Stepan Company

Greetings and welcome to the Step & Company second quarter 2022 results call. At the start of the presentation, all lines 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, today's call is being recorded Wednesday, July 27, 2022. I would now like to turn the conference over to Luis Rojo, Vice President and Chief Financial Officer. Please go ahead, sir.

Good morning, and thank you for joining Stepan Company's second quarter 2022 financial review. Before we begin, please note that 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 prospects for our foreign operations, global and regional economic conditions, and factors detailing our security and exchange commission filings. Whether you're joining us online or over the phone, we encourage you to review the investor slide presentation, which we have made available at www.stepan.com under the investor section of our website. We made these slides available at approximately the same time as where 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 Behrends, our President and Chief Executive Officer.

Scott Behrends Thank you, Luis, and good morning, and thank all of you for joining us today to discuss our second quarter results. To begin, I will share our second quarter highlights and strategy outlook, and Luis will provide additional details on our financial results for the quarter. The second quarter continued to be a challenging operating environment, given continued raw material and transportation constraints, cost inflation, and global macroeconomic uncertainties. Nonetheless, I am proud of how our team has continued to overcome these challenges by delivering record results for the second quarter. Reported net income reached a record of $52.1 million, or $2.26 per diluted share. while adjusted net income was a record $53 million, or $2.30 per diluted share. So, in fact, an operating income was $48.2 million compared to $45.9 million in the prior year quarter. Growth was mainly driven by a better product and customer mix, but was partially offset by a 3 percent decline in global sales volume related to commodity laundering. Lower commodity laundry volumes were the result of continued raw material supply constraints in North America and lower overall demand in Latin America. The sales volume decline was driven by laundry products within the consumer products business, partially offset by very strong functional products volume growth. Our polymer segment reached a record operating income of $33.9 million, compared to $23 million in the prior year. which represents a 47% increase. Margin recovery, improved mix, and a 2% increase in global volume were responsible for the record quarter. Our specialty product segment also had a record quarter, growing operating income by 41%, driven by improved margins within the 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 September 15, 2022. During the second quarter of 2022, the company paid $7.5 million of dividends to shareholders and repurchased $7 million of company stock. For the first half of 2022, the company paid $15 million in dividends and repurchased $17 million of company stock. Steppen has increased its dividend for 54 consecutive years. The company still has $133 million remaining under our share repurchase program authorized. Looking forward, we believe the operational environment will remain challenging. However, we are confident that we can deliver a good year as demand for our products remains healthy. At this point, I would like Luis to walk through a few more details about our second quarter results.