STEPAN CO Leases Disclosure
7. Leases
The Company’s operating leases are primarily comprised of real estate, railcar, storage tank, warehouse, auto, trailer and manufacturing/office equipment leases. Real estate and railcars comprise approximately 39 percent and 46 percent, respectively, of the Company’s consolidated right of use (ROU) asset balance. Except for real estate, typical lease terms range from to ten years. Real estate lease terms typically range from to fifty years. As of December 31, 2025, the Company’s two principal real estate leases consist of the office lease for the corporate headquarters in Northbrook, Illinois and land leases in Singapore. During the fourth quarter of 2025, the Company exited from land leases in the Philippines and Lake Providence, Louisiana as part of its asset sale transactions (see Note 20, Sales of Assets, of the notes to the Company’s consolidated financial statements included in Item 8 of this Form 10-K). As of December 31, 2025, the Company had no leases that had not commenced.
As most of the Company’s leases do not provide an implicit borrowing rate, the Company uses its incremental borrowing rate (IBR) based on the information available at the commencement date in determining the present value of lease payments. IBRs were specifically determined for the United States, Philippines, Singapore, Brazil and China, typically for five-year increments. The U.S. IBR was used for all other countries as the leases in these countries are not material. The total value of leases that reside in the five countries identified above represents approximately 97 percent of the Company’s consolidated ROU asset balance. Lease cost is recognized in both the Cost of Sales and Operating Expenses sections of the Consolidated Statements of Income.
(In thousands) |
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Year ended December 31, 2025 |
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Year ended December 31, 2024 |
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Lease Cost |
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Operating lease cost |
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$ |
19,314 |
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$ |
18,424 |
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Short-term lease cost |
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11,633 |
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11,592 |
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Variable lease cost |
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1,524 |
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1,681 |
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Total lease cost |
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$ |
32,471 |
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$ |
31,697 |
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Other Information |
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Cash paid for amounts included in the |
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Operating cash flow from operating |
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$ |
19,298 |
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$ |
18,453 |
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Right-of-use assets obtained in exchange |
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1,693 |
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4,715 |
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The following table outlines maturities of lease liabilities as of December 31, 2025:
(In thousands) |
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Undiscounted Cash Flows: |
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2026 |
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$ |
17,072 |
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2027 |
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12,269 |
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2028 |
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9,354 |
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2029 |
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8,353 |
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2030 |
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7,164 |
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Subsequent to 2030 |
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17,638 |
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Total Undiscounted Cash Flows |
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$ |
71,850 |
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Less: Imputed interest |
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(7,518 |
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Present value |
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$ |
64,332 |
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Current operating lease liabilities (1) |
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14,992 |
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Non-current operating lease liabilities |
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49,340 |
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Total lease liabilities |
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$ |
64,332 |
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Weighted-average remaining lease term - operating leases |
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6 Years |
Weighted-average discount rate - operating leases |
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3.8 % |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 27, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 24, 2016 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.