NORTHFIELD, Ill., Feb. 22, 2017 /PRNewswire/ -- Stepan Company
(NYSE: SCL) today reported:
Fourth Quarter Highlights
- Reported net income was $8.4
million, or $0.36 per diluted
share versus $12.9 million, or
$0.56 per diluted share, in the prior
year. Adjusted net income was $12.3
million, or $0.52 per diluted
share versus $17.0 million, or
$0.74 per diluted share, in the prior
year.*
- Total company sales volume increased 1% for the quarter as a
result of higher polyol volumes, which benefited from increased
demand from the insulation market in the
United States and Europe.
- The fourth quarter 2016 results were negatively impacted by
$8.9 million of pre-tax non-recurring
costs, of which $8.3 million impacted
Surfactants and $0.6 million impacted
Polymers. The after-tax impact was $6.1
million, or $0.26 per diluted
share.
- Surfactant operating income was $14.6
million versus $24.3 million
in the prior year. This decrease was primarily attributable to
certain non-recurring items including European product claim
commitments and environmental remediation expense in the United
States. Global Surfactant sales volume was down 1% versus the
prior year.
- Polymer operating income was $16.5
million versus $18.1 million
in the prior year. The decrease was mostly attributable to a
scheduled maintenance shutdown of the Company's Phthalic Anhydride
operations and higher manufacturing costs associated with the
Company's new production facility in China. Global Polymer
volume was up 6% versus the prior year.
- Specialty Product operating income was $4.2 million, up $3.3
million versus the prior year, primarily due to sustained
improvements within Lipid Nutrition.
- The Company closed on its previously announced acquisition of
Tebras/PBC in Brazil.
Full Year Highlights
- Reported net income was a record $86.2
million, or $3.73 per diluted
share, a 13% increase versus $76.0
million, or $3.32 per diluted
share, in the prior year. Adjusted net income was a record
$98.2 million, or $4.25 per diluted share, a 24% increase versus
$79.4 million, or $3.46 per diluted share, in the prior year.*
- Surfactant operating income was $99.8
million, a 4% decrease versus prior year. The Polymer
segment delivered its seventh consecutive year of record operating
income with $96.8 million, a 20%
increase versus prior year. Specialty Product operating
income was $10.7 million versus
$4.4 million in the prior year.
- Total company sales volume increased 6%. Surfactant, Polymer
and Specialty Product sales volume increased 5%, 12% and 8%,
respectively.
- The effect of foreign currency translation negatively impacted
net income by $2.7 million, or
$0.12 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 reconciliations of non-GAAP adjusted net
income and adjusted earnings per share.
|
"2016 was a very good year as the Company delivered record
reported and adjusted net income," said F.
Quinn Stepan, Jr., President and Chief Executive Officer.
"Strong global Polymer volumes, increased asset utilization and
enhanced internal efficiencies continued to deliver
results.
For the full year, the Surfactant segment delivered
$99.8 million of operating income
while overcoming certain non-recurring items. Operating income
improved in the US, Asia and
Latin America.
Polymers delivered its seventh consecutive year of record
operating income, primarily due to higher volumes in Rigid Polyols
which benefited from new customers and global energy conservation
efforts.
Specialty Product results were up significantly for the year
as the segment benefited from structural actions taken in
2015.
Our internal efficiency program, called DRIVE, delivered
$15.0 million of pre-tax
benefit."
