Release Date: 11/08/2022
Chandler, Arizona, November 8, 2022: Rogers Corporation (NYSE:ROG) today announced financial results for the third quarter of 2022.
“We are well positioned to move forward as an independent company focused on expanding our leadership in advanced materials solutions for high-growth markets including Hybrid and Electric Vehicles (EV/HEV) and Advanced Driver Assistance Systems (ADAS),” said Bruce D. Hoechner, Rogers' President and CEO. “Over the past year, we have not wavered in our focus on growing our business and implementing our proven strategy for developing innovative solutions and capitalizing on our market opportunities.”
Hoechner added: “While the immediate macroeconomic environment remains challenging, we are steadfast in our commitment to partner with the world’s leading technology firms and manufacturers to deliver cutting-edge materials for next-generation products, while improving margins and maintaining a strong balance sheet. I am confident in our ability to execute our strategy and deliver substantial value to all our stakeholders.”
|GAAP Results||Q3 2022||Q2 2022||Q3 2021|
|Net Sales ($M)||$247.2||$252.0||$238.3|
|Net Income ($M)||$14.8||$17.9||$25.1|
|Net Income Margin||6.0%||7.1%||10.5%|
|Diluted Earnings Per Share||$0.78||$0.94||$1.33|
|Net Cash Provided by Operating Activities||$13.5||$2.0||$39.9|
|Non-GAAP Results1||Q3 2022||Q2 2022||Q3 2021|
|Adjusted Operating Margin||10.8%||12.1%||17.2%|
|Adjusted Net Income ($M)||$21.2||$23.2||$30.9|
|Adjusted Earnings Per Diluted Share||$1.11||$1.22||$1.64|
|Adjusted EBITDA ($M)||$39.7||$45.4||$54.2|
|Adjusted EBITDA Margin||16.0%||18.0%||22.7%|
|Free Cash Flow ($M)||$(20.3)||$(22.9)||$17.9|
|Net Sales by Operating Segment (dollars in millions)||Q3 2022||Q2 2022||Q3 2021|
|Advanced Electronics Solutions (AES)||$130.6||$141.2||$135.0|
|Elastomeric Material Solutions (EMS)||$111.0||$105.1||$98.0|
1 - A reconciliation of GAAP to non-GAAP measures is provided in the schedules included below
Net sales of $247.2 million decreased 1.9% versus the prior quarter resulting from the impact of ongoing global supply challenges, China COVID-related restrictions, regional power outages and unfavorable currency exchange rate fluctuations. AES net sales decreased by 7.5% from lower ADAS, wireless infrastructure and defense market revenue, partially offset by higher EV/HEV market sales. EMS net sales increased by 5.6% primarily resulting from seasonally stronger portable electronics market demand, partially offset by lower EV and automotive market revenue. Currency exchange rates unfavorably impacted total company net sales in the third quarter of 2022 by $4.9 million compared to prior quarter net sales.
Gross margin was 31.6%, compared to 34.3% in the prior quarter. The decrease in gross margin was primarily driven by underutilization charges, stemming from lower AES volume, and unfavorable product mix. To address the decline in gross margin the Company has undertaken a series of actions, including adjusting capacity levels in certain businesses and driving efficiency improvements.
Selling, general and administrative (SG&A) expenses decreased by $5.5 million from the prior quarter to $50.7 million. SG&A expenses declined due to lower employee-related costs and professional service fees.
GAAP operating margin of 7.5% decreased by 180 basis points from the prior quarter, primarily due to the reduction in gross margin, partially offset by lower SG&A. Adjusted operating margin of 10.8% decreased by 130 basis points versus the prior quarter.
GAAP earnings per diluted share were $0.78, compared to earnings per diluted share of $0.94 in the previous quarter. The decrease in GAAP earnings was due to lower operating income, partially offset by a decrease in tax expense. On an adjusted basis, earnings were $1.11 per diluted share compared to adjusted earnings of $1.22 per diluted share in the prior quarter.
Ending cash and cash equivalents were $236.5 million, an increase of $11.1 million versus the prior quarter. The ending cash does not include the termination fee from Dupont of $162.5 million, before taxes and transaction-related fees, received in the fourth quarter. In the third quarter, capital expenditures were $33.8 million and net cash provided by operating activities was $13.5 million.
