WESTLAKE CORP
For the period ended Mar 31, 2025. Filed May 2, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 2, 2025
WLK$63.49-4.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-06.
0001262823-24-000053
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-02.
0001262823-25-000029
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 158 previous paragraphs and 143 current paragraphs.
100 unchanged; 32 reworded; 11 added; 25 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 6 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
Since 2022, our European and North American businesses have been impacted by reduced demand and lower prices due to macroeconomic conditions such as the war in Ukraine, volatility in energy prices, slower GDP growth, inflation and higher interest rates. Furthermore, the lower-than-expected demand for performance and essential materials in Asia amid capacity build-up over the years have also impacted most of our product prices and demand in Europe and North America. In the near term, we expect that the uncertainty in import tariff regimes and trading relationships across the world, volatility in energy prices, inflation and other macroeconomic conditions will continue to impact margins and demand for most of our products.
Current report
Tariffs and Trading Relationships
Current report
In April 2025, the U.S. government announced a baseline tariff of 10% on products imported from all countries and an additional individualized reciprocal tariff on the countries with which the United States has the largest trade deficits, including China. Increased tariffs by the United States have led and may continue to lead to the imposition of retaliatory tariffs by foreign jurisdictions. Additionally, the U.S. government has announced and rescinded multiple tariffs on several foreign jurisdictions, which has increased uncertainty regarding the ultimate effect of the tariffs on economic conditions. Current uncertainties about tariffs and their effects on trading relationships may affect the costs for and availability of raw materials or contribute to inflation in the markets in which we operate. Although we are continuing to monitor the economic effects of such announcements, as well as opportunities to mitigate their related impacts, costs and other effects associated with the tariffs remain uncertain.
Current report
Our Operations and Outlook
Current report
Income from Operations. Income from operations for the Housing and Infrastructure Products segment decreased by $62 million to $148 million in the first quarter of 2025 from $210 million in the first quarter of 2024. This decrease in income from operations in the first quarter of 2025, as compared to the first quarter of 2024, was primarily due to lower sales price and margins, due to an unfavorable shift in sales mix, and lower sales volume, particularly in pipe and fittings, partly due to winter storms early in the quarter.
Current report
Cash and Cash Equivalents and Available-For-Sale Securities
Current report
As of March 31, 2025, our available-for-sale securities totaled $183 million. See Note 2 to the unaudited consolidated financial statements appearing elsewhere in this Form 10-Q for a discussion of our available-for-sale securities.
Current report
Recent Accounting Pronouncements
Current report
See Note 1 to the consolidated financial statements included in Item 1 of this Form 10-Q for a full description of recent accounting pronouncements, including expected date of adoption and estimated effect on results of operations and financial condition.
Current report
•increased costs and other effects of tariffs imposed by the U.S. government, and any effects on trading relationships among the United States and other countries; and
Current report
•disruptions in global trade, including as a result of tariffs, trade restrictions, retaliatory trade measures or the effect of such actions on trading relationships between the United States and other countries;
Removed paragraphs (25)
Previous report
Since 2022 our European businesses were impacted by higher energy prices, inflation and reduced demand. Our North American businesses, where we derive a significant portion of our revenue, also experienced the impacts of high energy costs and interest rates and slower demand for most of our products since the second half of 2022. However, since the second half of 2023 we have experienced lower energy costs in Europe and North America as prices for electricity and natural gas have declined following the elevated 2022 levels and inflation has eased since the 2022 levels, although it still remains a concern. In the near term, we expect that the volatility in energy prices, higher interest rates, inflation and other macroeconomic conditions will continue to impact margins and demand for most of our products.
Previous report
AC and ECH Pernis Units
Previous report
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 report
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 report
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 report
As noted in Item 1A, "Risk Factors" in our 2023 Form 10-K, we are subject to extensive environmental regulations, which may impose significant additional costs on our operations in the future. Further, concerns about greenhouse gas emissions and their possible effects on climate change has led to the enactment of regulations, and to proposed legislation and additional regulations, that could affect us in the form of increased cost of feedstocks and fuel, other increased costs of production and decreased demand for our products. While we do not expect any of these enactments or proposals to have a material adverse effect on us in the near term, we cannot predict the longer-term effect of any of these regulations on our future financial condition, results of operations or cash flows.
