- Record Housing and Infrastructure Products (HIP) segment income
from operations of $266 million
- Record HIP segment EBITDA of $336 million
- Sequential increases in Performance and Essential Materials
(PEM) segment earnings and margins
Westlake Corporation (NYSE: WLK) (the "Company" or "Westlake")
today announced second quarter 2024 results.
SUMMARY FINANCIAL HIGHLIGHTS (in
millions of dollars, except per share data and
percentages)
Three Months Ended June
30, 2024
Three Months Ended
March 31, 2024
Three Months Ended June
30, 2023
Westlake Corporation
Net sales
$
3,207
$
2,975
$
3,251
Income from operations
$
406
$
223
$
396
Operating income margin
13%
7%
12%
Net income attributable to Westlake
Corporation
$
313
$
174
$
297
Diluted earnings per common share
$
2.40
$
1.34
$
2.31
EBITDA
$
744
$
546
$
690
EBITDA margin
23%
18%
21%
Performance and Essential Materials
("PEM") Segment
Net sales
$
2,013
$
1,931
$
2,136
Income from operations
$
157
$
22
$
215
Operating income margin
8%
1%
10%
EBITDA
$
391
$
253
$
435
EBITDA margin
19%
13%
20%
Housing and Infrastructure Products
("HIP") Segment
Net sales
$
1,194
$
1,044
$
1,115
Income from operations
$
266
$
210
$
190
Operating income margin
22%
20%
17%
EBITDA
$
336
$
264
$
244
EBITDA margin
28%
25%
22%
BUSINESS HIGHLIGHTS
In the second quarter of 2024, Westlake achieved net sales of
$3.2 billion, net income of $313 million and EBITDA (earnings
before interest expense, income taxes, depreciation and
amortization) of $744 million. These results were driven by strong
demand for most products in the Company's HIP segment, and higher
average sales price in the PEM segment as compared to the first
quarter of 2024.
Second quarter HIP sales volume increased 15% from the first
quarter of 2024 while PEM sales volume increased 1%
quarter-over-quarter. Overall sales volume for the Company
increased 6% sequentially from the previous quarter.
HIP's second quarter average sales price was flat compared to
the first quarter of 2024 while PEM's average sales price increased
4% quarter-over-quarter. Overall average sales price for the
Company increased 2% sequentially from the previous quarter.
HIP's second quarter EBITDA margin increased to 28% from 25% in
the first quarter of 2024, while PEM's EBITDA margin increased to
19% from 13% over the same period of time.
EXECUTIVE COMMENTARY
"We are pleased with our financial results for the second
quarter of 2024, highlighted by record HIP EBITDA and margins as
well as improved pricing and profitability in the PEM segment.
Combined, these factors enabled us to deliver year-over-year
quarterly earnings growth following the slowdown in global
macroeconomic activity that began in the second half of 2022. Our
HIP businesses continue to perform exceptionally well due in part
to our product portfolio as well as our focus and position in
segments of the market that have outperformed the broader industry.
While global industrial and manufacturing activity remains
sluggish, conditions in our PEM segment have stabilized and we are
encouraged by recent trends reflecting improved demand and higher
average sales price for most major products, which is driving a
recovery in our margins," said Albert Chao, Executive Chairman.
"Looking ahead, conditions in our HIP segment should continue to
be supported by favorable structural factors, including the
decade-long under-investment in housing that followed the financial
crisis, population growth, an aging housing stock and increasing
investments in infrastructure driven by the Infrastructure and Jobs
Act. While the improvement in global industrial and manufacturing
conditions has been modest, we are taking steps to enhance PEM
segment profitability, including our recently announced plan to
temporarily cease operations at two units within our European epoxy
business to align our manufacturing footprint and costs with
changing global conditions," continued Mr. Chao.
"Finally, we are excited to welcome Jean-Marc Gilson as
President and CEO of Westlake. Jean-Marc brings a wealth of
experience to the Company to build upon our solid foundation and
lead Westlake for years to come," concluded Mr. Chao.
