WLK - Earnings call transcript Q2 2022

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Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Westlake Corporation Second Quarter 2022 Earnings Conference Call.

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

and XXXX. conference ladies today, being reminder, X, August 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

conference Kearns, XXXX. Executive Good and Dennis. Roger CEO; our Financial Chief for welcome Westlake our everyone, Thank Vice today Officer, Chief and call quarter by Officer; you, discuss of morning, to second President our President joined Operating to and Steve and members team. our the Bender, Corporation I’m our of the Chao, results Albert other management

our risks quarter Albert During that our open comments, HIP, SEC on will which operating with to call SEC or press made of Investor on as open This these management as XXXX, our Westlake section Westlake’s forward-looking in then PEM. Relations also Housing we for beliefs, details and by the second to These the will to Materials the questions. XX, and factors will results. a will differ that are call, topics to results. Westlake’s performance. segment, is results refer refer to available This our begin will document concluding is could westlake.com. that we Essential available by more are information release and assumptions encourage refer we and the uncertainties two reporting which filings. thus which expectations forward-looking few with is contain conference predictions financial management’s well Products our who website a year issued Infrastructure to subject Today, a press going reviewing Today’s information our performance We which morning, you of management. discuss are discuss segments, website. at After these Albert, risks and the release and call lead as as suggest filings, comments with to December to Form actual currently few uncertainties. in and add and about up available discussed certain statements will ended Steve, will the regarding based to or other we’ll will learn These XX-K in segment,

that included webcast this presentation, XXXX, Internet We and of this only accurate earnings accessed an as available be time have accessed can that today’s call call the A via is following of also no today, on of speaks of finally would of found Relations at broadcast call. Please live an the our may any be replay advise section beginning you in that recorded be which may I time-sensitive that This our be hours note this conclusion August Westlake’s information on advised today, replay of call webpage be the conference X, will replay. two Investor as through can being therefore, website. are longer you information system westlake.com. website.

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

Albert Chao

colleagues to improvements income demand discuss new net America us integrated second and we of contributions disruptions. acquisitions demand rising results. with impact of I’m as I achieve Westlake sales billion at good well these operations their chain as of for second Jeff. and us raw of remodeling and strong pricing business, XXXX, record in we’ve past and helping that all the supply to these everyone. from completed pleased our our repair billion, record results in EBITDA a ongoing quarter my record by dedication announce significant margins with the record construction, driven quarter, quarterly $X.X joining costs We record from activities appreciate and drove of in North results material $X.X XXXX in EBITDA combined net work you, housing morning, markets margin quarter Thank million. record XX hard were chlorovinyls $XXX These stranding months. strong and thank energy over in you including and our Good results. the the The achieved want offsetting to

quarter, by vertically year. the segment our the globally the North we During the advantaged acquisitions our American driven integrated PEM quarter strong operations sales see energy over of continue our for grew portfolio while occurred to achieving expanded second leveraging benefits year-over-year the our in that margins past with feedstock costs. by XX% Over

year-over-year specialty products PVC PVC the strength the contribution a materials. driven provided these prices significant leader As caustic higher in by to for soda, global chlorovinyls, and resin,

product will our drive PVC see market of product more passed infrastructure continue Our over The along HIP with from will pull differentiated spending, significant second associated provide enable for will enabling North from remodeling financial call to the represents margin our the resin with for our now which clear approximately in mix Steve and and the sales to of markets, our value in demand advantage are our of Elevated spending beginning results specialty housing also The repair to backlogs we our of Within our I additional and businesses. and orders leading positions housing our advantage growths also portfolios brands and second bill focus the quarter. our while from in American market, for us. our recently to distinguishes activity products. offerings. on segment, sales many detail sustained the Infrastructure like to earnings us to take realize construction quarter XX% new product the the XXXX. on segments, home infrastructure Products the support turn resulting significant to us recently in which momentum across provides offerings now Housing acquired

Steve Bender

Albert, you, good morning, Thank and everyone.