Previous report
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 report
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 report
Income from Operations. Income from operations for the Housing and Infrastructure Products segment decreased by $54 million to $202 million in the third quarter of 2024 from $256 million 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 and volumes for pipe and fittings.
Previous report
Nine Months Ended September 30, 2024 Compared with Nine Months Ended September 30, 2023
Previous report
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 report
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 report
Amortization of Intangibles. Amortization expense in the nine months ended September 30, 2024 was comparable to the nine months ended September 30, 2023.
Previous report
Restructuring, Transaction and Integration-related Costs. Restructuring, transaction and integration-related costs in the nine months ended September 30, 2024 increased by $77 million compared to the nine months ended September 30, 2023. These costs primarily related to mothballing of the Units and 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 report
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 report
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 report
Income Taxes. The effective income tax rate was 25.4% for the nine months ended September 30, 2024 as compared to 19.8% for the nine months ended September 30, 2023. The effective tax rate in the nine months ended September 30, 2024 was higher compared to the nine months ended September 30, 2023 primarily due to a valuation allowance recorded against Westlake Epoxy Netherlands's net operating loss which was due to, among other things, the expenses related to the mothballing of the Units in Pernis, Netherlands and foreign taxes, partially offset by lower state taxes and U.S. federal research and development credits available to the Company.
Previous report
Performance and Essential Materials Segment
Previous report
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 report
Housing and Infrastructure Products Segment
Previous report
Net Sales. Net sales for the Housing and Infrastructure Products segment increased by $70 million, or 2%, to $3,336 million in the nine months ended September 30, 2024 from $3,266 million in the nine months ended September 30, 2023. Sales volumes for the Housing and Infrastructure Products segment increased by 9% in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 primarily due to higher sales of pipe and fittings and siding and trim. Average sales prices for the Housing and Infrastructure Products segment decreased by 7% in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to lower sales prices for most of our products in this segment.
Previous report
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 report
Cash and Cash Equivalents
Previous report
Redemption of 0.875% senior notes due 2024
Previous report
On August 15, 2024, the Company redeemed $300 million aggregate principal amount of its outstanding 0.875% senior notes due August 15, 2024 at a redemption price equal to 100% of the principal amount of the senior notes to be redeemed plus accrued and unpaid interest thereon.
Reworded paragraphs (32)
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. 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.
Current wording
In April 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. The U.S. Department of Commerce made its final determinations in March 2025. The U.S. International Trade Commission concluded its investigation in April 2025. In May 2025, the U.S. Department of Commerce is expected to impose antidumping and countervailing duty orders on imports of epoxy resins from South Korea and Taiwan and an antidumping order on imports of epoxy resins from Thailand.
Previous wording
On June 6, 2024, the Coalition confidentially lodged an antidumping complaint with the European Commission requesting the initiation of an antidumping investigation concerning imports of epoxy resins into the European Union market originating in China, South Korea, Taiwan and Thailand. On July 1, 2024, the European Commission published in the EU Official Journal a notice initiating an antidumping investigation concerning imports of epoxy resins originating in China, South Korea, Taiwan, and Thailand.
Current wording
In June 2024, the Coalition confidentially lodged an antidumping complaint with the European Commission requesting the initiation of an antidumping investigation concerning imports of epoxy resins into the European Union market originating in China, South Korea, Taiwan and Thailand. In July 2024, the European Commission published in the EU Official Journal a notice initiating an antidumping investigation concerning imports of epoxy resins originating in China, South Korea, Taiwan, and Thailand. In October 2024, the European Commission published a regulation requiring registration of imports subject to the investigation. The European Commission imposed provisional duties in late February 2025 and is expected to conclude the investigation by late August 2025.
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 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.
