NORTHFIELD, Ill., July 28, 2021 /PRNewswire/ -- Stepan Company
(NYSE: SCL) today reported:
Second Quarter Highlights
- Reported net income was a record $43.3
million, or $1.85 per diluted
share, versus $35.7 million, or
$1.54 per diluted share, in the prior
year. Adjusted net income* was a second quarter record
$42.2 million, or $1.81 per diluted share, versus $38.3 million, or $1.65 per diluted share, in the prior year.
Total Company sales volume increased 5% versus the prior year.
- Surfactant operating income was $45.9
million versus $48.5 million
in the prior year. This decrease was largely attributable to higher
North American supply chain costs due to inflationary pressures and
higher planned maintenance costs. Global Surfactant sales
volume decreased 6% but the associated impact was more than offset
by improved margins, product and customer mix. Consumer
product sales volume was negatively impacted by feedstock supply
issues following the first quarter 2021 severe weather in
Texas, customer inventory
rebalancing efforts and lower demand for cleaning products versus
the pandemic peak in 2020. Higher demand for products sold
into our institutional cleaning and functional product end markets
partially offset the above.
- Polymer operating income was $23.0
million versus $15.5 million
in the prior year. This increase was primarily attributable
to a 44% increase in global Polymer sales volume. Global
rigid polyol volume was up 41% versus the prior year largely due to
the INVISTA polyester polyol acquisition. Global rigid polyol
volume, excluding the INVISTA acquisition, was up 7% versus the
prior year. Higher demand within the phthalic anhydride and
specialty polyols businesses also contributed to the sales volume
growth.
- Specialty Product operating income was $7.0 million versus $3.2
million in the prior year. This increase was primarily
attributable to order timing differences within our food and flavor
business and improved margins within our medium chain triglycerides
(MCT) product line.
- The effect of foreign currency translation positively impacted
net sales by 4% and net income by $1.4
million, or $0.06 per diluted
share, versus the prior year.
First Half Highlights
- Reported net income was a record $83.9
million, or $3.59 per diluted
share, versus $63.3 million, or
$2.72 per diluted share, in the prior
year. Adjusted net income* was a record $84.6 million, or $3.62 per diluted share, versus $62.5 million, or $2.69 per diluted share, in the prior year.
The prior year first half results were negatively impacted by the
first quarter 2020 Millsdale, IL plant power outage. Total
Company sales volume was up 6% compared to the first six months of
2020. A 39% increase in global Polymer sales volume was
partially offset by a 3% decrease in global Surfactant sales
volume.
*
|
Adjusted net income
is a non-GAAP measure which excludes deferred compensation
income/expense, cash-settled stock appreciation rights (SARs)
income/expense, as well as other significant and
infrequent/non-recurring items. See Table II for reconciliations of
non-GAAP adjusted net income and earnings per diluted
share.
|
"The Company had a solid first half of 2021 and delivered
record year-to-date results. Both adjusted net income and
adjusted EPS were up 35% versus the first half of 2020 which was
negatively impact by the Millsdale plant outage," said F.
Quinn Stepan, Jr., Chairman and
Chief Executive Officer. "For the quarter, Surfactant
operating income was down 5% largely due to higher North American
supply chain costs driven by inflationary pressures and higher
planned maintenance. A 6% decline in global Surfactant sales
volume, mostly related to our consumer product business, was more
than offset by improved margins, product and customer mix.
Our Polymer operating income was up 48% on the strength of 44%
global sales volume growth. The Polymer growth was driven by
both the INVISTA acquisition and organic market growth. Our
Specialty Product business results were up due to higher volume and
improved margins."
