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Jun 30, 2020
Stepan Q2 2020 Earnings Report
Stepan's net income reached a record of $35.7 million, with surfactant operating income also hitting a record $48.5 million, but polymer and specialty product operating incomes decreased.
Key Takeaways
Stepan Company reported record net income for the second quarter of 2020, driven by strong surfactant sales volume growth due to increased demand for cleaning and disinfection products. However, the polymer business was down due to construction project delays, and the specialty product business was affected by order timing and margin issues.
Net income was a record $35.7 million, or $1.54 per diluted share, versus $30.2 million, or $1.30 per diluted share, in the prior year.
Adjusted net income was a record $38.3 million, or $1.65 per diluted share, versus $35.1 million, or $1.50 per diluted share, in the prior year.
Surfactant operating income was a record $48.5 million versus $32.1 million in the prior year, driven by a 10% increase in global Surfactant volume.
Polymer operating income was $15.5 million versus $22.8 million in the prior year, primarily due to a 13% decline in sales volume.
Revenue by Segment
Forward Guidance
Stepan anticipates continued strong surfactant volume in consumer product end markets due to demand for cleaning products. Polymer business is expected to be challenged in the short term due to construction project deferrals, and higher North American costs are anticipated due to the Illinois River lock closure. The company believes they are well positioned to operate in the challenging near-term environment.
Positive Outlook
- Surfactant volume in the consumer product end markets should remain strong as a result of heightened demand for disinfection, cleaning and personal wash products.
- Demand for surfactants within the agricultural market will approximate last year.
- Strong balance sheet and significant cash on hand.
- Well positioned to operate in the challenging near-term environment.
- Teams are working to minimize vulnerabilities and capture opportunities that are available.
Challenges Ahead
- Oilfield market will remain down for the balance of 2020.
- Polymer business will be challenged in the short term as re-roofing and new construction projects continue to be deferred or canceled.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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