Knowles Corp
For the period ended Mar 31, 2025. Filed Apr 29, 2025.
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.
Mar 31, 2025 · Filed Apr 29, 2025
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 2024-09-30; filed 2024-10-29.
0001587523-24-000083
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-04-29.
0001587523-25-000037
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 125 previous paragraphs and 88 current paragraphs.
41 unchanged; 25 reworded; 22 added; 53 removed; 6 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 6 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 (22)
Current report
On April 2, 2025, the U.S. announced a new universal baseline tariff of 10%, plus an additional country-specific tariff for select trading partners, on all U.S. imports. These actions, and retaliatory tariffs imposed by foreign jurisdictions, has resulted in market volatility and uncertainty regarding the ultimate effect of the tariffs on global economic conditions. Based on a preliminary analysis, we do not anticipate that these factors will have a material impact on our operations; however, we continue to monitor changes in international trade relations and trade policy, including those related to tariffs, which could adversely impact our results. We are optimizing operations and leveraging existing programs and strategies to reduce the impact from tariffs. Additionally, we are taking measures to control costs and implementing pricing actions designed to mitigate the risk these policies may have on our revenues and operations.
Current report
As inventory levels in the industrial markets have recently begun to normalize, our Precision Devices segment has experienced increased distribution orders for the past two quarters. In addition, with bookings increasing we have seen backlog across our capacitor products increase for the past two quarters.
Current report
Revenues for the first quarter of 2025 were $132.2 million, compared with $133.3 million for the first quarter of 2024, a decrease of $1.1 million or 0.8%. PD revenues decreased$1.8 million due to lower demand from the industrial market in our CD business and the defense market in our legacy PD business, partially offset by higher demand from the medtech market in our legacy PD business. MSA revenues increased $0.7 million, primarily due to higher shipping volumes of metal cans within the specialty audio market that we manufacture and sell to Syntiant as part of our supply agreement associated with the sale of CMM, partially offset by lower shipping volumes of hearing health products and unfavorable customer mix.
Current report
Cost of goods sold ("COGS") for the first quarter of 2025 was $78.4 million, compared with $79.1 million for the first quarter of 2024, a decrease of $0.7 million or 0.9%. This decrease was primarily due to a reduction of CD related acquisition and production transfer costs, lower shipping volumes, and Company-wide product cost reductions, partially offset by unfavorable product mix, the absence of a one-time benefit in our MSA business recorded in the prior year, and inefficiencies in our CD business as we ramp up our specialty film product line.
Current report
During the first quarter of 2025, we recorded restructuring charges of $0.5 million within Gross profit and $2.4 million within Operating expenses related to headcount reductions across the Company to rightsize operating expenses subsequent to the sale of the CMM business. For additional information, refer to Note 7. Restructuring and Related Activities to our Consolidated Financial Statements.
Current report
Gross profit for the first quarter of 2025 was $53.3 million, compared with $53.2 million for the first quarter of 2024, an increase of $0.1 million or 0.2%. Gross profit margin (gross profit as a percentage of revenues) for the first quarter of 2025 was 40.3%, compared with 39.9% for the first quarter of 2024. The increases were primarily due to a reduction of CD related acquisition and production transfer costs, along with Company-wide product cost reductions, partially offset by unfavorable product mix, the absence of a one-time benefit in our MSA business recorded in the prior year, and production inefficiencies in our CD business as we ramp up our specialty film product line.
Current report
Non-GAAP gross profit for the first quarter of 2025 was $55.0 million, compared with $57.9 million for the first quarter of 2024, a decrease of $2.9 million or 5.0%. Non-GAAP gross profit margin (non-GAAP gross profit as a percentage of revenues) for the first quarter of 2025 was 41.6%, compared with 43.4% for the first quarter of 2024. The decreases were primarily due to unfavorable product mix, the absence of a one-time benefit in our MSA business recorded in the prior year, and production inefficiencies in our CD business as we ramp up our specialty film product line, partially offset by Company-wide product cost reductions.
Current report
Research and development expenses for the first quarter of 2025 were $9.7 million, compared with $9.4 million for the first quarter of 2024, an increase of $0.3 million or 3.2%. Research and development expenses as a percentage of revenues for the first quarter of 2025 and 2024 were 7.3% and 7.1%, respectively. The increase in expenses and as a percentage of revenues was primarily driven by increased development activities in both our PD and MSA segments as we continue to invest in our businesses.
