Rogers ROG Q4 2025 Earnings Transcript Highlights

Call Participants

The key participants in this earnings call included Ali El-Haj, who serves as the President and Chief Executive Officer, and Laura Russell, the Senior Vice President and Chief Financial Officer. Their insights provided a comprehensive overview of the company’s performance and future expectations.

Key Financial Takeaways

During the fourth quarter, Rogers Corporation reported revenue of $202 million, marking a solid 5% increase compared to the same period in the previous year. This growth underscored the company’s resilience amid varying market conditions. Adjusted earnings per share reached $0.89, which was almost double the figure from the prior-year quarter, reflecting significant operational efficiencies and improved profitability.

The adjusted EBITDA margin stood at an impressive 17.1%, representing a substantial improvement of 500 basis points over the 2024 level. This enhancement was driven by a combination of higher sales volumes, better product mixes, and effective cost management strategies implemented throughout the year.

In the Advanced Electronics Solutions (AES) segment, fourth-quarter revenue grew by 14.6%. This robust performance was fueled by increased demand in electric vehicle/hybrid electric vehicle (EV/HEV), advanced driver-assistance systems (ADAS), renewable energy, and industrial markets, highlighting the segment’s strength in high-growth areas.

Conversely, the Electronics Manufacturing Services (EMS) segment experienced a 6.7% decline in Q4 revenue. This downturn was primarily attributed to reduced sales in EV/HEV within regions facing challenging demand dynamics. However, this was partly mitigated by stronger sales in the industrial sector, demonstrating some diversification benefits.

The industrial segment contributed 27% to total revenue and saw sales rise at a high-single-digit rate during the quarter. This growth stemmed from broader market recovery trends and gains from expanded business with longstanding customers, positioning it as a key pillar of stability.

Aerospace and defense accounted for 16% of revenue. While there was a modest decline in Q4, the segment achieved high-single-digit growth for the full year, supported by sustained demand in both defense applications and commercial aerospace sectors.

The EV/HEV segment made up 14% of revenue, but sales decreased in both Q4 and for the entire year across AES and EMS units. Executives pointed to regional weaknesses in EV markets as the main factor behind this trend.

On a positive note, ADAS sales surged at a double-digit rate in both Q4 and the full year. This expansion was propelled by greater adoption of ADAS technologies and the push toward higher levels of vehicle autonomy in the automotive industry.

The company generated $71 million in free cash flow for the full year, thanks to disciplined cost containment measures and proactive management of working capital. This strong cash position enabled strategic flexibility moving forward.

Share repurchases totaled $14.3 million in Q4 and $52 million for the year, with an additional $52 million still authorized under the current program. This reflects the company’s commitment to delivering shareholder value.

Net cash at year-end reached $197 million, up $29.2 million from the end of the third quarter, bolstering the balance sheet and providing ample liquidity for investments and returns.

Operating expenses were reduced by 8% year over year. In 2025, the company realized $25 million in cost improvements, with an additional $7 million slated for 2026, plus $13 million more from the ongoing Germany restructuring efforts.

Capital expenditures amounted to $4.7 million in Q4 and $30 million for the full year, aligning with the lower end of initial guidance. For 2026, capex is projected at $30 million to $40 million, maintaining a similar investment pace.

Q1 2026 Guidance

For the first quarter of 2026, sales are guided between $193 million and $208 million, with the midpoint suggesting a 5% year-over-year increase. This outlook anticipates continued momentum from key segments.

Gross margin is expected to range from 30.5% to 32.5%, with the midpoint showing a 160 basis point improvement over the prior year, driven by higher volumes and structural cost enhancements.

Adjusted operating expenses are forecasted to decline by more than 5% compared to Q1 2025, though they may rise modestly from Q4 levels due to annual compensation adjustments.

Adjusted EBITDA is projected at $27 million to $35 million, translating to a 15.5% margin at the midpoint—a remarkable 530 basis point gain versus Q1 2025.

Adjusted EPS guidance spans $0.45 to $0.85, with a midpoint of $0.65, significantly outperforming the $0.27 from a year earlier. This excludes restructuring charges tied to the Germany operations.

Restructuring charges in 2025 totaled $5.4 million toward a $12 million to $20 million estimate, primarily related to Germany, which is expected to yield $13 million in annual run-rate savings.

The non-GAAP tax rate is anticipated at around 32%, influenced by limitations in recognizing benefits from certain loss-making jurisdictions.

In a strategic move, the EMS business has secured initial design wins in data centers. The company is actively pursuing additional opportunities, capitalizing on its expertise in thermal management and signal integrity technologies.

