STEPAN CO
For the period ended Sep 30, 2024. Filed Nov 6, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 6, 2024
SCL$66.94-1.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0000950170-24-093579
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-06.
0000950170-24-121883
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 158 previous paragraphs and 158 current paragraphs.
68 unchanged; 70 reworded; 18 added; 16 removed; 4 previous and 2 current paragraphs rearranged.
Tables are not compared: 27 previous and 27 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
Consolidated net sales decreased $15.4 million, or three percent, versus the prior year quarter. Lower average selling prices negatively impacted the year-over-year change in net sales by $5.5 million. The decrease in average selling prices was mainly attributable to the pass-through of lower raw material costs and competitive activity within certain end markets. Foreign currency translation negatively impacted the year-over-year change in net sales by $5.6 million. Consolidated sales volume decreased one percent, which negatively impacted the change in net sales by $4.3 million. Surfactant sales volume increased three percent while Polymer and Specialty Products sales volume decreased 11 percent and five percent, respectively.
Current report
Selling expenses decreased $0.4 million, or four percent, year-over-year.
Current report
Net interest expense for the third quarter of 2024 increased $0.6 million, or 21 percent, versus the third quarter of 2023. This increase was primarily attributable to higher outstanding debt balances and higher interest rates on borrowings under the Company's revolving credit facility in 2024 versus 2023.
Current report
Net sales for Latin American operations increased $8.1 million, or 11 percent, primarily due to higher average selling prices and a seven percent increase in sales volume. These items positively impacted the year-over-year change in net sales by $12.3 million and $5.3 million, respectively. The sales volume improvement was primarily due to higher demand for products sold into the agricultural and laundry and cleaning end markets, and to our distribution partners. The higher average selling prices reflect more favorable product and customer mix. Foreign currency translation negatively impacted the change in net sales by $9.5 million. A stronger U.S. dollar relative to all currencies in the region led to the unfavorable foreign currency translation effect.
Current report
Gross profit for North American operations increased $0.2 million, or one percent. Higher average unit margins positively impacted the change in gross profit by $0.6 million. A two percent decline in sales volume negatively impacted the change in gross profit by $0.4 million.
Current report
Gross profit for European operations increased $3.0 million, or 51 percent, primarily due to higher average unit margins and a 12 percent increase in sales volume. These items positively impacted the change in net sales by $2.2 million and $0.7 million, respectively. The higher average unit margins were largely due to a more favorable product and customer mix. Foreign currency translation positively impacted the change in gross profit by $0.1 million.
Current report
Gross profit for Latin American operations increased $6.0 million, or 108%, primarily due to improved average unit margins and a seven percent increase in sales volume. These items positively impacted the change in gross profit by $7.0 million and $0.4 million, respectively. The higher average unit margins were primarily due to a more favorable product and customer mix. Foreign currency translation negatively impacted the change in gross profit by $1.4 million.
Current report
Net sales for Asia and Other operations decreased $0.1 million, or one percent, primarily due to a six percent decrease in sales volume which negatively impacted the year-over-year change in net sales by $0.8 million. Higher average selling prices and the favorable impact of foreign currency translation positively impacted the year-over-year change in net sales by $0.6 million and a $0.1 million, respectively.
Current report
Gross profit for North American operations decreased $4.7 million, or 29 percent, due to lower average unit margins and a 14 percent decline in sales volume. These items negatively impacted the change in gross profit by $2.4 million and $2.3 million, respectively. The lower average unit margins were primarily due to less favorable product mix.
Current report
Gross profit for European operations decreased $2.4 million, or 22 percent, versus the third quarter of 2023. This decrease was primarily due to lower average unit margins and a nine percent decline in sales volume that negatively impacted the change in gross profit by $1.7 million and $1.0 million, respectively. Foreign currency translation positively impacted the year-over-year change in gross profit by $0.3 million.
Current report
Gross profit for Asia and Other operations increased $0.3 million, or 14 percent, primarily due to higher average unit margins. These higher average unit margins positively impacted the change in net sales by $0.4 million and partially reflect the Company's product diversification efforts in China. A six percent decline in sales volume negatively impacted the change in net sales by $0.1 million. Foreign currency translation was negligible year-over-year.
Current report
Nine Months Ended September 30, 2024 and 2023
Current report
Selling expenses decreased $1.4 million, or four percent, year-over-year primarily due to lower salary expenses resulting from productivity measures implemented in late 2023.
Current report
Net sales for Latin American operations increased $10.3 million, or four percent, primarily due to a 13 percent increase in sales volume which positively impacted the year-over-year change in net sales by $29.6 million. The higher sales volume was primarily due to higher demand for products sold into the agricultural and the laundry and cleaning end markets combined with higher demand from our distribution partners. Lower average selling prices negatively impacted the change in net sales by $16.3 million and primarily reflect lower raw material costs and increased competitive activity within certain end-use markets. A stronger U.S. dollar relative to the Brazilian real primarily led to a $3.0 million unfavorable foreign currency translation effect.
Current report
Gross profit for European operations increased $2.5 million, or 12 percent, due to a nine percent increase in sales volume, higher average unit margins and the favorable impact of the foreign currency translation. These items positively impacted the year-over-year change in gross profit by $1.8 million, $0.5 million and $0.2 million, respectively.
Current report
Polymer operating income for the first nine months of 2024 decreased $10.9 million, or 23 percent, versus operating income for the first nine months of 2023. Gross profit decreased $11.3 million, or 16 percent, and operating expenses decreased $0.4 million, or two percent. Year-over-year comparisons of gross profit by region and total segment operating expenses and operating income follow:
Current report
Gross profit for European operations decreased $6.0 million, or 19 percent, versus the first nine months of 2023. This decrease was largely due to lower average unit margins and a one percent decline in sales volume that negatively impacted the change in gross profit by $6.7 million and $0.2 million, respectively. The lower average unit margins primarily reflect increased competitive activity. Foreign currency translation had a $0.9 million favorable impact on the change in gross profit.
Current report
Management is pleased that several of its Surfactant businesses delivered strong volume growth in the quarter. Agricultural sales volumes grew double-digits in the third quarter, which aligns with the Company's expectations for a second half 2024 recovery. Rigid Polyols demand should increase as the market gets more macro-economic clarity and the interest rate environment improves. Free cash flow should continue to improve driven by the completion of the Company's Pasadena investment, growth in market volumes, and the
Removed paragraphs (16)
Previous report
Consolidated net sales decreased $23.6 million, or four percent, versus the prior year quarter. Lower average selling prices negatively impacted the year-over-year change in net sales by $49.7 million. The decrease in average selling prices was mainly attributable to the pass-through of lower raw material costs, less favorable product mix and increased competitive activity within Latin American end-markets. Consolidated sales volume increased four percent, which favorably impacted the change in net sales by $25.3 million. Surfactant and Polymer sales volume increased five and two percent, respectively, while sales volume in the Specialty Products segment declined two percent. Foreign currency translation favorably impacted the year-over-year change in net sales by $0.8 million.
Previous report
Net interest expense for the second quarter of 2024 decreased $1.2 million, or 31 percent, versus the second quarter of 2023. This decrease was primarily attributable to higher non-US interest income recognition.
