Delivers Record Quarterly Revenue; Exceeds
Top End of Revenue and EPS Guidance
Rogers Corporation (NYSE:ROG) today announced financial results
for the 2019 first quarter.
The Company reported 2019 first quarter net sales of $239.8
million, a 7.6% increase compared to 2018 fourth quarter net sales
of $222.9 million and an 11.7% increase compared to 2018 first
quarter net sales of $214.6 million. Net sales for the 2019 first
quarter exceeded the high-end of the Company's previously announced
guidance range of $220 to $230 million. Currency exchange rates
favorably impacted the 2019 first quarter net sales by $0.2 million
compared to 2018 fourth quarter net sales, but had an unfavorable
impact of $6.1 million compared to 2018 first quarter net
sales.
First quarter 2019 net income was $28.4 million compared to
$24.5 million in the fourth quarter of 2018 and $26.1 million in
the first quarter of 2018. Earnings for 2019 first quarter were
$1.52 per diluted share compared to $1.31 per diluted share in the
fourth quarter of 2018 and $1.40 per diluted share in the first
quarter of 2018. Earnings per diluted share exceeded the Company's
previously announced guidance range of $0.97 to $1.12. On an
adjusted basis, earnings were $1.85 per diluted share for the 2019
first quarter compared to adjusted earnings of $1.67 per diluted
share in the fourth quarter of 2018 and $1.48 per diluted share in
the first quarter of 2018. Adjusted earnings exceeded the Company's
previously announced guidance range of $1.25 to $1.40 per diluted
share.
Adjusted EBITDA was $53.1 million, or 22.2% of net sales, for
the first quarter of 2019 compared to $46.7 million, or 20.9% of
net sales, reported in the fourth quarter of 2018 and $44.1
million, or 20.6% of net sales, reported in the first quarter of
2018. Beginning in the first quarter of 2019 the Company modified
its definition of adjusted EBITDA to add-back stock-based
compensation expense. This adjustment has been applied
retrospectively to all periods presented.
Gross margin was 35.6% in the first quarter of 2019 compared to
35.2% in the fourth quarter of 2018 and 35.7% in the first quarter
of 2018. First quarter 2019 gross margin exceeded the mid-point of
the Company's previously announced guidance range of 35% to 36%.
Operating margin was 13.7% in the first quarter of 2019 compared to
12.0% in the fourth quarter of 2018 and 14.5% in the first quarter
of 2018. Adjusted operating margin was 17.1% in the first quarter
of 2019 compared to 16.0% in the fourth quarter of 2018 and 15.4%
in the first quarter of 2018.
"Our record Q1 revenue and earnings performance exceeded our
expectations due to strong tailwinds in Advanced Connectivity and
Advanced Mobility applications. In particular, meaningful 5G demand
began to ramp during the quarter and ADAS returned to strong
sequential growth. Demand for specific EV/HEV applications also
continued to be strong," stated Bruce D. Hoechner, Rogers’
President and CEO. “We remain focused on capacity expansions and
operational improvements in order to capitalize on these
opportunities and deliver increased revenues and profitability. We
are seeing the results of our targeted strategy and believe we are
extremely well positioned to take advantage of the significant
market opportunities ahead."
Business segment
discussion
Advanced Connectivity Solutions
(ACS)Advanced Connectivity Solutions reported 2019 first
quarter net sales of $80.5 million, an 11.0% increase compared to
2018 fourth quarter net sales of $72.5 million and a 9.6% increase
compared to 2018 first quarter net sales of $73.5 million. The
sequential increase in 2019 first quarter net sales was largely
driven by growth in high frequency circuit materials for 5G and 4G
wireless infrastructure and Advanced Driver Assistance Systems
(ADAS). First quarter 2019 net sales were favorably impacted by
$0.4 million due to fluctuations in currency exchange rates
compared to 2018 fourth quarter net sales, but had an unfavorable
impact of $1.8 million compared to 2018 first quarter net
sales.
Elastomeric Material Solutions
(EMS)Elastomeric Material Solutions reported 2019 first
quarter net sales of $92.8 million, a 5.1% increase compared to
2018 fourth quarter net sales of $88.3 million and an 18.8%
increase compared to 2018 first quarter net sales of $78.1 million.
The sequential increase in 2019 first quarter net sales was due to
strong demand in automotive and mass transit and growth in general
industrial applications. Fluctuations in currency exchange rates
favorably impacted net sales by $0.2 million in the 2019 first
quarter compared to 2018 fourth quarter net sales, but had an
unfavorable impact of $1.5 million compared to 2018 first quarter
net sales.
