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The company reported net sales of $165.3 million for the 2016 third quarter, which exceeded the company’s previously announced guidance of $150.0 to $160.0 million in net sales. In the 2015 third quarter, net sales were $160.4 million, which included $5.2 million of net sales from divested non-core assets. In addition, net sales during the 2016 third quarter were unfavorably impacted by $1.5 million as a result of currency fluctuations, primarily related to the Renminbi.
Third quarter 2016 earnings were $0.88 per diluted share (includes a net discrete gain of $0.02 per diluted share), exceeding the company’s previously announced guidance of $0.60 to $0.70 earnings per diluted share. Adjusted earnings per diluted share were $0.95, favorable to guidance. The 2015 third quarter earnings were $0.67 per diluted share ($0.89 adjusted earnings per diluted share). The 2016 third quarter net income was $16.1 million and adjusted EBITDA was $34.1 million or 20.6% of net sales compared to 2015 third quarter net income of $12.5 million and adjusted EBITDA of $32.5 million or 20.3% of net sales.
The company’s gross margin was 37.5% in the 2016 third quarter compared to 37.2% for the 2015 third quarter. Operating margin was 14.0% (15.2% adjusted operating margin) for the 2016 third quarter compared to 14.5% (16.6% adjusted operating margin) for the 2015 third quarter.
Bruce D. Hoechner, President and CEO stated, “I was encouraged by our Q3 2016 business performance despite challenging conditions in some of our markets. As we move forward, we see demand improving in a number of our key segments. Our commitment to market driven innovation, operational excellence and the diversification of our materials portfolio is enabling Rogers to achieve solid results as we navigate through uncertain global economic conditions.”
Business Segment Discussion
Advanced Connectivity Solutions (ACS)
Advanced Connectivity Solutions reported net sales of $65.5 million for the 2016 third quarter, a 1.0% decrease compared to the 2015 third quarter net sales of $66.2 million. The 2016 third quarter results were unfavorably impacted by lower demand for 4G/LTE wireless telecom and aerospace and defense applications, which more than offset growth in automotive safety applications. Fluctuations in currency exchange rates unfavorably impacted net sales in the third quarter by $0.6 million or 0.8% as compared with the 2015 third quarter.
Elastomeric Material Solutions (EMS)
Elastomeric Material Solutions reported record quarterly net sales of $54.4 million for the 2016 third quarter, a 16.3% increase compared to 2015 third quarter net sales of $46.8 million. The 2016 third quarter results were favorably impacted by increased demand in portable electronics, automotive and general industrial applications, which more than offset lower demand in consumer and mass transit applications. Fluctuations in currency exchange rates unfavorably impacted net sales in the third quarter by $0.8 million or 1.6% as compared with the 2015 third quarter.
Power Electronics Solutions (PES)
Power Electronics Solutions reported net sales of $39.8 million for the 2016 third quarter, an 8.8% increase compared to 2015 third quarter net sales of $36.6 million. The 2016 third quarter results were favorably impacted by increased demand in electric and hybrid electric vehicles, energy efficient motor drives (variable frequency drives), vehicle electrification and certain renewable energy applications, which more than offset lower demand in rail applications. Fluctuations in currency exchange rates unfavorably impacted net sales in the third quarter by $0.1 million or 0.2% as compared to the 2015 third quarter.
The Other segment reported net sales of $5.6 million for the 2016 third quarter, or $5.3 million less than 2015 third quarter net sales of $10.9 million. Approximately $5.2 million of this decline is related to 2015 third quarter net sales in the polyimide and thermoset laminate business, which the Company sold in December 2015. Fluctuations in currency exchange rates unfavorably impacted net sales in the third quarter by $0.1 million or 1.3% as compared with the 2015 third quarter.
Rogers ended the 2016 third quarter with cash and cash equivalents of $173.5 million, a decrease of $31.1 million, or 15.2%, from $204.6 million at December 31, 2015 primarily due to debt repayments, partially offset by net cash from operating activities. Net cash provided by operating activities was $94.2 million for the first nine months of 2016 compared to the $45.6 million for the first nine months of 2015. Capital expenditures were $4.9 million for the 2016 third quarter and $14.9 million year-to-date. The Company repurchased 70,857 shares at an aggregate cost of $4.0 million during the 2016 third quarter. Under its current share repurchase program of up to $100.0 million of shares, which was initiated in the 2015 third quarter, the Company has repurchased 868,071 shares at an aggregate cost of $48.0 million.
The Company’s 2016 third effective quarter tax rate was 32.8%.
Rogers projects its 2016 fourth quarter net sales to be between $155.0 to $165.0 million and earnings to be between $0.61 and $0.71 per diluted share and adjusted earnings are expected to be between $0.76 and $0.86 per diluted share.
For full year 2016, Rogers expects capital expenditures to be in the range of approximately $20.0 to $25.0 million and its effective tax rate to be approximately 42% (included in the rate is the repatriation of prior years’ foreign earnings, increasing the effective tax rate by approximately 10%).
About Rogers Corporation
Rogers Corporation is a global leader in engineered materials to power, protect, and connect our world. With more than 180 years of materials science experience, Rogers delivers high-performance solutions that enable clean energy, internet connectivity, and safety and protection applications, as well as other technologies where reliability is critical. Rogers delivers Power Electronics Solutions for energy-efficient motor drives, e-Mobility and renewable energy; Elastomeric Material Solutions for sealing, vibration management and impact protection in mobile devices, transportation interiors, industrial equipment and performance apparel; and Advanced Connectivity Solutions for wireless infrastructure, automotive safety and radar systems. Headquartered in Arizona (USA), Rogers operates manufacturing facilities in the United States, China, Germany, Belgium, Hungary, and South Korea, with joint ventures and sales offices worldwide.