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DATE
Wednesday, October 29, 2025 at 5 p.m. ET
CALL PARTICIPANTS
Interim Chief Executive Officer — Ali El-Haj
Chief Financial Officer — Laura Russell
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TAKEAWAYS
Revenue -- representing a 6.5% sequential increase from Q2 2025 to Q3 2025 and a 2.7% year-over-year increase compared to Q3 2024, led by portable electronics, industrial, aerospace, and defense end markets.
AES Segment Revenue -- Up 5.2% quarter over quarter, with growth attributed to power substrate demand and strength in defense applications.
EMS Segment Revenue -- EMS segment revenue increased 8.7% quarter over quarter, driven by commercial aerospace sales in North America and broad-based industrial growth.
Gross Margin -- Gross margin reached 33.5%, improving 190 basis points sequentially, attributed to higher volumes, improved product mix, and reductions in manufacturing costs.
Adjusted EBITDA -- $37.2 million adjusted EBITDA, or 17.2% of sales, representing a 540 basis-point sequential improvement
GAAP EPS -- $0.48 EPS for Q3 2025, up from the prior quarter due to lower restructuring-related expenses.
Adjusted EPS -- Adjusted earnings per share: $0.90, compared to $0.34 in Q2 2025, reflecting improved sales, better gross margin, and lower G&A expenses.
Cash Balance -- $168 million at quarter end, a $10.6 million increase sequentially.
Operating Cash Flow -- $28.9 million cash provided by operations, increased due to higher sales and enhanced operating income.
Share Repurchases -- $10 million spent in Q3; $66 million remains authorized on the plan, with Q4 share repurchases expected to exceed Q3.
Capital Expenditures -- $7.7 million in Q3, with full-year capital expenditures guidance of $30 million to $40 million.
Ceramic China Facility -- Production commenced late in Q3; initial ramp had only a minor effect on gross margin, and an 80 basis-point headwind is guided for Q4 gross margin due to ramp-up.
Cost Reduction -- $25 million in savings underway for 2025, translating to approximately $18 million–$20 million lower adjusted OpEx for 2025; expected annualized benefit of $32 million in 2026 (with $13 million additional annualized ceramic restructuring savings targeted for late 2026).
Working Capital -- Improved due to reduced lead times (some by up to 60%) and lower inventories, enhancing flexibility and cash flow.
Q4 2025 Guidance -- Revenue expected between $190 million and $205 million for Q4 2025; adjusted EBITDA margin between 13.5% and 16.5% for Q4 2025; adjusted EPS guidance of $0.40–$0.80 for Q4 2025; EPS projected from breakeven to $0.40 for Q4 2025.
Gross Margin Guidance -- 30%–32% gross margin expected for Q4, gross margin down 250 basis points quarter over quarter and 110 basis points year over year (midpoint) versus Q4 2024 guidance, with ramp-related pressure from the new China facility noted as a factor.
Tax Rate -- Projected non-GAAP full-year tax rate is approximately 35% for FY2025, attributed to certain loss jurisdictions with no tax benefit realization.
End Market Dynamics -- Industrial and portable electronics drove sequential growth; Aerospace and defense saw continued improvement; ADAS sales decreased sequentially; But year-to-date sales remain solidly ahead of year-to-date 2024; EV/HEV year-to-date sales remain below the prior year but are expected to recover with China ceramic ramp and Western demand recovery.
Customer Alignment -- Company leadership reports stronger customer relationships following global engagement, along with internal structure changes to address expectations and deliver improved service.
Operational Model -- Organizational restructuring in commercial, R&D, and operations has resulted in faster execution, reduced lead times, and improved accountability.
SUMMARY
Rogers Corporation (ROG 2.52%) reported sequential and year-over-year sales growth; With both revenue and earnings at the top end of guidance, supported by improved operational efficiency and cost reduction efforts. Management noted the successful start of production at the new ceramic facility in China, with associated margin headwinds expected to moderate as customer qualification progresses through 2026. Guidance for Q4 reflects seasonal sequential sales declines and gross margin compression, largely tied to the China ramp; But year-over-year improvements in profitability versus Q4 2024 remain a priority given ongoing cost actions and further share repurchases. The company signaled a continued focus on market share gains, new product introductions, and optimizing global manufacturing to drive long-term shareholder returns.
