Q4 2024 Rogers Corp Earnings Call
and Micah Christensen.
[music].
Catherine: Good afternoon, My name is Catherine and I'll be your conference operator today at this time I'd like to welcome everyone to the Rogers Corporation fourth quarter year end 2024 earnings conference call.
Speaker Change: I'll now turn the conference over to your call. Mr. I'm, sorry, I'll now turn the conference over to your host Mr. Steve Haymore Director of Investor Relations. Mr. Haymore, you may begin.
Speaker Change: Good afternoon, everyone and welcome to the Rogers Corporation fourth quarter 2024 earnings Conference call.
Steve Haymore: Slides for today's call can be found on the investors section of our website along with the news release that was issued earlier today.
Steve Haymore: Let's turn to slide two before we begin I would like to note that statements. In this conference call that are not strictly historical are forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Steve Haymore: And should be considered as subject to the many uncertainties that exist in rogers' operations and environment.
Steve Haymore: These uncertainties include economic conditions market demands and competitive factors.
Such factors could cause actual results to differ materially from those in any forward looking statement made today.
Steve Haymore: Please turn to slide three the discussions during this conference call will also reference certain financial measures that were not prepared in accordance with U S. Generally accepted accounting principles.
Steve Haymore: A reconciliation of those non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the slide deck for today's call, which are available on our Investor Relations website.
Steve Haymore: Turning to slide four with me today is Colin <unk>, President and CEO, and Laura Russell Senior Vice President and CFO.
I'll now turn the call over to Colin.
Steve Haymore: Thanks, Steve Good afternoon, everyone and thank you for joining us today before I discuss the results for the quarter. Let me first mention that since our last earnings call. Laura Russell was appointed our Chief Financial Officer to our search process Laura emerged as the clear choice to serve in this position since joining the company in 2023 and especially during her.
Steve Haymore: Recent service is in term CFO Laura has been an invaluable addition to the Rogers executive team. She brings significant business and financial expertise developed during her multi decades of experience with other leading global companies predominantly in the semiconductor segment I look forward to partnering with her as we execute our strategic objectives.
Steve Haymore: Now turning to slide five I'll start with the key messages for today's call.
Steve Haymore: Fourth quarter results were in line with our expectations as sales gross margin and adjusted earnings will all near the midpoint of our guidance ranges as anticipated Q4 sales were lower sequentially due to challenging market conditions normal seasonality and successful completion in Q3 of our large wireless India design win however, our Q4 results.
Steve Haymore: Benefited from our continuing focus on managing operational costs and expenses.
Steve Haymore: We experienced significant market headwinds in most of 2024, particularly in industrial in EV HEV markets. The challenges in industrial markets resulted from continued weakness in global manufacturing activity, while global growth growth rates in the EV HEV market fell to half the level of the prior year the rapid deceleration.
Steve Haymore: <unk> and EV HEV production, particularly in Europe triggered a major inventory destocking among our customers as a result, our terrific power substrate sales dropped significantly and we're the largest reason for our lower 2024 sales, while our customers expect to see a gradual recovery in EV HEV and the power industrial markets.
Steve Haymore: In the second half of 2000 and twenty-five these inventory challenges as well as uncertainty related to trade policy.
Steve Haymore: Our persisting into Q1.
Customers are ordering cautiously in this current environment and therefore, we expect a relatively flat sales outlook for the first quarter, Laura will provide more details on the Q1 guidance later in.
Steve Haymore: In 2024, we further position Rogers for market recovery with solid progress on commercial innovation and operational excellence initiatives. This included securing new design wins and many of our key end markets launching new products and advancing our local for local manufacturing footprint strategy.
Steve Haymore: Operational excellence initiatives resulted in robust free cash flow conversion in 2024 with a pristine balance sheet Rogers is in a strong position to continue advancing both our organic and inorganic growth objectives, even as we navigate this dynamic market environment.
Steve Haymore: Turning to slide six in our fourth quarter and full year 2024 results.