of his As Westlake billion, net this million. $X.X opening record record in of reported $XXX $X.X of record Albert quarter and sales stated remarks, EBITDA billion income

to in and in pricing of $X.X acquired sales irrigation, of product of EBITDA $XX to and up our Compared broad-based across of $XXX the operations margin first compared gains portfolio driven global and of quarter of was with income as by $XXX since with manufacturing increased Housing prior segments, of In increased as volumes the over is disruptions, medical the both net North sales million Europe. XXXX gains strong with United XXXX, from global beginning automotive significantly sales and sales increasing Westlake energy a improved up with quarter quarter utilizing quarter increase discuss to XX% and product We now infrastructure $XXX from increased leader feedstock we and and our of which second second housing the housing by to with XXXX. product cost million by energy these million second increased product Materials specialty expansion the earnings Performance prior of respectively. a Compared second quarter chain second multiple HIP in contributions seen half both in to Infrastructure chlorovinyls persisting billion, industries. higher higher integrated million first of for advantage markets. reflecting prices. sales sales along construction our sales XXXX across position, supply in we’ve price users, continued end the of period, When the the is complimented million the in an in COVID-XX pandemic, the product the for global in billion economic XX% million I quarter spread from year-over-year spite XXXX, The and result onset Westlake with XXXX period year the million the million. product our of sales of offerings. America’s year $XXX for impacts business were of strength prices across XX%. cost $XXX segment, anchored including Essential quarter two housing across the margins were increase in segments from with in in segment the segments, strength of all States, Infrastructure of our second market segment XX% the million, second results products. inflationary the the will segment pricing performance our a the XXXX. $X.X $XXX XXXX, were $XX the and quarter operating of $XXX products deliver across EBITDA

to manufacturing combined with when another footprint, record us strong result. Our deliver quarter the enabled market for these products fundamentals

For of quarter quarter increased segment of EBITDA XXXX to PIM sales of second the on second from XXXX, $XXX the billion $X.X billion. $X.X million

quarter increased million second $XXX sales Second second of the XXXX. sales XXXX performance from over in of the the quarter $X second $X.X Essential million billion $XXX quarter increased quarter Materials of XXXX of of XXXX. billion material

global dynamics market chlorovinyls both for by allowed volumes capture North Ukraine, us our gains impacted businesses. sales European in and epoxy in in business and the in operations pricing solid our Although, to significant PIM America conflicts were fundamentals European and

based also since cost cost ethane quarter global first feedstocks. which operations gas in American oil retained United second the natural the naphtha was business, quarter North the competitors spite higher of earnings the America. our advantaged in particular contributed to and with The In strength utilize States, to epoxy North an the position full of acquisition compared

second in cash by repurchases interest total leverage positioned cash and returned by cycle balance share one cash XX were $XXX expense quarter in to nicely phases shareholders activities of was expenditures second approximately the trailing market about equivalent $X.X million. the dividends the was the of $X all Furthermore, Net and with the for for as a and $XX net record million balance long-term million sheet maturity. debt, EBI times quarter staggered XX, $X.X year. cash per debt provided month right form of retired to flows, Turning quarter, is million thereby the billion. well June of capital we debt $XXX and operating below run sheeting for Westlake’s for lowering XXXX debt In a $XXX we billion million

commitment also renewal revolving completed credit During five increasing a of the the quarter, the size XXXX. years second we $X.X to to billion for facility

able XXXX, business. debottleneck of in our to projects half chlorovinyls launch were first the During and several identify we

to As next for our to capital and cycle. cost operations, $X drive such, we support lower which expenditure preparing billion, are XXXX the revising expansion capacity forecast efficiencies million our shall while $XXX economic

of these balance an While of XXX Louisiana, million our expansion main a be increased several drive of XXXX. support and project take PVC late will capacity This network or basedchlor-alkali pounds will and membrane in Geismar chlorovinyls site sites, improve plans production. adding starting efficiencies in ECUs material the our XXX,XXX will at debottlenecks our our Geismar, place to of VCM site in with

Let guidance me for your provide models. some

FIFO method. be the reported accounting provides on to compared of of in results LIFO as method our of what the cost utilization periods Our rising would benefit a

would’ve earnings XXXX, products. a been reported in benefit cost of of quarter benefiting housing environment, of favorable PEM million the benefit XX% a to second a the FIFO segment the approximately and result As with infrastructure of the what and on $XX method to related the we LIFO remainder compared had to

full the on approximately tax XXXX, pricing, full expected year expense revenue reaffirming current expect guidance interest approximately our to by effective HIP’s and to in earlier rate $XXX and of $X.X billion. $X Based $X increase be demand billion. our between from XX% also year to for be to approximately depreciation million be XXXX for and be to we we with of XX% XXXX to XX% expense billion amortization are and revenue For view and a XXXX

like over Albert? Albert to outlook I’d call business. Now for provide our turn some to current to the