Financial
Summary
|
|
|
Three Months Ended
December
31
|
|
|
Twelve Months Ended
December
31
|
|
($ in thousands,
except per share data)
|
2016
|
|
|
2015
|
|
|
%
Change
|
|
|
2016
|
|
|
2015
|
|
|
%
Change
|
|
Net Sales
|
$
|
420,636
|
|
|
$
|
419,291
|
|
|
|
0
|
%
|
|
$
|
1,766,166
|
|
|
$
|
1,776,167
|
|
|
|
(1)%
|
|
Operating
Income
|
$
|
9,932
|
|
|
$
|
20,223
|
|
|
|
(51)%
|
|
|
$
|
126,193
|
|
|
$
|
122,790
|
|
|
|
3
|
%
|
Net Income
|
$
|
8,417
|
|
|
$
|
12,872
|
|
|
|
(35)%
|
|
|
$
|
86,191
|
|
|
$
|
75,968
|
|
|
|
13
|
%
|
Earnings per Diluted
Share
|
$
|
0.36
|
|
|
$
|
0.56
|
|
|
|
(36)%
|
|
|
$
|
3.73
|
|
|
$
|
3.32
|
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income
*
|
$
|
12,294
|
|
|
$
|
17,007
|
|
|
|
(28)%
|
|
|
$
|
98,187
|
|
|
$
|
79,449
|
|
|
|
24
|
%
|
Adjusted Earnings per
Diluted Share *
|
$
|
0.52
|
|
|
$
|
0.74
|
|
|
|
(30)%
|
|
|
$
|
4.25
|
|
|
$
|
3.46
|
|
|
|
23
|
%
|
* See Table II for
a reconciliation of non-GAAP Adjusted Net Income and Adjusted
Earnings per Diluted Share.
|
|
Summary of Fourth Quarter Adjusted Net Income Items
Adjusted net income excludes non-operational deferred
compensation income/expense and other significant and infrequent or
non-recurring items.
- Deferred Compensation: Both the current and prior
year quarters include $2.7 million of
after-tax expense.
- Business Restructuring and Asset Impairments: The
current year quarter includes $4.0
million of after-tax expense attributable to $1.3 million of severance and final
decommissioning costs related to the Canadian plant shutdown, a
$1.3 million asset write-down at the
Bahia, Brazil site, and a
$1.4 million asset write-down related
to our investment in Louisiana due
to our decision to make nonionic surfactants at the site in
Pasedena, Texas that we acquired
from Sun Products Corporation.
- Contract Termination Settlement: The current year
quarter includes $2.8 million of
after-tax income generated on a negotiated customer contract
termination fee related to the Bahia, Brazil site.
Percentage Change in Net Sales
Quarterly net sales were flat versus prior year. Slightly
higher sales volume and selling prices were offset by the negative
impact of foreign currency translation resulting from the stronger
U.S. dollar. Sales volumes were up 1% mostly due to strong
global polyol growth. Selling prices were up slightly due to the
pass-through of higher raw material costs within the Surfactant
segment.
|
|
Three Months Ended
December
31, 2016
|
|
|
Twelve Months Ended
December
31, 2016
|
|
Volume
|
|
|
1
|
%
|
|
|
6
|
%
|
Selling
Price
|
|
|
1
|
%
|
|
|
(5)
|
%
|
Foreign
Translation
|
|
|
(2)
|
%
|
|
|
(2)
|
%
|
Total
|
|
|
(—)
|
%
|
|
|
(1)
|
%
|
Segment
Results
|
|
|
|
Three Months Ended
December
31
|
|
|
Twelve Months Ended
December
31
|
|
($ in
thousands)
|
|
2016
|
|
|
2015
|
|
|
%
Change
|
|
|
2016
|
|
|
2015
|
|
|
%
Change
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Surfactants
|
|
$
|
282,549
|
|
|
$
|
284,725
|
|
|
|
(1)
|
%
|
|
$
|
1,181,563
|
|
|
$
|
1,205,849
|
|
|
|
(2)
|
%
|
Polymers
|
|
$
|
116,286
|
|
|
|
113,785
|
|
|
|
2
|
%
|
|
$
|
498,826
|
|
|
|
491,488
|
|
|
|
1
|
%
|
Specialty
Products
|
|
$
|
21,801
|
|
|
|
20,781
|
|
|
|
5
|
%
|
|
$
|
85,777
|
|
|
|
78,830
|
|
|
|
9
|
%
|
Total Net
Sales
|
|
$
|
420,636
|
|
|
$
|
419,291
|
|
|
|
0
|
%
|
|
$
|
1,766,166
|
|
|
$
|
1,776,167
|
|
|
|
(1)
|
%
|
|
|
Three Months Ended
December
31
|
|
|
Twelve Months Ended
December
31
|
|
($ in thousands,
all amounts pre-tax)
|
|
2016
|
|
|
2015
|
|
|
%
Change
|
|
|
2016
|
|
|
2015
|
|
|
%
Change
|
|
Operating
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Surfactants
|
|
$
|
14,582
|
|
|
$
|
24,322
|
|
|
|
(40)
|
%
|
|
$
|
99,796
|
|
|
$
|
104,080
|
|
|
|
(4)
|
%
|
Polymers
|
|
$
|
16,510
|
|
|
$
|
18,140
|
|
|
|
(9)
|
%
|
|
$
|
96,788
|
|
|
$
|
80,942
|
|
|
|
20
|
%
|
Specialty
Products
|
|
$
|
4,249
|
|
|
$
|
899
|
|
|
|
373
|
%
|
|
$
|
10,698
|
|
|
$
|
4,397
|
|
|
|
143
|
%
|
Total segment operating income decreased $8.0 million versus the prior year quarter. Total
segment operating income increased $17.9
million for the full year.
