Knowles Corporation (NYSE: KN) has announced the sale of its consumer mems microphones (CMM) business to Syntiant Corp for $150 million. The sale is part of Knowles' strategic transformation into an industrial technology company. Knowles will receive $70 million in cash and $80 million in Syntiant preferred stock as part of the consideration. The transaction is expected to close in the fourth quarter of 2024, subject to regulatory approvals and other customary closing conditions.
Following this transaction, Knowles will focus on its precision devices ("PD") and medtech & specialty audio ("MSA") segments, which primarily serve the aerospace, defense, medtech, industrial, and electrification markets. On a pro forma basis, the remaining Knowles businesses had $560 million of revenue in 2023.
Knowles plans to utilize the net cash proceeds from the sale of CMM to fund the paydown of debt and the repurchase of company stock. The company's CEO, Jeffrey Niew, emphasized that the transaction with Syntiant is aimed at protecting the intellectual property of Knowles' market-leading hearing health business while maximizing value for shareholders.
Knowles also provided an update on its financial guidance for the third quarter of 2024, reflecting the anticipated sale of the CMM business. The company expects revenues from continuing operations to be in the range of $139 to $143 million for the third quarter, and diluted earnings per share from continuing operations to be in the range of $0.10 to $0.14 on a GAAP basis.
Looking ahead to the fourth quarter of 2024, Knowles anticipates revenue from continuing operations to be in the range of $140 to $150 million.
The company has also posted an investor presentation with further details on its website.
Knowles Corporation is known for being a market leader and global provider of high-performance capacitors and radio frequency ("RF") filtering products, as well as advanced micro-acoustic microphones and balanced armature speakers. The company aims to deliver innovative solutions across multiple applications, serving the medtech, defense, electric vehicle, and industrial markets.
In addition to the specific figures mentioned, Knowles has also presented supplemental non-GAAP financial measures, which the company believes are useful as supplements to its GAAP results of operations for evaluating certain aspects of its operations and financial performance. These measures are also said to assist in comparing performance between various reporting periods on a consistent basis.
Jefferies LLC served as the exclusive financial advisor to Knowles, while Sidley Austin LLP served as legal counsel. The market has reacted to these announcements by moving the company's shares 2.9% to a price of $17.7. For more information, read the company's full 8-K submission here.
