Earnings Call Transcript - KN Q2 2020

Operator, Operator

Good afternoon and welcome to the Knowles Corporation Second Quarter 2020 Financial Results Conference Call. At this time all participants are in a listen-only mode. After the speakers presentation there will be a question-and-answer session. Please be advised that today's conference is being recorded. With that said, here with opening remarks is Knowles’ Vice President of Investor Relations, Mike Knapp. Please go ahead.

Mike Knapp, Vice President of Investor Relations

Thanks, David and welcome to our Q2 2020 earnings call. I am Mike Knapp and presenting with me on the call today are Jeff Niew, our President and Chief Executive Officer; and John Anderson, our Senior Vice President and Chief Financial Officer. Our call today will include remarks about future expectations, plans and prospects for Knowles, which constitute forward-looking statements for purposes of the Safe Harbor provisions under applicable federal securities laws. Forward-looking statements in this call will include comments about demand for company products, anticipated trends in company sales, expenses and profits and involve a number of risks and uncertainties that could cause actual results to differ materially from current expectations. The company urges investors to review the risks and uncertainties in the company’s SEC filings including, but not limited to the annual report on Form 10-K for the fiscal year ended December 31, 2019, periodic reports filed from time-to-time with the SEC, and the risks and uncertainties identified in today’s earnings release. All forward-looking statements are made as of the date of this call and Knowles disclaims any duty to update such statements except as required by law. In addition, pursuant to Reg G, any non-GAAP financial measures referenced during today’s conference call can be found in our press release posted on our website at knowles.com, including reconciliation to the most directly comparable GAAP measures. All financial references on this call will be on a non-GAAP continuing operations basis unless otherwise indicated. Also, we have made selected financial information available on webcast slides which can be found on the IR section of our website. With that, let me turn the call over to Jeff, who will provide some details on our results.

Jeff Niew, President and CEO

Thanks, Mike, and thanks to all of you for joining us today. For Q2, we reported revenue of $152 million, with better-than-expected sales of MEMS microphones and Precision Device solutions during the quarter. We also saw sales into the Hearing Health market improve throughout the quarter, which gives me confidence that Q2 marked the bottom for demand in this end market. Gross margins were 32.3%, and our loss per share was $0.01. In audio, an inventory write-off associated with reduced investment in Intelligent Audio as well as lower factory utilization and sales weighed on margins. This was partially offset by sequential improvement in Precision Device margins. Let me begin with an update on customer demand across our end markets. In Hearing Health, revenue was down close to 50% from normal demand due to COVID-19, with sales increasing each month as we move through Q2. Earlier this month, one of our large customers announced that sales during the three months of Q2 were running significantly below prior year levels, but they saw stronger sales in the back half of the quarter. In spite of mixed conditions in the U.S., I was pleased to see momentum and demand picking up in the second half of the quarter, with improving market conditions in Europe and Asia markets. Based on our current backlog, we expect significant sequential sales growth in this end market in Q3. That said, I still believe it could take until 2021 to get back to 2019 revenue run rates. The mobile market represented less than 25% of total company sales in Q2. We saw shipments into the mobile market improve sequentially, as stronger sales to Chinese and North American OEMs were partially offset by lower sales to a Korean OEM. Microphone sales into non-mobile end markets also increased sequentially, with much of the growth being driven by computing, as work-from-home trends remain in place. Overall, microphone sales were up 4% sequentially in Q2 versus our expectations of them being flat. We anticipate strong sequential growth in microphone sales in Q3, driven by continued strength in non-mobile applications and recovery in the mobile market. In Precision Devices, Q2 sales were up 11% sequentially, better than the 5% we expected going into the quarter, driven by continued demand for our differentiated products across the telecom and defense markets, partially offset by lower MedTech demand. Gross margins also increased from Q1 due to operational improvements and price recovery for increased palladium costs. In Q2 and early Q3, we have seen a slowdown in MedTech demand for high-performance capacitors as more states are reporting rising COVID cases and ICU availability has decreased. This has led hospitals to suspend or slow elective procedures for implantable devices. It has also delayed installations of new MRIs that use our product. We expect this slowdown in MedTech to be temporary in nature, and we remain confident in year-over-year growth for Precision Devices in 2020. Now let me discuss where we stand from an operations standpoint. For our manufactured facilities around the globe, although we continue to operate below full capacity due to demand, we are now largely back to normal in terms of government restrictions. We remain diligent with the processes we put in place to keep our employees safe. One exception still impacting our operations is our ability to travel around the globe. Specifically, in the Philippines' operations, COVID issues are delaying the timeline for installation of our new balanced armature automated line. The installation will be dependent on these issues being resolved, and this makes it difficult to set an exact timeline. In the interim, we plan to fill current demand for balanced armature receivers with manual production capacity. I mentioned last quarter, we would take significant actions to manage working capital, reduce operating expenses and control capital investments. In Q2, I was very pleased to see the team delivered $20 million in free cash flow as we focused on inventory and cash collections. In the quarter, we also announced an Intelligent Audio restructuring plan, which is part of a broader reallocation of resources that is expected to reduce our quarterly operating expenses to a run rate of $42 million to $44 million by the end of this year, while increasing spend in areas where we see the highest returns. John will expand on this in just a moment. While there are still challenges with COVID-19, I am pleased with the trajectory of the business. As we look to Q3, we anticipate strong sequential growth driven by Hearing Health and MEMS microphones. Our company remains uniquely positioned across the markets we serve, and I believe our strategy to deliver high value, differentiated solutions to a diverse set of growing end markets will enable us to come out of the pandemic well positioned to take advantage of future growth. With that, I will turn it over to John to expand our financial results and provide guidance for the third quarter.

