Rogers Reports Q3 2021 Results

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Rogers Corporation announced financial results for the third quarter of 2021.

“Rogers’ strong position in the burgeoning EV/HEV markets was again evident in our third quarter results, despite some near-term supply chain challenges,” stated Bruce D. Hoechner, Rogers' President and CEO. “The underlying, long-term strength of the EV/HEV and ADAS markets coupled with broad customer enthusiasm for our materials solutions bolsters the opportunity we see to double our revenues over the next five years. In addition, we are very pleased with DuPont’s proposed acquisition of Rogers, which was announced earlier today. The planned combination of DuPont and Rogers is a natural fit that can help accelerate our long-term growth in EV/HEV, ADAS and other key markets. We appreciate the commitment of our employees, the trust of our customers, the constancy of our suppliers, and the support of the communities in which we operate, all working together to achieve shared success.”

Q3 2021 Summary of Results

Net sales of $238.3 million increased 1.4% versus the prior quarter from record sales in the EMS business unit. EMS net sales increased by 9.6% and revenues increased in all markets, led by EV/HEV and portable electronics. AES net sales decreased by 3.9% due to lower revenues for ADAS applications, primarily due to the impact of chip shortages on customer demand. This decline was partially offset by higher EV/HEV, clean energy and aerospace and defense sales. Currency exchange rates unfavorably impacted total company net sales in the third quarter of 2021 by $0.4 million compared to prior quarter net sales.

Gross margin was 38.5%, compared to 38.2% in the prior quarter. The increase in gross margin was primarily due to commercial actions to address rising input costs and higher volumes, partially offset by the continued impact of supply constraints on raw material and labor availability.

Selling, general and administrative (SG&A) expenses increased by $2.9 million from the prior quarter to $47.9 million. The increase in SG&A expense was primarily due to one-time costs for strategic growth initiatives.

GAAP operating margin of 14.2% decreased by 100 basis points from the prior quarter primarily due to higher SG&A and restructuring charges, partially offset by the improvement in gross margin. Adjusted operating margin of 17.2% decreased by 20 basis points versus the prior quarter.

GAAP earnings per diluted share were $1.33, compared to earnings per diluted share of $1.52 in the previous quarter. The decrease in GAAP earnings resulted from a decline in operating income, an increase in other expense and higher tax expense. On an adjusted basis, earnings were $1.64 per diluted share compared to adjusted earnings of $1.72 per diluted share in the prior quarter.

Ending cash and cash equivalents were $220.9 million, an increase of $17.0 million versus the prior quarter. Net cash provided by operating activities of $39.9 million was offset by capital expenditures of $22.0 million. The Company generated free cash flow of approximately $17.9 million in the third quarter of 2021.

Transaction with DuPont

In a separate press release, Rogers announced that it has entered into a definitive merger agreement to be acquired by DuPont for $277 per share in cash, implying a purchase price of approximately $5.2 billion. The press release announcing the transaction is available on the Investor Relations section of Rogers' website. The transaction is expected to close in the second quarter of 2022, subject to customary closing conditions, including approval by Rogers’ shareholders and receipt of regulatory approvals.