10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(MARK ONE)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED December 31, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission File Number 1-4462

STEPAN COMPANY

(Exact name of registrant as specified in its charter)

Delaware	36-1823834
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
1101 Skokie Boulevard, Suite 500, Northbrook, Illinois	60062
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number including area code: 847-446-7500

Securities registered pursuant to Section 12 (b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, $1 par value	SCL	New York Stock Exchange

Securities registered pursuant to Section 12 (g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C 7262(b)) by the registered public accounting firm that prepared or issued its audit report.☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

Aggregate market value at June 30, 2022, of voting and non-voting common stock held by nonaffiliates of the registrant: $2,118,373,207*

Number of shares outstanding of each of the registrant’s classes of common stock as of January 31, 2023:

Class	Outstanding at January 31, 2023
Common Stock, $1 par value	22,240,034

Documents Incorporated by Reference

Part of Form 10-K	Document Incorporated
Part III, Items 10-14	Portions of the Proxy Statement for Annual Meeting of Stockholders expected to be held April 25, 2023.

* Based on reported ownership by all directors and executive officers at June 30, 2022.

STEPAN COMPANY

ANNUAL REPORT ON FORM 10-K

December 31, 2022

		Page No
	PART I
Item 1.	Business	3
	Information About our Executive Officers	5
Item 1A.	Risk Factors	7
Item 1B.	Unresolved Staff Comments	16
Item 2.	Properties	16
Item 3.	Legal Proceedings	16
Item 4.	Mine Safety Disclosures	18
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	19
Item 6.	(Removed and Reserved)	20
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 8.	Financial Statements and Supplementary Data	36
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	79
Item 9A.	Controls and Procedures	79
Item 9B.	Other Information	80
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	80
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	81
Item 11.	Executive Compensation	81
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	81
Item 13.	Certain Relationships and Related Transactions, and Director Independence	81
Item 14.	Principal Accountant Fees and Services	81
	PART IV
Item 15.	Exhibits, Financial Statement Schedules	81
Item 16.	Form 10-K Summary	85
SIGNATURES		86

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Annual Report on Form 10-K, other than purely historical information, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). These statements include statements about Stepan Company’s and its subsidiaries’ (the Company) plans, objectives, strategies, financial performance and outlook, trends, the amount and timing of future cash distributions, prospects or future events and involve known and unknown risks that are difficult to predict. As a result, the Company’s actual financial results, performance, achievements or prospects may differ materially from those expressed or implied by these forward-looking statements. In some cases, forward-looking statements can be identified by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “guidance,” “predict,” “potential,” “continue,” “likely,” “will,” “would,” “should,” “illustrative” and variations of these terms and similar expressions, or the negative of these terms or similar expressions. Such forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by the Company and its management based on their knowledge and understanding of the business and industry, are inherently uncertain. These statements are not guarantees of future performance, and stockholders should not place undue reliance on forward-looking statements. There are a number of risks, uncertainties and other important factors, many of which are beyond the Company’s control, that could cause the Company’s actual results to differ materially from the forward-looking statements contained in this Annual Report on Form 10-K. Such risks, uncertainties and other important factors, include, among others, the risks, uncertainties and factors set forth under “Part I-Item IA. Risk Factors” and “Part II-Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the risks and uncertainties related to the following:

•accidents, unplanned production shutdowns or disruptions in any of the Company’s manufacturing facilities;

•reduced demand for Company products due to customer product reformulations or new technologies;

•the Company’s inability to successfully develop or introduce new products;

•compliance with environmental, health and safety, product registration and anti-corruption laws;

•the Company’s ability to make acquisitions of suitable candidates and successfully integrate acquisitions;

•global competition and the Company’s ability to successfully compete;

•volatility of raw material, natural gas and electricity costs as well as any disruption in their supply;

•disruptions in transportation or significant changes in transportation costs;

•downturns in certain industries and general economic downturns;

•international business risks, including fluctuations in currency exchange rates, legal restrictions and taxes;

•unfavorable resolution of litigation against the Company;

•the Company’s ability to keep and protect its intellectual property rights;

•potentially adverse tax consequences due to the international scope of the Company’s operations;

•downgrades to the Company’s credit ratings or disruptions to the Company’s ability to access well-functioning capital markets;

•conflicts, military actions, terrorist attacks and general instability, particularly in certain energy-producing nations, along with increased security regulations;

•cost overruns, delays and miscalculations in capacity needs with respect to the Company’s expansion or other capital projects;

•interruption of, damage to or compromise of the Company’s IT systems and failure to maintain the integrity of customer, colleague or Company data;

•the Company’s ability to retain its executive management and other key personnel;

•the Company’s ability to operate within the limitations of debt covenants; and

•the other factors set forth under “Risk Factors.”

These factors are not necessarily all of the important factors that could cause the Company’s actual financial results, performance, achievements or prospects to differ materially from those expressed in or implied by any of the Company’s forward-looking statements. Other unknown or unpredictable factors could also impact the Company’s results. All forward-looking statements attributable to the Company or persons acting on the Company’s behalf are expressly qualified in their entirety by the cautionary statements set forth above. Forward-looking statements speak only as of the date they are made, and the Company does not undertake or assume any

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obligation to update publicly any of these forward-looking statements to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements, except to the extent required by applicable laws. If the Company updates one or more forward-looking statements, no inference should be drawn that the Company will make additional updates with respect to those or other forward-looking statements.

In this Annual Report on Form 10-K, "Stepan," the “Company,” “we,” “our” or “us” refers Stepan Company and its subsidiaries included in the consolidated financial statements, except as otherwise indicated or as the context otherwise requires. Our fiscal year ends on December 31, and references to "fiscal" when used in reference to any twelve-month period ended December 31 refer to our fiscal years ended December 31. The term "GAAP" refers to accounting principles generally accepted in the United States of America.

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PART I

Item 1. Business

Stepan Company, which was incorporated under the laws of the state of Delaware on February 19, 1959, and its subsidiaries produce specialty and intermediate chemicals, which are sold to other manufacturers and used in a variety of end products. The Company has three reportable segments: Surfactants, Polymers and Specialty Products.

Revenue-Generating Products

Surfactants are chemical agents that affect the interaction between two surfaces; they can provide actions such as detergency (i.e., the ability of water to remove soil from another surface), wetting and foaming, dispersing, emulsification (aiding two dissimilar liquids to mix), demulsification, viscosity modifications and biocidal disinfectants. Surfactants are the basic cleaning agent in detergents for washing clothes, dishes, carpets, fine fabrics, floors and walls. Surfactants are also used for the same purpose in shampoos, body wash and conditioners, fabric softeners, toothpastes, cosmetics and other personal care products. Commercial and industrial applications include emulsifiers for agricultural products, emulsion polymers such as floor polishes and latex foams and coatings, wetting and foaming agents for wallboard manufacturing and surfactants for oilfield applications.

Polymers, which include polyurethane polyols, polyester resins and phthalic anhydride, are used in a variety of applications. Polyurethane polyols are used in the manufacture of rigid foam for thermal insulation in the construction industry. They are also a raw material base for coatings, adhesives, sealants and elastomers (CASE) applications. Polyester resins, which include liquid and powdered products, are used in CASE applications. Phthalic anhydride is used in polyester resins, alkyd resins, and plasticizers for applications in construction materials and components of automotive, boating, and other consumer products and internally in the production of polyols.

Specialty Products are chemicals used in food, flavoring, nutritional supplement and pharmaceutical applications.

Competitive Conditions

The Company does not sell directly to the retail market but sells to a wide range of manufacturers in many industries and has many competitors. The principal methods of competition are product performance, price, technical assistance and ability to meet the specific needs of individual customers. These factors allow the Company to compete on bases other than price alone, reducing the extent of competition compared to that experienced in the sales of commodity chemicals having identical performance characteristics. The Company is one of the leading merchant producers of surfactants in the world. In the case of surfactants, much of the Company’s competition comes from several large global and regional producers and the internal divisions of larger customers. In the manufacturing of polymers, the Company competes with the chemical divisions of several large companies, as well as with other small specialty chemical manufacturers. In specialty products, the Company competes with several large firms plus numerous small companies.

Material Resources

Substantially all of the Company’s manufacturing plants operate on electricity and interruptible natural gas. During peak heating demand periods, gas service to all plants may be temporarily interrupted for varying periods ranging from a few days to several months. The plants operate on fuel oil during these periods of interruption. In January 2020 and January 2022, the Company’s Elwood, Illinois (Millsdale) facility suffered power outages that caused temporary shutdowns and further related operational issues. The Company’s operations have not experienced any other plant shutdowns or material adverse effects upon its business in recent years that were caused by a lack of available energy sources, other than temporary service interruptions brought on by mechanical failure or severe weather conditions.

The principal raw materials used by the Company are petroleum or plant based. For 2023, the Company has contracts with suppliers that cover most of its forecasted requirements for major raw materials and is not substantially dependent upon any one supplier.

Compliance with Government Regulations

We operate in a number of jurisdictions and are subject to numerous international, federal, state and local laws and regulations covering a wide variety of subject matters. We are subject to extensive environmental, health and safety laws and regulations in multiple jurisdictions because we blend, manage, handle, store, sell, transport and arrange for the disposal of chemicals, hazardous materials and hazardous waste. These include, without limitation, laws regulating discharges of hazardous substances into the soil, air and water, blending, managing, handling, storing, selling, transporting and disposing of hazardous substances, investigation and remediation of contaminated properties and protecting the safety of our employees and others. Some of these laws and regulations include the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA or Superfund), the Toxic Substances Control Act (TSCA), the Resource Conservation and Recovery Act (RCRA) and Registration, Evaluation, Authorization and Restriction of

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Chemicals (REACH), among others. Some of our operations are required to hold environmental permits and licenses to be compliant and certain of our services businesses are also impacted by these laws.

Compliance with applicable foreign, federal, state and local regulations regarding the discharge of materials into the environment, or otherwise relating to the protection of the environment, involved capital expenditures by the Company of $11.8 million during 2022. These expenditures represented approximately four percent of the Company’s total 2022 capital expenditures. Capitalized environmental expenditures are depreciated and charged on a straight-line basis to pretax earnings over their estimated useful lives, which are typically 10 to 15 years. Recurring costs associated with the operation and maintenance of facilities for waste treatment and waste disposal and managing environmental compliance in ongoing operations at our manufacturing locations were approximately $37.2 million in 2022. In addition, in response to recent regulations limiting the amount of 1,4 dioxane in certain consumer products, the Company has made capital expenditures to modify its manufacturing process to reduce 1,4 dioxane content in ethoxylated surfactants. These 1,4 dioxane-related capital investments position the Company to continue serving existing customers and pursue new market opportunities. Compliance with regulations is not expected to have a material adverse effect on the Company’s earnings and competitive position in the foreseeable future.

Human Capital Resources

At December 31, 2022 and 2021, the Company employed 2,453 and 2,439 persons, respectively. We view our employees as essential to helping us realize our vision of delivering innovative chemical solutions for a cleaner, healthier and more energy efficient world. The Company’s five Values reflect our shared commitment to this vision and serve as a guide as we operate our business: (1) People First: Empowering Everyone to Make a Difference – we listen, share and recognize great work; (2) Integrity: Doing the Right Thing – we do what is right and safe, and can be counted upon to fulfill our commitments and speak up when we have concerns; (3) Customer Focused: Partnering to Deliver Value – our approach to collaborative chemistry helps our customers’ products perform and deliver solutions that serve the needs of our global community; (4) Continuous Improvement: Improving Every Day – we embrace a spirit of continuous learning to improve the sustainability of our practices and our products; and (5) Growth, Innovation and Sustainability: Shaping the Future Through Curiosity – we see incredible possibilities and accept the challenge to make a positive impact.

Safety for all employees, our business partners, and the communities in which we operate continues to be a top priority. We have a long-standing focus on safety and responsible chemicals management, as well as a commitment to the environmental, health, safety and security performance initiative of the American Chemistry Council (ACC), a U.S.-based chemical industry association. As part of this focus and commitment, the Company invests in behavior-based and risk-based safety programs for its global workforce. The goal of these programs is to help establish habits and behaviors that promote safety awareness, thinking, and responsiveness. All Company facilities are ISO 9001:2015 certified, and the Company conforms to the ACC Responsible Care Management System at its U.S. sites. In addition, facilities outside the United States are encouraged to participate in their country-specific Responsible Care® program equivalents. Special recognition is given annually to the Company’s facilities that have demonstrated safety achievements. The President’s Safety Award is given to sites that meet specific criteria for recordable incidents and injuries, as well as other safety and compliance requirements, over the course of the year.

We depend on our highly skilled workforce to reach our business goals, and through a robust commitment to promote safety and well-being, enable professional development, and provide competitive benefits, the Company aims to attract and retain top talent. We value the fact that we have a diverse, inclusive, and engaged community of workers, and our goal is to create workplace environments built on respect, safety, strong teamwork, and high competency. Employee feedback is regularly solicited on workplace practices and culture. Results from these surveys are used at the corporate and site levels to define needs and develop improvement plans. Across our operations, employees are encouraged and supported in developing the technical and leadership skills they need to excel at their work and to advance in their roles. The Company provides an array of opportunities, including our Emerging Leaders Program, Leadership Development Program, technical training and certifications, language training, and educational assistance. Developing our talent pipeline and retaining our skilled labor force is a key focus, and our objective is to support employees’ progress toward their professional goals through opportunities within the Company. Employees receive comprehensive and competitive benefits packages aimed at attracting top talent and supporting needs for work-life balance. Employees are rewarded for their positive contributions to company success with Pay-for-Performance incentives, profit sharing and an employee stock ownership plan.

Acquisitions and Dispositions

See Note 20, Acquisitions, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for information regarding the Company’s acquisition activities.

Website

The Company’s website address is www.stepan.com. The Company makes available free of charge on or through its website, its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission

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(the SEC). The Company routinely posts important information for investors on its website in the "Investors" section and may use its website as a means of disclosing material, non-public information and for complying with its disclosure obligations under Regulation FD. Investors should monitor the Investors section of the Company’s website, in addition to following the Company's press releases, SEC filings, public conference calls, presentations and webcasts.

The website also makes available the Company’s sustainability report, code of conduct, corporate governance guidelines and the charters for the audit, human capital and compensation, compliance and nominating and corporate governance committees of the Company's Board of Directors.

The information on our website is not, and will not be deemed to be, a part of this annual report on Form 10-K, or incorporated into any of our other filings with the SEC, except where we expressly incorporated such information.

Information About our Executive Officers

The Company’s executive officers are elected annually by the Board of Directors at the first meeting following the Annual Meeting of Stockholders to serve until their respective successors are duly qualified and elected.

The executive officers of the Company, their ages and certain other information as of February 28, 2023, are as follows:

Name	Age	Title	Year First Elected Officer
Scott R. Behrens	53	President and Chief Executive Officer	2014
Arthur W. Mergner	59	Executive Vice President, Supply Chain	2014
Sean T. Moriarty	53	Vice President and General Manager –Surfactants	2017
Luis E. Rojo	50	Vice President and Chief Financial Officer	2018
Janet A. Catlett	46	Vice President and Chief Human Resources Officer	2018
Jason S. Keiper	49	Vice President and Chief Technology and Sustainability Officer	2019
David G. Kabbes	60	Vice President, General Counsel and Secretary	2019
Richard F. Stepan	46	Vice President and General Manager –Polymers	2021

Scott R. Behrens has served the Company as President and Chief Executive Officer since April 2022. From January 2021 through April 2022, he served as President and Chief Operating Officer and from September 2014 through December 2020, he served as Vice President and General Manager – Surfactants of the Company.

Arthur W. Mergner has served the Company as Executive Vice President, Supply Chain since January 2021. From August 2017 through December 2020, he served as Vice President, Supply Chain of the Company.

Sean T. Moriarty has served the Company as Vice President and General Manager – Surfactants since January 2021. From September 2017 through December 2020, he served as Vice President and General Manager – Polymers of the Company.

Luis E. Rojo has served the Company as Vice President and Chief Financial Officer since April 2018. From February 2018 to April 2018, he served as Global Hair Care Finance Director at Procter & Gamble Co. (P&G), a branded consumer packaged goods company. From April 2014 to February 2018, he served as NA Hair Care Finance Director at P&G.

Janet A. Catlett has served the Company as Vice President and Chief Human Resources Officer since July 2018. From March 2017 to July 2018, she served as Senior Director Total Rewards at Hollister Incorporated, which develops, manufactures and markets health care products and services worldwide.

Jason S. Keiper has served the Company as Vice President and Chief Technology and Sustainability Officer since June 2019. From October 2018 to June 2019, Dr. Keiper served as Head, Product Technology and Engineering, of Syngenta, an agriculture company. From 2015 to September 2018, Dr. Keiper served as Head, Global Formulation and Analytical Development; Technology and Engineering of Syngenta.

David G. Kabbes has served the Company as Vice President, General Counsel and Secretary of the Company since July 2019. From January 2018 to June 2019, Mr. Kabbes served as Executive Vice President, Corporate Affairs and Chief Legal Officer of Bunge Limited, an agricultural and food ingredient company.

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Richard F. Stepan has served the Company as Vice President and General Manager – Polymers since January 2021. From January 2019 through December 2020, Mr. Stepan served as Vice President, Consumer Products, and from September 2014 through December 2018, Mr. Stepan served as Director, Consumer Products, North America of the Company.

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Item 1A. Risk Factors

The following discussion identifies the most significant factors that may materially and adversely affect the Company’s business, financial position, results of operations and cash flows. These and other factors, many of which are beyond the Company’s control, may cause future results of operations to differ materially from past results or those results currently expected or desired. The following information should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations (included in Item 7 of this Form 10-K) and the Company’s consolidated financial statements and related notes (included in Item 8 of this Form 10-K).

Business and Operations Risks

Chemical manufacturing is inherently hazardous and may result in accidents or may require planned or unplanned production slowdowns or shutdowns, which may disrupt our operations or expose us to significant losses or liabilities that may have a material impact on our business, financial position, results of operations and cash flows.

Manufacturing facilities in the Company’s industry are subject to planned and unplanned production slowdowns and shutdowns, turnarounds and outages. Unplanned production disruptions may occur for external reasons, such as natural disasters, weather, disease, pandemic, strikes, transportation interruption, government regulation, political unrest or terrorism, or internal reasons, such as fire, explosions, mechanical failure, labor-related work stoppages or slowdowns, maintenance, discharges, contamination, environmental remediation or other manufacturing problems. For example, in 2020 we experienced a temporary facility closure in response to government mandates in one jurisdiction in which we operate due to the COVID-19 pandemic. During 2021 and 2022 at certain times we also experienced reduced staffing and reduced production capacity at facilities due to the impact of the COVID-19 pandemic on our employees. In addition, in January 2020 and 2022, unplanned weather-related production disruptions at the Company’s Elwood, Illinois (Millsdale) facility impacted Polymer operations. Certain of our production facilities are, and production facilities acquired or built in the future may be, located in areas where unplanned disruptions are more likely. Alternative facilities with sufficient capacity may not be available, may cost substantially more or may take a significant amount of time to increase production or qualify with Company customers, each of which could negatively impact the Company’s business, financial position, results of operations and cash flows. Further, some of the Company’s products cannot currently be made, or made in the volume required, at more than one of the Company’s locations. For some of these products, the Company has access to external market suppliers, but the Company cannot guarantee that these products will be available to it in amounts sufficient to meet its requirements or at a cost that is competitive with the Company’s cost of manufacturing these products. Long-term production disruptions may cause Company customers to seek alternative supply, which could further adversely affect Company profitability.

The hazards associated with chemical manufacturing and the related storage and transportation of raw materials, products and wastes are inherent in our operations. We cannot eliminate the risk of accidental contamination, discharge or injury resulting from those materials. Also, our suppliers and customers may use and/or generate hazardous materials, and we may be required to indemnify our suppliers, customers or waste disposal contractors against damages and other liabilities arising out of the production, handling or storage of our products or raw materials or the disposal of related wastes. Potential risks include explosions and fires, chemical spills and other discharges or releases of toxic or hazardous substances or gases, and pipeline and storage tank leaks and ruptures. Those hazards may result in personal injury and loss of life, damage to property, damages to public health and contamination of the environment, which may result in a suspension of operations and the imposition of civil or criminal fines, penalties and other sanctions, cleanup costs, and claims by governmental entities or third parties. Furthermore, the Company is subject to present claims, and may be subject to future claims, with respect to workplace exposure, contractor exposure to toxic or hazardous substances on the Company’s premises as well as other persons located nearby, workers' compensation and other matters.

We are dependent on the continued operation of our production facilities and the loss or shutdown of operations over an extended period could have a material adverse effect on our business, financial position, results of operations and cash flows. The Company maintains property, business interruption, products liability and casualty insurance policies, as well as insurance policies covering other types of risks, including pollution legal liability insurance. However, some of these potential manufacturing hazards and risks may not be insurable. Moreover, even when such hazards and risks are insurable, the insurance coverage may not be sufficient to cover all losses resulting from the occurrence of any of these events. Each of these insurance policies is subject to customary exclusions, deductibles and coverage limits, in accordance with industry standards and practices. As a result of market conditions, premiums and deductibles for certain insurance policies can increase substantially and, in some instances, certain insurance may become unavailable or available only with reduced amounts of coverage. There is also a risk, beyond the reasonable control of the Company, that an insurance carrier may not have the financial resources to cover an insurable loss. As a result, the occurrence of any of these events could have a material adverse effect on the Company’s business, financial position, results of operations and cash flows.

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The volatility of raw material, natural gas and electricity costs, as well as any disruption in their supply, may result in increased costs and materially and adversely affect the Company’s business, financial position, results of operations and cash flows.

The costs of raw materials, natural gas and electricity represent a substantial portion of the Company’s operating costs. The principal raw materials used in the Company’s products are petroleum-based or plant-based. Natural gas is used in the Company’s manufacturing sites primarily to generate steam for its manufacturing processes. The prices of many of these raw materials can be subject to periods of rapid and significant instability. These fluctuations in prices may be affected by supply and demand factors, such as general economic conditions, regulatory developments with respect to and restrictions on the transport of raw materials (some of which may be viewed as hazardous), currency exchange rates, political instability or terrorist attacks, all of which are beyond the Company’s control. For example, in 2021 and 2022, supply chain disruptions and inflationary pressures increased raw material prices for the Company. The Company may not be able to pass increased raw material or energy costs on to customers through increases in product prices as a result of arrangements the Company has with certain customers and competitive pressures in the market. In addition, the Company’s suppliers are subject to planned and unplanned production slowdowns and shutdowns, turnarounds and outages. Unplanned production disruptions may occur for external reasons, such as natural disasters, weather, disease, strikes, transportation interruption, government regulation, political unrest or terrorism, or internal reasons, such as fire, explosions, mechanical failure, labor-related work stoppages or slowdowns, maintenance, discharges, contamination, environmental remediation or other manufacturing problems. Certain of our suppliers’ facilities are located in areas where unplanned disruptions are more likely. In the event of supply disruptions, raw materials may not be available to the Company in amounts sufficient to meet our requirements, and alternative raw materials may not be available, may cost substantially more or may take a significant amount of time for the Company to qualify. For example, in 2021, severe weather in Texas and the U.S. Gulf Coast caused production disruptions for several of the Company’s suppliers, which resulted in feedstock issues for the Company’s Surfactants segment. If the Company is unable to minimize the effects of increased raw material and energy costs or pass such increased costs on to customers, or manage any interruption to the supply of raw materials or energy, its business, financial position, results of operations and cash flows may be materially and adversely affected.

The Company relies heavily on third-party transportation to deliver raw materials to Company manufacturing facilities and ship products to Company customers. Disruptions in transportation or significant changes in transportation costs have affected and could continue to affect the Company’s business, financial position, results of operations and cash flows.

The Company relies heavily on railroads, ships, and other over-the-road shipping methods to transport raw materials to its manufacturing facilities and to ship finished products to customers. Transport operations are exposed to various risks, such as extreme weather conditions, natural disasters, technological problems, work stoppages, personnel shortages and operating hazards, as well as interstate and international transportation regulations. If the Company, its suppliers or third-party transportation operators experience transportation problems, or if there are significant changes in the cost of these services, the Company may not be able to arrange efficient alternatives and timely means to obtain raw materials or ship finished product, which could result in a material adverse effect on Company revenues, costs and operating results. For example, during 2021, transportation disruptions due to driver shortages and increased costs negatively impacted results of operations in our Surfactants and Polymers segments.

Conflicts, military actions, terrorist attacks and general instability, particularly in certain energy-producing nations, along with increased security regulations related to our industry, could adversely affect the Company’s business.

Conflicts, military actions and terrorist attacks have precipitated economic instability, turmoil in financial markets and disruptions in the price and supply of raw materials and energy. The uncertainty and economic or operational disruptions resulting from hostilities, military action or acts of terrorism may impact the Company’s facilities and operations or those of its suppliers or customers. Accordingly, any conflict, military action or terrorist attack that impacts the Company or any of its suppliers or customers, or any resulting economic or operational instability resulting from such conflict, military action or terrorist attack, could have a material adverse effect on the Company’s business, results of operations, financial position and cash flows. For example, Russia’s invasion of Ukraine in February 2022 resulted in higher energy prices and concerns regarding the supply of natural gas to countries in Europe. Higher energy costs and reduced availability of natural gas in European countries could materially and adversely affect the operations and results of operations of the Company or its suppliers and customers.

Cost overruns, delays and miscalculations in capacity needs with respect to the Company’s expansion or other capital projects could adversely affect the Company’s business, financial position, results of operations and cash flows.

From time to time, the Company initiates expansion and other significant capital projects. Projects of this type are subject to risks of delay or cost overruns inherent in any large construction project resulting from numerous factors, including the following: shortages of equipment, materials or skilled labor; work stoppages; unscheduled delays in the delivery of ordered materials and equipment; unanticipated cost increases; difficulties in obtaining necessary permits or in meeting permit conditions; difficulties in meeting regulatory requirements or obtaining regulatory approvals; availability of suppliers to certify equipment for existing and enhanced regulations; design and engineering problems; and failure or delay of third-party service providers, civil unrest and labor disputes. For example, in 2022 the Company disclosed that supply chain disruptions and labor shortages had delayed the expected startup of its

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Pasadena, Texas facility from the fourth quarter of 2023 to the first half of 2024, and that cost inflation had increased the expected cost of the project. Significant cost overruns or delays in completing a capital project could have a material adverse effect on the Company’s return on investment, results of operations and cash flows. In addition, if the Company misjudges its future capacity needs, this too could materially and adversely impact its business, financial position, results of operations and cash flows.

Market, Competition and Strategic Risks

Customer product reformulations or new technologies can reduce the demand for the Company’s existing products, and the Company may not be successful in developing or introducing new products.

The Company’s products are used in a broad range of customer product applications. Changes in customer manufacturing processes, customer product reformulations, development and use of new technologies or changes in regulatory, legislative or industry requirements may lead to reduced consumption of the Company’s products or cause customers to consider some Company products obsolete or less attractive.

For example, increased concerns regarding the safety of 1,4 dioxane in consumer products and its potential impact on human health and the environment may lessen the demand for certain of the Company’s products. 1,4 dioxane is generated as a by-product during the manufacture of certain of the Company’s surfactant products, including alkoxylates and ether sulfates, used by its customers as cleaning agents in household cleaning, personal care and cosmetics products. In their finished form, consumer products that contain ethoxylated surfactants may contain trace amounts of 1,4 dioxane. 1,4 dioxane has been categorized by regulators as a toxic and carcinogenic substance at certain levels. In December 2019, New York adopted a law that, beginning in 2022 and 2023, permits no more than 2 ppm, 1 ppm or 10 ppm of the chemical in cleaning, personal care and cosmetics products, respectively. California and New Jersey are also considering regulating 1,4 dioxane. The U.S. Environmental Protection Agency (USEPA) also continues to examine 1,4 dioxane as part of its environmental and occupational regulatory authority. We expect our customers to continue reformulating their personal care, cosmetics and cleaning products to comply with New York’s regulations. These trends and corresponding changes in consumer preferences could reduce demand for our ethoxylated surfactant products, as our customers look to reduce the levels of ethoxylated surfactants in their finished products to stay below the maximum allowed levels or transition to alternative surfactants with lower levels of 1,4 dioxane. We are currently making investments to modify our manufacturing process to reduce 1,4 dioxane content to allow customers to continue to use ethoxylated surfactants at current use levels, while also offering consumer product formulation prototypes that contain low/no dioxane surfactants currently offered by the Company.

It is imperative that the Company continue to develop new products to replace the sales of products that mature and decline in use, though the Company may not be successful in achieving its growth expectations from developing new products. Moreover, the Company cannot be certain that the costs it incurs investing in new product and technology development will result in an increase in revenues or profits commensurate with its investment, and the introduction of any new products may be disrupted or delayed by manufacturing or other technical difficulties. The Company’s business, financial position, results of operations and cash flows could be materially and adversely affected if the Company is unable to successfully manage the maturation of existing products and the timely and successful development and introduction of new products.

To the extent the Company seeks acquisition opportunities, it may not be able to make acquisitions of suitable candidates or integrate acquisitions successfully.

In recent years, the Company’s business strategy has included acquisitions to expand into new markets and to enhance its position in its existing markets. To the extent it seeks to do so in the future it may not be able to successfully identify suitable candidates, negotiate appropriate acquisition terms, obtain financing needed to consummate those acquisitions, complete proposed acquisitions or successfully integrate acquired businesses into its existing operations. In addition, any acquisition, once successfully integrated, may not perform as planned, be accretive to earnings, or otherwise prove beneficial to the Company.

Acquisitions involve numerous risks, including the assumption of undisclosed or unindemnified liabilities, difficulties in the assimilation of the operations and the transfer of all necessary licenses and permits, technologies, services and products of the acquired companies and the diversion of management’s attention from other business concerns. In addition, prior acquisitions have resulted, and future acquisitions could result, in the incurrence of substantial additional indebtedness and other expenses.

The Company faces significant global competition in each of its operating segments. If the Company cannot successfully compete in the marketplace, its business, financial position, results of operations and cash flows may be materially and adversely affected.

The Company faces significant competition from numerous global companies as well as national, regional and local companies in the markets it serves. Many of the Company’s competitors have access to greater financial resources, which may enable them to invest significant capital into their businesses, including expenditures for research and development. Some of the Company’s

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competitors have their own raw material resources and may be able to produce products more economically. In addition, some of the Company’s customers have internal manufacturing capabilities that allow them to achieve make-versus-buy economics, which may result at times in the Company losing business with these customers in volumes that could adversely affect the Company’s profitability. For example, in 2022, the Company lost sales volume from one customer that invested in internal production capabilities for low-1,4 Dioxane products.

To maximize profitability levels, the Company must, among other things, maintain the service levels, product quality and performance and competitive pricing necessary to retain existing customers and attract new customers as well as continue to develop and introduce new products. The Company’s inability to do so could place it at a competitive disadvantage relative to its competitors, and if the Company cannot successfully compete in the marketplace, its business, financial position, results of operations and cash flows may be materially and adversely affected.

We are affected by general economic conditions and downturns in certain industries, in some cases driven by consumer preferences, and general economic downturns may have an adverse effect on the Company’s business, financial position, results of operations and cash flows.

General economic conditions and macroeconomic trends could adversely affect users of some end products that are manufactured using the Company’s products and the industries in which such end products are used. During economic downturns or other period of uncertainty, these users may reduce their volume of purchases of such end products or may purchase alternative products, which would reduce demand for the Company’s products. For example, in 2021 and 2022, construction project delays and cancellations related to the impacts of the COVID-19 pandemic and uncertain general economic conditions, including supply chain issues, reduced demand for the Company’s rigid polyol products. In addition, increasing concern among consumers, public health professionals and government agencies about environmental, health or wellness issues could lead some of the Company’s customers to limit the use of certain of our products or result in harm to the Company’s reputation. Reduced demand from the primary end markets for the Company’s products, such as the consumer products industry, could adversely affect the Company and demand for our products. Additionally, uncertain conditions in the financial markets pose a risk to the overall economy that may impact consumer demand for such end products and customer demand of some of the Company’s products, as well as the Company’s ability to manage normal commercial relationships with its customers, suppliers and creditors. Some of the Company’s customers may not be able to meet the terms of sale, which would result in increased credit risk and suppliers may not be able to fully perform their contractual obligations due to tighter credit markets or a general slowdown in economic activity.

In the event that economic conditions worsen or result in a prolonged downturn or recession, or consumer‑driven preferences result in reduced demand for our products, the Company’s business, financial position, results of operations and cash flows may be materially and adversely affected.

If the Company is unable to protect its intellectual property rights, the Company’s ability to compete may be negatively impacted.

The Company’s patents and other intellectual property may not prevent competitors from independently developing or selling similar or duplicative products and services, and there can be no assurance that the resources the Company invests to protect its intellectual property will be sufficient or that the Company’s intellectual property portfolio will adequately deter misappropriation or improper use of its technology. The Company could also face competition in some countries where it has not invested in an intellectual property portfolio, or where intellectual property rights are more difficult to obtain and/or assert. In addition, the Company may be the target of aggressive and opportunistic enforcement of patents by third parties, including non-practicing entities. Regardless of the merit of such claims, responding to infringement claims can be expensive and time-consuming. If the Company is found to infringe any third-party rights, it could be required to pay substantial damages or it could be enjoined from offering some of its products and services. Also, there can be no assurances that the Company will be able to obtain or renew from third parties the licenses it may need in the future on reasonable terms or at all. If the Company is unable to protect or maintain its intellectual property rights, the Company’s business, financial position, results of operations and cash flows may be materially and adversely affected.

Regulatory and Legal Risks

The Company is subject to a variety of environmental, health and safety and product registration laws dealing with the production and sale of chemicals that could require us to incur additional costs or to reformulate or discontinue certain of our products, or expose us to liability or enforcement actions.

The Company’s operations are regulated under a number of federal, state, local and foreign environmental, health and safety laws and regulations that govern, among other things, the production and marketing of chemical substances and the discharge, use, handling, transport, storage and disposal of hazardous materials into the air, soil and water. In the United States, these laws and regulations include, but are not limited to, the U.S. Toxic Substances Control Act (TSCA), the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA), the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act (RCRA), the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), the Occupational Safety and Health Act and state and local laws,

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such as California’s Safe Drinking Water and Toxic Enforcement Act of 1986 (Proposition 65). Analogous laws outside the United States apply to us in many jurisdictions, including, among others, the Registration, Evaluation, Authorization and Restriction of Chemical Substances (REACH) regulations in the European Union and the United Kingdom and Biocidal Products Regulations in the European Union and the United Kingdom. Compliance with these environmental, health and safety laws and regulations is a major consideration for the Company, and to comply with some of these laws, we may need to alter our product lines or implement different or more costly manufacturing processes (including the installation of pollution control equipment), which could lead to a material adverse effect on our results of operations. In addition, the transportation of certain raw materials is highly regulated and is subject to increased regulation or restrictions. These regulations may restrict or prohibit transport of these raw materials, resulting in these raw materials not being available to the Company in quantities desired by the Company or at costs attractive to the Company, which may restrict or substantially limit the Company’s manufacturing operations.

The REACH regulations are registration systems that impose obligations on manufacturers and importers of chemicals and other products into the European Union and United Kingdom to compile and file reports and testing data on, and perform safety assessments for, certain chemical substances. Any new substances introduced to the EU or UK markets in the future must be registered. The costs associated with the Company’s compliance with these registrations have been substantial and are expected to increase as product sales increase because higher tonnage bands have higher annual registration fees and require more testing to support the registration. Moreover, if a registration in the future is not submitted by any applicable deadline, our ability to sell those products may be negatively impacted until the registration process has been completed. In addition, the European Chemical Agency is evaluating existing chemical registrations and may require additional testing and data collection. Chemicals may be assessed and removed from EU commerce entirely, potentially requiring the Company to discontinue certain product lines and to reformulate others, which could materially alter the Company’s marketplace position or otherwise have a material financial effect on its revenues and expenses. Regulators in other countries are also implementing chemical registration regulations similar to the REACH regulations.

Furthermore, some of the laws and regulations applicable to us have changed in recent years to impose new obligations or increasing compliance costs that could also force us to reformulate or discontinue certain of our products. For example, the European Union is now requiring a review of existing active biocide substances, and based on this review, the European Commission or an individual member state may decide not to authorize the product for continued sale. As another example, TSCA now mandates that the USEPA must designate “high priority” chemicals and perform a risk evaluation, which could result in a finding of “unreasonable risk” and a decision to promulgate new regulations to address such risk. As a result of such regulations, our ability to sell certain products may be curtailed and customers may avoid purchasing some products in favor of less regulated, less hazardous or less costly alternatives. It may be impractical for us to continue manufacturing heavily regulated products, and we may incur costs to shut down or transition such operations to alternative products. In this regard, the nature, stringency and timing of any future regulations or changes in regulations are uncertain.

In addition, increasingly stringent regulation of human exposure to ethylene oxide by regulatory authorities in the United States could require material expenditures or changes in our manufacturing operations. The Company uses ethylene oxide at its Winder, Georgia and Elwood, Illinois (Millsdale) facilities and expects to use ethylene oxide at its Pasadena, Texas facility. The Company uses ethylene oxide in a closed loop process to manufacture surfactants that are used in products such as laundry detergents. The Company does not manufacture ethylene oxide, nor does it use ethylene oxide as a fumigant. Ethylene oxide is listed as a hazardous air pollutant under the Clean Air Act, as amended, emissions of which are regulated by the USEPA and other regulatory authorities. In 2020, Georgia adopted a law requiring any spill or release of ethylene oxide that occurs outside of normal operations to be reported to the state within 24 hours. Georgia and Illinois legislators have proposed legislation that would impose additional restrictions on the use of ethylene oxide. The USEPA is considering new standards for ethylene oxide emissions. While our production facilities have not yet been materially affected by changes in ethylene oxide regulation, any additional regulatory restrictions on the use or emission of ethylene oxide by facilities could impair our ability to manufacturer certain products in affected locations, including at our Winder, Georgia and Elwood, Illinois (Millsdale) and Pasadena, Texas facilities.

Compliance with environmental laws could restrict the Company’s ability to expand its facilities or require the Company to modify its facilities and processes or acquire additional costly pollution control equipment, incur other significant expenses, or expose the Company to greater liability associated with its production processes and products. The Company has incurred and will continue to incur capital expenditures and operating costs in complying with these laws and regulations, as our operations currently use, and have historically used, hazardous materials and generate, and have historically generated, quantities of hazardous waste. Some existing environmental laws and regulations impose liability and responsibility on present and former owners, operators or users of facilities and sites for contamination at those locations without regard to causation or knowledge of contamination. Certain of our sites have an extended history of industrial use, which may expose us to liability. We are subject to regulatory oversight and investigation, remediation, and monitoring obligations at certain current and former U.S. Superfund sites, as well as third-party disposal sites, under federal laws and their state and local analogues, including the RCRA, the Clean Water Act, the Clean Air Act, and CERCLA, as well as analogous foreign laws. See Item 3, Legal Proceedings, in this Form 10-K and Note 16, Contingencies, in the Notes to the Company’s Consolidated Financial Statements (included in Item 8 of this Form 10-K) for a summary of current significant environmental proceedings related to certain environmental sites. In the event that new contamination is discovered, including at facilities we may acquire in the future, the Company may become subject to additional obligations. The costs and liabilities associated with these issues may have a material adverse effect on the Company’s business, financial position, results of operations and cash flows.

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The Company is also subject to numerous federal, state, local and foreign laws that regulate the manufacture, storage, distribution and labeling of many of the Company’s products, including some of the Company’s disinfecting, sanitizing and antimicrobial products. Some of these laws require the Company to have operating permits for the Company’s production facilities, warehouse facilities and operations. Various federal, state, local and foreign laws and regulations also require the Company to register the Company’s products and to comply with specified requirements with respect to those products, such as FIFRA, the EU Biocidal Products Regulation and Mexico’s General Law of Ecological Equilibrium and Environmental Protection. Additionally, those requirements, and enforcement of those requirements, may become more stringent in the future. The ultimate cost of compliance with any such requirements could be material.

Although it is our policy to comply with such laws and regulations, it is possible that we have not been or may not be at all times in material compliance with all of those requirements. If the Company has failed to comply or fails to comply in the future with any of these laws and regulations, including permitting and licensing requirements, it may be liable for damages and the costs of remedial actions in excess of the Company’s recorded liabilities, and may also be subject to fines, injunctions or criminal sanctions or to revocation, non-renewal or modification of the Company’s operating permits and revocation of the Company’s product registrations. Any such revocation, modification or non-renewal may require the Company to cease or limit the manufacture and sale of its products at one or more of the Company’s facilities, which may limit or prevent the Company’s ability to meet product demand or build new facilities and may have a material adverse effect on the Company’s business, financial position, results of operations and cash flows. Any such revocation, non-renewal or modification may also result in an event of default under the indenture for the Company’s notes or under the Company’s credit facilities, which, if not cured or waived, may result in the acceleration of all or a portion of the Company’s indebtedness.

In addition to the costs of complying with environmental, health and safety laws and regulations, the Company has incurred, and may incur in the future, costs defending against environmental litigation and/or investigations brought by government agencies and private parties, including administrative proceedings. The Company is, and may be in the future, a defendant in lawsuits brought by parties alleging environmental damage, personal injury or property damage. A significant judgment or settlement against the Company, to the extent not covered by existing insurance policies, could have a material adverse effect on its business, financial position, results of operations and cash flows. Although the Company has insurance policies that may cover some of these potential losses, there is always uncertainty as to whether such insurance may be sufficient to cover such losses or available at all to the Company based on case-specific factors and the specific provisions of the Company’s insurance policies.

The potential cost to the Company relating to environmental, health and safety and product registration matters is uncertain due to factors such as the complexity and evolving nature of laws and regulations relating to the environment, health and safety and product registration, including those outside of the United States. Environmental, health and safety and product registration laws and regulations may also become more stringent over time, imposing greater compliance costs and increasing risks and penalties associated with any violation, as well as restricting or prohibiting the sale of existing or new products, which may also negatively impact the Company’s operating results. Without limiting the foregoing, these laws or regulations may also restrict or prohibit the use of non-renewable or carbon-based substances, or impose fees or penalties for the use of these substances. Accordingly, the Company may become subject to additional liabilities and increased operating costs in the future under these laws and regulations. The impact of any such changes, which are unknown at this time, may have a material adverse effect on the Company’s business, financial position, results of operations and cash flows.

Various liability claims could materially and adversely affect the Company’s business, financial position, results of operations and cash flows.

The Company may be required to pay for losses or injuries purportedly caused by its products. The Company faces an inherent exposure to various types of claims including general liability, product liability, product recall, toxic tort and environmental, among others, if its products, or the end products that are manufactured with the Company’s products, result in property damage, injury or death. In addition, because the Company conducts business in multiple jurisdictions, the Company also faces an inherent exposure to other general claims based on its operations in those jurisdictions and the laws of those jurisdictions, including but not limited to claims arising from its relationship with employees, distributors, agents, customers and other parties with whom it has a business relationship, directly or indirectly. Many of these claims may be made against the Company even if there is no evidence of a loss from that claim, and these claims may be made by individual persons, groups of persons, or groups of plaintiffs in a class action. Defending these claims could result in significant legal expenses relating to defense costs and/or damage awards and diversion of management’s time and the Company’s resources. Any claim brought against the Company could materially and adversely affect the Company’s business, financial position, results of operations and cash flows.

The Company’s failure to comply with the anti-corruption laws of the United States and various international jurisdictions could negatively impact its reputation and results of operations.

Doing business on a worldwide basis requires the Company to comply with anti-corruption laws and regulations imposed by governments around the world with jurisdiction over our operations, which may include the U.S. Foreign Corrupt Practices Act (FCPA) and the U.K. Bribery Act 2010 (the Bribery Act), as well as the laws of the countries where the Company does business. These laws

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and regulations can apply to companies and individual directors, officers, employees and agents, and may restrict the Company’s operations, trade practices, investment decisions and partnering activities. Where they apply, the FCPA, the Bribery Act and similar laws prohibit, among other things, the Company and its officers, directors, employees and business partners, including joint venture partners and agents acting on the Company’s behalf, from corruptly offering, promising, authorizing or providing anything of value to “foreign officials” for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The Bribery Act also prohibits non-governmental “commercial” bribery and accepting bribes. Part of the Company’s business may involve dealings with governments and state-owned business enterprises, the employees and representatives of which may be considered “foreign officials” for purposes of the FCPA and the Bribery Act. The Company is also subject to the jurisdiction of various governments and regulatory agencies around the world, which may bring Company personnel and agents into contact with “foreign officials” responsible for issuing or renewing permits, licenses, or approvals or for enforcing other governmental regulations. The Company’s global operations, including in countries with high levels of perceived corruption, expose it to the risk of violating, or being accused of violating, anti-corruption laws. Any failure on the part of the Company to successfully comply with these laws and regulations may expose the Company to reputational harm as well as significant sanctions, including criminal fines, imprisonment of its employees or representatives, civil penalties, disgorgement of profits, injunctions and debarment from government contracts, as well as other remedial measures. Investigations of alleged violations can be expensive and disruptive. Compliance with these laws can increase the cost of doing business globally. The Company maintains policies and procedures designed to assist the Company and its subsidiaries in complying with applicable anti-corruption laws. However, there can be no guarantee that these policies and procedures will effectively prevent violations by Company employees or representatives for which the Company may be held responsible, and any such violation could materially and adversely affect the Company’s reputation, as well as its business, financial position and results of operations and cash flows.

International Operations Risks

The Company’s results of operations may be adversely affected by international business risks, including fluctuations in currency exchange rates, legal restrictions and taxes.

The Company has substantial operations outside the United States. In the year ended December 31, 2022, the Company’s sales outside of the United States constituted approximately 43 percent of the Company’s net sales. In addition to the risks described in this Annual Report on Form 10‑K that are common to both the Company’s U.S. and non-U.S. operations, the Company faces, and will continue to face, risks related to the Company’s foreign operations, including:

•variability of intellectual property laws outside the United States, which may impact enforceability and consistency of protection of intellectual property assets;

•high levels of inflation;

•fluctuations in foreign currency exchange rates, which may affect product demand and may adversely affect the profitability in U.S. dollars of products and services the Company provides in international markets where payment for the Company’s products and services is made in the local currency;

•political, economic, financial and market conditions, which may be unstable;

•changes in labor conditions and difficulties in staffing and managing international operations;

•corruption by government officials or other third parties or other adverse government actions;

•differing economic cycles and adverse economic conditions;

•trade and currency restrictions, including tariffs and currency exchange controls imposed by the United States and foreign countries;

•changes in foreign laws and tax rates or U.S. laws and tax rates with respect to foreign income, which may unexpectedly increase the rate at which the Company’s income is taxed, impose new and additional taxes on remittances, repatriation or other payments by the Company’s subsidiaries, or cause the loss of previously recorded tax benefits;

•greater difficulty enforcing contracts and collecting accounts receivable;

•enforceability and compliance with U.S. and foreign laws affecting operations outside of the United States, including the FCPA (and foreign equivalents), export controls and regulations administered by the Office of Foreign Assets Control; and

•evolving laws and regulations over chemicals and chemical production and transportation that could limit the Company’s ability to sell products in certain markets (for example, the EU REACH regulation) and changing laws related to or the modification or non-renewal of operating permits and licenses that could result in material costs relating to regulatory compliance, liabilities, litigation proceedings, or other impacts, such as restrictions or prohibitions on our products.

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The impacts of any or all of the foregoing could have a material adverse effect on the Company’s business, financial position, results of operations and cash flows.

The international scope of the Company’s operations and corporate structure may expose the Company to potentially adverse tax consequences.

The Company is subject to taxation in and to the tax laws and regulations of multiple jurisdictions as a result of the international scope of its operations and corporate structure. The Company is also subject to intercompany pricing laws, including those relating to the flow of funds between its entities pursuant to, for example, purchase agreements, licensing agreements or other arrangements. Adverse developments in these laws or regulations, or any change in position regarding the application, administration or interpretation of these laws or regulations in any applicable jurisdiction could have a material adverse effect on the Company’s business, financial position, results of operations and cash flows. In addition, the tax authorities in any applicable jurisdiction may disagree with the positions the Company has taken or intends to take regarding the tax treatment or characterization of any of the Company’s transactions, including the tax treatment or characterization of the Company’s indebtedness. If any applicable tax authorities were to successfully challenge the tax treatment or characterization of any of the Company’s transactions, it could result in the disallowance of deductions, the imposition of withholding taxes on internal deemed transfers or other consequences that could have a material adverse effect on the Company’s business, financial position, results of operations and cash flows.

Fluctuations in foreign currency exchange rates could affect Company financial results.

The Company is also exposed to fluctuations in foreign exchange rates. The Company’s results of operations are reported in U.S. dollars. However, outside the United Sates, the Company’s sales and costs are denominated in a variety of currencies including the European euro, British pound, Canadian dollar, Mexican peso, Colombian peso, Philippine peso, Brazilian real, Polish zloty, and Chinese RMB. The Company translates its local currency financial results into U.S. dollars based on average exchange rates prevailing during the reporting period or the exchange rate at the end of that period. During times of a strengthening U.S. dollar, the Company’s reported international sales and earnings may be reduced because the local currency may translate into fewer U.S. dollars. Fluctuations in exchange rates may materially and adversely affect the Company’s business, financial position, results of operations and cash flows.

In all jurisdictions in which the Company operates, the Company is also subject to laws and regulations that govern foreign investment, foreign trade and currency exchange transactions. These laws and regulations may limit the Company’s ability to repatriate cash as dividends or otherwise to the United States or to efficiently allocate cash to support strategic initiatives, and may limit the Company’s ability to convert foreign currency cash flows into U.S. dollars. A weakening of the currencies in which the Company generates sales relative to the foreign currencies in which the Company’s costs are denominated may lower the Company’s operating profits and cash flows.

Financial Risks

The Company could be adversely affected by downgrades to its credit ratings or disruptions in its ability to access well-functioning credit markets.

Historically, the Company has relied on the debt capital markets to fund portions of its capital investments and other corporate initiatives, as well as access to bank credit facilities as part of its overall financing strategy, including working capital management strategy. The Company’s continued access to these markets, and the terms of such access, depend on multiple factors including the condition of debt capital markets, the Company’s operating performance, and its credit ratings. These ratings are based on a number of factors, which include rating agencies’ assessment of the Company’s financial strength and outlook. There can be no assurance that any particular rating assigned to the Company will remain in effect for any given period of time or that a rating will not be changed or withdrawn by a rating agency, if in that rating agency’s judgment, future circumstances relating to the basis of the rating so warrant. Incurrence of additional debt by the Company could adversely affect its credit ratings. The Company depends on banks and other financial institutions to provide credit to its business and perform under the Company’s agreements with them. Defaults by one or more of these counterparties on their obligations to the Company could materially and adversely affect it. Any downgrade of the Company’s credit ratings could materially and adversely affect its cost of funds, liquidity, competitive position and access to credit markets and increase the cost of and counterparty risks associated with existing facilities, which could materially and adversely affect the Company’s business, financial position, results of operations and cash flows.

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The Company has a significant amount of indebtedness and may incur additional indebtedness, or need to refinance existing indebtedness, in the future, which may adversely affect the Company’s business, financial position, results of operations and cash flows.

The Company has a significant amount of indebtedness and may incur additional indebtedness in the future. As of December 31, 2022, the Company had $397.9 million of debt on its balance sheet consisting of senior unsecured notes with maturities ranging from 2023 until 2032. In addition, the Company is party to a credit agreement providing for a $350.0 million revolving credit facility and a $100.0 million delayed-draw term loan credit facility; as of December 31, 2022, the Company had $189.2 million outstanding borrowings and $10.9 million outstanding letters of credit under the credit agreement with $249.8 million remaining available for future borrowings.

Certain of the Company’s foreign subsidiaries periodically maintain bank term loans and short-term bank lines of credit in their respective countries to meet working capital requirements as well as to fund capital expenditure programs and acquisitions. As of December 31, 2022, the Company’s foreign subsidiaries had no debt.

The Company’s current indebtedness and any additional indebtedness incurred in the future may materially and adversely affect its business, financial position, results of operations and cash flows. For example, such indebtedness could:

•require the Company to dedicate a substantial portion of cash flow from operations to pay principal and interest on the Company’s debt, which would reduce funds available to fund future working capital, capital expenditures and other general operating requirements;

•limit the Company’s ability to borrow funds that may be needed to operate and expand its business;

•limit the Company’s flexibility in planning for or reacting to changes in the Company’s business and the industries in which the Company operates;

•increase the Company’s vulnerability to general adverse economic and industry conditions or a downturn in the Company’s business; and

•place the Company at a competitive disadvantage compared to its competitors that have less debt.

The Company’s debt agreements contain customary covenants and other provisions that, among other things, require maintenance of certain financial ratios and place limitations on additional debt, investments and payment of dividends. The Company’s ability to comply with these provisions may be affected by events beyond our control. Failure to comply with these provisions could require repayment of outstanding debt or lead to a debt restructuring that could materially and adversely affect the Company’s business, financial position, results of operations and cash flows.

In addition, an increase in interest rates could limit the Company’s ability to incur additional debt to fund the Company’s strategic plans or to refinance maturing debt without incurring significant additional costs and could make borrowings under the Company’s revolving credit facility or other floating rate debt materially more expensive. Further, any future disruptions in the credit and financial markets may reduce the availability of debt financing or refinancing alternatives and increase the costs associated with such financing activities. If the Company is unable to secure financing when needed on satisfactory terms, or at all, its business, financial position, results of operations and cash flows may be materially and adversely affected.

General Risks

The Company relies extensively on information technology (IT) systems to conduct its business. Interruption of, damage to or compromise of the Company’s IT systems and failure to maintain the integrity of customer, colleague or Company data could harm the Company’s reputation and have an adverse effect on the Company’s business, financial position, results of operations and cash flows.

The Company relies on IT systems in its operations, including production, supply chain, research and development, finance, human resource and regulatory functions. The Company’s ability to effectively manage its business depends on the security, reliability and adequacy of these systems. IT system failures due to events including but not limited to network disruptions, programming errors, computer viruses and security breaches (e.g., cyber-attacks) could impact production activities, impede shipment of products, cause delays or cancellations of customer orders, or hamper the processing of transactions or reporting of financial results. These or similar occurrences, whether accidental or intentional, could result in theft, unauthorized use or publication of our intellectual property or confidential business information of our employees, customers, suppliers or other third parties, which could harm our reputation and competitive position, reduce the value of our investments in research and development and other strategic initiatives, result in a loss of business, as well as remedial and other costs, fines, investigations, enforcement actions or lawsuits or otherwise materially and adversely affect our business, financial position, results of operations and cash flows.

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During the normal course of business, we have experienced and expect to continue to experience attempts to compromise our information and communications technology and related systems. To date, no cybersecurity incident or attack has had a material impact on our business or results of operations. If a material, actual or perceived breach of our security occurs, the public perception of the effectiveness of our security measures could be harmed and we could lose customers or suppliers. Any such material disruptions or breaches of security could have a material adverse effect on our business, financial position, results of operations and cash flows.

The Company continues to develop and enhance controls and security measures designed to protect against the risk of theft, loss or fraudulent or unlawful use of customer, supplier, third party, employee or Company data, and it maintains an ongoing process to re-evaluate the adequacy of its controls and measures. The Company may also be required to expend additional resources to continue to enhance its information privacy and security measures and/or to investigate and remediate any information security vulnerabilities. The Company maintains what it believes to be adequate and collectible insurance in the event of the theft, loss, fraudulent or unlawful use of customer, supplier, third party, employee or Company data, but any such occurrences could result in costs that may not be covered or may be in excess of any available insurance that the Company may have procured. While the Company has a comprehensive program in place for continuously reviewing, maintaining, testing and upgrading its IT systems and security, there can be no assurance that such efforts will prevent breakdowns of or breaches in Company IT systems that could materially and adversely affect the Company’s business, financial position, results of operations and cash flows.

The Company’s success depends on its executive management and other key personnel.

The Company’s future success depends to a significant degree on the skills, experience and efforts of its executive management and other key personnel and their ability to provide the Company with uninterrupted leadership and direction. The availability of highly qualified talent is limited and the competition for talent is robust; as a result, the Company may not be able to recruit and retain the personnel it needs if it were to lose an existing member of executive management or other key personnel. The Company’s future success will depend on its ability to have adequate succession plans in place and to attract, retain and develop qualified personnel. A failure to efficiently replace members of executive management and other key personnel and to attract, retain and develop new qualified personnel could have a material and adverse effect on the Company’s business financial position, results of operations and cash flows.

Item 1B. Unresolved Staff Comments

None

Item 2. Properties

The following are the Company’s principal physical properties. Unless otherwise noted, the listed properties are owned by the Company. Management believes that the facilities are suitable and adequate for the Company’s current operations.

	Name of Facility	Location	Site Size	Segment
1.	Millsdale	Elwood, Illinois (Millsdale)	492 acres	Surfactants/Polymers
2.	Winder	Winder, Georgia	202 acres	Surfactants
3.	Maywood	Maywood, New Jersey	19 acres	Surfactants / Specialty Products
4.	Pasadena	Pasadena, Texas	51 acres	Surfactants
5.	Stepan France	Voreppe, France	20 acres	Surfactants
6.	Stepan Ecatepec	Ecatepec, Mexico	34 acres	Surfactants
7.	Stepan China	Nanjing, China (Nanjing Chemical Industrial Park)	13 acres (right of use arrangement)	Polymers
8.	Stepan Brazil	Vespasiano, Minas Gerais, Brazil	27 acres	Surfactants
9.	Global Technology Center	Northfield, Illinois	8 acres	N/A
10.	Company Headquarters	Northbrook, Illinois	1.72 acres (leased)	N/A

Item 3. Legal Proceedings

There are a variety of legal proceedings pending or threatened against the Company that occur in the normal course of the Company’s business, the majority of which relate to environmental assessment, protection and remediation matters. Some of these

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proceedings may result in fines, penalties, judgments or costs being assessed against the Company at some future time. The Company’s operations are subject to extensive local, state and federal regulations, including the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) and the Superfund amendments of 1986 (Superfund) as well as comparable regulations applicable to the Company’s foreign locations. Over the years, the Company has received requests for information related to or has been named by government authorities as a potentially responsible party (PRP) at a number of sites where cleanup costs have been or may be incurred by the Company under CERCLA and similar state statutes. In addition, damages are being claimed against the Company in general liability actions for alleged personal injury or property damage in the case of some disposal and plant sites. The Company believes that it has made adequate provisions for the costs it is likely to incur with respect to these sites and claims. While the Company is unable to predict the outcome of these matters, it does not believe, based upon current available facts, that the ultimate resolution of any of these matters will have a material effect on its overall financial position. The Company’s material legal proceedings are described below:

Maywood, New Jersey Site

The Company’s property in Maywood, New Jersey, property formerly owned by the Company adjacent to its current site and other nearby properties (collectively, the Maywood site) were listed on the National Priorities List in September 1993 pursuant to the provisions of CERCLA because of alleged chemical contamination. Pursuant to (i) a September 21, 1987 Administrative Order on Consent entered into between the USEPA and the Company for property formerly owned by the Company at the Maywood site and (ii) the issuance of an order on November 12, 2004 by the USEPA to the Company for property currently owned by the Company at the Maywood site, the Company has completed various Remedial Investigation Feasibility Studies (RI/FS), and on September 24, 2014, USEPA issued its Record of Decision (ROD) for chemically-contaminated soil at the Maywood site, which requires the Company to perform remedial cleanup of the soil and buried waste. The USEPA has not yet issued a ROD for chemically-contaminated groundwater at the Maywood site. Based on the most current information available, the Company believes its recorded liability is reasonable having considered the range of estimated costs of remediation for the Maywood site. During the third quarter of 2022 the Company increased its accrual for environmental remediation costs at the Maywood site. This increase primarily reflects revised environmental remediation cost estimates for the Company’s Maywood site due to USEPA work plan approvals and the receipt of third-party contractor bids during the third quarter of 2022. The estimate of the cost of remediation for the Maywood site could change again as the Company continues to hold discussions with the USEPA, as the design of the remedial action is finalized, if a groundwater ROD is issued or if other PRPs are identified. The ultimate amount for which the Company is liable could differ materially from the Company’s current recorded liability.

In April 2015, the Company entered into an Administrative Settlement Agreement and Administrative Order on Consent with USEPA which requires payment of certain costs and performance of certain investigative and design work for chemically-contaminated soil.

In addition, under the terms of a settlement agreement reached on November 12, 2004, the U.S. Department of Justice and the Company agreed to fulfill the terms of a Cooperative Agreement reached in 1985. Under the Cooperative Agreement, the United States is responsible for the removal of radioactive waste at the Maywood site, including past and future remediation costs at the site. As such, the Company recorded no liability related to this settlement agreement.

D’Imperio Property Site

During the mid-1970’s, Jerome Lightman and the Lightman Drum Company disposed of hazardous substances generated by the Company at several sites in New Jersey, including the D’Imperio Property Superfund Site (the D’Imperio site). The Company was named as a PRP in an October 2, 1998 lawsuit in the U.S. District Court for the District of New Jersey that involved the D’Imperio site. In 2022, the PRPs were provided with updated remediation cost estimates by the PRP group technical consultant and project manager, which the Company considered in its determination of its range of estimated possible losses and liability balance. The changes in range of possible losses and liability balance were immaterial. Remediation work continues at the D’Imperio site. Based on current information, the Company believes that its recorded liability is reasonable having considered the range of estimated cost of remediation for the D’Imperio site. Depending on the ultimate cost of the remediation at this site, the amount for which the Company is liable could differ materially from the Company’s current recorded liability.

Wilmington Site

The Company is currently contractually obligated to contribute to the environmental response costs associated with the Company’s formerly-owned site in Wilmington, Massachusetts (the Wilmington site). Remediation at this site is being managed by its current owner, to whom the Company sold the property in 1980. Under the Company’s October 1, 1993 agreement with the current owner of the Wilmington site, once total site remediation costs exceed certain levels, the Company is obligated to contribute up to five percent of future response costs associated with this site with no limitation on the ultimate amount of contributions. The Company has paid the current owner $3.5 million for the Company’s portion of environmental response costs at the Wilmington site through December 31,

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2022. The Company has recorded a liability for its portion of the estimated remediation costs for the site. Depending on the ultimate cost of the remediation at this site, the amount for which the Company is liable could differ materially from the current recorded liability. On July 29, 2022, the Company and other potentially responsible parties were notified of a possible joint claim by federal and state trustees for alleged natural resource damages related to the Wilmington site. The alleged damages may result in a range of possible penalties; however, at this stage, the Company is unable to predict the ultimate outcome of this claim, the allocation of costs among the potentially responsible parties or what impact, if any, the outcome might have on the Company’s results of operations or cash flows.

The Company and other prior owners of the Wilmington site also entered into an agreement in April 2004 waiving certain statute of limitations defenses for claims that may be filed by the Town of Wilmington, Massachusetts, in connection with this site. While the Company has denied any liability for any such claims, the Company agreed to this waiver while the parties continue to discuss the resolution of any potential claim which may be filed.

Other U.S. Sites

Through the regular environmental monitoring of its plant production sites, the Company discovered levels of chemical contamination that were above thresholds allowed by law at its Elwood, Illinois (Millsdale) and Fieldsboro, New Jersey plants. The Company voluntarily reported its results to the applicable state environmental agencies. As a result, the Company is required to perform self-remediation of the affected areas. Based on current information, the Company believes that its recorded liability for the remediation of the affected areas is appropriate based on an estimate of expected costs. However, actual costs could differ materially from the current recorded liability.

Item 4. Mine Safety Disclosures

Not Applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

(a)The Company’s common stock is listed and traded on the New York Stock Exchange under the symbol SCL.

As of January 31, 2023, there were 1,821 holders of record of the Company’s common stock. This number does not include beneficial owners whose shares are held by banks, brokers and other institutions holding shares of the Company’s common stock on behalf of their customers.

(b)Below is a summary by month of shares purchases by the Company during the fourth quarter of 2022:

Period	Total Number of Shares Purchased			Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)			Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs (1)
October		28,452	(2) (3)	$	94.80		28,400	(3)	$	125,050,905
November		196	(4)	$	108.84		—		$	125,050,905
December		1,904	(4)		111.66		—		$	125,050,905
Total		30,552		$	95.94		28,400		$	125,050,905

(1)On October 20, 2021, the Company announced that its Board of Directors had authorized the Company to repurchase up to $150,000,000 of its outstanding common stock. Under this program, which does not have an expiration date, repurchases may be made from time to time through open market transactions, privately negotiated transactions or a combination of the foregoing, subject to applicable laws. The program authorization superseded the Company’s prior share repurchase authorization.

(2)Includes 52 shares of Company common stock tendered by employees to settle statutory withholding taxes related to the exercise of stock appreciation rights (SARs).

(3)Includes 28,400 shares of Company common stock purchased on the open market.

(4)Consists of shares of Company common stock surrendered by employees to settle statutory withholding taxes related to the exercise of SARs.

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(c)Stock Performance Graph

The following stock performance graph compares the yearly change since December 31, 2017, in cumulative return on the common stock of the Company on a dividend reinvested basis to the Dow Jones Chemical Industry Index and the Russell 2000 Index. The Dow Jones Chemical Industry Index is a market-capitalization weighted grouping of 35 chemical companies, including major manufacturers of both basic and specialty products. The Company is not included in the Dow Jones Chemical Industry Index. The Russell 2000 Index is a market-capitalization weighted grouping of 2,000 small to medium sized companies in a broad range of industries. The Company has been included in the Russell 2000 Index since 1992. The graph assumes $100 was invested on December 31, 2017 and shows the cumulative total return as of each December 31 thereafter.

 

Item 6. (Removed and Reserved)

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is management’s discussion and analysis (MD&A) of certain significant factors that have affected the Company’s financial condition and results of operations during the annual periods included in the accompanying consolidated financial statements.

Presentation of Information

The discussion that follows includes a comparison of the Company’s results of operations and liquidity and capital resources for the fiscal years ended December 31, 2021 and 2022. For a discussion of changes from the fiscal year ended December 31, 2020 to the fiscal year ended December 31, 2021, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (filed February 25, 2022).

Overview

The Company produces and sells intermediate chemicals that are used in a wide variety of applications worldwide. The overall business is comprised of three reportable segments:

Surfactants - Surfactants, which accounted for 68 percent of the Company’s consolidated net sales in 2022, are principal ingredients in consumer and industrial cleaning and disinfection products such as detergents for washing clothes, dishes, carpets, floors and walls, as well as shampoos and body washes. Other applications include fabric softeners, germicidal quaternary compounds, disinfectants, lubricating ingredients, emulsifiers for spreading agricultural products and industrial applications such as latex systems, plastics and composites. Surfactants are manufactured at five sites in the United States, two European sites (United Kingdom and France), five Latin American sites (one site in Colombia and two sites in each of Brazil and Mexico) and two Asian sites (Philippines and Singapore). Recent significant events include:

•On September 23, 2022, the Company completed the purchase of PerformanX Specialty Chemicals, LLC’s surfactant business and associated assets. Included in the transaction were intellectual property, customer relationships, inventory and working capital. This acquisition enhanced the Company’s specialty alkoxylates portfolio and provides market diversification opportunities. This acquisition is also expected to deliver additional baseload volumes for the Company’s Pasadena, Texas alkoxylation facility that is scheduled to start up in the first half of 2024. See Note 20, Acquisitions, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for additional details.

•In February 2021, the Company completed the purchase of a fermentation plant, located in Lake Providence, Louisiana. The Company believes this plant complements the rhamnolipid-based bio-surfactant technology the Company acquired from Logos Technologies in March 2020. Fermentation is a new platform technology for the Company and the Company is focusing efforts to further develop, integrate, produce and commercialize these unique surfactants moving forward. Bio-surfactants, produced via fermentation, are attractive due to their biodegradability, low toxicity, and in some cases, unique antimicrobial properties. These bio-surfactants offer synergies in several strategic end use markets including oilfield, agriculture, personal care and household, industrial and institutional cleaning. The acquisition of this industrial scale fermentation plant is a step in the Company’s bio-surfactant commercialization efforts. See Note 20, Acquisitions, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for additional details.

Polymers - Polymers, which accounted for 28 percent of consolidated net sales in 2022, include polyurethane polyols, polyester resins and phthalic anhydride. Polyurethane polyols are used in the manufacture of rigid foam for thermal insulation in the construction industry and are also a base raw material for coatings, adhesives, sealants and elastomers (collectively, CASE products). Powdered polyester resins are used in coating applications. CASE and powdered polyester resins are collectively referred to as specialty polyols. Phthalic anhydride is used in unsaturated polyester resins, alkyd resins and plasticizers for applications in construction materials and components of automotive, boating and other consumer products. In addition, the Company uses phthalic anhydride internally in the production of polyols. In the United States, polyurethane polyols are manufactured at the Company’s Elwood, Illinois (Millsdale), and Wilmington, North Carolina sites. Phthalic anhydride is manufactured at the Company’s Elwood, Illinois (Millsdale) site and specialty polyols are manufactured at the Company’s Columbus, Georgia, site. In Europe, polyurethane polyols are manufactured at the Company’s subsidiaries in Germany and Vlissingen, Netherlands and specialty polyols are manufactured by the Company’s Poland subsidiary. In China, polyurethane polyols and specialty polyols are manufactured at the Company’s Nanjing, China, plant. Recent significant events include:

•In January 2021, the Company completed the purchase of INVISTA’s aromatic polyester polyol business and associated assets. Included in the transaction were two manufacturing sites, one in Wilmington, North Carolina and the other in Vlissingen, Netherlands along with intellectual property, customer relationships, inventory and working capital. This acquisition expanded the Company’s manufacturing capabilities in both the United States and Europe and enhanced the Company’s business continuity capabilities for the polymer market. The Company believes that the available spare capacity, combined with

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debottlenecking opportunities in both plants, allows Stepan to support future market growth in a capital efficient way. See Note 20, Acquisitions, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for additional details.

