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Dec 31, 2022
Stepan Q4 2022 Earnings Report
Reported net income decreased due to lower sales volume and higher expenses, while specialty product results improved due to margin improvement and customer mix.
Key Takeaways
Stepan Company reported a decrease in net income for the fourth quarter of 2022, primarily due to lower sales volumes in the Surfactant and Polymer segments, partially offset by improved performance in the Specialty Products segment. Customer destocking and lower demand in certain markets contributed to the decline. Full year earnings reached a record high.
Net income was $10.8 million, or $0.47 per diluted share, compared to $17.0 million, or $0.73 per diluted share, in the prior year.
Adjusted net income was $13.5 million, or $0.59 per diluted share versus $22.5 million, or $0.97 per diluted share, in the prior year.
Surfactant operating income decreased to $21.8 million due to a 15% decline in global sales volume.
Polymer operating income decreased to $3.0 million due to a 23% decline in global sales volume.
Revenue by Segment
Forward Guidance
Stepan Company anticipates challenges in 2023 due to elevated inflation, high interest rates, and potential negative impacts on consumer demand and construction-related activity. Higher costs associated with the new Pasadena site will also pose challenges to earnings growth.
Positive Outlook
- Focusing on productivity improvements.
- Implementing pricing increases where possible.
- Improving product and customer mix.
- Committed to executing long-term growth strategy.
- Delivered three consecutive years of record earnings (in 2022).
Challenges Ahead
- Continued elevated inflation.
- High interest rates.
- Potential negative impact on consumer demand.
- Potential negative impact on construction-related activity.
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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