斯泰潘公司 (SCL) 2026年第三季度業績電話會：EBITDA增長18%，銷量增長7%

核心要點

• 斯泰潘公司（Stepan Company）公佈2026財年第三季度調整后EBITDA為6630萬美元，同比增長18%，內生銷量增長、利潤率修復以及「催化劑項目」（Project Catalyst）帶來的成本節省抵消了公司支出的增加。
• 調整后淨利潤增長98%至2170萬美元，調整后攤薄每股收益從0.48美元增至0.94美元。報告期攤薄每股收益為0.78美元，上年同期為0.47美元。
• 三大業務板塊的內生銷量整體增長7%。其中，表面活性劑增長8%，聚合物增長3%，特種產品增長20%。
• 表面活性劑業務引領利潤增長，調整后EBITDA增長27%至4800萬美元。定價舉措和合同傳導機制抵消了原材料成本上漲的影響。
• 在扣除2100萬美元資本支出和3200萬美元營運資金佔用后，自由現金流為800萬美元。淨槓桿率從一年前的2.7倍改善至2.4倍。
• 管理層預計2026全財年調整后EBITDA將實現增長，自由現金流為正，並持續去槓桿。同時預計2026年「催化劑項目」將節省約6600萬至7000萬美元成本，超出了其兩年1億美元目標中原本60%的階段性里程碑。

關鍵財務數據

報告業績包含560萬美元的税前重組費用，主要與新澤西州菲爾茲伯勒工廠關停、部分資產退役以及7月宣佈的全球月薪員工裁減有關。

業務與運營業績

表面活性劑

表面活性劑淨銷售額增長15%至4.87億美元。銷售價格上漲10%，報告銷量增長3%，內生銷量增長8%，匯率因素拉動銷售額增長2%。

消費品（包括洗滌用品）、建築與工業以及油田市場的兩位數增長引領了內生增長。農作物增產需求下降抵消了部分增幅。

調整后EBITDA增長27%至4800萬美元。北美、亞洲和拉丁美洲受益於內生銷量增長、價格執行良好和利潤率修復。歐洲小幅下降，因農作物增產需求弱化抵消了消費市場的增長。

聚合物

聚合物淨銷售額增長24%至1.79億美元。銷售價格上漲22%，主要反映了原材料成本上漲的順暢傳導，銷量則增長了3%。

在硬質多元醇、苯酐以及噴塗泡沫持續增長的支撐下，北美銷量實現了兩位數增長。歐洲和亞洲的需求疲軟抵消了部分增幅。

調整后EBITDA增長4%至2300萬美元。北美EBITDA增加300萬美元，歐洲減少200萬美元，主要由於德國生產基地的例行監管檢修。由於中國對特種多元醇需求疲軟，亞洲地區略有下降。

特種產品

特種產品淨銷售額增長12%至2700萬美元，銷量增長20%。調整后EBITDA在MCT銷量增加的推動下增長5%至1170萬美元，但被不利的產品組合部分抵消。

管理層表示，其擴展的MCT產品線覆蓋了更多市場細分領域和價格層級。公司擁有可用產能，並計劃在收益率適宜的情況下繼續提高反應釜利用率。

現金流、資本配置與運營

營運資金變動前的經營現金流為4900萬美元。自由現金流為800萬美元，反映了因銷售強勁和原材料成本增加導致的3200萬美元營運資金佔用，以及600萬美元的重組相關現金支出。

斯泰潘公司支付了900萬美元股息，並將季度股息每股提高0.01美元（即2.5%），標誌着其連續第59年提高年度股息。

10月，公司完成了對米爾斯代爾（Millsdale）基地附近土地的出售，交易金額為2850萬美元。管理層表示所得款項將在11月用於償還債務。

位於德克薩斯州帕薩迪納的基地產能利用率約為75%至80%。管理層表示，該工廠在2026年已帶來高於預期的代工節省，對未來特種烷氧基化物的增長依然至關重要。

管理層業績指引

管理層預計斯泰潘公司2026全財年將實現調整后EBITDA增長、自由現金流為正以及資產負債表進一步去槓桿。

「催化劑項目」的季度成本節省年化率在第三季度達到約2300萬美元。公司目前預計2026年節省約6600萬至7000萬美元，超出了其兩年1億美元税前節省目標中原本60%的階段性里程碑。

