Stepan Reports Fourth Quarter and Full Year 2019 Results
NORTHFIELD, Ill., Feb. 20, 2020 /PRNewswire/ -- Stepan Company (NYSE: SCL) today reported:
Fourth Quarter Highlights
-- Reported net income was $22.0 million, or $0.95 per diluted share versus
$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 was $33.9 million versus $29.1 million in
the prior year. This increase was attributable to insurance recovery
related to the Company's first quarter 2019 equipment failure in
Ecatepec, Mexico and margin improvement in Latin America and Europe.
These items were partially offset by lower sales volume due to lower
demand and year end inventory reductions in our distribution channel and
higher unit overhead costs in Singapore due to unfavorable production
timing differences. Global Surfactant sales volume was flat versus the
prior year.
-- Polymer operating income was $11.4 million versus $9.5 million in the
prior year. This increase was mostly attributable to higher volume and
improved margins. Global Polymer sales volume increased 3% versus the
prior year. Global rigid polyol volume growth of 7% more than offset
lower volume in the phthalic anhydride end market.
-- Specialty Product operating income was $5.0 million versus $5.1 million
in the prior year. This slight decrease reflects unfavorable order
timing differences within our flavor business largely offset by improved
margins within our medium chain triglycerides (MCTs) product line.
Full Year Highlights
-- Reported net income was $103.1 million, or $4.42 per diluted share,
versus $111.1 million, or $4.76 per diluted share, in the prior year.
Adjusted net income* was $119.4 million, or $5.12 per diluted share, a
7% increase versus $111.7 million, or $4.79 per diluted share, in the
prior year.
-- The Surfactant segment delivered operating income of $122.8 million, an
8% decline versus prior year driven by North America. The key drivers
in the U.S. were lower Personal Care commodity volume due to one key
customer losing an important business and lower demand and year end
inventory adjustments in the distribution channel. The Polymer segment
delivered $69.6 million of operating income, a 5% increase versus prior
year. Specialty Product operating income was $16.4 million versus $11.7
million in the prior year.
-- Total Company sales volume decreased 2% versus the prior year. Sales
volume growth within the Polymer and Specialty Product segments was
offset by a 3% decline in Surfactant sales volume, or a 2% decline
excluding the exit from the sulfonation business in Germany.
-- The Company had negative net debt at year-end as cash balances of $315
million exceeded total debt of $222 million.
-- The effect of foreign currency translation negatively impacted net
income by $2.0 million, or $0.08 per diluted share, versus the prior
year.
-- As disclosed in the first quarter of 2019, the Company elected to change
its method of accounting for U.S. inventories from the last in, first
out (LIFO) basis to the first in, first out (FIFO) basis. The Company
has retrospectively applied this change to its prior year financial
statement comparables and denoted impacted prior year columns "As
Adjusted". The net impact of changing from the LIFO method to the FIFO
method on prior year results was $3.0 million of additional expense
recognition in the fourth quarter and $1.6 million of additional expense
recognition for full year 2018.
* Adjusted net income is a non-GAAP measure which excludes deferred compensation income/expense, cash-settled stock appreciation rights (SARs), as well as other significant and infrequent/non-recurring items. See Table II for reconciliations of non-GAAP adjusted net income and adjusted earnings per diluted share.
"Despite significant challenges during the year, driven by the equipment failure in Ecatepec, the wet weather in the U.S. farm belt, the sulfonation exit in Germany and FX headwinds, the Company exceeded its 2018 record full year adjusted net income and grew adjusted EPS 7%," said F. Quinn Stepan, Jr., Chairman, President and Chief Executive Officer. "For the quarter, Surfactant earnings were up due to the insurance recovery in Mexico and improved margins. The Polymer business had a good fourth quarter driven by global rigid polyol growth of 7%. Specialty Products income was down slightly due to customer order patterns but was up significantly on a full year basis."
