Exhibit 99.1
Rogers Corporation Reports Second
Quarter Results
ROGERS, Conn.--(BUSINESS WIRE)--Aug. 6, 2007--Rogers Corporation
(NYSE:ROG) today announced that for the second fiscal quarter of 2007,
the Company lost $0.26 per diluted share, compared to earnings of
$0.23 per diluted share in the second quarter of 2006. This year's
second quarter loss included restructuring charges of $12.9 million or
$0.47 per diluted share. In the second quarter of 2006, the Company
recognized impairment charges of $11.3 million or $0.52 per diluted
share. Excluding these charges, non-GAAP net income for the second
quarter was $0.21 per diluted share, slightly above the revised
guidance provided on June 27, 2007, compared to non-GAAP net income of
$0.75 per diluted share for the second quarter of 2006. A
reconciliation of GAAP to non-GAAP earnings for the second quarter of
2007 and 2006 is included at the end of this release.
Net sales in this year's second quarter were $99.0 million,
compared to $104.8 million in the second quarter of 2006. This is
slightly above the Company's June 27, 2007 revised guidance of $95 to
$97 million.
On June 27th, the Company reported it might incur restructuring
and impairment charges as a result of a change in business conditions
and future outlook associated with two of the Company's product lines.
After careful evaluation, the Company determined that the initiatives
taken in the second quarter of 2007 did not result in impairment
charges; however it did incur restructuring charges of $12.9 million
or $8.0 million net of taxes. Of the $12.9 million, approximately $7.1
million is attributable to the Durel Division of the Custom Electrical
Components reportable segment and approximately $2.7 million is
related to the Flexible Circuit Materials portion of the Printed
Circuit Materials reporting segment. The remainder of the charges of
approximately $3.1 million primarily relate to severance associated
with the company-wide work force reductions. As a result of these
restructuring activities, the Company also expects to incur additional
charges of approximately $2.7 million spread over the next three
quarters.
Robert D. Wachob, Rogers' President and CEO commented; "By the end
of the second quarter, all production for Durel electroluminescent
(EL) lamps for the portable communications market was in China. By the
end of this year we expect to have substantially all EL, including our
automotive lamp production, in China. This change in production
locations will significantly reduce our cost structure and we
anticipate a return to profitability in the Custom Electrical
Components segment in 2008. On the flexible materials side, we are
currently evaluating our strategic options for this business going
forward."
Printed Circuit Materials
Sales of Printed Circuit Materials totaled $33.5 million, down
6.7% from the second quarter of 2006. The downturn in sales is
attributed to a softening in the portable communication and hard disk
drive markets and by the imposition of new export licensing regulatory
requirements for the Company's flexible cover film and bond ply
materials. This licensing issue, which for the most part has been
resolved, prevented the Company from shipping those specific materials
during most of the second quarter. However, sales into communications
infrastructure and satellite TV dish markets continue to gain
momentum. Also, the Company expects to benefit from the recent direct
broadcast industry addition of newer High Definition (HD) TV
satellites, which will expand HD channel offerings to consumers. This
market development will require consumers to upgrade their satellite
dishes, a high percentage of which we believe use the Company's
materials. In addition, Rogers' advanced circuit materials are well
positioned in next generation cellular infrastructure systems,
commonly referred to as "3G", which provide broadband access to
wireless subscribers.
Custom Electrical Components
Custom Electrical Components sales for the quarter were $28.5
million, compared to $30.5 million for last year's second quarter. The
sales decline was attributed to the beginning of an end of life cycle
for one program in the portable communications market driving reduced
volumes and pricing. This negative sales trend was partially offset by
significant growth in the locomotive market serviced with our power
distribution products. Due to the dramatic reduction in demand
experienced for EL lamps in the portable communications market, the
Company expects lower production rates as we reduce inventories of
these products for the remainder of the year, resulting in unfavorable
operating variances. This change, along with a significant drop in
selling prices on some programs, will adversely impact profits for
this product line for the remainder of the year.
Driven by demand in Asia, the Company continues to see future
growth in the power distribution systems market, with record sales
again this quarter. The Company's Suzhou, China Campus is well
positioned to service this growing demand.
