Slides
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October 29, 2025Third Quarter 2025Earnings Results
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Safe HarborCertain information in this presentation consists of forward-looking statements within the meaning of the Private SecuritiesLitigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the SecuritiesExchange Act of 1934, as amended (the Exchange Act). These statements include statements about Stepan Company’splans, objectives, strategies, financial performance and outlook, trends, the amount and timing of future cash distributions,prospects or future events and involve known and unknown risks that are difficult to predict. As a result, Stepan Company’sactual financial results, performance, achievements or prospects may differ materially from those expressed or implied bythese forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as“may,” “could,” “expect,” “intend,” “plan,” “seek,” “aim,” “anticipate,” “believe,” “estimate,” “guidance,” “predict,” “potential,”“continue,” “likely,” “will,” “would,” “should,” “illustrative” and variations of these terms and similar expressions, or the negativeof these terms or similar expressions. Such forward-looking statements are necessarily based upon estimates andassumptions that, while considered reasonable by Stepan Company and its management based on their knowledge andunderstanding of the business and industry, are inherently uncertain. These statements are not guarantees of futureperformance, and stockholders should not place undue reliance on forward-looking statements.There are a number of risks, uncertainties and other important factors, many of which are beyond Stepan Company’s control,that could cause actual results to differ materially from the forward-looking statements contained in this presentation. Suchrisks, uncertainties and other important factors include, among other factors, the risks, uncertainties and factors described inStepan Company’s Form 10-K, Form 10-Q and Form 8-K reports and exhibits to those reports, and include (but are notlimited to) risks and uncertainties related to disruptions in production or accidents at manufacturing facilities; reduced demanddue to customer product reformulations or new technologies; our inability to successfully develop or introduce new products;compliance with laws; our ability to make acquisitions of suitable candidates and successfully integrate acquisitions; globalcompetition; volatility of raw material and energy costs and supply; disruptions in transportation or significant changes intransportation costs; downturns in certain industries and general economic downturns; international business risks, includingcurrency exchange rate fluctuations, legal restrictions and taxes; unfavorable resolution of litigation against us; maintainingand protecting intellectual property rights; our ability to access capital markets; global political, military, security or otherinstability; costs related to expansion or other capital projects; interruption or breaches of information technology systems; ourability to retain our executive management and key personnel; and our debt covenants.These forward-looking statements are made only as of the date hereof, and Stepan Company undertakes no obligation toupdate or revise these forward-looking statements, whether as a result of new information, future events or otherwise.2
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Stepan Company: AgendaInvest in Organic Growth 3 AGENDA2025 Third Quarter Highlights2025 Third Quarter Financial ResultsStrategic OutlookClosing RemarksQ&A12345
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(1) Adjusted Net Income is a Non-GAAP measure. See Appendix II for a GAAP reconciliation.(2) EBITDA and Adjusted EBITDA are Non-GAAP measures. See Appendices III and VII for GAAP reconciliations.(3)Free Cash Flow is a Non-GAAP measure. See Appendix V for GAAP reconciliations. VOLUME GROWTHGlobal sales volume grew 1% year-over-year. Strong growth across Polymers, Crop Productivity, Industrial Cleaning, and our MCT business was partially offset by decline in Global commodity Consumer Surfactants.POSITIVE FREE CASH FLOW(3)Free cash flow (FCF)(3)was $40.2 million compared to a negative ($4.0) million in the prior year, driven by reductions in working capital.4 Reported Net Income$10.8MMAdjusted Net Income(1)$10.9MM-54% Y oYEBITDA(2)$56.1MMAdjusted EBITDA(2)$56.2MM+6% Y oY+6% Y oYSales Volume+1% YoY Cash From Operations$40.2MM-54% Y oYFree Cash Flow(3)$69.8MM+207% Y oY Third Quarter - HighlightsStepan Company: HighlightsEBITDA GROWTHEarnings growth was driven by improved results within our Crop Productivity and Specialty Products businesses, which was partially offset by continued escalation of raw material costs (oleochemicals).STRATEGIC UPDATEOur Pasadena, Texas site continue to ramp up production following the start up earlier in the year. We remain on track to close the sale of our Philippines assets in Q4 and are actively evaluating asset optimization opportunities. NET INCOME DOWNThe decrease in earnings was mainly driven by a higher effective tax rate and higher interest net.
