Earnings call transcript Q1 2023

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Operator

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Westlake Corporation First Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, ladies and gentlemen, this conference is being recorded today, May 4, 2023.

I would now like to turn the call over to your host today, Jeff Holy, Westlake's Vice President and Treasurer. Sir, you may begin.

Jeff Holy

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

Albert, Essential with and HIP call, and begin Infrastructure call we to will with discuss as Products, Products. Westlake's segments: we financial few or Today's will which PEM open questions. the to our we who which or Steve During reporting Materials; or conference two refer and performance. Performance to Materials add up and will after regarding will will and Housing comments few refer a call open results, will a our then comments, Albert the concluding operating

XX-K actual discussed by these you the about on available Westlake's SEC website. factors more Relations certain which currently to Form lead We going as These as to XXXX, beliefs uncertainties. topics will for SEC is on is risks to information contain differ well forward-looking are uncertainties These XX, that learn year ended encourage thus suggest could management that are also these results and or other to risks to or and in forward-looking available based our and by that December expectations information Today, and predictions are management's filings. subject statements management. assumptions filings made reviewing our discuss Investor

our quarter available the of in This at our section morning, press is document Westlake results. Press This details issued with westlake.com. first a release Release of website

replay in beginning our the via Westlake's presentation, will earnings an on can accessed hours of This be Investor A the may today, following of X today's section Relations available conclusion this call replay included found website. be be website. also have call. We which

the XXXX. time be May time-sensitive note that of of only replay. accurate no information of may longer on you're X, information this reported that speaks therefore, as And today, call as Please any advised

would system I advise conference you westlake.com. our call Internet broadcast this can webcast is accessed that at that on being an page Finally, be live through web

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

Albert Chao

Thank appreciate quarter you discuss We results. first to our XXXX you, morning, Jeff. joining Good everyone. us

of power For income $X.X million million. end XXXX, market These of XXXX earnings from billion, quarter EBITDA quarter results and improvement we margins and of activity destocking fuel achieved benefited net costs. of as first and of from in and improved, we sales solid lower $XXX reflect fourth significant the the customer volumes, $XXX demand moderated, feedstock

quarter, markets, higher from improved shifted demand better in margins. sales to volumes first we exports sales domestic and the As contributing to integrated mix

we costs energy but benefited the to from saw lower further, of globally U.S. energy XXXX low-cost Gulf feedstock as the costs feedstock Coast as also improved and We Europe in energy compared our in position and levels lower well. advantaged also

our integrated results $XX Our $XX of of of solid quarter $XXX improvement of achievement the factors margins savings. the for Each communicated to towards XXXX reflected cost in million targeted previously these approximately this million the savings cost million our also quarter in first supported quarter XXXX. fourth on of

by margins year to financial quarter affordability when due quarter rates. first volume driven compared segment period, results, in margin XX% similar from to which XX%, EBITDA decline our particularly the building proud mortgage at home decline activity was XXXX. the which the performance, Looking of maintained higher our in of HIP of These to lower a achieved prior I'm first despite were

Dimex. why the in Products, through in were and of our segment and the of benefit we strength acquisitions XXXX key U.S. market growth the of margin Building invested of our This product brands. stability reasons demonstrates Boral The long-term with these in the businesses mix the along LASCO opportunity housing Fittings HIP

positive demographic a the the -- the Great have and U.S. housing in Recession deficit increasing construction housing to XXXX long-term since XXXX driven demand. continue market, in view of new by We

PEM our segment. to Turning

to America. We and first of to Lower significant continue with higher prices, changing cost North domestic chlor-alkali agility Overall, the to sales to with from selling caustic operate quarter PVC end polyethylene chlorine and soda average integrated by as our improvement solid XXXX. market successfully feedstock performance markets pleased fourth rebounding margins for export the combined back markets, volume reduction in rapidly team's our while very energy with the actions, drove dynamics we from markets and I'm both current ability trends. navigated adjust market quarter drove prices in shifting

more now like quarter to the over results financial our call I detail to for would XXXX. provide turn on first Steve to the