Steve Haymore: Fourth quarter revenues of $192 million declined 9% from the prior quarter and were in line with our guidance midpoint gross margin of 32, 1% was about 300 basis points lower versus Q3 due to volume.
Full year sales declined 9%, primarily due to two markets industrial and EV HEV too.
Steve Haymore: 2024, gross margin was 33, 4% 40 basis points lower versus the prior year the impact of the lower volume was largely offset by significant improvements in operational excellence, including a notable reduction in our operations spending and procurement costs.
Steve Haymore: Looking at our sales by market.
Steve Haymore: The increase in Q4, EV HEV sales was modest as we've not yet seen a meaningful demand improvement from our <unk> power module customers. The last American materials solutions or EMS sales into the EV HEV market were again solid, albeit flat to Q3 as.
Steve Haymore: As discussed earlier.
<unk> full year sales for <unk> were significantly lower versus 2023, However, EMS had record revenue in 2024 into EV HEV driven by ramping production rates for key programs with critical customers.
Steve Haymore: <unk> sales improved sequentially due to improved automotive volumes and stronger order patterns from some key customers.
Steve Haymore: Aerospace and defense delivered solid growth for a second consecutive quarter in Q4 from higher commercial aerospace demand for the full year. Our A&D sales grew at double digit rate led by the radio frequency solutions, our RFS business, which saw a stronger demand for military radar applications.
Steve Haymore: Portable electronics sales were sequentially lower in the fourth quarter due to normal seasonality and in line with expectations full year sales grew only slightly compared to the previous year as we saw less aggressive refresh cycle for smartphones in late 2024, despite having strong content in high end AI functional devices as <unk>.
Steve Haymore: <unk> industrial sales were sequentially lower in the fourth quarter due to customers managing year end inventory levels, although inventory levels have stabilized across most of most of the submarkets that comprise our industrial sales to may.
Steve Haymore: <unk> has not yet improved this is consistent with U S and European PMI data, which has been in contraction for most of the last two years.
Steve Haymore: Wireless infrastructure sales saw the largest decline of all our market segments quarter to quarter as shipments to our Indian program were completed however for the full year, we delivered strong wireless growth primarily due to the Indian based fixed wireless access project.
Steve Haymore: With strong proven technology targeted to this market.
Steve Haymore: We continue to pursue opportunities in our sales funnel, including the next phase of this project in India.
Steve Haymore: Yeah.
Steve Haymore: Next on slide seven I'd like to spend a few minutes highlighting some of the key accomplishments across our commercial and R&D teams from 2024.
Steve Haymore: We remain confident in the underlying strength and growth opportunities in the markets. We serve despite last year's challenges, we secured a number of significant wins across our portfolio in 2024 and while some of these wins delivered sales in the year. Many of our wins that are expected to contribute to revenues in the coming quarters and beyond.
Steve Haymore: Most recent of these wins is in a das space in the fourth quarter, a leading Asian automotive radar supplier selected Rogers materials for our new 77 gigahertz forward radar unit application.
Steve Haymore: We were awarded this business based on the strong performance and reliability of our laminate materials.
Steve Haymore: Where we remain the technology leader in mission critical applications.
Steve Haymore: Other significant design wins from earlier in 2024 were in key markets, such as EV, HEV portable electronics renewable energy and.
Steve Haymore: In data centers.
Steve Haymore: Design wins in the EV HEV space have the largest future revenue potential and included multiple wins in both western and Asian customers. These wins were in both business segments and Aes are chromic power substrates. We're designed in by multiple power module manufacturers and Oems in China. This provides us increased access to the <unk>.
Steve Haymore: Fast as growing EV HEV region in the world and underpins our capacity expansion plans.
Steve Haymore: We also continued to develop strong relationships with our U S and European customers and have good exposure to each of these geographies through our customer base and.
Steve Haymore: In addition, our EMS business has secured important design wins for our battery cell pad technology with leading global Oems and their battery suppliers are poor on polyurethane products continued to be a leading material of choice for pressure and vibration management solutions that improve EV battery efficiency and reliability.
