Rogers Corporation Reports 2012 Fourth Quarter and Year-End Results

  Rogers Corporation Reports 2012 Fourth Quarter and Year-End Results

Business Wire

ROGERS, Conn. -- February 19, 2013

Rogers Corporation (NYSE:ROG) (“Rogers” or the “Company”) today announced
fourth quarter 2012 net sales of $124.2 million and income from continuing
operations of $0.30 per diluted share, which includes net special charges of
$0.28 per diluted share. Excluding these net special charges, non-GAAP income
from continuing operations was $0.58 per diluted share. Net sales and GAAP
income from continuing operations were within the Company’s updated guidance
announced on January 29, 2013 of approximately $124 million in net sales and
GAAP income of $0.24 to $0.30 per diluted share. Actual non-GAAP income per
diluted share from continuing operations was also within the updated guidance
range. Fourth quarter 2011 net sales were $125.3 million with income from
continuing operations of $0.22 per diluted share, which included net special
charges of $0.20 per diluted share.

Net sales from continuing operations for the full year 2012 were $498.8
million, a decrease from the all-time record $548.3 million for the full year
2011. Full year 2012 income from continuing operations was $4.07 per diluted
share compared to $2.64 per diluted share for the full year 2011. Full year
2012 income included a net benefit from special items of $2.06 per diluted
share, which is primarily related to the reversal of a tax valuation allowance
on the majority of the Company’s US deferred tax assets. Full year 2011
results included net special charges of $0.20 per diluted share.

Reconciliations of the fourth quarter and full year non-GAAP to GAAP operating
results discussed in the preceding paragraphs and first quarter 2013 guidance
are included at the end of this release.

Business Segment Discussion

High Performance Foams

In the fourth quarter of 2012, High Performance Foams reported an all-time
record for fourth quarter net sales of $47.6 million, an increase of 6.5%
compared to the fourth quarter 2011 net sales of $44.7 million. The increase
in net sales is primarily due to increased sales of PORON® foam cushioning and
sealing materials into tablet computer devices, as this market segment
continues to grow. This business segment also experienced strong demand for
PORON® XRD® extreme impact protection materials for use in protective cases
for smart phones and tablets, as well as sports performance apparel. Demand
also increased in the industrial and mass transit markets. In addition, during
the fourth quarter this segment substantially completed the announced shut
down of its manufacturing operations in Bremen, Germany and successfully moved
certain production to its existing facility in Carol Stream, Illinois.

Printed Circuit Materials

Net sales of Printed Circuit Materials totaled $38.5 million for the fourth
quarter of 2012, an increase of 3.6% from the $37.2 million reported in the
fourth quarter of 2011. The increase in net sales is primarily due to strong
demand for high frequency printed circuit materials for use in the telecom
base station market, especially in China and the US. This increase offset
weaker demand into the satellite TV markets for LNB (Low Noise Blockdown)
converters, as well as high reliability applications. Market growth continues
to drive use of the Company’s high frequency circuit materials for automotive
safety sensors. In addition, the Company continues to gain share in new
wireless antenna applications.

Power Electronics Solutions

Curamik Electronics Solutions reported net sales of $22.1 million for the
fourth quarter of 2012, a decrease of 22.7% compared to the fourth quarter
2011 net sales of $28.6 million. Lower net sales at Curamik in the fourth
quarter of 2012 were primarily related to the ongoing pull back in global
capital and infrastructure spending, as well as inventory corrections
throughout the supply chain, both of which negatively impacted demand for
industrial motor drives and renewable energy applications. The Company
believes that inventories have now stabilized at current levels.

Power Distribution Systems’ fourth quarter of 2012 net sales were $10.4
million, an increase of 8.2% compared to $9.6 million in the fourth quarter of
2011. The increase in sales was due primarily to continued demand for its
power distribution products in the automotive market. This offset the
continued lower spending on infrastructure projects in the mass transit and
renewable energy markets, primarily in Europe and China.

