Greetings and welcome to the Q2 2019 Earnings Conference Call. [Operator Instructions] Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, Wednesday, July 24th, 2019. Your speaker for today is Mr. Luis Rojo. I would now like to turn the conference over to Mr.

Luis Rojo, Vice President and Chief Financial Officer. Go ahead please..

Good morning, and thank you for joining Stepan Company's second quarter 2019 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 prospects for our foreign operations, global and regional economic conditions and factors detailed in our Securities 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 Relations section of our website.

We will 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. Now with that, I would like to turn the call over to Quinn Stepan, Jr., our Chairman, President and Chief Executive Officer..

Thank you, Luis. Good morning and thank you all for joining us today. Despite many challenges in the first half of the year, the Company matched its 2018 record first half adjusted net income. Surfactant operating income excluding the negative impact of the Ecatepec equipment failure and foreign currency translation was down slightly.

Wet weather in the United States farm belt negatively impacted Surfactant income. The Polymer business improved significantly versus the first quarter results on the strength of a 5% volume growth and margin improvement. North American and European rigid polyol volumes grew 15% and 9% respectively during the first half of the year.

Our Specialty Product business results were higher versus the prior year quarter due to improved margins within the food and nutritional business and order timing differences within our pharmaceutical business.

Second quarter adjusted net income was $35.1 million or $1.50 per diluted share versus $32.2 million or $1.39 per diluted share in the prior year.

Surfactant operating income for the quarter was down primarily due to lower volumes and personal care, the exit of the sulfonation business in Germany, the equipment failure at the Ecatepec, Mexico facility and foreign exchange impacts.

The Ecatepec facility is now fully operational and the Company's insurance provider has acknowledged this incident is a covered event. The Company is pursuing insurance recovery for damaged equipment, incremental supply chain expenses and business interruption.

Global Surfactant volume decreased 8%, principally due to the Company's exit from the sulfonation business in Germany and lower demand in the global personal care end market. The Polymer business was up versus the prior year, primarily due to higher volume and slight margin improvement.

Global polymer sales volume increased 5% versus the prior year quarter. North American and European rigid polyol sales volume grew 9% -- 19% and 10% respectively.

Our Specialty Product business results were higher due to improved volume and margins within our medium chain triglyceride product line and order timing differences within our pharmaceutical business. Our Board of Directors declared a quarterly cash dividend on Stefan's common stock of $0.25 per share payer, payable on September 13th, 2019.

At this point, I would like Luis to walk through a few more details about our second quarter results..

Thank you, Quinn. My comments will generally follow the slide presentation. Let's start with Slide 4 to recap the quarter.

Adjusted net income for the second quarter of 2019 was $35.1 million or $1.50 per diluted share, a 9% increase versus $32.2 million or $1.39 per diluted share in the second quarter of 2018, because adjusted net income is a non-GAAP measure, we provide full reconciliations to the comparable GAAP measures, and these can be found in Appendix II of the presentation and table 2 of the press release.

Specifically, adjustment to reported net income this quarter consists of adjustments for deferred compensation expense, restructuring expenses and other non-operational items.

Adjusted net income for the quarter exclude deferred compensation expense of $1.4 million or $0.06 per diluted share, compared to the deferred compensation income of $1.4 million dollars or $0.06 per diluted share in the same period last year.

The deferred compensation numbers represent the net expense related to the Company, deferred compensation plan, as well as cash-settled stock appreciation rights for our employees, because these liabilities change with a movement in the stock price, we exclude this item from our operational discussion.

Adjusted net income for the quarter also exclude $300,000 or $0.01 per diluted share of after-tax business restructuring charges, related to the ongoing decommissioning cost related to the Canadian plant closure in 2017 and the Germany sulfonation shutdown in 2018.

We expect that additional $1 million of after-tax decommission expense at our Canadian and German plants in 2019. Additionally, adjusted net income excludes $2.2 million or $0.09 per diluted share of after-tax environmental remediation expense.

The majority of the current year expense reflects environmental remediation costs associated with the Company's Maywood, New Jersey site. Finally, adjusted net income excludes $900,000 of after-tax expense associated with the Company's voluntary prepayment of the outstanding principal balance of its 5.88% senior notes.

Slide 5 shows the total Company earnings bridge for the second quarter compared to last year's second quarter, and breaks down the increase in adjusted net income. Because this is net income, these figures noted here are on an after-tax basis.