Current wording
Since 2022, we have continued to experience lower prices and weak demand for most of our performance and essential materials 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 and Europe, increases in bisphenol-A, epichlorohydrin and base epoxy resin exports out of Asia into European and North American markets, disruption of trade flows due to enactment of duties and tariffs and related uncertainties, overcapacity in all the regions of PVC resin, polyethylene, chlor-alkali and epoxy , and volatility in natural gas, electricity and crude oil prices could have a continuing negative impact on the performance of Performance and Essential Materials businesses.
Previous wording
Factors that have caused volatility in our raw material prices, energy costs and production processes in the past, and which may do so in the future, include significant fluctuation in prices of these raw materials in response to, among other things, variable worldwide supply and demand across different industries, speculation in commodities futures, general economic, business or environmental conditions, labor costs, competition, import duties, tariffs, worldwide currency fluctuations, freight, inflationary pressures, regulatory costs, and product and process evolutions that impact demand for the same materials. Increasing raw material prices directly impact our cost of sales and our ability to maintain margins depends on implementing price increases in response to increasing raw material costs. The market for our products may or may not accept price increases, and as such, our future financial condition, results of operations or cash flows could be materially impacted.
Current wording
Factors that have caused volatility in our raw material prices, energy costs and other production costs in the past, and which may do so in the future, include significant fluctuation in prices of these raw materials in response to, among other things, variable worldwide supply and demand across different industries, speculation in commodities futures, general economic, business or environmental conditions, labor costs, competition, import duties impacting our cross-border trades within North America, enactment of tariffs and related uncertainties, worldwide currency fluctuations, freight, inflationary pressures, regulatory costs, and product and process evolutions that impact demand for the same materials. Increasing raw material prices directly impact our cost of sales and our ability to maintain margins depends on implementing price increases in response to increasing raw material costs. The market for our products may or may not accept price increases, and as such, our future financial condition, results of operations or cash flows could be materially impacted.
Previous 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.
Current wording
The table below and descriptions that follow represent the consolidated results of operations of the Company for thethree months ended March 31, 2025 and 2024.
Previous wording
The table below presents net external sales on a disaggregated basis for our two principal operating segments. Performance Materials net external sales primarily consist of sales of PVC, polyethylene and epoxy. Essential Materials net external sales primarily consist of sales of caustic soda, styrene, and related derivative materials. Housing Products net external sales primarily consist of sales of housing exterior and interior products, residential pipes and fittings and residential products utilizing PVC compounds. Infrastructure Products net external sales primarily consist of sales of infrastructure related pipes and fittings and infrastructure products utilizing PVC compounds.
Current wording
The table below presents net external sales on a disaggregated basis for our two principal operating segments. Performance Materials net external sales primarily consist of sales of PVC, polyethylene and epoxy. Essential Materials net external sales primarily consist of sales of caustic soda, chlorine, styrene, and related derivative materials. Housing Products net external sales primarily consist of sales of housing exterior and interior products, residential pipes and fittings and residential products utilizing PVC compounds. Infrastructure Products net external sales primarily consist of sales of infrastructure related pipes and fittings and infrastructure products utilizing PVC compounds.
Previous 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.
Current wording
For the quarter ended March 31, 2025, Westlake Corporation incurred a net loss of $40 million, or $(0.31) per diluted share, on net sales of $2,846 million. This represents a decrease in net income attributable to Westlake Corporation of $214 million, or $1.65 per diluted share, compared to the quarter ended March 31, 2024 net income attributable to Westlake Corporation of $174 million, or $1.34 per diluted share, on net sales of $2,975 million. Loss from operations was $32 million for the quarter ended March 31, 2025, as compared to income of $223 million for the quarter ended March 31, 2024, a decrease of $255 million in income from operations. The decrease in net income and income from operations was primarily due to lower sales prices for many of our products across both segments, including PVC resin, chlorine and pipe and fittings, lower sales volumes for polyethylene and PVC resin and higher energy and feedstock costs. The lower sales prices and demand resulted from weak global industrial and manufacturing activity. These decreases were slightly offset by higher caustic soda sales volumes. Net sales decreased by $129 million to $2,846 million in the quarter ended March 31, 2025 from $2,975 million in the quarter ended March 31, 2024, primarily due to lower sales prices for PVC resin, chlorine and pipe and fittings and lower sales volumes for polyethylene and PVC resin, which were partially offset by higher caustic soda volumes.
