WESTLAKE CORP

Previous wording

Non-Binding Letter of Intent of a PVC and VCM Production Site in Germany

Current wording

Acquisition of PVC and VCM Production Site in Wilhelmshaven, Germany

Previous wording

On April 27, 2026, the Company provided notice of redemption with respect to all of its outstanding 3.60% 2026 Senior Notes at a redemption price equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest to the redemption date, which is May 29, 2026. As of March 31, 2026, $496 million aggregate principal amount of the 3.60% 2026 Senior Notes were outstanding.

Current wording

On May 29, 2026 the Company redeemed all $496 million aggregate principal amount of its outstanding 3.60% 2026 Senior Notes at a price equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest through the redemption date.

Previous wording

In February 2026, a military conflict primarily involving the United States, Israel and Iran commenced in the Middle East. As a result, the global energy, petrochemical and transportation markets have experienced significant volatility and supply constraints with naphtha based producers of petrochemicals in particular facing significantly higher production costs and feedstock supply limitations. Although we do not have operations in the Middle East and the substantial majority of our energy and feedstock requirements are sourced from North America and do not use naphtha-based supply, the ongoing geopolitical conflict in the region may contribute to continued disruptions in energy and shipping routes for an undeterminable period of time, leading to higher costs for feedstocks, energy and logistics services and heightened inflationary pressures. We are continuing to assess the impact of the conflict on our global operations. Please also see our Outlook section below for discussion of potential impacts on our HIP and PEM segments.

Current wording

In February 2026, a military conflict primarily involving the United States, Israel and Iran commenced in the Middle East. As a result, the global energy, petrochemical and transportation markets have experienced significant volatility and supply constraints with naphtha based petrochemical producers in particular facing significantly higher production costs and feedstock supply limitations. Although we do not have operations in the Middle East and the substantial majority of our energy and feedstock requirements are sourced from North America and do not use naphtha-based supply, the ongoing disruptions to global shipping and elevated logistical costs continue to create inflationary pressures across our broader supply-chain. These disruptions may continue for an undeterminable period of time, leading to higher costs for feedstocks and energy and logistics services. We are actively assessing these conditions and their potential impact on our global operations. Please also see our Outlook section below for discussion of potential impacts on our HIP and PEM segments.

Previous wording

Our HIP segment is primarily comprised of residential building products, PVC pipe and fittings, and compound products made from PVC and other polymers. Our sales are affected by the level of new home construction and home repair and remodeling activity, particularly in North America, water infrastructure spending for our pipe and fittings business, as well as the decisions of distributors and dealers on the levels of inventory they carry, their views on product demand, their financial condition and the manner in which they choose to manage inventory risk, and customer decision on product selection based on price, aesthetics, and performance among other characteristics.. Performance of our HIP businesses generally reflects trends of building permits and housing starts in the New Residential Construction Survey by the U.S. Census Bureau and the Repair and Remodeling Index (RRI) provided by the National Association of Home Builders (the "NAHB") among others. We also expect that the preceding historically low level of residential housing construction that has resulted in an undersupply of existing housing may benefit our HIP segment in the medium to long-term. Furthermore, the ongoing geopolitical volatility in the Middle East has impacted the global supply of crude oil and increased crude oil prices, increasing our distribution and certain raw material costs. A delay in our ability to realize price increases may negatively impact our HIP margins in the near future. Additionally, while recent U.S. Federal Reserve actions to cut interest rates have supported an improved outlook for North American housing demand, a prolonged Middle East conflict may create sustained inflationary pressures which may impede further interest rate reductions, or cause interest rates to rise, adversely affecting demand for our products and our margins.

