Stepan Company reported a 45% year-over-year increase in trailing twelve-month EBITDA to $210 million for the second quarter, as margin recovery gains pace following the launch of a two-year, $100 million cost-out initiative. The specialty and intermediate chemicals producer, with a market capitalization of $1.42 billion, also cited broad-based organic volume growth of 6% and a net leverage ratio that improved to 2.5x from 3.0x previously.
The cost-reduction program, dubbed Project Catalyst, targets quarterly run-rate savings of $25 million, with $18 million to $20 million already realized in Q2. The initiative includes the closure of legacy facilities in New Jersey, Illinois, and the U.K., alongside the consolidation of production into the Pasadena, Texas alkylation plant, which is expected to reach 80% utilization by year-end. Stepan has also reduced its workforce by 100 roles as part of an organizational redesign.
Speaking at the 17th Annual Midwest IDEAS Conference on August 27, 2026, CFO Ruben Velasquez described Stepan’s recovery as being in the early innings, noting that Q2 performance demonstrated the program’s early success. "A lot of the Catalyst savings are already showing in our margin," Velasquez said. The company’s EBITDA margin expansion reflects a strategic shift toward higher-margin segments, with 75% of EBITDA now generated from priority areas such as non-commodity surfactants, oil field services, agriculture, and tier 2/3 customers.
The company’s surfactants segment, which accounts for 70% of sales and 60% of EBITDA, remains its largest business line. However, commodity surfactants contribute only 20% of EBITDA despite comprising 52% of volume. The polymers segment, representing 25% of total sales, saw triple-digit growth in its rigid foam and spray foam business during the quarter. Oil field services, supported by oil prices in the $80 to $100-plus per barrel range, grew at a high single-digit rate.
Stepan’s annual capital expenditure has normalized to $100 million to $110 million after a period of heavy investment. The company employs 230 scientists across 14 global application centers and launched 41 new products in the prior year, with new products contributing around 10% of annual sales. Stepan’s stock has delivered a 25% return over the past six months and a 34% gain year-to-date, yielding 2.5% and maintaining a 55-year streak of dividend increases.
