- Record first quarter Housing and Infrastructure Products (HIP)
income from operations of $210 million with a 20% operating income
margin
- HIP EBITDA of $264 million rose 29% year-over-year with a
record first quarter EBITDA margin of 25%
- PEM sales volume grew 3% sequentially from gradual demand
recovery with stable average sales prices
Westlake Corporation (NYSE: WLK) (the "Company" or "Westlake")
today announced first quarter 2024 results.
SUMMARY FINANCIAL
HIGHLIGHTS (in millions of dollars, except per share data and
percentages)
Three Months Ended March 31,
2024
Three Months Ended December
31, 2023
Three Months Ended March 31,
2023
Westlake Corporation
Net sales
$
2,975
$
2,826
$
3,356
Income (loss) from operations
$
223
$
(552
)
$
536
Net income (loss) attributable to Westlake
Corporation
$
174
$
(497
)
$
394
Diluted earnings (loss) per common
share
$
1.34
$
(3.86
)
$
3.05
EBITDA
$
546
$
(235
)
$
825
Identified Items (1)
$
—
$
625
$
—
EBITDA excl. Identified Items
$
546
$
390
$
825
EBITDA margin (2)
18%
14%
25%
Performance and Essential Materials
("PEM") Segment
Net sales
$
1,931
$
1,880
$
2,349
Income (loss) from operations
$
22
$
(664
)
$
403
EBITDA
$
253
$
(424
)
$
615
Identified Items (1)
$
—
$
625
$
—
EBITDA excl. Identified Items
$
253
$
201
$
615
EBITDA margin (2)
13%
11%
26%
Housing and Infrastructure Products
("HIP") Segment
Net sales
$
1,044
$
946
$
1,007
Income from operations
$
210
$
121
$
143
EBITDA
$
264
$
173
$
205
EBITDA margin
25%
18%
20%
_______________
(1)
"Identified Items" include a $475 million
non-cash impairment charge and a $150 million charge to fully
resolve certain liability claims
(2)
Excludes Identified Items
BUSINESS HIGHLIGHTS
In the first quarter of 2024, Westlake achieved net sales of
$3.0 billion, net income of $174 million and EBITDA (earnings
before interest expense, income taxes, depreciation and
amortization) of $546 million. The Company benefitted from
continued strong demand in housing end markets, particularly for
pipe & fittings and siding & trim, that drove record first
quarter EBITDA in our HIP segment, while results in our PEM segment
reflected continued weak global industrial and manufacturing
activity.
Sales volume for Housing and Infrastructure Products in the
first quarter increased 12% from the fourth quarter of 2023 while
Performance and Essential Materials sales volume increased 3%
quarter-over-quarter. Overall sales volume for the Company
increased 6% sequentially from the previous quarter.
Housing and Infrastructure Products first quarter average sales
price decreased 2% from the fourth quarter of 2023 while
Performance and Essential Materials average sales price decreased
less than 1% quarter-over-quarter. Overall average sales price for
the Company decreased 1% sequentially from the previous
quarter.
In the first quarter of 2024, HIP's EBITDA margin increased to
25% from 18% in the fourth quarter of 2023, while PEM's EBITDA
margin increased to 13% from 11%, excluding Identified Items, over
the same period of time.
EXECUTIVE COMMENTARY
"Our first quarter of 2024 results demonstrated the value of the
diversity of the businesses in our portfolio as sales volume growth
and margin expansion in our HIP segment supported our overall
earnings at a time when pricing and margins in our PEM segment
remain challenged by weak global demand. HIP sales volume grew a
solid 12% sequentially as our leading positions in key channels
enabled us to capitalize on resilient North American residential
construction and infrastructure activity. The solid sales volume
growth, combined with cost savings initiatives, enabled HIP EBITDA
margin to expand to a first-quarter record of 25% from 18% in the
fourth quarter of 2023," said Albert Chao, President and Chief
Executive Officer.
