EXHIBIT 99.1
WESTLAKE CHEMICAL CORPORATION
Contact – (713) 960-9111
Finance – Ruth I. Dreessen
Media – David R. Hansen
WESTLAKE CHEMICAL REPORTS FIRST QUARTER RESULTS
Houston, (May 11, 2004) – Westlake Chemical Corporation today reported first quarter net earnings of $10.0 million and adjusted EBITDA of $47.0 million on higher sales of $400.9 million. The results compare with net earnings of $10.4 million and adjusted EBITDA of $48.0 million on net sales of $380.6 million in the first quarter of last year. Higher selling prices contributed to improved net sales and helped offset the earnings impact of a previously announced fire at the company’s Calvert City, Ky. ethylene plant in January 2004. First quarter results also benefited from lower selling, general and administrative expenses (SG&A), resulting from the receipt of a $1.5 million legal settlement in the first quarter of 2004 and higher provisions for accounts receivable and legal expenses in the first quarter of 2003 as compared to the first quarter of 2004.
Sequentially, first quarter 2004 sales of $400.9 million compares favorably to the $365.9 million of net sales in the fourth quarter of 2003. Sales were higher in the first quarter primarily due to higher selling prices. The first quarter net income and adjusted EBITDA were essentially equal to the net income of $10.1 million and adjusted EBITDA of $47.1 million reported in the fourth quarter of 2003. Higher selling prices were offset by the effects of the outage at our Calvert City ethylene plant in January 2004.
OLEFINS SEGMENT
Income from operations increased by $4.7 million to $29.8 million in the first quarter of 2004 from $25.1 million in the first quarter of 2003. This increase was primarily due to higher selling prices and higher sales volumes in ethylene and styrene, which were partially offset by higher raw material costs for ethane, propane and benzene and lower polyethylene sales volumes.
First quarter 2004 income from operations was $29.8 million, as compared to income from operations of $17.7 million in the fourth quarter of 2003, an increase of $12.1 million. The increase was primarily due to higher selling prices, which were partially offset by higher feedstock and energy costs.
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VINYLS SEGMENT
First quarter loss from operations of $3.3 million compared unfavorably to income from operations of $2.1 million in the first quarter of 2003. This decrease was primarily due to the outage at our ethylene unit at Calvert City, Ky. which lasted for three weeks and reduced production of ethylene, PVC resin and VCM. This decrease was partially offset by higher selling prices for PVC pipe, PVC resin and VCM, and higher sales volumes for PVC pipe.
First quarter loss from operations of $3.3 million compared unfavorably to income from operations of $4.8 million in the fourth quarter of 2003. This decrease was primarily due to the fire in our ethylene unit at Calvert City as well as higher feedstock and energy costs. This decrease was partially offset by higher selling prices for PVC pipe, PVC resin and VCM, and higher sales volumes for PVC pipe.
In this release, Westlake refers to a non-GAAP financial measure, adjusted EBITDA. Adjusted EBITDA is calculated as net income before interest expense, income taxes, depreciation and amortization, other income [expense], debt retirement costs, impairment of long-lived assets (a non-cash charge) and minority interest. Adjusted EBITDA is not a substitute for the GAAP measures of earnings and cash flow. Adjusted EBITDA is included in this release because management believes that it is a useful tool for measuring the company’s ability to meet its future debt service, capital expenditure and working capital requirements and for comparing its operating performance with the performance of other companies that have different financing and capital structures or tax rates. Adjusted EBITDA is not necessarily a measure of Westlake’s ability to fund its cash needs. In addition, it should be noted that companies calculate EBITDA differently and, therefore, adjusted EBITDA as presented in this release may not be comparable to EBITDA or adjusted EBITDA reported by other companies.
Westlake Chemical Corporation Conference Call Information:
A conference call to discuss Westlake Chemical Corporation’s first quarter results will be held today, Tuesday, May 11, at 11:00 a.m. EST (10:00 a.m. CST). To access the conference call, dial (800) 299-7635, or (617) 786-2901 for international callers, approximately 10 minutes prior to the scheduled start time and reference passcode 41058571.
A replay of today’s conference call will be available beginning an hour after its conclusion until 5:00 p.m. EST (4:00 p.m. CST) on Tuesday, May 18. To hear a replay, dial (888) 286-8010, or (617) 801-6888 for international callers. The replay passcode is 74651904.
Westlake is a manufacturer and supplier of petrochemicals, polymers and fabricated products with headquarters in Houston, Texas. The company’s range of products includes: ethylene, polyethylene, styrene, vinyl intermediates, PVC and PVC pipe, windows and fence. For more information, visit the company’s Web site at www.westlakegroup.com.