- Surfactant net sales were $282.5
million for the quarter, a 1% decrease versus prior
year. The translation impact of a stronger U.S. dollar
decreased sales by 2%. Sales volume was down 1% versus the
prior year due to lower North American consumer product volume,
partially offset by higher volume in Latin America, Asia and Europe. Slightly higher selling prices
favorably impacted net sales by 2%. Surfactant operating income
decreased $9.7 million versus the
prior year. This decrease was mostly attributable to
non-recurring costs reported within the results, including European
product claim commitments and environmental remediation expense in
the United States. Results were
also negatively impacted by accelerated depreciation related to the
Canadian plant closure, partially offset by a contract termination
settlement in Brazil.
- Polymer net sales were $116.3
million for the quarter, a 2% increase versus prior
year. Sales volume increased 6% in the quarter primarily due
to continued growth in polyols used in rigid foam insulation and
insulated metal panels. Slightly lower selling prices unfavorably
impacted net sales by 2%. The translation impact of a
stronger U.S. dollar unfavorably impacted net sales by 2%.
Polymer operating income decreased $1.6
million versus the prior year. This decrease was
primarily attributable to a scheduled maintenance shutdown of the
Company's Phthalic Anhydride operations and higher manufacturing
costs associated with the Company's new production facility in
China. The decrease was partially offset by higher global
Rigid Polyol demand from increased insulation standards and growth
in construction.
- Specialty Products net sales were $21.8
million, $1.0 million higher
than prior year. Operating income increased $3.4 million versus the prior year. This
increase was primarily within our Lipid Nutrition business due to
higher volumes, improved margins and lower costs due to structural
actions taken in 2015.
Corporate
Expenses
|
|
|
|
Three Months Ended
December
31
|
|
|
Twelve Months Ended
December
31
|
|
($ in
thousands)
|
|
2016
|
|
|
2015
|
|
|
%
Change
|
|
|
2016
|
|
|
2015
|
|
|
%
Change
|
|
Total -
Corporate Expenses
|
|
$
|
25,409
|
|
|
$
|
23,138
|
|
|
|
10
|
%
|
|
$
|
81,089
|
|
|
$
|
66,629
|
|
|
|
22
|
%
|
Deferred Compensation
Expense/(Income) *
|
|
$
|
4,210
|
|
|
$
|
5,272
|
|
|
|
(20)
|
%
|
|
$
|
16,805
|
|
|
$
|
6,500
|
|
|
|
159
|
%
|
Restructuring and
Asset Impairment Expense
|
|
$
|
6,003
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
7,064
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Adjusted Corporate
Expense
|
|
$
|
15,196
|
|
|
$
|
17,866
|
|
|
|
(15)
|
%
|
|
$
|
57,220
|
|
|
$
|
60,129
|
|
|
|
(5)
|
%
|
* See Table III
for a discussion of deferred compensation plan
accounting.
|
- Corporate expenses, excluding deferred compensation, decreased
$2.7 million, or 15%, 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.
