NORTHFIELD, Ill., Oct. 18, 2016 /PRNewswire/ -- Stepan Company
(NYSE: SCL) today reported:
Third Quarter Highlights
- Reported net income was $20.4
million, or $0.89 per diluted
share, an 18% decrease versus $24.9
million, or $1.09 per diluted
share, in the prior year. Adjusted net income* was $24.5 million, or $1.06 per diluted share, a 16% increase versus
$21.1 million, or $0.92 per diluted share, in the prior year.
- Total company sales volume increased 2% for the quarter.
- Surfactant operating income was $20.7
million, a 5% decrease versus prior year. Most of this
decrease was attributable to lower sales volumes in Latin American
and Europe. Global Surfactant
sales volume was flat versus prior year.
- Polymer operating income was $27.1
million, a 10% increase versus prior year. This was mostly
attributable to higher volume which was up 11% versus prior
year.
- The effect of foreign currency translation had an immaterial
impact on net income versus prior year.
- On October 3rd, closed on
acquisition of Tebras/PBC in Brazil, which will allow Stepan to expand and
diversify its customer base in Brazil and provide an opportunity to sell the
Company's broader surfactant portfolio.
Nine Month Highlights
- Reported net income was a record $75.9
million, or $3.31 per diluted
share, a 20% increase versus $63.1
million, or $2.76 per diluted
share, in the prior year. Adjusted net income* was a record
$84.1 million, or $3.66 per diluted share, a 35% increase versus
$62.4 million, or $2.73 per diluted share, in the prior year.
- Total company sales volume increased 8% for the first nine
months.
- The effect of foreign currency translation negatively impacted
net income by $2.3 million, or
$0.10 per diluted share, versus prior
year.
* Adjusted net income is a non-GAAP measure which excludes
Deferred Compensation income/ expense as well as other significant
and infrequent/non-recurring items. See Table II for this non-GAAP
reconciliation.
"The Company delivered reported net income of $20.4 million, a record adjusted net income in
the third quarter, and record results through the first nine months
of the year," said F. Quinn Stepan,
Jr., President and Chief Executive Officer. "Strong Polymer
volumes globally, increased asset utilization and enhanced internal
efficiencies continue to drive results.
"Surfactant operating income was down 5% mostly due to lower
volumes in Latin America and
Europe. North American surfactant
operating income improved on higher volumes. Polymer income was up
10%, benefiting from global energy conservation efforts and the
advantages that our technologies provide over competitive
insulation materials."
Financial Summary
|
Three Months Ended September
30
|
|
|
Nine Months Ended September 30
|
|
($ in thousands,
except per share data)
|
2016
|
|
|
2015
|
|
|
% Change
|
|
|
2016
|
|
|
2015
|
|
|
% Change
|
|
Net Sales
|
$
|
445,030
|
|
|
$
|
444,011
|
|
|
|
0
|
%
|
|
$
|
1,345,530
|
|
|
$
|
1,356,876
|
|
|
|
(1)
|
%
|
Operating
Income
|
$
|
28,738
|
|
|
$
|
38,794
|
|
|
|
(26)
|
%
|
|
$
|
116,261
|
|
|
$
|
102,567
|
|
|
|
13
|
%
|
Net Income
|
$
|
20,427
|
|
|
$
|
24,912
|
|
|
|
(18)
|
%
|
|
$
|
75,946
|
|
|
$
|
63,096
|
|
|
|
20
|
%
|
Earnings per Diluted
Share
|
$
|
0.89
|
|
|
$
|
1.09
|
|
|
|
(18)
|
%
|
|
$
|
3.31
|
|
|
$
|
2.76
|
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income
*
|
$
|
24,510
|
|
|
$
|
21,098
|
|
|
|
16
|
%
|
|
$
|
84,065
|
|
|
$
|
62,441
|
|
|
|
35
|
%
|
Adjusted Earnings per
Diluted Share *
|
$
|
1.06
|
|
|
$
|
0.92
|
|
|
|
15
|
%
|
|
$
|
3.66
|
|
|
$
|
2.73
|
|
|
|
34
|
%
|
|
* See Table II for
a reconciliation of non-GAAP Adjusted Net Income and Earnings per
Diluted Share.
|
Summary of Third Quarter Adjusted Net Income Items
Adjusted net income excludes non-operational deferred
compensation income/expense and may exclude certain other
significant and infrequent or non-recurring items.
