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What changed in ROGERS CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ROGERS CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+181 added−184 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-27)

Top changes in ROGERS CORP's 2024 10-K

181 paragraphs added · 184 removed · 145 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

26 edited+4 added−9 removed27 unchanged
Biggest changeAmong the factors that could cause our results to differ materially from those indicated by forward-looking statements are risks and uncertainties inherent in our business including, without limitation: • failure to capitalize on, volatility within, or other adverse changes with respect to our growth drivers, such as delays in adoption or implementation of new technologies; • failure to successfully execute on our long-term growth strategy as a standalone company; • uncertain business, economic and political conditions in the U.S. and abroad, particularly in China, South Korea, Germany, Belgium, England and Hungary, where we maintain significant manufacturing, sales or administrative operations; • the trade policy dynamics between the U.S. and China reflected in trade agreement negotiations, the imposition of tariffs and other trade restrictions, as well as the potential for U.S.-China supply chain decoupling; • fluctuations in foreign currency exchange rates; • our ability to develop innovative products and the extent to which they are incorporated into end-user products and systems; • the extent to which end-user products and systems incorporating our products achieve commercial success; • the ability and willingness of our sole or limited source suppliers to deliver certain key raw materials, including commodities, to us in a timely and cost-effective manner; • 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; • disruptions in, or breaches of, our information technology systems; and • our terminated merger with 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.
Biggest changeAmong the factors that could cause our results to differ materially from those indicated by forward-looking statements are risks and uncertainties inherent in our business including, without limitation: • failure to capitalize on, volatility within, or other adverse changes with respect to our growth drivers, due to factors such as intense global competition affecting both our existing products and products currently under development or delays in adoption or implementation of new technologies; • failure to successfully execute on our long-term growth strategy; • uncertain business, economic and political conditions in the U.S. and abroad, particularly in China, South Korea, Germany, Belgium, England and Hungary, where we maintain significant manufacturing, sales or administrative operations; • the trade policy dynamics between the U.S. and China reflected in trade agreement negotiations, the imposition of tariffs and other trade restrictions, as well as the potential for U.S.-China supply chain decoupling; • fluctuations in foreign currency exchange rates; • our ability to develop innovative products and the extent to which they are incorporated into end-user products and systems; • the extent to which end-user products and systems incorporating our products achieve commercial success; • the ability and willingness of our sole or limited source suppliers to deliver certain key raw materials, including commodities, to us in a timely and cost-effective manner; • business interruptions due to catastrophes or other similar events, such as natural disasters, war, terrorism or public health crises; • the impact of sanctions, export controls and other foreign asset or investment restriction; • failure to realize, or delays in the realization of, anticipated benefits of acquisitions and divestitures due to, among other things, the existence of unknown liabilities or difficulty integrating acquired businesses; • our ability to attract and retain management and skilled technical personnel; • our ability to protect our proprietary technology from infringement by third parties and/or allegations that our technology infringes third party rights; • changes in effective tax rates or tax laws and regulations in the jurisdictions in which we operate; • failure to comply with financial and restrictive covenants in our credit agreement or restrictions on our operational and financial flexibility due to such covenants; • the outcome of ongoing and future litigation, including our asbestos-related product liability litigation; • changes in environmental laws and regulations applicable to our business; and • disruptions in, or breaches of, our information technology systems.
Risk Factors.” 6 Seasonality Except for some minor seasonality for consumer products, which often aligns with year-end holidays and product launch cycles, the operations of our segments have not been seasonal.
Risk Factors.” Seasonality Except for some minor seasonality for consumer products, which often aligns with year-end holidays and product launch cycles, the operations of our segments have not been seasonal.
Griffin Gappert 50 Vice President and Chief Technology Officer 2023 Global Head of Innovation for Automotive OEMs at Henkel from April 2021 to August 2023; Vice President of Innovation and Technical Customer Service at Henkel from January 2020 to April 2021; Vice President of Product Development and Technical Customer Service at Henkel from June 2018 to January 2020; Global Technical Director of Industrial Supplies at Ashland Inc from June 2016 to May 2018.
Griffin Gappert 51 Vice President and Chief Technology Officer 2023 Global Head of Innovation for Automotive OEMs at Henkel from April 2021 to August 2023; Vice President of Innovation and Technical Customer Service at Henkel from January 2020 to April 2021; Vice President of Product Development and Technical Customer Service at Henkel from June 2018 to January 2020; Global Technical Director of Industrial Supplies at Ashland Inc from June 2016 to May 2018.
Human Capital Management The Company’s continuing success derives from our talented and dedicated employees globally, who are responsible for the innovation, operations and ethics foundational to our business and its future. As of December 31, 2023, we employed approximately 3,300 people, of whom approximately 1,200 were employed in North America, 1,100 in the EMEA region and 1,000 in APAC region.
Human Capital Management Our Company’s continuing success derives from our talented and dedicated employees globally, who are responsible for the innovation, operations and ethics foundational to our business and its future. As of December 31, 2024, we employed approximately 3,200 people, of whom approximately 1,100 were employed in North America, 1,100 in the EMEA region and 1,000 in APAC region.
Larry Schmid 62 Senior Vice President, Global Operations and Supply Chain 2023 President, Pilko & Associates, from January 2020 to January 2023; Global Manufacturing & Engineering Operations Director, The Dow Chemical Company, Performance Materials & Coatings, from June 2018 to June 2019; Global Operations Director, The Dow Chemical Company, Dow Performance Silicones, from June 2016 to June 2018.
Larry Schmid 63 Senior Vice President, Global Operations and Supply Chain 2023 President, Pilko & Associates, from January 2020 to January 2023; Global Manufacturing & Engineering Operations Director, The Dow Chemical Company, Performance Materials & Coatings, from June 2018 to June 2019; Global Operations Director, The Dow Chemical Company, Dow Performance Silicones, from June 2016 to June 2018.
Jeff Tsao 45 Senior Vice President and General Manager of Advanced Electronics Solutions, Senior Vice President of Asia 2023 Vice President and General Manager of AES from September 2019 to November 2023; Vice President of Sales and Marketing of PES from December 2018 to September 2019; Global Sales Director of PES from August 2017 to November 2018.
Jeff Tsao 46 Senior Vice President and General Manager of Advanced Electronics Solutions, Senior Vice President of Asia 2023 Vice President and General Manager of AES from September 2019 to November 2023; Vice President of Sales and Marketing of PES from December 2018 to September 2019; Global Sales Director of PES from August 2017 to November 2018.
Brian Larabee 57 Senior Vice President and General Manager of Elastomeric Material Solutions 2023 Vice President and General Manager of EMS from November 2022 to November 2023; Senior Director, EMS Product Management from February 2021 to December 2022; Director, EMS New Product and Business Development from November 2016 to February 2021.
Brian Larabee 58 Senior Vice President and General Manager of Elastomeric Material Solutions 2023 Vice President and General Manager of EMS from November 2022 to November 2023; Senior Director, EMS Product Management from February 2021 to December 2022; Director, EMS New Product and Business Development from November 2016 to February 2021.
Colin Gouveia 60 President and Chief Executive Officer, Director, Principal Executive Officer 2022 Senior Vice President and General Manager of EMS from June 2019 to December 2022; Vice President and General Manager, Eastman Chemical Co., from December 2014 to June 2019.
Colin Gouveia 61 President and Chief Executive Officer, Director, Principal Executive Officer 2022 Senior Vice President and General Manager of EMS from June 2019 to December 2022; Vice President and General Manager, Eastman Chemical Co., from December 2014 to June 2019.
As of December 31, 2023, our EMS operating segment had manufacturing and administrative facilities in Rogers, Connecticut; Woodstock, Connecticut; Bear, Delaware; Carol Stream, Illinois; Narragansett, Rhode Island; Evergem, Belgium; Blackburn, England; Siheung, South Korea; and Suzhou, China.
As of December 31, 2024, our EMS operating segment had manufacturing and administrative facilities in Rogers, Connecticut; Woodstock, Connecticut; Bear, Delaware; Carol Stream, Illinois; Narragansett, Rhode Island; Suzhou, China; Blackburn, England; Evergem, Belgium; Siheung, South Korea; and Ansan, South Korea.
As of December 31, 2023, our AES operating segment had manufacturing and administrative facilities in Chandler, Arizona; Rogers, Connecticut; Bear, Delaware; Eschenbach, Germany; Evergem, Belgium; Budapest, Hungary; and Suzhou, China. Elastomeric Material Solutions Our EMS operating segment designs, develops, manufactures and sells engineered material solutions for a wide variety of applications and markets.
As of December 31, 2024, our AES operating segment had manufacturing and administrative facilities in Chandler, Arizona; Rogers, Connecticut; Bear, Delaware; Eschenbach, Germany; Suzhou, China; Budapest, Hungary; Evergem, Belgium; and Apodoca, Mexico. Elastomeric Material Solutions Our EMS operating segment designs, develops, manufactures and sells engineered material solutions for a wide variety of applications and markets.
Operating Segments Advanced Electronics Solutions Our AES operating segment designs, develops, manufactures and sells circuit materials, ceramic substrate materials, busbars and cooling solutions for applications in EV/HEV, automotive (e.g, ADAS), aerospace and defense (e.g., antenna systems, communication systems and phased array radar systems), renewable energy (e.g., wind and solar), wireless infrastructure (e.g., power amplifiers, antennas and small cells), mass transit, industrial (e.g., variable frequency drives), connected devices (e.g., mobile internet devices and thermal solutions) and wired infrastructure (e.g., computing and internet protocol infrastructure) markets.
We are headquartered in Chandler, Arizona. 4 Operating Segments Advanced Electronics Solutions Our AES operating segment designs, develops, manufactures and sells circuit materials, ceramic substrate materials, busbars and cooling solutions for applications in EV/HEV, automotive (e.g, ADAS), aerospace and defense (e.g., antenna systems, communication systems and phased array radar systems), renewable energy (e.g., wind and solar), wireless infrastructure (e.g., power amplifiers, antennas and small cells), mass transit, industrial (e.g., variable frequency drives), connected devices (e.g., mobile internet devices and thermal solutions) and wired infrastructure (e.g., computing and internet protocol infrastructure) markets.
Approximately 300 of our domestic employees are covered by collective bargaining agreements or by specific labor agreements and approximately 600 of our European employees are covered by work council arrangements.
Approximately 300 of our domestic employees are covered by collective bargaining agreements or by specific labor agreements and approximately 700 of our European employees are covered by work council arrangements.
We believe that we have a competitive advantage because of our reputation for innovation, the performance, reliability and quality of our materials and components, and our commitment to technical support and customer service. Our sales are generally pursuant to short-term purchase orders.
We believe that we have a competitive advantage because of our reputation for innovation, the performance, reliability and quality of our materials and components, and our commitment to technical support and customer service. Our sales recognized at a point in time are generally pursuant to short-term purchase orders.
We compete primarily with manufacturers of high-end materials, some of which are large, multi-national companies, principally on the basis of innovation, historical customer relationships, product quality, reliability, performance and price, technical and engineering service and support, breadth of product line, and manufacturing capabilities.
Accordingly, we provide similar technical support services to component suppliers. 5 We compete primarily with manufacturers of high-end materials, some of which are large, multi-national companies, principally on the basis of innovation, historical customer relationships, product quality, reliability, performance and price, technical and engineering service and support, breadth of product line, and manufacturing capabilities.
Jessica Morton 44 Vice President, General Counsel and Corporate Secretary 2023 Associate General Counsel and Assistant Secretary of FMC Corporation from April 2021 to March 2023; Assistant General Counsel and Assistant Secretary of FMC Corporation from April 2019 to March 2021; Assistant General Counsel of FMC Corporation from July 2016 to March 2019.
Jessica Morton 45 Senior Vice President, General Counsel and Corporate Secretary 2025 Vice President, General Counsel and Corporate Secretary from March 2023 to February 2025; Associate General Counsel and Assistant Secretary of FMC Corporation from April 2021 to March 2023; Assistant General Counsel and Assistant Secretary of FMC Corporation from April 2019 to March 2021; Assistant General Counsel of FMC Corporation from July 2016 to March 2019.
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. 4 Company Background 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: AES and EMS.
We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law. Company Background We design, develop, manufacture and sell high-performance and high-reliability engineered materials and components to meet our customers’ demanding challenges. We operate two strategic operating segments: AES and EMS.
Michael Webb 56 Senior Vice President and Chief Administrative Officer 2023 Executive Vice President - Chief Human Resources Officer and Chief Administrative Officer at Nutrien from January 2018 to May 2022; Senior Vice President, Human Resources at Agrium from January 2014 to January 2018; Senior Vice President of Human Resources at HSBC from August 2010 to January 2014.