Previous wording
Third Quarter 2024 Compared with Third Quarter 2023
Current wording
First Quarter 2025 Compared with First Quarter 2024
Previous 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.
Current wording
Net Sales. Net sales decreased by $129 million, or 4%, to $2,846 million in the first quarter of 2025 from $2,975 million in the first quarter of 2024. Average sales prices for the first quarter of 2025 decreased by 2% as compared to the first quarter of 2024 as a result of lower sales prices for many of our products across both segments, including PVC resin, chlorine and pipe and fittings. Sales volumes decreased by 2% in the first quarter of 2025 as compared to the first quarter of 2024, due to lower sales volumes for polyethylene and PVC resin, which were partially offset by higher caustic soda volumes.
Previous 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.
Current wording
Gross Profit. Gross profit margin was 8% in the first quarter of 2025 as compared to 16% in the first quarter of 2024. The decrease in gross profit margin was primarily due to lower sales prices for most of our products across both segments and higher energy and feedstock costs.
Previous 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.
Current wording
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $18 million to $227 million in the first quarter of 2025 from $209 million in the first quarter of 2024. This increase was mainly due to higher allowance for credit losses, legal and other consulting costs, and technology related expenses.
Previous wording
Amortization of Intangibles. Amortization expense in the third quarter of 2024 was comparable to the third quarter of 2023.
Current wording
Amortization of Intangibles. Amortization expense in the first quarter of 2025 was consistent with the first quarter of 2024.
Previous 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.
Current wording
Restructuring, Transaction and Integration-related Costs. Restructuring, transaction and integration-related costs were $7 million in the first quarter of 2025 compared to $4 million in the first quarter of 2024. The first quarter of 2025 and 2024 costs primarily represent mothballing and plant closure related costs.
Previous wording
Interest Expense. Interest expense in the third quarter of 2024 was comparable to the third quarter of 2023.
Current wording
Interest Expense. Interest expense in the first quarter of 2025 was comparable to the first quarter of 2024.
Previous 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.
Current wording
Other Income, Net. Other income, net decreased by $13 million to $37 million in the first quarter of 2025 from $50 million in the first quarter of 2024, primarily due to lower interest income resulting from the lower average cash and cash equivalent balances and lower interest rates in the first quarter of 2025 as compared to the first quarter of 2024.
Previous wording
Income Taxes. The effective income tax rate was 35.1% for the third quarter of 2024 as compared to 19.2% for the third quarter of 2023. The effective tax rate in the third quarter of 2024 was higher compared to the third quarter of 2023 primarily due to a valuation allowance recorded against Westlake Epoxy Netherlands's net operating loss, which was due to the expenses related to the mothballing of the Units in Pernis, Netherlands and foreign taxes, partially offset by lower state taxes and U.S. federal research and development credits available to the Company.
Current wording
Income Taxes. The effective income tax rate was (2.9)% for the first quarter of 2025 as compared to 20.6% for the first quarter of 2024. The effective tax rate in the first quarter of 2025 was lower compared to the first quarter of 2024 primarily due to an increase in the valuation allowance recorded against Westlake Epoxy Netherlands's net operating loss for which no tax benefit can be recognized associated with the pre-tax loss in the first quarter of 2025.
Previous 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.
Current wording
Net Sales. Net sales for the Performance and Essential Materials segment decreased by $81 million, or 4%, to $1,850 million in the first quarter of 2025 from $1,931 million in the first quarter of 2024. Average sales prices for the Performance and Essential Materials segment decreased by 2% in the first quarter of 2025 as compared to the first quarter of 2024. 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 chlorine sales prices. Sales volumes for the Performance and Essential Materials segment decreased by 2% in the first quarter of 2025 as compared to the first quarter of 2024, primarily due to lower PVC resin and polyethylene sales volumes.
