STEPAN CO 10-Q

Item 1 - Financial Statements STEPAN COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME Unaudited (In thousands, except per share amounts) Three Months Ended March 31, 2026 2025 Net Sales $ 604,509 $ 593,255 Cost of Sales 539,658 517,792 Gross Profit 64,851 75,463 Operating Expenses: Selling 12,166 12,108 Administrative 21,313 21,414 Research, development and technical services 14,993 14,649 Deferred compensation (income) expense 562 ( 996 ) 49,034 47,175 Business restructuring (Note 16) 65,439 — Operating Income (Loss) ( 49,622 ) 28,288 Other Income (Expense): Interest, net ( 5,011 ) ( 4,126 ) Other, net (Note 15) 144 502 ( 4,867 ) ( 3,624 ) Income (Loss) Before Provision for Income Taxes ( 54,489 ) 24,664 Provision for Income Taxes ( 13,083 ) 4,953 Net Income (Loss) ( 41,406 ) 19,711 Net Income (Loss) Per Common Share (Note 10): Basic $ ( 1.81 ) $ 0.86 Diluted $ ( 1.81 ) $ 0.86 Shares Used to Compute Net Income Per Common Share (Note 10): Basic 22,888 22,867 Diluted 22,888 22,890 The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements. 2 STEPAN COMPANY CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Unaudited (In thousands) Three Months Ended March 31, 2026 2025 Net Income (Loss) $ ( 41,406 ) $ 19,711 Other Comprehensive Income (Loss): Foreign currency translation adjustments (Note 11) 262 21,609 Defined benefit pension adjustments, net of tax (Note 11) 145 55 Derivative instrument activity, net of tax (Note 11) ( 105 ) ( 1,114 ) Total Other Comprehensive Income 302 20,550 Comprehensive Income (Loss) $ ( 41,104 ) $ 40,261 The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements. 3 STEPAN COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS Unaudited (Dollars in thousands) March 31, 2026 December 31, 2025 Assets Current Assets: Cash and cash equivalents $ 140,775 $ 132,688 Receivables, net 433,694 387,959 Inventories (Note 6) 289,020 298,827 Other current assets 42,749 39,485 Total current assets 906,238 858,959 Property, Plant and Equipment: Cost 2,744,684 2,787,036 Less: Accumulated depreciation ( 1,596,520 ) ( 1,567,409 ) Property, plant and equipment, net 1,148,164 1,219,627 Goodwill, net 92,260 92,570 Other intangible assets, net 37,671 39,526 Long-term investments (Note 3) 13,287 21,270 Operating lease assets (Note 7) 59,474 62,494 Other non-current assets 76,243 63,256 Total assets $ 2,333,337 $ 2,357,702 Liabilities and Equity Current Liabilities: Current maturities of debt (Note 14) $ 323,310 $ 285,735 Accounts payable 285,699 261,723 Accrued liabilities 111,444 119,036 Total current liabilities 720,453 666,494 Deferred income taxes 11,052 11,450 Long-term debt, less current maturities (Note 14) 328,415 340,975 Non-current operating lease liabilities (Note 7) 47,086 49,340 Other non-current liabilities 33,307 45,433 Commitments and Contingencies (Note 8) Equity: Common stock, $ 1 par value; authorized 60,000,000 shares; 27,446,721 issued shares in 2026 and 27,301,177 issued shares in 2025 27,447 27,301 Additional paid-in capital 262,200 259,820 Accumulated other comprehensive loss (Note 11) ( 138,672 ) ( 138,974 ) Retained earnings 1,235,383 1,285,752 Less: Common treasury stock, at cost, 4,735,238 shares in 2026 and 4,676,739 shares in 2025 ( 193,334 ) ( 189,889 ) Total equity 1,193,024 1,244,010 Total liabilities and equity $ 2,333,337 $ 2,357,702 The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements. 4 STEPAN COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited (In thousands) Three Months Ended March 31, 2026 2025 Cash Flows From Operating Activities Net income (loss) $ ( 41,406 ) $ 19,711 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 32,947 29,270 Deferred compensation (income) expense 562 ( 996 ) Realized and unrealized loss on long-term investments 114 493 Stock-based compensation 1,503 1,382 Deferred income taxes ( 12,333 ) 990 Business restructuring 64,844 — Other non-cash items 156 125 Changes in assets and liabilities: Receivables, net ( 46,188 ) ( 40,348 ) Inventories 10,613 ( 16,892 ) Other current assets ( 4,129 ) ( 11,070 ) Accounts payable and accrued liabilities 10,191 27,361 Pension liabilities ( 28 ) ( 268 ) Environmental and legal liabilities 554 ( 2,076 ) Deferred revenues ( 466 ) ( 740 ) Net Cash Provided By Operating Activities 16,934 6,942 Cash Flows From Investing Activities Expenditures for property, plant and equipment ( 30,888 ) ( 32,748 ) Other, net 7,978 6,337 Net Cash Used In Investing Activities ( 22,910 ) ( 26,411 ) Cash Flows From Financing Activities Revolving debt and bank overdrafts, net (Note 14) 35,700 33,800 Other debt repayments ( 10,714 ) — Dividends paid ( 8,963 ) ( 8,684 ) Stock option exercises 294 82 Other, net ( 2,715 ) ( 2,437 ) Net Cash Provided By Financing Activities 13,602 22,761 Effect of Exchange Rate Changes on Cash 461 4,535 Net Increase in Cash and Cash Equivalents 8,087 7,827 Cash and Cash Equivalents at Beginning of Period 132,688 99,665 Cash and Cash Equivalents at End of Period $ 140,775 $ 107,492 Supplemental Cash Flow Information Cash payments of income taxes, net of refunds $ 5,257 $ 3,974 Cash payments of interest $ 6,000 $ 6,761 The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements. 5 STEPAN COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2026 Unaudited 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The condensed consolidated financial statements included herein have been prepared by Stepan Company (the Company), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate and make the information presented not misleading. In the opinion of management, all adjustments, consisting only of normal recurring accruals, necessary to present fairly the Company’s financial position as of March 31, 2026, its results of operations for the three months ended March 31, 2026 and 2025 and cash flows for the three months ended March 31, 2026 and 2025, have been included. These financial statements and related footnotes should be read in conjunction with the financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (2025 Annual Report on Form 10-K). 