Michael Webb 57 Senior Vice President and Chief Administrative Officer 2023 Executive Vice President - Chief Human Resources Officer and Chief Administrative Officer at Nutrien from January 2018 to May 2022; Senior Vice President, Human Resources at Agrium from January 2014 to January 2018.
Our remaining operations, which represent our non-core businesses, are reported in our Other operating segment. We are headquartered in Chandler, Arizona.
Our remaining operations, which represent our non-core businesses, are reported in our Other operating segment.
Component suppliers convert, modify or otherwise incorporate our engineered materials and components into their components for these OEMs in accordance with their specifications. Accordingly, we provide similar technical support services to component suppliers.
Component suppliers convert, modify or otherwise incorporate our engineered materials and components into their components for these OEMs in accordance with their specifications.
We sold to approximately 3,200 customers worldwide in 2023, consisting primarily of OEMs and component suppliers. No individual customer represented more than 10% of our total net sales for 2023; however, there are concentrations of OEM customers in our AES operating segment (semiconductor and automotive manufacturers).
We sold to approximately 2,900 customers worldwide in 2024, consisting primarily of OEMs and component suppliers. No individual customer represented more than 10% of our total net sales for 2024.
We are focused on identifying technologies and innovations related to both our current product portfolio as well as initiatives targeted at further diversifying and growing our business.
We are focused on identifying technologies and innovations related to both our current product portfolio as well as initiatives targeted at further diversifying and growing our business. As part of this technology commitment, we have Rogers Innovation Centers at our facilities in Chandler, Arizona; Rogers, Connecticut; Eschenbach, Germany; and Suzhou, China.
Additionally, we connect our day-to-day work with our organizational objectives through our Cultural Behaviors: Live Safely, Trust, Just Decide, Speak Openly, Simply Improve, Innovate and Deliver Results. Management’s principal objectives, with oversight from our Board of Directors, are Health and Safety, Employee Experience and Diversity, Equity and Inclusion.
Additionally, we connect our day-to-day work with our organizational objectives through our Cultural Behaviors: Live Safely, Trust, Just Decide, Speak Openly, Simply Improve, Innovate and Deliver Results. 6 Health and Safety Promoting the health and safety of our employees is one of our most important objectives. We strive to minimize lost workdays and recordable incidents.
Health and Safety Promoting the health and safety of our employees is one of our most important objectives. We strive to minimize lost workdays and recordable incidents. To promote awareness and accountability, our vision is clear: Everyone, Everywhere goes home safely Every Day.
To promote awareness and accountability, our vision is clear: Everyone, Everywhere goes home safely Every Day. Our commitment is to put safety first and we ask for everyone’s commitment to never compromise their safety or the safety of others.
We believe that our diversity, equity and inclusion will make our Company a more desirable workplace and will lead to improved business performance. 7 Information About Our Executive Officers Our executive officers as of February 26, 2024 were as follows: Name Age Present Position Year Appointed to Present Position Other Relevant Positions Held R.
We are proud to invest in our employees’ futures through a variety of technical and other training opportunities internally, as well as education reimbursement programs globally. 7 Information About Our Executive Officers Our executive officers as of February 26, 2025 were as follows: Name Age Present Position Year Appointed to Present Position Other Relevant Positions Held R.
Once we hire, we endeavor to provide our employees a safe and ethical work environment that includes fair compensation, opportunities for career development and employee engagement. We are proud to invest in our employees’ futures through a variety of technical and other training opportunities internally, as well as education reimbursement programs globally.
Employment Experience We take a comprehensive approach to the employment experience, striving to use a fair and inclusive recruiting process to select talented individuals. Once we hire, we endeavor to provide our employees a safe and ethical work environment that includes fair compensation, opportunities for career development and employee engagement.
Pursuant to the terms of the merger agreement, we received a regulatory termination fee in the amount of $162.5 million, before taxes, and incurred a transaction-related fee of $20.4 million. 5 Sales and Competition We sell our materials and components primarily through direct sales channels positioned near major concentrations of our customers in North America, Europe and Asia.
For additional information, refer to “Note 16 - Mergers and Acquisitions” to “Item 8. Financial Statements and Supplementary Data.” Sales and Competition We sell our materials and components primarily through direct sales channels positioned near major concentrations of our customers in North America, Europe and Asia.
Removed
We also own 50% of two unconsolidated joint ventures: (1) RIC, a joint venture established in Japan to design, develop, manufacture and sell PORON ® products predominantly for the Japanese market and (2) RIS, a joint venture established in China to design, develop, manufacture and sell PORON ® products primarily for RIC customers in various Asian countries.
Added
Joint Venture Separation Agreement On October 29, 2024, we entered into a JV Separation Agreement with INOAC with an effective date of November 5, 2024, in which INOAC acquired our shares of RIC, we acquired INOAC’s shares of RIS, and we sold the property, plant and equipment constituting RIS Production Line 1 to INOAC.
Removed
INOAC Corporation owns the remaining 50% of both RIC and RIS. RIC has manufacturing facilities at the INOAC facilities in Nagoya and Mie, Japan, and RIS has manufacturing facilities at Rogers’ facilities in Suzhou, China.
Added
The combined transaction resulted in a net payment to us from INOAC of $4.9 million. The definitive agreement terminated all other agreements previously entered into in connection with the RIC and RIS JV relationships. In connection with the combined transactions, we recognized a gain of $7.7 million.
Removed
Terminated Merger Agreement with DuPont On November 1, 2021, we entered into a definitive merger agreement to be acquired by DuPont in an all-cash transaction. Our shareholders approved the merger agreement at a special shareholder meeting held on January 25, 2022.
Added
Laura Russell 49 Senior Vice President and Chief Financial Officer, Treasurer, Principal Financial Officer 2024 Vice President, Corporate Finance from September 2023 to September 2024; Vice President, Operations at Wolfspeed from July 2021 to September 2023; Vice President, Finance - RP Business at NXP Semiconductor from December 2015 to July 2021; CFO of HPRF Business at Freescale Semiconductor from July 2013 to December 2015.
Removed
Consummation of the merger was subject to various customary closing conditions, including regulatory approval by the SAMR, and either party had the right to terminate the merger agreement if the merger had not closed on or before November 1, 2022.
Added
John Alexis 51 Senior Vice President and Chief Information and Digital Officer 2025 Chief Information Officer at FORTNA from April 2022 to July 2024; Chief Information Officer at TegraGlobal from January 2020 to April 2022; Global Vice President of Enterprise Technology Solutions at Travelport from October 2017 to January 2020; Director of IT services at Greater Toronto Airports Authority from April 2011 to June 2017.
Removed
As of November 1, 2022, the parties had not received regulatory approval from SAMR and on that date, DuPont issued a notice of termination of the merger agreement.
Removed
As part of this technology commitment, we have a Rogers Innovation Center co-located at Northeastern University in Burlington, Massachusetts, as well as Rogers Innovation Centers at our facilities in Chandler, Arizona; Eschenbach, Germany; and Suzhou, China.
Removed
Our commitment is to put safety first and we ask for everyone’s commitment to never compromise their safety or the safety of others. Employment Experience We take a comprehensive approach to the employment experience, striving to use a fair and inclusive recruiting process to select talented individuals.
Removed
Diversity, Equity and Inclusion We continue to advance efforts to improve diversity, equity and inclusion within the Company, focusing on attracting and maintaining diverse talent within the organization and promoting awareness and acceptance globally.
Removed
Ramakumar Mayampurath 60 Senior Vice President and Chief Financial Officer, Principal Financial Officer 2021 Vice President, Corporate Finance from December 2020 to May 2021; Vice President, Business Transformation from March 2020 to December 2020; Vice President, Financial Planning and Analysis from November 2014 to December 2020.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

45 edited+20 added−9 removed108 unchanged
Biggest changeIn June 2021, the European Climate Law set legally binding targets of net zero GHG emissions by 2050, and a 55% reduction in GHG emissions by 2030. In December 2022, the EU announced forthcoming regulations to support the 2030 climate target, including a revision of the EU Emissions Trading System (ETS), and the introduction of a Carbon Border Adjustment Mechanism.
Biggest changeIn December 2022, the EU announced forthcoming regulations to support the 2030 climate target, including a revision of the EU Emissions Trading System, and the introduction of a Carbon Border Adjustment Mechanism. Our operations in Europe participate in the Emissions Trading System and we meet our obligations through a combination of free and purchased emission allowances.
Risks related to our extensive international operations include the following: • foreign currency fluctuations, particularly in the value of the euro, the Chinese renminbi, the South Korean won, the British pound, the Japanese yen and the Hungarian forint against the U.S. dollar; • economic and political instability due to regional or country-specific events or changes in relations between the U.S. and the countries in which we operate; • accounts receivable practices across countries, including longer payment cycles; • export control or customs matters, including tariffs and trade restrictions; • changes in multilateral and bilateral trade relations; • complications in complying, and failure to comply, with a variety of laws and regulations applicable to our foreign operations, including due to unexpected changes in the laws or regulations of the countries in which we operate; • failure to comply with the Foreign Corrupt Practices Act or other applicable anti-corruption laws; 11 • greater difficulty protecting our intellectual property; and • compliance with foreign employment regulations, as well as work stoppages and labor and union disputes.
Risks related to our extensive international operations include the following: • foreign currency fluctuations, particularly in the value of the euro, the Chinese renminbi, the South Korean won, the British pound, the Japanese yen and the Hungarian forint against the U.S. dollar; • economic and political instability due to regional or country-specific events or changes in relations between the U.S. and the countries in which we operate; • accounts receivable practices across countries, including longer payment cycles; • export control or customs matters, including tariffs and trade restrictions; • changes in multilateral and bilateral trade relations; • complications in complying, and failure to comply, with a variety of laws and regulations applicable to our foreign operations, including due to unexpected changes in the laws or regulations of the countries in which we operate; • failure to comply with the Foreign Corrupt Practices Act or other applicable anti-corruption laws; • greater difficulty protecting our intellectual property; and • compliance with foreign employment regulations, as well as work stoppages and labor and union disputes.
The foregoing risks may be particularly acute in emerging markets such as China, where our operations are subject to greater uncertainty due to increased volatility associated with the developing nature of the economic, legal and governmental systems of these countries, changes in bilateral and multilateral arrangements with the U.S. and other governments, and challenges that some multinational customers that are headquartered in emerging markets may have complying fully with U.S. and other developed market extraterritorial regulations.
The foregoing risks may be particularly acute in emerging markets such as China, where our operations are subject to greater uncertainty due to increased volatility associated with the developing nature of the economic, legal and governmental systems of these countries, changes in bilateral and multilateral arrangements with the U.S. and other governments, and challenges that 11 some multinational customers that are headquartered in emerging markets may have complying fully with U.S. and other developed market extraterritorial regulations.
For example, as previously reported, in February 2023, after an activist shareholder provided notice of its intention to conduct a proxy contest to seek to elect several director candidates to our board of directors, we entered into a 16 settlement agreement with the shareholder and certain of its affiliates regarding, among other things, changes to the composition of our board of directors, including the appointment of two new independent directors.
For example, as previously reported, in February 2023, after an activist shareholder provided notice of its intention to conduct a proxy contest to seek to elect several director candidates to our board of directors, we entered into a settlement agreement with the shareholder and certain of its affiliates regarding, among other things, changes to the composition of our board of directors, including the appointment of two new independent directors.
Failure to satisfy these financial ratios or to comply with the covenants in our credit agreement would constitute a default. An uncured default with respect to one or more of our covenants could result in outstanding borrowings thereunder being declared immediately due and payable, which may also trigger an obligation to repay other outstanding indebtedness.
Failure to satisfy these financial ratios or to comply with the covenants in our credit agreement would constitute a default. An uncured default with respect to one or more of our covenants could result in outstanding borrowings thereunder being 15 declared immediately due and payable, which may also trigger an obligation to repay other outstanding indebtedness.
In addition, some environmental laws impose liability, sometimes without fault, for investigating and/or cleaning up contamination on, or emanating from, properties currently or formerly owned, leased or operated by us, as well as for damages to property or natural resources and for personal injury arising out of such contamination.
In addition, some environmental laws impose liability, sometimes retroactively and without fault, for investigating and/or cleaning up contamination on, or emanating from, properties currently or formerly owned, leased or operated by us, as well as for damages to property or natural resources and for personal injury arising out of such contamination.
If we are not successful in protecting our proprietary technology or if the protection afforded to us is 14 not sufficiently broad, our competitors may be able to manufacture and offer products substantially similar to our own, thereby reducing demand for our products and adversely affecting our results of operations and financial position.