Joint Ventures

Rogers’ 50% owned High Performance Foams joint ventures’ net sales totaled
$15.3 million this quarter, a decrease of 16.4% compared to the $18.3 million
sold in the fourth quarter of 2011. The decrease was due to continued weakness
in the Japanese domestic and export markets, particularly related to LCD TVs,
domestic mobile phones and general industrial applications.

Operational Highlights

The net special adjustments in the fourth quarter of 2012 were comprised
primarily of the following:

  *$4.3 million of pre-tax charges primarily associated with moving the final
    inspection operation for Curamik Electronics Solutions from its site in
    Eschenbach, Germany to Hungary.
  *$2.9 million pre-tax charge related to the lengthening of the forecast
    period for asbestos liabilities and the related insurance receivables. In
    the fourth quarter of 2012, the Company deemed it appropriate to increase
    the forecast period for asbestos litigation claims from 5 to 10 years as
    it now has a longer, more meaningful history of asbestos claims activity,
    which provides greater confidence in the reasonableness of the longer
    forecast period.
  *$1.1 million in fourth quarter losses relate to the negative foreign
    currency impact of the Japanese Yen depreciation and unfavorable mark to
    market valuation declines on copper commodity hedges during the period.
    The Company expects that in both cases, these valuation changes will
    result in lower costs to the Company in 2013 as currencies are exchanged
    and materials are purchased at the lower rates.
  *These charges were partially offset by approximately $2.1 million of
    favorable inventory adjustments as the Company updated its costing
    methodology during the quarter.

The Company ended the fourth quarter of 2012 with cash and cash equivalents of
$114.9 million. Capital expenditures were $23.8 million for the full year 2012
compared to the $21.3 million in 2011. Rogers expects capital expenditures of
approximately $28 million in 2013.

The Company reported gross margins of 34.4% in the fourth quarter and 31.8%
for the full year of 2012, which compares to 29.7% for the fourth quarter and
32.6% for the full year of 2011, respectively.

The Company’s 2012 effective tax rate was a benefit of 205.2%. This rate was
favorably impacted by net discrete tax items, the most significant of which
was the reversal of a valuation allowance on the majority of the Company's US
deferred tax assets, which occurred in the third quarter of 2012. The Company
believes its tax rate for 2013 will be approximately 28%.

Bruce D. Hoechner, President and CEO commented: “Rogers’ two largest
businesses, High Performance Foams and Printed Circuit Materials, ended the
quarter solidly above the same quarter of last year. Streamlining programs
initiated early in 2012 helped improve profitability by $5.0 million in the
fourth quarter and we anticipate these savings will carry forward through
2013. Sales dropped in December across most of our businesses due to global
economic concerns and inventory draw downs in some markets. However, early
indicators for 2013 are positive, including a January rebound in demand that
impacted most markets. For the first quarter of 2013, we forecast revenues
between $129 to $133 million and non-GAAP income from continuing operations of
between $0.57 and $0.61 per diluted share, which excludes any restructuring
expenses related to the relocation of certain Curamik inspection operations
and other special charges.”

About Rogers Corporation

Rogers Corporation (NYSE:ROG) is a global technology leader in specialty
materials and components for consumer electronics, power electronics, mass
transit, clean technology, and telecommunications infrastructure. With more
than 180 years of materials science and engineering experience, Rogers
provides product designers with solutions to help them power, protect and
connect our world with greater reliability, efficiency and performance.
Rogers’ three core businesses include Power Electronics Solutions for
high-voltage rail traction, energy efficient motor drives, wind and solar
power conversion; High Performance Foams for cushioning, sealing and impact
protection in tablets and smart phones, aircraft, rail and automotive
interiors, sporting goods, apparel and gear; and Printed Circuit Materials for
wireless infrastructure, power amplifiers, smart antennas, and radar systems
for automotive and defense applications. Headquartered in Connecticut (USA),
Rogers operates manufacturing facilities in the United States, China, Germany,
Belgium, and South Korea, with joint ventures and sales offices worldwide. For
more information, visit www.rogerscorp.com.