Current report
Loss from Continuing Operations
Current report
Loss from continuing operations for the first quarter of 2025 was $0.4 million, compared with $1.0 million for the first quarter of 2024, an improvement of $0.6 million. As described above, the improvement is primarily due to lower interest and income tax expense, partially offset by higher operating expenses and other expense in the first quarter of 2025 compared to other income for the first quarter of 2024.
Current report
Loss from discontinued operations for the first quarter of 2025 was $1.6 million, compared with earnings of $3.5 million for the first quarter of 2024, a decrease of $5.1 million. Loss from discontinued operations for the first quarter of 2025 was primarily driven by unfavorable working capital adjustments. Earnings from discontinued operations for the first quarter of 2024 was primarily driven by the gain on sale of asset, partially offset by income tax expense and additional expenses in connection with the sale of the CMM business. For additional information, refer to Note 3. Discontinued Operations to our Consolidated Financial Statements.
Current report
Diluted loss per share from continuing operations was nil for the first quarter of 2025, compared with a loss of $0.01 for the first quarter of 2024, an improvementof $0.01. As described above, the improvement is primarily due to lower interest and income tax expense, partially offset by higher operating expenses and other expense in the first quarter of 2025 compared to other income for the first quarter of 2024.
Current report
(4) Transition services represent amounts charged to Syntiant in connection with post-closing transition and separation costs
Current report
(8) Non-GAAP diluted earnings per share includes reconciling adjustments on non-GAAP net earnings.
Current report
PD revenues were $72.5 million for the first quarter of 2025, compared with $74.3 million for the first quarter of 2024, a decrease of $1.8 million or 2.4%. Revenues decreaseddue to lower demand from the industrial market in our CD business and the defense market in our legacy PD business, partially offset by higher demand from the medtech market in our legacy PD business.
Current report
PD EBIT was $3.2 million for the first quarter of 2025, compared with a loss of $2.1 million for the first quarter of 2024, an increase of $5.3 million. EBIT margin for the first quarter of 2025 was 4.4%, compared to (2.8)% for the first quarter of 2024. The increases were primarily due to lower operating expenses and higher gross profit. The decrease in operating expenses was primarily driven by lower acquisition-related costs, intangible amortization, and the benefits of restructuring actions, partially offset by higher stock-based compensation. The gross profit increase was primarily driven by a reduction of CD related acquisition and production transfer costs, product cost reductions, and lower restructuring charges, partially offset by unfavorable product mix and production inefficiencies in our CD business as we ramp up our specialty film product line.
Current report
PD Adjusted EBIT was $10.7 million for the first quarter of 2025, compared with $9.8 million for the first quarter of 2024, an increase of $0.9 million. Adjusted EBIT margin for the first quarter of 2025 was 14.8%, compared with 13.2% for the first quarter of 2024. The increases were primarily due to lower non-GAAP operating expenses, partially offset by lower non-GAAP gross profit. The decrease in non-GAAP operating expenses was primarily driven by the benefits of restructuring actions. The non-GAAP gross profit decrease was primarily driven by unfavorable product mix and production inefficiencies in our CD business as we ramp up our specialty film product line, partially offset by product cost reductions.
Current report
MSA revenues were $59.7 million for the first quarter of 2025, compared with $59.0 million for the first quarter of 2024, an increase of $0.7 million or 1.2%. Revenues increased primarily due to higher shipping volumes of metal cans within the specialty audio market that we manufacture and sell to Syntiant as part of our supply agreement associated with the sale of CMM, partially offset by lower shipping volumes of hearing health products and unfavorable customer mix.
Current report
MSA EBIT was $19.3 million for the first quarter of 2025, compared with $22.8 million for the first quarter of 2024, a decrease of $3.5 million or 15.4%. EBIT margin for the first quarter of 2025 was 32.3%, compared with 38.6% for the first quarter of 2024. The decreases were primarily due to lower gross profit and higher operating expenses. The gross profit decrease was primarily due to unfavorable product mix, the absence of a one-time benefit recorded in the prior year, and the impact of higher shipping volumes of our lower margin metal can products to Syntiant, partially offset by product cost reductions. The increase in operating expenses was primarily driven by higher stock-based compensation.
