Stepan Company

Good morning, and welcome to the Steppin' Company third quarter 2025 earnings conference call. During the presentation, all participants will be in a listen-only mode. Afterward, we will conduct a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. As a reminder, this call is being recorded. on Wednesday, October 29th, 2025. It is now my pleasure to turn the call over to Mr. Ruben Velazquez, Vice President and Chief Financial Officer of Stepan Company. Mr. Velazquez, please go ahead.

Thanks, Jacinda. Good morning, and thank you for joining Stepan's Company Third Quarter 2025 Financial Review. Before we begin, please note that information in this conference call contains forward-looking statements, which are not historical facts. These statements involve risks and uncertainties that could cause actual results to differ material, including but not limited to prospects for our foreign operations, global and regional economic conditions, and factors detailed in our securities and exchange commission filings. In addition, this conference call will include discussions of adjusted net income, adjusted EBITDA, and free cash flow, which are non-GAAP measures. We provide reconciliations to the comparable gap measures in the earnings presentation and press release, which we have made available at www.stepan.com under the investor section of our website. Whether you are joining us online or over the phone, we encourage you to review the investor's slide presentation. We make these slides available at approximately the same time as when the earnings release is issued, and we hope that you find the information and perspectives helpful. With that, I would like to turn the call over to Mr. Luis Rojo, our president and CHIP executive officer.

Thank you, Ruben. Good morning, and thank you all for joining us today to discuss our third quarter 2025 results. I plan to share highlights of the quarterly performance and will also share updates on our key strategic priorities, while Ruben will provide additional details on our financial results. We delivered 9% adjusted EBITDA growth through the first nine months of 2025, bringing year-to-date adjusted EBITDA to $165 million. These results were restrained by the significant increase in oleochemical raw material prices, which continue to impact surfactant margins, and by higher startup costs related to our new Pasadena, Texas facility. we remain focused on gradually recovering our margins and keeping a healthy balance between volumes and margins. Third quarter adjusted EBITDA was $56 million, up 6% year-on-year. Specialty product adjusted EBITDA increased significantly, driven by favorable order timing within the pharmaceutical business. Polymers deliver volume growth across rigid polyols and commodity pH. while EBITDA was slightly lower due to unfavorable mix and margin pressures. Surfactant-adjusted EBITDA declined versus the prior year, driven by higher Pasadena startup costs, oleochemical raw material cost inflation, and lower demand within our global commodity consumer products and markets. Total company sales volumes grew 1%, with polymers up 8%, and our NCT product line up 26%, while surfactants' volume declined 2%. In surfactants, we continued to experience double-digit volume growth within the crop productivity business and mid-single-digit growth in the oil field and market. This growth was offset by lower demand within the global commodity consumer products and markets. North America's rigid polio and commodity PA volumes were both up double digits, while European rigid polio volumes continues to be impacted by macroeconomic uncertainties and low construction activity. Despite a very challenging environment for the chemical sector, we remain encouraged by the volume growth across several of our key strategic end markets. We finished the third quarter of 2025 with $10.9 million of adjusted net income, down 54% versus the prior year, largely reflecting a higher effective tax rate, higher interest net, and higher depreciation, none of which had cash impacts. Free cash flow was positive at $40 million, during the quarter, driven by reduced working capital and disciplined capital spending. During the third quarter of 2025, the company paid $8.7 million in dividends to shareholders. Our Board of Directors declared a quarterly cash dividend on Stepan Commonwealth stock of 39.5 cents per share, payable on December 15, 2025. This represents a 2.6% increase in our dividend. Stepan has paid and increased his dividend for 58 consecutive years. Ruben will now share some details about our third quarter results.