Stepan (NYSE:SCL) Posts Earnings Results, Beats Estimates By $0.57 EPS

Key Points

• Stepan beat quarterly expectations: EPS was $1.18 versus the $0.61 consensus, while revenue rose 15% year over year to $684.11 million, above estimates of $635.85 million.
• Operating performance improved significantly: Adjusted EBITDA increased 45% to $74.4 million, supported by organic volume growth, margin recovery and early Project Catalyst savings. Management expects more than $60 million in pretax savings from the project in 2026.
• Shares rose 6.6%, but challenges remain: Stepan reported negative free cash flow after a major working-capital investment, plans to cut about 100 salaried jobs and expects $75 million–$80 million in 2026 restructuring charges. Wall Street’s average rating remains “Reduce.”

Stepan (NYSE:SCL - Get Free Report) announced its quarterly earnings results on Wednesday. The basic materials company reported $1.18 earnings per share (EPS) for the quarter, beating the consensus estimate of $0.61 by $0.57, FiscalAI reports. Stepan had a negative net margin of 0.61% and a positive return on equity of 2.65%. The company had revenue of $684.11 million during the quarter, compared to analyst estimates of $635.85 million. During the same quarter in the previous year, the business earned $0.52 EPS. The firm's revenue was up 15.0% on a year-over-year basis.

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

• Strong second-quarter performance: Adjusted EBITDA rose 45% to $74.4 million, while adjusted EPS more than doubled to $1.18, supported by 6% organic volume growth, margin recovery, and early Project Catalyst savings.
• Surfactants and Polymers both delivered higher earnings, with organic volumes up 7% and 5%, respectively. North American Polymers benefited from strong Rigid Polyols and Phthalic Anhydride demand, including spray-foam volumes that tripled from a small base.
• Project Catalyst remains on track: Management expects more than $60 million of pretax savings in 2026 and estimates quarterly savings could reach a $22 million run rate by year-end, while Pasadena has reached roughly 75%–80% of targeted production.
• Free cash flow was negative $15 million after a $58 million working-capital investment tied to higher raw-material costs and sales; management also cautioned that an estimated $5 million–$10 million of EBITDA benefited from customer pre-buying and that special maintenance turnarounds could reduce second-half EBITDA by $4 million–$5 million.
• The company plans to eliminate approximately 100 salaried positions in the third quarter and expects total 2026 restructuring charges of $75 million–$80 million, although management reiterated its expectation for full-year adjusted EBITDA growth, positive free cash flow, and continued deleveraging.

Stepan Stock Up 6.6%

SCL stock traded up $3.81 during trading hours on Wednesday, reaching $61.82. 185,327 shares of the stock were exchanged, compared to its average volume of 162,992. The firm's 50-day moving average is $54.85 and its 200-day moving average is $53.62. Stepan has a 12 month low of $41.82 and a 12 month high of $68.00. The company has a market cap of $1.40 billion, a price-to-earnings ratio of -99.89 and a beta of 0.95. The company has a debt-to-equity ratio of 0.28, a current ratio of 1.26 and a quick ratio of 0.86.

Wall Street Analyst Weigh In

SCL has been the topic of several recent analyst reports. Zacks Research upgraded Stepan from a "strong sell" rating to a "hold" rating in a report on Monday, July 6th. Weiss Ratings cut Stepan from a "sell (d+)" rating to a "sell (d)" rating in a report on Monday, May 11th. One analyst has rated the stock with a Hold rating and one has given a Sell rating to the company. According to MarketBeat, the company has an average rating of "Reduce".

Hedge Funds Weigh In On Stepan

Several hedge funds have recently made changes to their positions in the business. Royal Bank of Canada lifted its position in shares of Stepan by 8.3% in the first quarter. Royal Bank of Canada now owns 11,211 shares of the basic materials company's stock worth $617,000 after purchasing an additional 859 shares in the last quarter. AQR Capital Management LLC acquired a new stake in Stepan in the 1st quarter valued at $818,000. MIRAE ASSET GLOBAL ETFS HOLDINGS Ltd. lifted its position in Stepan by 4.6% during the 1st quarter. MIRAE ASSET GLOBAL ETFS HOLDINGS Ltd. now owns 12,701 shares of the basic materials company's stock worth $699,000 after buying an additional 555 shares in the last quarter. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC boosted its stake in shares of Stepan by 4.3% during the 1st quarter. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC now owns 66,301 shares of the basic materials company's stock worth $3,649,000 after buying an additional 2,707 shares during the last quarter. Finally, Hsbc Holdings PLC bought a new position in shares of Stepan in the 2nd quarter valued at about $495,000. 82.70% of the stock is owned by institutional investors.

About Stepan

Stepan Company is a global manufacturer of specialty and intermediate chemicals, primarily known for its development and production of surfactants and related specialty products. The company's portfolio includes a wide range of ingredients used to enhance the performance of consumer and industrial formulations, such as emulsifiers, foam control agents, odor control agents, antimicrobial products and performance additives. These products are integral components in cleaning solutions, personal care items, agrochemical formulations, coatings, oilfield treatments and polymer systems.

Serving a diverse set of end-markets, Stepan's offerings address both consumer-facing and industrial applications.

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