Rogers Corp 10-K for FY2024
Rogers Corp (ROG)
10-K
2025-02-26
For: 2024-12-31
View Original
Added on
April 04, 2026
About this 10-K
Rogers Corp filed this 10-K on February 26, 2025, covering the fiscal year ended December 31, 2024 (FY2024).
Headline figures
Fiscal year ended December 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $830.1M
- down 8.6% from $908.4M a year earlier
- Net income
- $26.1M
- down 53.9% from net income of $56.6M a year earlier
- Diluted EPS
- $1.40
- down 53.8% from $3.03 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________
FORM 10-K
_______________________________
| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the fiscal year ended December 31 , 2024
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from _______________ to _______________
Commission file number 1-4347
_______________________________
(Exact name of registrant as specified in its charter)
_______________________________
| (State or other jurisdiction of incorporation or organization) | (I. R. S. Employer Identification No.) | ||||
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (480 ) 917-6000
| Securities registered pursuant to Section 12(b) of the Act: | |||||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |||||||||
| par value $1.00 per share | |||||||||||
| Securities registered pursuant to Section 12(g) of the Act: None | |||||||||||
_______________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
ý | Accelerated filer | ☐ | |||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) Yes ☐ No ☒
The aggregate market value of the voting common equity held by non-affiliates as of June 30, 2024, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $2,234,781,057 . Rogers has no non-voting common equity. The number of shares outstanding of capital stock as of February 21, 2025 was 18,518,095 .
Documents Incorporated by Reference
Portions of the Registrant’s definitive Proxy Statement related to the 2025 Annual Meeting of Shareholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein. The Proxy Statement will be filed with the Securities and Exchange Commission within 120 days of the Registrant’s fiscal year ended December 31, 2024.
ROGERS CORPORATION
FORM 10-K
December 31, 2024
| TABLE OF CONTENTS | ||||||||
| Part I | ||||||||
| Item 1. | Business | |||||||
| Item 1A. | Risk Factors | |||||||
| Item 1B. | Unresolved Staff Comments | |||||||
| Item 1C. | Cybersecurity | |||||||
| Item 2. | Properties | |||||||
| Item 3. | Legal Proceedings | |||||||
| Item 4. | Mine Safety Disclosures | |||||||
| Part II | ||||||||
| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | |||||||
| Item 6. | [Reserved] | |||||||
| Item 7. | Management’s Discussion and Analysis of Results of Operations and Financial Position | |||||||
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | |||||||
| Item 8. | Financial Statements and Supplementary Data | |||||||
| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | |||||||
| Item 9A. | Controls and Procedures | |||||||
| Item 9B. | Other Information | |||||||
| Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | |||||||
| Part III | ||||||||
| Item 10. | Directors, Executive Officers and Corporate Governance | |||||||
| Item 11. | Executive Compensation | |||||||
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | |||||||
| Item 13. | Certain Relationships and Related Transactions, and Director Independence | |||||||
| Item 14. | Principal Accountant Fees and Services | |||||||
| Part IV | ||||||||
| Item 15. | Exhibits, Financial Statement Schedules | |||||||
| Item 16. | Form 10-K Summary | |||||||
| Signatures | ||||||||
2
ROGERS CORPORATION
Defined Terms(1)
| Term | Definition | ||||
| 5th Amended Credit Agreement | 5th Amended and Restated Credit Agreement, dated as of March 24, 2023, among Rogers Corporation, the lenders from time to time party hereto, JPMorgan Chase Bank, N.A., as Administrative Agent and HSBC Bank USA, National Association, Wells Fargo Bank, National Association, Citibank, N.A. and Citizens Bank, N.A., as Co-Syndication Agents | ||||
| ABO | Accumulated Benefit Obligation | ||||
| ADAS | Advanced Driver Assistance Systems | ||||
| AES | Advanced Electronics Solutions | ||||
| AI | Artificial Intelligence | ||||
| APAC | Asia - Pacific | ||||
| ASC | Accounting Standards Codification | ||||
| ASU | Accounting Standards Update | ||||
| CHIPS | Creative Helpful Incentives to Produce Semiconductors | ||||
| CIDO | Chief Information and Digital Officer | ||||
| CODM | Chief Operating Decision Maker | ||||
| CSRD | Corporate Sustainability Reporting Directive | ||||
| EMEA | Europe, the Middle East and Africa | ||||
| EMS | Elastomeric Material Solutions | ||||
| ERP | Enterprise Resource Planning | ||||
| ESG | Environmental, Social and Corporate Governance | ||||
| EU | European Union | ||||
| EV/HEV | Electric Vehicles/Hybrid Electric Vehicles | ||||
| Exchange Act | Securities Exchange Act of 1934, as amended | ||||
| FASB | Financial Accounting Standards Board | ||||
| GHG | Greenhouse Gas | ||||
| INOAC | INOAC Corporation | ||||
| ISO | International Organization for Standardization | ||||
| JPMorgan Chase | JP Morgan Chase Bank, N.A. | ||||
| IRA | Inflation Reduction Act | ||||
| JV | Joint Venture | ||||
| NIST | National Institute of Standards and Technology | ||||
| OECD | Organization for Economic Co-operation and Development | ||||
| OEMs | Original equipment manufacturers | ||||
| Proxy Statement | Our Definitive Proxy Statement for our 2024 Annual Meeting of Shareholders | ||||
| PBO | Projected Benefit Obligation | ||||
| R&D | Research and Development | ||||
| RESIP | Rogers Employee Savings and Investment Plan | ||||
| RIC | Rogers Inoac Corporation | ||||
| RIS | Rogers Inoac Suzhou Corporation | ||||
| SEC | U.S. Securities and Exchange Commission | ||||
| SG&A | Selling, General and Administrative | ||||
| SOFR | Secured Overnight Financing Rate | ||||
| Union Plan | Rogers Corporation Employees’ Pension Plan | ||||
| U.S. | United States of America | ||||
| U.S. EPA | United States Environmental Protection Agency | ||||
| U.S. GAAP | Accounting principles generally accepted in the United States | ||||
(1) Certain terms used within this Annual Report on Form 10-K are defined in the table above.
3
Part I
Item 1. Business
As used herein, the “Company,” “Rogers,” “we,” “us,” “our” and similar terms include Rogers Corporation and its subsidiaries, unless the context indicates otherwise.
Forward-Looking Statements
This Annual Report on Form 10-K includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. Such statements are generally accompanied by words such as “anticipate,” “assume,” “believe,” “could,” “estimate,” “expect,” “foresee,” “goal,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “seek,” “target” or similar expressions that convey uncertainty as to future events or outcomes. Forward-looking statements are based on assumptions and beliefs that we believe to be reasonable; however, assumed facts almost always vary from actual results, and the differences between assumed facts and actual results could be material depending upon the circumstances. Where we express an expectation or belief as to future results, that expectation or belief is expressed in good faith and based on assumptions believed to have a reasonable basis. We cannot assure you, however, that the stated expectation or belief will occur or be achieved or accomplished. Among the factors that could cause our results to differ materially from those indicated by forward-looking statements are risks and uncertainties inherent in our business including, without limitation:
•failure to capitalize on, volatility within, or other adverse changes with respect to our growth drivers, due to factors such as intense global competition affecting both our existing products and products currently under development or delays in adoption or implementation of new technologies;
•failure to successfully execute on our long-term growth strategy;
•uncertain business, economic and political conditions in the U.S. and abroad, particularly in China, South Korea, Germany, Belgium, England and Hungary, where we maintain significant manufacturing, sales or administrative operations;
•the trade policy dynamics between the U.S. and China reflected in trade agreement negotiations, the imposition of tariffs and other trade restrictions, as well as the potential for U.S.-China supply chain decoupling;
•fluctuations in foreign currency exchange rates;
•our ability to develop innovative products and the extent to which they are incorporated into end-user products and systems;
•the extent to which end-user products and systems incorporating our products achieve commercial success;
•the ability and willingness of our sole or limited source suppliers to deliver certain key raw materials, including commodities, to us in a timely and cost-effective manner;
•business interruptions due to catastrophes or other similar events, such as natural disasters, war, terrorism or public health crises;
•the impact of sanctions, export controls and other foreign asset or investment restriction;
•failure to realize, or delays in the realization of, anticipated benefits of acquisitions and divestitures due to, among other things, the existence of unknown liabilities or difficulty integrating acquired businesses;
•our ability to attract and retain management and skilled technical personnel;
•our ability to protect our proprietary technology from infringement by third parties and/or allegations that our technology infringes third party rights;
•changes in effective tax rates or tax laws and regulations in the jurisdictions in which we operate;
•failure to comply with financial and restrictive covenants in our credit agreement or restrictions on our operational and financial flexibility due to such covenants;
•the outcome of ongoing and future litigation, including our asbestos-related product liability litigation;
•changes in environmental laws and regulations applicable to our business; and
•disruptions in, or breaches of, our information technology systems.
Our forward-looking statements are expressly qualified by these cautionary statements, which you should consider carefully, along with the risks discussed under the headings “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Results of Operations and Financial Position” and elsewhere in this Annual Report on Form 10-K, any of which could cause actual results to differ materially from historical results or anticipated results. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law.
Company Background
We design, develop, manufacture and sell high-performance and high-reliability engineered materials and components to meet our customers’ demanding challenges. We operate two strategic operating segments: AES and EMS. Our remaining operations, which represent our non-core businesses, are reported in our Other operating segment. We are headquartered in Chandler, Arizona.
4
Operating Segments
Advanced Electronics Solutions
Our AES operating segment designs, develops, manufactures and sells circuit materials, ceramic substrate materials, busbars and cooling solutions for applications in EV/HEV, automotive (e.g, ADAS), aerospace and defense (e.g., antenna systems, communication systems and phased array radar systems), renewable energy (e.g., wind and solar), wireless infrastructure (e.g., power amplifiers, antennas and small cells), mass transit, industrial (e.g., variable frequency drives), connected devices (e.g., mobile internet devices and thermal solutions) and wired infrastructure (e.g., computing and internet protocol infrastructure) markets. We believe these materials have characteristics that offer performance and other functional advantages in many market applications, which serve to differentiate our products from other commonly available materials. AES products are sold globally to converters, fabricators, distributors and OEMs. Trade names for our AES products include: curamik®, ROLINX®, RO4000® Series, RO3000® Series, RT/duroid®, CLTE Series®, TMM®, AD Series®, DiClad® Series, CuClad® Series, Kappa®, COOLSPAN®, TC Series®, IsoClad® Series, MAGTREX®, IM Series™, 2929 Bondply, SpeedWave® Prepreg, RO4400™/RO4400T™ Series and Radix™. As of December 31, 2024, our AES operating segment had manufacturing and administrative facilities in Chandler, Arizona; Rogers, Connecticut; Bear, Delaware; Eschenbach, Germany; Suzhou, China; Budapest, Hungary; Evergem, Belgium; and Apodoca, Mexico.
Elastomeric Material Solutions
Our EMS operating segment designs, develops, manufactures and sells engineered material solutions for a wide variety of applications and markets. These include polyurethane and silicone materials used in cushioning, gasketing and sealing, and vibration management applications for EV/HEV, general industrial, portable electronics, automotive, mass transit, aerospace and defense, footwear and impact mitigation markets; customized silicones used in flex heater and semiconductor thermal applications for EV/HEV, general industrial, portable electronics, automotive, mass transit, aerospace and defense and medical markets; polytetrafluoroethylene and ultra-high molecular weight polyethylene materials used in wire and cable protection, electrical insulation, conduction and shielding, hose and belt protection, vibration management, cushioning, gasketing and sealing, and venting applications for EV/HEV, general industrial, automotive and aerospace and defense markets. We believe these materials have characteristics that offer functional advantages in many market applications, which serve to differentiate our products from other commonly available materials. EMS products are sold globally to converters, fabricators, distributors and OEMs. Trade names for our EMS products include: PORON®, BISCO®, DeWAL®, ARLON®, eSorba®, XRD®, Silicone Engineering and R/bak®. As of December 31, 2024, our EMS operating segment had manufacturing and administrative facilities in Rogers, Connecticut; Woodstock, Connecticut; Bear, Delaware; Carol Stream, Illinois; Narragansett, Rhode Island; Suzhou, China; Blackburn, England; Evergem, Belgium; Siheung, South Korea; and Ansan, South Korea.
Other
Our Other operating segment consists of elastomer components for applications in the general industrial market, as well as elastomer floats for level sensing in fuel tanks, motors, and storage tanks applications in the general industrial and automotive markets. We sell our elastomer components under our ENDUR® trade name and our floats under our NITROPHYL® trade name.
Joint Venture Separation Agreement
On October 29, 2024, we entered into a JV Separation Agreement with INOAC with an effective date of November 5, 2024, in which INOAC acquired our shares of RIC, we acquired INOAC’s shares of RIS, and we sold the property, plant and equipment constituting RIS Production Line 1 to INOAC. The combined transaction resulted in a net payment to us from INOAC of $4.9 million. The definitive agreement terminated all other agreements previously entered into in connection with the RIC and RIS JV relationships. In connection with the combined transactions, we recognized a gain of $7.7 million. For additional information, refer to “Note 16 - Mergers and Acquisitions” to “Item 8. Financial Statements and Supplementary Data.”
Sales and Competition
We sell our materials and components primarily through direct sales channels positioned near major concentrations of our customers in North America, Europe and Asia. We sold to approximately 2,900 customers worldwide in 2024, consisting primarily of OEMs and component suppliers. No individual customer represented more than 10% of our total net sales for 2024. Although the loss of any one of our larger customers would require a period of adjustment, during which the results of operations could be materially adversely impacted, we believe that such events could be successfully mitigated over a period of time due to the diversity of our customer base.
We employ a technical sales and marketing approach pursuant to which we work collaboratively to provide design engineering, testing, product development and other technical support services to OEMs that incorporate our engineered materials and components in their products. Component suppliers convert, modify or otherwise incorporate our engineered materials and components into their components for these OEMs in accordance with their specifications. Accordingly, we provide similar technical support services to component suppliers.
5
We compete primarily with manufacturers of high-end materials, some of which are large, multi-national companies, principally on the basis of innovation, historical customer relationships, product quality, reliability, performance and price, technical and engineering service and support, breadth of product line, and manufacturing capabilities. We also compete with manufacturers of commodity materials, including smaller regional producers with lower overhead costs and profit requirements located in Asia that attempt to upsell their products based principally upon price, particularly for products that have matured in their life cycle. We believe that we have a competitive advantage because of our reputation for innovation, the performance, reliability and quality of our materials and components, and our commitment to technical support and customer service.
Our sales recognized at a point in time are generally pursuant to short-term purchase orders. These purchase orders are made without deposits and may be rescheduled, canceled or modified on relatively short notice, without substantial penalty. Therefore, even though we may have a large backlog from time to time, we believe the purchase orders or backlog are not necessarily a reliable indicator of future sales.
Research and Development
We have a history of innovation, and innovation leadership is a key component of our overall business strategy. The markets we serve are typically characterized by rapid technological changes and advances. Accordingly, the success of our strategy is in part dependent on our ability to develop market-leading products, which is primarily driven by efforts in R&D. We are focused on identifying technologies and innovations related to both our current product portfolio as well as initiatives targeted at further diversifying and growing our business. As part of this technology commitment, we have Rogers Innovation Centers at our facilities in Chandler, Arizona; Rogers, Connecticut; Eschenbach, Germany; and Suzhou, China. Our Innovation Centers focus on early stages of technical and commercial development of new high-tech materials solutions in an effort to align with market direction and needs.
Patents and Other Intellectual Property
We have many domestic and foreign patents, licenses and additional patent applications pending related to technology in each of our operating segments. These patents and licenses vary in duration and provide some protection from competition. We also own a number of registered and unregistered trademarks and have acquired and developed certain confidential and proprietary technologies, including trade secrets that we believe to be of some importance to our business.
While we believe our patents and other intellectual property provide a competitive advantage to our operating segments, we believe that a significant part of our competitive position and future success will be determined by factors such as the innovative skills, systems and process knowledge, and technological expertise of our personnel; the range of new products we develop; and our customer service and support.
Manufacturing and Raw Materials
The key raw materials used in our business are as follows: for our AES operating segment, copper, including copper foil, polymer, polytetrafluoroethylene, fiberglass materials, ceramic and brazing paste materials, including silver, and various fillers and flame retardants; and for our EMS operating segment, polyol, isocyanates, polytetrafluoroethylene, ultra-high molecular weight polyethylene materials and silicone materials.
Some of the raw materials used in our business are available through sole or limited-source suppliers. While we have undertaken strategies to mitigate the risks associated with sole or limited source suppliers, these strategies may not be effective in all cases, and price increases or disruptions in our supply of raw materials could have a material adverse impact on our business. For additional information, refer to “Item 1A. Risk Factors.”
Seasonality
Except for some minor seasonality for consumer products, which often aligns with year-end holidays and product launch cycles, the operations of our segments have not been seasonal.
Human Capital Management
Our Company’s continuing success derives from our talented and dedicated employees globally, who are responsible for the innovation, operations and ethics foundational to our business and its future.
As of December 31, 2024, we employed approximately 3,200 people, of whom approximately 1,100 were employed in North America, 1,100 in the EMEA region and 1,000 in APAC region. Approximately 300 of our domestic employees are covered by collective bargaining agreements or by specific labor agreements and approximately 700 of our European employees are covered by work council arrangements.
Our approach to human capital management is based on our culture of respect, which is built on the ethical foundation of our Code of Business Ethics and our commitment to making choices that are based on what is ethically sound and not just what is easy or expedient. Additionally, we connect our day-to-day work with our organizational objectives through our Cultural Behaviors: Live Safely, Trust, Just Decide, Speak Openly, Simply Improve, Innovate and Deliver Results.
6
Health and Safety
Promoting the health and safety of our employees is one of our most important objectives. We strive to minimize lost workdays and recordable incidents. To promote awareness and accountability, our vision is clear: Everyone, Everywhere goes home safely Every Day. Our commitment is to put safety first and we ask for everyone’s commitment to never compromise their safety or the safety of others.
Employment Experience
We take a comprehensive approach to the employment experience, striving to use a fair and inclusive recruiting process to select talented individuals. Once we hire, we endeavor to provide our employees a safe and ethical work environment that includes fair compensation, opportunities for career development and employee engagement. We are proud to invest in our employees’ futures through a variety of technical and other training opportunities internally, as well as education reimbursement programs globally.
7
Information About Our Executive Officers
Our executive officers as of February 26, 2025 were as follows:
| Name | Age | Present Position | Year Appointed to Present Position | Other Relevant Positions Held | ||||||||||
| R. Colin Gouveia | 61 | President and Chief Executive Officer, Director, Principal Executive Officer | 2022 | Senior Vice President and General Manager of EMS from June 2019 to December 2022; Vice President and General Manager, Eastman Chemical Co., from December 2014 to June 2019. | ||||||||||
| Laura Russell | 49 | Senior Vice President and Chief Financial Officer, Treasurer, Principal Financial Officer | 2024 | Vice President, Corporate Finance from September 2023 to September 2024; Vice President, Operations at Wolfspeed from July 2021 to September 2023; Vice President, Finance - RP Business at NXP Semiconductor from December 2015 to July 2021; CFO of HPRF Business at Freescale Semiconductor from July 2013 to December 2015. | ||||||||||
| Brian Larabee | 58 | Senior Vice President and General Manager of Elastomeric Material Solutions | 2023 | Vice President and General Manager of EMS from November 2022 to November 2023; Senior Director, EMS Product Management from February 2021 to December 2022; Director, EMS New Product and Business Development from November 2016 to February 2021. | ||||||||||
| Jeff Tsao | 46 | Senior Vice President and General Manager of Advanced Electronics Solutions, Senior Vice President of Asia | 2023 | Vice President and General Manager of AES from September 2019 to November 2023; Vice President of Sales and Marketing of PES from December 2018 to September 2019; Global Sales Director of PES from August 2017 to November 2018. | ||||||||||
| Larry Schmid | 63 | Senior Vice President, Global Operations and Supply Chain | 2023 | President, Pilko & Associates, from January 2020 to January 2023; Global Manufacturing & Engineering Operations Director, The Dow Chemical Company, Performance Materials & Coatings, from June 2018 to June 2019; Global Operations Director, The Dow Chemical Company, Dow Performance Silicones, from June 2016 to June 2018. | ||||||||||
| Jessica Morton | 45 | Senior Vice President, General Counsel and Corporate Secretary | 2025 | Vice President, General Counsel and Corporate Secretary from March 2023 to February 2025; Associate General Counsel and Assistant Secretary of FMC Corporation from April 2021 to March 2023; Assistant General Counsel and Assistant Secretary of FMC Corporation from April 2019 to March 2021; Assistant General Counsel of FMC Corporation from July 2016 to March 2019. | ||||||||||
| Griffin Gappert | 51 | Vice President and Chief Technology Officer | 2023 | Global Head of Innovation for Automotive OEMs at Henkel from April 2021 to August 2023; Vice President of Innovation and Technical Customer Service at Henkel from January 2020 to April 2021; Vice President of Product Development and Technical Customer Service at Henkel from June 2018 to January 2020; Global Technical Director of Industrial Supplies at Ashland Inc from June 2016 to May 2018. | ||||||||||
| Michael Webb | 57 | Senior Vice President and Chief Administrative Officer | 2023 | Executive Vice President - Chief Human Resources Officer and Chief Administrative Officer at Nutrien from January 2018 to May 2022; Senior Vice President, Human Resources at Agrium from January 2014 to January 2018. | ||||||||||
| John Alexis | 51 | Senior Vice President and Chief Information and Digital Officer | 2025 | Chief Information Officer at FORTNA from April 2022 to July 2024; Chief Information Officer at TegraGlobal from January 2020 to April 2022; Global Vice President of Enterprise Technology Solutions at Travelport from October 2017 to January 2020; Director of IT services at Greater Toronto Airports Authority from April 2011 to June 2017. | ||||||||||
Available Information
We make available on our website (http://www.rogerscorp.com), or through a link posted on our website, free of charge, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, reports filed by our executive officers and directors pursuant to Section 16 of the Exchange Act, and amendments to those reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. In addition, the SEC maintains an internet site that contains these reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC (http://www.sec.gov).
We also make available on our website the charters for our Audit Committee, Compensation and Organization Committee, and Nominating and Governance Committee, in addition to our Corporate Governance Guidelines, Bylaws, Code of Business Ethics, and Compensation Recovery Policy. Our website is not incorporated into or a part of this Annual Report on Form 10-K.
8
Item 1A. Risk Factors
Our business, results of operations and financial position are subject to various risks, including those discussed below, which may affect the value of our capital stock. The following risk factors, which we believe represent the most significant factors that may make an investment in our capital stock risky, may cause our actual results to differ materially from those projected in any forward-looking statement. You should carefully consider these factors, as well as the other information contained in this Annual Report on Form 10-K, including the information set forth in “Item 1. Business - Forward-Looking Statements” and “Item 7. Management’s Discussion and Analysis of Results of Operations and Financial Position,” when evaluating an investment in our capital stock.
Risks Relating to Our Business, Strategy and Operations
Failure to capitalize on, volatility within, or other adverse changes with respect to the Company’s growth drivers, including significant growth markets and high growth markets, may adversely affect our business.
We derived approximately 18% and 34% of our net sales for the year ended December 31, 2024 from sales relating to the significant growth markets (e.g., EV/HEV) and high growth markets (e.g., ADAS, portable electronics, renewable energy and aerospace and defense), respectively. These growth drivers, as well as specific market and industry trends within them, may be volatile, cyclical and sensitive to a variety of factors, including general economic conditions (including higher inflation and interest rates), demand disruptions (including third-party component availability at our customers), technology disruptions, consumer preferences and political priorities. Adverse or cyclical changes to and within these growth drivers, such as delays in adoption or implementation of new technologies, has resulted in, and may continue to result in, reduced demand for certain of our products, production overcapacity, increased inventory levels and related risks of obsolescence, as well as price erosion, ultimately leading to a decline in our operating results. Acceleration within these growth drivers and corresponding rapid increases in demand for certain products may also require us to make significant capital investments or acquisitions in facilities and information systems and significantly increase our personnel in order to increase production levels and to maintain customer relationships and market positions. However, we may not be able to increase our production levels with sufficient speed or efficiency to capitalize on such increases in demand.
We face intense global competition, which could reduce demand for our products or create additional pricing pressure on our products.
We operate in a highly competitive global environment and compete with domestic and international companies principally on the basis of the following:
•innovation;
•historical customer relationships;
•product quality, reliability, performance and price;
•technical and engineering service and support;
•breadth of product line; and
•manufacturing capabilities.
Our competitors include commodity materials suppliers, which offer product substitutions based mostly on price, and suppliers of alternate solutions, which offer product substitutions or eliminations based mostly on disruptive technology. Certain of these competitors have greater financial and other resources than we have, and, in some cases, these competitors are well established in specific product niches. We expect that our competitors will continue to improve the design and performance of their products, which could result in the development of products that offer price or performance features superior to our products. Furthermore, our customers may engage in internal manufacturing of products that may result in reduced demand for our products. If we are unable to maintain our competitive advantage for any reason, demand for our products may be materially reduced, which may adversely affect our business, results of operations and financial position.
Moreover, as OEMs, particularly in the electronics and automotive markets, seek cost reductions from their supply chains, our customers may make greater demands on us with regard to pricing and other contractual terms. This may adversely affect our gross margins on certain products or exacerbate competition that we face which could ultimately result in lower potential sales.
Our business is dependent upon our development of innovative products and our customers’ incorporation of those products into end user products and systems that achieve commercial success.
As a manufacturer and supplier of engineered materials and components, our business depends upon our ability to innovate and sell our materials and components for inclusion in other products that are developed, manufactured and sold by our customers. We strive to differentiate our products and secure long-term demand through our engagement with our customers to design in our materials and components as part of their product development processes. The value of any design-in largely depends upon the decision of our customers to manufacture their products or systems in sufficient production quantities, the commercial success of the end product and the extent to which the design of our customers’ products or systems could accommodate substitution of competitor products. A consistent failure to introduce new products in a timely manner, achieve design wins or
9
achieve market acceptance on commercially reasonable terms could materially adversely affect our business, results of operations and financial position. The introduction of new products presents particularly significant business challenges in our business because product development commitments and expenditures must be made well in advance of product sales.
Macroeconomic conditions could materially adversely affect our business, financial condition, or results of operations.
Macroeconomic conditions, such as high inflationary pressure, changes to monetary policy, high interest rates, volatile currency exchange rates, credit and sovereign debt concerns, decreasing consumer confidence and spending, including capital spending, concerns about the stability and liquidity of certain financial institutions, the introduction of or changes in tariffs or trade barriers, and global or local recessions can adversely impact demand for our products, which could negatively impact our business, financial condition, or results of operations. Recent macroeconomic conditions have been adversely impacted by geopolitical instability and military hostilities in multiple geographies (including the conflict between Ukraine and Russia and the conflict between Israel, Hamas and Hezbollah), and monetary and financial uncertainties.
The results of these macroeconomic conditions, and the actions taken by governments, central banks, companies, and consumers in response, have resulted in, and may continue to result in, higher inflation in the U.S. and globally, which is likely, in turn, to lead to an increase in costs and may cause changes in fiscal and monetary policy, including additional increases in interest rates. Other adverse impacts of recent macroeconomic conditions have been, and may continue to be, supply chain constraints, logistics challenges, liquidity concerns in the broader financial services industry, and fluctuations in labor availability.
Our dependence on sole or limited source suppliers for certain of our raw materials could materially adversely affect our ability to manufacture products and materially increase our costs.
We rely on sole and limited source suppliers for certain of the raw materials that are critical to the manufacturing of our products. This reliance subjects us to risks related to our potential inability to obtain an adequate supply of required raw materials, particularly given our use of lean manufacturing and just-in-time inventory techniques and reduces our control over pricing and timing of delivery of raw materials. Our operating results could be materially adversely affected if we were unable to obtain adequate supplies of these materials in a timely manner or if their cost increased significantly.
While we believe we could obtain and qualify alternative sources for most sole and limited source supplier materials, if necessary, the transition time could be long, particularly if the change requires us to redesign our systems. Ultimately, we may be unable to redesign our systems, which could further increase delays or prevent us from manufacturing our products at all. Even if a system redesign is feasible, increased costs associated with such a redesign would decrease our profit margins, perhaps materially, if we could not effectively pass such costs along to our customers. Further, it would likely result in production and delivery delays, which could lead to lost sales and damage to our relationships with current and potential customers.
We have engaged in transactions in the past and may in the future acquire or dispose of businesses, or engage in other transactions, which expose us to a variety of risks that could materially adversely affect our business operating results and financial position.
From time to time, we have explored and pursued transaction opportunities that we believe complement our core businesses, and we expect to do so again in the future. We have also divested and may again consider divesting businesses or assets that we do not regard as part of our core businesses. These transaction opportunities may come in the form of acquisitions, JVs, investments, divestitures or other structures. There are risks associated with such transactions, including, without limitation, general business risk, technology risk, market acceptance risk, litigation risk, environmental risk, regulatory approval risk and risks associated with the failure to complete announced transactions. In the case of acquisitions, we may not be able to discover, during the due diligence process or otherwise, all known and unknown risks associated with the business we are acquiring, including the existence of liabilities. We may spend a significant portion of available cash, incur substantial debt or issue equity securities, which would dilute current shareholders’ equity ownership, to pay for the acquisitions. In addition, if we are unsuccessful in integrating any acquired company or business into our operations or if integration is more difficult than anticipated, we may experience disruptions that could harm our business and result in our failure to realize the anticipated benefits of the acquisitions. In the case of divestitures, we may agree to indemnify acquiring parties for known or unknown liabilities arising from the businesses we are divesting. We have incurred, and may in the future incur, significant costs in the pursuit and evaluation of transactions that we do not consummate for a variety of reasons.
As a result, these transactions may not ultimately create value for us or our shareholders and may harm our reputation and materially adversely affect our business, results of operations and financial position.
Our business strategy includes plans for organic growth, and our results of operations and financial position could be adversely affected if we fail to grow or fail to manage our growth effectively.
As part of our general growth strategy, we expect to continue to pursue organic growth (including the significant capital expenditures associated therewith), while also continuing to evaluate potential acquisitions and expansion opportunities that we
10
believe provide a strategic or geographic fit with our business. Although we have experienced significant growth in our assets and revenues in the past, we may not be able to sustain our historical growth rate or be able to grow at all. Our growth strategy may divert management from our existing business and may require us to incur additional expenditures to expand our administrative and operational infrastructure and, if we are unable to effectively manage our growth, including to the satisfaction of our regulators, we could be materially and adversely affected. Consequently, continued organic growth, if achieved, may place a strain on our administrative and operational infrastructure, which could have a material adverse effect on our financial condition and results of operations.
We rely on highly specialized technical personnel and management, and the failure to attract and retain these individuals could impair our expected growth and future success.
We continue to depend upon the continued services and performance of key executives, senior management and skilled technical personnel, particularly our sales engineers and other professionals with significant experience in the key industries we serve. Our ability to compete effectively and our future success depend on our continuing to identify, hire, develop, motivate, and retain highly skilled personnel for all areas of our organization. Competition for these personnel from other companies, academic institutions and government entities is intense. In addition, our compensation arrangements, such as our equity award programs, may not always be successful in attracting new employees and retaining and motivating our existing employees. Outside the U.S., it is increasingly important that we are also able to attract and retain personnel with relevant local qualifications and experience. We may not be able to continue to attract and retain the qualified personnel necessary to continue to advance our business and achieve our strategic objectives. Additionally, as demand for our products and services increases, our existing personnel may not be able to effectively scale their job functions with the increased demand. If we are unable to identify, hire, develop, motivate, and retain new qualified personnel with relevant local qualifications and experience, our existing workforce may become too lean to accommodate the increased demand, which may have a material adverse effect on our ability to grow and scale our business.
If we suffer loss or disruption to our facilities, supply chains, distribution systems or information technology systems due to catastrophe or other events, our business could be seriously harmed.
Our facilities, supply chains, distribution systems and information technology systems are subject to catastrophic loss or disruption due to fire, flood, earthquake, hurricane, public health crisis, war, terrorism or other natural or man-made disasters or events. If any of these facilities, supply chains or systems were to experience a catastrophic loss or disruption, it could disrupt our operations, delay production and shipments, result in defective products or services, damage customer relationships and our reputation and result in legal exposure and large repair or replacement expenses. In 2021, we experienced fire damage in our Ansan, South Korea manufacturing facility, the impacts of which have since largely been resolved. The third-party insurance coverage that we maintain will vary from time to time in both type and amount depending on cost, availability and our decisions regarding risk retention, and may be unavailable or insufficient to protect us against losses or disruptions.
We have extensive international operations, and events and circumstances that have general international consequence or specific impact in the countries in which we operate may materially adversely affect our business.
For the year ended December 31, 2024, approximately 73% of our net sales resulted from sales in foreign markets, with approximately 44% and 27% of such net sales occurring in Asia and Europe, respectively. We expect our net sales in foreign markets to continue to represent a substantial majority of our consolidated net sales. We maintain significant manufacturing and administrative operations in China, Germany, England, South Korea and Hungary, and approximately 66% of our employees were located outside the U.S. as of December 31, 2024. Risks related to our extensive international operations include the following:
•foreign currency fluctuations, particularly in the value of the euro, the Chinese renminbi, the South Korean won, the British pound, the Japanese yen and the Hungarian forint against the U.S. dollar;
•economic and political instability due to regional or country-specific events or changes in relations between the U.S. and the countries in which we operate;
•accounts receivable practices across countries, including longer payment cycles;
•export control or customs matters, including tariffs and trade restrictions;
•changes in multilateral and bilateral trade relations;
•complications in complying, and failure to comply, with a variety of laws and regulations applicable to our foreign operations, including due to unexpected changes in the laws or regulations of the countries in which we operate;
•failure to comply with the Foreign Corrupt Practices Act or other applicable anti-corruption laws;
•greater difficulty protecting our intellectual property; and
•compliance with foreign employment regulations, as well as work stoppages and labor and union disputes.
The foregoing risks may be particularly acute in emerging markets such as China, where our operations are subject to greater uncertainty due to increased volatility associated with the developing nature of the economic, legal and governmental systems of these countries, changes in bilateral and multilateral arrangements with the U.S. and other governments, and challenges that
11
some multinational customers that are headquartered in emerging markets may have complying fully with U.S. and other developed market extraterritorial regulations.
On February 1, 2025, President Donald J. Trump signed an executive order imposing 25% tariffs on most goods from Mexico and Canada and a 10% additional tariff on all goods from China, effective February 4, 2025. The tariffs on Mexico and Canada were delayed by 30 days following negotiations. Additionally, a 25% tariff on steel and aluminum was reinstated on February 11, 2025. The situation remains fluid, and the duration and outcome of these tariff actions are uncertain. As a result, we are unable to predict the ultimate result and duration of any tariff actions by the U.S. government, or countermeasures that may be taken by other nations.
It remains unclear what additional actions, if any, will be taken by the U.S. or other governments with respect to international trade agreements, the imposition of tariffs on goods imported into the U.S., tax policy related to international commerce, increased export control, sanctions and investment restrictions, import or use of foreign communications equipment, or other trade matters. Although the ultimate scope and timing of any such tariffs is indeterminable, if implemented, they could have a significant impact on our financial condition and results of operations. Based on our manufacturing practices and locations, there can be no assurance that any future executive or legislative action in the U.S. or other countries relating to tax policy and trade regulation would not adversely affect our business, operations and financial results.
Government regulation of usage, import or export of our products, or our technology within our products, changes in that regulation, or our failure to obtain required approvals for our products, could harm our international and domestic sales and adversely affect our revenue and costs of sales. Failure to comply with such regulations could result in enforcement actions, fines, penalties or restrictions on export privileges. In addition, costly tariffs on our equipment, restrictions on importation, trade protection measures and domestic preference requirements of certain countries could limit our access to these markets and harm our sales. These regulations could adversely affect the sale or use of our products, substantially increase our cost of sales, and adversely affect our business and revenue.
In addition, our business has been, and may continue to be, adversely affected by the lack of development, or disruptions, of transportation or other critical infrastructure, including wireless infrastructure, in emerging markets. If we are unable to successfully manage the risks associated with expanding our global business, or to adequately manage operational fluctuations, it may materially adversely affect our business, results of operations and financial position.
Deteriorating trade relations between the U.S. and China, other trade conflicts and barriers, economic sanctions, and Chinese policies to decrease dependence on foreign suppliers could limit or prevent certain existing or potential customers from doing business with us and materially adversely affect our business.
The increased trade conflicts between the U.S. and its major trading partners, evidenced by trade restrictions such as tariffs, taxes, export controls, economic sanctions, and enhanced policies designed to protect national security, could adversely impact our business. In particular, we have experienced in the past and expect that we may in the future experience impacts on our business due to the increase in trade conflicts between the U.S. and China. Export controls, as well as retaliatory controls and tariffs that China has imposed and which remain in place to a certain extent under the Phase 1 agreement reached between the U.S. and China on January 15, 2020, could continue to restrict our ability to do business with Chinese customers. Further U.S. government actions to protect domestic economic and security interests could lead to further restrictions. China continues to be a fast-developing market and an area of potential growth for us. Sales to customers located in China and the Asia Pacific region have typically accounted for nearly half of our total sales and a substantial majority of our overall sales to customers located outside the U.S. In addition, certain of the end products created in China that incorporate our products are ultimately sold outside of the Asia Pacific region. We expect that revenue from these sales generally, and sales to China and the Asia Pacific region specifically, will continue to be a material component of our total revenue. Therefore, any financial crisis, trade war or dispute or other major event causing business disruption in international jurisdictions generally, and China and the Asia Pacific region in particular, could negatively affect our business, results of operations and financial position.
