ROGERS CORP

Note 1 –Basis of Presentation

As used herein, the terms “Company,” “Rogers,” “we,” “us,” “our” and similar terms mean Rogers Corporation and its consolidated subsidiaries, unless the context indicates otherwise.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information. Accordingly, these statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In our opinion, the accompanying condensed consolidated financial statements include all normal recurring adjustments necessary for their fair presentation in accordance with U.S. GAAP. All significant intercompany balances and transactions have been eliminated.

Interim results are not necessarily indicative of results for a full year. For further information regarding our accounting policies, refer to the audited consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Note 2 –Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss by component were as follows:

(1) Net of taxes of $1.4 million and $1.5 million as of June 30, 2025 and December 31, 2024, respectively. Net of taxes of $1.7 million and $1.8 million as of June 30, 2024 and December 31, 2023, respectively.

Note 3 –Derivatives and Hedging

The valuation of our derivative contracts used to manage their respective risks is described below:

•Foreign Currency– The fair value of any foreign currency option derivative is based upon valuation models applied to current market information such as strike price, spot rate, maturity date and volatility, and by reference to market values resulting from an over-the-counter market or obtaining market data for similar instruments with similar characteristics.

•Commodity– The fair value of copper derivatives is computed using a combination of intrinsic and time value valuation models, which are collectively a function of five primary variables: price of the underlying instrument, time to expiration, strike price, interest rate and volatility. The intrinsic valuation model reflects the difference between the strike price of the underlying copper derivative instrument and the current prevailing copper prices in an over-the-counter market at period end. The time value valuation model incorporates changes in the price of the underlying copper derivative instrument, the time value of money, the underlying copper derivative instrument’s strike price and the remaining time to the underlying copper derivative instrument’s expiration date from the period end date.

As of June 30, 2025, we did not have any derivative contracts that qualified for hedge accounting treatment.

Foreign Currency

During the three and six months ended June 30, 2025, we entered into U.S. dollar, euro, Korean won, Hungarian forint, and Japanese yen forward contracts. We entered into these foreign currency forward contracts to mitigate certain global transactional exposures. These contracts do not qualify for hedge accounting treatment. As a result, any fair value adjustments required on these contracts are recorded in “Other income (expense), net” line item in our condensed consolidated statements of operations in the period in which the adjustment occurred.

As of June 30, 2025, the notional values of the remaining foreign currency forward contracts were as follows:

Commodity

As of June 30, 2025, we had 12 outstanding contracts to hedge exposure related to the commodity price of copper in our AES operating segment. These contracts are held with financial institutions and are intended to offset rising copper prices and do not qualify for hedge accounting treatment. As a result, any fair value adjustments required on these contracts are recorded in “Other income (expense), net” line item in our condensed consolidated statements of operations in the period in which the adjustment occurred.

As of June 30, 2025, the volume of our copper contracts outstanding was as follows:

Note 4 -Balance Sheet Items

Accounts Receivable

The “Accounts receivable, net” line item in the condensed consolidated statements of financial position consisted of the following:

Contract Assets

We had contract assets primarily related to unbilled revenue for products that are deemed to have no alternative use whereby we have the right to payment. Revenue is recognized in advance of billing to the customer in these circumstances as billing is typically performed at the time of shipment to the customer. The unbilled revenue is included in the “Contract assets” line item in the condensed consolidated statements of financial position. We did not have any contract liabilities as of June 30, 2025 or December 31, 2024. No impairment losses were recognized in each of the three- and six-month periods ended June 30, 2025 or June 30, 2024 on any contract assets arising from our contracts with customers. Our contract assets by operating segment as of June 30, 2025 and December 31, 2024 were as follows:

Inventories

The “Inventories, net” line item in the condensed consolidated statements of financial position consisted of the following:

Accounts Payable

The “Accounts payable” line item in the condensed consolidated statements of financial position consisted of the following:

Note 5 -Leases

Finance Leases

We have finance leases primarily related to manufacturing equipment. Noncash activities involving finance lease right-of-use assets obtained in exchange for lease liabilities werenil for the three months ended June 30, 2025 and 2024. Noncash activities involving finance lease right-of-use assets obtained in exchange for lease liabilities was $8.1 million and $0.1 million for the six months ended June 30, 2025 and 2024, respectively. Our expenses and payments for finance leases were as follows:

