Westlake Chemical Corporation Reports Fourth Quarter and Full Year 2020 Results
Westlake Chemical Corporation (NYSE: WLK) reported a net income of $113 million for Q4 2020, a $41 million increase from Q4 2019. Revenue for the quarter was $1,965 million, driven by higher sales prices for polyethylene and PVC resin. However, lost sales due to hurricanes and increased maintenance costs impacted net income. For the full year 2020, net income was $330 million, down $91 million from 2019. The outlook for 2021 is positive, with expectations of continued demand growth in polyethylene and PVC, aided by rising housing starts.
- Net income increased by $41 million year-over-year in Q4 2020.
- Q4 2020 revenue of $1,965 million reflects strong demand and higher sales prices.
- Operating income in Q4 2020 rose by $76 million from Q4 2019.
- The company reported net cash from operating activities of $431 million for Q4 2020.
- Full year 2020 net income decreased by $91 million compared to 2019.
- Income from operations for 2020 fell by $227 million year-over-year.
- Production disruptions and lost sales volumes due to hurricanes impacted earnings.
- Fourth quarter income from the Olefins segment decreased significantly due to lower sales volumes.
Westlake Chemical Corporation (NYSE: WLK) (the "Company" or "Westlake") today reported net income attributable to Westlake for the three months ended December 31, 2020 of
Fourth quarter 2020 net income of
For full year 2020, net income of
"Westlake had a strong finish to the year as we restarted all of our production in Lake Charles following two powerful hurricanes that hit Southwest Louisiana. With our operations restored in the middle of the fourth quarter, we were able to capitalize on the robust global demand and benefit from higher prices and margins for most of our products," said Albert Chao, President and Chief Executive Officer. "We believe this strength in global demand in polyethylene and PVC, coupled with the rise in housing starts and new building permits will continue into 2021. This will also highlight the value in our downstream building products business. The highly integrated nature of Westlake, which extends through the value chain from feedstocks to consumer end products, combined with many of our operations sitting on the lower end of the global cost curve, enables us to drive long-term value for our shareholders throughout the business and investment cycles inherent in our industry. We will remain focused on our strategy of safely and efficiently operating our facilities, while making disciplined investments, developing new and green 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."
Net cash provided by operating activities was
EBITDA (earnings before interest expense, income taxes, depreciation and amortization) of
VINYLS SEGMENT
Fourth quarter 2020 income from operations for the Vinyls segment of
Vinyls income from operations for the fourth quarter of 2020 of
For full year 2020, Vinyls income from operations of
OLEFINS SEGMENT
Fourth quarter 2020 income from operations for the Olefins segment of
Olefins income from operations of
For full year 2020, Olefins income from operations of
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 delivering long-term value to shareholders, 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, 2019, which was filed with the SEC in February 2020, and Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.
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 packaging and healthcare products to automotive and consumer goods, to building and construction products. 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 fourth quarter and full year 2020 results will be held Tuesday, February 23, 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 308 97 28.
A replay of the conference call will be available beginning two hours after its conclusion until 11:59 p.m. Eastern Time on March 2, 2021. To hear a replay, dial (855) 859-2056 or (404) 537-3406 for international callers. The replay passcode is 308 97 28.
The conference call will also be available via webcast at https://edge.media-server.com/mmc/p/atqiwr7g and the earnings release can be obtained via the Company's web page at: http://www.westlake.com/investor-relations.
