Company News

October 24, 2019

Stepan Q3 Results

Stepan Reports Third Quarter Results and Nine Month Earnings

NORTHFIELD, Ill., Oct. 23, 2019 /PRNewswire/ — Stepan Company (NYSE: SCL) today reported:

Third Quarter Highlights

  • Reported net income was $25.9 million, or $1.11 per diluted share versus $21.8 million, or $0.93 per diluted share, in the prior year. Adjusted net income* was $27.9 million, or $1.20 per diluted share versus $26.4 million, or $1.13 per diluted share, in the prior year.
  • Surfactant operating income was $19.7 million versus $28.8 million in the prior year. This decrease was primarily attributable to an 8% decline in global sales volume. The decline in global sales volume was mostly due to the Company’s exit from its sulfonation business in Germany in 2018, lower agricultural demand due to the wet weather in the U.S. farm belt and lower demand in the U.S. commodity consumer product end markets. The current quarter was also significantly impacted by higher inventory-related costs associated with the Company’s internal Asian-U.S. supply chain and the residual impact of the equipment failure in Ecatepec, Mexico. The Company’s insurance provider has acknowledged the Ecatepec incident is a covered event and the Company is pursuing insurance recovery for damaged equipment, incremental supply chain expenses and business interruption.
  • Polymer operating income was $23.3 million versus $19.3 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 6% more than offset lower volume in other end markets.
  • Specialty Product operating income was $2.3 million versus $2.7 million in the prior year. This decrease was primarily attributable to unfavorable order timing differences within our pharmaceutical business largely offset by improved margins within our medium chain triglycerides (MCTs) product line.
  • The effect of foreign currency translation negatively impacted net income by $0.4 million, or $0.02 per diluted share, versus the prior year.
  • The Company increased its quarterly cash dividend in the fourth quarter of 2019 by $.­­­025 per share, or 10%, marking the 52nd consecutive year that the Company has increased its cash dividend to stockholders.

YTD Highlights

  • Reported net income was $81.1 million, or $3.48 per diluted share, versus $87.2 million, or $3.74 per diluted share, in the prior year. Adjusted net income* was $93.7 million, or $4.02 per diluted share, versus $92.2 million, or $3.95 per diluted share, in the prior year. Total Company sales volume declined 3% compared to the first nine months of 2018. Sales volume growth within the Polymer and Specialty Product segments was offset by a 4% decline in Surfactant sales volume, or a 2% decline excluding the exit from the sulfonation business in Germany.
  • 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 $0.4 million of additional expense recognition in the third quarter and $1.3 million of additional income recognition for the first nine months. The Company will recognize $1.6 million of additional expense 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 the challenging current environment, the Company’s quarterly net income and adjusted net income exceeded prior year, and through nine months, adjusted net income is ahead of last year’s record,” said F. Quinn Stepan, Jr., Chairman, President and Chief Executive Officer.  “For the quarter, Surfactant earnings were down significantly due to lower commodity volumes in North America and the slow recovery of our business in Mexico.  The Polymer business had a strong third quarter driven by global rigid polyol growth.  Specialty Products income was down due to customer order patterns, but is expected to deliver significant profit growth for the year.”       

Outlook
“Adjusted net income for the first nine months of 2019 is up 2% from our record in 2018, despite the Mexican equipment failure and the decrease in commodity surfactant volumes.  We believe our continued focus on end market diversification, Tier 2 and Tier 3 customers, as well as our cost-out activities should improve future Surfactant margins.  We remain optimistic the Polymer business will deliver full year volume growth and incremental margin improvement versus 2018 given our strong rigid polyol growth in the first nine months.  We believe full year Specialty Product results will improve versus 2018.  Overall, despite the current year challenges, we have an opportunity to deliver another year of adjusted net income growth,” said F. Quinn Stepan, Jr., Chairman, President and Chief Executive Officer.

https://stepan.gcs-web.com/news-releases/news-release-details/stepan-reports-third-quarter-results-and-nine-month-earnings

October 24, 2019

Stepan Q3 Results

Stepan Reports Third Quarter Results and Nine Month Earnings

NORTHFIELD, Ill., Oct. 23, 2019 /PRNewswire/ — Stepan Company (NYSE: SCL) today reported:

