STEPAN CO
For the period ended Mar 31, 2025. Filed May 7, 2025.
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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.
Mar 31, 2025 · Filed May 7, 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-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 OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-07.
0000950170-25-065195
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 114 current paragraphs.
52 unchanged; 43 reworded; 18 added; 59 removed; 4 previous and 1 current paragraphs rearranged.
Tables are not compared: 27 previous and 16 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 increased $41.8 million, or eight percent, versus the prior year quarter. Higher average selling prices favorably impacted the year-over-year change in net sales by $40.4 million. The increase in average selling prices was mainly attributable to the pass-through of higher raw material costs and more favorable product mix. Consolidated sales volume increased four percent, which favorably impacted the change in net sales by $19.9 million. Surfactant and Polymer sales volumes increased three and seven percent, respectively, year-over-year. Specialty Products sales volume decreased 13 percent. Foreign currency translation negatively impacted the year-over-year change in net sales by $18.5 million, primarily due to a stronger U.S. dollar against the Brazilian real and Mexican peso.
Current report
Operating income in the first quarter of 2025 increased $8.1 million, or 40 percent, versus operating income in the first quarter of 2024. Surfactant and Specialty Products operating income increased $2.9 million and $1.2 million, respectively, year-over-year. Polymer operating income decreased $0.3 million versus the first quarter of 2024. Corporate expenses, including environmental remediation and deferred compensation expenses decreased $4.4 million, or 24 percent, year-over-year. Corporate expenses, excluding environmental remediation and deferred compensation expenses decreased $0.2 million, or one percent, year-over-year. Foreign currency translation had a $1.8 million unfavorable impact on operating income year-over-year.
Current report
Selling expenses increased $0.7 million, or six percent, primarily due to higher bad debt provision expenses in 2025.
Current report
Administrative expenses decreased $1.3 million, or six percent, year-over-year primarily due to lower environmental reserve expenses.
Current report
Net interest expense for the first quarter of 2025 increased $1.1 million, or 34 percent, versus the first quarter of 2024. This increase was primarily attributable to lower U.S. capitalized interest income recognized in 2025 as the Company's new specialty alkoxylation facility in Pasadena, Texas neared completion. Following the quarter end, in early April, the Company started production at the new facility.
Current report
The Company’s effective tax rate was 20.1 percent in the first quarter of 2025 versus 28.6 percent in the first quarter of 2024. The decrease was primarily attributable to the Company effectively settling an audit in one jurisdiction combined with the non-recurrence of an unfavorable event, related to GILTI, in the first quarter of 2024. These items were partially offset by the expected tax impact of certain cash repatriations to the US.
Current report
Net sales for Latin American operations increased $4.9 million, or six percent, primarily due to higher average selling prices that positively impacted the change in net sales by $21.3 million. The higher average selling prices primarily reflect more favorable product mix and the pass-through of higher raw material costs. Sales volume decreased two percent and negatively impacted the change in net sales by $1.3 million. The decrease in sales volume was primarily due to lower demand for products sold into the commodity consumer end markets. A stronger U.S. dollar relative to all currencies within the region led to a $15.1 million unfavorable foreign currency translation effect.
Current report
Gross profit for North American operations decreased $5.0 million, or 16 percent, versus the prior year primarily due to lower average unit margins. The lower average unit margins negatively impacted the year-over-year change in gross profit by $6.1 million and were primarily attributable to higher expenses associated with the Company's new alkoxylation facility in Pasadena, Texas. The three percent increase in sales volume positively impacted the year-over-year change in gross profit by $1.1 million.
Current report
Gross profit for European operations increased $2.4 million, or 29 percent, primarily due to higher average unit margins and a five percent increase in sales volume. These items positively impacted the year-over-year change in gross profit by $2.3 million and $0.4 million, respectively. The higher average unit margins primarily reflect more favorable product mix. Foreign currency translation negatively impacted the year-over-year change in gross profit by $0.3 million.
Current report
Gross profit for Latin American operations increased $2.9 million, or 33 percent, primarily due to higher average unit margins. The higher average unit margins positively impacted the year-over-year change in gross profit by $5.2 million and primarily reflect a more favorable product mix. The two percent decrease in sales volume negatively impacted the change in gross profit by $0.1 million. A stronger U.S. dollar relative to all currencies within the region led to a $2.2 million negative foreign currency translation effect.
