#United States #Financial Performance #Northbrook #Stepan Company #Q2 Results

Stepan Company Reports Second Quarter Results for 2025

In its recent announcement, Stepan Company (NYSE: SCL) detailed its financial outcomes for the second quarter of 2025, showcasing a robust performance characterized by increased revenues and net income, indicating a solid growth trajectory amid market challenges.

Key Financial Highlights

For the quarter ending June 30, 2025, Stepan reported a net income of $11.3 million, representing a 19% surge compared to the same period last year. Adjusted net income reflected an even more impressive increase of 27%, reaching $12.0 million. This significant growth was primarily fueled by strong operational performance within its Polymers division and the Crop Productivity business, complemented by a favorable reduction in the company’s effective tax rate.

The company reported an EBITDA of $50.6 million, with an adjusted EBITDA of $51.4 million, marking increases of 6% and 8%, respectively, year-over-year. Notably, global sales volume experienced a 1% rise compared to the previous year, demonstrating resilient demand in a fluctuating market environment.

Cash Flow and Investments

During the quarter, Stepan generated $11.2 million from operations. However, free cash flow took a negative turn, totaling -$14.4 million, largely due to heightened working capital requirements to support ongoing business expansion, preparations for expected tariff impacts, and maintaining necessary safety stock ahead of the hurricane season alongside a new labor agreement at the Millsdale site.

The company’s pre-tax earnings faced a $6.1 million reduction attributed to startup expenses for a new alkoxylation facility in Pasadena, Texas, along with an environmental remediation reserve adjustment linked to the Millsdale site.

Quarterly and Year-to-Date Performance

For the first half of the year, Stepan’s reported net income stood at $31.1 million, equating to a 33% year-on-year growth, and adjusted net income reached $31.3 million, up 30% from 2024. EBITDA figures also mirrored this upward trend, with first-semester results of $108.6 million for standard EBITDA and $108.9 million adjusted.

Total sales for the second quarter reached $594.7 million, a 7% increase, driven by higher selling prices attributed to increased raw material costs and a positive product mix. The overall tonnage parametric saw a 1% improvement in volume, while pricing adjustments contributed significantly, showing a 6% year-on-year increase in selling price mix.

Segment Performance Breakdown

Surfactants

Net Sales: $411.5 million; an 8% increase from Q2 2024.
Adjusted EBITDA: Slight decline of 1% due to demand fluctuations in certain consumer product markets.

Polymers

Net Sales: $162.8 million; a modest growth rate of 2%.
A remarkable 7% increase in volumes, primarily in North America and Europe.

Specialty Products

* Net Sales: $20.5 million; witnessing a robust 22% increase, although adjusted EBITDA saw a decline of 24% due to order timing issues in the pharmaceutical space.

Effective Tax Rate and Outlook

The effective tax rate improved to 19.2% for the first half of 2025, down from 36.1% the prior year, influenced by a successful tax settlement and the absence of unfavorable events from the previous year. Looking ahead, Stepan aims to maintain focus on enhancing operational excellence and cost management while leveraging its competitive advantages to seize growth opportunities.

Luis E. Rojo, President and CEO, remarked on the optimistic outlook for the company's segments, particularly the Surfactants sector and Polymer demand, underlining expectations of improved market stability and operational performance.

In conclusion, Stepan Company’s second quarter results reveal a robust financial resilience bolstered by strategic operational strategies, despite facing challenges such as supply chain dynamics and market uncertainties. The company is well-positioned to enhance its financial performance in the remaining months of 2025, driven by innovation and strategic growth initiatives.