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Dec 31, 2023
Stepan Q4 2023 Earnings Report
Stepan's Q4 2023 results were impacted by lower unit margins and sales volume declines in certain segments, but benefited from volume growth in others.
Key Takeaways
Stepan Company reported a net loss of $1.2 million for Q4 2023, compared to a net income of $10.8 million in the prior year. Adjusted net income was $7.5 million, versus $13.5 million in the prior year. Total company sales volume increased 3% year-over-year, driven by double-digit growth in Rigid Polyols volumes. The company expects $50 million in pre-tax cost savings in 2024.
Net loss of $1.2 million, or negative $0.05 per diluted share, compared to net income of $10.8 million, or $0.47 per diluted share in the prior year.
Adjusted net income was $7.5 million, or $0.33 per diluted share, compared to $13.5 million, or $0.59 per diluted share in the prior year.
Total Company sales volume increased 3% versus the prior year.
Free cash flow for the quarter was a positive $22.3 million.
Revenue by Segment
Forward Guidance
Stepan expects improved volumes and margins in 2024 due to recovery in Rigid Polyols demand, growth in Surfactant volumes, recovery of the agricultural business, and lower raw material costs. Cost reduction activities are expected to offset inflationary pressures and increased expenses.
Positive Outlook
- Volumes and margins will improve due to continued recovery in Rigid Polyols demand.
- Growth in Surfactant volumes driven by contracted business.
- Expected recovery of the agricultural business in the second half of the year.
- Lower raw material costs across the business versus 2023.
- Cost reduction activities to deliver $50 million in pre-tax savings in 2024.
Challenges Ahead
- Inflationary pressures.
- Increased expenses associated with the commissioning of new Pasadena alkoxylation assets.
- Higher incentive-based compensation expenses.
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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