NORTHBROOK, Ill., Feb. 16,
2023 /PRNewswire/ -- Stepan Company (NYSE: SCL) today
reported:
Fourth Quarter Highlights
- Reported net income was $10.8
million, or $0.47 per diluted
share, versus $17.0 million, or
$0.73 per diluted share, in the prior
year. Adjusted net income* was $13.5
million, or $0.59 per diluted
share versus $22.5 million, or
$0.97 per diluted share, in the prior
year. Total Company sales volume decreased 17% versus the prior
year.
- Surfactant operating income was $21.8
million versus $32.4 million
in the prior year. This decrease was primarily due to a 15% decline
in global sales volume that was partially offset by improved
product and customer mix. The lower sales volume was mostly due to
lower global commodity laundry demand, lower demand within the
North American Personal Care end market and customer inventory
destocking. Higher global demand in the Agricultural and
Institutional Cleaning end markets partially offset the above.
- Polymer operating income was $3.0
million versus $12.9 million
in the prior year. This decrease was primarily due to a 23% decline
in global sales volume, including a 21% volume decline in Rigid
Polyols and lower demand in the Specialty Polyols and Phthalic
Anhydride businesses. The lower demand reflects customer inventory
destocking, lower construction-related activities and general
economic concerns.
- Specialty Product operating income was $6.6 million versus $2.1
million in the prior year. This increase was primarily
attributable to improved margins and customer mix within the medium
chain triglycerides (MCT) product line and order timing differences
within the food and flavor business.
- The effect of foreign currency translation negatively impacted
net income by $0.4 million, or
$0.02 per diluted share, versus the
prior year.
Full Year Highlights
- Reported net income for full year 2022 was a record
$147.2 million, or $6.38 per diluted share, versus $137.8 million, or $5.92 per diluted share, in the prior year.
Adjusted net income* was a record $153.5
million, or $6.65 per diluted
share, versus $143.5 million, or
$6.16 per diluted share, in the prior
year. Total Company sales volume declined 7% versus the prior year
driven by a 12% decline in the second half of 2022.
- The Surfactant segment delivered operating income of
$162.7 million, down 2% versus the
prior year. Surfactant global sales volume was down 6% primarily
due to lower global commodity laundry demand, raw material
constraints and customer inventory destocking efforts. Higher
demand for products sold into the Functional Products and
Institutional Cleaning end markets partially offset the above. The
Polymer segment delivered $82.9
million of operating income, up 13% versus the prior year.
Global Polymer sales volume declined 7% versus the prior year due
to customer inventory destocking and lower construction-related
activities, primarily in the second half of the year. Specialty
Product operating income was $29.9
million versus $14.2 million
in the prior year.
- The effect of foreign currency translation negatively impacted
net income by $5.6 million, or
$0.24 per diluted share, versus the
prior year.
*
|
Adjusted net income
and adjusted earnings per share are non-GAAP measures which exclude
deferred compensation income/expense, cash-settled stock
appreciation rights (SARs) income/expense, certain environmental
remediation-related costs as well as other significant and
infrequent/non-recurring items. See Table II for reconciliations of
non-GAAP adjusted net income and adjusted earnings per diluted
share.
|
"The Company delivered record full year earnings in 2022
despite significant inflation across many cost elements, supply
chain challenges, a slow down in demand across most end use markets
and customer destocking efforts during the second half of the
year. Both reported net income and adjusted net income were
up 7% versus 2021," said Scott
Behrens, President and Chief Executive Officer.
"For the fourth quarter, both Surfactant and Polymer operating
income were significantly impacted by customer and channel
inventory destocking. We saw lower demand, particularly in
construction-related markets, consumer commodity laundry and from
our Tier 2/3 customers. In addition, Surfactant results were
negatively impacted by higher expenses associated with our
transition to low 1,4 dioxane capabilities, while Polymer results
were negatively impacted by higher planned maintenance activity in
our North American Phthalic Anhydride plant. These headwinds
were partially offset by improved product and customer mix
inclusive of double digit sales volume growth into the Agricultural
end market. Specialty Product results improved significantly
due to margin improvement and customer mix."
