Well, good morning and welcome to Rogers Corporation 2026 Analyst and Investor Day. My name is Steve Haymore. I am the Head of Investor Relations at Rogers, and it is my pleasure to welcome all of you with us here today. It is wonderful to see so many familiar faces with us here at the New York Stock Exchange, and we are equally delighted to have many more joining us via the public webcast. Before we begin, there are a few items to quickly make you aware of. The first is that all the presentation materials for today's event will be posted over the course of this morning, and you can access that through our Investor Relations website. There is a link to a dedicated page where you will find those presentations. In addition, the information this morning will include some forward-looking statements.
We invite you to review more about this and review this statement, which is available on our website. The materials today will also include some non-GAAP financial measures. You can find the reconciliations to all those in the appendix of the materials, again, on our website. During the course of the morning, we will have the opportunity to hear from the Rogers leadership team about the vision, the strategy, and the exciting growth opportunities that we have ahead. At the conclusion of those presentations, we will have a brief break. Following that break, we will then have a live Q&A session. At the conclusion of the Q&A session, Ali will have a few closing remarks, and then for all those here, we invite you to come and see the product displays in the back of the room.
I know we are excited to get started, so with that, let me turn it over to Ali.
Good morning, everyone. We are excited and honored to share with you our vision for the future and our detailed strategy to achieve it. Rogers has a strong foundation and all the ingredients to successfully deliver. Rogers has the talent, technology platforms, loyal customers, and global reach all needed to become a great company. Our entire team is committed to delivering on this next phase of growth. We know Rogers has not consistently delivered against its potential. But today we will show you what has changed and the milestones to measure our progress. Our strategy and outlook reflect a conviction in what Rogers can achieve and is supported by active customer projects and tangible market opportunities. There are four themes that we will focus on in our presentations today. First, we are making progress toward becoming a leaner, faster, and higher growth company.
Second, you will hear about the significant potential we see in our core markets and in fast-growing adjacencies such as data centers. Third, our growth plans are built on product technologies, manufacturing capabilities, and supply chain that are proven in the market and trusted by our customers. Lastly, with our improved cost structure and growth outlook, there is a significant margin earnings upside embedded in the business. Our plan is to grow Rogers sales to over $1.5 billion by 2030. Our focus today will be on how we can achieve this organic growth and unlock Rogers' potential. Our confidence in achieving this target is supported by several key pillars. First, we are extending established technologies and manufacturing platforms into adjacent growth markets. Second, the differentiated performance of our solution has been validated through customer testing. Third, the expected size of those opportunities are based on active customer engagements.
In other words, this isn't a market share estimate. These are actual programs with customers. We'll share more details about the growth plans in a few moments. For those of you who are new to the story, let's go and tell you, who is Rogers? We may not be a household name, but we are in a lot of the products you use every day. We are in your cellphone. We are in airplanes, trains, and even cars that you may have used to come here today. We have been around for more than 190 years. It's a long time. With over 3,000 associates serving more than 2,800 customers in more than 60 countries. We serve global leaders in many industries with a diverse mix of products and services. Our global technical and manufacturing capabilities are well-positioned to refine and secure supply chain for our customers.
Our business is well-diversified with 36% of our revenue from industrial, 26% from automotive, followed by consumer electronics, aerospace, and defense at 16% each. We operate through two segments, the Advanced Electronics Solutions and the Elastomeric Material Solutions. There are three business units under each segment led by talented professionals. The AES segment is focused on solving customer issues in radio frequencies, connectivity, power, and thermal management. The EMS segment is made up of a comprehensive portfolio of high-performance elastomers, which protect critical systems and improve reliability, even providing customers with comfort and convenience. In AES, Rogers laminate materials enable improved radar performance in driver-assistance systems, such as blind spot detections. In EV, our power substrates improve vehicle range with more efficient power conversion. In EMS, Rogers improve the durability of your smartphones with polyurethane materials that provide impact protection and environmental sealing.
Our silicones also make air travel more comfortable with sound-dampening materials. Both Nate and Brian will go into a lot more details about this. Throughout our presentation today, you'll hear about why customers choose Rogers. We have a long and proven history. Many of our major customers have used our products for decades. Why? First, because we've been around for a long time. We have a strong reputation and a brand recognition. We have decades of experience in serving our customers with high-performing products. We also have a broad product portfolio and international footprint. We have a global scale combined with our regional experts that provide local support. In other words, we speak the customer's language. Second, our customers turn to us. Thank you, man. Our customers turn to us for our application and development experience.
Rogers engineers act as trusted partners to provide the necessary technical and development capabilities to optimize solutions for our global OEMs and end users. They know that Rogers can deliver and always delivers with the performance and reliability needed. I was talking to one of our large partners in Europe who told me that thousands of his customers actually ask for our products and brand by name, and they would not accept alternatives. This is an impressive statement and showing the strength of the brand in the global market. It's not just the U.S.. In simple terms, we help solve complex challenges with engineered materials and products. In other words, the more challenging the problem, the greater need for Rogers solutions. For decades, Rogers has helped customers solve design challenges created by each new wave of technology.
When customers need data to travel further across a circuit board without losing quality or detect a faint radio signal, they turn to Rogers. Whether in space, defense, wireless communication, or automotive radars, we have been their trusted partners with the optimal solutions. When they are dealing with power and thermal management challenges in high-power chips, renewable energy, or EVs, they turn to Rogers. If they need solutions to ensure reliability of smartphones or if they need to improve the life of their EV battery, they turn to Rogers. Underpinning the value we provide to our customers is the mission-critical reliability provided by our materials and products. Sorry, this thing is not working here. Okay. Our global footprint gives customers supply resilience, regional production, and local technical capabilities that matter more as supply chain regionalize.
We have manufacturing operations in North America, Europe, and Asia, and the ability to produce many of our products in multiple regions, minimizing supply chain risks to our customers. We are also well-positioned to benefit from the continuing supply localization trends. Our market strategy is built on the deep connections we have with our customers. Our engagement with customers provide an understanding of their specific challenges at every stage in the value chain. That allows us to address and help them address their needs. If our existing portfolio does not meet their needs or expectations, we then customize our offering to their specific and unique criteria. Through this process, we are able to secure design wins that translate into durable revenue streams. These relationships also create opportunities to cross-sell more of our Rogers portfolio, compounding growth over time. We are continuing to strengthen this model in three ways.
First, we are expanding cross-selling by aligning capabilities around key industry verticals and increasing collaboration across product lines. Second, we are strengthening and building on existing relationship with our channel partners, such as converters and fabricators. Third, we are deepening customer engagement and expanding direct relationships with OEMs in targeted markets. Across each of these improvement areas, our focus is on developing a closer customer connection that will anticipate their needs and translate this into the products and solution that they will need and enable them to succeed. Rogers operates in dynamic markets, where speed of execution and time to markets are critical. In recent years, we did not consistently move at the pace these markets require. To succeed going forward, we are operating with greater focus, making faster decisions, shortening development cycles, and responding more quickly to customer needs.
We are already seeing evidence of this change in the marketplace. A lead customer has specifically recognized the pace at which we are sampling, testing, and delivering prototypes, one indication that our execution model is improving. The quick turnaround of samples to optimize their system performance was recognized by the same customer as a differentiated value. Examples like this have been enabled by our more simplified operating model and improved accountability structure. Our teams are empowered to make faster decisions and immediately address customer needs. We are not yet where we want to be, but the changes we are making are moving Rogers in the right direction, and it's showing up in our financial results. Sales are expected this year to end at $870 million, compared to $811 in 2025. EBITDA margins to grow by about 300 basis points and adjusted earning per share to $3.80 from $2.39 in 2025.
This is an important first step toward our long-term targets and evidence that our operating improvements are beginning to translate into a measurable result. Our growth plans begin with a strong alignment between our core technologies and the secular trends reshaping markets. Across connectivity, thermal management, power electronics, and pressure management, customers are facing increasingly complex design challenges, areas that align directly with Rogers' established and proven capabilities. In aerospace and defense, record OEM backlogs are driving demand for higher performance interconnect and elastomeric materials. In industrial markets, supply localization and factory automation are increasing the need for sealing and vibration management solution in demanding operating environments. In automotive, electrification and higher level of vehicle safety are creating opportunity across battery systems, power conversion, and high-performance radar. In data centers, rapidly increasing computing power is creating new requirements for higher speed connectivity and more efficient thermal management.
Across these markets, our established technology platforms are aligned with demand drivers that support steady core market growth through 2030. Together, these market drivers support our expectations that Rogers can grow its core market annually at 5% annually through 2030. Aerospace and defense is expected to lead the portfolio, advancing at a high- single-digit rate, followed by automotive and industrial markets at mid-single- digit. This thing keeps moving. Electronics and communications are expected to grow in the low- single-digit range as gains in premium smartphones and other consumer electronics is partially offset by lower demand or flat demand in wireless infrastructure over the plan period. Across the portfolio, our differentiated technology, deeper customer engagement, and improved go-to-market give us conviction that we can achieve the blended growth rates of 5%. Now let's turn to the exciting chapter here.