High Performance Foams
High Performance Foams quarterly sales were $25.0 million, down
$1.1 million or 4.1% from the second quarter of last year. The decline
is primarily due to shifting production for one customer to the
Company's joint venture in China. Excluding this event, the Company
has experienced and foresees additional growth in this segment. The
Company launched two unique new foam products during the quarter,
bringing the total of significant new foam products introduced this
year to three. Among these new products is the thinnest, most
compressible foam ever provided to the consumer electronics market,
which continues to trend toward thinner, smaller devices packed with
more delicate components. This new product has already been specified
into a number of new portable electronic devices entering production
in the third quarter. The other new foam products will allow the
Company to expand its presence in the printing and healthcare
industries. Given the anticipated growth, the Company is adding a new
polyurethane foam line in its Suzhou facility that will be combined
with its China foams joint venture to maximize leverage. This line is
close to completion and will be finalizing qualifications through the
second half of this year.
Joint Ventures
Rogers' 50% owned joint ventures had quarterly sales totaling
$26.2 million compared to $23.9 million in the second quarter of 2006.
The increase is primarily attributed to increased sales from our high
performance foams joint ventures.
Second quarter 2007 GAAP gross margin was 16.4%. Excluding the
effect of the restructuring charges, non-GAAP gross margin was 25.5%
as compared to 32.4% in the prior year and 30.4% in the first quarter.
The softer gross margin, excluding the restructuring charges, was
driven from lower sales volumes in all segments and pricing pressure
in the Custom Electrical Components and Printed Circuit Materials
segments.
Rogers' balance sheet ended the quarter with a cash and short-term
investment balance of $64.1 million. Capital expenditures were
approximately $9.0 million for the second quarter and $16.7 million
year-to-date; total expenditures for the year are expected to be in
the range of $30 to $35 million. During the second quarter the Company
bought back approximately 242,000 shares for $10.0 million. To date
the Company has repurchased approximately 529,000 shares for $23.9
million under its current buyback program which authorizes a total
buyback of up to $50 million depending on market and business
circumstances, and the Company expects to continue repurchasing
shares.
During the second quarter the Company experienced a favorable tax
rate due to the effect of the restructuring charges and due to overall
softening of income projections. The Company expects its annualized
tax rate, excluding the effects of the restructuring charges, for the
year to be 26%.
Mr. Wachob, continued "During the second quarter we were faced
with the need to better align our resources with our revenues, based
on the sudden changes that impacted our Durel and flexible circuit
materials businesses. During the quarter, we aggressively addressed
the rapid sales decline in two of our businesses and are now
positioned to move the Company forward and sequentially become more
profitable during the remainder of the year. We expect to see
immediate results but the full benefit of our restructuring actions
will not occur until 2008. The Company is firmly focused on growing
its businesses and we remain excited about the many new potential
opportunities that are in the pipeline. In the first half of the year
we launched seven new products with potential fifth year sales of
approximately $120 million. In addition, we are actively developing
over twenty new products. In the short term, we expect continued
softening in the portable communications market with commensurate
pricing pressure, mitigated in part by continued strength in our
transportation and communications infrastructure markets. We will be
working diligently in the third quarter to make the restructuring
initiatives we have kicked off a reality. Although difficult to
project given the dynamics and recent volatility, our current third
quarter forecast is for sales of $94 to $97 million with diluted
non-GAAP earnings per share of $0.32 to $0.35 before approximately
$1.5 million pretax expense of the related restructuring charges.
Rogers Corporation (NYSE:ROG), headquartered in Rogers, CT, is a
global technology leader in the development and manufacture of high
performance, specialty-material-based products for a variety of
applications in diverse markets including: portable communications,
communications infrastructure, computer and office equipment, consumer
products, ground transportation, aerospace and defense. Rogers
operates manufacturing facilities in the United States (Arizona,
Connecticut, and Illinois), Europe (Ghent, Belgium) and Asia (Suzhou,
China). In Asia the company maintains sales offices in Japan, China,
Taiwan, Korea and Singapore. Rogers has joint ventures in Japan and
China with INOAC Corporation, in Taiwan with Chang Chun Plastics and
in the U.S. with Mitsui Chemicals. The world runs better with Rogers.
(R) www.rogerscorporation.com.
