SCL - Earnings call transcript Q3 2021

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Operator

Greetings, and welcome to the Stepan Company Q3 2021 Earnings Call [Operator Instructions].

As a reminder, this conference is being recorded on Wednesday, October 20, 2021. I would now like to turn the conference over to Luis Rojo, Vice President and Chief Financial Officer. Please go ahead.

Luis Rojo

Good morning, and thank you for joining Stepan Company's Third Quarter 2021 Financial Review.

note which in are please contains conference begin, statements, forward-looking not we that this information call Before historical facts. risks materially, limited in our involve results regional economic foreign statements and and factors could and that These detailed and cause operations, to global differ prospects Exchange including to, not Securities conditions but for our uncertainties actual Commission filings. the www.stepan.com have us online of site. we the to review phone, made section or encourage we which at the joining investor over are our presentation, you under Whether Investors available slide you Web time slides was we We at information make these available you that earnings approximately perspective and the issued, same as release helpful. find the hope

to Now Executive over the Officer. call Quinn and with would to Chief that, like turn Stepan, I Mr. our Chairman

Quinn Stepan

thank us our joining and morning, today earnings. for all quarter third you discuss year-to-date and to Good

tax raw supply per Although impacted. help the improving, have or rates $XX.X much Year-to-date, are negative global pandemic million XXXX. income was wash third our market. company's for serve disinfection every the by Both customers negatively net our of income many benefits. adjusted chain disruptions American the affected third and been including maintenance we and year. the largely the $XXX quarter chain supply net to day logistics per share. XXXX. commerce first Surfactant chain was plant also the inflation, have inflation all $X.XX offset North earnings negatively was the significant Delta planned by team use turbulent products constraints. $X.X the peak share onetime impact Stepan, variant down personal was adjusted to price driven million XX% environment lower and adjusted material material by raw prior our with Global disruptions were world of in XXXX. operating insurance supply the shortages income consumer world costs, segments supply nine income the vaccine Millsdale months was flat in Adjusted The and disruptions, of the diluted parts quarter, which and million navigate In of net since pressures inflationary higher to recovery global spread and versus related by each through many XX% to in chain have to slowly developed of three continues Surfactants of dropped costs and At higher are business demand was and impacting products, the due cleaning, impacted up continues stalled.

was the insurance Our largely Global Polymer down government to INVISTA driven the the Polymer compensation operating income sales nonreoccurrence XX% XX%, Chinese received the and and from quarter third of the the by mostly acquisition. rose in due was XXXX. volume recovery of

and by Our business. Specialty flavor due mainly and was food differences to XX% rose Product order our timing business within

Our company the allocation. to up demonstrating of to common value has payable Directors X.X% common and cash further XX its repurchase Board now dividend stock, stockholder December share years. authorized this capital $X.XXX increased paid commitment disciplined consecutive $XXX on of for on deliver Board XX, increase, through With of declared stock to quarterly XXXX. Stepan per dividend its a The million our Stepan's

opportunities Our will stockholders. current while our will and third share balance our some results. year-to-date and about our Luis return invest generation business strong and in to sheet quarter to us now capital allow cash details we strategic pursue

Luis Rojo

slide the My will generally Thank comments presentation. you, follow Quinn.

quarter flat per the Because the diluted the presentation share, be versus Slide adjusted to net full with X the release. and or can X X third GAAP the Let's of comparable third Table the this for found to quarter. reconciliations provide we was and measures, income of measure, $XX.X of million is net income start in a press non-GAAP Adjusted quarter XXXX Appendix basically XXXX. recap of $X.XX

for net compared items Slide net [settled] deferred change total the share discussion. $X.XX compensation as earnings million for rights our to last stock income the the these we income consists company minor Because and the for quarter and the income, net to company's compensation and reported in or the movement appreciation diluted for numbers the quarter here The same net diluted to Because reserve with bridge per Adjusted expense from share million deferred adjustment expense $X.X income period quarter, compensation increase figure related these third income. of Specifically, employees. this $X.XX is the $X.X down adjusted on of well cash quarter the adjustment compared X third of deferred not liabilities operational shows exclude basis. plan breaks after-tax this as an our price, expenses. environmental to compensation per in is the year. restructuring deferred exclude compensation, increase or last deferred represent net in year's stock

