Rogers Corporation (NYSE:ROG) today announced financial results
for the first quarter of 2022.
“Rogers delivered solid first quarter revenue growth driven by
EV/HEV, ADAS and industrial market sales,” stated Bruce D.
Hoechner, Rogers' President and CEO. “Underlying market demand
continues to be strong, although further sales growth and margin
improvement in the first quarter was tempered by global supply
challenges and COVID impacts in China. The outlook for Advanced
Mobility and other growth markets remains robust and our
investments to capitalize on the long-term growth, particularly in
the EV/HEV market where demand is accelerating, remain on track. We
continue to look forward to the combination with DuPont and the
many compelling benefits we expect it will provide for our
employees, customers and other stakeholders.”
Financial
Overview
GAAP Results
Q1 2022
Q4 2021
Q1 2021
Net Sales ($M)
$248.3
$230.5
$229.3
Gross Margin
34.4%
33.9%
39.0%
Operating Margin
8.0%
4.5%
16.2%
Net Income ($M)
$16.6
$23.1
$31.2
Net Income Margin
6.7%
10.0%
13.6%
Diluted Earnings Per Share
$0.87
$1.22
$1.66
Net Cash Provided by Operating
Activities
$(13.7)
$18.2
$36.5
Non-GAAP Results1
Q1 2022
Q4 2021
Q1 2021
Adjusted Operating Margin
14.5%
12.2%
19.0%
Adjusted Net Income ($M)
$29.1
$36.3
$36.0
Adjusted Earnings Per Diluted Share
$1.53
$1.92
$1.92
Adjusted EBITDA ($M)
$47.2
$41.7
$59.8
Adjusted EBITDA Margin
19.0%
18.1%
26.1%
Free Cash Flow ($M)
$(42.0)
$(9.5)
$32.9
Net Sales by Operating Segment (dollars in
millions)
Q1 2022
Q4 2021
Q1 2021
Advanced Electronics Solutions (AES)2
$133.2
$127.1
$131.9
Elastomeric Material Solutions (EMS)
$110.2
$98.9
$91.8
Other
$4.9
$4.4
$5.5
1 - A reconciliation of GAAP to non-GAAP measures is provided in
the schedules included below 2 - The AES business segment was
formed in the first quarter of 2021 through the combination of the
Advanced Connectivity Solutions (ACS) and Power Electronics
Solutions (PES) businesses. Prior period consolidated financial
statements have been reclassified to conform to the current year
presentation.
Q1 2022 Summary of
Results
Net sales of $248.3 million increased 7.7% versus the prior
quarter primarily due to higher EV/HEV, ADAS and industrial market
volumes and commercial actions. Further sales growth was tempered
by lower demand from customers dealing with COVID impacts and
component shortages. Additionally, labor and raw material
constraints moderated manufacturing levels for certain products.
EMS net sales increased by 11.5% resulting from higher EV/HEV and
industrial market sales and the Silicone Engineering acquisition.
This increase was partially offset by lower portable electronics
revenues from COVID impacts. AES net sales increased by 4.7% due to
strong EV/HEV revenues and improved ADAS volumes, partially offset
by lower wireless infrastructure revenues. Currency exchange rates
unfavorably impacted total company net sales in the first quarter
of 2022 by $1.3 million compared to prior quarter net sales.
Gross margin was 34.4%, compared to 33.9% in the prior quarter.
The increase in gross margin was primarily driven by higher volume
and commercial actions, partially offset by unfavorable product mix
and lower yields.
Selling, general and administrative (SG&A) expenses
decreased by $0.2 million from the prior quarter to $57.7 million.
SG&A expense declined due to lower depreciation and
amortization expense, which was primarily offset by an increase in
costs associated with the proposed acquisition of Rogers by
DuPont.
GAAP operating margin of 8.0% increased by 350 basis points from
the prior quarter primarily due to the improvement in gross margin
and lower SG&A expenses. Adjusted operating margin of 14.5%
increased by 230 basis points versus the prior quarter.
