Stepan at Midwest IDEAS: margin recovery gains pace

On Thursday, 27 August 2026, Stepan Company (SCL) detailed its faster-growing business at the 17th Annual Midwest IDEAS Conference, highlighting cost-cutting measures and a shift toward higher-margin products. Second-quarter EBITDA rose 45% year-over-year, driven by 6% organic volume growth and stronger margins. About 75% of EBITDA now comes from priority segments like non-commodity surfactants, oil field services, agriculture, and tier 2 and tier 3 customers.

The company's $100 million cost-out plan, Project Catalyst, is ahead of schedule, with $18 million to $20 million of targeted $25 million quarterly savings already realized in Q2. Management expects continued growth in oil field services and polymers, but notes construction markets, particularly in Europe, remain subdued. Stepan's CFO, Ruben Velasquez, stated that the company is early in its margin recovery journey.

Q2 EBITDA growth was attributed to pricing actions, pass-through contracts, and customer pull-forward activity. Working capital usage totaled $58 million, funding higher volume and inventory levels. Net leverage decreased to 2.5x from 3.0x previously. Stepan is trading at an EV/EBITDA multiple of 9.6, with a market cap of $1.42 billion and trailing twelve-month EBITDA of $210 million.

The stock is considered undervalued relative to its fair value. The company's business mix shifted, with priority segments now generating about 75% of total EBITDA, up from about 60% previously. Project Catalyst, a two-year $100 million cost-out program, is improving margins and simplifying operations, with production consolidated into Pasadena, Texas.

The company announced 100 role reductions as part of its organizational redesign. Stepan remains strategic in its growth approach, focusing on surfactants, oil field services, polymers, and specialty products, while leveraging its extensive regional footprint and safety performance record.