WESTLAKE CHEMICAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
||||||||||||||||||||
|
|
|
|
|
||||||||||||||||
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
||||||||||||||||
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
(In millions of dollars, except per share data) |
||||||||||||||||||
Net sales |
|
$ |
1,965 |
|
|
|
$ |
1,883 |
|
|
|
$ |
7,504 |
|
|
|
$ |
8,118 |
|
|
Cost of sales |
|
1,642 |
|
|
|
1,633 |
|
|
|
6,481 |
|
|
|
6,858 |
|
|
||||
Gross profit |
|
323 |
|
|
|
250 |
|
|
|
1,023 |
|
|
|
1,260 |
|
|
||||
Selling, general and administrative expenses |
|
117 |
|
|
|
115 |
|
|
|
449 |
|
|
|
458 |
|
|
||||
Amortization of intangibles |
|
28 |
|
|
|
28 |
|
|
|
109 |
|
|
|
109 |
|
|
||||
Restructuring, transaction and integration-related costs |
|
— |
|
|
|
5 |
|
|
|
36 |
|
|
|
37 |
|
|
||||
Income from operations |
|
178 |
|
|
|
102 |
|
|
|
429 |
|
|
|
656 |
|
|
||||
Interest expense |
|
(34 |
) |
|
|
(35 |
) |
|
|
(142 |
) |
|
|
(124 |
) |
|
||||
Other income, net |
|
12 |
|
|
|
6 |
|
|
|
44 |
|
|
|
38 |
|
|
||||
Income before income taxes |
|
156 |
|
|
|
73 |
|
|
|
331 |
|
|
|
570 |
|
|
||||
Provision for (benefit from) income taxes |
|
33 |
|
|
|
(12 |
) |
|
|
(42 |
) |
|
|
108 |
|
|
||||
Net income |
|
123 |
|
|
|
85 |
|
|
|
373 |
|
|
|
462 |
|
|
||||
Net income attributable to noncontrolling interests |
|
10 |
|
|
|
13 |
|
|
|
43 |
|
|
|
41 |
|
|
||||
Net income attributable to Westlake Chemical |
||||||||||||||||||||
Corporation |
|
$ |
113 |
|
|
|
$ |
72 |
|
|
|
$ |
330 |
|
|
|
$ |
421 |
|
|
Earnings per common share attributable to Westlake |
|
|
|
|
|
|
|
|
||||||||||||
Chemical Corporation: |
||||||||||||||||||||
Basic |
|
$ |
0.87 |
|
|
|
$ |
0.56 |
|
|
|
$ |
2.57 |
|
|
|
$ |
3.26 |
|
|
Diluted |
|
$ |
0.87 |
|
|
|
$ |
0.56 |
|
|
|
$ |
2.56 |
|
|
|
$ |
3.25 |
|
|
WESTLAKE CHEMICAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) |
||||||||
|
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|
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|
||||
|
|
December 31, 2020 |
|
December 31, 2019 |
||||
|
|
|
|
|
||||
|
|
(In millions of dollars) |
||||||
ASSETS |
|
|
|
|
||||
Current assets |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
1,313 |
|
|
$ |
728 |
|
Accounts receivable, net |
|
1,214 |
|
|
1,036 |
|
||
Inventories |
|
918 |
|
|
936 |
|
||
Prepaid expenses and other current assets |
|
32 |
|
|
42 |
|
||
Total current assets |
|
3,477 |
|
|
2,742 |
|
||
Property, plant and equipment, net |
|
6,920 |
|
|
6,912 |
|
||
Other assets, net |
|
3,438 |
|
|
3,607 |
|
||
Total assets |
|
$ |
13,835 |
|
|
$ |
13,261 |
|
|
|
|
|
|
||||
LIABILITIES AND EQUITY |
|
|
|
|
||||
Current liabilities (accounts payable and accrued and other liabilities) |
|
$ |
1,357 |
|
|
$ |
1,241 |
|
Long-term debt, net |
|
3,566 |
|
|
3,445 |
|
||
Other liabilities |
|
2,334 |
|
|
2,172 |
|
||
Total liabilities |
|
7,257 |
|
|
6,858 |
|
||
Total Westlake Chemical Corporation stockholders' equity |
|
6,043 |
|
|
5,860 |
|
||
Noncontrolling interests |
|
535 |
|
|
543 |
|
||
Total equity |
|
6,578 |
|
|
6,403 |
|
||
Total liabilities and equity |
|
$ |
13,835 |
|
|
$ |
13,261 |
|
WESTLAKE CHEMICAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
||||||||||
|
|
|
||||||||
|
|
Twelve Months Ended December 31, |
||||||||
|
|
2020 |
|
2019 |
||||||
|
|
|
|
|
||||||
|
|
(In millions of dollars) |
||||||||
Cash flows from operating activities |
|
|
|
|
||||||
Net income |
|
$ |
373 |
|
|
|
$ |
462 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
||||||
Depreciation and amortization |
|
773 |
|
|
|
713 |
|
|
||
Deferred income taxes |
|
146 |
|
|
|
54 |
|
|
||
Net loss on disposition and others |
|
83 |
|
|
|
75 |
|
|
||
Other balance sheet changes |
|
(78 |
) |
|
|
(3 |
) |
|
||
Net cash provided by operating activities |
|
1,297 |
|
|
|
1,301 |
|
|
||
Cash flows from investing activities |
|
|
|
|
||||||
Acquisition of businesses, net of cash acquired |
|
— |
|
|
|
(314 |
) |
|
||
Additions to investments in unconsolidated subsidiaries |
|
(18 |
) |
|
|
(862 |
) |
|
||
Additions to property, plant and equipment |
|
(525 |
) |
|
|
(787 |
) |
|
||
Return of investment from an unconsolidated subsidiary |
|
44 |
|
|
|
— |
|
|
||
Other, net |
|
(10 |
) |
|
|
9 |
|
|
||
Net cash used for investing activities |
|
(509 |
) |
|
|
(1,954 |
) |
|
||
Cash flows from financing activities |
|
|
|
|
||||||
Distributions to noncontrolling interests |
|
(55 |
) |
|
|
(50 |
) |
|
||
Dividends paid |
|
(137 |
) |
|
|
(132 |
) |
|
||
Net proceeds from debt issuance and drawdown of revolver |
|
1,299 |
|
|
|
784 |
|
|
||
Net proceeds from issuance of Westlake Chemical Partners LP common units |
|
— |
|
|
|
63 |
|
|
||
Net proceeds from (repayment of) short-term notes payable |
|
(17 |
) |
|
|
2 |
|
|
||
Repayment of revolver and senior notes |
|
(1,254 |
) |
|
|
— |
|
|
||
Repurchase of common stock for treasury |
|