Income Taxes
During the fourth quarter of 2016, the Company benefited from a
more favorable geographical mix of income versus the prior year,
resulting in a lower quarterly tax provision. The 2016 full
year effective tax rate was 24% compared to 26% in the prior
year. The full year decrease was mostly attributable to a
more favorable mix of income and a tax benefit derived from the
early adoption of ASU 2016-09/Stock Compensation.
Selected Balance Sheet Information
The Company's net debt level decreased $27.8 million for the quarter while the net debt
ratio dropped from 16% to 13%. The decrease in net debt was
attributable to an $18.7 million
increase in cash combined with a $9.1
million decline in total debt. The cash increase in
the fourth quarter was primarily attributable to improved working
capital components.
($ in
millions)
|
12/31/16
|
|
|
9/30/16
|
|
|
6/30/16
|
|
|
3/31/16
|
|
|
12/31/15
|
|
Net Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Debt
|
$
|
317.0
|
|
|
$
|
326.1
|
|
|
$
|
321.4
|
|
|
$
|
327.9
|
|
|
$
|
331.4
|
|
Cash
|
|
225.7
|
|
|
|
207.0
|
|
|
|
190.4
|
|
|
|
145.7
|
|
|
|
176.1
|
|
Net Debt
|
$
|
91.3
|
|
|
$
|
119.1
|
|
|
$
|
131.0
|
|
|
$
|
182.2
|
|
|
$
|
155.3
|
|
Equity
|
|
634.6
|
|
|
|
638.4
|
|
|
|
618.9
|
|
|
|
594.8
|
|
|
|
557.0
|
|
Net Debt +
Equity
|
$
|
725.9
|
|
|
$
|
757.5
|
|
|
$
|
749.9
|
|
|
$
|
777.0
|
|
|
$
|
712.3
|
|
Net Debt / (Net Debt
+ Equity)
|
|
13
|
%
|
|
|
16
|
%
|
|
|
17
|
%
|
|
|
23
|
%
|
|
|
22
|
%
|
The major working capital components were:
($ in
millions)
|
12/31/2016
|
|
|
9/30/16
|
|
|
6/30/16
|
|
|
3/31/16
|
|
|
12/31/15
|
|
Net
Receivables
|
$
|
263.4
|
|
|
$
|
281.1
|
|
|
$
|
285.1
|
|
|
$
|
291.6
|
|
|
$
|
249.6
|
|
Inventories
|
|
173.7
|
|
|
|
184.0
|
|
|
|
180.7
|
|
|
|
177.8
|
|
|
|
170.4
|
|
Accounts
Payable
|
|
(158.3)
|
|
|
|
(129.1)
|
|
|
|
(144.2)
|
|
|
|
(130.0)
|
|
|
|
(128.6)
|
|
|
$
|
278.8
|
|
|
$
|
336.0
|
|
|
$
|
321.6
|
|
|
$
|
339.4
|
|
|
$
|
291.4
|
|
The Company had full year capital expenditures of $103 million in 2016 versus $119 million in the prior year.
Outlook
"After record results in 2016, we are positioned for further
growth in 2017," said F. Quinn Stepan,
Jr., Chairman, President and Chief Executive Officer.
"Although we had several events that negatively impacted the fourth
quarter of 2016, our base business remains strong. Benefits from
our product and end market diversification efforts, continued
growth in core polymer markets, and enhanced internal efficiencies
should positively impact 2017."
Conference Call
Stepan Company will host a conference call to discuss its fourth
quarter and full year 2016 results at 10:00
a.m. ET (9:00 a.m. CT) on
February 22, 2017. The call can be
accessed by phone and webcast. Telephone access will be
available by dialing +1 (888) 224-8023, 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, and 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
Certain information in this presentation 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 (the Exchange Act).
