Earnings call transcript Q2 2023

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Operator

Good morning, ladies and gentlemen, thank you for standing by. Welcome to the Westlake Corporation Second Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, ladies and gentlemen, this conference is being recorded today, August 3, 2023.

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

Jeff Holy

you. Thank and second 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

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

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

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

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

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

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

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

Albert Chao

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

the and of construction billion, drove of our the we EBITDA of $XXX sales income epoxy million. and quarter soft America resin, activity industrial particularly For second Europe. PVC maintenance unplanned North and In XXXX, reported and soda in activities impacting $X.X and sales volume million caustic net continuation PEM $XXX of segment, of declines,

The elevated level of resulted approximately in million. $XX impacted lost unplanned income by that outages sales operating

we segment in our While from prices compared lower where fuel the position strategically were costs quarter. in We saw feedstock North average selling our America, located quarter. and first feedstock benefited the to lower first advantaged globally PEM than

million in In in our to XX% in the our quarter-over-quarter XX%, products the averaging with and the quarter, in start HIP strength the sales margin X.X material reflecting of at of volume to due improvement second branded sequentially reductions. starts raw HIP housing the relationships EBITDA its approximately repair season segment, we experienced grow. construction And line XXXX increased margin remained and and our second with quarter cost record with customers. America volumes with an North units continuing increase segment modeling the and in

now cost expect program the to quarter, of $XX efforts third after our million XXXX. in $XX to quarter XXXX, first savings we $XXX the and While approximately our will to expect end, million million $XXX and the achieve million between previous we To reducing of the focus achieved second assets operating our in challenging million cost continue $XX savings macro reduction from costs. cost that in we we half to backdrop million of reliably up of target the in $XX

Overall, impact to volatile margins we sales activity, our strategic the operations along our global economy in with disciplined approach unplanned in and and weakness this our outages, take industrial and a managing reflected and results from long-term volumes continue the the to to manufacturing quarter second planned and advance priorities.

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

Steve Bender

billion. as income everyone. Westlake for and from second a of million in the and production of and on Albert, second volumes. sales you, of quarter Net integrated margins average the $X.XX Thank of lower million and $XXX good decreased per result quarter sales prices XXXX selling of of morning, reported $XXX the XXXX share quarter net $X.X XXXX or income second more

in to unplanned production to outages. compared million the income decreased particularly conditions $XX average primarily for of soda, quarter due market the PVC by net XXXX, first resin to When and quarter lower caustic selling second softer XXXX, prices, of

on have quarter would earnings LIFO second not compared the a on an pre-tax For has impact of FIFO what of method utilization been is had to XXXX, negligible the of audited. method. been the This earnings accounting and only our estimate reported

performance. segment our to Moving

second lower particularly to Our of to $X.X in PVC billion of compared $X.X quarter in XXXX Materials to XXXX EBITDA due the volume, of in segment's were average selling sales for million epoxy. performance quarter sales $XXX addition largely in Central Performance lower second prices, and EBITDA billion Materials with

from $XXX due Performance particularly both million materials $XXX decreased soda, first and Materials of average and polyethylene. the epoxy prices in XXXX, lower the to PEM million for caustic for second essential of quarter quarter selling resins EBITDA largely segment

and elevated integrated and unplanned demand caustic impacted volumes sales that epoxy in Lower sales both volumes, and of margins. particularly, PVC, for outages resulting soda and level resin,

our Turning Infrastructure Housing Products segment. and to

billion, due were second million in and the $XX quarter in driven of compared the with lower XXXX. housing sales sales EBITDA which starts seen $X.X when over declined completions $XXX to segment record decrease year. quarter to EBITDA decline million, XX% Second The an of by we've volumes past was

costs unchanged in of second XX% the and lower pricing was of margin segment sales volumes. resilient EBITDA impact of offset quarter the material volume decline the XXXX the Despite raw lower year-over-year, HIP as

volume in product $XX When due quarter $XXX XXXX, solid sales million of of of by North quarter to million average sales Housing that the housing than compared to American prices. XXXX slightly was construction widespread segment product sales This more seasonal first the $XXX million lower of improvement EBITDA significant volume HIP in product growth second increased selling lines. trends offset most supported million. with $XXX increased gains

