- Record quarterly net sales of $3.1 billion
- Record quarterly net income of $607 million
- Record quarterly EBITDA of $1.1 billion
- Completed acquisitions of Boral’s North American building
products businesses, Dimex LLC and LASCO Fittings, Inc.
Westlake Chemical Corporation (NYSE: WLK) (the "Company" or
"Westlake") today reported record net income, excluding one-time
tax benefits in a prior quarter, attributable to Westlake for the
three months ended September 30, 2021 of $607 million, or $4.69 per
diluted share, on record net sales of $3,055 million. Net income in
the third quarter of 2021 increased by $550 million, or $4.24 per
share, from third quarter 2020 net income of $57 million on net
sales of $1,898 million despite the negative impacts of Hurricane
Ida. Income from operations for the third quarter of 2021 was a
quarterly record of $861 million, and increased by $782 million
from income from operations of $79 million for the third quarter of
2020. The increases in net income and income from operations were
driven by significantly higher sales prices and margins for most of
our major products. PVC resin margins benefited from the continued
strength of residential construction coupled with the solid repair
and remodeling markets, also driving demand in our building
products business. Additionally, the olefins business experienced
robust strength from packaging and consumer markets resulting in
higher prices and margins driven by the global economic
expansion.
Third quarter 2021 net income of $607 million, or $4.69 per
share, increased by $85 million from second quarter 2021 net income
of $522 million. Income from operations of $861 million for the
third quarter of 2021 increased by $141 million from income from
operations of $720 million for the second quarter of 2021. The
increases in net income and income from operations versus the prior
quarter were primarily due to higher sales prices and higher
margins for most of our major products, including caustic soda and
building products.
For the first nine months of 2021, net income of $1,371 million,
or $10.60 per share, increased by $1,154 million from the first
nine months of 2020 net income of $217 million. Income from
operations of $1,927 million for the first nine months of 2021
increased by $1,676 million from income from operations of $251
million for the first nine months of 2020, which was severely
impacted by the global COVID-19 pandemic. The increases in net
income and income from operations were primarily due to the global
economic recovery, which has driven strong demand and significantly
higher sales prices and margins for most of our major products and
strong demand in our building products business.
On August 19, 2021, Westlake announced that it acquired LASCO
Fittings, Inc. ("LASCO"), a leading manufacturer of injected-molded
PVC fittings. The acquisition will add complementary products to
NAPCO's existing portfolio of pipe and fittings products, with an
emphasis on new products and new markets.
On September 10, 2021, Westlake announced the completion of the
acquisition of Dimex LLC ("Dimex"). The acquisition adds a range of
post-industrial recycled plastic consumer and building products,
including landscape edging; industrial, home and office matting;
marine dock edging; and masonry joint controls. Dimex is engaged in
the development of additional opportunities to increase the use of
recycled materials to meet the growing demand for sustainable and
durable consumer products.
On October 1, 2021, Westlake announced the completion of the
acquisition of Boral Limited's North American building products
businesses ("Boral North America") in roofing; siding, trim and
shutters; decorative stone; and windows. The acquisition positions
Westlake at the forefront of the growing building products and
construction markets, with durable and sustainable materials and
creates opportunities for further product innovations.
"In the third quarter, we accomplished a number of milestones at
Westlake. We achieved a consecutive quarter of record earnings as
we continue to benefit from the global economic expansion that
began early in the second half of 2020 with strong demand across
our product offerings which enhance the lives of countless peoples,
illustrating the earnings capabilities of our company," said Albert
Chao, President and Chief Executive Officer. "As global supply
chains and manufacturing recover to meet pent-up consumer demand
across the spectrum of manufactured goods, Westlake is well
positioned to continue to deliver strong results."
"Through the investments of approximately $2.6 billion we made
in our recent acquisitions of Boral North America, Dimex and LASCO,
we have created a platform for the next chapter of our growing
building products business in North America," continued Mr. Chao.