We will cover each segment in more detail, but to summarize, Surfactant was down, while Polymers and the Specialty Product were up versus the prior year. Favorable net interest expense was related to higher interest income in the US after the company cash repatriation in 2018.

The Company's effective tax rate -- tax rate was 21.8% for the first half of 2019 versus 20.7% for the first half of 2018. This year-over-year increase was primarily attributed to a favorable non-recurring recurring tax benefit in 2018. We expect the full year 2019 effective tax rate to be in the range of 21% to 24%.

The Slide 6 focuses on Surfactant segment results for the quarter. Surfactant operating income decreased $2 million, driven by volume, unfavorable impact of foreign currency translation, and the exit of the Germany sulfonation business.

This was partially offset by operating income margin improvement of 70 basis points due to raw material price reduction and cost reduction efforts. Surfactant net sales were $330 million, down 12% from the same quarter a year ago.

Volume decreased 8%, mostly due to the Company's exit from commercial sulfonation in Germany in 2018, lower demand in the North America personal care and agriculture markets, and the impact of Ecatepec, Mexico equipment failure. Selling prices were down 2%, primarily due to pass through of lower raw material cost.

The translation impact of a stronger US dollar decreased net sales by 2% and operating income by $500,000. In the bridge, we show North America and Asia in the same category, because our Surfactant business in Asia is relatively small and most of the Surfactant production in that region is used to support business in the United States.

North America decrease was primarily due by lower commodity personal care volumes and soft agricultural demand due to the wet weather in the United States farm belt. Latin America losses associated with Ecatepec, Mexico sulfonation equipment failure were offset by one-time benefits related to a VAT tax recovery quality project in Brazil.

The Ecatepec, Mexico facility is now fully operational and we have began to recapture market share. The Company's insurance provider has acknowledged this incident is a cover event for insurance recovery. Therefore, we believe that majority of this impact is just a timing issue, with recovery in future quarters.

European results were flat despite lost volume and gross profit from the exit of the low margin sulfonation business in Germany and unfavorable foreign exchange translation. Now turning to polymers on Slide 7. Polymer operating income increased $2.5 million or 12% versus the prior year quarter, primarily due to higher volumes and improved margins.

Net sales for the quarter were $141 million, in line with the prior year period. Volume increased 5%, primarily due to high -- higher North America and European polyols used in rigid foam insulation and insulated metal panels, partially offset by lower PA volumes.

Selling prices declined 3% and the translation impact of a stronger US dollar negatively impacted net sales by 2%. Global polyol volumes increased 11% due to rigid polyol growth in North America, Europe and Asia.

The strong market demand, driven by increased insulation standards and growth in construction was partially offset by lower specialty polyol volumes. North America polyol results increase due to 19% volume growth in rigid polyols and margin improvements. European results were down slightly, primarily due to unfavorable foreign exchange translation.

Rigid polyol volumes were up 10% due to the PIR insulation recovery from the 2017 MDI challenges. China results improved on double-digit volume growth, driven by cold storage insulation demand. Finally, PA results decrease due to lower volumes.

The Specialty Products operating income increased $1.7 million versus the prior year quarter, primarily due to improved volume and margins within the medium chain triglyceride, MCT, product line and order timing differences within our pharmaceutical business. Turning to Slide 8. Our balance sheet remains strong as we continue to having no net debt.

We returned $18 million to our shareholders via dividend and share repurchase in the first half of 2019. We also increase our cash dividend for the 51st consecutive year, placing us in a very select group of companies. Beginning on Slide 9, Quinn will now update you on our strategic priorities and some plans to increase shareholder value..

Thank you, Luis. Despite the challenging current environment, we believe our Surfactant strategy will deliver value for our shareholders. Our focus on end market diversification, Tier 2 and Tier 3 customers, as well as our cost-out activities should continue to improve our margins.

Given the strong volume growth in the first half, we believe our Polymer business will continue to benefit from the growing market for insulation materials and that the business should deliver both full volume -- full year volume growth and incremental margin improvement versus 2018.

On the strength of our first half earnings, we believe full year Specialty Product results will improve versus 2018. Overall, we remain cautiously optimistic about the balance of the year.

After a good start, we are well positioned to continue our momentum by focusing on our strategic priorities, market diversification, customer intimacy, innovation, operational excellence and M&A. Our core values, which are ingrained throughout the entire organization serve as the foundation for the Company's execution of this strategy.

