scl-8k_20220426.htm
false 0000094049 0000094049 2022-04-26 2022-04-26

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): 04/26/2022

 

STEPAN COMPANY

(Exact name of registrant as specified in its charter)

 

Commission File Number: 1-4462

 

Delaware

 

36-1823834

(State or other jurisdiction of

incorporation)

 

(IRS Employer

Identification No.)

Edens and Winnetka Road, Northfield, Illinois 60093

(Address of principal executive offices, including zip code)

(847)446-7500

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 


 

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

Title of each class

 

 

Trading Symbol(s)

 

Name of Each exchange on which registered

 

Common Stock, $1 par value

 

SCL

 

New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

 

 

 

 

 


 

 

Item 2.02.Results of Operations and Financial Condition

 

On April 26, 2022, Stepan Company (“Stepan”) issued a press release providing its financial results for the first quarter ended March 31, 2022.  A copy of the press release is attached as Exhibit 99.1 hereto and incorporated herein by reference.

 

In addition, on April 26, 2022, Stepan issued a press release announcing that its Board of Directors declared a quarterly cash dividend on its common stock of $0.335 per share.  The dividend will be paid on June 15, 2022, to common stockholders of record on May 31, 2022.  A copy of the press release is attached as Exhibit 99.2 hereto and incorporated herein by reference.

 

Item 9.01.Financial Statements and Exhibits

 

(d)

Exhibits

 

Exhibit Number: 99.1

Description: Press Release of Stepan Company dated April 26, 2022

 

Exhibit Number: 99.2

Description: Press Release of Stepan Company dated April 26, 2022

 

Exhibit Number:  104

Description:  Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

 

 


 

 

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

 

 

STEPAN COMPANY

Date: April 26, 2022  

 

 

 

 

By:

 

 

/s/ David G. Kabbes

 

 

 

 

 

 

David G. Kabbes

 

 

 

 

 

 

Vice President, General Counsel and Secretary

 

 

scl-ex991_74.htm

 

 

Exhibit 99.1

 

Stepan Reports First Quarter Results

 

Northbrook, Illinois, April 26, 2022 -- Stepan Company (NYSE: SCL) today reported:

 

First Quarter Highlights

 

 

Reported net income was a record $44.8 million, or $1.93 per diluted share versus $40.6 million, or $1.74 per diluted share, in the prior year.  Adjusted net income* was $40.7 million, or $1.76 per diluted share versus $42.4 million, or $1.82 per diluted share, in the prior year.  Total Company sales volume was flat versus the prior year.  

 

 

 

Surfactant operating income was a record $53.8 million versus $53.2 million in the prior year. This increase was primarily driven by improved product and customer mix that was mostly offset by ongoing global supply chain challenges and a 1% decline in global sales volume.  The lower sales volume was primarily due to lower demand for laundry products within the consumer products business.  Higher demand in the functional products, personal care and institutional cleaning end markets mostly offset the above.  Volume sold within the Tier 2 and Tier 3 customer channel continues to perform well.    

 

 

 

Polymer operating income was $14.1 million versus $18.0 million in the prior year.  This decrease was due to a January 2022 power outage at the Company’s Millsdale, IL plant site that negatively impacted production.  The production disruption resulted in the declaration of force majeure for select products and higher sourcing, logistic and maintenance costs. The Company estimates these items negatively impacted Polymer’s first quarter 2022 earnings by approximately $5.0 million pre-tax.  The force majeure was lifted on April 15th.  Global Polymer sales volume increased 2% versus the prior year.  Global rigid polyol volume was up 5% versus the prior year largely due to the 2021 INVISTA polyester polyol acquisition which closed at the end of January 2021.      

 

 

 

Specialty Product operating income was $3.7 million versus $2.6 million in the prior year.  This increase was primarily attributable to order timing differences within the food and flavor business and margin recovery within the medium chain triglycerides (MCTs) product line, partially offset by a decline in MCTs 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 adjusted earnings per share.

 

 

“The Company had a solid start to the year despite the power outage at the Company’s Millsdale, IL plant site and ongoing global supply chain challenges.  Reported net income was up 10% versus the prior year first quarter while adjusted net income declined 4%” said Scott Behrens, President and Chief Executive Officer.  “Surfactant operating income was up 1% largely due to improved product and customer mix, driven by growth in our functional products business as a result of higher commodity prices and continued growth in the

1


construction industry, that offset a 1% decline in sales volume and ongoing supply chain challenges.  Our Polymer operating income was down 21% primarily due to the Millsdale power outage and related production disruptions.  Global Polymer sales volume was up 2% year-over-year.  Our Specialty Product business results were up primarily due to order timing differences.     

