Stepan Company Price & Performance (SCL)

We provide reconciliations to the comparable GAAP measures in the earnings presentation and press release which we have made available at www.stepan.com under the Investors section of our website. Whether you're joining us online over the phone, we encourage you to review the investor slide presentation. We make these slides available at approximately the same time as when the earnings release is issued and we hope that you find the information and perspectives helpful. With that, I would like to turn the call over to Mr. Luis Rojo, our President and Chief Executive Officer. Thank you, Sam. Good morning. And thank you all for joining us today to discuss our first quarter twenty twenty five results. I plan to share highlights of the quarterly performance, and will also share updates on our key strategic priorities. While Sam will provide additional details on our financial results. We are pleased with the start of 2025. And I'm proud of our team that is committed to further improving earnings going forward. The company reported first quarter adjusted EBITDA of $57,500,000 up 12% versus the prior year. Surfactant and specialty products delivered double digit adjusted EBITDA growth while polymers adjusted EBITDA decreased slightly year over year.

Volume grew 4% and the growth was broad based with surfactants up 3% polymers up 7%, and our MCT product line up 4%. We continue to experience double digit volume growth within the agricultural and oilfield end markets, and with our distribution partners in North America and the European rigid polyol [indiscernible] While the specialty polyols and commodity PA businesses delivered a strong growth year over year. We believe that rigid polyol growth in America and Europe continues to be restrained by global macroeconomic uncertainties and the high interest rate environment. We're encouraged by the broad based volume growth across several of our key strategic end markets. We finished the first quarter of twenty twenty five with $19,300,000 of adjusted net income. Up 32% versus the prior year. Driven by earnings growth in Surfactants and Specialty Products and a lower tax rate. We executed the safe start up of our new Pasadena, Texas site which is now operational. During the first quarter of twenty twenty five, the company paid $8,700,000 in dividends to shareholders. Our Board of Directors declared a quarterly cash dividend on Stepan stock on common stock of 38.5¢ per share, payable on 06/13/2025. The Stepan has paid an increase in dividend for fifty seven consecutive years.

Sam will now share some details about our first quarter results. Thank you, Luis. My comments would generally follow the slide presentation. Let's start with slide four to recap the quarter. First quarter twenty twenty five adjusted net income $19,300,000 or $0.84 per diluted share, versus $14,700,000 or $0.64 per diluted share for the first quarter of last year, a 32% increase. The increase was driven by broad based volume growth, higher margins in surfactants, and a lower tax rate. Adjusted EBITDA for the quarter was $57,500,000 up 12% year over year. Driven by volume growth and improved surfactant product and customer mix. Which was partially offset by higher pre operating expenses at our Pasadena, Texas site. Cash from operations was $6,900,000 for the quarter, and free cash flow was negative at $25,800,000 Slide five shows the total company net income bridge for the first quarter of twenty twenty five compared to last year's first quarter and breaks down the increase in adjusted net income. Because this net income, the figures noted on an after tax basis. We will cover each segment in more detail, but to summarize, we delivered operating income growth in surfactants and specialty products partially offset by lower operating results in polymers.

The first quarter results benefited from a lower effective tax rate. The effective tax rate was 20% versus our normal range of 24% to 26%. This decrease was primarily attributable to favorable discrete items associated with the tax audit settlement in The U. S. Slide six shows the total company adjusted EBITDA bridge for the first quarter compared to last year's first quarter. Adjusted EBITDA was $57,500,000 versus $51,200,000 in the prior year. A 12% increase. We will cover each segment in more detail, but to summarize, we delivered adjusted EBITDA growth in surfactants and specialty products partially offset by global polymers. Adjusted EBITDA results also benefited from lower corporate expenses compared to prior year.

Slide seven focuses on the Surfactant segment results. Surfactant net sales were $430,300,000 for the quarter. A 10% increase versus the prior year. Selling prices were up 12% primarily due to the improved product and customer mix. And the pass through of higher raw material costs. Sales volume grew 3% year over year, mainly due to double digit growth within the agricultural and oilfield end markets, along with our distribution partners. This growth was partially offset by lower demand within the commodity consumer product end markets. Foreign currency translation negatively impacted net sales by 5%. Perfection adjusted EBITDA increased 4,500,000.0 or 10% versus the prior year. This increase was primarily driven by the 3% growth in sales volume and improved product and customer mix. Which was partially offset by pre operating expenses at our Pasadena, Texas site. Now on Slide eight, polymer net sales were $146,100,000 for the quarter. That versus the prior year. Sending prices decreased 7%, primarily due to the pass through of lower raw material costs and competitive pressures. Sales volume increased 7% in the quarter. North American and European rigid polyol volume to low single digits despite the continued challenging overall environment. Especially polyols and commodity metallic anhydride volume delivered strong growth year over year.

