Core Insights - The company reported a 7% increase in net sales for the second quarter of 2025, driven by higher selling prices and improved product mix, despite a decline in global commodity consumer products demand [6][14][21] - Adjusted EBITDA grew by 8% in the second quarter and 10% for the first half of 2025, reflecting strong performance in the Polymer and Crop Productivity segments [2][5][11] - The effective tax rate decreased significantly to 19.2% in the first half of 2025 from 36.1% in the same period of 2024, contributing to improved net income [10][21] Financial Performance - Net sales for Q2 2025 were $594.7 million, up from $556.4 million in Q2 2024, while net income increased by 19% to $11.3 million [3][5][21] - Adjusted net income for Q2 2025 was $12.0 million, a 27% increase year-over-year, driven by growth in Polymers and Crop Productivity [5][23] - The company experienced a negative free cash flow of $14.4 million in Q2 2025, primarily due to inventory builds [5][13] Segment Performance - Surfactants segment net sales increased by 8% to $411.5 million, with selling prices up 11% but sales volume down 1% due to lower demand in commodity markets [8][14] - Polymers segment net sales rose by 2% to $162.8 million, with a 7% increase in sales volume, although selling prices decreased by 7% [8][14] - Specialty Products segment saw a significant 22% increase in net sales to $20.5 million, primarily due to higher sales volume [8][14] Operational Developments - The new alkoxylation site in Pasadena, Texas is now operational and is expected to contribute positively to volume growth and supply chain savings in the second half of 2025 [2][11] - The company is on track to close an asset sale in the Philippines in Q4 2025, aiming to optimize its global footprint [11] Outlook - The company remains optimistic about achieving full-year growth in adjusted EBITDA and adjusted net income, despite market uncertainties and tariff impacts [11][21] - Focus will be on enhancing operational excellence, improving product and customer mix, and accelerating free cash flow generation [11]

NORTHBROOK, Ill., July 23, 2025 /PRNewswire/ -- Stepan Company (NYSE: SCL) will issue its second quarter 2025 earnings results on Wednesday, July 30, 2025 at approximately 7:00 a.m. ET (6:00 a.m. CT). Supporting slides will be posted at approximately the same time on the Investors/Presentations page at www.stepan.com. The Company will hold a conference call to discuss and answer questions about its financial and operational performance on the same day at 9:00 a.m. ET (8:00 a.m. CT).The call will be hosted b ...

Core Viewpoint - Stepan Company will release its second quarter 2025 earnings results on July 30, 2025, followed by a conference call to discuss financial and operational performance [1][2]. Company Profile - Stepan Company is a major manufacturer of specialty and intermediate chemicals, particularly known for surfactants used in cleaning and disinfection products, as well as polyurethane polyols for thermal insulation [4]. - The company operates modern production facilities across North and South America, Europe, and Asia, and its stock is traded on the NYSE under the symbol SCL [5].

Group 1 - Stepan Company announced the appointment of Ruben Velasquez as Vice President and Chief Financial Officer, effective July 15, 2025, succeeding Samuel Hinrichsen [1] - Mr. Velasquez has over two decades of global finance leadership experience across various industries, including industrial conglomerates and oil and gas [3] - The company is a major manufacturer of specialty and intermediate chemicals, leading in surfactants and polyurethane polyols for various markets [3][4] Group 2 - Stepan Company is headquartered in Northbrook, Illinois, and operates modern production facilities across North and South America, Europe, and Asia [4] - The company's common stock is traded on the New York Stock Exchange under the symbol SCL [4]

Group 1 - Stepan Company (NYSE: SCL) has been performing well in recent months [1] - The focus of Crude Value Insights is on cash flow and companies that generate it, leading to value and growth prospects [1] Group 2 - Subscribers have access to a 50+ stock model account and in-depth cash flow analyses of exploration and production firms [2] - The service includes live chat discussions about the oil and gas sector [2]

Core Insights - Stepan Company has appointed Corning Painter as a Director, effective immediately [1] - Corning Painter is currently the CEO of Orion S.A. and has extensive experience in the chemical industry [2] - The Chairman of Stepan, F. Quinn Stepan, Jr., expressed confidence in Painter's strategic and operational expertise [3] Company Profile - Stepan Company is a major manufacturer of specialty and intermediate chemicals across various industries [3] - The company is a leading producer of surfactants, essential for cleaning, disinfection, and agricultural solutions [3] - Stepan is also a significant supplier of polyurethane polyols for the thermal insulation market and CASE industries [3] - The company operates modern production facilities in North and South America, Europe, and Asia [4] - Stepan's common stock is traded on the NYSE under the symbol SCL [4]

