SCL

• Overall Performance & Safety

  • Safety is the company's top priority, with the strongest 12-month safety performance on record this quarter.
  • Q2 2026 consolidated net sales hit $684 million, up 15% year-over-year, driven by higher prices, volume growth, favorable mix, and positive currency translation. Adjusted EBITDA reached $74.4 million, up 45% year-over-year; adjusted diluted EPS was $1.18, more than double the prior year.
  • 6% organic volume growth was achieved across all end markets, with market share gains in strategic segments.
  • Net leverage ratio improved to 2.5x at quarter-end, down from 2.7x in Q1 2026 and 2.9x in Q2 2025.

• Strategic Priorities

  • Strategy is anchored on four core pillars: customer-centric innovation for top-line growth; market and customer diversification to accelerate growth in higher-value end markets and expand reach to Tier 2/Tier 3 customers; operational excellence to improve manufacturing and supply chain reliability/resilience; and financial strength via disciplined free cash flow generation, balance sheet deleveraging, and prudent capital allocation.

• Project Catalyst Progress

  • Project Catalyst, the company's two-year efficiency initiative targeting $100 million in pre-tax savings, remains on track. 60% of total savings (=$60 million pre-tax) are expected to be realized in 2026, with savings ramping as planned. The program delivered $18-$20 million in quarterly savings as of Q2, with a projected $22 million quarterly run rate by year-end 2026, and full $100 million annual run-rate savings targeted for 2027.
  • Footprint optimization is complete for the closure of the Fieldsboro, NJ site and decommissioning of select assets at Millsdale, IL and Staley Bridge, UK, with volume consolidation to more efficient sites proceeding as planned and expected savings being delivered.
  • A planned reduction of ~100 global salaried positions was announced, to be implemented in Q3 2026. The company minimized impact via natural attrition, paused external hiring, and internal redeployment, in line with its People First culture.

• Capital Allocation & Operations

  • The company maintained a balanced capital allocation approach, invested $23 million in capex (executed as planned), and paid $9 million in dividends, extending its 58-year streak of consecutive dividend increases.
  • The sale of non-productive land adjacent to the Joliet, IL plant remains pending, subject to customary closing conditions.
  • The Pasadena, TX site is ramping production ahead of projected supply chain savings targets for 2026, and is currently at 75-80% utilization, enabling future strategic growth in specialty alkoxylates.

• Full-year 2026 restructuring charges are projected to be $75-$80 million, in line with prior guidance.
• Management reaffirmed expectations to deliver full-year adjusted EBITDA growth, positive free cash flow, and further balance sheet deleveraging in 2026, supported by strong first-half results.
• Q3 2026 EBITDA is expected to be moderately lower than Q2 2026, due to the pull-forward of demand from pre-buying in Q2 and $4-$5 million in planned maintenance turnaround costs in the second half of 2026.
• Project Catalyst is on track to deliver the full $60 million in pre-tax savings for 2026, with the potential to exceed this target, and will reach the full $100 million annual run-rate savings in 2027 as originally planned.

1. Surfactants: Net sales of $484 million, up 18% year-over-year, contributing 70.8% of total consolidated net sales. Organic volume increased 7% year-over-year, with broad-based growth across all end markets and regions. Adjusted EBITDA was $55 million, up 59% year-over-year, with earnings improvements across all regions driven by volume growth, catalyst savings, and production timing recovery.
2. Polymers: Net sales of $178 million, up 9% year-over-year, contributing 26.0% of total consolidated net sales. Sales volume increased 5% year-over-year, with strong double-digit growth in North America offset by lower volumes in Europe and Asia. Adjusted EBITDA was $31 million, up 22% year-over-year, driven by sales volume growth and margin recovery.
3. Specialty Products: Net sales of $22 million, up 8% year-over-year, contributing 3.2% of total consolidated net sales. Volume increased 4% year-over-year. Adjusted EBITDA was $6.5 million, slightly down year-over-year due to less favorable product mix within the medium chain triglycerides product line.

• Forward-looking results are subject to material uncertainty from geopolitical instability (including the Iran conflict), global and regional economic conditions, and foreign operational risks, which could cause actual outcomes to differ from projections.
• Persistent raw material price volatility and availability uncertainty create margin volatility, with ongoing shifts in commodity prices (including both increases in oil-related inputs and decreases in coconut oil) creating mixed impacts that require ongoing active management.
• Soft construction demand in Europe and weak demand in China create ongoing headwinds for polymer segment performance in those regions.
• Ag end market growth was pressured in Q2 2026 by broader market headwinds linked to fertilizer market disruptions from geopolitical conflict.

Q: What portion of Q2's strong volume and EBITDA growth came from customer pre-buying driven by geopolitical and raw material uncertainty? / A: Management estimates that pre-buying added $5 to $10 million in Q2 2026 adjusted EBITDA, pulling that demand forward from the third quarter. The pre-buying was largely triggered by the Iran conflict, which created uncertainty around raw material availability. This accounts for a couple of percentage points of Q2's organic volume growth.

Q: What is the long-term growth outlook for Stepan's spray foam polymer business, which grew 3x year-over-year in Q2 from a small base? / A: Management confirmed it is committed to the spray foam market, which has a long-term track record of high single-digit market growth and is expected to continue expanding over the next 5-10 years. The company is focused on gaining market share and growing alongside the overall market, and declined to provide a specific near-term volume or revenue forecast.

Q: What is the current utilization level and cost savings progress at the new Pasadena, Texas expansion site? / A: Management reported the Pasadena site is currently at 75-80% of targeted full utilization, with production ramp-up proceeding ahead of the original projected supply chain savings schedule for 2026. Full 100% utilization is expected to be reached in 2027, and the site has maintained an excellent safety record throughout the ramp-up process, with no incidents during peak construction.

Q: How much of Q2's volume strength came from resolving Q1 2026 production timing issues, and is more pre-buying expected in Q3? / A: Some of Q2's year-over-year volume benefit came from reversing Q1's production timing disruptions from US cold weather and Asian operational issues, though this benefit was not quantified. Pre-buying activity is tied to ongoing geopolitical uncertainty, as customers remain in a hybrid just-in-time/just-in-case inventory model that is likely to persist for several more months, so some pre-buying may continue.