Financial Summary
Three Months Ended
December 31
Twelve Months Ended
December 31
($ in
thousands,
except per
share data) 2019 2018 % 2019 2018 %
As Adjusted As Adjusted
Change Change
Net Sales $
444,990 $
466,659 (5) $
1,858,745 $
1,993,857 (7)
% %
Operating $
28,491 $
35,451 (20) $
127,260 $
149,265 (15)
Income (1) % %
Net Income (1) $
22,038 $
23,957 (8) $
103,129 $
111,117 (7)
% %
Earnings per
Diluted Share % %
(1) $
0.95 $
1.03 (8) $
4.42 $
4.76 (7)
Adjusted Net $
25,692 $
19,482 32 $
119,387 $
111,652 7
Income (1) (2) % %
Adjusted
Earnings per % %
Diluted Share
(1) (2) $
1.10 $
0.84 31 $
5.12 $
4.79 7
(1) The 2018 amounts for the noted line
items have been retrospectively
changed from the amounts originally
reported as a result of the
Company's first quarter 2019 change
in method of accounting for U.S.
inventory valuation from LIFO to
FIFO.
(2) See Table II for reconciliations of
non-GAAP adjusted net income and
earnings per diluted share.
Summary of Fourth Quarter Adjusted Net Income Items
Adjusted net income excludes non-operational deferred compensation income/expense, cash-settled SARs and other significant and infrequent/non-recurring items.
-- Deferred Compensation: The current year fourth quarter reported net
income includes $1.5 million of after tax expense versus $3.4 million of
after-tax income in the prior year.
-- Cash-Settled SARs: These management incentive instruments provide cash
to participants equal to the appreciation on the price of specified
shares of Company stock over a specified period of time. Because income
or expense is recognized merely on the movement in the price of Company
stock it has been excluded, similar to deferred compensation, to arrive
at adjusted net income. The current year fourth quarter includes $0.3
million of after-tax expense versus $1.2 million of after-tax income in
the prior year.
-- Business Restructuring: The current year fourth quarter reported net
income includes $0.8 million of after-tax decommissioning expense
primarily related to the Company's prior year Canadian plant closure and
Germany sulfonation shutdown versus $0.2 million of after-tax expense in
the prior year.
-- Environmental Remediation: The current year quarter reported net income
includes $1.1 million of after-tax expense versus no expense recognition
in the prior year. The current year expense primarily relates to higher
anticipated environmental remediation costs associated with the
Company's formerly-owned site in Wilmington, Massachusetts.
Percentage Change in Net Sales
Net sales decreased 5% in the year-over-year fourth quarter due to a 4% decline in global selling prices, mainly attributable to the pass-through of lower raw material costs, and the unfavorable impact of foreign currency translation. Polymer sales volume growth of 3% more than offset slight declines in Surfactant and Specialty Product volume.
Three Months Ended Twelve Months Ended
December 31, 2019 December 31, 2019
Volume (2)
%
Selling Price (4)
% (3)
%
Foreign Translation (1)
% (2)
%
Total (5)
% (7)
%
Segment Results
Three Months Ended
December 31
Twelve Months Ended
December 31
($ in thousands) 2019 2018 % 2019 2018 %
Change Change
Net Sales
Surfactants $
309,974 $
323,224 (4) $
1,272,723 $
1,385,932 (8)
% %
Polymers $
116,443 $
122,974 (5) $
512,347 $
527,420 (3)
% %
Specialty Products $
18,573 $
20,461 (9) $
73,675 $
80,505 (8)
% %
Total Net Sales $
444,990 $
466,659 (5) $
1,858,745 $
1,993,857 (7)
% %
Three Months Ended
December 31
Twelve Months Ended
December 31
($ in thousands, all amounts
pre-tax) 2019 2018 % 2019 2018 %
Change Change
Operating Income *
Surfactants $
33,867 $
29,148 16 $
122,780 $
133,518 (8)
%
%
Polymers $
11,419 $
9,510 20 $
69,567 $
66,373 5
% %
Specialty Products $
5,041 $
5,118 (2)
%
% $
16,415 $
11,661 41
Segment Operating Income $
50,327 $
43,776 15 $
208,762 $
211,552 (1)
%
%
Corporate Expenses $
(21,836) $
(8,325) 162
%
% $
(81,502) $
(62,287) 31
Consolidated Operating Income $
28,491 $
35,451 (20) $
127,260 $
149,265 (15)
% %
* The 2018 Segment operating income
amounts have been retrospectively
changed from the amounts originally
reported as a result of the
Company's first quarter 2019 change
in method of accounting for U.S.