Current report
MSA Adjusted EBIT was $21.3 million for the first quarter of 2025, compared with $23.8 million for the first quarter of 2024, a decrease of $2.5 million. Adjusted EBIT margin for the first quarter of 2025 was 35.7%, compared to 40.3% for the first quarter of 2024. The decreases were primarily due to lower non-GAAP gross profit driven by unfavorable product mix, the absence of a one-time benefit recorded in the prior year, and the impact of higher shipping volumes of our lower margin metal can products to Syntiant, partially offset by product cost reductions.
Current report
On December 27, 2024, we completed the sale of the CMM segment to Syntiant for approximately $141.9 million in total consideration, consisting of $63.6 million in cash ($58.0 million net of cash sold), $1.1 million for estimated purchase price adjustments, and Series D-2 preferred stock of Syntiant with a fair value of $77.2 million. For additional information, refer to Note 3. Discontinued Operations to our Consolidated Financial Statements. We will also share in certain separation costs pursuant to a credit for up to $13.5 million, which the buyer may apply to specified separation costs post-closing. For additional information, refer to Note 1. Basis of Presentation.
Current report
In 2025 we generated adjusted free cash flow of $18.3 million compared to adjusted free cash flow of $13.3 million in 2024. The increase in adjusted free cash flow in 2025 was primarily due to customer prepayments of $19.8 million, lower incentive compensation payments and reduced restructuring payments, partially offset by unfavorable changes in working capital and accruals driven by the timing of collections and payments.
Removed paragraphs (53)
Previous report
Revenues for the third quarter of 2024 were $142.5 million, compared with $108.1 million for the third quarter of 2023, an increase of $34.4 million or 31.8%. PD revenues increased$28.6 million due to our acquisition of the CD business. However, our legacy PD business experienced lower demand from the industrial and communication markets as a result of continued demand weakness associated with excess customer and channel inventory, partially offset by higher demand from the defense and medtech markets. MSA revenues increased $5.8 million, primarily 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 report
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 report
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 report
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 report
Non-GAAP gross profit for the third quarter of 2024 was $64.8 million, compared with $50.9 million for the third quarter of 2023, an increase of $13.9 million or 27.3%. Non-GAAP gross profit margin (non-GAAP gross profit as a percentage of revenues) for the third quarter of 2024 was 45.5%, compared with 47.1% for the third quarter of 2023. The increase in non-GAAP gross profit was primarily due to our acquisition of CD. The decrease in non-GAAP gross profit marginwas primarily due to the impacts of 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 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 report
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 report
Earnings from Continuing Operations
Previous report
Earnings from continuing operations for the third quarter of 2024 was $9.2 million, compared with $15.2 million for the third quarter of 2023, a decrease of $6.0 million. As described above, the decrease is primarily due to income tax expense in the third quarter of 2024 compared to a benefit for the third quarter of 2023, along with higher operating expenses, interest expense, and unfavorable foreign currency changes, partially offset by higher gross profit.
Previous report
Loss from discontinued operations for the third quarter of 2024 was $8.7 million, compared with earnings of $1.4 million for the third quarter of 2023, a decrease of $10.1 million. The change in discontinued operations was primarily driven by our goodwill impairment and loss on disposal of business related to the pending divestiture of CMM, partially offset by favorable income tax changes. For additional information, refer to Note 3. Discontinued Operations to our Consolidated Financial Statements.
Previous report
Diluted earnings per share from continuing operations was $0.10 for the third quarter of 2024, compared with $0.17 for the third quarter of 2023, a decrease of $0.07. As described above, the decrease is primarily due to income tax expense in the third quarter of 2024 compared to a benefit for the third quarter of 2023, along with higher operating expenses, interest expense, and unfavorable foreign currency changes, partially offset by higher gross profit.
Previous report
Results of Operations for the Nine Months Ended September 30, 2024 compared with the Nine Months Ended September 30, 2023
Previous report
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 report
Cost of Goods Sold
Previous report
COGS for the nine months ended September 30, 2024 was $235.7 million, compared with $172.2 million for the nine months ended September 30, 2023, an increase of $63.5 million or 36.9%. This increase was primarily due to our acquisition of CD, lower factory capacity utilization in our legacy PD business, partially offset by product cost reductions and favorable MSA product mix.
