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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Rogers Corp | NYSE:ROG | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 114.88 | 0 | 12:55:09 |
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Massachusetts
|
06-0513860
|
(State or Other Jurisdiction of
|
(I. R. S. Employer Identification No.)
|
Incorporation or Organization)
|
|
|
|
2225 W. Chandler Blvd., Chandler, Arizona
|
85224-6155
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
Large accelerated filer
ý
|
Accelerated filer
o
|
Non-accelerated filer
o
|
Smaller reporting company
o
|
Emerging growth company
o
|
|
TABLE OF CONTENTS
|
|||
Part I – Financial Information
|
|||
|
|
||
|
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||
|
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||
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||
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Part II – Other Information
|
|||
|
|||
|
|||
|
|||
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|
Item 1.
|
Financial Statements
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2018
|
|
September 30, 2017
|
|
September 30, 2018
|
|
September 30, 2017
|
||||||||
Net sales
|
$
|
226,863
|
|
|
$
|
206,783
|
|
|
$
|
656,149
|
|
|
$
|
612,035
|
|
Cost of sales
|
147,733
|
|
|
124,595
|
|
|
423,741
|
|
|
368,951
|
|
||||
Gross margin
|
79,130
|
|
|
82,188
|
|
|
232,408
|
|
|
243,084
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative expenses
|
39,943
|
|
|
39,010
|
|
|
123,080
|
|
|
113,590
|
|
||||
Research and development expenses
|
7,630
|
|
|
7,411
|
|
|
24,514
|
|
|
21,512
|
|
||||
Restructuring and impairment charges
|
1,052
|
|
|
962
|
|
|
2,015
|
|
|
2,767
|
|
||||
Other operating (income) expense, net
|
863
|
|
|
(4,387
|
)
|
|
(3,111
|
)
|
|
(5,329
|
)
|
||||
Operating income
|
29,642
|
|
|
39,192
|
|
|
85,910
|
|
|
110,544
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Equity income in unconsolidated joint ventures
|
1,642
|
|
|
1,384
|
|
|
4,453
|
|
|
3,359
|
|
||||
Other income (expense), net
|
(680
|
)
|
|
1,991
|
|
|
(647
|
)
|
|
3,370
|
|
||||
Interest expense, net
|
(2,000
|
)
|
|
(1,639
|
)
|
|
(4,503
|
)
|
|
(4,834
|
)
|
||||
Income before income tax expense
|
28,604
|
|
|
40,928
|
|
|
85,213
|
|
|
112,439
|
|
||||
Income tax expense
|
8,870
|
|
|
15,396
|
|
|
22,014
|
|
|
38,979
|
|
||||
Net income
|
$
|
19,734
|
|
|
$
|
25,532
|
|
|
$
|
63,199
|
|
|
$
|
73,460
|
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share
|
$
|
1.07
|
|
|
$
|
1.40
|
|
|
$
|
3.44
|
|
|
$
|
4.05
|
|
Diluted earnings per share
|
$
|
1.06
|
|
|
$
|
1.37
|
|
|
$
|
3.39
|
|
|
$
|
3.97
|
|
|
|
|
|
|
|
|
|
||||||||
Shares used in computing:
|
|
|
|
|
|
|
|
|
|
||||||
Basic earnings per share
|
18,403
|
|
|
18,181
|
|
|
18,360
|
|
|
18,126
|
|
||||
Diluted earnings per share
|
18,678
|
|
|
18,588
|
|
|
18,649
|
|
|
18,503
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2018
|
|
September 30, 2017
|
|
September 30, 2018
|
|
September 30, 2017
|
||||||||
Net income
|
$
|
19,734
|
|
|
$
|
25,532
|
|
|
$
|
63,199
|
|
|
$
|
73,460
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment
|
(1,608
|
)
|
|
6,407
|
|
|
(9,901
|
)
|
|
23,136
|
|
||||
Derivative instruments designated as cash flow hedges:
|
|
|
|
|
|
|
|
||||||||
Unrealized gain (loss) on derivative instruments held at period end, net of tax (Note 6)
|
211
|
|
|
(51
|
)
|
|
1,308
|
|
|
(487
|
)
|
||||
Unrealized loss reclassified into earnings (Note 6)
|
—
|
|
|
115
|
|
|
—
|
|
|
222
|
|
||||
Accumulated other comprehensive loss pension and post-retirement benefits:
|
|
|
|
|
|
|
|
||||||||
Actuarial net gain (loss) incurred in fiscal year, net of tax (Note 6)
|
—
|
|
|
(300
|
)
|
|
—
|
|
|
35
|
|
||||
Pension and postretirement benefit plans reclassified into earnings:
|
|
|
|
|
|
|
|
||||||||
Amortization of loss, net of tax (Note 6)
|
44
|
|
|
—
|
|
|
131
|
|
|
36
|
|
||||
Other comprehensive income (loss)
|
(1,353
|
)
|
|
6,171
|
|
|
(8,462
|
)
|
|
22,942
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive income
|
$
|
18,381
|
|
|
$
|
31,703
|
|
|
$
|
54,737
|
|
|
$
|
96,402
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
149,556
|
|
|
$
|
181,159
|
|
Accounts receivable, less allowance for doubtful accounts of $1,143 and $1,525
|
155,706
|
|
|
140,562
|
|
||
Contract assets
|
20,260
|
|
|
—
|
|
||
Inventories
|
125,885
|
|
|
112,557
|
|
||
Prepaid income taxes
|
2,820
|
|
|
3,087
|
|
||
Current portion of asbestos-related insurance receivables
|
5,682
|
|
|
5,682
|
|
||
Assets held for sale
|
—
|
|
|
896
|
|
||
Other current assets
|
12,416
|
|
|
10,580
|
|
||
Total current assets
|
472,325
|
|
|
454,523
|
|
||
Property, plant and equipment, net of accumulated depreciation of $308,126 and $289,909
|
241,504
|
|
|
179,611
|
|
||
Investments in unconsolidated joint ventures
|
17,812
|
|
|
18,324
|
|
||
Deferred income taxes
|
4,478
|
|
|
6,008
|
|
||
Goodwill
|
266,304
|
|
|
237,107
|
|
||
Other intangible assets, net of amortization
|
181,618
|
|
|
160,278
|
|
||
Asbestos-related insurance receivables
|
63,511
|
|
|
63,511
|
|
||
Other long-term assets
|
21,873
|
|
|
5,772
|
|
||
Total assets
|
$
|
1,269,425
|
|
|
$
|
1,125,134
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
||
Current liabilities
|
|
|
|
|
|
||
Accounts payable
|
$
|
39,999
|
|
|
$
|
36,116
|
|
Accrued employee benefits and compensation
|
27,598
|
|
|
39,394
|
|
||
Accrued income taxes payable
|
9,189
|
|
|
6,408
|
|
||
Current portion of capital lease obligations
|
436
|
|
|
579
|
|
||
Current portion of asbestos-related liabilities