Financial Summary
|
Three Months Ended
December 31
|
|
|
Twelve Months Ended
December 31
|
|
($ in thousands,
except per share data)
|
2022
|
|
|
2021
|
|
|
%
Change
|
|
|
2022
|
|
|
2021
|
|
|
%
Change
|
|
Net Sales
|
$
|
627,176
|
|
|
$
|
610,027
|
|
|
|
3
|
%
|
|
$
|
2,773,270
|
|
|
$
|
2,345,966
|
|
|
|
18
|
%
|
Operating
Income
|
$
|
11,691
|
|
|
$
|
19,997
|
|
|
|
(42)
|
%
|
|
$
|
207,336
|
|
|
$
|
170,781
|
|
|
|
21
|
%
|
Net Income Attributable
to Stepan
|
$
|
10,834
|
|
|
$
|
16,995
|
|
|
|
(36)
|
%
|
|
$
|
147,153
|
|
|
$
|
137,804
|
|
|
|
7
|
%
|
Earnings per Diluted
Share
|
$
|
0.47
|
|
|
$
|
0.73
|
|
|
|
(36)
|
%
|
|
$
|
6.38
|
|
|
$
|
5.92
|
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income
*
|
$
|
13,456
|
|
|
$
|
22,493
|
|
|
|
(40)
|
%
|
|
$
|
153,473
|
|
|
$
|
143,499
|
|
|
|
7
|
%
|
Adjusted Earnings per
Diluted Share *
|
$
|
0.59
|
|
|
$
|
0.97
|
|
|
|
(39)
|
%
|
|
$
|
6.65
|
|
|
$
|
6.16
|
|
|
|
8
|
%
|
|
|
* See Table II for
reconciliations of non-GAAP adjusted net income and earnings per
diluted share.
|
|
Summary of Fourth Quarter Adjusted Net Income Items
Adjusted net income excludes non-operational deferred
compensation income/expense, cash-settled SARs income/expense,
certain environmental remediation costs and other significant and
infrequent or non-recurring items.
- Deferred Compensation: The 2022 fourth quarter reported
net income includes $2.0 million of
after-tax expense versus $2.2 million
of after-tax expense in the prior year.
- Cash-Settled SARs: These management incentive
instruments provide cash to participants equal to the appreciation
on the price of specified shares of Company stock over a specified
period of time. Because income or expense is recognized merely on
the movement in the price of Company stock it has been excluded,
similar to deferred compensation, to arrive at adjusted net income.
Reported net income in both the 2022 and 2021 fourth quarters
include $0.2 million of after-tax
expense.
- Business Restructuring and Asset Disposition: The 2022
fourth quarter reported net income includes $0.1 million of after-tax decommissioning expense
related to the Company's Canadian plant closure. The fourth quarter
of 2021 includes a $2.0 million
after-tax loss on the sale of one of the Company's corporate
headquarters buildings and $0.3
million of after-tax decommissioning expense related to the
Company's Canadian plant closure.
- Environmental Remediation – The fourth quarter of 2022
reported net income includes $0.4
million of after-tax expense versus $0.8 million of after-tax expense in the prior
year.
Percentage Change in Net Sales
Net sales in the fourth quarter of 2022 increased 3%
year-over-year primarily due to higher selling prices that were
mainly attributable to the pass-through of higher raw material and
input costs as well as improved product and customer mix.
These higher selling prices were largely offset by a 17% decrease
in global sales volume and the unfavorable impact of foreign
currency translation.
|
|
Three Months Ended
December 31, 2022
|
|
|
Twelve Months Ended
December 31, 2022
|
|
Volume
|
|
|
(17)
|
%
|
|
|
(7)
|
%
|
Selling Price &
Mix
|
|
|
24
|
%
|
|
|
30
|
%
|
Foreign
Translation
|
|
|
(4)
|
%
|
|
|
(5)
|
%
|
Total
|
|
|
3
|
%
|
|
|
18
|
%
|
Segment Results
|
|
Three Months Ended
December 31
|
|
|
Twelve Months Ended
December 31
|
|
($ in
thousands)
|
|
2022
|
|
|
2021
|
|
|
%
Change
|
|
|
2022
|
|
|
2021
|
|
|
%
Change
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Surfactants
|
|
$
|
454,534
|
|
|
$
|
420,123
|
|
|
|
8
|
%
|
|
$
|
1,882,745
|
|
|
$
|
1,562,795
|
|
|
|
20
|
%
|
Polymers
|
|
$
|
148,309
|
|
|
$
|
173,676
|
|
|
|
(15)
|
%
|
|
$
|
789,080
|
|
|
$
|
713,440
|
|
|
|
11
|
%
|
Specialty
Products
|
|
$
|
24,333
|
|
|
$
|
16,228
|
|
|
|
50
|
%
|
|
$
|
101,445
|
|
|
$
|
69,731
|
|
|
|
45
|
%
|
Total Net
Sales
|
|
$
|
627,176
|
|
|
$
|
610,027
|
|
|
|
3
|
%
|
|
$
|
2,773,270
|
|
|
$
|
2,345,966
|
|
|
|
18
|
%
|
|
|
|
Three Months Ended
December 31
|
|
|
Twelve Months Ended
December 31
|
|
($ in thousands, all
amounts pre-tax)
|
|
2022
|
|
|
2021
|
|
|
%
Change
|
|
|
2022
|
|
|
2021
|
|
|
%
Change
|
|
Operating
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Surfactants
|
|
$
|
21,752
|
|
|
$