Albert Chao

Thank Steve. you,

of of quarter In all we’ve second our markets months. and the industries. addition results With both new to into record XXXX, acquisitions proud of we in we have the recent repositioned accomplished the segments operating XX Westlake over are past for

the macroeconomic energy interest second inflation high prices. the power environment, economic or half of to recession, slowdown including forward growth rates, the volatility year, in uncertainty possible we surrounding Looking and potential and recognized

take factors well these some the the we our will in opportunities believe, on business very to business. advantage of are have cycle. We market the over While impact positioned

both related see in half demand continue solid lockdowns across will from of for COVID-XX America up segments spur year. in economic We pent China second growth North demand the to our the and of the reopening

durable we between American difference Materials, as with cost oversee competitors another Essential have and believe continues. cost the the global [ph] oil-based we Performance fee stock For advantage a compared and gas-based North

will recently lowered sales While which affordability be of year, the continue affect there to undersupplied investments may half in the current will U.S. second the market our continued in interest rates grow. meet have which starts, housing as and the structurally housing new is to volume demand, rising

available proposed the their highs, housing construction the home as for foundation The current recently along XXXX country stock with remodeling of XX Even expect anchors housing the and our new our at new activity. across we half of loan products agent demand repair returns market many XXXX an which approximately invest number to provide elevated remain housing sales. represents both market, water The suited Act average to as sparing remodeling Inflation new products legislation, for are compared a and new from downturn. products housing their passed with starts Reduction strong to to to such infrastructure to softened refurbish in recent bill year levels also of These infrastructure. as factors fittings our our repair encourage spur America’s pipe for and a may from normalized market well for the segments our aging of people as demand and homes,

in critical alternative production. materials energy proxy While are

the and advancing businesses to and improve operations. commitment increase enhance also with protecting product of allowing value We of integration safely, focus from to our of operations, has and people to our recently strong sell generate products, the that tenants a core innovations, products ESG of us delivering world. initiatives acquired the integration sustainability a daily around and operating will benefit continue vertical on our environment efficiencies, lives Westlake cross the the

wide goals pipe, solutions work as we material. we in for and such carbon-based lower recycled PVC, work our continuing a also materials, soda plastic are products, consumer caustic As our building intensity, our and bio-based for using PVC of carbon reducing lower sustainable carbon products footprint developing towards range

new society. to the Our continue product and innovation products pipeline to of will needs sustainable introduce meet

in are support consumer in market positioned and the PEM very pipeline support evolving growth will our needs, in consumer in well premium Our while address product to offering HIP in continue innovative housing future materials demand. to tastes

Jeff. will is to support the for back sheet you today I second well the call and balance over now earnings listening business call. quarter our turn into positioned, Thank to very strong our Our future. much

Jeff Holy

Thank you, Albert.

is questions, after the remind website end the clarity now into is Dennis, replay our additional of taking information at would and of will a that our We’ll available again like available I begin hours we our take provide be we’ll the earnings to results Before provides which two listeners presentation, teleconference questions. this call that call. on ended.

Operator

Instructions] John [Operator Please your Thank from And of Capital questions the you. with first Markets. line McNulty ahead. go BMO the

Bhavesh Lodaya

to sales roughly the segment, you’re Hi, in Steve. half is good Albert outlook With quarter. and your in the John. reduction revenue on morning, record This of the million down And right Bhavesh do Could color pricing? for you your $XXX dial add half. HIP versus some second on respect a for Congrats versus calling of how that that seeing volumes take expectations what steps in margins second the strong now? are you to we broken in kind the quarter protect then is plan in first to

Steve Bender

this so, morning. Steve. Yes, is Good

strong volume very second in the quarter housing that markets. about think very you very well we construction a as when you strong so pickup HIP, saw construction, is contribution well, as we And clearly saw the within the know quarter pickup, pricing strong might as the

front. the both as well So, volume on as we pricing front on nice saw contributions,

So nice both on contributions ends.

