Stepan Company (SCL, NYSE)
Industry: Basic Materials / Specialty Chemicals
Annual report, fiscal year 2020


Working Together
for a Safer,
Cleaner World

2020 ANNUAL REPORT

## Stepan



## Financial Highlights

<table><tr><td>(in thousands, except per share and stockholder amounts)</td><td>2020</td><td>2019</td><td>% CHANGE (2020 VS. 2019)</td><td>2018</td><td>% CHANGE (2019 VS. 2018)</td></tr><tr><td>Net Sales</td><td>$1,869,750</td><td>$1,858,745</td><td>+ 1</td><td>$1,993,857</td><td>- 7</td></tr><tr><td>Net Income Attributable to Stepan Company</td><td>126,770</td><td>103,129</td><td>+ 23</td><td>111,117</td><td>- 7</td></tr><tr><td>Per Diluted Share</td><td>5.45</td><td>4.42</td><td>+ 23</td><td>4.76</td><td>- 7</td></tr><tr><td>Percent of Net Sales</td><td>6.8%</td><td>5.5%</td><td>+ 24</td><td>5.6%</td><td>- 2</td></tr><tr><td>Percent Return on Average Equity</td><td>13.5%</td><td>12.1%</td><td>+ 12</td><td>14.1%</td><td>- 14</td></tr><tr><td>Depreciation and Amortization</td><td>81,860</td><td>78,701</td><td>+ 4</td><td>81,115</td><td>- 3</td></tr><tr><td>Capital Expenditures</td><td>125,792</td><td>105,572</td><td>+ 19</td><td>86,647</td><td>+ 22</td></tr><tr><td>Dividends Per Common Share</td><td>$ 1.13</td><td>$ 1.03</td><td>+ 10</td><td>$ 0.93</td><td>+ 11</td></tr><tr><td>Working Capital</td><td>489,097</td><td>479,675</td><td>+ 2</td><td>495,311</td><td>- 3</td></tr><tr><td>Current Ratio</td><td>2.2</td><td>2.4</td><td>- 8</td><td>2.5</td><td>- 4</td></tr><tr><td>Long-Term Debt, Less Current Maturities</td><td>160,812</td><td>198,532</td><td>- 19</td><td>239,022</td><td>- 17</td></tr><tr><td>Total Stepan Company Stockholders&#x27; Equity</td><td>986,693</td><td>891,783</td><td>+ 11</td><td>807,425</td><td>+ 10</td></tr><tr><td>Total Stepan Company Stockholders&#x27; Equity Per Share</td><td>43.91</td><td>39.61</td><td>+ 11</td><td>35.88</td><td>+ 10</td></tr><tr><td>Average Common Shares Outstanding (Diluted)</td><td>23,256</td><td>23,316</td><td>-</td><td>23,325</td><td>-</td></tr><tr><td>Number of Stockholders</td><td>1,738</td><td>1,730</td><td>-</td><td>1,705</td><td>+ 1</td></tr></table>

## Stock Information

<table><tr><td>New York Stock Exchange, Symbol SCL</td><td>2020</td><td>2019</td></tr><tr><td>Stock Price Range</td><td>$71.35-$129.16</td><td>$72.71-$102.44</td></tr><tr><td>Dividend (Common)</td><td>$ 1.13</td><td>$ 1.03</td></tr><tr><td>Earnings Per Diluted Share</td><td>$ 5.45</td><td>$ 4.42</td></tr><tr><td>Return on Equity</td><td>13.5%</td><td>12.1%</td></tr><tr><td>Book Value</td><td>$ 43.91</td><td>$ 39.61</td></tr><tr><td>Shares Outstanding</td><td>22,472,790</td><td>22,513,600</td></tr></table>

Certain 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 10-Q and Form 8-K reports filed with the Securities and Exchange Commission, and risks and uncertainties related to the impact of the Covid-19 pandemic; disruptions in production or accidents at manufacturing facilities; reduced demand due to customer product reformulations or new technologies; our inability to successfully develop or introduce new products; compliance with laws; our ability to make acquisitions of suitable candidates and successfully integrate acquisitions; global competition; volatility of raw material and energy costs and supply; disruptions in transportation or significant changes in transportation costs; downturns in certain industries and general economic downturns; international business risks, including currency exchange rate fluctuations, legal restrictions and taxes; unfavorable resolution of litigation against us; maintaining and protecting intellectual property rights; our ability to access capital markets; global political, military, security or other instability; costs related to expansion or other capital projects; interruption or breaches of information technology systems; our ability to retain executive management and key personnel; and our debt covenants.