Steven Bender

epoxy prices Westlake morning, everyone. or first polyethylene, first Thank $XXX of $XXX PVC, quarter decreased good the and margins, share and as per XXXX and lower and volume each you, first on Net selling in XXXX production million $X.XX for of net million of from sales of billion. segment. particularly the quarter sales reported average quarter income of a of lower Albert, income resins, integrated the $X.X for result XXXX in

lower quarter XXXX, $XXX cost million American improved allowed volumes which sales as North we When the America compared fuel income quarter that and key fourth domestic this higher XXXX, first to us stronger the PVC in markets environment, of from polyethylene throughout for of the to demand increased in improved, back to quarter the in and first by and shift The to experienced due driving abated fourth in and export destocking power XXXX netbacks. North conditions each net production quarter market volume of sales feedstock of and in segment Europe. higher XXXX

operational with seasonally were as and we move and Overall, we first XXXX spring quarter. are half financial demand along increase activity stronger volumes. HIP with about XXXX HIP second optimistic that into seasonal construction the uptick customer a the our in also results occurred destocking XX% in of we abated in sequential drove segment quarter pleased cautiously the trends which, the The in second

is of of million quarter method. the For has $XX unfavorable only of on pretax estimate FIFO and This been method in an reported resulted of would an have impact earnings to the what first audited. the XXXX, compared utilization accounting our not LIFO been

our segment to performance. Moving

first decreased Our performance $XXX million in first of Central the quarter Materials segment million from EBITDA quarter XXXX of the XXXX. $XXX

As the prices, lower portfolio. in Materials sales $XXX quarter by the to Performance our first selling prior million, for PVC period, year compared across particularly average decreased in to largely addition driven sales volumes lower resin

the in quarter first prices the XXXX million for Essential driven first of caustic Materials higher quarter decreased average sales by $XXX primarily XXXX, soda. over of selling

Performance average and sales lower XXXX, PVC, including headwinds offset margins particularly were most volumes Essential products, product polyethylene production lower integrated by As impacted lines. and our and -- were compared for along epoxy, across prices quarter the and by to lower fuel energy selling earnings of Materials of first partially with our higher all prices. These were Material

program million activity, selling in volumes of resins, segment million soda, higher we and PVC feedstock markets, PVC benefits from cost particularly first as sales savings fourth driven reduced quarter average and the PEM's result $XXX Performance cost, and improved polyethylene as energy mix increased lower shifted from of sales quarter elements. in previously the the in volumes, announced. prices and epoxy, of and a X key XXXX particularly in Materials turnaround epoxy domestic $XXX EBITDA Higher Essential caustic by to production Materials

product as uptick segment. saw to EBITDA compared improved demand customers XXXX markets. the Products million quarter their Infrastructure from Products improved HIP segment first compared year prior the $XXX sales million and volumes seasonal Housing by to categories. million driven as quarter $XX by our of for XXXX. quarter of We decreased decreased demand double-digit declined of $XXX across the fourth Housing saw our XXXX all in to when the rates first Turning period

first XXXX, carried servicing by and due lower decline in cost sales the by the fresh first from customers Infrastructure in materials were prices sales along volume declines a of cost, Products savings raw Infrastructure and and The realized by lower program. quarter decline inventories to Infrastructure XXXX. These and partially in offset quarter $XX volumes our were of from Products fell million driven benefits average Products applications. lower selling wastewater housing starts Housing primarily volume of the only with higher our

and of construction as and seasonal the increases and due our destocking that improvements rather earnings result fourth the Products backdrop million $X from overall XXXX broad-based their inventories discussed. $XX $XX I in volumes uncertain quarter XXXX. activity. customers and macroeconomic Products increased sales to lower of compared increased of of HIP quarter increased XXXX, million EBITDA Housing quarter $XXX the $XXX of the first Infrastructure the while million they in of have The of quarter When raw for million, previously $XXX customer kept million. tight sales moderating first look to sales million fourth were segment remains higher trends economic material the cost in in The

demand America, the while products reported the Therefore, In of level HIP March increase cautious until construction products customers beginning the in similar half experienced HIP seasonal products provide and inventory building uncertainty building are our to they customers building to in in cost they our and closely remodeling their and supporting our to North million remaining of second controlling housing working in PEM for at XXXX, see needs. the brands less the with average $X.XX we to premium with the segment, economy. continue we the our the see with starts meet our quarter first activity customers

balance Turning and flows. to sheet the cash

and cash cash were billion $X.X debt schedule. billion equivalents debt staggered and of was maturity long-term XX, $X.X As XXXX, rate for fixed March total a

million, the $XXX operating million of in $XXX were cash net cash quarter resulting of CapEx $XXX was XXXX, expenditures free in For activities flow first million. by provided

