Stepan(SCL) - 2025 Q4 - Annual Results

Financial Performance - Full year adjusted EBITDA grew 6% year-over-year, reaching $198.9 million, despite significant increases in raw material costs[4] - Fourth quarter net sales increased by 5% year-over-year to $553.9 million, driven by higher selling prices and favorable product mix[7] - Reported net income for the fourth quarter was $5.0 million, up 49% compared to the prior year, while adjusted net income was a loss of $0.5 million, down 119%[5] - Net sales for Q4 2025 were $553.9 million, an increase of 5.3% from $525.6 million in Q4 2024[25] - Gross profit for Q4 2025 was $51.5 million, down 9.3% from $56.7 million in Q4 2024[25] - Operating income for Q4 2025 increased to $10.5 million, compared to $7.7 million in Q4 2024, reflecting a 36.5% growth[25] - Net income for Q4 2025 was $5.0 million, up 49.3% from $3.4 million in Q4 2024[25] - Basic earnings per share (EPS) for Q4 2025 was $0.22, compared to $0.15 in Q4 2024, representing a 46.7% increase[26] - Total operating expenses for Q4 2025 were $50.7 million, slightly up from $49.0 million in Q4 2024[25] - Adjusted EBITDA for the quarter was $33.8 million, compared to $35.0 million in the same quarter last year[46] - Consolidated operating income for the twelve months ended December 31, 2025, was $78.5 million[50] - Adjusted EBITDA for the same period was $198.9 million, with contributions of $153.0 million from Surfactants, $76.4 million from Polymers, and $31.5 million from Specialty Products[50] - The company achieved an EBITDA of $208.0 million for the twelve months ended December 31, 2025[50] Sales and Volume - Global sales volume decreased by 3% year-over-year in the fourth quarter, but was flat when excluding the impact of the Philippines asset divestiture[5] - Polymer volume increased by 11%, contributing to a 1% increase in net sales for the Polymer segment[6] - Surfactant net sales for the fourth quarter were $401.8 million, a 6% increase, despite a 7% decline in sales volume due to lower demand in certain markets[11] Cash Flow and Debt - Free cash flow for the fourth quarter was $25.4 million, supported by a reduction in working capital[5] - The company reduced its net debt by $31.7 million, resulting in a leverage ratio of 2.5[4] - The net debt level decreased by $43.0 million to $494.0 million, with a net debt ratio of 28%[44] - Cash increased by $14.2 million to $132.7 million compared to the previous quarter[44] Expenses and Impairments - The company reported a goodwill impairment charge of $6.2 million in Q4 2025 related to its Mexican reporting unit[30] - The company reported a goodwill impairment of $6,245 thousand for the quarter[40] - Research, development, and technical services expenses increased to $15.7 million in Q4 2025 from $13.8 million in Q4 2024, a rise of 13.9%[25] - Total corporate expenses decreased by 54% to $8,065 thousand for the quarter, primarily due to the non-recurrence of CEO transition expenses[40] - Environmental remediation costs amounted to $1.2 million, while deferred compensation was a negative $0.6 million[50] - Unallocated corporate expenses were $57.8 million, impacting overall profitability[50] Strategic Initiatives - Project Catalyst aims to deliver approximately $100 million in pre-tax savings over the next two years, including site closures and asset decommissioning[14] - The company anticipates continued focus on product development and market expansion in the upcoming quarters[21] Other Financial Metrics - The effective tax rate increased to 21.7% in 2025 from 16.7% in 2024, primarily due to the non-recurrence of favorable deferred tax adjustments[13] - A gain on the sale of assets contributed $11.9 million to net income in Q4 2025[30] - The total pre-tax income for the quarter was $(101) thousand, a decrease from $1,016 thousand in the prior year[35] - The company's total assets increased to $2,357,702 thousand as of December 31, 2025, compared to $2,304,648 thousand in the prior year[42] - Depreciation and amortization expenses totaled $126.0 million, with $85.6 million attributed to Surfactants[50] - The gain on the sale of assets was reported at a negative $15.9 million[50] - Operating income for Surfactants was $67.4 million, while Polymers and Specialty Products reported $43.3 million and $25.6 million, respectively[50] - Other net income contributed $3.5 million to the overall financial results[50]