"These investments build our footprint in the sustainable building
product markets, enhancing our position to drive greater value with
new and complementary platforms and long-term growth opportunities
for Westlake. We are excited to welcome the Boral, Dimex and LASCO
employees to the Westlake family."
Net cash provided by operating activities was $755 million for
the third quarter of 2021. As of September 30, 2021, cash and cash
equivalents were $3,571 million and long-term debt was $5,197
million. Capital expenditures were $144 million for the third
quarter of 2021.
Record EBITDA (earnings before interest expense, income taxes,
depreciation and amortization) of $1,077 million for the third
quarter of 2021 increased by $790 million compared to third quarter
2020 EBITDA of $287 million. Third quarter 2021 EBITDA increased by
$145 million compared to second quarter 2021 EBITDA of $932
million. Record EBITDA of $2,562 million for the first nine months
of 2021 was $1,702 million higher than EBITDA for the first nine
months of 2020 of $860 million. A reconciliation of EBITDA to net
income, income from operations, and net cash provided by operating
activities can be found in the financial schedules at the end of
this press release.
VINYLS SEGMENT
Record Vinyls income from operations for the third quarter of
2021 of $601 million increased by $559 million from third quarter
2020 income from operations of $42 million. This increase in income
from operations versus the prior-year period was primarily due to
significantly higher sales prices and margins as well as increased
earnings in our building products business.
Record Vinyls income from operations for the third quarter of
2021 of $601 million increased by $166 million from second quarter
2021 income from operations of $435 million primarily due to higher
sales prices and integrated margins for caustic soda and chlorine
as well as increased earnings in our building products
business.
For the first nine months of 2021, Vinyls income from operations
of $1,236 million increased by $1,101 million from income from
operations of $135 million for the first nine months of 2020. This
increase in income from operations versus the prior-year period was
primarily due to significantly higher sales prices and integrated
margins for PVC resin as well as strong demand in our building
products business. Income from operations for the first nine months
of 2021 saw higher ethylene and energy costs as well as the impacts
from Winter Storm Uri and Hurricane Ida, while income from
operations for the first nine months of 2020 was negatively
impacted by the onset of the COVID-19 pandemic and Hurricane
Laura.
OLEFINS SEGMENT
Record Olefins income from operations for the third quarter of
2021 of $281 million increased by $230 million from third quarter
2020 income from operations of $51 million. This increase in income
from operations versus the prior-year period was primarily due to
significantly higher sales prices and margins for all of our
products, driven by solid global demand.
Record Olefins income from operations of $281 million in the
third quarter of 2021 increased by $4 million from second quarter
2021 income from operations of $277 million. This increase in
income from operations versus the prior quarter was primarily due
to higher sales prices and margins for polyethylene.
For the first nine months of 2021, Olefins income from
operations of $738 million increased by $600 million from income
from operations of $138 million for the first nine months of 2020.
This increase in income from operations was primarily due to
significantly higher sales prices and margins as well as 2020
impacts of Hurricane Laura, partially offset by lower polyethylene
sales volumes resulting from Winter Storm Uri.
Forward-Looking Statements
The statements in this release and the related teleconference
relating to matters that are not historical facts, including
statements regarding our ability to deliver strong results,
continued improvement of our performance in 2021, and demand for
polyethylene, PVC and downstream building products, are
forward-looking statements. These forward-looking statements are
subject to significant risks and uncertainties. Actual results
could differ materially, based on factors including, but not
limited to: the COVID-19 pandemic and the response thereto; general
economic and business conditions; the cyclical nature of the
chemical industry; availability, cost and volatility of raw
materials and utilities, including natural gas and natural gas
liquids from shale production; the price of crude oil;
uncertainties associated with the United States and worldwide
economies, including those due to global economic and financial
conditions; governmental regulatory actions, including
environmental regulation and changes in trade policies; political
unrest; industry production capacity and operating rates; the
supply/demand balance for Westlake's products; competitive products
and pricing pressures; access to capital markets; technological
developments; the effect and results of litigation and settlements
of litigation; operating interruptions; the ability to integrate
the recent acquisitions; the diversion of management time on
transaction-related issues; and other risk factors. For more
detailed information about the factors that could cause actual
results to differ materially, please refer to Westlake's Annual
Report on Form 10-K for the year ended December 31, 2020, which was
filed with the SEC in February 2021.
