Rogers Corporation Reports Second Quarter 2023 Results
Operating Performance Drives Continued Margin and Earnings Improvement
“We continued to execute on our profitability improvement plans in the second quarter which drove gross margin and earnings per share results that exceeded the mid-point of our guidance,” stated Colin Gouveia, Rogers' President and CEO. “We are pleased with the progress we have made thus far, and we remain intently focused on driving additional margin and earnings improvement in the coming quarters. Challenging market conditions tempered sales for the second quarter, but with our strong technology portfolio we remain extremely well positioned to benefit as demand improves. We continue to execute on our strategy to achieve our long-term growth targets, including the recent announcement that we are expanding our power substrate capacity to capitalize on the accelerating demand for silicon carbide devices in EV and renewable energy markets."
Financial Overview
GAAP Results |
Q2 2023 |
Q1 2023 |
Q2 2022 |
Net Sales ($M) |
|
|
|
Gross Margin |
|
|
|
Operating Margin |
|
( |
|
Net Income (Loss) ($M) |
|
|
|
Net Income (Loss) Margin |
|
(1.4)% |
|
Diluted Earnings Per Share |
|
|
|
Net Cash Provided by Operating Activities ($M) |
|
|
|
|
|
|
|
Non-GAAP Results1 |
Q2 2023 |
Q1 2023 |
Q2 2022 |
Adjusted Operating Margin |
|
|
|
Adjusted Net Income ($M) |
|
|
|
Adjusted Earnings Per Diluted Share |
|
|
|
Adjusted EBITDA ($M) |
|
|
|
Adjusted EBITDA Margin |
|
|
|
Free Cash Flow ($M) |
|
|
|
|
|
|
|
Net Sales by Operating Segment (dollars in millions) |
Q2 2023 |
Q1 2023 |
Q2 2022 |
Advanced Electronics Solutions (AES) |
|
|
|
Elastomeric Material Solutions (EMS) |
|
|
|
Other |
|
|
|
1 - A reconciliation of GAAP to non-GAAP measures is provided in the schedules included below |
Q2 2023 Summary of Results
Net sales of
Gross margin improved to
Selling, general and administrative (SG&A) expenses decreased by
GAAP operating margin of
GAAP earnings per diluted share were
Ending cash and cash equivalents were
Financial Outlook
|
Q3 2023 |
Net Sales ($M) |
|
Gross Margin |
|
Earnings Per Diluted Share |
|
Adjusted Earnings Per Diluted Share1 |
|
|
|
|
2023 |
Capital Expenditures ($M) |
|
1 - A reconciliation of GAAP to non-GAAP measures is provided in the schedules included below |
Conference call and additional Information
A conference call to discuss the results for the first quarter will take place today, Thursday, August 03, 2023 at 5:00 pm ET. A live webcast of the event and the accompanying presentation can be accessed on the Rogers Corporation website at https://www.rogerscorp.com/investors.