Safe Harbor Statement

Certain statements in this press release may constitute “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements are based on management's
expectations, estimates, projections and assumptions. Words such as “expects,”
“anticipates,” “intends,” “believes,” “estimates,” “should,” “target,” “may,”
“project,” “guidance,” and variations of such words and similar expressions
are intended to identify such forward-looking statements. Such forward-looking
statements involve known and unknown risks, uncertainties, and other factors
that may cause our actual results or performance to be materially different
from any future results or performance expressed or implied by such
forward-looking statements. Such factors include, but are not limited to,
changing business, economic, and political conditions both in the United
States and in foreign countries, particularly in light of the sovereign debt
crisis being experienced globally and the uncertain outlook for global
economic growth, particularly in several of our key markets; uncertainty
regarding resolution of the United States fiscal cliff and debt ceiling
issues; increasing competition; any difficulties in integrating acquired
businesses into our operations and the possibility that anticipated benefits
of acquisitions and divestitures may not materialize as expected; delays or
problems in completing planned operational enhancements to various facilities;
our achieving less than anticipated benefits and/or incurring greater than
anticipated costs relating to streamlining initiatives or that such
initiatives may be delayed or not fully implemented due to operational, legal
or other challenges; changes in product mix; the possibility that changes in
technology or market requirements will reduce the demand for our products; the
possibility of significant declines in our backlog; the possibility of
breaches of our information technology infrastructure; the development and
marketing of new products and manufacturing processes and the inherent risks
associated with such efforts and the ability to identify and enter new
markets; the outcome of current and future litigation; our ability to retain
key personnel; our ability to adequately protect our proprietary rights; the
possibility of adverse effects resulting from the expiration of issued
patents; the possibility that we may be required to recognize impairment
charges against goodwill and non-amortizable assets in the future; the
possibility of increasing levels of excess and obsolete inventory; increases
in our employee benefit costs could reduce our profitability; the possibility
of work stoppages, union and work council campaigns, labor disputes and
adverse effects related to changes in labor laws; the accuracy of our analysis
of our potential asbestos-related exposure and insurance coverage; the fact
that our stock price has historically been volatile and may not be indicative
of future prices; changes in the availability and cost and quality of raw
materials, labor, transportation and utilities; changes in environmental and
other governmental regulation which could increase expenses and affect
operating results; our ability to accurately predict reserve levels; our
ability to obtain favorable credit terms with our customers and collect
accounts receivable; our ability to service our debt; certain covenants in our
debt documents could adversely restrict our financial and operating
flexibility; fluctuations in foreign currency exchange rates; and changes in
tax rates and exposure which may increase our tax liabilities. Such factors
also apply to our joint ventures. We make no commitment to update any
forward-looking statement or to disclose any facts, events, or circumstances
after the date hereof that may affect the accuracy of any forward-looking
statements, unless required by law. Additional information about certain
factors that could cause actual results to differ from such forward-looking
statements include, but are not limited to, those items described in our
filings with the Securities and Exchange Commission ("SEC"), including those
in Item 1A, Risk Factors, of the Company's Form 10-K for the year ended
December 31, 2011 and subsequent Securities and Exchange Commission filings.

         Additional Information and February 20, 2013 Conference Call

For more information, please contact the Company directly, visit Rogers’
website on the Internet, or send a message by email.

Website Address: http://www.rogerscorp.com

A conference call to discuss fourth quarter and year-end results will be held
on Wednesday, February 20, 2013 at 9:00AM (Eastern Time).

A slide presentation will be made available prior to the start of the call.
The slide presentation may be accessed under the investor relations sections
of the Rogers Corporation website (www.rogerscorp.com/ir).

The Rogers participants in the conference call will be:

Bruce D. Hoechner, President and CEO
Robert C. Daigle, Senior Vice President and CTO
Dennis M. Loughran, Vice President Finance and CFO

A Q&A session will immediately follow management’s comments.

To participate in the conference call, please call:

     1-800-574-8929     Toll-free in the United States
          1-973-935-8524         Internationally
          There is no passcode for the live teleconference.

For playback access, please call: 1-855-859-2056 in the United States and
1-404-537-3406 internationally through 11:59PM (Eastern Time), Wednesday,
February 27, 2013. The passcode for the audio replay is 97521160.

