Stepan Company

Greetings and welcome to the STEP and Company first quarter 2022 results. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press the 1 followed by the 4 on your telephone. If at any time during the conference you need to reach an operator, please press star 0. As a reminder, this conference is being recorded Tuesday, April 26, 2022. I would now like to turn the conference over to Luis Rojo, Vice President and Chief Financial Officer. Please go ahead.

Good morning, and thank you for joining Esteban Company's first quarter 2022 financial review. Before we begin, please note that the information in this conference call contains forward-looking statements, which are not historical facts. These statements involve risks and uncertainties that could cause actual results to differ materially. including but not limited to processes for our foreign operations, global and regional economic conditions, and factors detailing our Security and Exchange Commission filings. Whether you are joining us online or over the phone, we encourage you to review this investor slide presentation, which we have made available at www.stephan.com under the Investor section of our website. We make these slides available at approximately the same time as when the earnings releases issue. and we hope that you find the information and perspective helpful. With that, I would like to turn the call over to Mr. Scott Barrett, our President and new Chief Executive Officer. Yesterday, he became the fourth CEO and the first non-founding family CEO of the Stephan Company. Congratulations, Scott.

Good morning, and thank you for joining us today to discuss our first quarter results. I will share our first quarter highlights and strategy outlook and Luis will provide additional details on our financial results. The first quarter continued to be a challenging operating environment. Continued raw material and transportation constraints, cost inflation, and the emergence of a new COVID-19 variant were all headwinds against the business. However, I am proud about how our team worked through these challenges to deliver solid results for the first quarter. Reported net income was a record $44.8 million, or $1.93 per diluted share, while adjusted net income was $40.7 million, or $1.76 per diluted share, representing the third-best quarter ever on an adjusted net income basis. Reported surfactant operating income reached a record of $53.8 million, led mainly by a better product and customer mix, which offset inflationary cost pressures challenges imposed by global supply chains and the 1% decrease in surfactant volume. Our polymer business was affected by external supply chain disruptions and a power outage in early January at our Millsdale plant that impacted operations and led to a force majeure declaration for select products. Our operations team did a good job reestablishing production in February which allowed us to lift the force majeure in early April. On a global basis, polymer sales volume increased due to strong underlining base business and one extra month of sales from the Invista acquisition, which closed at the end of January 2021. Our specialty products business results were up due to order timing differences within our food and flavors business and the recovery of margins within our MCT product line. Our board of directors declared a quarterly cash dividend on Steppen's common stock of 33.5 cents per share, payable on June 15th, 2022. Steppen has increased its dividend for 54 consecutive years. During the first quarter of 2022, the company paid $7.5 million to shareholders in dividends and repurchased $10 million of Steppen's stock. The company has $140.1 million remaining under the Share Repurchase Program authorized by the Board of Directors. We remain confident in the strength and diversity of our business and its ability to generate cash that will allow us to further invest in our current business, pursue strategic M&A opportunities, and return cash to our shareholders. At this point, I would like Luis to walk through a few more details about our first quarter results.