NORTHBROOK, Ill., July 27,
2022 /PRNewswire/ -- Stepan Company (NYSE: SCL) today
reported:
Second Quarter Highlights
- Reported net income was a record $52.1
million, or $2.26 per diluted
share, versus $43.3 million, or
$1.85 per diluted share, in the prior
year. Adjusted net income* was a record $53.0 million, or $2.30 per diluted share, versus $42.2 million, or $1.81 per diluted share, in the prior year. Total
Company sales volume declined 1% versus the prior year.
- Surfactant operating income was $48.2
million versus $45.9 million
in the prior year. This increase was primarily driven by improved
product and customer mix that was partially offset by a 3% decline
in global sales volume. The lower sales volume was driven by global
commodity laundry products due to raw material and logistics
constraints in North American and lower demand in Latin America. Higher demand in the Functional
Products, Personal Care and Institutional Cleaning end markets
partially offset the above.
- Polymer operating income was a record $33.9 million versus $23.0
million in the prior year. This increase was primarily
attributable to margin recovery, improved mix and a 2% increase in
global sales volume. Global Rigid Polyol volume was up 5% versus
the prior year driven by North American volume growth of 8%,
partially offset by lower demand within the Phthalic Anhydride and
Specialty Polyols businesses.
- Specialty Product operating income was a record $9.9 million versus $7.0
million in the prior year. This increase was primarily
attributable to improved margins and customer mix within the medium
chain triglycerides (MCTs) product line, partially offset by order
timing differences within the food and flavor business.
- The effect of foreign currency translation negatively impacted
net income by $1.9 million, or
$0.08 per diluted share, versus the
prior year.
First Half Highlights
- Reported net income was a record $96.9
million, or $4.19 per diluted
share, versus $83.9 million, or
$3.59 per diluted share, in the prior
year. Adjusted net income* was a record $93.7 million, or $4.05 per diluted share, versus $84.6 million, or $3.62 per diluted share, in the prior year. Total
Company sales volume was down 1% compared to the first six months
of 2021. A 2% decrease in global Surfactant sales volume was
partially offset by a 2% increase in global Polymer sales
volume.
*
|
Adjusted net income
is a non-GAAP measure which excludes deferred compensation
income/expense, cash-settled stock appreciation rights (SARs)
income/expense, legacy environmental remediation-related costs as
well as other significant and infrequent/non-recurring items. See
Table II for reconciliations of non-GAAP adjusted net income and
earnings per diluted share
|
"The Company had a strong first half performance and
delivered record results despite ongoing supply chain
challenges. Reported net income was up 16% versus the first
half of 2021 while adjusted net income was up 11%," said
Scott Behrens, President and Chief
Executive Officer. "For the quarter, Surfactant operating
income was up 5% largely due to improved product and customer
mix. This improvement was driven by growth in our Functional
Products business as a result of elevated crop and energy prices
and continued growth in the construction industry, which offset a
3% decline in sales volume. Our Polymer operating income was
up 47% due to margin recovery, improved mix and 2% sales volume
growth. Our Specialty Product results improved primarily due
to to margin improvement and favorable customer mix."
Financial
Summary
|
|
|
Three Months Ended
June
30
|
|
|
Six Months Ended
June
30
|
|
($ in thousands,
except per share data)
|
2022
|
|
|
2021
|
|
|
%
Change
|
|
|
2022
|
|
|
2021
|
|
|
%
Change
|
|
Net Sales
|
$
|
751,633
|
|
|
$
|
595,511
|
|
|
|
26
|
%
|
|
$
|
1,426,909
|
|
|
$
|
1,133,251
|
|
|
|
26
|
%
|
Operating
Income
|
$
|
77,640
|
|
|
$
|
56,657
|
|
|
|
37
|
%
|
|
$
|
140,986
|
|
|
$
|
110,571
|
|
|
|
28
|
%
|
Net Income Attributable
to Stepan **
|
$
|
52,126
|
|
|
$
|
43,278
|
|
|
|
20
|
%
|
|
$
|
96,935
|
|
|
$
|
83,889
|
|
|
|
16
|
%
|
Earnings per Diluted
Share
|
$
|
2.26
|
|
|
$
|
1.85
|
|
|
|
22
|
%
|
|
$
|
4.19
|
|
|
$
|
3.59
|
|
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income
*
|
$
|
53,009
|
|
|
$
|
42,218
|
|
|
|
26
|
%
|
|
$
|
93,736
|
|
|
$
|
84,589
|
|
|
|
11
|
%
|
Adjusted Earnings per
Diluted Share *
|
$
|
2.30
|
|
|
$
|
1.81
|
|
|
|
27
|
%
|
|
$
|
4.05
|
|
|
$
|
3.62
|
|
|
|
12
|
%
|
|
|
*
|
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,
certain environmental remediation costs and other significant
and infrequent or non-recurring items.
