WESTLAKE CORP

Previous wording

Initiation of Antidumping and Countervailing Duty Investigations

Current wording

Antidumping and Countervailing Duty Investigations

Previous wording

On April 3, 2024, the U.S. Epoxy Resin Producers Ad Hoc Coalition (the"Coalition"), of which we are a member, filed petitions with the U.S. Department of Commerce and the U.S. International Trade Commission requesting the initiation of antidumping investigations regarding imports of certain epoxy resins from China, India, South Korea, Taiwan, and Thailand and countervailing duty investigations regarding imports of the same products from China, India, South Korea, and Taiwan.

Current wording

On April 3, 2024, the U.S. Epoxy Resin Producers Ad Hoc Coalition (the "Coalition"), of which we are a member, filed petitions with the U.S. Department of Commerce and the U.S. International Trade Commission requesting the initiation of antidumping investigations regarding imports of certain epoxy resins from China, India, South Korea, Taiwan, and Thailand and countervailing duty investigations regarding imports of the same products from China, India, South Korea, and Taiwan. On September 13, 2024, the U.S. Department of Commerce published its preliminary countervailing duty determination and imposed provisional duties ranging from 0 to 113.83 percent. The preliminary antidumping determination is expected to be issued in early November 2024.

Previous wording

On July 2, 2024, management of the Company approved a plan to temporarily cease operations of ("mothball") the allyl chloride ("AC") and epichlorohydrin ("ECH") units at the Company's site in Pernis, the Netherlands (collectively, the "Units") subject to completion of local consultation obligations. The Company will continue to operate the liquid epoxy resin ("LER") and bisphenol A ("BPA") units at the Pernis facility.

Current wording

On July 2, 2024, the Company approved a plan to temporarily cease operations ("mothball") of the allyl chloride (AC) and epichlorohydrin (ECH) units at the Company's site in Pernis, the Netherlands (collectively, the "Units"). The Company continues to operate the liquid epoxy resin (LER) and bisphenol A (BPA) units at the Pernis facility.

Previous wording

On July 29, 2024, the Company notified the affected employees at the Units that management approved the plan to mothball the Units. The Units are expected to temporarily cease operations in 2025. The Company expects to incur total pre-tax costs of approximately €80 million related to the mothballing of the Units. The mothballing of the Units is expected to result in a workforce reduction of approximately 30 employees. The expected costs related to mothballing the Units consist of employee severance and separation costs of approximately €5 million and charges for environmental remediation and other plant mothballing costs of approximately €75 million.

Current wording

On July 29, 2024, the Company notified the affected employees at the Units that management approved the plan to mothball the Units. The Units are expected to temporarily cease operations in 2025. In the third quarter of 2024, the Company accrued expenses of approximately $75 million related to mothballing of the Units that consisted of charges for environmental remediation and other plant mothballing expenses of approximately $71 million and of employee severance and separation expenses of approximately $4 million.

Previous wording

The Company expects to record substantially all of these costs during fiscal period Q3 2024 with cash outflows expected to occur over several years starting in 2025. Once completed, the Company expects these actions will materially improve the financial performance of the Pernis, Netherlands site while enabling the Company to continue to serve its customers with BPA, LER, solutions, and epoxy specialty resins as it does now prior to taking these actions.

Current wording

Once the mothballing is completed, the Company expects these actions will materially improve the financial performance of the Pernis, Netherlands site while enabling the Company to continue to serve its customers with BPA, LER, solutions, and epoxy specialty resins.

Previous wording

Global demand for most of our products started to recover from the effects of the COVID-19 pandemic in the second half of 2020 and remained strong through the first half of 2022. However, since the second half of 2022 and during the early part of 2023, we saw significant volatility in natural gas and electricity costs, particularly in Europe, as well as in ethane and ethylene prices. We have experienced a decline in natural gas and electricity costs since the second half of 2023 through the second quarter of 2024. Since the first half of 2022, we have continued to experience lower prices and weak demand for most of our products globally through the first quarter of 2024, with signs of demand improving in the second quarter of 2024. The ongoing conflict between Russia and Ukraine since Russia's invasion of Ukraine in 2022, the conflict in the Middle East, slow economic growth in China, increase in bisphenol-A, epichlorohydrin and base epoxy resin exports out of Asia into European and North American markets, timing of certain new ethylene and polyethylene capacity additions in North America, Asia, and the Middle East, volatility in natural gas and electricity prices, volatility in crude oil prices and inflationary pressures could have a continuing negative impact on the performance of Performance and Essential Materials businesses.

