Westlake Corporation Reports First Quarter 2024 Results
-
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
SUMMARY FINANCIAL HIGHLIGHTS (in millions of dollars, except per share data and percentages) |
||||||||||||
|
|
Three Months
|
|
Three Months
|
|
Three Months
|
||||||
|
|
|
|
|
|
|
||||||
Net sales |
|
$ |
2,975 |
|
|
$ |
2,826 |
|
|
$ |
3,356 |
|
Income (loss) from operations |
|
$ |
223 |
|
|
$ |
(552 |
) |
|
$ |
536 |
|
Net income (loss) attributable to |
|
$ |
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 |
|
(2) |
Excludes Identified Items |
BUSINESS HIGHLIGHTS
In the first quarter of 2024, Westlake achieved net sales of
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
"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
"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
RESULTS
Consolidated Results
(Unless otherwise noted the financial numbers below exclude the Identified Items)
For the three months ended
First quarter 2024 net income of
EBITDA of
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
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
Sequentially, Performance and Essential Materials income from operations increased by
Housing and Infrastructure Products Segment
For the first quarter of 2024, Housing and Infrastructure Products income from operations of
Sequentially, Housing and Infrastructure Products income from operations increased by
UPCOMING HOUSING & INFRASTRUCTURE PRODUCTS-FOCUSED INVESTOR EVENT
Westlake will host an investor event focused on its Housing & Infrastructure Products businesses on
The event will take place in
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
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
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
About Westlake
Westlake is a global manufacturer and supplier of materials and innovative products that enhance life every day. Headquartered in
Westlake Corporation Conference Call Information:
A conference call to discuss
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.
|
||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||
(Unaudited) |
||||||||
|
|
Three Months Ended |
||||||
|
|
2024 |
|
2023 |
||||
|
|
(in millions of dollars, except per
|
||||||
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 |
|
$ |
174 |
|
|
$ |
394 |
|
Earnings per common share attributable to |
|
|
|
|
||||
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 |
|
|
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(Unaudited) |
||||||||
|
|
|
|
|
||||
|
|
(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 |
||
|
|
|
10,331 |
|
|
10,241 |
||
Noncontrolling interests |
|
|
522 |
|
|
523 |
||
Total equity |
|
|
10,853 |
|
|
10,764 |
||
Total liabilities and equity |
|
$ |
20,960 |
|
$ |
21,035 |
|
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
(Unaudited) |
||||||||
|
|
Three Months Ended |
||||||
|
|
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 |
|
|
||||||||
SEGMENT INFORMATION |
||||||||
(Unaudited) |
||||||||
|
|
Three Months Ended |
||||||
|
|
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 |
|
|
|
|
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 |
|
|
||||||||||||
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
|
|
Three Months Ended |
||||||||
|
|
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% |
|
||||||||||||
RECONCILIATION OF DILUTED EARNINGS PER COMMON SHARE TO DILUTED EARNINGS PER COMMON SHARE EXCLUDING IDENTIFIED ITEMS |
||||||||||||
(Unaudited) |
||||||||||||
|
|
Three Months
|
|
Three Months Ended |
||||||||
|
|
2023 |
|
2024 |
|
2023 |
||||||
|
|
(per share data) |
||||||||||
Diluted earnings (loss) per common share attributable to |
|
$ |
(3.86 |
) |
|
$ |
1.34 |
|
$ |
3.05 |
||
Add: |
|
|
|
|
|
|
||||||
Impairment charge |
|
|
3.69 |
|
|
|
— |
|
|
— |
||
Litigation settlement charge |
|
|
0.89 |
|
|
|
— |
|
|
— |
||
Diluted earnings per common share attributable to |
|
$ |
0.72 |
|
|
$ |
1.34 |
|
$ |
3.05 |
|
||||||||||||
RECONCILIATION OF FREE CASH FLOW TO NET CASH PROVIDED BY OPERATING ACTIVITIES |
||||||||||||
(Unaudited) |
||||||||||||
|
|
Three Months
|
|
Three Months Ended |
||||||||
|
|
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 |
|
||||||||||||
RECONCILIATION OF PEM SEGMENT EBITDA TO INCOME FROM OPERATIONS (INCLUDING AND EXCLUDING IDENTIFIED ITEMS) |
||||||||||||
(Unaudited) |
||||||||||||
|
|
Three Months
|
|
Three Months Ended |
||||||||
|
|
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% |
|
||||||||||||
RECONCILIATION OF HIP SEGMENT EBITDA TO INCOME FROM OPERATIONS |
||||||||||||
(Unaudited) |
||||||||||||
|
|
Three Months
|
|
Three Months Ended |
||||||||
|
|
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% |
|
||||||||||||
SUPPLEMENTAL INFORMATION |
||||||||||||
PRODUCT SALES PRICE AND VOLUME VARIANCE BY OPERATING SEGMENTS |
||||||||||||
(Unaudited) |
||||||||||||
|
|
First Quarter 2024 vs. First Quarter
|
|
First Quarter 2024 vs. Fourth Quarter
|
||||||||
|
|
Average
|
|
Volume |
|
Average
|
|
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.
Source: