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- **Adjusted EBITDA growth**: +9% YTD to $165M, driven by Specialty Products (+113%) and Polymers (+8% volumes)
- **Free cash flow turnaround**: $40.2M Q3 vs -$4.2M prior year, dividend +2.6%
- **Strategic momentum**: 350 new customers Q3, Pasadena facility ramping to full contribution in 2026
- **Challenges**: 70% oleochemical cost increase, European construction weakness
- **Outlook**: Full year EBITDA growth, double-digit Surfactant margins achievable in 2-3 years

**【CEO Opening Remarks】**
- Year-to-date 2025: Adjusted EBITDA up 9% to $165 million, despite challenges from 70% oleochemical raw material cost increase and $10 million Pasadena start-up costs.
- Q3 2025 highlights:
  - Specialty Products EBITDA +113% on 68% sales growth (pharma order timing)
  - Polymers volumes +8% (North America Rigid Polyol +20%, Europe -15%)
  - Surfactants volumes -2% (crop productivity +20%, oilfield +mid-single, offset by consumer products -)
- Free cash flow $40M (vs -$4M prior year), dividend +2.6% to $0.395/share
- Strategic priorities: End market diversification (crop productivity, oilfield), Tier 2/3 customer growth (+350 new Q3), Pasadena ramp-up (41 SKUs produced)

**【CFO Financial Commentary】**
- Q3 2025: Adjusted net income $10.9M (-54% vs prior year) due to:
  - Higher tax rate (23.8% vs 18.9%) from U.S. tax law
  - $1.5M lower capitalized interest
  - $1.3M higher depreciation (Pasadena)
- EBITDA breakdown:
  - Specialty Products +$5.9M (113%)
  - Surfactants -$6.2M (14%)
  - Polymers -$1M (4%)
- Free cash flow $40.2M (vs -$4.2M prior year) from working capital reduction
- 2025 outlook: Full year adjusted EBITDA growth, positive free cash flow

**【Q&A Highlights】**
- **Oleochemical recovery**: Coconut oil prices down from $3,000/ton peak to $2,500, but 70% higher than 2024. Full margin recovery expected by 2026
- **Surfactant margins**: Target double-digit EBITDA margin in 2-3 years (currently ~10%)
- **Polymers demand**: Spray foam growth (0% share → +), Europe construction lagging due to macro uncertainty
- **Asset optimization**: Philippines site sale Q4 2025, evaluating further footprint rationalization
- **Dividend policy**: 58-year streak, 2.6% increase to $0.395/share

Stepan Company (SCL) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

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Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

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Income Tax Adjustments

Net Income from Continuing Operations

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Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

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Other Comprehensive Income

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Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

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Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

SCL

SCL fundamentals

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