Specialty Products – Specialty products, which accounted for four percent of consolidated net sales in 2022, include flavors, emulsifiers and solubilizers used in food, flavoring, nutritional supplement and pharmaceutical applications. Specialty products are primarily manufactured at the Company’s Maywood, New Jersey, site and, in some instances, by third-party contractors.

Deferred Compensation Plans

The accounting for the Company’s deferred compensation plans can cause period-to-period fluctuations in Company income and expenses. Compensation expense is recognized when the value of Company common stock and mutual fund investment assets held for the plans increase, and compensation income is recognized when the value of Company common stock and mutual fund investment assets decline. The pretax effect of all deferred compensation-related activities (including realized and unrealized gains and losses on the mutual fund assets held to fund deferred compensation obligations) and the income statement line items in which the effects of the activities were recorded are displayed in the following tables:

	Income (Expense)
	For the Year Ended December 31,
(In millions)	2022			2021			Change
Deferred Compensation (Administrative expenses)	$	9.4		$	(6.9	)	$	16.3		(1)
Investment Income (Other, net)		1.7			2.8			(1.1	)
Realized/Unrealized Gains (Losses) on Investments    (Other, net)		(8.0	)		2.1			(10.1	)
Pretax Income Effect	$	3.1		$	(2.0	)	$	5.1

	Income (Expense)
	For the Year Ended December 31,
(In millions)	2021			2020			Change
Deferred Compensation (Administrative expenses)	$	(6.9	)	$	(10.0	)	$	3.1		(1)
Investment Income (Other, net)		2.8			1.6			1.2
Realized/Unrealized Gains on Investments    (Other, net)		2.1			3.1			(1.0	)
Pretax Income Effect	$	(2.0	)	$	(5.3	)	$	3.3

(1)See the Segment Results – Corporate Expenses sections of this MD&A for details regarding the period-over-period changes in deferred compensation.

Below are the year-end Company common stock market prices used in the computation of deferred compensation income and expense:

	December 31
	2022		2021		2020		2019
Company Stock Price	$	106.46	$	124.29	$	119.32	$	102.44

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Effects of Foreign Currency Translation

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 year-over-year comparisons of financial statement items (i.e., because foreign exchange rates fluctuate, similar year-over-year local currency results for a foreign subsidiary may translate into different U.S. dollar results). The following tables present the effects that foreign currency translation had on the year-over-year changes in consolidated net sales and various income statement line items for 2022 compared to 2021 and 2021 compared to 2020:

	For the Year Ended December 31,						Decrease Due to Foreign
(In millions)	2022		2021		Increase		Currency Translation
Net Sales	$	2,773.3	$	2,346.0	$	427.3	$	(95.4	)
Gross Profit		427.1		395.8		31.3		(11.1	)
Operating Income		207.3		170.8		36.5		(7.4	)
Pretax Income		188.7		172.5		16.2		(7.2	)

	For the Year Ended December 31,							Increase Due to Foreign
(In millions)	2021		2020		Increase (Decrease)			Currency Translation
Net Sales	$	2,346.0	$	1,869.8	$	476.2		$	24.4
Gross Profit		395.8		383.6		12.2			2.6
Operating Income		170.8		171.5		(0.7	)		1.4
Pretax Income		172.5		171.1		1.4			1.5

Results of Operations

2022 Compared with 2021

Summary

Net income attributable to the Company in 2022 increased seven percent to $147.2 million, or $6.38 per diluted share, from $137.8 million, or $5.92 per diluted share in 2021. Adjusted net income increased seven percent to $153.5 million, or $6.65 per diluted share, from $143.5 million, or $6.16 per diluted share in 2021 (see the “Reconciliation of Non-GAAP Adjusted Net Income and Diluted Earnings per Share” section of this MD&A for a reconciliation of reported net income attributable to the Company and reported earnings per diluted share to non-GAAP adjusted net income and adjusted earnings per diluted share). Below is a summary discussion of the major factors leading to the year-over-year changes in net sales, expenses and income in 2022 compared to 2021. A detailed discussion of segment operating performance for 2022, compared to 2021, follows the summary.

Consolidated net sales increased $427.3 million, or 18 percent, between years. Higher average selling prices positively impacted the year-over-year change in net sales by $676.2 million. The increase in average selling prices was mainly attributable to the pass through of higher raw material, logistics and input costs as well as more favorable product and customer mix. Consolidated sales volume decreased seven percent and negatively impacted the year-over-year change in net sales by $153.5 million. Sales volume in the Surfactant, Polymer and Specialty Products segments decreased six, seven and four percent, respectively. Foreign currency translation negatively impacted the year-over-year change in net sales by $95.4 million due to a stronger U.S. dollar against the majority of currencies where the Company has foreign operations.

Operating income in 2022 increased $36.5 million, or 21 percent, versus operating income in 2021. Polymer and Specialty Products operating income increased $9.3 million and $15.7 million, respectively, year-over-year. Surfactant operating income decreased $3.3 million year-over-year. Corporate expenses, including deferred compensation and business restructuring/asset disposition expenses, decreased $14.8 million year-over-year. Most of this decrease was attributable to a $16.3 million decrease in deferred compensation expenses, a $3.0 million decrease in business restructuring/asset disposition expenses and lower acquisition-related and consulting expenses. These lower expenses were partially offset by $9.5 million of higher environmental remediation reserve expenses and higher incentive-based compensation expenses. The higher environmental reserve expenses primarily reflect revised remediation cost estimates for the Company’s Maywood, New Jersey site due to U.S. Environmental Protection Agency (USEPA) work plan approvals and the receipt of third-party contractor bids during the third quarter of 2022. Foreign currency translation had a $7.2 million negative impact on operating income in 2022 versus the prior year.

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Operating expenses (including deferred compensation, business restructuring/asset disposition expenses and goodwill impairment) decreased $5.3 million, or two percent, year-over-year. Changes in the individual income statement line items that comprise the Company’s operating expenses were as follows:

•Selling expenses decreased $0.2 million between years.

•Administrative expenses increased $9.3 million, or 10 percent, year-over-year primarily due to higher environmental remediation reserve ($9.5 million) and incentive-based compensation expenses, partially offset by lower acquisition-related and consulting expenses.

•Research, development and technical service (R&D) expenses increased $3.9 million, or six percent, year-over-year primarily due to higher salaries and incentive-based compensation expenses.

•Deferred compensation expense decreased $16.3 million, year-over-year, primarily due to a $17.83 per share decrease in the market price of Company common stock during 2022 versus a $4.97 per share increase in the market price of Company common stock during 2021. A decrease in the value of mutual fund investment options selected by some plan participants also contributed to the lower expense year-over-year. See the Overview and Segment Results - Corporate Expenses sections of this MD&A for further details.

•Business restructuring/asset disposition expenses were $0.3 million in 2022 versus $3.4 million in 2021. The 2022 expenses consist of $0.3 million of decommissioning costs associated with the Company’s Canadian plant closure. The 2021 expenses include a $2.7 million loss on the sale of the Company's corporate headquarters building and $0.7 million of decommissioning costs associated with the Company’s Canadian plant closure. See Note 22, Business Restructuring, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for additional details.

•Goodwill impairment expenses were $1.0 million in 2022 versus no impairment expense recognition in the prior year. See Note 4, Goodwill and Other Intangible Assets, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for additional details.

Net interest expense in 2022 increased $4.1 million, or 71%, versus the prior year. This increase was primarily attributable to higher outstanding debt balances in 2022 versus 2021.

Other, net was $8.8 million of expense in 2022 versus $7.5 million of income in 2021. The Company recognized $6.4 million of investment losses (including realized and unrealized gains and losses) for the Company’s deferred compensation and supplemental defined contribution mutual fund assets in 2022 compared to $5.2 million of income in 2021. The Company also recognized $2.9 million of foreign exchange losses in 2022 versus $0.5 million of foreign exchange gains in 2021. In addition, the Company recognized $0.5 million of income related to net periodic pension and other retirement obligations in 2022 versus $0.9 million of income in 2021. The Company also recognized $1.0 million of income related to the dissolution of its China joint venture in 2021.

The Company’s effective tax rate was 22.0 percent in 2022 compared to 20.1 percent in 2021. The increase was primarily attributable to a non-recurring favorable tax benefit recognized in 2021, related to the anticipated utilization of a foreign tax credit attribute, for years prior to 2021. See Note 9, Income Taxes, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for a reconciliation of the statutory U.S. federal income tax rate to the effective tax rate.

Segment Results

(In thousands)	For the Year Ended December 31,
Net Sales	2022		2021		Increase		Percent Change
Surfactants	$	1,882,745	$	1,562,795	$	319,950		20
Polymers		789,080		713,440		75,640		11
Specialty Products		101,445		69,731		31,714		45
Total Net Sales	$	2,773,270	$	2,345,966	$	427,304		18

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(In thousands)	For the Year Ended December 31,
Operating Income	2022		2021		Increase (Decrease)			Percent Change
Surfactants	$	162,746	$	165,999	$	(3,253	)		-2
Polymers		82,897		73,591		9,306			13
Specialty Products		29,895		14,178		15,717			111
Segment Operating Income	$	275,538	$	253,768	$	21,770			9
Corporate Expenses, Excluding Deferred Compensation,     Restructuring and Asset Disposition		58,501		72,739		(14,238	)		-20
Deferred Compensation Expense (Income)		9,393		6,895		2,498			36
Business Restructuring and Asset Disposition		308		3,353		(3,045	)		-91
Total Operating Income	$	207,336	$	170,781	$	36,555			21

Surfactants

Surfactant 2022 net sales increased $320.0 million, or 20 percent, versus 2021 net sales. Higher average selling prices positively impacted the change in net sales by $469.5 million. The higher average selling prices were primarily due to the pass-through of higher raw material, logistics and input costs along with improved product and customer mix. Sales volume declined six percent and negatively impacted the change in net sales by $100.9 million. Foreign currency translation had a $48.6 million unfavorable impact on the year-over-year change in net sales. A year-over-year comparison of net sales by region follows:

	For the Year Ended December 31,
(In thousands)	2022		2021		Increase (Decrease)			Percent Change
North America	$	1,099,616	$	904,469	$	195,147			22
Europe		349,651		288,735		60,916			21
Latin America		363,799		299,601		64,198			21
Asia		69,679		69,990		(311	)		—
Total Surfactants Segment	$	1,882,745	$	1,562,795	$	319,950			20

Net sales for North American Surfactant operations increased $195.1 million, or 22 percent, between years. Higher average selling prices positively impacted the change in net sales by $244.6 million. The higher average selling prices were primarily due to the pass-through of higher raw material, logistics and input costs along with more favorable product and customer mix. Sales volume declined five percent and negatively impacted the year-over-year change in net sales by $47.8 million. Lower sales volume into the consumer products end markets, principally commodity laundry and personal care products, accounted for most of this decline and was largely due to raw material availability issues, customer inventory destocking efforts and previously anticipated lost volume at one customer that chose to invest in internal production as part of the transition to low 1,4 dioxane products. Partially offsetting the above was higher demand for products sold into the functional products end markets and higher demand from the Company’s Tier 2/3 customers. Foreign currency translation negatively impacted 2022 net sales by $1.7 million.

Net sales for European Surfactant operations increased $60.9 million, or 21 percent, year-over-year. Higher average selling prices positively impacted the change in net sales by $115.5 million. The higher average selling prices were primarily due to the pass-through of higher raw material costs and improved product and customer mix. Foreign currency translation and a four percent decline in sales volume negatively impacted the year-over-year change in net sales by $42.2 million and $12.4 million, respectively. A stronger U.S. dollar relative to the European euro and British pound sterling led to the unfavorable foreign currency translation effect. The lower sales volume was primarily due to lower demand for commodity laundry products sold within the consumer products business partially offset by higher demand for products sold into the functional products and institutional cleaning end markets.

Net sales for Latin American Surfactant operations increased $64.2 million, or 21 percent, between years primarily due to higher average selling prices that positively impacted the change in net sales by $84.6 million. The higher average selling prices were primarily due to the pass-through of higher raw material costs and improved product and customer mix. Sales volume declined seven percent and negatively impacted the change in net sales by $22.2 million. The decline in sales volume was primarily due to lower demand for commodity laundry products within the consumer products business partially offset by higher demand for products sold into the functional products and institutional cleaning end markets. Foreign currency translation positively impacted the change in net sales by $1.8 million.

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Net sales for Asian Surfactant operations decreased $0.3 million year-over-year. A 20 percent decline in sales volume and the unfavorable impact of foreign currency translation negatively impacted the change in net sales by $14.0 million and $6.5 million, respectively. The decline in sales volume primarily reflects lower demand for commodity laundry products sold within the consumer products business, partially attributable to lost market share at one major customer, and lower demand from our distribution partners. A stronger U.S. dollar relative to the Philippine peso accounted for most of the unfavorable foreign currency translation effect. Higher average selling prices positively impacted the year-over-year change in net sales by $20.2 million and primarily reflected the pass-through of higher raw material costs.

Surfactant operating income for 2022 decreased $3.3 million, or two percent, versus operating income reported in 2021. Gross profit increased $3.8 million, or one percent, and operating expenses increased $7.1 million, or seven percent. Year-over-year comparisons of gross profit by region and total segment operating expenses and operating income follow:

	For the Year Ended December 31,
(In thousands)	2022		2021		Increase (Decrease)			Percent Change
Gross Profit and Operating Income
North America	$	174,097	$	168,727	$	5,370			3
Europe		41,349		38,213		3,136			8
Latin America		53,494		54,769		(1,275	)		-2
Asia		7,822		11,215		(3,393	)		-30
Surfactants Segment Gross Profit	$	276,762	$	272,924	$	3,838			1
Operating Expenses		114,016		106,925		7,091			7
Surfactants Segment Operating Income	$	162,746	$	165,999	$	(3,253	)		-2

Gross profit for North American Surfactant operations increased $5.4 million, or three percent, year-over-year. Higher average unit margins positively impacted the year-over-year change in gross profit by $14.4 million. The higher average unit margins were mostly attributable to more favorable product and customer mix that was partially offset by higher raw material, manufacturing and transportation costs, which were not fully recovered in the market, and higher expenses associated with the Company’s transition to low 1,4 dioxane capabilities. A five percent decline in sales volume negatively impacted the change in gross profit by $8.9 million. Foreign currency translation negatively impacted the change in gross profit by $0.1 million.

Gross profit for European Surfactant operations increased $3.1 million, or eight percent, year-over-year. Higher average unit margins positively impacted the year-over-year change in gross profit by $9.4 million. The higher average unit margins primarily reflect a more favorable product and customer mix. The unfavorable impact of foreign currency translation and a four percent decline in sales volume negatively impacted the year-over-year change in gross profit by $4.7 million and $1.6 million, respectively. A stronger U.S. dollar relative to the European euro and British pound sterling led to the unfavorable foreign currency translation effect.

Gross profit for Latin American Surfactant operations decreased $1.3 million, or two percent, primarily due to a seven percent decline in sales volume that negatively impacted the year-over-year change in gross profit by $4.1 million. Higher average unit margins and the favorable impact of foreign currency translation positively impacted the year-over-year change in gross profit by $2.4 million and $0.4 million, respectively. The higher unit margins primarily reflect a more favorable customer and product mix.

Gross profit for Asian Surfactant operations decreased $3.4 million, or 30 percent, year-over-year. A 20 percent decline in sales volume and lower unit margins negatively impacted the change in gross profit by $2.2 million and $1.4 million, respectively. Foreign currency translation positively impacted the change in gross profit by $0.2 million.

Operating expenses for the Surfactant segment increased $7.1 million, or seven percent, year-over-year. Most of this increase was attributable to higher incentive-based compensation and travel-related expenses, a goodwill impairment charge at the Company’s Philippines subsidiary and higher bad debt provision expense.

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Polymers

Polymer 2022 net sales increased $75.6 million, or 11 percent, versus net sales in 2021. Higher average selling prices favorably impacted the year-over-year change in net sales by $169.6 million. The higher average selling prices were mainly due to the pass through of higher raw material, logistics and input costs along with margin recovery. A seven percent decrease in sales volume and the unfavorable impact of foreign currency translation negatively impacted the year-over-year change in net sales by $49.2 million and $44.8 million, respectively. A year-over-year comparison of net sales by region follows:

	For the Year Ended December 31,
(In thousands)	2022		2021		Increase (Decrease)			Percent Change
North America	$	437,312	$	364,382	$	72,930			20
Europe		307,441		302,137		5,304			2
Asia and Other		44,327		46,921		(2,594	)		-6
Total Polymers Segment	$	789,080	$	713,440	$	75,640			11

Net sales for North American Polymer operations increased $72.9 million, or 20 percent, primarily due to higher average selling prices that positively impacted the change in net sales by $99.1 million. The higher average selling prices were mainly due to the pass-through of higher raw material, logistics and input costs along with margin recovery. Sales volume declined seven percent and negatively impacted the change in net sales by $26.2 million. Sales volume of polyols used in rigid foam applications decreased three percent year-over-year. Sales volume within the phthalic anhydride and specialty polyols businesses decreased 19 percent and 15 percent, respectively. The year-over-year decline in sales volume reflects customer inventory destocking, lower construction-related activities and general economic concerns. In addition, sales volume in 2022 was impacted by a January 2022 power outage at the Company’s Elwood, Illinois (Millsdale) plant site that negatively impacted Polymer production. The production disruption resulted in the declaration of force majeure for select products. Production resumed in February 2022 and the force majeure was lifted in April 2022. The Company was able to mitigate a portion of this production disruption by supplying customers from its Wilmington, North Carolina site, which was acquired a part of the acquisition of INVISTA's aromatic polyester polyol business in 2021.

Net sales for European Polymer operations increased $5.3 million, or two percent, year-over-year. Higher average selling prices favorably impacted the change in net sales by $67.4 million. The higher average selling prices were mainly due to the pass-through of higher raw material costs. The unfavorable impact of foreign currency translation and a six percent decline in sales volume negatively impacted the change in net sales by $43.2 million and $18.9 million, respectively. A stronger U.S dollar relative to the Polish zloty and British pound sterling led to the unfavorable foreign currency translation impact. The decline in sales volume reflects lower construction-related activities, customer inventory destocking and the effects of general economic concerns.

Net sales for Asian and Other Polymer operations decreased $2.6 million, or six percent, primarily due to an eight percent decline in sales volume and the unfavorable impact of foreign currency translation. These two factors negatively impacted the year-over-year change in net sales by $3.9 million and $1.6 million, respectively. The decline in sales volume was primarily attributable to suppressed demand resulting from COVID lockdowns and restrictions in China. Higher average selling prices positively impacted the year-over-year change in net sales by $2.9 million.

Polymer operating income for 2022 increased $9.3 million, or 13 percent, versus operating income for 2021. Gross profit increased $9.7 million, or nine percent, and operating expenses were up $0.4 million, or one percent, year-over-year. Year-over-year comparisons of gross profit by region and total segment operating expenses and operating income follow:

	For the Year Ended December 31,
(In thousands)	2022		2021		Increase (Decrease)			Percent Change
Gross Profit and Operating Income
North America	$	63,768	$	53,610	$	10,158			19
Europe		46,733		46,372		361			1
Asia and Other		4,286		5,073		(787	)		-16
Polymers Segment Gross Profit	$	114,787	$	105,055	$	9,732			9
Operating Expenses		31,890		31,464		426			1
Polymers Segment Operating Income	$	82,897	$	73,591	$	9,306			13

Gross profit for North American Polymer operations increased $10.2 million, or 19 percent, primarily due to higher average unit margins. The higher average unit margins favorably impacted the year-over-year change in gross profit by $14.0 million. The higher

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average unit margins primarily reflect year-over-year margin recovery. Sales volume declined seven percent and negatively impacted the year-over-year change in gross profit by $3.8 million.

Gross profit for European Polymer operations increased $0.4 million, or one percent, primarily due to higher average unit margins that favorably impacted the change in gross profit by $9.4 million. The higher average unit margins primarily reflect year-over-year margin recovery. The unfavorable impact of foreign currency translation and a six percent decline in sales volume negatively impacted the change in gross profit by $6.1 million and $2.9 million, respectively.

Gross profit for Asia and Other Polymer operations declined $0.8 million, or 16 percent, due to an eight percent decline in sales volume, lower average unit margins and the negative impact of the foreign currency translation. These items negatively impacted the year-over-year change in gross profit by $0.4 million, $0.2 million and $0.2 million, respectively.

Operating expenses for the Polymers segment increased $0.4 million, or one percent, year-over-year mainly due to higher incentive-based compensation and travel-related expenses.

Specialty Products

Specialty Products net sales in 2022 increased $31.7 million, or 45 percent versus net sales in 2021. This increase reflects higher average selling prices that were partially offset by a four percent decline in sales volume. Gross profit and operating income increased $15.1 million and $15.7 million, respectively. The year-over-year improvements in gross profit and operating income were mostly attributable to improved margins and customer mix within the medium chain triglycerides (MCTs) product line.

Corporate Expenses

Corporate expenses, which include deferred compensation, business restructuring/asset disposition and other operating expenses that are not allocated to the reportable segments, decreased $14.8 million between years. Corporate expenses were $68.2 million in 2022 versus $83.0 million in the prior year. This decrease was primarily attributable to $9.4 million of deferred compensation income recognized in 2022 versus $6.9 million of deferred compensation expense recognized in 2021. Also contributing to the reduction in corporate expenses were lower year-over-year acquisition-related expenses, consulting expenses and the non-recurrence of a $2.7 million loss incurred on the sale of a corporate headquarter building in 2021. Partially offsetting the decreases above were higher year-over-year environmental remediation reserve ($10.2 million) and incentive-based compensation expenses. The higher environmental reserve expenses were primarily due to revised remediation cost estimates associated with the Company’s Maywood, New Jersey site.

Deferred compensation expense decreased $16.3 million between years. This decrease was primarily due to a $17.83 per share decrease in the market price of the Company’s common stock during 2022 compared to a $4.97 per share increase during 2021. A decrease in the value of mutual fund investment options selected by some plan participants also contributed to the lower expense year-over-year. The following table presents the period-end Company common stock prices used in the computation of deferred compensation income/expense in 2022 and 2021:

	December 31
	2022		2021		2020		2019
Company Stock Price	$	106.46	$	124.29	$	119.32	$	102.44

Liquidity and Capital Resources

Overview

Historically, the Company’s principal sources of liquidity have included cash flows from operating activities, available cash and cash equivalents and the proceeds from debt issuance and borrowings under credit facilities. The Company’s principal uses of cash have included funding operating activities, capital investments and acquisitions. The Company’s generation of cash from operations, cash on hand, committed credit facilities and ability to access capital markets are expected to meet the Company’s short-term and long-term cash requirements for working capital, capital expenditures, debt maturities, contributions to pension plans, dividend distributions to stockholders, share repurchases and other needs.

For 2022, cash generated from operating activities was a cash source of $160.8 million versus a source of $72.1 million in 2021. For 2022, investing cash outflows were $308.1 million versus cash outflows of $376.8 million in 2021. Financing activities were a cash source of $166.2 million in 2022 versus a source of $117.3 million in 2021. Cash and cash equivalents increased by $14.6 million compared to December 31, 2021, inclusive of $4.3 million of unfavorable foreign exchange rate impacts.

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As of December 31, 2022, the Company’s cash and cash equivalents totaled $173.8 million. Cash in U.S. demand deposit accounts and money market funds totaled $11.8 million and $64.9 million, respectively. The Company’s non-U.S. subsidiaries held $97.1 million of cash outside the United States as of December 31, 2022.

Operating Activities

Net income in 2022 increased by $9.3 million versus the comparable period in 2021. Working capital was a cash use of $75.7 million in 2022 versus a cash use of $140.5 million in 2021.

Accounts receivable were a cash use of $26.2 million in 2022 compared to a use of $104.2 million in 2021. Inventories were a cash use of $99.4 million in 2022 versus a use of $79.3 million in 2021. Accounts payable and accrued liabilities were a cash source of $54.2 million in 2022 compared to a source of $44.4 million in 2021.

Working capital in 2022 was a lower use of cash versus the prior year primarily due to the changes noted in the preceding paragraph. The major driver of the year-over-year decrease was accounts receivable. The lower accounts receivable cash usage reflects lower sales volume, particularly in the second half of the year, due to a slow down in customer demand across most end use markets and customer inventory destocking. It is management’s opinion that the Company’s liquidity is sufficient to provide for potential increases in working capital requirements during 2023.

Investing Activities

Cash used for investing activities decreased $68.7 million year-over-year. This decrease primarily reflects the Company’s 2021 acquisition of INVISTA’s aromatic polyester polyol business and associated assets for $183.7 million, net of cash received. Cash used for capital expenditures was $301.6 million in 2022 versus $194.5 million in 2021. The higher capital spending in 2022 was largely attributable to the alkoxylation plant the Company is building at its Pasadena, Texas site and equipment upgrades to meet new regulatory limits on 1,4 Dioxane in the United States.

For 2023, the Company estimates that total capital expenditures will range from $240.0 million to $270.0 million. This projected spending includes the new alkoxylation plant that is being built in Pasadena, Texas, equipment upgrades to meet new regulatory limits on 1,4 Dioxane in the United States, growth initiatives, infrastructure, and optimization spending in the United States and Mexico.

Financing Activities

Cash flow from financing activities was a source of $166.2 million in 2022 versus a source of $117.3 million in 2021. The year-over-year change is primarily due to a higher level of borrowings under the Company’s revolving credit facility and a $98.8 million delayed draw term loan borrowing during 2022, partially offset by lower cash proceeds received from the issuance of senior unsecured notes in 2022 versus 2021.

The Company purchases shares of its common stock in the open market or from its U.S. pension plan from time to time to fund its own benefit plans and to mitigate the dilutive effect of new shares issued under its compensation plans. The Company may, from time to time, seek to purchase additional amounts of its outstanding equity and/or retire debt securities through cash purchases and/or exchanges for other securities, in open market purchases, privately negotiated transactions or otherwise, including pursuant to plans meeting the requirements of Rule 10b5-1 promulgated by the SEC. Such repurchases or exchanges, if any, will depend on prevailing market conditions, the Company’s liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. During the twelve months ended December 31, 2022, the Company purchased 251,120 shares of its common stock on the open market at a total cost of $24.9 million. At December 31, 2022, the Company had $125.1 million remaining under the share repurchase program authorized by its Board of Directors.

Debt and Credit Facilities

Consolidated balance sheet debt increased from $363.6 million on December 31, 2021 to $587.1 million on December 31, 2022, primarily due to higher domestic debt, which includes borrowings from the Company’s revolving credit agreement and new senior unsecured notes issued during the first quarter of 2022. Net debt (which is defined as total debt minus cash – See the “Reconciliation of Non-GAAP Net Debt” section of this MD&A) increased by $209.0 million in 2022, from $204.4 million on December 31, 2021 to $413.4 million on December 31, 2022. This change was due to a debt increase of $223.6 million partially offset by a cash increase of $14.6 million. The cash increase primarily reflects the new debt borrowings and cash from operations, largely offset by scheduled debt repayments, capital expenditures, dividends, share repurchases and the previously announced third quarter 2022 acquisition of the PerformanX Specialty Chemicals surfactant business.

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As of December 31, 2022, the ratio of total debt to total debt plus shareholders’ equity was 33.5 percent compared to 25.3 percent at December 31, 2021. As of December 31, 2022, the ratio of net debt to net debt plus shareholders’ equity was 26.2 percent versus 16.0 percent as of December 31, 2021. On December 31, 2022, the Company’s debt included $397.9 million of senior unsecured notes, with maturities ranging from 2023 through 2032, that were issued to insurance companies in private placement transactions pursuant to note purchase agreements, a $98.8 million delayed-draw term loan borrowed pursuant to the Company’s credit agreement, $90.5 million of short-term loans borrowed under the Company’s revolving credit facility and no foreign credit line borrowings. The proceeds from the senior unsecured note issuances have been the Company’s primary source of long-term debt financing and are supplemented by borrowings under revolving and other bank credit facilities to meet short and medium-term liquidity needs.

On March 1, 2022, pursuant to a note purchase and master note agreement dated as of June 10, 2021 (the NYL note purchase agreement), the Company issued and sold $25.0 million in aggregate principal amount of its 2.83% Senior Notes, Series 2022-A, due March 1, 2032 (the Series 2022-A Notes). In addition, on March 1, 2022, pursuant to a note purchase and private shelf agreement dated as of June 10, 2021 (the Prudential note purchase agreement), the Company issued and sold $50.0 million in aggregate principal amount of its 2.83% Senior Notes, Series 2022-B, due March 1, 2032 (the Series 2022-B Notes). The Series 2022-A Notes and the Series 2022-B Notes bear interest at a fixed rate of 2.83%, with interest to be paid semi-annually and with equal annual principal payments beginning on March 1, 2026 and continuing through final maturity on March 1, 2032. The proceeds of the issuance of the Series 2022-A Notes and the Series 2022-B Notes are being used primarily for capital expenditures, to pay down existing debt and for working capital and other general corporate purposes. The NYL note purchase agreement and the Prudential note purchase agreement require the maintenance of certain financial ratios and covenants that are substantially similar to the Company’s existing long-term debt and provide for customary events of default.

On June 24, 2022, the Company entered into a credit agreement with a syndicate of banks. The credit agreement provides for credit facilities in an initial aggregate principal amount of $450.0 million, consisting of (a) a $350.0 million multi-currency revolving credit facility and (b) a $100.0 million delayed-draw term loan credit facility, each of which matures on June 24, 2027. This credit agreement replaced the Company’s prior $350.0 million revolving credit agreement. This credit agreement allows the Company to make unsecured borrowings, as requested from time to time, to finance working capital needs, permitted acquisitions, capital expenditures and for general corporate purposes. This unsecured facility is the Company’s primary source of short-term borrowings. As of December 31, 2022, the Company had outstanding letters of credit totaling $10.9 million and $189.2 million of outstanding borrowings under the credit agreement, inclusive of a $98.8 million delayed-draw term loan, with $249.8 million remaining available.

Certain foreign subsidiaries of the Company maintain short-term bank lines of credit in their respective local currencies to meet working capital requirements as well as to fund capital expenditures and acquisitions. At December 31, 2022, the Company’s foreign subsidiaries had no outstanding debt.

The Company is subject to covenants under its material debt agreements that require the maintenance of minimum interest coverage and minimum net worth. These agreements also limit the incurrence of additional debt as well as the payment of dividends and repurchase of shares. As of December 31, 2022, testing for these agreements was based on the Company’s consolidated financial statements. Under the most restrictive of these debt covenants:

1. The Company is required to maintain a minimum interest coverage ratio, as defined within the agreements, not to exceed 3.50 to 1.00, for the preceding four calendar quarters.

2. The Company is required to maintain a maximum net leverage ratio, as defined within the agreements, not to exceed 3.50 to 1.00.

3. The Company is required to maintain net worth of at least $750.0 million.

4. The Company is permitted to pay dividends and purchase treasury shares after June 24, 2022, in amounts of up to $100.0 million plus 100 percent of net income and cash proceeds of stock option exercises, measured cumulatively beginning January 1, 2022. The maximum amount of dividends that could have been paid within this limitation is disclosed as unrestricted retained earnings in Note 6, Debt, of the notes to the consolidated financial statements (included in Item 8 of this Form 10-K).

The Company believes it was in compliance with the covenants under its material debt agreements as of December 31, 2022.

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Material Cash Requirements

At December 31, 2022, the Company’s material cash requirements included the following contractual obligations (including estimated payments by period):

	Payments Due by Period
(In thousands)	Total		Less than 1 year		1-3 years		3 – 5 years		More than 5 years
Long-term debt obligations (1)	$	587,826	$	132,111	$	122,680	$	202,321	$	130,714
Interest payments on debt obligations (2)		50,340	$	11,839	$	18,732	$	11,727	$	8,042
Operating lease obligations (3)		75,092		14,683		16,353		9,993		34,063
Purchase obligations (4)		10,856		10,856		—		—		—
Other (5)		53,175		16,775		16,194		8,713		11,493
Total	$	777,289	$	186,264	$	173,959	$	232,754	$	184,312

(1)Excludes unamortized debt issuance costs of $0.7 million.

(2)Interest payments on debt obligations represent interest on all Company debt at December 31, 2022. Future interest rates may change, and, therefore, actual interest payments could differ from those disclosed in the above table.

(3)The majority of operating lease obligations consist of railcar and real estate leases.

(4)Purchase obligations consist of raw material, utility and telecommunication service purchases made in the normal course of business.

(5)The “Other” category comprises deferred revenues that represent commitments to deliver products, expected 2023 required contributions to the Company’s funded defined benefit pension plans, estimated payments related to the Company’s unfunded defined benefit supplemental executive and outside director pension plans, estimated payments (undiscounted) related to the Company’s asset retirement obligations, environmental remediation payments for which amounts and periods can be reasonably estimated and income tax liabilities for which payments and periods can be reasonably estimated.

The above table does not include $43.2 million of other non-current liabilities recorded on the balance sheet at December 31, 2022, as summarized in Note 15, Other Non-Current Liabilities, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K). The significant non-current liabilities excluded from the table are defined benefit pension, deferred compensation, environmental and legal liabilities and unrecognized tax benefits for which payment periods cannot be reasonably determined. In addition, deferred income tax liabilities are excluded from the table due to the uncertainty of their timing.

During the periods covered by this Form 10-K, the Company was not party to any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on the Company’s financial condition, revenues or expenses, results of operations, liquidity, cash requirements or capital resources.

Pension Plans

The Company sponsors a number of defined benefit pension plans, the most significant of which cover employees in the Company’s U.S. and U.K. locations. The U.S. and U.K. plans are frozen, and service benefit accruals are no longer being made. The overfunded status (pretax) of the Company’s U.S and U.K. defined benefit pension plans was $8.2 million at December 31, 2022, versus overfunded status (pretax) of $7.9 million at December 31, 2021. See Note 13, Postretirement Benefit Plans, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for additional details.

The Company contributed $0.8 million to its U.S. and U.K. defined benefit plans in 2022. In 2023, the Company expects to contribute a total of $0.5 million to the U.K. defined benefit plan. As a result of pension funding relief included in the Highway and Transportation Funding Act of 2014, the Company has no 2023 contribution requirement to the U.S. qualified defined benefit plans. The company expects to contribute $0.3 million in 2023 to the unfunded non-qualified U.S. pension plans.

Letters of Credit

The Company maintains standby letters of credit under its workers’ compensation insurance agreements and for other purposes as needed. The insurance letters of credit are renewed annually and amended to the amounts required by the insurance agreements. As of December 31, 2022, the Company had a total of $10.9 million of outstanding standby letters of credit.

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Environmental and Legal Matters

The Company’s operations are subject to extensive federal, state and local environmental laws and regulations and similar laws in the other countries in which the Company does business. Although the Company’s environmental policies and practices are designed to ensure compliance with these regulations, future developments and increasingly stringent environmental regulation may require the Company to make additional unforeseen environmental expenditures. The Company will continue to invest in the equipment and facilities necessary to comply with existing and future regulations. During 2022, the Company’s expenditures for capital projects related to environmental matters were $11.8 million. Expenditures for capital projects related to environmental matters are capitalized and depreciated over their estimated useful lives, which are typically 10 years to 15 years. Recurring costs associated with the operation and maintenance of facilities for waste treatment and disposal and managing environmental compliance in ongoing operations at the Company’s manufacturing locations were approximately $37.2 million for 2022, $34.9 million for 2021 and $35.4 million for 2020.

Over the years, the Company has received requests for information related to or has been named by the government as a potentially responsible party at a number of waste disposal sites where cleanup costs have been or may be incurred under CERCLA and similar state or foreign statutes. In addition, damages are being claimed against the Company in general liability actions for alleged personal injury or property damage in the case of some disposal and plant sites. The Company believes that it has made adequate provisions for the costs it is likely to incur with respect to these sites. See the Critical Accounting Policies section that follows for a discussion of the Company’s environmental liabilities accounting policy. After partial remediation payments at certain sites, the Company has estimated a range of possible environmental and legal losses from $32.6 million to $56.4 million at December 31, 2022, compared to $23.1 million to $41.7 million at December 31, 2021. Within the range of possible environmental losses, management has currently concluded that no single amount is more likely to occur than any other amounts in the range and, thus, has accrued at the lower end of the range. The Company’s environmental and legal accruals totaled $32.6 million at December 31, 2022 as compared to $23.1 million at December 31, 2021. This increase primarily reflects revised environmental cost estimates for the Company’s Maywood, New Jersey site due to USEPA work plan approvals and the receipt of third party contractor bids during the third quarter of 2022. Remediation work has commenced at a portion of the Maywood site and the Company anticipates increased cash spending to occur in 2023. Because the liabilities accrued are estimates, actual amounts could differ materially from the amounts reported. During 2022, cash expenditures related to environmental remediation and certain other legal matters approximated $2.3 million compared to $3.5 million expensed in 2021.

For certain sites, the Company has responded to information requests made by federal, state or local government agencies but has received no response confirming or denying the Company’s stated positions. As such, estimates of the total costs, or range of possible costs, of remediation, if any, or the Company’s share of such costs, if any, cannot be determined with respect to these sites. Consequently, the Company is unable to predict the effect thereof on the Company’s financial position, cash flows and results of operations. Based on the Company’s present knowledge with respect to its involvement at these sites and the possibility of other viable entities’ responsibilities for cleanup, and the extended period over which any costs would be incurred, management believes that the Company has no material liability at these sites and that these matters, individually and in the aggregate, will not have a material effect on the Company’s financial position.

See Item 3. Legal Proceedings, in this Form 10-K and Note 16, Contingencies, in the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for a summary of the significant environmental proceedings related to certain environmental sites.

Outlook

Management believes the macro environment in 2023 will continue to be challenged by elevated inflation and high interest rates which could negatively impact consumer demand and construction-related activity, thereby impacting the Company’s Surfactant and Polymer segments. Additionally, management believes higher overall cost inflation, higher depreciation and pre-start up expenses associated with the Company’s new Pasadena facility, will challenge the Company’s ability to deliver earnings growth in 2023. The Company is seeking to partially offset these 2023 headwinds with productivity improvements, pricing increases where possible, and furthering its efforts to improve product and customer mix. The Company remains committed to executing its long-term growth strategy.

Climate Change Legislation

Based on currently available information, the Company does not believe that existing or pending climate change legislation or regulation is reasonably likely to have a material effect on the Company’s financial position, results of operations or cash flows.

Critical Accounting Policies

The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America (generally accepted accounting principles or GAAP). Preparation of financial statements in accordance with generally accepted accounting principles requires the Company to make estimates and assumptions that affect the reported amounts of assets,

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liabilities, income and expenses at the date of the financial statements and to provide disclosures of contingent assets, liabilities and related amounts of revenues and expenses during the reporting period. The following is a summary of the accounting policies the Company believes are the most important to aid in understanding its financial results:

Environmental Liabilities

It is the Company’s accounting policy to record environmental liabilities when environmental assessments and/or remedial efforts are probable, and the cost or range of possible costs can be reasonably estimated. When no amount within a range of possible costs is a better estimate than any other amount, the minimum amount in the range is accrued. Estimating the possible costs of remediation requires making assumptions related to the nature and extent of contamination and the methods and resulting costs of remediation. Some of the factors on which the Company bases its estimates include information provided by decisions rendered by State and Federal environmental regulatory agencies, information provided by feasibility studies, and remedial action plans developed.

Estimates for environmental liabilities are subject to potentially significant fluctuations as new facts emerge related to the various sites where the Company is exposed to liability for the remediation of environmental contamination. See the Environmental and Legal Matters section of this MD&A for discussion of the Company’s recorded liabilities and range of cost estimates.

Recent Accounting Pronouncements

See Note 1, Summary of Significant Accounting Policies, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for information on recent accounting pronouncements which affect the Company.

Non-GAAP Reconciliations

The Company believes that certain non-GAAP measures, when presented in conjunction with comparable GAAP measures, are useful for evaluating the Company’s performance and financial condition. 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, not as substitutes for or superior to, measures of financial performance prepared in accordance with GAAP. The Company’s definitions of these adjusted measures may differ from similarly titled measures used by other entities.

Reconciliations of Non-GAAP Adjusted Net Income and Dilutive Earnings per Share

Management uses the non-GAAP adjusted net income metric to evaluate the Company’s operating performance. Management excludes the items listed in the table below because they are non-operational items. The cumulative tax effect was calculated using the statutory tax rates for the jurisdictions in which the transactions occurred.

	Twelve Months Ended December 31
	2022						2021						2020
(In millions, except per share amounts)	Net Income			Diluted EPS			Net Income			Diluted EPS			Net Income			Diluted EPS
Net Income Attributable to the Company    as Reported	$	147.2		$	6.38		$	137.8		$	5.92		$	126.8		$	5.45
Deferred Compensation (Income) Expense    (including related investment activity)		(3.1	)		(0.14	)		2.0			0.08			5.3			0.23
Business Restructuring/Asset Disposition		0.3			0.01			3.3			0.14			1.2			0.05
Cash Settled Stock Appreciation Rights		(0.4	)		(0.01	)		0.2			0.01			0.4			0.02
Remediation Expenses		11.5			0.50			2.0			0.08			—			—
Cumulative Tax Effect on Above Adjustment    Items		(2.0	)		(0.09	)		(1.8	)		(0.07	)		(1.7	)		(0.07	)
Adjusted Net Income	$	153.50		$	6.65		$	143.5		$	6.16		$	132.0		$	5.68

33

Reconciliations of Non-GAAP Net Debt

Management uses the non-GAAP net debt metric to show a more complete picture of the Company’s overall liquidity, financial flexibility and leverage level.

	December 31
(In millions)	2022			2021
Current Maturities of Long-Term Debt as Reported	$	132.1		$	40.7
Long-Term Debt as Reported	$	455.0		$	322.9
Total Debt as Reported	$	587.1		$	363.6
Less Cash and Cash Equivalents as Reported	$	(173.8	)	$	(159.2	)
Net Debt	$	413.3		$	204.4
Equity	$	1,166.1		$	1,074.2
Net Debt plus Equity	$	1,579.4		$	1,278.6
Net Debt/Net Debt plus Equity		26	%		16	%

34

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Exchange Risk

Because Company operates globally, its cash flows and operating results are subject to movements in foreign currency exchange rates. Except for the financial transactions, balances and forward contracts referred to below, most of the Company’s foreign subsidiaries’ financial instruments are denominated in their respective functional currencies.

The Company uses forward contracts to mitigate the exposure of certain foreign currency transactions and balances to fluctuating exchange rates. At December 31, 2022, the Company had forward contracts with an aggregated notional amount of $56.7 million. Except for the Company’s subsidiaries in Argentina, Brazil, China and Colombia, foreign currency exposures are substantially hedged by forward contracts. The fair value of all forward contracts as of December 31, 2022, was a net liability of $0.01 million. As of December 31, 2022, the potential reduction in the Company’s earnings resulting from the impact of hypothetical adverse changes in exchange rates on the fair value of its outstanding foreign currency contracts of 10 percent for all currencies would have been $5.0 million.

Interest Rates

The Company’s debt was comprised of $397.9 million fixed-rate borrowings and $189.2 million variable-rate borrowings as of December 31, 2022. A hypothetical 10 percent average change to short-term interest rates would result in less than a $0.5 million (assuming the same debt level as December 31, 2022) increase or decrease to interest expense for 2023.

The fair value of the Company’s long term fixed-rate debt, including current maturities, was estimated to be $351.8 million as of December 31, 2022, which was approximately $46.8 million above the carrying value. Market risk was estimated as the potential increase to the fair value that would result from a hypothetical 10 percent decrease in the Company’s weighted average long-term borrowing rates at December 31, 2022, or $6.1 million.

Commodity Price Risk

Certain raw materials used in the manufacture of the Company’s products are subject to price volatility caused by weather, petroleum price fluctuations, general economic demand and other unpredictable factors. Increased raw material costs are recovered from customers as quickly as the marketplace allows; however, certain contractual arrangements allow for price changes only on a quarterly basis, and competitive pressures sometimes prevent the recovery of cost increases from customers, particularly in periods where there is excess industry capacity. As a result, for some product lines or market segments it may take time to recover raw material price increases. Periodically, firm purchase commitments are entered into which fix the price of a specific commodity that will be delivered at a future time. Forward purchase contracts are used to aid in managing the Company’s natural gas costs. At December 31, 2022, the Company had open forward contracts for the purchase of 1.6 million dekatherms of natural gas at a cost of $9.4 million. Because the Company has agreed to fixed prices for the noted quantity of natural gas, a hypothetical 10 percent fluctuation in the price of natural gas would cause the Company’s actual natural gas cost to be $0.9 million higher or lower than the cost at market price.

35

Item 8. Financial Statements and Supplementary Data

The following statements and data are included in this item:

Report of Independent Registered Public Accounting Firm (PCAOB ID Number 34)	36
Consolidated Statements of Income (For years ended December 31, 2022, 2021 and 2020)	38
Consolidated Statements of Comprehensive Income (For years ended December 31, 2022, 2021 and 2020)	39
Consolidated Balance Sheets (December 31, 2022 and 2021)	40
Consolidated Statements of Cash Flow (For years ended December 31, 2022, 2021 and 2020)	41
Consolidated Statements of Stockholders’ Equity (For years ended December 31, 2022, 2021 and 2020)	42
Notes to Consolidated Financial Statements	45

Report of Independent Registered Public Accounting Firm

To the shareholders and Board of Directors of Stepan Company

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Stepan Company and subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2023, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is matter arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

36

Contingencies — Refer to Note 16 to the financial statements

Critical Audit Matter Description

The Company is involved in several property sites where the Company may be exposed to liabilities for the remediation of environmental contamination. Environmental loss contingencies are evaluated based on the likelihood of the Company incurring a liability and whether a loss or range of losses is reasonably estimable. The likelihood and amount of a loss or range of losses are estimated based on currently available information and assumptions related to the nature and extent of contamination and the methods and resulting costs of remediation. Past estimates for environmental liabilities are subject to adjustment as new facts emerge during the investigatory and remediation processes.

Given the subjectivity of estimating the likelihood of a loss, the range of potential loss, and the amount of liability to recognize, performing audit procedures to evaluate whether environmental loss contingencies were appropriately recorded and disclosed as of December 31, 2022, required especially challenging, subjective, and complex auditor judgment and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the environmental loss contingencies included the following, among others:

•We tested the effectiveness of internal controls related to the Company’s development of the estimated environmental loss contingencies, including the assumptions related to the nature and extent of contamination and the methods and resulting costs of remediation.

•We inquired of Company legal counsel and external legal counsel to understand developments in environmental matters.

•We evaluated written responses received from external legal counsel as it relates to the environmental loss contingencies.

•We inquired of the Company’s third-party environmental specialists to understand developments in the Maywood environmental matters.

•We searched data on the U.S. Environmental Protection Agency website to identify any additional information relevant to the specific property sites.

•We read Board of Directors meeting minutes to identify any additional information relevant to the specific property sites.

•We evaluated whether the assumptions related to the nature and extent of contamination and the methods and resulting costs of remediation used by the Company to determine the estimated losses or ranges of losses were reasonable by comparing those assumptions to decisions rendered by state and Federal environmental regulatory agencies, information provided by feasibility studies and remedial action plans developed for the Maywood site.

•If the Company’s reasonable estimate of loss for a remediation site is a range, we evaluated whether the amount of the liability recognized by the Company within that range was reasonable based on the facts and circumstances specific to the remediation site.

•We evaluated the Company’s environmental contingencies disclosures for consistency with our knowledge of the Company’s environmental matters.

/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP

Chicago, Illinois

February 28, 2023

We have served as the Company’s auditor since 2002.

37

Stepan Company

Consolidated Statements of Income

For the years ended December 31, 2022, 2021 and 2020

(In thousands, except per share amounts)	2022			2021			2020
Net Sales (Note 1)	$	2,773,270		$	2,345,966		$	1,869,750
Cost of Sales		2,346,201			1,950,156			1,486,137
Gross Profit		427,069			395,810			383,613
Operating Expenses:
Selling (Note 1)		59,030			59,186			55,543
Administrative (Note 1)		102,177			92,906			87,362
Research, development and technical services (Note 1)		66,633			62,689			57,986
Deferred compensation (income) expense (Note 12)		(9,393	)		6,895			9,988
		218,447			221,676			210,879
Goodwill impairment (Note 4)		(978	)		—			—
Business restructuring and loss on asset disposition (Note 22)		(308	)		(3,353	)		(1,212	)
Operating Income		207,336			170,781			171,522
Other Income (Expense):
Interest, net (Note 6)		(9,809	)		(5,753	)		(5,409	)
Other, net (Note 8)		(8,824	)		7,509			4,954
		(18,633	)		1,756			(455	)
Income Before Provision for Income Taxes		188,703			172,537			171,067
Provision for Income Taxes (Note 9) \		41,550			34,642			43,411
Net Income		147,153			137,895			127,656
Net Income Attributable to Noncontrolling Interest (Note 1)		—			(91	)		(886	)
Net Income Attributable to Stepan Company	$	147,153		$	137,804		$	126,770
Net Income Per Common Share Attributable to Stepan Company (Note 18):
Basic	$	6.46		$	6.01		$	5.52
Diluted	$	6.38		$	5.92		$	5.45
Shares Used to Compute Net Income Per Common Share    Attributable to Stepan Company (Note 18):
Basic		22,781			22,922			22,949
Diluted		23,064			23,287			23,256

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

38

Stepan Company

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2022, 2021 and 2020

(In thousands)	2022			2021			2020
Net Income	$	147,153		$	137,895		$	127,656
Other Comprehensive Income:
Foreign currency translation adjustments (Note 19)		(21,567	)		(28,154	)		(2,973	)
Defined benefit pension plans:
Net actuarial gain (loss) arising in period    (net of tax benefit of $894, tax expense of $2,661    and tax benefit of $265 for    2022, 2021 and 2020, respectively)		(2,857	)		8,188			(996	)
Amortization of prior service cost included in pension expense    (net of taxes of $3, $4 and $3 for    2022, 2021 and 2020, respectively)		6			8			8
Amortization of actuarial loss included in pension expense    (net of taxes of $599, $1,157 and $1,089 for    2022, 2021 and 2020, respectively)		1,794			3,643			3,332
Net defined benefit pension plan activity (Note 19)		(1,057	)		11,839			2,344
Cash flow hedges:
Cash flow hedge activity		8,357			—			—
Reclassifications to income in period		(9	)		(9	)		(9	)
Net cash flow hedge activity (Note 19)		8,348			(9	)		(9	)
Other Comprehensive Income		(14,276	)		(16,324	)		(638	)
Comprehensive Income		132,877			121,571			127,018
Comprehensive Income Attributable to Noncontrolling    Interest		—			(122	)		(959	)
Comprehensive Income Attributable to Stepan Company	$	132,877		$	121,449		$	126,059

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

39

Stepan Company

Consolidated Balance Sheets

December 31, 2022 and 2021

(Dollars in thousands)	2022			2021
Assets
Current Assets:
Cash and cash equivalents	$	173,750		$	159,186
Receivables, less allowances of $11,100 in 2022 and $10,157 in 2021		436,914			419,542
Inventories (Note 5)		402,531			305,538
Other current assets		31,607			29,102
Total current assets		1,044,802			913,368
Property, Plant and Equipment:
Land		50,695			50,675
Buildings and improvements		293,264			260,809
Machinery and equipment		1,640,478			1,541,925
Construction in progress		386,115			237,548
		2,370,552			2,090,957
Less: Accumulated depreciation		(1,297,255	)		(1,240,353	)
Property, plant and equipment, net		1,073,297			850,604
Goodwill, net (Note 4)		95,922			97,187
Other intangible assets, net (Note 4)		58,026			60,784
Long-term investments (Note 2)		23,294			34,495
Operating lease assets (Note 7)		62,540			69,612
Other non-current assets		75,291			39,562
Total Assets	$	2,433,172		$	2,065,612
Liabilities and Equity
Current Liabilities:
Current maturities of long-term debt (Note 6)	$	132,111		$	40,718
Accounts payable		375,726			323,362
Accrued liabilities (Note 14)		162,812			136,396
Total current liabilities		670,649			500,476
Deferred income taxes (Note 9)		10,179			12,491
Long-term debt, less current maturities (Note 6)		455,029			322,862
Non-current operating lease liability (Note 7)		50,559			56,668
Other non-current liabilities (Note 15)		80,691			98,922
Commitments and Contingencies (Note 16)
Equity (Note 10):
Common stock, $1 par value; 60,000,000 authorized shares;    26,840,843 issued shares in 2022 and 26,760,714 issued shares in 2021		26,841			26,761
Additional paid-in capital		237,202			220,820
Accumulated other comprehensive loss (Note 19)		(167,512	)		(153,236	)
Retained earnings		1,250,130			1,133,550
Less: Common treasury stock, at cost, 4,605,858 shares in 2022    and 4,340,729 shares in 2021		(180,596	)		(153,702	)
Total Stepan Company stockholders’ equity		1,166,065			1,074,193
Total Liabilities and Equity	$	2,433,172		$	2,065,612

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

40

Stepan Company

Consolidated Statements of Cash Flows

For the years ended December 31, 2022, 2021 and 2020

(In thousands)	2022			2021			2020
Cash Flows From Operating Activities
Net income	$	147,153		$	137,895		$	127,656
Adjustments to reconcile net income to net cash provided by    operating activities:
Depreciation and amortization		94,650			90,876			81,860
Deferred compensation		(9,393	)		6,895			9,988
Realized and unrealized (gains) losses on long-term investments		8,188			(2,289	)		(3,143	)
Stock-based compensation		13,851			11,716			10,080
Deferred income taxes		(27,452	)		(33,605	)		(4,506	)
Goodwill impairment (Note 4)		978			—			—
Other non-cash items		1,752			2,158			3,068
Changes in assets and liabilities, excluding effects of    acquisitions:
Receivables, net		(26,153	)		(104,231	)		(23,417	)
Inventories		(99,394	)		(79,258	)		(15,358	)
Other current assets		(4,354	)		(1,434	)		(13,927	)
Accounts payable and accrued liabilities		54,173			44,414			55,739
Pension liabilities		(1,821	)		(1,729	)		(612	)
Environmental and legal liabilities		9,547			450			(3,021	)
Deferred revenues		(962	)		277			10,809
Net Cash Provided By Operating Activities		160,763			72,135			235,216
Cash Flows From Investing Activities
Expenditures for property, plant and equipment		(301,553	)		(194,482	)		(125,792	)
Proceeds from asset disposition		—			4,149			—
Asset acquisition (Note 20)		—			(3,503	)		(2,040	)
Business acquisitions, net of cash acquired (Note 20)		(9,693	)		(184,473	)		(13,519	)
Other, net		3,156			1,480			2,317
Net Cash Used In Investing Activities		(308,090	)		(376,829	)		(139,034	)
Cash Flows From Financing Activities
Revolving debt and bank overdrafts, net (Note 6)		186,551			2,861			—
Other debt borrowings (Note 6)		75,000			200,000			—
Other debt repayments (Note 6)		(37,857	)		(37,858	)		(23,571	)
Dividends paid		(30,573	)		(28,083	)		(25,405	)
Company stock repurchased		(24,949	)		(16,969	)		(15,253	)
Stock option exercises		782			1,369			2,926
Other, net		(2,745	)		(3,987	)		(3,631	)
Net Cash Provided By (Used In) Financing Activities		166,209			117,333			(64,934	)
Effect of Exchange Rate Changes on Cash		(4,318	)		(3,391	)		3,307
Net Increase (Decrease) in Cash and Cash Equivalents		14,564			(190,752	)		34,555
Cash and Cash Equivalents at Beginning of Year		159,186			349,938			315,383
Cash and Cash Equivalents at End of Year	$	173,750		$	159,186		$	349,938
Supplemental Cash Flow Information
Cash payments of income taxes, net of refunds/payments	$	41,617		$	92,867		$	39,017
Cash payments of interest	$	16,526		$	9,542		$	9,329

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

41

Stepan Company

Consolidated Statements of Equity

For the year ended December 31, 2020

				STEPAN COMPANY STOCKHOLDERS
(In thousands, except share and per share amounts)	Total			Common Stock		Additional Paid-in Capital		Common Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Noncontrolling Interest
Balance, December 31, 2019	$	892,496		$	26,493	$	193,135	$	(114,139	)	$	(136,170	)	$	922,464		$	713
Issuance of 48,389 shares of common    stock under stock option plan		2,926			48		2,878		—			—			—			—
Purchase of 173,956 shares of common    stock		(15,253	)		—		—		(15,253	)		—			—			—
Stock-based and deferred compensation		6,583			117		10,703		(4,237	)		—			—			—
Net income		127,656			—		—		—			—			126,770			886
Other comprehensive income		(638	)		—		—		—			(711	)		—			73
Cash dividends paid:
Common stock ($1.130 per share)		(25,405	)		—		—		—			—			(25,405	)		—
Balance, December 31, 2020	$	988,365		$	26,658	$	206,716	$	(133,629	)	$	(136,881	)	$	1,023,829		$	1,672

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

42

Stepan Company

Consolidated Statements of Equity

For the year ended December 31, 2021

				STEPAN COMPANY STOCKHOLDERS
(In thousands, except share and per share amounts)	Total			Common Stock		Additional Paid-in Capital		Common Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Noncontrolling Interest
Balance, December 31, 2020	$	988,365		$	26,658	$	206,716	$	(133,629	)	$	(136,881	)	$	1,023,829		$	1,672
Issuance of 20,435 shares of common    stock under stock option plan		1,369			20		1,349		—			—			—			—
Purchase of 135,103 shares of common    stock		(16,969	)		—		—		(16,969	)		—			—			—
Stock-based and deferred compensation		9,734			83		12,755		(3,104	)		—			—			—
Net income		137,895			—		—		—			—			137,804			91
Other comprehensive income		(16,324	)		—		—		—			(16,355	)		—			31
Cash dividends paid:
Common stock ($1.250 per share)		(28,083	)		—		—		—			—			(28,083	)		—
Other(1)		(1,794	)															(1,794	)
Balance, December 31, 2021	$	1,074,193		$	26,761	$	220,820	$	(153,702	)	$	(153,236	)	$	1,133,550		$	—

(1)Reflects the derecognition of noncontrolling interest due to the dissolution of the China joint venture. See Note 1, Summary of Significant Accounting Policies, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K).

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

43

Stepan Company

Consolidated Statements of Equity

For the year ended December 31, 2022

				STEPAN COMPANY STOCKHOLDERS
(In thousands, except share and per share amounts)	Total			Common Stock		Additional Paid-in Capital		Common Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Retained Earnings
Balance, December 31, 2021	$	1,074,193		$	26,761	$	220,820	$	(153,702	)	$	(153,236	)	$	1,133,550
Issuance of 11,888 shares of common stock    under stock option plan		782			12		770		—			—			—
Purchase of 251,120 shares of common    stock		(24,949	)		—		—		(24,949	)		—			—
Stock-based and deferred compensation		13,735			68		15,612		(1,945	)		—			—
Net income		147,153			—		—		—			—			147,153
Other comprehensive income		(14,276	)		—		—		—			(14,276	)		—
Cash dividends paid:
Common stock ($1.370 per share)		(30,573	)		—		—		—			—			(30,573	)
Balance, December 31, 2022	$	1,166,065		$	26,841	$	237,202	$	(180,596	)	$	(167,512	)	$	1,250,130

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

44

Notes to Consolidated Financial Statements

For the years ended December 31, 2022, 2021 and 2020

1. Summary of Significant Accounting Policies

Nature of Operations

Stepan Company’s (the Company) operations consist predominantly of the production and sale of specialty and intermediate chemicals, which are sold to other manufacturers for use in a variety of end products. Principal markets for all products are manufacturers of cleaning and washing compounds (including detergents, shampoos, fabric softeners, toothpastes and household cleaners), paints, cosmetics, food, beverages, nutritional supplements, agricultural products, plastics, furniture, automotive equipment, insulation and refrigeration.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires Company management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses at the date of the financial statements and to provide disclosures of contingent assets, liabilities and related amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and all wholly-owned subsidiaries in which the Company exercises controlling influence. The equity method is used to account for investments in which the Company exercises significant but noncontrolling influence. Intercompany balances and transactions are eliminated in consolidation.

Prior to the fourth quarter of 2021, the Company had an 80 percent ownership interest in the Nanjing Stepan Jinling Chemical Limited Liability Company (a joint venture) and exercised controlling influence over the entity. As a result, the China joint venture results were included in the Company’s consolidated financial statements. The partner’s interest in the joint venture’s net income was reported in the net income attributable to noncontrolling interest line of the consolidated statements of income and its interest in the net assets of the joint venture was reported in the noncontrolling interest line (a component of equity separate from Company equity) of the consolidated balance sheets. The joint venture was dissolved during the fourth quarter of 2021.

Business Combinations

The Company makes acquisitions from time to time. When such acquisitions occur, the Company applies the accounting guidance per FASB ASC Topic 805, Business Combinations (ASC 805), to determine whether the acquisition should be treated as an asset acquisition or a business combination. When the acquisition meets the criteria of a business combination the Company recognizes the identifiable assets acquired and liabilities assumed at their estimated fair values as of the date of the acquisition. The Company recognizes goodwill for any portion of the purchase price that exceeds the sum of the net fair value of all the assets purchased in the acquisition and the liabilities assumed. Considerable estimates, complex judgments and assumptions are typically required to arrive at the fair value of elements acquired in a business combination, inclusive of discount rates, customer attrition rates, royalty rates, economic lives, and estimated future cash flows expected to be generated from the assets acquired. These items are typically most relevant to the fair valuation of identifiable intangible assets and property, plant and equipment.

In some instances, the purchase price allocation of an acquisition is not complete by the end of a reporting period. This situation most typically arises when an acquisition is complex and/or completed very close to the end of a reporting period and all necessary information is not available by the end of the reporting period in which the acquisition occurs. In these instances, the Company reports provisional amounts for any incomplete items and makes subsequent adjustments as necessary information becomes available or determines that additional information is not obtainable. Any subsequent adjustments could have a material impact on the Company’s financial position or results of operations as they could impact the initial fair values assigned to intangible assets and property, plant and equipment and/or their estimated economic lives. ASC 805 requires purchase price allocations to be finalized within one year from the acquisition date.

Cash and Cash Equivalents

The Company considers all highly liquid investments with purchased maturities of three months or less to be cash equivalents.

At December 31, 2022, the Company’s cash and cash equivalents totaled $173,750,000 including $64,851,000 in money market funds each rated AAAm by Standard and Poor’s, Aaa-mf by Moody’s and AAAmmf by Fitch. Cash in U.S. demand deposit accounts

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and certificates of deposit totaled $11,811,000 and cash of the Company’s non-U.S. subsidiaries held outside the U.S. totaled $97,088,000 as of December 31, 2022. At December 31, 2021, the Company’s cash and cash equivalents totaled $159,186,000 including $46,689,000 in money market funds, each of which was rated AAAm by Standard and Poor’s, Aaa-mf by Moody’s and AAAmmf by Fitch. Cash in U.S. demand deposit accounts totaled $25,253,000 and cash of the Company’s non-U.S. subsidiaries held outside the U.S. totaled $87,244,000 as of December 31, 2021.

Receivables and Credit Risk/Losses

Receivables are stated net of allowances for doubtful accounts and other allowances and primarily include trade receivables from customers, as well as nontrade receivables from suppliers, governmental tax agencies and others.

The Company is exposed to both credit risk and losses on accounts receivable balances. The Company’s credit risk and loss exposure predominately relates to the sale of products to its customers. When extending credit to customers the Company evaluates a customer’s credit worthiness based on a combination of qualitative and quantitative factors, inclusive of, but not limited to, a customer’s credit rating from external providers, financial condition and past payment experience. The Company performs credit reviews on all customers at inception and on a scheduled basis thereafter dependent on customer risk and the level of credit extended. Payment terms extended are short term in duration, typically ranging from 30 to 60 days. The majority of the Company’s sales are made to large companies that are able to weather periodic changes in economic conditions. This risk of losses is further mitigated by the Company’s diverse customer base, which is dispersed over various geographic regions and industrial sectors. No single customer comprised more than 10 percent of the Company’s consolidated net sales in 2022, 2021 or 2020.

The Company maintains allowances for potential credit losses. With the adoption of ASU No. 2016-13, Financial Instruments – Credit Losses, the Company assesses the likelihood of default based on various factors, including the length of time receivables are past due, historical experience, current economic conditions and forward-looking economic forecasts. The Company also evaluates expected losses based on portfolios of data inclusive of geographical areas, specific end market uses of its products, etc. Although the Company’s historical credit loss experience has not been significant, its exposure to credit losses may increase if customers are adversely affected by economic challenges and/or uncertainty due to domestic or global recessions, disruptions due to pandemics, or other adverse global/regional events and customer specific factors. Specific customer allowances are recorded when a review of customer creditworthiness and current economic conditions indicate that collection is doubtful. General allowances are also maintained based on historical averages and trade receivable levels and incorporate existing economic conditions and forecast assumptions, when warranted. The Company reviews its reserves for credit losses on a quarterly basis. The Company also maintains other customer allowances that occur in the normal course of business.

The following is an analysis of the allowance for doubtful accounts and other accounts receivable allowances for the years ended December 31, 2022, 2021 and 2020:

(In thousands)	2022			2021			2020
Balance at January 1	$	10,157		$	10,133		$	9,325
Provision charged to income		1,374			943			864
Accounts written off, net of recoveries		(431	)		(919	)		(56	)
Balance at December 31	$	11,100		$	10,157		$	10,133

Inventories

Inventories are valued at cost, which is not in excess of net realizable value, and include material, labor and plant overhead costs. Currently, the first in, first out (FIFO) method is used to determine the cost of the Company’s inventory.

Property, Plant and Equipment

Depreciation of property, plant and equipment is provided on a straight-line basis over the estimated useful lives of the assets. Lives used for calculating depreciation are generally 30 years for buildings and 15 years for building improvements. For assets classified as machinery and equipment, lives generally used for calculating depreciation expense range from 10 to 15 years for manufacturing equipment, five to 10 years for furniture and fixtures, three to five years for vehicles and three to 10 years for computer equipment and software. The manufacturing of chemicals is capital intensive and a large majority of the assets included within machinery and equipment represent manufacturing equipment. Major renewals and betterments are capitalized in the property accounts, while maintenance and repairs ($82,110,000, $75,351,000, and $69,234,000 in 2022, 2021 and 2020, respectively), which do not renew or extend the life of the respective assets, are charged to operations as incurred. Land is not depreciated. The cost of property retired or sold, and the related accumulated depreciation, are removed from the accounts and any resulting gain or loss is reflected in income. Long-lived assets are reviewed for impairment when conditions exist that indicate the carrying amount of the assets may not be fully

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recoverable. Such conditions could include significant adverse changes in the business environment, significant declines in forecasted operations or an approved plan to discontinue an asset or an asset group before the end of its useful life.

Included in the computer equipment and software component of machinery and equipment are costs related to the acquisition and development of internal-use software. Capitalized costs for internal-use software include external direct costs of materials and services consumed in obtaining and developing the software. For development projects where major internal resources are committed, payroll and payroll-related costs incurred during the application development phase of the project are also capitalized. The capitalized costs are amortized over the useful lives of the software, which are generally three to 10 years. Costs incurred in the preliminary project phase are expensed. Deferred implementation costs for hosted cloud computing service arrangements are stated at historical cost and amortized on a straight-line basis over the term of the hosting arrangement.

Interest charges on borrowings applicable to major construction projects are capitalized.

Deferred Compensation

The Company sponsors deferred compensation plans that allow management employees to defer receipt of their annual cash incentive compensation and performance shares and outside directors to defer receipt of their fees and stock awards until retirement, departure from the Company or as elected by the participant. The plans allow for the deferred compensation to grow or decline based on the results of investment options chosen by the participants. The investment options include Company common stock and a limited selection of mutual funds. The Company funds the obligations associated with these plans by purchasing investment assets that match the investment choices made by the plan participants. A sufficient number of shares of treasury stock are maintained on hand to cover the equivalent number of shares that result from participants electing the Company common stock investment option. As a result, the Company must periodically purchase its common shares in the open market or in private transactions. Upon retirement or departure from the Company or at the elected time, participants receive cash amounts equivalent to the payment date value of the investment choices they have made or shares of Company common stock equal to the number of share equivalents held in the accounts.

Some plan distributions may be made in cash or Company common stock at the option of the participant. Other plan distributions can only be made in Company common stock. For deferred compensation obligations that may be settled in cash, the Company must record appreciation in the market value of the investment choices made by participants as additional compensation expense. Conversely, declines in the value of Company stock or the mutual funds result in a reduction of compensation expense since such declines reduce the cash obligation of the Company as of the date of the financial statements. These market price movements may result in significant period-to-period fluctuations in the Company’s income. The increases or decreases in compensation expenses attributable to market price movements are reported in the operating expenses section of the consolidated statements of income. Because the obligations that must be settled only in Company common stock are treated as equity instruments, fluctuations in the market price of the underlying Company stock do not affect earnings.

At December 31, 2022 and December 31, 2021, the Company’s deferred compensation liability was $43,005,000 and $61,219,000, respectively. In 2022 and 2021, approximately 47 percent of deferred compensation liability represented deferred compensation tied to the performance of the Company’s common stock. The remainder of the deferred compensation liability was tied to the chosen mutual fund investment assets. A $1.00 increase in the market price of the Company’s common stock will result in approximately $189,000 of additional compensation expense. A $1.00 reduction in the market price of the common stock will reduce compensation expense by a like amount. The expense or income associated with the mutual fund component will generally fluctuate in line with the overall percentage increase or decrease of the U.S. stock markets.

