Rogers Corporation · NYSE:ROG
Rogers — Q3 2018 Earnings Presentation
28 slides from Rogers's earnings presentation, Nov 1, 2018
Slide 1: Q3 2018 Earnings Call
Q3 2018 Earnings Call Nov. 1, 2018 1
Slide 2: Forward-looking statements
Forward-looking statements Safe Harbor Statement This presentation 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 intention
Slide 3: Introductions
Introductions Bruce Hoechner Mike Ludwig Bob Daigle President & Senior Vice President & Chief Senior Vice President & Chief Executive Officer Financial Officer Chief Technology Officer 3
Slide 4: Q3-2018 Summary
Q3-2018 Summary • Net sales of $227M Results • Gross margin of 35% • Adjusted EPS* of $1.42 per diluted share • Organic growth in PES and EMS businesses, driven primarily by EV/HEV applications Highlights • Accelerated design wins across all OEMs in 5G base stations and antennas • Capacity plans on
Slide 5: Rogers vision 2020
Rogers vision 2020 Strategic Elements Financial objectives Organic $1.2B Synergistic Market-Driven Innovation growth: Revenues M&A growth: Organization Leadership 7-10% 5-8% 15% Total growth Synergistic Operational M&A Excellence 20% Margin: Adjusted Operating Adjusted operating margin 20% Build and
Slide 6: Market-driven innovation
Market-driven innovation Providing enabling solutions for: TODAY’s TOMORROW’s Growth applications Emerging market opportunities • HEV power modules • EV batteries Autonomous Advanced vehicles • Vehicle electrification Mobility • Advanced driver assistance systems Vehicle-to-vehicle communications A
Slide 7: Advanced Connectivity Solutions (ACS)
Advanced Connectivity Solutions (ACS) Q3 2018 Update Strategy • Net sales of $72M Continue to leverage innovation to capitalize on market opportunities in • Softness in 4G LTE and ADAS key areas: • Automotive safety • Capacity expansion continues to prepare for projected growth in 5G • Wireless infr
Slide 8: Power Electronics Solutions (PES)
Power Electronics Solutions (PES) Q3 2018 Update Strategy • Net sales of $55M • Broaden Advanced Mobility solutions to increase penetration • Growth from e-Mobility, and content particularly in EV/HEV applications • Execute on operational excellence • Automation and capacity initiatives to increase
Slide 9: Elastomeric Material Solutions (EMS)
Elastomeric Material Solutions (EMS) Q3 2018 Update Strategy • Record net sales of $96M • Broaden portfolio through top of pyramid acquisitions, leveraging • Contribution of $7M in net sales acquisition synergies from Griswold • Continue focus on applications in • Higher organic demand for key marke
Slide 10: Market environment
Market environment Favorable Neutral Unfavorable Advanced Mobility Competitive intensity Trade policies Advanced Connectivity Geopolitical environment Inflation US tax reform Regulatory environment Interest rates Rogers’ focus remains on growth drivers and execution 10
Slide 11: Financial overview
Financial overview Mike Ludwig, Sr. Vice President, Finance and Chief Financial Officer
Slide 12: Financial highlights
Financial highlights ($ in millions, except EPS) Q3-2018 Q2-2018 Q3-2017 Net sales $226.9 $214.7 $206.8 Gross margin $79.1 $76.7 $82.2 Gross margin % 34.9% 35.7% 39.7% Operating income $29.6 $25.2 $39.2 Operating margin % 13.1% 11.7% 19.0% Adjusted operating income* $38.6 $31.7 $40.0 Adjusted operat
Slide 13: Revenue bridge vs prior year
Revenue bridge vs prior year ($ in millions) Q3-2018 Update +3.3% +0.4% (0.9%) +9.7% +6.9% $6.9 $0.8 $1.9 • Revenues of $226.9 million, or total revenue growth of 9.7% $14.3 • Organic volume growth in EMS / PES businesses and higher price across $206.8 $226.9 all segments • Griswold Acquisition $6.9
Slide 14: Revenue bridge vs prior quarter
Revenue bridge vs prior quarter ($ in millions) Q3-2018 Update +3.2% (2.0%) +5.3% (0.8%) +5.7% $4.2 $1.8 $6.9 • Revenues of $226.9 million, or total $11.3 revenue growth of 5.7% • Volume & other increase driven by seasonality in EMS business $214.7 $226.9 • Griswold Acquisition $6.9 million • Revenu
Slide 15: Gross margin bridge vs prior year
