NORTHBROOK, Ill., April 25,
2023 /PRNewswire/ -- Stepan Company (NYSE: SCL) today
reported:
First Quarter Highlights
- Reported net income was $16.1
million, or $0.70 per diluted
share versus $44.8 million, or
$1.93 per diluted share, in the prior
year. Adjusted net income* was $16.4
million, or $0.71 per diluted
share versus $40.7 million, or
$1.76 per diluted share, in the prior
year. Total Company sales volume decreased 14% versus the prior
year.
- Surfactant operating income was $27.1
million versus $53.8 million
in the prior year. This decrease was primarily due to a 13% 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, low 1,4 dioxane transition
start-up delays and the previously mentioned backward integration
by one customer in the third quarter of 2022. Volumes were also
negatively impacted by lower demand within the North American
Personal Care end market and continued customer inventory
destocking. Higher global demand in the Agricultural end market
partially offset the above.
- Polymer operating income was $10.0
million versus $14.1 million
in the prior year. This decrease was primarily due to an 18%
decline in global sales volume, including a 19% volume decline in
Rigid Polyols and lower demand in the Specialty Polyols and
Phthalic Anhydride businesses. The lower demand reflects continued
customer inventory destocking and lower construction-related
activities.
- Specialty Product operating income was $2.5 million versus $3.7
million in the prior year. This decrease was primarily
attributable to lower sales volume and margins within the medium
chain triglycerides (MCT) product line.
- The effect of foreign currency translation negatively impacted
net income by $0.9 million, or
$0.04 per diluted share, versus the
prior year.
- Total Company EBITDA** was $48.3
million during the first quarter of 2023 versus $84.6 million in the prior year. Adjusted
EBITDA** was $48.7 million versus
$79.3 million in the prior year.
*
|
Adjusted net income
and adjusted earnings per share are non-GAAP measures which exclude
deferred compensation income/expense, cash-settled stock
appreciation rights (SARs) income/expense, certain environmental
remediation-related costs as well as other significant and
infrequent/non-recurring items. See Table II for reconciliations of
non-GAAP adjusted net income and adjusted earnings per diluted
share.
|
**
|
EBITDA and adjusted
EBITDA are non-GAAP measures. See Table VI for calculations
and GAAP reconciliations of EBITDA and adjusted
EBITDA.
|
"The Company's first quarter financial results were
significantly impacted by lower sales volume stemming from
softening market demand, delays in the startup of new low 1,4
dioxane production assets and continued customer and channel
destocking across most of our markets," said Scott Behrens, President and Chief Executive
Officer. "Margins were in line with expectations despite
high-cost inventory carryover from the fourth quarter and increased
competitive activity within certain end-use markets. Despite
ongoing inflationary cost pressures and higher cash expenses
related to the construction and pre-commissioning activities of our
new Alkoxylation investment in Pasadena,
Texas and the startup of our new low 1,4 dioxane capacity in
the U.S., we kept cash expenses consistent
year-over-year."
Financial Summary
|
|
Three Months Ended
March 31
|
|
($ in thousands,
except per share data)
|
|
2023
|
|
|
2022
|
|
|
%
Change
|
|
Net Sales
|
|
$
|
651,436
|
|
|
$
|
675,276
|
|
|
|
(4)
|
%
|
Operating
Income
|
|
$
|
21,057
|
|
|
$
|
63,346
|
|
|
|
(67)
|
%
|
Net Income
|
|
$
|
16,142
|
|
|
$
|
44,809
|
|
|
|
(64)
|
%
|
Earnings per Diluted
Share
|
|
$
|
0.70
|
|
|
$
|
1.93
|
|
|
|
(64)
|
%
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income
*
|
|
$
|
16,419
|
|
|
$
|
40,728
|
|
|
|
(60)
|
%
|
Adjusted Earnings per
Diluted Share *
|
|
$
|
0.71
|
|
|
$
|
1.76
|
|
|
|
(60)
|
%
|
|
|
* See Table II for
reconciliations of non-GAAP adjusted net income and earnings per
diluted share.
|
|
Summary of First 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 2023 first quarter reported
net income includes $0.1 million of
after-tax income versus $3.9 million
of after-tax income 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.
