WLK - Earnings call 3 2023 | Westlake Corporation

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Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Westlake Corporation Third Quarter 2023 Earnings Conference Call. [Operator Instructions]

As a reminder, ladies and gentlemen, this conference is being recorded today, November 2, 2023. to Westlake's call Vice like host, to now Holy, Jeff President would turn over the today's I and Treasurer. begin. may you Sir,

Jeff Holy

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

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

of We replay that call which available hours be today's Investor advised reported be can will earnings only as A call information no as accurate may accessed XXXX. beginning Westlake's of of today, website. information be time may X, that on November are Relations replay the following included replay. via speaks note also that section website. Please longer of today, this of any have And be therefore, this found conclusion time-sensitive an the the call. This presentation, X of in you

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

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

Albert Chao

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

third $XXX we $XXX XXXX, including of income reported $X.X EBITDA HIP of sales For of net the million. million, $XXX million quarter and record EBITDA of segment billion of

in typically segment downstream the and overall in benefit of than segment our by quarterly requirements housing our as cost-saving the environment. pricing stronger diversification EBITDA in North also from while HIP of of EBITDA a record, selling a rates by growth previous strategy. HIP brands generally is average Our achieved cash much highlighted second a sequential initiatives. The of where despite American HIP segment driven solid of higher costs integration set lower construction disciplined material housing strength EBITDA strong rate. XX% record converts segment by well infrastructure generation at as flow and our -- lower our margin higher lower additional which and segment period and business doing earnings with [indiscernible] the progress was Penn benefited a capital activities, segment's resilient and operating our from in was our drove exceeded the portfolio XXXX, segment comes volume in in prices. The our economic our to HIP quarter vertical generally

more the results have to call. will to We about all say record want their our third our on and later of portfolio quarter our outlook employees congratulate HIP I results But our the in diversification. of HIP performance. Overall, reflect advantages

and our earnings compression, businesses our infrastructure delivered dividend Penn margin pricing pressure housing and improvement. experienced While and businesses cost

stability leading margin To and As offerings flow of our value-added with our margin XX% a and vertically of earnings producer, for of materials of our portfolio and essential demonstrating XX% infrastructure year the products. was EBITDA our a and strategy. be housing second XX%, consistent result, prior performance combined of Westlake cash quarter margin integrated with

over Our in billion future our year-to-date. allowed The $X.X focus confidence flow company's generation on $XXX enabled the consistent in the flow Westlake to cash and third in the generation, the cash increase to to deliver August January. I business flow the turn strength in by our provide operations from quarter dividend third and of quarter $XXX million cash financial solid million to in our return to since Steve detail for to results more us like XXXX. to call our and approximately shareholders now would XX% on

M. Bender

XXXX PIMS third reported XXXX Net in $X.X Westlake Albert, lower segment prices sales products XXXX offset partially of third on quarter as share billion. the in good margins result of our in operating the quarter lower income margins for compared and third from our decreased you, quarter net $X.XX average third income rates as Thank higher of integrated $XX income as and by prices million of and of integrated for or a well most volumes. to the selling morning, quarter and volumes. When XXXX by primarily XXXX, $XXX of to of lower due the of net sales per second million quarter million of sales the decreased everyone. $XXX

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

due the These record vertical to with deliver want are HIP our decreases. produce segment challenging of cost to The as our when segment housing time to this some strength at managing expansion quarter. net to and Before our sales integration a strategy lower North testament and the drove cost margins customers. segment record materials to value diversification price of to margin illustrates on American of result to used our in downstream pleased was while the results a PIMS third second HIP period compared to XX% thoughts compressed provide high-level third in backdrop. a XX% our importance of Westlake this I against that integration delivered products EBITDA earnings 'XX the our the and in XX% in ability quarter segment's despite a of a of our customers were of benefits quarter I We price brands results, the We commodity in believe the declines. our performance discuss margin quarter

taking in pleased segment, to performance global While soft are challenging macroeconomic we PIMS we results with conditions. and the HIP demand, reflect the to our address actions are of the continue segment our financial

