Rogers Corporation

Good afternoon. My name is Sean Molley and I will be your conference operator today. At this time, I would like to welcome everyone to the Rogers Corporation Second Quarter 2025 Earnings Conference Call. I will now turn the call over to your host, Mr. Steve Haymore, Senior Director of Investor Relations. Mr. Haymore, you may begin.

Good afternoon and welcome to the Rogers Corporation Second Quarter 2025 Earnings Conference Call. The slides for today's call can be found in the investor section of our website along with the news release that was issued earlier today. Please turn to slide two. Before we begin, I would like to note that statements in this conference call that are not strictly historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and should be considered as subject to the many uncertainties that exist in Roger's operations and environment. These uncertainties include economic conditions, market demands, and competitive factors. Such factors could cause actual results to differ materially from those in any forward-looking statement made today. Please turn to slide three. The discussion during this conference call will also reference certain financial measures that were not prepared in accordance with U.S. generally accepted accounting principles. A reconciliation of those non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the slide deck for today's call, which are available on our Investor Relations website. With me today are Ali El-Haj, Interim President and CEO, Laura Russell, Senior Vice President and CFO, and Jeff Tsao, President of the Advanced Electronic Solutions Business Unit. I will now turn the call over to Ali.

Thank you, Steve. Good afternoon, everyone, and thank you for joining us today. First, let me say that I appreciate the opportunity to step in as the interim CEO role at Rogers. Over the past several months, I have directly observed the talent and capability of the global Rogers team, as well as the many compelling opportunities that are ahead. There are challenges that need to be addressed. However, I'm excited to lead the organization and leverage my prior experience to help improve the company's performance. Over the past 30 plus years, I have gained significant experience leading both private equity-owned businesses and divisions of public companies. Like Rogers, these companies have been global manufacturers of highly engineered materials and products that have competed in similar end markets, such as automotive and industrial. At each of these companies, I have demonstrated the ability to deliver growth in both sales and profitability. I look forward to working with the executive leadership team and employees globally to do the same at Rogers. Now turning to slide four. First, I want to emphasize to our shareholders that Rogers' core capability and strengths are intact. The recent leadership transition does not signal a major change in strategy or a deterioration of our competitive advantages. Rather, the changes are needed to increase the speed of execution, improve accountability, and create a more dynamic organization to accelerate growth and improve margins. Next, the performance of the AES ceramic business has been affected in recent quarters by a rapidly evolving EV market. I will cover how we are responding to the market-driven changes facing this business and the actions we are taking to address them. Turning to our Q2 results, our sales, gross margins, and adjusted EPS were all within guidance ranges. Sales increased by 6.5% from the prior quarter, led by a stronger industrial portable electronics, A&D, and ADAS end markets. We look ahead to Q3, and we expect a more modest increase in revenue. However, gross margin and adjusted EPS should see stronger increases due to our ongoing cost and expense containment initiatives. Laura will cover both the Q2 financials and third quarter outlook in more details. Next on slide five. Here are the key elements that provide a strong foundation for Roger's future success. For many years, Rogers has been a trusted partner by leading OEMs globally. They value Rogers' design capabilities, proven reliability, and broad portfolio products. As a customer-focused company, we will continue to build on these values in all areas of our business. Rogers' technical capabilities also remain a strength for the company. Our sales engineers and technical service organizations are critical to our success. They leverage their deep expertise to assist our customers in finding the right materials and solutions for their specific applications. Rogers' greatest strength is its employees. As I have had the opportunity to meet many of the Rogers team around the world, I have been impressed at the talent and commitment they bring to work each and every day. We will continue to invest in the development of our employees and their success. Finally, Rogers' global reach and footprint continues to be a strength and source of differentiation. We have manufacturing and technical expertise in every major region of the world to provide high levels of support to our customers. We are building a global company with local experts. Next, on slide six, I'll highlight some of the changes happening in the global electric vehicle market. Over the past 18 months, we have seen a sharp divergence in the regional growth rates for EV production and sales. In North America and Europe, projections for EV growth have been downgraded over time by millions of units. This resulted in both a significant inventory correction and a stagnation of production levels in these regions. In contrast, EV production in China has remained on track to projections, and unit volumes have grown rapidly. This change in regional growth rates has altered the competitive landscape for Coramic's direct customers. Power module manufacturers in Asia, and specifically China, have capitalized on the fast growth in their home market and have been able to capture large share from Roger's traditional customers. Also, with intense global EV competition and consistent with typical trends in the auto industry, power substrates are facing price and pressure. As a result of these market changes, we experience lower demand than originally forecasted, and we are adjusting the ceramic business accordingly. Turning to slide seven. In support of our local or local manufacturing strategy, we are rebalancing our capacity between Europe and China. As recently announced, we are taking meaningful actions to right-size the ceramic business. With lower growth in the EV market outside of China, it is necessary that we have a cost competitive footprint in each region. Our plans include ramping up manufacturing capabilities in China and reducing capacity in our European operations. The full year run rate savings from these actions are projected to be in excess of $13 million. Our Suzhou factory combined with a localized supply chain will afford us a global competitive advantage. Customer qualification work at this facility is continuing, and we expect to ramp up production in the coming months. We continue to see good traction with additional design wins in the local market. Indeed, in the second quarter, our AMB substrates were designed into a key EV platform by one of the leading Chinese power module manufacturers. The new facility also expands opportunities in industrial and renewable energy and markets. We continue to believe that electrification will provide compelling market opportunities ahead. Executing on this strategy will be key to competing effectively in all regions and enabling our growth in the EV market. We are also focused on growing across our other key end markets. Laura will highlight the growth we saw in Q2, especially in industrial, aerospace, and defense, and ADAS. In industrial, our primary markets are showing signs of recovery and remain a major focus area. We have identified several growth opportunities, such as battery energy storage systems and data centers. In data centers, sales today are small, but we are actively engaging with customers to help them address thermal vibration management and signal integrity challenges. In A&D, we expect the demand from both U.S. and European primes will continue to be strong, and we are working to secure additional wins. In the ADAS market, there are compelling growth opportunities as vehicles move to higher levels of autonomy. We are making progress with design wins in new regions and on new introduced laminate materials which build on our proven performance while reducing manufacturing costs for our customers. I'll turn it over to Laura to discuss our Q2 financial performance and Q3 outlook.