About Rogers Corporation
Rogers Corporation (NYSE:ROG) is a global leader in engineered materials to power, protect and connect our world. Rogers delivers innovative solutions to help our customers solve their toughest material challenges. Rogers’ advanced electronic and elastomeric materials are used in applications for EV/HEV, automotive safety and radar systems, mobile devices, renewable energy, wireless infrastructure, energy-efficient motor drives, industrial equipment and more. Headquartered in
Safe Harbor Statement
Statements included in this release that are not a description of historical facts are forward-looking statements. Words or phrases such as “believe,” “may,” “could,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “seek,” “plan,” “expect,” “should,” “would” or similar expressions are intended to identify forward-looking statements, and are based on Rogers’ current beliefs and expectations. This release contains forward-looking statements regarding our plans, objectives, outlook, goals, strategies, future events, future net sales or performance, capital expenditures, future restructuring, plans or intentions relating to expansions, business trends and other information that is not historical information. All forward-looking statements are based upon information available to us on the date of this release and are subject to risks, uncertainties and other factors, many of which are outside of our control, which could cause actual results to differ materially from those indicated by the forward-looking statements. Other risks and uncertainties that could cause such results to differ include: the duration and impacts of the coronavirus global pandemic and efforts to contain its transmission and distribute vaccines, including the effect of these factors on our business, suppliers, customers, end users and economic conditions generally; continuing disruptions to global supply chains and our ability, or the ability of our suppliers, to obtain necessary product components; failure to capitalize on, volatility within, or other adverse changes with respect to the Company's growth drivers, including advanced mobility and advanced connectivity, such as delays in adoption or implementation of new technologies; uncertain business, economic and political conditions in
(Financial statements follow)
Condensed Consolidated Statements of Operations (Unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) |
June 30, 2023 |
|
June 30, 2022 |
|
June 30, 2023 |
|
June 30, 2022 |
||||||||
Net sales |
$ |
230,821 |
|
|
$ |
251,970 |
|
|
$ |
474,668 |
|
|
$ |
500,236 |
|
Cost of sales |
|
151,204 |
|
|
|
165,452 |
|
|
|
315,350 |
|
|
|
328,324 |
|
Gross margin |
|
79,617 |
|
|
|
86,518 |
|
|
|
159,318 |
|
|
|
171,912 |
|
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative expenses |
|
46,128 |
|
|
|
56,138 |
|
|
|
106,213 |
|
|
|
113,843 |
|
Research and development expenses |
|
8,098 |
|
|
|
8,050 |
|
|
|
17,684 |
|
|
|
16,310 |
|
Restructuring and impairment charges |
|
3,939 |
|
|
|
677 |
|
|
|
14,440 |
|
|
|
746 |
|
Other operating (income) expense, net |
|
(6,442 |
) |
|
|
(1,743 |
) |
|
|
(6,661 |
) |
|
|
(2,274 |
) |
Operating income |
|
27,894 |
|
|
|
23,396 |
|
|
|
27,642 |
|
|
|
43,287 |
|
|
|
|
|
|
|
|
|
||||||||
Equity income in unconsolidated joint ventures |
|
842 |
|
|
|
1,800 |
|
|
|
918 |
|
|
|
3,075 |
|
Other income (expense), net |
|
(757 |
) |
|
|
319 |
|
|
|
(752 |
) |
|
|
586 |
|
Interest expense, net |
|
(2,837 |
) |
|
|
(1,548 |
) |
|
|
(6,299 |
) |
|
|
(2,617 |
) |
Income before income tax expense |
|
25,142 |
|
|
|
23,967 |
|
|
|
21,509 |
|
|
|
44,331 |
|
Income tax expense (benefit) |
|
7,278 |
|
|
|
6,084 |
|
|
|
7,150 |
|
|
|
9,848 |
|
Net income |
$ |
17,864 |
|
|
$ |
17,883 |
|
|
$ |
14,359 |
|
|
$ |
34,483 |
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share |
$ |
0.96 |
|
|
$ |
0.95 |
|
|
$ |
0.77 |
|
|
$ |
1.83 |
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per share |
$ |
0.96 |
|
|
$ |
0.94 |
|
|
$ |
0.77 |
|
|
$ |
1.82 |
|
|
|
|
|
|
|
|
|
||||||||
Shares used in computing: |
|
|
|
|
|
|
|
||||||||
Basic earnings per share |
|
18,627 |
|
|
|
18,813 |
|
|
|
18,615 |
|
|
|
18,797 |
|
Diluted earnings per share |
|
18,683 |
|
|
|
18,992 |
|
|
|
18,659 |
|
|
|
18,996 |
|
Condensed Consolidated Statements of Financial Position (Unaudited) |
|||||||