- Deferred Compensation: The current year quarter
includes $6.6 million of pre-tax
expense versus $6.2 million of
pre-tax income in the prior year. These amounts were
$4.1 million of expense and
$3.8 million of income, respectively,
on an after-tax basis.
Percentage Change in Net Sales
Quarterly net sales were essentially flat versus prior
year. Higher sales volume offset lower selling prices and the
negative impact of foreign currency translation resulting from the
stronger U.S. dollar. Sales volumes were up 2% mostly due to
strong Polymer growth globally and higher volumes in North America
Surfactants. The lower selling prices were primarily related to
lower raw material costs within the Polymer segment.
|
|
Three Months Ended September
30, 2016
|
|
|
Nine Months Ended September
30, 2016
|
|
Volume
|
|
|
2
|
%
|
|
|
8
|
%
|
Selling
Price
|
|
|
(1)
|
%
|
|
|
(6)
|
%
|
Foreign
Translation
|
|
|
(1)
|
%
|
|
|
(3)
|
%
|
Total
|
|
|
0
|
%
|
|
|
(1)
|
%
|
Segment Results
|
|
Three Months Ended September
30
|
|
|
Nine Months Ended September 30
|
|
($ in
thousands)
|
|
2016
|
|
|
2015
|
|
|
% Change
|
|
|
2016
|
|
|
2015
|
|
|
% Change
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Surfactants
|
|
$
|
290,467
|
|
|
$
|
290,830
|
|
|
|
0
|
%
|
|
$
|
899,014
|
|
|
$
|
921,124
|
|
|
|
(2)
|
%
|
Polymers
|
|
$
|
134,144
|
|
|
|
134,726
|
|
|
|
0
|
%
|
|
$
|
382,540
|
|
|
|
377,703
|
|
|
|
1
|
%
|
Specialty
Products
|
|
$
|
20,419
|
|
|
|
18,455
|
|
|
|
11
|
%
|
|
$
|
63,976
|
|
|
|
58,049
|
|
|
|
10
|
%
|
Total Net
Sales
|
|
$
|
445,030
|
|
|
$
|
444,011
|
|
|
|
0
|
%
|
|
$
|
1,345,530
|
|
|
$
|
1,356,876
|
|
|
|
(1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September
30
|
|
|
Nine Months Ended September 30
|
|
($ in thousands,
all amounts pre-tax)
|
|
2016
|
|
|
2015
|
|
|
% Change
|
|
|
2016
|
|
|
2015
|
|
|
% Change
|
|
Operating Income
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Surfactants
|
|
$
|
20,737
|
|
|
$
|
21,762
|
|
|
|
(5)
|
%
|
|
$
|
85,214
|
|
|
$
|
79,758
|
|
|
|
7
|
%
|
Polymers
|
|
$
|
27,087
|
|
|
$
|
24,588
|
|
|
|
10
|
%
|
|
$
|
80,278
|
|
|
$
|
62,802
|
|
|
|
28
|
%
|
Specialty
Products
|
|
$
|
2,328
|
|
|
$
|
(268)
|
|
|
NM
|
|
|
$
|
6,449
|
|
|
$
|
3,498
|
|
|
|
84
|
%
|
Total segment operating income increased $4.1 million, or 9%, versus the prior year
quarter. Total segment operating income for the first nine months
increased $25.9 million or 18% versus
the prior year.
