Rogers Corporation · NYSE:ROG
Rogers — Investor Presentation (July 2018)
47 slides from Rogers's investor presentation, July 2018
Slide 1: Investor Presentation Q1 2018
Investor Presentation Q1 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: Rogers at a glance
Rogers at a glance Power Ticker NYSE ROG Heritage Established in 1832, >185 years of operations Protect 2017 Sales $821M Employees 3,400 employees worldwide Connect Headquarters Chandler, AZ Global Scale 12 manufacturing locations in 6 countries Global leader in engineered materials; well-positioned
Slide 4: Rogers business overview
Rogers business overview Key business metrics 3% Sales by business unit Portfolio highlights Full year 2017 Advanced Connectivity Solutions 27% 3% Elastomeric Material Solutions • High-performance materials 34% 22% Power Electronics Solutions 37% • Mission-critical applications $821M 2017 Other • Te
Slide 5: “One Rogers” approach
“One Rogers” approach Cultural behaviors driving results • Live safely • Trust • Innovate • Just decide • Speak openly • Simply improve • Deliver results Performance-driven, ethical culture driving exceptional results 5
Slide 6: Focused strategy guiding the way
Focused strategy guiding the way Strategic intent… Build and optimize businesses for profitable growth and scale through innovation and acquisitions …leveraging our For markets that demand performance, Rogers applies technical problem competencies… solving and engineering capabilities to identify, d
Slide 7: Strategic track record
Strategic track record Sales Adjusted operating margin* Free cash flow** $821 18.5% $112 Significant Substantial Strong $499 sales 10.0% profitability cash growth improvement $17 generation 2012 2017 2012 2017 2012 2017 • Growth through Innovation and synergistic M&A • Strong operating cash flow • S
Slide 8: 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 9: Strong execution of synergistic M&A
Strong execution of synergistic M&A • Market and technology leadership “Top of the • Highly engineered applications Pyramid” • Differentiated offerings criteria: • Attractive financial profile Q1 2011 Q1 2015 Q4 2016 Q1 2017 Future transactions… Continuing focus on differentiated growth businesses 9
Slide 10: Global capabilities
Global capabilities North America E Europe E Asia Headquarters Manufacturing Manufacturing Chandler, AZ Belgium, Germany, China, South Korea, Japan Hungary (JV) Manufacturing AZ, CA, CT, DE, IL, RI Innovation center China Innovation centers AZ, MA E Manufacturing & partnering globally to deliver ser
Slide 11: Strategic business segments
3 Strategic business segments Advanced Connectivity Solutions (ACS) • High performance materials • Mission-critical applications Elastomeric Material Solutions • Technology innovation leadership (EMS) • Strong, collaborative customer relationships Power Electronics Solutions (PES) Focused on unique,
Slide 12: ACS business overview
ACS business overview Key business metrics Consumer Portfolio highlights Full year 2017 electronics 4% • Leader across market Other ACS 12% applications $301M Wireless • Expanded offering / Q1 ’18 $73.5M infrastructure solutions provider Sales Vertical 40% • Trusted partner for Auto safety / applica
Slide 13: ACS market applications
ACS market applications Market application % of YTD Sales Competitive Advantages • Portfolio supports short, mid and long range sensors Auto safety / connectivity 24% • Global leadership position in installed base • Reliability is a cornerstone value • Broad portfolio of high-frequency solutions Wir
Slide 14: EMS business overview
