Ladies and gentlemen, thank you for standing by. Welcome to the Stepan Company Fourth Quarter and Full Year 2015 Earnings 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, February 24, 2016. I would now like to turn the conference over to Scott Beamer, Vice President and Chief Financial Officer of Stepan Company. Please go ahead, sir.

Hello and thank you for joining the Stepan Company's fourth quarter and full year 2015 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 the 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 investor slide presentation, which we have made available at www.stepan.com, under the Investor Relations portion of our website. We make these slides available at approximately the same time as when we release earnings. And I hope that you find the information and prospectus helpful. Now with 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 today. Overall 2015 was a good year for Stepan Company and specifically in the fourth quarter adjusted net income was $17 million or $0.74 per diluted share compared to $8.8 million or $0.38 per diluted share in the same quarter last year. Total volume for the quarter increased 10%. Despite this increase net sales decreased 8% primarily as a result of pricing that contractually followed lower raw material costs and the negative impact of foreign currency translation. Unit gross profits and gross profit as a percent of net sales improved versus 2014. Both surfactant and polymer results improved. Surfactant income increased on strong volume growth and an improved global product mix. We delivered savings from the previously reported restructuring activities and executed actions to improve earnings going forward, including the dissolution of our Enhanced Oil Recovery joint venture, reducing Lipid Nutrition expenses and the planned discontinuation of ethoxylation in Canada. Polymers benefited from energy conservation efforts globally, expanding sales into metal panels and CASE applications as well as improved margins. Specialty products results were down significantly for the year but are expected to benefit going forward from actions taken in the fourth quarter. During 2015, we addressed the challenges incurred in 2014 and completed key components of our short-term and long-term strategies. Operationally we increased asset utilization, improved product mix, reduced costs and enhanced our internal efficiency. Full year 2015 adjusted net income grew from $57.7 million to $79.4 million, a strong rebound from 2014. Surfactant earnings operating income increased by $43.3 million to $104.1 million. Earnings were up in all regions. North America benefited from improved asset utilization mostly from our new supply contract with The Sun Products Corporation. Mix improved and we delivered benefits from our efficiency program drive. Latin America and Europe both had record surfactant operating incomes. Latin America delivered higher sulfate and specialty volumes. Europe grew fabric softeners in the Consumer Products segment and environmentally friendly solvents and other specialties in the functional markets. For the full year, reported polymer operating income was $80.9 million up $20.3 million for 33% from 2014. Polymers delivered their sixth consecutive record year of earnings. Both volumes and margins improved. Today we announced our quarterly dividend of $0.19 per share. We paid a total of $0.73 per share in 2015. At this point I would like Scott to walk through a few more details about our fourth quarter and full year results.

Thank you Quinn. My comments will generally follow the slide presentation. Let's turn to Slide 3 to recap the fourth quarter. Adjusted net income for the quarter was $70 million or $0.74 per diluted share which is nearly double from $8.8 million or $0.78 per diluted share in the fourth quarter of last year. Both of our largest segments, Surfactant and Polymers delivered significant income growth and continued to overcome foreign currency translation headwinds. Surfactant operating income was $24.3 million, an increase of $12.2 million or double compared to the fourth quarter of last year, due to improved performance in North America and Latin America. Our long-term supplies agreement with The Sun Products Corporation continues to perform very well. SUN is one of the leading detergent producers in the U.S. and we now supply their anionic surfactant requirement from within our network, significantly improving our asset utilization in North America. Additionally polymer operating income was $18.1 million an increase of $5 million or 38%, most significantly as a result of volume growth within our Global Rigid Polyol business and improved margins overall. Since adjusted net income is a non-GAAP measure we provide full reconciliations to the reported figures and these can be found in appendix 2 of the presentation and table 2 of the press release. Specifically regarding adjustments to reported net income, this quarter included deferred compensation expense of $2.7 million or $0.12 per diluted share compared to $1.6 million or $0.07 of income in the same period last year. Naturally all employee compensation is reflected in our normal operating income, although we also allow employees the opportunity to defer their payouts until some future date. When the future payment -- and the future payment change is based on the company's share price. When the stock price increases, expense…