China’s stated policy of reducing its dependence on foreign manufacturers and technology companies has resulted and may continue to result in reduced demand for our products in China. These trends may lead to increased decoupling of the supply chains for U.S. and Chinese economies, thereby leading to reduced market opportunities and disrupted supply chains for U.S. companies with sales and operations in China. Increased geopolitical tensions between the U.S. and China would likely accelerate these trends. Both countries could pursue policies to reduce their dependence on foreign goods. Such policies could have a material adverse impact on our business, results of operations and financial position. In addition, as a consequence of such policies, there are risks that the Chinese government may, among other things, require the use of local suppliers, compel companies that do business in China to partner with local companies to conduct business, or provide incentives to government-backed local customers to buy from local suppliers rather than companies like ours, all of which could adversely impact our business, results of operations and financial position.
12
A significant disruption in, or breach in security of, our information technology systems or violations of data protection laws could materially adversely affect our business and reputation.
In the ordinary course of business, we collect and store confidential information, including proprietary business information belonging to us, our customers, suppliers, business partners and other third parties and personally identifiable information of our employees. We rely on information technology systems to protect this information and to keep financial records, process orders, manage inventory, coordinate shipments to customers, and operate other critical functions. Our information technology systems are susceptible to damage, disruptions or shutdowns due to power outages, hardware failures, telecommunication failures, systems upgrades (including the planned implementation of a new ERP system) and user errors. If we experience a disruption in our information technology systems, it could result in the loss of sales and customers and significant incremental costs, which could materially adversely affect our business.
We are also subject to security breaches caused by computer viruses, illegal break-ins or hacking, sabotage, or acts of vandalism by disgruntled employees or third parties. The risk of a security breach or disruption, particularly through cyberattack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased, in part because of evolving technologies, the ubiquitous use of the Internet and telecommunications technologies (including mobile devices) to conduct business transactions. Our information technology network and systems have been and, we believe, continue to be under constant attack. Accordingly, despite our security measures or those of our third-party service providers, we have experienced and may in the future experience security breaches, including breaches that we may not be able to detect. Security breaches of our information technology systems, including through mobile devices, could result in the misappropriation or unauthorized disclosure of confidential information belonging to us or to our customers, suppliers, business partners, employees or other third parties, which could result in our suffering significant financial and reputational damage. If we are unable to protect sensitive information, our customers or governmental authorities could question the adequacy of our security processes and procedures and our compliance with applicable laws and regulations, including evolving government cyber security requirements for government contractors.
In addition, the processing and storage of certain information is increasingly subject to privacy and data security regulations, and many such regulations are country-specific. The interpretation and application of data protection laws in the U.S., Europe, and elsewhere, including the EU General Data Protection Regulation and the California Consumer Privacy Act, are uncertain, evolving and may be inconsistent among jurisdictions. Compliance with these various laws may be onerous and require us to incur substantial costs or to change our business practices in a manner that adversely affects our business, while failure to comply with such laws may subject us to substantial penalties.
Emerging issues related to the development and use of AI could give rise to legal or regulatory action, damage our reputation, or otherwise materially harm our business.
The use of generative AI technologies by employees and personnel to perform routine work is becoming more common within our business industry. Disclosure and use of personal data in generative AI technologies is subject to various privacy laws and other privacy obligations. Governments have passed and are likely to pass additional laws regulating generative AI. Our use of this technology is currently limited, but could result in additional compliance costs, regulatory investigations and actions, and lawsuits should we determine to increase our adoption and use of the technology. If we are unable to use generative AI due to these additional costs, it could make our business less efficient and result in competitive disadvantages.
Changes in accounting guidance may cause us to experience greater volatility in our financial results. If we are unsuccessful in adapting to and interpreting the requirements of new guidance, or in clearly explaining to shareholders how the new guidance affects reporting of our results of operations, our share price may decline.
We prepare our consolidated financial statements to conform to U.S. GAAP. These accounting principles are subject to interpretation by the SEC, FASB, and various bodies formed to interpret and create accounting rules and regulations. Accounting standards, or the guidance relating to interpretation and adoption of standards, could have a significant effect on our financial results and could affect our business. Additionally, the FASB and the SEC are focused on the integrity of financial reporting, and our accounting policies are subject to scrutiny by regulators and the public.
We cannot predict the impact of future changes to accounting principles or our related accounting policies on our financial statements going forward. In addition, were we to change our accounting estimates, including those related to the timing of revenue recognition and those used to allocate revenue between various performance obligations, our reported revenue and results of operations could be significantly impacted. If we are unsuccessful in adapting to the requirements of any new standard, then we may experience greater volatility in our quarterly and annual results, which may cause our stock price to decline.
We may experience difficulties in implementing our new ERP system.
We are in the midst of a multi-year design and implementation of a new ERP system, which will replace our existing financial and operating systems. The implementation of this ERP requires an investment of significant personnel and financial resources,
13
including substantial expenditures for outside consultants, system hardware and software in addition to other expenses in connection with the transformation of our organizational structure and financial and operating processes. As we work to complete the implementation phase of this ERP, and even after the implementation phase, we may experience additional delays, increased costs and other difficulties, including potential design defects, miscalculations, testing requirements, re-work due to changes in business plans or reporting standards, and the diversion of management’s attention from day-to-day business operations. Additional extended delays could also introduce operational risk, including cybersecurity risks, and other complications. If we are unable to implement this ERP as planned, the effectiveness of our internal control over financial reporting could be adversely affected, our ability to assess those controls adequately could be delayed, and our business, results of operations, cash flows and financial position could be negatively impacted.
Legal, Compliance and Regulatory Risks
We are subject to many environmental laws and regulations as well as potential environmental liabilities that could adversely affect our business.
We are subject to a variety of federal, state, local and foreign laws, rules and regulations related to the use, storage, handling, discharge or disposal of certain toxic, volatile or otherwise hazardous chemicals, gases and other substances used in manufacturing our products. Some of these laws in the U.S. include the Federal Clean Water Act, Clean Air Act, Resource Conservation and Recovery Act, Comprehensive Environmental Response, Compensation, and Liability Act, Toxic Substances Control Act, and similar state statutes and regulations. In the EU, we are subject to the EU regulations (and their related national implementing legislation) including the Registration, Evaluation, Authorization and Restriction of Chemicals, the Regulation on the Classification, Labelling and Packaging of Substances and Mixtures and the Industrial Emissions Directive. Compliance with these laws and regulations could require us to incur substantial expenses, including in connection with the acquisition of new equipment. Any failure to comply with present or future environmental laws, rules and regulations could result in criminal and civil liabilities, fines, suspension of production or cessation of certain operations, any of which could have a material adverse effect on our business, results of operations and financial position.
By way of example, but not limitation, governmental authorities in the U.S. and in other jurisdictions are increasingly focused on potential contamination resulting from the use of so-called “forever chemicals,” most notable at present are per- and polyfluoroalkyl, substances (PFAS). Products containing PFAS have been used in manufacturing, industrial, and consumer applications over many decades, including in some of our engineered materials and components, and are virtually ubiquitous in parts of the environment. Until recently, these substances were largely unregulated. Nevertheless, over the last few years, PFAS regulation has been evolving rapidly. In 2023, the U.S. EPA issued a new rule under the Toxic Substances Control Act, requiring manufacturers and importers of PFAS to submit additional reporting information about production volumes, industrial uses, byproducts, worker exposure, and disposal. In 2023, certain EU member states submitted a proposal to the European Chemicals Agency calling for the phase out of the manufacture, import, sale, and use of PFAS substances beginning in late 2025. In 2024, among other things, U.S. EPA issued new regulations regarding PFAS in drinking water, PFAS reporting obligations under Toxic Substances Control Act, and designated two PFAS chemicals (Perfluorooctanoic acid and Perfluorooctane sulfonic acid) as hazardous substances under Comprehensive Environmental Response, Compensation, and Liability Act. While PFAS regulation continues to advance at the federal level and in many states, the full scope of such regulation is still being developed. In some cases, PFAS compounds are regulated at, or even below, the ability of current technology to detect their presence, making remediation difficult and complex. We may therefore incur costs in connection with any obligations to transition away from the usage of PFAS-containing products, to dispose of PFAS-containing waste or to remediate any PFAS contamination, which could have a negative effect on our financial position, results of operations and cash flows.
New and evolving laws, regulations and rule makings globally are expected to impose different and more restrictive standards and require greater disclosures. They could also require capital investments, incremental personnel resources, could adversely impact our ongoing operations, and could require changes on a more accelerated time frame. Our suppliers are expected to face similar challenges and incur additional compliance costs that may be passed on to us. These direct and indirect costs may adversely impact our results of operations and financial condition, and, if we are unable to comply with legislative and regulatory requirements or meet our sustainability objectives, our reputation and ability to do business could be negatively impacted. In addition, our customers’ requirements, priorities and ways of doing business with respect to environmental matters, and climate change specifically, also may have an impact on our business, operations and financial success. For example, the SEC finalized a rule in 2024 to enhance and standardize climate-related disclosures. The rule, which faces legal challenge and has been voluntarily stayed by the SEC, as well as other changes the government might implement, could impose significant new burdens on our Company and our suppliers, with significant potential costs and operational impacts, and adversely impact our ability to win business and operate successfully.
Environmental matters may significantly impact our business and operations and present evolving risks and challenges. Environmental impacts, including climate change specifically, create short and long-term financial risks to our business globally. Increased worldwide focus on climate change has led to legislative and regulatory efforts to combat both potential causes and adverse impacts of climate change, including regulation of GHG emissions. New or more stringent laws and
14
regulations related to GHG emissions and other climate change related concerns have affected and will likely continue to affect us, our suppliers and our customers. There can be no assurance our Company will meet the evolving sustainability expectations and standards of our investors and other external stakeholders.
In addition, some environmental laws impose liability, sometimes retroactively and without fault, for investigating and/or cleaning up contamination on, or emanating from, properties currently or formerly owned, leased or operated by us, as well as for damages to property or natural resources and for personal injury arising out of such contamination. Such liability may be joint and several, meaning that we could be held responsible for more than our share of the liability involved, or even the entire liability. For additional information regarding our material legal proceedings, refer to “Note 10 – Commitments and Contingencies” to “Item 8. Financial Statements and Supplementary Data.”
Our business may be materially adversely affected if we cannot protect our proprietary technology or if we infringe the proprietary rights of others.
Our proprietary technology supports our ability to compete effectively with other companies, and we seek to protect our intellectual property rights by obtaining domestic and foreign patents, trademarks and copyrights, and maintaining trade secrets. It is possible, however, that our efforts to obtain such protection in the U.S. and abroad will be unsuccessful or that the protection afforded will not be sufficiently broad to protect our technology.
Even if domestic and foreign laws do grant initial protection to our technology, our competitors or other third parties may subsequently obtain and unlawfully copy, use or disclose our technologies, products, and processes. We believe that the risk of piracy of our technology is particularly acute in the foreign countries in which we operate. In circumstances in which we conclude that our proprietary technology has been infringed, we have pursued, and may again pursue, litigation to enforce our rights. The defense and prosecution of intellectual property infringement suits are both costly and time consuming, even if the outcome is favorable to us. If we are not successful in protecting our proprietary technology or if the protection afforded to us is not sufficiently broad, our competitors may be able to manufacture and offer products substantially similar to our own, thereby reducing demand for our products and adversely affecting our results of operations and financial position. We may also be adversely affected by, and subject to increased competition as a result of, the normal expiration of our issued patents.
Our competitors or other third parties may also assert infringement or invalidity claims against us in the future. In addition to the significant costs associated with such suits, as noted above, an adverse outcome could subject us to significant liabilities to third parties and require us to license rights from third parties or cease selling our products. Any of these events may have a material adverse effect on our business, results of operations and financial position.
As a multinational corporation doing business in the U.S. and various foreign jurisdictions, changes in tax laws or exposures to additional tax liability could negatively impact our operating results.
As a result of the variability and uncertainty in global taxation, we are subject to a wide variety of tax-related risks, any of which could provoke changes in our global structure, international operations or intercompany agreements, which could materially reduce our net income in future periods or result in restructuring costs, increased effective tax rates and other expenses. Given the global nature of our business, a number of factors may increase our effective tax rates or otherwise subject us to additional tax liability, including:
•decisions to redeploy foreign earnings outside of their country of origin for which we have not previously provided for income taxes;
•increased scrutiny of our transactions by taxing authorities;
•changes in the geographic mix of our profits among jurisdictions with differing statutory income tax rates;
•ability to utilize, or changes in the valuation of, deferred tax assets; and
•changes in tax laws, regulations and interpretations thereof or issuance of new interpretations of laws or regulations applicable to us.
For instance, many foreign jurisdictions are actively considering, and some have enacted, changes to existing tax laws as a result of the base erosion and profit shifting project undertaken by the OECD. As these changes are enacted, our tax obligations could increase in countries where we do business or sell our products.
The terms of our credit agreement subject us to risks, including potential acceleration of our outstanding indebtedness if we fail to satisfy financial ratios and comply with numerous covenants.
Our credit agreement with JPMorgan Chase contains, and any future debt agreements into which we enter may contain, certain financial ratios and certain restrictive covenants that, among other things, limit our ability to incur indebtedness or liens, acquire other businesses, dispose of assets, or make investments. Our ability to make scheduled payments on these borrowings and to satisfy financial ratios may be adversely affected by changes in economic or business conditions beyond our control, while the restrictive covenants to which we are subject may limit our ability to take advantage of potential business opportunities as they arise. Failure to satisfy these financial ratios or to comply with the covenants in our credit agreement would constitute a default. An uncured default with respect to one or more of our covenants could result in outstanding borrowings thereunder being
15
declared immediately due and payable, which may also trigger an obligation to repay other outstanding indebtedness. Any such acceleration of our indebtedness would have a material adverse effect on our cash flows, financial position and results of operations.
We may be adversely affected by litigation stemming from product liability and other claims.
Our products may contain defects that we do not detect before sale, which may lead to warranty or damage claims against us or product recalls. We are involved in various unresolved legal matters that arise in the ordinary course of our operations or otherwise, including asbestos-related product liability claims related to our operations before the 1990s. For additional information, refer to “Item 3. Legal Proceedings” and “Note 10 – Commitments and Contingencies” to “Item 8. Financial Statements and Supplementary Data.” We maintain insurance coverage with respect to certain claims, but the policy coverage limits may not be adequate or cover a particular loss. Costs associated with, among other things, the defense of, or settlements or judgments relating to, claims against us that are not covered by insurance or that result in settlements in excess of insurance coverage may adversely affect our business, results of operations and financial position. Irrespective of insurance coverage, claims against us could divert the attention of our senior management and/or result in reputational damage, thereby adversely affecting our business.
Our projections on the potential exposure and expected insurance coverage relating to our asbestos-related product liability claims are based on a number of assumptions, including the number of new claims to be filed each year, the average cost of disposing of such claims, the length of time it takes to dispose of such claims, coverage issues among insurers and the continuing solvency of various insurance companies, as well as the numerous uncertainties surrounding asbestos litigation in the U.S. The full extent of our financial exposure to asbestos-related litigation remains very difficult to estimate and could include both compensatory and punitive damage awards. To the extent such assumptions are inaccurate, the net liabilities that we have recorded in our financial statements may fail to approximate the losses we could suffer in connection with such claims.
We may incur substantial costs to comply with climate change legislation and related regulatory initiatives.
Under the 2015 Paris Agreement, parties to the United Nations Framework Convention on Climate Change agreed to undertake ambitious efforts to reduce GHG emissions and strengthen adaptation to the effects of climate change. Subsequently, there has been a broad range of proposed or promulgated international, national and state laws and/or regulations focusing on GHG emissions reduction, climate-related financial risk management, and global climate change. On January 21, 2025, President Trump signed an executive order directing his administration to initiate a withdrawal of the U.S. from the Paris Agreement. However, laws and/or regulations may still apply or could apply in countries in countries that remain party to the Paris Agreement where we have interests or may have interests in the future. Laws and regulations in this field continue to evolve and are likely to be increasingly widespread, stringent, and complex, as different countries mandate different disclosure requirements. We are preparing for required climate-related compliance deadlines in the jurisdictions in which we operate; however, at this stage it is not possible to accurately estimate either a timetable for implementation in all instances or our future compliance costs relating to implementation.
Jurisdictions in which we operate, including, in particular, the EU, are preparing national legislation and protection plans to implement their emission reduction commitments under the Paris Agreement. In June 2021, the European Climate Law set legally binding targets of net zero GHG emissions by 2050, and a 55% reduction in GHG emissions by 2030. In December 2022, the EU announced forthcoming regulations to support the 2030 climate target, including a revision of the EU Emissions Trading System, and the introduction of a Carbon Border Adjustment Mechanism. Our operations in Europe participate in the Emissions Trading System and we meet our obligations through a combination of free and purchased emission allowances. We anticipate the forthcoming regulations will result in an accelerated reduction of our free allowances and higher market prices for purchased allowances. In addition, in January 2023, the EU adopted the Corporate Sustainability Reporting Directive which requires EU and non-EU companies with activities in the EU to file annual sustainability reports including climate-related information. These and other future regulations could result in increased costs, additional capital expenditures, and/or restrictions on operations.
Addressing climate change was a stated priority of the former presidential administration, including recommitting the U.S. to the Paris Agreement and enacting legislation to advance objectives to achieve a net zero emissions economy by 2050. For example, the IRA, the Bipartisan Infrastructure Law, and the CHIPS and Science Act, provide incentives to promote climate-friendly technologies and innovation that may increase the demand for the products we produce. The U.S. EPA, in addition to several state governments, promulgated regulations directed at GHG emissions reductions from certain types of facilities. California adopted the Climate Accountability Package in 2023 that introduces extensive climate-related disclosure requirements, and the SEC finalized a rule in 2024 to enhance and standardize climate-related disclosures. Both disclosure measures face legal challenge, and the SEC has voluntarily stayed its rule. On February 11, 2025, the acting Chairman of the SEC directed the SEC staff to request that the courts hearing legal challenges to the climate-related disclosure rules not schedule the case for argument to provide time for the SEC to deliberate and determine the appropriate next steps in these cases. The Trump administration has indicated that it will take a different approach towards climate change compared to its predecessor and there is uncertainty regarding what regulatory or executive actions may be forthcoming. Given these
16
uncertainties, it is difficult to accurately estimate at this time if U.S. federal or state level activity could result in increased operating costs for compliance, required acquisition or trading of emission allowances, or compliance costs associated with additional regulatory frameworks for a range of potential carbon reduction projects, including carbon capture, use, and sequestration projects. Additionally, demand for the products we produce may be reduced.
Failure to meet environmental, social and governance ESG expectations or standards or achieve our ESG goals could adversely affect our business, results of operations, financial condition, or stock price.
There has been an increased focus from regulators and stakeholders on ESG matters. Given our commitment to ESG, we actively manage these issues and have established and publicly announced certain goals, commitments, and targets which we may refine or even expand further in the future. These goals, commitments, and targets reflect our current plans and aspirations and are based on available data and estimates. However, these are not guaranteed outcomes and are subject to numerous factors, both within and outside of our control.
Initiatives to address such ESG issues may be costly and may not have the desired effect. Evolving stakeholder expectations and our efforts and ability to manage these issues and accomplish our goals, commitments, and targets present numerous operational, regulatory, reputational, financial, legal, and other risks and opportunities. Any risks could have adverse impacts on our business, including on our stock price; however, ESG-related opportunities may result in positive business impacts. Further, there are ESG-related laws and reporting requirements adopted in multiple jurisdictions that will likely increase future compliance costs.
Our failure, or even perceived failure, to achieve some or all of our ESG goals or maintain ESG practices that meet evolving stakeholder expectations or regulatory requirements could adversely impact our ability to attract and retain employees or customers, expose us to increased scrutiny from the investment community, regulatory authorities and others, or subject us to liability. Furthermore, perceptions about our action or inaction on certain ESG-related issues could also harm our reputation, particularly if stakeholders disagree with our goals and initiatives. Damage to our reputation and loss of brand equity may reduce demand for our products and services, adversely affecting our future financial performance and stock price, as well as require additional resources to rebuild our reputation. Conversely, our efforts to actively manage material ESG issues could increase employee and customer loyalty, support risk mitigation, resiliency, operational efficiencies, and positive reputation, influence cost of capital or access to finance, or other outcomes that may positively benefit our business.
Our business could be negatively affected as a result of actions of activist shareholders, and such activism could impact the trading value of our securities.
In recent years, shareholder activists have become involved in numerous public companies. While we strive to maintain constructive communications with our shareholders, activist shareholders have engaged and may, from time to time, engage in proxy solicitations or shareholder proposals, or otherwise attempt to effect changes and assert influence on our board of directors and management. For example, as previously reported, in February 2023, after an activist shareholder provided notice of its intention to conduct a proxy contest to seek to elect several director candidates to our board of directors, we entered into a settlement agreement with the shareholder and certain of its affiliates regarding, among other things, changes to the composition of our board of directors, including the appointment of two new independent directors.
Responding to actions by activist shareholders can be costly and time-consuming, disrupting our operations and diverting the attention of management and our employees. Such activities could interfere with our ability to execute our strategic plan. In addition, a proxy contest for the election of directors at our annual meeting of shareholders would require us to incur significant legal fees and proxy solicitation expenses and require significant time and attention by management and our board of directors. The perceived uncertainties as to our future direction also could affect the market price and volatility of our securities.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Safeguarding our information technology systems, intellectual property, and the confidential information and personal data that customers, suppliers, business partners, employees and others share with us is a critical concern for our business. As such, we have processes in place to assess, identify, and manage material cybersecurity threats and incidents. Key to these efforts is our cybersecurity risk management program (the “Cybersecurity Program”). We aim to incorporate industry best practices throughout our Cybersecurity Program. It is founded on the NIST’s Cybersecurity Framework (Identify, Protect, Detect, Respond and Recover) and includes elements of ISO 27001 standards, NIST SP 800-171 guidance, the ISO, and other applicable industry standards for protecting controlled unclassified information. The Cybersecurity Program also incorporates preventative, detective and corrective controls to identify relevant cyber risks. The controls are tested and evaluated on a regular basis and include the following controls: network and endpoint protection technologies that are designed to block and detect security events at the perimeter and within our networks; evaluation and monitoring of detected security events; and
17
We regularly remind employees of the importance of handling and protecting customer and employee data, including through periodic security training to enhance employee awareness of how to detect and respond to cybersecurity incidents. We also conduct tabletop exercises to simulate response plans to various cybersecurity incidents. Our team of cybersecurity professionals then collaborate with relevant stakeholders within our Company to evaluate and adjust our detection and mitigation strategies.
We impose security requirements upon our suppliers, including maintaining an effective security management program, abiding by information handling and asset management requirements; and notifying us in the event of any known or suspected cyber incident.
Our CIDO is responsible for leading the Cybersecurity Program, which is coordinated and primarily executed by our Director of Information Security and Compliance.
For a discussion regarding risks from cybersecurity threats that have or are reasonably likely to materially affect our Company, see the risk factor titled “A significant disruption in, or breach in security of, our information technology systems or violations of data protection laws could materially adversely affect our business and reputation” in “Item 1A. Risk Factors” of this Annual Report on Form 10-K.
18
Item 2. Properties
We operate various general offices and manufacturing facilities throughout North America, Europe and Asia. The following table provides certain information about the material general offices and manufacturing facilities used by our operating segments:
| Location | Floor Space (Square Feet) | Type of Facility | Leased / Owned | Operating Segment | ||||||||||||||||||||||
| North America | ||||||||||||||||||||||||||
| Chandler, Arizona | 147,000 | Manufacturing / Administrative Offices / Innovation Center | Owned | AES | ||||||||||||||||||||||
| Chandler, Arizona | 105,100 | Manufacturing | Owned | AES | ||||||||||||||||||||||
| Chandler, Arizona | 75,000 | Administrative Offices | Owned | All | ||||||||||||||||||||||
| Chandler, Arizona | 17,000 | Warehouse | Leased through 3/2026 | AES | ||||||||||||||||||||||
| Rogers, Connecticut | 388,100 | Manufacturing / Administrative Offices / Innovation Center | Owned | All | ||||||||||||||||||||||
| Woodstock, Connecticut | 150,600 | Manufacturing | Owned | EMS | ||||||||||||||||||||||
| Carol Stream, Illinois | 216,600 | Manufacturing | Owned | EMS | ||||||||||||||||||||||
| Bear, Delaware | 125,000 | Manufacturing | Owned | All | ||||||||||||||||||||||
| Narragansett, Rhode Island | 84,600 | Manufacturing | Owned | EMS | ||||||||||||||||||||||
| Apodoca, Mexico* | 61,500 | Manufacturing | Leased through 1/2034 | AES | ||||||||||||||||||||||
| Europe | ||||||||||||||||||||||||||
| Eschenbach, Germany | 149,000 | Manufacturing | Owned | AES | ||||||||||||||||||||||
| Eschenbach, Germany | 13,000 | Warehouse | Leased through 12/2025 | AES | ||||||||||||||||||||||
| Eschenbach, Germany | 24,100 | Warehouse / Innovation Center | Leased through 11/2025 | AES | ||||||||||||||||||||||
| Evergem, Belgium | 116,500 | Manufacturing / Administrative Offices | Owned | All | ||||||||||||||||||||||
| Evergem, Belgium | 88,200 | Warehouse | Leased through 6/2027 | AES | ||||||||||||||||||||||
| Budapest, Hungary | 46,800 | Manufacturing | Leased through 2/2027 | AES | ||||||||||||||||||||||
| Blackburn, England | 58,000 | Manufacturing / Warehouse | Owned | EMS | ||||||||||||||||||||||
| Blackburn, England | 9,000 | Warehouse | Leased through 8/2029 | EMS | ||||||||||||||||||||||
| Asia | ||||||||||||||||||||||||||
| Suzhou, China | 682,000 | Manufacturing / Administrative Offices / Innovation Center | Owned | All | ||||||||||||||||||||||
| Suzhou, China | 77,000 | Manufacturing | Leased through 12/2031 | EMS | ||||||||||||||||||||||
| Suzhou, China | 75,000 | Manufacturing | Leased through 5/2033 | EMS | ||||||||||||||||||||||
| Suzhou, China | 164,000 | Manufacturing | Leased through 9/2033 | AES | ||||||||||||||||||||||
| Suzhou, China | 27,000 | Manufacturing | Leased through 5/2027 | EMS | ||||||||||||||||||||||
| Siheung, South Korea | 17,500 | Manufacturing | Leased though 5/2025 | EMS | ||||||||||||||||||||||
| Ansan, South Korea | 51,300 | Manufacturing | Leased through 9/2030 | EMS | ||||||||||||||||||||||
* Rogers Corporation is a guarantor to this lease, which commenced in September 2024, to establish a premise of operations for our manufacturing operations through a shelter agreement in Mexico.
Item 3. Legal Proceedings
The information called for by this item is incorporated herein by reference to the information set forth in “Note 10 – Commitments and Contingencies” to “Item 8. Financial Statements and Supplementary Data.”
Item 4. Mine Safety Disclosures
Not applicable.
19
Part II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Capital Stock Market Prices and Dividend Policy
Our capital stock is traded on the New York Stock Exchange under the symbol “ROG”. As of the end of business on February 21, 2025, we had 250 shareholders of record. The actual number of holders of our capital stock is greater than this number of record holders, and includes shareholders who are beneficial owners, but whose shares are held in street name by brokers or held by other nominees. This number of holders of record also does not include shareholders whose shares may be held in trust by other entities.
We currently retain all of our earnings for use in the operation and expansion of our business, to repurchase or redeem capital stock, and in the repayment of our debt. We have never declared or paid any cash dividends on our capital stock and may not pay any cash dividends in the foreseeable future. Whether or not dividends will be paid in the future will depend on, among other things, our results of operations, financial condition, level of indebtedness, cash requirements, covenants in our financings, contractual restrictions and other factors that our board of directors and our shareholders may deem relevant.
Performance Graph
The following graph compares the cumulative total return on our capital stock over the past five fiscal years with the cumulative total return on the S&P 500 Industrials Index and the S&P Small Cap 600 Electronic Equipment, Instruments & Components Index. The graph tracks the performance of a $100 investment in our capital stock and in each of the indexes (with the reinvestment of all dividends) on the date specified.
Issuer Purchases of Equity Securities
In 2015, we initiated a share repurchase program of up to $100.0 million of our capital stock to mitigate the dilutive effects of stock options exercises and vesting of restricted stock units granted by the Company, in addition to enhancing shareholder value. In 2024, the Board of Directors authorized an additional $100.0 million to be used for share repurchases. Our share repurchase program has no expiration date and may be suspended or discontinued at any time without notice. There were
20
0.2 million shares repurchased for a total value of $19.8 million in 2024. There were no shares repurchased in 2023. There were 0.2 million shares repurchased for a total value of $25.0 million in 2022. As of December 31, 2024, $104.2 million remained available to purchase under our share repurchase program. For additional information regarding share repurchases, refer to “Note 12 – Capital Stock and Equity Compensation” to “Item 8. Financial Statements and Supplementary Data.”
| (Dollars in millions, except shares and per share amounts) | ||||||||||||||||||||||||||
| Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs | ||||||||||||||||||||||
| March 1, 2024 to March 31, 2024 | 1,500 | $ | 109.92 | 1,500 | $ | 23.8 | ||||||||||||||||||||
| April 1, 2024 to April 30, 2024 | 70,893 | $ | 108.79 | 70,893 | $ | 116.2 | ||||||||||||||||||||
| December 1, 2024 to December 31, 2024 | 116,045 | $ | 103.58 | 116,045 | $ | 104.2 | ||||||||||||||||||||
Item 6. [Reserved]
21
Item 7. Management’s Discussion and Analysis of Results of Operations and Financial Position
The following discussion and analysis of our results of operations and financial position should be read together with our consolidated financial statements and accompanying notes, which are contained in “Item 8. Financial Statements and Supplementary Data.”
The discussion of the comparison of our 2023 and 2022 results was previously disclosed within the Management’s Discussion & Analysis in Part II, Item 7 of the Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2024 and has been omitted from this section pursuant to Instruction 1 to Item 303(b) of Regulation S-K, except the Operating Segment Net Sales and Gross Margin section, which has been recast due to changes resulting from the adoption of ASU 2023-07: Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.
Company Overview and Strategy
We design, develop, manufacture and sell high-performance and high-reliability engineered materials and components to meet our customers’ challenges. We operate two strategic operating segments: AES and EMS. Our remaining operations, which represent non-core businesses, are reported in our Other operating segment. We are headquartered in Chandler, Arizona.
Our growth and profitability strategy is based upon the following principles: (1) market-driven organization, (2) innovation leadership, (3) synergistic mergers and acquisitions, and (4) operational excellence. Our priorities in executing this strategy are focused on driving near-term improvements to profitability and improving the growth outlook for the Company over the next several years by further strengthening our focus on our portfolio and commercial activities, optimizing our global capacity to meet customer demand and driving innovation.
As a market-driven organization, we are focused on capitalizing on growth opportunities in several different end markets. This includes the automotive industry, where there are market opportunities resulting from the increasing electrification of vehicles, and in the expanding use of ADAS. Other opportunities are driven by the advancement of communication systems in aerospace and defense, the growth of next-generation smartphones in the portable electronics industry, and the continued expansion of renewable energy. In addition to our focus on these markets, we sell into a variety of other markets, including general industrial, wireless infrastructure and mass transit.
Our growth strategy is based on addressing trends in these markets and applying our repeatable customer engagement process. Our sales engineers and technical service employees work closely with our customers to understand their complex challenges. They then leverage our innovation and technology capabilities and deep applications expertise to provide unique solutions to customers’ challenges. In addition to these capabilities, our strategy for success is also built on our reputation for high performance and reliability, trusted customer relationships and an expansive product portfolio. Through this strategy we expect to be able to drive further commercial wins, which provide the potential for higher growth in the future. This growth strategy is enabled by both organic and inorganic investments from which we strive to ensure high-quality solutions for our customers.
Our operational excellence efforts are focused on driving ongoing cost structure improvements to further enhance our profitability. These efforts include focusing on improving yields, throughput, procurement capabilities, and manufacturing processes. We have also taken specific cost improvement actions in recent quarters that have and will benefit our performance. These actions include optimizing our manufacturing footprint, divesting non-core product lines and reducing manufacturing and corporate employees. We continue to review and re-align our manufacturing and engineering footprint in an effort to maintain a leading competitive position globally and to support our customers’ growth initiatives.
We seek to enhance our operational and financial performance by investing in research and development, manufacturing and materials efficiencies, and new product initiatives that respond to the needs of our customers. We strive to evaluate operational and strategic alternatives to improve our business structure and align our business with the changing needs of our customers and major industry trends affecting our business.
If we are able to successfully execute on our strategy, we see an opportunity, over the next several years, to meaningfully increase revenues from current levels and further improve profitability. The increase in revenues is expected to come from a combination of organic growth and targeted acquisitions. This outlook is supported by our participation in a number of growth markets and by our competitive positions in these markets. The fastest growing market opportunity is expected to be EV/HEV where third-party analysis projects that the market will increase at a compound annual growth rate of between 10% and 15% over the next several years. Within the EV/HEV market, we believe our advanced battery cell pads and ceramic substrates provide multiple content opportunities to capitalize on this growth. Other markets with good growth trajectories include ADAS, aerospace and defense, portable electronics and renewable energy.
22
Executive Summary
The following key highlights and factors should be considered when reviewing our results of operations, financial position and liquidity:
•In 2024 as compared to 2023, our net sales decreased by 8.6% to $830.1 million, our gross margin decreased 40 basis points to 33.4% from 33.8%, and operating income as a percentage of net sales decreased 640 basis points to 3.0% from 9.4%.
•We entered into and executed the JV Separation Agreement with INOAC, which resulted in gains of $7.7 million recorded in Other income (expense), net.
•We recognized restructuring charges of $16.2 million in 2024 primarily related to our manufacturing footprint consolidation plan and our reduction in global workforce plan.
•We recognized impairment charges of $7.9 million in 2024, primarily related to our new ERP system still in development.
•We made $30.0 million of discretionary principal payments on our revolving credit facility in 2024.
•We repurchased 0.2 million shares of our capital stock for $19.8 million in 2024.
Results of Operations
The following table sets forth, for the periods indicated, selected operations data expressed as a percentage of net sales:
| 2024 | 2023 | ||||||||||
| Net sales | 100.0 | % | 100.0 | % | |||||||
| Gross margin | 33.4 | % | 33.8 | % | |||||||
| Selling, general and administrative expenses | 23.3 | % | 22.2 | % | |||||||
| Research and development expenses | 4.2 | % | 3.9 | % | |||||||
| Restructuring and impairment charges | 2.9 | % | 1.9 | % | |||||||
| Other operating (income) expense, net | — | % | (3.6) | % | |||||||
| Operating income | 3.0 | % | 9.4 | % | |||||||
| Equity income in unconsolidated joint ventures | 0.2 | % | 0.2 | % | |||||||
| Other income (expense), net | 1.0 | % | (0.1) | % | |||||||
| Interest expense, net | (0.1) | % | (1.1) | % | |||||||
| Income before income tax expense | 4.1 | % | 8.4 | % | |||||||
| Income tax expense | 1.0 | % | 2.2 | % | |||||||
| Net income | 3.1 | % | 6.2 | % | |||||||
Net Sales and Gross Margin
| (Dollars in millions) | 2024 | 2023 | |||||||||
| Net sales | $ | 830.1 | $ | 908.4 | |||||||
| Gross margin | $ | 277.1 | $ | 307.1 | |||||||
| Percentage of net sales | 33.4 | % | 33.8 | % | |||||||
Net sales decreased by 8.6% in 2024 compared to 2023. Our AES and EMS operating segments had net sales decreases of 11.3% and 4.8%, respectively. The decrease in net sales was primarily due to lower net sales in the EV/HEV, industrial, ADAS and renewable energy markets, partially offset by higher net sales in the wireless infrastructure and aerospace and defense markets. We experienced lower EV/HEV net sales in our AES operating segment as customers continued to manage inventory levels and adjusted to softer end market demand and we experienced lower industrial net sales in our EMS operating segment primarily due to the non-recurrence of a one-time bulk purchase by a customer in 2023.
Gross margin in 2024 declined due to lower volume and unfavorable mix, partially offset by reduction in manufacturing spend, scrap and yield improvements and lower inventory reserves provisions. Gross margin as a percentage of net sales decreased 40 basis points to 33.4% in 2024 compared to 33.8% in 2023.