Core Viewpoint - Stepan Company has announced the sale of its manufacturing assets in the Philippines to Masurf, Inc., aligning with its strategy to focus on core growth areas and maintain service to its customer base in Southeast Asia [1][2]. Group 1: Transaction Details - The manufacturing assets located in Bauan, Batangas, Philippines will be sold to Masurf, a subsidiary of Musim Mas Holdings Pte. Ltd. [1] - A tolling agreement will be established between Stepan Philippines Quaternaries, Inc. (SPQI) and Masurf to continue serving customers post-transaction [2]. - The terms of the transaction have not been disclosed, and it is subject to normal closing conditions [2]. Group 2: Company Profile - Stepan Company is a major manufacturer of specialty and intermediate chemicals, particularly known for its surfactants used in cleaning, disinfection, and agricultural solutions [3]. - The company also supplies polyurethane polyols for the thermal insulation market and CASE (Coatings, Adhesives, Sealants, and Elastomers) industries [3]. - Headquartered in Northbrook, Illinois, Stepan operates a network of modern production facilities across North and South America, Europe, and Asia [4].

[Part I - FINANCIAL INFORMATION](index=2&type=section&id=Part%20I%20-%20FINANCIAL%20INFORMATION) [Item 1 - Financial Statements](index=2&type=section&id=Item%201%20-%20Financial%20Statements) Presents unaudited condensed consolidated financial statements for Q1 2025 and 2024, detailing financial position and performance [Condensed Consolidated Statements of Income](index=2&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Stepan Company reported increased Q1 2025 net sales to $593.3 million and net income to $19.7 million, reflecting improved operating performance Q1 2025 vs Q1 2024 Income Statement Highlights | Metric (In thousands, except per share) | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $593,255 | $551,418 | +7.6% | | **Gross Profit** | $75,463 | $70,281 | +7.4% | | **Operating Income** | $28,288 | $20,169 | +40.3% | | **Net Income** | $19,711 | $13,893 | +41.9% | | **Diluted EPS** | $0.86 | $0.61 | +41.0% | [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets increased to $2.39 billion, with total equity rising to $1.20 billion, primarily due to retained earnings Balance Sheet Summary | Metric (In thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $897,156 | $810,429 | | **Total Assets** | $2,389,683 | $2,304,648 | | **Total Current Liabilities** | $739,480 | $669,034 | | **Total Liabilities** | $1,189,145 | $1,134,714 | | **Total Equity** | $1,200,538 | $1,169,934 | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities sharply declined to $6.9 million in Q1 2025 from $41.6 million in Q1 2024, primarily due to increased working capital use Q1 2025 vs Q1 2024 Cash Flow Summary | Cash Flow Activity (In thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net Cash Provided By Operating Activities** | $6,942 | $41,554 | | **Net Cash Used In Investing Activities** | ($26,411) | ($24,415) | | **Net Cash Provided By (Used In) Financing Activities** | $22,761 | ($19,984) | | **Net Increase (Decrease) in Cash** | $7,827 | ($4,048) | [Notes to Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes explain financial statement preparation, segment performance, debt structure, and environmental contingencies, with Surfactants as the dominant segment - The company has three reportable segments: Surfactants, Polymers, and Specialty Products, with **Surfactants accounting for 72% of consolidated net sales** for the first three months of 2025[58](index=58&type=chunk)[83](index=83&type=chunk) - As of March 31, 2025, the company estimated a range of possible environmental and legal losses from **$17.9 million to $42.4 million** and has accrued the minimum amount of **$17.9 million**[37](index=37&type=chunk) - Total debt increased from **$625.4 million** at year-end 2024 to **$659.3 million** as of March 31, 2025, primarily due to higher borrowings under the revolving credit facility[67](index=67&type=chunk)[125](index=125&type=chunk) - North America is the company's largest geographic market, with net sales of **$338.0 million** in Q1 2025, an increase from **$312.6 million** in Q1 2024[66](index=66&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=26&type=section&id=Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20%28MD%26A%29) Management analyzes Q1 2025 financial results, highlighting an 8% sales increase to $593.3 million and a 40% operating income rise, driven by higher prices and volume [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Q1 2025 net income rose to $19.7 million, driven by an 8% increase in consolidated net sales from higher prices and 4% volume growth, and reduced corporate expenses - Consolidated net sales increased by **$41.8 million (8%)** year-over-year, primarily due to higher average selling prices and a **4% increase in sales volume**[89](index=89&type=chunk) - Operating income increased by **$8.1 million (40%)** year-over-year, driven by higher income in the Surfactants and Specialty Products