$X of in products million to $XXX second XXXX, growth Infrastructure of million the of in product and from quarter primarily infrastructure sales XXXX volume of quarter first sales increased the due of an improvement The XX% segment drove the in HIP wastewater quarter. applications. higher second margin XX% to sales EBITDA fresh and serving overall quarter the from first in in the XXXX

pleased improvement sequential HIP were with we volume performance. solid margin Overall, segment and

reflected segment financial demand outages. particularly globally Our slow in results, our and production PIMS

taking As our market conditions macroeconomic by we to market adapting third conditions. levels conditions to as -- reducing demand the market the disciplined indices. remain production managing evidenced sluggish adjusting evolving to our enter published business matching our inventory, our adjusting by approach quarter, recently We're a and manufacturing cost,

our Our financial strong position credit objectives. support investment-grade an rating long-term supported by to

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

our net $XXX model. were CapEx XXXX, free of of cash million, cash flow resulting in expenditures million, activities which strong $XXX provided while quarter generative $XXX cash second the business by reflects For operating was million

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

the to your and provide between let our based high-teens. with Now, in $X of be Infrastructure our me demand XXXX second segment margins some prices, models. view of and -- Products guidance half housing current for expect and on billion in billion $X.X we revenue EBITDA

expect after our reduction we up million to We previous savings to achieved in of program cost cost to achieve million the to $XX of in approximately XXXX, $XX target date XXXX. $XXX between $XX company-wide million million $XXX savings million from

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

be interest approximately XX% For and million. the tax year to full effective expect expense we XXXX, to approximately rate cash be $XXX of our

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

Albert Chao

you, Thank Steve.

with rates slowing challenging we're Looking the a of second and half economy continued high environment in this ahead, interest a expecting year.

business the changing look differentiated customers' disciplined product expand to they costs our long-term meet We offerings long-term to through managing approach to sustainable and as innovations creating our confident plans, needs value. and However, of growth our we sales in our our unfold. the remain products to our strength on adapting market portfolio with and conditions

highly soda, driven favorable driving polyethylene by Inflation In American demographic advantage benefits and clean, integrated from increased the production demand PEM Infrastructure our leverage our our demand feedstock PVC outlook segment, resin, epoxy. for water, caustic consumer on remain and for Act electrification for activity chain. Investment We Reduction the energy and positive we all PEM trends, and fresh and segment, will North Act and renewable

the selling curtailing prices industry markets export selling second and weeks, from seen average and unprofitable markets in price tightening some June PEM signs PVC polyethylene While few production have ending the were quarter, international we improvement average of inventory last in with both the below resin in high-cost producers of levels. lower

levels. As a result, we for our the segment from PEM outlook remain recent constructive on

Investment HIP the also spending for infrastructure potential to to North in sales from support our Act. outlook coming the homes the first-time and volumes homebuyers supported improving remain decade to our undersupply on America, Infrastructure the over segment of positive more by demographics related We benefits structural product

to needs. and meet We customers' will of products innovation broad our offer a and deliver value continue service branded portfolio to through

demonstrated to this market its our reflect Over its several the HIP quarters, characteristics. past and adapt [ph], strengthen it conditions the this can business branding changing and results period over capital-light actability that has

critical environmental and Westlake. at strategy our remain Sustainability to stewardship

and customers' to sustainability commercializing our continue We in challenges. meet products developing new innovative to invest

of a adoption bean in PVCO proud of to increased quarter the are result one- report and We second innovations as green solution customer these our pellet efforts.

to and intensity to significant our carbon XX% continue reduction XXXX made plans progress goal. reduce improve capital our we have our by and towards invest Separately, to emissions

opportunities share rating sheet, With strong investment-grade value for significant of net debt high-returning trailing we a including through robust a dividends cash quick investments we balance present to disciplined shareholders redeploy look XX value sheet in months for credit generation our synergistic through capital long-term shareholders. create onetime profiles expansions EBITDA, opportunities our the Finally, cost will exceeding in with and capability, create opportunities below these for that our avenues, our well-capitalized to manner organic with flow continue and balance themselves. payback to buybacks, of returns acquisitions as see and return multiple capital

to will our very listening you call Jeff. the back to earnings for call. I Thank second much quarter turn over now

Jeff Holy

Albert. Thank you,

and after hours the begin our of like earnings website call is to available this I'd on ended. our presentation taking X questions, we listeners available replay has Before be a will remind that teleconference

