Rogers' Q3 2025 Earnings Call: Contradictions Emerge on Customer Relationships, Industrial Market Growth, Curamik Production Delays, Share Buyback Strategy, and EV Market Outlook

Date of Call: October 29, 2025

Financials Results

• EPS: $0.90 adjusted EPS in Q3, up from $0.34 in Q2; GAAP EPS $0.48 in Q3
• Gross Margin: 33.5% in Q3, up 190 basis points sequentially; Q4 guidance 30%–32% (midpoint ~110 bps below prior year; ~80 bps headwind from China curamik ramp; ~250 bps below prior quarter)
• Operating Margin: Adjusted EBITDA margin 17.2% in Q3, up 540 basis points sequentially; Q4 adjusted EBITDA margin guidance 13.5%–16.5% (midpoint ~300 bps improvement vs prior year)

Guidance:

• Q4 revenue expected $190M–$205M (midpoint ~3% YOY growth, ~9% QOQ decline)
• Q4 gross margin guided 30%–32% (midpoint ~110 bps below prior year; ~80 bps headwind from China ramp)
• Q4 EPS: GAAP breakeven to $0.40; adjusted EPS $0.40–$0.80
• Q4 adjusted EBITDA margin 13.5%–16.5% (midpoint ~300 bps YOY improvement)
• Full-year capex $30M–$40M; non-GAAP tax rate ~35%; share repurchases expected to exceed Q3 levels
• German curamik restructuring to deliver $13M annualized savings by late 2026

Business Commentary:

• Revenue Growth and Market Performance:
• Rogers Corporation reported a 6.5% sequential increase in sales for Q3, with an annual 2.7% rise, leading to results at the upper end of guidance and exceeding Street consensus.

• The growth was driven by improvements in portable electronics, industrial, aerospace, and defense end markets, supported by cost and expense reduction actions.

• Profitability and Margin Improvement:

• Adjusted EPS rose to $0.90 in Q3, an improvement from $0.34 in Q2, indicating a 2.7x increase.

• This improvement was due to higher sales, gross margin increases of 190 basis points to 33.5%, and a reduction in operating expenses.

• Operational Efficiency and Cash Flow:

• Rogers enhanced operational efficiency, resulting in approved savings of $13 million annually by late 2026 from restructuring the curamik operations in Germany.

• Cash provided by operations rose to $20.9 million, driven by higher sales and operating income, with a working capital focus on inventory reduction.

• Dividend and Capital Allocation:

• The company continued its share repurchase program, spending $10 million in Q3 and indicating further activity in Q4.
• The repurchase strategy reflects opportunistic capital allocation based on share price conditions, focusing on optimizing returns to shareholders.

Sentiment Analysis:

Overall Tone: Positive

• Management stated Q3 results were at the upper end of guidance and beat Street; "we expect sales and earnings to improve versus the prior year" and "adjusted EBITDA margin should improve around 300 basis points versus the prior year." Leadership emphasized cost reductions, operating improvements and new-product ramps as drivers of renewed growth.

Q&A:

• Question from Dan Moore (CJS Securities, Inc.): I'll start with the top line and just kind of general revenue trends... confidence in demand continuing to build in industrial, aerospace and defense... and outlook for the first half of '26?
  Response: Management is confident in the Q4 range and expects continued strength across most end markets; EV recovery is the main uncertainty, but they have high confidence in improved performance in the first half of 2026.

• Question from Dan Moore (CJS Securities, Inc.): The gross margin recovered to 33.5% this quarter... how should we think about the 80 bps Q4 headwind dissipating, and what is a baseline for annualized gross margins / upside?
  Response: The ~80 bps Q4 headwind is typical from the China curamik ramp and should dissipate through 2026 as customers qualify and volumes grow; longer-term margin upside depends on operating-model improvements and top-line growth.

• Question from Craig Ellis (B. Riley Securities, Inc., Research Division): Are there cost benefits beyond the plans in progress (the $25M this year/$32M run-rate and $13M Germany savings)? How material and when actionable?
  Response: The disclosed savings are crystallizing (roughly $25M in 2025, ~$32M annualized in 2026 plus $13M COGS savings from Germany later in 2026); additional opportunities will be pursued but no further defined plans today.

• Question from Craig Ellis (B. Riley Securities, Inc., Research Division): What drove strength in the industrial end market and what are opportunities to drive growth; are supply-chain inventories still a headwind?
  Response: Inventory headwinds are largely behind them; growth is driven by market-share gains, improved service/response that is recapturing volumes, and introduction of new products to penetrate adjacent markets.

• Question from Craig Ellis (B. Riley Securities, Inc., Research Division): Is pricing at the right level or is there tactical pricing opportunity to capture more value?
  Response: It's mixed—Rogers commands premium pricing in some high-value markets, while other segments are price-driven; priority is tightening cost structure to compete and protect margins.

• Question from David Silver (Freedom Capital Markets): After visiting key customers, are relationships as strong and do you need further steps to align with customers following softer demand and other disruptions?
  Response: Customer relationships are strong; management has realigned the organization to customer needs, improved responsiveness (lead-time reductions, service), and expects to be an industry benchmark in service by end-2026 while continuing continuous improvements.

