Rogers Corporation announced financial results for the third quarter of 2023.
"We continued our strong operating performance in the third quarter as we increased gross margin to over 35%, which drove stronger earnings and operating cash flow," stated Colin Gouveia, Rogers' President and CEO. "This marks the third consecutive quarter of gross margin improvement and delivers on the margin commitments we made previously. We are pleased with our progress thus far and remain committed to further improving our cost structure with our operational excellence initiatives. Third quarter sales were nearly flat compared to the prior quarter as global economic conditions remained challenging and customer inventory destocking continued. We are pleased with the strong progress we have made so far this year. We have significantly improved our margin and cost structure, bolstered the organization with new talent, secured important design wins, and are moving forward with targeted investments in fast growing markets."
Financial Overview
Q3 2023 Summary of Results
Net sales of $229.1 million decreased 0.7% versus the prior quarter resulting from lower sales in the AES business unit, partially offset by higher EMS business unit sales. AES net sales decreased by 2.9% primarily related to lower EV/HEV, aerospace and defense (A&D) and ADAS sales. EMS net sales increased by 2.8% primarily from higher portable electronics and A&D sales, partially offset by lower general industrial sales. Currency exchange rates unfavorably impacted total company net sales in the third quarter of 2023 by $0.7 million compared to the prior quarter.
Gross margin improved to 35.1% compared to 34.5% in the prior quarter due to procurement cost savings and favorable product mix, partially offset by the decline in sales volume.
Selling, general and administrative (SG&A) expenses decreased by $1.8 million from the prior quarter to $44.3 million. The lower SG&A expense was due primarily to a decrease in variable compensation costs, partially offset by higher professional service fees.
GAAP operating margin of 11.8% decreased from 12.1% in the prior quarter. The lower operating margin was due to a decrease in other operating income, partially offset by the improvement in gross margin and lower SG&A and restructuring and impairment charges. Adjusted operating margin of 14.3% increased by 90 basis points versus the prior quarter.
GAAP earnings per diluted share were $1.02 compared to earnings per diluted share of $0.96 in the previous quarter. The increase in GAAP earnings per diluted share was due to an increase in other income and lower interest expense. On an adjusted basis, earnings were $1.24 per diluted share compared to adjusted earnings of $1.07 per diluted share in the prior quarter.
Ending cash and cash equivalents were $126.5 million, a decrease of $15.0 million versus the prior quarter. Net cash provided by operating activities in the third quarter was $42.0 million, capital expenditures were $6.7 million and a principal payment of $50 million was made on the outstanding borrowings under the Company’s revolving credit facility.