"After my first few weeks I look forward to helping drive
Westlake forward and execute on our strategy while embracing the
culture and continuing the focus on creating long-term value for
shareholders," said Jean-Marc Gilson, President and Chief Executive
Officer.
RESULTS
Consolidated Results
For the second quarter of 2024, the Company reported net income
of $313 million, or $2.40 per share, on net sales of $3.2 billion.
The year-over-year increase in net income of $16 million was
primarily due to higher sales volume and margins in our HIP
segment, which were partially offset by lower average sales price
and margins in our PEM segment, particularly for caustic soda and
PVC resin.
Second quarter 2024 net income of $313 million increased by $139
million as compared to the first quarter of 2024. The sequential
increase in net income compared to the prior quarter was primarily
due to higher sales volume in our HIP segment and higher average
sales price in our PEM segment.
EBITDA of $744 million for the second quarter of 2024 increased
by $54 million as compared to second quarter 2023 EBITDA of $690
million. Second quarter 2024 EBITDA increased by $198 million as
compared to first quarter 2024 EBITDA of $546 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.
Cash and Debt
Net cash provided by operating activities was $237 million for
the second quarter of 2024 and capital expenditures were $231
million. As of June 30, 2024, cash and cash equivalents were $3.0
billion and total debt was $4.9 billion.
Performance and Essential Materials Segment
For the second quarter of 2024, PEM income from operations was
$157 million as compared to $215 million in the second quarter of
2023. This year-over-year decrease of $58 million was due to lower
average sales price for most of our major products, particularly
caustic soda and PVC resin, partially offset by higher production
and sales volume across our major products.
Sequentially, PEM income from operations increased by $135
million as compared to the first quarter of 2024. This increase in
income from operations versus the prior quarter was primarily
driven by higher average sales price, particularly for Performance
Materials.
Housing and Infrastructure Products Segment
For the second quarter of 2024, HIP income from operations of
$266 million increased by $76 million as compared to the second
quarter of 2023. The year-over-year increase was the result of
higher production and sales volume for all of our major
products.
Sequentially, HIP income from operations increased by $56
million as compared to the first quarter of 2024. This increase in
income from operations versus the prior quarter was primarily due
to higher sales volume as a result of the seasonal increase in
demand.
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, our market position, our ability to improve reliability and
efficiency of our plants, our cost savings initiatives, global
demand for our products, the possible effects of the restructuring
of our European operations, the possible impact of the
Infrastructure and Jobs Act on us, our ability to continue to
execute our strategies, and our ability to deliver greater
long-term value to 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; 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 March 31, 2024, which was filed with the SEC in
May 2024.
Use of Non-GAAP Financial Measures
This release makes reference to certain "non-GAAP" financial
measures, such as EBITDA, EBITDA margin and free cash flow, 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 free
cash flow, 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, and (ii) free cash flow to 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 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 second
quarter 2024 results will be held Tuesday, August 6, 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/BI9ab6061c43e746338afcdc616da9a809.
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/j9tcjmaf.
