Stepan’s 2Q25 results demonstrated solid execution and disciplined cost management in the face of persistent raw material inflation, particularly in oleochemicals. Net sales were $594.7M, up 6.7% y/y. Adjusted EBITDA came in at $51.4M, and adjusted EPS was $0.52, both stronger year over year but below expectations due to one time expenses that totaled $6.1M. Operating margins were impacted by the mentioned raw material cost increases. An example of this is the price of coconut oil, which rose ~40% since year-end 2024, increasing from $1,973 to $2,766 per metric ton. The Company is actively working to mitigate higher input costs, though the timing lag has pressured gross margins. To increase capacity SCL announced an expansion of an AOS production capacity of 25%, expected to maintain Stepan’s position as a one stop shop for both Tier 1 and Tier 2/3 customers. We expect that this commitment to providing an expansive suite of offerings will also pay dividends should raw input costs continue to climb, giving customers an opportunity to reformulate with lower cost inputs if needed.
