NORTHBROOK, Ill., Oct. 20, 2021 /PRNewswire/ -- Stepan Company
(NYSE: SCL) today reported:
Third Quarter Highlights
- Reported net income was $36.9
million, or $1.59 per diluted
share versus $33.2 million, or
$1.43 per diluted share, in the prior
year. Adjusted net income* was $36.4
million, or $1.57 per diluted
share, versus $36.4 million, or
$1.56 per diluted share, in the prior
year. Total Company sales volume increased 1% versus the prior
year.
- Surfactant operating income was $34.5
million versus $41.2 million
in the prior year. This decrease was primarily due to supply chain
disruptions, lower sales volume and the non-recurrence of a
$2.2 million insurance recovery,
related to the 2020 Millsdale, IL plant power outage, recognized in
the third quarter of 2020. Global Surfactant sales volume decreased
6% and primarily reflects lower demand for cleaning products in the
consumer products business 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 $19.8
million versus $22.4 million
in the prior year. Global Polymer sales volume increased 27%.
Global rigid polyol volume was up 32% versus the prior year largely
due to the INVISTA polyester polyol acquisition. The operating
income decrease primarily reflects supply chain disruptions and the
non-recurrence of two third quarter 2020 events: (i) a $2.8 million insurance recovery related to the
2020 Millsdale, IL plant power outage and; (ii) a $1.2 million partial settlement received from the
China government as compensation
for the government-mandated China JV shutdown in 2012.
- The Company estimates that the supply chain disruptions
negatively impacted Surfactants and Polymers by $4.0 million and $3.0
million, respectively. Both segments have implemented
additional price increases in October to offset inflationary
pressures.
- Specialty Product operating income was $2.4 million versus $1.6
million in the prior year. This increase was primarily
attributable to order timing differences within our food and flavor
business and improved volume and margins within our medium chain
triglycerides (MCT) product line.
- The effect of foreign currency translation positively impacted
net sales by 1% and net income by $0.4
million, or $0.02 per diluted
share, versus the prior year.
- The Company increased its quarterly cash dividend in the fourth
quarter of 2021 by $0.03 per share,
or 10.9%, marking the 54th consecutive year that the
Company has increased its cash dividend to stockholders.
YTD Highlights
- Reported net income for the first nine months of 2021 was a
record $120.8 million, or
$5.19 per diluted share, versus
$96.4 million, or $4.15 per diluted share, in the prior year.
Adjusted net income* was a record $121.0
million, or $5.20 per diluted
share, versus $98.9 million, or
$4.25 per diluted share, in the prior
year. The prior year nine-month results were negatively
impacted by the first quarter 2020 Millsdale, IL plant power
outage. Total Company sales volume was up 4% compared to the
first nine months of 2020. A 34% increase in global Polymer
sales volume was partially offset by a 4% 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 nine months of 2021 and
delivered record year-to-date results. Both reported
net income and EPS were up 25% and both adjusted net income and
adjusted EPS were up 22% versus the first nine months of
2020. Adjusted third quarter 2021 results were flat
with the prior year as the negative impact of global supply chain
disruptions and inflationary pressures were offset by favorable
one-time tax benefits," said F. Quinn
Stepan, Jr., Chairman and Chief Executive Officer. "For the
quarter, Surfactant operating income was down 16% largely due to
North American supply chain disruptions, higher planned maintenance
costs and the non-recurrence of an insurance recovery recognized in
the third quarter of 2020. A 6% decline in global Surfactant
sales volume, mostly related to our consumer products business, was
offset by improved margins, product and customer mix. Our
Polymer operating income was down 12% mostly due to the
non-recurrence of an insurance recovery and compensation received
from the Chinese government in the third quarter of 2020.
Global Polymer sales volume was up 27% largely due to the INVISTA
acquisition. Our Specialty Product business results were up
due to higher volume and improved margins."
