Q3 2025 Rogers Corp Earnings Call

Speaker #1: Good afternoon . My name is Alicia , and I'll be your conference operator today . At this time , I would like to welcome everyone to the ROGERS CORP third Quarter 2020 Earnings Conference call .

Operator: Good afternoon. My name is Alicia, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Rogers Corporation's third quarter 2025 earnings conference call. I will now turn the call over to your host, Mr. Stephen Haymore, Senior Director of Investor Relations. Mr. Haymore, you may begin.

Speaker #1: I'll now turn the call over to your host , Mr. . Steve Hammer , Senior Director of Investor Relations . Mr. hammer , you may begin .

Speaker #2: Good afternoon , and welcome to the Rogers Corporation . Third quarter 2020 earnings Conference call . The slides for today's call can be found in the investor section of our website , along with the news release that was issued earlier today .

Stephen Haymore: Good afternoon and welcome to the Rogers Corporation's third quarter 2025 earnings conference call. The slides for today's call can be found in the investor section of our website, along with the news release that was issued earlier today. Please 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 and should be considered as subject to the many uncertainties that exist in Rogers' operations and environment. 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. Please turn to slide three. The discussions during this conference call will reference certain financial measures that were not prepared in accordance with U.S. generally accepted accounting principles.

Speaker #2: Please 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 , and should be considered as subject to the many uncertainties that exist in Rogers operations and environment .

Speaker #2: 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.

Speaker #2: Please turn to slide three . The discussions during this conference call will reference certain financial measures that were not prepared in accordance with U.S.

Speaker #2: generally Accepted accounting principles . A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures can financial be found in the slide deck for today's call , which are available on our Investor Relations website .

Stephen 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. With me today are Ali El-Haj, Interim President and CEO, and Laura Russell, Senior Vice President and CFO. I'll now turn the call over to Ali.

Speaker #2: With me today are Ali al-Hajj , interim president and CEO . And Laura Russell , senior vice president and CFO . I'll now turn the call over to Ali .

Speaker #3: Thanks , Steve . Good afternoon , everyone , and thank you for joining us today . I'll begin on slide four with the key messages for the quarter .

Ali El-Haj: Thanks, Steve. Good afternoon, everyone, and thank you for joining us today. I'll begin on slide four with the key messages for the quarter. First, since taking on this role in mid-July, I have engaged extensively in meeting with Rogers Corporation employees and customers in Asia, Europe, and the United States. These meetings and discussions have reinforced Rogers Corporation's core strengths and the key growth opportunities ahead. They have also shown the areas where we must improve to achieve renewed growth and sustainable operating performance. To capitalize on these opportunities and to deliver greater returns to shareholders, we are executing on a plan with several critical focus areas. I will cover these in detail and share the progress we have made thus far. Turning to our Q3 results, our sales, gross margins, and adjusted EPS results were all at the upper end of the guidance and exceeded street consensus.

Speaker #3: First , since taking on this role in mid-July , I have engaged extensively meeting with Rogers employees and customers in Asia , Europe and the United States .

Speaker #3: These meetings and discussions have reinforced ROGERS CORP strengths and the key growth opportunities ahead . They have also shown the areas where we must improve to achieve renewed growth and sustainable operating performance .

Speaker #3: To capitalize on these opportunities and to deliver greater returns to shareholders . We are executing on a plan with several critical focus areas .

Speaker #3: I will cover these in detail and share the progress we have made thus far . Turning to our Q3 results . Our sales , gross margins and adjusted EPs results were all at the upper end of the guidance and exceeded street consensus .

Speaker #3: Sales increased by 6.5% from prior by improvements in portable electronics . Industrial , aerospace and end markets . Compared to the prior year , sales increased by 2.7% .

Ali El-Haj: Sales increased by 6.5% from prior quarter, led by improvements in portable electronics, industrial, aerospace, and defense end markets. Compared to the prior year, sales increased by 2.7%. Q3 results benefited from delivering on cost and expense reductions actions. For the fourth quarter, we expect sales and earnings to improve versus the prior year, while typical seasonal factors will lead to a sequential decline. With expense reductions actions completed, adjusted EBITDA margins should improve around 300 basis points versus the prior year. Laura will cover both the Q3 financials and fourth quarter outlook in more details. On slide five, I will discuss the critical initiatives we are advancing in the near and midterm. First, we are committed to improving Rogers Corporation's top-line growth potential. To achieve this, we are intensifying our customer focus with actions underway to better anticipate their needs and improve service levels.

Speaker #3: Q3 results benefited from delivering on cost and expense reductions . Actions for the fourth quarter , we expect sales and earnings to improve versus the prior year .

Speaker #3: While typical seasonal factors will lead to a sequential decline with expense reductions , actions completed , adjusted EBITDA margins should improve around 300 basis points versus the prior year .

Speaker #3: Laura will cover both the Q3 financials and fourth quarter outlook in more detail on slide five. I will discuss the critical initiatives we are advancing in the near and mid-term.

Speaker #3: First , we are committed to improving Roger's top line growth potential . To achieve this , we are intensifying our customer focus with actions underway to better anticipate their needs and improve service levels .

Speaker #3: As we work to delight our customers . We will leverage our global manufacturing capabilities to increase our competitiveness and market share in each region .

Ali El-Haj: As we work to delight our customers, we will leverage our global manufacturing capabilities to increase our competitiveness and market share in each region. We have recently expanded these capabilities as we have started production in the new ceramic facility in China. With a localized supply chain and a regionally competitive cost structure, we are positioned to compete effectively. Delivering innovative new products is also key to achieving our growth objectives. There are compelling opportunities in the technology pipeline and significant future potential applications. In the coming quarters, Rogers Corporation will be introducing new products in all business units, targeting new and adjacent market segments. The next critical priority is to maintain a lean and efficient cost structure. Expense reduction actions and footprint optimization efforts that were started in recent quarters are taking hold, improving EBITDA margins and cash flow.

Speaker #3: We have recently expanded this capability as we have started production in the new ceramic facility in China with a localized supply chain and a regionally competitive cost structure .

Speaker #3: We are positioned to compete effectively delivering innovative new products is also key to achieving our growth objectives . There are compelling in the technology pipeline and significant future potential applications in the coming quarters .

Speaker #3: Rogers will be introducing new products in all business units targeting new and adjacent market segments . The next critical priority is to maintain a lean and efficient cost structure .

Speaker #3: Expense reduction actions and footprint optimization efforts that were started in recent quarters are taking hold . Improving EBITDA margins and cash flow . We are making significant progress on the previously announced restructuring of operations in Germany .

