Rogers Corporation (ROG) | The Buildout — AI Infrastructure
The Verdict
Rogers Corporation designs and manufactures high-performance engineered materials and components. Its Advanced Electronics Solutions segment produces circuit materials, ceramic substrates, busbars, and cooling solutions, while Elastomeric Material Solutions makes engineered elastomers for cushioning, sealing, and thermal management. The link to the AI buildout sits in AES: microchannel coolers for high-power AI chips and high-frequency circuit materials for signal integrity in next-generation servers.
| Market Cap | — |
| Revenue (TTM) | $827M |
| Revenue Growth | +3.9% |
| EBITDA Margin (TTM) | 15.0% |
| Net Cash | $191M |
| Earnings Beats | 6 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Top-line growth stepped from +5% in Q1 2026 to +6.9% in Q2 2026, with Q3 guidance midpoint implying +10% YoY.
- Adjusted EBITDA margin expanded 580 bps YoY in Q1 and 550 bps YoY in Q2; Q3 guidance midpoint implies 19.7%.
- Curamik restructuring is on track for $13 million in annualized savings by Q4 2026, with some savings already visible.
- High-frequency data center materials moved to active sampling with multiple customers ahead of the promised two-quarter timeline.
- Cash and short-term investments were above $211 million at Q2 2026, with Q2 free cash flow of $18.3 million.
What We’re Watching
- Data center revenue is not expected to be significant until Q3/Q4 2027; no design awards, orders, or named customers are disclosed.
- China ceramic factory ramp remains a margin drag: $1.4M EBITDA headwind in Q1, $1.0M in Q2, and roughly 85 bps gross-margin headwind guided for Q3.
- Supply chain remains tight: freight transit times have stretched from 4–6 weeks to over 12 weeks, and silver/copper are constrained.
- Defense recovery is expected in 2H based on backlog commentary, but Q2 aerospace & defense revenue declined slightly.
The thesis is strengthening on industrial demand, automotive inflection, and cost execution, but the AI opportunity is still early and unproven. The open question is whether data center sampling converts into named design wins and whether the China ceramic ramp stops compressing gross margin by the 2027 revenue window.
Earnings Beat
Rogers reported Q2 2026 revenue of $216.8 million, up 6.9% year over year and above the guidance midpoint. Gross margin was 32.5%. Adjusted EBITDA was $37.6 million, or 17.3% of sales, while adjusted EPS of $0.92 came in below the midpoint because of a cumulative impact of more than $0.10 per share from supply-chain, one-time facility, and opex items.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $217M | $200M | $203M | +6.9% |
| Gross margin | 32.5% | 32.2% | 31.6% | +90bps |
| EBITDA | $33M | $30M | −$56M | −159.6% |
| EPS | $0.74 | $0.24 | $-4.00 | −118.5% |
I think really, it’s a broad-based growth. It’s not limited to one industry. I don’t consider that to be seasonal. I think the momentum will continue to be — we continue to gain momentum here on the top line.— Ali El-Haj, President and CEO, July 28, 2026
Management tone: Management's tone moved from operational in Q1 to more growth-forward in Q2: it described top-line momentum as broad-based, explicitly rejected seasonality, and expressed confidence in a second-half defense recovery. On operational setbacks, management remained direct — disclosing the small plant fire, quantifying the China ceramic gross-margin headwind, and tying M&A update hopes to the next quarter or so.
Management Guidance
Third-quarter guidance calls for revenue of $233M–$243M, gross margin of 33.2%–34.2%, adjusted EPS of $1.10–$1.30, and adjusted EBITDA of $44M–$50M, implying a 19.7% EBITDA margin at the midpoint and roughly 250 bps of YoY improvement. Management embeds continued China ceramic underutilization and commodity cost pressure. Full-year capex was narrowed to $30M–$35M, and the full-year non-GAAP tax rate was raised to ~32%.
Trajectory
Revenue growth has stepped from 5% in Q1 to 6.9% in Q2, and Q3 guidance midpoint implies 10%. Gross margin improved from 29.9% in Q1 2025 to 32.2% in Q1 2026 and 32.5% in Q2 2026, but Q3 gross margin is guided up only about 20 bps YoY at the midpoint because the China ceramic ramp is an ~85 bps gross-margin headwind. The larger margin expansion is happening at the EBITDA line through cost actions, while the earnings bar is in line and TTM free-cash-flow conversion is high.