Safe Harbor Statement
Statements in this news release that are not strictly historical
may be deemed to be "forward-looking" statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are based on management's current
expectations and are subject to the many uncertainties that exist in
the Company's operations and environment. These uncertainties, which
include economic conditions, market demand and pricing, competitive
and cost factors, rapid technological change, new product
introductions, legal proceedings, and the like, are incorporated by
reference in the Rogers Corporation 2006 Form 10-K filed with the
Securities and Exchange Commission. Such factors could cause actual
results to differ materially from those in the forward-looking
statements. All information in this press release is as of August 6,
2007 and Rogers undertakes no duty to update this information unless
required by law.
Additional Information and August 7, 2007 Conference Call
For more information, please contact the Company directly, visit
Rogers' website on the Internet, or send a message by email.
Website Address: http://www.rogerscorporation.com
Financial News Contact: Dennis M. Loughran, Vice President Finance
and Chief Financial Officer, Phone: 860-779-5508, FAX: 860-779-4714
Investor Contact: William J. Tryon, Manager of Investor and Public
Relations
Phone: 860-779-4037, FAX: 860-779-5509
Email: william.tryon@rogerscorporation.com
A conference call to discuss second quarter results will be held
on Tuesday, August 7, at 9:00AM (Eastern Time).
The Rogers participants in the conference call will be:
Robert D. Wachob, President and CEO
Dennis M. Loughran, Vice President, Finance and CFO
Robert C. Daigle, Vice President, Research and Development and
Chief Technology Officer
Robert M. Soffer, Vice President, Treasurer and Secretary
Debra J. Granger, Vice President, Corporate Compliance and
Controls
Paul B. Middleton, Corporate Controller
William J. Tryon, Manager of Investor and Public Relations
A Q&A session will immediately follow management's comments.
To participate in the conference call, please call:
1-800-574-8929 Toll-free in the United States
1-706-634-1907 Internationally
There is no passcode for the live teleconference.
For playback access, please call: 1-800-642-1687 in the United
States and 1-706-645-9291 internationally through 11:59PM (Eastern
Time), Tuesday, August 7, 2007. The passcode for the audio replay is
10970816.
The call will also be webcast live in a listen-only mode. The
webcast may be accessed through links available on the Rogers
Corporation website at www.rogerscorporation.com. Replay of the
archived webcast will be available on the Rogers website beginning two
hours following the webcast.
(Financial Statements Follow)
Three Months Ended Six Months Ended
(IN THOUSANDS, EXCEPT PER SHARE July 1, July 2, July 1, July 2,
AMOUNTS) 2007 2006 2007 2006
- ------------------------------------------- -------- -------- --------
Net Sales $98,990 $104,781 $214,836 $207,913
Costs and Expenses:
Cost of Sales(a) 82,805 70,784 163,453 137,629
Selling and Administrative(b) 17,568 14,244 36,859 31,629
Research and Development 6,043 6,009 11,731 11,970
Restructuring and Impairment 3,082 11,272 3,082 11,272
Charges(c)
--------- -------- -------- --------
Total Costs and Expenses(d) 109,498 102,309 215,125 192,500
--------- -------- -------- --------
Operating (Loss) Income (10,508) 2,472 (289) 15,413
Other Income less Other Charges 1,659 2,578 3,514 5,451
Interest Income, Net 460 629 885 979
--------- -------- -------- --------
Income (Loss) Before Taxes (8,389) 5,679 4,110 21,843
Income Tax (Benefit) Expense (4,059) 1,682 (1,071) 5,238
--------- -------- -------- --------
Net (Loss) Income $(4,330) $3,997 $5,181 $16,605
--------- -------- -------- --------
Net (Loss) Income Per Share:
Basic $(0.26) $0.24 $0.31 $1.00
Diluted $(0.26) $0.23 $0.29 $0.97
Shares Used in Computing:
Basic 16,562 16,773 16,698 16,630
Diluted 16,562 17,224 17,584 17,094
(a) Second quarter 2007 includes $9.0 million of restructuring
charges related to increased inventory reserves and accelerated
depreciation of production equipment recorded in the Custom Electrical
Components and Printed Circuit Materials segments.
(b) Second quarter 2007 includes a $0.8 million restructuring
charge related to the accelerated expense recognition of a prepaid
license agreement recorded in the Custom Electrical Components
segment.
