Rogers Corporation · NYSE:ROG
Rogers — Q4 2018 Earnings Presentation
29 slides from Rogers's earnings presentation, Feb 20, 2019
Slide 1: Q4 2018 Earnings Call
Q4 2018 Earnings Call February 20, 2019 1
Slide 2: Forward-looking statements
Forward-looking statements Safe Harbor Statement This release 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 intentions rel
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: 2018 Results
2018 Results • Strong start in Q4 offset by weaker demand in December • Net sales of $223M, a decrease of 2% from Q3 2018 Q4 2018 • Gross margin of 35.2%, an increase of 30 bps over Q3 2018 • Adjusted operating margin* of 16.0%, a decrease of 100 bps from Q3 2018 • Adjusted EPS* of $1.67 per diluted
Slide 5: Advanced Connectivity Growth Driver
Advanced Connectivity Growth Driver Projected 5G base Providing enabling solutions for: station shipments* (Units in thousands) • 5G wireless infrastructure Advanced • Portable electronics Connectivity • Internet of Things (IoT) 704 • 4G/LTE power amplifiers 663 531 623 211 2018 2019 2020 2021 2022
Slide 6: Advanced Mobility Growth Driver
Advanced Mobility Growth Driver Providing enabling solutions for: Projected e-Mobility growth* (Units in millions) 3.3 • EV/HEV power modules 2.8 Advanced • EV batteries 2.3 Mobility 1.9 15.4 • Vehicle electrification 1.4 12.4 1.1 9.7 7.5 4.3 5.7 2018 2019 2020 2021 2022 2023 HEV EV Expansion of EV/
Slide 7: Advanced Mobility Growth Driver
Advanced Mobility Growth Driver Projected Automotive Radar Providing enabling solutions for: Sensor Volume* (Units in thousands) 99 • Advanced driver 88 assistance systems Advanced 73 • Autonomous vehicles 62 Mobility 50 • Vehicle-to-vehicle 41 communication 2018 2019 2020 2021 2022 2023 Rogers’ gro
Slide 8: Advanced Connectivity Solutions (ACS)
Advanced Connectivity Solutions (ACS) 2018 Update Strategy • Net sales of $294M, down 2% from • Continue to leverage innovation to FY 2017 capitalize on market opportunities in key areas: • Growth in aerospace & defense and • Automotive safety ADAS offset by transitioning • Wireless infrastructure w
Slide 9: Power Electronics Solutions (PES)
Power Electronics Solutions (PES) 2018 Update Strategy • Net sales of $223M, up 21% over FY • Broaden Advanced Mobility 2017 solutions to increase penetration and content • Robust growth in EV/HEV and • Capacity expansion to support vehicle electrification accelerating demand for EV/HEV • Strong mar
Slide 10: Elastomeric Material Solutions (EMS)
Elastomeric Material Solutions (EMS) 2018 Update Strategy • Net sales of $341M, up 9% over FY • Broaden portfolio through top of 2017 pyramid acquisitions, leveraging acquisition synergies • Organic sales growth of 5%; strong • Continue focus on applications in demand in portable electronics and key
Slide 11: Rogers vision for 2020
Rogers vision for 2020 Strategic Elements Financial objectives Organic $1.2B Synergistic Market-Driven Innovation growth: Revenues M&A growth: Organization Leadership 7-10% 15% 5-8% Operational Total growth Synergistic M&A Excellence 20% Margin: Adjusted Operating Adjusted operating margin 20% Build
Slide 12: Financial overview
Financial overview Mike Ludwig, Sr. Vice President and Chief Financial Officer
Slide 13: Q4 2018 Financial highlights
Q4 2018 Financial highlights ($ in millions, except EPS) Q4-2018 Q3-2018 Q4-2017 Net sales $222.9 $226.9 $209.0 Gross margin $78.4 $79.1 $75.5 Gross margin % 35.2% 34.9% 36.1% Operating income $26.8 $29.6 $18.6 Operating margin % 12.0% 13.1% 8.9% Adjusted operating income* $35.6 $38.6 $27.2 Adjusted
Slide 14: 2018 Financial highlights
2018 Financial highlights ($ in millions, except EPS) FY-2018 FY-2017 Net sales $879.1 $821.0 Gross margin $310.8 $318.6 Gross margin % 35.4% 38.8% Operating income $112.7 $129.1 Operating margin % 12.8% 15.7% Adjusted operating income* $138.9 $150.0 Adjusted operating margin %* 15.8% 18.3% Net inco
Slide 15: Revenue bridge vs prior quarter
Revenue bridge vs prior quarter ($ in millions) Q4-2018 Update (0.8%) (0.9%) (1.7%) • Revenues of $223 million or 1.7% $1.9 $2.1 decrease sequentially • Volume & other impact driven by $226.9 $222.9 seasonality in EMS business • Unfavorable currency of 0.9% on the Euro and Renminbi Q3-2018 Volume Cu
Slide 16: Gross margin bridge vs prior quarter