for value manner our our to deploy look long-term to to sheet We a continue reward shareholders. create in opportunities strategically shareholder-friendly and balance

me Now models. guidance some for let your provide

XXXX earlier revenue with be segment $X.X full our guidance reaffirming and teens. the between and for are high Products an $X.X We to billion EBITDA Infrastructure margin year in billion Housing our in

approximately $XX to continue savings the target XXXX, quarter. $XX in already of million million $XXX achieved in first annualized with We million to

grade investment support and balance position allow credit cash invest significant customers. in Our to business and us our our rating

earlier capital $X similar run XXXX depreciation and from to to be continue amortization to which our expect and We expenditures is for billion, unchanged rate. is approximately total our guidance

As Calvert second a this ethylene unit a City reminder, our turnaround XX-day the at includes of quarter planned XXXX. in

expect XX%. approximately rate year full our we the to be of effective tax For XXXX,

We also cash to to $XXX expense expect continue million. be interest approximately

outlook to for the turn Albert let business. to a current Now me our over provide Albert? call

Albert Chao

products fourth quarter but you, Steve. quarter of mixed for fourth has the our demand of economy compared improved, economic the improvement all to of drove with XXXX. growth in XXXX, first quarter the as economic signals. some This the the Since XXXX during environment Thank

lower Additionally, costs low-cost North our ethane improved America. advantaged in further position natural power structurally gas, and

lower our economic highlights the the and and results first improvement volume of environment. position the together, current cost strength quarter in the improved Taken drove business

believe and stabilized Looking are ahead, have cautiously as improve that to for will XXXX we our progresses. optimistic products demand conditions economic continue

from demand to continue products, our China margins. improving many of improve would to expect We for which spur demand integrated

in with We also improve construction demand and the industrial increasing activity. to expect U.S.

segment, overall to affordability address to HIP from the housing including concerns these homebuilders seen In market and prices, our Yes, the action by be continues increased we conditions have adjust incentives. resulting higher taking mortgage rates. impacted

product homes these margins decade. average in new has more the strong repair Longer demographics since of construction remodeling million XX% XX-year housing XX% and U.S. and remained Our the to brand deficit homebuyers mix structurally X.X first-time relative over annually of improving to the term, and of market support undersupplied resilient due and homebuilding conditions. new remains built and XXXX, coming supportive

on have to the products continue a very we result, long-term outlook fundamentals building business. for positive a our As

towards continuing for segment, and epoxy. keep packaging, Materials PEM At wind in care, PVC, housing, future Westlake, our we quarter using recognized as reduce products the sustainability outlook first by to the XXXX. our intensity continue automotive products to and operations remaining and our Performance demand global health and the of critical of favorable as urbanization, make by such our polyethylene progress to energy drive population XX% success. In our carbon In growth we improving goal remains everyday XXXX,

incorporating the sustainable post-consumer an resin, exciting progress products. its include commercialization while of solution, significant maintaining polyethylene our many our one-pellet solution strength. These efficient also products We in of made

pipe or In entered with PVCO molecular material. which a provides lower a PVC and our footprint pipe, durable main PVC than carbon weight more water any already pipe lighter other

million Dimex processing United including XXXX one increasing business an the scrap in and the from amount XXX annually, largest scrap of acquired Westlake businesses. of plastic other in of of is Our States, waste materials pounds recycling

continuing to and the As part of our bio recycled are sustainability we components into focus, market include products satisfy attributed that consumer introduce that demands.

identifying long-term share disciplined look will returning create that acquisition for value sheet shareholders repurchases. includes candidates to can cash continue redeploy both we for through Finally, our shareholders. well-capitalized to This to dividends opportunities with our and see both capital in balance manner that a and cost returns

redeploy capital from throughout first and XXXX. for the power call. more our themselves expect the economic increasing have meantime, continue as by in very focus Thank we opportunities to earnings to benefit created present materials and In We our stabilize to business conditions to stability listening made investments products. earnings we you downstream the and the much on specialty our quarter

now back call turn to over will the Jeff. I

Jeff Holy

you, Thank Albert.

questions, Before results we X hours replay I is and call listeners which after website, our a additional clarity into begin be our of taking like this will teleconference earnings remind this would has to available presentation available our that on ended. provides

the call. at We end number of will provide the that again

We will take questions. now

Operator

Sison Michael [Operator Fargo. Instructions] question comes of Wells Your first the line of from

