Knowles Corporation KN reported healthy first-quarter 2021 results, wherein both the top line and the bottom line beat the respective Zacks Consensus Estimate.
On a GAAP basis, net income (from continuing operations) in the March quarter was $12.5 million or 13 cents per share against net loss of $12.8 million or loss of 14 cents per share in the year-ago quarter. The improvement was primarily driven by an operating income.
Non-GAAP net income came in at $27.8 million or 29 cents per share compared with $3.2 million or 3 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 4 cents.
Quarterly revenues grew 23.2% year over year to $201 million, which came above the midpoint of the company’s guidance. The growth was driven by solid MEMS (micro-electro-mechanical systems) microphone demand across multiple end markets and improved trends in the Hearing Health business. Precision Devices revenues were in line with its expectations. Also, the top line surpassed the consensus estimate of $200 million.
Audio revenues increased 35.8% year over year to $163.1 million. The segment’s gross profit was $64.8 million compared with $40.6 million in the prior-year quarter.
Precision Devices revenues declined 11.9% to $37.9 million, as the pandemic continued to affect the medtech and defense end markets. Gross profit was $13.7 million compared with $16.1 million in the year-ago quarter.
Cost of goods sold increased to $123 million from $105.5 million year over year. Gross profit improved to $78 million from $56.2 million for a margin of 38.8% and 34.5%, respectively. Total operating expenses were $59.7 million compared with $65.8 million in the prior-year quarter. Operating income came in at $18.3 million against a loss of $9.6 million a year ago.
Cash Flow & Liquidity
During the first quarter of 2021, Knowles generated $39.7 million of cash from operations. Free cash flow was $34.5 million.
As of Mar 31, 2021, the company had $181.6 million in cash and cash equivalents with $16.6 million of long-term operating lease liabilities compared with the respective tallies of $147.8 million and $18.7 million at the end of the previous quarter.
Knowles has guided for the second quarter of 2021. On a continuing operations basis, it expects non-GAAP revenues in the range of $185-$205 million. Non-GAAP gross profit margin is estimated in the range of 39-41%. Non-GAAP earnings are projected in the band of 23-29 cents per share.
Zacks Rank & Stocks to Consider
Knowles currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader industry are Micron Technology MU, Etsy ETSY and Perion Network PERI, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Micron delivered a trailing four-quarter earnings surprise of 6.5%, on average.
Etsy delivered a trailing four-quarter earnings surprise of 31.8%, on average.
Perion delivered a trailing four-quarter earnings surprise of 109.4%, on average.
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