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, the 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," "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 8-K and Form 10-Q reports and
exhibits to those reports, and include (but are not limited to)
risks and uncertainties related to disruptions in production or
accidents at manufacturing facilities, global competition,
volatility of raw material and energy costs, disruptions in
transportation or significant changes in transportation costs,
reduced demand due to customer product reformulations or new
technologies, the probability of future acquisitions and the
uncertainties related to the integration of acquired businesses,
maintaining and protecting intellectual property rights,
international business risks, including currency exchange rate
fluctuations, legal restrictions and taxes, our ability to estimate
and maintain appropriate levels of recorded liabilities, our debt
covenants, our ability to access capital markets, downturns in
certain industries and general economic downturns, global
political, military, security or other instability, costs related
to expansion or other capital projects, interruption or breaches of
information technology systems, the costs and other effects of
governmental regulation and legal and administrative proceedings
and our ability to retain executive management and key
personnel.
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, 2016 and 2015
(Unaudited –
in thousands, except per share data)
|
|
|
|
Three Months Ended
December
31
|
|
|
Twelve Months Ended
December
31
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Net
Sales
|
|
$
|
420,636
|
|
|
$
|
419,291
|
|
|
$
|
1,766,166
|
|
|
$
|
1,776,167
|
|
Cost of
Sales
|
|
|
351,916
|
|
|
|
344,602
|
|
|
|
1,427,621
|
|
|
|
1,467,926
|
|
Gross
Profit
|
|
|
68,720
|
|
|
|
74,689
|
|
|
|
338,545
|
|
|
|
308,241
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
|
|
|
14,960
|
|
|
|
14,235
|
|
|
|
57,212
|
|
|
|
55,522
|
|
Administrative
*
|
|
|
19,835
|
|
|
|
21,728
|
|
|
|
75,185
|
|
|
|
76,048
|
|
Research, Development
and Technical Services
|
|
|
13,780
|
|
|
|
13,231
|
|
|
|
56,086
|
|
|
|
50,243
|
|
Deferred Compensation
(Income) Expense *
|
|
|
4,210
|
|
|
|
5,272
|
|
|
|
16,805
|
|
|
|
6,500
|
|
|
|
|
52,785
|
|
|
|
54,466
|
|
|
|
205,288
|
|
|
|
188,313
|
|
Other Operating
Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on Sale of
Product Line
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,862
|
|
Business
Restructuring
|
|
|
(6,003)
|
|
|
|
-
|
|
|
|
(7,064)
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
|
9,932
|
|
|
|
20,223
|
|
|
|
126,193
|
|
|
|
122,790
|
|
Other Income
(Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest,
Net
|
|
|
(3,350)
|
|
|
|
(3,773)
|
|
|
|
(13,205)
|
|
|
|
(14,533)
|
|
Loss from Equity in
Joint Venture
|
|
|
-
|
|
|
|
(3,067)
|
|
|
|
-
|
|
|
|
(6,985)
|
|
Other, Net
|
|
|
427
|
|
|
|
1,678
|
|
|
|
828
|
|
|
|
1,584
|
|
|
|
|
(2,923)
|
|
|
|
(5,162)
|
|
|
|
(12,377)
|
|
|
|
(19,934)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before
Income Taxes
|
|
|
7,009
|
|
|
|
15,061
|
|
|
|
113,816
|
|
|
|
102,856
|
|
Provision for
Income Taxes
|
|
|
(1,402)
|
|
|
|
2,185
|
|
|
|
27,618
|
|
|
|
26,819
|
|
Net
Income
|
|
|