Financial Summary
|
Three Months Ended
June
30
|
|
|
Six Months Ended
June
30
|
|
($ in thousands,
except per share data)
|
2021
|
|
|
2020
|
|
|
%
Change
|
|
|
2021
|
|
|
2020
|
|
|
%
Change
|
|
Net Sales
|
$
|
595,511
|
|
|
$
|
460,549
|
|
|
|
29
|
%
|
|
$
|
1,133,251
|
|
|
$
|
910,536
|
|
|
|
24
|
%
|
Operating
Income
|
$
|
56,657
|
|
|
$
|
44,623
|
|
|
|
27
|
%
|
|
$
|
110,571
|
|
|
$
|
84,627
|
|
|
|
31
|
%
|
Net Income
Attributable to Stepan **
|
$
|
43,278
|
|
|
$
|
35,707
|
|
|
|
21
|
%
|
|
$
|
83,889
|
|
|
$
|
63,252
|
|
|
|
33
|
%
|
Earnings per Diluted
Share
|
$
|
1.85
|
|
|
$
|
1.54
|
|
|
|
20
|
%
|
|
$
|
3.59
|
|
|
$
|
2.72
|
|
|
|
32
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income
*
|
$
|
42,218
|
|
|
$
|
38,315
|
|
|
|
10
|
%
|
|
$
|
84,589
|
|
|
$
|
62,473
|
|
|
|
35
|
%
|
Adjusted Earnings per
Diluted Share *
|
$
|
1.81
|
|
|
$
|
1.65
|
|
|
|
10
|
%
|
|
$
|
3.62
|
|
|
$
|
2.69
|
|
|
|
35
|
%
|
|
|
*
|
See Table II for
reconciliations of non-GAAP adjusted net income and earnings per
diluted share.
|
**
|
Net Income
Attributable to Stepan = Net Income – Net Income Attributable to
Noncontrolling Interests
|
Summary of Second Quarter Adjusted Net Income Items
Adjusted net income excludes non-operational deferred
compensation income/expense, cash-settled SARs income/expense and
other significant and infrequent or non-recurring items.
- Deferred Compensation: The current year second
quarter reported net income includes $1.1
million of after-tax income versus $1.9 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. The current year second quarter includes
$0.1 million of after-tax income
versus $0.5 million of after-tax
expense in the prior year.
- Business Restructuring: The current year second
quarter includes $0.1 million of
after-tax decommissioning expense related to the Company's Canadian
plant closure versus $0.2 million of
after-tax expense in the prior year.
Percentage Change in Net Sales
Net sales in the second quarter of 2021 increased 29%
year-over-year due to higher selling prices, mainly due to improved
product and customer mix and the pass-through of higher raw
material costs, a 5% increase in global sales volume and the
favorable impact of foreign currency translation. The
increase in sales volume was predominantly due to Polymer sales
growth of 44%.
|
|
Three Months Ended
June
30, 2021
|
|
|
Six Months Ended
June
30, 2021
|
|
Volume
|
|
|
5
|
%
|
|
|
6
|
%
|
Selling Price &
Mix
|
|
|
20
|
%
|
|
|
16
|
%
|
Foreign
Translation
|
|
|
4
|
%
|
|
|
2
|
%
|
Total
|
|
|
29
|
%
|
|
|
24
|
%
|
Segment
Results
|
|
|
|
Three Months Ended
June
30
|
|
|
Six Months Ended
June
30
|
|
($ in
thousands)
|
|
2021
|
|
|
2020
|
|
|
%
Change
|
|
|
2021
|
|
|
2020
|
|
|
%
Change
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Surfactants
|
|
$
|
384,002
|
|
|
$
|
332,335
|
|
|
|
16
|
%
|
|
$
|
754,938
|
|
|
$
|
659,406
|
|
|
|
14
|
%
|
Polymers
|
|
$
|
190,538
|
|
|
$
|
112,409
|
|
|
|
70
|
%
|
|
$
|
340,923
|
|
|
$
|
218,900
|
|
|
|
56
|
%
|
Specialty
Products
|
|
$
|
20,971
|
|
|
$
|
15,805
|
|
|
|
33
|
%
|
|
$
|
37,390
|
|
|
$
|
32,230
|
|
|
|
16
|
%
|
Total Net
Sales
|
|
$
|
595,511
|
|
|
$
|
460,549
|
|
|
|
29
|
%
|
|
$
|
1,133,251
|
|
|
$
|
910,536
|
|
|
|
24
|
%
|
|
|
|
|
Three Months Ended
June
30
|
|
|
Six Months Ended
June
30
|
|
($ in
thousands)
|
|
2021
|
|
|
2020
|
|
|
%
Change
|
|
|
2021
|
|
|
2020
|
|
|
%
Change
|
|
Operating
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Surfactants
|
|
$
|
45,896
|
|
|
$
|
48,503
|
|
|
|
(5)
|
%
|
|
$
|
99,106
|
|
|
$
|
84,659
|
|
|
|
17
|
%
|
Polymers
|
|
$
|
23,025
|
|
|
$
|
15,527
|
|
|
|
48
|
%
|
|
$
|
40,976
|
|
|
$
|
23,043
|
|
|
|
78
|
%
|
Specialty
Products
|
|
$
|
6,977
|
|
|
$
|
3,226