23
Selling, General and Administrative Expenses
| (Dollars in millions) | 2024 | 2023 | |||||||||
| Selling, general and administrative expenses | $ | 193.4 | $ | 202.3 | |||||||
| Percentage of net sales | 23.3 | % | 22.2 | % | |||||||
SG&A expenses decreased 4.4% in 2024 from 2023, primarily due to a $9.5 million decrease in professional services expense, partially offset by the non-recurrence of the $0.7 million gain on the sale of our high-performance engineered cellular elastomer business in 2023.
The decrease in professional services expense was primarily attributable to the non-recurrence of the $7.6 million of non-routine shareholder advisory costs and the $1.1 million of expenses in connection with the sale of our high-performance engineered cellular elastomer business, both of which were incurred in 2023.
Research and Development Expenses
| (Dollars in millions) | 2024 | 2023 | |||||||||
| Research and development expenses | $ | 34.6 | $ | 35.7 | |||||||
| Percentage of net sales | 4.2 | % | 3.9 | % | |||||||
R&D expenses decreased 3.1% in 2024 from 2023, primarily due to a $1.0 million decrease in compensation and benefits and a $0.8 million decrease in professional services expense, partially offset by a $0.7 million increase in trial costs for alternative raw materials.
Restructuring and Impairment Charges and Other Operating (Income) Expense, Net
| (Dollars in millions) | 2024 | 2023 | |||||||||
| Restructuring and impairment charges | $ | 24.1 | $ | 16.9 | |||||||
| Other operating (income) expense, net | $ | 0.1 | $ | (33.1) | |||||||
We recognized $16.2 million and $16.9 million of restructuring charges in 2024 and 2023, respectively. The restructuring charges in 2024 were related to manufacturing footprint consolidation efforts, which impacted our Evergem, Belgium facility, along with the reduction in global workforce plan announced in November 2024 and the R&D facility exit plan announced in June 2024. The restructuring charges in 2023 were related to the reduction in global workforce and facility consolidation plans announced in February 2023. We recognized $7.9 million of impairment charges in 2024, which were primarily related to our new ERP system still in development.
With respect to other operating (income) expense, net, we recognized expense of $0.1 million and income of $33.1 million in 2024 and 2023, respectively. The income recognized in 2023 was primarily related to insurance recoveries from the fire at our UTIS manufacturing facility in Ansan, South Korea.
For additional information, refer to “Note 14 – Supplemental Financial Information” to “Item 8. Financial Statements and Supplementary Data.”
Equity Income in Unconsolidated Joint Ventures
| (Dollars in millions) | 2024 | 2023 | |||||||||
| Equity income in unconsolidated joint ventures | $ | 1.4 | $ | 1.8 | |||||||
Up until November 5, 2024, we had two unconsolidated JVs, each 50% owned: RIC and RIS. Equity income in those unconsolidated JVs decreased 22.2% in 2024 from 2023 due to lower net sales for RIC and RIS, which was primarily driven by the portable electronics market in Asia, a change in the business model for RIS to subcontracting manufacturing in the second half of 2023, as well as the discontinuation of the JV relationships in November 2024. For additional information, refer to “Note 16 – Mergers and Acquisitions” to “Item 8. Financial Statements and Supplementary Data.”
Other Income (Expense), Net
| (Dollars in millions) | 2024 | 2023 | |||||||||
| Other income (expense), net | $ | 8.8 | $ | (0.7) | |||||||
Other income (expense), net increased to $8.8 million of income in 2024 compared to $0.7 million of expense in 2023. The increase was due to the recognition of $7.7 million of gains in connection to the execution of the JV Separation Agreement with INOAC, as well as a favorable year-over-year change in impacts from our foreign currency transactions, partially offset by an unfavorable year-over-year change in impacts from our foreign currency derivatives.
24
Interest Expense, Net
| (Dollars in millions) | 2024 | 2023 | |||||||||
| Interest expense, net | $ | (0.8) | $ | (10.1) | |||||||
Interest expense, net, decreased by $9.3 million in 2024 from 2023, due to a lower weighted-average outstanding balance for our borrowings under our revolving credit facility.
Income Tax Expense
| (Dollars in millions) | 2024 | 2023 | |||||||||
| Income tax expense | $ | 8.2 | $ | 19.7 | |||||||
| Effective tax rate | 23.9 | % | 25.8 | % | |||||||
Our effective income tax rate for 2024 was 23.9% compared to 25.8% for 2023. The decrease from 2023 was primarily due to the (i) release of valuation allowance against certain NOLs, (ii) JV Separation which did not have a corresponding tax gain and (iii) favorable releases of uncertain tax positions, offset by (iv) increased non-deductible equity compensation.
Operating Segment Net Sales and Gross Margin
Advanced Electronics Solutions
| (Dollars in millions) | 2024 | 2023 | 2022 | ||||||||||||||
| Net sales | $ | 452.2 | $ | 509.7 | $ | 530.2 | |||||||||||
| Gross margin | $ | 132.6 | $ | 157.6 | $ | 171.5 | |||||||||||
| Percentage of net sales | 29.3 | % | 30.9 | % | 32.3 | % | |||||||||||
Our AES operating segment net sales decreased by 11.3% in 2024 compared to 2023. The decrease in net sales was primarily driven by lower net sales in the EV/HEV, industrial power systems, ADAS and renewable energy markets, partially offset by higher net sales in the wireless infrastructure and aerospace and defense markets. We experienced lower EV/HEV net sales as customers continued to manage inventory levels and adjusted to softer end market demand.
Our AES operating segment net sales decreased by 3.9% in 2023 compared to 2022. The decrease in net sales was primarily driven by lower net sales in the power interconnects EV/HEV, aerospace and defense, wireless infrastructure and portable electronics markets, partially offset by higher net sales in the power substrates EV/HEV, renewable energy and ADAS markets. Net sales were favorably impacted by foreign currency fluctuations of $0.7 million, or 0.1%, due to the appreciation in value of the euro relative to the U.S. dollar, partially offset by the depreciation in value of Chinese renminbi relative to the U.S. dollar.
Our AES operating segment gross margin in 2024 declined due to lower volume and unfavorable mix, which was partially offset by lower manufacturing spend. As a percentage of net sales, gross margin in 2024 was 29.3% as compared to 30.9% in 2023.
Our AES operating segment gross margin in 2023 declined due to lower volumes and unfavorable mix, unfavorable yield performance and higher inventory reserves provisions, which was partially offset by lower freight, duties and tariffs costs, lower raw material costs and favorable factory optimization efforts. As a percentage of net sales, gross margin in 2023 was 30.9% as compared to 32.3% in 2022.
Elastomeric Material Solutions
| (Dollars in millions) | 2024 | 2023 | 2022 | ||||||||||||||
| Net sales | $ | 360.9 | $ | 379.0 | $ | 420.0 | |||||||||||
| Gross margin | $ | 138.5 | $ | 142.0 | $ | 141.6 | |||||||||||
| Percentage of net sales | 38.4 | % | 37.5 | % | 33.7 | % | |||||||||||
Our EMS operating segment net sales decreased by 4.8% in 2024 compared to 2023. The decrease in net sales was primarily driven by lower net sales in the industrial market, partially offset by higher net sales in the EV/HEV market. We experienced lower industrial net sales primarily due to the non-recurrence of a one-time bulk purchase by a customer in 2023.
Our EMS operating segment net sales decreased by 9.8% in 2023 compared to 2022. The decrease in net sales was primarily driven by lower net sales in the general industrial, consumer, portable electronics and EV/HEV markets, partially offset by higher net sales in the aerospace and defense market. Net sales were unfavorably impacted by foreign currency fluctuations of $3.6 million, or 0.9%, due to the depreciation in value of Chinese renminbi relative to the U.S. dollar, partially offset by the appreciation in value of the euro relative to the U.S. dollar.
25
Our EMS operating segment gross margin in 2024 improved due to scrap and yield improvements and lower inventory reserves provisions, which was partially offset by lower volume and unfavorable mix. As a percentage of net sales, gross margin in 2024 was 38.4% as compared to 37.5% in 2023.
Our EMS operating segment gross margin in 2023 improved due to lower freight, duties and tariffs costs, lower raw material costs and favorable factory optimization efforts, which was partially offset by lower volumes, unfavorable yield performance and higher inventory reserves provisions. As a percentage of net sales, gross margin in 2023 was 37.5% as compared to 33.7% in 2022.
Other
| (Dollars in millions) | 2024 | 2023 | 2022 | ||||||||||||||
| Net sales | $ | 17.0 | $ | 19.7 | $ | 21.0 | |||||||||||
| Gross margin | $ | 6.0 | $ | 7.5 | $ | 7.9 | |||||||||||
| Percentage of net sales | 35.3 | % | 38.1 | % | 37.6 | % | |||||||||||
Net sales in our Other operating segment decreased by 13.7% in 2024 from 2023. Our Other operating segment gross margin in 2024 declined due to unfavorable impacts from lower volume and unfavorable factory utilization. As a percentage of net sales, gross margin in 2024 was 35.3%, an approximately 280 basis point decrease as compared to 38.1% in 2023.
Net sales in our Other operating segment decreased by 6.2% in 2023 from 2022. Net sales were unfavorably impacted by foreign currency fluctuations of $0.4 million, or 2.0%, due to the depreciation in value of Chinese renminbi relative to the U.S. dollar. Our Other operating segment gross margin improved in 2023 due to lower freight, duties and tariffs costs, partially offset by lower volume and unfavorable factory utilization. As a percentage of net sales, gross margin in 2023 was 38.1%, an approximately 50 basis point increase as compared to 37.6% in 2022.
Liquidity, Capital Resources and Financial Position
We believe that our existing sources of liquidity and cash flows that are expected to be generated from our operations, together with our available credit facilities, will be sufficient to fund our operations, currently planned capital expenditures, R&D efforts and our debt service commitments, for at least the next 12 months. We regularly review and evaluate the adequacy of our cash flows, borrowing facilities and banking relationships, seeking to ensure that we have the appropriate access to cash to fund both our near-term operating needs and our long-term strategic initiatives. The following table illustrates the location of our cash and cash equivalents by our three major geographic areas:
| As of December 31, | |||||||||||
| (Dollars in millions) | 2024 | 2023 | |||||||||
| U.S. | $ | 84.7 | $ | 60.0 | |||||||
| Europe | 37.4 | 37.6 | |||||||||
| Asia | 37.7 | 34.1 | |||||||||
| Total cash and cash equivalents | $ | 159.8 | $ | 131.7 | |||||||
Approximately $75.1 million of our cash and cash equivalents were held by non-U.S. subsidiaries as of December 31, 2024. We did not make any changes in 2024 to our position on the permanent reinvestment of our historical earnings from foreign operations. With the exception of certain of our Chinese subsidiaries, where a substantial portion of our Asia cash and cash equivalents is held, we continue to assert that historical foreign earnings are indefinitely reinvested.
Net working capital was $370.4 million and $410.5 million as of December 31, 2024 and 2023, respectively.
Key Financial Position Accounts
| As of December 31, | |||||||||||
| (Dollars in millions) | 2024 | 2023 | |||||||||
| Cash and cash equivalents | $ | 159.8 | $ | 131.7 | |||||||
| Accounts receivable, net | 135.3 | 161.9 | |||||||||
| Inventories, net | 142.3 | 153.5 | |||||||||
| Borrowings under revolving credit facility | — | 30.0 | |||||||||
26
Significant changes in our statement of financial position accounts from December 31, 2023 to December 31, 2024 were as follows:
•Cash and cash equivalents were $159.8 million as compared to $131.7 million as of December 31, 2023, an increase of $28.1 million, or 21.3%. This increase was primarily due to $127.1 million of net cash flow provided by operations, partially offset by $56.1 million in capital expenditures, $30.0 million in discretionary principal payments on our revolving credit facility, $19.8 million in share repurchases and $1.4 million in tax payments related to net share settlement of equity awards.
•Accounts receivable, net decreased 16.4% to $135.3 million as of December 31, 2024, from $161.9 million as of December 31, 2023. The decrease from year-end was primarily due to lower net sales at the end of 2024 compared to at the end of 2023 and lower days sales outstanding, as well as a $4.1 million receipt of previously recognized UTIS fire insurance receivables for our business interruption claims.
•Inventories, net decreased 7.3% to $142.3 million as of December 31, 2024, from $153.5 million as of December 31, 2023, primarily driven by lower raw materials and work-in-process levels, combined with higher inventory reserves provisions, partially offset by higher finished goods levels.
•Borrowings under revolving credit facility were nil as of December 31, 2024, compared to $30.0 million as of December 31, 2023. The decrease was due to $30.0 million in discretionary principal payments on our revolving credit facility made in early 2024. For additional information regarding this facility, as well as the Fifth Amended Credit Agreement, refer to “Note 9 – Debt” to “Item 8. Financial Statements and Supplementary Data.”
| (Dollars in millions) | Year Ended December 31, | ||||||||||
| Key Cash Flow Measures: | 2024 | 2023 | |||||||||
| Net cash provided by operating activities | $ | 127.1 | $ | 131.4 | |||||||
| Net cash used in investing activities | (45.6) | (47.9) | |||||||||
| Net cash used in financing activities | (50.1) | (190.3) | |||||||||
In 2025, we expect capital spending to be in the range of approximately $40.0 million to $50.0 million, of which we are contractually committed to $2.9 million as of December 31, 2024. We plan to fund our capital spending in 2025 with cash from operations and cash on-hand, as well as our existing revolving credit facility, if necessary.
Excluding $3.0 million of inventory purchase commitments, there are no contractual obligations requiring material cash requirements in 2025 and beyond, excluding those already noted, including those related to our outstanding borrowings under our revolving credit facility, our operating and finance lease obligations and our pension benefit and other postretirement benefit obligations, which are discussed in “Note 9 – Debt,” “Note 6 – Leases” and “Note 8 – Postretirement Benefits,” to “Item 8. Financial Statements and Supplementary Data,” respectively.
We do not have any off-balance sheet arrangements that have, or are, in the opinion of management, reasonably likely to have a current or future material effect on our results of operations or financial position.
Restriction on Payment of Dividends
The Fifth Amended Credit Agreement generally permits us to pay cash dividends to our shareholders, provided that (i) no default or event of default has occurred and is continuing or would result from the dividend payment and (ii) our total net leverage ratio does not exceed 2.75 to 1.00. If our total net leverage ratio exceeds 2.75 to 1.00, we may nonetheless make up to $20.0 million in restricted payments, including cash dividends, during the fiscal year, provided that no default or event of default has occurred and is continuing or would result from the payments. Our total net leverage ratio did not exceed 2.75 to 1.00 as of December 31, 2024. For additional information regarding the Fifth Amended Credit Agreement, refer to “Note 9 – Debt” to “Item 8. Financial Statements and Supplementary Data.”
Critical Accounting Estimates
Our consolidated financial statements are prepared in accordance with U.S. GAAP, which require management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances and believe that appropriate reserves have been established using reasonable methodologies and appropriate assumptions based on facts and circumstances that are known; however, actual results may differ from these estimates under different assumptions or conditions. Certain accounting policies may require a choice between acceptable accounting methods or may require substantial judgment or estimation in their application. A summary of our critical accounting estimates is presented below:
27
Product Liabilities
We endeavor to maintain insurance coverage with reasonable deductible levels to protect us from potential exposures to product liability claims. Any liability associated with such claims is based on management’s best estimate of the potential claim value, while insurance recoverables associated with related claims are not recorded until verified by the insurance carrier.
For asbestos-related claims, we recognize projected asbestos liabilities and related insurance recoverables, with any difference between the liability and related insurance recoverable recognized as an expense in the consolidated statements of operations. Our estimates of asbestos-related contingent liabilities and related insurance recoverables are based on a claim projection analysis and an insurance usage analysis prepared annually by third parties. The claim projection analysis contains numerous assumptions, including number of claims that might be received, the type and severity of the disease alleged by each claimant, the long latency period associated with asbestos exposure, dismissal rates, average indemnity costs, average defense costs, costs of medical treatment, the financial resources of other companies that are co-defendants in claims, uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, and the impact of potential changes in legislative or judicial standards, including potential tort reform. Furthermore, any predictions with respect to these assumptions are subject to even greater uncertainty as the projection period lengthens. The insurance usage analysis considers, among other things, applicable deductibles, retentions and policy limits, the solvency and historical payment experience of various insurance carriers, the likelihood of recovery as estimated by external legal counsel and existing insurance settlements.
The liability projection period covers all current and future indemnity and defense costs through 2064, which represents the expected end of our asbestos liability exposure with no further ongoing claims expected beyond that date. This conclusion was based on our history and experience with the claims data, the diminished volatility and consistency of observable claims data, the period of time that has elapsed since we stopped manufacturing products that contained encapsulated asbestos and an expected downward trend in claims due to the average age of our claimants, which is approaching the average life expectancy.
Our accrued asbestos liabilities may not approximate our actual asbestos-related indemnity and defense costs, and our accrued insurance recoveries may not be realized. We believe it is reasonably possible that we may incur additional charges for our asbestos liabilities and defense costs in the future that could exceed existing reserves and insurance recoveries. We plan to continue to vigorously defend ourselves and believe we have substantial unutilized insurance coverage to mitigate future costs related to this matter.
We review our asbestos-related projections annually in the fourth quarter of each year unless facts and circumstances materially change during the year, at which time we would analyze these projections. We believe the assumptions made on the potential exposure and expected insurance coverage are reasonable at the present time, but are subject to uncertainty based on the actual future outcome of our asbestos litigation.
As of December 31, 2024, the estimated liabilities and estimated insurance recoveries for all current and future indemnity and defense costs projected through 2064 were $57.5 million and $52.3 million, respectively.
28
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk
•Foreign Currency Risk
Our financial results are affected by changes in foreign exchange rates and economic conditions in foreign countries in which we operate. Our primary overseas markets are in Europe and Asia, thus exposing us to exchange rate risk from fluctuations in the euro, the Chinese renminbi, the British pound, the Japanese yen, the South Korean won and certain other currencies. We seek to mitigate exposure to variability in currency exchange rates, when possible, through the use of natural hedges, whereby purchases and sales in the same foreign currency and with similar maturity dates offset one another. We further seek to mitigate this exposure through hedging activities by entering into foreign exchange forward contracts with third parties when the use of natural hedges is not possible or desirable. We currently do not use derivative instruments for trading or speculative purposes. We monitor foreign exchange risks and at times manage such risks on specific transactions. Our risk management process primarily uses analytical techniques and sensitivity analysis. In 2024, a 10% strengthening of the U.S. dollar relative to other currencies would have resulted in a decrease to net sales and net income of approximately $8.6 million and $4.1 million, respectively, while a 10% weakening of the U.S. dollar relative to other currencies would have resulted in an increase to net sales and net income of approximately $10.5 million and $4.9 million, respectively. These impacts are not reflective of the effects of our foreign currency forward contracts.
•Interest Rate Risk
As of December 31, 2024, we had no borrowings outstanding under our revolving credit facility. The interest charged on these borrowings fluctuates with movements in the benchmark SOFR. As of December 31, 2024, the interest rate on our revolving credit facility was 6.30%, and a 100-basis point increase in SOFR would have increased the amount of interest expense by an immaterial amount for the year ended December 31, 2024.
•Commodity Risk
We are subject to fluctuations in the cost of raw materials used to manufacture our materials and products. In particular, we are exposed to market fluctuations in commodity pricing as we utilize certain materials, such as copper and ceramic, which are key materials in certain of our products. In order to minimize the risk of market driven price changes in these commodities, we utilize hedging strategies to insulate us against price fluctuations of copper, the most frequently used commodity in our manufacturing processes. We currently do not use hedging strategies to minimize the risk of price fluctuations on other commodity-based raw materials; however, we regularly review such strategies to hedge market risk on an ongoing basis.
For additional discussion, refer to “Note 3 – Derivatives and Hedging” to “Item 8. Financial Statements and Supplementary Data.”
29
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 238 )
To the Board of Directors and Shareholders of Rogers Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated statements of financial position of Rogers Corporation and its subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, of comprehensive income, of shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2024 appearing under Item 8 (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
30
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Asbestos-Related Liabilities and Insurance Recoverables
As described in Notes 1 and 10 to the consolidated financial statements, the Company's consolidated asbestos-related liabilities and asbestos-related insurance recoverables balances were $57.5 million and $52.3 million, respectively, as of December 31, 2024. Management reviews the asbestos-related projections annually in the fourth quarter of each year unless facts and circumstances materially change during the year, at which time management would analyze these projections. Management recognizes a liability for asbestos-related contingencies that are probable of occurrence and reasonably estimable.
In connection with the recognition of liabilities for asbestos-related matters, management records asbestos-related insurance recoverables that are deemed probable. Management's estimates of asbestos-related contingent liabilities and related insurance recoverables are based on a claim projection analysis and an insurance usage analysis, respectively, prepared annually by third parties. The claim projection analysis contains numerous assumptions, including the number of claims that might be received, the type and severity of the disease alleged by each claimant, the long latency period associated with asbestos exposure, dismissal rates, average indemnity costs, average defense costs, costs of medical treatment, the financial resources of other companies that are co-defendants in claims, uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, and the impact of potential changes in legislative or judicial standards, including potential tort reform. The insurance usage analysis considers, among other things, applicable deductibles, retentions and policy limits, the solvency and historical payment experience of various insurance carriers, the likelihood of recovery as estimated by external legal counsel and existing insurance settlements.
The principal considerations for our determination that performing procedures relating to asbestos-related liabilities and insurance recoverables is a critical audit matter are (i) the significant judgement by management when determining the asbestos-related liabilities and insurance recoverables; (ii) a high degree of auditor judgement, subjectivity, and effort in performing procedures and evaluating management's significant assumptions related to the number of claims that might be received, type and severity of the disease alleged by each claimant, average indemnity costs, average defense costs, and dismissal rates used in the claim projection analysis; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the analyses of the asbestos-related liabilities and insurance recoverables. These procedures also included, among others (i) testing management's process for determining the asbestos-related liabilities and insurance recoverables estimates; (ii) evaluating the appropriateness of the claim projection and insurance usage analyses; (iii) testing the completeness and accuracy of the underlying data used in the analyses; and (iv) evaluating the reasonableness of significant assumptions used by management related to the number of claims that might be received, type and severity of the disease alleged by each claimant, average indemnity costs, average defense costs, and dismissal rates. Professionals with specialized skill and knowledge were used to assist in evaluating management's analyses and significant assumptions related to the number of claims that might be received, type and severity of the disease alleged by each claimant, average indemnity costs, average defense costs, and dismissal rates.
/s/ | ||
| February 26, 2025 | ||
| We have served as the Company’s auditor since 2015. | ||
31
ROGERS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For each of the fiscal years in the three-year period ended December 31, 2024
| (Dollars and shares in millions, except per share amounts) | 2024 | 2023 | 2022 | ||||||||||||||
| Net sales | $ | $ | $ | ||||||||||||||
| Cost of sales | |||||||||||||||||
| Gross margin | |||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||
| Research and development expenses | |||||||||||||||||
| Restructuring and impairment charges | |||||||||||||||||
| Other operating (income) expense, net | ( | ( | |||||||||||||||
| Operating income | |||||||||||||||||
| Equity income in unconsolidated joint ventures | |||||||||||||||||
| Other income (expense), net | ( | ||||||||||||||||
| Interest expense, net | ( | ( | ( | ||||||||||||||
| Income before income tax expense | |||||||||||||||||
| Income tax expense | |||||||||||||||||
| Net income | $ | $ | $ | ||||||||||||||
| Basic earnings per share | $ | $ | $ | ||||||||||||||
| Diluted earnings per share | $ | $ | $ | ||||||||||||||
| Shares used in computing: | |||||||||||||||||
| Basic earnings per share | |||||||||||||||||
| Diluted earnings per share | |||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
32
ROGERS CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For each of the fiscal years in the three-year period ended December 31, 2024
| (Dollars in millions) | 2024 | 2023 | 2022 | ||||||||||||||
| Net income | $ | $ | $ | ||||||||||||||
| Foreign currency translation adjustment | ( | ( | |||||||||||||||
| Pension and other postretirement benefits: | |||||||||||||||||
| Actuarial net gain (loss) incurred, net of tax (Note 2) | ( | ( | |||||||||||||||
| Pension settlement charges, net of tax (Note 2) | |||||||||||||||||
| Amortization of loss, net of tax (Note 2) | |||||||||||||||||
| Other comprehensive income (loss) | ( | ( | |||||||||||||||
| Comprehensive income (loss) | $ | ( | $ | $ | |||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
33
ROGERS CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
| As of December 31, | |||||||||||
| (Dollars and share amounts in millions, except par value of capital stock) | 2024 | 2023 | |||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, less allowance for credit losses of $ | |||||||||||
| Contract assets | |||||||||||
| Inventories, net | |||||||||||
| Asbestos-related insurance recoverables, current portion | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
Property, plant and equipment, net of accumulated depreciation of $ | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Goodwill | |||||||||||
| Other intangible assets, net of amortization | |||||||||||
| Asbestos-related insurance recoverables, non-current portion | |||||||||||
| Investments in unconsolidated joint ventures | |||||||||||
| Deferred income taxes | |||||||||||
| Other long-term assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Shareholders’ Equity | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued employee benefits and compensation | |||||||||||
| Accrued income taxes payable | |||||||||||
| Operating lease obligations, current portion | |||||||||||
| Asbestos-related liabilities, current portion | |||||||||||
| Other accrued liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Borrowings under revolving credit facility | |||||||||||
| Operating lease obligations, non-current portion | |||||||||||
| Asbestos-related liabilities, non-current portion | |||||||||||
| Non-current income tax | |||||||||||
| Deferred income taxes | |||||||||||
| Other long-term liabilities | |||||||||||
| Commitments and contingencies (Note 6 and Note 10) | |||||||||||
| Shareholders’ equity | |||||||||||
Capital stock - $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total shareholders' equity | |||||||||||
| Total liabilities and shareholders' equity | $ | $ | |||||||||
The accompanying notes are an integral part of the consolidated financial statements.
34
ROGERS CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
For each of the fiscal years in the three-year period ended December 31, 2024
| (Dollars and share amounts in millions) | 2024 | 2023 | 2022 | ||||||||||||||
| Capital Stock | |||||||||||||||||
| Balance, beginning of period | $ | $ | $ | ||||||||||||||
| Shares issued for vested restricted stock units, net of shares withheld for taxes | — | ||||||||||||||||
| Shares issued for employee stock purchase plan | — | — | — | ||||||||||||||
| Shares repurchased | ( | — | ( | ||||||||||||||
| Other capital stock activity | — | — | — | ||||||||||||||
| Balance, end of period | |||||||||||||||||
| Additional Paid-In Capital | |||||||||||||||||
| Balance, beginning of period | |||||||||||||||||
| Shares issued for vested restricted stock units, net of shares withheld for taxes | ( | ( | ( | ||||||||||||||
| Shares issued for employee stock purchase plan | — | — | |||||||||||||||
| Equity compensation expense | |||||||||||||||||
| Shares repurchased | ( | — | ( | ||||||||||||||
| Other additional paid-in capital activity | — | — | |||||||||||||||
| Balance, end of period | |||||||||||||||||
| Retained Earnings | |||||||||||||||||
| Balance, beginning of period | |||||||||||||||||
| Net income | |||||||||||||||||
| Balance, end of period | |||||||||||||||||
| Accumulated Other Comprehensive Loss | |||||||||||||||||
| Balance, beginning of period | ( | ( | ( | ||||||||||||||
| Other comprehensive income (loss) | ( | ( | |||||||||||||||
| Balance, end of period | ( | ( | ( | ||||||||||||||
| Total Shareholders’ Equity | $ | $ | $ | ||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
35
ROGERS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For each of the fiscal years in the three-year period ended December 31, 2024
| (Dollars in millions) | 2024 | 2023 | 2022 | ||||||||||||||
| Operating Activities: | |||||||||||||||||
| Net income | $ | $ | $ | ||||||||||||||
| Adjustments to reconcile net income to cash provided by operating activities: | |||||||||||||||||
| Depreciation and amortization | |||||||||||||||||
| Equity compensation expense | |||||||||||||||||
| Deferred income taxes | ( | ( | ( | ||||||||||||||
| Equity in undistributed income of unconsolidated joint ventures | ( | ( | ( | ||||||||||||||
| Dividends received from unconsolidated joint ventures | |||||||||||||||||
| Gain on JV Separation Agreement transactions | ( | ||||||||||||||||
| Gain on sale of business | ( | ||||||||||||||||
| (Gain) loss on sale or disposal of property, plant and equipment | ( | ||||||||||||||||
| Impairment charges | |||||||||||||||||
| Other non-cash charges, net | |||||||||||||||||
| Changes in assets and liabilities: | |||||||||||||||||
| Accounts receivable | ( | ( | |||||||||||||||
| Proceeds from insurance related to operations | |||||||||||||||||
| Contract assets | ( | ( | |||||||||||||||
| Inventories, net | ( | ||||||||||||||||
| Other current assets | ( | ||||||||||||||||
| Accounts payable and other accrued expenses | ( | ( | |||||||||||||||
| Other, net | ( | ( | |||||||||||||||
| Net cash provided by operating activities | |||||||||||||||||
| Investing Activities: | |||||||||||||||||
| Capital expenditures | ( | ( | ( | ||||||||||||||
| Acquisition of business, net of cash received | ( | ||||||||||||||||
| Disposition of business | |||||||||||||||||
| Net cash from JV Separation Agreement transactions | |||||||||||||||||
| Proceeds from the sale of marketable equity securities | |||||||||||||||||
| Purchases of marketable equity securities | ( | ||||||||||||||||
| Proceeds from the sale of property, plant and equipment, net | |||||||||||||||||
| Proceeds from insurance claims | |||||||||||||||||
| Net cash used in investing activities | ( | ( | ( | ||||||||||||||
| Financing Activities: | |||||||||||||||||
| Proceeds from borrowings under revolving credit facility | |||||||||||||||||
| Repayment of debt principal and finance lease obligations | ( | ( | ( | ||||||||||||||
| Line of credit issuance costs | ( | ||||||||||||||||
| Payments of taxes related to net share settlement of equity awards | ( | ( | ( | ||||||||||||||
| Proceeds from issuance of shares to employee stock purchase plan | |||||||||||||||||
| Share repurchases | ( | ( | |||||||||||||||
| Net cash used in financing activities | ( | ( | ( | ||||||||||||||
| Effect of exchange rate fluctuations on cash | ( | ( | |||||||||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ||||||||||||||||
| Cash and cash equivalents at beginning of period | |||||||||||||||||
| Cash and cash equivalents at end of period | $ | $ | $ | ||||||||||||||
| Supplemental Disclosures: | |||||||||||||||||
| Accrued capital additions | $ | $ | $ | ||||||||||||||
| Cash paid during the year for: | |||||||||||||||||
| Interest, net of amounts capitalized | $ | $ | $ | ||||||||||||||
| Income taxes, net of refunds | $ | $ | $ | ||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
36
ROGERS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Basis of Presentation, Organization and Summary of Significant Accounting Policies
As used herein, the terms “Company,” “Rogers,” “we,” “us,” “our” and similar terms mean Rogers Corporation and its consolidated subsidiaries, unless the context indicates otherwise.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and our wholly-owned subsidiaries, after elimination of intercompany balances and transactions. The preparation of financial statements, in conformity with U.S. GAAP, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Organization
Our reporting structure is comprised of three operating segments: AES, EMS and Other.
Advanced Electronics Solutions
Our AES operating segment designs, develops, manufactures and sells circuit materials, ceramic substrate materials, busbars and cooling solutions for applications in EV/HEV, automotive (e.g., ADAS), aerospace and defense (e.g., antenna systems, communication systems and phased array radar systems), renewable energy (e.g., wind and solar), wireless infrastructure (e.g., power amplifiers, antennas and small cells), mass transit, industrial (e.g., variable frequency drives), connected devices (e.g., mobile internet devices and thermal solutions) and wired infrastructure (e.g., computing and internet protocol infrastructure) markets. We believe these materials have characteristics that offer performance and other functional advantages in many market applications, which serve to differentiate our products from other commonly available materials. AES products are sold globally to converters, fabricators, distributors and OEMs. Trade names for our AES products include: curamik®, ROLINX®, RO4000® Series, RO3000® Series, RT/duroid®, CLTE Series®, TMM®, AD Series®, DiClad® Series, CuClad® Series, Kappa®, COOLSPAN®, TC Series®, IsoClad® Series, MAGTREX®, IM Series™, 2929 Bondply, SpeedWave® Prepreg, RO4400™/RO4400T™ Series and Radix™. As of December 31, 2024, our AES operating segment had manufacturing and administrative facilities in Chandler, Arizona; Rogers, Connecticut; Bear, Delaware; Eschenbach, Germany; Suzhou, China; Budapest, Hungary; Evergem, Belgium; and Apodoca, Mexico.
Elastomeric Material Solutions
Our EMS operating segment designs, develops, manufactures and sells engineered material solutions for a wide variety of applications and markets. These include polyurethane and silicone materials used in cushioning, gasketing and sealing, and vibration management applications for EV/HEV, general industrial, portable electronics, automotive, mass transit, aerospace and defense, footwear and impact mitigation markets; customized silicones used in flex heater and semiconductor thermal applications for EV/HEV, general industrial, portable electronics, automotive, mass transit, aerospace and defense and medical markets; polytetrafluoroethylene and ultra-high molecular weight polyethylene materials used in wire and cable protection, electrical insulation, conduction and shielding, hose and belt protection, vibration management, cushioning, gasketing and sealing, and venting applications for EV/HEV, general industrial, automotive and aerospace and defense markets. We believe these materials have characteristics that offer functional advantages in many market applications, which serve to differentiate our products from other commonly available materials. EMS products are sold globally to converters, fabricators, distributors and OEMs. Trade names for our EMS products include: PORON®, BISCO®, DeWAL®, ARLON®, eSorba®, XRD®, Silicone Engineering and R/bak®. As of December 31, 2024, our EMS operating segment had manufacturing and administrative facilities in Rogers, Connecticut; Woodstock, Connecticut; Bear, Delaware; Carol Stream, Illinois; Narragansett, Rhode Island; Evergem, Belgium; Blackburn, England; Siheung, South Korea; and Suzhou, China.
Other
Our Other operating segment consists of elastomer components for applications in the general industrial market, as well as elastomer floats for level sensing in fuel tanks, motors, and storage tanks applications in the general industrial and automotive markets. We sell our elastomer components under our ENDUR® trade name and our floats under our NITROPHYL® trade name.
Summary of Significant Accounting Policies
Cash and Cash Equivalents
Highly liquid investments with original maturities of three months or less are considered cash and cash equivalents. These investments are stated at cost, which approximates fair value.
37
Foreign Currency
All balance sheet accounts of foreign subsidiaries are translated or remeasured at exchange rates in effect at each year end, and income statement items are translated using the average exchange rates for the year. Translation adjustments for those entities that operate under a local currency are recorded directly to a separate component of shareholders’ equity, while remeasurement adjustments for those entities that operate under the parent’s functional currency are recorded in the “Other income (expense), net” line item in the consolidated statements of operations. Currency transaction gains and losses are recorded as income or expense, respectively, in the “Other income (expense), net” line item in the consolidated statements of operations. For the financial statement impacts, refer to Other Income (Expense), net table in “Note 14 – Supplemental Financial Information.”
Accounts Receivable
Allowance for Credit Losses
The allowance for credit losses is determined based on a variety of factors that affect the potential collectability of the related receivables, including the length of time receivables are past due, customer credit ratings, financial stability of customers, specific one-time events and past customer history. In addition, in circumstances where we are made aware of a specific customer’s inability to meet its financial obligations, a specific allowance is established. The majority of accounts are individually evaluated on a regular basis and appropriate reserves are established as deemed appropriate based on the criteria previously mentioned. The remainder of the reserve is based on our estimates and takes into consideration historical trends, market conditions and the composition of our customer base.
Inventories
Inventories are stated at the lower of cost or net realizable value with costs determined primarily on a first-in, first-out basis. We record allowances for estimated losses due to excess, obsolete and slow-moving inventory that is determined for groups of products based on purchases in the recent past and/or expected future demand, as well as market conditions, design cycles and other economic factors. Abnormal amounts of idle facility expense and waste are not capitalized in inventory. The allocation of fixed production overheads to the inventory cost is based on the normal capacity of the production facilities.
Property, Plant and Equipment
| Property, Plant and Equipment Classification | Estimated Useful Lives | ||||
| Buildings and improvements | |||||
| Machinery and equipment | |||||
| Office equipment | |||||
Software Costs
| (Dollars in millions) | 2024 | 2023 | |||||||||
| Capitalized software | $ | $ | |||||||||
| Accumulated amortization | ( | ( | |||||||||
| Software in-process | |||||||||||
| Capitalized software, net | $ | $ | |||||||||
38
The December 31, 2024 and 2023 balances were almost entirely attributable to our new ERP system still in development, for which useful lives will be determined upon implementation/completion of the project.
Additionally, we had a $6.0 million net balance as of December 31, 2024 related to our cloud computing arrangements, which was contained in “Other long-term assets” and “Other current assets” line items in the consolidated statements of financial position.
Leases
We determine whether an arrangement is a lease at contract inception by establishing if the contract conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration.