Financial Summary
|
Three Months Ended
September
30
|
|
|
Nine Months Ended
September 30
|
|
($ in thousands,
except per share data)
|
2021
|
|
|
2020
|
|
|
%
Change
|
|
|
2021
|
|
|
2020
|
|
|
%
Change
|
|
Net Sales
|
$
|
602,688
|
|
|
$
|
464,480
|
|
|
|
30
|
%
|
|
$
|
1,735,939
|
|
|
$
|
1,375,016
|
|
|
|
26
|
%
|
Operating
Income
|
$
|
40,213
|
|
|
$
|
42,395
|
|
|
|
(5)
|
%
|
|
$
|
150,784
|
|
|
$
|
127,022
|
|
|
|
19
|
%
|
Net Income
Attributable to Stepan
Company **
|
$
|
36,920
|
|
|
$
|
33,168
|
|
|
|
11
|
%
|
|
$
|
120,809
|
|
|
$
|
96,420
|
|
|
|
25
|
%
|
Earnings per Diluted
Share
|
$
|
1.59
|
|
|
$
|
1.43
|
|
|
|
11
|
%
|
|
$
|
5.19
|
|
|
$
|
4.15
|
|
|
|
25
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income
*
|
$
|
36,417
|
|
|
$
|
36,421
|
|
|
|
(0)
|
%
|
|
$
|
121,005
|
|
|
$
|
98,894
|
|
|
|
22
|
%
|
Adjusted Earnings per
Diluted Share *
|
$
|
1.57
|
|
|
$
|
1.56
|
|
|
|
1
|
%
|
|
$
|
5.20
|
|
|
$
|
4.25
|
|
|
|
22
|
%
|
Summary of Third 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 third quarter
reported net income includes $1.1
million of after-tax income versus $2.6 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 third quarter includes $0.1
million of after-tax income versus $0.5 million of after-tax expense in the prior
year.
- Environmental Remediation: The current year third
quarter reported net income includes $0.7
million of after-tax expense versus no expense recognition
in the prior year. The majority of the current year expense
reflects EPA environmental remediation oversight costs associated
with the Company's Maywood, New
Jersey site.
- Business Restructuring: The current year third quarter
includes $0.1 million of after-tax
decommissioning expense related to the Company's Canadian plant
closure versus $0.1 million of
after-tax expense in the prior year.
Percentage Change in Net Sales
Net sales in the third quarter of 2021 increased 30%
year-over-year primarily due to higher selling prices, mainly
attributable to improved product and customer mix and the
pass-through of higher raw material costs, slightly higher sales
volume and the favorable impact of foreign currency
translation.
|
|
Three Months Ended
September
30, 2021
|
|
|
Nine Months Ended
September
30, 2021
|
|
Volume
|
|
|
1
|
%
|
|
|
4
|
%
|
Selling Price &
Mix
|
|
|
28
|
%
|
|
|
20
|
%
|
Foreign
Translation
|
|
|
1
|
%
|
|
|
2
|
%
|
Total
|
|
|
30
|
%
|
|
|
26
|
%
|
Reported Segment Results
|
|
Three Months Ended
September
30
|
|
|
Nine Months Ended
September 30
|
|
($ in
thousands)
|
|
2021
|
|
2020
|
|
|
%
Change
|
|
|
2021
|
|
2020
|
|
|
%
Change
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Surfactants
|
|
$
|
387,734
|
|
|
$
|
333,839
|
|
|
|
16
|
%
|
|
$
|
1,142,672
|
|
|
$
|
993,245
|
|
|
|
15
|
%
|
Polymers
|
|
$
|
198,841
|
|
|
$
|
116,682
|
|
|
|
70
|
%
|
|
$
|
539,764
|
|
|
$
|
335,582
|
|
|
|
61
|
%
|
Specialty
Products
|
|
$
|
16,113
|
|
|
$
|
13,959
|
|
|
|
15
|
%
|
|
$
|
53,503
|
|
|
$
|
46,189
|
|
|
|
16
|
%
|
Total Net
Sales
|
|
$
|
602,688
|
|
|
$
|
464,480
|
|
|
|
30
|
%
|
|
$
|
1,735,939
|
|
|
$
|
1,375,016
|
|
|
|
26
|
%
|
|
|
|
|
|
|
Three Months Ended
September
30
|
|
|
Nine Months Ended
September 30
|
|
($ in thousands,
all amounts pre-tax)
|
|
2021
|
|
2020
|
|
|
%
Change
|
|
|
2021
|
|
2020
|
|
|
%
Change
|
|
Operating
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Surfactants
|
|
$
|
34,452
|
|
|
$
|
41,151
|
|
|
|
(16)
|
%
|
|
$
|
133,558
|
|
|
$
|
125,810
|
|
|
|
6
|
%
|
Polymers
|
|
$
|
19,753
|
|
|
$
|
22,387
|
|
|
|
(12)
|
%
|
|
$
|
60,729
|
|
|
$
|
45,430
|
|
|
|
34
|
%
|
Specialty
Products
|
|
$
|
2,442
|
|
|
$
|
1,593
|
|
|
|
53
|
%
|
|
$
|
12,052
|
|
|
$
|
8,803
|
|
|
|
37
|
%
|
Total Segment
