WLK

A month has gone by since the last earnings report for Westlake (WLK). Shares have lost about 3.1% in that time frame, underperforming the S&P 500. But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Westlake due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for Westlake Corporation before we dive into how investors and analysts have reacted as of late. Westlake logged adjusted earnings of $2.01 per share for the second quarter of 2026, topping the Zacks Consensus Estimate of $1.93. Adjusted earnings improved sharply from an adjusted loss of 9 cents per share a year ago. Net sales were $3.27 billion, which increased 10.8% year over year but missed the consensus mark of $3.28 billion marginally. Overall sales volume (excluding plant closures and the ACI acquisition) increased 7%, while average sales price rose 8% from the year-ago quarter. PEM net sales were $2,019 million, up 13% from the year-ago quarter. It surpassed our estimate of $1,842.3 million. The segment posted operating income of $185 million versus a loss of $318 million a year ago, while EBITDA excluding identified items surged to $416 million from $52 million. Within PEM, performance materials sales increased 21% year over year to $1,236 million and essential materials sales rose 2% to $783 million. Management attributed the improvement to significantly higher average sales prices, particularly for polyethylene and PVC resin, along with steady improvement in U.S. demand and better operating rates. Lower natural gas and ethane costs also benefited the EBITDA margin. HIP net sales were $1,252 million, up 8% year over year and topped our estimate of $1,229.6 million. Operating income was $212 million, down 4.5% from $222 million a year ago, while EBITDA excluding identified items was essentially flat at $276 million. Operationally, HIP benefited from strong double-digit Pipe & Fittings sales volume growth supported by infrastructure spending, including data centers. Housing Products sales increased 3% year over year, while disciplined pricing actions helped offset inflation in transportation and raw material costs. Net cash provided by operating activities was $318 million in the second quarter. Capital expenditures were $207 million, resulting in free cash flow of $111 million. Westlake also reduced debt by $500 million and returned $99 million to shareholders through dividends and share repurchases. Cash, equivalents and investments totaled $1.9 billion. Westlake maintained its guidance for HIP revenue and EBITDA margin at the lower ends of the previously communicated ranges of $4.4 billion to $4.6 billion of sales and a 19% to 21% EBITDA margin. Management said its three-pillar profitability improvement plan delivered roughly $150 million of year-over-year EBITDA benefit in the second quarter toward its $600 million full-year 2026 target. The company expects the significant majority of the 2026 EBITDA uplift from the profitability improvement plan to benefit PEM. Management also expects improved reliability and production, which supported higher second-quarter sales volume, to continue in the second half of 2026. Since the earnings release, investors have witnessed a flat trend in estimates revision. At this time, Westlake has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for value investors. Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in. Westlake has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Westlake Corporation (WLK) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Tuesday, Aug. 4, 2026 at 11 a.m. ET Vice President and Chief Accounting Officer - Jeff Holy President and Chief Executive Officer - Jean-Marc Gilson Executive Chairman - Albert Chao Special Adviser to the President - Steven Bender Senior Vice President and Chief Financial Officer - Jonathan Baksht Operator: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Westlake Corporation Second Quarter 2026 Earnings Conference Call. As a reminder, ladies and gentlemen, this conference is being recorded today, August 4, 2026. I would now like to turn the call over to today's host, Jeff Holy, Westlake's Vice President and Chief Accounting Officer. Sir, you may now begin. Jeff Holy: Thank you, Dana. Good morning, everyone, and welcome to the Westlake Corporation conference call to discuss our second quarter 2026 results. I'm joined today by Albert Chao, our Executive Chairman; Jean-Marc Gilson, our President and CEO; Jon Baksht, our Senior Vice President and Chief Financial Officer; Steve Bender, our Special Adviser to the President; and other members of our management team. During the call, we will refer to our 2 reporting segments: Performance and Essential Materials, which we refer to as PEM or Materials; and Housing and Infrastructure Products, which we refer to as HIP or Products. Today's conference call will begin with Jean-Marc, who will open with a few comments regarding Westlake's second quarter performance. Jon will then discuss our financial and operating results, after which Jean-Marc will add a few concluding comments, and we'll open the call up to questions. References to income from operations, EBITDA, net income and earnings per share on this call exclude the financial impact of the identified items. As such, comments made on this call will be in regard to our underlying business results using non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to GAAP financial measures is provided in our earnings release, which is available in the Investor Relations section of our website. Today, management is going to discuss certain topics that will contain forward-looking information that is based on management's beliefs as well as assumptions made by and information currently available to management. These forward-looking statements suggest predictions or expectations and thus are subject to risks or uncertainties. These risks and uncertainties are discussed in Westlake's Form 10-K for the year ended December 31, 2025, and other SEC filings. We encourage you to learn more about these factors that could lead our actual results to differ by reviewing these SEC filings, which are also available on our Investor Relations website. This morning, Westlake issued a press release with details of our second quarter results. This document is available in the Press Release section of our website at westlake.com. We have also included an earnings presentation, which can be found in the Investor Relations section on our website. A replay of today's call will be available beginning today, 2 hours following the conclusion of this call. This replay may be accessed via Westlake's website. Please note that information reported on this call speaks only as of today, August 4, 2026, and therefore, you are advised that time-sensitive information may no longer be accurate as of the time of any replay. Finally, I would advise you that this conference call is being broadcast live through an Internet webcast system that can be accessed on our web page at westlake.com. Now I would like to turn the call over to Jean-Marc Gilson. Jean-Marc? Jean-Marc Gilson: Thank you, Jeff, and good morning, everyone. We appreciate you joining us to discuss our second quarter of 2026 results. During the second quarter, we delivered $3.3 billion in net sales and EBITDA of $679 million which was a substantial improvement from both the first quarter of 2026 and the second quarter of 2025. At a high level, there were really 3 key earnings drivers in the second quarter. First, PEM's globally advantaged feedstock and energy position in North America enabled it to expand its integrated margins as its average sales prices benefited from higher oil prices due to the conflict in the Middle East. Second, our 3-pillar profitability improvement plan contributed approximately $150 million to the year-over-year EBITDA improvement. Third, HIP's 6% year-over-year organic sales volume growth against the backdrop of South and North American residential construction activity drove stable segment EBITDA and demonstrates why we continue to view HIP as a key growth driver for Westlake. I'd like to expand on each of these 3 drivers in more detail to provide more context on how the quarter played out. PEMs feedstock and energy cost advantage in North America, where over 85% of our production capacity resides, was an important factor in PEM's second quarter earnings improvement. During the second quarter, a spike in global oil price drove significantly higher cost for competitors in higher cost regions like Asia and Europe, which along with tighter global supply-demand conditions contributed to a 21% sequential increase in PEM's average sales price. At the same time, PEM's own production costs, which are mostly based on more affordable North American natural gas and NGLs were largely immune to the spike in oil prices. This allowed PEM to convert to higher global selling prices directly into higher margins and EBITDA. In fact, our natural gas and ethane costs in North America actually declined significantly from the first quarter due to warmer weather and an increase in associated gas from higher U.S. oil drilling activity. PEM also benefited from a 2% sequential increase in sales volume, driven by improved North American demand. Taken together, we believe that PEM's second quarter performance demonstrates the value of PEM's globally advantaged feedstock and energy position and the substantial earnings leverage that PEM has to a better global supply-demand balance for its products, particularly polyethylene, caustic soda and PVC resin. Turning now to our 3-pillar profitability improvement plan. The actions that we took last year are generating significant cost savings that are contributing to our EBITDA improvement. Our first pillar is footprint optimization, which primarily consists of the shutdown of our epoxy plant in Pernis, a styrene plant in Lake Charles and 3 of our chlorvinyl plants in the U.S. These shutdowns took place last year and the associated cost savings from these actions are tracking ahead of plan so far in 2026. For example, our Epoxy business has done a complete turnaround from annual losses in excess of $100 million to a return to profitability in the second quarter of 2026. And our North American chlorvinyl business is benefiting from more streamlined operations with significant logistical cost savings from a more optimized footprint. Our second pillar, cost savings is also tracking ahead of plan, thanks to help from our suppliers and a company-wide effort to economize. Our third pillar is plant reliability. While the reliability of our plant in the first half of 2026 was much improved from the prior year, it was not yet where we wanted to be due to residual unplanned outages this quarter. We continue to make progress improving our operations and most of the production issues were corrected by the end of the second quarter with the plants running well into July. We continue to target $600 million of combined EBITDA benefit in 2026 from our profitability improvement plan. And I would like to thank and recognize the efforts of all our employees as they safely execute our 3-pillar improvement plan. Turning to HIP's contribution to the second quarter earnings. The segment produced its second highest quarterly revenue in its history, which we view as a significant achievement considering the soft level of homebuilding activity during the quarter and a testament to the value of the diversity of our HIPS portfolio. As a reminder, infrastructure makes up a significant portion of HIP sales and earnings, and this part of the segment has shown solid growth in recent quarters. HIP second quarter revenue grew 8% year-over-year, driven by solid 6% organic sales volume growth, which translated into stable EBITDA despite cost inflation and a lower average sales price. As has been the case in recent quarters, pipe and fittings drove the volume growth. In fact, pipe and fittings sales volume grew roughly 20% year-over-year as a result of