UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported)
July
31, 2018
ROGERS
CORPORATION
(Exact
name of registrant as specified in its charter)
Massachusetts |
1-4347 |
06-0513860 |
(State or other jurisdiction of incorporation |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
2225 West Chandler Blvd., Chandler, Arizona 85224 |
(Address of principal executive offices) (Zip Code) |
(480)
917-6000
(Registrant’s
telephone number, including area code)
Not
Applicable
(Former
name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
⃞
Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
⃞
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
⃞
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
⃞
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ⃞
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ⃞
Item 2.02 Results of Operations and Financial Condition
Item 7.01 Regulation FD Disclosure
In a press release dated July 31, 2018, the Company announced its second quarter 2018 results and provided guidance for the third quarter of 2018. A copy of the press release is furnished herewith as Exhibit 99.1. The Company will also host a conference call and webcast on July 31, 2018 to discuss its results of operations.
All information in this Form 8-K and the Exhibit attached hereto, including guidance or any other forward-looking statements, speaks as of July 31, 2018, and the Company undertakes no duty to update this information to reflect subsequent events, actual results or changes in the Company’s expectations, unless required by law.
The information in Items 2.02 and 7.01 of this Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. |
Description |
|
Press release, dated July 31, 2018, issued by Rogers Corporation |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ROGERS CORPORATION |
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By: |
/s/ Mark Weaver |
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Mark Weaver |
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Vice President, Principal Financial Officer |
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Chief Accounting Officer and Corporate Controller |
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Date: July 31, 2018 |
Exhibit 99.1
Rogers Corporation Reports Second Quarter 2018 Results
Second quarter 2018, versus second quarter 2017:
CHANDLER, Ariz.--(BUSINESS WIRE)--July 31, 2018--Rogers Corporation (NYSE:ROG) today announced financial results for the 2018 second quarter.
The Company reported 2018 second quarter net sales of $214.7 million, which was within the Company's previously announced guidance of $210 to $220 million, and an increase of 6.6% compared to 2017 second quarter net sales of $201.4 million. Currency exchange rates favorably impacted 2018 second quarter net sales by $8.4 million due to strengthening in the Euro and Renminbi.
Earnings for the 2018 second quarter were $0.93 per diluted share, compared to $1.13 per diluted share in the second quarter of 2017. Earnings per diluted share were below the Company's guidance of $1.10 to $1.25. On an adjusted basis, earnings were $1.19 per diluted share, compared to adjusted earnings of $1.33 per diluted share in the second quarter of 2017. Adjusted earnings were below the Company's guidance of $1.25 to $1.40 per diluted share.
Second quarter 2018 net income was $17.3 million, compared to $20.9 million in the second quarter of 2017. Adjusted EBITDA was $40.7 million for the second quarter of 2018, compared to $46.5 million reported in the second quarter of 2017.
Gross margin was 35.7% in the second quarter of 2018, compared to 40.0% in the second quarter of 2017. Operating margin was 11.7% in the second quarter of 2018, compared to 16.0% in the second quarter of 2017. Adjusted operating margin was 14.8% in the second quarter of 2018, compared to 18.8% in the second quarter of 2017.
"Rogers achieved revenue growth across much of the business; however, margins were below our expectations in the quarter primarily due to additional costs for capacity and activities to reduce cost structure," stated Bruce D. Hoechner, Rogers' President and CEO. "We are turning the corner on near-term operating challenges. We are executing well on our strategy, as demonstrated by our recent synergistic acquisition of Griswold, and our ongoing substantial investments in capacity and multi-site readiness, in preparation for the significant growth opportunities in 5G wireless, advanced driver assistance systems, and electric and hybrid electric vehicles. Rogers is well positioned to achieve the performance targets outlined in our 2020 vision."
Business segment discussion
Advanced Connectivity Solutions (ACS)
Advanced
Connectivity Solutions reported 2018 second quarter net sales of $76.4
million, a 2.7% increase compared to 2017 second quarter net sales of
$74.3 million. The increase in 2018 second quarter net sales was largely
driven by aerospace and defense and automotive advanced driver
assistance systems (ADAS) revenues, partially offset by lower demand in
portable electronics and wireless 4G LTE applications. Second quarter
2018 net sales were favorably impacted by $1.9 million due to
fluctuations in currency exchange rates.
