div align="justify">NORTHFIELD, Ill., /PRNewswire-FirstCall/ -- Stepan Company (NYSE: SCL) today reported second quarter and year-to-date results for the period ended June 30, 2010.
- Year-to-date net income rose 9 percent to $37.7 million.
- Second quarter net income declined 13 percent to $17.0 million from the record year ago quarter of $19.6 million.
- Net income, excluding deferred compensation plan expense, declined 14 percent from $22.4 million to $19.1 million for the quarter and increased 12 percent from $34.3 million to $38.5 million year-to-date (see Table II).
- Sales volume rose six percent for the quarter and seven percent year-to-date, with strong polymer volume growth of 16 percent and 19 percent for the quarter and six months, respectively.
SUMMARY | ||||||||
Three Months Ended June 30 | Six Months Ended June 30 | |||||||
($ in thousands) | 2010 | 2009 | % Change | 2010 | 2009 | % Change | ||
Net Sales | $366,504 | $321,199 | + 14 | $703,534 | $639,342 | + 10 | ||
Net Income | 17,046 | 19,584 | - 13 | 37,706 | 34,737 | + 9 | ||
Net Income Excluding Deferred Compensation* | 19,163 | 22,405 | - 14 | 38,490 | 34,357 | + 12 | ||
Earnings per Diluted Share | $1.53 | $1.83 | - 16 | $3.41 | $3.26 | + 5 | ||
Earnings per Diluted Share Excluding Deferred Compensation | 1.72 | 2.09 | - 18 | 3.48 | 3.23 | + 8 | ||
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* See Table II for a discussion of deferred compensation plan accounting. | ||||||||
SECOND QUARTER RESULTS
Net income for the quarter was $17.0 million, or $1.53 per diluted share, compared to $19.6 million, or $1.83 per diluted share, for the prior year record quarter. Net income excluding deferred compensation was $19.2 million versus $22.4 million last year. Sales volume grew six percent with both the surfactant and polymer groups posting higher volumes led by the significantly higher volumes of polyol used in flat roof rigid foam insulation. The lower operating results were attributable to lower margins in Europe and higher global production, administrative and research expenses. Production costs rose on higher salaries and wages and maintenance expense. The Company continues to invest in growth opportunities resulting in acquisition expenses and higher research expense. Administrative expenses were higher due to the recent acquisitions in Poland, Singapore and the Philippines. Research expense rose due to increased headcount in support of our innovation portfolio and higher regulatory compliance for the European REACH product registration initiative.
Net sales rose 14 percent due to the six percent increase in sales volume coupled with higher prices (eight percent). The higher selling prices were due to rising commodity raw material costs.
Gross profit declined by $2.2 million, or three percent.
- Surfactant gross profit declined by $1.7 million, or four percent. Sales volume increased by four percent. The gross profit decline was due to the lower margins in Europe combined with the higher operating expenses related to growth initiatives discussed above.
- The polymer segment gross profit declined by $0.4 million, or three percent, while sales volume grew by 16 percent. Unit profit margins on polyol products have declined, primarily in Europe, due to higher raw material costs, competitive pressure and foreign currency translation.