Lease right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of all minimum lease payments over the lease term. We use an incremental borrowing rate representative of our ability to borrow on a collateralized basis over a similar lease term. Lease terms may include options to extend or terminate the lease. These options are included in the lease term when it is reasonably certain that we will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term. We have elected the following policy elections on adoption: separating lease and non-lease components, exclusion of short-term leases on the balance sheet and recognition of lease payments for short-term leases in the consolidated statements of operations on a straight-line basis.
Goodwill and Other Intangible Assets
We have made acquisitions over the years that included the recognition of intangible assets. Intangible assets are classified into three categories: (1) goodwill; (2) other intangible assets with definite lives subject to amortization; and (3) other intangible assets with indefinite lives not subject to amortization. Other intangible assets can include items such as trademarks and trade names, licensed technology, customer relationships and covenants not to compete, among other things. Each definite-lived other intangible asset is amortized over its respective economic useful life using the economic attribution method.
Goodwill is evaluated for impairment annually, and between annual impairment assessments if events or changes in circumstances indicate the carrying value may be impaired, by first performing a qualitative assessment to determine whether a quantitative goodwill impairment assessment is necessary. If it is determined, based on qualitative factors, the fair value of the reporting unit may be more likely than not less than its carrying amount or if significant changes to macro-economic factors related to the reporting unit have occurred that could materially impact fair value, a quantitative goodwill impairment assessment would be required. We can elect to forgo the qualitative assessment and perform a quantitative assessment. The quantitative assessment compares the fair value of a reporting unit with its carrying amount. The application of the quantitative assessment requires significant judgment, including the assignment of assets and liabilities to reporting units and determination of the fair value of each reporting unit. Determining the fair value is subjective and requires the use of significant estimates and assumptions, including financial projections for net sales, gross margin and operating margin, discount rates, terminal growth rates and future market conditions, among others. When performing the quantitative assessment, we have historically estimated the fair value of our reporting units using an income approach based on the present value of future cash flows through a five-year discounted cash flow analysis. Upon performing the quantitative assessment, if the carrying value of the reporting unit exceeds its fair value, an impairment charge is recognized in an amount equal to that excess, not to exceed the carrying amount of goodwill.
We currently have four reporting units with goodwill: RF Solutions, EMS, curamik® and Elastomer Components Division. Consistent with historical practice, the annual impairment test on these reporting units was performed as of November 30, 2024. In 2024, we elected to utilize a qualitative assessment. There were no impairment charges resulting from our goodwill impairment assessment for the year ended December 31, 2024. Our RF Solutions, EMS, curamik® and ECD reporting units had allocated goodwill of $51.7 million, $241.7 million, $62.0 million and $2.2 million, respectively, as of December 31, 2024.
Indefinite-lived other intangible assets are evaluated for impairment annually, and between annual impairment assessments if events or changes in circumstances indicate the carrying value may be impaired, by first performing a qualitative assessment to determine whether a quantitative indefinite-lived other intangible asset impairment assessment is necessary. If it is determined, based on qualitative factors, the fair value of the indefinite-lived other intangible asset may be more likely than not less than its carrying amount or if significant changes to macro-economic factors related to the indefinite-lived other intangible asset have occurred that could materially impact fair value, a quantitative indefinite-lived other intangible asset impairment assessment would be required. We can elect to forgo the qualitative assessment and perform a quantitative assessment. The quantitative assessment compares the fair value of the indefinite-lived other intangible asset with its carrying amount. The application of the quantitative assessment requires significant judgment, including determining the fair value of each indefinite-lived other intangible asset. Fair value is primarily based on income approaches using discounted cash flow models, which have significant assumptions. Such assumptions are subject to variability from year to year and are directly impacted by global market conditions. There were no impairment charges resulting from our indefinite-lived other intangible assets impairment assessment
39
for the year ended December 31, 2024. Our curamik® reporting unit had an indefinite-lived other intangible asset of $4.1 million as of December 31, 2024.
Definite-lived other intangible assets are tested for recoverability whenever events or changes in circumstances indicate the carrying value may not be recoverable. The recoverability test involves comparing the estimated sum of the undiscounted cash flows for each definite-lived other intangible asset to its respective carrying value. If a definite-lived other intangible asset’s carrying value is greater than the sum of its undiscounted cash flows, then the definite-lived other intangible asset’s carrying value is compared to its estimated fair value and an impairment charge is recognized for the excess and charged to operations. The application of the recoverability test requires significant judgment, including the identification of the asset group and determination of undiscounted cash flows and fair value of the underlying definite-lived other intangible asset. Determination of undiscounted cash flows requires the use of significant estimates and assumptions, including certain financial projections. Fair value is primarily based on income approaches using discounted cash flow models, which have significant assumptions. Such assumptions are subject to variability from year to year and are directly impacted by global market conditions. There were no resulting from our definite-lived other intangible assets impairment analysis for the year ended December 31, 2024. Our EMS and curamik® reporting units had definite-lived other intangible assets of $104.0 million and $2.2 million, respectively, as of December 31, 2024.
The useful life determination for each indefinite-lived other intangible asset is evaluated each reporting period to determine whether events and circumstances support an indefinite useful life. The useful life determination for each definite-lived other intangible asset is evaluated each reporting period to determine whether events and circumstances warrant a revision to the remaining period of amortization.
Pension and Other Postretirement Benefits
We sponsor one material defined benefit pension plan, the Union Plan, which covers certain union employees, and we sponsor multiple fully insured or self-funded medical plans and fully insured life insurance plans for retirees. The Union Plan was frozen in 2013 so that future benefits no longer accrue. The costs and obligations associated with these plans are dependent upon various actuarial assumptions used in calculating such amounts. These assumptions include discount rates, long-term rates of return on plan assets, mortality rates, and other factors. The assumptions used in these models are determined as follows: (i) the discount rate used is based on the PruCurve bond index; (ii) the long-term rate of return on plan assets is determined based on historical portfolio results, market conditions and our expectations of future returns; and (iii) the mortality rate is based on a mortality projection that estimates current longevity rates and their impact on the long-term plan obligations. We determine these assumptions based on consultation with outside actuaries and investment advisors. Any changes in these assumptions could have a significant impact on our assets and liabilities. We review these assumptions periodically throughout the year and update as necessary.
We are required, as an employer, to: (a) recognize in the consolidated statements of financial position an asset for a plan’s overfunded status or a liability for a plan’s underfunded status; (b) measure a plan’s assets and a plan’s obligations that determine our funded status as of the end of the year; and (c) recognize changes in the funded status of a defined benefit plan in the year in which the changes occur and report these changes in accumulated other comprehensive loss. Additionally, actuarial losses (gains) that are not immediately recognized as net periodic pension cost (credit) are recognized as a component of accumulated other comprehensive loss (income) and amortized into net periodic pension cost (credit) in future periods.
Investments were stated at fair value as of the dates reported. Securities traded on a national securities exchange were valued at the last reported sales price on the last business day of the plan year. Fixed-income bonds were valued using price evaluations provided by independent pricing services. The fair value of the guaranteed deposit account was determined through discounting expected future investment cash flow from both investment income and repayment of principal for each investment purchased. The estimated fair values of the participation units owned by the plan in pooled separate accounts were based on quoted redemption values and adjusted for management fees and asset charges, as determined by the recordkeeper, on the last business day of the relevant plan year. Pooled separate accounts are accounts established solely for the purpose of investing the assets of one or more plans. Funds in a separate account are not commingled with other Company assets for investment purposes.
Environmental and Product Liabilities
We accrue for our environmental investigation, remediation, operating and maintenance costs when it is probable that a liability has been incurred and the amount can be reasonably estimated. For environmental matters, the most likely cost to be incurred is accrued based on an evaluation of currently available facts with respect to each individual site, including existing technology, current laws and regulations and prior remediation experience. For sites with multiple potential responsible parties, we consider our likely proportionate share of the anticipated remediation costs and the ability of the other parties to fulfill their obligations in establishing a provision for those costs. When no amount within a range of estimates is more likely to occur than another, we accrue to the low end of the range and disclose the range. When future liabilities are determined to be reimbursable by insurance coverage, an accrual is recorded for the potential liability and a receivable is recorded for the estimated insurance
40
reimbursement amount. We are exposed to the uncertain nature inherent in such remediation and the possibility that initial estimates will not reflect the final outcome of a matter.
We review our asbestos-related projections annually in the fourth quarter of each year unless facts and circumstances materially change during the year, at which time we would analyze these projections. We believe the assumptions made on the potential exposure and expected insurance coverage are reasonable at the present time, but are subject to uncertainty based on the actual future outcome of our asbestos litigation. Our estimates of asbestos-related contingent liabilities and asbsestos-related insurance recoverables are based on a claim projection analysis and an insurance usage analysis prepared annually by third parties. The claim projection analysis contains numerous assumptions, including number of claims that might be received, the type and severity of the disease alleged by each claimant, the long latency period associated with asbestos exposure, dismissal rates, average indemnity costs, average defense costs, costs of medical treatment, the financial resources of other companies that are co-defendants in claims, uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, and the impact of potential changes in legislative or judicial standards, including potential tort reform. Furthermore, any predictions with respect to these assumptions are subject to even greater uncertainty as the projection period lengthens. The insurance usage analysis considers, among other things, applicable deductibles, retentions and policy limits, the solvency and historical payment experience of various insurance carriers, the likelihood of recovery as estimated by external legal counsel and existing insurance settlements.
We believe the assumptions used in our models for determining our potential exposure and related insurance coverage are reasonable at the present time, but such assumptions are inherently uncertain. Given the inherent uncertainty in making projections, we plan to re-examine periodically the assumptions used in the projections of current and future asbestos claims, and we will update them, if needed, based on our experience, changes in the assumptions underlying our models, and other relevant factors, such as changes in the tort system. Our accrued asbestos liabilities may not approximate our actual asbestos-related indemnity and defense costs, and our accrued insurance recoveries may not be realized. We believe that it is reasonably possible that we may incur additional charges for our asbestos liabilities and defense costs in the future that could exceed existing reserves and insurance recoveries.
Fair Value Measurements
The accounting guidance for fair value measurements establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.
•Level 1 – Quoted prices in active markets for identical assets or liabilities.
•Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
•Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Fair Value of Financial Instruments
Derivative Financial Instruments and Hedging Transactions
We are exposed to certain risks related to our ongoing business operations, and, from time to time, we manage these risk exposures by utilizing derivative financial instruments. We do not utilize derivative financial instruments for trading or speculative purposes. The primary risks being managed through our use of derivative instruments are foreign currency exchange rate risk and commodity pricing risk (primarily related to copper).
To qualify for hedge accounting treatment, derivatives used for hedging purposes must be designated and deemed effective as a hedge of the identified underlying risk exposure at the inception of the contract. Accordingly, changes in fair value of the derivative contract must be highly correlated with changes in the fair value of the underlying hedged item at inception of the hedge and over the life of the hedge contract.
41
Concentration of Credit and Investment Risk
We are subject to credit and market risk by using derivative instruments. If a counterparty fails to fulfill its performance obligations under a derivative contract, our credit risk will equal the fair value of the derivative instrument. We seek to minimize counterparty credit (or repayment) risk by entering into derivative transactions with major financial institutions with investment grade credit ratings.
We invest excess cash principally in investment grade government securities and time deposits. We have established guidelines relative to diversification and maturities in order to maintain safety and liquidity. These guidelines are periodically reviewed and modified to reflect changes in market conditions.
Income Taxes
We are subject to income taxes in the U.S. and in numerous foreign jurisdictions. We account for income taxes following ASC 740, Income Taxes, recognizing deferred tax assets and liabilities using enacted tax rates for the effect of temporary differences between book and tax basis of recorded assets and liabilities. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some or all of a deferred tax asset will not be realized.
We record benefits for uncertain tax positions based on an assessment of whether it is more likely than not that the tax positions will be sustained by the taxing authorities. If this threshold is not met, no tax benefit of the uncertain position is recognized. If the threshold is met, we recognize the largest amount of the tax benefit that is greater than fifty percent likely to be realized upon ultimate settlement.
We recognize interest and penalties within the “Income tax expense” line item in the consolidated statements of operations. Accrued interest and penalties are included within the related tax liability line item in the consolidated statements of financial position.
Revenue Recognition
Recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the providing entity expects to be entitled in exchange for those goods or services. We recognize revenue when all of the following criteria are met: (1) we have entered into a binding agreement, (2) the performance obligations have been identified, (3) the transaction price to the customer has been determined, (4) the transaction price has been allocated to the performance obligations in the contract, and (5) the performance obligations have been satisfied. The majority of our shipping terms permit us to recognize revenue at point of shipment. Some shipping terms require the goods to be cleared through customs or be received by the customer before title passes. In those instances, revenue is not recognized until either the customer has received the goods or they have passed through customs, depending on the circumstances. Shipping and handling costs are treated as fulfillment costs. Sales tax or VAT are excluded from the measurement of the transaction price.
We manufacture some products to customer specifications which are customized to such a degree that it is unlikely that another entity would purchase these products or that we could modify these products for another customer. These products are deemed to have no alternative use to the Company whereby we have an enforceable right to payment evidenced by contractual termination clauses. In accordance with ASC 606, for those circumstances we recognize revenue on an over-time basis. Revenue recognition does not occur until the product meets the definition of “no alternative use” and therefore, items that have not yet reached that point in the production process are not included in the population of items with over-time revenue recognition.
As appropriate, we record estimated reductions to revenue for customer returns, allowances, and warranty claims. Provisions for such reductions are made at the time of sale and are typically derived from historical trends and other relevant information.
42
Earnings Per Share
Basic earnings per share is based on the weighted average number of common shares outstanding. Diluted earnings per share is based on the weighted average number of common shares outstanding and all dilutive potential common shares outstanding.
Equity Compensation
Equity compensation mainly consists of expense related to restricted stock units and deferred stock units.
Performance-based restricted stock unit compensation expense is based on achievement of both market and service conditions. The fair value of these awards is determined based on a Monte Carlo simulation valuation model on the grant date. We recognize compensation expense on all of these awards on a straight-line basis over the vesting period with no changes for final projected payout of the awards.
Time-based restricted stock unit compensation expense is based on the achievement of only service conditions. The fair value of these awards is determined based on the market value of the underlying stock price on the grant date. We recognize compensation expense on all of these awards on a straight-line basis over the vesting period.
Deferred stock units, which are granted to non-management directors, are fully vested on the date of grant and the related shares are generally issued on the 13 -month anniversary of the grant date unless the director elects to defer the receipt of those shares. The fair value of these awards is determined based on the market value of the underlying stock price on the grant date. The compensation related to these grants is expensed immediately on the date of grant.
Business Combination Purchase Price Allocation
The application of the acquisition method requires the allocation of the purchase price amongst the acquisition date fair values of identifiable assets acquired and liabilities assumed in a business combination. Fair values are determined using the income approach, market approach and/or cost approach depending on the nature of the asset or liability being valued and the reliability of available information. The income approach estimates fair value by discounting associated lifetime expected future cash flows to their present value and relies on significant assumptions regarding future revenues, expenses, working capital levels and discount rates. The market approach estimates fair value by analyzing recent actual market transactions for similar assets or liabilities. The cost approach estimates fair value based on the expected cost to replace or reproduce the asset or liability and relies on assumptions regarding the occurrence and extent of any physical, functional and/or economic obsolescence.
Restructuring Activities
We record charges associated with restructuring activities, such as employee termination benefits, when management approves and commits to a plan of termination, or over the future service period, if any. Other costs associated with restructuring activities may include contract termination costs, including costs related to leased facilities to be abandoned or subleased, and facility and employee relocation costs.
Advertising Costs
Advertising costs are expensed as incurred and included in the "Selling, general and administrative expenses” line item of the consolidated statements of operations, amounted to $2.8 million, $3.5 million, and $3.3 million in 2024, 2023 and 2022, respectively.
Reclassification
Certain reclassifications have been made in the 2023 and 2022 financial statements and notes to conform to the 2024 presentation.
43
Note 2 – Accumulated Other Comprehensive Loss
The changes in accumulated other comprehensive loss by component for each of the fiscal years in the two-year period ended December 31, 2024 were as follows:
| (Dollars in millions) | Foreign Currency Translation Adjustments | Pension and Other Postretirement Benefits(1) | Total | ||||||||||||||
| Balance as of December 31, 2022 | $ | ( | $ | ( | $ | ( | |||||||||||
| Other comprehensive income (loss) before reclassifications | ( | ||||||||||||||||
| Amounts reclassified to earnings | |||||||||||||||||
| Net other comprehensive income (loss) for period | |||||||||||||||||
| Balance as of December 31, 2023 | ( | ( | ( | ||||||||||||||
| Other comprehensive income (loss) before reclassifications | ( | ( | |||||||||||||||
| Amounts reclassified to earnings | ( | ( | |||||||||||||||
| Net other comprehensive income (loss) for period | ( | ( | |||||||||||||||
| Balance as of December 31, 2024 | $ | ( | $ | ( | $ | ( | |||||||||||
The reclassification of impacts to the consolidated statements of operations for our pension and other postretirement benefits amortization and settlements in 2024 and 2023 were as follows:
| (Dollars in millions) | Financial Statement Line Item | 2024 | 2023 | |||||||||||||||||
Settlement charges(1) | Other income (expense), net | $ | $ | ( | ||||||||||||||||
Amortization of loss(1) | Other income (expense), net | ( | ( | |||||||||||||||||
| Income tax (expense) benefit | Income tax (expense) benefit | |||||||||||||||||||
| Net income | Net income | $ | ( | $ | ( | |||||||||||||||
(1) These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost (credit). For additional details, refer to “Note 8 – Postretirement Benefits.”
Note 3 – Derivatives and Hedging
Derivatives
The valuation of our derivative contracts used to manage their respective risks is described below:
•Foreign Currency – The fair value of any foreign currency option derivative is based upon valuation models applied to current market information such as strike price, spot rate, maturity date and volatility, and by reference to market values resulting from an over-the-counter market or obtaining market data for similar instruments with similar characteristics.
•Commodity – The fair value of copper derivatives is computed using a combination of intrinsic and time value valuation models, which are collectively a function of five primary variables: price of the underlying instrument, time to expiration, strike price, interest rate and volatility. The intrinsic valuation model reflects the difference between the strike price of the underlying copper derivative instrument and the current prevailing copper prices in an over-the-counter market at period end. The time value valuation model incorporates changes in the price of the underlying copper derivative instrument, the time value of money, the underlying copper derivative instrument’s strike price and the remaining time to the underlying copper derivative instrument’s expiration date from the period end date.
As of December 31, 2024, we did not have any derivative contracts that qualified for hedge accounting treatment.
Derivative instrument gains and losses are recorded as income or expense in the “Other income (expense), net” line item in the consolidated statements of operations. For the financial statement impacts, refer to Other Income (Expense), net table in “Note 14 – Supplemental Financial Information.”
Foreign Currency
In 2024, we entered into U.S. dollar, euro, South Korean won, Hungarian forint and Japanese yen forward contracts. We entered into these foreign currency forward contracts to mitigate certain global transactional exposures. These contracts do not qualify for hedge accounting treatment. As a result, any fair value adjustments required on these contracts are recorded in the “Other income (expense), net” line item in the consolidated statements of operations in the period in which the adjustment occurred.
44
As of December 31, 2024, the notional values of these foreign currency forward contracts were as follows:
| Notional Values of Foreign Currency Derivatives | |||||
| USD/CNH | $ | ||||
| KRW/USD | ₩ | ||||
| JPY/EUR | ¥ | ||||
| HUF/EUR | Ft | ||||
| USD/EUR | $ | ||||
Commodity
As of December 31, 2024, we had 12 outstanding contracts to hedge exposure related to the purchase of copper in our AES operating segment. These contracts are held with financial institutions and are intended to offset rising copper prices and do not qualify for hedge accounting treatment. As a result, any fair value adjustments required on these contracts are recorded in the “Other income (expense), net” line item in the consolidated statements of operations in the period in which the adjustment occurred.
As of December 31, 2024, the volumes of our copper contracts outstanding were as follows:
| Volume of Copper Derivatives | |||||
| January 2025 - March 2025 | |||||
| April 2025 - June 2025 | |||||
| July 2025 - September 2025 | |||||
| October 2025 - December 2025 | |||||
Note 4 – Balance Sheet Items
Restricted Cash
Our restricted cash balance, which was subject to contractual restrictions and not readily available, was recorded in the “Cash and cash equivalents” line item in the consolidated statements of financial position, and served as collateral for letters of credit related to our environmental and workers’ compensation liabilities. This arrangement was terminated in the third quarter of 2024. Our restricted cash balance as of December 31, 2023 was as follows:
| (Dollars in millions) | 2024 | 2023 | |||||||||
| Restricted cash | $ | $ | |||||||||
Accounts Receivable
The “Accounts receivable, less allowance for credit losses” line item in the consolidated statements of financial position, as of December 31, 2024 and 2023, consisted of the following:
| (Dollars in millions) | 2024 | 2023 | |||||||||
| Accounts receivable - trade | $ | $ | |||||||||
| Accounts receivable - other | |||||||||||
| Total accounts receivable | $ | $ | |||||||||
45
Contract Assets
We had contract assets primarily related to unbilled revenue for revenue recognized related to products that are deemed to have no alternative use whereby we have the right to payment. Revenue is recognized in advance of billing to the customer in these circumstances as billing is typically performed at the time of shipment to the customer. The unbilled revenue is included in the “Contract assets” line item in the consolidated statements of financial position. We did not have any contract liabilities as of December 31, 2024 or 2023. No impairment losses were recognized in 2024, 2023 or 2022 on any contract assets arising from our contracts with customers. Our contract assets by operating segment as of December 31, 2024 and 2023, were as follows:
| (Dollars in millions) | 2024 | 2023 | |||||||||
| Advanced Electronics Solutions | $ | $ | |||||||||
| Elastomeric Material Solutions | |||||||||||
| Other | |||||||||||
| Total contract assets | $ | $ | |||||||||
Contract assets decreased 46 % to $23.7 million as of December 31, 2024, from $45.2 million as of December 31, 2023, mainly attributable to the decrease of contract assets in our AES operating segment, which was driven by a decline in the global EV market as well as a decrease of customer orders due to inventory overstocking.
Inventories
The “Inventories, net” line item in the consolidated statements of financial position, as of December 31, 2024 and 2023, consisted of the following:
| (Dollars in millions) | 2024 | 2023 | |||||||||
| Raw materials | $ | $ | |||||||||
| Work-in-process | |||||||||||
| Finished goods | |||||||||||
| Total inventories, net | $ | $ | |||||||||
Accounts Payable
The “Accounts payable” line item in the consolidated statements of financial position, as of December 31, 2024 and 2023, consisted of the following:
| (Dollars in millions) | 2024 | 2023 | |||||||||
| Accounts payable - trade | $ | $ | |||||||||
| Accounts payable - other | |||||||||||
| Total accounts payable | $ | $ | |||||||||
Long-Lived Assets by Geographic Area
Our long-lived assets(1) by geographic area, as of December 31, 2024 and 2023, were as follows:
| (Dollars in millions) | 2024 | 2023 | |||||||||
| U.S. | $ | $ | |||||||||
| England | |||||||||||
| Germany | |||||||||||
| China | |||||||||||
| Other | |||||||||||
| Total long-lived assets | $ | $ | |||||||||
(1) Long-lived assets are based on the location of the asset and are comprised of goodwill, other intangible assets, property, plant and equipment and right-of-use assets. Countries with 10% or more of long-lived assets have been disclosed.
46
Note 5 – Property, Plant and Equipment
The “Property, plant and equipment, net” line item in the consolidated statements of financial position, as of December 31, 2024 and 2023, consisted of the following:
| (Dollars in millions) | 2024 | 2023 | |||||||||
| Land and improvements | $ | $ | |||||||||
| Buildings and improvements | |||||||||||
| Machinery and equipment | |||||||||||
| Office equipment | |||||||||||
| Property plant and equipment, gross | |||||||||||
| Accumulated depreciation | ( | ( | |||||||||
| Property, plant and equipment, net | |||||||||||
| Construction in process | |||||||||||
| Total property, plant and equipment, net | $ | $ | |||||||||
The depreciation expense and impairment charges related to property, plant and equipment in 2024, 2023 and 2022, were as follows:
| (Dollars in millions) | 2024 | 2023 | 2022 | ||||||||||||||
| Depreciation expense | $ | $ | $ | ||||||||||||||
| Impairment charges | $ | $ | $ | ||||||||||||||
For additional information related to the impairment charges, refer to “Note 14 – Supplemental Financial Information.”
Note 6 – Leases
Finance Leases
We have finance leases primarily related to manufacturing equipment. Noncash activities involving finance lease right-of-use assets obtained in exchange for lease liabilities was $0.1 million, $0.1 million and $1.7 million for 2024, 2023 and 2022, respectively. Our expenses and payments for finance leases in 2024, 2023 and 2022, were as follows:
| (Dollars in millions) | 2024 | 2023 | 2022 | ||||||||||||||
| Amortization expense of finance lease right-of-use assets | $ | $ | $ | ||||||||||||||
| Interest expense on finance lease obligations | $ | ( | $ | ( | $ | ||||||||||||
| Payments on finance lease obligations | $ | $ | $ | ||||||||||||||
Operating Leases
We have operating leases primarily related to manufacturing and R&D facilities, as well as vehicles. Our new leases relate to facility expansion in 2024, 2023 and 2022. Noncash activities involving operating lease right-of-use assets obtained in exchange for lease liabilities was $6.0 million, $9.6 million and $8.6 million for 2024, 2023 and 2022, respectively. Our expenses and payments for operating leases in 2024, 2023 and 2022, were as follows:
| (Dollars in millions) | 2024 | 2023 | 2022 | ||||||||||||||
| Operating leases expense | $ | $ | $ | ||||||||||||||
| Short-term leases expense | $ | $ | $ | ||||||||||||||
| Payments on operating lease obligations | $ | $ | $ | ||||||||||||||
47
Lease Balances in Statements of Financial Position
The assets and liabilities balances related to finance and operating leases reflected in the consolidated statements of financial position, as of December 31, 2024 and 2023, were as follows:
| (Dollars in millions) | Financial Statement Line Item | 2024 | 2023 | |||||||||||
| Finance lease right-of-use assets | $ | $ | ||||||||||||
| Operating lease right-of-use assets | Operating lease right-of-use assets | $ | $ | |||||||||||
| Finance lease obligations, current portion | $ | $ | ||||||||||||
| Finance lease obligations, non-current portion | $ | $ | ||||||||||||
| Total finance lease obligations | $ | $ | ||||||||||||
| Operating lease obligations, current portion | Operating lease obligations, current portion | $ | $ | |||||||||||
| Operating lease obligations, non-current portion | Operating lease obligations, non-current portion | $ | $ | |||||||||||
| Total operating lease obligations | $ | $ | ||||||||||||
Net Future Minimum Lease Payments
The following table includes future minimum lease payments under finance and operating leases together with the present value of the net future minimum lease payments as of December 31, 2024:
| Finance | Operating | ||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Leases Signed | Less: Leases Not Yet Commenced | Leases in Effect | Leases Signed | Less: Leases Not Yet Commenced | Leases in Effect | |||||||||||||||||||||||||||||
| 2025 | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| 2026 | ( | ||||||||||||||||||||||||||||||||||
| 2027 | ( | ||||||||||||||||||||||||||||||||||
| 2028 | ( | ||||||||||||||||||||||||||||||||||
| 2029 | ( | ||||||||||||||||||||||||||||||||||
| Thereafter | ( | ||||||||||||||||||||||||||||||||||
| Total lease payments | ( | ||||||||||||||||||||||||||||||||||
| Less: Interest | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Present Value of Net Future Minimum Lease Payments | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||
The following table includes information regarding the lease term and discount rates utilized in the calculation of the present value of net future minimum lease payments:
| 2024 | 2023 | ||||||||||
| Weighted Average Remaining Lease Term | |||||||||||
| Finance leases | |||||||||||
| Operating leases | |||||||||||
| Weighted Average Discount Rate | |||||||||||
| Finance leases | |||||||||||
| Operating leases | |||||||||||
48
Note 7 – Goodwill and Other Intangible Assets
Goodwill
The changes in the carrying amount of goodwill for the period ended December 31, 2024, by operating segment, were as follows:
| (Dollars in millions) | Advanced Electronics Solutions | Elastomeric Material Solutions | Other | Total | |||||||||||||||||||
| December 31, 2023 | $ | $ | $ | $ | |||||||||||||||||||
| Acquisition | |||||||||||||||||||||||
| Foreign currency translation adjustment | ( | ( | ( | ||||||||||||||||||||
| December 31, 2024 | $ | $ | $ | $ | |||||||||||||||||||
Other Intangible Assets
The “Other intangible assets, net” line item in the consolidated statements of financial position, as of December 31, 2024 and 2023, consisted of the following:
| 2024 | 2023 | ||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||||||||
| Customer relationships | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Technology | |||||||||||||||||||||||||||||||||||
| Trademarks and trade names | |||||||||||||||||||||||||||||||||||
| Covenants not to compete | |||||||||||||||||||||||||||||||||||
| Total definite-lived other intangible assets | |||||||||||||||||||||||||||||||||||
| Indefinite-lived other intangible asset | — | — | |||||||||||||||||||||||||||||||||
| Total other intangible assets | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
In the table above, gross carrying amounts and accumulated amortization may differ from prior periods due to foreign exchange rate fluctuations.
The amortization expense and impairment charges related to other intangible assets in 2024, 2023 and 2022, were as follows:
| (Dollars in millions) | 2024 | 2023 | 2022 | ||||||||||||||
| Amortization expense | $ | $ | $ | ||||||||||||||
| Impairment charges | $ | $ | $ | ||||||||||||||
For additional information related to the impairment charges, refer to “Note 14 – Supplemental Financial Information.” The estimated annual future amortization expense is $10.7 million, $10.3 million, $10.0 million, $7.7 million and $7.3 million in 2025, 2026, 2027, 2028 and 2029, respectively. These amounts could vary based on changes in foreign currency exchange rates.
The weighted average amortization period as of December 31, 2024, by definite-lived other intangible asset class, were as follows:
| Definite-Lived Other Intangible Asset Class | Weighted Average Remaining Amortization Period | ||||
| Customer relationships | |||||
| Technology | |||||
| Trademarks and trade names | |||||
| Total definite-lived other intangible assets | |||||
49
Note 8 – Postretirement Benefits
Pension Plan
As of December 31, 2024, we had one qualified noncontributory defined benefit pension plan: the Union Plan. The measurement date for the plan is December 31st for each respective plan year.
Plan Assets and Plan Benefit Obligations
The following table summarizes the change in Union Plan assets and changes in benefit obligations:
| (Dollars in millions) | 2024 | 2023 | |||||||||
| Change in plan assets: | |||||||||||
| Fair value of plan assets as of January 1 | $ | $ | |||||||||
| Actual return on plan assets | |||||||||||
| Settlements | ( | ||||||||||
| Employer contributions | |||||||||||
| Benefit payments | ( | ( | |||||||||
| Fair value of plan assets as of December 31 | $ | $ | |||||||||
| Change in plan benefit obligations: | |||||||||||
| Fair value of plan benefit obligations as of January 1 | $ | $ | |||||||||
| Interest cost | |||||||||||
| Actuarial (gain) loss | ( | ||||||||||
| Settlements | ( | ||||||||||
| Benefit payments | ( | ( | |||||||||
| Fair value of plan benefit obligations as of December 31 | $ | $ | |||||||||
| Amount overfunded | $ | $ | |||||||||
The decrease in our pension plan benefit obligations in 2024 was primarily driven by actuarial gains and benefit payments, partially offset by interest costs. The increase in our pension plan benefit obligations in 2023 was primarily driven by actuarial losses and interest costs, partially offset by benefit payments and settlements.
The Union Plan balances reflected in the consolidated statements of financial position, as of December 31, 2024 and 2023, consisted of the following:
| (Dollars in millions) | 2024 | 2023 | |||||||||
| Assets & Liabilities: | |||||||||||
| Non-current assets | $ | $ | |||||||||
| Net assets | $ | $ | |||||||||
| Accumulated Other Comprehensive Loss: | |||||||||||
| Net actuarial loss | $ | ( | $ | ( | |||||||
| Accumulated other comprehensive loss | $ | ( | $ | ( | |||||||
The PBO, ABO, and fair value of plan assets for the Union Plan, which has plan assets in excess of its PBO or ABO as of December 31, 2024 and 2023, were as follows:
| (Dollars in millions) | 2024 | 2023 | |||||||||
| Projected benefit obligation | $ | $ | |||||||||
| Accumulated benefit obligation | $ | $ | |||||||||
| Fair value of plan assets | $ | $ | |||||||||
50
Components of Net Periodic Benefit Cost (Credit)
The components of the Union Plan’s net periodic benefit cost (credit) in 2024, 2023 and 2022, were as follows:
| (Dollars in millions) | 2024 | 2023 | 2022 | ||||||||||||||
| Interest cost | $ | $ | $ | ||||||||||||||
| Expected return of plan assets | ( | ( | ( | ||||||||||||||
| Amortization of net loss | |||||||||||||||||
| Settlement | |||||||||||||||||
| Net periodic benefit cost (credit) | $ | $ | $ | ( | |||||||||||||
Plan Assumptions
The key plan assumptions for the Union Plan utilized in our annual plan measurement as of December 31, 2024 and 2023, were as follows:
| 2024 | 2023 | ||||||||||
| Weighted average assumptions used in benefit obligations: | |||||||||||
| Discount rate | % | % | |||||||||
| Weighted average assumptions used in net periodic benefit costs: | |||||||||||
| Discount rate | % | % | |||||||||
| Expected long-term rate of return on assets | % | % | |||||||||
The Union Plan is invested with the objective of achieving a total rate of return over the long-term that is sufficient to fund future pension obligations. In managing these assets and our investment strategy, we consider future cash contributions to the plan as well as the potential of the portfolio underperforming the market. We set asset allocation target ranges based on current funding status and future projections in order to mitigate the portfolio performance risk while maintaining its funded status. Fixed income securities comprise a substantial percentage of our plan assets portfolio. As of December 31, 2024 and 2023, we held approximately 90 10
In determining our investment strategy and calculating the net benefit cost, we utilized an expected long-term rate of return on plan assets, which was developed based on several factors, including the plans’ asset allocation targets, the historical and projected performance on those asset classes, as well as the plan’s current asset composition. To justify our assumptions, we analyzed certain data points related to portfolio performance. Based on the historical returns and the projected future returns, we determined that a target return of 5.20 % is appropriate for the current portfolio.
The following table presents the fair value of the pension plan net assets by asset category and level, within the fair value hierarchy, as of December 31, 2024 and 2023:
| Fair Value of Plan Assets as of December 31, 2024 | |||||||||||||||||||||||
| (Dollars in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||
| Fixed income bonds | $ | $ | $ | $ | |||||||||||||||||||
| Mutual funds | |||||||||||||||||||||||
| Pooled separate accounts | |||||||||||||||||||||||
| Guaranteed deposit account | |||||||||||||||||||||||
| Total plan assets at fair value | $ | $ | $ | $ | |||||||||||||||||||
| Fair Value of Plan Assets as of December 31, 2023 | |||||||||||||||||||||||
| (Dollars in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||
| Fixed income bonds | $ | $ | $ | $ | |||||||||||||||||||
| Mutual funds | |||||||||||||||||||||||
| Pooled separate accounts | |||||||||||||||||||||||
| Guaranteed deposit account | |||||||||||||||||||||||
| Total plan assets at fair value | $ | $ | $ | $ | |||||||||||||||||||
51
Cash Flows
We were not required to make any contributions to our qualified noncontributory defined benefit pension plan in 2024 and 2023. We made expected benefit payments for our qualified noncontributory defined benefit pension plan through the utilization of plan assets in 2024 and 2023.
The benefit payments are based on the same assumptions used to measure our benefit obligations as of December 31, 2024. The following table sets forth the expected benefit payments to be paid for the Union Plan:
| (Dollars in millions) | Pension Benefits | ||||
| 2025 | $ | ||||
| 2026 | $ | ||||
| 2027 | $ | ||||
| 2028 | $ | ||||
| 2029 | $ | ||||
| 2030-2034 | $ | ||||
Employee Savings and Investment Plan
We sponsor the RESIP, a 401(k) plan for domestic employees. In 2024, employees could defer an amount they choose, up to the annual IRS limit of $23,000. Certain eligible participants are also allowed to contribute the maximum catch-up contribution per IRS regulations. We match each eligible employee’s annual pre-tax contributions at a rate of 100 % for the first 1 % of the employee’s salary and 50 % for the next 5 % of each employee’s salary for a total match of 3.5 %. Unless otherwise indicated by the participant, the matching dollars are invested in the same funds as the participant’s contributions. RESIP related expense amounted to $5.1 million, $4.6 million and $11.8 million in 2024, 2023 and 2022, respectively. The higher expense in 2022 was primarily due to a $6.5 million discretionary RESIP contribution related to the previously anticipated merger with DuPont.