|
5,682
|
|
|
5,682
|
|
||
Other accrued liabilities
|
24,686
|
|
|
25,629
|
|
||
Total current liabilities
|
107,590
|
|
|
113,808
|
|
||
Borrowings under revolving credit facility
|
233,482
|
|
|
130,982
|
|
||
Non-current portion of capital lease obligations
|
4,786
|
|
|
5,873
|
|
||
Pension liability
|
268
|
|
|
8,720
|
|
||
Retiree health care and life insurance benefits
|
1,685
|
|
|
1,685
|
|
||
Asbestos-related liabilities
|
69,560
|
|
|
70,500
|
|
||
Non-current income tax
|
10,707
|
|
|
12,823
|
|
||
Deferred income taxes
|
10,936
|
|
|
10,706
|
|
||
Other long-term liabilities
|
4,028
|
|
|
3,464
|
|
||
Commitments and contingencies (Note 14)
|
|
|
|
|
|
||
Shareholders’ equity
|
|
|
|
|
|
||
Capital Stock - $1 par value; 50,000 authorized shares; 18,390 and 18,255 shares issued and outstanding
|
18,390
|
|
|
18,255
|
|
||
Additional paid-in capital
|
129,659
|
|
|
128,933
|
|
||
Retained earnings
|
751,951
|
|
|
684,540
|
|
||
Accumulated other comprehensive loss
|
(73,617
|
)
|
|
(65,155
|
)
|
||
Total shareholders' equity
|
826,383
|
|
|
766,573
|
|
||
Total liabilities and shareholders' equity
|
$
|
1,269,425
|
|
|
$
|
1,125,134
|
|
|
Nine Months Ended
|
||||||
|
September 30, 2018
|
|
September 30, 2017
|
||||
Operating Activities:
|
|
|
|
||||
Net income
|
$
|
63,199
|
|
|
$
|
73,460
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
|||
Depreciation and amortization
|
35,320
|
|
|
32,679
|
|
||
Equity compensation expense
|
8,536
|
|
|
8,508
|
|
||
Deferred income taxes
|
(17
|
)
|
|
10,452
|
|
||
Equity in undistributed income of unconsolidated joint ventures
|
(4,453
|
)
|
|
(3,359
|
)
|
||
Dividends received from unconsolidated joint ventures
|
4,431
|
|
|
616
|
|
||
Pension and postretirement benefits
|
(1,193
|
)
|
|
(1,177
|
)
|
||
Realized (gain) loss from sale of property, plant and equipment
|
(161
|
)
|
|
(5,329
|
)
|
||
Impairment of assets/investments
|
477
|
|
|
341
|
|
||
(Benefit) provision for doubtful accounts
|
(264
|
)
|
|
(553
|
)
|
||
Proceeds from insurance related to operations
|
—
|
|
|
932
|
|
||
Changes in operating assets and liabilities, excluding effects of acquisitions:
|
|
|
|
|
|
||
Accounts receivable
|
(14,012
|
)
|
|
(12,772
|
)
|
||
Contract assets
|
(20,260
|
)
|
|
—
|
|
||
Inventories
|
(11,840
|
)
|
|
(16,573
|
)
|
||
Pension and postretirement benefit contributions
|
(25,347
|
)
|
|
(372
|
)
|
||
Other current assets
|
146
|
|
|
(1,283
|
)
|
||
Accounts payable and other accrued expenses
|
(4,354
|
)
|
|
13,325
|
|
||
Other, net
|
3,216
|
|
|
956
|
|
||
Net cash provided by operating activities
|
33,424
|
|
|
99,851
|
|
||
|
|
|
|
||||
Investing Activities:
|
|
|
|
|
|
||
Acquisition of business, net of cash received
|
(78,571
|
)
|
|
(60,191
|
)
|
||
Capital expenditures
|
(36,557
|
)
|
|
(17,678
|
)
|
||
Isola asset acquisition
|
(43,434
|
)
|
|
—
|
|
||
Proceeds from insurance claims
|
—
|
|
|
1,040
|
|
||
Proceeds from the sale of property, plant and equipment, net
|
1,027
|
|
|
8,130
|
|
||
Net cash used in investing activities
|
(157,535
|
)
|
|
(68,699
|
)
|
||
|
|
|
|
||||
Financing Activities:
|
|
|
|
|
|
||
Proceeds from long-term borrowings
|
102,500
|
|
|
—
|
|
||
Line of credit issuance costs
|
—
|
|
|
(1,169
|
)
|
||
Repayment of debt principal and capital lease obligations
|
(1,046
|
)
|
|
(110,285
|
)
|
||
Repurchases of capital stock
|
(2,999
|
)
|
|
—
|
|
||
Proceeds from the exercise of stock options, net
|
734
|
|
|
1,926
|
|
||
Payments of taxes related to net share settlement of equity awards
|
(6,492
|
)
|
|
(5,145
|
)
|
||
Proceeds from issuance of shares to employee stock purchase plan
|
1,082
|
|
|
895
|
|
||
Net cash provided by (used in) financing activities
|
93,779
|
|
|
(113,778
|
)
|
||
|
|
|
|
||||
Effect of exchange rate fluctuations on cash
|
(1,271
|
)
|
|
5,852
|
|
||
|
|
|
|
||||
Net decrease in cash and cash equivalents
|
(31,603
|
)
|
|
(76,774
|
)
|
||
Cash and cash equivalents at beginning of period
|
181,159
|
|
|
227,767
|
|
||
Cash and cash equivalents at end of period
|
$
|
149,556
|
|
|
$
|
150,993
|
|
|
|
|
|
||||
Supplemental Disclosures:
|
|
|
|
||||
Cash paid during the year for:
|
|
|
|
||||
Interest, net of amounts capitalized
|
$
|
4,662
|
|
|
$
|
4,539
|
|
Income taxes
|
$
|
23,357
|
|
|
$
|
23,989
|
|
|
|
Capital Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Total Shareholders’ Equity
|
||||||||||
Balance at December 31, 2017
|
|
$
|
18,255
|
|
|
$
|
128,933
|
|
|
$
|
684,540
|
|
|
$
|
(65,155
|
)
|
|
$
|
766,573
|
|
Net income
|
|
—
|
|
|
—
|
|
|
63,199
|
|
|
—
|
|
|
63,199
|
|
|||||
Other comprehensive income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,462
|
)
|
|
(8,462
|
)
|
|||||
Stock options exercised
|
|
19
|
|
|
715
|
|
|
—
|
|
|
—
|
|
|
734
|
|
|||||
Stock issued to directors
|
|
12
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Shares issued for employee stock purchase plan
|
|
12
|
|
|
1,070
|
|
|
—
|
|
|
—
|
|
|
1,082
|
|
|||||
Shares issued for vested restricted stock units, net of cancellations for tax withholding
|
|
115
|
|
|
(6,607
|
)
|
|
—
|
|
|
—
|
|
|
(6,492
|
)
|
|||||
Shares repurchased
|
|
(23
|
)
|
|
(2,976
|
)
|
|
—
|
|
|
—
|
|
|
(2,999
|
)
|
|||||
Cumulative-effect adjustment of revenue recognition ASC 606
|
|
—
|
|
|
—
|
|
|
4,212
|
|
|
—
|
|
|
4,212
|
|
|||||
Equity compensation expense
|
|
—
|
|
|
8,536
|
|
|
—
|
|
|
—
|
|
|
8,536
|
|
|||||
Balance at September 30, 2018
|
|
$
|
18,390
|
|
|
$
|
129,659
|
|
|
$
|
751,951
|
|
|
$
|
(73,617
|
)
|
|
$
|
826,383
|
|
•
|
Level 1 – Quoted prices in active markets for identical assets or liabilities.
