0000084748-25-000066
SEC filingQ3 2025 net sales rose 2.7% to $216.0M, but gross margin fell 170bps to 33.5% due to cost headwinds and mix.
In the third quarter of 2025, Rogers Corporation reported net sales of $216.0 million, a 2.7% increase compared to $210.3 million in the same period last year. The growth was driven by higher sales in aerospace and defense, industrial, and ADAS markets, partially offset by declines in wireless infrastructure and EV/HEV. Gross margin decreased 170 basis points to 33.5% from 35.2%, primarily due to unfavorable product mix, higher freight, duty, and tariff costs, and unfavorable yield performance. Partially offsetting these headwinds were higher volumes and commercial mitigation actions. Selling, general and administrative expenses declined 7.8% to $41.6 million, driven by lower compensation and professional services costs. Research and development expenses decreased 8.6% to $7.4 million. Restructuring and impairment charges were $7.1 million in Q3 2025, compared to $6.3 million in the prior year. As a result, operating income improved to $15.8 million (7.3% of sales) from $14.5 million (6.9% of sales) in Q3 2024. Net income as a percentage of sales was 4.0% versus 5.1% in the prior year, reflecting higher income taxes. The effective tax rate increased to 47.2% from 20.7%, due to valuation allowances and uncertain tax positions.
Advanced Electronics Solutions (AES) segment net sales grew 2.2% to $114.7 million, driven by higher ADAS and EV/HEV sales, partially offset by lower wireless infrastructure. Gross margin improved 110 basis points to 31.5% from 30.4%, benefiting from higher volumes, favorable utilization, and yield improvements. Elastomeric Material Solutions (EMS) segment net sales rose 3.2% to $97.2 million, led by aerospace/defense and industrial markets, partially offset by EV/HEV. However, gross margin declined sharply by 550 basis points to 35.7% from 41.2%, due to utilization headwinds from new production line startups, unfavorable mix, and higher freight, duty, and tariff costs. The Other segment (non-core) saw net sales increase 5.1% to $4.1 million, with gross margin improving 580 basis points to 36.6% on higher volumes and favorable mix.
Management’s outlook emphasizes driving near-term profitability through cost actions, including manufacturing footprint optimization and workforce reductions. The company expects capital expenditures for fiscal 2025 to be in the range of $30 million to $40 million, funded by cash from operations and on-hand cash. While no specific revenue or margin guidance is provided, the company sees opportunities for future growth from organic investments and targeted acquisitions, supported by trends in EV/HEV, ADAS, aerospace/defense, portable electronics, and renewable energy. However, near-term headwinds from customer inventory management, tariff costs, and competitive dynamics remain, as evidenced by the curamik impairment. Liquidity remains solid with $167.8 million in cash and equivalents and a net leverage ratio below 2.75x, allowing flexibility for dividends and strategic investments.
As of September 30, 2025, Rogers Corporation held $167.8M in cash and cash equivalents, up from $159.8M at December 31, 2024. The company had no outstanding borrowings under its $450.0M revolving credit facility, which matures in March 2028. Total shareholders' equity decreased to $1,202.7M from $1,251.6M, primarily due to a net loss of $66.4M and $38.1M in share repurchases, partially offset by a $48.1M increase in accumulated other comprehensive income. Inventory remained relatively flat at $142.9M.
The company disclosed asbestos-related liabilities of $57.2M as of September 30, 2025, with corresponding insurance recoverables of $52.3M. The liability projection extends through 2064. Environmental remediation accruals for the Rogers, Connecticut site totaled $0.7M. No other material purchase commitments or contractual obligations were disclosed in the Notes.
Rogers repurchased 563,869 shares for $38.1M during the nine months ended September 30, 2025, leaving $66.1M available under the $200.0M authorized program. No dividends were paid. Capital expenditures totaled $25.4M (4.2% of sales), down from $40.7M in the prior-year period. The company made $1.2M in debt and finance lease repayments and had no new borrowings.
The company reports three operating segments: Advanced Electronics Solutions (AES), Elastomeric Material Solutions (EMS), and Other. For the nine months ended September 30, 2025, AES generated $327.9M in net sales (down 6.3% YoY), EMS $269.2M (down 2.0%), and Other $12.2M (down 9.6%). Gross margins were $96.1M for AES, $92.9M for EMS, and $4.3M for Other. Geographically, APAC accounted for $247.4M (40.6% of total), Americas $186.7M (30.6%), and EMEA $175.2M (28.8%). The curamik reporting unit within AES recorded a $67.3M goodwill impairment and a $4.5M indefinite-lived intangible asset impairment in Q2 2025.
For the nine months ended September 30, 2025, Rogers Corporation reported net cash provided by operating activities of $54.3 million, a significant decline from $93.4 million in the same period of 2024. This decrease occurred despite a net loss of $66.4 million (versus net income of $26.6 million in the prior year), primarily due to a $71.8 million impairment charge. Excluding that non-cash charge, operating cash flow would have been higher, but working capital changes also weighed on cash generation: accounts receivable increased $3.9 million (vs. a decrease of $1.5 million in 2024), contract assets decreased by $1.2 million (vs. an increase of $17.0 million), and inventories decreased $5.5 million (vs. a $0.3 million increase).
Capital expenditures were $25.4 million, down from $40.7 million in the prior year, reflecting lower capex intensity. Free cash flow (operating cash flow minus capex) was $28.9 million, compared to $52.7 million in the prior year. The company used $38.1 million for share repurchases, up sharply from $7.9 million, and $1.2 million for debt and finance lease repayments. No dividends were paid. The cash flow statement shows that operating cash flow, while lower, still covered capital returns (share repurchases and debt repayments) of $39.3 million, with the shortfall funded by cash on hand and a $4.9 million positive effect from exchange rate fluctuations. Overall, cash and cash equivalents increased by $8.0 million to $167.8 million at period end.