STEPAN CO
For the period ended Dec 31, 2024. Filed Feb 27, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 27, 2025
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-K
Period ended 2023-12-31; filed 2024-02-29.
0000950170-24-022778
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-27.
0000950170-25-029079
Item 7. 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 125 previous paragraphs and 118 current paragraphs.
51 unchanged; 52 reworded; 14 added; 22 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 19 previous and 20 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 (14)
Current report
Consolidated net sales decreased $145.5 million, or six percent, between years. Lower average selling prices negatively impacted the year-over-year change in net sales by $160.3 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. Consolidated sales volume increased one percent and positively impacted the year-over-year change in net sales by $17.3 million. Surfactant and Specialty Products sales volume increased two percent and seven percent, respectively. Polymer sales volume decreased four percent. Foreign currency translation negatively impacted the year-over-year change in net sales by $2.5 million, primarily due to a stronger U.S. dollar against the Brazilian real and Mexican peso.
Current report
Selling expenses decreased $2.7 million, or six percent, between years primarily due to lower salary expenses resulting from workforce productivity measures implemented in late 2023 and lower bad debt provision expenses in 2024 versus 2023.
Current report
Administrative expenses increased $5.1 million, or five percent, year-over-year. This increase was primarily due to a $6.8 million expense recognized for a criminal social engineering scheme impacting one of the Company’s subsidiaries in Asia, higher expenses associated with the CEO transition in the fourth quarter of 2024 and higher environmental reserve expenses. The higher environmental expenses reflect 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.
Current report
Net sales for North American operations decreased $55.1 million, or six percent, between years. Lower average selling prices had a $40.8 million unfavorable impact on the year-over-year change in net sales. The lower average selling prices were primarily due to the pass-through of lower raw material costs and less favorable product mix. Sales volume declined one percent and negatively impacted the year-over-year change in net sales by $13.8 million. The lower sales volume primarily reflects lower demand for products sold into 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 Millsdale site, during the first half of 2024. Higher demand for products sold into the oil field end markets and to our distribution partners partially offset the aforementioned decreases. Foreign currency translation negatively impacted the change in net sales by $0.5 million.
Current report
Net sales for European operations decreased $25.2 million, or nine percent, primarily due to lower average selling prices that negatively impacted the change in net sales by $45.8 million. The lower average selling prices were primarily due to the pass-through of lower raw material costs and increased competitive activity within certain end-use markets. Sales volume increased six percent and positively impacted the change in net sales by $17.8 million. The higher sales volume was primarily due to higher demand for products sold into the industrial cleaning and personal care end markets and to our distribution partners. Foreign currency translation positively impacted the year-over-year change in net sales by $2.8 million. A weaker U.S. dollar relative to the British pound sterling and European euro led to the favorable foreign currency translation effect.
Current report
Net sales for Latin American operations increased $14.6 million, or five percent, primarily due to a nine percent increase in sales volume which positively impacted the year-over-year change in net sales by $26.3 million. The higher sales volume was primarily due to higher demand for products sold into the laundry and cleaning and agricultural end markets combined with higher demand for products sold to our distribution partners. Higher average selling prices positively impacted the change in net sales by $2.0 million. A stronger U.S. dollar relative to the Brazilian real and Mexican peso led to a $13.7 million unfavorable foreign currency translation effect.
Current report
Gross profit for European operations increased $5.4 million, or 20 percent, due to higher average unit margins, a six percent increase in sales volume and the favorable impact of foreign currency translation. These items positively impacted the year-over-year change in gross profit by $3.5 million, $1.6 million, and $0.2 million, respectively. The higher average unit margins primarily reflect a more favorable product mix.
Current report
Gross profit for Latin American operations increased $15.1 million, or 60 percent, primarily due to higher average unit margins and a nine percent increase in sales volume. These items positively impacted the year-over-year change in gross profit by $15.1 million and $2.2. million, respectively. The higher average unit margins were primarily due to higher demand for products sold into the agricultural end markets partially offset by a one-time tax proceeding reserve established in the fourth quarter of 2024. Foreign currency translation negatively impacted the year-over-year change in gross profit by $2.2 million.
Current report
Gross profit for Asian operations decreased $0.2 million or two percent, year-over-year due primarily to lower average unit margins and a one percent decrease in sales volume.
Current report
Net sales for European Polymer operations decreased $13.0 million, or five percent, year-over-year. Lower average selling prices and a two percent decline in sales volume negatively impacted the year-over-year change in net sales by $18.6 million and $5.7 million, respectively. The lower average selling prices were mainly due to pass-through of lower raw material costs and increased competitive activity. Foreign currency translation positively impacted the change in net sales by $11.3 million. A weaker U.S. dollar relative to the Polish zloty and British pound sterling led to the favorable foreign currency translation effect.
Current report
Net sales for Asian and Other operations increased $4.6 million, or 10 percent, primarily due to an 11 percent increase in sales volume which positively impacted the year-over-year change in net sales by $4.8 million. The higher sales volume was driven by the non-recurrence of COVID lock downs and restrictions that were in place in China in the first half of 2023 and higher demand for specialty polyols resulting from the Company’s product diversification efforts. Higher average selling prices positively impacted the change in net sales by $0.6 million. Foreign currency translation negatively impacted the year-over-year change in net sales by $0.8 million.
Current report
Gross profit for North American operations decreased $16.1 million, or 36 percent, due to lower average unit margins and a 10 percent decline in sales volume. These items negatively impacted the year-over-year change in gross profit by $11.7 million and $4.3 million, respectively. The lower average unit margins were primarily due to a phthalic anhydride related catalyst write-off ($2.1 million) during the second quarter of 2024, higher expenses incurred at the Company’s Millsdale plant due to operational issues during the first half of 2024 and higher expenses associated with a planned phthalic anhydride plant maintenance shut-down in the fourth quarter of 2024.
Current report
product line. The margin recovery was primarily due to the non-recurrence of high-cost raw material inventory carryover experienced during 2023.
