ROGERS CORP

Previous wording

This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. Such statements are generally accompanied by words such as “anticipate,” “assume,” “believe,” “could,” “estimate,” “expect,” “foresee,” “goal,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “seek,” “target” or similar expressions that convey uncertainty as to future events or outcomes. Forward-looking statements are based on assumptions and beliefs that we believe to be reasonable; however, assumed facts almost always vary from actual results, and the differences between assumed facts and actual results could be material depending upon the circumstances. Where we express an expectation or belief as to future results, that expectation or belief is expressed in good faith and based on assumptions believed to have a reasonable basis. We cannot assure you, however, that the stated expectation or belief will occur or be achieved or accomplished. Among the factors that could cause our results to differ materially from those indicated by forward-looking statements are risks and uncertainties inherent in our business including, without limitation:

Current wording

This Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. Such statements are generally accompanied by words such as “anticipate,” “assume,” “believe,” “could,” “estimate,” “expect,” “foresee,” “goal,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “seek,” “target” or similar expressions that convey uncertainty as to future events or outcomes. Forward-looking statements are based on assumptions and beliefs that we believe to be reasonable; however, assumed facts almost always vary from actual results, and the differences between assumed facts and actual results could be material depending upon the circumstances. Where we express an expectation or belief as to future results, that expectation or belief is expressed in good faith and based on assumptions believed to have a reasonable basis. We cannot assure you, however, that the stated expectation or belief will occur or be achieved or accomplished. Among the factors that could cause our results to differ materially from those indicated by forward-looking statements are risks and uncertainties inherent in our business including, without limitation:

Previous wording

•failure to successfully execute on our long-term growth strategy as a standalone company;

Current wording

•failure to successfully execute on our long-term growth strategy;

Previous wording

•uncertain business, economic and political conditions in the U.S. and abroad, particularly in China, Germany, Belgium, England, South Korea and Hungary where we maintain significant manufacturing, sales or administrative operations;

Current wording

•uncertain business, economic and political conditions in the U.S. and abroad, particularly in China, South Korea, Belgium, Germany, England, and Hungary where we maintain significant manufacturing, sales or administrative operations;

Previous wording

•the trade policy dynamics between the U.S. and China reflected in trade agreement negotiations, the imposition of tariffs and other trade restrictions, as well as the potential for U.S.-China supply chain decoupling;

Current wording

•the trade policy dynamics between the U.S. and other countries where the Company does business, in particular China, as reflected in recently escalated tariff impositions and associated countermeasures, as well as the potential for U.S.-China supply chain decoupling;

Previous wording

We design, develop, manufacture and sell high-performance and high-reliability engineered materials and components to meet our customers’ demanding challenges. We operate two strategic operating segments: AES and EMS. Our remaining operations, which represent non-core businesses, are reported in our Other operating segment. We are headquartered in Chandler, Arizona.

Current wording

We design, develop, manufacture and sell high-performance and high-reliability engineered materials and components to meet our customers’ challenges. We operate two strategic operating segments: AES and EMS. Our remaining operations, which represent non-core businesses, are reported in our Other operating segment. We are headquartered in Chandler, Arizona.

Previous wording

Our growth and profitability strategy is based upon the following principles: (1) market-driven organization, (2) innovation leadership, (3) synergistic mergers and acquisitions, and (4) operational excellence. Our priorities in executing this strategy are focused on driving near-term improvements to profitability and improving the growth outlook for the Company over the next several years by further strengthening our focus on commercial activities, expanding capacity to meet customer demand and driving innovation.

Current wording

Our growth and profitability strategy is based upon the following principles: (1) market-driven organization, (2) innovation leadership, (3) synergistic mergers and acquisitions, and (4) operational excellence. Our priorities in executing this strategy are focused on driving near-term improvements to profitability and improving the growth outlook for the Company over the next several years by further strengthening our focus on our portfolio and commercial activities, optimizing our global capacity to meet customer demand and driving innovation.

