Stepan Company (SCL) Q1 2026 earnings summary

Executive summary

• Reported a net loss of $41.4 million for Q1 2026, compared to net income of $19.7 million in Q1 2025, driven by a $65.4 million pre-tax restructuring charge related to Project Catalyst, which included site shutdowns and asset decommissioning.

• Adjusted net income was $10.3 million, down 47% year-over-year, mainly due to lower surfactant earnings and higher interest expense.

• Adjusted EBITDA was $49.6 million, down 14% year-over-year, primarily due to lower surfactant earnings, production timing in Asia, competitive pressures in Mexico, severe weather in North America, and higher oleochemical costs.

• Project Catalyst is on track to deliver $100 million in pre-tax savings over two years, with about 60% expected in 2026.

• Record safety performance was achieved in Q1 2026.

Financial highlights

• Net sales increased 2% year-over-year to $604.5 million, driven by higher selling prices and favorable currency translation, despite a 3% decline in sales volume.

• Reported net loss of $41.4 million, or $1.81 per diluted share, versus net income of $19.7 million, or $0.86 per share, in Q1 2025, due to restructuring charges.

• Adjusted earnings per diluted share was $0.45, down 46% from $0.84.

• Free cash flow was -$14 million, reflecting typical Q1 working capital build, but improved from -$25.8 million in Q1 2025.

• Net debt ended at $511 million with a leverage ratio of 2.7, improved from 2.9 a year ago.

Outlook and guidance

• Project Catalyst savings are expected to ramp up in Q2 2026, with full-year restructuring expenses projected at $70–80 million.

• Capital expenditures for 2026 are projected at $105–$115 million, with 75–80% for base reliability and infrastructure.

• Management expects adjusted EBITDA growth, positive free cash flow, and further deleveraging in 2026.

• Effective tax rate expected at 24–26% for 2026.

• Liquidity is considered sufficient to meet anticipated needs.