Stepan Company (SCL, NYSE)
Industry: Basic Materials / Specialty Chemicals
Annual report, fiscal year 2019


## CHEMISTRY THAT
CONNECTS US

Stepan \( ^{®} $ 
2019 Annual Report



## FINANCIAL HIGHLIGHTS \( ^{*} \) 

<table><tr><td>(in thousands, except per share and stockholder amount)</td><td>2019</td><td>2018</td><td>% CHANGE (2019 VS. 2018)</td><td>2017</td><td>% CHANGE (2018 VS. 2017)</td></tr><tr><td>Net Sales</td><td>$1,858,745</td><td>$1,993,857</td><td>- 7</td><td>$1,925,007</td><td>+ 4</td></tr><tr><td>Net Income Attributable to Stepan Company</td><td>103,129</td><td>111,117</td><td>- 7</td><td>100,774</td><td>+ 10</td></tr><tr><td>Per Diluted Share</td><td>4.42</td><td>4.76</td><td>- 7</td><td>4.31</td><td>+ 10</td></tr><tr><td>Percent of Net Sales</td><td>5.5%</td><td>5.6%</td><td>- 2</td><td>5.2%</td><td>+ 8</td></tr><tr><td>Percent Return on Average Equity</td><td>12.1%</td><td>14.1%</td><td>- 14</td><td>14.2%</td><td>- 1</td></tr><tr><td>Depreciation and Amortization</td><td>78,701</td><td>81,115</td><td>- 3</td><td>79,022</td><td>+ 3</td></tr><tr><td>Capital Expenditures</td><td>105,572</td><td>86,647</td><td>+ 22</td><td>78,613</td><td>+ 10</td></tr><tr><td>Dividends Per Common Share</td><td>$ 1.03</td><td>$ 0.93</td><td>+ 11</td><td>$ 0.86</td><td>+ 8</td></tr><tr><td>Working Capital</td><td>479,675</td><td>495,311</td><td>- 3</td><td>502,000</td><td>- 1</td></tr><tr><td>Current Ratio</td><td>2.4</td><td>2.5</td><td>- 4</td><td>2.6</td><td>- 4</td></tr><tr><td>Long-Term Debt, Less Current Maturities</td><td>198,532</td><td>239,022</td><td>- 17</td><td>268,299</td><td>- 11</td></tr><tr><td>Total Stepan Company Stockholders&#x27; Equity</td><td>891,783</td><td>807,425</td><td>+ 10</td><td>765,400</td><td>+ 5</td></tr><tr><td>Total Stepan Company Stockholders&#x27; Equity Per Share</td><td>39.61</td><td>35.88</td><td>+ 10</td><td>34.00</td><td>+ 6</td></tr><tr><td>Average Common Shares Outstanding (Diluted)</td><td>23,316</td><td>23,325</td><td>-</td><td>23,377</td><td>-</td></tr><tr><td>Number of Stockholders</td><td>1,730</td><td>1,705</td><td>+ 1</td><td>1,691</td><td>+ 1</td></tr></table>

## STOCK INFORMATION

<table><tr><td>NEW YORK STOCK EXCHANGE, SYMBOL SCL</td><td>2019</td><td>2018</td></tr><tr><td>Stock Price Range</td><td>$72.71-$102.44</td><td>$68.09-$90.96</td></tr><tr><td>Dividend (Common)</td><td>$ 1.03</td><td>$ 0.93</td></tr><tr><td>Earnings Per Diluted Share</td><td>$ 4.42</td><td>$ 4.76</td></tr><tr><td>Return on Equity</td><td>12.1%</td><td>14.1%</td></tr><tr><td>Book Value</td><td>$ 39.61</td><td>$35.88</td></tr><tr><td>Shares Outstanding</td><td>22,513,600</td><td>22,505,625</td></tr></table>

*The 2018 and 2017 amounts have been retrospectively changed from the amounts originally reported as a result of the Company’s first quarter 2019 change in method of accounting for U.S. inventory valuation from Last-In, First-Out (LIFO) to First-In, First-Out (FIFO).