Deferred Compensation Plan
We sponsor a non-qualified deferred compensation plan, which provides specified deferred compensation benefits to a certain group of select employees. The deferred compensation plan is funded through a rabbi trust, which are ultimately invested in accordance with each plan participants’ selections from pre-approved funds. As of December 31, 2024 and 2023, our deferred compensation plan primarily consisted of marketable securities, which includes mutual funds and fixed income funds. Marketable securities are recorded at fair value. The following table summarizes, by major security type, our marketable securities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy:
| Fair Value of Deferred Compensation Plan as of December 31, 2024 | |||||||||||||||||||||||
| (Dollars in millions) | Adjusted Cost | Unrealized Gains | Unrealized Losses | Fair Value | |||||||||||||||||||
| Level 1 Securities: | |||||||||||||||||||||||
| Mutual funds | $ | $ | $ | $ | |||||||||||||||||||
| Level 2 Securities: | |||||||||||||||||||||||
| Fixed income funds | $ | $ | $ | $ | |||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| Fair Value of Deferred Compensation Plan as of December 31, 2023 | |||||||||||||||||||||||
| (Dollars in millions) | Adjusted Cost | Unrealized Gains | Unrealized Losses | Fair Value | |||||||||||||||||||
| Level 1 Securities: | |||||||||||||||||||||||
| Mutual funds | $ | $ | $ | ( | $ | ||||||||||||||||||
| Level 2 Securities: | |||||||||||||||||||||||
| Fixed income funds | $ | $ | $ | $ | |||||||||||||||||||
| Total | $ | $ | $ | ( | $ | ||||||||||||||||||
Note 9 – Debt
On March 24, 2023, we entered into the Fifth Amended Credit Agreement which amends and restates the Fourth Amended Credit Agreement, and provides for (1) a revolving credit facility with up to $450.0 million of revolving loans, with sub-limits for multicurrency borrowings, letters of credit and swing-line notes, and (2) a $225.0 million expansion feature. Borrowings may be used to finance working capital needs, for letters of credit and for general corporate purposes in the ordinary course of
52
business, including the financing of permitted acquisitions (as defined in the Fifth Amended Credit Agreement). The Fifth Amended Credit Agreement extended the maturity, the date on which all amounts borrowed or outstanding under the Fifth Amended Credit Agreement are due, from March 31, 2024 to March 24, 2028.
All obligations under the Fifth Amended Credit Agreement are guaranteed by each of our existing and future material domestic subsidiaries, as defined in the Fifth Amended Credit Agreement (the Guarantors). The obligations are also secured by a Fifth Amended and Restated Pledge and Security Agreement, dated as of March 24, 2023, entered into by us and the Guarantors which grants to the administrative agent, for the benefit of the lenders, a security interest, subject to certain exceptions, in substantially all of the non-real estate assets of ours and the Guarantors. These assets include, but are not limited to, receivables, equipment, intellectual property, inventory, and stock in certain subsidiaries.
Borrowings under the Fifth Amended Credit Agreement bear interest based on one of two options. Alternate base rate loans will bear interest at a rate that includes a base reference rate plus a spread of 62.5 to 100.0 basis points, depending on our leverage ratio. The base reference rate will be the greater of the (1) prime rate, (2) federal funds effective rate plus 50.0 basis points, and (3) one-month Term SOFR plus 110.0 basis points. Loans bearing an interest rate determined by reference to the Adjusted Term SOFR Rate, the Adjusted Euro Interbank Offered Rate, or the Adjusted Tokyo Interbank Offered Rate (each as defined in the Fifth Amended Credit Agreement) will bear interest based on the screen rate plus a spread of 162.5 to 200.0 basis points, depending on our leverage ratio. Based on our leverage ratio as of December 31, 2024, the spread was 162.5 basis points.
In addition to interest payable on the principal amount of indebtedness outstanding, we incur an annual fee of 25.0 to 35.0 basis points (based upon our leverage ratio), paid quarterly, of the unused amount of the lenders’ commitments under the Fifth Amended Credit Agreement.
The Fifth Amended Credit Agreement contains customary representations and warranties, covenants, mandatory prepayments and events of default under which the Company’s payment obligations may be accelerated. The financial covenants include a requirement to maintain (1) a total net leverage ratio of no more than 3.25 to 1.00, subject to a one-time election to increase the maximum total net leverage ratio to 3.75 to 1.00 for fiscal year in connection with a permitted acquisition, and (2) an interest coverage ratio of no less than 3.00 to 1.00. We are permitted to net up to $50.0 million of unrestricted domestic cash and cash equivalents in the calculation of the total net leverage ratio. The Fifth Amended Credit Agreement generally permits us to pay cash dividends to our shareholders, provided that (i) no default or event of default has occurred and is continuing or would result from the dividend payment and (ii) our total net leverage ratio does not exceed 2.75 to 1.00. If our total net leverage ratio exceeds 2.75 to 1.00, we may nonetheless make up to $20.0 million in restricted payments, including cash dividends, during the fiscal year, provided that no default or event of default has occurred and is continuing or would result from the payments. Our total net leverage ratio did not exceed 2.75 to 1.00 and our interest coverage ratio was greater than or equal to 3.00 to 1.00 as of December 31, 2024.
Our new borrowings under our revolving credit facility and discretionary principal payments on our revolving credit facility in 2024, 2023 and 2022, were as follows:
| (Dollars in millions) | 2024 | 2023 | 2022 | ||||||||||||||
| New borrowings | $ | $ | $ | ||||||||||||||
| Discretionary principal payments | |||||||||||||||||
We had no outstanding borrowings under our revolving credit facility as of December 31, 2024, and $30.0 million as of December 31, 2023. We had $1.6 million and $2.1 million of outstanding line of credit issuance costs as of December 31, 2024 and 2023, respectively, which will be amortized over the life of the Fifth Amended Credit Agreement.
Note 10 – Commitments and Contingencies
Legal & Environmental
We are currently engaged in the following legal and environmental proceedings:
Asbestos Products Litigation
Overview
We, like many other industrial companies, have been named as a defendant in a number of lawsuits filed in courts across the U.S. by persons alleging personal injury from exposure to products containing asbestos. We have never mined, milled, manufactured or marketed asbestos; rather, we made and provided to industrial users a limited number of products that contained encapsulated asbestos, but we stopped manufacturing these products in the late 1980s. Most of the claims filed against us involve numerous defendants, sometimes as many as several hundred. In virtually all of the cases against us, the plaintiffs are seeking unspecified damages above a jurisdictional minimum against multiple defendants who may have manufactured, sold or used asbestos-containing products to which the plaintiffs were allegedly exposed and from which they
53
purportedly suffered injury. Most of these cases are being litigated in Maryland, Illinois, Missouri and New York; however, we are also defending cases in other states. We continue to vigorously defend these cases, primarily on the basis of the plaintiffs’ inability to establish compensable loss as a result of exposure to our products. The indemnity and defense costs of our asbestos-related product liability litigation to date have been substantially covered by insurance.
The following table summarizes the change in number of asbestos claims outstanding during 2024, 2023 and 2022:
| 2024 | 2023 | 2022 | |||||||||||||||
| Claims outstanding as of January 1 | |||||||||||||||||
| New claims filed | |||||||||||||||||
| Pending claims dismissed | ( | ( | ( | ||||||||||||||
| Pending claims settled | ( | ( | ( | ||||||||||||||
| Claims outstanding as of December 31 | |||||||||||||||||
The total indemnity settlements for asbestos claims in 2024, 2023 and 2022 were as follows:
| (Dollars in millions) | 2024 | 2023 | 2022 | ||||||||||||||
| Settlements | $ | $ | $ | ||||||||||||||
Impacts on Financial Statements
We recognize a liability for asbestos-related contingencies that are probable of occurrence and reasonably estimable. In connection with the recognition of liabilities for asbestos-related matters, we record asbestos-related insurance recoverables that are deemed probable.
The liability projection period covers all current and future indemnity and defense costs through 2064, which represents the expected end of our asbestos liability exposure with no further ongoing claims expected beyond that date. This conclusion was based on our history and experience with the claims data, the diminished volatility and consistency of observable claims data, the period of time that has elapsed since we stopped manufacturing products that contained encapsulated asbestos and an expected downward trend in claims due to the average age of our claimants, which is approaching the average life expectancy.
To date, the indemnity and defense costs of our asbestos-related product liability litigation have been substantially covered by insurance. Although we have exhausted coverage under some of our insurance policies, we believe that we have applicable primary, excess and/or umbrella coverage for claims arising with respect to most of the years during which we manufactured and marketed asbestos-containing products. In addition, we have entered into a cost sharing agreement with most of our primary, excess and umbrella insurance carriers to facilitate the ongoing administration and payment of claims covered by the carriers. The cost sharing agreement may be terminated by any party, but will continue until a party elects to terminate it. As of the filing date for this report, the agreement has not been terminated, and no carrier had informed us it intended to terminate the agreement. We expect to continue to exhaust individual primary, excess and umbrella coverages over time, and there is no assurance that such exhaustion will not accelerate due to additional claims, damages and settlements or that coverage will be available as expected.
The amounts recorded for the asbestos-related liability and the related insurance recoverables are based on facts known at the time and a number of assumptions. However, projecting future events, such as the number of new claims to be filed each year, the average cost of disposing of such claims, the length of time it takes to dispose of such claims, coverage issues among insurers and the continuing solvency of various insurance companies, as well as the numerous uncertainties surrounding asbestos litigation in the U.S., could cause the actual liability and insurance recoveries for us to be higher or lower than those projected or recorded. The full extent of our financial exposure to asbestos-related litigation remains very difficult to estimate and could include both compensatory and punitive damage awards.
The uninsured indemnity and defense costs in 2024, 2023 and 2022, were as follows:
| (Dollars in millions) | 2024 | 2023 | 2022 | ||||||||||||||
| Uninsured indemnity and defense costs | $ | $ | $ | ||||||||||||||
The changes recorded in the estimated liability and estimated insurance recovery based on the projections of asbestos litigation and corresponding insurance coverage, result in the recognition of expense or income in the "Selling, general and administrative expenses” line item of the consolidated statements of operations. The net impact of the changes in estimated liability and estimated insurance recovery in 2024, 2023 and 2022, were as follows:
54
| (Dollars in millions) | 2024 | 2023 | 2022 | ||||||||||||||
| Change in estimates of liability and insurance recovery | $ | $ | $ | ||||||||||||||
Our projected asbestos-related claims and insurance recoverables as of December 31, 2024 and 2023 were as follows:
| (Dollars in millions) | 2024 | 2023 | |||||||||
| Asbestos-related liabilities | $ | $ | |||||||||
| Asbestos-related insurance recoverables | $ | $ | |||||||||
Environmental Voluntary Corrective Action Program
Our location in Rogers, Connecticut is part of the Connecticut Voluntary Corrective Action Program. As part of this program, we partnered with the Connecticut Department of Energy and Environmental Protection to determine the corrective actions to be taken at the site related to contamination issues. We evaluated this matter and completed internal due diligence work related to the site in the fourth quarter of 2015. Remediation activities on the site are ongoing and are recorded as reductions to the accrual as they are incurred. We have incurred of $2.0 million through December 31, 2024, and the accrual for future remediation efforts is $0.7 million.
Other Matters
In addition to the above issues, the nature and scope of our business brings us in regular contact with the general public and a variety of businesses and government agencies. Such activities inherently subject us to the possibility of litigation, including other production liability and environmental matters, commercial disputes, intellectual property matters, personal injury claims, tax claims and employment matters, which are defended and handled in the ordinary course of business. Although the outcome of no legal matter can be predicted with certainty, it is the opinion of management that facts known at the present time do not indicate that such litigation, either individually or in the aggregate, will have a material adverse effect on our business, results of operations, cash flows or financial position.
Note 11 – Earnings Per Share
Basic earnings per share is based on the weighted average number of common shares outstanding. Diluted earnings per share is based on the weighted average number of common shares outstanding and all dilutive potential common shares outstanding.
The following table sets forth the computation of basic and diluted earnings per share:
| (Dollars and shares in millions, except per share amounts) | 2024 | 2023 | 2022 | ||||||||||||||
| Numerator: | |||||||||||||||||
| Net income | $ | $ | $ | ||||||||||||||
| Denominator: | |||||||||||||||||
| Weighted average shares outstanding - basic | |||||||||||||||||
| Effect of dilutive shares | |||||||||||||||||
| Weighted average shares outstanding - diluted | |||||||||||||||||
| Basic earnings per share | $ | $ | $ | ||||||||||||||
| Diluted earnings per share | $ | $ | $ | ||||||||||||||
Note 12 – Capital Stock and Equity Compensation
Capital Stock
Our 2019 Long-Term Equity Compensation Plan, which was approved by our shareholders in May 2019, permits the granting of restricted stock units and certain other forms of equity awards to officers and other key employees. Under this plan, we also grant each non-management director deferred stock units, which permit non-management directors to receive, at a later date, one share of Rogers capital stock for each deferred stock unit, with no payment of any consideration by the director at the time the shares were received.
55
Shares of capital stock reserved for possible future issuance as of December 31, 2024 and 2023, were as follows:
| 2024 | 2023 | ||||||||||
| Shares reserved for issuance under outstanding restricted stock unit awards | |||||||||||
| Deferred compensation to be paid in stock, including deferred stock units | |||||||||||
| Additional shares reserved for issuance under Rogers Corporation 2019 Long-Term Equity Compensation Plan | |||||||||||
| Shares reserved for issuance under the Rogers Corporation Employee Stock Purchase Plan | |||||||||||
| Total | |||||||||||
Share Repurchases
In 2015, we initiated a share repurchase program of up to $100.0 million of our capital stock to mitigate the dilutive effects of stock options exercises and vesting of restricted stock units granted by the Company, in addition to enhancing shareholder value. In 2024, the Board of Directors authorized an additional $100.0 million to be used for share repurchases. Our share repurchase program has no expiration date and may be suspended or discontinued at any time without notice. There were 0.2 million shares repurchased for a total value of $19.8 million in 2024, using cash from operations and cash on hand. There were no shares repurchased in 2023. There were 0.2 million shares repurchased for a total value of $25.0 million in 2022, using cash from operations and cash on hand. As of December 31, 2024, $104.2 million remained available to purchase under our share repurchase program.
| (Dollars in millions, except shares and per share amounts) | ||||||||||||||||||||||||||
| Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs | ||||||||||||||||||||||
| March 1, 2024 to March 31, 2024 | $ | $ | ||||||||||||||||||||||||
| April 1, 2024 to April 30, 2024 | $ | $ | ||||||||||||||||||||||||
| December 1, 2024 to December 31, 2024 | $ | $ | ||||||||||||||||||||||||
Equity Compensation
Equity Compensation Expense
The components of equity compensation expense in 2024, 2023 and 2022, were as follows:
| (Dollars in millions) | 2024 | 2023 | 2022 | ||||||||||||||
| Performance-based restricted stock units | $ | $ | $ | ||||||||||||||
| Time-based restricted stock units | |||||||||||||||||
| Deferred stock units | |||||||||||||||||
| Other | |||||||||||||||||
| Total equity compensation expense | $ | $ | $ | ||||||||||||||
As of December 31, 2024, there was total unrecognized compensation cost related to unvested performance-based restricted stock units and unvested time-based restricted stock units of $8.7 million and $8.5 million, respectively, which are expected to be recognized over a weighted average period of 0.8 years and 0.9 years, respectively.
Performance-Based Restricted Stock Units
As of December 31, 2024, we had performance-based restricted stock units from 2024 and 2023 outstanding. These awards generally cliff vest at the end of a three-year measurement period. However, employees whose employment terminates during the measurement period due to death, disability, or, in certain cases, retirement may receive a pro-rata payout based on the number of days they were employed during the measurement period. Participants are eligible to be awarded shares ranging from 0 % to 200 % of the original award amount, based on certain defined performance measures.
The outstanding awards have one measurement criteria: the three-year total shareholder return on our capital stock as compared to that of a specified group of peer companies. The total shareholder return measurement criteria of the awards is considered a market condition. As such, the fair value of this measurement criteria is determined on the grant date using a Monte Carlo simulation valuation model. We recognize compensation expense on all of these awards on a straight-line basis over the vesting period with no changes for final projected payout of the awards. We account for forfeitures as they occur.
56
Below were the assumptions used in the Monte Carlo calculation for each material award granted in 2024 and 2023:
| February 19, 2024 | February 13, 2024 | February 9, 2023 | |||||||||||||||
| Expected volatility | |||||||||||||||||
| Expected term (in years) | |||||||||||||||||
| Risk-free interest rate | |||||||||||||||||
Expected volatility – In determining expected volatility, we have considered a number of factors, including historical volatility.
Expected term – We use the vesting period of the award to determine the expected term assumption for the Monte Carlo simulation valuation model.
Risk-free interest rate – We use an implied “spot rate” yield on U.S. Treasury Constant Maturity rates as of the grant date for our assumption of the risk-free interest rate.
Expected dividend yield – We do not currently pay dividends on our capital stock; therefore, a dividend yield of 0 % was used in the Monte Carlo simulation valuation model.
A summary of activity of the outstanding performance-based restricted stock units for 2024, 2023 and 2022 is presented below:
| 2024 | 2023 | 2022 | |||||||||||||||||||||||||||||||||
| Awards Outstanding | Weighted- Average Grant Date Fair Value | Awards Outstanding | Weighted- Average Grant Date Fair Value | Awards Outstanding | Weighted- Average Grant Date Fair Value | ||||||||||||||||||||||||||||||
| Awards outstanding as of January 1 | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Awards granted | |||||||||||||||||||||||||||||||||||
| Stock issued | ( | ( | |||||||||||||||||||||||||||||||||
| Awards forfeited/cancelled | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Awards outstanding as of December 31 | $ | $ | $ | ||||||||||||||||||||||||||||||||
Time-Based Restricted Stock Units
As of December 31, 2024, we had time-based restricted stock unit awards from 2024, 2023 and 2022 outstanding. The outstanding awards all ratably vest on the first, second and third anniversaries of the original grant date. However, employees whose employment terminates during the measurement period due to death, disability, or, in certain cases, retirement may receive a pro-rata payout based on the number of days they were employed subsequent to the last grant anniversary date. Each time-based restricted stock unit represents a right to receive one share of Rogers’ capital stock at the end of the vesting period. The fair value of the award is determined by the market value of the underlying stock price at the grant date. We recognize compensation expense on all of these awards on a straight-line basis over the vesting period. We account for forfeitures as they occur.
A summary of activity of the outstanding time-based restricted stock units for 2024, 2023 and 2022 is presented below:
| 2024 | 2023 | 2022 | |||||||||||||||||||||||||||||||||
| Awards Outstanding | Weighted- Average Grant Date Fair Value | Awards Outstanding | Weighted- Average Grant Date Fair Value | Awards Outstanding | Weighted- Average Grant Date Fair Value | ||||||||||||||||||||||||||||||
| Awards outstanding as of January 1 | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Awards granted | |||||||||||||||||||||||||||||||||||
| Stock issued | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Awards forfeited/cancelled | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Awards outstanding as of December 31 | $ | $ | $ | ||||||||||||||||||||||||||||||||
Deferred Stock Units
We grant deferred stock units to non-management directors. These awards are fully vested on the date of grant and the related shares are generally issued on the 13 -month anniversary of the grant date unless the individual elects to defer the receipt of those shares. Each deferred stock unit results in the issuance of one share of Rogers’ capital stock. The grant of deferred stock units is typically done annually during the second quarter of each year. The fair value of the award is determined by the market value of the underlying stock price at the grant date.
57
A summary of activity of the outstanding deferred stock units for 2024, 2023 and 2022 is presented below:
| 2024 | 2023 | 2022 | |||||||||||||||||||||||||||||||||
| Awards Outstanding | Weighted- Average Grant Date Fair Value | Awards Outstanding | Weighted- Average Grant Date Fair Value | Awards Outstanding | Weighted- Average Grant Date Fair Value | ||||||||||||||||||||||||||||||
| Awards outstanding as of January 1 | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Awards granted | |||||||||||||||||||||||||||||||||||
| Stock issued | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Awards outstanding as of December 31 | $ | $ | $ | ||||||||||||||||||||||||||||||||
Note 13 – Operating Segment and Geographic Information
Our reporting structure is comprised of the following strategic operating segments: AES and EMS. Our remaining operations, which represent our non-core businesses, are reported in the Other operating segment. We believe this structure aligns our external reporting presentation with how we currently manage and view our business internally. Our CODM is the Chief Executive Officer of Rogers Corporation. The CODM uses gross margin as a reported segment profit or loss measure to evaluate the performance of each business segment, and then leverages this information to decide where to allocate resources and assess how well each segment is performing financially, considering factors like revenue, inventory, and significant expenses specific to that segment.
58
Operating Segment Information
The following table presents a disaggregation of revenue from contracts with customers and other pertinent financial information, for the periods indicated; inter-segment sales have been eliminated from the net sales data:
| (Dollars in millions) | Advanced Electronics Solutions | Elastomeric Material Solutions | Other | Total | |||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||
| Net sales - recognized over time | $ | $ | $ | $ | |||||||||||||||||||
| Net sales - recognized at a point in time | $ | $ | $ | $ | |||||||||||||||||||
| Total net sales | $ | $ | $ | $ | |||||||||||||||||||
| Cost of sales | $ | $ | $ | $ | |||||||||||||||||||
| Gross margin | $ | $ | $ | $ | |||||||||||||||||||
| Inventories, net | $ | $ | $ | $ | |||||||||||||||||||
| Depreciation expense | $ | $ | $ | $ | |||||||||||||||||||
| December 31, 2023 | |||||||||||||||||||||||
| Net sales - recognized over time | $ | $ | $ | $ | |||||||||||||||||||
| Net sales - recognized at a point in time | $ | $ | $ | $ | |||||||||||||||||||
| Total net sales | $ | $ | $ | $ | |||||||||||||||||||
| Cost of sales | $ | $ | $ | $ | |||||||||||||||||||
| Gross margin | $ | $ | $ | $ | |||||||||||||||||||
| Inventories, net | $ | $ | $ | $ | |||||||||||||||||||
| Depreciation expense | $ | $ | $ | $ | |||||||||||||||||||
| December 31, 2022 | |||||||||||||||||||||||
| Net sales - recognized over time | $ | $ | $ | $ | |||||||||||||||||||
| Net sales - recognized at a point in time | $ | $ | $ | $ | |||||||||||||||||||
| Total net sales | $ | $ | $ | $ | |||||||||||||||||||
| Cost of sales | $ | $ | $ | $ | |||||||||||||||||||
| Gross margin | $ | $ | $ | $ | |||||||||||||||||||
| Inventories, net | $ | $ | $ | $ | |||||||||||||||||||
| Depreciation expense | $ | $ | $ | $ | |||||||||||||||||||
59
Operating Segment Net Sales by Geographic Area
The following table presents net sales by our operating segment operations by geographic area for the years indicated:
| (Dollars in millions) | Net Sales(1) | |||||||||||||||||||||||||
| Region/Country | Advanced Electronics Solutions | Elastomeric Material Solutions | Other | Total | ||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||
| U.S. | $ | $ | $ | $ | ||||||||||||||||||||||
| Other Americas | ||||||||||||||||||||||||||
| Total Americas | ||||||||||||||||||||||||||
| China | ||||||||||||||||||||||||||
| Other APAC | ||||||||||||||||||||||||||
| Total APAC | ||||||||||||||||||||||||||
| Germany | ||||||||||||||||||||||||||
| Other EMEA | ||||||||||||||||||||||||||
| Total EMEA | ||||||||||||||||||||||||||
| Total net sales | $ | $ | $ | $ | ||||||||||||||||||||||
| December 31, 2023 | ||||||||||||||||||||||||||
| U.S. | $ | $ | $ | $ | ||||||||||||||||||||||
| Other Americas | ||||||||||||||||||||||||||
| Total Americas | ||||||||||||||||||||||||||
| China | ||||||||||||||||||||||||||
| Other APAC | ||||||||||||||||||||||||||
| Total APAC | ||||||||||||||||||||||||||
| Germany | ||||||||||||||||||||||||||
| Other EMEA | ||||||||||||||||||||||||||
| Total EMEA | ||||||||||||||||||||||||||
| Total net sales | $ | $ | $ | $ | ||||||||||||||||||||||
| December 31, 2022 | ||||||||||||||||||||||||||
| U.S. | $ | $ | $ | $ | ||||||||||||||||||||||
| Other Americas | ||||||||||||||||||||||||||
| Total Americas | ||||||||||||||||||||||||||
| China | ||||||||||||||||||||||||||
| Other APAC | ||||||||||||||||||||||||||
| Total APAC | ||||||||||||||||||||||||||
| Germany | ||||||||||||||||||||||||||
| Other EMEA | ||||||||||||||||||||||||||
| Total EMEA | ||||||||||||||||||||||||||
| Total net sales | $ | $ | $ | $ | ||||||||||||||||||||||
(1) Net sales are allocated to countries based on the location of the customer. The table above lists individual countries with 10% or more of net sales for the periods indicated.
60
Note 14 – Supplemental Financial Information
Restructuring and Impairment Charges
The components of the “” line item in the consolidated statements of operations were as follows:
| (Dollars in millions) | 2024 | 2023 | 2022 | ||||||||||||||
| Restructuring charges | |||||||||||||||||
| Manufacturing footprint consolidation | $ | $ | $ | ||||||||||||||
| R&D facility exit | |||||||||||||||||
| Global workforce reduction | |||||||||||||||||
| Facility consolidations | |||||||||||||||||
| Manufacturing footprint optimization | |||||||||||||||||
| Total restructuring charges | |||||||||||||||||
| Impairment charges | |||||||||||||||||
| Fixed assets impairment charges | |||||||||||||||||
| Other impairment charges | |||||||||||||||||
| Total impairment charges | |||||||||||||||||
| Total restructuring and impairment charges | $ | $ | $ | ||||||||||||||
Restructuring Charges - Manufacturing Footprint Consolidation
On June 6, 2024, we announced our intent to consolidate our high frequency circuit material manufacturing operations, impacting our Evergem, Belgium facility. We anticipate the plan to be completed in the second half of 2025. The plan is expected to significantly reduce our manufacturing costs and operating expenses. We estimate this will improve operating income between $7.0 million and $9.0 million annually. We expect to incur approximately $22.0 million to $28.0 million in pre-tax restructuring charges related to this plan, the majority of which are expected to be in the form of cash-based expenditures related to employee severance and other termination benefits. Most of the non-cash expenditures will be in the form of accelerated depreciation. The restructuring may be considered by the Belgian authorities to be an exit of a business, which could subject Rogers to an additional charge in 2025 incurred at the time of exit.
We incurred $12.2 million of restructuring charges related to this plan as of December 31, 2024, of which $9.7 million were cash-based expenditures in the form of severance and other termination benefits and $2.3 million were non-cash expenditures in the form of accelerated depreciation.
Severance and related benefits activity related to the manufacturing footprint consolidation plan is presented in the table below as of December 31, 2024:
| (Dollars in thousands) | Manufacturing Footprint Consolidation Restructuring Severance and Related Benefits | ||||
| Balance as of December 31, 2023 | $ | ||||
| Provisions | |||||
| Payments | |||||
| Foreign currency translation adjustment | ( | ||||
| Balance as of December 31, 2024 | $ | ||||
61
Restructuring Charges - R&D Facility Exit
On June 13, 2024, we announced that our Burlington, Massachusetts Innovation Center facility would be closed by the end of 2024. We incurred $1.4 million in pre-tax restructuring charges as of December 31, 2024, of which $0.6 million were cash-based expenditures in the form of severance and other termination benefits and $0.7 million were non-cash expenditures in the form of accelerated depreciation.
Restructuring Charges - Global Workforce Reduction
In November 2024, we announced a plan to reduce our global workforce that was substantially completed in the fourth quarter of 2024. We incurred $2.3 million in pre-tax restructuring charges related to this plan, all of which were cash-based expenditures in the form of employee severance and other termination benefits.
In February 2023, we announced a plan to reduce our global workforce that was completed in late 2023. The plan significantly reduced our manufacturing costs and operating expenses. We incurred $8.8 million in pre-tax restructuring charges related to this plan, all of which were cash-based expenditures in the form of employee severance and other termination benefits.
Restructuring Charges - Facility Consolidations
In late 2022 and early 2023, we announced our intention to exit certain facilities in the U.S. and Asia. The plan significantly reduced our manufacturing costs and operating expenses. We incurred $8.3 million in pre-tax restructuring charges to-date related to these facility consolidations, of which $0.3 million was incurred in 2024 while $8.1 million was incurred in 2023, the majority of which were non-cash expenditures in the form of accelerated depreciation.
As part of our facility consolidations plan, in February 2023, we entered into an asset purchase agreement to sell our high-performance engineered cellular elastomer business in our EMS operating segment for a purchase price of $1.8 million. The first phase of the deal, which pertained to the net assets other than the land and building, was completed in late March 2023, while the second phase, which pertained to the sale of the land and building, was completed in early September 2023. Of the $1.8 million purchase price, $1.0 million and $0.8 million were allocated to the first and second phases of the deal, respectively. The first phase of the deal included $3.7 million in assets and $3.1 million in liabilities. The assets were primarily comprised of accounts receivable, contract assets and inventories, while the liabilities were primarily comprised of accounts payable and other accrued liabilities, along with the previously recognized accrual against the net assets of the business based on the estimated fair value of the business in December 2022. We incurred $1.2 million of selling costs in 2023, which were recorded in “Selling, general and administrative expenses” in our consolidated statements of operations.
As of December 31, 2024, and as of December 31, 2023, we included $13.1 3.0 million, for $6.8 million resulting in a pre-tax gain of $1.9 million, inclusive of selling and disposal costs. The sale was completed in December 2023. The net impact of this transaction was recorded in the “Other operating (income) expense, net” line item in the consolidated statements of operations.
Restructuring Charges - Manufacturing Footprint Optimization
During the third quarter of 2020, we commenced manufacturing footprint optimization plans involving certain Europe and Asia manufacturing locations, primarily impacting our AES operating segment, in order to achieve greater cost competitiveness as well as align capacity with end market demand. The majority of the restructuring activities were completed in the first half of 2021. We incurred restructuring charges and related expenses of $1.1 million in 2022.
Impairment Charges
We recognized $7.9 million and $65.1 million of impairment charges in 2024 and 2022, respectively. The impairment charges in 2022 primarily related to certain AES operating segment equipment-in-process in the U.S. as well as certain EMS operating segment intangible assets and fixed assets related to our high-performance engineered cellular elastomer business in the U.S. The impairment of the equipment-in-process in our AES operating segment was triggered by our decision in November 2022 to exit the Price Road facility in Arizona. The impairment charges in 2024 were primarily related to our new ERP system still in development.
62
Allocation of Restructuring and Impairment Charges to Operating Segments
The following table summarizes the allocation of restructuring and impairment charges to our operating segments:
| (Dollars in millions) | 2024 | 2023 | 2022 | ||||||||||||||
| Advanced Electronics Solutions | |||||||||||||||||
| Allocated restructuring charges | $ | $ | $ | ||||||||||||||
| Allocated impairment charges | |||||||||||||||||
| Elastomeric Material Solutions | |||||||||||||||||
| Allocated restructuring charges | |||||||||||||||||
| Allocated impairment charges | |||||||||||||||||
| Total restructuring and impairment charges | $ | $ | $ | ||||||||||||||
Other Operating (Income) Expense, Net
The components of the “Other operating (income) expense, net” line item in the consolidated statements of operations were as follows:
| (Dollars in millions) | 2024 | 2023 | 2022 | ||||||||||||||
| UTIS fire | |||||||||||||||||
| Inventory charges | $ | $ | $ | ||||||||||||||
| Professional services | |||||||||||||||||
| Lease obligations | |||||||||||||||||
| Compensation & benefits | |||||||||||||||||
| Other | ( | ||||||||||||||||
| Insurance recoveries | ( | ( | |||||||||||||||
| Total UTIS fire | ( | ( | |||||||||||||||
| Regulatory termination fee, net | ( | ||||||||||||||||
| Loss (gain) on sale or disposal of property, plant and equipment | ( | ||||||||||||||||
| Total other operating (income) expense, net | $ | $ | ( | $ | ( | ||||||||||||
In early February 2021, there was a fire at our UTIS manufacturing facility in Ansan, South Korea, which manufactures eSorba® polyurethane foams used in portable electronics and display applications. The site was safely evacuated and there were no reported injuries; however, there was extensive damage to the manufacturing site and some damage to nearby property. Commercial production at a new location in Siheung, South Korea commenced in late-January 2023.
In 2023, in connection with the UTIS fire, we recognized insurance recoveries of $31.4 million related to our business interruption and property damage insurance claims and incurred $0.9 million for various professional services. In 2022, in connection with the UTIS fire, we recognized insurance recoveries of $6.6 million related to our ongoing insurance claim for property damage and compensation and benefits of hourly employees, incurred $1.4 million for various professional services and incurred $2.4 million for compensation and benefits for UTIS manufacturing employees subsequent to the fire.
In 2022, we recognized income from a regulatory termination fee of $142.1 million, which was net of an incurred transaction-related fee. For additional information, refer to “Note 16 – Mergers and Acquisitions.”
Other Income (Expense), Net
The components of the “Other income (expense), net” line item in the consolidated statements of operations were as follows:
| (Dollars in millions) | 2024 | 2023 | 2022 | ||||||||||||||
| Foreign currency translation impacts | $ | $ | ( | $ | |||||||||||||
| Foreign currency derivative impacts | ( | ( | |||||||||||||||
| Copper derivative impacts | ( | ( | ( | ||||||||||||||
| Gain on JV Separation Agreement transactions | |||||||||||||||||
| Other | |||||||||||||||||
| Total other income (expense), net | $ | $ | ( | $ | |||||||||||||
63
Interest Expense, Net
The components of the “Interest expense, net” line item in the consolidated statements of operations were as follows:
| (Dollars in millions) | 2024 | 2023 | 2022 | ||||||||||||||
| Interest on revolving credit facility | $ | $ | $ | ||||||||||||||
| Line of credit fees | |||||||||||||||||
| Debt issuance amortization costs | |||||||||||||||||
| Interest income | ( | ( | ( | ||||||||||||||
| Other | |||||||||||||||||
| Total interest expense, net | $ | $ | $ | ||||||||||||||
Note 15 – Income Taxes
The “Income before income tax expense” line item in the consolidated statements of operations consisted of:
| (Dollars in millions) | 2024 | 2023 | 2022 | ||||||||||||||
| Domestic | $ | ( | $ | $ | |||||||||||||
| Foreign | |||||||||||||||||
| Total | $ | $ | $ | ||||||||||||||
The “Income tax expense” line item in the consolidated statements of operations consisted of:
| (Dollars in millions) | Current | Deferred | Total | ||||||||||||||
| 2024 | |||||||||||||||||
| Domestic | $ | $ | ( | $ | ( | ||||||||||||
| Foreign | ( | ||||||||||||||||
| Total | $ | $ | ( | $ | |||||||||||||
| 2023 | |||||||||||||||||
| Domestic | $ | $ | ( | $ | ( | ||||||||||||
| Foreign | ( | ||||||||||||||||
| Total | $ | $ | ( | $ | |||||||||||||
| 2022 | |||||||||||||||||
| Domestic | $ | $ | ( | $ | |||||||||||||
| Foreign | ( | ||||||||||||||||
| Total | $ | $ | ( | $ | |||||||||||||
64
Deferred tax assets and liabilities as of December 31, 2024 and 2023, were comprised of the following:
| (Dollars in millions) | 2024 | 2023 | |||||||||
| Deferred tax assets | |||||||||||
| Accrued employee benefits and compensation | $ | $ | |||||||||
| Net operating loss carryforwards | |||||||||||
| Tax credit carryforwards | |||||||||||
| Reserves and accruals | |||||||||||
| Operating leases | |||||||||||
| Capitalized research and development | |||||||||||
| Other | |||||||||||
| Total deferred tax assets | |||||||||||
| Less deferred tax asset valuation allowance | ( | ( | |||||||||
| Total deferred tax assets, net of valuation allowance | |||||||||||
| Deferred tax liabilities | |||||||||||
| Depreciation and amortization | |||||||||||
| Postretirement benefit obligations | |||||||||||
| Unremitted earnings | |||||||||||
| Operating leases | |||||||||||
| Other | |||||||||||
| Total deferred tax liabilities | |||||||||||
| Net deferred tax asset (liability) | $ | $ | |||||||||
As of December 31, 2024, we had state net operating loss carryforwards totaling $13.2 million in various state taxing jurisdictions, which expire between 2025 and 2044, and approximately $3.8 million of state research credit carryforwards, which will expire between 2025 and 2041. We also had a $1.7 million federal R&D credit carryforward that will expire in 2043. We believe that it is more likely than not that the benefit from certain of the state net operating losses and state R&D credits carryforwards will not be realized. In recognition of this risk, we have provided a valuation allowance of $2.1 million relating to these carryforwards. We currently have approximately $2.3 million of foreign tax credits that begin to expire in 2028.
As of December 31, 2024, we had foreign net operating loss carryforwards totaling $60.8 million. Germany losses totaled $12.2 million and can be carried forward indefinitely. Luxembourg losses totaled $29.3 million, of which $4.0 million will expire between 2034 and 2040, and the rest will be carried forward indefinitely. We believe it is more likely than not that these losses will expire unused, and have provided a valuation allowance for all Luxembourg net operating loss carryforwards. China losses totaled $14.8 million, which expire between 2025 and 2029. We believe it is more likely than not that some of these losses will expire unused, and have provided a valuation allowance for a portion of China net operating loss carryforwards. South Korea losses totaled $4.5 million, which expire between 2036 and 2038.
