[10-Q] Stepan Co. Quarterly Earnings Report
Stepan Company (NYSE: SCL) filed its Q2-25 Form 10-Q. Net sales rose 6.9% YoY to $594.7 million, driven by 8.3% growth in Surfactants and 1.9% in Polymers; Specialty Products advanced 21.5%. Gross profit improved 3.4% to $71.9 million, but operating income slipped 3.8% to $18.0 million as selling and R&D costs increased 6.0%. Higher interest expense (-106% YoY) cut pre-tax earnings 20% to $13.8 million; however, a sharply lower effective tax rate (17.7% vs. 44.7%) lifted net income 19% to $11.3 million, or $0.50 diluted EPS.
For the six-month period, revenue gained 7.2% to $1.19 billion and operating income rose 19% to $46.3 million. Net income reached $31.1 million (+32.6%), translating to $1.36 EPS.
Segment detail (Q2): Polymers profit jumped 26% to $17.2 million on higher volume and price/mix, offsetting declines in Surfactants (-22%) and Specialty Products (-28%). Corporate expense fell 8%.
Balance sheet: Cash fell to $88.9 million (-$10.8 million YTD) as operating cash flow weakened to $18.1 million from $71.1 million. Capex remained elevated at $58.3 million. Total debt increased 5.3% to $658 million after issuing $75 million of 6.17% senior notes; net leverage stands near 1.1× EBITDA. Equity improved to $1.24 billion, aided by a $57 million favorable FX translation adjustment that reduced AOCI.
Other highlights: • Assets of the Philippine surfactant plant ($8.7 million) classified as held for sale.
• Environmental liabilities accrued at $19.5 million (low end of $19.5–$44.9 million range).
• New U.S. tax act (enacted 7-4-25) not yet reflected; management expects no material 2025 impact.
Outlook: Management continues to invest in capacity (capex $58 million YTD) while navigating higher financing costs and mixed segment margins. Sale of the Philippine site and working-capital normalization are expected to support liquidity in 2H-25.
Stepan Company (NYSE: SCL) ha presentato il modulo 10-Q per il secondo trimestre 2025. Le vendite nette sono aumentate del 6,9% su base annua, raggiungendo 594,7 milioni di dollari, trainate da una crescita dell'8,3% nei tensioattivi e dell'1,9% nei polimeri; i prodotti speciali sono cresciuti del 21,5%. Il profitto lordo è migliorato del 3,4%, arrivando a 71,9 milioni di dollari, mentre l'utile operativo è diminuito del 3,8%, attestandosi a 18,0 milioni di dollari, a causa dell'aumento del 6,0% delle spese di vendita e R&S. L'aumento degli interessi passivi (-106% su base annua) ha ridotto l'utile ante imposte del 20%, portandolo a 13,8 milioni di dollari; tuttavia, un tasso fiscale effettivo nettamente inferiore (17,7% contro 44,7%) ha fatto salire il utile netto del 19%, a 11,3 milioni di dollari, ovvero 0,50 dollari per azione diluita.
Nel periodo di sei mesi, i ricavi sono cresciuti del 7,2%, raggiungendo 1,19 miliardi di dollari, mentre l'utile operativo è aumentato del 19%, arrivando a 46,3 milioni di dollari. L'utile netto ha raggiunto 31,1 milioni di dollari (+32,6%), pari a 1,36 dollari per azione.
Dettaglio segmenti (Q2): L'utile dei polimeri è aumentato del 26%, a 17,2 milioni di dollari, grazie a maggiori volumi e miglioramenti nel prezzo/mix, compensando i cali nei tensioattivi (-22%) e nei prodotti speciali (-28%). Le spese aziendali sono diminuite dell'8%.
Bilancio: La liquidità è scesa a 88,9 milioni di dollari (-10,8 milioni da inizio anno) a causa di un flusso di cassa operativo ridotto a 18,1 milioni da 71,1 milioni. Gli investimenti in capitale sono rimasti elevati a 58,3 milioni di dollari. Il debito totale è aumentato del 5,3%, raggiungendo 658 milioni di dollari dopo l'emissione di 75 milioni di dollari di obbligazioni senior al 6,17%; la leva finanziaria netta si attesta intorno a 1,1× EBITDA. Il patrimonio netto è migliorato a 1,24 miliardi di dollari, grazie a un aggiustamento favorevole di cambio da 57 milioni di dollari che ha ridotto il patrimonio complessivo altro (AOCI).
Altri punti salienti: • Gli asset dello stabilimento filippino di tensioattivi (8,7 milioni di dollari) sono classificati come in vendita.
• Le passività ambientali accantonate ammontano a 19,5 milioni di dollari (al limite inferiore della fascia 19,5–44,9 milioni).
• La nuova legge fiscale statunitense (entrata in vigore il 4 luglio 2025) non è ancora riflessa; la direzione prevede nessun impatto significativo nel 2025.
Prospettive: La direzione continua a investire nella capacità produttiva (capex 58 milioni di dollari da inizio anno), affrontando costi di finanziamento più elevati e margini di segmento contrastanti. La vendita dello stabilimento filippino e la normalizzazione del capitale circolante dovrebbero sostenere la liquidità nella seconda metà del 2025.
Stepan Company (NYSE: SCL) presentó su formulario 10-Q del segundo trimestre de 2025. Las ventas netas aumentaron un 6,9% interanual hasta 594,7 millones de dólares, impulsadas por un crecimiento del 8,3% en tensioactivos y del 1,9% en polímeros; los productos especializados avanzaron un 21,5%. El beneficio bruto mejoró un 3,4% hasta 71,9 millones de dólares, pero el ingreso operativo cayó un 3,8% hasta 18,0 millones de dólares debido al aumento del 6,0% en gastos de venta e I+D. Un mayor gasto por intereses (-106% anual) redujo las ganancias antes de impuestos un 20%, hasta 13,8 millones de dólares; sin embargo, una tasa impositiva efectiva mucho menor (17,7% vs. 44,7%) elevó el ingreso neto un 19%, hasta 11,3 millones de dólares, o 0,50 dólares por acción diluida.
En el período de seis meses, los ingresos aumentaron un 7,2% hasta 1.190 millones de dólares y el ingreso operativo subió un 19% hasta 46,3 millones de dólares. El ingreso neto alcanzó 31,1 millones de dólares (+32,6%), equivalente a 1,36 dólares por acción.
Detalle por segmento (Q2): La ganancia en polímeros saltó un 26% hasta 17,2 millones de dólares por mayores volúmenes y mejoras en precio/mezcla, compensando las caídas en tensioactivos (-22%) y productos especializados (-28%). Los gastos corporativos disminuyeron un 8%.
Balance: El efectivo cayó a 88,9 millones de dólares (-10,8 millones desde inicio de año) debido a un flujo de caja operativo reducido a 18,1 millones desde 71,1 millones. La inversión en capital se mantuvo elevada en 58,3 millones de dólares. La deuda total aumentó un 5,3% hasta 658 millones de dólares tras emitir 75 millones de dólares en notas senior al 6,17%; el apalancamiento neto se sitúa cerca de 1,1× EBITDA. El patrimonio mejoró a 1.240 millones de dólares, impulsado por un ajuste favorable por traducción cambiaria de 57 millones que redujo el AOCI.
Otros aspectos destacados: • Los activos de la planta de tensioactivos en Filipinas (8,7 millones de dólares) están clasificados como mantenidos para la venta.
• Las obligaciones ambientales acumuladas ascienden a 19,5 millones de dólares (en el extremo inferior del rango 19,5–44,9 millones).
• La nueva ley fiscal estadounidense (promulgada el 4-7-25) aún no está reflejada; la dirección espera que no tenga un impacto material en 2025.
Perspectivas: La dirección continúa invirtiendo en capacidad (capex 58 millones de dólares en lo que va del año) mientras navega por mayores costos financieros y márgenes mixtos por segmento. Se espera que la venta del sitio en Filipinas y la normalización del capital de trabajo apoyen la liquidez en la segunda mitad de 2025.
스테판 컴퍼니(NYSE: SCL)는 2025년 2분기 10-Q 보고서를 제출했습니다. 순매출은 전년 대비 6.9% 증가한 5억 9,470만 달러로, 계면활성제 부문이 8.3%, 폴리머 부문이 1.9% 성장했으며, 특수 제품 부문은 21.5% 증가했습니다. 총이익은 3.4% 개선되어 7,190만 달러를 기록했으나, 판매 및 연구개발 비용이 6.0% 증가하면서 영업이익은 3.8% 감소한 1,800만 달러에 그쳤습니다. 이자 비용이 전년 대비 -106% 증가하여 세전 이익이 20% 감소한 1,380만 달러가 되었으나, 유효 세율이 크게 낮아지면서(17.7% 대 44.7%) 순이익은 19% 증가한 1,130만 달러, 희석 주당순이익은 0.50달러를 기록했습니다.
6개월 누계 기간 동안 매출은 7.2% 증가한 11억 9천만 달러, 영업이익은 19% 증가한 4,630만 달러를 기록했습니다. 순이익은 3,110만 달러(+32.6%)로, 주당순이익은 1.36달러입니다.
부문별 세부 사항 (2분기): 폴리머 부문 이익은 판매량과 가격/믹스 상승에 힘입어 26% 증가한 1,720만 달러를 기록했으며, 계면활성제(-22%) 및 특수 제품(-28%) 부문의 감소를 상쇄했습니다. 법인 비용은 8% 감소했습니다.
재무상태표: 현금은 연초 대비 1,080만 달러 감소한 8,890만 달러로 줄었으며, 영업 현금 흐름은 7,110만 달러에서 1,810만 달러로 약화되었습니다. 자본적지출은 5,830만 달러로 높은 수준을 유지했습니다. 총 부채는 6.17% 선순위 채권 7,500만 달러 발행 후 5.3% 증가하여 6억 5,800만 달러에 이르렀으며, 순차입금 배율은 EBITDA 대비 약 1.1배 수준입니다. 환율 변동에 따른 5,700만 달러의 우호적 환산 조정으로 기타포괄손익누계액(AOCI)이 감소하며 자본총액은 12억 4,000만 달러로 개선되었습니다.
기타 주요 사항: • 필리핀 계면활성제 공장 자산(870만 달러)은 매각예정 자산으로 분류됨.
• 환경 관련 부채는 1,950만 달러로 추정되며(범위 1,950만~4,490만 달러 중 하단).
• 2025년 7월 4일 제정된 미국 신세법은 아직 반영되지 않았으며, 경영진은 2025년에 중대한 영향이 없을 것으로 예상함.
전망: 경영진은 용량 투자(연초 이후 자본적지출 5,800만 달러)를 지속하면서 높은 금융비용과 혼재된 부문별 마진을 관리하고 있습니다. 필리핀 부지 매각과 운전자본 정상화가 2025년 하반기 유동성 지원에 기여할 것으로 기대됩니다.
Stepan Company (NYSE : SCL) a déposé son formulaire 10-Q pour le deuxième trimestre 2025. Les ventes nettes ont augmenté de 6,9 % en glissement annuel pour atteindre 594,7 millions de dollars, portées par une croissance de 8,3 % dans les tensioactifs et de 1,9 % dans les polymères ; les produits spécialisés ont progressé de 21,5 %. La marge brute s’est améliorée de 3,4 % à 71,9 millions de dollars, mais le résultat d’exploitation a reculé de 3,8 % à 18,0 millions de dollars en raison d’une hausse de 6,0 % des coûts de vente et de R&D. Des charges d’intérêts plus élevées (-106 % en glissement annuel) ont réduit le résultat avant impôts de 20 % à 13,8 millions de dollars ; cependant, un taux d’imposition effectif nettement plus bas (17,7 % contre 44,7 %) a porté le résultat net à 11,3 millions de dollars, en hausse de 19 %, soit un BPA dilué de 0,50 $.
Sur les six premiers mois, le chiffre d’affaires a progressé de 7,2 % à 1,19 milliard de dollars et le résultat d’exploitation a augmenté de 19 % à 46,3 millions de dollars. Le résultat net a atteint 31,1 millions de dollars (+32,6 %), soit un BPA de 1,36 $.
Détail par segment (T2) : Le bénéfice des polymères a bondi de 26 % à 17,2 millions de dollars grâce à des volumes et un mix prix supérieurs, compensant les baisses dans les tensioactifs (-22 %) et les produits spécialisés (-28 %). Les frais généraux ont diminué de 8 %.
Bilan : La trésorerie a diminué à 88,9 millions de dollars (-10,8 millions depuis le début de l’année) en raison d’un flux de trésorerie opérationnel réduit à 18,1 millions contre 71,1 millions. Les investissements sont restés élevés à 58,3 millions de dollars. La dette totale a augmenté de 5,3 % à 658 millions de dollars après l’émission de 75 millions de dollars de billets seniors à 6,17 % ; l’effet de levier net est proche de 1,1× l’EBITDA. Les capitaux propres se sont améliorés à 1,24 milliard de dollars, aidés par un ajustement favorable de change de 57 millions de dollars qui a réduit les autres éléments du résultat global (AOCI).
Autres points clés : • Les actifs de l’usine de tensioactifs aux Philippines (8,7 millions de dollars) sont classés comme détenus en vue de la vente.
• Les passifs environnementaux s’élèvent à 19,5 millions de dollars (limite basse de la fourchette 19,5–44,9 millions).
• La nouvelle loi fiscale américaine (promulguée le 4 juillet 2025) n’est pas encore prise en compte ; la direction ne prévoit pas d’impact significatif en 2025.
Perspectives : La direction continue d’investir dans les capacités (capex de 58 millions de dollars depuis le début de l’année) tout en gérant des coûts de financement plus élevés et des marges segmentaires mitigées. La vente du site philippin et la normalisation du fonds de roulement devraient soutenir la liquidité au second semestre 2025.
Die Stepan Company (NYSE: SCL) hat ihren 10-Q-Bericht für das zweite Quartal 2025 eingereicht. Der Nettoumsatz stieg im Jahresvergleich um 6,9 % auf 594,7 Millionen US-Dollar, angetrieben durch ein Wachstum von 8,3 % im Bereich Tenside und 1,9 % bei Polymeren; Spezialprodukte legten um 21,5 % zu. Der Bruttogewinn verbesserte sich um 3,4 % auf 71,9 Millionen US-Dollar, während das Betriebsergebnis aufgrund gestiegener Vertriebs- und F&E-Kosten um 6,0 % um 3,8 % auf 18,0 Millionen US-Dollar zurückging. Höhere Zinsaufwendungen (-106 % im Jahresvergleich) reduzierten das Ergebnis vor Steuern um 20 % auf 13,8 Millionen US-Dollar; eine deutlich niedrigere effektive Steuerquote (17,7 % gegenüber 44,7 %) hob jedoch den Nettoertrag um 19 % auf 11,3 Millionen US-Dollar bzw. 0,50 US-Dollar verwässertes Ergebnis je Aktie.
Für den Sechsmonatszeitraum stiegen die Erlöse um 7,2 % auf 1,19 Milliarden US-Dollar, und das Betriebsergebnis legte um 19 % auf 46,3 Millionen US-Dollar zu. Der Nettogewinn erreichte 31,1 Millionen US-Dollar (+32,6 %), entsprechend 1,36 US-Dollar Gewinn je Aktie.
Segmentdetails (Q2): Der Gewinn im Polymersegment stieg um 26 % auf 17,2 Millionen US-Dollar aufgrund höherer Volumina und verbesserter Preis-/Mix-Effekte, was Rückgänge bei Tensiden (-22 %) und Spezialprodukten (-28 %) ausglich. Die Verwaltungskosten sanken um 8 %.
Bilanz: Die Zahlungsmittel sanken auf 88,9 Millionen US-Dollar (-10,8 Millionen seit Jahresbeginn), da der operative Cashflow von 71,1 Millionen auf 18,1 Millionen US-Dollar zurückging. Die Investitionen blieben mit 58,3 Millionen US-Dollar hoch. Die Gesamtverschuldung stieg um 5,3 % auf 658 Millionen US-Dollar nach der Emission von 75 Millionen US-Dollar 6,17 % Senior Notes; die Nettofinanzverschuldung liegt bei etwa dem 1,1-fachen EBITDA. Das Eigenkapital verbesserte sich auf 1,24 Milliarden US-Dollar, begünstigt durch eine günstige Währungsumrechnung von 57 Millionen US-Dollar, die das sonstige Ergebnis (AOCI) reduzierte.
Weitere Highlights: • Vermögenswerte der philippinischen Tensidfabrik (8,7 Millionen US-Dollar) als zum Verkauf gehalten klassifiziert.
• Umweltverbindlichkeiten in Höhe von 19,5 Millionen US-Dollar (unteres Ende der Spanne von 19,5–44,9 Millionen).
• Das neue US-Steuergesetz (verabschiedet am 4.7.25) ist noch nicht berücksichtigt; das Management erwartet keine wesentlichen Auswirkungen für 2025.