nine XXXX. will recognized primarily We detail. down, last were Brazilian rate in favorable to versus XX% tax others slightly three due quarter to credits. same effective higher Specialty was Polymers of year. the Surfactants to benefit The and Product and XX% entities into single This to in compared while segment was to the the entity third benefits tax favorable period were company's more But inflation. the all tax year-over-year attributable company's year. this up are the prior months R&D tax cover was more a of for summarize, The merger and Corporate the decrease related of XXXX a first in expenses

of the results of estimate million disruption in Slide quarter effect recognized XXXX. and pass-through the decrease supply that end impacts institutional XX% operating from year, by had were reflects demand be million into We lower the the solid and the the costs. prices products, planned partially offset effective October year XX%, income million for this primarily improved personal recovery markets of to products focuses in negative to $X sold year-over-year. currency well on volumes market. prior product in the or wash product end impact our decreased in segment approximately peak payment Latin expansion North onetime current disruption of sales chain due the to decreased Surfactant sales as offset pandemic. was by the margins. versus third consumer XXXX continue were for XX% in and functional products. of Selling a demand product results and for million, maintenance due strong XX% the range. to customer Surfactant quarter. in $X.X activities. X consumer tax to the industrial up supply Surfactant year. America expect growth America to rate versus partially to increases growth quarter. net full and The We results a XX% chain primarily insurance and increase We $XXX cleaning, the lower in material mix, as of raw functional impacted disinfection dropped X% operating during implemented of cleaning our X%. prior higher the $X.X increased positively a This Most translation very Europe due market due were in decrease Volume slightly quarter price foreign higher as the by

to XX%, quarter. mostly up X. Selling is the This in flat, global $X.X was the recorded quarter product sales onetime Volume polyol. million volume disruption and Polymer were partially benefits the quarters. XX% the growth driven In demand quarter had pass-through income due XXXX increased due contributed raw benefit decreased in polyol we between third sales supply price as our volume approximately within recover XXXX in chain higher onetime results recognized margins. XX% costs. by the the increased of onetime quarter from material costs. XXXX growth driven market by XX% Europe INVISTA estimate million by acquisition. result We driven $X Slide were decreased by chain related volume. third Polyol on improved impact Operating the within the due Polymers due increases margins specialty to food offset in Net third X% grew well negative driven a supply quarter. rigid polyol flavor the Products to acquisition. October, to the year. chain income increased million INVISTA of North our by Specialty Global or $X.X XX% prior significant disruptions. Higher of to prices turning business quarter, the line. million $X implemented supply our and growth. benefit the during timing differences to China million by within or the volume INVISTA driven disruptions primarily in chain decreased up disruptions, and MCT supply America of higher Now a of the quarter, excluding volume, Rigid of in supply higher in up results and to to $XXX chain also business as net XX%, the The in order operating XX%, current

to on Moving Slide X.

and to invest remains sheet Our the have in we balance strong ample business. liquidity

X%. cash a Our and buybacks leverage placement in capital, inflation. nine fixed and rate interest given capital have dividends, used the material healthy attractive flow level. private growth months of XXXX, We million raw at first executed had a interest of for operations We we strong very investments, sales which and around coverage strong ratios share the $XX and working at a note very continues

organic fund other new use opportunities cash to will growth our inorganic purposes. general We and the corporate for and

year, our million. the estimate priorities. on announced new full our Pasadena, on $XXX to expected million includes will XXXX update alkoxylation now Scott the This of you XX, capital Beginning in facility. be Texas strategic For at $XXX investment Slide expenditures to are range today's

Scott Behrens

Thank you, Luis.

customers the believe the will wrap we challenges our experiencing. we strong business months we relatively As of and XXXX, up are remain supply our despite first chain nine

products. have that higher XXXX. health the cleaning employees market as COVID-XX. prioritize than in deliver habits changed contribute peak against include consumer disinfection, the product the lower to continue use the end to versus behaviors levels, We prepandemic fight remain of wash we demand these Consumer safety higher products of our new and We surfactant however, and believe volumes in personal pandemic and will our

