8-K - KN - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 10, 2022

Knowles Corporation

(Exact name of registrant as specified in its charter)

Delaware	001-36102	90-1002689
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

1151 Maplewood Drive, Itasca, IL

(Address of Principal Executive Offices)

60143

(Zip Code)

Registrant's telephone number, including area code: (630) 250-5100

(Former Name or Former Address, if Changed since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value per share	KN	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Item 7.01 Regulation FD Disclosure.
Knowles Corporation ("Knowles") hosted an investor update call on November 30, 2021, where representatives of Knowles used slides (the "Prior Presentation") to make presentations regarding Knowles' business and financial outlook. Knowles has updated the estimated results for fiscal year 2021 presented in the Prior Presentation with full year results for fiscal year 2021, as presented in the slides attached to this Current Report on Form 8-K as Exhibit 99.1 (the "Investor Presentation"). The forward-looking statements contained in the updated Investor Presentation continue to be made as of November 30, 2021. Knowles expects to use the updated Investor Presentation in meetings with investors from time to time.<br><br><br><br>Knowles makes reference to non-GAAP financial measures in the attached Investor Presentation. A reconciliation of these non-GAAP financial measures to the applicable GAAP financial measures is contained in the attached Investor Presentation.<br><br><br><br>The information included in this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that Section, nor shall such information be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.		Item 9.01 Financial Statements and Exhibits.
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(d) Exhibits.
The following exhibits are furnished as part of this report:
Exhibit Number	Description
99.1	Presentation slides, issued by Knowles Corporation, dated February 10, 2022.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	KNOWLES CORPORATION
Date: February 10, 2022	By: /s/ John S. Anderson
	John S. Anderson
	Senior Vice President & Chief Financial Officer

exhibit9912102022

$ • • • • • • •

Electronics Experience 10 Years 24 Years 25 Years 18 Years 19 Years 28 Years 16 Years 29 Years 25 Years 26 Years In-House Counsel Experience

Achievements • • • • • •

remove the “mid- term target” time reference, just focus it on $2.50.

Growth Core

Innovate Deliver Design Innovate a concept for differentiated, customer-driven features & functionality Design a high quality, high performance, cost-effective product Differentiate ourselves through unique manufacturing techniques & processes Enable our customers to consistently offer new products & applications Manufacture

• • • • •

• • • • • • • • • • • • •

• • • • • • • •

• • • •

• • •

Focusing on market segments with the most favorable tailwinds including Ear, IoT, MedTech, EV and Defense Successful debt reduction enables increased share buyback Innovating across complex customer needs to maximize differentiation Focusing CapEx on our attractive products and markets Expanding M&A to deliver accretive returns Path to $2.50+ Non-GAAP Diluted EPS* with top quartile financial metrics among diversified electronic component peers Deploying R&D to markets and products with better profit potential

