Stepan (NYSE:SCL) Posts Quarterly Earnings Results, Beats Expectations By $0.21 EPS

Key Points

• Stepan beat quarterly expectations: EPS was $0.94 versus the $0.73 consensus, while revenue reached $692.15 million, up 17.3% year over year and above estimates of $634.30 million.
• Operational performance improved broadly: Adjusted EBITDA rose 18% to $66.3 million, supported by 7% organic volume growth, stronger surfactants and specialty-products results, and productivity savings.
• Cost savings and deleveraging advanced, but cash flow remained pressured: Project Catalyst savings are ahead of plan and net leverage fell to 2.4 times, while free cash flow was limited to $8 million due to working-capital needs and weakness in Europe, China, and agricultural demand.

Stepan (NYSE:SCL - Get Free Report) issued its quarterly earnings data on Wednesday. The basic materials company reported $0.94 EPS for the quarter, beating the consensus estimate of $0.73 by $0.21, FiscalAI reports. The business had revenue of $692.15 million for the quarter, compared to analysts' expectations of $634.30 million. During the same quarter in the prior year, the company posted $0.48 EPS. The business's revenue for the quarter was up 17.3% on a year-over-year basis.

Here are the key takeaways from Stepan's conference call:

• Third-quarter adjusted EBITDA rose 18% to $66.3 million, while adjusted EPS nearly doubled to $0.94, supported by 7% organic volume growth, margin recovery, and productivity savings across all three segments.
• Surfactants led performance with adjusted EBITDA up 27%, while Specialty Products benefited from 20% volume growth in MCT products and North American Polymers delivered double-digit volume growth.
• Project Catalyst savings are running ahead of plan, with a $23 million quarterly run rate and expectations to exceed the 2026 savings target; management also expects to surpass $25 million in average quarterly savings during 2027.
• Stepan improved net leverage to 2.4 times and expects continued deleveraging, aided by $28.5 million of land-sale proceeds earmarked for debt repayment; management also raised the quarterly dividend for the 59th consecutive year.
• Free cash flow was only $8 million despite stronger earnings because working capital absorbed $32 million, while Europe and China remained weak in Polymers, crop productivity demand softened, and ongoing raw-material volatility and maintenance costs remain headwinds.

Stepan Trading Up 1.5%

Shares of NYSE SCL traded up $1.00 during trading on Wednesday, reaching $66.21. 136,785 shares of the company traded hands, compared to its average volume of 158,313. The firm's fifty day simple moving average is $62.67 and its 200 day simple moving average is $56.61. The stock has a market cap of $1.51 billion, a P/E ratio of -549.12 and a beta of 0.94. Stepan has a 12-month low of $41.82 and a 12-month high of $70.00.

Wall Street Analyst Weigh In

A number of research analysts have issued reports on the stock. Wall Street Zen raised shares of Stepan from a "hold" rating to a "buy" rating in a report on Saturday, August 8th. Seaport Research Partners reissued a "buy" rating and set a $85.00 price objective on shares of Stepan in a report on Friday, August 7th. Zacks Research raised Stepan from a "hold" rating to a "strong-buy" rating in a research report on Tuesday, September 29th. Finally, Weiss Ratings reissued a "sell (d+)" rating on shares of Stepan in a research report on Tuesday. One investment analyst has rated the stock with a Strong Buy rating and one has given a Sell rating to the company's stock. According to data from MarketBeat, Stepan presently has a consensus rating of "Moderate Buy".

Stepan Company Profile

Stepan Company NYSE: SCL is a global manufacturer of specialty and intermediate chemicals. Founded in 1932 and headquartered in Northfield, Illinois, the company develops products used by manufacturers in consumer and industrial markets.

Stepan's principal products include surfactants, which are used in detergents, cleaners, personal-care products, agricultural formulations and other applications. The company also produces polyurethane polyols, phthalic anhydride and other specialty chemicals used in insulation, construction materials, coatings, plastics, food packaging and related industrial products.

Stepan serves customers across North America, Latin America, Europe and Asia through a network of manufacturing facilities, research and development operations, and sales organizations.

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