Rogers Corporation Q3 2024 Earnings Conference Call Summary

During the Third Quarter 2024 Earnings Conference Call, Rogers Corporation (NYSE: ROG) CEO Colin Gouveia and Interim CFO Laura Russell presented a mixed financial performance. The company experienced a slight revenue decline and anticipates a cautious outlook for Q4, but reported a stronger-than-expected gross margin and adjusted earnings per share (EPS). Strategic investments and a focus on innovation in various sectors were highlighted as key to driving future growth despite persistent global market challenges.

Key Takeaways

• Rogers Corporation's Q3 revenue decreased by 2% to $210 million, with a notable decline in the EV/HEV segment.
• Gross margin exceeded expectations at 35.2%, and adjusted EPS rose to $0.98 from $0.69 in Q2.
• The company is investing in a new curamik power substrate factory in China, aiming to start shipping customer samples in Q4 2024.
• Q4 sales are projected to be between $185 million and $200 million, with lower guidance for gross margin and adjusted EPS.
• Rogers Corporation is prioritizing capital allocation for organic growth, potential M&A, and share repurchases.

Company Outlook

• Q4 guidance is cautious with projected sales between $185 million and $200 million and gross margin between 31.5% and 33%.
• Full production at the new curamik facility in China is anticipated by mid-2025.
• The company remains optimistic about growth in the curamik substrate market and industrial demand by 2025.

Bearish Highlights

• Sales in the EV/HEV, ADAS, and industrial segments have declined.
• Curamik sales dropped over 35% year-to-date due to inventory corrections and weak demand.
• Q4 adjusted EPS is expected to range from a loss of $0.15 to earnings of $0.15, including restructuring expenses.

Bullish Highlights

• Increased sales in A&D and wireless infrastructure partially offset declines in other segments.
• The company has a strong cash position, with $146 million in reserves.
• Ongoing operational excellence initiatives are expected to support growth.

Misses

• The company missed revenue expectations due to lower sales in key segments and seasonal declines.
• Q4 adjusted EPS projections include potential losses, reflecting restructuring expenses.

Q&A Highlights

• Management discussed the strong cash position and intention to pursue strategic acquisitions.
• The company is prepared to act on three to four potential acquisition targets that align with their strategic goals.
• Colin Gouveia provided insights into the curamik technology and its expected contribution from the new China facility.

In conclusion, Rogers Corporation is navigating global manufacturing and automotive production challenges while focusing on strategic growth areas. Investments in new facilities and technologies, along with disciplined capital allocation, are central to the company's strategy to overcome current headwinds and capitalize on future opportunities.

InvestingPro Insights

Rogers Corporation's recent financial performance aligns with several key metrics and insights from InvestingPro. Despite highlighted challenges, data reveals that Rogers maintains a strong financial position with a market capitalization of $1.87 billion USD.

One tip indicates that Rogers "holds more cash than debt on its balance sheet," supporting the company’s strong cash position of $146 million. This stability is crucial as Rogers pursues strategic investments and potential acquisitions.

Another tip notes that Rogers' "net income is expected to grow this year," suggesting potential recovery despite cautious Q4 guidance. The InvestingPro data shows a P/E Ratio (Adjusted) of 90.36 as of Q2 2024, indicating that investors are pricing in future growth expectations, consistent with the company's focus on innovation.

Full Transcript – Rogers Corp (ROG) Q3 2024

Operator

Good afternoon. My name is Alicia, and I’ll be your conference operator today. At this time, I would like to welcome everyone to Rogers Corporation’s Third Quarter 2024 Earnings Conference Call. I will now turn the call over to your host, Mr. Steve Haymore, Director of Investor Relations. Mr. Haymore, you may begin.

Steve Haymore

Good afternoon, everyone. And welcome to the Rogers Corporation third quarter 2024 earnings conference call. The slides for today’s call can be found on the Investor section of our website, along with the press release that was issued earlier today. Please turn to Slide 2. Before we begin, I’d like to note that statements in this conference call that are not strictly historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These uncertainties could cause actual results to differ materially from those in any forward-looking statement made today.

Colin Gouveia

Thanks Steve. Good afternoon to everyone, and thank you for joining us today. Our results were mixed in Q3, with earnings exceeding our guidance forecast while revenues fell below the low end of our estimate. The improved earnings were a result of a 35.2% gross margin, surpassing our expectations, despite softer order patterns in the EV/HEV segment.

Laura Russell

Our performance in the third quarter was mixed. Our top line sales of $210 million were below our outlook, but gross margin of 35.2% and adjusted EPS of $0.98 exceeded guidance expectations.