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Sep 30, 2024
Stepan Q3 2024 Earnings Report
Stepan's third quarter results were released, showing an increase in net income and adjusted EBITDA driven by the Surfactant and Specialty Product businesses.
Key Takeaways
Stepan Company reported an 88% increase in net income and an 11% increase in adjusted EBITDA for the third quarter of 2024. The growth was primarily driven by the Surfactant and Specialty Product businesses, with Surfactants experiencing double-digit volume growth in several end markets. However, Polymer volumes declined due to soft demand and competitive pressures. The company is on track to deliver its $50 million cost out goal for 2024, with $13.3 million in pre-tax savings recognized in the third quarter.
Net income increased by 88% year-over-year to $23.6 million.
Adjusted EBITDA increased by 11% year-over-year to $53.1 million.
Global sales volume decreased by 1% year-over-year, with growth in Surfactants offset by weakness in Polymers.
The company recognized $13.3 million in pre-tax savings from its cost out program.
Revenue by Segment
Forward Guidance
Stepan expects continued strong volume growth in several Surfactant businesses and anticipates increased Rigid Polyol demand as macroeconomic conditions improve. The company forecasts improved free cash flow driven by the completion of the Pasadena investment, growth in market volumes, and continued cost reduction. Stepan believes it is positioned to deliver full year Adjusted EBITDA growth and positive free cash flow.
Positive Outlook
- Several Surfactant businesses continue to deliver strong volume growth.
- Agricultural volumes grew double-digits in the third quarter, aligning with expectations for a second half 2024 recovery.
- Optimism that Rigid Polyol demand will increase as the market gets more macro-economic clarity and the interest rate environment improves.
- Free cash flow should continue to improve versus prior year driven by the completion of our Pasadena investment.
- Continued focus on cost reduction.
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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