Revenue and EPS at Top End of
Guidance
Rogers Corporation (NYSE:ROG) today announced financial results
for the first quarter of 2020.
"Rogers delivered solid first quarter results at the high end of
our guidance range, despite the impact of the ongoing COVID-19
pandemic," stated Bruce D. Hoechner, Rogers' President and CEO.
"The global Rogers team responded swiftly to focus on employee
safety and health while maintaining continuity of our operations in
order to meet commitments to our customers. Looking ahead we
anticipate Q2 sales to be comparable to Q1 due to stronger wireless
infrastructure demand from China offsetting weakness in automotive
and industrial markets. The current environment remains dynamic,
however with a strong balance sheet, a history of adaptability,
resilience and innovation, and leading positions in global
diversified markets, Rogers is well positioned to navigate these
challenges."
Q1 2020 Financial
Overview
GAAP Results
Q1 2020
Q4 2019
Q1 2019
Net Sales ($M)
$198.8
$193.8
$239.8
Gross Margin
33.0
%
33.1
%
35.6
%
Operating Margin
8.8
%
7.5
%
13.7
%
Net Income/ (Loss) ($M)1
$13.3
$(28.8)
$28.4
Earnings Per Share1
$0.71
$(1.55)
$1.52
Non-GAAP Results2
Q1 2020
Q4 2019
Q1 2019
Adjusted Operating Margin
11.3
%
11.6
%
17.1
%
Adjusted Net Income ($M)
$17.2
$21.3
$34.6
Adjusted Earnings Per Share
$0.92
$1.14
$1.85
Adjusted EBITDA ($M)
$33.4
$34.5
$53.1
Adjusted EBITDA Margin
16.8
%
17.8
%
22.2
%
Net Sales by Operating Segment (dollars in
millions)
Q1 2020
Q4 2019
Q1 2019
Advanced Connectivity Solutions (ACS)
$64.6
$64.6
$80.5
Elastomeric Material Solutions (EMS)
$83.5
$80.0
$92.8
Power Electronic Solutions (PES)
$46.7
$43.9
$59.8
Other
$4.0
$5.2
$6.8
1 - Q4 2019 net loss and earnings per share inclusive of a
non-cash after-tax pension settlement charge of $43.9 million, or
$2.35 per diluted share
2 - A reconciliation of GAAP to non-GAAP measures is provided in
the schedules included below
Q1 2020 Summary of
Results
Net sales of $198.8 million increased 2.6% versus the prior
quarter, despite some impact to demand from the COVID-19 pandemic.
PES and EMS segment sales increased versus the fourth quarter of
2019 and ACS segment revenue was essentially flat. PES net sales
increased sequentially due to stronger EV/HEV and renewable energy
market demand, partially offset by lower rail market demand. EMS
net sales increased sequentially due to higher general industrial,
EV/HEV battery and mass transit market demand, partially offset by
lower portable electronics demand. In the ACS segment, higher ADAS
and wireless infrastructure sales were offset by a decline in
aerospace and defense market demand. Currency exchange rates
favorably impacted total company net sales in the first quarter of
2020 by $0.5 million compared to prior quarter net sales.
Gross margin was 33.0%, compared to 33.1% in the prior quarter.
The decline in gross margin was primarily due to unfavorable
product mix and the impact of COVID-19 related costs of $0.6
million, partially offset by higher volume and operational
savings.
GAAP operating margin of 8.8% increased by approximately 130
basis points sequentially. Adjusted operating margin of 11.3%
decreased by approximately 30 basis points versus the prior
quarter.
GAAP earnings per share were $0.71, compared to a net loss per
share of $(1.55) in the fourth quarter of 2020. The sequential
improvement in GAAP earnings is primarily a result of a non-cash
pension settlement charge of $2.35 per diluted share in Q4 2019,
partially offset by increased tax expense. On an adjusted basis,
earnings were $0.92 per diluted share compared to adjusted earnings
of $1.14 per diluted share in the prior quarter. The decrease in
adjusted earnings was primarily due to higher tax expense in
Q1.
The first quarter of 2020 ending cash and cash equivalents was
$308.3 million, an increase of $141.4 million versus the prior
quarter. The increase in cash was primarily due to $150 million of
new borrowing under the Company’s revolving credit facility and net
cash provided by operating activities of $8.6 million, partially
offset by capital expenditures of $11.2 million and $5.0 million in
tax payments related to net share settlement of equity awards. The
borrowing under the revolving credit facility was a precautionary
measure to preserve financial flexibility in the current market
environment. At the end of the first quarter of 2020, cash exceeded
borrowings by $35 million.
