Stepan Company (NYSE:SCL) Q2 2023 Earnings Call Transcript

David Silver: Yes. No. That was great. Cannibalization was the word I was trying to think of. But no, that’s very helpful.

Operator: [Operator Instructions]. And we have a follow-up question from Vincent Anderson from Stifel.

Vincent Anderson: I just had 1 more, quick one. You mentioned, I think, alkoxylation demand in your current product portfolio was up double digit year-to-date. Is that correct?

Scott Behrens: Correct.

Luis Rojo: Correct.

Vincent Anderson: Okay. Yes, I believe the estimates that I’ve seen typically put demand growth for that family in kind of the mid- to high single digit area, at best. So can you talk about what’s been driving your growth in your portfolio specifically?

Scott Behrens: Yes. So it’s pretty simple. It’s a $265 million investment, tremendous focus from our commercial and R&D organizations. And we are winning out in the marketplace with our product offerings and our — more importantly, our service. So there’s a lot of formulation activity that’s happening within the Surfactant industry because of sustainability needs, because of all the supply chain constraints that have happened in ’21 and ’22. So there’s a lot of opportunity to engage with customers on formulation projects. And quite honestly, we’re winning.

Vincent Anderson: That’s good to hear. And then maybe just a quick follow-up on just how you commercialize the plant that size. With the growth that you’ve seen so far, is it really kind of with a customer mix today that is matched to your current capacity, and you’ll just have to take what you’ve learned and start over with the higher volumes and higher volume customers. Or is this going to translate pretty quickly to larger offtake once the plant is up and running?

Scott Behrens: Yes. So when that plant starts up, there is a strong baseload demand already existing within our business. as we move product around both an internal and external manufacturing coproducer network. So we’re pretty confident that we’re going to have a good baseload upon start-up. The transition time line, so once the commissioning process will take months, there is a lot of different products, a lot of number of qualifications. So when you’re talking about steady onstream continuous demand. It’s going to be Q3 at the earliest before that sustainable stream of production is online.

Operator: And I am showing no further questions. I would now like to turn the call back over to Scott Behrens for closing remarks.

Scott Behrens: Thank you, Justin. Thank you very much for joining us on today’s call. We appreciate your interest and ownership in Stepan Company, and please have a great day.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.