GAAP earnings per diluted share were $0.87, compared to earnings
per diluted share of $1.22 in the previous quarter. The decrease in
GAAP earnings was due to higher tax expense from a change in
unrecognized tax positions in China in Q4, partially offset by the
improvement in operating income. On an adjusted basis, earnings
were $1.53 per diluted share compared to adjusted earnings of $1.92
per diluted share in the prior quarter.
Ending cash and cash equivalents were $182.1 million, a decrease
of $50.2 million versus the prior quarter. Net cash used in
operating activities was $13.7 million, compared to net cash
provided by operating activities of $18.2 million in Q4. Operating
cash flow declined versus the prior quarter primarily due to an
increase in working capital, resulting from higher sales and
additional inventory for new production facilities and building
safety stock. Capital expenditures were $28.2 million in the first
quarter compared to $27.7 million in the prior quarter.
Transaction with DuPont
As previously announced on November 2, 2021, Rogers has entered
into a definitive merger agreement to be acquired by DuPont for
$277.00 per share in cash. As a result of the pending acquisition,
Rogers will not hold an earnings call or provide forward-looking
guidance. Rogers' shareholders approved the merger agreement at a
special shareholder meeting held on January 25, 2022. The
transaction is expected to close late in the second quarter or
early in the third quarter of 2022, subject to the satisfaction of
other customary closing conditions, including receipt of certain
regulatory approvals.
About Rogers Corporation
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.
Safe Harbor Statement
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, which concern the planned acquisition of Rogers by
DuPont de Nemours, Inc. (the “DuPont Merger”), 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. Rogers’ actual
future results may differ materially from Rogers’ current
expectations due to the risks and uncertainties inherent in its
business and risks relating to the DuPont Merger. These risks
include, but are not limited to: uncertainties as to the timing and
structure of the DuPont Merger; the possibility that various
closing conditions for the transaction may not be satisfied or
waived, including that a governmental entity may prohibit, delay or
refuse to grant approval for the consummation of the DuPont Merger;
the risk that management’s time and attention is diverted on
transaction related issues; the risk that Rogers is unable to
retain key personnel; the effects of disruptions caused by the
transaction making it more difficult to maintain relationships with
employees, customers, vendors and other business partners; and the
risk that stockholder litigation in connection with the DuPont
Merger may result in significant costs of defense, indemnification
and liability. 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;
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 or the DuPont Merger. 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.
(Financial statements follow)
Condensed Consolidated
Statements of Operations (Unaudited)
Three Months Ended
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
March 31, 2022
March 31, 2021
Net sales
$
248,266
$
229,265
Cost of sales
162,872
139,766
Gross margin
85,394
89,499
Selling, general and administrative
expenses
57,705
42,413
Research and development expenses
8,260
7,172
Restructuring and impairment charges
69
1,506
Other operating (income) expense, net
(531
)
1,215
Operating income
19,891
37,193
Equity income in unconsolidated joint
ventures
1,275
2,181
Other income (expense), net
267
2,968
Interest expense, net
(1,069
)
(607
)
Income before income tax expense
20,364
41,735
Income tax expense
3,764
10,517
Net income
$
16,600
$
31,218
Basic earnings per share
$
0.88
$
1.67
Diluted earnings per share
$
0.87
$
1.66
Shares used in computing:
Basic earnings per share
18,780
18,712
Diluted earnings per share
18,999
18,774
Condensed Consolidated
Statements of Financial Position (Unaudited)
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT
PAR VALUE)
March 31, 2022
December 31, 2021
Assets
Current assets
Cash and cash equivalents
