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Actionable news in SCL: STEPAN CO.,

Northfield, Illinois, October 21, 2015 — Stepan Company (Nyse: Scl) Today Reported:

The following excerpt is from the company's SEC filing.

Stepan Reports Higher Third Quarter Results and

Announces Forty-Eighth Consecutive Year of Dividend Increases

Third Quarter Highlights

Reported net income was $24.9 million or $1.09 per diluted share, an 85% increase versus $13.5 million or $0.59 per diluted share in the prior year.

Adjusted net income* was $21.1 million or $0.92 per diluted share, a 35% increase versus $15.6 million or $0.68 per diluted share in the prior year.

Surfactant operating income was $21.8 million, a 96% increase versus prior year. Polymer operating income was $24.6 million, a 35% increase versus prior year.

Total sales volume increased 7%. Surfactant and Polymer sales volumes increased 8% and 4%, respectively.

The effects of foreign currency translation negatively impacted net income by $2.8 million or $0.12 per diluted share versus prior year.

YTD Highlights

Reported net income was $63.1 million or $2.76 per diluted share versus $50.9 million or $2.22 per diluted share in the prior year.

Adjusted net income* was $62.4 million or $2.73 per diluted share versus $49.0 million or $2.14 per diluted share in the prior year.

The effects of foreign currency translation negatively impacted net income by $6.9 million or $0.30 per diluted share versus prior year.

Adjusted net income is a non-GAAP measure which excludes Deferred Compensation Income/ Expense as well as other significant and infrequent/non-recurring items. See Table II for this non-GAAP reconciliation.

“Our third quarter operating results benefited from continued earnings improvements in Surfactants and a strong performance in Polymers, partially offset by a decline in Specialty Products,”

said F. Quinn Stepan, Jr.,

President and Chief Executive Officer.

“Actions taken to improve product mix, improve asset utilization, reduce costs and improve efficiency are contributing to income growth despite the negative impacts of a strong U.S. dollar.”

“We are pleased with our year over year improvement and our focus remains on generating long-term sustainable earnings growth. During the quarter, we made significant progress on a number of key strategic initiatives. Our long-term supply agreement with The Sun Products Corporation, announced on July 9, 2015, has significantly improved our North American sulfonation capacity utilization. We have successfully integrated our second quarter purchase of a sulfonation plant in Bahia, Brazil. We have advanced projects to add polyol capacity in China, Poland and the United States. Our previously announced efficiency improvement program is delivering expected results.”

Financial Summary

Three Months Ended

September 30

Nine Months Ended

September 30

($ in thousands, except per share data)

Change

Net Sales

444,011

491,429

1,356,876

1,472,982

Operating Income

38,794

22,253

102,567

81,690

Net Income

24,912

13,491

63,096

50,862

Earnings per Diluted Share

Adjusted Net Income *

21,098

15,579

62,441

48,972

Adjusted Earnings per Diluted Share*

See Table II for a reconciliation of non-GAAP Adjusted Net Income and Earnings per Diluted Share.

Summary of Third Quarter Adjusted Net Income Items

Adjusted net income excludes non-operational deferred compensation income and/or expense as well as certain other significant and infrequent or non-recurring items.

Deferred Compensation:

The current year quarter includes $3.8 million of after-tax income versus $2.7 million of after-tax income in the prior year.

Environmental Reserve:

The prior year quarter includes $2.7 million of after-tax environmental reserve expense associated with the Company’s Maywood, New Jersey site.

Customer Bankruptcy:

The prior year quarter includes $2.1 million of after-tax expense for a Phthalic Anhydride customer that filed for bankruptcy.

Percentage Change in Net Sales

The decrease in quarterly net sales was primarily due to lower selling prices related to certain pass-through contract requirements associated with lower raw material costs and the negative impact of foreign currency translation resulting from the stronger U.S. dollar. These decreases were partially offset by 7% volume growth in the quarter. Surfactant and Polymer volumes grew by 8% and 4% respectively.

September 30, 2015

September 30, 2015

Volume

Selling Price

Foreign Translation

Segment Results

($ in thousands)

290,830

318,486

921,124

987,957

134,726

152,955

377,703

420,332

18,455

19,988

58,049

64,693

Total Net Sales

($ in thousands, all amounts pre-tax)

21,762

11,115

79,758

48,692

24,588

18,268

62,802

47,538

10,600

Total segment operating income increased $13.7 million or 42% versus the prior year quarter. Total segment operating income is up $39.2 million or 37% year to date.

Surfactant sales were $290.8 million in the third quarter, $27.7 million less than prior year. The translation impact of a stronger U.S. dollar decreased sales by $29.3 million. Sales volume increased 8% in the third quarter. North American sales volume increased 6% mostly due to higher consumer product sales. Strong volume growth in Brazil and Europe, 32% and 6% respectively, was slightly offset by lower sales in Asia and Mexico. Surfactant operating income increased $10.6 million or 96% versus the prior year quarter. All regions, with the exception of Asia, delivered operating income growth in the quarter. North America benefited from the earnings leverage effect of the aforementioned volume growth.

Polymer sales were $134.7 million in the third quarter, an $18.2 million decrease...


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