Current report
Reconciliations of Non-GAAP EBITDA and Adjusted EBITDA
Removed paragraphs (22)
Previous report
On September 23, 2022, the Company completed the purchase of PerformanX Specialty Chemicals, LLC’s surfactant business and associated assets. Included in the transaction were intellectual property, customer relationships, inventory and working capital. This acquisition enhanced the Company’s specialty alkoxylates portfolio and provides market diversification opportunities. This acquisition is expected to deliver additional baseload volumes for the Company’s Pasadena, Texas alkoxylation facility that is expected to start up in the third quarter of 2024. See Note 20, Acquisitions, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for additional details.
Previous report
In February 2021, the Company completed the purchase of a fermentation plant, located in Lake Providence, Louisiana. The Company believes this plant complements the rhamnolipid-based bio-surfactant technology the Company acquired from Logos Technologies in March 2020. Fermentation is a new platform technology for the Company and the Company is focusing efforts to further develop, integrate, produce and commercialize these unique surfactants moving forward. Bio-surfactants, produced via fermentation, are attractive due to their biodegradability, low toxicity, and in some cases, unique antimicrobial properties. These bio-surfactants offer synergies in several strategic end use markets including oilfield, agriculture, personal care and household, industrial and institutional cleaning. The acquisition of this industrial scale fermentation plant is a step in the Company’s bio-surfactant commercialization efforts. See Note 20, Acquisitions, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for additional details.
Previous report
In January 2021, the Company completed the purchase of INVISTA’s aromatic polyester polyol business and associated assets. Included in the transaction were two manufacturing sites, one in Wilmington, North Carolina and the other in Vlissingen, Netherlands along with intellectual property, customer relationships, inventory and working capital. This acquisition expanded the Company’s manufacturing capabilities in both the United States and Europe and enhanced the Company’s business continuity capabilities for the polymer market. The Company believes that available spare capacity, combined with debottlenecking opportunities in both plants, allows Stepan to support future market growth in a capital efficient way. See Note 20, Acquisitions, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for additional details.
Previous report
Consolidated net sales decreased $447.5 million, or 16 percent, between years. Consolidated sales volume decreased 11 percent and negatively impacted the year-over-year change in net sales by $292.2 million. Sales volume in the Surfactant, Polymer and Specialty Products segments decreased nine, 15 and 19 percent, respectively. Lower average selling prices negatively impacted the year-over-year change in net sales by $182.4 million. Foreign currency translation favorably impacted the year-over-year change in net sales by $27.1 million, primarily due to a weaker U.S. dollar against the European euro, Mexican peso, Brazilian real and Polish zloty.
Previous report
Selling expenses decreased $10.7 million, or 18 percent, between years primarily due to lower salaries and incentive-based compensation expenses.
Previous report
Administrative expenses decreased $9.0 million, or nine percent, year-over-year primarily due to lower environmental remediation reserve ($10.5 million) and incentive-based compensation expenses, partially offset by higher salaries. The higher environmental reserve expenses in 2022 primarily reflected revised remediation cost estimates for the Company’s Maywood, New Jersey site due to USEPA work plan approvals and the receipt of third-party contractor bids during the third quarter of 2022.
Previous report
Net sales for North American operations decreased $150.4 million, or 14 percent, between years. Sales volume declined 14 percent and negatively impacted the year-over-year change in net sales by $150.9 million. The lower sales volume primarily reflects a slow down in demand across most end markets and significant customer and channel destocking. Foreign currency translation negatively impacted the change in net sales by $1.7 million. Higher average selling prices favorably impacted the change in net sales by $2.2 million.
Previous report
Net sales for European operations decreased $60.6 million, or 17 percent, year-over-year. An 11 percent decrease in sales volume and lower average selling prices negatively impacted the change in net sales by $37.1 million and $26.9 million, respectively. The lower sales volume was primarily due to lower demand for products sold within the consumer products and agricultural end markets. 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 positively impacted the year-over-year change in net sales by $3.4 million. A weaker U.S. dollar relative to the European euro led to the favorable foreign currency translation effect.
Previous report
Net sales for Latin American operations decreased $58.9 million, or 16 percent, between years primarily due to lower average selling prices which negatively impacted the change in net sales by $91.0 million. The lower average selling prices were primarily due to less favorable product mix, the pass-through of lower raw material costs and increased competitive activity within certain end-use markets. Sales volume increased three percent and favorably impacted the change in net sales by $12.1 million. The higher sales volume primarily reflects higher demand within the consumer products end markets that was partially offset by lower demand within the agricultural end markets due to significant customer and channel inventory destocking. Foreign currency translation positively impacted the change in net sales by $20.0 million. A weaker U.S. dollar relative to the Mexican peso and Brazilian real led to the favorable foreign currency translation.
Previous report
Gross profit for European operations decreased $14.7 million, or 36 percent, primarily due to lower average unit margins and an 11 percent decrease in sales volume. These items negatively impacted the year-over-year change in gross profit by $10.6 million and $4.4 million, respectively. The lower average unit margins primarily reflect a less favorable product mix and increased competitive activity within certain end-use markets. Foreign currency translation positively impacted the year-over-year change in gross profit by $0.3 million.
Previous report
Gross profit for Latin American operations decreased $28.3 million, or 53 percent, primarily due to lower average unit margins which negatively impacted the year-over-year change in gross profit by $31.0 million. These lower average unit margins were primarily due to less favorable product mix, mostly due to lower demand for products sold into the agricultural end market, and increased competitive activity from imported products. A three percent increase in sales volume and the favorable impact of foreign currency translation positively impacted the year-over-year change in gross profit by $1.8 million and $0.9 million, respectively.
Previous report
Gross profit for Asian Surfactant operations decreased $0.6 million, or seven percent, year-over-year. A nine percent decline in sales volume negatively impacted the change in gross profit by $0.7 million. Higher average unit margins favorably impacted the year-over-year change in gross profit by $0.1 million.
Previous report
Net sales for European Polymer operations decreased $48.0 million, or 16 percent, year-over-year. A 10 percent decrease in sales volume and lower average selling prices negatively impacted the change in net sales by $32.1 million and $24.7 million, respectively. The decline in sales volume reflects customer and channel inventory destocking, reduced construction-related activities and customer share loss. The lower average selling prices were primarily due to the pass-through of lower raw material costs and increased competitive activities. Favorable foreign currency translation positively impacted the change in net sales by $8.8 million. A weaker U.S. dollar relative to the Polish zloty led to the favorable foreign currency translation.