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Stepan Company: Financial Results Note: All amounts are in millions of U.S. dollars and are reported after-tax.(1) The adjustments to Reported Net Income in Q3 2024 consisted of deferred compensation income $0.4 million and environmental remediation expense of $0.4 million.(2) Adjusted Net Income and Adjusted EPS are Non-GAAP measures that exclude certain significant, non-recurring items. See Appendix II for GAAP reconciliations.(3) The adjustments to Reported Net Income in Q3 2025 consisted of deferred compensation income of $0.1 million and environmental remediation expense of $0.3 million. Net Income Bridge$23.6 $23.7 $10.9 $10.8 $0.1 $6.5 $1.2 Adjustments(3)Q3 2025 Adjusted Net Income(2)Q3 2025 Reported Net Income($7.5)Corporate Expenses & All OtherSpecialty Products Operating IncomePolymers Operating Income($1.3)Surfactants Operating Income($11.7)Q3 2024 Adjusted Net Income(2)Adjustments(1)Q3 2024 Reported Net Income($0.1)Taxes$1.03Adj. EPS$0.48Adj. EPS5 Q3 2024 to Q3 2025
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Stepan Company: Financial ResultsAdjusted EBITDA(1) Bridge 6 $53.1 $56.2 $5.9 $4.5 Q3 2024Adj. EBITDA(1)($6.2)Surfactants Polymers Specialty Products CorporateQ3 2025 Adj. EBITDA(1)($1.1)Note: All amounts are in millions of U.S. dollars.(1) Adjusted EBITDA is a Non-GAAP measure. See Appendices III and VII for GAAP reconciliations. Q3 2024 to Q3 2025 SurfactantsAdjusted EBITDA(1)decreased $6.2 million, or 14%, compared to prior year primarily due to higher expenses associated with the start up of our Pasadena site, a 2% decrease in sales volume, and higher Oleochemicals raw material costs. Lower demand in Commodity Consumer end markets, largely offset by double digit sales volume growth within Agricultural and Industrial Cleaning end markets.PolymersAdjusted EBITDA(1)decreased by $1.1 million, or 4%, year-over-year driven by lower unit margins and unfavorable product mix, largely offset by double digit sales volume growth across North America Rigid Polyols and Phthalic Anhydride.Specialty ProductsAdjusted EBITDA(1) increased by $5.9 million primarily due to order timing fluctuations between the second and third quarter within the pharmaceutical business, in addition to volume growth in our Medium-Chain Triglycerides (MCT) product line. Corporate expenseswere down 22% year-over-year primarily driven by the non-recurrence of expenses associated with an externally generated criminal social engineering fraud event in 2024.
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North America and Asiaadversely impacted by lower demand within Commodity Consumer end markets, higher expenses associated with the start up of our Pasadena site, and raw material (oleochemicals) cost escalation. This was partially offset by double-digit growth across Agricultural Chemicals and Oilfield end markets.Latin Americaresults were impacted by softer demand on Commodity Consumer end market and lower sales with our Distribution partners. Europeresults were driven by lower Commodity Consumer demand, partially offset by margin improvements and stronger end-market demand in Agricultural Chemicals. Stepan Company: Business Segments Volumewas down 2% year-over-year primarily due to lower demand within the Commodity Consumer end markets, largely offset by double digit growth within the Agricultural and Industrial Cleaning end markets.Price/Mixbenefited from improved product and customer mix and pass through of higher raw material costs.F/Xpositively impacted net sales by 1%.7 $44.2 $38.0 Q3 2024Adj. EBITDA(1)($2.9)North America + Asia($2.4)Latin America($0.9)Europe Q3 2025 Adj. EBITDA(1) Adjusted EBITDA(1) Bridge$382.7 $422.4 $41.4 $5.5 Q3 2024Net Sales($7.3)Volume Price/Mix F/X Q3 2025 Net Sales Net Sales Bridge Note: All amounts are in millions of U.S. dollars.(1) Adjusted EBITDA is a Non-GAAP measure. See Appendices III and VII for GAAP reconciliations. SurfactantsQ3 2024 to Q3 2025 Note: All amounts are in millions of U.S. dollars.