Current wording

Global demand for most of our products started to recover from the effects of the COVID-19 pandemic in the second half of 2020 and remained strong through the first half of 2022. However, since the second half of 2022 and during the early part of 2023, we saw significant volatility in natural gas and electricity costs, particularly in Europe, as well as in ethane and ethylene prices. We have experienced a decline in natural gas and electricity costs since the second half of 2023 through the third quarter of 2024. Since the first half of 2022, we have continued to experience lower prices and weak demand for most of our products globally. The ongoing conflict between Russia and Ukraine since Russia's invasion of Ukraine in 2022, the conflict in the Middle East, slow economic growth in China, increase in bisphenol-A, epichlorohydrin and base epoxy resin exports out of Asia into European and North American markets, timing of certain new ethylene and polyethylene capacity additions in North America, Asia, and the Middle East, volatility in natural gas and electricity prices, volatility in crude oil prices and inflationary pressures could have a continuing negative impact on the performance of Performance and Essential Materials businesses.

Previous wording

Our Housing and Infrastructure Products segment is primarily comprised of residential building products, PVC pipes and fittings and PVC compound products. Our sales are affected by new home constructions and home repair and remodeling as well as the decisions of distributors and dealers on the levels of inventory they carry, their views on product demand, their financial condition and the manner in which they choose to manage inventory risk. A significant portion of our performance in this segment is driven by the activities in the residential construction and repair and remodeling markets in North America, which began to decline at the end of the second quarter of 2022 primarily due to the negative effect that rising mortgage rates in the United States had on buyer sentiment. Since the beginning of 2024, with the stabilization of interest rates and the possibility of interest rate cuts by the U.S. Federal Reserve in the near term, we have seen improvement in the demand for housing products. Performance of our housing and infrastructure products businesses over time are generally reflective of the trends of building permits and housing starts in the New Residential Construction Survey by the U.S. Census Bureau and the Repair and Remodeling Index (RRI) provided by the National Association of Home Builders (the "NAHB") among others. Although we ultimately expect that the Infrastructure Investment and Jobs Act of 2021 and historically low residential housing construction that has resulted in an undersupply of existing housing may have a favorable long-term impact on our Housing and Infrastructure Products segment, the current inflationary environment impacting consumer spending and priorities and decade-high mortgage interest rates impacting consumer affordability are expected to have an unfavorable impact on the demand for housing construction in the near term and, as a result, our products produced by this segment.

Current wording

Our Housing and Infrastructure Products segment is primarily comprised of residential building products, PVC pipes and fittings and PVC compound products. Our sales are affected by new home constructions and home repair and remodeling as well as the decisions of distributors and dealers on the levels of inventory they carry, their views on product demand, their financial condition and the manner in which they choose to manage inventory risk. A significant portion of our performance in this segment is driven by the activities in the residential construction and repair and remodeling markets in North America, which began to decline at the end of the second quarter of 2022 primarily due to the negative effect that rising mortgage rates in the United States had on buyer sentiment. Since the beginning of 2024, with the stabilization of interest rates and the possibility of further interest rate cuts by the U.S. Federal Reserve in the near term, we have seen improvement in the demand for housing products. Performance of our housing and infrastructure products businesses over time are generally reflective of the trends of building permits and housing starts in the New Residential Construction Survey by the U.S. Census Bureau and the Repair and Remodeling Index (RRI) provided by the National Association of Home Builders (the "NAHB") among others. Although we ultimately expect that the Infrastructure Investment and Jobs Act of 2021 and historically low residential housing construction that has resulted in an undersupply of existing housing may have a favorable long-term impact on our Housing and Infrastructure Products segment, the current inflationary environment impacting consumer spending and priorities and decade-high mortgage interest rates impacting consumer affordability are expected to have an unfavorable impact on the demand for housing construction in the near term and, as a result, our products produced by this segment.

Previous wording

The table below and descriptions that follow represent the consolidated results of operations of the Company for the three andsix months ended June 30, 2024 and 2023.

Current wording

The table below and descriptions that follow represent the consolidated results of operations of the Company for the three andnine months ended September 30, 2024 and 2023.

