Company News
October 31, 2024
BASF Quarterly Highlights
BASF SE (BASFY) Q3 2024 Earnings Call Transcript
Oct. 30, 2024 11:33 AM ETBASF SE (BASFY) Stock, BFFAF Stock
BASF SE (OTCQX:BASFY) Q3 2024 Earnings Conference Call October 30, 2024 8:00 AM ET
Company Participants
Stefanie Wettberg – SVP of IR
Markus Kamieth – CEO & Chairman of the Board of Executive Directors
Dirk Elvermann – Member of the Board of Executive Directors, CFO & Chief Digital Officer
Markus Kamieth
Good morning, everyone. Welcome to our Analyst Conference Call. Today, Dirk and I will provide you with details on our business development in the third quarter. It’s roughly one month since we presented BASF’s new strategy at our Capital Markets Day. Thanks again to those of you who were able to attend either in person or virtually. And overall, we all have the impression that our key messages were understood and also in general well received.
Let’s now start with an overview of BASF’s performance in Q3. With €15.7 billion, sales matched the level of the prior-year quarter. Volumes of BASF Group excluding precious and base metals increased by 7%. All segments achieved volume growth, with the exception of Surface Technologies. Here, volumes in the Catalysts division declined, while the Coatings division recorded higher volumes. Prices were slightly positive, excluding precious and base metals. The pressure on sales prices thus continued to ease. Currency headwinds dampened sales growth by 3%. Negative currency effects were mainly related to the Argentine Peso and the Brazilian Real.
EBITDA before special items improved by 5% and came in at €1.6 billion. The positive earnings momentum in our core businesses, which was already visible in the first half of 2024, continued in the third quarter, driven by higher volumes and higher margins. Considerably higher earnings in BASF’s core businesses more than offset lower contributions from the standalone businesses in Q3 2024.
Here you can see a snapshot of how the markets and our segments’ volumes and specific margins developed in the third quarter. In a slightly improving market environment for base chemicals, we achieved strong volume growth in the Chemicals segment. The Petrochemicals division increased specific margins, while margins in the Intermediates division remained stable. EBITDA before special items in the Chemicals segment increased considerably compared with the prior-year quarter. In an overall stable market environment, the Materials segment benefited from slightly higher volumes, particularly in the MDI, propylene oxide and ammonia value chains. The considerable increase in specific margins was largely driven by a few product lines in the Monomers division and led to a significant increase in the segment’s EBITDA before special items.
Chetan Udeshi
Yeah. Thank you. Morning all. I just wanted to follow up on the question on Q4 guidance because I’m sorry, but I really don’t understand why you expect Q4 to be better than Q3. So let’s try other way around. Can you maybe give us a bit more color by segments where you actually think Q3 will be better than — Q4 will be better than Q3 in terms of EBITDA, as you seem to suggest in your group guidance? And the second question I had was on Activision [ph]. Clearly the volumes are coming back very, very strongly, but I go back to the question I had asked on CMD as well. I’m just surprised that there is typically what we see with companies or specialty chemical companies where R&D spending is high. You usually have Euro based pricing. So when FX moves a lot against you sort of try to pass it on to your customers because you’ve got that differentiated products. But here in Ag chemicals business, what we see is the FX impact is very, very big and on top the price is also down. I mean, that just seems very unlike a specialty business. So, just any thoughts around that?
Markus Kamieth
Yeah, Chetan your question, I mean, I would not go now into individual segment guidances on Q4. In general, let me give you maybe some thoughts on this. I mean, what we see and you have seen this now throughout Q2-Q3, the overall earnings momentum in our chemicals businesses, so what we now call core businesses is actually quite favorable compared to last year. And we are seeing both volume growth in almost all divisions and margin expansion. The trend that certainly in Q4 will be more challenging is the volume picture in this area, but the margin is actually holding up quite well because when you look at raw material markets, most of them are actually walking sideways or actually receding. So the margin picture is actually quite positive and we are expecting also this momentum in most divisions to carry forward. So we are quite optimistic that despite, of course, always yearend challenges in buying behavior of customers, we can see a continued good momentum, especially margin wise in the chemicals businesses. And then Dirk has already alluded to some of the effects that we will also see in our P&L coming in the fourth quarter. And so, in our books, the 8 billion lower end of the guidance is achievable. We’re confident that we will be there at the end of the year.