Ali El-Haj: We are making significant progress on the previously announced restructuring of ceramic operations in Germany. Cost savings from this initiative will begin in the fourth quarter, with $13 million of annualized savings targeted by late 2026. We will continue to evaluate our global footprint and make refinements as needed. This may include selective investments to support growth opportunities that meet certain return criteria. These investments will be carefully balanced with vigilant cost control. Operational excellence will remain a top priority, focused on creating a more flexible and dynamic organization. Actions already completed include changes made to the commercial R&D and operations organizational structure in both business units. These changes were implemented to increase the speed of execution, improve accountability, and simplify how we operate. We already are seeing results with significantly reduced lead times, some by as much as 60%, while reducing inventories and improving working capital.

Speaker #3: Cost savings from this initiative will begin in the fourth quarter , with $13 million of annualized savings targeted by late 2026 . We will continue to evaluate our global footprint and make refinements as needed .

Speaker #3: This may include selective investments to support growth opportunities that meet certain return criteria . These investments will be carefully balanced with vigilant cost control , operational excellence will remain a top priority , focused on creating a more flexible and dynamic organization .

Speaker #3: Actions already completed include changes made to the commercial R&D and operations . Organizational structure . In both business units . These changes were implemented to increase the speed of execution , improve accountability , and simplify how we operate .

Speaker #3: We already are seeing results with significant reduced lead times , some by as much as 60% , while reducing inventories and capital . Our revised operating model will continue to drive these types of improvements as we reshape our structure into our customer centric organization .

Ali El-Haj: Our revised operating model will continue to drive these types of improvements. As we reshape our structure into a customer-centric organization, we expect to see more consistent performance and improved returns to shareholders. Lastly, we are also intensely focused on critical initiatives to grow and strengthen Rogers Corporation over the long term. While these objectives are not part of today's discussion, we will share our plans at the appropriate time. On slide six, we'll discuss our sales for the third quarter by end market. Beginning with industrial markets, sales were higher versus the prior quarter in both AES and AMS business units. In Q3, the improvement was broad-based, with sales increasing across all regions. This marks the third consecutive quarter of higher industrial sales, and on a year-to-date basis, we have continued to show growth. Aerospace and defense sales also improved sequentially.

Speaker #3: We expect to see more consistent performance and improved returns to shareholders. Lastly, we are also intensely focused on critical initiatives to grow and strengthen Rogers over the long term.

Speaker #3: While these objectives are not part of today's discussion , we will share our plans at the appropriate time on slide six . We'll discuss our sales for the third quarter by end market , beginning with industrial markets .

Speaker #3: Sales were higher versus the prior quarter in both AOS and AMS . Business units in Q3 , the improvement was broad based , with sales increasing across all regions .

Speaker #3: This marked the third consecutive quarter of higher industrial sales . And on a year to date basis , we have continued to show growth .

Speaker #3: Aerospace and defense sales also improved sequentially . AMS sales increased , driven by stronger commercial aerospace demand in the North American market . AOS defense sales remained strong and were in line with the prior quarter on a year .

Ali El-Haj: AMS sales increased, driven by a stronger commercial aerospace demand in the North American market. AES defense sales remained strong and were in line with the prior quarter. On a year-to-date basis, total A&D sales have increased at a low double-digit rate. EV and HEV sales were relatively unchanged versus the prior quarter. AES sales increased from improved power substrate demand. Year-to-date sales remain well below the prior year. We anticipate further growth in this market, supported by the recent ceramic expansion in China and the recovery in demand from the Western power module manufacturers. As anticipated, ADF sales decreased sequentially. The sales decline tracked lower light vehicle production in Q3. Year-to-date sales remain solidly ahead of 2024. Lastly, portable electronics was the largest driver of the sequential improvement in revenue. The double-digit increase versus the prior quarter was in line with expected seasonal patterns.

Speaker #3: To date, total AMD sales have increased at a low double-digit rate. EV and heavy sales were relatively unchanged versus the prior quarter, as increased sales were driven by improved power.

Speaker #3: Substrate demand . Year to date sales remain well below the prior year . We anticipate further growth in this market , supported by the recent economic expansion in China and the recovery in demand from the Western Power Module manufacturers , as anticipated , sales decreased sequentially .

Speaker #3: The sales decline tracked lower light vehicle production in Q3 year to date , sales remained solidly ahead of 2020 . For lastly , portable Electronics was the largest driver of the sequential improvement in revenue .

Speaker #3: The double-digit increase versus the prior quarter was in line with expected seasonal patterns. I will now turn it over to Laura Russell to discuss our Q3 financial performance and Q4 outlook.

Ali El-Haj: I will now turn it over to Laura to discuss our Q3 financial performance and Q4 outlook.

Speaker #4: Thank . Starting on slide seven , I'll begin with a summary of our third quarter financials . Q3 results , improved meaningfully from the prior quarter , with all financial metrics at the top end of guidance .

Laura Russell: Thank you, Ali. Starting on slide seven, I'll begin with a summary of our third quarter financials. Q3 results improved meaningfully from the prior quarter, with all financial metrics at the top end of guidance. Sales increased across most end markets, with the largest increase in portable electronics and industrial. AES revenues increased by 5.2%, and EMS revenues were 8.7% higher on a quarter-on-quarter basis. GAAP EPS of $0.48 improved significantly from the prior quarter, mainly due to lower restructuring-related expenses. Adjusted EPS in Q3 increased to $0.90 from $0.34 in Q2, a result of the improvement in sales and gross margin and reductions in G&A expenses. Turning to slide eight, Q3 adjusted EBITDA was $37.2 million, or 17.2% of sales. A 540 basis point improvement from the prior quarter was driven by multiple factors.

Speaker #4: Sales increased across most end markets , with the largest increase in portable electronics and industrial revenues increased by 5.2% , and EMS revenues were 8.7% higher on a quarter on quarter basis .

Speaker #4: GAAP EPs of $0.48 improved significantly from the prior quarter , mainly due to lower restructuring related expenses . Adjusted earnings per share in Q3 increased to $0.90 from $0.34 in Q2 , a result of the improvement in sales and gross margin and reductions in G&A expenses .

Speaker #4: Turning to slide eight . Q3 adjusted EBITDA was 37.2 million , or 17.2% of sales . The 540 basis point improvement from the prior quarter was driven by multiple factors .

Speaker #4: First , gross margin increased 190 basis points to 33.5% due to higher volumes , favorable product mix , and reductions in manufacturing costs .