(c) Second quarter 2007 includes a $2.6 million charge related to
severance associated with the company-wide work force reductions and a
$0.5 million related to the impairment of goodwill for the composite
materials operating segment. Second quarter 2006 includes an $11.3
million charge related to the impairment of goodwill for the
polyolefin foams and the polyester based laminate materials operating
segments.
(d) Includes Depreciation and Amortization of: 2007 - $7.8 million
and $13.2 million; 2006 - $4.0 million and $9.4 million.
Consolidated Balance Sheets
(IN THOUSANDS) July 1, December 31,
2007 2006
- ------------------------------------------------ -------- ------------
Assets
Current Assets:
Cash and Cash Equivalents $ 26,226 $ 13,638
Short-term Investments 37,850 68,185
Accounts Receivable, Net 64,829 86,311
Accounts Receivable - Joint Ventures 3,208 5,437
Accounts Receivable - Other 2,313 3,552
Note Receivable, Current 2,100 2,100
Inventories 68,324 70,242
Current Deferred Income Taxes 13,156 15,430
Asbestos-Related Insurance Receivables 4,244 4,244
Other Current Assets 5,806 3,415
-------- ------------
Total Current Assets 228,056 272,554
-------- ------------
Property, Plant and Equipment, Net 146,526 141,728
Investments in Unconsolidated Joint Ventures 25,482 26,629
Deferred Income Taxes 9,237 4,828
Pension Asset 974 974
Goodwill 10,131 10,656
Other Intangible Assets 226 454
Asbestos-Related Insurance Receivables 18,503 18,503
Other Assets 5,053 4,576
-------- ------------
Total Assets $444,188 $480,902
-------- ------------
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts Payable $ 16,459 $ 25,715
Accrued Employee Benefits and Compensation 17,078 27,322
Accrued Income Taxes Payable 6,989 9,970
Asbestos-Related Liabilities 4,244 4,244
Other Current Liabilities 16,426 14,892
-------- ------------
Total Current Liabilities 61,196 82,143
-------- ------------
Noncurrent Pension Liability 11,698 11,698
Noncurrent Retiree Health Care and Life
Insurance Benefits
10,021 10,021
Asbestos-Related Liabilities 18,694 18,694
Other Long-Term Liabilities 1,068 1,169
Shareholders' Equity 341,511 357,177
-------- ------------
Total Liabilities and Shareholders' Equity $444,188 $480,902
-------- ------------
(Reconciliation of Non-GAAP Figures Follow)
Reconciliation of Second Quarter 2007 Non-GAAP Earnings per Diluted
Share
- ----------------------------------------------------------------------
GAAP Loss per Diluted Share $(0.26)
Plus: Restructuring and Impairment Charges per Diluted Share 0.47
- ----------------------------------------------------------------------
Non-GAAP Earnings per Diluted Share $0.21
Reconciliation of Second Quarter 2006 Non-GAAP Earnings per Diluted
Share
- ----------------------------------------------------------------------
GAAP Income per Diluted Share $0.23
Plus: Non-cash Impairment Charge per Diluted Share 0.52
- ----------------------------------------------------------------------
Non-GAAP Earnings per Diluted Share $0.75
Notes to our Non-GAAP Financial measures:
Rogers believes that net income from continuing operations and
diluted earnings per share, excluding the effect of any restructuring
and impairment charges, is a measure that should be presented in
addition to income determined in accordance with generally accepted
accounting principles (GAAP) and is useful to investors. The following
matters should be considered when evaluating these non-GAAP financial
measures:
-- Rogers reviews the operating results of its businesses
excluding the impact of any restructuring and impairment
charges because it provides an additional basis of comparison.
We believe that these events are unusual in nature, and would
not be indicative of ongoing operating results. As a result,
management believes such charges should be excluded in order
to compare past, current and future periods.
-- Restructuring and impairment charges principally represent
adjustments to the carrying value of certain assets and do not
typically require a cash payment.
-- Restructuring and impairment charges are typically material
and are considered to be outside the normal operations of a
business. Corporate management is responsible for making
decisions about such charges.
CONTACT: Rogers Corporation
William J. Tryon, 860-779-4037
william.tryon@rogerscorporation.com