China polymers volume was up low single digits. Foreign currency translation had a nominal impact on net sales during the quarter. Polymer adjusted EBITDA decreased point $3,000,000 or 2% versus the prior year, primarily due to less favorable product mix a high cost inventory carryover which was partially offset by the 7% volume growth. Finally, specialty product, net sales were $16,800,000 for the quarter, an 11% increase versus the prior year primarily due to higher selling prices Specialty product adjusted EBITDA increased 1,200,000.0 or 21%. The increase in adjusted EBITDA primarily due to margin recovery and volume growth within the medium chain triglycerides product line. Next on Slide nine, free cash flow was negative at $25,800,000 for the first quarter. Down $37,200,000 year over year. Reflecting typically higher working capital requirements during the first quarter as well as increased purchases of raw materials in anticipation of tariffs and to support business growth. We are cautiously optimistic in our ability to deliver positive free cash flow for the full year 2025. During the first quarter, we deployed $32,700,000 against capital investments and $8,700,000 for dividends. Now on slide ten and eleven, Luis will update you on our strategic priorities. Thanks, Sam.

I will focus my comment on our strategic priorities. Our customer will always remain at the center of our strategy and innovation efforts. Our Tier one customer base remains a solid foundation of our business. Continue our new customer acquisition with Tier two and Tier three customers remains a key priority. This is an important and profitable growth channel within our surfactant business. For the first quarter of twenty twenty five, our volume grew mid single digits year over year, and we added over 400 new customers. Our end market diversification strategy remains a key focus area. For the first quarter, we grew double digits in our agricultural and oilfield businesses. We are pleased to see our North America and European rigid polyol business return to year over year growth after a challenging 2023 and 2024. Insulation remains a critical enabler of a more sustainable energy efficient world.

And we are confident in the long term growth prospects of this business. Our focus continues to be on developing the next generation rigid polytechnologies that can increase the energy efficiency and cost performance of our customer insulation products. Additionally, we are excited about the new products we are introducing in the growing spray foam end market. Within polymers, we were able to achieve a strong growth in our specialty polyol and our commodity PA business. This will enable us to deliver earnings growth in 2025. Our supply chain operation and resiliency continues to improve. And we delivered a solid quarter in all our key operational metrics. We're continuing to make the necessary investments in our Neil's Health site to ensure reliable operations both today and in the future. Moving to slide 11, we safely start off our new Pasadena, Texas site. We have made six different products today. We expect to achieve the full contribution rate of the plan during the second half of twenty twenty five. Our commercial teams continues to develop and deliver new specialty oxalation opportunities. Specialty oxalation volume grew strong double digits in the first quarter. To conclude, we remain focused on accelerating our business strategy through improved executions to grow volume, improve product and customer mix, and accelerate free cash flow generation.

We believe Surfactant will experience continued growth in our key strategic end markets and that polymer demand will continue improving as we get more market certainty and we execute our innovation and growth.

Plans.

In addition, our Pasadena facility is now operational. And as previously communicated, we believe this will enable us to deliver volume growth and supply chain savings during the second half of the year. Despite all the current market uncertainties, including the impact of tariffs, we remain cautiously optimistic that we will deliver full year adjusted EBITDA and adjusted net income growth and positive free cash flow in 2025. This concludes our prepared remarks. At this point, we would like to turn the call over for questions. Stephen, please review the instructions for the questions portion of today's call.

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again.

First question comes from the line of Mike Harrison of Seaport Research Partners. Your line is now open. Hi, good morning.

Good morning, Mike. Good morning.

Congratulations on the PASADENA alkoxylation startup. I was hoping that maybe you could answer a few questions about that facility and kind of the timing of how we should think about the contribution there. First of all, you said it I believe you said it was producing six products. Is that kind of the limit or are there still some products that you're bringing online And can you talk at all about how we should think about the utilization and customer qualification ramp up process? Is that something that gets wrapped up in in the next few months? Or is that something that's continuing kind of through through the end of the year?

