Ladies and gentlemen, thank you for standing-by and welcome to the Stepan Company Third Quarter 2014 Result Conference 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, this conference is being recorded, Wednesday, October 22. I’d now like to turn the conference over to Mr. Scott Beamer. Please go ahead.

Thank you, Stephanie. Good morning and thank you for joining the Stepan Company’s third 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 risk and uncertainties that could cause actual results to differ materially including, but not limited to prospects of 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 quarterly investor presentation, which we have available at www.stepan.com under the Investor Relations section of our Web site, we make these slides available at approximately the same time that the earnings release is issued. 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. As previously communicated our Surfactant business continues to be challenged by lower commodity laundry and biodiesel volumes in North America. For the quarter, Stepan reported net income was $13.5 million, down $6.9 million from last year. Earnings adjusted for several non-reoccurring items were $15.6 million versus $18.6 million last year. Specifically in the quarter, global Surfactant volumes were down 8%. North American volumes were down 9% primarily due to commodity sulfonation volumes in laundry and in unprofitable biodiesel opportunity. We expect volumes in both of these areas to continue to be down in the fourth quarter. We are pursuing opportunities to improve utilization in the market and/or through additional asset consolidation. Global functional Surfactant sales volume including agricultural and oilfield applications was up 6%. Surfactant operating income was $11.1 million, down from $24.1 million last year. Stepan’s Polymer business continued its strong performance with sales volume up 8% and adjusted operating income up $6.3 million or 41% versus last year. Polyol volumes were up 23% in North America, while Europe was down slightly. Specialty Polyol sales for CASE applications were up globally. Today we were pleased to announce a 6% increase in our quarterly cash dividend which represents the 47th consecutive year of dividend increases. Our Board of Directors declared a quarterly cash dividend on Stepan’s common stock of $0.18 per share payable on December 15, 2014. At this point, I’d like Scott to walk through Stepan’s third quarter results.

Thanks, Quinn. First our quarter was impacted by a number of significant non-recurring items which were both favorable and unfavorable. These are detailed on Page 2 of the press release and in the Appendix of Table 2 and I will take a moment to comment upon them now. Generally we have provided adjusted net income which excludes items such as these in order to focus our discussion on the items which truly impacted operations. Since I am speaking about net income, I am providing the after tax figures here. First is deferred compensation income or expense. We generally exclude this item from our discussion of operations because it's solely impacted by changes in the Company’s stock price. For example, when the stock falls income is generated. Also we increased our environmental reserve at our Maywood, New Jersey site as a result of the U.S. EPA issuing a record of decision for that site. We previously disclosed this item and previously recorded a liability based on the best information available at that time. Now that the decision has been issued, we’ve increased the reserve by 2.7 million on an after tax basis. Additionally, we recorded a reserve of 2.1 million after tax for a phthalic anhydride customer, which filed for bankruptcy during the quarter. The pre-tax number of 3.4 is shown on Page 4 of the press release since operating income is a pre-tax figure. You may recall that we sell phthalic anhydride into the merchant market after our internal Polyols requirements are met. Also the third quarter of 2013 benefitted from a 2.5 million after tax insurance recovery related to a fire at our plant in Germany in 2011. You may have also noticed that the press release presentation shows explanations of operating income by segment, as we feel this…

Thanks, Scott. 2014 has been a challenging year for Stepan. We expect lower commodity Surfactant volumes in North America will continue in the fourth quarter. We are pursuing opportunities to improve commodity sulfonation utilization externally in the market and/or through further internal consolidation. Global functional sales Surfactant sales should be flat versus a strong fourth quarter in 2013 with lower agricultural sales offset by improving oilfield volumes and high customer inventory levels in the agricultural segment will negatively impact the fourth quarter. Enhanced oil recovery is on-track to deliver an additional $3 million to $5 million operating income for the year. Our announced Surfactant acquisition in Brazil has been approved by the antitrust authorities we expect the transaction to be completed early first quarter of 2015. The fourth quarter is typically a slow quarter for Polyol sales and therefore volume growth should moderate. The fully integrated Columbus acquisition is on-track to deliver the $6 million to $8 million that we have said consistently throughout the year. We plan additional investments to support CASE Polyol growth in both Columbus and Poland. 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 manufactures. Construction of the new plant is in progress and we expected to be operational in the first half of 2016. The fourth quarter results will include approximately $1 million in expenses for a planned maintenance shutdown of our phthalic anhydride production unit. The formal program using internal and external resources to improve efficiency across the Company is advancing and should deliver meaningful results in 2015. Overall, we have a healthy balance sheet and we’ll continue to pursue investments that decrease our cost, restore profitability and grow in targeted areas. This concludes our prepared remarks. At this time we would like to turn the call over for questions. Stephanie, please review the instructions for the question portion of today’s call.

and:

Thank you. (Operator Instructions) Our first question is from Daniel Rizzo with Sidoti & Company.