|
|
|
|
116
|
%
|
|
$
|
9,610
|
|
|
$
|
7,210
|
|
|
|
33
|
%
|
Total Segment Operating
Income
|
|
$
|
75,898
|
|
|
$
|
67,256
|
|
|
|
13
|
%
|
|
$
|
149,692
|
|
|
$
|
114,912
|
|
|
|
30
|
%
|
Corporate
Expenses
|
|
$
|
(19,241)
|
|
|
$
|
(22,633)
|
|
|
|
(15)
|
%
|
|
$
|
(39,121)
|
|
|
$
|
(30,285)
|
|
|
|
29
|
%
|
Consolidated Operating Income
|
|
$
|
56,657
|
|
|
$
|
44,623
|
|
|
|
27
|
%
|
|
$
|
110,571
|
|
|
$
|
84,627
|
|
|
|
31
|
%
|
Total segment operating income increased $8.6 million, or 13%, versus the prior year
quarter. Total segment operating income in the first half of
2021 increased $34.8 million, or 30%,
versus the prior year.
- Surfactant net sales were $384.0
million for the quarter, a 16% increase versus the prior
year. Selling prices were up 17% primarily due to improved
product and customer mix as well as the pass-through of higher raw
material costs. The effect of foreign currency translation
positively impacted net sales by 5%. Sales volume in the second
quarter of 2021 decreased 6% year-over-year. Most of this decrease
reflects lower sales volume into the North American consumer
product end markets as a result of feedstock supply issues,
customer inventory rebalancing efforts and lower demand for
consumer cleaning, disinfection and personal wash products versus
the pandemic peak in 2020. Higher demand for products sold into our
institutional cleaning and functional product end markets partially
offset the above. Surfactant operating income for the quarter
decreased $2.6 million, or 5%, versus
the prior year quarter primarily due higher North American supply
chain costs related to inflationary pressures and planned higher
maintenance costs. Improved margins, product and customer mix
partially offset the impact of the 6% decline in global sales
volume and higher supply chain costs. Latin American operating
results benefited from a $2.1 million
VAT tax recovery in the current year quarter.
- Polymer net sales were $190.5
million for the quarter, a 70% increase versus the prior
year. Sales volume increased 44% in the quarter primarily due
to 41% growth in rigid polyol demand. Global rigid polyol
volume, excluding the INVISTA acquisition, was up 7% versus the
prior year. Higher demand within the phthalic anhydride and
specialty polyols businesses also contributed to the sales volume
growth. Selling prices increased 21% and the translation
impact of a weaker U.S. dollar positively increased net sales by
5%. Polymer operating income increased $7.5 million, or 48%, primarily due to the strong
sales volume growth.
- Specialty Product net sales were $21.0
million for the quarter, up 33% versus the prior year.
Sales volume was up 17% between quarters and operating income
increased $3.8 million, or
116%. The operating income increase was primarily
attributable to order timing differences within our food and flavor
business and improved margins within our medium chain triglycerides
product line.
Corporate
Expenses
|
|
|
|
Three Months Ended
June
30
|
|
|
Six
Months Ended
June
30
|
|
($ in
thousands)
|
|
2021
|
|
|
2020
|
|
|
%
Change
|
|
|
2021
|
|
|
2020
|
|
|
%
Change
|
|
Total Corporate
Expenses
|
|
$
|
19,241
|
|
|
$
|
22,633
|
|
|
|
(15)
|
%
|
|
$
|
39,121
|
|
|
$
|
30,285
|
|
|
|
29
|
%
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
Compensation
|
|
$
|
(958)
|
|
|
$
|
(6,464)
|
|
|
|
(85)
|
%
|
|
$
|
(3,652)
|
|
|
$
|
859
|
|
|
NM
|
|
Business
Restructuring
|
|
$
|
(114)
|
|
|
$
|
(225)
|
|
|
|
(49)
|
%
|
|
$
|
(195)
|
|
|
$
|
(582)
|
|
|
|
(66)
|
%
|
Adjusted Corporate
Expense
|
|
$
|
18,169
|
|
|
$
|
15,944
|
|
|
|
14
|
%
|
|
$
|
35,274
|
|
|
$
|
30,562
|
|
|
|
15
|
%
|
|
* See Table III
for a discussion of deferred compensation plan
accounting.
