Stepan Reports Strong Third Quarter Results

NORTHFIELD, Ill., Oct. 18, 2016

Third Quarter Highlights

• Reported net income was $20.4 million, or $0.89 per diluted share, an 18% decrease versus $24.9 million, or $1.09 per diluted share, in the prior year. Adjusted net income* was $24.5 million, or $1.06 per diluted share, a 16% increase versus $21.1 million, or $0.92 per diluted share, in the prior year.
• Total company sales volume increased 2% for the quarter.
• Surfactant operating income was $20.7 million, a 5% decrease versus prior year. Most of this decrease was attributable to lower sales volumes in Latin American and Europe. Global Surfactant sales volume was flat versus prior year.
• Polymer operating income was $27.1 million, a 10% increase versus prior year. This was mostly attributable to higher volume which was up 11% versus prior year.
• The effect of foreign currency translation had an immaterial impact on net income versus prior year.
• On October 3rd, closed on acquisition of Tebras/PBC in Brazil, which will allow Stepan to expand and diversify its customer base in Brazil and provide an opportunity to sell the Company's broader surfactant portfolio.

Nine Month Highlights

• Reported net income was a record $75.9 million, or $3.31 per diluted share, a 20% increase versus $63.1 million, or $2.76 per diluted share, in the prior year. Adjusted net income* was a record $84.1 million, or $3.66 per diluted share, a 35% increase versus $62.4 million, or $2.73 per diluted share, in the prior year.
• Total company sales volume increased 8% for the first nine months.
• The effect of foreign currency translation negatively impacted net income by $2.3 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 delivered reported net income of $20.4 million, a record adjusted net income in the third quarter, and record results through the first nine months of the year," said F. Quinn Stepan, Jr., President and Chief Executive Officer. "Strong Polymer volumes globally, increased asset utilization and enhanced internal efficiencies continue to drive results.

"Surfactant operating income was down 5% mostly due to lower volumes in Latin America and Europe. North American surfactant operating income improved on higher volumes. Polymer income was up 10%, benefiting from global energy conservation efforts and the advantages that our technologies provide over competitive insulation materials."  

Financial Summary