UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2022~~2023


☐			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

ROGERS CORPORATION

(Exact Name of Registrant as Specified in its Charter)


Massachusetts			06-0513860
(State or Other Jurisdiction of			(I. R. S. Employer Identification No.)
Incorporation or Organization)

2225 W. Chandler Blvd., Chandler, Arizona 85224-6155

(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
Common Stock,	par value $1.00 per share	ROG	New York Stock Exchange

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.


Large accelerated filer	☒	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 is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s capital stock as of ~~November 4, 2022~~October 23, 2023 was ~~18,811,874.~~18,616,519.

ROGERS CORPORATION

FORM 10-Q

September 30, ~~2022~~2023

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Refer to “Forward-Looking Statements” in Item 2, Management’s Discussion and Analysis of Results of Operations and Financial Position for additional information.

Part I – Financial Information

Item 1. Financial Statements

ROGERS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars and shares in thousands, except per share amounts)


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021			September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Net sales	Net sales	$	247,231	$	238,263	$	747,467	$	702,434	Net sales	$	229,148	$	247,231	$	703,816	$	747,467
Cost of sales	Cost of sales	169,167		146,609		497,491		431,448		Cost of sales	148,788		169,167		464,138		497,491
Gross margin	Gross margin	78,064		91,654		249,976		270,986		Gross margin	80,360		78,064		239,678		249,976

Selling, general and administrative expenses	Selling, general and administrative expenses	50,653		47,886		164,496		135,258		Selling, general and administrative expenses	44,336		50,653		150,549		164,496
Research and development expenses	Research and development expenses	9,140		7,531		25,450		22,195		Research and development expenses	7,827		9,140		25,511		25,450
Restructuring and impairment charges	Restructuring and impairment charges	373		1,007		1,119		3,260		Restructuring and impairment charges	1,921		373		16,361		1,119
Other operating (income) expense, net	Other operating (income) expense, net	(578)		1,431		(2,852)		3,536		Other operating (income) expense, net	(846)		(578)		(7,507)		(2,852)
Operating income	Operating income	18,476		33,799		61,763		106,737		Operating income	27,122		18,476		54,764		61,763

Equity income in unconsolidated joint ventures	Equity income in unconsolidated joint ventures	1,162		1,773		4,237		5,884		Equity income in unconsolidated joint ventures	641		1,162		1,559		4,237
Pension settlement charges		—		(534)		—		(534)

Other income (expense), net	Other income (expense), net	977		(469)		1,563		3,738		Other income (expense), net	761		977		9		1,563
Interest expense, net	Interest expense, net	(2,942)		(441)		(5,559)		(1,452)		Interest expense, net	(2,328)		(2,942)		(8,627)		(5,559)
Income before income tax expense		17,673		34,128		62,004		114,373
Income tax expense		2,835		8,999		12,683		29,371
Income before income taxes										Income before income taxes	26,196		17,673		47,705		62,004
Income tax expense (benefit)										Income tax expense (benefit)	7,161		2,835		14,311		12,683
Net income	Net income	$	14,838	$	25,129	$	49,321	$	85,002	Net income	$	19,035	$	14,838	$	33,394	$	49,321

Basic earnings per share	Basic earnings per share	$	0.79	$	1.34	$	2.62	$	4.54	Basic earnings per share	$	1.02	$	0.79	$	1.79	$	2.62
Diluted earnings per share	Diluted earnings per share	$	0.78	$	1.33	$	2.60	$	4.51	Diluted earnings per share	$	1.02	$	0.78	$	1.79	$	2.60

Shares used in computing:	Shares used in computing:									Shares used in computing:
Basic earnings per share	Basic earnings per share	18,818		18,740		18,804		18,727		Basic earnings per share	18,627		18,818		18,619		18,804
Diluted earnings per share	Diluted earnings per share	18,999		18,874		18,997		18,831		Diluted earnings per share	18,685		18,999		18,668		18,997

The accompanying notes are an integral part of the condensed consolidated financial statements.

ROGERS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(Dollars in thousands)


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021			September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Net income	Net income	$	14,838	$	25,129	$	49,321	$	85,002	Net income	$	19,035	$	14,838	$	33,394	$	49,321

Foreign currency translation adjustment	Foreign currency translation adjustment	(35,035)		(8,126)		(80,383)		(18,627)		Foreign currency translation adjustment	(17,906)		(35,035)		(3,860)		(80,383)
Pension and other postretirement benefits:	Pension and other postretirement benefits:									Pension and other postretirement benefits:

Actuarial net loss incurred, net of tax (Note 4)	Actuarial net loss incurred, net of tax (Note 4)	—		—		(15)		—		Actuarial net loss incurred, net of tax (Note 4)	—		—		—		(15)
Amortization of loss, net of tax (Note 4)	Amortization of loss, net of tax (Note 4)	87		52		260		173		Amortization of loss, net of tax (Note 4)	93		87		280		260

Other comprehensive income (loss)	Other comprehensive income (loss)	(34,948)		(8,074)		(80,138)		(18,454)		Other comprehensive income (loss)	(17,813)		(34,948)		(3,580)		(80,138)
Comprehensive income (loss)	Comprehensive income (loss)	$	(20,110)	$	17,055	$	(30,817)	$	66,548	Comprehensive income (loss)	$	1,222	$	(20,110)	$	29,814	$	(30,817)

The accompanying notes are an integral part of the condensed consolidated financial statements.

ROGERS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Unaudited)

(Dollars and shares in thousands, except par value)

September 30, 2022 December 31, 2021
Assets
Current assets
Cash and cash equivalents $ 236,461 $ 232,296
Accounts receivable, less allowance for credit losses of $1,227 and $1,223 162,929 163,092
Contract assets 41,809 36,610
Inventories 173,610 133,384
Prepaid income taxes 4,008 1,921
Asbestos-related insurance receivables, current portion 3,361 3,176
Other current assets 15,500 13,586
Total current assets 637,678 584,065
Property, plant and equipment, net of accumulated depreciation of $368,270 and $367,850 374,984 326,967
Investments in unconsolidated joint ventures 12,974 16,328
Deferred income taxes 41,873 32,671
Goodwill 338,312 370,189
Other intangible assets, net of amortization 150,148 176,353
Pension assets 5,461 5,123
Asbestos-related insurance receivables, non-current portion 55,516 59,391
Other long-term assets 8,844 27,479
Total assets $ 1,625,790 $ 1,598,566
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable $ 57,200 $ 64,660
Accrued employee benefits and compensation 35,978 48,196
Accrued income taxes payable 4,046 9,632
Asbestos-related liabilities, current portion 4,048 3,841
Other accrued liabilities 36,644 37,620
Total current liabilities 137,916 163,949
Borrowings under revolving credit facility 290,000 190,000
Pension and other postretirement benefits liabilities 1,495 1,618
Asbestos-related liabilities, non-current portion 60,167 64,491
Non-current income tax 8,013 7,131
Deferred income taxes 24,599 29,451
Other long-term liabilities 13,747 23,031
Commitments and contingencies (Note 10 and Note 12)
Shareholders’ equity
Capital stock - $1 par value; 50,000 authorized shares; 18,812 and 18,730 shares issued and outstanding 18,812 18,730
Additional paid-in capital 165,276 163,583
Retained earnings 1,031,146 981,825
Accumulated other comprehensive loss (125,381) (45,243)
Total shareholders' equity 1,089,853 1,118,895
Total liabilities and shareholders' equity $ 1,625,790 $ 1,598,566


	September 30, 2023		December 31, 2022
Assets
Current assets
Cash and cash equivalents	$	126,455	$	235,850
Accounts receivable, less allowance for credit losses of $1,147 and $1,007	185,750		177,413
Contract assets	46,476		38,853
Inventories	157,073		182,402
Prepaid income taxes	3,337		4,042
Asbestos-related insurance receivables, current portion	3,881		3,881

Other current assets	31,825		17,426
Total current assets	554,797		659,867
Property, plant and equipment, net of accumulated depreciation of $391,898 and $381,584	341,696		358,415
Investments in unconsolidated joint ventures	10,346		14,082
Deferred income taxes	58,922		50,649
Goodwill	352,214		352,365
Other intangible assets, net of amortization	124,496		133,724
Pension assets	5,523		5,251
Asbestos-related insurance receivables, non-current portion	55,926		55,926
Other long-term assets	16,946		15,935
Total assets	$	1,520,866	$	1,646,214
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	46,852	$	57,342
Accrued employee benefits and compensation	33,778		34,158
Accrued income taxes payable	7,018		5,504
Asbestos-related liabilities, current portion	4,968		4,968
Finance lease obligations, current portion	345		498
Other accrued liabilities	23,176		40,067
Total current liabilities	116,137		142,537
Borrowings under revolving credit facility	80,000		215,000
Pension and other postretirement benefits liabilities	1,618		1,501
Asbestos-related liabilities, non-current portion	59,739		60,065
Finance lease obligations, non-current portion	1,147		1,295
Non-current income tax	9,560		9,985
Deferred income taxes	23,720		23,557
Other long-term liabilities	18,333		19,808
Commitments and contingencies (Note 10 and Note 12)
Shareholders’ equity
Capital stock - $1 par value; 50,000 authorized shares; 18,616 and 18,574 shares issued and outstanding	18,616		18,574
Additional paid-in capital	148,992		140,702
Retained earnings	1,131,848		1,098,454
Accumulated other comprehensive loss	(88,844)		(85,264)
Total shareholders' equity	1,210,612		1,172,466
Total liabilities and shareholders' equity	$	1,520,866	$	1,646,214

The accompanying notes are an integral part of the condensed consolidated financial statements.

ROGERS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)


		Nine Months Ended					Nine Months Ended
		September 30, 2022		September 30, 2021			September 30, 2023		September 30, 2022
Operating Activities:	Operating Activities:					Operating Activities:
Net income	Net income	$	49,321	$	85,002	Net income	$	33,394	$	49,321
Adjustments to reconcile net income to cash provided by operating activities:
Adjustments to reconcile net income (loss) to cash provided by operating activities:						Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	34,352		31,121		Depreciation and amortization	39,823		34,352
Equity compensation expense	Equity compensation expense	11,576		13,147		Equity compensation expense	10,874		11,576
Deferred income taxes	Deferred income taxes	(14,076)		(1,267)		Deferred income taxes	(8,297)		(14,076)
Equity in undistributed income of unconsolidated joint ventures	Equity in undistributed income of unconsolidated joint ventures	(4,237)		(5,884)		Equity in undistributed income of unconsolidated joint ventures	(1,559)		(4,237)
Dividends received from unconsolidated joint ventures	Dividends received from unconsolidated joint ventures	4,677		4,965		Dividends received from unconsolidated joint ventures	4,254		4,677
Pension settlement charges (benefits)				534

Pension and other postretirement benefits	Pension and other postretirement benefits	23		(300)		Pension and other postretirement benefits	205		23

Gain on sale of business						Gain on sale of business	(704)		—
(Gain) loss on sale or disposal of property, plant and equipment	(Gain) loss on sale or disposal of property, plant and equipment	(15)		(673)		(Gain) loss on sale or disposal of property, plant and equipment	(679)		(15)
Impairment charges	Impairment charges	212		385		Impairment charges	—		212
UTIS fire fixed asset and inventory write-offs	UTIS fire fixed asset and inventory write-offs	199		1,254		UTIS fire fixed asset and inventory write-offs	—		199
Provision (benefit) for credit losses	Provision (benefit) for credit losses	331		(310)		Provision (benefit) for credit losses	124		331
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Accounts receivable	Accounts receivable	(23,759)		(32,254)		Accounts receivable	(17,531)		(23,759)
Proceeds from insurance/government subsidies related to operations	Proceeds from insurance/government subsidies related to operations	1,153		264		Proceeds from insurance/government subsidies related to operations	5,705		1,153
Contract assets	Contract assets	(9,320)		(6,136)		Contract assets	(8,635)		(9,320)
Inventories	Inventories	(47,500)		(19,386)		Inventories	22,427		(47,500)
Pension and postretirement benefit contributions	Pension and postretirement benefit contributions	(141)		(156)		Pension and postretirement benefit contributions	(9)		(141)
Other current assets	Other current assets	(4,919)		(144)		Other current assets	2,075		(4,919)
Accounts payable and other accrued expenses	Accounts payable and other accrued expenses	(12,083)		27,495		Accounts payable and other accrued expenses	(20,205)		(12,083)
Other, net	Other, net	16,040		8,458		Other, net	(1,740)		16,040
Net cash provided by operating activities	Net cash provided by operating activities	1,834		106,115		Net cash provided by operating activities	59,522		1,834

Investing Activities:	Investing Activities:					Investing Activities:
Acquisition of business, net of cash received	Acquisition of business, net of cash received	(1,300)		—		Acquisition of business, net of cash received	—		(1,300)
Disposition of business						Disposition of business	1,693		—
Capital expenditures	Capital expenditures	(87,000)		(43,411)		Capital expenditures	(34,539)		(87,000)
Proceeds from the sale of property, plant and equipment, net	Proceeds from the sale of property, plant and equipment, net	—		714		Proceeds from the sale of property, plant and equipment, net	745		7,252
Proceeds from insurance claims	Proceeds from insurance claims	7,252		—		Proceeds from insurance claims	1,755		—

Net cash used in investing activities	Net cash used in investing activities	(81,048)		(42,697)		Net cash used in investing activities	(30,346)		(81,048)

Financing Activities:	Financing Activities:					Financing Activities:
Proceeds from borrowings under revolving credit facility	Proceeds from borrowings under revolving credit facility	100,000		—		Proceeds from borrowings under revolving credit facility	—		100,000
Repayment of debt principal and finance lease obligations	Repayment of debt principal and finance lease obligations	(202)		(29,655)		Repayment of debt principal and finance lease obligations	(135,328)		(202)
Line of credit issuance costs						Line of credit issuance costs	(1,742)		—
Payments of taxes related to net share settlement of equity awards	Payments of taxes related to net share settlement of equity awards	(10,751)		(2,752)		Payments of taxes related to net share settlement of equity awards	(2,542)		(10,751)
Proceeds from issuance of shares to employee stock purchase plan	Proceeds from issuance of shares to employee stock purchase plan	950		1,563		Proceeds from issuance of shares to employee stock purchase plan	—		950

Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	89,997		(30,844)		Net cash provided by (used in) financing activities	(139,612)		89,997

Effect of exchange rate fluctuations on cash	Effect of exchange rate fluctuations on cash	(6,618)		(3,458)		Effect of exchange rate fluctuations on cash	1,041		(6,618)

Net (decrease) increase in cash and cash equivalents		4,165		29,116
Net increase (decrease) in cash and cash equivalents						Net increase (decrease) in cash and cash equivalents	(109,395)		4,165
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	232,296		191,785		Cash and cash equivalents at beginning of period	235,850		232,296
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	236,461	$	220,901	Cash and cash equivalents at end of period	$	126,455	$	236,461

Supplemental Disclosures:	Supplemental Disclosures:					Supplemental Disclosures:
Accrued capital additions	Accrued capital additions	$	9,330	$	6,447	Accrued capital additions	$	2,493	$	9,330
Cash paid during the year for:	Cash paid during the year for:					Cash paid during the year for:
Interest, net of amounts capitalized	Interest, net of amounts capitalized	$	5,491	$	1,285	Interest, net of amounts capitalized	$	8,851	$	5,491
Income taxes	Income taxes	$	19,617	$	25,867	Income taxes	$	6,261	$	19,617

The accompanying notes are an integral part of the condensed consolidated financial statements.

