Rogers Corporation Q3 FY2025 earnings call

• Ali El-Haj engaged with employees and customers globally, reinforcing Rogers' core strengths and identifying growth opportunities. • Key focus areas include intensifying customer focus, leveraging global manufacturing capabilities (e.g., new curamik facility in China) to enhance competitiveness and market share. • Committed to delivering innovative new products across all business units. • Focus on maintaining a lean and efficient cost structure, with expense reduction actions and footprint optimization efforts underway, including progress on restructuring curamik operations in Germany, targeting $13 million of annualized savings by late 2026. • Operational excellence efforts, such as organizational structure changes in commercial, R&D, and operations, leading to reduced lead times (up to 60%) and improved working capital.

Sales increased by 6.5% from the prior quarter, driven by improvements in portable electronics, industrial, aerospace, and defense end markets. Compared to the prior year, sales rose by 2.7%. Industrial markets saw higher sales in both AES and EMS business units for the third consecutive quarter. Aerospace and Defense sales improved sequentially, with EMS boosted by stronger commercial aerospace demand in North America and AES defense sales remaining strong. EV and HEV sales were relatively unchanged, while AES sales increased due to improved power substrate demand. ADAS sales decreased sequentially. Portable electronics was the largest driver of sequential revenue growth. Specifically, AES revenues increased by 5.2% and EMS revenues by 8.7% quarter-on-quarter.

• Q4 sales are expected to be between $190 million and $205 million, with the midpoint representing a 3% year-over-year growth and a 9% sequential decline. • Gross margin is guided to be in the range of 30% to 32%, with the midpoint 110 basis points lower than the prior year due to an 80 basis point headwind from the ramp of the curamik factory in China. • Adjusted EPS is projected to range from breakeven to $0.40, with an adjusted EPS range of $0.40 to $0.80. • Adjusted EBITDA margin is expected to be between 13.5% and 16.5%, representing a roughly 300 basis point improvement compared to the prior year. • The non-GAAP full year tax rate is projected to be approximately 35% due to certain loss jurisdictions where no tax benefits can be realized.

• Macroeconomic conditions, market demands, and competitive factors could cause actual results to materially differ from forward-looking statements. • Tariff impacts and challenges in fully ramping the curamik facility in China could affect gross margins. • Uncertainty regarding the recovery of the EV market, which could impact sales performance.

Q: Dan Moore with CJS Securities inquires about top line and revenue trends, confidence in key end markets, and growth in the first half of 2026.

A: Ali El-Haj states confidence in the Q4 range, is confident in growth across all segments except the EV market, and has high confidence in better performance and continued growth in all business segments during the first half of 2026.

Q: Craig Ellis with B. Riley Securities asks about cost and margin dynamics, cost savings, and additional cost benefits.

A: Laura Russell explains the 80 basis point headwind from the curamik ramp, mentions margin optimization with the new operator model, and notes that cost savings are crystallizing.

Q: David Silver with Freedom Capital Markets asks about customer relationships and further cost reduction steps.

A: Ali El-Haj states that customer relationships are strong, focuses on meeting customer needs, and emphasizes continuous improvement; Laura Russell clarifies on adjusted operating expenses.

Q: Dan Moore with CJS Securities asks about the Q4 range and factors affecting the range.

A: Laura Russell says the guidance is based on current visibility, considering the slowdown in portable electronics and inventory management by customers.

Q: Craig Ellis with B. Riley Securities asks about the China curamik facility, gating factors, and levers to accelerate speed.

A: Ali El-Haj mentions multiple customers with ongoing programs, notes that the gating factor is product/process qualification, states the facility is staffed, and is on track to meet 2026 numbers.