|
- Corporate expenses, excluding deferred compensation and
business restructuring costs, increased $2.2
million, or 14%, versus the prior year quarter. The
quarterly increase was primarily due to the non-recurrence of a
sales and use tax refund received in the second quarter of 2020
combined with higher acquisition-related expenses, insurance
premiums and cloud application costs in
2021.
Income Taxes
The Company's effective tax rate was 24.4% for the first half of
2021 versus 23.9% for the first half of 2020. This
year-over-year increase was primarily attributable to a less
favorable geographical mix of income in the first half of 2021
versus 2020, partially offset by higher tax benefits derived from
stock-based compensation awards exercised or distributed in the
first half of 2021 versus 2020.
Shareholder Return
The Company paid $6.9 million of
dividends to shareholders and repurchased $9.9 million of Company stock in the second
quarter of 2021. During the first six months of 2021 the
Company paid $13.7 million of
dividends and repurchased $10.9
million of Company stock. The Company has 93,829
shares remaining under its Board of Directors' share repurchase
authorization. The Company has increased its dividend on the
Company's common stock for 53 consecutive years.
Selected Balance Sheet Information
The Company's net debt level increased $14.1 million versus the first quarter of 2021
while the net debt ratio increased from 9% to 10%. The
increase in net debt reflects a $23.6
million decrease in cash and a $9.5
million decrease in debt. The decrease in cash was
driven by scheduled debt repayments in June
2021 and higher working capital
requirements.
($ in
millions)
|
6/30/21
|
|
|
3/31/21
|
|
|
12/31/20
|
|
Net Debt
|
|
|
|
|
|
|
|
|
|
|
|
Total Debt
|
$
|
238.9
|
|
|
$
|
248.4
|
|
|
$
|
198.7
|
|
Cash
|
|
127.1
|
|
|
|
150.7
|
|
|
|
349.9
|
|
Net Debt
|
$
|
111.8
|
|
|
$
|
97.7
|
|
|
$
|
(151.2)
|
|
Equity
|
|
1,048.8
|
|
|
|
1,002.3
|
|
|
|
986.7
|
|
Net Debt +
Equity
|
$
|
1,160.6
|
|
|
$
|
1,100.0
|
|
|
$
|
835.5
|
|
Net Debt / (Net Debt
+ Equity)
|
|
10
|
%
|
|
|
9
|
%
|
|
|
-18
|
%
|
The major working capital components were:
($ in
millions)
|
6/30/21
|
|
|
3/31/21
|
|
|
12/31/20
|
|
Net
Receivables
|
$
|
391.7
|
|
|
$
|
380.6
|
|
|
$
|
301.3
|
|
Inventories
|
|
266.1
|
|
|
|
235.1
|
|
|
|
218.8
|
|
Accounts
Payable
|
|
(286.9)
|
|
|
|
(264.2)
|
|
|
|
(236.8)
|
|
Total
|
$
|
370.9
|
|
|
$
|
351.5
|
|
|
$
|
283.3
|
|
Capital spending was $37.3 million
during the quarter and $74.9 million
during the first half of 2021. This compares to $21.5 million and $54.7
million, respectively, in the prior year. For the full
year, capital expenditures are expected to be in the range of
$150 million to $170 million.