Turning to Slide 10, we've made good progress on our market diversification efforts, which continues to be a key component of our strategy. Although volume to the functional end markets decreased during the quarter and lower demand for agricultural products in North America due to wet weather, our agricultural volume in Latin America increased 32%.

We are expanding our presence in specialty alkoxylates with new dedicated technical resources and have introduced 13 new products over the past 18 months.

Next, our focus on customer intimacy continues to be a priority in order to deliver growth within our Tier 2 and Tier 3 Surfactant customer base, and to maintain our market leadership position in several of our key businesses.

Although Tier 2 and Tier 3 Surfactant customer volumes decreased 9% during the quarter, primarily due to the exit of the sulfonation business in Germany and the equipment failure at Ecatepec, Mexico facility. Contribution margin from this customer segment improved slightly.

Global Rigid Polyol volume increased 14% during the quarter due to strong market demand driven by increased insulation standards, European PIR insulation market recovery from the previous MDI challenges and growth in construction.

We remain optimistic about continued growth of the Rigid Polyol market due to increased insulation standards, energy conservation efforts and growth in the construction globally. Innovation is also a key aspect of our strategy.

As a leader in the rigid polyester polyol market, we continue to work on developing the next generation of value added technologies for our customer base.

Our agricultural chemicals business has developed and commercialized 10 new products over the last year, which are helping customers around the world improve the performance and the environmental profile of pesticide formulations.

Our patent-pending technology for fracturing, including flowback modifiers and friction reducer boosters are helping Oilfield customers maintain or increase production at lower cost. Current oil prices should accelerate adoption.

The use of biocides is growing in the fracturing market due to regulations that restrict the use of fresh water which should provide opportunities for our biocidal quaternary products. The launch of STEPANQUAT Helia is well under way.

North American personal care customers are responding positively to a new hair care conditioner ingredient that is mild and safer for the environment. During the quarter, we had our first STEPANQUAT Helia sale in North America and we have now also introduced the product to our Latin American customer base.

Next, operational excellence is an integral part of our strategy. We believe that the application of sulfonation best practices, network synergies and drive cost savings opportunities will create long-term value from our Ecatepec acquisition. Restructure of the Specialty Products office in the Netherlands is complete.

Cost savings should be realized going forward, as we absorb the site's supply chain, QA and R&D functions into other Stepan locations. We are also delivering savings on the shutdown of our surfactant operations at the Wesseling, Germany plant.

We will continue to examine our asset base for opportunities to further optimize and improve capacity utilization and to more efficiently serve our customers around the world. Finally, M&A represents an important tool as it means to deliver EPS growth.

Given the strength of our balance sheet, we will continue to prudently assess M&A opportunities to fill gaps in our product portfolio and to add new platform chemistries. Our core values, customer focus, people first, continuous improvement, integrity, growth and innovation and sustainability describe how we will accomplish our plan.

The market provides challenges and opportunities, we feel we are well-positioned to capture opportunities for you, our shareholders. This concludes our prepared remarks at this time. We'd like to turn the call over for questions. Misty, please review the instructions for the question portion of today's call..

[Operator Instructions] Your first question is from Mike Harrison with Seaport Global Securities..

Hi, good morning. Quinn, I was wondering if you can talk a little bit about the margin performance in the Polymers business, really trying to get a sense of just how sustainable that improvement could be, clearly you guys got some benefits from volume leverage as well as from raw materials versus pricing.

I'm just wondering if we're also seeing maybe some restructuring benefits or maybe if you can walk through the drivers there? That would be helpful..

Yeah, I think as we looked at our first quarter, we came into the year with high raw material costs due to the -- in preparation of an inventory -- due to an inventory build in anticipation of a potential freezing of the river. And then during that period, raw material prices declined that negatively impacted our margins in Q1.

So Q2, I believe, is more representative of where we will be kind of going forward in the Polymer segment of our business in terms of margins for the balance of the year..

All right.

And then over on the Surfactant side, can you quantify the impact of that onetime VAT recovery and were there any other onetime benefits really in either segment?.

The value of the onetime VAT was approximately $2 million..

Basically outside of the losses that we had in Mexico..

All right. And speaking of the losses in Mexico, and is that plant -- you said it was up and running.

