Second quarter 2018, versus second quarter 2017:
- Net sales of $214.7 million, up
6.6%
- Gross margin of 35.7%, down 430
basis points
- Net income of $17.3 million, down
17.1%
- Earnings of $0.93 per diluted share;
adjusted earnings of $1.19 per diluted share
Rogers Corporation (NYSE:ROG) today announced financial results
for the 2018 second quarter.
The Company reported 2018 second quarter net sales of $214.7
million, which was within the Company's previously announced
guidance of $210 to $220 million, and an increase of 6.6% compared
to 2017 second quarter net sales of $201.4 million. Currency
exchange rates favorably impacted 2018 second quarter net sales by
$8.4 million due to strengthening in the Euro and Renminbi.
Earnings for the 2018 second quarter were $0.93 per diluted
share, compared to $1.13 per diluted share in the second quarter of
2017. Earnings per diluted share were below the Company's guidance
of $1.10 to $1.25. On an adjusted basis, earnings were $1.19 per
diluted share, compared to adjusted earnings of $1.33 per diluted
share in the second quarter of 2017. Adjusted earnings were below
the Company's guidance of $1.25 to $1.40 per diluted share.
Second quarter 2018 net income was $17.3 million, compared to
$20.9 million in the second quarter of 2017. Adjusted EBITDA was
$40.7 million for the second quarter of 2018, compared to $46.5
million reported in the second quarter of 2017.
Gross margin was 35.7% in the second quarter of 2018, compared
to 40.0% in the second quarter of 2017. Operating margin was 11.7%
in the second quarter of 2018, compared to 16.0% in the second
quarter of 2017. Adjusted operating margin was 14.8% in the second
quarter of 2018, compared to 18.8% in the second quarter of
2017.
"Rogers achieved revenue growth across much of the business;
however, margins were below our expectations in the quarter
primarily due to additional costs for capacity and activities to
reduce cost structure," stated Bruce D. Hoechner, Rogers' President
and CEO. "We are turning the corner on near-term operating
challenges. We are executing well on our strategy, as demonstrated
by our recent synergistic acquisition of Griswold, and our ongoing
substantial investments in capacity and multi-site readiness, in
preparation for the significant growth opportunities in 5G
wireless, advanced driver assistance systems, and electric and
hybrid electric vehicles. Rogers is well positioned to achieve the
performance targets outlined in our 2020 vision."
Business segment
discussion
Advanced Connectivity Solutions
(ACS)Advanced Connectivity Solutions reported 2018
second quarter net sales of $76.4 million, a 2.7% increase compared
to 2017 second quarter net sales of $74.3 million. The increase in
2018 second quarter net sales was largely driven by aerospace and
defense and automotive advanced driver assistance systems (ADAS)
revenues, partially offset by lower demand in portable electronics
and wireless 4G LTE applications. Second quarter 2018 net sales
were favorably impacted by $1.9 million due to fluctuations in
currency exchange rates.
Elastomeric Material Solutions
(EMS)Elastomeric Material Solutions reported 2018 second
quarter net sales of $79.2 million, a 2.1% increase compared to
2017 second quarter net sales of $77.6 million. EMS net sales
increased on portable electronics, consumer, automotive and mass
transit revenues, partially offset by lower general industrial and
other applications. Fluctuations in currency exchange rates
favorably impacted net sales by $2.0 million in the 2018 second
quarter.
Power Electronics Solutions
(PES)Power Electronics Solutions reported 2018 second
quarter net sales of $53.6 million, a 22.2% increase compared to
2017 second quarter net sales of $43.9 million. 2018 second quarter
net sales increased due to broad based demand across markets,
including particular strength in electric and hybrid electric
vehicles, renewable energy, mass transit and variable frequency
drives. Second quarter 2018 net sales were favorably impacted by
$4.3 million due to fluctuations in currency exchange rates.
OtherOther reported 2018
second quarter net sales of $5.4 million, a decrease of 2.8%
compared to the second quarter of 2017 sales of $5.6 million.
Balance sheet and other
highlights
Cash positionRogers ended
the second quarter of 2018 with cash and cash equivalents of $174.7
million, a decrease of $6.5 million from $181.2 million at
December 31, 2017. The primary drivers of the lower cash
balance were capital spending of $20.2 million, tax payments
related to vested equity awards of $6.4 million, and share
repurchases of $3.0 million, partially offset by $22.8 million of
net cash provided by operating activities.