If we are not successful in protecting our proprietary technology or if the protection afforded to us is not sufficiently broad, our competitors may be able to manufacture and offer products substantially similar to our own, thereby reducing demand for our products and adversely affecting our results of operations and financial position.
Security 12 breaches of our information technology systems, including through mobile devices, could result in the misappropriation or unauthorized disclosure of confidential information belonging to us or to our customers, suppliers, business partners, employees or other third parties, which could result in our suffering significant financial and reputational damage.
Security breaches of our information technology systems, including through mobile devices, could result in the misappropriation or unauthorized disclosure of confidential information belonging to us or to our customers, suppliers, business partners, employees or other third parties, which could result in our suffering significant financial and reputational damage.
The implementation of this ERP requires an investment of significant personnel and financial resources, including substantial expenditures for outside consultants, system hardware and software in addition to other expenses in connection with the transformation of our organizational structure and financial and operating processes.
The implementation of this ERP requires an investment of significant personnel and financial resources, 13 including substantial expenditures for outside consultants, system hardware and software in addition to other expenses in connection with the transformation of our organizational structure and financial and operating processes.
Recent macroeconomic conditions have been adversely impacted by geopolitical instability and military hostilities in multiple geographies (including the conflict between Ukraine and Russia and the conflict between Israel and Hamas), and monetary and financial uncertainties.
Recent macroeconomic conditions have been adversely impacted by geopolitical instability and military hostilities in multiple geographies (including the conflict between Ukraine and Russia and the conflict between Israel, Hamas and Hezbollah), and monetary and financial uncertainties.
We depend upon the continued services and performance of key executives, senior management and skilled technical personnel, particularly our sales engineers and other professionals with significant experience in the key industries we serve.
We continue to depend upon the continued services and performance of key executives, senior management and skilled technical personnel, particularly our sales engineers and other professionals with significant experience in the key industries we serve.
Our failure or perceived failure to achieve some or all of our ESG goals or maintain ESG practices that meet evolving stakeholder expectations or regulatory requirements could harm our reputation, adversely impact our ability to attract and retain employees or customers and expose us to increased scrutiny from the investment community, regulatory authorities and others or subject us to liability.
Our failure, or even perceived failure, to achieve some or all of our ESG goals or maintain ESG practices that meet evolving stakeholder expectations or regulatory requirements could adversely impact our ability to attract and retain employees or customers, expose us to increased scrutiny from the investment community, regulatory authorities and others, or subject us to liability.
These transaction opportunities may come in the form of acquisitions, joint ventures, investments, divestitures or other structures. There are risks associated with such transactions, including, without limitation, general business risk, technology risk, market acceptance risk, litigation risk, environmental risk, regulatory approval risk and risks associated with the failure to complete announced transactions.
These transaction opportunities may come in the form of acquisitions, JVs, investments, divestitures or other structures. There are risks associated with such transactions, including, without limitation, general business risk, technology risk, market acceptance risk, litigation risk, environmental risk, regulatory approval risk and risks associated with the failure to complete announced transactions.
New or more stringent laws and regulations related to greenhouse gas emissions and other climate change related concerns have affected and will likely continue to affect us, our suppliers and our customers. There can be no assurance the company will meet the evolving sustainability expectations and standards of our investors and other external stakeholders.
New or more stringent laws and 14 regulations related to GHG emissions and other climate change related concerns have affected and will likely continue to affect us, our suppliers and our customers. There can be no assurance our Company will meet the evolving sustainability expectations and standards of our investors and other external stakeholders.
If we are unsuccessful in adapting to the requirements of any new standard, then we may experience greater volatility in our quarterly and annual results, which may cause our stock price to decline. We may experience difficulties in implementing our new enterprise resource planning system.
If we are unsuccessful in adapting to the requirements of any new standard, then we may experience greater volatility in our quarterly and annual results, which may cause our stock price to decline. We may experience difficulties in implementing our new ERP system.
We are in the midst of a multi-year design and implementation of a new enterprise resource planning system (ERP), which will replace our existing financial and operating systems.
We are in the midst of a multi-year design and implementation of a new ERP system, which will replace our existing financial and operating systems.
Environmental Protection Agency issued a new rule under the Toxic Substances Control Act, requiring manufacturers and importers of PFAS to submit additional reporting information about production volumes, industrial uses, byproducts, worker exposure, and disposal.
EPA issued a new rule under the Toxic Substances Control Act, requiring manufacturers and importers of PFAS to submit additional reporting information about production volumes, industrial uses, byproducts, worker exposure, and disposal.
Our information technology systems are susceptible to damage, disruptions or shutdowns due to power outages, hardware failures, telecommunication failures, systems upgrades (including the planned implementation of a new enterprise resource planning system) and user errors.
Our information technology systems are susceptible to damage, disruptions or shutdowns due to power outages, hardware failures, telecommunication failures, systems upgrades (including the planned implementation of a new ERP system) and user errors.
We derived approximately 22% and 31% of our net sales for the year ended December 31, 2023 from sales relating to the significant growth markets (e.g., EV/HEV) and high growth markets (e.g., ADAS, portable electronics, renewable energy and aerospace and defense), respectively.
We derived approximately 18% and 34% of our net sales for the year ended December 31, 2024 from sales relating to the significant growth markets (e.g., EV/HEV) and high growth markets (e.g., ADAS, portable electronics, renewable energy and aerospace and defense), respectively.
We maintain significant manufacturing and administrative operations in China, Germany, Belgium, England, South Korea and Hungary, and approximately 64% of our employees were located outside the U.S. as of December 31, 2023.
We maintain significant manufacturing and administrative operations in China, Germany, England, South Korea and Hungary, and approximately 66% of our employees were located outside the U.S. as of December 31, 2024.
For the year ended December 31, 2023, approximately 74% of our net sales resulted from sales in foreign markets, with approximately 40% and 31% of such net sales occurring in Asia and Europe, respectively. We expect our net sales in foreign markets to continue to represent a substantial majority of our consolidated net sales.
For the year ended December 31, 2024, approximately 73% of our net sales resulted from sales in foreign markets, with approximately 44% and 27% of such net sales occurring in Asia and Europe, respectively. We expect our net sales in foreign markets to continue to represent a substantial majority of our consolidated net sales.
Compliance with these various laws may be onerous and require us to incur substantial costs or to change our business practices in a manner that adversely affects our business, while failure to comply with such laws may subject us to substantial penalties. Employee benefit cost increases could reduce our profitability.
Compliance with these various laws may be onerous and require us to incur substantial costs or to change our business practices in a manner that adversely affects our business, while failure to comply with such laws may subject us to substantial penalties.
These accounting principles are subject to interpretation by the SEC, FASB, and various bodies formed to interpret and create accounting rules and regulations. Accounting standards, or the guidance relating to interpretation and adoption of standards, could have a significant effect on our financial results and could affect our business.
We prepare our consolidated financial statements to conform to U.S. GAAP. These accounting principles are subject to interpretation by the SEC, FASB, and various bodies formed to interpret and create accounting rules and regulations. Accounting standards, or the guidance relating to interpretation and adoption of standards, could have a significant effect on our financial results and could affect our business.
In addition, as a consequence of such policies, there are risks that the Chinese government may, among other things, require the use of local suppliers, compel companies that do business in China to partner with local companies to conduct business, or provide incentives to government-backed local customers to buy from local suppliers rather than companies like ours, all of which could adversely impact our business, results of operations and financial position.
In addition, as a consequence of such policies, there are risks that the Chinese government may, among other things, require the use of local suppliers, compel companies that do business in China to partner with local companies to conduct business, or provide incentives to government-backed local customers to buy from local suppliers rather than companies like ours, all of which could adversely impact our business, results of operations and financial position. 12 A significant disruption in, or breach in security of, our information technology systems or violations of data protection laws could materially adversely affect our business and reputation.
In addition, our customers’ requirements, priorities and ways of doing business with respect to environmental matters, and climate change specifically, also may have an impact on our business, operations and financial success. For example, in 2022, the SEC issued proposed rule-makings on climate change.
In addition, our customers’ requirements, priorities and ways of doing business with respect to environmental matters, and climate change specifically, also may have an impact on our business, operations and financial success. For example, the SEC finalized a rule in 2024 to enhance and standardize climate-related disclosures.
Evolving stakeholder expectations and our efforts and ability to manage these issues and accomplish our goals, commitments, and targets present numerous operational, regulatory, reputational, financial, legal, and other risks, any of which may be outside of our control or could have adverse impacts on our business, including on our stock price.
Evolving stakeholder expectations and our efforts and ability to manage these issues and accomplish our goals, commitments, and targets present numerous operational, regulatory, reputational, financial, legal, and other risks and opportunities. Any risks could have adverse impacts on our business, including on our stock price; however, ESG-related opportunities may result in positive business impacts.
In addition, our business has been, and may continue to be, adversely affected by the lack of development, or disruptions, of transportation or other critical infrastructure, including wireless infrastructure, in emerging markets.
These regulations could adversely affect the sale or use of our products, substantially increase our cost of sales, and adversely affect our business and revenue. In addition, our business has been, and may continue to be, adversely affected by the lack of development, or disruptions, of transportation or other critical infrastructure, including wireless infrastructure, in emerging markets.
If we are unsuccessful in adapting to and interpreting the requirements of new guidance, or in clearly explaining to shareholders how the new guidance affects reporting of our results of operations, our share price may decline. We prepare our consolidated financial statements to conform to U.S. GAAP.
Changes in accounting guidance may cause us to experience greater volatility in our financial results. If we are unsuccessful in adapting to and interpreting the requirements of new guidance, or in clearly explaining to shareholders how the new guidance affects reporting of our results of operations, our share price may decline.
In the EU, we are subject to the EU regulations (and their related national implementing legislation) including the Registration, Evaluation, Authorization and Restriction of Chemicals, the Regulation on the Classification, Labelling and Packaging of Substances and Mixtures and the Industrial Emissions Directive. 13 Compliance with these laws and regulations could require us to incur substantial expenses, including in connection with the acquisition of new equipment.
In the EU, we are subject to the EU regulations (and their related national implementing legislation) including the Registration, Evaluation, Authorization and Restriction of Chemicals, the Regulation on the Classification, Labelling and Packaging of Substances and Mixtures and the Industrial Emissions Directive.
Our continued performance will depend in part on the success of our new leadership. If we suffer loss or disruption to our facilities, supply chains, distribution systems or information technology systems due to catastrophe or other events, our business could be seriously harmed.
If we suffer loss or disruption to our facilities, supply chains, distribution systems or information technology systems due to catastrophe or other events, our business could be seriously harmed.
Additional regulations could be forthcoming at the U.S. federal or state level that could result in increased operating costs for compliance, required acquisition or trading of emission allowances, or compliance costs associated with additional regulatory frameworks for a range of potential carbon reduction projects, including carbon capture, use, and sequestration projects.
Given these 16 uncertainties, it is difficult to accurately estimate at this time if U.S. federal or state level activity could result in increased operating costs for compliance, required acquisition or trading of emission allowances, or compliance costs associated with additional regulatory frameworks for a range of potential carbon reduction projects, including carbon capture, use, and sequestration projects.
In some cases, PFAS compounds are regulated at, or even below, the ability of current technology to detect their presence, making remediation difficult and complex.
While PFAS regulation continues to advance at the federal level and in many states, the full scope of such regulation is still being developed. In some cases, PFAS compounds are regulated at, or even below, the ability of current technology to detect their presence, making remediation difficult and complex.
The proposed rules, depending on how they are finally adopted, as well as other changes the government might implement, could impose significant new burdens on the company and our suppliers, with significant potential costs and operational impacts, and adversely impact our ability to win business and operate successfully.
The rule, which faces legal challenge and has been voluntarily stayed by the SEC, as well as other changes the government might implement, could impose significant new burdens on our Company and our suppliers, with significant potential costs and operational impacts, and adversely impact our ability to win business and operate successfully.
Environmental matters may significantly impact our business and operations and present evolving risks and challenges. Environmental impacts, including climate change specifically, create short and long-term financial risks to our business globally.
Environmental matters may significantly impact our business and operations and present evolving risks and challenges. Environmental impacts, including climate change specifically, create short and long-term financial risks to our business globally. Increased worldwide focus on climate change has led to legislative and regulatory efforts to combat both potential causes and adverse impacts of climate change, including regulation of GHG emissions.
In 2023, certain EU member states submitted a proposal to the European Chemicals Agency calling for the phase out of the manufacture, import, sale, and use of PFAS substances beginning in late 2025. While PFAS regulation continues to advance at the federal level and in many states, the full scope of such regulation is still being developed.
In 2023, certain EU member states submitted a proposal to the European Chemicals Agency calling for the phase out of the manufacture, import, sale, and use of PFAS substances beginning in late 2025. In 2024, among other things, U.S.
