Stepan's Adjusted Ebitda Growth Cools After Second-Quarter Spike

The Tip Desk · November 9, 2026 · 3 min read

Third-quarter adjusted EBITDA was $66.3 million, up 18% year over year, after a 45% rise in the second quarter.

Stepan Company (SCL), a specialty and intermediate chemicals maker, reported third-quarter adjusted EBITDA of $66.3 million, up 18% from a year earlier, a slower year-over-year pace than the 45% increase recorded in the second quarter.

Net sales were $692.2 million, up 17% from the year-earlier quarter, after a 2% year-over-year increase in the first quarter. The company said the rise reflected higher selling prices, mainly from pass-through of higher raw material costs and pricing actions, a 3% increase in sales volume and foreign-currency translation. Organic sales volume was up 7% year over year.

Reported net income was $17.8 million, or $0.78 a share, up 64% from a year earlier. Adjusted net income was $21.7 million, or $0.94 a share, up 98%. Pre-tax earnings included a $5.6 million Project Catalyst restructuring charge covering about 100 salaried positions, or 7% of global salaried headcount.

President and Chief Executive Officer Luis E. Rojo said quarterly earnings were up significantly, driven by improved results in all three segments, and that the adjusted EBITDA increase came from global volume growth, margin recovery and Project Catalyst savings. He said the company executed the organizational redesign phase of Project Catalyst during the quarter in line with expectations.

Surfactants remained the largest contributor. Segment net sales were $486.6 million, up 15%, with selling prices up 10%, global volume up 3% and organic volume up 8%. Surfactant adjusted EBITDA was $48.2 million, up 27%, after a 59% year-over-year increase in the second quarter. The company said double-digit growth in Consumer Products, Construction & Industrial and Oilfield end markets and in the Tier 2/3 customer base was partially offset by lower Crop Productivity demand.

Polymers net sales were $178.7 million, up 24%, with selling prices up 22% and sales volume up 3%. Polymer adjusted EBITDA was $23.3 million, up 4%, after a 22% year-over-year increase in the second quarter. The company said North American sales volume was up double digits, including Spray Foam, partially offset by lower volumes in Europe and Asia, and that volume growth more than offset regulatory-mandated maintenance turnaround costs at its Germany site.

Specialty Products net sales were $26.9 million, up 12%, with sales volume up 20%. Adjusted EBITDA was $11.7 million, up 5%, which the company attributed primarily to higher volume in medium chain triglycerides, partially offset by less favorable product mix.

Cash from operations was $29.3 million. Free cash flow was $8.2 million, versus negative $15.0 million in the second quarter, and the company said it was negatively impacted by higher working capital requirements. Capital expenditures were $21.1 million.

In October the company closed the sale of a parcel of land near its Millsdale site for $28.5 million, with full cash proceeds to be used to pay down debt. Total debt decreased $13.3 million and cash decreased $15.6 million versus June 30, 2026.

Rojo said that with those actions and the first nine-month results, the company believes it will deliver full-year 2026 adjusted EBITDA growth, positive free cash flow and continued de-leveraging of the balance sheet.