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Volumewas up 8% driven by growth across our North America Rigid Polyol and Commodity Phthalic Anhydride businesses.Price/Mixwas impacted by the contracted pass-through of lower raw material costs, competitive pressures, and less favorable product mix.F/X positively impacted net sales by 2%.North Americaresults benefited from sales volume growth in the Rigid Polyols and Commodity Phthalic Anhydride businesses, which was partially offset by less favorable product mix.Europeresults were impacted by lower Rigid Polyols demand and continued competitive pressures.Asia results were driven by lower Rigid Polyols end market demand, which was partially offset by growth in our Specialties Polyols business.8 $23.4 $22.4 $1.2 Q3 2024Adj. EBITDA(1)North America($1.9)Europe($0.3)Asia +Latin AmericaQ3 2025 Adj. EBITDA(1)$149.8 $143.9 $12.6 $2.9 Q3 2024Net SalesVolume($21.4)Price/Mix F/X Q3 2025 Net Sales(1) Adjusted EBITDA is a Non-GAAP measure. See Appendices III and VII for GAAP reconciliations. Stepan Company: Business SegmentsPolymersQ3 2024 to Q3 2025Net Sales BridgeAdjusted EBITDA(1) Bridge Note: All amounts are in millions of U.S. dollars.Note: All amounts are in millions of U.S. dollars.
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Stepan Company: Financial ResultsBalance Sheet & Cash FlowNet Debt(1)TTM Adjusted EBITDA(2)2025 Working Capital(5) 9Free Cash Flow(4)($MM) (1)Net Debt is a Non-GAAP measure. See Appendix VI for a GAAP reconciliation.(2) TTM Adjusted EBITDA is a Non-GAAP measure. See Appendix IV for a GAAP reconciliation.(3) Net Debt / TTM Adjusted EBITDA Ratio is a Non-GAAP measure. See Appendix VI for a GAAP reconciliation.(4) Free Cash Flow is a Non-GAAP measure. See Appendix V for GAAP reconciliations.(5) Includes the following components of Working Capital: accounts receivable, inventory, accounts payable Q3 2024 to Q3 2025537200Net Debt(1)/ TTM Adjusted EBITDA(2)($MM)2.7Net Debt/TTM Adj EBITDA Ratio(3)Capital Expenditures $MM2602023123202426.7Q3 202429.6Q3 2025118 - 1232025 Est.$MM4552023474Q3 2024471Q3 2025
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High-Margin / Growth Priority MarketsCustomer-Centric Innovation & Extended ReachKey Strategic InvestmentsCost & Operational Excellence Creating and Delivering Shareholder Value Investments in Organic GrowthM&A Opportunities Greater Than GDP GrowthAccretive MarginsLimited Global Risk ExposureCustomer IntimacyExpand Tier 2 & 3 Customer BaseWorld Class R&D & SustainabilityStepan Company: Growth StrategyStrategic Priorities and Growth Drivers 10 Safe & Efficient ManufacturingAsset Reliability/OptimizationCost Reduction & Productivity GainsCash Flow Management
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Stepan Company: Strategic InvestmentsAlkoxylates are a core surfactant technology consumed across Stepan’s key agricultural, oilfield, construction, and household end marketsContinued sales volume growth during the third quarter of 2025 across multiple end use markets and applicationsPasadena is Stepan’s third alkoxylation site, providing strategically located capacity for growth in ethoxylates and propoxatesNew Alkoxylation Capacity: Pasadena, Texas – Summary and BenefitsStrategic Capital Investments Update 11 Site is operational and ramping up
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Stepan Company –> Growth Drivers 12 Thank YouRuben VelasquezVice President & Chief Financial Officer+1-224-716-4673
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AppendixAdditional Sources of Information and Definitions
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Stepan Company: Appendix IUpdate on Certain Expectations2025 Forecast2024 Actual2023 Actual2022 Actual(millions USD)118 - 123123260301Capital Expenditures69493838Debt Repayments 23 - 25141210Interest Net 125 – 13011210595Depreciation & Amortization24 - 26%17%17%22%Effective Tax Rate(1)(%) 14 (1) Effective Tax Rate (ETR) increase related to new US tax legislation enacted on July 4, 2025, and lower R&D tax credits estimates.
