☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2021 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 1-4462 STEPAN COMPANY (Exact name of registrant as specified in its charter) (State or other jurisdiction (I.R.S. Employer of incorporat ...

Stepan S | --- | --- | --- | --- | --- | |-----------------------------------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | Earnings Call | | | | | | Presentation | | | | | | | | | | | | Second Quarter 2021 July 28, 2021 | | | | | | | | | | | | | | | | | | | | | | | Cautionary Statement Certain information in this presentation consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, ...

Financial Data and Key Metrics Changes - Adjusted net income for Q2 2021 was $42.2 million or $1.81 per diluted share, a 10% increase from $38.3 million or $1.65 per diluted share in Q2 2020 [12][18] - Adjusted net income for the first half of 2021 was $84.6 million or $3.62 per diluted share, up 35% compared to the first half of 2020 [7][10] - The effective tax rate for the first half of 2021 was 24.4%, up from 23.9% in the prior year, primarily due to a less favorable geographical mix of income [17] Business Line Data and Key Metrics Changes - Surfactant segment net sales were $384 million, a 16% increase year-over-year, with selling prices up 17% but volume decreased 6% [18][20] - Polymer segment net sales were $191 million, up 70% from the prior year, with sales volume increasing 44% [21][22] - Specialty Products net sales were $21 million, a 33% increase from the prior year, with operating income up 116% [24] Market Data and Key Metrics Changes - North American surfactant volumes decreased due to lower demand for consumer cleaning products compared to pandemic peaks [19][41] - Latin America benefitted from a $2.1 million VAT tax recovery project, while Europe saw slight decreases in consumer product demand [20] - Agricultural volumes increased due to higher commodity prices, with corn and soybean prices doubling from the previous year [93] Company Strategy and Development Direction - The company is focusing on increasing capacity in product lines such as biocides and amphoterics to meet higher customer demand [32] - A strategic priority includes enhancing the product portfolio through acquisitions, with a focus on North America [39][70] - The company plans to continue investing in capacity improvements and productivity enhancements, particularly in the polymer business [36][92] Management's Comments on Operating Environment and Future Outlook - Management noted that while consumer demand for cleaning products has decreased from pandemic peaks, institutional cleaning volumes are expected to grow [30][41] - The company anticipates continued demand growth in agricultural and oilfield markets due to rising commodity prices [31][42] - Management expressed cautious optimism for the remainder of the year despite ongoing raw material price increases and maintenance costs [44] Other Important Information - The company declared a quarterly cash dividend of $0.305 per share, marking 53 consecutive years of dividend increases [10] - The company executed agreements for $100 million of new private placement debt at a fixed interest rate of around 2% [26] Q&A Session Summary Question: Pricing and raw material cost dynamics in surfactants and polymers - Management indicated that price increases implemented on July 1 are progressing well in surfactants, while more work is needed in polymers to restore margins [47][48] Question: Consumer surfactant demand compared to pre-pandemic levels - Management noted that while business is up versus pre-pandemic levels, it remains below peak levels from last year [50][52] Question: Impact of supply chain issues on construction activity - Management acknowledged supply shortages, particularly in MDI, affecting demand but remains optimistic about future growth [56][57] Question: Underlying earnings growth comparison - Management clarified that adjusted net income growth of 35% translates to approximately 12% growth on an apples-to-apples basis when excluding prior year impacts [61][62] Question: Revenue impact from raw material and logistics shortages - Management stated that shortages primarily impacted ethylene oxide and propylene oxide derivative businesses, estimating a couple of million dollars below expected operating income [66] Question: M&A strategy and pipeline - Management confirmed ongoing interest in acquisitions, particularly in enhancing the product portfolio, with a focus on North America [69][70] Question: CapEx expansion and its continuation into 2022 - Management confirmed that the low 1,4-dioxane project will continue into 2022, contributing to higher CapEx this year [75] Question: Customer feedback on price increases - Management indicated that customers are generally accepting of price increases due to widespread inflation across the industry [78][81] Question: Agricultural business growth drivers - Management attributed growth in agricultural volumes to rising commodity prices and successful product initiatives [93] Question: KMCO business relaunch timing and revenue potential - Management noted delays in relaunching the KMCO business due to R&D and supply chain challenges, with no incremental revenue expected in 2021 [95]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) STEPAN COMPANY (Exact name of registrant as specified in its charter) (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification Number) Delaware 36-1823834 22 West Frontage Road, Northfield, Illinois 60093 (Address of principal executive offices) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2021 ...