continued North American infrastructure investments, including the growth in data center projects. The performance of our Housing Products business was another bright spot as it outgrew the market during the second quarter due to the strength of our brands, our broad geographic footprint and our position as a supplier of choice to large national homebuilders and distributors. So in summary, we were very pleased with our overall second quarter results that reflect Westlake's foundational strength, our globally advantaged North American production, our highly integrated business model, our innovative and differentiated HIP product offering and our strong investment-grade rated balance sheet. While our plant reliability improved, we are making further progress to generate better results in coming quarters. The issues that we experienced in recent quarters are fixable and our corrective actions are already generating solid return thus far in the third quarter. Now before Jon provides more detail on our financial results for the second quarter of 2026, I want to take this opportunity to thank Steve Bender for all of his many contributions to Westlake over the past 21 years as our CFO and wish him the best of luck with his upcoming retirement. And I'd now like to turn the call over to our Executive Chairman, Albert Chao, to say a few words. Albert? Albert Chao: Thank you, Jean-Marc, and thank you, Steve, for all you have done to grow Westlake into a Fortune 500 company with diversified, vertically integrated chemical and building products businesses operating around the world. On behalf of James and the entire Chao family, I want to thank you for your many years of service and your contributions to Westlake's growth and financial strength. We would like to wish you and Denise the best in your retirement. Steven Bender: Thank you, Albert and Jean-Marc. It's been a pleasure working with both of you and James Chao and the entire Westlake team over the past 21 years. I am proud that during my tenure as CFO, together, we navigated the demands of the high-yield markets were recognized for the discipline we demonstrate in running Westlake and built the financial foundation that would carry Westlake to investment-grade standing, which supported a significant growth in our business, delivering compounded annual growth in total shareholder return of 13% over that time period. I leave for retirement next month knowing that Westlake's foundation is solid and the future holds promise. I look forward to Westlake's continued growth while delivering meaningful value to shareholders. I want to also thank all the analysts and investors on the call for their continued support of Westlake over the years and the relationships that we have built over that time. With that, I'd like to turn the call over to Westlake's new Chief Financial Officer, Jon Baksht. Jon? Jonathan Baksht: Thank you, Steve. Your contributions to Westlake will be missed, and we all wish you the best of luck in your retirement. I'm excited to be a part of the Westlake team with its rich history and culture. What really stood out to me when joining the organization is not only the strong track record of shareholder returns and growth, but also the focus on all stakeholders, including employees and communities. I look forward to partnering with all of you as the company builds on its positive momentum. Now turning to our financial results. In the second quarter of 2026, Westlake reported sales of $3.3 billion and net income of $260 million or $2.01 per share, which compares to a net loss of $12 million in the second quarter of 2025. At the segment level, HIP posted solid results against the backdrop of weaker North American residential construction. Net sales of $1.3 billion increased nearly $100 million or 8% from the second quarter of 2025, driven by the January acquisition of ACI and solid double-digit sales volume growth in Pipe and Fittings. Excluding ACI, HIP sales volume grew 6%, while average sales prices declined 3% with Pipe and Fittings driving both trends. HIP sales volume also benefited from solid growth in siding and trim through our strong position with large national homebuilders and distributors. HIP EBITDA of $276 million increased by $1 million from the second quarter of 2025 as HIP sales growth more than offset a slight decline in EBITDA margin to 22% from 24% in the prior year period, driven by a lower average sales price and inflation in transportation and raw material costs. Sequentially, HIP sales volume of $1.3 billion increased 26%, driven by a 24% increase in sales volume and a 2% increase in average sales price. The sales volume growth was led by Pipe and Fittings, where growth was the result of solid end market demand for Pipe, driven by higher U.S. infrastructure spending, including the construction of data centers. We also believe that some Pipe orders and demand may have shifted from the third quarter into the second quarter of 2026 as customers sought to secure supply in the wake of the onset of the conflict in the Middle East. As a result, there could be a modest impact to our third quarter Pipe sales volumes from this shift in the timing of orders. Aside from Pipe, HIP's second quarter sales volumes benefited from seasonally higher demand for exterior building products. Housing product sales of $1 billion increased $223 million sequentially, reflecting seasonal strength in siding and trim and stone. Meanwhile, Infrastructure Products sales of $241 million rose $36 million from the first quarter, primarily due to higher Pipe and Fitting sales volume and pricing actions in global compounds aimed at offsetting rising costs. Moving to our PEM segment. PEM second quarter EBITDA of $416 million increased by $364 million versus the second quarter of 2025, driven by the benefits of our 3-pillar profitability improvement plan and a 14% increase in average sales price led by polyethylene and PVC resin. Excluding the impact of plant closures, sales volume increased 7%, driven by caustic soda and PVC resin. Compared to the first quarter, PEM EBITDA increased by $380 million due to a 21% increase in average sales price and lower natural gas and ethane costs. Sales volume rose 2% sequentially as higher caustic soda, chlorine and epoxy resin sales volume more than offset lower polyethylene and PVC resin sales volume. Now turning to the balance sheet and cash flow statements. We continue to maintain financial flexibility with a strong balance sheet as well as our long-standing commitment to a solid investment-grade credit rating. As of June 30, 2026, cash and investments totaled $1.9 billion and total debt was $5.1 billion with a staggered long-term fixed rate debt maturity schedule. I'd like to thank Steve for establishing the company's enviable debt profile with a weighted average maturity of over 17 years with an average coupon rate of 4%. During the second quarter, we retired the remaining $500 million of debt outstanding on our 2026 notes, and we repurchased $30 million of Westlake common stock. For the second quarter of 2026, net cash provided by operating activities of $318 million more than doubled from the prior year period and includes a seasonal build in working capital as well as cash payments for the $67 million PVC pipe legal settlement that were recorded in the first quarter of 2026. As is typically the case, we expect our cash flow in the second half of the year to benefit from a significant release of working capital, particularly in the fourth quarter. In June, we closed the acquisition of PVC and VCM plant in Wilhelmshaven, Germany. This facility benefits from its advantageous logistical infrastructure, including a deepwater port capable of receiving globally advanced feedstock supplied by our North American operations. We see significant integration benefits from this acquisition as we optimize our European supply chain and manufacturing operations. This transaction underscores our disciplined approach to deploying capital in ways that create long-term shareholder value. Now let me provide guidance. We expect 2026 revenue and EBITDA margin in our Housing and Infrastructure Products segments to be towards the lower end of our previously communicated ranges of $4.4 billion to $4.6 billion of revenue, with EBITDA margin between 19% and 21%, excluding identified items. As we discussed last quarter, the decrease in expectations is driven by a more muted outlook for North American residential construction activity and increases in transportation and raw material costs. Total capital expenditures for the company for 2026 are still expected to be $900 million, which is approximately $100 million lower than last year and in line with our annual depreciation. We continue to expect cash interest expense to be approximately $215 million. Now I will turn the call over to Jean-Marc to provide current outlook of our business. Jean-Marc? Jean-Marc Gilson: Thank you, Jon. Global industrial and manufacturing activity has shown steady improvement thus far in 2026, led by North America, where ISM readings in the U.S. have been above 50 each month this year. PEM sales volume has tracked these trends with modest demand growth in the U.S., balanced by softer end market conditions in other regions. As we look to the second half of 2026, we expect PEM sales volume to continue to reflect the same steady global demand environment that we experienced in the first half of the year. With regards to PEM pricing, polyethylene prices exited the second quarter of 2026, slightly below the quarterly average, though they remained higher than pre-conflict levels. Meanwhile, PVC resin prices exited the quarter at or very near the highest levels for the year. Looking ahead to the second half of the year, we expect future price trends to be heavily influenced by global oil price movements. During the second half of 2026, PEM's margins and earnings will continue to be supported by our 3-pillar profitability improvement program, which we continue to expect to generate $600 million of EBITDA benefit in 2026. As I discussed, we are improving the reliability of our plants and operations have performed well thus far in the third quarter. Our focus for PEM for the remainder of 2026 is to sustain this improved reliability on a consistent month-to-month and quarter-to-quarter basis. Additionally, in the second half of 2026, PEM will integrate the newly acquired PVC business in Wilhelmshaven into the broader Westlake system. These actions establish a structural regional cost advantage at the site, enabled by its unique logistical assets, positioning it to contribute more meaningfully to PEM sales and earnings beginning next year. Turning to HIP. We do not expect the macro environment to provide a meaningful tailwind for HIP's Housing Products business in 2026. Even so, our strong competitive position, supported by the value of our brands and the breadth of our offerings should enable HIP's Housing Products business to continue to outperform the market. Turning to HIP's Pipe and Fitting business. End market conditions remain favorable, driven by robust demand for municipal pipe as a result of the Infrastructure Act as well as strong growth in overall U.S. infrastructure spending, including the construction of new data centers. The short and long-term outlook for Pipe and Fittings demand remains favorable, and we continue to expect its sales volume to grow at healthy rates, supported by solid underlying demand trends and the start-up of our new PVCO plant in Wichita Falls at the end of this year. Finally, in global compounds, we have been pleased by the performance of ACI since its acquisition in January. ACI brings differentiated technology and expanded market access to Westlake, which we intend to leverage across our legacy compound business. Before opening the call to questions, I want to highlight the actions taken during the quarter to improve our balance sheet and reward our shareholders. As Jon noted, we