Ausblick: Das Management investiert weiterhin in Kapazitäten (Capex 58 Millionen US-Dollar seit Jahresbeginn) und bewältigt höhere Finanzierungskosten sowie gemischte Segmentmargen. Der Verkauf des Standorts auf den Philippinen und die Normalisierung des Working Capitals sollen die Liquidität in der zweiten Jahreshälfte 2025 unterstützen.
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Insights
TL;DR – Solid revenue & EPS growth, but cash flow and leverage trends warrant caution.
Revenue beat inflation and volumes modestly, demonstrating end-market resilience, particularly in Polymers. EPS benefited from an unusually light tax rate; underlying operating profit was flat and interest costs surged 106% as variable-rate borrowings reset higher and new 6.17% notes were issued. Operating cash flow collapsed 75% on working-capital build and pension funding, leaving FCF deeply negative after capex. Net debt/EBITDA ticked up, though still manageable near 1.1×. Currency tailwinds boosted OCI and equity but are non-cash. Guidance was not provided, yet management’s commentary on the Philippine asset sale suggests minor EPS dilution offset by cash proceeds. Overall impact: modestly positive headline EPS, but quality of earnings mixed.
TL;DR – Segment divergence: Polymers up, Surfactants down; portfolio shift continues.
Polymers’ 26% profit jump reflects demand for insulation foams in North America and greater price discipline. Surfactants’ 22% decline indicates tougher competition in consumer detergents and agrochem markets; Specialty margin erosion relates to phasing of nutraceutical orders. Capital deployment toward polymer assets (75% of capex) aligns with margin expansion strategy. The Philippine divestiture underscores an exit from low-margin, small-scale surfactant manufacturing in Asia. Environmental accruals remain contained; new Millsdale remediation provisions are immaterial to EBITDA. Rating: neutral with selective positives.
Stepan Company (NYSE: SCL) ha presentato il modulo 10-Q per il secondo trimestre 2025. Le vendite nette sono aumentate del 6,9% su base annua, raggiungendo 594,7 milioni di dollari, trainate da una crescita dell'8,3% nei tensioattivi e dell'1,9% nei polimeri; i prodotti speciali sono cresciuti del 21,5%. Il profitto lordo è migliorato del 3,4%, arrivando a 71,9 milioni di dollari, mentre l'utile operativo è diminuito del 3,8%, attestandosi a 18,0 milioni di dollari, a causa dell'aumento del 6,0% delle spese di vendita e R&S. L'aumento degli interessi passivi (-106% su base annua) ha ridotto l'utile ante imposte del 20%, portandolo a 13,8 milioni di dollari; tuttavia, un tasso fiscale effettivo nettamente inferiore (17,7% contro 44,7%) ha fatto salire il utile netto del 19%, a 11,3 milioni di dollari, ovvero 0,50 dollari per azione diluita.
Nel periodo di sei mesi, i ricavi sono cresciuti del 7,2%, raggiungendo 1,19 miliardi di dollari, mentre l'utile operativo è aumentato del 19%, arrivando a 46,3 milioni di dollari. L'utile netto ha raggiunto 31,1 milioni di dollari (+32,6%), pari a 1,36 dollari per azione.
Dettaglio segmenti (Q2): L'utile dei polimeri è aumentato del 26%, a 17,2 milioni di dollari, grazie a maggiori volumi e miglioramenti nel prezzo/mix, compensando i cali nei tensioattivi (-22%) e nei prodotti speciali (-28%). Le spese aziendali sono diminuite dell'8%.
Bilancio: La liquidità è scesa a 88,9 milioni di dollari (-10,8 milioni da inizio anno) a causa di un flusso di cassa operativo ridotto a 18,1 milioni da 71,1 milioni. Gli investimenti in capitale sono rimasti elevati a 58,3 milioni di dollari. Il debito totale è aumentato del 5,3%, raggiungendo 658 milioni di dollari dopo l'emissione di 75 milioni di dollari di obbligazioni senior al 6,17%; la leva finanziaria netta si attesta intorno a 1,1× EBITDA. Il patrimonio netto è migliorato a 1,24 miliardi di dollari, grazie a un aggiustamento favorevole di cambio da 57 milioni di dollari che ha ridotto il patrimonio complessivo altro (AOCI).
Altri punti salienti: • Gli asset dello stabilimento filippino di tensioattivi (8,7 milioni di dollari) sono classificati come in vendita.
• Le passività ambientali accantonate ammontano a 19,5 milioni di dollari (al limite inferiore della fascia 19,5–44,9 milioni).
• La nuova legge fiscale statunitense (entrata in vigore il 4 luglio 2025) non è ancora riflessa; la direzione prevede nessun impatto significativo nel 2025.
Prospettive: La direzione continua a investire nella capacità produttiva (capex 58 milioni di dollari da inizio anno), affrontando costi di finanziamento più elevati e margini di segmento contrastanti. La vendita dello stabilimento filippino e la normalizzazione del capitale circolante dovrebbero sostenere la liquidità nella seconda metà del 2025.
Stepan Company (NYSE: SCL) presentó su formulario 10-Q del segundo trimestre de 2025. Las ventas netas aumentaron un 6,9% interanual hasta 594,7 millones de dólares, impulsadas por un crecimiento del 8,3% en tensioactivos y del 1,9% en polímeros; los productos especializados avanzaron un 21,5%. El beneficio bruto mejoró un 3,4% hasta 71,9 millones de dólares, pero el ingreso operativo cayó un 3,8% hasta 18,0 millones de dólares debido al aumento del 6,0% en gastos de venta e I+D. Un mayor gasto por intereses (-106% anual) redujo las ganancias antes de impuestos un 20%, hasta 13,8 millones de dólares; sin embargo, una tasa impositiva efectiva mucho menor (17,7% vs. 44,7%) elevó el ingreso neto un 19%, hasta 11,3 millones de dólares, o 0,50 dólares por acción diluida.
En el período de seis meses, los ingresos aumentaron un 7,2% hasta 1.190 millones de dólares y el ingreso operativo subió un 19% hasta 46,3 millones de dólares. El ingreso neto alcanzó 31,1 millones de dólares (+32,6%), equivalente a 1,36 dólares por acción.
Detalle por segmento (Q2): La ganancia en polímeros saltó un 26% hasta 17,2 millones de dólares por mayores volúmenes y mejoras en precio/mezcla, compensando las caídas en tensioactivos (-22%) y productos especializados (-28%). Los gastos corporativos disminuyeron un 8%.
Balance: El efectivo cayó a 88,9 millones de dólares (-10,8 millones desde inicio de año) debido a un flujo de caja operativo reducido a 18,1 millones desde 71,1 millones. La inversión en capital se mantuvo elevada en 58,3 millones de dólares. La deuda total aumentó un 5,3% hasta 658 millones de dólares tras emitir 75 millones de dólares en notas senior al 6,17%; el apalancamiento neto se sitúa cerca de 1,1× EBITDA. El patrimonio mejoró a 1.240 millones de dólares, impulsado por un ajuste favorable por traducción cambiaria de 57 millones que redujo el AOCI.
Otros aspectos destacados: • Los activos de la planta de tensioactivos en Filipinas (8,7 millones de dólares) están clasificados como mantenidos para la venta.
• Las obligaciones ambientales acumuladas ascienden a 19,5 millones de dólares (en el extremo inferior del rango 19,5–44,9 millones).
• La nueva ley fiscal estadounidense (promulgada el 4-7-25) aún no está reflejada; la dirección espera que no tenga un impacto material en 2025.
Perspectivas: La dirección continúa invirtiendo en capacidad (capex 58 millones de dólares en lo que va del año) mientras navega por mayores costos financieros y márgenes mixtos por segmento. Se espera que la venta del sitio en Filipinas y la normalización del capital de trabajo apoyen la liquidez en la segunda mitad de 2025.
스테판 컴퍼니(NYSE: SCL)는 2025년 2분기 10-Q 보고서를 제출했습니다. 순매출은 전년 대비 6.9% 증가한 5억 9,470만 달러로, 계면활성제 부문이 8.3%, 폴리머 부문이 1.9% 성장했으며, 특수 제품 부문은 21.5% 증가했습니다. 총이익은 3.4% 개선되어 7,190만 달러를 기록했으나, 판매 및 연구개발 비용이 6.0% 증가하면서 영업이익은 3.8% 감소한 1,800만 달러에 그쳤습니다. 이자 비용이 전년 대비 -106% 증가하여 세전 이익이 20% 감소한 1,380만 달러가 되었으나, 유효 세율이 크게 낮아지면서(17.7% 대 44.7%) 순이익은 19% 증가한 1,130만 달러, 희석 주당순이익은 0.50달러를 기록했습니다.
6개월 누계 기간 동안 매출은 7.2% 증가한 11억 9천만 달러, 영업이익은 19% 증가한 4,630만 달러를 기록했습니다. 순이익은 3,110만 달러(+32.6%)로, 주당순이익은 1.36달러입니다.
부문별 세부 사항 (2분기): 폴리머 부문 이익은 판매량과 가격/믹스 상승에 힘입어 26% 증가한 1,720만 달러를 기록했으며, 계면활성제(-22%) 및 특수 제품(-28%) 부문의 감소를 상쇄했습니다. 법인 비용은 8% 감소했습니다.
재무상태표: 현금은 연초 대비 1,080만 달러 감소한 8,890만 달러로 줄었으며, 영업 현금 흐름은 7,110만 달러에서 1,810만 달러로 약화되었습니다. 자본적지출은 5,830만 달러로 높은 수준을 유지했습니다. 총 부채는 6.17% 선순위 채권 7,500만 달러 발행 후 5.3% 증가하여 6억 5,800만 달러에 이르렀으며, 순차입금 배율은 EBITDA 대비 약 1.1배 수준입니다. 환율 변동에 따른 5,700만 달러의 우호적 환산 조정으로 기타포괄손익누계액(AOCI)이 감소하며 자본총액은 12억 4,000만 달러로 개선되었습니다.
기타 주요 사항: • 필리핀 계면활성제 공장 자산(870만 달러)은 매각예정 자산으로 분류됨.
• 환경 관련 부채는 1,950만 달러로 추정되며(범위 1,950만~4,490만 달러 중 하단).
• 2025년 7월 4일 제정된 미국 신세법은 아직 반영되지 않았으며, 경영진은 2025년에 중대한 영향이 없을 것으로 예상함.
전망: 경영진은 용량 투자(연초 이후 자본적지출 5,800만 달러)를 지속하면서 높은 금융비용과 혼재된 부문별 마진을 관리하고 있습니다. 필리핀 부지 매각과 운전자본 정상화가 2025년 하반기 유동성 지원에 기여할 것으로 기대됩니다.
Stepan Company (NYSE : SCL) a déposé son formulaire 10-Q pour le deuxième trimestre 2025. Les ventes nettes ont augmenté de 6,9 % en glissement annuel pour atteindre 594,7 millions de dollars, portées par une croissance de 8,3 % dans les tensioactifs et de 1,9 % dans les polymères ; les produits spécialisés ont progressé de 21,5 %. La marge brute s’est améliorée de 3,4 % à 71,9 millions de dollars, mais le résultat d’exploitation a reculé de 3,8 % à 18,0 millions de dollars en raison d’une hausse de 6,0 % des coûts de vente et de R&D. Des charges d’intérêts plus élevées (-106 % en glissement annuel) ont réduit le résultat avant impôts de 20 % à 13,8 millions de dollars ; cependant, un taux d’imposition effectif nettement plus bas (17,7 % contre 44,7 %) a porté le résultat net à 11,3 millions de dollars, en hausse de 19 %, soit un BPA dilué de 0,50 $.
Sur les six premiers mois, le chiffre d’affaires a progressé de 7,2 % à 1,19 milliard de dollars et le résultat d’exploitation a augmenté de 19 % à 46,3 millions de dollars. Le résultat net a atteint 31,1 millions de dollars (+32,6 %), soit un BPA de 1,36 $.
Détail par segment (T2) : Le bénéfice des polymères a bondi de 26 % à 17,2 millions de dollars grâce à des volumes et un mix prix supérieurs, compensant les baisses dans les tensioactifs (-22 %) et les produits spécialisés (-28 %). Les frais généraux ont diminué de 8 %.
Bilan : La trésorerie a diminué à 88,9 millions de dollars (-10,8 millions depuis le début de l’année) en raison d’un flux de trésorerie opérationnel réduit à 18,1 millions contre 71,1 millions. Les investissements sont restés élevés à 58,3 millions de dollars. La dette totale a augmenté de 5,3 % à 658 millions de dollars après l’émission de 75 millions de dollars de billets seniors à 6,17 % ; l’effet de levier net est proche de 1,1× l’EBITDA. Les capitaux propres se sont améliorés à 1,24 milliard de dollars, aidés par un ajustement favorable de change de 57 millions de dollars qui a réduit les autres éléments du résultat global (AOCI).
Autres points clés : • Les actifs de l’usine de tensioactifs aux Philippines (8,7 millions de dollars) sont classés comme détenus en vue de la vente.
• Les passifs environnementaux s’élèvent à 19,5 millions de dollars (limite basse de la fourchette 19,5–44,9 millions).
• La nouvelle loi fiscale américaine (promulguée le 4 juillet 2025) n’est pas encore prise en compte ; la direction ne prévoit pas d’impact significatif en 2025.
Perspectives : La direction continue d’investir dans les capacités (capex de 58 millions de dollars depuis le début de l’année) tout en gérant des coûts de financement plus élevés et des marges segmentaires mitigées. La vente du site philippin et la normalisation du fonds de roulement devraient soutenir la liquidité au second semestre 2025.
Die Stepan Company (NYSE: SCL) hat ihren 10-Q-Bericht für das zweite Quartal 2025 eingereicht. Der Nettoumsatz stieg im Jahresvergleich um 6,9 % auf 594,7 Millionen US-Dollar, angetrieben durch ein Wachstum von 8,3 % im Bereich Tenside und 1,9 % bei Polymeren; Spezialprodukte legten um 21,5 % zu. Der Bruttogewinn verbesserte sich um 3,4 % auf 71,9 Millionen US-Dollar, während das Betriebsergebnis aufgrund gestiegener Vertriebs- und F&E-Kosten um 6,0 % um 3,8 % auf 18,0 Millionen US-Dollar zurückging. Höhere Zinsaufwendungen (-106 % im Jahresvergleich) reduzierten das Ergebnis vor Steuern um 20 % auf 13,8 Millionen US-Dollar; eine deutlich niedrigere effektive Steuerquote (17,7 % gegenüber 44,7 %) hob jedoch den Nettoertrag um 19 % auf 11,3 Millionen US-Dollar bzw. 0,50 US-Dollar verwässertes Ergebnis je Aktie.
Für den Sechsmonatszeitraum stiegen die Erlöse um 7,2 % auf 1,19 Milliarden US-Dollar, und das Betriebsergebnis legte um 19 % auf 46,3 Millionen US-Dollar zu. Der Nettogewinn erreichte 31,1 Millionen US-Dollar (+32,6 %), entsprechend 1,36 US-Dollar Gewinn je Aktie.
Segmentdetails (Q2): Der Gewinn im Polymersegment stieg um 26 % auf 17,2 Millionen US-Dollar aufgrund höherer Volumina und verbesserter Preis-/Mix-Effekte, was Rückgänge bei Tensiden (-22 %) und Spezialprodukten (-28 %) ausglich. Die Verwaltungskosten sanken um 8 %.
Bilanz: Die Zahlungsmittel sanken auf 88,9 Millionen US-Dollar (-10,8 Millionen seit Jahresbeginn), da der operative Cashflow von 71,1 Millionen auf 18,1 Millionen US-Dollar zurückging. Die Investitionen blieben mit 58,3 Millionen US-Dollar hoch. Die Gesamtverschuldung stieg um 5,3 % auf 658 Millionen US-Dollar nach der Emission von 75 Millionen US-Dollar 6,17 % Senior Notes; die Nettofinanzverschuldung liegt bei etwa dem 1,1-fachen EBITDA. Das Eigenkapital verbesserte sich auf 1,24 Milliarden US-Dollar, begünstigt durch eine günstige Währungsumrechnung von 57 Millionen US-Dollar, die das sonstige Ergebnis (AOCI) reduzierte.
Weitere Highlights: • Vermögenswerte der philippinischen Tensidfabrik (8,7 Millionen US-Dollar) als zum Verkauf gehalten klassifiziert.
• Umweltverbindlichkeiten in Höhe von 19,5 Millionen US-Dollar (unteres Ende der Spanne von 19,5–44,9 Millionen).
• Das neue US-Steuergesetz (verabschiedet am 4.7.25) ist noch nicht berücksichtigt; das Management erwartet keine wesentlichen Auswirkungen für 2025.
