WLK - Earnings call transcript Q4 2020

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Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Westlake Chemical Corporation Fourth Quarter 2020 Earnings Conference Call.

During the presentation, all participants will be in a listen-only mode. After speakers' remarks, you'll be invited to participate in a question-and-answer session.

and XXXX. conference ladies today, being reminder, XX, February a gentlemen, is this recorded As now to and would Jeff I like Holy, today's over Westlake's host, to Vice President Treasurer. turn the call Sir, you may begin.

Jeff Holy

Corporation Chao, Officer, will Good Vice Joelle. current begin President our our I'm welcome Westlake conference everyone, detailed Thank a and and will agenda Albert, the team. who Westlake's of operating with fourth by call management a CEO; you, look XXXX The Steve open Albert morning, with few quarter and financial performance, today Executive results. will conference Financial other more President to industry. our provide then members followed and perspective and regarding the at comments Chief Chemical our by joined Bender, call. a on Steve

add open will will and Albert the call a few comments, to questions. concluding we Finally, up

as document based made management's Partners management. LP, risks information or partnership beliefs is Any currently Partners refer discuss information this thus certain will to many to subject suggest Actual to including and Chemical. based upon are references forward-looking to that factors, nature OpCo subsidiary, reference morning, call, as predictions to assumptions filings. uncertainties. contain in pricing of capital regulatory could political risk changes statements energy pressures; Westlake markets; limited weather that release Westlake's cost Today, economic to facilities. to events; supply-demand westlake.com. is by discussed of for developments These SEC olefins master products; owns Westlake press as and and going forward-looking including unrest; and our the on the certain our materially differ as and well coronavirus; competitive available the cyclical press rates; web or in results compete; trade the fourth expectations of OpCo our the utilities; details our Westlake ourselves of available volatility Westlake to release of availability, and our impacts Westlake and and with operating issued topics to industries similar results. factors Chemical refer in This raw of other we which industry LP, in is During management global Chemical the is This impact extreme products at section conditions, balance page a access policy technological we materials, quarter actions, governmental which

by this of Domestic into today, access XXX-XXXX. International XXXX, two be that system The This website numbers the westlake.com. provide have time of quarter I the code be replay internet being our that replay. as We that longer would as as may also our you available call may callers a hours at callers following replay information reported of on advise live therefore, conference is February at webcast and information page an through Please time-sensitive only XXXXXXX. of accessed the web any can is no you're advised call this XX, accurate today, for speaks note both on as finally the numbers. broadcast (XXX) that the of beginning be today's will replay and XXX-XXXX. call well should accessed on an presentation dial XXXX. outlook fourth dialing to call. review year A results posted full access conclusion (XXX) this may following be

call Chao. over to to Now, Albert? Albert I turn would the like

Albert Chao

everyone, morning, year for XXXX to and Good and results. Jeff. joining our you, Thank us quarter fourth you discuss full thank

protect and provide priorities as was me some let the we were our day out, one continue an results, employees, our deliver dealing who production to health appreciative strengthen the our in context in into of to plants get with those the and to commitments Company. approach of I'm clearly particularly how our very and XXXX our employees on safety year challenges in and facilities. commercial work and we Before our XXXX. unprecedented where day

component Our our services the in facilities essential the that response, crucial economy. to goods our are who pandemic of customers, flowing a infrastructure keeping support products of and provides assist in key

We year our have and initiatives We to responsible a a citizen. also and products protecting to being with future forward this you commitment later these look developing made discussing sustainable products investing our These progress year. solutions for while in more people. reflect corporate further this

In and we of results. full for XXXX release, reported me income per $X.XX $XXX turn this income per million XXXX net million morning's net share, $X.XX year quarter of or of to now Let review the the fourth $XXX press or share.

the rebound Before PVC, let building products. the were of products. the into Louisiana. and environment capitalize early year PVC, the effects a increasing demand XXXX. beginning on But on at Southwest the drove Steve two in starting COVID-XX of August heavily saw for and demand, global we weighed and building year. provide downstream able quarter fourth margins insights The end October, we the economy full and downstream the me of results, through hurricanes that improving major in strong our second global goes product recovery landfall In polyethylene to some With quarter, strong a price for our polyethylene made in

tirelessly Once was utility constraints caused our particularly Charles we area. storms our damage were employees hurricanes who worked to operations. While infrastructure well, while the hurricanes, restored, dedication working the customers. impacted of restart thankful our In extensive by and to restore were serve production the in by also to utilities these to diligently I'm plants their worked for spite we our to the operations. weathered Lake power there

half over downstream provide more building demand into products business. the to did housing the our and our While call in strong This able we're activities in the as new product financial growth packaging, automotive the to constraints was and benefit like products, sectors. the to generated on the now for from results translated of especially second demand for true by repair continuing I sales housing Steve experience remodeling full and year hurricanes, and to of quarter from detail year. demand. driven in operating the due global This would turn production volumes our fourth starts, we robust most to strong