Third Quarter Highlights

  • Reported net income was $25.9 million, or $1.11 per diluted share versus $21.8 million, or $0.93 per diluted share, in the prior year. Adjusted net income* was $27.9 million, or $1.20 per diluted share versus $26.4 million, or $1.13 per diluted share, in the prior year.
  • Surfactant operating income was $19.7 million versus $28.8 million in the prior year. This decrease was primarily attributable to an 8% decline in global sales volume. The decline in global sales volume was mostly due to the Company’s exit from its sulfonation business in Germany in 2018, lower agricultural demand due to the wet weather in the U.S. farm belt and lower demand in the U.S. commodity consumer product end markets. The current quarter was also significantly impacted by higher inventory-related costs associated with the Company’s internal Asian-U.S. supply chain and the residual impact of the equipment failure in Ecatepec, Mexico. The Company’s insurance provider has acknowledged the Ecatepec incident is a covered event and the Company is pursuing insurance recovery for damaged equipment, incremental supply chain expenses and business interruption.
  • Polymer operating income was $23.3 million versus $19.3 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 6% more than offset lower volume in other end markets.
  • Specialty Product operating income was $2.3 million versus $2.7 million in the prior year. This decrease was primarily attributable to unfavorable order timing differences within our pharmaceutical business largely offset by improved margins within our medium chain triglycerides (MCTs) product line.
  • The effect of foreign currency translation negatively impacted net income by $0.4 million, or $0.02 per diluted share, versus the prior year.
  • The Company increased its quarterly cash dividend in the fourth quarter of 2019 by $.­­­025 per share, or 10%, marking the 52nd consecutive year that the Company has increased its cash dividend to stockholders.

YTD Highlights

  • Reported net income was $81.1 million, or $3.48 per diluted share, versus $87.2 million, or $3.74 per diluted share, in the prior year. Adjusted net income* was $93.7 million, or $4.02 per diluted share, versus $92.2 million, or $3.95 per diluted share, in the prior year. Total Company sales volume declined 3% compared to the first nine months of 2018. Sales volume growth within the Polymer and Specialty Product segments was offset by a 4% decline in Surfactant sales volume, or a 2% decline excluding the exit from the sulfonation business in Germany.
  • 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 $0.4 million of additional expense recognition in the third quarter and $1.3 million of additional income recognition for the first nine months. The Company will recognize $1.6 million of additional expense 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 the challenging current environment, the Company’s quarterly net income and adjusted net income exceeded prior year, and through nine months, adjusted net income is ahead of last year’s record,” said F. Quinn Stepan, Jr., Chairman, President and Chief Executive Officer.  “For the quarter, Surfactant earnings were down significantly due to lower commodity volumes in North America and the slow recovery of our business in Mexico.  The Polymer business had a strong third quarter driven by global rigid polyol growth.  Specialty Products income was down due to customer order patterns, but is expected to deliver significant profit growth for the year.”       

Outlook
“Adjusted net income for the first nine months of 2019 is up 2% from our record in 2018, despite the Mexican equipment failure and the decrease in commodity surfactant volumes.  We believe our continued focus on end market diversification, Tier 2 and Tier 3 customers, as well as our cost-out activities should improve future Surfactant margins.  We remain optimistic the Polymer business will deliver full year volume growth and incremental margin improvement versus 2018 given our strong rigid polyol growth in the first nine months.  We believe full year Specialty Product results will improve versus 2018.  Overall, despite the current year challenges, we have an opportunity to deliver another year of adjusted net income growth,” said F. Quinn Stepan, Jr., Chairman, President and Chief Executive Officer.

https://stepan.gcs-web.com/news-releases/news-release-details/stepan-reports-third-quarter-results-and-nine-month-earnings

October 24, 2019

Lanxess Uses AI for Prepolymer Development

Lanxess launches AI-assisted formulation development for Urethane Systems

By Mary Page Bailey |

Lanxess AG (Cologne, Germany; www.lanxess.com) is broadening its use of artificial intelligence (AI) in product development. The specialty chemicals company has launched a project aimed at expanding its range of prepolymers. The goal is to offer customers tailor-made polyurethane systems with even shorter lead times, including for entirely new applications with different requirements. The Urethane Systems business unit is using the potential of AI and has brought materials AI company Citrine Informatics on board as a project partner.

In an initial project phase, Lanxess enlarged its database of prepolymer-based formulations. Lanxess data specialists and process experts used the Citrine Platform for artificial intelligence to add further data points to the company’s formulation database. This involved linking existing empirical measurement data with the knowledge of the process experts and a chemistry-aware algorithm to calculate additional measurement values. This meant that only a few real-life measurements were required to verify the figures determined with AI.

In a next step, data and process experts at Lanxess will check how reliably optimal formulations can be predicted with the aid of AI to meet customer-specific requirements for product characteristics. “If the next tests are successful, we will be able to fulfill customer requests even more quickly and effectively. Our existing knowledge of formulations shall be enhanced by AI-assisted formulation design – in other words, systems that are not yet part of our portfolio but for which artificial intelligence will enable us to know instantly whether we can manufacture them and how,” says Markus Eckert, head of the Urethane Systems business unit at Lanxess.

So far, chemists have largely had to rely on their specialist expertise and years of experience when researching new formulations with defined product characteristics such as hardness, tensile strength and viscosity. AI is expected to become an important tool to help them broaden their knowledge and significantly reduce the amount of tests required.