reduction cost million in to we XXXX, deliver cost previous $XX After to to savings cost company-wide $XX implement savings to from million $XX to achieve our $XXX achieved million of program date in up the now reduction savings in continue $XXX to targeted million We -- XXXX. cost target. expect approximately We actions of XXXX. million

energy a and regions contribute that advantage cost taking to feedstock vertical strategy. managing are investments a don't We in prudent approach our and integration global costs, capital to markets and or

performance. Moving to the specifics our of segment

sales margin average record segment price, The from of more driving $XX year-over-year $XXX sales of more of lower $XXX than that the million XX% of X% and EBITDA segment to quarter and year expansion volume million pipe to $XX lower costs due with by increase second period. the year increased XX% HIP to Products in sales. to XXXX, average segment due solid decrease in sales solid sales $XXX XX% third primarily selling HIP Our $X.X business. on produced and EBITDA due decreased Housing $X.X lower second [ more XXXX, siding million $XXX offset EBITDA prices of lower than million quarterly in to the of an the in EBITDA were decrease from volumes of segment compound sales in prior EBITDA quarter million. XXXX, growth average sales Infrastructure $XX prices. billion higher the an improvement HIP offset X% in trim growth that of product average sales When which driven in The in materials quarter offset and previous along ] the EBITDA million Meanwhile, than our of in drove the XXXX in and The million third quarter growth quarter and price. Housing of a overall margin X% the sales of volume, Product selling from compared our sales in quarter. in fittings cost, second XX% to was applications billion Infrastructure in materials the in from

$XXX As a the result, HIP third million from million quarter. second $XX in quarter the increased to segment EBITDA

our performance segment. in to Turning Materials Essential

feedstock of selling weak more global in prices, for segment drove increased by Third our Performance from XXXX declines, with volume, as third sales demand decreased and coupled $XXX the were and resin average of X% higher volumes, to third sales a in When million average Epoxy, by PIMS in $XXX addition in XXXX, prices, polyethylene imports. particularly segment to quarter lower million. by million XXXX decline offset and of than earnings. as EBITDA $XX lower energy second by in competition of charges. Net quarter third the EBITDA PVC soda, were sales combination and million selling EBITDA epoxy which over for cost driven PIMS Asian fell $XXX quarter sequentially quarter a in were caustic particularly offset certain quarter with of PVC more charges billion sales due volume to than the for the quarter largely certain were improved segment from the $X compared resin and second Materials gains lower particularly price lower

PVC As while markets markets such continue the face in pressure. improvement quarter progressed, we saw other modest and in a as polyethylene pricing pricing to some

as feedstock continue processing low-cost a specialty to PIMS well-invested, Our and product our is with segment position, grow competitive differentiated to sheet. our we balance integrated vertically a offerings. Shifting globally

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

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

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

current in view expect and the demand Now revenue with let me typical and account on million and into for in seasonality, your prices $XXX of fourth between the we million $XXX segment EBITDA some provide margins Infrastructure guidance Products quarter to mid-teens. Housing Based models. taking to our

We the million million also expect $XXX XXXX of savings that in $XX previously mentioned. I to

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

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

Now outlook of business. turn provide to current over Albert the I'll Albert? a call to back our

Albert Chao

level fourth The housing quarter, These combined to highest remains backdrop, outlook leads demand. in normal and a makes affordability are high years. over macroeconomic challenging The and pressures seasonal demand of and next negatively quarters. consumer This several it the remains Steve. uncertain backdrop continue and to throughout demand, in expect ongoing mortgage inflation Entering impacting economic rate conditions turmoil economic the predict the volatile us to inflationary quarter. challenging. fourth XX geopolitical over trends rates at the with you, difficult are decline Thank the the