October 31, 2024
Stepan Earnings Call Highlights
Stepan Company (SCL) Q3 2024 Earnings Call Transcript
Oct. 30, 2024 12:34 PM ETStepan Company (SCL) Stock
Q3: 2024-10-30 Earnings Summary
EPS of $1.03 beats by $0.38 | Revenue of $546.84M (-2.74% Y/Y) misses by $30.39M
Stepan Company (NYSE:SCL) Q3 2024 Earnings Conference Call October 30, 2024 9:00 AM ET
Company Participants
Sam Hinrichsen – Vice President and Interim CFO
Quinn Stepan – Chairman
Luis Rojo – President and CEO
Quinn Stepan
Good morning. Today we announce that our Board of Directors has appointed Luis Rojo as the company’s President and CEO and a member of the Board, effective immediately. Luis succeeds Scott Behrens, who has served in that role for the past three years. We thank Scott for his leadership and his many contributions to the growth and diversification of Stepan over his 30-year career with the company.
As you are aware, Luis has served as the CFO of Stepan for the past seven years. During his tenure, Luis has developed a deep understanding of all aspects of our business. And while he naturally has a strong financial mindset that will serve him well in the CEO role, he is also a strategic thinker and will ensure we execute on present market and operational opportunities.
He is a passionate leader who cares deeply about our customers, employees and shareholders. Together with the strong team we have at Stepan, he will drive our profit recovery and deliver value for our shareholders. The Board and I have great confidence in Luis and look forward to working with him in his new role.
With that, I would like to turn the call over to Luis. Congratulations, Luis.
Luis Rojo
Thank you, Quinn, and good morning. And thank you all for joining us today to discuss our third quarter 2024 results. I plan to share highlights from our third quarter performance and will also share updates on our key strategic priorities, while Sam will provide additional details on our financial results.
The company reported third quarter adjusted EBITDA of $53 million, up 11% versus the prior year. This double-digit adjusted EBITDA growth was driven by improved volumes and margins in our Surfactant business. Global sales volume was down 1%.
Double-digit growth in several Surfactant end markets was fully offset by demand weakness and competitive pressures in our Polymers business. We believe this sluggish demand in Polymers is related to global macroeconomic uncertainties, low overall construction activity, and the high interest rate environment.
Third quarter adjusted net income was up significantly, driven by improved Surfactant and Specialty Products results and a lower tax rate. Year-to-date, adjusted EBITDA was $152 million, up 7% versus the prior year, driven by improved volumes and margins.
Free cash flow for the first nine months of the year was $7 million and we remain confident that we will close 2024 with positive free cash flow. The company is on track to deliver our $50 million cost reduction goal for 2024 through ongoing discipline efforts in supply chain and the workforce productivity actions taken in the last quarter of 2023.
During the third quarter of 2024, the company paid $8.4 million in dividends to our shareholders. Our Board of Directors declared a quarterly cash dividend on Stepan common stock of $0.385 per share, payable on December 13, 2024. This represents a 2.7% increase in our dividends. Stepan has paid an increased dividend for 57 consecutive years.
Now on Slide 8, Polymer net sales were $150 million for the quarter, a 12% decrease versus the prior year. Selling prices decreased 3%, primarily due to the pass-through of lower raw material costs and competitive pressures. Volume declined 11% in the quarter.
Global Rigid Polyols volume was down 13% due to sluggish demand and competitive pressures. We believe the sluggish demand is related to global macroeconomic uncertainties, overall low construction activity and the high interest rate environment.
Specialty Polyols volume was up low single digits. Foreign currency translation positively impacted net sales by 2%. Polymer adjusted EBITDA decreased $6.3 million or 21%, versus the prior year, primarily due to the 11% decline in sales volume.
Our customers will always remain at the center of our strategy and innovation. Our longstanding Tier 1 customers value our technical capabilities and our ability to manufacture and deliver quality products at the scale they need. Our Tier 1 customer base remains a solid foundation of our business. Continuing our new customer acquisition with Tier 2 and Tier 3 customers remains a key priority. This is an important and profitable growth channel within our Surfactant business. In the first nine months, our volume grew high single digits and we added over 1,200 new customers.
