Ladies and gentlemen, thank you for standing by. Welcome to the Stepan Company’s Second Quarter 2014 Results Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. (Operator Instructions). As a reminder, the call is being recorded, Wednesday, July 23, 2014. I’d now like to turn the call over to Scott Beamer. Please proceed.

Thank you, James. Good morning and thank you everyone for joining the Stepan Company’s second quarter 2014 financial review. Before we begin, please note that information in this conference call contains forward-looking statements, which are not historical facts. These statements involve risks and uncertainties that could cause actual results to differ materially including, but not limited to prospects for our foreign operations, global and regional economic conditions and factors detailed in our Securities and Exchange Commission filings. Whether you’re joining us online or over the phone, we encourage you to review the investor slide presentation, which we have made available at www.stepan.com under the Investor Relations section of our website. As we started doing last quarter, we’ll plan to post the slide presentation at the same time we issue our earnings release. We hope that you find the information and perspectives helpful. With all of that said, I’d like to turn the call over to F. Quinn Stepan, Jr., our President and Chief Executive Officer.

Thank you, Scott, and thank you all for joining us this morning. Despite facing challenges in the second quarter, we matched prior year earnings. Operating earnings were hampered by continued weakness in North American Surfactants offset by good growth in our Polymer business. Net income for the second quarter was $24.4 million, up 7% from last year’s $22.7 million. Net income excluding deferred compensation was $20.6 million, essentially flat with prior year results of $20.4 million. In the second quarter, our Surfactant business in North America experienced an 11% volume decrease and is expected to continue challenges for the rest of 2014. Stepan’s Polymer business experienced good growth with Polymer sales volume increasing 22% and operating income up 36%. Our balance sheet continues to be solid and we will continue to pursue further investments and opportunities to improve efficiency, accelerate our earnings growth and deliver greater returns to our shareholders. Last week we announced an agreement to acquire a second sulfonation site in Brazil, which is synergistic with our existing plant and provides an opportunity to serve the growing northeast of Brazil. Our Board of Directors has declared a quarterly cash dividend on Stepan’s common stock of $0.17 per share payable on September 15, 2014. In the fourth quarter of 2013, we increased our quarterly cash dividend by 6% marking the 46th consecutive year that we have paid increasing dividends to our shareholders. At this point, I would like Scott to walk through Stepan’s second quarter results.

Thanks, Quinn. Total net sales for the second quarter were $504 million, up 6% versus prior year. The selling price increases mostly from our Surfactant business accounted for 7% of this change. These increases are mostly from contractual changes to selling prices, which correspond to changes in our raw material costs. In other words, when our raw material cost increase in some cases we’re able to pass the increase along. Total volume was down 2% with global Surfactants down 8%. Consistent with the prior quarter, we chose not to participate in the biodiesel market because it was not economically advantageous to do so and this accounted for 2% of the Surfactants decline. You will notice this item is not shown separately on the earnings bridge because the impact to net income was negligible. However, earnings were impacted by the remaining 6% volume decline in Surfactants, most of which is from North America. Specifically, two of our customers brought volume in-house to use more of their internal surfacting capacity and this accounted for 2% out of the 6% decline. One item is new for this quarter, so it will remain a difficult comparable until this time next year. The other item was mentioned in last quarter’s call and will remain a difficult comparable for the remainder of this year. Similar to other information that has been issued by other sources, we have noted that the agricultural market was weaker than expected. Consistent with this, Surfactant sales for agricultural applications fell and this accounted for most of the remaining decline. Primarily, there was a carryover impact of severe first quarter weather in North America, which led to reduced customer demand and higher customer inventory levels. Also, Brazil’s agricultural market was impacted by drought conditions from earlier this year. While the Surfactant volumes…