Building on the core market foundation, we are also focused on three targeted adjacencies that can meaningfully accelerate Rogers' long-term trajectory. Those are data centers, battery systems, and EMI shielding. The common thread across these three opportunities is similar. Customers are facing more complex performance challenges, and Rogers can build from existing product platforms, applications know-how, and customers relationships to provide effective solutions. The largest of these adjacencies is data center, where rising AI workloads are creating signal loss and thermal management challenges. EV and energy storage customers face increasingly stringent requirements for thermal management or thermal runaway protection and pressure management. In EMI shielding, increasingly complex electronics require greater protection from electromagnetic interference. Across each of these areas, we are building from existing capabilities into markets with attractive long-term potential.
I'll start with data centers, where Rogers has potential content across the entire facility, with the most meaningful opportunity inside the server rack. In high-speed digital, increasing data rates are making insertion loss and signal integrity more demanding, particularly at M9 and beyond. This is a natural extension of Rogers' long-standing expertise in PTFE-based materials, and our products are currently being tested by major industry leaders. We have active engagements with a handful of customers, and design awards are expected to generate revenue starting the second half of 2027. Advanced cooling is the second major area. As AI chips consume more power and generate more heat, customers need solutions that can remove the heat more efficiently at the source. We are adapting our cooling technology, already used in demanding high-power applications, for the next-generation data centers architectures.
We are engaged with multiple customers, and they are in prototyping and testing activities. All the feedback we have is encouraging on the performance of the product. Importantly, these technologies are not new to Rogers. They are proven platforms we have manufactured for years and now being applied to one of the fastest-growing end markets. Within automotive, battery systems are the most compelling growth platform for Rogers. The automakers push for longer range, faster charging, and higher energy density. Batteries safety become even more critical. Rogers serve these markets and these applications today, and we are developing differentiated solutions that address both thermal runaway protection and pressure management, two increasingly important needs in advanced battery designs. This build on established automotive partnership and proven material expertise. Our automotive opportunity extends well beyond battery systems. Power substrates provide meaningful content in BEV and PHEV inverters and converters.
While high-frequency circuit materials enable radar applications, our broad elastomeric portfolio also supports sealing, noise, and vibration management applications throughout the vehicle. Together, these technologies give Rogers diversified content across the major drivers of vehicle electrification and safety. Bringing this together, our core markets and targeted adjacencies create a clear bridge to our 2030 target. Beyond the core growth of 5%, we expect data centers, battery systems, and EMI shielding to generate over $450 million of annual revenue by 2030. These high-growth opportunities are consistent with our strategy and existing capability, giving us the confidence in our ability to execute. The foundation of our confidence is simple. We are leveraging our technologies, manufacturing capabilities, and supply chain, which are proven today in the market and trusted by our customers. Our revenue expansion and continuous operational improvements are expected to drive significant margin and earnings expansion.
By 2030, we are targeting 13% annual revenue growth, 26% adjusted EBITDA, and $14 of adjusted EPS. In other words, we will roughly double the revenue in the next four years, and our EPS will increase by approximately six-folds. This represents a significant step change in Rogers' earnings power, including approximately 40% annual adjusted EPS improvements, along with a stronger free cash flow and return on invested capital. M&A could and would provide incremental upside beyond these organic targets, but we didn't include any M&A impact in our targets. Again, this is based on organic growth. We have the confidence in these targets because of the strength of our team, the differentiated solutions we are bringing to market, and the progress already underway. Rogers has the foundation, capabilities, and opportunities to deliver this transformation, and I'm excited about what lies ahead.
Nate now will show you how Advanced Electronics Solutions will convert these opportunities into growth. Nate.
Thanks, Ali. As you've heard, Rogers has a clear path to accelerated growth [inaudible] relationships. I'm going to take a closer look at Advanced Electronics Solutions, or AES, and show how our connectivity, thermal management, and power electronics capabilities position us to grow in our core markets and capture meaningful adjacent opportunities, most notably in AI data centers. Before we dive in, let me introduce myself. I'm Nate Breeze, Senior Director of Marketing in our AES Segment. I joined Rogers two years ago, but after three decades in electronic materials, ranging from circuit board to semiconductor, electronic packaging, optics, and display. That experience gives me a deep appreciation for the challenges that our customers face and Rogers' capabilities that are increasingly valuable as electronics become faster, more complex, and more powerful. Now, let's jump into today's presentation.
There are three main messages I'd like you to take away today. First, AES has a very long history of providing high-quality solutions and innovation in connectivity, thermal management, and power electronics. Second, our trusted customer relationships are built on deep materials expertise, applications, and even systems-level expertise, not simply on supplying a component or even a specialty material. Third, these capabilities and experience have been proven and evolved for decades in demanding applications such as automotive, aerospace and defense, industrial, and communications. Importantly, we're now applying these capabilities to fast-growing sectors like AI data centers. AES combines three complementary businesses, radio frequency solutions, curamik thermal substrates, and ROLINX laminated busbars. Collectively, we help customers manage increasingly difficult challenges in signal integrity, heat removal, power conversion, and connectivity. Our competitive advantages are consistent with what Ali described.
Decades of proven performance, trusted OEM relationships, mission-critical reliability, applications and development expertise, a broad portfolio, and a global manufacturing footprint. These are the reasons why we have strong collaborative relationships with our customers. They rely on us for technical expertise because failure is costly and reliability is absolutely essential. AES generated $445 million of sales in 2025 and serves a diversified set of markets. Automotive is our largest segment, with industrial, aerospace, and defense rounding out the other largest portions. Put simply, as electronic systems have become faster, hotter, and more power-intensive, the problems AES solves become more difficult and therefore our solutions more valuable. Our radio frequency solutions business provides specialty copper-clad laminates that deliver exceptional signal integrity, directly affecting the range, accuracy, and reliability of radar and communication devices.
We often think of circuit boards as playing a supporting role to semiconductors, the real stars of the electronics show. As you'll see in many examples today, Rogers' copper-clad laminates are an integral part of the electrical architecture, particularly in transmitting and receiving radio or RF signals. Copper-clad laminate route signals to antenna structures while minimizing signal loss, managing power distribution, and participate in the overall thermal management or heat generation and dissipation. The performance of our materials enable many of our daily activities. In automotive radar, our materials help maximize signal strength and support greater range and resolution. For example, enabling emergency braking if a child runs in front of your car or slowing down a vehicle when it comes to a traffic jam. This is critical when you depend on the adaptive cruise control or blind spot detection systems of your vehicle.
In defense systems, we enable advanced threat detection, telling an enemy drone from a bird at a very long distance, for example. In wireless infrastructure, we support critical communication so that you can have reliable signal to your cell phone, whether from a base station on the ground or in orbit. Increasingly, this same capability is relevant at AI data centers, where we preserve signal fidelity as transmission speeds and signal routing challenges rise, making sure the ones and zeros in a signal arrive intact. What differentiates Rogers is the combination of low-loss materials performance, excellent reliability, and our applications expertise. Customers are designing systems with increasingly demanding requirements, and our ability to help them select, qualify, and apply the right material makes Rogers a trusted development partner. Our curamik and ROLINX busbar businesses address a different but increasingly connected set of challenges.
Curamik thermal substrates are perhaps the most critical component in a power semiconductor package, combining electrical isolation with effective heat dissipation. Our micro channel coolers provide highly efficient liquid cooling for the most demanding applications. ROLINX laminated bus bars are really the backbone inside power conversion equipment, handling high voltages and currents efficiently while reducing electrical losses, voltage spikes, EMI, and system complexity. These products enable higher performance electric vehicles, renewable energy systems, industrial equipment, and mass transit, just to name a few. As power levels increase, customers need to remove more heat, convert power more efficiently, and package systems within tighter spaces. Rogers brings proven reliability, applications expertise, and customized design to these challenges. Importantly, these are the same challenges required by next generation AI data infrastructure. Automotive showcases all three product lines.
Automotive radar is so commonplace we often don't pause to think about all the technology that keeps us safer on the roads today. Rogers can trace its copper clad laminate to over 500 million automotive radar units over the past decade or so. Vehicle electrification is another sweet spot for AES technology. Most Rogers manufacturing sites are certified to the rigorous International Automotive Task Force, or IATF, standards to minimize defects, product variation, and ensure high quality. We typically secure a few dozen design wins each year across the three business units, and the industry trend towards higher levels of electrification has provided increased sales opportunity. The opportunity for curamik is primarily in the power modules, which contain hot silicon or very hot silicon carbide chips. Our substrates in the DC/AC inverters, which connect the battery to the motors, support hundreds of kilowatts of power.
Think about a few hundred hairdryers pointed at your hand, and you can start to appreciate the importance of dissipating that waste heat. We also provide laminated busbars for efficient power conversion in the traction inverter in premium automotive or more often off-road construction vehicles, and in this context, perhaps more visibly in the EV charging stations. Rogers RF laminates were in the very first automotive radar systems back in the 20th century and remain a key component of the majority of automotive safety systems today. Curamik thermal substrates have been in EVs since their rise in the early 21st century. We remain disciplined about where we compete, focusing on applications in which performance, reliability, and technical support matter the most. We expect AES automotive sales to grow at a mid-single- digit rate through 2030. Electrification, as you can see, remains the primary driver.