Ausblick: Das Management investiert weiterhin in Kapazitäten (Capex 58 Millionen US-Dollar seit Jahresbeginn) und bewältigt höhere Finanzierungskosten sowie gemischte Segmentmargen. Der Verkauf des Standorts auf den Philippinen und die Normalisierung des Working Capitals sollen die Liquidität in der zweiten Jahreshälfte 2025 unterstützen.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(MARK ONE)
FOR THE QUARTERLY PERIOD ENDED
FOR THE TRANSITION PERIOD FROM TO
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Securities registered pursuant to Section 12(b) of the Exchange Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
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Outstanding at August 5, 2025 |
Common Stock, $1 par value |
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Part I FINANCIAL INFORMATION
Item 1 - Financial Statements
STEPAN COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited
(In thousands, except per share amounts) |
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Three Months Ended |
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2025 |
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Gross Profit |
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Selling |
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Administrative |
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Operating Income |
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Other Income (Expense): |
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Interest, net |
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Income Before Provision for Income Taxes |
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Net Income |
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Net Income Per Common Share (Note 10): |
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Shares Used to Compute Net Income Per Common Share (Note 10): |
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The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.
2
STEPAN COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Unaudited
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The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.
3
STEPAN COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
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June 30, 2025 |
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December 31, 2024 |
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Assets |
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Assets held for sale (Note 17) |
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Property, Plant and Equipment: |
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Less: Accumulated depreciation |
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Liabilities and Equity |
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Current Liabilities: |
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Liabilities held for sale (Note 17) |
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Long-term debt, less current maturities (Note 14) |
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Commitments and Contingencies (Note 8) |
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Equity: |
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Common stock, $ |
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Accumulated other comprehensive loss (Note 11) |
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Retained earnings |
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Less: Common treasury stock, at cost, |
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Total equity |
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Total liabilities and equity |
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The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.
4
STEPAN COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
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Six Months Ended June 30, |
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Net income |
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Deferred compensation |
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Realized and unrealized gains on long-term investments |
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Changes in assets and liabilities: |
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Other current assets |
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( |
) |
Accounts payable and accrued liabilities |
|
|
( |
) |
|
|
|
|
Pension liabilities |
|
|
( |
) |
|
|
( |
) |
Environmental and legal liabilities |
|
|
( |
) |
|
|
|
|
Deferred revenues |
|
|
( |
) |
|
|
( |
) |
Net Cash Provided By Operating Activities |
|
|
|
|
|
|
||
Cash Flows From Investing Activities |
|
|
|
|
|
|
||
Expenditures for property, plant and equipment |
|
|
( |
) |
|
|
( |
) |
Other, net |
|
|
|
|
|
|
||
Net Cash Used In Investing Activities |
|
|
( |
) |
|
|
( |
) |
Cash Flows From Financing Activities |
|
|
|
|
|
|
||
Revolving debt and bank overdrafts, net (Note 14) |
|
|
( |
) |
|
|
|
|
Other debt borrowings (Note 6) |
|
|
|
|
|
— |
|
|
Other debt repayments (Note 6) |
|
|
( |
) |
|
|
( |
) |
Dividends paid |
|
|
( |
) |
|
|
( |
) |
Stock option exercises |
|
|
|
|
|
|
||
Other, net |
|
|
( |
) |
|
|
( |
) |
Net Cash Provided By (Used In) Financing Activities |
|
|
|
|
|
( |
) |
|
Effect of Exchange Rate Changes on Cash |
|
|
|
|
|
( |
) |
|
Net Decrease in Cash and Cash Equivalents |
|
|
( |
) |
|
|
( |
) |
Cash and Cash Equivalents at Beginning of Period |
|
|
|
|
|
|
||
Cash and Cash Equivalents at End of Period |
|
$ |
|
|
$ |
|
||
Supplemental Cash Flow Information |
|
|
|
|
|
|
||
Cash payments of income taxes, net of refunds |
|
$ |
|
|
$ |
|
||
Cash payments of interest |
|
$ |
|
|
$ |
|
||
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.
5
STEPAN COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
Unaudited
The condensed consolidated financial statements included herein have been prepared by Stepan Company (the Company), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate and make the information presented not misleading. In the opinion of management, all adjustments, consisting only of normal recurring accruals, necessary to present fairly the Company’s financial position as of June 30, 2025, its results of operations for the three and six months ended June 30, 2025 and 2024 and cash flows for the six months ended June 30, 2025 and 2024, have been included. These financial statements and related footnotes should be read in conjunction with the financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (2024 Annual Report on Form 10-K).
Below are reconciliations of total equity for the three and six months ended June 30, 2025 and 2024:
(In thousands, except share and per share amounts) |
|
Total |
|
|
Common |
|
|
Additional |
|
|
Common |
|
|
Accumulated |
|
|
Retained |
|
||||||
Balance, March 31, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Issuance of |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Stock-based and deferred compensation |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other comprehensive income |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash dividends paid: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Common stock ($ |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance, June 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
(In thousands, except share and per share amounts) |
|
Total |
|
|
Common |
|
|
Additional |
|
|
Common |
|
|
Accumulated |
|
|
Retained |
|
||||||
Balance, December 31, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Issuance of |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Stock-based and deferred compensation |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other comprehensive income |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash dividends paid: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Common stock ($ |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance, June 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
6
(In thousands, except share and per share amounts) |
|
Total |
|
|
Common |
|
|
Additional |
|
|
Common |
|
|
Accumulated |
|
|
Retained |
|
||||||
Balance, March 31, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Issuance of |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Stock-based and deferred compensation |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other comprehensive (loss) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash dividends paid: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Common stock ($ |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance, June 30, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
(In thousands, except share and per share amounts) |
|
Total |
|
|
Common |
|
|
Additional |
|
|
Common |
|
|
Accumulated |
|
|
Retained |
|
||||||
Balance, December 31, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Issuance of |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Stock-based and deferred compensation |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other comprehensive (loss) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash dividends paid: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Common stock ($ |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance, June 30, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Cash and cash equivalents
Carrying value approximated far value because of the short maturity of the instruments. Fair value of cash and cash equivalents is a Level 1 measurement. The Company's cash and cash equivalents included money market funds totaling $
Derivative assets and liabilities
Derivative assets and liabilities include the foreign currency exchange and interest rate swap contracts discussed in Note 4, Derivative Instruments, of the notes to the Company’s condensed consolidated financial statements (included in Item 1 of this Form 10-Q). Fair value and carrying value were the same because the contracts were recorded at fair value. The fair values of the foreign currency contracts were calculated as the difference between the applicable forward foreign exchange rates at the reporting date and the contracted foreign exchange rates multiplied by the contracted notional amounts. The fair value of the interest rate swap was calculated as the difference between the contracted swap rate and the floating interest rate multiplied by the present value of the notional amount of the contract.
At June 30, 2025, and December 31, 2024, the fair values and related carrying values of debt, including current maturities, were as follows (the fair value and carrying value amounts are presented without regard to unamortized debt issuance costs of $
(In thousands) |
|
June 30, |
|
|
December 31, |
|
||
Fair value |
|
$ |
|
|
$ |
|
||
Carrying value |
|
|
|
|
|
|
||
7
The following tables present financial assets and liabilities, excluding cash and cash equivalents, measured on a recurring basis at fair value as of June 30, 2025, and December 31, 2024, and the level within the fair value hierarchy in which the fair value measurements fall:
(In thousands) |
|
June 30, |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Mutual fund assets |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
||
Derivative assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate contracts |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Foreign currency contracts |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Total assets at fair value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|||
Derivative liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency contracts |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
||
(In thousands) |
|
December 31, |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Mutual fund assets |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
||
Derivative assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate contracts |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Foreign currency contracts |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Total assets at fair value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|||
Derivative liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency contracts |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
||
At June 30, 2025, and December 31, 2024, the Company had open forward foreign currency exchange contracts to buy or sell foreign currencies with U.S. dollar equivalent amounts of $
The Company is currently exposed to volatility in short-term interest rates and has mitigated certain portions of that risk by using an interest rate swap. The interest rate swap is recognized on the balance sheet as either an asset or a liability measured at fair value. At June 30, 2025, the Company held an interest rate swap contract with a notional value of $
The fair values of the derivative instruments held by the Company on June 30, 2025, and December 31, 2024, are disclosed in Note 3, Fair Value Measurements, of the notes to the Company’s condensed consolidated financial statements (included in Item 1 of this Form 10-Q). Derivative instrument gains and losses for the three and six months ended June 30, 2025 and 2024, were immaterial. For amounts reclassified out of AOCI into earnings for the three and six months ended June 30, 2025 and 2024, see Note 11, Accumulated Other Comprehensive Income (Loss), of the notes to the Company’s condensed consolidated financial statements (included in Item 1 of this Form 10-Q).
Compensation expense recorded for all stock options, performance shares, time-based restricted stock units (RSUs) and stock appreciation rights (SARs) was as follows:
(In thousands) |
|
|||||||||||||
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Unrecognized compensation costs for stock options, performance shares, RSUs and SARs were as follows:
8
(In thousands) |
|
June 30, |
|
|
December 31, |
|
||
Stock options |
|
$ |
|
|
$ |
|
||
Performance shares and RSUs |
|
|
|
|
|
|
||
SARs |
|
|
|
|
|
|
||
The change in unrecognized compensation costs for stock options, performance shares, RSUs and SARs is due to new grants issued in 2025.
The Company granted the following awards in the first six months of 2025:
|
|
Shares |
|
|
Stock options |
|
|
|
|
Performance shares (at target) and RSUs |
|
|
|
|
SARs |
|
|
|
|
The unrecognized compensation costs at June 30, 2025, are expected to be recognized over weighted-average periods of
The composition of inventories at June 30, 2025, and December 31, 2024, was as follows:
(In thousands) |
|
June 30, |
|
|
December 31, |
|
||
Finished goods |
|
$ |
|
|
$ |
|
||
Raw materials |
|
|
|
|
|
|
||
Total inventories |
|
$ |
|
|
$ |
|
||
Lease cost is recognized in both the Cost of Sales and Operating Expenses sections of the Condensed Consolidated Statements of Income.
(In thousands) |
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Lease Cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Short-term lease cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Variable lease cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Other Information |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash paid for amounts included in the |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating cash flow from operating leases |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Right-of-use assets obtained in exchange |
|
|
|
|
|
|
|
|
|
|
|
|
||||
9
The following table outlines the maturities of lease liabilities as of June 30, 2025.
(In thousands) |
|
|
|
|
Undiscounted Cash Flows: |
|
|
|
|
2025 (excluding the six months ended June 30, 2025) |
|
$ |
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
Subsequent to 2029 |
|
|
|
|
Total Undiscounted Cash Flows |
|
$ |
|
|
Less: Imputed interest |
|
|
( |
) |
Present value |
|
$ |
|
|
Current operating lease liabilities (1) |
|
|
|
|
Non-current operating lease liabilities |
|
|
|
|
Total lease liabilities |
|
$ |
|
|
Weighted-average remaining lease term-operating leases |
|
|
||
Weighted-average discount rate-operating leases |
|
|
% |
|
As of June 30, 2025, the Company had
There are a variety of legal proceedings pending or threatened against the Company that occur in the normal course of the Company’s business, the majority of which relate to environmental assessment, protection and remediation matters. Some of these proceedings may result in fines, penalties, judgments or costs being assessed against the Company at some future time. The Company’s operations are subject to extensive local, state and federal regulations, including the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) and the Superfund amendments of 1986 (Superfund) as well as comparable regulations applicable to the Company’s foreign locations. Over the years, the Company has received requests for information related to or has been named by government authorities as a potentially responsible party at a number of sites where cleanup costs have been or may be incurred by the Company under CERCLA and similar state statutes. In addition, the Company is from time to time involved in routine legal proceedings incidental to the conduct of its business, including personal injury, property damage, tax, trade and labor matters. The Company believes that it has made adequate provisions for the costs it is likely to incur with respect to these claims.
In determining the appropriate level of environmental reserves, the Company considers several factors such as information obtained from investigatory studies; changes in the scope of remediation; the interpretation, application and enforcement of laws and regulations; changes in the costs of remediation programs; the development of alternative cleanup technologies and methods; and the relative level of the Company’s involvement at various sites for which the Company is allegedly associated. The level of annual expenditures for remedial, monitoring and investigatory activities will change in the future as major components of planned remediation activities are completed and the scope, timing and costs of existing activities are changed. As of June 30, 2025, the Company estimated a range of possible environmental losses and legal losses of $
10
For certain sites, the Company has responded to information requests made by federal, state or local government agencies but has received no response confirming or denying the Company’s stated positions. As such, estimates of the total costs, or range of possible costs, of remediation, if any, or the Company’s share of such costs, if any, cannot be determined with respect to these sites. Consequently, the Company is unable to predict the effect thereof on the Company’s financial position, cash flows and results of operations. Based on the Company’s present knowledge with respect to its involvement at these sites, the possibility of other viable entities’ responsibilities for cleanup, and the extended period over which any costs would be incurred, management believes that the Company has no material liability at these sites and that these matters, individually and in the aggregate, will not have a material effect on the Company’s financial position. However, in the event of one or more adverse determinations with respect to such sites in any annual or interim period, the effect on the Company’s cash flows and results of operations for those periods could be material.
Following are summaries of the Company’s major contingencies at June 30, 2025:
Maywood, New Jersey Site
The Company’s property in Maywood, New Jersey, property formerly owned by the Company adjacent to its current site and other nearby properties (collectively, the Maywood site) were listed on the National Priorities List in September 1993 pursuant to the provisions of CERCLA because of alleged chemical and radiological contamination. Pursuant to (i) a September 21, 1987 Administrative Order on Consent entered into between the U.S. Environmental Protection Agency (USEPA) and the Company for property formerly owned by the Company at the Maywood site and (ii) the issuance of an order on May 2, 1991 by the USEPA to the Company for property currently owned by the Company at the Maywood site, the Company has completed various Remedial Investigation/Feasibility Studies of soil and groundwater at the Maywood site. On September 24, 2014, the USEPA issued its Record of Decision (ROD) for chemically-contaminated soil at the Maywood site. The ROD was amended pursuant to an Explanation of Significant Differences in January 2021. On February 29, 2024, the U.S. District Court for the District of New Jersey entered a consent decree among the Company, the United States, the New Jersey Department of Environmental Protection (NJDEP) and the New Jersey Spill Compensation Fund Administrator that requires the Company to take certain actions and to pay certain past costs of the United States and NJDEP. The USEPA has not yet issued a ROD for chemically-contaminated groundwater at the Maywood site.
Based on the most current information available, the Company believes its recorded liability is reasonable having considered the range of estimated costs of remediation for the Maywood site. The estimate of the cost of remediation for the Maywood site could change again as the Company continues to hold discussions with the USEPA, as the design of the remedial action is finalized, if a groundwater ROD is issued or if other potentially responsible parties are identified. The ultimate amount for which the Company is liable could differ materially from the Company’s current recorded liability.
D’Imperio Property Site
During the mid-1970’s, Jerome Lightman and the Lightman Drum Company disposed of hazardous substances generated by the Company at several sites in New Jersey, including the D’Imperio site. The Company was named as a potentially responsible party in an October 2, 1998 lawsuit in the U.S. District Court for the District of New Jersey that involved the D’Imperio Site. The Company is cooperating with other potentially responsible parties to implement the selected remedy. Based on current information, the Company believes that its recorded liability is reasonable having considered the range of estimated cost of remediation for the D’Imperio site. Depending on the ultimate cost of the remediation at this site, the amount for which the Company is liable could differ materially from the Company’s current recorded liability.
Wilmington Site
Property formerly owned and operated by the Company in Wilmington, Massachusetts was listed on the National Priorities List in 2006. The Company, together with the current site owner and another potentially responsible party, entered into an Administrative Order on Consent in July 2007 to undertake a Remedial Investigation and Feasibility Study. A ROD was issued by the USEPA on March 30, 2021. The Company and three other potentially responsible parties entered into a consent decree, dated September 28, 2023, with USEPA and the Commonwealth of Massachusetts that requires the remedial design and remedial action of the remedy selected in the ROD for two operable units and an interim remedy for another operable unit. Remediation at this site is being managed by its current owner, to whom the Company sold the property in 1980. The Company is contractually obligated to contribute up to
11
On July 29, 2022, the Company and other potentially responsible parties were notified of a possible joint claim by federal and state trustees for alleged natural resource damages related to the Wilmington site. The alleged damages may result in a range of possible penalties and the Company recorded a liability for this matter during the first quarter of 2024. Depending on the ultimate resolution of this matter, the amount for which the Company is liable could differ materially from the current recorded liability.
Millsdale Site
On March 26, 2024, the Company received a Notice and Finding of Violation from the USEPA alleging violations of air regulations at the Company’s Elwood, Illinois (Millsdale) facility. The notice alleges violations related to operating parameters and air emission requirements. The notice does not state whether the USEPA intends to pursue financial penalties or operational remedies. The alleged violations may result in a range of possible penalties; however, at this stage of the matter, the Company is unable to predict the ultimate outcome or what impact, if any, the outcome might have on the Company’s financial position, results of operations or cash flows.
Other U.S. Sites
Through the regular environmental monitoring of its plant production sites, the Company discovered levels of chemical contamination that were above thresholds allowed by law at its Millsdale and Fieldsboro, New Jersey plants. The Company voluntarily reported its results to the applicable state environmental agencies. As a result, the Company is required to perform self-remediation of the affected areas. Based on current information, the Company believes that its recorded liability for the remediation of the affected areas is appropriate based on an estimate of expected costs. However, actual costs could differ materially from the current recorded liability.