Previous report
Net sales for Asian and Other operations decreased $0.3 million, or one percent. Lower average selling prices and the unfavorable impact of foreign currency translation negatively impacted the year-over-year change in net sales by $5.2 million and $2.2 million, respectively. A 16 percent increase in sales volume positively impacted the change in net sales by $7.1 million. The higher sales volume reflects the loosening of COVID lockdowns and restrictions in China during the early part of 2023.
Previous report
Gross profit for North American operations decreased $18.8 million, or 29 percent, due to a 22 percent decline in sales volume and lower average unit margins. These items negatively impacted the year-over-year change in gross profit by $14.1 million and $4.7 million, respectively. The lower unit margins primarily reflect high-cost inventory carryover in 2023.
Previous report
On September 29, 2023, the Company entered into amendments to the Note Purchase Agreements (the NPA Amendments) to primarily provide additional covenant flexibility. The NPA Amendments, among other things, (i) amended the existing maximum net leverage ratio covenant; (ii) expanded the definition of “Qualified Cash”, a metric used to calculate the net leverage ratio, to include 65 percent of unrestricted and unencumbered foreign-based cash or permitted investments; and (iii) included a debt rating requirement and, to the extent the relevant notes are rated below investment grade, a rating fee of 0.75 percent per annum.
Previous report
On September 29, 2023, the Company entered into an amendment (the Amendment) to the Credit Agreement. The Amendment amends the Credit Agreement to, among other things, (i) provide for a maximum net leverage ratio on substantially the same terms as the corresponding covenant contained in the NPA Amendments; and (ii) expand the definition of “Qualified Cash”, to align with the definition of “Qualified Cash” included in the NPA Amendments.
Previous report
Outlook
Previous report
Management believes sales volumes and margins will improve in 2024 due to continued recovery in Rigid Polyols demand, growth in Surfactant sales volumes driven by contracted business along with the expected recovery of the agricultural business in the second half of the year, and lower raw material costs across the business versus 2023. Management believes its previously shared cost reduction activities to deliver $50 million in pre-tax savings in 2024 will help offset inflationary pressures, increased expenses associated with the commissioning of the Company’s new Pasadena alkoxylation assets and higher incentive-based compensation expenses. The cost reduction activities are centered around the workforce productivity actions already taken and on focused programs to improve operational performance across the Company’s manufacturing network. Management believes continued market recovery, execution of the Company’s strategic initiatives, and the aforementioned cost reductions, should position the Company to deliver adjusted EBITDA growth and positive free cash flow in 2024. Management remains confident in the Company’s long-term growth and innovation initiatives.
Previous report
Climate Change Legislation
Previous report
Based on currently available information, the Company does not believe that existing or pending climate change legislation or regulation is reasonably likely to have a material effect on the Company’s financial position, results of operations or cash flows.
Previous report
At December 31, 2023, the Company conducted additional goodwill testing for its Mexico reporting unit due to a decline in earnings. The decline in earnings was primarily due to a slow down in demand and significant customer and channel inventory destocking. At December 31, 2023, the goodwill related to the Mexico reporting unit was $6.7 million. The Company used both market and income-based methodologies to assess the fair value of its Mexico reporting unit. Both approaches required the Company to make significant economic-related assumptions. Based on the Company’s testing, the fair value of the Mexico reporting units was greater than its carrying value, and as a result, the Company did not record any impairment charge as of December 31, 2023. The Company performed a sensitivity analysis on certain assumptions used in the valuation of its Mexico reporting unit as the fair value was not significantly in excess of the carrying value. Holding all other assumptions constant, a 100 basis point increase in the discount rate would not result in impairment nor would a 1.5 decrease in the multiple used in the market-based computation result in an impairment.
Reworded paragraphs (52)
Previous wording
Surfactants - Surfactants, which accounted for 69 percent of the Company’s consolidated net sales in 2023, 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 Brazil and Mexico) and two Asian sites (Philippines and Singapore). Recent significant events include:
Current wording
Surfactants - Surfactants, which accounted for 70 percent of the Company’s consolidated net sales in 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 Brazil and Mexico) and two Asian sites (Philippines and Singapore).
Previous wording
Polymers - Polymers, which accounted for 28 percent of consolidated net sales in 2023, 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 Elwood, Illinois (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 Nanjing, China, plant. Recent significant events include:
Current wording
Polymers - Polymers, which accounted for 27 percent of consolidated net sales in 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 Nanjing, China, plant.
Previous wording
The accounting for the Company’s deferred compensation plans can cause period-to-period fluctuations in Company income and expenses. Compensation expense is recognized when the value of Company common stock and mutual fund investment assets held for the plans increase, and compensation income is recognized when the value of Company common stock and mutual fund investment assets decline. The pretax effect of all deferred compensation-related activities (including realized and unrealized gains and losses on the mutual fund assets held to fund deferred compensation obligations) and the income statement line items in which the effects of the activities were recorded are displayed in the following tables:
Current wording
The accounting for the Company’s deferred compensation plans can cause period-to-period fluctuations in Company income and expenses. Compensation expense is recognized when the value of the Company’s common stock and mutual fund investment assets held for the plans increase, and compensation income is recognized when the value of the Company’s common stock and mutual fund investment assets decline. The pretax effect of all deferred compensation-related activities (including realized and unrealized gains and losses on the mutual fund assets held to fund deferred compensation obligations) and the income statement line items in which the effects of the activities were recorded are displayed in the following tables:
Previous wording
See the Segment Results – Corporate Expenses sections of this MD&A for details regarding the period-over-period changes in deferred compensation.
Current wording
See the Segment Results – Corporate Expenses section of this MD&A for details regarding the period-over-period changes in deferred compensation.
Previous wording
Net income attributable to the Company in 2023 decreased 73 percent to $40.2 million, or $1.75 per diluted share, from $147.2 million, or $6.38 per diluted share in 2022. Adjusted net income was $50.7 million, or $2.21 per diluted share in 2023 versus $153.5 million, or $6.65 per diluted share in 2022 (see the “Reconciliation of Non-GAAP Adjusted Net Income and Diluted Earnings per Share” section of this MD&A for a reconciliation of reported net income attributable to the Company and reported earnings per diluted share to non-GAAP adjusted net income and adjusted earnings per diluted share). Below is a summary discussion of the major factors leading to the year-over-year changes in net sales, expenses and income in 2023 compared to 2022. A detailed discussion of segment operating performance for 2023, compared to 2022, follows the summary.