Previous report
Restructuring Charges
Previous report
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 report
Gross profit for the nine months ended September 30, 2024 was $173.9 million, compared with $145.2 million for the nine months ended September 30, 2023, an increase of $28.7 million or 19.8%. Gross profit margin for the nine months ended September 30, 2024 was 42.3%, compared with 45.7% for the nine months ended September 30, 2023. The increase in gross profit was primarily due to our acquisition of CD, product cost reductions, higher shipping volumes, and favorable MSA product mix, partially offset by lower factory capacity utilization in our legacy PD business, production transfer costs, theamortization of fair value adjustments to inventory for the CD acquisition, andlower average pricing on mature products in our MSA business. The decrease in gross profit margin was primarily due toimpacts of the acquisition of CD. Excluding the impacts of CD, gross profit margins increased primarily due to product cost reductions and favorable MSA product mix, partially offset by lower factory capacity utilization in our legacy PD business, production transfer costs, the amortization of fair value adjustments to inventory for the CD acquisition, andlower average pricing on mature products in our MSA business.
Previous report
Non-GAAP gross profit for the nine months ended September 30, 2024 was $182.5 million, compared with $146.7 million for the nine months ended September 30, 2023, an increase of $35.8 million or 24.4%. Non-GAAP gross profit margin for the nine months ended September 30, 2024 was 44.4%, compared with 46.2% for the nine months ended September 30, 2023. The increase in non-GAAP gross profit was primarily due to our acquisition of CD, product cost reductions, higher shipping volumes, and favorable MSA product mix, partially offset bylower factory capacity utilization in our legacy PD business andlower average pricing on mature products in our MSA business. The decrease innon-GAAP gross profit margin was primarily due to impacts of the acquisition of CD. Excluding the impacts of CD, non-GAAP gross profit margins increased primarily due to product cost reductions and favorable MSA product mix, partially offset by lower factory capacity utilization in our legacy PD business andlower average pricing on mature products in our MSA business.
Previous report
Research and Development Expenses
Previous report
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 report
Selling and Administrative Expenses
Previous report
Selling and administrative expenses for the nine months ended September 30, 2024 were $106.8 million, compared with $87.3 million for the nine months ended September 30, 2023, an increase of $19.5 million or 22.3%. Selling and administrative expenses as a percentage of revenues for the nine months ended September 30, 2024 and 2023 were 26.0% and 27.5%, respectively. The increase in expenses was primarily driven by our acquisition of CD, partially offset by lower professional fees and the benefits of PD restructuring actions taken in the prior year. The decrease in expenses as a percentage of revenues was driven by higher revenues.
Previous report
Interest Expense, net
Previous report
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 report
Other Expense, net
Previous report
Other expense for the nine months ended September 30, 2024 was $2.5 million, compared with $0.5 million for the nine months ended September 30, 2023, a change of $2.0 million. The change is primarily due to unfavorable foreign currency exchange rate changes.
Previous report
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 report
Earnings from Continuing Operations
Previous report
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 report
EBIT from continuing operations for the nine months ended September 30, 2024 was $33.9 million, compared with $31.6 million for the nine months ended September 30, 2023, an increase of $2.3 million. EBIT margin for the nine months ended September 30, 2024 was 8.2%, compared with 9.9% for the nine months ended September 30, 2023. The increase in EBIT is primarily due to higher gross profit, partially offset by higher operating expenses and unfavorable foreign currency exchange rate changes. The decrease in EBIT margin is primarily due to higher operating expenses, impacts of the acquisition of CD on gross margins, and unfavorable foreign currency exchange rate changes, partially offset by higher gross profit.
Previous report
Adjusted EBIT from continuing operations for the nine months ended September 30, 2024 was $78.5 million, compared with $59.5 million for the nine months ended September 30, 2023, an increase of $19.0 million. Adjusted EBIT margin for the nine months ended September 30, 2024 was 19.1%, compared with 18.7% for the nine months ended September 30, 2023. The increase in Adjusted EBIT is primarily due to higher non-GAAP gross profit, partially offset by higher non-GAAP operating expenses and unfavorable foreign currency exchange rate changes. The increase in Adjusted EBIT margin was primarily due to higher non-GAAP gross profit, partially offset by higher non-GAAP operating expenses, impacts of the acquisition of CD on gross margins, and unfavorable foreign currency changes.
