ROGERS CORP Q3 FY2024 earnings call

• Welcome of Interim CFO Laura Russell, who brings over 20 years of semiconductor experience.
• Mixed Q3 results: Earnings exceeded guidance but revenues fell below estimate. Gross margin of 35.2% was higher than expected, driven by lower operating expenses. Revenues down due to softer EV/HEV and portable electronics.
• Ongoing challenges in General Industrial and EV/HEV markets; global manufacturing contraction weighs on Industrial, and EV/HEV growth is behind last year's pace.
• Ribbon-cutting of new curamik power substrate factory in China, which will manufacture AMB substrates and support regional capacity strategy.
• Opportunities in industrial segments like medical devices, data centers, battery energy storage systems; EV/HEV with new design wins and capacity investments in China.

For AES, revenue decreased 3% versus the prior quarter to $112 million, with curamik sales down more than 35% due to customer inventory correction and lack of demand recovery. For EMS, revenue decreased less than 1% to approximately $94 million, primarily due to lower EV/HEV sales, partially offset by seasonally higher portable electronic sales and improved industrial sales. AES contributed around 53.3% of total revenues ($112M out of $210M), while EMS contributed around 44.8% ($94M out of $210M).

• Q4 net sales expected to range between $185 million and $200 million, midpoint down ~8% from Q3.
• Gross margin projected to be in the range of 31.5% to 33% for Q4.
• Adjusted EPS expected to range from a loss of $0.15 to $0.15 of earnings.
• Full year tax rate projected to be approximately 27%.

• Ongoing contraction in global manufacturing activity impacting the Industrial segment.
• Soft order patterns and lack of demand recovery in the EV/HEV segment.
• Competitive dynamics in the ADAS market.
• Macro challenges such as monetary policy and election uncertainty affecting industrial demand.

Q: Daniel Moore asks about the sequential decline in revenue implied in the Q4 guide.

A: Colin Gouveia states the main reasons are the wireless program ending in Q3, seasonal decline in portable electronics, curamik not recovering, and customer de-stocking for year-end.

Q: Craig Ellis inquires about the industrial business and power substrate ramp.

A: Colin Gouveia discusses industrial opportunities in medical, data centers, BESS, etc., and Laura Russell talks about OpEx related to the substrate factory ramp.

Q: Daniel Moore asks about margins and EMS.

A: Laura Russell and Colin Gouveia discuss margin management, utilization issues, and margin expansion efforts.

Q: Craig Ellis asks about M&A and cash return to shareholders.

A: Colin Gouveia talks about M&A strategy and Laura Russell discusses opportunistic share buybacks based on capital allocation priorities.