Executive Summary / Key Takeaways

• Strategic Reorientation and Operational Discipline: Rogers Corporation is undergoing a significant transformation under new interim leadership, prioritizing accelerated execution, customer focus, and a lean cost structure to drive renewed top-line growth and margin expansion. This includes a major restructuring of its curamik operations in Germany and the ramp-up of its new China facility.
• Technological Edge in High-Growth Markets: Rogers leverages its proprietary engineered materials in critical applications across EV/HEV, ADAS, aerospace & defense, and industrial sectors. Its advanced circuit materials and elastomeric solutions offer superior thermal management, reliability, and vibration control, providing a competitive moat in mission-critical systems.
• Financial Resilience Amidst Headwinds: Despite a challenging 2024 marked by EV market volatility and inventory destocking, Rogers demonstrated robust free cash flow generation and significant cost reductions. Q3 2025 results exceeded guidance, signaling a potential inflection point, with Q4 2025 guidance projecting year-over-year sales and EBITDA margin improvement.
• Optimized Capital Allocation and Shareholder Returns: With major organic capacity investments largely complete, Rogers is pivoting to a lower capital expenditure intensity and increasing opportunistic share repurchases, reflecting a commitment to enhancing shareholder value while maintaining a strong, debt-free balance sheet.
• Geopolitical and Market Risks: The company faces ongoing uncertainties from global trade policies, particularly tariffs, and the pace of EV market recovery. However, its "local-for-local" manufacturing strategy and proactive mitigation efforts are designed to buffer these impacts.

A Foundation of Innovation: Rogers' Engineered Materials in a Dynamic World

Rogers Corporation, established in 1832, has a storied history rooted in the development and manufacturing of high-performance engineered materials and components. Headquartered in Chandler, Arizona, the company has evolved from its early days, ceasing asbestos-containing product manufacturing in the late 1980s, to become a specialized provider of solutions critical to modern electronics and industrial applications. Its enduring strategy is built on a market-driven approach, innovation leadership, strategic mergers and acquisitions, and a relentless pursuit of operational excellence, all aimed at enhancing profitability and growth.

The company operates through two strategic segments: Advanced Electronics Solutions (AES) and Elastomeric Material Solutions (EMS), alongside an "Other" segment for non-core businesses. This structure aligns its external reporting with internal management, allowing for focused resource allocation and performance evaluation. Rogers' products are foundational to several high-growth industries, including electric and hybrid electric vehicles (EV/HEV), advanced driver assistance systems (ADAS), aerospace and defense, renewable energy, and portable electronics. These markets are driven by broad industry trends such as vehicle electrification, advancements in communication systems, the proliferation of next-generation smartphones, and the expansion of renewable energy infrastructure. The company is also actively engaging with customers in the burgeoning data center market to address thermal, vibration management, and signal integrity challenges.

Technological Edge: The Core of Rogers' Competitive Moat

Rogers' competitive advantage is deeply rooted in its differentiated technology, which provides tangible and often quantifiable benefits over alternative solutions. In the AES segment, Rogers designs, develops, manufactures, and sells advanced circuit materials, ceramic substrate materials (under brands like curamik), busbars (ROLINX), and cooling solutions. These materials are crucial for managing heat and ensuring signal integrity in high-power and high-frequency applications. For instance, its laminate materials are recognized as technology leaders in mission-critical ADAS applications, enabling accurate and timely object detection for automotive safety. The company's curamik power substrates are vital for power modules in EV/HEV and industrial applications, where efficient thermal dissipation is paramount for system performance and longevity.

In the EMS segment, Rogers provides engineered material solutions, including proprietary polyurethane (PORON) and silicone (BISCO) materials. These are used extensively in cushioning, gasketing, sealing, and vibration management applications across diverse markets. For EV/HEV batteries, PORON polyurethane products are a leading material choice, improving battery efficiency and reliability through superior pressure and vibration management. The company's R&D efforts are continuous, with new product introductions planned across all business units. For example, an advanced thermoset laminate was launched in Q4 2024 for corner radar applications in ADAS, designed to reduce manufacturing costs for customers while building on existing strengths. Rogers is also developing next-generation power substrate solutions aimed at improving thermal dissipation, which will enable enhanced system performance and lower costs for its customers. The strategic intent behind these innovations is to solidify Rogers' competitive moat, command premium pricing in certain niche applications, and drive long-term growth by addressing evolving customer needs with superior material science.

Performance with Perspective: Navigating Market Shifts

Rogers' financial performance in recent periods reflects both market challenges and the impact of its strategic initiatives. For the third quarter of 2025, Rogers reported net sales of $216 million, a 2.7% increase compared to Q3 2024, and a 6.5% sequential increase from Q2 2025. This improvement was primarily driven by portable electronics, industrial, and aerospace and defense markets. However, for the first nine months of 2025, net sales decreased by 4.5% year-over-year to $609.3 million, largely due to lower sales in wireless infrastructure and EV/HEV, partially offset by gains in aerospace and defense and ADAS.

Gross margin in Q3 2025 was 33.5% of net sales, a decrease of 170 basis points from 35.2% in Q3 2024. This decline was attributed to an unfavorable mix, higher freight, duty, and tariff costs, and unfavorable yield performance, despite benefits from higher volumes and commercial actions. For the nine months ended September 30, 2025, gross margin stood at 31.7%, down from 33.8% in the prior year period, impacted by lower volumes, utilization headwinds, and increased costs. Selling, general and administrative (SGA) expenses decreased by 7.8% in Q3 2025 year-over-year, and research and development (R&D) expenses decreased by 8.6%, reflecting ongoing cost reduction efforts, including savings from the exit of the Burlington, Massachusetts Innovation Center facility.

