Stepan Co

Reported net income was $17.8 million, or $0.78 per diluted share, versus $10.8 million, or $0.47, a year ago. Adjusted net income was $21.7 million, or $0.94 per diluted share, up from $10.9 million, or $0.48. Adjusted EBITDA was $66.3 million, up $10.1 million, or 18%, year over year. Surfactant net sales were $487 million, up 15%, and adjusted EBITDA was $48 million, up 27%. Polymer net sales were $179 million, up 24%, and adjusted EBITDA was $23 million, up 4%. Specialty Products net sales were $27 million, up 12%, and adjusted EBITDA was $11.7 million, up 5%. Cash flow from operations before working capital was $49 million; free cash flow was $8 million after $21 million of capex and a $32 million working capital build. Through September, the company recognized $76 million of pretax restructuring charges, and year-to-date restructuring cash impact was $13 million. Management expects to exceed the 60% of the $100 million pretax Project Catalyst savings target in 2026, and said the quarterly run rate was about $23 million in Q3. For 2026, the company reiterated expectations for full-year adjusted EBITDA growth, positive free cash flow, and continued deleveraging.

Luis E. Rojo framed the quarter as another period of earnings growth driven by volume, pricing discipline, and productivity. He emphasized that the company is balancing growth, margins, and cash generation while navigating volatile raw-material markets and supply-chain disruption tied in part to the Middle East conflict. He also highlighted strategic progress in customer diversification, innovation, and manufacturing reliability, especially in surfactants, North America polymers, MCT, and Pasadena ramp-up.

Ruben Velasquez focused on the financial bridge: reported net income of $17.8 million, adjusted net income of $21.7 million, and adjusted EBITDA of $66.3 million, all higher year over year. He noted that higher surfactant earnings were the main driver, with polymers and specialty products also contributing, while corporate expenses rose by $1 million to reflect higher incentive compensation. On cash flow, he cited $49 million of operating cash flow before working capital, $8 million of free cash flow after $21 million of capex, a $32 million working-capital build, and net debt of $536 million; he also pointed to the land sale proceeds of $28.5 million being used to reduce debt.

Analysts pressed on how much raw-material inflation is still pressuring margins and whether more pricing catch-up is needed in Q4; management said the majority of pricing actions have been taken, margins are moving in the right direction, and the company is comfortable with its position at current oil prices, though some adjustments remain. Questions on Project Catalyst prompted management to say 2026 savings are tracking above plan at roughly $66 million to $70 million, with a $23 million Q3 run rate and potential to average above $25 million per quarter in 2027. Analysts also asked about polymer weakness in Europe and Asia, and management characterized that as mainly a macro/demand issue, while noting possible pent-up demand over the next 3 to 5 years in Europe. On crop productivity, management acknowledged the broader ag market is weak but said it is still gaining share through product development and customer wins.