The mutual fund assets related to the deferred compensation plans are recorded on the Company’s balance sheet at cost when acquired and adjusted to their market values at the end of each reporting period. As allowed by generally accepted accounting principles, the Company elected the fair value option for recording the mutual fund investment assets. Therefore, market value changes for the mutual fund investment assets are recorded in the income statement in the same periods that the offsetting changes in the deferred compensation liabilities are recorded. Dividends, capital gains distributed by the mutual funds and realized and unrealized gains and losses related to mutual fund shares are recognized as investment income or loss in the other, net line of the consolidated statements of income.

Fair Value Measurements

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Furthermore, GAAP establishes a framework, in the form of a three-level hierarchy, for measuring fair value that prioritizes the inputs to valuation techniques used to measure fair value. The following describes the hierarchy levels:

Level 1 - quoted prices in active markets for identical assets and liabilities.

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Level 2 - inputs other than quoted prices included within Level 1 that are directly or indirectly observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 - unobservable inputs which reflect the entity’s own assumptions about the assumptions market participants use in pricing the assets and liabilities.

The Company applies the fair value measurement provisions of GAAP to any of its financial assets and liabilities that are carried at fair value on the consolidated balance sheets (see Note 2, Fair Value Measurements, of the notes to the Company’s consolidated financial statements included in Item 8 of this Form 10-K), its outstanding debt for disclosure purposes (see Note 2, Fair Value Measurements, of the notes to the Company’s consolidated financial statements included in Item 8 of this Form 10-K) and its pension plan assets (see Note 13, Postretirement Benefit Plans, of the notes to the Company’s consolidated financial statements included in Item 8 of this Form 10-K).

The Company also applies fair value measurements to nonfinancial assets and liabilities recorded in conjunction with business combinations and as part of impairment reviews for goodwill and other long-lived assets.

Revenue Recognition

The Company’s contracts typically have a single performance obligation that is satisfied at the time product is shipped and control passes to the customer. For a small portion of the business, performance obligations are deemed satisfied when product is delivered to a customer location. For arrangements where the Company consigns product to a customer location, revenue is recognized when the customer uses the inventory. The Company accounts for shipping and handling as activities to fulfill a promise to transfer a good. As such, shipping and handling fees billed to customers in a sales transaction are recorded in Net Sales and shipping and handling costs incurred are recorded in Cost of Sales. Volume and cash discounts due customers are estimated and recorded in the same period as the sales to which the discounts relate and are reported as reductions of revenue in the consolidated statements of income. See Note 21, Revenue from Contracts with Customers, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for more details.

Cost of Sales

Cost of sales is comprised of raw material costs (including inbound freight expense to deliver the raw materials), manufacturing plant labor expenses and various manufacturing overhead expenses, such as utilities, maintenance, operating supplies, amortization and manufacturing asset depreciation expenses. Cost of sales also includes outbound shipping and handling expenses, inter-plant transfer costs, warehouse expenses and rail car rental expenses.

Operating Expenses

Selling expenses are comprised of salaries and related fringe benefit expenses for marketing and sales personnel and operating costs, such as outside agent commissions, automobile rental and travel-related expenses, which support the sales and marketing functions. Bad debt charges and any depreciation expenses related to marketing assets (e.g., computers) are also classified as selling expenses.

Administrative expenses are comprised of salaries and related fringe benefit expenses and operating costs for the Company’s various administrative functions, which include information services, finance, legal, and human resources. The majority of environmental remediation expenses are also classified as administrative expense.

The Company’s research and development costs are expensed as incurred. These expenses are aimed at the discovery of new knowledge with the intent that such effort will be useful in developing and commercializing a new product or in bringing about a significant improvement to an existing product or process. Total research and development expenses were $40,902,000, $38,778,000, and $35,999,000 in 2022, 2021 and 2020, respectively. The remainder of research, development and technical service expenses reflected on the consolidated statements of income relate to technical services, which include routine product testing, quality control and sales service support.

Compensation expenses or income related to the Company’s deferred compensation plans is presented in the deferred compensation expense line in the Consolidated Statements of Income. For more details, see Note 12, Deferred Compensation, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K).

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Environmental Expenditures

Environmental expenditures that relate to current operations are typically recorded in cost of sales. Expenditures that mitigate or prevent environmental contamination and that benefit future operations are capitalized as assets and depreciated on a straight-line basis over the estimated useful lives of the assets, which are typically 10 years.

Estimated future expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are recorded as liabilities, with the corresponding charge typically recorded in administrative expenses, when environmental assessments and/or remedial efforts are probable and the cost or range of possible costs can be reasonably estimated. When no amount within the range is a better estimate than any other amount, the minimum amount in the range is accrued. Estimating the possible costs of remediation requires making assumptions related to the nature and extent of contamination and the methods and resulting costs of remediation. Some of the factors on which the Company bases its estimates include information provided by feasibility studies, potentially responsible party negotiations and the development of remedial action plans. Legal costs related to environmental matters are expensed as incurred. See Note 16, Contingencies, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for environmental contingencies details.

Goodwill and Other Intangible Assets

The Company’s intangible assets include patents, agreements not to compete, trademarks, customer lists and relationships, technological and manufacturing know-how, supply contracts and goodwill, all of which were acquired as part of business or product line acquisitions. Intangible assets other than goodwill are determined to have either finite or indefinite useful lives. The Company currently has no indefinite-life intangible assets other than goodwill. The values for intangible assets with finite lives are amortized over the useful lives of the assets. Currently, the useful lives for the Company’s finite-lived intangible assets are as follows: patents – 15 years; non-compete agreements – three years; trademarks – eight to 11 years; customer relationships – ten to 20 years and know-how – seven to 20 years. In addition, finite-life intangible assets are tested for impairment when events or changes in circumstances indicate that the carrying value of an intangible asset may not be recoverable. Goodwill is not amortized but is tested for impairment at least annually, or more frequently, if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit to which goodwill relates below the reporting unit’s carrying value. See Note 4, Goodwill and Other Intangibles, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for detailed information about goodwill and other intangible assets.

Income Taxes

Income taxes are accounted for under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

Deferred tax assets are recognized to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

Uncertain tax positions are recorded in accordance with ASC 740, Income Taxes, on the basis of a two-step process whereby (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying Consolidated Statements of Income. Accrued interest and penalties are included within the related tax liability line in the Consolidated Balance Sheet. See Note 9, Income Taxes, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for more information about the Company’s income taxes.

Translation of Foreign Currencies

For the Company’s consolidated foreign subsidiaries whose functional currency is the local foreign currency, assets and liabilities are translated into U.S. dollars at exchange rates in effect at year end and revenues and expenses are translated at average exchange rates for the year. Any resulting translation adjustments are included in the consolidated balance sheets in the accumulated other comprehensive loss line of stockholders’ equity. Gains or losses on foreign currency transactions are reflected in the other, net caption

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of the consolidated statements of income. The Company has four foreign subsidiaries whose functional currencies are the U.S. dollar. For these subsidiaries, nonmonetary assets and liabilities are translated at historical rates, monetary assets and liabilities are translated at exchange rates in effect at year end, revenues and expenses are translated at average exchange rates for the year and translation gains and losses are included in the other, net caption of the consolidated statements of income.

Stock-Based Compensation

The Company grants stock options, stock awards (including performance-based stock awards) and SARs to certain employees under its incentive compensation plans. The Company calculates the fair values of stock options, stock awards and SARs on the date such instruments are granted. The fair values of the stock options and stock awards are then recognized as compensation expense over the vesting periods of the instruments. The Company’s SARs granted prior to 2015 are cash-settled, and SARs granted in 2015 and later are stock-settled. The cash-settled SARs are accounted for as liabilities that must be re-measured at fair value at the end of each reporting period. Compensation expense for each reporting period is calculated as the period-to-period change (or portion of the change, depending on the proportion of the vesting period that has been completed at the reporting date) in the fair value of the cash-settled SARs. Compensation expense for the stock-settled SARs is calculated in the same way as compensation expense for stock options. See Note 11, Stock-based Compensation, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for detailed information about the Company’s stock-based compensation.

Earnings Per Share

Basic earnings per share amounts are computed as net income attributable to the Company divided by the weighted-average number of common shares outstanding. Diluted earnings per share amounts are based on the weighted-average number of common shares outstanding plus the weighted-average of net common shares (under the treasury stock method) that would be outstanding assuming the exercise of outstanding stock options and stock-settled SARs, the vesting of unvested stock awards that have no performance or market condition and the issuance of contingent performance stock awards. See Note 18, Earnings Per Share, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for detailed information about the Company’s earnings per share calculations.

Comprehensive Income and Accumulated Other Comprehensive Income

Comprehensive income includes net income and all other non-owner changes in equity that are not reported in net income. Comprehensive income is disclosed in the consolidated statements of comprehensive income. Accumulated other comprehensive income (AOCI) is reported as a component of stockholders’ equity in the Company’s consolidated balance sheets. See Note 19, Accumulated Other Comprehensive Income (Loss), of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for detailed information regarding changes in the Company’s AOCI and reclassifications out of AOCI to income.

Segment Reporting

The Company reports financial and descriptive information about its reportable operating segments. Operating segments are components of the Company that have separate financial information that is regularly evaluated by the chief operating decision maker to assess segment performance and allocate resources. The Company discloses segment revenue, operating income, assets, capital expenditures and depreciation and amortization expenses. Enterprise-wide financial information about the geographic locations in which the Company earns revenues and holds assets is also disclosed. See Note 17, Segment Reporting, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for detailed information about the Company’s segment reporting.

Derivative Instruments

Derivative instruments are recognized in the consolidated balance sheets as either assets or liabilities measured at fair value. For derivative instruments that are not designated as hedging instruments, changes in the fair values of the derivative instruments are recognized currently in earnings. For derivative instruments designated as hedging instruments, depending on the nature of the hedge, changes in the fair values of the derivative instruments are either offset in earnings against changes in the fair values of the hedged items or recognized in AOCI until the hedged transaction is recognized in earnings. At the time a hedging relationship is designated, the Company establishes the method it will use for assessing the effectiveness of the hedge and the measurement approach for determining the ineffective aspect of the hedge. Company policy prohibits the use of derivative instruments for trading or speculative purposes. See Note 3, Derivative Instruments, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for further information regarding the Company’s use of derivatives.

At December 31, 2022, the Company held open forward contracts for the purchase of 1.6 million dekatherms of natural gas in 2023 at a cost of $9,381,000. The Company uses forward contracts to minimize its exposure to volatile natural gas prices. Because the

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Company anticipates taking delivery of the natural gas for use in its operations, the forward contracts qualify for the normal purchase exception provided under U.S. GAAP for derivative instruments. The Company has elected the exception for such contracts. As a result, the forward contracts are not accounted for as derivative instruments. The cost of natural gas is charged to expense at the time the natural gas is delivered and used.

Recent Accounting Pronouncements

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effect of Reference Rate Reform on Financial Reporting. This update provides optional guidance for a limited period of time to ease the burden of implementing the usage of new reference rates. The amendments apply to contract modifications that replace a reference rate affected by reference rate reform and contemporaneous modifications of other contract terms related to the replacement of the reference rate. If elected, the optional expedients to contract modifications must be applied consistently for all eligible contracts or eligible transactions. The original timeframe for electing optional expedients to contract modifications was between March 12, 2020 and December 31, 2022. In December 2022, the FASB issued ASU No. 2022-06 deferring the sunset date of Topic 848 from December 31, 2022, to December 31, 2024. The guidance should be applied prospectively. Other than electing select expedients associated with an interest rate swap, the Company has not currently utilized any of the optional expedients of exceptions available under this ASU. The Company will continue to assess whether this ASU is applicable throughout the effective period.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers which improves the accounting for acquired revenue contracts with customers in a business combination by addressing current inconsistencies in the recognition of acquired contract liabilities as well as payment terms and their effect on subsequent revenue recognized by the acquirer. Under current GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers and other similar contracts that are accounted for in accordance with ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) at fair value on the acquisition date. This amendment requires acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The amendments in this update are effective for fiscal years beginning after December 31, 2022 and should be applied prospectively. The Company is prepared to implement the guidance of ASU No. 2021-08 when it becomes applicable.

2. Fair Value Measurements

The following were the financial instruments held by the Company at December 31, 2022 and 2021, and the methods and assumptions used to estimate the instruments’ fair values:

Cash and cash equivalents

Carrying value approximated fair value because of the short maturity of the instruments. Fair value of cash and cash equivalents is a Level 1 measurement.

Derivative assets and liabilities

Derivative assets and liabilities include the foreign currency exchange and interest rate swap contracts discussed in Note 3, Derivative Instruments, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K). Fair value and carrying value were the same because the contracts were recorded at fair value. The fair values of the foreign currency contracts were calculated as the difference between the applicable forward foreign exchange rates at the reporting date and the contracted foreign exchange rates multiplied by the contracted notional amounts. The fair value of the interest rate swaps was calculated as the difference between the contracted swap rate and the floating interest rate multiplied by the present value of the notional amount of the contract. The Company’s fair value measurements for derivative assets and liabilities fall within Level 2 of the fair value hierarchy.

See the table that follows the financial instrument descriptions for the reported fair values of derivative assets and liabilities.

Long-term investments

Long-term investments include the mutual fund assets the Company held to fund a portion of its deferred compensation liabilities and all of its non-qualified supplemental executive defined contribution obligations. See the defined contribution plans section of Note 13, Postretirement Benefit Plans, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K). Fair value and carrying value were the same because the mutual fund assets were recorded at fair value in accordance with the FASB’s fair value option guidance. Fair values for the mutual funds were calculated using the published market price per unit at the reporting date multiplied by the number of units held at the reporting date and therefore its fair value measurements for mutual fund assets fall within Level 1 of the fair value hierarchy.

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See the table that follows the financial instrument descriptions for the reported fair value of long-term investments.

Debt obligations

The fair value of debt with original maturities greater than one year comprised the combined present values of scheduled principal and interest payments for each of the various loans, individually discounted at rates equivalent to those which could be obtained by the Company for new debt issues with durations equal to the average life to maturity of each loan. The fair values of the remaining Company debt obligations approximated their carrying values due to the short-term nature of the debt. The Company’s fair value measurements for debt fall in level 2 of the fair value hierarchy.

At December 31, 2022 and 2021, the fair values and related carrying values of debt, including current maturities, were as follows (the fair value and carrying value amounts are presented without regard to unamortized debt issuance costs of $686,000 and $710,000 as of December 31, 2022 and 2021, respectively):

	December 31
(In thousands)	2022		2021
Fair value	$	541,029	$	369,456
Carrying value		587,826		364,290

The following tables present financial assets and liabilities, excluding cash and cash equivalents, measured on a recurring basis at fair value as of December 31, 2022 and 2021, and the level within the fair value hierarchy in which the fair value measurement falls:

(In thousands)	December 31, 2022		Level 1		Level 2		Level 3
Mutual fund assets	$	23,294	$	23,294	$	—	$	—
Derivative assets:
Interest rate contracts		8,357		—		8,357		—
Foreign currency contracts		513		—		513		—
Total assets at fair value	$	32,164	$	23,294	$	8,870	$	—
Derivative liabilities:
Foreign currency contracts	$	525	$	—	$	525	$	—

(In thousands)	December 31, 2021		Level 1		Level 2		Level 3
Mutual fund assets	$	34,495	$	34,495	$	—	$	—
Derivative assets:
Foreign currency contracts		436		—		436		—
Total assets at fair value	$	34,931	$	34,495	$	436	$	—
Derivative liabilities:
Foreign currency contracts	$	338	$	—	$	338	$	—

3. Derivative Instruments

The Company is exposed to certain risks relating to its ongoing business operations. The primary risk managed by the use of derivative instruments is foreign currency exchange risk. The Company holds forward foreign currency exchange contracts that are not designated as any type of accounting hedge as defined by U.S. generally accepted accounting principles. The Company uses these contracts to manage its exposure to exchange rate fluctuations on certain Company subsidiary cash, accounts receivable, accounts payable and other obligation balances that are denominated in currencies other than the entities’ functional currencies. The forward foreign exchange contracts are recognized on the balance sheet as either an asset or a liability measured at fair value. Gains and losses arising from recording the foreign exchange contracts at fair value are reported in earnings as offsets to the losses and gains reported in earnings arising from the re-measurement of the receivable and payable balances into the applicable functional currencies. At December 31, 2022 and 2021, the Company had open forward foreign currency exchange contracts, all with durations of one to six months, to buy or sell foreign currencies with a U.S. dollar equivalent of $56,746,000 and $51,542,000, respectively.

The Company is currently exposed to volatility in short-term interest rates and has mitigated certain portions of that risk by using an interest rate swap. The interest rate swap is recognized on the balance sheet as either an asset or a liability measured at fair value. At December 31, 2022, the Company held an interest rate swap contract with a notional value of $100,000,000 that was designated as a cash flow hedge. Period-to-period changes in the fair value of the interest rate swap are initially recognized as gains or losses in other

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comprehensive income. As the interest rate swap contract is settled, the corresponding gain or loss is reclassified out of accumulated other comprehensive income (AOCI) into earnings. The maturity date of the current interest swap contract is March 10, 2027 which is closely aligned with the June 24, 2027 maturity of the Company’s revolving credit facility.

The fair values of the derivative instruments held by the Company on December 31, 2022, and December 31, 2021, are disclosed in Note 2, Fair Value Measurements, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K). Derivative instrument gains and losses for the years ended December 31, 2022, 2021 and 2020, were immaterial. For amounts reclassified out of AOCI into earnings for the years ended December 31, 2022, 2021 and 2020, see Note 19, Accumulated Other Comprehensive Income (Loss), of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K).

4. Goodwill and Other Intangible Assets

The changes in the carrying value of goodwill for the years ended December 31, 2022 and 2021, were as follows:

	Surfactants Segment						Polymer Segment						Specialty Products Segment				Total
(In thousands)	2022			2021			2022			2021			2022		2021		2022			2021
Balance as of January 1
Goodwill	$	25,689		$	25,537		$	74,482		$	5,419		$	483	$	483	$	100,654		$	31,439
Accumulated impairment loss		(3,467	)		(3,467	)		—			—			—		—		(3,467	)		(3,467	)
Goodwill, net		22,222			22,070			74,482			5,419			483		483		97,187			27,972
Goodwill acquired (1)		1,792			—			—			72,467			—		—		1,792			72,467
Goodwill measurement period adjustment (1)		—			940			—			—			—		—		—			940
Goodwill impairment		(978	)		—			—			—			—		—		(978	)		—
Foreign currency translation		656			(788	)		(2,735	)		(3,404	)		—		—		(2,079	)		(4,192	)
Balance as of December 31
Goodwill		28,137			25,689			71,747			74,482			483		483		100,367			100,654
Accumulated impairment loss		(4,445	)		(3,467	)		—			—			—		—		(4,445	)		(3,467	)
Goodwill, net	$	23,692		$	22,222		$	71,747		$	74,482		$	483	$	483	$	95,922		$	97,187

(1)See Note 20, Acquisitions, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for information regarding the goodwill acquired in a business combination.

The Company typically tests its goodwill balances for impairment in the second quarter of each calendar year. Testing is completed more frequently when triggering events or changes in circumstances indicate it is more likely than not that the fair value of a reporting unit to which goodwill relates has declined below its carrying value. During the second quarter of 2022 the Company completed its annual goodwill impairment testing and concluded that the goodwill related to its Philippines reporting unit was impaired. The Philippines reporting unit is part of the Company’s Surfactant segment. Goodwill impairment was recognized as a result of the reporting unit’s fair value declining below its carrying value. The Company estimates the fair value of each of its reporting units based on the average of market and income-based computations. The Philippines impairment primarily resulted from lost market share at one major customer combined with higher unit overhead costs. The Company recorded a non-cash charge of $978,000 in the Consolidated Statements of Income for the year ended December 31, 2022. The impairment charge equaled the entire balance of the Philippines’ goodwill. The Company concluded that there was no goodwill impairment at any of its other reporting units based on its quantitative testing completed during the second quarter of 2022 and its qualitative assessment at the year end.

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The following table presents the components of other intangible assets, all of which have finite lives, as of December 31, 2022 and 2021. The year-over-year changes in gross carrying values mainly resulted from the acquisition that took place in 2022 and the effects of foreign currency translation.

	Gross Carrying Value				Accumulated Amortization
	December 31				December 31
(In thousands)	2022		2021		2022		2021
Other Intangible Assets:
Patents (2)	$	7,411	$	7,411	$	6,363	$	6,139
Non-compete agreements (2)		635		594		548		404
Trademarks (2)		11,384		12,013		5,346		4,160
Customer lists/relationships (2)		46,972		44,447		12,491		9,557
Supply contract		1,551		1,472		1,551		1,472
Know-how (1)(2)		28,908		27,029		12,536		10,450
Total	$	96,861	$	92,966	$	38,835	$	32,182

(1)Know-how includes intellectual property rights covering proprietary information, written formulae, trade secrets or secret processes, inventions and developmental products (whether patentable or not), discoveries, improvements, compositions, manufacturing processes, manuals, specifications and technical data.

(2)The 2021 balances include intangible assets acquired as part of the Company’s acquisition of INVISTA’s aromatic polyester polyol business and associated assets in January 2021 and the Company’s fermentation plant acquisition in February 2021. The 2022 balances include intangible assets acquired as part of the Company’s PerformanX acquisition in September 2022. See Note 20, Acquisitions, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for additional details.

Aggregate amortization expense for the years ended December 31, 2022, 2021 and 2020, was $6,835,000, $7,292,000, and $3,621,000, respectively. The Company typically recognizes amortization expense within the Cost of Sales line item on the income statement. Estimated amortization expense for identifiable intangibles assets for each of the five succeeding fiscal years is as follows:

(In thousands)
For year ended 12/31/23	$	7,237
For year ended 12/31/24		6,950
For year ended 12/31/25		6,509
For year ended 12/31/26		6,186
For year ended 12/31/27		6,106

5. Inventories

The composition of inventories was as follows:

	December 31
(In thousands)	2022		2021
Finished products	$	250,373	$	184,010
Raw materials		152,158		121,528
Total inventories	$	402,531	$	305,538

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6. Debt

At December 31, 2022 and 2021, debt was comprised of the following:

(In thousands)	Maturity Dates	December 31, 2022		December 31, 2021
Senior unsecured notes
3.95% (net of unamortized debt issuance cost of $186 and     $230 for 2022 and 2021, respectively)	2023-2027	$	71,243	$	85,485
3.86% (net of unamortized debt issuance cost of $125 and     $181 for 2022 and 2021, respectively)	2023-2025		42,732		56,962
4.86% (net of unamortized debt issuance cost of $30 and     $69 for 2022 and 2021 respectively)	2023		9,260		18,502
2.30% (net of unamortized debt issuance cost of $122 and     $100 for 2022 and 2021, respectively)	2024-2028		49,878		49,900
2.37% (net of unamortized debt issuance cost of $128 and     $108 for 2022 and 2021, respectively)	2024-2028		49,872		49,892
2.73% (net of unamortized debt issuance cost of $55 and     $22 for 2022 and 2021, respectively)	2025-2031		99,945		99,978
2.83% (net of unamortized debt issuance cost of $40 and     $0 for 2022 and 2021, respectively)	2026-2032		74,960		—
Revolving credit facility and term loan borrowing	2023-2027		189,250		—
Debt of foreign subsidiaries
Unsecured bank debt, foreign currency	2023		—		2,861
Total debt		$	587,140	$	363,580
Less current maturities			132,111		40,718
Long-term debt		$	455,029	$	322,862

The Company’s long-term debt financing is currently comprised of certain senior unsecured notes issued to insurance companies in private placement transactions, totaling $397,890,000 as of December 31, 2022. These notes are denominated in U.S. dollars and have fixed interest rates ranging from 2.30 percent to 4.86 percent. The notes had original maturities of seven to 12 years with mandatory principal payments beginning four, five and six years after issuance. The Company will be required to make principal payments on the currently outstanding notes from 2023 to 2032.

On March 1, 2022, pursuant to a note purchase and master note agreement dated as of June 10, 2021 (the NYL note purchase agreement), the Company issued and sold $25,000,000 in aggregate principal amount of its 2.83% Senior Notes, Series 2022-A, due March 1, 2032 (the Series 2022-A Notes). In addition, on March 1, 2022, pursuant to a note purchase and private shelf agreement dated as of June 10, 2021 (the Prudential note purchase agreement), the Company issued and sold $50,000,000 in aggregate principal amount of its 2.83% Senior Notes, Series 2022-B, due March 1, 2032 (the Series 2022-B Notes). The Series 2022-A Notes and the Series 2022-B Notes bear interest at a fixed rate of 2.83%, with interest to be paid semi-annually and with equal annual principal payments beginning on March 1, 2026 and continuing through final maturity on March 1, 2032. The proceeds of the issuance of the Series 2022-A Notes and the Series 2022-B Notes are being used primarily for capital expenditures, to pay down existing debt and for other corporate purposes. The NYL note purchase agreement and the Prudential note purchase agreement require the maintenance of certain financial ratios and covenants that are substantially similar to the Company’s existing long-term debt and provide for customary events of default.

On June 24, 2022, the Company entered into a credit agreement with a syndicate of banks. The credit agreement provides for credit facilities in an initial aggregate principal amount of $450,000,000, consisting of (a) a $350,000,000 multi-currency revolving credit facility and (b) a $100,000,000 delayed draw term loan credit facility, each of which matures on June 24, 2027. This credit agreement replaced the Company’s prior $350,000,000 revolving credit agreement. The Company maintains import letters of credit, and standby letters of credit under its workers’ compensation insurance agreements and for other purposes, as needed from time to time, which are issued under the revolving credit agreement. As of December 31, 2022, the Company had outstanding letters of credit totaling $10,870,000 and $189,250,000 of outstanding borrowings under the credit agreement, inclusive of a $98,750,000 delayed-draw term loan. There was $249,880,000 available under the credit agreement as of December 31, 2022.

Loans under the credit agreement may be incurred, at the discretion of the Company, with terms to maturity of one month, three months or six months. The Company may choose from two interest rate options: (1) Adjusted Term Secured Overnight Financing

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Rate (SOFR) applicable to USD loans and relevant benchmark rates applicable to EUR, GBP and CAD loans plus spreads ranging from 1.125 percent to 1.750 percent, depending on the Company’s net leverage ratio, or (2) the prime rate plus 0.125 percent to 0.750 percent, depending on the Company’s net leverage ratio. The credit agreement requires the Company to pay a commitment fee ranging from 0.125 percent to 0.250 percent per annum, which also depends on the Company’s net leverage ratio. The credit agreement requires the maintenance of certain financial ratios and compliance with certain other covenants that are similar to the Company’s existing debt agreements, including net worth, interest coverage, leverage financial covenants and limitations on restricted payments, indebtedness and liens.

The Company’s foreign subsidiaries had no debt at December 31, 2022.

The Company’s material debt agreements contain provisions which, among other covenants, require maintenance of certain financial ratios and place limitations on additional debt, investments and payment of dividends. Based on the loan agreement provisions that place limitations on dividend payments, unrestricted retained earnings (i.e., retained earnings available for dividend distribution) were $224,189,000 and $468,095,000 at December 31, 2022 and 2021, respectively.

Debt at December 31, 2022, matures as follows: $132,111,000 in 2023; $53,572,000 in 2024; $69,108,000 in 2025; $66,786,000 in 2026; $135,535,000 in 2027 and $130,714,000 after 2027. Debt maturing in 2023 includes $41,608,000 of scheduled repayments under long-term debt agreements. The Company’s foreign subsidiaries routinely have short-term working capital loans. These short-term loan agreements could be supplemented, if necessary, by the Company’s $350,000,000 revolving credit facility entered into on June 24, 2022.

Net interest expense for the years ended December 31, 2022, 2021 and 2020, comprised the following:

(In thousands)	2022			2021			2020
Interest expense	$	17,852		$	10,145		$	9,859
Interest income		(1,080	)		(1,255	)		(2,171	)
		16,772			8,890			7,688
Capitalized interest		(6,963	)		(3,137	)		(2,279	)
Interest expense, net	$	9,809		$	5,753		$	5,409

7. Leases

The Company’s operating leases are primarily comprised of real estate, railcar, storage tank, warehouse, auto, trailer and manufacturing/office equipment leases. Real estate and railcars comprise approximately 62 percent and 24 percent, respectively, of the Company’s consolidated right of use (ROU) asset balance. Except for real estate, typical lease terms range from one to ten years. Real estate lease terms typically range from one to fifty years. The Company’s four principal real estate leases consist of the office lease for the corporate headquarters in Northbrook, Illinois and land leases in the Philippines, Singapore and Lake Providence, Louisiana. As of December 31, 2022, the Company had railcars, equipment and storage tank leases valued at approximately $8,229,000, that had not commenced. These leases will commence during the first three quarters of 2023 with lease terms ranging 1 year to 10 years.

As most of the Company’s leases do not provide an implicit borrowing rate, the Company uses its incremental borrowing rate (IBR) based on the information available at the commencement date in determining the present value of lease payments. IBRs were specifically determined for the United States, Philippines, Singapore, Brazil and China, typically for five-year increments. The U.S. IBR was used for all other countries as the leases in these countries are not material. The total value of leases that reside in the five countries identified above represents approximately 97 percent of the Company’s consolidated ROU asset balance. Lease cost is recognized in both the Cost of Sales and Operating Expenses sections of the Consolidated Statements of Income.

(In thousands)	Year ended December 31, 2022		Year ended December 31, 2021
Lease Cost
Operating lease cost	$	16,042	$	15,630
Short-term lease cost		7,029		6,570
Variable lease cost		1,206		892
Total lease cost	$	24,277	$	23,092
Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow from operating leases	$	15,963	$	14,885
Right-of-use assets obtained in exchange for operating lease liabilities		7,588		19,610

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The following table outlines maturities of lease liabilities as of December 31, 2022:

(In thousands)
Undiscounted Cash Flows:
2023	$	14,683
2024		9,461
2025		6,892
2026		5,226
2027		4,767
Subsequent to 2027		34,063
Total Undiscounted Cash Flows	$	75,092
Less: Imputed interest		(11,481	)
Present value	$	63,611
Current operating lease liabilities (1)		13,052
Non-current operating lease liabilities		50,559
Total lease liabilities	$	63,611

(1)This item is included in Accrued liabilities line on the Company’s Consolidated Balance Sheet.

Weighted-average remaining lease term-operating leases	10 Years
Weighted-average discount rate-operating leases	3.2%

8. Other, Net

Other, net in the Consolidated Statements of Income included the following for the years ended December 31, 2022, 2021 and 2020:

(In thousands)	2022			2021		2020
Foreign exchange gains (losses)	$	(2,871	)	$	501	$	1,367
Investment income		1,757			2,886		1,681
Realized and unrealized gains (losses) on investments		(8,188	)		2,289		3,143
Net periodic benefit cost		690			302		(874	)
Other retirement obligation		(212	)		559		(363	)
Gain on dissolution of the China joint venture		—			972		—
Other, net	$	(8,824	)	$	7,509	$	4,954

9. Income Taxes

The provisions for taxes on income and the related income before taxes for the years ended December 31, 2022, 2021 and 2020, were as follows:

(In thousands)	2022			2021			2020
Taxes on Income
Federal
Current	$	39,328		$	35,057		$	21,889
Deferred		(20,636	)		(25,653	)		(3,453	)
State
Current		9,875			9,320			4,305
Deferred		(6,943	)		(6,556	)		(562	)
Foreign
Current		19,799			23,870			21,723
Deferred		127			(1,396	)		(491	)
Total	$	41,550		$	34,642		$	43,411
Income before Taxes
Domestic	$	103,831		$	77,696		$	81,906
Foreign		84,872			94,841			89,161
Total	$	188,703		$	172,537		$	171,067

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The variations between the effective and statutory U.S. federal income tax rates are summarized as follows:

	2022						2021						2020
(In thousands)	Amount			%			Amount			%			Amount			%
Federal income tax provision at statutory tax rate	$	39,628			21.0		$	36,233			21.0		$	35,924			21.0
State income tax provision, less applicable federal tax benefit		2,316			1.2			2,184			1.3			2,956			1.7
Foreign income taxed at different rates		2,417			1.3			2,356			1.4			1,964			1.1
U.S. taxation of foreign earnings (1)		1,616			0.9			(134	)		(0.1	)		4,134			2.4
Unrecognized tax benefits		3,324			1.8			1,775			1.0			1,454			0.8
Prior years return to provision true-up (2)		(1,915	)		(1.0	)		(3,314	)		(1.9	)		(588	)		(0.3	)
Stock based compensation, excess tax benefits		(580	)		(0.3	)		(1,287	)		(0.7	)		(1,816	)		(1.1	)
U.S. tax credits (3)		(4,508	)		(2.4	)		(2,692	)		(1.6	)		(1,831	)		(1.1	)
Non-deductible expenses and other items, net		(748	)		(0.5	)		(479	)		(0.3	)		1,214			0.9
Total income tax provision	$	41,550			22.0		$	34,642			20.1		$	43,411			25.4

(1)Includes cost of global intangible low-taxed income (GILTI) in 2022, 2021 and 2020 plus other taxes paid or withheld on cash repatriated from foreign countries in 2021 and 2020. For 2022, includes Subpart F activity. For 2021, includes the benefit of separate limitation loss foreign tax credit attributes, related to prior years, that were utilized in 2021.

(2)For 2022, amount resulted from a higher federal research credit and lower GILTI. For 2021, amount resulted from a higher federal research credit, higher foreign-derived intangible income (FDII), and lower GILTI.

(3)For 2022, the increase was partially due to certain pilot model design and engineering costs.

At December 31, 2022 and 2021, the tax effects of significant temporary differences representing deferred tax assets and liabilities were as follows:

(In thousands)	2022			2021
Deferred Tax Assets:
Pensions	$	144		$	537
Deferred revenue		3,483			3,444
Other accruals and reserves		13,949			13,331
Legal and environmental accruals		10,283			7,385
Deferred compensation		13,845			16,210
Bad debt and rebate reserves		3,729			2,706
Non-U.S. subsidiaries net operating loss carryforwards		3,634			1,494
Amortization of intangibles		28,311			5,092
Inventories		10,577			3,108
Tax credit carryforwards		8,183			2,829
	$	96,138		$	56,136
Deferred Tax Liabilities:
Depreciation	$	(52,130	)	$	(42,299	)
Unrealized foreign exchange loss		(3,603	)		(2,908	)
Other		(3,064	)		(1,614	)
	$	(58,797	)	$	(46,821	)
Valuation Allowance	$	(836	)	$	(862	)
Net Deferred Tax Assets	$	36,505		$	8,453
Reconciliation to Consolidated Balance Sheet:
Non-current deferred tax assets (in other non-current    assets)		46,684			20,944
Non-current deferred tax liabilities		(10,179	)		(12,491	)
Net Deferred Tax Assets	$	36,505		$	8,453

Earnings generated by a foreign subsidiary are presumed to ultimately be transferred to the parent company. Therefore, the establishment of deferred taxes may be required with respect to the excess of the investment value for financial reporting over the tax basis of investments in those foreign subsidiaries (also referred to as book-over-tax outside basis differences). A company may overcome this presumption and forgo recording a deferred tax liability in its financial statements if it can assert that management has

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the intent and ability to indefinitely reinvest the earnings of its foreign subsidiaries. Pursuant to the 2017 U.S. Tax Cuts and Jobs Act (Tax Act), the Company’s foreign earnings have been subject to U.S. federal taxes. The Company now has the ability to repatriate to the U.S. parent the cash associated with these foreign earnings with little additional U.S. federal taxes. This cash may, however, be subject to foreign income and/or local country taxes if repatriated to the United States. In addition, repatriation of some foreign cash balances may be further restricted by local laws. As such, the Company intends to limit its distributions to earnings previously taxed in the U.S. or earnings that would qualify for the 100 percent dividends received deduction provided for in the Tax Act as long as such distributions would not result in any significant foreign taxes. In 2022, the Company did not repatriate any cash to the U.S. parent company. In 2021, the Company repatriated $15,340,000 between May and December from its Brazilian, Colombian, and Mexican subsidiaries. The Company did not incur any incremental taxes as a result of this repatriation. In anticipation of the Company’s acquisition of INVISTA’s aromatic polyester polyol business and associated assets, the Company’s Philippines entities declared a cash dividend of approximately $20,700,000 to the U.S. parent in December 2020. The Company recorded $2,384,000 of additional income tax expense in 2020 as a result of the expected repatriation. The Company’s U.S. parent received the cash in 2021. The effect of the adjustment on the 2020 effective tax rate was an increase of approximately 1.4 percent.

The Company evaluated its indefinite reinvestment assertion with regards to certain accumulated foreign earnings as of December 31, 2022. The Company does not consider the undistributed earnings of its Canadian subsidiary to be indefinitely reinvested in foreign operations to the extent of the subsidiary’s paid-up capital (PUC) as determined under Canadian tax law which is used to determine tax-free distributions for Canadian tax purposes. The Company also does not consider the undistributed earnings of one of its Dutch subsidiaries, and one of its Singapore subsidiaries to be indefinitely reinvested in foreign operations. A distribution from any of these subsidiaries should not result in any significant foreign taxes to the extent of the distribution limitations discussed above and therefore, the Company has not recognized a deferred tax liability for these undistributed earnings as of December 31, 2022. In 2021, the Company dissolved its China joint venture that prior to dissolution had not been considered indefinitely reinvested. The dissolution resulted in $142,000 of additional income tax expense in 2021. The Company considers the undistributed earnings of its remaining foreign subsidiaries to be indefinitely reinvested in foreign operations. At this time, the determination of deferred tax liabilities on this amount is not practicable.

The Company had non-U.S. tax loss carryforwards of $10,754,000 (pretax) as of December 31, 2022, and $3,351,000 as of December 31, 2021, that are available for use by the Company between 2023 and 2032. The Company had tax credit carryforwards of $8,183,000 as of December 31, 2022, and $2,829,000 as of December 31, 2021, that are available for use by the Company between 2023 and 2042. The Company had non-U.S. capital loss carryforwards of $595,000 as of December 31, 2022, and $638,000 as of December 31, 2021. The Company’s capital loss carryforwards do not expire.

As of December 31, 2022, and 2021, the Company had valuation allowances of $836,000 and $862,000, respectively, which were attributable to deferred tax assets in Canada, India, the Philippines and Singapore. The realization of deferred tax assets is dependent on the generation of sufficient taxable income in the appropriate tax jurisdictions. The Company believes that it is more likely than not that the related deferred tax assets will not be realized.

As of December 31, 2022, 2021 and 2020, unrecognized tax benefits totaled $10,682,000, $7,292,000 and $4,735,000, respectively. The amount of unrecognized tax benefits that, if recognized, would favorably affect the Company’s effective income tax rate in any future periods, net of the federal benefit on state issues, was approximately $10,172,000, $6,973,000 and $4,545,000 at December 31, 2022, 2021 and 2020, respectively. The Company does not believe that the amount of unrecognized tax benefits related to its current uncertain tax positions will change significantly over the next 12 months.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. In 2022, the Company recognized net interest and penalty expense of $202,000 compared to $260,000 of net interest and penalty expense in 2021 and $31,000 of net interest and penalty expense in 2020. At December 31, 2022 the liability for interest and penalties was $543,000 compared to $340,000 at December 31, 2021.

The Company files income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. The Company is not subject to U.S. federal income tax examinations by tax authorities for years before 2016. Some foreign jurisdictions and various U.S. states jurisdictions may be subject to examination back to 2015.

During 2021, the Internal Revenue Service started its audit of the 2016-2019 tax years and expanded the years under audit to 2016-2020 in 2022. As of December 31, 2022, this audit was still open, and the Company had not been notified of any significant proposed adjustments.

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Below are reconciliations of the January 1 and December 31 balances of unrecognized tax benefits for 2022, 2021 and 2020:

(In thousands)	2022			2021			2020
Unrecognized tax benefits, opening balance	$	7,292		$	4,735		$	3,273
Gross increases – tax positions in prior period		2,188			938			190
Gross increases – current period tax positions		1,617			1,662			1,288
Settlements		(454	)		—			—
Foreign currency translation		74			(14	)		15
Lapse of statute of limitations		(35	)		(29	)		(31	)
Unrecognized tax benefits, ending balance	$	10,682		$	7,292		$	4,735

10. Stockholders’ Equity

At December 31, 2022 and 2021, treasury stock consisted of 4,605,858 and 4,340,729 shares of common stock, respectively. During 2022, 251,120 shares of Company common stock were purchased in the open market. In addition, 20,347 shares were surrendered to the Company in connection with the settlement of employees’ minimum statutory withholding taxes related to performance stock awards, exercised SARs and deferred compensation distributions. Also, 6,338 shares of treasury stock were distributed to participants under the Company’s deferred compensation plans.

11. Stock-based Compensation

On December 31, 2022, the Company had outstanding stock options, stock awards and SARs awarded under its 2011 Incentive Compensation Plan (2011 Plan) and stock awards and SARs awarded under its 2022 Equity Incentive Compensation Plan (2022 Plan). Equity incentive awards are currently granted to Company executives and other key employees. In addition, stock awards are currently granted to non-employee directors of the Company. As of April 26, 2022, no additional stock options, stock awards or SARs may be granted under the 2011 Plan. As of the effective date of the 2022 Plan, 500,000 shares of the Company’s common stock, plus the number of shares that remained available for awards under the 2011 Plan as of April 26, 2022, were available for equity awards under the 2022 Plan. At December 31, 2022, there were 810,080 shares available for grant under the 2022 Plan.

Compensation expense recorded in the consolidated statements of income for all plans was $13,851,000, $11,716,000, and $10,080,000 for the years ended December 31, 2022, 2021 and 2020, respectively. The increase in stock-based compensation in 2022 versus 2021 was primarily attributable to the accelerated vesting of certain equity grants for the Company’s former Chief Executive Officer, who retired on April 25, 2022. In addition, management’s assessment that higher performance targets for certain grants would be achieved led to the increase of compensation expenses for performance awards.

The total income tax benefit recognized in the income statement for share-based compensation arrangements was $3,537,000, $2,867,000, and $2,390,000 for the years ended December 31, 2022, 2021 and 2020, respectively.

Stock Options

Under all plans, stock option awards are granted with an exercise price equal to the market price of the Company’s stock at the date of grant. The market price is defined and calculated as the average of the opening and closing prices for Company common stock on the grant date as reported in the New York Stock Exchange – Composite Transactions. Stock option awards granted prior to 2017 generally cliff vested after two years. Starting in 2017, stock options have a three-year graded vesting feature, with one-third of the awards vesting each year. The Company has elected the straight-line method of expense attribution for the stock options with graded vesting feature. These options have a 10-year contractual term. The fair value of each option award was estimated on the date of grant using the Black-Scholes option valuation model incorporating the weighted-average assumptions noted in the following table. Expected volatility is based on the historical volatility of the Company’s common stock. The Company also uses historical data to estimate the expected term of options granted. The risk-free rate is the U.S. Treasury note rate that corresponds to the expected option term at the date of grant. The following are the weighted-average assumptions used to calculate the grant-date fair values of stock option awards granted in the years ended December 31, 2022, 2021 and 2020:

	For the Years Ended December 31
	2022	2021	2020
Expected dividend yield	1.18%	1.30%	1.31%
Expected volatility	32.27%	31.81%	26.00%
Expected term	6.0 years	7.3 years	7.3 years
Risk-free interest rate	1.93%	0.96%	1.47%

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A summary of stock option activity for the year ended December 31, 2022 is presented below:

	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value ($000)
Options
Outstanding at January 1, 2022		435,966		$	81.92
Granted		34,444			114.43
Exercised		(11,888	)		65.74
Forfeited		(31,361	)		115.43
Outstanding at December 31, 2022		427,161			82.53		5.27	$	10,224
Vested or expected to vest at December 31, 2022		427,161			82.53		5.27		10,224
Exercisable at December 31, 2022		408,802			80.80		5.14		10,488

The weighted-average grant-date fair values of options awarded during the years ended December 31, 2022, 2021 and 2020, were $32.21, $36.49, and $25.90, respectively. The total intrinsic values of options exercised during the years ended December 31, 2022, 2021, and 2020 were $475,000, $1,287,000, and $2,534,000, respectively.

As of December 31, 2022, the total unrecognized compensation cost for unvested stock options was $692,000. That cost is expected to be recognized over a weighted-average period of 1.2 years.

Cash received from stock option exercises under the Company’s stock option plans for the years ended December 31, 2022, 2021, and 2020 was $782,000, $1,369,000, and $2,926,000, respectively. The actual tax benefit realized for the tax deductions from stock option exercises totaled $36,000, $172,000, and $339,000 for the years ended December 31, 2022, 2021 and 2020, respectively.

Stock Awards

In 2020, 2021, and 2022, the Company granted stock awards under the 2011 Plan and, starting in April 2022, the Company also granted stock awards under the 2022 Plan. Most Company stock awards are granted in the form of performance awards. The performance stock awards vest only upon the Company’s achievement of certain levels of financial performance by the end of specified measurement periods as approved by the Board of Directors. The number of shares of the Company’s common stock ultimately distributed, if any, is contingent upon the Company’s actual financial performance attained by the end of the measurement period relative to the targets approved by the Board of Directors. The fair value of performance stock awards equals the grant-date market price of the Company’s common stock, discounted for the estimated amount of dividends that would not be received during the measurement period. Compensation expense is recorded each reporting period based on the probable number of awards that will ultimately vest given the projected level of financial performance. If at the end of the measurement period the performance objectives are not met, no compensation cost is recognized and any compensation expense recorded in prior periods is reversed. Under the 2011 Plan, the Company periodically granted stock awards that have no performance conditions associated with their vesting. Under the 2022 Plan, stock awards that have no performance conditions may be routinely granted to eligible employees. These stock awards vest after the period of service established for the given grant. In addition, the Company grants stock awards that have no performance conditions associated with their vesting to non-employee directors of the Company.

A summary of stock award activity for the year ended December 31, 2022, is presented below:

	Shares			Weighted-Average Grant Date Fair Value
Stock Awards
Unvested at January 1, 2022		103,278		$	61.30
Granted		64,392			106.78
Vested		(69,314	)		99.30
Forfeited/Modified due to change of assumptions		5,613			86.94
Unvested at December 31, 2022		103,969			110.50

The weighted-average grant-date fair values of stock awards granted during the years ended December 31, 2022, 2021 and 2020, were $106.78, $119.76, and $98.46, respectively. As of December 31, 2022, under the current Company assumption as to the number of shares of the Company’s common stock underlying stock awards that will vest at the measurement periods ended December 31, 2023

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and 2024, there was $6,144,000 of unrecognized compensation cost for unvested stock awards. That cost is expected to be recognized over a period of 1.7 years.

SARs

At December 31, 2022, the Company had both cash-settled and Company stock-settled SARs outstanding. SARs granted prior to 2015 are cash-settled, and SARs granted in 2015 and later are stock-settled. SARs granted prior to 2017 cliff vested after two years. Starting in 2017, SARs have a three-year graded vesting feature, with one-third of the awards vesting each year. The Company has elected the straight-line method of expense attribution for the SARs with graded vesting feature. All SARs expire ten years from the grant date. Upon the exercise of a SARs award, a participant receives cash (for cash-settled SARs) or Company common stock (for stock-settled SARs). For cash-settled SARs, an amount equals the excess of the fair market value of a total number of shares/SARs exercised at the date of exercise over the fair market value of a total number of shares/SARs exercised at the date of grant (the exercise price). For stock-settled SARs, the number of shares equals the excess of the fair market value of a total number of shares/SARs exercised at the date of exercise over the fair market value of a total number of shares/SARs exercised at the date of grant (the exercise price) divided by the fair market value of a share of Company common stock at the date of exercise. Cash-settled SARs are accounted for as liabilities that must be re-measured at fair value at the end of every reporting period until settlement. Compensation expense for each reporting period is based on the period-to-period change (or portion of the change, depending on the proportion of the vesting period that has been completed at the reporting date) in the fair value of the SARs. Compensation expense for stock-settled SARs is based on the grant-date value of the awards allocated over the proportion of the vesting period that has been completed at the reporting date. Because stock-settled SARs are considered equity instruments, they are not re-measured at fair value at the end of each reporting period.

The following is a summary of SARs activity for the year ended December 31, 2022:

	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value ($000)
SARs
Outstanding at January 1, 2022		726,987		$	90.06
Granted		188,957			110.04
Exercised		(31,562	)		63.06
Forfeited		(34,226	)		115.20
Outstanding at December 31, 2022		850,156			94.49		6.62	$	10,176

The weighted-average grant-date fair values of SARs granted during the years 2022, 2021 and 2020 were $34.76, $36.49, and $25.88, respectively. The fair value for each SARs award was estimated using the Black-Scholes valuation model incorporating the same assumptions as noted for stock options.

As of December 31, 2022, and 2021, the liability for cash-settled SARs recorded on the consolidated balance sheet (non-current liabilities) was $747,000 and $1,502,000, respectively. At December 31, 2022, there was $5,211,000 of total unrecognized compensation cost related to all unvested SARs. That cost is to be recognized over a weighted-average period of 1.8 years.

In general, it is the Company’s policy to issue new shares of its common stock upon the exercise of stock options and stock-settled SARs or the vesting of stock awards.

12. Deferred Compensation

The Company sponsors deferred compensation plans that allow management employees to defer receipt of their annual cash incentive compensation and performance shares and outside directors to defer receipt of their fees and stock awards until retirement, departure from the Company or as otherwise elected. Compensation expense and the related deferred compensation obligation are recorded when the underlying compensation is earned. Over time, the deferred obligation may increase or decrease based on the performance results of investment options chosen by the plan participants. The investment options include the Company’s common stock and a limited selection of mutual funds. The Company maintains sufficient shares of treasury stock to cover the equivalent number of shares that result from participants elections of the Company common stock investment option. As a result, the Company periodically purchases shares of its common stock in the open market or in private transactions. The Company purchases shares of the applicable mutual funds to fund the portion of its deferred compensation liabilities tied to such investments.

Some plan distributions may be made in cash or Company common stock at the option of the participant. Other plan distributions can only be made in Company common stock. For deferred compensation obligations that may be settled in cash or shares of Company’s

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common stock at the option of the participant, the Company must record appreciation in the market values of the investment choices made by participants as additional compensation expense. Conversely, declines in the market values of the investment choices reduce compensation expense. Increases and decreases of compensation expense that result from fluctuations in the underlying investments are recorded as part of operating expenses in the consolidated statements of income. The obligations that must be settled only in shares of the Company’s common stock are treated as equity instruments; therefore, fluctuations in the market price of the underlying shares of the Company’s common stock do not affect earnings.

The additional compensation expense or income resulting from the changes in the market values and earnings of the selected investment options was $9,393,000 income in 2022, and $6,895,000 expense and in 2021 and $9,988,000 expense in 2020. The main factors in the decrease of the 2022 deferred compensation expense versus 2021 deferred compensation expense was a decrease in the value of the mutual fund investment assets as well as a $17.83 per share decrease in the market price of the Company’s common stock in 2022 versus a $4.97 per share increase in the market price of the Company’s common stock in 2021. The Company’s deferred compensation liability was $43,005,000 and $61,219,000 at December 31, 2022 and 2021, respectively.

13. Postretirement Benefit Plans

Defined Benefit Plans

The Company sponsors various funded qualified and unfunded non-qualified defined benefit pension plans, the most significant of which cover employees in the U.S. and U.K. locations. The various U.S. defined benefit pension plans were amended during the years 2005-2008 to freeze the plans by stopping the accrual of service benefits. The U.K. defined benefit pension plan was frozen in 2006. Benefits earned through the freeze dates are available to participants when they retire, in accordance with the terms of the plans. The Company established defined contribution plans to replace the frozen defined benefit pension plans.

Obligations and Funded Status at December 31

	United States						United Kingdom
(In thousands)	2022			2021			2022			2021
Change in benefit obligation
Benefit obligation at beginning of year	$	174,863		$	187,371		$	23,276		$	25,526
Interest cost		4,923			4,671			374			357
Actuarial income		(40,420	)		(8,682	)		(7,333	)		(1,171	)
Benefits paid		(8,899	)		(8,497	)		(709	)		(1,198	)
Foreign exchange impact		—			—			(2,322	)		(238	)
Benefit obligation at end of year	$	130,467		$	174,863		$	13,286		$	23,276

	United States						United Kingdom
(In thousands)	2022			2021			2022			2021
Change in plan assets
Fair value of plan assets at beginning of year	$	178,574		$	175,336		$	27,464		$	28,504
Actual return on plan assets		(33,187	)		11,459			(9,393	)		(78	)
Employer contributions		256			276			536			526
Benefits paid		(8,899	)		(8,497	)		(709	)		(1,198	)
Foreign exchange impact		—			—			(2,735	)		(290	)
Fair value of plan assets at end of year	$	136,744		$	178,574		$	15,163		$	27,464
Over funded status at end of year	$	6,277		$	3,711		$	1,877		$	4,188

The amounts recognized in the consolidated balance sheets at December 31 consisted of:

	United States						United Kingdom
(In thousands)	2022			2021			2022		2021
Non-current assets	$	8,700		$	7,166		$	1,877	$	4,188
Current liability		(278	)		(290	)		—		—
Non-current liability		(2,145	)		(3,165	)		—		—
Net amount recognized	$	6,277		$	3,711		$	1,877	$	4,188

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The amounts recognized in accumulated other comprehensive income at December 31 consisted of:

	United States				United Kingdom
(In thousands)	2022		2021		2022		2021
Net actuarial loss	$	18,801	$	19,508	$	6,188	$	3,767

At December 31, 2022 and 2021 there were no pension plans with projected benefit obligations in excess of plan assets.

Components of Net Periodic Benefit Cost and Other Amounts Recognized in Other Comprehensive Income

Net periodic benefit costs for the years ended December 31, 2022, 2021 and 2020, were as follows:

	United States									United Kingdom
(In thousands)	2022			2021			2020			2022			2021			2020
Interest cost	$	4,923		$	4,671		$	5,668		$	374		$	357		$	445
Expected return on plan assets		(8,802	)		(10,348	)		(9,747	)		(399	)		(320	)		(548	)
Amortization of net actuarial loss		2,277			4,444			4,262			9			129			79
Net periodic benefit cost	$	(1,602	)	$	(1,233	)	$	183		$	(16	)	$	166		$	(24	)

Other changes in plan assets and benefit obligations recognized in other comprehensive income for the years ended December 31, 2022, 2021 and 2020, were as follows:

	United States									United Kingdom
(In thousands)	2022			2021			2020			2022			2021			2020
Net actuarial (gain) loss	$	1,570		$	(9,793	)	$	336		$	2,430		$	(757	)	$	272
Amortization of net actuarial loss		(2,277	)		(4,444	)		(4,262	)		(9	)		(129	)		(79	)
Total recognized in other comprehensive    income	$	(707	)	$	(14,237	)	$	(3,926	)	$	2,421		$	(886	)	$	193
Total recognized in net periodic benefit    cost and other comprehensive income	$	(2,309	)	$	(15,470	)	$	(3,743	)	$	2,405		$	(720	)	$	169

Estimated Future Benefit Payments

(In thousands)	United States		United Kingdom
2023	$	9,267	$	531
2024		9,575		558
2025		9,826		583
2026		10,003		623
2027		10,118		647
2028-2032		50,301		3,800

Assumptions

The weighted-average assumptions used to determine benefit obligations at December 31 were as follows:

	United States						United Kingdom
	2022			2021			2022			2021
Discount rate		5.50	%		2.90	%		5.00	%		1.80	%

The weighted-average assumptions used to determine net periodic benefit costs for years ended December 31 were as follows:

	United States									United Kingdom
	2022			2021			2020			2022			2021			2020
Discount rate		2.90	%		2.60	%		3.30	%		1.80	%		1.40	%		2.10	%
Expected long-term return on plan assets		5.50	%		6.75	%		6.75	%		1.61	%		1.13	%		2.30	%

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In addition to the above assumptions, the Company uses a market-related value of assets approach to calculate the expected return on the plan assets component of U.S. net periodic benefit cost. The market-related value equals the fair value of plan assets with five-year smoothing of asset gains or losses. Asset gains are subtracted or losses added in the following way: 80 percent of the prior year’s gain or loss; 60 percent of the second preceding year’s gain or loss; 40 percent of the third preceding year’s gain or loss; and 20 percent of the fourth preceding year’s gain or loss. Gains or losses for the year are calculated as the difference between the expected fair value of assets and the actual fair value of assets.

Investment Strategies and Policies

U.S. Plans

Plan assets are predominantly invested using a combination of active and passive investment strategies. An investment management firm hires and monitors underlying investment management firms for each asset category. Equity managers within each category cover a range of investment styles and approaches, including both active and passive, and are combined in a way that controls for capitalization, style biases, and country exposure versus benchmark indexes. While active equity managers focus primarily on stock selection to improve returns, fixed income managers seek to reduce the volatility of the plan’s funded status by matching the duration with the plan’s liability while seeking to improve returns through security selection, sector allocation and yield curve management. Real estate exposure is now categorized within mid cap equity.

Risk is diversified among multiple asset categories, managers, styles, and securities. The investment management firm recommends asset allocations based on the time horizon available for investment, funded status, the nature of the plan cash flows and liabilities and other factors. The asset allocation targets are approved by the Company’s Plan Committee.

Available investment categories include:

Equities: Common stocks of large, medium, and small companies (company stock), including both U.S. and non-U.S. based companies. The long-term target allocation for equities, excluding Company stock, is approximately 25 percent and the total equity target is 35 percent, including allocation to the Company’s common stock.

Fixed Income (Debt): Bonds or notes issued or guaranteed by the U.S. government, and to a lesser extent, by non-U.S. governments, or by their agencies or branches, mortgage-backed securities, including collateralized mortgage obligations, corporate bonds, municipal bonds and dollar-denominated debt securities issued in the U.S. by non-U.S. banks and corporations. A small percentage of the fixed income assets may be in debt securities that are below investment grade. The target allocation for fixed income is 63 percent. The fixed income portfolio has a duration similar to the plan’s liability stream and is designed to perform consistent with the movement of the plan’s liabilities.

Employer Securities: The retirement plans also hold shares of the Company’s common stock, which are purchased or sold by the trustee from time to time, as directed by the Plan Committee. At the direction of the Plan Committee, the plans sold 33,983 shares of the Company’s common stock to the Company’s employee stock ownership plan (ESOP) trust on February 17, 2022. In 2021, the plans sold 31,362 shares to the Company’s ESOP trust on February 24, 2021. In 2020, the plans sold 32,706 shares to the Company’s ESOP trust on February 24, 2020.

In addition to these primary investment types, excess cash may be invested in futures in order to efficiently achieve more fully invested portfolio positions. Otherwise, a small number of investment managers may make limited use of derivatives, including futures contracts, options on futures and interest rate swaps in place of direct investment in securities to efficiently achieve equivalent market positions. Derivatives are not used to leverage portfolios.

The target allocation for cash is two percent of plan assets.

U.K. Plan

The objective of the U.K. defined benefit pension fund investment strategy is to maximize the long-term rate of return on plan assets within a medium level of risk in order to minimize the cost of providing pension benefits. To that end, the plan assets are invested in an actively managed pooled fund of funds that diversifies its holdings among equity securities, debt securities, property and cash. Essentially, the plan is to hold equity instruments to back the benefits of participants yet to retire and bonds and cash to back current pensioners. Although there are no formal target allocations for the plan assets, the overall strategy is to achieve a mix of investments for long-term growth and near-term benefit payments with a wide diversification of asset types. Equity securities are selected from U.K., European, U.S. and emerging market companies. Bonds include U.K. and other countries’ government notes and corporate debt of U.K and non-U.K. companies. There are no specific prohibited investments, but the current managed fund will not allocate assets to derivatives or other financial hedging instruments. Plan trustees meet regularly with the fund manager to assess the fund’s performance

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and to reassess investment strategy. At December 31, 2022, the pension asset allocation was 11 percent equities, 75 percent fixed income, four percent insurance contracts, and ten percent cash.

Included in plan assets are insurance contracts purchased by the plan trustees to provide pension payments for specific retirees. In past years, at the time a plan participant retired, the plan trustee would periodically purchase insurance contracts to cover the future payments due the retiree. This practice is no longer followed. The contracts are revocable, and the related plan obligations are not considered settled. Therefore, the plan assets and obligations include the insured amounts.

Plan Assets

U.S. Plans

The Company’s asset allocations for its U.S. pension plans at December 31, 2022 and 2021, by asset category, were as follows:

	December 31, 2022
(In thousands)	Level 1		Level 2		Level 3		Total
Cash and Cash Equivalents	$	7,531	$	—	$	—	$	7,531
Equity Securities
U.S. Equities		21,279		—		—		21,279
Non-U.S. Equities		9,788		—		—		9,788
Employer Securities		17,970		—		—		17,970
Total Equities		49,037		—		—		49,037
Fixed Income Securities
U.S. Corporate Bonds		—		51,444		—		51,444
U.S. Government and Agency Bonds		15,627		2,628		—		18,255
Other Bonds		—		10,477		—		10,477
Total Fixed Income		15,627		64,549		—		80,176
Total	$	72,195	$	64,549	$	—	$	136,744

	December 31, 2021
(In thousands)	Level 1		Level 2		Level 3		Total
Cash and Cash Equivalents	$	10,918	$	—	$	—	$	10,918
Equity Securities
U.S. Equities		25,083		—		—		25,083
Non-U.S. Equities		12,544		—		—		12,544
Employer Securities		25,204		—		—		25,204
Total Equities		62,831		—		—		62,831
Fixed Income Securities
U.S. Corporate Bonds		—		69,073		—		69,073
U.S. Government and Agency Bonds		20,072		2,845		—		22,917
Other Bonds		—		12,835		—		12,835
Total Fixed Income		20,072		84,753		—		104,825
Total	$	93,821	$	84,753	$	—	$	178,574

Plan Asset Valuation Methodology

Following is a description of the valuation methodologies used for plan assets measured at fair value.

Individual equity securities, including employer securities, are valued by Standard & Poor’s Securities Evaluations as determined by quoted market prices on the New York Stock Exchange or other active trading markets. Both market pricing and future cash flow analysis may be used in the pricing process as follows:

Level 1 – Equities are valued according to the exchange-quoted market prices of the underlying investments. Level 1 fixed income securities are U.S. government securities and are valued according to quoted prices from active markets.

Level 2 – Fixed income investments without equivalent trading exchanges are valued primarily through a technique known as “future cash flow approach” which is based on what bondholders can reasonably expect to receive based upon an issuer’s current financial condition. Pricing analysts prepare cash flow forecasts and utilize one or two pricing models to arrive at an evaluated price. These models include factors such as the interest rate on the coupon, maturity, rating, cash flow projections and other factors.

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Level 3 – no investments held during 2022 or 2021 were categorized as Level 3.

U.K. Plan

The Company’s asset allocations for its U.K. pension plans at December 31, 2022 and 2021, by asset category, were as follows:

	December 31, 2022
(In thousands)	Level 1		Level 2		Level 3		Total
Cash		—	$	1,448	$	—	$	1,448
Equity Securities
Pooled Pension Funds		—		1,688		—		1,688
Fixed Income
Pooled Pension Funds		—		11,350		—		11,350
Insurance Contracts		—		—		677		677
Total	$	—	$	14,486	$	677	$	15,163

	December 31, 2021
(In thousands)	Level 1		Level 2		Level 3		Total
Cash	$	—	$	2,414	$	—	$	2,414
Equity Securities
Pooled Pension Funds		—		3,715		—		3,715
Fixed Income
Pooled Pension Funds		—		20,332		—		20,332
Insurance Contracts		—		—		1,003		1,003
Total	$	—	$	26,461	$	1,003	$	27,464

Units of each of the pooled funds are valued by the trustee based on quoted market prices of the underlying investments (the underlying assets are either exchange traded or have readily available markets).

Fair value changes within asset categories for which fair value measurements use significant unobservable inputs (Level 3) were as follows during 2022 and 2021:

(In thousands)	Insurance Contracts
Fair value, December 31, 2020	$	1,159
Sale proceeds (benefit payments)		(131	)
Change in unrealized gain		(15	)
Foreign exchange impact		(10	)
Fair value, December 31, 2021	$	1,003
Sale proceeds (benefit payments)		(104	)
Change in unrealized gain		(120	)
Foreign exchange impact		(102	)
Fair value, December 31, 2022	$	677

Long-term Rate of Return for Plan Assets

U.S. Plans

The overall expected long-term rate of return on assets of 5.50 percent that was used to develop the 2022 pension expense is based on plan asset allocation, capital markets forecasts and expected benefits of active investment management. For fixed income, the expected return is 4.05 percent. This assumption includes the yield on the five-year zero-coupon U.S. Treasury bond as the base rate along with historical data from the U.S. Treasury yield curve. For equities, the expected return is 7.98 percent for U.S. and international equities. This return is based on a blended average of three different statistical models that each incorporates multiple factors, including forecasts relating to inflation, Gross Domestic Product, and the Fed Funds Target Rate.

The overall investment return forecast reflects the target allocations and the capital markets forecasts for each asset category, plus a premium for active asset management expected over the long-term.

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U.K. Plan

The overall expected long-term return on plan assets is a weighted-average of the expected long-term returns for equity securities, debt securities and other assets. The redemption yield at the measurement date on U.K. government fixed interest bonds and the yield on corporate bonds are used as proxies for the return on the debt portfolio. The returns for equities and property are estimated as a premium of 3.0 percent added to the risk-free rate. Cash is assumed to have a long-term return of 3.5 percent.

Other Defined Benefit Plans

The Company maintains funded and unfunded defined benefit plans in other foreign locations. The liabilities and expenses associated with these plans, individually and collectively, are not material to the Company’s consolidated financial statements. Discount rates for these plans are determined based on local interest rates and plan participant data.

Cash Flows

As a result of pension funding relief included in the Highway and Transportation Funding Act of 2014, the Company does not expect to make any 2023 contributions to the funded U.S. qualified defined benefit plans. The Company expects to contribute $278,000 in 2023 to the unfunded non-qualified U.S. pension plans. The Company expects to contribute $451,000 to the U.K. defined benefit plan in 2023.

Defined Contribution Plans

The Company sponsors retirement savings defined contribution retirement plans that cover eligible U.S. and U.K. employees. The Company’s U.S. retirement plans include two qualified plans, one of which is a 401(k) plan and one of which is an employee stock ownership plan (ESOP), and one non-qualified supplemental executive plan. Prior to 2018, the Company made profit sharing contributions into the qualified retirement plans for its U.S. employees and starting in 2018 made profit sharing contributions into the qualified retirement plans for U.S. employees and for certain non-U.S. employees. Profit sharing contributions were determined using a formula applied to Company earnings. In 2020, 2021 and 2022, profit sharing contributions for U.S. employees were made to the ESOP trust. Profit sharing contributions are allocated to participant accounts on the basis of participant base earnings.

Defined contribution expenses for the Company’s qualified defined contribution plans and statutory profit sharing contributions were as follows:

(In thousands)	2022		2021		2020
Retirement contributions	$	8,556	$	8,134	$	8,035
Profit sharing contributions		5,276		5,081		6,107
Total	$	13,832	$	13,215	$	14,142

The Company has a rabbi trust to fund the obligations of its non-qualified supplemental executive defined contribution plans (supplemental plans). The trust comprises various mutual fund investments selected by the participants of the supplemental plans. In accordance with the accounting guidance for rabbi trust arrangements, the assets of the trust and the obligations of the supplemental plans are reported on the Company’s consolidated balance sheet. The Company elected the fair value option for the mutual fund investment assets so that offsetting changes in the mutual fund values and defined contribution plan obligations would be recorded in earnings in the same period. Therefore, the mutual funds are reported at fair value with any subsequent changes in fair value recorded in the income statement. The supplemental plan liabilities increase (i.e., supplemental plan expense is recognized) when the value of the trust assets appreciate and decrease (i.e., supplemental plan income is recognized) when the value of the trust assets decline. At December 31, 2022 and 2021, the trust asset balances were $376,000 and $2,146,000, respectively, and the supplemental plan liability balances were $446,000 and $2,221,000, respectively. The differences between the trust asset balances and the supplemental liability balances were due to estimated liabilities that were not funded until after the end of the year when the actual liabilities were determined.

Certain foreign locations are required by law to make profit sharing contributions to employees based on statutory formulas. For the years ended December 31, 2022, 2021 and 2020, the Company recognized $421,000, $219,000 and $1,679,000, respectively, of statutory profit sharing expense that is included in the table above.

In all Company locations, approximately 85 percent of union and non-union employees are eligible for either the Company’s sponsored or statutory profit sharing contributions and 100 percent of U.S. based union and non-union employees are eligible for the Company’s sponsored profit sharing contribution.

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14. Accrued Liabilities

The composition of accrued liabilities was as follows:

	December 31
(In thousands)	2022		2021
Accrued payroll and benefits	$	73,713	$	70,983
Accrued customer rebates		24,715		21,030
Other accrued liabilities		64,384		44,383
Total accrued liabilities	$	162,812	$	136,396

15. Other Non-Current Liabilities

The composition of other non-current liabilities was as follows:

	December 31
(In thousands)	2022		2021
Deferred revenue	$	8,762	$	9,979
Environmental and legal matters		16,276		17,663
Deferred compensation liability		32,459		50,122
Pension liability		5,241		4,552
Other non-current liabilities		17,953		16,606
Total other non-current liabilities	$	80,691	$	98,922

16. Contingencies

There are a variety of legal proceedings pending or threatened against the Company that occur in the normal course of the Company’s business, the majority of which relate to environmental assessment, protection and remediation matters. Some of these proceedings may result in fines, penalties, judgments or costs being assessed against the Company at some future time. The Company’s operations are subject to extensive local, state and federal regulations, including the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) and the Superfund amendments of 1986 (Superfund) as well as comparable regulations applicable to the Company’s foreign locations. Over the years, the Company has received requests for information related to or has been named by government authorities as a potentially responsible party (PRP) at a number of sites where cleanup costs have been or may be incurred by the Company under CERCLA and similar state statutes. In addition, damages are being claimed against the Company in general liability actions for alleged personal injury or property damage in the case of some disposal and plant sites. The Company believes that it has made adequate provisions for the costs it is likely to incur with respect to these sites and claims.