WESTLAKE CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
(in millions of dollars,
except per share data and share amounts)
Net sales
$
3,207
$
3,251
$
6,182
$
6,607
Cost of sales
2,543
2,609
5,052
5,173
Gross profit
664
642
1,130
1,434
Selling, general and administrative
expenses
224
213
433
435
Amortization of intangibles
30
30
60
61
Restructuring, transaction and
integration-related costs
4
3
8
6
Income from operations
406
396
629
932
Interest expense
(41
)
(42
)
(81
)
(84
)
Other income, net
59
23
109
45
Income before income taxes
424
377
657
893
Provision for income taxes
101
70
149
179
Net income
323
307
508
714
Net income attributable to noncontrolling
interests
10
10
21
23
Net income attributable to Westlake
Corporation
$
313
$
297
$
487
$
691
Earnings per common share attributable to
Westlake Corporation:
Basic
$
2.42
$
2.32
$
3.77
$
5.39
Diluted
$
2.40
$
2.31
$
3.75
$
5.35
Weighted average common shares
outstanding:
Basic
128,576,735
127,649,341
128,468,359
127,599,093
Diluted
129,350,720
128,484,016
129,185,545
128,471,760
WESTLAKE CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
June 30, 2024
December 31,
2023
(in millions of
dollars)
ASSETS
Current assets
Cash and cash equivalents
$
3,042
$
3,304
Accounts receivable, net
1,812
1,601
Inventories
1,684
1,622
Prepaid expenses and other current
assets
71
82
Total current assets
6,609
6,609
Property, plant and equipment, net
8,541
8,519
Other assets, net
5,933
5,907
Total assets
$
21,083
$
21,035
LIABILITIES AND EQUITY
Current liabilities (accounts payable and
accrued and other liabilities)
$
2,237
$
2,491
Current portion of long-term debt, net
300
299
Long-term debt, net
4,585
4,607
Other liabilities
2,867
2,874
Total liabilities
9,989
10,271
Total Westlake Corporation stockholders'
equity
10,574
10,241
Noncontrolling interests
520
523
Total equity
11,094
10,764
Total liabilities and equity
$
21,083
$
21,035
WESTLAKE CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June
30,
2024
2023
(in millions of
dollars)
Cash flows from operating
activities
Net income
$
508
$
714
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
552
538
Deferred income taxes
(58
)
(51
)
Net loss on disposition and others
24
22
Other balance sheet changes
(620
)
(156
)
Net cash provided by operating
activities
406
1,067
Cash flows from investing
activities
Additions to investments in unconsolidated
subsidiaries
(1
)
(2
)
Additions to property, plant and
equipment
(503
)
(507
)
Other, net
9
10
Net cash used for investing activities
(495
)
(499
)
Cash flows from financing
activities
Distributions to noncontrolling
interests
(21
)
(24
)
Dividends paid
(130
)
(92
)
Proceeds from exercise of stock
options
8
9
Repurchase of common stock for
treasury
—
(23
)
Other, net
(3
)
(1
)
Net cash used for financing activities
(146
)
(131
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(26
)
9
Net increase (decrease) in cash, cash
equivalents and restricted cash
(261
)
446
Cash, cash equivalents and restricted cash
at beginning of period
3,319
2,246
Cash, cash equivalents and restricted cash
at end of period
$
3,058
$
2,692
WESTLAKE CORPORATION
SEGMENT INFORMATION
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
(in millions of
dollars)
Net external sales
Performance and Essential Materials
Performance Materials
$
1,177
$
1,140
$
2,341
$
2,422
Essential Materials
836
996
1,603
2,063
Total Performance and Essential
Materials
2,013
2,136
3,944
4,485
Housing and Infrastructure Products
Housing Products
1,010
918
1,889
1,736
Infrastructure Products
184
197
349
386
Total Housing and Infrastructure
Products
1,194
1,115
2,238
2,122
$
3,207
$
3,251
$
6,182
$
6,607
Income (loss) from operations
Performance and Essential Materials