"PEM segment sales volume improved 3% sequentially with most
product categories growing due to favorable seasonality and modest
improvement in end market demand. Average sales price, while
relatively stable sequentially, remained depressed by continued
weak global industrial and manufacturing activity and low-priced
Asian imports," continued Mr. Chao.
"Looking ahead, we expect the growth in our HIP segment to
continue despite elevated inflation and interest rates, as the
supply of houses remains limited and the demographics supporting
housing demand remain favorable. In our PEM segment, we expect
relatively stable near-term performance as growth is constrained by
continuing weak end market demand and low-priced Asian imports in
some product categories and geographies. While we await an
improvement in macroeconomic conditions, we are progressing with
our efforts to improve the profitability of our European operations
through structural cost improvement and we continue to make
investments to improve the reliability and efficiency of our
plants," concluded Mr. Chao.
RESULTS
Consolidated Results
(Unless otherwise noted the financial numbers below exclude the
Identified Items)
For the three months ended March 31, 2024, the Company reported
quarterly net income of $174 million, or $1.34 per share, on net
sales of $3.0 billion. The year-over-year decrease in net income of
$220 million was primarily due to lower average sales price and
margins in our PEM segment, which were partially offset by lower
material costs and higher margins in our HIP segment.
First quarter 2024 net income of $174 million increased by $81
million as compared to the fourth quarter of 2023. The sequential
increase in net income compared to the prior quarter was primarily
due to higher sales volume, driven by seasonal demand improvement
and strong demand for both Housing Products and Infrastructure
Products.
EBITDA of $546 million for the first quarter of 2024 decreased
by $279 million compared to first quarter 2023 EBITDA of $825
million. First quarter 2024 EBITDA increased by $156 million
compared to fourth quarter 2023 EBITDA of $390 million.
A reconciliation of EBITDA to net income, income from operations
(including and excluding Identified Items) and net cash provided by
operating activities can be found in the financial schedules at the
end of this press release.
Cash and Debt
Net cash provided by operating activities was $169 million for
the first quarter of 2024 and capital expenditures were $272
million. As of March 31, 2024, cash and cash equivalents were $3.1
billion and total debt was $4.9 billion.
Performance and Essential Materials Segment
(Unless otherwise noted the financial numbers below exclude the
Identified Items)
For the first quarter of 2024, Performance and Essential
Materials income from operations was $22 million as compared to
$403 million in the first quarter of 2023. This year-over-year
decrease of $381 million was due to lower average sales price for
most of the Company's major products, particularly caustic soda and
epoxy resin. The lower average sales price in the first quarter of
2024 was partially offset by higher sales volume in the
quarter.
Sequentially, Performance and Essential Materials income from
operations increased by $61 million as compared to the fourth
quarter of 2023. This increase in income from operations versus the
prior quarter was primarily driven by higher sales volume,
particularly for epoxy resin and PVC resin. Average sales price
declined by less than 1% sequentially as increases in epoxy resin
and olefins nearly offset decreases in chlorovinyls.
Housing and Infrastructure Products Segment
For the first quarter of 2024, Housing and Infrastructure
Products income from operations of $210 million increased by $67
million as compared to the first quarter of 2023. The
year-over-year increase was the result of higher sales volume,
particularly for pipe and fittings, and lower material costs.
Sequentially, Housing and Infrastructure Products income from
operations increased by $89 million as compared to the fourth
quarter of 2023. This increase in income from operations versus the
prior quarter was primarily due to higher sales volume and
approximately $15 million lower plant closure costs associated with
our footprint optimization program.