All photos were taken under strict Covid-19 guidelines.



# Dear Fellow Shareholders

2020 was a challenging year for our world, our country and Stepan Company, in many respects, but it was also a rewarding year. Our Company pulled together with determination and commitment to keep each other healthy and safe, to keep our plants running and to support a surge in consumer driven demand. In 2020 we did Work Together for a Safer, Cleaner World.

In response to the Covid-19 crisis, we took action to ensure the health and safety of our employees by implementing recommended safety procedures and protocols in our global operations, and organizing work from home for most of our administrative employees. Our team took great pride in making products that contributed to the fight against the virus, and we were able to support our customers' growing requirements for cleaning, disinfection and personal wash products.

While 2020 had its challenges, it was a good year for Stepan. Reported net income for 2020 was $126.8 million and adjusted net income was a record $132.0 million, up 11 percent from last year. \( ^{1} $  Earnings per share were $5.68, also up 11 percent from adjusted 2019. Our Surfactant business grew significantly, based on higher consumer cleaning, disinfection and personal wash volumes due to Covid-19. Our Polymer results decreased due to a first quarter power outage at our Millsdale facility and lower volumes resulting from pandemic-related construction delays. Specialty Product results were slightly down from the previous year. Total Company volume increased 3 percent. Our adjusted EBITDA margin increased from 12.4 percent to 14.1 percent this year. \)^{2} Net sales of $1.9 billion were essentially flat with 2020, but included an improved customer and product mix.
Surfactants made $169.1 million in operating income in 2020, up 38 percent from 2019. Because of the pandemic-related change in consumer habits, we expect growth to continue in cleaning, disinfecting and personal wash products globally, with some moderation as the vaccines reduce the health threat. Growth in the industrial and institutional cleaning markets should improve as economies around the world reopen. Record earnings in Brazil and Mexico were driven by strong volume growth, progress that is expected to continue with expanded capabilities in Mexico and the recent acquisition of Clariant's anionic surfactant business. To support increased demand for disinfection and sanitization products we have debottlenecked and are expanding production of biocidal actives and amphoterics in France, Mexico and the United States.

The Company advanced its customer and product diversification strategy with the addition of over 1,000 customers globally. Sales to these customers significantly contributed to the record Surfactant results in North America and Europe. We are investing to further enhance our digital customer engagement tools to efficiently reach Tier 2 and Tier 3 customers around the globe.

## Stepan Manufacturing Locations

NORTH AMERICA

Northfield, Illinois, USA

Corporate Headquarters

Anaheim, California, USA

Columbus, Georgia, USA

Fieldsboro, New Jersey, USA

Maywood, New Jersey, USA

Millsdale (Joliet), Illinois, USA

Wilmington, North Carolina, USA

Winder, Georgia, USA

ASIA PACIFIC

Bauan, Batangas, Philippines

Jurong Island, Singapore

Nanjing, China

EUROPE

Brzeg Dolny, Poland

Stalybridge, England, UK

Vlissingen, the Netherlands

Voreppe (Grenoble), France

Wesseling (Cologne), Germany



In the agricultural and oilfield markets, surfactant volumes were down in 2020, driven by lower crop and petroleum prices. We expect these markets to recover, supported by the development of new products and service offerings. Despite the near-term volatility, we have increased market share in our base oilfield business, and we will continue to expand our production chemical portfolio globally with our patent-pending oilfield technologies, flowback modifiers and friction reducer boosters, which help customers improve production yields. We are also planning to relaunch the recently acquired KMCO demulsifier portfolio.

## “

Our team took great pride in making products that contributed to the fight against the virus, and we were able to support our customers' growing requirements for cleaning, disinfection and personal wash products.

In 2020, Polymer operating income was $68.2 million, down 2 percent from 2019, primarily due to lower sales volume of phthalic anhydride and rigid polyol, as well as lower polyol margins in North America. We expect demand to gradually improve for polyols as consumers embrace energy conservation and pandemic labor supply issues subside. We expect that the development of next-generation products that enable customers to produce more energy-efficient boards, with lower density, and improved flammability and insulation performance will ensure our success in these markets. In China, cold storage and insulation for livestock structures are attractive growing markets for polyols.