|
•
|
Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
•
|
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
|
|
Derivative Instruments at Fair Value as of September 30, 2018
|
||||||||||||||
(Dollars in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Foreign currency contracts
|
$
|
—
|
|
|
$
|
342
|
|
|
$
|
—
|
|
|
$
|
342
|
|
Copper derivative contracts
|
$
|
—
|
|
|
$
|
631
|
|
|
$
|
—
|
|
|
$
|
631
|
|
Interest rate swap
|
$
|
—
|
|
|
$
|
1,710
|
|
|
$
|
—
|
|
|
$
|
1,710
|
|
|
Derivative Instruments at Fair Value as of December 31, 2017
|
||||||||||||||
(Dollars in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Foreign currency contracts
|
$
|
—
|
|
|
$
|
(396
|
)
|
|
$
|
—
|
|
|
$
|
(396
|
)
|
Copper derivative contracts
|
$
|
—
|
|
|
$
|
2,016
|
|
|
$
|
—
|
|
|
$
|
2,016
|
|
Interest rate swap
|
$
|
—
|
|
|
$
|
41
|
|
|
$
|
—
|
|
|
$
|
41
|
|
•
|
Foreign Currency
- The fair value of any foreign currency option derivative is based upon valuation models applied to current market information such as strike price, spot rate, maturity date and volatility, and by reference to market values resulting from an over-the-counter market or obtaining market data for similar instruments with similar characteristics.
|
•
|
Commodity -
The fair value of copper derivatives is computed using a combination of intrinsic and time value valuation models. The intrinsic valuation model reflects the difference between the strike price of the underlying copper derivative instrument and the current prevailing copper prices in an over-the-counter market at period end. The time value valuation model incorporates the constant changes in the price of the underlying copper derivative instrument, the time value of money, the underlying copper derivative instrument’s strike price and the remaining time to the underlying copper derivative instrument’s expiration date from the period end date. Overall, fair value is a function of five primary variables: price of the underlying instrument, time to expiration, strike price, interest rate, and volatility.
|
•
|
Interest Rates
- The fair value of interest rate swap instruments is derived by comparing the present value of the interest rate forward curve against the present value of the swap rate, relative to the notional amount of the swap. The net value represents the estimated amount we would receive or pay to terminate the agreements. Settlement amounts for an “in the money” swap would be adjusted down to compensate the counterparty for cost of funds, and the adjustment is directly related to the counterparties’ credit ratings.
|
(Dollars in thousands)
|
|
|
|
The Effect of Current Derivative Instruments on the Financial Statements for the period ended September 30, 2018
|
|
Fair Values of Derivative Instruments as of September 30, 2018
|
||||||||
|
|
|
|
Gain (Loss)
|
|
Other Current Assets/
(Other Accrued Liabilities)
|
||||||||
Foreign Exchange Contracts
|
|
Location
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
||||||
Contracts not designated as hedging instruments
|
|
Other income (expense), net
|
|
$
|
29
|
|
|
$
|
(95
|
)
|
|
$
|
342
|
|
Copper Derivatives
|
|
|
|
|
|
|
|
|
||||||
Contracts not designated as hedging instruments
|
|
Other income (expense), net
|
|
$
|
(453
|
)
|
|
$
|
(1,637
|
)
|
|
$
|
631
|
|
Interest Rate Swap
|
|
|
|
|
|
|
|
|
||||||
Contracts designated as hedging instruments
|
|
Other comprehensive income (loss)
|
|
$
|
270
|
|
|
$
|
1,669
|
|
|
$
|
1,710
|
|
(Dollars in thousands)
|
|
|
|
The Effect of Current Derivative Instruments on the Financial Statements for the period ended September 30, 2017
|
|
Fair Values of Derivative Instruments as of September 30, 2017
|
|||||
|
|
|
|
Gain (Loss)
|
|
Other Current Assets/
(Other Accrued Liabilities)
|
|||||
Foreign Exchange Contracts
|
|
Location
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|||
Contracts not designated as hedging instruments
|
|
Other income (expense), net
|
|
(198
|
)
|
|
(382
|
)
|
|
(382
|
)
|
Copper Derivatives
|
|
|
|
|
|
|
|
|
|||
Contracts not designated as hedging instruments
|
|
Other income (expense), net
|
|
474
|
|
|
578
|
|
|
1,534
|
|
Interest Rate Swap
|
|
|
|
|
|
|
|
|
|||
Contracts designated as hedging instruments
|
|
Other comprehensive income (loss)
|
|
100
|
|
|
(415
|
)
|
|
(638
|
)
|
(Dollars in thousands)
|
September 30, 2018
|
|
December 31, 2017
|
||||
Raw materials
|
$
|
57,928
|
|
|
$
|
43,092
|
|
Work-in-process
|
29,884
|
|
|
28,133
|
|
||
Finished goods
|
38,073
|
|
|
41,332
|
|
||
Total inventories
|
$
|
125,885
|
|
|
$
|
112,557
|
|
(Dollars in thousands)
|
July 6, 2018
|
||
Assets:
|
|
||
Accounts receivable, less allowance for doubtful accounts
|
$
|
2,553
|
|
Inventories
|
2,998
|
|
|
Other current assets
|
154
|
|
|
Property, plant & equipment
|
7,554
|
|
|
Other intangible assets
|
34,120
|
|
|
Goodwill
|
32,305
|
|
|
Total assets
|
79,684
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
Accounts payable
|
711
|
|
|
Accrued employee benefits and compensation
|
299
|
|
|
Other accrued liabilities
|
103
|
|
|
Total liabilities
|
1,113
|
|
|
|
|
|
|
Fair value of net assets acquired
|
$
|
78,571
|
|
(Dollars in thousands)
|
Three Months Ended September 30, 2018 (unaudited)
|
|
Nine Months Ended September 30, 2018 (unaudited)
|
|
Three Months Ended September 30, 2017 (unaudited)
|
|
Nine Months Ended September 30, 2017 (unaudited)