Outlook
"The Company delivered record earnings in the first half of
2021," said F. Quinn Stepan, Jr.,
Chairman and Chief Executive Officer. "Looking forward, we
believe our Surfactant volumes in the North American consumer
product end markets will be challenged versus peak pandemic levels
in 2020. While we believe institutional cleaning volume will
continue to grow versus prior year, we do not believe it will
compensate for lower consumer consumption of cleaning, disinfection
and personal wash products. We anticipate that demand for
surfactants within the agricultural and oilfield markets will
benefit from higher agricultural and commodity prices and improve
versus 2020. Global demand for rigid polyols continues to
recover from pandemic-related delays and cancellations of
re-roofing and new construction projects. This recovery,
combined with our first quarter 2021 acquisition of INVISTA's
aromatic polyester polyol business, should position our Polymer
business to deliver growth versus prior year. We believe the
long-term prospects for rigid polyols remain attractive as energy
conservation efforts and more stringent building codes are expected
to continue. We anticipate our Specialty Product business
results will improve slightly year-over-year. Despite
continued raw material price increases, supply chain inflationary
pressures and planned second half maintenance expenses, we remain
cautiously optimistic about the remainder of the year."
Conference Call
Stepan Company will host a conference call to discuss the second
quarter results at 10:00 a.m. ET
(9:00 a.m. CT) on July 28, 2021. The call can be accessed by phone
and webcast. Telephone access will be available by dialing +1
(800) 584-2088, and 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 Northfield,
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 Six Months Ended June 30, 2021
and 2020 (Unaudited – '000's Omitted)
|
|
|
|
Three Months Ended
June
30
|
|
|
Six Months Ended
June
30
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Net
Sales
|
|
$
|
595,511
|
|
|
$
|
460,549
|
|
|
$
|
1,133,251
|
|
|
$
|
910,536
|
|
Cost of
Sales
|
|
|
483,830
|
|
|
|
362,054
|
|
|
|
912,590
|
|
|
|
732,772
|
|
Gross
Profit
|
|
|
111,681
|
|
|
|
98,495
|
|
|
|
220,661
|
|
|
|
177,764
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
|
|
|
14,990
|
|
|
|
12,921
|
|
|
|
29,494
|
|
|
|
26,453
|
|
Administrative
|
|
|
23,974
|
|
|
|
20,731
|
|
|
|
46,612
|
|
|
|
39,603
|
|
Research, Development
and Technical Services
|
|
|
14,988
|
|
|
|
13,531
|
|
|
|
30,137
|
|
|
|
27,358
|
|
Deferred Compensation
(Income) Expense
|
|
|
958
|
|
|
|
6,464
|
|
|
|
3,652
|
|
|
|
(859)
|
|
|
|
|
54,910
|
|
|
|
53,647
|
|
|
|
109,895
|
|
|
|
92,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business
Restructuring
|
|
|
114
|
|
|
|
225
|
|
|
|
195
|
|
|
|
582
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
|
56,657
|
|
|
|
44,623
|
|
|
|
110,571
|
|
|
|
84,627
|
|
Other Income
(Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest,
Net
|
|
|
(1,567)
|
|
|
|
(1,259)
|
|
|
|
(3,091)
|
|
|
|
(2,489)
|
|
Other, Net
|
|
|
2,758
|
|
|
|
4,437
|
|
|
|
3,504
|
|
|
|
1,175
|
|
|
|
|
1,191
|
|
|
|
3,178
|
|
|
|
413
|
|
|
|
(1,314)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before
Income Taxes
|
|
|
57,848
|
|
|
|
47,801
|
|
|
|
110,984
|
|
|
|
83,313
|
|
Provision for
Income Taxes
|
|
|
14,545