Battery electric and plug-in hybrid vehicle production is expected to expand at low- double-digit CAGR through the end of the decade as production moves increasingly towards these new energy vehicles. We also expect increasingly capable vehicle safety systems to support demand for high-performance radar materials. Although the mix of technologies and price points will continue to evolve. Our strategy is to concentrate on the higher performance portions of these sectors, where Rogers' materials expertise and reliability provide the greatest differentiation. The opportunity is balanced across power substrates, power conversion, and radar, giving us multiple ways to participate. We expect aerospace and defense to be AES's fastest-growing core segment with high- single-digit growth through 2030.
Demand for Rogers' copper clad laminate is supported by rising government defense budgets, including system modernization, especially radar and missile guidance systems, replenishment of stockpiles, increasingly sophisticated radar and sensing, as well as expansion into space and satellite applications. These systems require exceptional signal quality, stable performance, and reliability under very severe operating conditions. Rogers has served these applications for decades, enjoys durable customer positions, and is specified across a broad range of programs that you hear about in the news. Our RFS copper clad laminates are in the air, on the ground, at sea, and in space. They're in the seekers and missile systems, ground-based radar, the birds and the drones I mentioned earlier, and a lot of secret systems that we're just not allowed to know or certainly to name. Let me illustrate this with one recent design win.
A well-known defense contractor was designing a new high-power radar system for the high-altitude surveillance, and they invited our applications experts to a design meeting, since we have a long, productive relationship with them. They wanted to use materials with pretty unique electrical specifications, thickness, high thermal conductivity, and tight manufacturing tolerances. Our team helped them optimize the material selection to give them the largest design window to accomplish the surveillance task. We expect sales in that airborne system to continue for years as the airplanes are built or retrofitted. We have special PTFE and non-PTFE materials, products with high thermal conductivity spanning a wide range of electrical applications, which enable our sales and applications engineers to help our customers optimize their systems. Design iterations and qualification cycles in A&D are long, but once designed in, supplier positions can endure for years or often decades.
Our established relationships with major defense contractors and specialized fabricators, combined with our technical capabilities, position us well to benefit from sustained investment across the sector. AI data centers brings our connectivity and thermal management capabilities together into one compelling adjacency. Ali introduced this opportunity at the company level. I will now explain where we have the greatest content opportunities and why the underlying technical challenges align so directly with AES. As mentioned earlier, semiconductor chips often get the headlines, but chips don't float in space. They need to be supported and interconnected by a circuit board and kept cool. AI infrastructure creates two increasingly difficult problems that map directly onto Rogers' capabilities. The first, moving enormous amounts of data without losing signal integrity, and two, removing enormous amounts of heat from these increasingly powerful chips.
The true power of an AI data center is to orchestrate the cooperation of multiple GPUs and CPUs. Some of the latest servers place four GPUs and two CPUs alongside high bandwidth memory in very close proximity, and that's a good start. The system gets vastly more intelligent and powerful when servers are connected together and GPUs can communicate directly. This could be done with cables, and it was in the past, but currently this would require about 2 mi worth of cables and 20,000 connections just within a single rack. Far more efficient and compact is to make these connections through a high-end circuit board. These circuit boards can be called midplanes, backplanes, can be a meter in length, and may require 24, 48, even I've seen 72 layers of copper clad laminate to fabricate. Performance and manufacturing quality are absolute differentiators.
As our downstream customers pack these ever more powerful chips ever more densely, directed chip cooling becomes another absolute requirement. Our microchannel cooler technology has been utilized for decades in specialty applications and has the versatility to address the thermal management challenges of increasing power density. Our qualified and scaled capabilities are primed to meet the latest challenges in this evolving segment. With that context, I will now cover a little bit more of the technical challenges. It's well established that demand for AI is increasing, and to increase performance, the industry is using more powerful chips, of course, and is connecting them at even higher speeds so that they can collaborate with each other. Data rates are quickly moving from 56 GHz or 112 GHz, even up to 448 GHz and beyond. As a general rule of thumb, again, a rule of thumb, signal strength drops in half as frequency doubles.
To diverse large circuit boards like midplanes and backplanes I mentioned a moment ago, they need to incorporate lower loss copper clad laminates, so the signals, the ones and zeros, can make it across that meter size circuit board. The laminate circuit materials that meet today's requirements, often called M6, M7, M8, are just no longer adequate for these most advanced data centers, certainly not in the large boards that I mentioned, like midplanes and backplanes. Each generation of material innovation brings about a 10%-20% improvement in insertion loss. Industry leaders are actively pulling for lower loss M9, M10 and beyond to improve their signal integrity. Building on our decades of experience with low-loss PTFE-based copper clad laminates, we've developed a solution that exceeds the performance requirements of M9 with a clear path to M10 and beyond.
That means that our materials maintain signal fidelity across larger boards, more complex PCBs, and allow designers additional loss budget to increase board complexity and address the evolving needs of the industry. The strength of our solution is not going unnoticed. Following completion of our internal testing, we began active sampling of our materials to our industry leaders and their favored board manufacturers. Our applications and development engineers are deeply engaged with these customers, working together in their fabs, and we're extremely encouraged by their confirmatory test results and fabrication validation as we work towards securing design wins. Cooling is the second major AES opportunity in AI infrastructure. Advanced chips are already at kilowatt power levels, it's amazing, and hotspots are becoming more problematic. This requires advances in cooling performance. Our direct chip-to-chip solution uses customized microchannel structures to remove heat efficiently at the chip level.
These coolers can be tailored to specific GPUs, CPUs, custom ASICs, memory devices, each with their own hotspots and cooling needs, and are intended to integrate into conventional liquid cooling systems. Our value proposition extends beyond the module itself. More efficient heat removal can support higher compute density and ultimately higher system performance. We bring substantial relevant experience, 10 years manufacturing microchannel coolers for high performance CPUs, 25 years serving the high power laser industry. We've shipped more than 10 million units for various applications with no known field failures. We're actively prototyping with several major industry players, and we're likewise extremely encouraged by the feedback from our lead customers, as their testing has indicated clear advantages in our performance versus conventional cooling solutions. In closing, we're executing on the strategy Ali outlined. Build on Rogers' core strengths in connectivity, thermal management, and power electronics.
Execute with greater speed and customer focus, and scale differentiated technologies into large, fast-growing adjacencies. AES has durable positions in demanding applications. Automotive and aerospace and defense provide attractive growth, and the technology challenges in AI data centers add two material growth opportunities for Rogers. I'll leave you with one final thought. The challenges our customers need us to solve are getting harder. Data rates are rising, power density's increasing, heat's becoming more difficult to manage. Rogers has spent decades building capabilities around precisely those challenges. AES is positioned to grow in our established markets, and our strong technology toolbox gives us a credible path into large new opportunities like AI data centers. Thank you for your attention. I'll now turn you over to Brian, who will discuss Elastomeric Material Solutions. As soon as I advance the slide.
Thank you, Nate. Sorry, and a good morning to all of you. You've just heard how AES is applying capabilities to attractive opportunities in their core markets, as well as positioning themselves for adjacent opportunities and growth, most notably in areas like AI data centers. I'll now explain the strength of the Elastomeric Material Solutions, or EMS business, and how we are also taking our capabilities into compelling adjacencies and opportunities, and show you why we believe EMS can grow through 2030 faster than its underlying markets. So before I begin, let me introduce myself. I'm Brian Minnis. I'm the Vice President of the Silicones Business within EMS. I joined Rogers seven years ago after nearly three decades in engineered materials, specialty chemicals, across a wide variety of applications and markets.
That experience has really provided me with the positive contribution that deep material innovation and application expertise can really help our customers win in an increasingly competitive, challenging, and globally competitive world. There are three messages I'd like for you to take away from this presentation today. First, EMS has differentiated capabilities with a track record of innovation in solving the most demanding challenges and applications that require sealing, impact protection, pressure management, and most importantly, durability. Second, entrenched positions. We have very deep customer relationships across our value chain built on materials, systems, and that application expertise. Customers do not really rely on us only for a product, but for help in solving some of their most common, complex challenges and applications and designs. Third, by leveraging these core capabilities into adjacent applications, specifically thermal runaway protection and EMI shielding, we are creating a path towards meaningful growth.
Importantly, this growth does not require us to build new capabilities or a new customer ecosystem. We'll simply leverage technologies that we have, customers, and channels that already exist. Together, our established positions in electronics and communications, industrial, and automotive provide a durable foundation and a clear path to accelerated growth. EMS business combines three complementary businesses targeting polyurethanes, silicones, and specialty materials. Collectively, EMS helps manage increasingly difficult design challenges that protect our customers' sensitive equipment and components, enable their advanced performance, and helps in providing them lasting durability. Our competitive advantage are consistent with what both Nate and Ali described. Decades of proven performance, trusted OEM relationships, mission-critical reliability, the application and development expertise, an extremely broad material portfolio, and a global manufacturing and technical support footprint. These reasons explain why leading OEMs continue to look to EMS. Our approach is consultative.