Current report
Polymers net sales for the first quarter of 2025 increased $0.6 million versus net sales for the same period of 2024. A seven percent increase in sales volume positively impacted the change in net sales by $10.1 million. Lower average selling prices and the unfavorable impact of foreign currency translation negatively impacted the year-over-year change in net sales by $9.2 million and $0.3 million, respectively. A comparison of net sales by region follows:
Current report
Gross profit for North American operations was flat year-over-year. The 13 percent increase in sales volume positively impacted the year-over-year change in gross profit by $0.6 million. Lower average unit margins negatively impacted the change in gross profit by $0.6 million. The lower average unit margins largely reflected less favorable product mix and high cost inventory carryover.
Current report
Gross profit for European operations decreased $1.0 million, or 12 percent, versus the first quarter of 2024. The decrease was primarily due to lower average unit margins that negatively impacted the year-over-year change in gross profit by $1.2 million. The three percent increase in sales volume positively impacted the change in gross profit by $0.2 million.
Current report
Gross profit for Asia and Other operations increased $1.2 million, or 84 percent, primarily due to higher average unit margins that positively impacted the change in gross profit by $1.2 million. The higher average unit margins mostly reflect better product mix resulting from the Company's diversification efforts.
Current report
Corporate expenses, which include deferred compensation and other operating expenses that are not allocated to the reportable segments, decreased $4.4 million, or 24 percent, year-over-year. Corporate expenses were $14.2 million in the first quarter of 2025 versus $18.6 million in the first quarter of 2024. Deferred Compensation and environmental reserve expenses were down $2.8 million and $1.4 million, respectively, year-over-year. The lower environmental reserve expenses are due to the non-recurrence of an environmental reserve adjustment made in the first quarter of 2024 related to property formerly owned and operated by the Company in Wilmington, Massachusetts.
Current report
The $2.8 million decrease in deferred compensation expense was primarily due to a decline in the market value of mutual fund investment assets during the first quarter of 2025 versus an increase during the first quarter of 2024. In addition, the market price of the Company's common stock decreased $9.66 per share in the first quarter of 2025 versus a $4.51 per share decrease in the first quarter of 2024.
Current report
Reconciliations of Non-GAAP EBITDA and Adjusted EBITDA
Current report
Reconciliations of Non-GAAP Net Debt
Removed paragraphs (59)
Previous 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.
Previous report
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 report
Selling expenses decreased $0.4 million, or four percent, year-over-year.
Previous report
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 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.
Previous report
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 report
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 report
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 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.
Previous 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.
Previous 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.
Previous 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.
Previous report
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 report
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 report
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 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.
Previous report
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 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.
Previous 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.
Previous 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.
Previous report
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 report
Nine Months Ended September 30, 2024 and 2023
Previous report
Summary
Previous report
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 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.
Previous report
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 report
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 report
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 report
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 report
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 report
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.
Previous report
Segment Results
Previous report
Surfactants
Previous report
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 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.
Previous report
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 report
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.
Previous 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.
Previous report
Gross profit for Latin American operations increased $11.5 million, or 58 percent, due to improved average unit margins and a 13 percent increase in sales volume. These items positively impacted the year-over-year change in gross profit by $9.9 million and $2.5 million, respectively. The higher average unit margins were primarily due to a more favorable product and customer mix. Foreign currency translation had a $0.9 million unfavorable impact on the change in gross profit.
Previous report
Gross profit for Asian operations increased $3.3 million, or 64 percent, primarily due to higher average unit margins that positively impacted the year-over-year change in gross profit by $3.4 million. The higher average unit margins were primarily due to lower overhead costs due to the timing of production runs. A two percent decline in sales volume negatively impacted the year-over-year change in gross profit by $0.1 million.
Showing the first 40 of 59 passages. Open the source sections for the rest.