Will it be fully up and running for the entire third quarter or should we think of the third quarter as kind of a ramp up or transition period and maybe we're back to normal by the fourth quarter?.

So the plant is up and running today in terms of our ability to recapture some of the business that we lost during the outage. I would anticipate that that would ramp up Q3 -- during Q3 and then into Q4. So we are projecting that that business will be profitable in the second half of the year with incrementally getting better Q4 over Q3..

Okay..

Not a significant needle mover in -- for the balance of 2018. Losses will stop but it won't significantly impact profitability -- positively..

Okay.

And then as it relates to the ag demand that you were seeing, is that something that's run its course at this point that we sense there or do you have some customers that maybe came out of this planting season with high inventory levels for herbicides or insecticides and you're going to potentially see some slower demand as we get into the next growing season, kind of first half of 2020?.

I think we're a -- personal opinion, I think we're absorbing a lot of that -- that decrease in the ag business in Q2 and Q3. Today we are projecting kind of Q4, which would be the next growing season to be back on track with traditional levels..

Okay. And then last question for me is on the Specialty business, not one that we talk about very often, but obviously a very strong quarter.

I know that that's a business where you've been trying to make some improvements to the cost structure you mentioned, the Netherlands office closure, but I also know that that MCT business has had some market related challenges if we go back a couple of years.

So just wondering, is the better performance that we're seeing related to your internal efforts or improvement in the MCP market or both?.

Both, both. So we also expanded production capability in that -- for that product line during 2018. So we do have increase. We are able to support some increased quantities in the marketplace today and margins have improved as well. So the largest percent of the increase of that business is due to the MCT line today, both volume and margins..

And your next question is from the line of Vincent Anderson with Stifel..

Thank you for taking my questions. Good morning.

I was hoping you could quantify the volume headwinds in Surfactant between the plant outage, the shutdown in Germany and then with the remainder being the decline in customer demand, and then if you also don't mind expanding on the weakness in personal care products?.

So roughly 25% of the decrease, so two of the 8% is associated with the shutdown of the business in Germany. And then we would say, roughly, let's call it another 2% to 3% is associated with the Ecatepec.

Is that fair?.

Yeah, fair..

With the Ecatepec outage, maybe a little -- maybe closer to 2%, then 3%, and then maybe another 2% associated with personal care addition and the rest would be the balance of our product line..

So that's helpful.

And in personal care, was there anything specific? Was there a major contract that moved against you or is that a broader slowdown?.

So one of the value propositions that we offer the marketplace is that we are feedstock agnostic and there are times in the marketplace when customers change their feedstocks from either natural base to petroleum based or vice versa, and we help them save money by facilitating their -- that feedstock flexibility for them.

In this case, we have two large customers that are in middle of a transition from one feedstock to another. Their transition has been delayed. So we've had some start-up issues primarily in the personal care marketplace.

And what we anticipate and those conversions have started in Q3, so we anticipate Q3, Q4 volumes improving versus where we were in the first half because of that value that we offer the marketplace, but the customer delays in terms of implementation in 2019..

That's very helpful. I mean, if I stack it all up, it sounds like close to 5% to 6% of the 8% volume decline could be characterized as onetime in nature.

Is that a good way of thinking about it?.

The transitions occur on a regular basis and -- so I don't know that I would -- I don't know that I would go fully in that..

Yeah..

I would think that maybe a little bit of an overstatement..

Okay. All right. Fair enough.

And then when I look at where you had headwinds in Surfactants, did that translate to a negative mix impact on margins?.

Certainly, lower agricultural volumes negatively impact our mix, but -- so I would say that -- in the big picture, those volumes are relatively small. So I would say that's a small picture in the big picture..

Okay. And then you talked about raw material benefits in Surfactants as well.

Was that more related to timing of pass through of raw material declines or is there a more sustainable expansion in the spread over your raw material costs that we can look forward going forward?.

Generally, our strategy -- as we implement our strategy, more functional products, more Tier 2, Tier 3 customers that has a favorable impact on our margins. And raw materials overall, from a Surfactant perspective, oleochemical raw materials as well as ethylene derivatives are at the lower end of their recent historical prices.

And so maybe some benefit from lower pricing -- raw material pricing, but we would say it's more reflective of our customer and market mix..

Okay. Thanks. And I'm going to sneak one last one here..