Gross margin bridge vs prior year ($ in millions) Q3-2018 Update +8.0% (4.2%) • Maintaining strategic investments in (6.1%) anticipation of strong 5G & Advanced Mobility market demands $3.5 (1.5%) • Performance impacted by EMS $6.6 (3.8%) infrastructure, PES new product $5.0 $1.2 development, EMS si
Slide 16: Gross margin bridge vs prior quarter
Gross margin bridge vs prior quarter ($ in millions) Q3-2018 Update +5.1% (0.0%) (2.0%) • Volume benefit primarily driven by +3.1% seasonality in EMS business $0.0 $1.5 $3.9 • Performance impacted by ACS softness in 4G LTE and ADAS as well as volume $76.7 $79.1 driven freight 35.7% 34.9% Q2-2018 Vol
Slide 17: Adjusted EPS bridge vs prior year
Adjusted EPS* bridge vs prior year Q3-2018 Update • Adjusted EPS* of $1.42 +15.6% (22.0%) • Performance impacted by carrying costs from strategic investments and +3.5% (0.7%) (6.4%) +10.7% +0.7% short term operational challenges $0.22 $0.01 • Other income losses partially offset by $0.31 $0.05 $0.15
Slide 18: Adjusted EPS bridge vs prior quarter
Adjusted EPS* bridge vs prior quarter Q3-2018 Update +3.4% (5.0%) +3.3% +19.3% +9.2% • Adjusted EPS* of $1.42 (3.4%) +11.8% $0.04 $0.06 $0.04 • Performance impacted primarily by $0.11 lower ACS volumes from softness in $0.04 4G LTE and ADAS $0.14 $1.42 • Disciplined SG&A cost control $1.19 • GAAP ta
Slide 19: Segment revenue
Segment revenue* ($ in millions) Q3-2018 Update Q3’18 Change vs Q3’17 % ACS (1.2%) EMS 16.5% • ACS: Softness driven by 4G LTE and PES 19.0% Consolidated 9.7% ADAS applications • EMS: Higher organic demand for $95.8 automotive, portable electronics and $82.2 $79.2 general industrial. Griswold acquisi
Slide 20: YTD 2018 cash utilization
YTD 2018 cash utilization ($ in millions) Net cash provided by operating activities $33.4M $101.5 $122.0 Net cash used in investing activities ($157.5M) Net cash used in financing activities $93.8M Effect of FX ($1.3M) Net increase (decrease) in cash ($31.6M) $44.0 $129.6 $36.6 Change in adj. trade
Slide 21: Q4-2018 guidance
Q4-2018 guidance ($ in millions, except EPS) Net sales $215M - $225M Gross Margin 35% - 36% EPS $0.84 - $0.99 Adjusted EPS* $1.20 - $1.35 *See reconciliation of adjusted earnings per diluted share to earnings per diluted share in the appendix. 21
Slide 22: Q&A
Q&A
Slide 23: Appendix
Appendix
Slide 24: Q3-2018 adjusted operating income and operating margin reconciliation
Q3-2018 adjusted operating income and operating margin reconciliation Q3-17($) Q3-17(%) Q2-18($) Q2-18(%) Q3-18($) Q3-18(%) Operating income and operating margin $39.2 19.0% $25.2 11.7% $29.6 13.1% Restructuring, severance, impairment and other related costs $0.9 0.5% $2.2 1.0% $2.7 1.2% Acquisition
Slide 25: Q3-2018 and YTD adjusted EBITDA and adjusted EBITDA margin reconciliation
Q3-2018 and YTD adjusted EBITDA and adjusted EBITDA margin reconciliation ($ in millions) Q3-17 ($) Q3-17 (%) Q2-18 ($) Q2-18 (%) Q3-18 ($) Q3-18 (%) YTD-18 ($) YTD-18 (%) Net Income $25.5 12.3% $17.3 8.1% $19.7 8.7% $63.2 9.6% Interest, net $1.6 0.8% $1.3 0.6% $2.0 0.9% $4.5 0.7% Income tax expense
Slide 26: Q3-2018 adjusted EPS reconciliations
Q3-2018 adjusted EPS reconciliations Q3-17 ($) Q2-18 ($) Q3-18 ($) Earnings per diluted share $1.37 $0.93 $1.06 Restructuring, severance, impairment and other related costs $0.03 $0.09 $0.11 Acquisition and related integration costs $0.02 $0.04 $0.04 Acquisition inventory step up - - $0.02 Lease rev
Slide 27: Q3-2018 YTD change in adjusted trade capital
Q3-2018 YTD change in adjusted trade capital ($ in millions) Change Change Revenue in Trade In Trade recognition Capital Capital impact Adjusted $ $ $ Accounts receivable ($14.0) - ($14.0) Contract assets ($20.3) $20.3 - Inventories ($11.8) ($13.8) ($25.6) *Accounts payable and other accrued expense
Slide 28: Q4-2018 guidance reconciliation
Q4-2018 guidance reconciliation Q4-18 ($) Guidance Q4-18 earnings per diluted share $0.84 - $0.99 Add back adjustments: Discrete Items, Restructuring / other expenses $0.18 Acquisition intangible amortization $0.18 Guidance Q4-18 adjusted earnings per diluted share $1.20 - $1.35 Note: percentages an