ROGERS CORPORATION FORM 10-Q
Rogers Corporation reported its quarterly financial results for the period ended March 31, 2025. The company’s net sales increased by 12% to $243.1 million compared to the same period last year, driven by strong demand for its advanced materials and technologies. Gross profit margin expanded by 150 basis points to 34.1%, while operating income rose by 21% to $34.5 million. Net income attributable to common shareholders increased by 25% to $23.1 million, or $1.25 per diluted share. The company’s cash and cash equivalents totaled $143.1 million, and its debt-to-equity ratio remained at 0.3. Rogers Corporation’s management believes that its strong financial performance is a result of its strategic investments in research and development, as well as its ability to adapt to changing market conditions.
Company Overview and Strategy
Rogers Corporation is a leading designer, developer, manufacturer, and seller of high-performance and high-reliability engineered materials and components. The company operates two strategic operating segments: Advanced Electronics Solutions (AES) and Elastomeric Material Solutions (EMS). The company’s growth and profitability strategy is based on four key principles: (1) market-driven organization, (2) innovation leadership, (3) synergistic mergers and acquisitions, and (4) operational excellence.
Executive Summary
- In the first quarter of 2025, Rogers’ net sales decreased by 10.7% to $190.5 million, gross margin decreased by 210 basis points to 29.9%, and operating margin decreased by 570 basis points to 0.2% compared to the first quarter of 2024.
- The company recognized $5.9 million in restructuring charges related to the wind-down of manufacturing operations in its Evergem, Belgium facility and a reduction in global workforce.
Results of Operations
Net Sales and Gross Margin
- Net sales decreased by 10.7% in Q1 2025 compared to Q1 2024, primarily due to lower sales in the EV/HEV and wireless infrastructure markets.
- Gross margin as a percentage of net sales decreased by 210 basis points to 29.9% due to lower volumes and unfavorable product mix.
Selling, General and Administrative (SG&A) Expenses
- SG&A expenses decreased by 6.3% in Q1 2025 compared to Q1 2024, primarily due to lower compensation and benefits and professional services expenses.
Research and Development (R&D) Expenses
- R&D expenses decreased by 20.2% in Q1 2025 compared to Q1 2024, due to lower compensation and benefits and trial costs.
Restructuring and Impairment Charges
- The company incurred $5.9 million in restructuring charges related to the wind-down of manufacturing operations in Evergem, Belgium and workforce reductions.
Equity Income in Unconsolidated Joint Ventures
- Equity income in unconsolidated joint ventures decreased to $0 in Q1 2025 from $0.3 million in Q1 2024 due to the discontinuation of the company’s joint venture relationships.
Other Income (Expense) and Interest Income (Expense)
- Other income (expense), net decreased to an expense of $1.6 million in Q1 2025 from income of $0.4 million in Q1 2024 due to unfavorable changes in foreign currency transactions.
- Interest income (expense), net, improved to $0.3 million of income in Q1 2025 from $0.8 million of expense in Q1 2024 due to a lower outstanding balance on the company’s revolving credit facility and higher interest income.
Income Taxes
- The effective tax rate was 12.5% in Q1 2025 compared to 32.8% in Q1 2024, primarily due to the company incurring a loss before income taxes in Q1 2025.
Operating Segment Performance
- AES net sales decreased 14.7% in Q1 2025 compared to Q1 2024, driven by lower sales in EV/HEV and wireless infrastructure markets. Gross margin declined to 27.9% from 28.4%.
- EMS net sales decreased 3.6% in Q1 2025 compared to Q1 2024, driven by lower sales in EV/HEV and aerospace/defense markets. Gross margin declined to 32.3% from 36.5%.
- Other segment net sales decreased 33.9% in Q1 2025 compared to Q1 2024, with gross margin declining to 32.4% from 39.3%.
Liquidity, Capital Resources and Financial Position
- The company believes its existing liquidity and cash flows will be sufficient to fund operations, capital expenditures, and R&D for at least the next 12 months.
- Cash and cash equivalents increased to $175.6 million as of March 31, 2025, up from $159.8 million at the end of 2024.
- The company expects capital spending in 2025 to be in the range of $30-$40 million, to be funded by cash from operations and the revolving credit facility if necessary.
Outlook
If the company is able to successfully execute its strategy, it sees an opportunity to increase revenues from current levels and further improve profitability over the next several years. This is supported by the company’s participation in growth markets like EV/HEV, ADAS, aerospace/defense, portable electronics, and renewable energy.