展望2027年，管理層預計「催化劑項目」的平均季度節省金額將超過2500萬美元。隨着帕薩迪納基地產能提升和更多項目實施，預計上半年節省額將略低於該水平，下半年將高於該水平。

管理層預計第四季度內生銷量增速將較第二季度的6%和第三季度的7%有所放緩。不過，管理層表示，前九個月實現的4%內生增長相對於公司的終端市場而言依然表現強勁。

風險與關注事項

• 原材料和油價波動性依然居高不下，包括與中東衝突相關的擾動。管理層表示，基於第三季度的油價環境，大部分價格調整工作已完成，但仍有部分后續舉措尚待實施。
• 在德國檢修對第三季度聚合物業務造成超200萬美元逆風后，公司預計美國苯酐檢修與維護成本將影響第四季度業績。
• 由於建築、汽車及更廣泛的終端市場需求疲軟，歐洲和中國市場的聚合物需求依然羸弱。
• 第三季度農作物增產需求下降，同時管理層承認農業行業環境艱難，且面臨化肥價格壓力的挑戰。
• 隨着銷售額和原材料成本上漲，第三季度營運資金佔用了3200萬美元。
• 斯泰潘公司約8億美元的固定成本基數若出現2%至3%的正常通脹，可能會抵消「催化劑項目」的部分節省成果。

分析師問答集錦

定價與利潤率：管理層表示，表面活性劑業務今年以來的調整后EBITDA利潤率保持在兩位數，而聚合物業務則在13%至15%左右。大多數定價舉措已經實施，但后續展望仍取決於原材料和油價走勢。

季度盈利模式：管理層表示，第二季度和第三季度應當結合來看。第二季度受益於較低成本的庫存，而第三季度反映了常態化的庫存成本及不同的銷售組合。兩個季度的合計調整后EBITDA約為1.4億美元。

客户與市場份額增長：斯泰潘今年以來新增了300多家客户，並提供了近900種新的客户產品組合。其二線及三線客户群實現了兩位數增長，對一線跨國客户的持續業務形成了補充。

區域表現韌性：管理層認為拉美地區的大部分改善具有可持續性，並指出了斯泰潘在墨西哥、哥倫比亞和巴西的生產佈局。管理層還指出，相比巴西，墨西哥面臨更大的亞洲進口衝擊風險。

歐洲長期需求：儘管當前聚合物需求依然疲軟，但管理層相信，建築能效投資有望在未來三至五年內釋放歐洲被抑制的需求。

業績電話會議完整文字記錄

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完整財報電話會議逐字稿

管理層陳述

Operator

Good morning and welcome to the Stepan Company Third Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded on Wednesday, October 28, 2026. It is now my pleasure to turn the call over to Mr. Ruben Velasquez, Senior Vice President and Chief Financial Officer of Stepan Company. Mr. Velasquez, please go ahead.

Ruben Velasquez

Thanks, Sherry. Good morning, and thank you for joining Stepan Company's Third Quarter 2026 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 materially, 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, free cash flow, net debt and leverage-related metrics, which are non-GAAP measures. We provide reconciliations to the comparable GAAP measures in the earnings presentation and press release, which we have made available at www.stepan.com under the Investors section of our website.

Whether you are joining us online or over the phone, we encourage you to review the investor 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 information and perspectives helpful. With that, I would like to turn the call over to Mr. Luis Rojo, our President and Chief Executive Officer.