Ali El-Haj stated, "we expect the market to continue strong for us in all activities." except for some ongoing uncertainty in the EV/HEV market, which is reflected in current sales forecasts.
Laura Russell confirmed that the impact of tariffs on gross margin was "minor" due to mitigation measures and a U.S.-China agreement to delay tariff increases.
Management highlighted the expected annualized cost savings of $13 million from the German ceramic restructuring will not fully materialize until late 2026.
The organization expects to maintain a "customer-centric" focus according to Ali El-Haj and aims to benchmark industry service levels and quality by 2026.
INDUSTRY GLOSSARY
ADAS: Advanced Driver Assistance Systems, a segment supplying electronic solutions for vehicle automation and safety.
HEV/EV: Hybrid Electric Vehicle/Electric Vehicle, designating automotive markets utilizing electric propulsion technologies.
AES: Advanced Electronics Solutions, Rogers' business segment providing materials for high-performance electronics.
EMS: Elastomeric Material Solutions, Rogers' business segment focused on engineered polyurethane and silicone components.
COGS: Cost of Goods Sold as referenced in context of cost savings realization.
Full Conference Call Transcript
Ali El-Haj: Thanks, Stephen. Good afternoon everyone and thank you for joining us today. I will begin on Slide four with the key messages for the quarter. First, since taking on this role in mid-July, I have engaged extensively meeting with Rogers employees and customers in Asia, Europe, and The United States. These meetings and discussions have reinforced Rogers' core strength and the key growth opportunities ahead. They have also shown the areas where we must improve to achieve renewed growth and sustainable operating performance. To capitalize on these opportunities and to deliver greater returns to shareholders, we are executing on a plan with several critical focus areas.
I will cover these in detail and share the progress we have made thus far. Turning to our Q3 results. Our sales, gross margins, and adjusted EPS results were all at the upper end of the guidance and exceeded Street consensus. Sales increased by 6.5% from the prior quarter led by improvements in portable electronics, industrial, aerospace, and defense end markets. Compared to the prior year, sales increased by 2.7%. Q3 results benefited from delivering on cost and expense reduction actions. For the fourth quarter, we expect sales and earnings to improve versus the prior year while typical seasonal factors will lead to a sequential decline.
With expense reduction actions completed, adjusted EBITDA margin should improve around 300 basis points versus the prior year. Laura will cover both the Q3 financials and fourth quarter outlook in more detail. On Slide five, I will discuss the critical initiatives we are advancing in the near and mid-term. First, we are committed to improving Rogers' top-line growth potential. To achieve this, we are intensifying our customer focus with actions underway to better anticipate their needs and improve service levels. As we work to delight our customers, we will leverage our global manufacturing capabilities to increase our competitiveness and market share in each region.
We have recently expanded these capabilities as we have started production in the new ceramic facility in China. With a localized supply chain and a regionally competitive cost structure, we are positioned to compete effectively. Delivering innovative new products is also key to achieving our growth objectives. There are compelling opportunities in the technology pipeline and significant future potential applications. In the coming quarters, Rogers will be introducing new products in all business units, targeting new and adjacent market segments. The next critical priority is to maintain a lean and efficient cost structure. Expense reduction actions and footprint optimization efforts that were started in recent quarters are taking hold, improving EBITDA margins and cash flow.
We are making significant progress on the previously announced restructuring of ceramic operations in Germany. Cost savings from this initiative will begin in the fourth quarter with $13 million of annualized savings targeted by late 2026. We will continue to evaluate our global footprint and make refinements as needed. This may include selective investments to support growth opportunities that meet certain return criteria. These investments will be carefully balanced with vigilant cost control. Operational excellence will remain a top priority focused on creating a more flexible and dynamic organization. Actions already completed include changes made to the commercial R&D and operations organizational structure in both business units.
These changes were implemented to increase the speed of execution, improve accountability, and simplify how we operate. We already are seeing results with significantly reduced lead times, some by as much as 60%, while reducing inventories and improving working capital. Our revised operating model will continue to drive these types of improvements. As we reshape our structure into our customer-centric organization, we expect to see more consistent performance and improved returns to shareholders. Lastly, we are also intensely focused on critical initiatives to grow Rogers over the long term. While these objectives are not part of today's discussion, we will share our plans at the appropriate time.
