8-K
WESTLAKE CORP (WLK)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): May 3, 2022
Westlake Corporation
(Exact name of registrant as specified in its charter)
| Delaware | 001-32260 | 76-0346924 |
|---|---|---|
| (State or other jurisdiction<br>of incorporation) | (Commission File Number) | (I.R.S. Employer<br>Identification No.) |
| 2801 Post Oak Boulevard, | Suite 600 | |
| --- | --- | --- |
| Houston, | Texas | 77056 |
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: (713) 960-9111
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.01 par value | WLK | The New York Stock Exchange |
| 1.625% Senior Notes due 2029 | WLK29 | The New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ◻
Item 2.02. Results of Operations and Financial Condition.
On May 3, 2022, Westlake Corporation, formerly known as Westlake Chemical Corporation (the "Company"), issued a press release announcing its 2022 first quarter results. A copy of the press release is furnished with this Current Report as Exhibit 99.1.
The information furnished pursuant to this Current Report, including Exhibit 99.1, shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any registration statement filed by Westlake Corporation under the Securities Act of 1933, as amended, unless specifically identified as being incorporated therein.
Item 7.01. Regulation FD Disclosure.
The Company is holding a conference call on May 3, 2022 to discuss its 2022 first quarter results. Information about the call can be found in the press release furnished with this Current Report as Exhibit 99.1. In addition, the Company made available an investor presentation regarding its 2022 first quarter results, which is furnished with this Current Report as Exhibit 99.2.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The following exhibits are furnished herewith:
99.1 Press release issued on May 3, 2022.
99.2 Investor Presentation.
104 The cover page from this Current Report on Form 8-K, formatted in Inline XBRL.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| WESTLAKE CHEMICAL CORPORATION | |||
|---|---|---|---|
| Date: | May 3, 2022 | By: | /S/ ALBERT CHAO |
| Albert Chao<br>President and Chief Executive Officer |
Document
EXHIBIT 99.1
WESTLAKE CORPORATION
Contact—(713) 960-9111
Investors—Steve Bender
Media—L. Benjamin Ederington
Westlake Corporation Reports Record First Quarter 2022 Results
•Record quarterly net sales of $4.1 billion, an increase of 72% vs. first quarter 2021 net sales
•Record quarterly net income of $756 million, an increase of 212% vs. first quarter 2021 net income
•Record quarterly EBITDA of $1.3 billion, an increase of 135% vs. first quarter 2021 EBITDA
•Expanded specialty product focused portfolio with acquisition of Hexion's global epoxy business
HOUSTON--(BUSINESS WIRE) -- Westlake Corporation (NYSE: WLK) (the "Company" or "Westlake") today announced record first quarter 2022 results.
SUMMARY FINANCIAL HIGHLIGHTS ($ in millions except per share data)
| Three Months Ended March 31, | |||||
|---|---|---|---|---|---|
| 2022 | 2021 | ||||
| Westlake Corporation | |||||
| Income from operations | $ | 1,032 | $ | 346 | |
| Net income attributable to Westlake Corporation | $ | 756 | $ | 242 | |
| Diluted earnings per common share | $ | 5.83 | $ | 1.87 | |
| EBITDA | $ | 1,300 | $ | 553 | |
| EBITDA margin | 32% | 23% | |||
| Performance and Essential Materials ("PEM") Segment | |||||
| Net external sales | $ | 2,832 | $ | 1,742 | |
| Income from operations | $ | 879 | $ | 288 | |
| EBITDA | $ | 1,071 | $ | 458 | |
| EBITDA margin | 38% | 26% | |||
| Housing and Infrastructure Products ("HIP") Segment | |||||
| Net external sales | $ | 1,224 | $ | 615 | |
| Income from operations | $ | 185 | $ | 71 | |
| EBITDA | $ | 258 | $ | 105 | |
| EBITDA margin | 21% | 17% |
BUSINESS HIGHLIGHTS
In the first quarter of 2022, Westlake achieved record quarterly net sales of $4.1 billion, record quarterly net income of $756 million and record quarterly EBITDA of $1.3 billion. The Company benefitted from strong market conditions attributable to a robust demand environment.
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In February 2022, the Company completed the acquisition of Hexion Inc.'s global epoxy business for approximately $1.2 billion in an all-cash transaction. Based in Rotterdam, The Netherlands, the epoxy business, branded as Westlake Epoxy, is a global industry leader in the manufacture and development of specialty resins, modifiers and curing agents for high-performance materials, coatings and composites utilized in a variety of industries, including high-growth and sustainability-oriented end-uses such as wind turbine blades and light-weight automotive structural components. The fully-integrated business includes upstream base epoxy resins and intermediates delivered as liquid or solid epoxy resins, as well as downstream specialty epoxy resins used in coatings and composites. Westlake Epoxy serves numerous industries, including marine and protective coatings, wind energy and general composites, civil engineering and construction, electrical laminates and electronics, automotive and aerospace as well as adhesives.