It extends beyond merely supplying a product. We work with our customers to discover their specific needs and application requirements early, which then provides information and direction to our material innovation and our overall direction within EMS. EMS generated approximately $350 million in sales in 2025 across a diversified set of end markets, where these broad material platforms solve a really common set of customer problems. Industrial is our largest segment, followed by electronics and communications, and automotive, and then finally aerospace and defense. What do we do in EMS? We formulate, we customize, and ultimately manufacture specialty polyurethane and silicone foams, silicone sponges, solids, composite structures, and high-performance thin films and tapes. Put more simply, we sell highly engineered materials into applications where failure is not an option and long-term reliability is absolutely critical.
These materials may be less visible than the actual systems they enable, but the role is absolutely essential. They seal against moisture, dust, light, other contaminants. They manage the pressure within the system. They absorb impact and vibration. They control noise and acoustics, and they provide thermal and chemical resistance. As Ali referenced at the very beginning, you likely interacted with a lot of our products without knowing it before you even arrived today. They're in your smartphones in your pockets. They're in the automobile or the Uber that you took. If you happened to fly in, they're in the airplanes you took to get to New York City. The EMS products designed into all these various devices and applications do differ by customer requirements and application, but the value proposition is always consistent.
Predictable performance across long operating lives backed by materials and application expertise and customer technical support wherever it's needed. This combination of materials performance, application expertise, and proven durability has earned Rogers and EMS a trusted position with leading OEMs across the globe. Industrial markets, again, our largest and most durable part of EMS. They comprise no less than 10 different subsegments. I've listed some select examples here. Our core capabilities are targeted towards solving our customers' most challenging and demanding applications. Again, sealing, pressure management, impact protection, acoustics and vibration control. Importantly though, our solutions are market-agnostic. We solve the same physics problems repeatedly. Critically, the industrial economy is being rebuilt and re-equipped simultaneously, driven by industrial automation, overall electrification, supply chain regionalization, and as you heard from Nate, just the unprecedented build-out of AI infrastructure.
All of this results in new opportunities for EMS, and we can pursue these opportunities through the customers, through the qualification processes, and through the channels that are already familiar to us, thus lowering the commercial barriers to market entry. Therefore, this large industrial base of business for EMS is both diversified revenue today, but more importantly, the capability engine for focused growth tomorrow. This provides confidence that our industrial business will grow at a mid-single-digit rate through 2030. There we go. Consumer electronics, again, our second-largest market. This market is characterized, as you know, by rapid technology change, very short design cycles, and a mix, especially recently moving toward more high-end premium devices. While total consumer electronic growth remains relatively modest, if you look at the premium devices, they're continuing to outgrow the broader market, and that is where EMS materials have increasing importance.
For example, while the overall smartphone shipment forecast hovers around 1%, the premium end of the market is forecasted to grow roughly 6%. Smartphones do comprise the biggest part of our consumer electronics business, but earbuds, smart speakers, smart devices are also targeted in a big part of our portfolio. The consumer pull towards premium devices, or if you want to call them the upgrade triggers, is really multifaceted in nature, but primarily it's being driven by three things: on-device generative AI features, devices that have longer lifespans, and a narrowing price gap between those premium devices and the rest of the market. Premium devices typically require more advanced materials. What this does is it provides higher content per device and higher value-add opportunities for a material supplier like EMS.
As the smartphone diagram here illustrates, we proactively work with all of our OEM partners early in their design cycles by providing high-performance materials as they work through that to meet these increasingly difficult design challenges. Our established relationships with leading OEMs in this space give us early visibility into what these design challenges are. They also create opportunities to extend solutions that we create for smartphones, for example, into smart devices and smart speakers. Put simply, this is the Rogers growth model in action. We combine proven technology, these trusted OEM relationships built over decades, design support, and manufacturing near the final device assembly to expand content into these growing markets. This gives us confidence that our consumer electronics business will grow at a mid-single- digits through 2030, which will outpace the overall market. Moving to automotive.
So automotive is an attractive segment for EMS because our content opportunity actually increases as powertrains become more electrified. While total passenger vehicle production is forecasted to remain relatively flat out to 2030, the consensus view is that battery electric vehicles, plug-in hybrid vehicles will grow at roughly a 12% CAGR out to 2030. Resultantly, by 2030, these battery electric vehicles and plug-in hybrids are projected to represent around 40% of global light vehicle production or about 38 million vehicles in 2030. That mix shift presents new content opportunities for EMS that align extremely well with our capabilities. The highest content opportunities are within the battery systems themselves. As these battery systems comprised of all these battery cells charge, discharge, and age, they expand and they contract. At the same time, as they're building higher density batteries, raises both thermal and safety requirements.
Both of these trends put together drive a need for engineered pressure management and thermal protection materials simultaneously. Importantly, we aren't entering battery systems for the first time. We've been supplying materials to leading electric vehicle OEMs and tier one battery producers for the last 15 years. In addition, we also have a strong base of automotive application opportunities that apply regardless of powertrain, including things like environmental sealing, noise and vibration management. All this expertise paired with these long-standing relationships across the automotive value chain lead us, lead EMS well to grow our overall content per vehicle at a mid-single-digit rate, which again, is going to outpace overall automotive production moving forward.
So far I've described the foundation or the base business of EMS. I want to pivot here and talk about two opportunities that Ali mentioned earlier that can accelerate EMS's growth beyond that base business, utilizing the same material platforms, the same customers, and same channels for these new applications. This accelerated growth is really driven by material innovation that cuts across markets, and is a natural extension of the foundational capabilities that I've described earlier. Thermal runaway protection, or TRP, applies primarily to large lithium-ion battery systems, most notably electric vehicles and stationary energy storage systems. As adoption grows, engineered thermal barriers are becoming absolutely essential to help prevent catastrophic thermal events. Electromagnetic interference, or EMI shielding, is also growing in importance.
As devices become more powerful, they become more compact, they become more connected, and as overall electrification of all the industries and AI infrastructure increases tremendously, drives this electrical complexity. Our confidence in these two areas comes from the fact that these are not new areas for EMS. Again, they build on the same materials, customers, and value chain relationships that we already have in place. Let's talk about the first one. Thermal runaway protection targets two of the fastest-growing applications and largest applications of lithium-ion batteries. As mentioned earlier, global electric vehicles, plug-in hybrid vehicles growing at 12% CAGR through 2030. While if you look at stationary energy storage systems, they're forecasted to compound at a 16% rate through 2030. Battery safety standards for EVs especially have become progressively more stringent.
Requirements have evolved in just a few years from warning passengers of a thermal event to providing them at least a few minutes to exit the vehicle to now some of the strictest standards actually requiring no fire or explosion at all. That combination of rapid battery deployment, rising safety requirements, is really expanding the addressable opportunity for engineered TRP materials in these two markets. The rising level of stringency is really dramatically changing what our automotive OEM customers and Tier 1 battery producers are requiring from thermal protection and battery materials in these systems. Now, if we pivot to stationary energy storage systems, they create a very similar need. These systems must operate for lifespans of 15 to 20 years, making thermal runaway protection increasingly important for asset protection and also insurability.
The use cases are different, passenger safety on the EV side, asset protection on stationary energy storage, but the material challenge is fundamentally the same, preventing a singular thermal runaway event from propagating to the entire battery system. Now, if we look at the ideal material to sit between adjacent battery cells in these EV and stationary energy storage systems, that material must perform two critical jobs. The first is managing the pressure during just the everyday operation of these systems. As I mentioned, these battery cells repeatedly expand and contract as they charge, they discharge and they age. Now, Rogers compression pads accommodate this cell breathing. They manage the expansion across the cell's lifetime. They help to maintain a consistent force within the system. And this supports reliable battery performance for OEMs over the lifespan of the vehicle.
The second job, and the one that is hoped to be extremely rare or actually nonexistent, is to suppress a thermal runaway event in one battery cell from propagating to the rest of the battery cells in the system. Now, if a battery cell does enter thermal runaway, an engineered barrier material must provide immediate protection. It must withstand temperatures in excess of 800 degrees Celsius. It must still maintain this dielectric integrity, and it must remain mechanically durable. These jobs are distinct, but they occur within the same battery system. Thermal runaway protection is a really compelling adjacency because it builds directly on strengths and capabilities that Rogers already has. We have more than 15 years of proven experience supplying pressure management materials to the world's leading OEMs.
To put that in perspective, just over the past five years, we've manufactured and sold over 100 million square feet of material that goes into pressure management pads for electric vehicles, which, depending on the size, equates to something to in the order of 400,000 to 600,000 parts per week. But in addition to these longstanding OEM relationships we have, they actually give us very early insight into how evolving battery technology is changing, how battery architecture is changing, as well as how these safety standards are progressing as we move forward. Historically, Rogers has been a leader in the first job, pressure management. The opportunity now is to combine that proven capability with thermal runaway protection in a more comprehensive material solution. As always, our approach remains disciplined.
