ROG - Earnings call 3 2023 | Rogers Corporation

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Operator

Good afternoon. My name is Shamali, and I will be your conference operator today. At this time, I would like to welcome everyone to the Rogers Corporation Q3 2023 Earnings Conference Call.I will now turn the call over to your host, Mr. Steve Haymore, Director of Investor Relations. Mr. begin. may you Haymore,

Stephen Haymore

website, and X. conference the today's call. on today.Please of be everyone, that news quarter issued was call Corporation XXXX found earlier our section Investors earnings The to the with welcome afternoon, the Rogers release Slide to turn third can along Good slides for

to Reform statements statements the to conference are conditions, not Litigation results certain CEO; were measures now found generally Ram X. discussions President to operations uncertainties today.Please also strictly to during the conference made Before factors slide we financial many financial to market uncertainties of like non-GAAP Private environment. deck directly principles. accordance that would Act the economic with actual forward-looking meaning will note Rogers' call that cause the are differ for should in call measures that most that and as comparable With turn me to forward-looking within financial and Senior materially Such exist include reference today's Mayampurath, be accepted begin, of factors. Colin. those prepared turn could and will today the is I in in call and Gouveia, President statements the of from demands to those in be this CFO.I Slide subject competitive XXXX historical Securities and any Vice These in GAAP considered Colin Slide can call.Turning measures the Reconciliations accounting The X. and not over

Randall Gouveia

us for today. everyone, to afternoon Thanks, Steve. Good you thank joining and

margin cash performance in of targets guidance again QX, progress we the our set the made the for Gross I'll give we was improvement Before expenses we on over in operating to this strength of markets first, results. progress our and our QX during I growth past rapidly With the we new in our to initiatives is our business and significant introduced leveraging has headwinds We turn the quarter.In these headwinds Rogers areas. to sales demand.Later and XX.X%, One strengthen our the But the in where the market elaborate have We history X. which to Day.Please the product to lower presentation, existing will above a and on end QX. of range the margin target Investor this and these during drove execute generated economic of curamik high adjusted set increased the adding guidance margin of QX was year. years. power growth continued high markets. stronger secular capitalizing are market our several to our Slide example and cost our on end highlight customers. we want company ahead, quarter. applying adjusted quick range This towards in more a as are I global this good market, exceeded by impacting capacity expansion trends to flow the EV support core technology making in summary Restore EPS we we turn it do despite slide, new our fast-growing next substrate to improvements the achieved contributed

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on here. I touched we made progress earlier, substantial have As

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growth sales sales in continue high our to to ADAS forward.Rounding out and Year-to-date, opportunity a grown declined. ADAS sales the defense strong have and first to this the at expect be the prior rate sales of for and quarter are stronger Aerospace typically single-digit markets. were half flat high-growth We year. a moving

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XXXX our that outlined to making not updates targets are the relates we this we this at at As Day, Investor any point.

on the targets sales Restore, Accelerate we X executing on to this based we range including phases focus set, Elevate key priorities achieve this it to QX the line $X.X billion billion.When the and of continue $X.X We key assumptions. on top of target our in and annual set was to year, in

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managing added improved our the needed QX discuss organization We over different capacity tools outlook. expenses. product wins, and financial the are QX I'll customers in to lines design with to to and Ram turn and execute our operating operating new strong many support and costs performance on improving strategy.Now our to securing capabilities have leadership We've it

Ram Mayampurath

what good despite on and stated conditions, Colin a earlier, course afternoon, you, year. of this market accomplished difficult Colin, we Thank over everyone. have the great deal Building

have our and cash We kept focus profitability on flow. improving

of points basis of capacity in business points time nearly debt.Let investments same guidance QX growth. exceeded for our to less QX the declined prior of and beginning a basis, expectations. were than EBITDA and margin improved asset growth third due of These to versus slightly in end by invest paying was while timing XXXX. XXX share improvements expected the guidance gross $X.XX, for On per guidance making improvement the the quarter long-term include of X. was period. down sales XXXX earnings range X% has of margin our that points $X.XX XX% over now We of are Adjusted share versus below by to $XXX margins million necessary our prepare of Gross quarter cash compared sale earnings also top capabilities higher XX slightly at a results basis sequentially by Higher the adjusted review driving per Achieving generation allowed increased basis and sale. end and an held high an our the XX%, the the QX to XXX detail, on below me for the Slide range. of XX.X% us range. to committed GAAP