Brazil Tax Rescission Action
In March 2017, the Brazil Supreme Court ruled that ICMS (State VAT) does not represent a Company’s revenue and should not be included in the calculation basis of certain indirect taxes (PIS/COFINS). Based on the Supreme Court’s decision, the Company’s Brazilian subsidiary filed a lawsuit on March 23, 2017 to recover PIS/COFINS overpayments. The Company’s recovery case was successful and became final in November 2018. In May 2021, the Brazil Supreme Court modulated its original decision so that only taxpayers that had filed lawsuits before March 15, 2017, should recover prior PIS/COFINS overpayments. On June 12, 2023, the Brazil National Treasury filed a rescission action against the Company’s Brazilian subsidiary to rescind its use of the PIS/COFINS tax credits for the period from March 23, 2012, to March 15, 2017. In September and October 2024, the Brazil Superior Court and Supreme Court, respectively, ruled that the generally held two-year “res judicata” principle would start from the May 2021 ruling and not the final ruling in prior taxpayer cases (e.g., November 30, 2018, for the Company’s case). Based on current information, the Company believes that its recorded liability is reasonable; however, depending on the ultimate resolution of this matter, the amount for which the Company is liable could differ materially from the current recorded liability.
Other Matters
On March 19, 2025, the Company received a pre-filing notice from USEPA for alleged violations of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) associated with certain of the Company’s biocide products sold by a licensed distributor. USEPA assessed a civil penalty of $
Defined Benefit Pension Plans
The Company sponsors various funded qualified and unfunded non-qualified defined benefit pension plans, the most significant of which cover employees in the U.S. and U.K. locations. The U.S. and U.K. defined benefit pension plans are frozen and service benefits are no longer being accrued.
12
Components of Net Periodic Benefit Cost
|
|
UNITED STATES |
|
|||||||||||||
(In thousands) |
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Interest cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Expected return on plan assets |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Amortization of net actuarial loss |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net periodic benefit cost |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
UNITED KINGDOM |
|
|||||||||||||
(In thousands) |
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Interest cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Expected return on plan assets |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Amortization of net actuarial loss |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net periodic benefit cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Employer Contributions
U.S. Plans
As a result of pension funding relief provisions included in the Highway and Transportation Funding Act of 2014, the Company is not required to make contributions to its funded U.S. qualified defined benefit plans. Approximately $
U.K. Plan
The Company’s U.K. subsidiary does not expect to contribute to its defined benefit pension plan in 2025.
Defined Contribution Plans
The Company sponsors retirement defined contribution plans that cover eligible U.S. and U.K. employees. The Company’s U.S. retirement plans include two qualified plans, one of which is a 401(k) plan and one of which is an employee stock ownership plan (profit sharing plan), and one non-qualified supplemental executive plan. In the six months ended June 30, 2025 and 2024, the Company made contributions into the qualified retirement plans for U.S. employees and for certain non-U.S. employees. Profit sharing contributions were determined using a formula applied to Company earnings. Approximately
Defined contribution plan expenses for the Company’s qualified contribution plans were as follows:
(In thousands) |
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Retirement savings contributions |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Profit sharing contributions |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total defined contribution plan expenses |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Company has a rabbi trust to fund the obligations of its non-qualified supplemental executive defined contribution plans (supplemental plans). The trust is comprised of various mutual fund investments selected by the participants of the supplemental plans. In accordance with the accounting guidance for rabbi trust arrangements, the assets of the trust and the obligations of the supplemental plans are reported on the Company’s condensed consolidated balance sheets. The Company elected the fair value option for the mutual fund investment assets so that offsetting changes in the mutual fund values and defined contribution plan obligations would be recorded in earnings in the same period. Therefore, the mutual funds are reported at fair value with any subsequent changes in fair value recorded in the statements of income. The supplemental plan liabilities increase (i.e.,
13
supplemental plan expense is recognized) when the value of the trust assets appreciate and decrease when the value of the trust assets decline (i.e., supplemental plan income is recognized). At June 30, 2025, the balance of the trust assets was $
Below are the computations of basic and diluted earnings per share for the three and six months ended June 30, 2025 and 2024:
(In thousands, except per share amounts) |
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Computation of Basic Earnings per Share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Weighted-average number of common shares |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic earnings per share |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Computation of Diluted Earnings per Share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Weighted-average number of shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Add weighted-average net shares from assumed |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Add weighted-average net shares related to unvested |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Add weighted-average net shares from assumed |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Add weighted-average contingently issuable net |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Weighted-average shares applicable to diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted earnings per share |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
14
Below is the change in the Company’s accumulated other comprehensive income (loss) (AOCI) balance by component (net of income taxes) for the three and six months ended June 30, 2025 and 2024:
(In thousands) |
|
Foreign |
|
|
Defined |
|
|
Cash Flow |
|
|
Total |
|
||||
Balance at March 31, 2024 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Other comprehensive (loss) before |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Amounts reclassified from AOCI |
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
|
||
Net current-period other comprehensive income (loss) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Balance at June 30, 2024 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at March 31, 2025 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Other comprehensive income (loss) before |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Amounts reclassified from AOCI |
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
|
||
Net current-period other comprehensive income (loss) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Balance at June 30, 2025 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at December 31, 2023 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Other comprehensive income ( loss) before |
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
Amounts reclassified from AOCI |
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
|
||
Net current-period other comprehensive income (loss) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Balance at June 30, 2024 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at December 31, 2024 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Other comprehensive income (loss) before |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Amounts reclassified from AOCI |
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
|
||
Net current-period other comprehensive income (loss) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Balance at June 30, 2025 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
15
Information regarding the reclassifications out of AOCI for the three and six months ended June 30, 2025 and 2024, is displayed below:
(In thousands) |
|
Amount Reclassified from AOCI (1) |
|
|
|
|||||||||||||
AOCI Components |
|
Three Months Ended |
|
|
Six Months Ended |
|
|
Affected Line Item in |
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
|
|
||||
Amortization of defined benefit |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax benefit |
||||
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Net of tax |
Gains and losses on cash flow |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total before tax |
||||
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Tax benefit |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
Net of tax |
||||
Total reclassifications for the period |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Net of tax |
The Company has
|
|
For the Three Months Ended June 30, 2025 |
|
|||||||||||||
(In thousands) |
|
Surfactants |
|
|
Polymers |
|
|
Specialty |
|
|
Total |
|
||||
Net Sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of Sales (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating Expenses (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating Income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Unallocated Corporate Expenses (3) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Consolidated Operating Income |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment Capital Expenditures |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Unallocated Capital Expenditures (4) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Consolidated Capital Expenditures |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment Depreciation and Amortization |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Unallocated Depreciation and Amortization (5) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Consolidated Depreciation and Amortization |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
16
|
|
For the Six Months Ended June 30, 2025 |
|
|||||||||||||
(In thousands) |
|
Surfactants |
|
|
Polymers |
|
|
Specialty |
|
|
Total |
|
||||
Net Sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of Sales (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating Expenses (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating Income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Unallocated Corporate Expenses (3) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Consolidated Operating Income |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment Capital Expenditures |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Unallocated Capital Expenditures (4) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Consolidated Capital Expenditures |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment Depreciation and Amortization |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Unallocated Depreciation and Amortization (5) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Consolidated Depreciation and Amortization |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
|
|
For the Three Months Ended June 30, 2024 |
|
|||||||||||||
(In thousands) |
|
Surfactants |
|
|
Polymers |
|
|
Specialty |
|
|
Total |
|
||||
Net Sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of Sales (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating Expenses (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating Income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Unallocated Corporate Expenses (3) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Consolidated Operating Income |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment Capital Expenditures |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Unallocated Capital Expenditures (4) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Consolidated Capital Expenditures |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment Depreciation and Amortization |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Unallocated Depreciation and Amortization (5) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Consolidated Depreciation and Amortization |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
17
|
|
For the Six Months Ended June 30, 2024 |
|
|||||||||||||
(In thousands) |
|
Surfactants |
|
|
Polymers |
|
|
Specialty |
|
|
Total |
|
||||
Net Sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of Sales (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating Expenses (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating Income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Unallocated Corporate Expenses (3) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Consolidated Operating Income |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment Capital Expenditures |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Unallocated Capital Expenditures (4) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Consolidated Capital Expenditures |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment Depreciation and Amortization |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Unallocated Depreciation and Amortization (5) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Consolidated Depreciation and Amortization |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
|
|
As of June 30, 2025 |
|
|||||||||||||
(In thousands) |
|
Surfactants |
|
|
Polymers |
|
|
Specialty |
|
|
Total |
|
||||
Segment Assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Unallocated Assets (6) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Consolidated Assets |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
As of December 31, 2024 |
|
|||||||||||||
(In thousands) |
|
Surfactants |
|
|
Polymers |
|
|
Specialty |
|
|
Total |
|
||||
Segment Assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Unallocated Assets (6) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Consolidated Assets |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
18
As of June 30, 2025 and December 31, 2024, the Company had $
In addition, during 2020, the Company recorded $
The tables below provide a geographic disaggregation of net sales for the three and six months ended June 30, 2025 and 2024. The Company’s business segmentation by geographic region most effectively captures the nature and economic characteristics of the Company’s revenue streams impacted by economic factors.
(In thousands) |
|
For the Three Months Ended June 30, 2025 |
|
|||||||||||||
Geographic Market |
|
Surfactants |
|
|
Polymers |
|
|
Specialty |
|
|
Total |
|
||||
North America |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Latin America |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asia |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(In thousands) |
|
For the Six Months Ended June 30, 2025 |
|
|||||||||||||
Geographic Market |
|
Surfactants |
|
|
Polymers |
|
|
Specialty |
|
|
Total |
|
||||
North America |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Latin America |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asia |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(In thousands) |
|
For the Three Months Ended June 30, 2024 |
|
|||||||||||||
Geographic Market |
|
Surfactants |
|
|
Polymers |
|
|
Specialty |
|
|
Total |
|
||||
North America |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Latin America |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asia |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(In thousands) |
|
For the Six Months Ended June 30, 2024 |
|
|||||||||||||
Geographic Market |
|
Surfactants |
|
|
Polymers |
|
|
Specialty |
|
|
Total |
|
||||
North America |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Latin America |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asia |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
19
At June 30, 2025 and December 31, 2024, debt was comprised of the following:
(In thousands) |
|
Maturity |
|
June 30, |
|
|
December 31, |
|
||
Senior unsecured notes |
|
|
|
|
|
|
|
|
||
|
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
Revolving credit facility and term loan borrowing |
|
|
|
|
|
|
|
|||
Debt of foreign subsidiaries |
|
|
|
|
|
|
|
|
||
Unsecured bank debt, foreign currency |
|
|
|
|
|
|
|
|||
Total debt |
|
|
|
$ |
|
|
$ |
|
||
Less current maturities |
|
|
|
|
|
|
|
|
||
Long-term debt |
|
|
|
$ |
|
|
$ |
|
||
The Company's long-term debt financing is comprised of certain senior unsecured notes issued to insurance companies in private placement transactions pursuant to note purchase agreements (the “Note Purchase Agreements”), totaling $
On May 21, 2025, pursuant to a note purchase and private shelf agreement dated as of June 10, 2021, Stepan issued and sold $
The Company’s credit agreement (the Credit Agreement) with a syndicate of banks provides for credit facilities in an initial aggregate principal amount of $
The Company's foreign subsidiaries had $
20
The Company’s material debt agreements contain provisions which, among other covenants, require maintenance of certain financial ratios and place limitations on additional debt, investments and payment of dividends. Based on the loan agreement provisions that place limitations on dividend payments, unrestricted retained earnings (i.e., retained earnings available for dividend distribution) were $
Other, net in the condensed consolidated statements of income included the following:
(In thousands) |
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Foreign exchange (loss) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Investment income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Realized and unrealized gain on investments |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net periodic benefit cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other, net |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Noncash investing activities included liabilities (accounts payable) incurred for property, plant and equipment expenditures of approximately $
On May 27, 2025 Stepan Company announced that its subsidiary, Stepan Philippines Quaternaries, Inc. (SPQI), had entered into an agreement to sell SPQI's manufacturing assets located in Bauan, Batangas, Philippines to Masurf, Inc., a subsidiary of Musim Mas Holdings Pte. Ltd. The Company plans to close the sale during the second half of 2025. The asset disposal group includes $
A U.S. tax act (H.R.1) was signed into law on July 4, 2025 (the 2025 U.S. tax act). Under U.S. GAAP, the effects of changes in tax laws or rates should be recognized in the financial statements as of the enactment date. As a result, the impact of the new tax act has not been reflected in the Company’s financial statements as of June 30, 2025. The Company is evaluating the impact of the 2025 U.S. tax act and anticipates that its provisions that will have the most relevance to the Company are bonus depreciation, the immediate expensing of domestic research and development costs, and the increased limitation on the deduction for interest expense. Based on Company’s current understanding, the Company does not believe the new provisions of the 2025 U.S. tax act will have a material impact on the Company’s financial results, financial position, liquidity, or cash flows for 2025.
In December 2023, the FASB issued ASU No. 2023-09, Income taxes (Topic 740) Improvement to Income Tax Disclosures. This update requires that public entities on an annual basis disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. In addition, the amendments in this update require the disclosure on an annual basis of the amount of income taxes paid (net of refund received) disaggregated by federal, state and foreign taxes and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid is equal or greater than five percent of total income taxes paid (net of refunds received). This update requires all entities to disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign. The amendments in this update are effective for annual periods beginning after December 15, 2024 and should be applied on a prospective basis. The implementation of ASU No. 2023-09 will not have an impact on the Company’s financial position, results of operations and cash flow but will impact the Company’s annual income tax disclosures.
21
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive income - Expense Disaggregation Disclosures (Subtopic 220-40). This update requires that public entities on an interim and annual basis disclose, in the notes to financial statements, specified information about certain costs and expenses. ASU No. 2024-03 requires a footnote disclosure in tabular form of each expense caption on the face of the income statement that includes any of the following natural expenses: (1) purchases of inventory, (2) employee compensation, (3) depreciation, and (4) intangible asset amortization. The disclosure would also include a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively and disclosure of the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. This ASU does not change or remove existing expense disclosure requirements; however, it may affect where that information appears in the footnotes to the financial statements. In January 2025, the FASB issued ASU No. 2025-01, Income Statement - Reporting Comprehensive income - Expense Disaggregation Disclosures (Subtopic 220-40), Clarifying the effective date. The amendments in ASU No. 2024-03 are effective for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The amendments in this update should be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. The implementation of ASU No. 2024-03 will not have an impact on the Company’s financial position, results of operations and cash flow but will impact the Company’s interim and annual disclosures related to the relevant subtopics in this update.
22
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following is management’s discussion and analysis (MD&A) of certain significant factors that have affected the Company’s financial condition and results of operations during the interim periods included in the accompanying condensed consolidated financial statements.
Certain statements in this Quarterly Report on Form 10-Q, other than purely historical information, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). These statements include statements about Stepan Company’s and its subsidiaries’ (the Company) plans, objectives, strategies, financial performance and outlook, trends, the amount and timing of future cash distributions, prospects or future events and involve known and unknown risks that are difficult to predict. As a result, the Company’s actual financial results, performance, achievements or prospects may differ materially from those expressed or implied by these forward-looking statements. In some cases, forward-looking statements can be identified by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “guidance,” “predict,” “potential,” “continue,” “likely,” “will,” “would,” “should,” “illustrative” and variations of these terms and similar expressions, or the negative of these terms or similar expressions. Such forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by the Company and its management based on their knowledge and understanding of the business and industry, are inherently uncertain. These statements are not guarantees of future performance, and stockholders should not place undue reliance on forward-looking statements. There are a number of risks, uncertainties and other important factors, many of which are beyond the Company’s control, that could cause the Company’s actual results to differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q.
Such risks, uncertainties and other important factors, include, among others, the risks, uncertainties and factors set forth under “Part II-Item IA - Risk Factors” of this Quarterly Report on Form 10-Q and under “Part I-Item IA. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, including the risks and uncertainties related to the following:
23
These factors are not necessarily all of the important factors that could cause the Company’s actual financial results, performance, achievements or prospects to differ materially from those expressed in or implied by any of the Company's forward-looking statements. Other unknown or unpredictable factors could also impact the Company’s results. All forward-looking statements attributable to the Company or persons acting on the Company’s behalf are expressly qualified in their entirety by the cautionary statements set forth above. Forward-looking statements speak only as of the date they are made, and the Company does not undertake or assume any obligation to update publicly any of these forward-looking statements to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements, except to the extent required by applicable laws. If the Company updates one or more forward-looking statements, no inference should be drawn that the Company will make additional updates with respect to those or other forward-looking statements.
The “Company,” “we,” “our” or “us” means Stepan Company and one or more of its subsidiaries only.