Previous wording

For the quarter ended June 30, 2024, net income attributable to Westlake was $313 million, or $2.40 per diluted share, on net sales of $3,207 million. This represents an increase in net income attributable to Westlake of $16 million, or $0.09 per diluted share, compared to the quarter ended June 30, 2023 net income attributable to Westlake of $297 million, or $2.31 per diluted share, on net sales of $3,251 million. Income from operations for the quarter ended June 30, 2024 was $406 million, a $10 million increase from income from operations of $396 million for the quarter ended June 30, 2023. The increase in net income and income from operations was primarily due to higher sales volumes for PVC resin, caustic soda, chlorine, pipe and fittings and siding and trim and lower feedstock and natural gas costs. The overall increase in net income and income from operations in the second quarter of 2024 were partially offset by lower sales prices for our products across both segments and slightly higher selling, general and administrative expenses. Our Housing and Infrastructure Products segment continued to benefit from strong demand in housing end markets while our Performance and Essential Materials segment reflected improvement during the second quarter of 2024. Net income was also positively impacted by higher interest income. Net sales decreased by $44 million to $3,207 million in the quarter ended June 30, 2024 from $3,251 million in the quarter ended June 30, 2023, primarily due to lower sales prices for our products across both segments, partially offset by an increase in sales volumes for PVC resin, caustic soda, chlorine, pipe and fittings and siding and trim.

Current wording

For the quarter ended September 30, 2024, net income attributable to Westlake was $108 million, or $0.83 per diluted share, on net sales of $3,117 million. This represents a decrease in net income attributable to Westlake of $177 million, or $1.37 per diluted share, compared to the quarter ended September 30, 2023 net income attributable to Westlake of $285 million, or $2.20 per diluted share, on net sales of $3,115 million. Income from operations for the quarter ended September 30, 2024 was $180 million, a $169 million decrease in income from operations of $349 million for the quarter ended September 30, 2023. The decrease in net income and income from operations was primarily due to lower sales prices for our products across both segments and the accrual of $75 million expense associated with mothballing of the Units in Pernis, Netherlands. The higher ethylene purchase costs, which included the impact of greater quantities of purchased ethylene in the third quarter of 2024 due to lower production caused by maintenance activities at our ethylene producing joint venture LACC, also had a negative impact on our margins during the third quarter of 2024 as compared to the third quarter of 2023. This decrease was partially offset by higher sales volumes for caustic soda and chlorine and lower feedstock and natural gas costs. Net income was also positively impacted by higher interest income. Net sales of $3,117 million in the quarter ended September 30, 2024 was comparable to $3,115 million in the quarter ended September 30, 2023. The increase in sales volumes for caustic soda, chlorine and epoxy resin was offset by the lower sales prices for most of our products across both segments and lower pipe and fittings sales volumes.

Previous wording

For the six months ended June 30, 2024, net income attributable to Westlake was $487 million, or $3.75 per diluted share, on net sales of $6,182 million. This represents a decrease in net income attributable to Westlake of $204 million, or $1.60 per diluted share, compared to the six months ended June 30, 2023 net income attributable to Westlake of $691 million, or $5.35 per diluted share, on net sales of $6,607 million. Income from operations for the six months ended June 30, 2024 was $629 million, a $303 million decrease from income from operations of $932 million for the six months ended June 30, 2023. The decrease in net income and income from operations was primarily due to lower sales prices for our products across both segments. The decreases in net income and income from operations in the six months ended June 30, 2024 were partially offset by higher PVC resin, caustic soda, chlorine, polyethylene, pipe and fittings and siding and trim sales volumes and lower natural gas and feedstock costs. Net income was also favorably impacted by higher interest income. Net sales decreased by $425 million to $6,182 million in the six months ended June 30, 2024 from $6,607 million in the six months ended June 30, 2023, primarily due to lower sales prices for our products, partially offset by higher sales volumes for PVC resin, caustic soda, chlorine, polyethylene, pipe and fittings and siding and trim.

Current wording

For the nine months ended September 30, 2024, net income attributable to Westlake was $595 million, or $4.58 per diluted share, on net sales of $9,299 million. This represents a decrease in net income attributable to Westlake of $381 million, or $2.98 per diluted share, compared to the nine months ended September 30, 2023 net income attributable to Westlake of $976 million, or $7.56 per diluted share, on net sales of $9,722 million. Income from operations for the nine months ended September 30, 2024 was $809 million, a $472 million decrease from income from operations of $1,281 million for the nine months ended September 30, 2023. The decreases in net income and income from operations were primarily due to lower sales prices for our products across both segments. The decreases in net income and income from operations in the nine months ended September 30, 2024 were partially offset by higher PVC resin, caustic soda, chlorine, polyethylene, pipe and fittings and siding and trim sales volumes and lower natural gas and feedstock costs. Net income was favorably impacted by higher interest income. Net sales decreased by $423 million to $9,299 million in the nine months ended September 30, 2024 from $9,722 million in the nine months ended September 30, 2023, primarily due to lower sales prices for our products, partially offset by higher sales volumes for PVC resin, caustic soda, chlorine, epoxy resin, polyethylene, pipe and fittings and siding and trim.

