Stepan Reports Second Quarter 2025 Results

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]