Elastomeric Material Solutions (EMS)
Elastomeric
Material Solutions reported 2018 second quarter net sales of $79.2
million, a 2.1% increase compared to 2017 second quarter net sales of
$77.6 million. EMS net sales increased on portable electronics,
consumer, automotive and mass transit revenues, partially offset by
lower general industrial and other applications. Fluctuations in
currency exchange rates favorably impacted net sales by $2.0 million in
the 2018 second quarter.
Power Electronics Solutions (PES)
Power Electronics
Solutions reported 2018 second quarter net sales of $53.6 million, a
22.2% increase compared to 2017 second quarter net sales of $43.9
million. 2018 second quarter net sales increased due to broad based
demand across markets, including particular strength in electric and
hybrid electric vehicles, renewable energy, mass transit and variable
frequency drives. Second quarter 2018 net sales were favorably impacted
by $4.3 million due to fluctuations in currency exchange rates.
Other
Other reported 2018 second quarter net sales of
$5.4 million, a decrease of 2.8% compared to the second quarter of 2017
sales of $5.6 million.
Balance sheet and other highlights
Cash position
Rogers ended the second quarter of 2018
with cash and cash equivalents of $174.7 million, a decrease of $6.5
million from $181.2 million at December 31, 2017. The primary drivers of
the lower cash balance were capital spending of $20.2 million, tax
payments related to vested equity awards of $6.4 million, and share
repurchases of $3.0 million, partially offset by $22.8 million of net
cash provided by operating activities.
Cash flow
Net cash provided from operating activities
of $22.8 million in the first half of 2018, a decrease compared to 2017.
The decrease in net cash provided by operating activities was primarily
driven by the use of working capital and lower net income. Capital
spending was $20.2 million in the first half of 2018, an increase
compared to $9.7 million in 2017.
Effective tax rate
Rogers' effective income tax rate
was 32.6% for the second quarter of 2018, compared to 33.9% for the
second quarter of 2017. The decrease was primarily due to a lower U.S.
effective tax rate, as a result of U.S. tax reform and geographic profit
mix, partially offset by an increase in current year accruals for
uncertain tax positions.
Financial outlook
Rogers guides its 2018 third quarter
net sales to a range of $220 to $230 million. Rogers guides its 2018
third quarter earnings to a range of $0.97 to $1.12 per diluted share,
excluding the impact of purchase accounting related to the acquisition
of Griswold. Adjusted earnings are guided to a range of $1.25 to $1.40
per diluted share.
Rogers guides 2018 full year capital spending to be in the range of $50 to $60 million.
Rogers guides the 2018 full year effective tax rate to be 25-27%, with a third quarter effective tax rate of 30-31%.
About Rogers Corporation
Rogers Corporation (NYSE: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, and safety and protection applications,
as well as other technologies where reliability is critical. Rogers
delivers Power Electronics Solutions for energy-efficient motor drives,
e-Mobility and renewable energy; Elastomeric Material Solutions for
sealing, vibration management and impact protection in mobile devices,
transportation interiors, industrial equipment and performance apparel;
and Advanced Connectivity Solutions for wireless infrastructure,
automotive safety and radar systems. Headquartered in Arizona (USA),
Rogers operates manufacturing facilities in the United States, China,
Germany, Belgium, Hungary, and South Korea, with joint ventures and
sales offices worldwide.