Use of Non-GAAP Financial Measures
This release makes reference to certain "non-GAAP" financial
measures, such as EBITDA, as defined in Regulation G of the U.S.
Securities Exchange Act of 1934, as amended. For this purpose, a
non-GAAP financial measure is generally defined by the Securities
and Exchange Commission ("SEC") as a numerical measure of a
registrant's historical or future financial performance, financial
position or cash flows that (1) excludes amounts, or is subject to
adjustments that have the effect of excluding amounts, that are
included in the most directly comparable measure calculated and
presented in accordance with GAAP in the statement of income,
balance sheet or statement of cash flows (or equivalent statements)
of the registrant; or (2) includes amounts, or is subject to
adjustments that have the effect of including amounts, that are
excluded from the most directly comparable measure so calculated
and presented. We report our financial results in accordance with
U.S. generally accepted accounting principles ("U.S. GAAP"), but
believe that certain non-GAAP financial measures, such as EBITDA,
provide useful supplemental information to investors regarding the
underlying business trends and performance of the Company's ongoing
operations and are useful for period-over-period comparisons of
such operations. These non-GAAP financial measures should be
considered as a supplement to, and not as a substitute for, or
superior to, the financial measures prepared in accordance with
U.S. GAAP. A reconciliation of EBITDA to net income, income from
operations and net cash provided by operating activities can be
found in the financial schedules at the end of this press
release.
About Westlake
Westlake is a global manufacturer and supplier of materials and
innovative products that enhance life every day. Headquartered in
Houston, we provide the building blocks for vital solutions — from
building products and infrastructure materials, to packaging and
healthcare products, to automotive and consumer goods. For more
information, visit the company's web site at www.westlake.com.
Westlake Chemical Corporation Conference Call Information:
A conference call to discuss Westlake Chemical Corporation's
third quarter 2021 results will be held Tuesday, November 2, 2021
at 11:00 AM Eastern Time (10:00 AM Central Time). To access the
conference call, dial (855) 760-8160 or (704) 288-0624 for
international callers, approximately 10 minutes prior to the
scheduled start time and reference passcode 249 55 84.
A replay of the conference call will be available beginning two
hours after its conclusion until 11:59 p.m. Eastern Time on
November 9, 2021. To hear a replay, dial (855) 859-2056 or (404)
537-3406 for international callers. The replay passcode is 249 55
84.
The conference call will also be available via webcast at
https://edge.media-server.com/mmc/p/k7sddqsx and the earnings
release can be obtained via the Company's web page at:
http://www.westlake.com/investor-relations.