- Deferred Compensation: The current year second quarter
reported net income includes $0.5
million of after-tax expense versus $1.1 million of after-tax income in the prior
year.
- Cash-Settled SARs: These management incentive
instruments provide cash to participants equal to the appreciation
on the price of specified shares of Company stock over a specified
period of time. Because income or expense is recognized merely on
the movement in the price of Company stock it has been excluded,
similar to deferred compensation, to arrive at adjusted net income.
The current year second quarter includes $0.1 million of after-tax expense versus
$0.1 million of after-tax income in
the prior year.
- Business Restructuring: Both the current and prior year
second quarters include $0.1 million
of after-tax decommissioning expense related to the Company's
Canadian plant closure.
- Environmental Remediation – The second quarter 2022
adjusted net income excludes $0.2
million of after-tax expense versus no environmental
remediation expense excluded from adjusted net income in the prior
year.
Percentage Change in Net Sales
Net sales in the second quarter of 2022 increased 26%
year-over-year primarily due to higher selling prices that were
mainly attributable to the pass-through of higher raw material and
logistics costs and improved product and customer mix. These
higher average selling prices were partially offset by a 1%
decrease in global sales volume and the unfavorable impact of
foreign currency translation.
|
|
Three Months Ended
June
30, 2022
|
|
|
Six Months Ended
June
30, 2022
|
|
Volume
|
|
|
(1)
|
%
|
|
|
(1)
|
%
|
Selling Price &
Mix
|
|
|
32
|
%
|
|
|
30
|
%
|
Foreign
Translation
|
|
|
(5)
|
%
|
|
|
(3)
|
%
|
Total
|
|
|
26
|
%
|
|
|
26
|
%
|
Segment
Results
|
|
|
|
Three Months Ended
June
30
|
|
|
Six Months Ended
June
30
|
|
($ in
thousands)
|
|
2022
|
|
|
2021
|
|
|
%
Change
|
|
|
2022
|
|
|
2021
|
|
|
%
Change
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Surfactants
|
|
$
|
485,084
|
|
|
$
|
384,002
|
|
|
|
26
|
%
|
|
$
|
953,350
|
|
|
$
|
754,938
|
|
|
|
26
|
%
|
Polymers
|
|
$
|
238,885
|
|
|
$
|
190,538
|
|
|
|
25
|
%
|
|
$
|
425,964
|
|
|
$
|
340,923
|
|
|
|
25
|
%
|
Specialty
Products
|
|
$
|
27,664
|
|
|
$
|
20,971
|
|
|
|
32
|
%
|
|
$
|
47,595
|
|
|
$
|
37,390
|
|
|
|
27
|
%
|
Total Net
Sales
|
|
$
|
751,633
|
|
|
$
|
595,511
|
|
|
|
26
|
%
|
|
$
|
1,426,909
|
|
|
$
|
1,133,251
|
|
|
|
26
|
%
|
|
|
|
Three Months Ended
June
30
|
|
|
Six Months Ended
June
30
|
|
($ in
thousands)
|
|
2022
|
|
|
2021
|
|
|
%
Change
|
|
|
2022
|
|
|
2021
|
|
|
%
Change
|
|
Operating
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Surfactants
|
|
$
|
48,249
|
|
|
$
|
45,896
|
|
|
|
5
|
%
|
|
$
|
102,018
|
|
|
$
|
99,106
|
|
|
|
3
|
%
|
Polymers
|
|
$
|
33,912
|
|
|
$
|
23,025
|
|
|
|
47
|
%
|
|
$
|
48,041
|
|
|
$
|
40,976
|
|
|
|
17
|
%
|
Specialty
Products
|
|
$
|
9,866
|
|
|
$
|
6,977
|
|
|
|
41
|
%
|
|
$
|
13,561
|
|
|
$
|
9,610
|
|
|
|
41
|
%
|
Total Segment Operating
Income
|
|
$
|
92,027
|
|
|
$
|
75,898
|
|
|
|
21
|
%
|
|
$
|
163,620
|
|
|
$
|
149,692
|
|
|
|
9
|
%
|
Corporate
Expenses
|
|
$
|
(14,387)
|
|
|
$
|
(19,241)
|
|
|
|
(25)
|
%
|
|
$
|
(22,634)
|
|
|
$
|
(39,121)
|
|
|
|
(42)
|
%
|
Consolidated Operating
Income
|
|
$
|
77,640
|
|
|
$
|
56,657
|
|
|
|
37
|
%
|
|
$
|
140,986
|
|
|
