Thank you for standing by. My name is Kayla, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 2024 Knowles Corporation Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again, press the star and one. I would now like to turn the call over to Sarah Cook. You may begin. Thank you, and welcome to our second quarter 2024 Earnings Call. I'm Sarah Cook, Vice President of Investor Relations, and presenting with me today are Jeffrey Niew, our President and CEO, and John Anderson, our Senior Vice President and CFO. Our call today will include remarks about future expectations, plans, and prospects for Knowles, which constitute forward-looking statements for purposes of the safe harbor provisions under applicable federal securities laws. Forward-looking statements in this call will include comments about demand for company products, anticipated trends in company sales, expenses, and profits, and involve a number of risks and uncertainties that could cause actual results to differ materially from current expectations. The company urges investors to review the risks and uncertainties in the company's SEC filings, including, but not limited to, the annual report Form 10-K for the fiscal year ended December 31st, 2023, periodic reports filed from time to time with the SEC, and the risks and uncertainties identified in today's earnings release. All forward-looking statements are made as of the date of this call, and Knowles disclaims any duty to update such statements except as required by law. In addition, pursuant to Reg G, any non-GAAP financial measures referenced during today's conference call can be found in our press release posted on our website at knowles.com and in our current report on Form 8-K filed today with the SEC. This will include a reconciliation to the most directly comparable GAAP measure. All financial references on this call will be on a non-GAAP continuing operations basis, unless otherwise indicated. We've made selected financial information available in webcast slides, which can be found in the Investor Relations section of our website. With that, let me turn the call over to Jeff, who will provide details on our results. Jeff? Thanks, Sarah, and thank you all for joining us today. Let me start by saying I'm pleased with the performance of our business in the second quarter. We continued to execute on our plan of focusing on high growth end markets where we have differentiated solutions, and in Q2, the business performed as we expected. We delivered $205 million in revenue, which is at the midpoint of our guided range and represents 18% growth on a year-over-year basis. EPS of $0.24 and cash from operations of $25 million were both in line with our expectation and at the midpoint of our guided range. From a segment perspective, MedTech and Specialty Audio revenue grew 4% sequentially as the end market for our hearing health products remained strong. The market dynamic of the aging population, expansion of the middle class globally, and improved hearing aid penetration all remain favorable. We reported adjusted EBITDA margins of over 45%, driven by continued operational execution and our sustained success of new product adoption. We expect this strength to remain throughout the year within 2024 and for 2024 to be a year of growth for the MedTech and Specialty Audio segment. Despite the continued headwinds from normalization of inventory levels in our industrial and distribution end markets, Precision Devices delivered solid results in the second quarter. Driven by the acquisition of Cornell, revenue was up 55% on a year-over-year basis. Adjusted EBITDA margins increased nearly 260 basis points sequentially on flat revenue, driven by strong operational execution and improvements in gross margin within Cornell. We have begun to see signs of inventory reduction in our distribution channel in industrial end markets, and we are ready to capitalize on growth as demand improves. I would also add our design activity remains robust, and we are well positioned to grow as the market recovers. On our Consumer MEMS Microphones business, we continue to progress to a conclusion on the strategic alternatives process, taking into consideration all stakeholders from customers to suppliers and shareholders to employees. From an operational standpoint, CMM financial results in the quarter were solid. Revenue was up 9% from the prior quarter, and adjusted EBITDA margins grew by 330 basis points. Before I conclude, I would like to touch on our capital allocation activities. In the second quarter, based on our continued robust cash generation, we repurchased $25 million of shares while also reducing our debt by $34 million. We expect sustained cash generation for the remainder of 2024. The first half of 2024 produced solid financial results. I continue to be pleased with the performance of the business, and I am excited about the opportunities we have ahead of us. My confidence in our ability to deliver shareholder value remains strong as our teams continue to demonstrate operational excellence, execution, innovative products, and expanding our market share across our core businesses. Now, let me turn