reduced debt by $500 million while returning approximately $100 million to shareholders through dividends and share repurchases. Our investment-grade rated balance sheet and cash flow generation allow us to continue to invest to profitably grow the company, including our new PVCO pipe plant and the acquisition of ACI and Wilhelmshaven. Thank you very much for listening to our second quarter earnings call. I will now turn the call back over to Jeff. Jeff? Jeff Holy: Thank you, Jean-Marc. Before we begin taking questions, I would like to remind listeners that our earnings presentation, which provides additional clarity into our results, is available on our website, and a replay of this teleconference will be available a few hours after the call has ended. Dana, we will now take questions. Hassan Ahmed: Obviously, pleased to see the strong results in the PEM segment. And I know you addressed -- you guys addressed this on the call as well. Just trying to figure out the sustainability of these higher results. I know pricing was obviously very strong. But you guys obviously also talked about a year-over-year benefit of around $150 million from the 3-pillar program. So just trying to understand how much of that $150 million actually was on the PEM side of things rather than the Hip side of things. And again, any commentary around the sustainability of these higher sort of profitability levels in PEM would be helpful. Jean-Marc Gilson: Yes. Thank you. Look, I mean, good question. As we explained it in -- I mean, previous quarters, we've been working really hard on the 3-pillar strategy, and they are really delivering up to our expectation. As you -- I mean, as you mentioned, most of the benefit, not all of the benefit of the 3-pillar strategy is going to the PEM segment. Some of it is going to the HIP segment, but the vast majority of it is going into the PEM segment. Now none of these are one-offs. So these are sustainable cost savings going into the future. So we've added about $300 million to EBITDA, thanks to these savings so far this year and about $150 million in this quarter. And as I said, we are expecting to deliver the full value of the program over the course of the year and getting into a better operating mode into 2027 and beyond. Jonathan Baksht: This is Jon. I would just add, you can see this on our financial statements as well, and it is coming through. This isn't one of these programs where you have to take an off-line spreadsheet to calculate the savings. I would just point to our first half, if you look at our cost of sales line, first half year-over-year, our volume is up 3% in an inflationary environment, and you see $150 million of reduction in our cost of sales just in the first half of the year. And then when you consider that the 3% volume increase would translate into additional cost of sales as well, you can translate that at the same run rate of our other volume right to the $300 million. So you're seeing it in our P&L today in the first half of the year. Hassan Ahmed: Very helpful, guys. And just as a follow-up, I mean, it seems that at least the North American chlorovinyls landscape is changing a little bit with recently announced merger. So just with that in mind, how are you guys thinking about that? I mean, would there be potentially more opportunities for you guys on the chlorine side of things? I know you consume a lot of it internally. And could there be some risks on the caustic side of things as potentially a large chloralkali starts sort of raising their operating rates, call it, through the course of 2027? Jean-Marc Gilson: Yes. No, that's a good question. Yes, there is some announcement, and there will be an increase in supply. later on this year by one of our competitors. But if you look into what we've done over the last -- since the beginning of the year and really starting in last quarter of 2025, we have shrunk our capacity. And our goal is regardless of what happens in the market, we will aim to run at 100% of all of our assets. So we are aiming -- really the whole strategy is to aim to run at 100% like we do on the polyethylene side, where regardless of market conditions, we are trying to run at 100%. That is exactly the goal that we're trying to achieve on the chlorovinyl side of our business in North America and then if you extend that to Europe now with the new acquisition, that is the goal of Westlake, be the lowest cost producer and running at 100% regardless of market conditions. And I think we've taken some really good steps to achieve that. And when the price is up, I mean, you see the absolute advantage of that strategy. Kevin McCarthy: Jean-Marc, would appreciate your latest thoughts on the low density and linear low-density polyethylene markets. I think some of the consultants had set forth a projected price decline of $0.10 a pound. I'm not sure if you've engaged in any settlements yet for the month of July, but would welcome an update on that trajectory as you see it as well as any market color around inventories and demand and so forth. Jean-Marc Gilson: Yes. Kevin, I'll take that one. What we've seen on polyethylene is it's up 25% through the second quarter of the year, so year-to-date. July has not settled yet. And so I really don't have a comment on that one. The August announcements are out and at up 5%. What I'd tell you is 0.5 -- yes, sorry, $0.05, excuse me. By year-end, we expect the pricing to be higher than the prior year. Kevin McCarthy: Okay. Very helpful. And then I wanted to follow up on the HIP segment, maybe a 2-parter there. I think you were able to grow your housing product sales by 3%, outperforming the market. Just curious on where you think you're punching above your weight or gaining share on that side. And then on the infrastructure side, I think there was a comment in the prepared remarks that we'll see if we pulled forward some demand from 3Q. Curious if you're seeing or suspecting anything to that effect in July or just something that you're watching for? Jean-Marc Gilson: Yes, I will take the first part of the question, and then Jon will take the second part of the question. So the first part of the question as it relates to our better than market performance in HIP. I think what you see there is the competitive advantage of our housing products, is reliability of supply all across the U.S., great warranty, affordable price, PVC being one of the preferred product for siding across the U.S. and really supporting this affordability question in the U.S. So I will not comment on our competitors, but frankly, we've done not only this quarter, but over the last several years, I think we've done very well in the U.S. housing market even when the market is flat like it is this year. And we're doing everything to continue on that trend. Jonathan Baksht: And then picking up on the second part of your question here. As you look into the back half of the year for HIP, we are expecting the housing market for new construction to be relatively flat. R&R likely up low single digits, but there's still a lot of uncertainty in the interest rate environment, mortgage rates continue to go up. And so that expectation is overall a bit softer than it would have been 1 quarter ago or before some of the conflicts in the Middle East and the corresponding impacts in the financial markets. But that being said, we see a second half demand being very solid. And we did mention that we are expecting some pull forward into Q2. But what we did see was some customers secured supply at the onset of the war just to secure some additional inventory. We also passed through some increases in pricing in Q2 that you'll see through the back part of the year. But that was -- a lot of that was to offset the costs such as inflation, predominantly on freight costs that we're seeing. David Begleiter: Jean-Marc, just on polyethylene exports, how much of your production did you export in Q2 and the first half of the year? Jean-Marc Gilson: Yes. So as you know, we are not -- we are mostly domestic -- I mean, producer and selling into the domestic market. So I would say between 10% and 20% is being exported, much lower than our competitors. Hence, we are less exposed to export pricing than our competitors. David Begleiter: Very good. And just on caustic, what are your expectations for caustic in the back half of the year? Jean-Marc Gilson: So yes, caustic, I think we are looking to see some solid demand, pretty flat price. And again, a similar comment as polyethylene. With the reduction and the closure last year of a very large diaphragm plant at our Lake Charles South facility, we are much, much less exposed to export markets, which currently, and I think it's our forecast, will stay at a lower price than domestic market. Jeff Holy: Yes. And caustic is up 75% to the second quarter, and we expect the second half to average higher than the first half. Patrick Cunningham: I think you mentioned PVC price exiting the quarter at or near the highest levels. I think you noted steady improvement in domestic demand. But how would you characterize overall export demand throughout the quarter and what you're kind of expecting to see from the export market in the second half? Jean-Marc Gilson: Yes. So export markets were subdued in the first and certainly after March. Now the very first part of the year, they were subdued because there was a flooding in the market from China right before there was a reduction of the VAT or elimination of the VAT drawback. We saw a real flooding of the market with really a peak in export from China in -- around March. That really fell back into more normal, about 300,000 ton per month from a peak of 700,000 tonnes. And so we are starting to see a little bit of a pickup right now in terms of export demand because also price is getting back to -- it's still higher than where we started. But I think lower price is starting to peak the interest of traders again. Jonathan Baksht: Yes. And if you look at the pricing, we're up 9% through Q2. Like Jean-Marc said, inventory, we're seeing high inventories, but solid demand with the pickup in the export pricing. By year-end, we expect pricing to be higher than the prior year. Patrick Cunningham: Great. And then just on the overall strong performance in PEM, I just want to dial into reliability and operating rates. How much did your operating rates improve in 2Q? I know you mentioned maybe there was some offset from unplanned outages. And just as we think about the back half, is there any planned maintenance to be mindful of? Or should we expect some modest tailwinds there? Jean-Marc Gilson: Yes. Thank you. Good question. I'll give you a rundown of how we look at our operations right now, and I'll start by making a simple comment about HIP. I mean, HIP, no problem, really running to supply demand, and that's it with plenty of capacity to jump on to any opportunities that might arise. Let me go to PEM now. So -- and that's very much in line with what I said before, which is, I mean, in line with our strategy. In terms of -- I'll start with epoxy. We've been running at 100%, so really full out in terms of our upstream capacity in epoxy. Olefins, likewise, we've been running full out. In terms of polyethylene, likewise, we've been running full out. In terms of our ECU production, we've been running above 90%. And if you look at PVC, we're in the mid-80s, climbing back up. But as you very well know, PVC is related to VCM production and VCM from a low last year, we are really performing better and better. So if you look at the second half of the year, our expectations based on everything that we've done, all the fixing that we've done, and I would say the relatively small number of planned shutdown that we would see in the second half of the year, we would be expecting to running our assets at a higher rate than what we've seen in the first half. Peter Osterland: So I just wanted to start by asking about your cost improvement plans for the year. What is