|
||||||||
Net sales
|
$
|
226,863
|
|
|
$
|
670,936
|
|
|
$
|
219,707
|
|
|
$
|
650,806
|
|
Net income
|
20,765
|
|
|
63,204
|
|
|
26,174
|
|
|
74,483
|
|
(Dollars in thousands)
|
August 28, 2018
|
||
Land
|
$
|
6,104
|
|
Buildings
|
8,401
|
|
|
Machinery and equipment
|
18,616
|
|
|
Equipment in process
|
12,633
|
|
|
Total property, plant and equipment
|
$
|
45,754
|
|
(Dollars and accompanying footnotes in thousands)
|
Foreign currency translation adjustments
|
|
Funded status of pension plans and other postretirement benefits
(1)
|
|
Unrealized gain (loss) on derivative instruments
(2)
|
|
Total
|
||||||||
Beginning Balance December 31, 2017
|
$
|
(17,983
|
)
|
|
$
|
(47,198
|
)
|
|
$
|
26
|
|
|
$
|
(65,155
|
)
|
Other comprehensive income (loss) before reclassifications
|
(9,901
|
)
|
|
—
|
|
|
1,308
|
|
|
(8,593
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
131
|
|
|
—
|
|
|
131
|
|
||||
Net current-period other comprehensive income (loss)
|
(9,901
|
)
|
|
131
|
|
|
1,308
|
|
|
(8,462
|
)
|
||||
Ending Balance September 30, 2018
|
$
|
(27,884
|
)
|
|
$
|
(47,067
|
)
|
|
$
|
1,334
|
|
|
$
|
(73,617
|
)
|
|
|
|
|
|
|
|
|
||||||||
Beginning Balance December 31, 2016
|
$
|
(46,446
|
)
|
|
$
|
(45,816
|
)
|
|
$
|
—
|
|
|
$
|
(92,262
|
)
|
Other comprehensive income (loss) before reclassifications
|
23,136
|
|
|
—
|
|
|
(487
|
)
|
|
22,649
|
|
||||
Actuarial net gain incurred in the fiscal year
|
—
|
|
|
35
|
|
|
—
|
|
|
35
|
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
36
|
|
|
222
|
|
|
258
|
|
||||
Net current-period other comprehensive income (loss)
|
23,136
|
|
|
71
|
|
|
(265
|
)
|
|
22,942
|
|
||||
Ending Balance September 30, 2017
|
$
|
(23,310
|
)
|
|
$
|
(45,745
|
)
|
|
$
|
(265
|
)
|
|
$
|
(69,320
|
)
|
(Dollars
and shares
in thousands,
except per share amounts)
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
September 30, 2018
|
|
September 30, 2017
|
|
September 30, 2018
|
|
September 30, 2017
|
|||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
19,734
|
|
|
$
|
25,532
|
|
|
$
|
63,199
|
|
|
$
|
73,460
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|||||||
Weighted-average shares outstanding - basic
|
18,403
|
|
|
18,181
|
|
|
18,360
|
|
|
18,126
|
|
||||
Effect of dilutive shares
|
275
|
|
|
407
|
|
|
289
|
|
|
377
|
|
||||
Weighted-average shares outstanding - diluted
|
18,678
|
|
|
18,588
|
|
|
18,649
|
|
|
18,503
|
|
||||
Basic earnings per share
|
$
|
1.07
|
|
|
$
|
1.40
|
|
|
$
|
3.44
|
|
|
$
|
4.05
|
|
Diluted earnings per share
|
$
|
1.06
|
|
|
$
|
1.37
|
|
|
$
|
3.39
|
|
|
$
|
3.97
|
|
|
September 17, 2018
|
|
February 8, 2018
|
|
February 2, 2017
|
Expected volatility
|
36.6%
|
|
34.8%
|
|
33.6%
|
Expected term (in years)
|
3.0
|
|
3.0
|
|
3.0
|
Risk-free interest rate
|
2.85%
|
|
2.28%
|
|
1.38%
|
|
Performance-Based
Restricted Stock Units
|
|
Awards outstanding at December 31, 2017
|
169,202
|
|
Awards granted
|
75,760
|
|
Stock issued
|
(81,230
|
)
|
Awards forfeited
|
(18,599
|
)
|
Awards outstanding at September 30, 2018
|
145,133
|
|
|
Time-Based
Restricted Stock Units
|
|
Awards outstanding at December 31, 2017
|
173,331
|
|
Awards granted
|
44,610
|
|
Stock issued
|
(79,375
|
)
|
Awards forfeited
|
(16,302
|
)
|
Awards outstanding at September 30, 2018
|
122,264
|
|
|
Deferred Stock Units
|
|
Awards outstanding at December 31, 2017
|
9,250
|
|
Awards granted
|
8,400
|
|
Stock issued
|
(9,250
|
)
|
Awards outstanding at September 30, 2018
|
8,400
|
|
|
Options Outstanding
|
|
Weighted- Average Exercise Price Per Share
|
|
Weighted-Average Remaining Contractual Life in Years
|
|
Aggregate Intrinsic Value
|
|||||
Outstanding at December 31, 2017
|
33,283
|
|
|
$
|
36.40
|
|
|
2.2
|
|
$
|
4,177,655
|
|
Options exercised
|
(19,183
|
)
|
|
$
|
38.26
|
|
|
|
|
|
||
Options forfeited
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Options outstanding, vested and exercisable at September 30, 2018
|
14,100
|
|
|
$
|
33.88
|
|
|
2.5
|
|
$
|
1,599,534
|
|
|
Pension Benefits
|
|
Retirement Health and
Life Insurance Benefits
|
||||||||||||||||||||||||||||
(Dollars in thousands)
|
Three Months Ended
|
|
Nine Months Ended
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||||||||
September 30,
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
|||||||||||||||||||||||||
Change in benefit obligation:
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17
|
|
|
$
|
12
|
|
|
$
|
55
|
|
|
$
|
68
|
|
Interest cost
|
1,692
|
|
|
1,837
|
|
|
5,064
|
|
|
5,519
|
|
|
16
|
|
|
20
|
|
|
47
|
|
|
51
|
|
||||||||
Expected return of plan assets
|
(2,164
|
)
|
|
(2,302
|
)
|
|
(6,497
|
)
|
|
(6,920
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Amortization of prior service credit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(400
|
)
|
|
(411
|
)
|
|
(1,201
|
)
|
|
(1,191
|
)
|
||||||||
Amortization of net loss (gain)
|
457
|
|
|
445
|
|
|
1,370
|
|
|
1,311
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
(15
|
)
|
||||||||
Net periodic (benefit) cost
|
$
|
(15
|
)
|
|
$
|
(20
|
)
|
|
$
|
(63
|
)
|
|
$
|
(90
|
)
|
|
$
|
(367
|
)
|
|
$
|
(363
|
)
|
|
$
|
(1,099
|
)
|
|
$
|
(1,087
|
)
|
(Dollars in thousands)
|
|
Advanced Connectivity Solutions
|
|
Elastomeric Material Solutions
|
|
Power Electronics Solutions
|
|
Other
|
|
Total
|
||||||||||
Three Months Ended September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales - recognized over time