Current wording

Our HIP segment is primarily comprised of residential building products, PVC pipe and fittings, and compound products made from PVC and other polymers. Our sales are affected by the level of new home construction and home repair and remodeling activity, particularly in North America, water infrastructure spending for our pipe and fittings business, as well as the decisions of distributors and dealers on the levels of inventory they carry, their views on product demand, their financial condition and the manner in which they choose to manage inventory risk, and customer decision on product selection based on price, aesthetics, and performance among other characteristics. Performance of our HIP businesses generally reflects the trends of building permits and housing starts in the New Residential Construction Survey by the U.S. Census Bureau and the Repair and Remodeling Index (RRI) provided by the National Association of Home Builders (the "NAHB") among others. We also expect that the preceding historically low level of residential housing construction that has resulted in an undersupply of existing housing may benefit our HIP segment in the medium to long-term. Furthermore, the ongoing geopolitical volatility in the Middle East has impacted the global supply of crude oil and increased crude oil prices, increasing our distribution and certain raw material costs. Additionally, while recent U.S. Federal Reserve actions to cut interest rates have supported an improved outlook for North American housing demand, a prolonged Middle East conflict and other uncertainties may create sustained inflationary pressures which may impede further interest rate reductions, or cause interest rates to rise, adversely affecting demand for our products and our margins.

Previous wording

Our PEM segment manufactures products such as ethylene, PE, chlor-alkali, chlorinated derivative products, ethylene dichloride, VCM and PVC, many of which are used in our integrated vinyls production chain. The chlor-alkali and petrochemical industries exhibit cyclical commodity characteristics, and margins are influenced by changes in the balance between global supply and demand and the resulting operating rates, the level of general economic activity, turnaround activities and the price of raw materials. We have continued to experience lower prices, increased supply and weaker demand for most of our PEM products globally since 2022. However, the current geopolitical volatility in the Middle East has created feedstock shortages and higher production costs for naphtha-based manufacturers in Asia, driving up global prices for performance and essential materials products. Our North American operations have been less affected by the conflict and hold a competitive advantage due to lower natural gas and power costs, creating opportunities to increase price and supply to domestic and global markets. However, we remain cautious of headwinds impacting our operations in Europe and Asia, including slower economic growth in China, margin compression, and trade disruptions from tariffs. Significant uncertainties remain regarding the duration of the Middle East conflict, the subsequent recovery period, return of supply-chain stability in the Middle East and potential broader demand destruction due to inflationary pressures.

Current wording

Our PEM segment manufactures products such as ethylene, PE, chlor-alkali, chlorinated derivative products, ethylene dichloride, VCM and PVC, many of which are used in our integrated vinyls production chain. The chlor-alkali and petrochemical industries exhibit cyclical commodity characteristics, and margins are influenced by changes in the balance between global supply and demand and the resulting operating rates, the level of general economic activity, turnaround activities and the price of raw materials. We have continued to experience lower prices, increased supply and weaker demand for most of our PEM products globally since 2022. However, the current geopolitical volatility in the Middle East due to the conflict that commenced in February 2026 created feedstock shortages and higher production costs for naphtha-based manufacturers in Asia, driving up global prices for performance and essential materials products. Our North American operations have been less affected by the conflict and hold a competitive advantage due to lower natural gas and power costs, creating opportunities to increase price and supply to domestic and global markets. However, we remain cautious of headwinds impacting our operations in Europe and Asia, including slower economic growth in China, margin compression, and trade disruptions from tariffs. Significant uncertainties remain regarding the duration of the war in Ukraine, the resolution of the Middle East conflict, the subsequent recovery period, return of supply-chain stability in the Middle East and potential broader demand destruction due to inflationary pressures.

Previous wording

The body of accounting principles generally accepted in the United States is commonly referred to as "GAAP." For this purpose, a non-GAAP financial measure is generally defined by the Securities and Exchange Commission ("SEC") as one that purports to measure historical or future financial performance, financial position or cash flows that (1) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of operations, balance sheet or statement of cash flows (or equivalent statements) of the registrant; or (2) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. In this report, we disclose non-GAAP financial measures, primarily earnings before interest, taxes, depreciation and amortization ("EBITDA") and Free Cash Flow. We define EBITDA as net loss before interest expense, income taxes, depreciation and amortization. We define Free Cash Flow as net cash used for operating activities less additions to property, plant and equipment. The non-GAAP financial measures described in this Form 10-Q are not substitutes for the GAAP measures of earnings and cash flows.

