Westlake Corp Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Eric Zhang - Citi - Analyst : Hi, good morning. This is Eric Zhang on for Patrick. On the AC and ECH units that have returned to service, are these plants back to running at full capacity? And do you have any additional planned maintenance for your other plants scheduled this year?

Question: Eric Zhang - Citi - Analyst : Yeah, thank you.

Question: Duffy Fischer - Goldman Sachs - Analyst : Just some questions around -- $120 million. So one, I believe some of that was planned maintenance and then the maintenance lasted longer -- is that correct? And if so is the $120 million just the lasted longer part of it? Or could you break it out between what was planned and what ended up kind of being unplanned or longer? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 4:00PM, WLK.N - Q3 2024 Westlake Corp Earnings Call

Question: Duffy Fischer - Goldman Sachs - Analyst : Okay. And then on the $120 million, if you bucketed it between -- how much was foregone production that you didn't have to sell? How much was kind of higher cost because of the increased ethylene price? And then how much was just the actual cost for the repairs, what's the rough breakdown of that?

Question: Duffy Fischer - Goldman Sachs - Analyst : Okay. Fair enough. And then just the last one for me. You talked about some Q3 sales getting pushed into Q4. Can you quantify roughly how large that is?

Question: Duffy Fischer - Goldman Sachs - Analyst : Perfect, thank you, guys.

Question: Bhavesh Lodaya - BMO Capital Markets - Analyst : Hi, good morning. Thanks for taking my question. You made an overall comment that the third-quarter earnings would have been in line with the second quarter, except for the one-time events. Is that true for the HIP segment as well? Or was that 9% sequential drop in volumes, was that some of it was like just the end markets being weaker as well? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 4:00PM, WLK.N - Q3 2024 Westlake Corp Earnings Call

Question: Bhavesh Lodaya - BMO Capital Markets - Analyst : Got it. And then a quick follow-up. You also mentioned about the typical seasonality expected in the fourth quarter. Would you say last year was a typical year for you? I think the business -- the HIP business saw around a 47% decline sequentially in EBITDA. Are you talking about the same level of seasonality this year?

Question: Bhavesh Lodaya - BMO Capital Markets - Analyst : Thank you.

Question: Frank Mitsch - Fermium Research - Analyst : Good morning. Just a quick clarification. Steve, you mentioned that the two units were back up and running last month at the beginning of the month, last month was October. So I just wanted to make sure that we're looking at a totally clean quarter in terms of operating rates of those two assets in PEM?

Question: Frank Mitsch - Fermium Research - Analyst : Terrific. And obviously, a nice generation of free cash flow despite the difficulties here in the third quarter. How are you thinking about free cash flow for the fourth quarter, particularly as it surrounds working capital as a source or as a use of cash?

Question: Frank Mitsch - Fermium Research - Analyst : Perfect, thank you so much.

Question: John Roberts - Mizuho Group - Analyst : Thank you, and welcome, Jean-Marc. The earnings release indicated that you had some learnings from these outages that might help you mitigate them better in the future. What were those learnings?

Question: John Roberts - Mizuho Group - Analyst : Thank you. That's all I have.

Question: Arun Viswanathan - RBC Capital Markets - Analyst : Great. Thanks for taking my question. I hope you guys are well. Maybe I could just try and help you guys frame Q4 for us a little bit. So if you look at Q3, maybe we'll start with that $580 million or so of EBITDA and add back the maintenance charges at $120 million. Is typical seasonality maybe, and I think it could be in the maybe the 15% to 20% range, if you look at Q4 and so maybe that brings you down into the middle 500s. What else would you include as we kind of try to frame up where you guys could be maybe in Q4? Thanks.

Question: Arun Viswanathan - RBC Capital Markets - Analyst : Great. Thanks for that, Steve. And as you look into '25, we do see some potential optimism around lower rates. And maybe you could also see some benefit on the epoxy side from antidumping duties, again, potentially some recovery in some of your other markets. So -- is it fair to assume that you should be -- you should see some EBITDA growth in '25 as well? And is that -- would that be more back-half weighted just given the lags that typically are present when rates come down and when that flows through your P&L or how are you thinking about some initial thoughts on '25 if you could share those? Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 4:00PM, WLK.N - Q3 2024 Westlake Corp Earnings Call

Question: Arun Viswanathan - RBC Capital Markets - Analyst : Great, thanks.

Question: Michael Leithead - Barclays - Analyst : Great, thanks. Good morning, guys. There appears to be a number of chemical assets in areas you compete in recently up for sale. Would you consider adding further PEM assets or is your inorganic strategy primarily focused on HIP right now?

Question: Michael Leithead - Barclays - Analyst : Great. That's helpful. And then any initial thoughts about 2025 and HIP. I appreciate it's hard and early to forecast the market. But just given what you have in the pipeline with new customers or your new PVCO plant. Just how should we think about your ability to grow volumes above the market next year?

Question: Michael Leithead - Barclays - Analyst : Great, thank you.

Question: Turner Hinrichs - Morgan Stanley - Analyst : Hi. This is Turner Hinrichs on for Vincent. I was just wondering what drove the lower chlorovinyl export shipments in the third quarter?

Question: Turner Hinrichs - Morgan Stanley - Analyst : Great. That makes a lot of sense. And if I can fit one more in. Have you all seen the antidumping duties affect the PVC market in Europe? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 4:00PM, WLK.N - Q3 2024 Westlake Corp Earnings Call

Question: Turner Hinrichs - Morgan Stanley - Analyst : All right. Thanks for taking my questions.