John Anderson, Senior Vice President and CFO

Thanks, Jeff. We reported second quarter revenues of $152 million, with higher-than-expected sales of MEMS microphones and Precision Device solutions. Shipments into the hearing health market were down nearly 50% from prior year levels, with sales levels increasing each month as we move throughout the quarter. Audio revenues of $105 million were down 13% sequentially, with the decline attributable to lower shipments into the hearing health market. Shipments of MEMS microphones into the consumer markets were up 4% sequentially, with growth driven by computing as work-from-home trends continue to remain in place. The Precision Device segment delivered revenues of $48 million, up 11% sequentially, driven by robust demand in the telecom and defense markets. Second quarter gross margins were 32.3%, down 340 basis points sequentially. In the Audio segment, gross margins were down 530 basis points sequentially, as we incurred a $3 million charge to write off inventory as part of our reduced investment in Intelligent Audio. In addition, we experienced lower factory capacity utilization driven by weaker end market demand associated with the COVID-19 pandemic. Precision Device gross margins improved slightly over Q1 levels, as the impact of improved factory capacity utilization, labor productivity and higher pricing more than offset an increase in palladium costs. R&D expense in the quarter was $20 million, down nearly 10% sequentially, primarily driven by reduced spending in Intelligent Audio. SG&A expenses were $27 million, down almost 20% from Q1 levels, driven by reduced spending in Intelligent Audio, lower company-wide discretionary spending and headcount reductions taken to reduce costs during the COVID-19 pandemic. For the quarter, we reported a loss per share of $0.01. Further information, including a detailed reconciliation of GAAP to non-GAAP results, is provided in the financial tables of today's press release and can also be found on our website at knowles.com. Now I'll turn to our balance sheet and cash flow. Cash and cash equivalents at the end of the second quarter were $168 million, up $21 million from Q1 levels. We were pleased to deliver strong free cash flow during the quarter, with cash generated from operations of $27 million and capital spending of $7 million. Moving to the third quarter, we expect total company revenue to be between $185 million and $200 million, up 26% sequentially at the midpoint. Revenue from the Audio segment is expected to be up more than 40% from Q2 levels, due to stronger consumer market demand and recovery in our Hearing Health business as market conditions improve in several European and Asia markets and certain states within the U.S. Precision Device revenue is expected to be down 10% sequentially, with the decline driven by reduced shipments into the telecom market following stronger-than-expected shipments in Q2. We project gross margins for the third quarter to be approximately 35% to 38%, up 420 basis points from Q2 levels due to improving factory capacity utilization in our Audio segment and favorable product mix as we expect a greater portion of revenues in the quarter coming from Hearing Health products, which carry above-average margins. R&D expense in Q3 is expected to be $18 million to $19 million, down more than $1 million from prior quarter levels due to restructuring activities related to Intelligent Audio. We're projecting selling and administrative expense to be between $26 million and $28 million, flat with Q2 levels. I remain confident that we are on track to achieve our previously announced cost reduction targets and exit 2020 with quarterly operating expenses between $42 million and $44 million. We're projecting adjusted EBIT margin for the quarter to be in the range of 10% to 14% and expect EPS to be within a range of $0.17 to $0.23 per share. This assumes weighted average shares outstanding during the quarter of 94.1 million, on a fully diluted basis. We're forecasting an effective tax rate of 16% to 20% for the quarter as well as the full year, which is up from the first half of the year due to the impact of changes in jurisdictional mix. For the quarter, we expect cash generated by operations to be between $15 million and $25 million, with capital spending approximately $10 million. Despite the challenging market conditions associated with COVID-19, we remain well positioned to serve our customers' needs, generate free cash flow and deliver strong operating leverage over the long term. I'll now turn the call back over to Jeff for closing remarks. And then we'll move to the Q&A portion of the call.