Steve Bender

and I a results. consolidated go morning, will with detailed results, review Thank of more segment our and everyone. Albert, then Vinyls you, Olefins good financial start into discussing our and

to XXXX, me beginning results. Let of improving sales maintenance quarter volumes, most strong third Westlake our the the hurricanes. The of a expense, the consolidated products. dynamics second our result two and late most and our to our with begin production of idling facilities, increasing of late for quarter business benefit our from prices lower as of of and continued increased due effects including beginning for demand products hurricanes, market impacted in with in the the the major

units, stretched outages some For November. into these

increased $X.XX results of The fourth on we to or from estimate, sales, While fully affecting approximately segment, both have was approximately our this $XXX operations share. full our impact maintenance Olefins million pretax Vinyls from the million and the estimate be expense our to resumed storms lost our XX% $XXX million. quarter was related approximately segment. the to year the with resulting Of impact earnings $XXX higher following hurricanes, cost we storms per the balance

These quarter $XX higher income business. reported resin share of of income The fourth quarter for $XXX XXXX, and hurricanes the million for of by higher and for impacts volumes of Offsetting to largely and as prices these million the well I polyethylene XXXX. from as quarter year-over-year increases million the XXXX prices are The lower lower the volumes related and resulting mentioned. robust mentioned, was $X.XX per net impact other increase quarter the income million. a and the production compared increases PVC of and results charges. in in were sales fourth hurricanes to $X.XX PVC soda. margins is offsetting increase previously or of from for sales $XX we just caustic Partially of net cost. share prices income attributable hurricane and caustic net increased income third $XX resin two prices of soda and in lower $XX as income lower products from fuel we XXXX were margins our approximately sales costs demand fourth result inclusive as earnings well building from these million higher quarter lower the polyethylene Fourth lost net hurricanes, of higher restructuring downstream sales net For resulting to net per

or reported and on Our utilization in been has to the of method an approximately impact would per unfavorable only not is resulted million $X.XX LIFO $XX compared share what pretax method. have we FIFO This estimate audited. if of earnings of been an accounting

fourth the for by performance now construction starting of global segment. on activities. segments, move quarter, strong Throughout Vinyls global me the Let PVC with our we review the demand two increasing anchored saw to

fourth Our PVC downstream continued the medical strong to see driven building quarter. during automotive, businesses products industries. This residential and -- demand, construction, global robust demand by appliance consumer was driven

of hurricanes the strong sales, from margins the during PVC benefited While we the limited our our production impacted effects of and PVC quarter.

operating sales quarter million primarily resin $XXX the million of for of fuel were lower the and result as earnings and and volumes products cost. for caustic our fourth sales by PVC For Vinyls production hurricanes, in margins higher partially of income from resulting $XX prior prices higher XXXX, business, period, increased offset higher which from and downstream building sales loss a lower soda year

fourth from cost. PVC higher by higher products in a and the million of partially Vinyls hurricanes, lower from XXXX, XXXX, volumes third offset result the business the and as quarter seasonally $XXX margins operating resin sales resulting and of downstream lower of increased For sales costs, restructuring fuel income our sales primarily building lower quarter for

packaging our expanded global olefins products and in business, polyethylene. Now, segment. demand for let our turn me to robust nondurable In our margins Olefins

of both, operating XXXX. of polyethylene, from XXXX $XX sales quarter million the our the quarter limited decreased fourth income volumes effects the hurricanes our for production ethylene $XX and fourth million As and

a from and For sales partially the to operating higher as million income the XXXX, lower Olefins due of for quarter decreased $XX offset sales volumes hurricanes third margins and XXXX, by fourth quarter was prices result primarily polyethylene.