PIM That in at should some are fourth the of products destocking experienced that customer reduce our activity relative today believe HIP they which last with in key year. both customer said, the year, of lower this what we recent of in degree we to pricing segments our and combined momentum last were time much inventories than the quarter

cash with As business executing leading to cash our has operations we business. low-cost on in market $X.X combined position, market enable broad in our globally solid Westlake product generative trends our brands, head our to advantaged into evolving with resulting position from basis. XX-month respond a trailing strategies. Westlake demonstrated of portfolio XXXX, while a a nature strong billion and flow

the our We last shareholders. invest value X doubled Notably, will continue our shareholders. continuing a sheet quarterly to to strategic maintain to capital priorities a long-term in our balance to testament return and has strong to years dividend over to while our returning commitment as

sustainability reaffirming to also our products improve our of community broader stakeholder We the our commitment and to operations. are

into we're virgin for products our will of intensity to XX% goals. We intensities Separately, pellets that post-consumer an reduction resin new sustainability emissions requirements. In our Solutions. circle as properties lastly One we scope interest continue of of market resin. to introduce X since we validates achieved to I'm and this This already line to our by up we customers' Pellet increase goal reduction post-consumer the from of have pivotal our emission introduce has portfolio for look The XXXX, seeing our to to more we innovative continue increasing September, meet XX% with into product line products content XXXX, and are efforts, pleased moving recycled material COX material. XX% to closer independently that our which recycled comparable achieve certification, reduction green achieved customers announce pleased scope a to to in sustainable progress, X opportunities significant to incorporates

Before to quarter third the and questions, I our call thoughts provide some we closing the want on our to outlook. open

focused the a to of value results margin that culture recent and we're up businesses. the believe strategy. diversification strong integration in can chain. segment very brands that strategy manufacturing to is portfolio flow, Our conditions, potential third as downstream EBITDA we our Through and Recognizing this product goal of the profitability we made maximizing important A Depending flows. our proved key able capture a in enhance to the all operational moved the low-cost the or to it's excellence. In profitability by stability of earnings third highlight cash this on quarter, growth economic our the supported quarter downstream volatility component down cash with years, to on benefits shift broad have value that reduce our have beneficial and Hip shift vertical HIP strategy investment

to Jeff. forward, additional seek over we through call. I As much listening organically look this Thank turn to to back business third quarter strategy. to further call will acquisitions our the earnings through we now our broaden ways you very for and

Jeff Holy

Albert. you, Thank

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

Operator

Citi. the first Our of Instructions] comes [Operator line Cunningham from question from Patrick

Patrick Cunningham

the areas broad-based? sort drove pricing in be would helpful. are next XQ the pricing segment HIP What into quarter? year of into sort for of And the declines to of Was Or it there specific outlook any highlight? any and pressure

M. Bender

Yes.

housing quarter the in QX. the had sector. when pickup pickup, Certainly, of seeing pricing about quarter, saw issue these know, second there in affordability certainly you offerings over we're think So is the compared portfolio when volume certainly X% we But see of some can certainly pressure. some about is we decline, pockets you and where to as nice all we certainly, an think volume you

to to pressure segments There did, in within be we record results. certainly, HIP. certain is performing very solidly continue some so in as that within And fact, portfolio

Patrick Cunningham

would you then similar towards And follow-up. Or I trends your to for be just negative indication end some the to segment. this Is narrower it. range. XQ point the the EBITDA might a appreciate sales any what other HIP sales expect Got and challenged beyond more maybe of guide range there are seasonality? typical The the there? that point business seems bottom previous from to just

M. Bender

of of interest a But Patrick, both and impacting we've play. it certainly it's certainly, rates of certainly for combination seasonal plus affordability. interest seen a of rising is Well, effect rates mortgages that combination, and seasonal both compounding impact play a the

the drivers X that's within we've So that really the primary guidance provided.

