Earnings call transcript Q4 2022

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Operator

Good day, and thank you for standing by. Welcome to the Stepan’s Fourth Quarter and Full Year Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference call is being recorded.

to Rojo, conference Financial Vice like speaker to Officer. now Luis today, President would turn over the your I and Chief Please go ahead.

Luis Rojo

quarter thank Stepan financial and for and fourth review. morning, XXXX full Good year you Company's joining

operations, but we for cause conference contains and this detailed differ actual global historical These results forward-looking information and our risks including, not call statements are to begin, involve and conditions please not which uncertainties economic Before prospects and that our facts. in in foreign Exchange limited note to statements, filings. that Commission regional materially, could factors Securities

Investors you're to of made We slides or review And Whether we earnings our over available you slide these the that same issued. and is at investor the we we the perspective presentation, find when which encourage hope at online time you section us helpful. the information release available as have website. the joining made approximately phone, under the www.stepan.com

would Behrens, our With that, Chief Scott to and like over call I Officer. Executive President Mr. the turn to

Scott Behrens

highlights fourth joining and financial thank details morning, results. begin, for today our to will fourth Good our and strategy To Luis all quarter while will and provide share results. you our discuss year full and full outlook, on year I us quarter additional

delivering were mix XXXX to after in expenses another product and year, other significant Improved record Despite by significant raw increased XX% improvements offset external business logistics growth and supply revenue XX% chain actions, challenges mix and in deliver efforts. the was inflation a difficult with customer in macro XXXX, able productivity environment, materials, pricing and fully

and to material customer primarily slightly, commodity institutional lower cleaning global operating partially the product markets under for above. laundry inventory demands, demand was constraints offset raw Surfactant's Higher functional sold products to end the income due and stocking. down

$XX general year destocking, versus economic improved sales construction industry despite income lower channel and inventory year volume activity of operating mix. prior Products driven operating $XX in delivered reduced customer customer record to prior compared and the increased income by global million concerns. to and XX% Specialty Polymer due margin million,

Directors Stepan March a and common per paid Stepan's on dividend increased $X.XXXX XXXX. years. on XX, share XX its Our quarterly cash declared has payable stock consecutive Board of dividend of for

fourth the to company XXXX, company's the and During quarter the $X.X paid of of million $X.X million of stock. dividends repurchase shareholders

Board year, under million stock. For company company $XXX paid dividends million repurchase has repurchase The the the $XX.X the in remaining and $XX million of company Directors. authorized by share full program of

the to shareholders. strength business. and our that of diversity its current allow cash return We in pursue to to our And and remain M&A ability in will our strategic confident us business, opportunities generate invest cash

will results. now share about our full year Luis, fourth and some quarter details

Luis Rojo

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

recap five us share with to fourth or diluted slide per Let $XX.X $X.XX start net $X.XX Adjusted the versus million the diluted share quarter. income per or of XXXX. quarter for was a million $XX.X

in to full a Appendix release. comparable the can two of measures, II GAAP Because these income non-GAAP found measure, net the is table and reconciliations be provide adjusted and of presentation we the press

also we Specifically, serve to in the compared of restructuring last million, year fourth for of expense changes quarter, million. $X.X $X.X environmental remediation adjusted exclude our deferred net compensation income It expense the the and excludes expenses. minor

plan exclude appreciation item price, income change in stock we with as net related as the deferred for cash-settled these the stock represent figures compensation compensation the the well this employees. liabilities Because our operational to discussion. from company's movement deferred The

at to increase slide figure on income, and is year not net last fourth breaks is net bridge shows total the the The the quarter income down basis. this income. X the for company's adjusted here compared in net Because an fourth after-tax quarter,

in detail, lower segment and income operating this Polymers. we more for result growth products specialty to Surfactants cover and some excellent but summarize, in will delivered a operating We

expenses, and to overall tax was segment, to higher effective which allocated slightly favorable rate The for Corporate negative, benefits. company inflation. other lead by the are expenses the $X.X not all you interest business and million, went driven quarter tax up may one-time