Previous report
Net sales for European operations decreased $5.3 million, or eight percent, primarily due to lower average selling prices that negatively impacted the change in net sales by $14.9 million. The lower average selling prices were primarily due to the pass-through of lower raw material costs, less favorable product mix and increased competitive activity within certain end-use markets. Foreign currency translation negatively impacted the change in net sales by $0.3 million. Sales volume was up 14 percent year-over-year and positively impacted the change in net sales by $9.9 million. The sales volume improvement was primarily due to higher demand for products sold into the consumer products end markets and to our distribution partners, partially offset by lower demand for products sold into the agricultural end markets.
Previous report
Gross profit for European operations increased $1.4 million, or 28 percent, due to higher average unit margins and a 14 percent increase in sales volume. These factors positively affected the change in net sales by $0.7 million each.
Previous report
Gross profit for Latin American operations increased $3.9 million, or 54 percent, primarily due to improved average margins and a 15 percent increase in sales volume. These items positively impacted the year-over-year change in gross profit by $3.0 million and $1.1 million, respectively. The higher average unit margins were primarily due to a more favorable product mix. Foreign currency translation negatively impacted the change in gross profit by $0.2 million.
Previous report
Net sales for Asia and Other operations increased $2.1 million, or 20 percent, primarily due to a 28 percent increase in sales volume which positively impacted the year-over-year change in net sales by $2.9 million. The higher sales volume was largely driven by the non-recurrence of COVID lock downs and restrictions that were partially in place during the second quarter of 2023 and higher specialty polyols demand resulting from the Company's product diversification efforts. The unfavorable impact of foreign currency translation and lower average selling prices negatively impacted the year-over-year change in net sales by $0.4 million each.
Previous report
Gross profit for North American operations decreased $1.1 million, or nine percent, due to lower average unit margins and a four percent decline in sales volume. These items negatively impacted the change in gross profit by $0.6 million and $0.5 million, respectively. The lower average unit margins were primarily due to a non-cash phthalic anhydride related catalyst write-off ($2.1 million) and higher expenses incurred at the Company's Millsdale, Illinois plant site due to operational issues in the second quarter of 2024.
Previous report
Gross profit for European operations decreased $2.3 million, or 24 percent, versus the second quarter of 2023. This decrease was primarily due to lower average unit margins that negatively impacted the change in gross profit by $2.7 million. A three percent increase in sales volume and the favorable effect of foreign currency translation positively impacted the year-over-year change in gross profit by $0.3 million and $0.1 million, respectively.
Previous report
Gross profit for Asia and Other operations increased $1.3 million primarily due to higher average unit margins and a 28 percent increase in sales volume. These items positively impacted the change in gross profit by $1.2 million and $0.2 million, respectively. Foreign currency translation negatively impacted the year-over-year change in gross profit by $0.1 million.
Previous report
Six Months Ended June 30, 2024 and 2023
Previous report
Consolidated net sales decreased $123.6 million, or 10 percent, year-over-year. Lower average selling prices negatively impacted the year-over-year change in net sales by $166.1 million. The decrease in average selling prices was mainly due to the pass-through of lower raw material costs, less favorable product mix and increased competitive activity primarily within the European and Latin American end markets. Consolidated sales volume increased two percent and favorably impacted the year-over-year change in net sales by $29.9 million. Sales volume in the Surfactant, Polymer and Specialty Products segments increased three percent, two percent and four percent, respectively. Foreign currency translation favorably impacted the year-over-year change in net sales by $12.6 million mainly due to a weaker U.S. dollar against the British pound, Mexican peso, Colombian peso and Polish zloty.
Previous report
Selling expenses decreased $1.0 million, or four percent, year-over-year primarily due to lower salaries.
Previous report
Net sales for Latin American operations increased $2.1 million, or one percent, primarily due to a 16 percent increase in sales volume and the favorable impact of foreign currency translation. These items positively impacted the change in net sales by $25.0 million and $6.4 million, respectively. The higher sales volume was primarily due to higher demand for products sold into the consumer products end markets and to our distribution partners. A weaker U.S. dollar relative to the Mexican and Colombian pesos led to the favorable foreign currency translation effect. Lower average selling prices negatively impacted the change in net sales by $29.3 million and primarily reflect less favorable product mix, lower raw material costs and increased competitive activity within certain end-use markets.
Previous report
Gross profit for European operations decreased $0.5 million, or three percent, primarily due to lower average unit margins that negatively impacted the change in gross profit by $1.6 million. Sales volume growth of seven percent and the favorable impact of foreign currency translation positively impacted the year-over-year change in gross profit by $1.0 million and $0.1 million, respectively.
Previous report
Polymer operating income for the first half of 2024 decreased $4.3 million, or 17 percent, versus operating income for the first half of 2023. Gross profit decreased $4.5 million, or 11 percent, and operating expenses decreased $0.1 million, or one percent. Year-over-year comparisons of gross profit by region and total segment operating expenses and operating income follow:
Previous report
Gross profit for European operations decreased $3.6 million, or 18 percent, versus the first half of 2023. This decrease was primarily due to lower average unit margins that negatively impacted the change in gross profit by $4.9 million. A four percent increase in sales volume and the favorable effect of foreign currency translation positively impacted the year-over-year change in gross profit by $0.7 million and $0.6 million, respectively.
Reworded paragraphs (70)
Previous wording
Surfactants – Surfactants, which accounted for 69 percent of consolidated net sales for the first six months of 2024, are principal ingredients in consumer and industrial cleaning and disinfection products such as detergents for washing clothes, dishes, carpets, floors and walls, as well as shampoos and body washes. Other applications include fabric softeners, germicidal quaternary compounds, disinfectants, lubricating ingredients, emulsifiers for spreading agricultural products and industrial applications such as latex systems, plastics and composites. Surfactants are manufactured at five sites in the United States, two European sites (United Kingdom and France), five Latin American sites (one site in Colombia and two sites in each of Mexico and Brazil) and two Asian sites (Philippines and Singapore).
Current wording
Surfactants – Surfactants, which accounted for 69 percent of consolidated net sales for the first nine months of 2024, are principal ingredients in consumer and industrial cleaning and disinfection products such as detergents for washing clothes, dishes, carpets, floors and walls, as well as shampoos and body washes. Other applications include fabric softeners, germicidal quaternary compounds, disinfectants, lubricating ingredients, emulsifiers for spreading agricultural products and industrial applications such as latex systems, plastics and composites. Surfactants are manufactured at five sites in the United States, two European sites (United Kingdom and France), five Latin American sites (one site in Colombia and two sites in each of Mexico and Brazil) and two Asian sites (Philippines and Singapore).