the call over to John to go into the details of our quarterly results and provide the Q3 guidance. John? Thanks, Jeff. We reported second quarter revenues of $205 million at the midpoint of guidance and up 18% from the year ago period, driven by organic growth of 2% and the acquisition of Cornell in the fourth quarter of 2023. EPS was $0.24 in the quarter, at the midpoint of our guidance range, and up $0.01 or 4% from the second quarter of 2023. In the MedTech and Specialty Audio segment, revenue was $60 million, down 2% versus the prior year. Our hearing health business was up 5%, offset by lower demand in the specialty audio market. Gross margins were 54.6%, up more than 100 basis points versus the year ago period, driven by favorable product mix and benefits from foreign currency. The Precision Devices segment delivered revenues of $74 million, up 55% from the year ago period, driven by the acquisition of Cornell, partially offset by lower shipments of high-performance capacitors into distribution and OEMs in the industrial end market, as customer and channel inventories remain elevated. Gross margins were 37.2%, down 250 basis points from the second quarter of 2023 due to the acquisition of Cornell. While the gross margins at Cornell remain lower than that of the legacy Precision Devices business, we saw sequential margin improvement at Cornell of 340 basis points, and we expect margins to continue to improve throughout 2024. Excluding Cornell, year-over-year gross margins within the PD segment were flat. Consumer MEMS microphone revenues of $71 million were up 9% versus the year ago period due to share gains and increased consumer demand, primarily in Ear and IoT end markets. Gross margins were 28.1%, a 550 basis points decrease from the prior year due to the absence of a $4 million benefit related to the sale of fixed assets, which was recorded in the second quarter of 2023. On a total company basis, R&D expense in the quarter was $17 million, up 6% from Q2 2023 due to the acquisition of Cornell. SG&A expenses were $32 million, $2 million higher than prior year levels, driven by the acquisition of Cornell, partially offset by restructuring actions taken in the second half of 2023 in the Precision Devices segment. Interest expense was up $4 million versus the prior year due to higher bank borrowings associated with the acquisition of Cornell in the fourth quarter of 2023. Now I'll turn to our balance sheet and cash flow. In the second quarter, we generated $25 million in cash from operating activities at the midpoint of our guidance. For the first six months of 2024, we generated $42 million in operating cash flow, representing a $20 million increase over the first six months of 2023. Capital spending was $3 million in Q2, and we ended the quarter with cash and cash equivalents of $84 million. During the second quarter, we repurchased 1.4 million shares at a total cost of $25 million, and we reduced outstanding borrowings under our revolving credit facility by $34 million. We exited the second quarter with $261 million of total debt. That includes $146 million of borrowings under our revolving credit facility and an interest-free seller note issued in connection with the Cornell acquisition. Lastly, our net debt leverage ratio, based on trailing twelve months adjusted EBITDA, was 1.1 times. Moving to our guidance. For the third quarter of 2024, revenues are expected to be between $210 million and $220 million, up 23% versus the year ago period, driven by organic growth of 3% and the acquisition of Cornell. R&D expenses are expected to be between $16 million and $18 million, and selling and administrative expenses are expected to be within a range of $29 million-$31 million, up $5 million from the prior year due to increases associated with the Cornell acquisition. We're projecting adjusted EBIT margin for the quarter to be within a range of 16%-18%. We're forecasting interest expense in Q3 to be approximately $4 million, which includes $2 million of non-cash imputed interest. We expect an effective tax rate of 9%-13% for the quarter, which is lower than normal due to the utilization of foreign tax credits. We're projecting EPS to be within the range of $0.29-$0.33 per share. This assumes weighted average shares outstanding during the quarter of 92.2 million on a fully diluted basis. We're projecting cash from operations to be within a range of $35 million-$45 million, and capital spending is expected to be $5 million. I'll now turn the call back over to the operator for the questions and answers portion of our call. Operator? At this time, I would like to remind everyone in order to ask a question, please press star, then the number one on your telephone keypad. Our first question comes from the line of Christopher Rolland with Susquehanna. Your line is open. Hey, guys. Thanks for the question. I know you guided for sequential and year-over-year growth in MedTech and Specialty Audio and Precision Devices. I assume that's also going to include consumer, and if you could just kind of force rank or you know, give us some idea of what that sequential strength might be for those different segments, that