ROGERS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

(Dollars and shares in thousands)


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021			September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Capital Stock	Capital Stock									Capital Stock
Balance, beginning of period	Balance, beginning of period	$	18,811	$	18,722	$	18,730	$	18,677	Balance, beginning of period	$	18,616	$	18,811	$	18,574	$	18,730
Shares issued for vested restricted stock units, net of shares withheld for taxes	Shares issued for vested restricted stock units, net of shares withheld for taxes	1		1		69		29		Shares issued for vested restricted stock units, net of shares withheld for taxes	—		1		35		69
Shares issued for employee stock purchase plan	Shares issued for employee stock purchase plan	—		6		6		13		Shares issued for employee stock purchase plan	—		—		—		6
Shares issued to directors	Shares issued to directors	—		—		7		10		Shares issued to directors	—		—		7		7

Balance, end of period	Balance, end of period	18,812		18,729		18,812		18,729		Balance, end of period	18,616		18,812		18,616		18,812
Additional Paid-In Capital	Additional Paid-In Capital									Additional Paid-In Capital
Balance, beginning of period	Balance, beginning of period	161,885		154,330		163,583		147,961		Balance, beginning of period	145,219		161,885		140,702		163,583
Shares issued for vested restricted stock units, net of shares withheld for taxes	Shares issued for vested restricted stock units, net of shares withheld for taxes	(129)		(69)		(10,820)		(2,781)		Shares issued for vested restricted stock units, net of shares withheld for taxes	(29)		(129)		(2,577)		(10,820)
Shares issued for employee stock purchase plan	Shares issued for employee stock purchase plan	—		853		944		1,550		Shares issued for employee stock purchase plan	—		—		—		944
Shares issued to directors	Shares issued to directors	—		—		(7)		(10)		Shares issued to directors	—		—		(7)		(7)
Equity compensation expense	Equity compensation expense	3,520		4,753		11,576		13,147		Equity compensation expense	3,802		3,520		10,874		11,576

Balance, end of period	Balance, end of period	165,276		159,867		165,276		159,867		Balance, end of period	148,992		165,276		148,992		165,276
Retained Earnings	Retained Earnings									Retained Earnings
Balance, beginning of period	Balance, beginning of period	1,016,308		933,565		981,825		873,692		Balance, beginning of period	1,112,813		1,016,308		1,098,454		981,825
Net income	Net income	14,838		25,129		49,321		85,002		Net income	19,035		14,838		33,394		49,321
Balance, end of period	Balance, end of period	1,031,146		958,694		1,031,146		958,694		Balance, end of period	1,131,848		1,031,146		1,131,848		1,031,146
Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss									Accumulated Other Comprehensive Loss
Balance, beginning of period	Balance, beginning of period	(90,433)		(29,955)		(45,243)		(19,575)		Balance, beginning of period	(71,031)		(90,433)		(85,264)		(45,243)
Other comprehensive income (loss)	Other comprehensive income (loss)	(34,948)		(8,074)		(80,138)		(18,454)		Other comprehensive income (loss)	(17,813)		(34,948)		(3,580)		(80,138)
Balance, end of period	Balance, end of period	(125,381)		(38,029)		(125,381)		(38,029)		Balance, end of period	(88,844)		(125,381)		(88,844)		(125,381)
Total Shareholders’ Equity	Total Shareholders’ Equity	$	1,089,853	$	1,099,261	$	1,089,853	$	1,099,261	Total Shareholders’ Equity	$	1,210,612	$	1,089,853	$	1,210,612	$	1,089,853

The accompanying notes are an integral part of the condensed consolidated financial statements.

ROGERS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Basis of Presentation

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.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information. Accordingly, these statements do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, the accompanying condensed consolidated financial statements include all normal recurring adjustments necessary for their fair presentation in accordance with GAAP. All significant intercompany balances and transactions have been eliminated.

Interim results are not necessarily indicative of results for a full year. For further information regarding our accounting policies, refer to the audited consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2021. Refer to the discussion below for our restructuring activities significant accounting policy.~~2022.

Note 2 – 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.

As a result of our pension termination and settlement efforts in late 2019 and the first half of 2020, we had a pension surplus investment balance, which was accounted for as an available-for-sale investment as of June 2020. At the end of April, 2022, the entirety of the balance was paid out as a one-time discretionary contribution to all participants of the Rogers Employees Savings Investment Plan. For additional information regarding this balance, refer to “Note 11 – Pension Benefits and Other Postretirement Benefits.” Available-for-sale investments measured at fair value on a recurring basis, categorized by the level of inputs used in the valuation, were as follows:

~~Available-for-Sale Investment at Fair Value as of September 30, 2022~~

~~(Dollars in thousands)~~

~~Level 1~~

~~Level 2~~

~~Level 3~~

~~Total~~

~~Pension surplus investment(1)~~

—

Available-for-Sale Investment at Fair Value as of December 31, 2021
(Dollars in thousands) Level 1 Level 2 Level 3 Total
Pension surplus investment(1)
$ 6,638 $ — $ — $ 6,638

~~(1)~~ This balance was invested in funds comprised of short-term cash and fixed income securities, and was recorded in the “Other long-term assets” line item in the condensed consolidated statements of financial position as of December 31, 2021. The fair value of this investment approximated its carrying value as of December 31, 2021.

From time to time we enter into various instruments that require fair value measurement, including foreign currency contracts and copper derivative contracts. Derivative instruments measured at fair value on a recurring basis, categorized by the level of inputs used in the valuation, were as follows:


	Derivative Instruments at Fair Value as of September 30, 2023
(Dollars in thousands)	Level 1		Level 2		Level 3		Total(1)
Foreign currency contracts	$	—	$	(53)	$	—	$	(53)
Copper derivative contracts	$	—	$	299	$	—	$	299

Derivative Instruments at Fair Value as of September 30, 2022
(Dollars in thousands) Level 1 Level 2 Level 3
Total(1)
Foreign currency contracts $ — $ 25 $ — $ 25
Copper derivative contracts $ — $ 189 $ — $ 189


		Derivative Instruments at Fair Value as of December 31, 2021									Derivative Instruments at Fair Value as of December 31, 2022
(Dollars in thousands)	(Dollars in thousands)	Level 1		Level 2		Level 3		Total(1)		(Dollars in thousands)	Level 1		Level 2		Level 3		Total(1)
Foreign currency contracts	Foreign currency contracts	$	—	$	(16)	$	—	$	(16)	Foreign currency contracts	$	—	$	(82)	$	—	$	(82)
Copper derivative contracts	Copper derivative contracts	$	—	$	1,344	$	—	$	1,344	Copper derivative contracts	$	—	$	500	$	—	$	500

(1) All balances were recorded in the “Other current assets” or “Other accrued liabilities” line items in the condensed consolidated statements of financial position.

For additional information on derivative contracts, refer to “Note 3 – Hedging Transactions and Derivative Financial Instruments.”

Note 3 – Hedging Transactions and Derivative Financial Instruments

We are exposed to certain risks related to our ongoing business operations. 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). We do not use derivative instruments for trading or speculative purposes. The valuation of derivative contracts used to manage each of ~~these~~foreign currency and commodity 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.

The guidance for the accounting and disclosure of derivatives and hedging transactions requires companies to recognize all of their derivative instruments as either assets or liabilities at fair value in the condensed consolidated statements of financial position. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies for hedge accounting treatment as defined under the applicable accounting guidance. For derivative instruments that are designated and qualify for hedge accounting treatment as cash flow hedges (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss) in the condensed consolidated statements of comprehensive income (loss). This gain or loss is reclassified into earnings in the same line item of the condensed consolidated statements of operations associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings.

Foreign Currency

During the three months ended September 30, ~~2022,~~2023, we entered into U.S. dollar, euro, ~~and~~ Korean won, 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 “Other income (expense), net” in our condensed consolidated statements of operations in the period in which the adjustment occurred.

As of September 30, ~~2022,~~2023, the notional values of the remaining foreign currency forward contracts were as follows:


Notional Values of Foreign Currency Derivatives
USD/CNH	$	~~14,173,529~~18,999,562
EUR/USD	€	~~4,984,006~~10,440,705
KRW/USD	₩	~~8,081,640,000~~3,994,650,000
JPY/EUR	¥	50,000,000

Commodity

As of September 30, ~~2022,~~2023, 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 “Other income (expense), net” in our condensed consolidated statements of operations in the period in which the adjustment occurred.

As of September 30, ~~2022,~~2023, the volume of our copper contracts outstanding was as follows:


Volume of Copper Derivatives
October ~~2022~~2023 - December ~~2022~~2023			69 metric tons per month
January ~~2023~~2024 - March ~~2023~~2024			69 metric tons per month
April ~~2023~~2024 - June ~~2023~~2024			69 metric tons per month
July ~~2023~~2024 - September ~~2023~~2024			69 metric tons per month

Effects on Financial Statements

The impacts from our derivative instruments on the statement of operations and statements of comprehensive income (loss) were as follows:

Three Months Ended Nine Months Ended
(Dollars in thousands) Financial Statement Line Item September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Foreign Currency Contracts
Contracts not designated as hedging instruments Other income (expense), net $ (101) $ (909) $ (1,019) $ (2,131)
Copper Derivative Contracts
Contracts not designated as hedging instruments Other income (expense), net $ (171) $ (775) $ (969) $ 3,085


		Three Months Ended				Nine Months Ended
(Dollars in thousands)	Financial Statement Line Item	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Foreign Currency Contracts
Contracts not designated as hedging instruments	Other income (expense), net	$	268	$	(101)	$	1,103	$	(1,019)
Copper Derivative Contracts
Contracts not designated as hedging instruments	Other income (expense), net	$	(182)	$	(171)	$	(602)	$	(969)

Note 4 – Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss by component were as follows:


(Dollars and accompanying footnotes in thousands)	(Dollars and accompanying footnotes in thousands)	Foreign Currency Translation Adjustments		Pension and Other Postretirement Benefits(1)		Total		(Dollars and accompanying footnotes in thousands)	Foreign Currency Translation Adjustments		Pension and Other Postretirement Benefits(1)		Total
Balance as of December 31, 2022								Balance as of December 31, 2022	$	(75,575)	$	(9,689)	$	(85,264)
Other comprehensive income (loss) before reclassifications								Other comprehensive income (loss) before reclassifications	(3,860)		—		(3,860)
Amounts reclassified from accumulated other comprehensive loss								Amounts reclassified from accumulated other comprehensive loss	—		280		280
Net current-period other comprehensive income (loss)								Net current-period other comprehensive income (loss)	(3,860)		280		(3,580)
Balance as of September 30, 2023								Balance as of September 30, 2023	$	(79,435)	$	(9,409)	$	(88,844)

Balance as of December 31, 2021	Balance as of December 31, 2021	$	(35,641)	$	(9,602)	$	(45,243)	Balance as of December 31, 2021	$	(35,641)	$	(9,602)	$	(45,243)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(80,383)		(15)		(80,398)		Other comprehensive income (loss) before reclassifications	(80,383)		(15)		(80,398)
Amounts reclassified from accumulated other comprehensive loss	Amounts reclassified from accumulated other comprehensive loss	—		260		260		Amounts reclassified from accumulated other comprehensive loss	—		260		260
Net current-period other comprehensive income (loss)	Net current-period other comprehensive income (loss)	(80,383)		245		(80,138)		Net current-period other comprehensive income (loss)	(80,383)		245		(80,138)
Balance as of September 30, 2022	Balance as of September 30, 2022	$	(116,024)	$	(9,357)	$	(125,381)	Balance as of September 30, 2022	$	(116,024)	$	(9,357)	$	(125,381)

Balance as of December 31, 2020		$	(10,571)	$	(9,004)	$	(19,575)
Other comprehensive income (loss) before reclassifications		(18,627)		—		(18,627)
Amounts reclassified from accumulated other comprehensive loss		—		173		173
Net current-period other comprehensive income (loss)		(18,627)		173		(18,454)
Balance as of September 30, 2021		$	(29,198)	$	(8,831)	$	(38,029)

(1) Net of taxes of $1,846 and $1,926 as of September 30, 2023 and December 31, 2022, respectively. Net of taxes of $2,056 and $2,125 as of September 30, 2022 and December 31, 2021, ~~respectively. Net of taxes of $1,902 and $1,951 as of September 30, 2021 and December 31, 2020,~~ respectively.

Note 5 – Inventories

Inventories, which are valued at the lower of cost or net realizable value, consisted of the following:


(Dollars in thousands)	(Dollars in thousands)	September 30, 2022		December 31, 2021		(Dollars in thousands)	September 30, 2023		December 31, 2022
Raw materials	Raw materials	$	81,797	$	60,208	Raw materials	$	71,133	$	87,851
Work-in-process	Work-in-process	44,235		29,078		Work-in-process	48,377		45,100
Finished goods	Finished goods	47,578		44,098		Finished goods	37,563		49,451
Total inventories	Total inventories	$	173,610	$	133,384	Total inventories	$	157,073	$	182,402

Note 6 – Goodwill and Other Intangible Assets

Goodwill

The changes in the net carrying amount of goodwill by operating segment were as follows:

(Dollars in thousands) Advanced Electronics Solutions Elastomeric Material Solutions Other Total
December 31, 2021 $ 119,567 $ 248,398 $ 2,224 $ 370,189
Purchase accounting adjustment — (925) — (925)
Foreign currency translation adjustment (9,552) (21,400) — $ (30,952)
September 30, 2022 $ 110,015 $ 226,073 $ 2,224 $ 338,312


(Dollars in thousands)	Advanced Electronics Solutions		Elastomeric Material Solutions		Other		Total
December 31, 2022	$	115,352	$	234,789	$	2,224	$	352,365


Foreign currency translation adjustment	(520)		369		—		$	(151)
September 30, 2023	$	114,832	$	235,158	$	2,224	$	352,214

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Other Intangible Assets

The gross and net carrying amounts, as well as the accumulated amortization of other intangible assets were as follows:


		September 30, 2022						December 31, 2021							September 30, 2023						December 31, 2022
(Dollars in thousands)	(Dollars in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		(Dollars in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer relationships	Customer relationships	$	186,799	$	82,103	$	104,696	$	198,095	$	77,870	$	120,225	Customer relationships	$	175,214	$	87,232	$	87,982	$	178,605	$	85,569	$	93,036
Technology	Technology	82,844		55,471		27,373		88,445		54,900		33,545		Technology	75,898		55,788		20,110		82,349		59,052		23,297
Trademarks and trade names	Trademarks and trade names	22,979		9,676		13,303		25,504		8,968		16,536		Trademarks and trade names	18,840		7,040		11,800		19,098		6,639		12,459
Covenants not to compete	Covenants not to compete	2,452		1,535		917		2,693		1,137		1,556		Covenants not to compete	1,479		1,051		428		1,919		1,199		720
Total definite-lived other intangible assets	Total definite-lived other intangible assets	295,074		148,785		146,289		314,737		142,875		171,862		Total definite-lived other intangible assets	271,431		151,111		120,320		281,971		152,459		129,512
Indefinite-lived other intangible asset	Indefinite-lived other intangible asset	3,859		—		3,859		4,491		—		4,491		Indefinite-lived other intangible asset	4,176		—		4,176		4,212		—		4,212
Total other intangible assets	Total other intangible assets	$	298,933	$	148,785	$	150,148	$	319,228	$	142,875	$	176,353	Total other intangible assets	$	275,607	$	151,111	$	124,496	$	286,183	$	152,459	$	133,724

In the table above, gross carrying amounts and accumulated amortization may differ from prior periods due to foreign exchange rate fluctuations.

Amortization expense was ~~$4.1~~$3.4 million and ~~$3.1~~$4.1 million for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$12.6~~$10.0 million and ~~$9.4~~$12.6 million for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The estimated future amortization expense is ~~$3.9~~$3.3 million for the remainder of ~~2022~~2023 and ~~$14.9~~$12.2 million, ~~$13.6~~$10.6 million, ~~$11.9~~$10.2 million and ~~$11.3~~$9.9 million for ~~2023,~~ 2024, 2025, 2026 and ~~2026,~~2027, respectively.

The weighted average amortization period as of September 30, ~~2022,~~2023, by definite-lived other intangible asset class, was as follows:


Definite-Lived Other Intangible Asset Class						Weighted Average Remaining Amortization Period
Customer relationships						~~7.8~~7.5 years
Technology						~~3.5~~3.4 years
Trademarks and trade names						~~2.1~~10.0 years
Covenants not to compete						~~1.0~~0.6 years
Total definite-lived other intangible assets						~~6.4~~7.0 years

Note 7 – 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 thousands, except per share amounts)	(Dollars and shares in thousands, except per share amounts)	Three Months Ended				Nine Months Ended				(Dollars and shares in thousands, except per share amounts)	Three Months Ended				Nine Months Ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021			September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Numerator:	Numerator:									Numerator:
Net income	Net income	$	14,838	$	25,129	$	49,321	$	85,002	Net income	$	19,035	$	14,838	$	33,394	$	49,321
Denominator:	Denominator:									Denominator:
Weighted-average shares outstanding - basic	Weighted-average shares outstanding - basic	18,818		18,740		18,804		18,727		Weighted-average shares outstanding - basic	18,627		18,818		18,619		18,804
Effect of dilutive shares	Effect of dilutive shares	181		134		193		104		Effect of dilutive shares	58		181		49		193
Weighted-average shares outstanding - diluted	Weighted-average shares outstanding - diluted	18,999		18,874		18,997		18,831		Weighted-average shares outstanding - diluted	18,685		18,999		18,668		18,997
Basic earnings per share	Basic earnings per share	$	0.79	$	1.34	$	2.62	$	4.54	Basic earnings per share	$	1.02	$	0.79	$	1.79	$	2.62
Diluted earnings per share	Diluted earnings per share	$	0.78	$	1.33	$	2.60	$	4.51	Diluted earnings per share	$	1.02	$	0.78	$	1.79	$	2.60

Dilutive shares are calculated using the treasury stock method and primarily include unvested restricted stock units. Anti-dilutive shares are excluded from the calculation of diluted shares and diluted earnings per share. For the three months ended September 30, 2023 and 2022, ~~and 2021, no~~8,000 shares and ~~1,994~~no shares were excluded, respectively.