Our diversification strategy into more functional products remains a key focus area. In the first nine months, we grew double digits in Oilfields and Construction and Industrial Solutions. Our Agricultural business resumed growth and delivered 22% year-over-year volume growth in the third quarter after a difficult first half.
We remain optimistic Rigid Polyol demand will increase as the market gets more macroeconomic clarity and the interest rate environments improve. Insulation remains a critical enabler of a more sustainable and energy-efficient world. Our Polymers business continues to focus on developing the next generation Rigid Polyol technologies that can increase the energy efficiency and cost performance of our customer insulation products. Additionally, we are excited about the new products we are introducing in the growing Spray Foam end market.
Moving to slide 11, construction of our new alkoxylation production facility in Pasadena, Texas is 99% complete and we are excited to start the plant in December. We expect the full contribution growth rate of the plant to be achieved in the second half of 2025.
After completing a three-year capital investment program last year, Stepan now has the largest installed Low 1,4-Dioxane production capacity serving the North American merchant market. For the first nine months of 2024, margin contribution from Low 1,4-Dioxane produce grew versus the prior year.
To conclude, we remain pleased that several of our Surfactant businesses continue to deliver double-digit volume growth during the quarter. Third quarter Agricultural volumes grow in double digits, aligned with our expectations for a second half 2024 recovery. We remain optimistic Rigid Polyol demand will increase as the market gets more macroeconomic clarity and the interest rate environment improves next year.
Dave Storms
Congrats on the new role there, Luis. And I just kind of wanted to start with Rigid Polyol. You mentioned a couple of times that there’s obviously macro headwinds. Are there any specific catalysts that you’re keeping an eye on that might bring some clarity to the macro market and maybe how fast could we see a rebound there if any of those catalysts come to fruition?
Luis Rojo
Great question, Dave. Look, as we said, and you can see a lot of statistics out there, the construction activity, both residential and non-residential, is pretty weak. Now, if you look at has been very weak in the short-term, and the expectation is that with moderation in interest rates, we should see a pickup in activity in 2025.
Let me remind you guys that this is a market that has been growing high single digits over the last 10 years to 20 years. The need for better insulation is there. The new codes in different states and different countries in Europe continues changing. And we believe the market growth, even though it was 7%, 8%, 9% in the past, we believe it’s going to be that — we believe we are going to see this type of market growth 3%, 4%, 5% into the future.
So we are confident with our Rigid Polyol business in the next five years. When you think — when you look at trends in pent-up demand for re-roofing and all the construction that happens early 2000 that needs re-roofing in the next five years, all those things are very, very positive.
So we feel good about the lamination market growth opportunities going forward and we are heavily working on our diversification strategy to get into the high margin and growing Spray Foam business, which is critical for us as well to get into residential insulation and all of that. But great question and we feel good about the Polymers business for the future.
https://seekingalpha.com/article/4730963-stepan-company-scl-q3-2024-earnings-call-transcript
October 31, 2024
Nippon Paint Acquires AOC
Lone Star Announces Sale of AOC to Nippon Paint Holdings
October 28, 2024 07:00 AM Eastern Daylight Time
DALLAS & NEW YORK & LONDON & TOKYO–(BUSINESS WIRE)–Lone Star Funds (“Lone Star”) today announces the signing by an affiliate of Lone Star Fund XI, LP of a definitive agreement to sell AOC, a leading global specialty chemicals company, to Nippon Paint Holdings Co., Ltd. (“NPHD”).
“AOC is backed by a strong management team that has been instrumental in driving the company’s success and unlocking value. We believe AOC is well-positioned for continued growth, and we wish the team continued success in the future.”Post this
AOC is a leading manufacturer of specialty chemical formulations in the unsaturated polyester and vinyl ester sectors. With operations in North America, Europe and Asia, AOC serves customers globally in the infrastructure, construction (residential and commercial), transportation, and recreation sectors.
Under Lone Star’s stewardship, AOC invested in its core business systems, including commercial excellence, innovation, procurement and manufacturing efficiency, to drive earnings growth. AOC also invested in the expansion of its executive leadership team, broadening the capabilities of the team to efficiently manage the global enterprise. AOC is poised to capitalize on its next leg of growth, supported by a well-capitalized asset base and a world-class management team.
