Westlake Corporation Reports Record First Quarter 2022 Results
Westlake Corporation (NYSE: WLK) reported record first quarter 2022 results with net sales of $4.1 billion, a 72% increase from Q1 2021, and net income of $756 million, up 212% year-over-year. EBITDA reached $1.3 billion, a 135% rise. The company expanded its portfolio through the acquisition of Hexion's global epoxy business for $1.2 billion, enhancing its market position in specialty resins. Despite economic and geopolitical volatility, Westlake remains confident in strong market demand and is committed to sustainability goals, including a 20% reduction in emissions by 2030.
- Record quarterly net sales of $4.1 billion, a 72% increase vs. Q1 2021.
- Net income of $756 million, up 212% from the previous year.
- Record EBITDA of $1.3 billion, representing a 135% rise year-over-year.
- Acquisition of Hexion's global epoxy business for $1.2 billion, expanding the specialty product portfolio.
- Rising feedstock costs and logistical constraints impacting margins.
-
Record quarterly net sales of
, an increase of$4.1 billion 72% vs. first quarter 2021 net sales
-
Record quarterly net income of
, an increase of$756 million 212% vs. first quarter 2021 net income
-
Record quarterly EBITDA of
, an increase of$1.3 billion 135% vs. first quarter 2021 EBITDA
- Expanded specialty product focused portfolio with acquisition of Hexion's global epoxy business
SUMMARY FINANCIAL HIGHLIGHTS ($ in millions except per share data)
|
|
|
Three Months Ended |
||
|
|
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
|
|
|
Net income attributable to |
|
|
|
|
|
Diluted earnings per common share |
|
|
|
|
|
EBITDA |
|
|
|
|
|
EBITDA margin |
|
|
|
|
|
|
|
|
|
|
|
Performance and Essential Materials ("PEM") Segment |
|
|
|
|
|
Net external sales |
|
|
|
|
|
Income from operations |
|
|
|
|
|
EBITDA |
|
|
|
|
|
EBITDA margin |
|
|
|
|
|
|
|
|
|
|
|
Housing and Infrastructure Products ("HIP") Segment |
|
|
|
|
|
Net external sales |
|
|
|
|
|
Income from operations |
|
|
|
|
|
EBITDA |
|
|
|
|
|
EBITDA margin |
|
|
|
|
|
BUSINESS HIGHLIGHTS
In the first quarter of 2022, Westlake achieved record quarterly net sales of
In
In the first quarter of 2022, the Company announced its target to reduce Scope 1 and Scope 2 CO2 equivalent emissions per ton of production by
EXECUTIVE COMMENTARY
"The record results this quarter are driven by the groundwork Westlake has laid and the recent acquisitions that build on this solid foundation. The addition of our epoxy business to our PEM segment with its leading market position continues our drive toward a more differentiated and specialized product offering. Through the strong performance of all of our businesses and our recent acquisitions, we delivered record performance during the first quarter of 2022. I want to thank all of the Westlake employees for their hard work and dedication in helping us achieve these results. We continued to see robust residential construction and remodeling activity drive demand for PVC resin, as well as for products in our Housing and Infrastructure Products segment. The growth in the
"While we see volatility driven by economic and geopolitical factors which could impact our businesses, market conditions currently remain favorable and we are confident in our business fundamentals and the markets in which we participate. We remain focused on our ESG tenets and continue to bring a portfolio of leading brands to market that not only enhance lives every day but also create a greener, more sustainable future for all of us, while also remaining steadfast in creating value for our shareholders. With the steps we have taken to date, combined with a continued strong demand outlook for our products, we remain optimistic about the future ahead," concluded
RESULTS
Consolidated Results
The Company reported record quarterly net income of
Record EBITDA (earnings before interest expense, income taxes, depreciation and amortization) of
Cash and Debt
Net cash provided by operating activities was
Performance and Essential Materials Segment
Performance and Essential Materials income from operations for the first quarter of 2022 of
Housing and Infrastructure Products Segment
For the first quarter of 2022, Housing and Infrastructure Products income from operations of
Forward-Looking Statements
The statements in this release and the related teleconference relating to matters that are not historical facts, including statements regarding favorable market conditions, our outlook for our business segments, our ability to create value and grow, launching sustainable brands and reducing our
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
About Westlake
Westlake is a global manufacturer and supplier of materials and innovative products that enhance life every day. Headquartered in
Westlake Corporation Conference Call Information:
A conference call to discuss
A replay of the conference call will be available beginning two hours after its conclusion until
The conference call will also be available via webcast at https://edge.media-server.com/mmc/p/5ytbsbdp and the earnings release can be obtained via the Company's website at: http://www.westlake.com/investor-relations.