inventory valuation from LIFO to
FIFO.
Total segment operating income increased $6.6 million, or 15%, versus the prior year quarter. Full year segment operating income decreased $2.8 million, or 1%, versus the prior year.
-- Surfactant net sales were $310.0 million for the quarter, a 4% decrease
versus the prior year. Selling prices were down 3% primarily due to the
pass-through of lower raw material costs. The translation impact of a
stronger U.S. dollar decreased net sales by 1%. Sales volume was flat
versus the prior year. Higher global demand for products sold into our
agricultural and oil field end markets offset lower sales volume of
surfactants to our distribution partners. Surfactant operating income
increased $4.7 million, or 16% versus the prior year, primarily due to
insurance recovery related to the Ecatepec, Mexico incident and margin
improvement. These items were partially offset by lower U.S. demand and
year end inventory adjustments in the distribution channel and higher
unit overhead costs in Singapore due to unfavorable production timing
differences.
-- Polymer net sales were $116.4 million in the fourth quarter, down 5%
versus prior year. Total sales volume increased 3%
quarter-over-quarter. Global rigid polyol volume growth of 7% more than
offset lower phthalic anhydride volumes. Selling prices declined 7% and
the translation impact of a stronger U.S. dollar negatively impacted net
sales by 1%. Operating income increased $1.9 million, or 20%, versus
the prior year quarter primarily due to higher sales volume and a more
favorable product mix.
-- Specialty Product net sales were $18.6 million for the quarter, a 9%
decrease versus the prior year. Sales volume declined 7% for the
quarter. Operating income decreased $0.1 million versus the prior year
quarter primarily due to unfavorable order timing differences within our
flavor business that were mostly offset by improved margins within our
medium chain triglycerides (MCTs) product line.
Corporate Expenses
Three Months Ended
December 31
Twelve Months Ended
December 31
($ in thousands) 2019 2018 % 2019 2018 %
Change Change
Total - Corporate $
21,836 $
8,325 162 $
81,502 $
62,287 31
Expenses
% %
Less:
Deferred Compensation
Expense/(Income) * $
3,662 $
(7,300) NM $
15,140 $
(2,329) NM
Business $
1,102 $
242 355 $
2,744 $
2,588 6
Restructuring
% %
Adjusted Corporate $
17,072 $
15,383 11 $
63,618 $
62,028 3
Expense %
%
* See Table III for a discussion of
deferred compensation plan
accounting.
-- Corporate expenses, excluding deferred compensation and business
restructuring expenses, increased $1.7 million, or 11%, versus the prior
year quarter. This quarterly increase was primarily due to a $1.3
million pre-tax adjustment to the Company's environmental remediation
reserves associated with the Company's formerly-owned site in
Wilmington, Massachusetts.
Income Taxes
The Company's full year effective tax rate was 18.1% in 2019 compared to 19.4% in 2018. This year-over-year decrease was primarily attributable to higher current year U.S. research and development tax credits, partially offset by the non-recurrence of 2018 favorable tax benefits. Net interest expense is down 45% year-over-year primarily due to interest earned on higher U.S. cash balances after the cash repatriation completed in 2018.
Shareholder Return
The Company paid $6.2 million of dividends to shareholders in the fourth quarter of 2019. For the full year the Company paid $23.1 million of dividends and repurchased $13.2 million of Company stock. The Company has 349,830 shares remaining under its Board of Directors' share repurchase authorization. With the increased cash dividend in the fourth quarter of 2019, the Company has increased its dividend on its common stock for the 52(nd) consecutive year.