Previous wording

Second Quarter 2024 Compared with Second Quarter 2023

Current wording

Third Quarter 2024 Compared with Third Quarter 2023

Previous wording

Net Sales. Net sales decreased by $44 million, or 1%, to $3,207 million in the second quarter of 2024 from $3,251 million in the second quarter of 2023, primarily due to lower sales prices for most of our products across both segments. Average sales prices for the second quarter of 2024 decreased by 14% as compared to the second quarter of 2023 as a result of lower sales prices for our products across both segments. Sales volumes increased by 12% in the second quarter of 2024 as compared to the second quarter of 2023, due to higher sales volumes for several of our products in both segments, particularly PVC resin, caustic soda, chlorine, pipe and fittings and siding and trim.

Current wording

Net Sales. Net sales of $3,117 million in the third quarter of 2024 was comparable to $3,115 million in the third quarter of 2023. Average sales prices for the third quarter of 2024 decreased by 3% as compared to the third quarter of 2023 as a result of lower sales prices for our products across both segments. Sales volumes increased by 3% in the third quarter of 2024 as compared to the third quarter of 2023, due to higher sales volumes for caustic soda, chlorine and epoxy resin, partially offset by lower pipe and fittings sales volumes.

Previous wording

Gross Profit. Gross profit margin was 21% in the second quarter of 2024 as compared to 20% in the second quarter of 2023. The increase in gross profit margin was primarily due to higher sales volumes for several of our products, which was partially offset by lower sales prices for our products across both segments.

Current wording

Gross Profit. Gross profit margin was 16% in the third quarter of 2024 as compared to 19% in the third quarter of 2023. The decrease in gross profit margin was primarily due to lower sales prices for several of our products, which was partially offset by higher sales volumes for some of our products and lower energy and feedstock costs.

Previous wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $11 million to $224 million in the second quarter of 2024 as compared to $213 million in the second quarter of 2023. This increase was mainly due to higher professional consulting and selling expenses.

Current wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $9 million to $215 million in the third quarter of 2024 as compared to $206 million in the third quarter of 2023. This increase was mainly due to higher compensation, selling and technology related expenses.

Previous wording

Amortization of Intangibles. Amortization expense in the second quarter of 2024 was comparable to the second quarter of 2023.

Current wording

Amortization of Intangibles. Amortization expense in the third quarter of 2024 was comparable to the third quarter of 2023.

Previous wording

Restructuring, Transaction and Integration-related Costs. Restructuring, transaction and integration-related costs in the second quarter of 2024 were comparable to the second quarter of 2023.

Current wording

Restructuring, Transaction and Integration-related Costs. Restructuring, transaction and integration-related costs in the third quarter of 2024 increased by $75 million compared to the third quarter of 2023. These costs relate to mothballing of the Units in Pernis, Netherlands, which consisted of expenses for environmental remediation and other plant mothballing expenses of approximately $71 million and employee severance and separation expenses of approximately $4 million.

Previous wording

Interest Expense. Interest expense in the second quarter of 2024 was comparable to the second quarter of 2023.

Current wording

Interest Expense. Interest expense in the third quarter of 2024 was comparable to the third quarter of 2023.

Previous wording

Other Income, Net. Other income, net increased by $36 million to $59 million in the second quarter of 2024 from $23 million in the second quarter of 2023, substantially due to higher interest income attributable to a higher average cash and cash equivalents balance and higher interest rates in the second quarter of 2024 as compared to the second quarter of 2023.

Current wording

Other Income, Net. Other income, net decreased by $12 million to $44 million in the third quarter of 2024 from $56 million in the third quarter of 2023. The decrease was substantially due to lower insurance recoveries recognized partially offset by higher interest income attributable to a higher average cash and cash equivalents balance and higher interest rates in the third quarter of 2024 as compared to the third quarter of 2023.