Michael Sison

than mentioned that tends to better to Nice seasonally you XQ Albert, the think be start XQ. I year.

said for all are this margins year demand businesses, do the weakening as plays -- across think at you where are how that you As given look board? your you integrated and out things

Albert Chao

seen quarter course economy We've inventories seen it the we Yes. the through of finished demand. that we've changes that stabilized customers fourth and rate they from has much And destocking the we destocking the XXXX. that as in interest And believe run reordering the see and are pretty in process. believe bottoms improve should increase, its

quite Fed having in seen believe HIP could PVC domestic our PEM Materials in as But is the economy we strong. -- well raised have our polyethylene, that, But rates, is We've said the demand forward. and going U.S. the both quite they business. economy in in as that the still that repercussions just segment, interest long, Building

that rates doesn't that XXXX cautiously mean back It or So increasing. we to are interest go start optimistic the see we improvements. will high levels we'll XXXX some before

Michael Sison

then the here China And shore polyethylene, improve for market And starting domestic could is export it. is really operating rates? how up and Got PVC to recovering?

Albert Chao

Yes.

from slower people People government But strong. be are some pandemic after celebrations. the and expected think out than New take from opening the I improving. after economy the believe China's and stimulus economy as Year that time. still should that see improving is well, Chinese slowly, will spending going China's and the We we traveling about the is economy

Operator

Your question the next from Partners. Kevin of McCarthy of Vertical comes line Research

Kevin McCarthy

surprised pricing regard seeing increasing elaborate on a to operating demand any press your for little increased you there that Can with is market in stability there? epoxy Albert, resins release, which demand epoxy bit. a the comment you looking rates? saw and you're in ahead, in me function seeing the what And are you

Albert Chao

Yes, blades still epoxy Sure, it's structural and U.S. in in is seeing need cost as relatively well we high improvement weak Europe a improving, primarily in of quite are in Kevin. see the Asia, products. coatings with also But as more economy Europe still we demand North growing. and position We windmill signs America, weak. and

of XXXX, I XXXX. course, when cost So And we not as, lower think the increased the believe we recovers, epoxy, the there. going in in position a economy demand as especially have robust But business but with as believe position forward, is U.S. a should well. demand that the good the epoxy in

Kevin McCarthy

Okay. And debt to portfolio tougher construction-related your during well the you prove you add through billion demand-wise, downturn? hung margins that the do flexibility. your external the then you declined It financial providing to what $X.X segment in business decline opportunities with see year-over-year, has to more volume a given cyclical looks seems sort HIP like Albert, secondly, net about current environment, of quite be out as

acquisitions curious appetite business? to via your as So that add to to

Steven Bender

branding, seen, to I very And maintain in And mix. margins of the to And portfolio products brand building quarter first business. good strength you're it the business. we are to I in and that think, able performance right, Kevin, illustrates mix strong the be the we've the think that it's that the Steve. of the in we as think about opportunities add and have to products there

be continue add we our opportunities with we fill demand see where and those to satisfy that look and to branded portfolio. quite to And to can products interested customers

it out opportunities for portfolio look build to to sense. continue we'll that So where makes

So we the and right you constantly the with looking are and dialogue just folks price. as would right in actively guess finding and opportunity

Operator

comes question Josh next of from line our UBS. And the of Spector

Joshua Spector

wondering just cost where your say is you would was now. I base

kind what today? Or tranche another reported is lower call through does of you versus with reflect flows the where feedstock that your So are that? quarter, way help you kind that that or you environment you about right adjustments to of in think the energy out. that could Is inventory there LIFO the

Steven Bender

lower still a sense using flow our as providing why through see is Certainly, of is some you there result, I FIFO. you would that imagine we versus would which a that of if LIFO like FIFO that what cost will you're as always Yes. reporter, some

the or can compared As to be will curve. for forward see or forward lower you you look prices ethane XXXX, as forward gas for for into in for ethane, we 'XX the see significantly gas numbers that

I North -- portfolio positioned will forward So well the curve a think Coast strong if position we're for forecasted well a plays as large our very is that of to. and portion footprint to it Gulf continue we out with American play