Lanxess already has some experience in using AI. In a pilot project with Citrine Informatics, the specialty chemicals company is using AI to optimize glass fibers as a way of further enhancing the properties of Lanxess high-performance plastics. It is anticipated that AI will cut development times for the necessary formulations by more than half. Customers will receive even better, tailor-made products within shorter time frames.

For Jörg Hellwig, Head of the Lanxess Digitalization Initiative, the partnership between Citrine and the Lanxess Urethane Systems business unit demonstrates the growing role of digitalization in product development. “Most employees who are already using artificial intelligence cannot imagine ever going back to the old methods of working. The use of digital technologies is increasingly becoming standard procedure at Lanxess,” says Hellwig.

https://www.chemengonline.com/lanxess-launches-ai-assisted-formulation-development-for-urethane-systems/?printmode=1

October 24, 2019

Lanxess Uses AI for Prepolymer Development

Lanxess launches AI-assisted formulation development for Urethane Systems

By Mary Page Bailey |

Lanxess AG (Cologne, Germany; www.lanxess.com) is broadening its use of artificial intelligence (AI) in product development. The specialty chemicals company has launched a project aimed at expanding its range of prepolymers. The goal is to offer customers tailor-made polyurethane systems with even shorter lead times, including for entirely new applications with different requirements. The Urethane Systems business unit is using the potential of AI and has brought materials AI company Citrine Informatics on board as a project partner.

In an initial project phase, Lanxess enlarged its database of prepolymer-based formulations. Lanxess data specialists and process experts used the Citrine Platform for artificial intelligence to add further data points to the company’s formulation database. This involved linking existing empirical measurement data with the knowledge of the process experts and a chemistry-aware algorithm to calculate additional measurement values. This meant that only a few real-life measurements were required to verify the figures determined with AI.

In a next step, data and process experts at Lanxess will check how reliably optimal formulations can be predicted with the aid of AI to meet customer-specific requirements for product characteristics. “If the next tests are successful, we will be able to fulfill customer requests even more quickly and effectively. Our existing knowledge of formulations shall be enhanced by AI-assisted formulation design – in other words, systems that are not yet part of our portfolio but for which artificial intelligence will enable us to know instantly whether we can manufacture them and how,” says Markus Eckert, head of the Urethane Systems business unit at Lanxess.

So far, chemists have largely had to rely on their specialist expertise and years of experience when researching new formulations with defined product characteristics such as hardness, tensile strength and viscosity. AI is expected to become an important tool to help them broaden their knowledge and significantly reduce the amount of tests required.

Lanxess already has some experience in using AI. In a pilot project with Citrine Informatics, the specialty chemicals company is using AI to optimize glass fibers as a way of further enhancing the properties of Lanxess high-performance plastics. It is anticipated that AI will cut development times for the necessary formulations by more than half. Customers will receive even better, tailor-made products within shorter time frames.

For Jörg Hellwig, Head of the Lanxess Digitalization Initiative, the partnership between Citrine and the Lanxess Urethane Systems business unit demonstrates the growing role of digitalization in product development. “Most employees who are already using artificial intelligence cannot imagine ever going back to the old methods of working. The use of digital technologies is increasingly becoming standard procedure at Lanxess,” says Hellwig.

https://www.chemengonline.com/lanxess-launches-ai-assisted-formulation-development-for-urethane-systems/?printmode=1

October 21, 2019

Casper Preps for IPO

Casper Is Said to Work With Morgan Stanley, Goldman on IPO

By

and

Updated on
  • Mattress retailer could exceed $1.1 billion private valuation
  • IPO proceeds to help fund expansion, including storefronts

Online mattress retailer Casper Sleep Inc. is working with Morgan Stanley and Goldman Sachs Group Inc. on a U.S. initial public offering, according to people with knowledge of the matter.

The New York-based company could go public as soon as this year or the first half of 2020, said the people, who asked not to be identified because the information is private.

Casper, which sells and delivers mattresses directly to consumers, reached a $1.1 billion valuation this year in its most recent private funding round. Target Corp., New Enterprise Associates and Dani Reiss, the chief executive officer of Canada Goose Holdings Inc., are among its investors.

The company could attain a higher valuation in an IPO, one of the people said.

Representatives for Casper, Morgan Stanley and Goldman Sachs declined to comment.

Despite poor performances by high-profile listings including Peloton Interactive Inc. and the collapse of WeWork’s IPO plans, many companies are still aiming to go public before end of the year.

Casper, which has expanded its products to include bedding, pillows and bed frames, operates in the U.S., Canada, the U.K., Germany, Switzerland and Austria. CEO Philip Krim said in March that the company’s next big international market would be Asia.

The company also plans to open hundreds of physical stores. Part of its motive for going public is to raise capital for that expansion, one of the people said.

https://www.bloomberg.com/news/articles/2019-10-18/casper-is-said-to-work-with-morgan-stanley-goldman-on-ipo