Stepan Reports Third Quarter 2025 Results

NORTHBROOK, Ill., Oct. 29, 2025 /PRNewswire/ -- Stepan Company (NYSE: SCL) today reported:

Third Quarter 2025 Highlights

YTD 2025 Highlights

"Third quarter adjusted EBITDA grew 6% and free cash flow improved to $40.2 million dollars for the quarter. Year-to-date adjusted EBITDA is up 9% with volumes up 2%. We achieved these positive results despite higher start-up expenses at our Pasadena site and a significant run up in oleochemical raw material costs," said Luis E. Rojo, President and Chief Executive Officer. "Third quarter Adjusted Net Income was negatively impacted by a higher effective tax rate, higher depreciation and higher interest net versus prior year, none of which had a cash impact. From a segment perspective, Polymer volume was up 8% as our Rigid, Specialty Polyols and Phthalic Anhydride businesses all delivered volume growth. Within Surfactants, we experienced double digit volume growth within the Agricultural and Industrial Cleaning end markets and mid-single digit growth within the Oilfield end markets. This growth was offset by lower demand in the global commodity Consumer Products end markets. Specialty Products delivered earnings growth during the quarter due to order timing differences. We are encouraged by volume growth across several key strategic end markets, and we remain focused on gradually restoring margins while maintaining a healthy balance between volume and margins."

Financial Summary

Three Months Ended

September 30,

Nine Months Ended

September 30,

($ in thousands, except per share data)

2025

2024

Change

2025

2024

Change

Net Sales

590,284

546,842

1,778,228

1,654,665

Operating Income

21,794

23,949

(9)

68,047

62,785

Net Income

10,839

23,606

(54)

41,891

47,020

(11)

Earnings per Diluted Share

0.47

1.03

(54)

1.83

2.05

(11)

Adjusted Net Income *

10,948

23,661

(54)

42,211

47,713

(12)

Adjusted Earnings per

Diluted Share *

0.48

1.03

(53)

1.84

2.08

(12)

* See Table II for reconciliations of non-GAAP adjusted net income and adjusted earnings per diluted share.

Percentage Change in Net Sales

Net sales in the third quarter of 2025 increased 8% year-over-year. This increase was primarily driven by higher selling prices that were mainly attributable to the pass-through of higher raw material costs and more favorable product mix.

Three Months Ended

September 30, 2025

Nine Months Ended

September 30, 2025

Volume

Selling Price & Mix

Foreign Translation

(1)

Total

Segment Results

Three Months Ended

September 30,

Nine Months Ended

September 30,

($ in thousands)

2025

2024

Change

2025

2024

Change

Net Sales

Surfactants

422,358

382,724

1,264,151

1,153,339

Polymers

143,928

149,796

(4)

452,795

455,061

Specialty Products

23,998

14,322

61,282

46,265

Total Net Sales

590,284

546,842

1,778,228

1,654,665

Three Months Ended

September 30,

Nine Months Ended

September 30,

($ in thousands, all amounts pre-tax)

2025

2024

Change

2025

2024

Change

Operating Income

Surfactants

15,718

26,303

(40)

58,015

69,445

(16)

Polymers

14,104

15,248

(8)

39,281

37,227

Specialty Products

9,634

3,727

158

20,400

15,314

Total Segment

Operating Income

39,456

45,278

(13)

117,696

121,986

(4)

Corporate Expenses

(17,662)

(21,329)

(17)

(49,649)

(59,201)

(16)

Consolidated

Operating Income

21,794

23,949

(9)

68,047

62,785

Three Months Ended

September 30,

Nine Months Ended

September 30,

($ in millions)

2025

2024

Change

2025

2024

Change

EBITDA

56.1

53.0

164.7

151.0

Adjusted EBITDA

Surfactants

38.0

44.2

(14)

120.9

122.9

(2)

Polymers

22.4

23.4

(4)

64.0

61.6

Specialty Products

11.1

5.2

113

24.8

19.8

Unallocated Corporate

(15.3)

(19.7)

(22)

(44.6)

(52.4)

(15)

Consolidated Adjusted EBITDA

56.2

53.1

165.1

151.9

Consolidated adjusted EBITDA (2) increased $3.1 million, or 6%, in the quarter. This increase was primarily driven by strong Specialty Products results and the non-recurrence of expenses associated with the external criminal social engineering fraud event in 2024. Surfactant adjusted EBITDA declined due to a 2% decline in sales volume, lower unit margins and higher costs associated with the start-up of our new alkoxylation site in Pasadena, Texas.