We collaborate early with our OEMs, with our partners to understand what their specific application requirements are, and we scale as these programs move into production. Moving to EMI. As the physical economy continues its electrification journey, this growth in overall structural electronics increases the need and criticality for EMI shielding solutions. It is not only the overall level of electrification that is driving EMI growth. It is the increasing level of connectivity between devices. It is more electronics being placed in less space, and these electronic systems in more demanding environments, outdoors, in space, for electric vehicles, under the hood. Importantly, this challenge of providing EMI shielding and then simultaneously protecting these systems from harsher environments, again, cuts across markets. In aerospace and defense, you need it for avionic equipment enclosures. You need it for low earth orbit satellites.
Again, you need it for battery energy storage systems and for electric vehicles for multiple applications, from the inverter housing to the battery pack itself, to the onboard charger, just to highlight a few. For EMS, this translates into a compelling adjacency that is driven by existing capabilities, most notably a track record in providing advanced environmental sealing solutions across markets. Apologies, this slide layout is the same as I just used for TRP, and I did not do it because of continuity. It is because the underlying growth opportunity and the approach we are taking is exactly the same. We leverage existing capabilities, in this case, environmental sealing expertise. We build in and layer in additional functionality like EMI shielding, provide one comprehensive solution that addresses two critical jobs. Again, just like TRP, the two jobs are distinct, but they occur within the same system.
EMI shielding is a compelling adjacency for an established elastomer producer like EMS, because our customers are increasingly requiring electrically conductive elastomers that are effective at both sealing or protecting their systems, but also protecting against increasing levels of electromagnetic interference. For today, this is just one final example of the EMS business model. We extend our proven capabilities in material science, application know-how into spaces that help us create new growth opportunities. Let me close my talk today with actually the three messages I started at the very beginning. EMS starts with differentiated capabilities, materials, and application. Those capabilities have created durable positions with leading customers around the globe, and those positions now give us a lower-risk path into faster-growing adjacent applications. Our core industrial, automotive, and consumer electronics businesses provide a durable foundation.
The high-growth opportunities that I just discussed create the potential to accelerate performance beyond that base. As you heard from both Ali and Nate earlier, the playbook is actually consistent across Rogers. Grow in attractive core markets, extend proven technologies into adjacent opportunities, and convert that growth into greater earnings power. With that, I would like to thank you all for your attention, and I am going to hand this over to Laura.
Thank you, Brian.
You're welcome.
Good morning, all. It's a pleasure to be with you this morning. I'm Laura Russell, Chief Financial Officer here at Rogers. For those of you that I haven't had the opportunity to meet previously, I joined the company in September of 2023. Prior to that, I have a decade-long experience in the semiconductor industry. During this morning's presentations that you've heard from Ali, Nate, and Brian, we shared a lot about Rogers' proven capabilities in connectivity, thermal management, power electronics, and engineered elastomeric materials, and how those position us to grow both in our core markets and into new, attractive adjacent end markets. Ali outlined the strategy for building a higher growth, higher performing Rogers, and Nate and Brian then showed how our teams are applying those technologies and competencies developed over decades in demanding applications to enable significant incremental opportunities into automotive and AI data centers.
These incremental revenue opportunities will complement our mid-single-digit growth that we forecast in our core business. Bringing all the elements shared together financially, I'll discuss the compelling framework that we use in our financial outlook, the financial framework to manage the business, the progress that we've already made, and how we expect growth to translate into margins and earnings expansion. Finally, I'll discuss how we intend to allocate the cash generated by that growth. As we review my materials, I think it's important that my objective is to ensure that I provide clear financial roadmap for the transformation Ali described. A transformation should grow Rogers from $800 million to $1.5 billion, with associated margin expansion driven by our differentiation, scale, and execution. Our long-term target should reflect more than stronger end market demand.
They're supported by a fundamentally improved operating model, a more disciplined cost structure, and a focused set of organic growth opportunities that build on the technologies and capabilities that Rogers already possesses. Together, these factors create a path to substantially greater revenue, profitability, earnings, and cash generation through 2030. Stepping back, it's important to review the framework that we use to guide how we operate and make capital decisions. The first component is our growth. In our core markets, we intend to outperform underlying market growth through deeper customer engagement, greater cross-selling, and improved execution. In adjacent markets, we're applying our proven expertise in areas such as thermal management and signal integrity to customer challenges where Rogers has a clear ability to enable our customers' performance. The second component is profitability.
We're using the voice of our customer insights to improve our abilities to sharpen our value proposition and direct our resources toward investments where we can create the greatest value. At the same time, we're driving continuous improvement across our operations and benefiting from the scale available within our existing global footprint. The third component is our liquidity and cash allocation. As profitable growth increases the cash that we're going to generate, we intend to reinvest first in our organic opportunities that offer the most attractive risk-adjusted returns. We will also consider strategic acquisitions that add capabilities or accelerate our objectives whilst we will maintain balance sheet flexibility to return excess capital to shareholders. Essentially, this creates a reinforcing cycle. Growth provides profitability expands our liquidity, and liquidity funds our future value creation. I recognize that the objectives that we're presenting today come after a period of underperformance.
That said, we're already working on Rogers' transformation. This chart demonstrates that transformation as it relates to our cost structure, and it's already producing measurable results. We have taken both structural and operational actions to create a leaner and more scalable organization. Structural actions include manufacturing footprint consolidation to meet customers where their demand is, R&D site consolidation to improve our innovation cycles, and savings initiatives in our operations and across the broader business reorganization. Operationally, we have enhanced supplier strategies, improved quality and yields, expanded the use of Six Sigma principles, and introduced more rigorous performance measures throughout the organization. These actions are reflected in our year-over-year results. Across each of the first three quarters shown here, adjusted gross margin improved in spite of the pricing and cost pressures, adjusted operating expense as a percent of sales declined, and EBITDA margin improved meaningfully. Critically, these aren't temporary improvements.
They reflect changes in how we operate, greater accountability, faster decision-making, better productivity, and a more focused organizational structure. This work establishes the sustainable operating discipline needed to translate future revenue growth into substantially greater earnings. Our path from $800 million to $1.5 billion in 2030 has two primary components. First, as you heard, we expect our core business to grow at approximately a mid-single-digit rate, contributing roughly $250 million of revenue expansion by 2030. Second, we expect the focused high-growth opportunities that we shared with you today, including AI data centers, advanced battery materials, and EMI shielding, to contribute around $450 million. Together, that represents around $700 million of incremental revenue and takes Rogers from an $800 million top-line company to $1.5 billion by 2030. As discussed, we expect the profitability to expand as we grow our revenues.
We expect adjusted EBITDA margin to grow from 14.2% in 2025 to around 21% by 2028, and ultimately to reach 26% by 2030. High-growth opportunities that we shared are expected to be the largest contributor to our EBITDA expansion by 2030, with attractive incremental margins fueled by the differentiation we've already discussed. Growth in our core markets provides an additional source of leverage. We expect meaningful benefits as increased volumes across our global footprint scale fixed costs while ongoing productivity, quality, yield, and cost actions more than offset the anticipated pricing pressure. Operating expense leverage provides another important contribution. We will invest in the commercial and technical capabilities needed to support our growth objectives, but we expect operating expense to grow substantially slower than our revenues.
After our diligently managed investments, the combination of high growth opportunities, core business growth, improved utilization, continued cost reductions, and operating expense leverage is expected to drive approximately 1,200 basis points of adjusted EBITDA expansion by 2030. To provide context before we go into our capital allocation strategy, I thought it prudent to revisit our current balance sheet strength. We have grown our on-hand cash and short-term investments by roughly $80 million over the last few years, while continuing to invest organically and making share repurchases of roughly $75 million. We have not undertaken any acquisitions in the last five years, and resultantly, we don't have any debt. We maintain a revolver balance with $450 million available. As I pivot into our capital allocation, our priorities are designed to support growth whilst preserving financial flexibility and maintaining a clear focus ultimately on our shareholder value.
Our first priority is to continue to invest in organic growth. That includes the manufacturing capacity, technical resources, customer development activity, and innovation required to capture the opportunities we discussed today. We will stage our investments with customer commitments and appropriate return thresholds. The second priority is our strategic M&A. We will pursue disciplined opportunities that add capabilities, strengthen market positions, or accelerate progress against our strategic objectives. Third, we want to maintain financial flexibility. A strong balance sheet provides resilience and allows us to act when attractive opportunities emerge. We intend to maintain prudent leverage and sufficient liquidity through different market cycles. Our fourth priority is to return excess capital to shareholders, beyond simply offsetting any dilution from new issuances, when it's not required to fund the higher growth organic or inorganic opportunities. The governing principle for this is very straightforward.
