Rogers Posts Q2 Net Sales of $157.5M, Down 3.4%

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Rogers Corporation today announced financial results for the 2016 second quarter.

The Company reported 2016 second quarter net sales of $157.5 million, within the Company’s previously announced guidance range. In the 2015 second quarter, net sales were $163.1 million, which included $4.9 million of net sales related to the polyimide and thermoset laminate business, which the Company sold in December 2015. Net sales were unfavorably impacted by $0.3 million as a result of currency fluctuations, primarily related to the Euro and Renminbi.

2016 second quarter earnings were $0.29 per diluted share, which fell below the Company’s previously announced guidance range due primarily to a discrete tax related expense of $0.49 per diluted share (related to taxes associated with the Company’s repatriation of foreign earnings from prior years). Adjusted earnings per diluted share were $0.88, in line with the Company’s previously announced guidance. The 2015 second quarter earnings were $0.71 per diluted share ($0.77 adjusted earnings per diluted share). The 2016 second quarter net income was $5.4 million and adjusted EBITDA was $29.0 million compared to net income of $13.6 million and adjusted EBITDA of $29.5 million for the 2015 second quarter.

The Company’s gross margin was 38.2% in the 2016 second quarter compared to 37.2% for the 2015 second quarter resulting from operational excellence and cost improvement initiatives. Operating margin was 11.9% (13.5% adjusted operating margin) for the 2016 second quarter compared to 12.6% (14.6% adjusted operating margin) for the 2015 second quarter.

Bruce D. Hoechner, President and CEO stated, “Rogers’ Q2 net sales and adjusted earnings results were within our previously announced Q2 guidance range. Our discipline around cost management and commitment to continuous operational improvements contributed to a gross margin of 38.2%, an increase of 100 basis points over Q2 2015. We believe our actions, such as repatriating foreign earnings and investments in key market analyses, position us well to fulfill our strategic goals. While we are cautious in the near-term and expect market uncertainty to continue into Q3, our strategic investments will drive greater agility and flexibility to address fluctuations in market dynamics.”

Business Segment Discussion

Advanced Connectivity Solutions (ACS)

Advanced Connectivity Solutions reported record second quarter net sales of $67.2 million, a 1.2% increase compared to the 2015 second quarter net sales of $66.4 million. Fluctuations in currency exchange rates unfavorably impacted net sales in the second quarter by $0.4 million or 0.6% as compared with the 2015 second quarter. The 2016 second quarter results were favorably impacted by growth in sales of high frequency circuit materials used in automotive safety applications and 4G/LTE wireless telecom applications, which more than offset lower demand in satellite TV dish applications.

Elastomeric Material Solutions (EMS)

Elastomeric Material Solutions reported net sales of $45.8 million for the 2016 second quarter, a 2.7% decline compared to 2015 second quarter net sales of $47.0 million. Fluctuations in currency exchange rates unfavorably impacted net sales in the second quarter by $0.6 million or 1.2% as compared with the 2015 second quarter. The 2016 second quarter results were unfavorably impacted by lower demand in general industrial applications (primarily in North America), mass transit and consumer applications. These unfavorable impacts were partially offset by growth in automotive and portable electronics applications.

Power Electronics Solutions (PES)

Power Electronics Solutions reported net sales of $38.4 million for the 2016 second quarter, a 0.5% decrease compared to 2015 second quarter net sales of $38.5 million. Fluctuations in currency exchange rates favorably impacted net sales in the second quarter by $0.8 million or 2.1% as compared to the 2015 second quarter. The 2016 second quarter results were unfavorably impacted by weaker demand in mass transit, which more than offset increased demand in energy efficient motor drives (variable frequency drives), certain renewable energy and vehicle electrification applications.

Other

The Other segment reported net sales of $6.1 million for the 2016 second quarter, a decrease of 44.9% compared to 2015 second quarter net sales of $11.1 million, which included $4.9 million of net sales related to the polyimide and thermoset epoxy laminate product business, which the Company sold in the 2015 fourth quarter. Net sales were also unfavorably impacted by $0.1 million, or 1.9%, due to fluctuations in currency exchange rates as compared with the 2015 second quarter.

Operational Highlights

Rogers ended the 2016 second quarter with cash and cash equivalents of $247.4 million, an increase of $42.8 million, or 20.9%, from $204.6 million at December 31, 2015. Net cash provided by operating activities was $51.3 million for the first half of 2016 compared to the $22.4 million for the first half of 2015. Capital expenditures were $5.2 million for the 2016 second quarter and $10.0 million year-to-date. The Company repurchased 31,674 shares at an aggregate cost of $2.0 million during the 2016 second quarter. Under its current share repurchase program of up to $100.0 million of shares initiated in the 2015 third quarter, the Company has repurchased 797,214 shares at an aggregate cost of $44.0 million.

The Company’s 2016 second quarter tax rate was 71.0%, which was unfavorably impacted by withholding taxes and a non-cash tax charge associated with the repatriation of prior years’ foreign earnings.

Outlook

Rogers projects its 2016 third quarter net sales to be between $150 to $160 million and earnings to be between $0.60 and $0.70 per diluted share and adjusted earnings are expected to be between $0.69 and $0.79 per diluted share.

For full year 2016, Rogers expects capital expenditures to be approximately $25 million and its effective tax rate to be approximately 42% (included in the rate is the repatriation of prior years’ foreign earnings, increasing the effective tax rate by approximately 10%).

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, vehicle electrification and alternative 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 Connecticut (USA), Rogers operates manufacturing facilities in the United States, China, Germany, Belgium, Hungary, and South Korea, with joint ventures and sales offices worldwide.