2. RECONCILIATIONS OF EQUITY Below are reconciliations of total equity for the three months ended March 31, 2026 and 2025: (In thousands, except share and per share amounts) Total Common Stock Additional Paid-in Capital Common Treasury Stock Accumulated Other Comprehensive Income (Loss) Retained Earnings Balance, December 31, 2025 $ 1,244,010 $ 27,301 $ 259,820 $ ( 189,889 ) $ ( 138,974 ) $ 1,285,752 Issuance of 6,694 shares of common stock under incentive compensation plan 294 7 287 — — — Stock-based and deferred compensation ( 1,213 ) 139 2,093 ( 3,445 ) — — Net income (loss) ( 41,406 ) — — — — ( 41,406 ) Other comprehensive income 302 — — — 302 — Cash dividends paid: Common stock ($ 0.395 per share) ( 8,963 ) — — — — ( 8,963 ) Balance, March 31, 2026 $ 1,193,024 $ 27,447 $ 262,200 $ ( 193,334 ) $ ( 138,672 ) $ 1,235,383 (In thousands, except share and per share amounts) Total Common Stock Additional Paid-in Capital Common Treasury Stock Accumulated Other Comprehensive Income (Loss) Retained Earnings Balance, December 31, 2024 $ 1,169,934 $ 27,156 $ 253,779 $ ( 188,049 ) $ ( 196,838 ) $ 1,273,886 Issuance of 1,943 shares of common stock under incentive compensation plan 82 2 80 — — — Stock-based and deferred compensation ( 1,055 ) 95 507 ( 1,657 ) — — Net income 19,711 — — — — 19,711 Other comprehensive income 20,550 — — — 20,550 — Cash dividends paid: Common stock ($ 0.385 per share) ( 8,684 ) — — — — ( 8,684 ) Balance, March 31, 2025 $ 1,200,538 $ 27,253 $ 254,366 $ ( 189,706 ) $ ( 176,288 ) $ 1,284,913 6 3. FAIR VALUE MEASUREMENTS Cash and cash equivalents Carrying value approximated fair value because of the short maturity of the instruments. Fair value of cash and cash equivalents is a Level 1 measurement. The Company's cash and cash equivalents included money market funds totaling $ 18,527,000 and $ 13,807,000 at March 31, 2026 and December 31, 2025, respectively. Derivative assets and liabilities Derivative assets and liabilities include the foreign currency exchange and interest rate swap contracts discussed in Note 4, Derivative Instruments , of the notes to the Company’s condensed consolidated financial statements (included in Item 1 of this Form 10-Q). Fair value and carrying value were the same because the contracts were recorded at fair value. The fair values of the foreign currency contracts were calculated as the difference between the applicable forward foreign exchange rates at the reporting date and the contracted foreign exchange rates multiplied by the contracted notional amounts. The fair value of the interest rate swap was calculated as the difference between the contracted swap rate and the floating interest rate multiplied by the present value of the notional amount of the contract. The Company's fair value measurements for debt fall in Level 2 of the fair value hierarchy. At March 31, 2026, and December 31, 2025 , the fair values and related carrying values of debt, including current maturities, were as follows (the fair value and carrying value amounts are presented without regard to unamortized debt issuance costs of $ 246,000 and $ 275,000 as of March 31, 2026 and December 31, 2025, respectively): (In thousands) March 31, 2026 December 31, 2025 Fair value $ 639,782 $ 619,027 Carrying value 651,971 626,985 The following tables present financial assets and liabilities, excluding cash and cash equivalents, measured on a recurring basis at fair value as of March 31, 2026, and December 31, 2025, and the level within the fair value hierarchy in which the fair value measurements fall: (In thousands) March 31, 2026 Level 1 Level 2 Level 3 Mutual fund assets $ 13,287 $ 13,287 $ — $ — Derivative assets: Interest rate contracts 1,871 — 1,871 — Foreign currency contracts 439 — 439 — Total assets at fair value $ 15,597 $ 13,287 $ 2,310 $ — Derivative liabilities: Foreign currency contracts $ 1,026 $ — $ 1,026 $ — (In thousands) December 31, 2025 Level 1 Level 2 Level 3 Mutual fund assets $ 21,270 $ 21,270 $ — $ — Derivative assets: Interest rate contracts 1,974 — 1,974 — Foreign currency contracts 423 — 423 — Total assets at fair value $ 23,667 $ 21,270 $ 2,397 $ — Derivative liabilities: Foreign currency contracts $ 340 $ — $ 340 $ — 4. DERIVATIVE INSTRUMENTS At March 31, 2026, and December 31, 2025 , the Company had open forward foreign currency exchange contracts to buy or sell foreign currencies with U.S. dollar equivalent amounts of $ 45,805,000 and $ 57,755,000 , respectively. All forward foreign exchange contracts at March 31, 2026 had durations of one month to three months . The Company is currently exposed to volatility in short-term interest rates and has mitigated certain portions of that risk by using an interest rate swap. The interest rate swap is recognized on the balance sheet as either an asset or a liability 7 measured at fair value. At March 31, 2026 , the Company held an interest rate swap contract with a notional value of $ 100,000,000 that was designated as a cash flow hedge. Period-to-period changes in the fair value of the interest rate swap are initially recognized as gains or losses in other comprehensive income. As the interest rate swap contract is settled, the corresponding gain or loss is reclassified out of accumulated other comprehensive income (AOCI) into earnings. The maturity date of the current interest swap contract is March 10, 2027 , which is closely aligned with the June 24, 2027 maturity of the Company's revolving credit facility. The fair values of the derivative instruments held by the Company on March 31, 2026, and December 31, 2025, are disclosed in Note 3, Fair Value Measurements , of the notes to the Company’s condensed consolidated financial statements (included in Item 1 of this Form 10-Q). Derivative instrument gains and losses for the three months ended March 31, 2026 and 2025, were immaterial. For amounts reclassified out of AOCI into earnings for the three months ended March 31, 2026 and 2025, see Note 11, Accumulated Other Comprehensive Income (Loss) , of the notes to the Company’s condensed consolidated financial statements (included in Item 1 of this Form 10-Q). 