ROGERS CORP 10-Q

Item 1. Financial Statements ROGERS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars and shares in millions, except per share amounts) Three Months Ended March 31, 2025 March 31, 2024 Net sales $ 190.5 $ 213.4 Cost of sales 133.5 145.2 Gross margin 57.0 68.2 Selling, general and administrative expenses 44.5 47.5 Research and development expenses 7.1 8.9 Restructuring and impairment charges 5.9 0.1 Other operating (income) expense, net ( 0.2 ) — Operating income (loss) ( 0.3 ) 11.7 Equity income in unconsolidated joint ventures — 0.3 Other income (expense), net ( 1.6 ) 0.4 Interest income (expense), net 0.3 ( 0.8 ) Income (loss) before income taxes ( 1.6 ) 11.6 Income tax (benefit) expense ( 0.2 ) 3.8 Net income (loss) $ ( 1.4 ) $ 7.8 Basic earnings (loss) per share $ ( 0.08 ) $ 0.42 Diluted earnings (loss) per share $ ( 0.08 ) $ 0.42 Shares used in computing: Basic earnings (loss) per share 18.5 18.6 Diluted earnings (loss) per share 18.5 18.7 The accompanying notes are an integral part of the condensed consolidated financial statements. 4 ROGERS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (Dollars in millions) Three Months Ended March 31, 2025 March 31, 2024 Net income (loss) $ ( 1.4 ) $ 7.8 Foreign currency translation adjustment 17.6 ( 9.2 ) Pension and other postretirement benefits: Amortization of loss, net of tax (Note 2) 0.1 0.1 Other comprehensive income (loss) 17.7 ( 9.1 ) Comprehensive income (loss) $ 16.3 $ ( 1.3 ) The accompanying notes are an integral part of the condensed consolidated financial statements. 5 ROGERS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited) (Dollars and shares in millions, except par value ) March 31, 2025 December 31, 2024 Assets Current assets Cash and cash equivalents $ 175.6 $ 159.8 Accounts receivable, net 139.2 135.3 Contract assets 25.0 23.7 Inventories, net 143.0 142.3 Asbestos-related insurance recoverables, current portion 4.3 4.3 Other current assets 15.8 28.5 Total current assets 502.9 493.9 Property, plant and equipment, net of accumulated depreciation of $ 403.6 and $ 390.8 375.5 365.1 Operating lease right-of-use assets 23.4 24.1 Goodwill 363.4 357.6 Other intangible assets, net of amortization 109.6 110.3 Asbestos-related insurance recoverables, non-current portion 48.0 48.0 Deferred income taxes 66.4 61.5 Other long-term assets 21.2 20.6 Total assets $ 1,510.4 $ 1,481.1 Liabilities and Shareholders’ Equity Current liabilities Accounts payable $ 50.9 $ 48.1 Accrued employee benefits and compensation 41.3 41.5 Accrued income taxes payable 5.6 7.7 Operating lease obligations, current portion 4.1 4.0 Asbestos-related liabilities, current portion 5.4 5.4 Other accrued liabilities 20.3 16.8 Total current liabilities 127.6 123.5 Operating lease obligations, non-current portion 20.1 20.6 Asbestos-related liabilities, non-current portion 52.0 52.1 Non-current income tax 5.8 5.7 Deferred income taxes 18.3 18.0 Other long-term liabilities 16.3 9.6 Commitments and contingencies (Note 5 and Note 9) Shareholders’ equity Capital stock - $ 1 par value; 50.0 authorized shares; 18.5 and 18.5 shares issued and outstanding 18.5 18.5 Additional paid-in capital 149.7 147.3 Retained earnings 1,179.7 1,181.1 Accumulated other comprehensive loss ( 77.6 ) ( 95.3 ) Total shareholders' equity 1,270.3 1,251.6 Total liabilities and shareholders' equity $ 1,510.4 $ 1,481.1 The accompanying notes are an integral part of the condensed consolidated financial statements. 6 ROGERS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited) (Dollars and shares in millions) Three Months Ended March 31, 2025 March 31, 2024 Capital Stock Balance, beginning of period $ 18.5 $ 18.6 Shares issued for vested restricted stock units, net of shares withheld for taxes — 0.1 Shares repurchased — — Balance, end of period 18.5 18.7 Additional Paid-In Capital Balance, beginning of period 147.3 151.8 Shares issued for vested restricted stock units, net of shares withheld for taxes ( 1.2 ) ( 1.2 ) Equity compensation expense 3.6 3.5 Shares repurchased — ( 0.3 ) Balance, end of period 149.7 153.8 Retained Earnings Balance, beginning of period 1,181.1 1,155.0 Net income (loss) ( 1.4 ) 7.8 Balance, end of period 1,179.7 1,162.8 Accumulated Other Comprehensive Loss Balance, beginning of period ( 95.3 ) ( 66.4 ) Other comprehensive income (loss) 17.7 ( 9.1 ) Balance, end of period ( 77.6 ) ( 75.5 ) Total Shareholders’ Equity $ 1,270.3 $ 1,259.8 The accompanying notes are an integral part of the condensed consolidated financial statements. 7 ROGERS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in millions) Three Months Ended March 31, 2025 March 31, 2024 Operating Activities: Net income (loss) $ ( 1.4 ) $ 7.8 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 12.6 11.3 Equity compensation expense 3.6 3.5 Deferred income taxes ( 4.6 ) ( 5.9 ) Equity in undistributed income of unconsolidated joint ventures — ( 0.3 ) Dividends received from unconsolidated joint ventures — 1.2 Other non-cash charges, net — 0.1 Changes in assets and liabilities: Accounts receivable ( 1.9 ) ( 2.8 ) Proceeds from insurance related to operations — 4.1 Contract assets ( 0.6 ) 4.1 Inventories, net 1.3 1.3 Other current assets ( 0.4 ) 0.4 Accounts payable and other accrued expenses 4.2 2.0 Other, net ( 1.1 ) 1.3 Net cash provided by operating activities 11.7 28.1 Investing Activities: Capital expenditures ( 9.6 ) ( 9.4 ) Proceeds from the sale of marketable equity securities 0.2 — Purchases of marketable equity securities ( 0.1 ) — Proceeds from the sale of property, plant and equipment, net 13.4 — Net cash provided by (used in) investing activities 3.9 ( 9.4 ) Financing Activities: Repayment of debt principal and finance lease obligations ( 0.4 ) ( 30.1 ) Payments of taxes related to net share settlement of equity awards ( 1.2 ) ( 1.1 ) Share repurchases — ( 0.3 ) Net cash used in financing activities ( 1.6 ) ( 31.5 ) Effect of exchange rate fluctuations on cash 1.8 ( 2.0 ) Net increase (decrease) in cash and cash equivalents 15.8 ( 14.8 ) Cash and cash equivalents at beginning of period 159.8 131.7 Cash and cash equivalents at end of period $ 175.6 $ 116.9 Supplemental Disclosures: Accrued capital additions $ 5.5 $ 5.4 Cash paid during the year for: Interest, net of amounts capitalized $ 0.3 $ 0.5 Income taxes, net of refunds $ 7.7 $ 3.1 The accompanying notes are an integral part of the condensed consolidated financial statements. 