Rogers Corporation · NYSE:ROG
Rogers — Q2 2015 Earnings Presentation
27 slides from Rogers's earnings presentation, Jul 30, 2015
Slide 1: Rogers Corporation Q2 2015 Earnings Call
Rogers Corporation Q2 2015 Earnings Call July 30, 2015
Slide 2: Introductions
Introductions Bruce Hoechner David Mathieson Bob Daigle President & CEO VP Finance & CFO Senior VP & CTO 2
Slide 3: Forward Looking and Cautionary Statements
Forward Looking and Cautionary Statements Safe Harbor Statement This presentation contains forward-looking statements within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements do not constitute guarantees of future perf
Slide 4: Multi-Pronged Strategy Drives Sustainable Growth
Multi-Pronged Strategy Drives Sustainable Growth Our Global leaders in engineered materials helping power, protect, connect our world Focus Our Market-Driven Innovation Synergistic Operational Strategy Excellence Organization Leadership M&A A Winning Team: Top Talent, Engaged Employees, Performance
Slide 5: Q2 Operating Highlights
Q2 Operating Highlights Record second quarter net sales on volume from Arlon acquisition… Actual Actual In millions Q2-2015 Q2-2014 change % change Total Rogers Sales Organic (prior year currency) $146.0 $153.5 ($7.5) (4.9%) Currency impact (since prior year) ($8.3) - ($8.3) (5.4%) Subtotal $137.7 $
Slide 6: Advanced Connectivity Solutions (ACS) Q2 Highlights
Advanced Connectivity Solutions (ACS)* Q2 Highlights Net sales impacted by slowing in China markets Summary • Net sales $66.4M; including $13.8M from Arlon – Increase of 8% over Q2-14 – Organic sales decreased 13.3% on currency adjusted basis • Growth in automotive Advanced Driver Assistance Systems
Slide 7: Elastomeric Material Solutions (EMS) Q2 Highlights
Elastomeric Material Solutions (EMS)* Q2 Highlights Acquisition contributing to higher net sales Summary • Net sales $47.0M; including $6.7M from Arlon – Increase of 9.9% over Q2-14 – Organic sales declined by 4.0% on a currency adjusted basis • Increased demand in mass transit and general industria
Slide 8: Power Electronics Solutions (PES) Q2 Highlights
Power Electronics Solutions (PES) Q2 Highlights Demand increase more than offset by weakened Euro Summary • Net sales $38.5M – Decrease of 10.2% from Q2-14 – Net sales grew 5.3% on a currency adjusted basis • Continued substantial impact of foreign exchange rates. Strong demand in electric vehicle a
Slide 9: Q2-2015 Performance by Megatrend & Market
Q2-2015 Performance by Megatrend & Market Sales in Megatrend Categories 62% of Revenues in Q2-2015 Internet Connectivity Mobile Data Traffic Forecast: • 57% CAGR 2014-2019 Source: Cisco 2015 Clean Energy EV/HEV Forecast: • 32% CAGR 2015-2020 Source: Yole Développement - April 2015 Safety & Protectio
Slide 10: Financial Highlights
Financial Highlights David Mathieson, VP Finance and Chief Financial Officer 10
Slide 11: Summary of Q2-2015 Results
Summary of Q2-2015 Results 4/29/2015 Sales ($M) Actual Guidance Net Sales $163.1 $175-$185 EPS Non-GAAP EPS $0.67 $0.81-$0.93 Favorable tax benefit 0.06 - Integration Costs (0.02) (0.10) Total GAAP EPS $0.71 $0.71-$0.83 11
Slide 12: Total Company Revenue Growth
Total Company Revenue Growth Revenue Bridge Q2-2015 Commentary* Q2-2014 Actuals vs. Q2-2015 Actuals ($M) Revenue of $163.1M, an increase of 6.3%: • Organic growth -4.9%: ACS -13.3% -4.9% EMS -4.0% PES +5.3% • Currency (Euro) -5.4% primarily impacting PES • Arlon acquisition +16.5% * All comments ref
Slide 13: EPS
EPS EPS Bridge Q2-2015 Commentary* Q2-2014 Actuals vs. Q2-2015 Actuals EPS before integration and discrete tax benefit $0.67 ($0.71 GAAP) • Rogers organic -$0.05 • Arlon acquisition +$0.14 • Favorable tax benefit and Integration +$0.04 * All comments reflect Q2-2015 vs. Q2-2014 comparisons except wh
Slide 14: Total Company Gross Margin
Total Company Gross Margin Gross Margin ($M) Q2-2015 Commentary* Overall gross margin decline of 10bps Organic GM improved 60 bps despite lower organic sales due to operational excellence initiatives and favorable absorption/mix The acquired Arlon business reduced GM by 70 bps * All comments ref
Slide 15: Total Company SG&A and R&D
Total Company SG&A and R&D SG&A ($M) Q2-2015 Commentary* SG&A** • $32.5M includes $2.3 million of SG&A and $1.6 million of amortization related to the Arlon acquisition • Net decrease over the prior period is due to discrete items in 2014, lower variable costs and controlled R&D ($M) spending R&D •
Slide 16: Total Company Operating Margin
Total Company Operating Margin Operating Margin ($M) Q2-2015 Commentary* Operating Margin** Operating Margin up 230bps • Gross Margin -10bps due to organic growth offset by acquisition • Commercial expenses +240bps due to lower rate of SG&A spending and higher R&D * All comments reflect Q2-2015 vs.
