Stepan Reports Record Second Quarter and First Half Earnings

NORTHFIELD, Ill., July 20, 2016

Second Quarter Highlights

• Reported net income was a record $27.9 million, or $1.21 per diluted share, a 65% increase versus $16.9 million, or $0.74 per diluted share, in the prior year.
• Adjusted net income* was a record $30.1 million, or $1.31 per diluted share, a 44% increase versus $20.9 million, or $0.91 per diluted share, in the prior year. Total sales volume increased 12% for the quarter.
• Surfactant operating income was $27.2 million, a 12% increase versus prior year benefiting from our internal efficiency program, lower raw material costs and an 11% increase in volume.
• Polymer operating income was a record $31.0 million, a 32% increase versus prior year. Volumes were 14% higher and margins improved partially due to lower raw material costs.
• The effect of foreign currency translation negatively impacted net income by $0.7 million, or $0.03 per diluted share, versus prior year.

First Half Highlights

• Reported net income was a record $55.5 million, or $2.42 per diluted share, a 45% increase versus $38.2 million, or $1.67 per diluted share, in the prior year.
• Adjusted net income* was a record $59.6 million, or $2.60 per diluted share, a 44% increase versus $41.3 million, or $1.80 per diluted share, in the prior year. Total sales volume increased 12% during the first half of the year.
• The effect of foreign currency translation negatively impacted net income by $2.2 million or $0.10 per diluted share versus prior year.

*  Adjusted net income is a non-GAAP measure which excludes Deferred Compensation income/ expense as well as other significant and infrequent/non-recurring items. See Table II for this non-GAAP reconciliation.

"The Company had a strong second quarter and delivered record quarterly and year to date results," said F. Quinn Stepan, Jr., President and Chief Executive Officer. "The quarter benefited from higher Surfactant and Polymer volumes, increased asset utilization, reduced raw material costs and enhanced internal efficiencies. 

Surfactant operating income was up 12% on strong volume growth, improved asset utilization and a better product mix.  Polymers delivered a record quarter with a 32% increase in operating income on higher volumes and margins.  Our polymer business continues to benefit from global energy conservation efforts and the advantages our technologies provide over competitive insulation materials."