Operating Income
|
|
$
|
56,647
|
|
|
$
|
65,131
|
|
|
|
(13)
|
%
|
|
$
|
206,339
|
|
|
$
|
180,043
|
|
|
|
15
|
%
|
Corporate
Expenses
|
|
$
|
(16,434)
|
|
|
$
|
(22,736)
|
|
|
|
28
|
%
|
|
$
|
(55,555)
|
|
|
$
|
(53,021)
|
|
|
|
(5)
|
%
|
Consolidated
Operating
Income
|
|
$
|
40,213
|
|
|
$
|
42,395
|
|
|
|
(5)
|
%
|
|
$
|
150,784
|
|
|
$
|
127,022
|
|
|
|
19
|
%
|
Total segment operating income for the third quarter of 2021
decreased $8.5 million, or 13%,
versus the prior year quarter. Total segment operating income for
the first nine months of 2021 increased $26.3 million, or 15%, versus the prior year.
- Surfactant net sales were $387.7
million for the quarter, a 16% increase versus the prior
year. Selling prices were up 20% 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 2%. Sales volume decreased 6%
quarter-over-quarter. Most of this decrease reflects lower sales
volume into the North American consumer product end markets due to
lower demand for consumer cleaning, disinfection and personal wash
products versus the pandemic peak. Higher demand for products sold
into the institutional cleaning and functional product end markets
partially offset the above. Surfactant operating income for the
quarter decreased $6.7 million, or
16%, versus the prior year quarter primarily due to inflationary
pressures, supply chain disruptions and higher planned maintenance
expenses. Also contributing to decline in operating income was the
non-recurrence of a $2.2 million
insurance recovery, related to the 2020 Millsdale, IL plant power
outage, recognized in the third quarter of 2020.
- Polymer net sales were $198.8
million for the quarter, a 70% increase versus the prior
year. Selling prices increased 44% primarily due to the pass
through of higher raw material costs. Sales volume increased 27% in
the quarter primarily due to 33% growth in rigid polyol demand that
was mostly attributable to the INVISTA acquisition. Higher demand
within the specialty polyols business also contributed to the sales
volume growth. The translation impact of a stronger U.S. dollar
negatively impacted net sales by 1%. Polymer operating income
decreased $2.6 million, or 12%,
primarily due to supply chain disruptions and the non-recurrence of
two third quarter 2020 events: (i) a $2.8
million insurance recovery related to the 2020 Millsdale, IL
plant power outage, and (ii) a $1.2
million partial settlement received from the China government as compensation for the
government-mandated China JV shutdown in 2012.
- Specialty Product net sales were $16.1
million for the quarter, a 15% increase versus the prior
year. Sales volume was up 9% between quarters and operating income
increased $0.8 million, or 53%. The
operating income increase was primarily attributable to order
timing differences with our food and flavor business and improved
volume and margins within our medium chain triglycerides (MCT)
product line.
Corporate Expenses
|
|
Three Months Ended
September
30
|
|
|
Nine Months Ended
September 30
|
|
($ in
thousands)
|
|
2021
|
|
|
2020
|
|
|
%
Change
|
|
|
2021
|
|
|
2020
|
|
|
%
Change
|
|
Total Corporate
Expenses
|
|
$
|
16,434
|
|
|
$
|
22,736
|
|
|
|
(28)
|
%
|
|
$
|
55,555
|
|
|
$
|
53,021
|
|
|
|
5
|
%
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
Compensation
Expense (Income)
|
|
$
|
(1,504)
|
|
|
$
|
5,613
|
|
|
NM
|
|
|
$
|
2,148
|
|
|
$
|
4,754
|
|
|
|
(55)
|
%
|
Business
Restructuring
|
|
$
|
72
|
|
|
$
|
126
|
|
|
|
(43)
|
%
|
|
$
|
267
|
|
|
$
|
708
|
|
|
|
(62)
|
%
|
Adjusted Corporate
Expenses
|
|
$
|
17,866
|
|
|
$
|
16,997
|
|
|
|
5
|
%
|
|
$
|
53,140
|
|
|
$
|
47,559
|
|
|
|
12
|
%
|
|
* See Table III
for a discussion of deferred compensation plan
accounting.