In determining the appropriate level of environmental reserves, the Company considers several factors such as information obtained from investigatory studies; changes in the scope of remediation; the interpretation, application and enforcement of laws and regulations; changes in the costs of remediation programs; the development of alternative cleanup technologies and methods; and the relative level of the Company’s involvement at various sites for which the Company is allegedly associated. The level of annual expenditures for remedial, monitoring and investigatory activities will change in the future as major components of planned remediation activities are completed and the scope, timing and costs of existing activities are changed. As of December 31, 2022, the Company estimated a range of possible environmental losses and legal losses of $32,628,000 to $56,404,000. Within the range of possible environmental losses and legal losses, management has currently concluded that no single amount is more likely to occur than any other amounts in the range and, thus, has accrued at the lower end of the range. These accruals totaled $32,628,000 at December 31, 2022 and $23,127,000 at December 31, 2021. This increase primarily reflects revised environmental remediation cost estimates for the Company’s Maywood, New Jersey site due to U.S. Environmental Protection Agency (USEPA) work plan approvals and the receipt of third-party contractor bids during the third quarter of 2022. Remediation work has commenced at a portion of the Maywood site and the Company anticipates increased cash spending to occur in 2023. Although the Company believes that its estimated range of possible environmental losses and legal losses and its reserves are adequate for contingencies, it is possible due to the uncertainties noted above, that additional reserves could be required in the future. During 2022, cash expenditures related to environmental remediation and certain other legal matters approximated $2,330,000 compared to $3,461,000 expensed in 2021.

For certain sites, the Company has responded to information requests made by federal, state or local government agencies but has received no response confirming or denying the Company’s stated positions. As such, estimates of the total costs, or range of possible costs, of remediation, if any, or the Company’s share of such costs, if any, cannot be determined with respect to these sites. Consequently, the Company is unable to predict the effect thereof on the Company’s financial position, cash flows and results of operations. Based upon the Company’s present knowledge with respect to its involvement at these sites, the possibility of other viable entities’ responsibilities for cleanup, and the extended period over which any costs would be incurred, management believes that the

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Company has no material liability at these sites and that these matters, individually and in the aggregate, will not have a material effect on the Company’s financial position. However, in the event of one or more adverse determinations with respect to such sites in any annual or interim period, the effect on the Company’s cash flows and results of operations for those periods could be material.

Following are summaries of the Company’s major contingencies at December 31, 2022:

Maywood, New Jersey Site

The Company’s property in Maywood, New Jersey, property formerly owned by the Company adjacent to its current site and other nearby properties (collectively, the Maywood site) were listed on the National Priorities List in September 1993 pursuant to the provisions of CERCLA because of alleged chemical contamination. Pursuant to (i) a September 21, 1987 Administrative Order on Consent entered into between the USEPA and the Company for property formerly owned by the Company at the Maywood site and (ii) the issuance of an order on November 12, 2004 by the USEPA to the Company for property currently owned by the Company at the Maywood site, the Company has completed various Remedial Investigation Feasibility Studies (RI/FS), and on September 24, 2014, USEPA issued its Record of Decision (ROD) for chemically-contaminated soil at the Maywood site, which requires the Company to perform remedial cleanup of the soil and buried waste. The USEPA has not yet issued a ROD for chemically-contaminated groundwater at the Maywood site. Based on the most current information available, the Company believes its recorded liability is reasonable having considered the range of estimated costs of remediation for the Maywood site. As noted above, during the third quarter of 2022 the Company increased its accrual for environmental remediation costs at the Maywood site. The estimate of the cost of remediation for the Maywood site could change again as the Company continues to hold discussions with the USEPA, as the design of the remedial action is finalized, if a groundwater ROD is issued or if other PRPs are identified. The ultimate amount for which the Company is liable could differ materially from the Company’s current recorded liability.

In April 2015, the Company entered into an Administrative Settlement Agreement and Administrative Order on Consent with USEPA which requires payment of certain costs and performance of certain investigative and design work for chemically-contaminated soil.

In addition, under the terms of a settlement agreement reached on November 12, 2004, the U.S. Department of Justice and the Company agreed to fulfill the terms of a Cooperative Agreement reached in 1985. Under the Cooperative Agreement, the United States is responsible for the removal of radioactive waste at the Maywood site, including past and future remediation costs at the site. As such, the Company recorded no liability related to this settlement agreement.

D’Imperio Property Site

During the mid-1970’s, Jerome Lightman and the Lightman Drum Company disposed of hazardous substances generated by the Company at several sites in New Jersey, including the D’Imperio site. The Company was named as a PRP in an October 2, 1998 lawsuit in the U.S. District Court for the District of New Jersey that involved the D’Imperio Site. In 2022, the PRPs were provided with updated remediation cost estimates by the PRP group technical consultant and project manager which the Company considered in its determination of its range of estimated possible losses and liability balance. The changes in range of possible losses and liability balance were immaterial. Remediation work continues at the D’Imperio site. Based on current information, the Company believes that its recorded liability is reasonable having considered the range of estimated cost of remediation for the D’Imperio site. Depending on the ultimate cost of the remediation at this site, the amount for which the Company is liable could differ materially from the Company’s current recorded liability.

Wilmington Site

The Company is currently contractually obligated to contribute to the environmental response costs associated with the Company’s formerly-owned site in Wilmington, Massachusetts (the Wilmington site). Remediation at this site is being managed by its current owner to whom the Company sold the property in 1980. Under the Company’s October 1, 1993 agreement with the current owner of the Wilmington site, once total site remediation costs exceed certain levels, the Company is obligated to contribute up to five percent of future response costs associated with this site with no limitation on the ultimate amount of contributions. The Company has paid the current owner $3,451,000 for the Company’s portion of environmental response costs at the Wilmington site through December 31, 2022. The Company has recorded a liability for its portion of the estimated remediation costs for the site. Depending on the ultimate cost of the remediation at this site, the amount for which the Company is liable could differ materially from the current recorded liability. On July 29, 2022, the Company and other potentially responsible parties were notified of a possible joint claim by federal and state trustees for alleged natural resource damages related to the Wilmington site. The alleged damages may result in a range of possible penalties; however, at this stage, the Company is unable to predict the ultimate outcome of this claim, the allocation of costs among the potentially responsible parties or what impact, if any, the outcome might have on the Company’s financial position, results of operations or cash flows.

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The Company and other prior owners of the Wilmington site also entered into an agreement in April 2004 waiving certain statute of limitations defenses for claims which may be filed by the Town of Wilmington, Massachusetts, in connection with this site. While the Company has denied any liability for any such claims, the Company agreed to this waiver while the parties continue to discuss the resolution of any potential claim which may be filed.

Other U.S. Sites

Through the regular environmental monitoring of its plant production sites, the Company discovered levels of chemical contamination that were above thresholds allowed by law at its Elwood, Illinois (Millsdale) and Fieldsboro, New Jersey plants. The Company voluntarily reported its results to the applicable state environmental agencies. As a result, the Company is required to perform self-remediation of the affected areas. Based on current information, the Company believes that its recorded liability for the remediation of the affected areas is appropriate based on an estimate of expected costs. However, actual costs could differ materially from the current recorded liability.

17. Segment Reporting

The Company has three reportable segments: Surfactants, Polymers and Specialty Products. Each segment provides distinct products and requires separate management due to unique markets, technologies and production processes. Surfactants are used in a variety of consumer and industrial cleaning and disinfection products as well as in agricultural products, lubricating ingredients, oil field chemicals and other specialized applications. Polymers are used primarily in the manufacture of rigid foam for thermal insulation in the construction industry, plastics, building materials, refrigeration systems and CASE applications. Specialty Products are used in food, flavoring, nutritional supplement and pharmaceutical applications.

The Company evaluates the performance of its segments and allocates resources based on operating income before interest expense, other income/expense items and income tax provision. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.

The following is segment data for the three years ended December 31, 2022, 2021 and 2020:

(In thousands)	Surfactants		Polymers		Specialty Products		Segment Totals
2022
Net sales	$	1,882,745	$	789,080	$	101,445	$	2,773,270
Operating income		162,746		82,897		29,895		275,538
Assets		1,579,242		565,726		96,193		2,241,161
Capital expenditures		259,442		35,679		4,926		300,047
Depreciation and amortization expenses		55,262		31,399		5,807		92,468
2021
Net sales	$	1,562,795	$	713,440	$	69,731	$	2,345,966
Operating income		165,999		73,591		14,178		253,768
Assets		1,245,207		556,799		78,100		1,880,106
Capital expenditures		154,953		29,077		4,976		189,006
Depreciation and amortization expenses		51,375		30,598		5,836		87,809
2020
Net sales	$	1,351,686	$	452,277	$	65,787	$	1,869,750
Operating income		169,101		68,214		13,966		251,281
Assets		1,018,555		361,219		92,964		1,472,738
Capital expenditures		88,484		26,719		5,960		121,163
Depreciation and amortization expenses		49,429		22,873		5,686		77,988

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Below are reconciliations of segment data to the consolidated financial statements:

(In thousands)	2022			2021			2020
Operating income - segment totals	$	275,538		$	253,768		$	251,281
Business restructuring and asset disposition (1)		(308	)		(3,353	)		(1,212	)
Unallocated corporate expenses (2)		(67,894	)		(79,634	)		(78,547	)
Total operating income		207,336			170,781			171,522
Interest expense, net		(9,809	)		(5,753	)		(5,409	)
Other, net		(8,824	)		7,509			4,954
Consolidated income before income taxes	$	188,703		$	172,537		$	171,067
Assets - segment totals	$	2,241,161		$	1,880,106		$	1,472,738
Unallocated corporate assets		192,011			185,506			279,598
Consolidated assets	$	2,433,172		$	2,065,612		$	1,752,336
Capital expenditures - segment totals	$	300,047		$	189,006		$	121,163
Unallocated corporate expenditures		1,506			5,476			4,629
Consolidated capital expenditures	$	301,553		$	194,482		$	125,792
Depreciation and amortization expenses – segment totals	$	92,468		$	87,809		$	77,988
Unallocated corporate depreciation expenses		2,182			3,067			3,872
Consolidated depreciation and amortization expenses	$	94,650		$	90,876		$	81,860

(1)See Note 22, Business Restructuring and Asset Disposition, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) regarding business restructuring and asset disposition costs.

(2)Unallocated corporate expenses are primarily comprised of corporate administrative expenses (e.g., corporate finance, legal, human resources, information systems, deferred compensation and environmental remediation) that are not included in segment operating income and not used to evaluate segment performance.

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Below is certain Company-wide geographic data for the years ended December 31, 2022, 2021 and 2020:

(In thousands)	2022		2021		2020
Net sales (1)
United States	$	1,579,194	$	1,297,650	$	1,117,695
France		227,421		179,746		141,516
Poland		195,781		198,883		147,289
United Kingdom		229,836		208,780		93,115
Brazil		175,004		136,799		105,639
Mexico		148,858		127,944		100,763
All other countries		217,176		196,164		163,733
Total	$	2,773,270	$	2,345,966	$	1,869,750
Long-lived assets (2)
United States	$	896,867	$	668,362	$	499,260
Netherlands		79,007		85,931		—
Germany		42,512		41,438		39,759
Singapore		20,899		23,507		25,815
Brazil		38,493		35,294		35,786
China		28,717		30,991		27,300
United Kingdom		33,389		38,634		24,335
Mexico		52,917		45,384		39,482
All other countries		34,444		39,034		42,970
Total	$	1,227,245	$	1,008,575	$	734,707

(1)Net sales are attributed to countries based on the location of the Company legal entity making the sale.

(2)Includes net property, plant and equipment, goodwill and other intangible assets.

18. Earnings Per Share

Below is the computation of basic and diluted earnings per share for the years ended December 31, 2022, 2021 and 2020:

(In thousands, except per share amounts)	2022		2021		2020
Computation of Basic Earnings per Share
Net income attributable to Stepan Company	$	147,153	$	137,804	$	126,770
Weighted-average number of shares outstanding		22,781		22,922		22,949
Basic earnings per share	$	6.46	$	6.01	$	5.52
Computation of Diluted Earnings per Share
Net income attributable to Stepan Company	$	147,153	$	137,804	$	126,770
Weighted-average number of shares outstanding		22,781		22,922		22,949
Add weighted-average net shares from assumed    exercise of options (under treasury share method) (1)		104		138		112
Add weighted-average net shares related to unvested    stock awards (under treasury share method)		1		1		1
Add weighted-average net shares from assumed    exercise of SARs (under treasury share method)		111		166		145
Add weighted-average contingently issuable net shares    related to performance stock awards (under treasury    share method)		67		60		49
Weighted-average shares applicable to diluted    earnings		23,064		23,287		23,256
Diluted earnings per share	$	6.38	$	5.92	$	5.45

(1)Options/SARs to purchase 343,715, 103,182 and 127,434 shares of the Company’s common stock were excluded from the computations of diluted earnings per share for the years ended December 31, 2022, 2021 and 2020, respectively. The options’/SARs’ exercise prices were greater than the average market price for the Company’s common stock and inclusion of the instruments would have had an antidilutive effect on the computations of earnings per share.

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19. Accumulated Other Comprehensive Income (Loss)

Below is the change in the Company’s accumulated other comprehensive income (loss) (AOCI) balance by component (net of income taxes) for the years ended December 31, 2022, 2021 and 2020:

(In thousands)	Foreign Currency Translation Adjustments			Defined Benefit Pension Plan Adjustments			Cash Flow Hedge Adjustments			Total
Balance at December 31, 2019	$	(104,037	)	$	(32,205	)	$	72		$	(136,170	)
Other comprehensive income before reclassifications		(3,046	)		(996	)		—			(4,042	)
Amounts reclassified from AOCI		—			3,340			(9	)		3,331
Net current period other comprehensive income		(3,046	)		2,344			(9	)		(711	)
Balance at December 31, 2020	$	(107,083	)	$	(29,861	)	$	63		$	(136,881	)
Other comprehensive income before reclassifications		(28,185	)		8,188			—			(19,997	)
Amounts reclassified from AOCI		—			3,651			(9	)		3,642
Net current period other comprehensive income		(28,185	)		11,839			(9	)		(16,355	)
Balance at December 31, 2021	$	(135,268	)	$	(18,022	)	$	54		$	(153,236	)
Other comprehensive income before reclassifications		(21,567	)		(2,857	)		8,357			(16,067	)
Amounts reclassified from AOCI		—			1,800			(9	)		1,791
Net current period other comprehensive income		(21,567	)		(1,057	)		8,348			(14,276	)
Balance at December 31, 2022	$	(156,835	)	$	(19,079	)	$	8,402		$	(167,512	)

Amounts reclassified out of AOCI for the three years ended December 31, 2022, 2021 and 2020, is displayed below:

	Amounts Reclassified from AOCI (1)
(In thousands)	2022			2021			2020			Affected Line Item in Consolidated Statements of Income
Amortization of defined pension items:
Prior service cost	$	(9	)	$	(12	)	$	(11	)
Actuarial loss		(2,393	)		(4,800	)		(4,421	)
	$	(2,402	)		(4,812	)		(4,432	)	Total before tax (2)
		602			1,161			1,092		Tax benefit
	$	(1,800	)	$	(3,651	)	$	(3,340	)	Net of tax
Gains and losses on cash flow hedges:
Foreign exchange contracts	$	9		$	9		$	9		Cost of sales
		9			9			9		Total before tax
		—			—			—		Tax benefit
	$	9		$	9		$	9		Net of tax
Total reclassifications for the period	$	(1,791	)	$	(3,642	)	$	(3,331	)	Net of tax

(1)Amounts in parentheses denote expense to the Company’s Consolidated Statements of Income.

(2)This component of accumulated other comprehensive income is included in the computation of net periodic benefit cost (see Note 13, Postretirement Benefit Plans, of the notes to the Company’s consolidated financial statements for details regarding net periodic benefit costs for the Company’s U.S. and U.K. defined benefit plans).

20. Acquisitions

2022 Acquisition

PerformanX Acquisition

On September 23, 2022, the Company completed the acquisition of the surfactants business and associated assets of PerformanX Specialty Chemicals, LLC. This acquisition enhanced the Company’s specialty alkoxylates portfolio and provides market diversification opportunities. This acquisition is also expected to deliver additional baseload volumes for the Company’s Pasadena, Texas alkoxylation facility that is expected to start up in the first half of 2024. The purchase price of the acquisition was $9,693,000 and was paid for with

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cash on hand. This acquisition did not have a material effect on the Company’s financial position as of December 31, 2022, its results of operations or cash flows for the year ended December 31, 2022. This acquisition was accounted for as a business combination and the assets were measured and recorded at their estimated fair values. The primary assets acquired were intangibles, mostly comprised of goodwill ($1,792,000), manufacturing know-how ($2,750,000), customer relationships ($3,250,000) and non-compete agreements ($10,000). The Company also acquired inventory ($1,312,000) and working capital ($579,000). All of the acquired assets are included within the Company’s Surfactants segment. The Company finalized the purchase price allocation during the fourth quarter of 2022. The average amortization period for the acquired identifiable intangibles assets has been estimated to be in the range of nine to ten years for manufacturing know-how, nine to 11 years for customer relationships and five years for non-compete agreements.

Pro forma financial information has not been included because reported revenues and earnings of the Company would not have been materially different had the acquisition date been January 1, 2021.

2021 Acquisitions

Acquisition of INVISTA’s Aromatic Polyester Polyol Business

On January 29, 2021, the Company and its wholly-owned subsidiaries Stepan Holdings Netherlands B.V. and Stepan UK Limited (collectively, “Stepan”) entered into a Stock and Asset Purchase Agreement with Arteva Specialties B.V., INV Performance Surfaces, LLC, INVISTA Textiles (U.K.) Limited, INV Management Services, LLC, and INVISTA Equities, LLC (collectively, “INVISTA”) to acquire INVISTA’s aromatic polyester polyol business and associated assets. Included in the transaction were two manufacturing sites, one in Wilmington, North Carolina (U.S.) and the other in Vlissingen, Netherlands, along with intellectual property, customer relationships, inventory and working capital. The purchase price was $165,000,000, plus $21,560,000 of working capital and $3,000,000 of associated value-added taxes (VAT), and was paid for with cash on hand. The working capital acquired included $5,900,000 of cash. The Company finalized the purchase price allocation during the third quarter of 2021. The following table summarizes the purchase price allocation for the major components of the acquisition:

(In thousands)
Assets:
Property, plant and equipment	$	54,200
Identifiable intangibles assets		46,000
Goodwill		64,800
Total assets acquired	$	165,000

Fermentation Plant Acquisition

On February 2, 2021, the Company completed the acquisition of a fermentation plant located in Lake Providence, Louisiana. The Company believes this plant complements the rhamnolipid-based bio-surfactant technology the Company acquired from Logos Technologies in March 2020. Fermentation is a new platform technology for the Company and the Company is focusing efforts to further develop, integrate, produce and commercialize these unique surfactants moving forward. Bio-surfactants, produced via fermentation, are attractive due to their biodegradability, low toxicity, and in some cases, unique antimicrobial properties. These bio-surfactants offer potential synergies in several strategic end use markets including oilfield, agriculture, personal care and household, industrial and institutional cleaning. The acquisition of this industrial scale fermentation plant represents a step in the Company’s bio-surfactant commercialization efforts. The purchase price was $3,500,000 and was paid for with cash on hand. This acquisition has been accounted for as an asset acquisition.

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2020 Acquisitions

Clariant (Mexico) Acquisition

On September 17, 2020, the Company through its subsidiaries in Mexico, completed the acquisition of Clariant (Mexico) S.A. de C.V.’s (Clariant) anionic business located in Santa Clara, Mexico. The acquisition did not include the purchase of a manufacturing site. The business acquired has been integrated into the Company’s two existing manufacturing sites in Mexico (Matamoros and Ecatepec). The purchase price of the acquisition was $14,000,000, plus associated value-added taxes ($308,000) and was paid for with cash on hand. The acquisition was accounted for as a business combination and the assets were measured and recorded at their estimated fair values. The acquired goodwill is not tax deductible. All assets acquired are included in the Company’s Surfactants segment. The following table summarizes the purchase price allocation for the acquisition:

(In thousands)
Assets:
Identifiable intangible assets:
Customer lists	$	8,000
Trademarks and know-how		1,300
Non-compete agreement		300
Goodwill		5,165
Property, plant and equipment		175
Total assets acquired	$	14,940
Liabilities:
Other non-current liabilities		940
Total liabilities assumed		940
Net assets acquired	$	14,000

Logos Technologies Acquisition

On March 13, 2020, the Company completed the acquisition off certain assets of Logos Technologies LLC’s NatSurFact® business, a rhamnolipid-based line of bio-surfactants derived from renewable sources. These bio-surfactants offer synergies in several strategic end use markets including oilfield, agriculture, personal care and household, industrial and institutional. The acquisition was accounted for as an asset acquisition. The purchase price of the acquisition was $2,040,000 and was paid with cash on hand. All assets acquired are included in the Company’s Surfactants segment. The assets acquired were primarily intangibles, including trademarks and know-how ($1,392,000) and patents ($464,000). Additionally, $184,000 of laboratory equipment was acquired.

21. Revenue from Contracts with Customers

The Company deems a contract with a customer to exist when a purchase order is received from a customer for a specified quantity of product or products and the Company acknowledges receipt of such purchase order. In some instances the Company has entered into manufacturing supply agreements with customers but these agreements typically do not bind a customer to any purchase volume requirements and thus an obligation is not created until the customer submits a purchase order to the Company. The Company’s contracts typically have a single performance obligation that is satisfied at the time product is shipped and control passes to the customer. For a small portion of the business, performance obligations are deemed satisfied when product is delivered to a customer location.

As of December 31, 2022, the Company had $739,000 of contract liabilities and no contract assets. A contract liability would typically arise when an advance or deposit is received from a customer before the Company recognizes revenue. In practice, this is rare as it would require a customer to make a payment prior to a performance obligation being satisfied. When such situations do arise, the Company maintains a deferred revenue liability until the time a performance obligation has been satisfied. The Company recognized $1,376,000 of revenue in 2022 from pre-existing contract liabilities at December 31, 2021. During 2020 the Company recorded $10,709,000 of long-term deferred revenue associated with a payment received to defray the cost of capital expenditures necessary to service a customer’s future product needs. On December 31, 2022, $8,762,000 was classified as long-term and $1,947,000 was classified as short-term. This deferred revenue will be recognized over the period of the contract. As of December 31, 2022, no revenue has been recognized from this contract.

76

The tables below provide a geographic disaggregation of net sales for the years ended December 31, 2022, 2021 and 2020. The Company’s business segmentation by geographic region most effectively captures the nature and economic characteristics of the Company’s revenue streams impacted by economic factors.

	2022
(In thousands)	Surfactants		Polymers		Specialty Products		Total
Geographic Market
North America	$	1,099,616	$	437,312	$	83,807	$	1,620,735
Europe		349,651		307,441		16,118		673,210
Latin America		363,799		4,629		1,520		369,948
Asia		69,679		39,698		—		109,377
Total	$	1,882,745	$	789,080	$	101,445	$	2,773,270

	2021
(In thousands)	Surfactants		Polymers		Specialty Products		Total
Geographic Market
North America	$	904,469	$	364,382	$	59,461		1,328,312
Europe		288,735		302,137		9,152		600,024
Latin America		299,601		3,823		1,118		304,542
Asia		69,990		43,098		—		113,088
Total	$	1,562,795	$	713,440	$	69,731	$	2,345,966

	2020
(In thousands)	Surfactants		Polymers		Specialty Products		Total
Geographic Market
North America	$	826,841	$	265,700	$	56,455		1,148,996
Europe		234,631		147,289		9,332		391,252
Latin America		234,568		2,498		—		237,066
Asia		55,646		36,790		—		92,436
Total	$	1,351,686	$	452,277	$	65,787	$	1,869,750

22. Business Restructuring and Asset Disposition

2018 Restructuring

During the third quarter of 2018, the Company approved a plan to shut down surfactants operations at its German plant site. As of December 31, 2022, an aggregate of $2,392,000 shut down related expense had been recognized at the site. This aggregate expense is comprised of $1,404,000 of asset and spare part write downs recognized in 2018 and $988,000 of cumulative decommissioning costs. The Company recognized $79,000 and $909,000 in decommissioning expenses in 2020 and 2019, respectively.

2016 Restructuring

During 2016, the Company shut down its Longford Mills, Ontario, Canada (Longford Mills) manufacturing facility, a part of the Surfactant reportable segment. The shutdown plan was implemented to improve the Company’s asset utilization in North America and to reduce the Company’s fixed cost base. Manufacturing operations of the Longford Mills plant ceased by the end of 2016, and production of goods manufactured at the facility was transferred to other Company North American production sites. As of December 31, 2022, $9,558,000 of aggregate restructuring expense had been recognized, reflecting $1,644,000 of termination benefits for approximately 30 employees and $7,914,000 for other expenses, principally site decommissioning costs. The Company recognized restructuring expenses of $308,000, $633,000 and $1,133,000 in 2022, 2021 and 2020, respectively.

77

Asset Disposition

In the fourth quarter 2021, the Company sold one of its corporate headquarters buildings and recognized a $2,720,000 loss on the sale of the building. The loss is reflected in the Business restructuring and asset disposition line on the Company’s consolidated statements of income.

23. Insurance Recovery

Elwood, Illinois (Millsdale) site

On January 19, 2020, the Company experienced a power disruption that impacted its Elwood, Illinois (Millsdale) facility. This power outage combined with below freezing temperatures, led to significant production and operational challenges that impacted both Surfactants and Polymers produced at the site. The Millsdale facility operated on a partial basis and used existing inventories to serve its customers during this time. On February 17, 2020, power outage-related operational issues impacted the Millsdale site’s waste water treatment plant and forced the Company to stop production at the site. As a result, the Company declared force majeure for the supply of phthalic anhydride (Polymers) and certain surfactant product lines. All production lines were fully operational prior to the end of the 2020 first quarter. During the second half of 2020, the Company finalized an insurance settlement related to this incident and recognized an $18,000,000 pre-tax insurance recovery. This insurance recovery was recognized as a reduction of expenses within cost of sales in the consolidated financial statements of income for the year ended December 31, 2020. The Surfactant and Polymer segments recorded $5,200,000 and $12,800,000, respectively, in insurance recovery.

24. Noncash Investing and Financing Activities

Noncash investing activities included liabilities (accounts payable) incurred for property, plant and equipment expenditures of approximately $55,480,000, $36,588,000, and $17,946,000 that were unpaid at December 31, 2022, 2021 and 2020, respectively. Noncash financing activities included 58,441 shares of the Company’s common stock (valued at $6,095,000), 60,132 shares of the Company’s common stock (valued at $7,286,000) and 58,282 shares of the Company’s common stock (valued at $5,485,000) issued in connection with the Company’s equity incentive compensation plan in 2022, 2021 and 2020, respectively.

78

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A. Controls and Procedures

a.Evaluation of Disclosure Controls and Procedures

We have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of December 31, 2022. Based on this evaluation of our disclosure controls and procedures, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of December 31, 2022, such that the information required to be disclosed in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Exchange Act and is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

b.Management’s Annual Report on Internal Control over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control system was designed to provide reasonable assurance to the Company’s management and board of directors regarding the preparation and fair presentation of published financial statements.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013). Based on our assessment we believe that, as of December 31, 2022, the Company’s internal controls over financial reporting were effective based on those criteria.

The Company’s independent registered public accounting firm that audited the financial statements included in this Form 10-K has issued an attestation report on the Company’s internal control over financial reporting. This report follows:

c.Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of

Stepan Company

Northbrook, Illinois

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Stepan Company and subsidiaries (the “Company”) as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2022, of the Company and our report dated February 28, 2023 expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

79

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP

Chicago, Illinois

February 28, 2023

d.Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

80

PART III

Item 10. Directors, Executive Officers and Corporate Governance

(a)Directors

All information required by this Item will be included in the Company’s Proxy Statement for the Annual Meeting of Stockholders expected to be held April 25, 2023 (the “2023 Proxy Statement”) and is incorporated by reference herein.*

(b)Executive Officers

All information required by this Item will be included in the 2023 Proxy Statement and is incorporated by reference herein.

(c)Delinquent Section 16(a) Reports

All information required by this Item will be included in the 2023 Proxy Statement and is incorporated by reference herein.

(d)Audit Committee Financial Expert

All information required by this Item will be included in the 2023 Proxy Statement and is incorporated by reference herein.

(e)Code of Conduct

All information required by this Item will be included in the 2023 Proxy Statement and is incorporated by reference herein.

Item 11. Executive Compensation

All information required by this Item will be included in the 2023 Proxy Statement and is incorporated by reference herein.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

All information required by this Item will be included in the 2023 Proxy Statement and is incorporated by reference herein.

Item 13. Certain Relationships and Related Transactions, and Director Independence

All information required by this Item will be included in the 2023 Proxy Statement and is incorporated by reference herein.

Item 14. Principal Accountant Fees and Services

All information required by this Item will be included in the 2023 Proxy Statement and is incorporated by reference herein.

* Except for information or data specifically incorporated herein by reference under Items 10 through 14, other information and data appearing in the 2023 Proxy Statement are not deemed to be a part of this Annual Report on Form 10-K or deemed to be filed with the SEC as part of this report.

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)(1)(2) Financial Statements and Financial Statement Schedules

See Item 8 for the Consolidated Financial Statements and supplementary data included in this Form 10-K.

(a)(3) Exhibits

See the following List of Exhibits:

Exhibit No.	Description
3.1	Restated Certificate of Incorporation of Stepan Company, filed October 21, 2013, with the State of Delaware (filed with the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 (File No. 001-4462), and incorporated herein by reference)

81

Exhibit No.	Description
3.2	Amended and Restated Bylaws of Stepan Company (Amended as of October 22, 2019) (filed with the Company’s Quarterly Report on Form 10-Q filed on October 30, 2019 (File No. 001-4462), and incorporated herein by reference)
4.1	Description of the Company’s Common Stock (filed with the Company’s Annual Report on form 10-K for the year ended December 31, 2019 (File No. 001-4462), and incorporated herein by reference)
10.1	Settlement Agreement, which provided information with respect to the Company’s agreement with the United States regarding environmental remediation work to be completed at Stepan’s site in Maywood, New Jersey (filed with the Company’s Current Report on Form 8-K filed on November 18, 2004 (File No. 001-4462), and incorporated herein by reference)
10.2+	Stepan Company Supplemental Savings and Investment Retirement Plan (Amended and Restated Effective as of January 1, 2019) (filed with the Company’s Quarterly Report on Form 10-Q filed on October 30, 2019 (File No. 001-4462), and incorporated herein by reference)
10.3+	Stepan Company 2011 Incentive Compensation Plan (filed with the Company’s Definitive Proxy Statement on Schedule 14A filed on March 31, 2011 (File No. 001-4462), and incorporated herein by reference)
10.4+	Form of Non-Qualified Stock Option Agreement under the Stepan Company 2011 Incentive Compensation Plan (filed with the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 (File No. 001-4462), and incorporated herein by reference)
10.5+	Form of Incentive Stock Option Agreement under the Stepan Company 2011 Incentive Compensation Plan (filed with the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 (File No. 001-4462), and incorporated herein by reference)
10.6	Form of Non-Employee Director Non-Qualified Stock Option Agreement under the Stepan Company 2011 Incentive Compensation Plan (filed with the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 (File No. 001-4462), and incorporated herein by reference)
10.7+	Form of Stock Appreciation Rights Agreement under the Stepan Company 2011 Incentive Compensation Plan (filed with the Company’s Current Report on Form 8-K filed on February 23, 2015 (File No. 001-4462), and incorporated herein by reference)
10.8+	Form of Non-Qualified Stock Option Agreement under the Stepan Company 2011 Incentive Compensation Plan (filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (File No. 001-4462), and incorporated herein by reference)
10.9+	Form of Stock Appreciation Rights Agreement under the Stepan Company 2011 Incentive Compensation Plan (filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (File No. 001-4462), and incorporated herein by reference)
10.10+	First Amendment to the Stepan Company 2011 Incentive Compensation Plan (filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (File No. 001-4462), and incorporated herein by reference)
10.11+	Form of Non-Qualified Stock Option Agreement under the Stepan Company 2011 Incentive Compensation Plan (filed with the Company’s Annual Report on Form 10-k for the year ended December 31, 2017 (File No. 001-4462), and incorporated herein by reference
10.12+	Form of Performance Grant Agreement under the Stepan Company 2011 Incentive Compensation Plan (filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (File No. 001-4462), and incorporated herein by reference)
10.13+	Form of Stock Appreciation Rights Agreement under the Stepan Company 2011 Incentive Compensation Plan (filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (File No. 001-4462), and incorporated herein by reference
10.14+	Form of Stock Awards Agreement under the Stepan Company 2011 Incentive Compensation Plan (filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (File No. 001-4462), and incorporated herein by reference

82

Exhibit No.	Description
10.15+	Second Amendment to the Stepan Company 2011 Incentive Compensation Plan (filed with the Company’s Current Report on Form 8-K filed on May 6, 2019 (File No. 001-4462), and incorporated herein by reference)
10.16+	Performance Award Deferred Compensation Plan (Effective January 1, 2008) (filed with the Company’s Current Report on Form 8-K filed on October 24, 2008 (File No. 001-4462), and incorporated herein by reference)
10.17	Stepan Company Directors Deferred Compensation Plan amended and restated as of January 1, 2012 (filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (File No. 001-4462), and incorporated herein by reference)
10.18+	Management Incentive Plan (As Amended and Restated Effective January 1, 2015) (filed with the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 001-4462), and incorporated herein by reference)
10.19+	Stepan Company 2022 Equity Incentive Compensation Plan (filed with the Company’s Current Report on Form 8-K filed on May 3, 2022 (File No. 001-04462), and incorporated herein by reference)
10.20*+	Form of Appreciation Rights Agreement under the Stepan Company 2022 Equity Incentive Compensation Plan
10.21*+	Form of Nonqualified Stock Option Agreement under the Stepan Company 2022 Equity Incentive Compensation Plan
10.22*+	Form of Performance Shares Agreement under the Stepan Company 2022 Equity Incentive Compensation Plan
10.23*+	Form of Restricted Stock Units Agreement under the Stepan Company 2022 Equity Incentive Compensation Plan
10.24	Note Purchase Agreement, dated as of September 29, 2005, regarding 5.69% Senior Notes due November 1, 2018, with Connecticut General Life Insurance Company, Life Insurance Company of North America, MONY Life Insurance Company, AXA Equitable Life Insurance Company and Horizon Blue Cross Blue Shield of New Jersey (filed with the Company’s Current Report on Form 8-K filed on October 3, 2005 (File No. 001-4462), and incorporated herein by reference)
10.25	First Supplement, dated as of June 1, 2010, to Note Purchase Agreement dated as of September 29, 2005, regarding 5.88% Senior Notes due June 1, 2022, with The Prudential Insurance Company of America, Prudential Retirement Insurance and Annuity Company, Forethought Life Insurance Company, AXA Equitable Life Insurance Company, Connecticut General Life Insurance Company and Life Insurance Company of North America (filed with the Company’s Current Report on Form 8-K filed on June 3, 2010 (File No. 001-4462), and incorporated herein by reference)
10.26	First Amendment, dated as of October 25, 2011, to Note Purchase Agreement dated as of September 29, 2005 (filed with the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011(File No. 001-4462), and incorporated herein by reference)
10.27	Second Supplement, dated as of November 1, 2011, to Note Purchase Agreement dated as of September 29, 2005, regarding 4.86% Senior Notes due November 1, 2023 (filed with the Company’s Current Report on Form 8-K filed on November 4, 2011 (File No. 001-4462), and incorporated herein by reference)
10.28	Second Amendment, dated as of April 23, 2014, to Note Purchase Agreement dated as of September 29, 2005 (filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (File No. 001-4462), and incorporated herein by reference
10.29	Third Amendment, dated as of January 30, 2018, to the Note Purchase Agreement dated as of September 29, 2005 among Stepan Company and the noteholders party thereto (filed with the Company’s Current Report on Form 8-K filed on February 2, 2018 (File No. 001-4462) and incorporated herein by reference)
10.30	Note Purchase Agreement, dated as of June 27, 2013, regarding 3.86% Senior Notes due June 27, 2025 (filed with the Company’s Current Report on Form 8-K filed on July 3, 2013 (File No. 001-4462), and incorporated herein by reference)
10.31	First Amendment, dated as of January 30, 2018, to the Note Purchase Agreement dated as of June 27, 2013 among Stepan Company and the noteholders party thereto (filed with the Company’s Current Report on Form 8-K filed on February 2, 2018 (File No. 001-4462) and incorporated herein by reference)

83

Exhibit No.	Description
10.32	Note Purchase Agreement, dated as of July 10, 2015, regarding 3.95% Senior Notes Due July 10, 2027 (filed with the Company’s Current Report on Form 8-K filed on July 13, 2015 (File No. 001-4462), and incorporated herein by reference)
10.33	First Amendment, dated as of January 30, 2018, to the Note Purchase Agreement dated as of July 10, 2015 among Stepan Company and the noteholders party thereto (filed with the Company’s Current Report on Form 8-K filed on February 2, 2018 (File No. 001-4462) and incorporated herein by reference)
10.34	Stock and Asset Purchase Agreement, dated as of January 29, 2021, by and among Arteva Specialties B.V., INV Performance Surfaces, LLC, INVISTA Textiles (U.K.) Limited, INV Management Services, LLC, Stepan Company, Stepan U.K. Limited and Stepan Holdings Netherlands B.V. (filed with the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 (File No. 001-4462), and incorporated herein by reference)
10.35	Note Purchase and Private Shelf Agreement dated as of June 10, 2021 by and among Stepan Company, PGIM, Inc. and the purchasers thereto (filed with the Company’s Current Report on Form 8-K filed on June 14, 2021 (File No. 001-4462), and incorporated herein by reference)
10.36	Subsidiary Guaranty dated as of June 10, 2021, by and between Stepan Specialty Products, LLC and Stepan Surfactants Holdings, LLC relating to the Note Purchase and Private Shelf Agreement dated as of June 10, 2021, by and among Stepan Company, PGIM, Inc. and the purchasers thereto (filed with the Company’s Current Report on Form 8-K filed on June 14, 2021 (File No. 001-4462), and incorporated herein by reference)
10.37	Note Purchase and Master Note Agreement dated as of June 10, 2021, by and among Stepan Company, NYL Investors LLC and the purchasers thereto (filed with the Company’s Current Report on Form 8-K filed on June 14, 2021 (File No. 001-4462), and incorporated herein by reference)
10.38	Subsidiary Guaranty dated as of June 10, 2021, by and between Stepan Specialty Products, LLC and Stepan Surfactants Holdings, LLC relating to the Note Purchase and Master Note Agreement dated as of June 10, 2021, by and among Stepan Company, NYL Investors LLC and the purchasers thereto (filed with the Company’s Current Report on Form 8-K filed on June 14, 2021 (File No. 001-4462), and incorporated herein by reference)
10.39	Credit Agreement, dated as of June 24, 2022, among Stepan Company, the foreign subsidiary borrowers from time to time party thereto, the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent, Bank of America, N.A., as syndication agent, and JPMorgan Chase Bank, N.A. and BofA Securities, Inc., as joint lead arrangers and joint bookrunners (filed with the Company’s Current Report on Form 8-K filed on June 27, 2022 (File No. 001-04462), and incorporated herein by reference)
21*	Subsidiaries of the Registrant at December 31, 2022
23*	Consent of Independent Registered Public Accounting Firm
24*	Power of Attorney
31.1*	Certification of President and Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Chief Financial Officer (Principal Financial Officer) to Section 302 of the Sarbanes-Oxley Act of 2002
32**	Certification of President and Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer) pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document

84

Exhibit No.	Description
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith

** Furnished herewith

+ Management contract or compensatory plan

Item 16. Form 10-K Summary

None

85

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

STEPAN COMPANY
By:	/s/ Luis E. Rojo
	Luis E. Rojo Vice President and Chief Financial Officer

February 28, 2023

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/s/ F. Quinn Stepan, Jr.	Chairman and Director	February 28, 2023
F. Quinn Stepan, Jr.
/s/ Scott R. Behrens	President and Chief Executive Officer and Director	February 28, 2023
Scott R. Behrens	(Principal Executive Officer)
/s/ Luis E. Rojo	Vice President and Chief Financial Officer	February 28, 2023
Luis E. Rojo	(Principal Financial and Accounting Officer)
/s/ Lorinda A. Burgess	Director	February 28, 2023
Lorinda A. Burgess
/s/ Randall S. Dearth	Director	February 28, 2023
Randall S. Dearth
/s/ Joaquin Delgado	Director	February 28, 2023
Joaquin Delgado
/s/ Gregory E. Lawton	Director	February 28, 2023
Gregory E. Lawton
/s/ Jan Stern Reed	Director	February 28, 2023
Jan Stern Reed
/s/ Edward J. Wehmer	Director	February 28, 2023
Edward J. Wehmer

Luis E. Rojo, pursuant to powers of attorney executed by each of the directors and officers listed above, does hereby execute this report on behalf of each of such directors and officers in the capacity in which the name of each appears above.

February 28, 2023	/s/ Luis E. Rojo
	Luis E. Rojo

86

EX-10

Exhibit 10.20

STEPAN COMPANY

2022 EQUITY INCENTIVE COMPENSATION PLAN

NOTICE OF GRANT OF APPRECIATION RIGHTS

Stepan Company (the “Company”) hereby grants to the Participant Appreciation Rights under the Stepan Company 2022 Equity Incentive Compensation Plan (the “Plan”). The Appreciation Rights are subject to all of the terms and conditions in this Notice of Grant of Appreciation Rights (this “Grant Notice”), in the Appreciation Rights Agreement attached hereto (the “Agreement”) and in the Plan. Capitalized terms used, but not otherwise defined, in this Grant Notice will have the meanings given to such terms in the Plan or Agreement, as applicable, and the Plan and Agreement are hereby incorporated by reference into this Grant Notice. If there are any inconsistences between this Grant Notice or the Agreement and the Plan, the terms of the Plan shall govern.

Participant:	[___]
Type of Grant:	Appreciation Rights
Date of Grant:	[____]
Number of Stock Appreciation Rights:	[____]
Base Price:	[____]
SAR Expiration Date:	[____]
Vesting Schedule:	Subject to the conditions set forth in the Agreement, including but not limited to the Participant’s continuous employment with the Company or a Subsidiary until the applicable vesting date, the Appreciation Rights shall vest and become exercisable [in three substantially equal installments on the first three anniversaries of the Date of Grant].

Exhibit 10.20

STEPAN COMPANY

2022 EQUITY incentive compensation plan

APPRECIATION RIGHTS AGREEMENT

Stepan Company (the “Company”) has granted, pursuant to the Stepan Company 2022 Equity Incentive Compensation Plan (the “Plan”), to the Participant named in the Notice of Grant of Appreciation Rights (the “Grant Notice”) to which this Appreciation Rights Agreement is attached (together with the Grant Notice, this “Agreement”) the number of Appreciation Rights set forth in the Grant Notice, subject to the terms and conditions set forth in this Agreement.

1.Certain Definitions. Capitalized terms used, but not otherwise defined, in this Agreement will have the meanings given to such terms in the Plan.

2.Grant of Appreciation Rights. Subject to and upon the terms, conditions and restrictions set forth in this Agreement and in the Plan, the Company has granted to the Participant, as of the Date of Grant, the number of Appreciation Rights set forth in the Grant Notice (the “SARs”) at the Base Price specified therein. The Base Price represents at least the Market Value per Share on the Date of Grant.

3.Vesting of SARs.

(a)The SARs shall vest and become exercisable (“Vest,” or “Vested”) as set forth in the Grant Notice if the Participant remains continuously employed by the Company or a Subsidiary in accordance with the Vesting Schedule set forth in the Grant Notice (the period from the Date of Grant until the last vesting date of the Vesting Schedule, the “Vesting Period”).

(b)Any portion of the SARs that does not become Vested will be forfeited, including if the Participant ceases to be continuously employed by the Company or a Subsidiary prior to the end of the Vesting Period. For purposes of this Agreement, “continuously employed” (or substantially similar terms) means the absence of any interruption or termination of the Participant’s employment with the Company or a Subsidiary; provided, however, that the Participant’s employment shall not be considered interrupted or terminated if, immediately following the Participant’s service as an employee, the Participant continues providing services as a non‑employee Director or material services to the Company or a Subsidiary as a consultant. Continuous employment shall not be considered interrupted or terminated in the case of sick leave, military leave or any other leave of absence approved by the Company or in the case of transfers between locations of the Company and its Subsidiaries.

(c)Notwithstanding Section 3(b), in the event that the Participant’s employment with the Company or a Subsidiary is terminated by the Company as a result of (i) the Participant becoming disabled or (ii) the Participant’s death, then in any such case, the SARs shall become fully Vested as of the date of the Participant’s termination of employment with the Company or a Subsidiary.

(d)Notwithstanding Section 3(b), in the event that the Participant’s employment with the Company or a Subsidiary is terminated by the Participant due to retirement (as determined under the provisions of any qualified retirement plan that may be maintained by the Company or a Subsidiary), then a prorated portion (equal to the product of (i) the number of SARs granted hereunder, multiplied by (ii) a fraction, the numerator of which is the number of whole months following the most recent preceding anniversary of the Date of Grant during which the Participant was employed by the Company or a Subsidiary, and the denominator of which is thirty-six (36), with the result then rounded up or down to the nearest whole number) of the SARs shall become fully Vested as of the date of the Participant’s termination of employment with the Company or a Subsidiary.

4.Right To Exercise; Termination of the SARs. Any portion of the SARs that becomes Vested in accordance with Section 3 shall remain exercisable until, and shall terminate on, the earliest of the following dates:

(a)Three (3) months after the Participant’s employment with the Company is terminated for any reason, unless such termination of employment (i) is due to the Participant’s death, disability or retirement (as determined under the provisions of any qualified retirement plan that may be maintained by the Company or a Subsidiary) or (ii) is a result of a termination for Cause as described in Section 4(b); provided, however, that if there are no open trading days under the Company’s Insider Trading Policy during such three (3) month post-termination exercise period, then such exercise period shall be extended by an additional thirty (30) days (subject to Sections 4(c) and 4(d) below);

(b)The date of termination of the Participant’s employment by the Company or any Subsidiary for Cause;

(c)The SAR Expiration Date set forth in the Grant Notice; or

(d)Ten (10) years from the Date of Grant.

For the avoidance of doubt, any portion of the SARs that remains outstanding, whether or not Vested, will terminate immediately on the tenth anniversary of the Date of Grant.

5.Exercise of SARs. To the extent exercisable, the SARs may be exercised in whole or in part from time to time by the Participant giving written notice to the Company or its third party administrator specifying the number of SARs with respect to which the Participant elects to exercise such right and the exercise date. Upon exercise, the SARs will be settled in a number of Common Shares equal in value to the excess of the fair market value per Common Share on the date of exercise over the Base Price, multiplied by the number of SARs exercised. An exercise may be disallowed if, as determined by the Company, it is not made in compliance with any applicable provisions of the Company’s Insider Trading Policy as in effect from time to time. For the avoidance of doubt, in no event shall the Participant be entitled to receive payment for the SARs in any form other than Common Shares, and under no circumstance shall the Participant be entitled to receive a cash payment or any other security under this Agreement.

6.Transferability, Binding Effect. Subject to Section 15 of the Plan, the SARs are not transferable by the Participant otherwise than by will or the laws of descent and distribution, and in no event shall the SARs be transferred for value.

7.No Dividend Equivalents. The Participant shall not be entitled to dividends or dividend equivalents with respect to the SARs or the Common Shares underlying the SARs until such Common Shares are issued after the exercise of the SARs (or a portion thereof).

8.Adjustments. The number of Common Shares issuable subject to the SARs and the other terms and conditions of the grant evidenced by this Agreement are subject to mandatory adjustment, including as provided in Section 11 of the Plan.

9.Taxes and Withholding. To the extent that the Company or any Subsidiary is required to withhold federal, state, local or foreign taxes or other amounts in connection with the delivery to the Participant of Common Shares or any other payment to the Participant or any other payment or vesting event under this Agreement, the Participant agrees that the Company will withhold or collect from the Participant any taxes required to be withheld by the Company under federal, state, local or foreign law as a result of the payment of the SARs, including by withholding and retaining a portion of the Common Shares to be delivered to the Participant upon the payment of such SARs under this Agreement (which share withholding, for any “officers” (for purposes of Section 16 of the Exchange Act), will be the method of withholding unless otherwise determined by the Committee). In any event, it shall be a condition to the obligation of the Company to make any such delivery or payment that the Participant make arrangements satisfactory to the Company for payment of such taxes or other amounts required to be withheld. Any Common Shares retained by the Company as set forth above shall be credited against any such withholding requirement at the fair market value of the Common Shares on the date of such delivery. In no event will the total fair market value of the Common Shares to be withheld and/or delivered pursuant to this Section 9 to satisfy applicable withholding taxes exceed the maximum amount of taxes or other amounts that could be required to be withheld. Notwithstanding any other provision of this Agreement, the Company shall not be obligated to guarantee any particular tax result for the Participant with respect to any payment provided to the Participant hereunder, and the Participant shall be responsible for any taxes imposed on the Participant with respect to any such payment.

10.Compliance with Law. The Company shall make reasonable efforts to comply with all applicable federal and state securities laws; provided, however, notwithstanding any other provision of the Plan and this Agreement, the Company shall not be obligated to issue any Common Shares pursuant to this Agreement if the issuance thereof would result in a violation of any such law. The SARs shall not be exercisable if such exercise would involve a violation of any law.

11.No Right to Future Awards or Employment. The Appreciation Rights award is a voluntary, discretionary award being made on a one-time basis and it does not constitute a commitment to make any future awards. The Appreciation Rights award and any related payments made to the Participant will not be considered salary or other compensation for purposes of any severance pay or similar allowance, except as otherwise required by law. Nothing contained in this Agreement will confer upon the Participant any right to be employed or remain employed by the Company or any of its Subsidiaries, nor limit or affect in any manner the right of the Company

or any of its Subsidiaries to terminate the Participant’s employment or adjust the compensation of the Participant.

12.Relation to Other Benefits. Any economic or other benefit to the Participant under this Agreement or the Plan shall not be taken into account in determining any benefits to which the Participant may be entitled under any profit-sharing, retirement or other benefit or compensation plan maintained by the Company or any of its Subsidiaries and shall not affect the amount of any life insurance coverage available to any beneficiary under any life insurance plan covering employees of the Company or any of its Subsidiaries.

13.Amendments.Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided, however, that no amendment shall adversely affect the Participant’s rights with respect to the SARs without the Participant’s consent, and the Participant’s consent shall not be required to an amendment that is deemed necessary by the Company to ensure compliance with Section 10D of the Exchange Act.

14.Severability. In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable.

15.Relation to Plan. The SARs granted under this Agreement and all of the terms and conditions hereof are subject to all of the terms and conditions of the Plan. In the event of any inconsistency between this Agreement and the Plan, the terms of the Plan will govern. The Committee acting pursuant to the Plan, as constituted from time to time, shall, except as expressly provided otherwise herein or in the Plan, have the right to determine any questions which arise in connection with this Agreement.

16.Recoupment. The SARs and any related benefit or compensation under this Agreement is subject to the applicable recoupment, recapture, clawback or recovery policy of the Company as adopted by the Board or the Committee and in effect from time to time. In addition, this Agreement may be amended at any time and from time to time by the Company without the consent or written agreement of the Participant to the extent necessary to comply with any recoupment, recapture, clawback or recovery policy of the Company adopted by the Board or the Committee to comply with Section 10D of the Exchange Act and any applicable rules or regulations promulgated by the Securities and Exchange Commission or any national securities exchange or national securities association on which the Stock may then be traded, as reasonably determined by the Board or the Committee in its sole discretion.

17.Electronic Delivery.The Company may, in its sole discretion, deliver any documents related to the SARs and the Participant’s participation in the Plan, or future awards that may be granted under the Plan, by electronic means or request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and, if requested, agrees to participate in the Plan through an online or electronic system established and maintained by the Company or another third party designated by the Company.

18.Governing Law. This Agreement shall be governed by and construed with the internal substantive laws of the State of Delaware, without giving effect to any principle of law that would result in the application of the law of any other jurisdiction.

19.Successors and Assigns. Without limiting Section 6 hereof, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of the Participant, and the successors and assigns of the Company.

20.Acknowledgement. The Participant acknowledges that the Participant (a) has received a copy of the Plan, (b) has had an opportunity to review the terms of this Agreement and the Plan, (c) understands the terms and conditions of this Agreement and the Plan and (d) agrees to such terms and conditions.

21.Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same agreement.

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned have executed this Agreement on the day and year indicated below.

STEPAN COMPANY

By:

Name:

Title:

Date:

Participant Acknowledgment and Acceptance

By:

Name:

Date:

EX-10

Exhibit 10.21

STEPAN COMPANY

2022 EQUITY INCENTIVE COMPENSATION PLAN

NOTICE OF GRANT OF NONQUALIFIED STOCK OPTION

Stepan Company (the “Company”) hereby grants to the Participant an Option Right (the “Option”) to purchase the number of Common Shares set forth below under the Stepan Company 2022 Equity Incentive Compensation Plan (the “Plan”). The Option is subject to all of the terms and conditions in this Notice of Grant of Nonqualified Stock Option (this “Grant Notice”), in the Nonqualified Stock Option Agreement attached hereto (the “Agreement”) and in the Plan. Capitalized terms used, but not otherwise defined, in this Grant Notice will have the meanings given to such terms in the Plan or Agreement, as applicable, and the Plan and Agreement are hereby incorporated by reference into this Grant Notice. If there are any inconsistences between this Grant Notice or the Agreement and the Plan, the terms of the Plan shall govern.

Participant:	[___]
Type of Grant:	Nonqualified Option Right
Date of Grant:	[____]
Number of Common Shares Subject to the Option:	[____]
Option Price:	[____]
Option Expiration Date:	[____]
Vesting Schedule:	Subject to the conditions set forth in the Agreement, including but not limited to the Participant’s continuous employment with the Company or a Subsidiary until the applicable vesting date, Option shall vest and become exercisable [in three substantially equal installments on the first three anniversaries of the Date of Grant].

Exhibit 10.21

STEPAN COMPANY

2022 EQUITY incentive compensation plan

NONQUALIFIED STOCK OPTION AGREEMENT

Stepan Company (the “Company”) has granted, pursuant to the Stepan Company 2022 Equity Incentive Compensation Plan (the “Plan”), to the Participant named in the Notice of Grant of Nonqualified Stock Option (the “Grant Notice”) to which this Nonqualified Stock Option Agreement is attached (together with the Grant Notice, this “Agreement”) an Option to purchase the number of Common Shares set forth in the Grant Notice, subject to the terms and conditions set forth in this Agreement.

1.Certain Definitions. Capitalized terms used, but not otherwise defined, in this Agreement will have the meanings given to such terms in the Plan.

2.Grant of Option. Subject to and upon the terms, conditions and restrictions set forth in this Agreement and in the Plan, the Company has granted to the Participant, as of the Date of Grant, an Option to purchase the number of Common Shares set forth in the Grant Notice at the Option Price specified therein. The Option Price represents at least the Market Value per Share on the Date of Grant. The Option is intended to be a nonqualified stock option.

3.Vesting of Option.

(a)The Option shall vest and become exercisable (“Vest,” or “Vested”) as set forth in the Grant Notice if the Participant remains continuously employed by the Company or a Subsidiary in accordance with the Vesting Schedule set forth in the Grant Notice (the period from the Date of Grant until the last vesting date of the Vesting Schedule, the “Vesting Period”).

(b)Any portion of the Option that does not become Vested will be forfeited, including if the Participant ceases to be continuously employed by the Company or a Subsidiary prior to the end of the Vesting Period. For purposes of this Agreement, “continuously employed” (or substantially similar terms) means the absence of any interruption or termination of the Participant’s employment with the Company or a Subsidiary; provided, however, that the Participant’s employment shall not be considered interrupted or terminated if, immediately following the Participant’s service as an employee, the Participant continues providing services as a non-employee Director or material services to the Company or a Subsidiary as a consultant. Continuous employment shall not be considered interrupted or terminated in the case of sick leave, military leave or any other leave of absence approved by the Company or in the case of transfers between locations of the Company and its Subsidiaries.

(c)Notwithstanding Section 3(b), in the event that the Participant’s employment with the Company or a Subsidiary is terminated by the Company as a result of (i) the Participant becoming disabled or (ii) the Participant’s death, then in any such case, the Option shall become fully Vested as of the date of the Participant’s termination of employment with the Company or a Subsidiary.

(d)Notwithstanding Section 3(b), in the event that the Participant’s employment with the Company or a Subsidiary is terminated by the Participant due to retirement (as determined under the provisions of any qualified retirement plan that may be maintained by the Company or a Subsidiary), then a prorated portion (equal to the product of (i) the number of Common Shares subject to the Option, multiplied by (ii) a fraction, the numerator of which is the number of whole months following the most recent preceding anniversary of the Date of Grant during which the Participant was employed by the Company or a Subsidiary, and the denominator of which is thirty-six (36), with the result then rounded up or down to the nearest whole number) of the Option shall become fully Vested as of the date of the Participant’s termination of employment with the Company or a Subsidiary.

4.Right To Exercise; Termination of the Option. Any portion of the Option that becomes Vested in accordance with Section 3 shall remain exercisable until, and shall terminate on, the earliest of the following dates:

(a)Three (3) months after the Participant’s employment with the Company is terminated for any reason, unless such termination of employment (i) is due to the Participant’s death, disability or retirement (as determined under the provisions of any qualified retirement plan that may be maintained by the Company or a Subsidiary) or (ii) is a result of a termination for Cause as described in Section 4(b); provided, however, that if there are no open trading days under the Company’s Insider Trading Policy during such three (3) month post-termination exercise period, then such exercise period shall be extended by an additional thirty (30) days (subject to Sections 4(c) and 4(d) below);

(b)The date of termination of the Participant’s employment by the Company or any Subsidiary for Cause;

(c)The Option Expiration Date set forth in the Grant Notice; or

(d)Ten (10) years from the Date of Grant.

For the avoidance of doubt, any portion of the Option that remains outstanding, whether or not Vested, will terminate immediately on the tenth anniversary of the Date of Grant.

5.Exercise and Payment of Option. To the extent exercisable, the Option may be exercised in whole or in part from time to time and will be settled in Common Shares by the Participant giving written notice to the Company or its third party administrator specifying the number of Common Shares for which the Option is to be exercised and paying the aggregate Option Price for such Common Shares. An exercise may be disallowed if, as determined by the Company, it is not made in compliance with any applicable provisions of the Company’s Insider Trading Policy as in effect from time to time. Payment of the Option Price by the Participant shall be (a) in cash, by check acceptable to the Company or by wire transfer of immediately available funds, (b) by the actual or constructive transfer to the Company of Common Shares owned by the Participant having a value at the time of exercise equal to the total Option Price, (c) subject to any conditions or limitations established by the Board or the Committee, by the withholding of Common Shares otherwise issuable upon exercise of the Option pursuant to a “net exercise”

arrangement, (d) by a combination of such methods of payment, or (e) by such other methods as may be approved by the Board or the Committee.

6.Transferability, Binding Effect. Subject to Section 15 of the Plan, the Option is not transferable by the Participant otherwise than by will or the laws of descent and distribution, and in no event shall the Option be transferred for value.

7.No Dividend Equivalents. The Participant shall not be entitled to dividends or dividend equivalents with respect to the Option or the Common Shares underlying the Option until such Common Shares are issued after the exercise of the Option (or portion thereof).

8.Adjustments. The number of Common Shares issuable subject to the Option and the other terms and conditions of the grant evidenced by this Agreement are subject to mandatory adjustment, including as provided in Section 11 of the Plan.

9.Taxes and Withholding. To the extent that the Company or any Subsidiary is required to withhold federal, state, local or foreign taxes or other amounts in connection with any payment made to or benefit realized by the Participant or other person under the Option, the Participant agrees that the Company will withhold or collect from the Participant any taxes or other amounts required to be withheld by the Company under federal, state, local or foreign law as a result of such payment or benefit. In any event, it shall be a condition to the obligation of the Company to make any such delivery or payment that the Participant or such other person make arrangements satisfactory to the Company for payment of the balance of such taxes or other amounts required to be withheld. Notwithstanding any other provision of this Agreement, the Company shall not be obligated to guarantee any particular tax result for the Participant with respect to any payment provided to the Participant hereunder, and the Participant shall be responsible for any taxes imposed on the Participant with respect to any such payment.

10.Compliance with Law. The Company shall make reasonable efforts to comply with all applicable federal and state securities laws; provided, however, notwithstanding any other provision of the Plan and this Agreement, the Company shall not be obligated to issue any Common Shares pursuant to this Agreement if the issuance thereof would result in a violation of any such law. The Option shall not be exercisable if such exercise would involve a violation of any law.

11.No Right to Future Awards or Employment. The Option award is a voluntary, discretionary award being made on a one-time basis and it does not constitute a commitment to make any future awards. The Option award and any related payments made to the Participant will not be considered salary or other compensation for purposes of any severance pay or similar allowance, except as otherwise required by law. Nothing contained in this Agreement will confer upon the Participant any right to be employed or remain employed by the Company or any of its Subsidiaries, nor limit or affect in any manner the right of the Company or any of its Subsidiaries to terminate the Participant’s employment or adjust the compensation of the Participant.

12.Relation to Other Benefits. Any economic or other benefit to the Participant under this Agreement or the Plan shall not be taken into account in determining any benefits to which the Participant may be entitled under any profit-sharing, retirement or other benefit or

compensation plan maintained by the Company or any of its Subsidiaries and shall not affect the amount of any life insurance coverage available to any beneficiary under any life insurance plan covering employees of the Company or any of its Subsidiaries.

13.Amendments.Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided, however, that no amendment shall adversely affect the Participant’s rights with respect to the Option without the Participant’s consent, and the Participant’s consent shall not be required to an amendment that is deemed necessary by the Company to ensure compliance with Section 10D of the Exchange Act.

14.Severability. In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable.

15.Relation to Plan. The Option granted under this Agreement and all of the terms and conditions hereof are subject to all of the terms and conditions of the Plan. In the event of any inconsistency between this Agreement and the Plan, the terms of the Plan will govern. The Committee acting pursuant to the Plan, as constituted from time to time, shall, except as expressly provided otherwise herein or in the Plan, have the right to determine any questions which arise in connection with this Agreement.

16.Recoupment. The Option and any related benefit or compensation under this Agreement is subject to the applicable recoupment, recapture, clawback or recovery policy of the Company as adopted by the Board or the Committee and in effect from time to time. In addition, this Agreement may be amended at any time and from time to time by the Company without the consent or written agreement of the Participant to the extent necessary to comply with any recoupment, recapture, clawback or recovery policy of the Company adopted by the Board or the Committee to comply with Section 10D of the Exchange Act and any applicable rules or regulations promulgated by the Securities and Exchange Commission or any national securities exchange or national securities association on which the Stock may then be traded, as reasonably determined by the Board or the Committee in its sole discretion.

17.Electronic Delivery.The Company may, in its sole discretion, deliver any documents related to the Option and the Participant’s participation in the Plan, or future awards that may be granted under the Plan, by electronic means or request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and, if requested, agrees to participate in the Plan through an online or electronic system established and maintained by the Company or another third party designated by the Company.

18.Governing Law. This Agreement shall be governed by and construed with the internal substantive laws of the State of Delaware, without giving effect to any principle of law that would result in the application of the law of any other jurisdiction.

19.Successors and Assigns. Without limiting Section 6 hereof, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of the Participant, and the successors and assigns of the Company.

20.Acknowledgement. The Participant acknowledges that the Participant (a) has received a copy of the Plan, (b) has had an opportunity to review the terms of this Agreement and the Plan, (c) understands the terms and conditions of this Agreement and the Plan and (d) agrees to such terms and conditions.

21.Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same agreement.

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned have executed this Agreement on the day and year indicated below.

STEPAN COMPANY

By:

Name:

Title:

Date:

Participant Acknowledgment and Acceptance

By:

Name:

Date:

EX-10

Exhibit 10.22

STEPAN COMPANY

2022 EQUITY incentive compensation plan

NOTICE OF GRANT OF PERFORMANCE SHARES

Stepan Company (the “Company”) hereby grants to the Participant the target number of Performance Shares set forth below under the Stepan Company 2022 Equity Incentive Compensation Plan (the “Plan”).The Performance Shares are subject to all of the terms and conditions in this Notice of Grant of Performance Shares (this “Grant Notice”), in the Performance Shares Agreement attached hereto (the “Agreement”) and in the Plan. Capitalized terms used, but not otherwise defined, in this Grant Notice will have the meanings given to such terms in the Plan or Agreement, as applicable, and the Plan and Agreement are hereby incorporated by reference into this Grant Notice. If there are any inconsistences between this Grant Notice or the Agreement and the Plan, the terms of the Plan shall govern.

Participant:	[___]
Type of Grant:	Performance Shares
Date of Grant:	[___]
Total Target Number of Performance Shares:	[___]
One-Year Performance Period:	January 1, 20__ through December 31, 20__
Three-Year Performance Period:	January 1, 20__ through December 31, 20__
Potential Payout %:	From 0% to 195%
Vesting Schedule:	Subject to the terms and conditions set forth in the Agreement and in the Statement of Performance Goals, the Performance Shares shall become earned (“Earned Performance Shares”) to the extent that the performance goals for the Performance Shares are achieved, as set forth or contemplated in the Statement of Performance Goals, provided (except as otherwise provided in the Agreement) that the Participant has remained in continuous employment with the Company or a Subsidiary through the last day of the Three-Year Performance Period.

Exhibit 10.22

STEPAN COMPANY

2022 EQUITY incentive compensation plan

PERFORMANCE SHARES AGREEMENT

Stepan Company (the “Company”) has granted, pursuant to the Stepan Company 2022 Equity Incentive Compensation Plan (the “Plan”), to the Participant named in the Notice of Grant of Performance Shares (the “Grant Notice”) to which this Performance Shares Agreement is attached (together with the Grant Notice, this “Agreement”) an award of Performance Shares as set forth in such Grant Notice, subject to the terms and conditions set forth in this Agreement.

1.Certain Definitions. Capitalized terms used, but not otherwise defined, in this Agreement will have the meanings given to such terms in the Grant Notice, or, if not defined therein, then in the Plan.

2.Grant of Performance Shares. Subject to and upon the terms, conditions and restrictions set forth in this Agreement and in the Plan, the Company has granted to the Participant, as of the Date of Grant, the target number of Performance Shares set forth in the Grant Notice. Each earned and vested Performance Share shall represent the right of the Participant to receive one Common Share subject to and upon the terms and conditions of this Agreement, the Plan and the achievement of the Management Objectives approved by the Committee.

3.Restrictions on Transfer of Performance Shares. Subject to Section 15 of the Plan, neither the Performance Shares evidenced hereby nor any interest therein or in the Common Shares underlying such Performance Shares shall be transferable prior to payment to the Participant pursuant to Section 5 hereof other than by will or pursuant to the laws of descent and distribution.

4.Vesting of Performance Shares.

(a)General Rule. The Performance Shares shall be subject to the terms of the Statement of Performance Goals provided to the Participant with respect to the Performance Shares and approved by the Committee. As set forth in the Grant Notice, Earned Performance Shares will be determined for the Performance Shares in accordance with the Statement of Performance Goals on the date on which the Committee determines the level of attainment of the performance goals for the Performance Shares (the “Determination Date”). The Determination Date for the Performance Shares shall occur no later than 2 ½ months after the end of the Three-Year Performance Period. Provided that the Participant remains continuously employed with the Company or a Subsidiary through the last day of the Three-Year Performance Period (the period from the Date of Grant through the last day of the Three-Year Performance Period, the “Service Period”), the total Earned Performance Shares shall vest on the Determination Date. Any Performance Shares that do not so become vested will be forfeited, including, except as provided in Section 4(b) below, if the Participant ceases to be continuously employed by the Company or a Subsidiary prior to the end of the Service Period. For purposes of

this Agreement, “continuously employed” (or substantially similar terms) means the absence of any interruption or termination of the Participant’s employment with the Company or a Subsidiary; provided, however, that the Participant’s employment shall not be considered interrupted or terminated if, immediately following the Participant’s service as an employee, the Participant continues providing services as a non-employee Director or material services to the Company or a Subsidiary as a consultant. Continuous employment shall not be considered interrupted or terminated in the case of sick leave, military leave or any other leave of absence approved by the Company or in the case of transfers between locations of the Company and its Subsidiaries.

(b)Special Circumstances.

(i)Notwithstanding Section 4(a) above and except as otherwise provided in an agreement between the Company and the Participant or in any plan or arrangement in which the Participant is a participant, if the Participant ceases to be employed by the Company or a Subsidiary prior to the end of the Service Period by reason of (A) the Participant’s death or (B) a termination by the Company due to the Participant becoming disabled then the Performance Shares will remain outstanding and have an opportunity to vest and become payable to the Participant depending on the level at which the performance goals are satisfied, in accordance with Section 5 below.