We questions will now take

Operator

UBS. from Instructions] question of first from you. Thank Our Spector [Operator the comes line Joshua

proceed. may You

Chris Perrella

everyone. I Perrella Josh. morning, the up on the for the Chris Good on quarter It's to Hello. outlook segment. for third follow in want PEM

-- sequentially the by that expecting -- improvement volume being the there? the looking What's normal volumes the are third turnarounds impacted the quarter? quarter? outlook in in quarter, And you in fourth what With is then seasonality you're how the for second

Albert Chao

strong are the is Yes. for the quarter the strong And seasonally typically third X second Normally, like quarter weaker quarters quarter, the a quarter fourth this year. quarter. weakest

continues the be the much at second quarter, a economic -- even like in the second in to So improve that modest volume though the the growing rate, third quarter quarter. should assuming pretty

Chris Perrella

-- underlying, they turnaround similar the I in the you quarter something turnarounds? What were the second in what that -- doing see unplanned third absent quarter should but the guess,

Steve Bender

Steven. it's Yes, Chris,

when by So and just quarter the quarter. said, unplanned tends second think quarterly, both turnaround the about good be to unplanned both third the a and impacted planned the as the quarter, you outages, like second planned Albert quarter was -- the strong outages. outages

should outages. and those so then normalized in that have both third not -- quarter, I And volumes production second the do volumes expect I that, see segment. seasonality in sales noted we as some as the expected hip quarter that the fourth would and have quarter, impacting more also we for PIM

is quarter volumes. lower than So the third and that second typically

Chris Perrella

lag? called Albert All through pricing XQ? just quickly on quick at the And the How one a it follow-up, how how pricing that pricing it was then XQ average June I below the the PEM can right. of end course -- as of improve out does do think And you over average. one your lag

Albert Chao

both comes increase, quickly, price and it polyethylene price when comes have down, it in a down the Well, it quarter. -- some does PVC pretty members for but as third industry announced we prices and increases when

of have going price Some increases those a may lag up.

Chris Perrella

much. Thank right. All very you

Albert Chao

You’re welcome.

Operator

Thank you.

next Our from the line Patrick question from of Cunningham Citi. comes

You may proceed

Patrick Cunningham

question. morning. Thanks taking Hi. Good for my

volume steep in margins that How business? about decline. hip margins a the It's through roughly year-on-year. cycle the delivered flattish segment You should pretty the we long-term in think

Albert Chao

though in see, home that continues in as And challenges of the for see Patrick, in volume, continue where is the we these certainly, about markets product second of starts our real to neighborhood the a Well, through product if which you year-over-year, selection even and to you by in we're was average branded X.X, certainly can the quarter, seeing a have we even seen we've think resiliency customers. got sell pricing. Yeah.

think And starts so continue about over expect that base, do with we'll we see improvements as margin. we to we that overall the our and improve using branding customer the in relationship horizon, as

the teens margins. nevertheless, see, innovative should and in relationships high-end of some the can certainly we the But you that market year. the half guided high there's as that still this to We've improve branding for headwinds the But second the of think products, not range given we this see half have range to we year. the expect improves. margins second with of the I've

Patrick Cunningham

That's driving it. helpful. the Got epoxies year? and by balance in you And see how trending the demand then for of the region weakness do what's

Albert Chao

still on. plants to economy many one areas, lightweighting there's in in and especially is China. industrial is much blades the also coatings capacities the and coming demand, Yes. Epoxies new really largest has China windmill blades of vehicles. of into world windmill growing China's in slow And back applies the not Epoxie and and coming overcapacity of mostly business

European global. we policy while. So a issue the the but up pick China And US, expect weak takes very main and the or impacted years, man in business we quarters coming it is is have.

Patrick Cunningham

Great. you. Thank

Albert Chao

You're welcome.