$
|
110,571
|
|
|
|
28
|
%
|
Total segment operating income for the second quarter of 2022
increased $16.1 million, or 21%,
versus the prior year quarter. Total segment operating income
in the first half of 2022 was up $13.9
million, or 9%, versus the prior year.
- Surfactant net sales were $485.1
million for the quarter, a 26% increase versus the prior
year. Selling prices were up 32% primarily due to the pass-through
of higher raw material and logistics costs as well as improved
product and customer mix. The unfavorable impact of foreign
currency translation negatively impacted net sales by 3%. Sales
volume decreased 3% year-over-year primarily due to a decline in
commodity laundry products sold within the Consumer Products
business, mostly attributable to raw material and logistics
constraints in North America and
lower demand in Latin America.
Higher global demand for products sold into the Functional
Products, Personal Care and Institutional Cleaning end markets
largely offset the above. Surfactant operating income for the
quarter increased $2.4 million, or
5%, versus the prior year primarily due to improved product and
customer mix that was partially offset by supply chain challenges
and a 3% decline in sales volume.
- Polymer net sales were $238.9
million for the quarter, a 25% increase versus the prior
year. Selling prices increased 30% primarily due to the pass
through of higher raw material and logistics costs. Sales volume
increased 2% in the quarter primarily due to Rigid Polyol growth of
5% that was partially offset by lower demand within the Phthalic
Anhydride and Specialty Polyols businesses. The translation impact
of a stronger U.S. dollar negatively impacted net sales by 7%.
Polymer operating income increased $10.9
million, or 47%, primarily due to margin recovery and the 2%
sales volume growth.
- Specialty Product net sales were $27.7
million for the quarter, a 32% increase versus the prior
year. Sales volume was down 7% between years while operating income
improved $2.9 million, or 41%. The
operating income improvement was primarily attributable to improved
margins within the MCTs product line and more favorable customer
mix, partially offset by order timing differences within the food
and flavor business.
Corporate
Expenses
|
|
|
|
Three Months Ended
June
30
|
|
|
Six
Months Ended
June
30
|
|
($ in
thousands)
|
|
2022
|
|
|
2021
|
|
|
%
Change
|
|
|
2022
|
|
|
2021
|
|
|
%
Change
|
|
Total Corporate
Expenses
|
|
$
|
14,387
|
|
|
$
|
19,241
|
|
|
|
(25)
|
%
|
|
$
|
22,634
|
|
|
$
|
39,121
|
|
|
|
(42)
|
%
|
Excluded
Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
Compensation
|
|
$
|
3,406
|
|
|
$
|
(958)
|
|
|
NM
|
|
|
$
|
10,907
|
|
|
$
|
(3,652)
|
|
|
NM
|
|
Business
Restructuring
|
|
$
|
(81)
|
|
|
$
|
(114)
|
|
|
|
(29)
|
%
|
|
$
|
(133)
|
|
|
$
|
(195)
|
|
|
|
(32)
|
%
|
Adjusted Corporate
Expense
|
|
$
|
17,712
|
|
|
$
|
18,169
|
|
|
|
(3)
|
%
|
|
$
|
33,408
|
|
|
$
|
35,274
|
|
|
|
(5)
|
%
|
|
* See Table III for
a discussion of deferred compensation plan
accounting.
|
- Corporate expenses, excluding deferred compensation and
business restructuring costs, decreased $0.5
million, or 3%, versus the prior year quarter. This decrease
was primarily due to lower acquisition-related expenses that were
partially offset by higher incentive-based compensation
expenses.
