Westlake Corporation (NYSE: WLK) (the "Company" or "Westlake")
today announced third quarter 2024 results.
SUMMARY FINANCIAL HIGHLIGHTS (in
millions of dollars, except per share data and
percentages)
Three Months Ended September
30, 2024
Three Months Ended June 30,
2024
Three Months Ended September
30, 2023
Westlake Corporation
Net sales
$
3,117
$
3,207
$
3,115
Income from operations
$
180
$
406
$
349
Net income attributable to Westlake
Corporation
$
108
$
313
$
285
Diluted earnings per common share
$
0.83
$
2.40
$
2.20
Identified Item (1)
$
75
$
—
$
—
Net income attributable to Westlake
Corporation excl. Identified Item
$
183
$
313
$
285
Diluted earnings per common share excl.
Identified Item
$
1.41
$
2.40
$
2.20
EBITDA
$
505
$
744
$
682
EBITDA excl. Identified Item
$
580
$
744
$
682
EBITDA margin (2)
19%
23%
22%
Performance and Essential Materials
("PEM") Segment
Net sales
$
2,019
$
2,013
$
1,971
Income from operations
$
(9
)
$
157
$
105
EBITDA
$
222
$
391
$
339
Identified Item (1)
$
75
$
—
$
—
EBITDA excl. Identified Item
$
297
$
391
$
339
EBITDA margin (2)
15%
19%
17%
Housing and Infrastructure Products
("HIP") Segment
Net sales
$
1,098
$
1,194
$
1,144
Income from operations
$
202
$
266
$
256
EBITDA
$
262
$
336
$
327
EBITDA margin
24%
28%
29%
______________________________
(1)
"Identified Item" represents $75
million accrued expense to temporarily cease operations
("mothball") of the allyl chloride (AC) and epichlorohydrin (ECH)
units at the Company's site in Pernis, the Netherlands
(2)
Excludes Identified Item
RESULTS
Consolidated Results
(Unless otherwise noted the financial numbers below exclude the
Identified Item)
For the third quarter of 2024, the Company reported net sales of
$3.1 billion, net income of $183 million, or $1.41 per share, and
EBITDA (earnings before interest expense, income taxes,
depreciation and amortization) of $580 million. During the third
quarter of 2024, we experienced extended maintenance outages at our
ethylene JV facility, which drove higher purchases of ethylene
feedstock, and one of our chlorovinyl facilities.
Third quarter 2024 sales of $3.1 billion declined by 3% compared
to the second quarter of 2024. Company sales volume decreased 4%
sequentially while average sales price increased 1% from the
previous quarter. Net income of $183 million decreased by $130
million as compared to the second quarter of 2024. The sequential
decrease in net income compared to the prior quarter was primarily
due to the aforementioned production outages, higher ethylene
feedstock costs and lower sales volume.
EBITDA of $580 million for the third quarter of 2024 decreased
by $102 million as compared to third quarter 2023 EBITDA of $682
million. Third quarter 2024 EBITDA decreased by $164 million as
compared to second quarter 2024 EBITDA of $744 million.
A reconciliation of EBITDA (including and excluding the
Identified Item) to net income, income from operations and net cash
provided by operating activities can be found in the financial
schedules at the end of this press release. Reconciliations of
segment EBITDA (including and excluding the Identified Item) to net
income and income from operations can be found in the financial
schedules at the end of this press release.
Mothball Expenses ("Identified Item")
During the third quarter of 2024, the Company accrued $75
million of mothball expenses in the Performance and Essential
Materials segment related to the previously announced decision to
mothball two units within our European epoxy business to align our
manufacturing footprint and costs with changing global conditions.
Consistent with our previous disclosure, cash outflows related to
these mothball expenses are expected to occur over several years
starting in 2025.
Cash and Debt
Net cash provided by operating activities was $474 million for
the third quarter of 2024 and capital expenditures were $220
million. $300 million of maturing senior notes were redeemed during
the quarter, resulting in cash and cash equivalents of $2.9 billion
and total debt of $4.6 billion as of September 30, 2024.
Performance and Essential Materials Segment
(Unless otherwise noted the financial numbers below exclude the
Identified Item)
For the third quarter of 2024, PEM sales of $2.0 billion were in
line with the second quarter of 2024. PEM sales volume decreased 1%
quarter-over-quarter while average sales price increased 1%
sequentially.