We had a valuation allowance of $12.5 million as of December 31, 2024 and $11.4 million as of December 31, 2023, against certain deferred tax assets, primarily carryforwards expected to expire unused and deferred tax assets that are capital in nature. No valuation allowance has been provided on our other deferred tax assets, as we believe it is more likely than not that all such assets will be realized in the applicable jurisdictions. Differences between forecasted and actual future operating results or changes in carryforward periods could adversely impact the amount of deferred tax asset considered realizable.
65
Income tax expense differs from the amount computed by applying the U.S. federal statutory income tax rate to income before income taxes. The reasons for this difference were as follows:
| (Dollars in millions) | 2024 | 2023 | 2022 | ||||||||||||||
| Tax expense at Federal statutory income tax rate | $ | $ | $ | ||||||||||||||
| Impact of foreign operations | |||||||||||||||||
| Foreign source income, net of tax credits | ( | ( | ( | ||||||||||||||
| State tax, net of federal impact | ( | ||||||||||||||||
| Deferred tax adjustment | |||||||||||||||||
| Unrecognized tax benefits | ( | ( | |||||||||||||||
| Equity compensation | ( | ||||||||||||||||
| General business credits | ( | ( | ( | ||||||||||||||
| Distribution related foreign taxes | |||||||||||||||||
| Executive compensation limitation | |||||||||||||||||
| Valuation allowance change | ( | ( | |||||||||||||||
| JV separation non-taxable | ( | ||||||||||||||||
| Taxable currency fluctuations | |||||||||||||||||
| Other | ( | ||||||||||||||||
| Income tax expense | $ | $ | $ | ||||||||||||||
Our effective income tax rate for 2024 was 23.9 % compared to 25.8 % for 2023. The 2024 rate decrease was primarily due to the (i) release of valuation allowance against certain NOLs, (ii) JV Separation which did not have a corresponding tax gain and (iii) favorable releases of uncertain tax positions, offset by (iv) increased non-deductible equity compensation.
We did not make any changes in 2024 to our position on the permanent reinvestment of our historical earnings from foreign operations. With the exception of certain Chinese subsidiaries, we continue to assert that historical foreign earnings are indefinitely reinvested. As of December 31, 2024 and 2023, we had recorded a deferred tax liability of $1.3 million and $1.5 million, respectively, for Chinese withholding tax on undistributed earnings that are not indefinitely reinvested. The other remaining foreign subsidiaries have both the intent and ability to indefinitely reinvest their undistributed earnings and we estimate that, if these undistributed earnings are distributed, they may give rise to an estimated $1.9 million of additional tax liabilities. If circumstances change and it becomes apparent that some, or all of the undistributed earnings as of December 31, 2024 will not be indefinitely reinvested, the provision for the tax consequences, if any, will be recorded in the period when circumstances change. Distributions out of current and future earnings are permissible to fund discretionary activities such as business acquisitions. However, when distributions are made, this could result in a higher effective tax rate.
Unrecognized tax benefits, excluding potential interest and penalties, for the years ended December 31, 2024 and 2023, were as follows:
| (Dollars in millions) | 2024 | 2023 | 2022 | ||||||||||||||
| Beginning balance as of January 1 | $ | $ | $ | ||||||||||||||
| Gross increases - current period tax positions | |||||||||||||||||
| Gross increases - tax positions in prior periods | |||||||||||||||||
| Gross decreases - tax positions in prior periods | ( | ( | |||||||||||||||
| Foreign currency exchange | ( | ||||||||||||||||
| Settlements and remeasurements | ( | ( | |||||||||||||||
| Lapse of statute of limitations | ( | ( | |||||||||||||||
| Ending balance as of December 31 | $ | $ | $ | ||||||||||||||
Included in the balance of unrecognized tax benefits as of December 31, 2024 were $5.2 million of tax benefits that, if recognized, would impact the effective tax rate.
We recognized interest accrued related to unrecognized tax benefit as income tax expense. Related to the unrecognized tax benefits noted above, as of December 31, 2024 and 2023, we had accrued potential interest and penalties of approximately $1.3 million and $1.4 million, respectively.
66
We are subject to taxation in the U.S. and various state and foreign jurisdictions. Our tax years from 2020 through 2024 are subject to examination by the tax authorities. With few exceptions, we are no longer subject to U.S. federal, state, local and foreign examinations by tax authorities for the years before 2020.
Note 16 – Mergers and Acquisitions
Joint Venture Separation Agreement
On October 29, 2024, we entered into a JV Separation Agreement with INOAC with an effective date of November 5, 2024, in which INOAC acquired our 50 % ownership shares of RIC, we acquired INOAC’s 50 % ownership shares of RIS, and we sold the property, plant and equipment constituting RIS Production Line 1 to INOAC. The combined transaction resulted in a net payment to us from INOAC of $4.9 million. The definitive agreement terminated all other agreements previously entered into in connection with the RIC and RIS JV relationships.
In connection with the combined transactions, we recognized a gain of $7.7 million, which was recorded in “Other income (expense), net” line item in our consolidated statements of operations. This was comprised of a $2.6 million remeasurement gain on our previously owned 50 % share of RIS, a $2.2 million gain on our disposition of our 50 % ownership of RIC, as well as $1.4 million and $1.6 million reclassifications of historical cumulative translation adjustments for RIC and RIS, respectively, to pre-tax income, from accumulated other comprehensive income (loss). Our 50 % ownership interests in RIS had estimated fair value of $5.5 million.
The acquisition of INOAC’s shares of RIS has been accounted for in accordance with applicable purchase accounting guidance. We recorded goodwill primarily related to the expected synergies from combining operations, which is not deductible for tax purposes.
The valuation methodology used to fair value our previously held equity investment in RIS was the discounted cash flow approach. Key inputs used in valuing RIS included projected future cash flows, a discount rate reflecting the cost of capital and cost of debt, and a terminal growth rate representing the asset's value beyond the explicit forecast period. The valuation methodology used to fair value the property, plant and equipment constituting RIS Production Line 1 was the indirect cost method of the cost approach. Key inputs used in valuing the property, plant and equipment constituting RIS Production Line 1 included the estimated replacement cost and the related physical depreciation, functional obsolescence, and economic obsolescence of the property, plant, and equipment.
If the JV Separation Agreement had been executed and effective January 1, 2023, the $7.7 million gain on the transactions would have been shifted from the fourth quarter of 2024 to the first quarter of 2023, with no other significant impacts.
As of the filing date of this Annual Report on Form 10-K, the purchase accounting and purchase price allocation for the RIS acquisition transaction are considered preliminary as we continue to refine our valuation of certain acquired assets and liabilities assumed. The following table represents the fair values assigned to the acquired assets and liabilities assumed in the transaction:
67
| (Dollars in millions) | November 5, 2024 | ||||
| Assets | |||||
| Cash and cash equivalents | $ | ||||
| Accounts receivable | |||||
| Property, plant and equipment | |||||
| Goodwill | |||||
| Other assets | |||||
| Total assets | |||||
| Liabilities | |||||
| Accounts payable | |||||
| Other accrued liabilities | |||||
| Deferred income taxes | |||||
| Total liabilities | |||||
| Fair value of net assets acquired | $ | ||||
Terminated Merger Agreement with DuPont
On November 1, 2021, we entered into a definitive merger agreement to be acquired by DuPont de Nemours, Inc. in an all-cash transaction. Our shareholders approved the merger agreement at a special shareholder meeting held on January 25, 2022. Consummation of the merger was subject to various customary closing conditions, including regulatory approval by the State Administration for Market Regulation of China, and either party had the right to terminate the merger agreement if the merger had not closed on or before November 1, 2022. As of November 1, 2022, the parties had not received regulatory approval from State Administration for Market Regulation of China and on that date, DuPont de Nemours, Inc. issued a notice of termination of the merger agreement. Pursuant to the terms of the merger agreement, we received a regulatory termination fee in the amount of $162.5 million, before taxes, and incurred a transaction-related fee of $20.4 million.
Note 17 - Recent Accounting Standards
Recently Adopted Standards Reflected in 2024 Financial Statements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 enhances segment reporting under Topic 280 by expanding the breadth and frequency of segment disclosures. This amendment will improve the disclosures about a public entity’s reportable segments and address requests from investors for additional, more detailed information about a reportable segment’s expenses. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We adopted ASU 2023-07 in our 2024 10-K using the retrospective approach.
Recently Issued Standards
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This update also includes certain other amendments to improve the effectiveness of income tax disclosures. The ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. Adoption of the standard will be applied on a prospective basis and retrospective application to all periods presented is permitted. We will adopt ASU 2023-09 in our 2025 10-K using a prospective transition method. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements and accompanying notes.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). The amendments in this update require new disclosures in tabular format, disaggregating information about prescribed categories underlying any relevant income statement expense captions. The ASU is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. Adoption should be applied either prospectively to financial statements issued after the effective date, or retrospectively to any or all prior periods presented in the financial statements. We will adopt ASU 2024-03 in our 2026 10-K using a prospective transition method. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements and accompanying notes.
68
SCHEDULE II
| (Dollars in millions) | Balance at Beginning of Period | Charged to (Reduction of) Costs and Expenses | Taken Against Allowance | Other (Deductions) Recoveries | Balance at End of Period | |||||||||||||||||||||||||||
| Allowance for Credit Losses | ||||||||||||||||||||||||||||||||
| December 31, 2024 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||
| December 31, 2023 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
| December 31, 2022 | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||
| (Dollars in millions) | Balance at Beginning of Period | Charged to (Reduction of) Costs and Expenses | Taken Against Allowance | Other (Deductions) Recoveries | Balance at End of Period | |||||||||||||||||||||||||||
| Inventory Reserves | ||||||||||||||||||||||||||||||||
| December 31, 2024 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||
| December 31, 2023 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||
| December 31, 2022 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||
| (Dollars in millions) | Balance at Beginning of Period | Charged to (Reduction of) Costs and Expenses | Taken Against Allowance | Other (Deductions) Recoveries | Balance at End of Period | |||||||||||||||||||||||||||
| Valuation on Allowance for Deferred Tax Assets | ||||||||||||||||||||||||||||||||
| December 31, 2024 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| December 31, 2023 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| December 31, 2022 | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||
69
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We conducted, with the participation of our Chief Executive Officer and Chief Financial Officer, an evaluation of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d- 15(e) under the Exchange Act, as of December 31, 2024. Our disclosure controls and procedures are designed (i) to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2024.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in the Company’s internal control over financial reporting during the fourth quarter of the fiscal year ended December 31, 2024 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with U.S. GAAP. Our internal control over financial reporting includes those policies and procedures that:
•pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
•provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
•provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024. In making its assessment of internal control over financial reporting, management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on the results of this assessment, management, including our Chief Executive Officer and our Chief Financial Officer, has concluded that, as of December 31, 2024, our internal control over financial reporting was effective.
The Company’s independent registered public accounting firm, PricewaterhouseCoopers, LLP, has audited the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024, as stated in their report included under “Item 8. Financial Statements and Supplementary Data.”
Item 9B. Other Information
None of our directors or officers (as defined in Rule 16a-1(f)) adopted or terminated a Rule 10b5-1 trading arrangement or adopted terminated
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
70
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Officers: Qualifications and Experience
Information with respect to our executive officers is presented in the “Information About Our Executive Officers” section of “Part I, Item 1. Business” of this Annual Report on Form 10-K and is hereby incorporated into this Item 10 by reference.
Directors: Qualifications and Experience
We are incorporating by reference the information with respect to the Directors, Executive Officers and Corporate Governance set forth under the captions “Nominees for Director: Qualifications and Experience” and “Our Corporate Governance” in the Proxy Statement.
Code of Ethics
We have adopted a code of business conduct and ethics policy, which applies to all employees, officers and directors of Rogers Corporation. The Rogers Corporation Code of Business Ethics is posted on our website at http://www.rogerscorp.com under “About Us - Corporate Responsibility.” We intend to satisfy the disclosure requirements regarding any amendment to, or waiver of, a provision of the Code of Business Ethics for our principal executive officer, principal financial officer or principal accounting officer (or others performing similar functions) by posting such information on our website. Our website is not incorporated into or a part of this Annual Report on Form 10-K.
Item 11. Executive Compensation
We are incorporating by reference the information with respect to Executive Compensation set forth under the captions “Compensation & Organization Committee Report”, “Compensation Discussion and Analysis”, “Executive Compensation”, “Director Compensation” and “CEO Pay Ratio” in the Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table and footnotes below describe those equity compensation plans approved and not approved by security holders of Rogers Corporation as of December 31, 2024:
| (a) | (b) | |||||||
| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Number of securities remaining available for future issuance under each equity compensation plan excluding securities referenced in column (a) | ||||||
| Equity Compensation Plans Approved by Security Holders | ||||||||
| Rogers Corporation 2019 Long-Term Equity Compensation Plan | 340,8571) | 486,947 | ||||||
| Rogers Corporation Employee Stock Purchase Plan | — | 43,716 | ||||||
| Total | 340,857 | 530,663 | ||||||
(1) Consists of 328,957 shares for restricted stock units and 11,900 shares for deferred stock units.
We are incorporating by reference the information with respect to Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters set forth under the caption “Security Ownership of Certain Beneficial Owners and Management” in the Proxy Statement.
Item 13. Certain Relationships and Related Transactions, and Director Independence
We are incorporating by reference the information with respect to Certain Relationships and Related Transactions and Director Independence as set forth under the captions “Related Party Transactions” and “Our Corporate Governance - Director Independence” in the Proxy Statement.
Item 14. Principal Accountant Fees and Services
We are incorporating by reference the information with respect to accountant fees and services set forth under the caption “Independent Auditing Firm Fees” in the Proxy Statement.
71
Part IV
Item 15. Exhibits, Financial Statement Schedules
(1) Financial Statements and Schedules.
The following consolidated financial statements of the Company are included in Item 8 of this Annual Report on Form 10-K:
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income (Loss)
Consolidated Statements of Financial Position
Consolidated Statements of Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules.
Schedule II - Valuation and Qualifying Accounts
Other than as set forth above, schedules are omitted because they are not applicable, or are not required, or because the information is included in the consolidated financial statements and notes thereto.
(3) Exhibits.
The following list of exhibits includes exhibits submitted with this Annual Report on Form 10-K as filed with the SEC and those incorporated by reference to other filings.
72
10.14 Letter Agreement between the Company and Ramakumar Mayampurath, dated May 1, 2021, incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on November 8, 2021.**
10.17 Letter Agreement between the Company and Michael Reed Webb, dated April 6, 2023, incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed on April 26,2024.**
10.18 Letter Agreement between the Company and Laura Russell, dated August 12, 2024, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on August 12, 2024.**
10.20 Annual Incentive Compensation Plan, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 4, 2024.**
101 The following materials from Rogers Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for the fiscal years ended December 31, 2024, 2023 and 2022; (ii) Consolidated Statements of Comprehensive Income for the fiscal years ended December 31, 2024, 2023 and 2022; (iii) Consolidated Statements of Financial Position for the fiscal years ended December 31, 2024 and 2023; (iv) Consolidated Statements of Shareholders’ Equity for the fiscal years ended December 31, 2024, 2023 and 2022; (v) Consolidated Statements of Cash Flows for the fiscal years ended December 31, 2024, 2023 and 2022; (vi) Notes to Consolidated Financial Statements and (vii) Cover Page.
104 The cover page from Rogers Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, formatted in iXBRL and contained in Exhibit 101.
** Management contract or compensatory plan or arrangement.
Item 16. Form 10-K Summary
Not Applicable.
73
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ROGERS CORPORATION (Registrant) | ||
/s/ R. Colin Gouveia | ||
| R. Colin Gouveia | ||
| President and Chief Executive Officer Principal Executive Officer | ||
| February 26, 2025 | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February 26, 2025, by the following persons on behalf of the Registrant and in the capacities indicated.
| /s/ R. Colin Gouveia | /s/ Jeffrey J. Owens | |||||||
R. Colin Gouveia President and Chief Executive Officer Director Principal Executive Officer | Jeffrey J. Owens Director | |||||||
| /s/ Laura Russell | /s/ Megan Faust | |||||||
Laura Russell Senior Vice President, Chief Financial Officer and Treasurer Principal Financial Officer | Megan Faust Director | |||||||
| /s/ R. Sean Reeder | /s/ Larry Berger | |||||||
R. Sean Reeder Chief Accounting Officer and Corporate Controller Principal Accounting Officer | Larry Berger Director | |||||||
| /s/ Peter C. Wallace | /s/ Anne K. Roby | |||||||
Peter C. Wallace Director | Anne K. Roby Director | |||||||
| /s/ Donna M. Costello | /s/ Armand F. Lauzon, Jr. | |||||||
Donna M. Costello Director | Armand F. Lauzon, Jr. Director | |||||||
| /s/ Woon Keat Moh | ||||||||
Woon Keat Moh Director | ||||||||
74
Exhibit 10.1
INDEMNIFICATION AGREEMENT
{Director Form}
This Agreement is made and entered into effective this [●] day of [●] 2024 (the “Agreement”), by and between Rogers Corporation, a Massachusetts corporation (the “Company,” which term shall include, where appropriate, any Entity (as hereinafter defined) controlled directly or indirectly by the Company and any domestic or foreign predecessor entity of Rogers Corporation in a merger) and [●] (“Indemnitee,” which term shall include, unless the context requires otherwise, the estate or personal representative of such person). This Agreement constitutes the entire agreement between the parties relating to this subject matter and supersedes all prior or contemporaneous oral or written agreements concerning such subject matter.
WHEREAS, it is essential to the Company that it be able to retain and attract as directors and officers the most capable persons available;
WHEREAS, the substantial increase in corporate litigation has subjected directors and officers to expensive litigation risks and expenses, and the limitations on the availability of directors and officers liability insurance have made it, or may in the future make it, increasingly difficult for the Company to attract and retain such persons;
WHEREAS, the Bylaws of the Company require the Company to indemnify and advance expenses to its directors and officers to the fullest extent permitted by applicable law, and permit it to make other indemnification arrangements and agreements;
WHEREAS, the Company desires to provide Indemnitee with specific contractual assurance of Indemnitee’s rights to full indemnification against litigation risks and expenses (regardless, among other things, of any amendment to or revocation of the Bylaws or any change in the ownership of the Company or the composition of its Board of Directors); and
WHEREAS, Indemnitee is relying upon the rights afforded under this Agreement in continuing as an director of the Company.
NOW, THEREFORE, in consideration of the promises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:
1.Definitions.
(a)“Corporate Status” describes the status of a person who is serving or has served (i) as an officer and/or, if applicable, a director of the Company, (ii) in any capacity with respect to any employee benefit plan applicable to the Company or any Subsidiary at the request of the Company, or (iii) as a director, officer, partner, trustee, employee, or agent of any other Entity at the request of the Company. For purposes of subsection (ii) and (iii) of this Section 1(a), if Indemnitee is serving or has served in any capacity with respect to an employee benefit plan applicable to the Company or any Subsidiary, or as a director, officer, partner, trustee, employee or agent of a Subsidiary, Indemnitee shall be deemed to be serving at the request of the Company.
(b)‘‘Entity’’ shall mean any domestic or foreign corporation, partnership, limited liability company, joint venture, trust, employee benefit plan, foundation, association, organization or other entity.
(c)‘‘Expenses” shall mean all fees, costs and expenses incurred by Indemnitee in connection with any Proceeding (as defined below), including, without limitation, attorneys’ fees, disbursements and retainers (including, without limitation, any such fees, disbursements and retainers incurred by Indemnitee pursuant to Sections 10 and 11(c) of this Agreement), fees and disbursements of expert witnesses, private investigators and professional advisors (including, without limitation, accountants and investment bankers), court costs, transcript costs, fees of experts, travel expenses, duplicating, printing and binding costs, telephone and fax transmission charges, postage, delivery services, secretarial services, and other disbursements and expenses.
(d)“Indemnifiable Expenses,” “Indemnifiable Liabilities” and “Indemnifiable Amounts” shall have the meanings ascribed to those terms in Section 3(a) below.
(e)“Liabilities” shall mean obligations to pay judgments, settlements, penalties, fines including excise taxes assessed with respect to employee benefit plans, or reasonable expenses incurred with respect to Proceedings.
(f)“Proceeding” shall mean any threatened, pending or completed claim, action, suit, arbitration, alternate dispute resolution process, investigation, administrative hearing, appeal, or any other proceeding, whether civil, criminal, administrative, arbitrative or investigative, whether formal or informal, including a proceeding initiated by Indemnitee pursuant to Section 10 of this Agreement to enforce Indemnitee’s rights hereunder.
(g)“Subsidiary” shall mean any corporation, partnership, limited liability company, joint venture, trust or other Entity of which the Company owns (either directly or through or together with another Subsidiary of the Company) either (i) a general partner, managing member or other similar interest or (ii) (A) 50% or more of the voting power of the voting capital equity interests of such corporation, partnership, limited liability, company, joint venture or other Entity, or (B) 50% or more of the outstanding voting capital stock or other voting equity interests of such corporation, partnership, limited liability company, joint venture or other Entity.
2.Services of Indemnitee. In consideration of the Company’s covenants and commitments hereunder, Indemnitee agrees to serve or continue to serve as an officer and/or, if applicable, a director of the Company. However, this Agreement shall not impose any obligation on Indemnitee or the Company to continue Indemnitee’s service to the Company beyond any period otherwise required by law or by other agreements or commitments of the parties, if any.
3.Agreement to Indemnify. The Company agrees to indemnify Indemnitee as follows:
(a) Proceedings Other Than By or In the Right of the Company. Subject to the exceptions contained in Section 4(a) below, if Indemnitee was or is a party or is threatened to be made a party to any Proceeding (other than an action by or in the
right of the Company) by reason of Indemnitee’s Corporate Status, Indemnitee shall be indemnified by the Company against all Expenses and Liabilities incurred or paid by Indemnitee in connection with such Proceeding (referred to herein as “Indemnifiable Expenses” and “Indemnifiable Liabilities,” respectively, and collectively as “Indemnifiable Amounts”).
(b)Proceedings By or In the Right of the Company. Subject to the exceptions contained in Section 4(b) below, if Indemnitee was or is a party or is threatened to be made a party to any Proceeding by or in the right of the Company by reason of Indemnitee’s Corporate Status, Indemnitee shall be indemnified by the Company against all Indemnifiable Expenses.
(c)Conclusive Presumption Regarding Standard of Care. In making any determination required to be made under Massachusetts law with respect to entitlement to indemnification hereunder, the person, persons or Entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee submitted a request therefor in accordance with Section 5 of this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making by any person, persons or Entity of any determination contrary to that presumption.
4.Exceptions to Indemnification. Indemnitee shall be entitled to indemnification under Sections 3(a) and 3(b) above in all circumstances other than with respect to any specific claim, issue or matter involved in the Proceeding out of which Indemnitee’s claim for indemnification has arisen, as follows:
(a)Proceedings Other Than By or In the Right of the Company. If indemnification is requested under Section 3(a) and it has been finally adjudicated by a court of competent jurisdiction in The Commonwealth of Massachusetts that, with respect to such specific claim, issue or matter, Indemnitee (i) did not conduct himself or herself in good faith in the reasonable belief that his or her conduct was (A) in the best interest of the Company or such other Entity, or (B) at least not opposed to the best interests of the Company or such other Entity; (ii) did not conduct himself or herself, to the extent such matter related to service with respect to an employee benefit plan, in the reasonable belief that his or her conduct was in the best interests of the participants or beneficiaries of such employee benefit plan, or (iii) with respect to any criminal Proceeding, had no reasonable cause to believe that his or her conduct was lawful, Indemnitee shall not be entitled to payment of Indemnifiable Amounts hereunder.
(b)Proceedings By or In the Right of the Company. If indemnification is requested under Section 3(b) and
(i)it has been finally adjudicated by a court of competent jurisdiction in The Commonwealth of Massachusetts that, with respect to such specific claim, issue or matter, Indemnitee (i) did not conduct himself or herself in good faith in the reasonable belief that his or her conduct was (A) in the best interest of the Company or such other Entity, or (B) at least not opposed to the best interests of the Company or such other Entity; or (ii) did not conduct himself or herself, to the extent such matter related to service with respect to an
employee benefit plan, in the reasonable belief that his or her conduct was in the best interests of the participants or beneficiaries of such employee benefit plan, Indemnitee shall not be entitled to payment of Indemnifiable Expenses hereunder; or
(ii)it has been finally adjudicated by a court of competent jurisdiction in The Commonwealth of Massachusetts that Indemnitee is liable to the Company with respect to such specific claim, Indemnitee shall not be entitled to payment of Indemnifiable Expenses hereunder with respect to such claim, issue or matter, unless a court of competent jurisdiction in The Commonwealth of Massachusetts shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification for such Indemnifiable Expenses which such court shall deem proper; or
(iii)it has been finally adjudicated by a court of competent jurisdiction in The Commonwealth of Massachusetts that Indemnitee is liable to the Company for an accounting of profits made from the purchase or sale by the Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934, the rules and regulations promulgated thereunder and amendments thereto or similar provisions of any federal, state or local statutory law, Indemnitee shall not be entitled to payment of Indemnifiable Expenses hereunder.
(c)Determination of Good Faith. For purposes of determining “good faith” hereunder, the Indemnitee shall be deemed to have acted in good faith if Indemnitee’s conduct was based primarily on (i) the records or books of account of the Company or the applicable Entity, including financial statements, (ii) information supplied to Indemnitee by or at the direction of other members of the management of the Company or the applicable Entity in the course of their duties, (iii) the advice of legal counsel for the Company or the applicable Entity, or (iv) information or records given or reports made to the Company or the applicable Entity by an independent certified public accountant, by an appraiser or other expert selected with reasonable care by the Company or the applicable Entity. The provisions of this clause shall not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed to have acted in good faith.
(d)Insurance Proceeds. To the extent payment is actually made to the Indemnitee under a valid and collectible insurance policy in respect of Indemnifiable Amounts in connection with such specific claim, issue or matter, Indemnitee shall not be entitled to payment of Indemnifiable Amounts hereunder except in respect of any excess beyond the amount of payment under such insurance.
5.Procedure for Payment of Indemnifiable Amounts. Indemnitee shall submit to the Company a written request specifying the Indemnifiable Amounts for which Indemnitee seeks payment under Section 3 of this Agreement and the basis for the claim. The Company shall pay such Indemnifiable Amounts to Indemnitee promptly, and in any event within thirty (30) calendar days of receipt of the request. At the request of the Company, Indemnitee shall
furnish such documentation and information as are reasonably available to Indemnitee and necessary to establish that Indemnitee is entitled to indemnification hereunder.
6.Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement, and without limiting any such provision, to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a party to and is wholly successful, on the merits or otherwise, in any Proceeding, Indemnitee shall be indemnified against all Expenses reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Agreement, the termination of any claim, issue, or matter in such a Proceeding by dismissal, with or without prejudice, by reason of settlement, judgment, order or otherwise, shall be deemed to be a successful result as to such claim, issue or matter.
7.Effect of Certain Resolutions. Neither the settlement or termination of any Proceeding nor the failure of the Company to award indemnification or to determine that indemnification is payable shall create a presumption that Indemnitee is not entitled to indemnification hereunder. In addition, the termination of any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shalt not create a presumption that Indemnitee (i) did not conduct himself or herself in good faith in the reasonable belief that his or her conduct was (A) in the best interest of the Company or such other Entity, or (B) at least not opposed to the best interests of the Company or such other Entity; (ii) did not conduct himself or herself, to the extent such matter related to service with respect to an employee benefit plan, in the reasonable belief that his or her conduct was in the best interests of the participants or beneficiaries of such employee benefit plan, or (iii) with respect to any criminal Proceeding, had no reasonable cause to believe that his or her conduct was lawful.
8.Agreement to Advance Expenses; Undertaking. The Company shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding, including a Proceeding by or in the right of the Company, in which Indemnitee is involved by reason of such Indemnitee’s Corporate Status, whether prior to or after final disposition of such Proceeding. To the extent required by Massachusetts law, Indemnitee hereby undertakes to repay any and all of the amount of Indemnifiable Expenses paid to, or amounts paid on behalf of, Indemnitee if it is finally determined by a court of competent jurisdiction in The Commonwealth of Massachusetts that Indemnitee is not entitled under this Agreement to indemnification with respect to such Expenses. This undertaking is an unlimited general obligation of Indemnitee.
9.Procedure for Advance Payment of Expenses. Indemnitee shall submit to the Company (i) a written request specifying the Indemnifiable Expenses for which Indemnitee seeks an advancement under Section 8 of this Agreement, together with documentation evidencing that Indemnitee has incurred such Indemnifiable Expenses; (ii) a written affirmation of his or her good faith belief that he or she (a) conducted himself or herself in good faith in the reasonable belief that his or her conduct was (I) in the best interest of the Company or such
other Entity, or (II) at least not opposed to the best interests of the Company or such other Entity; (b) conducted himself or herself, to the extent such matter related to service with respect to an employee benefit plan, in the reasonable belief that his or her conduct was in the best interests of the participants or beneficiaries of such employee benefit plan, or (c) with respect to any criminal Proceeding, had reasonable cause to believe that his or her conduct was lawful; (iii) his or her written undertaking to repay any funds advanced if it is ultimately determined by a court of competent jurisdiction that he or she is not entitled to indemnification under this Agreement. Payment of Indemnifiable Expenses under Section 8 shall be made no later than thirty (30) calendar days after the Company’s receipt of such request.
10.Remedies of Indemnitee.
(a) Right to Petition Court. In the event that Indemnitee makes a request for payment of Indemnifiable Amounts under Sections 3 and 5 above or a request for an advancement of Indemnifiable Expenses under Sections 8 and 9 above and the Company fails to make such payment or advancement in a timely manner pursuant to the terms of this Agreement, Indemnitee may petition any court of competent jurisdiction in The Commonwealth of Massachusetts to enforce the Company’s obligations under this Agreement.
(b)Burden of Proof. In any judicial proceeding brought under Section 10(a) above, the Company shall have the burden of proving that Indemnitee is not entitled to payment of Indemnifiable Amounts hereunder.
(c)Expenses. The Company agrees to reimburse Indemnitee in full for any Expenses incurred by Indemnitee in connection with investigating, preparing for, litigating, defending or settling any action brought by Indemnitee under Section 10(a) above, or in connection with any claim or counterclaim brought by the Company in connection therewith, whether or not Indemnitee is successful in whole or in part in connection with any such action.
(d)Failure to Act Not a Defense. The failure of the Company (including its Board of Directors or any committee thereof, independent legal counsel, or shareholders) to make a determination concerning the permissibility of the payment of Indemnifiable Amounts or the advancement of Indemnifiable Expenses under this Agreement shall not be a defense in any action brought under Section 10(a) above, and shall not create a presumption that such payment or advancement is not permissible.
11.Defense of the Underlying Proceeding.
(a)Notice by Indemnitee. Indemnitee agrees to notify the Company promptly upon being served with any summons, citation, subpoena, complaint, indictment, information, or other document relating to any Proceeding which may result in the payment of Indemnifiable Amounts or the advancement of Indemnifiable Expenses hereunder; provided, however, that the failure to give any such notice shall not disqualify Indemnitee from the right, or otherwise affect in any manner any right of Indemnitee, to receive payments of Indemnifiable Amounts or advancements of
Indemnifiable Expenses unless the Company’s ability to defend in such Proceeding is materially and adversely prejudiced thereby.
(b)Defense by Company. Subject to the provisions of the last sentence of this Section 11(b) and of Section 11(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise to the payment of Indemnifiable Amounts hereunder with counsel chosen by the Company with the consent of the Indemnitee (which consent shall not be unreasonably withheld); provided, however that the Company shall notify Indemnitee of any such decision to defend within ten (10) calendar days of receipt of notice of any such Proceeding under Section 11(a) above. The Company shall not, without the prior written consent of Indemnitee, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise which(i) includes an admission of fault of Indemnitee or (ii) does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to Indemnitee. This Section 11(b) shall not apply to a Proceeding brought by Indemnitee under Section 10(a) above or pursuant to Section 19 below.
(c)Indemnitee’s Right to Counsel. Notwithstanding the provisions of Section 11(b) above, if in a Proceeding to which Indemnitee is a party by reason of Indemnitee’s Corporate Status, (i) Indemnitee reasonably concludes that he or she may have separate defenses or counterclaims to assert with respect to any issue which may not be consistent with the position of other defendants in such Proceeding, (ii) a conflict of interest or potential conflict of interest exists between Indemnitee and the Company, or (iii) if the Company fails to assume the defense of such Proceeding in a timely manner, Indemnitee shall be entitled to be represented by separate legal counsel of Indemnitee’s choice at the expense of the Company. In addition, if the Company fails to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any action, suit or proceeding to deny or to recover from Indemnitee the benefits intended to be provided to Indemnitee hereunder, Indemnitee shall have the right to retain counsel of Indemnitee’s choice, at the expense of the Company, to represent Indemnitee in connection with any such matter.
12.Representations and Warranties of the Company. The Company hereby represents and warrants to Indemnitee as follows:
(a)Authority. The Company has all necessary power and authority to enter into, and be bound by the terms of, this Agreement, and the execution, delivery and performance of the undertakings contemplated by this Agreement have been duly authorized by the Company.
(b)Enforceability. This Agreement, when executed and delivered by the Company in accordance with the provisions hereof, shall be a legal, valid and binding obligation of the Company, enforceable against the Company and its successors in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the enforcement of creditors• rights generally.
13.Insurance. Nothing contained in this Agreement shall be deemed to prohibit the Company from purchasing and maintaining insurance, at its expense, to protect itself or the Indemnitee against any expense, liability or loss incurred by it or the Indemnitee in any such capacity, or arising out of the Indemnitee’s Corporate Status as such, whether or not the Indemnitee would be indemnifiable against such expense, liability or loss under this Agreement; provided that the Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that the Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.
14.Contract Rights Not Exclusive. The rights to payment of Indemnifiable Amounts and advancement of Indemnifiable Expenses provided by this Agreement shall be in addition to, but not exclusive of, any other rights which Indemnitee may have at any time under applicable law, the Company’s Restated Articles of Organization or Bylaws, or any other agreement, vote of shareholders or directors (or a committee of directors), or otherwise, both as to action in Indemnitee’s official capacity and as to action in any other capacity as a result of Indemnitee’s Corporate Status. In no event shall this Agreement limit the Indemnitee’s right to indemnification contained within the Company’s Bylaws.
15.Successors. This Agreement shall be (a) binding upon all successors and assigns of the Company (including any transferee of all or a substantial portion of the business, stock and/or assets of the Company and any direct or indirect successor by merger or consolidation or otherwise by operation of law) and (b) binding on and shall inure to the benefit of the heirs, personal representatives, executors and administrators of Indemnitee. This Agreement shall continue for the benefit of Indemnitee and such heirs, personal representatives, executors and administrators after Indemnitee has ceased to have Corporate Status for any action taken or not taken during such time that Indemnitee had Corporate Status.
16.Subrogation. In the event of any payment of Indemnifiable Amounts under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of contribution or recovery of Indemnitee against other persons, and Indemnitee shall take, at the request of the Company, all reasonable action necessary to secure such rights, including the execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
17.Change in Law. To the extent that a change in Massachusetts law (whether by statute or judicial decision) shall permit broader indemnification or advancement of expenses than is provided under the terms of the Bylaws and this Agreement, Indemnitee shall be entitled to such broader indemnification and advancements, and this Agreement shall be deemed to be amended to such extent.
18.Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement, or any clause thereof, shall be determined by a court of competent jurisdiction to be illegal, invalid or unenforceable, in whole or in part, such provision or clause
shall be limited or modified in its application to the minimum extent necessary to make such provision or clause valid, legal and enforceable, and the remaining provisions and clauses of this Agreement shall remain fully enforceable and binding on the parties.
19.Indemnitee as Plaintiff. Except as provided in Sections 10(a) and (c) of this Agreement and in the next sentence, Indemnitee shall not be entitled to payment of Indemnifiable Amounts or advancement of Indemnifiable Expenses with respect to any Proceeding brought by Indemnitee against the Company, any Entity which it controls, any director or officer thereof, or any third party, unless the Board of Directors of the Company has consented to the initiation of such Proceeding. This Section shall not apply to counterclaims or affirmative defenses asserted by Indemnitee in an action brought against Indemnitee.
20.Modifications and Waiver. Except as provided in Section 17 above with respect to changes in Massachusetts law which broaden the right of Indemnitee to be indemnified by the Company, no supplement, modification or amendment of this Agreement shall be binding unless executed in writing by each of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement (whether or not similar), nor shall such waiver constitute a continuing waiver.
21.General Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (a) when delivered by hand, (b) when transmitted by facsimile and receipt is acknowledged, or (c) if mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:
(i)If to Indemnitee, to the address shown on the signature page hereto.
(ii)If to the Company, to:
Rogers Corporation
2225 W. Chandler Blvd.
Chandler, AZ 85224
Attn: Corporate Secretary
or to such other address as may have been furnished in the same manner by any party to the other.
