was 4.6%, compared to 14.2% for the nine months ended September 30, 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 $8.5 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 lower factory capacity utilization in our legacy PD business, the acquisition of CD, production transfer costs, and the amortization of fair value adjustments to inventory for the CD acquisition, partially offset by product cost reductions and factory productivity improvements in our legacy PD business.

Previous wording

PD Adjusted EBIT was $21.6 million for the six months ended June 30, 2024, compared with $20.3 million for the six months ended June 30, 2023, an increase of $1.3 million. Adjusted EBIT margin for the six months ended June 30, 2024 was 14.6%, compared with 20.0% for the six months ended June 30, 2023. The increase in Adjusted EBIT was primarily due to higher revenues and non-GAAP gross profit, partially offset by higher non-GAAP operating expenses and lower non-GAAP gross profit margins. The decrease in adjusted EBIT margin was primarily due to higher non-GAAP operating expenses and lower non-GAAP gross profit margins. The increase in operating expenses was primarily driven by the acquisition of the CD business. The lower non-GAAP gross profit margins were impacted by the acquisition of CD and lower factory capacity utilization in our legacy PD business.

Current wording

PD Adjusted EBIT was $37.7 million for the nine months ended September 30, 2024, compared with $30.0 million for the nine months ended September 30, 2023, an increase of $7.7 million. Adjusted EBIT margin for the nine months ended September 30, 2024 was 16.6%, compared with 19.8% for the nine months ended September 30, 2023. The increase in Adjusted EBIT was primarily due to higher non-GAAP gross profit, partially offset by higher non-GAAP operating expenses and lower non-GAAP gross profit margins. The decrease in adjusted EBIT margin was primarily due to higher non-GAAP operating expenses and lower non-GAAP gross profit margins. The increase in operating expenses was primarily driven by the acquisition of the CD business. The lower non-GAAP gross profit margins were impacted by the acquisition of CD and lower factory capacity utilization in our legacy PD business, partially offset by product cost reductions and factory productivity improvements in our legacy PD business.

Previous 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.

Current wording

MSA revenues were $183.8 million for the nine months ended September 30, 2024, compared with $165.9 million for the nine months ended September 30, 2023, an increase of $17.9 million or 10.8%. 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 and lower average pricing on mature products. In addition, revenues in the nine months ended September 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

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.

Current wording

Due to the global nature of our operations, a portion of our cash is generated and typically held outside the United States. Our cash and cash equivalents totaled $92.6 million and $87.3 million at September 30, 2024 and December 31, 2023, respectively. Of these amounts, cash held by our non-U.S. operations totaled $32.7 million and $71.8 million as of September 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 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.

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 September 30, 2024, outstanding borrowings under the Credit Facility were $108.0 million. At any time during the term of the Credit Facility, we will be permitted to request an increase to the commitments under the Credit Facility to establish one or more incremental term loans or revolving credit facilities 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 9. 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 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.

Current wording

On February 24, 2020, we announced that our Board of Directors had authorized a share repurchase program of up to $100.0 million of our common stock. On April 28, 2022, we announced that our Board of Directors had increased the authorization by up to $150.0 million in additional aggregate value. At September 30, 2024, we have $68.2 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 nine months ended September 30, 2024 and 2023, the Company repurchased 1,686,253 and 1,630,161 shares of common stock, respectively, for a total of $29.5 million and of $27.5 million, respectively.

Previous wording

Cash flows from operating, investing, and financing activities as reflected in our Consolidated Statements of Cash Flows are summarized in the following table:

Current wording

Cash flows from operating, investing, and financing activities as reflected in our Consolidated Statements of Cash Flows and are presented on a consolidated basis, including discontinued operations. Cash flows are summarized in the following table:

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. 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.

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. The increase was 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 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.

Current wording

The cash used in investing activities during 2024 was primarily driven by capital expenditures, which were lower in 2024 as compared to 2023, offset by proceeds from the sale of intellectual property. 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

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.

Current wording

Cash used in financing activities during 2024 was primarily related to the $29.5 million of repurchases of common stock, the $52.0 million net payments on the revolving credit facility, the $6.4 million payment of taxes related to net share settlement of equity awards, and partially offset by proceeds of $2.1 million from the exercise of options. Cash used in financing activities during 2023 was primarily related to the $27.5 million of repurchases of common stock, the $6.2 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.