WESTLAKE CORP

Previous wording

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 wording

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. Our North American Chlorovinyls business performance has been significantly impacted by declining prices and reduced demand for our products, resulting in operating losses and a downward revision of our forecasts in the third quarter of 2025. As a result of these factors, the Company performed goodwill impairment analyses during the third quarter of 2025, as discussed under the recent developments section below, and recorded a non-cash impairment charge of $727 million, representing all of the goodwill associated with the North American Chlorovinyls reporting unit.

Previous wording

On July 4, 2025, President Trump signed into law the legislation commonly referred to as the One Big Beautiful Bill Act ("OBBBA"), which includes a broad range of tax reform provisions affecting corporations. The OBBBA, among other changes, permanently reinstates the "bonus" depreciation provisions that allow for the immediate expensing of 100% of the cost of certain qualified property acquired and placed in service after January 19, 2025, permanently reinstates the elective immediate expensing of domestic research and experimental expenditures paid or incurred in tax years beginning after December 31, 2024 (with a special transition rule that allows accelerated deduction of the remaining unamortized balance of capitalized domestic research and experimental expenditures), and permanently relaxes the limitation on the deductibility of business interest effective for tax years beginning after December 31, 2024. The OBBBA also modifies certain international tax provisions effective for tax years beginning after December 31, 2025. The Company is currently evaluating the impact of these tax law changes and will recognize the income tax effects in the consolidated financial statements beginning in the period in which the OBBBA was signed into law. At this time, we expect these tax law changes to reduce our cash tax without materially impacting our effective income tax rate.

Current wording

On July 4, 2025, President Trump signed into law the legislation commonly referred to as the One Big Beautiful Bill Act ("OBBBA"), which includes a broad range of tax reform provisions affecting corporations. The OBBBA, among other changes, permanently reinstates the "bonus" depreciation provisions that allow for the immediate expensing of 100% of the cost of certain qualified property, permanently reinstates the elective immediate expensing of domestic research and experimental expenditures paid or incurred, and permanently relaxes the limitation on the deductibility of business interest. The OBBBA also modifies certain international tax provisions. The Company evaluated the impact of these tax law changes and recognized the associated income tax effects in the consolidated financial statements beginning in the third quarter of 2025, the period of enactment. At this time, the Company expects these tax law changes to reduce its cash tax without materially impacting its effective income tax rate.

Previous wording

In July 2024, the Company approved a plan to mothball the allyl chloride ("AC") and epichlorohydrin ("ECH") units at the Company's site in Pernis, the Netherlands and recognized charges of approximately $75 million related to mothballing of the AC and ECH units in the third quarter of 2024. The Company continued to operate the liquid epoxy resin ("LER") and bisphenol A ("BPA") units at the Pernis facility through June 2025. In June 2025, due to the continued deterioration of the Company's business in Europe, the Company revised the original mothballing plan and approved a plan to close and cease all the remaining operations at its Pernis facility including the LER and BPA units. In connection therewith, the Company plans to continue supplying customers from its LER and BPA production capacity at its Deer Park, Texas facility. The anticipated closure of the entire Pernis facility would take place after the conclusion of the consultations with local works councils and unions. The Company ceased the BPA unit operations in June 2025 and expects to cease the LER unit operations in the second half of 2025. In June 2025, the Company notified the affected employees at the Pernis facility of the Company's revised plan.

Current wording

In July 2024, the Company approved a plan to mothball the allyl chloride ("AC") and epichlorohydrin ("ECH") units at the Company's site in Pernis, the Netherlands and recognized charges of approximately $75 million related to mothballing of the AC and ECH units in the third quarter of 2024. The Company continued to operate the liquid and solid epoxy resin ("LER/SER") and bisphenol A ("BPA") units at the Pernis facility through June 2025. In June 2025, due to the continued deterioration of the Company's business in Europe, the Company revised the original mothballing plan and approved a plan to close and cease all the remaining operations at its Pernis facility including the LER/SER and BPA units. In connection therewith, the Company plans to continue supplying customers from its LER/SER and BPA production capacity at its Deer Park, Texas facility. The anticipated closure of the entire Pernis facility would take place after the conclusion of the consultations with local works councils and unions. The Company ceased the BPA unit operations in June 2025 and ceased the LER/SER unit operations in the fourth quarter of 2025. In June 2025, the Company notified the affected employees at the Pernis facility of the Company's revised plan.