Information in this annual report consists of forward-looking statements which are not historical facts. These statements are subject to risks and uncertainties that could cause actual results to differ materially from the forward-looking statements, including without limitation, those described in the Company's Form 10-K, Form 8-K and Form 10-Q reports filed with the Securities and Exchange Commission, which risks and uncertainties related to disruptions in production or accidents at manufacturing facilities, global competition, volatility of raw material and energy costs, disruptions in transportation or significant changes in transportation costs, reduced demand due to customer product reformations or new technologies, the probability of future acquisitions and the uncertainties related to the integration of acquired businesses, maintaining and protecting intellectual property rights, international business risks, including currency exchange rate fluctuations, legal restrictions and taxes, our debt covenants, our ability to access capital markets, downturns in certain industries and general economic downturns, global political, military, security or other instability, costs related to expansion or other capital projects, interruption or breaches of information technology systems, the costs and other effects of governmental regulation and legal and administrative proceedings and our ability to retain executive management and key personnel.



## AT STEPAN COMPANY, WE CONNECT WITH THE WORLD THROUGH THE INNOVATIVE CHEMISTRY WE CREATE.

As we expand our capabilities and capacities, we are committed to developing newer and better ways to collaborate with our customers. That enhanced collaboration will empower our customers to grow and will ensure that we grow along with them.

Our growth will always connect directly to our values and will empower everyone at Stepan Company to make a difference, do the right thing, improve every day and shape the future through curiosity. Ultimately, Stepan Company will leave the world a better place for future generations. We are confident that dynamic will bring future success for our Company, our employees and our shareholders.



STEPAN
MANUFACTURING
LOCATIONS



NET INCOME ATTRIBUTABLE
TO STEPAN COMPANY \( ^{*} \) 
(dollars in thousands)



*2018, 2017, 2016, 2015 Adjusted for FIFO

NET INCOME ATTRIBUTABLE
TO STEPAN COMPANY PER
COMMON SHARE (DILUTED)*
(dollars)



*2018, 2017, 2016, 2015 Adjusted for FIFO

TOTAL STEPAN COMPANY
EQUITY PER SHARE \( ^{*} \) 
(dollars)



*2018, 2017, 2016, 2015 Adjusted for FIFO

DIVIDENDS PER COMMON SHARE
(dollars)



OPERATING INCOME BY SEGMENT 2015-2019 \( ^{*} \) 
(dollars in thousands)



*2018, 2017, 2016, 2015 Adjusted for FIFO

STOCK PERFORMANCE \( ^{*} \) 
(dollars)



*Assumes $100.00 invested on December 31, 2014, in Stepan Company common stock, The Dow Jones Chemical Industry Index and The Russell 2000 Index.

WE CONTINUALLY
LOOK FOR
OPPORTUNITIES
TO BECOME
MORE EFFECTIVE
AND MORE EFFICIENT
IN SERVICING OUR
CUSTOMER BASE.



# DEAR FELLOW SHAREHOLDERS

2019 WAS A CHALLENGING YEAR BUT A GOOD YEAR FOR STEPAN COMPANY. REPORTED NET INCOME WAS $103.1 MILLION AND ADJUSTED NET INCOME WAS A RECORD $119.4 MILLION \( ^{1} \) , UP 7 PERCENT FROM LAST YEAR. AFTER TWO YEARS OF GROWTH, OUR SURFACTANT BUSINESS TOOK A STEP BACKWARDS IN 2019. POLYMER OPERATING INCOME GREW DUE TO STRONG GLOBAL RIGID POLYOL VOLUMES. SPECIALTY PRODUCTS DELIVERED A RECORD PERFORMANCE BASED ON HIGHER NUTRACEUTICAL VOLUMES AND MARGINS.

Company results benefitted from higher interest income on cash balances and a lower consolidated tax rate. We believe The Chemistry That Connects Us defines our culture internally and externally with customers provides opportunities for the Company to grow in 2020 and beyond.

Net income decreased 7 percent, and adjusted net income rose 7 percent, or $0.33 per diluted share. Volume decreased 2 percent. Unit gross profit margins increased by 2 percent. Net sales decreased 7 percent to $1.9 billion, attributable to lower selling prices and a volume decline in commodity surfactants sold to large consumer product companies offset by growth in the functional surfactant and rigid polyol markets.

Surfactants made $122.8 million operating income in 2019, down 8 percent from 2018. A large part of that decrease was a result of a fire in our Ecatepec, Mexico facility early in 2019. While losses were mitigated by insurance recovery, the business did not recover as quickly as we had expected. However by year end, we were able to restore a large percentage of the lost volume, which has put us in a better place going into the new year.