the remaining work that needs to be done through year-end to meet the $600 million target? And on the cadence for earnings improvement, could you size how much of an impact you expect cost improvements will have in the third quarter relative to what you realized in the second quarter? Is that meaningful? Or are you just expecting to see the same continuation of year-over-year improvement rolling through in the back half? Jonathan Baksht: Yes. Pete, this is Jon. It's a good question. Broadly speaking, we're maintaining the $600 million target, and we've talked about the $300 million we've already achieved. And so we're already at that run rate that will help us get to that level. And for us, within the 3 pillars, it's going to be a pretty consistent clip between here and the end of the year. We've got the cost savings that we've already taken a lot of those actions, and those -- we're just seeing those continue forward in the P&L. Same with the footprint optimization. And the reliability pillar is one that if we continue to run our operations as well as Jean-Marc just described, we should be in very good shape in terms of meeting those objectives. Peter Osterland: Great. And then just as a follow-up, I wanted to ask about your expectations for free cash flow generation in the second half. Maybe do you have a net leverage target for year-end you could share? And how are you viewing debt reduction as a priority relative to continued share repurchases in the second half? Jeff Holy: Yes. So from a -- I'll take those in order. So free cash flow, we don't provide free cash flow guidance for the back part of the year. In terms of just balancing the share repurchases and the credit profile, we want to balance those. Typically, we are -- we prefer -- we are very proud of our strong investment-grade balance sheet and continuing to delever like we have with the free cash flow generation this quarter is something that I think that you should expect us to continue. We're going to continue to be opportunistic as it becomes with share repurchases. As noted by the $30 million purchases we did in Q2, we believe the shares are at a value. And if we continue to weigh those -- the returns on our shares as a good value driver, we will continue to purchase shares. I will note that we're a very returns-based culture, and we look at our shares as one area to -- where we can generate returns. We also look at organic growth opportunities. We look at inorganic growth opportunities, and we stack all of those against each other before we deploy capital. All that being said, within an investment-grade capital structure, and we are committed to keeping that. Patrick Fischer: Just a question. If you're looking at HIP and comparing the first half to the second half on margins, the last couple of years, you've come down first half to second half, 2% and 4%. At the low end of both pegs on your guidance for EBITDA and for sales, you would come down about 3%. Can you just talk through what is that structural decline in margin driven by? Is it just a little bit lower sales in the second half? Or is there a mix impact in there? What drives kind of that, call it, 200 to 400 bps decline in margins in the second half? Jeff Holy: Yes, it's a combination of things. I'd say there is a mix component to that. And as you look at some of the some of the pull forward that we talked about between Q2 and Q3 will impact that. In addition to the inflation factors that we've seen post some of the conflict in the Middle East, I touched on freight logistics costs starting to come into the system really in Q2, and we'll see a full half year of that in the back part of the year. And we are having some pricing to offset that on a dollar basis, but that does have an effect of tightening margins to some extent. Patrick Fischer: Great. And then just a second question, looking first half to second half. So the last couple of years, revenue has been down kind of high single digits as you go from the first half to the second half in HIP. And this year, with the pull forward, again, at the low end of your range, it's only coming down 4%. So you would think actually the delta because of that pull forward might be bigger than normal this year, but it seems like it's smaller. So is there something driving that? Jonathan Baksht: No, it's back to -- it's a function of mix and seasonality. And when I say the mix, the mix is some of the pull forward and seasonality is the way to think about it. Arun Viswanathan: If you could, maybe you could comment on pricing for the second half across maybe your outlook for polyethylene as well as caustic and chlorine. Jonathan Baksht: Yes. So like I mentioned, we don't -- we're not going to comment specifically on pricing for polyethylene, but just to reiterate the comments I made before, based on where -- what we've seen through the first half of the year, which is up 25%, July came off a little bit. But then August, we got -- we've announced increases of $0.05. By year-end, we do expect pricing to be higher than the prior year in polyethylene. For caustic, just to again reiterate some of my previous comments, we have seen an increase through the first half of the year, so up 75% there. We have solid demand, and so we expect second half to average higher than the first half. And on chlorine, chlorine has been down through the first half of the year, and we expect that to be roughly flat in the back half. Abigail Eberts: Just wondering if you could provide a little bit more color on some of your specific hip businesses that are more traditionally exposed to new construction, such as like your stone veneer business, for example? Jean-Marc Gilson: Yes. So what we've seen this year is we've had really good performance on our siding business, really good performance into our roofing business. We have a new strategy on roofing and going after reroofing as well as new construction and also our stone business, we spent a lot of time restructuring the activities and improving operations, and it's been paying off this year. So we expect that to continue for the second half of the year and going into next year. Jonathan Baksht: And then the other piece I would just add in terms of the infrastructure side, we're also seeing strength there, which we touched on. From a municipality standpoint, we are seeing continued spending there. And then the data center growth is something that we do want to -- that we have seen an increase. To note on the data centers, those aren't our end customers, but the overall consumers of our products. And we have been seeing increased spend going into that data center build-out. Abigail Eberts: Got it. And yes, a follow-up question on the data center point. So I assume most of that exposure is large diameter pipe. Is there anything you can give us to help us quantify that opportunity? Jonathan Baksht: We don't have specific numbers. Again, they're not our customers. We do talk to our distributors, and so we hear some anecdotal data. What we've heard through some of our distributors is that it could be up to 30% of that spend is going to data centers, but we can't substantiate that with our own data. Joshua Spector: I wanted to follow up on HIP and just ask about pricing. I mean you talked about pricing in place, but not fully realized in 2Q. So as you look sequentially, how much more price is coming through? And does that drive HIP pricing up year-over-year in 3Q? Jonathan Baksht: Yes. We don't quantify that in our forecast in terms of how much of that pricing is part of our projections. But we're not -- at this point, the pricing letters have gone out, and we're not expecting a decrease in pricing in the back part of the year. Joshua Spector: Okay. But I guess I'm not asking about future pricing. It's more of the May pricing and the roll forward. I thought more of that would layer in. So let's say you got 5% pricing in May, you realized 2% in the quarter. Does that mean an extra 3% flows through based on what you've already realized? Or is that incorrect? Jonathan Baksht: Well, if you look at just sequential pricing quarter-over-quarter, we're at 2% from Q1 to Q2 just from a pricing standpoint. And in terms of how much of that will continue, there's also a mix component of the price that we're not necessarily forecasting. But I think it would be safe to say that there will be some pricing increase from Q2 to Q3 that you'll see in the results. Jean-Marc Gilson: Yes. But I think they will be probably minor. We had -- I mean, we push -- started to push price up in HIP immediately after March. But as you know, in HIP, it takes a little bit of time because -- and I would say that by the end of -- I mean, the second quarter, maybe flowing a little bit into the third quarter, all prices were -- had been pretty much realized. So as Jon said, maybe slight improvement, but don't expect a lot. Matthew DeYoe: Steve, congrats again on the retirement. It's been a pleasure working with you. I wanted to talk a little bit more about the 1Q, 2Q bridge. I would have expected cost cuts maybe to -- or how about this? How much were cost cuts adding incrementally from 1Q to 2Q? Because I would have thought it would have put you on more than $150 million of year-over-year benefit based on kind of where we were in 1Q. And then I guess, similarly, like epoxies, it's a harder thing for us to track. So incrementally, what -- how should we gauge the tailwind that we saw from 1Q to 2Q in epoxies? Jonathan Baksht: Well, I can start with the cost bit. I gave some metrics around the first half versus the second half. Just it was a bit of a bigger quantity just to note, when I say first half of this year, year-over-year to demonstrate that the $300 million for the first half is flowing through. If you look at just the sequential for Q2, you do see some of that cost reduction going in there as well. The math is very similar. It's -- so when you're talking about the cost reductions, it's -- I don't have a full bridge for you in terms of what those are, but very similar elements. We are seeing all 3 of our pillars coming through in the Q1 to Q2 bridge. That's in there. There is some volume growth that we've seen. From the company standpoint, I think maybe what might be hiding some of those cost reductions is we did have 10% volume growth in the quarter and particularly strong volume growth in HIP. And so from that basis, our cost of sales is higher. But even with the 10% volume growth, you see our cost of sales decreasing by about $75 million year-over-year. So it's pretty consistent with the message around the first half. Jean-Marc Gilson: Trying to address your question on epoxy. Most of the epoxy restructuring basically completed at the end of the third quarter last year, and we started to see some benefits already in the fourth quarter. So if you compare this quarter or the first half of this year versus first half of last year, you would see really significant savings and improvement. If you look at it sequentially, the Epoxy business did better in the second quarter than it did in the first quarter, but it was not really related to further restructuring because they took place last year. It was solely driven by our strategy, which is to go after higher-margin segments, and we've seen some significant growth in aerospace and electrical segments in Epoxy and very good production rate, as I mentioned earlier, in our upstream business in LER. So -- and we are expecting that to continue going forward. Matthew DeYoe: Yes. I appreciate that. I guess it's a really hard business for us to diligence on our end. And so I was just wondering like order of magnitude dollar-wise, but I appreciate you not wanting to share. If I could, export PVC is just running much higher than -- I'm sorry, much lower than CMA contract. So I'm just wondering if you're seeing discounting or what you attribute the divergence to because historically that would maybe have difficulty sustaining. Jean-Marc Gilson: Yes. I