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PAR VALUE) |
June 30, 2023 |
|
December 31, 2022 |
||||
Assets |
|
|
|
||||
Current assets |
|
|
|
||||
Cash and cash equivalents |
$ |
141,452 |
|
|
$ |
235,850 |
|
Accounts receivable, less allowance for doubtful accounts of |
|
186,700 |
|
|
|
177,413 |
|
Contract assets |
|
42,223 |
|
|
|
38,853 |
|
Inventories |
|
169,675 |
|
|
|
182,402 |
|
Prepaid income taxes |
|
3,724 |
|
|
|
4,042 |
|
Asbestos-related insurance receivables, current portion |
|
3,881 |
|
|
|
3,881 |
|
Other current assets |
|
35,124 |
|
|
|
17,426 |
|
Total current assets |
|
582,779 |
|
|
|
659,867 |
|
Property, plant and equipment, net of accumulated depreciation of |
|
346,335 |
|
|
|
358,415 |
|
Investments in unconsolidated joint ventures |
|
12,760 |
|
|
|
14,082 |
|
Deferred income taxes |
|
60,165 |
|
|
|
50,649 |
|
Goodwill |
|
358,641 |
|
|
|
352,365 |
|
Other intangible assets, net of amortization |
|
130,551 |
|
|
|
133,724 |
|
Pension assets |
|
5,432 |
|
|
|
5,251 |
|
Asbestos-related insurance receivables, non-current portion |
|
55,926 |
|
|
|
55,926 |
|
Other long-term assets |
|
15,788 |
|
|
|
15,935 |
|
Total assets |
$ |
1,568,377 |
|
|
$ |
1,646,214 |
|
Liabilities and Shareholders’ Equity |
|
|
|
||||
Current liabilities |
|
|
|
||||
Accounts payable |
$ |
51,233 |
|
|
$ |
57,342 |
|
Accrued employee benefits and compensation |
|
33,591 |
|
|
|
34,158 |
|
Accrued income taxes payable |
|
7,616 |
|
|
|
5,504 |
|
Asbestos-related liabilities, current portion |
|
4,968 |
|
|
|
4,968 |
|
Finance lease obligations, current portion |
|
355 |
|
|
|
498 |
|
Other accrued liabilities |
|
20,817 |
|
|
|
40,067 |
|
Total current liabilities |
|
118,580 |
|
|
|
142,537 |
|
Borrowings under revolving credit facility |
|
130,000 |
|
|
|
215,000 |
|
Pension and other postretirement benefits liabilities |
|
1,579 |
|
|
|
1,501 |
|
Asbestos-related liabilities, non-current portion |
|
59,884 |
|
|
|
60,065 |
|
Finance lease obligations, non-current portion |
|
1,253 |
|
|
|
1,295 |
|
Non-current income tax |
|
9,450 |
|
|
|
9,985 |
|
Deferred income taxes |
|
24,443 |
|
|
|
23,557 |
|
Other long-term liabilities |
|
17,571 |
|
|
|
19,808 |
|
Shareholders’ equity |
|
|
|
||||
Capital stock - |
|
18,616 |
|
|
|
18,574 |
|
Additional paid-in capital |
|
145,219 |
|
|
|
140,702 |
|
Retained earnings |
|
1,112,813 |
|
|
|
1,098,454 |
|
Accumulated other comprehensive loss |
|
(71,031 |
) |
|
|
(85,264 |
) |
Total shareholders' equity |
|
1,205,617 |
|
|
|
1,172,466 |
|
Total liabilities and shareholders' equity |
$ |
1,568,377 |
|
|
$ |
1,646,214 |
|
Reconciliation of non-GAAP financial measures to the comparable GAAP measures
Non-GAAP financial measures:
This earnings release includes the following financial measures that are not presented in accordance with generally accepted accounting principles in
(1) Adjusted operating margin, which the Company defines as operating margin excluding acquisition-related amortization of intangible assets and discrete items, which are acquisition and related integration costs, dispositions, gains or losses on the sale or disposal of property, plant and equipment, restructuring, severance, impairment and other related costs, non-routine shareholder advisory costs, (income) costs associated with terminated merger, UTIS fire and recovery charges and the related income tax effect on these items (collectively, “discrete items”);
(2) Adjusted net income, which the Company defines as net income (loss) excluding amortization of acquisition intangible assets, pension settlement charges and discrete items;
(3) Adjusted earnings per diluted share, which the Company defines as earnings per diluted share excluding amortization of acquisition intangible assets, pension settlement charges and discrete items, divided by adjusted weighted average shares outstanding - diluted;
(4) Adjusted EBITDA, which the Company defines as net income (loss) excluding interest expense, net, income tax expense (benefit), depreciation and amortization, stock-based compensation expense, pension settlement charges and discrete items;
(5) Adjusted EBITDA Margin, which the Company defines as the percentage that results from dividing Adjusted EBITDA by total net sales;
(6) Free cash flow, which the Company defines as net cash provided (used) by operating activities less non-acquisition capital expenditures.