Power Electronics Solutions
(PES)Power Electronics Solutions reported 2019 first
quarter net sales of $59.8 million, a 5.4% increase compared to
2018 fourth quarter net sales of $56.8 million and a 3.6% increase
compared to 2018 first quarter net sales of $57.7 million. The 2019
first quarter sequential increase was primarily due to higher
demand for power semiconductor substrates for EV/HEV applications
and renewable energy applications. First quarter 2019 net sales
were unfavorably impacted by $0.4 million due to fluctuations in
currency exchange rates compared to 2018 fourth quarter net sales
and by $2.7 million compared to 2018 first quarter net sales.
OtherOther reported 2019
first quarter net sales of $6.8 million, a 24.1% increase compared
to 2018 fourth quarter net sales of $5.4 million and a 26.0%
increase compared to 2018 first quarter net sales of $5.4 million.
The sequential increase in 2019 first quarter net sales was due to
a last-time buy in the Durel business.
Balance sheet and other
highlights
Cash positionRogers ended
the first quarter of 2019 with cash and cash equivalents of $162.1
million, a decrease of $5.6 million from $167.7 million at
December 31, 2018. The primary drivers of the lower cash
balance were capital expenditures of $12.6 million and repayment of
debt principal of $5.0 million.
Effective tax rateRogers'
effective tax rate was 14.2% for the first quarter of 2019,
compared to 3.6% for the fourth quarter of 2018. The lower
effective tax rate for the fourth quarter of 2018 was due primarily
to the implementation of tax strategies which significantly lowered
our foreign taxes and facilitated the reversal of reserves
associated with uncertain tax positions. The first quarter
effective tax rate was lower than our expected tax rate of 27% to
28% due to a change in the forecasted geographic mix of pretax
income as well as certain discrete tax benefits realized in the
first quarter. The Company expects the 2019 effective tax rate to
be 25% to 26% before any discrete tax items.
Financial outlookRogers
guides its 2019 second quarter net sales to a range of $240 to $250
million and gross margin to a range of 35% to 36%. Rogers guides
its 2019 second quarter earnings to a range of $1.16 to $1.31 per
diluted share and adjusted earnings to a range of $1.47 to $1.62
per diluted share.
For the full year 2019, Rogers expects capital expenditures to
be in a range of $50 to $60 million.
About Rogers
CorporationRogers Corporation (NYSE:ROG) 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, e-Mobility and renewable 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 Arizona (USA), Rogers
operates manufacturing facilities in the United States, China,
Germany, Belgium, Hungary, and South Korea, with joint ventures and
sales offices worldwide.
Safe Harbor StatementThis
release contains forward-looking statements, which concern 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
the results discussed in the forward-looking statements. Risks and
uncertainties that could cause such results to differ include:
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 and abroad,
particularly in China, South Korea, Germany, Hungary and Belgium,
where we maintain significant manufacturing, sales or
administrative operations; the ongoing trade policy dispute between
the United States and China, as well as adverse changes in trade
policy, tariff regulation or other trade restrictions; fluctuations
in foreign currency exchange rates; the results of our research and
development efforts; adverse competitive developments; business
development transactions and related integration considerations,
including failure to realize, or delays in the realization of
anticipated benefits of such transactions; the outcome of ongoing
and future litigation, including our asbestos-related product
liability litigation; inability to obtain raw materials, including
commodities, from single or limited source suppliers in a timely
and cost effective manner; uncertainties with regard to the timing,
expense and cash outlays associated with the termination and
settlement of the Rogers Corporation Defined Benefit Pension Plan;
and changes in laws and regulations applicable to our business. 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.
Conference call and additional
information
A conference call to discuss 2019 first quarter results will
take place today, Tuesday, April 30, 2019 at 5pm ET.
A live webcast and slide presentation will be available under
the investors section of www.rogerscorp.com/ir.
To participate, please dial:
1-800-574-8929 Toll-free
in the United States 1-973-935-8524 Internationally There is no
passcode for the live teleconference.
If you are unable to attend, a conference call playback will be
available from April 30, 2019 at approximately 8 pm ET through May
14, 2019 at 11:59 pm ET, by dialing 1-855-859-2056 from the United
States, and 1-404-537-3406 from outside of the US, each with
passcode 4795925.
Additionally, the archived webcast will be available on the
Rogers website at approximately 8 pm ET May 1, 2019.
Additional informationPlease contact the Company directly
via email or visit the Rogers website.