And we expect some of these raw materials to go up slightly in the next couple of quarters. So this is -- we believe we're in a little bit on the bottom..

Okay. Last one from me. Rigid Polyols are something like two-thirds of your Polymer business, that would imply a pretty significant volume decline on the rest of the Polymer segment in order to pull volume growth down to 5%.

Can you expand on what's happening there right now?.

Our phthalic -- commodity phthalic anhydride volumes were down significantly in the first half of the year and some of that is customer related, but quite frankly, I think some of that could be end-market related as well.

If we look at kind of parts of our business that generally reflect more -- reflect the economy than other parts, certainly phthalic anhydride does and our distribution business does.

And I think you've seen or may have seen Brenntag issued a profit warning, and from what we understand other distributors in the marketplace, their volumes are -- we're challenging Q2.

So when we say we're cautiously optimistic for the balance of the year, a big part of that is, we're not sure exactly what's going to happen with the economy in the second half of the year. So we are beginning to see some slowdown in some of our market segments and certainly phthalic anhydride is in that category.

I will tell you that volumes in the month of January appear to be back on track, but we're watching that very, very cautiously..

I'm sorry, that's July..

July are back on track in that space, but we're watching that very carefully..

Okay. Thank you..

And our next question is from the line of Jason Rodgers with Great Lakes Review..

Yes, I did want to just follow-up with the Surfactant business. It seems like you have some of these issues that are short term in nature like the shutdown in Germany and the equipment failure.

I'm just wonder if you can provide an outlook on when you expect volume growth to return in Surfactants? And this is -- until that happens, do you see operating margins under pressure in that business?.

We're not anticipating significant volume recovery or growth in -- for the balance of 2019 in our -- particularly in our North American Surfactant business. I think as I mentioned, we'll see some recovery of our personal care volumes.

So we are anticipating that to happen in the second half, but not a lot of fundamental market driven growth in our Surfactants business. We do have opportunities in the ag and the oilfield market that are not market related, that are more customer focused.

So we do anticipate that our oilfield volumes will improve in the second half of the year, but from a -- it's still off a relatively small base from a global Surfactant business. We are seeing some growth in Europe and again that's off a smaller base because we did exit -- permanently exit the sulfonation business in Germany..

All right.

And I did want to ask about the environmental remediation costs, saw that wasn't broken out separately on the press release and wondered where that's located in the income statement?.

In admin. This is included in admin expenses. That's why you'll see the admin cost increase in Q2 versus Q2 '18..

Got it. Thank you..

And the next question is from Curt Siegmeyer with KeyBanc Capital..

Hey, good morning guys. Congratulations on the quarter..

Thank you. Good morning..

It's work, that's why we call it work..

I just wanted to dig in a little bit more on Europe on the Polymer side. Just wanted to try to get a better sense of what you're seeing from kind of an underlying demand standpoint, you know, sort of that -- you know, the growth there was a little bit stronger than I expected.

So I'm just trying to kind of parse out how much of this strength in particularly the volume growth is underlying demand strength versus this recovery from the MDI issues?.

Yeah, I would say there is a little bit of both and it's hard to differentiate exactly which is coming from the MDI recovery versus the market growth. I will tell you that virtually all of our customers in Europe are growing at this point in time.

So -- but it's hard -- it's hard for us to tell exactly how much is MDI recovery, but we do believe that growth will continue or the strength in the market will continue year-over-year in Europe for the balance of 2019..

Got it. And then if I could follow-up on the polymer margins, maybe ask a similar question a different way. You know, it looks like margins were up call it 240-ish basis points year-over-year.

How much of that do you think was attributed to the raw material benefit?.

Virtually all of it..

Okay. Got it. Thank you..

And what I would say also on the margins on Polymers. If you look at the first half, I mean, we mentioned -- the low margins in Q1, we were coming from a Q1 of 10%, we're offering the 16% in Q2. So when you think of the average of 13% for the first half that is a good position that we believe. It's a healthy -- it's a healthy margin situation.

If you look at -- if you look at what we did last year, I mean, we closed last year at 12.2% and what we're saying that, we're expecting on this business volume growth and some margin improvements, but we're not expecting to take these a few points higher.

We believe we're going to improve versus the 12% that we had last year, but not dramatically to historical levels and peaks. So I see more the -- first half, 13%, 13.5%, that's a good number for now..

Great. Thank you. That's helpful..