Operating Leases

We have operating leases primarily related to manufacturing and R&D facilities, as well as vehicles. Noncash activities involving operating lease right-of-use assets obtained in exchange for lease liabilities was $0.2 million and $0.2 million for the three months ended June 30, 2025 and 2024, respectively. Noncash activities involving operating lease right-of-use assets obtained in exchange for lease liabilities was $0.4 million and $0.3 million for the six months ended June 30, 2025 and 2024, respectively. Our expenses and payments for operating leases were as follows:

Lease Balances in Statements of Financial Position

The assets and liabilities balances related to finance and operating leases reflected in the condensed consolidated statements of financial position were as follows:

Net Future Minimum Lease Payments

The following table includes future minimum lease payments under finance and operating leases together with the present value of the net future minimum lease payments as of June 30, 2025:

The following table includes information regarding the lease term and discount rates utilized in the calculation of the present value of net future minimum lease payments:

Note 6 –Goodwill and Other Intangible Assets

Goodwill

The changes in the net carrying amount of goodwill by operating segment were as follows:

Other Intangible Assets

The carrying amount of other intangible assets were as follows:

In the table above, gross carrying amounts and accumulated amortization may differ from prior periods due to foreign exchange rate fluctuations.

The amortization expense related to other intangible assets was as follows:

The estimated future amortization expense is $5.6 million, $10.8 million, $10.4 million, $8.1 million, and $7.7 million in 2025, 2026, 2027, 2028, and 2029, respectively. These amounts could vary based on changes in foreign currency exchange rates.

The weighted average amortization period as of June 30, 2025, by definite-lived other intangible asset class, is presented in the table below:

Goodwill & Other Intangible Assets Impairments

Goodwill and indefinite-lived other intangible assets are evaluated for impairment annually, and between annual impairment assessments if events or changes in circumstances indicate the carrying value may be impaired, by first performing a qualitative assessment to determine whether a quantitative impairment assessment is necessary.

In the second quarter of 2025, we concluded that a quantitative impairment assessment was required as the fair value of our curamik® reporting unit, which is under our AES operating segment, may be more likely than not less than its carrying value based on multiple triggering events, including changing market competition and supply dynamics that resulted in reduced demand forecasts for short and mid-term net sales and gross margin.

Based on our interim impairment assessment, we concluded our curamik® reporting unit’s carrying value exceeded its estimated fair value. As a result, we recorded non-cash impairment charges to our curamik® reporting unit’s goodwill and indefinite-lived other intangible asset of $67.3 million and $4.5 million, respectively, which represents full impairments of each. The decline in the estimated fair value of our curamik® reporting unit during the second quarter of 2025, and the resulting impairment charges, was primarily driven by revised short-term and mid-term forecasts for net sales and gross margin expectations of our curamik® reporting unit. The impairment charges were recorded in the “Restructuring and impairment charges” line item in the condensed consolidated statements of operations.

The application of the quantitative assessment requires significant judgment, including the assignment of assets and liabilities to reporting units and determination of the fair value of each reporting unit for which a quantitative assessment is performed. The quantitative goodwill and indefinite-lived other intangible asset impairment assessment performed over the curamik® reporting unit consisted of a fair value calculation which combined an income approach and a market approach, weighted at 50% each, which was then compared with the reporting unit’s carrying value. The income approach uses the discounted cash flow method, which is based on the present value of future cash flows through a multi-year discounted cash flow analysis. The market approach uses the guideline public company method, which is based on market data using comparable publicly traded company multiples of EBITDA for a group of benchmark companies. Determination of fair value is subjective and requires the use of significant estimates and assumptions, including financial projections for net sales, gross margin and operating margin, discount rates, terminal growth rates, future market conditions, and market multiples, among others. We assessed the assumptions used in the quantitative impairment assessment to be reasonable and consistent with assumptions that would have been used by other market participants.

No triggering events were identified for our other reporting units in the second quarter of 2025, and therefore, interim impairment assessments were considered unnecessary.

Long-lived assets, including definite-lived other intangible assets, property, plant and equipment and lease right-of-use assets, are evaluated for recoverability whenever events or circumstances indicate the carrying value may not be recoverable. The recoverability test is performed at the asset group level, which we have assessed to be our reporting units. As a result of triggering events identified in our curamik® reporting unit during the second quarter of 2025, discussed above, we tested long-lived assets for recoverability by comparing the estimated future undiscounted cash flows of the asset group to its carrying value. Determination of estimated future undiscounted cash flows is subjective and requires the use of significant estimates and assumptions, including financial projections for net sales, gross margin and operating margin and future market conditions, among others. We assessed the assumptions used in the recoverability test to be reasonable and consistent with assumptions that would have been used by other market participants.