8 ROGERS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1 – Basis of Presentation As used herein, the terms “Company,” “Rogers,” “we,” “us,” “our” and similar terms mean Rogers Corporation and its consolidated subsidiaries, unless the context indicates otherwise. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information. Accordingly, these statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In our opinion, the accompanying condensed consolidated financial statements include all normal recurring adjustments necessary for their fair presentation in accordance with U.S. GAAP. All significant intercompany balances and transactions have been eliminated. Interim results are not necessarily indicative of results for a full year. For further information regarding our accounting policies, refer to the audited consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024. Note 2 – Accumulated Other Comprehensive Loss The changes in accumulated other comprehensive loss by component were as follows: (Dollars in millions) Foreign Currency Translation Adjustments Pension and Other Postretirement Benefits (1) Total Balance as of December 31, 2024 $ ( 86.7 ) $ ( 8.6 ) $ ( 95.3 ) Other comprehensive income (loss) before reclassifications 17.6 — 17.6 Amounts reclassified from accumulated other comprehensive loss — 0.1 0.1 Other comprehensive income (loss) 17.6 0.1 17.7 Balance as of March 31, 2025 $ ( 69.1 ) $ ( 8.5 ) $ ( 77.6 ) Balance as of December 31, 2023 $ ( 56.8 ) $ ( 9.6 ) $ ( 66.4 ) Other comprehensive income (loss) before reclassifications ( 9.2 ) — ( 9.2 ) Amounts reclassified from accumulated other comprehensive loss — 0.1 0.1 Other comprehensive income (loss) ( 9.2 ) 0.1 ( 9.1 ) Balance as of March 31, 2024 $ ( 66.0 ) $ ( 9.5 ) $ ( 75.5 ) (1) Net of taxes of $ 1.5 million for both March 31, 2025 and December 31, 2024, respectively. Net of taxes of $ 1.8 million for both March 31, 2024 and December 31, 2023, respectively. Note 3 – Derivatives and Hedging The valuation of our derivative contracts used to manage their respective risks is described below: • 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, which are collectively a function of five primary variables: price of the underlying instrument, time to expiration, strike price, interest rate and volatility. 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 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. As of March 31, 2025, we did not have any derivative contracts that qualified for hedge accounting treatment. 9 Foreign Currency During the three months ended March 31, 2025, we entered into U.S. dollar, euro, Korean won, Hungarian forint, and Japanese yen forward contracts. We entered into these foreign currency forward contracts to mitigate certain global transactional exposures. These contracts do not qualify for hedge accounting treatment. As a result, any fair value adjustments required on these contracts are recorded in “Other income (expense), net” in our condensed consolidated statements of operations in the period in which the adjustment occurred. As of March 31, 2025, the notional values of the remaining foreign currency forward contracts were as follows: (Amounts in millions) Currencies (Buy/Sell) Amount (Buy/Sell) USD/CNH $ 37.2 / ¥ 270.0 EUR/USD € 6.5 / $ 7.0 KRW/USD ₩ 732.1 / $ 0.5 HUF/EUR Ft 500.0 / € 1.2 JPY/EUR ¥ 800.0 / € 4.9 Commodity As of March 31, 2025, we had 12 outstanding contracts to hedge exposure related to the purchase of copper in our AES operating segment. These contracts are held with financial institutions and are intended to offset rising copper prices and do not qualify for hedge accounting treatment. As a result, any fair value adjustments required on these contracts are recorded in “Other income (expense), net” in our condensed consolidated statements of operations in the period in which the adjustment occurred. As of March 31, 2025, the volume of our copper contracts outstanding was as follows: (Amounts in ones) Contract Period Amount April 2025 - June 2025 69 metric tons per month July 2025 - September 2025 69 metric tons per month October 2025 - December 2025 69 metric tons per month January 2026 - March 2026 69 metric tons per month Note 4 - Balance Sheet Items Accounts Receivable The “Accounts receivable, net” line item in the condensed consolidated statements of financial position consisted of the following: (Dollars in millions) March 31, 2025 December 31, 2024 Accounts receivable - trade $ 130.8 $ 125.1 Allowance for credit losses ( 1.6 ) ( 1.5 ) Accounts receivable - other 10.0 11.7 Total accounts receivable, net $ 139.2 $ 135.3 Contract Assets We had contract assets primarily related to unbilled revenue for products that are deemed to have no alternative use whereby we have the right to payment. Revenue is recognized in advance of billing to the customer in these circumstances as billing is typically performed at the time of shipment to the customer. The unbilled revenue is included in the “Contract assets” line item in the condensed consolidated statements of financial position. We did not have any contract liabilities as of March 31, 2025 or December 31, 2024. No impairment losses were recognized in each of the three-month periods ending March 31, 2025 or March 31, 2024 on any contract assets arising from our contracts with customers. Our contract assets by operating segment as of March 31, 2025 and December 31, 2024 were as follows: 10 (Dollars in millions) March 31, 2025 December 31, 2024 Advanced Electronics Solutions $ 20.0 $ 18.9 Elastomeric Material Solutions 1.1 0.7 Other 3.9 4.1 Total contract assets $ 25.0 $ 23.7 Inventories The “Inventories, net” line item in the condensed consolidated statements of financial position consisted of the following: (Dollars in millions) March 31, 2025 December 31, 2024 Raw materials $ 65.5 $ 62.7 Work-in-process 45.5 41.7 Finished goods 32.0 37.9 Total inventories $ 143.0 $ 142.3 Accounts Payable The “Accounts payable” line item in the condensed consolidated statements of financial position consisted of the following: (Dollars in millions) March 31, 2025 December 31, 2024 Accounts payable - trade $ 48.2 $ 45.6 Accounts payable - other 2.7 2.5 Total accounts payable $ 50.9 $ 48.1 Note 5 - Leases Finance Leases We have finance leases primarily related to manufacturing equipment. Noncash activities involving finance lease right-of-use assets obtained in exchange for lease liabilities was $ 8.1 million and $ 0.1 million as of March 31, 2025 and 2024, respectively. Our expenses