Bhavesh Lodaya

if $X.XX on like for the for contract could you prices throughout what next saw question, And price on settled next, lower, or lower month price two year. for next the transaction the I you touch July. the a please? realized comment polyethylene what was the do your one please drop The if I business bit? So, for was of thoughts, your the quarters, And is in July? you could $X.XX we Can maybe which share expect understand accounting settled

Roger Kearns

This is Roger. thanks. Yes,

I on $X.XX, adjustments. of inventory at a our business. think see look comment settle we polyethylene But quick see a are forward, we we point Just We did on turning market as and bit the down that.

put almost we’re and of XX% got price really would stickiness that if specialty our Now, businesses, way. some which that we’ve differentiated, means I

And to so turn a the think, going from really insulate bit, I that’s inventories little the readjust. as us

Bhavesh Lodaya

Thank you.

Operator

Research Vertical Kevin of the next comes McCarthy from ahead. go Your line Please question with Partners.

Kevin McCarthy

expect good versus And to trends number increase into did that in did would quarter? soda third average quarter, the price caustic the quarter morning. the if please? Yes, increase it realized first much how you moving How second your

Roger Kearns

say Hey, strength good I the and again. chlorine, both would this sides fact, on of quite in caustic ECU, Roger seeing, general we’re is Yes, both. chlor-alkali continued in in

QX appreciation through we in side continue on as certainly right actually So well. QX expect saw on price to in the chlorine the molecule that and of

caustic certainly So, we’re you see seeing industry and of continued the chlorine, several pricing on report both that. increased have and analysts to

Kevin McCarthy

perhaps to secondly, net you debt Steve, $X.XX billion. a made on seems declined de-leveraging quarter then lot And that the Okay. more in of me for than progress

your in updated and seeing Geismar that allocation? how would expansions versus private the are additional on mentioned You you’re so context, project, the you this thoughts weigh market point? expansion what And in at capital what

Steve Bender

Yes.

Kevin, that capital full question. see midpoint of could year raise I did So organic the for mentioned. half you guidance And expenditure opportunities because or our we good of the second that the those year, at this for

to do good internally opportunities we’ve today. talked there these we’ll at number be of the if good opportunities And external as see so added company know, beyond sites, the opportunities debottleneck shows, are cash ability sheet provide they internal of certainly if the that to the both us. proposition value opportunities, those the acquisitions have and right see opportunities execute and on seen to could and you and to a look able do other that think external And and we a opportunities there potentially balance nice value-added we’ve strong to growth that or kind we to are given be really to to about always see taken further look those debottlenecks, course, continue of bolt-ons we those we’ve

Kevin McCarthy

much. you very Thank

Steve Bender

welcome. You’re

Operator

go of Barclays. question with Leithead next Please Mike line Your ahead. from is the

Mike Leithead

guys. Thanks. Good Great. morning. Good morning

year-over-year, acquisitions results, or the we whatever’s sequentially quantify or your in underlying second say how if benefit your easiest, at is quarter? from either quarter guess versus to EBITDA just way I to question, your help us top-line either there a or look the performed business First

Steve Bender

So all second would perform very we’ve the I Mike, when guess, nicely the contributions about acquisitions, you had course from they I think say quarter. that the over the of

mid-teens the the the that they the Of as contribution second think months And a nicely. given contributions was rate that very that full course, in three would first XX months. last we’ve the quarter But a experienced over investments contributing I made all contributed that in run about say we’ve on the they’re had, you the full other quarter, business epoxy of we quarter. return

So, we think would’ve been very nice contributions.

Mike Leithead

it. a there it’s quantify you’re the grade not just because hard your way Got to Or to that? inorganic to pieces. to Is I disclose? performance tough actual underlying willing guess moving of

Steve Bender

Yes.

guess was and we what you get the you contribute. might about that to I think the good a investments so acquisitions contributions four those think of for you trying what about return, And EBITDA as is, that made mid-teens I gives sense a at

Albert Chao

of from the staying the quarter legacy But majority businesses. second our earnings came really

Steve Bender

Yes.

Mike Leithead

just Got where think understand the obviously you into it. trend lot a of just there’s relative the first of acquired and half on where year? Makes back Can are you this And moving us help unit today then, pieces. margins you epoxy, broadly business and sense. when to they’ll

Roger Kearns

worlds difficult. three seeing become quite would Yes. is China we’re quite an This slow different regions. is and Roger, across pricing epoxy has kind where the different I say, of

offset raw moderate the I pretty has costs. position been but actually increased there. material to a demand, would Europe have pricing the We say has small

So, managed actually U.S. margins. maintain we’ve And is reasonable. then still in to actually the demand

so as China we’ll to And restarts. I we’re, watch continue think

in to to wind the And to start see be can as restarts, try come reinvestment energy certainly China hoping back. We’re we economy. there’ll push restart their hopefully with China

Mike Leithead

you Thank Great.

