Rogers Corporation ROG today announced results for the third quarter of 2014, reporting all-time record net sales of $163.1 million and net income from continuing operations of $1.09 per diluted share. Net sales and net income from continuing operations exceeded the Company's guidance provided on July 29, 2014 of $153 to $159 million in net sales and net income from continuing operations of $0.65 to $0.75 per diluted share. Third quarter 2013 net sales were $142.8 million with net income from continuing operations of $0.76 per diluted share, which included net special charges of $0.06 per diluted share.
Bruce D. Hoechner, President and CEO commented: “We are very pleased to report that in the third quarter, we set another all-time quarterly revenue record and posted our seventh consecutive quarter of year-over-year revenue growth. All three of our business segments contributed solid results and, overall, we saw strong gains in both gross margin and operating margin resulting in excellent earnings. These strong results were driven by the success we achieved in a number of higher growth markets, as well as our disciplined approach to operational improvements. Specifically, in the area of margin expansion, we continue to benefit from our implementation of manufacturing process improvements, enhancements of our business systems and processes, and high value products created through our market-driven innovation efforts.”
Business Segment Discussion
Printed Circuit Materials
Printed
Circuit Materials reported all-time record quarterly net sales of $63.4
million for the third quarter of 2014, an increase of 34.5% from the
$47.1 million reported in the third quarter of 2013. This strong growth
was driven primarily by significant demand for high frequency circuit
materials to support wireless base station and antenna applications in
connection with the global 4G/LTE infrastructure build-out, automotive
radar applications for Advanced Driver Assistance Systems, and certain
applications in portable electronic devices for improved internet
connectivity.
High Performance Foams
In
the third quarter of 2014, High Performance Foams reported net sales of
$46.7 million, an increase of 5.1% compared to third quarter 2013 net
sales of $44.5 million. Higher demand in general industrial, battery
applications for hybrid electric vehicles, consumer comfort and impact
protection applications offset slightly weaker demand in portable
electronics (mobile internet devices and feature phones) applications.
Power Electronics Solutions
Power
Electronics Solutions reported net sales of $46.5 million for the third
quarter of 2014, up 2.5% compared to third quarter 2013 net sales of
$45.3 million. Results were driven by strong demand in hybrid electric
vehicles, mass transit, energy efficient motor control applications and
vehicle electrification (x-by-wire) applications. These increases more
than offset weaker demand in laser diode and certain renewable energy
applications.
Joint Ventures
Rogers' 50%
owned High Performance Foams joint ventures' net sales totaled $12.0
million this quarter, a decrease of 26.8% compared to the $16.4 million
sold in the third quarter of 2013. The decline was due to lower demand
across many of their end markets.
Operational Highlights
Rogers
ended the third quarter of 2014 with cash and cash equivalents of $228.0
million, an increase of $36.1 million, or 18.8%, from $191.9 million at
December 31, 2013. Capital expenditures were approximately $8.5 million
for the third quarter and $18.8 million year-to-date 2014, and are
expected to be in the range of $25.0 to $30.0 million for the year.
The Company's gross margin improved to 39.6% in the third quarter of 2014 from 35.8% in the third quarter of 2013. Operating margin for the third quarter of 2014 was 17.4% compared to the 13.3% GAAP (non-GAAP of 14.4%) in the third quarter of 2013, reflecting good progress on the Company's overall goal to improve operating performance. Reconciliations of the GAAP to non-GAAP operating margin measure as well as the fourth quarter net income per diluted share guidance provided below appear at the end of this press release.
The Company's 2014 third quarter effective tax rate was 28.6%. The Company currently projects its effective tax rate for 2014 will be approximately 28%.
Outlook
The Company projects
fourth quarter 2014 net sales will be between $147 and $154 million with
non-GAAP net income from continuing operations of between $0.64 and
$0.76 per diluted share, excluding projected special charges of $0.17
per diluted share. GAAP net income from continuing operations is
projected to be between $0.47 and $0.59 per diluted share. The estimated
special non-cash charge of $0.17 per diluted share is related to the
lump sum payment of certain long term pension obligations in connection
with the Company's offer to buy out certain eligible former employees as
part of its continued efforts to reduce the risk and volatility
associated with its defined benefit pension plans.