Jeff Niew, President and CEO

Thanks, John. Our company remains uniquely positioned across a diverse set of end markets placed to grow in the next several years. We remained the leader in Hearing Health solutions and expect a recovery to 2019 levels in six to nine months. In MEMS microphones, we expect non-mobile applications to drive growth in the future. And the mobile market to stabilize as 5G phones are introduced. We also remained on track to grow Precision Devices revenue this year. 2020 has been a challenging year so far, but I believe we can deliver shareholder value by driving revenue growth with strong operating leverage and cash flow in 2021 and beyond. Operator, we can now take questions.

Operator, Operator

Your first question comes from Charlie Anderson with Colliers Securities. You may proceed.

Charlie Anderson, Analyst

Yes. Thank you for taking my questions. And Congrats on a nice comeback year. So I wanted to start with some of the health care exposure. So it sounds like, obviously, Hearing Health is starting to recover somewhat. It sounded like as you went through the quarter that was the case. And you expect it to be the case in Q2. I wonder maybe if you could just kind of describe how things are running relative to that minus 50, as you reported. And then as Precision Devices you articulated, some impact there so I wondered if you could maybe give us remind us how much exposure there is to the health care vertical within Precision Devices looking forward?

Jeff Niew, President and CEO

Sure. Let me start with Precision Devices. Looking at it, the exposure to the life sciences market is between $25 million and $30 million in 2019. We expect that to decline by about 15% to 20% for the full year. Currently, the weakness is mostly seen in Q2 and Q3; we began noticing the decline in Q2, which occurred later than in the Hearing Health market. This area has shown weakness, particularly in items like pacemakers and other implantable devices, as well as the installation of new MRI machines. We anticipate a recovery, but the timing remains uncertain. Additionally, in the Hearing Health sector, sales in Q2 were down nearly 50% compared to the previous year, although we did see significant improvement as the quarter progressed. My current estimate is that the Hearing Health market may be down just over 20% year-over-year. We're becoming more confident that a recovery is on the way, as our customers share a more positive outlook. However, we must remain cautious about any potential setbacks due to changes in the COVID situation. As for the timeline, I previously suggested that a return to normal levels could extend into the second quarter of next year, but I now believe that recovery might happen sooner than expected.

Charlie Anderson, Analyst

Great. And then for my follow-up, I wanted to ask about BA. You mentioned some of the issues you have in terms of getting the resources you need for the automated line. I'm wondering, maybe if you could update us your thoughts on how the pipeline is looking? How demand is looking? Are you still as ambitious in terms of some of the build plans as you were previously? And maybe just some of the impact on capital spending as it relates to that program? Thanks.

Jeff Niew, President and CEO

We will not decide to install a second line until at least the first line is operational. We need to verify that the yields and returns are satisfactory. On the other hand, we do have demand in the latter half of the year, but we will have to meet that demand using manual capacity. This will likely result in lower gross margins in the fourth quarter compared to the third quarter. We want to maintain our customer momentum even without the line installed. The line is related to travel restrictions and is set to be shipped to the Philippines this quarter. However, we require a team from the U.S. to assist with the automation during its installation, which makes me hesitant to provide a specific installation date. Currently, we expect it will not be operational until the end of the year, although it might be installed sooner. For now, we are preparing for manual production to meet the demand through the end of the year.

Charlie Anderson, Analyst

Okay. Great. Thank you so much.

Operator, Operator

Your next question comes from the line of Bill Peterson with JPMorgan. Your line is open.

Bill Peterson, Analyst

Yes. Hi. Thanks for taking my question. I'd like to try to parse between an audio, in the case of mobile versus non-mobile. Obviously, you have ear wear, you have smart home, you have mobile, you talk about compute, has really talked about TV in the past. How should we think about the demand profile for each of those segments during the back half of the year? In particular, I'm seeing that third-parties are assuming smart home. Smart speakers are actually going to be down this year versus this year as the direction is going to be fairly up double digits according to the third-party research, so I’m trying to get a feel for each of those segments within your microphone business?