We are the people and higher demand reopen as and disinfection settings. cleaning grow seeing and around volumes for cleaning world institutional in public economies standards disinfection

for be Stepan. into to strategy markets continues priority key diversification Our a functional

volume base. for nine year, agricultural the new coupled Oilfield being to During products planted XXXX strong our with nine post their to depressed due business the segment future in new the of demand global digits in up this continue We grow with was higher High per to and prices optimistic American corn the that prices year product to improve first double commodity America. about during remain oil in oil pesticide Asia drove growing we the continue $XX double level digits. patent Latin first world. XXXX protection for cost-effective sales season, the as the launched volume solutions and have and barrel acreage prices months promote in ROI products crop soybeans, higher opportunities and operator recovered increased oilfield protect the throughout North of the wells. months and a

to operational meet biocides margins. we as working higher will and We customers. on well from product can and lines, capacity Globally, productivity income ensure our Surfactant improve are to in product including continue certain as mix improving increasing we and requirements operating amphoterics customer

This facility Pasadena, under our ton of expenditure invest January primary requirements. meet regulatory alkoxylation manufacture which North of will foaming discussed surfactants, a to that combination Texas are today to equipment, forecast capacity production X,X-dioxane announcement million be As used to consumer year are to Through is an new EPC a manufacturing previously, sulfates. the to with per capability million customers XX,XXX minor Stepan the supply the million. our site, X,X-dioxane increasing either a process cleaning optimization formulations. produce project, and and build ingredients $XXX drivers prepared additional sulfates of in contract, low product key generated XXXX byproduct capital of either are sulfate American our along in XXXX $XXX and metric at we $XXX

expense We growth added be X Tier Tier that customers strategy. Stepan We projects to about the a capability and future Company. our of in will deliver quarter the investments are We now these consulting focusing XXX are approximately excited customers to year. finished customers during improve both changes. increase continue months focus investment and nine work to and X the first Surfactant new XXX our recommended We executing plant of and capacity. on Millsdale the and to during growth and CapEx our in accelerated the productivity

and year to level to and expect year. of should productivity we enhancements, several nine XXXX remainder performance We COVID levels from months the in high-margin good first demand the INVISTA lines capacity the the improved continue product service business investment our customers project year through closed after during and as had recovered increased due see this the also next including benefits, in challenging benefited Polymers to acquisition, The which of has year January. the a market in restrictions.

However, and raw remained third significant cost margins from we to and restrained availability due by availability material the material quarter, their orders impact to issues. chain supply customers raw in saw own escalation while other our

For force perspective, market their flame we shortages formulations. majeure and had MDI finished retardants, our foam raw experienced are insulation which materials suppliers used declare critical on on customers while in

more efforts The this demand. integration prospects recover currently deliver for fourth more going are business our to $XX from million than building long-term codes INVISTA We and increase business should the conservation in attractive working and of to is acquisition quarter. polyol well EBITDA the expect The remain acquired in of our energy stringent XXXX. as margins

aligned the call our back we plan I continue now and closing platform balance add of to acquisition opportunities gaps Quinn our the Given chemistries company's new with to for strength to our strategy. to growth and portfolio comments. sheet, turn in to will fill identify pursue

Quinn Stepan

The Scott. in company months first Thank XXXX. you, delivered nine record earnings

Looking continue raw North markets to end in forward, American transportation product volumes Surfactant we consumer be will by availability. material challenged believe and our

products. disinfection related compensate year institutional agricultural consumer believe growth demand. Polymer believe will personal prior cleaning, that and first our wash prior will believe polyol in pandemic and exceed delays due markets the do lower we deliver for We versus acquisition it believe oilfield business prior not year, to the year will the recovery surfactants business. grow cleaning we We demand While INVISTA's our and quarter aromatic versus ongoing of polyester of industrial from volume and consumption will for

despite review growth the rigid chain challenges. believe sourcing are will improve believe XXXX. full At chain to in This over the material the remarks. material business time, call instructions price for prospects delivering strong about we to issues, planned should raw long-term year slightly we our across call. provide market would year. expenses Frank, and attractive. inventories continued the anticipate We supply portion the continue this value demand maintenance turn We remain this year-over-year of for Products Specialty and polyols our higher optimistic earnings concludes increases, We remains like opportunities for raw question Low prepared please questions. today's underlying

Operator

[Operator Instructions] Our first question comes from Mike Harrison with Seaport Global Securities.

