Rogers Corporation (NYSE:ROG) today announced financial results for the first quarter of 2015. The first quarter of 2015 results include the newly acquired Arlon business from the date of acquisition, January 22, 2015.
For the first quarter of 2015 net sales were $165.1 million with net earnings of $0.72 per diluted share. Arlon contributed $20.2 million of net sales and earnings of $0.17 per diluted share for the quarter. The Company incurred discrete charges of $0.22 per diluted share related to integration activities and non-recurring purchase accounting costs in the first quarter of 2015. Exclusive of these acquisition related impacts, net earnings were $0.94 per diluted share. Net sales were slightly below, and non-GAAP net earnings exceeded, the Company’s guidance provided on February 17, 2015. First quarter of 2014 net sales were $146.6 million with net earnings of $0.79 per diluted share.
The Company’s record net sales performance was achieved through year-over-year quarterly sales growth of 12.6%. On a currency adjusted basis, the Company delivered organic sales growth of 3.2% from the same quarter of the prior year. Fluctuations in currency exchange rates from the first quarter of 2014 unfavorably impacted organic sales by $6.5 million or 4.3%. Arlon contributed 13.8% of the increase in net sales for the quarter.
Bruce D. Hoechner, President and CEO commented, “Rogers achieved its ninth consecutive quarter of year-over-year revenue growth, and set another sales record in the first quarter of 2015. In addition, we continued our journey of improved margin performance as a result of our strategic focus on operational excellence. The Arlon acquisition closed early in the quarter and was able to make a strong contribution to both the top and bottom line. Overall, our results were tempered by what we believe is temporary weaker demand in some of our markets, as well as the unfavorable impact of currency exchange rates.”
Business Segment Discussion
Printed Circuit Materials
Printed
Circuit Materials reported first quarter of 2015 net sales of $71.3
million, a 21.8% increase compared to first quarter of 2014 net sales of
$58.5 million. On a currency adjusted basis, organic sales grew 5.2%
from the same quarter of the prior year. Fluctuations in currency
exchange rates unfavorably impacted net sales in the first quarter by
approximately $0.8 million or 1.3% as compared with the first quarter of
2014. Net sales include $10.5 million or 17.9% from Arlon in the first
quarter of 2015. Growth was driven by increased demand for high
frequency circuit materials going into wireless infrastructure,
automotive Advanced Driver Assistance Systems, and aerospace and defense
applications. This growth was partially offset by lower demand in mobile
internet device wireless antenna applications due to higher than
expected inventory levels in the supply chain.
High Performance Foams
High
Performance Foams reported first quarter of 2015 net sales of $44.6
million, an 8.1% increase compared to first quarter 2014 net sales of
$41.2 million. On a currency adjusted basis, organic sales declined by
3.2% from the same quarter of the prior year. Fluctuations in currency
exchange rates unfavorably impacted net sales in the first quarter by
approximately $0.6 million or 1.4% as compared with the first quarter of
2014. Net sales include $5.2 million or 12.7% from Arlon in the first
quarter of 2015. Weaker demand in portable electronics was partially
offset by increased demand in general industrial and consumer
applications.
Power Electronics Solutions
Power
Electronics Solutions reported first quarter of 2015 net sales of $38.5
million, a 5.6% decrease compared to first quarter of 2014 net sales of
$40.8 million. Excluding the unfavorable currency impact, first quarter
of 2015 organic net sales grew by approximately 6.9% compared to the
first quarter of 2014. Net sales were unfavorably impacted by
approximately $5.1 million or 12.5% due to fluctuations in currency
exchange rates as compared with the first quarter of 2014. Results
reflect strong demand in mass transit and electric vehicle applications
offset in part by weaker demand in variable frequency motor drives and
certain renewable energy applications.
Other
Net sales of other
products reported for the first quarter of 2015 were $10.7 million, an
increase of 75.4% compared to the first quarter of 2014 net sales of
$6.1 million. This increase was predominantly driven by Arlon related
sales of $4.5 million in the first quarter of 2015.