Income Taxes
The Company's effective tax rate was 24.8% in the first half of
2022 versus 24.4% in the first half of 2021. This
year-over-year increase was primarily attributable to a less
favorable geographical mix of income and less favorable tax
benefits derived from stock-based compensation awards in the first
half of 2022 versus the first half of 2021.
Shareholder Return
The Company paid $7.5 million of
dividends to shareholders and repurchased $7.0 million of Company stock in the second
quarter of 2022. During the first six months of 2022 the
Company paid $15.0 million of
dividends and repurchased $17.0
million of Company stock. The Company has $133.0 million remaining under the share
repurchase program authorized by its Board of Directors. The
Company has increased its dividend on the Company's common stock
for 54 consecutive years.
Selected Balance Sheet
Information
The Company's total debt decreased by $11.1 million and cash decreased by $41.4 million versus March
31, 2022. The decrease in debt primarily reflects
scheduled debt repayments in June 2022. The decrease in cash
primarily reflects the scheduled debt repayments plus higher
working capital requirements and capital expenditures. The
Company's net debt level increased $30.3
million versus March 31, 2022
and the net debt ratio increased from 21% to 23% in the quarter
(Net Debt and Net Debt Ratio are non-GAAP
measures).
($ in
millions)
|
6/30/22
|
|
|
3/31/22
|
|
|
12/31/21
|
|
Net Debt
|
|
|
|
|
|
|
|
|
|
|
|
Total Debt
|
$
|
526.0
|
|
|
$
|
537.1
|
|
|
$
|
363.6
|
|
Cash
|
|
194.6
|
|
|
|
236.0
|
|
|
|
159.2
|
|
Net Debt
|
$
|
331.4
|
|
|
$
|
301.1
|
|
|
$
|
204.4
|
|
Equity
|
|
1,125.7
|
|
|
|
1,116.7
|
|
|
|
1,074.2
|
|
Net Debt +
Equity
|
$
|
1,457.1
|
|
|
$
|
1,417.8
|
|
|
$
|
1,278.6
|
|
Net Debt / (Net Debt +
Equity)
|
|
23
|
%
|
|
|
21
|
%
|
|
|
16
|
%
|
The major working capital components were:
($ in
millions)
|
6/30/22
|
|
|
3/31/22
|
|
|
12/31/21
|
|
Net
Receivables
|
$
|
518.8
|
|
|
$
|
504.5
|
|
|
$
|
419.5
|
|
Inventories
|
|
340.7
|
|
|
|
308.4
|
|
|
|
305.5
|
|
Accounts
Payable
|
|
(366.2)
|
|
|
|
(350.8)
|
|
|
|
(323.4)
|
|
Total
|
$
|
493.3
|
|
|
$
|
462.1
|
|
|
$
|
401.6
|
|
Capital spending was $69.2 million
during the quarter and $129.5 million
during the first half of 2022. This compares to $37.3 million and $74.9
million, respectively, in the prior year. The
year-over-year increase is primarily due to increased expenditures
in the U.S. for the advancement of the Company's new alkoxylation
facility in Pasadena, TX, which is
expected provide flexible capacity of 75,000 metric tons per year,
and new capability and capacity to produce ether sulfates that will
meet upcoming regulatory limits on 1,4 dioxane. For the full
year, capital expenditures are expected to be in the range of
$350 million to $375 million.
Outlook
"The Company delivered record earnings for the second quarter
and the first half of 2022," said Scott
Behrens, President and Chief Executive Officer.
"Looking forward, we believe demand across our business should
remain healthy but the Company will continue to be challenged by
inflation, raw material and logistics constraints. From a
segment perspective, we believe that Surfactant volumes within the
Functional Products end markets will show full year growth over
2021 supported by continued elevated crop and energy prices.