Jeff Niew, President and CEO

Yes. So I'm looking at the numbers here, I'm trying to see that, the real strong category beyond that. Well, first of all, check it get back. IoT, we agree with you. Smart speakers have been weak, but I think we're pretty confident with some of the things that we've got going on in smart speakers. We do have potentially some share gains coming in the back half of the year, and smart speakers with some unique products that are being introduced. Mobile, as we kind of said, I would sit there and say that right now, Q4 is going to be stronger than Q3, with Q3 being stronger than Q2 pretty significantly sequentially. I think tablet and notebook. We still see Q3 being pretty strong. And I think that's going to start to slow down. And then we see some pretty strong sequential improvement in ear as we go to the back half of the year, some very strong sequential improvement in ear. So what I overall, would say is that we have this guide for Q3. Right now, I would say this is probably not the peak quarter for the year. We think that Q4 will be the peak quarter in terms of shipments for the full year.

Bill Peterson, Analyst

Okay. With that in mind and also improve Hearing Health and presumably, maybe your medical business and Precision Device is getting better. How should we think about the gross margin trajectory into the fourth quarter? I guess, also assuming utilization continues to improve?

John Anderson, Senior Vice President and CFO

Yes, Bill, this is John. To recap, the gross margins in the Audio segment for Q2 were lower than we anticipated. We encountered two main issues: first, a charge of approximately $3 million related to our reduced investment and the scaling back of Intelligent Audio product lines to focus on areas where we believe we can succeed. This charge impacted our Q2 gross margins. Additionally, we experienced lower-than-expected capacity utilization, particularly in our Hearing Health business during the quarter. Moving forward, my guidance for Q3 at the midpoint is 36.5%, which represents a significant sequential improvement. This is largely due to better capacity utilization and the absence of the charge we faced in Q2. It's a bit early to provide specific guidance for Q4, but I expect it to be close to or slightly above Q3 levels, though it will depend heavily on...

Jeff Niew, President and CEO

Let me provide some insight, Bill. I don’t expect us to return to 2019 levels in Hearing Health in Q4. That’s not my current expectation. Additionally, this situation is above our average gross margin for Hearing Health. We will likely continue to face factory utilization issues in the Hearing Health market, probably extending into Q1 of next year.

Bill Peterson, Analyst

Okay. So not expecting really much utilization positive impact at this point?

Jeff Niew, President and CEO

It will likely be slightly better, but we do not expect to return to 2019 levels.

John Anderson, Senior Vice President and CFO

In the MEMS microphone segment, I anticipate similar build plans for the third and fourth quarters. There is a potential for margin improvement through better utilization of factory capacity in the Hearing Health and PD business.

Jeff Niew, President and CEO

And then also more sales of Hearing Health, which would drive gross margin up.

Bill Peterson, Analyst

Okay. That's fair. Thanks for the color in there. Good luck. Thanks.

John Anderson, Senior Vice President and CFO

Thanks, Bill.

Operator, Operator

Your next question comes from the line of Christopher Rolland with Susquehanna. Your line is open.

Unidentified Analyst, Analyst

Hi, good afternoon. This is speaking on behalf of Chris. So in the prepared remarks, you said that shipments into mobile grew in China as well as North America during the quarter. I was wondering, how should we think about the mobile market in the second half? Should we expect the trends to continue? And also, if you are seeing any kind of share losses in China as trade tension between the U.S. and China are still heating up?

John Anderson, Senior Vice President and CFO

Yes. We observed a sequential improvement in mobile during Q2 and anticipate significant progress in Q3, followed by further improvement in Q4. We expect to continue this upward trend throughout the year. However, it's important to note that for the entire year, mobile is expected to decline, as it has been a challenging year for that segment. Regarding your question about China, our share losses remain consistent with what we reported last quarter. Specifically, we still hold a very small share with Huawei, and we haven't noticed any major shifts in our market share beyond Huawei.

Unidentified Analyst, Analyst

Okay. Great. And as a follow up, there have been some reports with smartphone customers trying to exclude the inbox headsets with the purchase of their phone. Could you talk about some of the microphone content that is shipping a typical headset and the impact that it has to your business if customers would start to take the headsets out of the box?

