Rogers Corporation at Gabelli Symposium: Strategic Market Focus

On Thursday, 20 March 2025, Rogers Corporation (NYSE: ROG) presented at Gabelli Funds’ 16th Annual Specialty Chemicals Symposium. CEO Colin Gouvea outlined the company’s strategic pillars and market-driven approach, emphasizing growth in high-demand sectors such as electric vehicles and data centers. Despite challenges in the industrial sector and inventory issues, Rogers remains optimistic about future growth, leveraging a disciplined capital allocation strategy and local-for-local manufacturing.

Key Takeaways

• Rogers reported 2024 revenue of $830 million and an adjusted EBITDA of $119 million.
• The company is expanding ceramic production in China to meet demand for silicon carbide technology.
• A $20 million stock buyback was completed, with authorization for more.
• Approximately 44% of revenues come from Asia, with over 70% of sales outside the United States.
• Rogers is focused on strategic bolt-on acquisitions with differentiated technology.

Financial Results

• Revenue: $830 million in 2024, with Advanced Electronic Solutions (AES) contributing 54% and Elastomeric Material Solutions (EMS) 43%.
• Adjusted EBITDA: $119 million.
• Net Cash: $160 million.
• Market Cap: $1.4 billion, based on 19 million shares trading at around $75.
• Enterprise Value: $1.3 billion.
• Capital Allocation: Prioritizes organic growth, debt reduction, M&A, and returning cash to shareholders.

Operational Updates

• Strategy: Focuses on market-driven approach, technology development, and synergistic M&A.
• Manufacturing: 15 global facilities supporting local-for-local strategy; expanding ceramic production in China.
• Innovation: Three global innovation centers close to customers.
• Restructuring: Exited underperforming businesses and relocated production to customer-centric geographies.
• Cost Management: Emphasizes footprint optimization and cost reduction.
• Destocking: Addressing inventory issues in elastomerics and ceramic businesses.

Future Outlook

• EVHEV Business: Expected to grow at a 15% CAGR.
• Data Centers: Continued growth anticipated in cooling and high-frequency PCB boards.
• Portable Electronics: Rebound expected in Q3 due to AI-enabled phones.
• Aerospace and Defense: Strong growth area, accounting for 14% of sales.
• Renewable Energy: Continued growth expected.
• General Industrial: Modest recovery anticipated in the second half of the year.

Q&A Highlights

• CEO Tenure: Focused on resetting strategy and stabilizing operations.
• Inventory Reset: Addressing challenges in the ceramic business.
• China Expansion: Investing in ceramic production to meet silicon carbide demand.
• Capital Allocation: Prioritizes organic growth, M&A, and returning cash to shareholders.
• M&A Strategy: Targets strategic bolt-ons with differentiated technology.

For a detailed account, readers are encouraged to refer to the full transcript.

Full transcript - Gabelli Funds’ 16th Annual Specialty Chemicals Symposium:

Operator: Okay. So next, joining us virtually is Rogers Corp. Rogers, based in Chandler, Arizona, is a designer and manufacturer of highly engineered specified electronic materials and components for a wide range of applications used in EVs, advanced driving systems, wireless connectivity, industrial and consumer markets. With 2024 revenue of $830,000,000 adjusted EBITDA of $119,000,000 Rogers operates through two main business units and a small other segments that segment that makes up 2% of sales. The two main segments are advanced electronic solutions, 54% of 2024 sales.

They make engineered materials focused on power electronics and radio frequency, including high frequency laminates, cooling solutions, ceramic substrates, and bus bars. The other, main segment is elastomeric material solutions, EMS, that makes up 43% of sales. They provide high performance polyurethane foams and silicones using EVHEV, general industrial, portable electronics, automotive, mass transit, aerospace and defense, and footwear applications among others. Rogers has 19,000,000 shares outstanding, trading around $75 for around the, 1,400,000,000.0 market cap, net cash of a hundred 60,000,000 for 1,300,000,000.0 enterprise value. Joining us virtually is CEO Colin Gouvea.

