Selected quotes from our first quarter earnings call.
Read the corporate financials news release: Rogers Corporation Reports First Quarter 2016 Results
In Q1 2016 Rogers achieved net sales of $160.6 million, exceeding the high-end of our guidance, which was $156 million. Year-over-year revenues were down slightly primarily due to challenges we faced in the PES business segment, which are addressed below. Sequentially, revenues grew 5% over Q4 2015, which is attributable to the recovery we are seeing across a number of our key markets.
Rogers’ ongoing commitment to driving operating efficiencies and practicing disciplined cost management helped contribute to a substantial adjusted operating margin performance of 16.9% during the quarter. Our year-over-year adjusted EBITDA percentage was consistently strong at 21.1%. Q1 adjusted earnings of $0.94 per diluted share far exceeded the high-end of our guidance.
Bruce Hoechner, CEO, on Growth
During Q1, we were encouraged by strengthening demand in the areas of wireless infrastructure and general industrial applications. We believe the longer-term growth prospects for these and other key markets remain positive and Rogers is in a favorable position to capitalize on the many opportunities that lie ahead.
Our roadmap has enabled us to deliver sound results and positions us for growth as market demands strengthen. Rogers is a market driven organization and we leverage our deep understanding of the link between our markets and technology to develop solutions that fill unmet needs in the marketplace. One example of this is the technology leadership position we have established in wireless telecommunications especially in 4G LTE applications. With the rapid evolution of this market, we are privileged to be working very closely with all of the major OEMs on 5G technology, the next phase of wireless connectivity. We believe our technological expertise, strong customer relationships, and differentiated products will enable us to continue to thrive in this marketplace.
Bruce Hoechner, CEO, on Megatrends
The outlook and corresponding growth expectations for our key markets remain positive. For example, mobile data traffic is growing at 45% annually, yet only about 40% of the world’s population is currently covered by 4G LTE. So there remains tremendous opportunity for applications in the wireless infrastructure that will help meet global data demand.
Other areas of importance to Rogers are energy efficiency and safety, which continue to be at the forefront of our technology advancements across many segments. In particular, we expect to see solid growth for EV/HEV and automotive safety system applications going forward.
Bruce Hoechner, CEO, on Rogers’ Business Units
Advanced Connectivity Solutions delivered record quarterly net sales of $73.4 million during Q1 2016, which is an increase of 2.9% over Q1 2015. Adjusted operating margin decreased moderately as a result of unfavorable absorption.
In Q1 2016, we were encouraged by our 15% quarterly sequential revenue growth, which was driven by stronger demand for 4G LTE wireless telecom applications. Although sales of these applications were down year-over-year we believe we are seeing a return to a balanced supply chain between the board shops and the OEMs specifically in China. In addition, we are delighted with the consistently strong demand for automotive safety applications in advanced driver assistant systems (ADAS). As these features continue to expand into mass market automobile models globally, we are executing on our strategy to deliver growth in ACS.
In the near-term, we expect to maintain our leadership position in 4G LTE wireless infrastructure and automotive safety system applications. Going forward, we are well-positioned to benefit from the ongoing technology advancements in wireless telecommunications for 5G applications as well as the adoption of new technologies linked to the Internet of Things (IoT) and E-Mobility.
Elastomeric Material Solutions achieved record first quarter net sales of $46.3 million, an increase of 4% over Q1 2015. Adjusted operating margin increased slightly compared to Q1 2015. Profits were impacted primarily by inventory build that occurred in the comparative quarter of Q1 2015.
During the quarter, EMS results were driven by an increase in demand for general industrial and automotive applications, which more than offset a slight decline in sales into the portable electronics market. Sequentially, EMS net sales were up approximately 9%. Our strategy to drive growth in EMS through geographic expansion was evident during the quarter as sales in Europe increased 15% compared to Q1 2015. In addition, through our R&D efforts we are expanding our portfolio of opportunities. For example, we continue to make good progress in the penetration of our materials into backpack applications for portable electronics.
Power Electronics Solutions’ net sales were $35.3 million, an 8.5% decrease compared to Q1 2015, with much of the decline due to currency. PES adjusted operating margin of 6.8% was slightly down year-over-year and actions are currently underway to improve profitability in the PES business.
Overall, we saw increased demand in certain renewable energy and vehicle electrification applications during the quarter.
For the PES business, we maintain a positive outlook for the mid-to-long-term. We expect government mandates and climate change agreements to continue to drive demand for energy efficient motor drives and renewable energy applications.
Q1 2016 Earnings Call Full Transcript: http://rogerscorp.com/documents/7464/investor-relations/Rogers-Corporation-First-Quarter-2016-Conference-Call.pdf
Q1 2016 Financials Press Release: http://rogerscorp.com/ir/news/5460/Rogers-Corporation-Reports-First-Quarter-2016-Results.aspx
Q1 2016 Earnings Call Slides: http://rogerscorp.com/documents/7462/investor-relations/Rogers-Corporation-2016-First-Quarter-Conference-Call-Slides.pdf