Based on our long-lived assets recoverability test, our curamik® reporting unit, had estimated future undiscounted cash flows that exceeded its carrying value. As a result, no impairment charges to our curamik® reporting unit’s long-lived assets were recognized in the second quarter of 2025.

Note 7 –Postretirement Benefit Plans

Pension Plan

As of June 30, 2025, we hadone qualified noncontributory defined benefit pension plan, the Union Plan, which was frozen and ceased accruing benefits in 2013. The measurement date is December 31 st for each respective plan year. We were not required to make any contributions to the Union Plan in 2024 and will not be required to make any contributions in 2025.

Deferred Compensation Plan

We sponsor a non-qualified deferred compensation plan, which provides specified deferred compensation benefits to a certain group of select employees. The deferred compensation plan is funded through a rabbi trust, which is ultimately invested in accordance with each plan participants’ selections from pre-approved funds. As of June 30, 2025 and December 31, 2024, our deferred compensation plan primarily consisted of marketable securities, which includes mutual funds and fixed income funds. Marketable securities are recorded at fair value. The balances are reflected in the “Other long-term assets” line item in the condensed consolidated statements of financial position. The following table summarizes, by major security type, our marketable securities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy:

Note 8 –Revolving Credit Facility

On March 24, 2023, we entered into a Fifth Amended Credit Agreement which amended and restated the Fourth Amended Credit Agreement, and provides for (1) a revolving credit facility with up to $450.0 million of revolving loans, with sub-limits for multicurrency borrowings, letters of credit and swing-line notes, and (2) a $225.0 million expansion feature. Borrowings may be used to finance working capital needs, for letters of credit and for general corporate purposes in the ordinary course of business, including the financing of permitted acquisitions (as defined in the Fifth Amended Credit Agreement). The Fifth Amended Credit Agreement extended the maturity, the date on which all amounts borrowed or outstanding under the Fifth Amended Credit Agreement are due, from March 31, 2024 to March 24, 2028.

All obligations under the Fifth Amended Credit Agreement are guaranteed by each of our existing and future material domestic subsidiaries, as defined in the Fifth Amended Credit Agreement. The obligations are also secured by a Fifth Amended and Restated Pledge and Security Agreement, dated as of March 24, 2023, entered into by us and the Guarantors which grants to the administrative agent, for the benefit of the lenders, a security interest, subject to certain exceptions, in substantially all of the non-real estate assets of ours and the Guarantors. These assets include, but are not limited to, receivables, equipment, intellectual property, inventory, and stock in certain subsidiaries.

Borrowings under the Fifth Amended Credit Agreement bear interest based on one oftwo options. Alternate base rate loans will bear interest at a rate that includes a base reference rate plus a spread of 62.5 to 100.0 basis points, depending on our leverage ratio. The base reference rate will be the greater of the (1) prime rate, (2) federal funds effective rate plus 50 basis points, and (3) one-month Term SOFR plus 110.0 basis points. Loans bearing an interest rate determined by reference to the Adjusted Term SOFR Rate, the Adjusted Euro Interbank Offered Rate, or the Adjusted Tokyo Interbank Offered Rate (each as defined in the Fifth Amended Credit Agreement) will bear interest based on the screen rate plus a spread of 162.5 to 200.0 basis points, depending on our leverage ratio. Based on our leverage ratio as of June 30, 2025, the spread was 162.5 basis points.

In addition to interest payable on the principal amount of indebtedness outstanding, we incur an annual fee of 25 to 35 basis points (based upon our leverage ratio), paid quarterly, of the unused amount of the lenders’ commitments under the Fifth Amended Credit Agreement.

The Fifth Amended Credit Agreement contains customary representations and warranties, covenants, mandatory prepayments and events of default under which the Company’s payment obligations may be accelerated. The financial covenants include a requirement to maintain (1) a total net leverage ratio of no more than 3.25 to 1.00, subject to a one-time election to increase the maximum total net leverage ratio to 3.75 to 1.00 forone fiscal year in connection with a permitted acquisition, and (2) an interest coverage ratio of no less than 3.00 to 1.00. We are permitted to net up to $50.0 million of unrestricted domestic cash and cash equivalents in the calculation of the total net leverage ratio. The Fifth Amended Credit Agreement generally permits us to pay cash dividends to our shareholders, provided that (i) no default or event of default has occurred and is continuing or would result from the dividend payment and (ii) our total net leverage ratio does not exceed 2.75 to 1.00. If our total net leverage ratio exceeds 2.75 to 1.00, we may nonetheless make up to $20.0 million in restricted payments, including cash dividends, during the fiscal year, provided that no default or event of default has occurred and is continuing or would result from the payments. Our total net leverage ratio did not exceed 2.75 to 1.00 and our interest coverage ratio was greater than or equal to 3.00 to 1.00 as of June 30, 2025.

