A message from Bruce Hoechner, CEO, Rogers Corporation:
Read the corporate financials news release: Rogers Corporation Reports 2013 First Quarter Results
During the first quarter of 2013, Rogers continued to see positive impacts from our transforming initiatives that began in 2012. Building off our streamlining results in 2012, we expect to achieve an annualized cost savings in 2013 of approximately $20 million and we continue to seek further opportunities for cost savings. A portion of these savings are being reinvested in growth enabling initiatives in Sales, Marketing, and Research and Development, as well into improving our infrastructure capabilities in Information Technology and Operations.
A key indicator of our progress is the improvement in our gross margins in Q1 2013 to 33% from 30.3% in Q1 2012, reflecting our improved operating discipline. Looking forward, we expect that, as sales increase through the rest of year, our streamlining savings will hold and our gross margins will continue to improve. We have a very positive outlook for Rogers’ full year, both on the top line and bottom line.
Our megatrend focus areas of Internet Growth, Clean Technology, and Mass Transit drove 55% of net sales in the quarter with applications in automotive and industrial also adding to our growth engine.
We are seeing robust growth in Wireless Telecom Infrastructure. Sales for our printed circuit materials in this market were up about 12% for the quarter vs. Q1 2012. We believe we are seeing the much anticipated ramping of 4G installations around the world. This is good news for Rogers where, in this segment, we have greater than 90% market share in High Frequency circuit board technology used in 4G base station applications.
In Mobile Internet Devices, sales were essentially flat in the category due to seasonal inventory adjustments. Specifically in tablets, growth was moderated by a market shift in the quarter to smaller format tablets and continued supply chain yield improvements. We continue to be confident in our leadership position in sealing and impact protection for handheld electronics and are developing and launching new, innovative materials to address the needs of next generation platforms.
In Clean Technology markets, sales were up 4% over Q1 2012, and up 14% over last quarter. We generated strong growth in power electronics solutions in Hybrid Electric Vehicles and modest gains in Solar and Smart Grid applications, offsetting lower growth for industrial variable frequency drives. However, we have seen a significant increase in backorders and are ramping up production to meet what we believe is increased, sustainable demand as industrial capital spending increases.
In Mass Transit, with sales 6% below Q1 of last year, we anticipate improvement in demand when the Chinese government implements its announced investments in rail infrastructure. Based upon our assessment of the Chinese Ministry of Rail plans, we expect to see demand in this sector increase as we move through 2013.
In addition to our opportunities in the Megatrends, growing adoption of automotive safety sensors continues to be a bright spot for Rogers. For these radar-based safety applications, Rogers generated significant growth year-over-year (79%) and quarter-over-quarter (51%) in high frequency printed circuit materials. We continue to be the leading provider of circuit materials technology to support both the 24GHz and 77GHz designs.
Across our markets, particularly in Asia and North America, growing consumer confidence is helping to drive demand for Rogers’ products in a wide variety of consumer and industrial applications, from sports protective gear to automotive and industrial gasketing and sealing.
We grew our pipeline of design opportunities by 10% for the quarter vs. Q1 2012, diversified across our markets. At the end of the first quarter, we were tracking a cumulative total of 749 major design opportunities of which 425 have already been designed in. At the same time, we moved more than twice the number of opportunities from design into production vs. the same quarter of last year (37 in Q1 2013) vs, 16 in Q1 2012). We believe this is a strong indicator of our future growth opportunities.
Business Segment Performance
Our net sales were $126 million, up 5% over last year’s first quarter.
Our Printed Circuit Materials business generated approximately 11% growth due to strong performance in wireless infrastructure and auto safety sensor applications. We expect this momentum to carry forward throughout the year as service providers, particularly in North America and Asia, continue to invest in additional 4G capacity.
The High Performance Foams business was up 5% with growth in consumer and industrial applications, offsetting flat demand in mobile Internet devices for the quarter.
Our Power Electronics Solutions segment was down slightly vs. Q1 of last year, but up 5% over last quarter with Hybrid Electric Vehicle applications driving our growth. Although demand was still below Q1 2012 for Variable Frequency Drives and Rail propulsion system applications, both segments showed modest sequential improvement over Q4 of 2012. While European markets remain soft, we continue to see indications of growing customer confidence in the power electronics arena as infrastructure and capital spending starts to make a comeback in Asia and North America.
We entered 2013 in an environment of continued global economic uncertainty. We cannot control the external environment but we are aggressively managing Rogers to ensure we perform well in the short term and build a foundation that provides sustainable top line and bottom line growth for years to come. We are encouraged by our continued progress in cost streamlining and our Q1 improvements in gross margin. We are confident in our strategies and our ability to execute, and believe that, as 2013 unfolds, we will see our markets improve. We believe that the long anticipated build out in 4G infrastructure is here and will help drive strong results for our Printed Circuit Materials business. We see positive signs of recovery in the markets for our Power Electronics materials and are confident in the continued market leadership of our High Performance Foams business. With our portfolio diversified across many markets, we have demonstrated our ability to perform well in the face of changing economic and market dynamics.
