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Sep 30, 2025
Stepan Q3 2025 Earnings Report
Stepan Company reported its third quarter 2025 financial results, highlighting a decrease in net income but growth in adjusted EBITDA and free cash flow.
Key Takeaways
Stepan Company reported a significant 54% decrease in net income to $10.8 million for Q3 2025, primarily due to a higher effective tax rate and increased interest expense. However, adjusted EBITDA saw a 6% increase to $56.2 million, and free cash flow improved to $40.2 million, driven by working capital reduction. Sales volume increased by 1% year-over-year.
Reported net income decreased by 54% to $10.8 million, while adjusted net income also fell by 54% to $10.9 million.
EBITDA and Adjusted EBITDA both increased by 6% year-over-year, reaching $56.1 million and $56.2 million respectively.
Global sales volume was up 1% year-over-year, with Polymer volume up 8% and double-digit growth in Agricultural and Industrial Cleaning end markets within Surfactants.
Free cash flow for the quarter was $40.2 million, significantly improved due to a reduction in working capital.
Revenue by Segment
Forward Guidance
Stepan Company is focused on accelerating business strategies through operational excellence, improved product mix, and enhanced free cash flow generation. The company anticipates continued growth in key strategic end markets for Surfactants and improving Polymer demand. They expect to deliver full-year Adjusted EBITDA growth and positive free cash flow in 2025, despite ongoing market and tariff uncertainties.
Positive Outlook
- Continued growth expected in key strategic end markets for the Surfactant business.
- Polymer demand is expected to continue improving with increased market certainty and execution of innovation and growth plans.
- On track to close the asset sale in the Philippines during the fourth quarter.
- Optimistic about delivering full-year Adjusted EBITDA growth in 2025.
- Expects to generate positive free cash flow for the full year 2025.
Challenges Ahead
- Ongoing market uncertainties.
- Ongoing tariff uncertainties.
- Higher costs associated with the start-up of the new alkoxylation site in Pasadena, Texas.
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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