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Rogers (ROG) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Jul 28, 2026

Source: earnings call transcript

Executive summary

Rogers Corporation Q2 FY26 — Solid Progress with Accelerating Growth and Profitability

Rogers Corporation delivered solid Q2 FY26 results, exceeding revenue expectations and achieving significant year-over-year profitability improvements, driven by commercial initiatives and market share gains. Despite short-term headwinds from supply chain issues and a facility event impacting Q2 EPS, the company projects continued momentum into Q3 with accelerating top-line growth and further margin expansion. Management is actively pursuing new product opportunities in AI/data centers and EV, with an upcoming Analyst Day to detail strategic plans and long-term financial targets.

Highlights

5

  • Sales of $216.8 million, up 6.9% year-over-year and above the midpoint of guidance.

  • Adjusted EBITDA increased to $38 million or 17.3% of sales, representing a 550 basis point improvement year-over-year.

  • Adjusted EPS of $0.92, a significant 171% increase from the second quarter of 2025.

  • Q3 sales guidance of $233 million to $243 million, with the midpoint reflecting a 10% year-over-year increase across all end markets.

  • Q3 Adjusted EBITDA margins projected to reach 20%, an increase of 250 basis points year-over-year.

Concerns

3

  • Adjusted EPS of $0.92 was below the midpoint of guidance due to supply chain headwinds, a onetime facility event, and higher operating expenses, with a cumulative impact of over $0.10 per share.

  • Gross margin improvement in Q3 guidance is modest (20 bps YoY) due to underutilization during the China factory ramp and increased commodity costs.

  • Defense sales were lower in Q2 due to normal variability in customer ordering patterns.

Guidance & targets

CategoryTargetConfidence
Q3 Revenue
$233 million to $243 million
high materiality
High
Q3 Gross Margin
33.2% to 34.2%
medium materiality
High
Q3 Adjusted EPS
$1.10 to $1.30
high materiality
High
Q3 Adjusted EBITDA
$44 million to $50 million
high materiality
High
Q3 Adjusted EBITDA Margin
19.7%
high materiality
High
Full-year 2026 Capital Expenditures
$30 million to $35 million
medium materiality
High
Non-GAAP Full-year Tax Rate
approximately 32%
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Industrial
Performance driven by continued improvement in AMS general industrial demand in both the United States and Europe, led by Silicon Solutions experiencing healthy demand and gaining market share. Mass transit (rail applications in the United States) was also strong.
% of year-to-date sales: 37%
—high single-digit——
Automotive
Revenue supported by higher sales of ADAS and ICE vehicle applications. Sales into the EV market were flat versus the prior year, with improved power substrate revenues offset by lower orders of materials for EV batteries. Sequential EV and HEV battery sales improved, with stronger second half EV sales expected due to new program ramps and recent design wins.
% of sales: 25%
—low single-digit rate——
Electronics and Communications
Strongest performing end market during the quarter, with revenue increasing from higher sales into the wireless infrastructure and smartphone markets. Smartphone sales increased versus Q2 '25 from a favorable mix of higher-end devices and continued benefits from customer share gains.
% of sales: 18%
—double-digit rate——
Aerospace and Defense
Defense sales were lower due to normal variability in customer ordering patterns and were partly offset by improved commercial aerospace sales in the AMS business. Defense sales are expected to improve significantly in the second half of the year, while commercial aerospace demand remains strong.
% of sales: 15%
—decreased slightly——

Product announcements

ProductTypeDetails
Microchannel cooler technologyupdate
High-frequency circuit materialsupdate

Capital programs

Ceramic China factory ramp underway

Underutilization during the ramp of the Ceramic China factory is causing a $1 million headwind to EBITDA in Q2 and an 85 bps headwind to Q3 gross margin. The company is starting to build momentum but it will take time to ramp.

Risks & headwinds

Supply chain headwinds (raw material shortages, logistics delays) ongoing issue

more than $0.10 of earnings per share (cumulative impact with facility event and opex)

Mitigation:Managing supply contracts, evaluating copper program, engineering initiatives to reduce consumption, and passing on incremental costs to customers (with a lag).

Onetime facility event (small fire) resolved

more than $0.10 of earnings per share (cumulative impact with supply chain and opex)

Mitigation:The issue has been resolved, with no safety issues for employees.

Underutilization during China factory ramp will take time to ramp there

about 85 bps of a headwind in the third quarter (on gross margin)

Mitigation:Starting to build a little bit of momentum.

