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Dec 31, 2019
Stepan Q4 2019 Earnings Report
Stepan's Q4 2019 earnings were reported, with net income decreasing but adjusted net income increasing.
Key Takeaways
Stepan Company reported a decrease in net income but an increase in adjusted net income for Q4 2019. Surfactant earnings improved due to insurance recovery and margin improvements, while the Polymer business benefited from rigid polyol growth. Specialty Products income saw a slight decrease due to order timing.
Reported net income was $22.0 million, or $0.95 per diluted share, compared to $24.0 million, or $1.03 per diluted share, in the prior year.
Adjusted net income was $25.7 million, or $1.10 per diluted share, versus $19.5 million, or $0.84 per diluted share, in the prior year.
Surfactant operating income increased to $33.9 million, driven by insurance recovery and margin improvements.
Polymer operating income rose to $11.4 million, attributed to higher volume and improved margins.
Revenue by Segment
Forward Guidance
The company anticipates a challenging first quarter but expects benefits from end market diversification, customer focus, and cost-out activities. Energy conservation should support the Polymer business, and Specialty Products are expected to approximate 2019 results. Headwinds include potential Coronavirus impact and higher raw material costs.
Positive Outlook
- Continued focus on end market diversification should benefit the Surfactant business.
- Targeting Tier 2 and Tier 3 customers to drive growth.
- Cost-out activities are expected to improve profitability.
- Energy conservation efforts around the world will support the Polymer business.
- Polymer volume should continue to grow.
Challenges Ahead
- Anticipate a very challenging first quarter.
- Potential negative impact of Coronavirus in China.
- Higher raw material sourcing costs due to Illinois River lock closures scheduled during the second half of 2020.
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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