Knowles Corporation (NYSE:KN) Q4 2022 Earnings Call Transcript

John Anderson: Yes. If you look at Q4 and actually the numbers I gave in Q1, the benefits are fully of the restructuring, we announced last August are entirely baked into that, I’ve talked before about a $45 million run rate, which is about 180 million annualized, that’s kind of what I would expect sitting here today that is up over 2022 levels, and it’s really driven primarily by incentive comp. Bonuses were a very low in the consumer MEMS segment, as well as the corporate in 2022. So we’re going to have a pretty decent uptick, because we’re planning to get back to normalized levels in terms of incentive comp. We also are adding some headcount in the PD to support the growth there. And then we also have conversely benefits from the restructuring we took. So again, I think, kind of a $45 million run rate is appropriate.

Suji Desilva: Okay. Thanks, John.

John Anderson: Sure.

Operator: Thank you. Our next question comes from Christopher Rolland with Susquehanna. You may proceed.

Jeffrey Niew: Chris?

Q €“ Christopher Rolland: Sorry about that. Mute button. This one is for John. And I might have heard this incorrectly. So I apologize. But did you guide Q2 to an EBIT margin of 22 to 24? I have gross margins — well.

John Anderson: Yeah, Chris, I said gross margin, we have sequential €“ Jeff mentioned sequential growth of 15% to 20%. And I said with that gross margins we’ll be back at 40% or above in the €“ in Q2.

Q €“ Christopher Rolland: Yes. Okay, I thought I heard improved cap utilization and favorable mix 22 to 24 EBIT or — I made that up.

John Anderson: Yeah, I didn’t say that. But that gross margin, getting back to 40% is dependent on increased capacity utilization, but we do

Jeffrey Niew: I mean there is going to be a significant improvement in EBIT margins in Q2, you know, but..

Q €“ Christopher Rolland: But not that level, yeah.

Jeffrey Niew: If gross margin in Q1 €“ Q2 look at the revenue, that’s the most — that’s going go right to the bottom line..

John Anderson: It kind of gave you a pretty good trail. If you think of sequential growth, gross margins at 40 above and I just said the run rate on OpEx. So you can

Q €“ Christopher Rolland: Yeah, I must have had some bad notes. Apologize, guys. Thank you.

John Anderson: No worries. Thanks, Chris.

Operator: Thank you. There are no other questions waiting at this time. There appear to be no further questions at this time. This concludes today’s conference call. Thank you for your participation. You may now disconnect your line.