22.Governing Law; Consent to Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts without regard to its rules of conflict of laws. Each of the Company and the Indemnitee hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of any court of competent jurisdiction in The Commonwealth of Massachusetts (the ‘‘Massachusetts Courts”) for any litigation arising out of or relating to this Agreement and the transactions contemplated hereby (and agrees not to commence any litigation relating thereto except in such courts), waives any objection to the laying of venue of any such litigation in the Massachusetts Courts and agrees not to plead or claim in any Massachusetts Court that such litigation brought therein has been brought in an inconvenient forum.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
ROGERS CORPORATION
By: | |||||
Name: | |||||
Title: | |||||
INDEMNITEE
By: | |||||
Name: | |||||
Address: | |||||
Exhibit 10.7
____________________________________________________________________
ROGERS CORPORATION EXECUTIVE
SEVERANCE PLAN
___________________
Effective November 1, 2024
____________________________________________________________________
| TABLE OF CONTENTS | ||||||||
| Section 1. | Introduction | 4 | ||||||
| 1.1. | Purpose. | 4 | ||||||
| 1.2. | Effective Date. | 4 | ||||||
| Section 2. | Definitions and Construction | 4 | ||||||
| 2.1. | Definitions. | 4 | ||||||
| 2.2. | Gender and Number. | 6 | ||||||
| 2.3. | Section 409A. | 6 | ||||||
| Section 3. | Participation | 7 | ||||||
| 3.1. | Generally. | 7 | ||||||
| 3.2. | Participation Agreement Required. | 7 | ||||||
| Section 4. | Severance Benefits | 7 | ||||||
| 4.1. | Cash Severance Benefits. | 7 | ||||||
| 4.2. | Medical and Dental Benefits. | 8 | ||||||
| 4.3. | Outplacement Services. | 9 | ||||||
| 4.4. | Equity Awards. | 9 | ||||||
| 4.5. | Qualifying Termination. | 9 | ||||||
| 4.6. | Sections 280G and 4999 of the Code. | 10 | ||||||
| Section 5. | Covenants | 11 | ||||||
| 5.1. | Generally. | 11 | ||||||
| 5.2. | Noncompetition. | 11 | ||||||
| 5.3. | Interference with Business Relations. | 12 | ||||||
| 5.4. | Proprietary and Confidential Information. | 13 | ||||||
| 5.5. | Nondisparagement. | 13 | ||||||
| 5.6. | Cooperation. | 13 | ||||||
| 5.7. | Whistleblower Protected Activity. | 14 | ||||||
| 5.8. | Recoupment. | 14 | ||||||
| Section 6. | Release | 14 | ||||||
| 6.1. | Generally. | 14 | ||||||
| 6.2. | Time Limit for Providing Release. | 15 | ||||||
| Section 7. | Nature of Participant’s Interest in the Plan | 15 | ||||||
| 7.1. | No Right to Assets. | 15 | ||||||
| 7.2. | No Right to Transfer Interest. | 15 | ||||||
| 7.3. | No Employment Rights. | 16 | ||||||
| 7.4. | Withholding and Tax Liabilities. | 16 | ||||||
| Section 8. | Administration, Interpretation, and Modification of Plan | 16 | ||||||
| 8.1. | Plan Administrator. | 16 | ||||||
| 8.2. | Powers of the Administrator. | 16 | ||||||
| 8.3. | Incapacity. | 16 | ||||||
| 8.4. | Amendment, Suspension, and Termination. | 17 | ||||||
| 8.5. | Power to Delegate Authority. | 17 | ||||||
Rogers Corporation Executive Severance Plan Page 2
| 8.6. | Headings. | 17 | ||||||
| 8.7. | Severability. | 17 | ||||||
| 8.8. | Governing Law. | 17 | ||||||
| 8.9. | Complete Statement of Plan. | 18 | ||||||
| Section 9. | Claims and Appeals | 18 | ||||||
| 9.1. | Application of Claims and Appeals Procedures. | 18 | ||||||
| 9.2. | Initial Claims. | 18 | ||||||
| 9.3. | Appeals. | 19 | ||||||
| 9.4. | Other Rules and Rights Regarding Claims and Appeals. | 20 | ||||||
| 9.5. | Interpretation. | 21 | ||||||
| Exhibit A | Participation Agreement | 22 | ||||||
| Exhibit B | General Release and Separation Agreement- Executive Severance Plan Participant | 24 | ||||||
Rogers Corporation Executive Severance Plan Page 3
Section 1. INTRODUCTION
1.1. Purpose.
The purpose of the Plan is to ensure that Rogers Corporation (“Rogers” and, with its affiliates, the “Company”) will have the continued dedication of key employees of the Company by providing severance protection to selected individuals. The Plan is an unfunded plan maintained primarily for the purpose of providing severance benefits to a select group of key management employees.
1.2. Effective Date.
The Plan is effective as of November 1, 2024.
Section 2. DEFINITIONS AND CONSTRUCTION
2.1. Definitions.
When used in capitalized form in the Plan, the following words and phrases have the following meanings, unless the context clearly indicates that a different meaning is intended:
(a) | “Administrator” means the Chief Human Resources Officer of Rogers or such committee or person as the Chief Human Resources Officer of Rogers designates, except that, with respect to the participation of the Chief Human Resources Officer of Rogers in the Plan, “Administrator” means the President and Chief Executive Officer of Rogers. | ||||
(b) | “Cause” has the meaning provided in Section 4.5(c). | ||||
(c) | “Change in Control” means any of the following: | ||||
| (1) | The acquisition by one person, or more than one person acting as a group, during the 12-month period ending on the date of the most recent acquisition by such person or persons, of ownership of assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions; provided, however, that a Change in Control shall not occur solely as a result of a transfer of assets to any entity controlled by the shareholders of the Company immediately after such transfer, including a transfer to (A) a shareholder of the Company (immediately before such transfer) in exchange for or with respect to its stock, (B) an entity, 50 percent or more of the total value or voting power of which is owned (immediately after such transfer) directly or indirectly by the Company, (C) a person, or more than one person acting as a group, that owns (immediately after such | ||||
Rogers Corporation Executive Severance Plan Page 4
transfer) directly or indirectly 50 percent or more of the total value or voting power of all outstanding stock of the Company, or (D) an entity, at least 50 percent of the total value or voting power of which is owned (immediately after such transfer) directly or indirectly by a person described in clause (C), above. For purposes of this Section 2.1(c)(1), “gross fair market value” means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.
| (2) | The acquisition by one person, or more than one person acting as a group, of stock of Rogers that, together with stock already held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of Rogers. | ||||
(3) | The acquisition by one person, or more than one person acting as a group, during the 12-month period ending on the date of the most recent acquisition by such person or persons, of ownership of stock of Rogers possessing 30 percent or more of the total voting power of the stock of Rogers; provided, however, that a Change in Control shall not occur under this Section 2.1(c)(3) solely as a result of the acquisition of additional stock by a person, or more than one person acting as a group, that is considered to “effectively control” the Company (within the meaning of guidance issued under Section 409A of the Code). | ||||
(4) | The replacement of a majority of the Board of Directors of Rogers during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board of Directors of Rogers before the date of the appointment or election. | ||||
(5) | The consummation of any merger, reorganization, consolidation or share exchange unless the persons who were the beneficial owners of the outstanding shares of the common stock of Rogers immediately before the consummation of such transaction beneficially own more than 50% of the outstanding shares of the common stock of the successor or survivor entity in such transaction immediately following the consummation of such transaction. | ||||
For purposes of this Section 2.1(c), persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with Rogers. If a person, including an entity, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction,
Rogers Corporation Executive Severance Plan Page 5
such shareholder is considered to be acting as a group with other shareholders only with respect to the ownership in that corporation before the transaction giving rise to the change and not with respect to the ownership interest in the other corporation.
(d) | “Code” means the Internal Revenue Code of 1986, as amended. | ||||
(e) | “Company” means Rogers and its affiliates. | ||||
(f) | “Compensation and Organization Committee” means the Compensation and Organization Committee of the Board of Directors of Rogers. | ||||
(g) | “Effective Date” means November 1, 2024. | ||||
(h) | “Eligible Employee” means any employee of the Company who is designated by the Compensation and Organization Committee to be eligible to participate in the Plan. | ||||
(i) | “ERISA” means the Employee Retirement Income Security Act of 1974, as amended. | ||||
(j) | “Good Reason” has the meaning provided in Section 4.5(b). | ||||
(k) | “Participant” means an Eligible Employee who participates in the Plan under Section 3. | ||||
(l) | “Participation Agreement” has the meaning provided in Section 3.2. | ||||
(m) | “Plan” means the Rogers Corporation Severance Plan as set forth in this document. | ||||
(n) | “Rogers” means Rogers Corporation and any successor. | ||||
Rogers Corporation Executive Severance Plan Page 6
(o) | “Qualifying Termination” has the meaning provided in Section 4.5 | ||||
(p) | “Section” means a section of the Plan and any subsections of that section. | ||||
(q) | “Section 409A” means section 409A of the Code. | ||||
(r) | “Severance Benefit” has the meaning provided in Section 4.1. | ||||
(s) | “Severance Coverage Period” is, unless a different period (not to exceed 36 months) is approved by the Compensation and Organization Committee and reflected in the Participant’s Participation Agreement: | ||||
(1) For the President and Chief Executive Officer of Rogers, 24 months; and
(2) For other Participants, 12 months, except that, if he or she incurs a Qualifying Termination during the one-year period after a Change in Control, the Severance Coverage Period shall be 18 months.
2.2. Gender and Number.
Words used in the masculine gender in the Plan are intended to include the feminine and neuter genders, where appropriate. Words used in the singular form in the Plan are intended to include the plural form, where appropriate, and vice versa.
2.3. Section 409A.
Payments under the Plan are intended to be exempt from, or comply with, Section 409A, and the Plan will be interpreted to achieve this result. However, in no event is the Company responsible for any tax or penalty owed by a Participant with respect to the payments under the Plan.
Section 3. PARTICIPATION
3.1. Generally.
An employee of the Company participates in the Plan upon the date on which the Company and the employee execute a Participation Agreement in accordance with Section 3.2.
3.2. Participation Agreement Required.
No employee will be eligible to receive a benefit under the Plan unless the employee and the Company execute a Participation Agreement substantially in the form of Exhibit A,
Rogers Corporation Executive Severance Plan Page 7
except as otherwise determined by the Compensation and Organization Committee. The executed Participation Agreement will constitute an agreement between the Company and the employee that binds both of them to the terms of the Plan and will bind their heirs, executors, administrators, successors, and assigns, both present and future.
Section 4. SEVERANCE BENEFITS
4.1. Cash Severance Benefits.
A Participant who has a Qualifying Termination is entitled to a Severance Benefit in the amount described in subsection (a), unless otherwise specified in the Participant’s Participation Agreement. The Severance Benefit shall be paid in the time and form specified in subsection (b) and shall be conditioned upon the Participant’s timely execution of a release as provided in Section 6.
(a) | Amount. | ||||
(1) Base Salary. The Participant’s Severance Benefit includes an amount equal to the Participant’s base salary (at the rate in effect immediately prior to the Participant’s Qualifying Termination, or if greater, the rate in effect at any time within 180 days prior to the Participant’s Qualifying Termination) for the Participant’s Severance Coverage Period.
(2) Bonus Award. The Participant’s Severance Benefit includes an amount equal to the Participant’s target incentive under the Company’s annual cash incentive plan for the measurement period in which the Qualifying Termination occurs multiplied by the ratio of (A) the Participant’s Severance Coverage Period (in months) over (B) 12 months; provided that, for all Participants other than the President and Chief Executive Officer of Rogers, the benefits under this Section 4.1(a)(2)(A) will expire on the third anniversary of such Participant’s participation in the Plan, except with respect to Severance Benefits payable with respect to a Qualifying Termination within the one-year period following a Change in Control, which, for the avoidance of doubt, shall not so expire.
(b) | Time and Form of Payment. If a Participant is entitled to a Severance Benefit, the Severance Benefit will be paid as follows, unless otherwise specified in the Participation Agreement- | ||||
Rogers Corporation Executive Severance Plan Page 8
(1) | In General. Except as otherwise provided in paragraph (2), below, (A) the base salary (Section 4.1(a)(1)) portion of the Participant’s Severance Benefit will be paid in a lump sum on or before the 60th day following the Participant’s Qualifying Termination date and (B) any bonus award (Section 4.1(a)(2)) portion of the Participant’s Severance Benefit will be paid in a lump sum within 30 days after the six-month anniversary of the Participant’s Qualifying Termination date (except, with respect to a Participant who was subject to a severance arrangement with the Company prior to the Effective Date, to the extent such payment would otherwise be subject to Section 409A, it shall instead be paid on or before the 60th day following the Participant’s Qualifying Termination date). The Administrator may accelerate payment of any bonus award (Section 4.1(a)(2)) portion of the Participant’s Severance Benefit to the extent such portion is not subject to Section 409A. | ||||
(2) | Time of Payment under Section 409A. To comply with Section 409A- | ||||
(A) | Any payment under the Plan that is subject to Section 409A and that is contingent on a termination of employment is contingent on a “separation from service” within the meaning of Section 409A. | ||||
(B) | If, upon separation from service, the Participant is a “specified employee” within the meaning of Section 409A, any payment under the Plan that is subject to Section 409A and would otherwise be paid within six months after the Participant’s separation from service will instead be paid in the seventh month following the Participant’s separation from service. | ||||
4.2. Medical and Dental Benefits.
If the Participant has a Qualifying Termination and timely executes a release as provided in Section 6, the Company will provide the Participant with medical and dental benefits as follows, unless otherwise specified in the Participation Agreement-
Rogers Corporation Executive Severance Plan Page 9
(a) | Amount. During the Severance Coverage Period (or if shorter, the 18-month period immediately following the Participant’s Qualifying Termination), the Company will pay a portion of the Participant’s premiums for medical and dental coverage under COBRA equal to the portion of medical and dental benefit premiums (if any) that the Company would have paid with respect to the Participant had the Participant continued employment with the Company in the same position held by the Participant at the time of his or her Qualifying Termination. Notwithstanding the previous sentence, the Company reserves the right to modify, amend, or terminate at any time any Company benefit plan to the extent permitted under the terms of the plan and applicable law. | ||||
(b) | Time of Payment. Each month’s premium will be paid in the month it is due, except that payments may be delayed pending the Participant’s execution of a release in accordance with Section 6. For purposes of Section 409A, payments under this Section 4 are each a separate payment. | ||||
(c) | Cash In Lieu. The Company may, at its option and except as provided below, pay the Participant cash in lieu of the amounts payable by Company under Section 4.2(a) in a lump sum on or before the 60th day following the Participant’s Qualifying Termination date, in which case, the Company will provide continued health benefits in accordance with COBRA without any Company contributions. This Section 4.2(c) shall apply only to the extent that the amount of the cash payment paid in this section is exempt from Section 409A. | ||||
4.3. Outplacement Services.
If the Participant has a Qualifying Termination and timely executes a release as provided in Section 6, the Company will provide the Participant with reasonable outplacement services during the Severance Coverage Period (but not later than the end of the second calendar year that begins after the Qualifying Termination), not to exceed $50,000, unless otherwise provided in the Participation Agreement. The Company will not pay the participant cash in lieu of the benefits described in this Section 4.3.
4.4. Equity Awards.
The value of, and rights attendant to, each equity or equity-based award held by a Participant will be preserved or the award will be cashed out in a manner consistent with the plan and award agreement under which the award is issued.
4.5. Qualifying Termination.
(a) | A Participant has a Qualifying Termination if his or her employment with the Company is terminated- | ||||
(1) by the Participant for Good Reason; or
(2) by the Company for any reason other than for Cause.
Rogers Corporation Executive Severance Plan Page 10
(b) | Good Reason. | ||||
(1) Definition. “Good Reason” means, without the consent of the Participant, (A) any material diminution in the Participant’s base pay; (B) a material diminution in the Participant’s authority, duties, or responsibilities; or (C) a material change in the Participant’s primary office location (which, for this purpose, means a change of more than 100 miles). For the avoidance of doubt, “Good Reason” does not occur solely because Rogers ceases to be publicly traded.
(2) Notice and Cure Period. A Participant does not terminate for Good Reason unless (A) the Participant gives the Administrator written notice within 90 days of the initial existence of the condition on which Good Reason is based, (B) the Company does not cure the condition within 30 days of receiving such notice, and (C) the Participant terminates within one year following the initial existence of the condition.
4.6. Sections 280G and 4999 of the Code.
(a) | Limitation on Amounts. Notwithstanding any provision of the Plan to the contrary, if it is determined that part or all of the compensation and benefits payable to a Participant (whether pursuant to the terms of the Plan or otherwise) before application of this Section 4.6 would constitute “parachute payments” under Section 280G of the Code, and the payment thereof would cause the Participant to incur the 20% excise tax under Section 4999 of the Code (or its successor) (“Excise Tax”), the following provisions shall apply: | ||||
(1) The Participant shall receive payment of the greater of the following amounts, determined after subtracting the net amount of federal, state and local income taxes on such payments and the amount of Excise Tax to which the Participant would be subject in respect of such payments and after taking into account the phase-out of itemized deductions and personal exemptions attributable to such payments: (A) the amounts otherwise payable to or for the benefit of the Participant pursuant to the Agreement (or otherwise) that, but for this Section 4.6 would be “parachute payments,” (referred to below as the “Total Payments”), and (B) the Total Payments reduced to an amount equal to three times the “base amount” (as defined under Section 280G of the Code) less $1, as reasonably determined by the Consultant (as defined below).
(2) If the Total Payments are reduced under paragraph (1), above, such reductions shall be made by the Company in its reasonable discretion in the following order: (A) reduction of any cash payment, excluding any cash payment with respect to the acceleration of equity awards, that is otherwise payable to the participant that is exempt from Section 409A of the Code, (B) reduction of any
other payments or benefits (other than equity awards) otherwise payable to the Participant on a pro-rata basis or such other manner that complies with Section
Rogers Corporation Executive Severance Plan Page 11
409A of the Code, (C) reduction of any payment with respect to the acceleration of equity awards that is otherwise payable to the Participant that is exempt from Section 409A of the Code, and (D) reduction of any payment, on a pro rata basis, with respect to the acceleration of equity awards that is otherwise payable to the Participant that is subject to Section 409A of the Code.
(3) All determinations under this Section 4.6 shall be made by a nationally recognized accountant, executive compensation consultant, or law firm appointed by the Company (the “Consultant”) that is acceptable to the Participant on the basis of “substantial authority” (within the meaning of Section 6662 of the Code). The Consultant’s fee shall be paid by the Company. The Consultant shall provide a report to the Participant that may be used by the Participant to file the Participant’s federal tax returns.
(b) | It is possible that payments will be made by the Company which should not have been made (each, an “Overpayment”) due to the uncertain application of Section 280G of the Code at the time of a determination hereunder. In the event that there is a final determination by the Internal Revenue Service, or a final determination by a court of competent jurisdiction, that an Overpayment has been made, any such Overpayment shall be repaid by the Participant to the Company together with interest at the prime rate of interest in effect on the date of such Overpayment; provided, however, that no amount shall be payable by the Participant to the Company if and to the extent such payment would not reduce the amount which is subject to taxation under Section 4999 of the Code. | ||||
Section 5. COVENANTS
5.1. Generally.
In consideration for the benefits provided under the Plan, each Participant will agree to the covenants set forth in this Section 5.
5.2. Noncompetition.
(a) | Prohibited Conduct. During the period of a Participant’s employment with the Company, and for the Participant’s Severance Coverage Period, the Participant will not, without the prior written consent of the Administrator- | ||||
(1) personally engage in Competitive Activities (as defined below); or
(2) work for, own, manage, operate, control, or participate in the ownership, management, operation, or control of, or provide consulting or advisory services to, any individual, partnership, firm, corporation, or institution engaged in Competitive Activities, or any company or person affiliated with such person or entity engaged in Competitive Activities; provided that Participant’s mere
Rogers Corporation Executive Severance Plan Page 12
purchase or holding, for investment purposes, of securities of a publicly-traded company will not constitute “ownership” or “participation in ownership” for
purposes of this paragraph so long as Participant’s equity interest in any such company is less than 5% of its outstanding shares.
(b) | Competitive Activities. “Competitive Activities” means engage in, render services, either as an employee, consultant or independent contractor, or become associated in any way, either directly or indirectly, in the research, development, manufacture, use or sale of any product which is the same as, similar to or is competitive with any product, development or research activity of the of the Company or, for a Participant assigned to a particular business unit of the Company, such business unit. If the scope of the obligations contained in this Section 5.2 is determined to exceed that which may be enforceable under applicable law, the scope of these obligations will be reformed to provide for enforcement to the maximum extent permitted under applicable law. The Participant will bear the burden of proving the scope of the maximum enforceable obligations under applicable law and that the activities in which he or she has engaged do not exceed such maximum enforceable obligations. | ||||
5.3. Interference with Business Relations.
During the period of the Participant’s employment with the Company, and for the Participant’s Severance Coverage Period, Participant will not, without the prior written consent of the Administrator-
(a) | recruit or solicit any employee of the Company for employment or for retention as a consultant or service provider; | ||||
(b) | hire or participate (with another company or third party) in the process of hiring (other than for the Company) any person who is then an employee of the Company, or provide names or other information about Company employees to any person or business (other than the Company) under circumstances that could lead to the use of that information for purposes of recruiting or hiring; | ||||
(c) | interfere with the relationship of the Company with any of its employees, agents, or representatives; | ||||
Rogers Corporation Executive Severance Plan Page 13
(d) | solicit or induce, or in any manner attempt to solicit or induce, any client, customer, or prospect of the Company (1) to cease being, or not to become, a customer of the Company or (2) to divert any business of such customer or prospect from the Company; or | ||||
(e) | otherwise interfere with, disrupt, or attempt to interfere with or disrupt, the relationship, contractual or otherwise, between the Company and any of its customers, clients, prospects, suppliers, consultants, or employees. | ||||
5.4. Proprietary and Confidential Information.
The Participant will at all times preserve the confidentiality of all proprietary information and trade secrets of the Company, except to the extent that disclosure of such information is legally required or protected under whistleblower protection laws, as described in Section 5.7. “Proprietary information” means information that has not been disclosed to the public and that is treated as confidential within the business of the
Company, such as strategic or tactical business plans; undisclosed financial data; ideas, processes, methods, techniques, systems, patented or copyrighted information, models, devices, programs, computer software, or related information; documents relating to regulatory matters and correspondence with governmental entities; undisclosed information concerning any past, pending, or threatened legal dispute; pricing and cost data; reports and analyses of business prospects; business transactions that are contemplated or planned; research data; personnel information and data; identities of users and purchasers of the Company’s products or services; and other confidential matters pertaining to or known by the Company, including confidential information of a third party that Participant knows or should know the Company is bound to protect.
5.5. Nondisparagement.
The Participant will at no time make any derogatory, misleading or otherwise negative statement about the actions, performance or behavior of the Company or its officers, directors, employees and agents. The Company will at no time make any derogatory, misleading or otherwise negative statement about the actions, performance or behavior of the Participant; provided that, for purposes of this sentence, the Company shall mean the (a) President and Chief Executive Officer of Rogers and (b) Chief Human Resources Officer of Rogers. Nothing in this Section 5.5 shall be construed to prevent a Participant from activity that is protected under whistleblower protection laws, as described in Section 5.7.
5.6. Cooperation.
The Participant will cooperate with the Company in order to ensure an orderly transfer of his or her duties and responsibilities. In addition, the Participant will at all times, both before and after termination of employment, (a) provide reasonable cooperation in connection with any action or proceeding (or any appeal from any action or proceeding) that relates to events occurring during the Participant’s employment hereunder, provided
Rogers Corporation Executive Severance Plan Page 14
that such cooperation does not materially interfere with the Participant’s then current employment and that the Participant and the Company are not adverse in such action, proceeding, or appeal, and (b) cooperate with the Company in executing and delivering documents requested by the Company, and taking any other actions, that are necessary or requested by the Company to assist the Company in patenting, copyrighting, or registering any programs, ideas, inventions, discoveries, patented or copyrighted material, or trademarks, and to vest title thereto in the Company. Nothing in this Section 5.6 shall be construed to prevent a Participant from activity that is protected under whistleblower protection laws, as described in Section 5.7.
5.7. Whistleblower Protected Activity.
Notwithstanding anything herein to the contrary, nothing in the Plan shall (x) prohibit a Participant from making reports (including voluntary reports) of possible violations of federal law or regulation to any governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Securities Exchange Act of 1934, as amended, or Section 806 of the Sarbanes-Oxley Act of 2002, or making other disclosures protected under the whistleblower provisions of federal law or regulation, (y) require prior approval by the Company or notification to the Company of any such report or (z) prevent a Participant from collecting a monetary award in connection with such report.
5.8 Recoupment.
If the Participant breaches any of the covenants set forth in this Section 5, the Company will have no further obligation to pay to the Participant any benefit under the Plan, and the Participant will be obligated to repay to the Company all benefits previously paid to, or on behalf of, the Participant under the Plan.
Section 6. RELEASE
6.1. Generally.
A Participant will not be entitled to any benefits under the Plan unless, at the time of the participant’s Qualifying Termination, he or she executes and does not subsequently
revoke a release satisfactory to the Company releasing the Company, its affiliates, subsidiaries, shareholders, directors, officers, employees, representatives, and agents and their successors and assigns from any and all employment-related claims the Participant or his or her successors and beneficiaries might then have against them (excluding any claims the Participant might then have under the Plan or any employee benefit plan sponsored by the Company). The release will be substantially in the form that is attached as Exhibit B to the Plan.
6.2. Time Limit for Providing Release.
A Participant will execute and submit the release to the Company within 30 days after the date of the Participant’s Qualifying Termination. However, if the Participant has a Qualifying Termination in connection with an exit incentive or other employment
Rogers Corporation Executive Severance Plan Page 15
termination program offered to a group or class of employees, the Participant will have 50 days after the Participant terminates employment to execute and submit the release to the Company. With respect to any payment under the Plan that is subject to Section 409A, if payment is otherwise due prior to the latest date on which the release may become irrevocable and the period between separation from service and such date spans two calendar years, payment shall be made in the second of those two years.
Section 7. NATURE OF PARTICIPANT’S INTEREST IN THE PLAN
7.1. No Right to Assets.
Participation in the Plan does not create, in favor of any Participant, any right or lien in or against any asset of the Company. Nothing contained in the Plan, and no action taken under its provisions, will create or be construed to create a trust of any kind, or a fiduciary relationship, between the Company and a Participant or any other person. The Company’s promise to pay benefits under the Plan will at all times remain unfunded as to each Participant, whose rights under the Plan are limited to those of a general and unsecured creditor of the Company.
7.2. No Right to Transfer Interest.
Rights to benefits payable under the Plan are not subject in any manner to alienation, sale, transfer, assignment, pledge, or encumbrance. However, the Administrator may recognize the right of an alternate payee named in a domestic relations order to receive all or part of a Participant’s benefits under the Plan, but only if (a) the domestic relations order would be a “qualified domestic relations order” within the meaning of section 414(p) of the Code (if section 414 (p) applied to the Plan), (b) the domestic relations order does not attempt to give the alternate payee any right to any asset of the Company, (c) the domestic relations order does not attempt to give the alternate payee any right to receive payments under the Plan at a time or in an amount that the Participant could not receive under the Plan, and (d) the amount of the Participant’s benefits under the Plan are reduced to reflect any payments made or due the alternate payee.
7.3. No Employment Rights.
No provisions of the Plan and no action taken by the Company or the Administrator will give any person any right to be retained in the employ of the Company, and the Company specifically reserves the right and power to dismiss or discharge any Participant for any reason or no reason and at any time.
7.4. Withholding and Tax Liabilities.
The amount of any withholdings required to be made by any government or government agency will be deducted from benefits paid under the Plan to the extent deemed necessary by the Administrator. In addition, the Participant will bear the cost of any taxes not withheld on benefits provided under the Plan, regardless of whether withholding is required.
Rogers Corporation Executive Severance Plan Page 16
Section 8. ADMINISTRATION, INTERPRETATION, AND MODIFICATION OF PLAN
8.1. Plan Administrator.
The Administrator will administer the Plan.
8.2. Powers of the Administrator.
The Administrator’s powers include, but are not limited to, the power to adopt rules consistent with the Plan; the power to decide all questions relating to the interpretation of the terms and provisions of the Plan; and the power to resolve all other questions arising under the Plan (including, without limitation, the power to remedy possible ambiguities, inconsistencies, or omissions by a general rule or particular decision). The Administrator has full discretionary authority to exercise each of the foregoing powers.
8.3. Incapacity.
If the Administrator determines that any Participant entitled to benefits under the Plan is unable to care for his or her affairs because of illness or accident, any payment due (unless a duly qualified guardian or other legal representative has been appointed) may be paid for the benefit of such Participant to his or her spouse, parent, brother, sister, or other party deemed by the Administrator to have incurred expenses for such Participant. If a Participant dies after having a Qualifying Termination, any payment of the Participant's Severance Benefit remaining due to the Participant will be paid to the Participant's estate at the time such payment would otherwise be paid to the Participant but no later than 90 days after the Participant's death.
8.4. Amendment, Suspension, and Termination.
The Compensation and Organization Committee has the right by written resolution to amend, suspend, or terminate the Plan at any time, subject to the terms of this Section 8.4. In addition, the Administrator has the right by written resolution to amend the Plan at any time, subject to the terms of this Section 8.4 and to the extent that such amendment does not modify the amount or nature of benefits provided or the authority of
the Administrator’s authority as specified hereunder. No amendment, suspension, or termination that reduces the benefits to which a Participant is entitled under the Plan will apply to an employee who, at the time the amendment is adopted, already is a Participant without his or her express written consent (and refusal of such consent shall not constitute Cause). Notwithstanding the foregoing, the Administrator or Compensation and Organization Committee may amend the Plan at any time to the extent necessary to comply with Section 409A, provided that, to the extent possible, such amendment does not reduce the benefits of an employee who is already a Participant.
8.5. Power to Delegate Authority.
The Administrator may, in its sole discretion, delegate to any person or persons all or part of its authority and responsibility under the Plan, including, without limitation, the authority to amend the Plan.
8.6. Headings.
The headings used in this document are for convenience of reference only and may not be given any weight in interpreting any provision of the Plan.
8.7. Severability.
Rogers Corporation Executive Severance Plan Page 17
If an arbitrator or court of competent jurisdiction determines that any term, provision, or portion of the Plan is void, illegal, or unenforceable, the other terms, provisions, and portions of the Plan will remain in full force and effect, and the terms, provisions, and portions that are determined to be void, illegal, or unenforceable will either be limited so that they will remain in effect to the extent permissible by law, or such arbitrator or court will substitute, to the extent enforceable, provisions similar thereto or other provisions, so as to provide to the Company, to the fullest extent permitted by applicable law, the benefits intended by the Plan.
8.8. Governing Law.
The Plan will be construed, administered, and regulated in accordance with the laws of Arizona (excluding any conflicts or choice of law rule or principle), except to the extent that those laws are preempted by federal law.
8.9. Complete Statement of Plan.
The Plan contains a complete statement of its terms. The Plan may be amended, suspended, or terminated only in writing and then only as provided in Section 8.4 or 8.5. A Participant’s right to any benefit of a type provided under the Plan will be determined solely in accordance with the terms of the Plan. No other evidence, whether written or oral, will be taken into account in interpreting the provisions of the Plan. Notwithstanding the preceding provisions of this Section 8.9, for purposes of determining benefits with respect to a Participant, the Plan will be deemed to include (a) the provisions of any Participation Agreement executed in accordance with Section 3.2, and (b) the provisions of any other written agreement between the Company and the Participant to the extent
such other agreement explicitly provides for the incorporation of some or all of its terms into the Plan.
Section 9. CLAIMS AND APPEALS
9.1. Application of Claims and Appeals Procedures.
(a) | If a Participant is not receiving, or believes that he or she is not receiving, the full amount of benefits under the Plan to which he or she is entitled, the Participant may file a claim under the provisions of this Section 9. However, to the extent that the Participant requests a determination of disability, the procedures for disability benefit claims set forth in Department of Labor Regulation § 2560.503-1 shall apply. | ||||
(b) | No claim for non-payment or underpayment of benefits allegedly owed under the Plan may be filed in court until the claimant has exhausted the claims review procedures established in accordance with this Section 9. | ||||
Rogers Corporation Executive Severance Plan Page 18
9.2. Initial Claims.
(a) | Any claim for benefits will be in writing (which may be electronic if permitted by the Administrator) and will be delivered to a claims administrator designated in writing by the Administrator | ||||
(b) | Each claim for benefits will be decided by the claims administrator or the Administrator (as determined by the Administrator) within a reasonable period of time, but not later than 90 days after such claim is received by the claims administrator (without regard to whether the claim submission includes sufficient information to make a determination), unless the claims administrator or the Administrator determines that special circumstances require an extension of time for processing the claim. If the claims administrator or the Administrator determines that an extension of time for processing is required, the claims administrator or the Administrator will notify the claimant in writing before the end of the initial 90-day period of the circumstances requiring an extension of time and the date by which a decision is expected. | ||||
(c) | If any claim is denied in whole or in part, the claims administrator or the Administrator will provide to the claimant a written decision, issued by the end of the period prescribed by subsection (b), above, that includes the following information: | ||||
(1) The specific reason or reasons for denial of the claim;
(2) References to the specific Plan provisions upon which such denial is based;
(3) A description of any additional material or information necessary to perfect the claim, and an explanation of why such material or information is necessary;
(4) An explanation of the appeal procedures Plan’s and the applicable time limits; and
(5) A statement of the claimant’s right to bring a civil action under section 502(a) of ERISA, if his or her claim is denied upon review.
9.3. Appeals.
(a) | If a claim for benefits is denied in whole or in part, the claimant may appeal the denial to the Administrator. Such appeal will be in writing (which may be electronic, if permitted by the Administrator), may include any written comments, documents, records, or other information relating to the claim for benefits, and will be delivered to the Administrator within 60 days after the claimant receives written notice that his or her claim has been denied. | ||||
Rogers Corporation Executive Severance Plan Page 19
(b) | The Administrator will decide each appeal within a reasonable period of time, but not later than 60 days after such claim is received by the Administrator, unless the Administrator determines that special circumstances require an extension of time for processing the appeal. | ||||
(1) If the Administrator determines that an extension of time for processing is required, the Administrator will notify the claimant in writing before the end of the initial 60-day period of the circumstances requiring an extension of time and the date by which the claims administrator expects to render a decision.
(2) If an extension of time pursuant to paragraph (1), above, is due to the claimant’s failure to submit information necessary to decide the appeal, the period for deciding the appeal will be tolled from the date on which the notification of extension is sent to the claimant until the date on which the claimant responds to the request for additional information.
(c) | In connection with any appeal, the claimant will be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to his or her claim for benefits. A document, record, or other information will be considered relevant to a claim for benefits if such document, record, or other information: | ||||
(1) Was relied upon in making the benefit determination;
(2) Was submitted, considered, or generated in the course of making the benefit determination, without regard to whether such document, record, or other information was relied upon in making the benefit determination; or
(3) Demonstrates compliance with processes and safeguards designed to ensure and to verify that the benefit determination was made in accordance with the terms of the Plan and that such terms of the Plan have been applied consistently with respect to similarly situated claimants.
(d) | The Administrator review on appeal will take into account all comments, documents, records and other information submitted by the claimant, without regard to whether such information was considered in the initial benefit determination. | ||||
(e) | If any appeal is denied in whole or in part, the Administrator will provide to the claimant a written decision, issued by the end of the period prescribed by subsection (b), above, that includes the following information: | ||||
(1) The specific reason or reasons for the decision;
(2) References to the specific Plan provisions upon which the decision is based;
(3) An explanation of the claimant’s right to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other
Rogers Corporation Executive Severance Plan Page 20
information relevant to his or her claim for benefits (as determined pursuant to subsection (c), above); and
(4) A statement of the claimant’s right to bring a civil action under section 502(a) of ERISA.
9.4. Other Rules and Rights Regarding Claims and Appeals.
(a) | A claimant may authorize a representative to pursue any claim or appeal on his or her behalf. The Administrator may establish reasonable procedures for verifying that any representative has in fact been authorized to act on his or her behalf. | ||||
(b) | Notwithstanding the deadlines prescribed by this Section 9.4, the Administrator and any claimant may agree to a longer period for deciding a claim or appeal or for filing an appeal, provided that the Administrator will not extend any deadline for filing an appeal unless imposition of the deadline prescribed by Section 9.3(a) would be unreasonable under the applicable circumstances. | ||||
9.5. Interpretation.
The provisions of this Section 9 are intended to comply with section 503 of ERISA and will be administered and interpreted in a manner consistent with such intent.
Rogers Corporation Executive Severance Plan Page 21
Exhibit 10.10
ROGERS CORPORATION
DIRECTOR DEFERRED STOCK UNIT AWARD AGREEMENT UNDER THE ROGERS CORPORATION 2019 LONG-TERM EQUITY COMPENSATION PLAN
| Name of Grantee: | |||||
| Number of Shares Subject to DSUs: | |||||
| Grant Date: | |||||
This Deferred Stock Unit Award Agreement (the “Agreement”) is between Rogers Corporation (the “Company”), and the Grantee named above, as a non-management director of the Company.