Current wording
Net income in 2024 increased $10.2 million, or 25 percent, to $50.4 million, or $2.20 per diluted share, from $40.2 million, or $1.75 per diluted share in 2023. Adjusted net income was $50.5 million, or $2.20 per diluted share in 2024 versus $50.7 million, or $2.21 per diluted share in 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 $186.8 million in 2024, up 13 percent, versus $165.8 million in 2023. Adjusted EBITDA was $187.0 million in 2024, up 4 percent, versus $180.0 million in 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 2024 compared to 2023. A detailed discussion of segment operating performance for 2024, compared to 2023, follows the summary.
Previous wording
Operating income in 2023 decreased $148.7 million, or 72 percent, versus operating income in 2022. Surfactant, Polymer and Specialty Products operating income decreased $90.3 million, $22.1 million, and $18.4 million, respectively, year-over-year. Corporate expenses, including deferred compensation, business restructuring, and asset/goodwill/other intangibles impairment charges increased $17.8 million year-over-year. Most of this increase was attributable to $13.8 million of higher deferred compensation expense and a $12.7 million increase in business restructuring and asset/goodwill/other intangibles impairment expenses. Partially offsetting these increases was a $10.5 million reduction in environmental remediation reserve expenses year over year. Foreign currency translation had a $0.6 million positive impact on operating income year-over-year.
Current wording
Operating income in 2024 increased $11.9 million, or 20 percent, versus operating income in 2023. Surfactant and Specialty Products operating income increased $13.2 million and $9.4 million, respectively, year-over-year. Polymer operating income decreased $20.1 million in 2024 versus 2023. Corporate expenses, including deferred compensation, environmental remediation, business restructuring, asset/goodwill/other intangibles impairment charges and expenses associated with a criminal social engineering scheme impacting one of the Company’s subsidiaries in Asia, decreased $9.4 million, or 11 percent, year-over-year. Most of this decrease was attributable to the non-recurrence of business restructuring and asset/goodwill/other intangibles impairment expenses ($14.0 million) in 2023, partially offset by $6.8 million of expenses associated with a criminal social engineering scheme in 2024. Foreign currency translation had a $0.8 million negative impact on operating income year-over-year.
Previous wording
Operating expenses (including deferred compensation, business restructuring and asset/goodwill/other intangibles impairments) decreased $0.7 million, or less than one percent, year-over-year. 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, business restructuring and asset/goodwill/other intangibles impairments) decreased $17.3 million, or eight percent, year-over-year. Changes in the individual income statement line items that comprise the Company’s operating expenses were as follows:
Previous wording
Research, development and technical service (R&D) expenses decreased $7.6 million, or 11 percent, year-over-year primarily due to lower incentive-based compensation expenses.
Current wording
Research, development and technical service (R&D) expenses decreased $3.4 million, or six percent, year-over-year primarily due to lower salary expenses resulting from workforce productivity measures implemented in late 2023.
Previous wording
Deferred compensation expense increased $13.8 million, year-over-year, primarily due to an increase in the market values of mutual fund investment assets held for the plans in 2023 versus a decrease in 2022. An $11.91 per share decrease in the market price of Company common stock during 2023 compared to a $17.83 per share decrease in 2022 also contributed to the year-over-year change. See the Overview and Segment Results - Corporate Expenses sections of this MD&A for further details.
Current wording
Deferred compensation expense decreased $2.2 million, year-over-year, primarily due to a smaller increase in the value of mutual fund investment assets held for the plans during 2024 versus 2023. Additionally, the market price of the Company’s common stock decreased $29.85 per share in 2024 versus an $11.91 per share decrease during 2023. See the Overview and Segment Results - Corporate Expenses sections of this MD&A for further details.
Previous wording
Business restructuring and asset impairment expenses were $12.0 million in 2023 versus $0.3 million in 2022. This $11.7 million year-over-year increase was primarily attributable to a $5.5 million restructuring reserve, recorded in the third quarter of 2023, associated with the Company’s voluntary early retirement offering to eligible employees and $2.9 million of restructuring expense, associated with workforce productivity measures, recognized in the fourth quarter of 2023. The Company also recognized $3.2 million of asset impairment charges in the fourth quarter of 2023. These asset impairment charges primarily relate to assets that are no longer in use and to the write-off of engineering costs associated with projects that the Company no longer deems viable. In addition, the Company recorded $0.4 million and $0.3 million of decommissioning costs associated with the Company’s Canadian plant closure during 2023 and 2022, respectively. See Note 22, Business Restructuring, Assets Impairment and Asset Disposition, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for additional details.
Current wording
The Company did not incur any business restructuring and asset impairment expense in 2024 versus $12.0 million in 2023. The 2023 expenses were primarily attributable to a $5.5 million restructuring reserve, recorded in the third quarter of 2023, associated with the Company’s voluntary early retirement offering to eligible employees and $2.9 million of restructuring expense, associated with workforce productivity measures, recognized in the fourth quarter of 2023. The Company also recognized $3.2 million of asset impairment charges in the fourth quarter of 2023. These asset impairment charges mainly related to assets that were no longer in use and the write-off of engineering costs associated with projects the Company no longer deemed viable. See Note 22, Business Restructuring and Assets Impairment, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for additional details.
Previous wording
Goodwill and other intangibles impairment expense was $2.0 million in 2023 versus $1.0 million in 2022. In 2023, the Company recognized $1.0 million of goodwill impairment expense related to its Colombia reporting unit and $1.0 million of goodwill and other intangibles impairment expense related to its Lipid Nutrition reporting unit. In 2022, the Company recognized $1.0 million of goodwill impairment expense related solely to its Philippines reporting unit. See Note 4, Goodwill and Other Intangible Assets, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for additional details.
