Key Takeaways SCL closed the sale of Lake Providence, LA, manufacturing assets as part of ongoing footprint optimization.Stepan sold SPQI in the Philippines to Masurf, adding a tolling deal to continue serving Asia customers.SCL plans to exit non-core sites, boost efficiency and redeploy capital to higher-return businesses.Stepan Company (SCL) has continued to streamline its manufacturing footprint with the closure of the previously disclosed sale of the manufacturing assets in Lake Providence, LA. The tran ...

Footprint Optimization - The company is shutting down three North American chlorovinyl plants and exiting the styrene business due to unfavorable market conditions and high costs[2, 5] - These closures are expected to improve annual EBITDA by approximately $100 million and generate free cash flow savings of around $175 million in 2026[2, 9] - The company anticipates one-time charges of about $415 million in 4Q'25, including a $357 million non-cash accelerated depreciation, amortization, and asset write-off charge[9] - The shutdown includes the following capacity reductions: 825 million lbs of Chlorine (11% of WLK global capacity), 910 million lbs of VCM (11% of WLK global capacity), 1,000 million lbs of PVC (15% of WLK global capacity), and 570 million lbs of Styrene (100% of WLK global capacity)[5] Profitability Improvement Plan - The company's Profitability Improvement Plan aims to restore PEM's Return on Investment to an appropriate level[4] - The plan is expected to generate approximately $600 million per year of EBITDA uplift starting in 2026, with each of the three pillars contributing around $200 million[9, 10, 12] - The footprint optimization efforts, including North American chlorovinyls and styrene closures, are projected to contribute $100 million to the $200 million total from Footprint Optimization[10] - The plan has an expected payback period of less than one year on the $58 million cash costs required for execution[2, 9]

Financial Data and Key Metrics Changes - Gates reported third-quarter total sales of $856 million, translating to core growth of 1.7% year-over-year, with total revenues growing by 3% due to favorable foreign currency effects [8][9] - Adjusted EBITDA was $196 million, with an adjusted EBITDA margin of 22.9%, representing a record third-quarter margin rate for the company, an increase of 90 basis points year-over-year [9][10] - The net leverage ratio improved to 2.0 turns, a reduction of 0.4 turns compared to the previous year's third quarter [6] Business Line Data and Key Metrics Changes - In the power transmission segment, revenues were $533 million with core growth of 2.3%, driven by personal mobility growth exceeding 20% [10][11] - The fluid power segment generated $322 million in sales, with core growth just under 1%, impacted by mid-teens decline in commercial on-highway sales [11] - Automotive replacement sales increased by high single digits, while automotive OEM sales grew low single digits [14] Market Data and Key Metrics Changes - North America experienced flat core sales, with a low double-digit decline in industrial OEM sales due to demand weakness in agriculture and commercial on-highway [13][14] - EMEA saw core sales grow by 2.6%, with personal mobility growing almost 75% [14] - East Asia and India posted approximately 5% core growth, while South America experienced low to mid-single-digit declines [14] Company Strategy and Development Direction - The company is focused on restructuring plans, including closing multiple factories and implementing an ERP system conversion expected to be completed by mid-2026 [18][19] - The board approved a new $300 million share repurchase authorization, indicating a commitment to returning value to shareholders while maintaining flexibility for potential M&A opportunities [6][24] - The company anticipates achieving an adjusted EBITDA margin of approximately 24% by the end of 2026, driven by ongoing cost-saving initiatives and operational improvements [22][24] Management's Comments on Operating Environment and Future Outlook - Management noted that many end markets are at or near trough levels, with expectations for stabilization and improvement in 2026 [8][39] - The company remains optimistic about growth in personal mobility and data center opportunities, projecting a compound annual growth rate of around 30% for personal mobility from 2025 to 2028 [33][34] - Management acknowledged challenges in the agricultural sector but expressed confidence in a gradual recovery starting in 2026 [39] Other Important Information - The company updated its 2025 guidance, raising the adjusted EPS midpoint to $1.50 per share while slightly lowering the core sales growth outlook [6][17] - Free cash flow was reported at $73 million, representing a 73% conversion to adjusted net income, impacted by increased restructuring cash outflows [16] Q&A Session Summary Question: Clarification on margin targets and restructuring costs - Management confirmed that the 24% margin target for 2027 serves as a foundational floor, with expectations for growth in 2026 and beyond [27][29] - Additional costs related to restructuring and ERP implementation were discussed, with expectations for improved efficiencies post-implementation [30][31] Question: Growth visibility in structural growth vectors - Management expressed optimism about growth in personal mobility and liquid cooling in data centers, with expectations for significant design activity and adoption [33][34] Question: Details on restructuring dimensions - Management provided insights into the restructuring plan, indicating multiple factory closures and hundreds of affected employees, with a payback period of one to two years [44][46] Question: Tariff impact and volume outlook - Management noted a 30 to 40 basis points EBITDA dilution due to tariffs, with expectations for stabilization in agricultural markets and improved production output in automotive [49][50] Question: Exit rate from 2025 and Q4 expectations - Management indicated that Q4 revenue guidance reflects a cautious outlook, with no significant changes anticipated in demand conditions [54][56]

