Slide 1: Earnings Call Presentation Third Quarter 2020
Earnings Call Presentation Third Quarter 2020 October 21, 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., Third Quarter Financial Highlights Chairman, President and Chief Executive Officer Luis E. Rojo, Third Quarter Results Vice President and Chief Financial Officer F. Quinn Stepan, Jr., Financial and Strategic Outlook Chairman, President and Chief
Slide 4: Third Quarter 2020 Financial Recap
Third Quarter 2020 Financial Recap • Q3 Reported Net Income was a $33.2 million, or $1.43 per diluted share, a 28% increase versus $25.9 million, or $1.11 per diluted share, in Q3 2019. • Q3 Adjusted Net Income(1) was $36.4 million, or $1.56 per diluted share, a 30% increase versus $27.9 million, or
Slide 5: Net Income Bridge – Q3 2019 to Q3 2020
Net Income Bridge – Q3 2019 to Q3 2020 Note: All amounts are in millions of U.S. dollars and are reported after-tax. $50 $45 16.7 (0.6) (0.5) (2.1) (4.9) $40 36.4 (3.3) $35 33.2 USD in Millions $30 2.0 27.9 25.9 $25 $20 $15 $10 $5 $0 (1) The adjustments to Reported Net Income in Q3 2019 consisted of
Slide 6: Surfactants
Surfactants Strong demand for cleaning and disinfection, as well as, personal wash products, due to COVID-19. Business Results Highlights in millions $ Q3 2020 Q3 2019 Operating Income was $41.2 million, an increase of $21.5 million, or 109%, compared to the prior year. Net Net Sales $ 333.8 $ 299.7
Slide 7: Polymers
Polymers Lower results primarily driven by COVID-19 construction project delays and cancellations. Business Results Highlights in millions $ Q3 2020 Q3 2019 Operating Income was $22.4 million, a decrease of $0.9 million, compared to the prior year. Net sales decreased 14% due to lower Phthalic anhyd
Slide 8: Net Debt Ratio / Cash Flows
Net Debt Ratio / Cash Flows Historical Net Debt Ratio(1) 25% 20% 16% 15% Net debt ratio 10% 5% 0% -5% -10% -12% -15% Q3 2016 Q3 2017 Q3 2018 Q3 2019 Q3 2020 For the quarter: • Cash flow from operations was $83.2 million, up +54% versus Q3 2019. • Capital expenditures were $30.2 million. • We returne
Slide 9: Ample Liquidity to Maneuver the 2020 Challenge
Ample Liquidity to Maneuver the 2020 Challenge Debt Maturity Profile (in MMs USD) 350 310 38 38 38 29 29 9 14 14 9/30/2020 Q4 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 Tier 2/3 Cu
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 $6 million Effective tax rate 19% 18% 23-26% 14
Slide 15: Appendix II: Reconciliation of Non-GAAP Adjusted Net Income and EPS
Appendix II Reconciliation of Non-GAAP Adjusted Net Income and Earnings Per Diluted Share* Three Months Ended Nine Months Ended September 30 September 30 ($ in thousands, except per share amounts) 2020 EPS 2019 EPS 2020 EPS 2019 EPS Net Income Reported $ 33,168 $ 1.43 $ 25,889 $ 1.11 $ 96,420 $ 4.15
Slide 16: Appendix III: Foreign Exchange Impact – Q3 2020
Appendix III Foreign Exchange Impact – Q3 2020 (millions USD) Surfactants Polymers Specialty Consolidated Products Net Sales (10.6) 0.8 0.1 (9.7) Gross Profit (2.9) 0.2 0.0 (2.7) Operating (0.5) 0.0 0.0 (0.5) Expenses Operating Income (2.4) 0.2 0.0 (2.2) 16
Slide 17: Appendix IV: Net Debt to Total Capitalization Ratio
Appendix IV Net Debt to Total Capitalization Ratio (millions USD) September 30, September 30, September 30, September 30, September 30, 2020 2019 2018 2017 2016 Total Debt 207.9 231.9 286.2 304.4 326.1 Cash 310.4 286.0 274.0 264.1 207.0 Net Debt (102.5) (54.1) 12.2 40.3 119.1 Equity 938.2 854.2 777.