|
- Corporate expenses, excluding deferred compensation and
business restructuring expenses, increased $0.9 million, or 5% for the quarter. The
quarterly increase was primarily due to a $0.9 million pre-tax adjustment to the Company's
environmental remediation reserves and higher insurance premiums,
partially offset by lower incentive-based compensation
expense.
Income Taxes and Net Interest
The Company's effective tax rate was 19.6% for the first nine
months of 2021 versus 23.7% for the first nine months of
2020. This year-over-year decrease was primarily attributable
to: (i) a favorable tax benefit recognized in the third quarter of
2021 related to the merger of the Company's three Brazilian
entities into a single entity and (ii) more favorable research and
development tax credits in 2021 versus 2020.
Shareholder Return
The Company paid $6.8 million of
dividends to shareholders and repurchased $6.1 million of Company stock in the third
quarter of 2021. During the first nine months of 2021 the
Company paid $20.6 million of
dividends and repurchased $17.0
million of Company stock. As of September 30, 2021, the Company had 40,771 shares
remaining under its Board of Directors' share repurchase
authorization. On October 19,
2021, the Board of Directors authorized the Company to
repurchase up to $150.0 million of
its common stock and terminated the prior share repurchase
authorization. With the cash dividend increase in the fourth
quarter of 2021, the Company has increased its dividend on the
Company's common stock for the 54th consecutive
year.
Selected Balance Sheet Information
The Company's total debt increased by $40.9 million and cash decreased by $21.8 million versus the second quarter of
2021. The increase in debt primarily reflects the previously
disclosed $50.0 million private
placement senior notes. The decrease in cash was driven by
scheduled debt payments in July 2021,
higher working capital requirements and higher capital
expenditures. The Company's net debt level increased
$62.7 million versus the second
quarter of 2021 while the net debt ratio increased from 10% to
14%.
($ in
millions)
|
|
9/30/21
|
|
|
6/30/21
|
|
|
3/31/21
|
|
|
12/31/20
|
|
Net Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Debt
|
|
$
|
279.8
|
|
|
$
|
238.9
|
|
|
$
|
248.4
|
|
|
$
|
198.7
|
|
Cash
|
|
|
105.3
|
|
|
|
127.1
|
|
|
|
150.7
|
|
|
|
349.9
|
|
Net Debt
|
|
$
|
174.5
|
|
|
$
|
111.8
|
|
|
$
|
97.7
|
|
|
$
|
(151.2)
|
|
Equity
|
|
|
1,057.3
|
|
|
|
1,048.8
|
|
|
|
1,002.3
|
|
|
|
986.7
|
|
Net Debt +
Equity
|
|
$
|
1,231.8
|
|
|
$
|
1,160.6
|
|
|
$
|
1,100.0
|
|
|
$
|
835.5
|
|
Net Debt / (Net Debt
+ Equity)
|
|
|
14
|
%
|
|
|
10
|
%
|
|
|
9
|
%
|
|
|
-18
|
%
|
The major working capital components were:
($ in
millions)
|
|
9/30/21
|
|
|
6/30/21
|
|
|
3/31/21
|
|
|
12/31/20
|
|
Net
Receivables
|
|
$
|
413.6
|
|
|
$
|
391.7
|
|
|
$
|
380.6
|
|
|
$
|
301.3
|
|
Inventories
|
|
|
290.9
|
|
|
|
266.1
|
|
|
|
235.1
|
|
|
|
218.8
|
|
Accounts
Payable
|
|
|
(314.5)
|
|
|
|
(286.9)
|
|
|
|
(264.2)
|
|
|
|
(236.8)
|
|
|
|
$
|
390.0
|
|
|
$
|
370.9
|
|
|
$
|
351.5
|
|
|
$
|
283.3
|
|
Capital spending was $44.7 million
during the quarter and $119.5 million
during the first nine months of 2021. This compares to
$30.2 million and $84.9 million, respectively, in the prior
year. For the full year, capital expenditures are expected to
be in the range of $200 million to
$220 million. The increase in
projected full year capital spending is primarily attributable to
the new alkoxylation plant the Company intends to build at its
existing Pasadena, Texas site.