years the coupled schedule, the balance attention the Company future. with of other environment. in We our X.X%, in rate strong $X.X to Go refinancing maturity equivalents confidently position, operations operate and to extending XX us for from with cash cash sheet Zone billion cash average This in revenue the completed average today's and liquidity our debt maturity solid investment-grade of flows. investments to Ike to weighted We and debt expenditures long-dated debt our $XXX flows Zone billion, statement the business our capital in turn resulting our million generated of of let's sheet. the drove $X.X XXXX strengthen cash lowering cost bonds, Next, and allows strengthening interest balance while in to and

some address me of your let modeling Now, questions.

rate Our for XXXX, was year tax effective XX%. of we XX%, the of XXXX the to CARES Act, be expect effects approximately excluding the full and approximately

cash approximately For be XXXX, million. million to be our expect and expenditures interest million $XXX capital and to we between $XXX expense $XXX

of outage and disrupted some is to September. are turnaround Texas for raw feedstocks, winter II materials Louisiana We our and our extreme expected to utilities plants Last across XX planning ethylene and associated many caused to The plants. days. including industry, begin widespread much week, a in and weather our approximately of of outages unit turnaround in Petro last power

facilities experienced disruption consequence, operations. to As our of a their several

will impact With of million closing are to impact will the that, expenses our the XXXX margins Approximately results and for quarter. turn first assessing the Albert? call I falling approximately to some comments. estimate quarter million. $XXX storm, make the remainder repair loss back now we our still Albert are second into sales $XXX from While with the

Albert Chao

Thank you, Steve.

in into demand strength the that PVC and polyethylene is we As XXXX. half the global ahead, in second continuing was in XXXX prevalent look of

investment spending also new We liquids natural cycles feedstocks to as curve, long-term lower business, to the strength consumer enables salt driven starts. throughout integrated nature cost operations of drive building highly gas housing through downstream remodeling repair end as and of in Westlake, the The which building our us are business and in our the continued products our industry. global from by sitting value on products, extends with and well seeing combined

XXXX business remain Our PVC strong. experience into our strong our in on demand segment, Vinyls business business, demand An the from the have for also We very continues have economy that chain XXXX. such of healthcare, essential experienced consumer our polyethylene half to improving products to should by been a our market driven In fundamentals downstream solid benefit, markets. second the positive continued hygiene construction, residential a appliance and driving and by demand market full end-use industries. demand, margins business. continue goods as we which robust In into our reflect construction Olefins polyethylene products, the offering the building is also the foodservice packaging, rising prices driven significant the XXXX. in product durable is especially benefiting earlier This our strong foresee in has everyday products residential The customers, automotive impact discussed. in we

During demand capacity our namely million PVC focused the the priorities in we by the last remains aspects. PVC two approximately protect to the meet on positions and all we years, us strengthen Company deliver in pounds, and of safety expanded which global this employees, Westlake value, growing to the XXXX. health on commitments our commercial XXX

you deliver our our Thank value I growing call much with are to that which will the turn back to quarter the Jeff. We confident very earnings customers business, fundamentals us long-term maintaining our to serve now combined XXXX needs strong fourth over to our of listening of to while discipline, well-positioned the shareholders. financial Westlake for is enable call.

Jeff Holy

Thank you, Albert.

taking begin ended. of teleconference you I a will would call this to the like we hours that questions, remind has after available Before two replay be

will again now take will end at call. that questions. Joelle, we number We of provide the the

Operator

[Operator with Bob from Instructions] Goldman Our Sachs. question comes Koort first

Unknown Analyst

first PVC for in just here I It's the quarter, question a -- sorry, leads -- Bob. as margins. sitting had just digits. you that was out the mid-single-digits Mike for see fourth playing mid-double 'XX? low margin do I of how the Yes. in It if actually mean wondering, I the EBITDA half looks around

Albert Chao

pound. pound And And XXXX, able of also increase is with to to the increases PVC. price XXXX XXXX, a by of increase IHS pound June $X.XX industry in January price since $X.XX prices a in in made a of industry announcements in a According price a in report, $X.XX pass-through $X.XX pound for February. Yes. and March

netback domestic have actually, but And export So, this than since today's also prices represents higher growing export And customers. not the demand, some even price demand. only demand. higher export domestic for prices domestic increased June than is

So, for we global a demand strength see really PVC.

Unknown Analyst

follow-up, mentioned demand you Okay. the outlook PVC. Thanks. a right just tight as for pretty supply And now is

longer that do Just see in or when terms perhaps outlook, enough? loosen perhaps into through first half that carry the you of XXXX? Does

Albert Chao

million units housing meltdown to since continue is housing so year. as And close so housing last that's Well, and demand, above -- money, units climb low XX-year housing year. housing we just a we construction we long about XXXX, to have as average X.X residential to rates interest this stay a consumers -- year, the residential U.S. million long X.X year, XXXX, to And were a average the back for XX hope average years. construction in And X.X XX-year million.