Colin was elected president and CEO and director of Rogers in January 2023. He was prior head of the company’s EMS business since 2019. Colin has over three decades of experience in specialty chemicals and materials industries. Prior to joining Rogers, he held various leadership roles at Eastman Chemical, Dow, Roman Haas, and Imperial Chemical. And with that, I’ll turn it over to Colin to start us off with an overview of Rogers, and then we’ll, have a virtual fireside chat.

Colin Gouvea, CEO, Rogers: Thank you, and great to be here. Just wanted to do a sound check to see if people can hear me.

Operator: Yep. We can hear you.

Colin Gouvea, CEO, Rogers: Okay. Great. Well, thanks for having us virtually. Beautiful day here in Arizona. Hopefully, it’s the same, back east.

It’s not. I’ll start off on slide five on the presentation. Okay. So we have some very exciting opportunities here at Rogers I would like to talk about, but I will start with our strategy, which remains unchanged. I have been here just over two years as was mentioned, and when we look at how we’re approaching our strategy, we’re looking at four different pillars.

One is market driven, so everything we do is aligned around leading secular high growth markets and we align our business and our technology development, which is our second pillar around customers and technologies and markets that are growing in spaces where we want to participate. And I’ll talk a little bit about those secular end markets in the presentation. We’ve done a lot of work in the past two years driving and improving all areas of our operational space, including ops, supply chain and procurement. That’s made a big difference in terms of how we’ve moved our gross margin percentage from where it had been to where we want it to get to and it underpins what we’re trying to do. And then finally, the fourth pillar would be synergistic M and A.

So we have a good long track record of bolt on M and A that really fits well in terms of our overall goals and long term strategy. If we go to the next slide, Rogers at a glance, so we’ve actually been a standalone company for more than one hundred and ninety years. We have around 3,200 employees. As was mentioned, our revenues last year were $830,000,000 in 2024. We have 15 manufacturing facilities globally, and I’ll talk about how that fits into our local for local manufacturing strategy a bit more in the presentation.

We also have three specific global innovation centers, so it’s really important for us to do innovation as close to customers as possible. For a company of our size, we actually have quite a large global presence, So I would say roughly 44% of our revenues last year were in Asia, and the remainder were split pretty evenly between The US and Europe. So for a company our size, we have more than 70% of our revenues outside of The United States and that’s highlighted by the last bullet point here. We have over 5,000 customers in over 70 countries globally If we go to the next slide thanks Steve, here is a quick glance at who Rogers is in terms of using the lens of how we solve complex challenges. So I will just take a quick walk around here.

So in the upper left, extend EV range, we have several technologies that go into the EVHEV space that can help extend battery performance, improve charging times, and extend range of vehicles, which is a key CTQ for many of our customers. As I go to around clockwise, the Advanced Safety Autonomous Driving or ADAS, Rogers is actually the market leader in terms of mission critical technology in radars and antennas to enable ADOS to work properly. So that would be, anytime you’re trying to change lanes and you’d have a light go off in your mirror, well, that’s blind spot detection radar. Also, when you’re backing up or trying to park, that’s all driven by radar as well, and, you know, that would be another area where Rogers technology enables that. Staying in the ADAS space, adoptable cruise control, that’s also radar.

When you’re slowed down and emergency braking, you know, is the end result if there’s an issue if you’re coming up too fast on a vehicle in front of you, also enabled by radar, which is enabled by Rogers technology. In terms of high efficiency energy conversion, that would be our rolling technology, laminated bus bars to move high voltage safely in windmill builds or solar builds, renewable energy space, that’s an area where we also participate. As you see improved reliability in industrial technologies, that would be automation, where our ceramic substrate provides the packaging for the semiconductor chips that enable these types of tools and products to work. And then finally, I get to smartphone durability, that would be gasketing and sealing in all types of high end and high performing mobile devices, and then our radio frequency solutions business that also drives our ADOS business has a huge play in radars and antennas that go into critical defense and applications. If we go to the next slide, we won’t spend much time on this, but this is a breakdown of our reportable segments.

