Rogers Reports 2017 Net Sales of $821 Million, Up 25.1%

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Rogers Corporation today announced financial results for the 2017 full year and fourth quarter.

Full year 2017 highlights, versus full year 2016:

• Net sales of $821 million, up 25.1%
• Gross margin of 38.8%, up 79 basis points
• Earnings of $4.34 per diluted share; adjusted earnings of $5.76 per diluted share

Fourth quarter 2017 highlights, versus fourth quarter 2016:

• Record net sales of $209.0 million, up 20.8%
• Gross margin of 36.1%, down 252 basis points
• Earnings of $0.37 per diluted share; adjusted earnings of $1.36 per diluted share

Full year 2017

The company reported 2017 net sales of $821 million. Net sales for the full year 2016 were $656.3 million. Net sales during 2017 were unfavorably impacted by $1.0 million as a result of currency fluctuations, including a weaker Renminbi partially offset by a stronger Euro.

Earnings for full year 2017 were $4.34 per diluted share, compared to $2.65 per diluted share for full year 2016. On an adjusted basis, earnings were $5.76 per diluted share, compared to $3.72 for full year 2016.

Full year 2017 net income was $80.5 million, compared to $48.3 million for full year 2016. Adjusted EBITDA was $189.7 million for full year 2017, versus $130.1 million for full year 2016.

Gross margin was 38.8% in 2017, compared to 38.0% in 2016. Operating margin was 15.9% for full year 2017, compared to 12.8% in the full year of 2016. Adjusted operating margin was 18.5% in the full year of 2017, compared to 15.2% in the full year of 2016.

Fourth quarter 2017

The Company reported 2017 fourth quarter net sales of $209.0 million, which were within the Company's previously announced guidance of $200 to $210 million, compared to 2016 fourth quarter net sales of $173.0 million. Currency exchange rates favorably impacted 2017 fourth quarter net sales by $4.5 million due to strengthening in the Euro and Renminbi.

Earnings for the 2017 fourth quarter were $0.37 per diluted share, compared to $0.65 per diluted share in the fourth quarter of 2016. Earnings per diluted share were below the Company's guidance range of $1.18 to $1.28. On an adjusted basis, earnings were $1.36 per diluted share, compared to adjusted earnings of $0.94 per diluted share in the fourth quarter of 2016. Adjusted earnings were within the Company's guidance of $1.35 to $1.45 per diluted share.

Fourth quarter 2017 net income was $7.0 million, compared to $11.9 million in the fourth quarter of 2016. Adjusted EBITDA was $38.1 million for the fourth quarter of 2017, compared to $32.7 million reported in the fourth quarter of 2016.

Gross margin was 36.1% in the fourth quarter of 2017, compared to 38.6% in the fourth quarter of 2016. Operating margin was 9.1% in the fourth quarter of 2017, compared to 10.3% in the fourth quarter of 2016. Adjusted operating margin was 13.2% in the fourth quarter of 2017, compared to 14.8% in the fourth quarter of 2016.

"In 2017, Rogers set full-year performance records for both revenue and profitability, successfully achieving strong growth across all of our business segments,” stated Bruce D. Hoechner, Rogers' President and CEO. “Our robust revenue growth continued in Q4, although we did have temporary operating challenges during the quarter that are being addressed. We are optimistic about the outlook for 2018 given Rogers' strong leadership position in our core markets and our ability to execute."

Business segment discussion

Advanced Connectivity Solutions (ACS)

Advanced Connectivity Solutions reported 2017 fourth quarter net sales of $75.5 million, a 5.3% increase compared to 2016 fourth quarter net sales of $71.7 million. The increase in 2017 fourth quarter net sales was largely driven by growth in high frequency circuit materials for automotive advanced driver assistance systems (ADAS) and portable electronics, partially offset by lower demand for wireless 4G LTE applications. Fourth quarter 2017 net sales were favorably impacted by $0.7 million due to fluctuations in currency exchange rates.