Laura Russell: First, gross margin increased 190 basis points to 33.5% due to higher volumes, favorable product mix, and reductions in manufacturing costs. Late in the third quarter, we started production in our ceramic facility in China. Costs for the initial factory ramp had only a slight impact on Q3 margin. The impact of tariffs on gross margin was minor in Q3. This was a result of continued mitigation efforts and the agreement between the U.S. and China to delay tariff rate increases. Next, adjusted operating expense, excluding stock-based compensation, decreased by $2.5 million quarter-on-quarter. The lowered OpEx resulted from reductions in professional services and global workforce restructuring. Lastly, other income improved $2.6 million due to favorable quarter-over-quarter changes in foreign currency transactions. Continuing to slide nine, I'll discuss cash utilization for the quarter.

Speaker #4: Late in the third quarter , we started production in our facility in China . Cause for the initial factory ramp had only a slight impact on Q3 margin .

Speaker #4: The impact of tariffs on gross margin was minor in Q3 . This was a result of continued mitigation efforts and the agreement between the US and China to delay tariff rate increases .

Speaker #4: Next , adjusted operating expense , excluding stock based compensation , decreased by 2.5 million quarter on quarter . lower OpEx resulted from reductions in professional services and global workforce restructuring .

Speaker #4: Lastly , other income improved 2.6 million due to favorable quarter over quarter changes in foreign currency transaction . Continuing to slide nine , I'll discuss cash utilization for the quarter .

Speaker #4: Cash at the end of Q3 was 168 million , an increase of 10.6 million from the end of the second quarter . Cash provided by operations was 28.9 million and improved due to higher sales and operating income in addition , we improved working capital , particularly inventory , through continued focus cash .

Laura Russell: Cash at the end of Q3 was $168 million, an increase of $10.6 million from the end of the second quarter. Cash provided by operations was $28.9 million and improved due to higher sales and operating income. In addition, we improved working capital, particularly inventory, through continued focus. Uses of cash in the quarter included share repurchases of $10 million and capital expenditures of $7.7 million. For the full year, we forecast capital expenditures in the range of $30 to $40 million. Returning capital to shareholders will remain a priority. Our current view is that share repurchases in Q4 will exceed Q3 levels. Following our purchases in Q3, we have approximately $66 million remaining on our existing share repurchase program. Next, on slide 10, I'll review our guidance for the fourth quarter. Beginning with sales, we expect Q4 revenues to be between $190 million and $205 million.

Speaker #4: In the quarter included share repurchases of 10 million and capital expenditures of 7.7 million . For the full year , we forecast capital expenditures in the range of 30 to 40 million .

Speaker #4: The capital to shareholders will remain a priority . Our current view is that share repurchases in Q4 will exceed Q3 levels following our purchases in Q3 .

Speaker #4: We have approximately $66 million remaining on our existing share repurchase program. Next, on slide ten, we have our revised guidance for the fourth quarter.

Speaker #4: Beginning with sales , we expect Q4 revenues to be between 190 and 205 million . The midpoint of the range is a 3% increase in sales year over year .

Laura Russell: The midpoint of the range is a 3% increase in sales year over year and a 9% decline quarter over quarter. The guidance reflects a normal sequential decline in portable electronics sales from Q3 to Q4 and slower order patterns across most end markets as customers manage year-end inventories. We are guiding gross margin in the range of 30% to 32%. The midpoint of this range is 110 basis points lower than the prior year, with an 80 basis point headwind from the ramp of our ceramic factory in China. Compared to the prior quarter, gross margin is 250 basis points lower due to volume and mix. We expect adjusted operating expenses to decrease from third quarter levels, primarily from lower startup costs, which have moved into gross margin following the start of production at a ceramic facility. EPS is projected to range from break-even to earnings of $0.40.

Speaker #4: And a 9% decline quarter over quarter . The guidance reflects the normal sequential decline and portable electronics sales from Q3 to Q4 . And lowered order patterns across most end markets as customers manage year inventories .

Speaker #4: We are guiding gross margin in the range of 30 to 32% . The midpoint of this range is 110 basis points lower than the prior year , with an 80 basis point headwind from the ramp of our factory in China .

Speaker #4: Compared to the prior quarter . Gross margin is 250 basis points lower due to volume and mix . We expect adjusted expenses to decrease from third quarter levels , primarily from lower start up costs , which have moved into gross margins following the start of production at academic facility .

Speaker #4: EPs is projected to range from breakeven to earnings of $0.40 . The adjusted EPs range is 40 to $0.80 of earnings . We expect adjusted EBITDA margin between 13.5 and 16.5% .

Laura Russell: The adjusted EPS range is $0.40 to $0.80 of earnings. We expect adjusted EBITDA margin between 13.5% and 16.5%, a roughly 300 basis point improvement versus the prior year at the midpoint of the range. The margin and EPS guidance assumes that tariff policies in place today remain unchanged for the quarter. Adjustments to arrive at our non-GAAP EPS and adjusted EBITDA are mainly comprised of restructuring costs related to the ceramic actions in Germany. As communicated last quarter, the restructuring costs associated with this action will be incurred from Q4 of 2025 to Q3 of 2026. We anticipate savings, albeit small, to start in late Q4 of 2025. The program is still anticipated to deliver $13 million of annual run-rate savings. Lastly, we project our non-GAAP full-year tax rate to be approximately 35%.

Speaker #4: A roughly 300 basis point improvement versus the prior year at the midpoint of the range , the margin and EPs guidance assumes that tariff policies in place today remain unchanged for the quarter .

Speaker #4: Adjustments to arrive at our non-GAAP EPs and adjusted EBITDA are mainly comprised of restructuring costs related to the actions in Germany , as communicated last quarter .

Speaker #4: The restructuring costs associated with this action will be incurred from Q4 of 2025 to Q3 of 2026 . We anticipate savings , albeit small , to start in late Q4 of 25 .

Speaker #4: The program is still anticipated to deliver 13 million of annual run rate savings . Lastly , we project our non-GAAP full year tax rate to be approximately 35% .

Speaker #4: The higher expected tax rate is mainly due to certain loss jurisdictions where no tax benefits can be realized . I will now turn the call back over to Ali .

Laura Russell: The higher expected tax rate is mainly due to certain lost jurisdictions where no tax benefits can be realized. I will now turn the call back over to Ali.

Speaker #3: Thanks , Laura . In summary , there is a clear focus on the key initiatives to grow the top line , improve the cost structure , and further operational excellence .

Ali El-Haj: Thanks, Laura. In summary, there is a clear focus on the key initiatives to grow the top line, improve the cost structure, and further operational excellence. Combined with a renewed customer focus and new product introductions, we see significant opportunity to improve Rogers Corporation's performance over the near and long term. That concludes our prepared remarks. I will now turn the call back to the operator for questions.