Great question. Mike. We are very excited with the news and with PASADENA starting up Only six products we have shared in the past that we're planning to produce more than 60 products in Pasadena. So we are in the process of qualifying one by one This is going to take a few months. Okay? So, that's why we're saying the full contribution starting more in the second half of the year out of course, the full contribution from the plant in 2026, And as we have talked in the past, we expect to fill up the plant pretty quick in a few quarters. Right? Because we have a lot of the volumes already. But of course, we want to continue growing and if we can keep some of that volume in the site for growth, that is coming and keeping the other supply chain options that we have available that will be even better. For us. But we will see how the next few quarters develop. But as I said in my prepared remarks, specialty accountsulates are growing strong double And to give you the exact number, it's 19% growth in Q1. So very, very strong growth. So, it's early [indiscernible] [indiscernible] spent $4,000,000 in Q1 in pre operating expenses in Pasadena.

That's why if you exclude that, we are above the 60,000,000 EBITDA But that's something, of course, that we will mitigate with the supply chain savings going forward. In future quarters.

That's, I appreciate that color. That's helpful. So in terms of the how we should think about the earnings contribution, if at least directionally, it sounds like maybe in Q1, it was maybe 3,000,000 or $4,000,000 to the negative in operating income or EBITDA? And then should we assume that Q2 is still negative but better than that and then it's Q3 and Q4 when we start to see the positive earnings contribution ramp up?

Yeah. I think you are you are thinking that directionally. The right way. I think Q2 is still is again, we're just starting off. So we are still investing. And you're not going to see the help in Q2, but for sure you're not going to see such a negative like in Q1.

Perfect. So, moving on to a couple other questions that I had. One of them in surfactants, you mentioned the the weakness in the commodity consumer products portions of the business. I'm just curious, how much of that decline is intentional shifting of business into higher margin and non commodity product lines? And and kind of higher value applications. Or can you just help us understand what else is contributing to the decline in volumes in that commodity consumer piece?

No, yeah. Look, I mean, we are not intentionally moving volume from consumer products to other applications. But of course, I mean, we will always optimize our assets in the future if we have to. We have really a sluggish demand from several of our consumer product customers. And if you read the reports from others, volumes are are not growing. So that's a challenging situation with [indiscernible] with everything that the consumer is experienced. We are not seeing material volume growth in this segment as we as we expect.

Alright. And then the the one for me is on the polymers business. You mentioned that that high cost inventory that's still flowing through the P and L was a drag on margin. Are most of those higher cost goods out of inventory right now? Or is there still more that needs to flow through and I guess my other question on polymers is when might we expect to see pricing stabilize? I believe it still a negative 7% year over year in the first quarter.

Great question, Mike. And that's the main issue in polymers in Q1 was the higher inventory cost. That we were carrying on and we're getting out of that. We're getting out of that in [indiscernible] already in Q2. So margin should improve.

And pricing stabilizing?

Yeah, I think I think, again, when you think about pricing and raw materials, we should see we should see improvement. All right.

Thanks very much.

Thank you. Our next question comes from the line of Dave Storms of Stonegate. Your line is now open. Good morning.

Just hoping we can Good morning, Mark. With maybe morning. [indiscernible] down channel inventory levels.

The volume increases all this quarter was there any sense that this is for maybe a pull forward in inventory levels as customers are trying to get ahead of some of the macro uncertainties?

Great question, Dave. Look, we had a good quarter in Q1 in volumes, right? I mean, when you think of 3% in 7% in polymers, 4% in NCT, we're very pleased. And we don't believe there is any overstocking in Q1 with the volumes that we shipped. And actually, we have talked a lot about our customers especially on the polymer side. To see if there is any you know, potential inventory buildup. And we are not getting that perspective as of now. I will complement your question with we also are seeing the same dynamics in April. Right? I very similar dynamics in the business, very strong ag, very good oil good distribution. So same dynamics in surfactant. And actually, we're seeing an acceleration of growth in the polymers business. And we need to see how that plays out in May, June, and Q3, and if there is any pre built in inventory because of tariffs or price increase concerns or something like that. But yeah, April is coming stronger on the polymer side. And that's the piece that we need to evaluate in the next in the next few months.