The call will also be webcast live in a listen-only mode. The webcast may be
accessed through links available on the Rogers Corporation website at
www.rogerscorp.com/ir. Replay of the archived webcast will be available on the
Rogers website approximately two hours following the webcast.

                                                                   
                                                                            
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
                                                                            
                   Three Months Ended                  Year Ended
(DOLLARS IN        December 31,       December 31,       December 31,       December 31,
THOUSANDS,                                                           
EXCEPT PER         2012               2011               2012               2011
SHARE AMOUNTS)
Net sales          $ 124,176          $ 125,251          $ 498,761          $ 548,341
Cost of sales       81,465         88,077         340,015        369,356    
Gross margin         42,711             37,174             158,746            178,985
                                                                            
Selling and
administrative       27,049             26,047             99,689             103,532
expenses
Research and
development          4,704              5,404              19,311             21,530
expenses
Restructuring
and impairment      4,133          441            14,082         441        
charges
Operating            6,825              5,282              25,664             53,482
income
                                                                            
Equity income
in                   1,008              1,410              4,743              5,451
unconsolidated
joint ventures
Other income         (348       )       15                 (208       )       1,942
(expense), net
Net realized
investment           -                  -                  (3,245     )       (196       )
gain (loss)
Interest
income              (938       )    (1,027     )    (4,304     )    (4,911     )
(expense), net
Income before
income tax           6,547              5,680              22,650             55,768
expense
                                                                            
Income tax
expense             1,368          1,940          (46,484    )    11,518     
(benefit)
Income (loss)
from                 5,179              3,740              69,134             44,250
continuing
operations
Income (loss)
from
discontinued        (116       )    (2,604     )    (449       )    (7,195     )
operations,
net of income
taxes
Net income         $ 5,064            $ 1,136            $ 68,685           $ 37,055
                                                                            
Basic net
income (loss)
per share:
Income from
continuing         $ 0.31             $ 0.23             $ 4.21             $ 2.76
operations
(Loss) from
discontinued        (0.01      )    (0.16      )    (0.03      )    (0.45      )
operations
Net Income         $ 0.30          $ 0.07          $ 4.18          $ 2.31       
                                                                            
Diluted net
income (loss)
per share:
Income from
continuing         $ 0.30             $ 0.22             $ 4.07             $ 2.64
operations
(Loss) from
discontinued        (0.01      )    (0.15      )    (0.03      )    (0.43      )
operations
Net Income         $ 0.29          $ 0.07          $ 4.04          $ 2.21       
                                                                            
Shares used in
computing:
Basic                16,677,969         16,199,518         16,426,209         16,035,882
Diluted              17,254,959         16,809,336         16,991,158         16,737,711

                                                        
                                                             
Condensed Consolidated Statements of Financial Position (Unaudited)
                                                             
(IN THOUSANDS)                         December 31, 2012   December 31, 2011
Assets
Current assets:
Cash and cash equivalents              $   114,863           $   79,728
Restricted cash                            950                   -
Accounts receivable, net                   78,788                77,286
Accounts receivable from joint             2,142                 1,640
ventures
Accounts receivable, other                 2,297                 3,807
Taxes receivable                           5,079                 2,713
Inventories                                73,178                77,935
Prepaid income taxes                       4,914                 4,315
Deferred income taxes                      7,225                 2,146
Asbestos related insurance                 8,195                 6,459
receivables
Other current assets                       8,559                 7,360
Assets held for sale                       -                     1,400
Assets of discontinued operations         746               843       
Total current assets                       306,936               265,632
                                                             
Property, plant and equipment, net         149,017               148,182
Investments in unconsolidated              21,171                23,868
joint ventures
Deferred income taxes                      71,439                20,117
Goodwill and other intangibles             158,329               158,627
Asbestos related insurance                 40,067                21,943
receivables
Investments, other                         5,000                 5,000
Other long term assets                     8,065                 8,299
Long term marketable securities           -                 25,960    
Total assets                           $   760,024        $   677,628   
                                                             