(ii)Notwithstanding Section 4(a) above and except as otherwise provided in an agreement between the Company and the Participant or in any plan or arrangement in which the Participant is a participant, if the Participant ceases to be employed by the Company or a Subsidiary prior to the end of the Service Period by reason of the Participant’s retirement (as determined under the provisions of any qualified retirement plan maintained by the Company or a Subsidiary), then a prorated portion (equal to the product of (A) the number of Performance Shares granted hereunder, multiplied by (B) a fraction, the numerator of which is the number of whole months during the Service Period during which the Participant was employed by the Company or a Subsidiary, and the denominator of which is thirty-six (36), with the result then rounded up or down to the nearest whole number of shares) of the Performance Shares will remain outstanding and have an opportunity to vest and become payable to the Participant depending upon the level at which the performance goals are satisfied, in accordance with Section 5 below.

5.Form and Time of Payment of Performance Shares.

(a)Payment for the Performance Shares, after and to the extent they have become vested and nonforfeitable, shall be made in the form of Common Shares.

2

(b)Payment of the Performance Shares shall be made between January 1 and March 15 of the calendar year following the calendar year in which the Three-Year Performance Period ends.

(c)In all events, payment for the Performance Shares (to the extent vested) shall be made within the short-term deferral period for purposes of Section 409A of the Code.

(d)The Company’s obligations to the Participant with respect to the Performance Shares will be satisfied in full upon the issuance of Common Shares corresponding to such Performance Shares.

6.No Dividend Equivalents; Voting and Other Rights.

(a)The Participant shall have no rights of ownership in the Common Shares underlying the Performance Shares and no right to vote the Common Shares underlying the Performance Shares until the date on which the Common Shares underlying the Performance Shares are issued or transferred to the Participant pursuant to Section 5 above.

(b)The Participant shall not be entitled to, nor credited with, dividends or dividend equivalents with respect to the Performance Shares.

(c)The obligations of the Company under this Agreement will be merely that of an unfunded and unsecured promise of the Company to deliver Common Shares in the future, and the rights of the Participant will be no greater than that of an unsecured general creditor. No assets of the Company will be held or set aside as security for the obligations of the Company under this Agreement.

7.Adjustments. The Performance Shares and the number of Common Shares issuable for each Performance Share and the other terms and conditions of the grant evidenced by this Agreement are subject to adjustment, including as provided in Section 11 of the Plan.

8.Taxes and Withholding. To the extent that the Company or any Subsidiary is required to withhold federal, state, local or foreign taxes or other amounts in connection with the delivery to the Participant of Common Shares or any other payment to the Participant or any other payment or vesting event under this Agreement, the Participant agrees that the Company will withhold or collect from the Participantany taxes required to be withheld by the Company under federal, state, local or foreign law as a result of the settlement of the Performance Shares, including by withholding and retaining a portion of the Common Shares to be delivered to the Participant upon settlement of the Performance Shares under this Agreement (which share withholding, for any “officers” (for purposes of Section 16 of the Exchange Act), will be the method of withholding unless otherwise determined by the Committee). In any event, it shall be a condition to the obligation of the Company to make any such delivery or payment that the Participant make arrangements satisfactory to the Company for payment such taxes or other amounts required to be withheld. Any Common Shares retained by the Company as set forth above shall be credited against any such withholding requirement at the fair market value of the Common Shares on the date of such

3

delivery. In no event will the total fair market value of the Common Shares to be withheld and/or delivered pursuant to this Section 8 to satisfy applicable withholding taxes exceed the maximum amount of taxes or other amounts that could be required to be withheld. Notwithstanding any other provision of this Agreement, the Company shall not be obligated to guarantee any particular tax result for the Participant with respect to any payment provided to the Participant hereunder, and the Participant shall be responsible for any taxes imposed on the Participant with respect to any such payment.

9.Compliance with Law. The Company shall make reasonable efforts to comply with all applicable federal and state securities laws; provided, however, notwithstanding any other provision of the Plan and this Agreement, the Company shall not be obligated to issue any Common Shares pursuant to this Agreement if the issuance thereof would result in a violation of any such law.

10.Compliance With or Exemption From Section 409A of the Code. To the extent applicable, it is intended that this Agreement and the Plan comply with or be exempt from the provisions of Section 409A of the Code. This Agreement and the Plan shall be administered in a manner consistent with this intent, and any provision that would cause this Agreement or the Plan to fail to satisfy Section 409A of the Code shall have no force or effect until amended to comply with or be exempt from Section 409A of the Code (which amendment may be retroactive to the extent permitted by Section 409A of the Code and may be made by the Company without the consent of the Participant). Notwithstanding the foregoing, the Company is not guaranteeing any particular tax outcome, and the Participant shall remain solely liable for any and all tax consequences associated with the Performance Shares.

11.Interpretation. Any reference in this Agreement to Section 409A of the Code will also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.

12.No Right to Future Awards or Employment. The grant of the Performance Shares under this Agreement to the Participant is a voluntary, discretionary award being made on a one-time basis and it does not constitute a commitment to make any future awards. The grant of the Performance Shares and any related payments made hereunder will not be considered salary or other compensation for purposes of any severance pay or similar allowance, except as otherwise required by law. Nothing contained in this Agreement will confer upon the Participant any right to be employed or remain employed by the Company or any of its Subsidiaries, nor limit or affect in any manner the right of the Company or any of its Subsidiaries to terminate the Participant’s employment or adjust the compensation of the Participant.

13.Relation to Other Benefits. Any economic or other benefit to the Participant under this Agreement or the Plan shall not be taken into account in determining any benefits to which the Participant may be entitled under any profit-sharing, retirement or other benefit or compensation plan maintained by the Company or any of its Subsidiaries and shall not

4

affect the amount of any life insurance coverage available to any beneficiary under any life insurance plan covering employees of the Company or any of its Subsidiaries.

14.Amendments. Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided, however, that no amendment shall adversely affect the Participant’s rights with respect to the Performance Shares without the Participant’s written consent, and the Participant’s consent shall not be required to an amendment that is deemed necessary by the Company to ensure compliance with Section 409A of the Code or Section 10D of the Exchange Act.

15.Severability. In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable.

16.Relation to Plan. The Performance Shares granted under this Agreement and all of the terms and conditions hereof are subject to all of the terms and conditions of the Plan. In the event of any inconsistency between this Agreement and the Plan, the terms of the Plan will govern. The Committee acting pursuant to the Plan, as constituted from time to time, shall, except as expressly provided otherwise herein or in the Plan, have the right to determine any questions which arise in connection with this Agreement.

17.Recoupment. The Performance Shares and any related benefit or compensation under this Agreement is subject to the applicable recoupment, recapture, clawback or recovery policy of the Company as adopted by the Board or the Committee and in effect from time to time. In addition, this Agreement may be amended at any time and from time to time by the Company without the consent or written agreement of the Participant to the extent necessary to comply with any recoupment, recapture, clawback or recovery policy of the Company adopted by the Board or the Committee to comply with Section 10D of the Exchange Act and any applicable rules or regulations promulgated by the Securities and Exchange Commission or any national securities exchange or national securities association on which the Stock may then be traded, as reasonably determined by the Board or the Committee in its sole discretion.

18.Electronic Delivery. The Company may, in its sole discretion, deliver any documents related to the Performance Shares and the Participant’s participation in the Plan, or future awards that may be granted under the Plan, by electronic means or request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and, if requested, agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

19.Governing Law. This Agreement shall be governed by and construed with the internal substantive laws of the State of Delaware, without giving effect to any principle of law that would result in the application of the law of any other jurisdiction.

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20.Successors and Assigns. Without limiting Section 3 hereof, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of the Participant, and the successors and assigns of the Company.

21.Acknowledgement. The Participant acknowledges that the Participant (a) has received a copy of the Plan, (b) has had an opportunity to review the terms of this Agreement and the Plan, (c) understands the terms and conditions of this Agreement and the Plan and (d) agrees to such terms and conditions.

22.Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same agreement.

[SIGNATURES ON FOLLOWING PAGE]

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STEPAN COMPANY

By:

Name:
Title:

Participant Acknowledgment and Acceptance

By:

Name:

Date: _________________________

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Exhibit 10.22

STATEMENT OF PERFORMANCE GOALS
FOR PERFORMANCE SHARES

This Statement of Performance Goals applies to the Performance Shares granted to the Participant on the Date of Grant and applies with respect to the Performance Shares Agreement between the Company and the Participant (the “Agreement”).

23.Management Objectives. For purposes of this Award of Performance Shares, Management Objectives shall mean CNI and ROIC.

24.Definitions. Capitalized terms used in the Agreement that are not specifically defined in this Statement of Performance Goals have the meanings assigned to them in the Agreement or if not defined therein, in the Plan. For purposes of this Statement of Performance Goals:

(a)“Applicable CNI Percentage” means the CNI percentage (set by the Committee), which corresponds to the Company’s achieved specified CNI for the One-Year Performance Period, with the final calculation achieved by prorating between the values and corresponding payout percentages assigned to the Threshold, Target and Maximum performance levels at set forth herein. The Applicable CNI Percentage will be zero if the Threshold level is not achieved during the One-Year Performance Period.

(b)“Applicable ROIC Percentage” means the ROIC percentage (set by the Committee), which ranges from 70% to 130% and corresponds to the Company’s achieved specified average ROIC percentage for the Three-Year Performance Period, with the final calculation achieved by prorating between the values and corresponding payout percentages assigned to the Threshold, Target and Maximum performance levels at set forth herein.

(c)“CNI” means the Company’s Net Income.

(d)“ROIC” means the Company’s Return on Invested Capital

25.Performance Goals.

(a)CNI during the One-Year Performance Period:

Threshold (50% payout) Target (100% payout) Maximum and above (150% payout)

(b)ROIC during the Three-Year Performance Period:

Threshold and below Target Maximum and above

(70% payout) (100% payout) (130% payout)

26.Calculation of Earned Performance Shares. Except as otherwise provided in the Agreement, the number of Performance Shares that the Participant shall earn at the end of the Three-Year Performance Period (unless forfeited pursuant to the Agreement) shall equal: (a) the number of Performance Shares awarded in accordance with the Grant Notice, multiplied by (b) the Applicable CNI Percentage, further multiplied by (c) the Applicable ROIC Percentage. Any Performance Shares that the Participant does not earn at the end of the Three-Year Performance Period as determined by the Committee shall be deemed forfeited and cancelled at the end of the Three-Year Performance Period.

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EX-10

Exhibit 10.23

STEPAN COMPANY

2022 EQUITY incentive compensation plan

NOTICE OF GRANT OF RESTRICTED STOCK UNITS

Stepan Company (the “Company”) hereby grants to the Participant Restricted Stock Units under the Stepan Company 2022 Equity Incentive Compensation Plan (the “Plan”).The Restricted Stock Units are subject to all of the terms and conditions in this Notice of Grant of Restricted Stock Units (this “Grant Notice”), in the Restricted Stock Units Agreement attached hereto (the “Agreement”) and in the Plan. Capitalized terms used, but not otherwise defined, in this Grant Notice will have the meanings given to such terms in the Plan or Agreement, as applicable, and the Plan and Agreement are hereby incorporated by reference into this Grant Notice. If there are any inconsistences between this Grant Notice or the Agreement and the Plan, the terms of the Plan shall govern.

Participant:	[___]
Type of Grant:	Restricted Stock Units
Date of Grant:	[____]
Number of Restricted Stock Units:	[____]
Vesting Schedule:	Subject to the conditions set forth in the Agreement, including but not limited to the Participant’s continuous employment with the Company or a Subsidiary until the applicable vesting date, the Restricted Stock Units shall vest [in three substantially equal installments on the first three anniversaries of the Date of Grant].

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Exhibit 10.23

STEPAN COMPANY

2022 EQUITY incentive compensation plan

RESTRICTED STOCK UNITS AGREEMENT

Stepan Company (the “Company”) has granted, pursuant to the Stepan Company 2022 Equity Incentive Compensation Plan (the “Plan”), to the Participant named in the Notice of Grant of Restricted Stock Units (the “Grant Notice”) to which this Restricted Stock Units Agreement is attached (together with the Grant Notice, this “Agreement”) Restricted Stock Units (the “RSUs”) as set forth in such Grant Notice, subject to the terms and conditions set forth in this Agreement.

1.Certain Definitions. Capitalized terms used, but not otherwise defined, in this Agreement will have the meanings given to such terms in Plan.

2.Grant of RSUs. Subject to and upon the terms, conditions and restrictions set forth in this Agreement and in the Plan, the Company has granted to the Participant as of the Date of Grant, the number of RSUs set forth on the Grant Notice. Each RSU shall represent the right of the Participant to receive one Common Share subject to and upon the terms and conditions of this Agreement.

3.Restrictions on Transfer of RSUs. Subject to Section 15 of the Plan, neither the RSUs evidenced hereby nor any interest therein or in the Common Shares underlying such RSUs shall be transferable prior to payment to the Participant pursuant to Section 5 hereof other than by will or pursuant to the laws of descent and distribution.

4.Vesting of RSUs.

(a)Except as otherwise provided in this Section 4, the RSUs covered by this Agreement shall become nonforfeitable and payable to the Participant pursuant to Section 5 hereof pursuant to the Vesting Schedule set forth in the Grant Notice if the Participant remains in the continuous employment of the Company or a Subsidiary until such date.

(b)Notwithstanding Section 4(a), in the event that the Participant’s employment with the Company or a Subsidiary is terminated by the Company as a result of (i) the Participant becoming disabled or (ii) the Participant’s death, then in any such case, the RSUs shall become fully vested as of the date of the Participant’s termination of employment with the Company or a Subsidiary.

(c)Notwithstanding Section 4(a), in the event that the Participant’s employment with the Company or a Subsidiary is terminated by the Participant due to retirement (as determined under the provisions of any qualified retirement plan that may be maintained by the Company or a Subsidiary), then a prorated portion (equal to the product of (i) the number of RSUs granted hereunder, multiplied by (ii) a fraction, the numerator of which is the number of whole months following the most recent preceding anniversary of the Date of Grant during which the Participant was employed by the Company or a Subsidiary, and the denominator of which is

1

thirty‑six (36), with the result then rounded up or down to the nearest whole number of shares) of the RSUs shall become fully vested as of the date of the Participant’s termination of employment with the Company or a Subsidiary.

(d)Except as otherwise provided in this Section 4, any RSUs that do not so become nonforfeitable will be forfeited, including if the Participant ceases to be continuously employed by the Company or a Subsidiary prior to the end of the Vesting Period. For purposes of this Agreement, “continuously employed” (or substantially similar terms) means the absence of any interruption or termination of the Participant’s employment with the Company or a Subsidiary; provided, however, that the Participant’s employment shall not be considered interrupted or terminated if, immediately following the Participant’s service as an employee, the Participant continues providing services as a non-employee Director or material services to the Company or a Subsidiary as a consultant. Continuous employment shall not be considered interrupted or terminated in the case of sick leave, military leave or any other leave of absence approved by the Company or in the case of transfers between locations of the Company and its Subsidiaries.

5.Form and Time of Payment of RSUs.

(a)Payment for the RSUs, after and to the extent they have become nonforfeitable, shall be made in the form of Common Shares. Payment shall be made as soon as administratively practicable following (but no later than thirty (30) days following) the first to occur of the following (to the extent that the RSUs have become nonforfeitable pursuant to Section 4 hereof prior to such date):

(i)The date of the Participant’s separation from service (within the meaning of Section 409A of the Code);

(ii)[the first three anniversaries of the Date of Grant]; and

(iii)The date of a Change in Control that also constitutes a “change in the ownership,” “change in effective control,” and/or a “change in the ownership of a substantial portion of assets” of the Company as those terms are defined under Treasury Regulation §1.409A-3(i)(5).

(b)Except to the extent provided by Section 409A of the Code and permitted by the Committee, no Common Shares may be issued to the Participant at a time earlier than otherwise expressly provided in this Agreement.

(c)The Company’s obligations to the Participant with respect to the RSUs will be satisfied in full upon the issuance of Common Shares corresponding to such RSUs.

6.Dividend Equivalents; Voting and Other Rights.

(a)The Participant shall have no rights of ownership in the Common Shares underlying the RSUs and no right to vote the Common Shares underlying the RSUs until the

2

date on which the Common Shares underlying the RSUs are issued or transferred to the Participant pursuant to Section 5 above.

(b)The obligations of the Company under this Agreement will be merely that of an unfunded and unsecured promise of the Company to deliver Common Shares in the future, and the rights of the Participant will be no greater than that of an unsecured general creditor. No assets of the Company will be held or set aside as security for the obligations of the Company under this Agreement.

(c)From and after the Date of Grant and until the earlier of (i) the time when the RSUs become nonforfeitable and are paid in accordance with Section 5 hereof or (ii) the time when the Participant’s right to receive Common Shares in payment of the RSUs is forfeited in accordance with Section 4 hereof, on the date that the Company pays a cash dividend (if any) to holders of Common Shares generally, the Participant shall be credited with cash per RSU equal to the amount of such dividend. Any amounts credited pursuant to the immediately preceding sentence shall be subject to the same applicable terms and conditions (including vesting, payment and forfeitability) as apply to the RSUs based on which the dividend equivalents were credited, and such amounts shall be paid in cash at the same time as the RSUs to which they relate are settled pursuant to Section 5 above.

7.Adjustments. The RSUs and the number of Common Shares issuable for each RSU, and the other terms and conditions of the grant evidenced by this Agreement, are subject to mandatory adjustment, including as provided in Section 11 of the Plan.

8.Taxes and Withholding. To the extent that the Company or any Subsidiary is required to withhold federal, state, local or foreign taxes or other amounts in connection with the delivery to the Participant of Common Shares or any other payment to the Participant or any other payment or vesting event under this Agreement, the Participant agrees that the Company will withhold or collect from the Participantany taxes required to be withheld by the Company under federal, state, local or foreign law as a result of the settlement of the RSUs, including by withholding and retaining a portion of the Common Shares to be delivered to the Participant upon settlement of the RSUs under this Agreement (which share withholding, for any “officers” (for purposes of Section 16 of the Exchange Act), will be the method of withholding unless otherwise determined by the Committee). In any event, it shall be a condition to the obligation of the Company to make any such delivery or payment that the Participant make arrangements satisfactory to the Company for payment such taxes or other amounts required to be withheld. Any Common Shares retained by the Company as set forth above shall be credited against any such withholding requirement at the fair market value of the Common Shares on the date of such delivery. In no event will the total fair market value of the Common Shares to be withheld and/or delivered pursuant to this Section 8 to satisfy applicable withholding taxes exceed the maximum amount of taxes or other amounts that could be required to be withheld. Notwithstanding any other provision of this Agreement, the Company shall not be obligated to guarantee any particular tax result for the Participant with respect to any payment provided to the Participant hereunder, and the Participant shall be responsible for any taxes imposed on the Participant with respect to any such payment.

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9.Compliance With Law. The Company shall make reasonable efforts to comply with all applicable federal and state securities laws; provided, however, notwithstanding any other provision of the Plan and this Agreement, the Company shall not be obligated to issue any Common Shares pursuant to this Agreement if the issuance thereof would result in a violation of any such law.

10.Compliance With or Exemption From Section 409A of the Code. To the extent applicable, it is intended that this Agreement and the Plan comply with or be exempt from the provisions of Section 409A of the Code. This Agreement and the Plan shall be administered in a manner consistent with this intent, and any provision that would cause this Agreement or the Plan to fail to satisfy Section 409A of the Code shall have no force or effect until amended to comply with or be exempt from Section 409A of the Code (which amendment may be retroactive to the extent permitted by Section 409A of the Code and may be made by the Company without the consent of the Participant). Notwithstanding the foregoing, in no case will the Company be liable to the Participant, the Internal Revenue Service or any other person or entity for taxes imposed on the Participant pursuant to Section 409A of the Code.

11.Interpretation. Any reference in this Agreement to Section 409A of the Code will also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.

12.No Right to Future Awards or Employment. The grant of the RSUs under this Agreement to the Participant is a voluntary, discretionary award being made on a one-time basis and it does not constitute a commitment to make any future awards. The grant of the RSUs and any payments made hereunder will not be considered salary or other compensation for purposes of any severance pay or similar allowance, except as otherwise required by law. Nothing contained in this Agreement shall confer upon the Participant any right to be employed or remain employed by the Company or any of its Subsidiaries, nor limit or affect in any manner the right of the Company or any of its Subsidiaries to terminate the employment or adjust the compensation of the Participant.

13.Relation to Other Benefits. Any economic or other benefit to the Participant under this Agreement or the Plan shall not be taken into account in determining any benefits to which the Participant may be entitled under any profit-sharing, retirement or other benefit or compensation plan maintained by the Company or any of its Subsidiaries and shall not affect the amount of any life insurance coverage available to any beneficiary under any life insurance plan covering employees of the Company or any of its Subsidiaries.

14.Amendments. Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided, however, that (a) no amendment shall adversely affect the rights of the Participant under this Agreement without the Participant’s written consent, and (b) the Participant’s consent shall not be required to an amendment that is deemed necessary by the Company to ensure compliance with Section 409A of the Code or Section 10D of the Exchange Act.

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15.Severability. In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable.

16.Relation to Plan. This Agreement is subject to the terms and conditions of the Plan. In the event of any inconsistency between the provisions of this Agreement and the Plan, the Plan shall govern. The Committee acting pursuant to the Plan, as constituted from time to time, shall, except as expressly provided otherwise herein or in the Plan, have the right to determine any questions which arise in connection with this Agreement.

17.Recoupment. The RSUs and any related benefit or compensation under this Agreement is subject to the applicable recoupment, recapture, clawback or recovery policy of the Company as adopted by the Board or the Committee and in effect from time to time. In addition, this Agreement may be amended at any time and from time to time by the Company without the consent or written agreement of the Participant to the extent necessary to comply with any recoupment, recapture, clawback or recovery policy of the Company adopted by the Board or the Committee to comply with Section 10D of the Exchange Act and any applicable rules or regulations promulgated by the Securities and Exchange Commission or any national securities exchange or national securities association on which the Stock may then be traded, as reasonably determined by the Board or the Committee in its sole discretion.

18.Electronic Delivery. The Company may, in its sole discretion, deliver any documents related to the RSUs and the Participant’s participation in the Plan, or future awards that may be granted under the Plan, by electronic means or request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and, if requested, agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

19.Governing Law. This Agreement shall be governed by and construed with the internal substantive laws of the State of Delaware, without giving effect to any principle of law that would result in the application of the law of any other jurisdiction.

20.Successors and Assigns. Without limiting Section 3 hereof, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of the Participant, and the successors and assigns of the Company.

21.Acknowledgement. The Participant acknowledges that the Participant (a) has received a copy of the Plan, (b) has had an opportunity to review the terms of this Agreement and the Plan, (c) understands the terms and conditions of this Agreement and the Plan and (d) agrees to such terms and conditions.

22.Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same agreement.

[SIGNATURES ON FOLLOWING PAGE]

5

6

STEPAN COMPANY

By:

Name:
Title:

Participant Acknowledgment and Acceptance

By:

Name:

Date: _________________________

7

EX-21

Exhibit 21

SUBSIDIARIES OF THE REGISTRANT

Subsidiary	Jurisdiction of Organization
North Pier Insurance Company	United States
Stepan Asia Pte. Ltd.	Singapore
Stepan Canada Sales Inc.	Canada
Stepan CDMX, S. de R.L. de C.V.	Mexico
Stepan Chemical (Nanjing) Co., Ltd.	China
Stepan Chemical (Shanghai) Co., Ltd.	China
Stepan Colombia S.A.S.	Colombia
Stepan Deutschland GmbH	Germany
Stepan Europe S.A.S.	France
Stepan Holdings Asia Pte. Ltd.	Singapore
Stepan Holdings, LLC	United States
Stepan Holdings Netherlands B.V.	Netherlands
Stepan (India) Private Limited	India
Stepan Mexico Holdings, LLC	United States
Stepan Mexico, S.A. de C.V.	Mexico
Stepan (Nanjing) Chemical R&D Co., Ltd.	China
Stepan Netherlands B.V.	Netherlands
Stepan Philippines, Inc.	Philippines
Stepan Philippines Quaternaries, Inc.	Philippines
Stepan Poland Sp. z o.o.	Poland
Stepan Polska Sp. z o.o.	Poland
Stepan Química Argentina S.R.L.	Argentina
Stepan Química Ltda.	Brazil
Stepan Singapore Holdings Pte. Ltd.	Singapore
Stepan Specialty Products B.V.	Netherlands
Stepan Specialty Products, LLC	United States
Stepan Surfactants Holdings, LLC	United States
Stepan UK Limited	United Kingdom

EX-23

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 033-57189, 333-39938, 333-133588, 333-173878, and 333-264477 on Form S-8 of our reports dated February 28, 2023, relating to the financial statements of Stepan Company and the effectiveness of Stepan Company’s internal control over financial reporting appearing in this Annual Report on Form 10-K for the year ended December 31, 2022.

/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP

Chicago, Illinois

February 28, 2023

EX-24

Exhibit 24

POWER OF ATTORNEY

Each of the undersigned hereby appoints Scott R. Behrens and Luis E. Rojo and each of them individually, the true and lawful attorney or attorneys of the undersigned, with substitution and resubstitution, to execute in his name, place and stead in his capacity as an officer or director or both of Stepan Company, a Delaware corporation, the Annual Report on Form 10-K under the Securities Exchange Act of 1934 for the year ended December 31, 2022, and any amendments or supplements thereto, and all instruments necessary or incidental in connection therewith, and to file or cause to be filed such Annual Report and related documents with the Securities and Exchange Commission. Each of said attorneys shall have full power and authority to do and perform, in the name and on behalf of the undersigned, every act whatsoever necessary or desirable to be done in the premises, as fully as all intents and purposes of the undersigned could do in person. The undersigned hereby ratifies and approves the actions of said attorneys and each of them.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on this day of February 28, 2023.

/s/ F. Quinn Stepan, Jr.

F. Quinn Stepan, Jr.

/s/ Scott R. Behrens

Scott R. Behrens

/s/ Luis E. Rojo

Luis E. Rojo

/s/ Lorinda A. Burgess

Lorinda A. Burgess

/s/ Randall S. Dearth

Randall S. Dearth

/s/ Joaquin Delgado

Joaquin Delgado

/s/ Gregory E. Lawton

Gregory E. Lawton

/s/ Jan Stern Reed

Jan Stern Reed

/s/ Edward J. Wehmer

Edward J. Wehmer

EX-31

Exhibit 31.1

CERTIFICATION OF PRESIDENT AND CHIEF EXECUTIVE OFFICER

PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a)

I, Scott R. Behrens, certify that:

1.I have reviewed this annual report on Form 10-K of Stepan Company;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 28, 2023

/s/ Scott R. Behrens

Scott R. Behrens

President and Chief Executive Officer

EX-31

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a)

I, Luis E. Rojo, certify that:

1.I have reviewed this annual report on Form 10-K of Stepan Company;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 28, 2023

/s/ Luis E. Rojo

Luis E. Rojo

Vice President and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Stepan Company (the “Company”) on Form 10-K for the fiscal year ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

Date: February 28, 2023

/s/ Scott R. Behrens

Name: Scott R. Behrens

Title: President and Chief Executive Officer

/s/ Luis E. Rojo

Name: Luis E. Rojo

Title: Vice President and Chief Financial Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

XML

Document and Entity Information - USD ($)

12 Months Ended

Dec. 31, 2022

Jan. 31, 2023

Jun. 30, 2022

Cover [Abstract]

Document Type

10-K

Amendment Flag

false

Document Period End Date

Dec. 31, 2022

Document Fiscal Year Focus

2022

Document Fiscal Period Focus

FY

Trading Symbol

SCL

Entity Registrant Name

STEPAN COMPANY

Entity Well Known Seasoned Issuer

Yes

Entity Voluntary Filers

No

Entity Current Reporting Status

Yes

Entity Central Index Key

0000094049

Current Fiscal Year End Date

--12-31

Entity Filer Category

Large Accelerated Filer

Entity Small Business

false

Entity Shell Company

false

Entity Emerging Growth Company

false

Entity Tax Identification Number

36-1823834

Entity File Number

1-4462

Entity Incorporation, State or Country Code

DE

Entity Address, Address Line One

1101 Skokie Boulevard

Entity Address, Address Line Two

Suite 500

Entity Address, City or Town

Northbrook

Entity Address, State or Province

IL

Entity Address, Postal Zip Code

60062

City Area Code

847

Local Phone Number

446-7500

Security Exchange Name

NYSE

Title of 12(b) Security

Common Stock, $1 par value

Document Annual Report

true

Document Transition Report

false

Entity Interactive Data Current

Yes

Entity Common Stock, Shares Outstanding

22,240,034

Entity Public Float

$ 2,118,373,207

ICFR Auditor Attestation Flag

true

Auditor Name

DELOITTE & TOUCHE LLP

Auditor Location

Chicago, Illinois

Auditor Firm ID

34

Documents Incorporated by Reference

Documents Incorporated by Reference

Part of Form 10-K	Document Incorporated
Part III, Items 10-14	Portions of the Proxy Statement for Annual Meeting of Stockholders expected to be held April 25, 2023.

* Based on reported ownership by all directors and executive officers at June 30, 2022.

XML

Consolidated Statements of Income - USD ($) shares in Thousands		12 Months Ended
		Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Income Statement [Abstract]
Net Sales (Note 1)	[1]	$ 2,773,270,000	$ 2,345,966,000	$ 1,869,750,000
Cost of Sales		2,346,201,000	1,950,156,000	1,486,137,000
Gross Profit		427,069,000	395,810,000	383,613,000
Operating Expenses:
Selling (Note 1)		59,030,000	59,186,000	55,543,000
Administrative (Note 1)		102,177,000	92,906,000	87,362,000
Research, development and technical services (Note 1)		66,633,000	62,689,000	57,986,000
Deferred compensation (income) expense (Note 12)		(9,393,000)	6,895,000	9,988,000
Total Operating expenses		218,447,000	221,676,000	210,879,000
Goodwill impairment (Note 4)		(978,000)
Business restructuring and loss on asset disposition (Note 22)		(308,000)	(3,353,000)	(1,212,000)
Operating Income		207,336,000	170,781,000	171,522,000
Other Income (Expense):
Interest, net (Note 6)		(9,809,000)	(5,753,000)	(5,409,000)
Other, net (Note 8)		(8,824,000)	7,509,000	4,954,000
Nonoperating Income (Expense), Total		(18,633,000)	1,756,000	(455,000)
Income Before Provision for Income Taxes		188,703,000	172,537,000	171,067,000
Provision for Income Taxes (Note 9)		41,550,000	34,642,000	43,411,000
Net Income		147,153,000	137,895,000	127,656,000
Net Income Attributable to Noncontrolling Interest (Note 1)			(91,000)	(886,000)
Net Income Attributable to Stepan Company		$ 147,153,000	$ 137,804,000	$ 126,770,000
Net Income Per Common Share Attributable to Stepan Company (Note 18):
Basic		$ 6.46	$ 6.01	$ 5.52
Diluted		$ 6.38	$ 5.92	$ 5.45
Shares Used to Compute Net Income Per Common Share Attributable to Stepan Company (Note 18):
Basic		22,781	22,922	22,949
Diluted		23,064	23,287	23,256

[1] Includes net property, plant and equipment, goodwill and other intangible assets.

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Statement of Comprehensive Income [Abstract]
Net Income	$ 147,153	$ 137,895	$ 127,656
Other Comprehensive Income:
Foreign currency translation adjustments (Note 19)	(21,567)	(28,154)	(2,973)
Defined benefit pension plans:
Net actuarial gain (loss) arising in period (net of tax benefit of $894, tax expense of $2,661 and tax benefit of $265 for 2022, 2021 and 2020, respectively)	(2,857)	8,188	(996)
Amortization of prior service cost included in pension expense (net of taxes of $3, $4 and $3 for 2022, 2021 and 2020, respectively)	6	8	8
Amortization of actuarial loss included in pension expense (net of taxes of $599, $1,157 and $1,089 for 2022, 2021 and 2020, respectively)	1,794	3,643	3,332
Net defined benefit pension plan activity (Note 19)	(1,057)	11,839	2,344
Cash flow hedges:
Cash flow hedge activity	8,357
Reclassifications to income in period	(9)	(9)	(9)
Net cash flow hedge activity (Note 19)	8,348	(9)	(9)
Other Comprehensive Income	(14,276)	(16,324)	(638)
Comprehensive Income	132,877	121,571	127,018
Comprehensive Income Attributable to Noncontrolling Interest		(122)	(959)
Comprehensive Income Attributable to Stepan Company	$ 132,877	$ 121,449	$ 126,059

XML

Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Statement of Comprehensive Income [Abstract]
Net actuarial gain (loss) arising in period, tax expense (benefit)	$ (894)	$ 2,661	$ (265)
Amortization of prior service cost included in pension expense, tax	3	4	3
Amortization of actuarial loss included in pension expense, tax	$ 599	$ 1,157	$ 1,089

XML

Consolidated Balance Sheets - USD ($)	Dec. 31, 2022	Dec. 31, 2021
Current Assets:
Cash and cash equivalents	$ 173,750,000	$ 159,186,000
Receivables, less allowances of $11,100 in 2022 and $10,157 in 2021	436,914,000	419,542,000
Inventories (Note 5)	402,531,000	305,538,000
Other current assets	31,607,000	29,102,000
Total current assets	1,044,802,000	913,368,000
Property, Plant and Equipment:
Land	50,695,000	50,675,000
Buildings and improvements	293,264,000	260,809,000
Machinery and equipment	1,640,478,000	1,541,925,000
Construction in progress	386,115,000	237,548,000
Property, Plant and Equipment, Gross	2,370,552,000	2,090,957,000
Less: Accumulated depreciation	(1,297,255,000)	(1,240,353,000)
Property, plant and equipment, net	1,073,297,000	850,604,000
Goodwill, net (Note 4)	95,922,000	97,187,000
Other intangible assets, net (Note 4)	58,026,000	60,784,000
Long-term investments (Note 2)	23,294,000	34,495,000
Operating lease assets (Note 7)	62,540,000	69,612,000
Other non-current assets	75,291,000	39,562,000
Total Assets	2,433,172,000	2,065,612,000
Current Liabilities:
Current maturities of long-term debt (Note 6)	132,111,000	40,718,000
Accounts payable	375,726,000	323,362,000
Accrued liabilities (Note 14)	162,812,000	136,396,000
Total current liabilities	670,649,000	500,476,000
Deferred income taxes (Note 9)	10,179,000	12,491,000
Long-term debt, less current maturities (Note 6)	455,029,000	322,862,000
Non-current operating lease liability (Note 7)	50,559,000	56,668,000
Other non-current liabilities (Note 15)	80,691,000	98,922,000
Commitments and Contingencies (Note 16)
Equity (Note 10):
Common stock, $1 par value; 60,000,000 authorized shares; 26,840,843 issued shares in 2022 and 26,760,714 issued shares in 2021	26,841,000	26,761,000
Additional paid-in capital	237,202,000	220,820,000
Accumulated other comprehensive loss (Note 19)	(167,512,000)	(153,236,000)
Retained earnings	1,250,130,000	1,133,550,000
Less: Common treasury stock, at cost, 4,605,845 shares in 2022 and 4,340,729 shares in 2021	(180,596,000)	(153,702,000)
Total Stepan Company stockholders’ equity	1,166,065,000	1,074,193,000
Total Liabilities and Equity	$ 2,433,172,000	$ 2,065,612,000

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Allowances	$ 11,100	$ 10,157
Common stock, par value	$ 1	$ 1
Common stock, shares authorized	60,000,000	60,000,000
Common stock, shares issued	26,840,843	26,760,714
Treasury stock, shares	4,605,858	4,340,729

XML

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Cash Flows From Operating Activities
Net income	$ 147,153,000	$ 137,895,000	$ 127,656,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	94,650,000	90,876,000	81,860,000
Deferred compensation	(9,393,000)	6,895,000	9,988,000
Realized and unrealized (gains) losses on long-term investments	8,188,000	(2,289,000)	(3,143,000)
Stock-based compensation	13,851,000	11,716,000	10,080,000
Deferred income taxes	(27,452,000)	(33,605,000)	(4,506,000)
Goodwill impairment (Note 4)	978,000
Other non-cash items	1,752,000	2,158,000	3,068,000
Changes in assets and liabilities, excluding effects of acquisitions:
Receivables, net	(26,153,000)	(104,231,000)	(23,417,000)
Inventories	(99,394,000)	(79,258,000)	(15,358,000)
Other current assets	(4,354,000)	(1,434,000)	(13,927,000)
Accounts payable and accrued liabilities	54,173,000	44,414,000	55,739,000
Pension liabilities	(1,821,000)	(1,729,000)	(612,000)
Environmental and legal liabilities	9,547,000	450,000	(3,021,000)
Deferred revenues	(962,000)	277,000	10,809,000
Net Cash Provided By Operating Activities	160,763,000	72,135,000	235,216,000
Cash Flows From Investing Activities
Expenditures for property, plant and equipment	(301,553,000)	(194,482,000)	(125,792,000)
Proceeds from asset disposition		4,149,000
Asset acquisition (Note 20)		(3,503,000)	(2,040,000)
Business acquisitions, net of cash acquired (Note 20)	(9,693,000)	(184,473,000)	(13,519,000)
Other, net	3,156,000	1,480,000	2,317,000
Net Cash Used In Investing Activities	(308,090,000)	(376,829,000)	(139,034,000)
Cash Flows From Financing Activities
Revolving debt and bank overdrafts, net (Note 6)	186,551,000	2,861,000
Other debt borrowings (Note 6)	75,000,000	200,000,000
Other debt repayments (Note 6)	(37,857,000)	(37,858,000)	(23,571,000)
Dividends paid	(30,573,000)	(28,083,000)	(25,405,000)
Company stock repurchased	(24,949,000)	(16,969,000)	(15,253,000)
Stock option exercises	782,000	1,369,000	2,926,000
Other, net	(2,745,000)	(3,987,000)	(3,631,000)
Net Cash Provided By (Used In) Financing Activities	166,209,000	117,333,000	(64,934,000)
Effect of Exchange Rate Changes on Cash	(4,318,000)	(3,391,000)	3,307,000
Net Increase (Decrease) in Cash and Cash Equivalents	14,564,000	(190,752,000)	34,555,000
Cash and Cash Equivalents at Beginning of Year	159,186,000	349,938,000	315,383,000
Cash and Cash Equivalents at End of Year	173,750,000	159,186,000	349,938,000
Supplemental Cash Flow Information
Cash payments of income taxes, net of refunds/payments	41,617,000	92,867,000	39,017,000
Cash payments of interest	$ 16,526,000	$ 9,542,000	$ 9,329,000

XML

Consolidated Statements of Equity - USD ($) $ in Thousands		Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Common Treasury Stock [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Retained Earnings [Member]	Noncontrolling Interests [Member]
Beginning Balance at Dec. 31, 2019		$ 892,496	$ 26,493	$ 193,135	$ (114,139)	$ (136,170)	$ 922,464	$ 713
Issuance of common stock under stock option plan		2,926	48	2,878
Purchase of common stock		(15,253)			(15,253)
Stock-based and deferred compensation		6,583	117	10,703	(4,237)
Net income		127,656					126,770	886
Other comprehensive income		(638)				(711)		73
Cash dividends paid:
Common stock		(25,405)					(25,405)
Ending Balance at Dec. 31, 2020		988,365	26,658	206,716	(133,629)	(136,881)	1,023,829	1,672
Issuance of common stock under stock option plan		1,369	20	1,349
Purchase of common stock		(16,969)			(16,969)
Stock-based and deferred compensation		9,734	83	12,755	(3,104)
Net income		137,895					137,804	91
Other comprehensive income		(16,324)				(16,355)		31
Cash dividends paid:
Common stock		(28,083)					(28,083)
Other	[1]	(1,794)						$ (1,794)
Ending Balance at Dec. 31, 2021		1,074,193	26,761	220,820	(153,702)	(153,236)	1,133,550
Issuance of common stock under stock option plan		782	12	770
Purchase of common stock		(24,949)			(24,949)
Stock-based and deferred compensation		13,735	68	15,612	(1,945)
Net income		147,153					147,153
Other comprehensive income		(14,276)				(14,276)
Cash dividends paid:
Common stock		(30,573)					(30,573)
Ending Balance at Dec. 31, 2022		$ 1,166,065	$ 26,841	$ 237,202	$ (180,596)	$ (167,512)	$ 1,250,130

[1] Reflects the derecognition of noncontrolling interest due to the dissolution of the China joint venture. See Note 1, Summary of Significant Accounting Policies, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K).

XML

Consolidated Statements of Equity (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Number of shares of common stock issued under stock option plan	11,888	20,435	48,389
Number of common stock shares purchased	251,120	135,103	173,956
Common stock	$ 1.370	$ 1.250	$ 1.130
Common Stock [Member]
Number of shares of common stock issued under stock option plan	11,888	20,435	48,389
Additional Paid-in Capital [Member]
Number of shares of common stock issued under stock option plan	11,888	20,435	48,389
Treasury Stock [Member]
Number of common stock shares purchased	251,120	135,103	173,956

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

1. Summary of Significant Accounting Policies

Nature of Operations

Stepan Company’s (the Company) operations consist predominantly of the production and sale of specialty and intermediate chemicals, which are sold to other manufacturers for use in a variety of end products. Principal markets for all products are manufacturers of cleaning and washing compounds (including detergents, shampoos, fabric softeners, toothpastes and household cleaners), paints, cosmetics, food, beverages, nutritional supplements, agricultural products, plastics, furniture, automotive equipment, insulation and refrigeration.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires Company management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses at the date of the financial statements and to provide disclosures of contingent assets, liabilities and related amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and all wholly-owned subsidiaries in which the Company exercises controlling influence. The equity method is used to account for investments in which the Company exercises significant but noncontrolling influence. Intercompany balances and transactions are eliminated in consolidation.

Prior to the fourth quarter of 2021, the Company had an 80 percent ownership interest in the Nanjing Stepan Jinling Chemical Limited Liability Company (a joint venture) and exercised controlling influence over the entity. As a result, the China joint venture results were included in the Company’s consolidated financial statements. The partner’s interest in the joint venture’s net income was reported in the net income attributable to noncontrolling interest line of the consolidated statements of income and its interest in the net assets of the joint venture was reported in the noncontrolling interest line (a component of equity separate from Company equity) of the consolidated balance sheets. The joint venture was dissolved during the fourth quarter of 2021.

Business Combinations

The Company makes acquisitions from time to time. When such acquisitions occur, the Company applies the accounting guidance per FASB ASC Topic 805, Business Combinations (ASC 805), to determine whether the acquisition should be treated as an asset acquisition or a business combination. When the acquisition meets the criteria of a business combination the Company recognizes the identifiable assets acquired and liabilities assumed at their estimated fair values as of the date of the acquisition. The Company recognizes goodwill for any portion of the purchase price that exceeds the sum of the net fair value of all the assets purchased in the acquisition and the liabilities assumed. Considerable estimates, complex judgments and assumptions are typically required to arrive at the fair value of elements acquired in a business combination, inclusive of discount rates, customer attrition rates, royalty rates, economic lives, and estimated future cash flows expected to be generated from the assets acquired. These items are typically most relevant to the fair valuation of identifiable intangible assets and property, plant and equipment.

In some instances, the purchase price allocation of an acquisition is not complete by the end of a reporting period. This situation most typically arises when an acquisition is complex and/or completed very close to the end of a reporting period and all necessary information is not available by the end of the reporting period in which the acquisition occurs. In these instances, the Company reports provisional amounts for any incomplete items and makes subsequent adjustments as necessary information becomes available or determines that additional information is not obtainable. Any subsequent adjustments could have a material impact on the Company’s financial position or results of operations as they could impact the initial fair values assigned to intangible assets and property, plant and equipment and/or their estimated economic lives. ASC 805 requires purchase price allocations to be finalized within one year from the acquisition date.

Cash and Cash Equivalents

The Company considers all highly liquid investments with purchased maturities of three months or less to be cash equivalents.

At December 31, 2022, the Company’s cash and cash equivalents totaled $173,750,000 including $64,851,000 in money market funds each rated AAAm by Standard and Poor’s, Aaa-mf by Moody’s and AAAmmf by Fitch. Cash in U.S. demand deposit accounts

and certificates of deposit totaled $11,811,000 and cash of the Company’s non-U.S. subsidiaries held outside the U.S. totaled $97,088,000 as of December 31, 2022. At December 31, 2021, the Company’s cash and cash equivalents totaled $159,186,000 including $46,689,000 in money market funds, each of which was rated AAAm by Standard and Poor’s, Aaa-mf by Moody’s and AAAmmf by Fitch. Cash in U.S. demand deposit accounts totaled $25,253,000 and cash of the Company’s non-U.S. subsidiaries held outside the U.S. totaled $87,244,000 as of December 31, 2021.

Receivables and Credit Risk/Losses

Receivables are stated net of allowances for doubtful accounts and other allowances and primarily include trade receivables from customers, as well as nontrade receivables from suppliers, governmental tax agencies and others.

The Company is exposed to both credit risk and losses on accounts receivable balances. The Company’s credit risk and loss exposure predominately relates to the sale of products to its customers. When extending credit to customers the Company evaluates a customer’s credit worthiness based on a combination of qualitative and quantitative factors, inclusive of, but not limited to, a customer’s credit rating from external providers, financial condition and past payment experience. The Company performs credit reviews on all customers at inception and on a scheduled basis thereafter dependent on customer risk and the level of credit extended. Payment terms extended are short term in duration, typically ranging from 30 to 60 days. The majority of the Company’s sales are made to large companies that are able to weather periodic changes in economic conditions. This risk of losses is further mitigated by the Company’s diverse customer base, which is dispersed over various geographic regions and industrial sectors. No single customer comprised more than 10 percent of the Company’s consolidated net sales in 2022, 2021 or 2020.

The Company maintains allowances for potential credit losses. With the adoption of ASU No. 2016-13, Financial Instruments – Credit Losses, the Company assesses the likelihood of default based on various factors, including the length of time receivables are past due, historical experience, current economic conditions and forward-looking economic forecasts. The Company also evaluates expected losses based on portfolios of data inclusive of geographical areas, specific end market uses of its products, etc. Although the Company’s historical credit loss experience has not been significant, its exposure to credit losses may increase if customers are adversely affected by economic challenges and/or uncertainty due to domestic or global recessions, disruptions due to pandemics, or other adverse global/regional events and customer specific factors. Specific customer allowances are recorded when a review of customer creditworthiness and current economic conditions indicate that collection is doubtful. General allowances are also maintained based on historical averages and trade receivable levels and incorporate existing economic conditions and forecast assumptions, when warranted. The Company reviews its reserves for credit losses on a quarterly basis. The Company also maintains other customer allowances that occur in the normal course of business.

The following is an analysis of the allowance for doubtful accounts and other accounts receivable allowances for the years ended December 31, 2022, 2021 and 2020:

(In thousands)	2022			2021			2020
Balance at January 1	$	10,157		$	10,133		$	9,325
Provision charged to income		1,374			943			864
Accounts written off, net of recoveries		(431	)		(919	)		(56	)
Balance at December 31	$	11,100		$	10,157		$	10,133

Inventories

Inventories are valued at cost, which is not in excess of net realizable value, and include material, labor and plant overhead costs. Currently, the first in, first out (FIFO) method is used to determine the cost of the Company’s inventory.

Property, Plant and Equipment

Depreciation of property, plant and equipment is provided on a straight-line basis over the estimated useful lives of the assets. Lives used for calculating depreciation are generally 30 years for buildings and 15 years for building improvements. For assets classified as machinery and equipment, lives generally used for calculating depreciation expense range from 10 to 15 years for manufacturing equipment, five to 10 years for furniture and fixtures, three to five years for vehicles and three to 10 years for computer equipment and software. The manufacturing of chemicals is capital intensive and a large majority of the assets included within machinery and equipment represent manufacturing equipment. Major renewals and betterments are capitalized in the property accounts, while maintenance and repairs ($82,110,000, $75,351,000, and $69,234,000 in 2022, 2021 and 2020, respectively), which do not renew or extend the life of the respective assets, are charged to operations as incurred. Land is not depreciated. The cost of property retired or sold, and the related accumulated depreciation, are removed from the accounts and any resulting gain or loss is reflected in income. Long-lived assets are reviewed for impairment when conditions exist that indicate the carrying amount of the assets may not be fully

recoverable. Such conditions could include significant adverse changes in the business environment, significant declines in forecasted operations or an approved plan to discontinue an asset or an asset group before the end of its useful life.

Included in the computer equipment and software component of machinery and equipment are costs related to the acquisition and development of internal-use software. Capitalized costs for internal-use software include external direct costs of materials and services consumed in obtaining and developing the software. For development projects where major internal resources are committed, payroll and payroll-related costs incurred during the application development phase of the project are also capitalized. The capitalized costs are amortized over the useful lives of the software, which are generally three to 10 years. Costs incurred in the preliminary project phase are expensed. Deferred implementation costs for hosted cloud computing service arrangements are stated at historical cost and amortized on a straight-line basis over the term of the hosting arrangement.

Interest charges on borrowings applicable to major construction projects are capitalized.

Deferred Compensation

The Company sponsors deferred compensation plans that allow management employees to defer receipt of their annual cash incentive compensation and performance shares and outside directors to defer receipt of their fees and stock awards until retirement, departure from the Company or as elected by the participant. The plans allow for the deferred compensation to grow or decline based on the results of investment options chosen by the participants. The investment options include Company common stock and a limited selection of mutual funds. The Company funds the obligations associated with these plans by purchasing investment assets that match the investment choices made by the plan participants. A sufficient number of shares of treasury stock are maintained on hand to cover the equivalent number of shares that result from participants electing the Company common stock investment option. As a result, the Company must periodically purchase its common shares in the open market or in private transactions. Upon retirement or departure from the Company or at the elected time, participants receive cash amounts equivalent to the payment date value of the investment choices they have made or shares of Company common stock equal to the number of share equivalents held in the accounts.

Some plan distributions may be made in cash or Company common stock at the option of the participant. Other plan distributions can only be made in Company common stock. For deferred compensation obligations that may be settled in cash, the Company must record appreciation in the market value of the investment choices made by participants as additional compensation expense. Conversely, declines in the value of Company stock or the mutual funds result in a reduction of compensation expense since such declines reduce the cash obligation of the Company as of the date of the financial statements. These market price movements may result in significant period-to-period fluctuations in the Company’s income. The increases or decreases in compensation expenses attributable to market price movements are reported in the operating expenses section of the consolidated statements of income. Because the obligations that must be settled only in Company common stock are treated as equity instruments, fluctuations in the market price of the underlying Company stock do not affect earnings.

At December 31, 2022 and December 31, 2021, the Company’s deferred compensation liability was $43,005,000 and $61,219,000, respectively. In 2022 and 2021, approximately 47 percent of deferred compensation liability represented deferred compensation tied to the performance of the Company’s common stock. The remainder of the deferred compensation liability was tied to the chosen mutual fund investment assets. A $1.00 increase in the market price of the Company’s common stock will result in approximately $189,000 of additional compensation expense. A $1.00 reduction in the market price of the common stock will reduce compensation expense by a like amount. The expense or income associated with the mutual fund component will generally fluctuate in line with the overall percentage increase or decrease of the U.S. stock markets.

The mutual fund assets related to the deferred compensation plans are recorded on the Company’s balance sheet at cost when acquired and adjusted to their market values at the end of each reporting period. As allowed by generally accepted accounting principles, the Company elected the fair value option for recording the mutual fund investment assets. Therefore, market value changes for the mutual fund investment assets are recorded in the income statement in the same periods that the offsetting changes in the deferred compensation liabilities are recorded. Dividends, capital gains distributed by the mutual funds and realized and unrealized gains and losses related to mutual fund shares are recognized as investment income or loss in the other, net line of the consolidated statements of income.

Fair Value Measurements

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Furthermore, GAAP establishes a framework, in the form of a three-level hierarchy, for measuring fair value that prioritizes the inputs to valuation techniques used to measure fair value. The following describes the hierarchy levels:

Level 1 - quoted prices in active markets for identical assets and liabilities.

Level 2 - inputs other than quoted prices included within Level 1 that are directly or indirectly observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 - unobservable inputs which reflect the entity’s own assumptions about the assumptions market participants use in pricing the assets and liabilities.

The Company applies the fair value measurement provisions of GAAP to any of its financial assets and liabilities that are carried at fair value on the consolidated balance sheets (see Note 2, Fair Value Measurements, of the notes to the Company’s consolidated financial statements included in Item 8 of this Form 10-K), its outstanding debt for disclosure purposes (see Note 2, Fair Value Measurements, of the notes to the Company’s consolidated financial statements included in Item 8 of this Form 10-K) and its pension plan assets (see Note 13, Postretirement Benefit Plans, of the notes to the Company’s consolidated financial statements included in Item 8 of this Form 10-K).

The Company also applies fair value measurements to nonfinancial assets and liabilities recorded in conjunction with business combinations and as part of impairment reviews for goodwill and other long-lived assets.

Revenue Recognition

The Company’s contracts typically have a single performance obligation that is satisfied at the time product is shipped and control passes to the customer. For a small portion of the business, performance obligations are deemed satisfied when product is delivered to a customer location. For arrangements where the Company consigns product to a customer location, revenue is recognized when the customer uses the inventory. The Company accounts for shipping and handling as activities to fulfill a promise to transfer a good. As such, shipping and handling fees billed to customers in a sales transaction are recorded in Net Sales and shipping and handling costs incurred are recorded in Cost of Sales. Volume and cash discounts due customers are estimated and recorded in the same period as the sales to which the discounts relate and are reported as reductions of revenue in the consolidated statements of income. See Note 21, Revenue from Contracts with Customers, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for more details.

Cost of Sales

Cost of sales is comprised of raw material costs (including inbound freight expense to deliver the raw materials), manufacturing plant labor expenses and various manufacturing overhead expenses, such as utilities, maintenance, operating supplies, amortization and manufacturing asset depreciation expenses. Cost of sales also includes outbound shipping and handling expenses, inter-plant transfer costs, warehouse expenses and rail car rental expenses.

Operating Expenses

Selling expenses are comprised of salaries and related fringe benefit expenses for marketing and sales personnel and operating costs, such as outside agent commissions, automobile rental and travel-related expenses, which support the sales and marketing functions. Bad debt charges and any depreciation expenses related to marketing assets (e.g., computers) are also classified as selling expenses.

Administrative expenses are comprised of salaries and related fringe benefit expenses and operating costs for the Company’s various administrative functions, which include information services, finance, legal, and human resources. The majority of environmental remediation expenses are also classified as administrative expense.

The Company’s research and development costs are expensed as incurred. These expenses are aimed at the discovery of new knowledge with the intent that such effort will be useful in developing and commercializing a new product or in bringing about a significant improvement to an existing product or process. Total research and development expenses were $40,902,000, $38,778,000, and $35,999,000 in 2022, 2021 and 2020, respectively. The remainder of research, development and technical service expenses reflected on the consolidated statements of income relate to technical services, which include routine product testing, quality control and sales service support.

Compensation expenses or income related to the Company’s deferred compensation plans is presented in the deferred compensation expense line in the Consolidated Statements of Income. For more details, see Note 12, Deferred Compensation, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K).

Environmental Expenditures

Environmental expenditures that relate to current operations are typically recorded in cost of sales. Expenditures that mitigate or prevent environmental contamination and that benefit future operations are capitalized as assets and depreciated on a straight-line basis over the estimated useful lives of the assets, which are typically 10 years.

Estimated future expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are recorded as liabilities, with the corresponding charge typically recorded in administrative expenses, when environmental assessments and/or remedial efforts are probable and the cost or range of possible costs can be reasonably estimated. When no amount within the range is a better estimate than any other amount, the minimum amount in the range is accrued. Estimating the possible costs of remediation requires making assumptions related to the nature and extent of contamination and the methods and resulting costs of remediation. Some of the factors on which the Company bases its estimates include information provided by feasibility studies, potentially responsible party negotiations and the development of remedial action plans. Legal costs related to environmental matters are expensed as incurred. See Note 16, Contingencies, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for environmental contingencies details.

Goodwill and Other Intangible Assets

The Company’s intangible assets include patents, agreements not to compete, trademarks, customer lists and relationships, technological and manufacturing know-how, supply contracts and goodwill, all of which were acquired as part of business or product line acquisitions. Intangible assets other than goodwill are determined to have either finite or indefinite useful lives. The Company currently has no indefinite-life intangible assets other than goodwill. The values for intangible assets with finite lives are amortized over the useful lives of the assets. Currently, the useful lives for the Company’s finite-lived intangible assets are as follows: patents – 15 years; non-compete agreements – three years; trademarks – eight to 11 years; customer relationships – ten to 20 years and know-how – seven to 20 years. In addition, finite-life intangible assets are tested for impairment when events or changes in circumstances indicate that the carrying value of an intangible asset may not be recoverable. Goodwill is not amortized but is tested for impairment at least annually, or more frequently, if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit to which goodwill relates below the reporting unit’s carrying value. See Note 4, Goodwill and Other Intangibles, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for detailed information about goodwill and other intangible assets.

Income Taxes

Income taxes are accounted for under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

Deferred tax assets are recognized to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

Uncertain tax positions are recorded in accordance with ASC 740, Income Taxes, on the basis of a two-step process whereby (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying Consolidated Statements of Income. Accrued interest and penalties are included within the related tax liability line in the Consolidated Balance Sheet. See Note 9, Income Taxes, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for more information about the Company’s income taxes.

Translation of Foreign Currencies

For the Company’s consolidated foreign subsidiaries whose functional currency is the local foreign currency, assets and liabilities are translated into U.S. dollars at exchange rates in effect at year end and revenues and expenses are translated at average exchange rates for the year. Any resulting translation adjustments are included in the consolidated balance sheets in the accumulated other comprehensive loss line of stockholders’ equity. Gains or losses on foreign currency transactions are reflected in the other, net caption

of the consolidated statements of income. The Company has four foreign subsidiaries whose functional currencies are the U.S. dollar. For these subsidiaries, nonmonetary assets and liabilities are translated at historical rates, monetary assets and liabilities are translated at exchange rates in effect at year end, revenues and expenses are translated at average exchange rates for the year and translation gains and losses are included in the other, net caption of the consolidated statements of income.

Stock-Based Compensation

The Company grants stock options, stock awards (including performance-based stock awards) and SARs to certain employees under its incentive compensation plans. The Company calculates the fair values of stock options, stock awards and SARs on the date such instruments are granted. The fair values of the stock options and stock awards are then recognized as compensation expense over the vesting periods of the instruments. The Company’s SARs granted prior to 2015 are cash-settled, and SARs granted in 2015 and later are stock-settled. The cash-settled SARs are accounted for as liabilities that must be re-measured at fair value at the end of each reporting period. Compensation expense for each reporting period is calculated as the period-to-period change (or portion of the change, depending on the proportion of the vesting period that has been completed at the reporting date) in the fair value of the cash-settled SARs. Compensation expense for the stock-settled SARs is calculated in the same way as compensation expense for stock options. See Note 11, Stock-based Compensation, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for detailed information about the Company’s stock-based compensation.

Earnings Per Share

Basic earnings per share amounts are computed as net income attributable to the Company divided by the weighted-average number of common shares outstanding. Diluted earnings per share amounts are based on the weighted-average number of common shares outstanding plus the weighted-average of net common shares (under the treasury stock method) that would be outstanding assuming the exercise of outstanding stock options and stock-settled SARs, the vesting of unvested stock awards that have no performance or market condition and the issuance of contingent performance stock awards. See Note 18, Earnings Per Share, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for detailed information about the Company’s earnings per share calculations.

Comprehensive Income and Accumulated Other Comprehensive Income

Comprehensive income includes net income and all other non-owner changes in equity that are not reported in net income. Comprehensive income is disclosed in the consolidated statements of comprehensive income. Accumulated other comprehensive income (AOCI) is reported as a component of stockholders’ equity in the Company’s consolidated balance sheets. See Note 19, Accumulated Other Comprehensive Income (Loss), of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for detailed information regarding changes in the Company’s AOCI and reclassifications out of AOCI to income.

Segment Reporting

The Company reports financial and descriptive information about its reportable operating segments. Operating segments are components of the Company that have separate financial information that is regularly evaluated by the chief operating decision maker to assess segment performance and allocate resources. The Company discloses segment revenue, operating income, assets, capital expenditures and depreciation and amortization expenses. Enterprise-wide financial information about the geographic locations in which the Company earns revenues and holds assets is also disclosed. See Note 17, Segment Reporting, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for detailed information about the Company’s segment reporting.

Derivative Instruments

Derivative instruments are recognized in the consolidated balance sheets as either assets or liabilities measured at fair value. For derivative instruments that are not designated as hedging instruments, changes in the fair values of the derivative instruments are recognized currently in earnings. For derivative instruments designated as hedging instruments, depending on the nature of the hedge, changes in the fair values of the derivative instruments are either offset in earnings against changes in the fair values of the hedged items or recognized in AOCI until the hedged transaction is recognized in earnings. At the time a hedging relationship is designated, the Company establishes the method it will use for assessing the effectiveness of the hedge and the measurement approach for determining the ineffective aspect of the hedge. Company policy prohibits the use of derivative instruments for trading or speculative purposes. See Note 3, Derivative Instruments, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for further information regarding the Company’s use of derivatives.

At December 31, 2022, the Company held open forward contracts for the purchase of 1.6 million dekatherms of natural gas in 2023 at a cost of $9,381,000. The Company uses forward contracts to minimize its exposure to volatile natural gas prices. Because the

Company anticipates taking delivery of the natural gas for use in its operations, the forward contracts qualify for the normal purchase exception provided under U.S. GAAP for derivative instruments. The Company has elected the exception for such contracts. As a result, the forward contracts are not accounted for as derivative instruments. The cost of natural gas is charged to expense at the time the natural gas is delivered and used.

Recent Accounting Pronouncements

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effect of Reference Rate Reform on Financial Reporting. This update provides optional guidance for a limited period of time to ease the burden of implementing the usage of new reference rates. The amendments apply to contract modifications that replace a reference rate affected by reference rate reform and contemporaneous modifications of other contract terms related to the replacement of the reference rate. If elected, the optional expedients to contract modifications must be applied consistently for all eligible contracts or eligible transactions. The original timeframe for electing optional expedients to contract modifications was between March 12, 2020 and December 31, 2022. In December 2022, the FASB issued ASU No. 2022-06 deferring the sunset date of Topic 848 from December 31, 2022, to December 31, 2024. The guidance should be applied prospectively. Other than electing select expedients associated with an interest rate swap, the Company has not currently utilized any of the optional expedients of exceptions available under this ASU. The Company will continue to assess whether this ASU is applicable throughout the effective period.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers which improves the accounting for acquired revenue contracts with customers in a business combination by addressing current inconsistencies in the recognition of acquired contract liabilities as well as payment terms and their effect on subsequent revenue recognized by the acquirer. Under current GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers and other similar contracts that are accounted for in accordance with ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) at fair value on the acquisition date. This amendment requires acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The amendments in this update are effective for fiscal years beginning after December 31, 2022 and should be applied prospectively. The Company is prepared to implement the guidance of ASU No. 2021-08 when it becomes applicable.

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Fair Value Measurements

12 Months Ended

Dec. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

2. Fair Value Measurements

The following were the financial instruments held by the Company at December 31, 2022 and 2021, and the methods and assumptions used to estimate the instruments’ fair values:

Cash and cash equivalents

Carrying value approximated fair value because of the short maturity of the instruments. Fair value of cash and cash equivalents is a Level 1 measurement.

Derivative assets and liabilities

Derivative assets and liabilities include the foreign currency exchange and interest rate swap contracts discussed in Note 3, Derivative Instruments, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K). Fair value and carrying value were the same because the contracts were recorded at fair value. The fair values of the foreign currency contracts were calculated as the difference between the applicable forward foreign exchange rates at the reporting date and the contracted foreign exchange rates multiplied by the contracted notional amounts. The fair value of the interest rate swaps was calculated as the difference between the contracted swap rate and the floating interest rate multiplied by the present value of the notional amount of the contract. The Company’s fair value measurements for derivative assets and liabilities fall within Level 2 of the fair value hierarchy.

See the table that follows the financial instrument descriptions for the reported fair values of derivative assets and liabilities.

Long-term investments

Long-term investments include the mutual fund assets the Company held to fund a portion of its deferred compensation liabilities and all of its non-qualified supplemental executive defined contribution obligations. See the defined contribution plans section of Note 13, Postretirement Benefit Plans, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K). Fair value and carrying value were the same because the mutual fund assets were recorded at fair value in accordance with the FASB’s fair value option guidance. Fair values for the mutual funds were calculated using the published market price per unit at the reporting date multiplied by the number of units held at the reporting date and therefore its fair value measurements for mutual fund assets fall within Level 1 of the fair value hierarchy.

See the table that follows the financial instrument descriptions for the reported fair value of long-term investments.

Debt obligations

The fair value of debt with original maturities greater than one year comprised the combined present values of scheduled principal and interest payments for each of the various loans, individually discounted at rates equivalent to those which could be obtained by the Company for new debt issues with durations equal to the average life to maturity of each loan. The fair values of the remaining Company debt obligations approximated their carrying values due to the short-term nature of the debt. The Company’s fair value measurements for debt fall in level 2 of the fair value hierarchy.

At December 31, 2022 and 2021, the fair values and related carrying values of debt, including current maturities, were as follows (the fair value and carrying value amounts are presented without regard to unamortized debt issuance costs of $686,000 and $710,000 as of December 31, 2022 and 2021, respectively):

	December 31
(In thousands)	2022		2021
Fair value	$	541,029	$	369,456
Carrying value		587,826		364,290

The following tables present financial assets and liabilities, excluding cash and cash equivalents, measured on a recurring basis at fair value as of December 31, 2022 and 2021, and the level within the fair value hierarchy in which the fair value measurement falls:

(In thousands)	December 31, 2022		Level 1		Level 2		Level 3
Mutual fund assets	$	23,294	$	23,294	$	—	$	—
Derivative assets:
Interest rate contracts		8,357		—		8,357		—
Foreign currency contracts		513		—		513		—
Total assets at fair value	$	32,164	$	23,294	$	8,870	$	—
Derivative liabilities:
Foreign currency contracts	$	525	$	—	$	525	$	—

(In thousands)	December 31, 2021		Level 1		Level 2		Level 3
Mutual fund assets	$	34,495	$	34,495	$	—	$	—
Derivative assets:
Foreign currency contracts		436		—		436		—
Total assets at fair value	$	34,931	$	34,495	$	436	$	—
Derivative liabilities:
Foreign currency contracts	$	338	$	—	$	338	$	—

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Derivative Instruments

12 Months Ended

Dec. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

3. Derivative Instruments

The Company is exposed to certain risks relating to its ongoing business operations. The primary risk managed by the use of derivative instruments is foreign currency exchange risk. The Company holds forward foreign currency exchange contracts that are not designated as any type of accounting hedge as defined by U.S. generally accepted accounting principles. The Company uses these contracts to manage its exposure to exchange rate fluctuations on certain Company subsidiary cash, accounts receivable, accounts payable and other obligation balances that are denominated in currencies other than the entities’ functional currencies. The forward foreign exchange contracts are recognized on the balance sheet as either an asset or a liability measured at fair value. Gains and losses arising from recording the foreign exchange contracts at fair value are reported in earnings as offsets to the losses and gains reported in earnings arising from the re-measurement of the receivable and payable balances into the applicable functional currencies. At December 31, 2022 and 2021, the Company had open forward foreign currency exchange contracts, all with durations of one to six months, to buy or sell foreign currencies with a U.S. dollar equivalent of $56,746,000 and $51,542,000, respectively.

The Company is currently exposed to volatility in short-term interest rates and has mitigated certain portions of that risk by using an interest rate swap. The interest rate swap is recognized on the balance sheet as either an asset or a liability measured at fair value. At December 31, 2022, the Company held an interest rate swap contract with a notional value of $100,000,000 that was designated as a cash flow hedge. Period-to-period changes in the fair value of the interest rate swap are initially recognized as gains or losses in other

comprehensive income. As the interest rate swap contract is settled, the corresponding gain or loss is reclassified out of accumulated other comprehensive income (AOCI) into earnings. The maturity date of the current interest swap contract is March 10, 2027 which is closely aligned with the June 24, 2027 maturity of the Company’s revolving credit facility.

The fair values of the derivative instruments held by the Company on December 31, 2022, and December 31, 2021, are disclosed in Note 2, Fair Value Measurements, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K). Derivative instrument gains and losses for the years ended December 31, 2022, 2021 and 2020, were immaterial. For amounts reclassified out of AOCI into earnings for the years ended December 31, 2022, 2021 and 2020, see Note 19, Accumulated Other Comprehensive Income (Loss), of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K).

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Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

4. Goodwill and Other Intangible Assets

The changes in the carrying value of goodwill for the years ended December 31, 2022 and 2021, were as follows:

	Surfactants Segment						Polymer Segment						Specialty Products Segment				Total
(In thousands)	2022			2021			2022			2021			2022		2021		2022			2021
Balance as of January 1
Goodwill	$	25,689		$	25,537		$	74,482		$	5,419		$	483	$	483	$	100,654		$	31,439
Accumulated impairment loss		(3,467	)		(3,467	)		—			—			—		—		(3,467	)		(3,467	)
Goodwill, net		22,222			22,070			74,482			5,419			483		483		97,187			27,972
Goodwill acquired (1)		1,792			—			—			72,467			—		—		1,792			72,467
Goodwill measurement period adjustment (1)		—			940			—			—			—		—		—			940
Goodwill impairment		(978	)		—			—			—			—		—		(978	)		—
Foreign currency translation		656			(788	)		(2,735	)		(3,404	)		—		—		(2,079	)		(4,192	)
Balance as of December 31
Goodwill		28,137			25,689			71,747			74,482			483		483		100,367			100,654
Accumulated impairment loss		(4,445	)		(3,467	)		—			—			—		—		(4,445	)		(3,467	)
Goodwill, net	$	23,692		$	22,222		$	71,747		$	74,482		$	483	$	483	$	95,922		$	97,187

(1)See Note 20, Acquisitions, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for information regarding the goodwill acquired in a business combination.

