Rogers CEO Discuses Q3 2010 Results - Earnings Call Transcript
Rogers Corporation (
)
Q3 2010 Earnings Call
November 02, 2010 9:00 am ET
Executives
Bob Wachob - President and CEO
Dennis Loughran - CFO
Debra Granger - Vice President, Corporate Compliance and Controls
Robert Soffer - Vice President and Secretary
Bill Tryon - Manager of Investor and Public Relations.
Analysts
Fred Buonocore - CJS Securities
Avinash Kant - DA Davidson
Jiwon Lee - Sidoti & Company
Shawn Severson – ThinkEquity
Dana Walker - Kalmar Investments
Fred Buonocore - CJS Securities
Ralph Reis - Private Investor
Presentation
Operator
Compare to:
Previous Statements by ROG
»
Rogers Corporation Q2 2010 Earnings Call Transcript
»
Rogers Corporation Q1 2010 Earnings Call Transcript
»
Rogers Corp. Q4 2008 Earnings Call Transcript
»
Rogers Corporation F2Q08 (Quarter End 6/29/2008) Earnings Call Transcript
Good morning. My name is [Wes] and I will be your conference operator today. At this time I would like to welcome everyone to the Rogers Corporation third quarter conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. (Operator Instructions)
Thank you. I will now turn the conference over to Mr. Bob Wachob. Please go ahead, sir.
Bob Wachob
Good morning ladies and gentlemen. With me today are Dennis Loughran, Chief Financial Officer; Deb Granger, Vice President of Corporate Compliance and Controls, Robert Soffer, Vice President and Secretary, Ron Pelletier, Corporate Controller and Bill Tryon, Manager of Investor and Public Relations.
First, Dennis will dispense with the formalities and then we will get right down to business.
Dennis Loughran
I would like to point out to all our listeners 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 of any forward-looking statements.
I will now turn it back over to Bob.
Bob Wachob
Q2 turned out just as we predicted. How often is that happened? One of our markets were strong during the quarter, although as we said in the release, our customers in the high performance phones market, where it meeting to build some inventory and we will need to work it off, but we expect that will be a one quarter event or less.
As we mentioned to you in the past, we are currently focusing on three significant market trends. They are growth of the internet, expansion of mass transit and investment in sustainable energy.
Everywhere we look, we see evidence of the continuing growth of these megatrend. One example is that mobile internet devices are now expected to 55% in 2010 versus the original expectation of 22%.
Tablet type devices are being introduced by a large number of suppliers and are expected to reach 100 million units per year by 2014, up from 13.6 in 2010. In September four of the 3G spectrum winners in India announced the awarding of contracts for base stations, at least just a couple of the good news events positively affecting the megatrend.
Specifically for Rogers’ we are also having considerable success as 41% of our sales year-to-date were in to these megatrend. With 2010 growth in excess of 35% year-over-year, we now have 573 active customer opportunities with the significant increase during Q3 alone.
For the year we have 160% to 170% of the customer opportunities with 50% of them already in production. By all measures Q3 was very successful for Rogers. Importantly one of the new application areas for us, base station antennas, now have four programs in production.
These antennas programs with customers located in China, Korea and the US and additionally an electric vehicle application is now go on to production with anticipated first year sales of about $1 million.
We are now in the process of starting up and qualifying the Printed Circuit Material facility in Suzhou, China, which will add $30 million to $40 million of capacity and $12 million to $16 million of gross margin in fully operational.
The full complements of hourly and salary personnel are in place and have been trained. For the next two quarters, we will have additional wage, salary, utility and material expense connected with the startup, but with little corresponding revenue.
When fully qualified for our customers we will be able to significantly reduce cost in the US, in European operations and we will be in a great position to deal with the expected growth in 4G and other high frequency circuit applications around the world.
We also expect a significant reduction in our finished goods inventory once our new Suzhou operation is in full production. Also in Suzhou, our floats product line has been in rented buildings a few miles what is now our main campus.
We are in the middle of consolidating this float operation, which is with its 300 employees in to some vacant space on the main campus. This should greatly improve workforce flexibility as we will double the hourly staff at this location.
We expect full production of this product line will resume by the end of November. In the meantime, we are shipping from inventory that was build from preparation for this move.
The equipment is begun to arrive at our new Power Distribution Systems’ North American operation, which is located in one of our Chandler, Arizona, facilities. We expect to start up and customer qualification will take two quarters leading to first production shipments in Q2, 2011.
There are significant opportunities in North America for these products within hybrid electric and electric vehicle, variable frequency motor drives and mass transit that can only be addressed with local manufacturing.
Read the rest of this transcript for free on seekingalpha.com