Operator

you. Thank

from David next question Our comes from Begleiter Deutsche Bank.

line Your is open. now

David Begleiter

well Howard but Steve, sequentially, in feedstock morning. have think as be Albert as higher about Thank costs. as lower QX, you price facing might well PEM and will lower good if you you Aziz

dynamics? QX sequentially given up versus So still is QX PAM in those

Albert Chao

given elevated unplanned So we David, QX, in that if over pricing, when the second of average you course the the the quarter year, we end the as look the we second But that and of both about that to expect very was pricing over ethane second really in we obviously, should at end future the seasonally ethane strength quarter. see course headwinds ethane out because a we the business the -- tail have at PEM of don't half at forward perspective, year. of the look still outages, the Certainly, into think the the that pricing our we fact of of half certainly prices staying the improvement of and you planned kind pricing And than the from second in volume for the had pick up. low exited the to the mid-XXs of quarter. lower

David Begleiter

market? little global Very in give you right what Albert, a the you good. color And improvements landscape. now some mentioned that seeing you're as in polyethylene Can more market

Albert Chao

Yes.

primarily year. prices and dropped see and over in bottoming up as amount prices out We polyethylene the demand the a fair kind Asia, months polyethylene in been The export of think during picked in well. prices weak some I quite Asia

some quarter, we a the of so And second mentioned, result end there's as July. higher of feedstock the as kind improvements cost, well US price expect early saw of a as the as we Steve part tail in

also X.X% don't well is But for have third improvement still will as almost -- on demand economy economy pricing on for we and as increase some the strong, know general so the housing. we polyethylene, rate the kind assuming going that XX-year we quarter PVC. see expect of is approaching and the impact with cost and the price that's So push improving polyethylene globally in

David Begleiter

you Thank

Albert Chao

You’re welcome.

Operator

moment, you. please. Thank One

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

Your now line open. is

Aleksey Yefremov

and morning Thanks good everyone.

with some any in So lately new improvement Have domestically. you seen demand? up-tick in residential construction PVC

Steve Bender

Yeah.

and say when have that Aleksey, we've that into pulling you I and the pricing. materials really the trim, siding And that so PVC seen as announcements business well would we many construction as our and -- strength this announced in in about of through the think see pipes competitors you in

August September. out announcements So we and price have for

is overseas also begin seen what seeing prices And that may seen export to And in of PVC so markets. also in you have we've in that strength. reflective rise we're

So and nominations in pulling but pricing we've markets construction both strength the I through are volume seen that in that domestically mentioned, reflecting strength in also seen that as markets. export the

Aleksey Yefremov

And characterize how today Steve. fewer second level attractive will kind M&A. M&A your do engagement right Thanks, of question does or And How now? on you find of you look your more pipeline deals? on --

Steve Bender

Yeah.

kind amongst the and on it's always ourselves as both on about there's in marketplace. the opportunities well for good about say the right active opportunity see in obviously. we side for the So all of a products market, It's But finding others deploy value materials the parties, I right for side. looking opportunity of still the opportunities really that dialogue number there's just capital. an would value-added both building as

Aleksey Yefremov

lot, Steve. a Thanks

Steve Bender

welcome. You’re

Operator

One moment you. please. Thank

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

You may proceed.

Kevin McCarthy

Yes. morning. Good

on Just weeks. up three the the appreciably a for to speak Can you a you seen you over prices move I be? price the export producers and believe think will last US We've sustainable others driving How do in the you to think PVC August, that? PVC. come do domestic to four might table be what follow-up And contract enough the there? proposed raise it increase on is have

Albert Chao

of facing or perspective. from feedstocks. end their Kevin, you either the margin see we near really are number that a see they're producers margin are as bottom from end because the lowered number can at have a with bottom remarks, very operating that And our So there the of Asian rates challenges really a

is in prices rising margin mid-XXs, are as a for of that Brent driver the seeing and that in the those producers challenges, use really you market. supportive If benchmark

as frankly, not And QX through strength vinyl seeing I into muted the only see in seasonal think we're in the but markets, elsewhere. and price and level products my PVC, about comments continues by others ourselves pull this here for we strength market, construction to the the the North more at for August for announcements building even in American

Kevin McCarthy

or might China That's helpful. markets. China. thoughts updated side as appreciate recent Generally following improvement chemical commodity In any the markets a demand improvement I are any on China? in dynamics signs second seen speaking, you supply any compete, stimulate seeing many Albert, the on you from where you that there to across would efforts question, And matter, languish we've then of have for

Albert Chao

elephant the since largest out is one China the market And after of the quite expected produce chemicals of as Year, the New weak. for not well coming recover in China room. we capacity all much has is the largest the the it, and as It that did as still economy people the know of Chinese and many plastics pandemic.