The Model
The model's locked projections are FY+1 revenue of $853.5 million with EBITDA of $149 million (17.5% margin), and FY+2 revenue of $905 million with EBITDA of $172 million (19.0% margin). The near-term path reflects guided top-line acceleration and restructuring savings; FY+2 assumes continued revenue growth and modest EBITDA margin expansion toward 19%.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $803M | $854M | $905M |
| YoY Growth | — | +6.3% | +6.0% |
| EBITDA | $17M | $149M | $172M |
| EBITDA Margin | 2.1% | 17.5% | 19.0% |
Projections are the median of 5 independent model runs. The model’s revenue sits 2.7% below analyst consensus.
Third-quarter guidance calls for revenue of $233M–$243M, gross margin of 33.2%–34.2%, adjusted EPS of $1.10–$1.30, and adjusted EBITDA of $44M–$50M, implying a 19.7% EBITDA margin at the midpoint and roughly 250 bps of YoY improvement. Management embeds continued China ceramic underutilization and commodity cost pressure. Full-year capex was narrowed to $30M–$35M, and the full-year non-GAAP tax rate was raised to ~32%.
What Could Go Right — and Wrong
- Microchannel cooler or high-frequency circuit material sampling converts into a named data center design win or production order.
- Ceramic China design wins launch from late Q3 2026 into Q1 2027 and load the factory, reversing the gross-margin drag.
- Defense backlog translates into significant Q3/Q4 revenue growth, broadening momentum beyond industrial and electronics.
- Automotive and EV battery design wins ramp on schedule, supporting stronger second-half EV sales.
- An M&A transaction closes and adds adjacent scale or technology.
- Data center qualification stalls or a competitor wins the socket; revenue remains a development pipeline rather than a 2027 inflection.
- China ceramic design wins slip further, leaving the factory underutilized and extending the margin drag.
- Automotive design wins fail to ramp, weakening the second-half EV recovery and top-line acceleration.
- Freight disruption and silver/copper tightness worsen, further compressing gross margin.
- FX tailwinds reverse sharply, pressuring reported revenue growth.
Looking Ahead
The next 12 months hinge on execution rather than immediate AI revenue. Management's Investor Day on September 30, 2026 is the clearest window for quantifying AI/data-center and vehicle electrification detail, with Q3 results and ceramic China design wins following. Curamik savings are targeted for Q4 2026, defense recovery is expected in the second half, and possible M&A disclosure is signaled for the next quarter or so.
- September 30, 2026Investor Day — Tests AI/data center, vehicle electrification, and capital allocation detail.
- Q3 2026Q3 results — Tests revenue $233M–$243M and adjusted EBITDA $44M–$50M guidance.
- Late Q3 2026 into Q1 2027Ceramic China design wins — Tests whether new wins load the China factory and shrink the margin drag.
- Q4 2026Curamik savings completion — Tests $13M annualized savings target by Q4 2026.
- Q3/Q4 2026Defense backlog conversion — Tests expected significant second-half defense revenue recovery.
- Q3/Q4 2027Data center revenue inflection — Tests whether sampling converts to initial production revenue.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $830M | $803M | $827M | -3.2% |
| Gross Margin | 33.4% | 31.0% | 31.8% | 235bps |
| EBITDA | $74M | $17M | $1.3B | -77.0% |
| EBITDA Margin | 9.0% | 2.1% | 15.0% | 682bps |
| Net Income | $26M | −$62M | $31M | -336.8% |
| Free Cash Flow | $71M | $101M | $755M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)31.8%
- EBITDA Margin (TTM)15.0%
- Net Margin (TTM)3.8%
- ROIC5.2%
- FCF Conversion91.2%
- SBC / Revenue-0.4%
The Company
Rogers Corporation designs, develops, manufactures, and sells high-performance and high-reliability engineered materials and components. Advanced Electronics Solutions supplies circuit materials, ceramic substrates, busbars, and cooling solutions, while Elastomeric Material Solutions supplies engineered polyurethane, silicone, PTFE, and UHMW polyethylene materials for cushioning, gasketing, sealing, and thermal management. These materials matter for high-frequency signal integrity and thermal management in high-power electronics.
Rogers operates owned and leased manufacturing across the U.S., Europe, China, and South Korea. The largest sites by printed area are Suzhou, China at 682,000 square feet and Rogers, Connecticut at 388,100 square feet. Management says this footprint allows local-for-local supply and frames it as a tariff advantage; it also says current capacity is sufficient for the next six to eight quarters.
Business Segments
Competitive Landscape
Rogers' AES segment supplies circuit materials, ceramic substrate materials, busbars, and cooling solutions; its data center efforts center on microchannel coolers and high-frequency circuit materials. Rogers' own stated differentiation is its global manufacturing footprint and materials capability for local-for-local sourcing. The supplied sources do not name competitors.
Supply Chain
Rogers sits upstream as a materials and components supplier. The supplied sources describe customer relationships only generically and do not name end-system OEMs.
More on ROG: Earnings recap