material The Surfactant Selling focus versus and for customer mainly well Surfactant prices due X% mix. costs as the XX%, were up quarter on improved went and and net the prior $XXX to the pass-through for as higher segment the slide year. sales X, of results increase quarter. million, product raw logistic the

volumes of Volume declined probability Lower personal XX% demand X,X-Dioxane care stocking transition due the primarily and year-over-year, due and the and inventory efforts. capabilities to Low in market. laundry to commodity lower Polymer

partially demand global market for volumes, institutional and above. offset cleaning agricultural products Higher sold the the in

currency by net sales negatively impacted Foreign X%. translation

transition operating operating Surfactant income $XX the products. of with a decrease X,X-Dioxane by before. operating the XX% million, for quarter like But versus mentioned primarily $XX income prior Surfactant's mentioned decrease was All of before, the ratios of Low company a volumes million even due decline volume higher associated and expenses a to are year. lower it

net million on Selling versus Polymer for increased mainly XX% pass-through prices slide quarter, of a $XXX year. to X, sales prior to due higher turning cost. were material increase the raw Now, the XX%

a Specialty to declined a XX%, volume demand and Global volume by businesses. lower Products primarily declining XX% across and PA due volumes

activity, and was by customer driven concerns. general destocking, construction, economic decrease industry The reduced inventory

plant The sales company's by $XX negatively primarily due XX% versus the net Foreign the associated in in higher decline volume year. located X%. global prior to million translation Polymer currency costs maintenance in in was planned operating decrease income million with the is and US. the the impacted PA $X activities

partially results impacted by all offset by and recovery efforts. segments, America volume lower polymer were margin across North Europe

restrictions following in increase eased of COVID demand China. and improve lockdowns results the Asia on

due Finally, Specialty Products line. customer year. mix improve the $X.X operating in margins income This -- million million versus to $X within prior primarily was increase was the and product

million income deliver $X.XX slide diluted per another X% record increase to the to $X.XX challenges full and able versus $XXX.X diluted external environment, per $XXX.X a macro was despite share in net nine, Turning a year. share, significant chain million, or record a Adjusted XXXX. or supply difficult business was

X%, down as year, to in the the primarily the was of by the versus the prior customer of Products Cleaning commodity company lower for year. inventory volume down efforts demand declined lower partially X% Institutional destocking demand the market products The Higher the $XXX driven income year. and prior operating destocking global versus Surfactant [indiscernible] million, The global delivered second offset half customer above. end due the slightly inventory Functional segment and Surfactant laundry of sold in demand, efforts. impact volume

Global declined X% million due up volume costumer versus income, $XX activities and delivered operating prior prior and the second year XX% construction-related the segment Polymer the The of half year. year. inventory to of in destocking versus channel the Polymer lower

was $XX year, in million income operating product driven Specialty margins and improved our record versus million Product the in $XX by line. customer a prior needs

or foreign translation share Earnings $X.X income XXXX. net grew XX% per excluding million $X.XX of currency the effect impacted versus prior year. versus by negatively the Lastly, diluted Per Share FX

XXXX. down company shows earnings was compared of net This slightly offset XX% favorable recognized split The the Products. XX total a rate to in adjusted Surfactant year full full XXXX for company XXXX the in income. XXXX Slide than was the tax effective XX% tax non-recurring versus in breakdown Specialty to primarily by increase year more XXXX. and in benefits due year-over-year and increase was Polymers

sheet liquidity our invest increased and have investments, balance XX, onto Even the levels. with remains in ratios to our interest strong, CapEx a very business. Moving and leverage healthy coverage ample we our slide continued

raw dividends we investments, $XXX debt and During million repurchases, $XXX million inflation. material share against the CapEx working due and year, to cash deployed from and higher operations requirements was payments, capital