8,411
|
|
|
|
12,876
|
|
|
|
86,198
|
|
|
|
76,037
|
|
Net Income
Attributable to Noncontrolling Interests
|
|
|
6
|
|
|
|
(4)
|
|
|
|
(7)
|
|
|
|
(69)
|
|
Net Income
Attributable to Stepan Company
|
|
$
|
8,417
|
|
|
$
|
12,872
|
|
|
$
|
86,191
|
|
|
$
|
75,968
|
|
Net Income Per
Common Share Attributable to Stepan Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.37
|
|
|
$
|
0.57
|
|
|
$
|
3.78
|
|
|
$
|
3.34
|
|
Diluted
|
|
$
|
0.36
|
|
|
$
|
0.56
|
|
|
$
|
3.73
|
|
|
$
|
3.32
|
|
Shares Used to
Compute Net Income Per Common
Share Attributable
to Stepan Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
22,860
|
|
|
|
22,726
|
|
|
|
22,793
|
|
|
|
22,730
|
|
Diluted
|
|
|
23,335
|
|
|
|
22,879
|
|
|
|
23,094
|
|
|
|
22,858
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
2016
|
|
|
EPS
|
|
|
2015
|
|
|
EPS
|
|
|
2016
|
|
|
EPS
|
|
|
2015
|
|
|
EPS
|
|
Net Income
Reported
|
|
$
|
8,417
|
|
|
$
|
0.36
|
|
|
$
|
12,872
|
|
|
$
|
0.56
|
|
|
$
|
86,191
|
|
|
$
|
3.73
|
|
|
$
|
75,968
|
|
|
$
|
3.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation
(Income) Expense
|
|
$
|
2,654
|
|
|
$
|
0.11
|
|
|
|
2,675
|
|
|
$
|
0.12
|
|
|
$
|
9,977
|
|
|
$
|
0.43
|
|
|
|
3,453
|
|
|
$
|
0.15
|
|
Business
Restructuring
|
|
|
4,028
|
|
|
$
|
0.17
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
4,824
|
|
|
$
|
0.21
|
|
|
|
—
|
|
|
|
—
|
|
Contract Termination
Settlement
|
|
|
(2,805)
|
|
|
$
|
(0.12)
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
(2,805)
|
|
|
$
|
(0.12)
|
|
|
|
—
|
|
|
|
—
|
|
Environmental
Remediation Expense
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
341
|
|
|
$
|
0.01
|
|
Gain on Divestiture
of Product Line
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,774)
|
|
|
$
|
(0.08)
|
|
TIORCO JV
Dissolution
|
|
|
—
|
|
|
|
—
|
|
|
$
|
1,461
|
|
|
$
|
0.06
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
1,461
|
|
|
$
|
0.06
|
|
Adjusted Net
Income
|
|
$
|
12,294
|
|
|
$
|
0.52
|
|
|
$
|
17,007
|
|
|
$
|
0.74
|
|
|
$
|
98,187
|
|
|
$
|
4.25
|
|
|
$
|
79,449
|
|
|
$
|
3.46
|
|
*
|
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 nonoperational 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
December
31
|
|
|
Twelve
Months Ended
December
31
|
|
($ in
thousands, except per share amounts)
|
|
2016
|
|
|
EPS
|
|
|
2015
|
|
|
EPS
|
|
|
2016
|
|
|
EPS
|
|
|
2015
|
|
|
EPS
|
|
Pre-Tax
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation
(Income) Expense
|
|
$
|
4,281
|
|
|
|
|
|
|
$
|
4,314
|
|
|
|
|
|
|
$
|
16,092
|
|
|
|
|
|
|
$
|
5,569
|
|
|
|
|
|
Business
Restructuring
|
|
|
6,003
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
$
|
7,064
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
Contract Termination
Settlement
|
|
|
(4,250)
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
$
|
(4,250)
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
Environmental
Remediation Expense
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
$
|
550
|
|
|
|
|
|
Gain on Divestiture
of Product Line
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
$
|
(2,862)
|
|
|
|
|
|
TIORCO JV
Dissolution
|
|
|
—
|
|
|
|
|
|
|
|
2,356
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
$
|
2,356
|
|
|
|
|
|
Total
Pre-Tax Adjustments
|
|
$
|
6,034
|
|
|
|
|
|
|
$
|
6,670
|
|
|
|
|
