The Stock Exchange of Hong Kong Limited and the Securities and Futures Commission take no responsibility for the contents of this Application Proof, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Application Proof. Application Proof of Guangzhou Tinci Materials Technology Co., Ltd. 廣州天賜高新材料股份有限公司 (the "Company") (A joint stock limited company incorp ...

Core Viewpoint - Stepan Company (NYSE:SCL) is implementing Project Catalyst, a restructuring initiative aimed at achieving approximately $100 million in pre-tax savings over the next two years, focusing on operational efficiency and long-term growth stability [2][5]. Group 1: Project Catalyst Overview - Project Catalyst aims to simplify operations, reduce costs, and enhance shareholder returns [2]. - The initiative includes consolidating production into more efficient facilities and improving manufacturing and procurement processes [3]. - Leadership is restructuring parts of the organization to better align resources with growth opportunities [3]. Group 2: Plant Closures and Restructuring Charges - Stepan will close its Fieldsboro, New Jersey plant due to weak demand for certain surfactant products and plans to shut down selected assets in Illinois and the U.K., with completion expected by mid-2026 [4]. - The company anticipates restructuring charges between $70 million and $80 million, primarily related to asset write-downs and plant closure expenses, with most costs expected in 2026 [4]. Group 3: Management Insights - CEO Luis Rojo stated that the initiative is designed to enhance efficiency and resilience, helping the company manage inflation and cost pressures while freeing up resources for future growth [5]. - Stepan Company manufactures specialty and intermediate chemicals across three main segments: Surfactants, Polymers, and Specialty Products [5].

Group 1: Dividend Stocks Overview - Dividend King stocks are currently undervalued as investors favor growth stocks, presenting an opportunity for attractive yields and potential upside when market conditions change [2][3] - Accumulating dividend stocks is recommended for a defensive strategy as they typically trade at premium valuations due to their reliable dividend increases [3][4] Group 2: Stepan Co (SCL) - Stepan Co, a specialty chemicals manufacturer, experienced an 18% stock drop after reporting an adjusted EPS loss of -$0.02 compared to the expected $0.45, primarily due to high interest expenses [5][9] - The company's revenue fell short of expectations, but the surfactants segment showed growth from $378.8 million in 2024 to $401.8 million in 2025, indicating ongoing demand for its core products [5][6] - Stepan's total debt stands at $626.7 million, leading to annual net interest losses of $10 million to $15 million, which significantly impacts profitability [7][9] - A $100 million cost savings plan has been initiated to improve profitability, addressing the financial challenges posed by high interest rates [8] Group 3: Other Companies - American States Water (AWR) has seen a 30% decline from its 2021 peak, with net interest losses of $42.5 million affecting its profits [9] - Marzetti (MZTI) is trading at a forward earnings multiple of 23x, down from its historical average of 31x, with a strong cash position of $161 million against $56 million in debt [9]

Core Insights - Stepan Company demonstrated strong capital allocation discipline, achieving positive free cash flow in 2025, reducing net debt, and improving its leverage ratio from 2.8x to 2.5x by year-end [1][6]. Financial Performance - The company reported full-year adjusted EBITDA of $199 million, reflecting a 6% year-over-year increase, despite challenges in the macroeconomic environment for the chemical sector [2][14]. - Organic volume growth was 2% for the year, driven by crop productivity and growth in oil field and specialty products, although there was softer demand in global consumer commodity surfactants [2][5]. - For Q4 2025, Stepan posted an adjusted net loss of $0.5 million, or ($0.02) per diluted share, while reported net income was $5 million, a 49% increase from the prior year, primarily due to an asset sale [8][9]. Segment Performance - Surfactants segment saw sales of $402 million but experienced a 3% organic volume decline due to weaker demand in certain markets [5][10]. - Polymers segment grew to $132 million with an 11% volume increase and a 9% rise in adjusted EBITDA, driven by North America and Asia [11][12]. - Specialty Products reported modestly lower sales and EBITDA year-over-year, although medium-chain triglycerides showed double-digit volume growth [13]. Strategic Initiatives - The company introduced Project Catalyst, aiming for approximately $100 million in pre-tax savings over two years, with 60% expected in 2026, through operational efficiencies and footprint consolidation [7][17]. - The initiative includes the closure of the Fieldsboro, NJ site and decommissioning actions at Millsdale and Stalybridge, while ramping up the Pasadena facility to 70-80% utilization in 2026 [18][19]. Shareholder Returns - Stepan increased its dividend for the 58th consecutive year, declaring a quarterly dividend of $0.395 per share, representing a 2.6% increase compared to the previous year [16]. Future Outlook - Management reiterated expectations for adjusted EBITDA growth and positive free cash flow in 2026, with performance anticipated to be stronger in the second half of the year [21].