Capital will be directed towards the opportunities that create the greatest value for our long-term share. M&A remains an important potential upside. It's not included in any of the organic financial targets that we presented here today. Specifically, our focus will be on acquisitions that enhance the outlook of our existing business, add differentiated capabilities, or support our strategic growth priorities. We will evaluate potential acquisitions against three broad criteria. First is the attractiveness of the target market. The business should participate in an existing or adjacent market with growth characteristics that meet our objectives. It should align with Rogers' strengths and customer collaborations, materials expertise, and engineering excellence. Second is the attractiveness of the target itself. We will look for businesses that strengthen our capabilities or product offerings, fit our values and culture, and offer an identifiable opportunity to improve growth or returns under Rogers' ownership.
Third is the financial return. Transactions must have a clear path to accretion and attractive returns. We will maintain disciplined leverage, limit shareholder dilution, and target an appropriate payback period. Just to reiterate, we do not need M&A to achieve the targets that we shared today. That means that we retain complete flexibility to remain selective and pursue transactions only when they strengthen the company and create compelling shareholder value. Let me close by bringing the components of our financial strategy back together. Our targets provide meaningful milestones for our transformation. For 2030, we are targeting revenue of approximately $1.5 billion, ± $50 million, adjusted EBITDA margin of approximately 20.5%, ± 50 basis points, and adjusted earnings per share of $6, ± $0.50.
Overall, by 2030, the opportunities that we presented today, enabling core growth, high growth in adjacent end markets, plus our continued focus on cost and capital allocation discipline, should deliver $1.5 billion in revenue, 26% EBITDA, and $14 EPS. Several assumptions do underpin our targets. We expect core markets to grow at a mid-single-digit rate. This will be meaningfully compounded, particularly by 2029 and 2030, as the data center and high growth opportunities scale in adjacent end markets. We expect operating expense in absolute terms to increase to support the growth that we presented. However, it will decline meaningfully as a percent of sales to below 20%. We assume a long-term tax rate in the mid-20% range. At the midpoint, our target supply, our revenue compound annual growth of 12%-14%, and adjusted earnings per share CAGR greater than 40% from 2025 to 2030.
We also expect significantly stronger free cash flow and improved return on our invested capital as the business scales. Finally, I would like to recognize that these targets represent a significant transformation of Rogers. However, they are not aspirations. Rather, they are our objectives that are supported by capabilities that we possess today, opportunities that are already in development, and operating improvements that are already underway. I look forward to providing updates on our progress in our future sessions. Thank you for your time this morning, and I will now hand you back to Steve.
All right. As mentioned, we will take a 10-minute break now, and following that, we will have the Q&A session. Thanks.
[Break]
All right. Welcome back. Okay, great. We're going to go ahead and get started with our Q&A. We'll invite the leadership team to come out here and take a seat. We will have a couple of microphones going around the room, so once we get everyone seated, if you'd like to ask a question, just raise your hand and we'll bring you the mic. Looks like we got Craig and then Dan here in the front. We'll start with Craig. Chair right back here.
Yeah. Craig Ellis, B. Riley Securities. Team, thanks so much for all of the information. Really appreciate the depth of insight that you provided. I want to start focusing on things that get us to that 2030 $1.5 billion revenue number. Very impressive, and a big part of the path there is our high-growth opportunities. I'm hopeful that you can identify some of the underlying assumptions we're using with regard to design win visibility, the relative contribution, EMS versus AES, and whether or not there's any new technology that needs to develop to realize that growth, or if this is all product that's out engaging with customers. Thank you.
Thanks, Craig. Is this working? I think it is. Thanks for the question. Before I answer the question, just make a comment here. What you see, what we presented is not something that we invented in a C-suite or a dark room in the back. This is really the effort of the team. We put a strategy together that we believe in. We're committed to deliver. Now, to go back to how that breakout goes, I think the majority of the growth is coming from data centers applications. There is some automotive, and most of it, or the majority is data centers. Both the data center applications is the micro channel coolers, which we've been discussing before, thermal management, as well as the high-speed digital. We believe we have products today, according to customers' feedback and our internal testing, that outperforms what's in the market today, period.
All the feedback we're getting back from customers who are testing, validating the products, giving us that information, that performance-wise, we are above what's in the market today. We're outperforming what's in the market today. Where the numbers come from is what I highlighted before. We are not considering what the size of the market is. We're targeting areas where we believe technical challenges are there and there is no current solutions today. That's why we mentioned, for example, on the connectivity side, we're targeting the M9 and beyond. If you look in the market today, the M10, that's public information. There is no solutions today. We believe we're very close to having that solution. M9, we meet those requirements and exceed what's in the market today. On the thermal management, as the power increases, as temperature increases, those are the applications that we're targeting.
We're not targeting the 400 W, 600 W, 800 W. We're targeting the thousands of watts. As those temperatures and those power requirements increase, the thermal management, the solution that we're offering is, again, cooling the source, directly cooling the source and removing the temperature from the source. That's why those applications today or our current solution today is again, more effective, more efficient than what's on the market for these applications, the high-power ones. It is mostly AES. The majority of it will be in the AES side, but EMS also has applications. Again, the TRP that we've mentioned, the EMI shielding, that's also an opportunity for us. The majority of the drivers will be on the high-speed digital, which is the connectivity side, the thermal management, which is the micro channel coolers.
That's really helpful, Ali. So thank you. I'll ask a follow-up and then I'll hand the mic off. The follow-up is for you, Laura, although there may be contributions from other team members, but we have a very impressive adjusted EBITDA march as we go to 20% in 2028, then 26%. It looks like we've got three drivers, but in different sequence getting there. Can you clarify the relative contribution of things that are happening on the COGS line versus in OpEx and the line of sight you have to implementation on those things and the extent to which there's anything new that folds into the business as we get to 2028 as we then accelerate for that additional 600 basis points? Thank you.
Sure. Sure. So one of the slides that I had presented was just the progress that we've made on our transformation this year from a cost perspective. That is something that I would say we're largely through. In terms of expense and the impact that that's going to have in our future EBITDA expansion, it's actually going to go the other way because we need to invest or continue to invest to support these growth objectives and the market potential that we see. What you're going to see, though, in the EBITDA expansion from going from the 14.2% to the roughly 20% and then on to 26%, is really driven predominantly by first our growth.
We talk a lot about servicing our customers in region for region, which means that we have a large global footprint and capacity that's available to service our existing demands and then these new high-growth opportunities. Now, I'm not trying to indicate there won't be additional potential investment required, but not in the more near- term. At least not significant. What you're going to see is the new opportunities come in. They're going to leverage the capacity that we have in our existing footprints. I'm going to do a better job from scaling and utilizing that. The other thing you're going to see is when we're providing differentiated solutions to the market, then that's going to have differential pricing. So we're going to see some benefit there as well on our chart to our EBITDA expansion. Then, we will I'm trying to think, sorry.
I lost my train of thought. But yes, I think it's predominantly the revenues. The other thing, sorry, that I did mean to mention, I don't want to lose sight of, is the cost progress that we've made. We're not fully there. We've made a lot of significant improvements. But there's incremental opportunities beyond that. So as an example, our current yield performance in our factories has progressed, but we've still got room there. So when I look in the 2025 to 2028 time frame, I would say the margin expansion on EBITDA predominantly is going to come from our COGS and our top- line. And it's really split between leveraging and our ongoing operational excellence and efficiencies and the new revenue and the absorption I'm going to experience.
When I get beyond 2028, much more of the contribution and the margin expansion is coming off of that acceleration in the top- line and accelerating and differentiated revenue performance.
Got it. All right, we'll go to Dan next.
Thanks very much. Dan Moore, CJS Securities, and thank you for all the detail. Maybe talk a little bit about conversations and feedback you're getting from customers in beta testing for microchannel coolers as well as PTFE laminates, and what are the gating factors between now and when you'll be in position to make some of those initial customer announcements?
Like I mentioned earlier, I think all the feedback that we got so far, it's been confirming what we've tested and qualified internally, and that the performance of the products that we supply and the prototypes, significantly better than what's out there today. I'll let the guys who are actually working on it probably comment more. With regard to the timing, we are really hopeful that within the next two quarters, we will be announcing some design wins. The timing really is controlled mostly by the customers and the application, so they've got to be ready, too. But in some cases, on the microchannel coolers, I believe we're right now on generation three. I'm looking at my guy over there who handled the project, and I believe we're on generation three of improvements.
We're progressing very well in there, and we expect, again, announcements within the next two quarters. You want to add something, Nate?
Yeah, no, I think you covered it very well, Ali. But I'll just underscore that these customer engagements are generally designed at a very specific system, let's call it, a board, a box, a GPU, a configuration. So, we're not looking at a, Here's our glossy brochure. Wouldn't you like to buy from Rogers? We're really engaged with our customers about what's their problem. What are we trying to solve? Is it a hot spot? Is it a heat removal rate? Is it a data speed? So, we're really engaged with the customers about their very specific challenges.
Good.
Maybe a quick follow-up, and Laura, you alluded to this in answering Craig's last question, but just talk about current capacity in place to accommodate the growth, both in core, that 5% mid-single- digit core, as well as these really large emerging opportunities and CapEx requirements over the time frame. Thank you again.
Want to take that?
