Rogers Corporation Reports Fourth Quarter and Full Year 2019

Rogers Corporation Reports Fourth Quarter and Full Year 2019 Results

Rogers' effective tax rate for 2019 was 14.2% compared to 20.7% in 2018. The 2019 rate decreased primarily due to the increased utilization of research and development credits and excess tax deductions on stock-based compensation, partially offset by the disproportionate tax effect of the pension settlement charge and an increase in reserves for uncertain tax positions.

Pension Plan Termination

On October 17, 2019, in connection with the Company’s previously announced plans, the Company terminated the Rogers Corporation Defined Benefit Pension Plan, which had sufficient assets to satisfy all transaction obligations. This decision continues the Company’s strategy to improve cost competitiveness and reduces future risk. The Company recorded a total non-cash pre-tax settlement charge in connection with the termination of $53.2 million in the fourth quarter of 2019, or approximately $2.35 per diluted share.

Financial outlook

Rogers guides its 2020 first quarter net sales to a range of $185 to $200 million. The revenue range incorporates a 7% to 10% reduction from the expected impact of the coronavirus outbreak and is wider than normal due to uncertainty related to the evolving situation. The Company guides to a gross margin range of 32.5% to 33.5%. First quarter earnings is expected to be in the range of $0.50 to $0.70 per diluted share and adjusted earnings is expected to be in the range of $0.75 to $0.95 per diluted share. The 2020 full year effective tax rate is expected to be 20% to 21%. For the full year 2020, Rogers expects capital expenditures to be in a range of $40 to $45 million.

About Rogers Corporation

Rogers Corporation (NYSE: ROG) is a global leader in engineered materials to power, protect, and connect our world. With more than 180 years of materials science experience, Rogers delivers high-performance solutions that enable the company’s growth drivers-- advanced connectivity and advanced mobility applications, as well as other technologies where reliability is critical. Rogers delivers Power Electronics Solutions for energy-efficient motor drives, e-Mobility and renewable energy; Elastomeric Material Solutions for sealing, vibration management and impact protection in mobile devices, transportation interiors, industrial equipment and performance apparel; and Advanced Connectivity Solutions for wireless infrastructure, automotive safety and radar systems. Headquartered in Arizona (USA), Rogers operates manufacturing facilities in the United States, China, Germany, Belgium, Hungary, and South Korea, with joint ventures and sales offices worldwide.

Safe Harbor Statement

This release contains forward-looking statements, which concern our plans, objectives, outlook, goals, strategies, future events, future net sales or performance, capital expenditures, future restructuring, plans or intentions relating to expansions, business trends and other information that is not historical information. All forward-looking statements are based upon information available to us on the date of this release and are subject to risks, uncertainties and other factors, many of which are outside of our control, which could cause actual results to differ materially from the results discussed in the forward-looking statements. Risks and uncertainties that could cause such results to differ include: failure to capitalize on, volatility within, or other adverse changes with respect to the Company's growth drivers, including advanced mobility and advanced connectivity, such as delays in adoption or implementation of new technologies; uncertain business, economic and political conditions in the United States and abroad, particularly in China, South Korea, Germany, Hungary and Belgium, where we maintain significant manufacturing, sales or administrative operations; the trade policy dynamics between the U.S. and China reflected in trade agreement negotiations and the imposition of tariffs and other trade restrictions, including trade restrictions on Huawei Technologies Co., Ltd.; fluctuations in foreign currency exchange rates; the results of our research and development efforts; adverse competitive developments, including the extent to which our products are incorporated into end-user products and systems and the extent to which those products and systems achieve commercial success; business interruptions due to catastrophes or other similar events, such as natural disasters, war, terrorism or public health crises; business development transactions and related integration considerations, including failure to realize, or delays in the realization of anticipated benefits of such transactions; the outcome of ongoing and future litigation, including our asbestos-related product liability litigation; inability to obtain raw materials, including commodities, from single or limited source suppliers in a timely and cost effective manner; and changes in laws and regulations applicable to our business. For additional information about the risks, uncertainties and other factors that may affect our business, please see our most recent annual report on Form 10-K and any subsequent reports filed with the Securities and Exchange Commission, including quarterly reports on Form 10-Q. Rogers Corporation assumes no responsibility to update any forward-looking statements contained herein except as required by law.

Conference call and additional information

A conference call to discuss the 2019 fourth quarter and full year results will take place today, Thursday February 20, 2020 at 5pm ET.