In 2020 and beyond, we will continue to diversify our customer base in Surfactants by increasing our smaller tier three customers on a global basis. In 2019, we saw good tier three growth in Europe and Brazil. We will also achieve Surfactant growth by embracing opportunities in functional markets, including agriculture, oilfield and emulsion polymerization. Volume in these target markets grew 4 percent in 2019.

We continually look for opportunities to become more effective and more efficient in servicing our customer base. Toward that end, we have initiated a project at Millsdale, our largest facility, to deliver a sustainable step change in performance.

## “As the decade closes, I reflect back on how far the Company has come and what our team has delivered.”

In 2019, Polymer operating income was $69.6 million, up 5 percent from 2018. In 2019, we saw gains in this business from increased volume in North America and China. North American volumes grew due to energy conservation efforts aided by the adoption of more stringent building codes. In China, our team is helping reduce food waste by supplying insulation raw materials for cold storage.

Specialty Products delivered $16.4 million of operating income in 2019, up $4.8 million, or 41 percent, from the previous year. Our NE0BEE \( ^{\circledR} \)  Lipid Nutrition business had a good year, with increased volumes supported by favorable trends as the world continues to be more concerned about the nutritional value and health benefits our products provide.
Capital spending was $105.6 million, up 22 percent from $86.6 million in 2018. Going forward, we will invest to improve our position in the market for nonionic surfactants, expand capacity and capabilities in rigid polyols, as well as maintain our plants and make them more efficient.

Our balance sheet continues to be strong, and we finished the year with no net debt. We generated $112.8 million in free cash flow \( ^{2} \)  and we plan to be more acquisitive and accelerate our growth. Our priorities will be to add new platform technologies and chemistries as well as to support growth within the Company’s key target markets of agricultural, oilfield, personal care specialty and rigid polyol.

In 2019, Stepan increased its quarterly cash dividend by 10 percent, marking the 52 \( ^{nd} \)  consecutive year the Company has increased its cash dividend to shareholders.

During 2019, we welcomed David G. Kabbes, Vice President, General Counsel and Secretary, and Jason S. Keiper, PhD, Vice President and Chief Technology and Sustainability Officer, to our executive team. We also want to express our gratitude to Frank Pacholec, PhD, Vice President of Strategy and Corporate Development, who retired after 17 years.

We are confident that The Chemistry That Connects Us will provide opportunities for our customers and Stepan Company. The science and expertise we provide to our customers empowers their success and creates value for Stepan Company.

As the decade closes, I reflect back on how far the Company has come and what our team has delivered. In the last ten years we have built a more diversified business, we increased adjusted net income by 80 percent and had record results 7 of the last 10 years. We built a balance sheet with more cash than debt and tripled our market capitalization from $700 million to $2.2 billion. We remain an attractive and safe place to work. We value every employee and their contributions to our success. Employees think and act as owners because they are through our profit sharing and ESOP programs.

Looking ahead, we have a great organization and three strong businesses with opportunities to grow. We have the financial flexibility to make acquisitions that will complement our organic growth and help us deliver value to you, our shareholders.

Thank you for your investment in Stepan Company.





F. Quinn Stepan, Jr.
Chairman, President and CEO




OUR AGRICULTURAL TECHNOLOGIES
ENABLE FARMERS TO
USE LESS PESTICIDES
IN MORE TARGETED
WAYS, REDUCING
THE ENVIRONMENTAL
IMPACT OF PRODUCING
THEIR CROPS.

NEW AGRICULTURAL
CHEMICAL PRODUCTS
THAT STEPAN
INNOVATION DELIVERED
TO MARKET IN 2019.

STEPAN'S NEW
AGRICULTURAL
INNOVATION CENTER
WILL BE A
WORLD-CLASS
SETTING FOR
COLLABORATIVE
INNOVATION, TRAINING,
DEVELOPMENT
AND APPLICATION.



# HELPING FARMERS
GROW SUSTAINABLY

Stepan’s Agricultural Chemical business helps enhance the global food supply by helping crop protection companies improve yields. After starting in North America, the business has grown in all regions of the world.

The Company’s formulation expertise and technical assistance drive our growth. No matter what the season brings, crop protection companies and farmers rely on Stepan technologies to ensure that the money they invest produces a strong, healthy harvest.