chemical and that, polymers result, products. only products market as prices and used lot Not they're global dropped has now and exporting being prices a well. As they a import impact to

for that all impacted products. those global prices So

economy, with I still think They quite of for in government do is people as presume -- actions, yet. China been things. concrete specific and plans up buyer has quite the But recently, have out they policies well the a power surprisingly those issues. Chinese has we’re unemployment a very they lot off. the with with And to that the well I come central young And statement, leadership said as action coming high, for Chinese but not to aware have especially stimulate, statement Government are made

talk years. X% we Chinese near improve term economy that the will coming the targeted GDP time, for over and growth So they about believe

in prices hope third that mentioned, is the So with will really the spot has that, coupled Steve We issues but all with be last bottomed time during that planned a the usually the We which turnaround tell, started sustained, some several up there out busy have will see quarter. China. moving price as meantime, the quarter, weeks. especially

over think but tell, should we will China time. time improve So

Kevin McCarthy

much. you Thank so good. Very

Albert Chao

You’re, welcome.

Operator

Thank you. One moment, please.

Leithead next comes of from Barclays. Our from Michael line call the

You may proceed.

Michael Leithead

topic. Thank maybe Great. question on My PEM first on guys. the morning, last you. sticking Good and

does when how cycle you you envelope of back about it cash the selling this sort priced seems out of talk all levels, so dynamic there slides like the export breakeven how or for competitively you change do out? China plays think down exports are do it of epoxy And at Your approach… producers products and math, below

Albert Chao

depending polyethylene, losing margin. to information on US present that the the in are Certainly, players naphtha shows good cracking ethylene some industry, of the the China still the integrated in have very based are ethylene ethane definitely based Chinese our feedstock to on still we up, whereas integrated cash on -- cash,

business like epoxy, in but where additional built -- they So capacities. have

Some of are the below XX%. Chinese plants running

up And idle some new starting and plants – up. have not started

their adjusting are companies they dynamics. what over the businesses. the to time, think new do And right make I So decisions, should to with

Michael Leithead

can And maybe to helpful. talk or just decently such within segment have maybe super product the quarter? different pieces could within or segments moving tracked HIP, better HIP, That's fairly on worse you say, to relative categories lines the the doesn’t a the obviously Great. overall so this what then you areas perform, you follow-up the

Albert Chao

Yes.

saw across we portfolio. the really strength broad So a

strength business really of building pipe would such well so stone, businesses. products siding, pipe call So course, in fittings broad Westlake our we as as as in Royal storing wastewater the our really what businesses, and for application applications, a roofing,

in second in business made really all So the those the strength of broad HIP nice within businesses quarter. contributions

Michael Leithead

you. Thank Okay.

Albert Chao

welcome. You’re

Operator

Thank One please. moment, you.

Our next Please comes Matthew DeYoe of America. Bank from line call the of from proceed.

Matthew DeYoe

exporting right now? PVC Good do morning, you everyone. production percent they're suspect What China's of

Albert Chao

to and used of exporting Chinese PVC of the to is they VCM from quality not level is be carbide usually PVC. Chinese it. able on China meet a some the have a the are of process their not has And producers think I And VCM, PVC put monomer India -- great. I export – import think so Yes, a are produced importer been XX%

Asia into main has – market. was the Asia from But nevertheless, it PVC has Southeast an the reduced export volume does impact and markets, on So there primarily I South as think export China. those

Matthew DeYoe

in -- think I guess, that talked Steve, have it you said to less be past, it XX%? it's comments, X%? Is But -- and expected Albert's is assuming was I or thought number, had now. when you a idea? you have XX%. we've Is to any you XX%? it it around Do the it I'm you Do than

Steve Bender

that meaningfully XX%. it's Yeah, lower than

Matthew DeYoe

exported And shift in and what with to you quarter? versus your expect I capacity caustic Understood. get for import product PVC do the change if can, quarter your was And mix when next of you back? it meaningfully

Steve Bender

Yeah.

PVC, you so exports in exporting exporting PVC think perspective, we're And when in industry caustic and has in the the been have the the of both below we a just that is And that the from historically XX% range, and number. industry a XXs.

into so also well, we're is that building business. because products as And PVC below our remember, threshold number going

a have pretty consumption our for we domestic number PVC. own internally So good

Matthew DeYoe

Understood.