Overview
The Company produces and sells intermediate chemicals that are used in a wide variety of applications worldwide. The overall business is comprised of three reportable segments:
Surfactants – Surfactants, which accounted for 71 percent of consolidated net sales for the first six months of 2025, are principal ingredients in consumer and industrial cleaning and disinfection products such as detergents for washing clothes, dishes, carpets, floors and walls, as well as shampoos and body washes. Other applications include fabric softeners, germicidal quaternary compounds, disinfectants, lubricating ingredients, emulsifiers for spreading agricultural products and industrial applications such as latex systems, plastics and composites. Surfactants are manufactured at five sites in the United States, two European sites (United Kingdom and France), five Latin American sites (one site in Colombia and two sites in each of Mexico and Brazil) and two Asian sites (Philippines and Singapore).
Polymers – Polymers, which accounted for 26 percent of consolidated net sales for the first six months of 2025, include polyurethane polyols, polyester resins and phthalic anhydride. Polyurethane polyols are used in the manufacture of rigid foam for thermal insulation in the construction industry and are also a base raw material for coatings, adhesives, sealants and elastomers (collectively, CASE products). Powdered polyester resins are used in coating applications. CASE and powdered polyester resins are collectively referred to as specialty polyols. Phthalic anhydride is used in unsaturated polyester resins, alkyd resins and plasticizers for applications in construction materials and components of automotive, boating and other consumer products. In addition, the Company uses phthalic anhydride internally in the production of polyols. In the United States, polyurethane polyols are manufactured at the Company’s Elwood, Illinois (Millsdale) and Wilmington, North Carolina sites. Phthalic anhydride is manufactured at the Company’s Millsdale site and specialty polyols are manufactured at the Company’s Columbus, Georgia, site. In Europe, polyurethane polyols are manufactured at the Company’s plants in Germany and the Netherlands and specialty polyols are manufactured at the Company’s Poland site. In Asia, polyurethane polyols and specialty polyols are manufactured at the Company’s China plant.
Specialty Products – Specialty products, which accounted for three percent of consolidated net sales for the first six months of 2025, include flavors, emulsifiers and solubilizers used in food, flavoring, nutritional supplement and pharmaceutical applications. Specialty products are primarily manufactured at the Company’s Maywood, New Jersey, site.
24
Deferred Compensation Plans
The accounting for the Company’s deferred compensation plans can cause period-to-period fluctuations in Company income and expenses. Compensation expense is recognized when the value of the Company's common stock and mutual fund investment assets held for the plans increase, and compensation income is recognized when the value of the Company's common stock and mutual fund investment assets decline. The pretax effect of all deferred compensation-related activities (including realized and unrealized gains and losses on the mutual fund assets held to fund the deferred compensation obligations) and the income statement line items in which the effects of the activities were recorded are displayed in the following table:
|
|
Income (Expense) |
|
|
|
|
|
||||||
|
|
For the Three Months |
|
|
|
|
|
||||||
(In millions) |
|
2025 |
|
|
2024 |
|
|
Change |
|
|
|||
Deferred Compensation (Administrative expenses) |
|
$ |
(1.8 |
) |
|
$ |
(0.4 |
) |
|
$ |
(1.4 |
) |
(1) |
Realized/Unrealized Gains on Investments (Other, net) |
|
|
1.6 |
|
|
|
0.7 |
|
|
|
0.9 |
|
|
Investment Income (Other, net) |
|
|
0.1 |
|
|
|
0.1 |
|
|
|
— |
|
|
Pretax Income Effect |
|
$ |
(0.1 |
) |
|
$ |
0.4 |
|
|
$ |
(0.5 |
) |
|
|
|
Income (Expense) |
|
|
|
|
|
||||||
|
|
For the Six Months |
|
|
|
|
|
||||||
(In millions) |
|
2025 |
|
|
2024 |
|
|
Change |
|
|
|||
Deferred Compensation (Administrative expenses) |
|
$ |
(0.8 |
) |
|
$ |
(2.2 |
) |
|
$ |
1.4 |
|
(1) |
Realized/Unrealized Gains on Investments (Other, net) |
|
|
1.1 |
|
|
|
2.9 |
|
|
|
(1.8 |
) |
|
Investment Income (Other, net) |
|
|
0.2 |
|
|
|
0.2 |
|
|
|
- |
|
|
Pretax Income Effect |
|
$ |
0.5 |
|
|
$ |
0.9 |
|
|
$ |
(0.4 |
) |
|
Effects of Foreign Currency Translation
The Company’s foreign subsidiaries transact business and report financial results in their respective local currencies. As a result, foreign subsidiary income statements are translated into U.S. dollars at average foreign exchange rates appropriate for the reporting period. Because foreign exchange rates fluctuate against the U.S. dollar over time, foreign currency translation affects period-to-period comparisons of financial statement items (i.e., because foreign exchange rates fluctuate, similar period-to-period local currency results for a foreign subsidiary may translate into different U.S. dollar results). The following table presents the effects that foreign currency translation had on the period-over-period changes in consolidated net sales and various income statement line items for the three and six months ended June 30, 2025 and 2024:
|
|
For the Three Months |
|
|
|
|
|
|
|
|||||||
(In millions) |
|
2025 |
|
|
2024 |
|
|
Increase |
|
|
Decrease |
|
||||
Net Sales |
|
$ |
594.7 |
|
|
$ |
556.4 |
|
|
$ |
38.3 |
|
|
$ |
(1.7 |
) |
Gross Profit |
|
|
71.9 |
|
|
|
69.6 |
|
|
|
2.3 |
|
|
|
(0.2 |
) |
Operating Income |
|
|
18.0 |
|
|
|
18.7 |
|
|
|
(0.7 |
) |
|
|
(0.2 |
) |
Pretax Income |
|
|
13.8 |
|
|
|
17.2 |
|
|
|
(3.4 |
) |
|
|
(0.2 |
) |
|
|
For the Six Months |
|
|
|
|
|
|
|
|||||||
(In millions) |
|
2025 |
|
|
2024 |
|
|
Increase |
|
|
Decrease |
|
||||
Net Sales |
|
$ |
1,187.9 |
|
|
$ |
1,107.8 |
|
|
$ |
80.1 |
|
|
$ |
(20.2 |
) |
Gross Profit |
|
|
147.3 |
|
|
|
139.8 |
|
|
|
7.5 |
|
|
|
(2.8 |
) |
Operating Income |
|
|
46.3 |
|
|
|
38.8 |
|
|
|
7.5 |
|
|
|
(2.0 |
) |
Pretax Income |
|
|
38.5 |
|
|
|
36.7 |
|
|
|
1.8 |
|
|
|
(2.1 |
) |
25
RESULTS OF OPERATIONS
Three Months Ended June 30, 2025 and 2024
Summary
Net income in the second quarter of 2025 was $11.3 million, or $0.50 per diluted share, versus $9.5 million, or $0.42 per diluted share, in the second quarter of 2024. Adjusted net income was $12.0 million, or $0.52 per diluted share, versus $9.4 million, or $0.41 per diluted share in the second quarter of 2024 (see the “Reconciliation of Non-GAAP Adjusted Net Income and Diluted Earnings per Share” section of this MD&A for a reconciliation between reported net income and reported earnings per diluted share and non-GAAP adjusted net income and adjusted earnings per diluted share). Earnings before interest, taxes, depreciation and amortization (EBITDA) were $50.6 million in the second quarter of 2025, up six percent, versus $47.9 million in the second quarter of 2024. Adjusted EBITDA was $51.4 million, up eight percent, versus $47.7 million in the second quarter of 2024 (see the "Reconciliation of non-GAAP EBITDA and Adjusted EBITDA" section of this MD&A for a reconciliation between reported operating income and non-GAAP EBITDA and Adjusted EBITDA). Below is a summary discussion of the major factors leading to the changes in net sales, expenses and income in the second quarter of 2025 compared to the second quarter of 2024. A detailed discussion of segment operating performance for the second quarter of 2025, compared to the second quarter of 2024, follows the summary.
Consolidated net sales increased $38.3 million, or seven percent, versus the prior year quarter. Higher average selling prices favorably impacted the year-over-year change in net sales by $32.5 million. The increase in average selling prices was mainly attributable to the pass-through of higher raw material costs and more favorable product mix. Consolidated sales volume increased one percent, which favorably impacted the change in net sales by $7.5 million. Polymer and Specialty Products sales volumes increased seven and 33 percent, respectively, year-over-year. Surfactant sales volume decreased one percent. Foreign currency translation negatively impacted the year-over-year change in net sales by $1.7 million, primarily due to a stronger U.S. dollar against the Brazilian real and Mexican peso.
Operating income in the second quarter of 2025 decreased $0.7 million, or four percent, versus operating income in the second quarter of 2024. Polymer operating income increased $3.6 million versus the second quarter of 2024. Surfactant and Specialty Products operating income decreased $3.7 million and $2.1 million, respectively, year-over-year. Corporate expenses, including environmental remediation and deferred compensation expenses, decreased $1.5 million, or eight percent, year-over-year. Corporate expenses, excluding environmental remediation and deferred compensation expenses, decreased $3.3 million, or 18 percent, year-over-year. Foreign currency translation had a $0.2 million unfavorable impact on operating income year-over-year.
Operating expenses (including deferred compensation) increased $3.0 million, or six percent year-over-year. Changes in the individual income statement line items that comprise the Company’s operating expenses were as follows:
Net interest expense for the second quarter of 2025 increased $2.8 million versus the second quarter of 2024. This increase was primarily attributable to lower U.S. capitalized interest income recognized in 2025 as the Company's new specialty alkoxylation facility in Pasadena, Texas started up in April 2025.
Other, net was $1.3 million of income in the second quarter of 2025 versus $1.2 million of income in the second quarter of 2024. The Company recognized $1.7 million of investment gains (including realized and unrealized gains and losses) for the Company’s deferred compensation and supplemental defined contribution mutual fund assets in the second quarter of 2025 compared to $0.8 million of investment gains in the second quarter of 2024. In addition, the Company reported $0.6 million of foreign exchange losses in the second quarter of 2025 versus less than $0.1 million of foreign exchange losses in the second quarter of 2024. The Company's net periodic pension income was $0.3 million in the second quarter of 2025 versus $0.4 million of income in the second quarter of 2024.
26
The Company’s effective tax rate was 17.7 percent in the second quarter of 2025 versus 44.7 percent in the second quarter of 2024. This decrease was primarily attributable to the non-recurrence of an unfavorable event, related to a global intangible low-taxed income (GILTI) deduction and a foreign tax credit, in the second quarter of 2024, along with a favorable tax audit settlement and a more favorable geographical mix of income in 2025. In the second quarter of 2024, the Company intended to elect bonus depreciation for its new alkoxylation facility in Pasadena, Texas. The Company expected that, as a result of this election, it would lose its ability to use GILTI deduction and related GILTI foreign tax credits for 2024, resulting in a higher effective tax rate than in the second quarter of 2025, when the Company did not expect to lose such deduction and foreign tax credits.
Segment Results
(Dollars in thousands) |
|
For the Three Months |
|
|
|
|
|
|
|
|||||||
Net Sales |
|
2025 |
|
|
2024 |
|
|
Increase |
|
|
Percent |
|
||||
Surfactants |
|
$ |
411,456 |
|
|
$ |
379,795 |
|
|
$ |
31,661 |
|
|
|
8 |
|
Polymers |
|
|
162,751 |
|
|
|
159,757 |
|
|
|
2,994 |
|
|
|
2 |
|
Specialty Products |
|
|
20,482 |
|
|
|
16,853 |
|
|
|
3,629 |
|
|
|
22 |
|
Total Net Sales |
|
$ |
594,689 |
|
|
$ |
556,405 |
|
|
$ |
38,284 |
|
|
|
7 |
|
(Dollars in thousands) |
|
For the Three Months |
|
|
|
|
|
|
|
|||||||
Operating Income |
|
2025 |
|
|
2024 |
|
|
Increase |
|
|
Percent |
|
||||
Surfactants |
|
$ |
13,367 |
|
|
$ |
17,062 |
|
|
$ |
(3,695 |
) |
|
|
-22 |
|
Polymers |
|
|
17,159 |
|
|
|
13,597 |
|
|
|
3,562 |
|
|
|
26 |
|
Specialty Products |
|
|
5,258 |
|
|
|
7,319 |
|
|
|
(2,061 |
) |
|
|
-28 |
|
Segment Operating Income |
|
$ |
35,784 |
|
|
$ |
37,978 |
|
|
$ |
(2,194 |
) |
|
|
-6 |
|
Corporate Expenses, Excluding Deferred Compensation |
|
$ |
16,058 |
|
|
$ |
18,916 |
|
|
$ |
(2,858 |
) |
|
|
-15 |
|
Deferred Compensation Expense |
|
|
1,761 |
|
|
|
395 |
|
|
|
1,366 |
|
|
|
346 |
|
Total Operating Income |
|
$ |
17,965 |
|
|
$ |
18,667 |
|
|
$ |
(702 |
) |
|
|
-4 |
|
Surfactants
Surfactant net sales for the second quarter of 2025 increased $31.7 million versus net sales for the second quarter of 2024. Higher average selling prices favorably impacted the change in net sales by $40.9 million. The higher average selling prices were mainly attributable to the pass through of higher raw material costs and a more favorable product mix. Sales volume decreased one percent and had a $3.7 million unfavorable impact on the change in net sales. Foreign currency translation had an $5.5 million unfavorable impact on the year-over-year change in net sales. A comparison of net sales by region follows:
(Dollars in thousands) |
|
For the Three Months |
|
|
|
|
|
|
|
|||||||
Net Sales |
|
2025 |
|
|
2024 |
|
|
Increase |
|
|
Percent |
|
||||
North America |
|
$ |
234,364 |
|
|
$ |
220,520 |
|
|
$ |
13,844 |
|
|
|
6 |
|
Europe |
|
|
74,605 |
|
|
|
63,460 |
|
|
|
11,145 |
|
|
|
18 |
|
Latin America |
|
|
90,527 |
|
|
|
83,569 |
|
|
|
6,958 |
|
|
|
8 |
|
Asia |
|
|
11,960 |
|
|
|
12,246 |
|
|
|
(286 |
) |
|
|
-2 |
|
Total Surfactants Segment |
|
$ |
411,456 |
|
|
$ |
379,795 |
|
|
$ |
31,661 |
|
|
|
8 |
|
Net sales for North American operations increased $13.8 million, or six percent, year-over-year. Higher average selling prices had an $8.9 million favorable impact on the change in net sales and were primarily due to the pass-through of higher raw material costs and more favorable product mix. Sales volume increased two percent and positively impacted the change in net sales by $5.0 million. The higher sales volume was primarily due to higher demand for products sold into the agricultural and oilfield end markets and to our distribution partners. Lower demand for products sold into the consumer products end markets partially offset the above. Foreign currency translation negatively impacted the change in net sales by $0.1 million.
Net sales for European operations increased $11.1 million, or 18 percent, due to higher average selling prices and the favorable impact of foreign currency translation. These items positively impacted the change in net sales by $9.8 million and $3.9 million,
27
respectively. The higher average selling prices were primarily due to the pass-through of higher raw material costs and more favorable product mix. A weaker U.S. dollar relative to the European euro and British pound sterling led to the favorable foreign currency translation effect. Sales volume declined four percent and negatively impacted the change in net sales by $2.6 million. The lower sales volume was primarily due to lower demand for products sold into the commodity laundry and cleaning end markets that was partially offset by the higher demand for products sold into agricultural end markets.
Net sales for Latin American operations increased $7.0 million, or eight percent, primarily due to higher average selling prices that positively impacted the change in net sales by $19.7 million. The higher average selling prices primarily reflect more favorable product mix and the pass-through of higher raw material costs. The unfavorable impact of foreign currency translation and a four percent decrease in sales volume negatively impacted the change in net sales by $9.6 million and $3.2 million, respectively. A stronger U.S. dollar relative to all currencies within the region led to the unfavorable foreign currency translation effect. The lower sales volume was primarily due to lower demand for products sold into the commodity laundry and cleaning end markets that was partially offset by higher demand for products sold into the personal care and agricultural end markets.
Net sales for Asian operations decreased $0.3 million, or two percent, versus the prior year quarter. A seven percent decrease in sales volume negatively impacted the change in net sales by $0.9 million. The lower sales volume was primarily due to lower demand for products sold into the commodity laundry and cleaning end markets that was partially offset by higher sales to our distribution partners. Higher average selling prices and the favorable impact of foreign currency translation positively impacted the year-over-year change in net sales by $0.3 million, each.