The our in US. and was year spending X,X-dioxane company $XXX million, inclusive the capital full Pasadena of project investments

you beginning will Now XX, strategic on priorities. our Slide update Scott on

Scott Behrens

Luis. you, Thank

for of more priorities advancing another a world our efficient our year In good priorities record earnings, delivering preferences our strategic mind. XXXX. on a capture made The cleaner, and healthier and in with addition strategic following we energy customers to in slides progress vision

continues priority be a Our diversification and Stepan. the chemicals functional agricultural for products, strategy to and key oilfield including

wheat, commodity utilize incentivize corn, Our in supported which the options. increased global high to protection growers full of volumes digits agricultural by for soybean double crop prices and XXXX, breadth

addition, protection. increased for In favorable agronomic continues weather demand Brazil patterns while crop advance in practices, to in Australia

product build production of crude the We optimistic business product having as date. continue encourage portfolio We acquired use in to out chemicals. should and with elevated Oilfield commercialized of line, of production remain oil half the over the Demulsifier KMCO prices Kymco this about the increased future opportunities and stimulation

capturing Our on growth continues business the organic generation Rigid the focus efforts spray energy increasing driven delivering diversified technologies, conservation Polyols growth global market market. foam in by next polymer the and advanced developing to

productivity our significant We manufacturing Millsdale at infrastructure wintertime completed site, and several reliability. which will improve projects

site. many bottleneck the and efficiency production operational improve to units the capacity of across the efforts at continue Our

new forward look X,X-dioxane midyear. site by also We to at commissioning investments low the

net a X including Tier customers of Despite markets during growth We and focus our XXX grew we be X Surfactant and quarter new we channels. observed efforts XXXX strategy. the functional in customers digits. products, volumes mid-single Tier fourth the destocking across and most to continue added

in continue segment. will investing serving and We market strategic the

was efforts, ESG In Business company Daily’s best Chemical recognition the Stepan named list. XXXX number of our within Specialty Sector ESG Investor's one of

which again once achieved percentile places the level industry. the Stepan within our rating from gold also EcoVadis at We XX

It metric multi will our Slide approximately at construction will to reactor strategic agriculture, tons asset production specialty capability markets, This our the-art be end and new oilfield, for facility cleaning. a institutional state-of- continues provide strategically annual Texas. with located Moving alkoxylation and long across Pasadena, of growth XX, alkoxylate alkoxylation household XX,XXX capacity. and term in work flexible including capacity facility

mid We expect running XXXX. be up the and plant will

the for additional digit product business that market opportunities our initial The and provides expectations. recent its diversification and acquisition at baseload supports margins delivers volume growth PerformanX strong exceeding alkoxylate business for alkoxylation Specialty of attractive underlining Pasadena line. alkoxylation continues volumes The Pasadena investment double

markets the paper step integration The markets we existing serving are we business new involved and PerformanX complete such as with and and and new lubricants. pulp customers delighted of in, to are not is

either As the on either sulfate new Surfactants, you X,X-dioxane is with a network of meet know, X,X-dioxane in we American first byproduct North of regulatory expected are limits that ingredients and regulatory key customers capability requirements. to the used foaming produce the XXXX. half capacity meet formulations. new with in generated product which minor cleaning consumer either completion that sulfates sulfates increasing are is in to manufacture Stepan supply working and

Customers X,X-dioxane to Stepan generating commitments either maintain growth. for installed North to business. sales have low transition will and to X,X-dioxane focus American our low go sulfates we the enabling sulfonation expect largest have with American North and capacity through Stepan the our made market, XXXX grow production long-term value on this into

fermentation the pleased progress are product with in our platform. We

for markets first design. of has chemicals, and our end priority final significant engineering this biosurfactant Our personal field. Stepan, offering. development product and in consumer agricultural teams bio-based Rondel oil and We sampling including family progress anticipated remains care cleaning, as the has believe lipids, towards several process opportunities development commercialization Customer new important begun

the given that our sheet, strategy acquisition with opportunities align of our strength priority. growth a balance and remain Finally, diversification

effort delivered challenging a we was what of record proud market XXXX, environment. Summarizing and our and resiliency during I earnings am team's

