ROGERS CORP Q1 FY2025 earnings call

• Colin discussed how global trade policies affect Rogers, noting global manufacturing footprint and local-for-local supply capabilities help mitigate tariff impact, with mitigation plans in place for U.S. goods shipped to China. • Q1 results: sales, gross margin, and adjusted earnings slightly ahead of guidance. Secured new design wins in areas like silicone technology for European OEM, polyurethane and silicone materials in EV/HEV, and curamik power substrates. • Laura highlighted Q1 financial highlights: sales of $190.5 million, gross margin 29.9%, adjusted EPS $0.27. Discussed Q1 cash utilization, with cash at $176 million, increase of $16 million from Q4. • Capital allocation priorities: focus on decreasing CapEx intensity, returning capital to shareholders, synergistic bolt-on M&A, and prudent leverage management.

AES revenue increased 2% versus the prior quarter to $104 million from higher ADAS and Aerospace and Defense sales, partially offset by lower EV/HEV revenue. EMS revenue decreased by approximately 4% to $83 million from lower portable electronics, EV/HEV and Aerospace and Defense sales. Industrial sales increased sequentially. Q1 sales of $191 million were slightly lower sequentially, primarily due to foreign exchange rate changes and normal seasonality in portable electronics end market. AES and EMS business units saw EV/HEV sales decline, with curamik power substrate sales remaining soft. Aerospace and Defense declined slightly, while ADAS and Industrial markets increased.

• Q2 sales expected to be between $190 million and $205 million, midpoint represents 4% increase vs Q1. • Gross margin guided to be in range of 31% to 33% for Q2, driven by improved volume and favorable product mix. • Adjusted operating expenses expected to increase slightly in Q2 from first quarter. • Adjusted EPS range from breakeven to $0.40, adjusted EPS range $0.30 to $0.70. • Full year tax rate projected to be approximately 27%.

• Uncertainty from global trade policies, particularly exposure to U.S. goods shipped to China and potential tariff impacts. • Impact of tariff uncertainty on customer order timing and potential delays. • Unclear market conditions affecting customer demand and the ultimate contribution of new design wins.

Q: Regarding the $25 million cost savings in 2025, how much is in Q2 guidance on a run rate basis and if the $32 million annualized is earmarked for margin improvement or reinvestment?

A: Laura said most Q2 savings related to RFS impact, about $3 million for Q2. The $32 million annualized savings are around 70% in operating expenses and remainder in manufacturing costs, with focus on margin improvement.

Q: What are customers saying regarding tariff uncertainty?

A: Colin said customers are resilient, dialogues are constructive and open, with cooperation to mitigate potential tariffs.

Q: Color on mix dynamics and cost reduction impact on Q2 gross margin?

A: Laura said cost reduction is part of daily work, mix has significant impact due to business diversity, and mix improvement contributes to Q2 gross margin expansion.

Q: Expectations for free cash flow and long-term CapEx?

A: Laura mentioned cash balance expanded in Q1, resiliency and liquidity are strong. Historically, CapEx intensity is expected to decrease as organic growth investments are largely complete.