Operator

Thank you. please. moment One

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

proceed. may You

Matthew Blair

Albert good morning, Hey, Steve. and

Albert Chao

morning. Good

Steve Bender

Matthew. morning, Good

Matthew Blair

Xst, Could also, $XX by million should mind? and in keeping fully that roll we then expect And July they there QX. QX running you you in up QX anything or the impact share were be do turnaround to impact? on in any that What plan outage more PEM are into or color for back did And QX? assets any

Steve Bender

as the And And issues I in at core in stage. we us behind action this we quarter, are would those into so corrective quarter vinyl's say and the think took third I PEM, that it obviously in of are the second within business. our was terms businesses

Albert Chao

nothing major. but And always for turnaround there on, our turnaround going concerned, are more

Matthew Blair

Okay.

caustic the Could your you to Albert, you you're are run with the when demand you clarify then, market? demand think assets, ECU you matching in I mentioned matching that up in chlorine production or market And good. to Sounds demand. the

Albert Chao

all construction and now, cost caustic PVC It on stronger would depends we products and look every is markets globally for Right gradually. in coming that's demand down the weaker, demand bit month of a been areas. pricing, the the and has out and these is season certainly, price

the industrial picks weaker. economy So is becoming caustic picks up, up, activity until

Matthew Blair

is all to caustic would the demand? of that that marine is are that oversupply? implication the side And Okay. that And you running guess I meet mean --

Albert Chao

a It's combination.

we PVC, chlorine and to plans integrated integrate plans to not have have We it.

So the depending and adjust. those situation they are, areas market in where we

Matthew Blair

Okay.

Sounds good. Thank you

Albert Chao

welcome. You're

Operator

moment, please. Thank you. One

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

now Your open. line is

Arun Viswanathan

question. Great. you Thanks well. for my Hope taking

in year, the And into the look driven products you the to market market? there's comments maybe what are obviously and your side by -- wanted for is PVC as then into your been weakness rest you PBC building of housing Just some some terms the PBC that approximate outlook on noticed EBIT. head PVC? ethane with ethylene on volatility similarly, the affecting and side,

Albert Chao

As we export market improved, demand said seasonal has internationally. PVC and tighter a prices being has domestically earlier, increased quarter, turned

next bit So August in the at look view quarter, little think quarter and you domestically And down now there's year. improving maybe pricing, flat U.S. in if both this it price consultants' much of for announcements from pretty prices September, they increase also a the the in in pretty, third fourth will and looking at

seems stabilized general going PVC and improving just So from of view it it's market, is forward. the I think

Arun Viswanathan

also of side. compounding And refers part the I that any add to to nuances the Are Thanks. your about European just to wanted as comments there you'd it and business? that ask

Albert Chao

Yeah.

addressing compounding business, nice really perform markets auto -- cabling the are well. and businesses. the continues wire business. That we're business the We know, you Arun, that as and So business been the to medical has a

of As we really seen of some is we've think that the making been part contributions and mentioned about strength connectivity. and bill, the we've Internet the really the in we've in infrastructure cabling wire business,

going that certainly, starts. And housing we cabling we into also in construction were see the as markets see

cycles, continue to good at their the course, have the this markets stage. be businesses own medical auto business, Of but

that And pleased we're in with Europe well domestically business, so as both as compounding

Arun Viswanathan

Thank you.

Operator

Thank you. One moment, please.

Our Morgan next Stanley. question comes from the Vincent line Mangiere from of

proceed. You may

Turner Hinrichs

Vincent. on Hinrichs Turner is This Hi. for

and about tailwinds? in US Westlake exposure. you're investments infrastructure and having from longer-term these the construction, of optimistic size to that residential commented has more and as You exposure generally We the private nonresidential think opportunity degree can public Westlake of you medium-term

potential color helpful. would any and opportunity be sizing So the of

Steve Bende

Yeah.

think suited well billion. infrastructure of XX%, you when portion pipe our is business, construction, significant the into but portion, the significant is business, the larger but will see is not going our that country a so has. the we a there $XX pipe is Infrastructure for that seeing nevertheless, And needs Products we that certainly, are sizable of address residential that a infrastructure that that that's bill majority diameter

we well So counties positioned municipalities. able for and address very we're think those to to be needs

Albert Chao

So large-diameter the and is mentioned, also, coatings largest Steve are structures. as But mentioned, bridges any water our of business as for municipalities. supplier bigger infrastructure we a for of pipe epoxy one and for sewer

those PVC are government more to both see the as and So sent we'll governments funds municipalities for and demand for as as epoxy. getting same well

Turner Hinrichs

Thanks from if of the lot profit has all margin I HIP's you that your at peak? remind trough to mix? a the us also was through could with sense. color. of And of for changed cycle makes That Okay. view wondering

Steve Bender

No.

