Earnings call transcript: Rogers Corp. Q2 2025 misses EPS, stock dips

Rogers Corporation reported its Q2 2025 earnings on July 31, revealing a mixed financial performance. The company posted an earnings per share (EPS) of $0.34, missing the forecasted $0.50 by 32%. Despite this, revenue exceeded expectations, reaching $202.8 million, surpassing the forecasted $198.75 million. In response, Rogers’ stock fell by 1.23% in after-hours trading, closing at $66.4. According to InvestingPro analysis, the stock appears undervalued at current levels, with analysts maintaining a strong buy consensus. Want deeper insights? InvestingPro offers comprehensive analysis with 8 additional key tips for Rogers Corporation.

Key Takeaways

• Rogers Corp. missed its EPS forecast by 32%, reporting $0.34 against a projected $0.50.
• Revenue exceeded expectations, reaching $202.8 million, a 2.04% surprise.
• The stock price dropped by 1.23% in after-hours trading.
• The company is focusing on restructuring and cost-saving measures.
• Strong growth anticipated in China’s EV market, while North America and Europe face downgrades.

Company Performance

Rogers Corporation showcased a mixed performance in Q2 2025. Sales increased by 6.5% quarter-over-quarter, indicating a positive trajectory. However, the company reported a net loss of $73.6 million, or $4 per share, primarily due to restructuring efforts and market challenges. The gross margin improved to 31.6%, up by 170 basis points from the previous quarter, reflecting operational efficiencies.

Financial Highlights

• Revenue: $202.8 million, exceeding forecasts and up from previous quarters.
• Earnings per share: $0.34, below the forecast of $0.50.
• Gross margin: 31.6%, an improvement from Q1.
• Cash balance: Decreased to $157 million after $28.1 million spent on share repurchases.

Earnings vs. Forecast

Rogers Corp. reported an EPS of $0.34, missing the forecasted $0.50 by 32%. In contrast, revenue came in at $202.8 million, surpassing expectations by 2.04%. This mixed result highlights the company’s challenge in balancing profitability with revenue growth.

Market Reaction

Following the earnings announcement, Rogers’ stock declined by 1.23% in after-hours trading, closing at $66.4. This movement reflects investor concerns over the EPS miss, despite the revenue beat. The stock remains within its 52-week range, with a high of $121.87 and a low of $51.43. InvestingPro data reveals the stock has experienced a significant 29.52% decline over the past six months, suggesting potential value opportunity. For comprehensive analysis of Rogers and other undervalued stocks, explore InvestingPro’s Most Undervalued stocks list.

Outlook & Guidance

Looking ahead, Rogers Corp. provided guidance for Q3, expecting revenue between $200 million and $215 million, with an adjusted EPS projected between $0.50 and $0.90. The company remains focused on organic growth and operational improvements, with a full-year tax rate estimated at approximately 30%. Two analysts have recently revised their earnings estimates upward for the upcoming period, according to InvestingPro data, with consensus forecasts suggesting profitability for the full year.

Executive Commentary

Interim CEO Ali Elhaj emphasized the company’s global strategy, stating, "We are building a global company with local experts." He also expressed optimism about future growth, noting, "We anticipate to have meaningful growth quarter after quarter."

Risks and Challenges

• Pricing pressure in power substrates, losing market share to Asian manufacturers.
• Restructuring costs, projected at $12-20 million over 2025-2026.
• Regional EV market growth disparities, with downgrades in North America and Europe.
• Supply chain adjustments in response to manufacturing capacity rebalancing.

Q&A

During the earnings call, analysts inquired about lead time reduction strategies and the company’s approach to accelerating product development. Management clarified their focus on execution speed and cumulative cost savings, aiming to enhance operational efficiency.

Full transcript - Rogers Corp (ROG) Q2 2025:

Sean Malley, Conference Operator: Good afternoon. My name is Sean Malley, and I will be your conference operator today. At this time, I would like to welcome everyone to the Rogers Corporation Second Quarter twenty twenty five Earnings Conference Call. I will now turn the call over to your host, Mr. Steve Haymore, Senior Director of Investor Relations.

Mr. Haymore, you may begin.

Steve Haymore, Senior Director of Investor Relations, Rogers Corporation: Good afternoon, and welcome to the Rogers Corporation’s second quarter twenty twenty five earnings conference call. The slides for today’s call can be found in the Investors section of our website along with the news release that was issued earlier today. Please turn to slide two. Before we begin, I would like to note that statements in this conference call that are not strictly historical are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and should be considered as subject to the many uncertainties that exist in Rogers’ operations and environment. These uncertainties include economic conditions, market demands and competitive factors.