Previous 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.
Current wording
Income from Operations. Income from operations for the Performance and Essential Materials segment decreased by $185 million to a loss of $163 million in the first quarter of 2025 from income of $22 million in the first quarter of 2024. This decrease in income from operations in the first quarter of 2025, as compared to the first quarter of 2024, was primarily due to lower sales prices for most of our major products in this segment, particularly PVC resin, chlorine and epoxy resin, lower sales volumes for PVC resin and polyethylene, impact of Petro 1 turnaround activities and higher North American natural gas and feedstock costs, driven in part by winter storms early in the quarter. These decreases were partially offset by higher sales volumes for caustic soda.
Previous wording
Net Sales. Net sales for the Housing and Infrastructure Products segment decreased by $46 million, or 4%, to $1,098 million in the third quarter of 2024 from $1,144 million in the third quarter of 2023. Average sales prices for the Housing and Infrastructure Products segment decreased by 3% in the third quarter of 2024 as compared to the third quarter of 2023, primarily due to lower sales prices for pipe and fittings. Sales volumes for the Housing and Infrastructure Products segment decreased by 1% in the third quarter of 2024 as compared to the third quarter of 2023 primarily due to lower demand for pipe and fittings
Current wording
Net Sales. Net sales for the Housing and Infrastructure Products segment decreased by $48 million, or 5%, to $996 million in the first quarter of 2025 from $1,044 million in the first quarter of 2024. Average sales prices for the Housing and Infrastructure Products segment decreased by 3% in the first quarter of 2025 as compared to the first quarter of 2024, primarily due to lower sales prices for pipe and fittings and siding and trim. Sales volumes for the Housing and Infrastructure Products segment decreased by 2% in the first quarter of 2025 as compared to the first quarter of 2024 primarily due to lower demand for pipe and fittings and siding and trim.
Previous wording
CASH FLOW DISCUSSION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
Current wording
CASH FLOW DISCUSSION FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
Previous 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.
Current wording
Operating activities used cash of $77 million in the first three months of 2025 compared to cash provided by operating activities of $169 million in the first three months of 2024. The $246 million decrease in cash flows from operating activities was mainly due to lower prices and demand for most of our products, cash used in connection with the turnaround of Petro 1 ethylene facility in Lake Charles and a favorable change in working capital in the three months ended March 31, 2025. 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 $135 million in the first three months of 2025, compared to $177 million of cash used in the first three months of 2024, a favorable change of $42 million. The favorable change in the first three months of 2025 was substantially driven by the higher accounts payable and accrued and other liabilities due to the impact of the Petro 1 turnaround activities and the timing of related payments in the first three months of 2025 and also due to higher feedstock and energy purchase costs during the three months ended March 31, 2025.
Previous 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.
Current wording
Net cash used for investing activities in the first three months of 2025 was $434 million as compared to net cash used for investing activities of $272 million in the first three months of 2024. The increase in cash used for investing activities in the first three months of 2025 as compared to the first three months of 2024 was primarily related to the 2025 purchase of $183 million of investments comprising corporate bonds and U.S. government debt securities, among others. Capital expenditures were $248 million in the first three months of 2025 as compared to $272 million in the first three months of 2024. Capital expenditures in the first three months of 2025 and 2024 were primarily related to projects to increase production capacity or reduce costs, maintenance and safety projects and environmental projects at our various facilities.
Previous 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.
Current wording
Net cash used for financing activities during the first three months of 2025 was $115 million as compared to net cash used for financing activities of $74 million in the first three months of 2024. The financing activities during the first three months of 2025 included the payment of $68 million of cash dividends, the repurchase of $30 million of our outstanding common stock for treasury and $10 million of cash distributions to noncontrolling interests. The financing activities in the first three months of 2024 included the payment of $65 million of cash dividends and $10 million of cash distributions to noncontrolling interests.
Previous wording
Our principal sources of liquidity are from cash and cash equivalents, cash from operations, short-term borrowings under the credit agreement and our long-term financing.