|
||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||
(Unaudited) |
||||||||
|
|
Three Months Ended |
||||||
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
||||
|
|
(In millions of dollars, except per share data and share amounts) |
||||||
Net sales |
|
$ |
4,056 |
|
|
$ |
2,357 |
|
Cost of sales |
|
|
2,771 |
|
|
|
1,848 |
|
Gross profit |
|
|
1,285 |
|
|
|
509 |
|
Selling, general and administrative expenses |
|
|
200 |
|
|
|
136 |
|
Amortization of intangibles |
|
|
42 |
|
|
|
27 |
|
Restructuring, transaction and integration-related costs |
|
|
11 |
|
|
|
— |
|
Income from operations |
|
|
1,032 |
|
|
|
346 |
|
Interest expense |
|
|
(46 |
) |
|
|
(33 |
) |
Other income, net |
|
|
11 |
|
|
|
12 |
|
Income before income taxes |
|
|
997 |
|
|
|
325 |
|
Provision for income taxes |
|
|
233 |
|
|
|
72 |
|
Net income |
|
|
764 |
|
|
|
253 |
|
Net income attributable to noncontrolling interests |
|
|
8 |
|
|
|
11 |
|
Net income attributable to |
|
$ |
756 |
|
|
$ |
242 |
|
Earnings per common share attributable to |
|
|
|
|
||||
Basic |
|
$ |
5.87 |
|
|
$ |
1.88 |
|
Diluted |
|
$ |
5.83 |
|
|
$ |
1.87 |
|
Weighted average common shares outstanding: |
|
|
|
|
||||
Basic |
|
|
128,071,355 |
|
|
|
127,955,532 |
|
Diluted |
|
|
128,925,099 |
|
|
|
128,483,373 |
|
|
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(Unaudited) |
||||||||
|
|
|
|
|
||||
|
|
|
|
|
||||
|
|
(In millions of dollars) |
||||||
ASSETS |
|
|
|
|
||||
Current assets |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
1,055 |
|
$ |
1,908 |
||
Accounts receivable, net |
|
|
2,352 |
|
|
1,868 |
||
Inventories |
|
|
1,884 |
|
|
1,407 |
||
Prepaid expenses and other current assets |
|
|
114 |
|
|
80 |
||
Total current assets |
|
|
5,405 |
|
|
5,263 |
||
Property, plant and equipment, net |
|
|
8,276 |
|
|
7,606 |
||
Other assets, net |
|
|
6,060 |
|
|
5,590 |
||
Total assets |
|
$ |
19,741 |
|
$ |
18,459 |
||
|
|
|
|
|
||||
LIABILITIES AND EQUITY |
|
|
|
|
||||
Current liabilities (accounts payable and accrued and other liabilities) |
|
$ |
2,286 |
|
$ |
2,075 |
||
Current portion of long-term debt, net |
|
|
264 |
|
|
269 |
||
Long-term debt, net |
|
|
4,902 |
|
|
4,911 |
||
Other liabilities |
|
|
3,037 |
|
|
2,676 |
||
Total liabilities |
|
|
10,489 |
|
|
9,931 |
||
|
|
|
8,681 |
|
|
7,955 |
||
Noncontrolling interests |
|
|
571 |
|
|
573 |
||
Total equity |
|
|
9,252 |
|
|
8,528 |
||
Total liabilities and equity |
|
$ |
19,741 |
|
$ |
18,459 |
|
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
(Unaudited) |
||||||||
|
|
Three Months Ended |
||||||
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