Management believes adjusted operating margin, adjusted net income, adjusted earnings per diluted share, adjusted EBITDA and adjusted EBITDA margin are useful to investors because they allow for comparison to the Company’s performance in prior periods without the effect of items that, by their nature, tend to obscure the Company’s core operating results due to potential variability across periods based on the timing, frequency and magnitude of such items. As a result, management believes that these measures enhance the ability of investors to analyze trends in the Company’s business and evaluate the Company’s performance relative to peer companies. Management also believes free cash flow is useful to investors as an additional way of viewing the Company's liquidity and provides a more complete understanding of factors and trends affecting the Company's cash flows. However, non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation from, or as alternatives to, financial measures prepared in accordance with GAAP. In addition, these non-GAAP financial measures may differ from, and should not be compared to, similarly named measures used by other companies. Reconciliations of the differences between these non-GAAP financial measures and their most directly comparable financial measures calculated in accordance with GAAP are set forth below.
Reconciliation of GAAP operating margin to adjusted operating margin*:
|
2023 |
2022 |
||||
Operating margin |
Q2 |
Q1 |
Q2 |
|||
GAAP operating margin |
12.1 |
% |
(0.1 |
)% |
9.3 |
% |
|
|
|
|
|||
Acquisition and divestiture related costs: |
|
|
|
|||
Acquisition and related integration costs |
— |
% |
— |
% |
0.1 |
% |
Dispositions |
— |
% |
0.5 |
% |
— |
% |
Loss/(gain) on sale or disposal of assets |
(0.2 |
)% |
— |
% |
— |
% |
|
|
|
|
|||
Restructuring, business realignment and other cost saving initiatives: |
|
|
|
|||
Restructuring, severance, impairment and other related costs |
2.0 |
% |
4.9 |
% |
0.4 |
% |
|
|
|
|
|||
Non-routine shareholder advisory costs |
— |
% |
3.1 |
% |
— |
% |
(Income) costs associated with terminated merger |
0.7 |
% |
0.8 |
% |
1.4 |
% |
UTIS fire (recovery)/charges |
(2.6 |
)% |
(0.1 |
)% |
(0.7 |
)% |
Total discrete items |
(0.1 |
)% |
9.2 |
% |
1.1 |
% |
Operating margin adjusted for discrete items |
12.0 |
% |
9.1 |
% |
10.4 |
% |
|
|
|
|
|||
Acquisition intangible amortization |
1.4 |
% |
1.4 |
% |
1.7 |
% |
|
|
|
|
|||
Adjusted operating margin |
13.4 |
% |
10.5 |
% |
12.1 |
% |
*Percentages in table may not add due to rounding. |
Reconciliation of GAAP net income to adjusted net income*:
(amounts in millions) |
2023 |
2022 |
|||||||
Net income |
Q2 |
Q1 |
Q2 |
||||||
GAAP net income (loss) |
$ |
17.9 |
|
$ |
(3.5 |
) |
$ |
17.9 |
|
|
|
|
|
||||||
Acquisition and divestiture related costs: |
|
|