In the first quarter of 2022, the Company announced its target to reduce Scope 1 and Scope 2 CO2 equivalent emissions per ton of production by 20% by 2030 from a 2016 baseline. The Company has also expanded environmental reporting to better align with SASB industry standard and GRI framework. To further reduce its carbon footprint, Westlake's strategy is to optimally allocate capital to both proven and emerging technologies, including additional product and operational innovations. This strategy includes energy-efficiency projects, increasing power from less carbon-intensive electricity providers, adding more hydrogen as a fuel gas and other continuous operational improvements.
EXECUTIVE COMMENTARY
"The record results this quarter are driven by the groundwork Westlake has laid and the recent acquisitions that build on this solid foundation. The addition of our epoxy business to our PEM segment with its leading market position continues our drive toward a more differentiated and specialized product offering. Through the strong performance of all of our businesses and our recent acquisitions, we delivered record performance during the first quarter of 2022. I want to thank all of the Westlake employees for their hard work and dedication in helping us achieve these results. We continued to see robust residential construction and remodeling activity drive demand for PVC resin, as well as for products in our Housing and Infrastructure Products segment. The growth in the U.S. economy and the diminishing impact of COVID-19 continue to spur consumer and industrial demand with improvements in manufacturing and packaging benefiting caustic soda and polyethylene usage," said Albert Chao, President and Chief Executive Officer.
"While we see volatility driven by economic and geopolitical factors which could impact our businesses, market conditions currently remain favorable and we are confident in our business fundamentals and the markets in which we participate. We remain focused on our ESG tenets and continue to bring a portfolio of leading brands to market that not only enhance lives every day but also create a greener, more sustainable future for all of us, while also remaining steadfast in creating value for our shareholders. With the steps we have taken to date, combined with a continued strong demand outlook for our products, we remain optimistic about the future ahead," concluded Mr. Chao.
RESULTS
Consolidated Results
The Company reported record quarterly net income of $756 million (excluding a special tax benefit that occurred in the fourth quarter of 2017) on record net sales of $4,056 million for the three months ended March 31, 2022. Net income in the first quarter of 2021 was $242 million. The increase in net income of $514 million was driven by significantly higher sales prices and margins across most of our businesses as well as the contributions of the new businesses acquired in the second half of 2021 and early 2022. The continuing strength of residential construction driven by solid repair and remodeling markets drove strong demand and pricing dynamics for PVC resin as well as demand for a majority of offerings in the Housing and Infrastructure Products segment. Additionally, the Performance and Essential Materials segment experienced robust strength in polyethylene for packaging and consumer markets, epoxy coatings and applications, as well as caustic soda benefitting from increasing industrial activity, resulting in higher prices and margins. Despite rising feedstock costs and logistical constraints, margins expanded with pricing increases outpacing rising production costs.
Record EBITDA (earnings before interest expense, income taxes, depreciation and amortization) of $1,300 million for the first quarter of 2022 increased by $747 million compared to first quarter 2021 EBITDA of $553 million. A reconciliation of EBITDA 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.
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Cash and Debt
Net cash provided by operating activities was $700 million for the first quarter of 2022. As of March 31, 2022, cash and cash equivalents were $1,055 million and total debt was $5,166 million. Westlake has given notice to redeem $250 million of debt on May 14, 2022. Capital expenditures were $263 million for the first quarter of 2022.
Performance and Essential Materials Segment
Performance and Essential Materials income from operations for the first quarter of 2022 of $879 million increased by $591 million from first quarter 2021 income from operations of $288 million. This increase in income from operations versus the prior-year period was due to strong demand dynamics from manufacturing, packaging and construction markets resulting in higher prices and margins for all major products in the segment. In addition, the first quarter of 2022 included income from operations from our recently acquired epoxy business.
Housing and Infrastructure Products Segment
For the first quarter of 2022, Housing and Infrastructure Products income from operations of $185 million increased by $114 million from first quarter 2021 income from operations of $71 million. This increase in income from operations versus the prior-year period was the result of continued robust housing construction and remodeling activity, driving healthy demand and higher prices across our businesses and the contributions of the acquisitions made in 2021. Despite rising raw material and energy costs as well as logistical constraints, margins expanded with pricing increases outpacing rising production costs.
Forward-Looking Statements
The statements in this release and the related teleconference relating to matters that are not historical facts, including statements regarding favorable market conditions, our outlook for our business segments, our ability to create value and grow, launching sustainable brands and reducing our carbon footprint, our planned redemption of outstanding debt, the contribution of recent acquisitions and demand for our products, 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: the COVID-19 pandemic and the response thereto; general economic and business conditions; the cyclical nature of the industry; availability, cost and volatility of raw materials and utilities, including natural gas and natural gas liquids from shale production; the price of crude oil; uncertainties associated with the United States and worldwide economies, including those due to global economic and financial conditions; governmental regulatory actions, including environmental regulation and changes in trade policies; political unrest; industry production capacity and operating rates; the supply/demand balance for Westlake's products; competitive products and pricing pressures; access to capital markets; technological developments; the effect and results of litigation and settlements of litigation; operating interruptions; the ability to integrate the recent acquisitions; the diversion of management time on transaction-related issues; 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, 2021, which was filed with the SEC in February 2022.