Previous report
Loss from discontinued operations for the nine months ended September 30, 2024 was $269.3 million, compared with a loss of $14.0 million for the nine months ended September 30, 2023. The change in discontinued operations was primarily driven by our goodwill impairment and loss on disposal of business related to the pending divestiture of CMM, partially offset by favorable income tax changes. For additional information, refer to Note 3. Discontinued Operations to our Consolidated Financial Statements.
Previous report
Diluted earnings per share was $0.14 for the nine months ended September 30, 2024, compared with $0.42 for the nine months ended September 30, 2023, a decrease of $0.28. 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 report
Non-GAAP diluted earnings per share was $0.64 for the nine months ended September 30, 2024, compared with $0.47 for the nine months ended September 30, 2023, an increase of $0.17. As described above, the increase was primarily due to higher non-GAAP gross profit, partially offset by higher non-GAAP operating expenses, interest expense, and unfavorable foreign currency exchange rate changes.
Previous report
PD revenues were $78.8 million for the third quarter of 2024, compared with $50.2 million for the third quarter of 2023, an increase of $28.6 million or 57.0%. Revenues increaseddue to our acquisition of the CD business. In addition, our legacy PD business experienced lower demand from the industrial and communication markets as a result of continued demand weakness associated with excess customer and channel inventory, partially offset by higher demand from the defense and medtech markets.
Previous report
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 report
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 report
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 report
MSA EBIT was $25.0 million for the third quarter of 2024, compared with $22.3 million for the third quarter of 2023, an increase of $2.7 million or 12.1%. EBIT margin for the third quarter of 2024 was 39.2%, compared with 38.5% for the third quarter of 2023. The increase in EBIT is primarily due to higher gross profit, driven by higher shipping volumes. The increase in EBIT margin is primarily due to improved operating leverage, partially offset by lower gross profit margins driven by lower average pricing on mature products and unfavorable product mix.
Previous report
MSA Adjusted EBIT was $26.1 million for the third quarter of 2024, compared with $23.2 million for the third quarter of 2023, an increase of $2.9 million. Adjusted EBIT margin for the third quarter of 2024 was 41.0%, compared to 40.1% for the third quarter of 2023. The increase in Adjusted EBIT is primarily due to higher non-GAAP gross profit, driven by higher shipping volumes. The higher adjusted EBIT margin is primarily due to improved operating leverage, partially offset by lower non-GAAP gross profit margins driven by lower average pricing on mature products and unfavorable product mix.
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Reworded paragraphs (25)
Previous 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.
Current wording
We are a leading manufacturer of specialty electronic components. We design parts that perform unique and critical functions for innovative technologies. Through extreme reliability, custom engineering, and scalable manufacturing, we enable businesses to succeed in the most demanding applications across medtech, defense, and industrial markets. Our high performance capacitors, radio frequency ("RF") and microwave filters, advanced medtech microphones, and balanced armature speakers, enhance the performance of our customers products to change, improve, and save lives. 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, 2024, we entered into a definitive agreement to sell and assign certain assets and liabilities of the Company’s Consumer MEMS Microphones (“CMM”) business to Syntiant Corp. ("Syntiant") for approximately $150.0 million in total consideration, consisting of $70.0 million in cash, subject to customary working capital and inventory adjustments, and $80.0 million in Syntiant Series D-2 preferred stock, to be issued upon the closing of this transaction. The Company will also share in certain separation costs pursuant to a credit for up to $13.5 million, which Syntiant may apply to specified separation costs post-closing. In addition, the Company has committed to provide, under certain circumstances, up to $15.0 million in financing in connection with Syntiant's obligation to have $40.0 million of cash on the balance sheet, which financing would be junior to Syntiant's debt financing. The consummation of the transaction is not subject to a financing condition, but is subject to customary closing conditions. The transaction is expected to close in the fourth quarter of 2024. For additional information, refer to Note 3. Discontinued Operations to our Consolidated Financial Statements under Part I, Item 1, "Financial Statements."