Previous wording

In addition to the previous charges related to the July 2024 mothballing, the Company recognized expected costs of $123 million in the three months ended June 30, 2025 related to the closure of the Pernis facility. The additional costs recognized consist of charges for asset retirement obligations of $76 million, other plant shutdown related costs of $19 million and employee severance and separation costs of $13 million, that are included in the restructuring, transaction and integration-related costs, and the write-down of inventory of $15 million, that is included as a component of cost of sales in the Company's consolidated statement of operations. The Company expects to recognize additional charges related to other plant shut down costs of approximately $64 million and severance and separation costs of $14 million in future periods in connection with the closure of the LER unit and other future events. The Company expects to complete the closure plan in 2030.

Current wording

The total costs recognized during the nine months ended September 30, 2025 of $145 million consist of charges for asset retirement obligations of $77 million, other plant shutdown related costs of $33 million and employee severance and separation costs of $20 million, that are included in the restructuring, transaction and integration-related costs, and the write-down of inventory of $15 million, that is included as a component of cost of sales in the Company's consolidated statement of operations. The Company expects to incur additional costs in connection with the shutdown. The Company expects to complete the closure plan in 2030.

Previous wording

Suzhou Huasu Plastics PVC Resin Unit Temporary Cessation of Operations

Current wording

Suzhou Huasu Plastics PVC Resin Unit Cessation of Operations

Previous wording

In June 2025, the Company's 95% owned joint venture Suzhou Huasu Plastics plant located in Suzhou, Jiangsu, China temporarily ceased operations of its polyvinyl chloride ("PVC") resin unit. The decision was driven by the unit's lack of long-term economic viability. Westlake will continue to operate the PVC calendar products unit at Suzhou Huasu Plastics facility. The Company recognized expenses of $7 million in the second quarter of 2025 associated with the temporary cessation of operations of the unit.

Current wording

In October 2025, the Company's 95% owned joint venture Suzhou Huasu Plastics approved the shutdown of its polyvinyl chloride ("PVC") resin unit located at its plant in Suzhou, Jiangsu, China. The decision was driven by the unit's lack of long-term economic viability. Westlake will continue to operate the PVC calendar products unit at Suzhou Huasu Plastics facility. The Company previously recognized expenses of $7 million in the second quarter of 2025 and an additional $2 million in the third quarter of 2025 associated with the cessation of operations of the unit, and expects to incur additional costs in connection with the shutdown.

Previous 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 on imports of epoxy resins from China, Taiwan, and Thailand and is expected to conclude the investigation by late August 2025.

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 definitive duties in late July 2025 on imports of epoxy resins from China, Taiwan, and Thailand.

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, 2025 and 2024.

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, 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, 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.

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 resin, polyethylene and epoxy resin. 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 quarter ended June 30, 2025, Westlake Corporation incurred a net loss of $142 million, or $(1.11) per diluted share, on net sales of $2,953 million. This represents a decrease in net income attributable to Westlake Corporation of $455 million, or $3.51 per diluted share, compared to the quarter ended June 30, 2024 net income attributable to Westlake Corporation of $313 million, or $2.40 per diluted share, on net sales of $3,207 million. Loss from operations was $109 million for the quarter ended June 30, 2025, as compared to income from operations of $406 million for the quarter ended June 30, 2024, a decrease of $515 million. 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 and pipe and fittings, lower sales volumes for polyethylene, chlorine, caustic soda, PVC resin, and building products, and higher energy and feedstock costs, as well as unplanned plant outages and planned turnarounds in the second quarter of 2025. The lower sales prices and demand resulted from continuing weak global industrial and manufacturing activity. The decrease in net income and income from operations was also due to the recognition of charges of $115 million in the quarter ended June 30, 2025, related to the closure of the Pernis facility located in the Netherlands and the temporary cessation of operations of the PVC resin unit at the Suzhou Huasu Plastics plant located in China, under the Performance and Essential Materials Segment. These decreases were slightly offset by higher caustic soda sales prices and higher pipe and fittings sales volumes. Net sales decreased by $254 million to $2,953 million in the quarter ended June 30, 2025 from $3,207 million in the quarter ended June 30, 2024, primarily due to lower sales prices for PVC resin and pipe and fittings and lower sales volumes for polyethylene, chlorine, caustic soda, PVC resin and building products, which were partially offset by higher caustic soda sales prices and higher pipe and fittings sales volumes.