||||
|
|
(In millions of dollars) |
||||||
Cash flows from operating activities |
|
|
|
|
||||
Net income |
|
$ |
764 |
|
|
$ |
253 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
||||
Depreciation and amortization |
|
|
257 |
|
|
|
195 |
|
Deferred income taxes |
|
|
42 |
|
|
|
10 |
|
Net loss on disposition and others |
|
|
15 |
|
|
|
15 |
|
Other balance sheet changes |
|
|
(378 |
) |
|
|
(208 |
) |
Net cash provided by operating activities |
|
|
700 |
|
|
|
265 |
|
Cash flows from investing activities |
|
|
|
|
||||
Acquisition of businesses, net of cash acquired |
|
|
(1,154 |
) |
|
|
— |
|
Additions to investments in unconsolidated subsidiaries |
|
|
(96 |
) |
|
|
(7 |
) |
Additions to property, plant and equipment |
|
|
(263 |
) |
|
|
(141 |
) |
Other, net |
|
|
6 |
|
|
|
13 |
|
Net cash used for investing activities |
|
|
(1,507 |
) |
|
|
(135 |
) |
Cash flows from financing activities |
|
|
|
|
||||
Distributions to noncontrolling interests |
|
|
(10 |
) |
|
|
(11 |
) |
Dividends paid |
|
|
(39 |
) |
|
|
(35 |
) |
Proceeds from debt issuance |
|
|
5 |
|
|
|
4 |
|
Repayment of short-term notes payable, net |
|
|
(8 |
) |
|
|
— |
|
Other, net |
|
|
5 |
|
|
|
8 |
|
Net cash used for financing activities |
|
|
(47 |
) |
|
|
(34 |
) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
|
(3 |
) |
|
|
(3 |
) |
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
|
(857 |
) |
|
|
93 |
|
Cash, cash equivalents and restricted cash at beginning of period |
|
|
1,941 |
|
|
|
1,337 |
|
Cash, cash equivalents and restricted cash at end of period |
|
$ |
1,084 |
|
|
$ |
1,430 |
|
|
||||||||
SEGMENT INFORMATION |
||||||||
(Unaudited) |
||||||||
|
|
Three Months Ended |
||||||
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
||||
|
|
(In millions of dollars) |
||||||
Net external sales |
|
|
|
|
||||
Performance and Essential Materials |
|
|
|
|
||||
Performance materials |
|
$ |
1,929 |
|
|
$ |
1,204 |
|
Essential materials |
|
|
903 |
|
|
|
538 |
|
Total performance and essential materials |
|
|
2,832 |
|
|
|
1,742 |
|
Housing and Infrastructure Products |
|
|
|
|
||||
Housing products |
|
|
972 |
|
|
|
443 |
|
Infrastructure products |
|
|
252 |
|
|
|
172 |
|
Total housing and infrastructure products |
|
|
1,224 |
|
|
|
615 |
|
|
|
$ |
4,056 |
|
|
$ |
2,357 |
|
Income (loss) from operations |
|
|
|
|
||||
Performance and Essential Materials |
|
$ |
879 |
|
|
$ |
288 |
|
Housing and Infrastructure Products |
|
|
185 |
|
|
|
71 |
|
Corporate and other |
|
|
(32 |
) |
|
|
(13 |
) |
|
|
$ |
1,032 |
|
|
$ |
346 |
|
Depreciation and amortization |
|
|
|
|
||||