Financial Data and Key Metrics Changes - The company reported record quarterly income with adjusted net income of $42.4 million, or $1.82 per diluted share, representing a 75% increase from $24.2 million, or $1.04 per diluted share in the same quarter last year [7][12] - The effective tax rate for the quarter was 23.6%, up from 22.5% in the prior year, primarily due to a less favorable geographical mix of income [16] Business Line Data and Key Metrics Changes - Surfactant operating income increased by 47%, driven by an improved customer and product mix, with net sales reaching $371 million, a 13% increase year-over-year [17][19] - Polymer business saw a 140% increase in operating income, with net sales of $150 million, up 41% from the prior year, and a 32% growth in global sales volume [21][23] - Specialty product business net sales remained at $16 million, with a slight decline in operating income due to lower margins in the MCT product line [24] Market Data and Key Metrics Changes - North America surfactant results improved due to a better product mix, while Brazil and Mexico also saw volume increases [20] - Global agricultural volumes increased significantly, with strong growth in the post-patent pesticide segment [36] Company Strategy and Development Direction - The company is focusing on increasing capacity in specific product lines, including biocides and amphoterics, to meet anticipated higher customer requirements [31] - The integration of the INVISTA acquisition is progressing well, with expectations of it being accretive to EPS and EBITDA margins in 2021 [39][102] - The company is committed to enhancing its digital customer engagement strategy and optimizing fermentation process technology for next-generation surfactants [91][40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the continued strong demand for surfactants in consumer product markets due to changing consumer habits and heightened cleaning standards [30][68] - The company anticipates improvements in the Specialty Product business and expects to see benefits from productivity gains in the future [43][37] Other Important Information - The company declared a quarterly cash dividend of $0.305 per share, marking 53 consecutive years of dividend increases [9] - The total cash reduction from $350 million to $151 million was primarily due to the INVISTA acquisition [25] Q&A Session Summary Question: Polymer margins and seasonality - Management noted that polymer margins are down in 2021 due to significant raw material price increases, and they are implementing price increases to recover costs [48] Question: Surfactant margins and pricing initiatives - Management indicated that surfactant margins improved due to a better product mix and that they have already initiated price increases to address raw material inflation [53][54] Question: Fermentation business ramp-up - The company is in the R&D phase for fermentation technology and has staff trained in fermentation processes [56] Question: Capacity changes and sustainable demand - Management highlighted that they have increased capacity for amphoteric products and biocides, and they believe that enhanced cleaning standards will sustain demand [64][68] Question: Agricultural business outlook - The agricultural business is expected to see strong growth due to rising commodity prices and increased planting [76] Question: Integration of INVISTA - The integration of INVISTA is progressing well, with sufficient capacity to support market growth for the next decade [85] Question: Passing through higher raw material prices - Management stated that they are better positioned in surfactants to pass through price increases compared to polymers, where they are lagging [93]

Stepan S | --- | --- | --- | --- | --- | |--------------------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | Earnings Call | | | | | | | | | | | | Presentation | | | | | | First Quarter 2021 | | | | | | April 27, 2021 | | | | | | | | | | | | | | | | | | | | | | | Cautionary Statement Certain information in this presentation consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act ...

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 1-4462 STEPAN COMPANY (Exact name of registrant as specified in its charter) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (MARK ONE) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | Delaware 36-1823834 | | --- | | (State or other jurisdicti ...

Stepan S | --- | --- | --- | --- | |-----------------------------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | Earnings Call Presentation | | | | | | | | | | Fourth Quarter 2020 | | | | | February 18, 2021 | | | | Cautionary Statement Certain information in this presentation consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange A ...