- Surfactant net sales were $290.5
million for the quarter, $0.4
million less than prior year. Sales volume was flat with
prior year. Increased North American laundry business was offset by
lower volumes in Latin America and
Europe. Selling prices were
slightly higher resulting in an increase in net sales of
$5.3 million while the translation
impact of a stronger U.S. dollar decreased net sales by
$4.7 million. Surfactant operating
income decreased $1.0 million, or 5%,
versus the prior year. This decrease was primarily attributable to
lower sales volumes in Latin
America and Europe as well
as accelerated depreciation related to the Canadian plant closure.
These were partially offset by lower raw material costs and
contributions from our internal efficiency program (DRIVE).
- Polymer net sales were $134.1
million in the third quarter, a $0.6
million decrease versus prior year. Sales volume increased
11% in the quarter primarily due to continued growth in polyols
used in rigid foam insulation and insulated metal panels. Net sales
increased $14.4 million as a result
of this volume growth. Selling prices were lower which decreased
net sales by $13.4 million. The
translation impact of a stronger U.S. dollar decreased net sales by
$1.6 million. Operating income
increased $2.5 million, or 10%,
versus the prior year. This improvement was primarily attributable
to 14% volume growth within the Global Rigid Polyol business.
- Specialty Products net sales were $20.4
million, $2.0 million higher
than prior year. Operating income increased $2.5 million versus the prior year. This
improvement was primarily due to higher volumes, improved margins
and lower costs due to actions taken in 2015.
Corporate Expenses
|
|
Three Months Ended September
30
|
|
|
Nine Months Ended September 30
|
|
($ in
thousands)
|
|
2016
|
|
|
2015
|
|
|
% Change
|
|
|
2016
|
|
|
2015
|
|
|
% Change
|
|
Total -
Corporate Expenses
|
|
$
|
21,414
|
|
|
$
|
7,288
|
|
|
|
194
|
%
|
|
$
|
55,680
|
|
|
$
|
43,491
|
|
|
|
28
|
%
|
Deferred Compensation
Expense/(Income) *
|
|
$
|
7,441
|
|
|
$
|
(6,922)
|
|
|
|
(207)
|
%
|
|
$
|
12,595
|
|
|
$
|
1,228
|
|
|
|
926
|
%
|
Adjusted Corporate
Expense
|
|
$
|
13,973
|
|
|
$
|
14,210
|
|
|
|
(2)
|
%
|
|
$
|
43,085
|
|
|
$
|
42,263
|
|
|
|
2
|
%
|
|
* See Table III
for a discussion of deferred compensation plan
accounting.
|
|
- Corporate expenses, excluding deferred compensation, decreased
$0.2 million, or 2%, for the
quarter. This decrease was mostly attributable to lower
consulting expenses, as external resources related to our
efficiency efforts were not used in the current year, and lower
expat expenses. These decreases were partially offset by
higher incentive-based compensation expenses.
Income Taxes
The effective tax rate was 29% for the first nine months of
2016, which was slightly higher than the 28% rate for the first
nine months of 2015.
Selected Balance Sheet Information
The Company's net debt level decreased $12 million for the quarter while the net debt
ratio dropped from 17% to 16%. The decrease in net debt was
mostly attributable to a $17 million
increase in cash. The cash increase in the current quarter
was primarily attributable to third quarter earnings partially
offset by slightly higher working capital
requirements.