Such factors could cause actual results to differ materially from those in any forward looking statement made today. Please turn to slide three. The discussion during this conference call will also reference certain financial measures that were not prepared in accordance with U. S. Generally Accepted Accounting Principles.

A reconciliation of those non GAAP financial measures to the most directly comparable GAAP financial measures can be found in the slide deck for today’s call, which are available on our Investor Relations website. With me today are Ali Elhaj, Interim President and CEO Laura Russell, Senior Vice President and CFO and Jeff Tsao, President of the Advanced Electronic Solutions Business Unit. I will now turn the call over to Ali.

Ali Elhaj, Interim President and CEO, Rogers Corporation: Thank you, Steve. Good afternoon, everyone, and thank you for joining us today. First, let me say that I appreciate the opportunity to step in as the interim CEO role at Rogers. Over the past several months, I have directly observed the talent and capability of the global Rogers team as well as the many compelling opportunities that are ahead. There are challenges that need to be addressed.

However, I’m excited to lead the organization and leverage my prior experience to help improve the company’s performance. Over the past thirty plus years, I have gained significant experience leading both private equity owned businesses and divisions of public companies. Like Rogers, these companies have been global manufacturers of highly engineered materials and products that have competed in similar end markets such as automotive and industrial. At each of these companies, I have demonstrated the ability to deliver growth in both sales and profitability. I look forward to working with the executive leadership team and employees globally to do the same at Rogers.

Now turning to Slide four. First, I want to emphasize to our shareholders that Rogers’ core capability and strengths are intact. The recent leadership transition does not signal a major change in strategy or a deterioration of our competitive advantages. Rather the changes are needed to increase the speed of execution, improve accountability and create a more dynamic organization to accelerate growth and improve margins. Next, the performance of the AES ceramic business has been affected in recent quarters by a rapidly evolving EV market.

I will cover how we are responding to the market driven changes facing this business and the actions we are taking to address them. Turning to our Q2 results, our sales, gross margins and adjusted EPS were all within guidance ranges. Sales increased by 6.5% from the prior quarter led by a stronger industrial portable electronics, A and D and ADAS end markets. We look ahead to Q3 and we expect a more modest increase in revenue. However, gross margin and adjusted EPS should see stronger increases due to our ongoing cost and expense containment initiatives.

Laura will cover both the Q2 financials and third quarter outlook in more details. Next on Slide five. Here are the key elements that provide a strong foundation for Rogers’ future success. For many years, Rogers has been a trusted partner by leading OEMs globally. They value Rogers’ design capabilities, proven reliability and broad portfolio of products.

As a customer focused company, we will continue to build on these values in all areas of our business. Rogers’ technical capabilities also remain a strength for the company. Our sales engineers and technical service organizations are critical to our success. They leverage their deep expertise to assist our customers in finding the right materials and solutions for their specific applications. Rogers’ greatest strength is its employees.

As I have had the opportunity to meet many of the Rogers team around the world, I have been impressed at the talent and commitment they bring to work each and every day. We will continue to invest in the development of our employees and their success. Finally, Rogers global reach and footprint continues to be a strength and social differentiation. We have manufacturing and technical expertise in every major region of the world to provide high levels of support to our customers. We are building a global company with local experts.

Next on Slide six, I’ll highlight some of the changes happening in the global electric vehicle market. Over the past eighteen months, we have seen a sharp divergence in the regional growth rates for EV production and sales. In North America and Europe, projections for EV growth have been downgraded over time by millions of units. This resulted in both a significant inventory correction and a stagnation of production levels in these regions. In contrast, EV production in China has remained on track to projections and unit volumes have grown rapidly.

This change in regional growth rates has altered the competitive landscape for Coramix direct customers. Power module manufacturers in Asia and specifically China have capitalized on the fast growth in their home market and have been able to capture large share from Rogers’ traditional customers. Also with intense global EV competition and consistent with typical trends in the auto industry, power substrates are facing pricing pressure. As a result of these market changes, we experienced lower demand than originally forecasted and we are adjusting the ceramic business accordingly. Turning to Slide seven.

In support of our local for local manufacturing strategy, we are rebalancing our capacity between Europe and China. As recently announced, we are taking meaningful actions to right size the ceramic business. With lower growth in the EV market outside of China, it is necessary that we have a cost competitive footprint in each region. Our plans include ramping up manufacturing and capabilities in China and reducing capacity in our European operations. The full year run rate savings from these actions are projected to be in excess of $13,000,000 Our Suzhou factory combined with a localized supply chain will afford us a global competitive advantage.