July 28, 2021 (in millions, except per share amounts) 2021 2017 Gross profit 359.5$ 286.3$ Gross profit margin 41.4% 38.5% Stock-based compensation expense 1.6 1.8 Impairment charges - 1.4 Restructuring charges - 4.0 Production transfer costs (1) - 6.7 Other (2) 1.0 - Non-GAAP gross profit 362.1$ 300.2$ Non-GAAP gross profit margin 41.7% 40.3% Operating expenses 243.7$ 245.8$ Stock-based compensation expense (30.5) (22.9) Intangibles amortization expense (15.9) (7.3) Impairment charges (4.0) (19.9) Restructuring charges (0.5) (6.2) Production transfer costs (1) - (0.1) Other (2) (2.0) (0.3) Non-GAAP operating expenses 190.8$ 189.1$ Non-GAAP operating expenses margin 22.0% 25.4% Earnings from continuing operations 150.2$ 6.5$ Interest expense, net 14.2 20.6 (Benefit from) provision for income taxes (45.6) 12.9 Earnings from continuing operations before interest and income taxes 118.8 40.0 Earnings from continuing operations before interest and income taxes margin 13.7% 5.4% Stock-based compensation expense 32.1 24.7 Intangibles amortization expense 15.9 7.3 Impairment charges 4.0 21.3 Restructuring charges 0.5 10.2 Production transfer costs (1) - 6.8 Other (2) 3.0 0.3 Adjusted earnings from continuing operations before interest and income taxes 174.3$ 110.6$ Adjusted earnings from continuing operations before interest and income taxes margin 20.1% 14.9% Earnings from continuing operations $ 150.2 $ 6.5 Non-GAAP reconciling adjustments (3) 55.5 70.6 Interest expense, net non-GAAP reconciling adjustments (4) 6.6 6.1 Income tax effects of non-GAAP reconciling adjustments (5) 65.4 2.0 Non-GAAP net earnings $ 146.9 $ 81.2 Diluted earnings per share from continuing operations $ 1.59 $ 0.07 Earnings per share non-GAAP reconciling adjustment (0.06) 0.81 Non-GAAP diluted earnings per share $ 1.53 $ 0.88 Diluted average shares outstanding 94.7 90.5 Non-GAAP adjustment (6) 1.1 1.9 Non-GAAP diluted average shares outstanding (6) 95.8 92.4 Year Ended December 31, Notes: (6) The number of shares used in the diluted per share calculations on a non-GAAP basis excludes the impact of stock- based compensation expense expected to be incurred in future periods and not yet recognized in the financial statements, which would otherwise be assumed to be used to repurchase shares under the GAAP treasury stock method. In addition, the Company entered into convertible note hedge transactions that expired upon maturity of the convertible notes to offset any potential dilution from the convertible notes. Although the anti-dilutive impact of the convertible note hedges is not reflected under GAAP, the Company includes the anti-dilutive impact of the convertible note hedges in non-GAAP diluted average shares outstanding, if applicable. (1) Production transfer costs represent duplicate costs incurred to migrate manufacturing to facilities primarily in Asia. These amounts are included in the corresponding Gross profit and Earnings from continuing operations before interest and income taxes for each period presented. (2) In 2021, Other expenses represent the ongoing net lease cost (income) related to facilities not used in operations and expenses related to the acquisition of Integrated Microwave Corporation by the Precision Devices segment. In 2017, Other primarily represents expenses related to the acquisition of certain assets of a capacitors manufacturer. (3) 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. (4) Under GAAP, certain convertible debt instruments that may be settled in cash (or other assets) upon conversion are required to be separately accounted for as liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer’s nonconvertible debt borrowing rate. Accordingly, for GAAP purposes we were required to recognize imputed interest expense on the Company’s $172.5 million of convertible senior notes due November 1, 2021 that were issued in a private placement in May 2016. The imputed interest rate for the convertible notes was 8.12%, while the actual coupon interest rate of the notes was 3.25%. The difference between the imputed interest expense and the coupon interest expense is excluded from management’s assessment of the Company’s operating performance because management believes that this non-cash expense is not indicative of its core, ongoing operating performance. (5) Income tax effects of non-GAAP reconciling adjustments are calculated using the applicable tax rates in the jurisdictions of the underlying adjustments. In 2021, these adjustments include a valuation allowance release of $59.1 million for our U.S. subsidiaries.

(in millions) 2021 2020 2019 2018 2017 Cash provided by operating activities 182.1$ 128.1$ 123.9$ 98.5$ 92.9$ Less: Capital expenditures (48.6) (31.9) (41.2) (80.1) (51.6) Free cash flow (1) 133.5$ 96.2$ 82.7$ 18.4$ 41.3$ Free cash flow margin (1) 15.4% 12.6% 9.7% 2.2% 5.5% Years Ended December 31, (1) In addition to measuring cash flow generation and usage based on liquidity measures determined in accordance with GAAP, Knowles also measures free cash flow and free cash flow margin. Free cash flow is defined as cash provided by operating activities less capital expenditures. Knowles believes these measures are useful in measuring its cash generated from operations that is available to repay debt, fund acquisitions, and repurchase Knowles’ common stock. Free cash flow and free cash flow margin 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, free cash flow and free cash flow margin should not be considered in isolation from, or as an alternative to, any other liquidity measures determined in accordance with GAAP.