Current wording
The Company did not recognize any goodwill or other intangible impairment expense in 2024 versus $2.0 million in 2023. In 2023, the Company recognized $1.0 million of goodwill impairment expense related to its Colombia reporting unit and $1.0 million of goodwill and other intangibles impairment expense related to its Lipid Nutrition reporting unit. See Note 4, Goodwill and Other Intangible Assets, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for additional details.
Previous wording
Net interest expense in 2023 increased $2.3 million, or 23 percent, versus the prior year. This increase was primarily attributable to higher outstanding debt balances in 2023 versus 2022 and higher interest rates on the Company’s revolving credit facility in 2023 versus 2022.
Current wording
Net interest expense in 2024 increased $2.1 million, or 17 percent, versus the prior year. This increase was primarily attributable to higher interest rates on the Company’s revolving credit facility in 2024 versus 2023 along with higher interest expense in Latin America associated with a one-time tax proceeding reserve.
Previous wording
Other, net was $1.9 million of income in 2023 versus $8.8 million of expense in 2022. The Company recognized $5.2 million of investment gains (including realized and unrealized gains and losses) for the Company’s deferred compensation and supplemental defined contribution mutual fund assets in 2023 compared to $6.4 million of losses in 2022. In addition, the Company recognized $3.7 million of foreign exchange losses in 2023 versus $2.9 million of foreign exchange losses in 2022. The Company also recognized $0.4 million of net periodic pension and other retirement obligations income in 2023 versus $0.5 million of income in 2022.
Current wording
Other, net was $4.1 million of income in 2024 versus $1.9 million of income in 2023. The Company recognized $4.6 million of investment gains (including realized and unrealized gains and losses) for the Company’s deferred compensation and supplemental defined contribution mutual fund assets in 2024 compared to $5.2 million of investment gains in 2023. In addition, the Company recognized $2.3 million of lower foreign exchange losses in 2024 than in 2023 ($1.4 million of foreign exchange losses in 2024 versus $3.7 million of foreign exchange losses in 2023). The Company also recognized $1.0 million of net periodic pension and other retirement obligations income in 2024 versus $0.4 million of income in 2023.
Previous wording
The Company’s effective tax rate was 16.9 percent in 2023 versus 22.0 percent in 2022. This decrease was primarily attributable to more favorable tax benefits derived from stock-based compensation awards exercised or distributed in 2023 and the impact of certain recurring tax benefits (e.g., the research and development income tax credit), the amounts of which did not change materially year-over-year, having a more favorable impact on the tax rate due to the lower pre-tax income in 2023 versus in 2022. See Note 9, Income Taxes, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for a reconciliation of the statutory U.S. federal income tax rate to the effective tax rate.
Current wording
The Company’s effective tax rate was 16.7 percent in 2024 versus 16.9 percent in 2023. This small decrease was comprised of various offsetting items. See Note 9, Income Taxes, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for a reconciliation of the statutory U.S. federal income tax rate to the effective tax rate.
Previous wording
Surfactant net sales in 2023 decreased $280.0 million, or 15 percent, versus the prior year. Sales volume declined nine percent and negatively impacted the change in net sales by $169.8 million. The lower sales volume primarily reflects a slow down in demand across most end use markets and significant customer and channel inventory destocking. Lower average selling prices negatively impacted the change in net sales by $130.4 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 pressure within certain end-use markets. Foreign currency translation had a $20.2 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
Surfactant net sales in 2024 decreased $70.7 million, or four percent, versus the prior year. Lower average selling prices negatively impacted the change in net sales by $97.2 million. The lower average selling prices were primarily due to the pass-through of lower raw material costs and increased competitive pressure within certain end-use markets. Foreign currency translation had a $12.9 million unfavorable impact on the year-over-year change in net sales. Sales volume increased two percent and favorably impacted the change in net sales by $39.4 million. A year-over-year comparison of net sales by region follows:
Previous wording
Net sales for Asian Surfactant operations decreased $10.0 million, or 14 percent, year-over-year. A nine percent decline in sales volume, lower average selling prices and the unfavorable impact of foreign currency translation negatively impacted the change in net sales by $6.0 million, $2.5 million and $1.5 million, respectively. The decline in sales volume primarily reflects lower demand for products sold within the consumer products end markets that was partially offset by higher demand from our distribution partners.
Current wording
Net sales for Asian Surfactant operations decreased $5.0 million, or eight percent, year-over-year. Lower average selling prices, the unfavorable impact of foreign currency translation and a one percent decrease in sales volume negatively impacted the year-over-year change in net sales by $3.1 million, $1.5 million and $0.4 million, respectively. The decline in average selling prices reflects the pass-through of lower raw material costs. The decline in sales volume primarily reflects lower demand for products sold into the commodity laundry and cleaning markets that was partially offset by higher demand from our distribution partners and products sold to the personal care end markets.
Previous wording
Surfactant operating income for 2023 decreased $90.3 million, or 56 percent, versus operating income reported in 2022. Gross profit decreased $105.4 million, or 38 percent, and operating expenses decreased $15.1 million, or 13 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 2024 increased $13.2 million, or 18 percent, versus operating income reported in 2023. Gross profit increased $8.7 million, or five percent, and operating expenses decreased $4.5 million, or five 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 $61.9 million, or 36 percent, primarily due to lower average unit margins and a 14 percent decrease in sales volume. These items negatively impacted the year-over-year change in gross profit by $37.9 million and $23.9 million, respectively. The lower average unit margins were mostly attributable to less favorable product mix and high-cost inventory carryover in 2023. Foreign currency translation negatively impacted the change in gross profit by $0.1 million.
Current wording
Gross profit for North American operations decreased $11.6 million, or 10 percent, due to lower average unit margins and a one percent decline in sales volume. These items negatively impacted the year-over-year change in gross profit by $10.0 million and $1.6 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 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.
Previous wording
Operating expenses for the Surfactant segment decreased $15.1 million, or 13 percent, year-over-year. Most of this decrease was attributable to lower salaries and incentive-based compensation expenses.
Current wording
Operating expenses for the Surfactant segment decreased $4.5 million, or five percent, year-over-year. Most of this decrease was attributable to lower salary expenses and bad debt provision expenses.