Customer qualification work at this facility is continuing and we expect to ramp up production in the coming months. We continue to see good traction with additional design wins in the local market. Indeed in the second quarter, our AMB substrates were designed into a key EV platform by one of the leading Chinese power module manufacturers. The new facility also expand opportunities in industrial and renewable energy end markets. We continue to believe that electrification will provide compelling market opportunities ahead.

Executing on this strategy will be key to competing effectively in all regions and enabling our growth in the EV market. We are also focused on growing across our other key end markets. Laura will highlight the growth we saw in Q2, especially in industrial, aerospace and defense and ADAS. In industrial, our primary markets are showing signs of recovery and remain a major focus area. We have identified several growth opportunities such as battery energy storage systems and data centers.

In data centers, sales today are small, but we are actively engaging with customers to help them address thermal vibration management and signal integrity challenges. In AMD, we expect the demand from both U. S. And European primes will continue to be strong and we are working to secure additional wins. In the ADAS market, there are compelling growth opportunities as vehicles move to higher levels of autonomy.

We are making progress with design wins in new regions and our new introduced laminate materials which build on our proven performance while reducing manufacturing costs for our customers. I’ll turn it over to Laura to discuss our Q2 financial performance and Q3 outlook.

Laura Russell, Senior Vice President and CFO, Rogers Corporation: Thank you, Ali. Along with Rogers’ Board of Directors and employees, I have a great deal of confidence in Ali’s leadership abilities. I look forward to partnering together to drive improved results for our shareholders. I’ll begin on Slide eight with a summary of our Q2 results. Our key financial metrics for the quarter were within our previously announced guidance expectations.

Sales were above our expected midpoint as we saw increased demand across most end markets. AES revenues increased by 4.6% and EMS revenues were 8.2% higher on a quarter on quarter basis. On a GAAP basis, we recorded a net loss of $73,600,000 or $4 per share. This was inclusive of 4,300,000 of restructuring costs and a non cash impairment charge of $71,800,000 related to goodwill and other intangible assets for the ceramic business. As Ali referenced, market and competitive dynamics in the EV space have rapidly shifted in recent quarters.

These changes resulted in a lower outlook for ceramic, which triggered the impairment. With the expansion of our local manufacturing capabilities and the cost reduction initiatives we announced, we believe that we can meaningfully improve the performance of ceramic relative to current label. Adjusted earnings per share in Q2 increased to $0.34 from the $0.27 in Q1 as a result of the improvement in sales and gross margin. On Slide nine, I’ll discuss our sales for the second quarter by end market. Industrial markets had the strongest performance in Q2 increasing at a double digit rate versus the prior quarter.

General industrial sales and EMS increased across multiple product lines and regions. AES industrial sales were also higher with stronger industrial robotic and automation demand. Aerospace and defense sales were also higher in both AES and EMS operating segments. AES defense sales improved slightly and EMS commercial aerospace sales rebounded after a decline in Q1 related to customer order timing. ADAS sales increased for the third consecutive quarter as we continue to see traction with existing customers and grow business in Asia.

Portable electronics also increased at double digit rate versus the prior quarter consistent with expected seasonal growth. Turning to Slide 10, Q2 gross margin was 31.6%, an increase of 170 basis points from the first quarter. The improvement in gross margin was driven by higher sales and favorable product mix. The impact of tariffs on gross margin was relatively small in Q2 given the de escalation of rates between The U. S.

And China in the quarter and also as a result of our mitigation efforts. Gross margin was below the midpoint of our guidance range for two primary reasons. First, we had a material write off related to our Belgium facility, which ceased production in Q2. Second, there was an impact from underutilization at our ceramic Germany factory, which we are addressing with our planned cost reduction action. Adjusted EBITDA improved to CAD23.9 million or 11.8% of sales.

This resulted from the higher gross margin partially offset by an expected increase in adjusted operating expenses. Continuing to Slide 11, I’ll next discuss cash utilization for the quarter. Cash at the end of the second quarter was CAD157 million, a decrease of CAD18.4 million from the end of the first quarter. Our cash balance decreased in Q2 due to $28,100,000 of share repurchases. Capital expenditures were $8,100,000 in Q2 and included ERP implementation, maintenance CapEx and residual investments in new capacity.

