Rogers Corporation (NYSE: ROG) stock lost over 17.9% on Feb 28th, 2018 (As of 12:22PM EST; Source: Google finance) on concerns over their gross margins.
For the fourth quarter of 2017, the gross margin fell 252 basis points to 36.1%, against Q4 2016 hurt by several items. Adjusted EBITDA was $38 million which is a rise of 17% against Q4 2016. Adjusted EPS rose 45% yoy to $1.36. Net sales rose 21% yoy to $209 million driven by demand in nearly every one of their major markets across all three of their business segments. For full year of 2017, the group delivered a 13% organic growth while new acquisitions enhanced net sales by 12%.
The group expects a top line organic growth of their current businesses in the range of 7% to 10% per year over the next three years. Moreover, the top of the pyramid M&A strategy would add 5% to 8% revenue growth per year over the period for overall topline growth of 15% per year. By the end of 2020, the group forecasts Rogers to achieve roughly $1.2 billion in sales with adjusted operating profit margin at 20%.
They implemented their strategy of mid-very market dynamics and slower global GDP growth to build topline sales from roughly $500 million to $821 million. This is a rise of 64% overall or a 10% compounded annual growth rate.
Moreover, the overall industry drivers also looks favorable as the projections for EV and HEV power train sales have compounded annual growth rates projected to be nearly 50% over the next three years. Moreover, the Chinese government’s recent decision to extend its tax rebate on purchases of EV’s and HEVs through 2020 is also a favorable driver. These drivers would place Rogers witness an ongoing adoption of their silicon nitride substrates for Wide Bandgap Semiconductor’s. These products offer high thermal connectivity and reliability which are essential for EV HEV applications. Their elastomeric materials provide unique sealing and vibration management solutions to protect batteries from water, dust and other extreme environmental conditions while also reducing noise for passengers.