We believe Polymers will deliver growth versus the prior year as
energy conservation efforts and more stringent building codes
should have a continued positive impact on demand for our Rigid
polyols. Specialty Product results should show year over year
improvement as well. We remain cautiously optimistic
about the remainder of the year despite the current inflationary
environment and ongoing supply chain challenges."
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 27, 2022. The call can be accessed by phone
and webcast. Telephone access will be available by dialing
800-954-0624, 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.
Tables follow
Table
I
|
STEPAN COMPANY For the Three
and Six Months Ended June 30, 2022 and 2021 (Unaudited –
'000's Omitted)
|
|
|
|
Three Months Ended
June
30
|
|
|
Six Months Ended
June
30
|
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Net
Sales
|
|
$
|
751,633
|
|
|
$
|
595,511
|
|
|
$
|
1,426,909
|
|
|
$
|
1,133,251
|
|
Cost of
Sales
|
|
|
620,019
|
|
|
|
483,830
|
|
|
|
1,186,076
|
|
|
|
912,590
|
|
Gross
Profit
|
|
|
131,614
|
|
|
|
111,681
|
|
|
|
240,833
|
|
|
|
220,661
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
|
|
|
15,552
|
|
|
|
14,990
|
|
|
|
30,829
|
|
|
|
29,494
|
|
Administrative
|
|
|
24,079
|
|
|
|
23,974
|
|
|
|
45,651
|
|
|
|
46,612
|
|
Research, Development
and Technical Services
|
|
|
16,690
|
|
|
|
14,988
|
|
|
|
33,163
|
|
|
|
30,137
|
|
Deferred Compensation
(Income) Expense
|
|
|
(3,406)
|
|
|
|
958
|
|
|
|
(10,907)
|
|
|
|
3,652
|
|
|
|
|
52,915
|
|
|
|
54,910
|
|
|
|
98,736
|
|
|
|
109,895
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill Impairment
|
|
|
978
|
|
|
|
-
|
|
|
|
978
|
|
|
|
-
|
|
Business
Restructuring
|
|
|
81
|
|
|
|
114
|
|
|
|
133
|
|
|
|
195
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
|
77,640
|
|
|
|
56,657
|
|
|
|
140,986
|
|
|
|
110,571
|
|
Other Income
(Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest,
Net
|
|
|
(2,727)
|
|
|
|
(1,567)
|
|
|
|
(5,033)
|
|
|
|
(3,091)
|
|
Other, Net
|
|
|
(5,369)
|
|
|
|
2,758
|
|
|
|
(7,019)
|
|
|
|
3,504
|
|
|
|
|
(8,096)
|
|
|
|
1,191
|
|
|
|
(12,052)
|
|
|
|
413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before Income
Taxes
|
|
|
69,544
|
|
|
|
57,848
|
|
|
|
128,934
|
|
|
|
110,984
|
|
Provision for Income
Taxes
|
|
|
17,418
|
|
|
|
14,545
|
|
|
|
31,999
|
|
|
|
27,070
|
|
Net
Income
|
|
|
52,126
|
|
|
|
43,303
|
|
|
|
96,935
|
|
|
|
83,914
|
|
Net Income
Attributable to Noncontrolling Interests
|
|
|
-
|
|
|
|
(25)
|
|
|
|
-
|
|
|
|
(25)
|
|
Net Income
Attributable to Stepan Company
|
|
$
|
52,126
|
|
|
$
|
43,278
|
|
|
$
|
96,935
|
|
|
$
|
83,889
|
|
Net Income Per
Common Share Attributable to Stepan Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
2.29
|
|
|
$
|
1.89
|
|
|
$
|
4.24
|
|
|
$