Albert Chao

to some want Jo, information I more numbers. just add

said, MMBtu, ethane, and gas MMBtu impact also natural for the you our is per for on XXXX input And -- and fuel current and large know, less was of price fixed Steve price. and of that. $X.XX $X.XX power natural is a forecast the impact a average gas now power. based also price buy which power the for We ethylene price gas the As per in than XXXX estimate natural as gas half is

cost has all that on a impact So very our position. positive

Steven Bender

the in think gas, to MMBtu the Westlake the of portfolio we basis EBITDA. annualized of is you give across improvement sense when of on natural you here earnings in $X million to an sensitivities some have $XXX So just entire potential

for the you've And curve forward value that of Albert got $X.XX, fact so that over and given looking could at $X.XX through. the of forward play was XXXX $X

a company of So I is earnings that opportunity to gave year. EBITDA potential for sensitivity the million rent $XXX $X, of to you huge strengthened see this

Joshua Spector

a appreciate you more all skewed terms normal shifting you mean And of PVC sales quickly to mix mix. market. you it's on little than domestic just back improved in typically terms Or Would that. your are noted you it's in the still I bit say are? I to export the now? of

Albert Chao

of more lack demand year, because people fourth lower. recovered the demand, XXXX, from normal. the a At end the quarter as And really as well domestic and as starting the destocking is Yes, to last overseas We season of are are export it's lot of being those prices of March. of start had inventory. building

we a -- lot are demand seeing the increased more. second the So has improved quarter

Operator

Our of Suisse. next comes John question from the of Roberts Credit line

John Roberts

Could noted you geographic of exports You on of some that's about in epoxy. the talk vinyls. going and increased the polyethylene shift

got So our sales we've epoxies any footprint epoxy into shifting you well? moving China as in of Europe. your Are geographic

Albert Chao

Yes.

to with being India reacting things change. as the we're to are could all as economy places but Chinese that very in economy its exported competitive I past the years the like and improving, epoxy said the Europe. China global slowing down But and earlier, And well or seeing slowing the PVC as quarters, is the We they marketplace. in dynamics has been

activities all very we going are and but and -- the colleagues So cautious on.

John Roberts

value Westlake do on to at drop waiting you does point interest low-take secondly, it a for to into more still are the downs? cracker then make the And sense And better MLPs? some the partnership, drop just

Steven Bender

Yes.

issue the there having ethylene and noted, really of for put possible. opportunity think we to when our is the of of the the the ownership it's access. -- ethylene as valuations is, capital unit unit, certainly right you The So end low the

that capital. to to opportunity an right the we valuations right and is there if see So the do access

Operator

next from the Duffy of Goldman line Your question comes Sachs. Fischer of

Duffy Fischer

the steps we you at relative go significant When as VCM year? EDC, between the you shifts the contribution into look forward vinyl chlorine, see this chain in PVC

Albert Chao

chain value and looked Right now, economics, move Yes. the do Well, high. down tolling is chain. the at very and right, you're the up we they

chlor-alkali chain value business downstream the lot So could that also. change the PVC, but more is on

Duffy Fischer

Fair about enough. some year. years has of And in assets, for about pretty large competitors then of doing their you've a your had epoxy significant one talked restructuring

restructuring epoxy you need do right or base some -- of as look have As asset think the at your you do do you an footprint, well? to it, think you you do significant

Albert Chao

we business our go improve for are the ownership epoxy have lot we'll Yes, to and certainly, to we find try a a had improve. to year. opportunity as positions. new We And forward,

Operator

next from America. the of Steve question of Bank line Our of Byrne comes

Matthew DeYoe

This Matt Steve. for on is actually

this and but expectation feedstock I stay expect this, because out at just spoke you maybe here we been rationalize competitive that the of if was do we a PVC little about for up think can of will producers coal So the Do weak. some of kind But up? capacity are? see looking of bit now global that perhaps softer you margins Asia those Chinese with margin position right And there China some soak a bit. you and kind maybe demand prices -- prices think market, know prices? have are to a deflationary goes pretty for softening kind we relief could of to some just as Or that where

Albert Chao

very question. a good great. That's that's Yes,

process, the I the government money. PVC producers XX% by implementing think of losing generate PVC, compete GDP is and on cannot PVC mines produced coal-based still price carbide the coal really nonintegrated with not with the the and impact, control And integrated environmental emissions are much from who carbon they Chinese low the control. China, double double dollar and concerned or are

still also a chunk the be expansions there it Chinese could of integrated mean But business. non-integrated of producers. that being doesn't by So some announced getting producers quite there's out

producers phased see shut those improve But the coal-based out. or it are global down play PVC when Chinese should we'll dynamics out. how So economy