5. STOCK-BASED COMPENSATION Compensation expense recorded for all stock options, performance shares, time-based restricted stock units (RSUs) and stock appreciation rights (SARs) was as follows: (In thousands) Three Months Ended March 31, 2026 2025 $ 1,503 $ 1,382 Unrecognized compensation costs for stock options, performance shares, RSUs and SARs were as follows: (In thousands) March 31, 2026 December 31, 2025 Stock options $ 156 $ 109 Performance shares and RSUs 13,907 6,838 SARs 4,152 2,602 The change in unrecognized compensation costs for stock options, performance shares, RSUs and SARs is due to new grants issued in 2026. The Company granted the following awards in the first three months of 2026: Shares Stock options 3,936 Performance shares (at target) and RSUs 202,174 SARs 138,815 The unrecognized compensation costs at March 31, 2026 , are expected to be recognized over weighted-average periods of 2.2 years for stock options, 2.4 years for performance shares and RSUs and 2.3 years for SARs. 6. INVENTORIES The composition of inventories at March 31, 2026, and December 31, 2025, was as follows: (In thousands) March 31, 2026 December 31, 2025 Finished goods $ 201,699 $ 220,094 Raw materials 87,321 78,733 Total inventories $ 289,020 $ 298,827 8 7. LEASES Lease cost is recognized in both the Cost of Sales and Operating Expenses sections of the Condensed Consolidated Statements of Income. (In thousands) Three Months Ended March 31, 2026 2025 Lease Cost Operating lease cost $ 4,622 $ 4,762 Short-term lease cost 2,702 2,518 Variable lease cost 341 375 Total lease cost $ 7,665 $ 7,655 Other Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flow from operating leases $ 4,575 $ 4,776 Right-of-use assets obtained in exchange for new operating lease liabilities 316 222 The following table outlines the maturities of lease liabilities as of March 31, 2026. (In thousands) Undiscounted Cash Flows: 2026 (excluding the three months ended March 31, 2026) $ 12,736 2027 12,695 2028 9,637 2029 8,513 2030 7,166 Subsequent to 2030 17,619 Total Undiscounted Cash Flows $ 68,366 Less: Imputed interest ( 7,009 ) Present value $ 61,357 Current operating lease liabilities (1) 14,271 Non-current operating lease liabilities 47,086 Total lease liabilities $ 61,357 (1) This item is included in the Accrued liabilities line on the Company’s Condensed Consolidated Balance Sheet. Weighted-average remaining lease term-operating leases 6 Years Weighted-average discount rate-operating leases 3.8 % As of March 31, 2026 , the Company had a railcars lease, valued at approximately $ 356,000 , that had not commenced. The lease will commence during the second quarter of 2026 with a lease term of five years . 8. CONTINGENCIES There are a variety of legal proceedings pending or threatened against the Company that occur in the normal course of the Company’s business, the majority of which relate to environmental assessment, protection and remediation matters. Some of these proceedings may result in fines, penalties, judgments or costs being assessed against the Company at some future time. The Company’s operations are subject to extensive local, state and federal regulations, including the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) and the Superfund amendments of 1986 (Superfund) as well as comparable regulations applicable to the Company’s foreign locations. Over the years, the Company has received requests for information related to or has been named by government authorities as a potentially responsible party at a number of sites where cleanup costs have been or may be incurred by the Company under CERCLA and similar state statutes. In addition, the Company is from time to time involved in routine legal proceedings incidental to the conduct of its business, including personal injury, property damage, tax, trade and labor matters. The Company believes that it has made adequate provisions for the costs it is likely to incur with respect to these claims. 9 In determining the appropriate level of environmental reserves, the Company considers several factors such as information obtained from investigatory studies; changes in the scope of remediation; the interpretation, application and enforcement of laws and regulations; changes in the costs of remediation programs; the development of alternative cleanup technologies and methods; and the relative level of the Company’s involvement at various sites for which the Company is allegedly associated. The level of annual expenditures for remedial, monitoring and investigatory activities will change in the future as major components of planned remediation activities are completed and the scope, timing and costs of existing activities are changed. As of March 31, 2026 , the Company estimated a range of possible environmental losses and legal losses of $ 19,825,000 to $ 46,376,000 . Within the range of possible environmental losses and legal losses, management has currently concluded that no single amount is more likely to occur than any other amounts in the range and, thus, has accrued at the lower end of the range. These accruals totaled $ 19,825,000 at March 31, 2026 and $ 19,272,000 at December 31, 2025. A lthough the Company believes that its estimated range of possible environmental losses and legal losses and its reserves are adequate for contingencies, it is possible, due to uncertainties including those noted above, that additional reserves could be required in the future. Cash expenditures related to environmental remediation and certain other legal matters approximated $ 301,000 and $ 2,576,000 for the three months ended March 31, 2026 and 2025, respectively. For certain sites, the Company has responded to information requests made by federal, state or local government agencies but has received no response confirming or denying the Company’s stated positions. As such, estimates of the total costs, or range of possible costs, of remediation, if any, or the Company’s share of such costs, if any, cannot be determined with respect to these sites. Consequently, the Company is unable to predict the effect thereof on the Company’s financial position, cash flows and results of operations. Based on the Company’s present knowledge with respect to its involvement at these sites, the possibility of other viable entities’ responsibilities for cleanup, and the extended period over which any costs would be incurred, management believes that the Company has no material liability at these sites and that these matters, individually and in the aggregate, will not have a material effect on the Company’s financial position. However, in the event of one or more adverse determinations with respect to such sites in any annual or interim period, the effect on the Company’s cash flows and results of operations for those periods could be material. Following are summaries of the Company’s major contingencies at March 31, 2026: Maywood, New Jersey Site The Company’s property in Maywood, New Jersey, property formerly owned by the Company adjacent