Previous wording

Net Sales. Net sales for the Performance and Essential Materials segment decreased by $123 million, or 6%, to $2,013 million in the second quarter of 2024 from $2,136 million in the second quarter of 2023. Average sales prices for the Performance and Essential Materials segment decreased by 16% in the second quarter of 2024 as compared to the second quarter of 2023. Lower Performance Materials sales prices were primarily due to lower PVC resin sales prices. Lower Essential Materials sales prices were primarily due to lower caustic soda and chlorine sales prices. Sales volumes for the Performance and Essential Materials segment increased by 11% in the second quarter of 2024 as compared to the second quarter of 2023 primarily due to higher PVC resin, caustic soda and chlorine sales volumes.

Current wording

Net Sales. Net sales for the Performance and Essential Materials segment increased by $48 million, or 2%, to $2,019 million in the third quarter of 2024 from $1,971 million in the third quarter of 2023. Sales volumes for the Performance and Essential Materials segment increased by 6% in the third quarter of 2024 as compared to the third quarter of 2023 primarily due to higher caustic soda, chlorine and epoxy resin sales volumes. Average sales prices for the Performance and Essential Materials segment decreased by 3% in the third quarter of 2024 as compared to the third quarter of 2023. Lower Essential Materials sales prices were primarily due to lower caustic soda and chlorine sales prices, which were partially offset by higher polyethylene sales prices under Performance Materials.

Previous wording

Income from Operations. Income from operations for the Performance and Essential Materials segment decreased by $58 million to $157 million in the second quarter of 2024 from $215 million in the second quarter of 2023. This decrease in income from operations in the second quarter of 2024, as compared to the second quarter of 2023, was primarily due to lower sales prices for our major products, particularly PVC resin and caustic soda. These decreases were partially offset by higher sales volume for PVC resin and caustic soda and lower natural gas and feedstock costs.

Current wording

Income from Operations. Income from operations for the Performance and Essential Materials segment decreased by $114 million to an operating loss of $9 million in the third quarter of 2024 from $105 million income in the third quarter of 2023. This decrease in income from operations in the third quarter of 2024, as compared to the third quarter of 2023, was primarily due to lower sales prices for our major products, particularly caustic soda and the accrual of $75 million expense associated with mothballing of the Units in Pernis, Netherlands. The higher ethylene purchase costs, which included the impact of greater quantities of purchased ethylene in the third quarter of 2024 due to lower production caused by maintenance activities at our ethylene producing joint venture LACC, also had a negative impact on our margins during the third quarter of 2024 as compared to the third quarter of 2023. These decreases were partially offset by higher sales volume for caustic soda, chlorine and epoxy resin and lower natural gas and feedstock costs.

Previous wording

Six Months Ended June 30, 2024 Compared with Six Months Ended June 30, 2023

Current wording

Nine Months Ended September 30, 2024 Compared with Nine Months Ended September 30, 2023

Previous wording

Net Sales. Net sales decreased by $425 million, or 6%, to $6,182 million in the six months ended June 30, 2024 from $6,607 million in the six months ended June 30, 2023, primarily due to lower sales prices for most of our products across both segments. Average sales prices for the six months ended June 30, 2024 decreased by 17% as compared to the six months ended June 30, 2023 as a result of continuing lower demand for several of our products in the Performance and Essential Materials segment, including caustic soda. Sales volumes increased by 10% in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, due to increased demand for PVC resin, caustic soda, chlorine, polyethylene, pipe and fittings and siding and trim.

Current wording

Net Sales. Net sales decreased by $423 million, or 4%, to $9,299 million in the nine months ended September 30, 2024 from $9,722 million in the nine months ended September 30, 2023, primarily due to lower sales prices for most of our products across both segments. Average sales prices for the nine months ended September 30, 2024 decreased by 12% as compared to the nine months ended September 30, 2023 as a result of continuing lower demand for several of our products across both operating segments. Sales volumes increased by 8% in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, due to increased sales volumes of PVC resin, caustic soda, chlorine, epoxy resin, polyethylene, pipe and fittings and siding and trim.

Previous wording

Gross Profit. Gross profit margin was 18% in the six months ended June 30, 2024 as compared to 22% in the six months ended June 30, 2023. The decrease in gross profit margin was primarily due to lower prices for most of our products, which was partially offset by lower natural gas and feedstock costs.

Current wording

Gross Profit. Gross profit margin was 18% in the nine months ended September 30, 2024 as compared to 21% in the nine months ended September 30, 2023. The decrease in gross profit margin was primarily due to lower prices for most of our products, which was partially offset by lower natural gas and feedstock costs.