Previous wording
Polymer net sales in 2023 decreased $146.6 million, or 19 percent, versus the prior year. A 15 percent decrease in sales volume and lower average selling prices negatively impacted the year-over-year change in net sales by $114.5 million and $38.8 million, respectively. Foreign currency translation positively impacted the year-over-year change in net sales by $6.7 million. A year-over-year comparison of net sales by region follows:
Current wording
Polymer net sales in 2024 decreased $57.6 million, or nine percent, versus the prior year. Lower average selling prices and a four percent decrease in sales volume negatively impacted the year-over-year change in net sales by $40.0 million and $28.0 million, respectively. Foreign currency translation positively impacted the year-over-year change in net sales by $10.4 million. A year-over-year comparison of net sales by region follows:
Previous wording
Net sales for North American operations decreased $98.3 million, or 22 percent, primarily due to a 22 percent decline in sales volume which negatively impacted the change in net sales by $96.8 million. Sales volume of polyols used in rigid foam applications decreased 22 percent year-over-year. Sales volume within the phthalic anhydride and specialty polyols businesses decreased 31 percent and 13 percent, respectively. The year-over-year decline in sales volume primarily reflects customer and channel inventory destocking and reduced construction-related activities. Lower average selling prices negatively impacted the year-over-year change in net sales by $1.5 million.
Current wording
Net sales for North American operations decreased $49.2 million, or 15 percent, due to a 10 percent decrease in sales volume and lower average selling prices. These items negatively impacted the year-over-year change in net sales by $32.7 million and $16.5 million, respectively. Sales volume within the commodity phthalic anhydride business decreased 32 percent primarily due to operational issues at the Millsdale plant during the first half of 2024. Sales volume of polyols used in rigid foam applications decreased nine percent year-over-year mostly due to soft demand during the second half of 2024. Sales volume of specialty polyols increased five percent year-over-year. The lower average selling prices primarily reflect the pass-through of lower raw material costs.
Previous wording
Polymer operating income for 2023 decreased $22.1 million, or 27 percent, versus operating income for 2022. Gross profit decreased $25.9 million, or 23 percent, and operating expenses were down $3.8 million, or 12 percent, year-over-year. Year-over-year comparisons of gross profit by region and total segment operating expenses and operating income follow:
Current wording
Polymer operating income for 2024 decreased $20.1 million, or 33 percent, versus operating income for 2023. Gross profit decreased $20.9 million, or 23 percent, and operating expenses were down $0.7 million, or three percent, year-over-year. Year-over-year comparisons of gross profit by region and total segment operating expenses and operating income follow:
Previous wording
Gross profit for European Polymer operations decreased $7.4 million, or 16 percent, year-over-year. This decrease was primarily due to a 10 percent decline in sales volume and lower average unit margins. These items negatively impacted the change in gross profit by $4.9 million and $3.7 million, respectively. The lower unit margins primarily reflect high-cost inventory carryover in 2023. Foreign currency translation positively impacted the year-over-year change in gross profit by $1.2 million.
Current wording
Gross profit for European Polymer operations decreased $7.3 million, or 18 percent, year-over-year. This decrease was primarily due to lower average unit margins and a two percent decline in sales volume that negatively impacted the change in gross profit by $7.4 million and $0.9 million, respectively. The lower average unit margins primarily reflect mandatory maintenance shutdown at the Company’s Germany site and increased competitive activity in the region. Foreign currency translation had a $1.0 million favorable impact on the year-over year change in gross profit.
Previous wording
Gross profit for Asia and Other operations increased $0.2 million, or five percent, primarily due to a 16 percent increase in sales volume, which positively impacted the year-over-year change in gross profit by $0.7 million. Lower average unit margins and the unfavorable impact of the foreign currency translation negatively impacted the year-over-year change in gross profit by $0.3 million and $0.2 million, respectively.
Current wording
Gross profit for Asia and Other operations increased $2.4 million primarily due to higher average unit margins and an 11 percent increase in sales volume. These items positively impacted the year-over-year change in gross profit by $2.0 million and $0.5 million, respectively. Foreign currency translation had a $0.1 million negative impact on the year-over-year change in gross profit.
Previous wording
Operating expenses for the Polymers segment decreased $3.8 million, or 12 percent, year-over-year mainly due to lower salaries and incentive-based compensation expenses.
Current wording
Operating expenses for the Polymers segment decreased $0.7 million, or three percent, year-over-year primarily due to lower salary expenses and bad debt provision expenses.
Previous wording
Specialty Products net sales in 2023 decreased $21.0 million, or 21 percent, versus net sales in 2022. Gross profit and operating income decreased $19.3 million and $18.4 million, respectively, year-over-year. The year-over-year decline in net sales, gross profit and operating income were mostly attributable to a 19 percent decline in sales volume and lower unit margins within the medium chain triglycerides (MCT) product line. The lower unit margins were primarily due to high-cost raw material inventory and competitive pressures.
Current wording
Specialty Products net sales in 2024 decreased $17.2 million, or 21 percent, versus net sales in 2023. The year-over-year decline in net sales was due to lower average selling prices that were partially offset by a seven percent increase in sales volume. Gross profit and operating income increased $9.0 million and $9.4 million, respectively, year-over-year. The year-over-year increases in gross profit and operating income were mostly attributable to margin recovery and higher sales volume within the medium chain triglycerides (MCT)
Previous wording
Corporate expenses, which include deferred compensation, business restructuring, asset/goodwill/other intangibles impairment charges and other operating expenses that are not allocated to the reportable segments, increased $17.8 million between years. Corporate expenses were $86.0 million in 2023 versus $68.2 million in 2022. This increase was primarily attributable to $13.8 million of higher deferred compensation expense and a $12.7 million increase in business restructuring and asset/goodwill/other intangibles impairment expenses in 2023 versus 2022. Partially offsetting these increases was a $10.5 million reduction in environmental remediation reserve expenses year over year.
