Stepan Company Q4 FY2025 earnings call

• 2025 was transformational, divested two plants, optimized global footprint, had best safety results. • Delivered full year adjusted EBITDA growth of 6%, adjusted EBITDA $199 million. • Generated positive free cash flow, strengthened balance sheet, reduced net debt, increased dividend for 58th consecutive year. • Successfully commissioned Pasadena alkoxylation facility, optimized asset footprint through divestitures, established foundation for Project Catalyst. • Project Catalyst is comprehensive plan to optimize asset base, create more productive organization, expected to deliver around $100 million in pretax savings over next two years, with ~60% in 2026. Includes footprint optimization, operational efficiency and cost optimization, organizational effectiveness. • Announced closure of Fieldsboro, New Jersey site, decommissioning select assets at Millsdale and Stalybridge sites.

Fourth quarter 2025 adjusted net loss was $500,000, or down $0.02 per diluted share. Reported net income was $5 million, up 49% versus prior year. Consolidated adjusted EBITDA was $33.8 million, down 3% from prior year. Surfactants net sales were $402 million, up from $379 million in prior year, organic volume declined 3%, adjusted EBITDA slightly declined. Polymers net sales were $132 million versus $113 million in prior year, volume increased 11%, adjusted EBITDA increased 9%. Specialty Products net sales and EBITDA modestly lower year over year. Full year reported net income was $46.9 million, down 7% year over year, adjusted net income was $41.7 million. Full year EBITDA increased 11% to $208 million and adjusted EBITDA increased 6% to $199 million. Global organic sales volume increased 2% for full year.

• Expect EBITDA growth in 2026 versus 2025. • Oleochemical raw material situation to be significantly better in second half versus first half. • Catalyst savings of $60 million pretax heavily skewed to second half. • Expect demand recovery in second half versus first half due to potential interest rate cuts. • Q1 2026 has ~$6 million EBITDA impact due to weather, expect to recover at least half between Q2 and Q4.

• Prospects of foreign operations, global and regional economic conditions, factors detailed in SEC filings could cause actual results to differ materially. • Tariff impacts and raw material inflation were challenges in 2025 and may continue to be in 2026. • Weather impact in Q1 2026 could affect demand and EBITDA temporarily.

Q: Asked about capacity utilization in Surfactants business, status of closing facilities and their earnings contribution.

A: Surfactants have different platforms, moving volume to more cost-efficient sites to improve utilization, closing facilities not losing money but moving volume for better cost structure.

Q: Asked about $100 million savings timing and net savings considering inflation.

A: Expect $60 million pretax savings in 2026, but inflation will eat up some of the savings.

Q: Asked about oleochemicals impact in Q4 vs Q3 and Q1 outlook.

A: Oleochemical impact was felt in second half of 2025, coconut oil prices coming down, but impact in first half of 2026 still expected, help in second half of 2026.

Q: Asked about 2026 earnings outlook and cadence.

A: Expect EBITDA growth in 2026, second half better than first half due to oleochemicals, catalyst savings, and demand recovery; Q1 has weather impact but expect to recover half or more in following quarters.

Q: Asked about Project Catalyst impacts on tier two and three customers.

A: Project Catalyst will facilitate growth with tier two and three customers through more agile organization and investments in automation, systems, and tools.

Q: Asked about demand loss in ag due to weather.

A: Most of the $6 million EBITDA impact in Q1 is in Surfactants, ag business continues growing nicely.

Q: Asked about inventory levels down quarter over quarter.

A: Normal lag of Q4, but focused on free cash flow and managing working capital, deleveraging balance sheet.

Q: Asked about CapEx guidance for 2026.

A: $110 million midpoint reflects normal base CapEx and some growth CapEx on infrastructure, EHS, IT, R&D, etc.

Q: Asked about adapting to consumers trading down in personal care.

A: Focus on tier two and three, sulfate-free for personal care to align with where consumers are going.

Q: Asked about global tariff situation and Stepan's positioning.

A: Tariffs are evolving, focusing on optimizing supply chain, have production in regions close to customers, expect 2026 to be volatile in tariffs and look for opportunities like refunds of previous tariffs.