Previous wording

As a market-driven organization, we are focused on capitalizing on growth opportunities in the increasing electrification of vehicles, including EV/HEV, and increasing use of ADAS in the automotive industry, the advancement of communication systems in aerospace and defense, the growth of 5G smartphones in the portable electronics industry, and in renewable energy. In addition to our focus on these markets, we sell into a variety of other markets including general industrial, wireless infrastructure and mass transit.

Current wording

As a market-driven organization, we are focused on capitalizing on growth opportunities in several different end markets. This includes the automotive industry, where there are market opportunities resulting from the increasing electrification of vehicles, and in the expanding use of ADAS. Other opportunities are driven by the advancement of communication systems in aerospace and defense, the growth of next-generation smartphones in the portable electronics industry, and the continued expansion of renewable energy. In addition to our focus on these markets, we sell into a variety of other markets, including general industrial, wireless infrastructure and mass transit.

Previous wording

Our growth strategy is based on addressing trends in these markets and applying our repeatable customer engagement process. Our sales engineers and technical service employees work closely with our customers to understand their complex challenges. They then leverage our innovation and technology capabilities and deep applications expertise to provide unique solutions to customers’ challenges. In addition to these capabilities, our strategy for success as a manufacturer of engineered materials and components is also built on our reputation for high performance and reliability solutions, trusted customer relationships, a broad product portfolio and custom design capabilities. Through this strategy we expect to be able to drive further commercial wins, which provide the potential for higher growth in the future. We have also expanded our capabilities through organic investment and acquisitions and strive to ensure high quality solutions for our customers.

Current wording

Our growth strategy is based on addressing trends in these markets and applying our repeatable customer engagement process. Our sales engineers and technical service employees work closely with our customers to understand their complex challenges. They then leverage our innovation and technology capabilities and deep applications expertise to provide unique solutions to customers’ challenges. In addition to these capabilities, our strategy for success is also built on our reputation for high performance and reliability, trusted customer relationships and an expansive product portfolio. Through this strategy we expect to be able to drive further commercial wins, which provide the potential for future growth. This growth strategy includes both organic and inorganic investments from which we strive to ensure high-quality solutions for our customers.

Previous wording

Our operational excellence efforts are focused on driving significant near-term enhancements to our profitability and ongoing cost structure improvements. These efforts include focusing on improving yields, throughput, procurement capabilities and manufacturing processes and selectively adding strategic new hires to achieve better performance. We have also taken specific cost improvement actions in recent quarters that have benefited our performance. These actions include optimizing our manufacturing footprint, divesting non-core product lines and reductions to manufacturing and corporate employees. We continue to review and re-align our manufacturing and engineering footprint in an effort to maintain a leading competitive position globally and to support our customers’ growth initiatives.

Current wording

Our operational excellence efforts are focused on driving ongoing cost structure improvements to further enhance our profitability. These efforts include focusing on improving yields, throughput, procurement capabilities, and manufacturing processes. We have also taken specific cost improvement actions in recent quarters that have and will benefit our performance. These actions include optimizing our manufacturing footprint, divesting non-core product lines and reducing manufacturing and corporate employees. We continue to review and re-align our manufacturing and engineering footprint in an effort to maintain a leading competitive position globally and to support our customers’ growth initiatives.

Previous wording

If we are able to successfully execute on our strategy, we see an opportunity, over the next several years, to return to historical levels of profitability and meaningfully improve revenues from current levels, led by organic growth and complemented by targeted acquisitions. This outlook is supported by our participation in a number of growth markets and by our competitive positions in these markets. The fastest growing market opportunity is expected to be EV/HEV where third-party analysis projects that the market will increase at a compound annual growth rate of between 15% and 20% over the next several years. Within the EV/HEV market, we believe our advanced battery cell pads and ceramic substrates provide multiple content opportunities to capitalize on this growth. Across these areas we have secured a number of design wins and have a strong opportunity pipeline. Other markets with good growth trajectories include ADAS, aerospace and defense, portable electronics and renewable energy.

