Stepan Company Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2024

Press release·02/27/2025 21:51:33

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Stepan Company, a Delaware-based corporation, filed its annual report on Form 10-K for the fiscal year ended December 31, 2024. The company reported total revenues of $2.3 billion, a 5% increase from the previous year, driven by growth in its Surfactants and Polymers segments. Net income was $143 million, a 10% decrease from the previous year due to higher operating expenses and interest expenses. The company’s cash and cash equivalents increased to $344 million, and its total debt decreased to $1.1 billion. Stepan Company has 22.5 million shares of common stock outstanding and a market capitalization of $1.8 billion. The company’s financial statements reflect the correction of an error to previously issued financial statements, but this correction did not require a recovery analysis of incentive-based compensation received by executive officers.

Financial Performance Overview

The Company reported a 25% increase in net income to $50.4 million, or $2.20 per diluted share, in 2024 compared to $40.2 million, or $1.75 per diluted share, in 2023. Adjusted net income was $50.5 million, or $2.20 per diluted share, in 2024 versus $50.7 million, or $2.21 per diluted share, in 2023. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $186.8 million in 2024, up 13% from $165.8 million in 2023. Adjusted EBITDA was $187.0 million in 2024, up 4% from $180.0 million in 2023.

Revenue and Profit Trends

Consolidated net sales decreased 6% to $2,180.3 million in 2024 from $2,325.8 million in 2023. The decrease was primarily due to 7% lower average selling prices, partially offset by a 1% increase in sales volume. Foreign currency translation had a 0.1% negative impact on net sales.

By segment:

Surfactants net sales decreased 4% to $1,532.1 million, with lower average selling prices partially offset by a 2% increase in sales volume.
Polymers net sales decreased 9% to $584.9 million, due to a 4% decline in sales volume and lower average selling prices.
Specialty Products net sales decreased 21% to $63.3 million.

Operating income increased 20% to $70.5 million in 2024 from $58.6 million in 2023. The increase was driven by higher Surfactants and Specialty Products operating income, partially offset by lower Polymers operating income. Corporate expenses, including deferred compensation, environmental remediation, and other items, decreased 11% year-over-year.

Strengths and Weaknesses

Strengths:

Diversified product portfolio across Surfactants, Polymers, and Specialty Products segments
Strong market positions in key end markets like consumer and industrial cleaning, construction, and food/nutrition
Improving profitability in Surfactants and Specialty Products segments
Effective cost management, including workforce productivity measures

Weaknesses:

Declining profitability in Polymers segment due to lower sales volumes and pricing pressure
Exposure to foreign currency fluctuations, which negatively impacted sales and operating income
One-time expenses related to a criminal social engineering scheme and environmental remediation

Outlook

The Company expects to continue facing macroeconomic headwinds in 2025, including ongoing raw material cost volatility and competitive pricing pressures in certain end markets. However, the Company is focused on driving operational efficiencies, expanding in higher-growth specialty product lines, and managing costs to maintain profitability.

Key priorities for 2025 include:

Completing the new alkoxylation plant in Pasadena, Texas to support growth in the Surfactants segment
Implementing additional productivity measures to offset inflationary pressures
Investing in R&D and new product development to expand the Specialty Products portfolio
Prudently managing capital expenditures and working capital to preserve financial flexibility

Overall, the Company believes it is well-positioned to navigate the current environment and continue delivering value to shareholders over the long term through a combination of organic growth initiatives and disciplined cost management.

Conclusion

The Company demonstrated improved profitability in 2024 despite a decline in consolidated net sales. The Surfactants and Specialty Products segments performed well, while the Polymers segment faced headwinds. The Company remains focused on operational efficiency, new product development, and prudent capital allocation to drive sustainable growth. While near-term macroeconomic challenges persist, the Company’s diversified portfolio, strong market positions, and proactive management provide a solid foundation for the future.