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Use of Non-GAAP Financial Measures
This release makes reference to certain "non-GAAP" financial measures, such as EBITDA, 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, 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 EBITDA 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.
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. 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 first quarter 2022 results will be held Tuesday, May 3, 2022 at 11:00 AM Eastern Time (10:00 AM Central Time). To access the conference call, dial (855) 760-8160 or (704) 288-0624 for international callers, approximately 10 minutes prior to the scheduled start time and reference passcode 424 65 47.
A replay of the conference call will be available beginning two hours after its conclusion until 11:59 p.m. Eastern Time on May 10, 2022. To hear a replay, dial (855) 859-2056 or (404) 537-3406 for international callers. The replay passcode is 424 65 47.
The conference call will also be available via webcast at https://edge.media-server.com/mmc/p/5ytbsbdp and the earnings release can be obtained via the Company's website at: http://www.westlake.com/investor-relations.
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WESTLAKE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended March 31, | |||||
|---|---|---|---|---|---|
| 2022 | 2021 | ||||
| (In millions of dollars, except per share data and share amounts) | |||||
| Net sales | $ | 4,056 | $ | 2,357 | |
| Cost of sales | 2,771 | 1,848 | |||
| Gross profit | 1,285 | 509 | |||
| Selling, general and administrative expenses | 200 | 136 | |||
| Amortization of intangibles | 42 | 27 | |||
| Restructuring, transaction and integration-related costs | 11 | — | |||
| Income from operations | 1,032 | 346 | |||
| Interest expense | (46) | (33) | |||
| Other income, net | 11 | 12 | |||
| Income before income taxes | 997 | 325 | |||
| Provision for income taxes | 233 | 72 | |||
| Net income | 764 | 253 | |||
| Net income attributable to noncontrolling interests | 8 | 11 | |||
| Net income attributable to Westlake Corporation | $ | 756 | $ | 242 | |
| Earnings per common share attributable to Westlake Corporation: | |||||
| Basic | $ | 5.87 | $ | 1.88 | |
| Diluted | $ | 5.83 | $ | 1.87 | |
| Weighted average common shares outstanding: | |||||
| Basic | 128,071,355 | 127,955,532 | |||
| Diluted | 128,925,099 | 128,483,373 |
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WESTLAKE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| March 31,<br>2022 | December 31,<br>2021 | |||
|---|---|---|---|---|
| (In millions of dollars) | ||||
| ASSETS | ||||
| Current assets | ||||
| Cash and cash equivalents | $ | 1,055 | $ | 1,908 |
| Accounts receivable, net | 2,352 | 1,868 | ||
| Inventories | 1,884 | 1,407 | ||
| Prepaid expenses and other current assets | 114 | 80 | ||
| Total current assets | 5,405 | 5,263 | ||
| Property, plant and equipment, net | 8,276 | 7,606 | ||
| Other assets, net | 6,060 | 5,590 | ||
| Total assets | $ | 19,741 | $ | 18,459 |
| LIABILITIES AND EQUITY | ||||
| Current liabilities (accounts payable and accrued and other liabilities) | $ | 2,286 | $ | 2,075 |
| Current portion of long-term debt, net | 264 | 269 | ||
| Long-term debt, net | 4,902 | 4,911 | ||
| Other liabilities | 3,037 | 2,676 | ||
| Total liabilities | 10,489 | 9,931 | ||
| Total Westlake Corporation stockholders' equity | 8,681 | 7,955 | ||
| Noncontrolling interests | 571 | 573 | ||
| Total equity | 9,252 | 8,528 | ||
| Total liabilities and equity | $ | 19,741 | $ | 18,459 |
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WESTLAKE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended March 31, | ||||
|---|---|---|---|---|
| 2022 | 2021 | |||
| (In millions of dollars) | ||||
| Cash flows from operating activities | ||||
| Net income | $ | 764 | $ | 253 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||
| Depreciation and amortization | 257 | 195 | ||
| Deferred income taxes | 42 | 10 | ||
| Net loss on disposition and others | 15 | 15 | ||
| Other balance sheet changes | (378) | (208) | ||