1211

Note 8 – Capital Stock and Equity Compensation

Equity Compensation

Performance-Based Restricted Stock Units

As of September 30, ~~2022,~~2023, we had performance-based restricted stock units from ~~2021~~2023 and ~~2020~~2021 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, except as noted below in~~ ~~Chief Executive Officer’s 2021 Equity Award Grants~~.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 criterion: the three-year total shareholder return (TSR) on our capital stock as compared to that of a specified group of peer companies. The TSR measurement criterion of the awards is considered a market condition. As such, the fair value of this measurement criterion was 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.

The following table sets forth the assumptions used in the Monte Carlo calculation for each material award granted in ~~2021:~~2023:


			February ~~10, 2021~~9, 2023
Expected volatility			~~51.0%~~53.2%
Expected term (in years)			2.9
Risk-free interest rate			~~0.18%~~4.08%

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 the nine months ended September 30, ~~2022~~2023 is presented below:


			Performance-Based Restricted Stock Units
Awards outstanding as of December 31, ~~2021~~2022			~~114,554~~65,513
Awards granted			~~26,819~~50,551
Stock issued			~~(60,053)~~(8,775)
Awards cancelled			~~(1,860)~~(31,943)
Awards outstanding as of September 30, ~~2022~~2023			~~79,460~~75,346

We recognized ~~$1.1~~$1.3 million and ~~$2.6~~$1.1 million of compensation expense for performance-based restricted stock units for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. We recognized ~~$3.3~~$2.6 million and ~~$5.8~~$3.3 million of compensation expense for performance-based restricted stock units for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

Time-Based Restricted Stock Units

As of September 30, ~~2022,~~2023, we had time-based restricted stock unit awards from 2023, 2022, 2021 ~~2020~~ and ~~2019~~2020 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, except as noted below in~~ ~~Chief Executive Officer’s 2021 Equity Award Grants~~.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.

1312

A summary of activity of the outstanding time-based restricted stock units for the nine months ended September 30, ~~2022~~2023 is presented below:


			Time-Based Restricted Stock Units
Awards outstanding as of December 31, ~~2021~~2022			~~96,989~~124,284
Awards granted			~~63,150~~67,094
Stock issued			~~(47,600)~~(43,254)
Awards cancelled			~~(3,766)~~(24,296)
Awards outstanding as of September 30, ~~2022~~2023			~~108,773~~123,828

We recognized ~~$2.4~~$2.5 million and ~~$2.0~~$2.4 million of compensation expense for time-based restricted stock units for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. We recognized ~~$7.0~~$7.1 million and ~~$5.8~~$7.0 million of compensation expense for time-based restricted stock units for the nine months ended September 30, 2023 and 2022, ~~and 2021,~~ respectively.

~~Chief Executive Officer’s 2021 Equity Award Grants~~

The terms of the performance-based and time-based restricted stock unit awards granted to our Chief Executive Officer (CEO), Bruce Hoechner, in February 2021 were modified from the standard language provisions from prior year awards to allow for accelerated vesting of the full awards provided certain criteria are met. Accounting Standards Codification (ASC) Topic 718: ~~Compensation—Stock Compensation~~ requires companies that allow for accelerated vesting of employees’ unvested equity upon retirement to recognize the expense from the date of grant to the date the employee becomes eligible to retire – regardless of whether or not the employee actually retires when he or she is eligible to retire. As a result, the $4.0 million of expense in 2021 related to the awards granted on February 10, 2021 to our CEO, which provide for immediate vesting upon retirement, were expensed from the date of the grant, February 10, 2021, through his retirement eligibility date, November 9, 2021.

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.

A summary of activity of the outstanding deferred stock units for the nine months ended September 30, ~~2022~~2023 is presented below:


			Deferred Stock Units
Awards outstanding as of December 31, ~~2021~~2022			~~9,500~~6,850
Awards granted			~~4,800~~8,100
Stock issued			~~(7,450)~~(6,850)
Awards outstanding as of September 30, ~~2022~~2023			~~6,850~~8,100

We recognized no compensation expense for deferred stock units for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. We recognized ~~$1.3~~$1.2 million and ~~$1.2~~$1.3 million of compensation expense ~~for deferred stock units~~ for the nine months ended September 30, ~~2022~~2023, and ~~2021,~~2022, respectively.

Note 9 – Debt

OnIn October ~~16,~~ 2020, we entered into the Fourth Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto (the Fourth Amended Credit Agreement). The Fourth Amended Credit Agreement ~~amends~~amended and ~~restates~~restated the Third Amended Credit Agreement, and ~~provides~~provided for a revolving credit facility with up to a $450.0 million borrowing capacity, with sublimits for multicurrency borrowings, letters of credit and swing-line notes, in addition to a $175.0 million accordion feature. Borrowings ~~may be~~could have been used to finance working capital needs, for letters of credit and for general corporate purposes in the ordinary course of business, including the financing of permitted acquisitions (as defined in the Fourth Amended Credit Agreement). The Fourth Amended Credit Agreement ~~extends~~extended the maturity, the date on which all amounts borrowed or outstanding under the Fourth Amended Credit Agreement ~~are~~were due, from February 17, 2022 to March 31, 2024.

All obligations under the Fourth Amended Credit Agreement ~~are~~were guaranteed by each of our existing and future material domestic subsidiaries, as defined in the Fourth Amended Credit Agreement (the Previous Guarantors). The obligations ~~are~~were also secured by a Fourth Amended and Restated Pledge and Security Agreement, dated as of October 16, 2020, entered into by us and the

Previous Guarantors which ~~grants~~granted to the administrative agent, for the benefit of the lenders, a security interest, subject to certain exceptions, in substantially all of our and the Previous Guarantors’ non-real estate assets. These assets ~~include,~~included, but ~~are~~were not limited to, receivables, equipment, intellectual property, inventory, and stock in certain subsidiaries.

On March 5, 2021, the U.K. Financial Conduct Authority ~~(“FCA”)~~(FCA) publicly announced that immediately after December 31, 2021, publication of most Euro, Swiss Franc, Japanese Yen and Pound Sterling LIBOR settings will permanently cease. On October 15, 2021, Rogers Corporation and JPMorgan Chase Bank, N.A. entered into an amendment (Amendment No. 1) to the Fourth Amended Credit Agreement to adopt a new benchmark interest rate to replace the discontinued LIBOR reference rates.

Borrowings under the Fourth Amended Credit Agreement ~~can be~~could have been made as alternate base rate loans, euro-currency loans, or RFR loans. Alternate base rate loans ~~bear~~bore interest at a base reference rate plus a spread of 62.5 to 100.0 basis points,

depending on our leverage ratio. The base reference rate iswas the greatest of (a) the prime rate in effect on such day, (b) the NYFRB rate in effect on such day plus ½ of 1%, and (c) the adjusted LIBOR for a ~~one month~~one-month interest period in dollars on such day (or if such day is not a business day, the immediately preceding business day) plus 1%. Euro-currency loans ~~bear~~bore interest based on adjusted LIBOR plus a spread of 162.5 to 200.0 basis points, depending on our leverage ratio. RFR loans ~~bears~~bore interest based upon the Sterling Overnight Index Average (SONIA) plus 0.0326% plus a spread of 162.5 to 200.0 basis points. ~~Based on our leverage ratio as of September 30, 2022, the spread was 175.0 basis points.~~

In addition to interest payable on the principal amount of indebtedness outstanding, we ~~incur~~incurred an annual fee of 25 to 35 basis points (based upon our leverage ratio), paid quarterly, of the unused amount of the lenders’ commitments under the Fourth Amended Credit Agreement.

The Fourth Amended Credit Agreement ~~contains~~contained customary representations and warranties, covenants, mandatory prepayments and events of default under which our payment obligations may be accelerated. If an event of default ~~occurs,~~occurred, the lenders may have, among other things, ~~terminate~~terminated their commitments and ~~declare~~declared all outstanding borrowings to be immediately due and payable together with accrued interest and fees. The financial covenants ~~include~~included requirements 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 3.50 to 1.00 for one 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~~were permitted to net up to $50.0 million of unrestricted domestic cash and cash equivalents against indebtedness in the calculation of the total net leverage ratio.

The Fourth Amended Credit Agreement generally permitted us to pay cash dividends to our shareholders, provided that (i) no default or event of default had occurred and was continuing or would have resulted from the dividend payment and (ii) our total net leverage ratio did not exceed 2.75 to 1.00. If our total net leverage ratio exceeded 2.75 to 1.00, we may have nonetheless made up to $20.0 million in restricted payments, including cash dividends, during the fiscal year, provided that no default or event of default had occurred and was continuing or would have resulted from the payments.

On March 24, 2023, we entered into a Fifth Amended and Restated Credit Agreement (the Fifth Amended Credit Agreement) with each of the lenders party thereto, 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. The Fifth Amended Credit Agreement 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 business, including the financing of permitted acquisitions (as defined in the Fifth Amended Credit Agreement). The Fifth Amended Credit Agreement extends 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 basis points, and (3) one-month Term Secured Overnight Financial Rate (SOFR) plus 110 basis points. Loans bearing an interest rate determined by reference to the Adjusted Term SOFR Rate, the Adjusted Euro Interbank Offered Rate (EURIBOR), or the Adjusted (Tokyo Interbank Offered Rate (TIBOR) (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 September 30, 2023, 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 to 35 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 one 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 September 30, ~~2022.~~2023.

~~We borrowed~~There were no borrowings under the Fifth Amended Credit Agreement for the three and nine months ended September 30, 2023. There were $30.0 million and $100.0 million in borrowings under the Fourth Amended Credit Agreement for the three ~~months ended September 30, 2022, and $100.0 million for the nine months ended September 30, 2022. There were no borrowings for the three~~ and nine months ended September 30, ~~2021.~~2022, respectively. We are not required to make any quarterly principal payments under the Fifth Amended Credit Agreement, and we were not required to make any quarterly principal payments under the Fourth Amended Credit Agreement. We made $50.0 million of discretionary principal payments for the three months ended September 30, 2023, and $135.0 million of discretionary principal payments for the nine months ended September 30, 2023. There were no discretionary principal payments made for the three and nine months ended September 30, 2022, and no payments for the three months ended September 30, 2021. We made $25.0 million of discretionary principal payments on our revolving credit facility for the nine months ended September 30, 2021.2022.

We had ~~$290.0~~$80.0 million outstanding borrowings under our revolving credit facility as of September 30, ~~2022,~~2023, and ~~$190.0~~$215.0 million as of December 31, ~~2021.~~2022. We had ~~$1.1~~$2.3 million and ~~$1.6~~$0.9 million of outstanding line of credit issuance costs as of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, which will be amortized over the life of the ~~Fourth~~Fifth Amended Credit Agreement.

Note 10 - Leases

Finance Leases

Amortization expense related to our finance lease right-of-use assets, which is primarily included in the “Cost of sales” line item of the condensed consolidated statements of operations, was immaterial for each of the three- and ~~nine-month~~nine- month periods ended September 30, ~~2022~~2023 and ~~2021.~~2022. Interest expense related to our finance lease obligations, which is included in the “Interest expense, net” line item of the condensed consolidated statements of operations, was immaterial for each of the three- and ~~nine-month~~nine- month periods ended September 30, ~~2022~~2023 and 2021. Payments made on the principal portion of our finance lease obligations were immaterial for each of the three- and nine-month periods ended September 30, 2022 and 2021, excluding the $5.0 million net cash payment to exercise the Eschenbach, Germany manufacturing facility purchase option.2022.

Operating Leases

We have operating leases primarily related to building space and vehicles. Renewal options are included in the lease term to the extent we are reasonably certain to exercise the option. The exercise of lease renewal options is at our sole discretion. We account for lease components separately from non-lease components. The incremental borrowing rate represents our ability to borrow on a collateralized basis over a similar lease term.

Our expenses and payments for operating leases were as follows:

Three Months Ended Nine Months Ended
(Dollars in thousands) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Operating leases expense $ 652 $ 594 $ 1,896 $ 2,054
Short-term leases expense $ 168 $ 97 $ 420 $ 227
Payments on operating lease obligations $ 663 $ 610 $ 2,231 $ 1,945


	Three Months Ended				Nine Months Ended
(Dollars in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Operating leases expense	$	1,004	$	652	$	2,851	$	1,896
Short-term leases expense	$	211	$	168	$	568	$	420
Payments on operating lease obligations	$	871	$	663	$	2,606	$	2,231

Lease Balances in Statements of Financial Position

Our assets and liabilities balances related to finance and operating leases reflected in the condensed consolidated statements of financial position were as follows:


(Dollars in thousands)	Location in Statements of Financial Position	September 30, 2023		December 31, 2022
Finance lease right-of-use assets	Property, plant and equipment, net	$	1,477	$	1,749
Operating lease right-of-use assets	Other long-term assets	$	12,487	$	13,013

Finance lease obligations, current portion	Finance lease obligations, current portion	$	345	$	498
Finance lease obligations, non-current portion	Finance lease obligations, non-current portion	$	1,147	$	1,295
Total finance lease obligations		$	1,492	$	1,793

Operating lease obligations, current portion	Other accrued liabilities	$	2,933	$	2,842
Operating lease obligations, non-current portion	Other long-term liabilities	$	9,752	$	10,689
Total operating lease obligations		$	12,685	$	13,531

(Dollars in thousands) Location in Statements of
Financial Position September 30, 2022 December 31, 2021
Finance lease right-of-use assets Property, plant and equipment, net $ 1,629 $ 389
Operating lease right-of-use assets Other long-term assets $ 5,688 $ 17,161
Finance lease obligations, current portion Other accrued liabilities $ 389 $ 198
Finance lease obligations, non-current portion Other long-term liabilities $ 1,227 $ 209
Total finance lease obligations $ 1,616 $ 407
Operating lease obligations, current portion Other accrued liabilities $ 2,016 $ 2,810
Operating lease obligations, non-current portion Other long-term liabilities $ 4,112 $ 14,965
Total operating lease obligations $ 6,128 $ 17,775

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 September 30, ~~2022:~~2023:


		Finance			Operating				Finance						Operating
(Dollars in thousands)	(Dollars in thousands)	Leases Signed	Less: Leases Not Yet Commenced	Leases in Effect	Leases Signed	Less: Leases Not Yet Commenced	Leases in Effect	(Dollars in thousands)	Leases Signed		Less: Leases Not Yet Commenced		Leases in Effect		Leases Signed		Less: Leases Not Yet Commenced		Leases in Effect
2022		92	(4)	88	678	(19)	659
2023	2023	564	(51)	513	2,446	(441)	2,005	2023	$	103	$	(2)	$	101	$	1,386	$	(204)	$	1,182
2024	2024	381	(56)	325	1,364	(479)	885	2024	415		(11)		404		4,171		(834)		3,337
2025	2025	381	(56)	325	1,021	(498)	523	2025	416		(11)		405		3,537		(860)		2,677
2026	2026	379	(56)	323	947	(429)	518	2026	409		(11)		398		2,973		(873)		2,100
2027								2027	205		(11)		194		2,465		(826)		1,639
Thereafter	Thereafter	343	(126)	217	5,535	(2,973)	2,562	Thereafter	156		(9)		147		8,896		(4,868)		4,028
Total lease payments	Total lease payments	2,140	(349)	1,791	11,991	(4,839)	7,152	Total lease payments	1,704		(55)		1,649		23,428		(8,465)		14,963
Less: Interest	Less: Interest	(204)	29	(175)	(2,333)	1,309	(1,024)	Less: Interest	(164)		7		(157)		(4,348)		2,070		(2,278)
Present Value of Net Future Minimum Lease Payments	Present Value of Net Future Minimum Lease Payments	1,936	(320)	1,616	9,658	(3,530)	6,128	Present Value of Net Future Minimum Lease Payments	$	1,540	$	(48)	$	1,492	$	19,080	$	(6,395)	$	12,685

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:

Finance
Leases Operating
Leases
Weighted Average Remaining Lease Term 4.6 years 6.1 years
Weighted Average Discount Rate 3.76% 4.40%

In April 2022, we successfully negotiated the termination of a lease signed for the facility in South Korea, which went into effect in October 2021, in exchange for an approximately $0.4 million settlement fee. The termination of this lease reduced our operating lease right-of-use assets and lease liabilities by approximately $9.2 million each.


	Finance Leases	Operating Leases
Weighted Average Remaining Lease Term	4.2 years	5.8 years
Weighted Average Discount Rate	4.07%	4.89%

Note 11 – Pension Benefits and Other Postretirement Benefits

Pension and Other Postretirement Benefit Plans

As of September 30, ~~2022,~~2023, we had one qualified noncontributory defined benefit pension plan, the Rogers Corporation Employees’ Pension Plan (the Union Plan), which was frozen and ceased accruing benefits in 2013.

Additionally, we sponsor other postretirement benefit plans, including multiple fully insured or self-funded medical plans and life insurance plans for certain retirees. The measurement date for all plans is December 31st for each respective plan year.