The current year quarter includes less than $0.1 million of after-tax income versus
$0.4 million of after-tax income in
the prior year.
- Business Restructuring: The 2023 first quarter reported
net income includes $0.1 million of
after-tax decommissioning expense related to the Company's Canadian
plant closure versus less than $0.1
million of after-tax expense in the prior year.
- Environmental Remediation – The first quarter of 2023
reported net income includes $0.3
million of after-tax expense versus $0.2 million of after-tax expense in the prior
year.
Percentage Change in Net Sales
Net sales in the first quarter of 2023 decreased 4%
year-over-year primarily due to a 14% decrease in global sales
volume and the unfavorable impact of foreign currency
translation. Higher selling prices, that were mainly
attributable to the pass-through of higher raw material costs and
improved product and customer mix, partially offset the above.
|
|
Three Months Ended
March 31, 2023
|
|
Volume
|
|
|
(14)
|
%
|
Selling Price &
Mix
|
|
|
12
|
%
|
Foreign Currency
Translation
|
|
|
(2)
|
%
|
Total
|
|
|
(4)
|
%
|
Segment Results
|
|
Three Months Ended
March 31
|
|
($ in
thousands)
|
|
2023
|
|
|
2022
|
|
|
%
Change
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
|
Surfactants
|
|
$
|
467,828
|
|
|
$
|
468,266
|
|
|
|
(0)
|
%
|
Polymers
|
|
$
|
161,127
|
|
|
$
|
187,079
|
|
|
|
(14)
|
%
|
Specialty
Products
|
|
$
|
22,481
|
|
|
$
|
19,931
|
|
|
|
13
|
%
|
Total Net
Sales
|
|
$
|
651,436
|
|
|
$
|
675,276
|
|
|
|
(4)
|
%
|
|
|
|
|
Three Months Ended
March 31
|
|
($ in thousands, all
amounts pre-tax)
|
|
2023
|
|
|
2022
|
|
|
%
Change
|
|
Operating
Income
|
|
|
|
|
|
|
|
|
|
Surfactants
|
|
$
|
27,056
|
|
|
$
|
53,769
|
|
|
|
(50)
|
%
|
Polymers
|
|
$
|
10,004
|
|
|
$
|
14,129
|
|
|
|
(29)
|
%
|
Specialty
Products
|
|
$
|
2,530
|
|
|
$
|
3,695
|
|
|
|
(32)
|
%
|
Segment Operating
Income
|
|
$
|
39,590
|
|
|
$
|
71,593
|
|
|
|
(45)
|
%
|
Corporate Expenses
|
|
$
|
(18,533)
|
|
|
$
|
(8,247)
|
|
|
|
125
|
%
|
Consolidated Operating
Income
|
|
$
|
21,057
|
|
|
$
|
63,346
|
|
|
|
(67)
|
%
|
Total segment operating income for the first quarter of 2023
decreased $32.0 million, or 45%,
versus the prior year quarter.
- Surfactant net sales were $467.8
million for the quarter, flat versus the prior year. Selling
prices were up 14% primarily due to the pass-through of higher raw
material and input costs as well as improved product and customer
mix. Sales volume decreased 13% year-over-year primarily due to
lower global commodity laundry demand, startup delays associated
with the low 1,4 dioxane transition, lower demand within the North
American Personal Care end market and continued customer and
channel inventory destocking. Higher global demand for products
sold into the Agricultural end market partially offset the above.
The unfavorable impact of foreign currency translation negatively
impacted net sales by 1%. Surfactant operating income for the
quarter decreased $26.7 million
versus the prior year primarily due to the 13% decline in sales
volume and higher expenses associated with the Company's transition
to low 1,4 dioxane capabilities.