think what you're seeing is that, as Jon said, the people have inventory. And with prices going down, traders that were not really present for several months have started to pick up again. And I think people are trying to sell inventory now. For Westlake, as I mentioned on the caustic side, applies also on the PVC side, we are much, much less exposed now to export than any other of our competitor. And again, likewise, like caustic, we are probably in between 10% to 20% in terms of exports. So we will pick up some export business if it makes sense for us. And we have a choice to pick or not to pick these businesses. So again, we are not expecting that it would be such a variable of adjustment like it was in the past for Westlake. John Ezekiel Roberts: And again, best wishes, Steve, and welcome again, Jon. On the newly acquired German assets, could you give us a sense of what the revenue generating capability of that site has been or the 2 sites over the past several years? Jean-Marc Gilson: So yes, we acquired Wilhelmshaven in the second quarter. We don't disclose numbers, but it's several hundred million in terms of sales. As you can imagine, if you can -- I mean, put your hand on the capacity and just make a simple calculation, multiply that by PVC price. So it's a really nice acquisition for us. We acquired at very low price. and it's ideally situated close to the ocean. And basically, it will allow us to integrate that site and our European operations with low-cost feedstock produced in the U.S. And that will allow us to continue to restructure our European operations on a going-forward basis. So don't look at Wilhelmshaven just in isolation, but as really a part of an overall strategy to maximize earnings for a chlorovinyl business. John Ezekiel Roberts: And will you bring EDC into the site? Or will you bring ethylene in as well? Jean-Marc Gilson: We will look at everything to maximize our earnings. Turner Hinrichs: This is Turner Hinrichs on for Vincent. It would be great to get a mark-to-market on Chinese PVC market trends, specifically, if you've seen any impact from the elimination of the VAT export rebate? And what are your latest thoughts with regard to how anti-involution will affect PVC? Jean-Marc Gilson: Let me try to give you my best read on the Chinese economy. So as you know, the economy is not, I mean, doing that well with low GDP growth readings and lower than what they were expecting. So on the PVC side as well, I mean, it's a little bit different for PE. But on the PVC side, as you know, they have a carbide manufacturing, I mean, carbide sourcing and feedstock or they start from naphtha. So because of the slow economy, PVC business has been -- has turned over the last few years, mostly as an export-driven business. And you are right, before the they stopped the duty drawback. In March, there was a surge in export. Since then and after March, you can see that both the carbide and the naphtha-based PVC are running at very low capacity. So carbide is running around mid-70s in terms of capacity and naphtha is running below 60 because, I mean, it's very uneconomical to run and sell PVC with very elevated naphtha prices. So what we are seeing now is that the price in China has actually gone slightly back up. So it went way up, then it went way down and then now it's getting back up again. And for carbide based, it's around $690 per ton, and for naphtha base, it's around $720 per ton. So higher than what it was. But China will continue to be an export base for PVC. And as long as naphtha keeps going down, you're going to see more and more of these exports. But all the exports are, mostly going into Southeast Asia between Vietnam and India and a few other countries. Frank Mitsch: Yes, let me echo my best wishes for your retirement, Steve. Really just wanted to get -- make sure I understood. It sounded like when we talk about plant operations that you would anticipate the second half to be a benefit versus the first half. So I wanted to confirm if that was true. And then part and parcel of that, any commentary financial or otherwise that you could give us with respect to unplanned outages. You had a force majeure in Europe on PVC in the second quarter. So just curious if you could offer any color there. Jean-Marc Gilson: Yes. Good question, Frank. Our goal is to run our assets as hard as we can. And so far in the quarter, we've done pretty well. Always difficult to judge what's going to happen. So I will not make any prediction. But as I said, our strategy is to run our assets as hard as we can, not regardless of market price, but in most cases, that's the strategy. So -- and that's the goal. If you look into, I mean, unplanned shutdown or force majeure in Europe, yes, we had it for a very short time frame because of our turnaround that lasted a little bit longer, but really minimal impact. We are not -- as I said, we're not looking at any major turnaround activity in the second half of the year. Hence, my comment regarding trying to run our assets in the second half as hard as we can. Jeff Holy: Thank you. Thanks again, everyone, for participating in today's call. We hope you'll join us again for our next conference call to discuss our third quarter 2026 results. Operator: Thank you for participating in today's Westlake Corporation Second Quarter Earnings Call. As a reminder, this call will be available for replay beginning 2 hours after the call has ended. The replay can be accessed via Westlake's website. You may now disconnect. Before you buy stock in Westlake, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Westlake wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $411,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,335,252!* Now, it’s worth noting Stock Advisor’s total average return is 965% — a market-crushing outperformance compared to 215% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 11, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Westlake (WLK) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Westlake Corporation WLK logged adjusted earnings of $2.01 per share for the second quarter of 2026, topping the Zacks Consensus Estimate of $1.93. Adjusted earnings improved sharply from an adjusted loss of 9 cents per share a year ago. Net sales were $3.27 billion, which increased 10.8% year over year but missed the consensus mark of $3.28 billion marginally. Overall sales volume (excluding plant closures and the ACI acquisition) increased 7%, while average sales price rose 8% from the year-ago quarter. Westlake Corporation price-consensus-eps-surprise-chart | Westlake Corporation Quote Performance and Essential Materials (PEM) net sales were $2,019 million, up 13% from the year-ago quarter. It surpassed our estimate of $1,842.3 million. The segment posted operating income of $185 million versus a loss of $318 million a year ago, while EBITDA excluding identified items surged to $416 million from $52 million. Within PEM, performance materials sales increased 21% year over year to $1,236 million and essential materials sales rose 2% to $783 million. Management attributed the improvement to significantly higher average sales prices, particularly for polyethylene and PVC resin, along with steady improvement in U.S. demand and better operating rates. Lower natural gas and ethane costs also benefited the EBITDA margin. Housing and Infrastructure Products (HIP) net sales were $1,252 million, up 8% year over year and topped our estimate of $1,229.6 million. Operating income was $212 million, down 4.5% from $222 million a year ago, while EBITDA excluding identified items was essentially flat at $276 million. Operationally, HIP benefited from strong double-digit Pipe & Fittings sales volume growth supported by infrastructure spending, including data centers. Housing Products sales increased 3% year over year, while disciplined pricing actions helped offset inflation in transportation and raw material costs. Net cash provided by operating activities was $318 million in the second quarter. Capital expenditures were $207 million, resulting in free cash flow of $111 million. Westlake also reduced debt by $500 million and returned $99 million to shareholders through dividends and share repurchases. Cash, equivalents and investments totaled $1.9 billion. Westlake maintained its guidance for HIP revenue and EBITDA margin at the lower ends of the previously communicated ranges of $4.4 billion to $4.6 billion of sales and a 19% to 21% EBITDA margin. Management said its three-pillar profitability improvement plan delivered roughly $150 million of year-over-year EBITDA benefit in the second quarter toward its $600 million full-year 2026 target. The company expects the significant majority of the 2026 EBITDA uplift from the profitability improvement plan to benefit PEM. Management also expects improved reliability and production, which supported higher second-quarter sales volume, to continue in the second half of 2026. Shares of Westlake have gained 0.7% in the past year compared with the Zacks Consumer Products - Discretionary industry’s 18.4% rise. Image Source: Zacks Investment Research WLK currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the Consumer Discretionary space are Newsmax Inc. NMAX, Kontoor Brands, Inc. KTB and H World Group Limited HTHT. Newsmax is expected to report second-quarter results on Aug. 13. The Zacks Consensus Estimate for NMAX’s second-quarter loss is pegged at 2 cents per share. It carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here. KTB is slated to report second-quarter results on Aug. 12. The Zacks Consensus Estimate for earnings is pegged at $1.06 per share. KTB has a Zacks Rank #2 at present. H World Group is expected to report second-quarter results on Aug. 17. The Zacks Consensus Estimate for HTHT’s second-quarter earnings is pegged at 74 cents per share. It currently carries a Zacks Rank #2. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Westlake Corporation (WLK) : Free Stock Analysis Report H World Group Limited Sponsored ADR (HTHT) : Free Stock Analysis Report Kontoor Brands, Inc. (KTB) : Free Stock Analysis Report Newsmax Inc. (NMAX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in Westlake Corporation? Here are five stocks we like better. Westlake returned to profitability in Q2 2026, reporting $3.3 billion in sales, $260 million in net income and $679 million in EBITDA, supported by higher PEM pricing, lower feedstock costs and cost savings. The company’s profitability-improvement plan contributed about $150 million to year-over-year EBITDA growth in the quarter, keeping Westlake on track for its $600 million full-year 2026 target. HIP sales rose 8%, but its margin fell to 22% due to lower prices and higher transportation and raw-material costs. Westlake lowered its 2026 HIP outlook toward the low end of its prior guidance range amid weaker residential construction expectations, while maintaining $900 million in capital expenditures. The company also completed a PVC and VCM plant acquisition in Germany expected to contribute more meaningfully to earnings next year. Oil Jumps, 2 Plastic Stocks About To Become Value Plays Westlake (NYSE:WLK) reported second-quarter 2026 net sales of $3.3 billion and net income of $260 million, or $2.01 per share, compared with a net loss of $12 million in the prior-year quarter. The company said EBITDA reached $679 million, reflecting improvement in both its Performance and Essential Materials, or PEM, segment and its Housing and Infrastructure Products, or HIP, segment. President and CEO Jean-Marc Gilson said the quarter benefited from higher PEM selling prices, cost savings from the company’s profitability program and continued volume growth in HIP despite soft North American residential construction activity. → No Hangover: Revisiting Microsoft One Week After Earnings PEM generated second-quarter EBITDA of $416 million, up $364 million from the second quarter of 2025 and up $380 million sequentially. Westlake