Rogers Corporation · NYSE:ROG
Rogers — Q4 2019 Earnings Presentation
34 slides from Rogers's earnings presentation, Feb 20, 2020
Slide 1: Q4 2019 Earnings Call
Q4 2019 Earnings Call February 20, 2020 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: 2019 Summary
2019 Summary FY 2019 Q4 2019 • Net sales of $898M • Net sales of $194M Results • Gross margin of 35.0% • Gross margin of 33.1% • Adjusted EPS* of $6.14 per diluted share • Adjusted EPS* of $1.14 per diluted share • Advanced Mobility: Strong 2019 growth in power semiconductor substrates for EV/HEV; S
Slide 5: Rogers 2019 Revenues by Market
Rogers 2019 Revenues by Market Advanced Advanced Mobility ADAS Wireless Connectivity 24% 7% Infrastructure e-Mobility 27% 14% 9% Portable Mass Transit Electronics 8% 12% Other A&D 12% 8% Clean Industrial Energy 19% 9% Market-driven innovation leading to growth in diverse global markets 5
Slide 6: Growth Driver Update
Growth Driver Update Advanced Connectivity Advanced Mobility 5G Infrastructure Update: 5G Wireless EV/HEV Infrastructure Market Update: • ~4M 5G base station deployments expected by 20231. 2020 • TBD Projected CAGR of ~30% through 20242 deployments of 880K, subject to trade and coronavirus risks • ~
Slide 7: Advanced Connectivity Solutions (ACS)
Advanced Connectivity Solutions (ACS) 2019 Update Strategy • Net sales of $317M, up 8% YoY • Leverage innovation to capitalize on market opportunities in key areas: • Growth in wireless infrastructure, • Automotive safety sensors aerospace & defense and ADAS • Aerospace & Defense • Pause in 5G order
Slide 8: Elastomeric Material Solutions (EMS)
Elastomeric Material Solutions (EMS) 2019 Update Strategy • Net sales of $362M, up 6% YoY • Capitalize on the large emerging market opportunity for EV/HEV • Growth from strong demand in battery pads and battery pack portable electronics, mass transit, sealing solutions EV/HEV battery pads and recent
Slide 9: Power Electronics Solutions (PES)
Power Electronics Solutions (PES) 2019 Update Strategy • Net sales of $199M, down 11% YoY • Leverage our proven technology to capitalize on strong market growth • Strong growth in demand for power opportunities in Advanced Mobility semiconductor substrates for applications EV/HEV applications • Inve
Slide 10: Rogers Vision
Rogers Vision Strategic Elements Financial Objectives Market-Driven Innovation Organic growth: 15% Synergistic M&A growth: Total Organization Leadership 5-10% Revenue 5-10% Growth Synergistic Operational M&A Excellence >20%Margin: Adjusted Operating 20% Adjusted operating margin Capitalize on tailwi
Slide 11: Financial overview
Financial overview Mike Ludwig, Sr. Vice President and Chief Financial Officer
Slide 12: Q4 2019 Financial highlights
Q4 2019 Financial highlights ($ in millions, except EPS) Q4-2019 Q3-2019 Q4-2018 Net sales $193.8 $221.8 $222.9 Gross margin $64.2 $78.9 $78.4 Gross margin % 33.1% 35.6% 35.2% Operating income $14.6 $29.9 $26.8 Operating margin % 7.5% 13.5% 12.0% Adjusted operating income* $22.5 $36.2 $35.6 Adjusted
Slide 13: 2019 Financial highlights
2019 Financial highlights ($ in millions, except EPS) FY-2019 FY-2018 Net sales $898.3 $879.1 Gross margin $314.3 $310.8 Gross margin % 35.0% 35.4% Operating income $110.5 $112.7 Operating margin % 12.3% 12.8% Adjusted operating income* $141.4 $138.9 Adjusted operating margin %* 15.7% 15.8% Net inco
Slide 14: Revenue bridge vs prior quarter
