Knowles Loss Narrows, Outlook Strong; Shares Up 7%

(RTTNews) - Knowles Corp. (KN) Monday reported a second-quarter loss that narrowed from last year despite lower revenues, as gross margins improved and operating costs dropped significantly. Adjusted earnings for the quarter trumped Wall Street estimates by a penny, but revenues fell short of expectations.

Moving ahead, the company detailed a strong outlook for the third quarter, sending its shares up over 7 percent on the NYSE.

Itasca, Illinois-based Knowles' second-quarter loss narrowed to $16.1 million or $0.19 per share from last year's loss of $78.9 million or $0.93 per share.

Adjusted earnings for the quarter were $7.3 million or $0.08 per share for the quarter. On average, eight analysts polled by Thomson Reuters expected earnings of of $0.07 per share for the quarter. Analysts' estimates typically exclude special items.

Knowles, which was spun-off from Dover Corp. (DOV) last year, said its revenue for the quarter dropped to $240.9 million from $281.0 million a year ago. Analysts had a consensus revenue estimate of $250.63 million for the quarter.

Cost of goods sold dropped to $183.8 million from $230.8 million last year, while operating costs decreased to $69.5 million from $78.0 million last year.

Looking forward to the third quarter, Knowles expect adjusted earnings of $0.07 to $0.15 per share and revenues of $285 million to $305 million, including acquisition of Audience Inc. Excluding the acquisition, Knowles expects adjusted earnings of $0.25 to $0.33 per share and revenues of $275 million to $295 million.

Analysts currently expect earnings of $0.28 per share on revenues of $290.66 million.

Moving ahead, CEO Jeffrey Niew said, "For Q3, we anticipate more than 20 percent sequential revenue growth, driven by 30 percent organic growth in the mobile consumer segment, stable trends in our specialty components business, and 5 percent revenue growth from the Audience acquisition. We anticipate that this increase in revenue, coupled with better capacity utilization and product mix, will lead to strong gross margin expansion."

On July 1, Knowles completed the acquisition of Audience Inc. for $61.6 million in cash and 3.2 million shares of Knowles common stock.

KN closed Monday's trading at $17.23, up $0.34 or 2.01%, on the NYSE. The stock further, gained $1.26 or 7.31% in the after-hours trade.