|
32,441
|
|
|
|
(33)
|
%
|
|
$
|
162,746
|
|
|
$
|
165,999
|
|
|
|
(2)
|
%
|
Polymers
|
|
$
|
2,992
|
|
|
$
|
12,862
|
|
|
|
(77)
|
%
|
|
$
|
82,897
|
|
|
$
|
73,591
|
|
|
|
13
|
%
|
Specialty
Products
|
|
$
|
6,649
|
|
|
$
|
2,126
|
|
|
|
213
|
%
|
|
$
|
29,895
|
|
|
$
|
14,178
|
|
|
|
111
|
%
|
Segment Operating
Income
|
|
$
|
31,393
|
|
|
$
|
47,429
|
|
|
|
(34)
|
%
|
|
$
|
275,538
|
|
|
$
|
253,768
|
|
|
|
9
|
%
|
Corporate
Expenses
|
|
$
|
(19,702)
|
|
|
$
|
(27,432)
|
|
|
|
(28)
|
%
|
|
$
|
(68,202)
|
|
|
$
|
(82,987)
|
|
|
|
(18)
|
%
|
Consolidated Operating
Income
|
|
$
|
11,691
|
|
|
$
|
19,997
|
|
|
|
(42)
|
%
|
|
$
|
207,336
|
|
|
$
|
170,781
|
|
|
|
21
|
%
|
Total segment operating income for the fourth quarter of 2022
decreased $16.0 million, or 34%,
versus the prior year quarter. Total segment operating income
for full year 2022 increased $21.8
million, or 9%, versus the prior year.
- Surfactant net sales were $454.5
million for the quarter, an 8% increase versus the prior
year. Selling prices were up 26% primarily due to the pass-through
of higher raw material and input costs as well as improved product
and customer mix. Sales volume decreased 15% year-over-year
primarily due to lower global commodity laundry demand, lower
demand within the North American Personal Care end market and
customer inventory destocking. Higher global demand for products
sold into the Agricultural and Institutional Cleaning end markets
partially offset the above. The unfavorable impact of foreign
currency translation negatively impacted net sales by 3%.
Surfactant operating income for the quarter decreased $10.7 million versus the prior year primarily due
to the 15% decline in sales volume and higher expenses associated
with the Company's transition to low 1,4 dioxane capabilities.
- Polymer net sales were $148.3
million for the quarter, a 15% decrease versus the prior
year. Selling prices increased 14% primarily due to the pass
through of higher raw material and input costs. Sales volume
decreased 23% in the quarter primarily due to a 21% decline in
Rigid Polyols and lower demand in the Specialty Polyols and
Phthalic Anhydride businesses. The lower demand reflects customer
inventory destocking, lower construction-related activities and
general economic concerns. The translation impact of a stronger
U.S. dollar negatively impacted net sales by 6%. Polymer operating
income decreased $9.9 million versus
the prior year primarily due to the 23% decrease in global sales
volume and higher costs associated with planned maintenance
activity at the Company's North American Phthalic Anhydride
plant
- Specialty Product net sales were $24.3
million for the quarter, a 50% increase versus the prior
year. Sales volume was down 6% between years while operating income
increased $4.5 million. The operating
income increase was primarily attributable to improved margins and
customer mix within the MCT product line and order timing
differences within our food and flavor business.
Corporate Expenses
|
|
Three Months Ended
December 31
|
|
|
Twelve Months Ended
December 31
|
|
($ in
thousands)
|
|
2022
|
|
|
2021
|
|
|
%
Change
|
|
|
2022
|
|
|
2021
|
|
|
%
Change
|
|
Total -
Corporate Expenses
|
|
$
|
19,702
|
|
|
$
|
27,432
|
|
|
|
(28)
|
%
|
|
$
|
68,202
|
|
|
$
|
82,987
|
|
|
|
(18)
|
%
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation
Expense
|
|
$
|
3,645
|
|
|
$
|
4,747
|
|
|
|
(23)
|
%
|
|
$
|
(9,393)
|
|
|
$
|
6,895
|
|
|
|
(236)
|
%
|
Business Restructuring
and Asset Disposition
|
|
$
|
83
|
|
|
$
|
3,086
|
|
|
|
(97)
|
%
|
|
$
|
308
|
|
|
$
|
3,353
|
|
|
|
(91)
|
%
|
Environmental
Remediation Expense
|
|
$
|
481
|
|
|
$
|
1,031
|
|
|
|
(53)
|
%
|
|
$
|
11,483
|
|
|
$
|
1,977
|
|
|
|
481
|
%
|
Adjusted Corporate
Expense
|
|
$
|
15,493
|
|
|
$
|
18,568
|
|
|
|
(17)
|
%
|
|
$
|
65,804
|
|
|
$
|
70,762
|
|
|
|
(7)
|
%
|
|
* See Table III for
a discussion of deferred compensation plan
accounting.
|
- Corporate expenses, excluding deferred compensation, business
restructuring and environmental costs, decreased $3.1 million, or 17% for the quarter. The
decrease was primarily due to lower incentive-based compensation
expenses, lower consulting expenses and the favorable impact of
foreign currency
translation.