Core Insights - Ashland Inc. announced the retirement of Karl Bostaph, senior vice president of operations, effective October 1, 2025 [1] - Wayne Muil, global director of operations for specialty additives, will succeed Bostaph in the role of senior vice president of operations [3][4] Leadership Transition - Bostaph has been with the company since 1990, holding various roles in Research and Development, Quality, Engineering, and Manufacturing [2] - Muil joined Ashland in 2024 and has over 25 years of experience in the chemical industry, including leadership roles at Sadara Chemical Company [5][6] - Muil is recognized for his strategic vision and expertise in operational excellence, safety, and innovation across global production facilities [7] Company Overview - Ashland Inc. is a global additives and specialty ingredients company focused on environmental, social, and governance (ESG) initiatives [8] - The company serves diverse markets, including architectural coatings, construction, energy, food and beverage, personal care, and pharmaceuticals, with a workforce of approximately 2,960 employees [8]

Financial Data and Key Metrics Changes - In 2024, the company reported revenues of $4.3 billion, a 5% improvement over the prior year, significantly outpacing global GDP growth [23] - Adjusted operating profit for 2024 was $267 million, an increase of nearly $60 million from the previous year, with an adjusted operating profit margin of 6%, the strongest in the company's history [24] - Fourth quarter revenues reached $1.1 billion, growing by 4% year-over-year and by 5% sequentially, while adjusted operating profits were $54 million, increasing by 10% year-over-year [26] Business Line Data and Key Metrics Changes - The lift truck business saw a 4% increase in sales year-over-year, driven by a favorable sales mix, particularly in the Americas [26] - Adjusted operating profit for the lift truck business in Q4 was $62 million, a 15% increase compared to the prior year and a 55% increase sequentially [27] - Bolzoni reported Q4 revenue of $84 million, which was $4 million lower than the prior year, with an adjusted breakeven operating loss [29] Market Data and Key Metrics Changes - The global lift truck bookings market continued to decline in Q4 compared to the prior year, influenced by lower demand and order cancellations [10] - The company adjusted its production cadence to align better with market demand, resulting in a backlog that reached near normal levels by year-end [11] - Early 2025 bookings showed encouraging signs, particularly in the EMEA and JEPIC regions, indicating potential market improvement [12] Company Strategy and Development Direction - The company is focused on footprint optimization programs to streamline manufacturing and reduce costs, with expected annual savings of $30 million to $40 million starting in 2027 [8][9] - New product introductions, including modular and scalable models, are aimed at enhancing efficiency and meeting customer demand while reducing operational costs [16][18] - The company plans to leverage advancements in electric truck technology to expand its market share in areas traditionally dominated by combustion trucks [19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing uncertainty due to potential tariffs and trade wars, which could impact market outlook [13] - Despite a competitive market and expected margin declines in 2025, management remains optimistic about gradual market improvement and increased production rates as demand recovers [12][35] - The company anticipates a significant year-over-year revenue decrease in 2025 due to lower lift truck production levels and increased operating expenses [35] Other Important Information - The company generated $81 million in cash from operations in Q4, contributing to a total of $170 million for the full year [33] - Total inventory decreased by $60 million from prior year levels, reflecting better alignment between production needs and on-hand materials [34] - The effective income tax rate for 2024 was 34%, higher than the previous year's rate of 29%, primarily due to the capitalization of R&D costs [31][32] Q&A Session Summary Question: Market outlook for 2025 - Management expects the first half of 2025 to be lower, with an anticipated increase in the second half as prior orders are consumed [51][52] - There was a noted increase in cancellations towards the end of 2024, but recent months have shown a return to normal cancellation levels [52]