PEM income from operations was $66 million in the third quarter
of 2024 as compared to income from operations of $157 million in
the second quarter of 2024. This sequential decrease of $91 million
was primarily driven by unplanned outages and higher ethylene
feedstock costs, which were partially offset by higher average
sales price, particularly for polyethylene.
Compared to the prior year period, PEM income from operations
decreased by $39 million. This decrease in income from operations
versus the third quarter of 2023 was primarily driven by unplanned
outages and lower average sales price that were partially offset by
higher sales volume, particularly for chlorine, caustic soda and
epoxy resin.
Housing and Infrastructure Products Segment
For the third quarter of 2024, HIP sales of $1.1 billion
decreased from second quarter of 2024 sales of $1.2 billion as a
result of lower sales volume due to slower North American
residential construction activity and weather disruptions.
HIP income from operations was $202 million in the third quarter
of 2024 as compared to income from operations of $266 million in
the second quarter of 2024. This sequential decrease of $64 million
was primarily due to lower sales volume at most product categories
as a result of slower North American residential construction
activity and weather disruptions.
Compared to the prior year period, HIP income from operations
decreased by $54 million. This decrease in income from operations
versus the third quarter of 2023 was primarily driven by lower
average sales price and lower sales volume, particularly for pipe
& fittings.
EXECUTIVE COMMENTARY
"During the third quarter of 2024, global macroeconomic trends
modestly improved from the environment we saw in the second quarter
of 2024 with relatively solid and improving conditions in North
America, a continuing recovery in Asia, and slow improvement in
Europe. Demand for our products during the third quarter was
consistent with these market conditions, and our third quarter
financial results would have reflected these trends if it had not
been for extended maintenance outages at two plants during the
quarter in our PEM segment. While we are disappointed with this
operational performance, we have completed the maintenance and
these plants have returned to service. Furthermore, we are applying
the lessons learned from these incidents to other plants, while
increasing our focus on preventive maintenance across our
organization to improve the reliability of our plants," said
Jean-Marc Gilson, President and Chief Executive Officer.
"The pace of the recovery from the recent trough in global
industrial and manufacturing activity remains uneven. However,
recent monetary and fiscal stimulus, including actions by the
Federal Reserve and the Chinese government, have the potential to
accelerate the pace and duration of the macroeconomic recovery.
Meanwhile, we will continue to focus on our levers for growth,
including developing and commercializing innovative new products to
help our customers address their needs, improving the profitability
and reliability of our plants, and redeploying our investment-grade
balance sheet to create long-term shareholder value," concluded Mr.
Gilson.
Forward-Looking Statements
The statements in this release and the related teleconference
relating to matters that are not historical facts, including
statements regarding our outlook for the performance of our
business segments, global macroeconomic conditions, continuing
stabilization or increases in sales prices, volumes, margins and
profitability in both domestic and export markets for most of our
products, industrial, manufacturing, residential construction and
infrastructure activity in our target markets, our ability to
weather economic volatility, raw material costs, higher energy
prices, the earnings potential of our assets, monetary and fiscal
policies domestically and abroad, the pace and duration of economic
recovery, our ability to improve profitability and reliability of
our plants, future preventative maintenance activities, our ability
to continue to execute our strategies, and our ability to create
long-term value for our shareholders are forward-looking
statements.
These forward-looking statements are subject to significant
risks and uncertainties. Actual results could differ materially,
based on factors including, but not limited to: general economic
and business conditions; the cyclical nature of the chemical and
building products industries; the availability, cost and volatility
of raw materials and energy; the results of acquisitions and our
integration efforts; uncertainties associated with the United
States, European and worldwide economies, including those due to
political tensions and conflict in the Middle East, Russia and
Ukraine and elsewhere; uncertainties associated with pandemic
infectious diseases; uncertainties associated with climate change;
the potential impact on demand for ethylene, polyethylene and
polyvinyl chloride due to initiatives such as recycling and
customers seeking alternatives to polymers; current and potential
governmental regulatory actions in the United States and other
countries; industry production capacity and operating rates; the
supply/demand balance for Westlake's products; competitive products
and pricing pressures; instability in the credit and financial
markets; access to capital markets; terrorist acts; operating
interruptions (including explosions, fires, weather-related
incidents, unscheduled downtime and environmental risks); changes
in laws and regulations, including trade policies; technological
developments; information systems failures and cyberattacks;
foreign currency exchange risks; our ability to implement our
business strategies; creditworthiness of our customers; the effect
and results of litigation and settlements of litigation; and other
risk factors. For more detailed information about the factors that
could cause actual results to differ materially, please refer to
Westlake's Annual Report on Form 10-K for the year ended December
31, 2023, which was filed with the SEC in February 2024, and
Westlake's Quarterly Report on Form 10-Q for the quarter ended June
30, 2024, which was filed with the SEC in August 2024.