Surfactant operating income for the second quarter of 2025 decreased $3.7 million, or 22 percent, versus operating income for the second quarter of 2024. Gross profit was flat year-over-year and operating expenses increased $3.6 million, or 15 percent. Comparisons of gross profit by region and total segment operating expenses and operating income follow:
(Dollars in thousands) |
|
For the Three Months |
|
|
|
|
|
|
|
|||||||
Gross Profit and Operating Income |
|
2025 |
|
|
2024 |
|
|
Increase |
|
|
Percent |
|
||||
North America |
|
$ |
19,311 |
|
|
$ |
20,378 |
|
|
$ |
(1,067 |
) |
|
|
-5 |
|
Europe |
|
|
8,138 |
|
|
|
6,480 |
|
|
|
1,658 |
|
|
|
26 |
|
Latin America |
|
|
10,986 |
|
|
|
11,145 |
|
|
|
(159 |
) |
|
|
-1 |
|
Asia |
|
|
2,361 |
|
|
|
2,884 |
|
|
|
(523 |
) |
|
|
-18 |
|
Surfactants Segment Gross Profit |
|
$ |
40,796 |
|
|
$ |
40,887 |
|
|
$ |
(91 |
) |
|
|
0 |
|
Operating Expenses |
|
|
27,429 |
|
|
|
23,825 |
|
|
|
3,604 |
|
|
|
15 |
|
Surfactants Segment Operating Income |
|
$ |
13,367 |
|
|
$ |
17,062 |
|
|
$ |
(3,695 |
) |
|
|
-22 |
|
Gross profit for North American operations decreased $1.1 million, or five percent, versus the prior year primarily due to lower average unit margins. The lower average unit margins negatively impacted the year-over change in gross profit by $1.5 million and were primarily attributable to higher expenses associated with the start-up of the Company's new alkoxylation facility in Pasadena, Texas, higher Oleochemical raw material costs that the Company plans to recover in the second half of the year, and an environmental remediation reserve adjustment related to the Company's Elwood, Illinois site. A two percent increase in sales volume positively impacted the year-over-year change in gross profit by $0.4 million.
Gross profit for European operations increased $1.7 million, or 26 percent, primarily due to higher average unit margins and the favorable impact of foreign currency translation. These items positively impacted the year-over-year change in gross profit by $1.5 million and $0.4 million, respectively. The higher average unit margins primarily reflect more favorable product mix. A four percent decrease in sales volume negatively impacted the year-over-year change in gross profit by $0.2 million.
Gross profit for Latin American operations decreased $0.2 million, or one percent. Higher average unit margins positively impacted the year-over-year change in gross profit by $1.3 million and reflect a more favorable product mix. The unfavorable impact of foreign currency translation and a four percent decrease in sales volume negatively impacted the change in gross profit by $1.1 million and $0.4 million, respectively.
Gross profit for Asia operations decreased $0.5 million year-over-year due to lower average unit margins and the seven percent decrease in sales volume. These items negatively impacted the year-over-year change in gross profit by $0.3 million and $0.2 million, respectively.
Operating expenses for the Surfactant segment increased $3.6 million, or 15 percent, in the second quarter of 2025 versus the second quarter of 2024. The increase was largely due to a $1.1 million USEPA penalty associated with certain of the Company's biocide products sold by a licensed distributor. The Company is pursuing indemnification claims against two third parties to recover the cost of the penalty. Higher incentive-based compensation and bad debt provision expenses also contributed to this increase.
28
Polymers
Polymers net sales for the second quarter of 2025 increased $3.0 million versus net sales for the same period of 2024. A seven percent increase in sales volume and the favorable impact of foreign currency translation positively impacted the change in net sales by $11.6 million and $3.6 million, respectively. Lower average selling prices negatively impacted the year-over-year change in net sales by $12.2 million. A comparison of net sales by region follows:
(Dollars in thousands) |
|
For the Three Months |
|
|
|
|
|
|
|
|||||||
Net Sales |
|
2025 |
|
|
2024 |
|
|
Increase |
|
|
Percent |
|
||||
North America |
|
$ |
88,251 |
|
|
$ |
79,828 |
|
|
$ |
8,423 |
|
|
|
11 |
|
Europe |
|
|
63,296 |
|
|
|
67,401 |
|
|
|
(4,105 |
) |
|
|
-6 |
|
Asia and Other |
|
|
11,204 |
|
|
|
12,528 |
|
|
|
(1,324 |
) |
|
|
-11 |
|
Total Polymers Segment |
|
$ |
162,751 |
|
|
$ |
159,757 |
|
|
$ |
2,994 |
|
|
|
2 |
|
Net sales for North American operations increased $8.4 million, or 11 percent, primarily due to an 18 percent increase in sales volume that positively impacted the year-over-year change in net sales by $14.2 million. Sales volume of polyols used in rigid foam applications increased three percent year-over-year. Sales volume of commodity phthalic anhydride grew more than double digits primarily due to the market exit of a competitor. Specialty Polyols sales volume declined nine percent year-over-year. Lower average selling prices negatively impacted the year-over-year change in net sales by $5.8 million. The lower average selling prices primarily reflect the pass-through of lower raw material costs and less favorable product mix.
Net sales for European operations decreased $4.1 million, or six percent, year-over-year. This decrease was primarily due to lower average selling prices that negatively impacted the year-over-year change in net sales by $8.2 million. The lower average selling prices were primarily due to the pass-through of lower raw material costs and increased competitive activity. Foreign currency translation favorably impacted the change in net sales by $3.6 million. A one percent increase in sales volume positively impacted the change in net sales by $0.5 million.
Net sales for Asia and Other operations decreased $1.3 million, or 11 percent, primarily due to an 11 percent decrease in sales volume that negatively impacted the change in net sales by $1.3 million. The lower sales volume reflects lower demand for polyols used in rigid foam applications that was partially offset by a higher demand for specialty polyols resulting from the Company's product diversification efforts.
Polymer operating income in the second quarter of 2025 increased $3.6 million, or 26 percent, versus operating income in the second quarter of 2024. Gross profit increased $4.0 million, or 19 percent and operating expenses increased 0.4 million or six percent year-over-year. Comparisons of gross profit by region and total segment operating expenses and operating income follow:
(Dollars in thousands) |
|
For the Three Months |
|
|
|
|
|
|
|
|||||||
Gross Profit and Operating Income |
|
2025 |
|
|
2024 |
|
|
Increase |
|
|
Percent |
|
||||
North America |
|
$ |
13,799 |
|
|
$ |
11,285 |
|
|
$ |
2,514 |
|
|
|
22 |
|
Europe |
|
|
8,773 |
|
|
|
7,556 |
|
|
|
1,217 |
|
|
|
16 |
|
Asia and Other |
|
|
2,055 |
|
|
|
1,805 |
|
|
|
250 |
|
|
|
14 |
|
Polymers Segment Gross Profit |
|
$ |
24,627 |
|
|
$ |
20,646 |
|
|
$ |
3,981 |
|
|
|
19 |
|
Operating Expenses |
|
|
7,468 |
|
|
|
7,049 |
|
|
|
419 |
|
|
|
6 |
|
Polymers Segment Operating Income |
|
$ |
17,159 |
|
|
$ |
13,597 |
|
|
$ |
3,562 |
|
|
|
26 |
|
Gross profit for North American operations increased $2.5 million, or 22 percent, year-over-year. The 18 percent increase in sales volume positively impacted the year-over-year change in gross profit by $2.0 million. Higher average unit margins positively impacted the change in gross profit by $0.5 million. The higher average unit margins were primarily due to the non-recurrence of a phthalic anhydride related catalyst write-off charge and higher expenses incurred at the Company's Millsdale, Illinois site due to operational issues during the second quarter of 2024.
Gross profit for European operations increased $1.2 million, or 16 percent, versus the second quarter of 2024. This increase was primarily due to higher average unit margins and the favorable impact of foreign currency translation. These two items positively impacted the year-over-year change in gross profit by $0.7 million and $0.5 million, respectively.
Gross profit for Asia and Other operations increased $0.3 million, or 14 percent, primarily due to higher average unit margins that positively impacted the change in gross profit by $0.5 million. The higher average unit margins primarily reflect better product mix
29
resulting from the Company's recent diversification efforts. Foreign currency translation negatively impacted the year-over-year change in gross profit by $0.2 million.
Operating expenses for the Polymer segment increased $0.4 million, or six percent, in the second quarter of 2025 versus the second quarter of 2024.
Specialty Products
Specialty Products net sales for the second quarter of 2025 increased $3.6 million, or 22 percent, versus net sales for the second quarter of 2024. This increase was primarily due to higher sales volume. Gross profit and operating income decreased $1.9 million and $2.1 million, respectively, year-over-year. The decrease in gross profit and operating income primarily reflects order timing differences within the pharmaceutical business as typical second quarter sales orders were moved to the second half of the year.
Corporate Expenses
Corporate expenses, which include deferred compensation and other operating expenses that are not allocated to the reportable segments, decreased $1.5 million, or eight percent, year-over-year. Corporate expenses were $17.8 million in the second quarter of 2025 versus $19.3 million in the second quarter of 2024. This decrease was primarily due to the non-recurrence of a $3.5 million expense, related to a criminal social engineering scheme, during the second quarter of 2024. Higher deferred compensation and legacy environmental reserve expenses, which were up $1.4 million and $0.5 million, respectively, partially offset the above.
The $1.4 million year-over-year increase in deferred compensation expense primarily reflects a larger increase in the market value of mutual fund investment assets during the second quarter of 2025 versus the second quarter of 2024. Additionally, the market price of the Company's common stock decreased $0.46 per share in the second quarter of 2025 versus a $6.08 per share decrease in the second quarter of 2024.
The following table presents the quarter-end Company common stock market prices used in the computation of deferred compensation income/expense for the three months ended June 30, 2025 and 2024:
|
|
2025 |
|
|
2024 |
|
|
|||||||||
|
|
June 30 |
|
March 31 |
|
|
June 30 |
|
|
March 31 |
|
|
||||
Company Common Stock Price |
|
$ |
54.58 |
|
$ |
55.04 |
|
|
$ |
83.96 |
|
|
$ |
90.04 |
|
|
Six Months Ended June 30, 2025 and 2024
Summary
Net income in the first half of 2025 was $31.1 million, or $1.36 per diluted share, versus $23.4 million, or $1.02 per diluted share, in the first half of 2024. Adjusted net income was $31.3 million, or $1.37 per diluted share, versus $24.1 million, or $1.05 per diluted share in the first half of 2024 (see the “Reconciliation of Non-GAAP Adjusted Net Income and Diluted Earnings per Share” section of this MD&A for a reconciliation between reported net income and reported earnings per diluted share and non-GAAP adjusted net income and adjusted earnings per diluted share). Earnings before interest, taxes, depreciation and amortization (EBITDA) were $108.6 million in the first half of 2025, up 11 percent, versus $98.0 million in the first half of 2024. Adjusted EBITDA was $108.9 million, up 10 percent, versus $98.9 million in the first half of 2024 (see the "Reconciliation of non-GAAP EBITDA and Adjusted EBITDA" section of this MD&A for a reconciliation between reported operating income and non-GAAP EBITDA and Adjusted EBITDA). Below is a summary discussion of the major factors leading to the changes in net sales, expenses and income in the first half of 2025 compared to the first half of 2024. A detailed discussion of segment operating performance for the first half of 2025, compared to the first half of 2024, follows the summary.
Consolidated net sales increased $80.1 million, or seven percent, year-over-year. Higher average selling prices favorably impacted the year-over-year change in net sales by $72.9 million. The increase in average selling prices was mainly attributable to the pass-through of higher raw material costs and more favorable product mix. Consolidated sales volume increased two percent, which positively impacted the change in net sales by $27.4 million. Surfactant, Polymer and Specialty Products sales volumes increased one percent, seven percent and eight percent, respectively, year-over-year. Foreign currency translation negatively impacted the year-over-year change in net sales by $20.2 million, primarily due to a stronger U.S. dollar against the Mexican peso and Brazilian real.
Operating income in the first half of 2025 increased $7.4 million, or 19 percent, versus operating income in the first half of 2024. Polymer operating income increased $3.2 million year-over-year. Surfactant and Specialty Products operating income decreased $0.8 million each, year-over-year. Corporate expenses, including environmental remediation and deferred compensation expenses decreased $5.9 million, or 16 percent, year-over-year. Corporate expenses, excluding environmental remediation and deferred compensation expenses, decreased $3.5 million, or 10 percent, year-over-year. Foreign currency translation had a $2.0 million unfavorable impact on operating income year-over-year.
30
Operating expenses (including deferred compensation) were essentially flat between years. Changes in the individual income statement line items that comprise the Company’s operating expenses were as follows:
Net interest expense for the first half of 2025 increased $3.9 million, or 68 percent, versus the first half of 2024. This increase was primarily attributable to lower U.S. capitalized interest income recognized in 2025 as the Company's new specialty alkoxylation facility in Pasadena, Texas started up in April 2025.
Other, net was $1.8 million of income in the first half of 2025 versus $3.6 million of income in the first half of 2024. The Company recognized $1.3 million of investment gains (including realized and unrealized gains and losses) for the Company’s deferred compensation and supplemental defined contribution mutual fund assets in the first half of 2025 compared to $3.1 million of investment gains in the first half of 2024. In addition, the Company reported less than $0.1 million of foreign exchange losses in the first half of 2025 versus $0.4 million of foreign exchange losses in the first half of 2024. The Company's net periodic pension income was $0.5 million in the first half of 2025 versus $0.8 million of income in the first half of 2024.
The Company’s effective tax rate was 19.2 percent in the first half of 2025 versus 36.1 percent in the first half of 2024. This decrease was primarily attributable to a favorable tax audit settlement in 2025 combined with the non-recurrence of an unfavorable GILTI-related event in the first half of 2024. These items were partially offset by the expected tax impact of certain cash repatriations to the U.S. In the first six months of 2024, the Company intended to elect bonus depreciation for its new alkoxylation facility in Pasadena, Texas. The Company expected that, as a result of this election, it would lose its ability to use GILTI deduction and related GILTI foreign tax credits for 2024, resulting in a higher effective tax rate than in the first six months of 2025, when the Company did not expect to lose such deduction and foreign tax credits.
Segment Results
(In thousands) |
|
For the Six Months Ended June 30, |
|
|
|
|
|
|
|
|||||||
Net Sales |
|
2025 |
|
|
2024 |
|
|
Increase |
|
|
Percent |
|
||||
Surfactants |
|
$ |
841,793 |
|
|
$ |
770,615 |
|
|
$ |
71,178 |
|
|
|
9 |
|
Polymers |
|
|
308,867 |
|
|
|
305,265 |
|
|
|
3,602 |
|
|
|
1 |
|
Specialty Products |
|
|
37,284 |
|
|
|
31,943 |
|
|
|
5,341 |
|
|
|
17 |
|
Total Net Sales |
|
|
1,187,944 |
|
|
|
1,107,823 |
|
|
|
80,121 |
|
|
|
7 |
|
(In thousands) |
|
For the Six Months Ended June 30, |
|
|
|
|
|
|
|
|||||||
Operating Income |
|
2025 |
|
|
2024 |
|
|
Increase |
|
|
Percent |
|
||||
Surfactants |
|
$ |
42,297 |
|
|
$ |
43,142 |
|
|
$ |
(845 |
) |
|
|
-2 |
|
Polymers |
|
|
25,177 |
|
|
|
21,979 |
|
|
|
3,198 |
|
|
|
15 |
|
Specialty Products |
|
|
10,766 |
|
|
|
11,587 |
|
|
|
(821 |
) |
|
|
-7 |
|
Segment Operating Income |
|
$ |
78,240 |
|
|
$ |
76,708 |
|
|
$ |
1,532 |
|
|
|
2 |
|
Corporate Expenses, Excluding Deferred Compensation |
|
$ |
31,222 |
|
|
$ |
35,699 |
|
|
$ |
(4,477 |
) |
|
|
-13 |
|
Deferred Compensation |
|
|
765 |
|
|
|
2,173 |
|
|
|
(1,408 |
) |
|
|
65 |
|
Total Operating Income |
|
$ |
46,253 |
|
|
$ |
38,836 |
|
|
$ |
7,417 |
|
|
|
19 |
|
31
Surfactants
Surfactant net sales for the first half of 2025 increased $71.2 million versus net sales for the first half of 2024. Higher average selling prices favorably impacted the change in net sales by $88.1 million. The higher average selling prices were mainly attributable to the pass through of higher raw material costs and a more favorable product mix. Sales volume increased one percent and had a $6.7 million favorable impact on the change in net sales. Foreign currency translation had a $23.6 million unfavorable impact on the year-over-year change in net sales. A comparison of net sales by region follows:
(In thousands) |
|
For the Six Months Ended June 30, |
|
|
|
|
|
|
|
|||||||
Net Sales |
|
2025 |
|
|
2024 |
|
|
Increase |
|
|
Percent |
|
||||
North America |
|
$ |
486,099 |
|
|
$ |
450,110 |
|
|
$ |
35,989 |
|
|
|
8 |
|
Europe |
|
|
156,203 |
|
|
|
134,238 |
|
|
|
21,965 |
|
|
|
16 |
|
Latin America |
|
|
173,291 |
|
|
|
161,437 |
|
|
|
11,854 |
|
|
|
7 |
|
Asia |
|
|
26,200 |
|
|
|
24,830 |
|
|
|
1,370 |
|
|
|
6 |
|
Total Surfactants Segment |
|
$ |
841,793 |
|
|
$ |
770,615 |
|
|
$ |
71,178 |
|
|
|
9 |
|
Net sales for North American operations increased $36.0 million, or eight percent, year-over-year. Higher average selling prices had a $23.8 million favorable impact on the change in net sales and were primarily due to the pass-through of higher raw material costs and more favorable product mix. Sales volume increased three percent and positively impacted the change in net sales by $13.0 million. The higher sales volume was primarily due to higher demand for products sold into the agricultural and oilfield end markets and to our distribution partners. Lower demand for products sold into the consumer products end markets partially offset the above. Foreign currency translation negatively impacted the change in net sales by $0.8 million.