Selected Balance Sheet Information
The Company's net debt level decreased $39.2 million for the quarter while the net debt ratio decreased from -7% to -12%, reflecting cash balances in excess of total debt. The decrease in net debt was attributable to a $29.4 million increase in cash, partially driven by lower working capital requirements, and a $9.8 million decline in total debt.
($ in millions) 12/31/19 9/30/19 6/30/19 3/31/19 12/31/18
Net Debt
Total Debt $
222.1 $
231.9 $
232.6 $
271.9 $
276.1
Cash 315.4 286.0 275.3 269.5 300.2
Net Debt $
(93.3) $
(54.1) $
(42.7) $
2.4 $
(24.1)
Equity * 891.8 854.2 857.7 831.4 807.4
Net Debt +
Equity * $
798.5 $
800.1 $
815.0 $
833.8 $
783.3
Net Debt /(Net Debt + -12 -7 -5 0 -3
Equity) % % % % %
The major working capital components were:
($ in millions) 12/31/19 9/30/19 6/30/19 3/31/19 12/31/18
Net Receivables $
276.8 $
283.0 $
289.0 $
298.9 $
280.0
Inventories * 203.6 203.3 216.3 215.0 231.5
Accounts Payable (194.3) (175.8) (184.7) (175.6) (206.0)
$
286.1 $
310.5 $
320.6 $
338.3 $
305.5
* The 2018 amounts for the noted line
items have been retrospectively
changed from the amounts originally
reported as a result of the
Company's first quarter 2019 change
in method of accounting for U.S.
inventory valuation from LIFO to
FIFO.
The Company had full year capital expenditures of $105.6 million in 2019 versus $86.6 million in the prior year.
Millsdale Plant Incident
On January 19, 2020, we experienced a power disruption that impacted Millsdale, our largest facility. Although power was restored after a period of time, the power outage and below freezing temperatures created significant production and operational challenges. We have been able to run on a partial basis and have used existing inventories to serve our customers. However, on February 17, 2020, operational issues impacted the site's waste water treatment plant (WWTP) and forced us to stop production at the site. We have been able to restart Polyol production using a temporary solution and are targeting to bring the WWTP back into operation within the next few days. Once the WWTP is operational, we expect that production of Surfactants will resume. We anticipate Phthalic Anhydride production will remain down for approximately 30 days. Because of the WWTP being down and low inventory levels, we have declared Force Majeure for the supply of Phthalic Anhydride and certain Surfactant product lines. We are using our global production network and working with customers to minimize this supply disruption. We are also working with our insurance provider to recover the losses related to this incident.
At this time, we are not able to quantify the extent of the impact from this event, but this incident creates a challenge for us in 2020. We are confident that the resources are in place to resolve the issue and move forward. For more than 80 years we have supplied our customers on a reliable basis and are committed to do so in the future.
2020 Outlook
Although we anticipate a very challenging first quarter, we believe our continued focus on end market diversification, Tier 2 and Tier 3 customers, as well as our cost-out activities should benefit our Surfactant business. We believe energy conservation efforts around the world will support our Polymer business and volume should continue to grow. We anticipate our Specialty Products business results will approximate 2019. Additional headwinds include the potential negative impact of Coronavirus in China, as well as higher raw material sourcing costs due to Illinois River lock closures scheduled during the second half of 2020.
Conference Call
Stepan Company will host a conference call to discuss its fourth quarter and full year 2019 results at 10:00 a.m. ET (9:00 a.m. CT) on February 20, 2020. The call can be accessed by phone and webcast. Telephone access will be available by dialing +1 (800) 931-6421, and the webcast can be accessed through the Investor Relations/Conference Calls page at www.stepan.com. A webcast replay of the conference call will be available at the same location shortly after the call.
Supporting Slides
Slides supporting this press release will be made available at www.stepan.com through the Investor Relations page at approximately the same time as this press release is issued.
