Rogers Corporation

07/29/2026 | Press release | Distributed by Public on 07/29/2026 04:00

Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Results of Operations and Financial Position
As used herein, the "Company," "Rogers," "we," "us," "our" and similar terms include Rogers Corporation and its subsidiaries, unless the context indicates otherwise.
Forward-Looking Statements
This Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. Such statements are generally accompanied by words such as "anticipate," "assume," "believe," "could," "estimate," "expect," "foresee," "goal," "intend," "may," "might," "plan," "potential," "predict," "project," "should," "seek," "target" or similar expressions that convey uncertainty as to future events or outcomes. Forward-looking statements are based on assumptions and beliefs that we believe to be reasonable; however, assumed facts almost always vary from actual results, and the differences between assumed facts and actual results could be material depending upon the circumstances. Where we express an expectation or belief as to future results, that expectation or belief is expressed in good faith and based on assumptions believed to have a reasonable basis. We cannot assure you, however, that the stated expectation or belief will occur or be achieved or accomplished. Among the factors that could cause our results to differ materially from those indicated by forward-looking statements are risks and uncertainties inherent in our business including, without limitation:
•failure to capitalize on, volatility within, or other adverse changes with respect to growth opportunities, such as delays in adoption or implementation of new technologies;
•uncertain business, economic and political conditions in the U.S. and abroad, particularly in China, Germany, England, Belgium, South Korea and Hungary where we maintain significant manufacturing, sales or administrative operations;
•the global trade policy dynamics between nations reflected in trade agreement negotiations, the imposition of tariffs and other trade restrictions, as well as the potential for global supply chain decoupling;
•fluctuations in foreign currency exchange rates;
•our ability to develop innovative products and the extent to which they are incorporated into end-user products and systems that achieve commercial success;
•the ability and willingness of our sole or limited source suppliers to deliver certain key raw materials, including commodities, to us in a timely and cost-effective manner;
•business interruptions due to catastrophes, geopolitical events, or other similar events, such as natural disasters, war, terrorism or public health crises;
•the impact of sanctions, export controls and other foreign asset or investment restriction;
•failure to realize, or delays in the realization of, anticipated benefits of acquisitions and divestitures due to, among other things, the existence of unknown liabilities or difficulty integrating acquired businesses;
•our ability to attract and retain management and skilled technical personnel;
•our ability to protect our proprietary technology from infringement by third parties and/or allegations that our technology infringes third party rights;
•changes in effective tax rates or tax laws and regulations in the jurisdictions in which we operate;
•failure to comply with financial and restrictive covenants in our credit agreement or restrictions on our operational and financial flexibility due to such covenants;
•the outcome of ongoing and future litigation, including our asbestos-related product liability litigation;
•changes in environmental laws and regulations applicable to our business; and
•disruptions in, or breaches of, our information technology systems.
Our forward-looking statements are expressly qualified by these cautionary statements, which you should consider carefully, along with the risks discussed in this section and elsewhere in this report in addition to the section entitled "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025 (the Annual Report) and our other reports filed with the SEC, any of which could cause actual results to differ materially from historical results or anticipated results. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law.
The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and the related notes that appear elsewhere in this Form 10-Q along with our audited consolidated financial statements and the related notes thereto in our Annual Report.
Company Overview and Strategy
We design, develop, manufacture and sell high-performance and high-reliability engineered materials and components to meet our customers' needs. We operate two strategic operating and reportable segments: AES and EMS. Our remaining operations, which represent non-core businesses, are reported in our Other operating segment. We are headquartered in Chandler, Arizona.
Our growth and profitability strategy is based upon the following principles: (1) market-driven organization, (2) innovation leadership, (3) operational excellence, and (4) synergistic mergers and acquisitions. Our priorities in executing this strategy are focused on driving near-term improvements to profitability and improving the growth outlook for the Company over the next several years by further strengthening our focus on commercial activities, optimizing our global capacity to meet customer demand and driving innovation.
As a market-driven organization, we are focused on capitalizing on growth opportunities across multiple end markets. This includes the aerospace and defense industry, with opportunities driven by the advancement of communication systems and expanding global air travel. Also, the automotive industry where there are market opportunities resulting from continuing trends in vehicle electrification and ADAS adoption. In the electronics and communications industries there are compelling opportunities resulting from growth in data centers and next-generation smartphones. Industrial markets provide growth opportunities in certain sub-markets, including renewable energy which continues to expand globally.