- Polymer net sales were $161.1
million for the quarter, a 14% decrease versus the prior
year. Sales volume decreased 18% in the quarter primarily due to a
19% decline in Rigid Polyols and lower demand in the Specialty
Polyols and Phthalic Anhydride businesses. This was partially
offset by strong double digit sales volume growth in China and mid-single digit growth in the North
America CASE business. The lower demand reflects customer and
channel inventory destocking and lower construction-related
activities. Selling prices increased 8% primarily due to the pass
through of higher material raw material and input costs. The
translation impact of a stronger U.S. dollar negatively impacted
net sales by 4%. Polymer operating income decreased $4.1 million versus the prior year primarily due
to the 18% decrease in global sales volume.
- Specialty Product net sales were $22.5
million for the quarter, a 13% increase versus the prior
year. Sales volume was down 7% between years while operating income
decreased $1.2 million. The decline
in operating income was primarily attributable to lower sales
volume and margins within the MCT product line.
|
|
Three Months Ended
March 31
|
|
($ in
millions)
|
|
2023
|
|
|
2022
|
|
|
%
Change
|
|
EBITDA
|
|
|
|
|
|
|
|
|
|
Surfactants
|
|
$
|
42.4
|
|
|
$
|
67.0
|
|
|
$
|
(24.6)
|
|
Polymers
|
|
$
|
18.3
|
|
|
$
|
21.8
|
|
|
$
|
(3.5)
|
|
Specialty
Products
|
|
$
|
3.9
|
|
|
$
|
5.2
|
|
|
$
|
(1.3)
|
|
Unallocated Corporate
|
|
$
|
(16.3)
|
|
|
$
|
(9.4)
|
|
|
$
|
(6.9)
|
|
Consolidated
EBITDA
|
|
$
|
48.3
|
|
|
$
|
84.6
|
|
|
$
|
(36.3)
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
Surfactants
|
|
$
|
42.3
|
|
|
$
|
66.7
|
|
|
$
|
(24.4)
|
|
Polymers
|
|
$
|
18.3
|
|
|
$
|
21.7
|
|
|
$
|
(3.4)
|
|
Specialty
Products
|
|
$
|
3.9
|
|
|
$
|
5.2
|
|
|
$
|
(1.3)
|
|
Unallocated Corporate
|
|
$
|
(15.8)
|
|
|
$
|
(14.3)
|
|
|
$
|
(1.5)
|
|
Consolidated
Adjusted EBITDA
|
|
$
|
48.7
|
|
|
$
|
79.3
|
|
|
$
|
(30.6)
|
|
- Consolidated EBITDA was $48.3
million for the quarter, a 43% decrease versus the prior
year. Adjusted EBITDA was $48.7
million, a 38% decrease versus the prior year. The
year-over-year decrease in both EBITDA and Adjusted EBITDA was
primarily due to the decline in sales volume in the three business
segments.
Corporate Expenses
|
|
Three Months Ended
March 31
|
|
($ in
thousands)
|
|
2023
|
|
|
2022
|
|
|
%
Change
|
|
Total -
Corporate Expenses
|
|
$
|
18,533
|
|
|
$
|
8,247
|
|
|
|
125
|
%
|
Less:
|
|
|
|
|
|
|
|
|
|
Deferred
Compensation Expense/(Income)
|
|
$
|
1,502
|
|
|
$
|
(7,501)
|
|
|
NM
|
|
Business
Restructuring Expense
|
|
$
|
157
|
|
|
$
|
52
|
|
|
|
202
|
%
|
Environmental
Remediation Expense
|
|
$
|
409
|
|
|
$
|
303
|
|
|
|
35
|
%
|
Adjusted Corporate
Expenses
|
|
$
|
16,465
|
|
|
$
|
15,393
|
|
|
|
7
|
%
|
|
* See Table III for
a discussion of deferred compensation plan
accounting.
|
- Corporate expenses, excluding deferred compensation, business
restructuring and environmental remediation related costs,
increased $1.1 million, or 7%, for
the quarter. This increase was primarily driven by inflation
and the reallocation of some employee costs from the business units
to corporate during the first quarter of 2023. Total Company
SG&A expenses, excluding deferred compensation, business
restructuring and environmental remediation related costs were down
5% versus the prior year.