Operator

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

Frank Mitsch

into going in very If for XX% impressive I EBITDA as guidance, on from XXX margins you is third in And beyond? up could HIP year like and How year, follow to up to think Obviously, 'XX bps looks or probably margins based normalized look like quarter. last on so year. come do out the HIP. the XX% in you of your it close is which about EBITDA the full

M. Bender

see perform portfolio And customer acceptance strong we Yes, very our question. rising Frank, well in the that by had you offering certainly, continue from even and that period of good the broad I base rates. we think to a interest

of And the this I in portfolio provide It deliver think so compelling combination EBITDA and is really offer call I a an strong building exterior margins we does ability would to what business. products.

our goes products portfolio or of automotive of we're applications pipes into in our which whether that wire seeing, of building infrastructure some and fittings, a applications, markets course, adds course, and Of or the variety is infrastructure it both going medical. into other compounds,

attracts, So it's think, of offering. even seen that think headwinds a pricing I the kind given and the pressures. will these strong broad offer of face rates see margins some And the portfolio portfolio of interest good I we've the you in

well, believe performing to performing. to and So that I be incredibly expect strongly it we do it's continue

Frank Mitsch

That's helpful ahead, -- yes, go please.

Albert Chao

I past Albert, teens. the is Steve, that, have said, all want business for in just I think, the to margin our the high Its HIP EBITDA target comment

time and lower and of third Now fourth first it's can quarter. on and higher go second quarter, up the season, depending it down maybe the usually,

Frank Mitsch

of an about, cost that. the you've think year at Understood. this And target anomalous the But I talked was appear your significantly. for to be does raised then that that fairly obviously, also then I year, to improvement somewhat trying get you've and

You improvement the did segment that coming much $XX HIP is versus from PIM? of million year-to-date. cost How

M. Bender

logistics as opportunities. It's in the opportunities as both procurement in everything portfolio, well from across well HIP actually and PIM

say, really it roughly, is So segments across so. let's equally both

Operator

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

Ryan Weis

current Ryan be chlor-alkali. demand incremental And you're My seeing of impact in where by reductions Have thus are for is some your any for far? areas peers question recent first the positive around on Aleksey. product? capacity a had This would dynamics market on Great. like there your

Albert Chao

Yes.

the know only interest affordability PVC we the repair also of of is chlorine, seasonality Steve As impacted use and impacted but user as the mentioned, construction. not also high new and it. housing remodeling on rate biggest chlorine activities, we biggest for that PVC rate, mortgage by high impacting the is is And are on

especially the and tends So and chlor-alkali I of for the in the and quarter. PVC part quarter for first go rate operating down fourth chlorine maybe think to even both

Ryan Weis

about can there of you're seems been in like continuing seeing have market then margins. it's you talk in the at costs to get kind low are just stability And October, what a here epoxy some it albeit Helpful. at seems level, and like might in prices

Just there any give commentary you appreciated. us much can be would

Albert Chao

Yes.

very As is imports and business to Asian dropped U.S. Europe our and imports imported and now imports the to Europe both U.S. of to have Steve epoxy And both mentioned, close that Asian price. in the prices by impacted

So margin even we poor. the is stability though see some pretty

Operator

line Our from question Bhavesh Markets. of next comes BMO from the Lodaya Capital

Bhavesh Lodaya

are are Bhavesh the year this performance for is compare segment. an of and on in product versus quarter Is outperformance Congrats you last in HIP the John. mix roughly price your Yes, selling? that cost? year-over-year. versus there continued Or the are element quarter, so of volumes on this margins and what HIP I changes X% If flat, up during your all is the the --

M. Bender

No.

than we've we've related offered. flat, strength I seen right, testament you course, affordability have the pressure a So you're does really with I given year-over-year. testament the quarter-over-quarter year-over-year stronger strength relative But results, portfolio to the is, headwinds seen is year-over-year by 'XX I a the but or think provide. and really nevertheless, volumes 'XX, think, a strength higher to the the price Obviously, offerings driven rates, HIP with some much of customers of when year say would to about are that it we our that the that to on think either

at you performance in perspective had a X% where tells from from even right of in seen, rates the X%-plus this you a volume I in nice pickup quarter-over-quarter, the our we mortgages, that XQ XQ, are XX-year in think volume think if HIP we've from market to about strong portfolio which business. still we're performance

Bhavesh Lodaya

then question here. Got a it. And the on PE markets

feedstocks How color heavy U.S. line pricing seen your So on prices And mix higher we volumes general. the exports in here? in international pretty you do the outlook move going PE into with and see for going from any the have ahead?

