Financial Data and Key Metrics Changes - Consolidated second quarter sales were $500 million, down 10.4% from the prior year [18] - Adjusted EBITDA for the second quarter was $77 million with a 15.3% margin, marking the first time in eight years that adjusted EBITDA margins exceeded 15% [19][62] - The company generated cash flow of over $50 million in the quarter and reduced net debt by approximately $20 million [7][25] Business Line Data and Key Metrics Changes - RUPS segment sales decreased to $250 million from $254 million in the prior year, impacted by lower Class I crosstie volumes [19][20] - Performance Chemicals (PC) sales were $151 million, down from $177 million, with a 15% volume decrease primarily in The Americas [21] - Centimeters and C sales decreased to $104 million from $132 million, driven by lower volumes of phthalic anhydride and carbon black feedstock [22] Market Data and Key Metrics Changes - PC volumes were down by about 2% compared to prior year expectations of a couple percent improvement [29] - Class I demand is expected to tail off in the second half, similar to the previous year [7] - The untreated crosstie market prices remained stable compared to last year, while crosstie procurement was down 13% [20] Company Strategy and Development Direction - The company is focused on transforming into a high-performance organization aiming for mid to high teens EBITDA margins by 2027 [6][14] - A definitive agreement was signed to sell the railroad structures business, which has been a drag on margins [12] - The Catalyst transformation process was launched to improve business operations and unlock opportunities [13][14] Management's Comments on Operating Environment and Future Outlook - Management noted a sluggish demand environment across the portfolio, with expectations for the second half of the year to remain similar to the first half [7][30] - The company is revising its consolidated sales guidance for 2025 to $1.9 billion to $2 billion, reflecting a lack of material change in demand [38] - Despite the challenges, management remains optimistic about future performance improvements and margin expansion [42] Other Important Information - The company has been named to Time Magazine's America's Best Midsize Companies of 2025, recognizing exceptional performance and employee satisfaction [11] - The quarterly dividend was declared at $0.08 per share, representing a 14% increase over the previous year [24] Q&A Session Summary Question: How have the contracts with Class I customers been going? - Management indicated that long-term contracts are in place, and while they have maximized cost recovery, volume throughput remains a concern [47][48] Question: What is the outlook for the industrial side of the PC business? - Management noted that while there are signs of life in the industrial side, significant improvement will depend on the residential side recovering [52][53] Question: What is the status of the Catalyst transformation? - Management described Catalyst as a change management process aimed at unlocking opportunities and improving performance sustainably [60][61] Question: How will the proposed consolidation among rail companies affect the business? - Management stated it is too early to determine the impact of potential mergers among rail companies on pricing or demand [74] Question: What drives the target for high teens EBITDA margins? - Management emphasized that volume recovery across various business segments will significantly impact margins, alongside ongoing cost-saving initiatives [76][79]

July 30, 2025 Safe Harbor Certain information in this presentation consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). These statements include statements about Stepan Company's plans, objectives, strategies, financial performance and outlook, trends, the amount and timing of future cash distributions, pro ...