Previous wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses of $433 million in the six months ended June 30, 2024 was comparable to $435 million in the six months ended June 30, 2023.

Current wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $7 million to $648 million in the nine months ended September 30, 2024 from $641 million in the nine months ended September 30, 2023. This increase was mainly due to higher professional consulting, selling and technology related expenses.

Previous wording

Amortization of Intangibles. Amortization expense in the six months ended June 30, 2024 was comparable to the six months ended June 30, 2023.

Current wording

Amortization of Intangibles. Amortization expense in the nine months ended September 30, 2024 was comparable to the nine months ended September 30, 2023.

Previous wording

Interest Expense. Interest expense decreased slightly by $3 million to $81 million in the six months ended June 30, 2024 from $84 million in the six months ended June 30, 2023, primarily due to higher capitalized interest on capital projects.

Current wording

Interest Expense. Interest expense decreased slightly by $4 million to $120 million in the nine months ended September 30, 2024 from $124 million in the nine months ended September 30, 2023, primarily due to higher capitalized interest on capital projects.

Previous wording

Other Income, Net. Other income, net increased by $64.0 million to $109 million in the six months ended June 30, 2024 from $45 million in the six months ended June 30, 2023, substantially due to higher average cash and cash equivalents balance and higher interest rates in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

Current wording

Other Income, Net. Other income, net increased by $52 million to $153 million in the nine months ended September 30, 2024 from $101 million in the nine months ended September 30, 2023, substantially due to a higher average cash and cash equivalents balance and higher interest rates in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

Previous wording

Net Sales. Net sales for the Performance and Essential Materials segment decreased by $541 million, or 12%, to $3,944 million in the six months ended June 30, 2024 from $4,485 million in the six months ended June 30, 2023. Average sales prices for the Performance and Essential Materials segment decreased by 20% in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. Lower Performance Materials sales prices were primarily due to lower PVC resin and epoxy sales prices. Lower Essential Materials sales prices were primarily due to lower caustic soda sales prices. Sales volumes for the Performance and Essential Materials segment increased by 8% in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 primarily due to higher PVC resin, caustic soda and chlorine and polyethylene sales volumes.

Current wording

Net Sales. Net sales for the Performance and Essential Materials segment decreased by $493 million, or 8%, to $5,963 million in the nine months ended September 30, 2024 from $6,456 million in the nine months ended September 30, 2023. Average sales prices for the Performance and Essential Materials segment decreased by 15% in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. Lower Performance Materials sales prices were primarily due to lower PVC resin and epoxy resin sales prices. Lower Essential Materials sales prices were primarily due to lower caustic soda and chlorine sales prices. Sales volumes for the Performance and Essential Materials segment increased by 7% in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 primarily due to higher PVC resin, caustic soda, chlorine and polyethylene sales volumes.

Previous wording

Income from Operations. Income from operations for the Performance and Essential Materials segment decreased by $439 million to $179 million in the six months ended June 30, 2024 from $618 million in the six months ended June 30, 2023. This decrease in income from operations in the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to lower sales prices for our major products, particularly PVC resin, caustic soda and epoxy. These decreases were partially offset by higher sales volumes for PVC resin, caustic soda, chlorine and polyethylene and lower natural gas and feedstock costs.

Current wording

Income from Operations. Income from operations for the Performance and Essential Materials segment decreased by $553 million to $170 million in the nine months ended September 30, 2024 from $723 million in the nine months ended September 30, 2023. This decrease in income from operations in the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, was primarily due to lower sales prices for many of our major products in this segment, particularly PVC resin, caustic soda, chlorine and epoxy resin. These decreases were partially offset by higher sales volumes for PVC resin, caustic soda, chlorine and polyethylene and lower natural gas and feedstock costs.

Previous wording

Income from Operations. Income from operations for the Housing and Infrastructure Products segment increased by $143 million to $476 million in the six months ended June 30, 2024 from $333 million in the six months ended June 30, 2023. This increase in income from operations in the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to higher sales volumes for pipe and fittings and siding and trim and lower raw material costs.