Albert Chao

demand industry is U.S. in cannot And the percent capacities. the U.S. polyethylene. in local up exporting The additional with XX-odd domestic coming Yes. capacity new high absorb demand,

So of capacity the I more exported, new lower come a has think course. volume which to comes more up, export, will price, as be

Operator

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

Matthew Blair

you With likely $X.X make fair of could billion you kind in in? to adding assess is it's the And PIM? an that be interested of cash, you What that be than did HIP landscape? acquisition would would in areas think M&A it if more

M. Bender

landscape, equally Steve. our it's at hard in look line. immediately bottom as compelling to is side Matthew, as synergies looking the look opportunities we compelling segment we that there in that say well where good the accretive as building would I products across for value, are We're PIMS our space. the material both

And necessarily that while compel just really It's the spend really return. we're And or you looking drive we seen, the challenging the focusing focused really have doesn't sheet, And But we're It's we to more we the both that find on transaction return to spend two. over other, on incredibly in but so the as opportunities year real opportunities segments, line. not X at for invest as bottom cash do get easy value or know, last balance cash. right that us we're a the do where those the on to willing and it to you've basis. have always to out as cash. go

where look either the and focus PIMS as for or to be on continue segment, we'll those. will synergistic that's our opportunities hip So the

Matthew Blair

And you in tailwinds are raws And in out then, Sounds any also, were quarter? boost you Would there mentioned if raw so, the any good. material PVC? HIP? that the helped And onetime that there Steve, in HIP. other be

M. Bender

items the were PIM. really vinyl. onetime actually margin really reduction the the -- the business. it being the biggest on as in benefit a contribution inputs, or was period hip in of that were that items in to expansion And input all relates to impact the it The had seen We've

Operator

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

M. Bender

back next take Maria, the question. queue, the in let's and Mike maybe we put

Operator

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

M. Bender

Arun are you there? Maria, connectivity do issue? a we have

Operator

that I Not everything the clear. to go we on am try next seeing, looks Do person? I -- to want to

M. Bender

Yes.

in put let's Let's also to the que go next and Arun the next question.

Operator

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

David Begleiter

Thank you. Can you hear me?

M. Bender

David, Yes, can. we

David Begleiter

you. Thank

mentioned one-timers some in they in any PIM other they onetime impacts -- in And You tailwind all the into QX? quarter. should a much are in there were some How be QX?

M. Bender

this terms million to stage David, I and QX. I And out. segment, at item all we that none the would attributable was called PIMS this were see in say of $XX these a impacts in

David Begleiter

the North good. in Very year given early you're And an at construction. view weakness volumes 'XX, Albert HIP looking next seeing on you American have and Steve, do

Albert Chao

Yes.

still We be by expect high to high mortgage the HIP the rate. -- Housing impacted interest General industry rate,

So until Fed housing rates, any see building-related don't demand demand. in in recovery start or we lowering the

David Begleiter

be So would year HIP? you down expect your next volumes to in

Albert Chao

Possibly.

Operator

Our Duffy Goldman from Fisher next Sachs. from of line comes the question

Unknown Analyst

Question around epoxy.

of out you And are largely global which your seeing impacted we're have not? trade change of oversupply kind seen being Epoxy? for China, end the in by flows of which With that, markets a are

Albert Chao

world And as the winter such China down in steps has producer. largest in composite wind economy has over recovered, things think, the put of the areas has as though are a heading China even China the season capacity and well think slowing the really stretch next mills as and coatings not I by well. market and we're as several the incentives. in generally into in generally, largest Again, the epoxy government I for big are

think epoxy impact in I across So all it's activities. is -- the board the

Unknown Analyst

until And we these the Do are Meaning, do need some of struggling next is strategic? something some still cash then wait of parts rebound? just kind levels if talked something to you have you does going year, demand about below think stay you roughly the to in industry breakeven? get Or because construction may out the think industry, do world? running people Okay. we're at to this we

Albert Chao

speaking, about or... generally talk think if I chemical you just industry

Unknown Analyst

Epoxy general. in

Albert Chao

Yes.