Income Taxes
The Company's effective tax rate was 18.9% in the first quarter
of 2023 versus 24.6% in the first quarter of 2022. This decrease
was primarily attributable to more favorable tax benefits derived
from stock-based compensation awards exercised or distributed in
the first quarter of 2023 versus the first quarter of
2022.
Shareholder Return
The Company paid $8.2 million of
dividends to shareholders in the first quarter of 2023. The
Company did not purchase any Company stock in the first quarter of
2023 and has $125.1 million remaining
under the share repurchase program authorized by its Board of
Directors. The Company has increased its dividend on the
Company's common stock for 55 consecutive years.
Selected Balance Sheet Information
The Company's total debt increased by $123.9 million and cash decreased by $46.8 million versus December 31, 2022. The increase in debt
primarily reflects borrowings against the Company's revolving
credit facility. The decrease in cash primarily reflects
higher working capital requirements and capital expenditures.
The Company's net debt level increased $170.7 million versus December 31, 2022 and the net debt ratio
increased from 26% to 33% (Net Debt and Net Debt
Ratio are non-GAAP measures).
($ in
millions)
|
|
March 31,
2023
|
|
|
December 31,
2022
|
|
Net Debt
|
|
|
|
|
|
|
Total Debt
|
|
$
|
711.0
|
|
|
$
|
587.1
|
|
Cash
|
|
|
127.0
|
|
|
|
173.8
|
|
Net Debt
|
|
$
|
584.0
|
|
|
$
|
413.3
|
|
Equity
|
|
|
1,189.9
|
|
|
|
1,166.1
|
|
Net Debt +
Equity
|
|
$
|
1,773.9
|
|
|
$
|
1,579.4
|
|
Net Debt / (Net Debt +
Equity)
|
|
|
33
|
%
|
|
|
26
|
%
|
The major working capital components were:
($ in
millions)
|
|
March 31,
2023
|
|
|
December 31,
2022
|
|
|
|
Net
Receivables
|
|
$
|
470.3
|
|
|
$
|
436.9
|
|
|
|
Inventories
|
|
|
368.4
|
|
|
|
402.5
|
|
|
|
Accounts
Payable
|
|
|
(289.1)
|
|
|
|
(375.7)
|
|
|
|
Net
Total
|
|
$
|
549.6
|
|
|
$
|
463.7
|
|
|
|
Capital spending during the first quarter of 2023 was
$92.2 million versus $60.3 million in the prior year quarter.
The year-over-year increase is primarily due to increased
expenditures in the U.S. for the advancement of the Company's new
alkoxylation production 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. For the full year, capital
expenditures are expected to be in the range of $220 million to $240
million.
Outlook
"Looking forward, we believe second quarter volumes will
remain depressed as markets continue to reconcile forward demand
with inventory levels throughout the channel. We
expect second half year over year volume growth driven by modest
recovery in demand for Rigid Polyols, growth in Surfactant volumes
associated with new contracted business and a low
comparable base," said Scott
Behrens, President and Chief Executive Officer. "We
will continue to actively control costs and execute our
productivity programs. Our balance sheet remains healthy and we are
committed to advancing our strategic and innovation initiatives
that are instrumental to our long-term
growth."
Conference Call
Stepan Company will host a conference call to discuss its first
quarter results at 8:00 a.m. ET
(7:00 a.m. CT) on April 25, 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 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.
