Rogers Reports Q1 2018 Net Sales of $214.6 Million, Up 5.3%

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Rogers Corporation today announced financial results for the 2018 first quarter. The Company reported 2018 first quarter net sales of $214.6 million, which was within the Company's previously announced guidance of $208 to $218 million, compared to 2017 first quarter net sales of $203.8 million. Currency exchange rates favorably impacted 2018 first quarter net sales by $9.4 million due to strengthening in the Euro, Renminbi and Korean Won.

Earnings for the 2018 first quarter were $1.40 per diluted share, compared to $1.47 per diluted share in the first quarter of 2017. Earnings per diluted share were above the Company's guidance of $1.15 to $1.30. On an adjusted basis, earnings were $1.48 per diluted share, compared to adjusted earnings of $1.68 per diluted share in the first quarter of 2017. Adjusted earnings were above the Company's guidance of $1.30 to $1.45 per diluted share.

First quarter 2018 net income was $26.1 million, compared to $27.0 million in the first quarter of 2017. Adjusted EBITDA was $41.4 million for the first quarter of 2018, compared to $54.3 million reported in the first quarter of 2017.

Gross margin was 35.7% in the first quarter of 2018, compared to 39.4% in the first quarter of 2017. Operating margin was 14.5% in the first quarter of 2018, compared to 19.2% in the first quarter of 2017. Adjusted operating margin was 15.4% in the first quarter of 2018, compared to 22.0% in the first quarter of 2017.

"Strong growth in our Advanced Mobility markets, especially EV/HEV and ADAS, were highlights in the quarter. This strength was offset by lower demand in wireless infrastructure as the market transitions to 5G technology,” stated Bruce D. Hoechner, Rogers' President and CEO. "Revenue mix and operational challenges largely in the Advanced Connectivity Solutions business were the primary factors contributing to our lower than anticipated margin performance during Q1. Our actions to resolve these operational issues, as well as the strong outlook in our key markets, give us confidence in our ability to achieve our 2020 objectives."

Business segment discussion

Advanced Connectivity Solutions (ACS)

Advanced Connectivity Solutions reported 2018 first quarter net sales of $73.5 million, a 6.5% decrease compared to 2017 first quarter net sales of $78.5 million. The decrease in 2018 first quarter net sales was largely driven by lower demand in wireless 4G LTE, portable electronics and satellite TV applications, partially offset by continued strength in demand for automotive advanced driver assistance systems (ADAS) revenues. First quarter 2018 net sales were favorably impacted by $1.8 million due to fluctuations in currency exchange rates.

Elastomeric Material Solutions (EMS)

Elastomeric Material Solutions reported 2018 first quarter net sales of $78.1 million, a 1.6% increase compared to 2017 first quarter net sales of $76.9 million. EMS net sales increased on higher demand in portable electronics, general industrial and electric and hybrid electric vehicles, partially offset by lower demand in mass transit and other applications. Fluctuations in currency exchange rates favorably impacted net sales by $2.0 million in the 2018 first quarter.

Power Electronics Solutions (PES)

Power Electronics Solutions reported 2018 first quarter net sales of $57.7 million, a 35.3% increase compared to 2017 first quarter net sales of $42.7 million. 2018 first quarter net sales increased due to broad based demand across markets, including particular strength in electric and hybrid electric vehicles, renewable energy and laser diode coolers. First quarter 2018 net sales were favorably impacted by $5.3 million due to fluctuations in currency exchange rates.

Other

Other reported 2018 first quarter net sales of $5.4 million, a decrease of 7.3% compared to the first quarter of 2017 sales of $5.8 million. 

Balance sheet and other highlights

Cash position

Rogers ended the first quarter of 2018 with cash and cash equivalents of $173.0 million, a decrease of $8.1 million from $181.2 million at December 31, 2017. The primary drivers of the lower cash balance were capital spending of $9.1 million, tax payments related to vested equity awards of $6.4 million, and share repurchases of $3.0 million, partially offset by $8.8 million of net cash provided by operating activities. 

Cash flow

Net cash provided from operating activities of $8.8 million in the first quarter of 2018, a decrease compared to $23.2 million in 2017. The decrease in net cash provided by operating activities was primarily driven by the use of working capital. Capital spending was $9.1 million in 2018, an increase compared to $5.3 million in 2017.

Effective tax rate

Rogers' effective income tax rate was 15.4% and 32.3% for the three months ended March 31, 2018 and 2017, respectively. The decrease was primarily due to a lower U.S. effective tax rate as a result of U.S. Tax Reform, changes in pretax income mix across jurisdictions with disparate tax rates, excess tax deductions on stock-based compensation, R&D credits and a release of reserves for uncertain tax positions partially offset by an increase in current year accruals for uncertain tax positions. 

Financial outlook

Rogers guides its 2018 second quarter net sales to a range of $210 to $220 million. Rogers guides its 2018 second quarter earnings to a range of $1.10 to $1.25 per diluted share. Adjusted earnings are guided to a range of $1.25 to $1.40 per diluted share.

Rogers guides 2018 full year capital spending to be in the range of $50 to $60 million.

Rogers guides the 2018 full year effective tax rate to be 24-26%, with a second quarter effective tax rate of 28-29%.

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.