Three business units make up our advanced electronic solutions business, and then several brands come together that are primarily silicone or high performing polyurethane foam and they make up our elastomeric material solutions business. If we go to the next slide, I’ll talk a little bit about applications that are driving, you know our sales and how we’re driving innovation into these markets So for electric vehicles all the technologies we produce at Rogers more or less participate in this space It’s about 20% of our sales and there has been a lot of changes recently in terms of subsidies and adoption of electric vehicles, but we’re very confident that electrification is a long term growth platform and we see our business going into this space able to grow in that 15% COGRA range. In the four middle end applications, portable electronics, renewable energy, aerospace and defense and automotive radar, that would be roughly 30% of our sales. And those are also what we consider high growth secular markets. They’re growing in the mid single digit rate and we have strong technology from several of our businesses that participate in these areas.

When you go to the two end applications on the left, that would be our core business, that’s the remaining 45% of our sales. So general industrial would be a wide range of end applications where our total sales into that space would be less than 2% in specific end markets. These would be end markets like semiconductor, HVAC, oil and gas, medical, many other different areas. And then wireless infrastructure is many other different areas. And then wireless infrastructure is related to base stations and antennas for five gs capability and things of that nature.

Those businesses are our core business and they’re more of a GDP type growth business. Steve, if we go to the next slide, I wanted to spend a little bit of time here breaking down in more detail how we participate in EVHEV. So one of our businesses in our electronics business is our ceramic power substrate business. That technology is involved going into power modules, which then go into inverters, and what our ceramic material does is act as the semiconductor chip packaging substrate, where semiconductor chips are packaged directly on our ceramic material, which not only serves as the packaging substrate, but also it is the heat sink that pulls the heat out of those semiconductor chips as they perform their function. And where we see a lot of strong growth is that in inverters, in electric vehicles, and in some cases, industrial, companies are moving from lower performing silicon chips to silicon carbide, and those chips run hotter, so you need to have better energy removal, and that’s where our ceramic substrate really shines versus the competition in terms of being the most efficient and pulling energy out of those chips so that the inverters can work more efficiently.

Another area is in the battery depending on the form factor. It could be pouch, it could be prismatic or cylindrical. We’ve got solutions that go into improving battery performance, also battery connectivity. And, you know, we’re talking from the EMS business side of things, pressure management as these battery cells, particularly pouch and prismatic, swell and contract as they charge and discharge, you need constant pressure to ensure peak performance and to extend battery life, and we have leading technologies in those spaces. And then finally, I can expand just a little bit more, our radio frequency solutions business, which makes copper clad laminates, which are the precursors that go into making automotive radar, we have the leading technology and you can see the number three, it would be corner radars performing all of the activities I mentioned on the previous slide in regards to adaptive cruise control, automatic braking and blind spot detection.

So, these would be some of the areas within the EV space where we participate with our technology. A quick note on ADAS, pretty much every EV car being built these days includes ADAS technology, but we also see growth in the internal combustion engine vehicles as well, where ADOS continues to be adopted further for those types of vehicles just because of the safety profile it enables, and it’s become pretty much standard in many models where perhaps five years ago it was not. It was actually a fairly expensive option. So we see good growth from ADAS in both types of vehicles. Steve, next slide.

I think that concludes at least the prepared remarks for today, Colin. That’s right. So we can just hold on the financial overview. I think that gives us time for the Q and A that we’re planning on doing. And I’ll await the first question.

Operator: Okay. Great. Thanks again, Colin, for carving out some time. I know you, have a lot of meetings going on, but, joining us virtually, we appreciate it. So we’ll open it up for q and a.

I’ll start off, but if there’s any questions from the audience, please feel free to raise your hand. So Colin, we mentioned it a couple of times. You’ve been CEO for two years now. You’ve been operating through challenging markets during that time. Can you take us through what you’ve seen since you took the CEO role?

What’s been done so far to right size operations and improve the cost structure and how you feel about the company today?

