Stepan Company Reports 7.6% Increase in Net Sales to $593.3 Million in Q1 2025

Stepan Company reported a notable increase in financial performance for the first quarter of 2025, with net sales reaching $593.3 million, up 7.6% from $551.4 million in the same period last year. The company's gross profit also improved, rising to $75.5 million from $70.3 million, reflecting a gross margin of approximately 12.7%. Operating income surged by 40% to $28.3 million, compared to $20.2 million in the prior year, while net income increased to $19.7 million, or $0.86 per diluted share, from $13.9 million, or $0.61 per diluted share, in the first quarter of 2024.

The increase in revenue was primarily driven by higher average selling prices, which contributed $40.4 million to net sales, largely due to the pass-through of increased raw material costs. Sales volume also saw a 4% increase, adding $19.9 million to the revenue. However, foreign currency translation negatively impacted net sales by $18.5 million, primarily due to a stronger U.S. dollar against the Brazilian real and Mexican peso. The company’s operating expenses decreased by 6% year-over-year, attributed to lower environmental reserve expenses and a significant shift in deferred compensation from an expense in the previous year to income in the current quarter.

In terms of operational developments, Stepan Company reported a 3% increase in surfactant sales volume and a 7% increase in polymer sales volume, while specialty products experienced a 13% decline in sales volume. The company continues to focus on its three reportable segments: Surfactants, Polymers, and Specialty Products, which accounted for 72%, 25%, and 3% of consolidated net sales, respectively. The company’s geographic sales distribution showed strong performance in North America, with a 10% increase in surfactant sales, while European operations also saw a 15% increase.

Looking ahead, Stepan Company anticipates continued growth, with capital expenditures projected between $125 million and $135 million for 2025. The company’s liquidity remains strong, with cash and cash equivalents totaling $107.5 million as of March 31, 2025. The company is also actively managing its debt, which increased to $659.3 million, primarily due to higher borrowings from its revolving credit facility. The company believes it is well-positioned to meet its financial commitments and capitalize on growth opportunities in the coming quarters.