UPCOMING HOUSING & INFRASTRUCTURE
PRODUCTS-FOCUSED INVESTOR EVENT
Westlake will host an investor event focused on its Housing
& Infrastructure Products businesses on Thursday, June 13,
2024, from 9:00 a.m. to 1:00 p.m. Eastern Time. During the event,
Albert Chao, President and Chief Executive Officer; Steve Bender,
Executive Vice President and Chief Financial Officer; Robert
Buesinger, Executive Vice President – Housing & Infrastructure
Products, IT & Digital; and the leaders of Westlake Royal
Building Products, Westlake Pipe & Fittings, and Westlake
Global Compounds, will present an in-depth review of the Company's
HIP segment and its financials. The event will cover Westlake's
integrated and expanded business portfolio, including the breadth
of diversified and market-leading products and solutions produced
by the HIP businesses, which serve the home building and
construction markets, municipal water and sewer infrastructure, and
automotive and healthcare industries.
The event will take place in New York City, and information on
registering for in-person attendance will be provided in the coming
days.
A live webcast will be accessible on
https://www.westlake.com/investor-relations at the time of the
event. For those who are unable to attend in-person or watch the
live webcast, a replay of the webcast will be available on the
Investor Relations website.
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, consumer spending in the U.S., global
macroeconomic conditions, continuing stabilization or increases in
sales prices and volumes in both domestic and export markets for
most of our products, industrial, manufacturing, residential
construction and infrastructure activity in our target markets,
trends in labor markets and interest rates, our ability to weather
economic volatility, raw material costs, higher energy prices, the
continuation of low-priced exports out of Asia, our market
position, our ability to improve reliability and efficiency of our
plants, further commercialization of new product innovations, our
cost savings initiatives, global demand for our products, and our
ability to deliver greater value to customers and investors as
general economic conditions improve 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; 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; 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.
Use of Non-GAAP Financial Measures
This release makes reference to certain "non-GAAP" financial
measures, such as EBITDA, free cash flow and other measures that
exclude the effects of the Identified Items, 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, free cash flow and
measures that exclude the effects of the Identified Items, 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, (ii)
free cash flow to net cash provided by operating activities, and
(iii) other measures reflecting adjustments for the effects of the
Identified Items 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 first
quarter 2024 results will be held Wednesday, May 1, 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/BI6dd9f6d378244f26a329eb8dfb3d39ae.
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/b4szy7np.
WESTLAKE CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months Ended March
31,
2024
2023
(in millions of dollars,
except per share data and share amounts)
Net sales
$
2,975
$
3,356
Cost of sales
2,509
2,564
Gross profit
466
792
Selling, general and administrative
expenses
209
222
Amortization of intangibles
30
31
Restructuring, transaction and
integration-related costs
4
3
Income from operations
223
536
Interest expense
(40
)
(42
)
Other income, net
50
22
Income before income taxes
233
516
Provision for income taxes
48
109
Net income
185
407
Net income attributable to noncontrolling
interests
11
13
Net income attributable to Westlake
Corporation
$
174
$
394
Earnings per common share attributable to
Westlake Corporation:
Basic
$
1.35
$
3.07
Diluted
$
1.34
$
3.05
Weighted average common shares
outstanding:
Basic
128,359,983
127,548,287
Diluted
129,020,370
128,459,368
WESTLAKE CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
March 31, 2024
December 31,
2023
(in millions of