I the low, strong economy as, continue long said, as think, is interest demand the So, I is to increase. and will

Operator

Byrne Steve of America. from comes question next with Our Bank

Steve Byrne

Olefins into segment the are splitting new businesses that approaching …that's segment, considering more out product as some bolting you that a services business? on building and/or

Steve Bender

you've seen business. products the space. with I've area about has a strong we've give well. see that to building its strength everyone performance continue as give continue from downstream continue the we'll And that mentioned, to prepared to to pleased remarks, assess it performed more it very to in an by to and opportunities the And but assess can very, that -- market. And to we the as clarity to want you're grow. certainly our ability Steve, continue But see that clarity more continue expect products in right, the been is well. performance it Yes. we'll very overall you And to abilities, we

Steve Byrne

up as that is from about Home those for consider a such capturing reason too different $XX polyethylene, healthy. sells fittings you're it's I pound. than much you And Home don't The pipe as resin. margin, is or capturing Depot But, bring some PVC pound, Depot downstream on in I sourced $X And PECs? not products margin are much are really that whether as but that would a it know bolting

Steve Bender

not have present to of constructive continue we the of that continued us focus really bolt-on find themselves. we've that opportunities to strength that as downstream looked focus. been Yes. area businesses side, been see to we add very add at, And vinyls an Steve, that it's business. And the ability and on opportunities area to an our interesting see area you been the of continue as has

Albert Chao

Yes. Steve, add to the that one I just want of few sell North fittings together. also companies we in are that and pipe America

well, brand doing very said. well-known So, is we quite fitting you business a have our as and

Steve Byrne

any And do debottlenecking to plans in your more business? chlor-alkali

Albert Chao

last we PVC our our chlor-alkali. And XXX that grow the look businesses. the about in a We're business of to we our years, to all mentioned, always And downstream business also, customers. debottlenecking Well, at strong need opportunities of And is million had, two serve we at with as needs we more certainly, in capacity. chlorine so capacities looking the and also seems pounds construction.

Operator

question And comes Zekauskas from Morgan. with our next JP Jeff

Jeff Zekauskas

very Thanks much.

disclosed prices that or it is the of the quarter. a And trend seems make up they IHS, year you you fourth and quoted trend ticked through there do in there? You the chlorine in that? What

Albert Chao

as PVC Certainly, know, chlorine, you feedstock, the is half half of ethylene. other is is

in And strong as necessarily is So, the PVC, -- other other go TiOX not very in to chlorine price on but PVC is that finished demand hence, and products, many high. also chlorine chlorine draw and applications. water globally, urethane treatment,

strong -- chlorine chlorine the because the to demand the for increased of PVC, price chlorine of high also value into So product. reflect

Jeff Zekauskas

as was it and for is have used you see flow higher XXXX, percentage Why of a high was that as EBITDA? you cash in going it a a be, a percentage operating XX% maybe flow XXs. how of the percentage, low now, than as so XXs percentage your Do do XXXX. in target above And to or Historically, more the or operating EBITDA and Okay. than forward? cash XXs much XXX%

Steve Bender

which Jeff, opportunities as look at the opportunities operating business, flows. to really kind has of certainly that provide leverage. certainly, operating it's continue cash leveraged we we'll growth in to for And Well, look build that on continue leverage, that to

provide look us across opportunities As the so certainly have we minimal focused degree with per Albert capital. of at that opportunities we'll but imagine noted, leverage high can se, spectrum. allow But that do target we're on you to don't particular operating a in investment a

Jeff Zekauskas

deferred estimation XXXX? Should -- you what's in tax a the positive benefit have of your

Steve Bender

sorry. I'm -- deferred The

Jeff Zekauskas

What's your flows estimate of the in XXXX? cash benefit taxes your deferred to from

Steve Bender

to there'll this be throughout number, see operating going our quote of of some a because as And net were I but not the able benefits had, we also Act. to certainly, we some significant XXXX, loss. we forward. large LACC, recall, you reference because benefit you certainly, CARES I'm and did made we moving Yes. may investment from in have And the benefits also as to

or So, of they positions, tax deferred variety the leverage a NOLs the our taxes. to opportunities be be