Performance and Essential Materials |
|
$ |
184 |
|
|
$ |
161 |
|
Housing and Infrastructure Products |
|
|
71 |
|
|
|
32 |
|
Corporate and other |
|
|
2 |
|
|
|
2 |
|
|
|
$ |
257 |
|
|
$ |
195 |
|
Other income, net |
|
|
|
|
||||
Performance and Essential Materials |
|
$ |
8 |
|
|
$ |
9 |
|
Housing and Infrastructure Products |
|
|
2 |
|
|
|
2 |
|
Corporate and other |
|
|
1 |
|
|
|
1 |
|
|
|
$ |
11 |
|
|
$ |
12 |
|
|
||||||||||||
RECONCILIATION OF EBITDA TO NET INCOME, INCOME FROM OPERATIONS AND |
||||||||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES |
||||||||||||
(Unaudited) |
||||||||||||
|
|
Three Months
|
|
Three Months Ended |
||||||||
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
||||||
|
|
(In millions of dollars) |
||||||||||
Net cash provided by operating activities |
|
$ |
757 |
|
|
$ |
700 |
|
|
$ |
265 |
|
Changes in operating assets and liabilities and other |
|
|
(123 |
) |
|
|
106 |
|
|
|
(2 |
) |
Deferred income taxes |
|
|
27 |
|
|
|
(42 |
) |
|
|
(10 |
) |
Net income |
|
|
661 |
|
|
|
764 |
|
|
|
253 |
|
Less: |
|
|
|
|
|
|
||||||
Other income, net |
|
|
18 |
|
|
|
11 |
|
|
|
12 |
|
Interest expense |
|
|
(46 |
) |
|
|
(46 |
) |
|
|
(33 |
) |
Provision for income taxes |
|
|
(184 |
) |
|
|
(233 |
) |
|
|
(72 |
) |
Income from operations |
|
|
873 |
|
|
|
1,032 |
|
|
|
346 |
|
Add: |
|
|
|
|
|
|
||||||
Depreciation and amortization |
|
|
240 |
|
|
|
257 |
|
|
|
195 |
|
Other income, net |
|
|
18 |
|
|
|
11 |
|
|
|
12 |
|
EBITDA |
|
$ |
1,131 |
|
|
$ |
1,300 |
|
|
$ |
553 |
|
|
||||||||||||
RECONCILIATION OF SEGMENT EBITDA TO INCOME FROM OPERATIONS |
||||||||||||
(Unaudited) |
||||||||||||
|
|
Three Months
|
|
Three Months Ended |
||||||||
|
|
|
2021 |
|
|
2022 |
|
|
2021 |
|||
|
|
|
|
|
|
|
||||||
|
|
(In millions of dollars) |
||||||||||
Performance and Essential Materials Segment |
|
|
|
|
|
|
||||||
Income from operations |
|
$ |
821 |
|
$ |
879 |
|
$ |
288 |
|||
Add: |
|
|
|
|
|
|
||||||
Depreciation and amortization |
|
|
168 |
|
|
184 |
|
|
161 |
|||
Other income, net |
|
|
8 |
|
|
8 |
|
|
9 |
|||
EBITDA |
|
$ |
997 |
|
$ |
1,071 |
|
$ |
458 |
|
|
Three Months
|
|
|
Three Months Ended |
|||||||
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
||||||
|
|
(In millions of dollars) |
||||||||||
Housing and Infrastructure Products Segment |
|
|
|
|
|
|
||||||
Income from operations |
|
$ |
86 |
|
$ |
185 |
|
$ |
71 |
|||
Add: |
|
|
|
|
|
|
||||||
Depreciation and amortization |
|
|
70 |
|
|
71 |
|
|
32 |
|||
Other income, net |
|
|
6 |
|
|
2 |
|
|
2 |
|||
EBITDA |
|
$ |
162 |
|
$ |
258 |
|
$ |
105 |
|
||||||||
SUPPLEMENTAL INFORMATION |