Current wording
On December 27, 2024, the Company consummated the sale and assignment of certain assets and liabilities of the Company’s Consumer MEMS Microphones ("CMM") business to Syntiant Corp. ("Syntiant") for approximately $150.0 million in total consideration, consisting of $70.0 million cash ($58.0 million in net cash received) as adjusted for agreed deductions for indebtedness, and working capital and $80.0 million in Syntiant Series D-2 preferred stock (with a fair value of $77.2 million), par value $0.0001. The Company provided $6.4 million in financing, which was utilized to fund Syntiant's requirement to have $40.0 million of cash on its balance sheet at closing. The Company will also share in certain separation costs pursuant to a credit, which Syntiant may apply to specified separation costs post-closing. For additional information, refer to Note 3. Discontinued Operations to our Consolidated Financial Statements under Part I, Item 1, "Financial Statements."
Previous wording
The CMM divestiture represents a strategic shift that will have a major effect on our operations and financial results. As a result, we have reclassified the results of operations and financial position of CMM to discontinued operations for all periods presented. Unless otherwise noted, discussion within this Quarterly Report to the consolidated financial statements relates to our continuing operations.
Current wording
We have reclassified the results of operations and financial position of CMM to discontinued operations for all periods presented. Unless otherwise noted, our results of operations discussed below relate to continuing operations and will be impacted by the CMM divestiture.
Previous wording
This divestiture supports Knowles' continued transformation into an industrial technology company, consisting of its Precision Devices ("PD") and MedTech & Specialty Audio ("MSA") segments, primarily serving the defense, medtech, industrial, and electrification markets. We may incur some amount of dis-synergies following the sale of the CMM business due to the reduced size of our company and, as a result, we may undertake actions to help ensure that our cost structure is appropriate to support our remaining businesses.
Current wording
This divestiture supports Knowles' continued transformation into an industrial technology company, consisting of its Precision Devices ("PD") and MedTech & Specialty Audio ("MSA") segments, primarily serving the defense, medtech, industrial, and electrification markets. We have incurred some amount of dis-synergies following the sale of the CMM business due to the reduced size of our company and, as a result, we have undertaken actions to help ensure that our cost structure is appropriate to support our remaining businesses.
Previous 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.
Current 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.
Previous wording
Selling and administrative expenses for the third quarter of 2024 were $33.9 million, compared with $29.4 million for the third quarter of 2023, an increase of $4.5 million or 15.3%. Selling and administrative expenses as a percentage of revenues for the third quarter of 2024 and 2023 were 23.8% and 27.2%, respectively. The increase in expenses was primarily driven by our acquisition of CD, partially offset by lower professional fees and the benefits of PD restructuring actions taken in the prior year. The decrease in expenses as a percentage of revenues was driven by higher revenues.
Current wording
Selling and administrative expenses for the first quarter of 2025 were $37.2 million, compared with $37.3 million for the first quarter of 2024, a decrease of $0.1 million or 0.3%. Selling and administrative expenses as a percentage of revenues for the first quarter of 2025 and 2024 were 28.1% and 28.0%, respectively. The decrease in expenses was primarily driven by lower marketing costs, a change in our deferred compensation liability, the benefits of restructuring actions taken in the prior year, lower professional fees, and lower intangible amortization, partially offset by the acceleration of stock-based compensation expense for employees who are nearing or have reached retirement eligibility. The increase in expenses as a percentage of revenues was driven by lower revenues.
Previous 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.
Current wording
Interest expense for the first quarter of 2025 was $2.7 million, compared with $4.4 million for the first quarter of 2024, a decrease of $1.7 million. The decrease is due to a lower outstanding revolving credit facility balance during the first quarter of 2025 and lower imputed interest expense on our Seller Note from the CD acquisition. For additional information on borrowings and interest expense, refer to Note 8. Borrowings to our Consolidated Financial Statements.
Previous 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.
Current wording
Other expense for the first quarter of 2025 was $0.5 million, compared with income of $0.4 million for the first quarter of 2024, a change of $0.9 million. Expense in 2025 primarily represents unrealized losses in our investment balances. Income in the first quarter of 2024 primarily represents unrealized gains in our investment balances.
Previous wording
Provision for (Benefit from) Income Taxes and Non-GAAP Provision for Income Taxes
Current wording
Provision for Income Taxes and Non-GAAP Provision for Income Taxes
Previous 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.