Current wording

For the quarter ended September 30, 2025, Westlake Corporation incurred a net loss of $782 million, or $(6.06) per diluted share, on net sales of $2,838 million. This represents a decrease in net income attributable to Westlake Corporation of $890 million, or $6.89 per diluted share, compared to the quarter ended September 30, 2024 net income attributable to Westlake Corporation of $108 million, or $0.83 per diluted share, on net sales of $3,117 million. Loss from operations was $766 million for the quarter ended September 30, 2025, as compared to income from operations of $180 million for the quarter ended September 30, 2024, a decrease of $946 million. The decrease in net income and income from operations was due to lower sales prices for many of our products across both segments, including PVC resin, polyethylene and pipe and fittings, lower sales volumes for PVC resin, chlorine, chlorinated derivatives, epoxy resin and building products, and higher energy and feedstock costs in the third quarter of 2025. The decrease in net income and income from operations was also due to a non-cash impairment charge of $727 million related to North American Chlorovinyls goodwill under the Performance and Essential Materials segment, as discussed under the recent developments section. These decreases were slightly offset by higher PVC compounds sales prices, higher pipe and fittings sales volumes and lower impact from fewer unplanned plant outages in the third quarter of 2025 as compared to the third quarter of 2024. Net sales decreased by $279 million to $2,838 million in the quarter ended September 30, 2025 from $3,117 million in the quarter ended September 30, 2024, primarily due to lower sales prices for PVC resin, polyethylene and pipe and fittings and lower sales volumes for PVC resin, chlorine, chlorinated derivatives, epoxy resin and building products, which were partially offset by higher PVC compounds sales prices and higher pipe and fittings sales volumes.

Previous wording

For the six months ended June 30, 2025, Westlake Corporation incurred a net loss of $182 million, or $(1.42) per diluted share, on net sales of $5,799 million. This represents a decrease in net income attributable to Westlake Corporation of $669 million, or $5.17 per diluted share, compared to the six months ended June 30, 2024 net income attributable to Westlake Corporation of $487 million, or $3.75 per diluted share, on net sales of $6,182 million. Loss from operations was $141 million for the six months ended June 30, 2025, as compared to income of $629 million from operations for the six months ended June 30, 2024, a decrease of $770 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, caustic soda, PVC resin and building products and higher energy and feedstock costs, as well as unplanned plant outages and planned turnarounds in the six months ended June 30, 2025. The lower sales prices and demand resulted from continuing weak global industrial and manufacturing activity. The decrease in net income and income from operations was also due to the recognition of charges of $115 million in the six months ended June 30, 2025, related to the closure of the Pernis facility located in the Netherlands and the temporary cessation of operations of the PVC resin unit at the Suzhou Huasu Plastics plant located in China, under the Performance and Essential Materials Segment. These decreases were slightly offset by higher caustic soda sales prices and higher pipe and fittings sales volumes. Net sales decreased by $383 million to $5,799 million in the six months ended June 30, 2025 from $6,182 million in the six months ended June 30, 2024, primarily due to lower sales prices for chlorine, PVC resin and pipe and fittings, and lower sales volumes for polyethylene, caustic soda, PVC resin and building products, which were partially offset by slightly higher caustic soda sales prices and pipe and fittings sales volumes.

Current wording

For the nine months ended September 30, 2025, Westlake Corporation incurred a net loss of $964 million, or $(7.48) per diluted share, on net sales of $8,637 million. This represents a decrease in net income attributable to Westlake Corporation of $1,559 million, or $12.06 per diluted share, compared to the nine months ended September 30, 2024 net income attributable to Westlake Corporation of $595 million, or $4.58 per diluted share, on net sales of $9,299 million. Loss from operations was $907 million for the nine months ended September 30, 2025, as compared to income of $809 million from operations for the nine months ended September 30, 2024, a decrease of $1,716 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, polyethylene, chlorine and pipe and fittings, lower sales volumes for PVC resin, epoxy resin, polyethylene, caustic soda, chlorine, and building products and higher energy and feedstock costs in the nine months ended September 30, 2025. The decrease in net income and income from operations in the nine months ended September 30, 2025 was also due to the recognition of a non-cash impairment charge of $727 million related to North American Chlorovinyls goodwill and the recognition of restructuring charges of $139 million, primarily related to the closure of the Pernis facility located in the Netherlands , all under the Performance and Essential Materials Segment. These decreases were slightly offset by higher caustic soda and PVC compounds sales prices and higher pipe and fittings sales volumes. Net sales decreased by $662 million to $8,637 million in the nine months ended September 30, 2025 from $9,299 million in the nine months ended September 30, 2024, primarily due to lower sales prices for PVC resin, polyethylene, chlorine and pipe and fittings, and lower sales volumes for PVC resin, epoxy resin, polyethylene, caustic soda, chlorine, and building products, which were partially offset by higher caustic soda and PVC compounds sales prices and pipe and fittings sales volumes.

