Stepan Q3 Report 2023
Highlights
- Reported net income was $12.6 million, or $0.55 per diluted share, versus a record $39.4 million, or $1.71 per diluted share, in the prior year. Adjusted net income* was $14.7 million, or $0.64 per diluted share, versus a record $46.3 million, or $2.01 per diluted share, in the prior year. Total Company sales volume decreased 9% versus the prior year.
- Polymer operating income was $21.8 million versus $31.9 million in the prior year. This decrease was primarily due to a 12% decline in global sales volume, including a 10% decline in Rigid Polyols. Operating income improved $5.5 million, or 34%, versus the second quarter of 2023 primarily due to a 7% increase in global Rigid Polyols demand.
- Specialty Product operating income was $2.4 million versus $9.7 million in the prior year. This decrease was primarily attributable to lower unit margins and sales volume within the medium chain triglycerides (MCT) product line. Operating income was down $1.4 million from the second quarter of 2023 primarily due to order timing differences.
- The effect of foreign currency translation positively impacted net income by $0.7 million, or $0.03 per diluted share, versus the prior year.
- The Company increased its quarterly cash dividend in the fourth quarter of 2023 by $0.01 per share, or 3%, marking the 56th consecutive year that the Company has increased its cash dividend to stockholders.
- EBITDA** was $45.1 million during the third quarter of 2023 versus $76.4 million in the prior year. Adjusted EBITDA** was $48.0 million versus $85.5 million in the prior year. The declines in both EBITDA** and adjusted EBITDA** were primarily due to the 9% reduction in sales volume versus the prior year.
- The Company recorded a $4.1 million after-tax restructuring reserve, associated with the Company’s previously announced voluntary early retirement program, in the third quarter of 2023.
- In addition, the Company is expanding its cost reduction activities and expects to realize $50.0 million of pre-tax cost savings in 2024 to help offset inflation and increased expenses related to the Company’s new Pasadena alkoxylation investment.