On Slide six, we will discuss our sales for the third quarter by end market. Beginning with industrial markets, sales were higher versus the prior quarter in both AES and EMS business units. In Q3, the improvement was broad-based with sales increasing across all regions. This marks the third consecutive quarter of higher industrial sales, and on a year-to-date basis, we have continued to show growth. Aerospace and defense sales also improved sequentially. EMS sales increased driven by stronger commercial aerospace demand in the North American market. AES defense sales remained strong and were in line with the prior quarter. On a year-to-date basis, total A&D sales have increased at a low double-digit rate.
EV and HEV sales were relatively unchanged versus the prior quarter. AES sales increased from the improved power substrate demand. Year-to-date sales remain well below the prior year. We anticipate further growth in this market supported by the recent ceramic expansion in China and the recovery in demand from the Western power modules manufacturers. As anticipated, ADAS sales decreased sequentially. The sales decline tracked lower light vehicle production in Q3. Year-to-date sales remain solidly ahead of 2024. Lastly, portable electronics was the largest driver of the sequential improvement in revenue. The double-digit increase versus the prior quarter was in line with expected seasonal patterns.
I will now turn it over to Laura to discuss our Q3 financial performance and Q4 outlook.
Laura Russell: Thank you, Ali. Starting on slide seven, I will begin with a summary of our third quarter financials. Q3 results improved meaningfully from the prior quarter, with all financial metrics at the top end of guidance. Sales increased across most end markets with the largest increase in portable electronics and industrial. AES revenues increased by 5.2% and EMS revenues were 8.7% higher on a quarter-on-quarter basis. GAAP EPS of $0.48 improved significantly from the prior quarter, mainly due to lower restructuring-related expenses. Adjusted earnings per share in Q3 increased to $0.90 from $0.34 in Q2. This was a result of the improvement in sales and gross margin and reductions in G&A expenses.
Turning to Slide eight, Q3 adjusted EBITDA was $37.2 million or 17.2% of sales. The 540 basis point improvement from the prior quarter was driven by multiple factors. First, gross margin increased 190 basis points to 33.5% due to higher volumes, favorable product mix, and reductions in manufacturing costs. Late in the third quarter, we started production in our ceramic facility in China. Costs for the initial factory ramp had only a slight impact on Q3 margin. The impact of tariffs on gross margin was minor in Q3. This was a result of continued mitigation efforts and the agreement between the U.S. and China to delay tariff rate increases.
Next, adjusted operating expense excluding stock-based compensation decreased by $2.5 million quarter on quarter. The lower OpEx resulted from reductions in professional services and global workforce restructuring. Lastly, other income improved $2.6 million due to favorable quarter-over-quarter changes in foreign currency transactions. Continuing to Slide nine, I will discuss cash utilization for the quarter. Cash at the end of Q3 was $168 million, an increase of $10.6 million from the end of the second quarter. Cash provided by operations was $28.9 million and improved due to higher sales and operating income. In addition, we improved working capital, particularly inventory, through continued focus. Uses of cash in the quarter included share repurchases of $10 million and capital expenditures of $7.7 million.
For the full year, we forecast capital expenditures in the range of $30 million to $40 million. Return on capital to shareholders will remain a priority. Our current view is that share repurchases in Q4 will exceed Q3 levels. Following our purchases in Q3, we have approximately $66 million remaining on our existing share repurchase program. Next on Slide 10, I will review our guidance for the fourth quarter. Beginning with sales, we expect Q4 revenues to be between $190 million and $205 million. The midpoint of the range is a 3% increase in sales year over year and a 9% decline quarter over quarter.
The guidance reflects the normal sequential decline in electronic sales from Q3 to Q4 and slower order patterns across most end markets as customers manage year-end inventory. We are guiding gross margin in the range of 30% to 32%. The midpoint of this range is 110 basis points lower than the prior year with an 80 basis point headwind from the ramp of our ceramic factory in China. Compared to the prior quarter, gross margin is 250 basis points lower due to volume and mix. We expect adjusted operating expenses to decrease from third-quarter levels, primarily from lower start-up costs which have moved into gross margin following the start of production at the facility.