Outlook
"The Company delivered record nine-month earnings in 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 continue to be challenged by raw material and
transportation availability. While we believe industrial and
institutional cleaning volume will grow versus prior year, we do
not believe it will compensate for lower consumer consumption of
cleaning, disinfection and personal wash products. We believe
that demand for surfactants within the agricultural and oilfield
markets will exceed prior year demand. We believe our Polymer
business will deliver growth versus prior year due to the ongoing
recovery from pandemic-related delays and cancellations of
re-roofing and new construction projects and our first quarter 2021
acquisition of INVISTA's aromatic polyester polyol business.
We continue to 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 supply chain disruptions continuing
to impact the Company, we remain optimistic about delivering full
year earnings growth."
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 20, 2021. The call can be accessed by
phone and webcast. Telephone access will be available by
dialing +1 (877) 226-0954, 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 Northbrook,
Illinois, Stepan utilizes a network of modern production
facilities located in North and South
America, Europe and
Asia.
The Company's common stock is traded on the New York Stock
Exchange (NYSE) under the symbol SCL. For more information about
Stepan Company please visit the Company online
at www.stepan.com
More information about Stepan's sustainability program can be
found on the Sustainability page at www.stepan.com
Contact: Luis E. Rojo
847-446-7500
Certain information in this news release
consists of forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These statements
include statements about Stepan Company's plans, objectives,
strategies, financial performance and outlook, trends, the amount
and timing of future cash distributions, prospects or future events
and involve known and unknown risks that are difficult to predict.
As a result, Stepan Company's actual financial results,
performance, achievements or prospects may differ materially from
those expressed or implied by these forward-looking statements. In
some cases, you can identify forward-looking statements by the use
of words such as "may," "could," "expect," "intend," "plan,"
"seek," "anticipate," "believe," "estimate," "guidance," "predict,"
"potential," "continue," "likely," "will," "would," "should,"
"illustrative" and variations of these terms and similar
expressions, or the negative of these terms or similar expressions.
Such forward-looking statements are necessarily based upon
estimates and assumptions that, while considered reasonable by
Stepan Company and its management based on their knowledge and
understanding of the business and industry, are inherently
uncertain. These statements are not guarantees of future
performance, and stockholders should not place undue reliance on
forward-looking statements.
There are a number of risks, uncertainties and other
important factors, many of which are beyond Stepan Company's
control, that could cause actual results to differ materially from
the forward-looking statements contained in this news release. Such
risks, uncertainties and other important factors include, among
other factors, the risks, uncertainties and factors described in
Stepan Company's Form 10-K, Form 10-Q and Form 8-K reports and
exhibits to those reports, and include (but are not limited to)
risks and uncertainties related to the impact of the COVID-19
pandemic; accidents, unplanned production shutdowns or disruptions
in manufacturing facilities; reduced demand due to customer product
reformulations or new technologies; our inability to successfully
develop or introduce new products; compliance with laws; our
ability to identify suitable acquisition candidates and
successfully complete and integrate acquisitions; global
competition; volatility of raw material and energy costs and
supply; disruptions in transportation or significant changes in
transportation costs; downturns in certain industries and general
economic downturns; international business risks, including
currency exchange rate fluctuations, legal restrictions and taxes;
unfavorable resolution of litigation against us; maintaining and
protecting intellectual property rights; our ability to access
capital markets; global political, military, security or other
instability; costs related to expansion or other capital projects;
interruption or breaches of information technology systems; our
ability to retain executive management and key personnel; and our
debt covenants.
These forward-looking statements are made only as of the date
hereof, and Stepan Company undertakes no obligation to update or
revise these forward-looking statements, whether as a result of new
information, future events or otherwise.
