Rogers (ROG) Q2 2024 earnings summary

Executive summary

• Q2 2024 execution was solid, with net sales of $214.2M, up 0.4% sequentially, driven by EMS growth and record EV/HEV sales, but tempered by lower AES and general industrial demand; results met expectations and gross margin performance exceeded guidance high end.

• Operational excellence initiatives, cost reductions, and additional manufacturing footprint actions, especially in ceramic operations, drove margin improvement.

• Innovation remains a strategic focus, with R&D consolidation and new technology development underway, including the exit of the Northeastern University R&D location.

• Capacity expansion continues, notably with a new ceramic power substrate facility in China, expected to begin mass production in mid-2025.

• Demand remained uneven, with higher sales in key markets offset by elevated customer inventory levels.

Financial highlights

• Net sales for Q2 were $214.2M, nearly flat sequentially, but down 7.2% year-over-year; gross margin reached 34.1%, up from 32.0% in Q1.

• Adjusted net income was $12.8M; adjusted EPS was $0.69, up from $0.58 in Q1; GAAP net income was $8.1M, EPS $0.44.

• Adjusted EBITDA was $31.9M (14.9% margin), up from $28.3M in Q1, but down from $43.7M in Q2 2023.

• Operating cash flow was $23M; free cash flow was $8.8M; cash balance at quarter-end was $119.9M.

• Capital expenditures were $14.1M in Q2, with full-year CapEx expected at $55M–$65M.

Outlook and guidance

• Q3 2024 net sales expected between $215M–$225M, with gross margin guidance of 34.0%–35% and adjusted EPS of $0.75–$0.95, including restructuring charges for AES Belgium wind-down.

• Q3 GAAP EPS forecasted at $0.32–$0.52.

• Full-year capital spending projected at $55M–$65M, funded by operations and cash on hand.

• H2 EMS sales expected to be stronger than H1, but AES recovery remains uncertain due to ceramic inventory overhang.

• Full-year tax rate projected at 26%–27%.