Thank you, Scott. As previously noted in the prior earnings call, lower first quarter earnings will make it difficult to exceed 2013 operating earnings. North American Surfactants will continue to face challenges for the rest of 2014 with lower consumer product volumes and slightly higher maintenance costs. The North American agricultural market is not anticipated to reach 2013 levels in the second half. However, we expect the Brazilian agricultural market to recover. Contributions from new enhanced oil recovery projects should deliver between $3 million and $5 million in additional operating income versus last year. We anticipate continued earnings growth from our 2013 acquisition from Bayer and recent capacity expansions in Brazil, Europe and Singapore. Closing on the announced acquisition in Brazil would not materially impact 2014 results. It does have synergies with our existing site and would positively impact 2015. Polymer should continue to deliver strong global volume growth, improving economies in the U.S. and Europe and greater use of insulation should both contribute to full year Polymer growth. The North American polyester resin business in Columbus-Georgia purchased from Bayer is fully integrated and is expected to deliver between $6 million and $8 million of operating income in 2014 which is $4 million to $6 million higher than prior year. We expect the loss in China to be less than last year. We continue to supply material for this growing market from other Stepan facilities and local toll manufacturers. In this quarter, we signed an engineering procurement and construction contract to build our Chinese polyol plant which is expected to be operational in 2016. We launched a formal program utilizing internal and external resources to improve the efficiency and profitability and plan to communicate targets later this year. Overall, we have a healthy balance sheet and will continue to pursue investments that will accelerate our growth. This concludes our prepared remarks. At this time, we would like to turn the call over for questions. James, please review the instructions for the question portion of today’s call.

Thank you. (Operator Instructions). Our first question is from Daniel Rizzo from Sidoti & Company. Please proceed. Daniel Rizzo - Sidoti & Company: Good morning.

Good morning, Dan.

Good morning, Dan. Daniel Rizzo - Sidoti & Company: The Surfactant customers that are now doing their surfactants in-house, I assume that’s kind of a permanent loss at this point?

At this point, we would say it is a permanent loss. Daniel Rizzo - Sidoti & Company: Fair enough. And how much – sorry, go ahead.

If we take a look at that, due to the kind of reformulations, greater use of enzymes, the trading down from premium brands to economy brands, that has led to a decline in the use of surfactant in the wash load, and as result of that internal capacity at those customers has freed up and so they are moving some of that volume that they previously outsourced from us into their internal capabilities. So at this point in time, we would believe that’s a permanent loss. And to quantify that, it was probably one-third of our decrease that we highlighted in our surfactant bridge. Daniel Rizzo - Sidoti & Company: Okay.

That’s approximately $1 million after tax.

That’s 1 million after tax and you can think about that as being a similar number going out into the next couple of quarters as well. So that negative – and just to frame it, that negative on the bridge, the 3 million of surfactant volume and mix, as Quinn said, this piece is about a third of that and was the biggest part of that which was a surprise to us. We don’t expect there to be problems ongoing in ag but the piece on the two consumer product customers that’s going to be a continuing challenge in the next few quarters. Daniel Rizzo - Sidoti & Company: Then you guys have excess capacity now, I guess, at least domestically with the surfactants that was formally serving those customers.

In terms of our anionic product line, today we have excess capacity. That is correct. Daniel Rizzo - Sidoti & Company: Okay. All right, thank you guys.

Our next question is from the line of Jason Rogers from Great Lakes Review. Please proceed.

Good morning.

Good morning, Jason.

Good morning, Jason.

Wondered if you could talk about the loss of the customers in that consumer area, what’s the risk that you may see other customers bringing their own operations in-house as well as any risk for other industries to do the same?

What we’re talking about is just kind of the anionic and the sulfonation piece of our business today. The remaining anionic business that we have in the laundry segment we have under long-term contracts. So we think the additional risk going forward in North America is minimal. So relative to other industries, our industries generally don’t have the economies of scale that would allow them to install or build sulfonation equipment to that. So for the most part, all the personal care, the agricultural accounts are all buying on the merchant market with the exception of some of the large consumer companies that have both the laundry and a personal care business may supply some personal care SKUs today. But at this point in time, we will see the risk being minimal for the balance of our business going forward for the foreseeable future. There are opportunities that exist to increase that and today I would say we are pursuing one or two of those, but they’re not in our projections at this point in time going forward.