Table
I
|
|
STEPAN
COMPANY
For the Three and
Nine Months Ended September 30, 2021 and 2020
(Unaudited – 000's
Omitted)
|
|
|
|
Three Months Ended
September
30
|
|
|
Nine Months Ended
September
30
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Net
Sales
|
|
$
|
602,688
|
|
|
$
|
464,480
|
|
|
$
|
1,735,939
|
|
|
$
|
1,375,016
|
|
Cost of
Sales
|
|
|
510,792
|
|
|
|
367,423
|
|
|
|
1,423,382
|
|
|
|
1,100,195
|
|
Gross
Profit
|
|
|
91,896
|
|
|
|
97,057
|
|
|
|
312,557
|
|
|
|
274,821
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
|
|
|
14,786
|
|
|
|
13,266
|
|
|
|
44,280
|
|
|
|
39,719
|
|
Administrative
|
|
|
22,828
|
|
|
|
21,354
|
|
|
|
69,440
|
|
|
|
60,957
|
|
Research, Development
and Technical Services
|
|
|
15,501
|
|
|
|
14,303
|
|
|
|
45,638
|
|
|
|
41,661
|
|
Deferred Compensation
Expense (Income)
|
|
|
(1,504)
|
|
|
|
5,613
|
|
|
|
2,148
|
|
|
|
4,754
|
|
|
|
|
51,611
|
|
|
|
54,536
|
|
|
|
161,506
|
|
|
|
147,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business
Restructuring
|
|
|
72
|
|
|
|
126
|
|
|
|
267
|
|
|
|
708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
|
40,213
|
|
|
|
42,395
|
|
|
|
150,784
|
|
|
|
127,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income
(Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest,
Net
|
|
|
(1,599)
|
|
|
|
(1,626)
|
|
|
|
(4,690)
|
|
|
|
(4,115)
|
|
Other, Net
|
|
|
702
|
|
|
|
2,629
|
|
|
|
4,206
|
|
|
|
3,804
|
|
|
|
|
(897)
|
|
|
|
1,003
|
|
|
|
(484)
|
|
|
|
(311)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before
Income Taxes
|
|
|
39,316
|
|
|
|
43,398
|
|
|
|
150,300
|
|
|
|
126,711
|
|
Provision for
Income Taxes
|
|
|
2,393
|
|
|
|
10,056
|
|
|
|
29,463
|
|
|
|
29,987
|
|
Net
Income
|
|
|
36,923
|
|
|
|
33,342
|
|
|
|
120,837
|
|
|
|
96,724
|
|
Net Income
Attributable to Noncontrolling
Interests
|
|
|
(3)
|
|
|
|
(174)
|
|
|
|
(28)
|
|
|
|
(304)
|
|
Net Income
Attributable to Stepan Company
|
|
$
|
36,920
|
|
|
$
|
33,168
|
|
|
$
|
120,809
|
|
|
$
|
96,420
|
|
Net Income Per
Common Share Attributable to
Stepan Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.61
|
|
|
$
|
1.45
|
|
|
$
|
5.27
|
|
|
$
|
4.20
|
|
Diluted
|
|
$
|
1.59
|
|
|
$
|
1.43
|
|
|
$
|
5.19
|
|
|
$
|
4.15
|
|
Shares Used to
Compute Net Income Per Common
Share Attributable
to Stepan Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
22,898
|
|
|
|
22,907
|
|
|
|
22,941
|
|
|
|
22,951
|
|
Diluted
|
|
|
23,219
|
|
|
|
23,237
|
|
|
|
23,299
|
|
|
|
23,236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
2021
|
|
|
EPS
|
|
|
2020
|
|
|
EPS
|
|
|
2021
|
|
|
EPS
|
|
|
2020
|
|
|
EPS
|
|
Net Income
Reported
|
|
$
|
36,920
|
|
|
$
|
1.59
|
|
|
$
|
33,168
|
|
|
$
|
1.43
|
|
|
$
|
120,809
|
|
|
$
|
5.19
|
|
|
$
|
96,420
|
|
|
$
|
4.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
Compensation
(Income) Expense
|
|
$
|
(1,135)
|
|
|
$
|
(0.05)
|
|
|
$
|
2,612
|
|
|
$
|
0.11
|
|
|
$
|