Current wording

The body of accounting principles generally accepted in the United States is commonly referred to as "GAAP." For this purpose, a non-GAAP financial measure is generally defined by the Securities and Exchange Commission ("SEC") as one that purports to measure historical or future financial performance, financial position or cash flows that (1) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of operations, balance sheet or statement of cash flows (or equivalent statements) of the registrant; or (2) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. In this report, we disclose non-GAAP financial measures, primarily earnings before interest, taxes, depreciation and amortization ("EBITDA") and Free Cash Flow. We define EBITDA as net income (loss) before interest expense, income taxes, depreciation and amortization. We define Free Cash Flow as net cash provided by operating activities less additions to property, plant and equipment. The non-GAAP financial measures described in this Form 10-Q are not substitutes for the GAAP measures of earnings and cash flows.

Previous wording

EBITDA and Free Cash Flow are not substitutes for the GAAP measures of net loss, loss from operations and net cash used for operating activities and are not necessarily measures of our ability to fund our cash needs. In addition, companies calculate EBITDA and Free Cash Flow differently and, therefore, EBITDA and Free Cash Flow as presented for us may not be comparable to EBITDA and Free Cash Flow reported by other companies. EBITDA has material limitations as a performance measure because it excludes interest expense, depreciation and amortization and income taxes. Free Cash Flow has material limitations as a performance measure because it only considers net cash used for operating activities, and not net loss or loss from operations. For instance, it applies to the entire cost of capital expenditure in the period in which the property or equipment is acquired, rather than spreading it over several periods as is the case with net loss and loss from operations.

Current wording

EBITDA and Free Cash Flow are not substitutes for the GAAP measures of net income (loss), income (loss) from operations and net cash provided by operating activities and are not necessarily measures of our ability to fund our cash needs. In addition, companies calculate EBITDA and Free Cash Flow differently and, therefore, EBITDA and Free Cash Flow as presented for us may not be comparable to EBITDA and Free Cash Flow reported by other companies. EBITDA has material limitations as a performance measure because it excludes interest expense, depreciation and amortization and income taxes. Free Cash Flow has material limitations as a performance measure because it only considers net cash provided by operating activities, and not net income (loss) or income (loss) from operations. For instance, it applies to the entire cost of capital expenditure in the period in which the property or equipment is acquired, rather than spreading it over several periods as is the case with net loss and loss from operations.

Previous wording

Reconciliations of EBITDA to net loss, loss from operations and net cash used for operating activities, and Free Cash Flow to net cash used for operating activities are included in the "Results of Operations" section below.

Current wording

Reconciliations of EBITDA to net income (loss), income (loss) from operations and net cash provided by operating activities, and Free Cash Flow to net cash provided by operating activities are included in the "Results of Operations" section below.

Previous wording

The table below and descriptions that follow represent the consolidated results of operations of the Company for thethree months ended March 31, 2026 and 2025.

Current 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, 2026 and 2025.

Previous wording

(1)See above for discussions on non-GAAP financial measures. See "Reconciliation of EBITDA to Net Loss, Loss from Operations and Net Cash Used for Operating Activities" below.

Current wording

(1)See above for discussions on non-GAAP financial measures. See "Reconciliation of EBITDA to Net Income (Loss), Income (Loss) from Operations and Net Cash Provided by Operating Activities" below.

Previous wording

(2)See above for discussions on non-GAAP financial measures. See "Reconciliation of Free Cash Flow to Net Cash Used for Operating Activities" below.

Current wording

(2)See above for discussions on non-GAAP financial measures. See "Reconciliation of Free Cash Flow to Net Cash Provided by Operating Activities" below.

Previous wording

The following table presents the reconciliation of EBITDA to net loss, loss from operations and net cash used for operating activities, the most directly comparable GAAP financial measures, for each of the periods indicated.

Current wording

The following table presents the reconciliation of EBITDA to net income (loss), income (loss) from operations and net cash provided by operating activities, the most directly comparable GAAP financial measures, for each of the periods indicated.

Previous wording

The following table presents the reconciliation of Free Cash Flow to net cash used for operating activities, the most directly comparable GAAP financial measure, for each of the periods indicated.

Current wording

The following table presents the reconciliation of Free Cash Flow to net cash provided by operating activities, the most directly comparable GAAP financial measure, for each of the periods indicated.