We also markets. delivering growth continued earnings. have years project strategic our now successfully base progress delivered end in three customer innovation significant execution, We diversification made including and capital targeted use our record while sustainability several and our of consecutive within areas of programs,

delivered specialty within our business also within functional within business, growth our double-digit We our and products operating surfactants income business. products polymers

construction negatively believe impact challenged our businesses. could and high and macro inflation interest activity, by polymer consumer We believe the we affect and rates. forward, will XXXX continued be which will demand both surfactant environment elevated related Looking

cost believe Pasadena ability associated challenge to expenses deliver higher we site will in inflation, earnings Additionally, higher pre-startup our XXXX. growth and new depreciation overall our with

pricing long-term mix. strategy. remain to offset headwinds improvements, to executing productivity our and our XXXX to furthering Despite efforts these this macro We product committed environment, possible seeking customer increases projected with and are were improve we growth

remarks. prepared this question turn for the At to portion instructions our review we'd please for time, the questions. like of call concludes This call. the over Lisa, today's

Operator

will Please from you. go Harrison of be coming Mike Seaport. ahead. Instructions] [Operator question Our Thank first

is open. line Your

Mike Harrison

good Hi, morning.

Scott Behrens

Mark. morning, Good

Luis Rojo

morning. Good

Mike Harrison

key XX% between the how I those was discuss between the from the saw Surfactants us business business? you weakness drove understand volume other destocking, could of Polymers impacts, in the and split particularly were And some you hoping as any decline factors. and help factors in that the volume out QX. underlying Maybe market there that destocking, look differences you that

Luis Rojo

about One the you And low October as demand. you think right. lost minus when one the volume Look, said, Mike. is the And communicated customer. those impacts side one transition. you you, is transition which so XXXX we the to One product to other clearly that Thank destocking. related tier on are there a think about we XX%, buckets, in rightly to the three need other is

think minus big XX%, those is and So, if bucket roughly, about you you about each buckets, three think one-third. the

impact So them. think each the of of about X% X%, is

when course, you transition. low of don't And Polymers, you XXXX one a think have about

can So half how that's and situation three But minus more in buckets. see we summarize than, you know, QX. the two half big buckets between that you I other the in saw XX% will the

Mike Harrison

I Polymers? your as starting forever go in to from from in in what point And in customers hearing that about normalizing well Are patterns are your can't on right. as guess some All that you of terms you're see talk here customers. signs order at QX, maybe destocking, Surfactants,

Scott Behrens

the But seeing be what with QX. well. we little Yeah, I that destocking at point. don't Mike, we I we're this pattern would forever saw would uptick as activities say bit think But you I can't incrementally, versus know, see go say, in may a on it done

compare I insulation It's retail channels a of contractors the you side, say versus the that obviously on country. goes fragmented are Surfactants get panels all of to use. you once poly highly across manufacturer Polymer end As different and distributors two Polymers, the market past rigid into. would the the

because I I efforts think that while will So, destocking stuffed pretty that was a chain continue up. think

I think a we pretty consumer side, may think may behind the companies. the be think packaged the I little demand, Polymers consumer QX. Surfactant destocking in bit in further inventories But of along Surfactants. as pretty, at got look retailers full I be you product On into And the

Luis Rojo

what it. So Mike, versus into simple summarize seeing in it six as weeks I you QX would we're as already know,

suppliers second in We half. QX. expect and call we're the we of that at right? half year half, and a picking from or saw up hearing what a then of second Everybody QX both, similar kind demand condition versus are all. again the the customers in piece That's consensus and says facing people first Theme in

Mike Harrison

officially with of one All you the helpful. startup like some very And associated now Pasadena to And going that taking right, a pushed sales. was you're expenses process, look be XXXX you it little sales. the previously, XXXX. like believe before bit, or start about it sounds half then also the commercial first out on impact I Timing commercial ask startup said there's does P&L of early

startup? modeling should with and impact the the how maybe help just out So us timing we think about that of