(54 |
) |
|
|
(30 |
) |
|
||
Other, net |
|
2 |
|
|
|
(7 |
) |
|
||
Net cash provided by (used for) financing activities |
|
(216 |
) |
|
|
630 |
|
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
15 |
|
|
|
(2 |
) |
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
587 |
|
|
|
(25 |
) |
|
||
Cash, cash equivalents and restricted cash at beginning of the year |
|
750 |
|
|
|
775 |
|
|
||
Cash, cash equivalents and restricted cash at end of the year |
|
$ |
1,337 |
|
|
|
$ |
750 |
|
|
WESTLAKE CHEMICAL CORPORATION SEGMENT INFORMATION (Unaudited) |
||||||||||||||||||||
|
|
|
|
|
||||||||||||||||
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
||||||||||||||||
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
(In millions of dollars) |
||||||||||||||||||
Net external sales |
|
|
|
|
|
|
|
|
||||||||||||
Vinyls |
|
$ |
1,590 |
|
|
|
$ |
1,485 |
|
|
|
$ |
5,972 |
|
|
|
$ |
6,336 |
|
|
Olefins |
|
375 |
|
|
|
398 |
|
|
|
1,532 |
|
|
|
1,782 |
|
|
||||
|
|
$ |
1,965 |
|
|
|
$ |
1,883 |
|
|
|
$ |
7,504 |
|
|
|
$ |
8,118 |
|
|
Income (loss) from operations |
|
|
|
|
|
|
|
|
||||||||||||
Vinyls |
|
$ |
166 |
|
|
|
$ |
68 |
|
|
|
$ |
301 |
|
|
|
$ |
451 |
|
|
Olefins |
|
22 |
|
|
|
49 |
|
|
|
160 |
|
|
|
260 |
|
|
||||
Corporate and other |
|
(10 |
) |
|
|
(15 |
) |
|
|
(32 |
) |
|
|
(55 |
) |
|
||||
|
|
$ |
178 |
|
|
|
$ |
102 |
|
|
|
$ |
429 |
|
|
|
$ |
656 |
|
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
||||||||||||
Vinyls |
|
$ |
159 |
|
|
|
$ |
150 |
|
|
|
$ |
626 |
|
|
|
$ |
563 |
|
|
Olefins |
|
35 |
|
|
|
36 |
|
|
|
139 |
|
|
|
142 |
|
|
||||
Corporate and other |
|
2 |
|
|
|
2 |
|
|
|
8 |
|
|
|
8 |
|
|
||||
|
|
$ |
196 |
|
|
|
$ |
188 |
|
|
|
$ |
773 |
|
|
|
$ |
713 |
|
|
Other income, net |
|
|
|
|
|
|
|
|
||||||||||||
Vinyls |
|
$ |
9 |
|
|
|
$ |
— |
|
|
|
$ |
30 |
|
|
|
$ |
18 |
|
|
Olefins |
|
2 |
|
|
|
1 |
|
|
|
4 |
|
|
|
5 |
|
|
||||
Corporate and other |
|
1 |
|
|
|
5 |
|
|
|
10 |
|
|
|
15 |
|
|
||||
|
|
$ |
12 |
|
|
|
$ |
6 |
|
|
|
$ |
44 |
|
|
|
$ |
38 |
|
|
WESTLAKE CHEMICAL CORPORATION RECONCILIATION OF EBITDA TO NET INCOME, INCOME FROM OPERATIONS AND NET CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited) |
|||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
Three Months
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|||||||||||||||||||
|
|
2020 |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
(In millions of dollars) |
|||||||||||||||||||||||
Net cash provided by operating |
|||||||||||||||||||||||||
activities |
|
$ |
357 |
|
|
|
$ |
431 |
|
|
|
$ |
333 |
|
|
|
$ |
1,297 |
|
|
|
$ |
1,301 |
|
|
Changes in operating assets and |
|||||||||||||||||||||||||
liabilities and other |
|
(230 |
) |
|
|
(316 |
) |
|
|
(228 |
) |
|
|
(778 |
) |
|
|
(785 |
) |
|
|||||
Deferred income taxes |
|
(58 |
) |
|
|
8 |
|
|
|
(20 |
) |
|
|
(146 |
) |
|
|
(54 |
) |
|
|||||
Net income |
|
69 |
|
|
|
123 |
|
|
|
85 |
|
|
|
373 |
|
|
|
462 |
|
|
|||||
Less: |
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Other income, net |
|
12 |
|
|
|
12 |
|
|
|
6 |
|
|
|
44 |
|
|
|
38 |
|
|
|||||
Interest expense |
|
(37 |
) |
|
|
(34 |
) |
|
|
(35 |
) |
|
|
(142 |
) |
|
|
(124 |
) |
|
|||||
Benefit from (provision for) income |
|||||||||||||||||||||||||
taxes |
|
15 |
|
|
|
(33 |
) |
|
|
12 |
|
|
|
42 |
|
|
|
(108 |
) |
|
|||||
Income from operations |
|
79 |
|
|
|
178 |
|
|
|
102 |
|
|
|
429 |
|
|
|
656 |
|
|
|||||
Add: |
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Depreciation and amortization |
|
196 |
|
|
|
196 |
|
|
|
188 |
|
|
|
773 |
|
|
|
713 |
|
|
|||||
Other income, net |
|
12 |
|
|
|
12 |
|
|
|
6 |
|
|
|
44 |
|
|
|
38 |
|
|
|||||
EBITDA |
|
$ |
287 |
|
|
|
$ |
386 |
|
|
|
$ |
296 |
|
|
|
$ |
1,246 |
|
|
|
$ |
1,407 |
|
|
WESTLAKE CHEMICAL CORPORATION SUPPLEMENTAL INFORMATION Product Sales Price and Volume Variance by Operating Segments |
||||||||
|
|
|
|
|
||||
|
|
Fourth Quarter 2020 vs.
|
|
Fourth Quarter 2020 vs.
|
||||
|
|
Average Sales Price |
|
Volume |
|
Average Sales Price |
|
Volume |
Vinyls |
|
+ |
|
- |
|
+ |
|
- |
Olefins |
|
+ |
|
- |
|
+ |
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- |
Company |
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+ |
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- |
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+ |
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- |
Average Quarterly Industry Prices (1) |
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Quarter Ended |
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December 31,
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March 31,
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June 30,
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September 30,
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December 31,
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Average domestic prices |