Income Taxes

The Company's effective tax rate was 23.8% in the first nine months of 2025 versus 18.9% in the first nine months of 2024. This increase was primarily attributable to the recently enacted U.S. Tax Act (H.R.1), lower anticipated R&D tax credits and the expected tax impact of certain cash repatriations to the United States.

Outlook

"Looking forward, we remain focused on accelerating our business strategies through enhanced operational excellence, improved product and customer mix and accelerated free cash flow generation. We believe our Surfactant business will experience continued growth in our key strategic end markets and that Polymer demand will continue improving as we get more market certainty and we execute our innovation and growth plans," said Luis E. Rojo, President and Chief Executive Officer. "We remain on track to close our asset sale in the Philippines during the fourth quarter. In parallel, we are analyzing opportunities to optimize our footprint and asset base. Despite the ongoing market and tariff uncertainties, we remain optimistic about delivering full-year Adjusted EBITDA growth and generating positive free cash flow in 2025."

Notes

(1) Adjusted net income and adjusted earnings per share are non-GAAP measures which exclude deferred compensation income/expense, certain environmental remediation-related costs as well as other significant and infrequent/non-recurring items. See Table II for reconciliations of non-GAAP adjusted net income and adjusted earnings per diluted share.

(2) EBITDA and adjusted EBITDA are non-GAAP measures. See Table VI for calculations and GAAP reconciliations of EBITDA and adjusted EBITDA.

(3) Free cash flow is a non-GAAP measure and reflects cash generated from operations minus capital expenditures. Cash generated from operations was $69.8 million during the third quarter of 2025 and capital expenditures were $29.6 million.

Conference Call

Stepan Company will host a conference call to discuss its third quarter results at 9:00 a.m. ET (8:00 a.m. CT) on October 29, 2025. The call can be accessed by phone and webcast. To access the call by phone, please click on this Registration Link, complete the form and you will be provided with dial in details and a PIN. To avoid delays, we encourage participants to dial into the conference call ten minutes ahead of the scheduled start time. The webcast can be accessed through the Investors/Conference Calls page at www.stepan.com. A webcast replay of the conference call will be available at the same location shortly after the call.

Supporting Slides

Slides supporting this press release will be made available at www.stepan.com through the Investors/Presentations page at approximately the same time as this press release is issued.

Corporate Profile

Stepan Company is a major manufacturer of specialty and intermediate chemicals used in a broad range of industries. Stepan is a leading merchant producer of surfactants, which are the key ingredients in consumer and industrial cleaning and disinfection compounds and in agricultural and oilfield solutions. The Company is also a leading supplier of polyurethane polyols used in the expanding thermal insulation market, and CASE (Coatings, Adhesives, Sealants, and Elastomers) industries.

Headquartered in Northbrook, Illinois, Stepan utilizes a network of modern production facilities located in North and South America, Europe and Asia.

The Company's common stock is traded on the New York Stock Exchange (NYSE) under the symbol SCL. For more information about Stepan Company please visit the Company online at www.stepan.com

More information about Stepan's sustainability program can be found on the Sustainability page at www.stepan.com

Certain information in this news release 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. These statements include statements about Stepan Company's plans, objectives, strategies, financial performance and outlook, trends, the amount and timing of future cash distributions, prospects or future events and involve known and unknown risks that are difficult to predict. As a result, Stepan Company's actual financial results, performance, achievements or prospects may differ materially from those expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as "may," "could," "expect," "intend," "plan," "seek," "anticipate," "believe," "estimate," "guidance," "predict," "potential," "continue," "likely," "will," "would," "should," "illustrative" and variations of these terms and similar expressions, or the negative of these terms or similar expressions. Such forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by Stepan Company and its management based on their knowledge and understanding of the business and industry, are inherently uncertain. These statements are not guarantees of future performance, and stockholders should not place undue reliance on forward-looking statements.