| Net cash provided by operating activities | 700 | 265 | ||
| Cash flows from investing activities | ||||
| Acquisition of businesses, net of cash acquired | (1,154) | — | ||
| Additions to investments in unconsolidated subsidiaries | (96) | (7) | ||
| Additions to property, plant and equipment | (263) | (141) | ||
| Other, net | 6 | 13 | ||
| Net cash used for investing activities | (1,507) | (135) | ||
| Cash flows from financing activities | ||||
| Distributions to noncontrolling interests | (10) | (11) | ||
| Dividends paid | (39) | (35) | ||
| Proceeds from debt issuance | 5 | 4 | ||
| Repayment of short-term notes payable, net | (8) | — | ||
| Other, net | 5 | 8 | ||
| Net cash used for financing activities | (47) | (34) | ||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (3) | (3) | ||
| Net increase (decrease) in cash, cash equivalents and restricted cash | (857) | 93 | ||
| Cash, cash equivalents and restricted cash at beginning of period | 1,941 | 1,337 | ||
| Cash, cash equivalents and restricted cash at end of period | $ | 1,084 | $ | 1,430 |
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WESTLAKE CORPORATION
SEGMENT INFORMATION
(Unaudited)
| Three Months Ended March 31, | |||||
|---|---|---|---|---|---|
| 2022 | 2021 | ||||
| (In millions of dollars) | |||||
| Net external sales | |||||
| Performance and Essential Materials | |||||
| Performance materials | $ | 1,929 | $ | 1,204 | |
| Essential materials | 903 | 538 | |||
| Total performance and essential materials | 2,832 | 1,742 | |||
| Housing and Infrastructure Products | |||||
| Housing products | 972 | 443 | |||
| Infrastructure products | 252 | 172 | |||
| Total housing and infrastructure products | 1,224 | 615 | |||
| $ | 4,056 | $ | 2,357 | ||
| Income (loss) from operations | |||||
| Performance and Essential Materials | $ | 879 | $ | 288 | |
| Housing and Infrastructure Products | 185 | 71 | |||
| Corporate and other | (32) | (13) | |||
| $ | 1,032 | $ | 346 | ||
| Depreciation and amortization | |||||
| Performance and Essential Materials | $ | 184 | $ | 161 | |
| Housing and Infrastructure Products | 71 | 32 | |||
| Corporate and other | 2 | 2 | |||
| $ | 257 | $ | 195 | ||
| Other income, net | |||||
| Performance and Essential Materials | $ | 8 | $ | 9 | |
| Housing and Infrastructure Products | 2 | 2 | |||
| Corporate and other | 1 | 1 | |||
| $ | 11 | $ | 12 |
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WESTLAKE CORPORATION
RECONCILIATION OF EBITDA TO NET INCOME, INCOME FROM OPERATIONS AND
NET CASH PROVIDED BY OPERATING ACTIVITIES
(Unaudited)
| Three Months Ended December 31, | Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|---|
| 2021 | 2022 | 2021 | |||||
| (In millions of dollars) | |||||||
| Net cash provided by operating activities | $ | 757 | $ | 700 | $ | 265 | |
| Changes in operating assets and liabilities and other | (123) | 106 | (2) | ||||
| Deferred income taxes | 27 | (42) | (10) | ||||
| Net income | 661 | 764 | 253 | ||||
| Less: | |||||||
| Other income, net | 18 | 11 | 12 | ||||
| Interest expense | (46) | (46) | (33) | ||||
| Provision for income taxes | (184) | (233) | (72) | ||||
| Income from operations | 873 | 1,032 | 346 | ||||
| Add: | |||||||
| Depreciation and amortization | 240 | 257 | 195 | ||||
| Other income, net | 18 | 11 | 12 | ||||
| EBITDA | $ | 1,131 | $ | 1,300 | $ | 553 |
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WESTLAKE CORPORATION
RECONCILIATION OF SEGMENT EBITDA TO INCOME FROM OPERATIONS
(Unaudited)
| Three Months Ended December 31, | Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|---|
| 2021 | 2022 | 2021 | |||||
| (In millions of dollars) | |||||||
| Performance and Essential Materials Segment | |||||||
| Income from operations | $ | 821 | $ | 879 | $ | 288 | |
| Add: | |||||||
| Depreciation and amortization | 168 | 184 | 161 | ||||
| Other income, net | 8 | 8 | 9 | ||||
| EBITDA | $ | 997 | $ | 1,071 | $ | 458 | |
| Three Months Ended December 31, | Three Months Ended March 31, | ||||||
| --- | --- | --- | --- | --- | --- | ||
| 2021 | 2022 | 2021 | |||||
| (In millions of dollars) | |||||||
| Housing and Infrastructure Products Segment | |||||||