I in range. of the is very housing see business seen capabilities million think with you've to about think, over I of starts at scale averaging in second what where based you EBITDA the And have the -- -- the the can market course this performance conditions. the XX% X.X margins resilient quarter we on margin still the market

of perform market even business to when very of And think ability the and scale, margins certainly a an we its and beyond the in this business good well condition. ability delivering kind you it's we're to so think has

that good to product brands that would it's comes very strength and the we upside you that because So given have customer we guess, innovation the of think it. the as relationships and of out the brand-oriented, has business

business. been we've beyond that good guidance would in current given upside that We see guidance providing. specific we solid But have I not say do margins the of

Turner Hinrichs

Great. Thank you.

Steve Bender

welcome. You’re

Operator

minute, please. you. Thank One

Michael of next comes question Our the from from Wells Sison line Fargo.

proceed. may You

Michael Sison

what sort to about do -- Hey, other good acquisitions your to that sort you'd to areas longer-term? product like you the Boral and after of any when continue morning. there business Albert, or portfolio expand transaction, lines of think are

Albert Chao

very are leaders forth. with business, the our are in and PEM grow these vertically nine have HIP around well platforms and units. we strategic so can organically Well, Each business as and as on these so integration, as adjacencies, we the potential pleased we one nine markets world, in and

major the have markets and is major debottlenecking we we Steve So with continuous doing we reliability. of reducing parties is dialogue looking in studies constant internal cost reduction well where as are as opportunities mentioned, a improvement also initiatives are cost, our internal lot our a a and part as various on of in opportunity

something areas, are these all also we is we're inorganic but So outside growth looking working at. certainly, on

Michael Sison

to it. going margins PVC they end China here in Got you importing And start what follow-up. do how And again? much the you will as or importing recover, how from U.S. and just that? China if PVC, up If do then that continues a think affects the think do

Albert Chao

that China so think will very stopped I PVC, be good. long exporting

growth. global we many investor and chlor-alkali GDP below And additions you below as think going slides, GDP are in for our as are that -- a growth years As -- PVC I about looking investor the of capacities projects and And show we growth. typically, around are measure. know, forward, capacities investment at the GDP

So US that -- business lowest of there's we also the in cost and chloirde far, the make believe the to and make a energy by ethylene world. needed lot to producer energy

competitive more advantage world and energy PVC makes in anybody else making advantage So chloirde. much and having us piece of the

lack investment business. globally So our and of in position, a really position we with with very can our have good cost the new

Michael Sison

Thank you.

Albert Chao

welcome. You're

Operator

moment Thank please. you. One

from comes question the next of line Frank Fermium Research. Our from Mitsch

go may You ahead.

Frank Mitsch

inventory dropped good and that noticed morning. I the you enough. close pronunciation levels was Thank X% the sequentially. I guess

lower Your dropped downtime inventory or might I of from be out the inventory assume of some pricing. sequentially, that X% selling and unplanned levels

some talk we and factors can be the And of so happen about what there you see to on that expecting should line?

Albert Chao

Yeah.

morning. good Frank So,

come were so you're obviously, of selling on planned those right, outages, did impact not both some an during we and down and inventories. but has the inventory naturally, we were of so that And because outages, because unplanned producing

continuing demand think you to our as think production conditions. and meet levels are, address where where -- to when we're market But producers adjust we about of

about say as medium of of course I second it, levels we level. So think in inventory would kind the that half over the of the be should year the

And so well it, about polyethylene. we as both as think as vinyl

Frank Mitsch

all customer of businesses destocking, still Okay. And Do businesses, cetera. underlying some speaking throughout of destocking you on? last of the demand an of et -- there of at or think are I going Thank feel inventories we're talking the seeing about you. call was one that features was level that your conference are

Albert Chao

in very so accelerated business Frank end say, started ago this almost year. at the I'd really a and last that year Yeah. the of destocking

levels. time low point So our low-medium inventory at in where are to say that a I would I levels we're would customers' say, at,

destocking. say to this behind stage. I so at we've any continued that would not And see us That's

Frank Mitsch

Great.