attributed the improvement to a 14% year-over-year increase in average selling prices, benefits from its profitability-improvement plan, and higher sales volumes excluding the effect of plant closures. Sequentially, average PEM selling prices increased 21%, while natural gas and ethane costs declined. Gilson said higher global oil prices during the quarter raised costs for competitors in regions such as Asia and Europe, while Westlake’s North American operations benefited from lower-cost natural gas and natural gas liquids feedstocks. → MarketBeat Week in Review – 08/03 - 08/07 “Our natural gas and ethane cost in North America actually declined significantly from the first quarter due to warmer weather and an increase in associated gas from higher U.S. oil drilling activity,” Gilson said. PEM sales volume increased 2% from the first quarter, led by higher caustic soda, chlorine and epoxy resin volumes, partially offset by lower polyethylene and PVC resin volumes. The company said polyethylene prices exited the second quarter slightly below the quarterly average but above pre-conflict levels, while PVC resin prices ended the quarter at or near their highest levels of the year. → Why the Landlord of the AI Boom Could Outlast the Chipmakers For the second half, Westlake expects PEM volumes to reflect continued steady global demand. Gilson said future pricing trends will be heavily influenced by global oil prices. The company expects polyethylene prices at year-end to be higher than in the prior year, while it expects second-half caustic pricing to average above first-half levels. Chlorine pricing is expected to be roughly flat in the second half, according to Chief Financial Officer Jon Baksht. Westlake said its three-pillar profitability-improvement plan contributed about $150 million to year-over-year EBITDA improvement during the second quarter and about $300 million during the first half. The company continues to target $600 million in EBITDA benefits for full-year 2026. The plan includes footprint optimization, cost savings and plant reliability improvements. Footprint actions included the shutdown of Westlake’s epoxy plant in Pernis, its styrene plant in Lake Charles and three U.S. chlor-vinyl plants. Gilson said the epoxy business had moved from annual losses exceeding $100 million to profitability in the second quarter. While plant reliability improved from the prior year, management said unplanned outages still affected first-half performance. Gilson said most production issues had been addressed by the end of the second quarter and plants were operating well into July. Westlake expects fewer planned shutdowns during the second half and aims to operate its assets at higher rates than in the first half. HIP reported sales of $1.3 billion, an 8% increase from the second quarter of 2025. The increase was supported by the January acquisition of ACI and double-digit Pipe & Fittings volume growth. Excluding ACI, HIP sales volume rose 6%, while average selling prices declined 3%. HIP EBITDA increased $1 million year over year to $276 million. The segment’s EBITDA margin declined to 22% from 24% a year earlier, as lower average selling prices and higher transportation and raw-material costs offset sales growth. Pipe & Fittings volume grew roughly 20% from the prior-year quarter, supported by North American infrastructure spending, municipal pipe demand and construction of data centers. Management said some customers may have shifted orders from the third quarter into the second quarter to secure product supply after the onset of the Middle East conflict, which could modestly affect third-quarter pipe volume. Westlake also cited growth in siding and trim, saying its brands, geographic reach and relationships with national homebuilders and distributors helped its housing products business outperform the market. Gilson said the company expects no meaningful macroeconomic tailwind for housing products in 2026, but believes its competitive position can support continued market outperformance. The company expects to begin operations at its new PVCO pipe plant in Wichita Falls by the end of 2026. Management said ACI has performed well since its January acquisition and provides differentiated technology and expanded market access for the company’s compounds business. Westlake expects HIP revenue and EBITDA margin for 2026 to fall toward the low end of its previously communicated ranges. The company had projected HIP revenue of $4.4 billion to $4.6 billion and an EBITDA margin of 19% to 21%, excluding identified items. Management cited a more muted outlook for North American residential construction as well as increased transportation and raw-material costs. Total capital expenditures are still expected to be $900 million in 2026, approximately $100 million below the prior year and in line with annual depreciation. Cash interest expense is expected to be about $215 million. As of June 30, Westlake had $1.9 billion in cash and investments and $5.1 billion of total debt. During the quarter, the company retired its remaining $500 million of 2026 notes and repurchased $30 million of common stock. Management also said it returned approximately $100 million to shareholders through dividends and share repurchases. In June, Westlake completed the acquisition of a PVC and VCM plant in Wilhelmshaven, Germany. Gilson said the facility’s deepwater port can receive feedstocks supplied by the company’s North American operations, and management expects the acquisition to support European supply-chain and manufacturing optimization. The company said the site is expected to contribute more meaningfully to PEM sales and earnings beginning next year. Westlake Corp. is a global manufacturer of petrochemicals, polymers and building products, serving customers across industrial and residential markets. The company's core operations encompass the production of vinyls—primarily polyvinyl chloride (PVC) and its key feedstock vinyl chloride monomer (VCM)—as well as chlor-alkali products including caustic soda and chlorine. In addition, Westlake produces ethylene, propylene and specialty elastomers, along with construction-related materials such as vinyl siding, trim, windows and roofing systems. Operating a network of vertically integrated plants and distribution centers, Westlake serves markets in North America, Europe and Asia. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Westlake Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

For the quarter ended June 2026, Westlake (WLK) reported revenue of $3.27 billion, up 10.8% over the same period last year. EPS came in at $2.01, compared to -$0.09 in the year-ago quarter. The reported revenue compares to the Zacks Consensus Estimate of $3.28 billion, representing a surprise of -0.28%. The company delivered an EPS surprise of +4.15%, with the consensus EPS estimate being $1.93. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately. Here is how Westlake performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Net external sales- Performance and Essential Materials: $2.02 billion compared to the $2.06 billion average estimate based on four analysts. The reported number represents a change of +12.6% year over year. Net external sales- Performance and Essential Materials- Performance Materials: $1.24 billion compared to the $1.22 billion average estimate based on four analysts. The reported number represents a change of +20.9% year over year. Net external sales- Performance and Essential Materials- Essential Materials: $783 million versus $838.56 million estimated by four analysts on average. Compared to the year-ago quarter, this number represents a +1.6% change. Net external sales- Housing and Infrastructure Products- Housing Products: $1.01 billion versus $979.13 million estimated by three analysts on average. Compared to the year-ago quarter, this number represents a +3.2% change. Net external sales- Housing and Infrastructure Products: $1.25 billion compared to the $1.21 billion average estimate based on three analysts. The reported number represents a change of +7.9% year over year. Net external sales- Housing and Infrastructure Products- Infrastructure Products: $241 million versus the two-analyst average estimate of $188.71 million. The reported number represents a year-over-year change of +33.9%. EBITDA- Housing and Infrastructure Products: $276 million versus the two-analyst average estimate of $235.91 million. EBITDA- Performance and Essential Materials: $416 million compared to the $72.33 million average estimate based on two analysts. View all Key Company Metrics for Westlake here>>> Shares of Westlake have returned -6.6% over the past month versus the Zacks S&P 500 composite's +1.7% change. The stock currently has a Zacks Rank #5 (Strong Sell), indicating that it could underperform the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Westlake Corporation (WLK) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Significant improvement in net income and EBITDA from the prior quarter and prior year levels Three-pillar profitability improvement plan on track to deliver a $600 million operating income benefit Reduced debt by $500 million and returned $99 million to shareholders via dividends and share repurchases HOUSTON, Aug. 04, 2026 (GLOBE NEWSWIRE) -- Westlake Corporation (NYSE: WLK) (the "Company" or "Westlake") today announced second quarter 2026 results. SUMMARY FINANCIAL HIGHLIGHTS (in millions of dollars, except per share data and percentages) ______________________________ BUSINESS HIGHLIGHTS In the second quarter of 2026, Westlake reported net sales of $3.3 billion, net income of $260 million, or $2.01 per share, and EBITDA (earnings before interest expense, income taxes, depreciation and amortization) of $679 million. The Company's second quarter of 2026 financial results benefitted from a higher average sales price in our PEM segment, higher sales volume in our HIP segment, and our three-pillar profitability improvement plan. Sales volume for Housing and Infrastructure Products in the second quarter increased 6% from the second quarter of 2025 (excluding the effect of the ACI acquisition) while Performance and Essential Materials sales volume increased 7% year-over-year (excluding the effect of plant shutdowns). Overall sales volume for the Company increased 7% from the second quarter of 2025. Housing and Infrastructure Products second quarter average sales price decreased 3% from the second quarter of 2025 while Performance and Essential Materials average sales price increased 14% year-over-year. Overall average sales price for the Company increased 8% from the second quarter of 2025. In the second quarter of 2026, HIP's EBITDA margin decreased to 22% from 24% in the second quarter of 2025, while PEM's EBITDA margin, excluding Identified Items, increased to 21% from 3% over the same period of time. EXECUTIVE COMMENTARY "The significant improvement in PEM's second quarter earnings underscores its substantial leverage to improving global supply-demand fundamentals, driven in part by logistical disruptions in the Strait of Hormuz, as well as the meaningful actions that we took last year to improve PEM earnings through footprint optimization, cost reduction, and reliability improvement. Meanwhile, despite slower North American residential construction activity and accelerating raw material cost inflation, financial results in our HIP segment were solid in the second quarter with EBITDA growth that was driven by a double-digit increase in pipe & fittings sales volume. During the second quarter, we completed the acquisition of a PVC and VCM production site in Wilhelmshaven, Germany, which adds advantaged logistical assets into our European chlorovinyls business," said Jean‑Marc Gilson, President and Chief Executive Officer. "The ongoing conflict in the Middle East continues to exacerbate volatility in selling prices and export demand across many of PEM's products, including polyethylene and PVC