Stepan Co (SCL) Q4 2025 Earnings Call Highlights: Strong EBITDA Growth Amid Challenges

GuruFocus News

Tue, February 24, 2026 at 6:00 AM GMT+9 4 min read

In this article:

SCL

-20.65%

This article first appeared on GuruFocus.

**Adjusted EBITDA Growth:** 6% increase for the full year 2025, totaling $199 million.

**Organic Volume Growth:** 2% year-over-year increase, driven by crop productivity, oilfield, and specialty products.

**Free Cash Flow:** Positive at $25 million for Q4 2025, compared to negative $0.2 million in the prior year.

**Net Debt:** Reduced to $494 million, with a leverage ratio improvement from 2.8 to 2.5 times.

**Dividend Increase:** 2.6% increase, marking the 58th consecutive year of dividend growth.

**Surfactants Net Sales:** $402 million, up from $379 million in the prior year.

**Polymers Net Sales:** $132 million, up from $113 million in the prior year, with an 11% volume increase.

**Cash from Operations:** $60 million for Q4 2025.

**Reported Net Income:** $46.9 million for the full year, down 7% year-over-year.

**Adjusted Net Income:** $41.7 million for the full year 2025.

**Project Catalyst Savings:** Expected to deliver $100 million in pretax savings over the next two years.

Warning! GuruFocus has detected 14 Warning Signs with SCL.

Is SCL fairly valued? Test your thesis with our free DCF calculator.

Release Date: February 23, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Stepan Co (NYSE:SCL) delivered a 6% growth in full-year adjusted EBITDA, reaching $199 million, despite challenging macroeconomic conditions.

The company achieved the best safety results in its history, highlighting a strong focus on operational safety.

Stepan Co (NYSE:SCL) successfully commissioned its Pasadena alkoxylation facility, optimizing its asset footprint and enhancing operational efficiency.

The company increased its dividend for the 58th consecutive year, demonstrating confidence in its cash flow strength and long-term outlook.

Project Catalyst is expected to deliver around $100 million in pretax savings over the next two years, with significant savings anticipated in 2026.

Negative Points

Fourth quarter 2025 adjusted net loss was $0.5 million, reflecting a decrease in adjusted earnings due to lower Surfactants operating income and less favorable tax rates.

Surfactants segment experienced a 3% decrease in organic volumes due to softer demand in global commodity consumer product end markets.

Elevated raw material costs, particularly oleochemicals, negatively impacted EBITDA margins in the Surfactants business.

The company announced the closure of its Fieldsboro, New Jersey site and decommissioning of select assets at Millsdale and Stalybridge, impacting employees and communities.

First quarter 2026 is expected to be challenging due to historic weather impacts and ongoing inflationary pressures, affecting earnings cadence.

 






Story Continues  

Q & A Highlights

Q: Can you provide details on the capacity utilization within the Surfactants business and the impact of the optimization actions at Fieldsboro and other facilities? A: Luis Rojo, President and CEO, explained that the consolidation aims to optimize the cost structure by moving volume to more modern and cost-efficient sites. The facilities being closed were not losing money but are being optimized for better utilization rates and cost efficiency.

Q: Regarding the $100 million savings from Project Catalyst, how should we think about the net savings after accounting for inflation? A: Luis Rojo noted that while they expect to deliver at least $60 million in pretax savings in 2026, inflation, particularly in areas like healthcare and insurance, will offset some of these savings. The company is managing around $750 million in fixed costs with an inflation rate of over 3%.

Q: How did oleochemical raw material pressures impact Q4, and what is the outlook for Q1? A: Luis Rojo stated that oleochemical costs peaked in the second half of 2025, impacting margins. Prices are now normalizing, and the company expects margin recovery in the second half of 2026 due to the long supply chain and inventory lag.

Q: Can you provide guidance on the expected EBITDA growth for 2026 and the impact of weather on Q1 earnings? A: Luis Rojo confirmed expectations for EBITDA growth in 2026, with improvements anticipated in the second half due to factors like oleochemical cost normalization and Project Catalyst savings. Q1 faced a $6 million EBITDA impact from severe weather, but the company expects to recover at least half of this loss in subsequent quarters.

Q: How will Project Catalyst impact Tier 2 and Tier 3 customers? A: Luis Rojo emphasized that Project Catalyst aims to create a more agile and productive organization, facilitating growth in Tier 2 and Tier 3 segments. Investments in automation and systems are expected to enhance customer engagement and growth in these areas.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Terms and Privacy Policy

Privacy Dashboard

More Info