Luis Rojo

Thank you, Ruben. Good morning, and thank you all for joining us today to discuss our third quarter 2026 results. I will share the highlights of the quarter and an update on our key strategic priorities, while Ruben will take you through the financial details. Before reviewing the quarter, I want to recognize our teams around the world for their commitment to safety. Safety remains our top priority and the foundation of everything we do at Stepan. Our safety performance over the last 12 months remained strong. The third quarter was another quarter of earnings growth for Stepan. The 3 segments delivered organic volume growth and increased earnings versus the prior year.

Adjusted EBITDA was $66 million, up 18% versus the prior year, driven by global volume growth, margin recovery and Project Catalyst savings. Surfactant adjusted EBITDA was up 27%. Polymers grew single digits, including onetime maintenance turnaround costs at our Germany site. And Specialty Products grew EBITDA single digits, driven by double-digit volume growth. On a consolidated basis, adjusted earnings per diluted share were $0.94, nearly double the prior year. Now I want to highlight a few elements of our third quarter performance. First, volume growth. Organic volume grew 7% with growth in all 3 segments. Surfactant organic volume was up 8%, and the growth was broad-based across most of the end markets. Polymers volume was up 3% with North America growing strong double digits.

And Specialty Products delivered 20% volume growth behind a strong innovation plan in our MCT product line. We are pleased with the growth we achieved in several of our key strategic end markets despite ongoing global economic uncertainties and supply chain disruptions. Second, margin recovery and pricing discipline. Raw material cost continues to increase in a volatile environment, including the disruption related to the Middle East conflict. Our pricing actions, together with our disciplined execution of our contractual pass-through mechanism offset those higher costs. Third, productivity and cost out. Project Catalyst continues to deliver savings, and we are now projecting to exceed the 60% target for 2026. Finally, we remain focused on cash generation and balance sheet deleveraging. Our net leverage improved to 2.4x. Free cash flow was positive at $8 million despite a further investment in working capital.

In October, we closed the sale of a parcel of land near our Millsdale site for $28.5 million. The full cash proceeds will be used to pay down debt and continue to deleverage the balance sheet in November. Through the first 9 months of the year, adjusted EBITDA is up 15% and adjusted earnings per share are up 40% versus the prior year. We remain committed to a balanced approach to capital allocation. During the quarter, we continued to invest in working capital. We executed our capital plan across our site, and we paid $9 million in dividends. Finally, we increased our quarterly dividend by $0.01 per share or 2.5%, marking the 59th consecutive year that Stepan has increased its dividend. With that, I will turn the call back to Ruben to walk you through the financial details for the quarter.

Ruben Velasquez

Thank you, Luis. As shared in our third quarter 2026 earnings release, reported net income was $17.8 million or $0.78 per diluted share, up 64% versus $10.8 million or $0.47 per diluted share in the prior year. Reported results include a $5.6 million pretax restructuring charge largely related to the previously announced close of our Fieldsboro, New Jersey site, the decommissioning of select assets at our Millsdale, Illinois and the Stalybridge, United Kingdom facilities and the global salaried workforce reduction we announced in July. Let's move to Slide 6, which shows the adjusted net income bridge for the third quarter of 2026 versus the third quarter of last year. Adjusted net income was $21.7 million or $0.94 per diluted share, up 98% versus $10.9 million or $0.48 per diluted share in the prior year.

The increase in adjusted net income was primarily due to higher surfactant earnings with additional contributions from polymers and specialty products, partially offset by higher corporate expenses and a higher tax provision on the stronger earnings. Adjusted corporate expenses increased by $1 million or 6%, primarily due to higher incentive-based compensation associated with the improved operating performance. Slide 7 shows the total company adjusted EBITDA bridge. Adjusted EBITDA was $66.3 million, up $10.1 million or 18% versus the prior year. This increase was primarily due to higher surfactant earnings driven by sales volume growth and margin recovery with Polymers and Specialty Products also up, partially offset by $1.6 million of higher corporate expenses, reflecting higher incentive-based compensation.