Previous wording
Polymers – Polymers, which accounted for 28 percent of consolidated net sales for the first six months of 2024, include polyurethane polyols, polyester resins and phthalic anhydride. Polyurethane polyols are used in the manufacture of rigid foam for thermal insulation in the construction industry and are also a base raw material for coatings, adhesives, sealants and elastomers (collectively, CASE products). Powdered polyester resins are used in coating applications. CASE and powdered polyester resins are collectively referred to as specialty polyols. Phthalic anhydride is used in unsaturated polyester resins, alkyd resins and plasticizers for applications in construction materials and components of automotive, boating and other consumer products. In addition, the Company uses phthalic anhydride internally in the production of polyols. In the United States, polyurethane polyols are manufactured at the Company’s Elwood, Illinois (Millsdale) and Wilmington, North Carolina sites. Phthalic anhydride is manufactured at the Company’s Millsdale site and specialty polyols are manufactured at the Company’s Columbus, Georgia, site. In Europe, polyurethane polyols are manufactured at the Company’s plants in Germany and the Netherlands and specialty polyols are manufactured at the Company’s Poland site. In Asia, polyurethane polyols and specialty polyols are manufactured at the Company’s China plant.
Current wording
Polymers – Polymers, which accounted for 28 percent of consolidated net sales for the first nine months of 2024, include polyurethane polyols, polyester resins and phthalic anhydride. Polyurethane polyols are used in the manufacture of rigid foam for thermal insulation in the construction industry and are also a base raw material for coatings, adhesives, sealants and elastomers (collectively, CASE products). Powdered polyester resins are used in coating applications. CASE and powdered polyester resins are collectively referred to as specialty polyols. Phthalic anhydride is used in unsaturated polyester resins, alkyd resins and plasticizers for applications in construction materials and components of automotive, boating and other consumer products. In addition, the Company uses phthalic anhydride internally in the production of polyols. In the United States, polyurethane polyols are manufactured at the Company’s Elwood, Illinois (Millsdale) and Wilmington, North Carolina sites. Phthalic anhydride is manufactured at the Company’s Millsdale site and specialty polyols are manufactured at the Company’s Columbus, Georgia, site. In Europe, polyurethane polyols are manufactured at the Company’s plants in Germany and the Netherlands and specialty polyols are manufactured at the Company’s Poland site. In Asia, polyurethane polyols and specialty polyols are manufactured at the Company’s China plant.
Previous wording
Specialty Products – Specialty products, which accounted for three percent of consolidated net sales for the first six months of 2024, include flavors, emulsifiers and solubilizers used in food, flavoring, nutritional supplement and pharmaceutical applications. Specialty products are primarily manufactured at the Company’s Maywood, New Jersey, site.
Current wording
Specialty Products – Specialty products, which accounted for three percent of consolidated net sales for the first nine months of 2024, include flavors, emulsifiers and solubilizers used in food, flavoring, nutritional supplement and pharmaceutical applications. Specialty products are primarily manufactured at the Company’s Maywood, New Jersey, site.
Previous wording
The Company’s foreign subsidiaries transact business and report financial results in their respective local currencies. As a result, foreign subsidiary income statements are translated into U.S. dollars at average foreign exchange rates appropriate for the reporting period. Because foreign exchange rates fluctuate against the U.S. dollar over time, foreign currency translation affects period-to-period comparisons of financial statement items (i.e., because foreign exchange rates fluctuate, similar period-to-period local currency results for a foreign subsidiary may translate into different U.S. dollar results). The following table presents the effects that foreign currency translation had on the period-over-period changes in consolidated net sales and various income statement line items for the three and six months ended June 30, 2024 and 2023:
Current wording
The Company’s foreign subsidiaries transact business and report financial results in their respective local currencies. As a result, foreign subsidiary income statements are translated into U.S. dollars at average foreign exchange rates appropriate for the reporting period. Because foreign exchange rates fluctuate against the U.S. dollar over time, foreign currency translation affects period-to-period comparisons of financial statement items (i.e., because foreign exchange rates fluctuate, similar period-to-period local currency results for a foreign subsidiary may translate into different U.S. dollar results). The following table presents the effects that foreign currency translation had on the period-over-period changes in consolidated net sales and various income statement line items for the three and nine months ended September 30, 2024 and 2023:
Previous wording
Net income in the second quarter of 2024 was $9.5 million, or $0.42 per diluted share, versus $12.7 million, or $0.55 per diluted share, in the second quarter of 2023. Adjusted net income was $9.4 million, or $0.41 per diluted share, versus $12.1 million, or $0.53 per diluted share in the second quarter of 2023 (see the “Reconciliation of Non-GAAP Adjusted Net Income and Diluted Earnings per Share” section of this MD&A for a reconciliation between reported net income and reported earnings per diluted share and non-GAAP adjusted net income and adjusted earnings per diluted share). Earnings before interest, taxes, depreciation and amortization (EBITDA) were $47.9 million in the second quarter of 2024, up three percent, versus $46.7 million in the second quarter of 2023. Adjusted EBITDA was $47.7 million, up four percent, versus $45.8 million in the second quarter of 2023 (see the "Reconciliation of non-GAAP EBITDA and Adjusted EBITDA" section of this MD&A for a reconciliation between reported operating income and non-GAAP EBITDA and adjusted EBITDA). Below is a summary discussion of the major factors leading to the changes in net sales, expenses and income in the second quarter of 2024 compared to the second quarter of 2023. A detailed discussion of segment operating performance for the second quarter of 2024 compared to the second quarter of 2023 follows the summary.
Current wording
Net income in the third quarter of 2024 was $23.6 million, or $1.03 per diluted share, versus $12.6 million, or $0.55 per diluted share, in the third quarter of 2023. Adjusted net income was $23.7 million, or $1.03 per diluted share, versus $14.7 million, or $0.64 per diluted share in the third quarter of 2023 (see the “Reconciliation of Non-GAAP Adjusted Net Income and Diluted Earnings per Share” section of this MD&A for a reconciliation between reported net income and reported earnings per diluted share and non-GAAP adjusted net income and adjusted earnings per diluted share). Earnings before interest, taxes, depreciation and amortization (EBITDA) were $53.0 million in the third quarter of 2024, up 18 percent, versus $45.1 million in the third quarter of 2023. Adjusted EBITDA was $53.1 million, up 11 percent, versus $48.0 million in the third quarter of 2023 (see the "Reconciliation of non-GAAP EBITDA and Adjusted EBITDA" section of this MD&A for a reconciliation between reported operating income and non-GAAP EBITDA and adjusted EBITDA). Below is a summary discussion of the major factors leading to the changes in net sales, expenses and income in the third quarter of 2024 compared to the third quarter of 2023. A detailed discussion of segment operating performance for the third quarter of 2024 compared to the third quarter of 2023 follows the summary.
Previous wording
Operating income in the second quarter of 2024 increased $0.9 million, or five percent, versus operating income in the second quarter of 2023. Surfactant and Specialty Products operating income increased $1.9 million and $3.6 million, respectively, versus the second quarter of 2023. Polymer operating income decreased $2.7 million versus the second quarter of 2023. Corporate expenses, including business restructuring, environmental remediation, deferred compensation and a $3.5 million expense recognized as a result of a criminal social engineering scheme impacting one the Company's subsidiaries in Asia, increased $1.9 million, or 11 percent, year-over-year. See Note 17, Other Matter, of the notes to the Company's consolidated financial statements (included in Item 1 of the Form 10-Q) for additional details regarding the criminal social engineering scheme.