EMS business overview Key business metrics Portfolio highlights Full year 2017 Other • Diversified portfolio across 8% Consumer markets and applications $313M 6% Mass Transit • New North American-based Q1 ’18 $78.1M 7% acquisitions offer the General opportunity to leverage Sales Automotive Vertical
Slide 15: EMS market applications
EMS market applications Market application % of YTD Sales Competitive Advantages • Technology leadership General industrial 45% • Strong customer loyalty in all regions • Growing diversity of material portfolio • Market leadership with strong position across OEMs Portable electronics 25% • Well posi
Slide 16: PES business overview
PES business overview Key business metrics Micro Other Portfolio highlights Full year 2017 Channel 3% Coolers • Market leader in our 8% product lines $185M Mass Transit 9% e-Mobility • Well established global service network 36% Q1 ’18 $57.7M Sales Vertical • Experienced provider in Renewable applic
Slide 17: PES market applications
PES market applications Market application % of YTD Sales Competitive Advantages • Recognized technology leadership with OEMs and Tier 1 automotive customers e-Mobility 36% • Unsurpassed product quality and reliability EV/PHEV and Vehicle Electrification • Established, dependable supplier, 10+ years
Slide 18: Heritage of innovation
Heritage of innovation Materials innovation is in our DNA 18
Slide 19: “Top of the pyramid” focus
“Top of the pyramid” focus • Market and technology leadership • Highly engineered applications • Differentiated offerings Rogers’ • Attractive financial profile focus High performance differentiated solutions drive growth 19
Slide 20: Examples from new product pipeline
Examples from new product pipeline • New generation of power semiconductor substrates Advanced for wide bandgap semiconductors Mobility • Low inductance integrated capacitor solutions for EV applications • Dielectric-based broadband antennas for 5G infrastructure • Smaller, decorrelated antennas in
Slide 21: Initiatives for operational excellence
Initiatives for operational excellence Footprint Optimizing utilization Actions for target 38.8% 40% consistency Process Improving productivity and yield 31.8% Cost Increasing flexibility and structure repurposing underutilized assets Back office Increase utilization of shared services 2012 2017 Tar
Slide 22: Rogers vision for 2020
Rogers vision for 2020 Strategic Elements Financial objectives Organic $1.2B Synergistic Market-Driven Innovation growth: Revenues M&A growth: Organization Leadership 7-10% 5-8% 2017: 13% 15% 2017: 12% Operational Total growth Synergistic M&A Excellence Adjusted 20% Operating Margin:2017: 20% Adjust
Slide 23: Financial overview
Financial overview
Slide 24: Recent financial highlights – Q1-2018
Recent financial highlights – Q1-2018 ($ in millions, except EPS) Q1-2018 Q1-2017 Variance Net sales $214.6 $203.8 $10.8 Growth % 5.3% Operating income $31.0 $39.0 ($8.0) Operating margin % 14.5% 19.2% (469) Bps Adjusted operating income* $33.0 $44.8 ($11.8) Adjusted operating margin %* 15.4% 22.0%
Slide 25: Q1-2018 revenue bridge
Q1-2018 revenue bridge ($ in millions) 1.9% Highlights 4.6% 5.3% (1.2)% $9.4 $3.9 $2.5 • Revenues of $214.6 million • Volume & other decline of 1.2% $214.6 $203.8 • Currency impact of 4.6% • Adoption of revenue recognition guidance impact of 1.9% Q1-2017 Volume Currency Accounting Q1-2018 Revenue &
Slide 26: Q1-2018 adjusted operating income bridge
Q1-2018 adjusted operating income* bridge ($ in millions) +5.4% -17.6% Highlights $7.9 $2.4 -11.4% • Adjusted operating margin* 15.4% $5.1 -2.7% versus 22.0% last year $1.2 • Performance challenges on capacity optimization, multi-site qualifications, $44.8 downtime and copper costs • Increases in SG