Current wording
Our principal sources of liquidity are from cash and cash equivalents, available-for-sale securities, cash from operations, short-term borrowings under our credit agreement and our long-term financing.
Previous wording
In November 2014, our Board of Directors authorized a $250 million stock repurchase program (the "2014 Program"). In November 2015, our Board of Directors approved the expansion of the 2014 Program by an additional $150 million. In August 2018, our Board of Directors approved the further expansion of the existing 2014 Program by an additional $150 million. In August 2022, our Board of Directors approved the further expansion of the existing 2014 Program by an additional $500 million. As of September 30, 2024, we had repurchased 8,722,550 shares of our common stock for an aggregate purchase price of approximately $574 million under the 2014 Program. We did not repurchase any common stock under the 2014 Program during the three months ended September 30, 2024. Purchases under the 2014 Program may be made either through the open market or in privately negotiated transactions. Decisions regarding the amount and the timing of purchases under the 2014 Program will be influenced by our cash on hand, our cash flows from operations, general market conditions and other factors. The 2014 Program may be discontinued by our Board of Directors at any time.
Current wording
In November 2014, our Board of Directors authorized a $250 million stock repurchase program (the "2014 Program"). In November 2015, our Board of Directors approved the expansion of the 2014 Program by an additional $150 million. In August 2018, our Board of Directors approved the further expansion of the existing 2014 Program by an additional $150 million. In August 2022, our Board of Directors approved the further expansion of the existing 2014 Program by an additional $500 million. During the three months ended March 31, 2025, we repurchased 279,771 shares of common stock for an aggregate purchase price of $30 million under the 2014 Program. As of March 31, 2025, we had repurchased 9,482,402 shares of our common stock for an aggregate purchase price of approximately $664 million under the 2014 Program. Purchases under the 2014 Program may be made either through the open market or in privately negotiated transactions. Decisions regarding the amount and the timing of purchases under the 2014 Program will be influenced by our cash on hand, our cash flows from operations, general market conditions and other factors. The 2014 Program may be discontinued by our Board of Directors at any time.
Previous wording
We believe that our sources of liquidity as described above are adequate to fund our normal operations and ongoing capital expenditures and turnaround activities. Funding of any potential large expansions such as our recent acquisitions or potential future acquisitions or the redemption of debt may likely necessitate, and therefore depend on, our ability to obtain additional financing in the future. We may not be able to access additional liquidity at favorable interest rates due to volatility of the commercial credit markets.
Current wording
We believe that our sources of liquidity as described above are adequate to fund our normal operations and ongoing capital expenditures and turnaround activities. We commenced the planned maintenance turnaround at our Petro 1 ethylene facility in the first quarter of 2025, which concluded in April 2025. Funding of any potential large expansions such as our recent acquisitions or potential future acquisitions or the redemption of debt may likely necessitate, and therefore depend on, our ability to obtain additional financing in the future. We may not be able to access additional liquidity at favorable interest rates due to volatility of the commercial credit markets.
Previous wording
As of September 30, 2024, our cash and cash equivalents totaled $2,915 million.
Current wording
As of March 31, 2025, our cash and cash equivalents totaled $2,297 million.
Previous 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.
Current wording
As of March 31, 2025, the carrying value of our indebtedness totaled $4,592 million. See Note 7 to the unaudited 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 September 30, 2024 was 3.40%.
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 March 31, 2025 was 3.00%.
Previous wording
•timing of and amount of capital expenditures; and
Current wording
•timing of and amount of capital expenditures;
Previous wording
•results of mothballing of the AC and ECH Units (such as timing and amount of recognition of related costs, expectation of material improvement of the financial performance of our Pernis, Netherlands site).
Current wording
•results of mothballing of the AC and ECH Units (such as timing and amount of recognition of related costs, expectation of improvement of the financial performance of our Pernis, Netherlands site).
Previous wording
•changes in laws or regulations, including trade policies;
Current wording
•changes in laws or regulations, including trade policies and tariffs imposed on or by foreign jurisdictions;
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
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.