would be great. Yeah. So Chris, thanks for the question. So first, I think being very deliberate about this, the sequential growth is coming from the non- CMM portion of the business. ... So, you know, I think what we're starting to see, you know, particularly in the Precision Devices business, you know, we think, you know, we're starting to see sequential improvement, you know, on our way, you know, at some point, and hopefully in the near future, a return to year-over-year growth on a pro forma basis when you include Cornell. And we're seeing that, you know, being relatively broad-based. So, you know, I think, you know, we're pretty pleased. We are seeing some sequential growth in the MedTech and Specialty Audio. I think it's gonna be quite honestly a little bit more pronounced, the sequential growth in Q4 versus Q3. But we do expect in Precision Devices to again have sequential growth in Q4 from Q3. As far as the CMM business, you know, we are not in Q3 seeing a lot of sequential growth. I'd say it's flattish, but it is coming off, you know, I'd say a pretty strong Q2 on a year-over-year basis. We had a pretty strong Q2. I think, the CMM business was up about 8% or 9% year- over- year in Q2, so it's coming off a pretty strong Q2. Great. And then I guess maybe following up there, 'cause September for CMM typically is pretty strong for you guys. Are you seeing something different in content, or is it just purely timing? And then lastly, you know, any update on potentially selling that business and, yeah, we'll just stop there. Yeah. So let me take the second question first. I would say not a huge update from the last quarter, but I would say, you know, we're inching closer towards a conclusion. You know, and so, you know, I think that's about what we can say at this point, we're inching closer towards a conclusion. You know, I would say, you know, overall, for the full year, the CMM business is actually, you know, going to be up pretty significantly year- over- year. And so, you know, I think it appears-- you know, I would say, you know, we're not gonna comment by quarter, but, you know, I think it's up about 8% or so. That's what we're seeing for the full year. Okay, great. Well, great, great results in the parts that matter. Thanks, guys. Your next question comes from the line of Anthony Stoss with Craig-Hallum. Your line is open. Good afternoon, guys. I have a couple questions. On the CD acquisition, I think the past quarter, you were kind of ballparking it to equate to about $135 million -$140 million for the full year 2024. Has that changed, or is that still kind of the right number to think about? I'd say it's, you know, a little lower than that. You know, although, here's what I would say: you know, I think, you know, when we announced the deal, we talked about $26 million in EBITDA for this year. We're still sticking... We're gonna hit the $26 million of EBITDA, even on the, the lower number, and, the way we're doing that, quite frankly, is the synergies are, are larger than we had expected. I think we've talked about that probably in the past. I think, you know, a couple quarters ago, we were talking about maybe a couple million dollars of kind of, of price opportunity. Last quarter, we talked maybe 3-4. I would say it's probably closer to 5 now, in terms of price in that business. So, we're feeling pretty good about where we are, and I, and I think... You know, what I'd say, Tony, about CD acquisition is, you know, the margins are coming up, like, probably a little faster than we would've expected, even on lower revenue, which is, I think, a really good sign, because as the market starts to recover, you know, we, we can see that the margins are gonna expand, and we're gonna get to the target margins that we've kind of talked about early on, faster than we probably would've anticipated. Tony, just to give a little color to that, you know, when we, when we acquired CD Q4 of last year, margins were right around 30%. Same thing in Q1 of this year, and we're seeing sequential, pretty significant sequential improvement. We expect to be kind of in the high 30s as we exit 2024. Yeah. And so that's a combination, you know, obviously, of some just capacity utilization, but it's also getting the synergies. Got it. Perfect. Second question, just want to confirm something. So on the September guide, are you assuming anything from your, prior biggest handset customer in terms of, content in a handset? So, here, you know, again, what I would kind of say is, you know, obviously, we're not gonna make comments on specific customers. You know, I think, you know, overall, I would just make the comment again, the growth sequentially is coming from the non-CMM portion of the business. You know, and I think, you know, we keep continuing to focus on overall, you know, reducing our exposure to mobile, which is our, you know, one of our lowest gross margin markets. And, you know, but overall, you know, if you look at for the full year, the CMM business will be up 8% based on, you know, what we're seeing for this year, for the full year. Got it. Okay. And then lastly, Jeff, I think in past quarters, you're