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Ethane (cents/lb) (2) |
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6.3 |
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4.7 |
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6.4 |
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7.4 |
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7.1 |
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Propane (cents/lb) (3) |
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11.8 |
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8.8 |
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9.6 |
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11.9 |
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13.5 |
|
Ethylene (cents/lb) (4) |
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22.8 |
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15.8 |
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11.0 |
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19.3 |
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24.0 |
|
Polyethylene (cents/lb) (5) |
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54.0 |
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52.3 |
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49.0 |
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61.0 |
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|
67.7 |
|
Styrene (cents/lb) (6) |
|
77.1 |
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62.3 |
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48.3 |
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|
53.8 |
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59.6 |
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Caustic soda ($/short ton) (7) |
|
662 |
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|
648 |
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|
698 |
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|
697 |
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|
653 |
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Chlorine ($/short ton) (8) |
|
175 |
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176 |
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175 |
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176 |
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|
193 |
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PVC (cents/lb) (9) |
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67.8 |
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71.8 |
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66.5 |
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73.3 |
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84.5 |
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Average export prices |
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Polyethylene (cents/lb) (10) |
|
37.7 |
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39.4 |
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38.5 |
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45.7 |
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|
53.2 |
|
Caustic soda ($/short ton) (11) |
|
219 |
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|
203 |
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|
319 |
|
|
260 |
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|
219 |
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PVC (cents/lb) (12) |
|
33.6 |
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|
36.9 |
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27.5 |
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38.5 |
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55.4 |
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________________ |
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(1) |
Industry pricing data was obtained through IHS Markit ("IHS"). We have not independently verified the data. |
(2) |
Average Mont Belvieu spot prices of purity ethane over the period. |
(3) |
Average Mont Belvieu spot prices of non-TET propane over the period. |
(4) |
Average North American spot prices of ethylene over the period. |
(5) |
Average North American Net Transaction prices of polyethylene low density GP-Film grade over the period. |
(6) |
Average North American contract prices of styrene over the period. |
(7) |
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 |
(8) |
Average North American contract prices of chlorine over the period. |
(9) |
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." |
(10) |
Average North American export price for low density polyethylene GP-Film grade over the period. |
(11) |
Average North American low spot export prices of caustic soda over the period. |
(12) |
Average North American spot export prices of PVC over the period. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20210223005103/en/
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