Rogers Corporation · NYSE:ROG
Rogers — Q3 2019 Earnings Presentation
24 slides from Rogers's earnings presentation, Oct 30, 2019
Slide 1: Q3 2019 Earnings Call
Q3 2019 Earnings Call October 30, 2019 1
Slide 2: Forward-looking statements
Forward-looking statements Safe Harbor Statement This presentation 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 expansi
Slide 3: Introductions
Introductions Bruce Hoechner Mike Ludwig Bob Daigle President & Senior Vice President & Senior Vice President & Chief Executive Officer Chief Financial Officer Chief Technology Officer 3
Slide 4: Q3 2019 Summary
Q3 2019 Summary • Quarterly net sales of $222M Results • Gross margin of 35.6% • Quarterly adjusted EPS* of $1.51 per diluted share • Advanced Connectivity: Seasonal strength in portable electronics Highlights • Advanced Mobility: ADAS demand remains solid • Gross margin improvement and effective ma
Slide 5: Growth Driver Update
Growth Driver Update Advanced Connectivity Advanced Mobility Wireless Infrastructure: 5G 5G Wireless Infrastructure EV/HEV • China Mobile targeting deployments in 340 cities •• TBD Global sales expected to increase at ~30% CAGR by the end of 2020 through 20251 • Approximately 600K 5G base stations d
Slide 6: Advanced Connectivity Solutions (ACS)
Advanced Connectivity Solutions (ACS) Q3 2019 Update Strategy • Net sales of $79.0M, down 15% • Leverage innovation to capitalize over Q2 2019 on market opportunities in key areas: • Lower 4G and 5G demand. Trade • Wireless infrastructure tensions driving uncertainty and • Automotive safety sensors
Slide 7: Elastomeric Material Solutions (EMS)
Elastomeric Material Solutions (EMS) Q3 2019 Update Strategy • Net sales of $94.9M, up 1% over • Continue focus on applications in Q2 2019 key markets of EV/HEV, portable electronics and general industrial • Seasonal strength in portable • Optimize acquisitions to expand electronics profitable growt
Slide 8: Power Electronics Solutions (PES)
Power Electronics Solutions (PES) Q3 2019 Update Strategy • Net sales of $43.1M, down 17% • Leverage our proven technology to over Q2 2019 capitalize on strong market growth opportunities in Advanced Mobility • Weak industrial power and vehicle applications electrification market demand • Invest in
Slide 9: Rogers Vision for 2020
Rogers Vision for 2020 Strategic Elements Financial Objectives Organic $1.2B Synergistic Market-Driven Innovation growth: Revenues M&A growth: Organization Leadership 7-10% 5-8% 15% Total growth Synergistic Operational M&A Excellence 20% Margin: Adjusted Operating 20% Adjusted operating margin* Near
Slide 10: Financial overview
Financial overview Mike Ludwig, Sr. Vice President and Chief Financial Officer
Slide 11: Q3 2019 Financial highlights
Q3 2019 Financial highlights ($ in millions, except EPS) Q3-2019 Q2-2019 Q3-2018 Net sales $221.8 $242.9 $226.9 Gross margin $78.9 $85.8 $79.1 Gross margin % 35.6% 35.3% 34.9% Operating income $29.9 $33.2 $29.6 Operating margin % 13.5% 13.7% 13.1% Adjusted operating income* $36.2 $41.7 $38.6 Adjuste
Slide 12: Revenue bridge vs prior quarter
Revenue bridge vs prior quarter ($ in millions) Q3-2019 Update (8.0%) (0.7%) (8.7%) • Revenues of $222 million or 8.7% $19.5 decrease sequentially $1.6 • Volume & Other decline due to soft $242.9 demand in ACS & PES businesses $221.8 • Weaker CNY contributes to unfavorable currency impact Q2-2019 Vo
Slide 13: Gross margin bridge vs prior quarter
Gross margin bridge vs prior quarter ($ in millions) Q3-2019 Update (4.5%) (2.9%) (0.2%) (0.4%) (8.0%) • ACS and PES volumes decline partially $3.9 offset by favorable mix profile $2.5 $0.2 $0.3 $85.8 $78.9 • Performance shortfall due to lower 35.3% 35.6% ACS and PES throughput • Tariffs increased s