resin. Regardless of this impact, PEM's earnings should continue to benefit from our three-pillar profitability improvement plan and our globally advantaged North American feedstock and energy cost position. In HIP, slower homebuilding activity due to affordability pressures is being offset by strong demand for pipe and fittings, driven by North American infrastructure investments," Mr. Gilson concluded. "During the second quarter of 2026 we returned to free cash flow generation, reduced debt by $500 million and replaced our existing revolving credit facility, which had a scheduled expiration in 2027, with a new $1.5 billion revolver that expires in 2031. We continue to prioritize a disciplined approach to capital deployment supported by our strong financial position," added Jonathan Baksht, Senior Vice President and Chief Financial Officer. RESULTS Consolidated Results(Unless otherwise noted the financial numbers below exclude the effects of the Identified Items) For the three months ended June 30, 2026, the Company reported quarterly net income of $260 million, or $2.01 per share, on net sales of $3.3 billion compared to the net loss of $12 million reported in the second quarter of 2025. Compared to the prior year period, earnings benefited from a higher average sales price and margin in PEM, our three-pillar profitability improvement plan, the ACI acquisition and higher sales volume. EBITDA of $679 million for the second quarter of 2026 increased by 100% from the second quarter of 2025 EBITDA of $340 million. Second quarter 2026 EBITDA increased by $444 million compared to first quarter of 2026 EBITDA of $235 million. Reconciliations of non-GAAP financial measures used in this press release (including EBITDA and measures that exclude the effects of the Identified Items) to the most directly comparable GAAP measure can be found in the financial schedules at the end of this press release. Expenses Regarding Litigation, Facility Closure and Temporary Cessation of Operations ("Identified Items") During the first quarter of 2026, the Company accrued a $67 million charge to settle certain litigation involving direct purchasers of PVC pipe and fittings in the United States and $18 million of charges related to previously announced facility shutdowns, including the Pernis epoxy facility, certain North American chlorovinyls facilities and a styrene facility. During the second quarter of 2025, the Company accrued $108 million of expenses and wrote-off $15 million of inventory related to the previously announced decision to shut down Pernis and accrued $7 million of expenses to temporarily cease operations of a PVC resin production unit at Huasu. Cash, Investments and Debt Net cash provided by operating activities was $318 million for the second quarter of 2026 and capital expenditures were $207 million. During the second quarter of 2026, the Company redeemed the remaining approximately $500 million of its outstanding 3.60% 2026 Senior Notes. As of June 30, 2026, cash, cash equivalents and fixed-income investments were $1.9 billion and total debt was $5.1 billion. Housing and Infrastructure Products Segment (Unless otherwise noted the financial numbers below exclude the effects of the Identified Items) For the second quarter of 2026, Housing and Infrastructure Products income from operations of $212 million decreased by $10 million as compared to the second quarter of 2025. The year-over-year decrease was the result of a lower average sales price and margins, particularly for pipe & fittings. Housing Products net sales of $1.0 billion in the second quarter of 2026 increased by $31 million from the second quarter of 2025 primarily due to higher sales volume, particularly for pipe & fittings and siding & trim. Infrastructure Products net sales of $241 million increased by $61 million from the second quarter of 2025 primarily due to the January 2026 acquisition of ACI. Sequentially, Housing and Infrastructure Products income from operations increased by $88 million as compared to the first quarter of 2026. This increase in income from operations versus the prior quarter was primarily due to seasonally higher sales volume and higher end market demand for pipe & fittings. Performance and Essential Materials Segment (Unless otherwise noted the financial numbers below exclude the effects of the Identified Items) For the second quarter of 2026, Performance and Essential Materials income from operations was $185 million as compared to the second quarter of 2025's loss from operations of $188 million. The increase in income from operations was due to a 14% increase in average sales price and margin benefits from our three-pillar profitability improvement plan. Performance Materials net sales of $1.2 billion in the second quarter of 2026 increased by $214 million from the second quarter of 2025 primarily due to a higher average sales price for polyethylene and PVC resin. Essential Materials net sales of $783 million increased by $12 million from the second quarter of 2025 primarily due to higher caustic soda sales volume and a higher average sales price. Sequentially, Performance and Essential Materials income from operations of $185 million for the second quarter of 2026 increased by $379 million as compared to the first quarter of 2026's loss from operations of $194 million. This improvement in income from operations versus the prior quarter was primarily due to a higher average sales price, particularly for polyethylene and PVC resin, and lower North American natural gas costs. Forward-Looking Statements The statements in this release and the related teleconference relating to matters that are not historical facts, including statements regarding our outlook for the performance of our business segments and future earnings, global macroeconomic conditions and their effects on us and our customers, expectations regarding interest rates and building costs, trends in the global cost curve and any associated pricing and margin benefits, industrial and manufacturing activity in our target markets, including infrastructure spending and investment, expectations regarding the acquisition of the PVC and VCM production site in Wilhelmshaven, Germany, our capital deployment strategy, growth in our customers’ businesses and their dependence on our products, the effects of the conflict in the Middle East, our competitors and global supply chains, future global trading policy and relationships, housing demand and residential construction activity, raw material costs, fluctuations in energy and feedstock prices, our ability to execute against our profitability improvement plan and the effects of our optimization initiatives (including anticipated cost savings), our market position and the strength of our brands, the benefits of a diversified and integrated business model, our ability to maintain cost advantages and global demand for our products 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: general economic and business conditions; the cyclical nature of the chemical and building products industries; the availability, cost and volatility of raw materials and energy; uncertainties associated with the United States, European and worldwide economies, including those due to political tensions and conflict in the Middle East, Russia and Ukraine and elsewhere; uncertainties associated with pandemic infectious diseases; uncertainties associated with climate change; the potential impact on demand for ethylene, polyethylene and polyvinyl chloride due to initiatives such as recycling and customers seeking alternatives to polymers; current and potential governmental regulatory actions in the United States and other countries; industry production capacity and operating rates; the supply/demand balance for Westlake's products; competitive products and pricing pressures; instability in the credit and financial markets; access to capital markets; terrorist acts; operating interruptions; changes in laws and regulations, including trade policies and tariffs; the effects of government shutdowns; technological developments; information systems failures and cyberattacks; foreign currency exchange risks; our ability to implement our business strategies; creditworthiness of our customers; the effects and results of litigation and settlements of litigation; 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, 2025, which was filed with the SEC in February 2026 and Westlake's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, which was filed with the SEC in May 2026. Use of Non-GAAP Financial Measures This release makes reference to certain "non-GAAP" financial measures, such as EBITDA, free cash flow and other measures that exclude the effects of the Identified Items, 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 operations, 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, free cash flow and measures that exclude the effects of the Identified Items, 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 (i) net loss, loss from operations and net cash provided by (used for) operating activities to EBITDA, and (ii) net cash provided by (used for) operating activities to free cash flow and (iii) other measures reflecting adjustments for the effects of the Identified Items can be found in the financial schedules at the end of this press release. About Westlake Celebrating 40 years of operations in 2026, Westlake is a global manufacturer and supplier of materials and innovative products that enhance life every day. Headquartered in Houston, with operations in Asia, Europe and North America, we provide the building blocks for vital solutions — from housing and construction, to packaging and healthcare, to automotive and consumer goods. For more information, visit the Company's web site at www.westlake.com. Westlake Corporation Conference Call Information: A conference call to discuss Westlake Corporation's second quarter 2026 results will be held Tuesday, August 4, 2026 at 11:00 AM Eastern Time (10:00 AM Central Time). To access the conference call, it is necessary to pre-register at https://register-conf.media-server.com/register/BI462e4a5f6f6c4c44ad90a0e4540da14a. Once registered, you will receive a phone number and unique PIN number. A replay of the conference call will be available beginning two hours after its conclusion. The conference call and replay will be available via webcast at https://edge.media-server.com/mmc/p/t6u6ozaq/. ______________________________ Contact—(713) 960-9111Investors—Jonathan BakshtMedia—L. Benjamin Ederington