Our discretionary principal payments on our revolving credit facility in 2025 and 2024 were as follows:

We hadno outstanding borrowings under our revolving credit facility as of June 30, 2025 or December 31, 2024. We had $1.3 million and $1.6 million of outstanding line of credit issuance costs as of June 30, 2025 and December 31, 2024, respectively, which will be amortized over the life of the Fifth Amended Credit Agreement.

Note 9 –Commitments and Contingencies

We are currently engaged in the following material legal and environmental proceedings:

Asbestos

Overview

We, like many other industrial companies, have been named as a defendant in a number of lawsuits filed in courts across the country by persons alleging personal injury from exposure to products containing asbestos. We have never mined, milled, manufactured or marketed asbestos; rather, we made and provided to industrial users a limited number of products that contained encapsulated asbestos, but we stopped manufacturing these products in the late 1980s. Most of the claims filed against us involve numerous defendants, sometimes as many as several hundred. In virtually all of the cases against us, the plaintiffs are seeking unspecified damages above a jurisdictional minimum against multiple defendants who may have manufactured, sold or used asbestos-containing products to which the plaintiffs were allegedly exposed and from which they purportedly suffered injury. Most of these cases are being litigated in Maryland, Illinois, Missouri and New York; however, we are also defending cases in other states. We continue to vigorously defend these cases, primarily on the basis of the plaintiffs’ inability to establish compensable loss as a result of exposure to our products. The indemnity and defense costs of our asbestos-related product liability litigation to date have been substantially covered by insurance.

The following table summarizes the change in number of asbestos claims outstanding for the six months ended June 30, 2025:

The total indemnity settlements for asbestos claims in 2025 were as follows:

Impact on Financial Statements

We recognize a liability for asbestos-related contingencies that are probable of occurrence and reasonably estimable. In connection with the recognition of liabilities for asbestos-related matters, we record asbestos-related insurance recoverables that are deemed probable.

The liability projection period covers all current and future indemnity and defense costs through 2064, which represents the expected end of our asbestos liability exposure with no further ongoing claims expected beyond that date. This conclusion was based on our history and experience with the claims data, the diminished volatility and consistency of observable claims data, the period of time that has elapsed since we stopped manufacturing products that contained encapsulated asbestos and an expected downward trend in claims due to the average age of our claimants, which is approaching the average life expectancy.

To date, the indemnity and defense costs of our asbestos-related product liability litigation have been substantially covered by insurance. Although we have exhausted coverage under some of our insurance policies, we believe that we have applicable primary, excess and/or umbrella coverage for claims arising with respect to most of the years during which we manufactured and marketed asbestos-containing products. In addition, we have entered into a cost sharing agreement with most of our primary, excess and umbrella insurance carriers to facilitate the ongoing administration and payment of claims covered by the carriers. The cost sharing agreement may be terminated by any party, but will continue until a party elects to terminate it. As of the filing date for this report, the agreement has not been terminated, and no carrier had informed us that it intends to terminate the agreement. We expect to continue to exhaust individual primary, excess and umbrella coverages over time, and there is no assurance that such exhaustion will not accelerate due to additional claims, damages and settlements or that coverage will be available as expected.

The amounts recorded for the asbestos-related liability and the related insurance recoverables are based on facts known at the time and a number of assumptions. However, projecting future events, such as the number of new claims to be filed each year, the average cost of disposing of such claims, the length of time it takes to dispose of such claims, coverage issues among insurers and the continuing solvency of various insurance companies, as well as the numerous uncertainties surrounding asbestos litigation in the U.S., could cause the actual liability and insurance recoveries for us to be higher or lower than those projected or recorded. The full extent of our financial exposure to asbestos-related litigation remains very difficult to estimate and could include both compensatory and punitive damage awards.

Changes recorded in the estimated liability and estimated insurance recovery based on projections of asbestos litigation and corresponding insurance coverage, result in the recognition of expense or income.