Colin Gouvea, CEO, Rogers: Sure. Thanks for that first question. So, yes, I’ve been CEO just over two years, and I took over responsibility for Rogers after, the deal we had in place with DuPont was not taken over the finish line. So there’s been a lot of work in the past two years. I’d say we’ve done work to reset the true north and strategy of the company.

We bolstered the organization by hiring in talent we needed to drive the organization to the next level. In particular, we’ve made a lot of moves around operations, supply chain and procurement that have helped really stabilize and expand the capabilities of those functions within the company. Our balance sheet is in great shape. We’ve managed to pay off all of our debt. We have solid cash flow and a high cash reserve from compared to when I took over.

The top line growth has been a challenge based on the macro headwinds and also related to a lot of inventory challenges coming out of COVID. And so that has been a focus in terms of us revitalizing growing the top line. We see a path forward there, but certainly it’s been a difficult two years based on the macro in that regard. And we’re really continuing to push in all areas to grow the company and improve our performance. I would mention we did a little bit of a portfolio shift where we exited underperforming businesses the first year I was CEO.

We’ve also managed to take cost out in terms of getting our footprint correct in terms of relocating some production to the geographies where the customers were. So I’d say it’s been a pretty busy two years, but there’s more work to do, but we feel like we’re in a good position going forward.

Operator: Okay. And you mentioned the destocking issues that the industry has seen over the past couple of years. And you also mentioned during the presentation the importance of the ceramic product with the shift to silicon carbide. That’s been one area that you continued to see destocking kind of a separate issue from the industry wide issues that we’ve seen. Can you just take us through what’s happened there and what you’re hearing now from the power module customers and when we may see recovery?

Colin Gouvea, CEO, Rogers: Yes, happy to do that. So the destocking issue, I’d break it into two separate issues for us. So in 2023, we had seen a lot of customers really ramp up in terms of rebuilding their inventories and they were over aggressive in that. That was mostly related to our elastomerics business and mostly related to the end markets that we serve, which we call general industrial. In In 2023, our ceramic business actually had its fifth record year in a row in terms of top line sales and also from a profitability standpoint.

What happened in ’twenty four is that we believe the inventory issues for our elastomerics business have been worked through and really it’s just still the sluggish environment in the general industrial space, which has led to modest growth. But from a ceramic perspective, there’s been a large reset in terms of inventory and that’s related to the fact that the ceramic technology goes into ceramic technology goes to the power module producers, who then sell their power modules to the inverter producers. And when you look out at the global landscape, about 80% to 90% of all the world’s power modules are built by about 8% to 10 customers. So those customers have had quite a tough reset this past year. And as a result, all the upstream suppliers in that value chain have felt the same issue.

Those companies would be Infineon, STMicro, On Semi. They’ve been very public in terms of this reset, and it’s been challenging. It has really been going on for about twelve months now, and we still see several more months of inventories needing to normalize before things begin to settle out and return to normal towards the back half of the year. And that’s information coming directly from our customers who are saying the same thing in the public domain.

Operator: While that’s all been going on, you’ve continued to invest in ceramic with the new plant in China adding capacity there. Any changes on the long term growth prospects of that product or your confidence and how you’re feeling about it?

Colin Gouvea, CEO, Rogers: Well, Kremek has been a very strong growth technology for Rogers over the years and we have a lot of confidence in our market leading mission critical technology. This business was acquired by Rogers way back in 2010 and we continue to innovate and drive improvements and we remain the market leader in this category. In fact, the company we acquired and now continue to invest in invented the Kremic technology way back in 1983. So it’s a core product for us. Longer term, we believe electrification is still the right place to be.

With all the market resets, we still see, as I mentioned, a roughly 15% COGRA growth here. And so China remains a key area for us. And what we see in China is a real move towards using the silicon carbide technology in the silicon chip technology versus what’s currently being used. So we have a leading technology that is just the right fit with silicon carbide chips. So that’s actually the product we’re expanding into China with.