Reworded paragraphs (43)
Previous wording
international business risks, including fluctuations in currency exchange rates, legal restrictions and taxes;
Current wording
international business risks, including changes in global trade policy, including tariffs, retaliatory measures and countermeasures, currency exchange controls, fluctuations in currency exchange rates, legal restrictions and taxes;
Previous wording
These factors are not necessarily all of the important factors that could cause the Company’s actual financial results, performance, achievements or prospects to differ materially from those expressed in or implied by any of its forward-looking statements. Other unknown or unpredictable factors could also impact the Company’s results. All forward-looking statements attributable to the Company or persons acting on the Company’s behalf are expressly qualified in their entirety by the cautionary statements set forth above. Forward-looking statements speak only as of the date they are made, and the Company does not undertake or assume any obligation to update publicly any of these forward-looking statements to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements, except to the extent required by applicable laws. If the Company updates one or more forward-looking statements, no inference should be drawn that the Company will make additional updates with respect to those or other forward-looking statements.
Current wording
These factors are not necessarily all of the important factors that could cause the Company’s actual financial results, performance, achievements or prospects to differ materially from those expressed in or implied by any of the Company's forward-looking statements. Other unknown or unpredictable factors could also impact the Company’s results. All forward-looking statements attributable to the Company or persons acting on the Company’s behalf are expressly qualified in their entirety by the cautionary statements set forth above. Forward-looking statements speak only as of the date they are made, and the Company does not undertake or assume any obligation to update publicly any of these forward-looking statements to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements, except to the extent required by applicable laws. If the Company updates one or more forward-looking statements, no inference should be drawn that the Company will make additional updates with respect to those or other forward-looking statements.
Previous 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).
Current wording
Surfactants – Surfactants, which accounted for 72 percent of consolidated net sales for the first three months of 2025, 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 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.
Current wording
Polymers – Polymers, which accounted for 25 percent of consolidated net sales for the first three months of 2025, 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 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.
Current wording
Specialty Products – Specialty products, which accounted for three percent of consolidated net sales for the first three months of 2025, 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 nine months ended September 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 months ended March 31, 2025 and 2024:
Previous 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.
Current wording
Net income in the first quarter of 2025 was $19.7 million, or $0.86 per diluted share, versus $13.9 million, or $0.61 per diluted share, in the first quarter of 2024. Adjusted net income was $19.3 million, or $0.84 per diluted share, versus $14.7 million, or $0.64 per diluted share in the first quarter of 2024 (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 $58.0 million in the first quarter of 2025, up 16 percent, versus $50.2 million in the first quarter of 2024. Adjusted EBITDA was $57.5 million, up 12 percent, versus $51.2 million in the first quarter of 2024 (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 first quarter of 2025 compared to the first quarter of 2024. A detailed discussion of segment operating performance for the first quarter of 2025, compared to the first quarter of 2024, follows the summary.
Previous 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:
Current wording
Operating expenses (including deferred compensation) decreased $2.9 million, or six 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 $0.9 million, or seven percent, between quarters, primarily due to lower salary expenses resulting from productivity measures implemented in late 2023.
Current wording
Research, development and technical service (R&D) expenses increased $0.4 million, or three percent.
Previous 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.
Current wording
Deferred compensation was $1.0 million of income in the first quarter of 2025 versus $1.8 million of expense in the prior year quarter. The $2.8 million year-over-year decrease in deferred compensation expense reflects a decline in the market value of mutual fund investment assets during the first quarter of 2025 versus an increase during the first quarter of 2024. Additionally, the market price of the Company's common stock decreased $9.66 per share in the first quarter of 2025 versus a $4.51 per share decrease in the first quarter of 2024. See the Overview and Segment Results-Corporate Expenses section of this MD&A for further details.
Previous 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.
Current wording
Other, net was $0.5 million of income in the first quarter of 2025 versus $2.4 million of income in the first quarter of 2024. The Company recognized $0.4 million of investment losses (including realized and unrealized gains and losses) for the Company’s deferred compensation and supplemental defined contribution mutual fund assets in the first quarter of 2025 compared to $2.3 million of investment gains in the first quarter of 2024. In addition, the Company reported $0.6 million of foreign exchange gains in the first quarter of 2025 versus $0.4 million of foreign exchange losses in the first quarter of 2024. The Company's net periodic pension income was $0.3 million in the first quarter of 2025 versus $0.4 million of income in the first quarter of 2024.
Previous 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:
Current wording
Surfactant net sales for the first quarter of 2025 increased $39.5 million versus net sales for the first quarter of 2024. Higher average selling prices favorably impacted the change in net sales by $47.0 million. The higher average selling prices were mainly attributable to the pass through of higher raw material costs and a more favorable product mix. Sales volume increased three percent and had a $10.6 million favorable impact on the change in net sales. Foreign currency translation had an $18.1 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 $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.