Luis Rojo

well, – We investments, we're mean, big we're to capacity I to if to phase. on Sure, seeing you I Scott the XXXX. – have we Pasadena expense will look, small to will I you premier let in full a have later the the train you, – need production small going have I startup very you come hire width buckets that going have mean, on in right. as I have need we people. delay right to our What tell we're three on – on produce the full construction side, will the

is this seriously know, so. take chemical a You very ESNS training and our we everything this plant and

as in going in started Scott are commission in last that in to to, Georgia, in mentioned remarks plant we're low Millsdale. capabilities Millsdale it we the X,X-dioxane the we this going that, also With year year

So impact, two the XXXX, high we because also we buckets, between those net QX. press in expenses the event had Millsdale in remember, that had, with

a million talking of and the extra on X,X-dioxane, talk more P&L, time. ready when to out over Scott scheduled we – invest So about our commissioning low the bit as when it Pasadena. to turn you in $XX you little I are three, be around net will you costs to we

Scott Behrens

Yeah.

schedule, XX%, month with slipped, complete relates max. a maybe to the – construction So of about two it have Mike, We're construction. we maybe startup the as

full related some civil construction it's material had done We on the getting raw swing. So in site. to delays the

So site that nothing civil associated the from were the constraints just with normal raw of material project. portion

So and complete, running we mechanically up mid should year. be before and

Luis Rojo

and about all we are your that have example, already. the all they For equipments site. already need, on reactors site on you made think when mean, already I the we major equipments

Mike Harrison

All in back queue. right. Thanks. get I'll

Operator

The of from Thank next be Anderson the Vincent coming you Stifel. for question. will question

open. is line Your

Vincent Anderson

wanted guys. ramp quarter. given running? it's the book existing ask, once Thanks, just to Pasadena How morning. last I think and can PerformanX you you your and fill up then performing alkoxylate Good quickly portfolio can acquisition for order the – do the you facility and Yeah.

Scott Behrens

Yeah.

Vincent. – perspective, facilities From alkoxylation US morning, be an today, good So existing have we Pasadena alkoxylation in the will third. two here our

today a continue expectations. grow that as we been well using utilize also We to tool exceeding capacity manufacturers third network of doing party has product the line, to our broad been which very have

get very at in startup that manage balance a upon to good network. have we our will utilization we – want how to opportunity tolling Pasadena, will that up with external So we

So, flexibility the continue allow as our to ultimate we and proper have, needed. to I utilization think, to assets, ensure internal us using grow tollers the of

Vincent Anderson

going is I'm materials the all least positive and timing to reason bit not But, wouldn't past we that. between continue there price half any for and year, the at future Perfect. first down the slow in of demand little predict if ask we that environment this impact cycles? to seen of a along raws, you we've on like see raw

Scott Behrens

kind would to plateaued of in Vincent. raw say hard It's that, I QX. say materials

pretty play hard down There's or it's from it's into going And it's factors up to stable right here, So that whether that. too predict. now. many

operations. Our focus cost is have the and to any -- cover we our continuing our we actions within will inflation that continue really pricing business

that and strategy we'll think continue with I as we expect it's our So, pricing see. wait But, needed.

Vincent Anderson

do last couple quick how all or importantly, had bit over taxes with if is a should depreciation, of on XXXX maybe couple cash of maybe more qualify that about Pasadena guidance rate years. tax higher the the But of projects the impacting capital either we and And the then next a spending, Dioxane Fair one enough. things. those so, Low effective The think Okay. project little for than years? X,X bonus all taxes I

Scott Behrens

Vincent. UK question, guidance XX% rate The is is in tax Great Yes. for April. similar. example, kind moving to Remember, of a

that. baking impact. then have a So mix well you into that's as And key country

see So we XXXX, tax our XXXX, tax But rate go normal always XX%, rate of to XXXX you the projects. tax back lot XX%. -- you had in a if or in XXXX our

that guidance the have that's right So now. we

assets, on X,X totally you're we those -- cash depreciation. all the apply a bonus right. we On as as Dioxane will And soon commissioning basis, apply for Low

bonus per the to last year, remember, is law next moved year but new year down. to depreciation XX% Now going depreciation have from able bonus this we're Pasadena, to XXX%, the XX%. the goes down going And to be

we flow. see that in I planning cash unfortunately that like not course, the XXX% in -- of mean, but our we past, are it's So for

Vincent Anderson

Thank excellent. Okay, much. you very

Operator

Thank moment for Storms your And Stonegate. question. you next question. the coming we while be One from for prepare question our David next will of

is line Your open.