Our projected asbestos-related liabilities and insurance recoverables were as follows:

Environmental Voluntary Corrective Action Program

Our location in Rogers, Connecticut is part of the Connecticut Voluntary Corrective Action Program. As part of this program, we partnered with the Connecticut Department of Energy and Environmental Protection to determine the corrective actions to be taken at the site related to contamination issues. We evaluated this matter and completed internal due diligence work related to the site in 2015. Remediation activities on the site are ongoing and are recorded as reductions to the accrual as they are incurred. We have incurred $2.0 million of aggregate remediation costs through June 30, 2025, substantially all of which was incurred and accrued for prior to 2023, and the accrual for future remediation efforts is $0.7 million.

Other Matters

In addition to the above issues, the nature and scope of our business brings us in regular contact with the general public and a variety of businesses and government agencies. Such activities inherently subject us to the possibility of litigation, including environmental and product liability matters that are defended and handled in the ordinary course of business. We have established accruals for matters for which management considers a loss to be probable and reasonably estimable. It is the opinion of management that facts known at the present time do not indicate that such litigation will have a material adverse impact on our results of operations, financial position or cash flows.

Note 10 –Earnings (Loss) Per Share

Basic earnings (loss) per share is based on the weighted average number of common shares outstanding. Diluted earnings (loss) per share is based on the weighted average number of common shares outstanding and all dilutive potential common shares outstanding.

The following table sets forth the computation of basic and diluted earnings (loss) per share:

For the three and six months ended June 30, 2025, the assumed vesting of restricted stock units had an antidilutive effect on diluted loss per share and were excluded from the calculation of diluted loss per share. For the three and six months ended June 30, 2025,0.3 million anti-dilutive shares were excluded from the calculation of diluted loss per share. For the three and six months ended June 30, 2024,0.1 million shares of restricted stock were excluded from the calculation of diluted earnings per share.

Note 11 –Capital Stock and Equity Compensation

Share Repurchases

In 2015, we initiated a share repurchase program (the Program) of up to $100.0 million of the Company’s capital stock to mitigate the dilutive effects of stock option exercises and vesting of restricted stock units granted by the Company, in addition to enhancing shareholder value. In 2024, the Board of Directors authorized an additional $100.0 million to be used for share repurchases. The Program has no expiration date and may be suspended or discontinued at any time without notice. For the three and six months ended June 30, 2025, we purchased 425,990 shares for a total value of $28.1 million using cash from operations and cash on hand. As of June 30, 2025, $76.1 million remained available to purchase under the Program. Our stock repurchases may occur from time to time through open market purchases, privately negotiated transactions or plans designed to comply with Rule 10b5-1 promulgated under the Exchange Act.

Equity Compensation

Equity Compensation Expense

The components of equity compensation expense were as follows:

Performance-Based Restricted Stock Units

As of June 30, 2025, we had outstanding performance-based restricted stock units with a market condition from 2025, 2024 and 2023. These awards generally cliff vest at the end of athree-year measurement period. However, employees whose employment terminates during the measurement period due to death, disability, or, in certain cases, retirement may receive a pro-rata payout based on the number of days they were employed during the measurement period. Participants are eligible to be awarded shares ranging from 0% to 200% of the original award amount, based on certain defined performance measures.

The performance-based restricted stock units with a market condition have one measurement criterion: thethree-year total shareholder return on our capital stock as compared to that of a specified group of peer companies. The fair value of this measurement criterion was determined on the grant date using a Monte Carlo simulation valuation model. We recognize compensation expense on all of these awards on a straight-line basis over the vesting period with no changes for final projected payout of the awards. We account for forfeitures as they occur.

The following table sets forth the assumptions used in the Monte Carlo calculation for each material award granted in 2025 and 2024:

Expected volatility – In determining expected volatility, we have considered a number of factors, including historical volatility.

Expected term – We use the vesting period of the award to determine the expected term assumption for the Monte Carlo simulation valuation model.

Risk-free interest rate – We use an implied “spot rate” yield on U.S. Treasury Constant Maturity rates as of the grant date for our assumption of the risk-free interest rate.

Expected dividend yield – We do not currently pay dividends on our capital stock; therefore, a dividend yield of 0% was used in the Monte Carlo simulation valuation model.

As of June 30, 2025, we had outstanding performance-based restricted stock units with a performance condition from 2024. These awards generally cliff vest at the end of atwo-year performance period. However, employees whose employment terminates during the measurement period due to death, disability, or, in certain cases, retirement may receive a pro-rata payout based on the number of days they were employed during the measurement period. Participants are eligible to be awarded shares ranging from 0% to 200% of the original award amount, based on certain defined performance measures.