Use of Non-GAAP Financial Measures
This release makes reference to certain "non-GAAP" financial
measures, such as EBITDA, EBITDA margin and certain financial
measures adjusted to exclude the effect of the Identified Item, as
defined in Regulation G of the U.S. Securities Exchange Act of
1934, as amended. For this purpose, a non-GAAP financial measure is
generally defined by the Securities and Exchange Commission (SEC)
as a numerical measure of a registrant's historical or future
financial performance, financial position or cash flows that (1)
excludes amounts, or is subject to adjustments that have the effect
of excluding amounts, that are included in the most directly
comparable measure calculated and presented in accordance with GAAP
in the statement of income, balance sheet or statement of cash
flows (or equivalent statements) of the registrant; or (2) includes
amounts, or is subject to adjustments that have the effect of
including amounts, that are excluded from the most directly
comparable measure so calculated and presented. We report our
financial results in accordance with U.S. generally accepted
accounting principles (U.S. GAAP), but believe that certain
non-GAAP financial measures, such as EBITDA, EBITDA margin and
certain financial measures that exclude the effect of the
Identified Item, provide useful supplemental information to
investors regarding the underlying business trends and performance
of the Company's ongoing operations and are useful for
period-over-period comparisons of such operations. These non-GAAP
financial measures should be considered as a supplement to, and not
as a substitute for, or superior to, the financial measures
prepared in accordance with U.S. GAAP. A reconciliation of (i)
EBITDA to net income, income from operations and net cash provided
by operating activities (including and excluding the Identified
Item), and (ii) segment EBITDA to segment income from operations
(including and excluding the Identified Item) can be found in the
financial schedules at the end of this press release.
About Westlake
Westlake is a global manufacturer and supplier of materials and
innovative products that enhance life every day. Headquartered in
Houston, with operations in Asia, Europe and North America, we
provide the building blocks for vital solutions — from housing and
construction, to packaging and healthcare, to automotive and
consumer goods. For more information, visit the Company's web site
at www.westlake.com.
Westlake Corporation Conference Call Information:
A conference call to discuss Westlake Corporation's third
quarter 2024 results will be held Tuesday, November 5, 2024 at
11:00 AM Eastern Time (10:00 AM Central Time). To access the
conference call, it is necessary to pre-register at
https://register.vevent.com/register/BI9dd3d967e2694f52b0a3216544d073e3.
Once registered, you will receive a phone number and unique PIN
number.
A replay of the conference call will be available beginning two
hours after its conclusion. The conference call and replay will be
available via webcast at
https://edge.media-server.com/mmc/p/te7pi7po.
WESTLAKE CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
(in millions of dollars,
except per share data and share amounts)
Net sales
$
3,117
$
3,115
$
9,299
$
9,722
Cost of sales
2,618
2,529
7,670
7,702
Gross profit
499
586
1,629
2,020
Selling, general and administrative
expenses
215
206
648
641
Amortization of intangibles
29
31
89
92
Restructuring, transaction and
integration-related costs
75
—
83
6
Income from operations
180
349
809
1,281
Interest expense
(39
)
(40
)
(120
)
(124
)
Other income, net
44
56
153
101
Income before income taxes
185
365
842
1,258
Provision for income taxes
65
70
214
249
Net income
120
295
628
1,009
Net income attributable to noncontrolling
interests
12
10
33
33
Net income attributable to Westlake
Corporation
$
108
$
285
$
595
$
976
Earnings per common share attributable to
Westlake Corporation:
Basic
$
0.84
$
2.22
$
4.61
$
7.61
Diluted
$
0.83
$
2.20
$
4.58
$
7.56
Weighted average common shares
outstanding:
Basic
128,638,632
127,854,464
128,525,531
127,685,210
Diluted
129,340,461
128,583,927
129,237,560
128,509,618
WESTLAKE CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
September 30,
2024
December 31,
2023
(in millions of
dollars)
ASSETS
Current assets
Cash and cash equivalents
$
2,915
$
3,304