Current wording
Operating income in the third quarter of 2024 increased $4.4 million, or 23 percent, versus operating income in the third quarter of 2023. Surfactant and Specialty Products operating income increased $10.9 million and $1.3 million, respectively, versus the third quarter of 2023. Polymer operating income decreased $6.6 million versus the third quarter of 2023. Corporate expenses, including business restructuring, environmental remediation, deferred compensation and charges associated with a criminal social engineering scheme impacting one the Company's subsidiaries in Asia, increased $1.2 million, or six percent, year-over-year. See Note 17, Other Matter, and Note 18, Business Restructuring, of the notes to the Company's consolidated financial statements (included in Item 1 of the Form 10-Q) for additional details regarding the criminal social engineering scheme and business restructuring expenses.
Previous wording
Operating expenses (including deferred compensation and business restructuring) increased $2.3 million, or five percent, versus the prior year quarter. Changes in the individual income statement line items that comprise the Company’s operating expenses were as follows:
Current wording
Operating expenses (including deferred compensation and business restructuring) were flat year-over-year. Changes in the individual income statement line items that comprise the Company’s operating expenses were as follows:
Previous wording
Administrative expenses increased $2.0 million, or nine percent year-over-year, primarily due to a $3.5 million expense recognized as a result of the criminal social engineering scheme impacting one of the Company's subsidiaries in Asia that was partially offset by lower salaries.
Current wording
Administrative expenses increased $3.4 million, or 15 percent year-over-year, primarily due to a $3.3 million pre-tax charge recognized as a result of the criminal social engineering scheme impacting one of the Company's subsidiaries in Asia.
Previous wording
Research, development and technical service (R&D) expenses were flat between quarters.
Current wording
Research, development and technical service (R&D) expenses decreased $0.9 million, or seven percent, between quarters, primarily due to lower salary expenses resulting from productivity measures implemented in late 2023.
Previous wording
Deferred compensation was $0.4 million of expense in the second quarter of 2024 versus $0.7 million of expense in the prior year quarter. The $0.3 million decrease in deferred compensation expense was primarily due to a smaller appreciation in the market value of mutual fund investment assets held for the plans during the second quarter of 2024 versus the second quarter of 2023. See the Overview and Segment Results-Corporate Expenses section of this MD&A for further details.
Current wording
Deferred compensation was a $0.6 million of expense in the third quarter of 2024 versus $3.1 million of income in the prior year quarter. The $3.7 million increase in deferred compensation expense was primarily due to a smaller decrease in the market price of the Company's common stock held for the plans during the third quarter of 2024 versus the third quarter of 2023. Additionally, the market value of mutual fund investment assets held for the plans appreciated during the third quarter of 2024 versus declining in value during the third quarter of 2023. See the Overview and Segment Results-Corporate Expenses section of this MD&A for further details.
Previous wording
Other, net was $1.2 million of income in the second quarter of 2024 versus $2.4 million of income in the second quarter of 2023. The Company recognized $0.8 million of investment income (including realized and unrealized gains and losses) for the Company’s deferred compensation and supplemental defined contribution mutual fund assets in the second quarter of 2024 compared to $1.6 million of investment income in the second quarter of 2023. The Company's net periodic pension income was $0.4 million in the second quarter of 2024 versus $0.3 million of income in the second quarter of 2023. In addition, the Company reported less than $0.1 million of foreign exchange losses in the second quarter of 2024 versus $0.4 million of foreign exchange gains in the second quarter of 2023.
Current wording
Other, net was $1.0 million of income in the third quarter of 2024 versus $0.7 million of expense in the third quarter of 2023. The Company recognized $1.0 million of investment income (including realized and unrealized gains and losses) for the Company’s deferred compensation and supplemental defined contribution mutual fund assets in the third quarter of 2024 compared to $0.4 million of investment losses in the third quarter of 2023. In addition, the Company reported $0.5 million of foreign exchange losses in the third quarter of 2024 versus $0.6 million of foreign exchange losses in the third quarter of 2023. The Company's net periodic pension income was $0.4 million in the third quarter of 2024 versus $0.3 million of income in the third quarter of 2023.
Previous wording
The Company’s effective tax rate was 44.7 percent in the second quarter of 2024 versus 22.3 percent in the second quarter of 2023. The increase was primarily attributable to the Company’s intention to elect “Bonus Depreciation” for its new alkoxylation facility that is being built in Pasadena, Texas and is expected to start up in the fourth quarter of 2024. As a result of this election, the Company is expected to lose its ability to use its global intangible low-taxed income (GILTI) deduction, related GILTI foreign tax credits, and its foreign-derived intangible income (FDII) deduction for 2024, resulting in a higher effective tax rate. In addition, the Company’s current and forecasted geographic mix of income has driven the effective tax rate higher. The Organisation for Economic Co-operation and Development (OECD) has proposed a global minimum tax of 15 percent on reported profits (entitled "Pillar Two"). The Company does not expect Pillar Two to have a material impact on its financial position, results of operations, cash flow and effective tax rate.
Current wording
The Company’s effective tax rate was a negative 10.7 percent in the third quarter of 2024 versus 20.6 percent in the third quarter of 2023. The decrease was primarily attributable to the Company’s intention to make an election under the US GILTI tax regime to exclude certain high taxed entities from the GILTI computation and thereby reduce the Company’s GILTI tax impact. The Company continues to expect to elect “Bonus Depreciation” for its new alkoxylation facility that is being built in Pasadena, Texas and is expected to start up in December 2024. In addition, the Company’s research and development tax credit is forecasted to increase throughout the rest of the year. Finally, the Company recorded a favorable provision-to-return adjustment for its 2023 tax return in the third quarter of 2024. The Organisation for Economic Co-operation and Development (OECD) has proposed a global minimum tax of 15 percent on reported profits (entitled "Pillar Two"). The Company does not expect Pillar Two to have a material impact on its financial position, results of operations, cash flow and effective tax rate.
Previous wording
Surfactant net sales for the second quarter of 2024 decreased $11.9 million versus net sales for the second quarter of 2023. Lower average selling prices negatively impacted the change in net sales by $31.8 million. The lower average selling prices were mainly attributable to declining raw material costs, less favorable product mix and increased competitive activity within Latin American end-markets. Sales volume increased five percent year-over-year and positively impacted the change in net sales by $20.8 million. Foreign currency translation had a $0.9 million unfavorable impact on the year-over-year change in net sales. A comparison of net sales by region follows:
Current wording
Surfactant net sales for the third quarter of 2024 increased $8.9 million versus net sales for the third quarter of 2023. Sales volume increased three percent year-over-year and positively impacted the change in net sales by $12.0 million. Higher average selling prices favorably impacted the change in net sales by $5.6 million. The higher average selling prices were mainly attributable to a more favorable product and customer mix. Foreign currency translation had an $8.7 million unfavorable impact on the year-over-year change in net sales. A comparison of net sales by region follows:
Previous wording
Net sales for North American operations decreased $11.0 million, or five percent, year-over-year. Lower average selling prices had a $5.5 million unfavorable impact on the change in net sales and were primarily due to the pass-through of lower raw material costs and less favorable product mix. Sales volume declined two percent and negatively impacted the change in net sales by $5.3 million. The lower sales volume was primarily due to lower demand for products sold into the industrial cleaning and agricultural end markets. In addition, sales volume into the personal care end markets was negatively impacted by operational disruptions, primarily related to a flood event at the Millsdale, Illinois plant site, during the second quarter of 2024. Higher demand for products sold into the laundry and cleaning end markets, the oil field end markets and to our distribution partners, partially offset the above. Foreign currency translation negatively impacted the change in net sales by $0.2 million.