Thank you, Scott. I will speak about the initiatives as well as items we know with some level of certainty. Each amount stated will be before the effective taxes. 2016 should benefit from restructure activities taken in 2015. With more limited and more focused resources [indiscernible] recovery efforts will be better aligned with the opportunities we expect in the current low petroleum price environment. We expect profitability of EOR activities to improve by $3 million in 2016. The actions taken in the fourth quarter of 2015 to lower costs within the Lipid Nutrition portion of Specialty Products saw improved profitability of $3 million. In January 2016 we announced to our employees that we will begin to transition ethoxylation volumes from our Canadian site. 2016 accelerated depreciation and unit shut down costs should be between $2 million and $3 million. Our DRIVE program delivered expected benefits in 2015. Moving forward we expect to benefit from projects that will carry over into 2016, new projects and the elimination of consulting fees was its initiative. DRIVE should deliver an additional $8 million from 2016. We expect to benefit from a full year of the additional laundry volumes on the business we earned in July of 2015. In Germany we will incur additional costs of about $4 million because of an expected every five-year government mandated shutdown of our site. Shutdowns typically last 30 days. This action -- shutdown will impact our surfactants and polymer businesses. Our plant in China is beginning their operations ahead of schedule and below budgeted costs. Due to certain startup costs and primarily because of weaker construction activity in China, China will likely represent headwinds in 2016 between $3 million and $4 million. coatings adhesive sealants and elastomer or CASE business is an important adjacency for Polymers and we [indiscernible] about this business. The new reactor in Poland will begin in the second half of this year. In terms of growing our top line we expect the rigid insulation foam business to continue to grow benefiting from energy conservation efforts globally. Additionally we plan to build upon the record years in Brazil and Colombia by introducing new products and new customers in those regions. So overall I believe EPS should grow, despite the headwinds. Net debt without acquisition should improve and we would like to continue to increase our cash dividend annually as we have since 1968. This concludes our prepared remarks. At this time we would like to turn the call over for questions. Jennifer please review the instructions for the question portion of today's call.

Thank you. [Operator Instructions]. Our first question comes from the line of Eugene Fedotoff with KeyBanc. Please proceed with your question.

Could you talk about the trends you are seeing in your functional surfactants business? It seems like the Ag business is doing well despite the headwinds from the overall market, weaker Ag market. Can you talk about that? Is that something like a share gain or something else that's driving that business higher for you?

I would say our -- we are certainly gaining share in our green solvent product line which emulsifies pesticides and insecticides and allows those products to be dispersed across a farmer's field. So we are gaining share versus petroleum solvents. So gaining share in that segment. We are seeing a little bit of improved demand in the agricultural market overall but not significant, not significant. So I would say it's primarily based on new technology into that space.

Could you remind me of what exposure overall is for oil field related business for you guys?

Relatively small in the big picture, generally speaking we tend to benefit more from falling petroleum prices versus the decline in the sales in the marketplace. But overall the petroleum market today represents less than 10% of our surfactant business.

A question on Polymers Phthalic Anhydride business added about $2 million to operating income. In the quarter it seems like higher demand from one customer. Can you provide a little bit more color on that, is it sustainable demand and we should expect that business to benefit operating income by about $2 million a quarter going forward or just if you can talk about that?

I think the results the $2 million in the fourth quarter is probably a little bit high to [indiscernible] on an annual basis. There has been a change in that marketplace where one of our competitors has discontinued participation in the merchant market. So there is some also mass utilization for the industry has improved and there has been some margin improvement in that space. We would expect a more robust business, that is, a more profit business in 2016 and going forward.

Just in terms of your 2016 guidance, thanks a lot of for the color that you provided on the call. Just one clarification, the $8 million benefit that you expect from your cost savings program in 2016 does not include consulting fees or it does not so you would have additional $7 million or $8 million from the consultant fees not being there in 2015?