~~Pension Termination Surplus Funds~~

On October 17, 2019, our Chief Executive Officer approved the termination of the Rogers Corporation Defined Benefit Pension Plan (following its merger with the Hourly Employees Pension Plan of Arlon LLC, Microwave Material and Silicone Technologies Divisions, Bear, Delaware (collectively, the Merged Plan)). We provided participants of the Merged Plan an option to elect either a lump sum distribution or an annuity. A group annuity contract was purchased with an insurance company for all participants who did not elect a lump sum distribution. The insurance company became responsible for administering and paying pension benefit payments effective January 1, 2020.

Upon completion of the pension termination and settlement processes for the Merged Plan, we had a $9.7 million remaining pension surplus investment balance. In July 2020 and December 2021, we transferred $9.2 million of the pension surplus investment balance to a suspense account held within a trust for the Rogers Employee Savings and Investment Plan (RESIP), a 401(k) plan for domestic employees. In December 2021, we transferred the remaining pension investment balance not initially transferred, to the RESIP trust suspense account. The investment balance not transferred to the trust suspense account will be used to pay any final plan expenses, after which the remainder of these funds will be moved to the RESIP trust suspense account. The funds in the RESIP trust suspense account have been, and will continue to be, used to fund certain employer contributions. There was no remaining balance for the pension surplus investments as of September 30, 2022.

Components of Net Periodic Benefit (Credit) Cost

The components of net periodic benefit (credit) cost were as follows:


		Pension Benefits								Other Postretirement Benefits									Pension Benefits								Other Postretirement Benefits
		Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
		September 30,				September 30,				September 30,				September 30,					September 30,				September 30,				September 30,				September 30,
(Dollars in thousands)	(Dollars in thousands)	2022		2021		2022		2021		2022		2021		2022		2021		(Dollars in thousands)	2023		2022		2023		2022		2023		2022		2023		2022
Service cost	Service cost	$	—	$	—	$	—	$	—	$	10	$	16	$	30	$	46	Service cost	$	—	$	—	$	—	$	—	$	19	$	10	$	57	$	30
Interest cost	Interest cost	191		182		573		550		8		7		24		19		Interest cost	263		191		799		573		17		8		51		24
Expected return of plan assets	Expected return of plan assets	(340)		(389)		(1,020)		(1,169)		—		—		—		—		Expected return of plan assets	(354)		(340)		(1,066)		(1,020)		—		—		—		—
Amortization of prior service credit	Amortization of prior service credit	—		—		—		—		—		(25)		—		(73)		Amortization of prior service credit	—		—		—		—		—		—		—		—
Amortization of net loss		111		95		333		291		—		—		—		—
Amortization of net loss (gain)																		Amortization of net loss (gain)	116		111		360		333		(3)		—		(7)		—

Net periodic benefit (credit) cost	Net periodic benefit (credit) cost	$	(38)	$	(112)	$	(114)	$	(328)	$	18	$	(2)	$	54	$	(8)	Net periodic benefit (credit) cost	$	25	$	(38)	$	93	$	(114)	$	33	$	18	$	101	$	54

Employer Contributions

There were no required or voluntary contributions made to the Union Plan ~~or the Merged Plan~~ for each of the three and ~~nine-~~nine months ended September 30, ~~2022~~2023 and ~~2021.~~2022. Additionally, we are not required to make additional contributions to the Union Plan for the remainder of ~~2022.~~2023.

As there is no funding requirement for the other postretirement benefit plans, we funded these benefit payments as incurred, which were immaterial for each of the three and ~~nine-~~nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, using cash from operations.

Note 12 – Commitments and Contingencies

We are currently engaged in the following material environmental and legal proceedings:

Voluntary Corrective Action Program

Our location in Rogers, Connecticut is part of the Connecticut Voluntary Corrective Action Program (VCAP). As part of this program, we partnered with the Connecticut Department of Energy and Environmental Protection (CT DEEP) 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 incurred ~~$1.9~~$2.0 million of aggregate remediation costs through September 30, ~~2022,~~2023, and the accrual for future remediation efforts is ~~$0.8~~$0.7 million.

Asbestos

Overview

We, like many other industrial companies, have been named as a defendant in a number of lawsuits filed in courts across the country 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.

The following table summarizes the change in number of asbestos claims outstanding for the nine months ended September 30, ~~2022:~~2023:


			Asbestos Claims
Claims outstanding as of January 1, 2023			~~543~~537
New claims filed			~~101~~111
Pending claims concluded(1)			~~(107)~~(87)
Claims outstanding as of September 30, ~~2022~~2023			~~537~~561

(1) For the nine months ended September 30, ~~2022, 94~~2023, 75 claims were dismissed and 1312 claims were settled. Settlements totaled approximately ~~$1.7~~$4.5 million for the nine months ended September 30, ~~2022.~~2023.

Impact 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 receivables 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 that it ~~intended~~intends 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. We are responsible for uninsured indemnity and defense costs, and we incurred an immaterial amount of expenses for each of the three- and ~~nine-month~~nine- month periods ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, related to such costs.

The amounts recorded for the asbestos-related liability and the related insurance receivables are based on facts known at the time and a number of assumptions. However, projecting for 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 United States, could cause the actual liability and insurance recoveries for us to be higher or lower than those projected or recorded.

Changes recorded in the estimated liability and estimated insurance recovery based on projections of asbestos litigation and corresponding insurance coverage, result in the recognition of expense or income.

Our projected asbestos-related liabilities and insurance receivables were as follows:

(Dollars in thousands) September 30, 2022 December 31, 2021
Asbestos-related liabilities $ 64,215 $ 68,332
Asbestos-related insurance receivables $ 58,877 $ 62,567


(Dollars in thousands)	September 30, 2023		December 31, 2022
Asbestos-related liabilities	$	64,707	$	65,033
Asbestos-related insurance receivables	$	59,807	$	59,807

General

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 environmental and product liability matters that are defended and handled in the ordinary course of business. We have established accruals for matters for which management considers a loss to be probable and reasonably estimable. It is the opinion of management that facts known at the present time do not indicate that such litigation will have a material adverse impact on our results of operations, financial position or cash flows.

Note 13 – Income Taxes

Our effective income tax rate was ~~16.0%~~27.3% and ~~26.4%~~16.0% for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The ~~decrease~~increase from the third quarter of ~~2021~~2022 was primarily due to the ~~beneficial impact of a~~third quarter 2022 decrease in ~~current quarter accruals of~~ reserves for uncertain tax ~~positions.~~positions that did not recur in 2023. Our effective income tax rate was ~~20.5%~~30.0% and ~~25.7%~~20.5% for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The ~~decrease~~increase from the ~~first nine months~~third quarter of ~~2021~~2022 was primarily due to the ~~beneficial impact of a~~third quarter 2022 decrease in ~~current quarter accruals of~~ reserves for uncertain tax ~~positions.~~positions that did not recur in 2023.

The total amount of unrecognized tax benefits as of September 30, ~~2022~~2023 was ~~$6.5~~$8.9 million, of which ~~$5.9~~$7.9 million would affect our effective tax rate if recognized. Additionally, the balance of unrecognized tax benefits as of September 30, ~~2022~~2023 also included ~~$0.6~~$1.0 million of tax benefits that, if recognized, would result in adjustments to other tax accounts, primarily deferred taxes.

We recognize interest and penalties related to unrecognized tax benefits through income tax expense. As of September 30, ~~2022,~~2023, we had ~~$0.7~~$1.6 million accrued for the payment of interest.

We are subject to taxation in the U.S. and various state and foreign jurisdictions. Our tax years from ~~2018~~2019 through 2022 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 ~~2018.~~2019.

Note 14 – Operating Segment Information

Our reporting structure is comprised of the following strategic operating segments: AES and EMS. The remaining operations, which represent our non-core businesses, are reported in the Other operating segment.

Our AES operating segment designs, develops, manufactures and sells circuit materials, ceramic substrate materials, busbars and cooling solutions for applications in electric and hybrid electric vehicles (EV/HEV), ~~wireless infrastructure (i.e., power amplifiers, antennas and small cells),~~ automotive (i.e., advanced driver assistance systems (ADAS)~~, telematics and thermal solutions)~~), aerospace and defense (i.e., antenna systems, communication systems and phased array radar systems), ~~mass transit, clean~~renewable energy (i.e., ~~variable~~wind and solar), wireless infrastructure (i.e., power amplifiers, antennas and small cells), mass transit, industrial (variable frequency ~~drives, renewable energy)~~drives), connected devices (i.e., mobile internet devices and thermal solutions) and wired infrastructure (i.e., computing and IPinternet protocol (IP) infrastructure) markets.

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, ~~EV/HEV,~~ mass transit, aerospace and defense and footwear and impact mitigation ~~and printing~~ markets; customized silicones used in flex heater and semiconductor thermal applications for EV/HEV, general industrial, portable electronics, automotive, ~~EV/HEV,~~ mass transit, aerospace and defense and medical markets; and 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 ~~EV/HEV~~ and aerospace and defense markets.

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 ~~tank, motor,~~tanks, motors, and storage ~~tank~~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.~~

1918

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 thousands)	(Dollars in thousands)	Advanced Electronics Solutions		Elastomeric Material Solutions		Other		Total		(Dollars in thousands)	Advanced Electronics Solutions		Elastomeric Material Solutions		Other		Total
Three Months Ended September 30, 2023										Three Months Ended September 30, 2023
Net sales - recognized over time										Net sales - recognized over time	$	60,788	$	1,331	$	4,093	$	66,212
Net sales - recognized at a point in time										Net sales - recognized at a point in time	65,612		96,655		669		162,936
Total net sales										Total net sales	$	126,400	$	97,986	$	4,762	$	229,148
Operating income										Operating income	$	5,674	$	19,851	$	1,597	$	27,122

Three Months Ended September 30, 2022	Three Months Ended September 30, 2022									Three Months Ended September 30, 2022
Net sales - recognized over time	Net sales - recognized over time	$	72,969	$	3,346	$	4,110	$	80,425	Net sales - recognized over time	$	72,969	$	3,346	$	4,110	$	80,425
Net sales - recognized at a point in time	Net sales - recognized at a point in time	57,639		107,637		1,530		166,806		Net sales - recognized at a point in time	57,639		107,637		1,530		166,806
Total net sales	Total net sales	$	130,608	$	110,983	$	5,640	$	247,231	Total net sales	$	130,608	$	110,983	$	5,640	$	247,231
Operating income	Operating income	$	2,263	$	14,322	$	1,891	$	18,476	Operating income	$	2,263	$	14,322	$	1,891	$	18,476

Three Months Ended September 30, 2021
Nine Months Ended September 30, 2023										Nine Months Ended September 30, 2023
Net sales - recognized over time	Net sales - recognized over time	$	64,277	$	4,612	$	4,829	$	73,718	Net sales - recognized over time	$	180,338	$	17,423	$	12,011	$	209,772
Net sales - recognized at a point in time	Net sales - recognized at a point in time	70,714		93,339		492		164,545		Net sales - recognized at a point in time	212,102		278,153		3,789		494,044
Total net sales	Total net sales	$	134,991	$	97,951	$	5,321	$	238,263	Total net sales	$	392,440	$	295,576	$	15,800	$	703,816
Operating income	Operating income	$	13,945	$	18,104	$	1,750	$	33,799	Operating income	$	6,001	$	43,293	$	5,470	$	54,764

Nine Months Ended September 30, 2022	Nine Months Ended September 30, 2022									Nine Months Ended September 30, 2022
Net sales - recognized over time	Net sales - recognized over time	$	214,091	$	9,090	$	12,763	$	235,944	Net sales - recognized over time	$	214,091	$	9,090	$	12,763	$	235,944
Net sales - recognized at a point in time	Net sales - recognized at a point in time	190,835		317,223		3,465		511,523		Net sales - recognized at a point in time	190,835		317,223		3,465		511,523
Total net sales	Total net sales	$	404,926	$	326,313	$	16,228	$	747,467	Total net sales	$	404,926	$	326,313	$	16,228	$	747,467
Operating income	Operating income	$	12,342	$	43,920	$	5,501	$	61,763	Operating income	$	12,342	$	43,920	$	5,501	$	61,763

Nine Months Ended September 30, 2021
Net sales - recognized over time		$	176,339	$	11,057	$	14,802	$	202,198
Net sales - recognized at a point in time		230,970		268,074		1,192		500,236
Total net sales		$	407,309	$	279,131	$	15,994	$	702,434
Operating income		$	47,082	$	53,818	$	5,837	$	106,737

2019

Net sales by operating segment and by geographic area were as follows:


(Dollars in thousands)	(Dollars in thousands)	Net Sales(1)								(Dollars in thousands)	Net Sales(1)
Region/Country	Region/Country	Advanced Electronics Solutions		Elastomeric Material Solutions		Other		Total		Region/Country	Advanced Electronics Solutions		Elastomeric Material Solutions		Other		Total
Three Months Ended September 30, 2023										Three Months Ended September 30, 2023
United States										United States	$	20,403	$	37,269	$	1,060	$	58,732
Other Americas										Other Americas	273		2,453		(34)		2,692
Total Americas										Total Americas	20,676		39,722		1,026		61,424
China										China	33,719		28,341		1,762		63,822
Other APAC										Other APAC	20,766		8,793		555		30,114
Total APAC										Total APAC	54,485		37,134		2,317		93,936
Germany										Germany	24,830		6,295		95		31,220
Other EMEA										Other EMEA	26,409		14,835		1,324		42,568
Total EMEA										Total EMEA	51,239		21,130		1,419		73,788
Total net sales										Total net sales	$	126,400	$	97,986	$	4,762	$	229,148
Three Months Ended September 30, 2022	Three Months Ended September 30, 2022									Three Months Ended September 30, 2022
United States	United States	$	33,969	$	46,772	$	1,087	$	81,828	United States	$	33,969	$	46,772	$	1,087	$	81,828
Other Americas	Other Americas	843		2,534		247		3,624		Other Americas	843		2,534		247		3,624
Total Americas	Total Americas	34,812		49,306		1,334		85,452		Total Americas	34,812		49,306		1,334		85,452
China	China	36,126		37,349		2,290		75,765		China	36,126		37,349		2,290		75,765
Other APAC	Other APAC	16,544		5,173		508		22,225		Other APAC	16,544		5,173		508		22,225
Total APAC	Total APAC	52,670		42,522		2,798		97,990		Total APAC	52,670		42,522		2,798		97,990
Germany	Germany	19,727		7,310		393		27,430		Germany	19,727		7,310		393		27,430
Other EMEA	Other EMEA	23,399		11,845		1,115		36,359		Other EMEA	23,399		11,845		1,115		36,359
Total EMEA	Total EMEA	43,126		19,155		1,508		63,789		Total EMEA	43,126		19,155		1,508		63,789
Total net sales	Total net sales	$	130,608	$	110,983	$	5,640	$	247,231	Total net sales	$	130,608	$	110,983	$	5,640	$	247,231
Three Months Ended September 30, 2021
United States		$	22,119	$	42,338	$	1,510	$	65,967
Other Americas		950		2,415		195		3,560
Total Americas		23,069		44,753		1,705		69,527
China		47,153		34,789		1,059		83,001
Other APAC		17,608		6,177		645		24,430
Total APAC		64,761		40,966		1,704		107,431
Germany		24,620		5,892		175		30,687
Other EMEA		22,541		6,340		1,737		30,618
Total EMEA		47,161		12,232		1,912		61,305
Total net sales		$	134,991	$	97,951	$	5,321	$	238,263

(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.

2120


(Dollars in thousands)	(Dollars in thousands)	Net Sales(1)								(Dollars in thousands)	Net Sales(1)
Region/Country	Region/Country	Advanced Electronics Solutions		Elastomeric Material Solutions		Other		Total		Region/Country	Advanced Electronics Solutions		Elastomeric Material Solutions		Other		Total
Nine Months Ended September 30, 2023										Nine Months Ended September 30, 2023
United States										United States	$	63,263	$	123,109	$	3,127	$	189,499
Other Americas										Other Americas	3,232		11,961		282		15,475
Total Americas										Total Americas	66,495		135,070		3,409		204,974
China										China	110,237		69,227		6,187		185,651
Other APAC										Other APAC	67,817		23,760		1,934		93,511
Total APAC										Total APAC	178,054		92,987		8,121		279,162
Germany										Germany	74,002		22,449		334		96,785
Other EMEA										Other EMEA	73,889		45,070		3,936		122,895
Total EMEA										Total EMEA	147,891		67,519		4,270		219,680
Total net sales										Total net sales	$	392,440	$	295,576	$	15,800	$	703,816
Nine Months Ended September 30, 2022	Nine Months Ended September 30, 2022									Nine Months Ended September 30, 2022
United States	United States	$	94,907	$	136,340	$	3,075	$	234,322	United States	$	94,907	$	136,340	$	3,075	$	234,322
Other Americas	Other Americas	2,814		7,550		614		10,978		Other Americas	2,814		7,550		614		10,978
Total Americas	Total Americas	97,721		143,890		3,689		245,300		Total Americas	97,721		143,890		3,689		245,300
China	China	113,448		99,734		6,048		219,230		China	113,448		99,734		6,048		219,230
Other APAC	Other APAC	60,023		18,418		1,778		80,219		Other APAC	60,023		18,418		1,778		80,219
Total APAC	Total APAC	173,471		118,152		7,826		299,449		Total APAC	173,471		118,152		7,826		299,449
Germany	Germany	57,653		23,784		874		82,311		Germany	57,653		23,784		874		82,311
Other EMEA	Other EMEA	76,081		40,487		3,839		120,407		Other EMEA	76,081		40,487		3,839		120,407
Total EMEA	Total EMEA	133,734		64,271		4,713		202,718		Total EMEA	133,734		64,271		4,713		202,718
Total net sales	Total net sales	$	404,926	$	326,313	$	16,228	$	747,467	Total net sales	$	404,926	$	326,313	$	16,228	$	747,467
Nine Months Ended September 30, 2021
United States		$	67,740	$	120,736	$	3,535	$	192,011
Other Americas		2,334		7,724		582		10,640
Total Americas		70,074		128,460		4,117		202,651
China		155,417		90,047		3,478		248,942
Other APAC		66,412		20,875		2,013		89,300
Total APAC		221,829		110,922		5,491		338,242
Germany		51,434		22,057		526		74,017
Other EMEA		63,972		17,692		5,860		87,524
Total EMEA		115,406		39,749		6,386		161,541
Total net sales		$	407,309	$	279,131	$	15,994	$	702,434

(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.