We may not be able to continue to attract and retain the qualified personnel necessary to continue to advance our business and achieve our strategic objectives.
We may not be able to continue to attract and retain the qualified personnel necessary to continue to advance our business and achieve our strategic objectives. Additionally, as demand for our products and services increases, our existing personnel may not be able to effectively scale their job functions with the increased demand.
These and other future regulations could result in increased costs, additional capital expenditures, and/or restrictions on operations. In the U.S., addressing climate change is a stated priority of the current presidential administration, and in February 2021, the U.S. recommitted to the Paris Agreement after having withdrawn in August 2017. The U.S.
These and other future regulations could result in increased costs, additional capital expenditures, and/or restrictions on operations. Addressing climate change was a stated priority of the former presidential administration, including recommitting the U.S. to the Paris Agreement and enacting legislation to advance objectives to achieve a net zero emissions economy by 2050.
This could adversely impact our ability to attract and retain customers and talent, and expose us to increased scrutiny from the investment community and enforcement authorities. Furthermore, perceptions about our action or inaction on certain ESG-related issues could also harm our reputation, particularly if stakeholders disagree with our goals and initiatives.
Furthermore, perceptions about our action or inaction on certain ESG-related issues could also harm our reputation, particularly if stakeholders disagree with our goals and initiatives.
The full extent of our financial exposure to asbestos-related litigation remains very difficult to estimate and could include both compensatory and punitive damage awards.
The full extent of our financial exposure to asbestos-related litigation remains very difficult to estimate and could include both compensatory and punitive damage awards. To the extent such assumptions are inaccurate, the net liabilities that we have recorded in our financial statements may fail to approximate the losses we could suffer in connection with such claims.
Under the 2015 Paris Agreement, parties to the United Nations Framework Convention on Climate Change agreed to undertake ambitious efforts to reduce GHG emissions and strengthen adaptation to the effects of climate change. Jurisdictions in which we operate, including, in particular, the EU, are preparing national legislation and protection plans to implement their emission reduction commitments under the Paris Agreement.
We may incur substantial costs to comply with climate change legislation and related regulatory initiatives. Under the 2015 Paris Agreement, parties to the United Nations Framework Convention on Climate Change agreed to undertake ambitious efforts to reduce GHG emissions and strengthen adaptation to the effects of climate change.
Laws and regulations in this field continue to evolve and, while they are likely to be increasingly widespread and stringent, at this stage it is not possible to accurately estimate either a timetable for implementation or our future compliance costs relating to implementation.
We are preparing for required climate-related compliance deadlines in the jurisdictions in which we operate; however, at this stage it is not possible to accurately estimate either a timetable for implementation in all instances or our future compliance costs relating to implementation.
Our operations in Europe participate in the ETS and we meet our obligations through a combination of free and purchased emission allowances. We anticipate the forthcoming regulations will result in an accelerated reduction of our free allowances and higher market prices for purchased allowances.
We anticipate the forthcoming regulations will result in an accelerated reduction of our free allowances and higher market prices for purchased allowances. In addition, in January 2023, the EU adopted the Corporate Sustainability Reporting Directive which requires EU and non-EU companies with activities in the EU to file annual sustainability reports including climate-related information.
There has been a broad range of proposed or promulgated international, national and state laws and/or regulations focusing on greenhouse gas (GHG) emission reduction and global climate change. These proposed or promulgated laws and/or regulations apply or could apply in countries where we have interests or may have interests in the future.
Subsequently, there has been a broad range of proposed or promulgated international, national and state laws and/or regulations focusing on GHG emissions reduction, climate-related financial risk management, and global climate change. On January 21, 2025, President Trump signed an executive order directing his administration to initiate a withdrawal of the U.S. from the Paris Agreement.
Environmental Protection Agency, in addition to several state governments, promulgated regulations directed at GHG emissions reductions from certain types of facilities.
For example, the IRA, the Bipartisan Infrastructure Law, and the CHIPS and Science Act, provide incentives to promote climate-friendly technologies and innovation that may increase the demand for the products we produce. The U.S. EPA, in addition to several state governments, promulgated regulations directed at GHG emissions reductions from certain types of facilities.
Additionally, there was a fire at our UTIS manufacturing facility in Ansan, South Korea in early February 2021, which resulted in extensive damage to the manufacturing site.
In 2021, we experienced fire damage in our Ansan, South Korea manufacturing facility, the impacts of which have since largely been resolved.
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In addition, we have recently appointed several new senior executives, including our new Senior Vice President and General Manager of AES; Senior Vice President and General Manager of EMS; Senior Vice President, Global Operations and Supply Chain; Vice President, General Counsel and Corporate Secretary; Vice President and Chief Technology Officer; and Senior Vice President and Chief Administrative Officer.
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If we are unable to identify, hire, develop, motivate, and retain new qualified personnel with relevant local qualifications and experience, our existing workforce may become too lean to accommodate the increased demand, which may have a material adverse effect on our ability to grow and scale our business.
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Commercial operations resumed in late 2021, with the launch of a replacement production line at one of our Suzhou, China facilities, and commercial production at our new location in Siheung, South Korea commenced in late-January 2023.
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On February 1, 2025, President Donald J. Trump signed an executive order imposing 25% tariffs on most goods from Mexico and Canada and a 10% additional tariff on all goods from China, effective February 4, 2025. The tariffs on Mexico and Canada were delayed by 30 days following negotiations.
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Disruptions to our South Korean operations and certain customer relationships in South Korea directly resulting from the closure of the UTIS facility continued to be experienced through 2023. The extent to which these events will continue to affect our results of operations and financial position remains uncertain.
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Additionally, a 25% tariff on steel and aluminum was reinstated on February 11, 2025. The situation remains fluid, and the duration and outcome of these tariff actions are uncertain. As a result, we are unable to predict the ultimate result and duration of any tariff actions by the U.S. government, or countermeasures that may be taken by other nations.
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A significant disruption in, or breach in security of, our information technology systems or violations of data protection laws could materially adversely affect our business and reputation.
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It remains unclear what additional actions, if any, will be taken by the U.S. or other governments with respect to international trade agreements, the imposition of tariffs on goods imported into the U.S., tax policy related to international commerce, increased export control, sanctions and investment restrictions, import or use of foreign communications equipment, or other trade matters.
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Our profitability is affected by employee benefit costs, particularly medical and other employee benefits. In recent years, employee medical costs have increased due to factors such as the increase in health care costs in the U.S. These factors will continue to put pressure on our business and financial performance, as employee benefit costs continue to escalate.
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Although the ultimate scope and timing of any such tariffs is indeterminable, if implemented, they could have a significant impact on our financial condition and results of operations.
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We may not succeed in limiting future cost increases. Continued employee benefit cost increases could have an adverse effect on our results of operations, cash flows and financial position. Changes in accounting guidance may cause us to experience greater volatility in our financial results.
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Based on our manufacturing practices and locations, there can be no assurance that any future executive or legislative action in the U.S. or other countries relating to tax policy and trade regulation would not adversely affect our business, operations and financial results.
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Increased worldwide focus on climate change has led to legislative and regulatory efforts to combat both potential causes and adverse impacts of climate change, including regulation of greenhouse gas emissions.
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Government regulation of usage, import or export of our products, or our technology within our products, changes in that regulation, or our failure to obtain required approvals for our products, could harm our international and domestic sales and adversely affect our revenue and costs of sales.
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To the extent such assumptions are inaccurate, the net liabilities that we have recorded in our financial statements may fail to approximate the losses we could suffer in connection with such claims. 15 We may incur substantial costs to comply with climate change legislation and related regulatory initiatives.
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Failure to comply with such regulations could result in enforcement actions, fines, penalties or restrictions on export privileges. In addition, costly tariffs on our equipment, restrictions on importation, trade protection measures and domestic preference requirements of certain countries could limit our access to these markets and harm our sales.
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Further, there is uncertainty around the accounting standards and climate-related disclosures associated with emerging laws and reporting requirements and the related costs to comply with the emerging regulations. Our failure, or even the perceived failure, to achieve our ESG goals or maintain ESG practices that meet evolving stakeholder expectations or regulatory requirements could harm our reputation.
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Emerging issues related to the development and use of AI could give rise to legal or regulatory action, damage our reputation, or otherwise materially harm our business. The use of generative AI technologies by employees and personnel to perform routine work is becoming more common within our business industry.
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Disclosure and use of personal data in generative AI technologies is subject to various privacy laws and other privacy obligations. Governments have passed and are likely to pass additional laws regulating generative AI.
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Our use of this technology is currently limited, but could result in additional compliance costs, regulatory investigations and actions, and lawsuits should we determine to increase our adoption and use of the technology. If we are unable to use generative AI due to these additional costs, it could make our business less efficient and result in competitive disadvantages.
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Compliance with these laws and regulations could require us to incur substantial expenses, including in connection with the acquisition of new equipment.
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EPA issued new regulations regarding PFAS in drinking water, PFAS reporting obligations under Toxic Substances Control Act, and designated two PFAS chemicals (Perfluorooctanoic acid and Perfluorooctane sulfonic acid) as hazardous substances under Comprehensive Environmental Response, Compensation, and Liability Act.
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However, laws and/or regulations may still apply or could apply in countries in countries that remain party to the Paris Agreement where we have interests or may have interests in the future. Laws and regulations in this field continue to evolve and are likely to be increasingly widespread, stringent, and complex, as different countries mandate different disclosure requirements.
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Jurisdictions in which we operate, including, in particular, the EU, are preparing national legislation and protection plans to implement their emission reduction commitments under the Paris Agreement. In June 2021, the European Climate Law set legally binding targets of net zero GHG emissions by 2050, and a 55% reduction in GHG emissions by 2030.
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California adopted the Climate Accountability Package in 2023 that introduces extensive climate-related disclosure requirements, and the SEC finalized a rule in 2024 to enhance and standardize climate-related disclosures. Both disclosure measures face legal challenge, and the SEC has voluntarily stayed its rule.
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On February 11, 2025, the acting Chairman of the SEC directed the SEC staff to request that the courts hearing legal challenges to the climate-related disclosure rules not schedule the case for argument to provide time for the SEC to deliberate and determine the appropriate next steps in these cases.
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The Trump administration has indicated that it will take a different approach towards climate change compared to its predecessor and there is uncertainty regarding what regulatory or executive actions may be forthcoming.
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Further, there are ESG-related laws and reporting requirements adopted in multiple jurisdictions that will likely increase future compliance costs.
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Conversely, our efforts to actively manage material ESG issues could increase employee and customer loyalty, support risk mitigation, resiliency, operational efficiencies, and positive reputation, influence cost of capital or access to finance, or other outcomes that may positively benefit our business.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur CIO will also provide reports of material cybersecurity incidents or other relevant developments to our Board of Directors and Audit Committee as and when needed. Furthermore, our CIO provides periodic updates to our senior management regarding cybersecurity risks, as well as interim updates during regular meetings with our leadership team.
Biggest changeFurthermore, our CIDO and/or Director of Information Security and Compliance provide periodic updates to our senior management regarding cybersecurity risks, as well as interim updates during regular meetings with our leadership team.
For a discussion regarding risks from cybersecurity threats that have or are reasonably likely to materially affect the company, see the risk factor titled “A significant disruption in, or breach in security of, our information technology systems or violations of data protection laws could materially adversely affect our business and reputation” in “Item 1A.
For a discussion regarding risks from cybersecurity threats that have or are reasonably likely to materially affect our Company, see the risk factor titled “A significant disruption in, or breach in security of, our information technology systems or violations of data protection laws could materially adversely affect our business and reputation” in “Item 1A.
These updates consist of a report to the full Board of Directors and to the Audit Committee, and cover a wide range of topics, including evolving regulations and standards, vulnerability assessments, mitigation strategies, third-party and independent reviews, the evolving threat environment, technological and industry trends, and information security considerations arising with respect to the Company’s peers and other third parties.
These updates consist of a report to the full Board of Directors and to the Audit Committee, and cover a wide range of topics, including evolving regulations and standards, vulnerability assessments, mitigation strategies, third-party and independent reviews, the evolving threat environment, technological and industry trends, and information security considerations arising with respect to our Company’s peers and other third parties.
The controls are tested and evaluated on a regular basis and include the following controls: network and endpoint protection technologies that are designed to block and detect security events at the perimeter and within our networks; evaluation and monitoring of detected security events; and documented incident response actions and procedures.
The controls are tested and evaluated on a regular basis and include the following controls: network and endpoint protection technologies that are designed to block and detect security events at the perimeter and within our networks; evaluation and monitoring of detected security events; and 17 documented incident response actions and procedures.