$
182,144
$
232,296
Accounts receivable, less allowance for
doubtful accounts of $798 and $1,223
173,387
163,092
Contract assets
39,177
36,610
Inventories
152,150
133,384
Prepaid income taxes
2,898
1,921
Asbestos-related insurance receivables,
current portion
3,176
3,176
Other current assets
23,597
13,586
Total current assets
576,529
584,065
Property, plant and equipment, net of
accumulated depreciation of $365,671 and $367,850
349,681
326,967
Investments in unconsolidated joint
ventures
15,508
16,328
Deferred income taxes
32,521
32,671
Goodwill
364,684
370,189
Other intangible assets, net of
amortization
169,977
176,353
Pension assets
5,274
5,123
Asbestos-related insurance receivables,
non-current portion
59,391
59,391
Other long-term assets
19,697
27,479
Total assets
$
1,593,262
$
1,598,566
Liabilities and Shareholders’
Equity
Current liabilities
Accounts payable
$
74,916
$
64,660
Accrued employee benefits and
compensation
34,382
48,196
Accrued income taxes payable
1,384
9,632
Asbestos-related liabilities, current
portion
3,841
3,841
Other accrued liabilities
46,643
37,620
Total current liabilities
161,166
163,949
Borrowings under revolving credit
facility
190,000
190,000
Pension and other postretirement benefits
liabilities
1,638
1,618
Asbestos-related liabilities, non-current
portion
64,250
64,491
Non-current income tax
8,205
7,131
Deferred income taxes
27,739
29,451
Other long-term liabilities
22,786
23,031
Shareholders’ equity
Capital stock - $1 par value; 50,000
authorized shares; 18,803 and 18,730 shares issued and
outstanding
18,803
18,730
Additional paid-in capital
157,164
163,583
Retained earnings
998,425
981,825
Accumulated other comprehensive loss
(56,914
)
(45,243
)
Total shareholders' equity
1,117,478
1,118,895
Total liabilities and shareholders'
equity
$
1,593,262
$
1,598,566
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 operating margin, which the Company defines as
operating margin excluding acquisition-related amortization of
intangible assets and discrete items, which are acquisition and
related integration costs, asbestos-related charges, gains or
losses on the sale or disposal of property, plant and equipment,
restructuring, severance, impairment and other related costs, UTIS
fire charges, costs associated with the proposed DuPont
acquisition, and the related income tax effect on these items
(collectively, “discrete items”);
(2) Adjusted net income, which the Company defines as net income
excluding amortization of acquisition intangible assets and
discrete items;
(3) Adjusted earnings per diluted share, which the Company
defines as earnings per diluted share excluding amortization of
acquisition intangible assets, and discrete items divided by
adjusted weighted average shares outstanding - diluted;
(4) 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;
(5) Adjusted EBITDA Margin, which the Company defines as the
percentage that results from dividing Adjusted EBITDA by total net
sales;
(6) Free cash flow, which the Company defines as net cash
provided by operating activities less non-acquisition capital
expenditures.
Management believes adjusted operating margin, adjusted net
income, adjusted earnings per diluted share, adjusted EBITDA and
adjusted EBITDA 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 as alternatives to, financial
measures prepared in accordance with GAAP. In addition, these
non-GAAP financial measures may differ from, and should not be
compared to, 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 operating margin
to adjusted operating margin*:
2022
2021
Operating margin
Q1
Q4
Q1
GAAP operating margin
8.0
%
4.5
%
16.2
%
Acquisition and related integration
costs
0.2
%
1.3
%
—
%
Asbestos-related charges
—
%
(0.1
)%
—
%
Gain on sale or disposal of property,
plant and equipment
—
%
(0.1
)%
—
%
Restructuring, severance, impairment and
other related costs
0.2
%
0.6
%
0.8
%
UTIS fire charges
(0.2
)%
0.8
%
0.6
%
Costs associated with the proposed DuPont
acquisition
4.6
%
3.0
%
—
%
Total discrete items
4.8
%
5.5
%
1.4
%
Operating margin adjusted for discrete
items
12.8
%
10.1
%
17.6
%
Acquisition intangible amortization
1.7
%
2.1
%
1.4
%
Adjusted operating margin
14.5
%
12.2
%
19.0
%
*Percentages in table may not add due to
rounding.