|
3.65
|
|
Diluted
|
|
$
|
2.26
|
|
|
$
|
1.85
|
|
|
$
|
4.19
|
|
|
$
|
3.59
|
|
Shares Used to
Compute Net Income Per Common
Share
Attributable to Stepan Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
22,792
|
|
|
|
22,952
|
|
|
|
22,842
|
|
|
|
22,963
|
|
Diluted
|
|
|
23,055
|
|
|
|
23,345
|
|
|
|
23,115
|
|
|
|
23,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
2022
|
|
|
EPS
|
|
|
2021
|
|
|
EPS
|
|
|
2022
|
|
|
EPS
|
|
|
2021
|
|
|
EPS
|
|
Net Income
Reported
|
|
$
|
52,126
|
|
|
$
|
2.26
|
|
|
$
|
43,278
|
|
|
$
|
1.85
|
|
|
$
|
96,935
|
|
|
$
|
4.19
|
|
|
$
|
83,889
|
|
|
$
|
3.59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation
(Income) Expense
|
|
$
|
518
|
|
|
$
|
0.02
|
|
|
$
|
(1,050)
|
|
|
$
|
(0.04)
|
|
|
$
|
(3,431)
|
|
|
$
|
(0.15)
|
|
|
$
|
451
|
|
|
$
|
0.02
|
|
Business Restructuring
Expense
|
|
$
|
61
|
|
|
$
|
0.01
|
|
|
$
|
85
|
|
|
$
|
0.00
|
|
|
$
|
100
|
|
|
$
|
0.01
|
|
|
$
|
146
|
|
|
$
|
0.01
|
|
Cash-Settled SARs
(Income) Expense
|
|
$
|
55
|
|
|
$
|
0.00
|
|
|
$
|
(95)
|
|
|
$
|
(0.00)
|
|
|
$
|
(347)
|
|
|
$
|
(0.02)
|
|
|
$
|
103
|
|
|
$
|
0.00
|
|
Environmental
Remediation Expense
|
|
$
|
249
|
|
|
$
|
0.01
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
479
|
|
|
$
|
0.02
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income
|
|
$
|
53,009
|
|
|
$
|
2.30
|
|
|
$
|
42,218
|
|
|
$
|
1.81
|
|
|
$
|
93,736
|
|
|
$
|
4.05
|
|
|
$
|
84,589
|
|
|
$
|
3.62
|
|
|
|
*
|
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)
|
|
2022
|
|
|
EPS
|
|
|
2021
|
|
|
EPS
|
|
|
2022
|
|
|
EPS
|
|
|
2021
|
|
|
EPS
|
|
Pre-Tax
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation
(Income) Expense
|
|
$
|
681
|
|
|
|
|
|
|
$
|
(1,381)
|
|
|
|
|
|
|
$
|
(4,514)
|
|
|
|
|
|
|
$
|
594
|
|
|
|
|
|
Business Restructuring
Expense
|
|
$
|
81
|
|
|
|
|
|
|
$
|
114
|
|
|
|
|
|
|
$
|
133
|
|
|
|
|
|
|
$
|
195
|
|
|
|
|
|
Cash-Settled SARs
(Income) Expense
|
|
$
|
73
|
|
|
|
|
|
|
$
|
(125)
|
|
|
|
|
|
|
$
|
(455)
|
|
|
|
|
|
|
$
|
136
|
|
|
|
|
|
Environmental
Remediation Expense
|
|
$
|
327
|
|
|
|
|
|
|
$
|
-
|
|
|
|
|
|
|
$
|
630
|
|
|
|
|
|
|
$
|
-
|
|
|
|
|
|
Total
Pre-Tax Adjustments
|
|
$
|
1,162
|
|
|
|
|
|
|
$
|
(1,392)
|
|
|
|
|
|
|
$
|
(4,206)
|
|
|
|
|
|
|
$
|
925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative Tax Effect
on Adjustments
|
|
$
|
(279)
|
|
|
|
|
|
|
$
|
332
|
|
|
|
|
|
|
$
|
1,007
|
|
|
|
|
|
|
$
|
(225)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After-Tax
Adjustments
|
|
$
|
883
|
|
|
$
|
0.04
|
|
|
$
|
(1,060)
|
|
|
$
|
(0.04)
|
|
|
$
|
(3,199)
|
|
|
$
|
(0.14)
|
|
|
$
|
700
|
|
|
$
|
0.03
|
|
Table III
|
Deferred Compensation
Plans
|
|
The full effect of
deferred compensation plans on quarterly pre-tax income was $0.7
million of expense versus $1.4 million of income in the prior year.