As global economies get moving again, demand is increasing for better ways to power, protect, and connect our world – and Rogers is a leader in unique, innovative materials solutions to address these challenges. We see many opportunities for growth ahead in 2013 and beyond and remain focused on delivering value to our customers and consistent results for our shareholders.
A message from Bruce Hoechner, CEO, Rogers Corporation:
Rogers continues to be well diversified by market. The markets that represent our megatrend focus areas of Internet Growth, Mass Transit, and Clean Technology drove 55% of net sales in the quarter, and we continue to believe they will help accelerate the Company’s growth going forward.
In markets supporting Internet Growth, consumer demand for higher functionality, speed, and bandwidth drove sales growth for Rogers’ solutions in both Internet devices and infrastructure applications, with sales up 11% quarter-over-quarter (Q4 of 2012 vs. Q4 of 2011). In Mobile Internet Devices, we continue to have a market leading position in cushioning and sealing for tablet computer and smart phone applications. In Internet Infrastructure applications, sales of printed circuit materials used in base station power amplifiers as well as smart antenna systems were up substantially due to wireless telecom network builds.
In Mass Transit, sales were basically even with the same quarter of last year. China’s Ministry of Rail recently announced aggressive plans for increasing rail investment which may drive higher demand for our Power Distribution Systems for high-speed rail traction motors as programs begin to ramp up later this year.
Still impacted by the global slowdown of capital and infrastructure spending, Clean Technology sales were substantially lower than Q4 of last year. Sequentially, however, we saw improvement in demand for some clean technology applications versus Q3. We have also seen an increase in our order backlog for industrial motor drives and other applications, which would seem to indicate growing customer confidence in these markets.
In other markets, we achieved double-digit growth quarter-over-quarter and sequentially for our innovative cushioning and impact protection materials for personal protection.
Growing adoption of automotive safety sensors continued to boost demand for Rogers’ high frequency printed circuit materials with sales into this emerging technology area up significantly versus Q4 of 2011. More stringent safety requirements are being adopted in Europe in order for cars to receive 5-star safety ratings. As radar systems will help automakers achieve these coveted ratings, we believe the more demanding requirements will accelerate adoption of these systems.
We continue to build a solid pipeline of design opportunities across all three megatrend categories. At the end of the fourth quarter, we were working on 716 major design opportunities with 427 design-in wins. During the quarter we saw many programs move out of design into production. Our Q4 2012 opportunity pipeline compares favorably vs Q 4 2011 when we were working on 623 opportunities with 362 design-in wins. As a materials technology supplier of choice for many of the world’s leading innovators, we remain focused on partnering with customers in their design process for next generation products.
Our net sales were $124.2 million, a decline of 1% over last year’s fourth quarter, and 4% sequentially. Q4-2012 vs. Q4-2011, our two largest business segments performed well with High Performance Foams revenues up 7%, and Printed Circuit Materials up 4%. In Power Electronic Solutions, our Power Distribution Systems business was up 8% due primarily to strong demand in the automotive market. This growth was offset by a 23% decline in the Curamik substrates portion of our business as clean technology investments continue to be weighed down by the ongoing European fiscal crisis and clean tech regulatory and policy uncertainties in the US and other markets.
Looking at the businesses sequentially vs. Q3-2012, High Performance Foams demand was relatively flat due to some seasonality and a shift in display technology that reduced overall cushioning content per device for some platforms. Printed Circuit Materials revenues were down 11%, due primarily to year-end inventory corrections to match demand in LNB Satellite TV applications.
In the Power Electronics Solutions segment, we saw improvement over Q3. Power Distribution Systems sales were up 11% as demand continued to ramp in several key markets related to Automotive and Clean Technology. Revenues for Curamik Electronic Solutions were basically flat over Q3.
Moving forward, we are seeing positive indicators for growth across several of our markets, particularly those supporting Internet Growth, Mass Transit, and Automotive Safety. The streamlining and operational improvements we began in 2012 have positioned us well as markets improve. We believe that all of our businesses have strong growth prospects as we look toward the future. We remain disciplined in our focus on delivering greater value to our customers and shareholders in 2013 and for years to come.
Read the full 2012 Fourth Quarter and Year-End Results press release.
In this video interview, we get a chance to hear some insights from our CEO, Bruce Hoechner who officially took office in January this year. He shares where Rogers is going in the industry and what his thoughts are regarding Rogers future growth in a tough global economy.
Bruce starts by sharing where his focus has been inside the company since he took office:
- Realignment of the sales organization with Rogers business units to get closer with our customers
- A focus on marketing excellence around new technologies, new market demands and new applications for Rogers products. Part of this effort includes working with R&D to put together road maps for future innovation.