segments and a **24% decrease in corporate expenses**[90](index=90&type=chunk) - The effective tax rate decreased to **20.1%** in Q1 2025 from **28.6%** in Q1 2024, mainly due to the settlement of an audit in one jurisdiction[94](index=94&type=chunk) [Segment Results](index=32&type=section&id=Segment%20Results) Segment performance shows Surfactants leading with sales and operating income growth, Polymers with flat sales and declining income, and Specialty Products with increased sales and operating income Q1 2025 vs Q1 2024 Segment Operating Income | Segment (In thousands) | Q1 2025 Operating Income | Q1 2024 Operating Income | % Change | | :--- | :--- | :--- | :--- | | **Surfactants** | $28,930 | $26,079 | +11% | | **Polymers** | $8,018 | $8,382 | -4% | | **Specialty Products** | $5,508 | $4,268 | +29% | | **Total Segment** | $42,456 | $38,729 | +10% | - Surfactant sales volume grew **3%**, with strong demand in agricultural end markets, though North American gross profit decreased **16%** due to higher expenses at the new Pasadena facility, offset by strong performance in other regions[96](index=96&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) - Polymer sales volume increased **7%**, but operating income fell **4%** due to lower average selling prices and reduced margins, particularly in Europe[106](index=106&type=chunk)[109](index=109&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity remains solid despite Q1 2025 operating cash flow decreasing to $6.9 million due to higher working capital, with total debt increasing and 2025 capital expenditures projected at $125-135 million - Cash from operating activities decreased from **$41.6 million** in Q1 2024 to **$6.9 million** in Q1 2025, primarily due to a **$40.9 million** use of cash for working capital[117](index=117&type=chunk)[119](index=119&type=chunk) - The company estimates total capital expenditures for 2025 will be in the range of **$125.0 million to $135.0 million**[122](index=122&type=chunk) - Net debt (Total Debt minus Cash) increased to **$551.8 million** on March 31, 2025, from **$525.7 million** at December 31, 2024[125](index=125&type=chunk)[146](index=146&type=chunk) [Non-GAAP Reconciliations](index=41&type=section&id=Non-GAAP%20Reconciliations) This section reconciles GAAP figures to non-GAAP measures, showing Q1 2025 Adjusted Net Income of $19.3 million and Adjusted EBITDA of $57.5 million, up 12% YoY Reconciliation of GAAP to Non-GAAP Adjusted Net Income | (In millions, except per share) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net Income (GAAP)** | $19.7 | $13.9 | | **Adjusted Net Income (Non-GAAP)** | $19.3 | $14.7 | | **Diluted EPS (GAAP)** | $0.86 | $0.61 | | **Adjusted Diluted EPS (Non-GAAP)** | $0.84 | $0.64 | Reconciliation of Operating Income to Adjusted EBITDA | ($ in millions) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Operating Income** | $28.2 | $20.2 | | **EBITDA** | $58.0 | $50.2 | | **Adjusted EBITDA** | $57.5 | $51.2 | [Quantitative and Qualitative Disclosures about Market Risk](index=43&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) No material changes to market risks were reported compared to the 2024 Annual Report on Form 10-K - There have been no material changes to the market risks disclosed in the Company's 2024 Annual Report on Form 10-K[147](index=147&type=chunk) [Controls and Procedures](index=43&type=section&id=Controls%20and%20Procedures) Disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[148](index=148&type=chunk) - No changes occurred during Q1 2025 that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[148](index=148&type=chunk) [Part II - OTHER INFORMATION](index=43&type=section&id=Part%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=43&type=section&id=Item%201%20-%20Legal%20Proceedings) The company received a USEPA pre-filing notice regarding alleged FIFRA violations and intends to seek indemnification from the licensed distributor - The company received a pre-filing notice from the USEPA on March 19, 2025, for alleged violations of FIFRA related to biocide products sold by a licensed distributor[149](index=149&type=chunk) - The company expects to pursue indemnification claims against the licensed distributor in this matter[149](index=149&type=chunk) [Risk Factors](index=43&type=section&id=Item%201A%20-%20Risk%20Factors) No material changes to the risk factors disclosed in the 2024 Annual Report on Form 10-K were reported - There have been no material changes to the risk factors disclosed in the Company's 2024 Annual Report on Form 10-K[152](index=152&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202%20-%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No shares were repurchased under the public program in Q1 2025, with $125.1 million remaining authorized for future repurchases - No shares were purchased as part of the publicly announced repurchase program during Q1 2025[154](index=154&type=chunk) - As of March 31, 2025, the company had **$125.1 million** remaining under its authorized share repurchase program[124](index=124&type=chunk)[154](index=154&type=chunk)