| Income from operations | $ | 86 | $ | 185 | $ | 71 | |
| Add: | |||||||
| Depreciation and amortization | 70 | 71 | 32 | ||||
| Other income, net | 6 | 2 | 2 | ||||
| EBITDA | $ | 162 | $ | 258 | $ | 105 |
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WESTLAKE CORPORATION
SUPPLEMENTAL INFORMATION
Product Sales Price and Volume Variance by Operating Segments
| First Quarter 2022 vs. First Quarter 2021 | First Quarter 2022 vs. Fourth Quarter 2021 | |||||||
|---|---|---|---|---|---|---|---|---|
| Average<br>Sales Price | Volume | Average<br>Sales Price | Volume | |||||
| Performance and Essential Materials | +43.8 | % | +18.8 | % | +3.8 | % | +11.3 | % |
| Housing and Infrastructure Products | +53.4 | % | +45.6 | % | +10.1 | % | +6.8 | % |
| Company | +46.3 | % | +25.8 | % | +5.6 | % | +10.0 | % |
Average Quarterly Industry Prices and Housing Starts Data
| Quarter Ended | |||||
|---|---|---|---|---|---|
| March 31,<br>2021 | June 30,<br>2021 | September 30,<br>2021 | December 31,<br>2021 | March 31,<br>2022 | |
| Average domestic prices (1) | |||||
| Natural gas ($/MMBtu) (2) | 2.8 | 2.9 | 4.0 | 5.8 | 4.8 |
| Ethane (cents/lb) (3) | 8.1 | 8.7 | 11.7 | 13.2 | 13.5 |
| Propane (cents/lb) (4) | 21.2 | 20.7 | 27.6 | 29.5 | 30.7 |
| Ethylene (cents/lb) (5) | 45.1 | 43.0 | 48.0 | 35.4 | 37.6 |
| Polyethylene (cents/lb) (6) | 78.0 | 99.0 | 109.0 | 92.0 | 79.3 |
| Styrene (cents/lb) (7) | 76.5 | 90.5 | 82.0 | 84.8 | 91.3 |
| Caustic soda ($/short ton) (8) | 648 | 755 | 825 | 920 | 972 |
| Chlorine ($/short ton) (9) | 234 | 309 | 443 | 563 | 680 |
| PVC (cents/lb) (10) | 92.8 | 105.0 | 109.0 | 114.3 | 113.3 |
| Average export prices (1) | |||||
| Polyethylene (cents/lb) (11) | 76.3 | 89.7 | 86.0 | 72.7 | 69.6 |
| Caustic soda ($/short ton) (12) | 249 | 333 | 364 | 573 | 617 |
| PVC (cents/lb) (13) | 67.8 | 77.8 | 74.1 | 90.0 | 72.6 |
| Housing Starts (in thousands of units) | |||||
| Housing Starts - Actual quarterly starts (14) | 358 | 435 | 419 | 389 | 395 |
| Housing Starts - Seasonally Adjusted Annual Rate (15) | 1,599 | 1,588 | 1,562 | 1,670 | 1,753 |
________________
(1)Industry pricing data was obtained through IHS Markit ("IHS"). We have not independently verified the data.
(2)Average Burner Tip contract prices of natural gas over the period.
(3)Average Mont Belvieu spot prices of purity ethane over the period.
(4)Average Mont Belvieu spot prices of non-TET propane over the period.
(5)Average North American spot prices of ethylene over the period.
(6)Average North American Net Transaction prices of polyethylene low density GP-Film grade over the period.
(7)Average North American contract prices of styrene over the period.
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(8)Average USGC-CSLi index values for caustic soda over the period. As stated by IHS, "the caustic soda price listing represents the USGC-CSLi values. USGC-CSLi does not reflect contract price discounts, implementation lags, caps or other adjustments factors. Additionally, it is not intended to represent a simple arithmetic average of all market transactions occurring during the month. Rather, the USGC-CSLi is most representative of the month-to-month caustic soda price movement for contract volumes of liquid 50% caustic soda rather than the absolute value of contract prices at a particular point in time. It is intended to serve only as a benchmark."
(9)Average North American contract prices of chlorine over the period.
(10)Average North American contract prices of pipe grade polyvinyl chloride ("PVC") over the period. As stated by IHS, "the contract resin prices posted reflect an "index" or "market" for prices before discounts, rebates, incentives, etc."
(11)Average North American export price for low density polyethylene GP-Film grade over the period.
(12)Average North American low spot export prices of caustic soda over the period.
(13)Average North American spot export prices of PVC over the period.
(14)Quarterly Single and Multi-family Starts data per the U.S. Census Bureau - April 19, 2022 report.
(15)Quarterly Average Single and Multi-family Seasonally Adjusted Annual Rate data per the U.S. Census Bureau - April 19, 2022 report.