 

 

Financial Summary

 

 

Three Months Ended

March 31

 

($ in thousands, except per share data)

 

2022

 

 

2021

 

 

%

Change

 

Net Sales

 

$

675,276

 

 

$

537,740

 

 

 

26

%

Operating Income

 

$

63,346

 

 

$

53,914

 

 

 

17

%

Net Income Attributable to Stepan

 

$

44,809

 

 

$

40,611

 

 

 

10

%

Earnings per Diluted Share

 

$

1.93

 

 

$

1.74

 

 

 

11

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income *

 

$

40,728

 

 

$

42,372

 

 

 

(4

)%

Adjusted Earnings per Diluted Share *

 

$

1.76

 

 

$

1.82

 

 

 

(3

)%

 

* See Table II for reconciliations of non-GAAP adjusted net income and earnings per diluted share.

* * Net Income Attributable to Stepan = Net Income - Net Loss Attributable to Noncontrolling Interests.

 

 

Summary of First Quarter Adjusted Net Income Items

 

Adjusted net income excludes non-operational deferred compensation income/expense, cash-settled SARs income/expense, legacy environmental remediation-related costs and other significant and infrequent or non-recurring items.

 

 

Deferred Compensation:  The current year first quarter reported net income includes $3.9 million of after-tax income versus $1.5 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 quarter includes $0.4 million of after-tax income versus $0.2 million of after-tax expense in the prior year.

 

 

Business Restructuring:  The current year quarter includes $0.04 million of after-tax decommissioning expense related to the Company’s Canadian plant closure versus $0.06 million of after-tax expense in the prior year.

 

 

Environmental Remediation – The first quarter of 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.  

 

 

 

 

2


 

Percentage Change in Net Sales

 

Net sales in the first quarter increased 26% year-over-year primarily due to higher selling prices that were mainly attributable to the pass-through of higher raw material costs and improved product and customer mix.  These higher average selling prices were slightly offset by the unfavorable impact of foreign currency translation.  Consolidated sales volume was flat year-over-year.        

 

 

Three Months Ended

March 31, 2022

 

Volume

 

 

 

Selling Price & Mix

 

 

28

%

Foreign Currency Translation

 

 

(2

)%

Total

 

 

26

%

 

 

Segment Results

 

 

Three Months Ended

March 31

 

($ in thousands)

 

2022

 

 

2021

 

 

%

Change

 

Net Sales

 

 

 

 

 

 

 

 

 

 

 

 

Surfactants

 

$

468,266

 

 

$

370,936

 

 

 

26

%

Polymers

 

$

187,079

 

 

$

150,385

 

 

 

24

%

Specialty Products

 

$

19,931

 

 

$

16,419

 

 

 

21

%

Total Net Sales

 

$

675,276

 

 

$

537,740

 

 

 

26

%

 

 

Three Months Ended

March 31

 

($ in thousands, all amounts pre-tax)

 

2022

 

 

2021

 

 

%

Change

 

Operating Income

 

 

 

 

 

 

 

 

 

 

 

 

Surfactants

 

$

53,769

 

 

$

53,210

 

 

 

1

%

Polymers

 

$

14,129

 

 

$

17,951

 

 

 

(21

)%

Specialty Products

 

$

3,695

 

 

$

2,633

 

 

 

40

%

Segment Operating Income

 

$

71,593

 

 

$

73,794

 

 

 

(3

)%

    Corporate Expenses

 

$

(8,247

)

 

$

(19,880

)

 

 

(59

)%

Consolidated Operating Income

 

$

63,346

 

 

$

53,914

 

 

 

17

%

 

Total segment operating income for the first quarter of 2022 decreased $2.2 million, or 3%, versus the prior year quarter.  

 

Surfactant net sales were $468.3 million for the quarter, a 26% increase versus the prior year.  Selling prices were up 29% primarily due to the pass-through of higher raw material costs as well as improved product and customer mix. The unfavorable impact of foreign currency translation negatively impacted net sales by 2%.  Sales volume decreased 1% year-over-year primarily due to lower demand for laundry products in the consumer products business.  Higher global demand for products sold into the functional product, personal care and institutional cleaning end markets, largely offset the above.  Surfactant operating income for the quarter increased $0.6 million, or 1%, versus the prior year primarily due to improved product and customer mix that was mostly offset by supply chain challenges and a 1% decline in sales volume.  

