Rogers Targets $13M Annual Savings as Curamik Expands in China
Management View
Interim President and Interim CEO Ali El-Haj shared positive results from the third quarter, stating that sales, gross margins, and adjusted earnings per share all exceeded expectations. Sales increased by 6.5% compared to the previous quarter, driven by growth in portable electronics, industrial, aerospace, and defense markets. On an annual basis, sales rose by 2.7%.
El-Haj emphasized ongoing efforts to reduce costs and expenses, expand production at the new curamik facility in China, and focus on new product introductions across all business units. He also highlighted organizational changes aimed at improving execution speed, accountability, and operational simplicity. These changes have led to reduced lead times and improved working capital.
El-Haj noted that significant progress has been made on the restructuring of curamik operations in Germany, with cost savings expected to begin in the fourth quarter. The company targets $13 million in annualized savings by late 2026.
CFO Laura Russell provided further insights into the financial performance. She stated that Q3 results showed meaningful improvement from the prior quarter, with all financial metrics at the top end of guidance. Sales increased across most end markets, with the largest gains in portable electronics and industrial sectors. AES revenues rose by 5.2%, while EMS revenues increased by 8.7% quarter-over-quarter. GAAP EPS reached $0.48, a significant improvement from the previous quarter, primarily due to lower restructuring-related expenses. Adjusted EPS for Q3 climbed to $0.90 from $0.34 in Q2.
Russell added that adjusted EBITDA for Q3 was $37.2 million, or 17.2% of sales. This represented a 540 basis point improvement from the previous quarter, driven by higher volumes, favorable product mix, and reductions in manufacturing costs. Gross margin improved to 33.5%.
Outlook
Russell provided guidance for Q4 revenues, estimating them to be between $190 million and $205 million. The midpoint of this range represents a 3% increase year-over-year but a 9% decline quarter-over-quarter, reflecting seasonal patterns in portable electronics and slower order activity in most end markets.
Gross margin is expected to fall between 30% and 32%, with an 80 basis point headwind from the curamik China ramp. Margin guidance is 250 basis points lower sequentially. EPS is projected to range from breakeven to $0.40, with adjusted EPS between $0.40 and $0.80. Adjusted EBITDA margin is guided between 13.5% and 16.5%, which Russell described as a roughly 300 basis point improvement versus the prior year at the midpoint of the range.
The company continues to forecast capital expenditures for the full year between $30 million and $40 million and expects share repurchases in Q4 to surpass Q3 levels.
Financial Results
Sales increased by 6.5% from the prior quarter and 2.7% year-over-year, driven by growth in portable electronics, industrial, aerospace, and defense markets. AES revenues were up 5.2%, while EMS revenues rose 8.7% quarter-over-quarter. GAAP EPS was $0.48, and adjusted EPS increased to $0.90 from $0.34 in Q2. Adjusted EBITDA reached $37.2 million, representing 17.2% of sales, with a 540 basis point improvement from Q2. Gross margin improved to 33.5%.
Cash at quarter-end was $168 million, up $10.6 million sequentially, with $20.9 million in cash provided by operations. Share repurchases reached $10 million, with $66 million remaining in the program.
Q&A Highlights
During the Q&A session, analysts raised several questions about the company’s future performance. Dan Moore of CJS Securities asked about confidence in Q4 revenue growth and prospects for 2026. El-Haj expressed confidence in the given range, noting strong market conditions across all activities. However, he remained cautious about the EV market recovery. For the first half of 2026, he expressed high confidence in better performance and continued growth in all business segments.
Moore also questioned gross margin headwinds. Russell explained that the 80 basis point headwind associated with the curamik China ramp is typical and expected to ease by the end of next year.
Craig Ellis of B. Riley Securities probed further on cost savings. Russell clarified that the company is targeting $18 million to $20 million in cost reductions compared to the previous year. She also mentioned that the company will evaluate business and market opportunities as they arise, making appropriate investments or savings as needed.
Ellis asked about industrial market dynamics. El-Haj noted that the company is capturing more market share through existing and new products and customers. New product introductions are expected to help penetrate previously untapped markets.
David Silver of Freedom Capital Markets inquired about customer relationships and alignment. El-Haj emphasized strong relationships with customers, stating that communication has improved their understanding of expectations. He expects the company to become a benchmark in service level and quality by the end of 2026.
Silver also asked about the share buyback philosophy. Russell responded that it has been somewhat opportunistic, reflecting the company’s belief in its potential during periods when the stock price was lower.
Sentiment Analysis
Analysts maintained a neutral to slightly positive sentiment, focusing on growth visibility, cost reductions, and the curamik China ramp. Questions were forward-looking, with some concerns about margin headwinds and the sustainability of cost cuts.
Management maintained a confident tone during prepared remarks and Q&A. El-Haj repeatedly referenced confidence, while Russell provided detailed explanations of margin impacts and cost structure improvements. The tone was slightly more optimistic than the previous quarter, with management expressing "high confidence" in improved performance for 2026.
Quarter-over-Quarter Comparison
Guidance language shifted to a more confident outlook for year-over-year growth in Q4 and higher 2026 expectations, whereas last quarter's guidance was more measured and cautious.
Strategic focus expanded with the ramp-up of the curamik China facility and a sharper emphasis on customer service, lead time reduction, and new product launches.
Analysts continued to focus on margin recovery, cost savings execution, and market dynamics, but with more inquiries regarding long-term growth drivers and operational improvements.
Key metrics such as adjusted EPS and EBITDA margin showed significant sequential improvement. Management's confidence in cost savings and operational initiatives increased versus the prior quarter.
Risks and Concerns
Management noted lingering uncertainty in the EV market and the pace of its recovery. Ongoing headwinds from the curamik China ramp are expected to impact margins through at least the first half of 2026. The higher non-GAAP full year tax rate of approximately 35% was attributed to certain loss jurisdictions without tax benefits.
Analysts raised concerns about the sustainability of cost reductions and the timeline for full realization of savings from restructuring initiatives.
Final Takeaway
Rogers Corporation leadership underscored a renewed focus on operational discipline, accelerated new product introductions, and targeted expansion in China. With Q3 results at the high end of guidance and substantial progress in cost structure optimization, management expects continued margin improvements and year-over-year growth, despite seasonal and market-specific headwinds. The company remains committed to capital returns and believes its strategic initiatives will drive sustained performance and shareholder value through 2026.
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