and payments for finance leases were as follows: Three Months Ended (Dollars in millions) March 31, 2025 March 31, 2024 Amortization expense of finance lease right-of-use assets $ 0.3 $ 0.1 Interest expense on finance lease obligations $ ( 0.1 ) $ — Payments on finance lease obligations $ 0.4 $ 0.1 Operating Leases We have operating leases primarily related to manufacturing and R&D facilities, as well as vehicles. Noncash activities involving operating lease right-of-use assets obtained in exchange for lease liabilities was $ 0.2 million and $ 0.1 million as of March 31, 2025 and 2024, respectively. Our expenses and payments for operating leases were as follows: Three Months Ended (Dollars in millions) March 31, 2025 March 31, 2024 Operating leases expense $ 1.5 $ 1.3 Short-term leases expense $ 0.2 $ 0.2 Payments on operating lease obligations $ 1.1 $ 1.0 Lease Balances in Statements of Financial Position The assets and liabilities balances related to finance and operating leases reflected in the condensed consolidated statements of financial position were as follows: 11 (Dollars in millions) Financial Statement Line Item March 31, 2025 December 31, 2024 Finance lease right-of-use assets Property, plant and equipment, net $ 9.0 $ 1.1 Operating lease right-of-use assets Operating lease right-of-use assets $ 23.4 $ 24.1 Finance lease obligations, current portion Other accrued liabilities $ 1.3 $ 0.4 Finance lease obligations, non-current portion Other long-term liabilities $ 7.8 $ 0.8 Total finance lease obligations $ 9.1 $ 1.2 Operating lease obligations, current portion Operating lease obligations, current portion $ 4.1 $ 4.0 Operating lease obligations, non-current portion Operating lease obligations, non-current portion $ 20.1 $ 20.6 Total operating lease obligations $ 24.2 $ 24.6 Net Future Minimum Lease Payments The following table includes future minimum lease payments under finance and operating leases together with the present value of the net future minimum lease payments as of March 31, 2025: Finance Operating (Dollars in millions) Leases Signed Less: Leases Not Yet Commenced Leases in Effect Leases Signed Less: Leases Not Yet Commenced Leases in Effect 2025 $ 1.3 $ — $ 1.3 $ 4.3 $ — $ 4.3 2026 1.7 — 1.7 4.8 ( 0.1 ) 4.7 2027 1.4 — 1.4 4.0 — 4.0 2028 1.3 — 1.3 3.2 — 3.2 2029 1.3 — 1.3 3.1 — 3.1 Thereafter 3.8 — 3.8 10.7 — 10.7 Total lease payments 10.8 — 10.8 30.1 ( 0.1 ) 30.0 Less: Interest ( 1.7 ) — ( 1.7 ) ( 5.8 ) — ( 5.8 ) Present Value of Net Future Minimum Lease Payments $ 9.1 $ — $ 9.1 $ 24.3 $ ( 0.1 ) $ 24.2 The following table includes information regarding the lease term and discount rates utilized in the calculation of the present value of net future minimum lease payments: March 31, 2025 December 31, 2024 Weighted Average Remaining Lease Term Finance leases 7.3 years 3.4 years Operating leases 7.1 years 7.3 years Weighted Average Discount Rate Finance leases 4.68 % 4.33 % Operating leases 5.63 % 5.63 % Note 6 – Goodwill and Other Intangible Assets Goodwill The changes in the net carrying amount of goodwill by operating segment were as follows: (Dollars in millions) Advanced Electronics Solutions Elastomeric Material Solutions Other Total December 31, 2024 $ 113.6 $ 241.8 $ 2.2 $ 357.6 Foreign currency translation adjustment 2.6 3.2 — 5.8 March 31, 2025 $ 116.2 $ 245.0 $ 2.2 $ 363.4 12 Other Intangible Assets The carrying amount of other intangible assets were as follows: March 31, 2025 December 31, 2024 (Dollars in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 177.9 $ 98.6 $ 79.3 $ 175.9 $ 96.1 $ 79.8 Technology 76.9 62.5 14.4 75.6 60.6 15.0 Trademarks and trade names 19.5 7.9 11.6 19.1 7.7 11.4 Total definite-lived other intangible assets 274.3 169.0 105.3 270.6 164.4 106.2 Indefinite-lived other intangible asset 4.3 — 4.3 4.1 — 4.1 Total other intangible assets $ 278.6 $ 169.0 $ 109.6 $ 274.7 $ 164.4 $ 110.3 In the table above, gross carrying amounts and accumulated amortization may differ from prior periods due to foreign exchange rate fluctuations. The amortization expense related to other intangible assets was as follows: Three Months Ended (Dollars in millions) March 31, 2025 March 31, 2024 Amortization expense $ 2.7 $ 3.1 The estimated future amortization expense is $ 8.2 million, $ 10.5 million, $ 10.1 million, $ 7.9 million, and $ 7.4 million in 2025, 2026, 2027, 2028, and 2029, respectively. These amounts could vary based on changes in foreign currency exchange rates. The weighted average amortization period as of March 31, 2025, by definite-lived other intangible asset class, is presented in the table below: Weighted Average Remaining Amortization Period Customer relationships 6.9 years Technology 3.0 years Trademarks and trade names 9.2 years Total definite-lived other intangible assets 6.6 years Note 7 – Postretirement Benefit Plans Pension Plan As of March 31, 2025, we had one qualified noncontributory defined benefit pension plan, the Union Plan, which was frozen and ceased accruing benefits in 2013. The measurement date is December 31 st for each respective plan year. We were not required to make any contributions to the Union Plan in 2024 and will not be required to make any contributions in 2025. Deferred Compensation Plan We sponsor a non-qualified deferred compensation plan, which provides specified deferred compensation benefits to a certain group of select employees. The deferred compensation plan is funded through a rabbi trust, which is ultimately invested in accordance with each plan participants’ selections from pre-approved funds. As of March 31, 2025 and December 31, 2024, our deferred compensation plan primarily consisted of marketable securities, which includes mutual funds and fixed income funds. Marketable securities are recorded at fair value. The balances are reflected in the “Other long-term assets” line item in the condensed consolidated statements of financial position. The following table summarizes, by major security type, our marketable securities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy: 13 Fair Value of Deferred Compensation Plan as of March 31, 2025 (Dollars in millions) Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Level 1 Securities: Mutual funds $ 4.6 $ 0.3 $ ( 0.1 ) $ 4.8 Level 2 Securities: Fixed income funds $ 0.2 $ — $ — $ 0.2 Total $ 4.8 $ 0.3 $ ( 0.1 ) $ 5.0 Fair Value of Deferred Compensation Plan as of December 31, 2024 (Dollars in millions) Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Level 