Stepan Company (SCL) investor relations material

Executive summary

• Achieved record safety performance in Q1 2026, reflecting operational excellence focus.

• Adjusted EBITDA for Q1 2026 was $49.6 million, down 14% year-over-year, mainly due to lower surfactant earnings, production timing in Asia, competitive pressures in Mexico, severe weather in North America, and higher oleochemical costs.

• Adjusted Net Income was $10.3 million, down 47% year-over-year, primarily from lower surfactant earnings and higher interest expense related to the Pasadena, TX start-up.

• Project Catalyst execution is on track, targeting $100 million in pre-tax savings over two years, with about 60% expected in 2026.

• Board declared a quarterly cash dividend of $0.395 per share, continuing a 58-year streak of dividend increases.

Financial highlights

• Net sales for Q1 2026 were $604.5 million, up from $593.3 million in Q1 2025, driven by higher selling prices and favorable currency translation.

• Reported net loss of $41.4 million, or $1.81 per diluted share, versus net income of $19.7 million, or $0.86 per share, in Q1 2025, due to a $65.4 million pre-tax restructuring charge.

• Adjusted Net Income was $10.3 million ($0.45 per share), down 47% year-over-year.

• Adjusted EBITDA was $49.6 million, down 14% from $57.5 million in the prior year.

• Free cash flow was negative $14 million, reflecting typical Q1 working capital build.

Outlook and guidance

• Project Catalyst expected to deliver $100 million in pre-tax savings over two years, with about 60% realized in 2026.

• Pasadena, Texas facility expected to reach 80% utilization in 2026 and full utilization in 2027, supporting future growth.

• Management expects full-year adjusted EBITDA growth, positive free cash flow, and continued balance sheet deleveraging in 2026 despite market uncertainties.

• FY2026 capital expenditures are guided at $105–115 million, down from $122.5 million in 2025.

• Pricing expected to remain sticky due to market-wide raw material inflation; Q2 outlook positive.