I will now cover each segment in more detail. Turning to Surfactants on Slide 8. Net sales were $487 million, up 15% versus the prior year. Selling prices were up 10%, primarily due to the pass-through of higher raw material costs and targeted pricing actions. Reported volume grew 3% and organic volume increased 8%. Foreign currency translation positively impacted net sales by 2%. The organic growth was led by double-digit increases in consumer products, including laundry, Construction & Industrial and oilfield end markets, partially offset by lower crop productivity demand. Surfactants adjusted EBITDA was $48 million, up $10 million or 27% versus the prior year. North America and Asia earnings improved on organic volume growth in Consumer Products, oilfield and Construction & Industrial, together with margin recovery.

Latin America earnings increased on double-digit organic volume growth, pricing execution and margin recovery. Europe was modestly lower as reduced crop productivity demand more than offset growth in our consumer end markets. Moving to Polymers on Slide 9. Net sales were $179 million, a 24% increase versus the prior year. Selling prices were up 22%, primarily due to the pass-through of higher raw material costs. Sales volume increased 3% in the quarter. North American volume was up double digits, driven by rigid polyols and Phthalic Anhydride, including continued significant growth in our spray foam product line. This growth was partially offset by softer demand in Europe and Asia. Foreign currency translation negatively impacted net sales by 1%. Polymer adjusted EBITDA was $23 million, up 4% versus the prior year as North America's strong volume growth in rigid polyol, spray foam and Phthalic Anhydride more than offset the 5-year regulatory mandated maintenance turnaround costs at the company's Germany site, lower rigid polyol volume in Europe and softer demand in China.

North America EBITDA was up $3 million on volume growth and margin improvement. Europe was down $2 million, primarily due to the maintenance turnaround at our Germany site. Asia was slightly lower on softer demand for specialty polyols in China, partially offset by improved rigid polyol margins. Specialty Products net sales were $27 million, a 12% increase versus the prior year and volume increased 20%. Adjusted EBITDA was $11.7 million, up 5% versus the prior year, primarily due to higher volume in the MCT product line, partially offset by less favorable product mix. Now turning to cash flow and the balance sheet on Slide 10. Cash flow from operations before working capital was $49 million in the third quarter, while free cash flow was $8 million after $21 million of capital expenditures. Free cash flow reflected a $32 million working capital build from accounts receivables, account payables and inventories, driven by stronger sales and higher raw material costs.

Free cash flow included $6 million of restructuring-related cash payments. We ended the quarter with net debt of $536 million. Our net leverage ratio improved to 2.4x from 2.7x a year ago, reflecting continued progress in deleveraging. Improving cash flow and further strengthening the balance sheet remain key priorities across the organization. Moving to Slide 15 and Project Catalyst. Through September, we have recognized $76 million of pretax restructuring charges. The year-to-date cash impact of restructuring is $13 million. Project Catalyst continues to deliver savings in line with our plan. The savings run rate increased to approximately $23 million in the third quarter. These savings were partially offset by inflationary pressures on operating expenses. For 2026, we expect to exceed the 60%, 2-year $100 million pretax savings target. With that, I will turn the call back to Luis for an update on our strategic priorities and Project Catalyst.

Luis Rojo

Thanks, Ruben. Our strategy continues to be anchored in 4 pillars: First, customer-centric innovation to drive top line growth, diversification of our markets and customers with a focus on higher growth end markets and Tier 2 and Tier 3 accounts. Third, operational excellence, including the reliability and resiliency of our manufacturing network and supply chain; and fourth, financial strength through the free cash flow generation, deleveraging the balance sheet and disciplined capital allocation. We continue to make progress against these priorities during the quarter. Surfactants showed consistent and broad-based growth in the third quarter. Year-to-date, we have more than 300 new customers, and we have delivered nearly 900 new customer and product combination in this business with our global Tier 2 and Tier 3 customer base growing double digits.