Safe Harbor Statement
This release contains
forward-looking statements, which may concern our plans, objectives,
outlook, goals, strategies, future events, future net sales or
performance, capital expenditures, financing needs, future
restructuring, plans or intentions relating to expansions, business
trends and other information that is not historical information. All
forward-looking statements are based upon information available to us on
the date of this release and are subject to risks, uncertainties and
other factors, many of which are outside of our control, which could
cause actual results to differ materially from the results discussed in
the forward-looking statements. Risks that could cause such results to
differ include: failure to capitalize on, and volatility within, the
Company's growth drivers, including advanced mobility and advanced
connectivity, such as delays in adoption or implementation of new
technologies; uncertain business, economic and political conditions in
the United States and abroad, particularly in China, South Korea,
Germany, Hungary and Belgium, where we maintain significant
manufacturing, sales or administrative operations; changes in trade
policy, tariff regulation or other trade restrictions; fluctuations in
foreign currency exchange rates; research and development efforts;
competitive developments; business development transactions and related
integration considerations, including failure to realize, or delays in
the realization of anticipated benefits of such transactions; the
outcome of ongoing and future litigation, including our asbestos-related
product liability litigation; inability to obtain raw materials,
including commodities, from single or limited source suppliers in a
timely and cost effective manner; and changes in laws and regulations
applicable to our business. For additional information about the risks,
uncertainties and other factors that may affect our business, please see
our most recent annual report on Form 10-K and any subsequent quarterly
reports on Forms 10-Q filed with the Securities and Exchange Commission.
Rogers Corporation assumes no responsibility to update any
forward-looking statements contained herein except as required by law.
Conference call and additional information
A conference call to discuss 2018 second quarter results today on Tuesday July, 31 2018 at 5pm ET.
A live webcast and slide presentation will be available under the investors section of www.rogerscorp.com/ir.
To participate, please dial:
1-800-574-8929 Toll-free in the United States
1-973-935-8524
Internationally
There is no passcode for the live teleconference.
If you are unable to attend, a conference call playback will be available from July 31, 2018 at approximately 8 pm ET through August 7, 2018 at 11:59 pm ET, by dialing 1-855-859-2056 from the United States, and 1-404-537-3406 from outside of the US, each with passcode 4967299.
Additionally, the archived webcast will be available on the Rogers website at approximately 8 pm ET July 31, 2018.
Additional information
Please contact the Company directly via
email or visit the Rogers website.
(Financial statements follow)
Condensed Consolidated Statements of Operations (Unaudited) |
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Three Months Ended | Six Months Ended | |||||||||||||||||
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) |
June 30, 2018 | June 30, 2017 | June 30, 2018 | June 30, 2017 | ||||||||||||||
Net sales | $ | 214,675 | $ | 201,424 | $ | 429,286 | $ | 405,252 | ||||||||||
Cost of sales | 138,003 | 120,878 | 276,007 | 244,356 | ||||||||||||||
Gross margin | 76,672 | 80,546 | 153,279 | 160,896 | ||||||||||||||
Selling, general and administrative expenses | 42,540 | 40,012 | 83,137 | 74,580 | ||||||||||||||
Research and development expenses | 8,750 | 7,141 | 16,884 | 14,102 | ||||||||||||||
Restructuring and impairment charges | 541 | 1,079 | 963 | 1,805 | ||||||||||||||
Other operating (income) expense, net | (383 | ) | — | (3,974 | ) | (942 | ) | |||||||||||
Operating income | 25,224 | 32,314 | 56,269 | 71,351 | ||||||||||||||
Equity income in unconsolidated joint ventures | 1,804 | 966 | 2,811 | 1,976 | ||||||||||||||
Other income (expense), net | (34 | ) | 260 | 32 | 1,379 | |||||||||||||
Interest expense, net | (1,292 | ) | (1,947 | ) | (2,503 | ) | (3,195 | ) | ||||||||||
Income before income tax expense | 25,702 | 31,593 | 56,609 | 71,511 | ||||||||||||||
Income tax expense | 8,373 | 10,697 | 13,144 | 23,583 | ||||||||||||||
Net income | $ | 17,329 | $ | 20,896 | $ | 43,465 | $ | 47,928 | ||||||||||
Basic earnings per share | $ | 0.94 | $ | 1.15 | $ | 2.37 | $ | 2.65 | ||||||||||
Diluted earnings per share | $ | 0.93 | $ | 1.13 | $ | 2.33 | $ | 2.60 | ||||||||||
Shares used in computing: | ||||||||||||||||||
Basic earnings per share | 18,389 | 18,140 | 18,338 | 18,098 | ||||||||||||||
Diluted earnings per share | 18,660 | 18,547 | 18,635 | 18,460 | ||||||||||||||
Please note for adoption of ASU 2017-07, Rogers has reclassified second quarter and year to date 2017 pension and OPEB income, in the amount of $445 and $849 thousand, respectively, from selling, general and administrative expense to other income (expense), net, in the condensed consolidated statements of operations above.