(Financial statements follow)
Condensed Consolidated Statements of
Operations (Unaudited)
Three Months Ended
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
March 31,2019
March 31,2018
Net sales
$ 239,798 $ 214,611 Cost of sales
154,404 138,005 Gross margin
85,394
76,606 Selling, general and administrative expenses
43,252
40,597 Research and development expenses
7,609 8,134
Restructuring and impairment charges
822 422 Other operating
(income) expense, net
911 (3,591 ) Operating income
32,800 31,044 Equity income in unconsolidated joint ventures
837 1,007 Other income (expense), net
1,404 66
Interest expense, net
(1,938 ) (1,210 ) Income before
income tax expense
33,103 30,907 Income tax expense
4,704 4,771 Net income
$ 28,399
$ 26,136 Basic earnings per share
$ 1.53 $ 1.43 Diluted earnings
per share
$ 1.52 $ 1.40 Shares
used in computing: Basic earnings per share
18,557 18,288
Diluted earnings per share
18,692 18,610
Condensed Consolidated Statements of
Financial Position (Unaudited)
(IN THOUSANDS)
March 31, 2019 December 31, 2018
Assets Current assets Cash and cash equivalents
$
162,074 $ 167,738 Accounts receivable, less allowance for
doubtful accounts of $1,184 and $1,354
160,696 144,623
Contract assets
27,315 22,728 Inventories
133,242
132,637 Prepaid income taxes
3,190 3,093 Asbestos-related
insurance receivables, current portion
4,138 4,138 Other
current assets
13,255 10,829 Total current
assets
503,910 485,786 Property, plant and equipment, net of
accumulated depreciation of $323,623 and $317,414
244,911
242,759 Investments in unconsolidated joint ventures
15,799
18,667 Deferred income taxes
11,316 8,236 Goodwill
263,251 264,885 Other intangible assets, net of amortization
172,234 177,008 Pension assets
19,596 19,273
Asbestos-related insurance receivables, non-current portion
59,685 59,685 Other long-term assets
8,692
3,045 Total assets
$ 1,299,394 $
1,279,344
Liabilities and Shareholders’ Equity
Current liabilities Accounts payable
$ 43,481 $
40,321 Accrued employee benefits and compensation
26,984
30,491 Accrued income taxes payable
8,720 7,032
Asbestos-related liabilities, current portion
5,547 5,547
Other accrued liabilities
23,633 23,789 Total
current liabilities
108,365 107,180 Borrowings under
revolving credit facility
223,482 228,482 Pension and other
postretirement benefits liabilities
1,739 1,739
Asbestos-related liabilities, non-current portion
64,672
64,799 Non-current income tax
7,712 8,418 Deferred income
taxes
11,151 10,806 Other long-term liabilities
13,951 9,596 Shareholders’ equity Capital stock - $1 par
value; 50,000 authorized shares; 18,546 and 18,395 shares issued
and outstanding
18,546 18,395 Additional paid-in capital
128,417 132,360 Retained earnings
804,782 776,403
Accumulated other comprehensive loss
(83,423 )
(78,834 ) Total shareholders' equity
868,322 848,324
Total liabilities and shareholders' equity
$
1,299,394 $ 1,279,344
Reconciliation of non-GAAP financial measures to the
comparable GAAP measures
Non-GAAP financial measures:
This earnings release includes the following financial measures
that are not presented in accordance with generally accepted
accounting principles in the United States of America (“GAAP”):
(1) Adjusted earnings per diluted share, which the Company
defines as earnings per diluted share excluding acquisition-related
amortization of intangible assets and discrete items, such as
restructuring expenses, asbestos litigation-related charges, gain
from antitrust litigation settlement, acquisition and related
integration costs, change in foreign jurisdiction tax regulation on
equity awards attributable to a prior period, transition services
related to the asset acquisition, and gains or losses on asset or
business dispositions (collectively, “Discrete Items”);
(2) Adjusted EBITDA, which the Company defines as net income
excluding interest expense, income tax expense, depreciation and
amortization, stock-based compensation expense and Discrete Items;
and
(3) Adjusted operating margin, which the Company defines as
operating margin excluding acquisition-related amortization of
intangible assets and Discrete Items.
Management believes each of these measures is useful to
investors because they allow for comparison to the Company’s
performance in prior periods without the effect of items that, by
their nature, tend to obscure the Company’s core operating results
due to potential variability across periods based on the timing,
frequency and magnitude of such items. As a result, management
believes that adjusted earnings per diluted share, adjusted EBITDA
and adjusted operating margin enhance the ability of investors to
analyze trends in the Company’s business and evaluate the Company’s
performance relative to peer companies. However, non-GAAP financial
measures have limitations as analytical tools and should not be
considered in isolation from, or solely as alternatives to,
financial measures prepared in accordance with GAAP. In addition,
these non-GAAP financial measures may differ from similarly named
measures used by other companies. Reconciliations of the
differences between these non-GAAP financial measures and their
most directly comparable financial measures calculated in
accordance with GAAP are set forth below.