dollars)
ASSETS
Current assets
Cash and cash equivalents
$
3,108
$
3,304
Accounts receivable, net
1,691
1,601
Inventories
1,661
1,622
Prepaid expenses and other current
assets
66
82
Total current assets
6,526
6,609
Property, plant and equipment, net
8,523
8,519
Other assets, net
5,911
5,907
Total assets
$
20,960
$
21,035
LIABILITIES AND EQUITY
Current liabilities (accounts payable and
accrued and other liabilities)
$
2,355
$
2,491
Current portion of long-term debt, net
300
299
Long-term debt, net
4,590
4,607
Other liabilities
2,862
2,874
Total liabilities
10,107
10,271
Total Westlake Corporation stockholders'
equity
10,331
10,241
Noncontrolling interests
522
523
Total equity
10,853
10,764
Total liabilities and equity
$
20,960
$
21,035
WESTLAKE CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March
31,
2024
2023
(in millions of
dollars)
Cash flows from operating
activities
Net income
$
185
$
407
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
273
267
Deferred income taxes
(22
)
(16
)
Net loss on disposition and others
11
11
Other balance sheet changes
(278
)
(157
)
Net cash provided by operating
activities
169
512
Cash flows from investing
activities
Additions to investments in unconsolidated
subsidiaries
(1
)
(1
)
Additions to property, plant and
equipment
(272
)
(267
)
Other, net
1
5
Net cash used for investing activities
(272
)
(263
)
Cash flows from financing
activities
Distributions to noncontrolling
interests
(10
)
(10
)
Dividends paid
(65
)
(47
)
Proceeds from exercise of stock
options
7
5
Repurchase of common stock for
treasury
—
(22
)
Other, net
(6
)
(1
)
Net cash used for financing activities
(74
)
(75
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(18
)
9
Net increase (decrease) in cash, cash
equivalents and restricted cash
(195
)
183
Cash, cash equivalents and restricted cash
at beginning of period
3,319
2,246
Cash, cash equivalents and restricted cash
at end of period
$
3,124
$
2,429
WESTLAKE CORPORATION
SEGMENT INFORMATION
(Unaudited)
Three Months Ended March
31,
2024
2023
(in millions of
dollars)
Net external sales
Performance and Essential Materials
Performance Materials
$
1,164
$
1,282
Essential Materials
767
1,067
Total Performance and Essential
Materials
1,931
2,349
Housing and Infrastructure Products
Housing Products
879
818
Infrastructure Products
165
189
Total Housing and Infrastructure
Products
1,044
1,007
$
2,975
$
3,356
Income (loss) from operations
Performance and Essential Materials
$
22
$
403
Housing and Infrastructure Products
210
143
Corporate and other
(9
)
(10
)
$
223
$
536
Depreciation and amortization
Performance and Essential Materials
$
220
$
210
Housing and Infrastructure Products
50
55
Corporate and other
3
2
$
273
$
267
Other income, net
Performance and Essential Materials
$
11
$
2
Housing and Infrastructure Products
4
7
Corporate and other
35
13
$
50
$
22
WESTLAKE CORPORATION
RECONCILIATION OF EBITDA TO
NET INCOME AND INCOME FROM OPERATIONS AND
NET CASH PROVIDED BY OPERATING
ACTIVITIES (INCLUDING AND EXCLUDING IDENTIFIED ITEMS)
(Unaudited)
Three Months Ended December
31,
Three Months Ended March
31,
2023
2024
2023
(in millions of dollars,
except percentages)
Net cash provided by operating
activities
$
573
$
169
$
512
Changes in operating assets and
liabilities and other
(1,168
)
(6
)
(121
)
Deferred income taxes
108
22
16
Net income (loss)
(487
)
185
407
Add:
Impairment charge
475
0
0
Litigation settlement charge,
after-tax
115
0
0
Net income excl. Identified
Items
$
103
$
185
$
407
Net income (loss)
(487
)
185
407
Less:
Other income, net
35
50
22
Interest expense
(41
)
(40
)
(42
)
Benefit from (provision for) income
taxes
71
(48
)
(109
)
Income (loss) from operations
(552
)
223
536
Add:
Impairment charge
475
0
0
Litigation settlement charge, pre-tax
150
0
0
Income from operations excl. Identified
Items
73
223
536
Add:
Depreciation and amortization
282
273
267
Other income, net
35
50
22
EBITDA excl. Identified Items
390
546
825
Less:
Impairment charge
475
0
0
Litigation settlement charge, pre-tax
150
0
0
EBITDA
$
(235
)
$
546
$
825
Net external sales
$
2,826
$
2,975
$
3,356
Operating income (loss) margin
(20)%
7%
16%
Operating income margin excl.
