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Sep 30, 2020
Stepan Q3 2020 Earnings Report
Stepan delivered record third quarter results driven by strong surfactant performance and disciplined cost management.
Key Takeaways
Stepan Company reported a strong third quarter with net income increasing to $33.2 million, or $1.43 per diluted share, compared to $25.9 million, or $1.11 per diluted share, in the prior year. Adjusted net income was $36.4 million, or $1.56 per diluted share, a 30% increase. The Surfactant segment saw significant operating income growth due to increased sales volume, while the Polymer segment experienced a slight decline. The company's strong balance sheet and cash position support future growth.
Reported net income was $33.2 million, or $1.43 per diluted share versus $25.9 million, or $1.11 per diluted share, in the prior year.
Adjusted net income was $36.4 million, or $1.56 per diluted share, up 30% versus $27.9 million, or $1.20 per diluted share, in the prior year.
Surfactant operating income was $41.2 million versus $19.7 million in the prior year, primarily attributable to an 8% increase in global sales volume.
Polymer operating income was $22.4 million versus $23.3 million in the prior year, mostly attributable to a 5% decline in global Polymer sales volume versus prior year.
Revenue by Segment
Forward Guidance
The company anticipates strong Surfactant volumes in consumer product end markets due to heightened demand for disinfection and cleaning products. Demand for surfactants within the agricultural market is expected to approximate last year, while the oilfield market will remain down. The Polymer business is expected to be challenged short-term, but long-term prospects remain attractive. The Specialty Product business should approach prior year results.
Positive Outlook
- Surfactant volumes in the consumer product end markets should remain strong.
- Demand for surfactants within the agricultural market will approximate last year.
- The long-term prospects for rigid polyols remain attractive.
- Energy conservation efforts and more stringent building codes should increase demand.
Challenges Ahead
- The oilfield market will remain down for the balance of 2020.
- The business will continue to be challenged short-term as re-roofing and new construction projects have been deferred or canceled.
- Lower margins within our medium chain triglycerides (MCT) product line
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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