Reconciliation of GAAP earnings per
diluted share to adjusted earnings per diluted share for the first
quarter*:
2019 2018
Earnings per
diluted share Q1
Q4 Q1 GAAP earnings per diluted share
$
1.52 $ 1.31 $ 1.40 Restructuring,
severance, impairment and other related costs
0.07 0.11 0.06
Acquisition and related integration costs
0.02 0.02 0.02
Change in foreign jurisdiction tax regulation on equity awards
attributable to a prior period
0.02 — — Gain from antitrust
litigation settlement
— (0.06 ) (0.15 ) Loss on sale of
long-lived assets
0.01 — — Asbestos related charges
—
0.03 — Transition services, net
0.03 0.08
— Total discrete items
$ 0.15 $ 0.18
($0.07 ) Earnings per diluted share adjusted for
discrete items
$ 1.67
$ 1.49 $ 1.33
Acquisition intangible amortization
0.18 0.18 0.15
Adjusted earnings per diluted share
$ 1.85 $
1.67 $ 1.48
Reconciliation of GAAP net income to
adjusted EBITDA for the first quarter*:
2019
2018 (amounts in millions)
Q1
Q4 Q1 Net income
$ 28.4 $
24.5 $ 26.1 Interest expense, net
1.9
2.1 1.2 Income tax expense
4.7 0.9 4.8 Depreciation
8.5 10.3 7.3 Amortization
4.5 4.4 3.8 Stock-based
compensation expense
2.5 2.7 2.7 Restructuring, severance,
impairment and other related costs
1.9 2.7 1.4 Acquisition
and related integration costs
0.5 0.4 0.4 Change in foreign
jurisdiction tax regulation on equity awards attributable to a
prior period
0.5 — — Gain from antitrust litigation
settlement
— (1.3 ) (3.6 ) Asbestos-related charges
—
0.7 — Loss on sale of long-lived assets
0.3 — — Transition
services lease income
(0.6 ) (0.7 )
— Adjusted EBITDA**
$ 53.1 $ 46.7
$ 44.1
*Values in table may not add due to
rounding.
**Adjusted EBITDA has been retrospectively
restated for all periods presented to reflect the add-back of
stock-based compensation expense.
Reconciliation of GAAP operating margin
to adjusted operating margin for the first quarter*:
2019 2018
Operating margin Q1 Q4
Q1 **GAAP operating margin
13.7 % 12.0
% 14.5 % Restructuring, severance, impairment
and other related costs
0.8 % 1.2 % 0.7 % Acquisition
and related integration costs
0.2 % 0.2 % 0.2 %
Change in foreign jurisdiction tax regulation on equity awards
attributable to a prior period
0.2 % — % — %
Asbestos-related charges
— % 0.3 % — % Gain from
antitrust litigation settlement
— % (0.6 )% (1.7 )%
Loss on sale of long-lived assets
0.1 % — % — %
Transition services, net
0.3 %
0.9 % — % Total discrete Items
1.6 % 2.0 % (0.8 )%
Operating margin adjusted for discrete items
15.3 % 14.0 % 13.6 %
Acquisition intangible amortization
1.8 % 2.0
% 1.8 %
Adjusted operating margin
17.1
% 16.0 % 15.4 %
*Percentages in table may not add due to
rounding.
Reconciliation of GAAP earnings per
diluted share to adjusted earnings per diluted share guidance for
the 2019 first quarter:
GuidanceQ1 2019
GAAP earnings per diluted share
$0.97 - $1.12
Discrete items
$0.10 Acquisition intangible
amortization
$0.18 Adjusted earnings per
diluted share
$1.25 - $1.40
Reconciliation of GAAP earnings per
diluted share to adjusted earnings per diluted share guidance for
the 2019 second quarter:
GuidanceQ2 2019 GAAP earnings per
diluted share
$1.16 - $1.31 Discrete items
$0.13 Acquisition intangible amortization
$0.18 Adjusted earnings per diluted share
$1.47 - $1.62
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version on businesswire.com: https://www.businesswire.com/news/home/20190430006183/en/
Investor contact:Steve HaymorePhone: 480-917-6026Email:
investor.relations@rogerscorporation.comWebsite
address: http://www.rogerscorp.com
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