Additionally, we delivered a strong double-digit growth in North America polymers and our MCT product line. We delivered this growth while continuing to recover margin in an inflationary raw material environment, which reflects disciplined commercial execution. The Middle East conflict has added volatility to fixed costs and supply chains, and we believe we are well positioned to manage that disruption. Our regional manufacturing footprint keeps production close to our customers with a particular advantage in the United States. Our dual petrochemical and oleochemical raw material streams give us flexibility on feedstock management and maximize customer supply. Finally, we continue to improve the reliability and resiliency of our manufacturing network.

Our flagship Millsdale site had a great quarter in terms of production volumes and improving all key operating metrics. Our Pasadena, Texas site continues to ramp up production and deliver the expected supply chain savings embedded in Project Catalyst. Pasadena remains a critical enabler for strategic future growth in specialty alkoxylates. Let's move to Slide 12 for an update on Project Catalyst. As a reminder, Project Catalyst is our comprehensive plan to further optimize our asset base and create a more productive and agile organization to enable balanced growth. We're executing the program safely and in line with expectations. Third quarter run rate savings was approximately $23 million, and we have identified actions that we believe will enable us to exceed the $25 million per quarter goal on average during 2027. We executed the organizational redesign phase of Project Catalyst during the third quarter.

This new organization design is a key enabler for us to deliver our balanced growth strategy, which is focused on top line growth, margin recovery and disciplined cost-out initiatives. To conclude, we believe we are positioned to continue delivering growth in our businesses. Despite the ongoing and significant market uncertainties and challenges, the organization continues to be focused on executing our growth opportunities, productivity plans and cash intervention. With these actions and our strong results through the first 9 months of the year, we believe we will deliver full year adjusted EBITDA growth, positive free cash flow and continued deleveraging of the balance sheet in 2026. This concludes our prepared remarks. At this time, we would like to turn the call over for questions. Sherry, please review the instructions for the questions portions of today's call.

Operator

[Operator Instructions] And our first question will come from the line of Mike Harrison with Seaport Research Partners.

分析師問答

Michael Harrison

So really good to see all the pricing that you guys are getting across the 3 segments. I think we're trying to understand a little bit better the margin impact that you're seeing from raw material inflation and how much pricing is offsetting you across the 3 segments. Maybe help us understand where the margin pressure is still a factor from inflation? And should we see further pricing catch-up in Q4? Or maybe when do you neutralize the impact of some of the higher raw material costs that you're seeing?

Luis Rojo

Great question, Mike. And what I will say is this continues to be a very volatile environment when you think about oil prices and raw materials. I think we did a pretty good job in Q2 and Q3. I don't want to focus too much in quarterly numbers. But when you think about on a year-to-date basis and you look at our margins and you see surfactants double-digit margins, I mean, EBITDA margins, you see polymers in the 13% to 15% EBITDA margins. Those are healthy margins, and we will continue to work on productivity to make sure that we have the best value for our customers, right? So right now, with the current oil prices, we believe we are in a good position in several places. There are a few places where we are still making some price adjustments. But in general terms, I think the majority have been done. And again, this assumes the oil prices of Q3. We will see what happens in the next few weeks with the raw material environment.

But so far, I think the margins for the year are going in the right direction, and we are pleased with the work that our commercial team have done, not only to have decent margins, but to be able to grow our volumes 4%. 4% organic volume growth in the first 9 months is almost a record, right? I mean this is a significant amount of volume growth. And we want to make sure that we -- I have talked a lot about balanced growth. And again, I want to continue balancing volumes, margins and of course, cash, but we need to keep our reactors full, and that's what we are after.

Michael Harrison

All right. And then in terms of Project Catalyst, it sounds like the savings there are running ahead of plan for both 2026 and maybe the longer-term run rate into '27. I guess the way we were thinking about it is you'd get about $60 million worth of savings this year and then the incremental $40 million coming next year. But how should we think about Project Catalyst contribution to further earnings growth in '27 versus '26. Is $40 million still a good number? Or could it be higher or lower than that?