Speaker #3: Combined with a renewed customer focus and new product introductions , we see significant opportunity to improve Rogers performance over the near and long term .

Speaker #3: That concludes our prepared remarks . I will now turn the call back to the operator for questions .

Speaker #1: Thank you . We will now be conducting a question and answer session . If you would like to ask a question , please press star one on your telephone keypad .

Operator: Thank you. We'll now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. So that we may address questions from as many participants as possible, we ask that you limit yourself to one question and one follow-up. If you have additional questions, you may re-queue, and time permitting, those questions will be addressed. One moment, please, while we pull for questions. Thank you. Our first question comes to the line of Daniel Moore with CGS Securities. Please proceed.

Speaker #1: A confirmation tone will indicate your line is in the question queue . You may press star two . If you would like to remove your question from the queue for participants using speaker equipment , it may be necessary to pick up your handset before pressing the star key's so that we may address questions from as many participants as possible .

Speaker #1: We ask that you limit to one question and one follow up . If you additional questions , you may requeue and time permitting , those questions will be addressed One moment please , while we pull for questions .

Speaker #1: Thank you . Our first question comes from the line of Daniel Moore with KGI securities . Please proceed .

Speaker #5: Thank you . Good afternoon . Thanks for the color and taking the questions . I'll start with top line and , you know , just kind of general revenue trends , guidance for Q4 implies 2 to 3% growth at the midpoint year on year .

[Analyst 1]: Thank you. Good afternoon. Thanks for your color and taking the questions. I'm going to start with top line and just kind of general revenue trends. Guidance for Q4 implies 2% to 3% growth at the midpoint year on year. Just talk about confidence in demand continuing to build in those key end markets that you called out, like industrial, aerospace, and defense, some of your larger end markets. As we look out to the first half of 2026, would you expect similar, if not improved, year-on-year growth, particularly given some of the easier comps that we have in the first half of the year?

Speaker #5: Just talk about , you know , confidence in demand , continuing to build in those key end markets that you called out like industrial , you know , aerospace and defense .

Speaker #5: Some of your larger end markets . And as we look out to to the first half of 26 , would you expect similar not , improved year on year growth , particularly given , you know , some of the easier comps that we have in the first half of the year ?

Speaker #6: Yeah . Hi , Dennis . Ali , look , we're confident in the range that we've given you based on what we see today .

Ali El-Haj: Yeah. Hi, Dennis. Ali. Look, we're confident in the range that we've given you based on what we see today. Absent macroeconomic change, we're very confident with the range that we've given you for Q4. We expect the market to continue strong for us in all activities, all market segments. The only one we're probably still hesitant is the EV market and how far can it recover for us. That's the only concern. That's baked into the forecast or the guidance that we provided. As for the first six months of 2026, we actually have high confidence in better performance and continued growth in all business segments.

Speaker #6: You know , absent you know , macroeconomics change . We're very confident with the range that we've given you for Q4 . So we expect the market to continue strong for us in all activities .

Speaker #6: The only one that we all market segments , the only one would probably still hesitant is the EV market . And how far can it recover for us , that's the only concern .

Speaker #6: But that's that's baked into the forecast that we or the guidance that we provided . As for the first six months of 2026 , we have high confidence in , you know , better performance and continued growth in all business segments .

Speaker #5: Very helpful . And maybe for Laura , you know , gross margin recovered to 33.5% this quarter . Obviously mix helps . You know it's a seasonally stronger quarter .

[Analyst 1]: Very helpful. Maybe for Laura, the gross margin recovered to 33.5% this quarter. Obviously, mix helps. It's a seasonally stronger quarter. As we look out, two questions. One, that 80 basis point headwind in Q4, how should we think about that kind of dissipating as we move into the first half of next year? Two, what in your mind is sort of a baseline for gross margins on an annualized basis? What could an upside scenario look like? I'll jump back to you with any follow-ups. Thank you.

Speaker #5: But as we look out you know two questions . One , that 80 basis point headwind in Q4 , how should we think about that kind of dissipating as we move know , the first half of next year ?

Speaker #5: And to what in your mind is sort of a baseline for gross margins ? You know , on an annualized basis ? And what could an upside scenario look like ?

Speaker #5: And I'll jump back to you with any follow ups . Thank you .

Speaker #7: Okay . Sounds good . So let me address the first half of your question , Dan . So the 80 basis point headwind that we're going to face in the fourth quarter associated ramp at the facility in China is pretty typical of what we would anticipate .

Laura Russell: Okay. Sounds good. Let me address the first half of your question, Dan. The 80 basis points headwind that we're going to face in the fourth quarter associated with the ramp of the ceramic facility in China is pretty typical of what we would anticipate as we begin production in that facility. I think, as Ali mentioned in the prepared remarks, we have activities ongoing with many customers. We're looking to qualify and ramp those customers into full manufacturing production volumes, which will facilitate us getting ahead of that headwind and turning into return from that facility, which correlates with the investment they want to build out a regional capability and capacity and allow us to be far better positioned to compete locally in that market.

Speaker #7: You know , begin production in that facility , I think as Ali mentioned in the prepared remarks , we have activities ongoing with many customers , and we're looking to qualify and customers into full manufacturing production volumes , which will facilitate us getting ahead of that headwind and turn into return from that facility , which correlates with the investment that we undertook to to build our regional capability and capacity and allow us to be far better positioned to compete locally in that market .

Speaker #7: So what I would anticipate is it will take time to fully ramp the capacity through 2026 , not necessarily because of our readiness , but because of the time it takes to qualify the customers product and their solution directly from our factory .

Laura Russell: What I would anticipate is it will take time to fully ramp the capacity through 2026, not necessarily because of our readiness, but because of the time it takes to qualify the customer's product and their solution directly from our factory. Those activities are ongoing. We would anticipate, as we reach the back end of next year, to not be facing the same extent of headwinds to the margin from that operation. In terms of thinking about the potential for the business and the margin optimized, Ali spoke about the initiatives and the objectives that we have. A lot of them will crystallize and improve financial results as we embed a new operating model and deliver improved operational effectiveness and grow the top line. I've spoke previously about our current investments and the capacity being in place.

Speaker #7: So those activities are ongoing , and we would anticipate , as we reach the back end of next year , to not be facing the same extent of headwinds to the margin from that operation in terms of thinking about the potential for the business and the margin optimized , you know , Ali spoke about the initiatives and the objectives that we have .

Speaker #7: A lot of them will crystallize and improve financial results as we embed the new operating model and deliver improved operational effectiveness and grow the top line .

Speaker #7: I've spoke previously about our current investments in the capacity being in place . So now we're turning our attention to optimizing that capacity and utilizing it to to serve the demand and the potential that we see .