Current wording
Net sales for North American operations increased $22.1 million, or 10 percent, year-over-year. Higher average selling prices had a $14.8 million favorable impact on the change in net sales and were primarily due to the pass-through of higher raw material costs and more favorable product mix. Sales volume increased three percent and positively impacted the change in net sales by $8.0 million. The higher sales volume was primarily due to higher demand for products sold into the agricultural end markets and to our distribution partners. Foreign currency translation negatively impacted the change in net sales by $0.7 million.
Previous 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.
Current wording
Net sales for European operations increased $10.8 million, or 15 percent, primarily due to higher average selling prices and a five percent increase in sales volume. These items positively impacted the change in net sales by $9.3 million and $3.4 million, respectively. The higher average selling prices were primarily due to the pass-through of higher raw material costs and more favorable product mix. The higher sales volume was primarily due to higher demand for products sold into the agricultural end markets and to our distribution partners. Foreign currency translation negatively impacted the change in net sales by $1.9 million. A stronger U.S. dollar relative to the European euro and British pound sterling led to the unfavorable foreign currency translation effect.
Previous 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.
Current wording
Net sales for Asian operations increased $1.7 million, or 13 percent, versus the prior year quarter. A 14 percent increase in sales volume and higher average selling prices favorably impacted the change in net sales by $1.7 million and $0.4 million, respectively. The sales volume growth primarily reflects higher demand for products sold into the commodity laundry and cleaning end markets. Foreign currency translation negatively impacted the year-over-year change in net sales by $0.4 million.
Previous 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:
Current wording
Surfactant operating income for the first quarter of 2025 increased $2.9 million, or 11 percent, versus operating income for the first quarter of 2024. Gross profit increased $3.2 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:
Previous 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.
Current wording
Gross profit for Asia operations increased $3.0 million year-over-year primarily due to higher average unit margins and a 14 percent increase in sales volume. These items positively impacted the year-over-year change in gross profit by $2.7 million and $0.3 million, respectively. The higher average unit margins largely reflect lower overhead costs due to the timing of production runs.
Previous 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.
Current wording
Operating expenses for the Surfactants segment increased $0.4 million, or two percent, in the first quarter of 2025 versus the first quarter of 2024.
Previous wording
Net sales for North American operations decreased $36.2 million, or 14 percent, due to an eight percent decrease in sales volume and lower average selling prices. These items negatively impacted the year-over-year change in net sales by $20.4 million and $15.8 million, respectively. The lower average selling prices primarily reflect the pass-through of lower raw material costs. Sales volume within the commodity phthalic anhydride business declined 41 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 five percent year-over-year due to soft demand during the third quarter of 2024, which offset higher sales volume recognized during the first half of 2024. Sales volume of specialty polyols increased eight percent year-over-year.
Current wording
Net sales for North American operations increased $3.0 million, or four percent, primarily due to a 13 percent increase in sales volume that positively impacted the year-over-year change in net sales by $9.0 million. Sales volume of polyols used in rigid foam applications and within the commodity phthalic anhydride business increased two percent and 136 percent, respectively. The higher phthalic anhydride volume is mainly attributable to the non-recurrence of operational interruptions at the Millsdale, Illinois plant during the first quarter of 2024 and market share gain in 2025. Specialty Polyols sales volume declined five percent during the quarter. Lower average selling prices negatively impacted the year-over-year change in net sales by $6.0 million. The lower average selling prices primarily reflect the pass-through of lower raw material costs and less favorable product mix.
Previous wording
Net sales for European operations decreased $6.8 million, or three percent, year-over-year. Lower average selling prices and a one percent decline in sales volume negatively impacted the year-over-year change in net sales by $15.0 million and $1.6 million, respectively. The lower average selling prices were primarily due to the pass-through of lower raw material costs and increased competitive activity. Foreign currency translation positively impacted the change in net sales by $9.8 million. A weaker U.S. dollar relative to the Polish zloty and British pound sterling led to the favorable foreign currency translation effect.