Income Taxes
The Company's full year effective tax rate was 22.0% in 2022
versus 20.1% in 2021. This year-over-year increase was
primarily due to non-recurring favorable tax benefits recognized in
2021.
Shareholder Return
The Company paid $8.1 million of
dividends to shareholders and repurchased $2.7 million of Company stock in the fourth
quarter of 2022. For the full year the Company paid
$30.6 million of dividends and
repurchased $24.9 million of Company
stock. The Company has $125.1
million remaining under the share repurchase program
authorized by its Board of Directors. With the cash dividend
increase in the fourth quarter of 2022, the Company has increased
its dividend on the Company's common stock for the 55th consecutive
year.
Selected Balance Sheet Information
The Company's total debt increased by $22.2 million and cash increased by $8.1 million versus September 30, 2022. The increase in debt
primarily reflects borrowings against the Company's revolving
credit facility that were partially offset by scheduled debt
repayments. The Company's net debt level increased
$14.1 million versus September 30, 2022 and the net debt ratio
remained constant at 26% (Net Debt and Net Debt
Ratios are non-GAAP measures).
($ in
millions)
|
12/31/22
|
|
|
9/30/22
|
|
|
6/30/22
|
|
|
3/31/22
|
|
|
12/31/21
|
|
Net Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Debt
|
$
|
587.1
|
|
|
$
|
564.9
|
|
|
$
|
526.0
|
|
|
$
|
537.1
|
|
|
$
|
363.6
|
|
Cash
|
|
173.8
|
|
|
|
165.7
|
|
|
|
194.6
|
|
|
|
236.0
|
|
|
|
159.2
|
|
Net Debt
|
$
|
413.3
|
|
|
$
|
399.2
|
|
|
$
|
331.4
|
|
|
$
|
301.1
|
|
|
$
|
204.4
|
|
Equity
|
|
1,166.1
|
|
|
|
1,130.2
|
|
|
|
1,125.7
|
|
|
|
1,116.7
|
|
|
|
1,074.2
|
|
Net Debt +
Equity
|
$
|
1,579.4
|
|
|
$
|
1,529.4
|
|
|
$
|
1,457.1
|
|
|
$
|
1,417.8
|
|
|
$
|
1,278.6
|
|
Net Debt / (Net Debt +
Equity)
|
|
26
|
%
|
|
|
26
|
%
|
|
|
23
|
%
|
|
|
21
|
%
|
|
|
16
|
%
|
The major working capital components were:
($ in
millions)
|
12/31/22
|
|
|
9/30/22
|
|
|
6/30/22
|
|
|
3/31/22
|
|
|
12/31/21
|
|
Net
Receivables
|
$
|
436.9
|
|
|
$
|
476.2
|
|
|
$
|
518.8
|
|
|
$
|
504.5
|
|
|
$
|
419.5
|
|
Inventories
|
|
402.5
|
|
|
|
397.6
|
|
|
|
340.7
|
|
|
|
308.4
|
|
|
|
305.5
|
|
Accounts
Payable
|
|
(375.7)
|
|
|
|
(350.1)
|
|
|
|
(366.2)
|
|
|
|
(350.8)
|
|
|
|
(323.4)
|
|
|
$
|
463.7
|
|
|
$
|
523.7
|
|
|
$
|
493.3
|
|
|
$
|
462.1
|
|
|
$
|
401.6
|
|
The Company had full year capital expenditures of $301.6 million in 2022 versus $194.5 million in the prior year. The
year-over-year increase is primarily due to increased expenditures
in the U.S. for the advancement of the Company's new alkoxylation
facility in Pasadena, Texas, which
is expected to provide flexible capacity of 75,000 metric tons per
year, and new capability and capacity to produce ether sulfates
that meet new regulatory limits on 1,4 dioxane.
2023 Outlook
"The Company delivered record income in 2022 and I want to
thank all our employees for their excellent work. We have now
delivered three consecutive years of record earnings," said
Scott Behrens, President and Chief
Executive Officer. "Looking forward, we believe 2023 will
be challenged by continued elevated inflation and high interest
rates. We believe this macro environment could negatively
impact consumer demand and construction-related activity which will
affect both our Surfactant and Polymer businesses.