to its current site and other nearby properties (collectively, the Maywood site) were listed on the National Priorities List in September 1993 pursuant to the provisions of CERCLA because of alleged chemical and radiological contamination. Pursuant to (i) a September 21, 1987 Administrative Order on Consent entered into between the U.S. Environmental Protection Agency (USEPA) and the Company for property formerly owned by the Company at the Maywood site and (ii) the issuance of an order on May 2, 1991 by the USEPA to the Company for property currently owned by the Company at the Maywood site, the Company has completed various Remedial Investigation/Feasibility Studies of soil and groundwater at the Maywood site. On September 24, 2014, the USEPA issued its Record of Decision (ROD) for chemically-contaminated soil at the Maywood site. The ROD was amended pursuant to an Explanation of Significant Differences in January 2021. On February 29, 2024, the U.S. District Court for the District of New Jersey entered a consent decree among the Company, the United States, the New Jersey Department of Environmental Protection (NJDEP) and the New Jersey Spill Compensation Fund Administrator that requires the Company to take certain actions and to pay certain past costs of the United States and NJDEP. The USEPA has not yet issued a ROD for chemically-contaminated groundwater at the Maywood site. Based on the most current information available, the Company believes its recorded liability is reasonable having considered the range of estimated costs of remediation for the Maywood site. The estimate of the cost of remediation for the Maywood site could change again as the Company continues to hold discussions with the USEPA, as the design of the remedial action is finalized, if a groundwater ROD is issued or if other potentially responsible parties are identified. The ultimate amount for which the Company is liable could differ materially from the Company’s current recorded liability. D’Imperio Property Site During the mid-1970’s, Jerome Lightman and the Lightman Drum Company disposed of hazardous substances generated by the Company at several sites in New Jersey, including the D’Imperio site. The Company was named as a potentially responsible party in an October 2, 1998 lawsuit in the U.S. District Court for the District of New Jersey that involved the D’Imperio Site. The Company is cooperating with other potentially responsible parties to implement the selected remedy. Based on current information, the Company believes that its recorded liability is reasonable having considered the range of estimated cost of remediation for the D’Imperio site. Depending on the ultimate cost of the remediation at this site, the amount for which the Company is liable could differ materially from the Company’s current recorded liability. 10 Wilmington Site Property formerly owned and operated by the Company in Wilmington, Massachusetts was listed on the National Priorities List in 2006. The Company, together with the current site owner and another potentially responsible party, entered into an Administrative Order on Consent in July 2007 to undertake a Remedial Investigation and Feasibility Study. A ROD was issued by the USEPA on March 30, 2021. The Company and three other potentially responsible parties entered into a consent decree, dated September 28, 2023, with USEPA and the Commonwealth of Massachusetts that requires the remedial design and remedial action of the remedy selected in the ROD for two operable units and an interim remedy for another operable unit. Remediation at this site is being managed by its current owner, to whom the Company sold the property in 1980. The Company is contractually obligated to contribute up to five percent of the environmental response costs incurred by the current owner, with no limitation on the ultimate amount of contributions. The Company had paid the current owner $ 4,379,000 for the Company’s portion of environmental response costs at the Wilmington site through March 31, 2026. The Company has recorded a liability for its portion of the estimated remediation costs for the site. Depending on the ultimate cost of the remediation at this site, the amount for which the Company is liable could differ materially from the current recorded liability. On July 29, 2022, the Company and other potentially responsible parties were notified of a possible joint claim by federal and state trustees for alleged natural resource damages related to the Wilmington site. The alleged damages may result in a range of possible penalties and the Company recorded a liability for this matter during the first quarter of 2024. Depending on the ultimate resolution of this matter, the amount for which the Company is liable could differ materially from the current recorded liability. Millsdale Site On March 26, 2024, the Company received a Notice and Finding of Violation from the USEPA alleging violations of air regulations at the Company’s Elwood, Illinois (Millsdale) facility. The notice alleges violations related to operating parameters and air emission requirements. The alleged violations may result in a range of possible penalties, including financial penalties or operational remedies; however, at this stage of the matter, the Company is unable to predict the ultimate outcome or what impact, if any, the outcome might have on the Company’s financial position, results of operations or cash flows. Other U.S. Sites Through the regular environmental monitoring of its plant production sites, the Company discovered levels of chemical contamination that were above thresholds allowed by law at its Millsdale and Fieldsboro, New Jersey plants. The Company voluntarily reported its results to the applicable state environmental agencies. As a result, the Company is required to perform self-remediation of the affected areas. Based on current information, the Company believes that its recorded liability for the remediation of the affected areas is appropriate based on an estimate of expected costs. However, actual costs could differ materially from the current recorded liability. Brazil Tax Rescission Action In March 2017, the Brazil Supreme Court ruled that ICMS (State VAT) does not represent a Company’s revenue and should not be included in the calculation basis of certain indirect taxes (PIS/COFINS). Based on the Supreme Court’s decision, the Company’s