Strategic Performance and Operational Context - The company delivered 6% adjusted EBITDA growth in 2025 despite unprecedented raw material inflation, tariff impacts, and a challenging chemical sector macro environment [5] - Performance was driven by disciplined pricing and a favorable mix in crop productivity, oilfield, and specialty products, which offset softer demand in global consumer surfactants [5] - The Pasadena alkoxylation facility was successfully commissioned, marking a transition from a heavy investment phase to an operational ramp-up period [5] Financial Performance and Projections - Surfactant margins faced significant second-half pressure due to a lag in passing through elevated oleochemical costs, particularly the spike in coconut oil prices [5] - Polymers growth of 11% was supported by strong volume in North American and Asian rigid polyols, despite competitive pricing pressures from lower raw material pass-throughs [5] - Management prioritized balance sheet health, reducing the net leverage ratio from 2.8x to 2.5x through disciplined working capital management and positive free cash flow generation [5] Project Catalyst and Future Outlook - Project Catalyst aims to deliver $100 million in pretax savings over two years, with $60 million expected in 2026 to offset persistent 3% plus inflation in fixed costs [5] - The Pasadena facility is projected to reach 70% to 80% utilization in 2026, achieving full utilization by 2027 as volume shifts from less efficient sites [5] - Management expects a back-half weighted 2026 performance as oleochemical cost relief and structural savings from footprint optimization materialize in the second half [5] Capital Expenditure and Strategic Changes - Capital expenditure is guided to a lower range of $105 million to $115 million for 2026, reflecting a shift toward sustaining capital and targeted growth projects post-Pasadena [5] - The company announced the closure of the Fieldsboro, New Jersey site and decommissioning of select assets at Millsdale and Stalybridge to address declining commodity surfactant demand [5] - The company is exiting a low-margin, high-capital organics business in the U.K. to improve overall Return on Invested Capital (ROIC) [5] Dividend and Shareholder Commitment - The 58th consecutive annual dividend increase underscores management's commitment to shareholder returns despite the current restructuring phase [6]

Financial Data and Key Metrics Changes - Full-year adjusted EBITDA grew by 6% to $199 million despite a challenging macro environment and unprecedented raw material inflation [5][16] - Reported net income for the fourth quarter was $5 million, up 49% year-over-year, primarily due to asset sales [9] - Consolidated adjusted EBITDA for Q4 was $33.8 million, a 3% decrease from the prior year [10] - The leverage ratio improved from 2.8 to 2.5 times at the end of the year [5][15] Business Line Data and Key Metrics Changes - Surfactants net sales increased to $402 million from $379 million, but organic volume declined by 3% due to weaker demand [12] - Polymers net sales rose to $132 million, with an 11% volume increase driven by North America and Asia [13] - Specialty Products saw modest year-over-year results primarily due to order timing fluctuations [13] Market Data and Key Metrics Changes - Organic sales volume increased by 2% for the full year, driven by strong growth in crop productivity and oil field sectors [16] - Demand in global consumer commodity surfactants softened, impacting overall performance [5][16] Company Strategy and Development Direction - The company is focused on four strategic pillars: customer-centric innovation, diversification into higher value-end markets, operational excellence, and improving financial position [17][18] - Project Catalyst aims to deliver around $100 million in pre-tax savings over the next two years, with a focus on optimizing the asset base and enhancing competitiveness [19][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macro environment but expressed confidence in delivering adjusted EBITDA growth and positive free cash flow in 2026 [22] - The company expects demand recovery in the second half of 2026, aided by anticipated interest rate cuts [39][40] Other Important Information - The company paid $8.9 million in dividends during Q4 2025, marking a 2.6% increase from the previous year [6][7] - The company successfully commissioned its Pasadena sulfonation facility and optimized its asset footprint through targeted divestitures [8] Q&A Session Summary Question: What is the current capacity utilization in the surfactants business? - Management indicated that the consolidation aims to optimize the cost structure and improve utilization rates at more modern sites [27][28] Question: How will the $100 million savings from Project Catalyst be affected by inflation? - Management acknowledged that while they expect to deliver $60 million in savings in 2026, inflation will impact net savings [29][31] Question: What is the impact of oleochemicals on margins? - Management noted that the impact of oleochemicals worsened in Q4 but expects improvement in 2026 as prices stabilize [32][35] Question: What is the expected cadence of earnings growth in 2026? - Management expects EBITDA growth in 2026, with the second half showing significant improvement due to various factors including cost savings and demand recovery [38][39] Question: How will Project Catalyst affect Tier 2 and Tier 3 customers? - Management stated that the project aims to facilitate growth for Tier 2 and Tier 3 customers through improved organizational effectiveness [48][49] Question: What is the status of demand loss due to weather in Q1? - Management clarified that the majority of the $6 million demand loss was in surfactants, with agriculture continuing to grow positively [52][53] Question: What is the outlook for CapEx in 2026? - Management indicated that the CapEx guidance reflects a mix of sustaining and growth-oriented projects, with a focus on maintaining infrastructure and innovation [63][65] Question: How is the company adapting to changing consumer demand in personal care? - Management emphasized a focus on Tier 2 and Tier 3 markets and sulfate-free products to align with evolving consumer preferences [67][68] Question: How are tariffs affecting the company's competitiveness? - Management acknowledged the impact of tariffs on raw material prices but emphasized their strong supply chain and regional production capabilities [70][71]

