Rogers (ROG) Q2 Revenue Beats by 2%

Rogers (ROG 5.66%), a producer of specialty engineered materials for electronics and power systems, reported its Q2 2025 earnings on July 31, 2025. The most notable news was a mixed performance: GAAP revenue outpaced expectations, reaching $202.8 million versus an analyst forecast of $198.75 million. However, adjusted (Non-GAAP) EPS was $0.34, falling short of the $0.50 consensus. The period included a significant non-cash impairment charge related to the curamik power substrates business, resulting in a GAAP net loss of $73.6 million. While some operational metrics improved sequentially, year-over-year trends remain weak, and the quarter overall signals ongoing volatility and strategic challenges.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

About the Business and Strategic Focus

Rogers develops and manufactures advanced materials critical for electric vehicles, renewable energy infrastructure, wireless communications, and portable electronics. Its main product families are circuit materials, elastomeric foams, and engineered material solutions. Key business units are Advanced Electronics Solutions, which covers power modules and signal integrity components, and Elastomeric Material Solutions, used in industrial gaskets, seals, and cushioning applications.

Innovation is a core company focus, with investments in research and development (R&D) driving the introduction of next-generation materials for demanding markets. The company’s ongoing priorities include product development, global supply chain optimization, cost-control initiatives, and expanding its design wins, especially with electric vehicle and advanced driver-assistance system customers. Effective supply chain management and market diversification across geographies are viewed as important for mitigating risk.

Quarterly Developments and Performance Drivers

GAAP revenue outperformed analyst expectations, posting a 2.0% upside in Q2 2025. Management stated, “Sales, gross margin and adjusted earnings per share were all within our guidance ranges for the quarter.” However, compared to the same period last year, GAAP net sales decreased by 5.3% compared to Q2 2024, reflecting softer demand in several end markets and ongoing industrial weakness. The company attributed sequential sales growth to improved demand in industrial, portable electronics, automotive radar (ADAS), and aerospace and defense, particularly within the Advanced Electronics Solutions and Elastomeric Material Solutions businesses.

Gross margin (GAAP) improved by 1.7 percentage points from the prior quarter (Q2 2025 vs Q1 2025), but was still below prior-year levels. This improvement was attributed to higher plant utilization and mix effects -- favorable changes in the types and volumes of products sold. Currency translation provided a $3.6 million benefit compared to the prior quarter, boosting the topline but not signaling underlying organic demand growth. The margin still lagged last year’s performance, signaling that

On the bottom line, adjusted EBITDA was 11.8% of sales for Q2 2025, an improvement compared to Q1 2025, yet notably lower than the 14.9% adjusted EBITDA margin posted in Q2 2024. Operational cost reductions contributed; management referenced ongoing restructuring in both headcount and manufacturing operations. The most significant financial impact this period came from special charges: the company recorded $76.1 million in restructuring and impairment expenses, the bulk of which was a $67.3 million goodwill impairment on the curamik power substrates business. Management explained, “The higher charges were primarily due to a non-cash goodwill impairment charge of $67.3 million, resulting from the lowered outlook for the curamik® business in our AES operating segment.” This non-cash goodwill impairment charge resulted from a lowered outlook for the curamik® business in the AES operating segment.

Company cash flow remained positive but dipped compared to Q2 2024, with Free cash flow (non-GAAP) improved sequentially but fell short of the prior-year period, while capital expenditures moderated as large manufacturing expansion projects wound down. Notably, Rogers executed $28.1 million in share repurchases during the quarter. R&D expenses, a crucial input for future product launches, slid to $7.0 million from $9.5 million a year earlier (GAAP)

Product Families and Segment Trends

Within Advanced Electronics Solutions, curamik power substrates (used in electric vehicle and industrial power modules) suffered from lower demand and market visibility, prompting the impairment charge. This business supplies ceramic-based circuit boards that dissipate heat efficiently and enable high-power electronic devices. Segment revenue rose 4.6% sequentially, with gains in industrial, ADAS, and aerospace and defense, partly offset by wireless infrastructure weakness and curamik softness. Management continues to focus on ramping new manufacturing in China to support local customers, particularly as automotive and industrial end markets slowly recover.

In Elastomeric Material Solutions, which makes high-performance foams and elastomers for sealing and vibration management in electronics and industrial equipment, sequential GAAP revenue jumped 8.2%. Growth was driven primarily by stronger industrial and portable electronics demand. The segment is also seeing renewed activity in aerospace and defense applications, although pricing and competition remain factors to monitor. While both divisions responded to global trade and supply chain shifts, management’s “local-for-local” strategy -- producing goods close to where they’re sold -- continues to mitigate tariff impacts. The company highlighted ongoing supply chain complexities but flagged that tariff management actions are expected to largely offset impacts in the next quarter.

One-time events deeply affected reported profit. The $76.1 million in restructuring and impairment costs (GAAP) not only drove the net loss, but also signal further changes ahead as the company expects to incur $12–$20 million in additional charges over the coming quarters related to cost reductions. The savings target exceeds $13 million annually on a run-rate basis once restructuring is complete. The closure of legacy facilities and continued emphasis on operational efficiency, including personnel reductions, reflects ongoing adaptation to market realities. No dividend was declared.

Looking Ahead: Management Guidance and Key Risks

For Q3 2025, management guided net sales of $200–$215 million. Gross margin is expected to be between 31.5% and 33.5%. Adjusted EPS is expected in the range of $0.50–$0.90, compared to $0.34 in Q2 2025. No changes to the full-year outlook were discussed beyond this. Capital expenditures for 2025 are projected at $30–$40 million, which is below recent levels as major capacity investments conclude. Importantly, management emphasized that “actions that are expected to largely offset the impact of tariffs in the third quarter.”

There are no announced changes to the non-dividend shareholder return policy. Investors should be aware of persistent execution risks. These include ongoing restructuring initiatives for the curamik power substrates business, efforts to convert new design projects into revenue, and actions to address global supply chain disruptions, tariffs, and currency volatility. Management expects ongoing cost reduction and a ramp-up at the new China plant to drive future margin recovery. However, much depends on order trends in the electric vehicle, industrial, and electronics end-markets, as well as the pace of new innovations. Rogers does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.