Current wording

Income from Operations. Income from operations for the Housing and Infrastructure Products segment increased by $89 million to $678 million in the nine months ended September 30, 2024 from $589 million in the nine months ended September 30, 2023. This increase in income from operations in the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, was primarily due to higher sales volumes for pipe and fittings and siding and trim. These increases were partially offset by lower sales prices for most of our products in this segment in the nine months ended September 30, 2024 as compared to nine months ended September 30, 2024

Previous wording

CASH FLOW DISCUSSION FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

Current wording

CASH FLOW DISCUSSION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

Previous wording

Operating activities provided cash of $406 million in the first six months of 2024 compared to cash provided by operating activities of $1,067 million in the first six months of 2023. The $661 million decrease in cash flows from operating activities was mainly due to lower prices and demand for most of our products and an unfavorable change in working capital in the six months ended June 30, 2024. Changes in components of working capital, which we define for purposes of this cash flow discussion as accounts receivable, inventories, prepaid expenses and other current assets, less accounts payable and accrued and other liabilities, used cash of $453 million in the first six months of 2024, compared to $30 million of cash provided in the first six months of 2023, an unfavorable change of $483 million. The unfavorable change in the first six months of 2024 was substantially driven by the higher accounts receivables due to an increase in sales towards the end of the six months ended June 30, 2024, higher inventory volumes at the end of the six months ended June 30, 2024 for the Housing and Infrastructure segment and cash outflows related to the 2023 litigation accrual in the six months ended June 30, 2024.

Current wording

Operating activities provided cash of $880 million in the first nine months of 2024 compared to cash provided by operating activities of $1,763 million in the first nine months of 2023. The $883 million decrease in cash flows from operating activities was mainly due to lower prices and demand for most of our products and an unfavorable change in working capital in the nine months ended September 30, 2024. Changes in components of working capital, which we define for purposes of this cash flow discussion as accounts receivable, inventories, prepaid expenses and other current assets, less accounts payable and accrued and other liabilities, used cash of $413 million in the first nine months of 2024, compared to $152 million of cash provided in the first nine months of 2023, an unfavorable change of $565 million. The unfavorable change in the first nine months of 2024 was substantially driven by the higher inventory at the end of the nine months ended September 30, 2024 and cash outflows related to the 2023 litigation accrual in the nine months ended September 30, 2024.

Previous wording

Net cash used for investing activities in the first six months of 2024 of $495 million was relatively comparable to net cash used for investing activities of $499 million in the first six months of 2023. The investing activities in the first six months of 2024 and the first six months of 2023 were primarily related to capital expenditures in the period. Capital expenditures were $503 million in the first six months of 2024 as compared to $507 million in the first six months of 2023. Capital expenditures in the first six months of 2024 and 2023 were primarily related to projects to increase production capacity or reduce costs, maintenance and safety projects and environmental projects at our various facilities.

Current wording

Net cash used for investing activities in the first nine months of 2024 of $736 million as compared to net cash used for investing activities of $750 million in the first nine months of 2023. The investing activities in the first nine months of 2024 and the first nine months of 2023 were primarily related to capital expenditures in the period. Capital expenditures were $723 million in the first nine months of 2024 as compared to $752 million in the first nine months of 2023. Capital expenditures in the first nine months of 2024 and 2023 were primarily related to projects to increase production capacity or reduce costs, maintenance and safety projects and environmental projects at our various facilities. The investing activities in the first nine months of 2024 as well as in the first nine months of 2023 also included contributions to our unconsolidated subsidiaries which was primarily related to our joint venture LACC, LLC.

Previous wording

Net cash used for financing activities during the first six months of 2024 of $146 million was higher as compared to the net cash used for financing activities of $131 million in the first six months of 2023. The activities during the first six months of 2024 were primarily related to the $130 million payment of cash dividends, the $21 million payment of cash distributions to noncontrolling interests and inflows of $8 million from the exercise of stock options. The financing activities in the first six months of 2023 were primarily related to the $92 million payment of cash dividends, the $24 million payment of cash distributions to noncontrolling interests, repurchases of our common stock for an aggregate amount of $23 million and inflows of $9 million from the exercise of stock options.

Current wording

Net cash used for financing activities during the first nine months of 2024 of $517 million was higher as compared to the net cash used for financing activities of $175 million in the first nine months of 2023. The activities during the first nine months of 2024 were primarily related to the redemption of $300 million aggregate principal amount of the 0.875% senior notes due 2024, $197 million payment of cash dividends, $31 million of cash distributions to noncontrolling interests and inflows of $13 million from the exercise of stock options. The financing activities in the first nine months of 2023 were primarily related to the $156 million payment of cash dividends, the $33 million of cash distributions to noncontrolling interests, repurchases of our common stock for an aggregate amount of $23 million and inflows of $39 million from the exercise of stock options.