Revenue bridge vs prior quarter ($ in millions) Q4-2019 Update (12.2%) • Revenues of $194 million or 12.7% decrease sequentially (0.5%) (12.7%) $26.9 $1.1 • Volume & Other decline due to soft demand in ACS & EMS businesses; $221.8 partially offset by modest PES growth $193.8 • Weaker CNY and Euro co
Slide 15: Gross margin bridge vs prior quarter
Gross margin bridge vs prior quarter ($ in millions) Q4-2019 Update (16.2%) • ACS & EMS volumes decline: PES demand increased slightly (4.4%) 2.0% (18.6%) 0.0% • Performance shortfall due to lower $78.9 $12.8 $0.0 ACS & EMS throughput; partially offset $3.5 $1.6 $64.2 by reduced manufacturing spend
Slide 16: Adjusted net income bridge vs prior quarter
Adjusted net income* bridge vs prior quarter ($ in millions) Q4-2019 Update (48.6%) • Adjusted Op Income* negatively +18.4% (24.5%) impacted by lower revenues; partially $28.2 offset by decrease in adjusted +5.7% 12.7% $21.3 operating expense $5.2 $13.7 $1.6 • Other income/expense benefit from 11.0%
Slide 17: Cash utilization
Cash utilization ($ in millions) $188.2 Net cash provided by operating activities $161.3M Net cash used in investing activities ($49.0M) Net cash used by financing activities ($111.8M) Effect of FX ($1.4M) Net increase (decrease) in cash ($0.9M) $105.5 $13.4 $51.6 $17.6 $7.8 $20.1 $167.7 $166.8 12/3
Slide 18: Q1-2020 guidance
Q1-2020 guidance ($ in millions, except EPS) Net sales $185M - $200M Gross Margin 32.5% - 33.5% EPS $0.50 - $0.70 Adjusted EPS* $0.75 - $0.95 *See reconciliation of adjusted earnings per diluted share to earnings per diluted share in the appendix. 18
Slide 19: Appendix
ROGERS CORPORATION
Slide 20: Q4-2019: Adjusted operating income and operating margin reconciliation
Q4-2019: Adjusted operating income and operating margin reconciliation ($ in millions) Q4-18($) Q4-18(%) Q3-19($) Q3-19(%) Q4-19($) Q4-19(%) Operating income and operating margin $26.8 12.0% $29.9 13.5% $14.6 7.5% Restructuring, severance, impairment and other related costs $2.7 1.2% $1.3 0.6% $0.8
Slide 21: Q4-2019: Adjusted EBITDA and adjusted EBITDA margin reconciliation
Q4-2019: Adjusted EBITDA and adjusted EBITDA margin reconciliation ($ in millions) Q4-18($) Q4-18(%) Q3-19($) Q3-19(%) Q4-19($) Q4-19(%) Net Income $24.5 11.0% $23.4 10.5% ($28.8) (14.9%) Interest expense, net $2.1 1.0% $1.8 0.8% $1.1 0.6% Income tax expense $0.9 0.4% $5.3 2.4% ($9.5) (4.9%) Depreci
Slide 22: Q4-2019: Adjusted EPS reconciliation
Q4-2019: Adjusted EPS reconciliation Q4-18 ($) Q3-19 ($) Q4-19 ($) GAAP earnings per diluted share $1.31 $1.25 ($1.55) Restructuring, severance, impairment and other related costs $0.11 $0.05 $0.03 Acquisition and related integration costs $0.02 $0.02 $0.02 Transition services, net $0.08 $0.01 $0.01
Slide 23: Q4-2019: Adjusted net income reconciliation
Q4-2019: Adjusted net income reconciliation ($ in millions) Q4-18 ($) Q4-18(%) Q3-19 ($) Q3-19(%) Q4-19 ($) Q4-19(%) Net Income $24.5 11.0% $23.4 10.5% ($28.8) (14.9%) Restructuring, severance, impairment and other related costs $2.7 1.2% $1.3 0.6% $0.8 0.4% Acquisition and related integration costs
Slide 24: Q4-2019: Adjusted operating expenses reconciliation
Q4-2019: Adjusted operating expenses reconciliation* ($ in millions) Q4-18($) Q4-18(%) Q3-19($) Q3-19(%) Q4-19($) Q4-19(%) Operating expenses $51.6 23.1% $49.0 22.1% $49.7 25.6% Restructuring, severance, impairment and other related costs ($2.7) (1.2%) ($1.3) (0.6%) ($0.8) (0.4%) Acquisition and rel
Slide 25: Q4-2019: Free Cash Flow reconciliation
