Stepan Company Q4 2025 Earnings Call Summary - Moby Strategic Performance and Operational Context Delivered 6% adjusted EBITDA growth in 2025 despite unprecedented raw material inflation, tariff impacts, and a challenging chemical sector macro environment. Performance was driven by disciplined pricing and favorable mix in crop productivity, oilfield, and specialty products, which offset softer demand in global consumer surfactants. Successfully commissioned the Pasadena alkoxylation facility, markin ...

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 ...

(1) Full Year 2025 Highlights (1) Reported net income was $46.9 million, down 7% versus the prior year. Adjusted net incomewas $41.7 million, down 17% versus the prior year. (2) (2) "2025 was a transformational year for Stepan as we divested two plant sites and completed preliminary work that has positioned us to further optimize our footprint and asset base in 2026. Despite many challenges in 2025, we delivered growth in several of our core businesses, advanced several strategic initiatives and have an ope ...

Stepan Company's quarterly earnings per share of $0.48 surpassed the Zacks Consensus Estimate, indicating resilience in challenging market conditions.Despite a 25.7% drop in share price, analysts maintain a "Buy" rating, reflecting confidence in Stepan's long-term prospects.Investments in growth initiatives, such as a new plant in Texas, aim to enhance profitability and support long-term growth, potentially influencing future price targets.Stepan Company (NYSE:SCL) is a key player in the specialty and inter ...

Financial Data and Key Metrics Changes - In 2025, the company generated $1.4 billion in consolidated revenue, with a record adjusted EBITDA of $260 million, despite a challenging macro environment [17][25] - The company improved consolidated margins and achieved a gross profit margin of 54% in Q4 2025 [18][22] - Adjusted EBITDA for Q4 2025 was $64.2 million, exceeding guidance [25] Business Line Data and Key Metrics Changes - The Water Infrastructure segment saw revenue growth of over 800% over five years, becoming the largest segment by profitability [8] - The Chemical Technology segment achieved 19% year-over-year revenue growth and 45% growth in gross profit before depreciation and amortization [13][24] - The Water Services segment maintained market-leading positions and achieved 7% revenue growth in Q4 2025 [20][23] Market Data and Key Metrics Changes - The company anticipates a steady commodity price environment in 2026, with oil prices expected to remain between $55-$65 [17] - The company expects 20%-25% year-over-year growth in the Water Infrastructure segment for 2026 [9][21] Company Strategy and Development Direction - The company is focusing on expanding its water infrastructure in the Northern Delaware Basin, which is characterized by productive geology and low breakevens [9][10] - Strategic investments are being made in long-term diversification efforts, including beneficial reuse and mineral extraction [7][12] - The company aims to grow its water infrastructure to account for over 60% of consolidated gross profit in the next 24 months [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth trajectory for 2026, supported by ongoing infrastructure projects and market demand [16][30] - The company is well-positioned to generate healthy and durable free cash flows over the long term, with a focus on capital allocation for growth and shareholder returns [30] Other Important Information - The company is exploring additional opportunities in lithium extraction and other high-margin revenue streams [44][45] - The Peak Rentals business is under strategic evaluation to maximize value for shareholders while supporting core water infrastructure growth [15][50] Q&A Session Summary Question: Expansion opportunities in Northern Delaware - Management noted a mix of smaller opportunities and some larger projects in the Northern Delaware, with a focus on leveraging the existing system for attractive returns [32][34] Question: Future growth for infrastructure business - Management indicated ongoing expansion in Lea and Eddy County, with potential for growth into other basins [37] Question: Lithium extraction partnerships - Management confirmed ongoing evaluations for additional high-margin opportunities, including iodine and strontium extraction [44][45] Question: Update on Peak Rentals business - Management is strategically engaging around Peak Rentals to ensure positive outcomes for both Peak and Select [46][50] Question: Beneficial reuse pilots - Management highlighted successful pilots in collaboration with operators and universities, focusing on treated produced water for agricultural applications [53][56]

Financial Data and Key Metrics Changes - In 2025, the company generated $1.4 billion in consolidated revenue, with a record Adjusted EBITDA of $260 million, despite a challenging macro environment [17][25] - The company improved consolidated margins and achieved a gross profit margin of 54% in the fourth quarter [18][22] - Adjusted EBITDA for the fourth quarter was $64.2 million, exceeding guidance [25] Business Line Data and Key Metrics Changes - The Water Infrastructure segment saw revenue growth of over 800% over five years, becoming the largest segment by profitability [8] - The Chemical Technology segment achieved 19% year-over-year revenue growth and 45% growth in gross profit before depreciation and amortization [13][24] - The Water Services segment maintained market-leading positions and achieved 7% revenue growth in the fourth quarter [20][22] Market Data and Key Metrics Changes - The company anticipates a steady commodity price environment in 2026, with oil prices expected to remain between $55-$65 [17] - The company expects 20%-25% year-over-year growth in the Water Infrastructure segment for 2026 [9][21] Company Strategy and Development Direction - The company is focusing on expanding its water infrastructure in the Northern Delaware Basin, which is characterized by productive geology and low breakevens [9][10] - Strategic investments are being made in long-term diversification efforts, including beneficial reuse and mineral extraction [7][12] - The company aims to grow its water infrastructure to represent over 60% of consolidated gross profit in the next 24 months [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth trajectory for 2026, supported by ongoing construction projects and customer demand [16][21] - The company is well-positioned to benefit from market-leading positions in key gas basins and anticipates stable activity levels [17][18] Other Important Information - The company is targeting a reduction in SG&A expenses to below 11% of revenue for the full year 2026 [25] - Capital expenditures for 2026 are expected to be between $175 million and $225 million, with a focus on water infrastructure growth [27][28] Q&A Session Summary Question: Expansion opportunities in Northern Delaware - Management noted that smaller opportunities are more prevalent as the system matures, with some larger projects still being pursued [32][34] Question: Long-term growth opportunities beyond Northern Delaware - Management indicated potential expansion into other basins, including Winkler County, and emphasized the unique opportunities in Lea and Eddy County [35][37] Question: Lithium extraction partnerships and other high-margin opportunities - Management confirmed ongoing evaluations of additional high-margin revenue streams, including iodine and strontium extraction [42][44] Question: Update on Peak Rentals business - Management is strategically engaging around Peak Rentals to ensure positive outcomes for both Peak and Select [46][50] Question: Beneficial reuse pilots - Management highlighted successful pilots in collaboration with operators and universities, focusing on treated produced water applications [53][56]

GAAP EPS was $4.67, including special items that reduced full-year earnings by $0.60 per share. Excluding special items, adjusted EPS was $5.27, down from $5.92 in 2024.For the full year, Cleminson reported revenue of $1.8 billion, down 4% from 2024. Adjusted EBITDA was $203 million, down from $225.2 million in 2024. Net income for 2025 was $116.6 million, up from $35.6 million the prior year.Net income was $47.4 million, compared with a net loss of $70.4 million in the prior-year quarter. Cleminson said th ...