WESTLAKE CHEMICAL
CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
(In millions of dollars,
except per share data)
Net sales
$
3,055
$
1,898
$
8,271
$
5,539
Cost of sales
2,037
1,650
5,872
4,839
Gross profit
1,018
248
2,399
700
Selling, general and administrative
expenses
122
108
383
332
Amortization of intangibles
29
27
83
81
Restructuring, transaction and
integration-related costs
6
34
6
36
Income from operations
861
79
1,927
251
Interest expense
(61
)
(37
)
(130
)
(108
)
Other income, net
13
12
35
32
Income before income taxes
813
54
1,832
175
Provision for (benefit from) income
taxes
193
(15
)
423
(75
)
Net income
620
69
1,409
250
Net income attributable to noncontrolling
interests
13
12
38
33
Net income attributable to Westlake
Chemical Corporation
$
607
$
57
$
1,371
$
217
Earnings per common share attributable to
Westlake Chemical Corporation:
Basic
$
4.71
$
0.45
$
10.65
$
1.69
Diluted
$
4.69
$
0.45
$
10.60
$
1.69
WESTLAKE CHEMICAL
CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
September 30,
2021
December 31,
2020
(In millions of
dollars)
ASSETS
Current assets
Cash and cash equivalents
$
3,571
$
1,313
Accounts receivable, net
1,642
1,214
Inventories
1,124
918
Prepaid expenses and other current
assets
98
32
Total current assets
6,435
3,477
Property, plant and equipment, net
6,992
6,920
Other assets, net
3,681
3,438
Total assets
$
17,108
$
13,835
LIABILITIES AND EQUITY
Current liabilities (accounts payable and
accrued and other liabilities)
$
1,630
$
1,357
Current portion of long-term debt, net
268
—
Long-term debt, net
4,929
3,566
Other liabilities
2,412
2,334
Total liabilities
9,239
7,257
Total Westlake Chemical Corporation
stockholders' equity
7,298
6,043
Noncontrolling interests
571
535
Total equity
7,869
6,578
Total liabilities and equity
$
17,108
$
13,835
WESTLAKE CHEMICAL
CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September
30,
2021
2020
(In millions of
dollars)
Cash flows from operating
activities
Net income
$
1,409
$
250
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
600
577
Deferred income taxes
50
154
Net loss on disposition and others
58
70
Other balance sheet changes
(480
)
(185
)
Net cash provided by operating
activities
1,637
866
Cash flows from investing
activities
Acquisition of businesses, net of cash
acquired
(428
)
—
Additions to property, plant and
equipment
(414
)
(403
)
Return of (additions to) investment from
unconsolidated subsidiaries
(19
)
44
Other, net
19
(7
)
Net cash used for investing activities
(842
)
(366
)
Cash flows from financing
activities
Debt issuance costs
(18
)
(3
)
Distributions to noncontrolling
interests
(32
)
(39
)
Dividends paid
(107
)
(102
)
Proceeds from debt issuance and drawdown
of revolver, net
1,668
1,299
Proceeds from (repayment of) short-term
notes payable, net
5
(17
)
Repayment of revolver and senior notes
—
(1,100
)
Repurchase of common stock for
treasury
(30
)
(54
)
Other, net
1
2
Net cash provided by (used for) financing
activities
1,487
(14
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(9
)
4
Net increase in cash, cash equivalents and
restricted cash
2,273
490
Cash, cash equivalents and restricted cash
at beginning of period
1,337
750
Cash, cash equivalents and restricted cash
at end of period
$
3,610
$
1,240
WESTLAKE CHEMICAL
CORPORATION
SEGMENT INFORMATION
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
(In millions of
dollars)
Net external sales
Vinyls
$
2,348
$
1,529
$
6,356
$
4,382
Olefins
707
369
1,915
1,157
$
3,055
$
1,898
$
8,271
$
5,539
Income (loss) from operations
Vinyls
$
601
$
42
$
1,236
$
135
Olefins
281
51
738
138
Corporate and other
(21
)
(14
)
(47
)
(22
)
$
861
$
79
$
1,927
$
251
Depreciation and amortization
Vinyls
$
166
$
160
$
486
$
467
Olefins
36
34
109
104
Corporate and other
1
2
5
6
$
203
$
196
$
600
$
577
Other income, net
Vinyls
$
10
$
7
$
27
$
21
Olefins
—
1
2
2
Corporate and other
3
4
6
9
$
13
$
12
$
35
$
32
WESTLAKE CHEMICAL
CORPORATION
RECONCILIATION OF EBITDA TO