A shareholder letter accompanying today's release can be accessed on the Rogers Corporation website at https://www.rogerscorp.com/investors. The Company will host a conference call for investors in December and an Investor Day in the first half of 2023 to elaborate on growth prospects, outlook, capital allocation and other aspects of the business.
Rogers Corporation (NYSE:ROG) is a global leader in engineered materials to power, protect and connect our world. Rogers delivers innovative solutions to help our customers solve their toughest material challenges. Rogers’ advanced electronic and elastomeric materials are used in applications for EV/HEV, automotive safety and radar systems, mobile devices, renewable energy, wireless infrastructure, energy-efficient motor drives, industrial equipment and more. Headquartered in Chandler, Arizona, Rogers operates manufacturing facilities in the United States, Asia and Europe, with sales offices worldwide.
Statements included in this release that are not a description of historical facts are forward-looking statements. Words or phrases such as “believe,” “may,” “could,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “seek,” “plan,” “expect,” “should,” “would” or similar expressions are intended to identify forward-looking statements, and are based on Rogers’ current beliefs and expectations. This release contains forward-looking statements regarding our plans, objectives, outlook, goals, strategies, future events, future net sales or performance, capital expenditures, future restructuring, plans or intentions relating to expansions, business trends and other information that is not historical information. All forward-looking statements are based upon information available to us on the date of this release and are subject to risks, uncertainties and other factors, many of which are outside of our control, which could cause actual results to differ materially from those indicated by the forward-looking statements. Other risks and uncertainties that could cause such results to differ include: the duration and impacts of the novel coronavirus global pandemic and efforts to contain its transmission and distribute vaccines, including the effect of these factors on our business, suppliers, customers, end users and economic conditions generally; continuing disruptions to global supply chains and our ability, or the ability of our suppliers, to obtain necessary product components; failure to capitalize on, volatility within, or other adverse changes with respect to the Company's growth drivers, including advanced mobility and advanced connectivity, such as delays in adoption or implementation of new technologies; uncertain business, economic and political conditions in the United States (U.S.) and abroad, particularly in China, South Korea, Germany, the United Kingdom, Hungary and Belgium, where we maintain significant manufacturing, sales or administrative operations; the trade policy dynamics between the U.S. and China reflected in trade agreement negotiations and the imposition of tariffs and other trade restrictions, including trade restrictions on Huawei Technologies Co., Ltd. (Huawei); fluctuations in foreign currency exchange rates; our ability to develop innovative products and the extent to which our products are incorporated into end-user products and systems and the extent to which end-user products and systems incorporating our products achieve commercial success; the ability and willingness of our sole or limited source suppliers to deliver certain key raw materials, including commodities, to us in a timely and cost-effective manner; intense global competition affecting both our existing products and products currently under development; business interruptions due to catastrophes or other similar events, such as natural disasters, war, including the ongoing conflict between Russia and Ukraine, terrorism or public health crises; the impact of sanctions, export controls and other foreign asset or investment restrictions; failure to realize, or delays in the realization of anticipated benefits of acquisitions and divestitures due to, among other things, the existence of unknown liabilities or difficulty integrating acquired businesses; our ability to attract and retain management and skilled technical personnel; our ability to protect our proprietary technology from infringement by third parties and/or allegations that our technology infringes third party rights; changes in effective tax rates or tax laws and regulations in the jurisdictions in which we operate; failure to comply with financial and restrictive covenants in our credit agreement or restrictions on our operational and financial flexibility due to such covenants; the outcome of ongoing and future litigation, including our asbestos-related product liability litigation or risks arising from the DuPont Merger; changes in environmental laws and regulations applicable to our business; and disruptions in, or breaches of, our information technology systems. Should any risks and uncertainties develop into actual events, these developments could have a material adverse effect on the Company. For additional information about the risks, uncertainties and other factors that may affect our business, please see our most recent annual report on Form 10-K and any subsequent reports filed with the Securities and Exchange Commission, including quarterly reports on Form 10-Q. Rogers Corporation assumes no responsibility to update any forward-looking statements contained herein except as required by law.
Website address: https://www.rogerscorp.com