So we have good program wins, design in wins, which you see will be quite good for us for the next several years and beyond. And so, you know, we believe that to be competitive long term in China, we need a footprint. And it goes just in line with our strategy, which is one manufacturing site in China and then one manufacturing site in Europe, which helps us secure and sell into both markets. And that’s part of our local for local strategy where as you get into potential tariff issues, we’re able to supply most of the products in the company, if not all, in China from and Asia from facilities produced or from facilities based there. We can also supply and produce most of our product lines and technologies in the West to supply the Western demand.

So we feel like we’re set up quite well with a local for local strategy, depending how things go with tariffs and other issues.

Operator: Okay. Data centers with AI have been, you know, hot topic. Yes. You’ve recently started to mention, your entrance into data centers. Can you go over what products you have there?

What’s the opportunity and maybe other growth areas that you’re excited about as markets normalize?

Colin Gouvea, CEO, Rogers: Sure. Well, data centers certainly is a hot topic for everybody. And we also have technologies in all of our business units that can go into data centers. Really quickly, first from a sealing and gasketing perspective, our elastomeric materials business already has wins in certain data center servers. We also have wins with our silicone tapes business, also in the build of servers, etcetera.

So that’s been a good growth area for us. Where we’re also very excited is in terms of the PCB boards where the semiconductor chips sit, several of the leading companies, chip producers are looking for improved performance in high frequency in the printed circuit board. So we have several laminates that are now in testing with some of the major producers to be the performance layers that go into the PCB stack. And that’s also a good growth area for us that we’re strongly leveraging with our RF solutions technology. And then finally, longer term, energy consumption cooling is a big unmet need.

What happens as these data centers expand, increase in power, so from our ceramic technology, we’re experts in cooling, and so longer term, we’ve got several programs going on the ceramic side to help solve that unmet need as the power required to cool these data centers increases. So those would be some of the areas that get us excited about data centers. And then I would also say in terms of other areas, aerospace and defense remains a strong area before us, That’s about 14% of our sales. We see portable electronics having a rebound year this year as consumers become more interested and better understand the value proposition of AI enabled phones where we have strong content. So those are some areas, renewable energy will continue to grow for us.

And of course, the EVHEV space, while it’s had its share of challenges, we still believe it’s a great place to be this coming year and into the medium and long term.

Operator: Yeah. And on EVHEV, you mentioned some of the components you have for for batteries. We saw BYD announce, the holy grail for EVs with the ability to fully charge in five minutes.

Colin Gouvea, CEO, Rogers: We saw that.

Operator: Kind of making it comparable to being at a gas station. We know you can’t discuss specific customers, but how could Roger benefit from that? And what components do you have that could go into that technology for growth?

Colin Gouvea, CEO, Rogers: Sure. Well, if you’re talking about faster charging, it’s higher voltage to charge the battery more quickly. So in that case, wire and cable in the vehicles may need to be replaced and we look for design in wins with our Rolinc’s high performance bus bars. Also, those types of materials, the Rolinc’s laminated bus bars, go into the charging station themselves because it’s quite high voltage to charge that quickly. The second area where Rogers would participate is in the battery itself with materials that go into pressure management.

As cells are charged or as they expend energy, they swell and contract and you need constant pressure on these cells so that the electrolyte inside the battery is not damaged by the swelling and contracting. So, constant pressure management prevents that from happening. And as these batteries charge faster, pressure management could even be more important and that’s right in our power alley in terms of our technology. So those are two areas that come to mind and we’ve seen what BYD has said and we’re certainly interested to have them share more on this. And of course, it’s quite the target for all automotive producers.

Faster charging is a key unmet need for a lot of consumers.

Operator: Thanks. And then on tariff and trade implications, I know you’re mainly for local, but how are you managing through those headlines? And any can you go over any potential direct or indirect impacts for Rogers?

Colin Gouvea, CEO, Rogers: So it goes back to our local for local production strategy and we feel like that’s the best way to mitigate this risk. We’ve always needed to be close to our customers, so we could execute more quickly on their orders, reduce delivery time and have a more efficient supply chain. And as things evolve, we’ve continued to expand and drive that local for local approach. So as I mentioned earlier, we more or less have our manufacturing footprints set to produce all our technologies outside of China for the West and then in China for Asia. We’ll continue to monitor the situation.