• Question from David Silver (Freedom Capital Markets): Philosophy on share buybacks and whether repurchases are opportunistic or programmatic going forward?
  Response: Buybacks have been opportunistic given valuation and lack of attractive M&A; management will continue to optimize capital allocation and balance buybacks with M&A and organic investments.

• Question from Dan Moore (CJS Securities, Inc.): You came in at the top end this quarter; Q4 guidance is wide—what are the puts and takes that could drive results toward the low or high end?
  Response: The range reflects current visibility: seasonal portable-electronics slowdown and customer year-end inventory management are key drivers; stronger-than-expected industrial demand would push results higher, weakness would push lower.

• Question from Craig Ellis (B. Riley Securities, Inc., Research Division): Long-term perspective on the China curamik facility—customer diversity, ramp beyond gating factors, and 2–3 year potential?
  Response: The China plant has several committed programs and multiple customers (existing and new); the primary gating factor is customer qualification, but management expects significant multi-customer growth and a bright 2–3 year outlook.

• Question from Craig Ellis (B. Riley Securities, Inc., Research Division): If customer/product/process quals are the gating item, what levers can accelerate qualification (staffing, shifts, technical actions)?
  Response: The facility is staffed and resourced for expected volumes; the bottleneck is customer-side qualification—Rogers is assisting with testing to accelerate approvals and expects to stay on track for 2026 forecasts.

Contradiction Point 1

Customer Relationships and Recovery

It involves the assessment of customer relationships post-recovery from reduced demand, which directly impacts the company's ability to maintain and grow its customer base.

How strong are customer relationships post-reduced demand, and are further steps needed to improve alignment? - David Silver

2025Q3: Customer relationships remain strong, and we're working to deepen our understanding of their needs. Efforts include improving service levels and reducing lead times to meet customer expectations. - Ali El-Haj(CEO)

Ali, beyond the $13 million restructuring savings, what are your top 2-3 strategic or financial priorities for the next 6-12 months? - Daniel Joseph Moore (CJS Securities)

2025Q2: The impact of the previous restructuring actions, the improvement in our financials has clearly had a positive impact on customer trust toward Rogers. We're doing well on that front. - Ali El-Haj(CEO)

Contradiction Point 2

Growth Opportunities in Industrial End Market

It pertains to the company's strategic focus on growth opportunities in the industrial end market, which is crucial for top-line revenue expansion.

What factors are driving growth in the industrial market, and what expansion opportunities exist? - David Silver

2025Q3: We have the capacity and plans to increase market share and are focused on improving service levels. - Ali El-Haj(CEO)

What are your top 2 or 3 strategic or financial priorities over the next 6 to 12 months beyond the $13 million restructuring cost savings? - Daniel Joseph Moore (CJS Securities)

2025Q2: We're focused on leveraging our leading technology positions in high-reliability polyimide films and polymer compounds to drive organic growth. - Ali El-Haj(CEO)

Contradiction Point 3

Curamik Facility and Production Ramp

It directly impacts expectations regarding the production timeline and capacity expansion at the Curamik facility, potentially influencing company revenue and operational efficiency.

How will the new Curamik facility in China affect gross margin, and what is the expected timeline for this impact to take effect? - Laura Russell(CFO)

2025Q3: Full capacity ramp-up is expected to take through 2026, as customer product qualification is required. Eventually, this headwind should dissipate as customer volumes increase. - Laura Russell(CFO)

Can you update on the new Curamik facility in China and its expected impact on P&L for the next four quarters? - Bill Dulny (Oppenheimer)

2024Q4: The new facility in China has been commissioned and is already producing product and shipping customer orders. Full production ramp-up is expected in Q4. - Ali El-Haj(CEO)

Contradiction Point 4

Share Repurchase Strategy

It involves changes in financial strategy, specifically regarding share repurchase activities, which are critical indicators for investors.

Is the recent share buyback a strategic shift or opportunistic? - Laura Russell(CFO)

2025Q3: Share buybacks this year have been opportunistic, with the stock price where it was. Our strategy is to optimize returns to shareholders through capital allocation, and M&A opportunities have not met our investment criteria. - Laura Russell(CFO)

Can you share details on second-half volume growth for 2025 and any changes to the share buyback strategy? - Craig Ellis (B. Riley Securities, Inc., Research Division)

2024Q4: Our strategy is to continue to be opportunistic on the share buyback initiatives, and we'll continue to execute on that. - Laura Russell(CFO)

Contradiction Point 5

EV/HEV Market Recovery

It involves differing expectations for the recovery of the EV/HEV market, which could impact strategic decisions and resource allocation.

Can you address confidence in sustained demand in key end markets and growth expectations for the first half of '26? - Dan Moore

2025Q3: We're confident in the Q4 guidance range based on current conditions. There's a strong market outlook for us across all segments, except perhaps the EV market, which may not fully recover. - Ali El-Haj(CEO)

Can you provide an update on the Curamik opportunity pipeline in China, its progress year-to-date, and how it's impacted by global market softness? - Craig Ellis

2025Q1: We anticipate EV/HEV market improvement in the second half. Overall, we're optimistic about our technology differentiation but cautious about market macroeconomic recovery. - Colin Gouveia(CEO)