Cash flowNet cash provided
from operating activities of $22.8 million in the first half of
2018, a decrease compared to 2017. The decrease in net cash
provided by operating activities was primarily driven by the use of
working capital and lower net income. Capital spending was $20.2
million in the first half of 2018, an increase compared to $9.7
million in 2017.
Effective tax rateRogers'
effective income tax rate was 32.6% for the second quarter of 2018,
compared to 33.9% for the second quarter of 2017. The decrease was
primarily due to a lower U.S. effective tax rate, as a result of
U.S. tax reform and geographic profit mix, partially offset by an
increase in current year accruals for uncertain tax positions.
Financial outlookRogers
guides its 2018 third quarter net sales to a range of $220 to $230
million. Rogers guides its 2018 third quarter earnings to a range
of $0.97 to $1.12 per diluted share, excluding the impact of
purchase accounting related to the acquisition of Griswold.
Adjusted earnings are guided to a range of $1.25 to $1.40 per
diluted share.
Rogers guides 2018 full year capital spending to be in the range
of $50 to $60 million.
Rogers guides the 2018 full year effective tax rate to be
25-27%, with a third quarter effective tax rate of 30-31%.
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 may concern our
plans, objectives, outlook, goals, strategies, future events,
future net sales or performance, capital expenditures, financing
needs, 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 that could cause such results to
differ include: failure to capitalize on, and volatility within,
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;
changes in trade policy, tariff regulation or other trade
restrictions; fluctuations in foreign currency exchange rates;
research and development efforts; 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; 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 quarterly reports on Forms 10-Q
filed with the Securities and Exchange Commission. 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 2018 second quarter results today
on Tuesday July, 31 2018 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
States1-973-935-8524 InternationallyThere is no passcode for the
live teleconference.
If you are unable to attend, a conference call playback will be
available from July 31, 2018 at approximately 8 pm ET through
August 7, 2018 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 4967299.
Additionally, the archived webcast will be available on the
Rogers website at approximately 8 pm ET July 31, 2018.
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 Six Months
Ended
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
June 30, 2018 June 30, 2017
June 30, 2018
June 30, 2017 Net sales
$ 214,675 $ 201,424
$ 429,286 $ 405,252 Cost of sales
138,003
120,878
276,007 244,356 Gross
margin
76,672 80,546
153,279 160,896 Selling, general
and administrative expenses
42,540 40,012
83,137
74,580 Research and development expenses
8,750 7,141
16,884 14,102 Restructuring and impairment charges
541 1,079
963 1,805 Other operating (income) expense,
net
(383 ) —
(3,974 ) (942 )
Operating income
25,224 32,314
56,269 71,351 Equity
income in unconsolidated joint ventures
1,804 966
2,811 1,976 Other income (expense), net
(34 )
260
32 1,379 Interest expense, net
(1,292 )
(1,947 )
(2,503 ) (3,195 ) Income before income tax
expense
25,702 31,593
56,609 71,511 Income tax
expense
8,373 10,697
13,144
23,583 Net income
$ 17,329 $ 20,896
$ 43,465 $ 47,928
Basic earnings per share
$ 0.94
$ 1.15
$ 2.37 $ 2.65
Diluted earnings per share
$
0.93 $ 1.13
$ 2.33 $ 2.60
Shares used in computing: Basic earnings per share
18,389 18,140
18,338 18,098 Diluted earnings per
share
18,660 18,547
18,635 18,460
Please note for adoption of ASU 2017-07, Rogers has reclassified
second quarter and year to date 2017 pension and OPEB income, in
the amount of $445 and $849 thousand, respectively, from selling,
general and administrative expense to other income (expense), net,
in the condensed consolidated statements of operations above.