A notable event in Q2 2025 was a non-cash impairment charge of $71.8 million related to goodwill and other intangible assets for the curamik business, triggered by a "lower outlook for curamik" due to "market and competitive dynamics in the EV space [that] have rapidly shifted in recent quarters." Despite these challenges, Rogers generated $54.3 million in net cash from operating activities for the nine months ended September 30, 2025. The company's cash and cash equivalents stood at $167.8 million as of September 30, 2025, an increase of $8 million from December 31, 2024, bolstered by operating cash flows and proceeds from the sale of its Price Road facility. Rogers maintains a strong balance sheet with no outstanding borrowings under its revolving credit facility.

Competitive Landscape and Strategic Positioning

Rogers operates in a competitive landscape with diversified materials science companies like DuPont (DD), industrial conglomerates such as 3M (MMM), and connectivity specialists like TE Connectivity (TEL). While precise market share figures for all niche competitors are not publicly detailed, Rogers' strong performance in specialized applications suggests a robust competitive standing.

Rogers differentiates itself through its deep expertise in engineered materials, offering solutions with superior thermal performance, reliability, and customization for demanding applications. For instance, its advanced circuit materials are often chosen for mission-critical systems where performance cannot be compromised, potentially leading to higher average selling prices (ASPs) and better margins in these niche segments. In contrast, larger competitors like DuPont and 3M, with their broader portfolios and greater scale, may offer more generalized solutions and benefit from economies of scale, potentially leading to lower overall operating costs. However, Rogers' focused R&D and application-specific innovation allow it to maintain a technological lead in its chosen high-performance niches.

The rapidly evolving EV market has introduced intense global competition and pricing pressure on power substrates, particularly from Asian manufacturers who have gained significant market share. Rogers is responding strategically with its "local-for-local" manufacturing approach. The new curamik facility in China, now in production, is a cornerstone of this strategy, aiming to provide a "localized supply chain and a regionally competitive cost structure" to "compete effectively" in this critical market. This initiative, coupled with ongoing restructuring of its German curamik operations, is designed to optimize its global footprint and enhance competitiveness. Management acknowledges that "Rogers brand name and quality... commands obviously a premium pricing" in certain applications, but also recognizes the need to focus on cost structure to compete effectively in markets where "the market commands the pricing."

Outlook and Strategic Initiatives for Growth

Rogers' management anticipates a gradual market recovery, with Q1 2025 expected to be the low point for the year, followed by a stronger second half. For Q4 2025, the company expects revenues between $190 million and $205 million, representing a 3% year-over-year increase at the midpoint, though a 9% sequential decline due to normal seasonality in portable electronics and year-end inventory management by customers. Adjusted EBITDA margin is projected to improve by approximately 300 basis points year-over-year, ranging from 13.5% to 16.5%. Adjusted EPS is guided between $0.40 and $0.80. This outlook incorporates an 80 basis point headwind to gross margin from the ramp-up of the new curamik factory in China.

Looking further ahead, interim President and CEO Ali El-Haj expressed "high confidence in better performance and continued growth in all business segments" for the first six months of 2026, with the EV market recovery being the only area of lingering hesitation. The company is intensely focused on several critical initiatives:

• Top-line Growth: Intensifying customer focus, leveraging global manufacturing for market share gains, and introducing new products across all business units.
• Cost Structure Optimization: Significant progress on the curamik Germany restructuring is expected to yield $13 million in annualized savings by late 2026, incremental to the $32 million in annual run-rate savings previously communicated.
• Operational Excellence: Organizational changes have already led to "significant reduced lead times, some by as much as 60% while reducing inventories and improving working capital." The multi-year implementation of an SAP S/4HANA ERP system is also underway to enhance internal processes and scalability.
• Capital Allocation: Capital expenditures are expected to decrease to $30 million to $40 million in 2025, a reduction from prior forecasts, as major organic capacity investments are largely complete. This shift signals a lower capital intensity going forward. Rogers is also prioritizing opportunistic share repurchases, with $66.1 million remaining on its program as of September 30, 2025, reflecting a commitment to returning capital to shareholders.

Risks and Challenges

Despite the positive outlook, Rogers faces several risks. The volatility of the EV market, particularly the divergence in regional growth rates and pricing pressures, remains a key concern for the curamik business. Global trade policies, including tariffs, introduce uncertainty, although Rogers' "local-for-local" strategy and mitigation plans aim to minimize direct impacts. The $71.8 million goodwill impairment in Q2 2025 underscores the sensitivity of asset values to market shifts. Furthermore, the company continues to manage asbestos-related litigation, with liabilities projected through 2064, though costs have been substantially covered by insurance. General macroeconomic uncertainty could also impact customer demand and the timing of market recovery.

Conclusion

Rogers Corporation stands at a pivotal juncture, transforming its operations and strategic focus to capitalize on its deep expertise in engineered materials. Under new interim leadership, the company is executing a clear plan to drive top-line growth through enhanced customer engagement and new product innovation, while simultaneously bolstering profitability through aggressive cost reduction and operational excellence. The strategic investments in its China curamik facility and the restructuring of its European operations are critical steps in adapting to evolving global market dynamics and competitive pressures, particularly in the dynamic EV sector.

While macroeconomic headwinds and geopolitical uncertainties, including tariffs, present ongoing challenges, Rogers' robust balance sheet, disciplined capital allocation strategy, and commitment to technological differentiation position it for a compelling resurgence. The anticipated improvement in financial performance in the latter half of 2025 and into 2026, supported by a leaner cost structure and optimized manufacturing footprint, suggests that Rogers is laying the groundwork for sustainable long-term value creation for its discerning investment audience.