Our growth strategy is based on addressing trends in these markets and maintaining a strong customer-centric focus. Our sales engineers and technical service employees work closely with our customers to understand their needs and then leverage our development capabilities and applications expertise to provide customized solutions. Our strategy is supported by an expansive product portfolio and a reputation for producing high performance and reliable products. We expect to secure further commercial wins and improve sales as we execute on this strategy.
Our operational excellence efforts are focused on driving ongoing cost improvements and efficiencies to further enhance our profitability while enhancing the agility and customer focus of the organization. These efforts include focusing on improving yields, throughput, procurement capabilities, and manufacturing processes. We have also taken specific cost improvement actions in recent quarters that have and will benefit our performance. These actions include optimizing our manufacturing footprint and reducing manufacturing and corporate employees. We continue to review and re-align our manufacturing and engineering footprint in an effort to maintain a leading competitive position globally and to support our customers' growth initiatives.
We seek to enhance our operational and financial performance by investing in research and development, manufacturing and materials efficiencies, and new product initiatives that respond to the needs of our customers. We strive to evaluate operational and strategic alternatives to improve our business structure and align our business with the changing needs of our customers and evolving industry trends.
If we successfully execute this growth and operational improvement strategy, we see an opportunity, over the next several years, to increase revenues from current levels and further improve profitability. The increase in revenues is largely expected to come from our organic business, with the potential to augment this growth through targeted acquisitions.
Executive Summary
The following synopsis and factors should be considered when reviewing our results of operations, financial position and liquidity:
•In the second quarter of 2026 as compared to the second quarter of 2025, our net sales increased approximately 6.9% to $216.8 million, our gross margin increased approximately 90 basis points to 32.5% from 31.6%, and we had an operating margin of 9.2% compared to an operating loss of 33.3%.
•We repurchased 22.6 thousand shares of our capital stock for $3.0 million in the second quarter of 2026.
Results of Operations
The following table sets forth, for the periods indicated, selected operations data expressed as a percentage of net sales:
Three Months Ended Six Months Ended
June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Gross margin 32.5 % 31.6 % 32.4 % 30.8 %
Selling, general and administrative expenses 19.5 % 23.9 % 20.0 % 23.7 %
Research and development expenses 3.4 % 3.5 % 3.4 % 3.6 %
Restructuring and impairment charges 0.3 % 37.5 % 1.6 % 20.8 %
Other operating (income) expense, net 0.1 % - % 0.1 % (0.1) %
Operating income (loss) 9.2 % (33.3) % 7.4 % (17.2) %
Other income (expense), net 0.5 % (1.1) % 0.3 % (1.0) %
Interest income, net 0.1 % 0.2 % 0.1 % 0.2 %
Income (loss) before income taxes 9.9 % (34.2) % 7.8 % (18.0) %
Income tax expense 3.6 % 2.1 % 3.5 % 1.1 %
Net income (loss) 6.3 % (36.3) % 4.3 % (19.1) %
Net Sales and Gross Margin
Three Months Ended Six Months Ended
(Dollars in millions) June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025
Net sales $ 216.8 $ 202.8 $ 417.3 $ 393.3
Gross margin $ 70.4 $ 64.0 $ 135.0 $ 121.0
Percentage of net sales 32.5 % 31.6 % 32.4 % 30.8 %
Net sales increased in the second quarter by 6.9%, or $14.0 million, of which $8.7 million was driven by higher demand and $5.3 million of currency benefit. By end market, sales increased in the electronics and communications, industrial, and automotive markets, partially offset by lower net sales in the aerospace and defense market, in the second quarter of 2026 compared to the second quarter of 2025.
Net sales increased in the first six months by 6.1%, or $24.0 million, of which $10.9 million was driven by higher demand and $13.1 million of currency benefit. By end market, sales increased in the electronics and communications and industrial markets, partially offset by lower net sales in the automotive market, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025.
Gross margin as a percentage of net sales increased approximately 90 basis points to 32.5% in the second quarter of 2026 compared to 31.6% in the second quarter of 2025. Gross margin in the second quarter of 2026 increased due to higher sales volume, favorable mix, and operational efficiencies, partially offset by increased raw material costs.
Gross margin as a percentage of net sales increased approximately 160 basis points to 32.4% in the six months ended June 30, 2026 compared to 30.8% in the six months ended June 30, 2025. Gross margin in the six months ended June 30, 2026 increased due to higher sales volume, favorable mix, and productivity improvements from cost savings following our manufacturing footprint consolidation in Belgium and Germany, partially offset by increased raw material costs.