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WESTLAKE CHEMICAL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited, in $000)
Three Months Ended | ||||||||
March 31, | ||||||||
2004 | 2003 | |||||||
Net Sales | $ | 400,894 | $ | 380,573 | ||||
Cost of Sales | 363,267 | 336,916 | ||||||
Gross Profit | 37,627 | 43,657 | ||||||
Selling, General and Administrative Expenses | 11,892 | 18,275 | ||||||
Income from Operations | 25,735 | 25,382 | ||||||
Interest Expense | (10,396 | ) | (8,407 | ) | ||||
Other Income (Expense), net | (64 | ) | 3,510 | |||||
Income before Taxes and Minority Interest | 15,275 | 20,485 | ||||||
Income Tax Provision | 5,302 | 7,587 | ||||||
Income before Minority Interest | 9,973 | 12,898 | ||||||
Minority Interest | — | 2,472 | ||||||
Net Income | $ | 9,973 | $ | 10,426 | ||||
Reconciliation of Net Income to Adjusted EBITDA | ||||||||
Net Income | $ | 9,973 | $ | 10,426 | ||||
Plus: | ||||||||
Minority Interest | — | 2,472 | ||||||
Income Tax Provision | 5,302 | 7,587 | ||||||
Interest Expense | 10,396 | 8,407 | ||||||
Depreciation and amortization | 21,295 | 22,643 | ||||||
EBITDA Excluding Minority Interest | 46,966 | 51,535 | ||||||
Less: | ||||||||
Other Income (Expense), net | (64 | ) | 3,510 | |||||
Plus: | ||||||||
Impairment of Long-Lived assets | — | — | ||||||
Adjusted EBITDA | $ | 47,030 | $ | 48,025 | ||||
WESTLAKE CHEMICAL CORPORATION
SEGMENT INFORMATION
(unaudited, in $000)
Three Months Ended | ||||||||
March 31 | ||||||||
2004 | 2003 | |||||||
Net Sales to External Customers | ||||||||
Olefins | $ | 259,876 | $ | 241,066 | ||||
Vinyls | 141,018 | 139,507 | ||||||
$ | 400,894 | $ | 380,573 | |||||
Reconciliation of Income (loss) from operations to Adjusted EBITDA | ||||||||
Income (loss) from operations | ||||||||
Olefins | $ | 29,792 | $ | 25,052 | ||||
Vinyls | (3,261 | ) | 2,073 | |||||
Corporate and Other | (796 | ) | (1,743 | ) | ||||
$ | 25,735 | $ | 25,382 | |||||
Depreciation and Amortization | ||||||||
Olefins | $ | 13,559 | $ | 13,039 | ||||
Vinyls | 7,527 | 8,370 | ||||||
Corporate and Other | 209 | 1,234 | ||||||
$ | 21,295 | $ | 22,643 | |||||
Adjusted EBITDA | ||||||||
Olefins | $ | 43,351 | $ | 38,091 | ||||
Vinyls | 4,266 | 10,443 | ||||||
Corporate and Other | (587 | ) | (509 | ) | ||||
$ | 47,030 | $ | 48,025 | |||||
WESTLAKE CHEMICAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(in $000)
Unaudited | ||||||||
March 31, | December 31, | |||||||
2004 | 2003 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and Cash Equivalents | $ | 36,828 | $ | 37,371 | ||||
Accounts Receivable (net) | 177,152 | 178,639 | ||||||
Inventories | 198,300 | 180,760 | ||||||
Other Current Assets | 14,575 | 16,073 | ||||||
Total Current Assets | 426,855 | 412,843 | ||||||
Property, Plant and Equipment (net) | 895,047 | 905,068 | ||||||
Other Assets (net) | 67,778 | 68,027 | ||||||
Total Assets | $ | 1,389,680 | $ | 1,385,938 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts Payable and Accrued Liabilities | $ | 167,558 | $ | 178,855 | ||||
Current Portion of Long-Term Debt | 1,200 | 1,200 | ||||||
Total Current Liabilities | 168,758 | 180,055 | ||||||
Long-Term Debt | 508,789 | 509,089 | ||||||
Other Liabilities | 158,762 | 153,254 | ||||||
Total Liabilities | 836,309 | 842,398 | ||||||
Stockholders’ Equity | 553,371 | 543,540 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 1,389,680 | $ | 1,385,938 | ||||
WESTLAKE CHEMICAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in $000)
Three Months Ended | ||||||||
March 31, | ||||||||
2004 | 2003 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net Income | $ | 9,973 | $ | 10,426 | ||||
Adjustments to Reconcile Net Income to Net Cash: | ||||||||
Depreciation and Amortization | 21,295 | 22,643 | ||||||
Deferred Tax Expense | 5,047 | 7,670 | ||||||
Minority Interest in income | — | 2,472 | ||||||
Other Balance Sheet Changes | (26,519 | ) | 1,391 | |||||
(177 | ) | 34,176 | ||||||
Net Cash Provided by Operating Activities | 9,796 | 44,602 | ||||||
Cash Flows from Investing Activities: | ||||||||
Additions to Property, Plant and Equipment | (11,045 | ) | (8,372 | ) | ||||
Proceeds from disposition of assets | 1,006 | |||||||
Proceeds from Insurance Claims | — | 3,192 | ||||||
Net Cash Used by Investing Activities | (10,039 | ) | (5,180 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from Borrowings | — | 45,500 | ||||||
Repayment of Borrowings | (300 | ) | (78,000 | ) | ||||
Net Cash Used by Financing Activities | (300 | ) | (32,500 | ) | ||||
Net Increase (Decrease) in Cash | (543 | ) | 6,922 | |||||
Cash Balance at the Beginning of the Period | 37,371 | 10,074 | ||||||
Cash Balance at the End of the Period | $ | 36,828 | $ | 16,996 | ||||