Understood. Very helpful. Thank you. And then you mentioned a couple times just the the improved cost customer mix. I'm assuming this is referring to [indiscernible] two and three customers. Are you able to give us a sense of of those tier two and three customers, are more spot buyers and which maybe are a little stickier you know, using some of the additional services that you can provide for the tier two and three customers?

Sure. The mix is coming from both. It's coming from Tier two, Tier three, and it's also coming from the end market diversification. So ag is growing very, very strong. Oilfield is growing very nicely. So, of those are positive mix in our surfactant business. And actually, when you think about it, you all can see the public data All your chemicals went up significantly in Q1. So actually, that was a drag in our margins in because all your chemicals went up and you always have a gap between raw material price increases and then how much you can pass through and how fast you can pass through. Some of that increases. So, there is always a lag. So we are very pleased with the results in surfactants driven by the customer and the product mix.

Understood. Thank you for taking my questions. I'll get back in queue. Queue.

Thank you. Thank you, Dave.

Our next question one moment, please.

Our next question comes from the line of David Silver, CL King and Associates. Your line is now open.

Yeah, hi, good morning. Thank you.

Good morning, David. Good morning.

Yeah, good morning.

A couple of questions, maybe a follow-up on kind of your double digit sales growth in agricultural and oilfield surfactants? [indiscernible] [indiscernible] go back to maybe the question about potential I don't know, pipeline filling or overstocking. But you did note double digit growth. And firstly, I just was trying to confirm that the bulk of the demand growth was on the agricultural side as opposed to oilfield And then secondly, you know, I guess in the past couple of years there was a big run up in volumes on the agricultural surfactant side and then and then there was a period of time to I guess, for inventories to normalize. So I'm just thinking in the current environment, it is the run up to the spring planting season. There are some tariff issues. I mean, just just on the agricultural side, is your thoughts, your best thoughts about the level of any you know, pre buying or pipeline filling that may not be sustainable, I guess, as the balance of the year goes on? Thank you.

David, you are 100% right that the majority of the growth is driven by our ag business instead of oilfield. I mean, is strong growth, but ag was significantly higher. And of course, we have a bigger business in ag than in oilfield. We keep talking with our customers and we don't believe there is plenty of [indiscernible] inventory increases. And if you think about if you think about where people are with interest rates, nobody is willing to put a lot of inventory and tie a lot of cash like what happened in 2022, where was totally a different environment where with supply chain issues across the board, everybody wanted to have the material. And interest rates were not where they are today. So So all the data that we have from our customer is there is not there is no significant inventory built up anywhere that we know And And we'll continue seeing good orders for for April, and actually already a good book order for May. On the ag business.

Okay. Very good. Thank you for that. I did have a question, follow-up maybe on your comments on the polymer side this quarter. So I think you did speak to some of the inventory issues that may have impacted your margins. But I was hoping not sure if you commented on this, but in the slide deck you did cite less favorable product mix. And I'm just wondering if you could comment on that. Is that particular end markets? Is that a particular region? Just the less favorable product mix that may be impacted your margin performance this quarter? What is the outlook for that for the balance of the year? Thank you.

Yeah, good point, David. The issue is the following. We were very clear. We grew you know, single digits our rigid polyol business right, in North America and Europe, [indiscernible] we grew very strong double digits in our phallic anhydride. Our PA business. And, of course, phallic anhydride is a commodity. It has lower margins. And we are capturing a lot of new business and new share in that that end market. Because other competitive dynamics So that is what is driving the mix impact in the polymers business. That will continue because because we continue growing in our PA business. But, of course, I mean, we need the issue in Q1 was the high inventory cost. That we had across the polymers business. That really dragged the margins. And that's why we had basically flattish EBITDA with volumes of 7%. That was the main drag.

Okay, great. Thanks for that. Next question would probably be a two parter, the topic would be tariff impacts as you see them currently? And I do think you know, you're largely a local for local kind of structure right now. Certainly in The US, and Europe maybe. But I am wondering about if you could comment on how the tariff situation as it currently stands, I recognize is is uncertain. But are there any kind of pressure points maybe from in your Mexican production base in particular, is is all of that product covered by the USMCA agreement or might some of it be sold into The US and and be subject to some of the, you know, tariffs that have recently been announced. But [indiscernible] but, unsettled where would you kind of characterize your greatest sensitivity, you know, direct impact from you know, potential tariff [indiscernible] Sure. Of course, the question of the week and the month, right? Look, as you said, David, things are changing every day. This is a very volatile and uncertain dynamic that we all have to navigate through right now As you clearly said, the majority of our business is sourced produced, and sold within the regions.