Operator

Research. go Frank question is next Please from the of Fermium line ahead. Mitsch with Your

Aziza Gazieva

guys To force chlor-alkali on in Hi the for – maybe impacts you the quantify from financial begin or guys. quarter? It’s of Aziza could explain some Frank. the majeure

Steve Bender

Louisiana. force the of had facilities throughout year, Yes, we’ve in force one very a Aziza, you going in the course we’ve majeure and turnaround also a certainly we on haven’t know, this on number really as of our given guidance had but of significant specific majeure,

or well, are turnaround a but of just past these the across force this the you operating we’ve is events a years. activity really occur industry normal know seen year the are majeures So two that as the reflection entire

Aziza Gazieva

margins. you outlook there? Got it. think also I the was Could you business PVC specialty highlighted positively impacting the guys And discuss also that

Roger Kearns

Yes. is This Roger.

subsidiary. specialty those than products commodity Just I volatile heavily I’d has in continue I business. would Ukraine an we side, tend have be side. less on PVC would the touches margins impact war Europe [ph] business, in is those continue, general, the say that the on see side that to our the say, construction where of negative the on positive to on on in on out veinlets say we

be less so generally the have been volatile to able say than margins those that, we’ve And moderate but and suspension on better products PVC.

Aziza Gazieva

so you Thank it. much. Got

Operator

next of Your go from Global. Alembic with line the Please Ahmed Hassan ahead. questions

Hassan Ahmed

Steve. and Albert Morning,

Steve Bender

Good morning.

Hassan Ahmed

the the to the Question demand and year first least was around talk consultant supply at in of crude talking since of Obviously read polyethylene. least, higher half reports, oil and tightness. beginning about prices everyone like, you industry when folks, and the year, the at

sort in resolved are and potentially sort get variances global chain the issues the actually of of maybe to we’d prices, happen these go back market, some supply on me, cancellations is being at just this back to question project we quirks situation it think and from energy that tell and with, we a currently of a really shipping So sudden logistics for conducive capacity issues a terms pricing of all issues seeing global where export a its market, shipping pricing in starts Right? and meant of And in a global that market for are little curves trajectory don’t followed I regional making was for all starts following the U.S., the that with oil being my meant become of in very way And, decent these the that prices. market we’ve kind least of as which polyethylene cost glut of the So seeing we environment us? was then are like, escalation. a price and and that out?

Albert Chao

Yes, question. a this is good

coming on polyethylene U.S. issues including, sales. China logistic capacity absolutely are are and XX% LDP of whole, the right. You their There a the still and low also in export as capacity density in despite industry in high coming year-to-date, about June

due going that. more probably expect start increase is course, than of U.S., with So capacity there coming to export in export off, the the probably

So, really I capacity Separately, quite less it’s the China, have demand demand a with new of than is COVID-XX big as they result supply And capacity of business a think issue its not on well. because a our Westlake as coming China XX% access a weak. lockdowns the polyethylene business sales. is for

a So must very business. for a of while is which largest chlorovinyl less a – business impact it it’s us, our segment our important it has business, than

Hassan Ahmed

enough. Fair comments enough. earlier changing trying as sense. I call about were on epoxy some just a the a bit just a the side that follow-up of know business. things, I’m made gears Fair get And in to better

as okay, of mean obviously You is that almost I think business we understanding of kind from being kind the ebbs my half flows comes kind North that China. being talked and business impacting China. with Chinese market? Meaning Europe lockdowns okay, about America should of demand a global about guys of

after? if I up, mean that lockdowns Chinese the start So seeing start that momentum upward they’re in were assume to we on pretty business I immediately easing mean should one

Roger Kearns

Roger. Yes. Hassan, it’s

slowdown general, are and either businesses China at look those lockdowns normally look of with you I those trends epoxy, importers that, if you the in businesses, PVC similar demand, and they you’re or at think seeing products the polyethylene, neutral exporting. three if in have to shifted in some even

restarts. we back leader of this would And expect starts so wind energy in tremendous China expect to to epoxies off we that that restart amount market China’s the takes certainly, take China as a

Hassan Ahmed

Very helpful. Thank you so much.

