Rogers Corporation · NYSE:ROG
Rogers — Investor Day (August 2017)
74 slides from Rogers's investor day presentation, Aug 17, 2017
Slide 1: Investor Presentation 2017
1 InvestorPresentation 2017
Slide 2: Welcome
WelcomeJack Monti, CFADirector, Investor Relations
Slide 3: Forward-looking statements
Forward-looking statements 3 Safe Harbor StatementThis 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 intentio
Slide 4: Agenda
Agenda 4 Executive overviewBruce HoechnerPresident and Chief Executive Officer, Principal Executive Officer Technology and innovation leadershipBob DaigleSenior Vice President and Chief Technology Officer Advanced Connectivity Solutions overviewJeff GrudzienSenior Vice President and General Manager,
Slide 5: Executive overview
Executive overviewBruce HoechnerPresident and Chief Executive Officer, Principal Executive Officer
Slide 6: A transformed company
A transformed company… 6 Fulfilling the “Promise of Rogers”Well-positioned to deliver superior profitable growth over the long-term Highly experienced leadership team driving disciplined execution of our proven strategyResults-oriented “One Rogers” culture: ethical; team-based; customer-focused Inno
Slide 7: Rogers business overview
Rogers business overview *See reconciliation of adjusted operating margin to operating margin in the appendix, for both 2016 and the first half of 2017 7 Portfolio highlightsHigh-performance materialsMission-critical applicationsTechnology innovation and leadershipStrong, collaborative customer rela
Slide 8: The "One Rogers" Approach
The “One Rogers” Approach 8 Performance-driven, ethical culture driving exceptional results Live safelyTrustInnovateJust decideSpeak openlySimply improveDeliver results Cultural behaviors driving results Reward shareholders Expandcustomerloyalty Engageemployees
Slide 9: Focused strategy guiding the way
Focused strategy guiding the way 9 Targeting top-tier performance Strategic intent… Build and optimize businesses for profitable growth and scale through innovation and acquisitions …leveraging our competencies… For markets that demand performance, Rogers applies technical problem solving and engine
Slide 10: Delivering results
Delivering results *See reconciliation in the appendix of adjusted operating margin to operating margin. **Free cash flow calculated by subtracting GAAP capital expenditures from GAAP net cash provided by operating activities from continuing operations, with calculation in the appendix. 10 Executing
Slide 11: Market-driven innovation
Market-driven innovation 11 Providing enabling solutions for: AutonomousvehiclesVehicle-to-vehicle communications4.5G & 5G wireless infrastructureInternet of Things(IoT) TOMORROW’sEmerging market opportunities Advanced Mobility Advanced Connectivity A history of enabling innovationfor today’s and to
Slide 12: Strong execution of synergistic M&A
Strong execution of synergistic M&A 12 Continuing focus on differentiated growth businesses MOREdifferentiated Market and technology leadershipHighly engineered applicationsDifferentiated offeringsAttractive financial profile “Top of the Pyramid” criteria: Q1 2017 Q4 2016 Q1 2011 Future transactions
Slide 13: Vision for Rogers: 2020
Vision for Rogers: 2020 13 Deliver leading shareholder returns A market and innovation leader at the “top of the pyramid”A broad base of markets, customers and technologyOperationally excellentResults-driven, ethical culture focused on employees, customers and shareholders Company positioning Financ
Slide 14: Technology and innovation leadership
Technology and innovation leadershipBob Daigle Senior Vice President and Chief Technology Officer
Slide 15: Heritage of innovation
Heritage of innovation 15 Materials innovation is in our DNA
Slide 16: "Top of the pyramid" focus
“Top of the pyramid” focus 16 High performance differentiated solutions drive growth DIFFERENTIATED PERFORMANCE DIFFERENTIATED PERFORMANCE Market and technology leadershipHighly engineered applicationsDifferentiated offeringsAttractive financial profile Rogers’focus
Slide 17: Advanced Connectivity Solutions
Wirelessinfrastructure Automotive safety / connectivity Aerospace & defense Advanced Connectivity Solutions 17 Enabling the world’s most critical connections High frequency circuit materials