Operational Highlights
Rogers
ended the first quarter of 2015 with cash and cash equivalents of $199.9
million, a decrease of $37.5 million, or 15.8%, from $237.4 million on
December 31, 2014. Net cash provided by operating activities was $12.9
million for the first quarter of 2015 compared to the $17.8 million for
the first quarter of 2014. Capital expenditures were approximately $8.5
million for the first quarter of 2015.
The Company’s non-GAAP gross margins of 38.8% (37.8% GAAP) in the first quarter of 2015 compared to 36.8% for the first quarter of 2014. Operating margin on a non-GAAP basis was 15.8% (12.2% GAAP) for the first quarter of 2015 compared to 14.6% for the first quarter of 2014.
The Company’s 2015 first quarter effective tax rate was 31.5%.
Outlook
Rogers projects its
second quarter of 2015 net sales will be between $175 to $185 million
and non-GAAP net earnings between $0.81 and $0.93 per diluted share,
which excludes estimated integration costs of $0.10 per diluted share.
Included in the second quarter of 2015 net sales guidance is the
unfavorable impact of approximately $7.7 million due to currency
exchange rates.
For full year of 2015, Rogers expects capital expenditures to be in the range of $33 to $38 million and its effective tax rate to be approximately 30%.
Non-GAAP Financial Measures
Reconciliations
of non-GAAP measures used in this release to the applicable GAAP
financial measures appear at the end of the press release.
About Rogers Corporation
Rogers
Corporation (NYSE:ROG) is a global leader in engineered materials
helping to Power, Protect, Connect our world. With more than 180 years
of materials science experience, Rogers delivers high-performance
solutions that enable clean energy, internet connectivity, safety and
protection and other technologies where reliability is critical. Rogers
delivers Power Electronics Solutions for energy-efficient motor drives,
vehicle electrification and alternative energy; High Performance Foams
for sealing, vibration management and impact protection in mobile
devices, transportation interiors, industrial equipment and performance
apparel; and Printed Circuit Materials for wireless infrastructure,
automotive safety and radar systems. Headquartered in Connecticut (USA),
Rogers operates manufacturing facilities in the United States, China,
Germany, Belgium, Hungary, and South Korea, with joint ventures and
sales offices worldwide. For more information, visit www.rogerscorp.com.
Safe Harbor Statement
This
release contains forward-looking statements within the meaning of the
Safe Harbor Provisions of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements do not constitute guarantees
of future performance. Forward-looking statements include statements
concerning our plans, objectives, goals, strategies, future events,
future net sales or performance, capital expenditures, financing needs,
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: changing business, economic, and political conditions
both in the United States and in foreign countries, particularly in
light of the uncertain outlook for global economic growth, particularly
in several of our key markets; the possibility that changes in
technology or market requirements will reduce the demand for our
products increasing competition; the possibility of adverse effects
resulting from the expiration of issued patents; any difficulties
integrating acquired businesses into our operations and the possibility
that anticipated benefits of acquisitions and divestitures may not
materialize as expected or additional costs may be incurred; delays or
problems in completing planned operational enhancements to various
facilities; and our achieving less than anticipated benefits and/or
incurring greater than anticipated costs relating to streamlining
initiatives or that such initiatives may be delayed or not fully
implemented due to operational, legal or other challenges. The risk
factors identified in our filings with the Securities and Exchange
Commission, including the Company's most recent Annual Report on Form
10-K and most recent Quarterly Report on Form 10-Q, could impact any
forward-looking statements contained in this release. Rogers Corporation
assumes no responsibility to update any forward-looking statements
contained herein. This release refers to various non-GAAP financial
measures. We believe that this information is useful to understanding
the operating results and ongoing performance of our underlying
businesses.
Additional Information and April 30, 2015 Conference Call
For more information, please contact the Company directly, via email or visit the Rogers website.
Website Address: http://www.rogerscorp.com
A conference call to discuss 2015 first quarter results will be held on Thursday, April 30, 2015 at 9:00AM (Eastern Time).
A slide presentation will be made available prior to the start of the call. The slide presentation can be accessed under the investor relations sections of the Rogers Corporation website (www.rogerscorp.com/ir).
The Rogers participants in the conference call will be:
Bruce D. Hoechner, President and CEO
David Mathieson, Vice
President, Finance and CFO
Robert C. Daigle, Senior Vice President
and CTO
A Q&A session will immediately follow management’s comments.