Corporate Profile
Stepan Company is a major manufacturer of specialty and intermediate chemicals used in a broad range of industries. Stepan is a leading merchant producer of surfactants, which are the key ingredients in consumer and industrial cleaning compounds and in agricultural and oilfield solutions. The Company is also a leading supplier of polyurethane polyols used in the expanding thermal insulation market, and CASE (Coatings, Adhesives, Sealants, and Elastomers) industries.
Headquartered in Northfield, Illinois, Stepan utilizes a network of modern production facilities located in North and South America, Europe and Asia.
The Company's common stock is traded on the New York Stock Exchange (NYSE) under the symbol SCL. For more information about Stepan Company please visit the Company online at www.stepan.com
Contact: Luis E. Rojo (847) 446-7500
Tables follow
Certain information in this news release consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include statements about Stepan Company's plans, objectives, strategies, financial performance and outlook, trends, the amount and timing of future cash distributions, prospects or future events and involve known and unknown risks that are difficult to predict. As a result, Stepan Company's actual financial results, performance, achievements or prospects may differ materially from those expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as "may," "could," "expect," "intend," "plan," "seek," "anticipate," "believe," "estimate," "guidance," "predict," "potential," "continue," "likely," "will," "would," "should," "illustrative" and variations of these terms and similar expressions, or the negative of these terms or similar expressions. Such forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by Stepan Company and its management based on their knowledge and understanding of the business and industry, are inherently uncertain. These statements are not guarantees of future performance, and stockholders should not place undue reliance on forward-looking statements.
There are a number of risks, uncertainties and other important factors, many of which are beyond Stepan Company's control, that could cause actual results to differ materially from the forward-looking statements contained in this news release. Such risks, uncertainties and other important factors include, among other factors, the risks, uncertainties and factors described in Stepan Company's Form 10-K, Form 10-Q and Form 8-K reports and exhibits to those reports, and include (but are not limited to) risks and uncertainties related to disruptions in production or accidents at manufacturing facilities, global competition, volatility of raw material and energy costs, disruptions in transportation or significant changes in transportation costs, reduced demand due to customer product reformulations or new technologies, the probability of future acquisitions and the uncertainties related to the integration of acquired businesses, maintaining and protecting intellectual property rights, international business risks, including currency exchange rate fluctuations, legal restrictions and taxes, our debt covenants, our ability to access capital markets, downturns in certain industries and general economic downturns, global political, military, security or other instability, costs related to expansion or other capital projects, interruption or breaches of information technology systems, the costs and other effects of governmental regulation and legal and administrative proceedings and our ability to retain executive management and key personnel.
These forward-looking statements are made only as of the date hereof, and Stepan Company undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.
Table I
STEPAN COMPANY
For the Three and Twelve Months Ended December 31, 2019 and 2018
(Unaudited -
in thousands, except per share data
)
Three Months Ended
December 31 Twelve Months Ended
December 31
2019 2018 2019 2018
---
Net Sales $
444,990 $
466,659 $
1,858,745 $
1,993,857
Cost of Sales * 360,246 392,065 1,519,031 1,654,508
Gross Profit * 84,744 74,594 339,714 339,349
Operating Expenses:
Selling 14,661 13,447 56,956 56,319
Administrative 22,019 19,802 82,577 79,243
Research, Development and Technical
Services 14,809 12,952 55,037 54,263
Deferred Compensation (Income) Expense 3,662 (7,300) 15,140 (2,329)
55,151 38,901 209,710 187,496
Business Restructuring 1,102 242 2,744 2,588
Operating Income * 28,491 35,451 127,260 149,265
Other Income (Expense):
Interest, Net (911) (2,151) (5,932) (10,771)
Other, Net 306 (2,715) 4,571 (725)
(605) (4,866) (1,361) (11,496)
Income Before Income Taxes * 27,886 30,585 125,899 137,769
Provision for Income Taxes * 5,853 6,631 22,798 26,664
Net Income * 22,033 23,954 103,101 111,105
Net (Income) Loss Attributable to
Noncontrolling Interests 5 3 28 12
Net Income Attributable to
Stepan Company * $
22,038 $
23,957 $
103,129 $
111,117
===
Net Income Per Common Share
Attributable to Stepan Company *
Basic * $
0.96 $
1.04 $
4.47 $
4.83
===
Diluted * $
0.95 $
1.03 $
4.42 $
4.76
===
Shares Used to Compute Net Income Per
Common
Share Attributable to Stepan Company
Basic 23,005 22,987 23,054 23,022
Diluted 23,302 23,330 23,316 23,325
* The 2018 amounts for the noted line
items have been retrospectively
changed from the amounts originally
reported as a result of the
Company's first quarter 2019 change
in method of accounting for U.S.