|
|
$
|
—
|
|
|
$
|
1,790
|
|
|
$
|
54,797
|
|
|
$
|
3,067
|
|
|
$
|
59,654
|
|
Net sales - recognized at a point in time
|
|
71,854
|
|
|
93,998
|
|
|
425
|
|
|
932
|
|
|
167,209
|
|
|||||
Total net sales
|
|
$
|
71,854
|
|
|
$
|
95,788
|
|
|
$
|
55,222
|
|
|
$
|
3,999
|
|
|
$
|
226,863
|
|
Operating income
|
|
$
|
8,451
|
|
|
$
|
15,924
|
|
|
$
|
4,067
|
|
|
$
|
1,200
|
|
|
$
|
29,642
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Three Months Ended September 30, 2017
(1)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales - recognized over time
|
|
$
|
—
|
|
|
$
|
562
|
|
|
$
|
45,752
|
|
|
$
|
4,823
|
|
|
$
|
51,137
|
|
Net sales - recognized at a point in time
|
|
72,713
|
|
|
81,677
|
|
|
657
|
|
|
599
|
|
|
155,646
|
|
|||||
Total net sales
|
|
$
|
72,713
|
|
|
$
|
82,239
|
|
|
$
|
46,409
|
|
|
$
|
5,422
|
|
|
$
|
206,783
|
|
Operating income
|
|
$
|
14,278
|
|
|
$
|
17,727
|
|
|
$
|
5,340
|
|
|
$
|
1,847
|
|
|
$
|
39,192
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Nine Months Ended September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales - recognized over time
|
|
$
|
—
|
|
|
$
|
3,731
|
|
|
$
|
165,248
|
|
|
$
|
12,332
|
|
|
$
|
181,311
|
|
Net sales - recognized at a point in time
|
|
221,685
|
|
|
249,356
|
|
|
1,334
|
|
|
2,463
|
|
|
474,838
|
|
|||||
Total net sales
|
|
$
|
221,685
|
|
|
$
|
253,087
|
|
|
$
|
166,582
|
|
|
$
|
14,795
|
|
|
$
|
656,149
|
|
Operating income
|
|
$
|
26,946
|
|
|
$
|
38,505
|
|
|
$
|
15,328
|
|
|
$
|
5,131
|
|
|
$
|
85,910
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Nine Months Ended September 30, 2017
(1)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales - recognized over time
|
|
$
|
—
|
|
|
$
|
1,644
|
|
|
$
|
131,433
|
|
|
$
|
14,661
|
|
|
$
|
147,738
|
|
Net sales - recognized at a point in time
|
|
225,595
|
|
|
235,029
|
|
|
1,533
|
|
|
2,140
|
|
|
464,297
|
|
|||||
Total net sales
|
|
$
|
225,595
|
|
|
$
|
236,673
|
|
|
$
|
132,966
|
|
|
$
|
16,801
|
|
|
$
|
612,035
|
|
Operating income
|
|
$
|
46,773
|
|
|
$
|
44,451
|
|
|
$
|
13,744
|
|
|
$
|
5,576
|
|
|
$
|
110,544
|
|
(1)
|
Net sales are allocated to countries based on the location of the customer. The table above includes countries with 10% or more of net sales for the periods indicated.
|
(1)
|
Net sales are allocated to countries based on the location of the customer. The table above includes countries with 10% or more of net sales for the periods indicated.
|
Joint Venture
|
Location
|
Operating Segment
|
Fiscal Year-End
|
Rogers INOAC Corporation (RIC)
|
Japan
|
Elastomeric Material Solutions
|
October 31
|
Rogers INOAC Suzhou Corporation (RIS)
|
China
|
Elastomeric Material Solutions
|
December 31
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(Dollars in thousands)
|
September 30, 2018
|
|
September 30, 2017
|
|
September 30, 2018
|
|
September 30, 2017
|
||||||||
Net sales
|
$
|
15,216
|
|
|
$
|
14,020
|
|
|
$
|
43,466
|
|
|
$
|
38,653
|
|
Gross profit
|
$
|
6,119
|
|
|
$
|
5,463
|
|
|
$
|
16,897
|
|
|
$
|
14,832
|
|
Net income
|
$
|
3,284
|
|
|
$
|
2,768
|
|
|
$
|
8,906
|
|
|
$
|
6,718
|
|
(Dollars in thousands)
|
Advanced Connectivity Solutions
|
|
Elastomeric Material Solutions
|
|
Power Electronics Solutions
|
|
Other
|
|
Total
|
||||||||||
December 31, 2017
|
$
|
51,693
|
|
|
$
|
111,575
|
|
|
$
|
71,615
|
|
|
$
|
2,224
|
|
|
$
|
237,107
|
|
Acquisition
|
—
|
|
|
32,305
|
|
|
—
|
|
|
—
|
|
|
32,305
|
|
|||||
Foreign currency translation adjustment
|
—
|
|
|
(631
|
)
|
|
(2,477
|
)
|
|
—
|
|
|
(3,108
|
)
|
|||||
September 30, 2018
|
$
|
51,693
|
|
|
$
|
143,249
|
|
|
$
|
69,138
|
|
|
$
|
2,224
|
|
|
$
|
266,304
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
(Dollars in thousands)
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||||||||
Customer relationships
|
$
|
149,933
|
|
|
$
|
27,985
|
|
|
$
|
121,948
|
|
|
$
|
128,907
|
|
|
$
|
22,514
|
|
|
$
|
106,393
|
|
Technology
|
81,840
|
|
|
36,974
|
|
|
44,866
|
|
|
73,891
|
|
|
33,491
|
|
|
40,400
|
|
||||||
Trademarks and trade names
|
12,024
|
|
|
2,934
|
|
|
9,090
|
|
|
10,213
|
|
|
2,157
|
|
|
8,056
|
|
||||||
Covenants not to compete
|
1,340
|
|
|
200
|
|
|
1,140
|
|
|
1,799
|
|
|
1,108
|
|
|
691
|
|
||||||
Total definite-lived other intangible assets
|
245,137
|
|
|
68,093
|
|
|
177,044
|
|
|
214,810
|
|
|
59,270
|
|
|
155,540
|
|
||||||
Indefinite-lived other intangible asset
|
4,574
|
|
|
—
|
|
|
4,574
|
|
|
4,738
|
|
|
—
|
|
|
4,738
|
|
||||||
Total other intangible assets
|
$
|
249,711
|
|
|
$
|
68,093
|
|
|
$
|
181,618
|
|
|
$
|
219,548
|
|
|
$
|
59,270
|
|
|
$
|
160,278
|
|
Definite-Lived Other Intangible Asset Class
|
|
Weighted Average Remaining Amortization Period
|
Customer relationships
|
|
7.7
|
Technology
|
|
4.4
|
Trademarks and trade names
|
|
5.1
|
Covenants not to compete
|
|
2.3
|
Total definite-lived other intangible assets
|
|
6.7
|
|
Asbestos Claims
|
|
Claims outstanding at December 31, 2017
|
687
|
|
New claims filed
|
194
|
|
Pending claims concluded
|
(163
|
)
|
Claims outstanding at September 30, 2018
|
718
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
(Dollars in thousands)
|
September 30, 2018
|
|
September 30, 2018
|
||||
Shares of capital stock repurchased
|
—
|
|
|
23,138
|
|
||
Value of capital stock repurchased
|
$
|
—
|
|
|
$
|
2,999
|
|
(Dollars in thousands)
|