Current wording
The effective tax rate ("ETR") from continuing operations for the first quarter of 2025 and 2024 was 150.0% and 200.0%, respectively. The ETR from continuing operations for the first quarter of 2025 and 2024 includes discrete items totaling $0.5 million of tax benefit and $0.4 million of tax expense, respectively. The discrete items impacting the tax provision for 2025 and 2024 are primarily attributable to stock-based compensation. Absent the discrete items, the ETR from continuing operations for the first quarter of 2025 and 2024 was 212.5% and 160.0%, 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 2025 and 2024. The change in the ETR was mainly due to the mix of earnings and losses by taxing jurisdictions and net discrete items.
Previous 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.
Current wording
The non-GAAP ETR from continuing operations for the first quarter of 2025 and 2024 was 14.7% and 10.1%, respectively. The non-GAAP ETR from continuing operations includes no discrete impact for the first quarter of 2025 or 2024. The change in the non-GAAP ETR was primarily due to decreased utilization of foreign tax credits compared to the prior year.
Previous wording
Earnings from continuing operations before interest and income taxes ("EBIT") for the third quarter of 2024 was $16.1 million, compared with $11.9 million for the third quarter of 2023, an increase of $4.2 million. EBIT margin (EBIT as a percentage of revenues) for the third quarter of 2024 was 11.3%, compared with 11.0% for the third quarter of 2023. The increase in EBIT was primarily due to higher gross profit, partially offset by higher operating expenses and unfavorable foreign currency changes. The increase in EBIT margin was primarily due to higher gross profit, partially offset by higher operating expenses, the impacts of the acquisition of CD on gross margins, and unfavorable foreign currency changes.
Current wording
Earnings from continuing operations before interest and income taxes ("EBIT") for the first quarter of 2025 was $3.5 million, compared with $5.4 million for the first quarter of 2024, a decrease of $1.9 million. EBIT margin (EBIT as a percentage of revenues) for the first quarter of 2025 was 2.6%, compared with 4.1% for the first quarter of 2024. The decrease in EBIT and EBIT margin was primarily due to higher operating expenses and other expense in the first quarter of 2025 compared to other income for the first quarter of 2024.
Previous 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.
Current wording
Adjusted earnings before interest and income taxes ("Adjusted EBIT") from continuing operations for the first quarter of 2025 was $21.7 million, compared with $23.3 million for the first quarter of 2024, a decrease of $1.6 million. Adjusted EBIT margin (Adjusted EBIT from continuing operations as a percentage of revenues) for the first quarter of 2025 was 16.4%, compared with 17.5% for the first quarter of 2024. The decrease in Adjusted EBIT and Adjusted EBIT margin was primarily due to lower non-GAAP gross profit margin, partially offset by lower non-GAAP operating expenses.
Previous wording
Diluted Earnings per Share from Continuing Operations and Non-GAAP Diluted Earnings per Share from Continuing Operations
Current wording
Diluted Loss per Share from Continuing Operations and Non-GAAP Diluted Earnings per Share from Continuing Operations
Previous 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.
Current wording
Non-GAAP diluted earnings per share from continuing operations was $0.18 for the first quarter of 2025 and the first quarter of 2024. As described above, there is no change primarily due to lower non-GAAP gross profit and higher non-GAAP income tax expense, offset by lower non-GAAP operating expenses and interest expense.
Previous wording
(4) Other expenses include non-recurring professional service fees related to an execution of various reorganization projects, foreign currency exchange rate impacts on restructuring balances, and the ongoing net lease cost (income) related to facilities not used in operations.
Current wording
(5) Other expenses include non-recurring professional service fees related to the execution of various reorganization projects and foreign currency exchange rate impacts on restructuring balances.
Previous 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.
Current wording
(7) The non-GAAP reconciling adjustments to reconcile Earnings from continuing operations before interest and income taxes to Adjusted earnings from continuing operations before interest and income taxes include stock-based compensation expense, intangibles amortization expense, restructuring charges, production transfer costs, acquisition-related costs, and other expenses, partially offset by a credit to transition services.
Previous 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.
Current 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 adjusted earnings before interest and income taxes to our consolidated earnings before income taxes and discontinued operations.
Previous 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.
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 $101.9 million and $130.1 million at March 31, 2025 and December 31, 2024, respectively. Of these amounts, cash held by our non-U.S. operations totaled $45.4 million and $92.4 million as of March 31, 2025 and December 31, 2024, 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.