We also conduct tabletop exercises to simulate response plans to various cybersecurity incidents. Our team of cybersecurity professionals then collaborate with relevant stakeholders within the Company to evaluate and adjust our detection and mitigation strategies.
We also conduct tabletop exercises to simulate response plans to various cybersecurity incidents. Our team of cybersecurity professionals then collaborate with relevant stakeholders within our Company to evaluate and adjust our detection and mitigation strategies.
We impose security requirements upon our suppliers, including maintaining an effective security management program, abiding by information handling and asset management requirements; and notifying us in the event of any known or suspected cyber incident. Our Chief Information Officer (CIO) is responsible for leading the Cybersecurity Program, which is coordinated and primarily executed by our Senior Manager of Information Security.
We impose security requirements upon our suppliers, including maintaining an effective security management program, abiding by information handling and asset management requirements; and notifying us in the event of any known or suspected cyber incident. Our CIDO is responsible for leading the Cybersecurity Program, which is coordinated and primarily executed by our Director of Information Security and Compliance.
Risk Factors” of this Annual Report on Form 10-K. 17
Risk Factors” of this Annual Report on Form 10-K. 18
Our CIO delivers updates on the Cybersecurity Program to our Board of Directors semi-annually, including with respect to significant projects and initiatives.
Our CIDO and/or Director of Information Security and Compliance deliver updates on the Cybersecurity Program to our Board of Directors semi-annually, including with respect to significant projects and initiatives.
Our CIO has more than 25+ years of information technology and cybersecurity experience, and has served in this role since 2021. Our Board of Directors, primarily through the Audit Committee, oversees our enterprise risk management program, including cybersecurity risks. The enterprise risk management program is utilized in making decisions with respect to company priorities, resource allocation, and oversight structures.
Our Board of Directors, primarily through the Audit Committee, oversees our enterprise risk management program, including cybersecurity risks. The enterprise risk management program is utilized in making decisions with respect to our Company’s priorities, resource allocation, and oversight structures.
It is founded on the National Institute of Standards and Technology’s (NIST) Cybersecurity Framework (Identify, Protect, Detect, Respond and Recover) and includes elements of ISO 27001 standards, NIST SP 800-171 guidance, the International Organization for Standardization (ISO), and other applicable industry standards for protecting controlled unclassified information.
It is founded on the NIST’s Cybersecurity Framework (Identify, Protect, Detect, Respond and Recover) and includes elements of ISO 27001 standards, NIST SP 800-171 guidance, the ISO, and other applicable industry standards for protecting controlled unclassified information. The Cybersecurity Program also incorporates preventative, detective and corrective controls to identify relevant cyber risks.
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The Cybersecurity Program also incorporates preventative, detective and corrective controls to identify relevant cyber risks.
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Our CIDO and/or Director of Information Security and Compliance will also provide reports of material cybersecurity incidents or other relevant developments to our Board of Directors and Audit Committee as and when needed.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table provides certain information about the material general offices and manufacturing facilities used by our operating segments: Location Floor Space (Square Feet) Type of Facility Leased / Owned Operating Segment North America Chandler, Arizona 147,000 Manufacturing Owned AES Chandler, Arizona 105,100 Manufacturing Owned AES Chandler, Arizona 75,000 Administrative Offices Owned All Chandler, Arizona 17,000 Warehouse Leased through 3/2026 AES Rogers, Connecticut 388,100 Manufacturing / Administrative Offices Owned All Woodstock, Connecticut 150,600 Manufacturing Owned EMS Carol Stream, Illinois 216,600 Manufacturing Owned EMS Bear, Delaware 125,000 Manufacturing / Administrative Offices Owned All Narragansett, Rhode Island 84,600 Manufacturing Owned EMS Burlington, Massachusetts 6,000 Innovation Center / Administrative Offices Leased through 2/2025 All Apodoca, Mexico* 61,500 Manufacturing Leased through 1/2034 AES Europe Eschenbach, Germany 149,000 Manufacturing / Administrative Offices Owned AES Eschenbach, Germany 13,000 Warehouse / Administrative Offices Leased through 12/2024 AES Eschenbach, Germany 24,100 Warehouse / Administrative Offices / Innovation Center Leased through 8/2024 AES Evergem, Belgium 116,500 Manufacturing / Administrative Offices Owned All Evergem, Belgium 88,200 Warehouse / Administrative Offices / Innovation Center Leased through 6/2027 AES Ghent, Belgium 56,700 Warehouse Leased through 3/2024 All Budapest, Hungary 46,800 Manufacturing Leased through 2/2027 AES Blackburn, England 58,000 Manufacturing / Warehouse /Administrative Offices Owned EMS Blackburn, England 9,000 Warehouse Leased through 8/2029 EMS Asia Suzhou, China 769,000 Manufacturing / Administrative Offices / Innovation Center Owned All Suzhou, China 77,000 Manufacturing / Administrative Offices Leased through 12/2031 EMS Suzhou, China 75,000 Manufacturing / Administrative Offices Leased through 5/2033 EMS Suzhou, China 164,000 Manufacturing / Administrative Offices Leased through 9/2033 AES Suzhou, China 27,000 Manufacturing / Administrative Offices Leased through 5/2027 EMS Siheung, South Korea 17,500 Manufacturing / Administrative Offices Leased though 10/2025 EMS * Rogers Corporation is a guarantor to this lease, which was signed in January 2024, to establish a premise of operations for our manufacturing operations through a shelter agreement in Mexico.
Biggest changeThe following table provides certain information about the material general offices and manufacturing facilities used by our operating segments: Location Floor Space (Square Feet) Type of Facility Leased / Owned Operating Segment North America Chandler, Arizona 147,000 Manufacturing / Administrative Offices / Innovation Center Owned AES Chandler, Arizona 105,100 Manufacturing Owned AES Chandler, Arizona 75,000 Administrative Offices Owned All Chandler, Arizona 17,000 Warehouse Leased through 3/2026 AES Rogers, Connecticut 388,100 Manufacturing / Administrative Offices / Innovation Center Owned All Woodstock, Connecticut 150,600 Manufacturing Owned EMS Carol Stream, Illinois 216,600 Manufacturing Owned EMS Bear, Delaware 125,000 Manufacturing Owned All Narragansett, Rhode Island 84,600 Manufacturing Owned EMS Apodoca, Mexico* 61,500 Manufacturing Leased through 1/2034 AES Europe Eschenbach, Germany 149,000 Manufacturing Owned AES Eschenbach, Germany 13,000 Warehouse Leased through 12/2025 AES Eschenbach, Germany 24,100 Warehouse / Innovation Center Leased through 11/2025 AES Evergem, Belgium 116,500 Manufacturing / Administrative Offices Owned All Evergem, Belgium 88,200 Warehouse Leased through 6/2027 AES Budapest, Hungary 46,800 Manufacturing Leased through 2/2027 AES Blackburn, England 58,000 Manufacturing / Warehouse Owned EMS Blackburn, England 9,000 Warehouse Leased through 8/2029 EMS Asia Suzhou, China 682,000 Manufacturing / Administrative Offices / Innovation Center Owned All Suzhou, China 77,000 Manufacturing Leased through 12/2031 EMS Suzhou, China 75,000 Manufacturing Leased through 5/2033 EMS Suzhou, China 164,000 Manufacturing Leased through 9/2033 AES Suzhou, China 27,000 Manufacturing Leased through 5/2027 EMS Siheung, South Korea 17,500 Manufacturing Leased though 5/2025 EMS Ansan, South Korea 51,300 Manufacturing Leased through 9/2030 EMS * Rogers Corporation is a guarantor to this lease, which commenced in September 2024, to establish a premise of operations for our manufacturing operations through a shelter agreement in Mexico.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings The information called for by this item is incorporated herein by reference to the information set forth in “Note 10 – Commitments and Contingencies” to “Item 8. Financial Statements and Supplementary Data.” Item 4 . Mine Safety Disclosures Not applicable. 18 Part II
Biggest changeItem 3. Legal Proceedings The information called for by this item is incorporated herein by reference to the information set forth in “Note 10 – Commitments and Contingencies” to “Item 8. Financial Statements and Supplementary Data.” Item 4 . Mine Safety Disclosures Not applicable. 19 Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe Program has no expiration date and may be suspended or discontinued at any time without notice. There were no share repurchases in 2023 or 2021. In 2022, we made $25.0 million of share repurchases. As of December 31, 2023, 19 $24.0 million remained available to purchase under the Program.
Biggest changeIn 2024, the Board of Directors authorized an additional $100.0 million to be used for share repurchases. Our share repurchase program has no expiration date and may be suspended or discontinued at any time without notice. There were 20 0.2 million shares repurchased for a total value of $19.8 million in 2024. There were no shares repurchased in 2023.
Issuer Purchases of Equity Securities In 2015, we initiated a share repurchase program (the Program) of up to $100.0 million of our capital stock to mitigate the dilutive effects of stock options exercises and vesting of restricted stock units that we granted, in addition to enhancing shareholder value.
Issuer Purchases of Equity Securities In 2015, we initiated a share repurchase program of up to $100.0 million of our capital stock to mitigate the dilutive effects of stock options exercises and vesting of restricted stock units granted by the Company, in addition to enhancing shareholder value.
Performance Graph The following graph compares the cumulative total return on our capital stock over the past five fiscal years with the cumulative total return on the Standard & Poor’s Industrials Index (S&P Industrials) and the S&P Small Cap 600 Electronic Equipment, Instruments & Components Index.
Performance Graph The following graph compares the cumulative total return on our capital stock over the past five fiscal years with the cumulative total return on the S&P 500 Industrials Index and the S&P Small Cap 600 Electronic Equipment, Instruments & Components Index.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Capital Stock Market Prices and Dividend Policy Our capital stock is traded on the New York Stock Exchange under the symbol “ROG”. As of the end of business on February 23, 2024, we had 251 shareholders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Capital Stock Market Prices and Dividend Policy Our capital stock is traded on the New York Stock Exchange under the symbol “ROG”. As of the end of business on February 21, 2025, we had 250 shareholders of record.
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For additional information regarding share repurchases, refer to “Note 12 – Capital Stock and Equity Compensation” to “Item 8. Financial Statements and Supplementary Data.” Item 6. [Reserved] 20
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There were 0.2 million shares repurchased for a total value of $25.0 million in 2022. As of December 31, 2024, $104.2 million remained available to purchase under our share repurchase program. For additional information regarding share repurchases, refer to “Note 12 – Capital Stock and Equity Compensation” to “Item 8.
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Financial Statements and Supplementary Data.” (Dollars in millions, except shares and per share amounts) Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs March 1, 2024 to March 31, 2024 1,500 $ 109.92 1,500 $ 23.8 April 1, 2024 to April 30, 2024 70,893 $ 108.79 70,893 $ 116.2 December 1, 2024 to December 31, 2024 116,045 $ 103.58 116,045 $ 104.2 Item 6. [Reserved] 21

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeEach of these markets is expected to contribute to our growth. 21 Executive Summary The following key highlights and factors should be considered when reviewing our results of operations, financial position and liquidity: • In 2023 as compared to 2022, our net sales decreased by 6.5% to $908.4 million, our gross margin increased 70 basis points to 33.8% from 33.1%, and operating income as a percentage of net sales decreased 550 basis points to 9.4% from 14.9%. • We recognized restructuring charges of $16.9 million in 2023 related to our reduction in global workforce and facility consolidation plans. • In 2023, we recognized insurance recoveries of $31.4 million related to our business interruption and property damage insurance claims and incurred $0.9 million of charges for various professional services in connection with the 2021 UTIS fire. • On September 22, 2023, we entered into asset purchase agreement to sell of one of our Suzhou, China facilities for a purchase price of $6.8 million, resulting in a pre-tax gain of $1.9 million, inclusive of selling and disposal costs.
Biggest changeOther markets with good growth trajectories include ADAS, aerospace and defense, portable electronics and renewable energy. 22 Executive Summary The following key highlights and factors should be considered when reviewing our results of operations, financial position and liquidity: • In 2024 as compared to 2023, our net sales decreased by 8.6% to $830.1 million, our gross margin decreased 40 basis points to 33.4% from 33.8%, and operating income as a percentage of net sales decreased 640 basis points to 3.0% from 9.4%. • We entered into and executed the JV Separation Agreement with INOAC, which resulted in gains of $7.7 million recorded in Other income (expense), net. • We recognized restructuring charges of $16.2 million in 2024 primarily related to our manufacturing footprint consolidation plan and our reduction in global workforce plan. • We recognized impairment charges of $7.9 million in 2024, primarily related to our new ERP system still in development. • We made $30.0 million of discretionary principal payments on our revolving credit facility in 2024. • We repurchased 0.2 million shares of our capital stock for $19.8 million in 2024.