Gross margin bridge vs prior quarter ($ in millions) Q4-2018 Update (1.6%) +0.7% (0.9%) 0.0% • Volume impacted by EMS seasonality and unfavorable currency $1.3 $0.0 $0.6 $79.1 $78.4 • Performance increase driven by multi- site qualification efforts; partially offset 34.9% 35.2% by EMS site consolida
Slide 17: Adjusted EPS bridge vs prior quarter
Adjusted EPS* bridge vs prior quarter Q4-2018 Update 26.7% 17.6% • Adjusted EPS* of $1.67 (2.8%) (2.8%) • Gross margin impacted primarily by (2.8%) (0.7%) volume and currency $0.04 $1.67 $0.04 $0.04 $0.38 • SG&A increases from timing $0.01 $1.42 • R&D increase driven by discrete investments in new p
Slide 18: Segment revenue
Segment revenue* ($ in millions) Q4-2018 Update Q4’18 % Change vs PQ vs PY ACS 0.8% (4.0%) EMS (7.8%) 16.2% • ACS: Increase driven by higher PES 2.9% 9.2% Total (1.7%) 6.7% demand in aerospace & defense • EMS: Lower seasonal demand in portable electronics augmented by $95.8 $88.3 slight declines in
Slide 19: 2018 cash utilization
2018 cash utilization ($ in millions) Net cash provided by operating activities $66.8M Net cash used in investing activities ($167.4M) Net cash provided by financing activities $88.6M $96.3 $121.4 Effect of FX ($1.5M) Net increase (decrease) in cash ($13.5M) $47.1 $173.6 $46.2 $29.2 $25.0 $7.0 $3.0
Slide 20: Q1-2019 guidance
Q1-2019 guidance ($ in millions, except EPS) Net sales $220M - $230M Gross Margin 35.0% - 36.0% EPS $0.97 - $1.12 Adjusted EPS* $1.25 - $1.40 *See reconciliation of adjusted earnings per diluted share to earnings per diluted share in the appendix. 20
Slide 21: Appendix
Appendix
Slide 22: Q4-2018 adjusted operating income and operating margin reconciliation
Q4-2018 adjusted operating income and operating margin reconciliation Q4-17($) Q4-17(%) Q3-18($) Q3-18(%) Q4-18($) Q4-18(%) Operating income and operating margin $18.6 8.9% $29.6 13.1% $26.8 12.0% Restructuring, severance, impairment and other related costs $0.8 0.4% $2.7 1.2% $2.7 1.2% Acquisition/
Slide 23: Q4-2018 adjusted EBITDA and adjusted EBITDA margin reconciliation
Q4-2018 adjusted EBITDA and adjusted EBITDA margin reconciliation ($ in millions) Q4-17($) Q4-17(%) Q3-18($) Q3-18(%) Q4-18($) Q4-18(%) Net Income $7.0 3.3% $19.7 8.7% $24.5 11.0% Interest, net $1.3 0.6% $2.0 0.9% $2.1 1.0% Income tax expense (benefit) $13.5 6.5% $8.9 3.9% $0.9 0.4% Depreciation $7.
Slide 24: Q4-2018 adjusted EPS reconciliations
Q4-2018 adjusted EPS reconciliations Q4-17 ($) Q3-18 ($) Q4-18 ($) Earnings per diluted share $0.37 $1.06 $1.31 Restructuring, severance, impairment and other related costs $0.03 $0.11 $0.11 Acquisition and related integration costs $0.02 $0.04 $0.02 Acquisition inventory step up - $0.02 - Lease rev
Slide 25: 2018 adjusted operating income and operating margin reconciliation
2018 adjusted operating income and operating margin reconciliation FY-17($) FY-17(%) FY-18($) FY-18(%) Operating income and operating margin $129.1 15.7% $112.7 12.8% Restructuring, severance, impairment and other related costs $3.6 0.4% $9.0 1.0% Acquisition/ divestiture related costs $0.6 0.1% $1.
Slide 26: 2018 adjusted EBITDA and adjusted EBITDA margin reconciliation
2018 adjusted EBITDA and adjusted EBITDA margin reconciliation ($ in millions) FY-17($) FY-17(%) FY-18($) FY18(%) Net Income $80.5 9.8% $87.7 10.0% Interest, net $6.1 0.7% $6.6 0.8% Income tax expense (benefit) $52.5 6.4% $22.9 2.6% Depreciation $29.3 3.6% $33.5 3.8% Intangible amortization $14.8 1.
Slide 27: 2018 adjusted EPS reconciliations
2018 adjusted EPS reconciliations FY-17 ($) FY-18 ($) Earnings per diluted share $4.34 $4.70 Restructuring, severance, impairment and other related costs $0.13 $0.37 Acquisition and related integration costs $0.11 $0.11 Acquisition inventory step up $0.05 $0.01 Lease revenue related to asset acquisi
Slide 28: 2018 change in adjusted trade capital
2018 change in adjusted trade capital ($ in millions) Change Change Revenue in adjusted in trade recognition trade capital impact Capital Accounts receivable ($3.8) - ($3.8) Contract assets ($22.7) $22.7 - Inventories ($19.0) ($15.5) ($34.5) *Accounts payable and other accrued expenses ($7.9) - ($7.
Slide 29: Q1-2019 guidance reconciliation
Q1-2019 guidance reconciliation Q1-19 ($) Guidance Q1-19 earnings per diluted share $0.97 - $1.12 Add back adjustments: Discrete Items, Restructuring / other expenses $0.10 Acquisition intangible amortization $0.18 Guidance Q1-19 adjusted earnings per diluted share $1.25 - $1.40 Note: percentages an