Selling, General and Administrative Expenses
Three Months Ended Six Months Ended
(Dollars in millions) June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025
Selling, general and administrative expenses $ 42.2 $ 48.5 $ 83.4 $ 93.0
Percentage of net sales 19.5 % 23.9 % 20.0 % 23.7 %
SG&A expenses decreased 13.0% in the second quarter of 2026 from the second quarter of 2025, primarily due to a $2.1 million reduction in professional services costs, a $2.2 million reduction in total compensation and benefit expense, and a $0.5 million reduction in software costs.
SG&A expenses decreased 10.3% in the six months ended June 30, 2026 from the six months ended June 30, 2025, primarily due to a $2.2 million reduction in total compensation and benefit expense, a $4.6 million reduction in professional services costs, and a $1.4 million reduction in software costs.
Research and Development Expenses
Three Months Ended Six Months Ended
(Dollars in millions) June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025
Research and development expenses $ 7.3 $ 7.0 $ 14.0 $ 14.1
Percentage of net sales 3.4 % 3.5 % 3.4 % 3.6 %
R&D expenses increased 4.3% in the second quarter of 2026 from the second quarter of 2025, primarily due to a $0.5 million increase in R&D trials for product development, partially offset by a $0.4 million decrease in compensation and benefits expense.
R&D expenses decreased 0.7% in the six months ended June 30, 2026 from the six months ended June 30, 2025, primarily due to a $1.1 million decrease in compensation and benefits expense, partially offset by a $0.2 million increase in professional services and a $0.5 million increase in R&D trials for product development.
Restructuring and Impairment Charges
Three Months Ended Six Months Ended
(Dollars in millions) June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025
Restructuring and impairment charges $ 0.7 $ 76.1 $ 6.6 $ 82.0
We incurred restructuring and impairment charges of $0.7 million and $6.6 million in the three and six months ended June 30, 2026, due to our footprint consolidation actions in our Eschenbach, Germany facility, the executive leadership transition, additional reduction in forces, and the impairment of our Mexico facility lease. For additional information, refer to "Note 13 - Supplemental Financial Information" to the condensed consolidated financial statements in Part I, Item 1, of this Form 10-Q.
Other Income (Expense), Net
Three Months Ended Six Months Ended
(Dollars in millions) June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025
Other income (expense), net $ 1.1 $ (2.2) $ 1.4 $ (3.8)
Other income (expense), net was income of $1.1 million in the second quarter of 2026 compared to expense of $2.2 million in the second quarter of 2025. The increase was primarily due to $3.8 million of favorable year-over-year changes in impacts from foreign currency transactions combined with $0.6 million for our copper derivative, partially offset by $1.0 million in unfavorable performance on foreign exchange derivative contracts.
Other income (expense), net was income of $1.4 million in the six months ended June 30, 2026 compared to expense of $3.8 million in the six months ended June 30, 2025. The increase was primarily due to $6.4 million of favorable year-over-year changes in impacts from foreign currency transactions, partially offset by $1.8 million in unfavorable performance on foreign exchange derivative contracts.
Interest Income, Net
Three Months Ended Six Months Ended
(Dollars in millions) June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025
Interest income, net $ 0.3 $ 0.4 $ 0.6 $ 0.7
Interest income, net, was flat for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025.
Income Taxes
Three Months Ended Six Months Ended
(Dollars in millions) June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025
Income tax expense $ 7.8 $ 4.3 $ 14.6 $ 4.1
Effective tax rate 36.4 % (6.2) % 44.6 % (5.8) %
Compared to the 21% U.S. statutory federal income tax rate, we had a tax rate of 36.4% in the second quarter of 2026. During the quarter, our effective tax rate was unfavorably impacted by an increase in the valuation allowance attributable to loss
jurisdictions in which no tax benefit is anticipated to be realized.
We had a negative tax rate of 6.2% in the second quarter of 2025 due to tax expense on a pre-tax book loss. Our income tax expense for the second quarter of 2025 of $4.3 million was comprised primarily of an increase in the valuation allowance attributable to loss jurisdictions in which no tax benefit is anticipated to be realized. Our effective tax rate was also unfavorably impacted by the $67.3 million goodwill impairment in curamik® for which no tax benefit is available.
