Stepan Company · NYSE:SCL
Stepan — Q2 2020 Earnings Presentation
17 slides from Stepan's earnings presentation, Jul 22, 2020
Slide 1: Earnings Call Presentation Second Quarter 2020
Earnings Call Presentation Second Quarter 2020 July 22, 2020
Slide 2: Cautionary Statement
Cautionary Statement Certain information in this presentation 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.
Slide 3: Earnings Conference Call Agenda
Earnings Conference Call Agenda F. Quinn Stepan, Jr., Second Quarter Financial Highlights Chairman, President and Chief Executive Officer Luis E. Rojo, Second Quarter Results Vice President and Chief Financial Officer F. Quinn Stepan, Jr., Financial and Strategic Outlook Chairman, President and Chie
Slide 4: Second Quarter 2020 Financial Recap
Second Quarter 2020 Financial Recap • Q2 Reported Net Income was a record $35.7 million, or $1.54 per diluted share, an 18% increase versus $30.2 million, or $1.30 per diluted share, in Q2 2019. • Q2 Adjusted Net Income(1) was a record $38.3 million, or $1.65 per diluted share, a 9% increase versus
Slide 5: Net Income Bridge – Q2 2019 to Q2 2020
Net Income Bridge – Q2 2019 to Q2 2020 Note: All amounts are in millions of U.S. dollars and are reported after-tax. $60 $50 12.8 (5.4) (2.1) (0.6) (1.5) $40 38.3 (2.6) USD in Millions 4.9 35.1 35.7 30.2 $30 $20 $10 $0 (1) The adjustments to Reported Net Income in Q2 2019 consisted of deferred compe
Slide 6: Surfactants – RECORD Quarter
Surfactants – RECORD Quarter Strong demand for cleaning and disinfection, as well as, personal wash products, due to COVID-19. Business Results Highlights in millions $ Q2 2020 Q2 2019 Operating Income was $48.5 million, an increase of $16.4 million, or 51%, compared to the prior year. Net Net Sales
Slide 7: Polymers
Polymers Lower results primarily driven by COVID-19 construction project delays and cancellations. Business Results Highlights in millions $ Q2 2020 Q2 2019 Operating Income was $15.5 million, a decrease of $7.2 million, compared to the prior year. Net sales decreased Net Sales $ 112.4 $ 140.6 20% p
Slide 8: Net Debt Ratio / Cash Flows
Net Debt Ratio / Cash Flows Historical Net Debt Ratio(1) 25% 20% 17% 15% Net debt ratio 10% 5% 0% -5% -8% -10% -15% Q2 2016 Q2 2017 Q2 2018 Q2 2019 Q2 2020 For the quarter: • Cash flow from operations was $65.0 million. • Capital expenditures were $21.5 million. • We returned $12.7 million to our sh
Slide 9: Ample Liquidity to Maneuver the 2020 Challenge
Ample Liquidity to Maneuver the 2020 Challenge Debt Maturity Profile (in MMs USD) 350 315 23 38 38 38 29 29 14 14 2019 2020 2021 2022 2023 2024 2025 2026 2027 Debt Maturities Cash Revolver 9
Slide 10: Stepan Strategic Priorities
Stepan Strategic Priorities Our Vision: Innovative Chemical Solutions for a Cleaner, Healthier, More Energy Efficient World BUSINESS PRIORITIES • Enable a healthier world through the supply of surfactants for cleaning, disinfection and personal wash applications. • Accelerate growth with Local Tier
Slide 11: Strategic Priorities
Strategic Priorities: Key Priorities Stepan Opportunities / Actions • Ensure the health and safety of our employees. Implemented recommended safety procedures and protocols globally. Majority of administrative employees working from home. COVID-19 • Producing and delivering products that help fight
Slide 12: Thank You
NYSE: SCL Thank You Luis E. Rojo VP and CFO 847-446-7500 CHEMISTRY THAT CONNECTS US
Slide 13: Appendix: Financials and GAAP Reconciliations
APPENDIX Financials and GAAP Reconciliations 13
Slide 14: Appendix I: Update on Certain Expectations
Appendix I Update on Certain Expectations 2018 Actual 2019 Actual 2020 Expected Capital expenditures $87 million $106 million $100-120 million Debt repayments $21 million $54 million $23 million Interest expense $11 million $6 million $6 million Effective tax rate 19% 18% 22-25% 14
Slide 15: Appendix II: Reconciliation of Non-GAAP Adjusted Net Income and EPS
Appendix II Reconciliation of Non-GAAP Adjusted Net Income and Earnings Per Diluted Share* *Amounts are presented after-tax Reconciliation of Pre-Tax to After-Tax Adjustments 15
Slide 16: Appendix III: Foreign Exchange Impact – Q2 2020
Appendix III Foreign Exchange Impact – Q2 2020 (millions USD) Surfactants Polymers Specialty Consolidated Products Net Sales (17.2) (2.9) 0.0 (20.2) Gross Profit (3.9) (0.4) 0.0 (4.4) Operating (0.9) (0.2) 0.0 (1.1) Expenses Operating Income (3.0) (0.3) 0.0 (3.3) 16
Slide 17: Appendix IV: Net Debt to Total Capitalization Ratio
Appendix IV Net Debt to Total Capitalization Ratio (millions USD) June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 Total Debt 207.9 232.6 286.8 304.4 321.4 Cash 272.9 275.3 256.7 223.8 190.4 Net Debt (65.0) (42.7) 30.1 80.6 131.0 Equity 897.4 857.7 761.2 707.3 618.9 Net Debt + E