Mike Harrison

that the on believe capacity today. announcement questions of couple Texas that A you had you was something Sun idled. site from acquired then I and

you maybe us decision in to how a this much capacity your make that tons in year incremental that represents investment can through help walk the network? understand and So XX,XXX

Quinn Stepan

in polyester has allow and and organic over growth product this particularly has Stepan, me margin strong years, the alkoxylates. Let opportunities, invest last make earlier by begin to very our higher several strategic to that, in saying and case, core this INVISTA sheet specialty built for balance which the a lines, will year, for us polyol us this allowed acquisition other

expectations meet the long-term and are Pasadena maybe at We our like your business. about few million and and incremental a specific both I'd $XXX site investing to in the capacity. Scott our comments our extra question to really make in Polymer jump answer Surfactant And growth

Scott Behrens

its is specialty site including and Pasadena our of proximity oxide we production raw key an due key for new Mike, existing ethylene the the close feedstocks believe ideal on capacity in oxide, growth materials, alkoxylates. used to our other propylene location to

at efficient makes attractive build. storage Sun, infrastructure tanks, which utilities, and site, around this existing capital from the an which existing the a has Additionally, ample acquired we infrastructure

the provide installation include a total to future managing and are third reactors, which our to site up the three investment. capacity will the additional expandable And EPC incremental tons be project will XX party contract of We alkoxylation reactors new portfolio. under will XX,XXX of company's with

alkoxylation complete. the utilized network to expect Pasadena are after to our effectively investment new optimize and we be customer after installed startup We the will in current capacity leverage and approvals

Mike Harrison

Pasadena you you idled restarting those this Can are replacing idled is assets? facility some in help also understand, assets or old the me of

Quinn Stepan

ago, Sun had the of site the the that the six at we use years the or site capacity -- install acquired to Stepan. were acquired assets were had alkoxylation really So in five, to site. The we vision at not existing

We dismantled have most site the capacity other of and at to investment. sulfonation the esterification put the in capacity alkoxylation new

to the are storage that in terms We site. of firewater the So they were advantage capabilities tanks we've the of new able had, take leverage all been to different XX infrastructure pond being site. the kind on able process and but capabilities, of logistics to that added were

Mike Harrison

And Luis, $XXX of XXXX? about you $XX evenly million the the of million CapEx, it $XXX the the so Is split or remaining period is million looks talk that between coming for then or this of question year. terms for investment? payback maybe and can in all pretty at returns a this like about XXXX And

Luis Rojo

that that 'XX. say, I $XX plan lead think need about we for a is mean, mean not ahead I CapEx we that to 'XX buy away of for 'XX What yes, get split XXXX I year project. this XXXX, million because in in we year our increased start to will CapEx, remaining right and between we and It's even start-up. you than are want and the to more make it's time ready the equipment fast long sure When the the related guidance

the Scott It's Quinn mentioned, margin future a line. more product high is as in targets line. as about specific calls key this will our product project We about and discuss financials, and

and accretive EBITDA to expecting So Company. be for this accretive margin we Stepan EBITDA are project

Mike Harrison

margin costs disruption progression last or Obviously, costs do pricing announcing chain on lot of much pricing October. a been cost. in versus material from you some for QX or looking as into peak QX the little of there offset QX there's expecting you're raw a you're would peak color question the helpful. is have well overall worsening supply the on increases and Just I kind now see how and more pricing. showing material Is margin headwind from the And be already headwind then for raw QX? color bit maybe of for Any question an as additional

Luis Rojo

expect think prices we very system I is we mean, could bit you there, additional be it some think that. QX. oil what if in will of about a environment inflation a cetera, all the it's and out at $XX, et inflation in say more I I volatile mean little and transportation but

the saw slope environment, you between Now right. inflation is of reducing. that of always you is have slope we of inflation in believe QX, lag a cost. and pricing The in what reducing, QX, a QX, course, that inflation high is slope And

mix that's we in as So XX% and mix XX% as why, announced gradually we margins. had surfactants in you increases price additional saw, in October to well our a price price continue polymers as recovering

there mean basis. gradual course, is our So a margins inflation recover I always we, a there out see. of still lag, on planning to are we'll but is but