||||||||
Product Sales Price and Volume Variance by Operating Segments |
||||||||
|
|
First Quarter 2022 vs. First Quarter 2021 |
|
First Quarter 2022 vs. Fourth Quarter 2021 |
||||
|
|
Average
|
|
Volume |
|
Average
|
|
Volume |
Performance and Essential Materials |
|
+ |
|
+ |
|
+ |
|
+ |
Housing and Infrastructure Products |
|
+ |
|
+ |
|
+ |
|
+ |
Company |
|
+ |
|
+ |
|
+ |
|
+ |
Average Quarterly Industry Prices and Housing Starts Data |
||||||||||
|
|
Quarter Ended |
||||||||
|
|
|
|
|
|
|
|
|
|
|
Average domestic prices (1) |
|
|
|
|
|
|
|
|
|
|
Natural gas ($/MMBtu) (2) |
|
2.8 |
|
2.9 |
|
4.0 |
|
5.8 |
|
4.8 |
Ethane (cents/lb) (3) |
|
8.1 |
|
8.7 |
|
11.7 |
|
13.2 |
|
13.5 |
Propane (cents/lb) (4) |
|
21.2 |
|
20.7 |
|
27.6 |
|
29.5 |
|
30.7 |
Ethylene (cents/lb) (5) |
|
45.1 |
|
43.0 |
|
48.0 |
|
35.4 |
|
37.6 |
Polyethylene (cents/lb) (6) |
|
78.0 |
|
99.0 |
|
109.0 |
|
92.0 |
|
79.3 |
Styrene (cents/lb) (7) |
|
76.5 |
|
90.5 |
|
82.0 |
|
84.8 |
|
91.3 |
Caustic soda ($/short ton) (8) |
|
648 |
|
755 |
|
825 |
|
920 |
|
972 |
Chlorine ($/short ton) (9) |
|
234 |
|
309 |
|
443 |
|
563 |
|
680 |
PVC (cents/lb) (10) |
|
92.8 |
|
105.0 |
|
109.0 |
|
114.3 |
|
113.3 |
|
|
|
|
|
|
|
|
|
|
|
Average export prices (1) |
|
|
|
|
|
|
|
|
|
|
Polyethylene (cents/lb) (11) |
|
76.3 |
|
89.7 |
|
86.0 |
|
72.7 |
|
69.6 |
Caustic soda ($/short ton) (12) |
|
249 |
|
333 |
|
364 |
|
573 |
|
617 |
PVC (cents/lb) (13) |
|
67.8 |
|
77.8 |
|
74.1 |
|
90.0 |
|
72.6 |
|
|
|
|
|
|
|
|
|
|
|
Housing Starts (in thousands of units) |
|
|
|
|
|
|
|
|
|
|
Housing Starts - Actual quarterly starts (14) |
|
358 |
|
435 |
|
419 |
|
389 |
|
395 |
Housing Starts - Seasonally Adjusted Annual Rate (15) |
|
1,599 |
|
1,588 |
|
1,562 |
|
1,670 |
|
1,753 |
_______________ | ||
(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 |
|
(4) |
Average |
|
(5) |
Average North American spot prices of ethylene over the period. |
|
(6) |
Average North American |
|
(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 |
|
(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. |
|
(14) |
Quarterly Single and Multi-family Starts data per the |
|
(15) |
Quarterly Average Single and Multi-family Seasonally Adjusted Annual Rate data per the |
View source version on businesswire.com: https://www.businesswire.com/news/home/20220428006050/en/
(713) 960-9111
Investors—Steve Bender
Media—L.
Source:
FAQ
What were Westlake Corporation's Q1 2022 financial results?
How much did Westlake spend on the Hexion acquisition?
What is Westlake's emission reduction target for 2030?
How has Westlake's EBITDA changed year-over-year?