A live webcast and slide presentation will be available under the investors section of https://www.rogerscorp.com/investors.

To participate, please dial:

1-800-574-8929	Toll-free in the United States
1-973-935-8524	Internationally
The passcode for the live teleconference is 8027919.

If you are unable to attend, a conference call playback will be available from February 20, 2020 at approximately 8 pm ET through March 5, 2020 at 11:59 pm ET, by dialing 1-855-859-2056 from the United States, and 1-404-537-3406 from outside of the US, each with passcode 8027919.

Additionally, the archived webcast will be available on the Rogers website at approximately 8 pm ET February 21, 2020.

Additional information

Please contact the Company directly via email or visit the Rogers website.

Website address: http://www.rogerscorp.com

(Financial statements follow)

*Condensed Consolidated Statements of Operations (Unaudited)*

	Three Months Ended						Twelve Months Ended
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)	December 31, 2019			December 31, 2018			December 31, 2019			December 31, 2018
Net sales	$	193,768		$	222,942		$	898,260		$	879,091
Cost of sales	129,565			144,567			583,968			568,308
Gross margin	64,203			78,375			314,292			310,783
Selling, general and administrative expenses	41,333			40,966			168,682			164,046
Research and development expenses	8,403			8,561			31,685			33,075
Restructuring and impairment charges	—			2,023			2,485			4,038
Other operating (income) expense, net	(116		)	24			959			(3,087		)
Operating income	14,583			26,801			110,481			112,711
Equity income in unconsolidated joint ventures	1,242			1,048			5,319			5,501
Pension settlement charges	(53,213		)	—			(53,213		)	—
Other income (expense), net	323			(347		)	(592		)	(994		)
Interest expense, net	(1,146		)	(2,126		)	(6,869		)	(6,629		)
Income (loss) before income tax expense	(38,211		)	25,376			55,126			110,589

Income tax expense	(9,451		)	924			7,807			22,938
Net income (loss)	$	(28,760	)	$	24,452		$	47,319		$	87,651

Basic earnings per share	$	(1.55	)	$	1.33		$	2.55		$	4.77

Diluted earnings per share	$	(1.55	)	$	1.31		$	2.53		$	4.70

Shares used in computing:
Basic earnings per share	18,587			18,385			18,573			18,374
Diluted earnings per share	18,587			18,687			18,713			18,659

*Condensed Consolidated Statements of Financial Position (Unaudited)*

(IN THOUSANDS)	December 31, 2019			December 31, 2018
Assets
Current assets
Cash and cash equivalents	$	166,849		$	167,738
Accounts receivable, less allowance for doubtful accounts of $1,691 and $1,354	122,285			144,623
Contract assets	22,455			22,728
Inventories	132,859			132,637
Prepaid income taxes	4,524			3,093
Asbestos-related insurance receivables, current portion	4,292			4,138
Other current assets	10,838			10,829
Total current assets	464,102			485,786
Property, plant and equipment, net of accumulated depreciation of $341,119 and $317,414	260,246			242,759
Investments in unconsolidated joint ventures	16,461			18,667
Deferred income taxes	17,117			8,236
Goodwill	262,930			264,885
Other intangible assets, net of amortization	158,947			177,008
Pension assets	12,790			19,273
Asbestos-related insurance receivables, non-current portion	74,024			59,685
Other long-term assets	6,564			3,045
Total assets	$	1,273,181		$	1,279,344
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	33,019		$	40,321
Accrued employee benefits and compensation	29,678			30,491
Accrued income taxes payable	10,649			7,032
Asbestos-related liabilities, current portion	5,007			5,547
Other accrued liabilities	21,872			23,789
Total current liabilities	100,225			107,180
Borrowings under revolving credit facility	123,000			228,482
Pension and other postretirement benefits liabilities	1,567			1,739
Asbestos-related liabilities, non-current portion	80,873			64,799
Non-current income tax	10,423			8,418
Deferred income taxes	9,220			10,806
Other long-term liabilities	13,973			9,596
Shareholders’ equity
Capital stock - $1 par value; 50,000 authorized shares; 18,577 and 18,395 shares issued and outstanding	18,577			18,395
Additional paid-in capital	138,526			132,360
Retained earnings	823,702			776,403
Accumulated other comprehensive loss	(46,905		)	(78,834		)
Total shareholders' equity	933,900			848,324
Total liabilities and shareholders' equity	$	1,273,181		$	1,279,344

Reconciliation of non-GAAP financial measures to the comparable GAAP measures

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