Reconciliation of GAAP net income to
adjusted net income:
(amounts in millions)
2022
2021
Net income
Q1
Q4
Q1
GAAP net income
$
16.6
$
23.1
$
31.2
Acquisition and related integration
costs
0.5
2.9
—
Asbestos-related charges
—
(0.2
)
—
Gain on sale or disposal of property,
plant and equipment
—
(0.2
)
(0.1
)
Restructuring, severance, impairment and
other related costs
0.5
1.5
1.9
UTIS fire charges
(0.5
)
1.9
1.3
Costs associated with the proposed DuPont
acquisition
11.5
6.9
—
Acquisition intangible amortization
4.3
4.9
3.1
Income tax effect of non-GAAP adjustments
and intangible amortization
(3.7
)
(4.4
)
(1.5
)
Adjusted net income
$
29.1
$
36.3
$
36.0
*Values in table may not add due to
rounding.
Reconciliation of GAAP earnings per
diluted share to adjusted earnings per diluted share*:
2022
2021
Earnings per diluted share
Q1
Q4
Q1
GAAP earnings per diluted share
$
0.87
$
1.22
$
1.66
Acquisition and related integration
costs
0.02
0.11
—
Asbestos-related charges
—
(0.01
)
—
Gain on sale or disposal of property,
plant and equipment
—
(0.01
)
—
Restructuring, severance, impairment and
other related costs
0.02
0.06
0.08
UTIS fire charges
(0.02
)
0.08
0.05
Costs associated with the proposed DuPont
acquisition
0.47
0.27
—
Total discrete items
$
0.49
$
0.51
$
0.13
Earnings per diluted share adjusted for
discrete items
1.36
1.73
1.79
Acquisition intangible amortization
$
0.17
$
0.19
$
0.13
Adjusted earnings per diluted share
$
1.53
$
1.92
$
1.92
*Values in table may not add due to
rounding.
Reconciliation of GAAP net income to
adjusted EBITDA*:
2022
2021
(amounts in millions)
Q1
Q4
Q1
GAAP Net income
$
16.6
$
23.1
$
31.2
Interest expense, net
1.1
1.1
0.6
Income tax expense
3.8
(11.2
)
10.5
Depreciation
6.4
7.3
7.2
Amortization
4.3
4.9
3.1
Stock-based compensation expense
3.2
3.8
4.0
Acquisition and related integration
costs
0.5
2.9
—
Asbestos-related charges
—
(0.2
)
—
Gain on sale or disposal of property,
plant and equipment
—
(0.2
)
(0.1
)
Restructuring, severance, impairment and
other related costs
0.5
1.5
1.9
UTIS fire charges
(0.5
)
1.9
1.3
Costs associated with the proposed DuPont
acquisition
11.5
6.9
—
Adjusted EBITDA
$
47.2
$
41.7
$
59.8
*Values in table may not add due to
rounding.
Calculation of adjusted EBITDA
margin*:
2022
2021
Q1
Q4
Q1
Adjusted EBITDA (in millions)
$
47.2
$
41.7
$
59.8
Divided by Total Net Sales (in
millions)
248.3
230.5
229.3
Adjusted EBITDA Margin
19.0
%
18.1
%
26.1
%
*Values in table may not add due to
rounding.
Reconciliation of net cash provided by
operating activities to free cash flow*:
2022
2021
(amounts in millions)
Q1
Q4
Q1
Net cash provided by operating
activities
$
(13.7
)
$
18.2
$
36.5
Non-acquisition capital expenditures
(28.2
)
(27.7
)
(3.6
)
Free cash flow
$
(42.0
)
$
(9.5
)
$
32.9
*Values in table may not add due to
rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220428006156/en/
Investor contact: Steve Haymore Phone: 480-917-6026
Email: stephen.haymore@rogerscorporation.com Website
address: http://www.rogerscorp.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