Q4-2019: Free Cash Flow reconciliation* ($ in millions) Q4-18($) Q3-19($) Q4-19($) Net cash provided by operating activities $33.4 $48.2 $45.7 Capital expenditures ($10.6) ($14.8) ($12.8) Free cash flow $22.8 $33.4 $32.9 Note: percentages and dollars may not add due to rounding *Free cash flow defin
Slide 26: Q4-2019: Weighted average shares outstanding–diluted reconciliation
Q4-2019: Weighted average shares outstanding–diluted reconciliation (shares in thousands) Q4-18 Q3-19 Q4-19 Weighted average shares outstanding – diluted 18,687 18,724 18,587 Dilutive effect of awards under equity compensation plans - - 118 Adjusted weighted average shares outstanding – diluted 18,6
Slide 27: 2019: Adjusted operating income and operating margin reconciliation
2019: Adjusted operating income and operating margin reconciliation ($ in millions) FY-18($) FY-18(%) FY-19($) FY-19(%) Operating income and operating margin $112.7 12.8% $110.5 12.3% Restructuring, severance, impairment and other related costs $9.0 1.0% $7.7 0.9% Acquisition and related integration
Slide 28: 2019: Adjusted EBITDA and adjusted EBITDA margin reconciliation
2019: Adjusted EBITDA and adjusted EBITDA margin reconciliation ($ in millions) FY-18($) FY-18(%) FY-19($) FY-19(%) Net Income $87.7 10.0% $47.3 5.3% Interest expense, net $6.6 0.8% $6.9 0.8% Income tax expense $22.9 2.6% $7.8 0.9% Depreciation $33.5 3.8% $31.4 3.5% Amortization $16.5 1.9% $17.8 2.0
Slide 29: 2019: Adjusted EPS reconciliation
2019: Adjusted EPS reconciliation FY-18 ($) FY-19 ($) GAAP earnings per diluted share $4.70 $2.53 Restructuring, severance, impairment and other related costs $0.37 $0.31 Acquisition and related integration costs $0.11 $0.08 Purchase Accounting inventory adjustment $0.01 - Asbestos-related charges $
Slide 30: 2019: Adjusted net income reconciliation
2019: Adjusted net income reconciliation ($ in millions) FY-18 ($) FY-18(%) FY-19 ($) FY-19(%) Net Income $87.7 10.0% $47.3 5.3% Restructuring, severance, impairment and other related costs $9.0 1.0% $7.7 0.9% Acquisition and related integration costs $2.6 0.3% $1.9 0.2% Purchase accounting inventor
Slide 31: 2019: Adjusted operating expenses reconciliation
2019: Adjusted operating expenses reconciliation* ($ in millions) FY-18($) FY-18(%) FY-19($) FY-19(%) Operating expenses $198.1 22.5% $203.8 22.7% Restructuring, severance, impairment and other related costs ($9.0) (1.0%) ($7.7) (0.9%) Acquisition and related integration costs ($2.6) (0.3%) ($1.9) (
Slide 32: 2019: Free Cash Flow reconciliation
2019: Free Cash Flow reconciliation* ($ in millions) FY-18($) FY-19($) Net cash provided by operating activities $66.8 $161.3 Capital expenditures ($47.1) ($51.6) Free cash flow $19.7 $109.7 Note: percentages and dollars may not add due to rounding *Free cash flow defined as net cash provided from o
Slide 33: 2019: Weighted average shares outstanding–diluted reconciliation
2019: Weighted average shares outstanding–diluted reconciliation (shares in thousands) YTD-18 YTD-19 Weighted average shares outstanding – diluted 18,659 18,713 Dilutive effect of awards under equity compensation plans - - Adjusted weighted average shares outstanding – diluted 18,659 18,713 Note: pe
Slide 34: Q1-2020: Guidance reconciliation
Q1-2020: Guidance reconciliation Q1-20 ($) GAAP earnings per diluted share $0.50 – $0.70 Discrete items $0.10 Acquisition intangible amortization $0.15 Adjusted earnings per diluted share $0.75 - $0.95 Note: percentages and dollars may not add due to rounding. 34