Previous wording

For the quarter ended March 31, 2026, net loss attributable to Westlake Corporation was $169 million, or $1.31 per diluted share, on net sales of $2,652 million. This represents an increase in net loss attributable to Westlake Corporation of $129 million, or $1.00 per diluted share, compared to the quarter ended March 31, 2025 net loss attributable to Westlake Corporation of $40 million, or $0.31 per diluted share, on net sales of $2,846 million. Loss from operations was $172 million for the quarter ended March 31, 2026, as compared to loss from operations of $32 million for the quarter ended March 31, 2025, an increase of $140 million. The increase in net loss and loss from operations was primarily due to lower sales volumes for PVC resin, caustic soda, chlorine and building products, lower sales prices for PVC resin, polyethylene and pipe and fittings, and higher fuel costs in the quarter ended March 31, 2026 as compared to March 31, 2025. The increase in net loss and loss from operations in the quarter ended March 31, 2026 was also due to the recognition of a litigation charge of $67 million related to the settlement of certain PVC pipe antitrust litigation. These decreases were partially offset by higher polyethylene and pipe and fittings sales volumes and lower ethane feedstock costs. The net loss attributable to Westlake Corporation was also affected by higher interest expense in the quarter ended March 31, 2026, which resulted from a higher average debt balance as compared to the quarter ended March 31, 2025.

Current wording

For the second quarter ended June 30, 2026, net income attributable to Westlake Corporation was $260 million, or $2.01 per diluted share, on net sales of $3,271 million. This represents an increase in net income attributable to Westlake Corporation of $402 million, or $3.12 per diluted share, compared to the second quarter ended June 30, 2025, net loss attributable to Westlake Corporation of $142 million, or $1.11 per diluted share, on net sales of $2,953 million. Income from operations was $364 million for the quarter ended June 30, 2026, as compared to loss from operations of $109 million for the quarter ended June 30, 2025, an increase of $473 million. The increase in net income and income from operations was primarily due to higher sales prices for polyethylene and PVC resin, higher sales volumes for pipe and fittings, caustic soda and epoxy resin, and lower fuel and ethane feedstock costs. Additionally, the increase in net income and income from operations included contribution from the global compounding solutions businesses of the ACI/Perplastic Group (collectively, "ACI"), which was acquired in January 2026. These positive contributions were partially offset by lower pipe and fittings sales prices in the second quarter ended June 30, 2026, as compared to the second quarter ended June 30, 2025. The net income attributable to Westlake Corporation was also negatively affected by higher interest expense in the second quarter ended June 30, 2026, which resulted from a higher average debt balance as compared to the second quarter ended June 30, 2025. The net income and income from operations of the comparable second quarter ended June 30, 2025 were negatively impacted by the recognition of charges of $115 million, related to the closure of the Pernis, Netherlands facility and the closure of operations of the PVC resin unit at the Suzhou Huasu Plastics plant in China.

Previous wording

Sales volumes decreased by 4% in the first quarter of 2026 as compared to the first quarter of 2025, primarily due to lower sales volumes for PVC resin, caustic soda, chlorine, styrene and building products, which were partially offset by higher polyethylene, pipe and fittings and ACI related compounds sales volumes. Lower PVC resin and styrene sales volumes were due to certain North American plant closures in December 2025 as part of our footprint optimization actions. Average sales prices for the first quarter of 2026 decreased by 3% as compared to the first quarter of 2025, primarily as a result of lower sales prices for PVC resin, polyethylene and pipe and fittings.

Current wording

Net sales increased by $318 million in the second quarter of 2026 compared to the second quarter of 2025. Average sales prices for the second quarter of 2026 increased by 8% as compared to the second quarter of 2025, primarily because of higher sales prices for polyethylene and PVC resin, partially offset by lower pipe and fittings sales prices. Sales volumes increased by 3% in the second quarter of 2026 as compared to the second quarter of 2025, primarily due to higher sales volumes for pipe and fittings, caustic soda, and epoxy resin, and ACI related compounds sales volumes. These increases in sales volumes were partially offset by lower PVC resin and styrene sales volumes primarily due to certain North American vinyl plants and styrene plant closures in December 2025 as part of our footprint optimization actions.