Current wording
Net sales for North American operations decreased $6.1 million, or three percent, year-over-year. Sales volume declined two percent and negatively impacted the change in net sales by $3.7 million. The lower sales volume was primarily due to lower demand for products sold into the industrial cleaning and personal care end markets. Higher demand for products sold into the construction and industrial, oil field and agricultural end markets and to our distribution partners, partially offset the above. Lower average selling prices had a $2.2 million unfavorable impact on the change in net sales and were primarily due to the pass-through of lower raw material costs, partially offset by favorable product and customer mix. Foreign currency translation negatively impacted the change in net sales by $0.2 million.
Previous wording
Net sales for Latin American operations increased $5.4 million, or seven percent, largely due to a 15 percent increase in sales volume that positively impacted the change in net sales by $11.7 million. The sales volume improvement was primarily due to higher demand for products sold into the consumer products and agricultural end markets and to our distribution partners. Lower average selling prices negatively impacted the change in net sales by $6.3 million. The lower average selling prices primarily reflect the pass-through of lower raw material costs and increased competitive pressures from imports.
Current wording
Net sales for European operations increased $6.3 million, or 10 percent, primarily due to a 12 percent increase in sales volume that positively impacted the change in net sales by $7.2 million. The higher sales volume was primarily due to higher demand for products sold into the industrial cleaning, personal care and agricultural end markets and to our distribution partners. Lower average selling prices negatively impacted the change in net sales by $2.1 million and were primarily due to the pass-through of lower raw material costs, partially offset by more favorable product and customer mix. Foreign currency translation positively impacted the change in net sales by $1.2 million.
Previous wording
Net sales for Asian operations decreased $1.0 million, or eight percent, versus the prior year quarter. Lower average selling prices and the unfavorable impact of foreign currency translation negatively impacted the change in net sales by $1.6 million and $0.5 million, respectively. An eight percent increase in sales volume positively impacted the change in net sales by $1.1 million. The sales volume improvement was mainly due to higher demand for products sold to our distribution partners and into the agricultural end markets.
Current wording
Net sales for Asian operations increased $0.6 million, or four percent, versus the prior year quarter. A six percent increase in sales volume positively impacted the change in net sales by $0.9 million. The sales volume improvement was mainly due to higher demand for products sold to our distribution partners and into the functional products end markets. Foreign currency translation negatively impacted the change in net sales by $0.3 million.
Previous wording
Surfactant operating income for the second quarter of 2024 increased $1.9 million, or 13 percent, versus operating income for the second quarter of 2023. Gross profit increased $2.3 million, or six percent, and operating expenses increased $0.4 million, or two percent. Comparisons of gross profit by region and total segment operating expenses and operating income follow:
Current wording
Surfactant operating income for the third quarter of 2024 increased $10.9 million, or 71 percent, versus operating income for the third quarter of 2023. Gross profit increased $9.9 million, or 25 percent, and operating expenses decreased $1.0 million, or four percent. Comparisons of gross profit by region and total segment operating expenses and operating income follow:
Previous wording
Gross profit for Asia operations increased $0.9 million, or 43 percent, year-over-year primarily due to higher average unit margins and an eight percent increase in sales volume. These items positively impacted the year-over-year change in gross profit by $0.7 million and $0.2 million, respectively. The higher average unit margins reflect a more favorable product mix and lower overhead costs due to the timing of production runs.
Current wording
Gross profit for Asia operations increased $0.7 million, or 25 percent, year-over-year primarily due to higher average unit margins and a six percent increase in sales volume. These items positively impacted the year-over-year change in gross profit by $0.5 million and $0.2 million, respectively. The higher average unit margins reflect a more favorable product and customer mix along with lower overhead costs due to the timing of production runs.
Previous wording
Operating expenses for the Surfactants segment increased $0.4 million, or two percent, in the second quarter of 2024 versus the second quarter of 2023.
Current wording
Operating expenses for the Surfactants segment decreased $1.0 million, or four percent, in the third quarter of 2024 versus the third quarter of 2023. The decrease was mainly attributable to lower salary expenses.
Previous wording
Polymer net sales for the second quarter of 2024 decreased $4.8 million, or three percent, versus net sales for the same period of 2023. Lower average selling prices negatively impacted the change in net sales by $9.6 million. A two percent increase in sales volume and the favorable impact of foreign currency translation positively impacted the change in net sales by $3.1 million and $1.7 million, respectively. A comparison of net sales by region follows:
Current wording
Polymer net sales for the third quarter of 2024 decreased $19.8 million, or 12 percent, versus net sales for the same period of 2023. An 11 percent decrease in sales volume and lower average selling prices negatively impacted the change in net sales by $19.2 million and $3.7 million, respectively. Foreign currency translation positively impacted the change in net sales by $3.1 million. A comparison of net sales by region follows:
Previous wording
Net sales for North American operations decreased $8.3 million, or nine percent, due to lower average selling prices and a four percent decrease in sales volume. These items negatively impacted the year-over-year change in net sales by $4.9 million and $3.4 million, respectively. The lower average selling prices primarily reflect the pass-through of lower raw material costs. The decline in sales volume is mostly attributable to a 50 percent decrease within the commodity phthalic anhydride business due to operational issues at the Millsdale, Illinois plant site during the second quarter of 2024. Sales volume of specialty polyols increased 25 percent year-over year while sales volume of polyols used in rigid foam applications declined one percent.
Current wording
Net sales for North American operations decreased $16.5 million, or 18 percent, due to a 14 percent decline in sales volume and lower average selling prices. These items negatively impacted the year-over-year change in net sales by $13.1 million and $3.4 million, respectively. Sales volume of polyols used in rigid foam applications declined 17 percent due to soft demand and competitive pressures. Sales volume of commodity phthalic anhydride declined 27 percent while sales volume of specialty polyols increased six percent year-over year. The lower average selling prices primarily reflect the pass-through of lower raw material costs.
Previous wording
Net sales for European operations increased $1.5 million, or two percent, versus the second quarter of 2023. This increase was primarily due to the favorable impact of foreign currency translation and a three percent increase in sales volume. These items positively impacted the year-over-year change in net sales by $2.1 million and $2.0 million, respectively. A weaker U.S. dollar relative to the Polish zloty and British pound sterling led to the favorable foreign currency translation effect. Lower average selling prices negatively impacted the year-over-year change in net sales by $2.6 million. The lower average selling prices were primarily due to the pass-through of lower raw material costs and increased competitive activity.
Current wording
Net sales for European operations decreased $3.1 million, or five percent, versus the third quarter of 2023. This decrease was primarily due to a nine percent decline in sales volume which negatively impacted the year-over-year change in net sales by $6.1 million. The decline in sales volume was primarily due to soft demand and competitive pressures. Foreign currency translation positively impacted the change in net sales by $3.0 million. A weaker U.S. dollar relative to the Polish zloty and British pound sterling led to the favorable foreign currency translation effect.