The Company wishes to award to the Grantee a number of Deferred Stock Units (“DSUs” or the “Award”) which represent the right to receive shares of the Company’s common stock, par value $1.00 per share (“Stock”), subject to the terms of this Agreement, under Section 9.1 of the Company’s 2019 Long-Term Equity Compensation Plan, as it may be amended from time to time (the “Plan”). Capitalized terms used but not defined herein shall have the meanings set forth in the Plan.
Accordingly, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Grantee hereby agree as follows:
1. Vesting.
Subject to the Grantee remaining in continuous service through the relevant vesting date or event, 100% of the DSUs will vest on the earlier of: (a) the one year anniversary of the Grant Date, (b) the Grantee’s death, (c) the Grantee’s Disability (as defined below), (d) the Grantee’s cessation of service due to a removal by the Company without Cause, or (e) a Change in Control. Upon cessation of the Grantee’s service for any reason other than those provided in the preceding sentence, all then unvested DSUs shall immediately be forfeited by the Grantee, without payment of any consideration therefor.
2. Issuance of Common Stock.
The Company shall issue to the Grantee (or Grantee’s beneficiary or estate) one share of Stock with respect to each vested DSU as soon as administratively practicable (but no more than 30 days) after the earlier of (a) the one year anniversary of the Grant Date, (b) the Grantee’s death, (c) the Grantee’s Disability (as defined below), (d) the Grantee’s “separation from service” (within the meaning of Section 409A of the Code) from the Company or (e) a Change in Control. In lieu of receiving such shares on the date set forth in clause (a) in the preceding sentence, the Grantee may elect to defer the issuance of shares of Stock payable with respect to the DSUs to a later date. Any such election must be made no later than the end of the calendar year preceding the calendar year in which this Award is granted (or such earlier date as specified by the Company) pursuant to a payment election form provided by the Company. A Grantee
who submits an election form will have no right to accelerate or further defer a deferred distribution of Stock deliverable upon the settlement of the DSUs.
3. Dividend Equivalent Right.
Subject to the restrictions, limitations and conditions as described in the Plan, the Company also grants to the Grantee a dividend equivalent right (under Section 8.2 of the Plan) with respect to the shares of Stock underlying the DSUs. Any dividend equivalents credited with respect to shares of Stock underlying the DSUs shall be subject to the same vesting conditions as the DSUs. To the extent such dividend equivalents become vested, they will be paid in cash (without interest) at the same time as the underlying shares of Stock to which the dividend equivalents relate are distributed to the Grantee under Paragraph 2 above.
4. Taxes.
The Grantee is personally responsible for the proper reporting and payment of all taxes related to shares of Stock distributed with respect to DSUs and the dividend equivalent right.
5. Death; Disability.
Any shares of Stock or cash amounts that are issued to the Grantee on account of the Grantee’s death shall be issued to the beneficiary most recently designated by the Grantee and communicated in writing to the Company, or, if the Grantee has not designated a beneficiary, to the Grantee’s estate.
For purposes of this Agreement, “Disability” means the Grantee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months. Notwithstanding the foregoing, the Grantee shall only be deemed to have a Disability hereunder if such Grantee is considered disabled within the meaning of Section 409A of the Code.
6. Change in Control.
No shares of Stock or cash amounts shall be issuable to the Grantee upon a Change in Control unless such Change in Control is also a “change in the ownership or effective control of the corporation or in the ownership of a substantial portion of the assets of the corporation” within the meaning of Section 409A of the Code.
7. Conformity with the Plan.
This Award is intended to conform in all respects with, and is subject to, all applicable provisions of the Plan. The DSUs granted under this Agreement constitute a form of Restricted Stock Unit under Article 8 of the Plan. The Grantee agrees to be bound by all of the terms of this Award and the Plan.
8. Rights as a Shareholder.
Except for the right to receive dividend equivalents as set forth in Paragraph 3 of this agreement, the Grantee shall have no rights as a shareholder of the Company with respect to any DSUs covered by this Award until such time as shares of Stock in respect of such DSUs are issued to the Grantee.
9. Section 409A.
It is intended that this Award will be exempt from or comply with the requirements of Section 409A of the Code. To the maximum extent permitted, this Agreement shall be limited, construed and interpreted in accordance with such intent. This Paragraph 9 does not create an obligation on the part of the Company to modify the Plan or this Agreement and does not guarantee that the DSUs or the shares of Stock delivered hereunder will not be subject to taxes, interest and penalties under Section 409A of the Code. The Grantee shall be responsible for all of the Grantee’s federal, state and local taxes (and any related liabilities). The Company reserves the right to terminate this arrangement in a manner consistent with Section 409A of the Code (including if applicable, Treas. Reg. § 1.409A-3(j)(4)(ix)). Notwithstanding anything herein to the contrary, to the extent compliance with the requirements of Treas. Reg. § 1.409A-3(i)(2) is necessary to avoid the application of an additional tax under Section 409A of the Code, shares or other amounts that are otherwise issuable or payable upon the Grantee’s “separation from service” (within the meaning of Section 409A of the Code) will be deferred (without interest) and issued or paid immediately following that six-month period (or if sooner, upon the Grantee’s death). Notwithstanding any other provision of this Award, to the extent provided in Prop. Treas. Reg. § 1.409A-1(b)(4)(ii), Treas. Reg. § 1.409A-2(b)(7)(ii) or any successor provision, the Company may delay settlement of the Award if it reasonably determines that such settlement would violate federal securities laws or any other applicable law.
10. Restrictions on Transfer.
Notwithstanding anything to the contrary in this Agreement, the DSUs may not be sold, assigned, transferred, pledged, or otherwise encumbered by the Grantee. No transfer by will or the applicable laws of descent and distribution of any shares of Stock which are payable to the Grantee upon settlement of the DSUs by reason of the Grantee’s death shall be effective to bind the Company unless the Committee shall have been furnished with written notice of such transfer and a copy of the will or such other evidence as the Committee may deem necessary to establish the validity of the transfer.
11. Securities Matters.
The Company shall not be required to issue or deliver any shares of Stock under this Award until the requirements of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied. The Grantee acknowledges that the Plan is intended to conform to the extent necessary with all provisions of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, and state securities laws and regulations. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the DSUs are granted, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.
12. Entire Agreement.
This Award constitutes the entire agreement between the parties relative to the subject matter hereof, and supersedes all proposals, written or oral, and all other communications between the parties relating to the subject matter of this Award.
13. Acknowledgment of Non-Reliance.
Except for those representations and warranties expressly set forth in this Agreement, the Grantee hereby disclaims reliance on any and all representations, warranties, or statements of any nature or kind, express or implied, including, but not limited to, the accuracy or completeness of such representations, warranties, or statements.
14. Amendment.
This Award may be modified, amended or rescinded only by a written agreement executed by both parties’ signatories to this Award.
15. Governing Law.
This Agreement shall be governed by the laws of the Commonwealth of Massachusetts, United States of America without regard to any choice of law rules thereunder.
16. Arbitration.
Any dispute, controversy, suit, action or proceeding (“Proceeding”) arising out of or relating to this Award, other than the injunctive relief described below in this paragraph, will be settled exclusively by arbitration, conducted before a single arbitrator in Maricopa County, Arizona in accordance with, and pursuant to, the Employment Arbitration Rules and Procedures of JAMS (“JAMS”). The decision of the arbitrator will be final and binding upon the parties thereto. Any arbitral award may be entered as a judgment or order in any court of competent jurisdiction. Either party may commence litigation in court to obtain injunctive relief in aid of arbitration, to compel arbitration, or to confirm or vacate an award, to the extent authorized by the U.S. Federal Arbitration Act or applicable state law. The Company and the Grantee will share the JAMS administrative fees, the arbitrator’s fee and expenses. Each party shall be responsible for such party’s attorneys’ fees.
17. Waiver of Jury Trial.
IF THE AGREEMENT TO ARBITRATE CONTAINED IN SECTION 16 ABOVE IS HELD INVALID OR UNENFORCEABLE THEN, TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, THE GRANTEE AND THE COMPANY WAIVE AND COVENANT THAT THE GRANTEE AND THE COMPANY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THE AWARD OR ANY MATTERS CONTEMPLATED THEREBY, WHETHER NOW OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AND AGREE THAT ANY OF THE COMPANY OR ANY OF ITS AFFILIATES OR THE GRANTEE MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE COMPANY AND ITS AFFILIATES, ON THE ONE HAND, AND THE GRANTEE, ON THE OTHER HAND, IRREVOCABLY TO WAIVE THE RIGHT TO TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER BETWEEN SUCH PARTIES ARISING OUT OF OR RELATING TO THIS AWARD AND THAT ANY PROCEEDING PROPERLY HEARD BY A COURT UNDER THE AWARD WILL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
18. Consent to Electronic Delivery.
In lieu of receiving documents in paper format, the Grantee agrees, to the fullest extent permitted by law, to accept electronic delivery of any documents that the Company may be required to deliver (including, but not limited to, the Plan, prospectuses, prospectus supplements, grant or award notifications and agreements, account statements, annual and quarterly reports, and all other agreements, forms, notices and other communications) in connection with this and any other prior or future award or program made or offered by the Company or its predecessors or successors. Electronic delivery of a document to the Grantee may be made via a Company e-mail system, by reference to a location on a Company intranet site to which the Grantee has access, or by a website maintained by a third party engaged to provide administrative services related to the Plan.
19. Electronic Signature.
The parties may execute and deliver this Agreement and any documents now or hereafter executed and delivered in connection with this Agreement using procedures now or hereafter established by the Company for electronic signature and document delivery. The Grantee’s electronic signature shall be the same as, and shall have the same force and effect as, the Grantee’s manual signature. Any procedures for electronic signature and delivery may be effected by a third party engaged by the Company to provide administrative services related to the Plan.
20. Personal Information.
The Grantee hereby acknowledges and agrees that the personal data necessary to administer the Plan may be transferred from any direct or indirect subsidiary of the Company to the Company, and/or a securities brokerage firm and/or any other entity responsible for administering the accounts of participants of the Plan. Some of these entities may be located in countries whose privacy and data protection laws may not be equivalent to those in the Grantee’s country of residence. Such data may include the Grantee’s name, position, address, date of birth and all other data necessary to prove the Grantee’s eligibility to receive Shares and the data necessary to calculate any tax withholdings. Grantee may request access to and, where shown to be incorrect, correct the personal data.
IN WITNESS WHEREOF, this Agreement is effective as of the Grant Date set forth on the cover page of this Agreement.
ROGERS CORPORATION
By:
Name: Randall Colin Gouveia
Title: President and CEO
By electronically signing this document, the Grantee acknowledges receipt of this Agreement and agrees to its terms and conditions.
_____________________________________ _____________________
Signature Date
Exhibit 10.21
Non-Employee Director Compensation Policy
Effective as of January 1, 2025
I. Purpose & Background
This Policy shall be followed in connection with all compensation paid by Rogers Corporation (the “Company”) to Non-Employee Directors (as defined below) for their service on the Board of Directors of the Company (the “Board”), including, without limitation, cash payments and equity awards granted under the Company's Long-Term Equity Compensation Plan (the "Plan"). Non-Employee Directors shall not be entitled to any compensation for their service on the Board other than as described in this Policy.
Each Non-Employee Director shall be eligible to receive cash and equity compensation for their service on the Board and any committee thereof (each, a “Committee”) in accordance with this Policy. For the avoidance of doubt, the Policy shall not apply to members of the Board who are employees of the Company or any subsidiary thereof. This Policy shall remain in effect until it is amended or rescinded by further action of the Board.
II. Scope
Applicable to members of the Board who are not employees of the Company (each, a “Non-Employee Director”).
III. Cash Compensation
Each Non-Employee Director shall be entitled to the following cash compensation:
Annual Cash Retainers
Each Non-Employee Director shall receive an annual base cash retainer of $65,000 for their service on the Board, together with additional retainers as follows:
| Position | Board/Committee Chair Retainer | Committee Member Retainer | ||||||
| Non-Executive Board Chair | $80,000 | - | ||||||
| Audit Committee | $24,500 | $10,000 | ||||||
| Compensation & Organization Committee | $20,000 | $7,500 | ||||||
| Nominating, Governance & Sustainability Committee | $10,000 | $5,000 | ||||||
NON-EMPLOYEE DIRECTOR COMPENSATION POLICY (12/04/2024) | PAGE 1
A Non-Employee Director who is newly appointed to the Board or a Committee after a quarterly period has commenced shall receive a prorated portion of the applicable annual cash retainers for such quarterly period, calculated based on the number of days remaining in the quarterly period following the date of the appointment.
The annual cash retainers, including any prorata portion thereof, shall be paid in quarterly installments. Specifically, within the first 5 business days of each calendar quarter, each individual then serving as a Non-Employee Director shall be paid in advance for services to be rendered on the Board or a Committee during that calendar quarter. Non-Employee Directors appointed to the Board or a Committee mid-quarter shall be paid the prorated portion of their applicable cash retainers for such quarterly period within 5 business days of their appointment.
IV. Equity Compensation
Annual Equity Grant
On the close of business on the date of each Annual Meeting of Shareholders of the Company (the “Annual Meeting”), without further action by the Board, each individual serving as a Non-Employee Director at such time shall receive an Annual Equity Grant of Deferred Stock Units (“DSUs”). Each Annual Equity Grant shall be comprised of a number of DSUs, calculated as follows: (i) the annual equity grant value of $170,000 will be divided by the average closing share price for the 30 trading days immediately preceding the Annual Meeting grant date, and (ii) to the extent such number of DSUs is not a whole number, it shall be rounded to the nearest whole number using the standard rounding method (e.g., if the result was 100.1 through 100.4, it would get rounded down to 100, whereas if the result was 100.5 through 100.9, it would get rounded up to 101 (the “Standard Rounding Method”)).
New Director Equity Grant
In the event that a Non-Employee Director is appointed to the Board between Annual Meetings, such Non-Employee Director shall receive, without further action by the Board, a New Director Equity Grant of DSUs on the date the Non-Employee Director joins the Board. Such award shall have a pro-rated equity grant value of $170,000 multiplied by a fraction, the numerator of which is the number of days beginning with the date the Non-Employee Director joins the Board through (but not including) the first anniversary of the immediately preceding Annual Meeting date and the denominator of which is 365. Such New Director Equity Grant shall be comprised of a number of DSUs, calculated as follows: (i) the pro-rated equity grant value as determined above (rounded up to the nearest dollar), divided by the average closing share price for the 30 trading days immediately preceding the grant date, and (ii) to the extent such number of DSUs is not a whole number, it shall be rounded to the nearest whole number using the Standard Rounding Method.
All Equity Grants
All equity grants will be made in accordance with the Plan and memorialized on the form of award agreement most recently approved by the Board or an authorized Committee for DSU grants to Non-Employee Directors. Such grants will vest, subject to a Non-Employee Director’s continued service, on the one-year anniversary of the grant date, or upon such earlier events as
NON-EMPLOYEE DIRECTOR COMPENSATION POLICY (12/04/2024) | PAGE 2
provided in the applicable award agreement. The grants will be settled in accordance with the terms and conditions contained in the applicable award agreement.
V. Reimbursements
Each Non-Employee Director shall be reimbursed for reasonable travel expenses in connection with their attendance at Board and Committee meetings. In addition, directors are eligible for certain reimbursements under the Company’s Director Education and Training Allowance Policy, subject to the terms and conditions set forth therein. Each Non-Employee Director shall provide the Company with such receipts and other records related to such reimbursable expenses as the Company may request.
All reimbursements shall be made or provided in accordance with the requirements of Section 409A to the extent that such reimbursements or in-kind benefits are subject to Section 409A, including, where applicable, the requirements that (i) any reimbursement is for expenses incurred during a Non-Employee Director’s lifetime, (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred and (iv) the right to reimbursement is not subject to set off or liquidation or exchange for any other benefit.
VI. Insider Trading Policy
Non-Employee Directors are subject to the Company’s Insider Trading Policy.
VII. Hedging Prohibition
Non-Employee Directors are prohibited from entering into hedging transactions or similar arrangements regarding Company securities, pursuant to the Company’s Insider Trading Policy.
VIII. Stock Ownership Guidelines
Non-Employee Directors are subject to stock ownership guidelines, which are described in the Company’s Corporate Governance Guidelines.
Director and Officer Questionnaires are sent annually to each Non-Employee Director. The questionnaires verify all stock ownership numbers as of the date of the mailing.
NON-EMPLOYEE DIRECTOR COMPENSATION POLICY (12/04/2024) | PAGE 3
IX. Tax Matters
The Company shall have the right to deduct or withhold from all payments of compensation under the Policy any taxes required to be withheld with respect to such payments, if any. It is intended that this Policy be exempt from or comply with the requirements of Section 409A. To the maximum extent permitted, the Policy shall be limited, construed and interpreted in accordance with such intent. Notwithstanding the foregoing, the tax treatment of amounts paid under this Policy is not warranted or guaranteed, and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred on account of non-compliance with Section 409A. Notwithstanding anything herein to the contrary, to the extent compliance with the requirements of Treas. Reg. § 1.409A-3(i)(2) is necessary to avoid the application of an additional tax under Section 409A, shares or other amounts that are otherwise issuable or payable upon a Non-Employee Director’s “separation from service” will be deferred (without interest) and issued or paid immediately following that six-month period (or if sooner, upon the Non-Employee Director’s death).
X. Interpretation; Review of Policy
The Compensation & Organization Committee is authorized to interpret and construe this Policy and to make all determinations necessary, appropriate, or advisable for the administration of this Policy. Any interpretation made by the Compensation & Organization Committee shall be final, conclusive, and binding.
The Compensation & Organization Committee shall review this Policy at least annually and may recommend any modifications to the Board. The Board will determine any changes to be made to this Policy based on the Compensation & Organization Committee's recommendations.
Adopted by the Board of Directors of Rogers Corporation on December 4, 2024.
XI. Revision History
| Revision Date | Description | Approved By | ||||||
| 12/04/2024 | Initial Version | Board of Directors | ||||||
NON-EMPLOYEE DIRECTOR COMPENSATION POLICY (12/04/2024) | PAGE 4
Exhibit 19
Insider Trading Policy
1.0Purpose
Officers and employees of Rogers Corporation and its subsidiaries (referred to collectively in this policy as “the company”), as well as company consultants and contractors and members of the Board of Directors, may become aware of material, nonpublic information regarding the company and its business partners during the normal course of their employment or other relationship with the company. This policy refers to each of these persons as an “insider.” Each insider has a responsibility to maintain this information in strict confidence and use this information only in furtherance of Rogers’ legitimate business objectives.
Insider trading violations may occur when an insider purchases or sells securities while in possession of material, nonpublic information about a company or its securities or “tips” other parties (including through recommendations and opinions) about such material nonpublic information, thereby allowing them to purchase or sell securities while in possession of such information.
Pursuant to its Code of Business Ethics, Rogers prohibits unauthorized disclosure of any nonpublic information and misuse of material, nonpublic information in securities trading. The purpose of this policy is to supplement the general policies set forth in the Code of Business Ethics by providing a framework to assist insiders in complying with applicable insider trading laws, including during the sensitive periods around the end of fiscal quarters when insiders often possess material, nonpublic information about the company’s expected financial results for the quarter.
It is important to note that transactions involving the company's securities during a permitted trading window defined in this policy should not be considered a "safe harbor." Insiders are generally prohibited from engaging in any transactions involving the company’s securities while possessing material, nonpublic information regarding the company or its securities.1 Insiders are expected to use good judgment at all times and consult with the company’s Insider Trading Compliance Officer if they have any questions regarding this policy or any particular transaction.
2.0Applicability
This policy covers insiders as well as their family members. It is also intended to apply to all types of transactions involving the purchase or sale of the company’s securities, such as open market transactions (including limit orders), private transactions (including gifts), transactions in securities linked to the company’s common stock, and elections under the employee stock purchase plan (“ESPP”) (While there is no longer an option to purchase company stock in the
1 There are limited situations in which transactions may be permitted, for example, transactions completed under an approved Rule 10b5-1 trading plan. See Section 5.4 for details.
INSIDER TRADING POLICY (10/02/2024) | PAGE 1
401(k) plan, this policy is applicable to the sale of any company stock held in employee 401(k) plans.)
Further, the company’s general policies regarding insider trading likewise apply to transactions involving the purchase or sale of securities of certain other companies, including the company’s business partners, such as customers, vendors and suppliers, as well as competitors, while in possession of material, nonpublic information regarding these business partners that was obtained in the course of employment with, or the performance of services on behalf of, the company. Accordingly, insiders should treat material, nonpublic information about the company's business partners or their securities with the same care required with respect to information related directly to the company.
3.0Responsibility
Each insider has the individual responsibility to comply with insider trading laws and this policy. Such compliance may, for example, require an insider to forego a proposed transaction in the company's securities even if he or she planned to make the transaction before learning of material, nonpublic information regarding the company or its securities and even though the insider believes he or she may suffer an economic loss or forego anticipated profit by waiting to effect the transaction.
4.0Definitions
4.1“Insider” has the meaning set forth in Section 1.
4.2A “restricted insider” means each of the following individuals:
• members of the company’s Board of Directors,
• Executive Officers (as designated by the Board of Directors),
• Members of the following departments: Finance, Legal & Compliance, Investor Relations and Corporate Development, and
• such other individuals as the Insider Trading Compliance Officer may designate from time to time.
4.3Information should be regarded as “nonpublic” if it has not been previously disclosed to the general public or disseminated in a manner making it available to the general public. The company typically discloses information to the general public through means such as a press release distributed through a broad-based newswire service, a publicly available news conference or inclusion in reports publicly filed with the U.S. Securities and Exchange Commission. Disclosure is generally deemed to be publicly disseminated when the information has been available long enough to permit the investing public to consider the information. Generally, one full business day after public release is deemed sufficient for investor absorption and evaluation, but in certain cases, it may be necessary to allow additional time.
4.4Information should be regarded as “material” if there is a substantial likelihood that it would be considered important to a reasonable investor in making an investment decision regarding the purchase or sale of a company's securities. While it may be difficult in certain circumstances under this standard to determine whether particular information is material, there are certain types of information that are particularly sensitive and, as a general rule, should always be considered material, such as:
INSIDER TRADING POLICY (10/02/2024) | PAGE 2
• Financial results, including projections of financial results.
• Changes in important operating metrics, like capacity and production.
• Execution or termination of important contracts with business partners or the addition or loss of an important customer, supplier or other counterparty.
• Pending or proposed mergers or acquisitions or dispositions of material assets.
• Important developments related to intellectual property.
• Changes in dividend policy.
• Changes in capital structure, like stock splits and anticipated equity or debt offerings.
• Developments with respect to material legal proceedings or investigations, including those involving large litigation exposure.
• Major changes in senior management.
• Major cybersecurity incidents.
4.5A “permitted trading window” means a period described in Section 5.2 during which restricted insiders may engage in transactions involving the purchase or sale of the company’s securities.
4.6A “Rule 10b5-1 trading plan” means a pre-set trading plan or arrangement established under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.
4.7A “non-Rule 10b5-1 trading arrangement” has the meaning set forth in Item 408(c) of Regulation S-K.
4.8The “Insider Trading Compliance Officer” means the officer designated in Section 5.5 to administer this policy and undertake the specific duties described in such section.
5.0Procedures
5.1Prohibited Activities
A.Insider Trading and Unauthorized Disclosure. Insiders are prohibited from engaging in any transaction involving the purchase or sale of Rogers’ securities, including any offer to purchase or sell, while possessing material, nonpublic information regarding the company or its securities. Restricted insiders are further prohibited from engaging in any such transactions except during permitted trading windows, as further described in Section 5.2.
Insiders are also prohibited from making unauthorized disclosure of nonpublic information about the company or its securities that has been obtained or is being used in breach of a duty to maintain the information in confidence, including “tipping” third parties so that they may trade on such information.
INSIDER TRADING POLICY (10/02/2024) | PAGE 3
Note that these prohibitions apply even to information about the company learned inadvertently, such as by overhearing a conversation outside the workplace.
B.Rule 10b5-1 Trading Plans. Restricted insiders are prohibited from entering into, terminating or otherwise modifying any Rule 10b5-1 trading plan or any non-Rule 10b5-1 trading arrangement, except in accordance with the terms and conditions set forth in Sections 5.2 and 5.3.
C.Short Sale and Derivative Transactions. Insiders are prohibited from engaging in speculative transactions involving Rogers’ securities, including short sales, the purchase or sale of call or put options or collars, and other derivative transactions.
D.Hedging and Pledging Transactions. Members of the company’s Board of Directors as well as executive officers are prohibited from engaging in (1) hedging transactions with respect to Rogers’ securities, including the sale of covered calls and the use of collars, and (2) purchasing or holding Rogers’ securities in a margin account or pledging Rogers’ securities as collateral for a loan.
5.2Permitted Trading Windows
Restricted insiders may only engage in transactions involving the purchase or sale of the company’s securities, or enter into, terminate or otherwise modify a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement, during a permitted trading window, typically the period commencing at the opening of regular trading on the second trading day after the public release of the Company’s quarterly earnings results and ending at the close of business four weeks prior to the close of the Company’s then-current fiscal quarter. Notwithstanding whether a permitted trading window is open, no insider may engage in transactions involving the company’s securities while possessing material, nonpublic information regarding the company or its securities.
Permitted trading windows do not open automatically and may be opened only by the Insider Trading Compliance Officer, who has authority to operate the permitted trading windows in his or her discretion (including, delaying the opening of a window, closing it early or declining to open it) based upon business or other developments. The Insider Trading Compliance Officer will notify restricted insiders in writing regarding the opening, closing or modification of any permitted trading window.
Insiders who are not otherwise restricted insiders are encouraged to refrain from trading in Rogers’ securities except during permitted trading windows to avoid the appearance of improper trading.
5.3Pre-Clearance of Transactions/Approval of 10b5-1 Trading Plans
Even during permitted trading windows, directors, executive officers and other restricted insiders who are also required to file Section 16 reports with the SEC regarding their ownership and transactions in the company’s stock must obtain pre-clearance from the Insider Trading Compliance Officer before (1) engaging in any transaction involving the company’s securities or (2) establishing, terminating or otherwise modifying a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading
INSIDER TRADING POLICY (10/02/2024) | PAGE 4
arrangement. Note, however, that pre-clearance of transactions executed under an approved Rule 10b5-1 trading plan is not required.
A written pre-clearance request should be submitted to the Insider Trading Compliance Officer at least two business days before the proposed trade, with the restricted insider confirming in the request that he or she (1) has reviewed this policy and (2) is not aware of any material, nonpublic information about Rogers or its securities. The Insider Trading Compliance Officer will provide written approval or denial of the pre-clearance request. In addition, in order to qualify for pre-clearance, a Rule 10b5-1 trading plan must comply with the guidelines set forth in Appendix 1.
If a proposed transaction receives pre-clearance, the pre-cleared transaction must be effected by the close of business on the tenth business day following receipt of pre-clearance. Notwithstanding pre-clearance, a restricted insider may not complete a transaction if (1) the restricted insider becomes aware of material, nonpublic information regarding the company or its securities before it is executed, (2) the Insider Trading Compliance Officer advises the restricted insider that the pre-clearance has been revoked prior to that time, or (3) the pre-cleared trade has not been executed prior to the closing of the permitted trading window. In the case of a limit order or a good-till-cancelled order, the order must be either filled or cancelled by the tenth business day following receipt of pre-clearance. Transactions not effected within this period require new pre-clearance according to the process described above.
5.4Limited Exceptions
A.Rule 10b5-1 Trading Plans. Insiders are permitted to effect transactions in Rogers’ securities pursuant to existing Rule 10b5-1 trading plans, including transactions outside of a permitted trading window, provided the Insider Trading Compliance Officer pre-cleared the Rule 10b5-1 trading plan, and any amendment or modification thereto, under Section 5.3.
B.ESPP. Insiders are permitted to effect transactions in the company’s stock pursuant to an existing ESPP election. However, the initiation of an ESPP election, and any adjustments to an existing ESPP election, must be made while not in possession of material, nonpublic information and, for restricted insiders, only during permitted trading windows pursuant to Section 5.2 (with pre-clearance for Section 16 reporting individuals pursuant to Section 5.3). Note, however, that this policy as well as ESPP program restrictions remain applicable to the sale of company shares acquired through the ESPP.
C.Other Policy Exceptions. The following transactions are also exempt from the policy:
• the exercise of stock options for cash under the company’s equity plans,
• transactions with the company that are undertaken to satisfy tax obligations, such as those related to the vesting of restricted stock units and the net issuance of shares, which effectively involves disposing of vested shares to the company, and
INSIDER TRADING POLICY (10/02/2024) | PAGE 5
• transactions in mutual funds, index funds, or similar highly diversified publicly offered or traded investment vehicles that hold shares of Rogers securities or securities of the company’s business partners.
Note, however, that the following transactions remain subject to the policy:
• the exercise of stock options through the open-market sale of capital stock in order to fund the option exercise (often referred to as a “broker-assisted cashless exercise”),
• intra-plan transfers out of the Rogers’ stock fund of the 401(k) plan, and
• borrowing money against a 401(k) plan account if the loan could result in liquidation of all or a portion of the balance in the Company stock fund.
5.5Insider Trading Compliance Officer
The company's General Counsel will serve as its Insider Trading Compliance Officer. The duties of the Insider Trading Compliance Officer include the following:
A.Identify the restricted insiders and notify them of their designation.
B.Distribute periodic reminders to the restricted insiders of the dates that the permitted trading windows described in Section 5.2 begin and end.
C.Evaluate and, as appropriate, pre-clear transactions involving the company’s securities as described in Section 5.3.
D.Evaluate and, as appropriate, approve Rule 10b5-1 trading plans and non-Rule 10b5-1 trading arrangements (including modifications to, or terminations of, such plans or arrangements) as described in Section 5.3.
E.Provide assistance as needed to insiders in preparing and filing Section 16 reports (Forms 3, 4 and 5), and periodically remind insiders subject to Section 16 of their reporting obligations.
F.Perform periodic cross-checks of available materials, which may include Forms 3, 4 and 5, Forms 144, officer's and director's questionnaires, and reports received from the company's stock administrator and transfer agent, to determine trading activity by restricted insiders.
G.Periodically educate all insiders, including new insiders, about this policy and the related confidentiality and insider trading provisions of the Code of Business Ethics.
H.Distribute this policy to restricted insiders on an annual basis.
I.Review the adequacy and effectiveness of this policy in achieving the purposes described in Section 1 and recommend changes, as appropriate, to the Audit Committee.
The Insider Trading Compliance Officer may, in his or her discretion, delegate his or her responsibilities under this policy. A designated delegate may perform such responsibilities in circumstances regarding the applicability of the policy to, or interpretation of the policy with respect to, the Insider Trading Compliance Officer and such officer’s family members, including pre-clearance of trades.
INSIDER TRADING POLICY (10/02/2024) | PAGE 6
Should the acting Insider Trading Compliance Officer seek to enter into any transaction that would require approval by the Insider Trading Compliance Officer under the terms of this policy, such approval must be submitted to and obtained from the Company’s Chief Financial Officer, who has the authority to grant such approvals when deemed appropriate under the terms hereof.
5.6Interpretation and Application
The Insider Trading Compliance Officer is responsible for interpreting or construing this policy. This policy is to be read in conjunction with the company’s other policies, including its Code of Business Ethics and Regulation FD Policy.
6.0Related Documentation
Rogers Corporation Code of Business Ethics and Regulation FD Policy.
7.0Revision History
| Revision Date | Description | Approved by | ||||||
| December 5, 2019 | Original adoption, replacing prior instructions relating to insider trading | Board of Directors | ||||||
| October 4, 2023 | Revised version, replacing original adoption | Board of Directors | ||||||
| October 2, 2024 | Revised version, replacing original adoption | Board of Directors | ||||||
INSIDER TRADING POLICY (10/02/2024) | PAGE 7
Appendix 1
Rule 10b5-1 Trading Plan Guidelines
1.Proposed Rule 10b5-1 trading plans must be fully completed, but not executed, and submitted to the Insider Trading Compliance Officer at least three business days before the close of a permitted trading window in order to allow for proper internal (Insider Trading Compliance Officer) and external (Schwab) processing.
2.For Company directors and officers, there must be a waiting period after execution and before effectiveness of a Rule 10b5-1 trading plan that is the longer of (A) 90 days or (B) two business days following the disclosure of the Company’s financial results on Form 10-K or Form 10-Q for the fiscal quarter in which the Rule 10b5-1 trading plan was executed. For all other individuals, there must be at least a 30-day waiting period after execution and before effectiveness of a Rule 10b5-1 plan.
3.The term of the Rule 10b5-1 trading plan must be no less than six months nor more than 24 months.
4.Multiple or overlapping Rule 10b5-1 trading plans are not permitted, except as specified under Rule 10b5-1.
5.Restricted insiders may not trade in company stock while a Rule 10b5-1 trading plan is effective, except pursuant to the terms of such plan.
6.The company’s version of the Schwab Rule 10b5-1 trading plan must be used.
7.Insiders adopting Rule 10b5-1 trading plans must also comply with all other legal requirements applicable to such plans, including for directors’ and executive and certain other officers’ required transaction disclosures in personal Section 16 reports.
Any modifications (including requests for termination or suspension) to an existing Rule 10b5-1 trading plan must follow these same guidelines (as applicable).
The company reserves the right to impose additional requirements or restrictions related to Rule 10b5-1 trading plans at any time.
INSIDER TRADING POLICY (10/02/2024) | PAGE 8
Exhibit 21
ROGERS CORPORATION AND CONSOLIDATED SUBSIDIARIES
Subsidiaries of the Registrant
| Company | Percentage of Voting Securities Owned | Jurisdiction of Incorporation or Organization | ||||||
| World Properties, Inc. | 100% | Illinois | ||||||
| Rogers Japan, Inc. | 100% | Delaware | ||||||
| Rogers Southeast Asia, Inc. | 100% | Delaware | ||||||
| Rogers Taiwan, Inc. | 100% | Delaware | ||||||
| Rogers Technologies Singapore, Inc. | 100% | Singapore | ||||||
| Rogers KF, Inc. | 100% | Delaware | ||||||
| Rogers Korea, Inc. | 100% | Korea | ||||||
| Arlon MED International, LLC. | 100% | Delaware | ||||||
| Rogers Polymer Material (Suzhou) Co., Ltd. | 100% | China | ||||||
| Rogers Technologies (Suzhou) Co., Ltd. | 100% | China | ||||||
| Rogers Electronics Materials Technologies (Suzhou) Co., Ltd. | 100% | China | ||||||
| Rogers Advanced Materials Technology (Suzhou) Co., Ltd. | 100% | China | ||||||
| Utis Co., Ltd. | 100% | South Korea | ||||||
| Rogers New Territories Corporation, Ltd. | 100% | Hong Kong | ||||||
| Rogers Asia Holding Company, Ltd. | 100% | Hong Kong | ||||||
| Rogers Pacific, Ltd. | 100% | Hong Kong | ||||||
| Rogers BV | 100% | Belgium | ||||||
| Rogers GmbH | 100% | Germany | ||||||
| Rogers Germany GmbH | 100% | Germany | ||||||
| Rogers Hungary KfT | 100% | Hungary | ||||||
| Rogers U.K., Ltd. | 100% | England | ||||||
| Silicone Engineering, Ltd. | 100% | England | ||||||
| Rogers Finance (Luxembourg) Sarl | 100% | Luxembourg | ||||||
| Rogers Luxembourg Sarl | 100% | Luxembourg | ||||||
| Rogers Benelux Sarl | 100% | Luxembourg | ||||||
| Rogers Finance (Ireland) Unlimited Company | 100% | Ireland | ||||||
| Rogers Investment (Singapore) Pte., Ltd. | 100% | Singapore | ||||||
| Rogers Worldwide, LLC. | 100% | Delaware | ||||||
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-231459) of Rogers Corporation of our report dated February 26, 2025, relating to the financial statements, financial statement schedules and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.
/s/ PricewaterhouseCoopers LLP
Phoenix, Arizona
February 26, 2025
Exhibit 31.1
CERTIFICATIONS
I, R. Colin Gouveia, certify that:
1.I have reviewed this Annual Report on Form 10-K of Rogers Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Dated: February 26, 2025 | ||
| /s/ R. Colin Gouveia | ||
| R. Colin Gouveia | ||
| President and Chief Executive Officer Principal Executive Officer | ||
Exhibit 31.2
CERTIFICATIONS
I, Laura Russell, certify that:
1.I have reviewed this Annual Report on Form 10-K of Rogers Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Dated: February 26, 2025 | ||
| /s/ Laura Russell | ||
| Laura Russell | ||
| Senior Vice President, Chief Financial Officer and Treasurer Principal Financial Officer | ||
Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Rogers Corporation, a Massachusetts corporation (the “Corporation”), does hereby certify that:
The Annual Report on Form 10-K for the year ended December 31, 2024 (the “Form 10-K”) of the Corporation fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Corporation.
| /s/ R. Colin Gouveia | ||
| R. Colin Gouveia | ||
| President and Chief Executive Officer Principal Executive Officer | ||
| February 26, 2025 | ||
| /s/ Laura Russell | ||
| Laura Russell | ||
Senior Vice President, Chief Financial Officer and Treasurer Principal Financial Officer | ||
| February 26, 2025 | ||