The Company typically tests its goodwill balances for impairment in the second quarter of each calendar year. Testing is completed more frequently when triggering events or changes in circumstances indicate it is more likely than not that the fair value of a reporting unit to which goodwill relates has declined below its carrying value. During the second quarter of 2022 the Company completed its annual goodwill impairment testing and concluded that the goodwill related to its Philippines reporting unit was impaired. The Philippines reporting unit is part of the Company’s Surfactant segment. Goodwill impairment was recognized as a result of the reporting unit’s fair value declining below its carrying value. The Company estimates the fair value of each of its reporting units based on the average of market and income-based computations. The Philippines impairment primarily resulted from lost market share at one major customer combined with higher unit overhead costs. The Company recorded a non-cash charge of $978,000 in the Consolidated Statements of Income for the year ended December 31, 2022. The impairment charge equaled the entire balance of the Philippines’ goodwill. The Company concluded that there was no goodwill impairment at any of its other reporting units based on its quantitative testing completed during the second quarter of 2022 and its qualitative assessment at the year end.

The following table presents the components of other intangible assets, all of which have finite lives, as of December 31, 2022 and 2021. The year-over-year changes in gross carrying values mainly resulted from the acquisition that took place in 2022 and the effects of foreign currency translation.

	Gross Carrying Value				Accumulated Amortization
	December 31				December 31
(In thousands)	2022		2021		2022		2021
Other Intangible Assets:
Patents (2)	$	7,411	$	7,411	$	6,363	$	6,139
Non-compete agreements (2)		635		594		548		404
Trademarks (2)		11,384		12,013		5,346		4,160
Customer lists/relationships (2)		46,972		44,447		12,491		9,557
Supply contract		1,551		1,472		1,551		1,472
Know-how (1)(2)		28,908		27,029		12,536		10,450
Total	$	96,861	$	92,966	$	38,835	$	32,182

(1)Know-how includes intellectual property rights covering proprietary information, written formulae, trade secrets or secret processes, inventions and developmental products (whether patentable or not), discoveries, improvements, compositions, manufacturing processes, manuals, specifications and technical data.

(2)The 2021 balances include intangible assets acquired as part of the Company’s acquisition of INVISTA’s aromatic polyester polyol business and associated assets in January 2021 and the Company’s fermentation plant acquisition in February 2021. The 2022 balances include intangible assets acquired as part of the Company’s PerformanX acquisition in September 2022. See Note 20, Acquisitions, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for additional details.

Aggregate amortization expense for the years ended December 31, 2022, 2021 and 2020, was $6,835,000, $7,292,000, and $3,621,000, respectively. The Company typically recognizes amortization expense within the Cost of Sales line item on the income statement. Estimated amortization expense for identifiable intangibles assets for each of the five succeeding fiscal years is as follows:

(In thousands)
For year ended 12/31/23	$	7,237
For year ended 12/31/24		6,950
For year ended 12/31/25		6,509
For year ended 12/31/26		6,186
For year ended 12/31/27		6,106

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Inventories

12 Months Ended

Dec. 31, 2022

Inventory Disclosure [Abstract]

Inventories

5. Inventories

The composition of inventories was as follows:

	December 31
(In thousands)	2022		2021
Finished products	$	250,373	$	184,010
Raw materials		152,158		121,528
Total inventories	$	402,531	$	305,538

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Debt

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Debt

6. Debt

At December 31, 2022 and 2021, debt was comprised of the following:

(In thousands)	Maturity Dates	December 31, 2022		December 31, 2021
Senior unsecured notes
3.95% (net of unamortized debt issuance cost of $186 and     $230 for 2022 and 2021, respectively)	2023-2027	$	71,243	$	85,485
3.86% (net of unamortized debt issuance cost of $125 and     $181 for 2022 and 2021, respectively)	2023-2025		42,732		56,962
4.86% (net of unamortized debt issuance cost of $30 and     $69 for 2022 and 2021 respectively)	2023		9,260		18,502
2.30% (net of unamortized debt issuance cost of $122 and     $100 for 2022 and 2021, respectively)	2024-2028		49,878		49,900
2.37% (net of unamortized debt issuance cost of $128 and     $108 for 2022 and 2021, respectively)	2024-2028		49,872		49,892
2.73% (net of unamortized debt issuance cost of $55 and     $22 for 2022 and 2021, respectively)	2025-2031		99,945		99,978
2.83% (net of unamortized debt issuance cost of $40 and     $0 for 2022 and 2021, respectively)	2026-2032		74,960		—
Revolving credit facility and term loan borrowing	2023-2027		189,250		—
Debt of foreign subsidiaries
Unsecured bank debt, foreign currency	2023		—		2,861
Total debt		$	587,140	$	363,580
Less current maturities			132,111		40,718
Long-term debt		$	455,029	$	322,862

The Company’s long-term debt financing is currently comprised of certain senior unsecured notes issued to insurance companies in private placement transactions, totaling $397,890,000 as of December 31, 2022. These notes are denominated in U.S. dollars and have fixed interest rates ranging from 2.30 percent to 4.86 percent. The notes had original maturities of seven to 12 years with mandatory principal payments beginning four, five and six years after issuance. The Company will be required to make principal payments on the currently outstanding notes from 2023 to 2032.

On March 1, 2022, pursuant to a note purchase and master note agreement dated as of June 10, 2021 (the NYL note purchase agreement), the Company issued and sold $25,000,000 in aggregate principal amount of its 2.83% Senior Notes, Series 2022-A, due March 1, 2032 (the Series 2022-A Notes). In addition, on March 1, 2022, pursuant to a note purchase and private shelf agreement dated as of June 10, 2021 (the Prudential note purchase agreement), the Company issued and sold $50,000,000 in aggregate principal amount of its 2.83% Senior Notes, Series 2022-B, due March 1, 2032 (the Series 2022-B Notes). The Series 2022-A Notes and the Series 2022-B Notes bear interest at a fixed rate of 2.83%, with interest to be paid semi-annually and with equal annual principal payments beginning on March 1, 2026 and continuing through final maturity on March 1, 2032. The proceeds of the issuance of the Series 2022-A Notes and the Series 2022-B Notes are being used primarily for capital expenditures, to pay down existing debt and for other corporate purposes. The NYL note purchase agreement and the Prudential note purchase agreement require the maintenance of certain financial ratios and covenants that are substantially similar to the Company’s existing long-term debt and provide for customary events of default.

On June 24, 2022, the Company entered into a credit agreement with a syndicate of banks. The credit agreement provides for credit facilities in an initial aggregate principal amount of $450,000,000, consisting of (a) a $350,000,000 multi-currency revolving credit facility and (b) a $100,000,000 delayed draw term loan credit facility, each of which matures on June 24, 2027. This credit agreement replaced the Company’s prior $350,000,000 revolving credit agreement. The Company maintains import letters of credit, and standby letters of credit under its workers’ compensation insurance agreements and for other purposes, as needed from time to time, which are issued under the revolving credit agreement. As of December 31, 2022, the Company had outstanding letters of credit totaling $10,870,000 and $189,250,000 of outstanding borrowings under the credit agreement, inclusive of a $98,750,000 delayed-draw term loan. There was $249,880,000 available under the credit agreement as of December 31, 2022.

Loans under the credit agreement may be incurred, at the discretion of the Company, with terms to maturity of one month, three months or six months. The Company may choose from two interest rate options: (1) Adjusted Term Secured Overnight Financing

Rate (SOFR) applicable to USD loans and relevant benchmark rates applicable to EUR, GBP and CAD loans plus spreads ranging from 1.125 percent to 1.750 percent, depending on the Company’s net leverage ratio, or (2) the prime rate plus 0.125 percent to 0.750 percent, depending on the Company’s net leverage ratio. The credit agreement requires the Company to pay a commitment fee ranging from 0.125 percent to 0.250 percent per annum, which also depends on the Company’s net leverage ratio. The credit agreement requires the maintenance of certain financial ratios and compliance with certain other covenants that are similar to the Company’s existing debt agreements, including net worth, interest coverage, leverage financial covenants and limitations on restricted payments, indebtedness and liens.

The Company’s foreign subsidiaries had no debt at December 31, 2022.

The Company’s material debt agreements contain provisions which, among other covenants, require maintenance of certain financial ratios and place limitations on additional debt, investments and payment of dividends. Based on the loan agreement provisions that place limitations on dividend payments, unrestricted retained earnings (i.e., retained earnings available for dividend distribution) were $224,189,000 and $468,095,000 at December 31, 2022 and 2021, respectively.

Debt at December 31, 2022, matures as follows: $132,111,000 in 2023; $53,572,000 in 2024; $69,108,000 in 2025; $66,786,000 in 2026; $135,535,000 in 2027 and $130,714,000 after 2027. Debt maturing in 2023 includes $41,608,000 of scheduled repayments under long-term debt agreements. The Company’s foreign subsidiaries routinely have short-term working capital loans. These short-term loan agreements could be supplemented, if necessary, by the Company’s $350,000,000 revolving credit facility entered into on June 24, 2022.

Net interest expense for the years ended December 31, 2022, 2021 and 2020, comprised the following:

(In thousands)	2022			2021			2020
Interest expense	$	17,852		$	10,145		$	9,859
Interest income		(1,080	)		(1,255	)		(2,171	)
		16,772			8,890			7,688
Capitalized interest		(6,963	)		(3,137	)		(2,279	)
Interest expense, net	$	9,809		$	5,753		$	5,409

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Leases

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

7. Leases

The Company’s operating leases are primarily comprised of real estate, railcar, storage tank, warehouse, auto, trailer and manufacturing/office equipment leases. Real estate and railcars comprise approximately 62 percent and 24 percent, respectively, of the Company’s consolidated right of use (ROU) asset balance. Except for real estate, typical lease terms range from one to ten years. Real estate lease terms typically range from one to fifty years. The Company’s four principal real estate leases consist of the office lease for the corporate headquarters in Northbrook, Illinois and land leases in the Philippines, Singapore and Lake Providence, Louisiana. As of December 31, 2022, the Company had railcars, equipment and storage tank leases valued at approximately $8,229,000, that had not commenced. These leases will commence during the first three quarters of 2023 with lease terms ranging 1 year to 10 years.

As most of the Company’s leases do not provide an implicit borrowing rate, the Company uses its incremental borrowing rate (IBR) based on the information available at the commencement date in determining the present value of lease payments. IBRs were specifically determined for the United States, Philippines, Singapore, Brazil and China, typically for five-year increments. The U.S. IBR was used for all other countries as the leases in these countries are not material. The total value of leases that reside in the five countries identified above represents approximately 97 percent of the Company’s consolidated ROU asset balance. Lease cost is recognized in both the Cost of Sales and Operating Expenses sections of the Consolidated Statements of Income.

(In thousands)	Year ended December 31, 2022		Year ended December 31, 2021
Lease Cost
Operating lease cost	$	16,042	$	15,630
Short-term lease cost		7,029		6,570
Variable lease cost		1,206		892
Total lease cost	$	24,277	$	23,092
Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow from operating leases	$	15,963	$	14,885
Right-of-use assets obtained in exchange for operating lease liabilities		7,588		19,610

The following table outlines maturities of lease liabilities as of December 31, 2022:

(In thousands)
Undiscounted Cash Flows:
2023	$	14,683
2024		9,461
2025		6,892
2026		5,226
2027		4,767
Subsequent to 2027		34,063
Total Undiscounted Cash Flows	$	75,092
Less: Imputed interest		(11,481	)
Present value	$	63,611
Current operating lease liabilities (1)		13,052
Non-current operating lease liabilities		50,559
Total lease liabilities	$	63,611

(1)This item is included in Accrued liabilities line on the Company’s Consolidated Balance Sheet.

Weighted-average remaining lease term-operating leases	10 Years
Weighted-average discount rate-operating leases	3.2%

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Other, Net

12 Months Ended

Dec. 31, 2022

Other Income and Expenses [Abstract]

Other, Net

8. Other, Net

Other, net in the Consolidated Statements of Income included the following for the years ended December 31, 2022, 2021 and 2020:

(In thousands)	2022			2021		2020
Foreign exchange gains (losses)	$	(2,871	)	$	501	$	1,367
Investment income		1,757			2,886		1,681
Realized and unrealized gains (losses) on investments		(8,188	)		2,289		3,143
Net periodic benefit cost		690			302		(874	)
Other retirement obligation		(212	)		559		(363	)
Gain on dissolution of the China joint venture		—			972		—
Other, net	$	(8,824	)	$	7,509	$	4,954

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Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

9. Income Taxes

The provisions for taxes on income and the related income before taxes for the years ended December 31, 2022, 2021 and 2020, were as follows:

(In thousands)	2022			2021			2020
Taxes on Income
Federal
Current	$	39,328		$	35,057		$	21,889
Deferred		(20,636	)		(25,653	)		(3,453	)
State
Current		9,875			9,320			4,305
Deferred		(6,943	)		(6,556	)		(562	)
Foreign
Current		19,799			23,870			21,723
Deferred		127			(1,396	)		(491	)
Total	$	41,550		$	34,642		$	43,411
Income before Taxes
Domestic	$	103,831		$	77,696		$	81,906
Foreign		84,872			94,841			89,161
Total	$	188,703		$	172,537		$	171,067

The variations between the effective and statutory U.S. federal income tax rates are summarized as follows:

	2022						2021						2020
(In thousands)	Amount			%			Amount			%			Amount			%
Federal income tax provision at statutory tax rate	$	39,628			21.0		$	36,233			21.0		$	35,924			21.0
State income tax provision, less applicable federal tax benefit		2,316			1.2			2,184			1.3			2,956			1.7
Foreign income taxed at different rates		2,417			1.3			2,356			1.4			1,964			1.1
U.S. taxation of foreign earnings (1)		1,616			0.9			(134	)		(0.1	)		4,134			2.4
Unrecognized tax benefits		3,324			1.8			1,775			1.0			1,454			0.8
Prior years return to provision true-up (2)		(1,915	)		(1.0	)		(3,314	)		(1.9	)		(588	)		(0.3	)
Stock based compensation, excess tax benefits		(580	)		(0.3	)		(1,287	)		(0.7	)		(1,816	)		(1.1	)
U.S. tax credits (3)		(4,508	)		(2.4	)		(2,692	)		(1.6	)		(1,831	)		(1.1	)
Non-deductible expenses and other items, net		(748	)		(0.5	)		(479	)		(0.3	)		1,214			0.9
Total income tax provision	$	41,550			22.0		$	34,642			20.1		$	43,411			25.4

(1)Includes cost of global intangible low-taxed income (GILTI) in 2022, 2021 and 2020 plus other taxes paid or withheld on cash repatriated from foreign countries in 2021 and 2020. For 2022, includes Subpart F activity. For 2021, includes the benefit of separate limitation loss foreign tax credit attributes, related to prior years, that were utilized in 2021.

(2)For 2022, amount resulted from a higher federal research credit and lower GILTI. For 2021, amount resulted from a higher federal research credit, higher foreign-derived intangible income (FDII), and lower GILTI.

(3)For 2022, the increase was partially due to certain pilot model design and engineering costs.

At December 31, 2022 and 2021, the tax effects of significant temporary differences representing deferred tax assets and liabilities were as follows:

(In thousands)	2022			2021
Deferred Tax Assets:
Pensions	$	144		$	537
Deferred revenue		3,483			3,444
Other accruals and reserves		13,949			13,331
Legal and environmental accruals		10,283			7,385
Deferred compensation		13,845			16,210
Bad debt and rebate reserves		3,729			2,706
Non-U.S. subsidiaries net operating loss carryforwards		3,634			1,494
Amortization of intangibles		28,311			5,092
Inventories		10,577			3,108
Tax credit carryforwards		8,183			2,829
	$	96,138		$	56,136
Deferred Tax Liabilities:
Depreciation	$	(52,130	)	$	(42,299	)
Unrealized foreign exchange loss		(3,603	)		(2,908	)
Other		(3,064	)		(1,614	)
	$	(58,797	)	$	(46,821	)
Valuation Allowance	$	(836	)	$	(862	)
Net Deferred Tax Assets	$	36,505		$	8,453
Reconciliation to Consolidated Balance Sheet:
Non-current deferred tax assets (in other non-current    assets)		46,684			20,944
Non-current deferred tax liabilities		(10,179	)		(12,491	)
Net Deferred Tax Assets	$	36,505		$	8,453

Earnings generated by a foreign subsidiary are presumed to ultimately be transferred to the parent company. Therefore, the establishment of deferred taxes may be required with respect to the excess of the investment value for financial reporting over the tax basis of investments in those foreign subsidiaries (also referred to as book-over-tax outside basis differences). A company may overcome this presumption and forgo recording a deferred tax liability in its financial statements if it can assert that management has

the intent and ability to indefinitely reinvest the earnings of its foreign subsidiaries. Pursuant to the 2017 U.S. Tax Cuts and Jobs Act (Tax Act), the Company’s foreign earnings have been subject to U.S. federal taxes. The Company now has the ability to repatriate to the U.S. parent the cash associated with these foreign earnings with little additional U.S. federal taxes. This cash may, however, be subject to foreign income and/or local country taxes if repatriated to the United States. In addition, repatriation of some foreign cash balances may be further restricted by local laws. As such, the Company intends to limit its distributions to earnings previously taxed in the U.S. or earnings that would qualify for the 100 percent dividends received deduction provided for in the Tax Act as long as such distributions would not result in any significant foreign taxes. In 2022, the Company did not repatriate any cash to the U.S. parent company. In 2021, the Company repatriated $15,340,000 between May and December from its Brazilian, Colombian, and Mexican subsidiaries. The Company did not incur any incremental taxes as a result of this repatriation. In anticipation of the Company’s acquisition of INVISTA’s aromatic polyester polyol business and associated assets, the Company’s Philippines entities declared a cash dividend of approximately $20,700,000 to the U.S. parent in December 2020. The Company recorded $2,384,000 of additional income tax expense in 2020 as a result of the expected repatriation. The Company’s U.S. parent received the cash in 2021. The effect of the adjustment on the 2020 effective tax rate was an increase of approximately 1.4 percent.

The Company evaluated its indefinite reinvestment assertion with regards to certain accumulated foreign earnings as of December 31, 2022. The Company does not consider the undistributed earnings of its Canadian subsidiary to be indefinitely reinvested in foreign operations to the extent of the subsidiary’s paid-up capital (PUC) as determined under Canadian tax law which is used to determine tax-free distributions for Canadian tax purposes. The Company also does not consider the undistributed earnings of one of its Dutch subsidiaries, and one of its Singapore subsidiaries to be indefinitely reinvested in foreign operations. A distribution from any of these subsidiaries should not result in any significant foreign taxes to the extent of the distribution limitations discussed above and therefore, the Company has not recognized a deferred tax liability for these undistributed earnings as of December 31, 2022. In 2021, the Company dissolved its China joint venture that prior to dissolution had not been considered indefinitely reinvested. The dissolution resulted in $142,000 of additional income tax expense in 2021. The Company considers the undistributed earnings of its remaining foreign subsidiaries to be indefinitely reinvested in foreign operations. At this time, the determination of deferred tax liabilities on this amount is not practicable.

The Company had non-U.S. tax loss carryforwards of $10,754,000 (pretax) as of December 31, 2022, and $3,351,000 as of December 31, 2021, that are available for use by the Company between 2023 and 2032. The Company had tax credit carryforwards of $8,183,000 as of December 31, 2022, and $2,829,000 as of December 31, 2021, that are available for use by the Company between 2023 and 2042. The Company had non-U.S. capital loss carryforwards of $595,000 as of December 31, 2022, and $638,000 as of December 31, 2021. The Company’s capital loss carryforwards do not expire.

As of December 31, 2022, and 2021, the Company had valuation allowances of $836,000 and $862,000, respectively, which were attributable to deferred tax assets in Canada, India, the Philippines and Singapore. The realization of deferred tax assets is dependent on the generation of sufficient taxable income in the appropriate tax jurisdictions. The Company believes that it is more likely than not that the related deferred tax assets will not be realized.

As of December 31, 2022, 2021 and 2020, unrecognized tax benefits totaled $10,682,000, $7,292,000 and $4,735,000, respectively. The amount of unrecognized tax benefits that, if recognized, would favorably affect the Company’s effective income tax rate in any future periods, net of the federal benefit on state issues, was approximately $10,172,000, $6,973,000 and $4,545,000 at December 31, 2022, 2021 and 2020, respectively. The Company does not believe that the amount of unrecognized tax benefits related to its current uncertain tax positions will change significantly over the next 12 months.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. In 2022, the Company recognized net interest and penalty expense of $202,000 compared to $260,000 of net interest and penalty expense in 2021 and $31,000 of net interest and penalty expense in 2020. At December 31, 2022 the liability for interest and penalties was $543,000 compared to $340,000 at December 31, 2021.

The Company files income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. The Company is not subject to U.S. federal income tax examinations by tax authorities for years before 2016. Some foreign jurisdictions and various U.S. states jurisdictions may be subject to examination back to 2015.

During 2021, the Internal Revenue Service started its audit of the 2016-2019 tax years and expanded the years under audit to 2016-2020 in 2022. As of December 31, 2022, this audit was still open, and the Company had not been notified of any significant proposed adjustments.

Below are reconciliations of the January 1 and December 31 balances of unrecognized tax benefits for 2022, 2021 and 2020:

(In thousands)	2022			2021			2020
Unrecognized tax benefits, opening balance	$	7,292		$	4,735		$	3,273
Gross increases – tax positions in prior period		2,188			938			190
Gross increases – current period tax positions		1,617			1,662			1,288
Settlements		(454	)		—			—
Foreign currency translation		74			(14	)		15
Lapse of statute of limitations		(35	)		(29	)		(31	)
Unrecognized tax benefits, ending balance	$	10,682		$	7,292		$	4,735

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Stockholders' Equity

12 Months Ended

Dec. 31, 2022

Equity [Abstract]

Stockholders' Equity

10. Stockholders’ Equity

At December 31, 2022 and 2021, treasury stock consisted of 4,605,858 and 4,340,729 shares of common stock, respectively. During 2022, 251,120 shares of Company common stock were purchased in the open market. In addition, 20,347 shares were surrendered to the Company in connection with the settlement of employees’ minimum statutory withholding taxes related to performance stock awards, exercised SARs and deferred compensation distributions. Also, 6,338 shares of treasury stock were distributed to participants under the Company’s deferred compensation plans.

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Stock-based Compensation

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Stock-based Compensation

11. Stock-based Compensation

On December 31, 2022, the Company had outstanding stock options, stock awards and SARs awarded under its 2011 Incentive Compensation Plan (2011 Plan) and stock awards and SARs awarded under its 2022 Equity Incentive Compensation Plan (2022 Plan). Equity incentive awards are currently granted to Company executives and other key employees. In addition, stock awards are currently granted to non-employee directors of the Company. As of April 26, 2022, no additional stock options, stock awards or SARs may be granted under the 2011 Plan. As of the effective date of the 2022 Plan, 500,000 shares of the Company’s common stock, plus the number of shares that remained available for awards under the 2011 Plan as of April 26, 2022, were available for equity awards under the 2022 Plan. At December 31, 2022, there were 810,080 shares available for grant under the 2022 Plan.

Compensation expense recorded in the consolidated statements of income for all plans was $13,851,000, $11,716,000, and $10,080,000 for the years ended December 31, 2022, 2021 and 2020, respectively. The increase in stock-based compensation in 2022 versus 2021 was primarily attributable to the accelerated vesting of certain equity grants for the Company’s former Chief Executive Officer, who retired on April 25, 2022. In addition, management’s assessment that higher performance targets for certain grants would be achieved led to the increase of compensation expenses for performance awards.

The total income tax benefit recognized in the income statement for share-based compensation arrangements was $3,537,000, $2,867,000, and $2,390,000 for the years ended December 31, 2022, 2021 and 2020, respectively.

Stock Options

Under all plans, stock option awards are granted with an exercise price equal to the market price of the Company’s stock at the date of grant. The market price is defined and calculated as the average of the opening and closing prices for Company common stock on the grant date as reported in the New York Stock Exchange – Composite Transactions. Stock option awards granted prior to 2017 generally cliff vested after two years. Starting in 2017, stock options have a three-year graded vesting feature, with one-third of the awards vesting each year. The Company has elected the straight-line method of expense attribution for the stock options with graded vesting feature. These options have a 10-year contractual term. The fair value of each option award was estimated on the date of grant using the Black-Scholes option valuation model incorporating the weighted-average assumptions noted in the following table. Expected volatility is based on the historical volatility of the Company’s common stock. The Company also uses historical data to estimate the expected term of options granted. The risk-free rate is the U.S. Treasury note rate that corresponds to the expected option term at the date of grant. The following are the weighted-average assumptions used to calculate the grant-date fair values of stock option awards granted in the years ended December 31, 2022, 2021 and 2020:

	For the Years Ended December 31
	2022	2021	2020
Expected dividend yield	1.18%	1.30%	1.31%
Expected volatility	32.27%	31.81%	26.00%
Expected term	6.0 years	7.3 years	7.3 years
Risk-free interest rate	1.93%	0.96%	1.47%

A summary of stock option activity for the year ended December 31, 2022 is presented below:

	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value ($000)
Options
Outstanding at January 1, 2022		435,966		$	81.92
Granted		34,444			114.43
Exercised		(11,888	)		65.74
Forfeited		(31,361	)		115.43
Outstanding at December 31, 2022		427,161			82.53		5.27	$	10,224
Vested or expected to vest at December 31, 2022		427,161			82.53		5.27		10,224
Exercisable at December 31, 2022		408,802			80.80		5.14		10,488

The weighted-average grant-date fair values of options awarded during the years ended December 31, 2022, 2021 and 2020, were $32.21, $36.49, and $25.90, respectively. The total intrinsic values of options exercised during the years ended December 31, 2022, 2021, and 2020 were $475,000, $1,287,000, and $2,534,000, respectively.

As of December 31, 2022, the total unrecognized compensation cost for unvested stock options was $692,000. That cost is expected to be recognized over a weighted-average period of 1.2 years.

Cash received from stock option exercises under the Company’s stock option plans for the years ended December 31, 2022, 2021, and 2020 was $782,000, $1,369,000, and $2,926,000, respectively. The actual tax benefit realized for the tax deductions from stock option exercises totaled $36,000, $172,000, and $339,000 for the years ended December 31, 2022, 2021 and 2020, respectively.

Stock Awards

In 2020, 2021, and 2022, the Company granted stock awards under the 2011 Plan and, starting in April 2022, the Company also granted stock awards under the 2022 Plan. Most Company stock awards are granted in the form of performance awards. The performance stock awards vest only upon the Company’s achievement of certain levels of financial performance by the end of specified measurement periods as approved by the Board of Directors. The number of shares of the Company’s common stock ultimately distributed, if any, is contingent upon the Company’s actual financial performance attained by the end of the measurement period relative to the targets approved by the Board of Directors. The fair value of performance stock awards equals the grant-date market price of the Company’s common stock, discounted for the estimated amount of dividends that would not be received during the measurement period. Compensation expense is recorded each reporting period based on the probable number of awards that will ultimately vest given the projected level of financial performance. If at the end of the measurement period the performance objectives are not met, no compensation cost is recognized and any compensation expense recorded in prior periods is reversed. Under the 2011 Plan, the Company periodically granted stock awards that have no performance conditions associated with their vesting. Under the 2022 Plan, stock awards that have no performance conditions may be routinely granted to eligible employees. These stock awards vest after the period of service established for the given grant. In addition, the Company grants stock awards that have no performance conditions associated with their vesting to non-employee directors of the Company.

A summary of stock award activity for the year ended December 31, 2022, is presented below:

	Shares			Weighted-Average Grant Date Fair Value
Stock Awards
Unvested at January 1, 2022		103,278		$	61.30
Granted		64,392			106.78
Vested		(69,314	)		99.30
Forfeited/Modified due to change of assumptions		5,613			86.94
Unvested at December 31, 2022		103,969			110.50

The weighted-average grant-date fair values of stock awards granted during the years ended December 31, 2022, 2021 and 2020, were $106.78, $119.76, and $98.46, respectively. As of December 31, 2022, under the current Company assumption as to the number of shares of the Company’s common stock underlying stock awards that will vest at the measurement periods ended December 31, 2023

and 2024, there was $6,144,000 of unrecognized compensation cost for unvested stock awards. That cost is expected to be recognized over a period of 1.7 years.

SARs

At December 31, 2022, the Company had both cash-settled and Company stock-settled SARs outstanding. SARs granted prior to 2015 are cash-settled, and SARs granted in 2015 and later are stock-settled. SARs granted prior to 2017 cliff vested after two years. Starting in 2017, SARs have a three-year graded vesting feature, with one-third of the awards vesting each year. The Company has elected the straight-line method of expense attribution for the SARs with graded vesting feature. All SARs expire ten years from the grant date. Upon the exercise of a SARs award, a participant receives cash (for cash-settled SARs) or Company common stock (for stock-settled SARs). For cash-settled SARs, an amount equals the excess of the fair market value of a total number of shares/SARs exercised at the date of exercise over the fair market value of a total number of shares/SARs exercised at the date of grant (the exercise price). For stock-settled SARs, the number of shares equals the excess of the fair market value of a total number of shares/SARs exercised at the date of exercise over the fair market value of a total number of shares/SARs exercised at the date of grant (the exercise price) divided by the fair market value of a share of Company common stock at the date of exercise. Cash-settled SARs are accounted for as liabilities that must be re-measured at fair value at the end of every reporting period until settlement. Compensation expense for each reporting period is based on the period-to-period change (or portion of the change, depending on the proportion of the vesting period that has been completed at the reporting date) in the fair value of the SARs. Compensation expense for stock-settled SARs is based on the grant-date value of the awards allocated over the proportion of the vesting period that has been completed at the reporting date. Because stock-settled SARs are considered equity instruments, they are not re-measured at fair value at the end of each reporting period.

The following is a summary of SARs activity for the year ended December 31, 2022:

	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value ($000)
SARs
Outstanding at January 1, 2022		726,987		$	90.06
Granted		188,957			110.04
Exercised		(31,562	)		63.06
Forfeited		(34,226	)		115.20
Outstanding at December 31, 2022		850,156			94.49		6.62	$	10,176

The weighted-average grant-date fair values of SARs granted during the years 2022, 2021 and 2020 were $34.76, $36.49, and $25.88, respectively. The fair value for each SARs award was estimated using the Black-Scholes valuation model incorporating the same assumptions as noted for stock options.

As of December 31, 2022, and 2021, the liability for cash-settled SARs recorded on the consolidated balance sheet (non-current liabilities) was $747,000 and $1,502,000, respectively. At December 31, 2022, there was $5,211,000 of total unrecognized compensation cost related to all unvested SARs. That cost is to be recognized over a weighted-average period of 1.8 years.

In general, it is the Company’s policy to issue new shares of its common stock upon the exercise of stock options and stock-settled SARs or the vesting of stock awards.

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Deferred Compensation

12 Months Ended

Dec. 31, 2022

Compensation Related Costs [Abstract]

Deferred Compensation

12. Deferred Compensation

The Company sponsors deferred compensation plans that allow management employees to defer receipt of their annual cash incentive compensation and performance shares and outside directors to defer receipt of their fees and stock awards until retirement, departure from the Company or as otherwise elected. Compensation expense and the related deferred compensation obligation are recorded when the underlying compensation is earned. Over time, the deferred obligation may increase or decrease based on the performance results of investment options chosen by the plan participants. The investment options include the Company’s common stock and a limited selection of mutual funds. The Company maintains sufficient shares of treasury stock to cover the equivalent number of shares that result from participants elections of the Company common stock investment option. As a result, the Company periodically purchases shares of its common stock in the open market or in private transactions. The Company purchases shares of the applicable mutual funds to fund the portion of its deferred compensation liabilities tied to such investments.

Some plan distributions may be made in cash or Company common stock at the option of the participant. Other plan distributions can only be made in Company common stock. For deferred compensation obligations that may be settled in cash or shares of Company’s

common stock at the option of the participant, the Company must record appreciation in the market values of the investment choices made by participants as additional compensation expense. Conversely, declines in the market values of the investment choices reduce compensation expense. Increases and decreases of compensation expense that result from fluctuations in the underlying investments are recorded as part of operating expenses in the consolidated statements of income. The obligations that must be settled only in shares of the Company’s common stock are treated as equity instruments; therefore, fluctuations in the market price of the underlying shares of the Company’s common stock do not affect earnings.

The additional compensation expense or income resulting from the changes in the market values and earnings of the selected investment options was $9,393,000 income in 2022, and $6,895,000 expense and in 2021 and $9,988,000 expense in 2020. The main factors in the decrease of the 2022 deferred compensation expense versus 2021 deferred compensation expense was a decrease in the value of the mutual fund investment assets as well as a $17.83 per share decrease in the market price of the Company’s common stock in 2022 versus a $4.97 per share increase in the market price of the Company’s common stock in 2021. The Company’s deferred compensation liability was $43,005,000 and $61,219,000 at December 31, 2022 and 2021, respectively.

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Postretirement Benefit Plans

12 Months Ended

Dec. 31, 2022

Retirement Benefits [Abstract]

Postretirement Benefit Plans

13. Postretirement Benefit Plans

Defined Benefit Plans

The Company sponsors various funded qualified and unfunded non-qualified defined benefit pension plans, the most significant of which cover employees in the U.S. and U.K. locations. The various U.S. defined benefit pension plans were amended during the years 2005-2008 to freeze the plans by stopping the accrual of service benefits. The U.K. defined benefit pension plan was frozen in 2006. Benefits earned through the freeze dates are available to participants when they retire, in accordance with the terms of the plans. The Company established defined contribution plans to replace the frozen defined benefit pension plans.

Obligations and Funded Status at December 31

	United States						United Kingdom
(In thousands)	2022			2021			2022			2021
Change in benefit obligation
Benefit obligation at beginning of year	$	174,863		$	187,371		$	23,276		$	25,526
Interest cost		4,923			4,671			374			357
Actuarial income		(40,420	)		(8,682	)		(7,333	)		(1,171	)
Benefits paid		(8,899	)		(8,497	)		(709	)		(1,198	)
Foreign exchange impact		—			—			(2,322	)		(238	)
Benefit obligation at end of year	$	130,467		$	174,863		$	13,286		$	23,276

	United States						United Kingdom
(In thousands)	2022			2021			2022			2021
Change in plan assets
Fair value of plan assets at beginning of year	$	178,574		$	175,336		$	27,464		$	28,504
Actual return on plan assets		(33,187	)		11,459			(9,393	)		(78	)
Employer contributions		256			276			536			526
Benefits paid		(8,899	)		(8,497	)		(709	)		(1,198	)
Foreign exchange impact		—			—			(2,735	)		(290	)
Fair value of plan assets at end of year	$	136,744		$	178,574		$	15,163		$	27,464
Over funded status at end of year	$	6,277		$	3,711		$	1,877		$	4,188

The amounts recognized in the consolidated balance sheets at December 31 consisted of:

	United States						United Kingdom
(In thousands)	2022			2021			2022		2021
Non-current assets	$	8,700		$	7,166		$	1,877	$	4,188
Current liability		(278	)		(290	)		—		—
Non-current liability		(2,145	)		(3,165	)		—		—
Net amount recognized	$	6,277		$	3,711		$	1,877	$	4,188

The amounts recognized in accumulated other comprehensive income at December 31 consisted of:

	United States				United Kingdom
(In thousands)	2022		2021		2022		2021
Net actuarial loss	$	18,801	$	19,508	$	6,188	$	3,767

At December 31, 2022 and 2021 there were no pension plans with projected benefit obligations in excess of plan assets.

Components of Net Periodic Benefit Cost and Other Amounts Recognized in Other Comprehensive Income

Net periodic benefit costs for the years ended December 31, 2022, 2021 and 2020, were as follows:

	United States									United Kingdom
(In thousands)	2022			2021			2020			2022			2021			2020
Interest cost	$	4,923		$	4,671		$	5,668		$	374		$	357		$	445
Expected return on plan assets		(8,802	)		(10,348	)		(9,747	)		(399	)		(320	)		(548	)
Amortization of net actuarial loss		2,277			4,444			4,262			9			129			79
Net periodic benefit cost	$	(1,602	)	$	(1,233	)	$	183		$	(16	)	$	166		$	(24	)

Other changes in plan assets and benefit obligations recognized in other comprehensive income for the years ended December 31, 2022, 2021 and 2020, were as follows:

	United States									United Kingdom
(In thousands)	2022			2021			2020			2022			2021			2020
Net actuarial (gain) loss	$	1,570		$	(9,793	)	$	336		$	2,430		$	(757	)	$	272
Amortization of net actuarial loss		(2,277	)		(4,444	)		(4,262	)		(9	)		(129	)		(79	)
Total recognized in other comprehensive    income	$	(707	)	$	(14,237	)	$	(3,926	)	$	2,421		$	(886	)	$	193
Total recognized in net periodic benefit    cost and other comprehensive income	$	(2,309	)	$	(15,470	)	$	(3,743	)	$	2,405		$	(720	)	$	169

Estimated Future Benefit Payments

(In thousands)	United States		United Kingdom
2023	$	9,267	$	531
2024		9,575		558
2025		9,826		583
2026		10,003		623
2027		10,118		647
2028-2032		50,301		3,800

Assumptions

The weighted-average assumptions used to determine benefit obligations at December 31 were as follows:

	United States						United Kingdom
	2022			2021			2022			2021
Discount rate		5.50	%		2.90	%		5.00	%		1.80	%

The weighted-average assumptions used to determine net periodic benefit costs for years ended December 31 were as follows:

	United States									United Kingdom
	2022			2021			2020			2022			2021			2020
Discount rate		2.90	%		2.60	%		3.30	%		1.80	%		1.40	%		2.10	%
Expected long-term return on plan assets		5.50	%		6.75	%		6.75	%		1.61	%		1.13	%		2.30	%

In addition to the above assumptions, the Company uses a market-related value of assets approach to calculate the expected return on the plan assets component of U.S. net periodic benefit cost. The market-related value equals the fair value of plan assets with five-year smoothing of asset gains or losses. Asset gains are subtracted or losses added in the following way: 80 percent of the prior year’s gain or loss; 60 percent of the second preceding year’s gain or loss; 40 percent of the third preceding year’s gain or loss; and 20 percent of the fourth preceding year’s gain or loss. Gains or losses for the year are calculated as the difference between the expected fair value of assets and the actual fair value of assets.

Investment Strategies and Policies

U.S. Plans

Plan assets are predominantly invested using a combination of active and passive investment strategies. An investment management firm hires and monitors underlying investment management firms for each asset category. Equity managers within each category cover a range of investment styles and approaches, including both active and passive, and are combined in a way that controls for capitalization, style biases, and country exposure versus benchmark indexes. While active equity managers focus primarily on stock selection to improve returns, fixed income managers seek to reduce the volatility of the plan’s funded status by matching the duration with the plan’s liability while seeking to improve returns through security selection, sector allocation and yield curve management. Real estate exposure is now categorized within mid cap equity.

Risk is diversified among multiple asset categories, managers, styles, and securities. The investment management firm recommends asset allocations based on the time horizon available for investment, funded status, the nature of the plan cash flows and liabilities and other factors. The asset allocation targets are approved by the Company’s Plan Committee.

Available investment categories include:

Equities: Common stocks of large, medium, and small companies (company stock), including both U.S. and non-U.S. based companies. The long-term target allocation for equities, excluding Company stock, is approximately 25 percent and the total equity target is 35 percent, including allocation to the Company’s common stock.

Fixed Income (Debt): Bonds or notes issued or guaranteed by the U.S. government, and to a lesser extent, by non-U.S. governments, or by their agencies or branches, mortgage-backed securities, including collateralized mortgage obligations, corporate bonds, municipal bonds and dollar-denominated debt securities issued in the U.S. by non-U.S. banks and corporations. A small percentage of the fixed income assets may be in debt securities that are below investment grade. The target allocation for fixed income is 63 percent. The fixed income portfolio has a duration similar to the plan’s liability stream and is designed to perform consistent with the movement of the plan’s liabilities.

Employer Securities: The retirement plans also hold shares of the Company’s common stock, which are purchased or sold by the trustee from time to time, as directed by the Plan Committee. At the direction of the Plan Committee, the plans sold 33,983 shares of the Company’s common stock to the Company’s employee stock ownership plan (ESOP) trust on February 17, 2022. In 2021, the plans sold 31,362 shares to the Company’s ESOP trust on February 24, 2021. In 2020, the plans sold 32,706 shares to the Company’s ESOP trust on February 24, 2020.

In addition to these primary investment types, excess cash may be invested in futures in order to efficiently achieve more fully invested portfolio positions. Otherwise, a small number of investment managers may make limited use of derivatives, including futures contracts, options on futures and interest rate swaps in place of direct investment in securities to efficiently achieve equivalent market positions. Derivatives are not used to leverage portfolios.

The target allocation for cash is two percent of plan assets.

U.K. Plan

The objective of the U.K. defined benefit pension fund investment strategy is to maximize the long-term rate of return on plan assets within a medium level of risk in order to minimize the cost of providing pension benefits. To that end, the plan assets are invested in an actively managed pooled fund of funds that diversifies its holdings among equity securities, debt securities, property and cash. Essentially, the plan is to hold equity instruments to back the benefits of participants yet to retire and bonds and cash to back current pensioners. Although there are no formal target allocations for the plan assets, the overall strategy is to achieve a mix of investments for long-term growth and near-term benefit payments with a wide diversification of asset types. Equity securities are selected from U.K., European, U.S. and emerging market companies. Bonds include U.K. and other countries’ government notes and corporate debt of U.K and non-U.K. companies. There are no specific prohibited investments, but the current managed fund will not allocate assets to derivatives or other financial hedging instruments. Plan trustees meet regularly with the fund manager to assess the fund’s performance

and to reassess investment strategy. At December 31, 2022, the pension asset allocation was 11 percent equities, 75 percent fixed income, four percent insurance contracts, and ten percent cash.

Included in plan assets are insurance contracts purchased by the plan trustees to provide pension payments for specific retirees. In past years, at the time a plan participant retired, the plan trustee would periodically purchase insurance contracts to cover the future payments due the retiree. This practice is no longer followed. The contracts are revocable, and the related plan obligations are not considered settled. Therefore, the plan assets and obligations include the insured amounts.

Plan Assets

U.S. Plans

The Company’s asset allocations for its U.S. pension plans at December 31, 2022 and 2021, by asset category, were as follows:

	December 31, 2022
(In thousands)	Level 1		Level 2		Level 3		Total
Cash and Cash Equivalents	$	7,531	$	—	$	—	$	7,531
Equity Securities
U.S. Equities		21,279		—		—		21,279
Non-U.S. Equities		9,788		—		—		9,788
Employer Securities		17,970		—		—		17,970
Total Equities		49,037		—		—		49,037
Fixed Income Securities
U.S. Corporate Bonds		—		51,444		—		51,444
U.S. Government and Agency Bonds		15,627		2,628		—		18,255
Other Bonds		—		10,477		—		10,477
Total Fixed Income		15,627		64,549		—		80,176
Total	$	72,195	$	64,549	$	—	$	136,744

	December 31, 2021
(In thousands)	Level 1		Level 2		Level 3		Total
Cash and Cash Equivalents	$	10,918	$	—	$	—	$	10,918
Equity Securities
U.S. Equities		25,083		—		—		25,083
Non-U.S. Equities		12,544		—		—		12,544
Employer Securities		25,204		—		—		25,204
Total Equities		62,831		—		—		62,831
Fixed Income Securities
U.S. Corporate Bonds		—		69,073		—		69,073
U.S. Government and Agency Bonds		20,072		2,845		—		22,917
Other Bonds		—		12,835		—		12,835
Total Fixed Income		20,072		84,753		—		104,825
Total	$	93,821	$	84,753	$	—	$	178,574

Plan Asset Valuation Methodology

Following is a description of the valuation methodologies used for plan assets measured at fair value.

Individual equity securities, including employer securities, are valued by Standard & Poor’s Securities Evaluations as determined by quoted market prices on the New York Stock Exchange or other active trading markets. Both market pricing and future cash flow analysis may be used in the pricing process as follows:

Level 1 – Equities are valued according to the exchange-quoted market prices of the underlying investments. Level 1 fixed income securities are U.S. government securities and are valued according to quoted prices from active markets.

Level 2 – Fixed income investments without equivalent trading exchanges are valued primarily through a technique known as “future cash flow approach” which is based on what bondholders can reasonably expect to receive based upon an issuer’s current financial condition. Pricing analysts prepare cash flow forecasts and utilize one or two pricing models to arrive at an evaluated price. These models include factors such as the interest rate on the coupon, maturity, rating, cash flow projections and other factors.

Level 3 – no investments held during 2022 or 2021 were categorized as Level 3.

U.K. Plan

The Company’s asset allocations for its U.K. pension plans at December 31, 2022 and 2021, by asset category, were as follows:

	December 31, 2022
(In thousands)	Level 1		Level 2		Level 3		Total
Cash		—	$	1,448	$	—	$	1,448
Equity Securities
Pooled Pension Funds		—		1,688		—		1,688
Fixed Income
Pooled Pension Funds		—		11,350		—		11,350
Insurance Contracts		—		—		677		677
Total	$	—	$	14,486	$	677	$	15,163

	December 31, 2021
(In thousands)	Level 1		Level 2		Level 3		Total
Cash	$	—	$	2,414	$	—	$	2,414
Equity Securities
Pooled Pension Funds		—		3,715		—		3,715
Fixed Income
Pooled Pension Funds		—		20,332		—		20,332
Insurance Contracts		—		—		1,003		1,003
Total	$	—	$	26,461	$	1,003	$	27,464

Units of each of the pooled funds are valued by the trustee based on quoted market prices of the underlying investments (the underlying assets are either exchange traded or have readily available markets).

Fair value changes within asset categories for which fair value measurements use significant unobservable inputs (Level 3) were as follows during 2022 and 2021:

(In thousands)	Insurance Contracts
Fair value, December 31, 2020	$	1,159
Sale proceeds (benefit payments)		(131	)
Change in unrealized gain		(15	)
Foreign exchange impact		(10	)
Fair value, December 31, 2021	$	1,003
Sale proceeds (benefit payments)		(104	)
Change in unrealized gain		(120	)
Foreign exchange impact		(102	)
Fair value, December 31, 2022	$	677

Long-term Rate of Return for Plan Assets

U.S. Plans

The overall expected long-term rate of return on assets of 5.50 percent that was used to develop the 2022 pension expense is based on plan asset allocation, capital markets forecasts and expected benefits of active investment management. For fixed income, the expected return is 4.05 percent. This assumption includes the yield on the five-year zero-coupon U.S. Treasury bond as the base rate along with historical data from the U.S. Treasury yield curve. For equities, the expected return is 7.98 percent for U.S. and international equities. This return is based on a blended average of three different statistical models that each incorporates multiple factors, including forecasts relating to inflation, Gross Domestic Product, and the Fed Funds Target Rate.

The overall investment return forecast reflects the target allocations and the capital markets forecasts for each asset category, plus a premium for active asset management expected over the long-term.

U.K. Plan

The overall expected long-term return on plan assets is a weighted-average of the expected long-term returns for equity securities, debt securities and other assets. The redemption yield at the measurement date on U.K. government fixed interest bonds and the yield on corporate bonds are used as proxies for the return on the debt portfolio. The returns for equities and property are estimated as a premium of 3.0 percent added to the risk-free rate. Cash is assumed to have a long-term return of 3.5 percent.

Other Defined Benefit Plans

The Company maintains funded and unfunded defined benefit plans in other foreign locations. The liabilities and expenses associated with these plans, individually and collectively, are not material to the Company’s consolidated financial statements. Discount rates for these plans are determined based on local interest rates and plan participant data.

Cash Flows

As a result of pension funding relief included in the Highway and Transportation Funding Act of 2014, the Company does not expect to make any 2023 contributions to the funded U.S. qualified defined benefit plans. The Company expects to contribute $278,000 in 2023 to the unfunded non-qualified U.S. pension plans. The Company expects to contribute $451,000 to the U.K. defined benefit plan in 2023.

Defined Contribution Plans

The Company sponsors retirement savings defined contribution retirement plans that cover eligible U.S. and U.K. employees. The Company’s U.S. retirement plans include two qualified plans, one of which is a 401(k) plan and one of which is an employee stock ownership plan (ESOP), and one non-qualified supplemental executive plan. Prior to 2018, the Company made profit sharing contributions into the qualified retirement plans for its U.S. employees and starting in 2018 made profit sharing contributions into the qualified retirement plans for U.S. employees and for certain non-U.S. employees. Profit sharing contributions were determined using a formula applied to Company earnings. In 2020, 2021 and 2022, profit sharing contributions for U.S. employees were made to the ESOP trust. Profit sharing contributions are allocated to participant accounts on the basis of participant base earnings.

Defined contribution expenses for the Company’s qualified defined contribution plans and statutory profit sharing contributions were as follows:

(In thousands)	2022		2021		2020
Retirement contributions	$	8,556	$	8,134	$	8,035
Profit sharing contributions		5,276		5,081		6,107
Total	$	13,832	$	13,215	$	14,142

The Company has a rabbi trust to fund the obligations of its non-qualified supplemental executive defined contribution plans (supplemental plans). The trust comprises various mutual fund investments selected by the participants of the supplemental plans. In accordance with the accounting guidance for rabbi trust arrangements, the assets of the trust and the obligations of the supplemental plans are reported on the Company’s consolidated balance sheet. The Company elected the fair value option for the mutual fund investment assets so that offsetting changes in the mutual fund values and defined contribution plan obligations would be recorded in earnings in the same period. Therefore, the mutual funds are reported at fair value with any subsequent changes in fair value recorded in the income statement. The supplemental plan liabilities increase (i.e., supplemental plan expense is recognized) when the value of the trust assets appreciate and decrease (i.e., supplemental plan income is recognized) when the value of the trust assets decline. At December 31, 2022 and 2021, the trust asset balances were $376,000 and $2,146,000, respectively, and the supplemental plan liability balances were $446,000 and $2,221,000, respectively. The differences between the trust asset balances and the supplemental liability balances were due to estimated liabilities that were not funded until after the end of the year when the actual liabilities were determined.

Certain foreign locations are required by law to make profit sharing contributions to employees based on statutory formulas. For the years ended December 31, 2022, 2021 and 2020, the Company recognized $421,000, $219,000 and $1,679,000, respectively, of statutory profit sharing expense that is included in the table above.

In all Company locations, approximately 85 percent of union and non-union employees are eligible for either the Company’s sponsored or statutory profit sharing contributions and 100 percent of U.S. based union and non-union employees are eligible for the Company’s sponsored profit sharing contribution.

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Accrued Liabilities

12 Months Ended

Dec. 31, 2022

Payables and Accruals [Abstract]

Accrued Liabilities

14. Accrued Liabilities

The composition of accrued liabilities was as follows:

	December 31
(In thousands)	2022		2021
Accrued payroll and benefits	$	73,713	$	70,983
Accrued customer rebates		24,715		21,030
Other accrued liabilities		64,384		44,383
Total accrued liabilities	$	162,812	$	136,396

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Other Non-Current Liabilities

12 Months Ended

Dec. 31, 2022

Other Liabilities Disclosure [Abstract]

Other Non-Current Liabilities

15. Other Non-Current Liabilities

The composition of other non-current liabilities was as follows:

	December 31
(In thousands)	2022		2021
Deferred revenue	$	8,762	$	9,979
Environmental and legal matters		16,276		17,663
Deferred compensation liability		32,459		50,122
Pension liability		5,241		4,552
Other non-current liabilities		17,953		16,606
Total other non-current liabilities	$	80,691	$	98,922

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Contingencies

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Contingencies

16. Contingencies

There are a variety of legal proceedings pending or threatened against the Company that occur in the normal course of the Company’s business, the majority of which relate to environmental assessment, protection and remediation matters. Some of these proceedings may result in fines, penalties, judgments or costs being assessed against the Company at some future time. The Company’s operations are subject to extensive local, state and federal regulations, including the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) and the Superfund amendments of 1986 (Superfund) as well as comparable regulations applicable to the Company’s foreign locations. Over the years, the Company has received requests for information related to or has been named by government authorities as a potentially responsible party (PRP) at a number of sites where cleanup costs have been or may be incurred by the Company under CERCLA and similar state statutes. In addition, damages are being claimed against the Company in general liability actions for alleged personal injury or property damage in the case of some disposal and plant sites. The Company believes that it has made adequate provisions for the costs it is likely to incur with respect to these sites and claims.

In determining the appropriate level of environmental reserves, the Company considers several factors such as information obtained from investigatory studies; changes in the scope of remediation; the interpretation, application and enforcement of laws and regulations; changes in the costs of remediation programs; the development of alternative cleanup technologies and methods; and the relative level of the Company’s involvement at various sites for which the Company is allegedly associated. The level of annual expenditures for remedial, monitoring and investigatory activities will change in the future as major components of planned remediation activities are completed and the scope, timing and costs of existing activities are changed. As of December 31, 2022, the Company estimated a range of possible environmental losses and legal losses of $32,628,000 to $56,404,000. Within the range of possible environmental losses and legal losses, management has currently concluded that no single amount is more likely to occur than any other amounts in the range and, thus, has accrued at the lower end of the range. These accruals totaled $32,628,000 at December 31, 2022 and $23,127,000 at December 31, 2021. This increase primarily reflects revised environmental remediation cost estimates for the Company’s Maywood, New Jersey site due to U.S. Environmental Protection Agency (USEPA) work plan approvals and the receipt of third-party contractor bids during the third quarter of 2022. Remediation work has commenced at a portion of the Maywood site and the Company anticipates increased cash spending to occur in 2023. Although the Company believes that its estimated range of possible environmental losses and legal losses and its reserves are adequate for contingencies, it is possible due to the uncertainties noted above, that additional reserves could be required in the future. During 2022, cash expenditures related to environmental remediation and certain other legal matters approximated $2,330,000 compared to $3,461,000 expensed in 2021.

For certain sites, the Company has responded to information requests made by federal, state or local government agencies but has received no response confirming or denying the Company’s stated positions. As such, estimates of the total costs, or range of possible costs, of remediation, if any, or the Company’s share of such costs, if any, cannot be determined with respect to these sites. Consequently, the Company is unable to predict the effect thereof on the Company’s financial position, cash flows and results of operations. Based upon the Company’s present knowledge with respect to its involvement at these sites, the possibility of other viable entities’ responsibilities for cleanup, and the extended period over which any costs would be incurred, management believes that the

Company has no material liability at these sites and that these matters, individually and in the aggregate, will not have a material effect on the Company’s financial position. However, in the event of one or more adverse determinations with respect to such sites in any annual or interim period, the effect on the Company’s cash flows and results of operations for those periods could be material.

Following are summaries of the Company’s major contingencies at December 31, 2022:

Maywood, New Jersey Site

The Company’s property in Maywood, New Jersey, property formerly owned by the Company adjacent to its current site and other nearby properties (collectively, the Maywood site) were listed on the National Priorities List in September 1993 pursuant to the provisions of CERCLA because of alleged chemical contamination. Pursuant to (i) a September 21, 1987 Administrative Order on Consent entered into between the USEPA and the Company for property formerly owned by the Company at the Maywood site and (ii) the issuance of an order on November 12, 2004 by the USEPA to the Company for property currently owned by the Company at the Maywood site, the Company has completed various Remedial Investigation Feasibility Studies (RI/FS), and on September 24, 2014, USEPA issued its Record of Decision (ROD) for chemically-contaminated soil at the Maywood site, which requires the Company to perform remedial cleanup of the soil and buried waste. The USEPA has not yet issued a ROD for chemically-contaminated groundwater at the Maywood site. Based on the most current information available, the Company believes its recorded liability is reasonable having considered the range of estimated costs of remediation for the Maywood site. As noted above, during the third quarter of 2022 the Company increased its accrual for environmental remediation costs at the Maywood site. The estimate of the cost of remediation for the Maywood site could change again as the Company continues to hold discussions with the USEPA, as the design of the remedial action is finalized, if a groundwater ROD is issued or if other PRPs are identified. The ultimate amount for which the Company is liable could differ materially from the Company’s current recorded liability.

In April 2015, the Company entered into an Administrative Settlement Agreement and Administrative Order on Consent with USEPA which requires payment of certain costs and performance of certain investigative and design work for chemically-contaminated soil.

In addition, under the terms of a settlement agreement reached on November 12, 2004, the U.S. Department of Justice and the Company agreed to fulfill the terms of a Cooperative Agreement reached in 1985. Under the Cooperative Agreement, the United States is responsible for the removal of radioactive waste at the Maywood site, including past and future remediation costs at the site. As such, the Company recorded no liability related to this settlement agreement.

D’Imperio Property Site

During the mid-1970’s, Jerome Lightman and the Lightman Drum Company disposed of hazardous substances generated by the Company at several sites in New Jersey, including the D’Imperio site. The Company was named as a PRP in an October 2, 1998 lawsuit in the U.S. District Court for the District of New Jersey that involved the D’Imperio Site. In 2022, the PRPs were provided with updated remediation cost estimates by the PRP group technical consultant and project manager which the Company considered in its determination of its range of estimated possible losses and liability balance. The changes in range of possible losses and liability balance were immaterial. Remediation work continues at the D’Imperio site. Based on current information, the Company believes that its recorded liability is reasonable having considered the range of estimated cost of remediation for the D’Imperio site. Depending on the ultimate cost of the remediation at this site, the amount for which the Company is liable could differ materially from the Company’s current recorded liability.

Wilmington Site

The Company is currently contractually obligated to contribute to the environmental response costs associated with the Company’s formerly-owned site in Wilmington, Massachusetts (the Wilmington site). Remediation at this site is being managed by its current owner to whom the Company sold the property in 1980. Under the Company’s October 1, 1993 agreement with the current owner of the Wilmington site, once total site remediation costs exceed certain levels, the Company is obligated to contribute up to five percent of future response costs associated with this site with no limitation on the ultimate amount of contributions. The Company has paid the current owner $3,451,000 for the Company’s portion of environmental response costs at the Wilmington site through December 31, 2022. The Company has recorded a liability for its portion of the estimated remediation costs for the site. Depending on the ultimate cost of the remediation at this site, the amount for which the Company is liable could differ materially from the current recorded liability. On July 29, 2022, the Company and other potentially responsible parties were notified of a possible joint claim by federal and state trustees for alleged natural resource damages related to the Wilmington site. The alleged damages may result in a range of possible penalties; however, at this stage, the Company is unable to predict the ultimate outcome of this claim, the allocation of costs among the potentially responsible parties or what impact, if any, the outcome might have on the Company’s financial position, results of operations or cash flows.

The Company and other prior owners of the Wilmington site also entered into an agreement in April 2004 waiving certain statute of limitations defenses for claims which may be filed by the Town of Wilmington, Massachusetts, in connection with this site. While the Company has denied any liability for any such claims, the Company agreed to this waiver while the parties continue to discuss the resolution of any potential claim which may be filed.

Other U.S. Sites

Through the regular environmental monitoring of its plant production sites, the Company discovered levels of chemical contamination that were above thresholds allowed by law at its Elwood, Illinois (Millsdale) and Fieldsboro, New Jersey plants. The Company voluntarily reported its results to the applicable state environmental agencies. As a result, the Company is required to perform self-remediation of the affected areas. Based on current information, the Company believes that its recorded liability for the remediation of the affected areas is appropriate based on an estimate of expected costs. However, actual costs could differ materially from the current recorded liability.

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Segment Reporting

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Segment Reporting

17. Segment Reporting

The Company has three reportable segments: Surfactants, Polymers and Specialty Products. Each segment provides distinct products and requires separate management due to unique markets, technologies and production processes. Surfactants are used in a variety of consumer and industrial cleaning and disinfection products as well as in agricultural products, lubricating ingredients, oil field chemicals and other specialized applications. Polymers are used primarily in the manufacture of rigid foam for thermal insulation in the construction industry, plastics, building materials, refrigeration systems and CASE applications. Specialty Products are used in food, flavoring, nutritional supplement and pharmaceutical applications.

The Company evaluates the performance of its segments and allocates resources based on operating income before interest expense, other income/expense items and income tax provision. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.

The following is segment data for the three years ended December 31, 2022, 2021 and 2020:

(In thousands)	Surfactants		Polymers		Specialty Products		Segment Totals
2022
Net sales	$	1,882,745	$	789,080	$	101,445	$	2,773,270
Operating income		162,746		82,897		29,895		275,538
Assets		1,579,242		565,726		96,193		2,241,161
Capital expenditures		259,442		35,679		4,926		300,047
Depreciation and amortization expenses		55,262		31,399		5,807		92,468
2021
Net sales	$	1,562,795	$	713,440	$	69,731	$	2,345,966
Operating income		165,999		73,591		14,178		253,768
Assets		1,245,207		556,799		78,100		1,880,106
Capital expenditures		154,953		29,077		4,976		189,006
Depreciation and amortization expenses		51,375		30,598		5,836		87,809
2020
Net sales	$	1,351,686	$	452,277	$	65,787	$	1,869,750
Operating income		169,101		68,214		13,966		251,281
Assets		1,018,555		361,219		92,964		1,472,738
Capital expenditures		88,484		26,719		5,960		121,163
Depreciation and amortization expenses		49,429		22,873		5,686		77,988

Below are reconciliations of segment data to the consolidated financial statements:

(In thousands)	2022			2021			2020
Operating income - segment totals	$	275,538		$	253,768		$	251,281
Business restructuring and asset disposition (1)		(308	)		(3,353	)		(1,212	)
Unallocated corporate expenses (2)		(67,894	)		(79,634	)		(78,547	)
Total operating income		207,336			170,781			171,522
Interest expense, net		(9,809	)		(5,753	)		(5,409	)
Other, net		(8,824	)		7,509			4,954
Consolidated income before income taxes	$	188,703		$	172,537		$	171,067
Assets - segment totals	$	2,241,161		$	1,880,106		$	1,472,738
Unallocated corporate assets		192,011			185,506			279,598
Consolidated assets	$	2,433,172		$	2,065,612		$	1,752,336
Capital expenditures - segment totals	$	300,047		$	189,006		$	121,163
Unallocated corporate expenditures		1,506			5,476			4,629
Consolidated capital expenditures	$	301,553		$	194,482		$	125,792
Depreciation and amortization expenses – segment totals	$	92,468		$	87,809		$	77,988
Unallocated corporate depreciation expenses		2,182			3,067			3,872
Consolidated depreciation and amortization expenses	$	94,650		$	90,876		$	81,860

(1)See Note 22, Business Restructuring and Asset Disposition, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) regarding business restructuring and asset disposition costs.

(2)Unallocated corporate expenses are primarily comprised of corporate administrative expenses (e.g., corporate finance, legal, human resources, information systems, deferred compensation and environmental remediation) that are not included in segment operating income and not used to evaluate segment performance.

Below is certain Company-wide geographic data for the years ended December 31, 2022, 2021 and 2020:

(In thousands)	2022		2021		2020
Net sales (1)
United States	$	1,579,194	$	1,297,650	$	1,117,695
France		227,421		179,746		141,516
Poland		195,781		198,883		147,289
United Kingdom		229,836		208,780		93,115
Brazil		175,004		136,799		105,639
Mexico		148,858		127,944		100,763
All other countries		217,176		196,164		163,733
Total	$	2,773,270	$	2,345,966	$	1,869,750
Long-lived assets (2)
United States	$	896,867	$	668,362	$	499,260
Netherlands		79,007		85,931		—
Germany		42,512		41,438		39,759
Singapore		20,899		23,507		25,815
Brazil		38,493		35,294		35,786
China		28,717		30,991		27,300
United Kingdom		33,389		38,634		24,335
Mexico		52,917		45,384		39,482
All other countries		34,444		39,034		42,970
Total	$	1,227,245	$	1,008,575	$	734,707

(1)Net sales are attributed to countries based on the location of the Company legal entity making the sale.

(2)Includes net property, plant and equipment, goodwill and other intangible assets.

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Earnings Per Share

12 Months Ended

Dec. 31, 2022

Earnings Per Share [Abstract]

Earnings Per Share

18. Earnings Per Share

Below is the computation of basic and diluted earnings per share for the years ended December 31, 2022, 2021 and 2020:

(In thousands, except per share amounts)	2022		2021		2020
Computation of Basic Earnings per Share
Net income attributable to Stepan Company	$	147,153	$	137,804	$	126,770
Weighted-average number of shares outstanding		22,781		22,922		22,949
Basic earnings per share	$	6.46	$	6.01	$	5.52
Computation of Diluted Earnings per Share
Net income attributable to Stepan Company	$	147,153	$	137,804	$	126,770
Weighted-average number of shares outstanding		22,781		22,922		22,949
Add weighted-average net shares from assumed    exercise of options (under treasury share method) (1)		104		138		112
Add weighted-average net shares related to unvested    stock awards (under treasury share method)		1		1		1
Add weighted-average net shares from assumed    exercise of SARs (under treasury share method)		111		166		145
Add weighted-average contingently issuable net shares    related to performance stock awards (under treasury    share method)		67		60		49
Weighted-average shares applicable to diluted    earnings		23,064		23,287		23,256
Diluted earnings per share	$	6.38	$	5.92	$	5.45

(1)Options/SARs to purchase 343,715, 103,182 and 127,434 shares of the Company’s common stock were excluded from the computations of diluted earnings per share for the years ended December 31, 2022, 2021 and 2020, respectively. The options’/SARs’ exercise prices were greater than the average market price for the Company’s common stock and inclusion of the instruments would have had an antidilutive effect on the computations of earnings per share.

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Accumulated Other Comprehensive Income (Loss)

12 Months Ended

Dec. 31, 2022

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

19. Accumulated Other Comprehensive Income (Loss)

Below is the change in the Company’s accumulated other comprehensive income (loss) (AOCI) balance by component (net of income taxes) for the years ended December 31, 2022, 2021 and 2020:

(In thousands)	Foreign Currency Translation Adjustments			Defined Benefit Pension Plan Adjustments			Cash Flow Hedge Adjustments			Total
Balance at December 31, 2019	$	(104,037	)	$	(32,205	)	$	72		$	(136,170	)
Other comprehensive income before reclassifications		(3,046	)		(996	)		—			(4,042	)
Amounts reclassified from AOCI		—			3,340			(9	)		3,331
Net current period other comprehensive income		(3,046	)		2,344			(9	)		(711	)
Balance at December 31, 2020	$	(107,083	)	$	(29,861	)	$	63		$	(136,881	)
Other comprehensive income before reclassifications		(28,185	)		8,188			—			(19,997	)
Amounts reclassified from AOCI		—			3,651			(9	)		3,642
Net current period other comprehensive income		(28,185	)		11,839			(9	)		(16,355	)
Balance at December 31, 2021	$	(135,268	)	$	(18,022	)	$	54		$	(153,236	)
Other comprehensive income before reclassifications		(21,567	)		(2,857	)		8,357			(16,067	)
Amounts reclassified from AOCI		—			1,800			(9	)		1,791
Net current period other comprehensive income		(21,567	)		(1,057	)		8,348			(14,276	)
Balance at December 31, 2022	$	(156,835	)	$	(19,079	)	$	8,402		$	(167,512	)

Amounts reclassified out of AOCI for the three years ended December 31, 2022, 2021 and 2020, is displayed below:

	Amounts Reclassified from AOCI (1)
(In thousands)	2022			2021			2020			Affected Line Item in Consolidated Statements of Income
Amortization of defined pension items:
Prior service cost	$	(9	)	$	(12	)	$	(11	)
Actuarial loss		(2,393	)		(4,800	)		(4,421	)
	$	(2,402	)		(4,812	)		(4,432	)	Total before tax (2)
		602			1,161			1,092		Tax benefit
	$	(1,800	)	$	(3,651	)	$	(3,340	)	Net of tax
Gains and losses on cash flow hedges:
Foreign exchange contracts	$	9		$	9		$	9		Cost of sales
		9			9			9		Total before tax
		—			—			—		Tax benefit
	$	9		$	9		$	9		Net of tax
Total reclassifications for the period	$	(1,791	)	$	(3,642	)	$	(3,331	)	Net of tax

(1)Amounts in parentheses denote expense to the Company’s Consolidated Statements of Income.

(2)This component of accumulated other comprehensive income is included in the computation of net periodic benefit cost (see Note 13, Postretirement Benefit Plans, of the notes to the Company’s consolidated financial statements for details regarding net periodic benefit costs for the Company’s U.S. and U.K. defined benefit plans).

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Acquisitions

12 Months Ended

Dec. 31, 2022

Business Combinations [Abstract]

Acquisitions

20. Acquisitions

2022 Acquisition

PerformanX Acquisition

On September 23, 2022, the Company completed the acquisition of the surfactants business and associated assets of PerformanX Specialty Chemicals, LLC. This acquisition enhanced the Company’s specialty alkoxylates portfolio and provides market diversification opportunities. This acquisition is also expected to deliver additional baseload volumes for the Company’s Pasadena, Texas alkoxylation facility that is expected to start up in the first half of 2024. The purchase price of the acquisition was $9,693,000 and was paid for with

cash on hand. This acquisition did not have a material effect on the Company’s financial position as of December 31, 2022, its results of operations or cash flows for the year ended December 31, 2022. This acquisition was accounted for as a business combination and the assets were measured and recorded at their estimated fair values. The primary assets acquired were intangibles, mostly comprised of goodwill ($1,792,000), manufacturing know-how ($2,750,000), customer relationships ($3,250,000) and non-compete agreements ($10,000). The Company also acquired inventory ($1,312,000) and working capital ($579,000). All of the acquired assets are included within the Company’s Surfactants segment. The Company finalized the purchase price allocation during the fourth quarter of 2022. The average amortization period for the acquired identifiable intangibles assets has been estimated to be in the range of nine to ten years for manufacturing know-how, nine to 11 years for customer relationships and five years for non-compete agreements.