Liabilities and Shareholders’
Equity
Current liabilities:
Accounts payable                       $   16,730            $   15,731
Accrued employee benefits and              23,156                30,130
compensation
Accrued income taxes payable               3,135                 1,799
Current portion of lease                   1,423                 1,596
obligation
Current portion of long term debt          20,500                7,500
Asbestos related liabilities               8,195                 6,459
Other current liabilities                  11,363                15,343
Liabilities of discontinued               3                 239       
operations
Total current liabilities                  84,505                78,797
                                                             
Long term debt                             77,500                115,000
Long term lease obligation                 6,942                 7,610
Pension liability                          65,942                68,871
Retiree health care and life               10,654                9,486
insurance benefits
Asbestos related liabilities               43,222                22,326
Non-current income tax                     19,300                17,588
Deferred income taxes                      17,545                19,259
Other long term liabilities                262                   435
                                                             
Shareholders’ equity
Capital stock                              16,904                16,221
Additional paid in capital                 74,272                52,738
Retained earnings                          400,784               332,099
Accumulated other comprehensive           (57,808   )        (62,802   )
income (loss)
Total shareholders’ equity                434,152           338,256   
Total liabilities and                  $   760,024        $   677,628   
shareholders’ equity
                                                                           

Reconciliation of non-GAAP Financial Measures to the Comparable GAAP Measures

Non-GAAP Financial Measures

Management believes non-GAAP information provides meaningful supplemental
information regarding the Company’s performance by excluding certain expenses
that are generally non-recurring and accordingly may not be indicative of the
core business operating results. The Company believes that this additional
financial information is useful to management and investors in assessing the
Company’s historical performance and when planning, forecasting and analyzing
future periods. However, the non-GAAP information has limitations as an
analytical tool and should not be considered in isolation from, or as
alternatives to, financial information prepared in accordance with GAAP.

                                                        
                                 2012                     2011
                                 Q4          YTD         Q4       YTD
GAAP income per diluted
share from continuing            $ 0.30      $ 4.07        $ 0.22   $ 2.64
operations
Special item adjustments,
net of tax:
Relocation charge for
Curamik inspection operation       0.20          0.20          -          -
to Hungary
Asbestos charge for forecast       0.13          0.13          -          -
period change
Foreign currency and copper
hedging valuation                  0.05          0.05          -          -
adjustments
Charges related to CEO
transition and other               -             -             0.18       0.18
employee matters
Impairment charge on held          -             -             0.02       0.02
for sale building
Severance and related              -             0.23          -          -
charges
Closure charge for Bremen
manufacturing operations in        -             0.12          -          -
Germany
Impairment charge on auction       -             0.10          -          -
rate security liquidation
Pension settlement charge          -             0.08          -          -
Inventory revaluation              (0.09 )       (0.09 )       -          -
US tax valuation allowance         -             (2.74 )       -          -
reversal
Other net discrete tax items       -             (0.20 )       -          -
Other special charges, net        (0.01 )    0.06      -       -
Total net special items           0.28      (2.06 )    0.20    0.20
                                                                        
Non-GAAP income per diluted
share from continuing            $ 0.58     $ 2.01     $ 0.42   $ 2.84
operations
                                                                        

Reconciliation of non-GAAP to GAAP Income Per Share Guidance for the First
Quarter of 2013:

The following table includes non-recurring charges related to the move of
Curamik’s final inspection operations to Hungary and other special charges.

                                                              Q1 2013
Guidance Q1 2013 GAAP income per diluted share from             $ 0.54 - $0.58
continuing operations
                                                                
Add back special charges, net of tax:
Estimated expense related to relocation of Curamik’s final        0.01
inspection operation
Other special charges                                            0.02
Total special adjustment charges                                  0.03
                                                                
Guidance Q1 2013 non-GAAP income per diluted share from         $ 0.57 - $0.61
continuing operations

Contact:

Rogers Corporation
Financial News Contact:
Dennis M. Loughran, 860-779-5508
Vice President Finance and Chief Financial Officer
FAX: 860-779-4714
or
Investor Contact:
William J. Tryon, 860-779-4037
Director of Investor and Public Relations
FAX: 860-779-5509
william.tryon@rogerscorp.com
 
Press spacebar to pause and continue. Press esc to stop.