Good morning. You guys said that enhanced oil recovery is on track to deliver an improvement. Is that still the case, just given what's happened with Hess, I don't know, a month or so, with the drop in petroleum prices? Do you think that's going to make it -- that's going to kind of slow things down or has it slowed things down yet at all? Sidoti & Company: Good morning. You guys said that enhanced oil recovery is on track to deliver an improvement. Is that still the case, just given what's happened with Hess, I don't know, a month or so, with the drop in petroleum prices? Do you think that's going to make it -- that's going to kind of slow things down or has it slowed things down yet at all?

It has not slowed down our prospects for 2014, near-term prospects for 2014 with the falling price of oil and with increased opportunities in the fracing market. We do see those having a intermediate mid-term impact on funding for some projects in the marketplace today. So, our mid-term forecast for EOR does not contain the growth that we had in it over the next three years.

Okay. And then you indicated that European Polyol sales were down for the first time in six quarters. I mean, is that trend -- I know things have gotten worse in Europe, but as I recall, last time -- or I should say during the recession, that Europe was fine, even with the macroeconomic problems there. I was just wondering if that's something you would expect to happen again, given just increased demand for greater energy efficiency? Sidoti & Company: Okay. And then you indicated that European Polyol sales were down for the first time in six quarters. I mean, is that trend -- I know things have gotten worse in Europe, but as I recall, last time -- or I should say during the recession, that Europe was fine, even with the macroeconomic problems there. I was just wondering if that's something you would expect to happen again, given just increased demand for greater energy efficiency?

We still believe in our plan for 2015 is that we’ll continue to see market growth in Europe and in the rigid market and then we believe we’ll have increased share in the metal panel market in 2015 as well. We may see some moderation of the absolute growth in the market due to the slowing economy but we’re still optimistic and positive about growth prospects for 2015.

Okay. Thank you, guys. Sidoti & Company: Okay. Thank you, guys.

Our next question comes from Eugene Fedotoff with KeyBanc Capital Markets.

Good morning guys. Thanks for taking my questions. KeyBanc Capital Markets: Good morning guys. Thanks for taking my questions.

Good morning.

First, I guess I'm trying to understand the decrease in operating margin in Surfactants. So the decline was about $13 million. In your presentation on Slide 4, you showed that impact from volume was $5.5 million and then a higher depreciation, maintenance, and transportations were $2.5 million. So the remaining $5 million, was that the customer loss? Is that how we should understand that? KeyBanc Capital Markets: First, I guess I'm trying to understand the decrease in operating margin in Surfactants. So the decline was about $13 million. In your presentation on Slide 4, you showed that impact from volume was $5.5 million and then a higher depreciation, maintenance, and transportations were $2.5 million. So the remaining $5 million, was that the customer loss? Is that how we should understand that?

Yes Eugene. So essentially you can take from the bridge the maintenance that you take the volume piece, the maintenance piece, most of the freight is also Surfactants as well and these are the after tax numbers on the bridge, so just sort of adding those you get the 6, 7.5, 8.5 and that gets you closer then to the Surfactants on Slide 5 the delta here is a pre-tax ’13. So if we add up the first four or so numbers with freight being most of the Surfactants, add up the first four numbers that are after tax numbers on the bridge we get close to nine which is associated with the 13 on Slide 4, that’s the pre-tax numbers.

Got it, thank you. And then, I guess was there any impact from price cost spread? Did you see any lag between selling prices and higher raw material costs in surfactants? Also what are your expectations for raw materials and freight costs going forward? KeyBanc Capital Markets: Got it, thank you. And then, I guess was there any impact from price cost spread? Did you see any lag between selling prices and higher raw material costs in surfactants? Also what are your expectations for raw materials and freight costs going forward?

I would say that relative to raw material cost our margins have not significantly changed in North America, but what has changed is the freight component. So we have not yet been able to recover the freight component in the marketplace in our segment, in the Surfactant segment in particular. So it is our intent to announce a price increase in January trying to recover that in the marketplace. To-date we have not seen the competitive market in Surfactants to allow that, we will try again in January.

Got it. Okay. And switching to Polymers business, you saw strong growth in Polyol volumes, also CASE volumes were strong. What do you see in phthalic anhydride in the quarter and also if you could comment on pricing -- both pricing and volume trends in phthalic anhydride? KeyBanc Capital Markets: Got it. Okay. And switching to Polymers business, you saw strong growth in Polyol volumes, also CASE volumes were strong. What do you see in phthalic anhydride in the quarter and also if you could comment on pricing -- both pricing and volume trends in phthalic anhydride?