John Anderson, Senior Vice President and CFO

I'm struggling to understand the question. Just...

Unidentified Analyst, Analyst

Yes, sorry. So there have been some...

John Anderson, Senior Vice President and CFO

Go ahead.

Unidentified Analyst, Analyst

Yes, sorry. There have been some reports out there that some of the smartphone customers would start to exclude those headsets inside of that box when you first buy your phones. So I was wondering if you could talk about the microphone content that you ship in a typical headset? And what would be the impact to your business if customers started to take out the headset out of the box?

Jeff Niew, President and CEO

Well, I think, generally speaking, the true wireless market is doing quite well. I think there's a wide variance of different content from one microphone per ear on true wireless to two microphones per ear, to three microphones per ear on true wireless. So there's a pretty wide variance of content from headset to headset. That being said, we do see a trend towards digital. There's more digital usage in true wireless, which is positive for us as well. So I think if this did move toward inbox content, I think that would be positive for us because right now, most of the things that are in box today are the old - what we call old headset that was wired, which has one microphone. So if that started being put into a box, you could see at least one more microphone being put in two and then maybe four or I doubt. I would find it hard to believe that the highest end products would be included in the box. But I can only think that, that would be positive if it was put in a box.

Unidentified Analyst, Analyst

Got it. Thank you.

Operator, Operator

Your next question comes from the line of Harsh Kumar with Piper Sandler. Your line is open.

Harsh Kumar, Analyst

Hi, guys. All things considered, I just wanted to say very good execution, just given all the uncertainties, particularly with hearing health. So I wanted to pass that along. My first question was, Jeff, you mentioned that Q4 will be the top quarter. I assumed you meant that in absolute dollars versus sequential growth? I just wanted to clarify. We're always greedy for growth, so I just want to make that point cleared out?

Jeff Niew, President and CEO

Yes. It will be sequential growth again from Q3 our expectation.

Harsh Kumar, Analyst

Understood. But it will be up in absolute dollars? Maybe to that point, Jeff, could you tell us where you are going to see the sequential growth? Like what drove 3Q guidance? Was it China? Was it U.S. predominantly? And then, in 4Q, which one of these two will be the driver?

Jeff Niew, President and CEO

Yes. I mean, I would definitely say North America focused in Q3. And a fair amount of non-mobile application is driving that. So there, although mobile is definitely up sequentially, there's a fair amount of non-mobile application that is driving in North America. But China, our expectations will be up sequentially. And then, as I look towards Q4, we are right now expecting China will be up sequentially, where I would say North America will be probably more flattish throughout sequentially.

Harsh Kumar, Analyst

Thank you. I wanted to ask about Intelligent Audio. You've made some significant cost reductions and provided guidance for the full year exit rate. At this stage, do you think the restructuring is complete, or are there still potential costs you might eliminate in the future? Or would you prefer to wait and see how the business progresses from here?

Jeff Niew, President and CEO

To summarize, we underwent a significant restructuring this quarter, which extended beyond just Intelligent Audio. Intelligent Audio accounted for about half of the adjustments we made to achieve the numbers John mentioned. At this moment, I believe we are finished with the restructuring. As we've previously discussed, I feel we are well-positioned for a return to growth, which we anticipate in 2021, and aim to become a more profitable company even with lower revenue than in 2019. We have completed the necessary restructuring for now.

Harsh Kumar, Analyst

Thank you guys.

Operator, Operator

Your next question comes from the line of Suji Desilva with ROTH Capital. Your line is open.

Suji Desilva, Analyst

Hi, Jeff. Hi John. So in terms of the headset market and your expectation for doing better there next few quarters, how much of that is predicated on balanced armature and the automated line coming in? Or does the microphone business there alone, kind of give you kind of good tailwinds into the headset market?

Jeff Niew, President and CEO

Yes. I think in our last call, we did not anticipate a significant amount of balanced armature this year. Currently, we are balancing demand with our manual production capacity. Consequently, we are likely expecting somewhat lower sales due to the limitations of manual lines. However, the key focus for us is on 2021. Our goal is to fill this line, and we need to evaluate if another line is necessary. This is a short-term concern, and while balanced armature demand may be slightly reduced, it's not a significant issue. Our primary attention remains on microphones, which continue to drive demand for this year.

Suji Desilva, Analyst

Okay. That's helpful color, Jeff. And then the filter market, I think you have mentioned as much here. Can you talk about where that is in terms of the demand in the 5G structure, millimeter wave market and it's on track to your expectations?