Previous wording

Second Quarter 2025 Compared with Second Quarter 2024

Current wording

Third Quarter 2025 Compared with Third Quarter 2024

Previous wording

Net Sales. Net sales decreased by $254 million, or 8%, to $2,953 million in the second quarter of 2025 from $3,207 million in the second quarter of 2024. Sales volumes decreased by 7% in the second quarter of 2025 as compared to the second quarter of 2024, due to lower sales volumes for polyethylene, chlorine, caustic soda, PVC resin and building products, which were partially offset by higher pipe and fittings sales volumes. Average sales prices for the second quarter of 2025 decreased by 1% as compared to the second quarter of 2024 as a result of lower sales prices for many of our products across both segments, including PVC resin and pipe and fittings, which were partially offset by higher caustic soda sales prices.

Current wording

Net Sales. Net sales decreased by $279 million, or 9%, to $2,838 million in the third quarter of 2025 from $3,117 million in the third quarter of 2024. Average sales prices for the third quarter of 2025 decreased by 5% as compared to the third quarter of 2024 as a result of lower sales prices for many of our products across both segments, including PVC resin, polyethylene and pipe and fittings, which were partially offset by higher PVC compounds sales prices. Sales volumes decreased by 4% in the third quarter of 2025 as compared to the third quarter of 2024 due to lower sales volumes for PVC resin, chlorine, chlorinated derivatives, epoxy resin and building products, which were partially offset by higher pipe and fittings sales volumes.

Previous wording

Gross Profit. Gross profit margin was 9% in the second quarter of 2025 as compared to 21% in the second quarter of 2024. The decrease in gross profit margin was primarily due to lower sales volumes and prices for most of our major products across both segments and higher energy and feedstock costs, as well as unplanned plant outages and planned turnarounds in the second quarter of 2025.

Current wording

Gross Profit. Gross profit margin was 8% in the third quarter of 2025 as compared to 16% in the third quarter of 2024. The decrease in gross profit margin was primarily due to lower sales volumes and prices for most of our major products across both segments and higher energy and feedstock costs in the third quarter of 2025, as compared to the third quarter of 2024.

Previous wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased by $3 million to $221 million in the second quarter of 2025 from $224 million in the second quarter of 2024. This decrease was mainly due to lower payroll and related benefit costs that were partially offset by higher technology related expenses.

Current wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $13 million to $228 million in the third quarter of 2025 from $215 million in the third quarter of 2024. This increase was mainly due to higher contract labor and legal and other consulting costs.

Previous wording

Amortization of Intangibles. Amortization expense in the second quarter of 2025 was consistent with the second quarter of 2024.

Current wording

Amortization of Intangibles. Amortization expense in the third quarter of 2025 was consistent with the third quarter of 2024.

Previous wording

Restructuring, Transaction and Integration-related Costs. Restructuring, transaction and integration-related costs were $115 million in the second quarter of 2025 compared to $4 million in the second quarter of 2024. The restructuring, transaction and integration-related costs in the second quarter of 2025 comprised of $108 million related to the closure of Pernis facility located in the Netherlands and of $7 million related to the temporary cessation of the PVC resin unit at the Suzhou Huasu Plastics plant located in China, under the Performance and Essential Materials Segment.

Current wording

Restructuring, Transaction and Integration-related Costs. Restructuring, transaction and integration-related costs were $17 million in the third quarter of 2025 compared to $75 million in the third quarter of 2024. The restructuring, transaction and integration-related costs in the third quarter of 2025 primarily consisted of $15 million related to the closure of Pernis facility located in the Netherlands, under the Performance and Essential Materials Segment. The restructuring, transaction and integration-related costs in the third quarter of 2024 related to mothballing of the allyl chloride and epichlorohydrin units located in Pernis facility, 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 2025 was comparable to the second quarter of 2024.

Current wording

Interest Expense. Interest expense in the third quarter of 2025 was consistent with the third quarter of 2024.

Previous wording

Other Income, Net. Other income, net decreased by $35 million to $24 million in the second quarter of 2025 from $59 million in the second 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 second quarter of 2025 as compared to the second quarter of 2024 and also due to the recognition of higher insurance recovery in the second quarter of 2024 as compared to the second quarter of 2025.

Current wording

Other Income, Net. Other income, net decreased by $12 million to $32 million in the third quarter of 2025 from $44 million in the third 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 third quarter of 2025 as compared to the third quarter of 2024.

Previous wording

Income Taxes. The effective income tax rate was (4.8)% for the second quarter of 2025 as compared to 23.8% for the second quarter of 2024. The effective tax rate in the second quarter of 2025 was lower compared to the second 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, U.S. federal research and development credits available to the Company, state tax benefits and income attributable to noncontrolling interests, partially offset by an increase in reserves for uncertain tax positions and foreign taxes and the impact of earnings mix across jurisdictions associated with the pre-tax loss in the second quarter of 2025.