“We are immensely proud of the growth and innovation AOC has achieved during our ownership,” said Donald Quintin, Chief Executive Officer of Lone Star. “AOC is backed by a strong management team that has been instrumental in driving the company’s success and unlocking value. We believe AOC is well-positioned for continued growth, and we wish the team continued success in the future.”
Joe Salley, Chief Executive Officer of AOC said, “I would like to thank Lone Star for their support and partnership over the last three years. I would also like to thank our outstanding management team and employees for their tireless efforts to deliver best-in-class results for our customers and shareholders. We are excited about the opportunities that lie ahead as we join Nippon Paint Group, a company that shares our commitment to integrity, quality and innovation.”
The transaction is subject to certain closing adjustments and conditions, including regulatory clearances, and is expected to close in the first half of 2025.
Morgan Stanley & Co. LLC and Citi served as sell-side financial advisors and Gibson, Dunn & Crutcher LLP provided legal advice to seller. AOC Management was advised by Jamieson Corporate Finance, Katzke & Morgenbesser LLP.
About AOC
AOC is a leading global supplier of specialty formulations and solutions which enable customers to create robust, durable, and versatile products and components for applications in Coatings and Protective Barriers, Colorants and Visual Effects, Adhesives and Specialties, and conventional Composites.
With strong capabilities worldwide in manufacturing and science, the company works closely with customers to deliver unrivaled quality, service, and reliability for today and create innovative solutions for tomorrow.
About Lone Star
Lone Star is a leading private equity firm advising funds that invest globally in corporate equity, credit, real estate and other financial assets. Since the establishment of its first fund in 1995, Lone Star has organized 25 private equity funds with aggregate capital commitments totaling approximately $95 billion. The firm organizes its funds in three series: the Opportunity Fund series; the Commercial Real Estate Fund series; and the U.S. Residential Mortgage Fund series. Lone Star invests on behalf of its limited partners, which include institutional investors such as pension funds and sovereign wealth funds, as well as foundations and endowments that support medical research, higher education, and other philanthropic causes. For more information regarding Lone Star Funds, go to www.lonestarfunds.com.
October 30, 2024
Carpenter Acquires Casper Sleep
Casper Sleep Inc. To Operate As Subsidiary Of Carpenter Co.
Posted on October 29, 2024
RICHMOND, VA – Casper Sleep Inc., which has one of the best-known brands in the bedding category and is recognized as the leader in the bed-in-a-box e-commerce category, has become a subsidiary of Carpenter Co. Carpenter will assist Casper on a comprehensive growth and profitability strategy, as well as the appropriate future channels to market.
For more information, please contact Mike McQuiston, Senior Vice President of Consumer Products for Carpenter Co.
About Carpenter Co.
Founded in 1950, Carpenter Co. is the world’s largest vertically integrated manufacturer of polyurethane foams. Carpenter also serves a diversified global marketplace with polyurethane chemical solutions, polyester fibers, and insulation materials through a network of more than 70 production locations. Our 6,500+ employees across the globe seek to provide the most innovative products and solutions with a focus on enhancing the quality of people’s lives while being a good steward of our resources.
https://carpenter.com/en/casper-sleep-inc-to-operate-as-subsidiary-of-carpenter-co/
October 30, 2024
BASF Results for Q3
BASF Group in third quarter 2024:
EBITDA before special items increased compared with Q3 2023 due to considerably higher earnings of core businesses
- Sales in third quarter 2024: €15.7 billion (prior-year quarter: €15.7 billion)
- EBITDA before special items in third quarter 2024: €1.6 billion (prior-year quarter: €1.5 billion)
Thanks to significantly higher contributions from the core businesses, BASF Group’s EBITDA before special items (income from operations before depreciation, amortization and special items) increased in the third quarter by €77 million to €1.6 billion. “The positive earnings momentum in our core businesses was already visible in the first half of 2024 and continued in the third quarter, driven by higher volumes and margins,” said Dr. Markus Kamieth, Chairman of the Board of Executive Directors of BASF SE. This increase was partially offset by a considerable earnings decline in the standalone businesses as well as in Other.
Under its new strategy announced in late September 2024, BASF differentiates between its core businesses (Chemicals, Materials, Industrial Solutions and Nutrition & Care) and the standalone businesses that serve distinct industries. The standalone businesses are reported in the Surface Technologies and Agricultural Solutions segments.