So phthalic anhydride that’s where we had one of our largest customer for phthalic anhydride declared bankruptcy in the third quarter when we took the reserve for that. Actual volume for phthalic anhydride in the quarter was relatively flat with prior year but included some volume that we’re not going to ultimately would be paid for. So we are working in with the bankruptcy court, trying to get paid back or reimbursed for some of that money. But I think it will be interesting to see over a period of time what is going to happen with the volume from that customer and how that impacts the marketplace. Those products will continue to be sold in the market, who is the ultimate owner of that asset will be determined over the next probably six months. But volume and pricing for phthalic anhydride is significantly lower than it has been historically or I should volume is significantly lower than it has been historically but margins have been relatively there up a little bit in the market.

Okay. Great, thanks for that color. And just a last question what was the benefit from facility shutdown in Canada for the quarter? And also if you could provide more color on the results of the strategic review that you are doing and the possible ways that you can improve trading efficiency going forward? Thank you. KeyBanc Capital Markets: Okay. Great, thanks for that color. And just a last question what was the benefit from facility shutdown in Canada for the quarter? And also if you could provide more color on the results of the strategic review that you are doing and the possible ways that you can improve trading efficiency going forward? Thank you.

Yes, in the quarter it was minimal as we get the supply chain established, we have closed the facility but there was some extra cost in us getting the product, approvals that moved around the supply chain. We expect to ramp-up in the fourth quarter to get to that 2.5 million which is a pre-tax number on an annual sort of run rate basis. But for the quarter I would call it minimal.

And the strategic review? KeyBanc Capital Markets: And the strategic review?

I’m sorry Eugene?

And the strategic review that you are doing right now, have you identified anything or can you provide any more details on that? KeyBanc Capital Markets: And the strategic review that you are doing right now, have you identified anything or can you provide any more details on that?

In terms of -- so it is our internal project is called Drive and as we look at that today we would look at on a again an operating income or pre-tax basis a benefit of next year minimum of $5 million and the program is still looking for additional opportunities.

Got it. Thank you. KeyBanc Capital Markets: Got it. Thank you.

Thank you.

(Operator Instructions) Your next question is from Greg Halter of Great Lakes Review.

Good morning. Great Lakes Review/Wellington Shields: Good morning.

Good morning Greg.

Regarding the comments about the surfactant sales and so forth, I was just curious how much of your volume in that area is going through distributor partners? Is this just a couple folks or are there a slew of them? Great Lakes Review/Wellington Shields: Regarding the comments about the surfactant sales and so forth, I was just curious how much of your volume in that area is going through distributor partners? Is this just a couple folks or are there a slew of them?

We have, I believe we have 25 distributor partners in the U.S. alone. So it's a number of them, we work with two large multinational distributors on a global basis in not every location which they have. But our two largest distributors are Univar and Brenntag. And then we have a number of small independents. Give us a second and we’ll try to pull up a volume for you. Okay, so it's about 15% of our North American global volume, so 15% of our global Surfactant volume and it's a larger percent of our profitability. We look at distribution as a strategic channel to market within Stepan Company and it is typically represents a significant part of our profitability in terms of our servicing of that small fragmented customer base.

Okay. And relative to the bankruptcy that you mentioned just a moment ago, I presume that charge that you took would cover the amount of receivables you have with that entity? Great Lakes Review/Wellington Shields: Okay. And relative to the bankruptcy that you mentioned just a moment ago, I presume that charge that you took would cover the amount of receivables you have with that entity?

Yes, that’s correct.

Great Lakes Review/Wellington Shields: : Is there anything else out there or that covers it totally?

That totally covers it. And in a bankruptcy proceeding if there is money left there is a preference for sales that were within the last 20 days prior to bankruptcy filing. So, that number is approximately $1 million, so the probability of getting paid that is higher than the $3.4 million that we took, but that is included within that number.

And I presume you have credit systems and so forth and so on. Was this bankruptcy just came out of the blue or how did that work in terms of the dynamics of it? Great Lakes Review/Wellington Shields: And I presume you have credit systems and so forth and so on. Was this bankruptcy just came out of the blue or how did that work in terms of the dynamics of it?

We identified this Greg as one of our higher risk accounts. But they paid us, we have a history of more than 10 years with these guys and they never meant -- paid us more than a couple of days late. So, we feel certainly don’t have a process or a structural issue and generally I feel very good about our bad debt profile with the customer base that we sell to and so on, but this one caught us a little bit and we reviewed it, we reduced our credit limit but in hindsight we should have probably done more at the time, but they represent a significant customer to us and a large part of that commodity volume that we sell. So, hindsight is 20-20, but we chose to continue to participate in that business.