($ in
millions)
|
|
9/30/16
|
|
|
6/30/16
|
|
|
3/31/16
|
|
|
12/31/15
|
|
Net Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Debt
|
|
$
|
326.1
|
|
|
$
|
321.4
|
|
|
$
|
327.9
|
|
|
$
|
331.4
|
|
Cash
|
|
|
207.0
|
|
|
|
190.4
|
|
|
|
145.7
|
|
|
|
176.1
|
|
Net Debt
|
|
$
|
119.1
|
|
|
$
|
131.0
|
|
|
$
|
182.2
|
|
|
$
|
155.3
|
|
Equity
|
|
|
638.4
|
|
|
|
618.9
|
|
|
|
594.8
|
|
|
|
557.0
|
|
Net Debt +
Equity
|
|
$
|
757.5
|
|
|
$
|
749.9
|
|
|
$
|
777.0
|
|
|
$
|
712.3
|
|
Net Debt / (Net Debt
+ Equity)
|
|
|
16
|
%
|
|
|
17
|
%
|
|
|
23
|
%
|
|
|
22
|
%
|
The major working capital components were:
($ in
millions)
|
|
9/30/16
|
|
|
6/30/16
|
|
|
3/31/16
|
|
|
12/31/15
|
|
Net
Receivables
|
|
$
|
281.1
|
|
|
$
|
285.1
|
|
|
$
|
291.6
|
|
|
$
|
249.6
|
|
Inventories
|
|
|
184.0
|
|
|
|
180.7
|
|
|
|
177.8
|
|
|
|
170.4
|
|
Accounts
Payable
|
|
|
(129.1)
|
|
|
|
(144.2)
|
|
|
|
(130.0)
|
|
|
|
(128.6)
|
|
|
|
$
|
336.0
|
|
|
$
|
321.6
|
|
|
$
|
339.4
|
|
|
$
|
291.4
|
|
The Company had capital expenditures of $29 million during the quarter and $70 million through the first nine months of
2016. This compares to $36
million and $90 million,
respectively, in the prior year. For the full year, we expect
capital expenditures to continue to be between $110 million and $120 million.
Outlook
"After a record nine months, we anticipate headwinds in the
fourth quarter due to higher raw material costs versus fourth
quarter of 2015, scheduled maintenance shutdown of our phthalic
anhydride unit and accelerated depreciation resulting from the
closure of our Canadian plant," said F.
Quinn Stepan, Jr., President and Chief Executive Officer.
"Our base business should continue to benefit from
higher polyol volumes, increased asset utilization and enhanced
internal efficiencies. We believe the Company is positioned
for continued growth in 2017."
Conference Call
Stepan Company will host a conference call to discuss the third
quarter results at 10:00 a.m. ET
(9:00 a.m. CT) on October 18, 2016. The call can be accessed by
phone and webcast. Telephone access will be available by
dialing +1 (800) 677-7964, and the webcast can be accessed through
the Investor Relations/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 under the Investor Relations center 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
compounds. The Company is also a leading supplier of
Polyurethane polyols used in the expanding thermal insulation
market, and CASE (Coatings, Adhesives, Sealants, Elastomers)
industries.
Headquartered in Northfield,
Illinois, Stepan utilizes a network of modern production
facilities located in North and South
America, Europe and
Asia.
The 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.
Contact: Scott D.
Beamer
(847) 446-7500
* * * * *
Tables follow
Except for historical information, all other information in
this news release consists of forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are subject to risks
and uncertainties that could cause actual results to differ
materially from those projected, anticipated or implied.
