NORTHBROOK, Ill. - Stepan Company (NYSE: NYSE:SCL) reported first-quarter earnings that surpassed analyst expectations, with adjusted EPS coming in at $0.64, significantly higher than the analyst estimate of $0.34. However, the company's revenue for the quarter fell short of consensus estimates, totaling $551.4 million against expectations of $572.85 million.
The specialty chemicals manufacturer experienced a decline in revenue of 15% compared to the same period last year, primarily due to lower selling prices, which were largely a pass-through of decreased raw material costs and an unfavorable product mix. Despite the revenue shortfall, global sales volume saw a modest increase of 1% year-over-year (YoY).
Scott Behrens, President and CEO, remarked on the company's performance, "We are encouraged by the first quarter volume growth in several of our core end markets." He noted that the Surfactants segment saw double-digit volume growth in the Personal Care and Oil Field end markets, as well as with Distribution partners. Behrens also highlighted the company's progress towards its full-year cost reduction program, which contributed to a 5% increase in adjusted EBITDA.
The company's net income for the quarter was $13.9 million, a 14% decrease YoY, while adjusted net income also declined by 11% to $14.7 million. Earnings per diluted share were down 13% to $0.61. The lower net income figures were attributed to a higher effective tax rate in 2024.
Looking ahead, Behrens expressed optimism about the company's outlook, citing expected improvements in sales volumes due to recovery in Rigid Polyols and growth in Surfactant volumes. The anticipated recovery of the Agricultural business in the second half of the year is also projected to bolster performance. "We remain focused on delivering $50 million in pre-tax savings from our cost reduction program to help offset inflationary pressures," Behrens added.
Stepan Company's stock movement was not specified, indicating that the market's response to the earnings report may have been neutral or not significant enough to warrant mention.
The company's financial outlook remains focused on achieving full-year adjusted EBITDA growth and positive free cash flow, driven by market volume growth, improved operational performance, and continued cost reduction efforts.
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