About Rogers Corporation
Rogers
Corporation ROG is a global leader in engineered materials to
power, protect, and connect our world. With more than 180 years of
materials science experience, Rogers delivers high-performance solutions
that enable clean energy, internet connectivity, advanced transportation
and other technologies where reliability is critical. Rogers delivers
Power Electronics Solutions for energy-efficient motor drives, vehicle
electrification and alternative energy; High Performance Foams for
sealing, vibration management and impact protection in mobile devices,
transportation interiors, industrial equipment and performance apparel;
and Printed Circuit Materials for wireless infrastructure, automotive
safety and radar systems. Headquartered in Connecticut (USA), Rogers
operates manufacturing facilities in the United States, China, Germany,
Belgium, Hungary, and South Korea, with joint ventures and sales offices
worldwide. For more information, visit www.rogerscorp.com.
Safe Harbor Statement
Certain
statements in this press release may, including but not limited to those
set forth in the Outlook section above, constitute “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements are based on
management's expectations, estimates, projections and assumptions. Words
such as “expects,” “anticipates,” “intends,” “believes,” “estimates,”
“should,” “target,” “may,” “project,” “guidance,” and variations of such
words and similar expressions are intended to identify such
forward-looking statements. Such forward-looking statements involve
known and unknown risks, uncertainties, and other factors that may cause
our actual results or performance to be materially different from any
future results or performance expressed or implied by such
forward-looking statements. Such factors include, but are not limited
to, the possibility that results in the fourth quarter of 2014 will be
negatively impacted by the record sales achieved in the third quarter to
the extent record sales reflected a shift in the timing of customer
orders or other factors, changing business, economic, and political
conditions both in the United States and in foreign countries,
particularly in light of the uncertain outlook for global economic
growth, particularly in several of our key markets; increasing
competition; any difficulties in integrating acquired businesses into
our operations and the possibility that anticipated benefits of
acquisitions and divestitures may not materialize as expected; delays or
problems in completing planned operational enhancements to various
facilities; our achieving less than anticipated benefits and/or
incurring greater than anticipated costs relating to streamlining
initiatives or that such initiatives may be delayed or not fully
implemented due to operational, legal or other challenges; changes in
product mix; the possibility that changes in technology or market
requirements will reduce the demand for our products; the possibility of
significant declines in our backlog; the possibility of breaches of our
information technology infrastructure; the development and marketing of
new products and manufacturing processes and the inherent risks
associated with such efforts and the ability to identify and enter new
markets; the outcome of current and future litigation; our ability to
retain key personnel; our ability to adequately protect our proprietary
rights; the possibility of adverse effects resulting from the expiration
of issued patents; the possibility that we may be required to recognize
impairment charges against goodwill and non-amortizable assets in the
future; the possibility of increasing levels of excess and obsolete
inventory; increases in our employee benefit costs could reduce our
profitability; the possibility of work stoppages, union and work council
campaigns, labor disputes and adverse effects related to changes in
labor laws; the accuracy of our analysis of our potential
asbestos-related exposure and insurance coverage; the fact that our
stock price has historically been volatile and may not be indicative of
future prices; changes in the availability and cost and quality of raw
materials, labor, transportation and utilities; changes in environmental
and other governmental regulation which could increase expenses and
affect operating results; our ability to accurately predict reserve
levels; our ability to obtain favorable credit terms with our customers
and collect accounts receivable; our ability to service our debt;
certain covenants in our debt documents could adversely restrict our
financial and operating flexibility; fluctuations in foreign currency
exchange rates; and changes in tax rates and exposure which may increase
our tax liabilities. Such factors also apply to our joint ventures. We
make no commitment to update any forward-looking statement or to
disclose any facts, events, or circumstances after the date hereof that
may affect the accuracy of any forward-looking statements, unless
required by law. Additional information about certain factors that could
cause actual results to differ from such forward-looking statements
include, but are not limited to, those items described in our filings
with the Securities and Exchange Commission ("SEC"), including those in
Item 1A, Risk Factors, of the Company's Form 10-K for the year ended
December 31, 2013 and subsequent Securities and Exchange Commission
filings.
Additional Information and October 29, 2014 Conference Call
For more information, please contact the Company directly, via email or visit the Rogers website.