|
|
|
|
11,958
|
|
|
|
27,070
|
|
|
|
19,931
|
|
Net
Income
|
|
|
43,303
|
|
|
|
35,843
|
|
|
|
83,914
|
|
|
|
63,382
|
|
Net Income
Attributable to Noncontrolling Interests
|
|
|
(25)
|
|
|
|
(136)
|
|
|
|
(25)
|
|
|
|
(130)
|
|
Net Income
Attributable to Stepan Company
|
|
$
|
43,278
|
|
|
$
|
35,707
|
|
|
$
|
83,889
|
|
|
$
|
63,252
|
|
Net Income Per
Common Share Attributable to Stepan Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.89
|
|
|
$
|
1.56
|
|
|
$
|
3.65
|
|
|
$
|
2.75
|
|
Diluted
|
|
$
|
1.85
|
|
|
$
|
1.54
|
|
|
$
|
3.59
|
|
|
$
|
2.72
|
|
Shares Used to
Compute Net Income Per Common
Share
Attributable to Stepan Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
22,952
|
|
|
|
22,923
|
|
|
|
22,963
|
|
|
|
22,973
|
|
Diluted
|
|
|
23,345
|
|
|
|
23,184
|
|
|
|
23,338
|
|
|
|
23,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table
II
|
Reconciliations of
Non-GAAP Net Income and Earnings per Diluted Share *
|
|
|
|
Three Months Ended
June
30
|
|
|
Six Months Ended
June
30
|
|
($ in
thousands, except per share amounts)
|
|
2021
|
|
|
EPS
|
|
|
2020
|
|
|
EPS
|
|
|
2021
|
|
|
EPS
|
|
|
2020
|
|
|
EPS
|
|
Net Income
Reported
|
|
$
|
43,278
|
|
|
$
|
1.85
|
|
|
$
|
35,707
|
|
|
$
|
1.54
|
|
|
$
|
83,889
|
|
|
$
|
3.59
|
|
|
$
|
63,252
|
|
|
$
|
2.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation
(Income) Expense
|
|
$
|
(1,050)
|
|
|
$
|
(0.04)
|
|
|
$
|
1,938
|
|
|
$
|
0.08
|
|
|
$
|
451
|
|
|
$
|
0.02
|
|
|
$
|
(920)
|
|
|
$
|
(0.04)
|
|
Business
Restructuring Expense
|
|
$
|
85
|
|
|
$
|
0.00
|
|
|
$
|
168
|
|
|
$
|
0.01
|
|
|
$
|
146
|
|
|
$
|
0.01
|
|
|
$
|
431
|
|
|
$
|
0.02
|
|
Cash-Settled SARs
(Income) Expense
|
|
$
|
(95)
|
|
|
$
|
(0.00)
|
|
|
$
|
502
|
|
|
$
|
0.02
|
|
|
$
|
103
|
|
|
$
|
0.00
|
|
|
$
|
(290)
|
|
|
$
|
(0.01)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income
|
|
$
|
42,218
|
|
|
$
|
1.81
|
|
|
$
|
38,315
|
|
|
$
|
1.65
|
|
|
$
|
84,589
|
|
|
$
|
3.62
|
|
|
$
|
62,473
|
|
|
$
|
2.69
|
|
|
|
*
|
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 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
June
30
|
|
|
Six Months Ended
June
30
|
|
($ in
thousands, except per share amounts)
|
|
2021
|
|
|
EPS
|
|
|
2020
|
|
|
EPS
|
|
|
2021
|
|
|
EPS
|
|
|
2020
|
|
|
EPS
|
|
Pre-Tax
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation
(Income) Expense
|
|
$
|
(1,381)
|
|
|
|
|
|
|
$
|
2,550
|
|
|
|
|
|
|
$
|
594
|
|
|
|
|
|
|
$
|
(1,210)
|
|
|
|
|
|
Business
Restructuring Expense
|
|
$
|
114
|
|
|
|
|
|
|
$
|
225
|
|
|
|
|
|
|
$
|
195
|
|
|
|
|
|
|
$
|
582
|
|
|
|
|
|
Cash-Settled SARs
(Income) Expense
|
|
$
|
(125)
|
|
|
|
|
|
|
$
|
661
|
|
|
|
|
|
|
$
|
136
|
|
|
|
|
|
|
$
|
(381)
|
|
|
|
|
|
Total
Pre-Tax Adjustments
|
|
$
|
(1,392)
|
|
|
|
|
|
|
$
|
3,436
|
|
|
|
|
|
|
$
|
925
|
|
|
|
|
|
|
$
|
(1,009)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative Tax Effect
on Adjustments
|
|
$
|
332
|
|
|
|
|
|
|
$
|
(828)
|
|
|
|
|
|
|
$
|
(225)
|
|
|
|
|
|
|
$
|
230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After-Tax
Adjustments
|
|
$
|
(1,060)
|
|
|
$
|
(0.04)
|
|
|
$
|
2,608
|
|
|
$
|
0.11
|
|
|
$
|
700
|
|
|
$
|
0.03
|
|
|
$
|
(779)
|
|
|
$
|
(0.03)
|
|
Table
III
|
Deferred
Compensation Plans
|
|
The full effect of
deferred compensation plans on quarterly pre-tax income was $1.4
million of income versus $2.6 million of expense in the prior year.
