Selected quotes from our second quarter earnings call.

Read the corporate financials news release: Rogers Corporation Reports Second Quarter 2016 Results

Screen shot 2013-11-01 at 10.53.55 AMIn Q2 2016, Rogers achieved net sales of $157.5 million, in line with our stated guidance. Net sales declined 3.4% in comparison to Q2 2015. We experienced slower than expected growth in certain key markets, but we maintain confidence in the long-term growth prospects for our core markets and will continue to execute our growth strategy to capitalize on the opportunities ahead.

Bruce Hoechner, CEO, on Growth

Our roadmap has enabled us to deliver solid results and positions us for the projected growth in our megatrend markets. 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. We recently hosted a day-long innovation event where we brought together Rogers engineers and a key customer’s top technologists. These events deepen our customer partnerships so together we can develop a roadmap to meet their future technology needs.

In the area of innovation leadership, we are very pleased with the advancements we are making in our innovation centers, as well as in the operating units where our R&D teams are focused on next-generation solutions. Our approach to partnering with local universities in the US and Asia is yielding results. We are filing for new patents in record numbers and we are evaluating a robust pipeline of groundbreaking new technology platforms at our innovation centers.

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Bruce Hoechner, CEO, on Megatrends

The longer-term outlook and corresponding growth expectations for our key markets remains positive over the next two to three years. For example, consumer demand for mobile video content is expected to drive a 45% compounded annual growth rate in mobile data traffic over the next five years. To support that explosive growth, the FCC recently voted to open high-frequency spectrum for 5G networks in the US. Such actions bode well for Rogers since our core strengths in advanced antenna technology, power amps, and other wireless telecommunication components should enable us to capitalize on that growth.

Other areas of importance to Rogers are energy efficiency and safety, which continue to be at the forefront of technology advancements across many markets. In particular, we expect to see solid growth for EV/HEV and automotive safety system applications going forward.

We are confident that the strategic investments we are making will drive greater agility and flexibility in the face of market uncertainty.

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Bruce Hoechner, CEO, on Rogers’ Business Units

Advanced Connectivity Solutions delivered net sales of $67.2 million during Q2 2016, which is an increase of 1.2% over Q2 2015. Results were driven by demand in applications for high-frequency circuit materials used in automotive safety and other high-reliability applications.

Demand for wireless telecom applications was up slightly, but lower than expected, due to delayed spending in both India and China, which we expect to occur now in 2017. This resulted in a gradual softening of demand as we moved through the quarter. Growth in ACS was partially offset by lower demand in satellite TV dish applications.

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, as well as in automotive safety systems where manufacturers are offering more of these features across luxury and mass-market models. We are well positioned to capitalize on the growth we expect to see with the buildout of the 5G networks.

Elastomeric Material Solutions achieved second-quarter net sales of $45.8 million, a decrease of 2.6% from Q2 2015. During the quarter, EMS results were driven by an increase in demand for portable electronics and automotive applications. This demand was offset by lower demand for general industrial, mass transit, and consumer applications. Softness in the general industrial market was a result of reduced capital expenditures in North America, due in part to the decline in energy-related infrastructure investments. EMS’s consumer category was affected by lower demand for protective footwear, due to slowdowns in the mining and construction categories.

Our strategy to drive growth in EMS through geographic expansion was evident during the quarter, as the European region delivered another quarter of double-digit revenue growth. In addition, our R&D efforts are helping us to expand our portfolio of opportunities. For example, we are pleased with the traction we are gaining for our new back pad materials, which eliminate the ripple effect that can appear on the screens of certain portable electronic devices.

Power Electronics Solutions net sales were $38.4 million, essentially flat compared to Q2 2015. Overall, we saw increased demand for energy-efficient motor drives, due to strong results at one of our key customers. In addition, certain renewable energy and vehicle electrification applications also posted solid growth during the quarter. Demand for EV/HEV was essentially flat, due to a slower than expected ramp-up rate at a key customer in Q2, but we expect to see improvement in Q3. The positive results in these segments was more than offset by weaker demand in mass transit, where rail demand was much lower due to declines in energy and mining markets.

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, renewable energy applications, and EV/HEV content.

Q2 2016 Earnings Call Full Transcript

Q2 2016 Financials Press Release

Q2 2016 Earnings Call Slides


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