Westlake (WLK) came out with quarterly earnings of $2.01 per share, beating the Zacks Consensus Estimate of $1.93 per share. This compares to a loss of $0.09 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +4.15%. A quarter ago, it was expected that this chemical company would post a loss of $0.22 per share when it actually produced a loss of $0.77, delivering a surprise of -250%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Westlake, which belongs to the Zacks Consumer Products - Discretionary industry, posted revenues of $3.27 billion for the quarter ended June 2026, missing the Zacks Consensus Estimate by 0.28%. This compares to year-ago revenues of $2.95 billion. The company has not been able to beat consensus revenue estimates over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Westlake shares have lost about 5.5% since the beginning of the year versus the S&P 500's gain of 11%. While Westlake has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Westlake was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #5 (Strong Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.46 on $3.16 billion in revenues for the coming quarter and $3.20 on $11.89 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Consumer Products - Discretionary is currently in the bottom 20% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Central Garden (CENTA), is yet to report results for the quarter ended June 2026. The results are expected to be released on August 5. This pet and lawn products maker is expected to post quarterly earnings of $1.51 per share in its upcoming report, which represents a year-over-year change of -3.2%. The consensus EPS estimate for the quarter has been revised 50% lower over the last 30 days to the current level. Central Garden's revenues are expected to be $876.54 million, down 8.8% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Westlake Corporation (WLK) : Free Stock Analysis Report Central Garden & Pet Company (CENTA) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. Net Sales: $3.3 billion in Q2 2026. EBITDA: $679 million, a substantial improvement from both Q1 2026 and Q2 2025. Net Income: $260 million, or $2.01 per share, compared to a net loss of $12 million in Q2 2025. PEM Segment EBITDA: $416 million, up $364 million year-over-year. PEM Average Sales Price: Increased 21% sequentially and 14% year-over-year. PEM Sales Volume: Increased 2% sequentially and 7% year-over-year. HIP Segment Net Sales: $1.3 billion, up 8% year-over-year. HIP Segment EBITDA: $276 million, up $1 million year-over-year. HIP EBITDA Margin: 22%, down from 24% in the prior year period. HIP Organic Sales Volume Growth: 6% year-over-year. HIP Average Sales Price: Declined 3% year-over-year. Pipe and Fittings Sales Volume: Grew roughly 20% year-over-year. Cash and Investments: $1.9 billion as of June 30, 2026. Total Debt: $5.1 billion as of June 30, 2026. Net Cash Provided by Operating Activities: $318 million in Q2 2026, more than doubled from the prior year period. Capital Expenditures Guidance: $900 million for 2026. Cash Interest Expense Guidance: Approximately $215 million. Warning! GuruFocus has detected 4 Warning Signs with WLK. Is WLK fairly valued? Test your thesis with our free DCF calculator. Release Date: August 04, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Westlake Corp (NYSE:WLK) delivered a substantial improvement in Q2 2026, with EBITDA of $679 million, up significantly from both the prior quarter and the year-ago period. The company's three-pillar profitability improvement plan contributed approximately $150 million to year-over-year EBITDA improvement, with cost savings tracking ahead of plan. PEM segment benefited from its globally advantaged North American feedstock and energy position, expanding integrated margins as global oil prices spiked. HIP segment achieved its second-highest quarterly revenue in history, with 6% organic sales volume growth driven by strong pipe and fittings demand, including data center projects. The company maintains a strong balance sheet with $1.9 billion in cash and investments, and reduced debt by $500 million while returning approximately $100 million to shareholders in Q2. Westlake Corp (NYSE:WLK) experienced residual unplanned outages in Q2 2026, impacting plant reliability, though most issues were corrected by the end of the quarter. HIP segment EBITDA margin declined to 22% from 24% in the prior year period, due to lower average sales prices and inflation in transportation and raw material costs. The company expects 2026 HIP revenue and EBITDA margin to be towards the lower end of previously communicated ranges, driven by a muted outlook for North American residential construction. Some pipe orders and demand may have shifted from Q3 into Q2 2026 as customers sought to secure supply amid the Middle East conflict, potentially impacting Q3 sales volumes. Polyethylene prices exited Q2 slightly below the quarterly average, and future price trends remain heavily influenced by volatile global oil price movements. Q: How much of the $150 million year-over-year EBITDA benefit from the three-pillar profitability improvement plan was attributed to the PEM segment, and is this level of profitability sustainable? A: Jean-Marc Gilson (President and CEO) confirmed that the vast majority of the three-pillar strategy benefits are flowing into the PEM segment, with a smaller portion going to HIP. He emphasized that these are sustainable cost savings, not one-offs, and that the company is on track to deliver the full $600 million EBITDA benefit for 2026. Jon Baksht (CFO) added that the savings are visible in the financial statements, citing a $150 million reduction in cost of sales in the first half of the year despite a 3% volume increase. Q: What is the outlook for polyethylene (PE) pricing, and how are market dynamics evolving? A: Jon Baksht (CFO) stated that PE prices are up 25% year-to-date through Q2. While July pricing is not yet settled, August announcements are out with a $0.05 increase. He expects pricing by year-end to be higher than the prior year. Jean-Marc Gilson (CEO) added that Westlake is less exposed to export markets (only 10%-20% of production) compared to competitors, making them less vulnerable to export price fluctuations. Q: How is the North American chlorovinyls landscape changing, and what is Westlake's strategy in response to increased supply from competitors? A: Jean-Marc Gilson (CEO) acknowledged the announced increase in supply from a competitor later this year but emphasized Westlake's strategy of running its assets at 100% capacity regardless of market conditions, similar to its polyethylene operations. He highlighted that Westlake aims to be the lowest-cost producer, and the recent footprint optimization (shutting down three chlor-vinyl plants) has streamlined operations and reduced logistical costs. Q: Can you provide more color on the HIP segment's performance, particularly regarding market share gains and the potential pull-forward of pipe demand from Q3 to Q2? A: Jean-Marc Gilson (CEO) attributed HIP's outperformance to the reliability of supply, strong brands, and PVC being a preferred siding product, which has helped the company gain share even in a flat housing market. Jon Baksht (CFO) noted that some pipe orders were pulled forward into Q2 as customers sought to secure supply amid the Middle East conflict, which could modestly impact Q3 pipe sales volumes. He also mentioned that pricing actions were taken to offset inflation, particularly in freight costs. Q: What are the expectations for caustic soda pricing and demand in the second half of 2026? A: Jean-Marc Gilson (CEO) expects solid demand with relatively flat pricing for caustic soda. He noted that Westlake is much less exposed to export markets following the closure of a large diaphragm plant, which is beneficial as export prices are currently lower than domestic prices. Jon Baksht (CFO) added that caustic prices are up 75% through Q2 and expects the second half to average higher than the first half. Q: How much did operating rates improve in Q2, and what is the outlook for plant reliability and maintenance in the second half? A: Jean-Marc Gilson (CEO) provided a detailed rundown: epoxy and olefins are running at 100%, polyethylene at full capacity, ECU production above 90%, and PVC in the mid-80s and climbing. He noted that most production issues were corrected by the end of Q2, with plants running well into July. With relatively few planned shutdowns in the second half, he expects to run assets at a higher rate than in the first half. Q: What is the remaining work needed to achieve the $600 million cost improvement target, and how will the benefits flow through in Q3? A: Jon Baksht (CFO) stated that the company is maintaining the $600 million target, with $300 million already achieved in the first half. He expects a consistent clip of benefits between now and year-end, with cost savings and footprint optimization continuing to flow through the P&L. The reliability pillar is also expected to contribute if operations continue to run well. Q: How is Westlake balancing debt reduction, share repurchases, and capital allocation priorities? A: Jon Baksht (CFO) emphasized the company's commitment to maintaining a strong investment-grade balance sheet. While they will continue to be opportunistic with share repurchases (having bought $30 million in Q2), they will weigh returns on shares against organic and inorganic growth opportunities. He noted that free cash flow generation in the second half is expected to benefit from a significant release of working capital, particularly in Q4. Q: What are the expectations for HIP segment margins in the second half, and what factors are driving the typical sequential decline? A: Jon Baksht (CFO) explained that the margin decline is driven by a combination of mix and seasonality, along with inflation factors such as freight and logistics costs that emerged post the Middle East conflict. While pricing actions are being taken to offset these costs on a dollar basis, they do have the effect of tightening margins. He expects some pricing increase from Q2 to Q3, though Jean-Marc Gilson (CEO) noted it would likely be minor. Q: Can you provide details on the newly acquired Wilhelmshaven PVC plant in Germany and its strategic importance? A: Jean-Marc Gilson (CEO) described the acquisition as a "really nice acquisition" at a very low price, with approximately $700 million in sales. The facility's deepwater port allows it to receive globally advantaged feedstocks from Westlake's North American operations, creating significant integration benefits. He emphasized that Wilhelmshaven should be viewed as part of an overall strategy to maximize earnings for the chlorovinyl business, not in isolation. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Westlake Corporation (NYSE:WLK) reported second-quarter 2026 results that exceeded Wall Street forecasts, supported by stronger profitability in its Performance and Essential Materials business. The better-than-expected performance lifted the company’s shares 2.78% in pre-market trading. Westlake posted adjusted earnings of $2.01 per share, ahead of the analyst consensus estimate of $1.86. Revenue reached $3.27 billion, slightly above market expectations of $3.25 billion and representing an 11% increase from $2.95 billion in the second quarter of 2025. The results reflected higher sales volumes and improved pricing across several product categories. The company’s Performance and Essential Materials (PEM) segment delivered a sharp turnaround during the quarter. Operating income improved to $185 million, compared with an operating loss of $188 million a year earlier. Westlake attributed the improvement to a 14% increase in average selling prices, along with the continued benefits of its three-pillar profitability improvement programme. The Housing and Infrastructure Products segment generated operating income of $212 million, compared with $222 million in the prior-year period. Higher sales volumes were largely offset by lower average selling prices, resulting in a modest year-over-year decline in segment earnings. President and Chief Executive Officer Jean-Marc Gilson said the company’s performance reflected stronger market conditions as well as internal efficiency initiatives. “The significant improvement in PEM’s second quarter earnings underscores its substantial leverage to improving global supply-demand fundamentals, driven in part by logistical disruptions in the Strait of Hormuz, as well as the meaningful actions that we took last year to improve PEM earnings through footprint optimization, cost reduction, and reliability improvement,” said Jean-Marc Gilson, President and Chief Executive Officer. Second-quarter EBITDA increased to $679 million, doubling from $340 million in the same period last year. EBITDA margin expanded to 21%, compared with 12% a year earlier. Westlake also generated $318 million in operating cash flow during the quarter, reduced outstanding debt by $500 million and returned $99 million to shareholders through dividends and share repurchases. Overall sales volume rose 7% year over year. Volume in the Performance and Essential Materials segment increased 7%, while Housing and Infrastructure Products volume also grew 6%, excluding the impact of acquisitions and temporary plant shutdowns. Westlake Corporation stock price