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Stepan Company: Appendix IIReconciliation of Non-GAAP Adjusted Net Income and Earnings Per Diluted Share(1)Reconciliation of Pre-Tax to After-Tax Adjustments15 Reconciliations(1)All amounts in this table are presented after-tax Three Months Ended September 30, Nine Months Ended September 30, ($ in thousands, except per share amounts) 2025 EPS 2024 EPS 2025 EPS 2024 EPS Net Income Reported $ 10,839 $ 0.47 $ 23,606 $ 1.03 $ 41,891 $ 1.83 $ 47,020 $ 2.05 Deferred Compensation (Income) $ (149 ) $ - $ (350 ) $ (0.02 ) $ (549 ) $ (0.02 ) $ (1,043 ) $ (0.05 ) Environmental Remediation Expense $ 258 $ 0.01 $ 405 $ 0.02 $ 869 $ 0.03 $ 1,736 $ 0.08 Adjusted Net Income $ 10,948 $ 0.48 $ 23,661 $ 1.03 $ 42,211 $ 1.84 $ 47,713 $ 2.08 Three Months Ended September 30, Nine Months Ended September 30, ($ in thousands, except per share amounts) 2025 EPS 2024 EPS 2025 EPS 2024 EPS Pre-Tax Adjustments Deferred Compensation (Income) $ (198 ) $ (466 ) $ (732 ) $ (1,390 ) Environmental Remediation Expense $ 344 $ 541 $ 1,158 $ 2,315 Total Pre-Tax Adjustments $ 146 $ 75 $ 426 $ 925 Cumulative Tax Effect on Adjustments $ (37 ) $ (20 ) $ (106 ) $ (232 ) After-Tax Adjustments $ 109 $ 0.01 $ 55 $ - $ 320 $ 0.01 $ 693 $ 0.03
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Stepan Company: Appendix IIIAdjusted EBITDA and EBITDA Reconciliations Q3 2025 and Q3 2024(1) (1)Refer to Income Statement on appendix VII for a bridge between Operating Income and Net Income.16 Adjusted EBITDA and EBITDA Reconciliations Q3 2025 and Q3 2024(1) Three Months Ended September 30, 2025 ($ in millions) Surfactants Polymers Specialty Products Unallocated Corporate Consolidated Operating Income $ 15.7 $ 14.1 $ 9.6 $ (17.7 ) $ 21.8 Depreciation and Amortization $ 22.3 $ 8.3 $ 1.5 $ 0.7 $ 32.8 Other, Net Income $ - $ - $ - $ 1.5 $ 1.5 EBITDA $ 56.1 Deferred Compensation $ - $ - $ - $ (0.2 ) $ (0.2 ) Environmental Remediation $ - $ - $ - $ 0.3 $ 0.3 Adjusted EBITDA $ 38.0 $ 22.4 $ 11.1 $ (15.3 ) $ 56.2 Three Months Ended September 30, 2024 ($ in millions) Surfactants Polymers Specialty Products Unallocated Corporate Consolidated Operating Income $ 26.3 $ 15.2 $ 3.7 $ (21.3 ) $ 23.9 Depreciation and Amortization $ 17.9 $ 8.2 $ 1.5 $ 0.5 $ 28.1 Other, Net Income $ - $ - $ - $ 1.0 $ 1.0 EBITDA $ 53.0 Deferred Compensation $ - $ - $ - $ (0.4 ) $ (0.4 ) Environmental Remediation $ - $ - $ - $ 0.5 $ 0.5 Adjusted EBITDA $ 44.2 $ 23.4 $ 5.2 $ (19.7 ) $ 53.1