Jeff Niew, President and CEO

Yes, I think we've discussed this before. First, the growth of millimeter wave in 5G has likely been slower than we anticipated. As I mentioned in previous quarters, defense has been the primary driver of this growth. While defense is still growing, it seems to be progressing slightly slower than we expected a quarter ago, but it’s not a significant difference. When we projected $40 million in revenue for millimeter wave, it could fall a little short of that. However, the demand in defense remains strong.

Suji Desilva, Analyst

Thanks guys.

Operator, Operator

Your next question comes from the line of Tristan Gerra with Baird. Your line is open.

Tristan Gerra, Analyst

Hi, good afternoon. Quick follow up on the balanced armature speakers. I think your manual line is about 25 million to 30 million units output per year. And you had talked about the automated line being about 12 million units per year. So, what percentage are you going to move away from Hearing Health to balanced armature speakers from your manual line in Q4? And also, perhaps, if you could quantify the potential gross margin impact from that production in the quarter in Q4?

Jeff Niew, President and CEO

Yes, I'll let John handle the gross margin. But I think if you want to say one thing that's going on, relative to the Hearing Health market; we have excess access capacity on hearing lines. And if you think about it, we have not been able to fill our manual lines because of Hearing Health demand. It has been hurting, obviously, our gross margins. So we do have some excess capacity right now in the manual lines. That's how we're able to still fill the demand.

Tristan Gerra, Analyst

Quick follow-up. You mentioned silicon also declined sequentially in Q3. Is that driven by base station? It doesn’t seem necessarily in line with what we’ve heard from some of the companies for earnings. So maybe little bit more color as to what you think is happening there?

Jeff Niew, President and CEO

Yes, it is the base station, but I want to point out that at the beginning of the year, we anticipated a sequential increase of about 5% in PD. However, it actually exceeded expectations, coming in at over 10% or 11%. This growth was driven mainly by telecom, and we are experiencing some variability. Specifically, we delivered significantly more products in Q2 than we had anticipated. This isn't affecting our long-term outlook for telecom; it's just that we shipped more in Q2, leading to lower shipments in Q3. So, it's more about the delivery variability than anything else.

Tristan Gerra, Analyst

Great. Thank you.

Operator, Operator

Your next question comes from the line of Bob Labick with CJS Securities. Your line is open.

Bob Labick, Analyst

Thanks. Good afternoon. I wanted to talk about the cost containment and the cost cuts you've done. Obviously, you've done a very good job there. And just to clarify, or to be sure, the $42 million to $44 million OpEx year-end run rate, that compares to $46.6 million in adjusted SG&A for the quarter? Is that right?

Jeff Niew, President and CEO

Actually, it's $45.5 million, Bob. If you take the midpoint of the guidance, $45.5 million, $46 million for Q3, the biggest difference going forward will be in our legal spending. We are still very active in our patent infringement case. We are confident that the expenses related to this matter will decrease significantly as we move past this quarter. Therefore, I believe that even though we are at $45.5 million this quarter, we will be able to reach the range of $42 million to $44 million as we conclude 2020.

Bob Labick, Analyst

Okay, great. As you return to growth in 2021, is there additional operating leverage, or will you need to increase expenses to support your growth?

Jeff Niew, President and CEO

We will see some modest increases as we exit 2020 with expenditures around $43 million. We anticipate modest increases in wages, medical insurance, and travel restrictions, but we believe we can keep this level at approximately $45 million per quarter throughout 2021. If revenue accelerates, we will reassess this outlook. For now, as we look into the first half of 2021, we are confident in maintaining this run rate of around $45 million per quarter.

Bob Labick, Analyst

Okay. Terrific. I appreciate that. And then just another question. Earlier, you mentioned, I believe that sales into mobile were less than 25% of the total in the quarter. Can you give us a sense of what that was a year ago?

Jeff Niew, President and CEO

We'll look at the numbers right here.. It was almost 30 last year.

Bob Labick, Analyst

Got it. Okay. Terrific. All right. Thank you.

Operator, Operator

There are no further questions at this time. I will turn the call back over to Mike Knapp.

Mike Knapp, Vice President of Investor Relations

Great. Thanks very much for joining us today. As always, we appreciate your interest in Knowles and look forward to speaking with you on our next earnings call. Thanks and goodbye.

Operator, Operator

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.