Significant risks and uncertainties are described in Stepan
Company's Form 10-K, Form 8-K and Form 10-Q reports and exhibits to
those reports, and include (but are not limited to) risks related
to our foreign operations, foreign currency fluctuations, certain
global and regional economic conditions, costs related to expansion
or other capital projects, the probability of future acquisitions
and the uncertainties related to the integration of acquired
businesses, the effect of customer product reformulations or new
technologies, the loss of one or more key customer or supplier
relationships, the costs and other effects of governmental
regulation and legal and administrative proceedings, including the
expenditures necessary to address and resolve environmental claims
and proceedings, disruptions in production at manufacturing
facilities, volatility of raw material, natural gas and energy
costs, maintaining and protecting intellectual property rights,
interruption or breaches of information technology systems,
disruptions in transportation or significant changes in
transportation costs, our level of indebtedness and general
economic conditions. 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
Nine Months Ended September 30, 2016 and 2015
|
(Unaudited –
in thousands, except per share data)
|
|
|
|
Three Months Ended September
30
|
|
|
Nine Months Ended September
30
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Net
Sales
|
|
$
|
445,030
|
|
|
$
|
444,011
|
|
|
$
|
1,345,530
|
|
|
$
|
1,356,876
|
|
Cost of
Sales
|
|
|
361,635
|
|
|
|
366,413
|
|
|
|
1,075,705
|
|
|
|
1,123,324
|
|
Gross
Profit
|
|
|
83,395
|
|
|
|
77,598
|
|
|
|
269,825
|
|
|
|
233,552
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
|
|
|
13,990
|
|
|
|
14,025
|
|
|
|
42,252
|
|
|
|
41,287
|
|
Administrative
*
|
|
|
18,958
|
|
|
|
19,076
|
|
|
|
55,350
|
|
|
|
54,320
|
|
Research, Development
and Technical Services
|
|
|
14,268
|
|
|
|
12,625
|
|
|
|
42,306
|
|
|
|
37,012
|
|
Deferred Compensation
(Income) Expense *
|
|
|
7,441
|
|
|
|
(6,922)
|
|
|
|
12,595
|
|
|
|
1,228
|
|
|
|
|
54,657
|
|
|
|
38,804
|
|
|
|
152,503
|
|
|
|
133,847
|
|
Other Operating
Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on Sale of
Product Line
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,862
|
|
Business
Restructuring
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,061)
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
|
28,738
|
|
|
|
38,794
|
|
|
|
116,261
|
|
|
|
102,567
|
|
Other Income
(Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest,
Net
|
|
|
(2,824)
|
|
|
|
(3,837)
|
|
|
|
(9,855)
|
|
|
|
(10,760)
|
|
Loss from Equity in
Joint Venture
|
|
|
-
|
|
|
|
(863)
|
|
|
|
-
|
|
|
|
(3,918)
|
|
Other, Net
|
|
|
1,229
|
|
|
|
(981)
|
|
|
|
401
|
|
|
|
(94)
|
|
|
|
|
(1,595)
|
|
|
|
(5,681)
|
|
|
|
(9,454)
|
|
|
|
(14,772)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before
Income Taxes
|
|
|
27,143
|
|
|
|
33,113
|
|
|
|
106,807
|
|
|
|
87,795
|
|
Provision for
Income Taxes
|
|
|
6,711
|
|
|
|
8,179
|
|
|
|
30,848
|
|
|
|
24,634
|
|
Net
Income
|
|
|
20,432
|
|
|
|
24,934
|
|
|
|
75,959
|
|
|
|
63,161
|
|
Net Income
Attributable to Noncontrolling Interests
|
|
|
(5)
|
|
|
|
(22)
|
|
|
|
(13)
|
|
|
|
(65)
|
|
Net Income
Attributable to Stepan Company
|
|
$
|
20,427
|
|
|
$
|
24,912
|
|
|
$
|
75,946
|
|
|
$
|
63,096
|
|
Net Income Per
Common Share Attributable to Stepan Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.90
|
|
|
$
|
1.10
|
|
|
$
|
3.34
|
|
|
$
|
2.78
|
|
Diluted
|
|
$
|
0.89
|
|
|
$
|
1.09
|
|
|
$
|
3.31
|
|
|
$
|
2.76
|
|
Shares Used to
Compute Net Income Per Common Share Attributable to Stepan
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
22,819
|
|
|
|
22,732
|
|
|
|
22,771
|
|
|
|
22,731
|
|
Diluted
|
|
|
23,082
|
|
|
|
22,853
|
|
|
|
22,975
|
|
|
|
22,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* For the three and
nine months ended September 30, 2015, deferred compensation
(income)/expense was included in administrative expenses. The
2015 amounts have been classified separately to conform to the
current year presentation.