Accounts receivable, net
1,754
1,601
Inventories
1,747
1,622
Prepaid expenses and other current
assets
133
82
Total current assets
6,549
6,609
Property, plant and equipment, net
8,602
8,519
Other assets, net
5,958
5,907
Total assets
$
21,109
$
21,035
LIABILITIES AND EQUITY
Current liabilities (accounts payable and
accrued and other liabilities)
$
2,351
$
2,491
Current portion of long-term debt, net
—
299
Long-term debt, net
4,616
4,607
Other liabilities
2,956
2,874
Total liabilities
9,923
10,271
Total Westlake Corporation stockholders'
equity
10,662
10,241
Noncontrolling interests
524
523
Total equity
11,186
10,764
Total liabilities and equity
$
21,109
$
21,035
WESTLAKE CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September
30,
2024
2023
(in millions of
dollars)
Cash flows from operating
activities
Net income
$
628
$
1,009
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
833
815
Deferred income taxes
(58
)
(67
)
Net loss on disposition and others
51
43
Other balance sheet changes
(574
)
(37
)
Net cash provided by operating
activities
880
1,763
Cash flows from investing
activities
Additions to investments in unconsolidated
subsidiaries
(24
)
(18
)
Additions to property, plant and
equipment
(723
)
(752
)
Other, net
11
20
Net cash used for investing activities
(736
)
(750
)
Cash flows from financing
activities
Distributions to noncontrolling
interests
(31
)
(33
)
Dividends paid
(197
)
(156
)
Proceeds from exercise of stock
options
13
39
Repayment of senior notes
(300
)
—
Repurchase of common stock for
treasury
—
(23
)
Other, net
(2
)
(2
)
Net cash used for financing activities
(517
)
(175
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(15
)
(12
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(388
)
826
Cash, cash equivalents and restricted cash
at beginning of period
3,319
2,246
Cash, cash equivalents and restricted cash
at end of period
$
2,931
$
3,072
WESTLAKE CORPORATION
SEGMENT INFORMATION
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
(in millions of
dollars)
Net external sales
Performance and Essential Materials
Performance Materials
$
1,164
$
1,127
$
3,505
$
3,549
Essential Materials
855
844
2,458
2,907
Total Performance and Essential
Materials
2,019
1,971
5,963
6,456
Housing and Infrastructure Products
Housing Products
937
963
2,826
2,699
Infrastructure Products
161
181
510
567
Total Housing and Infrastructure
Products
1,098
1,144
3,336
3,266
$
3,117
$
3,115
$
9,299
$
9,722
Income (loss) from operations
Performance and Essential Materials
$
(9
)
$
105
$
170
$
723
Housing and Infrastructure Products
202
256
678
589
Corporate and other
(13
)
(12
)
(39
)
(31
)
$
180
$
349
$
809
$
1,281
Depreciation and amortization
Performance and Essential Materials
$
225
$
225
$
669
$
652
Housing and Infrastructure Products
54
51
157
157
Corporate and other
2
1
7
6
$
281
$
277
$
833
$
815
Other income, net
Performance and Essential Materials
$
6
$
9
$
27
$
14
Housing and Infrastructure Products
6
20
27
30
Corporate and other
32
27
99
57
$
44
$
56
$
153
$
101
WESTLAKE CORPORATION
RECONCILIATION OF EBITDA TO
NET INCOME, INCOME FROM OPERATIONS AND
NET CASH PROVIDED BY OPERATING
ACTIVITIES (INCLUDING AND EXCLUDING IDENTIFIED ITEM)
(Unaudited)
Three Months Ended June
30,
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2024
2023
2024
2023
(in millions of dollars,
except percentages)
Net cash provided by operating
activities
$
237
$
474
$
696
$
880
$
1,763
Changes in operating assets and
liabilities and other
50
(354
)
(417
)
(310
)
(821
)
Deferred income taxes
36
—
16
58
67
Net income
323
120
295
628
1,009
Add:
Mothball expenses
—
75
—
75
—
Net income excl. Identified
Item
$
323
$
195
$
295
$
703
$
1,009
Net income
323
120
295
628
1,009
Less:
Other income, net
59
44
56
153
101
Interest expense
(41
)
(39
)
(40
)
(120
)
(124
)
Provision for income taxes
(101
)
(65
)
(70
)
(214
)
(249
)
Income from operations
406
180
349
809
1,281
Add:
Mothball expenses
—
75
—
75
—
Income from operations excl. Identified
Item
406
255
349
884
1,281
Add:
Depreciation and amortization
279
281
277
833
815
Other income, net
59
44
56
153
101
EBITDA excl. Identified Item
744
580
682
1,870
2,197
Less:
Mothball expenses
—
75
—
75
—
EBITDA
$
744
$
505
$
682
$
1,795
$
2,197
Net external sales
$
3,207
$
3,117
$
3,115
$
9,299
$
9,722
Operating Income Margin
13%
6%
11%
9%
13%
Operating income margin excl.