Condensed Consolidated Statements of Financial Position (Unaudited) |
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(IN THOUSANDS) | June 30, 2018 | December 31, 2017 | ||||||||
Assets | ||||||||||
Current assets | ||||||||||
Cash and cash equivalents | $ | 174,700 | $ | 181,159 | ||||||
Accounts receivable, less allowance for doubtful accounts of $1,284 and $1,525 | 148,727 | 140,562 | ||||||||
Contract assets | 21,933 | — | ||||||||
Inventories | 117,739 | 112,557 | ||||||||
Prepaid income taxes | 2,732 | 3,087 | ||||||||
Current portion of asbestos-related insurance receivables | 5,682 | 5,682 | ||||||||
Assets held for sale | 381 | 896 | ||||||||
Other current assets | 13,535 | 10,580 | ||||||||
Total current assets | 485,429 | 454,523 | ||||||||
Property, plant and equipment, net of accumulated depreciation of $300,416 and $289,909 | 184,478 | 179,611 | ||||||||
Investments in unconsolidated joint ventures | 19,411 | 18,324 | ||||||||
Deferred income taxes | 3,501 | 6,008 | ||||||||
Goodwill | 234,287 | 237,107 | ||||||||
Other intangible assets, net of amortization | 152,009 | 160,278 | ||||||||
Asbestos-related insurance receivables | 63,511 | 63,511 | ||||||||
Other long-term assets | 5,503 | 5,772 | ||||||||
Total assets | $ | 1,148,129 | $ | 1,125,134 | ||||||
Liabilities and Shareholders’ Equity | ||||||||||
Current liabilities | ||||||||||
Accounts payable | $ | 37,299 | $ | 36,116 | ||||||
Accrued employee benefits and compensation | 26,081 | 39,394 | ||||||||
Accrued income taxes payable | 3,987 | 6,408 | ||||||||
Current portion of capital lease obligations | 600 | 579 | ||||||||
Current portion of asbestos-related liabilities | 5,682 | 5,682 | ||||||||
Other accrued liabilities | 25,095 | 25,629 | ||||||||
Total current liabilities | 98,744 | 113,808 | ||||||||
Borrowings under credit facility | 130,982 | 130,982 | ||||||||
Non-current portion of capital lease obligations | 5,404 | 5,873 | ||||||||
Pension liability | 8,720 | 8,720 | ||||||||
Retiree health care and life insurance benefits | 1,685 | 1,685 | ||||||||
Asbestos-related liabilities | 70,056 | 70,500 | ||||||||
Non-current income tax | 9,755 | 12,823 | ||||||||
Deferred income taxes | 13,879 | 10,706 | ||||||||
Other long-term liabilities | 4,119 | 3,464 | ||||||||
Shareholders’ equity | ||||||||||
Capital Stock - $1 par value; 50,000 authorized shares; 18,380 and 18,255 shares issued and outstanding | 18,380 | 18,255 | ||||||||
Additional paid-in capital | 126,452 | 128,933 | ||||||||
Retained earnings | 732,217 | 684,540 | ||||||||
Accumulated other comprehensive loss | (72,264 | ) | (65,155 | ) | ||||||
Total shareholders' equity | 804,785 | 766,573 | ||||||||
Total liabilities and shareholders' equity | $ | 1,148,129 | $ | 1,125,134 | ||||||
Reconciliation of non-GAAP financial measures to the comparable GAAP measures
Non-GAAP financial measures:
This earnings release includes the following financial measures that are not presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”):
(1) Adjusted earnings per diluted share, which the Company defines as earnings per diluted share excluding acquisition-related amortization of intangible assets and discrete items, such as restructuring expenses, acquisition and related integration costs, and gains or losses on asset or business dispositions (collectively, “Discrete Items”);
(2) Adjusted EBITDA, which the Company defines as net income excluding interest expense, income tax expense, depreciation and amortization, and Discrete Items; and
(3) Adjusted operating margin, which the Company defines as operating margin excluding acquisition-related amortization of intangible assets and Discrete Items.
