Rogers Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

rog-20200630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________

FORM 10-Q

_______________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission file number 1-4347

_______________________________

ROGERS CORPORATION

(Exact Name of Registrant as Specified in its Charter)

_______________________________


Massachusetts			06-0513860
(State or Other Jurisdiction of			(I. R. S. Employer Identification No.)
Incorporation or Organization)

2225 W. Chandler Blvd., Chandler, Arizona 85224-6155

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (480) 917-6000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock,

par value $1.00 per share

ROG

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s capital stock as of July 27, 2020 was 18,674,827.

ROGERS CORPORATION

FORM 10-Q

June 30, 2020

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Refer to “Forward-Looking Statements” in Item 2, Management’s Discussion and Analysis of Results of Operations and Financial Position for additional information.

Part I – Financial Information

Item 1. Financial Statements

ROGERS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars and shares in thousands, except per share amounts)


	Three Months Ended						Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Net sales	$	191,157	$	242,852	$	389,967	$	482,650
Cost of sales	121,188		157,024		254,368		311,428
Gross margin	69,969		85,828		135,599		171,222

Selling, general and administrative expenses	41,694		43,649		82,024		86,901
Research and development expenses	7,295		7,843		15,100		15,452
Restructuring and impairment charges	—		1,083		—		1,905
Other operating (income) expense, net	(112)		40		(92)		951
Operating income	21,092		33,213		38,567		66,013

Equity income in unconsolidated joint ventures	1,022		1,742		2,240		2,579
Pension settlement charges	(55)		—		(55)		—
Other (expense) income, net	634		(1,401)		(152)		3
Interest expense, net	(1,779)		(2,038)		(2,986)		(3,976)
Income before income tax expense	20,914		31,516		37,614		64,619
Income tax expense	6,394		7,223		9,835		11,927
Net income	$	14,520	$	24,293	$	27,779	$	52,692

Basic earnings per share	$	0.78	$	1.31	$	1.49	$	2.84
Diluted earnings per share	$	0.78	$	1.30	$	1.49	$	2.82

Shares used in computing:
Basic earnings per share	18,676		18,568		18,673		18,562
Diluted earnings per share	18,681		18,730		18,686		18,711

The accompanying notes are an integral part of the condensed consolidated financial statements.

ROGERS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(Dollars in thousands)


	Three Months Ended						Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Net income	$	14,520	$	24,293	$	27,779	$	52,692

Foreign currency translation adjustment	5,629		2,182		(1,265)		(2,075)
Pension and other postretirement benefits:
Pension settlement benefits, net of tax (Note 4)	(48)		—		(48)		—
Actuarial net gain incurred, net of tax (Note 4)	626		—		626		—
Amortization of loss, net of tax (Note 4)	67		157		133		313
Derivative instrument designated as cash flow hedge:
Change in unrealized gain (loss) before reclassifications, net of tax (Note 4)	383		(810)		(866)		(1,204)
Unrealized gain reclassified into earnings, net of tax (Note 4)	(267)		(62)		(334)		(156)
Other comprehensive income (loss)	6,390		1,467		(1,754)		(3,122)
Comprehensive income	$	20,910	$	25,760	$	26,025	$	49,570

The accompanying notes are an integral part of the condensed consolidated financial statements.

ROGERS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Unaudited)

(Dollars and shares in thousands, except par value)


	June 30, 2020		December 31, 2019
Assets
Current assets
Cash and cash equivalents	$	298,742	$	166,849
Accounts receivable, less allowance for doubtful accounts of $1,667 and $1,691	128,697		122,285
Contract assets	19,280		22,455
Inventories	124,747		132,859
Prepaid income taxes	3,801		4,524
Asbestos-related insurance receivables, current portion	4,292		4,292
Other current assets	11,131		10,838
Total current assets	590,690		464,102
Property, plant and equipment, net of accumulated depreciation of $361,541 and $341,119	263,051		260,246
Investments in unconsolidated joint ventures	16,907		16,461
Deferred income taxes	25,474		17,117
Goodwill	262,469		262,930
Other intangible assets, net of amortization	147,722		158,947
Pension assets	4,173		12,790
Asbestos-related insurance receivables, non-current portion	74,024		74,024
Other long-term assets	16,031		6,564
Total assets	$	1,400,541	$	1,273,181
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	35,616	$	33,019
Accrued employee benefits and compensation	25,230		29,678
Accrued income taxes payable	11,358		10,649
Asbestos-related liabilities, current portion	5,007		5,007
Other accrued liabilities	19,654		21,872
Total current liabilities	96,865		100,225
Borrowings under revolving credit facility	223,000		123,000
Pension and other postretirement benefits liabilities	1,625		1,567
Asbestos-related liabilities, non-current portion	80,696		80,873
Non-current income tax	14,554		10,423
Deferred income taxes	8,493		9,220
Other long-term liabilities	12,726		13,973
Commitments and contingencies (Note 10 and Note 12)
Shareholders’ equity
Capital stock - $1 par value; 50,000 authorized shares; 18,668 and 18,577 shares issued and outstanding	18,668		18,577
Additional paid-in capital	141,092		138,526
Retained earnings	851,481		823,702
Accumulated other comprehensive loss	(48,659)		(46,905)
Total shareholders' equity	962,582		933,900
Total liabilities and shareholders' equity	$	1,400,541	$	1,273,181

The accompanying notes are an integral part of the condensed consolidated financial statements.

