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Jun 30, 2025
Stepan Q2 2025 Earnings Report
Stepan's financial performance in the second quarter of 2025 was characterized by increased net income and adjusted EBITDA, driven by strong performance in Polymers and Crop Productivity, alongside a lower effective tax rate.
Key Takeaways
Stepan Company reported a strong second quarter in 2025, with net income increasing by 19% to $11.3 million and adjusted net income rising by 27% to $12.0 million. This growth was primarily fueled by improved results in the Polymers segment and the Crop Productivity business, coupled with a favorable effective tax rate. Adjusted EBITDA also saw an 8% increase year-over-year, reaching $51.4 million, despite higher start-up costs at the new Pasadena alkoxylation site and increased oleochemical raw material costs.
Net income increased by 19% to $11.3 million, and adjusted net income rose by 27% to $12.0 million, driven by Polymer and Crop Productivity earnings growth.
Adjusted EBITDA grew by 8% to $51.4 million, primarily due to a 7% increase in Polymer sales volume and the non-recurrence of prior year's fraud-related expenses.
Global sales volume was up 1% year-over-year, with strong double-digit growth in Agricultural and Oilfield end markets within Surfactants, and 7% volume growth in Polymers.
Free cash flow was negative $14.4 million, mainly due to increased working capital needs for business growth, inventory build-up ahead of anticipated tariffs, and safety stock for hurricane season and a new collective bargaining agreement.
Revenue by Segment
Forward Guidance
Stepan Company is optimistic about delivering full-year Adjusted EBITDA and Adjusted Net Income growth, along with positive free cash flow in 2025. The company plans to accelerate business strategies through operational excellence, improved product and customer mix, and enhanced free cash flow generation.
Positive Outlook
- Continued growth expected in key strategic end markets for the Surfactant business.
- Polymer demand is anticipated to improve with increased market certainty and execution of innovation and growth plans.
- The new Pasadena alkoxylation facility is operational and expected to deliver volume growth and supply chain savings in the second half of the year.
- On track to close the asset sale in the Philippines during the fourth quarter, optimizing the global footprint.
- Optimistic about delivering full-year Adjusted EBITDA and Adjusted Net Income growth.
Challenges Ahead
- Higher Oleochemical raw material costs are expected to be recovered via pricing in the second half of the year, indicating current pressure.
- Pre-tax earnings were negatively impacted by $6.1 million due to start-up costs at the Pasadena site and an environmental remediation reserve adjustment.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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