of As And the was to pretty said, that prices seeing U.S., the markets the European as because even we're earlier cost where companies up well And are of as both I are one has down of price seeing curtailing pressures, we're going is prices. in oil plants mentioned the much imports. production economy not dropped great. and to questions not slowing in running. some start And China the meet imports or

losses actions So the seeing reduce taking all are to we people are across production, reduce world.

think I So very any people money. making few epoxy we are know

Operator

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

Kevin McCarthy

in that XXXX. China I'd of view lot backdrop the property supply U.S. there's moving dislocated into of of Albert, there. prospects also seems PVC sector seems contract trending length appreciate updated against your resin The price to be about a but flat,

see Would year? is PVC rationalization out? you do you how throttling of So back? for playing next your view What anticipate that on or capacity

Albert Chao

as PVC for ratio are as and both of quite you -- that PVC demand production as know, domestic but at were while. I think least U.S. economy, exported at U.S. market global X/X housing well the construction about and impacted the a being by

has lowest -- So to and in U.S. the PVC the the cost produce world.

benefit for is gas half which for ethylene generating and low-cost for feedstock producing half of And is producers. making natural is ethane, ethylene are chlorine. for from and PVC predominant power natural low-cost chlor-alkali We gas U.S.

coal-based, comes at ethylene-based having new into in a cost switch in high is comes refining the because is naphtha, which from in Chinese higher and government cost PVC going the government of can margin. in issue the anywhere carbide, the on then that Chinese in are and produce to the polluting and so cracking And the is curtailment which any capacities are world ethylene high less producer we moving of process PVC, production, and have lowest thing is on And cost process carbide or capacities export the world and is carbide oil. based compete. The less about which we Chinese XX% China China, all one

the is higher. base So cost

able And so on to are compete they basis. global a less

sense, are again, that even against positioned from to U.S.-based compete better our producers exports. much globally So Chinese

economy is the economy a the through China right global and part at Chinese is end So of big construction a now. the and activity recession really is going

construction the the housing Which profitability going the to vinyl are improvements China until as improves, in in of either. and in impact the So well. business should world in China activity we rest see

Kevin McCarthy

headwinds I segments? the housekeeping did ones it, then if X $XX do quarter any how missed you. And Steve, also planned? between FIFO maybe your that I Apologies And curious, for million fourth but you turnarounds split have you had maintenance referenced

M. Bender

Yes.

question so in about Kevin. -- of your And that second tell X/X me again? was is PIM, And

Kevin McCarthy

Are of the around your in planning plants turn to you manufacturing any quarter? current

M. Bender

current maintenance levels. our in 'XX really ethylene will in perspective, small In in activity not we attributable a But only a the quarter, maintenance otherwise, bigger 'XX. when activity the turnaround turnaround be activity it's have any to from level fourth significant small quarter,

Operator

question Our comes from the Josh Spector next line of from UBS.

Christopher Perrella

Perrella Chris for Josh. It's on

third down having guess, quarter fourth the quarter final there? material that pieces, on margin What's Just sequentially? the What are higher I up in that for hip following the the costs? for And headwinds? of fourth margin in moving the and Is then quarter. sequentially raw guidance causing the is the

M. Bender

through seen fourth course, costs well. of roll slowdown the A the terms we also roll is of We're affordability. costs Yes. that rates interest to a are a compounding will in FIFO that in diminished level. -- feedstock the of some reporter some that also quarter headwind headwind as will seasonal And in of of really we've since of come a through attributable piece will big will so of and be terms to continue that demand through seeing

of those combination factors. a it's So

Christopher Perrella

All just like Albert the then soda market quick one PVC? I'd soda. move for weaker I on caustic hear we Steve. And that, through thoughts the demand and follow-up just right. appreciate outlook given Steve, on the to year your as the caustic

Albert Chao

with demand global growth is generally, Yes. the doing the caustic not really that and soda, GDP global GDP correlates global well well.