Additionally, we believe higher overall cost inflation, higher
depreciation and pre-start up expenses associated with our new
Pasadena site, will challenge our
ability to deliver earnings growth in 2023. We are seeking to
partially offset these 2023 headwinds with productivity
improvements, pricing increases where possible, and furthering our
efforts to improve product and customer mix. Despite this
projected macro environment, we remain committed to executing our
long-term growth strategy."
Conference Call
Stepan Company will host a conference call to discuss its fourth
quarter and full year 2022 results at 10:00
a.m. ET (9:00 a.m. CT) on
February 16, 2023. The call can be
accessed by phone and webcast. To access the call by phone,
please click on this Registration Link, complete the form and
you will be provided with dial in details and a PIN. To avoid
delays, we encourage participants to dial into the conference call
ten minutes ahead of the scheduled start time. The webcast
can be accessed through the Investors/Conference Calls page
at www.stepan.com. A webcast replay of the conference call will be
available at the same location shortly after the call.
Supporting Slides
Slides supporting this press release will be made available at
www.stepan.com through the Investors/Presentations page at
approximately the same time as this press release is issued.
Corporate Profile
Stepan Company is a major manufacturer of specialty and
intermediate chemicals used in a broad range of industries. Stepan
is a leading merchant producer of surfactants, which are the key
ingredients in consumer and industrial cleaning and disinfection
compounds and in agricultural and oilfield solutions. The Company
is also a leading supplier of polyurethane polyols used in the
expanding thermal insulation market, and CASE (Coatings, Adhesives,
Sealants, and Elastomers) industries.
Headquartered in Northbrook,
Illinois, Stepan utilizes a network of modern production
facilities located in North and South
America, Europe and
Asia.
The Company's common stock is traded on the New York Stock
Exchange (NYSE) under the symbol SCL. For more information about
Stepan Company please visit the Company online at
www.stepan.com
More information about Stepan's sustainability program can be
found on the Sustainability page at www.stepan.com
Contact: Luis E. Rojo
847-446-7500
Certain information in this news release consists of
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These statements
include statements about Stepan Company's plans, objectives,
strategies, financial performance and outlook, trends, the amount
and timing of future cash distributions, prospects or future events
and involve known and unknown risks that are difficult to predict.
As a result, Stepan Company's actual financial results,
performance, achievements or prospects may differ materially from
those expressed or implied by these forward-looking statements. In
some cases, you can identify forward-looking statements by the use
of words such as "may," "could," "expect," "intend," "plan,"
"seek," "anticipate," "believe," "estimate," "guidance," "predict,"
"potential," "continue," "likely," "will," "would," "should,"
"illustrative" and variations of these terms and similar
expressions, or the negative of these terms or similar expressions.
Such forward-looking statements are necessarily based upon
estimates and assumptions that, while considered reasonable by
Stepan Company and its management based on their knowledge and
understanding of the business and industry, are inherently
uncertain. These statements are not guarantees of future
performance, and stockholders should not place undue reliance on
forward-looking statements.
There are a number of risks, uncertainties and other
important factors, many of which are beyond Stepan Company's
control, that could cause actual results to differ materially from
the forward-looking statements contained in this news release. Such
risks, uncertainties and other important factors include, among
other factors, the risks, uncertainties and factors described in
Stepan Company's Form 10-K, Form 10-Q and Form 8-K reports and
exhibits to those reports, and include (but are not limited to)
risks and uncertainties related to the impact of the COVID-19
pandemic; accidents, unplanned production shutdowns or disruptions
in manufacturing facilities; reduced demand due to customer product
reformulations or new technologies; our inability to successfully
develop or introduce new products; compliance with laws; our
ability to identify suitable acquisition candidates and
successfully complete and integrate acquisitions; global
competition; volatility of raw material and energy costs and
supply; disruptions in transportation or significant changes in
transportation costs; downturns in certain industries and general
economic downturns; international business risks, including
currency exchange rate fluctuations, legal restrictions and taxes;
unfavorable resolution of litigation against us; maintaining and
protecting intellectual property rights; our ability to access
capital markets; global political, military, security or other
instability; costs related to expansion or other capital projects;
interruption or breaches of information technology systems; our
ability to retain executive management and key personnel; and our
debt covenants.
These forward-looking statements are made only as of the date
hereof, and Stepan Company undertakes no obligation to update or
revise these forward-looking statements, whether as a result of new
information, future events or otherwise.