Slide 18: Power Electronic Solutions
Industrial automation EV / HEV and vehicleelectrification Renewableenergy Power Electronic Solutions 18 Increasing efficiency, managing heat, ensuring reliability High performance materials and power electronic components
Slide 19: Elastomeric Material Solutions
Sealing & vibration management Portable electronicdevice protection EV batterymaterials Elastomeric Material Solutions 19 Protecting mission-critical components and devices High reliability polymeric/elastomeric solutions
Slide 20: Market-driven innovation
Market-driven innovation 20 Providing enabling solutions for: AutonomousvehiclesVehicle-to-vehicle communications4.5G & 5G wireless infrastructureInternet of Things(IoT) TOMORROW’sEmerging market opportunities Advanced Mobility Advanced Connectivity A history of enabling innovationfor today’s and to
Slide 21: Market-driven innovation
Market-driven innovation 21 Expanded Core Current coretechnology University collaboration Internal development Technology licensing Business acquisitions Unmet market needs
Slide 22: Innovation centers
Innovation centers 22 Partnering globally to speed innovation Chandler, AZ Burlington, MA Suzhou, China
Slide 23: Examples from new product pipeline
Examples from new product pipeline 23 Pursuing a wide range of market-driven opportunities Advanced Mobility Advanced Connectivity New generation of power semiconductor substrates for wide bandgap semiconductorsLow inductance integrated capacitor solutions for EV applications Dielectric-based broadb
Slide 24: Technology and innovation summary
Targeting advanced mobility and advanced connectivity opportunities Technology and innovation summary 24 Heritage of innovation Building on heritage of materials innovation “Top of the pyramid” Focusing on new platform top of the pyramid products Organic growth drivers Global collaboration Pursuing
Slide 25: Advanced Connectivity Solutions
Advanced Connectivity SolutionsJeff Grudzien Senior Vice President and General Manager
Slide 26: ACS key messages
ACS key messages 26 ACS well-positioned in rapidly expanding core markets Near-term focus Continued 4G LTE spend supplemented by early 4.5G deployments ADAS radar penetration exceeding consensus growth forecastsAerospace & Defense market providing steady growth Growthdrivers Rapidly increasing mobil
Slide 27: ACS business overview
ACS business overview 27 Portfolio highlightsLeader across market applicationsExpanded offering / solutions providerTrusted partner for innovationStrong customer loyalty / collaboration Key business metricsFull year 2016 $278 M1H ’17 $153 MSales 17.1%1H ’17 22.8%Segment adjusted operating margin* St
Slide 28: ACS market applications
ACS market applications 28 Trusted to deliver innovation and reliability to markets that demand nothing less 20% 41% 20% ACS Business Unit Operating from a position of strength in target markets Market application Next 5 years Competitive Advantages Auto safety / connectivity Portfolio supports shor
Slide 29: Auto safety / connectivity
Auto safety / connectivity *Sources: IHS Markit, June 2017; ABI Research, December 2016 29 High growth from ADAS penetration and trend toward connected, autonomous vehicles ADAS sensors prevalent in more vehicle platformsRadar is performance critical, supplemented by cameras / LIDARAutonomous drivin
Slide 30: Wireless infrastructure
Wireless infrastructure *Source: Cisco VNI Mobile, 2017 30 Accelerated 5G deployment will provide incremental growth 4G LTE global population coverage at approximately 55% by end of 20164.5G being deployed to build faster networks and expand capacitySmall cell, NB-IoT and LTE-M installationsFixed Wi
Slide 31: ACS summary
Operational excellence initiatives ACS summary 31 “Top of the pyramid” Position at the top of the pyramid provides a value premium Innovation Trusted innovation partner across multiple application segments Operational excellence Global capabilities Industry recognized, broad and deep global team for
Slide 32: Power Electronics Solutions
Power Electronics SolutionsHelen ZhangSenior Vice President and General Manager
Slide 33: PES key messages