(685)
|
|
|
$
|
(0.03)
|
|
|
$
|
1,692
|
|
|
$
|
0.07
|
|
Business
Restructuring
Expense
|
|
$
|
54
|
|
|
$
|
-
|
|
|
$
|
95
|
|
|
$
|
0.00
|
|
|
$
|
200
|
|
|
$
|
0.01
|
|
|
$
|
526
|
|
|
$
|
0.02
|
|
Cash-Settled SARs
(Income) Expense
|
|
$
|
(141)
|
|
|
$
|
-
|
|
|
$
|
546
|
|
|
$
|
0.02
|
|
|
$
|
(38)
|
|
|
$
|
(0.00)
|
|
|
$
|
256
|
|
|
$
|
0.01
|
|
Environmental
Remediation Expense
|
|
$
|
719
|
|
|
$
|
0.03
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
719
|
|
|
$
|
0.03
|
|
|
|
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income
|
|
$
|
36,417
|
|
|
$
|
1.57
|
|
|
$
|
36,421
|
|
|
$
|
1.56
|
|
|
$
|
121,005
|
|
|
$
|
5.20
|
|
|
$
|
98,894
|
|
|
$
|
4.25
|
|
* All amounts in this table are presented after-tax
The Company believes that certain measures that are not in
accordance with generally accepted accounting principles (GAAP),
when presented in conjunction with comparable GAAP measures, are
useful for evaluating the Company's operating performance and
provide better clarity on the impact of non-operational
items. Internally, the Company uses this non-GAAP information
as an indicator of business performance and evaluates management's
effectiveness with specific reference to these indicators.
These measures should be considered in addition to, neither a
substitute for, nor superior to, measures of financial performance
prepared in accordance with GAAP.
Reconciliation of
Pre-Tax to After-Tax Adjustments
|
|
|
|
Three Months Ended
September
30
|
|
|
Nine Months Ended
September
30
|
|
($ in
thousands, except per
share amounts)
|
|
2021
|
|
|
EPS
|
|
|
2020
|
|
|
EPS
|
|
|
2021
|
|
|
EPS
|
|
|
2020
|
|
|
EPS
|
|
Pre-Tax
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
Compensation
(Income) Expense
|
|
$
|
(1,494)
|
|
|
|
|
|
|
$
|
3,437
|
|
|
|
|
|
|
$
|
(901)
|
|
|
|
|
|
|
$
|
2,227
|
|
|
|
|
|
Business
Restructuring
Expense
|
|
$
|
72
|
|
|
|
|
|
|
$
|
126
|
|
|
|
|
|
|
$
|
267
|
|
|
|
|
|
|
$
|
708
|
|
|
|
|
|
Cash-Settled SARs
(Income) Expense
|
|
$
|
(186)
|
|
|
|
|
|
|
$
|
718
|
|
|
|
|
|
|
$
|
(50)
|
|
|
|
|
|
|
$
|
337
|
|
|
|
|
|
Environmental
Remediation Expense
|
|
$
|
946
|
|
|
|
|
|
|
$
|
-
|
|
|
|
|
|
|
$
|
946
|
|
|
|
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Pre-Tax
Adjustments
|
|
$
|
(662)
|
|
|
|
|
|
|
$
|
4,281
|
|
|
|
|
|
|
$
|
262
|
|
|
|
|
|
|
$
|
3,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative Tax
Effect
on Adjustments
|
|
$
|
159
|
|
|
|
|
|
|
$
|
(1,028)
|
|
|
|
|
|
|
$
|
(66)
|
|
|
|
|
|
|
$
|
(798)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After-Tax
Adjustments
|
|
$
|
(503)
|
|
|
$
|
(0.02)
|
|
|
$
|
3,253
|
|
|
$
|
0.13
|
|
|
$
|
196
|
|
|
$
|
0.01
|
|
|
$
|
2,474
|
|
|
$
|
0.10
|
|
Table
III
|
|
Deferred
Compensation Plan
|
|
The full effect of
the deferred compensation plan on quarterly pre-tax income was $1.5
million of income versus $3.4 million of expense in the prior year.