inventory valuation from LIFO to
FIFO.
Table II
Reconciliation of Non-GAAP Net Income and Earnings per Diluted Share *
Three Months Ended
Twelve Months Ended
December 31
December 31
---
($ in thousands,
except per share
amounts) 2019 EPS 2018 EPS 2019 EPS 2018 EPS
As As As As
Adjusted Adjusted Adjusted Adjusted
---
Net Income Reported $
22,038 $
0.95 $
23,957 $
1.03 $
103,129 $
4.42 $
111,117 $
4.76
Deferred Compensation
(Income) Expense $
1,465 $
0.06 $
(3,420) $
(0.15) $
7,947 $
0.34 $
(787) $
(0.03)
Business
Restructuring $
806 $
0.04 $
182 $
0.01 $
2,005 $
0.09 $
1,842 $
0.08
Cash-Settled SARs
(Income) Expense $
325 $
0.01 $
(1,237) $
(0.05) $
2,090 $
0.09 $
(520) $
(0.02)
Environmental
Remediation $
1,058 $
0.04
$
$ $
3,268 $
0.14
$
$ -
Voluntary Debt
Prepayment
$
$
$
$ $
948 $
0.04
$
$ -
Adjusted Net Income $
25,692 $
1.10 $
19,482 $
0.84 $
119,387 $
5.12 $
111,652 $
4.79
===
* All amounts in this table
are presented after-tax
The Company believes that certain measures that are not in accordance with generally accepted accounting principles (GAAP), when presented in conjunction with comparable GAAP measures, are useful for evaluating the Company's operating performance and provide better clarity on the impact of non-operational items. Internally, the Company uses this non-GAAP information as an indicator of business performance, and evaluates management's effectiveness with specific reference to these indicators. These measures should be considered in addition to, and are neither a substitute for, nor superior to, measures of financial performance prepared in accordance with GAAP.
Reconciliation of Pre-Tax to After-Tax Adjustments
Three Months Ended
Twelve Months Ended
December 31
December 31
---
($ in thousands,
except per share
amounts) 2019 EPS 2018 EPS 2019 EPS 2018 EPS
---
Pre-Tax Adjustments
---
Deferred Compensation
(Income) Expense $
1,927 $
(4,500) $
10,456 $
(1,035)
Business
Restructuring $
1,102 $
242 $
2,744 $
2,588
Cash-Settled SARs
(Income) Expense $
427 $
(1,628) $
2,749 $
(685)
Environmental
Remediation $
1,392
$ $
4,300
$
Voluntary Debt
Prepayment
$
$ $
1,247
$
Total Pre-Tax
Adjustments $
4,848 $
(5,886) $
21,496 $
868
Cumulative Tax Effect
on Adjustments $
(1,194) $
1,411 $
(5,238) $
(333)
US Tax Reform Impact
After-Tax
Adjustments $
3,654 $
0.15 $
(4,475) $
(0.19) $
16,258 $
0.70 $
535 $
0.03
===
Table III
Deferred Compensation Plan
The full effect of the deferred compensation plan on quarterly pretax income was $1.9 million of expense versus $4.5 million of income in the prior year. The year-to-date impact was $10.5 million of expense versus $1.0 million of income in the prior year. The accounting for
the deferred compensation plan results in operating income when the price of Stepan Company common stock or mutual funds held in the plan fall and expense when they rise. The Company also recognizes the change in value of mutual funds as investment income or loss. The quarter
end market prices of Stepan Company common stock are as follows:
2019 2018
---
12/31 9/30 6/30 3/31 12/31 9/30 6/30 3/31
---
Stepan
Company $
102.44 $
97.06 $
91.91 $
87.52 $
74.00 $
87.01 $