Pro forma financial information has not been included because reported revenues and earnings of the Company would not have been materially different had the acquisition date been January 1, 2021.

2021 Acquisitions

Acquisition of INVISTA’s Aromatic Polyester Polyol Business

On January 29, 2021, the Company and its wholly-owned subsidiaries Stepan Holdings Netherlands B.V. and Stepan UK Limited (collectively, “Stepan”) entered into a Stock and Asset Purchase Agreement with Arteva Specialties B.V., INV Performance Surfaces, LLC, INVISTA Textiles (U.K.) Limited, INV Management Services, LLC, and INVISTA Equities, LLC (collectively, “INVISTA”) to acquire INVISTA’s aromatic polyester polyol business and associated assets. Included in the transaction were two manufacturing sites, one in Wilmington, North Carolina (U.S.) and the other in Vlissingen, Netherlands, along with intellectual property, customer relationships, inventory and working capital. The purchase price was $165,000,000, plus $21,560,000 of working capital and $3,000,000 of associated value-added taxes (VAT), and was paid for with cash on hand. The working capital acquired included $5,900,000 of cash. The Company finalized the purchase price allocation during the third quarter of 2021. The following table summarizes the purchase price allocation for the major components of the acquisition:

(In thousands)
Assets:
Property, plant and equipment	$	54,200
Identifiable intangibles assets		46,000
Goodwill		64,800
Total assets acquired	$	165,000

Fermentation Plant Acquisition

On February 2, 2021, the Company completed the acquisition of a fermentation plant located in Lake Providence, Louisiana. The Company believes this plant complements the rhamnolipid-based bio-surfactant technology the Company acquired from Logos Technologies in March 2020. Fermentation is a new platform technology for the Company and the Company is focusing efforts to further develop, integrate, produce and commercialize these unique surfactants moving forward. Bio-surfactants, produced via fermentation, are attractive due to their biodegradability, low toxicity, and in some cases, unique antimicrobial properties. These bio-surfactants offer potential synergies in several strategic end use markets including oilfield, agriculture, personal care and household, industrial and institutional cleaning. The acquisition of this industrial scale fermentation plant represents a step in the Company’s bio-surfactant commercialization efforts. The purchase price was $3,500,000 and was paid for with cash on hand. This acquisition has been accounted for as an asset acquisition.

2020 Acquisitions

Clariant (Mexico) Acquisition

On September 17, 2020, the Company through its subsidiaries in Mexico, completed the acquisition of Clariant (Mexico) S.A. de C.V.’s (Clariant) anionic business located in Santa Clara, Mexico. The acquisition did not include the purchase of a manufacturing site. The business acquired has been integrated into the Company’s two existing manufacturing sites in Mexico (Matamoros and Ecatepec). The purchase price of the acquisition was $14,000,000, plus associated value-added taxes ($308,000) and was paid for with cash on hand. The acquisition was accounted for as a business combination and the assets were measured and recorded at their estimated fair values. The acquired goodwill is not tax deductible. All assets acquired are included in the Company’s Surfactants segment. The following table summarizes the purchase price allocation for the acquisition:

(In thousands)
Assets:
Identifiable intangible assets:
Customer lists	$	8,000
Trademarks and know-how		1,300
Non-compete agreement		300
Goodwill		5,165
Property, plant and equipment		175
Total assets acquired	$	14,940
Liabilities:
Other non-current liabilities		940
Total liabilities assumed		940
Net assets acquired	$	14,000

Logos Technologies Acquisition

On March 13, 2020, the Company completed the acquisition off certain assets of Logos Technologies LLC’s NatSurFact® business, a rhamnolipid-based line of bio-surfactants derived from renewable sources. These bio-surfactants offer synergies in several strategic end use markets including oilfield, agriculture, personal care and household, industrial and institutional. The acquisition was accounted for as an asset acquisition. The purchase price of the acquisition was $2,040,000 and was paid with cash on hand. All assets acquired are included in the Company’s Surfactants segment. The assets acquired were primarily intangibles, including trademarks and know-how ($1,392,000) and patents ($464,000). Additionally, $184,000 of laboratory equipment was acquired.

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Revenue from Contracts with Customers

12 Months Ended

Dec. 31, 2022

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

21. Revenue from Contracts with Customers

The Company deems a contract with a customer to exist when a purchase order is received from a customer for a specified quantity of product or products and the Company acknowledges receipt of such purchase order. In some instances the Company has entered into manufacturing supply agreements with customers but these agreements typically do not bind a customer to any purchase volume requirements and thus an obligation is not created until the customer submits a purchase order to the Company. The Company’s contracts typically have a single performance obligation that is satisfied at the time product is shipped and control passes to the customer. For a small portion of the business, performance obligations are deemed satisfied when product is delivered to a customer location.

As of December 31, 2022, the Company had $739,000 of contract liabilities and no contract assets. A contract liability would typically arise when an advance or deposit is received from a customer before the Company recognizes revenue. In practice, this is rare as it would require a customer to make a payment prior to a performance obligation being satisfied. When such situations do arise, the Company maintains a deferred revenue liability until the time a performance obligation has been satisfied. The Company recognized $1,376,000 of revenue in 2022 from pre-existing contract liabilities at December 31, 2021. During 2020 the Company recorded $10,709,000 of long-term deferred revenue associated with a payment received to defray the cost of capital expenditures necessary to service a customer’s future product needs. On December 31, 2022, $8,762,000 was classified as long-term and $1,947,000 was classified as short-term. This deferred revenue will be recognized over the period of the contract. As of December 31, 2022, no revenue has been recognized from this contract.

The tables below provide a geographic disaggregation of net sales for the years ended December 31, 2022, 2021 and 2020. The Company’s business segmentation by geographic region most effectively captures the nature and economic characteristics of the Company’s revenue streams impacted by economic factors.

	2022
(In thousands)	Surfactants		Polymers		Specialty Products		Total
Geographic Market
North America	$	1,099,616	$	437,312	$	83,807	$	1,620,735
Europe		349,651		307,441		16,118		673,210
Latin America		363,799		4,629		1,520		369,948
Asia		69,679		39,698		—		109,377
Total	$	1,882,745	$	789,080	$	101,445	$	2,773,270

	2021
(In thousands)	Surfactants		Polymers		Specialty Products		Total
Geographic Market
North America	$	904,469	$	364,382	$	59,461		1,328,312
Europe		288,735		302,137		9,152		600,024
Latin America		299,601		3,823		1,118		304,542
Asia		69,990		43,098		—		113,088
Total	$	1,562,795	$	713,440	$	69,731	$	2,345,966

	2020
(In thousands)	Surfactants		Polymers		Specialty Products		Total
Geographic Market
North America	$	826,841	$	265,700	$	56,455		1,148,996
Europe		234,631		147,289		9,332		391,252
Latin America		234,568		2,498		—		237,066
Asia		55,646		36,790		—		92,436
Total	$	1,351,686	$	452,277	$	65,787	$	1,869,750

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Business Restructuring and Asset Disposition

12 Months Ended

Dec. 31, 2022

Restructuring and Related Activities [Abstract]

Business Restructuring and Asset Disposition

22. Business Restructuring and Asset Disposition

2018 Restructuring

During the third quarter of 2018, the Company approved a plan to shut down surfactants operations at its German plant site. As of December 31, 2022, an aggregate of $2,392,000 shut down related expense had been recognized at the site. This aggregate expense is comprised of $1,404,000 of asset and spare part write downs recognized in 2018 and $988,000 of cumulative decommissioning costs. The Company recognized $79,000 and $909,000 in decommissioning expenses in 2020 and 2019, respectively.

2016 Restructuring

During 2016, the Company shut down its Longford Mills, Ontario, Canada (Longford Mills) manufacturing facility, a part of the Surfactant reportable segment. The shutdown plan was implemented to improve the Company’s asset utilization in North America and to reduce the Company’s fixed cost base. Manufacturing operations of the Longford Mills plant ceased by the end of 2016, and production of goods manufactured at the facility was transferred to other Company North American production sites. As of December 31, 2022, $9,558,000 of aggregate restructuring expense had been recognized, reflecting $1,644,000 of termination benefits for approximately 30 employees and $7,914,000 for other expenses, principally site decommissioning costs. The Company recognized restructuring expenses of $308,000, $633,000 and $1,133,000 in 2022, 2021 and 2020, respectively.

Asset Disposition

In the fourth quarter 2021, the Company sold one of its corporate headquarters buildings and recognized a $2,720,000 loss on the sale of the building. The loss is reflected in the Business restructuring and asset disposition line on the Company’s consolidated statements of income.

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Insurance Recovery

12 Months Ended

Dec. 31, 2022

Insurance Recovery [Abstract]

Insurance Recovery

23. Insurance Recovery

Elwood, Illinois (Millsdale) site

On January 19, 2020, the Company experienced a power disruption that impacted its Elwood, Illinois (Millsdale) facility. This power outage combined with below freezing temperatures, led to significant production and operational challenges that impacted both Surfactants and Polymers produced at the site. The Millsdale facility operated on a partial basis and used existing inventories to serve its customers during this time. On February 17, 2020, power outage-related operational issues impacted the Millsdale site’s waste water treatment plant and forced the Company to stop production at the site. As a result, the Company declared force majeure for the supply of phthalic anhydride (Polymers) and certain surfactant product lines. All production lines were fully operational prior to the end of the 2020 first quarter. During the second half of 2020, the Company finalized an insurance settlement related to this incident and recognized an $18,000,000 pre-tax insurance recovery. This insurance recovery was recognized as a reduction of expenses within cost of sales in the consolidated financial statements of income for the year ended December 31, 2020. The Surfactant and Polymer segments recorded $5,200,000 and $12,800,000, respectively, in insurance recovery.

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Noncash Investing and Financing Activities

12 Months Ended

Dec. 31, 2022

Supplemental Cash Flow Elements [Abstract]

Noncash Investing and Financing Activities

24. Noncash Investing and Financing Activities

Noncash investing activities included liabilities (accounts payable) incurred for property, plant and equipment expenditures of approximately $55,480,000, $36,588,000, and $17,946,000 that were unpaid at December 31, 2022, 2021 and 2020, respectively. Noncash financing activities included 58,441 shares of the Company’s common stock (valued at $6,095,000), 60,132 shares of the Company’s common stock (valued at $7,286,000) and 58,282 shares of the Company’s common stock (valued at $5,485,000) issued in connection with the Company’s equity incentive compensation plan in 2022, 2021 and 2020, respectively.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Nature of Operations

Nature of Operations

Stepan Company’s (the Company) operations consist predominantly of the production and sale of specialty and intermediate chemicals, which are sold to other manufacturers for use in a variety of end products. Principal markets for all products are manufacturers of cleaning and washing compounds (including detergents, shampoos, fabric softeners, toothpastes and household cleaners), paints, cosmetics, food, beverages, nutritional supplements, agricultural products, plastics, furniture, automotive equipment, insulation and refrigeration.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires Company management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses at the date of the financial statements and to provide disclosures of contingent assets, liabilities and related amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and all wholly-owned subsidiaries in which the Company exercises controlling influence. The equity method is used to account for investments in which the Company exercises significant but noncontrolling influence. Intercompany balances and transactions are eliminated in consolidation.

Prior to the fourth quarter of 2021, the Company had an 80 percent ownership interest in the Nanjing Stepan Jinling Chemical Limited Liability Company (a joint venture) and exercised controlling influence over the entity. As a result, the China joint venture results were included in the Company’s consolidated financial statements. The partner’s interest in the joint venture’s net income was reported in the net income attributable to noncontrolling interest line of the consolidated statements of income and its interest in the net assets of the joint venture was reported in the noncontrolling interest line (a component of equity separate from Company equity) of the consolidated balance sheets. The joint venture was dissolved during the fourth quarter of 2021.

Business Combinations

Business Combinations

The Company makes acquisitions from time to time. When such acquisitions occur, the Company applies the accounting guidance per FASB ASC Topic 805, Business Combinations (ASC 805), to determine whether the acquisition should be treated as an asset acquisition or a business combination. When the acquisition meets the criteria of a business combination the Company recognizes the identifiable assets acquired and liabilities assumed at their estimated fair values as of the date of the acquisition. The Company recognizes goodwill for any portion of the purchase price that exceeds the sum of the net fair value of all the assets purchased in the acquisition and the liabilities assumed. Considerable estimates, complex judgments and assumptions are typically required to arrive at the fair value of elements acquired in a business combination, inclusive of discount rates, customer attrition rates, royalty rates, economic lives, and estimated future cash flows expected to be generated from the assets acquired. These items are typically most relevant to the fair valuation of identifiable intangible assets and property, plant and equipment.

In some instances, the purchase price allocation of an acquisition is not complete by the end of a reporting period. This situation most typically arises when an acquisition is complex and/or completed very close to the end of a reporting period and all necessary information is not available by the end of the reporting period in which the acquisition occurs. In these instances, the Company reports provisional amounts for any incomplete items and makes subsequent adjustments as necessary information becomes available or determines that additional information is not obtainable. Any subsequent adjustments could have a material impact on the Company’s financial position or results of operations as they could impact the initial fair values assigned to intangible assets and property, plant and equipment and/or their estimated economic lives. ASC 805 requires purchase price allocations to be finalized within one year from the acquisition date.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid investments with purchased maturities of three months or less to be cash equivalents.

At December 31, 2022, the Company’s cash and cash equivalents totaled $173,750,000 including $64,851,000 in money market funds each rated AAAm by Standard and Poor’s, Aaa-mf by Moody’s and AAAmmf by Fitch. Cash in U.S. demand deposit accounts

and certificates of deposit totaled $11,811,000 and cash of the Company’s non-U.S. subsidiaries held outside the U.S. totaled $97,088,000 as of December 31, 2022. At December 31, 2021, the Company’s cash and cash equivalents totaled $159,186,000 including $46,689,000 in money market funds, each of which was rated AAAm by Standard and Poor’s, Aaa-mf by Moody’s and AAAmmf by Fitch. Cash in U.S. demand deposit accounts totaled $25,253,000 and cash of the Company’s non-U.S. subsidiaries held outside the U.S. totaled $87,244,000 as of December 31, 2021.

Receivables and Credit Risk/Losses

Receivables and Credit Risk/Losses

Receivables are stated net of allowances for doubtful accounts and other allowances and primarily include trade receivables from customers, as well as nontrade receivables from suppliers, governmental tax agencies and others.

The Company is exposed to both credit risk and losses on accounts receivable balances. The Company’s credit risk and loss exposure predominately relates to the sale of products to its customers. When extending credit to customers the Company evaluates a customer’s credit worthiness based on a combination of qualitative and quantitative factors, inclusive of, but not limited to, a customer’s credit rating from external providers, financial condition and past payment experience. The Company performs credit reviews on all customers at inception and on a scheduled basis thereafter dependent on customer risk and the level of credit extended. Payment terms extended are short term in duration, typically ranging from 30 to 60 days. The majority of the Company’s sales are made to large companies that are able to weather periodic changes in economic conditions. This risk of losses is further mitigated by the Company’s diverse customer base, which is dispersed over various geographic regions and industrial sectors. No single customer comprised more than 10 percent of the Company’s consolidated net sales in 2022, 2021 or 2020.

The Company maintains allowances for potential credit losses. With the adoption of ASU No. 2016-13, Financial Instruments – Credit Losses, the Company assesses the likelihood of default based on various factors, including the length of time receivables are past due, historical experience, current economic conditions and forward-looking economic forecasts. The Company also evaluates expected losses based on portfolios of data inclusive of geographical areas, specific end market uses of its products, etc. Although the Company’s historical credit loss experience has not been significant, its exposure to credit losses may increase if customers are adversely affected by economic challenges and/or uncertainty due to domestic or global recessions, disruptions due to pandemics, or other adverse global/regional events and customer specific factors. Specific customer allowances are recorded when a review of customer creditworthiness and current economic conditions indicate that collection is doubtful. General allowances are also maintained based on historical averages and trade receivable levels and incorporate existing economic conditions and forecast assumptions, when warranted. The Company reviews its reserves for credit losses on a quarterly basis. The Company also maintains other customer allowances that occur in the normal course of business.

The following is an analysis of the allowance for doubtful accounts and other accounts receivable allowances for the years ended December 31, 2022, 2021 and 2020:

(In thousands)	2022			2021			2020
Balance at January 1	$	10,157		$	10,133		$	9,325
Provision charged to income		1,374			943			864
Accounts written off, net of recoveries		(431	)		(919	)		(56	)
Balance at December 31	$	11,100		$	10,157		$	10,133

Inventories

Inventories

Inventories are valued at cost, which is not in excess of net realizable value, and include material, labor and plant overhead costs. Currently, the first in, first out (FIFO) method is used to determine the cost of the Company’s inventory.

Property, Plant and Equipment

Property, Plant and Equipment

Depreciation of property, plant and equipment is provided on a straight-line basis over the estimated useful lives of the assets. Lives used for calculating depreciation are generally 30 years for buildings and 15 years for building improvements. For assets classified as machinery and equipment, lives generally used for calculating depreciation expense range from 10 to 15 years for manufacturing equipment, five to 10 years for furniture and fixtures, three to five years for vehicles and three to 10 years for computer equipment and software. The manufacturing of chemicals is capital intensive and a large majority of the assets included within machinery and equipment represent manufacturing equipment. Major renewals and betterments are capitalized in the property accounts, while maintenance and repairs ($82,110,000, $75,351,000, and $69,234,000 in 2022, 2021 and 2020, respectively), which do not renew or extend the life of the respective assets, are charged to operations as incurred. Land is not depreciated. The cost of property retired or sold, and the related accumulated depreciation, are removed from the accounts and any resulting gain or loss is reflected in income. Long-lived assets are reviewed for impairment when conditions exist that indicate the carrying amount of the assets may not be fully

recoverable. Such conditions could include significant adverse changes in the business environment, significant declines in forecasted operations or an approved plan to discontinue an asset or an asset group before the end of its useful life.

Included in the computer equipment and software component of machinery and equipment are costs related to the acquisition and development of internal-use software. Capitalized costs for internal-use software include external direct costs of materials and services consumed in obtaining and developing the software. For development projects where major internal resources are committed, payroll and payroll-related costs incurred during the application development phase of the project are also capitalized. The capitalized costs are amortized over the useful lives of the software, which are generally three to 10 years. Costs incurred in the preliminary project phase are expensed. Deferred implementation costs for hosted cloud computing service arrangements are stated at historical cost and amortized on a straight-line basis over the term of the hosting arrangement.

Interest charges on borrowings applicable to major construction projects are capitalized.

Deferred Compensation

Deferred Compensation

The Company sponsors deferred compensation plans that allow management employees to defer receipt of their annual cash incentive compensation and performance shares and outside directors to defer receipt of their fees and stock awards until retirement, departure from the Company or as elected by the participant. The plans allow for the deferred compensation to grow or decline based on the results of investment options chosen by the participants. The investment options include Company common stock and a limited selection of mutual funds. The Company funds the obligations associated with these plans by purchasing investment assets that match the investment choices made by the plan participants. A sufficient number of shares of treasury stock are maintained on hand to cover the equivalent number of shares that result from participants electing the Company common stock investment option. As a result, the Company must periodically purchase its common shares in the open market or in private transactions. Upon retirement or departure from the Company or at the elected time, participants receive cash amounts equivalent to the payment date value of the investment choices they have made or shares of Company common stock equal to the number of share equivalents held in the accounts.

Some plan distributions may be made in cash or Company common stock at the option of the participant. Other plan distributions can only be made in Company common stock. For deferred compensation obligations that may be settled in cash, the Company must record appreciation in the market value of the investment choices made by participants as additional compensation expense. Conversely, declines in the value of Company stock or the mutual funds result in a reduction of compensation expense since such declines reduce the cash obligation of the Company as of the date of the financial statements. These market price movements may result in significant period-to-period fluctuations in the Company’s income. The increases or decreases in compensation expenses attributable to market price movements are reported in the operating expenses section of the consolidated statements of income. Because the obligations that must be settled only in Company common stock are treated as equity instruments, fluctuations in the market price of the underlying Company stock do not affect earnings.

At December 31, 2022 and December 31, 2021, the Company’s deferred compensation liability was $43,005,000 and $61,219,000, respectively. In 2022 and 2021, approximately 47 percent of deferred compensation liability represented deferred compensation tied to the performance of the Company’s common stock. The remainder of the deferred compensation liability was tied to the chosen mutual fund investment assets. A $1.00 increase in the market price of the Company’s common stock will result in approximately $189,000 of additional compensation expense. A $1.00 reduction in the market price of the common stock will reduce compensation expense by a like amount. The expense or income associated with the mutual fund component will generally fluctuate in line with the overall percentage increase or decrease of the U.S. stock markets.

The mutual fund assets related to the deferred compensation plans are recorded on the Company’s balance sheet at cost when acquired and adjusted to their market values at the end of each reporting period. As allowed by generally accepted accounting principles, the Company elected the fair value option for recording the mutual fund investment assets. Therefore, market value changes for the mutual fund investment assets are recorded in the income statement in the same periods that the offsetting changes in the deferred compensation liabilities are recorded. Dividends, capital gains distributed by the mutual funds and realized and unrealized gains and losses related to mutual fund shares are recognized as investment income or loss in the other, net line of the consolidated statements of income.

Fair Value Measurements

Fair Value Measurements

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Furthermore, GAAP establishes a framework, in the form of a three-level hierarchy, for measuring fair value that prioritizes the inputs to valuation techniques used to measure fair value. The following describes the hierarchy levels:

Level 1 - quoted prices in active markets for identical assets and liabilities.

Level 2 - inputs other than quoted prices included within Level 1 that are directly or indirectly observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 - unobservable inputs which reflect the entity’s own assumptions about the assumptions market participants use in pricing the assets and liabilities.

The Company applies the fair value measurement provisions of GAAP to any of its financial assets and liabilities that are carried at fair value on the consolidated balance sheets (see Note 2, Fair Value Measurements, of the notes to the Company’s consolidated financial statements included in Item 8 of this Form 10-K), its outstanding debt for disclosure purposes (see Note 2, Fair Value Measurements, of the notes to the Company’s consolidated financial statements included in Item 8 of this Form 10-K) and its pension plan assets (see Note 13, Postretirement Benefit Plans, of the notes to the Company’s consolidated financial statements included in Item 8 of this Form 10-K).

The Company also applies fair value measurements to nonfinancial assets and liabilities recorded in conjunction with business combinations and as part of impairment reviews for goodwill and other long-lived assets.

Revenue Recognition

Revenue Recognition

The Company’s contracts typically have a single performance obligation that is satisfied at the time product is shipped and control passes to the customer. For a small portion of the business, performance obligations are deemed satisfied when product is delivered to a customer location. For arrangements where the Company consigns product to a customer location, revenue is recognized when the customer uses the inventory. The Company accounts for shipping and handling as activities to fulfill a promise to transfer a good. As such, shipping and handling fees billed to customers in a sales transaction are recorded in Net Sales and shipping and handling costs incurred are recorded in Cost of Sales. Volume and cash discounts due customers are estimated and recorded in the same period as the sales to which the discounts relate and are reported as reductions of revenue in the consolidated statements of income. See Note 21, Revenue from Contracts with Customers, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for more details.

Cost of Sales

Cost of Sales

Cost of sales is comprised of raw material costs (including inbound freight expense to deliver the raw materials), manufacturing plant labor expenses and various manufacturing overhead expenses, such as utilities, maintenance, operating supplies, amortization and manufacturing asset depreciation expenses. Cost of sales also includes outbound shipping and handling expenses, inter-plant transfer costs, warehouse expenses and rail car rental expenses.

Operating Expenses

Operating Expenses

Selling expenses are comprised of salaries and related fringe benefit expenses for marketing and sales personnel and operating costs, such as outside agent commissions, automobile rental and travel-related expenses, which support the sales and marketing functions. Bad debt charges and any depreciation expenses related to marketing assets (e.g., computers) are also classified as selling expenses.

Administrative expenses are comprised of salaries and related fringe benefit expenses and operating costs for the Company’s various administrative functions, which include information services, finance, legal, and human resources. The majority of environmental remediation expenses are also classified as administrative expense.

The Company’s research and development costs are expensed as incurred. These expenses are aimed at the discovery of new knowledge with the intent that such effort will be useful in developing and commercializing a new product or in bringing about a significant improvement to an existing product or process. Total research and development expenses were $40,902,000, $38,778,000, and $35,999,000 in 2022, 2021 and 2020, respectively. The remainder of research, development and technical service expenses reflected on the consolidated statements of income relate to technical services, which include routine product testing, quality control and sales service support.

Compensation expenses or income related to the Company’s deferred compensation plans is presented in the deferred compensation expense line in the Consolidated Statements of Income. For more details, see Note 12, Deferred Compensation, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K).

Environmental Expenditures

Environmental Expenditures

Environmental expenditures that relate to current operations are typically recorded in cost of sales. Expenditures that mitigate or prevent environmental contamination and that benefit future operations are capitalized as assets and depreciated on a straight-line basis over the estimated useful lives of the assets, which are typically 10 years.

Estimated future expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are recorded as liabilities, with the corresponding charge typically recorded in administrative expenses, when environmental assessments and/or remedial efforts are probable and the cost or range of possible costs can be reasonably estimated. When no amount within the range is a better estimate than any other amount, the minimum amount in the range is accrued. Estimating the possible costs of remediation requires making assumptions related to the nature and extent of contamination and the methods and resulting costs of remediation. Some of the factors on which the Company bases its estimates include information provided by feasibility studies, potentially responsible party negotiations and the development of remedial action plans. Legal costs related to environmental matters are expensed as incurred. See Note 16, Contingencies, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for environmental contingencies details.

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

The Company’s intangible assets include patents, agreements not to compete, trademarks, customer lists and relationships, technological and manufacturing know-how, supply contracts and goodwill, all of which were acquired as part of business or product line acquisitions. Intangible assets other than goodwill are determined to have either finite or indefinite useful lives. The Company currently has no indefinite-life intangible assets other than goodwill. The values for intangible assets with finite lives are amortized over the useful lives of the assets. Currently, the useful lives for the Company’s finite-lived intangible assets are as follows: patents – 15 years; non-compete agreements – three years; trademarks – eight to 11 years; customer relationships – ten to 20 years and know-how – seven to 20 years. In addition, finite-life intangible assets are tested for impairment when events or changes in circumstances indicate that the carrying value of an intangible asset may not be recoverable. Goodwill is not amortized but is tested for impairment at least annually, or more frequently, if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit to which goodwill relates below the reporting unit’s carrying value. See Note 4, Goodwill and Other Intangibles, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for detailed information about goodwill and other intangible assets.

Income Taxes

Income Taxes

Income taxes are accounted for under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

Deferred tax assets are recognized to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

Uncertain tax positions are recorded in accordance with ASC 740, Income Taxes, on the basis of a two-step process whereby (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying Consolidated Statements of Income. Accrued interest and penalties are included within the related tax liability line in the Consolidated Balance Sheet. See Note 9, Income Taxes, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for more information about the Company’s income taxes.

Translation of Foreign Currencies

Translation of Foreign Currencies

For the Company’s consolidated foreign subsidiaries whose functional currency is the local foreign currency, assets and liabilities are translated into U.S. dollars at exchange rates in effect at year end and revenues and expenses are translated at average exchange rates for the year. Any resulting translation adjustments are included in the consolidated balance sheets in the accumulated other comprehensive loss line of stockholders’ equity. Gains or losses on foreign currency transactions are reflected in the other, net caption

of the consolidated statements of income. The Company has four foreign subsidiaries whose functional currencies are the U.S. dollar. For these subsidiaries, nonmonetary assets and liabilities are translated at historical rates, monetary assets and liabilities are translated at exchange rates in effect at year end, revenues and expenses are translated at average exchange rates for the year and translation gains and losses are included in the other, net caption of the consolidated statements of income.

Stock-Based Compensation

Stock-Based Compensation

The Company grants stock options, stock awards (including performance-based stock awards) and SARs to certain employees under its incentive compensation plans. The Company calculates the fair values of stock options, stock awards and SARs on the date such instruments are granted. The fair values of the stock options and stock awards are then recognized as compensation expense over the vesting periods of the instruments. The Company’s SARs granted prior to 2015 are cash-settled, and SARs granted in 2015 and later are stock-settled. The cash-settled SARs are accounted for as liabilities that must be re-measured at fair value at the end of each reporting period. Compensation expense for each reporting period is calculated as the period-to-period change (or portion of the change, depending on the proportion of the vesting period that has been completed at the reporting date) in the fair value of the cash-settled SARs. Compensation expense for the stock-settled SARs is calculated in the same way as compensation expense for stock options. See Note 11, Stock-based Compensation, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for detailed information about the Company’s stock-based compensation.

Earnings Per Share

Earnings Per Share

Basic earnings per share amounts are computed as net income attributable to the Company divided by the weighted-average number of common shares outstanding. Diluted earnings per share amounts are based on the weighted-average number of common shares outstanding plus the weighted-average of net common shares (under the treasury stock method) that would be outstanding assuming the exercise of outstanding stock options and stock-settled SARs, the vesting of unvested stock awards that have no performance or market condition and the issuance of contingent performance stock awards. See Note 18, Earnings Per Share, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for detailed information about the Company’s earnings per share calculations.

Comprehensive Income and Accumulated Other Comprehensive Income

Comprehensive Income and Accumulated Other Comprehensive Income

Comprehensive income includes net income and all other non-owner changes in equity that are not reported in net income. Comprehensive income is disclosed in the consolidated statements of comprehensive income. Accumulated other comprehensive income (AOCI) is reported as a component of stockholders’ equity in the Company’s consolidated balance sheets. See Note 19, Accumulated Other Comprehensive Income (Loss), of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for detailed information regarding changes in the Company’s AOCI and reclassifications out of AOCI to income.

Segment Reporting

Segment Reporting

The Company reports financial and descriptive information about its reportable operating segments. Operating segments are components of the Company that have separate financial information that is regularly evaluated by the chief operating decision maker to assess segment performance and allocate resources. The Company discloses segment revenue, operating income, assets, capital expenditures and depreciation and amortization expenses. Enterprise-wide financial information about the geographic locations in which the Company earns revenues and holds assets is also disclosed. See Note 17, Segment Reporting, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for detailed information about the Company’s segment reporting.

Derivative Instruments

Derivative Instruments

Derivative instruments are recognized in the consolidated balance sheets as either assets or liabilities measured at fair value. For derivative instruments that are not designated as hedging instruments, changes in the fair values of the derivative instruments are recognized currently in earnings. For derivative instruments designated as hedging instruments, depending on the nature of the hedge, changes in the fair values of the derivative instruments are either offset in earnings against changes in the fair values of the hedged items or recognized in AOCI until the hedged transaction is recognized in earnings. At the time a hedging relationship is designated, the Company establishes the method it will use for assessing the effectiveness of the hedge and the measurement approach for determining the ineffective aspect of the hedge. Company policy prohibits the use of derivative instruments for trading or speculative purposes. See Note 3, Derivative Instruments, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for further information regarding the Company’s use of derivatives.

At December 31, 2022, the Company held open forward contracts for the purchase of 1.6 million dekatherms of natural gas in 2023 at a cost of $9,381,000. The Company uses forward contracts to minimize its exposure to volatile natural gas prices. Because the

Company anticipates taking delivery of the natural gas for use in its operations, the forward contracts qualify for the normal purchase exception provided under U.S. GAAP for derivative instruments. The Company has elected the exception for such contracts. As a result, the forward contracts are not accounted for as derivative instruments. The cost of natural gas is charged to expense at the time the natural gas is delivered and used.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effect of Reference Rate Reform on Financial Reporting. This update provides optional guidance for a limited period of time to ease the burden of implementing the usage of new reference rates. The amendments apply to contract modifications that replace a reference rate affected by reference rate reform and contemporaneous modifications of other contract terms related to the replacement of the reference rate. If elected, the optional expedients to contract modifications must be applied consistently for all eligible contracts or eligible transactions. The original timeframe for electing optional expedients to contract modifications was between March 12, 2020 and December 31, 2022. In December 2022, the FASB issued ASU No. 2022-06 deferring the sunset date of Topic 848 from December 31, 2022, to December 31, 2024. The guidance should be applied prospectively. Other than electing select expedients associated with an interest rate swap, the Company has not currently utilized any of the optional expedients of exceptions available under this ASU. The Company will continue to assess whether this ASU is applicable throughout the effective period.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers which improves the accounting for acquired revenue contracts with customers in a business combination by addressing current inconsistencies in the recognition of acquired contract liabilities as well as payment terms and their effect on subsequent revenue recognized by the acquirer. Under current GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers and other similar contracts that are accounted for in accordance with ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) at fair value on the acquisition date. This amendment requires acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The amendments in this update are effective for fiscal years beginning after December 31, 2022 and should be applied prospectively. The Company is prepared to implement the guidance of ASU No. 2021-08 when it becomes applicable.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Allowance for Doubtful Accounts and Other Accounts Receivable Allowance

The following is an analysis of the allowance for doubtful accounts and other accounts receivable allowances for the years ended December 31, 2022, 2021 and 2020:

(In thousands)	2022			2021			2020
Balance at January 1	$	10,157		$	10,133		$	9,325
Provision charged to income		1,374			943			864
Accounts written off, net of recoveries		(431	)		(919	)		(56	)
Balance at December 31	$	11,100		$	10,157		$	10,133

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2022

Fair Value Disclosures [Abstract]

Fair Values and Related Carrying Values of Debt

At December 31, 2022 and 2021, the fair values and related carrying values of debt, including current maturities, were as follows (the fair value and carrying value amounts are presented without regard to unamortized debt issuance costs of $686,000 and $710,000 as of December 31, 2022 and 2021, respectively):

	December 31
(In thousands)	2022		2021
Fair value	$	541,029	$	369,456
Carrying value		587,826		364,290

Financial Assets and Liabilities, Excluding Cash and Cash Equivalents, Measured on a Recurring Basis at Fair Value

The following tables present financial assets and liabilities, excluding cash and cash equivalents, measured on a recurring basis at fair value as of December 31, 2022 and 2021, and the level within the fair value hierarchy in which the fair value measurement falls:

(In thousands)	December 31, 2022		Level 1		Level 2		Level 3
Mutual fund assets	$	23,294	$	23,294	$	—	$	—
Derivative assets:
Interest rate contracts		8,357		—		8,357		—
Foreign currency contracts		513		—		513		—
Total assets at fair value	$	32,164	$	23,294	$	8,870	$	—
Derivative liabilities:
Foreign currency contracts	$	525	$	—	$	525	$	—

(In thousands)	December 31, 2021		Level 1		Level 2		Level 3
Mutual fund assets	$	34,495	$	34,495	$	—	$	—
Derivative assets:
Foreign currency contracts		436		—		436		—
Total assets at fair value	$	34,931	$	34,495	$	436	$	—
Derivative liabilities:
Foreign currency contracts	$	338	$	—	$	338	$	—

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Goodwill and Other Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Changes in Carrying Value of Goodwill

The changes in the carrying value of goodwill for the years ended December 31, 2022 and 2021, were as follows:

	Surfactants Segment						Polymer Segment						Specialty Products Segment				Total
(In thousands)	2022			2021			2022			2021			2022		2021		2022			2021
Balance as of January 1
Goodwill	$	25,689		$	25,537		$	74,482		$	5,419		$	483	$	483	$	100,654		$	31,439
Accumulated impairment loss		(3,467	)		(3,467	)		—			—			—		—		(3,467	)		(3,467	)
Goodwill, net		22,222			22,070			74,482			5,419			483		483		97,187			27,972
Goodwill acquired (1)		1,792			—			—			72,467			—		—		1,792			72,467
Goodwill measurement period adjustment (1)		—			940			—			—			—		—		—			940
Goodwill impairment		(978	)		—			—			—			—		—		(978	)		—
Foreign currency translation		656			(788	)		(2,735	)		(3,404	)		—		—		(2,079	)		(4,192	)
Balance as of December 31
Goodwill		28,137			25,689			71,747			74,482			483		483		100,367			100,654
Accumulated impairment loss		(4,445	)		(3,467	)		—			—			—		—		(4,445	)		(3,467	)
Goodwill, net	$	23,692		$	22,222		$	71,747		$	74,482		$	483	$	483	$	95,922		$	97,187

(1)See Note 20, Acquisitions, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for information regarding the goodwill acquired in a business combination.

Components of Other Intangible Assets and Changes in Gross Carrying Values

The following table presents the components of other intangible assets, all of which have finite lives, as of December 31, 2022 and 2021. The year-over-year changes in gross carrying values mainly resulted from the acquisition that took place in 2022 and the effects of foreign currency translation.

	Gross Carrying Value				Accumulated Amortization
	December 31				December 31
(In thousands)	2022		2021		2022		2021
Other Intangible Assets:
Patents (2)	$	7,411	$	7,411	$	6,363	$	6,139
Non-compete agreements (2)		635		594		548		404
Trademarks (2)		11,384		12,013		5,346		4,160
Customer lists/relationships (2)		46,972		44,447		12,491		9,557
Supply contract		1,551		1,472		1,551		1,472
Know-how (1)(2)		28,908		27,029		12,536		10,450
Total	$	96,861	$	92,966	$	38,835	$	32,182

(1)Know-how includes intellectual property rights covering proprietary information, written formulae, trade secrets or secret processes, inventions and developmental products (whether patentable or not), discoveries, improvements, compositions, manufacturing processes, manuals, specifications and technical data.

(2)The 2021 balances include intangible assets acquired as part of the Company’s acquisition of INVISTA’s aromatic polyester polyol business and associated assets in January 2021 and the Company’s fermentation plant acquisition in February 2021. The 2022 balances include intangible assets acquired as part of the Company’s PerformanX acquisition in September 2022. See Note 20, Acquisitions, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for additional details.

Estimated Amortization Expense for Identifiable Intangibles Assets

Estimated amortization expense for identifiable intangibles assets for each of the five succeeding fiscal years is as follows:

(In thousands)
For year ended 12/31/23	$	7,237
For year ended 12/31/24		6,950
For year ended 12/31/25		6,509
For year ended 12/31/26		6,186
For year ended 12/31/27		6,106

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Inventories (Tables)

12 Months Ended

Dec. 31, 2022

Inventory Disclosure [Abstract]

Composition of Inventories

The composition of inventories was as follows:

	December 31
(In thousands)	2022		2021
Finished products	$	250,373	$	184,010
Raw materials		152,158		121,528
Total inventories	$	402,531	$	305,538

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Debt (Tables)

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Debt

t December 31, 2022 and 2021, debt was comprised of the following:

(In thousands)	Maturity Dates	December 31, 2022		December 31, 2021
Senior unsecured notes
3.95% (net of unamortized debt issuance cost of $186 and     $230 for 2022 and 2021, respectively)	2023-2027	$	71,243	$	85,485
3.86% (net of unamortized debt issuance cost of $125 and     $181 for 2022 and 2021, respectively)	2023-2025		42,732		56,962
4.86% (net of unamortized debt issuance cost of $30 and     $69 for 2022 and 2021 respectively)	2023		9,260		18,502
2.30% (net of unamortized debt issuance cost of $122 and     $100 for 2022 and 2021, respectively)	2024-2028		49,878		49,900
2.37% (net of unamortized debt issuance cost of $128 and     $108 for 2022 and 2021, respectively)	2024-2028		49,872		49,892
2.73% (net of unamortized debt issuance cost of $55 and     $22 for 2022 and 2021, respectively)	2025-2031		99,945		99,978
2.83% (net of unamortized debt issuance cost of $40 and     $0 for 2022 and 2021, respectively)	2026-2032		74,960		—
Revolving credit facility and term loan borrowing	2023-2027		189,250		—
Debt of foreign subsidiaries
Unsecured bank debt, foreign currency	2023		—		2,861
Total debt		$	587,140	$	363,580
Less current maturities			132,111		40,718
Long-term debt		$	455,029	$	322,862

Schedule of Net Interest Expense

Net interest expense for the years ended December 31, 2022, 2021 and 2020, comprised the following:

(In thousands)	2022			2021			2020
Interest expense	$	17,852		$	10,145		$	9,859
Interest income		(1,080	)		(1,255	)		(2,171	)
		16,772			8,890			7,688
Capitalized interest		(6,963	)		(3,137	)		(2,279	)
Interest expense, net	$	9,809		$	5,753		$	5,409

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Leases (Tables)

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Schedule of Lease Cost Included in Cost of Sale and Operating Expenses

Lease cost is recognized in both the Cost of Sales and Operating Expenses sections of the Consolidated Statements of Income.

(In thousands)	Year ended December 31, 2022		Year ended December 31, 2021
Lease Cost
Operating lease cost	$	16,042	$	15,630
Short-term lease cost		7,029		6,570
Variable lease cost		1,206		892
Total lease cost	$	24,277	$	23,092
Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow from operating leases	$	15,963	$	14,885
Right-of-use assets obtained in exchange for operating lease liabilities		7,588		19,610

Schedule of Maturities of Lease Liabilities

The following table outlines maturities of lease liabilities as of December 31, 2022:

(In thousands)
Undiscounted Cash Flows:
2023	$	14,683
2024		9,461
2025		6,892
2026		5,226
2027		4,767
Subsequent to 2027		34,063
Total Undiscounted Cash Flows	$	75,092
Less: Imputed interest		(11,481	)
Present value	$	63,611
Current operating lease liabilities (1)		13,052
Non-current operating lease liabilities		50,559
Total lease liabilities	$	63,611

(1)This item is included in Accrued liabilities line on the Company’s Consolidated Balance Sheet.

Schedule of Operating Leases Weighted Average, Remaining Lease Term and Discount Rate

Weighted-average remaining lease term-operating leases	10 Years
Weighted-average discount rate-operating leases	3.2%

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Other, Net (Tables)

12 Months Ended

Dec. 31, 2022

Other Income and Expenses [Abstract]

Other Net in Consolidated Statements of Income

Other, net in the Consolidated Statements of Income included the following for the years ended December 31, 2022, 2021 and 2020:

(In thousands)	2022			2021		2020
Foreign exchange gains (losses)	$	(2,871	)	$	501	$	1,367
Investment income		1,757			2,886		1,681
Realized and unrealized gains (losses) on investments		(8,188	)		2,289		3,143
Net periodic benefit cost		690			302		(874	)
Other retirement obligation		(212	)		559		(363	)
Gain on dissolution of the China joint venture		—			972		—
Other, net	$	(8,824	)	$	7,509	$	4,954

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Schedule of Provision for Taxes on Income and Other Related Income Before Taxes

The provisions for taxes on income and the related income before taxes for the years ended December 31, 2022, 2021 and 2020, were as follows:

(In thousands)	2022			2021			2020
Taxes on Income
Federal
Current	$	39,328		$	35,057		$	21,889
Deferred		(20,636	)		(25,653	)		(3,453	)
State
Current		9,875			9,320			4,305
Deferred		(6,943	)		(6,556	)		(562	)
Foreign
Current		19,799			23,870			21,723
Deferred		127			(1,396	)		(491	)
Total	$	41,550		$	34,642		$	43,411
Income before Taxes
Domestic	$	103,831		$	77,696		$	81,906
Foreign		84,872			94,841			89,161
Total	$	188,703		$	172,537		$	171,067

Summary of Variations Between the Effective and Statutory U.S. Federal Income Tax Rates

The variations between the effective and statutory U.S. federal income tax rates are summarized as follows:

	2022						2021						2020
(In thousands)	Amount			%			Amount			%			Amount			%
Federal income tax provision at statutory tax rate	$	39,628			21.0		$	36,233			21.0		$	35,924			21.0
State income tax provision, less applicable federal tax benefit		2,316			1.2			2,184			1.3			2,956			1.7
Foreign income taxed at different rates		2,417			1.3			2,356			1.4			1,964			1.1
U.S. taxation of foreign earnings (1)		1,616			0.9			(134	)		(0.1	)		4,134			2.4
Unrecognized tax benefits		3,324			1.8			1,775			1.0			1,454			0.8
Prior years return to provision true-up (2)		(1,915	)		(1.0	)		(3,314	)		(1.9	)		(588	)		(0.3	)
Stock based compensation, excess tax benefits		(580	)		(0.3	)		(1,287	)		(0.7	)		(1,816	)		(1.1	)
U.S. tax credits (3)		(4,508	)		(2.4	)		(2,692	)		(1.6	)		(1,831	)		(1.1	)
Non-deductible expenses and other items, net		(748	)		(0.5	)		(479	)		(0.3	)		1,214			0.9
Total income tax provision	$	41,550			22.0		$	34,642			20.1		$	43,411			25.4

(1)Includes cost of global intangible low-taxed income (GILTI) in 2022, 2021 and 2020 plus other taxes paid or withheld on cash repatriated from foreign countries in 2021 and 2020. For 2022, includes Subpart F activity. For 2021, includes the benefit of separate limitation loss foreign tax credit attributes, related to prior years, that were utilized in 2021.

(2)For 2022, amount resulted from a higher federal research credit and lower GILTI. For 2021, amount resulted from a higher federal research credit, higher foreign-derived intangible income (FDII), and lower GILTI.

(3)For 2022, the increase was partially due to certain pilot model design and engineering costs.

Schedule Showing Tax Effects of Significant Temporary Differences Representing Deferred Tax Assets and Liabilities

At December 31, 2022 and 2021, the tax effects of significant temporary differences representing deferred tax assets and liabilities were as follows:

(In thousands)	2022			2021
Deferred Tax Assets:
Pensions	$	144		$	537
Deferred revenue		3,483			3,444
Other accruals and reserves		13,949			13,331
Legal and environmental accruals		10,283			7,385
Deferred compensation		13,845			16,210
Bad debt and rebate reserves		3,729			2,706
Non-U.S. subsidiaries net operating loss carryforwards		3,634			1,494
Amortization of intangibles		28,311			5,092
Inventories		10,577			3,108
Tax credit carryforwards		8,183			2,829
	$	96,138		$	56,136
Deferred Tax Liabilities:
Depreciation	$	(52,130	)	$	(42,299	)
Unrealized foreign exchange loss		(3,603	)		(2,908	)
Other		(3,064	)		(1,614	)
	$	(58,797	)	$	(46,821	)
Valuation Allowance	$	(836	)	$	(862	)
Net Deferred Tax Assets	$	36,505		$	8,453
Reconciliation to Consolidated Balance Sheet:
Non-current deferred tax assets (in other non-current    assets)		46,684			20,944
Non-current deferred tax liabilities		(10,179	)		(12,491	)
Net Deferred Tax Assets	$	36,505		$	8,453

Schedule of Reconciliations of Unrecognized Tax Benefits

Below are reconciliations of the January 1 and December 31 balances of unrecognized tax benefits for 2022, 2021 and 2020:

(In thousands)	2022			2021			2020
Unrecognized tax benefits, opening balance	$	7,292		$	4,735		$	3,273
Gross increases – tax positions in prior period		2,188			938			190
Gross increases – current period tax positions		1,617			1,662			1,288
Settlements		(454	)		—			—
Foreign currency translation		74			(14	)		15
Lapse of statute of limitations		(35	)		(29	)		(31	)
Unrecognized tax benefits, ending balance	$	10,682		$	7,292		$	4,735

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Stock-based Compensation (Tables)

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Fair Value Assumptions for Stock Options

The following are the weighted-average assumptions used to calculate the grant-date fair values of stock option awards granted in the years ended December 31, 2022, 2021 and 2020:

	For the Years Ended December 31
	2022	2021	2020
Expected dividend yield	1.18%	1.30%	1.31%
Expected volatility	32.27%	31.81%	26.00%
Expected term	6.0 years	7.3 years	7.3 years
Risk-free interest rate	1.93%	0.96%	1.47%

Summary of Stock Option Activity

A summary of stock option activity for the year ended December 31, 2022 is presented below:

	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value ($000)
Options
Outstanding at January 1, 2022		435,966		$	81.92
Granted		34,444			114.43
Exercised		(11,888	)		65.74
Forfeited		(31,361	)		115.43
Outstanding at December 31, 2022		427,161			82.53		5.27	$	10,224
Vested or expected to vest at December 31, 2022		427,161			82.53		5.27		10,224
Exercisable at December 31, 2022		408,802			80.80		5.14		10,488

Summary of Stock Award Activity

A summary of stock award activity for the year ended December 31, 2022, is presented below:

	Shares			Weighted-Average Grant Date Fair Value
Stock Awards
Unvested at January 1, 2022		103,278		$	61.30
Granted		64,392			106.78
Vested		(69,314	)		99.30
Forfeited/Modified due to change of assumptions		5,613			86.94
Unvested at December 31, 2022		103,969			110.50

Summary of SARs Activity

The following is a summary of SARs activity for the year ended December 31, 2022:

	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value ($000)
SARs
Outstanding at January 1, 2022		726,987		$	90.06
Granted		188,957			110.04
Exercised		(31,562	)		63.06
Forfeited		(34,226	)		115.20
Outstanding at December 31, 2022		850,156			94.49		6.62	$	10,176

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Postretirement Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2022

Defined Benefit Plan Disclosure [Line Items]

Obligations and Funded Status

Obligations and Funded Status at December 31

	United States						United Kingdom
(In thousands)	2022			2021			2022			2021
Change in benefit obligation
Benefit obligation at beginning of year	$	174,863		$	187,371		$	23,276		$	25,526
Interest cost		4,923			4,671			374			357
Actuarial income		(40,420	)		(8,682	)		(7,333	)		(1,171	)
Benefits paid		(8,899	)		(8,497	)		(709	)		(1,198	)
Foreign exchange impact		—			—			(2,322	)		(238	)
Benefit obligation at end of year	$	130,467		$	174,863		$	13,286		$	23,276

	United States						United Kingdom
(In thousands)	2022			2021			2022			2021
Change in plan assets
Fair value of plan assets at beginning of year	$	178,574		$	175,336		$	27,464		$	28,504
Actual return on plan assets		(33,187	)		11,459			(9,393	)		(78	)
Employer contributions		256			276			536			526
Benefits paid		(8,899	)		(8,497	)		(709	)		(1,198	)
Foreign exchange impact		—			—			(2,735	)		(290	)
Fair value of plan assets at end of year	$	136,744		$	178,574		$	15,163		$	27,464
Over funded status at end of year	$	6,277		$	3,711		$	1,877		$	4,188

Schedule of Amounts Recognized in Balance Sheets

The amounts recognized in the consolidated balance sheets at December 31 consisted of:

	United States						United Kingdom
(In thousands)	2022			2021			2022		2021
Non-current assets	$	8,700		$	7,166		$	1,877	$	4,188
Current liability		(278	)		(290	)		—		—
Non-current liability		(2,145	)		(3,165	)		—		—
Net amount recognized	$	6,277		$	3,711		$	1,877	$	4,188

Amounts Recognized in Accumulated Other Comprehensive Income

The amounts recognized in accumulated other comprehensive income at December 31 consisted of:

	United States				United Kingdom
(In thousands)	2022		2021		2022		2021
Net actuarial loss	$	18,801	$	19,508	$	6,188	$	3,767

Components of Net Periodic Benefit Cost

Net periodic benefit costs for the years ended December 31, 2022, 2021 and 2020, were as follows:

	United States									United Kingdom
(In thousands)	2022			2021			2020			2022			2021			2020
Interest cost	$	4,923		$	4,671		$	5,668		$	374		$	357		$	445
Expected return on plan assets		(8,802	)		(10,348	)		(9,747	)		(399	)		(320	)		(548	)
Amortization of net actuarial loss		2,277			4,444			4,262			9			129			79
Net periodic benefit cost	$	(1,602	)	$	(1,233	)	$	183		$	(16	)	$	166		$	(24	)

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income

Other changes in plan assets and benefit obligations recognized in other comprehensive income for the years ended December 31, 2022, 2021 and 2020, were as follows:

	United States									United Kingdom
(In thousands)	2022			2021			2020			2022			2021			2020
Net actuarial (gain) loss	$	1,570		$	(9,793	)	$	336		$	2,430		$	(757	)	$	272
Amortization of net actuarial loss		(2,277	)		(4,444	)		(4,262	)		(9	)		(129	)		(79	)
Total recognized in other comprehensive    income	$	(707	)	$	(14,237	)	$	(3,926	)	$	2,421		$	(886	)	$	193
Total recognized in net periodic benefit    cost and other comprehensive income	$	(2,309	)	$	(15,470	)	$	(3,743	)	$	2,405		$	(720	)	$	169

Estimated Future Benefit Payments

Estimated Future Benefit Payments

(In thousands)	United States		United Kingdom
2023	$	9,267	$	531
2024		9,575		558
2025		9,826		583
2026		10,003		623
2027		10,118		647
2028-2032		50,301		3,800

Defined Contribution Expenses for Company's Qualified Defined Contribution Plans and Statutory Profit Sharing Contributions

Defined contribution expenses for the Company’s qualified defined contribution plans and statutory profit sharing contributions were as follows:

(In thousands)	2022		2021		2020
Retirement contributions	$	8,556	$	8,134	$	8,035
Profit sharing contributions		5,276		5,081		6,107
Total	$	13,832	$	13,215	$	14,142

United States [Member]

Defined Benefit Plan Disclosure [Line Items]

Company's Asset Allocations for its U.S. and U.K Pension Plans

The Company’s asset allocations for its U.S. pension plans at December 31, 2022 and 2021, by asset category, were as follows:

	December 31, 2022
(In thousands)	Level 1		Level 2		Level 3		Total
Cash and Cash Equivalents	$	7,531	$	—	$	—	$	7,531
Equity Securities
U.S. Equities		21,279		—		—		21,279
Non-U.S. Equities		9,788		—		—		9,788
Employer Securities		17,970		—		—		17,970
Total Equities		49,037		—		—		49,037
Fixed Income Securities
U.S. Corporate Bonds		—		51,444		—		51,444
U.S. Government and Agency Bonds		15,627		2,628		—		18,255
Other Bonds		—		10,477		—		10,477
Total Fixed Income		15,627		64,549		—		80,176
Total	$	72,195	$	64,549	$	—	$	136,744

	December 31, 2021
(In thousands)	Level 1		Level 2		Level 3		Total
Cash and Cash Equivalents	$	10,918	$	—	$	—	$	10,918
Equity Securities
U.S. Equities		25,083		—		—		25,083
Non-U.S. Equities		12,544		—		—		12,544
Employer Securities		25,204		—		—		25,204
Total Equities		62,831		—		—		62,831
Fixed Income Securities
U.S. Corporate Bonds		—		69,073		—		69,073
U.S. Government and Agency Bonds		20,072		2,845		—		22,917
Other Bonds		—		12,835		—		12,835
Total Fixed Income		20,072		84,753		—		104,825
Total	$	93,821	$	84,753	$	—	$	178,574

United Kingdom [Member]

Defined Benefit Plan Disclosure [Line Items]

Company's Asset Allocations for its U.S. and U.K Pension Plans

The Company’s asset allocations for its U.K. pension plans at December 31, 2022 and 2021, by asset category, were as follows:

	December 31, 2022
(In thousands)	Level 1		Level 2		Level 3		Total
Cash		—	$	1,448	$	—	$	1,448
Equity Securities
Pooled Pension Funds		—		1,688		—		1,688
Fixed Income
Pooled Pension Funds		—		11,350		—		11,350
Insurance Contracts		—		—		677		677
Total	$	—	$	14,486	$	677	$	15,163

	December 31, 2021
(In thousands)	Level 1		Level 2		Level 3		Total
Cash	$	—	$	2,414	$	—	$	2,414
Equity Securities
Pooled Pension Funds		—		3,715		—		3,715
Fixed Income
Pooled Pension Funds		—		20,332		—		20,332
Insurance Contracts		—		—		1,003		1,003
Total	$	—	$	26,461	$	1,003	$	27,464

Fair Value Changes within Asset Categories for which Fair Value Measurements Use Significant Unobservable Inputs (Level 3) Defined Benefit United States Plans and United Kingdom Plans

Fair value changes within asset categories for which fair value measurements use significant unobservable inputs (Level 3) were as follows during 2022 and 2021:

(In thousands)	Insurance Contracts
Fair value, December 31, 2020	$	1,159
Sale proceeds (benefit payments)		(131	)
Change in unrealized gain		(15	)
Foreign exchange impact		(10	)
Fair value, December 31, 2021	$	1,003
Sale proceeds (benefit payments)		(104	)
Change in unrealized gain		(120	)
Foreign exchange impact		(102	)
Fair value, December 31, 2022	$	677

Defined Benefit Plan Periodic Costs [Member]

Defined Benefit Plan Disclosure [Line Items]

Weighted-Average Assumptions Used to Determine Benefit Obligations/Net Periodic Benefit Costs

The weighted-average assumptions used to determine net periodic benefit costs for years ended December 31 were as follows:

	United States									United Kingdom
	2022			2021			2020			2022			2021			2020
Discount rate		2.90	%		2.60	%		3.30	%		1.80	%		1.40	%		2.10	%
Expected long-term return on plan assets		5.50	%		6.75	%		6.75	%		1.61	%		1.13	%		2.30	%

Benefit Obligation [Member]

Defined Benefit Plan Disclosure [Line Items]

Weighted-Average Assumptions Used to Determine Benefit Obligations/Net Periodic Benefit Costs

The weighted-average assumptions used to determine benefit obligations at December 31 were as follows:

	United States						United Kingdom
	2022			2021			2022			2021
Discount rate		5.50	%		2.90	%		5.00	%		1.80	%

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Accrued Liabilities (Tables)

12 Months Ended

Dec. 31, 2022

Payables and Accruals [Abstract]

Composition of Accrued Liabilities

The composition of accrued liabilities was as follows:

	December 31
(In thousands)	2022		2021
Accrued payroll and benefits	$	73,713	$	70,983
Accrued customer rebates		24,715		21,030
Other accrued liabilities		64,384		44,383
Total accrued liabilities	$	162,812	$	136,396

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Other Non-Current Liabilities (Tables)

12 Months Ended

Dec. 31, 2022

Other Liabilities Disclosure [Abstract]

Composition of Other Non-Current Liabilities

The composition of other non-current liabilities was as follows:

	December 31
(In thousands)	2022		2021
Deferred revenue	$	8,762	$	9,979
Environmental and legal matters		16,276		17,663
Deferred compensation liability		32,459		50,122
Pension liability		5,241		4,552
Other non-current liabilities		17,953		16,606
Total other non-current liabilities	$	80,691	$	98,922

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Segment Reporting (Tables)

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Operating Segment

The following is segment data for the three years ended December 31, 2022, 2021 and 2020:

(In thousands)	Surfactants		Polymers		Specialty Products		Segment Totals
2022
Net sales	$	1,882,745	$	789,080	$	101,445	$	2,773,270
Operating income		162,746		82,897		29,895		275,538
Assets		1,579,242		565,726		96,193		2,241,161
Capital expenditures		259,442		35,679		4,926		300,047
Depreciation and amortization expenses		55,262		31,399		5,807		92,468
2021
Net sales	$	1,562,795	$	713,440	$	69,731	$	2,345,966
Operating income		165,999		73,591		14,178		253,768
Assets		1,245,207		556,799		78,100		1,880,106
Capital expenditures		154,953		29,077		4,976		189,006
Depreciation and amortization expenses		51,375		30,598		5,836		87,809
2020
Net sales	$	1,351,686	$	452,277	$	65,787	$	1,869,750
Operating income		169,101		68,214		13,966		251,281
Assets		1,018,555		361,219		92,964		1,472,738
Capital expenditures		88,484		26,719		5,960		121,163
Depreciation and amortization expenses		49,429		22,873		5,686		77,988

Reconciliation of Segment Information to Consolidated Financial Statements

Below are reconciliations of segment data to the consolidated financial statements:

(In thousands)	2022			2021			2020
Operating income - segment totals	$	275,538		$	253,768		$	251,281
Business restructuring and asset disposition (1)		(308	)		(3,353	)		(1,212	)
Unallocated corporate expenses (2)		(67,894	)		(79,634	)		(78,547	)
Total operating income		207,336			170,781			171,522
Interest expense, net		(9,809	)		(5,753	)		(5,409	)
Other, net		(8,824	)		7,509			4,954
Consolidated income before income taxes	$	188,703		$	172,537		$	171,067
Assets - segment totals	$	2,241,161		$	1,880,106		$	1,472,738
Unallocated corporate assets		192,011			185,506			279,598
Consolidated assets	$	2,433,172		$	2,065,612		$	1,752,336
Capital expenditures - segment totals	$	300,047		$	189,006		$	121,163
Unallocated corporate expenditures		1,506			5,476			4,629
Consolidated capital expenditures	$	301,553		$	194,482		$	125,792
Depreciation and amortization expenses – segment totals	$	92,468		$	87,809		$	77,988
Unallocated corporate depreciation expenses		2,182			3,067			3,872
Consolidated depreciation and amortization expenses	$	94,650		$	90,876		$	81,860

(1)See Note 22, Business Restructuring and Asset Disposition, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) regarding business restructuring and asset disposition costs.

(2)Unallocated corporate expenses are primarily comprised of corporate administrative expenses (e.g., corporate finance, legal, human resources, information systems, deferred compensation and environmental remediation) that are not included in segment operating income and not used to evaluate segment performance.

Summary of company-wide geographic data

Below is certain Company-wide geographic data for the years ended December 31, 2022, 2021 and 2020:

(In thousands)	2022		2021		2020
Net sales (1)
United States	$	1,579,194	$	1,297,650	$	1,117,695
France		227,421		179,746		141,516
Poland		195,781		198,883		147,289
United Kingdom		229,836		208,780		93,115
Brazil		175,004		136,799		105,639
Mexico		148,858		127,944		100,763
All other countries		217,176		196,164		163,733
Total	$	2,773,270	$	2,345,966	$	1,869,750
Long-lived assets (2)
United States	$	896,867	$	668,362	$	499,260
Netherlands		79,007		85,931		—
Germany		42,512		41,438		39,759
Singapore		20,899		23,507		25,815
Brazil		38,493		35,294		35,786
China		28,717		30,991		27,300
United Kingdom		33,389		38,634		24,335
Mexico		52,917		45,384		39,482
All other countries		34,444		39,034		42,970
Total	$	1,227,245	$	1,008,575	$	734,707

(1)Net sales are attributed to countries based on the location of the Company legal entity making the sale.

(2)Includes net property, plant and equipment, goodwill and other intangible assets.

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2022

Earnings Per Share [Abstract]

Computation of Basic and Diluted Earnings Per Share

Below is the computation of basic and diluted earnings per share for the years ended December 31, 2022, 2021 and 2020:

(In thousands, except per share amounts)	2022		2021		2020
Computation of Basic Earnings per Share
Net income attributable to Stepan Company	$	147,153	$	137,804	$	126,770
Weighted-average number of shares outstanding		22,781		22,922		22,949
Basic earnings per share	$	6.46	$	6.01	$	5.52
Computation of Diluted Earnings per Share
Net income attributable to Stepan Company	$	147,153	$	137,804	$	126,770
Weighted-average number of shares outstanding		22,781		22,922		22,949
Add weighted-average net shares from assumed    exercise of options (under treasury share method) (1)		104		138		112
Add weighted-average net shares related to unvested    stock awards (under treasury share method)		1		1		1
Add weighted-average net shares from assumed    exercise of SARs (under treasury share method)		111		166		145
Add weighted-average contingently issuable net shares    related to performance stock awards (under treasury    share method)		67		60		49
Weighted-average shares applicable to diluted    earnings		23,064		23,287		23,256
Diluted earnings per share	$	6.38	$	5.92	$	5.45

(1)Options/SARs to purchase 343,715, 103,182 and 127,434 shares of the Company’s common stock were excluded from the computations of diluted earnings per share for the years ended December 31, 2022, 2021 and 2020, respectively. The options’/SARs’ exercise prices were greater than the average market price for the Company’s common stock and inclusion of the instruments would have had an antidilutive effect on the computations of earnings per share.

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Accumulated Other Comprehensive Income (Loss) (Tables)

12 Months Ended

Dec. 31, 2022

Equity [Abstract]

Summary of Changes in Accumulated Other Comprehensive Income (Loss)

Below is the change in the Company’s accumulated other comprehensive income (loss) (AOCI) balance by component (net of income taxes) for the years ended December 31, 2022, 2021 and 2020:

(In thousands)	Foreign Currency Translation Adjustments			Defined Benefit Pension Plan Adjustments			Cash Flow Hedge Adjustments			Total
Balance at December 31, 2019	$	(104,037	)	$	(32,205	)	$	72		$	(136,170	)
Other comprehensive income before reclassifications		(3,046	)		(996	)		—			(4,042	)
Amounts reclassified from AOCI		—			3,340			(9	)		3,331
Net current period other comprehensive income		(3,046	)		2,344			(9	)		(711	)
Balance at December 31, 2020	$	(107,083	)	$	(29,861	)	$	63		$	(136,881	)
Other comprehensive income before reclassifications		(28,185	)		8,188			—			(19,997	)
Amounts reclassified from AOCI		—			3,651			(9	)		3,642
Net current period other comprehensive income		(28,185	)		11,839			(9	)		(16,355	)
Balance at December 31, 2021	$	(135,268	)	$	(18,022	)	$	54		$	(153,236	)
Other comprehensive income before reclassifications		(21,567	)		(2,857	)		8,357			(16,067	)
Amounts reclassified from AOCI		—			1,800			(9	)		1,791
Net current period other comprehensive income		(21,567	)		(1,057	)		8,348			(14,276	)
Balance at December 31, 2022	$	(156,835	)	$	(19,079	)	$	8,402		$	(167,512	)

Summary of Amounts Reclassified Out of Accumulated Other Comprehensive Income

Amounts reclassified out of AOCI for the three years ended December 31, 2022, 2021 and 2020, is displayed below:

	Amounts Reclassified from AOCI (1)
(In thousands)	2022			2021			2020			Affected Line Item in Consolidated Statements of Income
Amortization of defined pension items:
Prior service cost	$	(9	)	$	(12	)	$	(11	)
Actuarial loss		(2,393	)		(4,800	)		(4,421	)
	$	(2,402	)		(4,812	)		(4,432	)	Total before tax (2)
		602			1,161			1,092		Tax benefit
	$	(1,800	)	$	(3,651	)	$	(3,340	)	Net of tax
Gains and losses on cash flow hedges:
Foreign exchange contracts	$	9		$	9		$	9		Cost of sales
		9			9			9		Total before tax
		—			—			—		Tax benefit
	$	9		$	9		$	9		Net of tax
Total reclassifications for the period	$	(1,791	)	$	(3,642	)	$	(3,331	)	Net of tax

(1)Amounts in parentheses denote expense to the Company’s Consolidated Statements of Income.

(2)This component of accumulated other comprehensive income is included in the computation of net periodic benefit cost (see Note 13, Postretirement Benefit Plans, of the notes to the Company’s consolidated financial statements for details regarding net periodic benefit costs for the Company’s U.S. and U.K. defined benefit plans).

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Acquisitions (Tables)

12 Months Ended

Dec. 31, 2022

2021 Acquisitions [Member]

Business Acquisition [Line Items]

Summary of Purchase Price Allocation for Acquisition

The following table summarizes the purchase price allocation for the major components of the acquisition:

(In thousands)
Assets:
Property, plant and equipment	$	54,200
Identifiable intangibles assets		46,000
Goodwill		64,800
Total assets acquired	$	165,000

2020 Acquisitions [Member]

Business Acquisition [Line Items]

Summary of Purchase Price Allocation for Acquisition

The following table summarizes the purchase price allocation for the acquisition:

(In thousands)
Assets:
Identifiable intangible assets:
Customer lists	$	8,000
Trademarks and know-how		1,300
Non-compete agreement		300
Goodwill		5,165
Property, plant and equipment		175
Total assets acquired	$	14,940
Liabilities:
Other non-current liabilities		940
Total liabilities assumed		940
Net assets acquired	$	14,000

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Revenue from Contracts with Customers (Tables)

12 Months Ended

Dec. 31, 2022

Revenue from Contract with Customer [Abstract]

Geographic Disaggregation of Net Sales

The tables below provide a geographic disaggregation of net sales for the years ended December 31, 2022, 2021 and 2020. The Company’s business segmentation by geographic region most effectively captures the nature and economic characteristics of the Company’s revenue streams impacted by economic factors.