Brazilian subsidiary filed a lawsuit on March 23, 2017 to recover PIS/COFINS overpayments. The Company’s recovery case was successful and became final in November 2018. In May 2021, the Brazil Supreme Court modulated its original decision so that only taxpayers that had filed lawsuits before March 15, 2017, should recover prior PIS/COFINS overpayments. On June 12, 2023, the Brazil National Treasury filed a rescission action against the Company’s Brazilian subsidiary to rescind its use of the PIS/COFINS tax credits for the period from March 23, 2012, to March 15, 2017. In September and October 2024, the Brazil Superior Court and Supreme Court, respectively, ruled that the generally held two-year “res judicata” principle would start from the May 2021 ruling and not the final ruling in prior taxpayer cases (e.g., November 30, 2018, for the Company’s case). Based on current information, the Company believes that its recorded liability is reasonable; however, depending on the ultimate resolution of this matter, the amount for which the Company is liable could differ materially from the current recorded liability. Other Matters On March 19, 2025, the Company received a pre-filing notice from USEPA for alleged violations of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) associated with certain of the Company’s biocide products sold by a licensed distributor. USEPA assessed a civil penalty of $ 1,126,000 , which the Company paid on July 2, 2025. As of March 31, 2026, the Company recovered the entire amount of the USEPA penalty from third parties. 11 9. POSTRETIREMENT BENEFIT PLANS Defined Benefit Pension Plans The Company sponsors various funded qualified and unfunded non-qualified defined benefit pension plans, the most significant of which cover employees in the U.S. and U.K. locations. The U.S. and U.K. defined benefit pension plans are frozen and service benefits are no longer being accrued. Components of Net Periodic Benefit Cost UNITED STATES (In thousands) Three Months Ended March 31, 2026 2025 Interest cost $ 1,646 $ 1,700 Expected return on plan assets ( 1,848 ) ( 2,002 ) Amortization of net actuarial loss (gain) 108 ( 19 ) Net periodic benefit cost $ ( 94 ) $ ( 321 ) UNITED KINGDOM (In thousands) Three Months Ended March 31, 2026 2025 Interest cost $ 179 $ 168 Expected return on plan assets ( 202 ) ( 194 ) Amortization of net actuarial loss 85 92 Net periodic benefit cost $ 62 $ 66 Employer Contributions U.S. Plans In 2026, the Company expects to contribute $ 910,000 to the U.S. qualified defined benefit plans and $ 145,000 to the U.S. unfunded non-qualified pension plans. Of such amount, $ 29,000 had been paid to the non-qualified plans as of March 31, 2026. U.K. Plan The Company’s U.K. subsidiary does not expect to contribute to its defined benefit pension plan in 2026. Defined Contribution Plans The Company sponsors retirement defined contribution plans that cover eligible U.S. and U.K. employees. The Company’s U.S. retirement plans include two qualified plans, one of which is a 401(k) plan and one of which is an employee stock ownership plan (profit sharing plan), and one non-qualified supplemental executive plan. In the three months ended March 31, 2026 and 2025 , the Company made contributions into the qualified retirement plans for U.S. employees and for certain non-U.S. employees. Profit sharing contributions were determined using a formula applied to Company earnings. Approximately 85 percent of union and non-union employees are eligible for either the Company's sponsored or statutory profit sharing contributions and 100 percent of U.S. based union and non-union employees are eligible for the Company's sponsored profit sharing contributions. In 2025 and 2026, profit sharing contributions for U.S. employees were made to the employee stock ownership plan. Profit sharing contributions are allocated to participant accounts based on participant base earnings. Defined contribution plan expenses for the Company’s qualified contribution plans were as follows: (In thousands) Three Months Ended March 31, 2026 2025 Retirement savings contributions $ 2,244 $ 2,215 Profit sharing contributions 561 1,110 Total defined contribution plan expenses $ 2,805 $ 3,325 12 The Company has a rabbi trust to fund the obligations of its non-qualified supplemental executive defined contribution plans (supplemental plans). The trust is comprised of various mutual fund investments selected by the participants of the supplemental plans. In accordance with the accounting guidance for rabbi trust arrangements, the assets of the trust and the obligations of the supplemental plans are reported on the Company’s condensed consolidated balance sheets. The Company elected the fair value option for the mutual fund investment assets so that offsetting changes in the mutual fund values and defined contribution plan obligations would be recorded in earnings in the same period. Therefore, the mutual funds are reported at fair value with any subsequent changes in fair value recorded in the statements of income. The supplemental plan liabilities increase (i.e., supplemental plan expense is recognized) when the value of the trust assets appreciate and decrease when the value of the trust assets decline (i.e., supplemental plan income is recognized). At March 31, 2026 , the balance of the trust assets was $ 338,000 which equaled the balance of the supplemental plan liabilities. See the long-term investments section in Note 3, Fair Value Measurements , of the notes to the Company’s condensed consolidated financial statements (included in Item 1 of this Form 10-Q) for further information regarding the Company’s mutual fund assets. 