|
||||||
Acquisition and related integration costs |
|
— |
|
|
0.1 |
|
|
0.1 |
|
Acquisition intangible amortization |
|
3.3 |
|
|
3.3 |
|
|
4.2 |
|
Dispositions |
|
0.1 |
|
|
1.2 |
|
|
— |
|
Loss/(gain) on sale or disposal of assets |
|
(0.5 |
) |
|
— |
|
|
— |
|
|
|
|
|
||||||
Restructuring, business realignment and other cost saving initiatives: |
|
|
|
||||||
Restructuring, severance, impairment and other related costs |
|
4.6 |
|
|
11.9 |
|
|
1.0 |
|
|
|
|
|
||||||
Non-routine shareholder advisory costs |
|
0.1 |
|
|
7.6 |
|
|
— |
|
(Income) costs associated with terminated merger |
|
1.5 |
|
|
1.9 |
|
|
3.4 |
|
UTIS fire (recovery)/charges |
|
(5.9 |
) |
|
(0.2 |
) |
|
(1.7 |
) |
Income tax effect of non-GAAP adjustments and intangible amortization |
|
(1.0 |
) |
|
(6.1 |
) |
|
(1.7 |
) |
Adjusted net income |
$ |
20.0 |
|
$ |
16.2 |
|
$ |
23.2 |
|
*Values in table may not add due to rounding. |
Reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share*:
|
2023 |
2022 |
|||||||
Earnings per diluted share |
Q2 |
Q1 |
Q2 |
||||||
GAAP earnings per diluted share |
$ |
0.96 |
|
$ |
(0.19 |
) |
$ |
0.94 |
|
|
|
|
|
||||||
Acquisition and divestiture related costs: |
|
|
|
||||||
Dispositions |
|
— |
|
|
0.05 |
|
|
— |
|
Loss/(gain) on sale or disposal of assets |
|
(0.02 |
) |
|
— |
|
|
— |
|
|
|
|
|
||||||
Restructuring, business realignment and other cost saving initiatives: |
|
|
|
||||||
Restructuring, severance, impairment and other related costs |
|
0.18 |
|
|
0.49 |
|
|
0.04 |
|
|
|
|
|
||||||
Non-routine shareholder advisory costs |
|
— |
|
|
0.31 |
|
|
— |
|
(Income) costs associated with terminated merger |
|
0.06 |
|
|
0.08 |
|
|
0.14 |
|
UTIS fire (recovery)/charges |
|
(0.25 |
) |
|
(0.01 |
) |
|
(0.07 |
) |
Impact of including dilutive securities(a) |
|
— |
|
|
— |
|
|
— |
|
Total discrete items |
$ |
(0.01 |
) |
$ |
0.92 |
|
$ |
0.11 |
|
|
|
|
|
||||||
Earnings per diluted share adjusted for discrete items |
|
0.94 |
|
|
0.73 |
|
|
1.05 |
|
|
|
|
|
||||||
Acquisition intangible amortization |
$ |
0.13 |
|
$ |
0.14 |
|
$ |
0.17 |
|
|
|
|
|
||||||
Adjusted earnings per diluted share |
$ |
1.07 |
|
$ |
0.87 |
|
$ |
1.22 |
|
*Values in table may not add due to rounding. |
(a)This represents the dilutive effect of awards under equity compensation plans. Refer to the table below for the effect on adjusted weighted average shares outstanding - diluted. |
The following table reconciles weighted average shares outstanding - diluted under US GAAP to adjusted weighted average shares outstanding - diluted used in the calculation of adjusted diluted EPS: |
|
2023 |
2022 |
|
(Shares in thousands) |
Q2 |
Q1 |
Q2 |
Weighted average shares outstanding - diluted |
18,683 |
18,604 |
18,992 |
Dilutive effect of awards under equity compensation plans |
— |
32 |
— |