Steve Haymore: Additionally, we strengthened our M&A pipeline in 2024, as we identified additional strategic bolt on acquisition targets.
Steve Haymore: To ensure we maintain our position in high performing engineered materials, we made advancements across our innovation pipeline in 2024, starting with our EES business, we launched a new advanced thermal set laminate in Q4 2024 designed for a corner radar applications in the Adas market for years, our copper clad.
Steve Haymore: Women at technologies have helped to enable accurate and timely detection of objects to improve automotive safety. This new product builds on these strengths, while reducing manufacturing costs for our customers. Our R&D team continues to innovate in this space with the next generation of this product scheduled to launch later this year.
Steve Haymore: We also launched multiple successful products in our EMS business. This includes our poor on polyurethane materials, where we introduced new technology targeted to the semiconductor market.
Steve Haymore: And our <unk> business, where it continues to develop next generation power substrate solutions that improve thermal dissipation to enable improved system performance and lower costs for our customers.
Steve Haymore: In Ams, we had multiple engagements with key Oems and battery manufacturers related to emerging EV battery technologies, where our polyurethane and silicone materials salt pressure management challenges and other critical needs.
Steve Haymore: And AI.
Steve Haymore: Early stage work on solutions for data centers also continued last year in both Aes in EMS, we are targeting opportunities in the areas of thermal and vibration management and signal integrity.
Steve Haymore: In 2025, we will build on these achievements as we continue to secure new design wins and accelerate our pace of innovation.
Steve Haymore: Turning to slide eight we have made good progress executing our local for local manufacturing strategy with the addition of a new keramic power substrate facility and the <unk> silicone line, both in China building, our geographically diversified manufacturing footprint is key to achieving our near and long term growth objectives.
Steve Haymore: In recent years, we have focused on selectively adding manufacturing capabilities to position Rogers to grow with existing customers as they expand in new regions as well as capture business with new customers by accessing these markets competitively.
Steve Haymore: This effort has also improved our operations flexibility with multi site product and supply chain qualifications. This strategy helps derisk sole supply and mitigates the impact of current and potential future tariffs spa.
Steve Haymore: Specific to our 2020 for investments the new Keramic power substrate factory better supports western customers, who are expanding their silicon carbide power module production in China, we have secured design wins with new customers headquartered in China with more design in activity ongoing.
Steve Haymore: This facility is scheduled to start full scale production in mid 2025.
Steve Haymore: These investments provide us with scale and capacity to address this growth market our capacity footprint additions are now essentially complete.
Steve Haymore: As we did in 2024, we will continue to drive manufacturing cost improvements and operational excellence throughout this year. This includes reductions in manufacturing and procurement costs as well as additional yield and throughput improvements. It also includes ongoing consolidation of our RFS footprint, which we first announced last year. These.
Steve Haymore: Actions are expected to improve operating profit between $7 million to $9 million annually with a portion of that benefit realized in the second half of this year once the wind down of our Belgian facility is complete this self help will remain our focus for operations in 2025, one final point on additional actions we've taken to support Rogers is growth.
Steve Haymore: And that is the implementation of our SAP <unk> Hana ERP system. We are currently in the early stages of this implementation, which we expect will lead to more efficient internal processes and improved customer experience and a more flexible and scalable business.
Steve Haymore: Rollout is on track and is expected to continue over the next two years now I will turn it over to Laura to discuss our Q4 financial performance in Q1 2025 outlook.
Laura Russell: Thank you Colin I'll begin on slide nine with the highlights of our results for Q4.
Laura Russell: And overall result for the fourth quarter were in line with that expectation.
Laura Russell: Sales of $192 million gross margin of 32, 1% and adjusted EPS of 46% like one near the midpoint of our previously announced guidance.
Laura Russell: For the full year sales of $830 million were 9% lower than the prior year.
Laura Russell: With our focused efforts to reduce 95 Shankar and increase efficiency gross margin declined by only 40 basis points.
Laura Russell: Adjusted earnings for the full year were $2.72 versus <unk> 70 in 2023.
