Reading time ( words)
Rogers Corporation announced financial results for the first quarter of 2021.
“Rogers delivered strong first quarter sales and earnings, driven by the continued execution of our growth strategy and operational excellence initiatives,” stated Bruce D. Hoechner, Rogers' President and CEO. “Accelerating demand for our innovative solutions in Advanced Mobility markets and a broad recovery in industrial demand were the primary catalysts for the sales increase. We continue to see robust market demand looking forward, but anticipate that global supply chain disruptions and the ongoing recovery of UTIS manufacturing will temper sales growth for the second quarter. We remain enthusiastic about the significant growth opportunities in Advanced Mobility and we are aggressively expanding capacity to capitalize on this opportunity, in addition to focusing on growth opportunities in our other core markets.”
Q1 2021 Summary of Results
Net sales of $229.3 million increased 8.8% versus the prior quarter from higher sales in both the AES and EMS business units. AES net sales increased due to strong demand for ADAS applications and higher sales in the EV/HEV, clean energy, defense and wireless infrastructure markets. EMS net sales increased from strong demand in the EV/HEV, traditional automotive and general industrial markets, partially offset by a seasonal decline in portable electronics market sales. Currency exchange rates favorably impacted total company net sales in the first quarter of 2021 by $3.1 million compared to prior quarter net sales.
Gross margin was 39.0%, compared to 38.3% in the prior quarter. The increase in gross margin was due to higher volumes and operational cost savings, partially offset by commodity price increases, higher freight costs and unfavorable product mix.
Selling, general and administrative (SG&A) expenses decreased by $7.6 million from the prior quarter to $42.4 million. The decrease in SG&A expense was due to a reduction in accelerated intangible amortization expense, partially offset by higher compensation and benefits costs.
GAAP operating margin of 16.2% increased by 670 basis points sequentially primarily due to the improved gross margin and reduction in SG&A expenses and restructuring charges. Adjusted operating margin of 19.0% increased by 60 basis points versus the prior quarter, primarily as a result of improved gross margin.
GAAP earnings per diluted share were $1.66, compared to earnings per diluted share of $0.81 in the previous quarter. The increase in GAAP earnings resulted from higher net sales, improved gross margin and lower SG&A expense and restructuring related charges. On an adjusted basis, earnings were $1.92 per diluted share compared to adjusted earnings of $1.58 per diluted share in the prior quarter. The increase in adjusted earnings per diluted share resulted from higher net sales and improved gross margin.
Ending cash and cash equivalents were $199.1 million, an increase of $7.3 million versus the prior quarter. The Company generated free cash flow of approximately $32.9 million in the first quarter of 2021. Net cash provided by operating activities of $36.5 million was offset by $21.0 million of principal payments made on the outstanding borrowings under the Company’s revolving credit facility and capital expenditures of $3.6 million. At the end of the first quarter of 2021, cash exceeded borrowings by $195.1 million..