10. EARNINGS PER SHARE Below are the computations of basic and diluted earnings per share for the three months ended March 31, 2026 and 2025: (In thousands, except per share amounts) Three Months Ended March 31, 2026 2025 Computation of Basic Earnings per Share Net income (loss) $ ( 41,406 ) $ 19,711 Weighted-average number of common shares outstanding 22,888 22,867 Basic earnings per share $ ( 1.81 ) $ 0.86 Computation of Diluted Earnings per Share Net income (loss) $ ( 41,406 ) $ 19,711 Weighted-average number of shares outstanding 22,888 22,867 Add weighted-average net shares from assumed exercise of options (under treasury stock method) (1)(2) — 12 Add weighted-average net shares related to unvested stock awards (under treasury stock method) (2) — 2 Add weighted-average net shares from assumed exercise of SARs (under treasury stock method) (1)(2) — 9 Add weighted-average contingently issuable net shares related to performance stock awards (under treasury stock method) (2) — — Weighted-average shares applicable to diluted earnings 22,888 22,890 Diluted earnings per share $ ( 1.81 ) $ 0.86 (1) Options/SARs to acquire 1,213,923 shares of the Company's common stock were excluded from the computation of dilutive earnings per share for the three months ended March 31, 2025. The options/SARs' exercise prices were greater than the average market price for the Company's common stock and inclusion of the instruments would have had an antidilutive effect on the computations of the earnings per share. (2) For the three months ended March 31, 2026, potential common shares were excluded from the computation of diluted earnings per share because of their anti-dilutive effect due to the net loss for the quarter. 13 11. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Below is the change in the Company’s accumulated other comprehensive income (loss) (AOCI) balance by component (net of income taxes) for the three months ended March 31, 2026 and 2025: (In thousands) Foreign Currency Translation Adjustments Defined Benefit Pension Plan Adjustments Cash Flow Hedge Adjustments Total Balance at December 31, 2024 $ ( 175,802 ) $ ( 25,996 ) $ 4,960 $ ( 196,838 ) Other comprehensive income (loss) before reclassifications 21,609 — ( 1,112 ) 20,497 Amounts reclassified from AOCI — 55 ( 2 ) 53 Net current-period other comprehensive income (loss) 21,609 55 ( 1,114 ) 20,550 Balance at March 31, 2025 $ ( 154,193 ) $ ( 25,941 ) $ 3,846 $ ( 176,288 ) Balance at December 31, 2025 $ ( 113,982 ) $ ( 26,982 ) $ 1,990 $ ( 138,974 ) Other comprehensive income (loss) before reclassifications 262 — ( 103 ) 159 Amounts reclassified from AOCI — 145 ( 2 ) 143 Net current-period other comprehensive income (loss) 262 145 ( 105 ) 302 Balance at March 31, 2026 $ ( 113,720 ) $ ( 26,837 ) $ 1,885 $ ( 138,672 ) Information regarding the reclassifications out of AOCI for the three months ended March 31, 2026 and 2025, is displayed below: (In thousands) Amount Reclassified from AOCI (1) AOCI Components Three Months Ended March 31, Affected Line Item in Condensed Consolidated Statements of Income 2026 2025 Amortization of defined benefit pension actuarial losses $ ( 193 ) $ ( 73 ) (2) 48 18 Tax benefit $ ( 145 ) $ ( 55 ) Net of tax Gains and losses on cash flow hedges: Foreign exchange contracts 2 2 Cost of sales 2 2 Total before tax — — Tax benefit $ 2 $ 2 Net of tax Total reclassifications for the period $ ( 143 ) $ ( 53 ) Net of tax (1) A mounts in parentheses denote expense to the Company’s Condensed Consolidated Statements of Income. (2) This component of accumulated other comprehensive income is included in the computation of net periodic benefit cost. See Note 9, Postretirement Benefit Plans , of the notes to the Company’s condensed consolidated financial statements (included in Item 1 of this Form 10-Q) for additional details. 12. SEGMENT REPORTING The Company has three reportable segments: Surfactants, Polymers and Specialty Products. The Company’s Chief Operating Decision Maker (CODM) is the President and Chief Executive Officer. The accounting policies of the reportable segments are the same as those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 . The 14 following is segment data for the three months ended March 31, 2026 and 2025, and reconciliations of segment data to the condensed consolidated financial statements: For the Three Months Ended March 31, 2026 (In thousands) Surfactants Polymers Specialty Products Total Net Sales $ 453,687 $ 130,029 $ 20,793 $ 604,509 Cost of Sales (1) 410,017 114,045 15,173 539,235 Operating Expenses (2) 25,122 7,162 905 33,189 Operating Income $ 18,548 $ 8,822 $ 4,715 $ 32,085 Unallocated Corporate Expenses (3) — — — ( 81,707 ) Consolidated Operating Income $ ( 49,622 ) Segment Capital Expenditures $ 22,383 $ 7,278 $ 1,462 $ 31,123 Unallocated Capital Expenditures (4) — — — ( 235 ) Consolidated Capital Expenditures $ 30,888 Segment Depreciation and Amortization $ 22,568 $ 8,576 $ 1,453 $ 32,597 Unallocated Depreciation and Amortization (5) — — — 350 Consolidated Depreciation and Amortization $ 32,947 For the Three Months Ended March 31, 2025 (In thousands) Surfactants Polymers Specialty Products Total Net Sales $ 430,337 $ 146,116 $ 16,802 $ 593,255 Cost of Sales (1) 376,666 130,896 10,397 517,959 Operating Expenses (2) 24,741 7,202 897 32,840 Operating Income $ 28,930 $ 8,018 $ 5,508 $ 42,456 Unallocated Corporate Expenses (3) — — — ( 14,168 ) Consolidated Operating Income $ 28,288 Segment Capital Expenditures $ 24,004 $ 7,071 $ 1,080 $ 32,155 Unallocated Capital Expenditures (4) — — — 593 Consolidated Capital Expenditures $ 32,748 Segment Depreciation and Amortization $ 19,430 $ 8,061 $ 1,489 $ 28,980 Unallocated Depreciation and Amortization (5) — — — 290 Consolidated Depreciation and Amortization $ 29,270 15 The following is segment assets at March 31, 2026 and December 31, 2025, and reconciliations of segment assets to the condensed consolidated financial statements. As of March 31, 2026 (In thousands) Surfactants Polymers Specialty Products Total Segment Assets $ 1,611,417 $ 527,755 $ 83,228 $ 2,222,400 Unallocated Assets (6) — — — 110,937 Consolidated Assets $ 2,333,337 As of December 31, 2025 (In thousands) Surfactants Polymers Specialty Products Total Segment Assets $ 1,630,551 $ 536,748 $ 82,300 $ 2,249,599 Unallocated Assets (6) — — — 108,103 Consolidated Assets $ 2,357,702 (1) Cost of sales is comprised of raw material costs (including freight and shipping/handling expenses to deliver the raw materials), manufacturing plant labor expenses and other manufacturing overhead expenses, such as utilities, maintenance, depreciation, etc. that can be allocated to reportable segments. (2) Operating expenses allocated to reportable segments are comprised of selling, administrative and research and development expenses. The CODM uses operating expenses in aggregate to analyze the performance of each reportable segment. (3) Unallocated corporate expenses are primarily comprised of corporate administrative expenses (e.g., corporate finance, legal, human resources, information technology and environmental remediation expenses), deferred compensation and business restructuring expenses that are not included in segment operating income and not used to evaluate segment performance. (4) Unallocated capital expenditures primarily include capital expenditures related to the Company’s Northfield, Illinois location. (5) Unallocated depreciation and amortization primarily includes depreciation related to the Company’s Northfield, Illinois location. (6) Unallocated assets primarily include assets in the Company’s Northfield, Illinois location. 