Yes. The $8 million that we gave the pretax number in the comments does include the savings from lower cost or no cost essentially in 2016 for the consultants.

Just a last question Scott for you, if you can talk about cash from operations and if you can give any number and total D&A for the quarter?

D&A Eugene has been pretty consistent at $17 million a quarter for this year and that's what you can expect for the fourth quarter as well and we will have K out shortly this week, Our operating cash flow for the fourth quarter was stronger than it has been throughout the year at about $60 million, because of a strong trend in the product orders.

Our next question comes from the line of Mike Harrison with Seaport Global Securities. Please proceed with your question.

Quinn you mentioned the North America surfactant volume was up 14%, it sounds like that was mostly related to the SUN products deal. I was wondering if you could break out what the underlying volume growth looked like and maybe talk about what were you seeing in laundry, personal care, HI&I as well as the functional surfactants?

I think excluding the new commodity volumes that we obtained, our volumes down slightly for the quarter and primarily the volume decrease was in the oilfield and EOR space and a little bit in the HI&I market space. So are the two areas where we experienced a decline in volume. The rest of the business was relatively flat in the quarter.

Obviously the oilfield piece is pretty weak and you are dissolving this joint venture but the impact on sales next year is a pretty neutral year-on-year, is it a negative year-on-year? I know you said that the earnings is going to be a positive from dissolving the joint venture.

In the first quarter -- it will be a decrease in 2016's first quarter because we had some large orders that shipped in the first quarter 2015. But beyond that it should be relatively neutral for the balance of the year.

The ethoxylation transition that you are making here in Canada, can you give us a little bit of color on how you came to that conclusion and you mentioned the headwinds near term as you had some shut down costs. But what does it mean in terms of the cost structure going forward?

So ethylene oxide is a toxic inhalation hazard and so we have been getting that materials via rail car and it’s a relatively long transition line. So in order to reduce the transportation risk associated with the shipment of toxic inhalation hazard we are going to be relocating some of our production to the Gulf Coast. And so we have talked about having a potential plant site in Louisiana and in potentially capacity in Texas site that we have acquired. So we would hope that the end of the second quarter to make a firm decision as to whether we are going to Texas or Louisiana with that investment. So this activity is part of our strategic plan to relocate a large portion of our ethoxylation business to the Gulf Coast. So we are filling up our existing sites in terms of our Winder site and our North American [indiscernible] sites and then we will outsource some incremental volumes as necessary as we begin the transition down to the Gulf Coast in the United States. Short-term there are costs associated with this in 2016, from an ethoxylation perspective we would expect to benefit by about $2 million a year in 2017 through the period at which we would start a new facility per year.

Looking at the raw material versus pricing dynamics in both the surfactants and Polymers businesses should we expect that dynamic to remain a tailwind for margins in 2016 or are we reaching a point where you have given most of that pricing back and its going to be a little bit more neutral in both segments?

I think we would anticipate it being a benefit in the first quarter and I think the balance of the year remains to be seen.

All right. Thank you very much.

[Operator Instructions]. Our next question comes from the line of David Stratton with Great Lakes Review. Please proceed with your question.

Most of my questions have been answered already, but can you breakout the pretax cost of the joint venture dissolution and whether that was included in the loss from equity in joint venture line item or where it came from?

Yes. It's on the part of our P&L in that other line item. Loss on joint venture you will see for the quarter it's higher than where it was last year. The impact -- the pretax impact is $2.4 million and you will see essentially that explains the delta fourth quarter this year versus fourth quarter last year and in fact the full year delta as well, that's where you can see that.

All right. Thank you very much. That's all I had.

Gentlemen we are showing no further questions at this time. We will turn the conference back over to you.

Thank you very much for joining us on today's call. We very much appreciate your attendance and appreciate your ownership is Stepan Company. We look forward to reporting the changing positive results at our first quarter 2016 call. Have a great day.