Stepan Q2 Earnings Call Highlights

Stepan NYSE: SCL reported higher second-quarter earnings as broad-based volume growth, margin recovery and early savings from its Project Catalyst program lifted results, while management cautioned that some demand may have been pulled forward amid geopolitical and raw-material uncertainty.

Reported net income for the second quarter of 2026 was $22.9 million, or $1.00 per diluted share, compared with $11.3 million, or $0.50 per share, a year earlier. Adjusted net income increased to $27.1 million, or $1.18 per diluted share, from $12 million, or $0.52 per share, in the prior-year period.

Net sales rose 15% year over year to $684 million. President and Chief Executive Officer Luis Rojo said higher selling prices, increased volumes, favorable product and customer mix, and favorable currency translation contributed to the sales increase.

Adjusted EBITDA rose 45% to $74.4 million, while organic volume increased 6% across the company.

Rojo said the company’s second-quarter performance reflected contributions from volume growth, margin recovery and productivity initiatives. Pricing actions and contractual pass-through mechanisms helped offset higher raw-material costs, he said, while Project Catalyst savings were ramping in line with the company’s plan.

However, management said some of the quarter’s sales strength may have reflected customer inventory building. Rojo estimated that pre-buying tied to uncertainty surrounding the Iran conflict and raw-material availability represented roughly $5 million to $10 million of EBITDA in the second quarter.

“We are considering that potential timing effect as we plan for the second half of 2026,” Rojo said in prepared remarks. During the question-and-answer session, he added that the company expects third-quarter results to be somewhat lower than the second quarter after accounting for the elevated volume and margin contribution.

Chief Financial Officer Ruben Velasquez said the company also expects special maintenance turnarounds, particularly in Polymers, to reduce second-half results by approximately $4 million to $5 million.

The Surfactants segment reported net sales of $484 million, up 18% from a year earlier. Selling prices increased 12%, largely reflecting raw-material pass-throughs, product and customer mix, and pricing actions. Reported volume rose 3%, while organic volume increased 7%; currency translation added 4% to sales.

Surfactants adjusted EBITDA increased 59% to $55 million. The company cited broad-based volume growth, Project Catalyst savings and recovery from production-timing and absorption impacts discussed in the first quarter. Industrial cleaning, laundry, construction and industrial applications, and oil field were among the leading growth areas.

Rojo highlighted growth in the company’s Tier 2 and Tier 3 customer base, saying the business generated 500 new customer-product combinations during the first half. He also said Stepan recorded double-digit growth in oil field and continued growth in agriculture despite market challenges related to fertilizers and the Iran conflict.

Polymers sales increased 9% to $178 million, with selling prices up 3% and volume up 5%. North American volume grew by strong double digits, driven by Rigid Polyols and Phthalic Anhydride, including significant growth in spray foam products. Those gains were partly offset by lower volumes in Europe and Asia. Polymers adjusted EBITDA rose 22% to $31 million, primarily on volume growth and margin recovery. North American EBITDA increased by $5 million, while Europe improved modestly as better margins offset continued soft construction demand. Asia was slightly lower because of softer demand in Chin...