3


 

Polymer net sales were $187.1 million in the quarter, a 24% increase versus the prior year.  Selling prices increased 26% primarily due to the pass through of higher raw material costs.  Sales volume increased 2% in the quarter primarily due to rigid polyol growth of 5% that was partially offset by an 8% decline in phthalic anhydride sales volume.  Both North American rigid polyol and phthalic anhydride sales volumes were negatively impacted by the first quarter 2022 Millsdale power outage.  The translation impact of a stronger U.S. dollar negatively impacted net sales by 4%.  Polymer operating income decreased $3.8 million, or 21%, primarily due to the Millsdale power outage that negatively impacted the quarter by an estimated $5.0 million pre-tax.      

 

 

 

Specialty Product net sales were $19.9 million for the quarter, a 21% increase versus the prior year.  Sales volume was down 12% between years while operating income improved $1.1 million, or 40%.  The operating income improvement was primarily attributable to order timing differences within the food and flavor business and improved margins within the MCTs product line.  

 

 

Corporate Expenses

 

 

 

Three Months Ended

March 31

 

($ in thousands)

 

2022

 

 

2021

 

 

%

Change

 

Total  -  Corporate Expenses

 

$

8,247

 

 

$

19,880

 

 

 

(59

)%

Less:

 

 

 

 

 

 

 

 

 

 

 

 

  Deferred Compensation Expense/(Income)

 

$

(7,501

)

 

$

2,694

 

 

NM

 

  Business Restructuring Expense

 

$

52

 

 

$

81

 

 

 

(36

)%

Adjusted Corporate Expenses

 

$

15,696

 

 

$

17,105

 

 

 

(8

)%

 

* See Table III for a discussion of deferred compensation plan accounting.

    

Corporate expenses, excluding deferred compensation and business restructuring costs, decreased $1.4 million, or 8%, versus the prior year quarter.  This decrease was primarily due to lower acquisition-related expenses.   

 

Income Taxes

 

The Company’s effective tax rate was 24.6% in the first quarter of 2022 versus 23.6% in the first quarter of 2021. This increase was primarily attributable to less favorable tax benefits derived from stock-based compensation awards exercised or distributed in the first quarter of 2022 versus the first quarter of 2021 and a less favorable geographical mix of income in the current year quarter.    

 

Shareholder Return

 

The Company paid $7.5 million of dividends to shareholders and repurchased $9.9 million of Company stock in the first quarter of 2022.  The Company has $140.1 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.

 

 

 

4


 

Selected Balance Sheet Information

 

The Company’s total debt increased by $173.5 million and cash increased by $76.8 million versus year-end 2021.  The increase in debt reflects borrowings against the Company’s $350MM revolving credit agreement and the previously disclosed issuance of $75.0 million of senior notes during March 2022.  The increase in cash primarily reflects the above debt borrowings, partially offset by higher working capital requirements and capital expenditures.  The Company’s net debt level increased $96.7 million versus year-end 2021 and the net debt ratio increased from 16% to 21% (net debt and net debt ratios are non-GAAP measures).

 

($ in millions)

 

March 31, 2022

 

 

December 31, 2021

 

Net Debt

 

 

 

 

 

 

 

 

Total Debt

 

$

537.1

 

 

$

363.6

 

Cash

 

 

236.0

 

 

 

159.2

 

Net Debt

 

$

301.1

 

 

$

204.4

 

Equity

 

 

1,116.7

 

 

 

1,074.2

 

Net Debt + Equity

 

$

1,417.8

 

 

$

1,278.6

 

Net Debt / (Net Debt + Equity)

 

 

21

%

 

 

16

%

 

The major working capital components were:

 

($ in millions)

 

March 31, 2022

 

 

December 31, 2021

 

 

 

Net Receivables

 

$

504.5

 

 

$

419.5

 

 

 

Inventories

 

 

308.4

 

 

 

305.5

 

 

 

Accounts Payable

 

 

(350.8

)

 

 

(323.4

)

 

 

   Net Total

 

$

462.1

 

 

$

401.6

 

 

 

 

Capital spending was $60.3 million versus $37.6 million in the prior year quarter.  The increase was primarily due to increased expenditures in the U.S. for the advancement of the Company’s new alkoxylation production facility in Pasadena, TX, which is expected to provide flexible capacity of 75,000 metric tons per year, and new capability and capacity to produce ether sulfates that will meet future 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

 

“Looking forward, we believe that demand across our business will remain strong but the Company will continue to be challenged by external supply chain issues, including raw material availability and transportation constraints that impacted us in 2021 and during the first quarter of 2022,” said Scott Behrens, President and Chief Executive Officer.  “From a segment perspective, we believe that Surfactant volumes within the functional product end-markets, inclusive of agricultural and oilfield, will improve versus 2021 driven by a favorable commodity pricing environment.  We believe our Polymer business will deliver growth versus the prior year and we continue to believe the long-term prospects for rigid polyols remain attractive as energy conservation efforts and more stringent building codes should increase demand.  We anticipate our Specialty Product business results will improve slightly year-over-year.  We are cautiously optimistic about the remainder of the year despite the current inflationary environment and ongoing supply chain challenges.”          

