Knowles Shares Plunge 8% As Q3 Results Miss Estimates, Weak Outlook

(RTTNews) - Shares of Knowles Corp. (KN) plunged more than eight percent in extended trading on Monday after the maker of acoustic and transducer products reported results for the third quarter that missed analysts' expectations. The company also provided earnings and revenue guidance for the fourth quarter, well below Street view.

Further, the company reported a loss for the quarter compared to a profit last year, reflecting lower gross margin and a revenue decline.

The company had earlier in the month also slashed earnings and sales guidance for the third quarter, citing temporary interruption of production and shipments of one new version of MEMS microphone.

"Our third quarter was in line with the preliminary results we issued earlier this month. While the impact of the microphone situation we experienced during the quarter presents a challenge, we continue to be encouraged by the broader trends we are experiencing in our Mobile Consumer Electronics and Specialty Components segments," President and CEO Jeffrey Niew said in a statement.

Itasca, Illinois-based Knowles, which was spun-off from Dover Corp. (DOV) in early March, reported a net loss of $14.6 million or $0.17 per share for the third quarter, compared to net earnings of $44.3 million or $0.52 per share in the prior-year quarter.

Excluding items, adjusted net earnings for the quarter was $32.7 million or $0.38 per share, compared to $50.9 million or $0.60 per share in the year-ago quarter.

On average, analysts polled by Thomson Reuters expected the company to report earnings of $0.41 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the quarter declined to $300.8 million from $311.6 million in the same quarter last year, and missed Wall Street analysts' consensus estimate of $307.22 million.

"Mobile consumer revenue was up 9.5 percent sequentially driven primarily by growth in China and improving trends at a Korean OEM. We also saw record quarterly revenue in our hearing health business within Specialty Components on broad-based strength at hearing aid OEMs," Niew noted.

Adjusted gross margin for the quarter contracted 780 basis points to 31.4 percent from last year, and expenses also increased as a percentage of total revenues.

Looking ahead to the fourth quarter, the company expects adjusted earnings in a range of $0.30 to $0.38 per share, on projected revenues between $280 million and $300 million. Street is currently looking for earnings of $0.62 per share on revenue of $338.04 million for the quarter.

"In addition, our restructuring efforts remain on track and we expect significant margin improvement in Q4 and in 2015 driven by the closure of our Vienna production facility, the ramp up of our Cebu plant, and the continued consolidation of our capacitor facilities," Niew added.

Knowles was created in early March 2014 when Dover spun-off certain of its communication technologies businesses into a standalone, publicly traded company. It makes acoustic components, including MEMs microphones, speakers, receivers and transducers, as well as communication infrastructure components.

KN closed Monday's regular trading session at $18.80, down $0.31 or 1.62% on a volume of 3.53 million shares. The stock plunged a further $1.53 or 8.14% in after-hours trading.