$
157
$
215
$
179
$
618
Housing and Infrastructure Products
266
190
476
333
Corporate and other
(17
)
(9
)
(26
)
(19
)
$
406
$
396
$
629
$
932
Depreciation and amortization
Performance and Essential Materials
$
224
$
217
$
444
$
427
Housing and Infrastructure Products
53
51
103
106
Corporate and other
2
3
5
5
$
279
$
271
$
552
$
538
Other income, net
Performance and Essential Materials
$
10
$
3
$
21
$
5
Housing and Infrastructure Products
17
3
21
10
Corporate and other
32
17
67
30
$
59
$
23
$
109
$
45
WESTLAKE CORPORATION
RECONCILIATION OF EBITDA TO
NET INCOME, INCOME FROM OPERATIONS AND
NET CASH PROVIDED BY OPERATING
ACTIVITIES
(Unaudited)
Three Months
Ended March 31,
Three Months Ended June
30,
Six Months Ended June
30,
2024
2024
2023
2024
2023
(in millions of dollars,
except percentages)
Net cash provided by operating
activities
$
169
$
237
$
555
$
406
$
1,067
Changes in operating assets and
liabilities and other
(6
)
50
(283
)
44
(404
)
Deferred income taxes
22
36
35
58
51
Net income
185
323
307
508
714
Less:
Other income, net
50
59
23
109
45
Interest expense
(40
)
(41
)
(42
)
(81
)
(84
)
Provision for income taxes
(48
)
(101
)
(70
)
(149
)
(179
)
Income from operations
223
406
396
629
932
Add:
Depreciation and amortization
273
279
271
552
538
Other income, net
50
59
23
109
45
EBITDA
$
546
$
744
$
690
$
1,290
$
1,515
Net external sales
$
2,975
$
3,207
$
3,251
$
6,182
$
6,607
Operating Income Margin
7%
13%
12%
10%
14%
EBITDA Margin
18%
23%
21%
21%
23%
WESTLAKE CORPORATION
RECONCILIATION OF FREE CASH
FLOW TO NET CASH PROVIDED BY OPERATING ACTIVITIES
(Unaudited)
Three Months Ended
March 31,
Three Months Ended June
30,
Six Months Ended June
30,
2024
2024
2023
2024
2023
(in millions of
dollars)
Net cash provided by operating
activities
$
169
$
237
$
555
$
406
$
1,067
Less:
Additions to property, plant and
equipment
272
231
$
240
503
507
Free cash flow
$
(103
)
$
6
$
315
$
(97
)
$
560
WESTLAKE CORPORATION
RECONCILIATION OF PEM SEGMENT
EBITDA TO INCOME FROM OPERATIONS
(Unaudited)
Three Months
Ended March 31,
Three Months Ended June
30,
Six Months Ended June
30,
2024
2024
2023
2024
2023
(in millions of dollars,
except percentages)
Performance and Essential Materials
Segment
Income from operations
$
22
$
157
$
215
$
179
$
618
Add:
Depreciation and amortization
220
224
217
444
427
Other income, net
11
10
3
21
5
EBITDA
$
253
$
391
$
435
$
644
$
1,050
Net external sales
$
1,931
$
2,013
$
2,136
$
3,944
$
4,485
Operating Income Margin
1%
8%
10%
5%
14%
EBITDA Margin
13%
19%
20%
16%
23%
WESTLAKE CORPORATION
RECONCILIATION OF HIP SEGMENT
EBITDA TO INCOME FROM OPERATIONS
(Unaudited)
Three Months Ended
March 31,
Three Months Ended June
30,
Six Months Ended June
30,
2024
2024
2023
2024
2023
(in millions of dollars,
except percentages)
Housing and Infrastructure Products
Segment
Income from operations
$
210
$
266
$
190
$
476
$
333
Add:
Depreciation and amortization
50
53
51
103
106
Other income, net
4
17
3
21
10
EBITDA
$
264
$
336
$
244
$
600
$
449
Net external sales
$
1,044
$
1,194
$
1,115
$
2,238
$
2,122
Operating Income Margin
20%
22%
17%
21%
16%
EBITDA Margin
25%
28%
22%
27%
21%
WESTLAKE CORPORATION
SUPPLEMENTAL
INFORMATION
PRODUCT SALES PRICE AND VOLUME
VARIANCE BY OPERATING SEGMENTS
(Unaudited)
Second Quarter 2024 vs.
Second
Quarter 2023
Second Quarter 2024 vs.
First
Quarter 2024
Average Sales
Price
Volume
Average Sales
Price
Volume
Performance and Essential Materials
-16%
+11%
+4%
+1%
Housing and Infrastructure Products
-9%
+16%
—%
+15%
Company
-14%
+12%
+2%
+6%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240806453482/en/
Contact—(713) 960-9111 Investors—Steve Bender Media—L. Benjamin
Ederington
Westlake (NYSE:WLK)
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