To participate in the conference call, please call: | |||||||||||||
1-800-574-8929 | Toll-free in the United States | ||||||||||||
1-973-935-8524 | Internationally | ||||||||||||
There is no passcode for the live teleconference. |
For playback access, please call: 1-855-859-2056 in the United States and 1-404-537-3406 internationally through 11:59PM (Eastern Time), May 6, 2015. The passcode for the audio replay is 6773126.
The call will also be webcast live in a listen-only mode. The webcast may be accessed through links available on the Rogers Corporation website at www.rogerscorp.com/ir. Replay of the archived webcast will be available on the Rogers website approximately two hours following the webcast.
(Financial Statements Follow)
Condensed Consolidated Statements of Income (Loss) (Unaudited) | ||||||||||||
Three Months Ended | ||||||||||||
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) | March 31, 2015 | March 31, 2014 | ||||||||||
Net sales | $ | 165,051 | $ | 146,640 | ||||||||
Cost of sales | 102,696 | 92,721 | ||||||||||
Gross margin | 62,355 | 53,919 | ||||||||||
Selling and administrative expenses | 36,147 | 27,599 | ||||||||||
Research and development expenses | 6,108 | 4,863 | ||||||||||
Operating income | 20,100 | 21,457 | ||||||||||
Equity income in unconsolidated joint ventures | 919 | 977 | ||||||||||
Other income (expense), net | (129 | ) | (1,191 | ) | ||||||||
Interest income (expense), net | (1,006 | ) | (748 | ) | ||||||||
Income before income tax expense | 19,884 | 20,495 | ||||||||||
Income tax expense | 6,257 | 5,915 | ||||||||||
Net income | $ | 13,627 | $ | 14,580 | ||||||||
Basic net earnings per share: | $ | 0.74 | $ | 0.81 | ||||||||
Diluted net earnings per share: | $ | 0.72 | $ | 0.79 | ||||||||
Shares used in computing: | ||||||||||||
Basic | 18,475,507 | 17,950,843 | ||||||||||
Diluted | 18,949,594 | 18,549,458 | ||||||||||
Condensed Consolidated Statements of Financial Position (Unaudited) | ||||||||||||
(IN THOUSANDS) | March 31, 2015 | December 31, 2014 | ||||||||||
Assets | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 199,858 | $ | 237,375 | ||||||||
Accounts receivable, net | 113,540 | 94,876 | ||||||||||
Accounts receivable from joint ventures | 2,028 | 1,760 | ||||||||||
Accounts receivable, other | 2,788 | 1,823 | ||||||||||
Taxes receivable | 703 | 606 | ||||||||||
Inventories | 82,239 | 68,628 | ||||||||||
Prepaid income taxes | 4,726 | 4,586 | ||||||||||
Deferred income taxes | 11,449 | 8,527 | ||||||||||
Asbestos related insurance receivables | 6,827 | 6,827 | ||||||||||
Other current assets | 11,008 | 7,046 | ||||||||||
Total current assets | 435,166 | 432,054 | ||||||||||
Property, plant and equipment, net | 179,630 | 150,420 | ||||||||||
Investments in unconsolidated joint ventures | 17,057 | 17,214 | ||||||||||
Deferred income taxes | 40,918 | 44,853 | ||||||||||
Pension Asset | 403 | 403 | ||||||||||
Goodwill | 175,009 | 98,227 | ||||||||||
Other intangible assets | 82,171 | 38,340 | ||||||||||
Asbestos related insurance receivables | 46,186 | 46,186 | ||||||||||
Other long term assets | 8,522 | 7,420 | ||||||||||
Total assets | $ | 985,062 | $ | 835,117 | ||||||||
Liabilities and Shareholders’ Equity | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable | $ | 29,954 | $ | 20,020 | ||||||||
Accrued employee benefits and compensation | 26,127 | 33,983 | ||||||||||
Accrued income taxes payable | 8,402 | 6,103 | ||||||||||
Current portion of lease obligation | 662 | 747 | ||||||||||
Current portion of long term debt | 42,500 | 35,000 | ||||||||||
Asbestos related liabilities | 6,827 | 6,827 | ||||||||||
Other accrued liabilities | 24,088 | 17,765 | ||||||||||