of the volume We have $XXX.X by from result defense XXXX The aerospace less margins a by customers, $XXX,XXX. The slight decreased $X inventory return decline million in QX X, sales to lower of on lower and profitability reportable sales. focused approximately of AES QX. short-term million. made related We discuss fluctuations a EV/HEV, $XXX,XXX sales good around quarter with decline and in to unfavorable and than growth progress we further to On EV/HEV detail. prior adjusted sales net EPS. fluctuations greater foreign decrease to total I'll expect segment and in intently in sales X.X% was was and ADAS basis, was The Slide our currency to improvements.Turning driving to due remain some

delays program markets. addition, in lower In resulted sales in other

continue than increased million, in improvements aerospace markets.EMS sales. by sales these lower opportunities portable our good industrial all seasonally significantly defense. of growth However, we X X.X% sales strength $XX continued and in strong and led to more to These offset electronic by see

than sales in continuing result manufacturing industrial global sector.Turning other in of to QX, declined market Slide more any the earlier, XX. a stated as As weakness

the Our margin third indirect for savings a cost or gross margin $XX.X favorable volume, and Despite versus prior quarter gross quarter of million in lower direct was was mix. the XX.X%. the procurement result improvement and

our flow QX increase ongoing was excellence, Ending improvement million, million, to a million $X.XX lower lower from $XXX $XXX at which QX credit increased adjusted $XX.X of debt of was driving be our related translates interest a and This to end XX% expenses continue XXXX strategy, end improvement a cash other our in an $XX in key cash debt XXXX. strong margin QX. are decrease which facility.Capital see to expenditures repayment the on discretionary income of exchange us and $X year-to-date. QX, and foreign generated We were and better from gain transactions from part expenses efforts.QX $X.XX, addition per a our starting on the quarter of net repayments.Continuing million approximately manufacturing to $XX $XX income million enabled savings operating resulted from we Slide earnings of XX. adjusted gross XX September In to million procurement approximately of improved of the make and income. adjusted in million revolving million from decrease of $XX was in results other QX. margin, to versus increase adjusted The higher than to net operating share The to income

year, be capital the million. expect to in now $XX full range $XX of million we the to expenditures For

balance have to this We strides good further made our year sheet. strengthen

to guidance our Slide continued fourth long-term strategic our cash of will while on quarter. revolver have and XX, a in initiatives increasing million paying We down for on discuss total our our $XXX position.Next, net the I invest

customers million following year has main our as QX $XXX $XXX sales to orders leaner until been levels First, for the and year. to lower run reason with guidance delay as follows: quarter the related between sales net inventory lowest the point are fourth are expected historically First, some range million. for the and The sales

strong challenges anticipate been decline in decline addition, QX. expected have amplify is we are seeing decline. sales A&D This expect to year-end typical in EMS QX.In we macro For in our current where true very to in this we are the XXXX, but further markets industrial sales, example, which this particularly to in

we the than factors. quarter, be expect by expect third other We relative to QX to these EV/HEV grow but growth will this in offset sales more

is QX from the optimization footprint of a we small the EPS XX%. sale QX XX% $X.XX.Our year factory from to GAAP than guiding gain to to to incorporates the project rate range lower the The decline. in midpoint tax This and per expected facility. of EPS reflecting are gross margin an share $X.XX results, on range $X.XX adjusted range of to our XX% Earnings was of for guidance We is XX.X% We expected be announced around volume sales previously. manufacturing QX. to full $X.XX, our part be

We are in drive growth.I the committed operator drive will capabilities remain to back questions. and to turn capacity our cash the and improved for increase investing call focused profitability activities on now necessary and to generation executing the the future that

Operator

[Operator CJS Instructions] Daniel of line Our Securities. with first question comes Moore from the