	2022
(In thousands)	Surfactants		Polymers		Specialty Products		Total
Geographic Market
North America	$	1,099,616	$	437,312	$	83,807	$	1,620,735
Europe		349,651		307,441		16,118		673,210
Latin America		363,799		4,629		1,520		369,948
Asia		69,679		39,698		—		109,377
Total	$	1,882,745	$	789,080	$	101,445	$	2,773,270

	2021
(In thousands)	Surfactants		Polymers		Specialty Products		Total
Geographic Market
North America	$	904,469	$	364,382	$	59,461		1,328,312
Europe		288,735		302,137		9,152		600,024
Latin America		299,601		3,823		1,118		304,542
Asia		69,990		43,098		—		113,088
Total	$	1,562,795	$	713,440	$	69,731	$	2,345,966

	2020
(In thousands)	Surfactants		Polymers		Specialty Products		Total
Geographic Market
North America	$	826,841	$	265,700	$	56,455		1,148,996
Europe		234,631		147,289		9,332		391,252
Latin America		234,568		2,498		—		237,066
Asia		55,646		36,790		—		92,436
Total	$	1,351,686	$	452,277	$	65,787	$	1,869,750

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Summary of Significant Accounting Policies - Additional Information (Detail) $ / shares in Units, MMBTU in Millions	12 Months Ended
	Dec. 31, 2022 USD ($) MMBTU Customer Subsidiary $ / shares	Dec. 31, 2021 USD ($) Customer	Dec. 31, 2020 USD ($) Customer
Summary Of Significant Accounting Policy [Line Items]
Cash and cash equivalents	$ 173,750,000	$ 159,186,000
Single customer comprised more than 10 percent of the Company's consolidated net sales | Customer	0	0	0
Deferred compensation liability	$ 43,005,000	$ 61,219,000
Percentage of deferred compensation liability related to performance common stock	47.00%	47.00%
Increase in market price of common stock due to deferred compensation | $ / shares	$ 1.00
Decrease in market price of common stock due to deferred compensation | $ / shares	$ 1.00
Additional compensation expense, Increase	$ 189,000
Additional compensation expense, Decrease	189,000
Cost of maintenance and repairs	82,110,000	$ 75,351,000	$ 69,234,000
Total research and development expenses	$ 40,902,000	38,778,000	$ 35,999,000
Capitalized Environmental expenditures depreciation period	10 years
Indefinite-life intangible assets	$ 0
Number of foreign subsidiaries | Subsidiary	4
Natural Gas [Member]
Summary Of Significant Accounting Policy [Line Items]
Volume in derivative contract | MMBTU	1.6
Purchased Contract Price	$ 9,381,000
Building [Member]
Summary Of Significant Accounting Policy [Line Items]
Lives used for calculating depreciation expense	30 years
Building Improvements [Member]
Summary Of Significant Accounting Policy [Line Items]
Lives used for calculating depreciation expense	15 years
Minimum [Member]
Summary Of Significant Accounting Policy [Line Items]
Concentration risk Payment terms extended	30 days
Percentage of Tax benefit recognized	50.00%
Minimum [Member] | Patents [Member]
Summary Of Significant Accounting Policy [Line Items]
Finite-lived intangible asset, useful life	15 years
Minimum [Member] | Non-compete Agreements [Member]
Summary Of Significant Accounting Policy [Line Items]
Finite-lived intangible asset, useful life	3 years
Minimum [Member] | Trademarks [Member]
Summary Of Significant Accounting Policy [Line Items]
Finite-lived intangible asset, useful life	8 years
Minimum [Member] | Customer Relationships [Member]
Summary Of Significant Accounting Policy [Line Items]
Finite-lived intangible asset, useful life	10 years
Minimum [Member] | Know-how [Member]
Summary Of Significant Accounting Policy [Line Items]
Finite-lived intangible asset, useful life	7 years
Minimum [Member] | Manufacturing Equipment [Member]
Summary Of Significant Accounting Policy [Line Items]
Lives used for calculating depreciation expense	10 years
Minimum [Member] | Furniture and Fixtures [Member]
Summary Of Significant Accounting Policy [Line Items]
Lives used for calculating depreciation expense	5 years
Minimum [Member] | Vehicles [Member]
Summary Of Significant Accounting Policy [Line Items]
Lives used for calculating depreciation expense	3 years
Minimum [Member] | Computers Equipment And Software [Member]
Summary Of Significant Accounting Policy [Line Items]
Lives used for calculating depreciation expense	3 years
Maximum [Member]
Summary Of Significant Accounting Policy [Line Items]
Concentration risk Payment terms extended	60 days
Maximum [Member] | Trademarks [Member]
Summary Of Significant Accounting Policy [Line Items]
Finite-lived intangible asset, useful life	11 years
Maximum [Member] | Customer Relationships [Member]
Summary Of Significant Accounting Policy [Line Items]
Finite-lived intangible asset, useful life	20 years
Maximum [Member] | Know-how [Member]
Summary Of Significant Accounting Policy [Line Items]
Finite-lived intangible asset, useful life	20 years
Maximum [Member] | Manufacturing Equipment [Member]
Summary Of Significant Accounting Policy [Line Items]
Lives used for calculating depreciation expense	15 years
Maximum [Member] | Furniture and Fixtures [Member]
Summary Of Significant Accounting Policy [Line Items]
Lives used for calculating depreciation expense	10 years
Maximum [Member] | Vehicles [Member]
Summary Of Significant Accounting Policy [Line Items]
Lives used for calculating depreciation expense	5 years
Maximum [Member] | Computers Equipment And Software [Member]
Summary Of Significant Accounting Policy [Line Items]
Lives used for calculating depreciation expense	10 years
Money Market Funds [Member]
Summary Of Significant Accounting Policy [Line Items]
Cash and cash equivalents	$ 64,851,000	46,689,000
Demand Deposits And Certifates of Deposit [Member]
Summary Of Significant Accounting Policy [Line Items]
Cash and cash equivalents	11,811,000
Non-U.S. Subsidiaries [Member]
Summary Of Significant Accounting Policy [Line Items]
Cash and cash equivalents	$ 97,088,000	87,244,000
Demand Deposits [Member]
Summary Of Significant Accounting Policy [Line Items]
Cash and cash equivalents		$ 25,253,000
Nanjing Stepan Jinling Chemical Limited Liability Company [Member]
Summary Of Significant Accounting Policy [Line Items]
Ownership percentage		80.00%

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Summary of Significant Accounting Policies - Allowance for Doubtful Accounts and Other Accounts Receivable Allowances (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
Allowance, balance at the beginning	$ 10,157	$ 10,133	$ 9,325
Provision charged to income	1,374	943	864
Accounts written off, net of recoveries	(431)	(919)	(56)
Allowance, balance at ending	$ 11,100	$ 10,157	$ 10,133

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Fair Value Measurements - Additional Information (Detail) - USD ($)	Dec. 31, 2022	Dec. 31, 2021
Fair Value Disclosures [Abstract]
Unamortized debt issuance cost	$ 686,000	$ 710,000

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Fair Value Measurements - Fair Values and Related Carrying Values of Debt (Detail) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Carrying value	$ 587,826	$ 364,290
Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair value	$ 541,029	$ 369,456

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Fair Value Measurements - Financial Assets and Liabilities, Excluding Cash and Cash Equivalents, Measured on a Recurring Basis at Fair Value (Detail) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Mutual fund assets	$ 23,294	$ 34,495
Derivative assets:
Interest rate contracts	8,357
Foreign currency contracts	513	436
Total assets at fair value	32,164	34,931
Derivative liabilities:
Foreign currency contracts	525	338
Level 1 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Mutual fund assets	23,294	34,495
Derivative assets:
Total assets at fair value	23,294	34,495
Level 2 [Member]
Derivative assets:
Interest rate contracts	8,357
Foreign currency contracts	513	436
Total assets at fair value	8,870	436
Derivative liabilities:
Foreign currency contracts	$ 525	$ 338

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Derivative Instruments - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Derivative notional amount	$ 56,746,000	$ 51,542,000
Cash Flow Hedging [Member]
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Derivative notional amount	$ 100,000,000
Maturity date of current interest swap contract	Mar. 10, 2027
Minimum [Member]
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Derivative foreign currency exchange contracts durations	1 month
Maximum [Member]
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Derivative foreign currency exchange contracts durations	6 months

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Goodwill and Other Intangible Assets - Schedule of Changes in Carrying Value of Goodwill (Detail) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2022	Dec. 31, 2021
Goodwill [Line Items]
Goodwill, Beginning Balance		$ 100,654	$ 31,439
Accumulated impairment loss, Beginning Balance		(3,467)	(3,467)
Goodwill net, Beginning Balance		97,187	27,972
Goodwill acquired	[1]	1,792	72,467
Goodwill measurement period adjustment	[1]		940
Goodwill impairment		(978)
Foreign currency translation		(2,079)	(4,192)
Goodwill, Ending Balance		100,367	100,654
Accumulated impairment loss, Ending Balance		(4,445)	(3,467)
Goodwill net, Ending Balance		95,922	97,187
Surfactants Segment [Member]
Goodwill [Line Items]
Goodwill, Beginning Balance		25,689	25,537
Accumulated impairment loss, Beginning Balance		(3,467)	(3,467)
Goodwill net, Beginning Balance		22,222	22,070
Goodwill acquired	[1]	1,792
Goodwill measurement period adjustment	[1]		940
Goodwill impairment		(978)
Foreign currency translation		656	(788)
Goodwill, Ending Balance		28,137	25,689
Accumulated impairment loss, Ending Balance		(4,445)	(3,467)
Goodwill net, Ending Balance		23,692	22,222
Polymer Segment [Member]
Goodwill [Line Items]
Goodwill, Beginning Balance		74,482	5,419
Goodwill net, Beginning Balance		74,482	5,419
Goodwill acquired	[1]		72,467
Foreign currency translation		(2,735)	(3,404)
Goodwill, Ending Balance		71,747	74,482
Goodwill net, Ending Balance		71,747	74,482
Specialty Products Segment [Member]
Goodwill [Line Items]
Goodwill, Beginning Balance		483	483
Goodwill net, Beginning Balance		483	483
Goodwill, Ending Balance		483	483
Goodwill net, Ending Balance		$ 483	$ 483

[1] See Note 20, Acquisitions, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for information regarding the goodwill acquired in a business combination.

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Goodwill and Other Intangible Assets - Additional Information (Detail) - USD ($)	3 Months Ended	12 Months Ended
	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Goodwill [Line Items]
Goodwill impairment		$ 978,000
Amortization of Intangible Assets, Total		6,835,000	$ 7,292,000	$ 3,621,000
Philippines Reporting Unit [Member]
Goodwill [Line Items]
Goodwill impairment		$ 978,000
Other Reporting Units [Member]
Goodwill [Line Items]
Goodwill impairment	$ 0

XML

Goodwill and Other Intangible Assets - Components of Other Intangible Assets and Changes in Gross Carrying Values (Detail) - USD ($) $ in Thousands		Dec. 31, 2022	Dec. 31, 2021
Finite-Lived Intangible Assets [Line Items]
Other Finite-Lived Intangible Assets, Gross Carrying Value		$ 96,861	$ 92,966
Other Finite-Lived Intangible Assets, Accumulated Amortization		38,835	32,182
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Other Finite-Lived Intangible Assets, Gross Carrying Value	[1]	7,411	7,411
Other Finite-Lived Intangible Assets, Accumulated Amortization	[1]	6,363	6,139
Non-compete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Other Finite-Lived Intangible Assets, Gross Carrying Value	[1]	635	594
Other Finite-Lived Intangible Assets, Accumulated Amortization	[1]	548	404
Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Other Finite-Lived Intangible Assets, Gross Carrying Value	[1]	11,384	12,013
Other Finite-Lived Intangible Assets, Accumulated Amortization	[1]	5,346	4,160
Customer Lists/relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Other Finite-Lived Intangible Assets, Gross Carrying Value	[1]	46,972	44,447
Other Finite-Lived Intangible Assets, Accumulated Amortization	[1]	12,491	9,557
Know-how [Member]
Finite-Lived Intangible Assets [Line Items]
Other Finite-Lived Intangible Assets, Gross Carrying Value	[1],[2]	28,908	27,029
Other Finite-Lived Intangible Assets, Accumulated Amortization	[1],[2]	12,536	10,450
Supply Contract [Member]
Finite-Lived Intangible Assets [Line Items]
Other Finite-Lived Intangible Assets, Gross Carrying Value		1,551	1,472
Other Finite-Lived Intangible Assets, Accumulated Amortization		$ 1,551	$ 1,472

[1] The 2021 balances include intangible assets acquired as part of the Company’s acquisition of INVISTA’s aromatic polyester polyol business and associated assets in January 2021 and the Company’s fermentation plant acquisition in February 2021. The 2022 balances include intangible assets acquired as part of the Company’s PerformanX acquisition in September 2022. See Note 20, Acquisitions, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) for additional details.

[2] Know-how includes intellectual property rights covering proprietary information, written formulae, trade secrets or secret processes, inventions and developmental products (whether patentable or not), discoveries, improvements, compositions, manufacturing processes, manuals, specifications and technical data.

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Goodwill and Other Intangible Assets - Estimated Amortization Expense for Identifiable Intangibles Assets (Detail) $ in Thousands	Dec. 31, 2022 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
For year ended 12/31/23	$ 7,237
For year ended 12/31/24	6,950
For year ended 12/31/25	6,509
For year ended 12/31/26	6,186
For year ended 12/31/27	$ 6,106

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Inventories - Composition of Inventories (Detail) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Inventory Disclosure [Abstract]
Finished products	$ 250,373	$ 184,010
Raw materials	152,158	121,528
Total inventories	$ 402,531	$ 305,538

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Debt - Debt (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Total debt	$ 587,140	$ 363,580
Less current maturities	132,111	40,718
Long-term debt, less current maturities (Note 6)	455,029	$ 322,862
Revolving credit facility and term loan borrowing [Member]
Debt Instrument [Line Items]
Total debt	$ 189,250
Minimum [Member] | Revolving credit facility and term loan borrowing [Member]
Debt Instrument [Line Items]
Maturity Dates	2023	2023
Maximum [Member] | Revolving credit facility and term loan borrowing [Member]
Debt Instrument [Line Items]
Maturity Dates	2027	2027
Unsecured private placement 3.95% note [Member]
Debt Instrument [Line Items]
Total debt	$ 71,243	$ 85,485
Debt instrument interest rate percentage	3.95%	3.95%
Unsecured private placement 3.95% note [Member] | Minimum [Member]
Debt Instrument [Line Items]
Maturity Dates	2023	2023
Unsecured private placement 3.95% note [Member] | Maximum [Member]
Debt Instrument [Line Items]
Maturity Dates	2027	2027
Unsecured private placement 3.86% note [Member]
Debt Instrument [Line Items]
Total debt	$ 42,732	$ 56,962
Debt instrument interest rate percentage	3.86%	3.86%
Unsecured private placement 3.86% note [Member] | Minimum [Member]
Debt Instrument [Line Items]
Maturity Dates	2023	2023
Unsecured private placement 3.86% note [Member] | Maximum [Member]
Debt Instrument [Line Items]
Maturity Dates	2025	2025
Unsecured private placement 4.86% note [Member]
Debt Instrument [Line Items]
Total debt	$ 9,260	$ 18,502
Debt instrument interest rate percentage	4.86%	4.86%
Unsecured private placement 4.86% note [Member] | Minimum [Member]
Debt Instrument [Line Items]
Maturity Dates	2023	2023
Unsecured private placement 2.30% note [Member]
Debt Instrument [Line Items]
Total debt	$ 49,878	$ 49,900
Debt instrument interest rate percentage	2.30%	2.30%
Unsecured private placement 2.30% note [Member] | Minimum [Member]
Debt Instrument [Line Items]
Maturity Dates	2024	2024
Unsecured private placement 2.30% note [Member] | Maximum [Member]
Debt Instrument [Line Items]
Maturity Dates	2028	2028
Unsecured private placement 2.37% note [Member]
Debt Instrument [Line Items]
Total debt	$ 49,872	$ 49,892
Debt instrument interest rate percentage	2.37%	2.37%
Unsecured private placement 2.37% note [Member] | Minimum [Member]
Debt Instrument [Line Items]
Maturity Dates	2024	2024
Unsecured private placement 2.37% note [Member] | Maximum [Member]
Debt Instrument [Line Items]
Maturity Dates	2028	2028
Unsecured private placement 2.73% note [Member]
Debt Instrument [Line Items]
Total debt	$ 99,945	$ 99,978
Debt instrument interest rate percentage	2.73%	2.73%
Unsecured private placement 2.73% note [Member] | Minimum [Member]
Debt Instrument [Line Items]
Maturity Dates	2025	2025
Unsecured private placement 2.73% note [Member] | Maximum [Member]
Debt Instrument [Line Items]
Maturity Dates	2031	2031
Unsecured private placement 2.83% note [Member]
Debt Instrument [Line Items]
Total debt	$ 74,960
Debt instrument interest rate percentage	2.83%	2.83%
Unsecured private placement 2.83% note [Member] | Minimum [Member]
Debt Instrument [Line Items]
Maturity Dates	2026	2026
Unsecured private placement 2.83% note [Member] | Maximum [Member]
Debt Instrument [Line Items]
Maturity Dates	2032	2032
Debt of foreign subsidiaries Unsecured bank debt, foreign currency [Member]
Debt Instrument [Line Items]
Total debt		$ 2,861
Maturity Dates	2023	2023

XML

Debt - Debt (Parenthetical) (Detail) - USD ($)	Dec. 31, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Unamortized debt issuance cost	$ 686,000	$ 710,000
Unsecured private placement 3.95% note [Member]
Debt Instrument [Line Items]
Unamortized debt issuance cost	186,000	230,000
Unsecured private placement 3.86% note [Member]
Debt Instrument [Line Items]
Unamortized debt issuance cost	125,000	181,000
Unsecured private placement 4.86% note [Member]
Debt Instrument [Line Items]
Unamortized debt issuance cost	30,000	69,000
Unsecured private placement 2.30% note [Member]
Debt Instrument [Line Items]
Unamortized debt issuance cost	122,000	100,000
Unsecured private placement 2.37% note [Member]
Debt Instrument [Line Items]
Unamortized debt issuance cost	128,000	108,000
Unsecured private placement 2.73% note [Member]
Debt Instrument [Line Items]
Unamortized debt issuance cost	55,000	22,000
Unsecured private placement 2.83% note [Member]
Debt Instrument [Line Items]
Unamortized debt issuance cost	$ 40,000	$ 0

XML

Debt - Additional Information (Detail) - USD ($)			12 Months Ended
	Jun. 24, 2022	Mar. 01, 2022	Dec. 31, 2022	Jun. 23, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Total debt			$ 587,140,000		$ 363,580,000
Line of credit facility, Minimum maturity period			1 month
Line of credit facility, maturity period			3 months
Line of credit facility, Maximum maturity period			6 months
Debt matures in 2023			$ 132,111,000
Debt matures in 2024			53,572,000
Debt matures in 2025			69,108,000
Debt matures in 2026			66,786,000
Debt matures in 2027			135,535,000
Debt matures after 2027			130,714,000
Amount of repayments of long-term debt due in next year			$ 41,608,000
Minimum [Member]
Debt Instrument [Line Items]
Commitment fee percentage			0.125%
Minimum [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Spread rate			1.125%
Minimum [Member] | Prime Rate [Member]
Debt Instrument [Line Items]
Spread rate			0.125%
Maximum [Member]
Debt Instrument [Line Items]
Commitment fee percentage			0.25%
Maximum [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Spread rate			1.75%
Maximum [Member] | Prime Rate [Member]
Debt Instrument [Line Items]
Spread rate			0.75%
Delayed Draw Term Loan Credit Facility [Member]
Debt Instrument [Line Items]
Revolving credit agreement			$ 98,750,000
Unsecured Private Placement Notes [Member]
Debt Instrument [Line Items]
Total debt			$ 397,890,000
Debt instrument maturity dates description			The notes had original maturities of seven to 12 years with mandatory principal payments beginning four, five and six years after issuance.
Unsecured Private Placement Notes [Member] | Minimum [Member]
Debt Instrument [Line Items]
Debt instrument interest rate percentage			2.30%
Maturity Dates			7 years
Unsecured Private Placement Notes [Member] | Maximum [Member]
Debt Instrument [Line Items]
Debt instrument interest rate percentage			4.86%
Maturity Dates			12 years
Series 2022-A Notes [Member]
Debt Instrument [Line Items]
Total debt		$ 25,000,000
Debt instrument interest rate percentage		2.83%
Debt instrument, periodic payment		semi-annually
Debt Instrument, Maturity Date		Mar. 01, 2032
Series 2022-B Notes [Member]
Debt Instrument [Line Items]
Total debt		$ 50,000,000
Debt instrument interest rate percentage		2.83%
Debt Instrument, Maturity Date		Mar. 01, 2032
Multi-Currency Credit Facility with Syndicate of Banks [Member]
Debt Instrument [Line Items]
Revolving credit agreement	$ 450,000,000
Committed multi-currency credit facility, maturity date	Jun. 24, 2027
Multi-Currency Credit Facility with Syndicate of Banks [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Revolving credit agreement	$ 350,000,000
Multi-Currency Credit Facility with Syndicate of Banks [Member] | Delayed Draw Term Loan Credit Facility [Member]
Debt Instrument [Line Items]
Revolving credit agreement	100,000,000
Multi Currency Revolving Credit Agreement [Member]
Debt Instrument [Line Items]
Revolving credit agreement	$ 350,000,000			$ 350,000,000
Letters of Credit Outstanding			$ 10,870,000
Unused Revolving credit			249,880,000
Outstanding borrowings, including term loan			189,250,000
Unrestricted retained earnings			224,189,000		$ 468,095,000
Debt of foreign subsidiaries Unsecured bank debt and Term Loan, foreign currency [Member]
Debt Instrument [Line Items]
Total debt			$ 0

XML

Debt - Schedule of Net Interest Expense (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Interest Income (Expense), Net [Abstract]
Interest expense	$ 17,852	$ 10,145	$ 9,859
Interest income	(1,080)	(1,255)	(2,171)
Interest expense net of interest income	16,772	8,890	7,688
Capitalized interest	(6,963)	(3,137)	(2,279)
Interest expense, net	$ 9,809	$ 5,753	$ 5,409

XML

Leases - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2022 USD ($) Country
Operating Leased Assets [Line Items]
Operating Lease, Liability	$ 63,611,000
Number of countries leases reside | Country	5
Percentage of value of leases reside	97.00%
Minimum [Member]
Operating Leased Assets [Line Items]
Lessee, operating lease, term of contract	1 year
Maximum [Member]
Operating Leased Assets [Line Items]
Lessee, operating lease, term of contract	10 years
Railcars [Member]
Operating Leased Assets [Line Items]
Percentage of lease asset categories	24.00%
Railcars [Member] | Minimum [Member]
Operating Leased Assets [Line Items]
Lessee, operating lease, term of contract	1 year
Railcars [Member] | Maximum [Member]
Operating Leased Assets [Line Items]
Lessee, operating lease, term of contract	10 years
Real Estate [Member]
Operating Leased Assets [Line Items]
Percentage of lease asset categories	62.00%
Real Estate [Member] | Minimum [Member]
Operating Leased Assets [Line Items]
Lessee, operating lease, term of contract	1 year
Real Estate [Member] | Maximum [Member]
Operating Leased Assets [Line Items]
Lessee, operating lease, term of contract	50 years
Railcar and Storage Tank Leases [Member]
Operating Leased Assets [Line Items]
Operating Lease, Liability	$ 8,229,000

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Leases - Schedule of Lease Cost Recognized in both Cost of Sale and Operating Expenses (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Lease Cost
Operating lease cost	$ 16,042	$ 15,630
Short-term lease cost	7,029	6,570
Variable lease cost	1,206	892
Total lease cost	24,277	23,092
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow from operating leases	15,963	14,885
Right-of-use assets obtained in exchange for operating lease liabilities	$ 7,588	$ 19,610

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Leases - Schedule of Lease Liability Payments (Detail) - USD ($) $ in Thousands		Dec. 31, 2022	Dec. 31, 2021
Leases [Abstract]
2023		$ 14,683
2024		9,461
2025		6,892
2026		5,226
2027		4,767
Subsequent to 2027		34,063
Total Undiscounted Cash Flows		75,092
Less: Imputed interest		(11,481)
Present value		63,611
Current operating lease liabilities	[1]	$ 13,052
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]		Accrued liabilities (Note 14)
Non-current operating lease liabilities		$ 50,559	$ 56,668
Total lease liabilities		$ 63,611

[1] This item is included in Accrued liabilities line on the Company’s Consolidated Balance Sheet.

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Leases - Schedule of Operating Leases Weighted Average, Remaining Lease Term and Discount Rate (Detail)	Dec. 31, 2022
Leases [Abstract]
Weighted-average remaining lease term-operating leases	10 years
Weighted-average discount rate-operating leases	3.20%

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Other, Net - Other Net in Consolidated Statements of Income (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Other Nonoperating Income (Expense) [Abstract]
Foreign exchange gains (losses)	$ (2,871)	$ 501	$ 1,367
Investment income	1,757	2,886	1,681
Realized and unrealized gains (losses) on investments	(8,188)	2,289	3,143
Net periodic benefit cost	(690)	302	(874)
Other retirement obligation	(212)	559	(363)
Gain on dissolution of the China joint venture		972
Other, net	$ (8,824)	$ 7,509	$ 4,954

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Income Taxes - Schedule of Provision for Taxes on Income and Other Related Income Before Taxes (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Federal
Current	$ 39,328	$ 35,057	$ 21,889
Deferred	(20,636)	(25,653)	(3,453)
State
Current	9,875	9,320	4,305
Deferred	(6,943)	(6,556)	(562)
Foreign
Current	19,799	23,870	21,723
Deferred	127	(1,396)	(491)
Total	41,550	34,642	43,411
Income before Taxes
Domestic	103,831	77,696	81,906
Foreign	84,872	94,841	89,161
Income Before Provision for Income Taxes	$ 188,703	$ 172,537	$ 171,067

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Income Taxes - Summary of Variations Between the Effective and Statutory U.S. Federal Income Tax Rates (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Federal income tax provision at statutory tax rate	$ 39,628	$ 36,233	$ 35,924
State income tax provision, less applicable federal tax benefit	2,316	2,184	2,956
Foreign income taxed at different rates	2,417	2,356	1,964
U.S. taxation of foreign earnings	(1,616)	(134)	4,134
Unrecognized tax benefits	3,324	1,775	1,454
Prior years return to provision true-up	(1,915)	(3,314)	(588)
Stock based compensation, excess tax benefits	(580)	(1,287)	(1,816)
U.S. tax credits	(4,508)	(2,692)	(1,831)
Non-deductible expenses and other items, net	(748)	(479)	1,214
Total	$ 41,550	$ 34,642	$ 43,411
Percentage of Federal income tax provision at statutory tax rate	21.00%	21.00%	21.00%
Percentage of state income tax provision, less applicable federal tax benefit	1.20%	1.30%	1.70%
Percentage of Foreign income taxed at different rates	1.30%	1.40%	1.10%
Percentage of U.S. taxation of foreign earnings	0.90%	(0.10%)	2.40%
Percentage of Unrecognized tax benefits	1.80%	1.00%	0.80%
Percentage of Prior years return to provision true-up	(1.00%)	(1.90%)	(0.30%)
Percentage of stock based compensation, excess tax benefits	(0.30%)	(0.70%)	(1.10%)
Percentage of U.S. tax credits	(2.40%)	(1.60%)	(1.10%)
Non-deductible expenses and other items, net	(0.50%)	(0.30%)	0.90%
Percentage of Total income tax provision	22.00%	20.10%	25.40%

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Income Taxes - Schedule Showing Tax Effects of Significant Temporary Differences Representing Deferred Tax Assets and Liabilities (Detail) - USD ($)	Dec. 31, 2022	Dec. 31, 2021
Deferred Tax Assets:
Pensions	$ 144,000	$ 537,000
Deferred revenue	3,483,000	3,444,000
Other accruals and reserves	13,949,000	13,331,000
Legal and environmental accruals	10,283,000	7,385,000
Deferred compensation	13,845,000	16,210,000
Bad debt and rebate reserves	3,729,000	2,706,000
Non-U.S. subsidiaries net operating loss carryforwards	3,634,000	1,494,000
Amortization of intangibles	28,311,000	5,092,000
Inventories	10,577,000	3,108,000
Tax credit carryforwards	8,183,000	2,829,000
Deferred Tax Assets, Gross	96,138,000	56,136,000
Deferred Tax Liabilities:
Depreciation	(52,130,000)	(42,299,000)
Unrealized foreign exchange loss	(3,603,000)	(2,908,000)
Other	(3,064,000)	(1,614,000)
Deferred Tax Liabilities, Gross	(58,797,000)	(46,821,000)
Valuation Allowance	(836,000)	(862,000)
Net Deferred Tax Assets	36,505,000	8,453,000
Reconciliation to Consolidated Balance Sheet:
Non-current deferred tax assets (in other non-current assets)	46,684,000	20,944,000
Non-current deferred tax liabilities	$ (10,179,000)	$ (12,491,000)

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Income Taxes - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
Income Tax Disclosure [Abstract]
Deduction percentage of dividends received from distribution to earnings previously taxed	100.00%
Cash dividend declared from Philippines entities			$ 20,700,000
Additional income tax expense		$ 142,000	$ 2,384,000
Increase in effective tax rate			0.014
Foreign earnings repatriated		15,340,000
Tax loss carryforwards	$ 10,754,000	3,351,000
Tax credit carryforwards	8,183,000	2,829,000
Capital loss carryforwards	595,000	638,000
Valuation Allowance	836,000	862,000
Unrecognized tax benefits	10,682,000	7,292,000	$ 4,735,000	$ 3,273,000
Unrecognized tax benefits that, if recognized, would impact effective tax rates	10,172,000	6,973,000	4,545,000
Net interest and penalty expense (income)	202,000	260,000	$ 31,000
Income tax liability for interest and penalties	$ 543,000	$ 340,000

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Income Taxes - Schedule of Reconciliations of Unrecognized Tax Benefits (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Unrecognized tax benefits, opening balance	$ 7,292,000	$ 4,735,000	$ 3,273,000
Gross increases – tax positions in prior period	2,188,000	938,000	190,000
Gross increases – current period tax positions	1,617,000	1,662,000	1,288,000
Settlements	(454,000)
Foreign currency translation	74,000	(14,000)	15,000
Lapse of statute of limitations	(35,000)	(29,000)	(31,000)
Unrecognized tax benefits, ending balance	$ 10,682,000	$ 7,292,000	$ 4,735,000

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Stockholders' Equity - Additional Information (Detail) - shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Class Of Stock [Line Items]
Treasury stock, shares	4,605,858	4,340,729
Shares purchased during period	251,120	135,103	173,956
Treasury stock distributed under deferred compensation plan	6,338
Stock purchased to settle employees statutory withholding taxes relates to performance stock awards and deferred compensation distribution	20,347
Open Market Repurchases [Member]
Class Of Stock [Line Items]
Shares purchased during period	251,120

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Stock-based Compensation - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares of common stock authorized for share based payment awards under 2011 Plan	500,000
Shares available for grant under the 2011 plan	810,080
Compensation expenses	$ 13,851,000	$ 11,716,000	$ 10,080,000
Income tax benefit recognized in the income statement for share-based compensation arrangements	3,537,000	2,867,000	2,390,000
Proceeds from stock option exercises	$ 782,000	$ 1,369,000	$ 2,926,000
Stock Option [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Period of expiration	10 years
Weighted-average grant-date fair values of options awarded	$ 32.21	$ 36.49	$ 25.90
Intrinsic values of options exercised	$ 475,000	$ 1,287,000	$ 2,534,000
Unrecognized compensation cost	$ 692,000
Weighted average period for amortization of unrecognized compensation cost	1 year 2 months 12 days
Actual tax benefit recognized for the tax deductions from stock based compensation	$ 36,000	$ 172,000	$ 339,000
Stock Option Granted Prior to 2017 [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period	2 years
Stock Options Granted in 2017 [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of awards vesting in each year	33.33%
Performance Stock Award [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Performance stock awards vested	0
Stock Awards [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized compensation cost	$ 6,144,000
Weighted average period for amortization of unrecognized compensation cost	1 year 8 months 12 days
Performance stock awards vested	69,314
Weighted-average grant-date fair values of awards granted	$ 106.78	$ 119.76	$ 98.46
SARs [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Period of expiration	10 years
Unrecognized compensation cost	$ 5,211,000
Weighted average period for amortization of unrecognized compensation cost	1 year 9 months 18 days
Weighted-average grant-date fair values of awards granted	$ 34.76	$ 36.49	$ 25.88
SARs liability cash-settled	$ 747,000	$ 1,502,000
SARs Granted Prior to 2017 [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period	2 years
SARs Granted in 2017 [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of awards vesting in each year	33.33%

XML

Stock-based Compensation - Fair Value Assumptions for Stock Options (Detail) - Stock Option [Member]	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected dividend yield	1.18%	1.30%	1.31%
Expected volatility	32.27%	31.81%	26.00%
Expected term	6 years	7 years 3 months 18 days	7 years 3 months 18 days
Risk-free interest rate	1.93%	0.96%	1.47%

XML

Stock-based Compensation - Summary of Stock Option Activity (Detail) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Share-Based Payment Arrangement [Abstract]
Shares, Beginning Balance	435,966
Granted, Shares	34,444
Exercised, Shares	(11,888)	(20,435)	(48,389)
Forfeited, Shares	(31,361)
Shares, Ending Balance	427,161	435,966
Vested or expected to vest, Shares	427,161
Exercisable, Shares	408,802
Weighted Average Exercise Price, Beginning Balance	$ 81.92
Granted, Weighted Average Exercise Price	114.43
Exercised, Weighted Average Exercise Price	65.74
Forfeited, Weighted Average Exercise Price	115.43
Weighted Average Exercise Price, Ending Balance	82.53	$ 81.92
Vested or expected to vest, Weighted Average Exercise Price	82.53
Exercisable, Weighted Average Exercise Price	$ 80.80
Weighted Average Remaining Contractual Term, Ending Balance	5 years 3 months 7 days
Vested or expected to vest, Weighted Average Remaining Contractual Term	5 years 3 months 7 days
Exercisable, Weighted Average Remaining Contractual Term	5 years 1 month 20 days
Aggregate Intrinsic Value, Ending Balance	$ 10,224
Vested or expected to vest, Aggregate Intrinsic Value	10,224
Exercisable, Aggregate Intrinsic Value	$ 10,488

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Stock-based Compensation - Summary of Stock Award Activity (Detail) - Stock Awards [Member] - $ / shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares, Beginning Balance	103,278
Granted, Shares	64,392
Vested, Shares	(69,314)
Forfeited/Modified due to change of assumptions, Shares	5,613
Shares, Ending Balance	103,969	103,278
Unvested Weighted Average Grant Date Fair Value, Beginning Balance	$ 61.30
Granted, Weighted Average Grant Date Fair Value	106.78	$ 119.76	$ 98.46
Vested, Weighted Average Grant Date Fair Value	99.30
Forfeited/Modified due to change of assumptions, Weighted Average Grand Date Fair Value	86.94
Unvested Weighted Average Grant Date Fair Value, Ending Balance	$ 110.50	$ 61.30

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Stock-based Compensation - Summary of SARs Activity (Detail) - SARs [Member] $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($) $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares, Beginning Balance | shares	726,987
Granted, Shares | shares	188,957
Exercised, Shares | shares	(31,562)
Forfeited, Shares | shares	(34,226)
Shares, Ending Balance | shares	850,156
Weighted Average Exercise Price, Beginning Balance | $ / shares	$ 90.06
Granted, Weighted Average Exercise Price | $ / shares	110.04
Exercised, Weighted Average Exercise Price | $ / shares	63.06
Forfeited, Weighted Average Exercise Price | $ / shares	115.20
Weighted Average Exercise Price, Ending balance | $ / shares	$ 94.49
Weighted Average Remaining Contractual Term, Ending balance	6 years 7 months 13 days
Aggregate Intrinsic Value, Ending balance | $	$ 10,176

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Deferred Compensation - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Share-Based Payment Arrangement [Abstract]
Deferred compensation	$ (9,393,000)	$ 6,895,000	$ 9,988,000
Deferred compensation liability	$ 43,005,000	$ 61,219,000
Increase (decrease) in market price of common stock due to deferred compensation	$ (17.83)	$ 4.97

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Postretirement Benefit Plans - Obligations and Funded Status (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
United States [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Benefit obligation at beginning of year	$ 174,863	$ 187,371
Interest cost	4,923	4,671	$ 5,668
Actuarial income	(40,420)	(8,682)
Benefits paid	(8,899)	(8,497)
Benefit obligation at end of year	130,467	174,863	187,371
Fair value of plan assets at beginning of year	178,574	175,336
Actual return on plan assets	(33,187)	11,459
Employer contributions	256	276
Benefits paid	(8,899)	(8,497)
Fair value of plan assets at end of year	136,744	178,574	175,336
Over funded status at end of year	6,277	3,711
United Kingdom [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Benefit obligation at beginning of year	23,276	25,526
Interest cost	374	357	445
Actuarial income	(7,333)	(1,171)
Benefits paid	(709)	(1,198)
Foreign exchange impact	(2,322)	(238)
Benefit obligation at end of year	13,286	23,276	25,526
Fair value of plan assets at beginning of year	27,464	28,504
Actual return on plan assets	(9,393)	(78)
Employer contributions	536	526
Benefits paid	(709)	(1,198)
Foreign exchange impact	(2,735)	(290)
Fair value of plan assets at end of year	15,163	27,464	$ 28,504
Over funded status at end of year	$ 1,877	$ 4,188

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Postretirement Benefit Plans - Schedule of Amounts Recognized in Balance Sheets (Detail) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
United States [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Non-current asset	$ 8,700	$ 7,166
Current liability	(278)	(290)
Non-current liability	(2,145)	(3,165)
Net amount recognized	6,277	3,711
United Kingdom [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Non-current asset	1,877	4,188
Net amount recognized	$ 1,877	$ 4,188

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Postretirement Benefit Plans - Amounts Recognized in Accumulated Other Comprehensive Income (Detail) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
United States [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Net actuarial loss	$ 18,801	$ 19,508
United Kingdom [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Net actuarial loss	$ 6,188	$ 3,767

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Postretirement Benefit Plans - Components of Net Periodic Benefit Cost (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Defined Benefit Plan Disclosure [Line Items]
Net periodic benefit cost	$ 690	$ (302)	$ 874
United States [Member]
Defined Benefit Plan Disclosure [Line Items]
Interest cost	4,923	4,671	5,668
Expected return on plan assets	(8,802)	(10,348)	(9,747)
Amortization of net actuarial loss	2,277	4,444	4,262
Net periodic benefit cost	(1,602)	(1,233)	183
United Kingdom [Member]
Defined Benefit Plan Disclosure [Line Items]
Interest cost	374	357	445
Expected return on plan assets	(399)	(320)	(548)
Amortization of net actuarial loss	9	129	79
Net periodic benefit cost	$ (16)	$ 166	$ (24)

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Postretirement Benefit Plans - Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
United States [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Net actuarial (gain) loss	$ 1,570	$ (9,793)	$ 336
Amortization of net actuarial loss	(2,277)	(4,444)	(4,262)
Total recognized in other comprehensive income	(707)	(14,237)	(3,926)
Total recognized in net periodic benefit cost and other comprehensive income	(2,309)	(15,470)	(3,743)
United Kingdom [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Net actuarial (gain) loss	2,430	(757)	272
Amortization of net actuarial loss	(9)	(129)	(79)
Total recognized in other comprehensive income	2,421	(886)	193
Total recognized in net periodic benefit cost and other comprehensive income	$ 2,405	$ (720)	$ 169

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Postretirement Benefit Plans - Estimated Future Benefit Payments (Detail) $ in Thousands	Dec. 31, 2022 USD ($)
United States [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
2023	$ 9,267
2024	9,575
2025	9,826
2026	10,003
2027	10,118
2028-2032	50,301
United Kingdom [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
2023	531
2024	558
2025	583
2026	623
2027	647
2028-2032	$ 3,800

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Postretirement Benefit Plans - Weighted-Average Assumptions Used To Determine Benefit Obligations (Detail)	Dec. 31, 2022	Dec. 31, 2021
United States [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Discount rate	5.50%	2.90%
United Kingdom [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Discount rate	5.00%	1.80%

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Postretirement Benefit Plans - The Weighted Average Assumptions Used to Determine Net Periodic Benefit Costs (Detail)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
United States [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Discount rate	2.90%	2.60%	3.30%
Expected long-term return on plan assets	5.50%	6.75%	6.75%
United Kingdom [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Discount rate	1.80%	1.40%	2.10%
Expected long-term return on plan assets	1.61%	1.13%	2.30%

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Postretirement Benefit Plans - Defined Benefit Plans - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Feb. 17, 2022	Feb. 24, 2021	Feb. 24, 2020
Defined Benefit Plan Disclosure [Line Items]
Assets gains or losses added for prior year	80.00%
Assets gains or losses added for second preceding year	60.00%
Assets gains or losses added for third preceding year	40.00%
Assets gains or losses added for fourth preceding year	20.00%
United States [Member]
Defined Benefit Plan Disclosure [Line Items]
Common shares sold to the Company's ESOP trust				33,983	31,362	32,706
Expected long-term rate of return on assets	5.50%	6.75%	6.75%
Expected payment related to qualified plan	$ 0
Expected payment related to non-qualified plan	$ 278,000
U.K Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Expected long-term rate of return on assets	1.61%	1.13%	2.30%
Percentage of premium estimated return for equities and properties to risk free rate	3.00%
Percentage of long term return in cash	3.50%
Expected payment related to qualified plan	$ 451,000
Equities [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of target allocation for investment category	25.00%
Percentage of target allocation for investment including stock category	35.00%
Expected long-term rate of return on assets	7.98%
Equities [Member] | U.K Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of target allocation for investment category	11.00%
Debt Securities [Member] | United States [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of target allocation for investment category	63.00%
Debt Securities [Member] | U.K Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of target allocation for investment category	75.00%
Cash [Member] | United States [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of target allocation for investment category	2.00%
Cash [Member] | U.K Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of target allocation for investment category	10.00%
Insurance Contracts [Member] | U.K Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of target allocation for investment category	4.00%
U.S. and international equities [Member]
Defined Benefit Plan Disclosure [Line Items]
Expected long-term rate of return on assets	4.05%

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Postretirement Benefit Plans - Company's Asset Allocations for its U.S. Pension Plans by Asset Category (Detail) - United States [Member] - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Defined Benefit Plan Disclosure [Line Items]
Total	$ 136,744	$ 178,574	$ 175,336
Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	72,195	93,821
Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	64,549	84,753
Cash and Cash Equivalents [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	7,531	10,918
Cash and Cash Equivalents [Member] | Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	7,531	10,918
Equity Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	49,037	62,831
Equity Securities [Member] | Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	49,037	62,831
U.S. Equities [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	21,279	25,083
U.S. Equities [Member] | Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	21,279	25,083
Non-U.S. Equities [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	9,788	12,544
Non-U.S. Equities [Member] | Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	9,788	12,544
Employer Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	17,970	25,204
Employer Securities [Member] | Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	17,970	25,204
Fixed Income Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	80,176	104,825
Fixed Income Securities [Member] | Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	15,627	20,072
Fixed Income Securities [Member] | Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	64,549	84,753
U.S. Corporate Bonds [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	51,444	69,073
U.S. Corporate Bonds [Member] | Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	51,444	69,073
U.S. Government and Agency Bonds [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	18,255	22,917
U.S. Government and Agency Bonds [Member] | Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	15,627	20,072
U.S. Government and Agency Bonds [Member] | Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	2,628	2,845
Other Bonds [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	10,477	12,835
Other Bonds [Member] | Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	$ 10,477	$ 12,835

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Postretirement Benefit Plans - Company's Asset Allocations for its U.K. Pension Plans by Asset Category (Detail) - United Kingdom [Member] - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Defined Benefit Plan Disclosure [Line Items]
Total	$ 15,163	$ 27,464	$ 28,504
Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	14,486	26,461
Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	677	1,003
Cash [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	1,448	2,414
Cash [Member] | Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	1,448	2,414
Pooled Pension Funds [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	1,688	3,715
Pooled Pension Funds [Member] | Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	1,688	3,715
Pooled Fixed Pension Funds [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	11,350	20,332
Pooled Fixed Pension Funds [Member] | Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	11,350	20,332
Insurance Contracts [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	677	1,003
Insurance Contracts [Member] | Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Total	$ 677	$ 1,003

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Postretirement Benefit Plans - Fair Value Changes Within Asset Categories for which Fair Value Measurements Use Significant Unobservable Inputs Level 3 (Detail) - Insurance Contracts [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Beginning balance	$ 1,003	$ 1,159
Sale proceeds (benefit payments)	(104)	(131)
Change in unrealized gain	(120)	(15)
Foreign exchange impact	(102)	(10)
Ending balance	$ 677	$ 1,003

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Postretirement Benefit Plans - Defined Contribution Expenses for Company's Qualified Defined Contribution Plans and Statutory Profit Sharing Contributions (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Defined Contribution Plan Disclosure [Line Items]
Total defined contribution expense	$ 13,832	$ 13,215	$ 14,142
Retirement Contributions [Member]
Defined Contribution Plan Disclosure [Line Items]
Total defined contribution expense	8,556	8,134	8,035
Profit Sharing Contributions [Member]
Defined Contribution Plan Disclosure [Line Items]
Total defined contribution expense	$ 5,276	$ 5,081	$ 6,107

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Postretirement Benefit Plans - Defined Contribution Plans - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Defined Contribution Plan Disclosure [Line Items]
Supplemental plan liability balances	$ 446,000	$ 2,221,000
Defined contribution plan expense	$ 13,832	13,215	$ 14,142
Percentage of union and non-union employees eligible for either statutory or Company's sponsored profit sharing contributions	85.00%
Percentage of us based union and non-union employees eligible for either statutory or Company's sponsored profit sharing contributions	100.00%
Statutory Plans [Member]
Defined Contribution Plan Disclosure [Line Items]
Defined contribution plan expense	$ 421,000	219,000	$ 1,679,000
Defined Contribution Plans [Member]
Defined Contribution Plan Disclosure [Line Items]
Balance of trust assets	$ 376,000	$ 2,146,000

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Accrued Liabilities - Composition of Accrued Liabilities (Detail) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Payables and Accruals [Abstract]
Accrued payroll and benefits	$ 73,713	$ 70,983
Accrued customer rebates	24,715	21,030
Other accrued liabilities	64,384	44,383
Total accrued liabilities	$ 162,812	$ 136,396

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Other Non-Current Liabilities - Statement of Composition of Other Non Current Liabilities (Detail) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Other Liabilities Disclosure [Abstract]
Deferred revenue	$ 8,762	$ 9,979
Environmental and legal matters	16,276	17,663
Deferred compensation liability	32,459	50,122
Pension liability	5,241	4,552
Other non-current liabilities	17,953	16,606
Total other non-current liabilities	$ 80,691	$ 98,922

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Contingencies - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Site Contingency [Line Items]
Environmental losses accrual	$ 32,628,000	$ 23,127,000
Cash expenditures related to legal and environmental matters	$ 2,330,000	$ 3,461,000
Contribution for future response costs	5.00%
Wilmington Site [Member]
Site Contingency [Line Items]
Payment of environmental response costs	$ 3,451,000
Minimum [Member]
Site Contingency [Line Items]
Environmental losses and legal losses	32,628,000
Maximum [Member]
Site Contingency [Line Items]
Environmental losses and legal losses	$ 56,404,000

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Segment Reporting - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2022 Segment
Segment Reporting [Abstract]
Number of reportable segments	3

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Segment Reporting - Operating Segment (Detail) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Segment Reporting Information [Line Items]
Net sales	[1]	$ 2,773,270	$ 2,345,966	$ 1,869,750
Operating income		207,336	170,781	171,522
Assets		2,433,172	2,065,612	1,752,336
Capital expenditures		301,553	194,482	125,792
Depreciation and amortization expenses		94,650	90,876	81,860
Operating Segments [Member]
Segment Reporting Information [Line Items]
Net sales		2,773,270	2,345,966	1,869,750
Operating income		275,538	253,768	251,281
Assets		2,241,161	1,880,106	1,472,738
Capital expenditures		300,047	189,006	121,163
Depreciation and amortization expenses		92,468	87,809	77,988
Surfactants [Member]
Segment Reporting Information [Line Items]
Net sales		1,882,745	1,562,795	1,351,686
Surfactants [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Net sales		1,882,745	1,562,795	1,351,686
Operating income		162,746	165,999	169,101
Assets		1,579,242	1,245,207	1,018,555
Capital expenditures		259,442	154,953	88,484
Depreciation and amortization expenses		55,262	51,375	49,429
Polymers [Member]
Segment Reporting Information [Line Items]
Net sales		789,080	713,440	452,277
Polymers [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Net sales		789,080	713,440	452,277
Operating income		82,897	73,591	68,214
Assets		565,726	556,799	361,219
Capital expenditures		35,679	29,077	26,719
Depreciation and amortization expenses		31,399	30,598	22,873
Specialty Products [Member]
Segment Reporting Information [Line Items]
Net sales		101,445	69,731	65,787
Specialty Products [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Net sales		101,445	69,731	65,787
Operating income		29,895	14,178	13,966
Assets		96,193	78,100	92,964
Capital expenditures		4,926	4,976	5,960
Depreciation and amortization expenses		$ 5,807	$ 5,836	$ 5,686

[1] Includes net property, plant and equipment, goodwill and other intangible assets.

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Segment Reporting - Reconciliation of Segment Information to Consolidated Financial Statements (Detail) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Segment Reporting Information [Line Items]
Operating income		$ 207,336	$ 170,781	$ 171,522
Business restructuring and asset disposition	[1]	(308)	(3,353)	(1,212)
Interest expense, net		(9,809)	(5,753)	(5,409)
Other, net		(8,824)	7,509	4,954
Consolidated income before income taxes		188,703	172,537	171,067
Assets		2,433,172	2,065,612	1,752,336
Capital expenditures		301,553	194,482	125,792
Depreciation and amortization		94,650	90,876	81,860
Operating Segments [Member]
Segment Reporting Information [Line Items]
Operating income		275,538	253,768	251,281
Assets		2,241,161	1,880,106	1,472,738
Capital expenditures		300,047	189,006	121,163
Depreciation and amortization		92,468	87,809	77,988
Segment Reconciling Items [Member]
Segment Reporting Information [Line Items]
Unallocated corporate expenses	[2]	(67,894)	(79,634)	(78,547)
Unallocated corporate assets		192,011	185,506	279,598
Unallocated corporate expenditures		1,506	5,476	4,629
Unallocated corporate depreciation expenses		$ 2,182	$ 3,067	$ 3,872

[1] See Note 22, Business Restructuring and Asset Disposition, of the notes to the Company’s consolidated financial statements (included in Item 8 of this Form 10-K) regarding business restructuring and asset disposition costs.

[2] Unallocated corporate expenses are primarily comprised of corporate administrative expenses (e.g., corporate finance, legal, human resources, information systems, deferred compensation and environmental remediation) that are not included in segment operating income and not used to evaluate segment performance.

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Segment Reporting - Summary of Company Wide Geographic Data (Detail) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Schedule Of Geographical Segments [Line Items]
Net sales	[1]	$ 2,773,270	$ 2,345,966	$ 1,869,750
Long-lived assets	[2]	1,227,245	1,008,575	734,707
United States [Member]
Schedule Of Geographical Segments [Line Items]
Net sales	[2]	1,579,194	1,297,650	1,117,695
Long-lived assets	[1]	896,867	668,362	499,260
France [Member]
Schedule Of Geographical Segments [Line Items]
Net sales	[2]	227,421	179,746	141,516
Poland [Member]
Schedule Of Geographical Segments [Line Items]
Net sales	[2]	195,781	198,883	147,289
United Kingdom [Member]
Schedule Of Geographical Segments [Line Items]
Net sales	[2]	229,836	208,780	93,115
Long-lived assets	[1]	33,389	38,634	24,335
All Other Countries [Member]
Schedule Of Geographical Segments [Line Items]
Net sales	[2]	217,176	196,164	163,733
Long-lived assets	[1]	34,444	39,034	42,970
Mexico [Member]
Schedule Of Geographical Segments [Line Items]
Net sales	[1]	148,858	127,944	100,763
Long-lived assets	[2]	52,917	45,384	39,482
Brazil [Member]
Schedule Of Geographical Segments [Line Items]
Net sales	[2]	175,004	136,799	105,639
Long-lived assets	[1]	38,493	35,294	35,786
Germany [Member]
Schedule Of Geographical Segments [Line Items]
Long-lived assets	[1]	42,512	41,438	39,759
Singapore [Member]
Schedule Of Geographical Segments [Line Items]
Long-lived assets	[1]	20,899	23,507	25,815
Netherlands [Member]
Schedule Of Geographical Segments [Line Items]
Long-lived assets	[1]	79,007	85,931
China [Member]
Schedule Of Geographical Segments [Line Items]
Long-lived assets	[1]	$ 28,717	$ 30,991	$ 27,300

[1] Includes net property, plant and equipment, goodwill and other intangible assets.

[2] Net sales are attributed to countries based on the location of the Company legal entity making the sale.

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Earnings Per Share - Computation of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands		12 Months Ended
		Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Computation of Basic Earnings per Share
Net income attributable to Stepan Company		$ 147,153	$ 137,804	$ 126,770
Weighted-average number of shares outstanding		22,781	22,922	22,949
Basic earnings per share		$ 6.46	$ 6.01	$ 5.52
Computation of Diluted Earnings per Share
Net income attributable to Stepan Company		$ 147,153	$ 137,804	$ 126,770
Weighted-average number of shares outstanding		22,781	22,922	22,949
Add weighted-average net shares related to unvested stock awards (under treasury share method)		1	1	1
Weighted-average shares applicable to diluted earnings		23,064	23,287	23,256
Diluted earnings per share		$ 6.38	$ 5.92	$ 5.45
Stock Option [Member]
Computation of Diluted Earnings per Share
Add weighted-average net shares from assumed exercise of options (under treasury share method)	[1]	104	138	112
Stock Appreciation Rights (SARs) [Member]
Computation of Diluted Earnings per Share
Add weighted-average net shares from assumed exercise of options (under treasury share method)		111	166	145
Performance Stock Award [Member]
Computation of Diluted Earnings per Share
Add weighted-average net shares from assumed exercise of options (under treasury share method)		67	60	49

[1] Options/SARs to purchase 343,715, 103,182 and 127,434 shares of the Company’s common stock were excluded from the computations of diluted earnings per share for the years ended December 31, 2022, 2021 and 2020, respectively. The options’/SARs’ exercise prices were greater than the average market price for the Company’s common stock and inclusion of the instruments would have had an antidilutive effect on the computations of earnings per share.

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Earnings Per Share - Computation of Basic and Diluted Earnings Per Share (Parenthetical) (Detail) - shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Options and Stock Appreciation Rights (SARs) [Member]
Earnings Per Share Basic [Line Items]
Options/SARs to purchase shares of common stock were excluded from the computations of diluted earnings per share	343,715	103,182	127,434

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Accumulated Other Comprehensive Income (Loss) - Summary of Changes in Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	$ 1,074,193
Ending Balance	1,166,065	$ 1,074,193
Foreign Currency Translation Adjustments [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	(135,268)	(107,083)	$ (104,037)
Other comprehensive income before reclassifications	(21,567)	(28,185)	(3,046)
Net current period other comprehensive income	(21,567)	(28,185)	(3,046)
Ending Balance	(156,835)	(135,268)	(107,083)
Defined Benefit Pension Plan Adjustments [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	(18,022)	(29,861)	(32,205)
Other comprehensive income before reclassifications	(2,857)	8,188	(996)
Amounts reclassified from AOCI	(1,800)	3,651	3,340
Net current period other comprehensive income	(1,057)	11,839	2,344
Ending Balance	(19,079)	(18,022)	(29,861)
Cash Flow Hedge Adjustments [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	54	63	72
Other comprehensive income before reclassifications	8,357
Amounts reclassified from AOCI	(9)	(9)	(9)
Net current period other comprehensive income	8,348	(9)	(9)
Ending Balance	8,402	54	63
AOCI Attributable to Parent [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	(153,236)	(136,881)	(136,170)
Other comprehensive income before reclassifications	(16,067)	(19,997)	(4,042)
Amounts reclassified from AOCI	1,791	3,642	3,331
Net current period other comprehensive income	(14,276)	(16,355)	(711)
Ending Balance	$ (167,512)	$ (153,236)	$ (136,881)

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Accumulated Other Comprehensive Income (Loss) - Summary of Amounts Reclassified Out of Accumulated Other Comprehensive Income (Detail) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Income Before Provision for Income Taxes		$ 188,703	$ 172,537	$ 171,067
Tax benefit		(41,550)	(34,642)	(43,411)
Cost of Sales		2,346,201	1,950,156	1,486,137
Defined Benefit Pension Plan Adjustments [Member] | Amounts Reclassified From Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Prior service cost	[1]	(9)	(12)	(11)
Actuarial loss	[1]	(2,393)	(4,800)	(4,421)
Income Before Provision for Income Taxes	[1],[2]	(2,402)	(4,812)	(4,432)
Tax benefit	[1]	(602)	1,161	1,092
Income applicable to common stock	[1]	(1,800)	(3,651)	(3,340)
Income applicable to common stock	[1]	(1,800)	(3,651)	(3,340)
Cash Flow Hedge Adjustments [Member] | Amounts Reclassified From Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Income Before Provision for Income Taxes	[1]	9	9	9
Income applicable to common stock	[1]	9	9	9
Income applicable to common stock	[1]	9	9	9
Cash Flow Hedge Adjustments [Member] | Foreign exchange contracts [Member] | Amounts Reclassified From Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Cost of Sales	[1]	9	9	9
Accumulated Other Comprehensive Income (Loss) [Member]
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Income applicable to common stock	[1]	(1,791)	(3,642)	(3,331)
Income applicable to common stock	[1]	$ (1,791)	$ (3,642)	$ (3,331)

[1] Amounts in parentheses denote expense to the Company’s Consolidated Statements of Income.

[2] This component of accumulated other comprehensive income is included in the computation of net periodic benefit cost (see Note 13, Postretirement Benefit Plans, of the notes to the Company’s consolidated financial statements for details regarding net periodic benefit costs for the Company’s U.S. and U.K. defined benefit plans).

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Acquisitions - Additional Information (Detail)						12 Months Ended
	Sep. 23, 2022 USD ($)	Feb. 02, 2021 USD ($)	Jan. 29, 2021 USD ($) Site	Sep. 17, 2020 USD ($)	Mar. 13, 2020 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Business Acquisition [Line Items]
Purchase price						$ 9,693,000	$ 184,473,000	$ 13,519,000
Payment of working capital			$ 21,560,000
Payment of value added tax			3,000,000
Cash acquired on working capital			$ 5,900,000
Paid from cash on hand, assets acquired							3,503,000	2,040,000
Goodwill						95,922,000	97,187,000	27,972,000
Polymer Segment [Member]
Business Acquisition [Line Items]
Goodwill						71,747,000	74,482,000	5,419,000
Surfactants Segment [Member]
Business Acquisition [Line Items]
Goodwill						$ 23,692,000	$ 22,222,000	$ 22,070,000
PerformanX Specialty Chemicals LLC [Member] | Surfactants Segment [Member] | 2022 Acquisitions [Member]
Business Acquisition [Line Items]
Asset purchase agreement date	Sep. 23, 2022
Purchase price	$ 9,693,000
Goodwill	1,792,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory	1,312,000
Payment of estimated working capital	579,000
PerformanX Specialty Chemicals LLC [Member] | Surfactants Segment [Member] | 2022 Acquisitions [Member] | Noncompete Agreements [Member]
Business Acquisition [Line Items]
Identifiable intangible assets	$ 10,000
Weighted average amortization periods of identifiable intangibles assets	5 years
Intangible assets identified related to acquisition	$ 10,000
PerformanX Specialty Chemicals LLC [Member] | Surfactants Segment [Member] | 2022 Acquisitions [Member] | Customer Relationships [Member]
Business Acquisition [Line Items]
Identifiable intangible assets	3,250,000
Intangible assets identified related to acquisition	$ 3,250,000
PerformanX Specialty Chemicals LLC [Member] | Surfactants Segment [Member] | 2022 Acquisitions [Member] | Customer Relationships [Member] | Minimum [Member]
Business Acquisition [Line Items]
Weighted average amortization periods of identifiable intangibles assets	9 years
PerformanX Specialty Chemicals LLC [Member] | Surfactants Segment [Member] | 2022 Acquisitions [Member] | Customer Relationships [Member] | Maximum [Member]
Business Acquisition [Line Items]
Weighted average amortization periods of identifiable intangibles assets	11 years
PerformanX Specialty Chemicals LLC [Member] | Surfactants Segment [Member] | 2022 Acquisitions [Member] | Product Know-how [Member]
Business Acquisition [Line Items]
Identifiable intangible assets	$ 2,750,000,000
Intangible assets identified related to acquisition	$ 2,750,000,000
PerformanX Specialty Chemicals LLC [Member] | Surfactants Segment [Member] | 2022 Acquisitions [Member] | Product Know-how [Member] | Minimum [Member]
Business Acquisition [Line Items]
Weighted average amortization periods of identifiable intangibles assets	9 years
PerformanX Specialty Chemicals LLC [Member] | Surfactants Segment [Member] | 2022 Acquisitions [Member] | Product Know-how [Member] | Maximum [Member]
Business Acquisition [Line Items]
Weighted average amortization periods of identifiable intangibles assets	10 years
INVISTA Aromatic Polyester Polyol Business Acquisition [Member] | Polymer Segment [Member] | 2021 Acquisitions [Member]
Business Acquisition [Line Items]
Asset purchase agreement date			Jan. 29, 2021
Number of manufacturing site | Site			2
Purchase price			$ 165,000,000
Goodwill			$ 64,800,000
Fermentation Plant Acquisition | 2021 Acquisitions [Member]
Business Acquisition [Line Items]
Paid from cash on hand, assets acquired		$ 3,500,000
Clariant (Mexico) [Member] | Surfactants Segment [Member] | 2020 Acquisitions [Member]
Business Acquisition [Line Items]
Payment of value added tax				$ 308,000
Purchase price				14,000,000
Goodwill				5,165,000
Clariant (Mexico) [Member] | Surfactants Segment [Member] | 2020 Acquisitions [Member] | Noncompete Agreements [Member]
Business Acquisition [Line Items]
Identifiable intangible assets				300,000
Intangible assets identified related to acquisition				300,000
Clariant (Mexico) [Member] | Surfactants Segment [Member] | 2020 Acquisitions [Member] | Trademarks and Know-how [Member]
Business Acquisition [Line Items]
Identifiable intangible assets				1,300,000
Intangible assets identified related to acquisition				$ 1,300,000
Logos Technologies Asset Acquisition [Member] | Surfactants Segment [Member] | 2020 Acquisitions [Member]
Business Acquisition [Line Items]
Paid from cash on hand, assets acquired					$ 2,040,000
Logos Technologies Asset Acquisition [Member] | Surfactants Segment [Member] | 2020 Acquisitions [Member] | Laboratory Equipment [Member]
Business Acquisition [Line Items]
Equipment acquired					184,000
Logos Technologies Asset Acquisition [Member] | Surfactants Segment [Member] | 2020 Acquisitions [Member] | Trademarks and Know-how [Member]
Business Acquisition [Line Items]
Intangible assets acquired					1,392,000
Logos Technologies Asset Acquisition [Member] | Surfactants Segment [Member] | 2020 Acquisitions [Member] | Patents [Member]
Business Acquisition [Line Items]
Intangible assets acquired					$ 464,000

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Acquisitions - Summary of Purchase Price Allocation for Major Components of Acquisition (Detail) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Jan. 29, 2021	Dec. 31, 2020
Assets:
Goodwill	$ 95,922	$ 97,187		$ 27,972
Polymer Segment [Member]
Assets:
Goodwill	$ 71,747	$ 74,482		$ 5,419
INVISTA Aromatic Polyester Polyol Business Acquisition [Member] | 2021 Acquisitions [Member] | Polymer Segment [Member]
Assets:
Property, plant and equipment			$ 54,200
Identifiable intangibles assets			46,000
Goodwill			64,800
Total assets acquired			$ 165,000

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Acquisitions - Summary of Purchase Price Allocation for Acquisition (Detail) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Sep. 17, 2020
Assets:
Goodwill	$ 95,922	$ 97,187	$ 27,972
Surfactants Segment [Member]
Assets:
Goodwill	$ 23,692	$ 22,222	$ 22,070
2020 Acquisitions [Member] | Clariant (Mexico) [Member] | Surfactants Segment [Member]
Assets:
Goodwill				$ 5,165
Property, plant and equipment				175
Total assets acquired				14,940
Liabilities:
Other non-current liabilities				940
Total liabilities assumed				940
Net assets acquired				14,000
2020 Acquisitions [Member] | Clariant (Mexico) [Member] | Surfactants Segment [Member] | Customer Lists [Member}
Assets:
Identifiable intangible assets				8,000
2020 Acquisitions [Member] | Clariant (Mexico) [Member] | Surfactants Segment [Member] | Trademarks and Know-how [Member]
Assets:
Identifiable intangible assets				1,300
2020 Acquisitions [Member] | Clariant (Mexico) [Member] | Surfactants Segment [Member] | Non-compete Agreements [Member]
Assets:
Identifiable intangible assets				$ 300

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Revenue from Contracts with Customers - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2020	Dec. 31, 2021
Disaggregation of Revenue [Line Items]
Contract assets	$ 0
Contract liabilities	739,000		$ 1,376,000
Contract liabilities revenue recognized	0	$ 10,709,000
Long-Term [Member]
Disaggregation of Revenue [Line Items]
Contract liabilities revenue recognized	8,762,000
Short-Term [Member]
Disaggregation of Revenue [Line Items]
Contract liabilities revenue recognized	$ 1,947,000

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Revenue from Contracts with Customers - Summary of Geographic Disaggregation of Net Sales (Detail) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Disaggregation Of Revenue [Line Items]
Net sales	[1]	$ 2,773,270	$ 2,345,966	$ 1,869,750
Surfactants [Member]
Disaggregation Of Revenue [Line Items]
Net sales		1,882,745	1,562,795	1,351,686
Polymers [Member]
Disaggregation Of Revenue [Line Items]
Net sales		789,080	713,440	452,277
Specialty Products [Member]
Disaggregation Of Revenue [Line Items]
Net sales		101,445	69,731	65,787
North America [Member]
Disaggregation Of Revenue [Line Items]
Net sales		1,620,735	1,328,312	1,148,996
North America [Member] | Surfactants [Member]
Disaggregation Of Revenue [Line Items]
Net sales		1,099,616	904,469	826,841
North America [Member] | Polymers [Member]
Disaggregation Of Revenue [Line Items]
Net sales		437,312	364,382	265,700
North America [Member] | Specialty Products [Member]
Disaggregation Of Revenue [Line Items]
Net sales		83,807	59,461	56,455
Europe [Member]
Disaggregation Of Revenue [Line Items]
Net sales		673,210	600,024	391,252
Europe [Member] | Surfactants [Member]
Disaggregation Of Revenue [Line Items]
Net sales		349,651	288,735	234,631
Europe [Member] | Polymers [Member]
Disaggregation Of Revenue [Line Items]
Net sales		307,441	302,137	147,289
Europe [Member] | Specialty Products [Member]
Disaggregation Of Revenue [Line Items]
Net sales		16,118	9,152	9,332
Latin America [Member]
Disaggregation Of Revenue [Line Items]
Net sales		369,948	304,542	237,066
Latin America [Member] | Surfactants [Member]
Disaggregation Of Revenue [Line Items]
Net sales		363,799	299,601	234,568
Latin America [Member] | Polymers [Member]
Disaggregation Of Revenue [Line Items]
Net sales		4,629	3,823	2,498
Latin America [Member] | Specialty Products [Member]
Disaggregation Of Revenue [Line Items]
Net sales		1,520	1,118
Asia [Member]
Disaggregation Of Revenue [Line Items]
Net sales		109,377	113,088	92,436
Asia [Member] | Surfactants [Member]
Disaggregation Of Revenue [Line Items]
Net sales		69,679	69,990	55,646
Asia [Member] | Polymers [Member]
Disaggregation Of Revenue [Line Items]
Net sales		$ 39,698	$ 43,098	$ 36,790

[1] Includes net property, plant and equipment, goodwill and other intangible assets.

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Business Restructuring and Asset Disposition - Additional Information (Detail)	3 Months Ended	12 Months Ended
	Dec. 31, 2021 USD ($)	Dec. 31, 2022 USD ($) Employees	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Restructuring Cost And Reserve [Line Items]
Restructuring costs		$ 308,000	$ 3,353,000	$ 1,212,000
Discontinued Operations, Disposed of by Sale
Restructuring Cost And Reserve [Line Items]
Gain on sale of asset	$ (2,720,000)
2018 Restructuring [Member] | Germany [Member] | Asset and Spare Part [Member]
Restructuring Cost And Reserve [Line Items]
Restructuring costs						$ 1,404,000
2018 Restructuring [Member] | Germany [Member] | Surfactants [Member]
Restructuring Cost And Reserve [Line Items]
Restructuring costs		2,392,000
2018 Restructuring [Member] | Cumulative Decommissioning Costs [Member] | Germany [Member] | Surfactants [Member]
Restructuring Cost And Reserve [Line Items]
Restructuring costs		988,000
2018 Restructuring [Member] | Decommissioning Costs [Member] | Germany [Member] | Surfactants [Member]
Restructuring Cost And Reserve [Line Items]
Restructuring costs				79,000	$ 909,000
2016 Restructuring [Member] | Longford Mills [Member] | Surfactants [Member]
Restructuring Cost And Reserve [Line Items]
Business restructuring		$ 9,558,000
Number positions eliminated | Employees		30
2016 Restructuring [Member] | Decommissioning Costs [Member] | Longford Mills [Member] | Surfactants [Member]
Restructuring Cost And Reserve [Line Items]
Business restructuring		$ 308,000	$ 633,000	$ 1,133,000
2016 Restructuring [Member] | Termination Benefits [Member] | Longford Mills [Member] | Surfactants [Member]
Restructuring Cost And Reserve [Line Items]
Business restructuring		1,644,000
2016 Restructuring [Member] | Other Expense [Member] | Longford Mills [Member] | Surfactants [Member]
Restructuring Cost And Reserve [Line Items]
Business restructuring		$ 7,914,000

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Insurance Recovery - Additional Information (Detail) - USD ($)	6 Months Ended	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2020
Insurance Recovery [Line Items]
Insurance recovery proceeds	$ 18,000,000
Surfactants Segment [Member]
Insurance Recovery [Line Items]
Insurance recovery proceeds		$ 5,200,000
Polymer Segment [Member]
Insurance Recovery [Line Items]
Insurance recovery proceeds		$ 12,800,000

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Noncash Investing and Financing Activities - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Supplemental Cash Flow Elements [Line Items]
Noncash investing activities, payables incurred for property, plant and equipment expenditures, unpaid	$ 55,480,000	$ 36,588,000	$ 17,946,000
Common Stock [Member] | Stock Award Plan [Member]
Supplemental Cash Flow Elements [Line Items]
Noncash financing activities shares issued	58,441	60,132	58,282
Noncash financing activities issued value	$ 6,095,000	$ 7,286,000	$ 5,485,000