Identified Items
3%
7%
16%
EBITDA Margin
(8)%
18%
25%
EBITDA margin excl. Identified
Items
14%
18%
25%
WESTLAKE CORPORATION
RECONCILIATION OF DILUTED
EARNINGS PER COMMON SHARE TO DILUTED EARNINGS PER COMMON SHARE
EXCLUDING IDENTIFIED ITEMS
(Unaudited)
Three Months Ended December
31,
Three Months Ended March
31,
2023
2024
2023
(per share data)
Diluted earnings (loss) per common
share attributable to Westlake Corporation
$
(3.86
)
$
1.34
$
3.05
Add:
Impairment charge
3.69
—
—
Litigation settlement charge
0.89
—
—
Diluted earnings per common share
attributable to Westlake Corporation excl. Identified Items
$
0.72
$
1.34
$
3.05
WESTLAKE CORPORATION
RECONCILIATION OF FREE CASH
FLOW TO NET CASH PROVIDED BY OPERATING ACTIVITIES
(Unaudited)
Three Months Ended
December 31,
Three Months Ended March
31,
2023
2024
2023
(in millions of
dollars)
Net cash provided by operating
activities
$
573
$
169
$
512
Less:
Additions to property, plant and
equipment
282
272
267
Free cash flow
$
291
$
(103
)
$
245
WESTLAKE CORPORATION
RECONCILIATION OF PEM SEGMENT
EBITDA TO INCOME FROM OPERATIONS (INCLUDING AND EXCLUDING
IDENTIFIED ITEMS)
(Unaudited)
Three Months Ended December
31,
Three Months Ended March
31,
2023
2024
2023
(in millions of dollars,
except percentages)
Performance and Essential Materials
Segment
Income (loss) from operations
$
(664
)
$
22
$
403
Add:
Impairment charge
475
—
—
Litigation settlement charge
150
—
—
Income (loss) from operations excl.
Identified Items
(39
)
22
403
Add:
Depreciation and amortization
229
220
210
Other income, net
11
11
2
EBITDA excl. Identified Items
201
253
615
Less:
Impairment charge
475
—
—
Litigation settlement charge
150
—
—
EBITDA
$
(424
)
$
253
$
615
Net external sales
$
1,880
$
1,931
$
2,349
Operating income (loss) margin
(35)%
1%
17%
Operating income (loss) margin excl.
Identified Items
(2)%
1%
17%
EBITDA Margin
(23)%
13%
26%
EBITDA margin excl. Identified
Items
11%
13%
26%
WESTLAKE CORPORATION
RECONCILIATION OF HIP SEGMENT
EBITDA TO INCOME FROM OPERATIONS
(Unaudited)
Three Months Ended December
31,
Three Months Ended March
31,
2023
2024
2023
(in millions of dollars,
except percentages)
Housing and Infrastructure Products
Segment
Income from operations
$
121
$
210
$
143
Add:
Depreciation and amortization
50
50
55
Other income, net
2
4
7
EBITDA
$
173
$
264
$
205
Net external sales
$
946
$
1,044
$
1,007
Operating Income Margin
13%
20%
14%
EBITDA Margin
18%
25%
20%
WESTLAKE CORPORATION
SUPPLEMENTAL
INFORMATION
PRODUCT SALES PRICE AND VOLUME
VARIANCE BY OPERATING SEGMENTS
(Unaudited)
First Quarter 2024 vs. First
Quarter 2023
First Quarter 2024 vs. Fourth
Quarter 2023
Average Sales
Price
Volume
Average Sales
Price
Volume
Performance and Essential Materials
-23%
+5%
-1%
+3%
Housing and Infrastructure Products
-10%
+14%
-2%
+12%
Company
-19%
+8%
-1%
+6%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240501372599/en/
Contact—(713) 960-9111 Investors—Steve Bender Media—L. Benjamin
Ederington
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