Current wording
Corporate expenses, which include deferred compensation, business restructuring, asset/goodwill/other intangibles impairment charges and other operating expenses that are not allocated to the reportable segments, decreased $9.4 million, or 11 percent, between years. The decrease was mainly due to the non-recurrence of $14.0 million of business restructuring and asset/goodwill/other intangibles impairment charges that were recognized in 2023. In addition, deferred compensation expenses were $2.2 million in 2024 versus $4.4 million in 2023, a $2.2 million decrease year-over-year. Partially offsetting the aforementioned decreases was $6.8 million of pre-tax charges associated with a criminal social engineering scheme impacting one of the Company’s subsidiaries in Asia (see Note 24, Other Matter, of the notes to the Company’s consolidated financial statements included in Item 8 of this Form 10-K).
Previous wording
The $13.8 million increased in deferred compensation expense was primarily due to an increase in the market values of mutual fund investment assets held for the plans in 2023 versus a decrease in 2022. An $11.91 per share decrease in the market price of Company common stock during 2023 compared to a $17.83 per share decrease in 2022 also contributed to the year-over-year change. The following table presents the period-end Company common stock market prices used in the computation of deferred compensation income/expense in 2023, 2022 and 2021:
Current wording
The $2.2 million decrease in deferred compensation expense was primarily due to a smaller increase in the value of mutual fund investment assets held for the plans during 2024 versus 2023. Additionally, the market price of the Company’s common stock decreased $29.85 per share in 2024 versus an $11.91 per share decrease during 2023. The following table presents the period-end Company common stock market prices used in the computation of deferred compensation income/expense in 2024, 2023 and 2022:
Previous wording
For 2023, cash generated from operating activities was a cash source of $174.9 million versus a source of $160.8 million in 2022. For 2023, investing cash outflows were $258.7 million versus cash outflows of $308.1 million in 2022. Financing activities were a cash source of $33.3 million in 2023 versus a source of $166.2 million in 2022. Cash and cash equivalents decreased by $43.9 million compared to December 31, 2022, inclusive of a $6.6 million favorable foreign exchange rate impact.
Current wording
For 2024, cash generated from operating activities was a cash source of $162.1 million versus a source of $174.9 million in 2023. For 2024, investing cash outflows were $116.9 million versus cash outflows of $258.7 million in 2023. Financing activities were a cash use of $64.5 million in 2024 versus a source of $33.3 million in 2023. Cash and cash equivalents decreased by $30.2 million compared to December 31, 2023, inclusive of a $10.7 million unfavorable foreign exchange rate impact.
Previous wording
As of December 31, 2023, the Company’s cash and cash equivalents totaled $129.8 million. Cash in U.S. demand deposit accounts and money market funds totaled $6.4 million and $15.1 million, respectively. The Company’s non-U.S. subsidiaries held $108.3 million of cash outside the United States as of December 31, 2023.
Current wording
As of December 31, 2024, the Company’s cash and cash equivalents totaled $99.7 million including $12.6 million in money market funds and $1.2 million in U.S. demand deposit accounts. Cash and cash equivalents of the Company’s non-U.S. subsidiaries held outside the U.S. totaled $85.9 million as of December 31, 2024. As of December 31, 2023, cash in U.S. demand deposit accounts and money market funds totaled $6.4 million and $15.1 million, respectively. The Company’s non-U.S. subsidiaries held $108.3 million of cash outside the United States as of December 31, 2023.
Previous wording
Net income decreased by $106.9 million in 2023 versus the prior year. Working capital was a cash source of $13.4 million in 2023 versus a cash use of $75.7 million in 2022.
Current wording
Net income increased by $10.2 million, or 25 percent, in 2024 versus the prior year. Working capital was a cash source of $5.8 million in 2024 versus a cash source of $13.4 million in 2023.
Previous wording
Accounts receivable were a cash source of $32.0 million in 2023 compared to a use of $26.2 million in 2022. Inventories were a cash source of $144.8 million in 2023 versus a use of $99.4 million in 2022. Accounts payable and accrued liabilities were a cash use of $158.9 million in 2023 compared to a source of $54.2 million in 2022.
Current wording
Accounts receivable were a cash source of $9.0 million in 2024 compared to a cash source of $32.0 million in 2023. Inventories were a cash use of $37.2 million in 2024 versus a cash source of $144.8 million in 2023. Accounts payable and accrued liabilities were a cash source of $34.0 million in 2024 compared to a cash use of $158.9 million in 2023.
Previous wording
Working capital requirements were lower in 2023 compared to 2022 primarily due to the changes noted above. The change in accounts receivable working capital primarily reflects lower sales volume due to a reduction in demand across most end use markets along with extensive customer and channel inventory destocking. The change in inventories reflects lower quantities and unit costs in 2023. The change in accounts payable primarily reflects lower raw material quantities purchased during 2023 combined with lower raw material unit costs. It is management’s opinion that the Company’s liquidity is reasonably sufficient to provide for potential increases in working capital requirements during 2024.
Current wording
Working capital requirements were a slightly lower source in 2024 compared to 2023 primarily due to the changes noted above. The change in inventories working capital primarily reflects targeted inventory builds, partially related to planned maintenance turnarounds, and higher unit cost in 2024. The change in accounts payable and accrued liabilities primarily reflects higher trade payables and incentive-based compensation accruals in 2024 versus a year ago. It is management’s opinion that the Company’s liquidity is reasonably sufficient to provide for potential increases in working capital requirements during 2025.
Previous wording
Cash used for investing activities decreased $49.4 million year-over-year. Cash used for capital expenditures was $260.3 million in 2023 versus $301.6 million in 2022. The year-over-year decrease was mainly due to lower capital expenditures in the U.S. for the advancement of the Company’s new alkoxylation plant in Pasadena, Texas. The Company is executing the last phase of its Pasadena, Texas alkoxylation investment, with the facility expected to start up in the third quarter of 2024.
Current wording
Cash used for investing activities decreased $141.7 million year-over-year and was primarily due to a $137.6 million decrease in capital expenditures. Cash used for capital expenditures was $122.8 million in 2024 versus $260.3 million in 2023. The year-over-year decrease was mainly due to a reduction in the expenditures required to construct the alkoxylation plant the Company is building at its Pasadena, Texas site. The new facility is expected to start up in the first quarter of 2025.
Previous wording
For 2024, the Company estimates that total capital expenditures will be in the range of $120.0 million to $140.0 million. This projected spending includes expenditures associated with the completion of the new alkoxylation plant in Pasadena, Texas, along with growth, infrastructure and optimization initiatives.