Albert Chao

welcome. You’re

Operator

the question ahead. of Mike is go Wells next line from with Please Sison Fargo. Your

Mike Sison

quarter. guys, Hey nice

Albert Chao

Thank you.

Mike Sison

into margins or when industry performance and built Albert, up, XXXX coming the this more last guess, known chlor-alkali, think I stream. not or around new the PVC different and you materials side. that acted from has you ECU the a of material think be We’ve recessions how How hold going margins if a past. time during the slowdown, lot PVC about on on could do forward capacity it there’s

Albert Chao

limited on Compare stream PVC has question. capacities that a catalyst the capacities, And as covers China. polyethylene new coming not amount very new capacity globally, with good China you just hence new mercury a on That’s U.S. moratorium of product issues. know, like or

pulp your and caustic demand products the but in using is such thing also as from believe strong other globally else. derivative is and we And water very treatment, general any a everything very PVC, paper still products and just chlorine products. everything So that for pulp broad

So a those past are we the interest potential slowdown, next global recession, and is economic rate and going high up. over while there through looking ready disruptions cycle we’re ourselves for

Mike Sison

Got second your year demand of outlook then half it. prices? for of and terms And the in for pricing PVC the

Albert Chao

impact severely. private government I The China weak because industry the is is do to Well, right spending And is now is demand as economy the trying probably the stimulate the think consortium I in said carbide PVC. based is largest to construction which earlier, something very starting weak. PVC industry, They’ve sector.

demand, exporting economic our and been all demand also weak. in its So but China based has in impacts these India is and carbide PVC

[indiscernible] which said going destocking and over think as on. I possible, I economy PVC the forecasting the some But recovers, some inventory come is earlier, will think weaknesses, analysts there’s are industry industry be price stocking I and So back. we think the also Roger believe

Mike Sison

Thank Great. you.

Albert Chao

welcome. You’re

Operator

questions from Arun Capital next Our Please ahead. go Markets. of RBC the with Viswanathan line

Arun Viswanathan

improve part the comment a you Europe that taking we’ve that if large epoxy, of market. for think also to just there I you guess really what China if first there the that been the say main or Thanks any the provide going are has weeks, been last outlook And the lockdowns couple I is hasn’t was about there? been weak. that just in been and could had my I Is update question. on is any question improvement guess there’s it they’re has mainly incremental hearing maybe that Great. been your market? buying

Albert Chao

Talk about China?

Arun Viswanathan

Yes.

Albert Chao

Yes.

earlier stimulating to trying economy. we that believe the the government said is start I As

National Congress, have with many now demand believe epoxy up. the year. having the initiatives epoxy coming business insulated business, in rather We applications, know, the Chinese other there’ll fiscal that of you said that the election U.S. believe the Inflation will be from benefit party They they especially our is U.S. epoxy And applications in a March and and on Act, stimulus government for October. As Reduction PVC specialty the or next have a materials we especially from those the bill with lot and in infrastructure

Arun Viswanathan

have deleverage pick And capitalizing last as your – downturns And so, as to areas acquisitions? a to to that. of that that if up having for Thanks of starting guys expect on being you’re another well what done the at? follow-up, about terrific think recent when that you would looking capital assets. past something And see we in you Okay. Is a deployed? couple kind are some after we job

Steve Bender

you Arun, some basis. a can guidance at on And our as at organic very and for that’s why we expense opportunities. get time, but opportunities, look we’re capital Those of the on we around continue understand them, opportunities organic look externally to same acting already arms to think see easier these year. our continuous raised are that at the we’ll I

XX made those we’ve activity last that does a slowdown. about acquisitions that as the really as you’ve of so think the And And of of in course we not number seen months. level

segments initiative return matter but to they look our I think business. look do could both have sides would We and good it’s PEM active of always business a there HIP. to be ongoing And of expectations, forward. opportunities very there’s our additions of good to we And hit that as be at opportunity opportunities a just set continue both both our an a across

Arun Viswanathan

lot. a Thanks Okay.

Steve Bender

You’re welcome.

Operator

question the Bank of of go comes America. next Your ahead. Byrne Stephen with Please from line

Matt DeYoe

Matt It’s for Steve. morning. Good on

Albert Chao

Good morning.

