ROGERS CORP Q3 FY2026 earnings call

• Financial Strength: Delivered highest adjusted EPS ($1.39) since 2022 and highest EBITDA margin (20.2%) in five years.
• Core Market Wins: Secured design wins in aerospace (drone detection), automotive (battery packs, ceramic substrates), and data centers (silicon materials).
• High-Growth Adjacencies: Advanced signal integrity and chip cooling solutions for AI data centers; began customer sampling for thermal runaway protection and EMI shielding.
• Operational Discipline: Improved factory utilization and cost structure; completed structural restructuring activities.
• Strategic Focus: Leveraging deep customer relationships and technical expertise to accelerate growth in core and adjacent markets.

The company reported total sales of $236.1 million, a 9% increase year-over-year. Industrial was the largest segment at 34% of sales, with slight improvement driven by renewable energy. Automotive represented 24% of sales, growing high-single digits due to ADAS and EV/ICE demand. Electronics and Communications accounted for 20% of sales, showing strong growth in wireless infrastructure laminates that offset lower smartphone sales. Aerospace and Defense comprised 15% of sales, growing mid-single digits across defense and commercial applications.

• Q4 Revenue: Guided between $215 million and $225 million, representing approximately 9% year-over-year growth at the midpoint.
• Q4 Adjusted EPS: Forecasted range of $0.90 to $1.10, up from $0.89 in Q4 2025.
• Q4 Adjusted EBITDA: Expected to range from $37 million to $43 million, a 16% increase year-over-year.
• Q4 Gross Margin: Targeted between 32.5% and 33.5%, benefiting from volume and cost improvements despite commodity headwinds.
• Full-Year Tax Rate: Non-GAAP rate projected at approximately 31%.

• Supply Constraints: Identified pockets of supply limitations that led to minor push-outs in sales during Q3.
• Commodity Costs: Higher commodity costs remain a headwind against margin expansion.
• Execution Risk: New business ramp-ups depend on successful qualification and commercialization timelines.

Q: Analyst asked about areas where sales were pushed out due to supply constraints and the size/timing of new design wins. / A: CFO confirmed slight misses to guidance midpoint due to supply constraints in specific spaces, though demand remains strong. CEO noted two material opportunities are sizable, with revenue expected to start ramping in late 2026 and reaching full volumes by Q2 2027.

Q: Analyst questioned if flat SG&A/R&D spending relative to sales growth indicates a standard model for 50% incremental EBITDA margins going forward. / A: CFO explained OPEX management is intentional but will grow absolutely as they chase organic opportunities. She emphasized that leveraging existing factory footprint and utilization benefits allows sales growth to flow through to margins, supporting higher incremental profitability.

Q: Analyst asked if the pace of new business wins is sufficient to meet or exceed targets laid out at the recent Investor Day. / A: CEO confirmed they are ahead of schedule in securing new business, noting that current growth rates (9% YoY) exceed the ~5% organic growth average indicated previously, and this momentum is expected to continue into 2027.

Q: Analyst inquired about the M&A pipeline and whether the company expects aggressive buybacks or acquisitions in the near term. / A: CFO stated share repurchases will remain opportunistic. CEO revealed they are actively evaluating at least one, possibly two, M&A opportunities based on strategic capability gaps, expecting actionable announcements within the next two quarters.

Q: Analyst asked about customer engagement amidst market volatility and which of the three major growth opportunities (data centers, battery tech, EMI) would ramp fastest. / A: CEO stated customer momentum is picking up with increased testing and sampling, unaffected by macro volatility. He identified data centers as the largest opportunity overall, with high-speed digital and cooling being the primary drivers, while EMI shielding spans multiple sectors.