Table
I
|
|
STEPAN COMPANY For the Three
and Twelve Months Ended December 31, 2022 and
2021 (Unaudited – in thousands, except per share
data)
|
|
|
|
Three Months Ended
December 31
|
|
|
Twelve Months Ended
December 31
|
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Net
Sales
|
|
$
|
627,176
|
|
|
$
|
610,027
|
|
|
$
|
2,773,270
|
|
|
$
|
2,345,966
|
|
Cost of
Sales
|
|
|
559,416
|
|
|
|
526,774
|
|
|
|
2,346,201
|
|
|
|
1,950,156
|
|
Gross
Profit
|
|
|
67,760
|
|
|
|
83,253
|
|
|
|
427,069
|
|
|
|
395,810
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
|
|
|
13,122
|
|
|
|
14,906
|
|
|
|
59,030
|
|
|
|
59,186
|
|
Administrative
|
|
|
22,678
|
|
|
|
23,466
|
|
|
|
102,177
|
|
|
|
92,906
|
|
Research, Development
and Technical Services
|
|
|
16,541
|
|
|
|
17,051
|
|
|
|
66,633
|
|
|
|
62,689
|
|
Deferred Compensation
Expense
|
|
|
3,645
|
|
|
|
4,747
|
|
|
|
(9,393)
|
|
|
|
6,895
|
|
|
|
|
55,986
|
|
|
|
60,170
|
|
|
|
218,447
|
|
|
|
221,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
Impairment
|
|
|
-
|
|
|
|
-
|
|
|
|
978
|
|
|
|
-
|
|
Business Restructuring
and Asset Disposition
|
|
|
83
|
|
|
|
3,086
|
|
|
|
308
|
|
|
|
3,353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
|
11,691
|
|
|
|
19,997
|
|
|
|
207,336
|
|
|
|
170,781
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income
(Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest,
Net
|
|
|
(2,555)
|
|
|
|
(1,063)
|
|
|
|
(9,809)
|
|
|
|
(5,753)
|
|
Other, Net
|
|
|
175
|
|
|
|
3,303
|
|
|
|
(8,824)
|
|
|
|
7,509
|
|
|
|
|
(2,380)
|
|
|
|
2,240
|
|
|
|
(18,633)
|
|
|
|
1,756
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before Income
Taxes
|
|
|
9,311
|
|
|
|
22,237
|
|
|
|
188,703
|
|
|
|
172,537
|
|
Provision for Income
Taxes
|
|
|
(1,523)
|
|
|
|
5,179
|
|
|
|
41,550
|
|
|
|
34,642
|
|
Net
Income
|
|
|
10,834
|
|
|
|
17,058
|
|
|
|
147,153
|
|
|
|
137,895
|
|
Net (Income)
Attributable to Noncontrolling Interests
|
|
|
-
|
|
|
|
(63)
|
|
|
|
-
|
|
|
|
(91)
|
|
Net Income
Attributable to Stepan Company
|
|
$
|
10,834
|
|
|
$
|
16,995
|
|
|
$
|
147,153
|
|
|
$
|
137,804
|
|
Net Income Per
Common Share Attributable to Stepan Company
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.48
|
|
|
$
|
0.74
|
|
|
$
|
6.46
|
|
|
$
|
6.01
|
|
Diluted
|
|
$
|
0.47
|
|
|
$
|
0.73
|
|
|
$
|
6.38
|
|
|
$
|
5.92
|
|
Shares Used to
Compute Net Income Per Common
Share Attributable to Stepan Company
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
22,685
|
|
|
|
22,868
|
|
|
|
22,781
|
|
|
|
22,922
|
|
Diluted
|
|
|
22,994
|
|
|
|
23,254
|
|
|
|
23,064
|
|
|
|
23,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table
II
|
Reconciliation of
Non-GAAP Net Income and Earnings per Diluted Share *
|
|
|
|
Three Months Ended
December 31
|
|
|
Twelve Months Ended
December 31
|
|
($ in thousands,
except per share amounts)
|
|
2022
|
|
|
EPS
|
|
|
2021
|
|
|
EPS
|
|
|
2022
|
|
|
EPS
|
|
|
2021
|
|
|
EPS
|
|
Net Income
Reported
|
|
$
|
10,834
|
|
|
$
|
0.47
|
|
|
$
|
16,995
|
|
|
$
|
0.73
|
|
|
$
|
147,153
|
|
|
$
|
6.38
|
|
|
$
|
137,804
|
|
|
$
|
5.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation
(Income) Expense
|
|
$
|
2,000
|
|
|
$
|
0.09
|
|
|
$
|
2,168
|
|
|
$
|
0.09
|
|
|
$
|
(2,369)
|
|
|
$
|
(0.10)
|
|
|
$
|
1,484
|
|
|
$
|
0.06
|
|
Business
Restructuring/Asset Disposition Exp.