Our goal is to enable farmers to minimize crop loss through technologies in weed control and disease control that address emerging issues with resistance. Our technologies also help them combine multiple active ingredients for convenience and efficacy.

## A SIGNIFICANT RUNWAY FOR GROWTH

In 2019, despite an unusually high amount of rain in the U.S. that limited the planting season, our global volume grew above organic market growth rates. And because Stepan currently has about 10% of the global market share in this space, there is significant runway for growth around the world.

In 2019, Stepan innovation delivered 10 new Agricultural Chemical products. These new technologies enable our customers to offer more efficacious products to growers, while making their formulations safer for the environment. Stepan technologies based on naturally derived oils, whether HALLCOMID \( ^{®} \)  solvents for fungicide formulations, or oil dispersion solutions based on STEPOSOL \( ^{®} \)  methyl esters, help our customers meet their sustainability targets for biorenewable content and biodegradability.

## INVESTING IN NEW LABORATORIES

To bring our solutions closer to the specific regional needs of farmers, we have invested in new laboratories in Singapore and expanded our labs in Brazil and Mexico. We also recently broke ground on an agricultural innovation center near our Winder, Georgia manufacturing site.
The agricultural innovation center in Winder is particularly exciting. Customers will be able to work side-by-side with Stepan scientists to formulate and test new products. The new facility will be a world-class setting for collaboration, innovation, training, development and application.

One of the issues Stepan scientists will focus on at the new Winder facility will be the increasing complexity of applications. In the past, one or two components were sprayed by a grower on his or her crops, and today there can be as many as a dozen components. Whether tank mixed or built into formulations, our surfactants are critical, helping disperse active ingredients, micronutrients and other components to ensure the field performance growers expect.

## HELPING FARMERS USE LESS PESTICIDES

Stepan’s Agricultural Chemical products also enable farmers to use less pesticides overall on their crops, improving efficacy and reducing off-target applications. As we help make pesticide formulations more efficacious by synthesizing and formulating new surfactants and solvents, farmers get better results.



An artist's rendering of our new Winder, Georgia agricultural innovation center.



>5%

GROWTH OF
NEOBEE \( ^{®} \)  LIPID
NUTRITION
SUPPLEMENTS
AND INFANT
CARE MARKETS
IN 2019.





STEPAN CONTINUES TO SUPPORT CLINICAL TRIALS TO DEMONSTRATE THE NUTRITIONAL AND HEALTH BENEFITS OF MCTS.



# IMPROVING HEALTH
WITH NUTRACEUTICALS

Stepan’s Specialty Products division had a very good year due in part to higher demand for our NEOBEE \( ^{®} \)  Lipid Nutrition products.

NEOBEE \( ^{®} \)  Medium Chain Triglycerides (MCTs) are employed in a wide variety of pharma, flavor and nutritional applications. These include medical nutritional products, infant formula, reduced calorie foods, sports nutrition products and pet foods.

NEOBEE \( ^{®} \)  MCTs are naturally derived healthy fats with unique properties as a result of their chemical structure. They are a highly efficient energy source, they do not accumulate in the body as fat and they have minimal impact on an individual’s cholesterol.

## LEVERAGING OUR PATENTED TECHNOLOGY

Stepan is poised to leverage its patented technology to continue to grow in the nutrition market. Stepan’s proprietary manufacturing process reduces impurities from the plant oils that are the source of our MCTs. Stepan is also evaluating the possibility of licensing our patented technology to help other companies take impurities out of their product streams as well.

The continued adoption of MCTs into healthy lifestyle products is increasing in demand. Health-conscious people are looking to incorporate these products into their diet, especially because they are naturally derived. They may benefit a growing number of people diagnosed with chronic diseases, as well as those interested in the benefits of Keto diets. MCTs have also been linked to brain health, which is a rapidly expanding market. Stepan has a series of clinical trials underway to further define the cognitive and health benefits of this specialty product line.

## CREATING NEW SYNERGIES

Additionally, Stepan is examining synergies between MCTs and other product lines to enhance performance across a number of markets. Unlike other companies in this space, our business extends beyond food, so we are well positioned to investigate how applications in personal care or agriculture could be improved through the use of NEOBEEs \( ^{®} \) .

Stepan is committed to the responsible stewardship of the earth’s resources, and we continue to focus on ensuring that the sources we use for NEOBEEs \( ^{®} \)  are grown and harvested responsibly.