13. REVENUE FROM CONTRACTS WITH CUSTOMERS The Company has accounts receivable financing programs under which the Company has the ability to sell eligible receivables for select customers to select banking institutions. For the three months ended March 31, 2026 and 2025 , the Company’s cash proceeds from the sale of receivables were $ 15,618,000 and $ 34,469,000 , respectively. Financing charges incurred from the sale of accounts receivable qualifying as sales for the three months ended March 31, 2026 and 2025 were immaterial. As of March 31, 2026 and December 31, 2025 , the Company had $ 307,000 and $ 218,000 of contract liabilities and no contract assets, respectively. A contract liability would typically arise when an advance or deposit is received from a customer before the Company recognizes revenue. In practice, this is rare as it would require a customer to make a payment prior to a performance obligation being satisfied. When such situations do arise, the Company maintains a deferred revenue liability until the time a performance obligation has been satisfied. The Company recognized $ 218,000 of revenue in the first three months of 2026 from pre-existing contract liabilities at December 31, 2025. In addition, during 2020, the Company recorded $ 10,709,000 of long-term deferred revenue associated with a payment received to defray the cost of capital expenditures necessary to service a customer’s future product needs. At March 31, 2026 , $ 1,662,000 was classified as long-term and $ 2,216,000 was classified as short-term. This deferred revenue is being recognized over the period of the contract and $ 6,831,000 of revenue has been recognized from the beginning of the contract term through March 31, 2026. 16 The tables below provide a geographic disaggregation of net sales for the three months ended March 31, 2026 and 2025. The Company’s business segmentation by geographic region most effectively captures the nature and economic characteristics of the Company’s revenue streams impacted by economic factors. (In thousands) For the Three Months Ended March 31, 2026 Geographic Market Surfactants Polymers Specialty Total North America $ 259,095 $ 71,802 $ 18,111 $ 349,008 Europe 94,161 47,534 2,635 144,330 Latin America 96,610 206 47 96,863 Asia 3,821 10,487 — 14,308 Total $ 453,687 $ 130,029 $ 20,793 $ 604,509 (In thousands) For the Three Months Ended March 31, 2025 Geographic Market Surfactants Polymers Specialty Total North America $ 251,735 $ 72,793 $ 13,464 $ 337,992 Europe 81,598 61,142 3,267 146,007 Latin America 82,764 296 71 83,131 Asia 14,240 11,885 — 26,125 Total $ 430,337 $ 146,116 $ 16,802 $ 593,255 14. DEBT At March 31, 2026 and December 31, 2025, debt was comprised of the following: (In thousands) Maturity Dates March 31, 2026 December 31, 2025 Senior unsecured notes 3.95 % (net of unamortized debt issuance cost of $ 45 and $ 56 for 2026 and 2025, respectively) 2026 - 2027 $ 28,525 $ 28,515 2.30 % (net of unamortized debt issuance cost of $ 49 and $ 55 for 2026 and 2025, respectively) 2026 - 2028 29,951 29,945 2.37 % (net of unamortized debt issuance cost of $ 54 and $ 60 for 2026 and 2025, respectively) 2026 - 2028 29,946 29,940 2.73 % (net of unamortized debt issuance cost of $ 48 and $ 52 for 2026 and 2025, respectively) 2026 - 2031 85,666 85,662 2.83 % (net of unamortized debt issuance cost of $ 50 and $ 52 for 2026 and 2025, respectively) 2026 - 2032 64,237 74,948 6.17 % (net of unamortized debt issuance cost of $ 0 and $ 0 for 2026 and 2025, respectively) 2029 - 2033 75,000 75,000 Revolving credit facility and term loan borrowing 2026 - 2027 338,400 302,700 Total debt $ 651,725 $ 626,710 Less current maturities 323,310 285,735 Long-term debt $ 328,415 $ 340,975 The Company's long-term debt financing is comprised of certain senior unsecured notes issued to insurance companies in private placement transactions pursuant to note purchase agreements (the “Note Purchase Agreements”), totaling $ 313,325,000 as of March 31, 2026 . These notes are denominated in U.S. dollars and have fixed interest rates ranging from 2.30 percent to 6.17 percent. The notes had original maturities of seven to 12 years with mandatory principal payments beginning four, five and six years after issuance . The Company will be required to make principal payments on the currently outstanding notes from 2026 to 2033. The Company’s credit agreement (the Credit Agreement) with a syndicate of banks provides for credit facilities in an initial aggregate principal amount of $ 450,000,000 , consisting of (a) a $ 350,000,000 multi-currency revolving credit facility and (b) a $ 100,000,000 delayed draw term loan credit facility, each of which matures on June 24, 2027 . The Company's credit agreement with Credit Industriel et Commercial NY (the CIC Credit Agreement) provides for a credit facility in an aggregate principal amount of $ 8,700,000 . The facility is for the sole purpose of the issuance of standby letters of credit. As of March 31, 2026 , the Company had an outstanding letter of credit of $ 8,694,000 under the CIC Credit Agreement. The 17 Company maintains import and export letters of credit, and standby letters of credit under its workers’ compensation insurance agreements and for other purposes, as needed from time to time, which are issued under the Credit Agreement and under the CIC Credit Agreement. As of March 31, 2026 , the Company had outstanding letters of credit totaling $ 4,860,000 and $ 338,400,000 of outstanding borrowings under the Credit Agreement, inclusive of an $ 81,875,000 delayed-draw term loan ($ 18,125,000 of the term loan principal has been permanently repaid as scheduled). There was $ 88,615,000 available under the Credit Agreement as of March 31, 2026. The Company's foreign subsidiaries had no debt outstanding at March 31, 2026. The Company’s material debt agreements contain provisions which, among other covenants, require maintenance of certain financial ratios and place limitations on additional debt, investments and payment of dividends. Based on the loan agreement provisions that place limitations on dividend payments, unrestricted retained earnings (i.e., retained earnings available for dividend distribution) were $ 213,848,000 and $ 263,923,000 at March 31, 2026 and December 31, 2025 , respectively. 