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ex992_20220331wlkearning
Q1 2022 Earnings Presentation EXHIBIT 99.2
2 Westlake Delivers Record Quarter Record results in 1Q 2022 Record quarterly net sales of $4.1 billion, an increase of 72% vs. first quarter 2021 net sales Record quarterly net income of $756 million, an increase of 212% vs. first quarter 2021 net income Record quarterly EBITDA of $1.3 billion, an increase of 135% vs. first quarter 2021 EBITDA Expanded specialty product focused portfolio with acquisition of Hexion's global epoxy business Established 2030 sustainability goal to reduce CO2 intensity of operations by 20%¹ Business Highlights 1) Baseline of 2016
3 Market leading position in Housing & Infrastructure Products (HIP) driving growth from high-valued, strong brand name product offerings with attractive secular growth Well positioned to execute on a portfolio of opportunities across both segments by leveraging a proven system of operational excellence and value creative capital allocation Westlake is a Compelling Investment Opportunity Leveraging a Strong History of Success Across a Dynamic Portfolio of Opportunities Strong and experienced leadership with a proven track record of operating excellence, asset allocation, and successful acquisitions and integrations all driving long-term value creation Accelerating profitable growth in Performance & Essential Materials (PEM) by leveraging our globally advantaged low-cost position with a market leading specialized product orientation in attractive end-markets 1 2 3 4 Disciplined investment culture and a strong balance sheet provide the ability to weather economic cycles and generate strategic bottom line growth 5
4 Westlake Corporation Performance First Quarter 2022 (1) Reconciliations of EBITDA, Housing and Infrastructure Products EBITDA, Performance and Essential Materials EBITDA and Corporate EBITDA to the applicable GAAP measures can be found on pages 13 and 14 + Strong market conditions attributable to a robust demand environment + Favorable market pricing offset inflationary cost pressure + Westlake’s leading market positions, low cost raw materials and vertical integration captures strong margins across the integrated value chain A Record Quarter for Westlake ($ in millions) 1Q 2022 4Q 2021 1Q 2022 vs. 4Q 2021 1Q 2021 1Q 2022 vs. 1Q 2021 Sales $4,056 $3,507 16% $2,357 72% Operating Income $1,032 $873 18% $346 198% Housing and Infrastructure Products EBITDA $258 $162 59% $105 146% Performance and Essential Materials EBITDA $1,071 $997 7% $458 134% Corporate EBITDA ($29) ($28) - ($10) - EBITDA¹ $1,300 $1,131 15% $553 135% Westlake delivers differentiated, specialty and branded products and solutions
5 Advancing Sustainability To further reduce our carbon footprint, we are allocating capital to both proven and emerging technologies, including additional product and operational innovations • We are expanding our portfolio of sustainable products and prioritizing implementation of additional environmentally friendly innovation by incorporating recycled and bio-derived materials while maintaining product quality: Light Weighting Pipe Composites – Renewable EnergyOne Pellet Solution • Low-Carbon PVC and Caustic Soda – meets market demand for lower-carbon plastics and materials • One Pellet Solution – an efficient polyethylene solution incorporating post consumer resin (PCR) while maintaining the strength of plastic materials • Dimex – one of the largest processors of recycled plastic materials in the United States and the leading supplier of recycled flexible PVC and TPE compounds; includes products such as the MotionTex exercise equipment mat • Aspire Vinyl – a bio-based solution for building materials; the first phthalate-free bio-based compound with more than 35% renewable content • Epoxy – given its lightweight properties, epoxy is used in coatings and composites to fabricate wind turbine blades and light-weight aerospace and automotive components • Molecular-Oriented PVC (PVC-O) Pipe – engineering solution for lighter-weight, more durable PVC pipe that is manufactured with a lower-carbon footprint than any other water main pipe materials; used in housing and infrastructure
6 Segment Update
7 Housing and Infrastructure Products (“HIP”) Segment Performance (1) Reconciliations of HIP EBITDA to the applicable GAAP measure can be found on page 14 + Strong repair and remodeling activity and new residential construction in North America + Residential housing construction has driven demand for our higher-margin offerings in building products, pipe and fittings as well as wire and cable compound products HIP Segment 1Q 2022 vs. 4Q 2021 Average Sales Price Volume +10.1% +6.8% HIP Segment 1Q 2022 vs. 1Q 2021 Average Sales Price Volume +53.4% +45.6% ($ in millions) 1Q 2022 4Q 2021 1Q 2022 vs. 4Q 2021 1Q 2021 1Q 2022 vs. 1Q 2021 Housing Products Sales $972 $843 15% $443 119% Infrastructure Products Sales $252 $204 24% $172 47% Total HIP Sales $1,224 $1,047 17% $615 99% Operating Income $185 $86 115% $71 161% EBITDA $258 $162 59% $105 146% EBITDA Margin 21% 15% - 17% -