Key Risks and Challenges

Executives noted ongoing softness and uncertainty in the automotive and EV sectors. Specifically, Ali El-Haj highlighted expectations of macroeconomic pressures affecting Q1 and Q2 2026 in autos, particularly EVs, and portable electronics.

The ceramic facility in China is ramping up more gradually than initially planned. While customer interest persists, the company is cautiously balancing aggressive market pursuit with avoiding price erosion, leading to a timeline shift but no change in overall plans. Growth is still anticipated in Q2, Q3, and Q4, albeit at a slower pace.

The EMS segment’s Q4 sales drop was linked to regional EV/HEV demand issues, which weighed on overall performance.

A structurally elevated non-GAAP tax rate of about 32% is projected for 2026, stemming from constraints in loss jurisdiction benefits.

Overall Summary

Rogers Corporation achieved revenue growth, notable margin expansion, and strong free cash flow generation, surpassing the upper limits of guidance for sales and adjusted profitability. Leadership focused on operational restructuring, cost efficiencies, and prudent capital use, including share buybacks and maintaining a robust net cash position. Plans for 2026 emphasize further margin improvements and controlled spending.

New design wins in EMS for data centers and continued innovation were spotlighted as growth drivers. Additional benefits are expected from the Germany ceramic restructuring and pending cost reductions.

Q1 sales guidance prioritizes industrial expansion with at least mid-single-digit growth, tempered by short-term uncertainties in EV/HEV and portable electronics due to market and economic factors.

Momentum in data center design wins and advancements in battery and renewable energy technologies could diversify revenue, with contributions likely in late 2026 or 2027.

Capital returns to shareholders are set to resume in 2026, balanced with heightened M&A focus and investments in global manufacturing.

The company’s worldwide manufacturing presence offers protection against tariff and trade risks, enabling localized supply to meet demands in Asia, North America, and Europe.

Glossary of Industry Terms

• ADAS: Advanced Driver-Assistance Systems refer to vehicle technologies that automate, adapt, and enhance driving systems to boost safety and performance.
• EV/HEV: Electric Vehicles and Hybrid Electric Vehicles represent automotive categories centered on electrified propulsion systems.

Full Earnings Call Transcript

Ali El-Haj opened the discussion by noting that Q4 sales of $202 million came close to the upper boundary of the provided guidance range. Adjusted EPS hit $0.89 per share, and adjusted EBITDA margins reached 17.1%, both surpassing the highest guidance projections. Relative to 2024, sales rose by 5%, and adjusted EBITDA margins expanded by 500 basis points. The quarter also featured substantial free cash flow and ongoing capital returns to shareholders via $14 million in share repurchases. This strong close to 2025 was bolstered by progressive improvements in end markets and essential structural adjustments. With a streamlined operating model and reduced cost structure, Rogers Corporation enters 2026 from a position of greater strength.

Looking ahead to 2026, the main focus will be enhancing the growth trajectory and advancing profitability programs. The team is well-aligned on yearly goals, equipped with the necessary skills to execute effectively. Q1 guidance reflects notable year-over-year progress, including 5% sales growth and a 530 basis point uplift in adjusted EBITDA margins. Laura Russell will delve deeper into Q4 results and the Q1 outlook.

Referring to Slide five, total sales climbed 5% from 2024, propelled by gains in industrial, ADAS, and renewable energy markets. Industrial sales, the largest segment, comprised 27% of total revenue by year-end. Q4 industrial sales advanced at a high-single-digit pace year over year, thanks to market rebound and new business from established clients. Full-year industrial sales grew at a mid-single-digit rate.

Aerospace and defense represented 16% of revenue. Q4 saw a slight dip year over year, but annual growth was high-single-digit, driven by robust defense and commercial aerospace demand.

EV/HEV held steady at 14% of revenue. Q4 sales fell year over year, as EMS declines outweighed AES gains. The EMS drop was due to customer concentration in weak EV demand regions. Full-year EV/HEV sales declined across both units. Efforts continue via ceramic expansion in China and adaptations to evolving EV battery technologies and markets.

ADAS sales rose year over year and achieved double-digit full-year growth, benefiting from wider ADAS adoption and elevated vehicle autonomy levels.

Portable electronics sales declined in Q4 and full year, mainly from an AES product reaching end-of-life status.

Moving to Slide six, structural and organizational shifts in 2025 are yielding early benefits, including stronger customer ties and elevated service quality. Revised KPIs promote alignment on growth and service priorities. These enhancements have intensified new product development, speeding up introductions and design wins. Confidence remains high in the team’s ability to boost innovation and expansion.