Dan Moore

Congrats with the of of obviously saw it your slowing, QX. been QX, on orders EV. noise lately least at sounds some new customers and lot return slowdown in a sequentially There's around bit winning platforms. are -- growth expect you sales very start I'll progression. margin significant like EV Maybe to but you What little in and and a to

So color what Europe, you out production North could as telling it specifically? about geography, look plans any expansion helpful. customers of would America, Asia to be they kind your down are their break very you if that and by 'XX And for

Randall Gouveia

Sure, Dan. Colin here.

mean would to the as a up. products to been hear ICE lot we have materials So that as you're what the be of be than customers just these lot was choppiness supply -- years, been lately anticipated engines some the there and of different and right, in. the comes back in weighing of getting have vehicles supply chain general a scaled fact more and still EV there for chains been nascent. And it pretty here about into XXX the it ICE are information ICE news I market developed always the from been. has companies these these from in hasn't some or market, EV

marketplace. So be X Toyota OEMs battery there also be also they for overall, quarter of in regions even though in will that growing there EV/HEV.I a growth strong. hybrids are in recent that comments of the were quite all like or will feel maybe we may effective our the feel hear going pure think plug-in vehicles around more an issue, be most from there how some the But

some there feel bumps So ahead are of both still we while the there's good decade growth a for long certainly term, initially, like in road platforms.

Dan Moore

And Very all and maybe as the there obviously seeing customers several your beyond about plans kind one are in or choppy with expansion of Maybe helpful. QX, and general appreciate the you macro. we commentary just slowing incremental industrial, what very the describe would remain telling you continue to quarters? CapEx consistent for their or of overall it next

Randall Gouveia

Sure, Dan.

sales probably impact our of continue not these rates would terms into helping is watch sales, general industrial describe of are which impacting roll end we interest So it's and business, mostly back Certainly, it feels I that economy industrial, different of incremental. HVAC the general and that through the general appliances, of a it would also of it such coming of part end new issues markets. bucket in as end segments. the home capital the equipment, high just it's have overall Within markets closely. the as our end semiconductor, And year, And we'll lot to like lighting. in

if don't it.Ram, that. at I So I different you would wanted add that's anything how to know look to

Ram Mayampurath

I agree. No,

go I QX, seeing slower. in it think Dan. we are weaker

out don't to now, that's slowing. the recovery and it we it sight. moved any some increasingly of I is for see So But recovery. bottom hope in

Dan Moore

Okay.

helpful. here. on monitor your it's think and we'll the I'll position year just expect kind question, an appreciate very when of last targets, results to better full or to of you it a kind jump But and and out. Would in for color update it's I continue report in to 'XX be I provide Second the fluid you February

Randall Gouveia

we and soon working that, as we're have can. we on share Yes, we'll what as

Operator

next Our Ellis B. of goes to question with Craig the Securities. line Riley

Craig Ellis

clarifications do and margin XX%. to margin you congratulations couple I nice the on wanted a tough a see there Guys, sitting execution the say for and to real product with I on out -- you side. of cost in environment. Colin, really gross see want to How start

EV China the ramping up. with starting plans business you're the power the for that substrate and So facility

local carbide Our a significant that entities, manufacturers there's other by are output dramatic international grow are with checks showing up silicon partnered ambition that levels. within to real pretty next China, year

you And is before Germany? if volume your you get in so And that the look the size capacity operation came in how up to expect it believe, one early facility, have, how would question as calendar is that an quickly ramping able facility demand would And you'd I now to possible compare is, this 'XX? higher to to ramp there? at that

Randall Gouveia

and to Sure, then in Steve. or can Ram I'll jump me, anyone help start

it we're factory, phases. So this the different in way Craig, is that looking at putting we're

we're CapEx we're this can factory to we're to additional the without the while So first into large infrastructure having is, infrastructure spend more is this that production doing what add we're produce, But we phases spend. add to able in be X. entire so bringing Phase putting putting up

faster to much ahead it. if than should larger that get goes we're about mindfully have quickly built to we a out demand how much be trying but up and ramp to is we up able it X think, thinking So Phase match demand, and we're bring we'll more so infrastructure think to

