Key Highlights

  • Adjusted diluted EPS was $1.39, up from $0.90 a year earlier, and GAAP diluted EPS was $1.26.
  • Net sales were $236.1 million, up 9.3% year over year.
  • Gross margin was 34.2%, up 70 basis points, and adjusted EBITDA margin was 20.2%, up 300 basis points.
  • Free cash flow was $35.4 million, up from $21.2 million a year earlier.
  • Fourth-quarter guidance is sales of $215 million to $225 million and adjusted EPS of $0.90 to $1.10.

Rogers Earnings: Did the Third Quarter Beat, and What Is the Fourth-Quarter Guide?

Rogers (NYSE:ROG) reported third-quarter results on Tuesday, October 27, with adjusted diluted EPS of $1.39, up from $0.90 a year earlier and $0.92 in the second quarter. GAAP diluted EPS was $1.26, compared with $0.48 a year ago. The screen showed an estimate of $1.19, a surprise of 16.48% as screened.

Net sales were $236.1 million, up 9.3% from $216.0 million and up from $216.8 million in the second quarter. Fourth-quarter guidance is net sales of $215 million to $225 million, gross margin of 32.5% to 33.5%, adjusted EPS of $0.90 to $1.10 and adjusted EBITDA of $37 million to $43 million.

Rogers makes engineered materials used in electric and hybrid vehicles, automotive safety and radar, mobile devices, wireless infrastructure, renewable energy and industrial equipment. Management said the quarter reflected improved execution, closer customer engagement and a more efficient operating structure.

Rogers Margins: What Drove Operating Income to Double?

Gross margin was 34.2%, compared with 33.5% a year ago and 32.5% in the second quarter, and gross profit was $80.7 million. Operating income was $30.1 million, up from $15.7 million, as restructuring and impairment charges fell to $1.0 million from $7.1 million. Selling, general and administrative expense was $42.6 million and research and development was $7.0 million.

Net income was $22.6 million, versus $8.6 million. Adjusted EBITDA was $47.7 million, up from $37.2 million, and the margin rose to 20.2% from 17.2%. The adjusted EPS bridge adds $0.15 for intangible amortization and $0.06 for restructuring, less $0.08 for tax effects.

Sales growth was concentrated in electronics and communications and in automotive, and currency added $2.4 million. Nine-month sales were $653.4 million, up about 7.2%, with net income of $40.7 million against a loss of $66.4 million.

Rogers Cash Flow and Balance Sheet: How Much Firepower Does the Quarter Leave?

Operating cash flow was $41.4 million, up from $28.9 million, and capital spending was $6.0 million, leaving free cash flow of $35.4 million. Full-year capital expenditures are guided to $30 million to $35 million. The company repurchased $9.3 million of shares in the quarter.

Cash was $206.1 million and short-term investments were $30.3 million, together up $25.0 million from the prior quarter. Receivables rose to $155.4 million from $130.6 million at year-end, while payables rose to $63.3 million from $42.9 million. Shareholders' equity was $1.22 billion and goodwill was $303.0 million.

Rogers Fourth-Quarter Guide: What Should Investors Watch Next?

At the midpoint, the guide implies sales of $220 million, about 6.8% below the third quarter, and adjusted EPS of $1.00 against $1.39, as calculated. Management still expects further year-over-year improvement in the fourth quarter. The release gave no segment breakdown and no full-year sales or earnings guidance.

Watch for the pace of automotive and communications demand, the gross margin range of 32.5% to 33.5% against 34.2% in the third quarter, and the effect of tariffs and trade policy, which the release cited only as a risk.