Severance Related to Headquarters Relocation
|
||
Balance at December 31, 2017
|
$
|
183
|
|
Provisions
|
118
|
|
|
Payments
|
(264
|
)
|
|
Balance at September 30, 2018
|
$
|
37
|
|
(Dollars in thousands)
|
Severance Related to Facility Consolidation
|
||
Balance at December 31, 2017
|
$
|
—
|
|
Provisions
|
395
|
|
|
Payments
|
(14
|
)
|
|
Balance at September 30, 2018
|
$
|
381
|
|
|
September 30, 2018
|
|||||||||||||
(Dollars in thousands)
|
Advanced Connectivity Solutions
|
|
Elastomeric Material Solutions
|
|
Power Electronics Solutions
|
|
Other
|
|
Total
|
|||||
Contract Assets
|
—
|
|
|
725
|
|
|
17,484
|
|
|
2,051
|
|
|
20,260
|
|
Condensed Consolidated Statements of Operations:
|
Three Months Ended
|
||||||||||
September 30, 2018
|
|
|
|
September 30, 2018
|
|||||||
(In thousands, except per share amounts)
|
Under ASC 605
|
|
Impact of Adoption
|
|
Under ASC 606
|
||||||
Net sales
|
$
|
228,536
|
|
|
$
|
(1,673
|
)
|
|
$
|
226,863
|
|
Cost of sales
|
148,870
|
|
|
(1,137
|
)
|
|
147,733
|
|
|||
Income tax expense
|
9,020
|
|
|
(150
|
)
|
|
8,870
|
|
|||
Net income
|
20,120
|
|
|
(386
|
)
|
|
19,734
|
|
|||
|
|
|
|
|
|
||||||
Basic earnings per share
|
$
|
1.09
|
|
|
$
|
(0.02
|
)
|
|
$
|
1.07
|
|
Diluted earnings per share
|
$
|
1.08
|
|
|
$
|
(0.02
|
)
|
|
$
|
1.06
|
|
Condensed Consolidated Statements of Operations:
|
Nine Months Ended
|
||||||||||
September 30, 2018
|
|
|
|
September 30, 2018
|
|||||||
(In thousands, except per share amounts)
|
Under ASC 605
|
|
Impact of Adoption
|
|
Under ASC 606
|
||||||
Net sales
|
$
|
653,988
|
|
|
$
|
2,161
|
|
|
$
|
656,149
|
|
Cost of sales
|
422,272
|
|
|
1,469
|
|
|
423,741
|
|
|||
Income tax expense
|
21,831
|
|
|
183
|
|
|
22,014
|
|
|||
Net income
|
62,690
|
|
|
509
|
|
|
63,199
|
|
|||
|
|
|
|
|
|
||||||
Basic earnings per share
|
$
|
3.41
|
|
|
$
|
0.03
|
|
|
$
|
3.44
|
|
Diluted earnings per share
|
$
|
3.36
|
|
|
$
|
0.03
|
|
|
$
|
3.39
|
|
|
Nine Months Ended
|
||||||||||
Condensed Consolidated Statements of Cash Flows:
|
September 30, 2018
|
|
|
|
September 30, 2018
|
||||||
(Dollars in thousands)
|
Under ASC 605
|
|
Impact of Adoption
|
|
Under ASC 606
|
||||||
Cash provided by operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
62,690
|
|
|
$
|
509
|
|
|
$
|
63,199
|
|
Deferred income taxes
|
(200
|
)
|
|
183
|
|
|
(17
|
)
|
|||
Contract assets
|
—
|
|
|
(20,260
|
)
|
|
(20,260
|
)
|
|||
Inventories
|
(25,617
|
)
|
|
13,777
|
|
|
(11,840
|
)
|
|||
Other, net
|
(2,575
|
)
|
|
5,791
|
|
|
3,216
|
|
|||
Net cash provided by operating activities
|
33,424
|
|
|
—
|
|
|
33,424
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(Dollars in thousands)
|
September 30, 2018
|
|
September 30, 2017
|
|
September 30, 2018
|
|
September 30, 2017
|
||||||||
Gain from antitrust litigation settlement
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3,591
|
)
|
|
$
|
—
|
|
Loss (gain) on sale of long-lived assets
|
222
|
|
|
(4,387
|
)
|
|
(161
|
)
|
|
(5,329
|
)
|
||||
Lease income
|
(237
|
)
|
|
—
|
|
|
(237
|
)
|
|
—
|
|
||||
Depreciation on leased assets
|
878
|
|
|
—
|
|
|
878
|
|
|
—
|
|
||||
|
$
|
863
|
|
|
$
|
(4,387
|
)
|
|
$
|
(3,111
|
)
|
|
$
|
(5,329
|
)
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
failure to capitalize on, volatility within, or other adverse changes with respect to the Company’s growth drivers, including advanced mobility and advanced connectivity, such as delays in adoption or implementation of new technologies;
|
•
|
uncertain business, economic and political conditions in the United States and abroad, particularly in China, South Korea, Germany, Hungary and Belgium, where we maintain significant manufacturing, sales or administrative operations;
|
•
|
changes in trade policy, tariff regulation or other trade restrictions, including between the United States and China;
|
•
|
fluctuations in foreign currency exchange rates;
|
•
|
our ability to develop innovative products and have them incorporated into end-user products and systems;
|
•
|
the extent to which end-user products and systems incorporating our products achieve commercial success;
|
•
|
the ability of our sole or limited source suppliers to deliver certain key raw materials, including commodities, to us in a timely or cost-effective manner;
|
•
|
intense global competition affecting both our existing products and products currently under development;
|
•
|
failure to realize, or delays in the realization of, anticipated benefits of acquisitions and divestitures due to, among other things, the existence of unknown liabilities or difficulty integrating acquired businesses;
|
•
|
our ability to attract and retain management and skilled technical personnel;
|
•
|
our ability to protect our proprietary technology from infringement by third parties and/or allegations that our technology infringes third party rights;
|
•
|
changes in effective tax rates or tax laws and regulations in the jurisdictions in which we operate;
|
•
|
failure to comply with financial and restrictive covenants in our credit agreement or restrictions on our operational and financial flexibility due to such covenants;
|
•
|
the outcome of ongoing and future litigation, including our asbestos-related product liability litigation;
|
•
|
changes in environmental laws and regulations applicable to our business; and
|
•
|
disruptions in, or breaches of, our information technology systems.