Revenue from Contracts with Customers

We have 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 contract assets on the condensed consolidated statements of financial position.

Contract assets by operating segment were as follows:


(Dollars in thousands)	(Dollars in thousands)	September 30, 2022		December 31, 2021		(Dollars in thousands)	September 30, 2023		December 31, 2022
Advanced Electronics Solutions	Advanced Electronics Solutions	$	36,015	$	31,398	Advanced Electronics Solutions	$	41,264	$	33,736
Elastomeric Material Solutions	Elastomeric Material Solutions	2,467		2,082		Elastomeric Material Solutions	1,503		1,584
Other	Other	3,327		3,130		Other	3,709		3,533
Total contract assets	Total contract assets	$	41,809	$	36,610	Total contract assets	$	46,476	$	38,853

We did not have any contract liabilities as of September 30, ~~2022~~2023 or December 31, ~~2021.~~2022. No impairment losses were recognized for the ~~three or nine-month~~three- and nine- month periods ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, on any receivables or contract assets arising from our contracts with customers.

2221

Note 15 – Supplemental Financial Information

Restructuring and Impairment Charges

The components of the “Restructuring and impairment charges” line item in the condensed consolidated statements of operations, which contains restructuring charges and related expenses, as well as impairment charges, were as follows:


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
(Dollars in thousands)	(Dollars in thousands)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021		(Dollars in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Restructuring charges	Restructuring charges									Restructuring charges
Manufacturing footprint optimization	Manufacturing footprint optimization	$	373	$	622	$	907	$	2,875	Manufacturing footprint optimization	$	—	$	373	$	—	$	907

Global workforce reduction										Global workforce reduction	656		—		8,746		—
Facility consolidations										Facility consolidations	1,265		—		7,615		—
Total restructuring charges	Total restructuring charges	373		622		907		2,875		Total restructuring charges	1,921		373		16,361		907
Impairment charges	Impairment charges									Impairment charges
Fixed asset impairment charges	Fixed asset impairment charges	—		385		212		385		Fixed asset impairment charges	—		—		—		212

Total impairment charges	Total impairment charges	—		385		212		385		Total impairment charges	—		—		—		212
Total restructuring and impairment charges	Total restructuring and impairment charges	$	373	$	1,007	$	1,119	$	3,260	Total restructuring and impairment charges	$	1,921	$	373	$	16,361	$	1,119

~~Our AES operating segment incurred $0.4 million~~Allocation of Restructuring and ~~$1.1 million~~Impairment Charges to Operating Segments

The following table summarizes the allocation of restructuring and impairment charges ~~for the three and nine months ended September 30, 2022, respectively, while~~to our ~~EMS~~ operating segment incurred an immaterial amount of restructuring and impairment charges for the three and nine months ended September 30, 2022. Our AES operating segment incurred $1.0 million and $3.2 million of restructuring and impairment charges, respectively, for the three and nine months ended September 30, 2021, while our EMS operating segment incurred an immaterial amount of restructuring and impairment charges for the three and nine months ended September 30, 2021.segments:


	Three Months Ended				Nine Months Ended
(Dollars in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Advanced Electronics Solutions
Allocated restructuring charges	$	1,636	$	371	$	10,213	$	920
Allocated impairment charges	—		—		—		212
Elastomeric Material Solutions
Allocated restructuring charges	285		2		6,148		(13)
Allocated impairment charges	—		—		—		—
Total restructuring and impairment charges	$	1,921	$	373	$	16,361	$	1,119

Restructuring Charges ~~& Related Expenses~~ - ~~Manufacturing Footprint Optimization~~Global Workforce Reduction

~~During the third quarter~~On February 16, 2023, we announced a reduction in force plan 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~~global workforce that was substantially completed in the first half of ~~2021.~~2023, and will conclude in the fourth quarter of 2023. The plan is expected to significantly reduce our manufacturing costs and operating expenses. We ~~incurred an immaterial amount of~~estimate that we will incur approximately $8.7 million to $8.9 million in pre-tax restructuring charges related to this plan, all of which are expected to be in the form of cash-based expenditures and substantially all of which are expected to be related ~~expenses for the three and nine months ended September 30, 2022, including~~to employee severance and ~~related~~other termination benefits. ~~Severance and related benefits activity related to the manufacturing footprint optimization plan is presented in the table below for the nine months ended September 30, 2022:~~


(Dollars in thousands)	~~Manufacturing Footprint Optimization~~Global Workforce Reduction Restructuring Severance and Related Benefits
Balance as of December 31, ~~2021~~2022	$	~~1,395~~—
Provisions	~~363~~8,476
Payments	~~(1,479)~~(8,133)
Foreign currency translation adjustment	~~(111)~~41
Balance as of September 30, ~~2022~~2023	$	~~168~~384

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 is expected to significantly reduce our manufacturing costs and operating expenses. We estimate that we will incur approximately $7.7 million to $8.3 million in pre-tax restructuring charges related to these facility consolidations, most of which are expected to be in the form of accelerated depreciation.

As part of our facility consolidations plan, on February 17, 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 the first quarter of 2023, which were recorded in “Selling, general and administrative expenses” in our condensed consolidated statements of operations.

As of September 30, 2023 we recognized $16.1 million of assets held for sale within the “Other current assets” financial statement line item of our condensed consolidated statements of financial position. This includes $13.1 million for land and building at our Price Road facility in Chandler, Arizona and $3.0 million of land and building at one of our Suzhou, China facilities. During the third quarter of 2023, the previously disclosed asset purchase agreement to sell our Price Road facility was terminated and the facility remains held for sale.

Other Operating (Income) Expense, Net

The components of “Other operating (income) expense, net” line item in the condensed consolidated statements of operations, were as follows:


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
(Dollars in thousands)	(Dollars in thousands)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021		(Dollars in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
UTIS fire	UTIS fire									UTIS fire
Fixed assets write-offs		$	—	$	—	$	—	$	891
Inventory charges	Inventory charges	(1)		43		199		363		Inventory charges	$	—	$	(1)	$	—	$	199
Professional services	Professional services	369		577		1,295		2,171		Professional services	77		369		596		1,295
Lease obligations	Lease obligations	91		60		369		600		Lease obligations	—		91		—		369
Lease impairments		—		495		—		495
Compensation & benefits	Compensation & benefits	562		614		1,931		1,458		Compensation & benefits	—		562		—		1,931
Third-party property claims		—		4,650		—		4,650
Other	Other	2		—		15		76		Other	—		2		—		15
Insurance recoveries	Insurance recoveries	(1,604)		(5,017)		(6,646)		(6,495)		Insurance recoveries	(730)		(1,604)		(7,424)		(6,646)
Total UTIS fire	Total UTIS fire	(581)		1,422		(2,837)		4,209		Total UTIS fire	(653)		(581)		(6,828)		(2,837)
(Gain) loss on sale or disposal of property, plant and equipment	(Gain) loss on sale or disposal of property, plant and equipment	3		9		(15)		(673)		(Gain) loss on sale or disposal of property, plant and equipment	(193)		3		(679)		(15)

Total other operating (income) expense, net	Total other operating (income) expense, net	$	(578)	$	1,431	$	(2,852)	$	3,536	Total other operating (income) expense, net	$	(846)	$	(578)	$	(7,507)	$	(2,852)

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. ~~Operations~~Commercial production at our new location in Siheung, South Korea ~~will be disrupted into~~commenced in late January 2023.

In connection with the ~~first half~~UTIS fire, we recognized insurance recoveries of ~~2023.~~$0.7 million and $7.4 million related to our ongoing insurance claims for business interruption and property damage for the three and nine months ended September 30, 2023, respectively. We incurred $0.1 million and $0.6 million for various professional services for the three and nine months ended September 30, 2023, respectively, in connection with the pursuit of our insurance claims.

In connection with the UTIS fire, we recognized insurance recoveries of $1.6 million and $6.6 million related to our ongoing insurance claim for property damage and compensation and benefits of hourly employees for the three and nine months ended September 30, 2022, respectively. We incurred $0.4 million and $1.3 million for various professional services for the three and nine months ended September 30, 2022, respectively, in connection with the assessment of the fire and the efforts to rebuild and resume operations. Further, we incurred $0.6 million and $1.9 million for compensation and benefits for UTIS manufacturing employees subsequent to the fire for the three and nine months ended September 30, 2022, respectively.

We recognized fixed asset write-offs and inventory charges of $0.9 million and $0.4 million, respectively, related to property destroyed in the fire for the nine months ended September 30, 2021. Additionally, we recognized a $4.7 million contingent liability pertaining to damage to nearby property and a $0.5 million contingent liability pertaining to our obligations for the fire damage to the building in connection with the underlying lease agreement. We incurred $0.6 million and $2.2 million of fees for various professional services for the three and nine months ended September 30, 2021, respectively, in connection with the assessment of the fire and the efforts to rebuild and resume operations. Further, we incurred $0.6 million and $1.5 million of compensation and benefits for UTIS manufacturing employees, subsequent to the fire, for the three and nine months ended September 30, 2021, respectively. In connection with the UTIS fire, we recognized insurance recoveries of $5.0 million and $6.5 million related to our ongoing insurance claim for property damage and compensation and benefits of hourly employees, less the applicable $0.3 million deductible, for the three and nine months ended September 30, 2021, respectively.

Interest Expense, Net

The components of “Interest expense, net” line item in the condensed consolidated statements of operations, were as follows:

Three Months Ended Nine Months Ended
(Dollars in thousands) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Interest on revolving credit facility $ 2,831 $ — $ 5,014 $ 106
Line of credit fees 118 292 409 856
Debt issuance amortization costs 178 178 536 536
Interest income (175) (64) (462) (409)
Other (10) 35 62 363
Total interest expense, net $ 2,942 $ 441 $ 5,559 $ 1,452


	Three Months Ended				Nine Months Ended
(Dollars in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Interest on revolving credit facility	$	(1,939)	$	(2,831)	$	(8,306)	$	(5,014)
Line of credit fees	(219)		(118)		(565)		(409)
Debt issuance amortization costs	(123)		(178)		(527)		(536)
Interest income	133		175		978		462
Other	(180)		10		(207)		(62)
Total interest expense, net	$	(2,328)	$	(2,942)	$	(8,627)	$	(5,559)

~~Note 16 – Mergers and Acquisitions~~

~~Acquisition of Silicone Engineering Ltd.~~

On October 8, 2021, we acquired Silicone Engineering Ltd. (Silicone Engineering), a leading European manufacturer of silicone material solutions based in Blackburn, England, for a combined purchase price of $172.3 million for the company, net of cash acquired, and its facility. As part of the agreement, there was a $4.1 million holdback, upon which we could issue claims against until six months after the close of the acquisition, at which point in time the holdback amount, less any holdback claims, be paid to the previous owners of Silicone Engineering. In April 2022, we paid $1.3 million of the holdback in exchange for a 6-month extension of the holdback period. In October 2022, we paid back the remaining of the holdback, less an immaterial amount for claims. Substantially all of our $190.0 million in borrowings under our existing credit facility in October 2021 were used to fund the transaction, with the remaining amounts being used for general corporate purposes. Silicone Engineering expands our existing advanced silicones platform in our EMS operating segment and provides us a European Center of Excellence to service customers requiring premium silicone solutions for applications in the EV/HEV, industrial, medical and other markets.

~~Pro-Forma Financial Information~~

The following unaudited pro forma financial information presents the combined results of operations of Rogers and Silicone Engineering as if the Silicone Engineering acquisition had occurred on January 1, 2020. The unaudited pro forma financial information is not intended to represent or be indicative of our consolidated results of operations that would have been reported had the Silicone Engineering acquisition been completed as of January 1, 2020 and should not be taken as indicative of our future consolidated results of operations.

Three Months Ended Nine Months Ended
(Dollars in thousands) September 30, 2021 September 30, 2021
Net sales $ 248,679 $ 733,404
Net income $ 26,419 $ 88,271

~~Terminated Merger Agreement with DuPont~~

On November 1, 2021, we entered into a definitive merger agreement to be acquired by DuPont de Nemours, Inc. (DuPont) in an all-cash transaction at a price of $277.00 per share of the Company’s capital stock. The merger agreement provided for the acquisition of Rogers Corporation by DuPont through the merger of Cardinalis Merger Sub, Inc., a wholly owned subsidiary of DuPont, with and into Rogers Corporation, with Rogers Corporation surviving the merger as a wholly owned subsidiary of DuPont. Company shareholders approved the merger agreement at a special shareholder meeting held on January 25, 2022. The merger agreement provided both Rogers Corporation and DuPont with a right to terminate the merger agreement if the merger had not closed on or before November 1, 2022. Consummation of the merger was subject to various customary closing conditions, including regulatory approval by the State Administration for Market Regulation of China (SAMR). As of November 1, 2022, the parties had not received regulatory approval from SAMR. On November 1, 2022, the Company received from DuPont a notice of termination of the merger agreement. Pursuant to the terms of the merger agreement, the Company received a regulatory termination fee from DuPont in the amount of $162.5 million, before taxes and transaction-related fees.

Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Position

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 Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (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:

•our terminated merger with DuPont de Nemours, Inc. (DuPont), which may cause us to incur substantial costs that may adversely affect our financial results and operations and the market price of our capital stock, including as a result of litigation;

•the duration and impacts of the novel coronavirus (COVID-19) global pandemic and efforts to contain its transmission and distribute vaccines, including the effect of these factors on our business, suppliers, supply chains, customers, end users and economic conditions generally;

•failure to capitalize on, volatility within, or other adverse changes with respect to the Company’s growth drivers, including advanced mobility and advanced connectivity, such as delays in adoption or implementation of new technologies;

•failure to successfully execute on the Company’s long-term growth strategy as a standalone company;

•uncertain business, economic and political conditions in the United States (U.S.) and abroad, particularly in China, ~~South Korea,~~ Germany, Belgium, England, South Korea 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;

•intense global competition affecting both our existing products and products currently under development;

•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.~~systems; and

Our forward-looking statements are expressly qualified by these cautionary statements, which you should consider carefully, along with the risks discussed in this section and elsewhere in this report, including under the section entitled “Risk Factors” in Part II, Item 1A and in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 (the Annual Report) and our

other reports filed with the Securities and Exchange Commission, 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.

The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and the related notes that appear elsewhere in this Form 10-Q along with our audited consolidated financial statements and the related notes thereto in our Annual Report.

Company Background and Strategy

Rogers Corporation designs, develops, manufactures and sells high-performance and high-reliability engineered materials and components to meet our customers’ demanding challenges. We operate two strategic operating segments: Advanced Electronics Solutions (AES) and Elastomeric Material Solutions (EMS). The remaining operations, which represent our non-core businesses, are reported in our Other operating segment. We have a history of innovation and have established Innovation Centers for our research and development (R&D) activities in Chandler, ~~Arizona,~~Arizona; Burlington, ~~Massachusetts,~~Massachusetts; Eschenbach, ~~Germany~~Germany; and Suzhou, China. 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 commercial activities, expanding capacity to meet customer demand and driving innovation.

As a market-driven organization, we are focused on capitalizing on growth ~~drivers, including advanced mobility and advanced connectivity. More specifically,~~opportunities in ~~addition to~~ the ~~impact of COVID-19 discussed below, the key medium- to long-term trends currently affecting our business include the increasing use of advanced driver assistance systems (ADAS) and~~ increasing electrification of vehicles, including electric and hybrid electric vehicles (EV/HEV), and increasing use of advanced driver assistance systems (ADAS) in the automotive industry, the advancement of communication systems in aerospace and defense, the growth of 5G smartphones in the portable electronics ~~industry.~~industry and in renewable energy. In addition to our focus on ~~advanced mobility and advanced connectivity in the automotive, portable electronics and telecommunications industries,~~these markets, we sell into a variety of other markets including general industrial, ~~aerospace~~wireless infrastructure and ~~defense,~~ mass ~~transit, clean energy and connected devices.~~transit.

