Kevin Holder

Kevin Holder from ROTH Capital Partners asked about the anticipated timing and cadence of neffy refill rates, their conversion to revenue through 2026, and the expected proportion of new prescriptions versus refills by year-end. He also inquired about the projected SG&A spend cadence for the remainder of 2026 following the launch of the new advertising campaign.

Answer

Richard Lowenthal, Co-Founder, President, and CEO, and Eric Karas, Chief Commercial Officer, clarified that current refills are primarily from patients seeking additional product or replacements, with expiration-driven refills expected to become meaningful in late 2026 and early 2027, potentially with some acceleration during the summer back-to-school period. They noted that the vast majority of current prescriptions are new, with approximately 75% coming from patients currently using needle injectors and 25% from newly diagnosed or lapsed patients. Regarding SG&A spend, Richard Lowenthal stated that it is expected to remain consistent throughout 2026, as the new advertising campaign primarily involves a change in messaging rather than an increase in expenditure.

Kevin Holder inquired about the timing and cadence of Neffy's refill rates, including the anticipated proportion of new prescriptions versus refills by year-end 2026. He also asked about the SG&A spend cadence for the rest of 2026 following the new advertising campaign launch.

Answer

Richard Lowenthal, Co-Founder, President, and CEO, clarified that current refills are mainly from patients seeking more product or replacements, with meaningful expiration-driven refills expected late 2026/early 2027, and some pickup over summer due to back-to-school needs. He noted that the vast majority of current prescriptions are new. Eric Karas, Chief Commercial Officer, added that 75% of prescriptions come from patients currently using needle injectors. Richard Lowenthal stated that SG&A spend is expected to remain consistent, as the new campaign primarily involves messaging changes, not increased expenditure.

Kevin Holder from ROTH Capital Partners asked about the expected timing and cadence of neffy refill rates, the anticipated proportion of new prescriptions versus refills throughout 2026, and the projected cadence of SG&A spend for the remainder of 2026 following the new advertising campaign launch.

Answer

Richard Lowenthal, Co-founder, President, and CEO, indicated that significant refill dynamics from product expiration are anticipated in late 2026 and early 2027, with some earlier pickup during the summer for back-to-school needs. He noted that new prescriptions currently constitute the vast majority. Eric Karas, Chief Commercial Officer, specified that 75% of prescriptions originate from patients currently using needle injectors. Richard Lowenthal also confirmed that the new advertising campaign primarily involves messaging changes, with no anticipated alteration to the overall SG&A spend cadence for 2026.

Kevin Holder sought clarification on the outlook for interest expense and depreciation in 2025 with the Pasadena facility coming online. He also asked about the company's sensitivity to currency fluctuations in the Euro, Mexican Peso, and Brazilian Real, and concluded by inquiring about expectations for China's construction market and the growth of spray foam there.

Answer

Luis Rojo, President and CEO, directed Holder to the presentation slides for 2025 depreciation guidance of $128M-$132M, noting the increase is mainly from Pasadena. Regarding currency, Rojo identified the Euro as the main risk, stating the impact from the Peso and Real is not material. He clarified that Stepan's China Polymers business is diversified away from the troubled residential construction sector, focusing on other growing end markets like LNG ships.

Kevin Holder of CL King & Associates asked if demand shifts have altered the timeline for expansion projects in Electronic Materials, inquired about updating the 20% adjusted EBITDA margin target, and asked about customer base diversification and market share strategy in the space business.

Answer

President and CEO Jugal Vijayvargiya confirmed that key expansion projects, including in Milwaukee and Newton, are proceeding without delays to ensure capacity for future growth. He stated that while pleased with achieving >20% EBITDA margins in four of the last six quarters, the focus remains on consistent delivery before considering new targets. He also highlighted growth in both government and emerging commercial space sectors, including outside the U.S., as key to their strategy.

Kevin Holder inquired about the performance of the fertilizer business, specifically the success of the fall fill program amid lower farm income, and fertilizer demand in the Southern Hemisphere. He also asked new CFO Sid Manjeshwar about his strategies for driving accelerated profitable growth.

Answer

President and CEO Erin Kane explained that strong sulfur premiums and grower recognition of sulfur's value in maximizing crop yields drove fertilizer success despite declining farmer economics. She noted a positive outlook for South American demand. SVP and CFO Siddharth Manjeshwar stated his focus for growth includes improving productivity and margins, expanding commercial earnings via differentiated products and high-return projects like SUSTAIN, and optimizing capital allocation.