Stepan Company (NYSE:SCL) Q4 2022 Earnings Call Transcript

Luis Rojo: Great question, Mike. So what we’re seeing is, we saw the peak of working capital kind of in Q3, and now we are our kind of stable versus that peak level. But yes, this has been roughly a $200 million increase, versus the base period versus 2020, we have seen a significant increase because of the of inflation on raw material and everything. So as we deliver $161 million in cash from operations, for 2022, that includes an impact of around $71 million of working capital. So if you exclude working capital, because this is a one-time, we’re now stable, we generated $232 million dollars in cash. And this was 100% in line with our plan. If you look at the 300 million CapEx, of course, the 300 million CapEx has too many of projects there.

Pasadena and low 1,4 so it just tick that out, you end up with a free cash flow productivity of around 85%, which is pretty damn good for us. So at the end, you have those three big drivers that I kind of want, I mean, $70 million working capital. And then of course, we’re building Pasadena and low 1,4. If you remove that from the equation, we were happy with our cash flow. And as you know, we’re very efficient on our working capital. We have less than 20% of our sales in working capital when the industry average is about 24% 25%.

Mike Harrison: Alright. And I guess just maybe another cash flow related question. Where did the depreciation and amortization end up for the whole year? I’m guessing it was around 95 million? And we’re thinking about next year? Where should that D&A number go? I assume that goes up substantially as you start to bring on some of the new assets that you’ve discussed.

A €“ Luis Rojo: You’re 100%, right. $95 million, were estimating at least $112 million to $114 million next year can increase between $17 million to $20 million that of course will depend on timing from when you — just start the depreciation of some of these assets, but roughly, probably around $70 million.

Mike Harrison: Excellent. Thank you very much.

Operator: Thank you. That concludes our Q&A session for today and I would like to turn the call over to Scott Behrens, for closing remarks. Please go ahead.

Scott Behrens: Thank you very much for joining us on today’s call, we appreciate your interest in ownership in Stepan company and have a great day

Operator: This concludes today’s conference call thank you all for joining. Enjoy the rest of your day.