1 Securities: Mutual funds $ 4.6 $ 0.5 $ — $ 5.1 Level 2 Securities: Fixed income funds $ 0.2 $ — $ — $ 0.2 Total $ 4.8 $ 0.5 $ — $ 5.3 Note 8 – Revolving Credit Facility On March 24, 2023, we entered into a Fifth Amended Credit Agreement which amended and restated the Fourth Amended Credit Agreement, and provides for (1) a revolving credit facility with up to $ 450.0 million of revolving loans, with sub-limits for multicurrency borrowings, letters of credit and swing-line notes, and (2) a $ 225.0 million expansion feature. Borrowings may be used to finance working capital needs, for letters of credit and for general corporate purposes in the ordinary course of business, including the financing of permitted acquisitions (as defined in the Fifth Amended Credit Agreement). The Fifth Amended Credit Agreement extended the maturity, the date on which all amounts borrowed or outstanding under the Fifth Amended Credit Agreement are due, from March 31, 2024 to March 24, 2028. All obligations under the Fifth Amended Credit Agreement are guaranteed by each of our existing and future material domestic subsidiaries, as defined in the Fifth Amended Credit Agreement. The obligations are also secured by a Fifth Amended and Restated Pledge and Security Agreement, dated as of March 24, 2023, entered into by us and the Guarantors which grants to the administrative agent, for the benefit of the lenders, a security interest, subject to certain exceptions, in substantially all of the non-real estate assets of ours and the Guarantors. These assets include, but are not limited to, receivables, equipment, intellectual property, inventory, and stock in certain subsidiaries. Borrowings under the Fifth Amended Credit Agreement bear interest based on one of two options. Alternate base rate loans will bear interest at a rate that includes a base reference rate plus a spread of 62.5 to 100.0 basis points, depending on our leverage ratio. The base reference rate will be the greater of the (1) prime rate, (2) federal funds effective rate plus 50 basis points, and (3) one-month Term SOFR plus 110.0 basis points. Loans bearing an interest rate determined by reference to the Adjusted Term SOFR Rate, the Adjusted Euro Interbank Offered Rate, or the Adjusted Tokyo Interbank Offered Rate (each as defined in the Fifth Amended Credit Agreement) will bear interest based on the screen rate plus a spread of 162.5 to 200.0 basis points, depending on our leverage ratio. Based on our leverage ratio as of March 31, 2025, the spread was 162.5 basis points. In addition to interest payable on the principal amount of indebtedness outstanding, we incur an annual fee of 25 to 35 basis points (based upon our leverage ratio), paid quarterly, of the unused amount of the lenders’ commitments under the Fifth Amended Credit Agreement. The Fifth Amended Credit Agree ment contains customary representations and warranties, covenants, mandatory prepayments and events of default under which the Company’s payment obligations may be accelerated. The financial covenants include a requirement to maintain (1) a total net leverage ratio of no more than 3.25 to 1.00, subject to a one-time election to increase the maximum total net leverage ratio to 3.75 to 1.00 for one fiscal year in connection with a permitted acquisition, and (2) an interest coverage ratio of no less than 3.00 to 1.00. We are permitted to net up to $ 50.0 million of unrestricted domestic cash and cash equivalents in the calculation of the total net leverage ratio. The Fifth Amended Credit Agreement generally permits us to pay cash dividends to our shareholders, provided that (i) no default or event of default has occurred and is continuing or would result from the dividend payment and (ii) our total net leverage ratio does not exceed 2.75 to 1.00. If our total net leverage ratio exceeds 2.75 to 1.00, we may nonetheless make up to $ 20.0 million in restricted payments, including cash dividends, during the fiscal year, provided that no default or event of default has occurred and is continuing or would result from the payments. Our total net leverage ratio did not exceed 2.75 to 1.00 and our interest coverage ratio was greater than or equal to 3.00 to 1.00 as of March 31, 2025. Our discretionary principal payments on our revolving credit facility in 2025 and 2024 were as follows: 14 (Dollars in millions) March 31, 2025 March 31, 2024 Discretionary principal payments $ — $ 30.0 We had no outstanding borrowings under our revolving credit facility as of March 31, 2025 or December 31, 2024. We had $ 1.5 million and $ 1.6 million of outstanding line of credit issuance costs as of March 31, 2025 and December 31, 2024, respectively, which will be amortized over the life of the Fifth Amended Credit Agreement. Note 9 – Commitments and Contingencies We are currently engaged in the following material legal and environmental proceedings: Asbestos Overview We, like many other industrial companies, have been named as a defendant in a number of lawsuits filed in courts across the country by persons alleging personal injury from exposure to products containing asbestos. We have never mined, milled, manufactured or marketed asbestos; rather, we made and provided to industrial users a limited number of products that contained encapsulated asbestos, but we stopped manufacturing these products in the late 1980s. Most of the claims filed against us involve numerous defendants, sometimes as many as several hundred. In virtually all of the cases against us, the plaintiffs are seeking unspecified damages above a jurisdictional minimum against multiple defendants who may have manufactured, sold or used asbestos-containing products to which the plaintiffs were allegedly exposed and from which they purportedly suffered injury. Most of these cases are being litigated in Maryland, Illinois, Missouri and New York; however, we are also defending cases in other states. We continue to vigorously defend these cases, primarily on the basis of the plaintiffs’ inability to establish compensable loss as a result of exposure to our products. The indemnity and defense costs of our asbestos-related product liability litigation to date have been substantially covered by insurance. The following table summarizes the change in number of asbestos claims outstanding for the three months ended March 31, 2025: Asbestos Claims Claims outstanding as of January 1, 2025 523 New claims filed 26 Pending claims dismissed ( 50 ) Pending claims