8 Home buyer demand fundamentals are being driven by home upsizing, historic under building, favorable demographics and more people working from home offsetting headwinds of rising mortgage interest rates U.S. census data reports new housing starts continuing at elevated levels, reflecting strong demand for single and multi-family housing construction New housing starts remain elevated and the leading indicators for construction activity are forecasting sustained growth over the next several of years Infrastructure Investment and Jobs Act should provide further demand strength as states and municipalities begin to develop and start construction of projects to address our nations long neglected infrastructure needs Housing and Infrastructure Products Update 1 2 3 4
9 Performance and Essential Materials (“PEM”) Segment Performance + Solid demand for PVC anchored by robust economic activity in end-use markets including construction and home remodeling + Polyethylene benefitted from the continuing strong demand in industrial and consumer packaging markets + Caustic soda saw pricing gains as global manufacturing activities improved driving demand + New epoxy business contributed to our earnings with higher sales prices and strong sales volumes (1) Reconciliations of PEM EBITDA to the applicable GAAP measure can be found on page 14 PEM Segment 1Q 2022 vs. 4Q 2021 Average Sales Price Volume +3.8% +11.3% PEM Segment 1Q 2022 vs. 1Q 2021 Average Sales Price Volume +43.8% +18.8% ($ in millions) 1Q 2022 4Q 2021 1Q 2022 vs. 4Q 2021 1Q 2021 1Q 2022 vs. 1Q 2021 Performance Materials Sales $1,929 $1,664 16% $1,204 60% Essential Materials Sales $903 $796 13% $538 68% Total PEM Sales $2,832 $2,460 15% $1,742 63% Operating Income $879 $821 7% $288 205% EBITDA $1,071 $997 7% $458 134% EBITDA Margin 38% 41% - 26% -
10 Population growth and urbanization in global economies drive performance product demand in housing, medical and automotive applications Value-added specialty polyethylene portfolio combined with our globally advantaged cost position in North America drives higher margin and more resilient profitability Epoxy extends Westlake’s end-market exposure to higher growth sustainability- oriented markets such as wind energy as well as automotive and aerospace light weighting Well positioned to benefit from secular demand driven by increasing product requirements for formulated, differentiated and specialty products in housing, packaging, wind energy, aerospace and automotive Performance and Essential Materials Update 1 2 3 4
11 Financial Reconciliations
12 Consolidated Statements of Operations Three months ended December 31, Three months ended March 31, 2021 2022 2021 (In millions of dollars, except per share data) Housing and Infrastructure Products Sales $ 1,047 $ 1,224 $ 615 Performance and Essential Materials Sales 2,460 2,832 1,742 Net sales 3,507 4,056 2,357 Cost of sales 2,411 2,771 1,848 Gross profit 1,096 1,285 509 Selling, general and administrative expenses 168 200 136 Amortization of intangibles 40 42 27 Restructuring, transaction and integration-related costs 15 11 — Income from operations 873 1,032 346 Interest expense (46) (46) (33) Other income, net 18 11 12 Income before income taxes 845 997 325 Provision for income taxes 184 233 72 Net income 661 764 253 Net income attributable to noncontrolling interests 17 8 11 Net income attributable to Westlake Corporation $ 644 $ 756 $ 242 Earnings per common share attributable to Westlake Corporation: Basic $ 5.01 $ 5.87 $ 1.88 Diluted $ 4.98 $ 5.83 $ 1.87
13 Reconciliation of EBITDA to Net Income, Income from Operations and Net Cash Provided by Operating Activities Three months ended December 31, Three months ended March 31, 2021 2022 2021 (In millions of dollars) Net cash provided by operating activities $ 757 $ 700 $ 265 Changes in operating assets and liabilities and other (123) 106 (2) Deferred income taxes 27 (42) (10) Net income 661 764 253 Less: Other income, net 18 11 12 Interest expense (46) (46) (33) Benefit from (provision for) income taxes (184) (233) (72) Income from operations 873 1,032 346 Add: Depreciation and amortization 240 257 195 Other income, net 18 11 12 EBITDA $ 1,131 $ 1,300 $ 553
14 Reconciliation of HIP, PEM and Corporate EBITDA to Applicable Operating Income (Loss) Three months ended December 31, Three months ended March 31, 2021 2022 2021 (In millions of dollars) Housing and Infrastructure Products EBITDA $ 162 $ 258 $ 105 Less: Depreciation and Amortization 70 71 32 Other Income (Expenses) 6 2 2 Housing and Infrastructure Products Operating Income (Loss) 86 185 71 Performance and Essential Materials EBITDA 997 1,071 458 Less: Depreciation and Amortization 168 184 161 Other Income (Expenses) 8 8 9 Performance and Essential Materials Operating Income (Loss) 821 879 288 Corporate EBITDA (28) (29) (10) Less: Depreciation and Amortization 2 2 2 Other Income (Expenses) 4 1 1 Corporate Operating Income (Loss) (34) (32) (13) Housing and Infrastructure Products Operating Income (Loss) 86 185 71 Performance and Essential Materials Operating Income (Loss) 821 879 288 Corporate Operating Income (Loss) (34) (32) (13) Total Operating Income (Loss) $ 873 $ 1,032 $ 346
15 Quarterly Industry Data
