Stepan Company · NYSE:SCL
Stepan — Q1 2020 Earnings Presentation
16 slides from Stepan's earnings presentation, Apr 21, 2020
Slide 1: Earnings Call Presentation First Quarter 2020
Chemistry That Connects Us Earnings Call Presentation First Quarter 2020 April 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., First Quarter Financial Highlights Chairman, President and Chief Executive Officer Luis Rojo, First Quarter Results Vice President and Chief Financial Officer F. Quinn Stepan, Jr., Financial and Strategic Outlook Chairman, President and Chief Exe
Slide 4: First Quarter 2020 Financial Recap
First Quarter 2020 Financial Recap • Q1 Reported Net Income was $27.5 million, or $1.18 per diluted share, a 10% increase versus $25.0 million, or $1.07 per diluted share, in Q1 2019. • Q1 Adjusted Net Income(1) was $24.2 million, or $1.04 per diluted share, a 21% decrease versus $30.6 million, or $
Slide 5: Net Income Bridge – Q1 2019 to Q1 2020
Net Income Bridge – Q1 2019 to Q1 2020 Note: All amounts are in millions of U.S. dollars and are reported after-tax. $35 5.6 30.6 (0.8) (3.5) $30 0.6 0.5 (3.3) 3.3 27.5 $25 25.0 24.2 USD in Millions $20 $15 $10 $5 $0 (1) The adjustments to Reported Net Income in Q1 2019 consisted of deferred compens
Slide 6: Surfactants
Surfactants • Reported Operating Income was $36.2 million, a decrease of $1.0 million, or 3%, Strong demand for cleaning and compared to the prior year. Net sales disinfection products due to COVID-19 decreased 6% driven by lower selling prices offset by Millsdale Plant incident. due to the pass-thr
Slide 7: Polymers
Polymers • Reported Operating Income was $7.5 Lower results driven by reduction in million, a decrease of $4.6 million, phthalic anhydride volume due to the compared to the prior year. Net sales Millsdale Plant power outage. decreased 11% due to a significant reduction in phthalic anhydride volume i
Slide 8: Net Debt Ratio / Cash Flows
Net Debt Ratio / Cash Flows Historical Net Debt Ratio(1) 25% 23% 20% 15% Net debt ratio 10% 5% 0% -4% -5% -10% -15% Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020 For the quarter: • Cash flow from operations was a usage of $6.5 million driven by higher working capital. • Capital expenditures were $33.2 mil
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 Earnings Call Presentation First Quarter 2020 9
Slide 10: Stepan Strategic Priorities
Stepan Strategic Priorities Our Vision: Innovative Chemical Solutions for a Cleaner, Healthier, More Energy Efficient World Earnings Call Presentation First Quarter 2020 10
Slide 11: 2020 Strategic Update
2020 Strategic Update Market Diversification • We have a well diversified portfolio. Overall we believe our Surfactants business should remain relatively recession resistant. Volume to the Functional Product end markets will be a challenge in the short term, however we believe in the long term prosp
Slide 12: Thank you for your interest in Stepan
Thank you for your interest in Stepan Contact Information: Luis Rojo – VP, CFO 847-446-7500 Earnings Call Presentation First Quarter 2020 12
Slide 13: 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% Earnings Call Presen
Slide 14: Appendix II: Reconciliation of Non-GAAP Adjusted Net Income
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 Earnings Call Presentation First Quarter 2020 14
Slide 15: Appendix III: Foreign Exchange Impact – Q1 2020
Appendix III Foreign Exchange Impact – Q1 2020 (millions USD) Surfactants Polymers Specialty Consolidated Products Net Sales (6.4) (1.7) (0.1) (8.2) Gross Profit (1.1) (0.3) 0.0 (1.4) Operating Expenses (0.5) (0.1) 0.0 (0.6) Operating Income (0.7) (0.1) 0.0 (0.8) Earnings Call Presentation First Qua
Slide 16: Appendix IV: Net Debt to Total Capitalization Ratio
Appendix IV Net Debt to Total Capitalization Ratio (millions USD) March 31, 2020 March 31, 2019 March 31, 2018 March 31, 2017 March 31, 2016 Total Debt 222.1 271.9 290.8 316.7 327.9 Cash 254.3 269.5 244.6 197.8 145.7 Net Debt (32.2) 2.4 46.2 118.9 182.2 Equity 866.8 831.4 774.6 673.2 594.8 Net Debt