settled ( 2 ) Claims outstanding as of March 31, 2025 497 The total indemnity settlements for asbestos claims in 2025 were as follows: (Dollars in millions) March 31, 2025 Settlements $ 0.2 Impact on Financial Statements We recognize a liability for asbestos-related contingencies that are probable of occurrence and reasonably estimable. In connection with the recognition of liabilities for asbestos-related matters, we record asbestos-related insurance recoverables that are deemed probable. The liability projection period covers all current and future indemnity and defense costs through 2064, which represents the expected end of our asbestos liability exposure with no further ongoing claims expected beyond that date. This conclusion was based on our history and experience with the claims data, the diminished volatility and consistency of observable claims data, the period of time that has elapsed since we stopped manufacturing products that contained encapsulated asbestos and an expected downward trend in claims due to the average age of our claimants, which is approaching the average life expectancy. To date, the indemnity and defense costs of our asbestos-related product liability litigation have been substantially covered by insurance. Although we have exhausted coverage under some of our insurance policies, we believe that we have applicable primary, excess and/or umbrella coverage for claims arising with respect to most of the years during which we manufactured and marketed asbestos-containing products. In addition, we have entered into a cost sharing agreement with most of our primary, excess and umbrella insurance carriers to facilitate the ongoing administration and payment of claims covered by the carriers. The cost sharing agreement may be terminated by any party, but will continue until a party elects to terminate it. As of the filing date for this report, the agreement has not been terminated, and no carrier had informed us that it intends to terminate the agreement. We expect to continue to exhaust individual primary, excess and umbrella coverages over time, and there is no 15 assurance that such exhaustion will not accelerate due to additional claims, damages and settlements or that coverage will be available as expected. The amounts recorded for the asbestos-related liability and the related insurance recoverables are based on facts known at the time and a number of assumptions. However, projecting future events, such as the number of new claims to be filed each year, the average cost of disposing of such claims, the length of time it takes to dispose of such claims, coverage issues among insurers and the continuing solvency of various insurance companies, as well as the numerous uncertainties surrounding asbestos litigation in the U.S., could cause the actual liability and insurance recoveries for us to be higher or lower than those projected or recorded. The full extent of our financial exposure to asbestos-related litigation remains very difficult to estimate and could include both compensatory and punitive damage awards. Changes recorded in the estimated liability and estimated insurance recovery based on projections of asbestos litigation and corresponding insurance coverage, result in the recognition of expense or income. Our projected asbestos-related liabilities and insurance receivables were as follows: (Dollars in millions) March 31, 2025 December 31, 2024 Asbestos-related liabilities $ 57.4 $ 57.5 Asbestos-related insurance receivables $ 52.3 $ 52.3 Environmental Voluntary Corrective Action Program Our location in Rogers, Connecticut is part of the Connecticut Voluntary Corrective Action Program. As part of this program, we partnered with the Connecticut Department of Energy and Environmental Protection to determine the corrective actions to be taken at the site related to contamination issues. We evaluated this matter and completed internal due diligence work related to the site in 2015. Remediation activities on the site are ongoing and are recorded as reductions to the accrual as they are incurred. We have incurred $ 2.0 million of aggregate remediation costs through March 31, 2025, substantially all of which was incurred and accrued for prior to 2023, and the accrual for future remediation efforts is $ 0.7 million. Other Matters In addition to the above issues, the nature and scope of our business brings us in regular contact with the general public and a variety of businesses and government agencies. Such activities inherently subject us to the possibility of litigation, including environmental and product liability matters that are defended and handled in the ordinary course of business. We have established accruals for matters for which management considers a loss to be probable and reasonably estimable. It is the opinion of management that facts known at the present time do not indicate that such litigation will have a material adverse impact on our results of operations, financial position or cash flows. Note 10 – Earnings (Loss) Per Share Basic earnings (loss) per share is based on the weighted average number of common shares outstanding. Diluted earnings (loss) per share is based on the weighted average number of common shares outstanding and all dilutive potential common shares outstanding. The following table sets forth the computation of basic and diluted earnings (loss) per share: (Dollars and shares in millions, except per share amounts) Three Months Ended March 31, 2025 March 31, 2024 Numerator: Net income (loss) $ ( 1.4 ) $ 7.8 Denominator: Weighted-average shares outstanding - basic 18.5 18.6 Effect of dilutive shares — 0.1 Weighted-average shares outstanding - diluted 18.5 18.7 Basic earnings (loss) per share $ ( 0.08 ) $ 0.42 Diluted earnings (loss) per share $ ( 0.08 ) $ 0.42 For the three months ended March 31, 2025, the assumed vesting of restricted stock units had an antidilutive effect on diluted loss per share and were excluded from the calculation of diluted loss per share. For the three months ended March 31, 2025, 0.2 million anti-dilutive shares were excluded from the calculation of diluted loss per share. For the three months ended March 31, 2024, 0.1 million were excluded from the calculation of diluted earnings per share. 