Current wording

Income Taxes. The effective income tax rate was 0.4% for the third quarter of 2025 as compared to 35.1% for the third quarter of 2024. The effective tax rate in the third quarter of 2025 was lower compared to the third quarter of 2024 primarily due to the non-deductible goodwill impairment charge associated with the North American Chlorovinyls reporting unit, slightly offset by a lower valuation allowance recorded against Westlake Epoxy Netherlands's net operating loss and the impact of earnings mix across jurisdictions associated with the pre-tax loss in the third quarter of 2025.

Previous wording

Net Sales. Net sales for the Performance and Essential Materials segment decreased by $220 million, or 11%, to $1,793 million in the second quarter of 2025 from $2,013 million in the second quarter of 2024. Sales volumes for the Performance and Essential Materials segment decreased by 9% in the second quarter of 2025 as compared to the second quarter of 2024, primarily due to lower polyethylene, chlorine, caustic soda and PVC resin sales volumes. Average sales prices for the Performance and Essential Materials segment decreased by 2% in the second quarter of 2025 as compared to the second quarter of 2024. Lower Performance Materials sales prices were primarily due to lower PVC resin and polyethylene sales prices, partially offset by slightly higher Essential Materials sales prices driven by caustic soda.

Current wording

Net Sales. Net sales for the Performance and Essential Materials segment decreased by $272 million, or 13%, to $1,747 million in the third quarter of 2025 from $2,019 million in the third quarter of 2024. Average sales prices for the Performance and Essential Materials segment decreased by 7% in the third quarter of 2025 as compared to the third quarter of 2024. Lower Performance Materials sales prices were primarily due to lower PVC resin and polyethylene sales prices. Sales volumes for the Performance and Essential Materials segment decreased by 6% in the third quarter of 2025 as compared to the third quarter of 2024, primarily due to lower PVC resin, chlorine, chlorinated derivatives and epoxy resin sales volumes.

Previous wording

Income from Operations. Income from operations for the Performance and Essential Materials segment decreased by $475 million to a loss of $318 million in the second quarter of 2025 from income of $157 million in the second quarter of 2024. This decrease in income from operations in the second quarter of 2025, as compared to the second quarter of 2024 was primarily due to lower PVC resin and polyethylene sales prices, and higher natural gas and feedstock costs, as well as unplanned plant outages and planned turnarounds in the second quarter of 2025. This decrease in income from operations was also due to the recognition of charges of $115 million in the quarter ended June 30, 2025 related to the closure of Pernis facility located in the Netherlands and the temporary cessation of the PVC resin unit at the Suzhou Huasu Plastics plant located in China. These decreases were partially offset by higher sales prices for caustic soda.

Current wording

Income from Operations. Income from operations for the Performance and Essential Materials segment decreased by $893 million to a loss of $902 million in the third quarter of 2025 from a loss of $9 million in the third quarter of 2024. This decrease in income from operations in the third quarter of 2025, as compared to the third quarter of 2024 was due to lower PVC resin and polyethylene sales prices, lower PVC resin, chlorine, chlorinated derivatives and epoxy resin sales volumes and higher natural gas and feedstock costs in the third quarter of 2025, partially offset by lower impact from fewer unplanned plant outages in the third quarter of 2025 as compared to the third quarter of 2024. This decrease in income from operations was also due to the recognition of a goodwill impairment charge of $727 million related to North American Chlorovinyls and restructuring charges of $15 million in the quarter ended September 30, 2025 related to the closure of Pernis facility located in the Netherlands.

Previous wording

Income from Operations. Income from operations for the Housing and Infrastructure Products segment decreased by $44 million to $222 million in the second quarter of 2025 from $266 million in the second quarter of 2024. This decrease in income from operations in the second quarter of 2025, as compared to the second quarter of 2024, was primarily due to lower sales prices and margins for pipe and fittings and lower sales volumes for our building products.

Current wording

Income from Operations. Income from operations for the Housing and Infrastructure Products segment decreased by $51 million to $151 million in the third quarter of 2025 from $202 million in the third quarter of 2024. This decrease in income from operations in the third quarter of 2025, as compared to the third quarter of 2024, was primarily due to lower sales prices and margins for pipe and fittings and lower sales volumes for our building products, partially offset by higher sales volumes for pipe and fittings.

Previous wording

Six Months Ended June 30, 2025 Compared with Six Months Ended June 30, 2024

Current wording

Nine Months Ended September 30, 2025 Compared with Nine Months Ended September 30, 2024

Previous wording

Net Sales. Net sales decreased by $383 million, or 6%, to $5,799 million in the six months ended June 30, 2025 from $6,182 million in the six months ended June 30, 2024. Sales volumes decreased by 5% in the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, due to lower sales volumes for polyethylene, caustic soda, PVC resin and building products, which were partially offset by higher pipe and fittings sales volumes. Average sales prices for the six months ended June 30, 2025 decreased by 2% as compared to the six months ended June 30, 2024 as a result of lower sales prices for chlorine, PVC resin and pipe and fittings, which were partially offset by slightly higher caustic soda sales prices.