David Storms

for my thanks and call. Good Perfect. morning, taking

some curious project. with Pasadena Just Dioxane about the X,X pacing of for the and expenses your

Scott Behrens

David, question? on could repeat you up that us. We broke

David Storms

sorry No, that. about

curious the expenses. Just the about for pacing

of and projects for X,X some Pasadena expenses the the Dioxane project. mentioned You've

how XXXX through think that and of beyond? Just about curious the pacing should we

Scott Behrens

say would -- is it’s I probably What Yes. more half-on-half.

The Pasadena. the more is into be half more loaded first X,X with Dioxane, is It’s going half back load. loaded heavily Low to

David Storms

Thank Perfect. you.

companies thing, forward? But of & like and that's give directionally know released The their earnings Do market explicit for estimates you EBITDA. for won't you of revenue and the other think raise Exxon analysts after their going lot Gamble correct kind Procter a I results, guys guidance.

Scott Behrens

I that, on know Exxon comment their expectations. and don't David? driving what's can't I

David Storms

very Perfect. you much. Thank

Operator

Our Thank from [Operator One Instructions] we moment you question question. will coming David next of the while for King. Silver your C.L. prepare for be next question.

open. is line Your

David Silver

and Hi. Yes. you Thank morning. good

Scott Behrens

David morning, Good

David Silver

wondering overall regionally. up that and America, geopolitical highlight for outlook? opinion. Europe, some overall. America a America, question. America. North XXXX the think shakeout regional I'm concerns could just North outlook XXXX did the XXXX? the was morning. maybe Good issues some I kind let's you as region, should South course, Is issues would kind in we opinion qualitative to thoughts And America XXXX Latin But your discuss if other mean, And outlook. your at or point a in in say, of mind or does This how some your of In keep in you I build in of this words, overall and detail there are broader outlook about strongest of But is in North Europe maybe thinking the some regional we regional for it

Scott Behrens

question, It’s underlining first about take at And talking me demand the let David. destocking kind shot where great and of a is.

earlier slowdown, maybe a QX. the really starting Europe, America, I slowdown didn't to year, North business, at last in think until QX saw in least we start kind whereas our see in everyone's of in

North I than Europe's So in their pattern bit think a America. ahead little demand

right North earlier, as demand weeks will a I where American able I good forward still little going And now be destocking uncertain I said year into think profile to a really think it's six will be end. the And the established. to

from perspective, bit a two the think regions little So Europe's I going any see that ahead, between don't differences macro big I forward. but

where The in North emerging Europe, the on lower a much is in than be one Latin bigger exposed economies to demand. underlining could continued and wage impact watch going more or have think those I they're a prolonged better and consumer American out inflation to is continue impact average high the America inflation

David Silver

color, XXXX. I products or year two step revenues vitality of question revenue I however, track, top been highlight question at and would in other from be would what impact, and internally, the you in kind one of years, advances Thank in there next list. could products strongest But that was performance, sales the very I've just, in new asked think the if mean, with last or at five that if something are maybe margin you a just are or you internally, of that? calculate not, I beyond great And last you wondering know, words, a like this does in out in the near the I a from the another but you. areas could it the much. if percentage new two some look time out be look are three product guess, Thank developed or products sales it. the ago, from My appreciate or about know, functional if That's some guessing new particular, And you what of I years, call index, helpful? areas your you is I'm have we

Scott Behrens

Yeah.