16 Note 11 – Capital Stock and Equity Compensation Equity Compensation Equity Compensation Expense The components of equity compensation expense were as follows: Three Months Ended (Dollars in millions) March 31, 2025 March 31, 2024 Performance-based restricted stock units expense $ 1.8 $ 1.3 Time-based restricted stock units expense 1.7 1.9 Deferred stock units expense 0.1 — Other — 0.3 Total equity compensation expense $ 3.6 $ 3.5 Performance-Based Restricted Stock Units As of March 31, 2025, we had outstanding performance-based restricted stock units with a market condition from 2025, 2024 and 2023. These awards generally cliff vest at the end of a three-year measurement period. However, employees whose employment terminates during the measurement period due to death, disability, or, in certain cases, retirement may receive a pro-rata payout based on the number of days they were employed during the measurement period. Participants are eligible to be awarded shares ranging from 0 % to 200 % of the original award amount, based on certain defined performance measures. The performance-based restricted stock units with a market condition have one measurement criterion: the three-year total shareholder return on our capital stock as compared to that of a specified group of peer companies. The fair value of this measurement criterion was determined on the grant date using a Monte Carlo simulation valuation model. We recognize compensation expense on all of these awards on a straight-line basis over the vesting period with no changes for final projected payout of the awards. We account for forfeitures as they occur. The following table sets forth the assumptions used in the Monte Carlo calculation for each material award granted in 2025 and 2024: February 26, 2025 February 19, 2024 February 13, 2024 Expected volatility 45.6 % 46.3 % 46.2 % Expected term (in years) 2.9 2.9 2.9 Risk-free interest rate 4.28 % 4.35 % 4.35 % Expected volatility – In determining expected volatility, we have considered a number of factors, including historical volatility. Expected term – We use the vesting period of the award to determine the expected term assumption for the Monte Carlo simulation valuation model. Risk-free interest rate – We use an implied “spot rate” yield on U.S. Treasury Constant Maturity rates as of the grant date for our assumption of the risk-free interest rate. Expected dividend yield – We do not currently pay dividends on our capital stock; therefore, a dividend yield of 0 % was used in the Monte Carlo simulation valuation model. 17 As of March 31, 2025, we had outstanding performance-based restricted stock units with a performance condition from 2024. These awards generally cliff vest at the end of a two-year performance period. However, employees whose employment terminates during the measurement period due to death, disability, or, in certain cases, retirement may receive a pro-rata payout based on the number of days they were employed during the measurement period. Participants are eligible to be awarded shares ranging from 0 % to 200 % of the original award amount, based on certain defined performance measures. The performance-based restricted stock units with a performance condition have one measurement criterion: 2025 net revenue. The fair value of these awards was determined based on the market value of the underlying stock price at the grant date with cumulative compensation expense recognized to-date being increased or decreased based on the changes in the forecasted payout percentage as of the end of each reporting period. As of March 31, 2025, the performance condition is not probable of vesting. As such, no compensation expense has been recognized for the performance-based restricted stock units. We account for forfeitures as they occur. A summary of activity of the outstanding performance-based restricted stock units for the three months ended March 31, 2025 is presented below: Performance-Based Restricted Stock Units Awards outstanding as of December 31, 2024 109,106 Awards granted 83,834 Stock issued — Awards forfeited/cancelled ( 2,218 ) Awards outstanding as of March 31, 2025 190,722 Time-Based Restricted Stock Units As of March 31, 2025, we had time-based restricted stock unit awards from 2025, 2024, 2023 and 2022 outstanding. The outstanding awards all ratably vest on the first, second and third anniversaries of the original grant date. However, employees whose employment terminates during the measurement period due to death, disability, or, in certain cases, retirement may receive a pro-rata payout based on the number of days they were employed subsequent to the last grant anniversary date. Each time-based restricted stock unit represents a right to receive one share of Rogers’ capital stock at the end of the vesting period. The fair value of the award is determined by the market value of the underlying stock price at the grant date. We recognize compensation expense on all of these awards on a straight-line basis over the vesting period. We account for forfeitures as they occur. A summary of activity of the outstanding time-based restricted stock units for the three months ended March 31, 2025 is presented below: Time-Based Restricted Stock Units Awards outstanding as of December 31, 2024 110,745 Awards granted 88,973 Stock issued ( 39,852 ) Awards forfeited/cancelled ( 2,339 ) Awards outstanding as of March 31, 2025 157,527 Deferred Stock Units We grant deferred stock units to non-management directors. These awards are fully vested on the date of grant and the related shares are generally issued on the 13 -month anniversary of the grant date unless the individual elects to defer the receipt of those shares. Each deferred stock unit results in the issuance of one share of Rogers’ capital stock. The grant of deferred stock units is typically done annually during the second quarter of each year. The fair value of the award is determined by the market value of the underlying stock price at the grant date. 18 A summary of activity of the outstanding deferred stock units for the three months ended March 31, 2025 is presented below: Deferred Stock Units Awards outstanding as of December 31, 2024 11,900 Awards granted 536 Stock issued ( 450 ) Awards outstanding as of March 31, 2025 11,986 Note 12 – Operating Segment Information Our reporting structure is comprised of the following strategic operating segments: AES and EMS. The remaining operations, which represent our non-core businesses, are reported in the Other operating segment. We believe this structure aligns our external reporting presentation with how we currently manage and view our business internally. Our CODM is the Chief Executive