Current wording

Net Sales. Net sales decreased by $662 million, or 7%, to $8,637 million in the nine months ended September 30, 2025 from $9,299 million in the nine months ended September 30, 2024. Sales volumes decreased by 4% in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, due to lower sales volumes for PVC resin, epoxy resin, polyethylene, caustic soda, chlorine and building products, which were partially offset by higher pipe and fittings sales volumes. Average sales prices for the nine months ended September 30, 2025 decreased by 3% as compared to the nine months ended September 30, 2024 as a result of lower sales prices for PVC resin, polyethylene, chlorine and pipe and fittings, which were partially offset by higher caustic soda and PVC compounds sales prices.

Previous wording

Gross Profit. Gross profit margin was 8% in the six months ended June 30, 2025 as compared to 18% in the six months ended June 30, 2024. The decrease in gross profit margin was primarily due to lower sales volumes and prices for most of our products across both segments and higher energy and feedstock costs, as well as unplanned plant outages and planned turnarounds in the six months ended June 30, 2025.

Current wording

Gross Profit. Gross profit margin was 8% in the nine months ended September 30, 2025 as compared to 18% in the nine months ended September 30, 2024. The decrease in gross profit margin was primarily due to lower sales volumes and prices for most of our products across both segments and higher energy and feedstock costs in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

Previous wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $15 million to $448 million in the six months ended June 30, 2025 from $433 million in the six months ended June 30, 2024. This increase was mainly due to higher legal and other consulting costs and higher technology related expenses, partially offset by lower payroll and related benefit costs.

Current wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $28 million to $676 million in the nine months ended September 30, 2025 from $648 million in the nine months ended September 30, 2024. This increase was mainly due to higher legal and other consulting costs and higher technology-related expenses, partially offset by lower payroll and related benefit costs.

Previous wording

Amortization of Intangibles. Amortization expense in the six months ended June 30, 2025 was consistent with the six months ended June 30, 2024.

Current wording

Amortization of Intangibles. Amortization expense in the nine months ended September 30, 2025 was consistent with the nine months ended September 30, 2024.

Previous wording

Restructuring, Transaction and Integration-related Costs. Restructuring, transaction and integration-related costs were $122 million in the six months ended June 30, 2025 compared to $8 million in the six months ended June 30, 2024. The costs in the six months ended June 30, 2025 primarily comprised of $108 million related to the closure of Pernis facility located in the Netherlands and $7 million related to the temporary cessation of the PVC resin unit at the Suzhou Huasu Plastics plant located in China, under the Performance and Essential Materials Segment.

Current wording

Restructuring, Transaction and Integration-related Costs. Restructuring, transaction and integration-related costs were $139 million in the nine months ended September 30, 2025 compared to $83 million in the nine months ended September 30, 2024. The costs in the nine months ended September 30, 2025 primarily consisted of $130 million related to the closure of Pernis facility located in the Netherlands and $9 million related to the cessation of operations of the PVC resin unit at the Suzhou Huasu Plastics plant located in China, under the Performance and Essential Materials Segment.

Previous wording

Interest Expense. Interest expense in the six months ended June 30, 2025 was comparable to the six months ended June 30, 2024.

Current wording

Interest Expense. Interest expense in the nine months ended September 30, 2025 was comparable to the nine months ended September 30, 2024.

Previous wording

Other Income, Net. Other income, net decreased by $48 million to $61 million in the six months ended June 30, 2025 from $109 million in the six months ended June 30, 2024, primarily due to lower interest income resulting from the lower average cash and cash equivalent balances and lower interest rates in the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 and also due to the recognition of higher insurance recoveries in the six months ended June 30, 2024 as compared to the six months ended June 30, 2025.

Current wording

Other Income, Net. Other income, net decreased by $60 million to $93 million in the nine months ended September 30, 2025 from $153 million in the nine months ended September 30, 2024, primarily due to lower interest income resulting from the lower average cash and cash equivalent balances and lower interest rates in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 and also due to the recognition of higher insurance recoveries in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2025.

Previous wording

Income Taxes. The effective income tax rate was (4.4)% for the six months ended June 30, 2025 as compared to 22.7% for the six months ended June 30, 2024. The effective tax rate in the six months ended June 30, 2025 was lower compared to the six months ended June 30, 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, U.S. federal research and development credits available to the Company, state tax benefits and income attributable to noncontrolling interests, partially offset by an increase in reserves for uncertain tax positions and foreign taxes, and the impact of earnings mix across jurisdictions associated with the pre-tax loss for the six months ended June 30, 2025.