EPS is projected to range from breakeven to earnings of $0.40. The adjusted EPS range is $0.40 to $0.80 of earnings. We expect adjusted EBITDA margin between 13.5% and 16.5%, a roughly 300 basis point improvement versus the prior year at the midpoint of the range. The margin and EPS guidance assumes that tariff policies in place today remain unchanged for the quarter. Adjustments to arrive at our non-GAAP EPS and adjusted EBITDA are mainly comprised of restructuring costs related to the economic actions in Germany. As communicated last quarter, the restructuring costs associated with this action will be incurred from Q3 2025 to 2026. We anticipate savings, albeit small, to start in 2025.
The program is still anticipated to deliver $13 million in annual run rate savings. Lastly, we project our non-GAAP full-year tax rate to be approximately 35%. The higher expected tax rate is mainly due to certain loss jurisdictions where no tax benefits can be realized. I will now turn the call back over to Ali.
Ali El-Haj: Thanks, Laura. In summary, there is a clear focus on the key initiatives to grow the top line, improve the cost structure, and further operational excellence. Combined with a renewed customer focus and new product introductions, we see significant opportunity to improve Rogers' performance over the near and long term. That concludes our prepared remarks. I will now turn the call back to the operator for questions. Thank you.
Operator: We will now be conducting a question and answer session. And time permitting, those questions will be addressed. One moment please while we poll for questions. Thank you. Our first question comes from the line of Daniel Joseph Moore with CJS Securities. Please proceed.
Daniel Joseph Moore: Thank you. Good afternoon. Thanks for the color and taking the questions. We will start with the top line and just kind of general revenue trends. Guidance for Q4 implies 2% to 3% growth at the midpoint year on year. Just talk about confidence in demand continuing to build in those key end markets that you called out like industrial, aerospace, and defense, some of your larger end markets. As we look out to 2026, would you expect similar, if not improved, year-on-year growth particularly given some of the easier comps that we have in the first half of the year?
Ali El-Haj: Yes. Hi, Daniel Joseph Moore. It is Ali. Look, we are confident in the range that we have given you based on what we see today. Absent macroeconomic change, we are very confident with the range that we have given you for Q4. So we expect the market to continue strong for us in all activities. The only one that we own market segments, the only one we are probably still hesitant about is the EV market and how far it can recover for us. That is the only concern, but that is baked into the forecast that we or the guidance that we provided.
As for the first six months of 2026, we actually have high confidence in better performance and continued growth in all business segments.
Daniel Joseph Moore: Very helpful. And maybe for Laura, the gross margin recovered to 33.5% this quarter. Obviously, mix helps, it is a seasonally stronger quarter. But as we look out, two questions. One, that 80 basis point headwind in Q4, how should we think about that kind of dissipating as we move into the first half of next year? And two, what in your mind is sort of the baseline for growth margins on an annualized basis? And what could an upside scenario look like? And I will jump back to you with any follow-ups. Thank you.
Laura Russell: Okay. Sounds good. So let me address the first half of your question, Daniel Joseph Moore. So the 80 basis points headwind that we are going to face in the fourth quarter associated around for the ceramic facility in China. It is very typical of what we would anticipate, you know, as we begin production in that facility. I think as Ali mentioned in the prepared remarks, we have activities ongoing with many customers, and we are looking to qualify and ramp those customers and to fuel manufacturing production volumes. Which will facilitate us getting ahead of that headwind. And turn into return from that facility.
And which correlates with the investment they wanted to build a regional capability and capacity. And allow us to be far better positioned to compete locally in that market. So what I would anticipate is it will take time to fully ramp the capacity through 2026. Not necessarily because of our readiness, but because of the time it takes to qualify the customer's product and their solution directly from our factory. So those activities are ongoing. And we would anticipate as we reach the back end of next year to not be facing the same extent of headwinds to the margin from that operating.
In terms of thinking about the potential for the business and the margin optimized, Ali spoke about the initiatives and the objectives that we have. A lot of them will crystallize and improve financial results as we embed a new operating model. And deliver improved operational effectiveness. And grow the top line. I have spoken previously about our current investments and the capacity being in place. So now we are turning our attention to optimizing that capacity and utilizing it to serve the demand and the potential that we see.