Slide 27: Q1-2018 adjusted EPS bridge
Q1-2018 adjusted EPS* bridge +5.4% -17.3% Highlights $0.09 $0.29 -10.7% +15.5% -11.9% • Adjusted EPS* of $1.48 • Decrease of 11.9% versus last year $0.18 -2.4% -2.4% $0.26 • Favorable volume & other, primarily $0.04 FX and revenue recognition $0.04 $1.68 • Performance challenges on capacity $1.48 op
Slide 28: Q1-2018 segment results
Q1-2018 segment results ($ in millions) Segment revenues Q1’18 Change % Adj. %* Segment adjusted operating margin* ACS (6.5)% (8.8%) Segment adjusted Q1’17 Q1’18 EMS 1.6% (1.1%) ACS 25.7% 13.1% PES 35.3% 12.8% operating income* EMS 22.2% 17.6% Consolidated 5.3% (1.2%) PES 13.2% 13.3% Consolidated 22
Slide 29: Q1-2018 cash utilization
Q1-2018 cash utilization ($ in millions) Net cash provided by operating activities $8.8M Net cash used in investing activities ($9.1M) Net cash used in financing activities ($8.5M) $40.6 $30.1 Effect of FX $0.8M Net increase (decrease) in cash ($8.1M) $9.1 $5.6 $3.0 $1.2 $0.1 $0.4 Working capital ($
Slide 30: Capital allocation priorities
Capital allocation priorities • Strong balance sheet and cash generation Execute strategic • Invest in business and pursue synergistic M&A priorities • New product innovations and operational excellence Ensure adequate • Maintain sufficient cash balance liquidity • Continue to ensure adequate capita
Slide 31: Capital allocation
Capital allocation Historical deployment* • Revenue growth Capital spending • Footprint optimization • Process improvements Debt repayment ~50% • Enhance growth platform Synergistic M&A • Increase market leadership • Deliver more significant value Capital expenditures ~24% Net acquisitions** ~15% •
Slide 32: 2018 capital spending outlook
2018 capital spending outlook Key points Capex by category Capex as a % of sales 2018 outlook 7.0% • Capital spending outlook higher 6.3% than historical spend Other / IT 6.0% • Strategic and growth investments 10% driving spending higher Maintenance 4.8% 4.7% capex 5.0% • Includes operational excel
Slide 33: Rogers outperforms
Rogers outperforms Track record Track record of strong financial performance Growth Accelerating growth through innovations and acquisitions Cost structure Continuing to optimize cost structure while investing for growth Flexibility Significant operational and financial flexibility Capital allocatio
Slide 34: Appendix
ROGERS CORPORATION
Slide 35: Q1-2018 and Q1-2017 adjusted operating income and operating margin reconciliation
Q1-2018 and Q1-2017 adjusted operating income and operating margin reconciliation* Q1-18($) Q1-18(%) Q1-17($) Q1-17(%) Operating income and operating margin $31.0 14.5% $39.0 19.2% Restructuring, severance, impairment and other related costs $1.4 0.7% $0.7 0.3% Acquisition/ divestiture related costs
Slide 36: 2017 and 2012 adjusted operating margin & 2017 operating income reconciliations
2017 and 2012 adjusted operating margin & 2017 operating income reconciliations FY-17 FY-17 $ FY-12 Operating margin & operating income 15.9% $130.8 5.1% Environmental accrual adjustment - - - Pension curtailment & settlement charges - - 0.4% Restructuring, severance, impairment and other related co
Slide 37: Free cash flow reconciliations
Free cash flow reconciliations ($ in millions) FY-17 FY-16 FY-15 FY-14 FY-13 FY-12 Operating cash flow from continuing operations $139.0 $117.0 $73.9 $85.2 $77.2 $40.4 Less capital expenditures $27.2 $18.1 $24.8 $28.8 $16.9 $23.8 Free cash flow $111.8 $98.9 $49.1 $56.4 $60.3 $16.6 Note: percentages
Slide 38: Q1-2018 Adjusted EBITDA and adjusted EBITDA margin reconciliation