|
Table
II
|
Reconciliation of
Non-GAAP Net Income and Earnings Per Diluted Share
|
|
|
|
Three Months Ended September
30
|
|
|
Nine Months Ended September
30
|
|
($ in
thousands, except per share amounts)
|
|
2016
|
|
|
EPS
|
|
|
2015
|
|
|
EPS
|
|
|
2016
|
|
|
EPS
|
|
|
2015
|
|
|
EPS
|
|
Net Income
Reported
|
|
$
|
20,427
|
|
|
$
|
0.89
|
|
|
$
|
24,912
|
|
|
$
|
1.09
|
|
|
$
|
75,946
|
|
|
$
|
3.31
|
|
|
$
|
63,096
|
|
|
$
|
2.76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation
(Income) Expense
|
|
$
|
4,083
|
|
|
$
|
0.17
|
|
|
|
(3,814)
|
|
|
$
|
(0.17)
|
|
|
$
|
7,323
|
|
|
$
|
0.32
|
|
|
|
778
|
|
|
$
|
0.03
|
|
Business
Restructuring
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
796
|
|
|
$
|
0.03
|
|
|
|
—
|
|
|
|
|
|
Environmental
Remediation Expense
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
341
|
|
|
$
|
0.01
|
|
Gain on Divestiture
of Product Line
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,774)
|
|
|
$
|
(0.08)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income
|
|
$
|
24,510
|
|
|
$
|
1.06
|
|
|
$
|
21,098
|
|
|
$
|
0.92
|
|
|
$
|
84,065
|
|
|
$
|
3.66
|
|
|
$
|
62,441
|
|
|
$
|
2.73
|
|
|
* All amounts in
this table are presented after-tax
|
|
The Company believes
that certain non-GAAP measures, when presented in conjunction with
comparable GAAP (Generally Accepted Accounting Principles)
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 September
30
|
|
|
Nine Months Ended September
30
|
|
($ in
thousands, except per share amounts)
|
|
2016
|
|
|
EPS
|
|
|
2015
|
|
|
EPS
|
|
|
2016
|
|
|
EPS
|
|
|
2015
|
|
|
EPS
|
|
Pre-Tax
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation
(Income) Expense
|
|
$
|
6,585
|
|
|
|
|
|
|
$
|
(6,152)
|
|
|
|
|
|
|
$
|
11,811
|
|
|
|
|
|
|
$
|
1,255
|
|
|
|
|
|
Business
Restructuring
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
$
|
1,061
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
Environmental
Remediation Expense
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
$
|
550
|
|
|
|
|
|
Gain on Divestiture
of Product Line
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
$
|
(2,862)
|
|
|
|
|
|
Total
Pre-Tax Adjustments
|
|
$
|
6,585
|
|
|
|
|
|
|
$
|
(6,152)
|
|
|
|
|
|
|
$
|
12,872
|
|
|
|
|
|
|
$
|
(1,057)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative Tax Effect
on Adjustments
|
|
$
|
(2,502)
|
|
|
|
|
|
|
$
|
2,338
|
|
|
|
|
|
|
$
|
(4,753)
|
|
|
|
|
|
|
$
|
402
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After-Tax
Adjustments
|
|
$
|
4,083
|
|
|
$
|
0.17
|
|
|
$
|
(3,814)
|
|
|
$
|
(0.17)
|
|
|
$
|
8,119
|
|
|
$
|
0.35
|
|
|
$
|
(655)
|
|
|
$
|
(0.03)
|
|
Table
III
|
Deferred
Compensation Plan
|
|
The full effect of
the deferred compensation plan on quarterly pretax income was $6.6
million of expense versus $6.2 million of income in the prior year.