We had a tax rate of 44.6% in the six months ended June 30, 2026. The effective rate for the first six months of 2026 was unfavorably impacted by an increase in the valuation allowance attributable to loss jurisdictions in which no tax benefit is anticipated to be realized.
We had a negative tax rate of 5.8% for the six months ended June 30, 2025 due to tax expense on a pre-tax book loss. Our income tax expense for the six months ended June 30, 2025 of $4.1 million was comprised primarily of an increase in the valuation allowance attributable to loss jurisdictions in which no tax benefit is anticipated to be realized. Our effective tax rate was also unfavorably impacted by the $67.3 million goodwill impairment in curamik® for which no tax benefit is available.
Operating Segment Net Sales and Gross Margin
Advanced Electronics Solutions
Three Months Ended Six Months Ended
(Dollars in millions) June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025
Net sales $ 117.5 $ 109.0 $ 225.2 $ 213.2
Gross margin $ 33.5 $ 30.9 $ 64.9 $ 60.0
Percentage of net sales 28.5 % 28.3 % 28.8 % 28.1 %
AES net sales increased in the second quarter by 7.8%, or $8.5 million, of which $5.2 million was driven by higher demand and $3.3 million of currency benefit. By end market, sales increased for electronics and communications, and automotive, while sales in the aerospace and defense market were lower, in the second quarter of 2026 compared to the second quarter of 2025.
AES net sales increased in the first six months by 5.6%, or $12.0 million, of which $3.5 million was driven by higher demand and $8.5 million of currency benefit. By end market, sales increased for electronics and communications, automotive, and industrial, while sales in the aerospace and defense market were lower, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025.
Our AES operating and reportable segment gross margin as a percentage of net sales in the second quarter of 2026 was 28.5% as compared to 28.3% in the second quarter of 2025. Gross margin improved primarily due to higher sales volume and favorable mix, partially offset by increased raw material costs.
Our AES operating and reportable segment gross margin as a percentage of net sales in the six months ended June 30, 2026 was 28.8% as compared to 28.1% in the six months ended June 30, 2025. Gross margin improved primarily due to higher sales volume, favorable mix, and productivity improvements from cost savings following our manufacturing footprint consolidation in Belgium and Germany, partially offset by lower utilization from a new production line and increased raw material costs.
Elastomeric Material Solutions
Three Months Ended Six Months Ended
(Dollars in millions) June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025
Net sales $ 94.8 $ 89.4 $ 183.2 $ 172.0
Gross margin $ 35.0 $ 31.5 $ 66.3 $ 58.2
Percentage of net sales 36.9 % 35.2 % 36.2 % 33.8 %
EMS net sales increased in the second quarter by 6.0%, or $5.4 million, of which $3.6 million was driven by higher demand and $1.8 million of currency benefit. By end market, sales increased in the industrial, electronics and communications, and aerospace and defense markets, partially offset by lower sales in the automotive market, in the second quarter of 2026 compared to the second quarter of 2025.
EMS net sales increased in the first six months by 6.5%, or $11.2 million, of which $6.9 million was driven by higher demand and $4.3 million of currency benefit. By end market, sales increased in the industrial, electronics and communications, and aerospace and defense markets, partially offset by lower sales in the automotive market, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025.
Our EMS operating and reportable segment gross margin as a percentage of net sales in the second quarter of 2026 was 36.9% as compared to 35.2% in the second quarter of 2025. Gross margin improved primarily due to increased sales volume and related utilization benefits and operational efficiencies.
Our EMS operating and reportable segment gross margin as a percentage of net sales in the six months ended June 30, 2026 was 36.2% as compared to 33.8% in the six months ended June 30, 2025. Gross margin improved primarily due to increased sales volume and related utilization benefits and productivity improvements.
Other
Three Months Ended Six Months Ended
(Dollars in millions) June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025
Net sales $ 4.5 $ 4.4 $ 8.9 $ 8.1
Gross margin $ 1.9 $ 1.6 $ 3.8 $ 2.8
Percentage of net sales 42.2 % 36.4 % 42.7 % 34.6 %
Liquidity, Capital Resources and Financial Position
We believe that our existing sources of liquidity and cash flows that we expect to generate from our operations, together with our available credit facilities, will be sufficient to fund our operations, currently planned capital expenditures and R&D efforts, for at least the next 12 months. We regularly review and evaluate the adequacy of our cash flows, borrowing facilities and banking relationships in an effort to ensure that we have the appropriate access to cash to fund both our near-term operating needs and our long-term strategic initiatives.