Specialty Products delivered $14.0 million of operating income in 2020, down $2.4 million, or 15 percent, from the previous year, primarily due to lower margins within our medium chain triglycerides (MCT) product line. We anticipate improved margins in our flavor business and higher volumes in MCT's as their nutritional value and health benefits are utilized more widely in consumer goods.

Capital spending was $125.8 million, up $20.2 million from last year, due to production capacity expansions, as well as plant maintenance and efficiency improvements. Our balance sheet continues to be strong, and we finished the year with no net debt. We plan to use our financial strength to make complementary and new platform acquisitions, as well as internal investments to grow our business and support our infrastructure.

In 2020, Stepan returned $40.7 million to shareholders via dividends and stock repurchases. We increased our quarterly cash dividend by 10 percent, marking the 53rd consecutive year the Company has increased its cash dividend to shareholders.

We also took significant strides during the year on our sustainability journey, and in particular, our progress to convert energy purchases to renewables and reducing our water consumption. Enhanced sustainability performance of our products is a key driver of our internal innovation and acquisition activities. We were pleased that The Wall Street Journal recognized our progress and in 2020 listed Stepan as the 45th Most Sustainably Managed Company in the World.

During 2020, we were pleased to announce several key promotions, effective January 1, 2021. Scott Behrens was named President and Chief Operating Officer after serving in a series of leadership positions at Stepan for 28 years. Other promotions include Art Mergner to Executive Vice President, Supply Chain; Sean Moriarty to Vice President and General Manager, Surfactants; and Richard Stepan to Vice President and General Manager, Polymers.

I believe we can be proud of how our team responded to the challenges of 2020 and captured the opportunities that were available. We thank all of our employees for their dedicated service and for their contributions to our success.

We are also enthusiastic about our future and the opportunities, both organic and inorganic, that we have to grow our business and improve our efficiency and performance. It is an exciting time to be at Stepan. We believe that we can continue to deliver value to you, our shareholders.

Thank you for your investment in Stepan Company. We appreciate your support.



F. Quinn Stepan, Jr.
Chairman & CEO











Net Income Attributable to Stepan Company
Per Common Share (Diluted) (dollars)





Operating Income by Segment 2016-2020 (dollars in thousands)



<table><tr><td></td><td>● Surfactants</td><td>● Polymers</td><td>Specialty Products</td></tr><tr><td>2016</td><td>109,367</td><td>96,537</td><td>10,717</td></tr><tr><td>2017</td><td>125,712</td><td>85,745</td><td>9,965</td></tr><tr><td>2018</td><td>133,518</td><td>66,373</td><td>11,661</td></tr><tr><td>2019</td><td>122,780</td><td>69,567</td><td>16,415</td></tr><tr><td>2020</td><td>169,101</td><td>68,214</td><td>13,966</td></tr></table>





*Assumes $100.00 invested on December 31, 2015, in Stepan Company Common Stock, Dow Jones Chemical Industry Index and Russell 2000 Index.




Application Centers around the world specializing in product analysis, formulation, synthesis and process technology.

## INNOVATION

## “

Stepan’s Agricultural Innovation center, which is opening in 2021, will greatly expand our ability to develop new products that help address land and water utilization and responsible agricultural production globally.



We will continue to expand our list of EPA-approved disinfectant formulations that are proven to be effective against SARS-CoV-2, the virus that causes Covid-19.

# Stepping Up in Challenging Times

Developing practical innovations in our products and operations – performance improvements, efficiencies and cost savings – is a fundamental part of Stepan’s strategy to meet customer needs and maintain our market leadership.

Such innovations are mostly developed in our 13 Application Centers around the world where we specialize in product analysis, formulation, synthesis and process technology, supported by a $50 million annual investment in research and development.

## PROACTIVELY MEETING CONSUMER DEMAND

In 2020, with our quick response to the Covid-19 pandemic, which fueled a surge in demand for cleaning, disinfection and personal wash products, we changed the way we operate, accelerating our approach to secure needed raw materials and streamlining operations to increase our capacity for the surfactants used in these products. We believe changes in consumer behaviors prompting the demand will remain after the pandemic, with a corresponding increase in our industrial cleaning and disinfection business activities when economies reopen.