Current wording

If we are able to successfully execute on our strategy, we see an opportunity, over the next several years, to increase revenues from current levels and further improve profitability. The increase in revenues is expected to come from a combination of organic growth and targeted acquisitions. This outlook is supported by our participation in a number of growth markets and by our competitive positions in these markets. The fastest growing market opportunity is expected to be EV/HEV where third-party analysis projects that the market will increase at a compound annual growth rate of between 10% and 15% over the next several years. Within the EV/HEV market, we believe our advanced battery cell pads and ceramic substrates provide multiple content opportunities to capitalize on this growth. Other markets with good growth opportunities include ADAS, aerospace and defense, portable electronics and renewable energy.

Previous wording

The following key highlights and factors should be considered when reviewing our results of operations, financial position and liquidity:

Current wording

The following synopsis and factors should be considered when reviewing our results of operations, financial position and liquidity:

Previous wording

•In the third quarter of 2024 as compared to the third quarter of 2023, our net sales decreased approximately 8.2% to $210.3 million, our gross margin increased approximately 10 basis points to 35.2% from 35.1%, and we had an operating margin of 6.9% compared to an operating margin of 11.8%, a decrease of approximately 490 basis points.

Current wording

•In the first quarter of 2025 as compared to the first quarter of 2024, our net sales decreased approximately 10.7% to $190.5 million, our gross margin decreased approximately 210 basis points to 29.9% from 32.0%, and we had an operating margin of 0.2% compared to an operating margin of 5.5%, a decrease of approximately 570 basis points.

Previous wording

We incurred restructuring charges and related expenses in 2024 associated with our announced intent to wind down manufacturing operations in our Evergem, Belgium facility for our AES operating segment and our announced exit from our Burlington, Massachusetts Innovation Center facility. We recognized restructuring charges and related expenses pertaining to these restructuring plans of $6.3 million and $7.6 million in the three and nine months ended September 30, 2024.

Current wording

•We recognized restructuring charges of $5.9 million for the three months ended March 31, 2025 primarily related to our announced intent to wind down our manufacturing operations for our AES operating segment in our Evergem, Belgium facility, along with a reduction of our global workforce.

Previous wording

AES net sales decreased by 10.9% in the first nine months of 2024 compared to the first nine months of 2023. The decrease in net sales over the first nine months of 2023 was primarily driven by lower net sales in the EV/HEV, ADAS, industrial power systems and renewable energy markets, partially offset by higher net sales in the wireless infrastructure and aerospace and defense markets. We experienced lower EV/HEV net sales as customers continued to manage inventory levels and adjusted to softer end market demand.

Current wording

Net sales decreased by 10.7% in the first quarter of 2025 compared to the first quarter of 2024. Our AES and EMS operating segments had net sales decreases of 14.7% and 3.6%, respectively. The decrease in net sales was primarily due to lower net sales in the EV/HEV and wireless infrastructure markets. We experienced lower EV/HEV net sales as customers continued to manage inventory levels and adjusted to softer end market demand. We experienced lower wireless infrastructure net sales as a program for a key customer was launched and completed in 2024.

Previous wording

R&D expenses increased 3.9% in the first nine months of 2024 from the first nine months of 2023 due to a $1.8 million increase in trial costs for alternative raw materials and a $0.5 million increase in fixed assets depreciation expense, partially offset by a $0.7 million decrease in compensation and benefits expense.

Current wording

R&D expenses decreased 20.2% in the first quarter of 2025 from the first quarter of 2024 due to a $0.8 million decrease in compensation and benefits expense and a $0.5 million decrease in trial costs.

Previous wording

Other income (expense), net decreased to expense of $1.5 million in the third quarter of 2024 from income of $0.7 million in the third quarter of 2023. On a quarter-to-date basis, the decrease was due to an unfavorable year-over-year change in impacts from our foreign currency transactions and an unfavorable year-over-year change in impacts from our foreign currency derivatives, partially offset by a favorable year-over-year change in impacts from our copper derivative contracts.