Previous wording

Gross Profit. The decrease in gross profit margin in the first quarter of 2026 as compared to the first quarter of 2025 was primarily due to lower sales volumes and prices for many of our major products across both segments, higher fuel costs and the recognition of a litigation charge of $67 million related to the settlement of certain PVC pipe antitrust litigation in the first quarter of 2026, as compared to the first quarter of 2025. These decreases were partially offset by lower ethane feedstock costs.

Current wording

The increase in gross profit margin in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 was primarily due to higher sales prices for polyethylene, PVC resin, caustic soda and epoxy resin, and higher sales volumes for pipe and fittings, and polyethylene, ACI related compounds sales volumes, and lower ethane feedstock costs. These increases were negatively impacted by higher fuel costs, the recognition of a litigation charge of $67 million related to the settlement of certain PVC pipe antitrust litigation in March 2026, lower pipe and fittings sales prices and lower sales volumes for several of our products.

Previous wording

Selling, General and Administrative Expenses. The increase in selling, general and administrative expenses in the first quarter of 2026 as compared to the first quarter of 2025 was primarily due to higher employee compensation, legal and other consulting costs and higher technology-related expenses, partially offset by lower charges related to allowance for credit losses.

Current wording

The increase in selling, general and administrative expenses in the second quarter of 2026 compared with the second quarter of 2025 and in the six months ended June 30, 2026 compared with the six months ended June 30, 2025, were primarily due to higher employee compensation, legal and other consulting and technology-related expenses. The higher selling, general and administrative expenses were also partially due to ACI related expenses.

Previous wording

Restructuring, Transaction and Integration-related Costs. Restructuring, transaction and integration-related costs in the first quarter of 2026 primarily consisted of facility closure costs, which are recognized over time, related to the closures of certain North American chlorovinyls facilities, the styrene facility, and the Pernis, Netherlands facility. Restructuring, transaction and integration-related costs in the first quarter of 2025 primarily consisted of facility closure costs associated with the Pernis facility.

Current wording

Restructuring, transaction and integration-related costs in the six months ended June 30, 2026, primarily consisted of facility closure costs, which are recognized over time, related to the closures of certain North American chlorovinyls facilities, the styrene facility and the Pernis, Netherlands facility. The restructuring, transaction and integration-related costs in the six months ended June 30, 2025, primarily comprised of $108 million related to the closure of the Pernis facility located in the Netherlands and $7 million related to the closure of the PVC resin unit at the Suzhou Huasu Plastics plant located in China.

Previous wording

Interest Expense. Interest expense in the first quarter of 2026 was higher compared to the first quarter of 2025 due to a higher average debt balance as a result of the issuance of $600 million aggregate principal amount of 5.550% senior notes due 2035 and $600 million aggregate principal amount of 6.375% senior notes due 2055 in November 2025.

Current wording

Interest expense in the second quarter of 2026 as compared to the second quarter of 2025, and in the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, was higher due to a higher average debt balance as a result of the issuance of $600 million aggregate principal amount of 5.550% senior notes due 2035 and $600 million aggregate principal amount of 6.375% senior notes due 2055 in November 2025. The impact of these debt increases was partially offset by the repurchase of $254 million aggregate principal amount of the outstanding 3.60% 2026 Senior Notes pursuant to a tender offer in November 2025 and the redemption of $496 million aggregate principal amount of the remaining outstanding 3.60% 2026 Senior Notes in May 2026.

Previous wording

Other Income, Net. Other income, net in the first quarter of 2026 was consistent with the first quarter of 2025. Other income, net, primarily comprised of interest income.

Current wording

Other income, net in the second quarter of 2026 was consistent with the second quarter of 2025 and in the six months ended June 30, 2026 was consistent with the six months ended June 30, 2025. Other income, net, for all the periods presented primarily comprised of interest income.

Previous wording

Income Taxes. The effective tax rate in the first quarter of 2026 was higher compared to the first quarter of 2025 primarily due to a higher valuation allowance recorded against Westlake Epoxy Netherlands's net operating loss in the first quarter of 2025.

Current wording

The effective tax rates were higher in the second quarter of 2026 compared to the second quarter of 2025 and in the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily due to a higher valuation allowance recorded against Westlake Epoxy Netherlands's net operating loss in the second quarter of 2025 and in the six months ended June 30, 2025 and higher state taxes in the second quarter of 2026 and in the six months ended June 30, 2026.