Our ~~sales and marketing approach~~growth strategy is based on addressing trends in these ~~trends, while~~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 ~~focuses on factors~~ for success as a manufacturer of engineered materials and ~~components:~~components is also built on our reputation for high performance ~~quality, service, cost, efficiency, innovation~~ and ~~technology.~~reliability solutions, trusted customer relationships, a broad product portfolio and custom design capabilities. Through this strategy we expect to be able to drive further commercial wins, which provide the potential for higher growth in the future. We have also expanded our capabilities through organic investment and acquisitions and strive to ensure high quality solutions for our customers.

Our operational excellence efforts are focused on driving significant near-term improvement in our profitability. These efforts include focusing on adding strategic new hires and improving processes and tools to achieve better performance. We have also taken specific cost improvement actions in the fourth quarter of 2022 and first half of 2023 that will benefit subsequent quarters. These actions include optimizing our manufacturing footprint, divesting non-core product lines and reduction to 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. We have established or expanded our capabilities in various locations in~~globally and to support of 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 ~~growth~~ strategy, we see an opportunity to ~~double our annual revenues~~return to historical levels of profitability and accelerate revenue growth, relative to 2022, over the next ~~five years.~~several years, led by organic growth and complemented by targeted

acquisitions. This ~~robust~~ outlook is supported by our participation in a number of fast-growing markets and by our strong competitive positions in these markets. ~~Advanced mobility markets, which are comprised of~~The fastest growing market opportunity is expected to be EV/HEV ~~and ADAS, are expected to grow at the fastest rate. Third-party~~where third-party analysis projects that the ~~EV/HEV~~ market will grow at compound annual growth rate of ~~more than~~between 20% and 25% over the next ~~five years and ADAS at a double-digit rate over that time period.~~several years. Within the EV/HEV market, we believe our advanced battery cell pads, ceramic substrates and power interconnects provide multiple content opportunities to capitalize on this growth. In each of these areas we have secured a number of design wins and have a strong opportunity pipeline, which provides confidence in our growth outlook. ~~In the ADAS market, we continue to build on our current position with new design wins, including those for next-generation automotive radar systems.~~ Other markets with a strong growth trajectory include ADAS, aerospace and defense, ~~clean energy~~portable electronics and ~~portable electronics. We expect that they will~~renewable energy. Each of these markets is expected to contribute to our ~~growth strategy’s aim of doubling revenues over the next five years.~~

To support our revenue growth opportunity during the five-year strategic planning period, we have initiated a manufacturing expansion plan, which includes expanding capacity at existing Rogers’ manufacturing facilities, relocating existing manufacturing capabilities to enhance operational efficiency and adding new manufacturing facilities. This expansion plan will require a significant increase in capital spending together with an associated increase in operating expenses, as compared to historic capital spending and operating expenses over the previous five years.growth.

Terminated Merger with DuPont

merger agreement provided both Rogers Corporation and DuPont with a right to terminate the merger agreement if the merger had not closed on or before November 1, 2022. Consummation of the merger was subject to various customary closing conditions, including regulatory approval by the State Administration for Market Regulation of China (SAMR). As of November 1, 2022, the parties had not received regulatory approval from SAMR. On November 1, 2022, the Company received from DuPont a notice of termination of the merger agreement. Pursuant to the terms of the merger agreement, the Company received a regulatory termination fee from DuPont in the amount of $162.5 million, before taxes, and incurred a transaction-related ~~fees.~~fee of $20.4 million.

COVID-19 Update

The global COVID-19 pandemic has affected and continues to affect Rogers’ business, operations and demand from customers with the emergence and spread of new variants of the virus, such as Delta and Omicron, although to a lesser extent than in 2020, mainly due to the rollout of vaccinations. In response to the outbreak, Rogers prioritized the safety and well-being of its employees—including incentivizing vaccinations, implementing social distancing initiatives in its facilities, providing remote working arrangements for certain employees, expanding personal protective equipment usage, enhancing plant hygiene processes and extending employee benefits, while at the same time taking actions to preserve business continuity. Our non-manufacturing employees transitioned seamlessly to remote working arrangements and are effectively collaborating both internally and with our customers. ~~In some cases, based on local conditions, non-manufacturing employees have returned to their worksites.~~ Surges in COVID-19 cases in China during 2022 resulted in lockdowns as well as various restrictions. These measures have not disrupted our manufacturing efforts, however, they ~~are causing~~have caused logistics challenges. Even since China ended its zero COVID policy in late 2022, although a significant percentage of our employees in Suzhou, China were diagnosed with COVID, our manufacturing has not been materially disrupted and to date we have received no reports of permanent disability or death among our employees. We expect that the COVID-19 pandemic will have a continuing but uncertain impact on our business and operations in the short- and medium-term.

Due to the above circumstances and as described generally in this Form 10-Q, our results of operations for the nine months ended September 30, ~~2022~~2023 are not necessarily indicative of the results to be expected for the full year.

Executive Summary

The following key highlights and factors should be considered when reviewing our results of operations, financial position and liquidity:

•In the third quarter of ~~2022~~2023 as compared to the third quarter of ~~2021,~~2022, our net sales ~~increased~~decreased approximately ~~3.8%~~7.3% to ~~$247.2~~$229.1 million, our gross margin ~~decreased~~increased approximately ~~690~~350 basis points to ~~31.6%~~35.1% from ~~38.5%~~31.6%, and we had an operating income ~~decreased~~of 11.8% compared to operating income of 7.5%, an approximately ~~670~~430 basis points to 7.5% from 14.2%. In the first nine months of 2022 as compared to the first nine months of 2021, our net sales increased approximately 6.4% to $747.5 million, our gross margin decreased approximately 520 basis points to 33.4% from 38.6%, and operating income decreased approximately 690 basis points to 8.3% from 15.2%.increase.

•~~With respect to other operating (income) expense, net, we recognized income~~We made $50.0 million of ~~$0.6 million and expense of $1.4 million~~discretionary principal payments on our revolving credit facility in the third quarter of 2022 and 2021, respectively, and income of $2.8 million and expense of $4.2 million in the first nine months of 2022 and 2021, respectively, primarily related to the financial impacts from the fire at our UTIS manufacturing facility in Ansan, South Korea.2023.

•~~Our net sales and gross margin results were tempered in~~On February 17, 2023, we entered into an asset purchase agreement to sell our high-performance engineered cellular elastomer business for a purchase price of $1.8 million. The first phase of the ~~first nine months of 2022 due to continued raw material shortages and supply chain disruptions,~~deal, which ~~we expect to continue into the fourth quarter of 2022.~~

•~~We incurred $3.4 million and $18.3 million of expenses related~~pertained to the ~~terminated merger with DuPont mainly associated with a discretionary RESIP contribution, retention awards~~net assets other than the land and ~~professional services expenses,~~building, was completed in late March 2023, while the ~~third quarter~~second phase, which pertained to the sale of ~~2022~~the land and ~~first nine months of 2022, respectively.~~building, was completed in early September 2023.

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Results of Operations

The following table sets forth, for the periods indicated, selected operations data expressed as a percentage of net sales:


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021			September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Net sales	Net sales	100.0	%	100.0	%	100.0	%	100.0	%	Net sales	100.0	%	100.0	%	100.0	%	100.0	%
Gross margin	Gross margin	31.6	%	38.5	%	33.4	%	38.6	%	Gross margin	35.1	%	31.6	%	34.1	%	33.4	%

Selling, general and administrative expenses	Selling, general and administrative expenses	20.5	%	20.1	%	22.0	%	19.3	%	Selling, general and administrative expenses	19.4	%	20.5	%	21.4	%	22.0	%
Research and development expenses	Research and development expenses	3.7	%	3.2	%	3.4	%	3.2	%	Research and development expenses	3.4	%	3.7	%	3.6	%	3.4	%
Restructuring and impairment charges	Restructuring and impairment charges	0.2	%	0.4	%	0.1	%	0.5	%	Restructuring and impairment charges	0.8	%	0.2	%	2.3	%	0.1	%
Other operating (income) expense, net	Other operating (income) expense, net	(0.3)	%	0.6	%	(0.4)	%	0.4	%	Other operating (income) expense, net	(0.3)	%	(0.3)	%	(1.0)	%	(0.4)	%
Operating income	Operating income	7.5	%	14.2	%	8.3	%	15.2	%	Operating income	11.8	%	7.5	%	7.8	%	8.3	%

Equity income in unconsolidated joint ventures	Equity income in unconsolidated joint ventures	0.5	%	0.7	%	0.6	%	0.8	%	Equity income in unconsolidated joint ventures	0.3	%	0.5	%	0.2	%	0.6	%
Pension settlement charges		—	%	(0.2)	%	—	%	(0.1)	%

Other income (expense), net	Other income (expense), net	0.3	%	(0.2)	%	0.1	%	0.6	%	Other income (expense), net	0.3	%	0.3	%	—	%	0.1	%
Interest expense, net	Interest expense, net	(1.2)	%	(0.2)	%	(0.7)	%	(0.2)	%	Interest expense, net	(1.0)	%	(1.2)	%	(1.2)	%	(0.7)	%
Income before income tax expense		7.1	%	14.3	%	8.3	%	16.3	%
Income before income taxes										Income before income taxes	11.4	%	7.1	%	6.8	%	8.3	%

Income tax expense		1.1	%	3.8	%	1.7	%	4.2	%
Income tax expense (benefit)										Income tax expense (benefit)	3.1	%	1.1	%	2.1	%	1.7	%

Net income	Net income	6.0	%	10.5	%	6.6	%	12.1	%	Net income	8.3	%	6.0	%	4.7	%	6.6	%

																											Net Sales and Gross Margin
		Three Months Ended						Nine Months Ended							Three Months Ended						Nine Months Ended
(Dollars in thousands)	(Dollars in thousands)	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021			(Dollars in thousands)	September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022
Net sales	Net sales	$	247,231		$	238,263		$	747,467		$	702,434		Net sales	$	229,148		$	247,231		$	703,816		$	747,467
Gross margin	Gross margin	$	78,064		$	91,654		$	249,976		$	270,986		Gross margin	$	80,360		$	78,064		$	239,678		$	249,976
Percentage of net sales	Percentage of net sales	31.6		%	38.5		%	33.4		%	38.6		%	Percentage of net sales	35.1		%	31.6		%	34.1		%	33.4		%

Net sales ~~increased~~decreased by ~~3.8%~~7.3% in the third quarter of ~~2022~~2023 compared to the third quarter of ~~2021.~~2022. Our AES and EMS operating segments had a net sales ~~decrease~~decreases of 3.2% and ~~a net sales increase of 13.3%~~11.7%, respectively. The ~~increase~~decrease in net sales was primarily due to ~~higher~~lower net sales in the EV/HEV, ~~market in our AES operating segment and higher net sales in the general industrial market in our EMS operating segment. The increase was partially offset by lower net sales in the clean energy,~~ aerospace and defense, portable electronics and wireless infrastructure and ADAS markets in our AES operating segment. Additionally, our EMS operating segment net sales increased by $9.8 million, or 4.1%, reflecting the impact from our acquisition of Silicone Engineering. Net sales were unfavorably impacted by foreign currency impacts of $11.8 million, or 5.0%, due to the depreciation in value of the euro, British pound and Chinese renminbi relative to the U.S. dollar.

Net sales increased by 6.4% in the first nine months of 2022 compared to the first nine months of 2021. Our AES and EMS operating segments had a net sales decrease of 0.6% and a net sales increase of 16.9%, respectively. The increase in net sales was primarily due to higher net sales in the EV/HEV market in our AES operating segment and higher net sales in the general industrial and EV/HEV markets in our EMS operating segment. The increase was partially offset by lower net sales in the wireless infrastructure, aerospace and defense, ADAS and clean energy markets in our AES operating segment and lower net sales in the general industrial, consumer and portable electronics markets in our EMS operating segment. The decrease was partially offset by higher net sales in the renewable energy, ADAS and general industrial markets in our AES operating segment and higher net sales in the aerospace and defense market in our EMS operating segment. ~~Additionally,~~Net sales were favorably impacted by foreign currency impacts of $1.9 million, or 0.8%, due to the appreciation in value of the euro relative to the U.S. dollar, partially offset by the depreciation in value of the Chinese renminbi relative to the U.S. dollar.

Net sales decreased by 5.8% in the first nine months of 2023 compared to the first nine months of 2022. Our AES and EMS operating segments had net sales decreases of 3.1% and 9.4%, respectively. The decrease in net sales was primarily due to lower net sales in the wireless infrastructure, aerospace and defense, EV/HEV and portable electronics markets in our AES operating segment and lower net sales in the general industrial, consumer, portable electronics and EV/HEV markets in our EMS operating ~~segment~~segment. The decrease was partially offset by higher net sales ~~increased by $32.0 million, or 4.6%, reflecting~~in the ~~impact from~~renewable energy and ADAS markets in our ~~acquisition of Silicone Engineering.~~AES operating segment and higher net sales in the aerospace and defense market in our EMS operating segment. Net sales were unfavorably impacted by foreign currency impacts of ~~$22.8~~$7.0 million, or ~~3.2%~~0.9%, due to the depreciation in value of the ~~euro,~~Chinese renminbi and the British pound ~~and Chinese renminbi~~relative to the U.S. dollar, partially offset by the appreciation in value of the euro relative to the U.S. dollar.

Gross margin as a percentage of net sales ~~decreased~~increased approximately ~~690~~350 basis points to 35.1% in the third quarter of 2023 compared to 31.6% in the third quarter of ~~2022 compared to 38.5% in the third quarter of 2021.~~2022. Gross margin in the third quarter of ~~2022 was unfavorably impacted by higher fixed overhead expenses, unfavorable absorption of fixed overhead expenses, higher~~2023 improved due to lower freight, duties and tariffs ~~expenses, unfavorable productivity performance~~costs and ~~unfavorable product mix~~favorable factory optimization efforts in our AES and EMS operating segments, as well as lower raw material costs in our EMS operating segment. This was partially offset by the unfavorable impacts from lower volume and

2927

unfavorable mix, as well as unfavorable yield performance ~~and a higher inventory reserves provision in our EMS operating segment and lower volume in our AES operating segment. This was partially offset by the favorable impacts of commercial actions taken~~ in our AES and EMS operating segments, ~~as well as~~and higher ~~volume~~inventory reserves provisions in our EMS operating segment.

Gross margin as a percentage of net sales ~~decreased~~increased approximately ~~520~~70 basis points to 34.1% in the first nine months of 2023 compared to 33.4% in the first nine months of ~~2022 compared to 38.6% in the first nine months of 2021.~~2022. Gross margin in the first nine months of ~~2022 was unfavorably impacted by higher fixed overhead expenses, unfavorable yield performance and higher~~2023 improved due to lower freight, duties and tariffs ~~expenses~~costs, lower raw material costs and favorable factory optimization efforts in our AES and EMS operating segments, as well as unfavorable productivity performance and a higher inventory reserves provision in our EMS operating segment and unfavorable product mix, unfavorable absorption of fixed overhead costs and lower volume in our AES operating segment.segments. This was partially offset by ~~the favorable impacts of commercial actions taken~~lower volume and unfavorable mix, as well as higher inventory reserves provisions and unfavorable yield performance in our AES and EMS operating ~~segments, as well as higher volume and favorable absorption of fixed overhead costs in our EMS operating segments and a lower inventory reserves provision in our AES operating segment.~~segments.

Supply constraints on raw material and labor availability moderated production levels for our EMS operating segment, creating operational inefficiencies, which negatively impacted our gross margin. Further, the continuation of the global semiconductor chip shortage and its impact on our customers’ ability to continue to manufacture has negatively impacted our net sales, particularly in the ADAS market segment, for our AES operating segment. The recent COVID-19 outbreaks, particularly in Asia, adversely impacted our customers’ ability to continue manufacturing operations, which in turn negatively impacted our net sales for both our AES and EMS operating segments in the first nine months of 2022. Additionally, the impacts of the war in Ukraine, including sanctions and export controls, have impacted the production efforts of suppliers for certain raw materials, both to us and our customers, which could potentially have an impact on our net sales, as well as our gross margin for our AES and EMS operating segments. The global supply chain disruptions experienced in 2022 to-date and their impacts to our net sales and gross margin are expected to continue further into 2022.