Previous wording
Polymer operating income in the second quarter of 2024 decreased $2.7 million, or 17 percent, versus operating income in the second quarter of 2023. Gross profit decreased $2.2 million, or 10 percent and operating expenses increased $0.5 million or eight percent between years. Comparisons of gross profit by region and total segment operating expenses and operating income follow:
Current wording
Polymer operating income in the third quarter of 2024 decreased $6.6 million, or 30 percent, versus operating income in the third quarter of 2023. Gross profit decreased $6.8 million, or 24 percent and operating expenses decreased $0.2 million or four percent between years. Comparisons of gross profit by region and total segment operating expenses and operating income follow:
Previous wording
Operating expenses for the Polymer segment increased $0.5 million, or eight percent, in the second quarter of 2024 compared to the second quarter of 2023.
Current wording
Operating expenses for the Polymer segment decreased $0.3 million, or four percent, in the third quarter of 2024 compared to the third quarter of 2023.
Previous wording
Specialty Products net sales for the second quarter of 2024 decreased $6.9 million, or 29 percent, versus net sales for the second quarter of 2023. The decrease was due to lower average selling prices and a two percent decrease in sales volume. Gross profit and operating income increased by $3.4 million and $3.5 million, respectively, year-over-year. The year-over-year increases in gross profit and operating income were mostly attributable to higher average unit margins within the medium chain triglycerides (MCT) product line. The higher unit margins reflect the non-recurrence of high-cost inventory carryover experienced in the prior year.
Current wording
Specialty Products net sales for the third quarter of 2024 decreased $4.5 million, or 24 percent, versus net sales for the third quarter of 2023. The decrease was due to lower average selling prices and a five percent decrease in sales volume. Gross profit and operating income increased $1.1 million and $1.3 million, respectively, year-over-year. The year-over-year increases in gross profit and operating income were mostly attributable to higher average unit margins within the medium chain triglycerides (MCT) product line. The higher unit margins reflect the non-recurrence of high-cost inventory carryover experienced in the prior year.
Previous wording
Corporate expenses, which include deferred compensation, business restructuring and other operating expenses that are not allocated to the reportable segments, increased $1.9 million, or 11 percent, year-over-year. Corporate expenses were $19.3 million in the second quarter of 2024 versus $17.4 million in the second quarter of 2023. This increase was primarily due to a $3.5 million expense related to a criminal social engineering scheme that impacted the Company's subsidiary in Asia, that was partially offset by lower deferred compensation expense and productivity measures implemented in late 2023. See Note 17, Other Matter, of the notes to the Company's consolidated financial statements for additional details regarding the criminal social engineering scheme.
Current wording
Corporate expenses, which include deferred compensation, business restructuring and other operating expenses that are not allocated to the reportable segments, increased $1.3 million, or six percent, year-over-year. Corporate expenses were $21.3 million in the third quarter of 2024 versus $20.1 million in the third quarter of 2023. This increase was primarily due to $0.6 million of deferred compensation expense in the third quarter of 2024 versus $3.1 million of deferred compensation income in the third quarter of 2023. The Company also recorded a $3.3 million expense in the third quarter of 2024 related to a criminal social engineering scheme that impacted one of the Company's subsidiaries in Asia. Partially offsetting these items was a $5.6 million business restructuring charge in the third quarter of 2023 that did not recur in 2024. See Note 17, Other Matter, and Note 18, Business Restructuring, of the notes to the Company's consolidated financial statements for additional details regarding the criminal social engineering scheme and business restructuring expenses.
Previous wording
The $0.3 million decrease in deferred compensation expense was primarily due to a smaller increase in the market value of mutual fund investment assets held for the plans in the second quarter of 2024 versus the second quarter of 2023. This decrease was partially offset by a $6.08 per share decrease in the market price of the Company's common stock in the second quarter of 2024 compared to a $7.47 per share decrease in the second quarter of 2023. The following table presents the quarter-end Company common stock market prices used in the computation of deferred compensation income/expense for the three months ended June 30, 2024 and 2023:
Current wording
The $3.7 million increase in deferred compensation expense was primarily due to a smaller decrease in the market price of the Company's common stock held for the plans during the third quarter of 2024 versus the third quarter of 2023. Additionally, the market value of mutual fund investment assets held for the plans appreciated during the third quarter of 2024 versus declining in value during the third quarter of 2023. The following table presents the quarter-end Company common stock market prices used in the computation of deferred compensation income/expense for the three months ended September 30, 2024 and 2023:
Previous wording
Net income in the first half of 2024 was $23.4 million, or $1.02 per diluted share, versus $28.8 million, or $1.25 per diluted share, in the first half of 2023. Adjusted net income was $24.1 million, or $1.05 per diluted share, versus $28.5 million, or $1.24 per diluted share in the prior year (see the “Reconciliation of Non-GAAP Adjusted Net Income and Diluted Earnings per Share” section of this MD&A for a reconciliation between reported net income and reported earnings per diluted share and non-GAAP adjusted net income and adjusted earnings per diluted share). Earnings before interest, taxes, depreciation and amortization (EBITDA) were $98.0 million in for the first half of 2024 versus $94.9 million in the first half of 2023. Adjusted EBITDA was $98.9 million, up five percent, versus $94.5 million in the first half of 2023 (see the "Reconciliation of non-GAAP EBITDA and Adjusted EBITDA" section of this MD&A for a reconciliation between reported operating income and non-GAAP EBITDA and adjusted EBITDA). Below is a summary discussion of the major factors leading to the year-over-year changes in net sales, expenses and income in the first half of 2024 compared to the first half of 2023. A detailed discussion of segment operating performance for the first half of 2024 compared to the first half of 2023 follows the summary.
Current wording
Net income in the first nine months of 2024 was $47.0 million, or $2.05 per diluted share, versus $41.4 million, or $1.80 per diluted share, in the first nine months of 2023. Adjusted net income was $47.7 million, or $2.08 per diluted share, versus $43.2 million, or $1.88 per diluted share in the prior year (see the “Reconciliation of Non-GAAP Adjusted Net Income and Diluted Earnings per Share” section of this MD&A for a reconciliation between reported net income and reported earnings per diluted share and non-GAAP adjusted net income and adjusted earnings per diluted share). Earnings before interest, taxes, depreciation and amortization (EBITDA) were $151.0 million, up eight percent, in the first nine months of 2024 versus $140.1 million in the first nine months of 2023. Adjusted EBITDA was $151.9 million, up seven percent, versus $142.5 million in the first nine months of 2023 (see the "Reconciliation of non-GAAP EBITDA and Adjusted EBITDA" section of this MD&A for a reconciliation between reported operating income and non-GAAP EBITDA and adjusted EBITDA). Below is a summary discussion of the major factors leading to the year-over-year changes in net sales, expenses and income in the first nine months of 2024 compared to the first nine months of 2023. A detailed discussion of segment operating performance for the first nine months of 2024 compared to the first nine months of 2023 follows the summary.