Luis Rojo

No. Look, good question, Mike. But as we said today, we are ahead of the 60% target for 2026. So we are -- instead of the $60 million, we are more in the $66 million to $70 million range. And we already are delivering $23 million run rate in the savings in Q3. We believe we can be ahead of the $25 million on average for 2027, right? So that means $2 million, $3 million more versus where we are today. Now that's going to be, again, on average for 2027, which means ahead of the $25 million in the second half, slightly below the $25 million in the first half as we continue ramping up production in Pasadena, as we continue implementing other projects that we have in the pipeline.

So that's the main component of the gradual savings increases in the next 4 to 5 quarters. And remember that we have been very clear that these are the savings from Project Catalyst. We also have the normal inflation in our P&L. You know that our fixed cost base is roughly $800 million. That's public information. And you can factor the normal 2%, 3% on the inflation piece on that base, and we will continue working on productivity, as I said before, to provide the best value that we can to our customers.

Michael Harrison

All right. Just a couple more for me. Apologies if I missed this earlier, but what was the impact of the maintenance costs in Germany in the Polymers business in Q3? And is that cost completely isolated to Q3? Or is there some carryover into Q4 or next year?

Ruben Velasquez

Yes, Mike. Effectively, as you mentioned, we have that turnaround in Europe in our Germany site. That's a turnaround that happens every 4 years. It's regulated, it's mandated. And the impact on the Polymers business for Q3 was $2 million plus driven by that maintenance.

Luis Rojo

Remember, Mike, that we talked last quarter that we had $4 million, $5 million of headwinds in turnaround maintenance costs, both Germany and the U.S. So Germany was more Q3. You will see the impact in Q4 in U.S. with all the maintenance and turnaround costs that we need to do in our PA facility. So it's coming in line as expected and as planned.

Michael Harrison

All right. And then last quarter, you had talked a little bit about some volume that you felt like was being pulled forward or some prebuying that might be happening. I think at the time you expected that maybe that was as much as a $10 million impact to EBITDA. Now that we're sitting here in October and maybe you have the numbers to fully understand how much impact you saw. Is there any way to help understand how much stronger Q2 was than what might have been normal and how much weaker, I guess, that made Q3? Any color on that would be helpful.

Luis Rojo

No, yes. I agree, Mike, that we talked about the $5 million to $10 million impact from Q3 to Q2 last call. I will say that some of that was expected on the volume side, but a lot of that was expected on the margin side as well, right? I mean we grew in Q2 6% volume, but the reality is that we grew with lower cost inventory in our tank. Now we're accelerating the growth actually to 7% with a different mix, with a different mix than we had in Q2 as well and with a normalized cost position in our tanks and our inventory. So what I will say is that I think the best way to look at Q2, Q3 will be averaging both.

When you think about the $75 million and the $66 million, there was some swing for sure, but delivering $140 million in those 2 quarters shows the discipline of our execution plan, shows a strong volume growth, which, let's be clear, when you think about 6% volume in Q2 and 7% volume in Q3, we are expecting a lower growth in Q4 for sure. When you think about the year, when you include also Q1, we're growing volumes 4% on an organic basis. That's still a very strong performance when these markets are basically not growing, right? These markets are 0% to 1% growth. So that 4% growth on volume is coming from a lot of new customers and share growth in the different end markets. So we're happy with a 4% volume growth. If we can continue that throughout the year, that will be an outstanding year of volume growth for Stepan Company.

Operator

One moment for our next question. And that will come from the line of Dave Storms with Stonegate.

David Storms

Luis, I actually wanted to go back to kind of what you just mentioned around margin growth coming from both new customers and share growth. I was hoping, given you mentioned approximately 340 new customers, 900 new combinations, can you help us understand how much of the margin growth came from new customers versus share growth?