sitting with about five months worth of inventory in PD, and you wanted to bring it down to two months. Are we still in that kind of same five months, or is it starting to come in? You're referring to inventory in the channel, correct? That's what you're referring to? Yeah. Okay. Yeah. So we're definitely seeing... So, you know, here, here's like, again, I kind of brought this up. We're, we expect PD both, you know, in the classic PD as well as Cornell, to be sequentially improving in Q3, and we expect it to improving in Q4. We are seeing the inventory in the channel starting to come down, you know, but it's probably coming down a little bit slower than we expected. You know, the steepness of the sequential improvement is probably a little less than we would have expected, but we're definitely seeing it. You know, and when I look at the numbers, you know, we had some nice even sequential growth. We're gonna have from in Cornell, but again, in classic PD from Q2 to Q3. So the inventory is definitely coming down in the channel. You know, and it, and there are still pockets where there's still probably too much inventory, but, but overall, we're starting to kind of see, you know, the, the light at the end of the tunnel, in the PD markets. The last thing I just would kind of make a comment on, Tony, is, you know, passives versus semiconductors, because I think we sometimes get these things mixed. You know, what we're seeing is the semiconductor channel, which, you know, we're not obviously involved with as much. There is a lot of inventory still in semiconductors, but the passive inventory in the channel, the, the passive inventory has been reducing, at a faster rate than semiconductor in the channel. Very good. Thanks, Jeff, for all the color. Yep. Your next question comes from the line of Tristan Gerra with Baird. Your line is open. Hi, this is Tyler on for Tristan. Thanks for taking the question. I know you talked about some of the pricing opportunities you have on the Cornell side, but can you speak to pricing across the rest of your businesses? Yeah, sure. I can talk about it. You know, I would sit there and say first in the MedT ech, Specialty Audio, pricing stable, you know, I wouldn't say we've gotten big price increases or reductions. It's very, very stable. You know, again, a lot of things we have with these customers are longer term contracts, very stable. I think we're a very valuable, valued supplier. In the, you know, in the precision device segment outside of Cornell, you know, we're seeing some modest price increases. I think, you know, again, I think I've talked about this before, Tyler, where, you know, when we first started doing pricing in the classic PD section, we had some larger increases. Now it's kind of smaller but continual. And then, you know, I think lastly, the CMM business. You know, I'd say, you know, outside of mobile, pricing's been pretty stable in our CMM business. You know, mobile's still challenged. I would sit there and say mobile's still challenged. And so, you know, that's probably, you know, our biggest challenge is the mobile area. And again, you know, as we try to over time, reduce our exposure to mobile, you know, we would probably see less and less price decreases in that business. Great. And then just looking at the hearing health business, have you seen anything notable to call out on the OTC market? Any sense that there's upside relative to your expectations for that business? Yeah, you know, we've been on the call like many times talking about OTC and, you know, I've always kind of like tried to hold back expectations, you know, in terms of how big this could be. It still is not really like becoming a significant piece of business for us. And what I could sit there and say pretty confidently, there's no sockets I can point to that we've really lost that have any significant volume. So it is just not developing the way people had hoped, but more it's kind of in line with what we'd hoped. Now, what I would say, I still think the OTC market is helping with the traditional hearing aid market, where, you know, people hearing more about hearing aids, and maybe they go look in the over-the-counter hearing aid, and then they opt into a, at the traditional hearing aid channel. Now, these are complicated devices, and, you know, I think there's probably a little bit of a, I would say, an under appreciation for, you know, the value of the audiologist in the way this works in terms of a person getting a hearing aid. And I think people are starting to realize that. And again, having been in the market for many years, you know, we didn't factor in too much in for OTC, and it's probably meeting expectation, but at a very low level. But the traditional hearing aid channel continued to do very well. Great. Thanks again for taking the questions. As a reminder, if you would like to ask a question, please press star and the number one on your telephone keypad. Our next question comes from the line of Bob Labick with CJS Securities. Your line is open. Thanks. Good afternoon. Hey, Bob. Hey, Bob. Hi. So you talked obviously about in Precision Devices in particular, you have