STEPAN REPORTS SECOND QUARTER RESULTS

     NORTHFIELD, Illinois, July 24, 2013 -- Stepan Company (NYSE: SCL) today reported higher second quarter net income of $22.7 million up 6 percent from $21.4 million in the year ago quarter. Diluted earnings per share was $0.99 versus $0.94 a year ago.

• Year-to-date net income, excluding deferred compensation plan expense, was $41.9 million, down 9 percent from $46.2 million a year ago.

The decline in selling prices was attributable to lower commodity raw material costs.

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• Surfactant sales volume rose by 5 percent with all regions contributing. Sales of consumer cleaning products led the growth. Surfactants used in agricultural products continued to deliver strong volume growth. Sales of functional surfactants used in oilfield applications, including enhanced oil recovery declined. Latin American sales volume grew by 15 percent with Brazil contributing the majority of the increase.
• Polymer sales volume grew by 1 percent. Polyol, used primarily in insulation foam, grew by 6 percent with both North American and Europe contributing to the increase. Lower phthalic anhydride sales volume partially offset the growth in polyol volume.
• Specialty Products net sales rose 4 percent on a favorable sales mix.

Gross profit grew by less than 1 percent to $73.7 million.

• Surfactant gross profit declined by 7 percent to $48.3 million. Lower North
  American sales of functional surfactants into the oilfield market including enhanced oil recovery combined with reduced profitability from biodiesel sales contributed to the weaker results. North American consumer products earnings were reduced by consumption of higher cost raw material inventories. Europe and Latin American surfactant profits were both higher on improved consumer product sales volume.
• Polymer gross profit grew by 15 percent to $19.9 million due to the 6 percent growth in polyol volume in North America and Europe.
  Contribution from China declined $1.1 million as the plant shut down, as planned, to relocate at the government’s request. Customers will continue to be supplied from Stepan’s US and European plants and toll production in China, which will result in lower margins. Construction of our new plant in China is anticipated to take 18 to 24 months. The polyol business acquired from Bayer Material Science added a small contribution to the quarter.
• Specialty Products gross profit grew by 19 percent to $6.6 million. A favorable sales mix of our nutritional supplement and pharmaceutical products led to the improvement.

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The year-to-date effective tax rate was 27.5 percent compared to 31.7 percent a year ago. The lower rate was due to the retroactive reenactment of the U.S. Research and Development tax credit which resulted in the 2012 and 2013 credit all being recognized in the 2013 income tax provision.

On June 27, 2013, the Company secured a new $100 million private placement and repaid $60 million of U.S. revolver borrowings that had been used to fund the Bayer

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acquisition on June 3, 2013. The new 3.86% notes have a final maturity of 12 years with straight-line amortization in years 6 through 12, resulting in an average life of 9 years. Terms and conditions are substantially equivalent to those in our existing long-term debt agreements.

Capital expenditures were $ 21.0 million during the quarter and $ 42.0 for the first half of 2013.

The Board of Directors of Stepan Company declared a quarterly cash dividend on its common stock of $0.16 per share on July 23, 2013. The dividend is payable on September 13, 2013, to common stockholders of record on August 30, 2013.

“Despite the lower first half operating results, we remain optimistic about our long-term growth,” said F. Quinn Stepan, Jr., President and Chief Executive Officer.

Global surfactant consumer product volumes should continue to grow, particularly in Brazil. Higher raw material cost inventory built to support our Singapore plant start-up and the subsequent decline in commodity prices, negatively impacted our first half surfactant margins by $3.0 million and potentially up to $1.7 million in the second half. The Singapore methyl ester plant is operational and should contribute to earnings in the second half. Surfactants sold for use in enhanced oil recovery are expected to improve compared to the slow first half. Demand for agricultural surfactants should remain strong.

The polymer segment is experiencing steady improvement in polyol volume after a slow start due to protracted winter weather delaying many roof insulation projects. The second quarter acquisition of the North America polyester resin business from Bayer Material Science should be modestly accretive to earnings in 2013 and more so after we add capacity to manufacture additional polyol products for the coating, adhesive, sealant and elastomers (CASE) markets.

“The slow start to the year will make full year earnings growth an aggressive target. We will continue to pursue investments that can accelerate our growth,” said Mr. Stepan.

Stepan Company will host a conference call to discuss the second quarter results at 2:00 p.m. Eastern Daylight Time on July 24, 2013. To listen to a live webcast of this call, please go to our Internet website at: www.stepan.com, click on investor relations, next click on conference calls and follow the directions on the screen.

Stepan Company, headquartered in Northfield, Illinois, is a leading producer of specialty and intermediate chemicals used in household, industrial, personal care, agricultural,

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food and insulation related products. The common and the convertible preferred stocks are traded on the New York Stock Exchange under the symbols SCL and SCLPR.

Except for historical information, all other information in this news release consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. The most significant of these uncertainties are described in Stepan Company’s Form 10-K, Form 8-K and Form 10-Q reports and exhibits to those reports, and include (but are not limited to), prospects for our foreign operations, foreign currency fluctuations, certain global and regional economic conditions, the probability of future acquisitions and the uncertainties related to the integration of acquired businesses, the probability of new products, the loss of one or more key customer or supplier relationships, the costs and other effects of governmental regulation and legal and administrative proceedings, including the expenditures necessary to address and resolve environmental claims and proceedings, and general economic conditions. These forward-looking statements are made only as of the date hereof, and Stepan Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

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The full effect of the deferred compensation plan on quarterly pretax income was $3.8 million of income versus expense of $1.8 million last year. The accounting for the deferred compensation plan results in income when the price of Stepan Company common stock or mutual funds held in the plan fall and expense when they rise. The Company also recognizes the change in value of mutual funds as investment income or loss. The quarter end market prices of Stepan Company common stock are as follows:

The deferred compensation expense income statement impact is summarized below:

The Company believes that certain non-GAAP measures, when presented in conjunction with comparable GAAP (Generally Accepted Accounting Principles) measures, are useful because that information is an appropriate measure for evaluating the Company’s operating performance. Internally, the Company uses this non-GAAP information as an indicator of business performance, and evaluates management’s effectiveness with specific reference to these indicators. These measures should be considered in addition to, neither a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

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The Company’s foreign subsidiaries transact business and report financial results in their respective local currencies. As a result, foreign subsidiary income statements are translated into U.S. dollars at average foreign exchange rates appropriate for the reporting period. Because foreign exchange rates fluctuate against the U.S. dollar over time, foreign currency translation affects period-to-period comparisons of financial statement items (i.e. because foreign exchange rates fluctuate, similar period-to-period local currency results for a foreign subsidiary may translate into different U.S. dollar results). Below are tables that present the effect that foreign currency translation had on the changes in consolidated net sales and various income line items for the quarter and six months ended June 30, 2013.

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