Matthew DeYoe

weaken ECU further of there PVC markets at I push chlorine and mean, the Okay. we further pricing? and side caustic is vinyl vinyls like I And should for look derivatives, if room the U.S. absorb merchant just chlorine to see markets, prices the these chlorine

Albert Chao

That's question. good a

XX-odd think wise XX-odd of around around today, U.S. is caustic think export I export already. its PVC And the will percent I percent.

market, So accessing we're which new very It be can export bad. also good. is capacity can It the volatile. added be on,

Matthew DeYoe

But dealing prices PVC, do kind can and we're think price that world you to it's is a push implied by with this of a the perspective chlorine into market? from Or you further -- do margins in see pushback? a be where you going

Albert Chao

Well, integrated you but the U.S. where then be you're have. the not use margin if PVC. you're selling shared, to the if biggest depending And chain is the integrated, still of chlorine in

So vice if a to a if And PVC, you chlor-alkali, able no you're but have that not access PVC chlor-alkali get you're no versa, you market. margin. and can't

U.S. want So the think I producer world. and all and -- the in best integrated the in Westlake

Operator

next question line Blair the Matthew comes TPH. Our of from of

Matthew Blair

volume just X.X% in weak demand the then just just able what less appears And was to what the quite Two, construction quarter-over-quarter segment? if break light strong, for QX? HIP of Are The is markets. destocking? underlying especially up of impact out normal improvement was what you impact seasonal the the into three, improvement, of HIP in of the this one, move in any,

Albert Chao

of purchases. probably Yes. because really of impact builders reduction the very products And home all the inventory. and and are rate -- the I the people think Yes, year the of sharp high many in rates last of mortgage part their interest is increase I it's use reduced mortgage rate large destocking of and the distorted cautious think a

of a then, So a first high peak kind that's of is still still -- infrastructure maybe reduction quarter with XXXX, XX% compared but in volume. business even

quite a quarter it reduction that with an year, last compared fourth it's So was dramatic despite improvement.

they we and everything And homebuilders, strongest that is as incentives of read treasury to demand. the the back, X.X%. else read percent, as is recently, hopefully, earlier. construction, we coming because coming second the it's we incentives had And quarter in the XX-year quarter that are down the is And X-odd some to usually down average reducing the what from said they rate increase demand some

interest mortgage is from So a benefit it rates.

But but poor some still will seeing know improvement, be it's last reading of compared early. we year how people this So of a to and second I most bit the and are will XXXX year don't pan housing are half XXXX think year. We sequentially. that out economy improve will this

Matthew Blair

then those into caustic XX% looks demand? weaker And And that about weaker like Asia U.S. mostly prices the likely market? function a prices of down is it flow Southeast that Asia QX how are spot versus will levels. Great. Is it industrial

Albert Chao

Yes.

was Asia economy have access down. coupled We generally will Asia, they of with and Asia that weak more China, came or caustic. As And the PVC bottomed improvement. we're caustic improving price help. especially exporting caustic speaking, out, a that also And export signs seeing economy, prices in Asia believe in are gradually,

of that think we the capacity. some So demand will excess absorb those

Operator

of Markets. next the line Arun our RBC And Viswanathan comes question of from Capital

Arun Viswanathan

Congrats on the quarter.

-- that PVC that maybe and continue and you accelerate So just sales guys I tax to guess, is guess, first -- elaborate expect reopening? a in epoxy. Could those I trends on you and question is, you commented on improving with some do

Albert Chao

analytics quarter shows for are they and quarter saying and Well, is foresee be looking from year I that improving this in market level as somewhat is much quarter. the at PVC price. of consultants And But think some that which next flat I of said, into U.S. first fourth pretty forward-looking. should they the chemical demand prices, rest year. the improving domestic the second prices This

people think and the things as we've bottom demand will believe fourth I that improves. last quarter seen year So improve gradually of

Arun Viswanathan

caustic you move the thoughts maybe just your Great. update year. through on on you then can And as

really Is expect stabilization there still You any there? declines?