The performance-based restricted stock units with a performance condition have one measurement criterion: 2025 net revenue. The fair value of these awards was determined based on the market value of the underlying stock price at the grant date with cumulative compensation expense recognized to-date being increased or decreased based on the changes in the forecasted payout percentage as of the end of each reporting period. As of June 30, 2025, the performance condition is not probable of vesting. As such, no compensation expense has been recognized for the performance-based restricted stock units. We account for forfeitures as they occur.

A summary of activity of the outstanding performance-based restricted stock units for the six months ended June 30, 2025 is presented below:

Time-Based Restricted Stock Units

As of June 30, 2025, we had time-based restricted stock unit awards from 2025, 2024, 2023 and 2022 outstanding. The outstanding awards all ratably vest on the first, second and third anniversaries of the original grant date. However, employees whose employment terminates during the measurement period due to death, disability, or, in certain cases, retirement may receive a pro-rata payout based on the number of days they were employed subsequent to the last grant anniversary date. Each time-based restricted stock unit represents a right to receiveone share of Rogers’ capital stock at the end of the vesting period. The fair value of the award is determined by the market value of the underlying stock price at the grant date. We recognize compensation expense on all of these awards on a straight-line basis over the vesting period. We account for forfeitures as they occur.

A summary of activity of the outstanding time-based restricted stock units for the six months ended June 30, 2025 is presented below:

Deferred Stock Units

We grant deferred stock units to non-management directors. These awards will generally vest at theone year anniversary of the award, subject to continuous service. Each deferred stock unit results in the issuance ofone share of Rogers’ capital stock. The grant of deferred stock units is typically done annually during the second quarter of each year. The fair value of the award is determined by the market value of the underlying stock price at the grant date.

A summary of activity of the outstanding deferred stock units for the six months ended June 30, 2025 is presented below:

Note 12 –Operating Segment Information

Our reporting structure is comprised of the following strategic operating segments: AES and EMS. The remaining operations, which represent our non-core businesses, are reported in the Other operating segment. We believe this structure aligns our external reporting presentation with how we currently manage and view our business internally. Our CODM is the Chief Executive Officer of Rogers Corporation. The CODM uses gross margin as a reported segment profit or loss measure to evaluate the performance of each business segment, and then leverages this information to decide where to allocate resources and assess how well each segment is performing financially, considering factors like revenue, inventory, and significant expenses specific to that segment.

Our AES operating segment designs, develops, manufactures and sells circuit materials, ceramic substrate materials, busbars and cooling solutions for applications in EV/HEV, automotive (e.g., ADAS), aerospace and defense (e.g., antenna systems, communication systems and phased array radar systems), renewable energy (e.g., wind and solar), wireless infrastructure (e.g., power amplifiers, antennas and small cells), mass transit, industrial (e.g., variable frequency drives), connected devices (e.g., mobile internet devices and thermal solutions) and wired infrastructure (e.g., computing and internet protocol infrastructure) markets.

Our EMS operating segment designs, develops, manufactures and sells engineered material solutions for a wide variety of applications and markets. These include polyurethane and silicone materials used in cushioning, gasketing and sealing, and vibration management applications for EV/HEV, general industrial, portable electronics, automotive, mass transit, aerospace and defense, footwear and impact mitigation markets; customized silicones used in flex heater and semiconductor thermal applications for EV/HEV, general industrial, portable electronics, automotive, mass transit, aerospace and defense and medical markets; and polytetrafluoroethylene and ultra-high molecular weight polyethylene materials used in wire and cable protection, electrical insulation, conduction and shielding, hose and belt protection, vibration management, cushioning, gasketing and sealing, and venting applications for EV/HEV, general industrial, automotive, and aerospace and defense markets.

Our Other operating segment consists of elastomer components for applications in the general industrial market, as well as elastomer floats for level sensing in fuel tanks, motors, and storage tanks applications in the general industrial and automotive markets.

Operating Segment Information

The following table presents a disaggregation of revenue from contracts with customers and other pertinent financial information, for the periods indicated; inter-segment sales have been eliminated from the net sales data:

Operating Segment Net Sales by Geographic Area

The following table presents net sales by our operating segment operations by geographic area for the periods indicated:

(1)Net sales are allocated to countries based on the location of the customer. The table above lists individual countries with 10% or more of net sales for the periods indicated.

