Stepan(US:SCL)2025-11-05 15:22Financial Performance - Consolidated net sales for the third quarter of 2025 increased by $43.4 million, or 8%, compared to the same period in 2024, driven by higher average selling prices and increased sales volume in Polymers and Specialty Products[94]. - Net income for the third quarter of 2025 was $10.8 million, or $0.47 per diluted share, down from $23.6 million, or $1.03 per diluted share, in the third quarter of 2024[93]. - EBITDA for the third quarter of 2025 was $56.1 million, reflecting a 6% increase from $53.0 million in the same quarter of 2024[93]. - Total net sales for Q3 2025 were $590.3 million, an increase of $43.4 million or 8% compared to Q3 2024[101]. - Operating income for the total company decreased by $2.2 million, or 9%, to $21.8 million in Q3 2025[101]. - Adjusted net income for the nine months ended September 30, 2025, was $42.2 million, compared to $47.7 million for the same period in 2024[172]. - Net income for the first nine months of 2025 was $41.9 million, or $1.83 per diluted share, compared to $47.0 million, or $2.05 per diluted share, in the same period of 2024[121]. Segment Performance - Surfactants accounted for 72% of consolidated net sales for the first nine months of 2025, while Polymers and Specialty Products accounted for 25% and 3%, respectively[87][88][89]. - Surfactants segment net sales increased by $39.6 million, or 10%, driven by higher average selling prices, which contributed $41.4 million[102]. - Polymers segment net sales decreased by $5.9 million, or 4%, primarily due to lower average selling prices impacting sales by $21.3 million[110]. - Specialty Products segment net sales increased by $9.7 million, or 68%, compared to the prior year[101]. - Specialty Products net sales increased by $15.0 million, or 32 percent, due to higher average selling prices and a 14 percent increase in sales volume[148]. - Surfactant net sales for the first nine months of 2025 increased by $110.8 million, or 10%, with higher average selling prices contributing $129.4 million to this increase[131]. Operating Income and Expenses - Operating income for the third quarter of 2025 decreased by $2.1 million, or 9%, compared to the third quarter of 2024, with declines in Surfactant and Polymer operating incomes[95]. - Surfactants operating income fell by $10.6 million, or 40%, with gross profit decreasing by $9.5 million, or 19%[106]. - Polymer operating income in Q3 2025 decreased by $1.1 million, or 8%, compared to Q3 2024, with gross profit down by $0.9 million, or 4%[114]. - Research and development expenses increased by $0.7 million, or 5%, year-over-year[98]. - Corporate expenses decreased by $3.7 million, or 17%, year-over-year, primarily due to the non-recurrence of prior year charges related to an external fraud event[95]. Tax and Interest - The effective tax rate rose to 34.4% in Q3 2025 from a negative 10.7% in Q3 2024, primarily due to an unfavorable provision-to-return adjustment[98]. - Net interest expense for the third quarter of 2025 increased by $3.2 million compared to the third quarter of 2024, primarily due to lower capitalized interest income[96]. Cash Flow and Capital Expenditures - Cash and cash equivalents increased by $18.9 million compared to December 31, 2024, totaling $118.5 million as of September 30, 2025[152]. - Cash used for capital expenditures was $87.9 million in the first nine months of 2025, with total capital expenditures estimated to be between $118.0 million and $123.0 million for the year[156]. - Operating activities generated a cash source of $87.9 million for the first nine months of 2025, compared to $93.8 million for the same period in 2024[151]. Debt and Financial Position - Consolidated balance sheet debt increased by $30.1 million, from $625.4 million on December 31, 2024, to $655.5 million on September 30, 2025, primarily due to the issuance of $75.0 million of senior unsecured notes[159]. - Net debt was $537.0 million on September 30, 2025, compared to $525.7 million at December 31, 2024, with a net debt to net debt plus shareholders' equity ratio of 30.1%[160]. - The Company maintains a credit agreement providing for credit facilities in an initial aggregate principal amount of $450.0 million, maturing on June 24, 2027[161]. - The Company's net debt to net debt plus equity ratio improved to 30% as of September 30, 2025, compared to 31% at the end of 2024[176]. Environmental and Legal Matters - Environmental expenditures for capital projects were $7.2 million for the first nine months of 2025, compared to $7.0 million for the same period in 2024[166]. - The Company accrued an additional $1.8 million for remediation expenses in the second quarter of 2025 due to a change in the scope of planned remediation activities[167]. - The Company's environmental and legal accruals totaled $19.4 million at September 30, 2025, compared to $20.0 million at December 31, 2024[167]. Market Risks - There have been no material changes to the market risks as described in the Company's 2024 Annual Report on Form 10-K[177].