Stepan Expects to Exceed 60% of $100 Million Catalyst Savings Target in 2026
Key Facts
Stepan expects savings from its Project Catalyst program in 2026 to exceed 60% of its $100 million, two-year pre-tax target, an update that puts third-quarter results in the context of the cost-cutting program the company announced on October 28. Savings ran at about $23 million in the third quarter, while management expects the average to exceed $25 million per quarter in 2027. The figures come alongside higher net sales and adjusted earnings in the third quarter compared with the same period a year earlier. The company also announced an increase in its quarterly cash dividend for the 59th consecutive year. SCL shares closed at $69.61 on October 30, compared with $64.77 on October 26, according to EL7 data.
Stepan announced on October 28 that Catalyst aims to deliver about $100 million in pre-tax savings over the following two years. In its results, the company said it expects to exceed 60% of that target in 2026, putting the program on track to achieve more than three-fifths of its goal in its first year. Savings ran at about $23 million in the third quarter, and the company expects average savings to exceed $25 million per quarter in 2027. This trajectory reflects the initiative’s continued impact on the company’s accounts in coming periods. The figures in the results did not specify a final cumulative value for savings achieved so far.
The company’s net sales rose 17% to $692.154 million in the third quarter, compared with $590.284 million in the third quarter of 2025. The company attributed the increase to pricing, mix, volume and foreign currency translation. Adjusted EBITDA was $66.3 million, up 18% from $56.2 million a year earlier. Reported net income reached $17.8 million, up 64% year over year, while adjusted net income was $21.7 million, an increase of 98%. These indicators show improved profitability alongside sales growth, with different rates of increase across income measures.
Chief Executive Officer Luis E. Rojo said growth in adjusted earnings was tied to higher global volumes, margin recovery and Catalyst savings. Organic surfactant sales volume rose 8% in the third quarter. The company also cited the effects of pricing, mix and foreign currency translation among the factors behind sales growth. The results therefore show contributions from demand and volume, margins and the efficiency program to quarterly performance, according to management’s account. Rojo said adjusted EBITDA was $66.3 million, up 18% from the prior year, driven by these factors.
Third-quarter results included a pre-tax restructuring charge of $5.6 million, which involved eliminating about 100 salaried positions, or 7% of global salaried employees. In October, the company closed a deal to sell a parcel of land near its Millsdale facility for $28.5 million. It said all cash proceeds from the deal would be used to reduce debt. Management expects adjusted EBITDA growth and positive free cash flow in 2026. It also said it would continue reducing leverage that year.
On shareholder returns, the board set the fourth-quarter 2026 cash dividend at $0.405 per share, an increase of $0.010 from the previous quarterly dividend. It marks the company’s 59th consecutive annual increase. The dividend will be paid on December 15 to shareholders of record on December 1. The company’s updates thus bring together its savings target, third-quarter results, debt-reduction plan and dividend increase. For 2027, Stepan expects average savings to exceed $25 million per quarter.