[Operator Instructions] And we do have a follow-up question from the line of Mike Harrison with Seaport Global..

Hi. Just a couple quick ones on the Polymers business. First of all, you mentioned some of the regulatory drivers for increasing polyol demand or insulation demand. It's been a while since we've seen that business growing.

Can you maybe just give us an update though on the regulatory environment and kind of the pace at which those more stringent regulations are being adopted as you look at different regions, as you look at Europe or the US or China?.

I'm not looking at the map today. I don't have that map in front of me. But generally speaking, states across the United States continue to adopt more stringent building code regulations or recommendations from an insulation perspective with an attempt to save energy.

And so that activity continues and it continues to over a period of time, slowly add to the amount of insulation and the thickness of insulation -- that is required in the United States.

Similar -- the US has generally recommendations and in Europe they tend to be mandates and we can provide an update to you and to the market in terms our perspective in terms of increased polyol consumption.

We've had a map in our -- some of our investor regulations and we'll make that available to you on the website that will quantify that a little bit more..

Yeah, but market growth continues to be the driver. The driver of the overall volumes where you saw the 19% in the US and the 10% in Europe..

And maybe to answer the question a little more differently.

In our planning -- in our long term planning process today, we used to have 6% or 7% growth for the Polymer market overall, and I think we've kind of taken that down a little bit, but we do anticipate kind of 5% sustained growth for our polyol products -- for the market for our polyol products over the next five years.

So that 5% growth rate is what we have attributed to market growth, but -- and that is driven a lot by insulation standards..

Got it. And then over in China, you didn't reference necessarily the insulation regulations or the environment driving demand there, but you referenced cold storage and insulation demand.

Can you maybe talk about that cold storage insulation market a little bit? How big is that relative to roofing insulation and maybe what's driving the strength in China?.

So today there is not a roofing market in China due to the current regulations. So due to fire concerns, the Chinese have banned the use of polyiso insulation in large multi-storey buildings for use. So the market that's currently available to us in China is for cold storage and so that's the market that we're currently pursuing.

We will also adopt and add additional case related product lines to be made at that site over a period of time. The cold storage is a significant growth opportunity in China, approximately 30% of the food that's used in China is spoiled in its delivery to the marketplace. So there is a significant need for refrigerated --.

Infrastructure..

Infrastructure, whether that be trucks or whether they be buildings or warehouses associated with cold storage to preserve their food and so that is a growth market today, and that has enabled us to swing from a loss to profitability in that marketplace today..

Interesting. Okay. Thanks very much..

Thank you, Mike..

You also have a follow-up question from the line of Vincent Anderson from Stifel..

Thank you. So you recently went even further in simplifying your balance sheet.

Should we take this as an indication that you're pursuing acquisition opportunities that may require more capital than just what's available in your undrawn term debt facility right now?.

You know, I would say that's aspirational at this time. We are working on a number of smaller acquisitions at this time that we could fund internally with existing cash.

We will determine if those happen or don't happen over the next couple of months, but we continue to look for other larger things that we may need additional cash for, but nothing is imminent or on -- in our sights at this point in time..

But we will continue looking, I mean, as you know, this is one of our leg on the growth, the M&A opportunity. And as you know, we have plenty of M&A capacity, more than a $1 billion in capacity if you think about our balance sheet. So we will continue looking and this will be a key growth strategy for the next five years, small and big..

Thank you.

And then just briefly, you mentioned that you made your first sale of STEPANQUAT, do you have a rough idea of what percent of your current Surfactants revenues are coming from products released and call it the past two or three years?.

I don't have it here..

That's okay. It's reassuring to see the progress..

Yeah, we need to make more progress in that regard. And we have -- and we're looking forward to the -- our new Chief Technology Officer and Sustainability Officer, Jason Keiper, who we recently hired from Syngenta, to have a positive impact on our innovation metrics going forward..

Perfect. Thank you so much..

Thank you..

Mr. Luis Rojo, there are no further questions at this time. I will now turn the call back over to you. Please continue with your presentation or closing remarks..

Hi, this is Quinn Stepan. Thank you very much for joining us on today's call. We appreciate your interest and ownership in Stepan Company. We look forward to reporting to you on our third quarter 2019 call. Thank you very much and have a great day..

That does conclude the conference call for today, we thank you for your participation and ask that you please disconnect your lines..