|
•
|
Our net sales increase in the
third quarter of 2018
was attributable to increases in net sales in our EMS and PES strategic operating segments.
The
increase
in net sales was driven in part by net sales of
$6.9 million
, or
3.3%
, related to our acquisition of Griswold. Net sales were favorably impacted by higher demand in electric and hybrid electric vehicles applications in the PES operating segment and higher demand in automotive, portable electronics and general industrial applications in the EMS operating segment, partially offset by lower demand in wireless 4G LTE and automotive radar applications in the ACS operating segment. The adoption of new accounting guidance for revenue recognition unfavorably impacted net sales in the
third quarter of 2018
by
$1.7 million
, or 0.8%. See Note 19, “Revenue from Contracts with Customers,” as well as “Segment Sales and Operations” for further discussion. Net sales were also favorably impacted by
$0.8 million
, or
0.4%
, due to the appreciation in value of the Euro and Renminbi relative to the U.S. dollar.
|
•
|
Our gross margin
decreased
approximately
480
basis points in the
third quarter of 2018
.
Our gross margin
decreased
to
34.9%
in the
third quarter of 2018
as a result of strategic investments in capacity optimization and infrastructure to support future growth initiatives, increased costs for raw materials and facility consolidation, unfavorable absorption of fixed costs, as well as new product launch.
|
•
|
Our operating income
decreased
to
$29.6 million
in the
third quarter of 2018
, as compared to
$39.2 million
in the
third quarter of 2017
, leading to a
decrease
in operating margin of approximately
590
basis points.
This
decrease
resulted primarily from a decrease in gross margin and a non-recurring
$4.4 million
gain on the sale of a facility in Belgium in the third quarter of 2017. This was furthered by a
$0.9 million
increase
in selling, general & administrative (SG&A) expenses and a
$0.2 million
increase
in research and development (R&D) expenses. The
increase
in SG&A expenses was driven by increases in acquisition and integration expenses as well as other intangible assets amortization related to Griswold. SG&A expenses decreased as a percentage of net sales from
18.9%
in the
third quarter of 2017
to
17.6%
in the
third quarter of 2018
.
|
•
|
We are an innovation company, and in the
third quarter of 2018
we continued our investment in R&D,
with R&D expenses comprising
3.4%
of our quarterly net sales. R&D expenses were
$7.6 million
in the
third quarter of 2018
, which was
an increase
of
$0.2 million
, a decrease of approximately
20
basis points as a percentage of net sales, from the
third quarter of 2017
. We have made concerted efforts to realign our R&D organization to better fit the future direction of our Company, including dedicating resources to focus on current product extensions and enhancements to meet our expected short-term and long-term technology needs.
|
•
|
We acquired Griswold in July 2018, as we continue to execute on our synergistic acquisition strategy.
Acquisitions are a core part of our growth strategy, and the Griswold acquisition extends the product portfolio and technology capabilities of our EMS operating segment. Griswold is a leading manufacturer of a wide range of high-performance engineered cellular elastomer and microcellular polyurethane products and solutions across the automotive, transportation, medical, office products, printing and electronics industries. We financed our acquisition of Griswold with
$82.5 million
in borrowings under our revolving credit facility. As a result, borrowings under our revolving credit facility increased in the third quarter of
2018
.
|
•
|
In preparation for expected demand in advanced connectivity and advanced mobility, we acquired a production facility and related machinery and equipment from Isola in August 2018.
We intend to use the purchased assets for capacity expansion within our ACS operating segment in contemplation of expected future demand from our 5G customers. We financed the asset acquisition with
$43.4 million
in cash on hand.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
September 30, 2018
|
|
September 30, 2017
|
|
September 30, 2018
|
|
September 30, 2017
|
||||
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Gross margin
|
34.9
|
%
|
|
39.7
|
%
|
|
35.4
|
%
|
|
39.7
|
%
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative expenses
|
17.6
|
%
|
|
18.9
|
%
|
|
18.8
|
%
|
|
18.6
|
%
|
Research and development expenses
|
3.4
|
%
|
|
3.6
|
%
|
|
3.7
|
%
|
|
3.5
|
%
|
Restructuring and impairment charges
|
0.5
|
%
|
|
0.5
|
%
|
|
0.3
|
%
|
|
0.5
|
%
|
Other operating (income) expense, net
|
0.4
|
%
|
|
(2.1
|
)%
|
|
(0.5
|
)%
|
|
(0.9
|
)%
|
Operating income
|
13.1
|
%
|
|
19.0
|
%
|
|
13.1
|
%
|
|
18.1
|
%
|
|
|
|
|
|
|
|
|
||||
Equity income in unconsolidated joint ventures
|
0.7
|
%
|
|
0.7
|
%
|
|
0.7
|
%
|
|
0.5
|
%
|
Other income (expense), net
|
(0.3
|
)%
|
|
1.0
|
%
|
|
(0.1
|
)%
|
|
0.6
|
%
|
Interest expense, net
|
(0.9
|
)%
|
|
(0.8
|
)%
|
|
(0.7
|
)%
|
|
(0.8
|
)%
|
Income before income tax expense
|
12.6
|
%
|
|
19.8
|
%
|
|
13.0
|
%
|
|
18.4
|
%
|
|
|
|
|
|
|
|
|
||||
Income tax expense
|
3.9
|
%
|
|
7.4
|
%
|
|
3.4
|
%
|
|
6.4
|
%
|
|
|
|
|
|
|
|
|
||||
Net income
|
8.7
|
%
|
|
12.3
|
%
|
|
9.6
|
%
|
|
12.0
|
%
|
Net Sales and Gross Margin
|
||||||||||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||
(Dollars in thousands)
|
|
September 30, 2018
|
|
September 30, 2017
|
|
Percent Change
|
|
September 30, 2018
|
|
September 30, 2017
|
|
Percent Change
|