The year to date impact was $11.8 million of expense versus $1.3
million of expense in the prior year. The accounting for the
deferred compensation plan results in operating income when the
price of Stepan Company common stock or mutual funds held in the
plan 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 Stepan Company
common stock are as follows:
|
|
|
|
2016
|
|
|
2015
|
|
|
|
12/31
|
|
9/30
|
|
|
6/30
|
|
|
3/31
|
|
|
12/31
|
|
|
9/30
|
|
|
6/30
|
|
|
3/31
|
|
Stepan
Company
|
|
N/A
|
|
$
|
72.66
|
|
|
$
|
59.53
|
|
|
$
|
55.29
|
|
|
$
|
49.69
|
|
|
$
|
41.61
|
|
|
$
|
54.11
|
|
|
$
|
41.66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The deferred
compensation income statement impact is summarized
below:
|
|
|
|
Three Months Ended September
30
|
|
|
Nine
Months Ended September 30
|
|
($ in
thousands)
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Deferred
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Expense)
|
|
$
|
(7,441)
|
|
|
$
|
6,922
|
|
|
$
|
(12,595)
|
|
|
$
|
(1,228)
|
|
Other, net – Mutual
Fund Gain (Loss)
|
|
|
856
|
|
|
|
(770)
|
|
|
|
784
|
|
|
|
(27)
|
|
Total
Pretax
|
|
$
|
(6,585)
|
|
|
$
|
6,152
|
|
|
$
|
(11,811)
|
|
|
$
|
(1,255)
|
|
Total After
Tax
|
|
$
|
(4,083)
|
|
|
$
|
3,814
|
|
|
$
|
(7,323)
|
|
|
$
|
(778)
|
|
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 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 line items for the three
and nine month periods ending September 30, 2016 as compared to
2015:
|
|
($ in
millions)
|
|
Three Months Ended September
30
|
|
|
Increase
(Decrease)
|
|
|
(Decrease)
Due to Foreign
Currency
Translation
|
|
|
Nine
Months Ended September 30
|
|
|
Increase
(Decrease)
|
|
|
(Decrease)
Due to Foreign
Currency
Translation
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
$
|
445.0
|
|
|
$
|
444.0
|
|
|
$
|
1.0
|
|
|
$
|
(6.3)
|
|
|
$
|
1,345.5
|
|
|
$
|
1,356.9
|
|
|
$
|
(11.4)
|
|
|
$
|
(34.8)
|
|
Gross
Profit
|
|
|
83.4
|
|
|
|
77.6
|
|
|
|
5.8
|
|
|
|
(0.4)
|
|
|
|
269.8
|
|
|
|
233.6
|
|
|
|
36.2
|
|
|
|
(5.5)
|
|
Operating
Income
|
|
|
28.7
|
|
|
|
38.8
|
|
|
|
(10.1)
|
|
|
|
(0.1)
|
|
|
|
116.3
|
|
|
|
102.6
|
|
|
|
13.7
|
|
|
|
(3.4)
|
|
Pretax
Income
|
|
|
27.1
|
|
|
|
33.1
|
|
|
|
(6.0)
|
|
|
|
(0.1)
|
|
|
|
106.8
|
|
|
|
87.8
|
|
|
|
19.0
|
|
|
|
(3.3)
|
|
Table
V
|
Stepan
Company
|
Consolidated
Balance Sheets
|
September 30, 2016
and December 31, 2015
|
|
|
|
2016 September 30
|
|
|
2015 December 31
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
$
|
696,332
|
|
|
$
|
619,573
|
|
Property, Plant &
Equipment, Net
|
|
|
573,698
|
|
|
|
555,463
|
|
Other
Assets
|
|
|
61,060
|
|
|
|
63,356
|
|
Total
Assets
|
|
$
|
1,331,090
|
|
|
$
|
1,238,392
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
$
|
244,723
|
|
|
$
|
243,244
|
|
Deferred Income
Taxes
|
|
|
13,187
|
|
|
|
9,455
|
|
Long-term
Debt
|
|
|
306,478
|
|
|
|
312,548
|
|
Other Non-current
Liabilities
|
|
|
126,970
|
|
|
|
114,761
|
|
Total Stepan Company
Stockholders' Equity
|
|
|
638,356
|
|
|
|
556,984
|
|
Noncontrolling
Interest
|
|
|
1,376
|
|
|
|
1,400
|
|
Total Liabilities and
Stockholders' Equity
|
|
$
|
1,331,090
|
|
|
$
|
1,238,392
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/stepan-reports-strong-third-quarter-results-300346390.html
SOURCE Stepan Company