 

 

 

5


 

Conference Call

 

Stepan Company will host a conference call to discuss its first quarter results at 8:00 a.m. ET (7:00 a.m. CT) on April 26, 2022. The call can be accessed by phone and webcast. Telephone access will be available by dialing +1 (800) 734-8592, 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

6


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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7


 

Table I

STEPAN COMPANY

For the Three Months Ended March 31, 2022 and 2021

(Unaudited – ‘000s Omitted)

 

 

 

Three Months Ended

March 31

 

 

 

2022

 

 

2021

 

Net Sales

 

$

675,276

 

 

$

537,740

 

Cost of Sales

 

 

566,057

 

 

 

428,760

 

Gross Profit

 

 

109,219

 

 

 

108,980

 

Operating Expenses:

 

 

 

 

 

 

 

 

Selling

 

 

15,277

 

 

 

14,504

 

Administrative

 

 

21,572

 

 

 

22,638

 

Research, Development and Technical Services

 

 

16,473

 

 

 

15,149

 

Deferred Compensation (Income) Expense

 

 

(7,501

)

 

 

2,694

 

 

 

 

45,821

 

 

 

54,985

 

 

 

 

 

 

 

 

 

 

Business Restructuring

 

 

52

 

 

 

81

 

Operating Income

 

 

63,346

 

 

 

53,914

 

 

 

 

 

 

 

 

 

 

Other Income (Expense):

 

 

 

 

 

 

 

 

Interest, Net

 

 

(2,306

)

 

 

(1,524

)

Other, Net

 

 

(1,650

)

 

 

746

 

 

 

 

(3,956

)

 

 

(778

)

 

 

 

 

 

 

 

 

 

Income Before Income Taxes

 

 

59,390

 

 

 

53,136

 

Provision for Income Taxes

 

 

14,581

 

 

 

12,525

 

Net Income

 

 

44,809

 

 

 

40,611

 

Net Loss Attributable to Noncontrolling Interests

 

 

 

 

 

 

 

 

Net Income Attributable to Stepan Company

 

$

44,809

 

 

$

40,611

 

Net Income Per Common Share Attributable to Stepan Company

 

 

 

 

 

 

 

 

Basic

 

$

1.96

 

 

$

1.77

 

Diluted

 

$

1.93

 

 

$

1.74

 

Shares Used to Compute Net Income Per Common

Share Attributable to Stepan Company

 

 

 

 

 

 

 

 

Basic

 

 

22,896

 

 

 

22,974

 

Diluted

 

 

23,167

 

 

 

23,330

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8


 

Table II

 

 

Reconciliations of Non-GAAP Net Income and Earnings per Diluted Share*

 

 

 

Three Months Ended

March 31

 

($ in thousands, except per share amounts)

 

2022

 

 

EPS

 

 

2021

 

 

EPS

 

Net Income Reported

 

$

44,809

 

 

$

1.93

 

 

$

40,611

 

 

$

1.74

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred Compensation (Income) Expense

 

$

(3,948

)

 

$

(0.17

)

 

$

1,501

 

 

$

0.07

 

Business Restructuring

 

 

39

 

 

$

0.00

 

 

 

61

 

 

$

0.00

 

Cash Settled Stock Appreciation Rights

 

 

(402

)

 

$

(0.01

)

 

 

199

 

 

$

0.01

 

Environmental Remediation

 

 

230

 

 

$

0.01

 

 

-

 

 

-

 

Adjusted Net Income

 

$

40,728

 

 

$

1.76

 

 

$

42,372

 

 

$

1.82

 

 

 

* 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 are neither a substitute for, nor superior to, measures of financial performance prepared in accordance with GAAP.