Financial Data and Key Metrics Changes - The company reported first quarter adjusted EBITDA of $57.5 million, up 12% year over year [5][11] - Adjusted net income was $19.3 million, a 32% increase compared to $14.7 million in the prior year [7][10] - The effective tax rate decreased to 20% from the normal range of 24% to 26% due to favorable discrete items [11][12] - Free cash flow was negative at $25.8 million, down $37.2 million year over year [17] Business Line Data and Key Metrics Changes - Surfactants segment net sales were $430.3 million, a 10% increase year over year, with a 3% growth in sales volume [13][14] - Polymers segment net sales were flat at $146.1 million, with a 7% increase in sales volume but a 7% decrease in selling prices [15][16] - Specialty products net sales increased by 11% to $16.8 million, driven by higher selling prices [16] Market Data and Key Metrics Changes - Volume growth was broad-based, with agricultural and oilfield end markets experiencing double-digit growth [6][20] - North American and European rigid polyol volume grew in low single digits, while specialty polyols and commodity PA businesses showed strong growth [6][15] Company Strategy and Development Direction - The company focuses on customer acquisition, particularly in Tier two and Tier three markets, with over 400 new customers added in Q1 [18][19] - The company aims to develop next-generation rigid polyol technologies to enhance energy efficiency [21] - The new Pasadena, Texas site is operational, with expectations for full contribution in the second half of 2025 [22][24] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2025, expecting adjusted EBITDA and net income growth despite market uncertainties [24] - The company is monitoring the impact of tariffs and is working on pricing strategies to mitigate potential effects [63][64] - There is a belief that pent-up demand exists in the construction market, which could lead to growth as economic conditions improve [81][82] Other Important Information - The company paid $8.7 million in dividends during the first quarter and has increased its dividend for 57 consecutive years [7][8] - The company is investing in capital expenditures and anticipates positive free cash flow for the full year 2025 [17][24] Q&A Session Summary Question: About the Pasadena alkoxylation startup and product qualification - Management confirmed that the Pasadena facility is producing six products currently, with plans to produce over 60 products, and full contribution expected in 2026 [30][32] Question: Earnings contribution from Pasadena facility - Management indicated that Q2 will still be negative but better than Q1, with positive contributions expected in Q3 and Q4 [33] Question: Decline in commodity consumer products - Management clarified that the decline is not intentional and is due to sluggish demand from consumer product customers [35][36] Question: Polymer business and inventory costs - Management stated that high-cost inventory is being cleared out, and margins should improve in Q2 [38] Question: Down channel inventory levels - Management reported no significant overstocking in Q1 and noted strong demand continuing into April [44] Question: Customer mix and growth - Management confirmed that growth is coming from both Tier two and Tier three customers, as well as end market diversification [48] Question: Agricultural and oilfield surfactants growth - Management confirmed that the majority of growth is driven by the agricultural side, with no significant inventory buildup expected [56][57] Question: Tariff impacts and sourcing strategy - Management is monitoring both direct and indirect impacts of tariffs and is adjusting sourcing strategies accordingly [63][64] Question: Raw material pricing environment - Management indicated that raw material prices have stabilized, but tariffs may introduce new dynamics [76] Question: Construction market outlook - Management believes there is pent-up demand in the construction market, with expectations for growth as economic conditions improve [81][82]

Financial Performance Highlights - Reported net income increased by 42% year-over-year to $197 million[8] - Adjusted net income rose by 32% year-over-year to $193 million, driven by volume growth in Surfactants, Polymers, and MCT business[8] - EBITDA increased by 16% year-over-year to $580 million, while Adjusted EBITDA increased by 12% year-over-year to $575 million[9] - Global sales volume grew by 4% year-over-year, with Surfactants up 3%, Polymers up 7%, and MCT up 4%[10] - Free cash flow was negative $258 million, compared to positive $114 million in the prior year, due to higher working capital[11] Segment Performance - Surfactants net sales increased from $3908 million to $4303 million, with volume up 3%[20,24] - Polymers volume increased by 7%, but price/mix was impacted by lower raw material costs and competitive pressures[29] - Specialty Products saw increased results due to margin recovery and 4% volume growth in the MCT product line[19] Strategic Initiatives - The Pasadena, Texas site is now operational and will be critical to grow the specialty alkoxylation business[12] - The company has invested $265 million in capital expenditures for the new alkoxylation capacity in Pasadena, Texas, with an annual capacity of 75KTA[40]