Current wording

Other income (expense), net decreased to expense of $1.6 million in the first quarter of 2025 from income of $0.4 million in the first quarter of 2024. The decrease was due to unfavorable year-over-year changes in impacts from our foreign currency transactions.

Previous wording

Interest expense, net, decreased by $2.3 million in the third quarter of 2024 from the third quarter of 2023, and decreased by $7.6 million in the first nine months of 2024 from the first nine months of 2023. The decreases on a year-over-year quarter-to-date basis and a year-to-date basis were primarily due to a lower weighted-average outstanding borrowings under our revolving credit facility.

Current wording

Interest income (expense), net, was $0.3 million of income in the first quarter of 2025 compared to $0.8 million of expense in the first quarter of 2024. The year-over-year change was due to a lower weighted-average outstanding balance for our borrowings under our revolving credit facility and higher income on interest-bearing cash accounts.

Previous wording

The below discussion of the effective tax rate for the periods presented in the consolidated statements of operations is in comparison to the 21% U.S. statutory federal income tax rate.

Current wording

The below discussion of the effective tax rate for the periods presented in the condensed consolidated statements of operations is in comparison to the 21% U.S. statutory federal income tax rate.

Previous wording

During the third quarter of 2023, our effective tax rate was 27.3%. During the third quarter of 2023, our effective tax rate was unfavorably impacted primarily by the mix of income in higher tax rate jurisdictions.

Current wording

During the first quarter of 2024, our effective tax rate was 32.8%. During the first quarter of 2024, our effective tax rate was unfavorably impacted primarily by the write-off of deferred tax assets related to stock compensation.

Previous wording

Operating Segment Net Sales and Operating Income

Current wording

Operating Segment Net Sales and Gross Margin

Previous wording

AES net sales decreased by 11.2% in the third quarter of 2024 compared to the third quarter of 2023. The decrease in net sales over the third quarter of 2023 was primarily driven by lower net sales in the EV/HEV, industrial power systems, ADAS and renewable energy markets, partially offset by higher net sales in the wireless infrastructure and aerospace and defense markets. We experienced lower EV/HEV net sales as customers continued to manage inventory levels and adjusted to softer end market demand.

Current wording

AES net sales decreased by 14.7% in the first quarter of 2025 compared to the first quarter of 2024. The decrease in net sales over the first quarter of 2024 was primarily driven by lower net sales in the EV/HEV, wireless infrastructure and industrial markets. We experienced lower EV/HEV net sales as customers continued to manage inventory levels and adjusted to softer end market demand. We experienced lower wireless infrastructure net sales as a program for a key customer was launched and completed in 2024.

Previous wording

EMS net sales decreased by 7.1% in the first nine months of 2024 compared to the first nine months of 2023. The decrease in net sales over the first nine months of 2023 was primarily driven by lower net sales in the general industrial and aerospace and defense markets, partially offset by higher net sales in the EV/HEV market.

Current wording

EMS net sales decreased by 3.6% in the first quarter of 2025 compared to the first quarter of 2024. The decrease in net sales over the first quarter of 2024 was primarily driven by lower net sales in the EV/HEV and aerospace and defense markets.

Previous wording

Net sales in this segment decreased by 18.8% in the third quarter of 2024 from the third quarter of 2023. Operating income decreased 31.3% in the third quarter of 2024 compared to the third quarter of 2023. The decrease in operating income was primarily driven by unfavorable impacts from lower volume. As a percentage of net sales, the operating income in the third quarter of 2024 was 28.2% compared to an operating income of 33.5% reported in the third quarter of 2023.

Current wording

Net sales in this segment decreased by 33.9% in the first quarter of 2025 from the first quarter of 2024. Our Other operating segment gross margin in the first quarter of 2025 declined due to lower volume. As a percentage of net sales, gross margin in the first quarter of 2025 was 32.4%, an approximately 690 basis point decrease as compared to 39.3% in the first quarter of 2024.