NET INCOME, INCOME FROM OPERATIONS AND
NET CASH PROVIDED BY OPERATING
ACTIVITIES
(Unaudited)
Three Months Ended June
30,
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2021
2020
2021
2020
(In millions of
dollars)
Net cash provided by operating
activities
$
617
$
755
$
357
$
1,637
$
866
Changes in operating assets and
liabilities and other
(67
)
(109
)
(230
)
(178
)
(462
)
Deferred income taxes
(14
)
(26
)
(58
)
(50
)
(154
)
Net income
536
620
69
1,409
250
Less:
Other income, net
10
13
12
35
32
Interest expense
(36
)
(61
)
(37
)
(130
)
(108
)
Benefit from (provision for) income
taxes
(158
)
(193
)
15
(423
)
75
Income from operations
720
861
79
1,927
251
Add:
Depreciation and amortization
202
203
196
600
577
Other income, net
10
13
12
35
32
EBITDA
$
932
$
1,077
$
287
$
2,562
$
860
WESTLAKE CHEMICAL
CORPORATION
SUPPLEMENTAL
INFORMATION
Product Sales Price and Volume
Variance by Operating Segments
Third Quarter 2021 vs. Third
Quarter 2020
Third Quarter 2021 vs. Second
Quarter 2021
Average Sales Price
Volume
Average Sales Price
Volume
Vinyls
+53.0
%
+0.5
%
+10.3
%
-3.0
%
Olefins
+88.1
%
+3.6
%
+4.5
%
+0.8
%
Company
+59.8
%
+1.1
%
+8.9
%
-2.1
%
Average Quarterly Industry
Prices (1)
Quarter Ended
September 30,
2020
December 31,
2020
March 31, 2021
June 30, 2021
September 30,
2021
Average domestic
prices
Natural gas ($/MMBtu) (2)
2.0
2.7
2.8
2.9
4.0
Ethane (cents/lb) (3)
7.4
7.1
8.1
8.7
11.7
Propane (cents/lb) (4)
11.9
13.5
21.2
20.7
27.6
Ethylene (cents/lb) (5)
19.3
24.0
45.1
43.0
48.0
Polyethylene (cents/lb) (6)
61.0
67.7
78.0
99.0
109.0
Styrene (cents/lb) (7)
53.8
59.6
76.5
90.5
82.0
Caustic soda ($/short ton) (8)
697
653
648
755
825
Chlorine ($/short ton) (9)
176
193
234
309
443
PVC (cents/lb) (10)
73.3
84.5
92.8
105.0
109.0
Average export
prices
Polyethylene (cents/lb) (11)
45.7
53.2
76.3
89.7
86.0
Caustic soda ($/short ton) (12)
260
219
249
333
364
PVC (cents/lb) (13)
38.5
55.4
67.8
77.8
74.1
________________
(1)
Industry pricing data was obtained through
IHS Markit ("IHS"). We have not independently verified the
data.
(2)
Average Burner Tip contract prices of
natural gas over the period.
(3)
Average Mont Belvieu spot prices of purity
ethane over the period.
(4)
Average Mont Belvieu spot prices of
non-TET propane over the period.
(5)
Average North American spot prices of
ethylene over the period.
(6)
Average North American Net Transaction
prices of polyethylene low density GP-Film grade over the
period.
(7)
Average North American contract prices of
styrene over the period.
(8)
Average USGC-CSLi index values for caustic
soda over the period. As stated by IHS, "the caustic soda price
listing represents the USGC-CSLi values. USGC-CSLi does not reflect
contract price discounts, implementation lags, caps or other
adjustments factors. Additionally, it is not intended to represent
a simple arithmetic average of all market transactions occurring
during the month. Rather, the USGC-CSLi is most representative of
the month-to-month caustic soda price movement for contract volumes
of liquid 50% caustic soda rather than the absolute value of
contract prices at a particular point in time. It is intended to
serve only as a benchmark."
(9)
Average North American contract prices of
chlorine over the period.
(10)
Average North American contract prices of
pipe grade polyvinyl chloride ("PVC") over the period. As stated by
IHS, "the contract resin prices posted reflect an "index" or
"market" for prices before discounts, rebates, incentives,
etc."
(11)
Average North American export price for
low density polyethylene GP-Film grade over the period.
(12)
Average North American low spot export
prices of caustic soda over the period.
(13)
Average North American spot export prices
of PVC over the period.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211102005290/en/
Contact—(713) 960-9111 Investors—Steve Bender Media—L. Benjamin
Ederington
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