 

 

Reconciliations of Pre-Tax to After-Tax Adjustments

 

 

 

 

 

Three Months Ended

March 31

 

 

($ in thousands, except per share amounts)

 

2022

 

 

EPS

 

 

2021

 

 

EPS

 

 

Pre-Tax Adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred Compensation (Income) Expense

 

$

(5,195

)

 

 

 

 

 

$

1,975

 

 

 

 

 

 

Business Restructuring

 

 

52

 

 

 

 

 

 

 

81

 

 

 

 

 

 

Cash Settled Stock Appreciation Rights

 

 

(529

)

 

 

 

 

 

 

261

 

 

 

 

 

 

Environmental Remediation

 

 

303

 

 

 

 

 

 

 

 

 

 

 

 

 

   Total Pre-Tax Adjustments

 

$

(5,369

)

 

 

 

 

 

$

2,317

 

 

 

 

 

 

Cumulative Tax Effect on Adjustments

 

$

1,288

 

 

 

 

 

 

$

(556

)

 

 

 

 

 

   After-Tax Adjustments

 

$

(4,081

)

 

$

(0.17

)

 

$

1,761

 

 

$

0.08

 

 


9


 

Table III

 

 

 

Deferred Compensation Plan

 

 

The full effect of the deferred compensation plans on quarterly pre-tax income was $5.2 million of income versus $2.0 million of expense in the prior year.  The accounting for the deferred compensation plans results in operating income when the price of Stepan Company common stock or mutual funds held in the plans 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

 

 

 

3/31

 

 

12/31

 

 

9/30

 

 

6/30

 

 

3/31

 

Stepan Company

 

$

98.81

 

 

$

124.29

 

 

$

112.94

 

 

$

120.27

 

 

$

127.11

 

 

 

The deferred compensation income statement impact is summarized below:

 

 

Three Months Ended

March 31

 

($ in thousands)

 

2022

 

 

2021

 

Deferred Compensation

 

 

 

 

 

 

 

 

Operating Income (Expense)

 

$

7,501

 

 

$

(2,694

)

Other, net – Mutual Fund Gain (Loss)

 

 

(2,306

)

 

 

719

 

Total Pre-Tax Income (Expense)

 

$

5,195

 

 

$

(1,975

)

Total After Tax Income (Expense)

 

$

3,948

 

 

$

(1,501

)

 

 

 

 


10


 

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-month period ending March 31, 2022 as compared to 2021:

 

($ in millions)

 

Three Months Ended

March 31

 

 

Increase

 

 

Change Due to Foreign

Currency

Translation

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

Net Sales

 

$

675.3

 

 

$

537.7

 

 

$

137.6

 

 

$

(11.6

)

Gross Profit

 

 

109.2

 

 

 

109.0

 

 

 

0.2

 

 

 

(1.7

)

Operating Income

 

 

63.3

 

 

 

53.9

 

 

 

9.4

 

 

 

(1.1

)

Pretax Income

 

 

59.4

 

 

 

53.1

 

 

 

6.3

 

 

 

(1.1

)

 

 

 

 


11


 

Table V

 

 

Stepan Company

Consolidated Balance Sheets

March 31, 2022 and December 31, 2021

 

 

March 31, 2022

 

 

December 31, 2021

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets

 

$

1,081,871

 

 

$

913,368

 

Property, Plant & Equipment, Net

 

 

892,581

 

 

 

850,604

 

Other Assets

 

 

298,144

 

 

 

301,640

 

Total Assets

 

$

2,272,596

 

 

$

2,065,612

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current Liabilities

 

$

611,062

 

 

$

500,476

 

Deferred Income Taxes

 

 

10,963

 

 

 

12,491

 

Long-term Debt

 

 

397,760

 

 

 

322,862

 

Other Non-current Liabilities

 

 

136,073

 

 

 

155,590

 

Total Stepan Company Stockholders’ Equity

 

 

1,116,738

 

 

 

1,074,193

 

Noncontrolling Interest

 

 

-

 

 

 

-

 

Total Liabilities and Stockholders’ Equity

 

$

2,272,596

 

 

$

2,065,612

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12

scl-ex992_6.htm

Exhibit 99.2

 

Stepan Declares Quarterly Dividend

 

Northbrook, Illinois, April 26, 2022 -- Stepan Company (NYSE:SCL) today reported:

 

On April 25, 2022, the Board of Directors of Stepan Company declared a quarterly cash dividend on the Company’s common stock of $0.335 per share.  The dividend is payable on June 15, 2022, to common stockholders of record on May 31, 2022.  The Company increased its quarterly cash dividend in the fourth quarter of 2021 by $0.030 per share, marking the 54th consecutive year that the Company has increased its cash dividend to stockholders.  

 

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 products 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.