Luis Rojo

No. Look, when you're growing volume 7%, of course, you have the benefit of reducing all the fixed cost and improving the margins this way. So again, we are seeing very strong performance in the surfactants business when you think about especially the Americas, you can do the math, right? On a year-to-date basis, our Surfactant business grew EBITDAR in all the regions. I mean, grew EBITDAR in North America, grew EBITDAR in Latin America, actually even grew EBITDAR very slightly, but grew EBITDAR in Europe. So the business -- the Surfactant business continues to be strong based on share growth, Tier 2, Tier 3 strength and actually a few very good quarters on the crop productivity business. Q3 was a little bit softer. But when you think about the year, crop productivity is still okay and still positive. So we feel good about the Surfactant business. And when you think about polymers, again, very strong performance in North America with a strong double-digit growth. The rigid business is strong, and we are growing a lot of share in spray foam and in PA. We have talked the PA business in the past. It's not secret. We are growing significantly in the PA business. So we feel good about how the margin profile is going vis-a-vis the leverage that you have when you are growing volumes 4% or 6% or 7%. Again, this is not related to one side of one customer or the others. I mean this is across the board.

David Storms

Understood. Appreciate that. You also -- in that answer, you mentioned North America polymers is growing strong, but Europe and Asia still remain weak on the polymer side. Any green shoots there? Any signs of improvements? Is that just a macro story? Anything we should keep an eye out for there?

Luis Rojo

Yes. No, totally right. I mean this is a macro story for Europe and China. It's not a secret how the chemical industry is doing and a lot of the end market demand are doing in Europe and in China, when you think about China, the car industry and a lot of our polymers products goes there as well, and that's not robust. And then, of course, all the challenges that we see in Europe with the overall demand and with the overall construction environment there. Now there is a lot of pent-up demand in Europe that we believe and our customers believe we can capture in the next 3 to 5 years.

There is plenty of work to be done to continue reducing energy consumption in Europe, which is the biggest issue there. And the building envelope can make a significant impact in reducing the energy consumption. So that's where we play, and we are happy to play in that industry, and we're happy to play and help the Europe region to reduce the energy consumption in the building. So we are all hopeful that the next 3 to 5 years, we will realize that pent-up demand.

David Storms

That's really great color. If I could ask one more, and it might be a quarter too early to ask this, but because you brought up crop productivity volumes decline in the quarter, when we're looking into the next couple of quarters with a developing El Nino, do you see any changes in customer purchase expectations as we start to get ready for the next 6 to 9 months on the ag side?

Luis Rojo

Great great question, Dave, because we are seeing -- I mean, and you guys are seeing a lot of struggle from some of the big ag companies. So it's not a secret. Now what I will tell you is that our team continues to do a great job in developing new products, new formulations to continue growing share with all our key multinational accounts in the ag business and also growing with the middle Tier 2, Tier 3 ag companies. We still have plenty of opportunities, right? When you think about tank mix adjuvant, this is a $1 billion market in the U.S. This is a $700 million market in Brazil. And we are still in the infant phase of developing our tank mix adjuvants and growing in that space. So I agree with you that the macros are not there for the overall ag industry and fertilizer prices and all of that. On the other hand, we will continue working on our innovation plan to continue growing in this space because it's a key strategic priority for a Stepan company to grow in crop productivity. We have the products, we have the team, we have the know-how, and we will continue executing.

Operator

One moment for our next question. And that will come from the line of Gowshi Sri with Singular Research.

Gowshihan Sriharan

Congratulations on a strong quarter. It's my first call covering Stepan.

Luis Rojo

Welcome Gowshi. Welcome to the team and happy to have you here.

Gowshihan Sriharan

On my first question is the double-digit growth in the consumer products. I know you alluded that there's some share gains. And I just want to make sure, are these share gains that you can hold to? Because I think in previous call, you alluded to the fact that some of the competitors were short on raw materials. Any comment or color on that?

