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Stepan Company Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: July 30, 2010 09:13AM
Stepan Company (SCL) filed Quarterly Report for the period ended 2010-06-30. Stepan Company has a market cap of $654 million; its shares were traded at around $65.34 with a P/E ratio of 10.1 and P/S ratio of 0.5. The dividend yield of Stepan Company stocks is 1.5%. Stepan Company had an annual average earning growth of 10.9% over the past 10 years.SCL is in the portfolios of Paul Tudor Jones of The Tudor Group, Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates.
Highlight of Business Operations:
Net income for the second quarter of 2010 declined 13 percent to $17.0 million, or $1.53 per diluted share, compared to $19.6 million, or $1.83 per diluted share, for the second quarter of 2009. Below is a summary discussion of the major factors leading to the quarter-over-quarter changes in net sales, profits and expenses. A detailed discussion of segment operating performance for the second quarter of 2010 follows the summary.
Operating income for the second quarter of 2010 declined $1.4 million, or five percent, from operating income for the second quarter of 2009. Gross profit decreased $2.2 million, or three percent. Surfactants segment gross profit was down $1.7 million, or four percent; polymers segment gross profit decreased $0.4 million, or three percent; and gross profit for the specialty products segment dropped $0.2 million, or four percent. The impact of higher raw material costs more than offset the effects of higher sales volume and average selling prices.
exchange gains and losses. Other, net was $1.1 million of expense for the second quarter of 2010 compared to $1.3 million of income for the same period of 2009. Unfavorable swings of $1.5 million and $0.9 million in realized and unrealized gains and losses on investments and foreign exchange gains and losses, respectively, accounted for the $2.4 million quarter-over-quarter unfavorable other, net change.
Surfactants net sales for the second quarter of 2010 increased $26.1 million, or 11 percent, from net sales for the second quarter of 2009. Higher average selling prices, a four percent increase in sales volume and the effects of foreign currency translation accounted for approximately $14.3 million, $10.1 million and $1.7 million, respectively, of the net sales change. A quarter-to-quarter comparison of net sales by region follows:
Operating expenses for the surfactants segment were up $0.7 million, or four percent, from quarter to quarter. The higher operating expenses were primarily due to $0.6 million and $0.4 million increases for European and Latin American operations, respectively, partially offset by a $0.2 million decline in expenses for North American operations. Increased expenses related to registering the Companys products under Europes REACH regulation ($0.4 million) accounted for the higher European operations expenses, and increased marketing expenses ($0.3 million) accounted for the higher Latin American operations operating expenses. The quarter-over-quarter change for North American operations included a $0.9 million decrease in marketing expenses partially offset by a $0.7 million increase in research and development expenses. Decreases in bad debt expense ($1.2 million), due to reduced reserve requirements, accounted for the marketing expense decline. The increase in research and development expenses included numerous items, the largest of which was increased expense for contracted services and consulting ($0.4 million).
Net sales for the second quarter of 2010 increased $19.8 million, or 28 percent, from net sales for the same quarter of 2009. A 16 percent increase in sales volume and a 10 percent increase in average selling prices accounted for $11.2 million and $10.4 million, respectively, of the increase in net sales. The effects of foreign currency translation reduced net sales by $1.8 million. A quarter-to-quarter comparison of net sales by region is displayed below:
Stocks Discussed: SCL,