78.01 $
83.18
The deferred compensation income statement impact is summarized below:
Three Months Ended
December 31 Twelve Months Ended
December 31
($ in thousands) 2019 2018 2019 2018
---
Deferred Compensation
Operating Income
(Expense) $
(3,662) $
7,300 $
(15,140) $
2,329
Other, net - Mutual Fund Gain
(Loss) 1,735 (2,800) 4,684 (1,294)
Total Pretax $
(1,927) $
4,500 $
(10,456) $
1,035
===
Total After Tax $
(1,465) $
3,420 $
(7,947) $
787
===
Table IV
Effects of Foreign Currency Translation
The Company's foreign subsidiaries transact business and report financial results in their respective local currencies. As a result, foreign subsidiary income statements are translated into U.S. dollars at average foreign exchange rates appropriate for the reporting period. Because foreign currency exchange rates fluctuate against the
U.S. dollar over time, foreign currency translation affects period-to-period comparisons of financial statement items (i.e., because foreign exchange rates fluctuate, similar period-to-period local currency results for a foreign subsidiary may translate into different U.S. dollar results). The table below presents the impact that
foreign currency translation had on the changes in consolidated net sales and various income line items for the three and twelve month periods ending December 31, 2019 as compared to 2018:
($ in
millions) Three Months Ended Twelve Months Ended Change
Due to Foreign
December 31 Increase Change December 31 Currency
(Decrease) Translation
Due to Foreign Increase
Currency (Decrease)
Translation
---
2019 2018 2019 2018
Net Sales $
445.0 $
466.7 $
(21.7) $
(4.1) $
1,858.7 $
1,993.9 $
(135.2) $
(37.3)
Gross Profit * 84.7 74.6 10.1 (0.4) 339.7 339.3 0.4 (5.0)
Operating Income * 28.5 35.5 (7.0) 127.3 149.3 (22.0) (2.5)
Pretax Income * 27.9 30.6 (2.7) 125.9 137.8 (11.9) (2.4)
* The 2018 amounts for the noted line
items have been retrospectively
changed from the amounts originally
reported as a result of the
Company's first quarter 2019 change
in method of accounting for U.S.
inventory valuation from LIFO to
FIFO.
Table V
Stepan Company
Consolidated Balance Sheets
December 31, 2019 and December 31, 2018
December 31, December 31,
2019 2018 As
Adjusted
---
ASSETS
Current Assets * $
818,789 $
833,893
Property, Plant & Equipment, Net 639,317 608,892
Other Assets 121,261 71,829
Total Assets * $
1,579,367 $
1,514,614
===
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities $
339,114 $
338,582
Deferred Income Taxes * 23,391 24,961
Long-term Debt 198,532 239,022
Other Non-current Liabilities 125,834 103,864
Total Stepan Company Stockholders'
Equity * 891,783 807,425
Noncontrolling Interest 713 760
Total Liabilities and
Stockholders' Equity * $
1,579,367 $
1,514,614
===
* The 2018 amounts for the noted line
items have been retrospectively
changed from the amounts originally
reported as a result of the
Company's first quarter 2019 change
in method of accounting for U.S.
inventory valuation from LIFO to
FIFO.
View original content:http://www.prnewswire.com/news-releases/stepan-reports-fourth-quarter-and-full-year-2019-results-301008192.html
SOURCE Stepan Company