Demand is increasing for Stepan’s naturally derived nutraceuticals.




LAURA SCHREINER
R&D Director, Polymers



ESTIMATED BARRELS
OF OIL EQUIVALENTS
SAVED THROUGH
USE OF STEPAN'S
POLYESTER POLYOLS.



IN 2020, WE WILL CONTINUE TO FOCUS ON INNOVATING OUR RIGID POLYOLS THROUGH OUR MULTIGENERATIONAL PRODUCT STRATEGY.



A BREAKTHROUGH
YEAR FOR OUR
RIGID POLYOL
BUSINESS IN CHINA.



# ENABLING ENERGY
CONSERVATION

Stepan has been in the rigid polyol business for more than half a century, and we are proud to be a global leader in their production. Our products are a key component of rigid foam insulation, and we are committed to the positive impact these products have on our customers' businesses, the environment and the people who live or work where our products are used.

Our rigid polyols help keep homes and offices warm in the winter and cool in the summer, as well as enhancing fire performance to allow people to exit safely and first responders to take action. In the last decade, an estimated 1.2 billion barrels of oil equivalents were saved over the anticipated 20-year product lifecycle through rigid insulation application using Stepan's polyester polyols.

Globally, our rigid polyol business benefits from some significant tailwinds, including the increased focus on energy conservation and the desire to reduce greenhouse gases. Enhanced government enforcement of existing energy codes written for buildings as well as the adoption of more stringent codes that require greater energy efficiency help our business grow.

## STRONG TECHNICAL SERVICE & FOCUSED INNOVATION

One way we are strengthening our position in this marketplace is through strong technical service. We work with our customers, side-by-side in their operations to help them optimize their production processes and create efficiencies.

We will continue our focused innovation efforts on delivering customer value through our long-term multigenerational product strategy for rigid polyols designed to continually improve insulation and fire performance, sustainability and customer processing productivity.

## INVESTING IN OUR LARGEST PLANT

In the coming year, we will complete an investment at our largest facility, Millsdale, adding capacity and capabilities to help support the production of our next generation rigid polyol. The project will allow us to use new and different raw materials that will increase product performance. We also plan to make investments in our Wessling, Germany plant in order to produce a wider variety of polyols there as well.

## A BREAKOUT YEAR IN CHINA

Internationally, 2019 was a breakthrough year for our rigid polyol business in China. The surge was driven primarily by a robust market for cold storage insulation infrastructure in China that is linked to growing consumer demand and the need to reduce spoilage throughout the food delivery chain.



Stepan's rigid polyols are having a positive impact on the environment.




















*The 2018, 2017, 2016 and 2015 amounts have been adjusted for FIFO

<table><tr><td colspan="6">RECONCILIATION OF NON-GAAP ADJUSTED NET INCOME* (dollars in thousands, except per share amounts)</td></tr><tr><td></td><td>2019</td><td>EPS</td><td>2018</td><td>EPS</td><td></td></tr><tr><td>Net Income Reported**</td><td>103,129</td><td>$4.42</td><td>$111,117</td><td>$4.76</td><td></td></tr><tr><td>Deferred Compensation (Income) Expense</td><td>$7,947</td><td>$0.34</td><td>(787)</td><td>(0.03)</td><td></td></tr><tr><td>Business Restructuring Expense</td><td>$2,005</td><td>$0.09</td><td>$1,842</td><td>$0.08</td><td></td></tr><tr><td>Cash-Settled SARs (Income) Expense</td><td>$2,090</td><td>$0.09</td><td>(520)</td><td>(0.02)</td><td></td></tr><tr><td>Environmental Remediation Expense</td><td>$3,268</td><td>$0.14</td><td>-\)</td><td>-</td><td>$-</td></tr><tr><td>Voluntary Debt Prepayment</td><td>$948</td><td>$0.04</td><td>-\)</td><td>-</td><td>$-</td></tr><tr><td>Adjusted Net Income**</td><td>$119,387</td><td>$5.12</td><td>$111,652</td><td>$4.79</td><td></td></tr></table>

*All amounts in this table are presented after-tax
**2018 Adjusted for FIFO



## FIVE-YEAR SUMMARY \( ^{1} $ 
2015-2019

(in thousands, except per share)