Right? So the majority of our volumes are in each of the regions that we that we compete And so but of course, there are still impacts. On the tariff because we import raw materials and there's going to be always some impact that we are working right now to mitigate through changes in our sourcing strategy where possible and where it makes sense and also pricing. We all know tariffs are inflationary. Many I believe many customers and many competitors will price for tariffs. And we're working on that right now. Because our objective will be to recover to recover any impact. When you think about Mexico and Canada, our products are included in the USMCA. So we're good. Good with Mexico and Canada. But we still have other things that we need to recover via pricing and via supply chain changes.

Okay. And then last one for me. Maybe question about the indirect effects that you've seen thus far from the tariff announcements or potential import tariff implementation. But this would have to do maybe with your R and D or your product development efforts where you're collaborating, you know, with customers and their tariff exposures may be a little bit different than Stepan's than your company's. But have you noted or can you speak to any pausing or any, you know, changes in the collaborative relationships let's say on new product developments that might be commercialized over the next year or two. As a result of the tariffs? In other words, has anything changed with your R and D or technical collaborations with customers? You know, let's say since the beginning of the year or since, you know, April second with the the tariff announced So kind of indirect indirect effects on your customers from tariff issues that might be impacting you know, your collaborative work with them? That would be my question. Thank you.

So, will continue our collaboratively work with our customer We have a customer intimacy strategy and our innovation, I call it a cost centric innovation, because again, we are co developing things with them We want to make sure that we're working on projects that they need they want, and they aspire to launch. It's not It's working with their with their objectives and their plans. So I wouldn't say we have seen a significant change in the last in the last few days with the tariff announcement. But we will stay diligent and we continue working with our customers. To make sure that we are providing the service and we're helping them in all their formulation challenges. And where things needs to be changed based on the tariff situation.

Okay, so no reduction in their willingness to work with Stepan, I guess. Is what you're saying? [indiscernible] I'm saying we will continue working with our customers in all their innovation challenges and changes that they need to execute. And I'm sure more requests are going to come in the future when this tariff situation also settles, I think people are also hesitant to make a lot of changes when the news are changing every day.

Right. Okay, great. Thanks very much. I appreciate all the color. Thank you, David.

Our next question comes from the line of Dmitry Silverstein of Water Tower Research. Your line is now open.

Thank you very much. Thanks gentlemen, for taking my call, and congratulations on a strong start to the year. A couple of questions. They are related, I think, So let's start with your raw material situation here. You've you've seen an increase in pricing on raw material pass through. In your surfactants business and a decline in pricing on raw material pass through in the polymer business. So what specific or at least families of raw materials that are still inflating in the surfactants and are deflating in your polymer business. And excluding the pass throughs, what does the pricing environment look like in in these businesses?

Look, as I mentioned before, in surfactants we saw important increases in all your chemicals. And that was the driver of pricing actions at the end of the quarter and actually early into April. To recover some of that. And And in polymers, again, we made some decisions in Q1 and we still have the raw material that we had on our inventory. So, we know we have to flow through that for a few months, for couple of months. But I don't I think we are in a good environment in terms of pricing and margins. I think it's a healthy situation. And we will need to continue working with with how tariff or any other development on the raw material piece can impact us in the following months, because again, tariffs are going to have direct and are going to have indirect impacts, right? So that's why we need to stay diligent and we need to to monitor the situation and take pricing where it's needed.

Okay. I understand that. I guess my question had more to do with the the the raw material cycle. Where where are we or where you are in raw material cycle? In other words, raw materials stopped increasing, for example, in surfactants and you're just catching up with the pass throughs, have they stopped declining or continue to decline polymers? So we can expect to see some more pricing pressure there.

Yeah, they have stabilized. But again, tariffs are coming. So, things will keep changing in the next few months. So, things have stabilized versus what we saw at the beginning of Q1. But now we will have a new development in the next few months. That we need to monitor.