There are a number of risks, uncertainties and other important factors, many of which are beyond Stepan Company's control, that could cause actual results to differ materially from the forward-looking statements contained in this news release. Such risks, uncertainties and other important factors include, among other factors, the risks, uncertainties and factors described in Stepan Company's Form 10-K, Form 10-Q and Form 8-K reports and exhibits to those reports, and include (but are not limited to) risks and uncertainties related to accidents, unplanned production shutdowns or disruptions in manufacturing facilities; reduced demand due to customer product reformulations or new technologies; our inability to successfully develop or introduce new products; compliance with laws; our ability to identify suitable acquisition candidates and successfully complete and integrate acquisitions; global competition; volatility of raw material and energy costs and supply; disruptions in transportation or significant changes in transportation costs; downturns in certain industries and general economic downturns; international business risks, including currency exchange rate fluctuations, changes in global trade policies, including tariffs; legal restrictions and taxes; unfavorable resolution of litigation against us; maintaining and protecting intellectual property rights; our ability to access capital markets; global political, military, security or other instability; costs related to expansion or other capital projects; interruption or breaches of information technology systems; our ability to retain executive management and key personnel; and our debt covenants.

These forward-looking statements are made only as of the date hereof, and Stepan Company undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

* * * * *

Tables follow

Table I

STEPAN COMPANY

For the Three and Nine Months Ended September 30, 2025 and 2024

(Unaudited – in 000's, except per share data)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2025

2024

2025

2024

Net Sales

590,284

546,842

1,778,228

1,654,665

Cost of Sales

519,261

471,157

1,559,857

1,439,147

Gross Profit

71,023

75,685

218,371

215,518

Operating Expenses:

Selling

11,299

11,394

38,064

34,610

Administrative

22,864

26,254

67,079

73,513

Research, Development and Technical Services

14,225

13,532

43,575

41,881

Deferred Compensation Expense

841

556

1,606

2,729

49,229

51,736

150,324

152,733

Operating Income

21,794

23,949

68,047

62,785

Other Income (Expense):

Interest, Net

(6,815)

(3,621)

(16,426)

(9,353)

Other, Net

1,536

989

3,344

4,551

(5,279)

(2,632)

(13,082)

(4,802)

Income Before Provision for Income Taxes

16,515

21,317

54,965

57,983

Provision for Income Taxes

5,676

(2,289)

13,074

10,963

Net Income

10,839

23,606

41,891

47,020

Net Income Per Common Share

Basic

0.47

1.03

1.83

2.06

Diluted

0.47

1.03

1.83

2.05

Shares Used to Compute Net Income Per

Common Share

Basic

22,875

22,836

22,869

22,829

Diluted

22,893

22,923

22,888

22,936

Table II

Reconciliation of Non-GAAP Net Income and Earnings per Diluted Share*

Three Months Ended

September 30,

Nine Months Ended

September 30,

($ in thousands, except per share amounts)

2025

EPS

2024

EPS

2025

EPS

2024

EPS

Net Income Reported

10,839

0.47

23,606

1.03

41,891

1.83

47,020

2.05

Deferred Compensation (Income)

(149)

(350)

(0.02)

(549)

(0.02)

(1,043)

(0.05)

Environmental Remediation

Expense

258

0.01

405

0.02

869

0.03

1,736

0.08

Adjusted Net Income

10,948

0.48

23,661

1.03

42,211

1.84

47,713

2.08

* All amounts in this table are presented after-tax

The Company believes that certain non-GAAP measures, in conjunction with comparable GAAP measures, are useful for evaluating the Company's operating performance and financial condition. The Company uses this non-GAAP information as an indicator of business performance and evaluates management's effectiveness with specific reference to these indicators. Management believes that these non-GAAP financial measures provide useful supplemental information because they exclude non-operational items that affect comparability between years. These measures should be considered in addition to, not as substitutes for or superior to, measures of financial performance prepared in accordance with GAAP and may differ from similarly titled measures presented by other companies. The Company's Annual Report on Form 10-K for the year ended December 31, 2024 contains additional information regarding the use of non-GAAP financial measures.