Laura Russell: As a result of our efforts to reduce cost control expenses and manage Washington capital, we generated free cash flow of $71 million in 2024 similar to prior year levels.
Laura Russell: On slide 10, I'll discuss our fourth quarter sales results in greater detail.
Laura Russell: Net sales of $192 million declined by approximately 9% versus the third quarter, primarily due to lower volume, which was slightly offset by favorable foreign currency fluctuation.
Laura Russell: On a reportable segment basis.
Laura Russell: Yes revenue decreased 9% versus the prior quarter to $110 million.
Laura Russell: Lower wireless infrastructure sales were partially offset by higher Athos faith in you.
Laura Russell: As noted on last quarter's call lower wireless infrastructure sales were expected as they completed shipments to projects in India and QC.
Laura Russell: <unk> revenue decreased by approximately 8% to $86 million due to lower industrial sales as customers manage G to N to inventory levels and film the normal seasonal decline in portable electronics sales.
Laura Russell: Aerospace and defense sales increased sequentially.
Laura Russell: Turning to slide 11, Q4 gross margin was 32, 1% a decrease of 310 basis points from the third quarter.
Laura Russell: The reduction in gross margin was primarily due to lower volume and unfavorable product mix.
Laura Russell: We achieved further operations and procurement savings in Q4, but these were more than offset by under absorbed fixed costs.
Laura Russell: Over the course of 'twenty 'twenty four we achieved significant cost reductions from our ongoing operational excellence initiative.
Laura Russell: Our focus on reducing manufacturing cost.
Laura Russell: We ate suitcases lease savings by driving operations, and procurement cost saving optimizing yield and enabling AAA and treatment.
Laura Russell: These actions led to a 6% decrease in manufacturing spend in 2024.
Laura Russell: Even with these reductions we did continue to carry some excess costs in the fourth quarter in anticipation of a rebound in demand.
Laura Russell: We will continue to monitor these costs closely as we work to balance margins and the ability to quickly respond to future recovery in demand.
Laura Russell: Adjusted net income decreased to $9 million in the fourth quarter from $18 million in Q3.
Laura Russell: Q4, adjusted earnings per share was 46% compared to 98 cents in the prior quarter.
Laura Russell: The lower Q4, adjusted net income with pay moderately due to the lower gross margin already discussed and higher operating expenses.
Laura Russell: The increase in adjusted operating expense was primarily due to additional startup costs.
Laura Russell: These items were partially offset by a decrease in other expense and lower income tax.
Laura Russell: On a GAAP basis, <unk> increased to $67 million in Q4 7 million higher sequentially.
Laura Russell: The payment of drivers of the encase for higher severance costs related to a global workforce reduction and incremental factory startup expenses.
Laura Russell: In Q4, we also incurred an $8 million impairment related to ERP system, which is in development.
Laura Russell: This was largely offset by a gain of nearly $8 million in connection with an agreement to safely extend their existing joint venture relationship.
Laura Russell: As Colin referenced we continue to make progress on that ERP deployment plan in it.
Laura Russell: State to achieve significant synergies when the implementation is complete.
Laura Russell: Continuing to slide 12, I'll next discuss some of the highlights from our capital allocation priorities in 2024.
Laura Russell: Cash at the end of 'twenty, four with $160 million.
Laura Russell: For the full year, we generated solid operating cash flow of $127 million and free cash flow of $71 million.
We allocated $56 million for capital expenditures to fund organic growth initiatives, which included new manufacturing and business process improvement activities.
Laura Russell: In the first quarter of the year, we repaid the remaining 30 million balance under our revolving credit facility and continue to carry no debt.
Laura Russell: Share repurchases in 2000 $24 million to $220 million with 12 million repurchased in the fourth quarter.
Laura Russell: As we move forward through the year, we will continue to prioritize actions to maximize cash generation.
Laura Russell: With our favorable cash position and a clean balance sheet. It continues to be in a good position to allocate capital consistent with our priorities of funding organic growth pursue synergistic M&A and returning capital to shareholders in the form of opportunistic share repurchases.