Financial Outlook
Q2 2020
Net Sales ($M)
$190 to $205
Gross Margin
32.5% to 33.5%
Earnings Per Share
$0.58 to $0.78
Non-GAAP Earnings Per Share1
$0.80 to $1.00
2020
Effective Tax Rate
24% to 25%
Capital Expenditures ($M)
$40 to $45
Rogers 2020 second quarter guidance incorporates the Company's
best estimate of the impact of COVID-19 and the net sales range is
wider than historically provided due to an increased level of
uncertainty in the outlook.
1 - A reconciliation of GAAP to non-GAAP measures is provided in
the schedules included below
About Rogers Corporation
Rogers 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 the company’s growth
drivers-- advanced connectivity and advanced mobility 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 Statement
This 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: the
duration and impacts of the novel coronavirus global pandemic and
efforts to contain its transmission, including the effect of these
factors on our business, our customers and economic conditions
generally; 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 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.; 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 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, terrorism or public
health crises; 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;
changes in environmental laws and regulations applicable to our
business; and disruptions in, or breaches of, our information
technology systems. 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 the results for the first quarter
of 2020 will take place today, Thursday, April 30, 2020 at 5pm
ET.
A live webcast of the event and the accompanying presentation
can be accessed on the Rogers Corporation website at
https://www.rogerscorp.com/investors.
To participate, please dial:
1-800-574-8929
Toll-free in the United States
1-973-935-8524
Internationally
The passcode for the live teleconference
is 1277251.
If you are unable to attend, a conference call playback will be
available from April 30, 2020 at approximately 8 pm ET through May
14, 2020 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 1277251.
Additionally, the archived webcast will be available on the
Rogers website at approximately 8 pm ET May 1, 2020.
Additional information
Please contact the Company directly via email or visit the
Rogers website.
Website address: http://www.rogerscorp.com
(Financial statements follow)
Condensed Consolidated
Statements of Operations (Unaudited)
Three Months Ended
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
March 31, 2020
March 31, 2019
Net sales
$
198,810
$
239,798
Cost of sales
133,180
154,404
Gross margin
65,630
85,394
Selling, general and administrative
expenses
40,330
43,252
Research and development expenses
7,805
7,609
Restructuring and impairment charges
—
822
Other operating (income) expense, net
20
911
Operating income
17,475
32,800
Equity income in unconsolidated joint
ventures
1,218
837
Other income (expense), net
(786
)
1,404
Interest expense, net
(1,207
)
(1,938
)
Income (loss) before income tax
expense
16,700
33,103
Income tax expense
3,441
4,704
Net income (loss)
$
13,259
$
28,399
Basic earnings per share
$
0.71
$
1.53
Diluted earnings per share
$
0.71
$
1.52
Shares used in computing:
Basic earnings per share
18,669
18,557
Diluted earnings per share
18,691
18,692
Condensed Consolidated
Statements of Financial Position (Unaudited)
(IN THOUSANDS)
March 31, 2020
December 31, 2019
Assets
Current assets
Cash and cash equivalents
$
308,277
$
166,849
Accounts receivable, less allowance for
doubtful accounts of $1,726 and $1,691
144,202
122,285
Contract assets
20,178
22,455
Inventories
127,517
132,859
Prepaid income taxes
4,063
4,524
Asbestos-related insurance receivables,
current portion
4,292
4,292
Other current assets
12,764
10,838
Total current assets
621,293
464,102
Property, plant and equipment, net of
accumulated depreciation of $355,595 and $341,119
260,922
260,246
Investments in unconsolidated joint
ventures
15,743
16,461
Deferred income taxes
18,328
17,117
Goodwill
260,870
262,930
Other intangible assets, net of
amortization
155,004
158,947
Pension assets
12,954
12,790
Asbestos-related insurance receivables,
non-current portion
74,024
74,024
Other long-term assets
7,278
6,564
Total assets
$
1,426,416
$
1,273,181
Liabilities and Shareholders’
Equity
Current liabilities
Accounts payable
$
39,707
$
33,019
Accrued employee benefits and
compensation
26,464
29,678
Accrued income taxes payable
6,626
10,649
Asbestos-related liabilities, current
portion
5,007
5,007
Other accrued liabilities
19,535
21,872
Total current liabilities