Current wording
Net sales for European operations decreased $2.7 million, or four percent, year-over-year. This decrease was mainly due to lower average selling prices that negatively impacted the year-over-year change in net sales by $4.3 million. The lower average selling prices were primarily due to the pass-through of lower raw material costs and increased competitive activity. Foreign currency translation negatively impacted the change in net sales by $0.1 million. A three percent increase in sales volume, driven by a four percent increase in rigid polyols, positively impacted the change in net sales by $1.7 million.
Previous wording
Net sales for Asia and Other operations increased $2.9 million, or eight percent, due to an 11 percent increase in sales volume which positively impacted the year-over-year change in net sales by $3.7 million. The higher sales volume was driven by the non-recurrence of COVID lock downs and restrictions that were in place in China during the first half of 2023 and higher demand for specialty polyols resulting from the Company's product diversification efforts. Foreign currency translation negatively impacted the year-over-year change in net sales by $0.8 million.
Current wording
Net sales for Asia and Other operations increased $0.4 million, or three percent, primarily due to a three percent increase in average selling prices and a two percent increase in sales volume. These items positively impacted the year-over-year change in net sales by $0.3 million each. The higher sales volume reflects higher demand for specialty polyols resulting from the Company's product diversification efforts. Foreign currency translation negatively impacted the year-over-year change in net sales by $0.2 million.
Previous 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:
Current wording
Polymer operating income in the first quarter of 2025 decreased $0.4 million, or four percent, versus operating income in the first quarter of 2024. Gross profit increased $0.1 million, or one percent and operating expenses increased $0.5 million or eight percent year-over-year. Comparisons of gross profit by region and total segment operating expenses and operating income follow:
Previous 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.
Current wording
Operating expenses for the Polymer segment increased $0.5 million, or eight percent, in the first quarter of 2025 versus the first quarter of 2024. The increase was attributable to numerous small items.
Previous 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.
Current wording
Specialty Products net sales for the first quarter of 2025 increased $1.7 million, or 11 percent, versus net sales for the first quarter of 2024. The increase was primarily due to higher average selling prices. Gross profit and operating income increased $1.3 million and $1.2 million, respectively, year-over-year. The year-over-year increases in gross profit and operating income were mostly attributable to margin recovery within the medium chain triglycerides (MCT) product line.
Previous 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:
Current wording
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 March 31, 2025 and 2024:
Previous wording
For the nine months ended September 30, 2024, operating activities were a cash source of $93.8 million versus a cash source of $105.9 million for the comparable period in 2023. For the first nine months of 2024, investing cash outflows totaled $80.7 million versus cash outflows of $211.9 million in the prior year period. Financing activities were a cash source of $6.9 million versus a cash source of $36.6 million in the prior year period.
Current wording
For the three months ended March 31, 2025, operating activities were a cash source of $6.9 million versus a cash source of $41.6 million for the comparable period in 2024. For the first three months of 2025, investing cash outflows totaled $26.4 million versus cash outflows of $24.4 million in the prior year period. Financing activities were a cash source of $22.8 million versus a cash use of $20.0 million in the prior year period.
Previous wording
Cash and cash equivalents increased $17.5 million compared to December 31, 2023, inclusive of a $2.5 million unfavorable foreign exchange rate impact. On September 30, 2024, the Company's cash and cash equivalents totaled $147.3 million including $27.2 million in money market funds, which were rated AAAm by Standard and Poor’s and Aaa-mf by Moody’s. Cash in U.S. demand deposit accounts totaled $6.7 million, and cash and cash equivalents of the Company’s non-U.S. subsidiaries totaled $134.9 million (including UK money market funds of $21.5 million) as of September 30, 2024.
Current wording
Cash and cash equivalents increased $7.8 million compared to December 31, 2024, inclusive of a $4.5 million favorable foreign exchange rate impact. On March 31, 2025, the Company's cash and cash equivalents totaled $107.5 million. Cash in U.S. money market funds, which were rated AAAm by Standard and Poor’s, and Aaa-mf by Moody’s, totaled $1.9 million and cash in U.S. demand deposit accounts totaled $2.2 million. The Company’s non-U.S. subsidiaries held $103.4 million of cash and cash equivalents as of March 31, 2025.
Previous wording
Net income during the first nine months of 2024 increased $5.6 million versus the comparable period in 2023. Working capital was a cash use of $39.2 million during the first nine months of 2024 versus a cash use of $13.8 million in the comparable period in 2023.