Steve Bender

high I need Frank, in also to. they uncertainty want very are that careful rates with and to our customers interest add the economy, when only they order

Frank Mitsch

That's you. very Thank helpful.

Steve Bender

You’re welcome.

Operator

moment One please. you. Thank

comes Suisse from question the next Our [ph]. Credit John of Roberts, line

proceed. may You

John Roberts

a between the activity? Building construction Back do Right. repair new remodeling sense for Thank have and Products, divergence you you. to

Albert Chao

see say John, business. both HIP that of demand would in that I did So continued sides we strong

remodeling. you a perform. adjust really to see, to the demand repair X.X year-over-year number, start strong And average still volumes So lower resilient able million business given to and being continue in and can again,

So HIP starts, in remodeling activity new say business. construction the to both continued in both of perform I the repair would and well the sides

John Roberts

strong Was merchant then weakness And greater availability the demand that in up sequentially was volume chlorine was in vinyls, given you Q-over-Q. actually noted or largely chlorine?

Albert Chao

in that's is You so story, know, in the pickup water summertime, activity chlorine, a part of for and there John. treatment that

John Roberts

Okay. Thank you.

Albert Chao

welcome. You’re

Operator

moment. Thank you. One

Our from Advisors. -- the Please Ahmed Global question Hassan last Alembic at line proceed. comes

Hassan Ahmed

Good Albert and Steve. morning,

Albert Chao

morning Good

Hassan Ahmed

ECU Question around to yet, ECU strong. come I quite but be pricing. caustic recently, history down rates globally pricing depressed, on soda has to basis, seem pricing be continues know relative an quite to Operating

sustainable my So how those are is pricing levels? question really

Albert Chao

the is coming improve. still Well, we demand the housing believe, will bottomed And – is demand coming out both monsoon, pretty strong. has derivatives demand though repair globally, chlorine strong. remodeling and R&R global new even of think for still India and And out. back. we are in mentioned come demand, construction We PVC, prices global

it's are the that chlorine but very think peaking, coming back very, I really will but demands So I bottom. strong, it's on say

the still but is I have world in GDP industrial far a US the possible activity. having the really so at of think we Europe in most And are far, and in level. And caustic of countries Asia, the low think I general GDP. positive

as around think hence tighter they the and grow, improve, there's mentioned more to so, going very strong I be as the demand as earlier, added I will demand the So continues little forward. new supply-demand world makes capacity

Hassan Ahmed

Understood. of the under left of story right? large about supply-demand competitors Texas, dynamics. supply, following one chlorovinyl or Very has investments investment virtues, your helpful. sort lack where it, off in of the of guess, chlorovinyl of considering sort And talked positives sort one particular. I was up just on call Look, And recently you in I of of chlorovinyl

do that now? undersupplied in market medium story sort tighten to sort of will to still the of longer continue how So with will that and supply-demand you that announcement feel you Do term, be the out see there

Albert Chao

Well, as globally, undersupply. I there's said earlier,

very other So difference one you the know, plan business, make is vinyl not this the would much unlike much olefins that, -- integrated. business, as business,

and seasonal or need lot very a investments, whether EDC plants plants very business. complete, power and PVC. and power of heavy it's renewal chlorine, You a It's a investment VCM, ethylene very

the So on and will mentioned long-term we on purely adjusted we're capital. find earlier, give basis looking at investments. looking return organic certainly us cost are the but growth return out which a We on

you Long in its going looking this global as And allow investments the impact warming, anything have has energy, does which China own our So basis, and business area through of what to in huge industry, term basis. And one and on energy China some a of review the out past. for phasing big -- -- returns high issues. a long-term know, China control they double want is short-term like of industries. major we're not a at as really been, on challenging

of and all on, on, will going it's time that is tell. uncertainty all So going

Hassan Ahmed

you Thank so Albert. helpful, much Very

Albert Chao

welcome. You’re

Operator

Thank And would like to showing to questions. no Jeff this I'm remarks. closing Holy you. I back now turn At further the time, conference for

Jeff Holy

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

Operator

participating. Thank today's for concludes call. This Thank you you. conference

You disconnect. may now

Westlake (WLK) 3 Aug 232023 Q2 Earnings call transcript