Website Address: http://www.rogerscorp.com
A conference call to discuss 2014 third quarter results will be held on Wednesday, October 29, 2014 at 9:00AM (Eastern Time).
A slide presentation will be made available prior to the start of the call. The slide presentation can be accessed under the investor relations sections of the Rogers Corporation website (www.rogerscorp.com/ir).
The Rogers participants in the conference call will be:
Bruce D. Hoechner, President and CEO
David Mathieson, Vice
President Finance and CFO
Robert C. Daigle, Senior Vice President
and CTO
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 | ||||||||
1-973-935-8524 | Internationally | ||||||||
There is no passcode for the live teleconference. | |||||||||
For playback access, please call: 1-855-859-2056 in the United States and 1-404-537-3406 internationally through 11:59PM (Eastern Time), Wednesday, November 5, 2014. The passcode for the audio replay is 98226626.
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.rogerscorp.com/ir. Replay of the archived webcast will be available on the Rogers website approximately two hours following the webcast.
(Financial Statements Follow)
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) |
||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) |
September 30,
2014 |
September 30,
2013 |
September 30, 2014 |
September 30,
2013 |
||||||||
Net sales | $ | 163,052 | $ | 142,820 | $ | 463,187 | $ | 401,252 | ||||
Cost of sales | 98,504 | 91,634 | 287,583 | 264,347 | ||||||||
Gross margin | 64,548 | 51,186 | 175,604 | 136,905 | ||||||||
Selling and administrative expenses | 30,182 | 25,582 | 92,279 | 76,335 | ||||||||
Research and development expenses | 5,977 | 5,364 | 17,259 | 16,883 | ||||||||
Restructuring and impairment charges | - | 1,231 | - | 5,756 | ||||||||
Operating income | 28,389 | 19,009 | 66,066 | 37,931 | ||||||||
Equity income in unconsolidated joint ventures |
953 |
1,754 |
2,992 |
3,045 |
||||||||
Other income (expense), net | (107) | (101) | (1,374) | (867) | ||||||||
Interest income (expense), net | (698) | (881) | (2,167) | (2,616) | ||||||||
Income before income tax expense | 28,537 | 19,781 | 65,517 | 37,493 | ||||||||
Income tax expense | 8,149 | 6,209 | 19,647 | 11,361 | ||||||||
Income from continuing operations | 20,388 | 13,572 | 45,870 | 26,132 | ||||||||
Income from discontinued operations, net of income taxes |
- |
- |
- |
102 |
||||||||
Net income | $ | 20,388 | $ | 13,572 | $ | 45,870 | $ | 26,234 | ||||
Basic net income per share: | ||||||||||||
Income from continuing operations | $ | 1.12 | $ | 0.79 | $ | 2.53 | $ | 1.52 | ||||
Income from discontinued operations |
- |
- |
- |
.01 |
||||||||
Net Income | $ | 1.12 | $ | 0.79 | $ | 2.53 | $ | 1.53 | ||||
Diluted net income per share: | ||||||||||||
Income from continuing operations | $ | 1.09 | $ | 0.76 | $ | 2.46 | $ | 1.48 | ||||
Income from discontinued operations |
- |
- |
- |
.01 |
||||||||
Net Income | $ | 1.09 | $ | 0.76 | $ | 2.46 | $ | 1.49 | ||||
Shares used in computing: | ||||||||||||
Basic | 18,258,709 | 17,244,831 | 18,122,599 | 17,141,672 | ||||||||
Diluted | 18,733,777 | 17,863,035 | 18,657,258 | 17,711,972 | ||||||||
Condensed Consolidated Statements of Financial Position (Unaudited) |
||||||
(IN THOUSANDS) |
September 30, 2014 |
December 31, 2013 |
||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 227,973 | $ | 191,884 | ||
Accounts receivable, net | 106,625 | 85,126 | ||||
Accounts receivable from joint ventures | 2,171 | 1,897 | ||||
Accounts receivable, other | 6,997 | 2,638 | ||||
Taxes receivable | 439 | 1,578 | ||||
Inventories | 65,003 | 66,889 | ||||
Prepaid income taxes | 4,773 | 5,519 | ||||
Deferred income taxes | 8,381 | 7,271 | ||||
Asbestos related insurance receivables | 7,542 | 7,542 | ||||
Other current assets | 8,163 | 7,363 | ||||
Total current assets | 438,067 | 377,707 | ||||
