Rogers rides the AI data center wave, but supply chain and China ramp cap margin upside

Q2 growth accelerates to 6.9%, EBITDA margin up 550 bps YoY; microchannel cooler and high-frequency materials gain traction ahead of Analyst Day

ROG · Earnings Call · 2026-07-28

Acceleration in growth

Rogers Corporation reported another quarter of accelerating growth, with sales of $216.8M up 6.9% YoY and all three largest end markets expanding. Adjusted EBITDA rose to 17.3% of sales, a 550 bps improvement YoY. “We delivered another quarter of solid progress as our commercial and profitability initiatives continue to gain traction across all business units.” — Ali El-Haj, CEO · 2026-07-28 Management highlighted broad-based growth, with particular strength in industrial, electronics/communications, and an expected rebound in aerospace & defense. The fundamentals confirm the reacceleration: Total revenue snapped back from a soft 2025, with Q2 2026 up ~7% YoY and Q3 guidance implying +10%. Gross margin recovered to 32.5%, still below historical peaks but clearly improving on mix and cost actions.

AI data center optionality

The most compelling narrative is the ramp of its microchannel cooler and high-frequency circuit materials for AI data centers.

We are making substantial progress with our customers and feedback on the differentiated performance of our solutions remain highly encouraging.
Ali El-Haj, CEO · 2026-07-28

These products are still in sampling/validation, but the company already cites multiple customer engagements. This is a leap from earlier quarters, where the opportunity was described more nebulously. “As mentioned, regarding the design wins, ... and on the AES side, we have ... one for radar applications with an Asian OEM. Both of these ... will be in production between Q2 and Q4 of this year.” — Ali El-Haj, President and CEO · 2026-04-28 Notably, the data center keyword has been present since 20234, but now appears with far more specificity: AI data centers and thermal management surged to the top of the company’s keyword ranks in 20263. The global tape is already voting on this theme — co-packaged optics and high bandwidth flash are driving advancers across the market. Rogers’ microchannel cooler sits squarely in that thermal interconnect story, and its high frequency circuit material addresses signal integrity in next-gen AI servers.

Near-term headwinds and outlook

Despite the strong guidance, management flagged lingering supply chain issues: Middle East freight delays stretching transit times from 4–6 weeks to 12+ weeks, and tightness in silver and copper. A small fire at one plant caused a few days’ shutdown, costing roughly $0.10 of EPS cumulatively. “We still have some raw material -- experiencing some raw material shortages as well as, I would say, logistics or from a freight perspective, it's just taking longer due to the situation in the Middle East.” — Ali El-Haj, CEO · 2026-07-28 These are transient but cap near-term margin expansion. Q3 guides to 19.7% EBITDA margin, a 250 bps YoY improvement, though gross margin only +20 bps due to underutilization in China and commodity costs. The company expects growth across all end markets, with A&D and industrial leading. The Analyst Day on September 30 will outline the longer-term value creation framework and AI data center strategy. The stock has re-rated as the story shifts from restructuring to growth, but it remains far below its 2022 peak. The combination of a confirmed growth inflection and a credible AI data center catalyst makes Rogers a name to watch.