Officer of Rogers Corporation. The CODM uses gross margin as a reported segment profit or loss measure to evaluate the performance of each business segment, and then leverages this information to decide where to allocate resources and assess how well each segment is performing financially, considering factors like revenue, inventory, and significant expenses specific to that segment. Our AES operating segment designs, develops, manufactures and sells circuit materials, ceramic substrate materials, busbars and cooling solutions for applications in EV/HEV, automotive (e.g., ADAS), aerospace and defense (e.g., antenna systems, communication systems and phased array radar systems), renewable energy (e.g., wind and solar), wireless infrastructure (e.g., power amplifiers, antennas and small cells), mass transit, industrial (e.g., variable frequency drives), connected devices (e.g., mobile internet devices and thermal solutions) and wired infrastructure (e.g., computing and internet protocol infrastructure) markets. Our EMS operating segment designs, develops, manufactures and sells engineered material solutions for a wide variety of applications and markets. These include polyurethane and silicone materials used in cushioning, gasketing and sealing, and vibration management applications for EV/HEV, general industrial, portable electronics, automotive, mass transit, aerospace and defense, footwear and impact mitigation markets; customized silicones used in flex heater and semiconductor thermal applications for EV/HEV, general industrial, portable electronics, automotive, mass transit, aerospace and defense and medical markets; and polytetrafluoroethylene and ultra-high molecular weight polyethylene materials used in wire and cable protection, electrical insulation, conduction and shielding, hose and belt protection, vibration management, cushioning, gasketing and sealing, and venting applications for EV/HEV, general industrial, automotive, and aerospace and defense markets. Our Other operating segment consists of elastomer components for applications in the general industrial market, as well as elastomer floats for level sensing in fuel tanks, motors, and storage tanks applications in the general industrial and automotive markets. 19 Operating Segment Information The following table presents a disaggregation of revenue from contracts with customers and other pertinent financial information, for the periods indicated; inter-segment sales have been eliminated from the net sales data: (Dollars in millions) Advanced Electronics Solutions Elastomeric Material Solutions Other Total Three Months Ended March 31, 2025 Net sales - recognized over time $ 38.9 $ 2.1 $ 3.5 $ 44.5 Net sales - recognized at a point in time 65.3 80.5 0.2 146.0 Total net sales $ 104.2 $ 82.6 $ 3.7 $ 190.5 Cost of sales $ 75.1 $ 55.9 $ 2.5 $ 133.5 Gross margin $ 29.1 $ 26.7 $ 1.2 $ 57.0 Inventories, net $ 80.5 $ 60.7 $ 1.8 $ 143.0 Depreciation expense $ 4.2 $ 2.8 $ 0.2 $ 7.2 Three Months Ended March 31, 2024 Net sales - recognized over time $ 46.4 $ 1.8 $ 5.4 $ 53.6 Net sales - recognized at a point in time 75.7 83.9 0.2 159.8 Total net sales $ 122.1 $ 85.7 $ 5.6 $ 213.4 Cost of sales $ 87.4 $ 54.4 $ 3.4 $ 145.2 Gross margin $ 34.7 $ 31.3 $ 2.2 $ 68.2 Inventories, net $ 84.3 $ 65.1 $ 1.5 $ 150.9 Depreciation expense $ 4.4 $ 2.1 $ 0.2 $ 6.7 20 Operating Segment Net Sales by Geographic Area The following table presents net sales by our operating segment operations by geographic area for the periods indicated: (Dollars in millions) Net Sales (1) Region/Country Advanced Electronics Solutions Elastomeric Material Solutions Other Total Three Months Ended March 31, 2025 United States $ 22.1 $ 33.7 $ 0.9 $ 56.7 Other Americas 0.8 3.0 — 3.8 Total Americas 22.9 36.7 0.9 60.5 China 33.6 19.9 1.0 54.5 Other APAC 12.7 8.0 0.6 21.3 Total APAC 46.3 27.9 1.6 75.8 Germany 11.6 5.6 0.2 17.4 Other EMEA 23.4 12.4 1.0 36.8 Total EMEA 35.0 18.0 1.2 54.2 Total net sales $ 104.2 $ 82.6 $ 3.7 $ 190.5 Three Months Ended March 31, 2024 United States $ 20.4 $ 33.1 $ 1.0 $ 54.5 Other Americas 0.6 3.9 0.1 4.6 Total Americas 21.0 37.0 1.1 59.1 China 34.3 20.4 1.6 56.3 Other APAC 23.7 6.6 1.1 31.4 Total APAC 58.0 27.0 2.7 87.7 Germany 21.9 7.9 0.2 30.0 Other EMEA 21.2 13.8 1.6 36.6 Total EMEA 43.1 21.7 1.8 66.6 Total net sales $ 122.1 $ 85.7 $ 5.6 $ 213.4 (1) Net sales are allocated to countries based on the location of the customer. The table above lists individual countries with 10% or more of net sales for the periods indicated. Note 13 – Supplemental Financial Information Restructuring and Impairment Charges The components of the “Restructuring and impairment charges” line item in the condensed consolidated statements of operations, were as follows: Three Months Ended (Dollars in millions) March 31, 2025 March 31, 2024 Restructuring charges Manufacturing footprint consolidation $ 4.0 $ — Global workforce reduction 1.8 — Facility consolidations 0.1 0.1 Total restructuring charges 5.9 0.1 Total restructuring and impairment charges $ 5.9 $ 0.1 Restructuring Charges - Manufacturing Footprint Consolidation In June 2024, we announced our intent to consolidate our high frequency circuit material manufacturing operations, impacting our Evergem, Belgium facility. We anticipate the plan to be completed in the second half of 2025. The plan is expected to significantly reduce our manufacturing costs and operating expenses. We estimate this will improve operating income between $ 7.0 million and $ 9.0 million annually. We expect to incur approximately $ 22.0 million to $ 28.0 million in pre-tax restructuring charges related to this plan, the majority of which are expected to be in the form of cash-based expenditures related to employee severance and other termination benefits. Most of the non-cash expenditures will be in the form of accelerated depreciation. 