It’s quite dynamic. It changes every day. But we feel like overall, we’re in a good position compared to our competition in terms of being able to mitigate anything that might happen in regards to tariffs.

Operator: Then, you gave Q1 guidance on the last call. You mentioned it here that you’re expecting a pickup in the back half. We’re hearing that from a lot of companies. It’s kind of same situation as 2024, where we’re seeing tepid first half and expecting a recovery in the second half. What’s giving you more confidence this year that we’re going to see recovery and return to volume growth?

Colin Gouvea, CEO, Rogers: Couple of things I would point to. First, our portable electronics business, which is 7% to 8% of our revenues, it really begins to pick up quite strongly in Q3. Q3 is always the strongest quarter for portable electronics as ODMs begin their builds for the end of year holidays. The second thing we point to is what I mentioned earlier on power module customers. So they all see after a difficult reset in inventory, this should be finishing up and normalizing and returning to growth in the second half of the year.

So that’s also baked into our assumptions. We also are anticipating from talking to our customers a modest recovery in general industrial, which we see that’s also been a long time coming. That could be a risk, however, based on how things develop in terms of trade policies. So that’s something we can’t control, but we’re certainly paying close attention to. But those would be some of the reasons and assumptions for seeing an increase in uptick in our second half.

Operator: Okay. Then, there’s any questions in the room? Otherwise, we have time for maybe one more. So you mentioned you became CEO right after the merger agreement with DuPont was terminated, $277 per share. Do you think anything’s changed or is there still a fit there or could you envision any larger M and A in the sector, in this environment with Rogers being in the mix?

Colin Gouvea, CEO, Rogers: Sure. I would say from our perspective, our M and A strategy is really for strategic bolt ons or tuck ins. Companies that have highly differentiated technology that follow our value creation model, meaning calling directly on OEMs, on the engineers at the OEMs getting locked in on design prints with differentiated technology. And so the revenues of those types of companies would be in that $50,000,000 to $75,000,000 could be slightly higher, if we found just the right fit. And our M and A pipeline is quite good.

We have a lot in front of us, but you know, the deals are just starting to happen. It’s been not what I would call a buyer’s market recently. In terms of a bigger deal, I think, you know, as we did with the DuPont deal, you know, we’re not for sale, but if anything could happen in terms of an offer, our board, it would be their fiduciary responsibility to review it. But currently, we’re on track with the strategy I presented in the beginning of the presentation.

Operator: Okay. And then just maybe one more since you spoke about the M and A strategy at Rogers.

Colin Gouvea, CEO, Rogers: Sure.

Operator: There’s cash on the balance sheet about $160,000,000

Colin Gouvea, CEO, Rogers: Yes.

Operator: What areas are you focused on specifically? And how do you weigh that against share repurchases with the stock price where it is right now?

Colin Gouvea, CEO, Rogers: Sure. Our capital allocation strategy typically has been expanding capacity for organic growth and we’ve had a higher cadence of CapEx over the past several years and we feel like we’ve got the capacity now in place for several years now. So that spending on organic growth has decreased. The second thing is pay down debt, we’ve taken care of that. And then the third would be M and A.

The fourth would be return cash to shareholders. So we’re careful. We did buy back $20,000,000 worth of stock this past year. We have authorization from the Board to do a lot more than that going forward. But with what’s in front of us, we’ll carefully analyze the best return to shareholders, be it M and A or buyback.

And that’s how we would make the choice. It would be what’s our strategy and then what are the financials look like in terms of where we would put that cash to work.

Operator: Okay. Well, that’s our time, Colin. We really appreciate you making some time for us virtually. Hopefully, we’ll get you next year in person, but we

Colin Gouvea, CEO, Rogers: That’d be great.

Operator: Which is the best of success at Rogers.

Colin Gouvea, CEO, Rogers: Okay. Well, thank you so much for the time. Really appreciate it. Thank you.

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