Slide 17: Advanced Connectivity Solutions (ACS)
Advanced Connectivity Solutions (ACS) Circuit materials enabling high-performance & high-reliability connectivity Segment Revenue ($M) Q2-2015 Revenue Performance* $70 +8.0% $60 $66.4 Sales: $4.9M, up 8.0% $61.5 $50 • Organic -13.3% $40 $30 • Currency -1.2% $20 • Acquisition +22.5% $10 $0 Q2-2014 Q2
Slide 18: Elastomeric Material Solutions (EMS)
Elastomeric Material Solutions (EMS) Elastomeric material solutions for critical cushioning, sealing, impact protection & vibration management Segment Revenue ($M) Q2-2015 Revenue Performance* Sales: $4.2M, up 9.9% • Organic -4.0% • Currency -1.7% • Acquisition +15.5% Segment Operating Income ($M) Q
Slide 19: Power Electronics Solutions (PES)
Power Electronics Solutions (PES) Energy-efficient substrates and components for power systems, modules and motor drives Segment Revenue ($M) Q2-2015 Revenue Performance* Sales: $38.5M, down 10.2% • Organic +5.3% • Currency -15.5% Segment Operating Income ($M) Q2-2015 Op Income Performance* Operatin
Slide 20: Liquidity
Liquidity Cash Generation ($M) Cash ($M) 6 Months 6 Months Ended Ended June 30, 2014 June 30, 2015 Cash at beginning of period $191.9 $237.4 Cash flow from operations 29.7 22.4 Capital expenditures (10.3) (14.3) Debt and lease repayments (7.7) (5.1) Proceeds from sale of 14.4 6.9 capital stock and i
Slide 21: Guidance
Guidance Q3-2015 Financial Guidance As of July 29, 2015 Net Sales $162-$172 million EPS (Non-GAAP) $0.67-$0.77 per diluted share EPS (GAAP) $0.62-$0.72 per diluted share EPS (GAAP) includes integration costs and other discrete charges of $0.05 per diluted share 21
Slide 22: Non-GAAP Reconciliation
Non-GAAP Reconciliation Rogers Corporation Reconciliation of GAAP to Non-GAAP Financial Measures (In % of Sales and $ in M) (Unaudited) Q2-15 (%) Q2-15 ($) SG&A GAAP 20.2% $33.1 Integration costs related to Arlon (0.3) (0.6) Total Special Charges (0.3) (0.6) Non-GAAP 19.9% $32.5 22
Slide 23: Non-GAAP Reconciliation
Non-GAAP Reconciliation Rogers Corporation Reconciliation of GAAP to Non-GAAP Financial Measures (In % of Sales and $ in M) (Unaudited) Q2-15 (%) Q2-15 ($) Operating Margin GAAP 12.6% $20.5 Integration costs related to Arlon 0.3 0.6 Total Special Charges 0.3 0.6 Non-GAAP 12.9% $21.1 23
Slide 24: Non-GAAP Reconciliation
Non-GAAP Reconciliation Rogers Corporation Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited) Q2-15 GAAP income per diluted share from $0.71 continuing operations Add back special adjustments, net of tax: Integration costs related to Arlon 0.02 Tax discrete items (0.06) Total special
Slide 25: Non-GAAP Reconciliation
Non-GAAP Reconciliation Rogers Corporation Reconciliation of GAAP to Non-GAAP Financial Measures (In % of Sales and $ in M) (Unaudited) Q2-15 (%) Q2-15 ($) ACS Segment Operating Income GAAP 18.1% $12.0 Integration costs related to Arlon 0.4 0.3 Total Special Charges 0.4 0.3 Non-GAAP 18.5% $12.3 Q2-1
Slide 26: Non-GAAP Reconciliation
Non-GAAP Reconciliation Reconciliation of non-GAAP to GAAP Income Per Share Guidance for the Third Quarter of 2015: The following table includes non-recurring special charges related to integration of the Arlon acquisition and other discrete charges Reconciliation of non-GAAP to GAAP Income - Per Sh
Slide 27: Questions
Questions protect connect ROGERS CORPORATION Helping power, protect, connect our world 27