Laura Russell: Now we're turning our attention to optimizing that capacity and utilizing it to serve the demand and the potential that we see.

Speaker #5: That is very helpful . Laura . I'll jump back . Let me follow ups . Thank you .

[Analyst 1]: That is very helpful, Laura. I'll jump back with any follow-ups. Thank you.

Speaker #7: Thank you .

Laura Russell: Okay.

Speaker #1: Thank you . Our next question comes from the line of Craig Ellis with B Riley Securities . Please proceed .

Operator: Thank you. Our next question comes from the line of Craig Ellis with B. Riley Securities. Please proceed.

Speaker #8: Yeah . Thank you for all of the information and for taking the question . Laura . I'll just start on the theme that Daniel was on and just take the the cost and margin dynamics a step further .

[Analyst 2]: Thank you for all of the information and for taking the question. Laura, I'll just start on the theme that Daniel was on and take the cost and margin dynamics a step further, perhaps. My sense from your characterization as you walk through some of the slides in the cost savings, which I think are targeted at $25 million this year with a $32 million run rate, and then we've got $13 million coming from the German facility next year, is that there may be other cost benefits that could be executed against, beyond things that are in progress and the German facility benefit. One, is that correct? Two, how material could those things be and when could they start to be things that would be actionable as we look at where profitability and cash conversion can ultimately go for the business?

Speaker #8: Perhaps so I my sense from your characterization as you walk through some of the slides in the cost savings , which I think are targeted at 25 million this year with a 32 million run rate , and then we've got 13 million coming from the German facility next year .

Speaker #8: There may be other cost benefits that could be executed against beyond things that are in progress, including the benefits from the German facility.

Speaker #8: One is that correct ? And to how material could those things be ? And and when could they start to be things that would be actionable ?

Speaker #8: As we look at where profitability and cash conversion can ultimately go for the business .

Speaker #7: Okay . So let me let me start . And now I can , you know , add comment as he sees fit . So in terms of the plans that we've already outlined , and where we're at in executing those , the 25 million savings in 25 at Woking to you can see that crystallizing in the PNL at the moment , based on the guide that we've given , if you look on a year on year basis , if you look at the OpEx and totality , you know , we're roughly 210 million last year .

Laura Russell: Okay. Let me start, and Ali can add additional comments as he sees fit. In terms of the plans that we've already outlined, Craig, and where we're at in executing those, the $25 million savings in 2025 that I've spoken to, you can see that crystallizing in the P&L at the moment, based on the guide that we've given. If you look on a year-on-year basis, if you look at the OpEx in totality, we're roughly $210 million last year. With our guidance, we're probably about $18 to $20 million below that in our update for 2025. You can see that coming to fruition from a full-year basis, and just to give clarity, that's because 70% of the $25 million is in OpEx and the residual is in gross margin.

Speaker #7: And with our guidance , we're probably about 18 to 20 million below that in our update for 2025 . So you can see that coming to fruition from a full year basis .

Speaker #7: And sorry , give clarity , that's because about 70% of the 25 million in opex and the residuals in gross margin you look on an annualized basis , as you stated , that should be more like 32 million benefit across both PNL geographies in 26 and in addition to that , as we announced last quarter , and as you correctly commented , the restructuring in Germany has commenced , the programs largely on track , and that's set to deliver 13 million on an annualized run rate basis just to remind you that that Cogs , not in OpEx saving .

Laura Russell: If you look on an annualized basis, as you stated, that should be more like $32 million, a benefit across both P&L geographies in 2026. In addition to that, as we announced last quarter and as you've correctly commented, the restructuring in Germany has commenced. The program's largely on track, and that's set to deliver $13 million on an annualized run-rate basis. Just to remind you, that $13 million, those are COG savings, not an OpEx saving. We won't see that fully materialize until later into 2026, just as we go through the ramp down of the capacity and the ramp-up in servicing some of those customers in the new geography in China. That's what we have there. In terms of incremental opportunity beyond that, what I would tell you is you hear us talk about efficiency in the operating model.

Speaker #7: We won't see that fully materialize until later into 2026 . Just as we go through , you know , the ramp down of the capacity and the ramp up in service in some of those customers in the new geography in China .

Speaker #7: So that's what we have there in terms of incremental opportunity beyond that . And what I would tell you is you talked about of the business .

Laura Russell: We will look to optimize the financial performance of the business month to month. That's exactly the discipline that we have, but with an increased intensity to that discipline with the processes and the approach that's now being deployed. With that, we will evaluate the business and the market opportunities as they present themselves and make appropriate investments or savings as needed. In terms of defined plans at the moment, it's the ones that we've already shared and I've just walked through just now.

Speaker #7: You know , month to month . And that's exactly the discipline that we have . But we've increased intensity that discipline with the processes and the approach that's now being deployed .

Speaker #7: So with that we will evaluate the business and the market opportunities as they present themselves and make appropriate investments or savings as , as , as needed in terms of defined plans at the moment , it's the ones that we've already shared , and I've just walked through just now .

Speaker #8: That's very helpful . And I think the execution on cost and other things have been quite notable over the last 3 to 4 quarters .

[Analyst 2]: That's very helpful. I think the execution on cost and other things have been quite notable over the last three to four quarters, Laura. It will be nice to see those continue. Ali, I'll turn my second question to you. You noted in your prepared remarks that the industrial end market, which is our biggest, was an area of strength. My question is, as you look at the dynamics in that end market, what is it that drove that strength? As you think about growth in that large end market, what are the opportunities specifically to drive growth? Do you think that we're at a point where supply chain inventories are no longer a headwind to that business?

Speaker #8: Laura . So it'll be nice to see those continue . Olly I'll turn my second question to you . You noted in your prepared remarks that the industrial and market , which is our biggest , was an area of strength .

Speaker #8: My question is , as you look at the dynamics in that and market , what is it that drove that strength ? And as you think about growth in that large end market , what are the opportunities specifically to drive growth ?

Speaker #8: And and do you think that we're at a point where supply chain inventories are no longer a headwind to that business ?

Speaker #6: Yeah, thanks. I'll answer the question kind of backwards from inventory supply chain issues. I think that's way behind us now.

Ali El-Haj: Yeah, thanks. I'll answer the question kind of backward. From inventory and supply chain issues, I think that's way behind us now. That's all kind of cleared up. I think we're looking forward in the potential for growth. We have three elements that we're targeting or we're working on. One is we're capturing more market share from products and customers that we already have and customers that we didn't have in the past. Increasing market share, this is key for us. This is for assets that we have so we can utilize these assets. We have the capacity to supply these type of products. In addition to that, and this is significantly important, I think our customers have started to see our improvement in response and service for their demand and need. We're seeing a lot more demand and a lot more of these volumes shifted back to us.