Condensed Consolidated Statements of
Financial Position (Unaudited)
(IN THOUSANDS)
June 30, 2018
December 31, 2017
Assets Current assets Cash and cash
equivalents
$ 174,700 $ 181,159 Accounts receivable,
less allowance for doubtful accounts of $1,284 and $1,525
148,727 140,562 Contract assets
21,933 — Inventories
117,739 112,557 Prepaid income taxes
2,732 3,087
Current portion of asbestos-related insurance receivables
5,682 5,682 Assets held for sale
381 896 Other
current assets
13,535 10,580 Total current
assets
485,429 454,523 Property, plant and equipment, net of
accumulated depreciation of $300,416 and $289,909
184,478
179,611 Investments in unconsolidated joint ventures
19,411
18,324 Deferred income taxes
3,501 6,008 Goodwill
234,287 237,107 Other intangible assets, net of amortization
152,009 160,278 Asbestos-related insurance receivables
63,511 63,511 Other long-term assets
5,503
5,772 Total assets
$ 1,148,129 $
1,125,134
Liabilities and Shareholders’ Equity
Current liabilities Accounts payable
$ 37,299 $
36,116 Accrued employee benefits and compensation
26,081
39,394 Accrued income taxes payable
3,987 6,408 Current
portion of capital lease obligations
600 579 Current portion
of asbestos-related liabilities
5,682 5,682 Other accrued
liabilities
25,095 25,629 Total current
liabilities
98,744 113,808 Borrowings under credit facility
130,982 130,982 Non-current portion of capital lease
obligations
5,404 5,873 Pension liability
8,720 8,720
Retiree health care and life insurance benefits
1,685 1,685
Asbestos-related liabilities
70,056 70,500 Non-current
income tax
9,755 12,823 Deferred income taxes
13,879
10,706 Other long-term liabilities
4,119 3,464 Shareholders’
equity Capital Stock - $1 par value; 50,000 authorized shares;
18,380 and 18,255 shares issued and outstanding
18,380
18,255 Additional paid-in capital
126,452 128,933 Retained
earnings
732,217 684,540 Accumulated other comprehensive
loss
(72,264 ) (65,155 ) Total shareholders' equity
804,785 766,573 Total liabilities and
shareholders' equity
$ 1,148,129 $ 1,125,134
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, acquisition and related integration costs,
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, 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 the potential variability across periods based on the
timing, frequency and magnitude. 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.
**2017 financial measures below have been adjusted for the
adoption of ASU 2017-07, and has reclassified pension and OPEB
income from selling, general and administrative expense to other
income (expense), net.
Reconciliation of GAAP earnings per
diluted share to adjusted earnings per diluted share for the second
quarter:
2018 2017
Earnings per diluted share
Q2 Q2 GAAP earnings per
diluted share
$ 0.93 $ 1.13 Restructuring,
severance, impairment and other related costs
0.09 0.04
Acquisition and related integration costs
0.04 0.03 Gain on
sale of long-lived asset
(0.02
) — Total discrete items
$ 0.11 $ 0.07 Earnings
per diluted share adjusted for discrete items
$ 1.04 $ 1.20 Acquisition
intangible amortization
0.15 0.13
Adjusted earnings per diluted
share
$ 1.19
$ 1.33
Reconciliation of GAAP net income to
adjusted EBITDA for the second quarter*:
2018 2017 (amounts in millions)
Q2 Q2 Net income
$ 17.3 $
20.9 Interest expense, net
1.3 1.9 Income tax expense
8.4 10.7 Depreciation
7.1 7.2 Amortization
3.8
3.8 Restructuring, severance, impairment and other related costs
2.2 1.1 Acquisition and related integration costs
0.9
0.9 Loss (gain) on sale of long-lived assets
(0.4 ) — Adjusted EBITDA
$ 40.7 $
46.5
*Values in table may not add due to
rounding.
Reconciliation of GAAP operating margin
to adjusted operating margin for the second quarter*:
2018 2017
Operating margin
Q2 Q2 **GAAP operating margin
11.7 % 16.0 % Restructuring, severance,
impairment and other related costs
1.0 % 0.5 %
Acquisition and related integration costs
0.4 % 0.5 %
Loss (gain) on sale of long-lived assets
(0.2 )% — % Total discrete Items
1.2 % 1.0 % Operating
margin adjusted for discrete items
13.0
% 17.0 % Acquisition intangible
amortization
1.8 % 1.8 %
Adjusted operating margin
14.8 % 18.8 %
*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 2018 second quarter:
GuidanceQ2 2018 GAAP earnings per diluted share
$1.10 - $1.25 Discrete items
$0.01
Acquisition intangible amortization
$0.14
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 2018 third quarter:
Guidance
Q3 2018 GAAP earnings per diluted share
$0.97 - $1.12
Discrete items
$0.13 Acquisition intangible
amortization
$0.15
Adjusted earnings per diluted share
$1.25 -
$1.40
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180731005856/en/
Investor contact:Rogers CorporationJack Monti,
480-917-6026jack.monti@rogerscorp.comhttp://www.rogerscorp.com
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