and expecting year, another the this declines have coming subject November are And that days. every to think global I demand, forecast experienced the December So this hard and But How of and this to up. price erosion more drop. we of to year, will it's price after least think I they're for year. there at increases year, economic these $XX almost more price the stable consultants all next month saying be

Operator

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

Hassan Ahmed

larger they to issue of on earlier your go-forward one of around supply-demand obviously come particularly a margins fundamentals, mean, couple will on the competitors inflection down the the years Wanted of by few positive one margins questions a bit the shut have as down Look, in pricing they I and capacity do see and your over views of margin last were chlor-alkali revisit what ECU and to But idling relate last pricing quarters. basis. saying quarter of the side well. a the capacity has recently fair that temporary of second they vocal very pricing ECU over on announced as the expect And of has some XXXX, it. and to

in views with your are agreement So that?

Albert Chao

more being of our of because Westlake, agree. strategy we speaking, generally historical fully integrated. Yes, Yes.

to PVC businesses. We have integration and then also to chlorine further downstream of manufacturing hit

So moderate we to help both vinyls along more to which operations, sell lot the chain, our and have us domestically export whole everything products channel a else.

as more business. improving the actually quarter, and whole we since much the prices And the downstream explained to stable down we're moved things we and better. this for earlier, to is So consultant mentioned, throughout as price caustic year get declines next for year HIP has expecting chain have, really last value forecast

interest feeling well. reverses, subject still what's until as both on is high don't interest Now effect the high to detrimental of which economic going rate. that demand, rate, U.S. and a with seeing overseas the in we'll conditions. -- this know have We global happen We're to impact

Hassan Ahmed

sort the we one by a go-forward to to China, what been impressive is that doing is cycle? seem enough. across mean, see destock some paradigm through put followed like restock quite Fair may of basis, a I if I housing new assume we The Albert, yours, pretty a we've actually on eventually pretty sort of living they right? And it's it's unprecedented what seen destock times. into a as now a with And massive rates chemical still enough. sort simplistically including doing, doing onwards? be doing product But it obviously, Or follow-up, XXXX chains, historical has we a a that impressive of are, fair severe Fair where cycle, with with we are in to variety were of restock mean, cycle context, shift?

Albert Chao

Absolutely.

been costs pretty over. the is people need. their destocking rates, question mentioned, interest -- issue what ordering you earlier, really are destocking people to need high what And I And as think is inventory are they whole high changes. think The The demand. because seeing expensive is we've I carry, year. much is are through really the companies true the activity mentioned most we

they very now. don't So short-term -- and know oriented they're

And serve. have ability demand so came to as more down, we

over have if certain As our for in a XXXX, HIP that's good and of know, our year backlog you we products, business, a not customers. back

ready large, serve of now, So we are customers short in notice. and by to relatively most businesses our a our

weather people start housing when the carry side, a don't customer which a and and higher from don't say sticks turns when we effect it, who March the need is as on and they they're what the inventory which in turn -- as February, when -- multiply level businesses. But And having springtime, start probably -- But said, benefits and we they do seeing ordering know benefits then want we they we're market speaking, be are supplying the a that the generally the know So also only you demand our more a any as to of bit is can that. ordering putting and ground a will are more we of will production true in producer, you and that to in serve the inventory if knows market customers that is future. reasonable competition import said them. be that

we So in But March should will improvement tell. see who knows some February, time of on signs housing related.

Operator

Fargo. Our the from Michael [Operator from Sison of comes next line Instructions] Wells question

Michael Sison

can me? you Guys, hear

M. Bender

Mike. can we Yes,

Michael Sison

what rate? to of operating terms fourth you the your the quarter chlor-alkali in you head demand as sort of continues to if that think year next into facilities challenged? about be you're However, in going do run think And how you do

Albert Chao

Yes.

earlier, Our down and generally, mentioned goes quarter. first industry the the the much rate operating in as demand pretty the rates, and quarter operating fourth follows

And operating the And pattern. high we in up this So tends impact is go mentioned, to again industry interest for quarter. also down rate the of activities. of have demand rate picks the third but construction Steve general our on as not course, second and and only seasonality,