Operator

John question next Our BMO comes McNulty from Capital Markets. with

Bhavesh Lodaya

for Hi. is morning. Lodaya Bhavesh This Good John.

the clearly disruptions by caused event. Regarding the unprecedented freeze, Texas

So, you And online? hurricane, industry? bring or help end you of the us kind to typical downtime could say, is back compare different when risk the with up what events plant the process could is the for surprises, of extending negative how that weather which to the

Albert Chao

tripped freeze. to than you're can boiler crash Freeze freeze, equipment and you sometimes hurricane you But of go be and sometimes down, orderly. hurricane, more usually down. is hard cause you're readily your plants boiler The shut when out got the is prepare, and risk sometimes down the instrumentation that fixed. Well, steam more plants damage buildings you coming, off caught it's the guard, crashing know

suffer hard will from plants crash. And the some those of equipment have damage

about find you know That's only to of not plant things unknowns it the there. properly. out you some out the risk so, when And more working restart

Bhavesh Lodaya

over assume your for lost the the months? that at of gets hit the And And of estimate that prices couple then, will roughly the if million nominated $XXX sales, Correct. from the commodity how next stay so, $X.XX much offset industry levels? be price current for side does if

Steve Bender

Yes.

and well. also repair it it And also sales so, environment price on margin not as contemplate we're some does only cost lost in, the includes partly but that

of the for February for and we'll the and price course And of how nominations if itself we're that made to see the rest have so, through quarter. we in just successful sustains some of March, the

portion first will will said big and QX. impact the a this quarter. impact that million see quarter, the rest of $XXX an it impact can for of first You We

Operator

with Our comes Deutsche Bank. next question Begleiter from David

David Begleiter

increase? or it through February polyethylene, thinking looks go going March $X.XX. on and are on through like How you about increase prospects the likely will the Just that the is of

Albert Chao

of the price the announced the several but the $X.XX announced increase Well, producers increases. tightness, all producers not with have polyethylene price

pushed But, the tell U.S. of time plants $X.XX will XXX% ethylene offline as ethylene with XX% of So, yesterday, Texas XXX% are all the whether issue and be freezes, are that through. of will Texas plants now of offline. total

as mentioned well of as the impact the may So, which restarting polyethylene will and availability ethylene availability of impact as earlier, risk of prices ethylene, prices of well.

extent know don't polyethylene going yet to shutdown the we So, of ethylene forward. prices what will impact

David Begleiter

$XXX and Very lost forecast how does for as assume, just assume that the impact that does weather And the in production million of many much weeks good. how on well? QX, production

Steve Bender

we those weeks, the next have fully a number have going David, we'll next over expect pounds, of So, here expect more the I'm weeks. ourselves course we quote the of but up to several several restored. over to operations not that

Operator

from with our Leithead Mike question comes Barclays. And next

Mike Leithead

guess, are point just this that either kind of get on preventing want you restart. a better starting you I that or restarting. kind the sense last of point? where I about are or right are there I on to still did on you any up maybe just And facilities, it at now want to restarting of suppliers logistics? largely follow-up Westlake its items for Are waiting from gating Is

Albert Chao

Yes.

plants some and the plants on are locations, running. I think, depending

not customers. to force much and sites have. the inventory your industry have serve depending majeure companies on polyethylene some just And as have you for how declared other location, We

Mike Leithead

Got it.

obviously I near the outlook a like be at a feel what now. bottom to Okay. change say, topic. weak here feels or or sense like that's couple wanted would if I for your couple been just get want you quarters over next, here? it caustic soda on did we're And to to want I quarters ask of for soda, caustic of

Albert Chao

PVC, because its That's with vast rate. interest industry of a with question. good connection low construction Usually,

PVC back. caustic concurrent coming leading indicator economic bit or usually little is And So, is cycle on indicator. either a usually, a the lagging

economy increase demand hence will that will caustic the improve. the looking start we both last price prices see year, we international caustic more, improves, moving the this saw bottom, and end from And domestic early early at the and of as So, up prices, year.

So, we believe that we're seeing the bottom of caustic prices.

Operator

from Next Wells Sison Mike question comes with Fargo.

