Stepan Company · NYSE:SCL
Stepan — Q2 2023 Earnings Presentation
20 slides from Stepan's earnings presentation, Jul 26, 2023
Slide 1: Earnings Call Presentation Second Quarter 2023
Earnings Call Presentation Second Quarter 2023 July 26, 2023
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 Scott R. Behrens, Second Quarter Highlights President and Chief Executive Officer Luis E. Rojo, Second Quarter Financial Results Vice President and Chief Financial Officer Scott R. Behrens, Strategic Outlook President and Chief Executive Officer Analyst / Shareholder
Slide 4: Second Quarter 2023 Financial Recap
Second Quarter 2023 Financial Recap • Q2 Reported Net Income was $12.7 million, or $0.55 per diluted share, versus the record $52.1 million, or $2.26 per diluted share, in Q2 2022. • Q2 Adjusted net income(1) was $12.1 million, or $0.53 per diluted share, versus the record $53.0 million, or $2.30 pe
Slide 5: Net Income Bridge – Q2 2022 to Q2 2023
Net Income Bridge – Q2 2022 to Q2 2023 Note: All amounts are in millions of U.S. dollars and are reported after-tax. (1) The adjustments to Reported Net Income in Q2 2022 consisted of deferred compensation expense and cash-settled SARs expense of $0.6 million, environmental remediation expense of $0
Slide 6: Surfactants
Surfactants Operating Income impacted by lower Volumes and mix. Agricultural Chemicals impacted by customer and channel destocking. Q2 2023 Business Results Highlights in millions $ Q2 2023 Q2 2022 Operating income was $15.1MM, a decrease of $33.1MM compared to prior year driven by a volume decline
Slide 7: Polymers
Polymers Lower Operating Income attributable to volume driven by reduced construction-related activity and continued customer and channel destocking. Q2 2023 Business Results Highlights in millions $ Q2 2023 Q2 2022 Operating income was $16.3MM, a decrease of $17.6MM $ 164.5 $ 238.9 Net Sales compar
Slide 8: Balance Sheet remains healthy
Balance Sheet remains healthy 2023 Capital Expenditure(1) Net Debt / TTM Adjusted EBITDA 160 549 2.5 Net Debt / TTM Adjusted EBITDA $ Millions $ Millions Ratio(4) $70-80M 80-90 Reduction 220 1H 2H Net Debt(2) TTM Adjusted Capex EBITDA(3) 2023 Working Capital(5) Scheduled Debt Principal Repayments 55
Slide 9: Stepan Strategic Priorities
Stepan Strategic Priorities Shareholder Value Creation Innovation & Customer Intimacy Market & Extended Reach Diversification PEOPLE FIRST Cost & Efficient Capital Operational Allocation Excellence ESG 9
Slide 10: Strategic Capital Investments Update
Strategic Capital Investments Update Alkoxylation / Specialty Nonionics Low 1,4 Dioxane Capability Pasadena, Texas (United States) Millsdale, Illinois (United States) Stepan investing in new alkoxylation capacity at existing Stepan investing in Low 1,4 dioxane capabilities at several Pasadena, Texas
Slide 11: Thank You
NYSE: SCL Thank You Luis E. Rojo VP and CFO 847-446-7500 WORKING TOGETHER FOR A SAFER, CLEANER WORLD
Slide 12: Appendix: Financials and GAAP Reconciliations
APPENDIX Financials and GAAP Reconciliations 12
Slide 13: Update on Certain Expectations
Appendix I Update on Certain Expectations (millions USD) 2020 Actual 2021 Actual 2022 Actual 2023 Forecast Capital Expenditures 126 195 301 240 - 250 Debt Repayments 24 38 38 42 Interest Net 5 6 10 15 Depreciation & Amortization 82 91 95 109 Effective Tax Rate (%) 25% 20% 22% 23-26% 2023 Capex guida
Slide 14: Reconciliation of Non-GAAP Adjusted Net Income and EPS
Appendix II Reconciliation of Non-GAAP Adjusted Net Income and Earnings Per Diluted Share Reconciliation of Pre-Tax to After-Tax Adjustments 14
Slide 15: Foreign Exchange Impact – Q2 2023
Appendix III Foreign Exchange Impact – Q2 2023 (millions USD) Surfactants Polymers Specialty Consolidated Products Net Sales (2.9) (5.0) (0.2) (8.0) Gross Profit (0.4) (0.6) (0.0) (1.1) Operating (0.1) (0.1) (0.0) (0.3) Expenses Operating Income (0.3) (0.5) (0.0) (0.8) 15
Slide 16: Net Debt to Total Capitalization Ratio
Appendix IV Net Debt to Total Capitalization Ratio (millions USD) June 30, June 30, June 30, June 30, June 30, June 30, 2023 2022 2021 2020 2019 2018 Total Debt 682.6 526.0 238.9 207.9 232.6 286.8 Cash 133.9 194.6 127.1 272.9 275.3 256.7 Net Debt 548.7 331.4 111.8 (65.0) (42.7) 30.7 Equity 1,215.1 1
Slide 17: Adjusted EBITDA and EBITDA Reconciliations
Appendix V Adjusted EBITDA and EBITDA Reconciliations Q2 2023 – Quarterly Adjusted EBITDA by Segment (millions USD) Surfactants Polymers Specialty Products Corporate Total Stepan Net Sales 392 165 24 - 580 Reported Operating Income 15 16 4 (17) 18 Adjustments 0 0 0 2 2 Adjusted Operating Income 15 1
Slide 18: Adjusted EBITDA Bridge
Appendix VI Adjusted EBITDA Bridge(1) (1) (1) Adjusted EBITDA is a non-GAAP measure. See Appendix V and Appendix VII for GAAP reconciliations. 18
Slide 19: Adjusted EBITDA and EBITDA Reconciliations 2022
Appendix VII Adjusted EBITDA and EBITDA Reconciliations 2022 (millions USD) Q2 2022 – Quarterly Adjusted EBITDA by Segment Surfactants Polymers Specialty Products Corporate Total Stepan Net Sales 485 239 28 - 752 Reported Operating Income 48 34 10 (14) 78 Adjustments* 0 0 0 (3) (3) Adjusted Operatin
Slide 20: Trailing Twelve Months Adjusted EBITDA Reconciliation
Appendix VIII Trailing Twelve Months Adjusted EBITDA Reconciliation 6/30/2023 TTM – Adjusted EBITDA Reported Operating Income 105 Depreciation & Amortization 100 Other Net Income (Expense) 2 EBITDA 208 Deferred Compensation 0 Cash Settled SARS (0) Business Restructuring 0 Environmental Remediation 1