Westlake Corp Q3 2025 Earnings Call Transcript

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

Question: David Begleiter - Deutsche Bank Securities Inc - Analyst : Jean-Marc, we've seen polyethylene an increasingly weakening spot market. How will that affect your earnings in the fourth-quarter? And what does that mean for -- if anything, for the October price increase you have out there for polyethylene?

Question: David Begleiter - Deutsche Bank Securities Inc - Analyst : And just for Albert, given the pressures you're seeing in the commodity chemical space, are you and the Board still committed to this current portfolio construct with a building products business with a petrochemical business? Or is there a thinking that perhaps these businesses at somewhere down the road are being separated?

Question: Frank Mitsch - Fermium Research LLC - Analyst : You discussed some of the weakness in the polyethylene markets. PVC hasn't exactly been covering itself in glory. What is your near and midterm outlook on the PVC side of things? And what will it take to get it back on track?

Question: Frank Mitsch - Fermium Research LLC - Analyst : And Steve, if I could follow up on the ACI acquisition. You noted in the release what the sales were in 2024. I was wondering if you might be able to give us an idea of what transpired in 2025. And are we looking at HIP margin type of business? Anything on D&A as we look to model 2026 with the ACI acquisition built into the company?

Question: Aleksey Yefremov - KeyBanc Capital Markets Inc - Analyst : I was hoping you could just discuss further in detail the sources of this revision to your HIP guidance and how it affects your maybe initial views of 2026 for the HIP segment?

Question: Aleksey Yefremov - KeyBanc Capital Markets Inc - Analyst : Apologies. I was just asking why the new HIP guidance is lower? What product lines or -- what was the reason behind it? And then any initial thoughts on HIP in '26?

Question: Aleksey Yefremov - KeyBanc Capital Markets Inc - Analyst : And I was hoping to get some color on caustic soda market, domestic and export. What is your view for the rest of the year?

Question: Patrick Cunningham - Citi Investment Research (US) - Analyst : Maybe just a follow-up on ACI, more of a general question. Are you seeing more opportunities on the PVC compounding or other sort of materials side relative to the building products space, just given where the difference in valuations is? And then maybe if you could just comment on what the pipeline in general looks like.

Question: Patrick Cunningham - Citi Investment Research (US) - Analyst : Understood. And then maybe just on the quarter-on-quarter sequential weakness on PVC. You mentioned a shift to export markets. Is this sort of a reversion back to your normal level of exports given the better operating rates? Or is there something abnormal here in terms of higher split towards the export markets? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2025 / 3:00PM, WLK.N - Q3 2025 Westlake Corp Earnings Call

Question: John Roberts - Mizuho Securities USA, LLC - Analyst : Did you get an opportunity to bid for the OxyChem business? Or was the antitrust there just even too far for this administration and something Oxy maybe didn't want to deal with?

Question: Hassan Ahmed - Alembic Global Advisors - Analyst : Just trying to -- I know in your prepared remarks; you talked a fair bit about sort of cost savings and asset optimization and the like. But just trying to get a better sense of a bridge to 2026 EBITDA-wise. It seems you guys will get $200 million in cost savings in '26, an incremental $100 million from the footprint optimization. And if I heard correctly, you had operational issues in PEM, accounting for around $200 million in 2025, which won't be there in '26. So -- and then obviously, some accretion from the acquisition. So I mean, is it fair to assume that via self-help and these things that I just laid out, I mean, on a year-over-year basis, all else equal, EBITDA next year would be $500 million higher than this year?

Question: Hassan Ahmed - Alembic Global Advisors - Analyst : Fair enough. And as a follow-up, kind of linking a couple of the past questions together, I mean, this $727 million impairment associated with the PEM segment, how should we think about that in light of some of the valuation data points provided by the OxyChem deal? I mean, obviously, that says something about the fundamentals there, Berkshire coming in and maybe scooping these assets up at the bottom of the cycle. How does that fit into this impairment you guys took? And again, going back to one of the earlier questions, just potentially thinking about the overall portfolio, is there some sort of valuation leakage with the way the business is set up today?

Question: Josh Spector - UBS Securities LLC - Analyst : I just wanted to ask around the $20 million of period-related expenses and HIP. Can you tell us what exactly that was? And is that really a one quarter cost? Or is that something that maybe lingers for a few more quarters?