Quinn Stepan

And the and say, from it I material bad recovering. slowly would believe a supply QX perspective, we was raw availability in situation is chain,

slowly would at that it the get improve as materials availability approach XXXX. of anticipate fourth raw we key going and is better we into gradually So look would improving we as and quarter,

Operator

with Anderson comes question Vincent Stifel. next from Our

Vincent Anderson

the a Just alkoxylation on capacity. questions quick of couple

part it up? appear portfolio line are and your doesn't through now. if opportunities kind Could based open maybe looking Just that's does of large propoxylation what you of maybe confirm a your that that guide, product then that true, product products

Quinn Stepan

some are Stepan key would fall over we those range intermediates Again, a So those of different products based have alkoxylation sell as XXX into the products. used of that the products I specialty we and other that marketplace. to in most say today,

use So portfolio non-anionic expanding the we're the PO, marketplace EO of products today, significant sell presence in that, in part the and to market. alkoxylation, interested of that of is a our our we and

Vincent Anderson

able of grow applications to direct you you any comfortable own there it your into detergent or to place being And into some capacity, to is feel markets, this sulfonation maybe it? having specialty consideration all displace more as for sales do

Quinn Stepan

are our our markets, amount or source and agricultural, of majority alkoxylation field fair of institutional specialty the would range, vast commodity we the The do ethoxylates some use industrial sulfonation commodity in to and products range marketplace. primarily business oil cleaning. for today, those continue targeted from We

on available basis utilize will We incremental an appropriate. as capacity

Vincent Anderson

one one then for quick And Luis. just

the very run about debt buy spending your back target more very so? option time the maybe balance a opportunity repurchases. shares you net about to share two have you towards long guys pick the the think You thinking a budget that and and level for and CapEx over moving or next seeing lean we're now sheet Are of years in a up when

Luis Rojo

say million over cash have. last will the company opportunities The I about we that decade, we're is last and year strong for We're a built we're we happy has opportunities. opportunities in sheet What and with balance very deploying excited the future good very for growth $XXX closed growth. the have balance sheet that we

growing continually We we will program. point. options organically opportunities, to are meaningful our evaluating and that inorganically buyback we adjusting But not in and changes for looking continue depends on will those continue

Quinn Stepan

themselves, inorganically. as our so terms We to in of the add to a perspective, willing and balance are sheet can have we and market disciplined an opportunities accretive business present had we our both capital the but organically allocation flex approach from

Luis Rojo

that financing. good and make, And the I last Vincent, a is are unique in to very also opportunity comment we affordable will get

getting You remarks fixed X% at interest about our we're that rate. notes saw

this flex bit So the sheet. time a a is to balance good little

Operator

comes question CL King. next Our with Silver from David

David Silver

So here, our remarks, preface Internet a both my I'll of I'm without network kind and here. net just are down working

or to slides in you costs yourself. curtailments or raw number want and being and into before if I about So if resulting limited that in and context kind follow just and about words, And focus normal. the of inflation mean return of gas of disruptions. talking a even to that months, up I wondering repeat in to number could intensity? of extreme the then weeks, the of could costs, particularly apologize and your if I'll materials heading of levels chain particular, things making about about duration begin kind to the power of peaking on costs there's there. disruptions power some will production we disruptions on in Europe. elevated In did And you advance or for extremely comments or been into last not kind asking by manufacturers in But supply wondering be gives around your I a was information whatever a in assets what other of may the of let's particular, winter limitations, stories shutdowns kind with prove was the little energy you I'm comments in I'm confidence yours a few a longer bit American maybe here issue term start put non-North maybe increase

Scott Behrens

chain centered I'll the materials can around our restraints within the businesses, try really we just The right of windows disruptions construction energy as shortages point, surfactant to demand have answer your the side. construction we're Even other in in on seen and and question the I European raw not as both that impede To timber, supply best now. any are market, this polymer can. seeing material availability.

industrial use seeing customer's use. to call our affect, some facilities achieve milestones point. out, throughout the energy the raw their facilities. I'll call, country, both point, would through to I rolling, earlier that of ultimately fossil impacting and most of seen some of which materials, China, power blackouts our would production are is what say energy at are likely issue raw going energy not have And So they our disruptions I will try our this customers' and though, are materials Chinese around we there markets industrial an as we

of news the the terms is In there duration, is the the marketplace. demand in good underlying

the is to supply side market polymer our there on can and help high and so alleviated, customers surfactant both meet of the get incentive our disruptions and So demand that both chain these the business. motivation Stepan

Quinn Stepan

issues constraints, have given with the we have that material some move confidence we material may contact facilities, constant that's are the through raw suppliers raw QX. their the to have key we be better projections And as that why supply And where in get they restart having we that our reason will situation today.