<table><tr><td>FOR THE YEAR</td><td>2019</td><td>2018</td><td>2017</td><td>2016</td><td>2015</td></tr><tr><td>Net Sales</td><td>$1,858,745</td><td>$1,993,857</td><td>$1,925,007</td><td>$1,766,166</td><td>$1,776,167</td></tr><tr><td>Operating Income</td><td>127,260</td><td>149,265</td><td>154,840</td><td>135,532</td><td>108,749</td></tr><tr><td>Percent of Net Sales</td><td>6.8%</td><td>7.5%</td><td>8.0%</td><td>7.7%</td><td>6.1%</td></tr><tr><td>Income Before Provision for Income Taxes</td><td>125,899</td><td>137,769</td><td>146,882</td><td>121,518</td><td>86,687</td></tr><tr><td>Percent of Net Sales</td><td>6.8%</td><td>6.9%</td><td>7.6%</td><td>6.9%</td><td>4.9%</td></tr><tr><td>Provision for Income Taxes</td><td>22,798</td><td>26,664</td><td>46,139</td><td>30,512</td><td>20,661</td></tr><tr><td>Net Income Attributable to Stepan Company</td><td>103,129</td><td>111,117</td><td>100,774</td><td>90,999</td><td>65,957</td></tr><tr><td>Per Diluted Share</td><td>4.42</td><td>4.76</td><td>4.31</td><td>3.94</td><td>2.89</td></tr><tr><td>Percent of Net Sales</td><td>5.5%</td><td>5.6%</td><td>5.2%</td><td>5.2%</td><td>3.7%</td></tr><tr><td>Percent to Total Stepan Company Stockholders&#x27; Equity²</td><td>12.1%</td><td>14.1%</td><td>14.2%</td><td>14.9%</td><td>12.0%</td></tr><tr><td>Cash Dividends Paid</td><td>23,097</td><td>20,857</td><td>18,907</td><td>17,329</td><td>16,300</td></tr><tr><td>Per Common Share</td><td>1.03</td><td>0.93</td><td>0.86</td><td>0.78</td><td>0.73</td></tr><tr><td>EBITDA³</td><td>210,532</td><td>229,655</td><td>237,348</td><td>209,690</td><td>168,205</td></tr><tr><td>Capital Expenditures</td><td>105,572</td><td>86,647</td><td>78,613</td><td>103,076</td><td>119,349</td></tr><tr><td>Weighted-Average Common Shares Outstanding (Diluted)</td><td>23,316</td><td>23,325</td><td>23,377</td><td>23,094</td><td>22,858</td></tr></table>

## AS OF YEAR END

<table><tr><td>Working Capital</td><td>$ 479,675</td><td>$ 495,311</td><td>$ 502,000</td><td>$ 414,148</td><td>$ 394,499</td></tr><tr><td>Current Ratio</td><td>2.4</td><td>2.5</td><td>2.6</td><td>2.4</td><td>2.6</td></tr><tr><td>Property, Plant and Equipment, Net</td><td>639,317</td><td>608,892</td><td>598,443</td><td>582,714</td><td>555,463</td></tr><tr><td>Total Assets</td><td>1,579,367</td><td>1,514,614</td><td>1,502,892</td><td>1,378,671</td><td>1,257,046</td></tr><tr><td>Long-Term Debt Obligations, Less Current Maturities</td><td>198,532</td><td>239,022</td><td>268,299</td><td>288,859</td><td>313,817</td></tr><tr><td>Total Stepan Company Stockholders&#x27; Equity</td><td>891,783</td><td>807,425</td><td>765,400</td><td>650,712</td><td>568,284</td></tr></table>

1. The 2018, 2017, 2016 and 2015 amounts have been retrospectively changed from the amounts originally reported as a result of the Company's first quarter 2019 change in method of accounting for U.S. inventory valuation from Last-In, First-Out (LIFO) to First-In, First-Out (FIFO).

2. Based on weighted-average number of common shares outstanding during the year.

3. EBITDA is a non-GAAP measure. See page 10 for a GAAP reconciliation.

The selected financial data included herein has not been audited. The information was derived from the Company's audited financial statements for the respective years, which were presented in accordance with accounting principles generally accepted in the United States of America and which were audited in accordance with the standards of the United States Public Company Accounting Oversight Board. Copies of the full consolidated financial statements and of the independent registered public accountants' report that expressed an unqualified opinion (dated February 27, 2020) are included in the Company's 2019 Annual Report on Form 10-K filed with the United States Securities and Exchange Commission, which is available on request or via our website at www.stepan.com.