Current wording
For 2025, the Company estimates that total capital expenditures will be in the range of $125.0 million to $135.0 million. This full year projected spending includes completion of the new alkoxylation plant that is being built in Pasadena, Texas, along with growth initiatives, infrastructure and optimization initiatives.
Previous wording
Cash flow from financing activities was a source of $33.3 million in 2023 versus a source of $166.2 million in 2022. The year-over-year change is primarily due to a lower level of borrowings under the Company’s revolving credit facility during 2023.
Current wording
Cash flow from financing activities was a use of $64.5 million in 2024 versus a source of $33.3 million in 2023. The year-over-year change was primarily due to a lower level of borrowings against the Company’s revolving credit facility and higher scheduled debt repayments in 2024 versus the comparable period in 2023.
Previous wording
Consolidated balance sheet debt increased from $587.1 million on December 31, 2022 to $654.1 million on December 31, 2023, primarily due to domestic borrowings from the Company’s revolving credit facility. Net debt (which is defined as total debt minus cash – See the “Reconciliation of Non-GAAP Net Debt” section of this MD&A) increased by $110.9 million in 2023, from $413.4 million on December 31, 2022 to $524.3 million on December 31, 2023. This change reflects a debt increase of $67.0 million and a cash decrease of $43.9 million.
Current wording
Consolidated balance sheet debt decreased $28.7 million, from $654.1 million on December 31, 2023 to $625.4 million on December 31, 2024, primarily due to scheduled debt repayments. Net debt (which is defined as total debt minus cash – See the “Reconciliation of Non-GAAP Net Debt” section of this MD&A) was $525.7 million in 2024 versus $524.3 million in 2023.
Previous wording
As of December 31, 2023, the ratio of net debt to net debt plus shareholders’ equity was 30.1 percent versus 26.2 percent as of December 31, 2022 (see the “Reconciliation of Non-GAAP Net Debt” section in this MD&A for further details). On December 31, 2023, the Company’s debt included $359.8 million of unsecured notes, with maturities ranging from 2024 through 2032, that were issued to insurance companies in private placement transactions pursuant to note purchase agreements (the “Note Purchase Agreements”), a $95.0 million delayed-draw term loan borrowed pursuant to the Company’s credit agreement, $188.0 million of short-term loans borrowed under the Company’s revolving credit facility and $11.3 of foreign credit line borrowings. The proceeds from the note issuances have been the Company’s primary source of long-term debt financing and are supplemented by borrowings under bank credit facilities to meet short and medium-term liquidity needs.
Current wording
On December 31, 2024, the Company’s debt included $311.7 million of unsecured notes, with maturities ranging from 2025 through 2032, that were issued to insurance companies in private placement transactions pursuant to note purchase agreements (the “Note Purchase Agreements”), inclusive of a $90.0 million delayed-draw term loan borrowed pursuant to the Company’s credit agreement, and $313.7 million of short-term loans borrowed under the Company’s revolving credit facility. As of December 31, 2024, the Company had an outstanding letter of credit of $12.9 million inclusive of $4.2 million issued under the Company’s revolving credit facility. The proceeds from the note issuances have been the Company’s primary source of long-term debt financing and are supplemented by borrowings under bank credit facilities to meet short and medium-term liquidity needs.
Previous wording
The Company’s credit agreement with a syndicate of banks provides for credit facilities in an initial aggregate principal amount of $450.0 million, consisting of (a) a $350.0 million multi-currency revolving credit facility and (b) a $100.0 million delayed draw term loan credit facility, each of which matures on June 24, 2027. The Company maintains import letters of credit, and standby letters of credit under its workers’ compensation insurance agreements and for other purposes, as needed from time to time, which are issued under the revolving credit agreement. As of December 31, 2023, the Company had outstanding loans totaling $283.0 million, inclusive of a $95.0 million delayed draw term loan, and letters of credit totaling $10.9 million under the credit agreement, with $151.1 million remaining available.
Current wording
On August 27, 2024, the Company entered into amendments to two of its note purchase agreements to increase the available facility amounts and extend the end date of the issuance period to August 27, 2027. The Company’s credit agreement (the Credit Agreement) with a syndicate of banks provides for credit facilities in an initial aggregate principal amount of $450.0 million, consisting of (a) a $350.0 million multi-currency revolving credit facility and (b) a $100.0 million delayed draw term loan credit facility ($10.0 million of the term loan principal has been permanently repaid as scheduled), each of which matures on June 24, 2027. The Company's credit agreement with Credit Industriel et Commercial NY (the CIC Credit Agreement) provides for a credit facility in an aggregate principal amount of $8.7 million. The facility is for the sole purpose of the issuance of standby letters of credit. As of December 31, 2024, the Company had outstanding letters of credit totaling $8.7 million under the CIC Credit Agreement. The Company also maintains import and export letters of credit. and standby letters of credit under its workers’ compensation insurance agreements and for other purposes, as needed from time to time, which are issued under the Credit Agreement. These outstanding letters of credit totaled $4.2 million at December 31, 2024. As of December 31, 2024, the ratio of net debt to net debt plus shareholders’ equity was 31.0 percent versus 30.0 percent as of December 31, 2023 (see the “Reconciliation of Non-GAAP Net Debt” section in this MD&A for further details).
Previous wording
Certain foreign subsidiaries of the Company maintain short-term bank lines of credit in their respective local currencies to meet working capital requirements as well as to fund capital expenditures and acquisitions. At December 31, 2023, the Company’s foreign subsidiaries had $11.3 million of outstanding debt.
Current wording
Certain foreign subsidiaries of the Company maintain short-term bank lines of credit in their respective local currencies to meet working capital requirements as well as to fund capital expenditures and acquisitions. At December 31, 2024, there was no debt held by foreign subsidiaries.
Showing the first 40 of 52 pairs. Open the source sections for the rest.
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Current report — wording carried from elsewhere
Management uses the non-GAAP EBITDA and adjusted EBITDA metric to evaluate the Company’s operating performance. Management excludes the items listed in the table below because they are non-operational items. Refer to the Company’s Consolidated Statements of Income for a bridge between Operating Income and Net Income.