I you space where growth. first on So specialty start well with, know, focused market that's And the and chemicals strategic alkoxylate. we within agricultural as are as

– that So, we you years market. anywhere long, to XX And agricultural pipeline know, products for in development are part come years chemicals pipeline that of to five for new active is pesticides. to new from

and deeply So have really the development we're is products embedded great regions out pipelines in which producers be pesticide multiple those being in launched there, new [indiscernible] place with to a large we

big is specialty alkoxylate. in for The us focus other

know, volume our portfolio. You And broadening improved dedicated but customers and to double-digit talking got year needs XXXX. out a another also we're continuing product performance, in team we've growth technical new for meet to

underlining global daily happen So activities those organization within a that R&D or basis. on are our

last I push would the And area Rigid Polyol. is in

for Europe deeply and panels. focused next of with So delivering in in board North innovation really we're programs the both performing a generation customers and and America. better our sustainable major rigid more those embedded And on we're

Luis Rojo

and spray progress. would the I in is, investing Scott making also. foam David we're are What remarks we mentioned good

with working products we're are we So there. new

also about If you think Chemco. we talk

kind in that means that regulation, That new end but new the versus portfolio. new that's that of the a We that making about to be at volume totally a actually And a new you have sulphate lot significant when does that's, a past. to of, line. the are ether end, right, -- at product going is we're X-dioxane, low that the investment relaunching think X, product

David Silver

pick last up your Yeah, no, I'll comment. on thank And just you. Luis,

that years, and couple about business thought of people that was I couple significantly the other know, that changed pandemic you been business, other affected some your last disinfection issues some think COVID like way Two direction the has last pretty your cleaning and things heading. you and the and the But by years of I parts. that. of was of know,

First cleaning you we've the in you institutional be pandemic of your fade there arenas, that, direct the like move years. issues for commercial maybe -- the persist, persist, know, we're, protocols will Will beyond you or the some dealt to of in once all, opinion maybe last kind know, or the know, with stadiums, or what ordinance COVID that, that -- will sites background? things COVID for couple that

And either are then internationally will require or are of there opportunities adaptations you kinds or your secondly, nationally going be here important regulations, initiatives that other or in to business. think some

So, kind direct two or should mind what one after then business? fades keep for And the what importance. we pandemic issues opportunities we in of your about remains in regulatory when think

Scott Behrens

Yeah.

David. Okay,

US. As at the been much America, COVID to North it in about pretty you open if relates we've think the pandemic, the to for I look last XX XX months here

pre-COVID around in going and the XXXX, in that is down, hand but was significant two we did were hand I That felt saw back today. levels disinfectants, above the service work. to while continuing back levels but see reported we we of that levels, disinfection. pre-COVID pandemic the right, XXXX, soaps in height spike So, think to spike not come And the

Okay.

spike due XXXX. So XX XX% much still at it's to an last come in running that's to for It's to XX COVID above but the But been immediate behaviours provided pre-COVID about steady XX%, the down, associated new pandemic. with state levels pretty consumer months.

COVID to the why in and for There's X,X-dioxane company the regulation tailwind new on our to that environments The a able we've And demand major has made of regulation headwind has going of been is will nothing customers or York. be regulations investments impacted regulatory related our would X,X-dioxane started that New initiatives. new disinfection to terms state by that's horizon the the cleaning. biggest forward. say or ensure a we that In meet

David Silver

X, about multi-year And and Okay, your opportunities course, marketing. Tier And I broaden kind picked for going wondering, on on for or services or about graded year, will great. don't X particular a to of should of you I'm products work And a just next you with the have do be the question, to And of has high think, that you've it net think X, Tier XXXX. of, that And last be addition, customer if there there of Tier think customers should do out development. the expect be the would this a X,X-dioxane. there. point, know, But mention, base you more X, strategy and customers, should customer you'll effort XXX, X base for mentioned I that we and kind did I and you will with, target your that Tier provide -- forward? to continue this cherry X of Tier the base Tier we

we come should expect forward? going -- measure Tier the to where your expect date revenue is progress kind earnings So, good of X, Tier should a or the of and to X from forward, portion what going growing we