Mike Sison

a take you in the I seeing quarter, Vinyls 'XX. you’re in margin When to fourth close were EBITDA look at the XX%, pretty guys what 'XX,

should If rest impact you the higher, the then first or price is storm think be about excluding the in kind kind and for year, of that winter the IHS you of 'XX of margins already quarter hit? the that of increases forecasting the level

Albert Chao

Well, those certainly, see to like we'd those levels. margins at

in into in remarks, his in caustic in is mentioned earlier As hit XXXX. by that integrated offset and products, I products, And caustic improvements we you has soon mentioned we improving. believe the helped Vinyls improve. then and also earlier, earnings, with will the how as pretty our Steve downturn also hope strength nature know, margin The that mentioned severely as weakness, And the that impacted COVID-XX the how vinyl bottom in the fast, building we building with in the question is caustic. weakness business really

in business tailwind helping another be will recovery. the that So,

Mike Sison

mentioned your you'll the terms you've out up one you are what of then, in given for full effectively on vinyls. facilities and running, quick just remainder And think Okay. demand, running follow-up be year? of the Once do

Albert Chao

today is U.S. is were we But, Yes, problems. full out everything but before, see only global strong, demand not we running demand we until that strong. had

than export higher As price domestic is prices. said, I

related So, we that the the the is the infrastructure with worst so long should and stimulus government rates improve. package and hopefully, around -- world the help economy business And economy. believe over, And is -- the increased COVID-XX PVC would will construction world, definitely help vaccination businesses. for with the

Operator

Mitsch with comes question Frank Fermium from Our next Research.

Frank Mitsch

fully want for on are about $XXX impact, the follow with sales able And, more that back not by those thinking up million up am Is build April explain in I numbers. between assumption? I two $XX how up from assuming If to guys to and not right QX, your negative that you bit million could being freeze, just you it the How lost you segments? X. $XX in QX. million Is a you the about that a are running inventory? XQ, came little

Steve Bender

for XX% quarter. that for in of Yes. be QX $XXX segments the Frank, well terms is in for impact a that. And the of that between basis. for from I the before $XX an that vinyls QX they it Olefins out would It's would on say expect is segment, impact will and million the I second in XX% two about up both is impact segment, the perspective, Vinyls how and the of remaining split and in the million

Frank Mitsch

the an $XX we inventory? that And quarter, do build ability the second think is about to for that? million How

Steve Bender

Yes.

quarter me our I -- will It's And the PVC vinyls the second let be say, so, second resin of said I flow-through when the The into in just total. downstream that's XX% further Vinyls. quarter Vinyls, -- really in building all the that as products impact businesses. clarify and

Frank Mitsch

very right, And to helpful. anticipating is All Can for hit in that thanks that the out you're significant turnarounds there Petro infer second turn the no around we quarter? calling September. II

Steve Bender

those That's are that right. We call more impactful. Yes. out

course the and year. those And both the PVC, the throughout spread we of so, units certainly, polyethylene, have, chlorine in all are many caustic, with

those only call I the out ethylene which more are So, are really impactful, that units.

And so, that's the only reason for specific calling out. one that

Operator

Viswanathan Markets. RBC with comes question Capital next Arun Our from

Arun Viswanathan

you in I just of I impacting inventories are wanted low kind going you back get that longer your down they're are the industry disruptions already But, at guess, to the up. I starting of that know on that see operations How see kind levels. thoughts now Texas. do where term?

couple the And on the the bit can months? your more, so, in is to exacerbate next thoughts you talk here going production to of evolution just this a little or maybe

Albert Chao

coming down be plants quite and low With of in now. Yes. will the produce inventory most inventory are down Texas,

curtail order come and when will reasonable back a so have the in they whether domestic, plants So, to they inventory it's inventory first, replenished sales, build export back, to level.

Arun Viswanathan

far as go, do higher you see to any do from relatively or the see feedstocks in as ethane remaining ethane pressure you then, is XX flexible? potentially And say, months costs, next, X

Albert Chao

on it depends you at. Well, who look

If low range mid if prices, ethane, high for you But, is gallon. are more forecast you a or of XXXX to they gallon the look $X.XX range. mid the look at a looking then, per mid at XXXX at in future gallon $X.XX a and HIS $X.XX to

they forecast ramp-up a do not ethane prices. So, in

Arun Viswanathan

if then, And Has the more a that of caustic pricing. index can that Thanks. competitors for guess, it's for I Vinyls on potentially dynamics you business? bit, ask think way follow-up. one just your off value overall any the your industry and little about had and effect, strategies one In business, main changed has Vinyls maximizing moving I