The commitment of our operations personnel around the world to follow new safety procedures while working in-person to maintain plant operations and improve processes enabled us to achieve the substantial 38% growth in 2020 Surfactant income. With the increased demand for biocides during the year, we will continue to expand our list of EPA-approved disinfectant formulations that are proven to be effective against SARS-CoV-2, the virus that causes Covid-19. Improvements are being made to reduce the surface contact time required to inactivate the virus while providing a wider selection of approved substrates for customers who market disinfectant “wipes” products.
MOVING TO RENEWABLE SOURCES AND SUSTAINABLE PRACTICES

Advancements in fermentation technology – a means to convert natural feedstocks into naturally occurring or bio-based materials – will provide Stepan access to manufacture biosurfactant products using microorganisms such as bacteria as conversion reactors, instead of conventional chemical processing. Biosurfactants produced through fermentation provide broad opportunities in several strategic end-use markets, from agriculture and oilfield processes to personal care, household, industrial and institutional cleaning and disinfection applications.



Dennis Murphy, PhD, Research Fellow, Consumer Products R&D, Northfield, IL

With our 2020 acquisition of NatSurFact \( ^{®} \) , Stepan will establish the capability to produce a class of biosurfactants known as rhamnolipids, offering a new option for customers seeking to meet new sustainability targets for their products.

Meanwhile, the continued development of adjuvant surfactants is generating new opportunities in the agricultural market. Distributors who serve farmers combine pesticides with our surfactants to create a finished spray formulation that makes the pesticide more stable and efficacious. Adjuvants improve the pesticide’s ability to penetrate and target the organism and reduce the potential for off-target application. We are also developing adjuvant products suitable for use in precision farming, including application by drones.



1,000

Stepan added 1,000 new customers around the world in 2020, many in Tier 2 and 3, which helped us improve our product mix.
Stepan teams responded with grit and agility to handle the unexpectedly high demand for our surfactants and disinfectant products around the world. For that, we are grateful.

- Art Mergner, EVP, Supply Chain

GROWTH






# Strengthening Our Leadership

Stepan had a very successful year, despite the significant challenges of Covid-19, based on our strategy that combines organic and acquisition growth, as well as geographic market diversification in both our consumer and functional businesses.

## REGIONAL SUCCESSES

With a growing percentage of our earnings coming from around the world, Stepan’s global reach is being supported by our investments in capital and people in Latin America, Europe and Asia, in addition to the United States.

After acquiring the Ecatepec facility two years ago, we have become the largest supplier of anionic surfactants in Mexico. In 2020 we acquired the anionic surfactant business and associated sulfonation equipment from Clariant and moved production to Ecatepec.

As a result, Stepan is now the largest merchant anionic surfactant producer in North America, as well as in Mexico and Brazil. With such a strong presence in commodity consumer surfactants, we not only achieved record results during the year and increased our production in the region by 20,000 metric tons, we also maintained an over 96% on-time service record for our customers – despite the challenges brought on by Covid-19.

None of these achievements would have been possible without the grit and dedication of our employees in Mexico, who quickly responded to the increased demand with expertise and agility.
GLOBAL BUILDING INSULATION OUTLOOK

Stepan is a leading manufacturer of polyester polyols used in rigid foam insulation. After several years of strong market growth, results were lower in 2020 primarily due to Covid-19-related construction delays and cancellations. However, we anticipate growth of 4-6% in the rigid insulation market over the next 5 years in the United States and Europe, as well as in China, a huge market where our products are a good fit for cold storage and livestock structures.



Marco Ramos, Manufacturing Manager, Ecatepec, MX

To support our growth plans, we are developing next-generation polyols and investing in additional capacity and technology designed to meet the increasing demand for improved product performance and energy conservation.



Consumer cleaning behavior has changed due to Covid-19, we are meeting the growing demand of customers globally.




3,000 gal

Stepan produced and distributed 3,000 gallons of sanitizer and disinfectant to first responders in local communities in 2020.

55M
pounds
SUSTAINABILITY

A concentrated fabric softener developed by Stepan could reduce the use of plastics in customer packaging by about 55 million pounds a year.




Stepan reduced its water usage by 30% at our Maywood plant in 2020.