																											Selling, General and Administrative Expenses
		Three Months Ended						Nine Months Ended							Three Months Ended						Nine Months Ended
(Dollars in thousands)	(Dollars in thousands)	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021			(Dollars in thousands)	September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022
Selling, general and administrative expenses	Selling, general and administrative expenses	$	50,653		$	47,886		$	164,496		$	135,258		Selling, general and administrative expenses	$	44,336		$	50,653		$	150,549		$	164,496
Percentage of net sales	Percentage of net sales	20.5		%	20.1		%	22.0		%	19.3		%	Percentage of net sales	19.4		%	20.5		%	21.4		%	22.0		%

Selling, general and administrative (SG&A) expenses ~~increased 5.8%~~decreased 12.5% in the third quarter of ~~2022~~2023 from the third quarter of ~~2021,~~2022, primarily due to a ~~$3.0~~$3.8 million ~~increase~~decrease in professional services, a ~~$0.9~~$1.8 million ~~increase~~decrease in total compensation and benefits and a $0.7 million decrease in other intangible asset amortization expense, partially offset by a ~~$0.3~~$0.4 million increase in travel expenses and ~~entertainment expenses,~~ a $0.2 million increase in fixed asset depreciation ~~expense and a $0.1 million increase~~expense.

SG&A expenses decreased 8.5% in ~~advertising expense, partially offset by a $1.3~~the first nine months of 2023 from the first nine months of 2022, primarily due to an $11.2 million decrease in total compensation and benefits, a ~~$0.7~~$2.6 million decrease ~~in software expenses and a $0.2 million decrease in utility costs.~~

SG&A expenses increased 21.6% in the first nine months of 2022 from the first nine months of 2021, primarily due to a $13.4 million increase in professional services, a $8.5 million increase in total compensation and benefits, a $3.2 million increase in other intangible asset amortization expense and a ~~$2.1~~$1.1 million decrease in professional services, partially offset by a $0.7 million increase in ~~software expenses, a $1.6~~fixed asset depreciation expense and $0.7 million increase in travel and entertainment expenses and a $0.6 million increase in advertising expense, partially offset by a $0.4 million decrease in recruiting/relocation/training expenses and a $0.4 million decrease in utility costs.expenses.

The ~~increase~~decrease in total compensation and benefits was primarily due to a ~~$1.8~~$0.4 million decrease in the impact for retention awards issued in connection with the terminated DuPont merger, on a quarter-to-date basis, and athe $6.5 million discretionary RESIP contribution in 2022 and a ~~$6.2~~$1.5 million decrease in the impact for retention awards issued in connection with the terminated DuPont merger on a year-to-date basis. The ~~increase~~decrease in professional services expense ~~is primarily~~on a quarter-to-date basis was due to a $1.5 million ofdecrease in expenses incurred related to the terminated merger with DuPont, ~~and~~a $0.1 million ofdecrease in expenses incurred related to our acquisition of Silicone Engineering as well as an overall general reduction of professional service expenses across general and administrative departments. The decrease in professional services expense on a ~~quarter-to-date~~year-to-date basis ~~and~~was due to a $5.4 million ofdecrease in expenses incurred related to the terminated merger with DuPont, ~~and $0.7~~a $0.6 million ofdecrease in expenses incurred related to our acquisition of Silicone Engineering ~~on a year-to-date basis.~~as well as an overall general reduction of professional service expenses across general and administrative departments, partially offset by $7.6 million of expenses related to non-routine shareholder advisory costs and $1.1 million of expenses in connection with the sale of our high-performance engineered cellular elastomer business.

																											Research and Development Expenses
		Three Months Ended						Nine Months Ended							Three Months Ended						Nine Months Ended
(Dollars in thousands)	(Dollars in thousands)	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021			(Dollars in thousands)	September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022
Research and development expenses	Research and development expenses	$	9,140		$	7,531		$	25,450		$	22,195		Research and development expenses	$	7,827		$	9,140		$	25,511		$	25,450
Percentage of net sales	Percentage of net sales	3.7		%	3.2		%	3.4		%	3.2		%	Percentage of net sales	3.4		%	3.7		%	3.6		%	3.4		%

R&D expenses ~~increased 21.4%~~decreased 14.4% in the third quarter of ~~2022~~2023 from the third quarter of ~~2021~~2022 due to ~~increases~~a decrease in ~~laboratory expenses,~~trial costs for alternative raw materials, a decrease in professional services and a decrease in total compensation and ~~professional services~~benefits expense.

R&D expenses increased ~~14.7%~~0.2% in the first nine months of ~~2022~~2023 from the first nine months of ~~2021~~2022 due to ~~increases~~an increase in trial costs for alternative raw materials, partially offset by a decrease in professional services and a decrease in total compensation and benefits ~~travel and entertainment expenses, laboratory expenses and depreciation~~ expense.

																			Restructuring and Impairment Charges and Other Operating (Income) Expense, Net
		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
(Dollars in thousands)	(Dollars in thousands)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021		(Dollars in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Restructuring and impairment charges	Restructuring and impairment charges	$	373	$	1,007	$	1,119	$	3,260	Restructuring and impairment charges	$	1,921	$	373	$	16,361	$	1,119
Other operating (income) expense, net	Other operating (income) expense, net	$	(578)	$	1,431	$	(2,852)	$	3,536	Other operating (income) expense, net	$	(846)	$	(578)	$	(7,507)	$	(2,852)

We incurred restructuring charges and related expenses associated with the announced reduction in force plan of our global workforce along with certain facility consolidation efforts, which were substantially completed as of September 30, 2023. The plans are expected to significantly reduce our manufacturing ~~footprint optimization plans involving certain Europe~~costs and ~~Asia manufacturing locations.~~operating expenses. We recognized restructuring charges

and related expenses pertaining to these restructuring projects of ~~$0.4~~$1.9 million in the third quarter of ~~2022~~2023 and ~~$0.9~~$16.4 million in the first nine months of ~~2022.~~2023. For additional information, refer to “Note 15 – Supplemental Financial Information” to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q.

With respect to other operating (income) expense, net, we recognized income of ~~$0.6~~$0.8 million and ~~expense~~income of ~~$1.4~~$0.6 million in the third quarter of ~~2022~~2023 and ~~2021,~~2022, respectively, and income of ~~$2.9~~$7.5 million and ~~expense~~income of ~~$3.5~~$2.9 million in the first nine months of 2023 and 2022, ~~and 2021, respectively, primarily related to the financial impacts from the fire at our UTIS manufacturing facility in Ansan, South Korea.~~respectively. The impact in the third quarter of 2023 and 2022 and the first nine months of 2023 and 2022, primarily consisted of insurance recoveries, partially offset by professional service costs, compensation and benefits for certain of our UTIS employees, costs incurred under our manufacturing facility lease agreement and inventory charges. The impact in the third quarter of 2021 and the first nine months of 2021 primarily consisted of write-offs of fixed assets and inventory destroyed and/or damaged in the fire, professional service costs, costs incurred under our manufacturing facility lease agreement, and compensation and benefits for certain of our UTIS employees, partially offset by the recognition of insurance recoveries. For additional information, refer to “Note 15 – Supplemental Financial Information” to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q.

																			Equity Income in Unconsolidated Joint Ventures
		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
(Dollars in thousands)	(Dollars in thousands)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021		(Dollars in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Equity income in unconsolidated joint ventures	Equity income in unconsolidated joint ventures	$	1,162	$	1,773	$	4,237	$	5,884	Equity income in unconsolidated joint ventures	$	641	$	1,162	$	1,559	$	4,237

As of September 30, ~~2022,~~2023, we had two unconsolidated joint ventures, each 50% owned: Rogers INOAC Corporation (RIC) and Rogers INOAC Suzhou Corporation (RIS). Equity income in those unconsolidated joint ventures decreased ~~34.5%~~44.8% in the third quarter of ~~2022~~2023 from the third quarter of ~~2021,~~2022, and decreased ~~28.0%~~63.2% in the first nine months of ~~2022~~2023 from the first nine months of ~~2021.~~2022. On a quarter-to-date ~~basis~~ and a year-to-date ~~basis,~~bases, the decrease was due to lower net sales ~~and unfavorable productivity performance~~ for RIC and RIS. The lower net sales for both RIC and RIS was primarily driven by the portable electronics market in Asia.

Other Income (Expense), Net
Three Months Ended Nine Months Ended
(Dollars in thousands) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Pension settlement charges $ — $ (534) $ — $ (534)
Other income (expense), net $ 977 $ (469) $ 1,563 $ 3,738

In the third quarter of 2021, we recorded a $0.5 million pre-tax settlement charge in connection with further settlement efforts for the termination of the Rogers Corporation Defined Benefit Pension Plan (following its merger with the Hourly Employees Pension Plan of Arlon LLC, Microwave Material and Silicone Technologies Divisions, Bear, Delaware (collectively, the Merged Plan)).


Other Income (Expense), Net
	Three Months Ended				Nine Months Ended
(Dollars in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022

Other income (expense), net	$	761	$	977	$	9	$	1,563

Other income (expense), net ~~increased~~decreased to income of $0.8 million in the third quarter of 2023 from income of $1.0 million in the third quarter of ~~2022 from expense of $0.5 million in the third quarter of 2021.~~2022. On a quarter-to-date basis, the ~~increase~~decrease was due to the unfavorable impacts from our foreign currency transactions, partially offset by favorable impacts from our foreign currency ~~derivatives and favorable impacts from our copper derivative contracts.~~derivatives.

Other income (expense), net decreased to income of less than $0.1 million in the first nine months of 2023 from income of $1.6 million in the first nine months of ~~2022 from income of $3.7 million in the first nine months of 2021.~~2022. On a year-to-date basis, the decrease was due to unfavorable impacts from our ~~copper derivative contracts,~~foreign currency transactions, partially offset by favorable impacts from our foreign currency derivatives and the favorable impacts from our ~~foreign currency transactions.~~copper derivative contracts.

																			Interest Expense, Net
		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
(Dollars in thousands)	(Dollars in thousands)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021		(Dollars in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Interest expense, net	Interest expense, net	$	(2,942)	$	(441)	$	(5,559)	$	(1,452)	Interest expense, net	$	(2,328)	$	(2,942)	$	(8,627)	$	(5,559)

Interest expense, net, ~~increased~~decreased by ~~$2.5~~$0.6 million in the third quarter of ~~2022~~2023 from the third quarter of ~~2021,~~2022, and increased by ~~$4.1~~$3.1 million in the first nine months of ~~2022~~2023 from the first nine months of ~~2021.~~2022. The ~~increases~~decrease on a quarter-to-date ~~and~~basis was primarily due to a lower weighted-average outstanding balance, partially offset by a higher weighted-average interest rate. The increase on a year-to-date ~~bases~~basis was primarily due to a higher weighted-average interest rate, partially offset by a lower weighted-average outstanding ~~balance for our borrowings under our revolving credit facility.~~balance.

																											Income Taxes
		Three Months Ended						Nine Months Ended							Three Months Ended						Nine Months Ended
(Dollars in thousands)	(Dollars in thousands)	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021			(Dollars in thousands)	September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022
Income tax expense		$	2,835		$	8,999		$	12,683		$	29,371
Income tax expense (benefit)														Income tax expense (benefit)	$	7,161		$	2,835		$	14,311		$	12,683
Effective tax rate	Effective tax rate	16.0		%	26.4		%	20.5		%	25.7		%	Effective tax rate	27.3		%	16.0		%	30.0		%	20.5		%

Our effective income tax rate was ~~16.0%~~27.3% and ~~26.4%~~16.0% for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The ~~decrease~~increase from the third quarter of ~~2021~~2022 was primarily due to the ~~beneficial impact of a~~third quarter 2022 decrease in ~~current quarter accruals of reserves for~~ uncertain tax ~~positions.~~positions that did not recur in 2023. Our effective income tax rate was ~~20.5%~~30.0% and ~~25.7%~~20.5% for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The ~~decrease~~increase from the ~~first nine months~~third quarter of ~~2021~~2022 was primarily due to the third quarter 2022 decrease in ~~the current quarter accruals of~~ reserves ~~of unrecognized~~for uncertain tax ~~benefits.~~positions that did not recur in 2023.

Operating Segment Net Sales and Operating Income

Advanced Electronics Solutions


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
(Dollars in thousands)	(Dollars in thousands)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021		(Dollars in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Net sales	Net sales	$	130,608	$	134,991	$	404,926	$	407,309	Net sales	$	126,400	$	130,608	$	392,440	$	404,926
Operating income	Operating income	$	2,263	$	13,945	$	12,342	$	47,082	Operating income	$	5,674	$	2,263	$	6,001	$	12,342

AES net sales decreased by 3.2% in the third quarter of ~~2022~~2023 compared to the third quarter of ~~2021.~~2022. The decrease in net sales over the third quarter of ~~2021~~2022 was primarily driven by lower net sales in the ~~clean energy,~~EV/HEV, wireless infrastructure, aerospace and defense and ~~ADAS~~portable electronics markets, partially offset by higher net sales in the ~~EV/HEV market.~~renewable energy, ADAS and general industrial markets. Net sales were ~~unfavorably~~favorably impacted by foreign currency fluctuations of ~~$8.0~~$2.6 million, or ~~5.9%~~2.0%, due to the appreciation in value of the euro relative to the U.S dollar, partially offset by the depreciation in value of the ~~euro~~Chinese renminbi relative to the U.S. dollar.

AES net sales decreased by ~~0.6%~~3.1% in the first nine months of ~~2022~~2023 compared to the first nine months of ~~2021.~~2022. The decrease in net sales over the first nine months of ~~2021~~2022 was primarily driven by lower net sales in the wireless infrastructure, aerospace and defense ~~ADAS~~ and ~~clean energy~~portable electronics markets, partially offset by higher net sales in the ~~EV/HEV market.~~renewable energy and ADAS markets. Net sales were unfavorably impacted by foreign currency fluctuations of ~~$16.3~~$2.3 million, or ~~4.0%~~0.6%, 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.

~~Operating~~We recognized operating income ~~decreased by 83.8%~~of $5.7 million in the third quarter of ~~2022 from~~2023 compared to operating income of $2.3 million in the third quarter of ~~2021.~~2022. The increase in operating income was primarily due to a year-over-year decrease in costs related to the terminated DuPont merger, partially offset by unfavorable year-over-year changes in restructuring charges. The increase in operating income was also due to lower freight, duties and tariffs costs and favorable factory optimization efforts. This was partially offset by lower volume and unfavorable mix, as well as unfavorable yield performance. As a percentage of net sales, the operating income in the third quarter of 2023 was 4.5% compared to 1.7% of operating income reported in the third quarter of 2022.

We recognized operating income of $6.0 million in the first nine months of 2023 compared to operating income of $12.3 million in the first nine months of 2022. The decrease in operating income was primarily due to unfavorable year-over-year changes in restructuring charges and shared service operating expense allocations driven by non-routine shareholder advisory costs, ~~incurred~~partially offset by a year-over-year decrease in costs related to the terminated DuPont merger. The decrease in operating income was also due to lower volume and unfavorable mix, as well as unfavorable yield performance and higher ~~fixed overhead expenses, unfavorable absorption of fixed overhead expenses, higher freight, duties and tariffs expenses, unfavorable productivity performance, unfavorable product mix and lower volume.~~inventory reserves provisions. This 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, operating income in the first nine months of 2023 was 1.5% compared to 3.0% of operating income reported in the first nine months of 2022.

Elastomeric Material Solutions


	Three Months Ended				Nine Months Ended
(Dollars in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Net sales	$	97,986	$	110,983	$	295,576	$	326,313
Operating income	$	19,851	$	14,322	$	43,293	$	43,920

EMS net sales decreased by 11.7% in the third quarter of 2023 compared to the third quarter of 2022. The decrease in net sales over the third quarter of 2022 was primarily driven by lower net sales in the general industrial, consumer and portable electronics markets, partially offset by higher net sales in the aerospace and defense market. Net sales were unfavorably impacted by foreign currency fluctuations of $0.5 million, or 0.5%, due to the depreciation in value of the Chinese renminbi relative to the U.S. dollar, partially offset by the appreciation in value of the euro relative to the U.S. dollar.

EMS net sales decreased by 9.4% in the first nine months of 2023 compared to the first nine months of 2022. The decrease in net sales over the first nine months of 2022 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 $4.2 million, or 1.3%, due to the depreciation in value of Chinese renminbi and the British pound relative to the U.S. dollar.

We recognized operating income of $19.9 million in the third quarter of 2023 compared to operating income of $14.3 million in the third quarter of 2022. The increase in operating income was primarily due to a year-over-year decrease in costs related to the terminated DuPont merger, partially offset by unfavorable year-over-year changes in restructuring charges. The increase in operating income was also due to lower freight, duties and tariffs costs, favorable ~~impacts of commercial actions taken.~~factory optimization efforts and lower raw

material costs. This was partially offset by lower volume, as well as unfavorable yield performance and higher inventory reserves provisions. As a percentage of net sales, operating income in the third quarter of ~~2022~~2023 was ~~1.7%, an approximately 860 basis point decrease as~~20.3% compared to ~~the 10.3%~~12.9% reported in the third quarter of ~~2021.~~2022.