|
|
$
|
62
|
|
|
$
|
0.00
|
|
|
$
|
2,343
|
|
|
$
|
0.10
|
|
|
$
|
231
|
|
|
$
|
0.01
|
|
|
$
|
2,543
|
|
|
$
|
0.11
|
|
Cash-Settled SARs
(Income) Expense
|
|
$
|
194
|
|
|
$
|
0.01
|
|
|
$
|
203
|
|
|
$
|
0.01
|
|
|
$
|
(270)
|
|
|
$
|
(0.01)
|
|
|
$
|
165
|
|
|
$
|
0.01
|
|
Environmental
Remediation Expense
|
|
$
|
366
|
|
|
$
|
0.02
|
|
|
$
|
784
|
|
|
$
|
0.04
|
|
|
$
|
8,728
|
|
|
$
|
0.37
|
|
|
$
|
1,503
|
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income
|
|
$
|
13,456
|
|
|
$
|
0.59
|
|
|
$
|
22,493
|
|
|
$
|
0.97
|
|
|
$
|
153,473
|
|
|
$
|
6.65
|
|
|
$
|
143,499
|
|
|
$
|
6.16
|
|
|
|
*
|
All amounts in this
table are presented after-tax
|
The Company believes that certain measures that are not in
accordance with generally accepted accounting principles (GAAP),
when presented in conjunction with comparable GAAP measures, are
useful for evaluating the Company's operating performance and
provide better clarity on the impact of non-operational
items. Internally, the Company uses this non-GAAP information
as an indicator of business performance and evaluates management's
effectiveness with specific reference to these indicators.
These measures should be considered in addition to, neither a
substitute for, nor superior to, measures of financial performance
prepared in accordance with GAAP.
Reconciliation of
Pre-Tax to After-Tax Adjustments
|
|
|
|
Three Months Ended
December 31
|
|
|
Twelve
Months Ended
December 31
|
|
($ in thousands,
except per share amounts)
|
|
2022
|
|
|
EPS
|
|
|
2021
|
|
|
EPS
|
|
|
2022
|
|
|
EPS
|
|
|
2021
|
|
|
EPS
|
|
Pre-Tax
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation
(Income) Expense
|
|
$
|
2,631
|
|
|
|
|
|
$
|
2,853
|
|
|
|
|
|
$
|
(3,117)
|
|
|
|
|
|
$
|
1,952
|
|
|
|
|
Business
Restructuring/Asset Disposition Exp.
|
|
$
|
83
|
|
|
|
|
|
$
|
3,086
|
|
|
|
|
|
$
|
308
|
|
|
|
|
|
$
|
3,353
|
|
|
|
|
Cash-Settled SARs
(Income) Expense
|
|
$
|
255
|
|
|
|
|
|
$
|
267
|
|
|
|
|
|
$
|
(354)
|
|
|
|
|
|
$
|
217
|
|
|
|
|
Environmental
Remediation Expense
|
|
$
|
481
|
|
|
|
|
|
$
|
1,031
|
|
|
|
|
|
$
|
11,483
|
|
|
|
|
|
$
|
1,977
|
|
|
|
|
Total Pre-Tax
Adjustments
|
|
$
|
3,450
|
|
|
|
|
|
$
|
7,237
|
|
|
|
|
|
$
|
8,320
|
|
|
|
|
|
$
|
7,499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative Tax Effect
on Adjustments
|
|
$
|
(828)
|
|
|
|
|
|
$
|
(1,739)
|
|
|
|
|
|
$
|
(2,000)
|
|
|
|
|
|
$
|
(1,804)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After-Tax
Adjustments
|
|
$
|
2,622
|
|
|
$
|
0.12
|
|
|
$
|
5,498
|
|
|
$
|
0.24
|
|
|
$
|
6,320
|
|
|
$
|
0.27
|
|
|
$
|
5,695
|
|
|
$
|
0.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table
III
|
Deferred
Compensation Plans
|
|
The full effect of the
deferred compensation plans on quarterly pre-tax income was $2.6
million of expense versus $2.9 million of expense in the prior
year. The year-to-date impact was $3.1 million of pre-tax
income versus $2.0 million of pre-tax expense in the prior
year. The accounting for the deferred compensation plans
results in operating income when the price
of Stepan Company common
stock or mutual funds held in the plans fall and expense when they
rise. The Company also recognizes the change in value of
mutual funds as investment income or loss. The quarter end
market prices of Company common stock were as follows:
|
|
|
|
2022
|
|
|
2021
|
|
|
|
12/31
|
|
|
9/30
|
|
|
6/30
|
|
|
3/31
|
|
|
12/31
|
|
|
9/30
|
|
|
6/30
|
|
|
3/31
|
|
Stepan
Company
|
|
$
|
106.46
|
|
|
$
|
93.67
|
|
|
$
|
101.35
|
|
|
$
|
98.81
|
|
|
$
|
124.29
|
|
|
$
|
112.94
|
|
|
$
|
120.27
|
|
|
$
|
127.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The deferred compensation income statement impact is summarized
below:
|
|
Three Months Ended
December 31
|
|
|
Twelve
Months Ended
December 31
|
|
($ in
thousands)
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Deferred
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Expense)
|
|
$
|
(3,645)
|
|
|
$
|
(4,747)
|
|
|
$
|
9,393
|
|
|
$
|
(6,895)
|
|
Other, net – Mutual
Fund Gain (Loss)
|
|
|
1,014
|
|
|
|
1,894
|
|
|
|
(6,276)
|
|
|
|
4,943
|
|
Total
Pretax
|
|
$
|
(2,631)
|
|
|
$
|
(2,853)
|
|
|
$
|
3,117
|
|
|
$
|
(1,952)
|
|
Total After
Tax
|
|
$
|
(2,000)
|
|
|
$
|
(2,168)
|
|
|
$
|
2,369
|
|
|
$
|
(1,484)
|
|
Table
IV
|
Effects of Foreign
Currency Translation
|
|
The Company's foreign
subsidiaries transact business and report financial results in
their respective local currencies. As a result, foreign subsidiary
income statements are translated into U.S. dollars at average
foreign exchange rates appropriate for the reporting period.