Slide 14: Adjusted net income bridge vs prior quarter
Adjusted net income* bridge vs prior quarter ($ in millions) Q3-2019 Update (17.9%) +8.1% (8.1%) +1.6% • Adjusted Op Income* negatively $2.5 impacted by lower revenues; partially $5.5 $0.5 offset by decrease in operating $30.7 $28.2 expense 12.6% 12.7% • Other income/expense benefit from derivatives
Slide 15: Cash utilization
Cash utilization ($ in millions) Net cash provided by operating activities $115.7M Net cash used in investing activities ($36.2M) Net cash used by financing activities ($104.0M) Effect of FX ($2.5M) $153.6 Net increase (decrease) in cash ($27.0M) $98.0 $38.8 $4.0 $16.0 $6.4 $17.4 $167.7 $140.7 12/31
Slide 16: Q4-2019 guidance
Q4-2019 guidance ($ in millions, except EPS) Net sales $200M - $210M Gross Margin 33.0% - 34.0% EPS ($1.43) – ($1.28) (Includes non-cash pension termination charge*) Adjusted EPS** $1.00 - $1.15 *Expected non-cash pre-tax charge of $52 million to $56 million associated with the termination of the Ro
Slide 17: Appendix
ROGERS CORPORATION
Slide 18: Q3-2019: Adjusted operating income and operating margin reconciliation
Q3-2019: Adjusted operating income and operating margin reconciliation ($ in millions) Q3-18($) Q3-18(%) Q2-19($) Q2-19(%) Q3-19($) Q3-19(%) Operating income and operating margin $29.6 13.1% $33.2 13.7% $29.9 13.5% Restructuring, severance, impairment and other related costs $2.7 1.2% $3.7 1.5% $1.3
Slide 19: Q3-2019: Adjusted EBITDA and adjusted EBITDA margin reconciliation
Q3-2019: Adjusted EBITDA and adjusted EBITDA margin reconciliation ($ in millions) Q3-18($) Q3-18(%) Q2-19($) Q2-19(%) Q3-19($) Q3-19(%) Net Income $19.7 8.7% $24.3 10.0% $23.4 10.5% Interest expense, net $2.0 0.9% $2.0 0.8% $1.8 0.8% Income tax expense $8.9 3.9% $7.2 3.0% $5.3 2.4% Depreciation $8.
Slide 20: Q3-2019: Adjusted EPS reconciliation
Q3-2019: Adjusted EPS reconciliation Q3-18 ($) Q2-19 ($) Q3-19 ($) GAAP earnings per diluted share $1.06 $1.30 $1.25 Restructuring, severance, impairment and other related costs $0.11 $0.15 $0.05 Acquisition and related integration costs $0.04 $0.01 $0.02 Acquisition inventory step-up $0.02 - - Tran
Slide 21: Q3-2019: Adjusted net income reconciliation
Q3-2019: Adjusted net income reconciliation ($ in millions) Q3-18 ($) Q3-18(%) Q2-19 ($) Q2-19(%) Q3-19 ($) Q3-19(%) Net Income $19.7 8.7% $24.3 10.0% $23.4 10.5% Restructuring, severance, impairment and other related costs $2.7 1.2% $3.7 1.5% $1.3 0.6% Acquisition and related integration costs $0.8
Slide 22: Q3-2019: Adjusted operating expenses reconciliation
Q3-2019: Adjusted operating expenses reconciliation* ($ in millions) Q3-18($) Q3-18(%) Q2-19($) Q2-19(%) Q3-19($) Q3-19(%) Operating expenses $49.5 21.8% $52.6 21.7% $49.0 22.1% Restructuring, severance, impairment and other related costs ($2.7) (1.2%) ($3.7) (1.5%) ($1.3) (0.6%) Acquisition and rel
Slide 23: Q3-2019: Free Cash Flow reconciliation
Q3-2019: Free Cash Flow reconciliation* ($ in millions) Q3-18($) Q2-19($) Q3-19($) YTD-19($) Net cash provided by operating activities $10.6 $50.5 $48.2 $115.7 Capital expenditures ($16.4) ($11.4) ($14.8) ($38.8) Free cash flow ($5.8) $39.1 $33.4 $76.8 Note: percentages and dollars may not add due t
Slide 24: Q4-2019 guidance reconciliation
Q4-2019 guidance reconciliation Q4-19 ($) GAAP earnings per diluted share ($1.43) – ($1.28) Discrete items (Includes non-cash pension termination charge*) $2.25 Acquisition intangible amortization $0.18 Adjusted earnings per diluted share $1.00 - $1.15 Note: percentages and dollars may not add due t