Daniel Joseph Moore: That is very helpful, Laura. I will jump back with any follow-ups. Thank you. Okay. Thank you.
Operator: Our next question comes from the line of Craig Andrew Ellis with B. Riley Securities. Please proceed.
Craig Andrew Ellis: Yes. Thank you for all of the information and for taking the question. Laura, I will just start on the theme that Daniel Joseph Moore was on and just take the cost and margin dynamics a step further perhaps. So my sense from your characterization as you walk through some of the slides in the cost savings, which I think are targeted at $25 million this year with a $32 million run rate and then we have got $13 million coming from the German facility next year. Is that there may be other cost benefits that could be executed against beyond things that are in progress and the German facility benefit one. Is that correct?
And two, how material could those things be? And when could they start to be things that would be actionable as we look at where profitability and cash conversion can ultimately go for the business?
Laura Russell: Okay. So let me start, and Ali can, you know, add additional comment as he sees fit. So in terms of the plans that we have already outlined, Craig Andrew Ellis, and where we are at in executing those, the $25 million savings in $25 million I have spoken to, you can see that crystallizing in the P&L at the moment. Based on the gate that was given. If you look on a year-on-year basis, if you look at the OpEx in totality, you know, we are roughly $210 million last year and with our guidance, we are probably about $18 million to $20 million below that and an update for 2025. So you can see that coming to fruition.
From a full-year base and sorry, just to get clarity, that is because of the 70% of the $25 million is in OpEx and the residuals in gross margin. If you look on an annualized basis as you stated, that should be more like $32 million benefit across both P&L geographies in '26. And in addition to that, as we announced last quarter and as you have correctly commented, the restructuring in Germany has commenced. The program is largely on track. And that is set to deliver $13 million on an annualized run rate basis. Just to remind you that $13 million those COGS not an OpEx saving. We would not see that fully materialize until later into 2026.
Just as we go through, you know, the ramp down of the capacity and the ramp up and servicing some of those customers in the new job. In China. So that is what we have there. In terms of incremental opportunity beyond that, what I would tell you is you hear us talk to the efficiency in the operating model, and we will look to optimize the financial performance of the business month to month and that is exactly the discipline that we have, but we have increased intensity to that discipline with the processes and the approach that is now being deployed. So with that, we will evaluate the business and the market opportunities.
As they present themselves and make appropriate investments or savings and as is needed. In terms of the same plans at the moment, it is the ones that we have already shared and I have just walked through just now.
Craig Andrew Ellis: That is very helpful and I think the execution on cost and other things have been quite notable over the last three to four quarters, Laura. So it will be nice to see those continue. Ali, I will turn my second question to you. You noted in your prepared remarks that the industrial end market, which is our biggest was an area of strength. My question is, as you look at the dynamics in that end market, what is it that drove that strength? And as you think about growth in that large end market, what are the opportunities specific to drive growth?
And do you think that we are at a point where supply chain inventories are no longer a headwind to that business?
Ali El-Haj: Yes, thanks. So I will answer the question kind of backward from inventory and supply chain issues. I think that is way behind us now. So that is all kind of cleared up. I think we are looking forward and the potential for growth. So we have three elements that we are targeting or we are working on. One is we are capturing more market share from products and customers that we already have and customers that we did not have in the past. So increasing market share this is key for us. And again this is for assets that we have so we can utilize these assets. We have the capacity to supply these types of products.
In addition to that, and that is significantly important I think our customers started to see our improvement in response and service and for their demand and need. So we are seeing a lot more demand and a lot more of these volumes shifted back to us. The third element is the introduction of new products. So as I indicated, we will be launching. We actually start in this in Q4 of this year going forward. Several new products that will allow us to even penetrate markets that we have not participated in, in the past. I think all those three elements were really given us a lot more confidence that we will continue to grow the top line.
Craig Andrew Ellis: That is very helpful. And if I could just ask a clarification on the heels of those three drivers, Ali. As you have interacted with the internal team, as you have interacted with partners and customers, do you feel like pricing is at the right level for the high value that Rogers products bring to market? Or is there an opportunity to do things tactically with pricing so that more of the functional value that Rogers provides comes home to the top line and down to the bottom line?