ROGERS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)


	Six Months Ended
	June 30, 2020		June 30, 2019
Operating Activities:
Net income	$	27,779	$	52,692
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	25,858		25,099
Equity compensation expense	7,022		6,143
Deferred income taxes	(8,976)		(2,536)
Equity in undistributed income of unconsolidated joint ventures	(2,240)		(2,579)
Dividends received from unconsolidated joint ventures	1,785		1,741
Pension settlement benefits	(63)		—
Pension and other postretirement benefits	(100)		(346)
Asbestos-related charges	—		67
Loss on sale or disposal of property, plant and equipment	53		276
Impairment charges	—		956
Provision (benefit) for doubtful accounts	54		(128)
Changes in assets and liabilities:
Accounts receivable	(6,623)		(12,747)
Contract assets	3,174		(2,845)
Inventories	7,910		(2,845)
Pension and postretirement benefit contributions	(244)		(11)
Other current assets	414		(1,211)
Accounts payable and other accrued expenses	(6,129)		3,653
Other, net	5,285		2,122
Net cash provided by operating activities	54,959		67,501

Investing Activities:

Capital expenditures	(18,150)		(24,026)
Proceeds from the sale of property, plant and equipment, net	—		9
Return of capital from unconsolidated joint ventures	—		2,625
Net cash used in investing activities	(18,150)		(21,392)

Financing Activities:
Proceeds from borrowings under revolving credit facility	150,000		—
Repayment of debt principal and finance lease obligations	(50,193)		(33,196)
Payments of taxes related to net share settlement of equity awards	(5,029)		(7,424)
Proceeds from the exercise of stock options, net	—		327
Proceeds from issuance of shares to employee stock purchase plan	664		594

Net cash provided by (used in) financing activities	95,442		(39,699)

Effect of exchange rate fluctuations on cash	(358)		(1,080)

Net increase (decrease) in cash and cash equivalents	131,893		5,330
Cash and cash equivalents at beginning of period	166,849		167,738
Cash and cash equivalents at end of period	$	298,742	$	173,068

Supplemental Disclosures:
Accrued capital additions	$	4,144	$	2,119
Cash paid during the year for:
Interest, net of amounts capitalized	$	3,311	$	4,440
Income taxes	$	15,644	$	9,164

The accompanying notes are an integral part of the condensed consolidated financial statements.

ROGERS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

(Dollars and shares in thousands)


	Three Months Ended						Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Capital Stock
Balance, beginning of period	$	18,662	$	18,546	$	18,577	$	18,395
Shares issued for vested restricted stock units, net of shares withheld for taxes	6		4		85		137
Stock options exercised	—		2		—		10
Shares issued for employee stock purchase plan	—		—		6		7
Shares issued to directors	—		7		—		10

Balance, end of period	18,668		18,559		18,668		18,559
Additional Paid-In Capital
Balance, beginning of period	137,235		128,417		138,526		132,360
Shares issued for vested restricted stock units, net of shares withheld for taxes	(38)		(288)		(5,114)		(7,561)
Stock options exercised	—		40		—		317
Shares issued for employee stock purchase plan	—		7		658		587
Shares issued to directors	—		(7)		—		(10)
Equity compensation expense	3,895		3,667		7,022		6,143

Balance, end of period	141,092		131,836		141,092		131,836
Retained Earnings
Balance, beginning of period	836,961		804,782		823,702		776,403
Net income	14,520		24,293		27,779		52,692
Cumulative-effect adjustment for lease accounting	—		—		—		(20)
Balance, end of period	851,481		829,075		851,481		829,075
Accumulated Other Comprehensive Loss
Balance, beginning of period	(55,049)		(83,423)		(46,905)		(78,834)
Other comprehensive income (loss)	6,390		1,467		(1,754)		(3,122)
Balance, end of period	(48,659)		(81,956)		(48,659)		(81,956)
Total Shareholders’ Equity	$	962,582	$	897,514	$	962,582	$	897,514

The accompanying notes are an integral part of the condensed consolidated financial statements.

ROGERS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Basis of Presentation

As used herein, the terms “Company,” “Rogers,” “we,” “us,” “our” and similar terms mean Rogers Corporation and its consolidated subsidiaries, unless the context indicates otherwise.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information. Accordingly, these statements do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, the accompanying condensed consolidated financial statements include all normal recurring adjustments necessary for their fair presentation in accordance with GAAP. All significant intercompany balances and transactions have been eliminated.

Interim results are not necessarily indicative of results for a full year. For further information regarding our accounting policies, refer to the audited consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019.

We assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to us and the unknown future impacts of COVID-19 as of June 30, 2020 and through the date of this report. The accounting matters assessed included, but were not limited to, our allowance for doubtful accounts, equity compensation, the carrying value of our goodwill, other intangible assets as well as other long-lived assets, financial assets, valuation allowances for tax assets and revenue recognition.