15. OTHER, NET Other, net in the condensed consolidated statements of income included the following: (In thousands) Three Months Ended March 31, 2026 2025 Foreign exchange gain $ 182 $ 619 Investment income 45 121 Realized and unrealized (loss) on investments ( 114 ) ( 493 ) Net periodic benefit cost 31 255 Other, net $ 144 $ 502 16. BUSINESS RESTRUCTURING In February 2026, as part of the Company's Project Catalyst, a comprehensive operational and efficiency plan, the Company’s Board of Directors approved plans to shut down the Company’s Fieldsboro, New Jersey site and decommission select assets at its Elwood, Illinois (Millsdale) and Stalybridge, U.K. facilities during the first half of 2026. The Company is consolidating the impacted operations into its existing network, improving its asset utilization and reducing its fixed cost basis, while maintaining ongoing supply for its customers. Total pre-tax business restructuring expense related to the asset shutdowns was $ 65,439,000 during the first quarter of 2026. Restructuring costs in the first quarter of 2026 included $ 62,367,000 of asset impairment charges. The Fieldsboro, New Jersey site, Elwood, Illinois (Millsdale) site and Stalybridge, U.K site recognized $ 43,022,000 , $ 14,284,000 and $ 5,061,000 , respectively, in asset impairment charges. The Company also recognized $ 1,817,000 and $ 1,255,000 in decommissioning and termination expenses, respectively, some of which were paid during the first quarter of 2026. Although all restructuring charges related to the Surfactants segment, they were excluded from the Surfactant segment results and are shown on a separate Business restructuring line item in the Condensed Consolidated Statements of Income for the three months ended March 31, 2026 and 2025. Below is a reconciliation of the beginning and ending balances of the restructuring liability: (In thousands) Decommissioning and Other Charges Termination Benefits Total Restructuring liability at January 1, 2026 $ — $ — $ — Expenses accrued during the period 1,405 815 2,220 Amounts paid — — — Foreign currency translation — — — Restructuring liability at March 31, 2026 $ 1,405 $ 815 $ 2,220 18 The Company anticipates recognizing total restructuring expenses in the range of $ 70,000,000 to $ 80,000,000 for full year 2026. 17. NONCASH INVESTING AND FINANCING ACTIVITIES Noncash investing activities included liabilities (accounts payable) incurred for property, plant and equipment expenditures of approximately $ 9,517,000 and $ 8,132,000 that were unpaid at March 31, 2026 and 2025 , respectively. Noncash financing activities included the issuance of 138,850 shares of the Company’s common stock (valued at $ 7,511,000 ) and 94,314 shares of the Company’s common stock (valued at $ 5,712,000 ) under the Company’s equity incentive compensation plan during the three months ended March 31, 2026 and 2025 , respectively. 18. RECENT ACCOUNTING PRONOUNCEMENTS In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2024-03, Income Statement - Reporting Comprehensive income - Expense Disaggregation Disclosures (Subtopic 220-40) . This update requires that public entities on an interim and annual basis disclose, in the notes to financial statements, specified information about certain costs and expenses. ASU No. 2024-03 requires a footnote disclosure in tabular form of each expense caption on the face of the income statement that includes any of the following natural expenses: (1) purchases of inventory, (2) employee compensation, (3) depreciation, and (4) intangible asset amortization. The disclosure would also include a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively and disclosure of the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. This ASU does not change or remove existing expense disclosure requirements; however, it may affect where that information appears in the footnotes to the financial statements. In January 2025, the FASB issued ASU No. 2025-01, Income Statement - Reporting Comprehensive income - Expense Disaggregation Disclosures (Subtopic 220-40), Clarifying the effective date. The amendments in ASU No. 2024-03 are effective for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The amendments in this update should be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. The implementation of ASU No. 2024-03 will not have an impact on the Company’s financial position, results of operations and cash flow but will impact the Company’s interim and annual disclosures related to the relevant subtopics in this update. In September 2025, the FASB issued ASU No. 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40) An Amendment of the FASB Accounting Standards Codification Targeted Improvements to the Accounting for Internal-Use Software. This update removes all references to software development stages so the entities start capitalizing software costs when 1) management has authorized and committed to funding the software projects and 2) it is probable that the project will be completed and the software will be used to perform the functions intended. Under the current rule, entities are required to capitalize development costs incurred depending on the nature of the costs and the project stage during which they occur. The amendments in this update are effective for annual periods beginning after December 15, 2027, and interim periods within those annual reporting periods. Early adoption is permitted as of the beginning of the annual reporting period. The Company is in the process of evaluating ASU 2025-06 to determine its impact, if any, on the Company’s financial position, results of operations and cash flows. 19. SUBSEQUENT EVENT On April 24, 2026, the Company entered into a Purchase and Sale Agreement to sell a parcel of the Company’s land near its Elwood, IL (Millsdale) site. The agreed upon purchase price for the property is $ 30,000,000 and is subject to customary adjustments and closing conditions. The transaction is expected to close during the second half of 2026. 19