So those effects. are compounded

Michael Sison

demand in? how Got pull you as run you into capacity it that? you sort demand think -- PVC about XXXX, then as if weakens Will 'XX, you of facilities head if when do your of in And run back sort think some it. just for you compensate to or

Albert Chao

XX% are mentioned but export mentioned, the The But Yes. demand down, lowest the ethylene we cost for I go HIP business, integrated back making to the pulled PVC. going industry We've much to have customer compounds. fully and And and -- more broader capacities been bio producer is the industry about American the the world making in down the PVC one further we resins windows companies there. are you chlorine the industry, bio when of [indiscernible] for more producers. exports pulled don't to PVC as from back pipes, out easy siding And base. and for we for we not has that of in resin, production. And reach

PBC, So In the benefit on also ethylene good upstream margin chlorine, we'll and our is the enough. industry will side. export

Operator

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

Arun Viswanathan

my I questions. I first question guess So X -- have

on think, is you've margin noted HIP. kind of this the past, I segment a question XX% you, in range. first to XX% discussed When So EBITDA

you I'll the to well that. a with consider? appropriate And in think could in You've well done very here. you range And range start still beyond that environment? go that's executing do potentially higher volume

M. Bender

guiding the we've environment the been in Arun, we've about so teens, think couple upper a we've been of exceeded you to quarters. in, see of that we when kind and And that demand

broad strong We've headwind got market quarter This be a for there to I stronger a that's move given we've plus very much think buyers. in a with pricing environment, quite that. But a and seasonality home play rates, see X% to quarter a we've record got we've XX-year potential a bit is think to was stronger that with as of mortgage most then very for sticker shock the a currently coming up. demand into for mortgages, But seen a fact margins I able offering, got and here, with XX. demand much product

to if you more a in lot macroeconomic a better affordability need uncertainty and And so of terms to of we a get better to backdrop will, be able tighter much a market, -- There's outlook. a the But and in constructive need be construction. a we market of is cautious that's and and but into backdrop. personal better remodeling deploying macroeconomic potential, causing there capital people days, other these a about lot repair yes,

Arun Viswanathan

of China some touched on years? What's be the you could weakness that that appears Epoxy? reductions that just question required we've further would be on the going biggest a that mean that? but see over better rates driver, also the part had PIM think Okay. about there, there's following what market couple on given your experienced do last well, another capacity that understanding I I to to it to there operating accelerate take And there the as I the really your was, chlor-alkali, you just on rationalization of footprint industry. think But kind

Albert Chao

Yes, that's good question. a

[indiscernible] world. As earlier the we that over discussed there's capacity in

a their I China wind build for demand lot for capacity anticipation cars, the of power. EV, generating mills, lightweighting think renewal both

the China the At But a better in the impacting think of even meeting China same EV the blade, customer going that's exporting various are come. these U.S. and is alarm and has the the or while that Europe, we the technology So is activities the mills, the globally, EV longer we the reasons reason wind people development of in built cost the wind can time, in XXX-meter the increases the the have strong, properties issues the takes for over efficiency on of adoption Westlake, and it, all make do further won't demand but mills. will pace blade, the up and going blades, capacity. renewal think competition. I windmill power, world why that one not still And

think I some plants shut in of And not are rates running down. older trying China integrated time. low takes this plants the So or

in going they like so still the U.S., very I so the coatings, think and And on and time. electronics. rebuild it But for car, and epoxies globally bridges you mill especially rationalization anything, ship is on and the just have these coatings. blades it And all So forth. demand That epoxy strong. and infrastructure need will be takes and way

demand. on long-term global the So very optimistic were for demand epoxy

will I go we the And issues these that. through. short through think term, I industry think have go to

Operator

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

Jeff Holy

again to again next conference call. We quarter and XXXX you our year-end our us you'll in today's results. discuss join call fourth participating for for Thank hope

Operator

Call. participating for Corporation today's you in Westlake Third Quarter Conference Thank

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

Westlake (WLK) 2 Nov 232023 Q3 Earnings call transcript