Stepan Co. (SCL) Tops Q2 EPS by 14c; Will Acquire Commercial Business of Brazil's Tebras

Stepan Co. (NYSE: SCL) reported Q2 EPS of $1.31, $0.14 better than the analyst estimate of $1.17. Revenue for the quarter came in at $454.6 million versus the consensus estimate of $453.45 million.

Outlook

"After a record first half, we remain optimistic about our core business for the balance of the year. Our business should continue to benefit from higher laundry volumes within our Surfactant business and rigid polyol volumes within Polymers. We expect higher raw material costs to slightly reduce margins. Our internal efficiency program should continue to deliver meaningful results. However, costs associated with a planned 30 day shutdown of our plant in Germany, accelerated depreciation and plant shutdown costs related to the closure of our Canadian plant, and lower construction activity in China should negatively impact the balance of 2016. Overall, we continue to believe earnings for the year should grow," said F. Quinn Stepan, Jr., President and Chief Executive Officer.

Acquisition:

Stepan Company also reported that its subsidiary in Brazil has reached an agreement with Tebras Tensoativos do Brazil Ltda. (Tebras) to acquire their commercial business and with PBC Industria Quimica Ltda. (PBC) to acquire their sulfonation production facility. The combined entities have annual sales of approximately $32 million dollars, 25,000 metric tons of sulfonation capacity and a large, diverse customer portfolio.

Both definitive agreements are subject to customary closing conditions and the transaction is projected to close in the fourth quarter of 2016. The transaction is expected to have minimal impact on Stepan's 2016 financial results. Financial terms of the transaction were not disclosed.

"The acquisition of Tebras and PBC is expected to expand and diversify our customer base for sulfonated products in Brazil and to provide an opportunity to sell our broader surfactant portfolio to over 1,200 new customers who will benefit from Stepan's technical service and formulation support," said F. Quinn Stepan Jr., President and CEO of Stepan Company. "Over time, we plan to utilize the newly acquired site within the greater Sao Paulo area to produce additional product lines. This acquisition is expected to be slightly accretive to earnings for the first full year of ownership."

For earnings history and earnings-related data on Stepan Co. (SCL) click here.

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