## Performing With Purpose

Helping our community was a key priority as we saw the health crisis unfold. When cleaning products and hand sanitizers were virtually impossible to find, we donated 3,000 gallons of hand sanitizer and spray disinfectant to police and fire departments near our plants, for first responders on the front lines serving and protecting our communities.

As a specialty chemical maker, we were able to access necessary raw materials and used R&D and pilot plant capabilities to formulate, produce and donate sanitizing and disinfectant products, as we continued to manufacture cleaning and disinfecting products for our customers – all essential in the fight against Covid-19. Stepan facilities around the world, from Poland and France to Brazil, also donated disinfectant, face masks and funds to support those in need.

“Stepan Company and its employees are proud to assist our first responders and help ensure they have the hand sanitizer and spray disinfectant needed to protect themselves and to keep our communities safe,” said F. Quinn Stepan, Jr., Chairman and CEO. “The health and safety of our community members and employees are, and always have been, our top priority. This is just a small way that we can say ‘thank you’ for the work they’re doing.”

## STRATEGIC PRIORITIES

A key focus and commitment at Stepan is on developing innovative and responsible solutions for a cleaner, healthier and more energy-efficient world.
In fact, we expect that by 2023 80% of our research and development investment will be applied towards sustainable processes and products. In 2020, we also showed our support for a more sustainable world by continuing our commitment as a signatory of the United Nations Global Compact, whose Sustainable Development Goals include universal availability and sustainable management of water and sanitation by 2030 (UN SDG 6).

WSJ
100
MOST
SUSTAINABLY
MANAGED
COMPANIES 2020
The Wall Street Journal
ranked Stepan the 45th
Most Sustainably Managed
Company in the World

A highlight of the year was the recognition we received from The Wall Street Journal as the 45th Most Sustainably Managed Company in the World, based on analysis of over 5,550 publicly traded companies. Top companies were chosen for their ability to create long-term value on financially material issues, such as environmental sustainability, human capital, social capital and innovation.

With our focus on environmental sustainability, we are making investments to reduce the amount of 1,4-dioxane in our surfactant formulations to make sure our customers' products meet new U.S. regulations that will come into effect in 2023.








2020 Long Lived Assets (dollars in thousands)

● North America 500,860

Europe 91,008

Latin America 79,155

Asia Pacific 63,684

2020 Global Sales (dollars in thousands)

● North America 1,148,996

Europe 391,252

Latin America 237,066

Asia Pacific 92,436



 \( ^{*} \) EBITDA is a non-GAAP measure.

<table><tr><td>Adjusted EBITDA Margin Reconciliation (dollars in thousands)</td><td>2020</td><td>2019</td></tr><tr><td>Net Sales</td><td>$1,869,750</td><td>$1,858,745</td></tr><tr><td>EBITDA</td><td>257,450</td><td>210,560</td></tr><tr><td>Deferred Compensation Expense</td><td>5,268</td><td>10,456</td></tr><tr><td>Cash-Settled SARs Expense</td><td>440</td><td>2,749</td></tr><tr><td>Business Restructuring Expense</td><td>1,212</td><td>2,744</td></tr><tr><td>Environmental Remediation Expense</td><td>-</td><td>4,300</td></tr><tr><td>Early Debt Repayment</td><td>-</td><td>1,247</td></tr><tr><td>Interest Adjustment</td><td>-</td><td>(1,247)</td></tr><tr><td>Adjusted EBITDA</td><td>$ 264,370</td><td>$ 230,809</td></tr><tr><td>Adjusted EBITDA Margin</td><td>14.1%</td><td>12.4%</td></tr></table>

<table><tr><td>EBITDA Reconciliation (dollars in thousands)</td><td>2020</td><td>2019</td><td>2018</td><td>2017</td><td>2016</td></tr><tr><td>Net Sales</td><td>$1,869,750</td><td>$1,858,745</td><td>$1,993,857</td><td>$1,925,007</td><td>$1,766,166</td></tr><tr><td>Net Income Attributable to Stepan Company</td><td>126,770</td><td>103,129</td><td>111,117</td><td>100,774</td><td>90,999</td></tr><tr><td>Provision for Income Taxes</td><td>43,411</td><td>22,798</td><td>26,664</td><td>46,139</td><td>30,512</td></tr><tr><td>Income Attributable to Stepan Company Before Provision for Income Taxes*</td><td>170,181</td><td>125,927</td><td>137,781</td><td>146,913</td><td>121,511</td></tr><tr><td>Interest, Net</td><td>5,409</td><td>5,932</td><td>10,771</td><td>11,444</td><td>13,205</td></tr><tr><td>EBIT</td><td>175,590</td><td>131,859</td><td>148,552</td><td>158,357</td><td>134,716</td></tr><tr><td>Depreciation &amp; Amortization</td><td>81,860</td><td>78,701</td><td>81,115</td><td>79,022</td><td>74,967</td></tr><tr><td>EBITDA</td><td>$ 257,450</td><td>$ 210,560</td><td>$ 229,667</td><td>$ 237,379</td><td>$209,683</td></tr></table>