Albert Chao

quite produced, few pound The Yes. very large chlorine you caustic. chlorine, and There X.X a are And is pound caustic produce producers. business of competitive. for demand big every of small the because of

as the demand So, is caustic. as The is picking and chlorine, demand is then have produce price. caustic, for we strong, PVC not -- the the shows chlorine up a economy the in you for when same caustic pace it at demand excess of or weakness lot

As improves, I mentioned absorbed. the economy as weakness be will earlier, that

a it's competitive very business. So,

Operator

with Alembic next Global. comes question from Our Hassan Ahmed

Hassan Ahmed

pricing going variety and oil now, the all obviously the I mean, tightness surprised you guys, of a pleasantly are in guys we a of maybe tale the in polyethylene -- as turnarounds of weather-related sort into and we terms halves potential are you us. pricing. there, parts moving how levels by question two And it season this see to the continue mean of are are second the it strength extreme maybe is pertains And utilization I of pretty high year a these guess, around rates as XXXX. what HX terms strong. of we're side be strength my in impact of in have seeing and really They of were and fundamentals half I these a obviously mean, outages, be there obviously, the of turnaround to would the A nondurable question strength supply-demand as sort in question the XXXX, heavy from the of of we see in sustainability things. of you lot pricing? is, then cracks behind some from sustainability And that where of surprised. well. presently I

Albert Chao

there the the Well, of two lot in predict hurricanes is thing things months. didn't didn’t of two do know don't a freeze, a as know. one We predict we span we we

the supply-demand, But, lot Certainly, there's global a with demand could for capacity globally. and panels. for polyethylene and with also a added supply-demand. of and increased the I So, the PPEs is amount sales pandemic, of packaging fundamental things with fair think solar But, happen. internet great this demand

solar shift LDPE making the lot to of a So, plants panels. EVAs polyethylene for

So, then the being rest LDPE is of the demand packaging supply reduced.

So, all demand impacting these changing side. dynamics is

side, PVC the around little last world On the added years. capacity very the few

two expansions years. last competitors the yet million XXX PVC capacity capacity mentioned, increase. in our We added of some facing capacity being we been few pounds added very of has globally, announced. have global or And And demand now, -- and announcing new have as about

prices go. see So, can conclude the you if dynamics then there supply, global will demand with you where the and

better. Now, it down. kind the things, building I in spending will new gyrate, are supply-demand, dollars inventory, billions it's it of that on our go month-to-month, be when up sure, people long many whether -- business confidence other term the depending it about But, plants, and of will should think,

Hassan Ahmed

Very about as on Albert. for broader M&A assets mean, I M&A, thoughts the I olefins have that, chlorovinyls obviously, your enough, you would between guys you or thinking mean, you what some a market? if preference side follow-up, segments? up two are thinking about are alongside this M&A? M&A about And you are sale, prioritizing And chlorovinyl indulge on A, the and, versa? there to Fair in over are the helpful. vice how how were in

Steve Bender

And time. in So, acquisition Hassan, the both we'll but acquisition also at business look organically our as continue you opportunities side. and obviously opportunities we'll at at to well know, look directly space, grown adjacencies. We over look the we've on through

You've even that expand businesses. sense seen look make And downstream to building our beyond in us products us. continue we'll those to

thing it's at we're fit, about for. always we'll that always the the look of the right finding but so, kind opportunity And synergistic is right looking those,

Operator

comes question next Our with from Jonas Bernstein. Oxgaard

Jonas Oxgaard

Thank you.

of business of could PVC bit. you deconvolute I from economy how you from the wondering I much shortages, the how enhancement benefit that -- help et little at was by the was business, kind or I much So, cetera? the was from a Looking got margin downstream me driven and hoping restarting, your say, outages should volume was gain

Albert Chao

Certainly.

hit, the mentioned last construction. the As pandemic when we part early of shut municipalities down earlier, year of many

production of to So, we products. our shut had down

both, So, of then as from products. outdoors, back. in areas is there urban as you some Vinyl as the of came the and well, movement plants as demand building constructions as most And know, the up, suburban well municipality as and impacted the the are opens constructions. to But, a soon business

spending and vacationing, remodeling, homes repair also home. with and to at people that So, single-family money home demand or in start traveling construction and are their increase money spending they're

construction products increased. demand has So, and building

spring during outdoors, down construction, up we built coming slow products, building as for demands inventory quarter, to seasonally, we because our then time fourth out And And the the the start into strong. the normal. sold back is are the snow, So, and mentioned, that temperature as demand will now when all improve. -- Steve ready cold way And typically the spring. back sales and of practically period, is especially very