The following table illustrates the location of our cash and cash equivalents by our three major geographic areas:
(Dollars in millions) June 30, 2026 December 31, 2025
U.S. $ 74.3 $ 100.1
Europe 37.5 40.7
Asia 69.6 56.2
Total cash and cash equivalents $ 181.4 $ 197.0
Approximately $107.1 million of our cash and cash equivalents were held by non-U.S. subsidiaries as of June 30, 2026. We did not make any changes in the six months ended June 30, 2026 to our position on the permanent reinvestment of our earnings from foreign operations. With the exception of certain of our Chinese subsidiaries, where a substantial portion of our cash and cash equivalents located in Asia are held, we continue to assert that historical foreign earnings are indefinitely reinvested.
(Dollars in millions) June 30, 2026 December 31, 2025
Key Financial Position Accounts:
Cash and cash equivalents $ 181.4 $ 197.0
Short-term investments $ 30.0 $ -
Accounts receivable, net $ 149.2 $ 130.6
Inventories, net $ 130.0 $ 125.0
Changes in key financial position accounts and other significant changes in our condensed consolidated statements of financial position from December 31, 2025 to June 30, 2026 were as follows:
•Cash and cash equivalents were $181.4 million as compared to $197.0 million as of December 31, 2025, a decrease of $15.6 million, or 7.9%. This decrease was primarily due to cash used in investing and financing activities, partially offset by cash provided by operations and favorable impacts of exchange rates on cash.
•Short-term investments were $30.0 million as compared to nil as of December 31, 2025. The addition of short-term investments was due to the purchase of time deposits with original maturities of more than three months and less than twelve months at the date of purchase, as of June 30, 2026.
•Accounts receivable, net increased 14.2% to $149.2 million as of June 30, 2026 from $130.6 million as of December 31, 2025. The increase was primarily due to higher net sales in the last month of the second quarter of 2026 compared to the last month of the fourth quarter of 2025.
•Inventories were $130.0 million as of June 30, 2026, compared to $125.0 million as of December 31, 2025. The change was due to higher levels of raw materials inventory, offset by lower levels of work-in-process and finished goods inventory.
Six Months Ended
(Dollars in millions) June 30, 2026 June 30, 2025
Key Cash Flow Measures:
Net cash provided by operating activities $ 30.2 $ 25.4
Net cash used in investing activities $ (40.3) $ (3.4)
Net cash used in financing activities $ (4.6) $ (29.6)
Changes in key cash flow measures and other significant changes in our condensed consolidated statements of cash flows from June 30, 2025 to June 30, 2026 were as follows:
•Net cash used in investing activities was $40.3 million as compared to $3.4 million as of June 30, 2025, an increase in net cash used of $36.9 million. This increase in net cash used was primarily due to purchases of short-term investments, which consists of time deposits with original maturities of more than three months and less than twelve months at the date of purchase.
•Net cash used in financing activities was $4.6 million as compared to $29.6 million as of June 30, 2025, a decrease in net cash used of $25.0 million. This decrease in net cash used was primarily due to a lower level of share repurchase activity.
In 2026, we expect capital spending to be in the range of approximately $30.0 million to $35.0 million. We plan to fund our capital spending in 2026 with cash from operations and cash on hand.
Restrictions on Payment of Dividends
The Fifth Amended Credit Agreement generally permits us to pay cash dividends to our shareholders, provided that (i) no default or event of default has occurred and is continuing or would result from the dividend payment and (ii) our total net leverage ratio does not exceed 2.75 to 1.00. If our total net leverage ratio exceeds 2.75 to 1.00, we may nonetheless make up to $20.0 million in restricted payments, including cash dividends, during the fiscal year, provided that no default or event of default has occurred and is continuing or would result from the payments. Our total net leverage ratio did not exceed 2.75 to 1.00 as of June 30, 2026.
Contingencies
During the second quarter of 2026, we did not become aware of any material developments related to environmental matters disclosed in our Annual Report, our asbestos litigation or other material contingencies previously disclosed or incur any material costs or capital expenditures related to such matters. Refer to "Note 9 - Commitments and Contingencies" to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q for further discussion of these contingencies.
Critical Accounting Policies and Estimates
There have been no material changes in our critical accounting policies and estimates from those disclosed in our Annual Report.
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