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Stepan Company: Appendix IV9/30/2025 TTM – Adjusted EBITDA75.7Reported Operating Income121.8Depreciation & Amortization2.9Other Net Income (Expense)(1.7)Deferred Compensation0.0Cash Settled SARS0.0Goodwill and Other Intangibles Impairment Expense0.0Business Restructuring & Asset Impairment Expense1.4Environmental Remediation Expense200.1Adjusted EBITDA Trailing Twelve Months 17 Adjusted EBITDA Reconciliation
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Stepan Company: Appendix V 20232024(million USD)174.9162.1Cash Flow from Operations(260.3)(122.8)Capital Expenditures(85.5)39.3Free Cash Flow Q3 2024Q3 2025(million USD)22.769.8Cash Flow from Operations(26.7)(29.6)Capital Expenditures(4.0)40.2Free Cash FlowFree Cash Flow (FCF) 18 Reconciliations
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Stepan Company: Appendix VISeptember 30, 2020September 30, 2021September 30, 2022September 30, 2023September 30, 2024December 31, 2024March 31, 2025June 30, 2025September 30, 2025(millions USD)207.9279.8564.9649.4688.5625.4659.3658.0655.5Total Debt310.4105.3165.7105.5147.399.7107.588.9118.5Cash(102.5)174.5399.2543.9541.2525.7551.8569.1537.0Net Debt938.21,057.31,130.21,202.81,219.41,169.91,200.51,241.71,246.8Equity835.71,231.81,529.41,746.71,760.61,695.61,752.31,810.81,783.8Net Debt + Equity(12%)14%26%31%31%31%31%31%30%Net Debt / (NetDebt + Equity) Net Debt to Total Capitalization Ratio Net Debt/TTM Adjusted EBITDA Ratio = 537/200 = 2.719
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Stepan Company: Appendix VIIIncome Statement 20 Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Net Sales $ 590,284 $ 546,842 $ 1,778,228 $ 1,654,665 Cost of Sales 519,261 471,157 1,559,857 1,439,147 Gross Profit 71,023 75,685 218,371 215,518 Operating Expenses: Selling 11,299 11,394 38,064 34,610 Administrative 22,864 26,254 67,079 73,513 Research, Development and Technical Services 14,225 13,532 43,575 41,881 Deferred Compensation Expense 841 556 1,606 2,729 49,229 51,736 150,324 152,733 Operating Income 21,794 23,949 68,047 62,785 Other Income (Expense): Interest, Net (6,815 ) (3,621 ) (16,426 ) (9,353 ) Other, Net 1,536 989 3,344 4,551 (5,279 ) (2,632 ) (13,082 ) (4,802 ) Income Before Provision for Income Taxes 16,515 21,317 54,965 57,983 Provision for Income Taxes 5,676 (2,289 ) 13,074 10,963 Net Income 10,839 23,606 41,891 47,020 Net Income Per Common Share Basic $ 0.47 $ 1.03 $ 1.83 $ 2.06 Diluted $ 0.47 $ 1.03 $ 1.83 $ 2.05 Shares Used to Compute Net Income Per Common Share Basic 22,875 22,836 22,869 22,829 Diluted 22,893 22,923 22,888 22,936