Profitability actions delivered $25 million in 2025 cost and operating expense savings, with $20 million more annualized savings by 2026 end. This contributed to an 8% full-year operating expense cut. Cost controls and working capital management produced $71 million in free cash flow, $52 million in repurchases, and $197 million net cash at year-end.

Slide seven shifts to 2026 priorities. Top-line growth is paramount, leveraging the global footprint for competitiveness and market share gains across regions. A customer-focused structure emphasizes design wins for growth and diversification. Data centers emerged as a promising new avenue, with initial EMS design wins in Q4. Larger pursuits leverage thermal management and signal integrity strengths, with at least one decision expected later this year.

Accelerating new product launches in adjacent markets is vital for growth. Profitability efforts continue, with Germany ceramic restructuring progressing. Adjusted operating expenses for 2026 will match 2025 levels. Full-year adjusted EBITDA is expected to grow. Capital allocation stays disciplined, prioritizing shareholder returns. Capex mirrors 2025, supporting facilities and operations. M&A gains emphasis, targeting strategic and financial fits. Buyback levels depend on other priorities.

Laura Russell then detailed Q4 financials on Slide eight. Sales and gross margins neared guidance highs, with adjusted earnings topping the range. Q4 sales rose 5% year over year. AES revenues jumped 14.6% from EV/HEV, ADAS, renewables, and industrial strength. EMS fell 6.7% on EV/HEV softness in tough regions, offset somewhat by industrial gains. Adjusted EPS of $0.89 nearly doubled prior-year levels via higher sales and expense reductions.

Slide nine showed Q4 adjusted EBITDA at $34.4 million, up from $23.3 million in 2024, with margins at 17.1%—a 500 basis point gain. Ali El-Haj attributed this to higher sales, and Laura added improved mix and profitability initiatives. Adjusted operating expenses (ex-stock comp) dropped $6.3 million, offset by $1.7 million in underutilization, mainly China ceramics startup.

Slide 10 covered cash: $197 million at Q4 end, up $29.2 million sequentially. Operating cash flow was $46.9 million, aided by inventory management. Uses included $14.3 million repurchases and $4.7 million capex. Full-year capex was $30 million. 2026 capex guided at $30-$40 million. Shareholder returns persist, with $52 million buyback remaining, balanced with M&A.

Slide 11 outlined Q1 2026 guidance, signaling major improvements. Sales: $193-$208 million (5% midpoint growth), mirroring Q4 markets with industrial uplift. Gross margin: 30.5%-32.5% (160 bp midpoint gain). Adjusted op ex down >5% YoY, up slightly QoQ on comp resets. Adjusted EBITDA: $27-$35 million (15.5% midpoint margin, +530 bp). Adjusted EPS: $0.45-$0.85 ($0.65 midpoint vs. $0.27). Excludes Germany restructuring; 2025 charges $5.4 million toward $12-$20 million total, with $13 million savings. Non-GAAP tax ~32% on loss jurisdiction limits.

Ali El-Haj summarized solid Q4 execution above midpoints, strong cash flow, and 2026 goals for growth, profitability, and capital deployment.

Q&A Session

The operator opened the floor for questions. First was Daniel Joseph Moore from CJS Securities, congratulating the solid year-end and probing Q1 guidance. He noted mid-single-digit growth akin to Q4 industrial trends and sought views on ADAS, renewables, defense, and near/mid-term outlook.

Ali El-Haj replied that Q1 expects strong industrial continuity but softening in autos/EV and portable electronics due to macro uncertainties in Q1/Q2. Other areas project high- to mid-single-digit growth.

Moore followed up on data centers, asking for application details and 2026 opportunities.

El-Haj emphasized recent focus on thermal management and signal integrity with major OEMs, expecting details/revenue in late 2026/2027. Laura Russell added smaller existing EMS revenues growing, with new tech poised for bigger impact.

Next, Craig Andrew Ellis from B. Riley Securities praised COGS/cost/working capital execution and followed on multiyear growth priorities beyond data centers/industrial, seeking initiatives for design wins/revenue.

El-Haj outlined broad growth targets across segments/markets in EMS/AES, including existing customer expansions, ADAS adoption, and new battery/renewables tech for double-digit penetration. Direct OEM engagement complements partner work for faster top-line expansion.

Ellis asked about 2026 profitability ambitions, noting $30 million executed initiatives plus $13 million ceramics benefits—any new ones?

Russell confirmed announced initiatives are progressing, with ceramics (Germany) benefits in 2026 at $13 million savings within committed costs. Focus is execution and sustaining gains for financial optimization.