Speaker #6: So that's all kind of cleared up . I think we're looking forward . And the potential for growth . So we have three elements that we're targeting or we're working on .

Speaker #6: One is we're capturing more market share from products and customers that we already have and customers that we didn't have in the past .

Speaker #6: So increasing market share , this is key for us . And again , this is for assets that we have . So we can utilize these assets .

Speaker #6: We have the capacity to supply these these Apple products . In addition to that . And that is significantly important . I think our customers started to see our improvement in response and service .

Speaker #6: And for their demand and need . So we're seeing a lot more demand and a lot more of these volumes shifted back to us .

Speaker #6: The third element is introduction of new products . So as I indicated , we will be launching , we actually started this in Q4 of this year , going forward , several new products that will allow us to even penetrate markets that we have not participated in in the past .

Ali El-Haj: The third element is the introduction of new products. As I indicated, we will be launching, we actually started this in Q4 of this year, going forward, several new products that will allow us to even penetrate markets that we have not participated in in the past. I think all those three elements were really giving us a lot more confidence that we will continue to grow the top line.

Speaker #6: So I think all those three elements were really given us a lot more confidence that we will continue to grow the top line .

Speaker #8: That's very helpful . And if I could just ask a clarification on the heels of those three drivers , Ali , as you've interacted with the internal team , as you've interacted with partners and customers , do you feel like pricing is at the right level for the high value that Rogers products bring to market , is there opportunity to do things tactically with pricing so that more of the functional value that Rogers provides come home to the top line and down to the bottom line ?

[Analyst 2]: That's very helpful. If I could just ask a clarification on the heels of those three drivers, Ali, as you've interacted with the internal team, as you've interacted with partners and customers, do you feel like pricing is at the right level for the high value that Rogers Corporation products bring to market, or is there opportunity to do things tactically with pricing so that more of the functional value that Rogers Corporation provides comes home to the top line and down to the bottom line?

Speaker #6: I think the simple answer is a combination of both . So I think I think Rogers brand name and and , you commands obviously a premium pricing in certain markets , certain applications , that's been a key for us .

Ali El-Haj: I think the simple answer is a combination of both. I think Rogers Corporation brand name and quality, you know, commands obviously a premium pricing. In certain markets, certain applications, that's been a key for us. However, there's other markets and areas where really the market commands the pricing. In this case, what we're doing internally is we need to make sure we focus on the cost structure that we have today to be able to compete effectively in these markets and be able to realize the margins and the returns that we expect to get.

Speaker #6: However , there's other markets and areas where really the market commands the pricing . And in this case , what we're doing internally is we need to make sure we focus on the cost structure that we have today to be able to compete effectively in these markets and be able to realize the margins and the returns that we expect to get .

Speaker #8: Very helpful . Thank you luck .

[Analyst 2]: Very helpful. Thank you and good luck.

Speaker #8: and good

Laura Russell: One point of clarification just before we jump off, naturally, what I was discussing in the OpEx spreadsheets was adjusted OpEx.

Speaker #7: One point of clarification just before we jump off , quite naturally , what I was discussing in the opex bridges was adjusted OpEx .

Speaker #8: Yep . Got it . Thank you . Laura .

[Analyst 2]: Yep, got it. Thank you, Laura.

Speaker #7: Thank you .

Laura Russell: Thank you.

Speaker #1: Thank you . Our next question comes from the line of David Silver with Freedom Capital Markets . Please proceed .

Operator: Thank you. Our next question comes from the line of David Silver with Freedom Capital Markets. Please proceed.

Speaker #8: Yeah . Hi . Thank you . First question would be for Ali and I .

[Analyst 3]: Yeah. Hi. Thank you. First question would be for Ali. I took note in your opening remarks that your first task, I guess, upon becoming Interim CEO was to visit with a number of your key customers, I guess, you mentioned globally. Your company's gone through an extended or the industry's gone through an extended period of kind of softer demand. There's been inventory issues. There's been more recently tariff issues. Would you say that the relationships with your key customers remain as strong as they were, let's say, 18 months ago? Or due to some of those changes, does Rogers Corporation need to take maybe some further steps to even more closely align with your key customers and collaboration partners in order to meet your goals?

Speaker #9: Took note in your opening remarks that your first task , I guess upon becoming interim CEO was to visit with a number of your key customers .

Speaker #9: I guess you mentioned globally . So

Speaker #9: guess your company has gone through an extended or the industry has gone through an extended period of kind of softer demand . There's been inventory issues .

Speaker #9: There's been more recently tariff issues , you know , would you say that the relationships with your key customers remain ? You know , as strong as they were , let's say , 18 months ago or due to some of those changes , does Rogers need to take maybe some further steps to even more closely align ?

Speaker #9: You know , with your key customers and collaboration partners ? You know , in order to meet your goals . So what is the status of the relationships over an extended period of reduced demand ?

[Analyst 3]: What is the status of the relationships over an extended period of reduced demand and then the significant steps you've taken thus far to reduce costs and tighten your alignment? Are there further steps, tactically or strategically, that you need to undertake? Thank you.

Speaker #9: And then the significant steps you've taken thus far to reduce costs and tighten your alignment ? Are there further steps tactically or strategically , that that you need to undertake ?

Speaker #9: Thank you .

Speaker #6: Yeah . Thank you question . I think again , I think relationship with our customers is very strong . I think it's solid .

Ali El-Haj: Thank you for the question. I think the relationship with our customers is very strong. I think it's solid. There's a lot of history here behind some of those customers, especially the key customers. I think my objective was really to develop some deeper understanding of the needs, listen to their voice, and understand their needs, expectations from Rogers Corporation, and making sure we're really paying attention to that and addressing those issues. This communication really improved our understanding of their expectations. That could have been, in some cases, maybe because of outside factors, whether it's supply chain interruptions, raw materials that we went through in the past three, four years. Obviously, that caused some hiccups in that or some, I would say, minor disruption and caused some pain to some of those customers. I think this understanding really now is very clear.

Speaker #6: There's a lot of history here behind some of those customers , especially the key customers . I think my , my , my objective was , is really to develop some deeper understanding of , of the needs , listen to their voice and understand their needs , expectations from Rogers and making sure we really paying attention to that .

Speaker #6: And addressing those issues . So , you know , this , this communication really improved our our understanding of their expectations that could have have been , you know , in some cases , maybe because of our factors , whether supply chain interruptions , raw materials that we went through in the past 3 or 4 years , and obviously that caused some some hiccups in that or some I would say some minor disruption and some some pain to some of those customers .

