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Rogers Corporation today announced financial results for the 2016 fourth quarter and full year.
- Net income of $11.9 million, up 81.1%
- Adjusted EBITDA of $32.7 million, up 24.3%
Full year 2016:
- Net sales of $656.3 million, up 2.3%
- Gross margin of 38.0%, up 130 basis points
- Net income of $48.3 million, up 4.2%
Fourth quarter 2016
The Company reported net sales of $173.0 million for the 2016 fourth quarter, which exceeded the company's previously announced guidance of $155 to $165 million. In the 2015 fourth quarter, net sales were $152.9 million, which included $4.0 million from divested non-core assets. Net sales during the 2016 fourth quarter were unfavorably impacted by $2.2 million as a result of currency fluctuations. Net sales and other financial measures discussed in this release for the fourth quarter and full year 2016 include results from the recently acquired DeWAL Industries business, which were not included in the company guidance or 2015 results.
Earnings for the 2016 fourth quarter were $0.65 per diluted share, an increase compared to $0.37 per diluted share in the fourth quarter of 2015. On an adjusted basis earnings were $0.94 per diluted share, an increase compared to adjusted earnings of $0.80 per diluted share in the fourth quarter of 2015. Adjusted earnings exceeded the company's guidance of $0.76 to $0.86 per diluted share.
Fourth quarter 2016 net income was $11.9 million, an increase compared to $6.6 million in the fourth quarter of 2015. Adjusted EBITDA was $32.7 million for the fourth quarter of 2016, an increase as compared to $26.3 million reported in the fourth quarter of 2015.
Gross margin was 38.6% in the fourth quarter of 2016, compared to 34.4% in the fourth quarter of 2015. Operating margin was 10.3% in the fourth quarter of 2016, compared to 8.0% in the fourth quarter of 2015. Adjusted operating margin was 14.8% in the fourth quarter of 2016, compared to 12.7% in the fourth quarter of 2015.
Full year 2016
The company reported net sales of $656.3 million for the full year 2016. Net sales for the full year 2015 were $641.4 million, which included $18.6 million from divested non-core assets. Net sales during 2016 were unfavorably impacted by $7.8 million as a result of currency fluctuations. In addition, 2016 net sales were favorably impacted by recently acquired DeWAL Industries.
Earnings for full year 2016 were $2.65 per diluted share, an increase compared to $2.48 per diluted share for full year 2015. On an adjusted basis, earnings were $3.72 per diluted share, an increase as compared to $3.48 for full year 2015.
Full year 2016 net income was $48.3 million, an increase as compared to $46.3 million for full year 2015. Adjusted EBITDA was $130.1 million for full year 2016, an increase versus $123.2 million for full year 2015.
Gross margin was 38.0% in 2016, compared to 36.7% in 2015. Operating margin was 12.8% for full year 2016, compared to 11.9% in the full year of 2015. Adjusted operating margin was 15.2% in the full year of 2016, compared to 15.4% in the full year of 2015.
Bruce D. Hoechner, President and CEO commented, "2016 was a successful year for Rogers, delivering improving financial results and advancing our strategic growth plans. We achieved solid net sales performance, margin expansion, earnings growth and record cash flow. In addition, we completed two acquisitions since November 2016 and launched a number of innovative, new technologies for rapidly evolving markets. We look forward to building upon this momentum in 2017, and we expect to deliver another year of strong results and strategic execution."
Business segment discussion
Advanced Connectivity Solutions (ACS)
Advanced Connectivity Solutions reported 2016 fourth quarter net sales of $71.7 million, a 12.4% increase compared to 2015 fourth quarter net sales of $63.8 million. 2016 fourth quarter net sales were unfavorably impacted by $0.8 million due to fluctuations in currency exchange rates. The 2016 fourth quarter results were favorably impacted by growth in high frequency circuit materials for automotive advanced driver assistance systems, aerospace / defense, and 4G LTE applications.
Elastomeric Material Solutions (EMS)
Elastomeric Material Solutions reported 2016 fourth quarter net sales of $56.7 million, a 33.3% increase compared to 2015 fourth quarter net sales of $42.5 million. Fluctuations in currency exchange rates unfavorably impacted net sales by $0.9 in the 2016 fourth quarter. The 2016 fourth quarter increase of 33.3% was attributable to recently acquired DeWAL Industries, higher demand for portable electronics, automotive and general industrial applications, slightly offset by lower demand for transit and certain consumer applications.
Power Electronics Solutions (PES)
Power Electronics Solutions reported 2016 fourth quarter net sales of $39.0 million, a 6.3% increase compared to 2015 fourth quarter net sales of $36.7 million. 2016 fourth quarter net sales were unfavorably impacted by $0.3 million due to fluctuations in currency exchange rates. The 2016 fourth quarter increased due to demand for electric and hybrid-electric vehicles, variable frequency motor drives, and certain renewable energy applications, partially offset by lower demand in rail.
Other reported 2016 fourth quarter net sales of $5.6 million, down $4.3 million dollars compared to the fourth quarter of 2015 sales of $10.0 million, primarily due to divested non-core asset sales.
Balance sheet and other highlights
Rogers ended 2016 with cash and cash equivalents of $227.8 million, an increase of $23.2 million from $204.6 million at December 31, 2015.
Net cash provided from operating activities was $117.0 million in 2016, an increase compared to $73.9 million in 2015. Capital spending of $18.1 million in 2016, was a decrease compared to $24.8 million in 2015.
Effective tax rate
The Company’s 2016 effective tax rate was 41.3%, compared to 30.0% in 2015. The higher effective rate in 2016 was primarily related to withholding taxes on off-shore cash movements and a change to our assertion that certain foreign earnings are permanently reinvested, partially offset by benefits associated with an increase in the reversal of reserves for uncertain tax positions.
On February 17, 2017, Rogers entered into an amended and restated secured credit agreement, providing for an increased revolving credit facility with borrowing capacity of up to $450.0 million, and a $175.0 million accordion feature. All revolving loans are due on the five-year maturity date in February 2022.
Rogers guides its 2017 first quarter net sales to a range of $185 to $195 million, with earnings in the range of $0.81 to $0.91 per diluted share, excluding purchase accounting related to the acquisition of Diversified Silicone Products. Adjusted earnings are guided to a range of $1.09 to $1.19 per diluted share.
For the full year 2017, Rogers expects capital expenditures to be in a range of $30 to $35 million.
For the full year 2017, Rogers guides its normalized effective tax rate to a range of 33% to 34%. The adoption of ASU 2016-9, which changed the GAAP reporting for stock compensation excess tax benefits, could have an impact on the forecasted effective tax rate provided above, depending on the share price on the vesting dates.
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 Connecticut (USA), Rogers operates manufacturing facilities in the United States, China, Germany, Belgium, Hungary, and South Korea, with joint ventures and sales offices worldwide.