STEPAN CO Q3 FY2024 earnings call

• The Board appointed Luis Rojo as President and CEO effective immediately. - Third quarter adjusted EBITDA was $53 million, up 11% versus prior year. Adjusted net income was $23.7 million, a 61% increase year-over-year. - On track to deliver $50 million cost reduction goal for 2024. - Executed tax projects reducing effective tax rate for 2024 to 19%-20%. - Surfactant business had double-digit volume growth; focus on Tier 2 and Tier 3 customers; diversification into functional products; Pasadena alkoxylation facility 99% complete.

Surfactant: Net sales for the quarter were $383 million, a 2% increase versus the prior year. Adjusted EBITDA increased $12.6 million or 40% versus the prior year. Polymers: Net sales were $150 million, a 12% decrease versus the prior year. Adjusted EBITDA decreased $6.3 million or 21% versus the prior year. Specialty Products: Net sales were $14.3 million, a 24% decrease versus the prior year. Adjusted EBITDA increased $1.3 million or 33% versus the prior year.

• Expect to return to lower inventory levels during Q4 2024. - Free cash flow was positive at $7 million for the first nine months of 2024 and confident of positive free cash flow for full year 2024. - Pasadena alkoxylation production facility expected to have full contribution growth rate achieved in the second half of 2025.

• Global and regional economic conditions. - Prospects for foreign operations. - Macro-economic uncertainties impacting Polymers business. - $3.3 million related to Asia fraud event, an isolated and contained event.

Q: Mike Harrison inquired about Ag business recovery, Europe Surfactant performance, Consumer Surfactant trends, and EBITDA potential.

A: Luis Rojo responded on Ag business growth, positive trends in Europe Surfactant, Consumer Surfactant ups and downs with Laundry and Cleaning business strength, and discussed EBITDA excluding one-time impacts.

Q: Dave Storms asked about Rigid Polyol catalysts, Surfactant customer mix improvement, and Q4 maintenance.

A: Luis Rojo talked about Rigid Polyol market outlook with interest rate moderation, Surfactant Tier 2/3 customer acquisition strategy, and Q4 Polymers turnarounds.

Q: David Silver questioned CapEx outlook, marketing efforts with Tier 2/3 customers, and strategic direction change.

A: Luis Rojo discussed CapEx returning to normal level, marketing focus on Tier 2/3 customers, and emphasis on surgical changes to accelerate growth while maintaining core strategic areas.