97,339
100,225
Borrowings under revolving credit
facility
273,000
123,000
Pension and other postretirement benefits
liabilities
1,596
1,567
Asbestos-related liabilities, non-current
portion
80,767
80,873
Non-current income tax
11,320
10,423
Deferred income taxes
9,115
9,220
Other long-term liabilities
15,470
13,973
Shareholders’ equity
Capital stock - $1 par value; 50,000
authorized shares; 18,662 and 18,577 shares issued and
outstanding
18,662
18,577
Additional paid-in capital
137,235
138,526
Retained earnings
836,961
823,702
Accumulated other comprehensive loss
(55,049
)
(46,905
)
Total shareholders' equity
937,809
933,900
Total liabilities and shareholders'
equity
$
1,426,416
$
1,273,181
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 net income, which the Company defines as net income
excluding amortization of acquisition intangible assets and
discrete items such as acquisition and related integration costs,
change in foreign jurisdiction tax regulation on equity awards
attributable to a prior period, asbestos related charges,
environmental accrual adjustment, gain from indemnity claim, losses
or gains on the sale or disposal of property, plant and equipment,
pension settlement charges, restructuring, severance, impairment
and other related costs, transition services, net, and the related
income tax effect on these items (collectively, “discrete
items”)
(2) Adjusted earnings per diluted share, which the Company
defines as earnings per diluted share excluding amortization of
acquisition intangible assets, discrete items and the impact of
including dilutive securities divided by adjusted weighted average
shares outstanding - diluted;
(3) Adjusted EBITDA, which the Company defines as net income
excluding interest expense, net, income tax expense, depreciation
and amortization, stock-based compensation expense and discrete
items;
(4) Adjusted operating margin, which the Company defines as
operating margin excluding acquisition-related amortization of
intangible assets and Discrete Items above excluding pension
settlement charges;
(5) Free cash flow, which the Company defines as net cash
provided by operating activities less non-acquisition capital
expenditures.
Management believes adjusted net income, adjusted earnings per
diluted share, adjusted EBITDA and adjusted operating margin are
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 these measures enhance the ability of
investors to analyze trends in the Company’s business and evaluate
the Company’s performance relative to peer companies. Management
also believes free cash flow is useful to investors as an
additional way of viewing the Company's liquidity and provides a
more complete understanding of factors and trends affecting the
Company's cash flows. 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 net income to adjusted net
income:
(amounts in millions)
2020
2019
Net income
Q1
Q4
Q1
GAAP net income
$
13.3
$
(28.8
)
$
28.4
Acquisition and related integration
costs
$
0.4
$
0.5
$
0.5
Change in foreign jurisdiction tax
regulation on equity awards attributable to a prior period
$
—
$
—
$
0.5
Asbestos-related charges
$
—
$
1.7
$
—
Environmental accrual adjustment
$
—
$
0.8
$
—
Gain from indemnity claim
$
—
$
(0.7
)
$
—
Loss on sale or disposal of property,
plant and equipment
$
—
$
0.4
$
0.3
Pension settlement charges
$
—
$
53.2
$
—
Restructuring, severance, impairment and
other related costs
$
1.1
$
0.8
$
1.9
Transition services, net
$
—
$
0.1
$
0.6
Acquisition intangible amortization
$
3.6
$
4.4
$
4.4
Income tax effect on non-GAAP adjustments
and intangible amortization
$
(1.2
)
$
(11.1
)
$
(2.0
)
Adjusted net income
$
17.2
$
21.3
$
34.6
*Values in table may not add due to rounding.
Reconciliation of GAAP earnings per diluted share to adjusted
earnings per diluted share*:
2020
2019
Earnings per diluted share
Q1
Q4
Q1
GAAP earnings per diluted share
$
0.71
$
(1.55
)
$
1.52
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
Asbestos related charges
—
0.07
—
Environmental accrual adjustment
—
0.03
—
Gain from indemnity claim
—
(0.03
)
—
Loss on sale or disposal of property,
plant and equipment
—
0.02
0.01
Pension settlement charges
—
2.35
—
Restructuring, severance, impairment and
other related costs
0.04
0.03
0.07
Transition services, net
—
0.01
0.03
Impact of including dilutive
securities(a)
—
0.01
—
Total discrete items
$
0.06
$
2.51
$
0.15
Earnings per diluted share adjusted for
discrete items
$
0.77
$
0.96
$
1.67
Acquisition intangible amortization
$
0.15
$
0.18
$
0.18
Adjusted earnings per diluted share
$
0.92
$
1.14
$
1.85
*Values in table may not add due to rounding.