Note 2 – Fair Value Measurements

The accounting guidance for fair value measurements establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value:

•Level 1 – Quoted prices in active markets for identical assets or liabilities.

•Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

As a result of our pension termination and settlement efforts in late 2019 and the first half of 2020, we have a pension surplus investment balance, which is now accounted for as an available-for-sale investment as of June 2020. For additional information regarding this balance, refer to “Note 11 – Pension Benefits and Other Postretirement Benefits.” Available-for-sale investments measured at fair value on a recurring basis, categorized by the level of inputs used in the valuation, were as follows:


	Available-for-Sale Investment at Fair Value as of June 30, 2020
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Pension surplus investment⁽¹⁾	$	—	$	9,744	$	—	$	9,744

⁽¹⁾ This balance was invested in a fund comprised of fixed income and short-term cash securities, and was recorded in the “Other long-term assets” line item in the condensed consolidated statements of financial position. As of June 30, 2020, the fair value of this investment approximated its carrying value.

From time to time we enter into various instruments that require fair value measurement, including foreign currency contracts, copper derivative contracts and interest rate swaps. Derivative instruments measured at fair value on a recurring basis, categorized by the level of inputs used in the valuation, were as follows:


	Derivative Instruments at Fair Value as of June 30, 2020
(Dollars in thousands)	Level 1		Level 2		Level 3		Total⁽¹⁾
Foreign currency contracts	$	—	$	(95)	$	—	$	(95)
Copper derivative contracts	$	—	$	1,541	$	—	$	1,541

Price	140.01	EPS	4
Shares	19	P/E	34
MCap	2,622	P/FCF	23
Net Debt	-10	EBIT	93
TEV	2,611	TEV/EBIT	28
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-07-31
10-Q	2020-03-31	Filed 2020-05-01
10-K	2019-12-31	Filed 2020-02-21
10-Q	2019-09-30	Filed 2019-10-31
10-Q	2019-06-30	Filed 2019-08-01
10-Q	2019-03-31	Filed 2019-05-01
10-K	2018-12-31	Filed 2019-02-21
10-Q	2018-09-30	Filed 2018-11-02
10-Q	2018-06-30	Filed 2018-08-01
10-Q	2018-03-31	Filed 2018-04-27
10-K	2017-12-31	Filed 2018-02-28
10-Q	2017-09-30	Filed 2017-11-03
10-Q	2017-06-30	Filed 2017-08-01
10-Q	2017-03-31	Filed 2017-05-01
10-K	2016-12-31	Filed 2017-02-21
10-Q	2016-09-30	Filed 2016-11-03
10-Q	2016-06-30	Filed 2016-08-09
10-Q	2016-03-31	Filed 2016-05-03
10-K	2015-12-31	Filed 2016-02-23
10-Q	2015-09-30	Filed 2015-10-30
10-Q	2015-06-30	Filed 2015-07-30
10-Q	2015-03-31	Filed 2015-04-30
10-K	2014-12-31	Filed 2015-02-18
10-Q	2014-09-30	Filed 2014-10-29
10-Q	2014-06-30	Filed 2014-07-30
10-Q	2014-03-31	Filed 2014-04-30
10-K	2013-12-31	Filed 2014-02-24
10-Q	2013-09-30	Filed 2013-10-30
10-Q	2013-06-30	Filed 2013-07-31
10-Q	2013-03-31	Filed 2013-05-01
10-Q	2012-09-30	Filed 2012-11-05
10-Q	2012-06-30	Filed 2012-08-01
10-Q	2012-03-31	Filed 2012-05-02
10-Q	2011-09-30	Filed 2011-11-01
10-Q	2011-06-30	Filed 2011-08-02
10-Q	2011-03-31	Filed 2011-05-03
10-K	2010-12-31	Filed 2011-02-18
10-Q	2010-09-30	Filed 2010-11-02
10-Q	2010-06-30	Filed 2010-08-03
10-Q	2010-03-31	Filed 2010-05-04
10-K	2009-12-31	Filed 2010-02-19

8-K	2020-07-30	Earnings, Exhibits
8-K	2020-07-30	Earnings, Regulation FD, Exhibits
8-K	2020-05-12
8-K	2020-04-30
8-K	2020-02-20
8-K	2020-02-12
8-K	2019-10-30
8-K	2019-09-03
8-K	2019-07-31
8-K	2019-06-10
8-K	2019-05-21
8-K	2019-05-15
8-K	2019-04-30
8-K	2019-02-20
8-K	2019-02-07
8-K	2018-11-01
8-K	2018-09-17
8-K	2018-08-29
8-K	2018-07-31
8-K	2018-07-09
8-K	2018-05-18
8-K	2018-05-03
8-K	2018-04-26
8-K	2018-03-16
8-K	2018-02-27

EX-31.1	rog-20200630x10ex311.htm
EX-31.2	rog-20200630x10ex312.htm
EX-32	rog-20200630x10ex32.htm

ROG 10Q Quarterly Report

Rogers Earnings 2020-06-30