- Understanding the capabilities of Manufacturing Excellence
- Internet Growth – From impact protection for handheld devices and tablets to supporting wireless infrastructures with base stations and antenna technologies
- Clean Technology – To help support sustainability initiatives for Rogers customers with sustainable materials to innovating power-based technologies that support the development of electric vehicles and hybrid vehicles
- Mass Transit – This includes advanced cushioning and seating solutions for high speed rail systems along with bus bars for rail traction systems
He also discussed Rogers expansion in Asia and what it means to expand globally but operate locally…
A shout out and thanks to Bruce Hoechner for sharing his thoughts with the Pat Hindle at Microwave Journal…
Watch this video now:
In catching up on some internet reading, I came across this press release from Frost and Sullivan that talked about Megatrends and how those trends are driving growth in key markets, particularly Chemicals and Materials. Frost and Sullivan defined Megatrends as “global, sustained and macroeconomic forces of development that impact business, economy, society, cultures and personal lives, thereby defining our future world and its increasing pace of change.”
At Rogers, we are committed as a company to innovation around three key Megatrends that directly relate to how our materials help make a better world. Our three Megatrends are: Internet Growth, Clean Technology and Mass Transit.
What was interesting was seeing the overlap with what Frost is saying with the direction we are seeing in our business:
“Megatrends will have a profound impact on the future direction of the chemicals and materials industry,” notes Frost & Sullivan Industry Principal Brian Balmer. “For instance, the growth of mega cities will stimulate growth for many chemical products such as glazing with added acoustic insulation, and materials such as plastics and adhesives that enable the production of more compact home appliances.”
“Over the longer term, continued urbanisation in developed countries will result in demand for more materials that contribute to making ‘healthier’ buildings… Similarly, social trends, in particular for more environmentally sustainable solutions, will be the single biggest factor affecting future chemicals demand,” states Balmer.
“Products designed for modern and future lifestyles (‘GenerationY’) use a wide range of innovative chemicals,” remarks Balmer. “These include structural materials such as engineering plastics for more compact and more feature-packed convergent devices such as smartphones, composite materials for lighter, stronger sports equipment and eco-friendly materials for bio-sourced, recyclable, re-usable or bio-degradable packaging.”
Product areas that will emerge at the forefront in future due to the impact of Megatrends range from nanomaterials, smart materials and sustainable/renewable materials to organic electronics, biotechnology and carbon fibre and engineered natural fibres. Their growing presence will, in turn, have ramifications for several chemicals.
Looking at our Megatrends, here’s what we see:
1. Internet Growth
As the internet continues to expand, mobile data traffic is expected to double every year through 2014, while Internet traffic will expand 46% annually. Demand for speed and bandwidth of network systems, and sales of smart phones, tablets, and mobile computers are expected to increase at double-digit rates.
Rogers is responding with:
- Printed circuit materials critical to high speed performance of fast-growing wired and wireless 3G and 4G infrastructures
- High performance foams to seal and protect top brands of popular smart phones, tablets, and notebook computers
2. Clean Technology
Demand for clean technologies will grow rapidly over the next five years and beyond, with deployment of renewable energy and highly efficient technologies to reduce carbon emissions for the transport sector and for energy efficiency in buildings, industry and agriculture. This trend is driving the need for specialty materials to enable new hybrid/electric vehicle technologies, improve motor efficiencies, and increase wind and solar energy performance. Includes technologies in renewable energy (wind power, solar power, biomass, hydropower, biofuels), information technology, green transportation, electric motors, green chemistry, lighting, and many other appliances that are now more energy efficient.
Rogers is responding with:
- Power electronic solutions for wind and solar power conversion over long distances
- CleanTech materials to seal and protect batteries in hybrid electric and electric vehicles
3. Mass Transit Expansion
Increasing urbanization and steady growth in urban populations worldwide, combined with the drive for sustainability, is driving demand for Mass Transit solutions (rail, aircraft, bus, and others) worldwide. Railways in India and China are expanding at a rapid pace. New components are in constant demand, and complexities of Mass Transit require innovative, high-reliability products and materials to ensure passenger safety.
Rogers is responding with:
- Power electronic components and thermal insulation for power conversion in rail propulsion systems
- Robust seating, sealing, and vibration isolation cushioning that meet stringent requirements for long life and passenger safety
And while it’s good to be on the forefront of trends, Rogers continues to be committed to evolving our materials to better serve the needs of our customers. We work hard to stay close to understanding the needs of the design engineers who reach out for help. Let us know how we can better serve you. We’re here to assist.
Today’s environmental challenges mean we all need to get serious about doing what it takes to enable clean energy for a greener planet. This takes many forms when it comes to making the materials that give our world its shape. For instance, power distribution systems can make wind and solar energy technologies more reliable and efficient. Cushioning products can provide critical vibration protection for batteries in hybrid electric vehicles.
View comments from the 12th Annual Clean Energy Economy Forum
Rogers Corp. is committed to clean energy. Our researchers spend many man-hours developing materials and components that help save energy by providing innovative power distribution and thermal management in hybrid electric vehicles for variable frequency motor drives. As demand grows, we will continue to make sustainable energy more practical, more cost effective, and more reliable.
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