Westlake Chemical Corporation Reports First Quarter 2021 Results

Westlake Chemical Corporation Reports First Quarter 2021 Results

Net cash provided by operating activities was $265 million for the first quarter of 2021. As of March 31, 2021, cash and cash equivalents were $1,393 million and long-term debt was $3,547 million. Capital expenditures were $141 million for the first quarter of 2021.

“Westlake had a strong start to 2021 as we experienced solid financial performance as we benefitted from the continuing global economic recovery and robust product demand paired with higher prices and margins for many of our products. The severe winter storm caused widespread industry disruption, including Westlake. Through the efforts of our employees, we quickly responded to the disruptions caused by the storm and fully resumed operations by the end of the quarter. We have worked tirelessly to address strong customer demand during the quarter,” said Albert Chao, President and Chief Executive Officer. “As we look further into the year, we see continuing strong global demand in our PVC, polyethylene and downstream building products business driven by solid markets for the downstream uses of our products including residential construction, packaging and healthcare. We will remain focused on our strategy of safely and efficiently operating our facilities, while making disciplined investments, launching new and sustainable products, furthering our chain integration, lowering our costs and leveraging our current products and footprint around the world, while being a good steward of the environment in the communities in which we operate.”

EBITDA (earnings before interest expense, income taxes, depreciation and amortization) of $553 million for first quarter 2021 increased by $216 million compared to first quarter 2020 EBITDA of $337 million. First quarter 2021 EBITDA increased by $167 million compared to fourth quarter 2020 EBITDA of $386 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.

OLEFINS SEGMENT

Vinyls income from operations for the first quarter of 2021 of $200 million increased by $34 million from fourth quarter 2020 income from operations of $166 million primarily due to strong sales prices for PVC resin, higher sales volumes for most of our major products and higher earnings in our downstream building products business, partially offset by higher feedstock and fuel costs as well as lower sales prices for caustic soda.

First quarter 2021 income from operations for the Olefins segment of $180 million increased by $118 million from first quarter 2020 income from operations of $62 million. This increase in income from operations versus the prior-year period was primarily due to higher sales prices and integrated margins for all of our products, driven by continuing strong global demand, partially offset by lower sales volumes and lost production and increased maintenance expense resulting from the impact of the severe winter storm, as well as higher feedstock costs and fuel costs.

First quarter 2021 income from operations for the Vinyls segment of $200 million increased by $127 million from first quarter 2020 income from operations of $73 million. This increase in income from operations versus the prior-year period was primarily due to higher sales prices and integrated margins for PVC resin and higher earnings in our downstream building products business. The increase in operating income was partially offset by lower sales volumes and production and increased maintenance expense resulting from the severe winter storm, higher feedstock and fuel costs, as well as lower sales prices for caustic soda.

VINYLS SEGMENT

The statements in this release and the related teleconference relating to matters that are not historical facts, including statements regarding continued improvement of our performance in 2021, demand for polyethylene, PVC and downstream business products, results of investments in initiatives and our focus on our strategy of safely and efficiently operating our facilities, while making disciplined investments, launching new and sustainable products, furthering our chain integration, lowering our costs and leveraging our current products and footprint around the world, and being a good steward of the environment in the communities in which we operate, 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; 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.

Olefins income from operations of $180 million in the first quarter of 2021 increased by $158 million from fourth quarter 2020 income from operations of $22 million. This increase in income from operations versus the prior quarter was primarily due to higher sales prices and integrated margins, driven by continuing strong global demand, as well as increased sales volumes for our products resulting from the hurricane impacts in late 2020, partially offset by higher feedstock and fuel costs.

About Westlake:

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.

Use of Non-GAAP Financial Measures

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