Craig Ellis

already how place in Phase in the X to you compared that Phase or And have Phase Europe? would capacity X plus over X

Randall Gouveia

for operational not plant is with at capacity, improvements this and were but it we've size out of Eschenbach, Germany what talking driving We're believe got the phased the really efficiencies with of the the and approach moment, our put we match upside also we ramp facility curve we can the customers our an from into think we in also. that years. meet And built can where China, for we case the curamik several think we've have we we the next production

at prepared specific in thing terms much to moment. capacity have, but do of we'll this So we're about not ultimately, how talk that we

Ram Mayampurath

Yes.

a to a million that $XX Craig, about look So million for what investments. our about That is investment, we publicly X-year on and -- it's should shared $XX payback we've

Craig Ellis

-- helpful Really I'm guys. sorry

Ram Mayampurath

That idea. an you give should

Craig Ellis

Yes. That's really helpful.

you Second last the out Obviously, are Colin, of had We're certainly, into years and years. product-related could showed that product there. about ago, iOS smartphone electronics correction check to personal inventory bottom that that X and on that talked that question drivers longer-term well, hearing slide the been the for issues you has Colin. start out, next starting couple Android the see over year. cycles went normalized but that's suggests we finally strong very more to

So sense the of business, about question getting side product new from year? on that next your for what reengagement customers are you activity

Randall Gouveia

So Where with now billion. that's electronics, below a terms handset in XX-year a it the really good are question. sales, $X.X we of port of low is

technology. closely hear while we we're optimistic to of what with feel positioned that for is we that 'XX, And the and up for lot design Western fortunate in understand of a that and with we that how facility that for I'll ago, to terms that's all and that they're anxious us go.One wins a of them that reasonably region. China end. UTIS our wins OEMs mention several can is about companies coming lot and we're to a XXXX had now team fire projecting helped is things we but seeing And working produce running, in thing years how call we're lot from on they're we're the that So OEMs from design in local also

in think next helps growth electronics us what of year. about in for that So portable terms we

Craig Ellis

Ram, you encouraging. very then, I just quickly. And for if No, a could, that's couple

really that is that some the or change were this more little found timing The are do macro mentioned that you less allowing what just guidelines to expected? just growth new that factors with CapEx everybody of team You had these year. the than is dealing related versus of efficiencies to you there CapEx prior, the for that's a

Ram Mayampurath

a good Craig. Yes, question, that's

by others, facility has targeting we down the X% removing bottlenecks, that lower So cash spending. of able guidance cash couple our we the facility year, of in the to going some the of planned years timing for cash that's on in we brought curamik and for The our plans a CapEx of as schedule our the and in lower. timing. we I'd terms And say as scheduled. manage particularly X% and just the China Germany, slightly certainly, about throughput to talked curamik flow increasing are CapEx also in have overall The the the expansion next mostly flow in CapEx. been in

Craig Ellis

And finally earlier than before expected. efficiencies The the to that this year at still path quarter as XX%? mix. ahead, did is the related XX% queue. a on hitting we here target a could you've think great margin look historically then the margin certainly from and look job gross gross helpful. back and that the Very me hop things for right said expansion to other I to way to team that drivers Is Ram, I the XX% the model the about volume path is in and executing had But I question target that XX% be cost and then this,

Ram Mayampurath

way right to That is still at the look it.

quicker the to and efficiently excellence, improvement that possible. see as volume as say, efforts will to we as procurement And can much the step lower operational see But will improvement returning. and once you cost that fast continue once you more correct big you margins. we volume, from that come know, in needless our Now design cost manufacturing, change line,

Operator

Randall for call no the [Operator appears to remarks. Therefore, back I that will session. are now further over our Instructions] Gouveia And there questions. closing question-and-answer This turn conclude does it

Randall Gouveia

Just for forward say with look several the thanks all to several wanted weeks. joining to talking and of next you over

Operator

conference. today's And this concludes

at Thank time. this disconnect for your your may you lines You participation.

Rogers (ROG) 26 Oct 232023 Q3 Earnings call transcript