Previous wording

We believe that our existing sources of liquidity and cash flows that we expect to generate from our operations, together with our available credit facilities, will be sufficient to fund our operations, currently planned capital expenditures, research and development efforts and our debt service commitments, for at least the next 12 months. We regularly review and evaluate the adequacy of our cash flows, borrowing facilities and banking relationships in an effort to ensure that we have the appropriate access to cash to fund both our near-term operating needs and our long-term strategic initiatives.

Current wording

We believe that our existing sources of liquidity and cash flows that we expect to generate from our operations, together with our available credit facilities, will be sufficient to fund our operations, currently planned capital expenditures and R&D efforts, for at least the next 12 months. We regularly review and evaluate the adequacy of our cash flows, borrowing facilities and banking relationships in an effort to ensure that we have the appropriate access to cash to fund both our near-term operating needs and our long-term strategic initiatives.

Previous wording

Approximately $93.5 million of our cash and cash equivalents were held by non-U.S. subsidiaries as of September 30, 2024. We did not make any changes in the nine months ended September 30, 2024 to our position on the permanent reinvestment of our earnings from foreign operations. With the exception of certain of our Chinese subsidiaries, where a substantial portion of our Asia cash and cash equivalents are held, we continue to assert that historical foreign earnings are indefinitely reinvested.

Current wording

Approximately $81.4 million of our cash and cash equivalents were held by non-U.S. subsidiaries as of March 31, 2025. We did not make any changes in the three months ended March 31, 2025 to our position on the permanent reinvestment of our earnings from foreign operations. With the exception of certain of our Chinese subsidiaries, where a substantial portion of our Asia cash and cash equivalents are held, we continue to assert that historical foreign earnings are indefinitely reinvested.

Previous wording

•Cash and cash equivalents were $146.4 million as compared to $131.7 million as of December 31, 2023, an increase of $14.7 million, or 11.2%. This increase was primarily due to cash flows provided by operations, partially offset by $30.0 million in discretionary principal payments on our revolving credit facility, $40.7 million in capital expenditures, $7.9 million in share repurchases and $1.3 million in tax payments related to net share settlement of equity awards.

Current wording

•Cash and cash equivalents were $175.6 million as compared to $159.8 million as of December 31, 2024, an increase of $15.8 million, or 9.9%. This increase was primarily due to the $13.4 million of proceeds from the sale of our Price Road facility and our cash flows provided by operations, partially offset by $9.6 million in capital expenditures, and $1.2 million in tax payments related to net share settlement of equity awards.

Previous wording

In 2024, we expect capital spending to be in the range of approximately $50.0 million to $60.0 million. We plan to fund our capital spending in 2024 with cash from operations and cash on-hand, as well as our existing revolving credit facility, if necessary.

Current wording

In 2025, we expect capital spending to be in the range of approximately $30.0 million to $40.0 million. We plan to fund our capital spending in 2025 with cash from operations and cash on-hand, as well as our existing revolving credit facility, if necessary.

Previous wording

During the third quarter of 2024, we did not become aware of any material developments related to environmental matters disclosed in our Annual Report, our asbestos litigation or other material contingencies previously disclosed or incur any material costs or capital expenditures related to such matters. Refer to “Note 10 – Commitments and Contingencies” to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q for further discussion of these contingencies.

Current wording

During the first quarter of 2025, we did not become aware of any material developments related to environmental matters disclosed in our Annual Report, our asbestos litigation or other material contingencies previously disclosed or incur any material costs or capital expenditures related to such matters. Refer to “Note 9 – Commitments and Contingencies” to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q for further discussion of these contingencies.

Previous wording

There were no material changes in our critical accounting policies during the third quarter of 2024.

Current wording

There were no material changes in our critical accounting policies during the first quarter of 2025.