Luis Rojo

Sure. We continue executing our Tier 2, Tier 3 strategy, Gowshi. So that works in the consumer space that works in many of our end markets, but it's working. It's working in -- especially in the Americas. And we will continue growing with our Tier 1 multinational companies. We have a strong plan there. We have been doing extremely good with our Tier 1 accounts. And on top of that, Tier 2, Tier 3 is coming up incremental. So that's the good news about how the strategy is playing out. Tier 1s represents a very important business for a Stepan company. We are doing extremely well with Tier 1s and Tier 2s and Tier 3s are coming on top, and we're happy to support them as they need formulation services and help on their products. So it's an AND strategy. We're working on both.

Gowshihan Sriharan

On the Specialty Products in the MCT, how sustainable do you see this MCT volume growth heading into next year? Was there any kind of order timing benefit in the segment this quarter?

Luis Rojo

Yes, yes. Remember that we have a pharma business that is very seasonal, and that's why you see the EBITDA or the operating income on Specialty Product this quarter because we ship a lot of the pharma business in Q3, and that was very similar to last year, right? That's why last year was also in the same level of $11 million of operating income in Q3. When I think about the MCT business, Jamil and the team in Maywood has done an extremely good job of expanding our offerings in MCT, and we have developed a new innovation program to go into different segments and different price tiers within the MCT business, not only on the top tier, but also on the mid-tier.

That's why the mix effect and the margin is a little bit different. But that is showing up on the results, and that is also filling up our reactors. And the reality is that this year, we had a lot of headwinds on the fatty acid pricing. When you think about raw materials for fatty acids, we had a lot of challenges there. That's why we are not growing even faster, which we could in this MCT business. So -- that's our plan for next year. And we will continue to filling up the reactors. We have extra capacity, and we want to deliver all the capacity that we have at margins that make sense.

Gowshihan Sriharan

And then a little bit of color on the Pasadena utilization. Where is it running today in terms of utilization? And what does getting into full utilization add to next year?

Luis Rojo

Good point. Look, we are in the -- we have talked this in the past. We are in the 75%, 80% range on utilization. And as we plan and as we plan next year, that's why I mentioned before that probably we will see more savings on tolling savings and things like that in the second half than the first half, as we continue ramping up production in Pasadena. Now when I say the 75%, 80%, of course, is very focused on the volume piece. We are very focused on maximizing Pasadena on the dollar front because at the end, every product is different. There are products that require 30 hours in a reactor and there are products that require way more or way less. And what we need to maximize is the dollar return from our Pasadena site, and that's what the team is working. We are delivering more savings than we thought on the tolling piece in 2026 from our Pasadena site. So we are happy with the development even at 75%, 80% capacity utilization.

Gowshihan Sriharan

And just I'll sneak in one last question. Latin America, I think you mentioned there was a competition that left. And so how exposed is Latin America to the Asian imports coming back? And how much of this year's recovery do you see it as structural?

Luis Rojo

Great point, Gowshi, great great point because for sure, Asia imports, especially in Mexico, Brazil is more protected. Brazil has a lot more restrictions. But in Mexico is where we see a lot of the imports from Asia. And you're rightly so that that having local production in the environment where we were in 2026 is a significant advantage for companies like Stepan. We need to continue making sure that we provide the right value for our customers in 2027, so we continue growing that business. We have an excellent footprint in Mexico, in Colombia, in Brazil. I want to give kudos to the other Jamil. We have 2 Jamil's in the company, but the other Jamil is in Brazil and the whole Brazil team for what they are delivering this year has been an outstanding performance from them. And we believe a lot of that is sustainable. So we will continue our plan to grow share to fill up our reactors at the right margins and continue to provide the right value to our customers in the Latin America region.

Gowshihan Sriharan

Congratulations, and i will talk to you later.

Operator

I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Mr. Rojo for any closing remarks.

Luis Rojo

Thank you very much for joining us on today's call. We appreciate your interest and ownership in Stepan Company. Have a great and safe day.

Operator

This concludes today's program. Thank you all for participating. You may now disconnect.