We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances and believe that appropriate reserves have been established using on reasonable methodologies and appropriate assumptions based on facts and circumstances that are known; however, actual results may differ from these estimates under different assumptions or conditions.
We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances and believe that appropriate reserves have been established using reasonable methodologies and appropriate assumptions based on facts and circumstances that are known; however, actual results may differ from these estimates under different assumptions or conditions.
Our total net leverage ratio did not exceed 2.75 to 1.00 as of December 31, 2023. For additional information regarding the Fifth Amended Credit Agreement, refer to “Note 9 – Debt” to “Item 8. Financial Statements and Supplementary Data.” Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with U.S.
Our total net leverage ratio did not exceed 2.75 to 1.00 as of December 31, 2024. For additional information regarding the Fifth Amended Credit Agreement, refer to “Note 9 – Debt” to “Item 8. Financial Statements and Supplementary Data.” Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with U.S.
We did not make any changes in 2023 to our position on the permanent reinvestment of our historical earnings from foreign operations. With the exception of certain of our Chinese subsidiaries, where a substantial portion of our Asia cash and cash equivalents is held, we continue to assert that historical foreign earnings are indefinitely reinvested.
We did not make any changes in 2024 to our position on the permanent reinvestment of our historical earnings from foreign operations. With the exception of certain of our Chinese subsidiaries, where a substantial portion of our Asia cash and cash equivalents is held, we continue to assert that historical foreign earnings are indefinitely reinvested.
This outlook is supported by our participation in a number of growth markets and by our strong competitive positions in these markets. The fastest growing market opportunity is expected to be EV/HEV where third-party analysis projects that the market will increase at a compound annual growth rate of between 15% and 20% over the next several years.
This outlook is supported by our participation in a number of growth markets and by our competitive positions in these markets. The fastest growing market opportunity is expected to be EV/HEV where third-party analysis projects that the market will increase at a compound annual growth rate of between 10% and 15% over the next several years.
Any liability associated with such claims is based on management’s best estimate of the potential claim value, while insurance receivables associated with related claims are not recorded until verified by the insurance carrier.
Any liability associated with such claims is based on management’s best estimate of the potential claim value, while insurance recoverables associated with related claims are not recorded until verified by the insurance carrier.
With respect to other operating (income) expense, net, we recognized income of $33.1 million and income of $144.0 million in 2023 and 2022, respectively. The income recognized in 2023 was primarily related to insurance recoveries from the fire at our UTIS manufacturing facility in Ansan, South Korea.
With respect to other operating (income) expense, net, we recognized expense of $0.1 million and income of $33.1 million in 2024 and 2023, respectively. The income recognized in 2023 was primarily related to insurance recoveries from the fire at our UTIS manufacturing facility in Ansan, South Korea.
We plan to fund our capital spending in 2024 with cash from operations and cash on-hand, as well as our existing revolving credit facility, if necessary.
We plan to fund our capital spending in 2025 with cash from operations and cash on-hand, as well as our existing revolving credit facility, if necessary.
For asbestos-related claims, we recognize projected asbestos liabilities and related insurance receivables, with any difference between the liability and related insurance receivable recognized as an expense in the consolidated statements of operations. Our estimates of asbestos-related contingent liabilities and related insurance receivables are based on a claim projection analysis and an insurance usage analysis prepared annually by third parties.
For asbestos-related claims, we recognize projected asbestos liabilities and related insurance recoverables, with any difference between the liability and related insurance recoverable recognized as an expense in the consolidated statements of operations. Our estimates of asbestos-related contingent liabilities and related insurance recoverables are based on a claim projection analysis and an insurance usage analysis prepared annually by third parties.
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.
Our priorities in executing this strategy are focused on driving near-term improvements to profitability and improving the growth outlook for the Company over the next several years by further strengthening our focus on our portfolio and commercial activities, optimizing our global capacity to meet customer demand and driving innovation.
Research and Development Expenses (Dollars in millions) 2023 2022 Research and development expenses $ 35.7 $ 35.2 Percentage of net sales 3.9 % 3.6 % R&D expenses increased 1.4% in 2023 from 2022, primarily due to a $1.8 million increase in trial costs for alternative raw materials, partially offset by a $1.0 million decrease in professional services expense and a $0.2 million decrease in compensation and benefits expense.
Research and Development Expenses (Dollars in millions) 2024 2023 Research and development expenses $ 34.6 $ 35.7 Percentage of net sales 4.2 % 3.9 % R&D expenses decreased 3.1% in 2024 from 2023, primarily due to a $1.0 million decrease in compensation and benefits and a $0.8 million decrease in professional services expense, partially offset by a $0.7 million increase in trial costs for alternative raw materials.
The decrease was due to $185.0 million in discretionary principal payments on our revolving credit facility made in 2023. For additional information regarding this facility, as well as the Fifth Amended Credit Agreement, refer to “Note 9 – Debt” to “Item 8.
The decrease was due to $30.0 million in discretionary principal payments on our revolving credit facility made in early 2024. For additional information regarding this facility, as well as the Fifth Amended Credit Agreement, refer to “Note 9 – Debt” to “Item 8.
Income Tax Expense (Dollars in millions) 2023 2022 Income tax expense $ 19.7 $ 23.8 Effective tax rate 25.8 % 16.9 % Our effective income tax rate for 2023 was 25.8% compared to 16.9% for 2022.
Income Tax Expense (Dollars in millions) 2024 2023 Income tax expense $ 8.2 $ 19.7 Effective tax rate 23.9 % 25.8 % Our effective income tax rate for 2024 was 23.9% compared to 25.8% for 2023.
Excluding $1.6 million of inventory purchase commitments, there are no contractual obligations requiring material cash requirements in 2024 and beyond, excluding those already noted, including those related to our outstanding borrowings under our revolving credit facility, our operating and finance lease obligations and our pension benefit and other postretirement benefit obligations, which are discussed in “Note 9 – Debt ,” “ Note 6 – Leases” and “ Note 8 – Pension Benefits, Other Postretirement Benefits and Employee Savings and Investment Plan,” to “Item 8.
Excluding $3.0 million of inventory purchase commitments, there are no contractual obligations requiring material cash requirements in 2025 and beyond, excluding those already noted, including those related to our outstanding borrowings under our revolving credit facility, our operating and finance lease obligations and our pension benefit and other postretirement benefit obligations, which are discussed in “Note 9 – Debt,” “Note 6 – Leases” and “Note 8 – Postretirement Benefits,” to “Item 8.
Net sales were favorably impacted by foreign currency fluctuations of $0.7 million, or 0.1%, due to the appreciation in value of the euro relative to the U.S. dollar, partially offset by the depreciation in value of Chinese renminbi relative to the U.S. dollar. Operating income decreased by 96.6% in 2023 from 2022.
Net sales were favorably impacted by foreign currency fluctuations of $0.7 million, or 0.1%, due to the appreciation in value of the euro relative to the U.S. dollar, partially offset by the depreciation in value of Chinese renminbi relative to the U.S. dollar.
Net working capital was $410.5 million and $517.4 million as of December 31, 2023 and 2022, respectively.
Net working capital was $370.4 million and $410.5 million as of December 31, 2024 and 2023, respectively.
Financial Statements and Supplementary Data.” (Dollars in millions) Year Ended December 31, Key Cash Flow Measures: 2023 2022 Net cash provided by operating activities $ 131.4 $ 129.5 Net cash used in investing activities (47.9) (113.1) Net cash used in financing activities (190.3) (10.1) In 2024, we expect capital spending to be in the range of approximately $70.0 million to $80.0 million, of which we are contractually committed to $5.3 million as of December 31, 2023.
Financial Statements and Supplementary Data.” (Dollars in millions) Year Ended December 31, Key Cash Flow Measures: 2024 2023 Net cash provided by operating activities $ 127.1 $ 131.4 Net cash used in investing activities (45.6) (47.9) Net cash used in financing activities (50.1) (190.3) In 2025, we expect capital spending to be in the range of approximately $40.0 million to $50.0 million, of which we are contractually committed to $2.9 million as of December 31, 2024.
As of December 31, 2023, the estimated liabilities and estimated insurance recoveries for all current and future indemnity and defense costs projected through 2064 were $61.5 million and $56.5 million, respectively. 28
As of December 31, 2024, the estimated liabilities and estimated insurance recoveries for all current and future indemnity and defense costs projected through 2064 were $57.5 million and $52.3 million, respectively. 28
Equity income in those unconsolidated joint ventures decreased 59.1% in 2023 from 2022 due to lower net sales for RIC and RIS, which was primarily driven by the portable electronics market in Asia, as well as a change in the business model for RIS to subcontracting manufacturing in the second half of 2023.
Equity income in those unconsolidated JVs decreased 22.2% in 2024 from 2023 due to lower net sales for RIC and RIS, which was primarily driven by the portable electronics market in Asia, a change in the business model for RIS to subcontracting manufacturing in the second half of 2023, as well as the discontinuation of the JV relationships in November 2024.
Restructuring and Impairment Charges and Other Operating (Income) Expense, Net (Dollars in millions) 2023 2022 Restructuring and impairment charges $ 16.9 $ 66.6 Other operating (income) expense, net $ (33.1) $ (144.0) We recognized $16.9 million and $1.5 million of restructuring charges in 2023 and 2022, respectively.
Restructuring and Impairment Charges and Other Operating (Income) Expense, Net (Dollars in millions) 2024 2023 Restructuring and impairment charges $ 24.1 $ 16.9 Other operating (income) expense, net $ 0.1 $ (33.1) We recognized $16.2 million and $16.9 million of restructuring charges in 2024 and 2023, respectively.
The following table illustrates the location of our cash and cash equivalents by our three major geographic areas: As of December 31, (Dollars in millions) 2023 2022 United States $ 60.0 $ 120.0 Europe 37.6 69.9 Asia 34.1 46.0 Total cash and cash equivalents $ 131.7 $ 235.9 Approximately $71.7 million of our cash and cash equivalents were held by non-U.S. subsidiaries as of December 31, 2023.
The following table illustrates the location of our cash and cash equivalents by our three major geographic areas: As of December 31, (Dollars in millions) 2024 2023 U.S. $ 84.7 $ 60.0 Europe 37.4 37.6 Asia 37.7 34.1 Total cash and cash equivalents $ 159.8 $ 131.7 Approximately $75.1 million of our cash and cash equivalents were held by non-U.S. subsidiaries as of December 31, 2024.
The decrease in net sales was primarily driven by lower net sales in the power interconnects EV/HEV, aerospace and defense, wireless infrastructure and portable electronics markets, partially offset by higher net sales in the power substrates EV/HEV, renewable energy and ADAS markets.
Our AES operating segment net sales decreased by 3.9% in 2023 compared to 2022. The decrease in net sales was primarily driven by lower net sales in the power interconnects EV/HEV, aerospace and defense, wireless infrastructure and portable electronics markets, partially offset by higher net sales in the power substrates EV/HEV, renewable energy and ADAS markets.
This decrease was primarily due to $185.0 million in discretionary principal payments on our revolving credit facility, $57.0 million in capital expenditures and $3.2 million in tax payments related to net share settlement of equity awards, partially offset by $131.4 million of net cash flow provided by operations. • Accounts receivable, net decreased 8.7% to $161.9 million as of December 31, 2023, from $177.4 million as of December 31, 2022.
This increase was primarily due to $127.1 million of net cash flow provided by operations, partially offset by $56.1 million in capital expenditures, $30.0 million in discretionary principal payments on our revolving credit facility, $19.8 million in share repurchases and $1.4 million in tax payments related to net share settlement of equity awards. • Accounts receivable, net decreased 16.4% to $135.3 million as of December 31, 2024, from $161.9 million as of December 31, 2023.
Company Overview 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: AES and EMS. Our remaining operations, which represent our non-core businesses, are reported in our Other operating segment.
Company Overview and Strategy We design, develop, manufacture and sell high-performance and high-reliability engineered materials and components to meet our customers’ challenges. We operate two strategic operating segments: AES and EMS. Our remaining operations, which represent non-core businesses, are reported in our Other operating segment. We are headquartered in Chandler, Arizona.
The sale was completed in September 2023. • We made $185.0 million of discretionary principal payments on our revolving credit facility in 2023. 22 Results of Operations The following table sets forth, for the periods indicated, selected operations data expressed as a percentage of net sales: 2023 2022 Net sales 100.0 % 100.0 % Gross margin 33.8 % 33.1 % Selling, general and administrative expenses 22.2 % 22.5 % Research and development expenses 3.9 % 3.6 % Restructuring and impairment charges 1.9 % 6.9 % Other operating (income) expense, net (3.6) % (14.8) % Operating income 9.4 % 14.9 % Equity income in unconsolidated joint ventures 0.2 % 0.5 % Other income (expense), net (0.1) % 0.1 % Interest expense, net (1.1) % (1.0) % Income before income tax expense 8.4 % 14.5 % Income tax expense 2.2 % 2.5 % Net income 6.2 % 12.0 % Net Sales and Gross Margin (Dollars in millions) 2023 2022 Net sales $ 908.4 $ 971.2 Gross margin $ 307.1 $ 321.0 Percentage of net sales 33.8 % 33.1 % Net sales decreased by 6.5% in 2023 compared to 2022.