Because foreign currency exchange rates fluctuate against the U.S.
dollar over time, foreign currency translation affects
period-to-period comparisons of financial statement items (i.e.,
because foreign exchange rates fluctuate, similar period-to-period
local currency results for a foreign subsidiary may translate into
different U.S. dollar results). Below is a table that
presents the impact that foreign currency translation had on the
changes in consolidated net sales and various income statement line
items for the three and twelve month periods ending December 31,
2022 as compared to 2021:
|
|
($ in
millions)
|
|
Three Months Ended
December 31
|
|
|
Increase
(Decrease)
|
|
|
Change Due to
Foreign Currency Translation
|
|
|
Twelve
Months Ended
December 31
|
|
|
Increase
(Decrease)
|
|
|
Change Due to
Foreign Currency Translation
|
|
|
|
2022
|
|
|
2021
|
|
|
|
|
|
|
|
|
2022
|
|
|
2021
|
|
|
|
|
|
|
|
Net Sales
|
|
$
|
627.2
|
|
|
$
|
610.0
|
|
|
$
|
17.2
|
|
|
$
|
(22.5)
|
|
|
$
|
2,773.3
|
|
|
$
|
2,346.0
|
|
|
$
|
427.3
|
|
|
$
|
(95.4)
|
|
Gross Profit
|
|
|
67.8
|
|
|
|
83.3
|
|
|
|
(15.5)
|
|
|
|
(1.4)
|
|
|
|
427.1
|
|
|
|
395.8
|
|
|
|
31.3
|
|
|
|
(11.1)
|
|
Operating
Income
|
|
|
11.7
|
|
|
|
20.0
|
|
|
|
(8.3)
|
|
|
|
(0.7)
|
|
|
|
207.3
|
|
|
|
170.8
|
|
|
|
36.5
|
|
|
|
(7.4)
|
|
Pretax
Income
|
|
|
9.3
|
|
|
|
22.2
|
|
|
|
(12.9)
|
|
|
|
(0.4)
|
|
|
|
188.7
|
|
|
|
172.5
|
|
|
|
16.2
|
|
|
|
(7.2)
|
|
Table V
|
Stepan Company Consolidated Balance Sheets December 31,
2022 and December 31, 2021
|
|
|
|
December 31,
2022
|
|
|
December 31,
2021
|
|
ASSETS
|
|
|
|
|
|
|
Current
Assets
|
|
$
|
1,044,802
|
|
|
$
|
913,368
|
|
Property, Plant &
Equipment, Net
|
|
|
1,073,297
|
|
|
|
850,604
|
|
Other Assets
|
|
|
315,073
|
|
|
|
301,640
|
|
Total Assets
|
|
$
|
2,433,172
|
|
|
$
|
2,065,612
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
Liabilities
|
|
$
|
670,649
|
|
|
$
|
500,476
|
|
Deferred Income
Taxes
|
|
|
10,179
|
|
|
|
12,491
|
|
Long-term
Debt
|
|
|
455,029
|
|
|
|
322,862
|
|
Other Non-current
Liabilities
|
|
|
131,250
|
|
|
|
155,590
|
|
Total Stepan Company
Stockholders' Equity
|
|
|
1,166,065
|
|
|
|
1,074,193
|
|
Noncontrolling
Interest
|
|
|
-
|
|
|
|
-
|
|
Total Liabilities and
Stockholders' Equity
|
|
$
|
2,433,172
|
|
|
$
|
2,065,612
|
|
View original
content:https://www.prnewswire.com/news-releases/stepan-reports-fourth-quarter-results-and-record-full-year-2022-earnings-301748508.html
SOURCE Stepan Company