Current wording
Net income during the first three months of 2025 increased $5.8 million versus the comparable period in 2024. Working capital was a cash use of $40.9 million during the first three months of 2025 versus a cash use of $2.8 million in the comparable period in 2024.
Previous wording
Accounts receivable was a cash use of $21.7 million during the first nine months of 2024 compared to a cash source of $25.8 million for the comparable period in 2023. Inventories were a cash use of $39.0 million in 2024 versus a cash source of $122.7 million in 2023. Accounts payable and accrued liabilities were a cash source of $27.5 million in 2024 compared to a cash use of $152.1 million for the same period in 2023.
Current wording
Accounts receivable were a cash use of $40.3 million during the first three months of 2025 compared to a cash use of $26.0 million for the comparable period in 2024. Inventories were a cash use of $16.9 million in 2025 versus a cash source of $3.2 million in 2024. Accounts payable and accrued liabilities were a cash source of $27.4 million in 2025 compared to a cash source of $26.0 million for the same period in 2024.
Previous wording
Working capital requirements were lower in the first nine months of 2024 compared to 2023 primarily due to the changes noted above. The change in inventories working capital primarily reflects the extensive efforts to reduce inventory levels in 2023 (source of cash) versus targeted inventory builds in 2024 in advance of two Polymer plant maintenance turnarounds and a third quarter 2024 inventory build in preparation for the hurricane season (use of cash). The change in accounts payable and accrued liabilities was due in large part to lower 2024 cash outlays required to meet lower incentive-based compensation, tax and other year-end obligations closely linked to lower 2023 earnings. It is management’s opinion that the Company’s liquidity is sufficient to provide for potential increases in working capital requirements during 2024.
Current wording
Working capital requirements were higher in the first three months of 2025 compared to 2024 primarily due to the changes noted above. The change in accounts receivable working capital primarily reflects higher sales volume and higher selling prices due to the pass through of higher raw material costs. The change in inventories primarily reflects higher quantities, primarily to support business growth and in anticipation of tariffs, and higher unit costs during the first quarter of 2025 versus a year ago. It is management’s opinion that the Company’s liquidity is sufficient to provide for potential increases in working capital requirements during 2025.
Previous wording
Cash used for investing activities decreased $131.2 million year-over-year. Cash used for capital expenditures was $86.6 million in the first nine months of 2024 versus $213.6 million in the same period of 2023. The lower capital spending in 2024 was largely attributable to reduced spending required to complete construction of the alkoxylation plant the Company is building at its Pasadena, Texas site.
Current wording
Cash used for investing activities increased slightly year-over-year. Cash used for capital expenditures was $32.7 million in the first three months of 2025 versus $30.2 million in the same period of 2024.
Previous wording
For 2024, the Company estimates that total capital expenditures will be in the range of $120.0 million to $125.0 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.
Current wording
For 2025, the Company estimates that total capital expenditures will be in the range of $125.0 million to $135.0 million.
Previous wording
Cash flow from financing activities was a source of $6.9 million in 2024 versus a source of $36.6 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.
Current wording
Cash flow from financing activities was a source of $22.8 million in 2024 versus a use of $20.0 million in 2024. The year-over-year change was primarily due to a higher level of borrowings against the Company's revolving credit facility during the first quarter of 2025.
Previous wording
The Company purchases shares of its common stock in the open market or from its benefit plans from time to time to fund its own benefit plans and to mitigate the dilutive effect of new shares issued under its compensation plans. The Company may, from time to time, seek to purchase additional amounts of its outstanding equity and/or retire debt securities through cash purchases and/or exchanges for other securities, in open market purchases, privately negotiated transactions or otherwise, including pursuant to plans meeting the requirements of Rule 10b5-1 promulgated by the SEC. Such repurchases or exchanges, if any, will depend on prevailing market conditions, the Company’s liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. The Company did not purchase any shares of its common stock on the open market during the nine months ended September 30, 2024. At September 30, 2024, the Company had $125.1 million remaining under the share repurchase program authorized by its Board of Directors.