(1)Net sales are allocated to countries based on the location of the customer. The table above lists individual countries with 10% or more of net sales for the periods indicated.

Note 13 –Supplemental Financial Information

Restructuring and Impairment Charges

The components of the “Restructuring and impairment charges” line item in the condensed consolidated statements of operations, were as follows:

Restructuring Charges - Manufacturing Footprint Consolidation

In June 2024, we announced our intent to consolidate our high frequency circuit material manufacturing operations, impacting our Evergem, Belgium facility. We anticipate the plan to be completed in the second half of 2025. The plan is expected to significantly reduce our manufacturing costs and operating expenses. We estimate this will improve operating income between $7.0 million and $9.0 million annually. We expect to incur approximately $22.0 million to $28.0 million in pre-tax restructuring charges related to this plan, the majority of which are expected to be in the form of cash-based expenditures related to employee severance and other termination benefits. Most of the non-cash expenditures will be in the form of accelerated depreciation.

We incurred $3.6 million of restructuring charges related to this plan for the three months ended June 30, 2025, of which $2.9 million were cash-based expenditures in the form of severance and other termination benefits and $0.7 million were non-cash expenditures in the form of accelerated depreciation. We incurred $7.6 million of restructuring charges related to this plan for the six months ended June 30, 2025, of which $6.1 million relates to severance and other termination benefits and $1.4 million in the form of accelerated depreciation.

We incurred $0.4 million in restructuring charges related to this plan in the three and six months ended June 30, 2024, all of which were in the form of accelerated depreciation.

Severance and related benefits activity related to the manufacturing footprint consolidation plan is presented in the table below for the six months ended June 30, 2025:

Restructuring Charges - Global Workforce Reduction

In March 2025, we announced a plan to reduce our global workforce that was substantially completed in the first half of 2025. We incurred $0.7 million and $2.5 million in pre-tax restructuring charges related to this plan for the three and six months ended June 30, 2025, respectively, all of which were cash-based expenditures in the form of employee severance and other termination benefits.

Restructuring Charges - R&D Facility Exit

In June 2024, we announced the closure of our Burlington, Massachusetts Innovation Center which was completed by the end of 2024. We incurred $0.9 million in pre-tax restructuring charges for both the three and six months ended June 30, 2024, of which, $0.2 million were cash-based expenditures in the form of severance and other termination benefits and $0.7 million were non-cash expenditures in the form of accelerated depreciation.

Restructuring Charges - Facility Consolidations

As of December 31, 2024, we included $13.1 million of assets held for sale within the “Other current assets” financial statement line item of the condensed consolidated statements of financial position, representing the land and building at our former Price Road facility in Chandler, Arizona. The sale was completed on March 11, 2025 for a sale price of $13.4 million, net of selling costs.

Goodwill Impairment Charge

In the second quarter of 2025, we determined the $67.3 million of goodwill attributable to our curamik® reporting unit was impaired. For additional information, refer to “Note 6 – Goodwill and Other Intangible Assets.”

Indefinite-Lived Other Intangible Asset Impairment Charge

In the second quarter of 2025, we determined the $4.5 million indefinite-lived other intangible asset attributable to our curamik® reporting unit was impaired. For additional information, refer to “Note 6 – Goodwill and Other Intangible Assets.”

Allocation of Restructuring and Impairment Charges to Operating Segments

The following table summarizes the allocation of restructuring and impairment charges to our operating segments:

Other Income (Expense), Net

The components of the “Other income (expense), net” line item in the condensed consolidated statements of operations, were as follows:

Interest Income (Expense), Net

The components of “Interest income (expense), net” line item in the condensed consolidated statements of operations, were as follows:

Note 14 –Income Taxes

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.

We had a negative tax rate of 6.2% in the second quarter of 2025 due to tax expense on a pre-tax book loss. Our income tax expense for the second quarter of 2025 of $4.3 million was comprised primarily of an increase in the valuation allowance attributable to loss jurisdictions in which no tax benefit is anticipated to be realized. Our effective tax rate was also unfavorably impacted by the $67.3 million goodwill impairment in curamik® for which no tax benefit is available.

During the second quarter of 2024, our effective tax rate was 31.9%. During the second quarter of 2024, our effective tax rate was unfavorably impacted primarily by the mix of income in higher tax jurisdictions.