Previous wording
Operating income for the first half of 2024 was flat versus operating income for the first half of 2023. Surfactant and Specialty Products operating income increased $0.9 million and $5.3 million, respectively, versus the first half of 2023. Polymer operating income decreased $4.3 million year-over-year. Corporate expenses, including business restructuring, environmental remediation, deferred compensation and a $3.5 million expense recognized for a criminal social engineering scheme at one of the Company's subsidiaries in
Current wording
Operating income for the first nine months of 2024 was $62.8 million, an eight percent increase versus operating income of $58.4 million for the first nine months of 2023. Surfactant and Specialty Products operating income increased $11.9 million and $6.6 million, respectively, versus the first nine months of 2023. Polymer operating income decreased $10.9 million year-over-year. Corporate expenses, including business restructuring, environmental remediation, deferred compensation and expenses associated with a criminal social engineering scheme at one of the Company's subsidiaries in Asia, increased $3.2 million, or six percent, year-over-year. See Note 17, Other Matter, and Note 18, Business Restructuring, of the notes to the Company's consolidated financial statements (included in Item 1 of the Form 10-Q) for additional details regarding the criminal social engineering scheme charges and business restructuring expenses. Foreign currency translation had a $0.2 million favorable impact on operating income in the first nine months of 2024 versus the first nine months of 2023.
Previous wording
Administrative expenses increased $2.0 million, or four percent, year-over-year. The increase was primarily driven by a $3.5 million expense recognized for a criminal social engineering scheme impacting one of the Company's subsidiaries in Asia and higher environmental reserve expenses. The higher environmental expense reflects a reserve adjustment for environmental costs related to property formerly owned and operated by the Company in Wilmington, Massachusetts. Lower salaries, resulting from productivity measures implemented in late 2023, partially offset the above.
Current wording
Administrative expenses increased $5.4 million, or eight percent, year-over-year. The increase was primarily driven by a $6.8 million expense recognized for a criminal social engineering scheme impacting one of the Company's subsidiaries in Asia and higher environmental reserve expenses. The higher environmental expense is primarily due to a reserve adjustment for environmental costs related to property formerly owned and operated by the Company in Wilmington, Massachusetts. Lower salary expenses, resulting from productivity measures implemented in late 2023, partially offset the above.
Previous wording
R&D expenses decreased $0.9 million, or three percent, year-over-year primarily due to lower salaries.
Current wording
R&D expenses decreased $1.8 million, or four percent, year-over-year primarily due to lower salary expenses resulting from productivity measure implemented in late 2023.
Previous wording
Deferred compensation expenses were flat year-over-year. See the Overviewand Segment Results-Corporate Expenses section of this MD&A for further details.
Current wording
Deferred compensation was a $2.7 million expense for the first nine months of 2024 versus $0.9 million of income during the first nine months of 2023. The $3.6 million increase in deferred compensation expense was primarily due to a smaller decrease in the market price of the Company's common stock held for the plans during the first nine months of 2024 versus the first nine months of 2023. Additionally, the market value of mutual fund investment assets held for the plans appreciated by a greater amount in 2024 versus the prior year. See the Overviewand Segment Results-Corporate Expenses section of this MD&A for further details.
Previous wording
Net interest expense for the first half of 2024 decreased $1.0 million, or 14 percent, versus the first half of 2023. This decrease was primarily attributable to higher non-U.S. interest income recognition and higher capitalized interest income, partially offset by higher U.S. interest expense.
Current wording
Net interest expense for the first nine months of 2024 decreased $0.3 million, or three percent, versus the first nine months of 2023. This decrease was primarily attributable to higher non-U.S. interest income recognition and higher capitalized interest income, partially offset by higher U.S. interest expense.
Previous wording
Other, net was $3.6 million of income for the first half of 2024 compared to $4.0 million of income for the first half of 2023. The Company recognized $3.1 million of investment income (including realized and unrealized gains and losses) for the Company’s deferred compensation and supplemental defined contribution mutual fund assets in the first half of 2024 compared to $3.3 million of investment income in the first half of 2023. In addition, the Company reported foreign exchange losses of $0.4 million in the first half of 2024 versus $0.1 million of foreign exchange gains in the first half of 2023. The Company also reported $0.2 million of higher net periodic pension income in the first half of 2024 versus the first half of 2023.
Current wording
Other, net was $4.6 million of income for the first nine months of 2024 compared to $3.3 million of income for the first nine months of 2023. The Company recognized $4.2 million of investment income (including realized and unrealized gains and losses) for the Company’s deferred compensation and supplemental defined contribution mutual fund assets in the first nine months of 2024 compared to $2.9 million of investment income in the first nine months of 2023. In addition, the Company reported foreign exchange losses of $0.9 million in the first nine months of 2024 versus $0.6 million of foreign exchange losses in the first nine months of 2023. The Company also reported $0.2 million of higher net periodic pension income in the first nine months of 2024 versus the first nine months of 2023.
Previous wording
Surfactants net sales for the first half of 2024 decreased $88.9 million, or 10 percent, versus net sales for the first half of 2023. Lower average selling prices negatively impacted the change in net sales by $118.7 million. The lower average selling prices were mainly due to declining raw material costs, less favorable product mix and increased competitive activity within the European and Latin American end-markets. Sales volume increased three percent and positively impacted the change in net sales by $23.0 million. Foreign currency translation had a $6.8 million favorable impact on the year-over-year change in net sales. A year-over-year comparison of net sales by region follows:
Current wording
Surfactants net sales for the first nine months of 2024 decreased $80.0 million, or six percent, versus net sales for the first nine months of 2023. Lower average selling prices negatively impacted the change in net sales by $113.3 million. The lower average selling prices were mainly due to declining raw material costs, less favorable product mix and increased competitive activity within the European and Latin American end-markets. Sales volume increased three percent and positively impacted the change in net sales by $35.2 million. Foreign currency translation had a $1.9 million unfavorable impact on the year-over-year change in net sales. A year-over-year comparison of net sales by region follows:
Previous wording
Net sales for North American operations decreased $58.5 million, or 12 percent, year-over-year. Lower average selling prices had a $38.4 million unfavorable impact on the change in net sales and were primarily attributable to the pass-through of lower raw material costs and less favorable product mix. Sales volume declined four percent and negatively impacted the change in net sales by $19.9 million. The decrease in sales volume primarily reflects lower demand for products sold into the agricultural end markets due to customer and channel inventory destocking. In addition, sales volume into the personal care end markets was negatively impacted by operational issues, partially related to a flood event at the Millsdale, Illinois plant site, during the first half of 2024. Higher demand for products sold into the oil field, construction and industrial solutions, and to our distribution partners partially offset the aforementioned decline. Foreign currency translation negatively impacted the year-over-year change in net sales by $0.2 million.
