A message from Bruce Hoechner, CEO, Rogers Corporation:

Read the corporate financials news release: Rogers Corporation Reports 2013 Third Quarter Results

I’m pleased to share with you today Rogers’ third quarter results and the great work our team is doing to drive margin improvement and grow revenues.

At the end of the second quarter, we talked about the journey of transformation well underway at Rogers and the progress we have made in improving both revenues and margins. We also forecasted an even stronger third quarter due to improving market conditions, seasonal demand, and continued focus by our global team on growth and profitability initiatives.

I’m pleased to say that we delivered even stronger performance than anticipated. We finished the quarter ahead of our revenue and earnings guidance due to strong demand for our products and our combined efforts to control costs and improve performance. Earnings per share were up 55%, net of special charges, compared to last quarter.  Overall, it was a very good quarter for Rogers and we are pleased that our actions are showing in our results.


Overall for the quarter, 59% of our sales fell into our strategic megatrend categories. Rogers’ focus on solving materials challenges in support of global megatrends continues to drive our growth along with the Company’s broad portfolio of advanced technologies that are helping power, protect, and connect our world.

In the Clean Technology category, sales were up 45% over Q3 of 2012 with a strong rebound in demand for power modules for variable frequency motor drives, hybrid electric vehicles, and wind and solar applications.

In support of global demand for Internet connectivity, we delivered record third quarter sales.  The market for 4G – LTE base station deployment was very active, especially in China.  Additional growth in new applications enabling wireless connectivity for mobile Internet devices also drove demand for Rogers’ high-frequency printed circuit materials.

In Mass Transit, revenues were up 7% as China rail spending began to ramp up again.

Additional growth areas included circuit materials for automotive safety systems, power electronics for energy-efficient appliances and laser diodes, and advanced cushioning products for safety and protection.

Business Performance

Overall, net sales were $142.8 million, up 10.6% compared to last year’s third quarter.

You know that we have talked a lot about the ongoing ramp in demand for Rogers’ high-frequency Printed Circuit Materials in the 4G-LTE wireless infrastructure market. The momentum we have seen continues to build, contributing to record sales for the PCM business in the third quarter if we compare revenues from our current portfolio of continuing business.

PCM delivered strong growth in auto safety sensor circuit materials, as well as new wireless connectivity applications for mobile devices.  Softer demand in the satellite TV market for low-noise block downconverters (or LNB) offset some of this growth.   Defense and aerospace printed circuit material demand remained stable for the quarter despite sequestration concerns.

In Power Electronics Solutions, revenues were up 45% vs. the third quarter of last year with robust performance across all key applications. PES saw high demand for curamik® power module substrates in variable frequency drive markets.  The business also delivered double-digit growth in substrate applications for wind and solar power, hybrid electric and drive-by-wire automotive, as well as appliances and laser diodes.

Power Distribution Systems also delivered double-digit revenue growth across all key application areas.   This solid performance extended to the rail market as the Chinese government began implementing its announced investments in rail expansion, driving demand for rail propulsion system components.

High Performance Foams revenues, on the other hand, were down 7.5% vs. the third quarter of 2012.  Delays in next generation tablet introductions and softer demand in transportation applications were key factors. In applications for mobile Internet devices, our foams business also continues to be negatively impacted by changes in tablet device design, a shift to smaller size tablets, and better production utilizations at our customers that have reduced the amount of total foam content in those devices. On the positive side, volume was up in smartphones and consumer applications for sports impact protection and industrial safety.

Corporate Initiatives

We have many initiatives underway at Rogers to drive future growth. Across the company, we are focused on becoming more market driven.    We are undertaking a journey of marketing excellence designed to enhance our capabilities in understanding market needs in order to deliver greater value to customers.

We are building a closer linkage between marketing and R&D, as we work to improve our innovation capabilities and accelerate delivery of differentiated, market-driven solutions. Our previously-announced Innovation Center in collaboration with Northeastern University is progressing well, and we plan to have members of our Innovation Team co-located with Northeastern researchers by year-end.

We continue to improve our design collaboration capabilities and the quality of our pipeline, in addition to the number of opportunities.

If we look at a snapshot of opportunities at the end of the third quarter in our targeted megatrend categories of Clean Tech, Internet, and Mass Transit, we were tracking a cumulative total of 671 major design opportunities of which 388 advanced to the design-in phase of the selling process. During the quarter, we moved 39 large megatrend opportunities from design into production.  We are also capturing wins across a wide array of other markets such as industrial, automotive, and consumer.

Looking ahead, we will win in the marketplace by aligning our entire organization around market and customer needs, building our innovation capabilities, and focusing on operational excellence.


In closing, let me sum up a few highlights.  First, we are reaping the benefits of our streamlining initiatives as evidenced by the solid margin improvement we delivered again in Q3.  More importantly, we have been able to sustain and build upon the gains made over the past 18 months.

Second, we are executing on our goal to grow our value to shareholders. Volume growth and strong operational execution, combined with cost reduction efforts, have enabled us to grow earnings per share by double digits for the last two quarters. We believe this is compelling evidence that our business transformation is gaining traction.

Third, our focused markets of clean technology and Internet growth are driving robust revenue growth and we expect that to continue for the balance of the year.  Our diversified portfolio of applications in both of these spaces, along with others in mass transit, advanced automotive, safety and protection, position us well for future growth.

And finally, as we look ahead to Q4, we expect to again deliver year-over-year revenue and earnings growth. With our key operating metrics in good shape and a solid balance sheet, Rogers’ financial strength allows us to invest in accelerating innovation, developing our team, exploring new opportunities, and driving the engine for Rogers’ future growth.  Our focus markets are improving, our costs are well under control, and we are confident in our ability to deliver continued value to shareholders in the future.

Thank you.


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