At €15.7 billion, sales were on a level with the prior-year period. Volume growth in almost all segments compared with the third quarter of 2023 had a positive impact on sales performance. Volumes increased in the core businesses as well as in Agricultural Solutions. Only the Surface Technologies segment recorded a decline in volumes in the Catalysts division due to weak demand in the automotive market. Negative currency effects, mainly relating to the Argentine peso and Brazilian real, burdened sales. Lower prices in nearly all segments, particularly for precious and base metals in the Surface Technologies segment, also hindered sales performance.
The EBITDA margin before special items was 10.3 percent, following 9.8 percent in the prior-year quarter. In the core businesses, the EBITDA margin before special items improved by 3.6 percentage points to 13.4 percent in the third quarter of 2024 versus 9.8 percent in the prior-year quarter.
EBITDA amounted to €1.3 billion, following €1.4 billion in the prior-year period. EBITDA included special items in the amount of minus €345 million. Special charges resulted in particular in the Agricultural Solutions division from provisions in connection with the closure of the production plants for glufosinate-ammonium and the associated site closures that were announced in July 2024.
At €250 million, EBIT was €144 million below the figure of the prior-year quarter. Depreciation and amortization amounted to €1 billion, compared with €969 million in the prior-year period.
Net income was €287 million (prior-year quarter: minus €249 million). This significant increase resulted mainly from higher net income from shareholdings, primarily due to special income of €398 million in connection with the transfer of Wintershall Dea assets to Harbour Energy plc. In the prior-year quarter, special items in the amount of minus €291 million arose at Wintershall Dea.
Cash flows from operating activities amounted to €2.1 billion in the third quarter of 2024, €633 million below the figure of the prior-year period. The €674 million higher reduction in trade accounts payable was the primary reason for this decrease. At the same time, cash released from inventories decreased by €339 million compared with the third quarter of 2023. Free cash flow amounted to €569 million in the third quarter of 2024, compared with €1.5 billion in the prior-year period.
Cost savings programs on track
Chief Financial Officer Dr. Dirk Elvermann provided an update on the cost savings programs currently underway: “We are on track to achieve the targeted €2.1 billion annual cost savings by the end of 2026. The implementation of the cost savings programs announced in February 2023 is in full swing.” As of the end of September 2024, BASF has already achieved a cost reduction run rate of around €800 million. The associated one-time costs were around €500 million. By the end of this year, the company expects to achieve a cost reduction run rate of more than €800 million, with associated one-time costs of around €550 million.
BASF is also moving forward as planned with the additional cost savings program launched in 2024 that focuses on improving the competitiveness of the Ludwigshafen site. The units at the site have recently been informed about the contributions they are expected to deliver by the end of 2026.
Changes in BASF reporting
In 2022, the European Union adopted the Corporate Sustainability Reporting Directive (CSRD). Due to the extended sustainability reporting requirements under this Directive, BASF will have two publication dates going forward.
On February 28, 2025, BASF will initially publish the results for the 2024 business year as an online report in unaudited form. This will contain all important financial and non-financial figures for 2024 as well as the outlook for 2025.
The audited BASF Report 2024 will be published on March 21, 2025. It will contain all legally required financial and ESG information and will be provided in the form of an online report and as a clickable PDF. A print version will no longer be provided.
BASF Group’s outlook for 2024 unchanged
BASF’s assumptions for the full year 2024 remain unchanged:
- Growth in gross domestic product: +2.3 percent
- Growth in industrial production: +2.2 percent
- Growth in chemical production: +2.7 percent
- Average euro/dollar exchange rate of $1.10 per euro
- Average annual oil price (Brent crude) of $80 per barrel
The BASF Group’s forecast for the 2024 business year published in the BASF Report 2023 also remains unchanged:
- EBITDA before special items of between €8.0 billion and €8.6 billion
- Free cash flow of between €0.1 billion and €0.6 billion
- CO2 emissions of between 16.7 million metric tons and 17.7 million metric tons
Based on current information, BASF expects to reach the low end of the EBITDA before special items forecast range for the full year 2024. For the fourth quarter of 2024, there are risks from potential declines in prices and lower volume growth than expected. Opportunities may arise from a positive development in demand and margins.
https://www.basf.com/global/en/media/news-releases/2024/10/p-24-308
Everchem Updates Archive 
Sign Up for Email Updates