Steve Bender

Matt. morning, Good

Matt DeYoe

put business, a the in the keeping right, you for So actions Or epoxy that numbers on elevated And million. general maybe million down your now? to the kind would’ve the peers $XXX markets taken by Are thought? up $XXX of up guidance strong to than we path longer EBITDA like maybe that initially XXXX. are was something normalization, prop

Steve Bender

each normalized across think in to American was see slightly of back And you look of we China the demand the Matt, demand talking markets Albert one in of Asia Well, think market. I beginning a initiatives will see. the earnings that a we’re of resins will Roger see in front. North those heard stimulus we that all sector kind of expect be just spur one be think and these guidance certainly, I on the we it terms to the as that mind. epoxy of kind But or Europe kind of level you provided market that And or I about is if as different China, the expecting in outline, getting that really in to

high so for epoxy be think incentive year. expect years I as a not a to of was the normalized in us would very last And I strength guided would And in the business seen [indiscernible] we’ve I nice be, out still contribution earlier over and of the of think the think in as this business we’ve over couple but good were invest being that level that the there business the restructured to the XXXX, we as always XXXX cycle.

do have the future. very view and constructive year So of a this we epoxy into

Matt DeYoe

Okay. going shoot hypotheticals, And to I I’m team anyway. at but Westlake love answering one doesn’t know you at the

of chlorine PVC the into about seasonally it year, are because volumes good. should PVC looks some So of really would How those the right? if inventories do PVC right. good? opportunity you to of molecules or really to are and both kind better soften run merchant producing half Does So markets make all values still cyclically, decision think pretty is chlorine second keep caustic the move in sense you high. caustic that

Roger Kearns

Yes.

it’s Roger. Matt, think I

the honest, the to best monthly. we that where’s place look monitor at molecule and we chlorine to put continuously be Just

is So the got as a we’re at able that. chlorine. PVC on we’ll treatment the a to But that we industry then is And now, height to export? how logistics well couple which some do. where’s to kind months put what right more to place of able water of in come of nice, Clearly, right we slows is the we a watch the off, respect really watch continuously back questions, season the

Albert Chao

caustic caustic. be and if chlorine question on caustic reduces, production is if demand forward. still pressure strong going a there continued also your less pricing that be And But demand could globally there’ll of

Matt DeYoe

Sure. I appreciate that. Thanks, Albert.

Albert Chao

welcome. You’re

Operator

ahead. Your from Bank. go David question is with Deutsche next the Begleiter line Please of

David Begleiter

and PVC, gap time U.S. have just wide a has How maybe further prices bit period down between Albert, quite here today? this you. of see over reversing by on U.S. back the here. price really being either gap Thank normalizing the we last pulled that widened the Asia do with you or

Albert Chao

Yes.

back pricing China pricing of causing Chinese exported have from much lockdowns, recover China many the been will has production be mode. because and drop earlier, said PVC the the – construction less been people in gap gap China as pressure of will U.S. lack increase I come the stimulus narrow. – will to believe cities between PVC and COVID-XX China to lockdown price and the Asia and hence demand and We As

David Begleiter

do cost value about the of Albert, ethane now the additional longer-term Understood. and And XX, ethene XXs just Is [indiscernible] with think this are you for in how fuel on function around prices? ethane

Albert Chao

Sure.

I think gas price to the ethane natural related prices. also is

slow As price that the ethane industry will from natural increase – prices think the I I way it’s And forecast price will projections analysts, ethane to the also that some soften believe year. down. into gas all down come will next of

think in probably range. I year, they’re next half at XXs, looking the mid-XXs second

David Begleiter

Thank you Sounds good. very much.

Albert Chao

You’re welcome.

Operator

ahead. line TPH. next of go Blair with Your from is question the Matthew Please

Matthew Blair

kind that. about you running Hey, good what of epoxy hoping currently rates could talk are assets I morning. operating your was

Roger Kearns

Yes. Matthew, Roger. it’s

significant in actual Netherlands in couple later So one are so turnarounds our a bit and have we of we’ve right coming the the turnaround lower, the in we’ve because now and got U.S. little year got here a rates

somewhat schedule just fortuitous little is So in fact, right demand is now bit. with soften turnaround a our

Matthew Blair

details gas was half And for QX hedges in Okay. what what any natural the share look like of could impact the of you might back sort and may year? that and then any on have of you the that

Steve Bender

it’s Matthew, Steve.

we in undertake hedges significant dated long edges, gas real do nothing the dated significant certainly around the but volume. certainly around do edges, some some but don’t long hedging will We in the marketplace, we but

Matthew Blair

Got it. Thank you.