Laura Russell: In 2025 capital expenditures will begin to decrease as we complete the current Paris upstream expansion in China.
Laura Russell: For this reason, we expect full year capex to be in the range of $40 million to $50 million.
Laura Russell: Next on slide 13, I will discuss our guidance for the first quarter.
Laura Russell: Before discussing the specific ranges for the quarter I'll provide some context or color on expectations for 2025.
Laura Russell: First as Colin touched on customers remain very cautious and there is a heightened level of uncertainty related to trade policy and timing of a market recovery.
Laura Russell: Customers protect kimberly off or cut on that business are signaling that the recovery will be gradual and second half weighted.
Laura Russell: For that reason and due to the normal seasonality in our portfolio electronics business. We expect the second half of the here to be stronger than the first half and this Q1 likely the low point for the year.
Laura Russell: Our sales into the higher volumes will naturally bring up gross margins to levels more in the range of what we achieved in 2024.
Laura Russell: Now turning to the ranges for the first quarter, we expect Q1 sales to be between 180 and $195 million.
Laura Russell: The midpoint of this range is a decrease of 2% from Q4 sales.
Laura Russell: The decline is due to an expected unfavorable foreign currency impact of 1% to 2% and lower portable electronic sales due to normal seasonality.
Laura Russell: We are guiding gross margin to be in the range of 29% to 35% for Q1 with a decrease a result of both lower volume and unfavorable product mix.
Laura Russell: This guidance range also incorporates a small impact from our new Silicon manufacturing line, which will continue until we reach a more normalized utilization rate.
Laura Russell: As noted earlier, we will continue to carefully monitor demand levels and will pursue further actions to flex our cost structure should we not see meaningful top line improvements in the coming quarters.
Laura Russell: First quarter adjusted operating expenses.
Laura Russell: Could it be slightly lower versus Q4.
Laura Russell: P. S is expected to range from a loss of 26% to four cents of earnings.
Laura Russell: And adjusted EPS range is 10 cents to four two cents of earnings.
Laura Russell: Our Q1 EPS range includes 25 cents of restructuring related expenses with most of that is associated with the wind down of our E. S operations in Belgium.
Laura Russell: Lastly, we project, our full year tax rate to be approximately 27%.
Colin: I will now turn the call back over to Colin.
Colin: Thanks, Laura in summary, we had solid execution in Q4 to deliver results that were in line with our expectations. We focused intently on what we can control in 2024, including securing new design wins, continuing to innovate new materials and solutions that meet our customers' needs and delivering cost savings looking ahead to 2000.
Colin: 25, we expect the market driven challenges from last year will continue while it is difficult to predict the timing of a market recovery. We will continue to execute aggressively on a commercial innovation and manufacturing footprint priorities. We are confident that our focus and discipline will position Rogers to win when market conditions begin to improve.
Colin: I'll now turn the call back over to the operator for questions.
Colin: Thank you will not be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad.
Speaker Change: So you. Please ask one question and one follow up the return to the queue.
Colin: A confirmation tone will indicate your line is in the question queue.
Colin: One moment, please while we poll for questions and once again Thats star one to be placed in the question queue.
Speaker Change: Our first question is coming from Bob <unk> from CJS Securities. Your line is now live.
Speaker Change: Hi, This is Jeremy on for Dan Moore with CJS. Thanks.
Speaker Change: Thanks for taking the time.
Speaker Change: Q1 guidance implies a 12% revenue decline year over year at the midpoint, albeit a more modest decline sequentially.
Speaker Change: How should we think about revenue on a segment basis as well as an end market basis for Q1 relative to Q4, and then what end markets are you experiencing further sequential softness in.
Speaker Change: Well I can start Jeremy and then Laura can answer if you think about sequentially.
Speaker Change: What we see is a slight decrease related to portable electronics, which is our highest.
Speaker Change: The the highest quarter for portable electronics for us in terms of revenues as Q3 decreasing a bit in Q4.