We had a negative tax rate of 5.8% for the six months ended June 30, 2025 due to tax expense on a pre-tax book loss. Our income tax expense for the six months ended June 30, 2025 of $4.1 million was comprised primarily of an increase in the valuation allowance attributable to loss jurisdictions in which no tax benefit is anticipated to be realized. Our effective tax rate was also unfavorably impacted by the $67.3 million goodwill impairment in curamik® for which no tax benefit is available.

For the first six months of 2024, the Company’s effective tax rate on its income before income taxes was 32.3%. The effective rate for the first six months of 2024 was unfavorably impacted by primarily (i) the write-off of deferred tax assets related to stock compensation and, (ii) the mix of income in higher tax rate jurisdictions.

The OECD Pillar 2 guidelines published to date include transition and safe harbor rules around the implementation of the Pillar 2 global minimum tax of 15%. Based on current enacted legislation effective in 2024 and our structure, we do not expect a material impact in 2025. We are monitoring developments and evaluating the impacts these new rules will have on our future effective income tax rate, tax payments, financial condition, and results of operations.

Note 15 -Mergers and Acquisitions

Joint Venture Separation Agreement

On October 29, 2024, we entered into a JV Separation Agreement with INOAC with an effective date of November 5, 2024, in which INOAC acquired our 50% ownership shares of RIC, we acquired INOAC’s 50% ownership shares of RIS, and we sold the property, plant and equipment constituting RIS Production Line 1 to INOAC. The combined transaction resulted in a net payment to us from INOAC of $4.9 million. The JV Separation Agreement terminated all other agreements previously entered into in connection with the RIC and RIS JV relationships.

The purchase accounting and purchase price allocation for the RIS acquisition transaction is now considered final, with no adjustments from the information presented in our Annual Report on Form 10-K for the year ended December 31, 2024.

Note 16 -Recent Accounting Standards

Recently Adopted Standards

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 enhances segment reporting under Topic 280 by expanding the breadth and frequency of segment disclosures. This amendment will improve the disclosures about a public entity’s reportable segments and address requests from investors for additional, more detailed information about a reportable segment’s expenses. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We adopted ASU 2023-07 in our Annual Report on Form 10-K for the year ended December 31, 2024, using the retrospective approach.

Recently Issued Standards

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This update also includes certain other amendments to improve the effectiveness of income tax disclosures. The ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. Adoption of the standard will be applied on a prospective basis and retrospective application to all periods presented is permitted. We will adopt ASU 2023-09 in our Annual Report on Form 10-K for the year ending December 31, 2025, using a prospective transition method. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements and accompanying notes.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). The amendments in this update require new disclosures in tabular format, disaggregating information about prescribed categories underlying any relevant income statement expense captions. The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. Adoption should be applied either prospectively to financial statements issued after the effective date, or retrospectively to any or all prior periods presented in the financial statements. We will adopt ASU 2024-03 in our Annual Report on Form 10-K for the year ending December 31, 2026, using a prospective transition method. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements and accompanying notes.

Note 17 -Subsequent Events

On July 4, 2025, H.R. 1, otherwise known as the “One Big Beautiful Bill Act”, was signed into law. We are currently evaluating the key provisions of this law and currently do not expect it to have a material impact on the Company or its financial statements.

On July 12, 2025, R. Colin Gouveia, President and Chief Executive Officer, left the Company and resigned from the Board of Directors. On July 14, 2025, Lawrence E. Schmid, Senior Vice President of Global Operations, and certain other executives left the Company. We expect to incur severance and other termination benefits charges of $4.9 million to $5.2 million related to these organizational changes.

On July 12, 2025, the Board appointed Ali El-Haj as Interim President and Chief Executive Officer, to lead the Company on an interim basis while the Board conducts a search for a new President and Chief Executive Officer.

On July 30, 2025 we determined to implement initiatives to reduce costs in the curamik® reporting unit in our AES operating segment. This determination was made in response to market conditions and once fully implemented, these actions are expected to reduce manufacturing costs and operating expenses. As a result of these intended actions, we expect to record expenses in the range of $12.0 million to $20.0 million, which are expected to comprise of employee severance costs, property, plant and equipment relocation and reinstallation costs, consulting fees and other miscellaneous cash costs. We expect the bulk of the cash outflows will occur in 2026, with some cash outflows occurring in second half of 2025. These proposed initiatives are subject to a consultation process with the applicable works council representatives for our Eschenbach, Germany facility, which we initiated on July 31, 2025. Future disclosures related to these cost reduction initiatives will be disclosed in the Restructuring and Impairment Charges section of “Note 13 – Supplemental Financial Information.”