Consistent with my comments last quarter, our investments and previously announced new capacity are largely complete. Naturally, we will continue to evaluate targeted investments to optimize our organic business performance. Returning capital to shareholders will remain a high priority. We will continue to balance this objective against evolving trade dynamics and cash costs for European restructuring activities. Based on our current view, we anticipate share repurchases in Q3 to be in a similar range to the second quarter.

Following our purchases in Q2, we have approximately $76,000,000 remaining on our existing share repurchase program. Synergistic bolt on M and A continues to be part of our long term strategy. However, during this transition, the focus will be on organic growth. With that said, evaluation of target opportunities with the right product and regional fit will continue to ensure we can capture any target meeting our investment criteria. Next on Slide 12, I’ll review our guidance for the third quarter.

Beginning with sales, we expect Q3 revenues to be between CHF 200,000,000 and CHF $215,000,000 with a midpoint of the range of 2% increase in sales versus the previous quarter. The guidance assumes seasonally stronger portable electronics and a modest recovery in ceramic for EV. ADAS sales are anticipated to be down from a seasonally lower auto production. We are guiding gross margin to be in the range of 31.5% to 33.5% or a 90 basis point improvement at the midpoint of our range. The guidance assumes that tariff policies in place today will remain unchanged for the quarter.

The improvement in our forecasted gross margin from 4Q3 is due to volume and product mix benefit. We expect adjusted operating expenses to decrease from the second quarter as a result of lower compensation expense and our continuing focus on discretionary spending. EPS is projected to range from breakeven to $0.40 of earnings. The adjusted EPS range is $0.50 to $0.90 of earnings. Adjustments to arrive at our non GAAP EPS are mainly comprised of severance related to the recent executive management departures and restructuring costs related to operations in Europe.

This includes some initial estimated charges for the ceramic restructuring actions announced today. We expect the total restructuring costs associated with the ceramic European operations to be in the 12,000,000 to $20,000,000 range and incurred over the period from 2025 to ’26. The cost savings associated with these actions are projected to be greater than 13,000,000 on an annual run rate basis and are mainly cost of sales. The savings from these actions will be incremental with the full run rate savings potential beginning in 2026. These are in addition to the $32,000,000 of annual run rate savings communicated last earnings call.

Lastly, on current visibility, we project our full year tax rate to be approximately 30%. I will now turn the call back over to Ali.

Ali Elhaj, Interim President and CEO, Rogers Corporation: Thank you, Laura. Let me conclude on Slide 13 with key priorities. Management is focused on simplifying how we operate by empowering our employees, leading to faster decision making and improved speed of execution. With this enhanced agility combined with a strong customer focus and new product introductions, we are confident in our ability to accelerate growth. That concludes our prepared remarks.

I will now turn the call back to the operator for questions.

Sean Malley, Conference Operator: Thank you. We will now be conducting a question and answer session. For questions. Our first question comes from the line of Daniel Moore with CJS Securities. Please proceed with your question.

Daniel Moore, Analyst, CJS Securities: Good afternoon, Ali and Laura. Thanks for taking the questions. Perhaps we just I’ll pick up where you just left off. But beyond the 13,000,000 restructuring targeted cost savings, maybe Ali just talk about your kind of top two or three priorities, either strategic or financial as we think about the next six to twelve months.

Ali Elhaj, Interim President and CEO, Rogers Corporation: Dan, as mentioned earlier, think strategically, first of all, we have a lot of cost initiatives internally that we were working on operational improvements internally that we need to to continue to focus on and improve. And that’s why we made the changes that we’ve made in the organization to speed up the execution and be able to to realize, you know, a much more dynamic organization that’s gonna be responsive to the customer and be able to to, you know, respond faster, be able to deliver, you know, in lower lead time or shorter lead times and stuff like this. This is critical for our current business and as well as as growth opportunities. So that’s one. The second one is again on the top line, we did identified a lot of opportunities short term, midterm and long term.

So the focus will be again, priorities will be on the short and midterm and we continue to pursue those opportunities to be able to impact the third and hopefully beyond that quarter’s top line revenues.

Daniel Moore, Analyst, CJS Securities: Helpful. And maybe I’ll ask a two and a two way and keep it to two questions. But you mentioned sequential growth several times. You also mentioned the focus will be on organic growth near term. What are the keys to getting back?

And when do you expect to get back to consolidated organic revenue growth on a year over year basis? And how do you think about kind of reasonable midterm, say one to two year gross margin targets given the updated outlook for ceramic? Thank you.

Ali Elhaj, Interim President and CEO, Rogers Corporation: Yes. With regard to top line growth, again, we’re really being aggressive. Our efforts will be the whole organization is going to be focused on doing so. And we anticipate to have meaningful growth quarter after quarter. As you know, we have guidance for the next quarter.