Scott Behrens

no. X, great strategy. is question. portion our Tier David, Tier think, X growth a been, company's We've this Yeah, clear of growing pretty that I segment major

these customers the growth our invest efficient, around more teams list tens And for forward hundreds going R&D new in our company, those identified in And for of a thousands. from continued segment that with the that's deliver per that, basis X, and that target reaching orders on to a and in to leads and world on proud support the net Tier customers our becoming in to number, securing Tier is continue X year. they good the and We global this and our focus. marketing improve that’s in as around a continue We've profitability worlds and is our of to execute and expectation XXX we're and basis. customer sales, prospective

David Silver

much. very great. you the the I appreciate detail. That's all all Thank

Operator

your have follow-up question. Thank One a you question. moment, for we

question Seaport. follow-up of will be Mike Harrison from Our coming

Your line is open.

Mike Harrison

Hi.

more Just for a couple me.

getting worse as as it more, In any stable? it I'm around that or Latin are of a you laundry happening care? Is seeing the pressure all look that's down? terms And because if of maybe little seeing seeing or is is this guess, the Surfactants it or of trend more America, under curious you're called something you it you QX, are personal if business, is in And the regions, at within pretty trading inflation. happening consumers trading you maybe bit down I the are portions business out

Scott Behrens

consumers Yeah, and question, It's from geographic down specific. inflationary high a mid-tier tiers yes, environments so trend. would, include opinion, private and also from trading And trade Mike. will to my label. I not mid-tiers premium to in economy economy-tiers, down universal great is the

do -- regions. been that there's in we've to from sales lens with trend customers our multiple think seen So that trend -- I

it's of worse view know I not. on whether Is can and it worse? happened what just, getting in definitely uncertain I right don't is, with the it's in everything comment if It's an getting but now QX. terms destocking or trend it

Mike Harrison

on disclose whatever working then little a guys it QX. to improved like that went be look was very in capital And net looking can operations you compared year, helpful? bit cash right. you numbers at It the What does provided, or the just flow your the All from debt fourth full cash capital working would looks up, like quarter, though.

Luis Rojo

Mike. question, Great

seeing saw everything. that peak stable the level. our a So and of of XXXX, inflation we roughly on the is, million kind capital and increase, significant seen have in $XXX been material period are kind peak what versus now versus versus But because base increase yes, of of QX, has this the we working we're of we a raw

So for $XXX million operations, of in an from that includes $XX as cash million of working capital. around XXXX, impact deliver we

dollars was working And now So with one-time, capital, our million XXX% because this line stable, in plan. if $XXX this is we're you a generated exclude cash. we in

course, you If of million of the XXX look too XXX there. many has CapEx, million projects CapEx the at

a XX%, is low around and us. for just that which flow of pretty up damn cash productivity X,X you free good so with Pasadena end tick out, it

have those at then the mean, you So big I low and And I capital. of kind three end, Pasadena $XX working million X,X. we're drivers that building course, want, of

that with on very from And capital. equation, If efficient you the you were we as cash happy flow. remove our know, our working we're

of in XX% when about working capital than XX%. less our have XX% is the average sales We industry

Mike Harrison

Where that should assume And number guessing bring we're to Where the did XX on million? thinking that that you related whole and assets discussed. as go? you've next up up guess I start Alright. year? end maybe cash about I flow the just D&A And was of amortization depreciation year? new some question. goes it another substantially for around I'm the

Luis Rojo

estimating at $XX of depreciation $XX around between year will the assets, of $XX million these million, were increase million. roughly, right. that timing million you but million next million least course $XXX probably some when $XXX XXX%, just You're $XX of from can to to depend start on --

Mike Harrison

very Excellent. Thank much. you

Operator

for for turn Scott session I over call That Behrens, ahead. concludes our remarks. Q&A like you. to would to today the Please go and closing Thank

Scott Behrens

we on very company today's ownership joining you your interest a day us have in call, in Stepan Thank and great for much appreciate

Operator

today's rest This Enjoy for thank call the of concludes day. you joining. your conference all

Stepan (SCL) 16 Feb 232022 Q4 Earnings call transcript