Total current liabilities | 138,560 | 120,445 | ||||||||||
Long term lease obligation | 5,285 | 6,042 | ||||||||||
Long term debt | 137,500 | 25,000 | ||||||||||
Pension liability | 19,650 | 17,652 | ||||||||||
Retiree health care and life insurance benefits | 8,768 | 8,768 | ||||||||||
Asbestos related liabilities | 49,718 | 49,718 | ||||||||||
Non-current income tax | 12,078 | 10,544 | ||||||||||
Deferred income taxes | 37,725 | 14,647 | ||||||||||
Other long term liabilities | 2,707 | 338 | ||||||||||
Shareholders’ equity | ||||||||||||
Capital stock | 18,605 | 18,404 | ||||||||||
Additional paid in capital | 141,999 | 137,225 | ||||||||||
Retained income | 505,055 | 491,428 | ||||||||||
Accumulated other comprehensive income (loss) | (92,588 | ) | (65,094 | ) | ||||||||
Total shareholders’ equity | 573,071 | 581,963 | ||||||||||
Total liabilities and shareholders’ equity | $ | 985,062 | $ | 835,117 | ||||||||
Reconciliation of non-GAAP Financial Measures to the Comparable GAAP Measures
Non-GAAP Financial Measures
Management believes non-GAAP information provides meaningful supplemental information regarding the Company’s performance by excluding certain expenses that are generally non-recurring and accordingly may not be indicative of the core business operating results. The Company believes that this additional financial information is useful to management and investors in assessing the Company’s historical performance and when planning, forecasting and analyzing future periods. However, the non-GAAP information has limitations as an analytical tool and should not be considered in isolation from, or as alternatives to, financial information prepared in accordance with GAAP.
Reconciliation of GAAP to non-GAAP Net Earnings Per Diluted Share for the First Quarter 2015:
The following table includes discrete charges related to special adjustments.
Q1 2015 | ||||||
GAAP net earnings per diluted share | $ | 0.72 | ||||
Integration costs related to Arlon (impact to SG&A) | 0.16 | |||||
Non-recurring purchase accounting costs (impact to gross margin) | 0.06 | |||||
Total special adjustments | 0.22 | |||||
Non-GAAP net earnings per diluted share | $ | 0.94 | ||||
Reconciliation of GAAP to non-GAAP Gross Margin for the First Quarter of 2015:
The following table includes discrete charges related to special adjustments.
Gross Margin | Q1 2015 | |||||
GAAP gross margin | 37.8 | % | ||||
Non--recurring purchase accounting costs | 1.0 | |||||
Total special adjustments | 1.0 | |||||
Non-GAAP gross margin | 38.8 | % | ||||
Reconciliation of GAAP to non-GAAP Operating Margin for the First Quarter of 2015:
The following table includes discrete charges related to special adjustments.
Operating Margin | Q1 2015 | |||||
GAAP operating margin | 12.2 | % | ||||
Integration costs related to Arlon | 2.6 | |||||
Non-recurring purchase accounting costs | 1.0 | |||||
Total special adjustments | 3.6 | |||||
Non-GAAP operating margin | 15.8 | % | ||||
Reconciliation of GAAP to non-GAAP Earnings Per Share Guidance for the Second Quarter of 2015:
The following table includes discrete special charges related to the acquisition of Arlon.
Q2 2015 | ||||||
Guidance Q2 2015 GAAP earnings per diluted share | $ | 0.71 - $0.83 | ||||
Add back special charges, net of tax: | ||||||
Estimated integration costs | 0.10 | |||||
Guidance Q2 2015 non-GAAP earnings per diluted share | $ | 0.81 - $0.93 | ||||
Contacts:
Financial News Contact:
David
Mathieson, 860-779-4033
Vice President, Finance and Chief Financial
Officer
FAX: 860-779-5509
or
Investor Contact:
William
J. Tryon, 860-779-4037
Director, Investor and Public Relations
FAX:
860-779-5509
william.tryon@rogerscorp.com