16 Average Quarterly Industry Prices and Housing Starts Data March 31, 2021 June 30, 2021 September 30, 2021 December 31, 2021 March 31, 2022 Average domestic prices (1) Natural gas ($/MMBtu) (2) 2.8 2.9 4.0 5.8 4.8 Ethane (cents/lb) (3) 8.1 8.7 11.7 13.2 13.5 Propane (cents/lb) (4) 21.2 20.7 27.6 29.5 30.7 Ethylene (cents/lb) (5) 45.1 43.0 48.0 35.4 37.6 Polyethylene (cents/lb) (6) 78.0 99.0 109.0 92.0 79.3 Styrene (cents/lb) (7) 76.5 90.5 82.0 84.8 91.3 Caustic soda ($/short ton) (8) 648 755 825 920 972 Chlorine ($/short ton) (9) 234 309 443 563 680 PVC (cents/lb) (10) 92.8 105.0 109.0 114.3 113.3 Average export prices (1) Polyethylene (cents/lb) (11) 76.3 89.7 86.0 72.7 69.6 Caustic soda ($/short ton) (12) 249 333 364 573 617 PVC (cents/lb) (13) 67.8 77.8 74.1 90.0 72.6 Housing Starts (in thousands of units) Housing Starts - Actual quarterly starts (14) 358 435 419 389 395 Housing Starts - Seasonally Adjusted Annual Rate (15) 1,599 1,588 1,562 1,670 1,753 1) Industry pricing data was obtained through IHS Markit ("IHS"). We have not independently verified the data. 2) Average Burner Tip contract prices of natural gas over the period. 3) Average Mont Belvieu spot prices of purity ethane over the period. 4) Average Mont Belvieu spot prices of non-TET propane over the period. 5) Average North American spot prices of ethylene over the period. 6) Average North American Net Transaction prices of polyethylene low density GP-Film grade over the period. 7) Average North American contract prices of styrene over the period. 8) Average USGC-CSLi index values for caustic soda over the period. As stated by IHS, "the caustic soda price listing represents the USGC-CSLi values. USGC-CSLi does not reflect contract price discounts, implementation lags, caps or other adjustments factors. Additionally, it is not intended to represent a simple arithmetic average of all market transactions occurring during the month. Rather, the USGC-CSLi is most representative of the month-to-month caustic soda price movement for contract volumes of liquid 50% caustic soda rather than the absolute value of contract prices at a particular point in time. It is intended to serve only as a benchmark." 9) Average North American contract prices of chlorine over the period. 10) Average North American contract prices of pipe grade polyvinyl chloride ("PVC") over the period. As stated by IHS, "the contract resin prices posted reflect an "index" or "market" for prices before discounts, rebates, incentives, etc." 11) Average North American export price for low density polyethylene GP-Film grade over the period. 12) Average North American low spot export prices of caustic soda over the period. 13) Average North American spot export prices of PVC over the period. 14) Quarterly Single and Multi-family Starts data per the U.S. Census Bureau - April 19, 2022 report. 15) Quarterly Average Single and Multi-family Seasonally Adjusted Annual Rate data per the U.S. Census Bureau - April 19, 2022 report.
17 Safe Harbor Language This presentation contains certain forward-looking statements including statements regarding creating value for our shareholders, pricing and demand for our products, continued recovery in key end markets, industry outlook for both of our segments, our cost control and efficiency efforts, our ability to deliver end-use building products to consumers, our ability to capture integrated chain margin, our development of additional green products in the future, our sustainability goals and commitments and our reduction in carbon impact. Actual results may differ materially depending on factors, including, but not limited to, the following: the effects of our recently completed acquisitions, including our future financial condition, results of operations, strategy and plans; and expected synergies and other benefits from the acquisitions and our ability to realize such synergies and other benefits; 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; uncertainties associated with the United States, European and worldwide economies, including those due to political tensions and unrest in the Middle East and elsewhere including the conflict between Russia and Ukraine; uncertainties associated with pandemic infectious diseases, particularly COVID-19; current and potential governmental regulatory actions in the United States and other countries; industry production capacity and operating rates; the supply/demand balance for our products; competitive products and pricing pressures; instability in the credit and financial markets; access to capital markets; terrorist acts; operating interruptions (including leaks, explosions, fires, weather-related incidents, mechanical failure, unscheduled downtime, labor difficulties, transportation interruptions, spills and releases and other environmental risks); changes in laws or regulations, including trade policies; technological developments; information systems failures and cyber attacks; foreign currency exchange risks; our ability to implement our business strategies; creditworthiness of our customers; and other factors described in our reports filed with the Securities and Exchange Commission. Many of these factors are beyond our ability to control or predict. Any of these factors, or a combination of these factors, could materially affect our future results of operations and the ultimate accuracy of the forward-looking statements. These forward-looking statements are not guarantees of our future performance, and our actual results and future developments may differ materially from those projected in the forward-looking statements. Management cautions against putting undue reliance on forward-looking statements. Every forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements. Investor Relations Contacts Westlake Corporation 2801 Post Oak Boulevard, Suite 600 Houston, Texas 77056 713-960-9111 Steve Bender Executive Vice President & Chief Financial Officer Jeff Holy Vice President & Treasurer