We cannot go beyond that company policy, but but we our expectation, we will see strong results going forward. Yep. And I’ll turn it to to Laura for the balance of the go ahead.

Laura Russell, Senior Vice President and CFO, Rogers Corporation: Yes. Yes. So, hi, Dan. Let me comment on the margin expansion target. So, as Ali said, the organization heavily focused on top line expansion and execution of the opportunities that we see in front of ourselves.

If we can execute that expansion, that utilization and benefit to the capacity that we already have invested in and have ready and available globally, will assist us in expanding our margins versus how we’re performing today with a challenge top line performance level. In addition to that, this year, we’ve announced a significant cost savings that we’ve undertaken and to manage during this environment. And as Ali said, we’ve already announced in today’s comments and additional restructuring. So that will also assist us in leveraging and optimizing our margins on a go forward basis.

Steve Haymore, Senior Director of Investor Relations, Rogers Corporation: We can go to the next question, please.

Sean Malley, Conference Operator: Thank you. Our next question comes from the line of Craig Ellis with D. Riley Securities. Please proceed with your question.

Craig Ellis, Analyst, D. Riley Securities: Yes. Thanks for taking the question. Ali, welcome. I wanted to start just going back to something that you emphasized both in the beginning of your prepared remarks and then at the end when you summarized key priorities and it was speed of execution. And what I was hoping you could do is give us some specific examples of where you think accelerating speed of execution can make a big difference for Rogers, whether it be in product development and changes to the way you met the company manages fulfillment, other aspects of how you’re bringing value to the customer?

What is it specifically that you’re looking for? And how much improvement do you need for this business to really in your eyes?

Ali Elhaj, Interim President and CEO, Rogers Corporation: Yes. Thank you, Craig. I think one example that I can give you with regard to speedy kind of change the company performance to be able to deliver faster. If you look at our lead time in some of our product lines, it just it is not acceptable in today’s market conditions. We just need to be faster.

So we’re trying to take our current lead times in some product lines and some plants from whatever today that number is and try to to bring it down by 50 to 60%. So be able to deliver faster, you know. If the customer needs it tomorrow, they need to have it tomorrow or not, you know, three or four days from now. This is something we need to to to work on. We have not, you know, been doing a great job with it in the past.

I think going forward, you will see a significant change in that. Customers will see that or realize that. The second part that we’ve talked about, we have a significant number of new products next generation type products that we intend to launch and deliver over the next quarters, not one quarter, but over the next coming quarters. And I think we need to accelerate that development process. So by focusing the R and D organization and making sure that the whole company is focused on this becomes part of the normal operating process of the company, not in a silo by itself and then working by themselves.

So I think doing these two things, we’ll be able to deliver faster prototypes to the customers so that they can put those in their new product development. We’ll be able to win programs faster and deliver faster.

Craig Ellis, Analyst, D. Riley Securities: That’s really helpful. The second question will be for Laura. Laura, we had previously had in place a 25,000,000 cost reduction effort that I think by the end of this year was going to be on a $32,000,000 run rate. And today, I believe we’ve talked about an incremental $13,000,000 So am I right in saying that if we’re talking about $13,000,000 and if we were to look out to next year, the 13,000,000 and the $32,000,000 run rate exiting this year would mean that we’re talking about around 45,000,000 in cost savings as we look at 2026? And if that’s so any color on the slope of the line?

And if that’s not right, please correct me with those numbers. Thank you.

Laura Russell, Senior Vice President and CFO, Rogers Corporation: Sure, Sure, Craig. So you’re right, what we discussed in our last call was a 26 savings benefit of $32,000,000 relative to how we exited 24,000,000 What we’ve announced today was the restructuring and economic operations in Europe is an incremental 13,000,000 to that amount. So cumulatively, you’re creating your observation of 45,000,000. What I would say though is the timing wouldn’t fully manifest in full year ’26. At the moment and based on our planning assumption and we would anticipate to start seeing the $13,000,000 which is an annual amount crystallizing savings through the P and L likely in the ’26.

And as we go through the process and evaluate that further, if there’s any material change naturally we’ll provide update.

Craig Ellis, Analyst, D. Riley Securities: Got it. Thank you.

Laura Russell, Senior Vice President and CFO, Rogers Corporation: Of course.

Sean Malley, Conference Operator: Thank you. And we have reached the end of the question and answer session. And this also conclude concludes today’s conference, and you may disconnect your lines at this time. We thank you for your participation.

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