Rogers Corporation Q2 FY2025 earnings call

• Ali El-Haj noted Rogers' core capability and strength are intact, and recent leadership transition doesn't signal major strategy change but aims to increase execution speed, improve accountability, and create dynamic org. - AES curamik business affected by evolving EV market; Rogers is responding to market changes and taking actions. - Q2 sales, gross margins, and adjusted EPS within guidance ranges; Q3 expected modest revenue increase but stronger gross margin and adjusted EPS due to cost containment. - Industrial, aerospace and defense, ADAS, and portable electronics end markets showed growth in Q2. - Q2 gross margin 31.6%, up 170 basis points from Q1, driven by higher sales and favorable product mix; adjusted EBITDA improved to $23.9 million or 11.8% of sales.

Sales increased by 6.5% from the prior quarter, led by stronger industrial, portable electronics, A&D and ADAS end markets. On a GAAP basis, Rogers recorded a net loss of $73.6 million or $4 per share in Q2, inclusive of $4.3 million of restructuring costs and a noncash impairment charge of $71.8 million related to goodwill and other intangible assets for the curamik business. AES revenues increased by 4.6% and EMS revenues were 8.2% higher quarter-on-quarter. Industrial markets had the strongest performance in Q2 with double-digit growth versus prior quarter; aerospace and defense sales were higher in both AES and EMS; ADAS sales increased for the third consecutive quarter; portable electronics also saw double-digit growth.

• Q3 revenues expected between $200 million and $215 million, midpoint 2% increase vs prior quarter; gross margin range 31.5% - 33.5%; adjusted EPS range breakeven to $0.40, adjusted EPS range $0.50 - $0.90. - Restructuring costs related to curamik European operations expected $12 million to $20 million over Q3 2025 to Q3 2026; cost savings projected over $13 million annual run rate, full run rate savings potential beginning Q4 2026. - Full year tax rate projected at approximately 30%.

• Rapidly evolving EV market led to sharp divergence in regional growth rates for EV production and sales, affecting AES curamik business with lower demand than forecasted. - Power substrates facing pricing pressure due to intense global EV competition.

Q: Beyond the $13 million restructuring targeted cost savings, talk about top 2 or 3 priorities for next 6 - 12 months.

A: Strategically, focus on internal cost initiatives and operational improvements to speed up execution; also focus on top - line opportunities short and midterm.

Q: Keys to getting back to consolidated organic revenue growth year - over - year and midterm gross margin targets.

A: Organization is focused on top - line expansion; margin expansion depends on executing top - line expansion, utilizing existing capacity, and cost savings from restructuring.

Q: Specific examples of accelerating speed of execution and improvement needed.

A: Need to reduce lead times in some product lines by 50% - 60%; accelerate development process of new and next - generation products.

Q: Regarding cost reduction efforts, $25 million cost reduction effort and incremental $13 million.

A: Cumulatively $45 million in cost savings by 2026, with $13 million annual amount likely crystallizing savings in Q4 2026 and timing not fully manifesting in full year 2026 initially