Speaker Change: Q1 is the low point, so I would say that would be primarily the major issue. There and then if you look at year over year.
Speaker Change: This related primarily to our <unk> business.
Speaker Change: That chronic business, our chronic business is a very important business for us. It did have five years of record growth all the way through 2023, but 24, it decreased substantially primarily due to inventory and the slowdown in the EV HEV.
Speaker Change: One thing to note, though in 2024 was that we had a reasonably good quarter with Keramic in Q1, the push outs and the challenges didn't really start until the beginning of March when we saw a lot of orders from basically our entire customer base get pushed outwards. So those would be I would say the two biggest impacts from a sequential.
Speaker Change: And year over year basis.
I'd ask Laura to add anything that I might have missed.
Speaker Change: You've covered that perfectly calling them.
Speaker Change: And part two is really the big one on a per year basis, and as you said from a forceful electronic per se that we're facing another challenge and stuff.
Speaker Change:
Speaker Change: Okay.
Speaker Change: Awesome very helpful. Thank you and then I know you don't provide guidance beyond the next quarter, but given the implied year over year decline in Q1 do you expect to get back to positive topline growth on a year over year basis at least by the second half of 'twenty five and if not are there further cost reduction actions you're thinking about to protect.
Speaker Change: Margins and cash flow.
Speaker Change: Jeremy I'll start and I'll talk about revenues and top line and then I'll ask Laura to make a few comments maybe on gross margin, but just to reemphasize. What we just mentioned that self help was a top priority for us in 2024 and remain so in 2025, there is still much more we can do in term.
Speaker Change: <unk> of controlling costs and more importantly, approve efficiencies so that remains one of our top.
Speaker Change: Our focus areas.
And although we don't give guidance beyond the one quarter you know here's the here's a general comment on the full year, we do expect Q1 to be the low point.
Speaker Change: And we see a much stronger or a stronger second half the drivers for that that are driving our assumptions are a few things first when you look out at the Keramic market.
Speaker Change: Those <unk> customers, which cell, which by our materials that go into power modules that go into EV HEV and industrial.
Speaker Change: Customers are pretty much pointing to a gradual recovery in the second half of the year.
The second thing is that as the portable electronics season hits and that seasonality comes along in Q3 as Oems begin to build for the holiday season at the end of the year, we have good content across the patch in terms of Western Oems, South Korean Oems and Chinese Oems, So theres been several <unk>.
Speaker Change: Good design wins, so we believe we're positioned for growth there when that seasonality hits and then finally, we've got some new manufacturing capability coming on in China for a few different product lines and we have some design wins in those product lines that are enabled by this new manufacturing capacity. So we believe that will also.
Speaker Change: <unk> help us in the second half of the year of the Keramic business. For example is still in qualifications and those will be wrapping up around mid 25, and then the.
Speaker Change: <unk> brand silicone line that is active but we're in the middle of qualifications now with customers as well and that will be sorted out second half of the year.
Speaker Change: I think overall, we do see some growth, especially in some of our key segments, but we have some pretty strong headwinds coming from FX, which will temper that growth. So self initiatives remain a top priority and that improved Q2, we think will get us to a relatively flat year.
Speaker Change: Driven by FX Emperor.
Speaker Change: Tempering some some growth.
Speaker Change: And then Laura I'd like to turn it to you for some comments on gross margins here. So can I, if I could just domain Collins comments from a margin perspective.
Speaker Change: You've seen the dilution that we saw in the fourth quarter and what we just posted which was really driven by predominantly volume as we saw they totally until we're at 18 million quarter on quarter and also a mix headwind we posted a 35, 1% in the third quarter, but we did highlight at that point in time, we did.
Speaker Change: And it fit from mix there with the portable electronics and peak quarter and then in addition to that the conclusion of the program that we had in the wireless space with favorable for it.
Speaker Change: So with those rolling off into the fourth quarter and they totally dilution we saw some tracer Nathan.
