Stepan Company (SCL) reported a robust second quarter for 2026 on Wednesday, July 29, with net income soaring 102% to $22.9 million, or $1.00 per diluted share, compared to $11.3 million in the same period last year.
Operational Performance and Strategic Growth
Stepan’s leadership attributed the strong quarterly results to broad-based volume growth, effective margin recovery, and the successful implementation of “Project Catalyst.” Adjusted EBITDA reached $74 million, a 45% increase year-over-year. Organic volume grew by 6%, with gains across all primary end markets, while net sales climbed 15% to $684 million.
President and CEO Luis Rojo highlighted that the company achieved its strongest safety performance on record over the last 12 months. “The second quarter was a strong quarter of execution for Stepan,” said Rojo, noting that the firm is successfully capturing market share in strategic segments.
Project Catalyst and Workforce Adjustments
The company remains on track with its Project Catalyst initiative, a two-year plan designed to optimize assets and improve organizational agility. The program aims for $100 million in pre-tax savings, with 60% expected within 2026. As part of this efficiency drive, Stepan announced a reduction of approximately 100 salaried positions to be implemented in the third quarter.
Restructuring costs for the full year are projected between $75 million and $80 million. These costs are linked to the closure of the Fieldsboro, New Jersey facility and the decommissioning of specific assets at the Millsdale, Illinois and Stalybridge, UK sites.
Segment Breakdown: Surfactants and Polymers
The Surfactants segment saw net sales rise 18% to $484 million. Organic volume grew by 7%, driven by strong demand in industrial cleaning, laundry, construction, and oil field applications. Meanwhile, the Polymers segment recorded a 9% increase in net sales to $178 million, fueled by a double-digit surge in rigid polyols and spray foam product lines in North America.
CFO Ruben Velasquez noted that while the company saw significant volume growth, $5 million to $10 million of the quarterly EBITDA was likely influenced by customer “pre-buying” in response to geopolitical and raw material uncertainties. The company ended the quarter with a net leverage ratio of 2.5 times, down from 2.7 times in the first quarter.
Outlook for the Second Half of 2026
Looking ahead, Stepan remains focused on cash generation and balance sheet deleveraging. While the company faces ongoing market uncertainties, management expressed confidence in delivering full-year adjusted EBITDA growth and maintaining positive free cash flow. The ramp-up of the Pasadena, Texas facility continues to serve as a critical driver for future growth in specialty alkoxylates, with the site currently operating at approximately 75% to 80% capacity.