Net sales for European operations increased $22.0 million, or 16 percent, primarily due to higher average selling prices which had a $19.5 million positive impact on the change in net sales The higher average selling prices were primarily due to the pass-through of higher raw material costs and more favorable product mix. Slightly higher sales volume had a $0.5 million favorable impact on the year-over-year change in net sales. Higher demand for products sold into the agricultural end markets was largely offset by lower demand for the products sold into the commodity laundry and cleaning end markets. Foreign currency translation favorably impacted the change in net sales by $2.0 million. A weaker U.S. dollar relative to the European euro and British pound sterling led to the favorable foreign currency translation effect.
Net sales for Latin American operations increased $11.9 million, or seven percent, primarily due to higher average selling prices that positively impacted the change in net sales by $41.0 million. The higher average selling prices primarily reflect more favorable product mix and the pass-through of higher raw material costs. Sales volume decreased three percent and negatively impacted the change in net sales by $4.4 million. The decrease in sales volume was primarily due to lower demand for products sold into the commodity laundry and cleaning end markets that was partially offset by higher demand for products sold into the agricultural, industrial cleaning and personal care end markets. A stronger U.S. dollar relative to all currencies within the region led to a $24.7 million unfavorable foreign currency translation effect.
Net sales for Asian operations increased $1.4 million, or six percent, year-over-year. Higher average selling prices and a three percent increase in sales volume positively impacted the change in net sales by $0.8 million and $0.7 million, respectively. The higher sales volume primarily reflects higher demand for products sold to our distribution partners. Foreign currency translation negatively impacted the year-over-year change in net sales by $0.1 million.
Surfactant operating income for the first half of 2025 decreased $0.8 million, or two percent, versus operating income for the first half of 2024. Gross profit increased $3.1 million, or three percent, and operating expenses increased $4.0 million, or eight percent. Comparisons of gross profit by region and total segment operating expenses and operating income follow:
(In thousands) |
|
For the Six Months Ended June 30, |
|
|
|
|
|
|
|
|||||||
Gross Profit and Operating Income |
|
2025 |
|
|
2024 |
|
|
Increase |
|
|
Percent |
|
||||
North America |
|
$ |
45,662 |
|
|
$ |
51,746 |
|
|
$ |
(6,084 |
) |
|
|
-12 |
|
Europe |
|
|
18,844 |
|
|
|
14,802 |
|
|
|
4,042 |
|
|
|
27 |
|
Latin America |
|
|
22,634 |
|
|
|
19,911 |
|
|
|
2,723 |
|
|
|
14 |
|
Asia |
|
|
7,327 |
|
|
|
4,870 |
|
|
|
2,457 |
|
|
|
50 |
|
Surfactants Segment Gross Profit |
|
$ |
94,467 |
|
|
$ |
91,329 |
|
|
$ |
3,138 |
|
|
|
3 |
|
Operating Expenses |
|
|
52,170 |
|
|
|
48,187 |
|
|
|
3,983 |
|
|
|
8 |
|
Surfactants Segment Operating Income |
|
$ |
42,297 |
|
|
$ |
43,142 |
|
|
$ |
(845 |
) |
|
|
-2 |
|
32
Gross profit for North American operations decreased $6.1 million, or 12 percent, versus the prior year primarily due to lower average unit margins. The lower average unit margins negatively impacted the year-over-year change in gross profit by $7.5 million and were primarily attributable to higher expenses associated with the start-up of the Company's new alkoxylation facility in Pasadena, Texas, higher Oleochemical raw material costs that the Company plans to recover in the second half of the year, and an environmental reserve adjustment related to the Company's Elwood, Illinois site. A three percent increase in sales volume positively impacted the year-over-year change in gross profit by $1.5 million. Foreign currency translation negatively impacted the year-over-year change in gross profit by $0.1 million.
Gross profit for European operations increased $4.0 million, or 27 percent, primarily due to higher average unit margins that had a $3.9 million favorable impact on the year-over-year change in gross profit. The higher average unit margins primarily reflect more favorable product mix. Foreign currency translation favorably impacted the year-over-year change in gross profit by $0.1 million.
Gross profit for Latin American operations increased $2.7 million, or 14 percent, primarily due to higher average unit margins. The higher average unit margins positively impacted the year-over-year change in gross profit by $6.5 million and primarily reflect a more favorable product mix. A three percent decrease in sales volume and the unfavorable impact of foreign currency translation negatively impacted the change in gross profit by $0.5 million and $3.3 million, respectively. A stronger U.S. dollar relative to all currencies within the region led to the foreign currency translation effect.
Gross profit for Asia operations increased $2.5 million year-over-year primarily due to higher average unit margins and a three percent increase in sales volume. These items positively impacted the year-over-year change in gross profit by $2.3 million and $0.2 million, respectively.
Operating expenses for the Surfactant segment increased $4.0 million, or eight percent, in the first half of 2025 versus the first half of 2024. The increase was largely due to a $1.1 million EPA penalty associated with the Company's biocide products sold to a licensed distributor along with higher salaries, incentive-based compensation and bad debt provision expenses. The Company is pursuing indemnification claims against two third parties to recover the cost of the EPA penalty.
Polymers
Polymers net sales for the first half of 2025 increased $3.6 million versus net sales for the same period of 2024. A seven percent increase in sales volume and the favorable impact of foreign currency translation positively impacted the change in net sales by $21.7 million and $3.3 million, respectively. Lower average selling prices negatively impacted the year-over-year change in net sales by $21.4 million. A comparison of net sales by region follows:
(In thousands) |
|
For the Six Months Ended June 30, |
|
|
|
|
|
|
|
|||||||
Net Sales |
|
2025 |
|
|
2024 |
|
|
Increase |
|
|
Percent |
|
||||
North America |
|
$ |
161,044 |
|
|
$ |
149,637 |
|
|
$ |
11,407 |
|
|
|
8 |
|
Europe |
|
|
124,438 |
|
|
|
131,278 |
|
|
|
(6,840 |
) |
|
|
-5 |
|
Asia and Other |
|
|
23,385 |
|
|
|
24,350 |
|
|
|
(965 |
) |
|
|
-4 |
|
Total Polymers Segment |
|
$ |
308,867 |
|
|
$ |
305,265 |
|
|
$ |
3,602 |
|
|
|
1 |
|
Net sales for North American operations increased $11.4 million, or eight percent, primarily due to a 16 percent increase in sales volume that positively impacted the year-over-year change in net sales by $23.3 million. Sales volume of polyols used in rigid foam applications increased two percent year-over-year. Sales volume of commodity phthalic anhydride grew more than double digits primarily due to the market exit of a competitor. Specialty Polyols sales volume declined seven percent year-over-year. Lower average selling prices negatively impacted the year-over-year change in net sales by $11.9 million. The lower average selling prices primarily reflect the pass-through of lower raw material costs and less favorable product mix.
Net sales for European operations decreased $6.8 million, or five percent, year-over-year. This decrease was mainly due to lower average selling prices that negatively impacted the year-over-year change in net sales by $12.6 million. The lower average selling prices were primarily due to the pass-through of lower raw material costs and increased competitive activity. Foreign currency translation positively impacted the change in net sales by $3.5 million. A two percent increase in sales volume, driven by a two percent increase in rigid polyols, positively impacted the change in net sales by $2.3 million.
Net sales for Asia and Other operations decreased $1.0 million, or four percent, primarily due to a five percent decrease in sales volume that negatively impacted the year-over-year change in net sales by $1.1 million. The lower sales volume reflects lower demand for polyols used in rigid foam applications that was partially offset by a higher demand for specialty polyols resulting from the Company's product diversification efforts. Higher average selling prices positively impacted the year-over-year change in net sales by $0.3 million. Foreign currency translation negatively impacted the change in net sales by $0.2 million.
33
Polymer operating income in the first half of 2025 increased $3.2 million, or 15 percent, versus operating income in the first half of 2024. Gross profit increased $4.1 million, or 12 percent and operating expenses increased $0.9 million or seven percent year-over-year. Comparisons of gross profit by region and total segment operating expenses and operating income follow:
(In thousands) |
|
For the Six Months Ended June 30, |
|
|
|
|
|
|
|
|||||||
Gross Profit and Operating Income |
|
2025 |
|
|
2024 |
|
|
Increase |
|
|
Percent |
|
||||
North America |
|
$ |
18,435 |
|
|
$ |
15,928 |
|
|
$ |
2,507 |
|
|
|
16 |
|
Europe |
|
|
16,755 |
|
|
|
16,578 |
|
|
|
177 |
|
|
|
1 |
|
Asia and Other |
|
|
4,657 |
|
|
|
3,216 |
|
|
|
1,441 |
|
|
|
45 |
|
Polymers Segment Gross Profit |
|
$ |
39,847 |
|
|
$ |
35,722 |
|
|
$ |
4,125 |
|
|
|
12 |
|
Operating Expenses |
|
|
14,670 |
|
|
|
13,743 |
|
|
|
927 |
|
|
|
7 |
|
Polymers Segment Operating Income |
|
$ |
25,177 |
|
|
$ |
21,979 |
|
|
$ |
3,198 |
|
|
|
15 |
|
Gross profit for North American operations increased $2.5 million, or 16 percent, year-over-year. The 16 percent increase in sales volume positively impacted the year-over-year change in gross profit by $2.5 million. Average unit margins were flat year-over-year.
Gross profit for European operations increased $0.2 million, or one percent, versus the first half of 2024. This increase was primarily due to the favorable impact of foreign currency translation and a two percent increase in sales volume. These items positively impacted the year-over-year change in gross profit by $0.4 million and $0.3 million, respectively. Lower average unit margins negatively impacted the year-over-year change in gross profit by $0.5 million.
Gross profit for Asia and Other operations increased $1.4 million, or 45 percent, primarily due to higher average unit margins that positively impacted the change in gross profit by $1.6 million. The higher average unit margins mostly reflect better product mix resulting from the Company's diversification efforts. A five percent decrease in sales volume and the unfavorable impact of foreign currency translation negatively impacted the year-over-year change in gross profit by $0.1 million each.
Operating expenses for the Polymer segment increased $0.9 million, or seven percent, year-over-year.
Specialty Products
Specialty Products net sales for the first half of 2025 increased $5.3 million, or 17 percent, versus net sales for the first half of 2024. The increase was primarily due to higher average selling prices and an eight percent increase in sales volume. Gross profit and operating income decreased $0.6 million and $0.8 million, respectively, year-over-year. The decrease in gross profit and operating income was primarily due to order timing differences within the pharmaceutical business.
Corporate Expenses
Corporate expenses, which include deferred compensation and other operating expenses that are not allocated to the reportable segments, decreased $5.9 million, or 16 percent, year-over-year. Corporate expenses were $32.0 million in the first half of 2025 versus $37.9 million in the first half of 2024. This decrease was primarily due to the non-recurrence of a $3.5 million expense related to a criminal social engineering scheme during the second quarter of 2024. In addition, deferred compensation and legacy environmental reserve expenses were down $1.4 million and $1.0 million, respectively, year-over-year.
The $1.4 million decrease in deferred compensation expense primarily reflects a smaller increase in the market value of mutual fund investment assets during the first half of 2025 versus the prior year.
The following table presents the period-end Company common stock market prices used in the computation of deferred compensation income/expense for the six months ended June 30, 2025 and 2024:
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||||||
|
|
June 30 |
|
|
December 31 |
|
|
June 30 |
|
|
December 31 |
|
||||
Company Common Stock Price |
|
$ |
54.58 |
|
|
$ |
64.70 |
|
|
$ |
83.96 |
|
|
$ |
94.55 |
|
34
LIQUIDITY AND CAPITAL RESOURCES
Overview
For the six months ended June 30, 2025, operating activities were a cash source of $18.1 million versus a cash source of $71.1 million for the comparable period in 2024. For the first six months of 2025, investing cash outflows totaled $51.5 million versus cash outflows of $54.0 million in the prior year period. Financing activities were a cash source of $13.3 million versus a cash use of $16.0 million in the prior year period.
Cash and cash equivalents decreased $10.8 million compared to December 31, 2024, inclusive of a $9.3 million favorable foreign exchange rate impact. On June 30, 2025, the Company's cash and cash equivalents totaled $88.9 million. Cash in U.S. money market funds, which were rated AAAm by Standard and Poor’s, and Aaa-mf by Moody’s, totaled $2.0 million and cash in U.S. demand deposit accounts totaled $2.2 million. The Company’s non-U.S. subsidiaries held $84.7 million of cash and cash equivalents as of June 30, 2025.
Operating Activities
Net income during the first six months of 2025 increased $7.6 million versus the comparable period in 2024. Working capital was a cash use of $74.7 million during the first six months of 2025 versus a cash use of $15.5 million in the comparable period in 2024.
Accounts receivable were a cash use of $31.8 million during the first six months of 2025 compared to a cash use of $27.3 million for the comparable period in 2024. Inventories were a cash use of $30.7 million in 2025 versus a cash use of $9.7 million in 2024. Accounts payable and accrued liabilities were a cash use of $1.6 million in 2025 compared to a cash source of $26.6 million for the same period in 2024.
Working capital requirements were higher in the first six months of 2025 compared to 2024 primarily due to the changes noted above. The change in accounts receivable working capital primarily reflects higher sales volume and higher selling prices due to the pass through of higher raw material costs. The change in inventories primarily reflects higher quantities to support business growth and in anticipation of tariffs. The Company also built inventory to provide safety stock in advance of the hurricane season and in preparation for negotiating a new collective bargaining agreement at the Millsdale, Illinois site. The change in inventories was also impacted by higher unit costs during the first six months of 2025 versus the prior year. The change in accounts payable and accrued liabilities reflects lower cash outlays in 2024 due to lower incentive-based compensation, tax and other year-end obligations linked to lower 2023 earnings. It is management’s opinion that the Company’s liquidity is sufficient to provide for potential increases in working capital requirements during 2025.
Investing Activities
Cash used for investing activities decreased $2.6 million year-over-year. Cash used for capital expenditures was $58.3 million in the first six months of 2025 versus $59.9 million in the same period of 2024.
For 2025, the Company estimates that total capital expenditures will be in the range of $120.0 million to $125.0 million.
Financing Activities
Cash flow from financing activities was a source of $13.3 million in 2025 versus a use of $16.0 million in 2024. The year-over-year change was primarily due to the issuance of $75.0 million of senior unsecured notes in the first half of 2025, the proceeds of which were partially used to pay scheduled principal debt repayments and repay borrowings against the Company's revolving credit facility.
The Company purchases shares of its common stock in the open market or from its benefit plans from time to time to fund its own benefit plans and to mitigate the dilutive effect of new shares issued under its compensation plans. The Company may, from time to time, seek to purchase additional amounts of its outstanding equity and/or retire debt securities through cash purchases and/or exchanges for other securities, in open market purchases, privately negotiated transactions or otherwise, including pursuant to plans meeting the requirements of Rule 10b5-1 promulgated by the SEC. Such repurchases or exchanges, if any, will depend on prevailing market conditions, the Company’s liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. The Company did not purchase any shares of its common stock on the open market during the six months ended June 30, 2025. At June 30, 2025, the Company had $125.1 million remaining under the share repurchase program authorized by its Board of Directors.
Debt and Credit Facilities
Consolidated balance sheet debt increased $32.6 million, from $625.4 million on December 31, 2024 to $658.0 million on June 30, 2025, primarily due to the issuance of $75.0 million of senior unsecured notes. On May 21, 2025, pursuant to a note purchase and private shelf agreement dated as of June 10, 2021, Stepan issued and sold $37.5 million in aggregate principal amount of its 6.17% Senior Notes, Series 2025-A, due May 21, 2033 (the Series 2025-A Notes). On May 21, 2025, pursuant to a note purchase and master note agreement dated as of June 10, 2021, Stepan issued and sold $37.5 million in aggregate principal amount of its 6.17% Senior Notes, Series 2025-B, due May 21, 2033 (together with the Series 2025-A Notes, the Notes). The Notes will bear interest at a fixed rate of
35
6.17% with interest to be paid semi-annually. Principal amortization for the Notes is contractually scheduled with equal annual payments beginning on May 21, 2029 and on each May 21 thereafter to and including May 21, 2032, with the final outstanding principal balance due at maturity on May 21, 2033.