 \( ^{*} \) Excluding Net (Gain) Loss Attributable to Noncontrolling Interest

<table><tr><td colspan="5">Reconciliation Of Non-GAAP Adjusted Net Income* (dollars in thousands, except per share amounts)</td></tr><tr><td></td><td>2020</td><td>EPS</td><td>2019</td><td>EPS</td></tr><tr><td>Net Income Reported</td><td>$126,770</td><td>$5.45</td><td>$103,129</td><td>$4.42</td></tr><tr><td>Deferred Compensation (Income) Expense</td><td>$4,004</td><td>$0.17</td><td>$7,947</td><td>$0.34</td></tr><tr><td>Business Restructuring Expense</td><td>$905</td><td>$0.04</td><td>$2,005</td><td>$0.09</td></tr><tr><td>Cash-Settled SARs (Income) Expense</td><td>$335</td><td>$0.02</td><td>$2,090</td><td>$0.09</td></tr><tr><td>Environmental Remediation Expense</td><td>$-</td><td>$-</td><td>$3,268</td><td>$0.14</td></tr><tr><td>Voluntary Debt Prepayment</td><td>$-</td><td>$-</td><td>$948</td><td>$0.04</td></tr><tr><td>Adjusted Net Income</td><td>$132,014</td><td>$5.68</td><td>$119,387</td><td>$5.12</td></tr></table>

 \( ^{*} \) All amounts in this table are presented after-tax



## Five-Year Summary 2016-2020

(in thousands, except per share)

<table><tr><td>FOR THE YEAR</td><td>2020</td><td>2019</td><td>2018</td><td>2017</td><td>2016</td></tr><tr><td>Net Sales</td><td>$1,869,750</td><td>$1,858,745</td><td>$1,993,857</td><td>$1,925,007</td><td>$1,766,166</td></tr><tr><td>Operating Income</td><td>171,522</td><td>127,260</td><td>149,265</td><td>154,840</td><td>135,532</td></tr><tr><td>Percent of Net Sales</td><td>9.2%</td><td>6.8%</td><td>7.5%</td><td>8.0%</td><td>7.7%</td></tr><tr><td>Income Before Provision for Income Taxes</td><td>171,067</td><td>125,899</td><td>137,769</td><td>146,882</td><td>121,518</td></tr><tr><td>Percent of Net Sales</td><td>9.1%</td><td>6.8%</td><td>6.9%</td><td>7.6%</td><td>6.9%</td></tr><tr><td>Provision for Income Taxes</td><td>43,411</td><td>22,798</td><td>26,664</td><td>46,139</td><td>30,512</td></tr><tr><td>Net Income Attributable to Stepan Company</td><td>126,770</td><td>103,129</td><td>111,117</td><td>100,774</td><td>90,999</td></tr><tr><td>Per Diluted Share</td><td>5.45</td><td>4.42</td><td>4.76</td><td>4.31</td><td>3.94</td></tr><tr><td>Percent of Net Sales</td><td>6.8%</td><td>5.5%</td><td>5.6%</td><td>5.2%</td><td>5.2%</td></tr><tr><td>Percent to Total Stepan Company Stockholders&#x27; Equity \( ^{1} \)</td><td>13.5%</td><td>12.1%</td><td>14.1%</td><td>14.2%</td><td>14.9%</td></tr><tr><td>Cash Dividends Paid</td><td>25,405</td><td>23,097</td><td>20,857</td><td>18,907</td><td>17,329</td></tr><tr><td>Per Common Share</td><td>1.13</td><td>1.03</td><td>0.93</td><td>0.86</td><td>0.78</td></tr><tr><td>EBITDA \( ^{2} \)</td><td>257,450</td><td>210,560</td><td>229,667</td><td>237,379</td><td>209,683</td></tr><tr><td>Capital Expenditures</td><td>125,792</td><td>105,572</td><td>86,647</td><td>78,613</td><td>103,076</td></tr><tr><td>Weighted-Average Common Shares Outstanding (Diluted)</td><td>23,256</td><td>23,316</td><td>23,325</td><td>23,377</td><td>23,094</td></tr></table>