Tables follow
Table
I
|
STEPAN COMPANY For the Three
Months Ended March 31, 2023 and 2022 (Unaudited – in
000's, except per share data)
|
|
|
|
Three Months Ended
March 31
|
|
|
|
2023
|
|
|
2022
|
|
Net
Sales
|
|
$
|
651,436
|
|
|
$
|
675,276
|
|
Cost of
Sales
|
|
|
577,876
|
|
|
|
566,057
|
|
Gross
Profit
|
|
|
73,560
|
|
|
|
109,219
|
|
Operating
Expenses:
|
|
|
|
|
|
|
Selling
|
|
|
13,067
|
|
|
|
15,277
|
|
Administrative
|
|
|
22,639
|
|
|
|
21,572
|
|
Research, Development
and Technical Services
|
|
|
15,138
|
|
|
|
16,473
|
|
Deferred Compensation
(Income) Expense
|
|
|
1,502
|
|
|
|
(7,501)
|
|
|
|
|
52,346
|
|
|
|
45,821
|
|
|
|
|
|
|
|
|
Business
Restructuring
|
|
|
157
|
|
|
|
52
|
|
Operating
Income
|
|
|
21,057
|
|
|
|
63,346
|
|
|
|
|
|
|
|
|
Other Income
(Expense):
|
|
|
|
|
|
|
Interest,
Net
|
|
|
(2,822)
|
|
|
|
(2,306)
|
|
Other, Net
|
|
|
1,668
|
|
|
|
(1,650)
|
|
|
|
|
(1,154)
|
|
|
|
(3,956)
|
|
|
|
|
|
|
|
|
Income Before Income
Taxes
|
|
|
19,903
|
|
|
|
59,390
|
|
Provision for Income
Taxes
|
|
|
3,761
|
|
|
|
14,581
|
|
Net
Income
|
|
|
16,142
|
|
|
|
44,809
|
|
Net Income Per
Common Share
|
|
|
|
|
|
|
Basic
|
|
$
|
0.71
|
|
|
$
|
1.96
|
|
Diluted
|
|
$
|
0.70
|
|
|
$
|
1.93
|
|
Shares Used to
Compute Net Income Per Common
Share
|
|
|
|
|
|
|
Basic
|
|
|
22,757
|
|
|
|
22,896
|
|
Diluted
|
|
|
22,994
|
|
|
|
23,167
|
|
Table
II
|
Reconciliation of
Non-GAAP Net Income and Earnings per Diluted Share*
|
|
|
|
Three Months Ended
March 31
|
|
($ in thousands,
except per share amounts)
|
|
2023
|
|
|
EPS
|
|
|
2022
|
|
|
EPS
|
|
Net Income
Reported
|
|
$
|
16,142
|
|
|
$
|
0.70
|
|
|
$
|
44,809
|
|
|
$
|
1.93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation
(Income) Expense
|
|
$
|
(104)
|
|
|
$
|
-
|
|
|
$
|
(3,948)
|
|
|
$
|
(0.17)
|
|
Business Restructuring
Expense
|
|
|
115
|
|
|
$
|
-
|
|
|
|
39
|
|
|
$
|
-
|
|
Cash Settled SARs
(Income) Expense
|
|
|
(40)
|
|
|
$
|
-
|
|
|
|
(402)
|
|
|
$
|
(0.01)
|
|
Environmental
Remediation Expense
|
|
|
306
|
|
|
$
|
0.01
|
|
|
|
230
|
|
|
$
|
0.01
|
|
Adjusted Net
Income
|
|
$
|
16,419
|
|
|
$
|
0.71
|
|
|
$
|
40,728
|
|
|
$
|
1.76
|
|
|
|
*
|
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, and are 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
March 31
|
|
|
($ in thousands,
except per share amounts)
|
|
2023
|
|
|
EPS
|
|
|
2022
|
|
|
EPS
|
|
|
Pre-Tax
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation
(Income) Expense
|
|
$
|
(137)
|
|
|
|
|
|
$
|
(5,195)
|
|
|
|
|
|
Business Restructuring
Expense
|
|
|
157
|
|
|
|