Previous wording

As of June 30, 2024, our cash and cash equivalents totaled $3,042 million.

Current wording

As of September 30, 2024, our cash and cash equivalents totaled $2,915 million.

Previous wording

As of June 30, 2024, the carrying value of our indebtedness totaled $4,885 million. See Note 7 to the consolidated financial statements appearing elsewhere in this Form 10-Q for a discussion of our long-term indebtedness.

Current wording

As of September 30, 2024, the carrying value of our indebtedness totaled $4,616 million. See Note 7 to the consolidated financial statements appearing elsewhere in this Form 10-Q for a discussion of our long-term indebtedness.

Previous wording

(6) The waste disposal revenue bonds expire in December 2027 and are subject to redemption and mandatory tender for purchase prior to maturity under certain conditions. Interest on the waste disposal revenue bonds accrues at a rate determined by a remarketing agent and is payable quarterly. The interest rate on the waste disposal revenue bonds at June 30, 2024 was 4.15%.

Current wording

(6) The waste disposal revenue bonds expire in December 2027 and are subject to redemption and mandatory tender for purchase prior to maturity under certain conditions. Interest on the waste disposal revenue bonds accrues at a rate determined by a remarketing agent and is payable quarterly. The interest rate on the waste disposal revenue bonds at September 30, 2024 was 3.40%.

Previous wording

The holders of the 0.875% 2024 Senior Notes, the 3.60% 2026 Senior Notes, the 1.625% 2029 Senior Notes, the 3.375% 2030 Senior Notes, the 3.50% 2032 tax-exempt GO Zone Refunding Senior Notes, the 2.875% 2041 Senior Notes, the 5.00% 2046 Senior Notes, the 4.375% 2047 Senior Notes, the 3.125% 2051 Senior Notes and the 3.375% 2061 Senior Notes may require us to repurchase the notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest to, but not including, the date of repurchase, upon the occurrence of both a "change of control" and, within 60 days of such change of control, a "below investment grade rating event" (as such terms are defined in the respective indentures governing these notes).

Current wording

The holders of the 3.60% 2026 Senior Notes, the 1.625% 2029 Senior Notes, the 3.375% 2030 Senior Notes, the 3.50% 2032 tax-exempt GO Zone Refunding Senior Notes, the 2.875% 2041 Senior Notes, the 5.00% 2046 Senior Notes, the 4.375% 2047 Senior Notes, the 3.125% 2051 Senior Notes and the 3.375% 2061 Senior Notes may require us to repurchase the notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest to, but not including, the date of repurchase, upon the occurrence of both a "change of control" and, within 60 days of such change of control, a "below investment grade rating event" (as such terms are defined in the respective indentures governing these notes).

Previous wording

The indenture governing the 0.875% 2024 Senior Notes, the 3.60% 2026 Senior Notes, the 1.625% 2029 Senior Notes, the 3.375% 2030 Senior Notes, the 3.50% 2032 tax-exempt GO Zone Refunding Senior Notes, the 2.875% 2041 Senior Notes, the 5.00% 2046 Senior Notes, the 4.375% 2047 Senior Notes, the 3.125% 2051 Senior Notes, and the 3.375% 2061 Senior Notes contains customary events of default and covenants that, among other things and subject to certain exceptions, restrict us and certain of our subsidiaries' ability to (1) incur certain secured indebtedness, (2) engage in certain sale and leaseback transactions and (3) consolidate, merge or transfer all or substantially all of our assets.

Current wording

The indenture governing the 3.60% 2026 Senior Notes, the 1.625% 2029 Senior Notes, the 3.375% 2030 Senior Notes, the 3.50% 2032 tax-exempt GO Zone Refunding Senior Notes, the 2.875% 2041 Senior Notes, the 5.00% 2046 Senior Notes, the 4.375% 2047 Senior Notes, the 3.125% 2051 Senior Notes, and the 3.375% 2061 Senior Notes contains customary events of default and covenants that, among other things and subject to certain exceptions, restrict us and certain of our subsidiaries' ability to (1) incur certain secured indebtedness, (2) engage in certain sale and leaseback transactions and (3) consolidate, merge or transfer all or substantially all of our assets.

Previous wording

•macroeconomic outlook, including rising interest rates, inflation and possible recession;

Current wording

•macroeconomic outlook, including elevated interest rates, inflation and possible recession;