Stepan Company · NYSE:SCL
Stepan — Q1 2023 Earnings Presentation
20 slides from Stepan's earnings presentation, Apr 25, 2023
Slide 1: Earnings Call Presentation First Quarter 2023
Earnings Call Presentation First Quarter 2023 April 25, 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, First Quarter Highlights President and Chief Executive Officer Luis E. Rojo, First Quarter Financial Results Vice President and Chief Financial Officer Scott R. Behrens, Strategic Outlook President and Chief Executive Officer Analyst / Shareholder Qu
Slide 4: First Quarter 2023 Financial Recap
First Quarter 2023 Financial Recap • Q1 Reported Net Income was $16.1 million, or $0.70 per diluted share, versus $44.8 million, or $1.93 per diluted share, in Q1 2022. • Q1 Adjusted Net Income(1) was $16.4 million, or $0.71 per diluted share, versus $40.7 million, or $1.76 per diluted share, in Q1
Slide 5: Net Income Bridge – Q1 2022 to Q1 2023
Net Income Bridge – Q1 2022 to Q1 2023 Note: All amounts are in millions of U.S. dollars and are reported after-tax. (1) The adjustments to Reported Net Income in Q1 2022 consisted of deferred compensation expense and cash-settled SARs income of $4.4 million, and environmental remediation expense of
Slide 6: Surfactants
Surfactants Lower demand and customer destocking in commodity Laundry, Personal Care and in the Distribution channel. This was partially offset by higher demand in Agricultural end markets. Q1 2023 Business Results Highlights in millions $ Q1 2023 Q1 2022 Operating income was $27 MM, a decrease of $
Slide 7: Polymers
Polymers Lower Operating Income attributable to volume driven by lower demand and customer/channel destocking. Q1 2023 Business Results Highlights in millions $ Q1 2023 Q1 2022 Operating income was $10 MM, a decrease of $4 MM $ 161.1 $ 187.1 Net Sales compared to prior year. Selling prices increased
Slide 8: Balance Sheet remains healthy with Ample Liquidity to Invest for Growth
Balance Sheet remains healthy with Ample Liquidity to Invest for Growth Cash vs. Debt Net Debt / TTM Adjusted EBITDA 711 587 584 2.15 Net Debt / TTM Adjusted EBITDA $ Millions $ Millions Ratio(3) 364 331 271 176 159 174 127 2015 2021 2022 Q1 2023 Net Debt(1) TTM Adjusted Cash Debt EBITDA(2) Interest
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: Stepan 2023 Strategic Priorities
Stepan 2023 Strategic Priorities Our Vision: Innovative Chemical Solutions for a Cleaner, Healthier, More Energy Efficient World Customer Intimacy & Extended Reach 1 • Diversify and grow our customer base by increasing our reach with Tier 2/3 customers through digitalization • Continue collaboration
Slide 11: 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 12: Thank You
NYSE: SCL Thank You Luis E. Rojo VP and CFO 847-446-7500 WORKING TOGETHER FOR A SAFER, CLEANER WORLD
Slide 13: Appendix: Financials and GAAP Reconciliations
APPENDIX Financials and GAAP Reconciliations 13
Slide 14: Update on Certain Expectations
Appendix I Update on Certain Expectations (millions USD) 2020 Actual 2021 Actual 2022 Actual 2023 Forecast Capital Expenditures 126 195 301 220 - 240 Debt Repayments 24 38 38 42 Interest Net 5 6 10 15 Depreciation & Amortization 82 91 95 110 Effective Tax Rate (%) 25% 20% 22% 25-27% 2023 Capex guida
Slide 15: 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 15
Slide 16: Foreign Exchange Impact – Q1 2023
Appendix III Foreign Exchange Impact – Q1 2023 (millions USD) Surfactants Polymers Specialty Consolidated Products Net Sales (5.9) (6.3) (0.2) (12.5) Gross Profit (0.7) (0.8) 0.0 (1.5) Operating (0.2) (0.2) (0.0) (0.5) Expenses Operating Income (0.5) (0.6) 0.0 (1.1) 16
Slide 17: Net Debt to Total Capitalization Ratio
Appendix IV Net Debt to Total Capitalization Ratio (millions USD) March 31, December March 31, March 31, March 31, March 31, 2023 31, 2022 2022 2021 2020 2019 Total Debt 711.0 587.1 537.1 248.4 222.1 271.9 Cash 127.0 173.8 236.0 150.7 254.3 269.5 Net Debt 584.0 413.3 301.1 97.7 (32.2) 2.4 Equity 1,1
Slide 18: Adjusted EBITDA Reconciliations
Appendix V Adjusted EBITDA Reconciliations Q1 2023 – Quarterly Adjusted EBITDA by Segment (millions USD) Surfactants Polymers Specialty Products Corporate Total Stepan Net Sales 468 161 22 - 651 Reported Operating Income 27 10 3 (19) 21 Adjustments 0 0 0 2 2 Adjusted Operating Income 27 10 3 (16) 23
Slide 19: Adjusted EBITDA Bridge
Appendix VI Adjusted EBITDA Bridge $90 79.3 (1) (24.4) $80 $70 $60 (3.4) USD in Millions (1.3) (1.5) $50 48.7 $40 $30 $20 $10 $0 (1) EBITDA and adjusted EBITDA are non-GAAP measures. See Appendix V and Appendix VII for GAAP reconciliations. 19
Slide 20: Adjusted EBITDA Reconciliations 2022
Appendix VII Adjusted EBITDA Reconciliations 2022 (millions USD) Q1 2022 – Quarterly Adjusted EBITDA by Segment Surfactants Polymers Specialty Products Corporate Total Stepan Net Sales 468 187 20 - 675 Reported Operating Income 54 14 4 (8.2) 63 Adjustments* 0 0 0 (8) (8) Adjusted Operating Income 53