The year-to-date impact was $0.9 million of income versus $2.2
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 Company common
stock are as follows:
|
|
|
|
2021
|
|
|
2020
|
|
|
|
12/31
|
|
9/30
|
|
|
6/30
|
|
|
3/31
|
|
|
12/31
|
|
|
9/30
|
|
|
6/30
|
|
|
3/31
|
|
Stepan
Company
|
|
N/A
|
|
$
|
112.94
|
|
|
$
|
120.27
|
|
|
$
|
127.11
|
|
|
$
|
119.32
|
|
|
$
|
109.00
|
|
|
$
|
97.10
|
|
|
$
|
88.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The deferred
compensation income statement impact is summarized
below:
|
|
|
|
Three Months Ended
September
30
|
|
|
Nine
Months Ended
September
30
|
|
($ in
thousands)
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Deferred
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Expense)
|
|
$
|
1,504
|
|
|
$
|
(5,613)
|
|
|
$
|
(2,148)
|
|
|
$
|
(4,754)
|
|
Other, net – Mutual
Fund Gain (Loss)
|
|
|
(10)
|
|
|
|
2,176
|
|
|
|
3,049
|
|
|
|
2,527
|
|
Total
Pre-Tax
|
|
$
|
1,494
|
|
|
$
|
(3,437)
|
|
|
$
|
901
|
|
|
$
|
(2,227)
|
|
Total
After-Tax
|
|
$
|
1,135
|
|
|
$
|
(2,612)
|
|
|
$
|
685
|
|
|
$
|
(1,692)
|
|
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 line items for
the three and nine month periods ending September 30, 2021 as
compared to 2020:
|
|
($ in
millions)
|
|
Three Months Ended
September
30
|
|
|
Increase
(Decrease)
|
|
|
Increase
Due to Foreign
Currency
Translation
|
|
|
Nine
Months Ended
September
30
|
|
|
Increase
|
|
|
Increase
Due to Foreign
Currency
Translation
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
$
|
602.7
|
|
|
$
|
464.5
|
|
|
$
|
138.2
|
|
|
$
|
5.9
|
|
|
$
|
1,735.9
|
|
|
$
|
1,375.0
|
|
|
$
|
360.9
|
|
|
$
|
30.5
|
|
Gross
Profit
|
|
|
91.9
|
|
|
|
97.1
|
|
|
|
(5.2)
|
|
|
|
0.8
|
|
|
|
312.6
|
|
|
|
274.8
|
|
|
|
37.8
|
|
|
|
3.7
|
|
Operating
Income
|
|
|
40.2
|
|
|
|
42.4
|
|
|
|
(2.2)
|
|
|
|
0.5
|
|
|
|
150.8
|
|
|
|
127.0
|
|
|
|
23.8
|
|
|
|
2.2
|
|
Pretax
Income
|
|
|
39.3
|
|
|
|
43.4
|
|
|
|
(4.1)
|
|
|
|
0.4
|
|
|
|
150.3
|
|
|
|
126.7
|
|
|
|
23.6
|
|
|
|
2.4
|
|
Table
V
|
|
Stepan
Company
Consolidated
Balance Sheets
September 30, 2021
and December 31, 2020
|
|
|
|
Sept. 30,
2021
|
|
|
December 31,
2020
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
$
|
839,213
|
|
|
$
|
905,651
|
|
Property, Plant &
Equipment, Net
|
|
|
799,396
|
|
|
|
682,667
|
|
Other
Assets
|
|
|
317,330
|
|
|
|
164,018
|
|
Total
Assets
|
|
$
|
1,955,939
|
|
|
$
|
1,752,336
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
$
|
491,065
|
|
|
$
|
416,554
|
|
Deferred Income
Taxes
|
|
|
8,637
|
|
|
|
20,745
|
|
Long-term
Debt
|
|
|
232,184
|
|
|
|
160,812
|
|
Other Non-current
Liabilities
|
|
|
165,036
|
|
|
|
165,860
|
|
Total Stepan Company
Stockholders' Equity
|
|
|
1,057,296
|
|
|
|
986,693
|
|
Noncontrolling
Interest
|
|
|
1,721
|
|
|
|
1,672
|
|
Total Liabilities and
Stockholders' Equity
|
|
$
|
1,955,939
|
|
|
$
|
1,752,336
|
|
View original
content:https://www.prnewswire.com/news-releases/stepan-reports-third-quarter-results-and-record-nine-month-earnings-301404200.html
SOURCE Stepan Company