Understood. And just to come back to the tariffs really briefly, You talked about direct and indirect impact, right? So the direct impact would be, if you have some raw material cost increases, and then indirect impact would be if your end products or your customers end products are being impacted in terms of demand by reciprocal tariffs going back and forth. So is there one area that you're more concerned or have a better visibility than another? Or are you monitoring both and you expect both of them to be somewhat impactful depending on how situation actually comes out?

Yeah, no, look, we need to monitor the indirect piece and we don't have enough data yet because things have not you know, been executed to the full extent. But, I mean, if there is a huge you know, wave of inflation, you could argue that could have some demand impact in construction industry. [indiscernible] right?

On surfactants. So So that's what we need to monitor in the next few months. We haven't seen anything. And as I said before, we have I mean, have a strong April. And so but this will take a few more months to go through the whole the whole chain all the way to the consumer. All the way to the construction industry, for our polymers business. And And we will provide more updates in July.

Understood. And then final question just on sort of base level demand. We've seen you've seen strong demand in oilfield chemicals and in consumer You also mentioned that your insulation products are growing well in North America and Europe. And you're, rolling out your spray foam, products. Construction seems to be I I don't wanna say starting to grow, but at least a little bit more uniform indications that the market is stabilizing certainly here in North America and maybe beginning to turn the corner. How do you feel about the construction side of your business? And what do you expect to see in 2025?

No. The comments that we made was we had single digit growth in our region volume business in North America and Europe. And that we believe there is a stat that is still, you know, demand because of the uncertainties in the market because of the high interest rate environment. So, we believe there is a lot of pent up demand in in this industry and this end market, and we haven't seen the full potential of it. And hopefully with more certainty and lowering interest rates in the future, that's where we will see this business growing faster like it did in the last if you think out the last ten to twenty years, this business grew high single digits. The markets grew high single digits. And we are not seeing the markets growing high single digits now. So that will take some time to go back to those levels.

Okay, but it is improving personally, excuse me. The demand level you're seeing in the first quarter, it better than than what you saw in in 2024 and 2023? Yeah, yeah. We grew 7% of volumes in polymers. And we grew [indiscernible] Okay.

Okay. But okay. So the business is growing, but but they're still more growth to come assuming the interest rate environment and the economic environment improves. Understood. Thank you.

Thank you, Thank you. As a reminder, to ask a question, you will need press 11 on your telephone and wait for your name to be announced. We will welcome back Mike Harrison for our next question. From Seaport Research Partners. Your line is now open.

Hi, just a couple more for me. I know you've addressed a lot of questions on tariffs. My question relates to imports of competitor products. I believe in the past, you guys, maybe particularly in the rigid polyol side, You've talked about some competition from imports in The U. S. And I believe this has also come up in the context of the medium chain triglycerides business within your specialty business. So are you based on what you're seeing with the tariffs right now, are you expecting that maybe some import competition could decline because of the impact of tariffs in any of your three segments?

Great question, Mike.

Not in polymers. The polymers business is heavily sourced from competition within the region. So but you are 100% right that our MCT business have imported competition and we're evaluating options. And to some degree the surfactant business as well. I mean, we always see some levels of surfactants import from China especially in the West. Coast. These are not significant volumes but there is always some imported products in the surfactant business that for sure we will we will evaluate and try to grow our business and grow our shares.

All right. Very helpful. And then last question for me is on the distribution piece of the Surfactants business. And the growth that you're seeing there, is that just underlying market growth Are you seeing some broader shifts away from a direct to customer and and more volume just naturally moving through distributors. Or is this part of a more concerted effort on your part to expand distribution relationships or partnerships And if that is the case, is that a North America thing? Is it a global thing? What color could you provide on that? Thank you.

Look, we are continuing working on our tier two, tier three strategy globally. I wouldn't say this is a North America only focus. I mean, it's a focus area for all our regions in our surfactant business.

But, of course, North America continues to be the the biggest region. And what I would say is that you have both You have market growth and you have our ongoing efforts to capture share to capture more customers. I mentioned that we acquired more than 400 new customers in this space. So it's part of our core strategy as we continue developing this business and continues to pay out.

All right. Thanks very much.

Thank you, Mike.

Thank you. I am showing no further questions at this time. I would now like to turn it back to Sam Hendrickson for closing remarks.

Thank you very much for joining us today's call. We appreciate your interest and ownership in Stepan Company. Have a great day.

Okay. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.