21 We incurred $ 4.0 million of restructuring charges related to this plan for the three months ended March 31, 2025, of which $ 3.2 million were cash-based expenditures in the form of severance and other termination benefits and $ 0.7 million were non-cash expenditures in the form of accelerated depreciation. Severance and related benefits activity related to the manufacturing footprint consolidation plan is presented in the table below for the three months ended March 31, 2025: (Dollars in thousands) Manufacturing Footprint Consolidation Restructuring Severance and Related Benefits Balance as of December 31, 2024 $ 9.2 Provisions 3.2 Payments ( 1.8 ) Foreign currency translation adjustment 0.4 Balance as of March 31, 2025 $ 11.0 Restructuring Charges - Global Workforce Reduction In March 2025, we announced a plan to reduce our global workforce that was substantially completed in the first quarter of 2025. We incurred $ 1.8 million in pre-tax restructuring charges related to this plan in the three months ended March 31, 2025, all of which were cash-based expenditures in the form of employee severance and other termination benefits. Restructuring Charges - Facility Consolidations As of December 31, 2024, we included $ 13.1 million of assets held for sale within the “Other current assets” financial statement line item of the condensed consolidated statements of financial position, representing the land and building at our former Price Road facility in Chandler, Arizona. The sale was completed on March 11, 2025 for a sale price of $ 13.4 million, net of selling costs. Allocation of Restructuring and Impairment Charges to Operating Segments The following table summarizes the allocation of restructuring and impairment charges to our operating segments: Three Months Ended (Dollars in millions) March 31, 2025 March 31, 2024 Advanced Electronics Solutions Allocated restructuring charges $ 4.7 $ 0.1 Elastomeric Material Solutions Allocated restructuring charges $ 1.2 $ — Total restructuring and impairment charges $ 5.9 $ 0.1 Other Income (Expense), Net The components of the “Other income (expense), net” line item in the condensed consolidated statements of operations, were as follows: Three Months Ended (Dollars in millions) March 31, 2025 March 31, 2024 Foreign currency translation impacts $ ( 1.3 ) $ 0.5 Foreign currency derivative impacts ( 0.2 ) ( 0.1 ) Copper derivative impacts 0.2 — Other ( 0.3 ) — Total other income (expense), net $ ( 1.6 ) $ 0.4 22 Interest Income (Expense), Net The components of “Interest income (expense), net” line item in the condensed consolidated statements of operations, were as follows: Three Months Ended (Dollars in millions) March 31, 2025 March 31, 2024 Interest on revolving credit facility $ — $ ( 0.5 ) Line of credit fees ( 0.3 ) ( 0.3 ) Debt issuance amortization costs ( 0.1 ) ( 0.1 ) Interest income 0.8 0.1 Other ( 0.1 ) — Total interest income (expense), net $ 0.3 $ ( 0.8 ) Note 14 – Income Taxes The below discussion of the effective tax rate for the periods presented in the condensed consolidated statements of operations is in comparison to the 21% U.S. statutory federal income tax rate. Our effective tax rate was 12.5 % in the first quarter of 2025. During the first quarter of 2025, we incurred a loss before income taxes of $ 1.6 million, which, when taxed at the 21% U.S. statutory federal income tax rate, resulted in an immaterial income tax benefit, partially offset by insignificant tax adjustments that caused the effective tax rate to differ from the statutory rate. During the first quarter of 2024, our effective tax rate was 32.8 %. During the first quarter of 2024, our effective tax rate was unfavorably impacted primarily by the write-off of deferred tax assets related to stock compensation. The OECD Pillar 2 guidelines published to date include transition and safe harbor rules around the implementation of the Pillar 2 global minimum tax of 15%. Based on current enacted legislation effective in 2024 and our structure, we do not expect a material impact in 2025. We are monitoring developments and evaluating the impacts these new rules will have on our future effective income tax rate, tax payments, financial condition, and results of operations. Note 15 - Mergers and Acquisitions Joint Venture Separation Agreement On October 29, 2024, we entered into a JV Separation Agreement with INOAC with an effective date of November 5, 2024, in which INOAC acquired our 50 % ownership shares of RIC, we acquired INOAC’s 50 % ownership shares of RIS, and we sold the property, plant and equipment constituting RIS Production Line 1 to INOAC. The combined transaction resulted in a net payment to us from INOAC of $ 4.9 million. The JV Separation Agreement terminated all other agreements previously entered into in connection with the RIC and RIS JV relationships. The purchase accounting and purchase price allocation for the RIS acquisition transaction is now considered final, with no adjustments from the information presented in our Annual Report on Form 10-K for the year ended December 31, 2024. Note 16 - Recent Accounting Standards Recently Adopted Standards In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . ASU 2023-07 enhances segment reporting under Topic 280 by expanding the breadth and frequency of segment disclosures. This amendment will improve the disclosures about a public entity’s reportable segments and address requests from investors for additional, more detailed information about a reportable segment’s expenses. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We adopted ASU 2023-07 in our Annual Report on Form 10-K for the year ended December 31, 2024, using the retrospective approach. Recently Issued Standards In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . The amendments in this update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This update also includes certain other amendments to improve the effectiveness of income tax disclosures. The ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. Adoption of the standard will be applied on a prospective basis and retrospective application to all periods presented is permitted. We will adopt ASU 2023-09 in our Annual 23 Report on Form 10-K for the year ending December 31, 2025, using a prospective transition method. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements and accompanying notes. In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). The amendments in this update require new disclosures in tabular format, disaggregating information about prescribed categories underlying any relevant income statement expense captions. The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. Adoption should be applied either prospectively to financial statements issued after the effective date, or retrospectively to any or all prior periods presented in the financial statements. We will adopt ASU 2024-03 in our Annual Report on Form 10-K for the year ending December 31, 2026, using a prospective transition method. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements and accompanying notes.