Stepan Company (SCL) investor relations material

Strategic focus and investments

• Emphasis on priority growth markets with strategic tailwinds, including agriculture, oilfield, and insulation sectors.

• Major capital investment completed with a new alkoxylation facility in Pasadena, Texas, the largest in company history.

• Ongoing expansion of customer base, especially Tier 2 and Tier 3 customers, with 1,800 new customers added in 2024.

• Continued investment in R&D, with 33 new products introduced in 2024, representing about 10% of revenue.

• Focus on operational excellence, cost management, and global manufacturing footprint across multiple continents.

Market trends and business segments

• Surfactants remain the largest segment, serving diverse end markets such as agriculture, oilfield, construction, personal care, and cleaning.

• Polymers segment is driven by rigid polyols for insulation, benefiting from energy efficiency and regulatory trends.

• Specialty Products serve niche markets like beverages and baby formula, with a focus on high-value, specialized offerings.

• Growth in agricultural and oilfield surfactants has been double-digit in the first half of the year.

• Customer-centric innovation and technical service are key differentiators, supporting long-term relationships.

Financial performance and capital allocation

• Sales have declined in recent years, influenced by raw material cost fluctuations and sector-specific weaknesses, but agricultural and oilfield segments have returned to growth.

• EBITDA and free cash flow growth targeted through high-margin, high-growth markets.

• Net leverage stands at 2.9, with ongoing efforts to delever and maintain prudent balance sheet management.

• Dividend increases have been sustained for 57 years, with share buybacks as part of a holistic capital allocation strategy.

• M&A remains a component of long-term growth, alongside organic investments.