Albert Chao

prices the year mining gradually throughout year. and industrial areas, caustic mining, weak, increasing. pulp increasing next by the the reflecting forecast is year. increasing. aluminum the are -- bit and is caustic mining, decline is Whilst levels And high is reached construction The what Again, on the in of things Yes. of broadly else year paper infrastructure consultants saying and the end first But depends economy. because again and end and demand the a probably is the now also other early price this very many is of -- year, improve very -- it lithium U.S. last in stabilize kind used economy will by right will alumina

caustic know. don't improve. benefiting chlorine earlier gas high demand we we as So that prices. our lower in and call, power in from caustic costs with natural could levels, are those said But We and are and prices very

from we're benefiting margins. So the

Operator

Our of Begleiter David next from Bank. of line Deutsche question comes the

David Begleiter

from its chain the own and drop about we've seen I drop XXs last the Albert, impact oil cost weeks. both rent profitability. low And XXs to your on the think price and ethylene in high X the vantage that U.S.

Albert Chao

definitely, it would Well, impact. have some

you the for world, destock so most or as know, the probably cracker. of naphtha ethylene As X/X using

naphtha So price polyethylene dropped, on the losing as polyethylene the oil it improves producers in drop, based been the selling But money Asia, naphtha-based naphtha especially price. ethylene, have economics. price

should this margin the among we still the lowest really with all economics. from are But ethane cost improve very cracking, is apart competitive the our them help wide feedstocks is still cracking. and -- it a So definitely naphtha

David Begleiter

about has How polyethylene And April prices U.S. think do the has yet. good. Very U.S. in I just don't on quarter? you believe QX the contract polyethylene prices, the trended failed

Albert Chao

Yes.

announced to actually looking I been think, the on pretty The push and think polyethylene I now a it and And year. rest flat. much came the May. price again, the has price flat. of some increase pound of for to flat the consultants industry has are April It April settled price for $X.XX

quarter half can last been compared some time realized be they or margins. last tell the in second year, of that price But May this the in will part the -- can The of of deserve improvements it $X.XX or of year. we be second with whether the low second -- year that improving. dropped believes industry is sharply half demand So since has

Operator

next Our comes from line Aleksey Yefremov the of of question KeyBanc.

Aleksey Yefremov

in assets. chlor-alkali talk and assets you U.S. about the your can utilization Albert, PVC

about If relative you can and also provide any averages? comments to levels your industry

Albert Chao

some Yes, there's turnaround outages. and going planned on some

dynamics I chlorine is the the rates the in think out supply-demand also XX-odd PVC operating mid-XXs percent running globally. and reflecting and

Aleksey Yefremov

do buckets? down we of those with housing, if domestic Albert, the try and and If you terms the How demand between three you to R&R staying see it rough PVC. percentages market do infrastructure? new kind of know between break

Albert Chao

and repair many in XXX housing, think HIP and we out And to X/X. are we component million, X/X the segment modeling close and probably There Housing know sales And the construction. there. lots component of homes we're show part Infrastructure within lots. as general, don't -- related how separations, are of X.X to housing, the homes new new The show home million largest is million and and segment. X.X sales infrastructure about is the I we of homes our in the smallest talking our

forth. what use, And window, depending whether on it's and so roofing, repair on siding, the so and modeling, they PVC

goes of of HIP they amount XX% XX-XX, with still than a our our is about construction. modeling. XX% split But capacities And our we're new go So about -- Westlake, modeling it. in big new fair to in PVC use repair homes construction into a in of new sales XX-XX construction part for business, repair and and

Steven Bender

levels, that quarter the grow forecasters resilient. repair nevertheless, but in to saw would remodeling probably but this first suggest remodeling There that first rates year, And repair resilient remain repair new though in at and could continue in will you we the start to was was 'XX. concern and that quarter, resilient see some you continue lower are than continued year, and remodeling that could the see fairly even last to

Operator

line Our Ahmed question comes next Global Hassan Alembic from the of of Advisors.

Hassan Ahmed

around polyethylene. A question

and about online LDPE grades of to it. sort LDPE of bit the other fair the Obviously, than pricing of year. of sort this growth tepid coming side, seems exposed more different capacity are fairly the a that there's far bit you the And talked through guys on a -- grades. capacity is side the dynamics. at it look I of sit as But the polyethylene, You there

expect we grades? pricing sort different of of sort the should between trends divergence see to So

Albert Chao

but Well, lumped this and different high that and Albert. completion, They are capacity segments, is have felt starting -- polyethylene, difficulty all industry you but be Good having density. not the separately altogether. mechanic question. started all somehow always primarily all load linear yet, They're We and new And haven't should but density different. is low density LDPE. and high serve and something up. our but Those as different a priced said, those LDPE

they impact ups the already and I But the pricing all nevertheless, together. are the lumped has it think linked downs industry, together has and started. LDPE

Hassan Ahmed

Understood. Understood.