Albert Chao

welcome. You’re

Operator

Markets. next KeyBanc from of ahead. the with Aleksey You questions Please go Yefremov line Capital

Aleksey Yefremov

everyone. you Could talk… good Thanks, morning, and

Albert Chao

morning. Good

Aleksey Yefremov

can about you what’s talk Albert. those power your How and you morning, natural Good consumption you Europe? buy your in Can also gas in the about sensitivity, it? or talk continent if

Albert Chao

prices very that product high price those PVC prices. and power there’s the even of polyethylene. in the market increases or price Well, high And paying mentioned, pass prices. heard gas a certainly Today, able price Roger European earlier those natural some are highest to we’re epoxies is higher. in world, it’s is as And our are product price and people whether

Aleksey Yefremov

PVC And demands you potentially products. residential Were Albert, or second weaker both maybe? products for you about in talking the new or construction spoke building about half for

Albert Chao

the And rate, with the slow with see go that certainly slowed that still U.S. but we plus or the is units X.X high home XX-year pent and interest you residential it’s which the minus. Well, construction, up down, high the will down mortgage construction believe high average, in million demand, rate, very to about level. for

think annualized pretty we on to high be – quite But earlier on still And be a so as as there’s still we we space. saw will as monthly month not continue be strong. – based strong, think the the pent-up demand X.X

Aleksey Yefremov

lot. Thanks Understood.

Operator

Spector Your next of the line ahead. questions go with Please UBS. from Josh

Josh Spector

Hi, thanks taking question. my for

you margins, do continue guys your HIP on expectations. to own Just than better

be there curious, performance? guys on of this that just would the of pricing anything quarters. because is over of demand margins low-XXs, segment Or to kind this somewhat couple new you or supply is past Thanks. better a in normal I’d in you the that’s expect comment you So helped remain

Steve Bender

Yeah.

teens XX%, couple QX. So Josh, – you’re quarters have we’ve over margins mid guiding had we the certainly teens the right upper HIP, and been to last upper in XX%, QX,

but the mid continue of segment products that mid that but segment. kind we’re Premium range. teens teens to guiding certainly to pleased our that good that see guiding HIP we’re strength to still in upper area, and expect given in numbers, certainly to performance so So for of to produces we the still that upper construction

Josh Spector

Okay. Thank you.

Steve Bender

welcome. You’re

Operator

from Please ahead. with the a is follow-up Kevin There McCarthy Vertical question go of Research line Partners.

Kevin McCarthy

Yes, morning. my And taking for follow-up. thanks good

So the it relates that you’ve to done. acquisitions

those building out taking costs you about business epoxy if you’ve could XXXX? of ago costs so, borrows versus XX Hexion’s so in that look that think XXXX months do what And far? months six products acquired you American number And Are the extracted ago. and of what platforms? You like amount aggregate is maybe North

Steve Bender

you’re Kevin, right. so And

we’ve are acquisitions, certainly and the mid-XXs, at synergies our revenue the certainly initiatives. be synergies. to the some These at businesses beyond acquired look housing these guided related we the on achieving As we’ve especially on that about And well Certainly, expect of in synergies the to to continued cost of they’re reduction. our borrow, some side, underway of cost those cost – in we’re moment. Those are way of see. to just reduction talked the going we’ve case opportunities

But a of some business, I in seeing we’re guidance we’re You’re and track perspective, the our some margin that of reduction that improvement the to think number on mid-XXs cost reductions. in margins. but in terms achieve the still from of still keeping

opportunities those and evaluating we’re we front. certainly, that front, epoxy the On certainly opportunities see some on

I reductions quantify be for ready good it, well. yet to opportunities today think as cost We’re certainly but not there’ll

Kevin McCarthy

Okay. Thank you very much.

Steve Bender

welcome. You’re

Operator

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

Jeff Holy

discuss our to us you’ll for call again, call. today’s for our in Thank results. We participating next quarter you, again conference join hope third

Operator

Thank Corporation conference today’s participating you call. second Westlake quarter in for earnings

the reminder, a will after hours Goodbye. As Westlake’s has for this ended. two replay be can call call via available The accessed beginning replay be website.

Westlake (WLK) 2 Aug 222022 Q2 Earnings call transcript