Question: Josh Spector - UBS Securities LLC - Analyst : But would you expect more integration costs in fourth-quarter? And are these numbers included in that $200 million reliability bucket you've called out or is this entirely separate? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2025 / 3:00PM, WLK.N - Q3 2025 Westlake Corp Earnings Call

Question: Matthew DeYoe - BofA Global Research (US) - Analyst : How are you thinking about operating rates in polyethylene? Because it feels like the industry is running a bit -- I guess, how you say, if the industry does run hot, it feels like product starts to back up domestically. And I think we saw that in July and August. But I don't know if I'm extrapolating too much off of shorter duration or shorter -- fewer data points. What's your perception there? And how do you think about your own utilization rates?

Question: Duffy Fischer - Goldman Sachs & Company, Inc. - Analyst : If you back into the number for HIP, just with what you've given us because we've got the year at the low end at the 4.2% and the 20%, you get a little under $150 million, which is down 20% year-on-year, roughly equal to Q3, which was down about 20%, but you don't have the period cost you just said. So how should we think about that back half number basically being a base to grow into 2026? It seems like HIP numbers should be down next year just given how low we are in the back half relative to the year. But any guidance on that would be helpful.

Question: Duffy Fischer - Goldman Sachs & Company, Inc. - Analyst : Fair enough. And then if I could just go back to the write-down in the PEM section, chlorovinyl, obviously everything has to be forward-looking, right? The fact we've been in a long trough, it's not a backward-looking write-down, it's your expectations going forward. So what's changed, I guess, kind of in your 10-year outlook for chlorovinyls? And how much of the hit is downstream and how much of the hit would be kind of at the chlor-alkali level?

Question: Turner Hinrichs - Morgan Stanley - Analyst : This is Turner Hinrichs on for Vincent. So I wanted to level set a little bit for your comments on outages. You all mentioned earlier, of course, the issues constituting around a $200 million impact this year. And you also had the Petro 1 turnaround, I believe, in addition to that, $80 million. So in the absence of unplanned outages, how are you all thinking about maintenance costs next year relative to this year? And is that the right way of framing it?

Question: Turner Hinrichs - Morgan Stanley - Analyst : Okay. I think that answers the question. How are you thinking about, if you can provide any color on this, go-forward CapEx, specifically, if the market environment remains relatively similar next year to this year, is it safe to assume that CapEx might still be in the $900 million range or perhaps $1 billion range?

Question: Peter Osterland - Truist Securities Inc - Analyst : Within PEM, you had a $36 million tailwind from improved plant reliability in the third-quarter. Do you expect this to be a sequential tailwind in fourth-quarter as well? And what is a reasonable amount to expect there? Could it be another $35 million or so?

Question: Peter Osterland - Truist Securities Inc - Analyst : Got it. And then I also just wanted to follow up on your plans for the $200 million of cost saves in '26. Could you share the cadence you expect throughout the year for actioning those cost savings? And I guess how much of that $200 million do you expect will actually be realized in '26 EBITDA relative to 2025?

Question: Matthew Blair - Tudor, Pickering, Holt & Co. Securities, Inc. - Analyst : You mentioned a few times the affordability issues in the US housing market. How are you responding here? Are you introducing more low-cost products? Are you changing the raw materials on any of your existing products? Or maybe this doesn't warrant a change in strategy from you, but could you discuss that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2025 / 3:00PM, WLK.N - Q3 2025 Westlake Corp Earnings Call

Question: Matthew Blair - Tudor, Pickering, Holt & Co. Securities, Inc. - Analyst : Sounds good. And then could you also discuss why you re-upped the ethylene supply agreement with the MLP? Does this raise costs at a time when margin -- when the industry is in a tough spot? And -- or is it the general idea that just preserve your optionality in case the MLP equity markets ever come back?

Question: Arun Viswanathan - RBC Capital Markets Inc - Analyst : So I guess just going back to caustic, you noted that caustic is well supplied, and you don't expect a price increase, or I don't know if that's what you said. But I guess I was under the impression that maybe there was a $50 increase announced, and you could get maybe $20 of that in the coming months. Maybe you can just elaborate on what you're seeing there in caustic soda.

Question: Kevin McCarthy - Vertical Research Partners LLC - Analyst : With epoxy resins having been removed from Annex II, would you provide an update on how you see that market unfolding over the next several quarters?

Question: Kevin McCarthy - Vertical Research Partners LLC - Analyst : And then as a follow-up or clarification, when exactly will the $100 million of goodness related to the Pernis closure begin to flow through? Does that happen in the first-quarter? Or how would you characterize that?