Current wording
The Company purchases shares of its common stock in the open market or from its benefit plans from time to time to fund its own benefit plans and to mitigate the dilutive effect of new shares issued under its compensation plans. The Company may, from time to time, seek to purchase additional amounts of its outstanding equity and/or retire debt securities through cash purchases and/or exchanges for other securities, in open market purchases, privately negotiated transactions or otherwise, including pursuant to plans meeting the requirements of Rule 10b5-1 promulgated by the SEC. Such repurchases or exchanges, if any, will depend on prevailing market conditions, the Company’s liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. The Company did not purchase any shares of its common stock on the open market during the three months ended March 31, 2025. At March 31, 2025, the Company had $125.1 million remaining under the share repurchase program authorized by its Board of Directors.
Previous wording
Consolidated balance sheet debt increased from $654.1 million on December 31, 2023 to $688.5 million on September 30, 2024, primarily due to domestic borrowings from the Company’s revolving credit facility partially offset by 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) increased $16.9 million, from $524.3 million at December 31, 2023 to $541.2 million at September 30, 2024. This change reflects a cash increase of $17.5 million and a total debt increase of $34.4 million.
Current wording
Consolidated balance sheet debt increased $33.9 million, from $625.4 million on December 31, 2024 to $659.3 million on March 31, 2025, primarily due to higher 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) was $551.8 million on March 31, 2025 versus $525.7 million at December 31, 2024.
Previous wording
As of September 30, 2024, the ratio of net debt to net debt plus shareholders’ equity was 30.7 percent versus 30.0 percent at December 31, 2023 (see the “Reconciliation of Non-GAAP Net Debt” section in this MD&A for further details). On September 30, 2024, the Company’s debt included $311.6 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 $91.3 million delayed draw term loan borrowed pursuant to the Company's credit agreement, $278.7 million of short term loans borrowed under the Company's revolving credit facility and $6.9 million 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. 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.
Current wording
As of March 31, 2025, the ratio of net debt to net debt plus shareholders’ equity was 31.5 percent versus 31.0 percent at December 31, 2024 (see the “Reconciliation of Non-GAAP Net Debt” section in this MD&A for further details). On March 31, 2025, the Company’s debt included $311.8 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”), a $88.7 million delayed-draw term loan borrowed pursuant to the Company’s credit agreement, $257.8 million of short-term loans borrowed under the Company’s revolving credit facility and $1.0 million of foreign credit line borrowings. As of March 31, 2025, the Company had outstanding letters of credit of $14.0 million, inclusive of $5.3 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 (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, 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. 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 and under the CIC Credit Agreement. As of September 30, 2024, the Company had outstanding borrowings totaling $370.0 million, inclusive of a $91.3 million delayed draw term loan, and letters of credit totaling $11.4 million under the Credit Agreement, with $59.9 million remaining available. As of September 30, 2024, the Company also had an outstanding letter of credit of $8.7 million under the CIC Credit Agreement.
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 ($11.3 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 March 31, 2025, 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 $5.3 million at March 31, 2025.
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 September 30, 2024, the Company’s foreign subsidiaries had $6.9 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 March 31, 2025, the Company’s foreign subsidiaries had $1.0 million of outstanding debt.
Previous wording
The Company’s operations are subject to extensive federal, state and local environmental laws and regulations and similar laws in the other countries in which the Company does business. Although the Company's environmental policies and practices are designed to ensure compliance with these laws and regulations, future developments and increasingly stringent environmental regulation may require the Company to make additional unforeseen environmental expenditures. The Company will continue to invest in the equipment and facilities necessary to comply with existing and future regulations. During the first nine months of 2024 and 2023, the Company’s expenditures for capital projects related to environmental matters were $7.0 million and $7.1 million, respectively. These projects are capitalized and depreciated over their estimated useful lives, which are typically 10 years. Recurring costs associated with the operation and maintenance of facilities for waste treatment and disposal and managing environmental compliance in ongoing operations at the Company’s manufacturing locations were $40.0 million and $27.1 million for the nine months ended September 30, 2024 and 2023, respectively.
Current wording
The Company’s operations are subject to extensive federal, state and local environmental laws and regulations and similar laws in the other countries in which the Company does business. Although the Company's environmental policies and practices are designed to ensure compliance with these laws and regulations, future developments and increasingly stringent environmental regulation may require the Company to make additional unforeseen environmental expenditures. The Company will continue to invest in the equipment and facilities necessary to comply with existing and future regulations. During the first three months of 2025 and 2024, the Company’s expenditures for capital projects related to environmental matters were $2.4 million and $1.5 million, respectively. These projects are capitalized and depreciated over their estimated useful lives, which are typically 10 years. Recurring costs associated with the operation and maintenance of facilities for waste treatment and disposal and managing environmental compliance in ongoing operations at the Company’s manufacturing locations were $10.0 million and $10.8 million for the three months ended March 31, 2025 and 2024, respectively.