Current wording

Income Taxes. The effective income tax rate was (0.4)% for the nine months ended September 30, 2025 as compared to 25.4% for the nine months ended September 30, 2024. The effective tax rate in the nine months ended September 30, 2025 was lower compared to the nine months ended September 30, 2024 primarily due to the non-deductible goodwill impairment charge associated with the North American Chlorovinyls reporting unit, a higher valuation allowance recorded against Westlake Epoxy Netherlands's net operating loss and the impact of earnings mix across jurisdictions associated with the pre-tax loss for the nine months ended September 30, 2025.

Previous wording

Net Sales. Net sales for the Performance and Essential Materials segment decreased by $301 million, or 8%, to $3,643 million in the six months ended June 30, 2025 from $3,944 million in the six months ended June 30, 2024. Average sales prices for the Performance and Essential Materials segment decreased by 1% in the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. Sales volumes for the Performance and Essential Materials segment decreased by 6% in the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to lower polyethylene, caustic soda and PVC resin sales volumes. Lower Performance Materials sales prices were primarily due to lower PVC resin sales prices. Lower Essential Materials sales prices for chlorine was offset by higher caustic soda sales prices.

Current wording

Net Sales. Net sales for the Performance and Essential Materials segment decreased by $573 million, or 10%, to $5,390 million in the nine months ended September 30, 2025 from $5,963 million in the nine months ended September 30, 2024. Average sales prices for the Performance and Essential Materials segment decreased by 3% in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. Sales volumes for the Performance and Essential Materials segment decreased by 6% in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to lower polyethylene, caustic soda and chlorine sales volumes. Lower Performance Materials sales prices were primarily due to lower PVC resin and epoxy resin sales prices. Lower Essential Materials sales prices for chlorine was offset by higher caustic soda sales prices.

Previous wording

Income from Operations. Income from operations for the Performance and Essential Materials segment decreased by $660 million to a loss of $481 million in the six months ended June 30, 2025 from income of $179 million in the six months ended June 30, 2024. This decrease in income from operations in the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, was primarily due to lower sales prices for most of our major products in this segment, particularly chlorine and PVC resin, lower sales volumes for polyethylene, caustic soda and PVC resin, the impact of Petro 1 and other planned turnaround activities and unplanned outages in the six months ended June 30, 2025, and higher natural gas and feedstock costs. This decrease in income from operations was also due to the recognition of charges of $115 million in the quarter ended June 30, 2025 related to the closure of Pernis facility located in the Netherlands and the temporary cessation of the PVC resin unit at the Suzhou Huasu Plastics plant located in China. These decreases were partially offset by higher sales prices for caustic soda.

Current wording

Income from Operations. Income from operations for the Performance and Essential Materials segment decreased by $1,553 million to a loss of $1,383 million in the nine months ended September 30, 2025 from income of $170 million in the nine months ended September 30, 2024. This decrease in income from operations in the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, was due to lower sales prices for most of our major products in this segment, particularly PVC resin, polyethylene, chlorine, lower sales volumes for PVC resin, epoxy resin, polyethylene, caustic soda and chlorine, the impact of Petro 1 and other planned turnaround activities, offset by the impact of fewer unplanned plant outages in the nine months ended September 30, 2025, and higher natural gas and feedstock costs. This decrease in income from operations was also due to the recognition of a North American Chlorovinyls goodwill impairment charge of $727 million in the quarter ended September 30, 2025, the recognition of restructuring charges of $139 million in the nine months ended September 30, 2025 primarily related to the closure of Pernis facility. These decreases were partially offset by higher sales prices for caustic soda.

Previous wording

Net Sales. Net sales for the Housing and Infrastructure Products segment decreased by $34 million, or 3%, to $1,160 million in the second quarter of 2025 from $1,194 million in the second quarter of 2024. Sales volumes for the Housing and Infrastructure Products segment decreased by 2% in the second quarter of 2025 as compared to the second quarter of 2024 primarily due to lower demand for our building products, partially offset by an increase in sales volumes for pipe and fittings. Average sales prices for the Housing and Infrastructure Products segment decreased by 1% in the second quarter of 2025 as compared to the second quarter of 2024, primarily due to lower sales prices for pipe and fittings.