|
|
|
52
|
|
|
|
|
|
Cash Settled SARs
(Income) Expense
|
|
|
(53)
|
|
|
|
|
|
|
(529)
|
|
|
|
|
|
Environmental
Remediation Expense
|
|
|
409
|
|
|
|
|
|
|
303
|
|
|
|
|
|
Total
Pre-Tax Adjustments
|
|
$
|
376
|
|
|
|
|
|
$
|
(5,369)
|
|
|
|
|
|
Cumulative Tax Effect
on Adjustments
|
|
$
|
(99)
|
|
|
|
|
|
$
|
1,288
|
|
|
|
|
|
After-Tax
Adjustments
|
|
$
|
277
|
|
|
$
|
0.01
|
|
|
$
|
(4,081)
|
|
|
$
|
(0.17)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table
III
|
Deferred
Compensation Plans
|
|
The full effect of the
deferred compensation plans on quarterly pre-tax income was $0.1
million of income versus $5.2 million of income 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:
|
|
|
|
2023
|
|
|
2022
|
|
|
|
3/31
|
|
|
12/31
|
|
|
9/30
|
|
|
6/30
|
|
|
3/31
|
|
Stepan
Company
|
|
$
|
103.03
|
|
|
$
|
106.46
|
|
|
$
|
93.67
|
|
|
$
|
101.35
|
|
|
$
|
98.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The deferred compensation income statement impact is summarized
below:
|
|
Three Months Ended
March 31
|
|
($ in
thousands)
|
|
2023
|
|
|
2022
|
|
Deferred
Compensation
|
|
|
|
|
|
|
Operating Income
(Expense)
|
|
$
|
(1,502)
|
|
|
$
|
7,501
|
|
Other, net – Mutual
Fund Gain (Loss)
|
|
|
1,639
|
|
|
|
(2,306)
|
|
Total Pre-Tax Income
(Expense)
|
|
$
|
137
|
|
|
$
|
5,195
|
|
Total After Tax Income
(Expense)
|
|
$
|
104
|
|
|
$
|
3,948
|
|
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-month period ending March 31, 2023 as compared
to 2022:
|
|
($ in
millions)
|
|
Three Months Ended
March 31
|
|
|
(Decrease)
|
|
|
Change
Due to Foreign
Currency
Translation
|
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
Net Sales
|
|
$
|
651.4
|
|
|
$
|
675.3
|
|
|
$
|
(23.9)
|
|
|
$
|
(12.5)
|
|
Gross Profit
|
|
|
73.6
|
|
|
|
109.2
|
|
|
|
(35.6)
|
|
|
|
(1.5)
|
|
Operating
Income
|
|
|
21.1
|
|
|
|
63.3
|
|
|
|
(42.2)
|
|
|
|
(1.1)
|
|
Pretax
Income
|
|
|
19.9
|
|
|
|
59.4
|
|
|
|
(39.5)
|
|
|
|
(1.1)
|
|
Table V
|
Stepan Company Consolidated Balance
Sheets March 31, 2023 and December 31,
2022
|
|
|
|
March 31,
2023
|
|
|
December 31,
2022
|
|
ASSETS
|
|
|
|
|
|
|
Current
Assets
|
|
$
|
1,006,524
|
|
|
$
|
1,044,802
|
|
Property, Plant &
Equipment, Net
|
|
|
1,120,129
|
|
|
|
1,073,297
|
|
Other Assets
|
|
|
319,284
|
|
|
|
315,073
|
|
Total Assets
|
|
$
|
2,445,937
|
|
|
$
|
2,433,172
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
Liabilities
|
|
$
|
662,744
|
|
|
$
|
670,649
|
|
Deferred Income
Taxes
|
|
|
9,469
|
|
|
|
10,179
|
|
Long-term
Debt
|
|
|
453,742
|
|
|
|
455,029
|
|