Financial Data and Key Metrics Changes - Fourth quarter adjusted net income was $33.1 million, or $1.42 per diluted share, up 29% from $25.7 million, or $1.10 per diluted share last year [6][12] - Full year adjusted net income reached a record $132 million, up 11% from the previous year [6][25] - The company's effective tax rate for 2020 was 25%, compared to 18% in 2019, primarily due to non-recurring tax savings in 2019 and a one-time tax cost in Q4 2020 [16] Business Line Data and Key Metrics Changes - Surfactant segment net sales were $358 million, a 16% increase year-over-year, with sales volume up 8% driven by demand for cleaning and disinfection products [18][20] - Polymer segment net sales were $116.7 million, consistent with the prior year, but operating income increased 100% to $11.4 million due to an insurance recovery [22] - Specialty product net sales were $19.6 million, a 6% increase, with operating income improving by 2% [24] Market Data and Key Metrics Changes - North America saw strong demand in the consumer product end market, while Brazil achieved record quarterly results driven by volume growth [21] - European results increased slightly due to higher consumer product demand, while Mexico's results were lower due to a high base period from the previous year [21] Company Strategy and Development Direction - The company is focusing on increasing capacity in biocides and amphoterics to meet higher customer requirements [31] - A significant acquisition of INVISTA's aromatic polyester polyol business was completed, expected to enhance market growth and improve margins [36][37] - The company is also investing in a fermentation plant to produce biosurfactants, aligning with sustainability trends [39][40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued strong demand in the surfactant market due to changing consumer habits [48] - The company anticipates that the specialty product business will improve slightly year-over-year [42] - Management noted challenges in the oilfield and polymer segments but remains optimistic about long-term prospects due to energy conservation efforts [34][41] Other Important Information - The company declared a quarterly cash dividend of $0.305 per share, marking 53 consecutive years of higher dividends [9] - The balance sheet remains strong with a cash balance of $350 million exceeding total debt of $199 million [28] Q&A Session Summary Question: What were the main drivers of the strong surfactant sales performance in Q4? - Management attributed the growth to sustained demand for disinfection and hand wash products, driven by changing consumer habits [48] Question: How should we think about the ramp-up in dollar sales for Tier 2 and Tier 3 accounts? - Management believes there is significant opportunity to expand product offerings to Tier 2 and Tier 3 customers, with a focus on increasing penetration [51][54] Question: What is the expected EBITDA contribution from the INVISTA acquisition? - Management indicated that while the first year will involve transition costs, the acquisition is expected to be accretive to EPS and deliver significant EBITDA contributions in the following years [63] Question: What are the key projects involved in the elevated CapEx for 2021? - Key projects include investments in 1,4-Dioxane capacity, specialty surfactants, and infrastructure improvements to reduce emissions [65][66] Question: How is the company managing raw material inflation and pricing dynamics? - Management noted that they are experiencing raw material price increases but are implementing price increases to maintain margins [70]

Financial Data and Key Metrics Changes - The company reported record third quarter adjusted net income of $36.4 million or $1.56 per diluted share, a 30% increase from $27.9 million or $1.20 per diluted share in the same quarter last year [7][12] - Year-to-date adjusted net income reached $98.9 million, up 5.5% from the previous year [7] - The effective tax rate for the first nine months of 2020 was 23.7%, compared to 17.3% in the same period of 2019, primarily due to a one-time tax benefit in 2019 [15] Business Line Data and Key Metrics Changes - Surfactant segment net sales were $334 million for the quarter, an 11% increase year-over-year, driven by strong demand for cleaning and disinfection products [16] - Surfactant operating income increased by $21.5 million or 109% compared to the prior year, largely due to sales volume growth and improved product mix [17] - Polymer segment net sales decreased by 14% to $116.7 million, with a 5% decline in sales volume attributed to lower demand in North America due to construction delays [18] - Specialty product net sales were $14 million, a 17% decrease year-over-year, primarily due to lower margins and order timing differences [21] Market Data and Key Metrics Changes - Mexican operations showed strong earnings growth compared to the prior year quarter, while the Polymer business faced challenges due to construction project delays in North America [8][18] - The agricultural business grew by 5%, with North America being the primary driver of this growth [26] Company Strategy and Development Direction - The company is focusing on increasing production capabilities for low 1,4-dioxane sulfates to meet new regulatory requirements by January 2023 [25] - The diversification strategy into Functional Products remains a key priority, with continued investment in new capacity to support growth in the agricultural market [26] - M&A activities are seen as a vital tool for delivering meaningful EPS and EBITDA growth, with the recent acquisition of Clariant's Mexican sulfate business expected to contribute approximately $3 million in EBITDA [28][54] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about sustained demand for cleaning and disinfection products due to changing consumer habits, with expectations of continued growth into 2021 and 2022 [57][59] - The Polymer business is anticipated to see gradual improvement in 2021 as customers become more comfortable returning to construction projects [64] - The company remains committed to delivering productivity gains and addressing capacity constraints in response to increased demand [75] Other Important Information - The board declared a quarterly cash dividend of $0.305 per share, marking an 11% increase and the 53rd consecutive year of dividend payments [10] - The company ended the quarter with a strong balance sheet, having negative net debt with cash exceeding total debt [22] Q&A Session Summary Question: Can you provide details on the surfactant price mix? - Management noted a strong seven-point price mix overall in the surfactant business, driven by growth in tier 2 and tier 3 customers [35] Question: What is the outlook for the agricultural business? - Growth in the agricultural business in Q3 was primarily from North America, with expectations for growth in Q4 and 2021 as customer inventories have been depleted [43][44] Question: Can you discuss the Clariant acquisition? - The acquisition is expected to contribute about $3 million of EBITDA and is seen as complementary to existing operations [54] Question: What is the outlook for the European surfactants business? - The European results were impacted by the loss of a large fabric softener business, but overall progress was noted due to improved product mix [55] Question: What are the expectations for the Polymers business? - Management anticipates gradual improvement in the Polymers business in 2021, with customers optimistic about growth [64][105] Question: Is there consideration for a stock split? - The board regularly considers stock splits, but no immediate plans were made due to the current global pandemic situation [111]