Financial Data and Key Metrics Changes - Full-year adjusted EBITDA grew by 6% to $199 million, despite a challenging macro environment and raw material inflation [5][15] - Reported net income for Q4 2025 was $5 million, up 49% year-over-year, primarily due to asset sales [9] - Consolidated adjusted EBITDA for Q4 2025 was $33.8 million, a 3% decrease from the prior year [10] - Free cash flow for 2025 was positive at $25.4 million, compared to -$0.2 million in the prior year [10][14] Business Line Data and Key Metrics Changes - Surfactants segment net sales increased to $402 million from $379 million, but organic volume declined by 3% due to weaker demand [12] - Polymers segment net sales rose to $132 million, with an 11% volume increase driven by North America and Asia [13] - Specialty Products saw modest year-over-year results due to order timing fluctuations, although medium-chain triglycerides delivered double-digit volume growth [13] Market Data and Key Metrics Changes - Global organic sales volume increased by 2% for the full year, driven by strong growth in crop productivity and oil field sectors [16] - Demand in global consumer commodity surfactants softened, impacting overall performance [5][16] Company Strategy and Development Direction - The company is focused on four strategic pillars: customer-centric innovation, diversification into higher value-end markets, operational excellence, and improving financial position through cash flow generation [17][18] - Project Catalyst aims to optimize the asset base and is expected to deliver around $100 million in pre-tax savings over the next two years [19][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by raw material inflation and tariffs but expressed confidence in the company's ability to deliver adjusted EBITDA growth and positive free cash flow in 2026 [22] - The company expects demand recovery in the second half of 2026, aided by anticipated interest rate cuts [40] Other Important Information - The company successfully commissioned its Pasadena sulfonation facility and divested two manufacturing plants to optimize its global footprint [4][8] - The dividend was increased for the 58th consecutive year, reflecting confidence in cash flow strength [6][7] Q&A Session Summary Question: Capacity utilization in surfactants business - Management indicated that consolidation aims to optimize cost structure and improve utilization rates, with no current losses from the sites being closed [26][28] Question: Timing of $100 million savings from Project Catalyst - Management confirmed that $60 million of the savings is expected in 2026, but inflation may offset some of these savings [29][31] Question: Impact of oleochemicals on margins - Management noted that the impact of oleochemicals worsened in Q4 but expects improvements in H2 2026 as prices stabilize [32][35] Question: Earnings growth expectations for 2026 - Management anticipates EBITDA growth in 2026, with H2 expected to perform better than H1 due to various factors including demand recovery and cost savings [38][40] Question: Demand loss due to weather - Management clarified that the majority of the $6 million demand loss in Q1 was from surfactants, with agriculture continuing to grow positively [51][52] Question: CapEx guidance for 2026 - Management indicated that the CapEx range of $105 million-$115 million reflects a new base level for sustaining CapEx, with some growth-oriented projects included [63][65] Question: Consumer behavior in personal care products - Management acknowledged that consumers are trading down in personal care, but emphasized a focus on Tier 2 and Tier 3 markets to adapt to changing demand [66][68] Question: Impact of tariffs on competitiveness - Management stated that while tariffs have had some impact, the company is well-positioned with a strong supply chain to mitigate these effects [70][71]