David Silver

maybe going about to question so follow question wanted about the marketing China, to up -- situation one. a with I Chinese anticipated you with follow in was up strategy. that I the a

success that guess, accounts segments. by retained I Tier Xs X meaningful at the from five ultimately the penetrate? Xs or X perspective, have Tier directed displace, longer-term And Tier goal to current to you'll be current Tier you maybe this customer if X continued directed base that a Stepan's is and Scott X and your your just say, growth outlined to now, So the Tier amount Tier your penetrating to X continued Tier continue to will business I'm out is the look case maybe a incremental growth the of Tier with let's volume will wondering, from where we side? Or of three largely offsetting years X and the on

Quinn Stepan

customers. customers our of who as well target the our smaller David, customer expertise, overall Tier product services as having our be the diversification believe our we Stepan our a world to the true. latter entire base. We reasons, be breadth broad Tier different formulation it and whether lines and really for with large capacity X catering are strategy our X, technical or customers to value grow with intend Tier It's X is throughout both, enterprise. We a for it

other. on intention more to no one both. grow with the intend of So than we have focusing We

David Silver

press forward that move other with one kind the you of was you capacity And in And up build months Stepan into growing forward company's on the for words, maybe were just in expansion. then fell I'm had last to capacity? producer process route two wondering to or And ethoxylates track should we kind decision, in one, now when forward versus if the ethoxylates expand the buying as a via please. to another decision decision But about that were to relates the another But move past you a of through, few think was this associated sale. to buy willing organically. inorganic and willing move

So scenario the of that should of this a out course kind of build played over the versus think we several as months? buy last

Quinn Stepan

Yes.

Operator

Next question with comes Stonegate from Marco Capital Markets. Rodriguez

Marco Rodriguez

talking on wondering was supply I disruptions for numbers is in little you I of those if out planned planned quantified? we're be maintenance million guys and bit surfactants need included the number polyol. inflationary that to called that sort Are the a that that but costs. clarification and about pressures of know $X costs chain sort pressures and number there maintenance separate I are the increased also inflationary total can of or

Quinn Stepan

They numbers. are separate

Marco Rodriguez

And any way quantify those is there impacts? to

Luis Rojo

provided QX. we we the because relevant in that's Marco, most million, thought $X number

on accelerate not of CapEx, of have, is and last with talking expenses, the items could And And in most our that here consultant, we're some that quarter, in maintenance done facilities especially our we in but $X inflation that they the but and a running on argue there of decided the one our of and other material. to the are we We elements. couple after higher all work as maintenance you dollars other investments relevant million number have million. course,

Marco Rodriguez

prices the raw seeing, out your the here increases you're you're prices Obviously, again. And of them October, then in the of material raising the terms customers. mentioned increases and planned that in in prices to you

You raised them last quarter.

so? six seeing also challenging little increases right material through to environment price maybe talk competitive environment and feeling now kind throughout on pass ability the you're can about to continue how if of the you of the raw months remains a if kind still your or about bit you're next the wondering Just

Scott Behrens

by and and supply across driven I commodity prices they're ramping would the disruptions, raw disruptions chain escalation on that materials say wild the supply industry. chain the

customers the the the the call supply supply to important consumer our inflation chain. it, customers three have as and levels of months are industrial think inventory I value that So is and across four depleted security almost in seen last, unprecedented and is

negotiations time boat, they the customers' that is So terms say is I paramount so product can over everyone orders, ensuring would on in is same taking their of pricing. in replenish delivered