Adjusted weighted average shares outstanding - diluted |
18,683 |
18,636 |
18,992 |
Reconciliation of GAAP net income to adjusted EBITDA*:
|
2023 |
2022 |
|||||||
(amounts in millions) |
Q2 |
Q1 |
Q2 |
||||||
GAAP net income (loss) |
$ |
17.9 |
|
$ |
(3.5 |
) |
$ |
17.9 |
|
|
|
|
|
||||||
Interest expense, net |
|
2.8 |
|
|
3.5 |
|
|
1.5 |
|
Income tax expense (benefit) |
|
7.3 |
|
|
(0.1 |
) |
|
6.1 |
|
Depreciation |
|
10.4 |
|
|
11.3 |
|
|
8.0 |
|
Amortization |
|
3.3 |
|
|
3.3 |
|
|
4.2 |
|
Stock-based compensation expense |
|
5.0 |
|
|
2.1 |
|
|
4.9 |
|
|
|
|
|
||||||
Acquisition and divestiture related costs: |
|
|
|
||||||
Acquisition and related integration costs |
|
— |
|
|
0.1 |
|
|
0.1 |
|
Dispositions |
|
0.1 |
|
|
1.2 |
|
|
— |
|
Loss/(gain) on sale or disposal of assets |
|
(0.5 |
) |
|
— |
|
|
— |
|
|
|
|
|
||||||
Restructuring, business realignment and other cost saving initiatives: |
|
|
|
||||||
Restructuring, severance, impairment and other related costs |
|
2.3 |
|
|
8.6 |
|
|
1.0 |
|
|
|
|
|
||||||
Non-routine shareholder advisory costs |
|
0.1 |
|
|
7.6 |
|
|
— |
|
(Income) costs associated with terminated merger |
|
1.0 |
|
|
1.3 |
|
|
3.4 |
|
UTIS fire (recovery)/charges |
|
(5.9 |
) |
|
(0.2 |
) |
|
(1.7 |
) |
Adjusted EBITDA |
$ |
43.7 |
|
$ |
35.1 |
|
$ |
45.4 |
|
*Values in table may not add due to rounding. |
Calculation of adjusted EBITDA margin*:
|
2023 |
2022 |
|||||||
|
Q2 |
Q1 |
Q2 |
||||||
Adjusted EBITDA (in millions) |
$ |
43.7 |
|
$ |
35.1 |
|
$ |
45.4 |
|
Divided by Total Net Sales (in millions) |
|
230.8 |
|
|
243.8 |
|
|
252.0 |
|
Adjusted EBITDA Margin |
|
18.9 |
% |
|
14.4 |
% |
|
18.0 |
% |
*Values in table may not add due to rounding. |
Reconciliation of net cash provided by (used in) operating activities to free cash flow*:
|
2023 |
2022 |
|||||||
(amounts in millions) |
Q2 |
Q1 |
Q2 |
||||||
Net cash provided by (used in) operating activities |
$ |
15.7 |
|
$ |
1.8 |
|
$ |
2.0 |
|
Non-acquisition capital expenditures |
|
(11.5 |
) |
|
(16.4 |
) |
|
(25.0 |
) |
Free cash flow |
$ |
4.2 |
|
$ |
(14.6 |
) |
$ |
(22.9 |
) |
*Values in table may not add due to rounding. Net cash provided by operating activities includes regulatory termination fee net of fees and taxes received in Q4 2022. |
Reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share guidance for the 2023 third quarter:
|
Guidance
|
GAAP earnings per diluted share |
|
|
|
Discrete items* |
|
|
|
Acquisition intangible amortization |
|
|
|
Adjusted earnings per diluted share |
|
*Discrete items includes expected net gain on assets held for sale |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230803017559/en/
Investor contact:
Steve Haymore
Phone: 480-917-6026
Email: stephen.haymore@rogerscorporation.com
Website address: https://www.rogerscorp.com
Source: Rogers Corporation