|
|
$
|
18,906
|
|
|
|
|
|
|
$
|
5,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative Tax Effect
on Adjustments
|
|
$
|
(2,157)
|
|
|
|
|
|
|
$
|
(2,534)
|
|
|
|
|
|
|
$
|
(6,910)
|
|
|
|
|
|
|
$
|
(2,132)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After-Tax
Adjustments
|
|
$
|
3,877
|
|
|
$
|
0.16
|
|
|
$
|
4,136
|
|
|
$
|
0.18
|
|
|
$
|
11,996
|
|
|
$
|
4.25
|
|
|
$
|
3,481
|
|
|
$
|
3.46
|
|
Table
III
|
Deferred
Compensation Plan
|
|
The full effect of
the deferred compensation plan on quarterly pretax income was $4.3
million of expense in both the current year and prior year
quarters. The year to date pretax impact was $16.1 million of
expense versus $5.6 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
|
|
$
|
81.48
|
|
|
$
|
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
December
31
|
|
|
Twelve
Months Ended
December
31
|
|
($ in
thousands)
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Deferred
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Expense)
|
|
$
|
(4,210)
|
|
|
$
|
(5,272)
|
|
|
$
|
(16,805)
|
|
|
$
|
(6,500)
|
|
Other, net – Mutual
Fund Gain (Loss)
|
|
|
(71)
|
|
|
|
958
|
|
|
|
713
|
|
|
|
931
|
|
Total
Pretax
|
|
$
|
(4,281)
|
|
|
$
|
(4,314)
|
|
|
$
|
(16,092)
|
|
|
$
|
(5,569)
|
|
Total After
Tax
|
|
$
|
(2,654)
|
|
|
$
|
(2,675)
|
|
|
$
|
(9,977)
|
|
|
$
|
(3,453)
|
|
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 twelve month periods ending December 31, 2016 as compared to
2015:
|
|
($ in
millions)
|
|
Three Months Ended
December
31
|
|
|
Increase
(Decrease)
|
|
|
(Decrease)
Due to Foreign
Currency
Translation
|
|
|
Twelve
Months Ended
December
31
|
|
|
Increase
(Decrease)
|
|
|
(Decrease)
Due to Foreign
Currency
Translation
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
$
|
420.6
|
|
|
$
|
419.3
|
|
|
$
|
1.3
|
|
|
$
|
(8.1)
|
|
|
$
|
1,766.2
|
|
|
$
|
1,776.2
|
|
|
$
|
(10.0)
|
|
|
$
|
(42.9)
|
|
Gross
Profit
|
|
|
68.7
|
|
|
|
74.7
|
|
|
|
(6.0)
|
|
|
|
(0.4)
|
|
|
|
338.5
|
|
|
|
308.2
|
|
|
|
30.3
|
|
|
|
(5.9)
|
|
Operating
Income
|
|
|
9.9
|
|
|
|
20.2
|
|
|
|
(10.3)
|
|
|
|
(0.3)
|
|
|
|
126.2
|
|
|
|
122.8
|
|
|
|
3.4
|
|
|
|
(3.7)
|
|
Pretax
Income
|
|
|
7.0
|
|
|
|
15.1
|
|
|
|
(8.1)
|
|
|
|
(0.3)
|
|
|
|
113.8
|
|
|
|
102.9
|
|
|
|
11.0
|
|
|
|
(3.6)
|
|
Table
V
|
Stepan
Company
Consolidated
Balance Sheets
December 31, 2016
and December 31, 2015
|
|
|
|
2016
December
31
|
|
|
2015
December
31
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
$
|
685,541
|
|
|
$
|
619,573
|
|
Property, Plant &
Equipment, Net
|
|
|
582,714
|
|
|
|
555,463
|
|
Other
Assets
|
|
|
85,635
|
|
|
|
63,356
|
|
Total
Assets
|
|
$
|
1,353,890
|
|
|
$
|
1,238,392
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
$
|
297,265
|
|
|
$
|
243,244
|
|
Deferred Income
Taxes
|
|
|
12,497
|
|
|
|
9,455
|
|
Long-term
Debt
|
|
|
288,859
|
|
|
|
312,548
|
|
Other Non-current
Liabilities
|
|
|
119,353
|
|
|
|
114,761
|
|
Total Stepan Company
Stockholders' Equity
|
|
|
634,604
|
|
|
|
556,984
|
|
Noncontrolling
Interest
|
|
|
1,312
|
|
|
|
1,400
|
|
Total Liabilities and
Stockholders' Equity
|
|
$
|
1,353,890
|
|
|
$
|
1,238,392
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/stepan-reports-fourth-quarter-and-record-full-year-2016-results-300411288.html
SOURCE Stepan Company