Elastomeric Material Solutions (EMS)

Elastomeric Material Solutions reported 2017 fourth quarter net sales of $76.0 million, a 34.0% increase compared to 2016 fourth quarter net sales of $56.7 million. The 2017 fourth quarter included a $13.5 million increase in net sales from recent acquisitions. On an organic basis, EMS net sales increased $5.9 million, or 10.4%, on higher demand across all segments, with particularly strong growth in portable electronics and automotive applications including electric and hybrid electric vehicles. Fluctuations in currency exchange rates favorably impacted net sales by $0.8 million in the 2017 fourth quarter. 

Power Electronics Solutions (PES)

Power Electronics Solutions reported 2017 fourth quarter net sales of $52.0 million, a 33.4% increase compared to 2016 fourth quarter net sales of $39.0 million. The 2017 fourth quarter increase was due to broad based demand across markets, including renewable energy, electric and hybrid electric vehicles, variable frequency motor drives and laser diode coolers. Fourth quarter 2017 net sales were favorably impacted by $3.2 million due to fluctuations in currency exchange rates. 

Other

Other reported 2017 fourth quarter net sales of $5.5 million, down $0.1 million compared to the fourth quarter of 2016 sales of $5.6 million.

Balance sheet and other highlights

Cash position

Rogers ended the fourth quarter of 2017 with cash and cash equivalents of $181.2 million, a decrease of $46.6 million from $227.8 million at December 31, 2016. The primary drivers of the lower cash balance were debt and long-term lease payments of approximately $110.7 million in 2017, and an acquisition completed in the first quarter of 2017 for approximately $60.2 million, partially offset by net cash provided from operating activities of $139.0 million.

Cash flow

Net cash provided from operating activities was $139.0 million in 2017, an increase compared to $117.0 million in 2016. The increase in net cash provided by operating activities was driven by higher 2017 net income partially offset by an increase in working capital due to growth. Capital spending was $27.2 million in 2017, an increase compared to $18.1 million in 2016.

Effective tax rate

Rogers' effective tax rate for 2017 was 39.5%, including the impact of tax reform in the United States (U.S. Tax Reform), compared to 41.3% in 2016. The 2017 rate decrease was primarily due to lower foreign tax impact on remitted and unremitted foreign earnings and profits, equity compensation excess tax deductions recognized in 2017 and increased international tax rate benefits due to earnings mix. This was substantially offset by our provisional estimate of the impact of U.S. Tax Reform, a decrease in reversal of reserves associated with uncertain tax positions and a change in valuation allowance associated with deferred tax assets that are capital in nature. Excluding the impact of U.S. Tax Reform, our effective tax rate for 2017 was 29.2%.

Financial outlook

Rogers guides its 2018 first quarter net sales to a range of $208 to $218 million. Rogers guides its 2018 first quarter earnings to a range of $1.15 to $1.30 per diluted share. Adjusted earnings are guided to a range of $1.30 to $1.45 per diluted share.

Rogers is in the process of reviewing the full impact of U.S. Tax Reform and the impact it will have on the Company's ongoing tax rate. Currently, based on the information available and analysis performed to date, Rogers guides its 2018 first quarter normalized effective tax rate to be approximately 28-30%.

For the full year 2018, Rogers expects capital expenditures to be in a range of $50 to $60 million.

About Rogers Corporation 

Rogers Corporation is a global leader in engineered materials to power, protect, and connect our world. With more than 180 years of materials science experience, Rogers delivers high-performance solutions that enable clean energy, internet connectivity, and safety and protection applications, as well as other technologies where reliability is critical. Rogers delivers Power Electronics Solutions for energy-efficient motor drives, e-Mobility and renewable energy; Elastomeric Material Solutions for sealing, vibration management and impact protection in mobile devices, transportation interiors, industrial equipment and performance apparel; and Advanced Connectivity Solutions for wireless infrastructure, automotive safety and radar systems. Headquartered in Arizona (USA), Rogers operates manufacturing facilities in the United States, China, Germany, Belgium, Hungary, and South Korea, with joint ventures and sales offices worldwide.