Albert Chao

is that to to the linear make -- than margins, better were margin down the or LDPE density. want the margins load point the far high One the for price together, I even or baking for up polyethylene density

margins. better Yes. turning So

Okay.

Hassan Ahmed

enough. Fair

on the So now -- the Albert, epoxy side you obviously of it commentary incrementally sounded positive.

it is that with trough the if sort cycling So sort being primarily and start of demand picking in is like? of of less assume partly will case, this this driven partly QX marketplace. Or demand things sort capacity Maybe of pricing. you're up inflection, sort where the be And there. up will in from some sort maybe and in well, potentially supply QX that the China be to fair and were as disruptive of driven driven rationalization commentary and that positive it the --

about obviously less now. exporting talked You China

to and you trying So there. what guys demand wise, figure I'm supply just have out seen

Albert Chao

very a good that's Yes, question.

PVC, which you for increasing, component big caustic. improve part and especially tried is that increase well, that as government think export as dimension so of stimulate the we real the of think estate, should pricing Chinese a I that to and are economy demand less right and

big the epoxy business bit the not side, It's are that different. On a Chinese building. little and

Looking back for windmills Certainly, construction. China needs and everybody and of the renewable getting just windmills energy in new a cost. lower are

the cycle a that year the have globally as still for So improve. But earlier one questions come overseas. I for of next year into will in demand it year, increase next But this this takes they think year. it's the that -- progresses Meanwhile, years, exporting time is maybe few definitely, epoxy as a to amount bottom of the been the place.

Operator

line question Castillo Morgan [Operator Instructions] Our from next of Stanley. comes Angel of the

Turner Hinrichs

business you as would the from evolving if on and moves results, is peers? you how in gaining year light say that, your XQ imports Angel. is epoxy 'XX a Westlake's part to specifically compare And and on This position XQ Hinrichs of the color ongoing of as your was I business wondering last they epoxy 'XX last Turner one share for in could strategic well. year by of of give market? of little more us is Asia Or how your

Steven Bender

So good question.

was the first in quarter of stronger market XXXX. the meaningfully So

first And market so in a in of you demand quarter seen of certainly change have XXXX. dynamic terms

epoxy power the circumstance that still right, that the of So say, the you're into rebound, European have, is we be Europe, position is to I'd able volume markets in with epoxy say to market. compete. that better terms let's Asian the in energy resins imports to in a much there epoxy European begin less of as though Asian market, so of into But

see When for position domestic a earlier, stronger you of resin, market market demand. terms overall think the our that epoxy noted there it's of in we as Albert

quarter really we end would was I fourth quarter. the so chains, an product across come say as the saw that in all And end destocking saw at fourth we that everybody to troughs of the certainly that

'XX being And so are will as I that energy being stronger and gets take recovery 'XX, much we wind and And demand 'XX greater led get for as those really demand we in and would we constructed stronger. 'XX with 'XX time windmill see windmills see say contracts beyond into some those and the before markets and beyond.

one market we is levels So means to saw that backed those strengthening by any the see and a we 'XX fully years quarter I'd first not the of say 'XX. but 'XX of of in back

Turner Hinrichs

That's great color.

any PVC export on mix shifts the more relative and And Another domestic the your one, could on levels mix picture respectively? and can seen color for export to in we mix get a and industry? PE, comments you little sales give

Albert Chao

This Albert. in industry for March. Year-to-date, is XX%. about about polyethylene The exports Yes. is XX%

and March export year-to-date. for we less the And For general. PVC, than XX% industry it's about in for XX% Westlake, average

Operator

I turn to like ended. this comments. closing The Q&A back to questions no And there time. it for are at Jeff further session would has now

Jeff Holy

for Thank our hope participating you. next again conference join call. again second in call results. to us We quarter today's our will XXXX discuss you for you Thank

Operator

Thank you conference first quarter call. for participating in today's Westlake Corporation's

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

Westlake (WLK) 4 May 232023 Q1 Earnings call transcript