Q1-2018 Adjusted EBITDA and adjusted EBITDA margin reconciliation* ($ in millions) Q1-18 ($) Q1-18 (%) Q1-17 ($) Q1-17 (%) Net Income $26.1 12.2% $27.0 13.3% Interest, net $1.2 0.6% $1.3 0.6% Income tax expense (benefit) $4.8 2.2% $12.9 6.3% Depreciation $7.3 3.4% $7.2 3.5% Intangible amortization $
Slide 39: Q1-2018 adjusted EPS reconciliations
Q1-2018 adjusted EPS reconciliations Q1-18 ($) Q1-17 ($) Earnings per diluted share $1.40 $1.47 Restructuring, severance, impairment and other related costs $0.06 $0.03 Acquisition and related integration costs $0.02 $0.04 Purchase accounting inventory adjustment - $0.05 Gain on legal settlement ($0
Slide 40: FY-2017 ACS Segment adjusted operating income reconciliations
FY-2017 ACS Segment adjusted operating income and operating margin reconciliations ($ in millions) FY-17 ($) FY-17 (%) Operating income and margin $56.2 18.7% Asbestos related charge $1.6 0.5% Gain on sale of non-core assets ($2.5) (0.8%) Restructuring, severance, impairment and other related costs
Slide 41: Q1-2018 ACS Segment adjusted operating income reconciliations
Q1-2018 ACS Segment adjusted operating income and operating margin reconciliations ($ in millions) Q1-18 ($) Q1-18 (%) Q1-17 ($) Q1-17 (%) Operating income and margin $7.9 10.8% $19.5 24.8% Gain on sale of non-core assets - - ($0.4) (0.5%) Restructuring, severance, impairment and other related costs
Slide 42: FY-2017 EMS Segment adjusted operating income reconciliations
FY-2017 EMS Segment adjusted operating income and operating margin reconciliations ($ in millions) FY-17 ($) FY-17 (%) Operating income and margin $51.4 16.4% Asbestos related charge $1.0 0.3% Restructuring, severance, impairment and other related costs $1.0 0.3% Purchase accounting inventory adjust
Slide 43: Q1-2018 EMS Segment adjusted operating income reconciliations
Q1-2018 EMS Segment adjusted operating income and operating margin reconciliations ($ in millions) Q1-18 ($) Q1-18 (%) Q1-17 ($) Q1-17 (%) Operating income and margin $14.2 18.1% $12.8 16.6% Gain on legal settlement ($3.6) (4.6%) - - Restructuring, severance, impairment and other related costs $0.4
Slide 44: FY-2017 PES Segment adjusted operating income reconciliations
FY-2017 PES Segment adjusted operating income and operating margin reconciliations ($ in millions) FY-17 ($) FY-17 (%) Operating income and margin $16.0 8.7% Asbestos related charge $0.8 0.4% Restructuring, severance, impairment and other related costs $1.1 0.5% Gain on sale of non-core assets ($1.2
Slide 45: Q1-2018 PES Segment adjusted operating income reconciliations
Q1-2018 PES Segment adjusted operating income and operating margin reconciliations ($ in millions) Q1-18 ($) Q1-18 (%) Q1-17 ($) Q1-17 (%) Operating income and margin $7.0 12.2% $4.8 11.4% Restructuring, severance, impairment and other related costs $0.5 0.8% $0.2 0.4% Gain on sale of non-core asset
Slide 46: Q1-2018 reported and adjusted net sales and growth
Q1-2018 reported and adjusted net sales and growth ($ in millions) Foreign Revenue Net sales adjusted for Reported net sales exchange (FX) recognition FX and revenue recognition 1Q17 1Q18 % impact impact 1Q18 $ $ Change $ % $ % $ % ACS 78.5 73.5 -6.5% 1.8 2.3% 0.0 0.0% 71.7 -8.8% EMS 76.9 78.1 1.6%
Slide 47: Q1-2018 working capital: changes in operating assets and liabilities
Q1-2018 working capital: changes in operating assets and liabilities used in working capital calculation ($ in millions) Reported Working Revenue Working Capital recognition Capital Calculation impact Adjusted $ $ $ Accounts receivable -7.8 0.0 -7.8 Contract assets -22.0 22.0 0.0 Inventories 5.8 -15