ROG Q1 Earnings Call: Tariff Challenges, Cost Actions, and New Design Wins Shape Outlook

Engineered materials manufacturer Rogers (NYSE: ROG) reported revenue ahead of Wall Street’s expectations in Q1 CY2025, but sales fell by 10.7% year on year to $190.5 million. The company expects next quarter’s revenue to be around $197.5 million, close to analysts’ estimates. Its non-GAAP profit of $0.27 per share was 6.6% above analysts’ consensus estimates.

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StockStory’s Take

Rogers’ first quarter performance reflected a mix of continued end-market weakness and the company’s ongoing efforts to streamline operations and secure new business. Management pointed to tariff-related uncertainty and soft demand—particularly in electric vehicles and industrial power modules—as key factors behind the year-on-year sales decline. CEO Colin Gouveia emphasized that while recently announced U.S.-China tariffs had a minimal impact on Q1, mitigation plans are being enacted for the coming periods. He highlighted the company’s ability to win new design-ins, including for inverters in the renewable energy and EV spaces, as evidence of Rogers’ technology strength.

Looking forward, management expects the second quarter to benefit from improved product mix and incremental cost savings, though the ultimate demand outlook remains clouded by ongoing trade policy changes. CFO Laura Russell stated, “We expect these actions will largely offset the impacts of tariffs in the second quarter,” while cautioning that wider macroeconomic effects may be harder to predict. The company is guiding for a sequential lift in both sales and margins, with cost reduction initiatives and operational optimization expected to drive profitability improvements as the year progresses.

Key Insights from Management’s Remarks

Rogers management focused on the dual impact of global trade policy changes and internal cost reduction on first quarter performance, while highlighting recent commercial wins and operational initiatives.

• Tariff Mitigation Strategy: The company’s local-for-local manufacturing approach limited first-quarter tariff exposure, but management is actively shifting supply chains and working with customers to reduce the impact of new U.S.-China tariffs on materials shipped from the U.S. to China.
• New Design Wins: Rogers secured notable design-ins during Q1, including its silicone technology for inverters used by a European OEM in industrial, renewable energy, and electric vehicle markets. The company also saw its materials chosen for battery applications across U.S., European, and Asian automakers, and for power modules with Chinese customers.
• Cost Structure Adjustments: Rogers continued its multi-year cost containment program, implementing workforce reductions and consolidating manufacturing sites. The closure of a Belgium facility and an R&D center in Boston, along with other actions, are expected to deliver $25 million in savings in 2025.
• End-Market Divergence: The automotive radar (ADAS) and industrial elastomer businesses saw growth versus the prior quarter, while EV/HEV and portable electronics segments lagged due to inventory adjustments and seasonality. Aerospace and defense showed mixed performance, with defense up but commercial aerospace down.
• Customer Collaboration: Management described constructive customer engagement in response to tariff uncertainties, noting that customers are willing to accelerate qualification from alternative manufacturing regions to maintain supply continuity.

Drivers of Future Performance

Management’s outlook for the coming quarters centers on execution of tariff mitigation, realization of cost savings, and the ramp-up of new design wins—while acknowledging ongoing uncertainty in global trade and end-market demand.

• Tariff Policy Uncertainty: The evolving trade environment remains the largest external risk, with management stating that secondary effects—such as changes in economic growth—are difficult to predict. The company is monitoring for further impacts on customer order patterns and global demand.
• Operational Efficiency Gains: Cost reductions from facility closures, workforce adjustments, and discretionary spending cuts are expected to support margin improvement and free cash flow, with most of the $25 million in planned savings realized in operating expenses.
• Commercial Pipeline Growth: The ramp-up of the new curamik facility in China and a balanced funnel of opportunities across both Advanced Electronics Solutions (AES) and Elastomeric Material Solutions (EMS) segments are expected to contribute to sales momentum, particularly if EV/HEV and industrial demand recover in the second half of the year.

Top Analyst Questions

• Dan Moore (CJS Securities): Asked how much of the $25 million in 2025 cost savings would benefit Q2 results and whether all savings would flow through to margins. CFO Laura Russell said most Q2 savings are from operating expense reductions, with manufacturing-related savings largely realized in the second half.
• Dan Moore (CJS Securities): Queried whether Q3 will again be seasonally strongest, especially for portable electronics. CEO Colin Gouveia noted the outcome depends on inventory correction in power modules and macroeconomic factors, especially tariffs.
• Craig Ellis (B. Riley Securities): Sought perspective on customer responses to tariffs and order adjustments. Gouveia described customer conversations as constructive, with collaboration to mitigate supply disruptions.
• Craig Ellis (B. Riley Securities): Requested color on the curamik pipeline in China and regional demand trends. Gouveia said progress continues at the new China facility, with multiple design-ins underway and a generally balanced opportunity funnel between segments.
• David Silver (CLK & Associates): Asked whether customers were rethinking longer-term collaborations due to trade uncertainty. Gouveia reported no major project delays or negative customer sentiment, stating global partnerships remain intact.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will be monitoring (1) execution of tariff mitigation plans and their effect on customer order patterns, (2) realization of the targeted cost savings from facility rationalization and headcount reductions, and (3) the pace at which new design wins—especially in the curamik and EV/HEV segments—translate into higher sales. Broader market demand recovery, particularly in power modules and industrial applications, will also be a key variable for the back half of the year.

Rogers currently trades at a forward P/E ratio of 26.7×. Should you load up, cash out, or stay put? Find out in our free research report.

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