Sure. What I would say is that with the current information, the expected ramp schedules that are assumed in the numbers that we shared, we largely have the capacity in place to service the opportunities through really 20, at least partway through the year. What I would say, though, is as we discussed one of your prior questions, the customer engagements and the design wins, as we see them and get more definitive confirmation on their volumes and their ramp schedule, we will invest our capacity appropriately. You saw with the information that I shared on the balance sheet, the existing position that we have and the capacity that we have. Even with that said, our current line of sight would suggest that our CapEx intensity shouldn't be overly onerous. What I mean by that is our current guidance for 2026 is $30 million-$35 million.
If I look forward in the next couple of years, I would anticipate something in the slightly more, in the mid-single- digit range.
As a percent of sales.
As a percent of revenue, yes.
Right.
Okay, I think we had a question in the middle I may have missed earlier. David, we will go there next. Thanks.
Yeah. Hi, Dave Silver, Freedom Capital Markets. You set out the 2030 targets, which were very eye-catching, and we are all wondering, well, what about the next couple of years? In other words, the credibility of your 2030 targets is, in a real way, kind of connected to maybe getting from here to 2028. What I am thinking of, Laura talked about capacity increases, but you already do have capacity in place that it is not underutilized, but the utilization is not where you had hoped it would be. I am just thinking to bridge the gap between now and maybe when the data center opportunity starts. Is that 5% core growth enough to really hit your margin and cost targets. So I am thinking of curamik and PORON in China in particular. But what kind of bridges the gap here?
Does the 5% core type of growth get you those volume-based operating leverage benefits that are sketched out there, I guess?
Well, David, we presented the number for 2028, so we already put a milestone there, at 2028. That is not a 5% growth. Obviously, it's higher than 5% growth. We expect data center business to start rolling in the second half of 2027. So we will start seeing that in 2027. With regard to capacity utilization, we continue to improve the current business we're in. We announced last quarter that we won two new opportunities in Asia for the curamik business. So that's actually consuming some of that capacity. It's taken some of that capacity. It depends also on how fast the micro channel coolers will take off. Then we're going to start shifting some of the capacities, as we've mentioned before, across regions.
Because our equipment today is to build that micro channel coolers probably in the German facility. Then we can shift some of the other business somewhere else, whether to China. So capacity utilization, we see it increasing. That's again baked in the numbers because EBITDA number for 2028 is 21%, actually. So we are already seeing the benefits of this capacity utilization.
Okay, thank you. The next question would be kind of about protecting your intellectual property here. A lot of your growth depends on, as Ali just said, you have solutions to problems that no one has solved before. I imagine there's a lot of people who would like to solve those problems and are putting a lot of resources towards that end. You have a global network. You sell 45% or so into Asia. So, what safeguards or what are your strategies in place to protect that intellectual property and make sure your solutions are the ones that get to market ahead of competition?
Again, most of our solutions are already patent protected from that perspective, so we have the patent protection. With regard to the enforcement of that, it's kind of more difficult as you know, to manage. What I tell my team, and that's what I lived all my life and my career is, we just need to maintain two steps ahead of the competition. They can copy us. They can do whatever they want to do. As long as I'm ahead of them, I think that's how we're going to win business, win new designs, and maintain our leadership. That's the challenge for us. This is where we are today. That's why I'm really excited about the opportunity because we think from a technical perspective, we're ahead of the competition. We need to maintain that leadership, and I have the team that will do that. So, Laura?
Yeah.
Okay. I think we have a hand from James, and then John after that.
Hey, guys. James Cannon, UBS. I just wanted to ask on your price versus volume algo. It does seem like you talked about your cost savings, but you are delivering pretty strong incremental margins as you get to your 2030 targets. Is there any price baked in as you look at some of these high-growth markets, or is it more similar to what you've done historically?
Without discussing detailed pricing, look, we need to be competitive. We have to maintain our competitiveness, so we're focused on our cost, and obviously, the market's going to drive what the pricing is. But Laura mentioned, if you have a solution, differentiated solution, you may command a little bit more higher pricing or premium on the pricing than the competition. So that's already baked into the numbers that we have.
I think just to reiterate again, the other thing I would say is just this focus that we have operationally on the continuous improvement. The other thing that's going to assist us is, when we get to the eight years and we have this higher volume, we're going to be benefiting from that through our manufacturing footprint, and that's also going to be significant, which is also assisting to more than offset the pricing pressure that we have assumed and that we've baked through our models.
Okay. Thanks. I think we have John next.
Thank you. John Roberts, Mizuho. Could you just go through who you view as your primary competitors across your key areas? Back to David's question about competition and so forth. So who are you facing?
Go ahead, Nate.
Well, each business has its own. We benchmark on five or 10 different competitors in each business unit in AES. Is your question specifically about high-speed digital, or just generically across Rogers?
[Inaudible] Just a couple of the key primary areas. Who are your top two or three competitors?
Yeah, we can probably touch on maybe the data center opportunity we discussed.
Yeah. Circuit copper-clad laminates have been supplied by, let's say, a dozen companies, major companies around the world. Those with PTFE experience, like ourselves, are limited to two or three, and you could find those pretty easily in the literature. So what differentiates us is that long experience. I'd say we're probably the longest. We have a mature supply chain, so we think about being a reliable supplier to our customers. Our suppliers are also reliable suppliers to us, so we've got that whole chain sorted out. But in terms of the companies, AGC, which bought Park Electrochemical and Taconic some time ago.
Panasonic, of course, has been in the industry for quite some time. There's a few upstarts here and there, but physics is physics, so everybody's kind of seeing that they need PTFE. So our customers are saying, Oh, well, there's formulation expertise, chemistry pretty wily, but there's some fundamentals about PTFE that's really driving the industry towards our solution.
John, I will tackle it from the EMS side. Again, it really depends on end market application, but in our case, also region, what we are competing in. If you look at the polyurethane side, if I had to give you a notable name that is global, 3M. If you look at the silicone side, again, probably Saint-Gobain. Now, they are the biggest names. Are they the biggest competitors to us in region for applications? Probably not, because there are some very good competitors of our size or smaller that focus on specific applications and regions. But those would be the two if I had to take a stab at something that would be name recognizable.
Okay. Thank you for those responses. We have others with questions? I think I saw Craig here, and then we will go back to Dan after that.
Yeah. Thanks for taking the follow-ups. I will ask one to Brian and one to Nate. Brian, you presented a slide that showed some really interesting EMI opportunities. I believe there were three. Can you help us understand the relative size of those as we look out into the 2030 timeframe? Then I will come to Nate after the answer.
Yeah. Excuse me. It is a great question, Craig, and I did not mean those examples to be anything more than examples of the breadth of this across markets. EMI shielding is not new. We all know that. It is very big in consumer electronics as it has been. But I think if you look at the opportunities, electric vehicles and battery energy storage systems. The same things I talked about on TRP is also probably going to drive the majority of more scalable, quicker qualification. Aerospace and defense, absolutely, but those qualification cycles are going to take some time for us to get in and to develop. So I would say electric vehicles and stationary storage systems are probably the biggest drivers.
Great. Thank you. Nate, there's so much investor inbound inquiry on potential Rogers participation of 800 V, and we've talked about things that go into that today. My question is when Rogers is engaging in the ecosystem, and I love the slide in the presentation that showed getting on the print, because that's what I've always thought about with Rogers. As I think about 800 V, whose print are we getting on? Is it the Schneider Electric's print and the stuff they've announced in conjunction with Big Green, who's got a roadmap for 800 V? Is it a PCB company? Is it an ODM in Taiwan? Is it everybody? Just help us understand where Rogers has to really execute with its engagement so that it gets the win in the business. Thank you.
Yeah. I would say that across the AES businesses, we really have to engage the whole supply chain. It's a little unsatisfying to say all of the above, but that's really the answer. So we have to understand what is the true face to the customer or the OEM need? What is their Tier 1 in the automotive context, or what is their supplier need? So we go all the way back up, really, throughout the supply chain. So when we read about 800 V, which is common, we're all reading the popular press and assimilating that. Sometimes our customers are discussing that directly with us. These are established relationships, and sometimes our business development folks are going out and finding those opportunities and understanding where in the value chain they are.
So it's unsatisfying, maybe, but it really is all of the above, whether it's a trade show or a direct sales call.
Thank you again. Maybe just going back to capital allocation and all the detail you provided around the M&A portion of the strategy. I guess talk about a range of size of opportunities that you'd be interested looking at, and given all the scope and scale of the organic growth opportunities in front of you, kind of just thinking management bandwidth and how big a priority is it, given all these significant growth potentials that you're going to be managing. Thank you.
Let me start, and then I am sure the guys will add additional context. Yes, I think it is important, as you said, organic growth is a huge opportunity for us, and everything we have presented today in the numbers is solely organic. Anything we do on an inorganic basis adds incremental to the numbers. But what you also saw was the balance sheet strength and the capacity that we have to do an inorganic transaction. We are already active in looking at that, and we have an existing pipeline and some engagements currently. We would intend, and we have said this previously as well, not to do anything that extends the balance sheet too heavily. We would intend to have something that is sub 2x on an EBITDA basis.