Previous 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.
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. On February 13, 2025, the Company announced another authorization increase of up to $150.0 million in additional aggregate value. At March 31, 2025, we have $189.0 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. Any shares repurchased will be held as treasury stock. During the three months ended March 31, 2025, the Company repurchased 300,768 shares of common stock for a total of $5.0 million. The Company did not repurchase any shares of its common stock during the three months ended March 31, 2024.
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. The increase was 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 decrease in cash provided by operating activities in 2025 is primarily due to $21.0 million of payments to settle supplier obligations and separation costs related to the CMM business and unfavorable changes in working capital driven by the timing of collections and payments, partially offset by customer prepayments of $19.8 million.
Previous 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.
Current wording
The cash used in investing activities during 2025 was driven by capital expenditures, which is primarily driven by capacity expansion related to our specialty film product line and cost savings. The cash provided by investing activities during 2024 was primarily driven by proceeds from the sale of intellectual property, 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 2.0% to 3.0% of revenues.
Current wording
In 2025, we expect capital expenditures to be in the range of 4% to 6% of revenues.
Previous 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.
Current wording
Cash used in financing activities during 2025 was primarily related to $15.0 million of payments on the revolving credit facility, $6.7 million of tax payments related to net share settlement of equity awards, and $5.0 million of repurchases of common stock, partially offset by proceeds of $0.6 million from the exercise of options. Cash provided by financing activities during 2024 was primarily related to $20.0 million of net borrowings on the revolving credit facility, partially offset by $5.8 million of tax payments related to net share settlement of equity awards.
Previous wording
In addition to measuring cash flow generation based on the operating, investing, and financing classifications included in the Consolidated Statement of Cash Flows (including discontinued operations), Knowles also measures adjusted free cash flow and adjusted free cash flow as a percentage of revenues. Adjusted free cash flow is defined as non-GAAP net cash attributable to continuing operations less non-GAAP capital expenditures attributable to continuing operations. Non-GAAP net cash attributable to continuing operations is defined as net cash provided by operating activities less amounts attributable to discontinued operations. Non-GAAP capital expenditures attributable to continuing operations is defined as capital expenditures less amounts attributable to discontinued operations. Knowles believes these measures are helpful in measuring its cash generated from its continuing operations that is available to repay debt, fund acquisitions, and repurchase Knowles common stock. Adjusted free cash flow and adjusted free cash flow as a percentage of revenues are not presented in accordance with GAAP and may not be comparable to similarly titled measures used by other companies in our industry. As such, adjusted free cash flow and adjusted free cash flow as a percentage of revenues should not be considered in isolation from, or as an alternative to, any other liquidity measures determined in accordance with GAAP.
Current wording
In addition to measuring cash flow generation based on the operating, investing, and financing classifications included in the Consolidated Statement of Cash Flows (including discontinued operations), Knowles also measures adjusted free cash flow and adjusted free cash flow as a percentage of revenues. Adjusted free cash flow is defined as non-GAAP net cash attributable to continuing operations less non-GAAP capital expenditures attributable to continuing operations. Non-GAAP net cash attributable to continuing operations is defined as net cash provided by operating activities less amounts generated or utilized by discontinued operations. Non-GAAP capital expenditures attributable to continuing operations is defined as capital expenditures less amounts attributable to discontinued operations. Knowles believes these measures are helpful in measuring its cash generated from its continuing operations that is available to repay debt, fund acquisitions, and repurchase Knowles common stock. Adjusted free cash flow and adjusted free cash flow as a percentage of revenues are not presented in accordance with GAAP and may not be comparable to similarly titled measures used by other companies in our industry. As such, adjusted free cash flow and adjusted free cash flow as a percentage of revenues should not be considered in isolation from, or as an alternative to, any other liquidity measures determined in accordance with GAAP.
Rearranged previous paragraphs (6)
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
Gross Profit and Non-GAAP Gross Profit
Previous report — wording carried elsewhere
Provision for (Benefit from) Income Taxes and Non-GAAP Provision for Income Taxes
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
(Loss) Earnings from Discontinued Operations, net
Previous report — wording carried elsewhere
Diluted Earnings per Share from Continuing Operations and Non-GAAP Diluted Earnings per Share from Continuing Operations