Speaker Change: Nathan we roll forward in the first quarter as Colin said, we expect this to be a little point of the year and 25, and then that low point, we're dealing with the continued to place and they totally.
Speaker Change: And under utilization overhang.
Speaker Change: And we have another terrorist impact Tonight.
Highlighted portable electronics and the lowest quarter of the year being in the first quarter.
Speaker Change: And the last thing I would say that the first quarter margin guide is that as we ramp the new silicon and in China, we need to qualify your customers from that line in the first quarter, we're going to see some margin headwind that's incremental to Q4 because of language need for it so that causes some.
Speaker Change: Lincoln, I mean until and pressure there.
Speaker Change: But if we look forward to some of the expectations, we have through 'twenty five.
Speaker Change: The biggest thing that will benefit as the recovery on the top line.
Speaker Change: And the expectation there is driven by some of the information that we're seeing from our customer base.
Speaker Change: A gradual to improving.
Speaker Change: Australia here should facilitate recovery in their margin.
Speaker Change: Just one quick add to that for everyone. There's been several questions on.
Speaker Change: RFS wind down in Belgium, and we did announce that and that is underway.
Speaker Change: But it really doesn't.
Speaker Change: Begin, helping the P&L until probably very much at the backend of this coming year and it will help both in gross margin. There is also some opex helped that will receive as well combined in that range previously mentioned of $7 million to $9 million and then you really get the full run rate and benefit of that in 2026.
Speaker Change: So thanks, Jeremy for that question.
Jeremy: Awesome. Thank you Super helpful. I'll hop back in the queue.
Speaker Change: Okay.
Speaker Change: Thank you next question today is coming from Craig Ellis from B Riley Securities. Your line, there's not a lot.
Speaker Change: Hi, Yeah, it's familiar on for Greg and Thanks for taking my question I wanted to ask about the.
Speaker Change: The A&D business and you guys have kind of characterized that as a high growth business for some time now and you've been seeing some improvement I think now it's about 14% of your total revenues.
Speaker Change: Just wanted to get a sense of is this improvement sort of.
Speaker Change: Quarter to quarter or is this the base being lifted and is this something that we can look forward to long term.
Speaker Change: I would say that we can look forward to that long term, we have great technology across several different product lines that go into aerospace and defense.
Speaker Change: The aerospace piece is mostly gas getting in sealing technologies from the EMS business going into the major.
Speaker Change: Airplane Oems and then from a defense perspective, we have some EMS business in defense around improving rugged ability of certain products and so for certain.
Speaker Change: Programs and.
Speaker Change: Cereals, theyre, making but then it's also our RFS business, which is making the precursors for radars and antennas and so there was great.
Pardon me did we lose a sound.
Speaker Change: Yes.
Speaker Change: Thank you Andre this is Robert and I do apologize please standby.
Speaker Change: Rogers team, we did lose yourself.
Speaker Change: You can still hear me correct, yes, I can thank you.
Speaker Change: Ladies and gentlemen, please standby we seem to have lost the sound of the room.
Speaker Change: Speakers your line is still connected.
Speaker Change: Please standby.
We do apologize it or some technical difficulties.
Speaker Change: I have a line is still connected to that you don't have a volume coming from the speakers. Please standby for one moment. Please.
Speaker Change: One moment, if I'm going to just place for music in the meantime, we'll be back with you. Shortly okay. Please standby. Thank you for your patience.
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay rejoining my Rogers came one moment please.
Speaker Change: Okay, well Youre now rejoined.
Speaker Change: You are back on everyone. Please proceed.
Speaker Change: Well, we gave a nice answer but I understood we were disconnected so.
Speaker Change: Where should we start in terms of what.
Speaker Change: What we say next do we need to reread our scripts.
Speaker Change: King.
Speaker Change: Yeah.
Here with me right now please proceed with B Riley.
Speaker Change: Okay.
Speaker Change: So some may or maybe where you.
Speaker Change: You would ask that question again on A&D, we can be sure to answer that and make sure that comes through.
Speaker Change: Sure sure.