Speaker #6: So I think we this understanding really now is very clear . Our understanding of their needs is very clear . And we align the organization itself internally to make sure we address those issues day in and day out across the whole spectrum , throughout the whole organization , not just the sales or the R&D , but when it comes to service .

Ali El-Haj: Our understanding of their needs is very clear. We aligned the organization itself internally to make sure we address those issues day in and day out across the whole spectrum throughout the whole organization, not just the sales or the R&D, but when it comes to service. We've mentioned some of the improvements we've made internally. Currently, time to 60 and some plans even higher than that. We're responsive. We're being more responsive. We think now we expect by the end of 2026, hopefully, to be the benchmark in the industry when it comes to the service level and quality and these types of activities. With regard to the second half of your questions, continuous improvements never stop.

Speaker #6: And we've mentioned some of the improvements we've made internally. Current lead time is 60 in some plants, even higher than that.

Speaker #6: So we're responsive . We're being more responsive . We think now we we expect by the end of 2026 hopefully to be the benchmark in the industry when it comes to the service level and quality and these type of activities with regard the second half of your questions .

Speaker #6: Continuously , improvements never stops . So this is going to be an ongoing effort to continue to to work on our operations and continue to improve our processes , whether it's in the manufacturing processes or , again , the customer service area , the sales area , the development processes .

Ali El-Haj: This is going to be an ongoing effort to continue to work on our operations and continue to improve our processes, whether it's in the manufacturing processes or, again, the customer service area, the sales area, the development processes. We're looking to reduce our development time and engineering significantly to be able to introduce products faster. Because we need to be, again, expecting the demand and need of the customers and be up there and upfront and be there when they need us, not react, and supply them stuff beyond or delaying their expectations and delaying their introductions. These are things we continue to focus on. A lot of it is in our or within our control. Therefore, I'm very confident we're going to get these things accomplished.

Speaker #6: You know , we're looking to reduce our development time and engineering significantly to be able to introduce products faster . And because we need to be , expecting the demand and need of the customers and be up there and up front and be there when they need us , not react .

Speaker #6: You know, we supply them stuff and beyond, or delaying their expectations and delaying their introductions. So these are things we continue to focus on.

Speaker #6: A lot of it is in our or within our control , and therefore we I'm very confident we're going to get these things accomplished .

Speaker #9: Okay . Thank you for that . I did want to maybe ask a question about your philosophy about share buybacks and returning cash to shareholders in general .

[Analyst 3]: Thank you for that. I did want to maybe ask a question about your philosophy about the share buybacks and returning cash to shareholders in general. The funds, I guess, over the past few quarters, including the current one, the funds allocated to buybacks have increased significantly over, let's say, the trend over the past several years. I think Laura indicated there'll be further repurchase activity in the fourth quarter. Just philosophically, is this a decision by management to act opportunistically because of maybe where the share price was earlier this year? Would you say it's more programmatic and share repurchases are likely to continue at a higher level than has been the typical levels over the past several years?

Speaker #9: But the funds , I guess over the past few quarters , including the one , I mean , the funds allocated to buybacks have increased significantly over , let's say , the trend over the past several years .

Speaker #9: current

Speaker #9: And I think Laura indicated there'll be further repurchase activity in the fourth quarter just philosophically , is this a decision by management to act opportunistically ?

Speaker #9: You know, perhaps it’s related to where the share price was earlier this year? Or would you say it's more programmatic, and share repurchases are likely to continue at a higher level than what has been the typical levels over the past several years?

Speaker #7: Hi , David . So let me start with that . So yes , it would be fair to say that it's been somewhat

Laura Russell: Hi, David. Let me start with that. Yes, it would be fair to say that it's been somewhat opportunistic. It's an indication of our belief in their potential with the share repurchases that we had undertaken this year when our stock price was where it was. We did do a further $10 million in Q3. I'd indicated in our call that we would likely do a little more than that in the fourth quarter. What I think is critical, though, is you asked about the philosophy around share buyback. Really, for us, it's about looking for optimizing returns for our shareholders as part of our capital allocation structure. What we had seen through 2025 as well, as we were still active in evaluating M&E and potential opportunities, there hadn't been presented opportunity or target that met our investment and return criteria.

Speaker #7: opportunistic . It's an indication of our belief in their potential with the sheer repurchases that we had undertaken this year when our stock price was where it was .

Speaker #7: We did do a further 10 million in Q3 , and I'd indicated in our in our call that we would likely do a little more than that in the fourth quarter .

Speaker #7: And what I think is critical , though , is you asked about the philosophy around share buyback and really for us , it's about looking for optimizing returns to our shareholders as part of our capital allocation structure and what we had seen through 25 , is whilst we were still active in evaluating M&A and potential opportunities , there hadn't been presented opportunity or target that met our investment and return criteria .

Speaker #7: And we had already explained we were largely through the organic investments that we saw for expanding the company and its existing structure , with its existing technologies .

Laura Russell: We had already explained we were largely through the organic investments that we saw for expanding the company in its existing structure with its existing technologies. That's what resulted in the pivot to the share repurchase activity. As with every quarter, we'll continue to evaluate the investment potential and seeking to optimize those returns. We'll balance what we do on a go-forward basis between all three legs as well as the capital allocation structure.

Speaker #7: So that's what resulted in the pivot to this repurchase activity . Now , as with every quarter , we'll continue to evaluate investment potential and seeking to optimize those returns .

Speaker #7: And we'll balance what we do on a go forward basis between all three legs , as well as the capital allocation structure .

Speaker #9: Okay . Thank you very much .

[Analyst 3]: Okay, thank you very much.

Speaker #7: You're welcome .

Laura Russell: You're welcome.

Speaker #1: Thank you . As a reminder to ask a question , please press star one . Our next question comes from the line of Daniel Moore with CDs securities .

Operator: Thank you. As a reminder, to ask a question, please press star one. Our next question comes from the line of Daniel Moore with CGS Securities. Please proceed.

Speaker #1: Please .

Speaker #5: Thanks again . First couple questions . More high level . You know , looking out to next year . But just in terms of Q4 , you came in at the top end of the range this quarter .

[Analyst 1]: Thanks again. First couple of questions, more high-level, looking out to next year. In terms of Q4, you came in at the top end of the range this quarter. Guidance for Q4, again, implies a pretty wide range. Just talk about the puts and takes that could cause you to come in to a lower or higher for that range this quarter. Thanks again.

Speaker #5: Guidance for Q4 . Again implies a pretty wide range . Just talk about the the puts and takes that could cause you to come in toward lower or higher that range this quarter .

Speaker #5: Thanks again .