~~Operating~~We recognized operating income ~~decreased by 73.8%~~of $43.3 million in the first nine months of ~~2022 from~~2023 compared to operating income of $43.9 million in the first nine months of ~~2021.~~2022. The decrease in operating income was primarily due to unfavorable year-over-year changes in restructuring charges and shared service operating expense allocations driven by non-routine shareholder advisory costs, ~~incurred~~partially offset by a year-over-year decrease in costs related to the terminated DuPont merger. The decrease in operating income was also due to ~~higher fixed overhead expenses,~~lower volume, as well as unfavorable yield performance and higher ~~freight, duties and tariffs expenses, unfavorable product mix, unfavorable absorption of fixed overhead costs and lower volume.~~inventory reserves provisions. This was partially offset by ~~the favorable impacts of commercial actions taken and a~~ lower inventory reserves provision. As a percentage of net sales, operating income in the first nine months of 2022 was 3.0%, an approximately 860 basis point decrease as compared to the 11.6% reported in the first nine months of 2021.

The continuation of the global semiconductor chip shortage and its impact on our customers’ ability to continue to manufacture has negatively impacted our net sales, particularly in the ADAS market segment. Further, the recent COVID-19 outbreaks,

particularly in Asia, adversely impacted our customers’ ability to continue manufacturing operations, which in turn negatively impacted our net sales in the first nine months of 2022. Additionally, the impacts of the war in Ukraine, including sanctions and export controls, have impacted the production efforts of suppliers for certain raw materials, both to us and our customers, which could potentially have an impact on our net sales, as well as our gross margin. The global supply chain disruptions experienced in 2022 to-date and their impacts to our net sales and gross margin are expected to continue further into 2022.

~~Elastomeric Material Solutions~~

Three Months Ended Nine Months Ended
(Dollars in thousands) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Net sales $ 110,983 $ 97,951 $ 326,313 $ 279,131
Operating income $ 14,322 $ 18,104 $ 43,920 $ 53,818

EMS net sales increased by 13.3% in the third quarter of 2022 compared to the third quarter of 2021. The increase in net sales over the third quarter of 2021 was primarily driven by $9.8 million in net sales, or 10.0%, reflecting the impact from our acquisition of Silicone Engineering, as well as higher net sales in the general industrial market. Net sales were unfavorably impacted by foreign currency fluctuations of $3.7 million, or 3.7%, due to the depreciation in value of the euro, British pound and Chinese renminbi relative to the U.S. dollar.

EMS net sales increased by 16.9% in the first nine months of 2022 compared to the first nine months of 2021. The increase in net sales over the first nine months of 2021 was primarily driven by $32.0 million in net sales, or 11.5%, reflecting the impact from our acquisition of Silicone Engineering, as well as higher net sales in the general industrial and EV/HEV markets, partially offset by lower net sales in the portable electronics market. Net sales were unfavorably impacted by foreign currency fluctuations of $6.2 million, or 2.2%, due to the depreciation in value of the euro, British pound and Chinese renminbi relative to the U.S. dollar.

Operating income decreased by 20.9% in the third quarter of 2022 from the third quarter of 2021. The decrease in operating income was primarily due to unfavorable year-over-year changes in shared service operating expense allocations driven by costs incurred related to the terminated DuPont merger. The decrease in operating income was also due to higher fixed overhead expenses, unfavorable yield performance, higher freight, duties and tariffs ~~expenses, unfavorable productivity performance and a higher inventory reserves provision. This was partially offset by the favorable impacts of commercial actions taken and higher volume~~costs, lower raw material costs and favorable ~~absorption of fixed overhead costs,~~factory optimization efforts, in addition to a $2.0 million favorable change in charges/benefits related to the UTIS fire. As a percentage of net sales, operating income in the third quarter of 2022 was 12.9%, an approximately 560 basis point decrease as compared to the 18.5% reported in the third quarter of 2021.

Operating income decreased by 18.4% in the first nine months of 2022 from the first nine months of 2021. The decrease in operating income was primarily due to unfavorable year-over-year changes in shared service operating expense allocations driven by costs incurred related to the terminated DuPont merger. The decrease in operating income was also due to higher fixed overhead expenses, unfavorable yield performance, higher freight, duties and tariffs expenses, unfavorable productivity performance and a higher inventory reserves provision. This was partially offset by the favorable impacts of commercial actions taken, higher volume and favorable absorption of fixed overhead costs, in addition to a $7.0$4.0 million favorable change in charges/benefits related to the UTIS fire. As a percentage of net sales, operating income in the first nine months of ~~2022~~2023 was ~~13.5%, an approximately 580 basis point decrease as~~14.6% compared to ~~the 19.3%~~13.5% reported in the first nine months of ~~2021.~~

Supply constraints on raw material and labor availability moderated production levels, creating operational inefficiencies, which negatively impacted our gross margin. Further, the recent COVID-19 outbreaks, particularly in Asia, adversely impacted our customers’ ability to continue manufacturing operations, which in turn negatively impacted our net sales in the first nine months of 2022. Additionally, the impacts of the war in Ukraine, including sanctions and export controls, have impacted the production efforts of suppliers for certain raw materials, both to us and our customers, which could potentially have an impact on our net sales, as well as our gross margin. The global supply chain disruptions experienced in 2022 to-date and their impacts to our net sales and gross margin are expected to continue further into 2022.

Other


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
(Dollars in thousands)	(Dollars in thousands)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021		(Dollars in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Net sales	Net sales	$	5,640	$	5,321	$	16,228	$	15,994	Net sales	$	4,762	$	5,640	$	15,800	$	16,228
Operating income	Operating income	$	1,891	$	1,750	$	5,501	$	5,837	Operating income	$	1,597	$	1,891	$	5,470	$	5,501

Net sales in this segment ~~increased~~decreased by ~~6.0%~~15.6% in the third quarter of ~~2022~~2023 from the third quarter of ~~2021. The increase in net sales over the third quarter of 2021 was primarily driven by higher net sales in the general industrial market.~~

Net sales in this segment increased by 1.5% in the first nine months of 2022 from the first nine months of 2021. The increase in net sales over the first nine months of 2021 was primarily driven by higher net sales in the general industrial market.

2022. Operating income ~~increased 8.1%~~decreased 15.5% in the third quarter of ~~2022~~2023 compared to the third quarter of 2021. The increase in operating income was primarily driven by favorable productivity performance, favorable yield performance and higher volume, partially offset by unfavorable absorption of fixed overhead costs and unfavorable product mix.

~~Operating income decreased 5.8% in the first nine months of 2022 compared to the first nine months of 2021.~~2022. The decrease in operating income was primarily driven by ~~unfavorable product mix~~lower volume and unfavorable ~~absorption of fixed overhead costs, partially offset by favorable productivity performance, favorable yield performance and higher volume.~~

factory utilization. As a percentage of net sales, operating income was 33.5% in both the third quarter of ~~2022 was 33.5%, a 60 basis point increase as compared to 32.9% in~~2023 and the third quarter of ~~2021.~~2022.

Net sales in this segment decreased by 2.6% in the first nine months of 2023 from the first nine months of 2022. Operating income decreased 0.6% in the first nine months of 2023 compared to the first nine months of 2022. The decrease in operating income was primarily driven by lower volume, unfavorable factory utilization and higher inventory reserves provisions, partially offset by lower freight, duties and tariffs costs. As a percentage of net sales, operating income in the first nine months of ~~2022~~2023 was ~~33.9%, a 260 basis point decrease as~~34.6% compared to ~~the 36.5% reported~~33.9% in the first nine months of ~~2021.~~2022.

Liquidity, Capital Resources and Financial Position

We believe that our existing sources of liquidity and cash flows that we expect to generate from our operations, together with our available credit facilities, will be sufficient to fund our operations, currently planned capital expenditures, research and development 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 in an effort 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:


(Dollars in thousands)	(Dollars in thousands)	September 30, 2022		December 31, 2021		(Dollars in thousands)	September 30, 2023		December 31, 2022
United States	United States	$	117,338	$	76,621	United States	$	44,378	$	119,931
Europe	Europe	34,178		56,034		Europe	33,525		69,877
Asia	Asia	84,945		99,641		Asia	48,552		46,042
Total cash and cash equivalents	Total cash and cash equivalents	$	236,461	$	232,296	Total cash and cash equivalents	$	126,455	$	235,850

Approximately ~~$119.1~~$82.1 million of our cash and cash equivalents were held by non-U.S. subsidiaries as of September 30, ~~2022.~~2023. We did not make any changes in the nine months ended September 30, ~~2022~~2023 to our position on the permanent reinvestment of our earnings from foreign operations. With the exception of certain of our Chinese subsidiaries, where a substantial portion of our Asia cash and cash equivalents are held, we continue to assert that historical foreign earnings are indefinitely reinvested.


(Dollars in thousands)	(Dollars in thousands)	September 30, 2022		December 31, 2021		(Dollars in thousands)	September 30, 2023		December 31, 2022
Key Financial Position Accounts:	Key Financial Position Accounts:					Key Financial Position Accounts:
Cash and cash equivalents	Cash and cash equivalents	$	236,461	$	232,296	Cash and cash equivalents	$	126,455	$	235,850
Accounts receivable, net	Accounts receivable, net	$	162,929	$	163,092	Accounts receivable, net	$	185,750	$	177,413
Inventories	Inventories	$	173,610	$	133,384	Inventories	$	157,073	$	182,402
Borrowings under revolving credit facility	Borrowings under revolving credit facility	$	290,000	$	190,000	Borrowings under revolving credit facility	$	80,000	$	215,000

Changes in key financial position accounts and other significant changes in our statements of financial position from December 31, ~~2021~~2022 to September 30, ~~2022~~2023 were as follows:

•Cash and cash equivalents were $126.5 million as compared to $235.9 million as of December 31, 2022, a decrease of $109.4 million, or 46.4%. This decrease was primarily due to $135.0 million in discretionary principal payments on our revolving credit facility, $34.5 million in capital expenditures and $2.5 million in tax payments related to net share settlement of equity awards, partially offset by cash flows provided by operations.

•Accounts receivable, net ~~decreased 0.1%~~increased 4.7% to ~~$162.9~~$185.8 million as of September 30, ~~2022~~2023 from ~~$163.1~~$177.4 million as of December 31, ~~2021.~~2022. The ~~decrease~~increase from year-end was primarily due to the receipt or settlement of $6.3 million in recognized UTIS fire insurance receivables and a $3.8 million decrease in our income taxes receivable, partially offset by an increase in days sales outstanding, higher net sales at the end of the third quarter of ~~2022~~2023 compared to at the end of ~~2021.~~2022, partially offset by a $5.3 million decrease in our income taxes receivable.

•Inventories ~~increased 30.2%~~decreased 13.9% to ~~$173.6~~$157.1 million as of September 30, ~~2022,~~2023, from ~~$133.4~~$182.4 million as of December 31, ~~2021,~~2022, primarily driven by ~~raw material cost increases~~a reduction in finished goods stock as well as ~~the ramp up of raw material purchases and production efforts to meet anticipated demand.~~higher inventory reserves provisions.

•Borrowings under revolving credit facility were ~~$290.0~~$80.0 million as of September 30, ~~2022 from $190.0~~2023 compared to $215.0 million as of December 31, ~~2021.~~2022. This decrease was ~~as a result of $100.0~~due to $135.0 million ~~of borrowings under~~in discretionary principal payments on our revolving credit facility ~~during~~made in the first nine months of ~~2022.~~2023. For additional information regarding this facility and the ~~Fourth~~Fifth Amended Credit Agreement, refer to “Note 9 – Debt” to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q.

Nine Months Ended
(Dollars in thousands) September 30, 2022 September 30, 2021
Key Cash Flow Measures:
Net cash provided by operating activities $ 1,834 $ 106,115
Net cash used in investing activities $ (81,048) $ (42,697)
Net cash provided by (used in) financing activities $ 89,997 $ (30,844)

As of September 30, 2022, cash and cash equivalents were $236.5 million as compared to $232.3 million as of December 31, 2021, an increase of $4.2 million, or 1.8%. This increase was primarily due to $100.0 million in borrowings under our revolving credit facility, partially offset by $87.0 million in capital expenditures and $10.8 million in tax payments related to net share settlement of equity awards.

Following the end of the third quarter, on November 1, 2022, the Company received from DuPont a notice of termination of the merger agreement, and pursuant to the terms of the merger agreement, the Company received a regulatory termination fee from DuPont in the amount of $162.5 million.


	Nine Months Ended
(Dollars in thousands)	September 30, 2023		September 30, 2022
Key Cash Flow Measures:
Net cash provided by operating activities	$	59,522	$	1,834
Net cash used in investing activities	$	(30,346)	$	(81,048)
Net cash provided by (used in) financing activities	$	(139,612)	$	89,997

In ~~2022,~~2023, we expect capital spending to be in the range of approximately ~~$120.0~~$55.0 million to ~~$130.0~~$65.0 million. We plan to fund our capital spending in ~~2022~~2023 with cash from operations and cash on-hand, as well as our existing revolving credit facility, if necessary.

Restrictions on Payment of Dividends

The ~~Fourth~~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 September 30, ~~2022.~~2023.

Contingencies

During the third quarter of ~~2022,~~2023, we did not become aware of any material developments related to environmental matters disclosed in our Annual Report, our asbestos litigation or other material contingencies previously disclosed or incur any material costs or capital expenditures related to such matters. Refer to “Note 12 – Commitments and Contingencies” to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q for further discussion of these contingencies.

Critical Accounting Policies

There were no material changes in our critical accounting policies during the third quarter of ~~2022.~~2023.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our exposure to market risk during the third quarter of ~~2022.~~2023. For discussion of our exposure to market risk, refer to “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” contained in our Annual Report.

Item 4. Controls and Procedures

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The Company, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted 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 Securities Exchange Act of 1934, as amended (the Exchange Act), as of September 30, ~~2022.~~2023. The Company’s disclosure controls and procedures are designed (i) to ensure that information required to be disclosed by it in the reports that it files or submits 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 the Company files or submits under the Exchange Act is accumulated and communicated to its management, including its 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 have concluded that the Company’s disclosure controls and procedures were effective as of September 30, ~~2022.~~2023.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in the Company’s internal control over financial reporting during its most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting, as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act.

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Part II - Other Information

Item 1. Legal Proceedings

Refer to the discussion of certain environmental, asbestos and other litigation matters in “Note 12 – Commitments and Contingencies” to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q.

Item 5. Other Information

During the three months ended September 30, 2023, none of our directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement”, as each term is defined in Item 408 of Regulation S-K.

Item 6. Exhibits


List of Exhibits:

3.1			Restated Articles of Organization of Rogers Corporation, as amended, incorporated by reference to Exhibit 3a to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006.

3.2			Amended and Restated Bylaws of Rogers Corporation, effective ~~February 11, 2016,~~August 9, 2023, incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on ~~February 26, 2016.~~August 15, 2023.

10.1			Fifth Amended and Restated Credit Agreement, dated as of March 24, 2023, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 29, 2023.

31.1			Certification of President and Chief Executive Officer (Principal Executive Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

31.2			Certification of Senior Vice President and Chief Financial Officer (Principal Financial Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

32			Certification of President and Chief Executive Officer (Principal Executive Officer) and Senior Vice President and Chief Financial Officer (Principal Financial Officer) pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished herewith.

101			The following materials from Rogers Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, ~~2022~~2023 formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, ~~2022~~2023 and September 30, ~~2021,~~2022, (ii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, ~~2022~~2023 and September 30, ~~2021,~~2022, (iii) Condensed Consolidated Statements of Financial Position as of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2022~~2023 and September 30, ~~2021,~~2022, (v) Condensed Consolidated Statements of Shareholders’ Equity for the three and nine months ended September 30, ~~2022~~2023 and September 30, ~~2021,~~2022, (vi) Notes to Condensed Consolidated Financial Statements and (vii) Cover Page.

104			The cover page from Rogers Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, ~~2022,~~2023, formatted in iXBRL and contained in Exhibit 101.

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Signatures

Pursuant to the requirements 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/ Ramakumar Mayampurath
Ramakumar Mayampurath
Senior Vice President, Chief Financial Officer and Treasurer
Principal Financial Officer
Dated: ~~November 8, 2022~~October 26, 2023

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TABLE OF CONTENTS
Part I – Financial Information
	Item 1.	Condensed Consolidated Financial Statements (Unaudited):
		Condensed Consolidated Statements of Operations	3
		Condensed Consolidated Statements of Comprehensive Income (Loss)	4
		Condensed Consolidated Statements of Financial Position	5
		Condensed Consolidated Statements of Cash Flows	6
		Condensed Consolidated Statements of Shareholders’ Equity	7
		Notes to Condensed Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Results of Operations and Financial Position	2624
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3633
	Item 4.	Controls and Procedures	3633

Part II – Other Information
	Item 1.	Legal Proceedings	3734
	Item 5.	Other	34
	Item 6.	Exhibits	3734
		Signatures	3835