Net debt (which is defined as total debt minus cash – see the “Reconciliation of Non-GAAP Net Debt” section of this MD&A) was $569.1 million on June 30, 2025 versus $525.7 million at December 31, 2024. As of June 30, 2025, the ratio of net debt to net debt plus shareholders’ equity was 31.4 percent versus 31.0 percent at December 31, 2024 (see the “Reconciliation of Non-GAAP Net Debt” section in this MD&A for further details). On June 30, 2025, the Company’s debt included $362.5 million of unsecured notes, with maturities ranging from 2025 through 2033, that were issued to insurance companies in private placement transactions pursuant to note purchase agreements, an $87.5 million delayed-draw term loan borrowed pursuant to the Company’s credit agreement, $205.5 million of short-term loans borrowed under the Company’s revolving credit facility and $2.5 million of foreign credit line borrowings. As of June 30, 2025, the Company had outstanding letters of credit of $13.6 million, inclusive of $4.9 million issued under the Company’s revolving credit facility. The proceeds from the note issuances have been the Company’s primary source of long-term debt financing and are supplemented by borrowings under bank credit facilities to meet short and medium-term liquidity needs.
The Company’s credit agreement (the Credit Agreement) with a syndicate of banks provides for credit facilities in an initial aggregate principal amount of $450.0 million, consisting of (a) a $350.0 million multi-currency revolving credit facility and (b) a $100.0 million delayed draw term loan credit facility ($12.5 million of the term loan principal has been permanently repaid as scheduled), each of which matures on June 24, 2027. The Company's credit agreement with Credit Industriel et Commercial NY (the CIC Credit Agreement) provides for a credit facility in an aggregate principal amount of $8.7 million. The facility is for the sole purpose of the issuance of standby letters of credit. As of June 30, 2025, the Company had outstanding letters of credit totaling $8.7 million under the CIC Credit Agreement. The Company also maintains import and export letters of credit and standby letters of credit under its workers’ compensation insurance agreements and for other purposes, as needed from time to time, which are issued under the Credit Agreement. These outstanding letters of credit totaled $4.9 million at June 30, 2025.
The Company anticipates that cash from operations, committed credit facilities and cash on hand will be sufficient to fund anticipated capital expenditures, working capital, dividends and other planned financial commitments for the foreseeable future.
Certain foreign subsidiaries of the Company maintain short-term bank lines of credit in their respective local currencies to meet working capital requirements as well as to fund capital expenditures and acquisitions. At June 30, 2025, the Company’s foreign subsidiaries had $2.5 million of outstanding debt.
The Company is subject to covenants under its material debt agreements that require the maintenance of minimum interest coverage and minimum net worth. These debt covenants also limit the incurrence of additional debt as well as the payment of dividends and repurchase of shares. Under the most restrictive of these debt covenants:
|
1. |
The Company is required to maintain a minimum interest coverage ratio, as defined within the agreements, of 3.50 to 1.00, for the preceding four calendar quarters. |
|
2. |
The Company is required to maintain an existing maximum net leverage ratio, as defined within the agreements, not to exceed 3.50 to 1.00. |
|
3. |
The Company is required to maintain net worth of at least $750.0 million. |
|
4. |
The Company is permitted to pay dividends and purchase treasury shares after June 24, 2022, in amounts of up to $100.0 million plus 100 percent of net income and cash proceeds of stock option exercises, measured cumulatively beginning January 1, 2022. The maximum amount of dividends that could have been paid within this limitation is disclosed as unrestricted retained earnings in Note 14, Debt, of the notes to the Company’s condensed consolidated financial statements (included in Item 1 of this Form 10-Q). |
The Company believes it was in compliance with the covenants under its material debt agreements as of June 30, 2025.
ENVIRONMENTAL AND LEGAL MATTERS
The Company’s operations are subject to extensive federal, state and local environmental laws and regulations and similar laws in the other countries in which the Company does business. Although the Company's environmental policies and practices are designed to ensure compliance with these laws and regulations, future developments and increasingly stringent environmental regulation may require the Company to make additional unforeseen environmental expenditures. The Company will continue to invest in the equipment and facilities necessary to comply with existing and future regulations. During the first six months of 2025 and 2024, the Company’s expenditures for capital projects related to environmental matters were $4.4 million and $3.6 million, respectively. These projects are capitalized and depreciated over their estimated useful lives, which are typically 10 years. Recurring costs associated with the operation and maintenance of facilities for waste treatment and disposal and managing environmental compliance in ongoing operations at the
36
Company’s manufacturing locations were $21.1 million and $28.6 million for the six months ended June 30, 2025 and 2024, respectively.
Over the years, the Company has received requests for information related to or has been named by the government as a potentially responsible party at a number of waste disposal sites where cleanup costs have been or may be incurred under CERCLA and similar state or foreign statutes. In addition, the Company is from time to time involved in routine legal proceedings incidental to the conduct of its business, including personal injury, property damage, tax, trade and labor matters. The Company believes that it has made adequate provisions for the costs it is likely to incur with respect to these claims. It is the Company’s accounting policy to record liabilities when environmental assessments, remediation expenses or legal proceeding losses are probable, and the cost or range of possible costs can be reasonably estimated. When no amount within the range is a better estimate than any other amount, the minimum is accrued. Estimating the possible costs of environmental remediation requires making assumptions related to the nature and extent of contamination and the methods and resulting costs of remediation. Some of the factors on which the Company bases its estimates include information provided by decisions rendered by State and Federal environmental regulatory agencies, information provided by feasibility studies, and remedial action plans developed. After partial remediation payments at certain sites, the Company has estimated a range of possible environmental and legal losses of $19.5 million to $44.9 million at June 30, 2025 and $20.0 million to $44.5 million at December 31, 2024. Within the range of possible environmental and legal losses, management has currently concluded that no single amount is more likely to occur than any other amounts in the range and, thus, has accrued at the lower end of the range. In the second quarter of 2025, the Company accrued an additional $1.8 million for remediation expenses at the Company's Elwood, Illinois (Millsdale) facility due to a change in the scope of planned remediation activities. The Company's environmental and legal accruals totaled $19.5 million at June 30, 2025 and $20.0 million at December 31, 2024. Because the liabilities accrued are estimates, actual amounts could differ materially from the amounts reported. Cash expenditures related to environmental remediation and certain other legal matters approximated $3.4 million for the six months ended June 30, 2025, compared to $2.0 million for the same period in 2024.
For certain sites, the Company has responded to information requests made by federal, state or local government agencies but has received no response confirming or denying the Company’s stated positions. As such, estimates of the total costs, or range of possible costs, of remediation, if any, or the Company’s share of such costs, if any, cannot be determined with respect to these sites. Consequently, the Company is unable to predict the effect thereof on the Company’s financial position, cash flows and results of operations. Based on the Company’s present knowledge with respect to its involvement at these sites, the possibility of other viable entities’ responsibilities for cleanup, and the extended period over which any costs would be incurred, management believes that the Company has no material liability at these sites and that these matters, individually and in the aggregate, will not have a material effect on the Company’s financial position. Certain of these matters are discussed in Item 1, Part 2, of the Company’s Annual Report on Form 10-K, Legal Proceedings, in this report and in other filings of the Company with the SEC, which are available upon request from the Company. See also Note 8, Contingencies, in the notes to the Company’s condensed consolidated financial statements (included in Item 1 of this Form 10-Q) for a summary of the significant environmental proceedings related to certain sites.
CRITICAL ACCOUNTING POLICIES
There have been no material changes to the critical accounting policies disclosed in the Company’s 2024 Annual Report on Form 10-K.
NON-GAAP RECONCILIATIONS
The Company believes that certain non-GAAP measures, when presented in conjunction with comparable GAAP measures, are useful for evaluating the Company’s performance and financial condition. Internally, the Company uses this non-GAAP information as an indicator of business performance and evaluates management’s effectiveness with specific reference to these indicators. Management uses these non-GAAP financial measures to assist in analyzing what management views as the Company’s core operating performance for purposes of business decision making. Management believes that presenting these non-GAAP financial measures provides investors with useful supplemental information because they (i) provide meaningful supplemental information regarding financial performance by excluding items affecting comparability between periods, (ii) permit investors to view performance using the same tools that management uses to budget, make operating and strategic decisions and evaluate the Company’s core operating performance across periods, and (iii) otherwise provide supplemental information that may be useful to investors in evaluating the Company’s financial results. In addition, the Company believes that the presentation of these non-GAAP financial measures, when considered together with the most directly comparable GAAP financial measures and the reconciliations to those GAAP financial measures, provides investors with additional tools to understand the factors and trends affecting the Company’s underlying business than could be obtained absent these disclosures. These measures should be considered in addition to, not as substitutes for or superior to, measures of financial performance prepared in accordance with GAAP and there are limitations to using non-GAAP financial measures. For example, the non-GAAP financial measures presented in this Form 10-Q may differ from similarly titled non-GAAP financial measures presented by other companies and other companies may not define these non-GAAP financial measures the same way as the Company does.
37
Reconciliations of Non-GAAP Adjusted Net Income and Diluted Earnings per Share
Management uses the non-GAAP adjusted net income metric to evaluate the Company’s operating performance. Management excludes the items listed in the table below because they are non-operational items. The cumulative tax effect was calculated using the statutory tax rates for the jurisdictions in which the transactions occurred.
|
|
Three Months Ended |
|
|||||||||||||
(In millions, except per share amounts) |
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||||||||||
|
|
Net Income |
|
|
Diluted EPS |
|
|
Net Income |
|
|
Diluted EPS |
|
||||
Net Income Attributable to the Company as Reported |
|
$ |
11.3 |
|
|
$ |
0.50 |
|
|
$ |
9.5 |
|
|
$ |
0.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred Compensation (Income) Expense (including |
|
|
0.1 |
|
|
|
— |
|
|
|
(0.4 |
) |
|
|
(0.01 |
) |
Environmental Remediation Expense |
|
|
0.7 |
|
|
|
0.02 |
|
|
|
0.2 |
|
|
|
— |
|
Cumulative Tax Effect on Above Adjustment Items |
|
|
(0.1 |
) |
|
|
— |
|
|
|
0.1 |
|
|
|
— |
|
Adjusted Net Income |
|
$ |
12.0 |
|
|
$ |
0.52 |
|
|
$ |
9.4 |
|
|
$ |
0.41 |
|
|
|
Six Months Ended |
|
|||||||||||||
(In millions, except per share amounts) |
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||||||||||
|
|
Net Income |
|
|
Diluted EPS |
|
|
Net Income |
|
|
Diluted EPS |
|
||||
Net Income Attributable to the Company as Reported |
|
$ |
31.1 |
|
|
$ |
1.36 |
|
|
$ |
23.4 |
|
|
$ |
1.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred Compensation (Income) Expense (including |
|
|
(0.5 |
) |
|
|
(0.02 |
) |
|
|
(0.9 |
) |
|
|
(0.04 |
) |
Environmental Remediation Expense |
|
|
0.8 |
|
|
|
0.03 |
|
|
|
1.8 |
|
|
|
0.08 |
|
Cumulative Tax Effect on Above Adjustment Items |
|
|
(0.1 |
) |
|
|
— |
|
|
|
(0.2 |
) |
|
|
(0.01 |
) |
Adjusted Net Income |
|
$ |
31.3 |
|
|
$ |
1.37 |
|
|
$ |
24.1 |
|
|
$ |
1.05 |
|
Reconciliations of Non-GAAP EBITDA and Adjusted EBITDA
Management uses the non-GAAP EBITDA and adjusted EBITDA metric to evaluate the Company's operating performance. Management excludes the items listed in the table below because they are non-operational items. Refer to the Company's Condensed Consolidated Statements of Income for a bridge between Operating Income and Net Income.
|
|
For the Three Months |
|
|||||
($ in millions) |
|
2025 |
|
|
2024 |
|
||
Operating Income |
|
$ |
18.0 |
|
|
$ |
18.7 |
|
Depreciation and Amortization |
|
|
31.3 |
|
|
|
28.0 |
|
Other, Net Income |
|
|
1.3 |
|
|
|
1.2 |
|
EBITDA |
|
$ |
50.6 |
|
|
$ |
47.9 |
|
Deferred Compensation |
|
|
0.1 |
|
|
|
(0.4 |
) |
Environmental Remediation |
|
|
0.7 |
|
|
|
0.2 |
|
Adjusted EBITDA |
|
$ |
51.4 |
|
|
$ |
47.7 |
|
|
|
For the Six Months |
|
|||||
($ in millions) |
|
2025 |
|
|
2024 |
|
||
Operating Income |
|
$ |
46.3 |
|
|
$ |
38.8 |
|
Depreciation and Amortization |
|
|
60.5 |
|
|
|
55.6 |
|
Other, Net Income |
|
|
1.8 |
|
|
|
3.6 |
|
EBITDA |
|
$ |
108.6 |
|
|
$ |
98.0 |
|
Deferred Compensation |
|
|
(0.5 |
) |
|
|
(0.9 |
) |
Environmental Remediation |
|
|
0.8 |
|
|
|
1.8 |
|
Adjusted EBITDA |
|
$ |
108.9 |
|
|
$ |
98.9 |
|
38
Reconciliations of Non-GAAP Net Debt
Management uses the non-GAAP net debt metric to show a more complete picture of the Company’s overall liquidity, financial flexibility and leverage level.
(In millions) |
|
June 30, |
|
|
December 31, |
|
||
Current Maturities of Long-Term Debt as Reported |
|
$ |
274.8 |
|
|
$ |
292.8 |
|
Long-Term Debt as Reported |
|
|
383.2 |
|
|
|
332.6 |
|
Total Debt as Reported |
|
|
658.0 |
|
|
|
625.4 |
|
Less Cash and Cash Equivalents as Reported |
|
|
(88.9 |
) |
|
|
(99.7 |
) |
Net Debt |
|
$ |
569.1 |
|
|
$ |
525.7 |
|
Equity |
|
$ |
1,241.7 |
|
|
$ |
1,169.9 |
|
Net Debt plus Equity |
|
$ |
1,810.8 |
|
|
$ |
1,695.6 |
|
Net Debt/Net Debt plus Equity |
|
|
31 |
% |
|
|
31 |
% |
39
Item 3 – Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes to the market risks described in the Company’s 2024 Annual Report on Form 10-K.
Item 4 – Controls and Procedures
We have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of June 30, 2025. Based on this evaluation of our disclosure controls and procedures, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of June 30, 2025, such that the information required to be disclosed in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Exchange Act and is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.
There were no changes in the Company’s internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Part II OTHER INFORMATION
Item 1 – Legal Proceedings
SEC regulations require the Company to disclose certain information about administrative or judicial proceedings involving certain environmental matters to which a governmental authority is a party if the Company reasonably believes that such proceedings may result in monetary sanctions above a specified threshold. Pursuant to SEC regulations, the Company has adopted a threshold of $1.0 million for purposes of determining whether disclosure of any such proceedings is required. The Company believes that this threshold is reasonably designed to result in disclosure of any such proceedings that are material to its business or financial condition.
Developments in the Company's legal proceedings are described below:
On March 19, 2025, the Company received a pre-filing notice from USEPA for violations of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) associated with certain of the Company’s biocide products sold by a licensed distributor. USEPA assessed a civil penalty of $1.1 million, which the Company paid on July 2, 2025. The Company is pursuing indemnification claims against two third parties to recover the cost of the penalty.
There have been no other material changes to the legal proceedings disclosed in the Company’s 2024 Annual Report on Form 10-K and in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2025.
Item 1A – Risk Factors
There have been no material changes to the risk factors disclosed in the Company’s 2024 Annual Report on Form 10-K.
40
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds
Below is a summary by month of share purchases by the Company during the second quarter of 2025:
Month |
|
Total Number |
|
|
|
Average Price |
|
|
Total Number of |
|
|
Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs (1) |
|
||||
April 2025 |
|
|
300 |
|
(2) |
|
$ |
47.42 |
|
|
|
— |
|
|
$ |
125,050,905 |
|
May 2025 |
|
|
7,649 |
|
(3) |
|
$ |
54.73 |
|
|
|
— |
|
|
$ |
125,050,905 |
|
June 2025 |
|
|
281 |
|
(4) |
|
$ |
53.46 |
|
|
|
— |
|
|
$ |
125,050,905 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
|
8,230 |
|
|
|
$ |
54.42 |
|
|
|
— |
|
|
$ |
125,050,905 |
|
Item 3 – Defaults Upon Senior Securities
None
Item 4 – Mine Safety Disclosures
Not applicable
Item 5 – Other Information
During the three months ended June 30, 2025, no director or officer of the Company
Item 6 – Exhibits
Exhibit No. |
|
Description |
||
|
|
|
||
31.1 |
– |
Certification of President and Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a)/15d-14(a) |
||
|
|
|
||
31.2 |
– |
Certification of Vice President and Chief Financial Officer pursuant to Exchange Act Rule 13a- 14(a)/15d-14(a) |
||
|
|
|
||
32 |
– |
Certification pursuant to 18 U.S.C. Section 1350 |
||
|
|
|
||
101.INS |
– |
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
||
|
|
|
||
101.SCH |
– |
Inline XBRL Taxonomy Extension Schema with Embedded Linkbases Document |
||
|
|
|
||
104 |
– |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
||
|
|
|
||
41
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
STEPAN COMPANY |
Date: August 6, 2025
/s/ Ruben Velasquez |
Ruben Velasquez |
Vice President and Chief Financial Officer |
42