Financial Data and Key Metrics Changes - Full-year adjusted EBITDA grew by 6% to $199 million, despite a challenging macro environment and raw material inflation [5][14] - Reported net income for Q4 2025 was $5 million, up 49% year-over-year, primarily due to asset sales [9] - Consolidated adjusted EBITDA for Q4 2025 was $33.8 million, a 3% decrease from the prior year [10] - Free cash flow for 2025 was positive at $25 million, compared to a negative $0.2 million in the prior year [10][14] - The leverage ratio improved from 2.8 to 2.5 times at the end of the year [5][14] Business Line Data and Key Metrics Changes - Surfactants net sales increased to $402 million from $379 million, but organic volume declined by 3% due to weaker demand [12] - Polymers net sales rose to $132 million, with an 11% volume increase driven by North America and Asia [13] - Specialty Products saw modest year-over-year results, primarily due to order timing fluctuations [13] Market Data and Key Metrics Changes - Organic volume for the full year increased by 2%, driven by growth in crop productivity and oil field sectors [15] - Demand in global consumer commodity surfactants softened, impacting overall performance [5][15] Company Strategy and Development Direction - The company is focused on four strategic pillars: customer-centric innovation, diversification into higher value-end markets, operational excellence, and improving financial position through cash flow generation [17][18] - Project Catalyst aims to deliver around $100 million in pre-tax savings over the next two years, with a focus on optimizing the asset base and enhancing competitiveness [19][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macro environment, including raw material inflation and tariff impacts, but expressed confidence in the company's ability to deliver earnings resilience [5][6] - The outlook for 2026 includes expectations for EBITDA growth, with improvements anticipated in the second half of the year due to various factors including demand recovery and cost savings from Project Catalyst [41][42] Other Important Information - The company paid $8.9 million in dividends during Q4 2025, marking a 2.6% increase from the previous year [6] - The company successfully commissioned its Pasadena sulfonation facility and optimized its asset footprint through targeted divestitures [5][7] Q&A Session Summary Question: What is the current capacity utilization in the surfactants business? - Management indicated that consolidation aims to optimize cost structure and improve utilization rates at more modern sites, with no current losses from the facilities being closed [28][29] Question: How will the $100 million savings from Project Catalyst be affected by inflation? - Management acknowledged that while $60 million in savings is expected in 2026, inflation will impact net savings, particularly in fixed costs [30][32] Question: What is the impact of oleochemicals on margins? - The impact of oleochemicals worsened in Q4 2025, but prices are expected to improve in 2026, leading to margin recovery [33][36] Question: What is the expected cadence of earnings growth in 2026? - Management expects EBITDA growth in 2026, with significant improvements anticipated in the second half due to various factors including demand recovery and cost savings [41][44] Question: How will Project Catalyst affect Tier 2 and Tier 3 customers? - Management stated that Project Catalyst will facilitate growth for Tier 2 and Tier 3 customers by creating a more agile and productive organization [50][51] Question: What is the status of demand loss due to weather in Q1? - The majority of the $6 million demand loss was attributed to surfactants, with Polymers experiencing delays but not significant losses [52][54] Question: How are inventory levels being managed? - Management emphasized a focus on free cash flow and maintaining optimal inventory levels, with a normal lag expected in Q4 [56][58] Question: What is the impact of tariffs on competitiveness? - Management noted that tariffs are an evolving issue, but the company has a strong supply chain and production capabilities close to customers, which provides a competitive advantage [70][71]

Fourth Quarter 2025 Earnings Results February 23, 2026 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 ...

Core Insights - The company reported a net income of $46.9 million for the full year 2025, a decrease of 7% compared to the previous year, while adjusted net income fell by 17% to $41.7 million [1][2] - Despite challenges, the company experienced growth in several core businesses, with adjusted EBITDA increasing by 6% year-over-year, driven by pricing actions and a favorable product mix [1][2] - The company announced Project Catalyst, aimed at optimizing its asset base and achieving approximately $100 million in pre-tax savings over the next two years [11] Financial Performance - For Q4 2025, net sales increased by 5% year-over-year to $553.9 million, while full-year net sales rose by 7% to $2.33 billion [2][3] - Operating income for Q4 was $10.5 million, up 36% from the previous year, and full-year operating income increased by 11% to $78.5 million [2][7] - Adjusted EBITDA for Q4 decreased by 3% to $33.8 million, while full-year adjusted EBITDA was $198.9 million, reflecting a 6% increase [5][7] Segment Performance - Surfactants segment net sales for Q4 were $401.8 million, a 6% increase, while sales volume declined by 7% due to lower demand in the commodity Laundry & Cleaning markets [8][9] - Polymers segment net sales rose by 1% to $131.7 million, with an 11% increase in sales volume, primarily driven by North American Rigid and commodity Phthalic Anhydride [8][9] - Specialty Products segment net sales increased by 20% to $20.4 million, mainly due to higher sales volume, although adjusted EBITDA decreased by 6% [9] Cash Flow and Debt Management - The company generated $60 million in cash from operations during Q4, with free cash flow of $25.4 million, attributed to a reduction in working capital [5][12] - Net debt was reduced by $31.7 million, resulting in a leverage ratio of 2.5, indicating improved financial flexibility [1][33] Tax and Corporate Expenses - 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 [10] - Corporate expenses decreased by 54% in Q4, reflecting the non-recurrence of CEO transition expenses from the previous year [31]