the destocking going on and inventory in the channel and stuff, but can you maybe talk a little bit about the, you know, overall end market demand, where the biggest drivers are, where you see that, and, you know, how long it takes to kind of get back up to that growth rate? Yeah. Yeah. So let me kind of try to divide it up into a few different markets. We got defense, MedTech, industrial, other. We'll make some comments a little bit about, you know, electric as well. And again, you know, Cornell as well as the traditional PD participate in all these areas. And so what I would sit there and say, let me start with defense. You know, we're definitely seeing growth in defense. We are seeing some growth in defense. You know, it's not probably as high as we would expected, but, you know, for the full year, we will see growth in defense. MedTech, you know, there has been a number of areas where we have seen, you know, inventory issues, not the hearing aid, but, you know, in some of our other precision device markets. But we are expecting some pretty strong year-over-year growth in MedTech in the back half of the year, as the inventory has kind of waned down, right? So we are starting to see that in the marketplace. My guess, what I would sit there and say is that the one market that's probably a little bit, probably the more murky of all is the industrial/other. And that market, you know, has been, you know, I'd say-... Not, it's still in decline, and there's some modest improvement that we're seeing going forward, but it's not like. And that's probably the area when I kind of said upfront that the steepness of the recovery is probably not as large as we thought, probably really more in the industrial area. We're seeing some sequential improvement. Now, let me just cut it a different way. I can also cut it a different way, which is, you know, OEM versus distribution. You know, we're expecting some pretty strong back half of the year sequential improvement on our OEM customers. A lot of that driven by med. And our distribution, we're expecting modest sequential growth in the back half of the year. Okay. Got it. Thanks. And then, I haven't really had a chance to fully go through this, but so at the risk of sounding a little silly, could you talk about the goodwill impairment in CMM and, you know, what I guess the process was and what that, you know, kind of says to us about that segment? Sure, Bob, I can take that. So as you recall, in the third quarter of last year, we announced that we were reviewing strategic alternatives for the CMM business. That review included, you know, a range of possibilities, including a potential sale or restructuring of the business. During the second quarter of 2024, we evaluated, you know, the potential outcomes of our review, and we concluded, as a management team, that it's more likely than not, the fair value of the CMM reporting unit was below its carrying value, and as a result, we recorded a goodwill impairment charge of $249 million. Okay. Got it. And basically, you said you're inching towards a resolution there. Can you talk about M&A? I mean, you've talked about, you know, most likely in the PD segment, but can you still? Is M&A still doable with the kind of ongoing CMM strategic alternatives? Or are they gonna be, you know, separate events, you'll finish CMM and then, and then get back to potential M&A? Or how's that process playing out? Well, let me start with the first statement, which is our cash flow continues to be very robust. You know, I—you know, we're very pleased with the cash flow in the first half. You know, normally, you know, seasonally, cash flow is usually weaker in the first half. We had a very strong first half cash flow. We're expecting that to continue in the back half. And I would sit there and say, we are definitely looking at acquisitions, you know? But I guess what I would just say is, we wanna make sure we don't do anything that, you know, our shareholders would look at and say, "Why are they doing that?" There's a lot of opportunities out there, you know, and I point to the Cornell acquisition, which, you know, we think is, you know, from a synergy standpoint, from a how it fits with what we do, I mean, this has been a really great acquisition for us. We're looking for that next Cornell, and so I don't think it's gonna take for a conclusion of the CMM process to move forward with the M&A. If we find the right thing, our balance sheet's in good shape, we are gonna move forward with M&A. Bob, we've always said, we're gonna maintain modest debt levels, you know, not going above, call it 2.75 on a net leverage ratio, you know? Yeah, and that kind of leads to just a little bit on the capital allocation. You know, we're continuing to buy back shares as well because of the cash flow. Okay. Super. Thank you very much. There are no further questions at this time. I will turn the call back over to Sarah Cook. Thank you for joining us today. As always, we appreciate your interest in Knowles and look forward to speaking with you on the next earnings call. This concludes our call today. This concludes today's conference call. You may now disconnect.