And did they receive DIP financing or are they closing down totally? And what you expect others to do in terms of picking that up and are they customers of yours? Great Lakes Review/Wellington Shields: And did they receive DIP financing or are they closing down totally? And what you expect others to do in terms of picking that up and are they customers of yours?

They have received funding from a private company, that company has a bid in for the assets and so it remains, I believe much of the business will continue to go on as, the demand will still be in the marketplace. We will wait and see if other people choose to bid on that asset but if the current bondholders chose to participate, we would anticipate maintaining or having a good chance to maintain our business with them.

Okay. And shifting to the corporate expense, obviously, the figure on the press release shows up 33%, but once you adjust for the environmental, I think it's about 10.8 million, if my math is correct, versus about $10.2 million. So up about 6%, which is somewhat in line with sales revenue growth and so forth, how you want to look at it. Any comment on corporate expenses going forward? Great Lakes Review/Wellington Shields: Okay. And shifting to the corporate expense, obviously, the figure on the press release shows up 33%, but once you adjust for the environmental, I think it's about 10.8 million, if my math is correct, versus about $10.2 million. So up about 6%, which is somewhat in line with sales revenue growth and so forth, how you want to look at it. Any comment on corporate expenses going forward?

Some of that is for our external consultant that we’re using in our Drive program.

Okay. All right. And I had one other one here. In the third quarter, Scott, do you have the number of shares that were purchased of that $1.7 million that you referenced? Great Lakes Review/Wellington Shields: Okay. All right. And I had one other one here. In the third quarter, Scott, do you have the number of shares that were purchased of that $1.7 million that you referenced?

Yes, I can get that number, I don’t believe that I have it right now Greg. I mean we talked about the 125, so everyone can get the number I will give it you, we gave the year-to-date now, we gave the year-to-date number last June, I’ll confirm it and make sure that you have it.

There is approximately $2 million for the quarter. So we’ll get it to you.

Okay. And last question, on the Maywood site increasing that reserve by 2.7 million – that’s after-tax. Is that -- does that settle that site or can there, will there be more? Great Lakes Review/Wellington Shields: Okay. And last question, on the Maywood site increasing that reserve by 2.7 million – that’s after-tax. Is that -- does that settle that site or can there, will there be more?

So specifically the ROD dealt with only soil contamination and it is not -- does not include groundwater contamination. What we’ve been told by the EPA is that it’s highly likely that natural attenuation will be the remedy for groundwater remediation and in our reserve that we have separated for that should be sufficient for that. But that has not been finalized. So we believe based on everything we know today the reserve is appropriate.

Okay, thank you. Great Lakes Review/Wellington Shields: Okay, thank you.

Thank you.

And we do have a follow-up from Eugene of KeyBanc Capital.

Hi Eugene.

Hi. Just a couple follow-ups. First, I guess, on EOR business, you said that you still expect 3 million to 5 million benefit. Is it all going to be in fourth quarter? KeyBanc Capital Markets: Hi. Just a couple follow-ups. First, I guess, on EOR business, you said that you still expect 3 million to 5 million benefit. Is it all going to be in fourth quarter?

We’ve been selling products all year long in that basis there will be an increase of business in the fourth quarter.

Okay. KeyBanc Capital Markets: Okay.

The results will be a little bit skewed to the fourth quarter.

Okay. So you should see a nice fourth quarter pickup. KeyBanc Capital Markets: Okay. So you should see a nice fourth quarter pickup.

Yes, $3 million -- I think it is $3 million year-to-date and so.

So that would say we’re at the higher end of that range then for the year with the fourth quarter being the biggest positive impact and those -- I mean generally these are longer lead times sort of sales. So we know about flood that are happening or generally having to sell in advance of that. So we feel pretty comfortable about that.

Okay. And just a question on Polymers margins, I guess. If you look out next two-three years, where do you see margins for that business to be? KeyBanc Capital Markets: Okay. And just a question on Polymers margins, I guess. If you look out next two-three years, where do you see margins for that business to be?

I would anticipate that margins in the U.S. will be relatively stable I believe that there are opportunities as the European economic firms up I think there are opportunities to improve margins in Europe. And then overall as we continue to sell more CASE products we’ll benefit from an improving mix and that will have the positive impact on margins as well.

Great, thank you. KeyBanc Capital Markets: Great, thank you.

And for everyone’s benefit we purchased about 35,000 shares in the quarter, and you can do the math that synchronizes with Quinn’s $2 million of value that he talked about. You know what the share price was and so if you do that math you get back to 35,000 shares. Okay.

There are no further questions 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 continued dedication to serving our customers worldwide and their valuable contributions. We look forward to reporting on our initiatives to improve operational and financial performance in our fourth quarter 2014 results call. Have a good day. Thank you.