Results of Operations The following table sets forth, for the periods indicated, selected operations data expressed as a percentage of net sales: 2024 2023 Net sales 100.0 % 100.0 % Gross margin 33.4 % 33.8 % Selling, general and administrative expenses 23.3 % 22.2 % Research and development expenses 4.2 % 3.9 % Restructuring and impairment charges 2.9 % 1.9 % Other operating (income) expense, net — % (3.6) % Operating income 3.0 % 9.4 % Equity income in unconsolidated joint ventures 0.2 % 0.2 % Other income (expense), net 1.0 % (0.1) % Interest expense, net (0.1) % (1.1) % Income before income tax expense 4.1 % 8.4 % Income tax expense 1.0 % 2.2 % Net income 3.1 % 6.2 % Net Sales and Gross Margin (Dollars in millions) 2024 2023 Net sales $ 830.1 $ 908.4 Gross margin $ 277.1 $ 307.1 Percentage of net sales 33.4 % 33.8 % Net sales decreased by 8.6% in 2024 compared to 2023.
The decrease in net sales was primarily driven by lower net sales in the general industrial, consumer, portable electronics and EV/HEV markets, partially offset by higher net sales in the aerospace and defense market.
Our EMS operating segment net sales decreased by 9.8% in 2023 compared to 2022. The decrease in net sales was primarily driven by lower net sales in the general industrial, consumer, portable electronics and EV/HEV markets, partially offset by higher net sales in the aerospace and defense market.
If we are able to successfully execute on our strategy, we see an opportunity, over the next several years, to return to historical levels of profitability and meaningfully improve revenues from 2023 levels, led by organic growth and complemented by targeted acquisitions.
If we are able to successfully execute on our strategy, we see an opportunity, over the next several years, to meaningfully increase revenues from current levels and further improve profitability. The increase in revenues is expected to come from a combination of organic growth and targeted acquisitions.
The decrease was primarily due to a $15.4 million decrease in our income taxes receivable as well as lower net sales at the end of 2023 compared to at the end of 2022, partially offset by the recognition of $4.1 million in UTIS fire insurance receivables for our business interruption claims. • Inventories, net decreased 15.8% to $153.5 million as of December 31, 2023, from $182.4 million as of December 31, 2022, primarily driven by a reduction in finished goods stock and raw materials, as well as a $7.5 million increase in inventory reserves provisions. • Borrowings under revolving credit facility decreased to $30.0 million as of December 31, 2023, from $215.0 million as of December 31, 2022.
The decrease from year-end was primarily due to lower net sales at the end of 2024 compared to at the end of 2023 and lower days sales outstanding, as well as a $4.1 million receipt of previously recognized UTIS fire insurance receivables for our business interruption claims. • Inventories, net decreased 7.3% to $142.3 million as of December 31, 2024, from $153.5 million as of December 31, 2023, primarily driven by lower raw materials and work-in-process levels, combined with higher inventory reserves provisions, partially offset by higher finished goods levels. • Borrowings under revolving credit facility were nil as of December 31, 2024, compared to $30.0 million as of December 31, 2023.
Key Financial Position Accounts As of December 31, (Dollars in millions) 2023 2022 Cash and cash equivalents $ 131.7 $ 235.9 Accounts receivable, net 161.9 177.4 Inventories, net 153.5 182.4 Borrowings under revolving credit facility 30.0 215.0 26 Significant changes in our statement of financial position accounts from December 31, 2022 to December 31, 2023 were as follows: • Cash and cash equivalents were $131.7 million as compared to $235.9 million as of December 31, 2022, a decrease of $104.2 million, or 44.2%.
Key Financial Position Accounts As of December 31, (Dollars in millions) 2024 2023 Cash and cash equivalents $ 159.8 $ 131.7 Accounts receivable, net 135.3 161.9 Inventories, net 142.3 153.5 Borrowings under revolving credit facility — 30.0 26 Significant changes in our statement of financial position accounts from December 31, 2023 to December 31, 2024 were as follows: • Cash and cash equivalents were $159.8 million as compared to $131.7 million as of December 31, 2023, an increase of $28.1 million, or 21.3%.
Financial Statements and Supplementary Data.” The discussion of the comparison of our 2022 and 2021 results was previously disclosed within the Management’s Discussion & Analysis in Part II, Item 7 of the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2023 , and has been omitted from this section pursuant to Instruction 1 to Item 303(b) of Regulation S-K.
Financial Statements and Supplementary Data.” The discussion of the comparison of our 2023 and 2022 results was previously disclosed within the Management’s Discussion & Analysis in Part II, Item 7 of the Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2024 and has been omitted from this section pursuant to Instruction 1 to Item 303(b) of Regulation S-K, except the Operating Segment Net Sales and Gross Margin section, which has been recast due to changes resulting from the adoption of ASU 2023-07: Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.
Net sales were unfavorably impacted by foreign currency fluctuations of $0.4 million, or 2.0%, due to the depreciation in value of Chinese renminbi relative to the U.S. dollar. Our Other operating segment operating income decreased by 4.3% in 2023 from 2022.
Net sales were unfavorably impacted by foreign currency fluctuations of $0.4 million, or 2.0%, due to the depreciation in value of Chinese renminbi relative to the U.S. dollar. Our Other operating segment gross margin improved in 2023 due to lower freight, duties and tariffs costs, partially offset by lower volume and unfavorable factory utilization.
Operating Segment Net Sales and Operating Income Advanced Electronics Solutions (Dollars in millions) 2023 2022 Net sales $ 509.7 $ 530.2 Operating income $ 2.6 $ 77.1 Our AES operating segment net sales decreased by 3.9% in 2023 compared to 2022.
Operating Segment Net Sales and Gross Margin Advanced Electronics Solutions (Dollars in millions) 2024 2023 2022 Net sales $ 452.2 $ 509.7 $ 530.2 Gross margin $ 132.6 $ 157.6 $ 171.5 Percentage of net sales 29.3 % 30.9 % 32.3 % Our AES operating segment net sales decreased by 11.3% in 2024 compared to 2023.
We have also taken specific cost improvement actions in the fourth quarter of 2022 through the end of 2023 that have benefited subsequent quarters. These actions include optimizing our manufacturing footprint, divesting non-core product lines and reductions to manufacturing and corporate employees.
We have also taken specific cost improvement actions in recent quarters that have and will benefit our performance. These actions include optimizing our manufacturing footprint, divesting non-core product lines and reducing manufacturing and corporate employees.
As a percentage of net sales, operating income in 2023 was 0.5% as compared to 14.5% in 2022.
As a percentage of net sales, gross margin in 2023 was 37.5% as compared to 33.7% in 2022.
The decrease was due to unfavorable year-over-year change in impacts from our foreign currency transactions, partially offset by the favorable year-over-year change in impacts from our foreign currency derivatives and copper derivative contracts. 24 Interest Expense, Net (Dollars in millions) 2023 2022 Interest expense, net $ (10.1) $ (9.5) Interest expense, net, increased by $0.6 million in 2023 from 2022, 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.
The increase was due to the recognition of $7.7 million of gains in connection to the execution of the JV Separation Agreement with INOAC, as well as a favorable year-over-year change in impacts from our foreign currency transactions, partially offset by an unfavorable year-over-year change in impacts from our foreign currency derivatives. 24 Interest Expense, Net (Dollars in millions) 2024 2023 Interest expense, net $ (0.8) $ (10.1) Interest expense, net, decreased by $9.3 million in 2024 from 2023, due to a lower weighted-average outstanding balance for our borrowings under our revolving credit facility.
Financial Statements and Supplementary Data.” Equity Income in Unconsolidated Joint Ventures (Dollars in millions) 2023 2022 Equity income in unconsolidated joint ventures $ 1.8 $ 4.4 As of December 31, 2023, we had two unconsolidated joint ventures, each 50% owned: RIC and RIS.
For additional information, refer to “ Note 14 – Supplemental Financial Information ” to “Item 8. Financial Statements and Supplementary Data.” Equity Income in Unconsolidated Joint Ventures (Dollars in millions) 2024 2023 Equity income in unconsolidated joint ventures $ 1.4 $ 1.8 Up until November 5, 2024, we had two unconsolidated JVs, each 50% owned: RIC and RIS.
Net sales were unfavorably impacted by foreign currency fluctuations of $3.6 million, or 0.9%, due to the depreciation in value of Chinese renminbi relative to the U.S. dollar, partially offset by the appreciation in value of the euro relative to the U.S. dollar. Operating income increased by 26.0% in 2023 from 2022.
Net sales were unfavorably impacted by foreign currency fluctuations of $3.6 million, or 0.9%, due to the depreciation in value of Chinese renminbi relative to the U.S. dollar, partially offset by the appreciation in value of the euro relative to the U.S. dollar. 25 Our EMS operating segment gross margin in 2024 improved due to scrap and yield improvements and lower inventory reserves provisions, which was partially offset by lower volume and unfavorable mix.
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.
Within the EV/HEV market, we believe our advanced battery cell pads and ceramic substrates provide multiple content opportunities to capitalize on this growth.
We have a history of innovation and have established Innovation Centers for our R&D activities in Chandler, Arizona; Burlington, Massachusetts; Eschenbach, 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 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.
The decrease in professional services expense was due to a $6.3 million decrease in expenses incurred related to the terminated merger with DuPont, a $0.7 million decrease 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, 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 in 2023.
The decrease in professional services expense was primarily attributable to the non-recurrence of the $7.6 million of non-routine shareholder advisory costs and the $1.1 million of expenses in connection with the sale of our high-performance engineered cellular elastomer business, both of which were incurred in 2023.
In addition to our focus on these markets, we sell into a variety of other markets including general industrial, wireless infrastructure and mass transit. Our growth strategy is based on addressing trends in these markets and applying our repeatable customer engagement process. Our sales engineers and technical service employees work closely with our customers to understand their complex challenges.
Our growth strategy is based on addressing trends in these markets and applying our repeatable customer engagement process. Our sales engineers and technical service employees work closely with our customers to understand their complex challenges. They then leverage our innovation and technology capabilities and deep applications expertise to provide unique solutions to customers’ challenges.
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.
In addition to these capabilities, our strategy for success is also built on our reputation for high performance and reliability, trusted customer relationships and an expansive product portfolio. Through this strategy we expect to be able to drive further commercial wins, which provide the potential for higher growth in the future.
The decrease in net sales was primarily due to lower net sales in the power interconnects EV/HEV, aerospace and defense, wireless infrastructure 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.
Our AES and EMS operating segments had net sales decreases of 11.3% and 4.8%, respectively. The decrease in net sales was primarily due to lower net sales in the EV/HEV, industrial, ADAS and renewable energy markets, partially offset by higher net sales in the wireless infrastructure and aerospace and defense markets.
Gross margin as a percentage of net sales increased 70 basis points to 33.8% in 2023 compared to 33.1% in 2022. Gross margin in 2023 improved due to lower freight, duties and tariffs costs, lower raw material costs and favorable factory cost optimization efforts in our AES and EMS operating segments.
As a percentage of net sales, gross margin in 2024 was 38.4% as compared to 37.5% in 2023. Our EMS operating segment gross margin in 2023 improved due to lower freight, duties and tariffs costs, lower raw material costs and favorable factory optimization efforts, which was partially offset by lower volumes, unfavorable yield performance and higher inventory reserves provisions.
Financial Statements and Supplementary Data.” Elastomeric Material Solutions (Dollars in millions) 2023 2022 Net sales $ 379.0 $ 420.0 Operating income $ 76.1 $ 60.4 Our EMS operating segment net sales decreased by 9.8% in 2023 compared to 2022.
Elastomeric Material Solutions (Dollars in millions) 2024 2023 2022 Net sales $ 360.9 $ 379.0 $ 420.0 Gross margin $ 138.5 $ 142.0 $ 141.6 Percentage of net sales 38.4 % 37.5 % 33.7 % Our EMS operating segment net sales decreased by 4.8% in 2024 compared to 2023.
Financial Statements and Supplementary Data.” Other (Dollars in millions) 2023 2022 Net sales $ 19.7 $ 21.0 Operating income $ 6.6 $ 6.9 Net sales in our Other operating segment decreased by 6.2% in 2023 from 2022.