## AS OF YEAR END

<table><tr><td>Working Capital</td><td>$ 489,097</td><td>$ 479,675</td><td>$ 495,311</td><td>$ 502,000</td><td>$ 414,148</td></tr><tr><td>Current Ratio</td><td>2.2</td><td>2.4</td><td>2.5</td><td>2.6</td><td>2.4</td></tr><tr><td>Property, Plant and Equipment, Net</td><td>682,667</td><td>639,317</td><td>608,892</td><td>598,443</td><td>582,714</td></tr><tr><td>Total Assets</td><td>1,752,336</td><td>1,579,367</td><td>1,514,614</td><td>1,502,892</td><td>1,378,671</td></tr><tr><td>Long-Term Debt Obligations, Less Current Maturities</td><td>160,812</td><td>198,532</td><td>239,022</td><td>268,299</td><td>288,859</td></tr><tr><td>Total Stepan Company Stockholders&#x27; Equity</td><td>986,693</td><td>891,783</td><td>807,425</td><td>765,400</td><td>650,712</td></tr></table>

(1) Based on weighted-average number of common shares outstanding during the year.

(2) EBITDA is a non-GAAP measure. A GAAP reconciliation is set forth in the table on page 10 of this Annual Report.

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 26, 2021), are included in the Company's 2020 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



F. Quinn Stepan, Jr.
Chairman and
Chief Executive Officer



Michael R. Boyce
Former Chairman,
PQ Corporation



Lorinda Burgess
Vice President, Finance and
Chief Financial Officer, Americas
Region of Medtronic Inc.



Randall S. Dearth
Senior Director,
SK Capital Partners, LP



Joaquin Delgado, PhD
Former Executive
Vice President, Consumer
Business Group, 3M Company



Gregory E. Lawton
Former President and
Chief Executive Officer,
Johnson Diversey, Inc.



Jan Stern Reed
Former Senior Vice President,
General Counsel and
Corporate Secretary,
Walgreens Boots Alliance, Inc.



Edward J. Wehmer
Founder and Chief
Executive Officer, Wintrust
Financial Corporation

## Officers

F. Quinn Stepan, Jr.
Chairman and Chief Executive Officer

Scott R. Behrens
President and Chief Operating Officer

Janet A. Catlett
Vice President and Chief Human Resources Officer

David G. Kabbes
Vice President, General Counsel and Secretary

Jason S. Keiper, PhD
Vice President and Chief Technology and Sustainability Officer

Arthur W. Mergner
Executive Vice President, Supply Chain

Sean T. Moriarty
Vice President and General Manager, Surfactants

Luis E. Rojo
Vice President and Chief Financial Officer

Debra A. Stefanik
Vice President, Business Enablement

Richard F. Stepan
Vice President and General Manager, Polymers



## Corporate Information

DEPARTMENTAL VICE PRESIDENTS

Business Enablement
Joseph Whitney
Vice President, Information Technology

Ethics & Compliance
David B. Mattingly
Chief Compliance Officer

Finance
Matthew J. Eaken
Vice President & Corporate Controller

Legal
Stefan Svensson
Vice President, Global Environmental, Health,
Safety & 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, Quality & General Manager,
Specialty Products

Supply Chain
Cliff Hardaway
Vice President, North America Manufacturing

Surfactants
Daniel Bertholf
Vice President, Platform Management

Eduardo Lopes Do Couto
Vice President & General Manager, Mercosul

Cassandra Fricke
Vice President, Global Channel Management

Adriano Galimberti
Vice President & General Manager, North America

Tom Giese
Vice President, Surfactant Commercial Development

Rafael Monroy Pedraza
Vice President & General Manager, LatAm

Mark F. Mydlach
Vice President, Sales

Didier Ray
Vice President, Europe

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 2021 Annual Meeting of the Stockholders of the Company will be held at 9:00 a.m., Tuesday, April 27, 2021, 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 Investors 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.