PES key messages 33 PES is well-positioned for growth in e-Mobility and continues to drive profit improvement Near-term focus Rapid growth in e-Mobility (EV/HEV + Vehicle Electrification) Ongoing adoption of Si Carbide (SiC) chip for e-Mobility and clean energy Accelerating demand for advanced manuf
Slide 34: PES business overview
PES business overview 34 Portfolio highlightsMarket leader in our product linesWell established global service networkExperienced provider in automotiveStrong customization design capabilityEngineer-to-engineer relationshipsManufacturing in low-cost countries Key business metricsFull year 2016 $152
Slide 35: PES market applications
PES market applications Strong commercial base with industrial market leadership; e-Mobility is a major growth driver 26% 43% 16% e-MobilityEV/PHEV and Vehicle Electrification IndustrialUPS, VFD& MCC PES Business Unit Renewable energy Recognized technology leadership with OEMs and Tier 1 automotive
Slide 36: e-Mobility as a PES growth engine
e-Mobility as a PES growth engine 36 Significant EV market adoption will drive e-Mobility growth *Source: Bloomberg New Energy Finance Global call to reduce air pollutionConsumer preference for lower emissions, government regulations and incentivesBattery improvements driving affordabilityIncreased
Slide 37: Laser systems enabling industry 4.0
Laser systems enabling industry 4.0 *Source: Laser Markets Research 37 Significant growth from high-end laser systems Industrial lasers are key components in automated processing systemsHealthcare is an additional growth driver of laser systems High performance coolers provide excellent reliability
Slide 38: PES summary
Broaden portfolio of solutions through collaborative innovation PES summary 38 Market leader e-Mobility, industrial and renewable energy markets poised for growth Innovation Global capabilities Global service network with local design expertise Operational excellence Focus on operational excellence
Slide 39: Elastomeric Material Solutions
Elastomeric Material SolutionsChris Shadday Senior Vice President and General Manager
Slide 40: EMS key messages
EMS key messages 40 EMS portfolio positioned for steady organic growth and strong inorganic opportunities Near-term focus Organic growth opportunities supported by market and technology trendsSignificant opportunities for global growth in newly acquired businessesDiversified portfolio offers stable
Slide 41: EMS business overview
EMS business overview 41 Portfolio highlightsDiversified portfolio across markets and applicationsNew North American based acquisitions offer the opportunity to leverage global footprintStrong customer loyaltyProduct performance is a critical customer criteria Diverse portfolio of applications acros
Slide 42: EMS market applications
EMS market applications 42 Attractive mix of steady growth and high-potential applications 38% 21% 8% General industrial Portableelectronics EMS Business Unit Automotive Technology leadershipStrong customer loyalty in all regionsGrowing diversity of material portfolio Market leadership with strong p
Slide 43: General industrial
General industrial Source: Internal Data 43 Significant opportunity to globalize acquired businesses More demanding technologies across industries drive needs for high-performing materialsDiverse portfolio offers steady growth opportunitiesNewly acquired businesses have high NA concentration… opport
Slide 44: Portable electronics
Portable electronics *Source: IDC 44 Competitive and rapidly changing market providing new challenges and opportunities Device replacement cycles ensure large market size and steady growthConstant innovation provides ongoing stream of new challenges and opportunities (e.g., OLED displays)Maturing ma
Slide 45: Automotive
Automotive *Source: IDC 45 Planning for steady growth from traditional auto seals and gaskets; accelerated growth from EV/HEVs Tighter tolerances mean new opportunities in traditional sealing and gasketingGrowth in EV/HEV driving growth in battery separator and sealing applicationsEmerging technolog
Slide 46: EMS summary
Continue to use synergistic M&A for growth, and build upon strong track record with recent acquisitions EMS summary 46 Diverse market opportunities Diverse application areas provide increased consistency and significant growth opportunities Synergistic M&A Global capabilities Leverage global capabil