If there was something that was hugely strategic, it really did augment our capabilities beyond, more significantly, there may be an appetite to extend slightly beyond that for something that we would believe would be paid back and back down to the leverage level that we are comfortable with pretty expediently.
Okay. Thank you. I think we had John next. Just need a microphone there. Thank you.
Thank you again. John Roberts, Mizuho. In 2025, you spent 3.5% of sales on R&D. Is there a fair amount of development spending that is away from R&D that is in SG&A as application development or maybe in cost of goods, as you are developing new processes?
Do you want me to start? What I would say is, maybe not R&D per se. We house that R&D specific to R&D in the P&L. What we do is continue to evolve our existing technologies and products, and some of that is smaller, incremental investments, which we do with our technical support team. There may be a small amount of technical development activities that resides within SG&A, that is in addition to the R&D and how we report that through the P&L.
Okay. I think we had another hand. Chris?
Hello. Chris Dowd, Third Avenue Management. Ali and Laura, if you could fast-forward to 2028 and 2030, if you are successful in those initiatives, what would excess capital look like or represent?
Go on.
Okay. What you can see is, I would reference EBITDA as an indication of the kind of cash creation and where we are at. What I would anticipate is that we become even more active in the inorganic space. I think we have substantial capacity to invest to support the organic business. As we stated, 3.5% revenue on R&D, whilst I have got an assumption in the targets that I shared about a substantial amount of incremental investment, I do not foresee that either in the opaque space or the capital space to be overly onerous. We are going to have a substantial increase in our capability to go further beyond what we have shared today on the inorganic space.
Okay, there might have been another hand here. David?
Hi. Dave Silver, Freedom Capital. I have kind of a wonky question. Sorry, but
Best ones.
John talked about 3.5% for R&D, 300% of sales. Is that enough? I am painting with a broad brush unfairly when I say this, but a lot of the specialty chemical and material companies I have tracked over time, they are great at developing new products, much less successful at smoothly
commercializing them, and you end up with more cannibalization than you'd like, et cetera. Especially from 2028 to 2030, you've got a steep ramp and it's kind of in areas that you don't really participate in so much as we sit here today. What's the strategy for developing? Instead of being reliant on your customers to have problems that you can solve, now you have to kind of go out and market. What is the thought internally about developing those collaborative technical teams, the really sharp technical salespeople, the people that will ultimately bring those products to market to new customers, and commercialize them successfully to hit Laura's or Ali's aggressive targets? Again, I know it's a little wonky, but have you thought that through, apart from CapEx and what you have in-house here?
What incremental skills do you think you have to develop to hit those 2030 targets? Thank you.
I think the difference, David, of what we're doing today and going forward compared to the past is we're not developing products in a vacuum. Most of our people who are engaged with the customers are technical. We understand to identify problems, as we indicated earlier. We try to predict the issues before they come up, so to be ready with the solutions. Our technical team is always engaged with customers, again, at all levels in the value chain, whether it's the end user, the OEM, or the fabricators, the converters. We work with them all the time, identifying opportunities and applications. If you look at the growth from 2025 to 2026, that's not just volume.
We have gained other applications that the team were able to identify and come in and, again, develop those unique solutions for those applications and translate those to sales that even impacted the business in 2026. That's the type of work we're doing. I admit that we probably will continue to spend more on R&D, and we are committed to invest more in R&D, but the R&D is directed development for targeted programs, targeted applications, things that's going to see the day of light, that we're going to see revenue and return on that investment in a short period of time or within this plan period, the next five years. That's the intent. We also, as we go forward, we're going to have a group of really R&D that's going to develop products that's not in the market today.
But that's going to be a smaller function and not for targeted applications. We know what's going to happen maybe three, four years from now based on the market research and our input and the feedback we're getting through our sales and technical teams that's engaged with customers. But that's a smaller piece of the spend, I guess. Most of the spend is going to be on targeted application programs that we're engaged with customers.
Thank you.
Can I add? First of all, it's not a wonky question. I've seen this over and over again, and we're not different.
is developing a product, a good product, and then give it to your sales team, go forth and sell. I'd say one of the capabilities that we focused on just over the last couple of years was bringing that, what I'd call market activation. So when you have a concept for a new product, it's not just technical. It's where's the market, how do these customers buy, et cetera. We're not there, but we've made significant strides in actually bringing the marketing, if you want to call it that, with the technical at the very earliest stages of this. So I think it's a highly relevant question for any engineered materials company. So thanks for the wonkiness of it.
All right. Thanks, Brian. We have time for just one or two more questions. There might have been a hand at front. Craig?
Yeah, I think this question will wind up being a takeoff from the most recent one, and I will direct it to you, Ali. Early in your presentation, you showed a slide that listed five Rogers capabilities historically and five things that were adjustments to the operating model. What I would like to hear you elaborate on is the confidence that you have that across the globe, since that is where Rogers operates and from the top all the way down to the bottom of the organization, that the team really gets that operating model and what happens from here to spin the continuous improvement dial, so we are going to get to those targets. Thank you.
If you look at the growth side of the business, I think you and I defined Rogers as a customer-centric company. We really need to focus, and we are. We are focused 100% our efforts on customer needs and expectations. Speed to market is very critical for us. I feel like right now, when you guys ask those questions during our earning calls, why now? We are coming into this, for example, the thermal management systems and data centers. We are coming kind of late to the game, right? We have got a lot of people in the market today, but we are not going to compete with those guys. We came up with unique solutions that we think we are going to drive a different growth for Rogers.
I think what we are changing here is our focus, our speed, and what the deliverables for the commitments and delivering to those customers.
As I said, one of our lead customers that we are targeting today and we are working with, they are impressed. One of the differentiation that they give us is how fast we can turn things around for them because they are optimizing their solution and their systems, and they depend on us to make sure we are keeping up with that and help them optimize that as fast as possible for them to also maintain their leadership. I think the criticality here is we need to respond to the customer faster. We need to be engaged with them more closer and continue to be engaging at all level like Nate said, whether it is the end user, whether it is the guys who are going to process that substrate for the end user.
Because everybody has their own challenges, and our team is going to be engaged with the whole supply chain to make sure those challenges are addressed and being resolved. I think that is really what we are trying to do, predict what the market need is, what the customer needs are, work with them to make sure that those things are resolved.
Thank you. If I may, I would just like to add to what Ali said, because I think the other thing and the other aspect to your question is what we are doing to shift the organization. And some of that is associated to how we actually operate. So you have met many of the management team today and through the product displays, and we have processes in place that disseminate objectives, targets, focuses across that leadership team. Then we have standard, and I do not want to get too tactical, but there is standard operating models below that about cascading messaging, about quarterly communications, about every employee in the organization having maximum five personal goals and be metriced and measured against that. Then naturally, we monitor our monthly performance.
Actually, Ali and I go and visit with our plants on a monthly basis to ensure we are executing part of that sessions on the top- line, and part of it is executing deliverables. Because a lot of what I spoke about and when we discussed the EBITDA expansion is about improving that operational cadence and execution, and we have the tactical processes in place to try and to drive and deliver against that.
Thank you.
You are welcome.
All right. Thank you, Laura. That concludes the Q&A session. We will turn it over to Ali for some closing remarks.
As we conclude today's presentation, I want to reiterate the messages that we shared with you. First, the growth outlook for Rogers is compelling. We have attractive core markets that provide a strong foundation and exciting opportunities in the adjacent areas, especially data centers. Second, our strategy to capture the opportunities in these fast-growing adjacencies is built on existing proven capabilities. We are leveraging product manufacturing, supply chain, and technical capabilities that are already proven in the marketplace and trusted by our customers. We are also building, again, on existing customer relationships. Nothing here is new, reducing the risk, minimizing the risk of failure here. We are confident of what we are presenting to you, again, because of what I just stated.
Again, with the new high growth opportunities, the efficiency that we establish in our operations internally and the cost structure, cost control, we believe there is a significant earnings potential for the company going forward. These factors give us confidence that the $1.5 billion is achievable. Our internal target is more than $1.5 billion. So the $14 per share is achievable. Again, our internal target is higher than that because we think we can get there. We have the confidence we can get there. We got the talent to get us there. We got the commitment from the team to get us there. As I mentioned, these targets, this plan was not created in the C-suite. It was not just sit down by four or five of us and put in a presentation for you together. This is a team effort.
With this, I will take the opportunity to say thank you to Rogers teams for really putting this together and putting this plan, this strategy together that is going to take Rogers to the next level of growth and success. With that, I just want to also thank all of our employees across the globe for getting us to this point and help us drive Rogers to the next level and their commitment to execute on this strategy because they believe in the vision, they believe in the strategy, and I am looking forward to more success. We are looking forward to above the $1.5 billion by 2030, and hopefully by 2028, we will be those numbers, too, and we will be able to share that with you. Again, thank you. Thank you for listening to us. Hopefully, you see our compelling story here.
I appreciate your time. Thanks a lot.
Thanks again.