Laura Russell: Dennis, Laura, let me start. We guided based on our current visibility. We stated in the prepared remarks, really, what we typically experience and what we've incorporated is the slowdown in portable electronics into the fourth quarter versus the third and the customer management of inventories. We may see some change in that inventory management. We've got a substantial exposure in the industrial space. If we see those indices shift and increased investments, then we have the capability to respond to demand as it comes in. If we go the other way and there's any weakness, which is not anticipated based on the guide, then we would manage the way we do, week to week, month to month on our activities. At the moment, with the visibility we have, the guidance is as it stands.

Speaker #7: So , Dana , it's Laura . Let me start . So you know , we guided based on our current visibility and you know , and we stated in the prepared remarks , really what we typically experience and what we've incorporated is the the slowdown in portfolio electronics into the fourth quarter versus the third .

Speaker #7: And the customer management of inventories . Now , we may see some change in that inventory management . We may see some , you know , we've got a substantial exposure in the industrial space .

Speaker #7: If we see those industries shift and increased investments, then we have the capability to respond to demand as it comes in. And if we go the other way and there's any weakness which is not anticipated based on that, then we would manage that.

Speaker #7: We would , you know , week to week , month to month on our activities . So at the moment , you know , with the visibility we have , the guidance is as it stands .

Speaker #5: Sorry about that . I was on Thank you . I think that covers the rest of my questions . Thank you very much .

[Analyst 1]: Sorry about that. I was on mute. Thank you. I think that covers the rest of my questions. Thank you very much.

Speaker #7: You're welcome .

Laura Russell: You're welcome.

Speaker #1: Thank you . As a reminder , it's Star One to ask a question . I have a our next question comes from the line of Craig Ellis with B Riley Securities .

Operator: Thank you. As a reminder, it's star one to ask a question. Our next question comes from the line of Craig Ellis with B Riley Securities. Please proceed.

Speaker #1: Please proceed .

Speaker #8: Yeah . Thanks for taking the question . I was hoping to go back and and just get a real long term perspective on what the view is with the China facility , both with respect to the diversity of that you think you can have in that facility , how you're thinking about being able to ramp up that facility beyond the very near-term gating factors like the specific customer and program calls that would start product , but what are the strategies the company has to engage with customers and grow both domestically and international ?

[Analyst 2]: Thank you for taking the question. I was hoping to go back and get a real long-term perspective on what the view is with the China ceramic facility, both with respect to the diversity of customers that you think you can have in that facility, how you're thinking about being able to ramp up that facility beyond the very near term, gating factors like the specific customer and program calls that would start product. What are the strategies the company has to engage with customers and grow both domestics and internationals that might need manufacturing autos there? Anything else that would help us form an insightful view on what you think is possible over the next two to three years with that facility would be appreciated. Thank you.

Speaker #8: So that might need manufacturing orders . There . And then anything else that would help us form a an insightful view on what you think is possible over the next 2 to 3 years .

Speaker #8: With that facility . Thank you .

Speaker #6: Yeah . Okay . Greg , I think , you know , obviously we did not build this blindly , you know , so we we were engaging with customers before we started the facility and started building the facility .

Ali El-Haj: Yeah. Okay, Greg. I think, you know, obviously, we did not build this blindly. We were engaging with customers before we started the facility and started building the facility and restructuring. From a customer activities and potential, it's all available to us. It's there. I can assure you that we already have several programs that were being sourced and committed by some of our customers. What we're going through is what we indicated earlier. We have some qualification, that product qualification, process qualification that we're going through with our customers. That's probably the gating item here. As some of these things get approved, they will launch because the demand is there. It's multiple customers, some existing customers, and a few additional newer customers and newer applications for us. The future for the ceramic facility in China is very bright as we see it today.

Speaker #6: And restructuring . So from a customer activities and potential , it's all available to us . It's there . So I can I can assure you that we already have several programs that we've been sourced and committed by some of our customers .

Speaker #6: So, what we're going through is what we indicated earlier. We have some qualification, that product process qualification, qualification that we're going through with our customers.

Speaker #6: And that's that's probably the gating item here . As some of these things get approved , they will launch because the demand is there .

Speaker #6: We and it's multiple customers . Some existing customers and a few additional newer customers and newer applications for us . So the future for economic facility in China is very bright as we see it today .

Speaker #6: We we expect significant growth . Growth qualification in the facility and in the overall economic business . So we're still believe that the growth there is very solid and we can forecast it .

Ali El-Haj: We expect significant growth in the facility and in the overall ceramic business. We still believe that the growth there is very solid, and we can forecast it.

Speaker #8: Thanks , Ali . And to follow up on one of the points that you made and understand it more deeply , if the gating factor near term is just the calls that we're doing , whether it be product or process , what are the levers that the company has to maximize the speed at which that can happen , whether it be how you're staffing the facility , the the shifts that may be running or just technical things that need done , just any further color , there would be helpful .

[Analyst 2]: Thanks, Ali. To follow up on one of the points that you made and understand it more deeply, if the gating factor near term is just the calls that we're doing, whether it be product or process, what are the levers that the company has to maximize the speed at which that can happen, whether it be how you're staffing the facility, the shifts that may be running, or just technical things that need to be done? Any further color there would be helpful. Thank you.

Speaker #6: mean , the facility is already staffed for the current volume and for the expected forecasted volume for the next . With regard to the expertise and experts and all the staffing that we need , the support function , the functions there already available , it's already staffed .

Ali El-Haj: Yeah. I mean, the facility is already staffed for the current volume and for the expected forecasted volume for the next quarter. With regard to the expertise and experts and all the staffing that we need, the support functions, they're already available and already staffed. I think some of the issues that I've mentioned is this type of qualification is really at the customer's end. We've done all the work internally for most customers. The next phase is their own qualification of the product itself. We're trying to assist some of those customers, actually doing some testing for them to speed up that process. I think overall, we believe we're on track to hit the numbers that we're forecasting for 2026.

Speaker #6: Think some of the issues that that I've mentioned is these type of qualification is really at the customer's end . We've done all the work internally for most customers , and now the the next phase is their own qualification of the product itself .

Speaker #6: And we're trying to assist some of those customers actually doing some testing for them to speed up that process . So I think overall , we believe we're on track to hit them .

Speaker #6: The numbers that we're forecasting for 2026.

Speaker #8: Very helpful . Thank you .

[Analyst 2]: Very helpful. Thank you.

Speaker #6: Sure .

Ali El-Haj: Sure.

Speaker #1: Thank you. There are no further questions at this time. And with that, this concludes today's teleconference. You may disconnect your lines at this time.

Operator: Thank you. There are no further questions at this time. With that, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.