Slide 47: Financial overview
Financial overviewJanice Stipp Senior Vice President and Chief Financial Officer, Principal Financial Officer
Slide 48: Recent financial highlights – Q2 2017
Recent financial highlights – Q2 2017 48 Accelerating revenue growth Strong revenues across all Rogers’ strategic business unitsQ2 revenue up 28% year-over-yearTurned the corner on the industrial recession Increasing profitability Q2 gross margins of 40.0%, increasing 180 basis pointsAdjusted operat
Slide 49: Financial priorities
Profitable organic growthStrategic acquisitionsResearch and development funding product innovationFurther diversify customer base and platform mix Execute integration and synergy plansOperational excellenceLeverage SG&A with growthIncrease engineering investment to support cost reductionsSupply chai
Slide 50: Financial performance
Financial performance 50 *See reconciliations in the appendix: adjusted EPS to EPS and adjusted operating margin to operating margin. Strategic focus increasing revenues; operating discipline driving margin expansion Sales Margins Significant growth *Adj. EPS +77% ’12-’16 $499M $656M *Adj. OM +520 b
Slide 51: Confidence in organic growth
Confidence in organic growth Note: Other segment sales are not included above with the core business segments. *3 year outlook on an organic basis. 51 Solid foundations support organic growth Strategic business units Comments on foundations for strong organic growth Advanced Connectivity Solutions (
Slide 52: Delivering value through M&A
Delivering value through M&A 52 Synergistic M&A enhances increased growth profile, accelerates value creation Augments and accelerates growth and core innovationAccess to new markets and customersRigorous deal review process with committed return on capitalIntegration focus on:Integrating and scalin
Slide 53: Significant diversification
Significant diversification 53 Diversifying customer base and product offerings Sales by customer Key growth drivers and markets Growth drivers focused on market-driven innovation increasing faster 2016 2012 Advanced mobility Advanced connectivity Other Aerospace & defense General industrial Clean /
Slide 54: Vision for Rogers: 2020 financial objectives
Vision for Rogers: 2020 financial objectives *See reconciliations in the appendix: adjusted EPS to EPS and adjusted operating income and margin to operating income and margin. 54 Strong growth and operating leverage drive margin expansion Organic revenue growth and synergistic M&A Adjusted operating
Slide 55: Initiatives for operational excellence
Initiatives for operational excellence 55 Operational excellence drives continued margin expansion Optimizing utilization Improving productivity and yield Increasing flexibility and repurposing underutilized assets Increase utilization of shared services Footprint Process Cost structure Back office
Slide 56: Further improving cost structure
Further improving cost structure 56 *See reconciliations in the appendix: adjusted operating margin to operating margin. Lean cost structure allows for investment in engineering and higher margins Lowering costs of goods sold Increasing R&D Increasing adjusted operating margin* 620 bps improvement 5
Slide 57: Capital allocation priorities
Capital allocation priorities 57 Execute strategic priorities Strong balance sheet and cash generationInvest in business and pursue synergistic M&ANew product innovations and operational excellence Ensure adequate liquidity Optimize capital structure Distribute excess cash Maintain sufficient cash b
Slide 58: Capital allocation
Capital allocation 58 *Historical capital deployment from 2014-2016**Gross cash outflow for acquisitions from 2014-2016 of $292M. Capital allocation flexibility remains focused on long-term shareholder value creation Capital spending Revenue growthFootprint optimizationProcess improvements Share rep
Slide 59: Continuing to optimize cost structure while investing for growth