Other Non-current
Liabilities
|
|
|
130,069
|
|
|
|
131,250
|
|
Total Stepan Company
Stockholders' Equity
|
|
|
1,189,913
|
|
|
|
1,166,065
|
|
Total Liabilities and
Stockholders' Equity
|
|
$
|
2,445,937
|
|
|
$
|
2,433,172
|
|
Table
VI
|
Reconciliations of Non-GAAP EBITDA and
Adjusted EBITDA to Operating Income
|
|
|
|
Three Months Ended
March 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in
millions)
|
|
Surfactants
|
|
|
Polymers
|
|
|
Specialty
Products
|
|
|
Unallocated
Corporate
|
|
|
Consolidated
|
|
Operating
Income
|
|
$
|
27.1
|
|
|
$
|
10.0
|
|
|
$
|
2.5
|
|
|
$
|
(18.5)
|
|
|
$
|
21.1
|
|
Depreciation and Amortization
|
|
$
|
15.3
|
|
|
$
|
8.3
|
|
|
$
|
1.4
|
|
|
$
|
0.5
|
|
|
$
|
25.5
|
|
Other, Net
Income (Expense)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1.7
|
|
|
$
|
1.7
|
|
EBITDA
|
|
$
|
42.4
|
|
|
$
|
18.3
|
|
|
$
|
3.9
|
|
|
$
|
(16.3)
|
|
|
$
|
48.3
|
|
Deferred
Compensation
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(0.1)
|
|
|
$
|
(0.1)
|
|
Cash
Settled SARs
|
|
$
|
(0.1)
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(0.1)
|
|
Business
Restructuring
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
Environmental Remediation
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
0.4
|
|
|
$
|
0.4
|
|
Adjusted
EBITDA
|
|
$
|
42.3
|
|
|
$
|
18.3
|
|
|
$
|
3.9
|
|
|
$
|
(15.8)
|
|
|
$
|
48.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in
millions)
|
|
Surfactants
|
|
|
Polymers
|
|
|
Specialty
Products
|
|
|
Unallocated
Corporate
|
|
|
Consolidated
|
|
Operating
Income
|
|
$
|
53.8
|
|
|
$
|
14.1
|
|
|
$
|
3.7
|
|
|
$
|
(8.2)
|
|
|
$
|
63.4
|
|
Depreciation and Amortization
|
|
$
|
13.2
|
|
|
$
|
7.7
|
|
|
$
|
1.5
|
|
|
$
|
0.5
|
|
|
$
|
22.9
|
|
Other, Net
Income (Expense)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(1.7)
|
|
|
$
|
(1.7)
|
|
EBITDA
|
|
$
|
67.0
|
|
|
$
|
21.8
|
|
|
$
|
5.2
|
|
|
$
|
(9.4)
|
|
|
$
|
84.6
|
|
Deferred
Compensation
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(5.2)
|
|
|
$
|
(5.2)
|
|
Cash
Settled SARs
|
|
$
|
(0.3)
|
|
|
$
|
(0.1)
|
|
|
$
|
(0.0)
|
|
|
$
|
(0.1)
|
|
|
$
|
(0.5)
|
|
Business
Restructuring
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
Environmental Remediation
|
|
$
|
-
|
|
|
|
|
|
|
|
|
$
|
0.3
|
|
|
$
|
0.3
|
|
Adjusted
EBITDA
|
|
$
|
66.7
|
|
|
$
|
21.7
|
|
|
$
|
5.2
|
|
|
$
|
(14.3)
|
|
|
$
|
79.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View original
content:https://www.prnewswire.com/news-releases/stepan-reports-first-quarter-results-301806375.html
SOURCE Stepan Company