Summary of Third Quarter 2025 Adjusted Net Income Items

Adjusted net income excludes non-operational deferred compensation income/expense, certain environmental remediation costs and other significant and infrequent or non-recurring items.

Table III

Reconciliation of Pre-Tax to After-Tax Adjustments

Management uses the non-GAAP adjusted net income metric to evaluate the Company's operating performance. Management excludes the items listed in the table below because they are non-operational items. The cumulative tax effect was calculated using the statutory tax rates for the jurisdictions in which the transactions occurred.

Three Months Ended

September 30,

Nine Months Ended

September 30,

($ in thousands, except per share amounts)

2025

EPS

2024

EPS

2025

EPS

2024

EPS

Pre-Tax Adjustments

Deferred Compensation (Income)

(198)

(466)

(732)

(1,390)

Environmental Remediation Expense

344

541

1,158

2,315

Total Pre-Tax Adjustments

146

426

925

Cumulative Tax Effect on Adjustments

(37)

(20)

(106)

(232)

After-Tax Adjustments

109

0.01

320

0.01

693

0.03

Table IV

Deferred Compensation Plans

The full effect of the deferred compensation plans on quarterly pre-tax income was $0.2 million of income versus $0.5 million of income in the prior year. The quarter-end market prices of Company stock and the impact of deferred compensation on specific income statement line items is summarized below:

2025

2024

9/30

6/30

3/31

12/31

9/30

6/30

3/31

Stepan Company

47.70

54.58

55.04

64.70

77.25

83.96

90.04

Three Months Ended

September 30,

Nine Months Ended

September 30,

($ in thousands)

2025

2024

2025

2024

Deferred Compensation

Operating Income (Expense)

(841)

(556)

(1,606)

(2,729)

Other, net – Mutual Fund Gain (Loss)

1,039

1,022

2,338

4,119

Total Pre-Tax

198

466

732

1,390

Total After-Tax

149

350

549

1,043

Effects of Foreign Currency Translation

The Company's foreign subsidiaries transact business and report financial results in their respective local currencies. These results are translated into U.S. dollars at average foreign exchange rates appropriate for the reporting period. The table below presents the impact that foreign currency translation had on select income statement line items.

($ in millions)

Three Months Ended

September 30,

Change

Due to

Foreign

Currency

Translation

Nine Months Ended

September 30,

Change

Due to

Foreign

Currency

Translation

2025

2024

2025

2024

Net Sales

590.3

546.8

43.5

8.6

1,778.2

1,654.7

123.5

(11.6)

Gross Profit

71.0

75.7

(4.7)

1.0

218.4

215.5

2.9

(1.9)

Operating Income

21.8

23.9

(2.1)

0.5

68.0

62.8

5.2

(1.5)

Pretax Income

16.5

21.3

(4.8)

0.5

55.0

58.0

(3.0)

(1.6)

Corporate Expenses

Three Months Ended

September 30,

Nine Months Ended

September 30,

($ in thousands)

2025

2024

Change

2025

2024

Change

Total Corporate Expenses

17,662

21,329

(17)

49,649

59,201

(16)

Less:

Deferred Compensation Expense

841

556

1,606

2,729

(41)

Environmental Remediation

Expense

344

541

(36)

1,158

2,315

(50)

Adjusted Corporate Expenses

16,477

20,232

(19)

46,885

54,157

(13)

Adjusted Corporate expenses decreased $3.8 million, or 19% for the quarter. This decrease was primarily due to the non-recurrence of expenses associated with a criminal social engineering scheme in 2024.