The year-to-date impact was $4.5 million of income versus $0.6
million of expense 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:
|
|
|
|
2022
|
|
|
2021
|
|
|
|
12/31
|
|
9/30
|
|
6/30
|
|
|
3/31
|
|
|
12/31
|
|
|
9/30
|
|
|
6/30
|
|
|
3/31
|
|
Stepan
Company
|
|
N/A
|
|
N/A
|
|
$
|
101.35
|
|
|
$
|
98.81
|
|
|
$
|
124.29
|
|
|
$
|
112.94
|
|
|
$
|
120.27
|
|
|
$
|
127.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The deferred
compensation income statement impact is summarized
below:
|
|
|
|
Three Months Ended
June
30
|
|
|
Six Months Ended
June
30
|
|
($ in
thousands)
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Deferred
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Expense)
|
|
$
|
3,406
|
|
|
$
|
(958)
|
|
|
$
|
10,907
|
|
|
$
|
(3,652)
|
|
Other, net – Mutual
Fund Gain (Loss)
|
|
|
(4,087)
|
|
|
|
2,339
|
|
|
|
(6,393)
|
|
|
|
3,058
|
|
Total
Pretax
|
|
$
|
(681)
|
|
|
$
|
1,381
|
|
|
$
|
4,514
|
|
|
$
|
(594)
|
|
Total After
Tax
|
|
$
|
(518)
|
|
|
$
|
1,050
|
|
|
$
|
3,431
|
|
|
$
|
(451)
|
|
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, 2022 as compared to
2021:
|
|
($ in
millions)
|
|
Three Months Ended
June
30
|
|
|
Increase
|
|
|
Change
Due to Foreign
Currency
Translation
|
|
|
Six Months Ended
June
30
|
|
|
Increase
|
|
|
Change
Due to Foreign
Currency
Translation
|
|
|
|
2022
|
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
2022
|
|
|
2021
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
$
|
751.6
|
|
|
$
|
595.5
|
|
|
$
|
156.1
|
|
|
$
|
(25.6)
|
|
|
$
|
1,426.9
|
|
|
$
|
1,133.3
|
|
|
$
|
293.6
|
|
|
$
|
(37.3)
|
|
Gross Profit
|
|
|
131.6
|
|
|
|
111.7
|
|
|
|
19.9
|
|
|
|
(3.5)
|
|
|
|
240.8
|
|
|
|
220.7
|
|
|
|
20.1
|
|
|
|
(5.2)
|
|
Operating
Income
|
|
|
77.6
|
|
|
|
56.7
|
|
|
|
20.9
|
|
|
|
(2.5)
|
|
|
|
141.0
|
|
|
|
110.6
|
|
|
|
30.4
|
|
|
|
(3.6)
|
|
Pretax
Income
|
|
|
69.5
|
|
|
|
57.8
|
|
|
|
11.7
|
|
|
|
(2.5)
|
|
|
|
128.9
|
|
|
|
111.0
|
|
|
|
17.9
|
|
|
|
(3.7)
|
|
Table V
|
Stepan Company Consolidated Balance Sheets June 30,
2022 and December 31, 2021
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June 30,
2022
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December 31,
2021
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ASSETS
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Current
Assets
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$
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1,087,367
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$
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913,368
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Property, Plant &
Equipment, Net
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919,534
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850,604
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Other Assets
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281,898
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301,640
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Total Assets
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$
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2,288,799
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$
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2,065,612
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LIABILITIES AND
STOCKHOLDERS' EQUITY
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Current
Liabilities
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$
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638,228
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$
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500,476
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Deferred Income
Taxes
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11,375
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12,491
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Long-term
Debt
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383,503
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322,862
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Other Non-current
Liabilities
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129,982
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155,590
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Total Stepan Company
Stockholders' Equity
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1,125,711
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1,074,193
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Noncontrolling
Interest
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-
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-
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Total Liabilities and
Stockholders' Equity
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$
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2,288,799
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$
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2,065,612
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View original
content:https://www.prnewswire.com/news-releases/stepan-reports-record-second-quarter-results-and-record-first-half-earnings-301594055.html
SOURCE Stepan Company