Ali El-Haj: I think the simple answer is a combination of both. So I think Rogers' brand name and quality and commands obviously a premium pricing in certain markets, certain applications that have been a key for us. However, there are other markets and areas where really the market commands the pricing. And in this case, what we are doing internally is we need to make sure we focused on the cost structure that we have today to be able to compete effectively in these markets and be able to realize the margins and the returns that we expect to get.
Craig Andrew Ellis: Very helpful. Thank you and good luck.
Laura Russell: Just one point of clarification just before we jump off actually what I was discussing in the OPEC spreadsheets was adjusted OPEC.
Craig Andrew Ellis: Yes. Got it. Thank you, Laura.
Laura Russell: Thank you.
Operator: Thank you. Our next question comes from the line of David Silver with Freedom Capital Markets. Please proceed.
David Silver: Yes, Thank you. First question would be for Ali, and I took note in your opening remarks that your first task I guess upon becoming Interim CEO was to visit with a number of your key customers, I guess you mentioned globally. So I guess your company has gone through an extended or the industry has gone through an extended period of kind of softer demand. There have been inventory issues. There have been more recently tariff issues. Would you say that the relationships with your key customers remain as strong as they were, let us say, eighteen months ago?
Or due to some of those changes does Rogers need to take maybe some further steps to even more closely align with your key customers and collaboration partners in order to meet your goals. So what is the status of the relationships over an extended period of reduced demand and then the significant steps you have taken thus far to reduce costs and tighten your alignment. Are there further steps tactically or strategically that you need to undertake? Thank you.
Ali El-Haj: Thank you for the question. I think again think the relationship with our customers is very strong. I think it is solid. There is a lot of history here behind some of those customers, especially the key customers. I think my objective was really to develop some deeper understanding of the needs, listen to their voice and understand their needs, expectations from Rogers. Making sure we are really paying attention to that and addressing those issues. So this communication really improved our understanding of their expectations. That could it have been some cases maybe because of outside factors whether supply chain interruptions raw materials that we went through in the past three, four years.
And obviously that caused some hiccups since that or some would say it is minor disruption and cause some pain to some of those customers. So I think we this understanding really now is very clear. Our understanding of their needs is very clear. We aligned the organization itself internally to make sure we address those issues day in and day out across the whole spectrum throughout the whole organization, not just the sales of R&D, but when it comes to service and we have mentioned some of the improvements we have made internally, currently time to 60 in some up plants even higher than that. We are responsive, we are being more responsive.
We think now we expect by the 2026, hopefully to be the benchmark in the industry when it comes to the service level and quality and these types of activities. Regard to the second half of your questions, continuous improvements never stop. So this is going to be an ongoing effort to continue work on our operations and continue to improve our processes whether it is in the manufacturing processes or again, the customer service area, the sales area, the development processes, We are looking to reduce our development time and engineering significantly to be able to introduce products faster.
And because we need to be again expecting the demand and need of the customers and be up there and upfront and be there when they need us. Not react you know, and supply them stuff in beyond or delaying their expectations and delaying their introductions. So these are things we continue to focus on. A lot of it is in our or within our control and therefore I am very confident we are going to get these things accomplished.
David Silver: Okay. Thank you for that. I did want to maybe ask a question about your philosophy about share buybacks and returning cash to shareholders in general. But the funds, I guess, over the past few quarters, including the current one, I mean, the funds allocated to buybacks have increased significantly over let us say the trend over the past several years. And I think Laura indicated there will be further repurchase activity in the fourth quarter. Just philosophically, is this a decision by management to act opportunistically because of maybe where the share price was earlier this year?
Or would you say it is more programmatic and share repurchases are likely to continue at a higher level than has been the typical levels over the past several years.
Laura Russell: Hi, David. So let me start with that. So, yes, it would be fair to say that it has been somewhat opportunistic. It is an indication of our belief in their potential. With the share repurchases that we had undertaken this year when our stock price was where it was. We did do a further $10 million in Q3 and I had indicated in our call that we would likely do a little more than that in the fourth quarter. And what I think is critical though is you asked about the share buyback. And really for us, it is about looking for optimizing returns to our shareholders. As part of our capital allocation structure.