Continuing to optimize cost structure while investing for growth Rogers outperforms 59 Track record Track record of strong financial performance Growth Accelerating growth through innovations and acquisitions Cost structure Flexibility Significant operational and financial flexibility Capital alloca
Slide 60: Outperform major indices
Outperform major indices Significant shareholder returns Source: IR insight price performance 2012 through August 1, 2017 60 +229% +97% +93%
Slide 61: Questions and answers
Questions and answersBruce Hoechner and executive team
Slide 62: A transformed company… Vision 2020
A transformed company… 62 Vision 2020: 15% total revenue growth; 20% adjusted operating margin Highly experienced leadership team driving disciplined execution of our proven strategyResults-oriented “One Rogers” culture: ethical; team-based; customer-focused Innovation Operational excellence and div
Slide 63: Presenters
Presenters
Slide 64: Presenters
Presenters 64 Bruce D. HoechnerPresident and Chief Executive OfficerPrincipal Executive Officer Bruce Hoechner joined Rogers as President and CEO in 2011. During his tenure, the company significantly increased revenues, margins and cash flow, through organic growth and acquisitions. Prior to Rogers,
Slide 65: Presenters
Presenters 65 Jeffrey M. GrudzienSr. Vice President and General ManagerAdvanced Connectivity Solutions Jeff Grudzien joined Rogers in 2000 and has served in a number of sales and marketing leadership roles during his tenure. Since 2012, Jeff has led the Advanced Connectivity Solutions business. Befo
Slide 66: Presenters
Presenters 66 Christopher R. ShaddaySr. Vice President and General ManagerElastomeric Material Solutions Chris Shadday joined Rogers in 2014 as Vice President of Marketing for the Elastomeric Material Solutions business and took over leadership of the division in early 2016. Prior to joining Rogers,
Slide 67: Rogers Corporation
ROGERS CORPORATION
Slide 68: Non-GAAP information
Non-GAAP information 68 This presentation includes the following financial measures that are not presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”): Adjusted earnings per diluted share, which the Company defines as earnings per diluted shar
Slide 69: Operating margin reconciliation
69 1H-17 FY-20 FY-16 FY-15 FY-14 FY-13 FY-12 Operating margin 17.8% 18.0% 12.8% 11.9% 13.3% 9.2% 5.1% Environmental accrual adjustment - - (0.1%) 0.5% - - - Pension curtailment & settlement charges - - - - 0.9% 0.3% 0.4% Restructuring, severance and other related costs 0.4% - 0.2% 0.3% - 0.9% 1.3% M
Slide 70: Free cash flow reconciliations
Free cash flow reconciliations 70 1H-17 FY-16 FY-15 FY-14 FY-13 FY-12 Operating cash flow from continuing operations $64.5 $117.0 $73.9 $85.2 $77.2 $40.4 Less capital expenditures $9.7 $18.1 $24.8 $28.8 $16.9 $23.8 Free cash flow $54.8 $98.9 $49.1 $56.4 $60.3 $16.6 ($ in millions)
Slide 71: Segment adjusted operating income reconciliations 1H 2017
71 ACS ACS EMS EMS PES PES 1H-17 ($) 1H-17 (%) 1H-17 ($) 1H-17 (%) 1H-17 ($) 1H-17 (%) Operating income and margin $32.9 21.5% $27.0 17.5% $8.6 9.9% Restructuring severance and other related costs $0.8 0.5% $0.5 0.3% $0.4 0.5% Purchase accounting inventory adjustment - - $1.6 1.0% - - Gain on sale o
Slide 72: Segment adjusted operating income reconciliations 2016
72 Segment adjusted operating income and operating margin reconciliations 2016 ACS ACS EMS EMS PES PES FY-16 ($) FY-16 (%) FY-16 ($) FY-16 (%) FY-16 ($) FY-16 (%) Operating income and margin $44.0 15.8% $26.6 13.1% $6.0 3.9% Environmental accrual adjustment ($0.4) (0.1%) ($0.2) (0.1%) ($0.2) (0.1%)
Slide 73: Adjusted operating income reconciliations Q2-2017 and Q2-2016
73 Q2-17 ($) Q2-17 (%) Q2-16 ($) Q2-16 (%) Operating income and margin $32.8 16.3% $18.8 11.9% Restructuring severance and other related costs $1.1 0.5% - - Acquisition related costs $0.9 0.5% - - Operating margin plus Discrete Items $34.8 17.3% $18.8 11.9% Acquisition intangible amortization $3.6 1
Slide 74: Adjusted earnings per diluted share reconciliation
74 Q2-17 ($) Q2-16 ($) 1H-17 ($) FY-20 ($) FY-16 ($) FY-12 ($) Earnings per diluted share $1.13 $0.29 $2.60 $7.05 $2.65 $3.97 Restructuring, severance and other related costs $0.04 - $0.07 - $0.04 $0.63 Acquisition related costs $0.03 - $0.07 - $0.13 - Tax discrete items - $0.49 - - $0.49 ($2.94) En