## BOARD OF DIRECTORS



GREGORY E. LAWTON
Former President & Chief Executive Officer, Johnson Diversey, Inc.
RANDALL S. DEARTH
President & Chief Executive Officer, GCP Applied Technologies, Inc.
JOAQUIN DELGADO, PhD
Former Executive Vice President, Consumer Business Group, 3M Company
F. QUINN STEPAN, JR.
Chairman, President & Chief Executive Officer
EDWARD J. WEHMER
President & Chief Executive Officer, Wintrust Financial Corporation
JAN STERN REED
Former Senior Vice President, General Counsel & Corporate Secretary, Walgreens Boots Alliance, Inc.
MICHAEL R. BOYCE
Former Chairman, PQ Corporation



## OFFICERS

F. QUINN STEPAN, JR.
Chairman, President & Chief Executive Officer

SCOTT R. BEHRENS
Vice President & General
Manager, Surfactants

JANET A. CATLETT
Vice President & Chief
Human Resources Officer

DAVID G. KABBES
Vice President, General
Counsel & Secretary

JASON S. KEIPER, PhD
Vice President &
Chief Technology &
Sustainability Officer

ARTHUR W. MERGNER
Vice President,
Supply Chain

SEAN T. MORIARTY
Vice President & General
Manager, Polymers

LUIS E. ROJO
Vice President &
Chief Financial Officer

DEBRA A. STEFANIAK
Vice President,
Business Enablement

## CORPORATE INFORMATION

DEPARTMENTAL VICE PRESIDENTS
BUSINESS ENABLEMENT
Joseph Whitney
Vice President, Information Technology

ETHICS & COMPLIANCE
David B. Mattingly
Vice President & Chief Compliance Officer

FINANCE
Matthew J. Eaken
Vice President, Corporate Controller

LEGAL
Stefan Svensson
Vice President, Global Environmental,
Health, Safety and Security

POLYMERS
Michael A. McCurrie
Vice President, Americas

Roger Stubbs
Vice President, Europe

PROCUREMENT
Brett Ruthberg
Vice President, Procurement

Richard H. Wehman, Jr.
Vice President, Strategic Purchasing

RESEARCH & DEVELOPMENT
Matthew I. Levinson, PhD
Vice President, Global Process Development

SPECIALTY PRODUCTS
Robert J. Peacock
Vice President & General Manager

SUPPLY CHAIN
Cliff Hardaway
Vice President, North America Manufacturing

SURFACTANTS
Cassandra Fricke
Vice President, Global Channel Management

Daniel Bertholf
Vice President, Platform Management

Adriano Galimberti
Vice President & General Manager, North America

Tom Giese
Vice President, Surfactant
Commercial Development

Mark F. Mydlach
Vice President, Sales

Didier Ray
Vice President, Europe

Richard F. Stepan
Vice President, Consumer Products
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP, Chicago, Illinois

TRANSFER AGENT AND REGISTRAR
Computershare
P.O. Box 505000
Louisville, KY 40233-5000
877-373-6374

Contact the Transfer Agent and Registrar concerning stock certificates, dividend checks, transfer of ownership or other matters pertaining to your stock.

STOCK LISTING
New York Stock Exchange: SCL

INVESTOR RELATIONS
Luis E. Rojo
847-446-7500

## FORM 10-K

Copies of the Company’s annual report on Form 10-K, filed with the Securities and Exchange Commission, will be available without charge to stockholders and interested parties upon written request to the Secretary of the Company or may be obtained on our website at www.stepan.com.

## ANNUAL MEETING

The 2020 Annual Meeting of the Stockholders of the Company will be held at 9:00 a.m., Tuesday, April 21, 2020, at the Company’s headquarters in Northfield, Illinois.

## CORPORATE GOVERNANCE

The Company’s Corporate Governance Guidelines and Code of Conduct are provided on our website at www.stepan.com within the Investor Relations section of the site. Our website also provides contact information for the Company’s Ethics Hotline, which allows employees, stockholders and other interested parties to communicate with the Company (on an anonymous basis, if desired) through an independent third party hotline by telephone or online.

Design: Daniel J. Edelman Inc.