The year to date impact was $0.6 million of expense versus $1.2
million of income in the prior year. The accounting for
deferred compensation plans 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 Company common
stock were as follows:
|
|
|
|
2021
|
|
|
2020
|
|
|
|
12/31
|
|
9/30
|
|
6/30
|
|
|
3/31
|
|
|
12/31
|
|
|
9/30
|
|
|
6/30
|
|
|
3/31
|
|
Stepan
Company
|
|
N/A
|
|
N/A
|
|
$
|
120.27
|
|
|
$
|
127.11
|
|
|
$
|
119.32
|
|
|
$
|
109.00
|
|
|
$
|
97.10
|
|
|
$
|
88.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The deferred
compensation income statement impact is summarized
below:
|
|
|
|
Three Months Ended
June
30
|
|
|
Six Months Ended
June
30
|
|
($ in
thousands)
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Deferred
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Expense)
|
|
$
|
(958)
|
|
|
$
|
(6,464)
|
|
|
$
|
(3,652)
|
|
|
$
|
859
|
|
Other, net – Mutual
Fund Gain
|
|
|
2,339
|
|
|
|
3,914
|
|
|
|
3,058
|
|
|
|
351
|
|
Total
Pretax
|
|
$
|
1,381
|
|
|
$
|
(2,550)
|
|
|
$
|
(594)
|
|
|
$
|
1,210
|
|
Total After
Tax
|
|
$
|
1,050
|
|
|
$
|
(1,938)
|
|
|
$
|
(451)
|
|
|
$
|
920
|
|
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 six month periods ending June 30, 2021 as compared to
2020:
|
|
($ in
millions)
|
|
Three Months Ended
June
30
|
|
|
Increase
|
|
|
Increase
Due to Foreign
Currency
Translation
|
|
|
Six Months Ended
June
30
|
|
|
Increase
|
|
|
Increase
Due to Foreign
Currency
Translation
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
$
|
595.5
|
|
|
$
|
460.5
|
|
|
$
|
135.0
|
|
|
$
|
20.3
|
|
|
$
|
1,133.3
|
|
|
$
|
910.5
|
|
|
$
|
222.8
|
|
|
$
|
24.6
|
|
Gross
Profit
|
|
|
111.7
|
|
|
|
98.5
|
|
|
|
13.2
|
|
|
|
2.7
|
|
|
|
220.7
|
|
|
|
177.8
|
|
|
|
42.9
|
|
|
|
2.9
|
|
Operating
Income
|
|
|
56.7
|
|
|
|
44.6
|
|
|
|
12.1
|
|
|
|
1.7
|
|
|
|
110.6
|
|
|
|
84.6
|
|
|
|
26.0
|
|
|
|
1.6
|
|
Pretax
Income
|
|
|
57.8
|
|
|
|
47.8
|
|
|
|
10.0
|
|
|
|
1.9
|
|
|
|
111.0
|
|
|
|
83.3
|
|
|
|
27.7
|
|
|
|
2.0
|
|
Table
V
|
Stepan
Company Consolidated Balance Sheets June 30,
2021 and December 31, 2020
|
|
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
$
|
815,855
|
|
|
$
|
905,651
|
|
Property, Plant &
Equipment, Net
|
|
|
764,784
|
|
|
|
682,667
|
|
Other
Assets
|
|
|
306,666
|
|
|
|
164,018
|
|
Total
Assets
|
|
$
|
1,887,305
|
|
|
$
|
1,752,336
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
$
|
464,501
|
|
|
$
|
416,554
|
|
Deferred Income
Taxes
|
|
|
9,995
|
|
|
|
20,745
|
|
Long-term
Debt
|
|
|
196,529
|
|
|
|
160,812
|
|
Other Non-current
Liabilities
|
|
|
165,764
|
|
|
|
165,860
|
|
Total Stepan Company
Stockholders' Equity
|
|
|
1,048,801
|
|
|
|
986,693
|
|
Noncontrolling
Interest
|
|
|
1,715
|
|
|
|
1,672
|
|
Total Liabilities and
Stockholders' Equity
|
|
$
|
1,887,305
|
|
|
$
|
1,752,336
|
|
View original
content:https://www.prnewswire.com/news-releases/stepan-reports-record-second-quarter-results-and-record-first-half-earnings-301342926.html
SOURCE Stepan Company