Property, plant and equipment, net | 146,596 | 146,931 | ||||
Investments in unconsolidated joint ventures | 20,153 | 18,463 | ||||
Deferred income taxes | 41,940 | 44,854 | ||||
Pension Asset | 4,047 | 2,982 | ||||
Goodwill | 101,676 | 108,671 | ||||
Other intangible assets | 41,230 | 49,171 | ||||
Asbestos related insurance receivables | 49,508 | 49,508 | ||||
Investments, other | 507 | 507 | ||||
Other long term assets | 7,170 | 7,740 | ||||
Total assets | $ | 850,894 | $ | 806,534 | ||
Liabilities and Shareholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 24,454 | $ | 17,534 | ||
Accrued employee benefits and compensation | 29,548 | 29,724 | ||||
Accrued income taxes payable | 9,438 | 4,078 | ||||
Current portion of lease obligation | 777 | 849 | ||||
Current portion of long term debt | 27,500 | 17,500 | ||||
Asbestos related liabilities | 7,542 | 7,542 | ||||
Other accrued liabilities | 22,052 | 12,813 | ||||
Total current liabilities | 121,311 | 90,040 | ||||
Long term lease obligation |
6,356 |
7,170 |
||||
Long term debt | 37,500 | 60,000 | ||||
Pension liability | - | 5,435 | ||||
Retiree health care and life insurance benefits | 9,649 | 9,649 | ||||
Asbestos related liabilities | 52,205 | 52,205 | ||||
Non-current income tax | 11,498 | 10,208 | ||||
Deferred income taxes | 14,999 | 16,077 | ||||
Other long term liabilities | 396 | 223 | ||||
Shareholders' equity | ||||||
Capital stock | 18,286 | 17,855 | ||||
Additional paid in capital | 130,660 | 110,577 | ||||
Retained earnings | 484,415 | 438,545 | ||||
Accumulated other comprehensive income (loss) | (36,381) | (11,450) | ||||
Total shareholders' equity | 596,980 | 555,527 | ||||
Total liabilities and shareholders' equity | $ | 850,894 | $ | 806,534 | ||
Reconciliation of non-GAAP Financial Measures to the Comparable GAAP Measures
Non-GAAP Financial Measures
Management believes non-GAAP information provides meaningful supplemental information regarding the Company's performance by excluding certain expenses that are generally non-recurring and accordingly may not be indicative of the core business operating results. The Company believes that this additional financial information is useful to management and investors in assessing the Company's historical performance and when planning, forecasting and analyzing future periods. However, the non-GAAP information has limitations as an analytical tool and should not be considered in isolation from, or as alternatives to, financial information prepared in accordance with GAAP.
Reconciliation of GAAP to non-GAAP Operating Margin from Continuing Operations for the Third Quarter of 2013:
The following tables include non-recurring charges related to special adjustments:
Operating Margin | Q3 2013 | |||||
GAAP operating margin from continuing operations | 13.3% | |||||
Severance and related charges | 0.9 | |||||
Curamik reorganization charges | 0.2 | |||||
Total special charges | 1.1 | |||||
Non-GAAP operating margin from continuing operations | 14.4% | |||||
Reconciliation of GAAP to non-GAAP Income Per Share Guidance for the Fourth Quarter of 2014:
The following table includes non-recurring special charges related to a non-cash pension charge.
Q4 2014 | ||||
Guidance Q4 2014 GAAP income per diluted share from continuing operations | $0.47 - $0.59 | |||
Add back special charges, net of tax: | ||||
Estimated expense related to non-cash pension charge | 0.17 | |||
Total special adjustment charge | 0.17 | |||
Guidance Q4 2014 non-GAAP income per diluted share from continuing operations | $0.64 - $0.76 |
Rogers Corporation
Financial News Contact:
David
Mathieson, 860-779-4033
Vice President Finance and Chief Financial
Officer
Fax: 860-779-5509
or
Investor Contact:
William
J. Tryon, 860-779-4037
Director of Investor and Public Relations
Fax:
860-779-5509
william.tryon@rogerscorp.com
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