Rogers (US:ROG)2025-04-30 01:56Financial Data and Key Metrics Changes - Q1 sales were $191 million, slightly lower sequentially, primarily due to foreign exchange rate changes and seasonality in the portable electronics market [8][22] - Gross margin for Q1 was 29.9%, a decrease of 220 basis points from the previous quarter, attributed to utilization headwinds and unfavorable product mix [24] - Adjusted EPS decreased to $0.27 from $0.46 in Q4, reflecting lower gross margin [22] Business Line Data and Key Metrics Changes - Advanced Electronic Solutions (AES) revenue increased by 2% to $104 million, driven by higher ADAS and aerospace and defense sales [23] - Electronic Materials Solutions (EMS) revenue decreased by approximately 4% to $83 million, impacted by lower portable electronics, EVHEV, and aerospace and defense sales [23] - Sales in the ADAS and industrial markets increased, while EVHEV sales declined in both AES and EMS business units [11][12] Market Data and Key Metrics Changes - The company noted a meaningful increase in opportunities with Chinese OEMs in the ceramic power substrate market [9] - Portable electronics sales declined sequentially due to normal seasonality [14] - The company expects Q2 sales to range between $190 million and $205 million, indicating a 4% increase from Q1 [29] Company Strategy and Development Direction - The company is focused on securing new design wins and improving operational efficiency while navigating the challenges posed by tariffs [31] - A local for local strategy is being implemented to mitigate tariff impacts, with plans to manage inventories and source materials from other countries [16][31] - The company is also prioritizing capital return to shareholders and exploring synergistic M&A opportunities [27][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating current market challenges due to a strong balance sheet and global manufacturing footprint [7][31] - There is uncertainty regarding the impact of tariffs on sales in the second half of the year, but management remains optimistic about long-term growth in the EVHEV market [17][52] - Customer conversations have been constructive, with a focus on collaboration to mitigate potential tariff impacts [45][46] Other Important Information - The company has implemented significant cost improvements, expecting net savings of $25 million in 2025 [20] - Cash at the end of Q1 was $176 million, an increase of $16 million from Q4 [26] - The company plans to reduce capital expenditures to between $30 million and $40 million for the full year [27] Q&A Session Summary Question: How much of the $25 million cost savings is in the Q2 guidance? - Most savings in Q2 are associated with the reduction force and are expected to be around $3 million [36][38] Question: Expectations for Q3 performance? - Improvement in Q3 is anticipated, contingent on portable electronics ramping and inventory issues in the power module market abating [39][40] Question: Customer sentiment regarding tariffs? - Customers are feeling resilient and are open to collaboration to mitigate potential tariff impacts [45][46] Question: Update on the ceramic opportunity pipeline in China? - The company is making good progress with the Kramer facility and has several design wins in the pipeline [50][52] Question: Insights on gross margin expansion in Q2? - Gross margin expansion is expected due to improved mix and ongoing cost management efforts [53][56]