Table V

Stepan Company

Consolidated Balance Sheets

September 30, 2025 and December 31, 2024

September 30,

2025

December 31,

2024

ASSETS

Current Assets

920,604

810,429

Property, Plant & Equipment, Net

1,213,862

1,198,454

Other Assets

297,818

295,765

Total Assets

2,432,284

2,304,648

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

713,923

669,034

Deferred Income Taxes

10,294

9,612

Long-term Debt

357,107

332,632

Other Non-current Liabilities

104,188

123,436

Total Stepan Company Stockholders' Equity

1,246,772

1,169,934

Total Liabilities and Stockholders' Equity

2,432,284

2,304,648

Selected Balance Sheet Information

The Company's total debt decreased by $2.5 million and cash increased by $29.6 million versus June 30, 2025. The Company's net debt level decreased $32.1 million versus June 30, 2025 and the net debt ratio was 30% versus 31% in the prior quarter (Net Debt and Net Debt Ratio are non-GAAP measures, reconciliations of which are shown in the table below). Management uses the non-GAAP net debt metric to show a more complete picture of the Company's overall liquidity, financial flexibility and leverage level.

($ in millions)

September 30,

2025

June 30,

2025

March 31,

2025

December 31,

2024

Net Debt

Total Debt

655.5

658.0

659.3

625.4

Cash

118.5

88.9

107.5

99.7

Net Debt

537.0

569.1

551.8

525.7

Equity

1,246.8

1,241.7

1,200.5

1,169.9

Net Debt + Equity

1,783.8

1,810.8

1,752.3

1,695.6

Net Debt / (Net Debt + Equity)

The major working capital components were:

($ in millions)

September 30,

2025

June 30,

2025

March 31,

2025

December 31,

2024

Net Receivables

436.1

442.2

436.5

388.0

Inventories

324.3

329.5

309.3

288.7

Accounts Payable

(289.4)

(281.8)

(298.1)

(258.8)

471.0

489.9

447.7

417.9

Table VI

Reconciliations of Non-GAAP EBITDA and Adjusted EBITDA

Management uses the non-GAAP EBITDA and adjusted EBITDA metrics to evaluate the Company's operating performance. Management excludes the items listed in the table below because they are non-operational items. Refer to the Income Statement on Table I for a bridge between Operating Income and Net Income.

Three Months Ended

September 30, 2025

($ in millions)

Surfactants

Polymers

Specialty

Products

Unallocated

Corporate

Consolidated

Operating Income

15.7

14.1

9.6

(17.7)

21.8

Depreciation and Amortization

22.3

8.3

1.5

0.7

32.8

Other, Net Income

1.5

EBITDA

56.1

Deferred Compensation

(0.2)

Environmental Remediation

0.3

Adjusted EBITDA

38.0

22.4

11.1

(15.3)

56.2

Three Months Ended

September 30, 2024

($ in millions)

Surfactants

Polymers

Specialty

Products

Unallocated

Corporate

Consolidated

Operating Income

26.3

15.2

3.7

(21.3)

23.9

Depreciation and Amortization

17.9

8.2

1.5

0.5

28.1

Other, Net Income

1.0

EBITDA

53.0

Deferred Compensation

(0.4)

Environmental Remediation

0.5

Adjusted EBITDA

44.2

23.4

5.2

(19.7)

53.1

Nine Months Ended

September 30, 2025

($ in millions)

Surfactants

Polymers

Specialty

Products

Unallocated

Corporate

Consolidated

Operating Income

58.0

39.3

20.4

(49.6)

68.1

Depreciation and Amortization

62.9

24.7

4.4

1.3

93.3

Other, Net Income

3.3

EBITDA

164.7

Deferred Compensation

(0.7)

Environmental Remediation

1.1

Adjusted EBITDA

120.9

64.0

24.8

(44.6)

165.1

Nine Months Ended

September 30, 2024

($ in millions)

Surfactants

Polymers

Specialty

Products

Unallocated

Corporate

Consolidated

Operating Income

69.4

37.2

15.3

(59.2)

62.7

Depreciation and Amortization

53.5

24.4

4.5

1.3

83.7

Other, Net Income

4.6

EBITDA

151.0

Deferred Compensation

(1.4)

Environmental Remediation

2.3

Adjusted EBITDA

122.9

61.6

19.8

(52.4)

151.9

SOURCE Stepan Company