Current wording
Net sales for North American operations decreased $64.6 million, or nine percent, year-over-year. Lower average selling prices had a $40.9 million unfavorable impact on the change in net sales and were primarily attributable to the pass-through of lower raw material costs and less favorable product mix. Sales volume decreased three percent and negatively impacted the change in net sales by $23.4 million. The decrease in sales volume primarily reflects lower demand for products sold into the agricultural end markets due to customer and channel inventory destocking during the first half of 2024. In addition, sales volume into the personal care end markets was negatively impacted by operational issues, partially related to a flood event at the Elwood, Illinois (Millsdale) site, during the first half of 2024. Higher demand for products sold into the oil field, construction and industrial solutions, and to our distribution partners partially offset the aforementioned decline. Foreign currency translation negatively impacted the year-over-year change in net sales by $0.3 million.
Previous wording
Net sales for European operations decreased $25.6 million, or 16 percent, primarily due to lower average selling prices that negatively impacted the change in net sales by $37.9 million. The lower average selling prices were primarily due to the pass-through of lower raw material costs, less favorable product mix and increased competitive activity within certain end-use markets. Sales volume was up 7 percent and positively impacted the change in net sales by $11.1 million. The higher sales volume was primarily due to higher demand for products sold into the consumer products end markets and to our distribution partners. Foreign currency translation positively impacted the change in net sales by $1.2 million. A weaker U.S. dollar relative to the European euro and British pound sterling led to the favorable foreign currency translation effect.
Current wording
Net sales for European operations decreased $19.4 million, or nine percent, primarily due to lower average selling prices that negatively impacted the change in net sales by $40.5 million. The lower average selling prices were primarily due to the pass-through of lower raw material costs, less favorable product mix and increased competitive activity within certain end-use markets. Sales volume was up nine percent and positively impacted the change in net sales by $18.7 million. The higher sales volume was primarily due to higher demand for products sold into the consumer products and construction and industrial solutions end markets and to our distribution partners. Foreign currency translation positively impacted the change in net sales by $2.4 million. A weaker U.S. dollar relative to the European euro and British pound sterling led to the favorable foreign currency translation effect.
Previous wording
Net sales for Asian operations decreased $6.9 million, or 22 percent, year-over-year. Lower average selling prices, a five percent decline in sales volume, and the unfavorable impact of foreign currency translation negatively impacted the year-over-year change in net sales by $4.5 million, $1.7 million and $0.7 million, respectively. The decline in average selling prices primarily reflects the pass-through of lower raw material costs and the decline in volume primarily reflects less demand for products sold into the commodity laundry and cleaning end markets.
Current wording
Net sales for Asian operations decreased $6.3 million, or 14 percent, year-over-year. Lower average selling prices, the unfavorable impact of foreign currency translation and a two percent decline in sales volume, negatively impacted the year-over-year change in net sales by $4.6 million, $1.0 million and $0.7 million, respectively. The decline in average selling prices primarily reflects the pass-through of lower raw material costs. The decline in volume primarily reflects less demand for products sold into the commodity laundry and cleaning end markets, partially offset by higher demand for products sold into the personal care end markets and to our distribution partners.
Previous wording
Surfactant operating income for the first half of 2024 increased $0.9 million, or two percent, versus operating income for the first half of 2023. Gross profit decreased $0.1 million, and operating expenses decreased $1.0 million, or two percent. Year-over-year comparisons of gross profit by region and total segment operating expenses and operating income follow:
Current wording
Surfactant operating income for the first nine months of 2024 increased $11.9 million, or 21 percent, versus operating income for the first nine months of 2023. Gross profit increased $9.8 million, or seven percent, and operating expenses decreased $2.1 million, or three percent. Year-over-year comparisons of gross profit by region and total segment operating expenses and operating income follow:
Previous wording
Gross profit for North American operations decreased $7.7 million, or 13 percent, versus the prior year primarily due to lower average unit margins and a four percent decline in sales volume. These items negatively impacted the year-over-year change in gross profit by $5.4 million and $2.3 million, respectively. The lower average unit margins were mostly attributable to less favorable product mix, higher pre-operating expenses associated with the alkoxylation production facility that is being built in Pasadena, Texas and higher expenses incurred at the Company's Millsdale, Illinois plant site due to operational issues, partially related to a flood event, during the first half of 2024.
Current wording
Gross profit for North American operations decreased $7.5 million, or nine percent, versus the prior year due to lower average unit margins and a three percent decline in sales volume. These items negatively impacted the year-over-year change in gross profit by $4.8 million and $2.7 million, respectively. The lower average unit margins were mostly attributable to less favorable product mix, higher pre-operating expenses associated with the alkoxylation production facility that is being built in Pasadena, Texas and higher expenses incurred at the Company's Millsdale plant site due to operational issues, partially related to a flood event, during the first half of 2024.
Showing the first 40 of 70 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
The Company’s effective tax rate was 18.9 percent for the first nine months of 2024 versus 20.5 percent for the first nine months of 2023. This is primarily due to the Company's increased research & development tax credit for 2024. The Organisation for Economic Co-operation and Development (OECD) has proposed a global minimum tax of 15 percent on reported profits (entitled "Pillar Two"). The Company does not expect Pillar Two to have a material impact on its financial position, results of operations, cash flow and effective tax rate.
Current report — wording carried from elsewhere
Corporate expenses, which include deferred compensation, business restructuring, and other operating expenses that are not allocated to the reportable segments, increased $3.2 million, or six percent, between years. The year-over-year increase was primarily attributable to $6.8 million of pre-tax charges associated with a criminal social engineering scheme impacting one of the Company's subsidiaries in
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Selling expenses increased $0.7 million, or six percent, year-over-year.
Previous report — wording carried elsewhere
Gross profit for North American operations decreased $3.9 million, or 16 percent, versus the prior year primarily due to lower average unit margins and a two percent decline in sales volume. These items negatively impacted the year-over-year change in gross profit by $3.3 million and $0.6 million, respectively. The lower average unit margins were primarily attributable to less favorable product mix, higher pre-operating expenses associated with the alkoxylation production facility that is being built in Pasadena, Texas and higher expenses incurred at the Company's Millsdale, Illinois plant site due to operational issues, primarily related to a flood event, during the second quarter of 2024.
Previous report — wording carried elsewhere
Asia, increased $1.9 million, or five percent, year-over-year. See Note 17, Other Matter, of the notes to the Company's consolidated financial statements (included in Item 1 of the Form 10-Q) for additional details regarding the criminal social engineering scheme. Foreign currency translation had a $0.6 million favorable impact on operating income in the first half of 2024 versus the first half of 2023.
Previous report — wording carried elsewhere
The Company’s effective tax rate was 36.1 percent in the first half of 2024 versus 20.4 percent in the first half of 2023. The increase was primarily attributable to the Company’s intention to elect “Bonus Depreciation” for its new alkoxylation facility that is being built in Pasadena, Texas and expected to start up in the fourth quarter of 2024. As a result of this election, the Company is expected to lose its ability to use its global intangible low-taxed income (GILTI) deduction, related GILTI foreign tax credits, and its income deduction (FDII) for 2024, resulting in a higher effective tax rate. In addition, the Company’s current and forecasted geographic mix of income has driven the effective tax rate higher. The Organisation for Economic Co-operation and Development (OECD) has proposed a global minimum tax of 15 percent on reported profits (entitled "Pillar Two"). The Company does not expect Pillar Two to have a material impact on its financial position, results of operations, cash flow and effective tax rate.