Management believes each of these measures is useful to investors because they allow for comparison to the Company’s performance in prior periods without the effect of items that, by their nature, tend to obscure the Company’s core operating results due to the potential variability across periods based on the timing, frequency and magnitude. As a result, management believes that adjusted earnings per diluted share, adjusted EBITDA and adjusted operating margin enhance the ability of investors to analyze trends in the Company’s business and evaluate the Company’s performance relative to peer companies. However, non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation from, or solely as alternatives to, financial measures prepared in accordance with GAAP. In addition, these non-GAAP financial measures may differ from similarly named measures used by other companies. Reconciliations of the differences between these non-GAAP financial measures and their most directly comparable financial measures calculated in accordance with GAAP are set forth below.
**2017 financial measures below have been adjusted for the adoption of ASU 2017-07, and has reclassified pension and OPEB income from selling, general and administrative expense to other income (expense), net.
Reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share for the second quarter: |
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2018 | 2017 | |||||||||
Earnings per diluted share | Q2 | Q2 | ||||||||
GAAP earnings per diluted share | $ | 0.93 | $ | 1.13 | ||||||
Restructuring, severance, impairment and other related costs | 0.09 | 0.04 | ||||||||
Acquisition and related integration costs | 0.04 | 0.03 | ||||||||
Gain on sale of long-lived asset | (0.02 | ) | — | |||||||
Total discrete items | $ | 0.11 | $ | 0.07 | ||||||
Earnings per diluted share adjusted for discrete items | $ | 1.04 | $ | 1.20 | ||||||
Acquisition intangible amortization | 0.15 | 0.13 | ||||||||
Adjusted earnings per diluted share | $ | 1.19 | $ | 1.33 | ||||||
Reconciliation of GAAP net income to adjusted EBITDA for the second quarter*: |
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2018 | 2017 | |||||||||
(amounts in millions) | Q2 | Q2 | ||||||||
Net income | $ | 17.3 | $ | 20.9 | ||||||
Interest expense, net | 1.3 | 1.9 | ||||||||
Income tax expense | 8.4 | 10.7 | ||||||||
Depreciation | 7.1 | 7.2 | ||||||||
Amortization | 3.8 | 3.8 | ||||||||
Restructuring, severance, impairment and other related costs | 2.2 | 1.1 | ||||||||
Acquisition and related integration costs | 0.9 | 0.9 | ||||||||
Loss (gain) on sale of long-lived assets | (0.4 | ) | — | |||||||
Adjusted EBITDA | $ | 40.7 | $ | 46.5 | ||||||
*Values in table may not add due to rounding. |
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Reconciliation of GAAP operating margin to adjusted operating margin for the second quarter*: |
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2018 | 2017 | ||||||||
Operating margin | Q2 | Q2 | |||||||
**GAAP operating margin | 11.7 | % | 16.0 | % | |||||
Restructuring, severance, impairment and other related costs | 1.0 | % | 0.5 | % | |||||
Acquisition and related integration costs | 0.4 | % | 0.5 | % | |||||
Loss (gain) on sale of long-lived assets | (0.2 | )% | — | % | |||||
Total discrete Items | 1.2 | % | 1.0 | % | |||||
Operating margin adjusted for discrete items | 13.0 | % | 17.0 | % | |||||
Acquisition intangible amortization | 1.8 | % | 1.8 | % | |||||
Adjusted operating margin | 14.8 | % | 18.8 | % | |||||
*Percentages in table may not add due to rounding. |
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Reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share guidance for the 2018 second quarter: |
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Guidance Q2 2018 |
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GAAP earnings per diluted share | $1.10 - $1.25 | |||
Discrete items | $0.01 | |||
Acquisition intangible amortization | $0.14 | |||
Adjusted earnings per diluted share | $1.25 - $1.40 | |||
Reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share guidance for the 2018 third quarter: |
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Guidance Q3 2018 |
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GAAP earnings per diluted share | $0.97 - $1.12 | |||
Discrete items | $0.13 | |||
Acquisition intangible amortization | $0.15 | |||
Adjusted earnings per diluted share | $1.25 - $1.40 |
CONTACT:
Investor contact:
Rogers Corporation
Jack
Monti, 480-917-6026
jack.monti@rogerscorp.com
http://www.rogerscorp.com