Other (Dollars in millions) 2024 2023 2022 Net sales $ 17.0 $ 19.7 $ 21.0 Gross margin $ 6.0 $ 7.5 $ 7.9 Percentage of net sales 35.3 % 38.1 % 37.6 % Net sales in our Other operating segment decreased by 13.7% in 2024 from 2023.
As a market-driven organization, we are focused on capitalizing on growth opportunities in the increasing electrification of vehicles, including EV/HEV, and increasing use of ADAS in the automotive industry, the advancement of communication systems in aerospace and defense, the growth of 5G smartphones in the portable electronics industry, and in renewable energy.
As a market-driven organization, we are focused on capitalizing on growth opportunities in several different end markets. This includes the automotive industry, where there are market opportunities resulting from the increasing electrification of vehicles, and in the expanding use of ADAS.
Selling, General and Administrative Expenses (Dollars in millions) 2023 2022 Selling, general and administrative expenses $ 202.3 $ 218.8 Percentage of net sales 22.2 % 22.5 % SG&A expenses decreased 7.5% in 2023 from 2022, primarily due to a $11.4 million decrease in compensation and benefits, a $3.8 million decrease in professional services expense and a $3.0 million decrease in other intangible asset amortization expense, partially offset by a $1.0 million increase in fixed asset depreciation expense and $0.5 million increase in travel expenses. 23 The decrease in compensation and benefits was primarily due to the $6.5 million discretionary RESIP contribution in 2022 and a $3.3 million decrease in the impact for retention awards issued in connection with the terminated DuPont merger.
Gross margin as a percentage of net sales decreased 40 basis points to 33.4% in 2024 compared to 33.8% in 2023. 23 Selling, General and Administrative Expenses (Dollars in millions) 2024 2023 Selling, general and administrative expenses $ 193.4 $ 202.3 Percentage of net sales 23.3 % 22.2 % SG&A expenses decreased 4.4% in 2024 from 2023, primarily due to a $9.5 million decrease in professional services expense, partially offset by the non-recurrence of the $0.7 million gain on the sale of our high-performance engineered cellular elastomer business in 2023.
Our operational excellence efforts are focused on driving significant near-term enhancements to our profitability and ongoing cost structure improvements. These efforts include focusing on improving yields, throughput, procurement capabilities and manufacturing processes and selectively adding strategic new hires to achieve better performance.
This growth strategy is enabled by both organic and inorganic investments from which we strive to ensure high-quality solutions for our customers. Our operational excellence efforts are focused on driving ongoing cost structure improvements to further enhance our profitability. These efforts include focusing on improving yields, throughput, procurement capabilities, and manufacturing processes.
The decrease in operating income was primarily driven by lower volume and unfavorable factory utilization, partially offset by lower freight, duties and tariffs costs. As a percentage of net sales, operating income in 2023 was 33.5%, an approximately 60 basis point increase as compared to 32.9% in 2022.
Our Other operating segment gross margin in 2024 declined due to unfavorable impacts from lower volume and unfavorable factory utilization. As a percentage of net sales, gross margin in 2024 was 35.3%, an approximately 280 basis point decrease as compared to 38.1% in 2023. Net sales in our Other operating segment decreased by 6.2% in 2023 from 2022.
This was partially offset by lower volume and unfavorable mix, as well as higher inventory reserves provisions and unfavorable yield performance in our AES and EMS operating segments.
Our AES operating segment gross margin in 2023 declined due to lower volumes and unfavorable mix, unfavorable yield performance and higher inventory reserves provisions, which was partially offset by lower freight, duties and tariffs costs, lower raw material costs and favorable factory optimization efforts.
The restructuring charges in 2023 were related to the reduction in global workforce and facility consolidation plans announced in February 2023. The restructuring charges in 2022 were related to the manufacturing footprint optimization plans involving certain Europe and Asia manufacturing locations.
The restructuring charges in 2023 were related to the reduction in global workforce and facility consolidation plans announced in February 2023. We recognized $7.9 million of impairment charges in 2024, which were primarily related to our new ERP system still in development.
Other Income (Expense), Net (Dollars in millions) 2023 2022 Other income (expense), net $ (0.7) $ 1.1 Other income (expense), net decreased to $0.7 million of expense in 2023 compared to $1.1 million of income in 2022.
For additional information, refer to “Note 16 – Mergers and Acquisitions” to “Item 8. Financial Statements and Supplementary Data.” Other Income (Expense), Net (Dollars in millions) 2024 2023 Other income (expense), net $ 8.8 $ (0.7) Other income (expense), net increased to $8.8 million of income in 2024 compared to $0.7 million of expense in 2023.
These decreases in net sales were partially offset by higher net sales in the power substrates EV/HEV, renewable energy and ADAS markets in our AES operating segment and higher net sales in the aerospace and defense market in our EMS operating segment.
The decrease in net sales was primarily driven by lower net sales in the EV/HEV, industrial power systems, ADAS and renewable energy markets, partially offset by higher net sales in the wireless infrastructure and aerospace and defense markets. We experienced lower EV/HEV net sales as customers continued to manage inventory levels and adjusted to softer end market demand.
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They then leverage our innovation and technology capabilities and deep applications expertise to provide unique solutions to customers’ challenges. In addition to these capabilities, our strategy for success as a manufacturer of engineered materials and components is also built on our reputation for high performance and reliability solutions, trusted customer relationships, a broad product portfolio and custom design capabilities.
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Other opportunities are driven by the advancement of communication systems in aerospace and defense, the growth of next-generation smartphones in the portable electronics industry, and the continued expansion of renewable energy. In addition to our focus on these markets, we sell into a variety of other markets, including general industrial, wireless infrastructure and mass transit.
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Other markets with a good growth trajectory include ADAS, aerospace and defense, portable electronics and renewable energy.
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We experienced lower EV/HEV net sales in our AES operating segment as customers continued to manage inventory levels and adjusted to softer end market demand and we experienced lower industrial net sales in our EMS operating segment primarily due to the non-recurrence of a one-time bulk purchase by a customer in 2023.
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The sale was completed in December 2023. • 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.
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Gross margin in 2024 declined due to lower volume and unfavorable mix, partially offset by reduction in manufacturing spend, scrap and yield improvements and lower inventory reserves provisions.
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Our AES and EMS operating segments had net sales decreases of 3.9% and 9.8%, respectively.
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The restructuring charges in 2024 were related to manufacturing footprint consolidation efforts, which impacted our Evergem, Belgium facility, along with the reduction in global workforce plan announced in November 2024 and the R&D facility exit plan announced in June 2024.
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Net sales were unfavorably impacted by foreign currency impacts of $3.3 million, or 0.3%, 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.
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The decrease from 2023 was primarily due to the (i) release of valuation allowance against certain NOLs, (ii) JV Separation which did not have a corresponding tax gain and (iii) favorable releases of uncertain tax positions, offset by (iv) increased non-deductible equity compensation.
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We recognized $65.1 million of impairment charges in 2022, primarily related to certain AES operating segment equipment-in-process in the U.S. as well as certain EMS operating segment intangibles and fixed assets related to our high-performance engineered cellular elastomer business in the U.S.
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Our AES operating segment gross margin in 2024 declined due to lower volume and unfavorable mix, which was partially offset by lower manufacturing spend. As a percentage of net sales, gross margin in 2024 was 29.3% as compared to 30.9% in 2023.
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The income recognized in 2022 was primarily related to the DuPont merger termination fee less costs incurred, as well as the impacts from the fire at our UTIS manufacturing facility in Ansan, South Korea. For additional information, refer to “ Note 14 – Supplemental Financial Information ” to “Item 8.
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As a percentage of net sales, gross margin in 2023 was 30.9% as compared to 32.3% in 2022.
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The increase from 2022 was primarily due to the impact of the decrease in the reversals of unrecognized tax positions in 2022 that did not reoccur in 2023.
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The decrease in net sales was primarily driven by lower net sales in the industrial market, partially offset by higher net sales in the EV/HEV market. We experienced lower industrial net sales primarily due to the non-recurrence of a one-time bulk purchase by a customer in 2023.
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The decrease in operating income was primarily due to unfavorable year-over-year changes in shared service operating expense allocations and a $9.6 million unfavorable year-over-year change in restructuring charges, as well as, lower volumes and unfavorable mix, unfavorable yield performance and higher inventory reserves provisions.
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As a percentage of net sales, gross margin in 2023 was 38.1%, an approximately 50 basis point increase as compared to 37.6% in 2022.
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The decrease in operating income was partially offset by a $40.5 million favorable year-over-year change in impairment charges and a $1.8 million net gain on the sale of one of our Suzhou, China facilities, as well as lower freight, duties and tariffs costs, lower raw material costs and favorable factory optimization efforts.
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The unfavorable changes in shared service expense allocations were driven by the merger termination fee less costs incurred related to the terminated DuPont merger in 2022 not recurring, as well as non-routine shareholder advisory costs incurred in 2023, partially offset by favorable year-over-year changes in costs associated with the terminated DuPont merger, including compensation and benefits costs as well as professional services expenses.
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In 2022, our AES operating segment recognized impairment charges of $40.5 million. In 2023 and 2022, our AES operating segment recognized restructuring charges and related expenses of $10.7 million and $1.1 million, respectively.
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For additional information related to restructuring and impairment charges, as well as the sale of one of our Suzhou, China facilities, refer to “Note 14 – Supplemental Financial Information” to “Item 8.
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The increase in operating income was primarily due to a $28.0 million favorable year-over-year change in charges/benefits related to the UTIS fire and a $24.6 million favorable year-over-year change in impairment charges, as well as lower freight, duties and tariffs costs, lower raw material costs and favorable 25 factory optimization efforts.
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The increase in operating income was partially offset by unfavorable year-over-year changes in shared service operating expense allocations and a $5.8 million unfavorable year-over-year change in restructuring charges, as well as lower volumes, unfavorable yield performance and higher inventory reserves provisions. As a percentage of net sales, operating income in 2023 was 20.1% as compared to 14.4% in 2022.
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The unfavorable changes in shared service expense allocations were driven by the merger termination fee less costs incurred related to the terminated DuPont merger in 2022 not recurring, as well as non-routine shareholder advisory costs incurred in 2023, partially offset by favorable year-over-year changes in costs associated with the terminated DuPont merger, including compensation and benefits costs as well as professional services expenses.
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In 2022, our EMS operating segment recognized impairment charges of $24.6 million. In 2023 and 2022, our EMS operating segment recognized restructuring charges and related expenses of $6.2 million and $0.4 million, respectively.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe impacts to net income in either scenario would have been less than $1 million. These impacts are not reflective of the effects of our foreign currency forward contracts. • Interest Rate Risk As of December 31, 2023, we had $30.0 million in borrowings outstanding under our revolving credit facility.
Biggest changeThese impacts are not reflective of the effects of our foreign currency forward contracts. • Interest Rate Risk As of December 31, 2024, we had no borrowings outstanding under our revolving credit facility. The interest charged on these borrowings fluctuates with movements in the benchmark SOFR.
Our primary overseas markets are in Europe and Asia, thus exposing us to exchange rate risk from fluctuations in the euro, the Chinese renminbi, the British pound, the Japanese yen, the Korean won and certain other currencies.
Our primary overseas markets are in Europe and Asia, thus exposing us to exchange rate risk from fluctuations in the euro, the Chinese renminbi, the British pound, the Japanese yen, the South Korean won and certain other currencies.
As of December 31, 2023, the interest rate on our revolving credit facility was 7.10%, and a 100 basis point increase in SOFR would have increased the amount of interest expense by approximately $1.6 million for the year ended December 31, 2023. • Commodity Risk We are subject to fluctuations in the cost of raw materials used to manufacture our materials and products.
As of December 31, 2024, the interest rate on our revolving credit facility was 6.30%, and a 100-basis point increase in SOFR would have increased the amount of interest expense by an immaterial amount for the year ended December 31, 2024. • Commodity Risk We are subject to fluctuations in the cost of raw materials used to manufacture our materials and products.
In 2023, a 10% strengthening of the U.S. dollar relative to other currencies would have resulted in a decrease to net sales of approximately $41 million, while a 10% weakening of the U.S. dollar relative to other currencies would have resulted in an increase to net sales of approximately $51 million.
In 2024, a 10% strengthening of the U.S. dollar relative to other currencies would have resulted in a decrease to net sales and net income of approximately $8.6 million and $4.1 million, respectively, while a 10% weakening of the U.S. dollar relative to other currencies would have resulted in an increase to net sales and net income of approximately $10.5 million and $4.9 million, respectively.
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The interest charged on these borrowings fluctuates with movements in the benchmark SOFR.

Other ROG 10-K year-over-year comparisons