||||||||
Net sales
|
|
$
|
226,863
|
|
|
$
|
206,783
|
|
|
9.7%
|
|
$
|
656,149
|
|
|
$
|
612,035
|
|
|
7.2%
|
Gross margin
|
|
34.9
|
%
|
|
39.7
|
%
|
|
|
|
35.4
|
%
|
|
39.7
|
%
|
|
|
Interest Expense, Net
|
||||||||||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||
(Dollars in thousands)
|
|
September 30, 2018
|
|
September 30, 2017
|
|
Percent Change
|
|
September 30, 2018
|
|
September 30, 2017
|
|
Percent Change
|
||||||||
Interest expense, net
|
|
$
|
(2,000
|
)
|
|
$
|
(1,639
|
)
|
|
22.0%
|
|
$
|
(4,503
|
)
|
|
$
|
(4,834
|
)
|
|
(6.8)%
|
Income Taxes
|
||||||||||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||
(Dollars in thousands)
|
|
September 30, 2018
|
|
September 30, 2017
|
|
Percent Change
|
|
September 30, 2018
|
|
September 30, 2017
|
|
Percent Change
|
||||||||
Income tax expense
|
|
$
|
8,870
|
|
|
$
|
15,396
|
|
|
(42.4)%
|
|
$
|
22,014
|
|
|
$
|
38,979
|
|
|
(43.5)%
|
Effective tax rate
|
|
31.0
|
%
|
|
37.6
|
%
|
|
|
|
25.8
|
%
|
|
34.6
|
%
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(Dollars in thousands)
|
September 30, 2018
|
|
September 30, 2017
|
|
September 30, 2018
|
|
September 30, 2017
|
||||||||
Net sales
|
$
|
71,854
|
|
|
$
|
72,713
|
|
|
$
|
221,685
|
|
|
$
|
225,595
|
|
Operating income
|
$
|
8,451
|
|
|
$
|
14,278
|
|
|
$
|
26,946
|
|
|
$
|
46,773
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(Dollars in thousands)
|
September 30, 2018
|
|
September 30, 2017
|
|
September 30, 2018
|
|
September 30, 2017
|
||||||||
Net sales
|
$
|
95,788
|
|
|
$
|
82,239
|
|
|
$
|
253,087
|
|
|
$
|
236,673
|
|
Operating income
|
$
|
15,924
|
|
|
$
|
17,727
|
|
|
$
|
38,505
|
|
|
$
|
44,451
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(Dollars in thousands)
|
September 30, 2018
|
|
September 30, 2017
|
|
September 30, 2018
|
|
September 30, 2017
|
||||||||
Net sales
|
$
|
55,222
|
|
|
$
|
46,409
|
|
|
$
|
166,582
|
|
|
$
|
132,966
|
|
Operating income
|
$
|
4,067
|
|
|
$
|
5,340
|
|
|
$
|
15,328
|
|
|
$
|
13,744
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(Dollars in thousands)
|
September 30, 2018
|
|
September 30, 2017
|
|
September 30, 2018
|
|
September 30, 2017
|
||||||||
Net sales
|
$
|
3,999
|
|
|
$
|
5,422
|
|
|
$
|
14,795
|
|
|
$
|
16,801
|
|
Operating income
|
$
|
1,200
|
|
|
$
|
1,847
|
|
|
$
|
5,131
|
|
|
$
|
5,576
|
|
(Dollars in thousands
)
|
September 30, 2018
|
|
December 31, 2017
|
||||
Key Balance Sheet Accounts:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
149,556
|
|
|
$
|
181,159
|
|
Accounts receivable, net
|
$
|
155,706
|
|
|
$
|
140,562
|
|
Contract assets
|
$
|
20,260
|
|
|
$
|
—
|
|
Inventories
|
$
|
125,885
|
|
|
$
|
112,557
|
|
Borrowings under revolving credit facility
|
$
|
233,482
|
|
|
$
|
130,982
|
|
(Dollars in thousands)
|
September 30, 2018
|
|
December 31, 2017
|
||||
United States
|
$
|
42,175
|
|
|
$
|
35,653
|
|
Europe
|
69,750
|
|
|
41,307
|
|
||
Asia
|
37,631
|
|
|
104,199
|
|
||
Total cash and cash equivalents
|
$
|
149,556
|
|
|
$
|
181,159
|
|
•
|
Accounts receivable
increased
10.8%
to
$155.7 million
as of September 30, 2018
, from
$140.6 million
at
December 31, 2017
. The
increase
from year-end was primarily due to higher net sales at the end of the
third quarter of 2018
compared to at the end of the
2017
.
|
•
|
We recorded contract assets of
$20.3 million
as of September 30, 2018
related to the adoption of ASU 2014-09. See further discussion in Note 19, “Revenue from Contracts with Customers” to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q.
|
•
|
Inventory
increased
11.8%
to
$125.9 million
as of
September 30, 2018
, from
$112.6 million
at
December 31, 2017
, as a result of our acquisition of Griswold, inventory buildup to meet future demand in anticipation of long supply lead times, supplier transition, safety stock replenishment and raw material increases, partially offset by the impact from the adoption of new accounting guidance for revenue recognition. See discussion in Note 19, “Revenue from Contracts with Customers.”
|
•
|
Accrued employee benefits and compensation
decreased
to
$27.6 million
as of September 30, 2018
, from
$39.4 million
at
December 31, 2017
. This
decrease
is primarily due to incentive compensation payouts of $18.2 million that occurred during 2018, partially offset by $5.2 million of accruals for projected incentive compensation payouts for the current performance year.
|
•
|
Goodwill increased 12.3% to
$266.3 million
as of September 30, 2018
, from
$237.1 million
at
December 31, 2017
. The increase is primarily due to the acquisition of Griswold in July 2018.
|
•
|
Other intangible assets, net of amortization increased 13.3% to
$181.6 million
as of September 30, 2018
, from
$160.3 million
at
December 31, 2017
. This overall increase is primarily due to the acquisition of Griswold in July 2018.
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
(Dollars in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
||||||
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs
|
||||||
March 1, 2018 to March 31, 2018
|
|
23,138
|
|
|
$
|
129.62
|
|
|
23,138
|
|
|
$
|
49,013
|
|
July 1, 2018 to July 31, 2018
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
49,013
|
|
August 1, 2018 to August 31, 2018
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
49,013
|
|
September 1, 2018 to September 30, 2018
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
49,013
|
|
ROGERS CORPORATION
(Registrant)
|
/s/ Michael M. Ludwig
|
|
|
Michael M. Ludwig
|
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
|
|
Dated: November 1, 2018
|
|
|
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