Published by Rogers Corporation

Selected quotes from our recent earnings call. Read the corporate financials news release: Rogers Corporation Reports Third Quarter 2019 Results.

In the third quarter of 2019, Rogers achieved net sales of $222 million and adjusted earnings of $1.51 per share.

Bruce Hoechner, CEO, on Growth Drivers

Advanced Connectivity

Within Advanced Connectivity, we see 5G as a multiyear growth opportunity for Rogers, where market indications continue to point towards increased deployments in 2020. At a recent forum, China Mobile increased their target for 5G coverage to 340 cities by the end of next year, underscoring their expansion plans. This followed recent news from Chinese telecoms that advanced subscriptions for 5G service which is not yet available, have already reached approximately 9 million. Third-party experts expect 2020 5G deployments to be in the range of 600,000 base stations, which at that scale would provide an opportunity for substantial growth in our 5G wireless infrastructure business next year.

Low earth orbit or LEO is a significant emerging growth opportunity within Advanced Connectivity. Several companies are competing to deploy large constellations of satellites that would provide high-speed internet to underserved areas. Rogers is well-positioned to capitalize on this opportunity, given our tremendous strength in the materials technologies needed to enable the complex antenna solutions that will be part of the receiver systems located on Earth. We are also encouraged by the progress of some companies in this sector to launch commercial services.

Advanced Mobility

Looking to Advanced Mobility, we remain optimistic about the strong opportunities in EV and HEVs. A recent IHS market report projects that through 2025, sales of EVs and HEVs will increase at a compounded annual growth rate of approximately 30%. These expectations for ambitious growth are underpinned by the plans of leading automakers and reinforce that this is a growing sustainable market for Rogers’ Power Electronics Solutions. One example is VW, which recently unveiled the first model in its new all-electric brand that will be delivered to customers early next year. This is the first step in VW’s plan to sell up to 3 million EVs and HEVs annually by 2025. Additionally, Daimler recently announced that they will discontinue all future development of internal combustion engines, further signaling the shift in focus to electric vehicles. By 2022, Daimler is scheduled to bring 10 all-electric vehicles to market and plans to eventually electrify the entire Mercedes Benz portfolio. Rogers is also targeting EV charging infrastructure, which is a related emerging growth opportunity for our Power Electronics Solutions.

Bruce Hoechner on Rogers’ Business Units

Advanced Connectivity Solutions (ACS) third quarter net sales were $79 million, a decrease of 15% from the prior quarter and an increase of 10% versus the prior year. This decline is primarily attributed to lower 4G and 5G sales. ADAS demand remained strong in Q3 and year-to-date sales have grown 8% compared to 2018. Aerospace and defense sales increased 17% versus Q2 and year-to-date results are up over 20% versus the prior year. This market segment is highly program-dependent and while we don’t anticipate demand for these applications to grow at the same rate into the future, we do expect stable and consistent high single-digit growth over time. As we look ahead, we anticipate that 4G and 5G demand will continue to be soft through the end of the year. However, we expect 5G demand to rebound in the first half of 2020 with the next wave of deployments.

In Q3, Elastomeric Material Solutions (EMS) net sales were $95 million, a slight increase compared to Q2. Seasonally strong portable electronics sales drove the sequential increase in revenue. A decline in demand for general industrial and EV/HEV battery applications partially offset the growth in portable electronics. Year-to-date, sales of applications for EV/HEV battery pads and battery pack sealing systems have increased 29% versus the prior year, highlighting the excellent growth opportunity in this area. The lower Q3 revenue is the result of the recent decline in the China EV market. We are very pleased with the progress we are making towards the new design wins with a number of European and other automakers for EV battery pad solutions. We expect this to continue to be a driver of growth over the next several years. Looking ahead to the fourth quarter, we anticipate total EMS segment sales to decline sequentially, in line with normal seasonal patterns.

Power Electronics Solutions (PES) third quarter net sales were $43 million, a decrease of 17% from Q2. As we anticipated at the outset of the quarter, sales of power semiconductor substrates in industrial power and vehicle electrification applications for conventional automobiles declined due to weak market demand in Q3. Sales of power substrates used in EVs and HEVs also declined, largely due to the previously mentioned soft China EV market which primarily uses lower-end solutions. The outlook continues to be strong for our new generation wide band gap semiconductor silicon nitride substrates, which are used in high-end EVs and where Rogers has a leading position.  As we look to Q4, we expect industrial and automotive market demand to be stable as compared to Q3. Looking ahead in PES, the EV/HEV market opportunity is extremely compelling and we firmly believe that we are well-positioned to fully take advantage of this opportunity.

Q3 2019 Financial Press Release

Q3 2019 Earnings Call Slides

Investor Relations

Published on Nov 04, 2019

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