Current wording

Net Sales. Net sales for the Housing and Infrastructure Products segment decreased by $89 million, or 3%, to $3,247 million in the nine months ended September 30, 2025 from $3,336 million in the nine months ended September 30, 2024. Average sales prices for the Housing and Infrastructure Products segment decreased by 2% in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to lower sales prices for pipe and fittings, partially offset by higher PVC compounds sales prices. Sales volumes for the Housing and Infrastructure Products segment decreased by 1% in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 primarily due to lower building products sales volumes, partially offset by higher pipe and fittings sales volumes.

Previous wording

Income from Operations. Income from operations for the Housing and Infrastructure Products segment decreased by $106 million to an income of $370 million in the six months ended June 30, 2025 from income of $476 million in the six months ended June 30, 2024. This decrease in income from operations in the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, was primarily due to lower sales volumes, particularly for building products, and lower sales prices for pipe and fittings, partially offset by higher pipe and fittings sales volumes.

Current wording

Income from Operations. Income from operations for the Housing and Infrastructure Products segment decreased by $157 million to an income of $521 million in the nine months ended September 30, 2025 from income of $678 million in the nine months ended September 30, 2024. This decrease in income from operations in the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, was primarily due to lower sales volumes, particularly for building products, and lower sales prices for pipe and fittings, partially offset by higher pipe and fittings sales volumes and higher PVC compounds sales prices.

Previous wording

CASH FLOW DISCUSSION FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2024

Current wording

CASH FLOW DISCUSSION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

Previous wording

Operating activities provided cash of $58 million in the first six months of 2025 compared to cash provided by operating activities of $406 million in the first six months of 2024. The $348 million decrease in cash flows from operating activities was mainly due to lower prices and demand for most of our products and cash used in connection with the turnaround of the Petro 1 ethylene facility in Lake Charles, partially offset by a favorable change in working capital in the six months ended June 30, 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 $141 million in the first six months of 2025, compared to $453 million of cash used in the first six months of 2024, a favorable change of $312 million. The favorable change in the first six months of 2025 was substantially driven by the higher accounts payable and accrued and other liabilities which were due to the accrual of Pernis facility closure costs, and higher feedstock and energy costs during the six months ended June 30, 2025.

Current wording

Operating activities provided cash of $240 million in the first nine months of 2025 compared to cash provided by operating activities of $880 million in the first nine months of 2024. The $640 million decrease in cash flows from operating activities was mainly due to lower prices and demand for most of our products and cash used in connection with the turnaround of the Petro 1 ethylene facility in Lake Charles, partially offset by a favorable change in working capital in the nine months ended September 30, 2025. The favorable change in the first nine months of 2025 was substantially driven by the higher accrued and other liabilities which were due to the accrual of Pernis facility closure costs partially offset by the cash outflows related to a payment to Triad Hunter, LLC, which was accrued previously in 2023, to resolve litigation in the nine months ended September 30, 2025 and lower inventory levels during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

Previous wording

Net cash used for investing activities in the first six months of 2025 was $726 million as compared to net cash used for investing activities of $495 million in the first six months of 2024. The increase in cash used for investing activities in the first six months of 2025 as compared to the first six months of 2024 was primarily related to the purchase of $192 million of investments comprising corporate bonds and U.S. government debt securities, among others. Capital expenditures were $515 million in the first six months of 2025 as compared to $503 million in the first six months of 2024. Capital expenditures in the first six 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.

Current wording

Net cash used for investing activities in the first nine months of 2025 was $968 million as compared to net cash used for investing activities of $736 million in the first nine months of 2024. The increase in cash used for investing activities in the first nine months of 2025 as compared to the first nine months of 2024 was primarily related to the purchase of $198 million of investments comprising corporate bonds and U.S. government debt securities, among others. Capital expenditures were $754 million in the first nine months of 2025 as compared to $723 million in the first nine months of 2024.

Previous wording

Net cash used for financing activities during the first six months of 2025 was $197 million as compared to net cash used for financing activities of $146 million in the first six months of 2024. The financing activities during the first six months of 2025 included the payment of $136 million of cash dividends, the repurchase of $30 million of our outstanding common stock for treasury and $23 million of cash distributions to noncontrolling interests. The financing activities in the first six months of 2024 included the payment of $130 million of cash dividends and $21 million of cash distributions to noncontrolling interests.

Current wording

Net cash used for financing activities during the first nine months of 2025 was $285 million as compared to net cash used for financing activities of $517 million in the first nine months of 2024. The financing activities during the first nine months of 2025 included the payment of $204 million of cash dividends, the repurchase of $30 million of our outstanding common stock for treasury and $33 million of cash distributions to noncontrolling interests. The financing activities in the first nine months of 2024 included the redemption of $300 million aggregate principal amount of the 0.875% senior notes due 2024, $197 million payment of cash dividends and $31 million of cash distributions to noncontrolling interests.