Speaker Change: Yes, I was just saying that you have.
Speaker Change: Doctors, the NDA as a high growth business for some time now and Thats, what im trying to come into fruition.
Speaker Change: It's not picked up to I think about 14% of your total revenues.
Speaker Change: And is this is this drove sort of this quarter to quarter or is the base being lifted and is this something that we can kind of expect this.
Speaker Change: Kind of volume from going forward into the future.
Speaker Change: Yeah.
Speaker Change: So I'll try to remember what I said last time, Noah I'm again, so choking on that so A&D as a core business for us it really breaks into two pieces. The aerospace piece, which is our <unk> technology going to the major aircraft Oems.
Speaker Change: Getting in sealing we also have some <unk> business in defense, where it's improving the rugged ability of whatever product is being produced for the defense Department from a RFS solutions business.
Speaker Change: <unk> make the precursor for radars and antennas and we have multiple program wins across many different programs and with many different primes. So this is a solid base business for US we had a good year in aerospace and defense, we anticipate that to continue going forward and we see the aerospace and defense business for us.
Speaker Change: As a mid single digit growth business.
Speaker Change: In the near medium and longer term.
Speaker Change: Okay, great. Thank you so much and then sort of shifting over to.
Speaker Change: The geopolitical uncertainty that you guys were pointing at.
Speaker Change: In part I think due to tariffs and I'm sure some of it.
Speaker Change: This restriction uncertainty can you guys help me.
Buildup some color on that and then you kind of point to where youre seeing that most and which end markets do you think might relief.
Speaker Change: Sure My last longer.
Speaker Change: So it's a very dynamic landscape the tariff situation is changing almost on a daily basis, we're paying very close attention to it based on the geographic dispersion of our revenues, we've got 44% in Asia and the rest split almost evenly between North America and Europe.
Speaker Change: Our mitigation for what might happen from a tariff perspective is this local for local strategy. So we with.
Speaker Change: With a few exceptions can make all of our products.
Speaker Change: In Asia and supply the Asian market and we have the same capabilities to supply most of our products and produce them in either North America or Europe and can sell in those geographies. So bottom line is we can't predict what's going to happen with tariffs, we pay attention and monitor it everyday but we feel like.
Speaker Change: We've got a very strategic footprint in terms of manufacturing to support our customers going forward in terms of if something happens, which again, we can't predict.
Yeah.
Okay, and then if I could just follow up with that after that really quick.
And then since you guys are positioned well with the local for local is it fair to think about it as any sort of its hesitance would be sort of downstream.
Speaker Change: You guys in supply chain and.
Speaker Change: You are sort of waiting on other players to sort of break the hesitance rather than your direct.
Speaker Change: Elections.
Speaker Change: I'll try to answer that the hesitance from downstream.
Speaker Change: Related to I might not let me try this answer and then we can always circle back in the queue.
Speaker Change: We see a lot of customers, who we've spoken to the.
Speaker Change: Especially in Q1, who are just unclear of whats going to develop in terms of the macro economy, it's been difficult macro headwinds and a lot of different segments inflation is still a bit higher than what people are used to and our customers are extremely cautious in terms of building inventory and feeling comfortable about the year.
Speaker Change: So we anticipate things to settle down as there is more clarity on some of these geopolitical issues and that would lead to a settling of the macro environment and we think things would then get back to a more reasonable cadence in terms of orders and also confidence in the economy across the different regions.
Speaker Change: Got it thank you so much.
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Speaker Change: At this time, please ask one question and one follow up to in terms of the queue, but please press star one to be placed into question Q1 moment. Please while we poll for further questions.
Speaker Change: Okay.
Speaker Change: Once again Thats star one to be placed in the question queue. We reached end of our question and answer session I'd like to turn the floor back over for any further or closing comments.
Speaker Change: Just wanted to say thank you for joining our call and we look forward to following up with many of you with call backs over the next several weeks. Thanks again for attending.
Speaker Change: Thank you that does conclude today's teleconference. Webcast. You may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.
Speaker Change: Yeah.