Increased commodity costs continuing into the third quarter

pressure of the commodity costs (on gross margins)

Mitigation:Managing supply contracts, evaluating copper program, and passing on incremental costs to customers (with a lag).

Higher operating expenses Q2 FY26

more than $0.10 of earnings per share (cumulative impact with supply chain and facility event)

Mitigation:Q3 adjusted operating expenses are forecasted to remain approximately flat sequentially.

Tax challenges FY26

Non-GAAP full year tax rate of approximately 32%

Mitigation:Working towards an improvement in tax performance, addressing valuation allowances in some jurisdictions.

What to watch in Q3 FY26

Resolution of supply chain issues

next quarter
Current Raw material shortages (silver, copper) and logistics delays (12+ weeks transit) ongoing.
Target Improvement in raw material availability and reduced transit times.

Why it matters

Supply chain issues impacted Q2 EPS by >$0.10/share and continue to pressure Q3 gross margins; resolution is key for profitability.

On the supply side, we still have some raw material -- experiencing some raw material shortages as well as, I would say, logistics or from a freight perspective, it's just taking longer due to the situation in the Middle East... On the raw material side, there is still -- from a silver and copper perspective, we still see some tightness in the market. However, we see it light at the end of the tunnel.

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Q&A highlights

Asked for elaboration on the supply chain challenges and the one-time facility event that impacted Q2 EPS, and if these issues are resolved for Q3.

Ali El-Haj explained supply chain issues include raw material shortages (silver, copper) and extended logistics (12+ weeks transit from 4-6 weeks) due to the Middle East situation, which are ongoing. The one-time facility event was a small fire that suspended manufacturing for a few days, now resolved with no safety issues.

“On the supply side, we still have some raw material -- experiencing some raw material shortages as well as, I would say, logistics or from a freight perspective, it's just taking longer due to the situation in the Middle East. So typically, from transit time from 4 to 6 weeks in the past, now it's taken somewhere between over 12 weeks in some instances. That's one of the issues. On the onetime event, we experienced a small fire in one of our plants that actually ended up suspending manufacturing for a few days.”

asked by Daniel Moore · answered by Ali El-Haj

2 min read 6 chapters

Detailed narrative

Q2 Performance Highlights

Rogers Corporation reported Q2 FY26 sales of $216.8 million, a 6.9% increase year-over-year, surpassing the midpoint of guidance. Adjusted EBITDA reached $38 million (17.3% of sales), marking a 550 basis point improvement from the prior year. Adjusted EPS significantly increased by 171% to $0.92, although it fell below the midpoint of guidance due to supply chain issues and a one-time facility event.

End Market Dynamics

Industrial remained the largest end market at 37% of year-to-date sales, growing high single-digits YoY, driven by Silicon Solutions and mass transit. Automotive sales grew low single-digits YoY (25% of sales), with EV sales flat but expected to strengthen in H2 due to new program ramps and design wins. Electronics and Communications (18% of sales) saw double-digit growth from wireless infrastructure and smartphones. Aerospace and Defense (15% of sales) decreased slightly due to defense ordering variability but is expected to improve significantly in H2.

New Product Development & AI Opportunities

The company is advancing microchannel cooler technology for high-power AI and data center applications, with multiple customer evaluations providing positive feedback on differentiated performance. Significant progress is also noted with high-frequency circuit materials for data centers, actively sampling with prospective customers and receiving positive initial feedback for next-generation AI server architectures.

Operational Headwinds and Mitigation

Q2 adjusted EPS was impacted by supply chain headwinds (raw material shortages, extended logistics due to Middle East situation) and a one-time small fire at a plant, totaling over $0.10 per share. While the facility issue is resolved, supply chain challenges persist. Management is working to mitigate commodity cost pressures through supply contracts, engineering initiatives to reduce consumption, and passing on incremental costs to customers where necessary, albeit with a lag.

Capital Allocation and M&A Strategy

Rogers ended Q2 with over $211 million in cash and short-term investments, up $15.6 million sequentially, and generated $18.3 million in free cash flow. The company repurchased $3 million of shares in Q2 and maintains a strong balance sheet for strategic flexibility. Management is actively evaluating M&A opportunities, noting that current market conditions may present more favorable valuations and strategic fits compared to previous years.

Analyst and Investor Day

Rogers Corporation will host an Analyst and Investor Day on September 30, 2026, in New York City. The event will provide a comprehensive update on strategy, growth opportunities, innovation initiatives, capital allocation priorities, long-term financial planning, and detailed insights into AI data centers and vehicle electrification opportunities.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.