Release Date: April 29, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rogers Corp (ROG, Financial) achieved new design wins in key areas, including silicone technology for inverters in industrial, renewable energy, and EV/HEV markets.
- The company has implemented significant cost-saving measures, expecting $25 million in savings for 2025 with a run rate of $32 million.
- Rogers Corp (ROG) is expanding its curamik opportunity pipeline in China, with a new facility set to ramp production in mid-2025.
- The company has a strong balance sheet, with cash increasing by $16 million in Q1, providing flexibility for capital deployment.
- Rogers Corp (ROG) is focused on maintaining a strong balance sheet and has reduced its CapEx intensity, expecting to spend $30 million to $40 million for the full year 2025.
Negative Points
- Q1 sales were slightly lower sequentially, primarily due to foreign exchange rate changes and seasonality in the portable electronics market.
- The company faces challenges from tariffs, particularly with shipments of work-in-process materials from the US to China.
- Gross margin decreased by 220 basis points from the fourth quarter, impacted by utilization headwinds and unfavorable product mix.
- EV/HEV sales declined in both the AES and EMS business units, with curamik power substrate sales remaining soft.
- The current trade and tariff environment creates uncertainty for global economic growth, impacting Rogers Corp (ROG)'s sales outlook for the second half of the year.
Q & A Highlights
Q: How much of the $25 million cost savings expected in 2025 is included in the Q2 guidance, and will the $32 million annualized savings be used for margin improvement or reinvestment?
A: Laura Russell, Senior Vice President and CFO, explained that most of the Q2 savings are from workforce reductions, with manufacturing savings expected in the second half of the year. Approximately $2 million in savings is expected for Q2, primarily aimed at margin improvement.
Q: Given the current visibility challenges, do you expect Q3 to be the strongest quarter again this year, particularly for the bottom line?
A: R. Colin Gouveia, President and CEO, noted that Q3 strength will depend on portable electronics ramping and inventory issues in the power module market resolving. However, geopolitical uncertainties, such as tariffs, could impact this outlook.
Q: What is the tone of customer conversations regarding tariffs, and are there any potential impacts on business?
A: Colin Gouveia stated that customer dialogues have been constructive, with a focus on cooperation to mitigate tariff impacts. Customers are resilient and willing to work with Rogers to find solutions, despite the uncertainty.
Q: Can you provide more details on the curamik opportunity pipeline in China and its development?
A: Colin Gouveia mentioned that the curamik facility in China is progressing well, with production expected to start mid-year. The opportunity pipeline is balanced between Western and Chinese OEMs, with several design wins anticipated. However, the global power module market remains sluggish.
Q: What are the expectations for free cash flow this year, and how will working capital be managed?
A: Laura Russell highlighted that the company increased its cash balance in Q1, demonstrating resilience in liquidity. While specific guidance for the full year wasn't provided, the focus remains on maintaining a strong balance sheet and prudent capital allocation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