Marco Rodriguez

with about a can earlier When a driving guys? Any certain decision growth more obviously target sort were that it expansion in then or you that talk market to it Texas. for increased color plant potential, what And you in moving discussions of Were were on helpful. terms there be bit one things you seeing quick alkoxylation customers is little for particular for you of there just maybe towards about being would talked in looking was follow-up the long-term supply you you of the that there? that start process wanted sort

Quinn Stepan

Millsdale, Illinois, would two our I of that say Georgia makes what at alkoxylation Stepan products our facility. and So is facilities, Winder, today,

a use of outside do also tool manufacturers. We network

our so much our actually is larger than capabilities. And business current

as time, in of look in-house that and period would potentially volume our a capacity also we're putting accretive we to margin a fill relatively margin so of over can of accretive the that a outsourced So and well, at business. we to continue -- believe move short time new with some grow business higher the over we higher period

Marco Rodriguez

saw I that made this execute you benefit you last on that, me maybe for guess, just tax guys some benefit or when just were And last saw some the Was able you're timing-wise something quarter for quick to that? this this you time particular on planning quarter. question

Quinn Stepan

regard country. of was business do to entities, with the to the that plan Brazilian simplify the within Specifically, to our our merging

we was that So an knew opportunity.

Luis Rojo

was have require that course, our as the And because quarter, migration certainty cetera, well of an this on resources SAP we side. from didn't et

been execute the are other little But minor some. for And in has the finally there So this our project we were do in QX. a and more credits, had while. put this found true-ups project to and able has and SAP was that pieces window a to R&D our to for right the tax that we planning implementation a we a resources been

Operator

Seaport We follow-up Mike Global Harrison have with Securities. from a

Mike Harrison

a Just couple of additional ones.

there. there volume or also XXXX. to that growth. of seeing terms guess model surfactants trying there? that's get and the but what channel institutional of kind point, for provide this consumer some is inventory might maybe happening growth you're can then customers, In demand in inventory question sense you're of in there of any guess, extent? from at levels seeing demand consumer, as about obviously, some real is growth the your we're think I surfactant color the some Thanks institutional volume restocking And we I mentioned to on maybe starting opposite just you some growth, a destocking the normalization going Is you that to

Scott Behrens

Let's start of marketplace with today. the the demand The business. in the happening institutional side is

around as that up, the economies that the part hotels, the open So world up, disinfection is are of the restaurants, to opening are regimen. cruise ships public starting

institutional beyond side. the and build consumption on the So I into inventory would actual we're say

On great to versus disruptions. clear not chain the side, It's understand delayed the still in what destocking marketplace being what's question. supply as is to consumer due

destocking value supply get pandemic chain which there are argue I'd very the board, may through going demand could hand chain remain than still reduction. is say across the high -- the XXXX, more I disruptions to during be across chain supply inventory probably inventory think the was side. some disruptions You product restraining demand depressed we peak believe I on until levels pandemic the believe, But have a the the alleviated. that in that soap, And that

Mike Harrison

need And shortages over maybe Rigid Can -- construction issue And mentioned issues products of to whether backlog about start your they you the we delays to about bit business, able to polymers get a activity what subside, to construction talk that some to months, maybe other you slowdown? winter that related issues your about I guess, then customers little the next their move isocyanate over into the you supply year. said seasonal as have isocyanates, other expect to Polyol some related not on activity, of get of talk forward. where some bit chain a they're Polymers little

Quinn Stepan

demand to I that pent-up think telling customers polyol perspective, there serve. able not from they a is have high-level are us been our

are will as have backlog remain anticipate first do XXXX. mentioned backlog issues active that, chain they orders. that I So of the we kind supply that getting And an anticipating They into of better, previously. do half of place in

versus So we're XXXX. to 'XX in see that growth at we're we where in going anticipating are

Operator

at further are this questions There no time.

Quinn Stepan

Okay. Thank Please already great appreciate clean haven't a so, you in your day. ownership your disinfectants all Company. done vaccinated. and very hands much stay for healthy, get please joining us to Stepan safe on if you We wash surfaces, today's frequently, Have and and interest use call.

Operator

everyone. conclude ask your day, and your lines. for call Have today. We participation That disconnect conference thank for a the please great does that you you

Stepan (SCL) 20 Oct 212021 Q3 Earnings call transcript