And how long do you believe this situation of excess capacity will exist or when will it improve in your opinion?

Certainly from a North American perspective, again it’s anionic capabilities that we’re talking about only, so there is excess capacity in the marketplace. So we have an issue before us. Ideally, we would like to fill it up with enhanced oil recovery opportunities but if that does not materialize in the North American market, we’re going to have to take some action. We talked about increasing our effectiveness and efficiency. That’s one of the opportunities that we’re looking at. We have taken a small step in terms of shutting down some sulfonation capacity in our Longford Mills Canadian facility and we’ll continue to look at our network as appropriate.

And finally just wanted to get an update on that new cleaning product with the Elevance partnership.

We’re still very excited. We have supplied over 900 samples to the marketplace today. I think we have had 16,000 hits on our MICRO website as of this point, so there is a fair amount of customer interest. We have sold very small drum quantities to date with a couple of customers talking about moving to bulk quantities in 2014. So we’re optimistic that it’s going to be a very successful product for us long term, but at this point in time it’s not a significant part of our 2014 forecast but we look forward to volumes beginning to build in 2015.

Thank you.

Thank you, Jason.

(Operator Instructions). Our next question is from the line of Chris Meeker from Franklin Templeton. Please proceed.

Good morning, guys.

Hi, Chris.

Could you remind us again how much North America represents of the total Surfactant business?

North America is about 55% of our Surfactants business globally.

Okay. And to go back to kind of the excess capacity questions, what I’m trying to kind of work through here in my head is, in terms of the capacity you have, you’ve got excess capacity it sounds like at some of the customer sites and maybe that’s been soaked up by these two customers bringing the volume in-house, but it seems like there could be risk that there are other customers out there that could bring volume in-house. You have excess capacity in your plants from the volume that you’ve lost and then you also have kind of the excess capacity sitting around because you’re no longer participating in the biodiesel market. Is that kind of the right way to frame the situation in front of us?

Partially. One, the biodiesel assets are a different type of assets and they’re distinct from sulfonation assets. So biodiesel in our case in North America, we have primarily batch reactors that are multipurpose reactors that are underutilized today but can be used in the future for other surfactant or polymer opportunities, and we’re looking at trying to fill those things with other Stepan technologies. So I think there’s an answer for the biodiesel assets going forward. Relative to our customers having excess sulfonation capacity, for the most part today with the two moves that the customers that we referred to have contemplated, our customer networks will be filled with their current demands and there is limited opportunities for other customers – other customers aren’t – they have limited opportunities to move in-house today without building additional facilities. So to date, there are no plans for those customers that are buying from the merchant market to build their own capacities. And today, generally consumer product companies would prefer to outsource rather than spend their money on capital projects to backward integrate. They would prefer to invest and to grow their market through acquisitions. So they will try to take advantage of existing assets as they have in place. So again, I think the risk of losing additional volume is to backward integration is minimal. Having said that, we have significant excess capacity in our marketplace today and again we’re strategically taking a look at that in terms of what we want to do with that going forward.

What does the utilization look like today on that North American capacity compared to a couple of years ago when the margins were more high single digits or even double digits a couple years back?

I would say we have lost – over the last 10 years we’ve probably lost 20% in terms of capacity utilization in North America and we’re short of capacity in Brazil and that’s why we’ve made the acquisition there and we’re a little bit long in capacity in Europe as well, I would say at this moment.

Okay. And then just a last question, could you just help us understand the significance of the new sulfonation plant that you bought down in Brazil? You mentioned that it’s synergistic to the one that you have down there already. What exactly does that do for you?

I would like to defer that question to the next quarter until after we actually close on the acquisition, if I could.

Okay. Thanks, guys.

Thank you, Chris.

(Operator Instructions). There are no further questions from the phone lines at this time.

Okay. I’d like to thank everyone for joining Scott and me on the call today as well as the entire Stepan team for their commitment to serving our customers worldwide and their valuable contributions that allow us to generate a value for you, our shareholders. We look forward to reporting results on our third quarter in our next call. Have a great day. Thank you.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines. Thank you.