Identified Item
13%
8%
11%
10%
13%
EBITDA Margin
23%
16%
22%
19%
23%
EBITDA margin excl. Identified
Item
23%
19%
22%
20%
23%
WESTLAKE CORPORATION
RECONCILIATION OF DILUTED
EARNINGS PER COMMON SHARE TO DILUTED EARNINGS PER COMMON SHARE
EXCLUDING IDENTIFIED ITEM
(Unaudited)
Three Months Ended June
30,
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2024
2023
2024
2023
(per share data)
Diluted earnings per common share
attributable to Westlake Corporation
$
2.40
$
0.83
$
2.20
$
4.58
$
7.56
Add:
Mothball expenses
—
0.58
—
0.58
—
Diluted earnings per common share
attributable to Westlake Corporation excl. Identified Item
$
2.40
$
1.41
$
2.20
$
5.16
$
7.56
WESTLAKE CORPORATION
RECONCILIATION OF FREE CASH
FLOW TO NET CASH PROVIDED BY OPERATING ACTIVITIES
(Unaudited)
Three Months Ended June
30,
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2024
2023
2024
2023
(in millions of
dollars)
Net cash provided by operating
activities
$
237
$
474
$
696
$
880
$
1,763
Less:
Additions to property, plant and
equipment
231
220
$
245
723
752
Free cash flow
$
6
$
254
$
451
$
157
$
1,011
WESTLAKE CORPORATION
RECONCILIATION OF PEM SEGMENT
EBITDA TO INCOME FROM OPERATIONS (INCLUDING AND EXCLUDING
IDENTIFIED ITEM)
(Unaudited)
Three Months Ended June
30,
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2024
2023
2024
2023
(in millions of dollars,
except percentages)
Performance and Essential Materials
Segment
Income (loss) from operations
$
157
$
(9
)
$
105
$
170
$
723
Add:
Mothball expenses
—
75
—
75
—
Income (loss) from operations excl.
Identified Item
157
66
105
245
723
Add:
Depreciation and amortization
224
225
225
669
652
Other income, net
10
6
9
27
14
EBITDA excl. Identified Item
391
297
339
941
1,389
Less:
Mothball expenses
—
75
—
75
—
EBITDA
$
391
$
222
$
339
$
866
$
1,389
Net external sales
$
2,013
$
2,019
$
1,971
$
5,963
$
6,456
Operating Income Margin
8%
—%
5%
3%
11%
Operating income margin excl.
Identified Item
8%
3%
5%
4%
11%
EBITDA Margin
19%
11%
17%
15%
22%
EBITDA margin excl. Identified
Item
19%
15%
17%
16%
22%
WESTLAKE CORPORATION
RECONCILIATION OF HIP SEGMENT
EBITDA TO INCOME FROM OPERATIONS
(Unaudited)
Three Months Ended June
30,
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2024
2023
2024
2023
(in millions of dollars,
except percentages)
Housing and Infrastructure Products
Segment
Income from operations
$
266
$
202
$
256
$
678
$
589
Add:
Depreciation and amortization
53
54
51
157
157
Other income, net
17
6
20
27
30
EBITDA
$
336
$
262
$
327
$
862
$
776
Net external sales
$
1,194
$
1,098
$
1,144
$
3,336
$
3,266
Operating Income Margin
22%
18%
22%
20%
18%
EBITDA Margin
28%
24%
29%
26%
24%
WESTLAKE CORPORATION
SUPPLEMENTAL
INFORMATION
PRODUCT SALES PRICE AND VOLUME
VARIANCE BY OPERATING SEGMENTS
(Unaudited)
Third Quarter 2024 vs. Third
Quarter 2023
Third Quarter 2024 vs. Second
Quarter 2024
Average
Sales Price
Volume
Average
Sales Price
Volume
Performance and Essential Materials
-3
%
+6
%
+1
%
-1
%
Housing and Infrastructure Products
-3
%
-1
%
—
%
-9
%
Company
-3
%
+3
%
+1
%
-4
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241105355131/en/
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