And what we had seen through '25 as well, we were still active in evaluating M&A and potential opportunities. There has not been presented opportunity or target that may earn investment and return price criteria. And we had already explained, we were largely through the organic investments that we saw for expanding the company in its existing structure with its existing technology. So that is what resulted in the pivot to this share repurchase activity. Now, as with every quarter, we will continue to evaluate the investment potential and seeking to optimize those returns and we will balance what we do on a go-forward basis. Between all three legs of those and the capital allocation structure.
David Silver: Okay. Thank you very much.
Laura Russell: You are welcome.
Operator: Thank you. As a reminder, to ask a question, please press 1. Our next question comes from the line of Daniel Joseph Moore with CJS Securities. Please proceed.
Daniel Joseph Moore: Thanks again. First couple of questions more high level looking out to next year, but just in terms of Q4, you came in at the top end of the range this quarter guidance for Q4 again implies a pretty wide range. Just talk about the puts and takes that could cause you to come in toward the lower or higher? For that range this quarter? Thanks again.
Laura Russell: So Daniel Joseph Moore, it is Laura. Let me start. So, you know, we guided based on our current and, you know, and we stated in the prepared remarks, really, what we typically experience and what we have incorporated is the slowdown in portable electronics into the fourth quarter versus the third. And the customer management of inventories. Now, we may see some change in that inventory management. We may see some, you know, we have got substantial exposure in the industrial space. If we see those industries shift and increased investments, then we have the capability to respond to demand as it comes in.
And if we go the other way and there is any weakness, which is not anticipated based on the gate, then we would manage the way we do, you know, week to week, month to month on our activity. So at the moment, you know, with the visibility we have, the guidance as it is done.
Daniel Joseph Moore: Sorry about that. I was on mute. Thank you. I think that covers the rest of my questions. Thank you very much.
Laura Russell: You are welcome.
Operator: Thank you. As a reminder, it is star one to ask a question. I have our next question comes from the line of Craig Andrew Ellis with B. Riley Securities. Please proceed.
Craig Andrew Ellis: Yeah. Thanks for taking the question. I was hoping to go back and just get a real long-term perspective on what the view is with the China ceramic facility both with respect to the diversity of customers that you think you can have in that facility? How you are thinking about being able to ramp up that facility beyond the very near-term gating factors like specific customer and program calls that would start product. But what are the strategies the company has to engage with customers and grow both domestics and internationals that might need there.
And then anything else that would help us form an insightful view on what you think is over the next two to three years with that facility? Thank you.
Ali El-Haj: Yes. Okay, Craig Andrew Ellis. I think obviously we did not build this plenty. So we were engaging with customers before we started the facility and started building the facility and restructuring. So from a customer activities and potential, it is all available to us, it is there. So I can assure you that we already have several programs that would be in source. And committed by some of our customers. So what we are going through is what we indicated earlier. We have some qualification that product qualification process qualification we are going through with our customers.
And that is probably the gating item here as some of these things get approved, they will launch because the demand is there. We and it is multiple customers, some existing customers and few additional newer customers and newer applications for us. So the future for the economic facility in China is very bright as we see it today. We expect significant growth in the facility and in the overall ceramic business. So we still believe that the growth there is very solid and we can forecast it.
Craig Andrew Ellis: Thanks, Ali. And to follow-up on one of the points that you made and understand it more deeply. If the gating factor near term is just the calls that we are doing, whether it be product or process, what are the levers that the company has to maximize the speed at which that can happen whether it be how you are staffing the facility, the shifts that may be running or just technical things. That need to be done. Just any further color there would be helpful. Thank you.
Ali El-Haj: Yes. The facility is already staffed for the current volume and for the expected forecasted volume for the next quarter. With regard to the expertise and experts and all the staffing that we need the support function, The functions they are already available and it is already staffed. Some of the issues that I have mentioned is these types of qualification is really at the customer's end. We have done all the work internally for most customers and now the next phase is their own qualification of the product itself. And we are trying to assist some of those customers actually doing some testing for them to speed up that process.
So I think overall we believe we are on track. To hit the numbers that we are forecasting for 2026.
Craig Andrew Ellis: Very helpful. Thank you.
Ali El-Haj: Sure.
Operator: Thank you. There are no further questions at this time. And with that, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.