(a)This represents the dilutive effect of awards under equity
compensation plans. Refer to the table below for the effect on
adjusted weighted average shares outstanding - diluted.
The following table reconciles weighted average shares
outstanding - diluted under US GAAP to adjusted weighted average
shares outstanding - diluted used in the calculation of adjusted
diluted EPS:
2020
2019
(shares in thousands)
Q1
Q4
Q1
Weighted average shares outstanding -
diluted
18,691
18,587
18,692
Dilutive effect of awards under equity
compensation plans
—
118
—
Adjusted weighted average shares
outstanding - diluted
18,691
18,705
18,692
Reconciliation of GAAP net income to adjusted
EBITDA*:
2020
2019
(amounts in millions)
Q1
Q4
Q1
GAAP Net income
$
13.3
$
(28.8
)
$
28.4
Interest expense, net
1.2
1.1
1.9
Income tax expense
3.4
(9.5
)
4.7
Depreciation
7.3
7.6
8.5
Amortization
3.7
4.4
4.5
Stock-based compensation expense
3.1
3.0
2.5
Acquisition and related integration
costs
0.4
0.5
0.5
Change in foreign jurisdiction tax
regulation on equity awards attributable to a prior period
—
—
0.5
Asbestos-related charges
—
1.7
—
Environmental accrual adjustment
—
0.8
—
Gain from indemnity claim
—
(0.7
)
—
Loss on sale or disposal of property,
plant and equipment
—
0.4
0.3
Pension settlement charges
—
53.2
—
Restructuring, severance, impairment and
other related costs
1.1
0.8
1.9
Transition services lease income
—
(0.1
)
(0.6
)
Adjusted EBITDA
$
33.4
$
34.5
$
53.1
*Values in table may not add due to rounding.
Reconciliation of GAAP operating margin to adjusted operating
margin*:
2020
2019
Operating margin
Q1
Q4
Q1
GAAP operating margin
8.8
%
7.5
%
13.7
%
Acquisition and related integration
costs
0.2
%
0.3
%
0.2
%
Change in foreign jurisdiction tax
regulation on equity awards attributable to a prior period
—
%
—
%
0.2
%
Asbestos-related charges
—
%
0.9
%
—
%
Environmental accrual adjustment
—
%
0.4
%
—
%
Gain from indemnity claim
—
%
(0.4
)
%
—
%
Loss on sale or disposal of property,
plant and equipment
—
%
0.2
%
0.1
%
Restructuring, severance, impairment and
other related costs
0.5
%
0.4
%
0.8
%
Transition services, net
—
%
0.1
%
0.3
%
Total discrete items
0.7
%
1.8
%
1.6
%
Operating margin adjusted for discrete
items
9.5
%
9.4
%
15.3
%
Acquisition intangible amortization
1.8
%
2.3
%
1.8
%
Adjusted operating margin
11.3
%
11.6
%
17.1
%
*Percentages in table may not add due to rounding.
Reconciliation of net cash provided by
operating activities to free cash flow:
2020
2019
(amounts in millions)
Q1
Q4
Q1
Net cash provided by operating
activities
$
8.6
$
45.7
$
17.1
Non-acquisition capital expenditures
(11.2
)
(12.8
)
(12.6
)
Free cash flow
$
(2.5
)
$
32.9
$
4.4
*Values in table may not add due to rounding.
Reconciliation of GAAP earnings per
diluted share to adjusted earnings per diluted share guidance for
the 2020 first quarter:
Guidance Q1
2020
GAAP earnings per diluted share
$0.50 - $0.70
Discrete items
$0.10
Acquisition intangible amortization
$0.15
Adjusted earnings per diluted share
$0.75 - $0.95
Reconciliation of GAAP earnings per
diluted share to adjusted earnings per diluted share guidance for
the 2020 second quarter:
Guidance Q2
2020
GAAP earnings per diluted share
$0.58 - $0.78
Discrete items
$0.07
Acquisition intangible amortization
$0.15
Adjusted earnings per diluted share
$0.80 - $1.00
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200430005955/en/
Investor contact: Steve Haymore Phone: 480-917-6026
Email: stephen.haymore@rogerscorporation.com
Rogers (NYSE:ROG)
Historical Stock Chart
From Mar 2024 to Apr 2024
Rogers (NYSE:ROG)
Historical Stock Chart
From Apr 2023 to Apr 2024