Jonas Oxgaard

QX though I was the how Well, temporary of boom … Okay. in versus the guess, much question is say

Albert Chao

Actually, business. X.X slowed continues, construction, or so for or mentioned, in in quarter products then, XXX,XXX. building seasonal the back actually it And the to XXXX. units But, X.X let's units season about with residential X.X the We the year And U.S. million long-term the XX-year May units. XXXX, the last the from high say construction down climbed starting quarter, second June, for average because residential about XXXX just units. every on million from And building X.X from XX-year sales a issues business. million QX saying typically demand is million weather is month U.S. XXXX average, construction average housing dropped as meltdown of a the XX-year The the boom on to first or basis, strong in went improving. average, we from keep -- XXX,XXX, you're

close in continue for back increased to average, strong, to over XX-year has average. with you demand long-term interest trend, got that the then just XX-year increase. low we believe population continuing U.S. construction if to the And will So, the rate the be and demand certainly

Jonas Oxgaard

got by the I of and the the quite to are this projected losses Okay. your Will be recouped relation insurance? you from wondering, hurricane was Thank the in from overall you. that also freeze deep here losses large any EBITDA.

Albert Chao

I'll damages some of the some Steve But, our be that. answer -- -- of can the certainly, Well, let recouped.

Steve Bender

Yes. Thank have insurance. we question. Yes, the do for certainly you

And we recover so claim a those be majority that of hurricanes. from certainly, we'll able as to work damage through claims, the

certainly, so, issues big for the still be on on freeze. claims those is an And that see the and freeze. We'll there are assessing the opportunity insurance if

Jonas Oxgaard

timing and expect to it Is you like how much that? recoup then on Okay. a magnitude of

Steve Bender

margin. lost obviously it's freeze, the On

it's little very So, property damage.

property the damage it hurricanes, than more margin. necessarily On was was lost it

provisions kinds of different here. So, claim

I the So, the expect I freeze, recovery; recovery. hurricanes, expect substantial on on do less

Operator

P.J. from Our with Citi. next question comes Juvekar

Eric Petrie

caustic P.J. prices Albert see held range demand that forward? It pretty how Petrie PVC bound. above up? Could in Eric are on do is This China looks about you per going Chinese soda Year’s you Steve, just How $X,XXX talk, or like New for been And has following ton.

thoughts on two any those molecules? So,

Albert Chao

Yes. Certainly.

heard, I have as home people workers to think government for the guest after discouraged may New you to New during Year. Year, travel the their Chinese the Chinese

Chinese by has demand business pound New price a one so, -- return after has polyethylene Year week has back, demand strong. And New And come demand Year, And Chinese think $X.XX holiday. been actually, I the up of returned. since very come has is going

quite bottomed, it's The and at Asia mentioned, we price, of but as soda we well. it's strong. small have least by though as see in some So, caustic improvement, signs even increases, believe margin improving

Eric Petrie

then recycling area? just electricity. technologies or Westlake many is are And ESG, in green a utilizing secondly, or what Could companies helpful. talk you doing low-carbon about chemical little Okay, on bit that in investing

Albert Chao

Certainly.

End of Plastic very are part ESG to and with We and associations other the Alliance concerned and industry Waste much we sustainability issues, are activities.

on year, areas this will As we mentioned will ESG. initiatives earlier, of the are we we more support that taking hopefully, on later discuss

Operator

ended. time, has this closing the Q&A At Are there session remarks? any now

Jeff Holy

needs Yes. switch to to The over Call. management Partners LP Thank the Joelle. you, team Westlake Chemical

for afterwards, call, again time. XXXX your for and not us has who results. address next we our to time question anyone, conference on encourage we'll call discuss happy our had we ask be quarter to you Thank So, you'll a their this hope call to us to again first And join questions.

Operator

Thank Corporation conference Chemical quarter you Westlake earnings for participating in fourth today's call.

until participating. access Domestic This for And numbers today's Thank disconnect. (XXX) you Access (XXX) at following As replay be does XXXX. replay two callers will p.m. Eastern by call may X, a XXX-XXXX. the Time the call has is call. code callers after on for can and be the both this numbers. be should XXXXXXX. available conference reminder, Tuesday, beginning for International The accessed hours may XXX-XXXX. replay accessed ended XX:XX dial you March conclude calling may now

Westlake (WLK) 23 Feb 212020 Q4 Earnings call transcript