Previous wording
Over the years, the Company has received requests for information related to or has been named by the government as a potentially responsible party at a number of waste disposal sites where cleanup costs have been or may be incurred under CERCLA and similar state or foreign statutes. In addition, the Company is from time to time involved in routine legal proceedings incidental to the conduct of its business, including personal injury, property damage, tax, trade and labor matters. The Company believes that it has made adequate provisions for the costs it is likely to incur with respect to these claims. It is the Company’s accounting policy to record liabilities when environmental assessments, remediation expenses or legal proceeding losses are probable, and the cost or range of possible costs can be reasonably estimated. When no amount within the range is a better estimate than any other amount, the minimum is accrued. Estimating the possible costs of environmental remediation requires making assumptions related to the nature and extent of contamination and the methods and resulting costs of remediation. Some of the factors on which the Company bases its estimates include information provided by decisions rendered by State and Federal environmental regulatory agencies, information provided by feasibility studies, and remedial action plans developed. After partial remediation payments at certain sites, the Company has estimated a range of possible environmental and legal losses of $21.5 million to $48.9 million at September 30, 2024 and $20.6 million to $49.4 million at December 31, 2023. Within the range of possible environmental and legal losses, management has currently concluded that no single amount is more likely to occur than any other amounts in the range and, thus, has accrued at the lower end of the range. The Company's environmental and legal accruals totaled $21.5 million at September 30, 2024 and $20.6 million at December 31, 2023. Because the liabilities accrued are estimates, actual amounts could differ materially from the amounts reported. Cash expenditures related to environmental remediation and certain other legal matters approximated $2.2 million for the nine months ended September 30, 2024, compared to $11.4 million for the same period in 2023.
Current wording
Over the years, the Company has received requests for information related to or has been named by the government as a potentially responsible party at a number of waste disposal sites where cleanup costs have been or may be incurred under CERCLA and similar state or foreign statutes. In addition, the Company is from time to time involved in routine legal proceedings incidental to the conduct of its business, including personal injury, property damage, tax, trade and labor matters. The Company believes that it has made adequate provisions for the costs it is likely to incur with respect to these claims. It is the Company’s accounting policy to record liabilities when environmental assessments, remediation expenses or legal proceeding losses are probable, and the cost or range of possible costs can be reasonably estimated. When no amount within the range is a better estimate than any other amount, the minimum is accrued. Estimating the possible costs of environmental remediation requires making assumptions related to the nature and extent of contamination and the methods and resulting costs of remediation. Some of the factors on which the Company bases its estimates include information provided by decisions rendered by State and Federal environmental regulatory agencies, information provided by feasibility studies, and remedial action plans developed. After partial remediation payments at certain sites, the Company has estimated a range of possible environmental and legal losses of $17.9 million to $42.4 million at March 31, 2025 and $20.0 million to $44.5 million at December 31, 2024. Within the range of possible environmental and legal losses, management has currently concluded that no single amount is more likely to occur than any other amounts in the range and, thus, has accrued at the lower end of the range. The Company's environmental and legal accruals totaled $17.9 million at March 31, 2025 and $20.0 million at December 31, 2024. Because the liabilities accrued are estimates, actual amounts could differ materially from the amounts reported. Cash expenditures related to environmental remediation and certain other legal matters approximated $2.6 million for the three months ended March 31, 2025, compared to $1.6 million for the same period in 2024.
Showing the first 40 of 43 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Reconciliations of Non-GAAP Adjusted Net Income and Diluted Earnings per Share
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
Operating expenses (including deferred compensation and business restructuring expenses) were flat between years. Changes in the individual income statement line items that comprise the Company’s operating expenses were as follows:
Previous report — wording carried elsewhere
Reconciliation of Non-GAAP EBITDA and Adjusted EBITDA
Previous report — wording carried elsewhere
Reconciliation of Non-GAAP Net Debt