Previous wording

Net Sales. Average sales prices for the HIP segment decreased by 2% in the first quarter of 2026 as compared to the first quarter of 2025, primarily due to lower sales prices for pipe and fittings. Total sales volumes for the HIP segment increased by 2% in the first quarter of 2026 as compared to the first quarter of 2025, due to higher pipe and fittings and compounds sales volumes, partially offset by lower building products sales volumes. Lower sales of housing products in the first quarter of 2026 was primarily due to lower sales volumes for our roofing products. Higher sales of infrastructure products in the first quarter of 2026 was largely attributable to compounds sold by ACI, which was acquired in the first quarter of 2026.

Current wording

Net sales for the HIP segment increased by $92 million in the second quarter of 2026 compared to the second quarter of 2025. Total sales volumes for the HIP segment increased by 10% in the second quarter of 2026 as compared to the second quarter of 2025, due to higher pipe and fittings and ACI compounds sales volumes. Average sales prices for the HIP segment decreased by 3% in the second quarter of 2026 as compared to the second quarter of 2025, primarily due to lower sales prices for pipe and fittings. Higher sales of infrastructure products in the second quarter of 2026 were largely attributable to compounds sold by ACI, which was acquired in January 2026.

Previous wording

Income from Operations. The decrease in income from operations in the first quarter of 2026, as compared to the first quarter of 2025, was primarily due to lower sales prices for pipe and fittings and lower sales volumes for building products. The HIP segment performance was also negatively impacted by the recognition of a litigation charge of $67 million related to PVC pipe antitrust litigation settlement for certain plaintiffs in the first quarter of 2026. These decreases were partially offset by higher pipe and fittings sales volumes.

Current wording

The decrease in income from operations for the HIP segment in the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, was primarily due to lower sales prices for pipe and fittings and lower sales volumes for building products. The HIP segment performance was also negatively impacted by the recognition of a litigation charge of $67 million related to PVC pipe antitrust litigation settlement for certain plaintiffs in the second quarter of 2026. The impact of these decreases was partially offset by higher pipe and fittings and ACI related compounds sales volumes.

Previous wording

Net Sales. Sales volume for the PEM segment decreased by 8% in the first quarter of 2026 as compared to the first quarter of 2025, due to lower PVC resin, caustic soda, chlorine and styrene sales volumes. Average sales prices for the PEM segment decreased by 3% in the first quarter of 2026 as compared to the first quarter of 2025, primarily due to lower PVC resin and polyethylene sales prices. The lower Performance Materials sales were primarily due to lower PVC resin sales prices and closure of certain North American vinyl plants in December 2025. The lower Essential Materials sales were primarily due to lower caustic soda and chlorine sales and the closure of the styrene plant in December 2025.

Current wording

Net sales for the PEM segment increased by $35 million in the six months ended June 30, 2026 compared to the six months ended June 30, 2025. Average sales prices for the PEM segment increased by 6% in the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, primarily due to higher polyethylene, PVC resin, caustic soda and epoxy resin sales prices. Sales volume for the PEM segment decreased by 5% in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, due to lower PVC resin, caustic soda, chlorine and styrene sales volumes. The higher Performance Materials sales were primarily due to higher polyethylene and epoxy resin sales, partially offset by lower PVC resin sales resulting from the closure of certain North American vinyl plants in December 2025. The lower Essential Materials sales were primarily due to lower chlorine sales and the closure of the styrene plant in December 2025.

Previous wording

Loss from Operations. The higher loss from operations for the PEM segment by $48 million was due to lower sales volumes for PVC resin, caustic soda and chlorine, lower sales prices for PVC resin and polyethylene, and higher fuel costs in the first quarter of 2026 as compared to the first quarter of 2025. These decreases were partially offset by margin benefits resulting from certain plant closures in 2025 as part of our footprint optimization actions and lower ethane feedstock costs in the first quarter of 2026 as compared to the first quarter of 2025.

Current wording

The decrease in loss from operations for the PEM segment by $455 million was primarily due to higher sales prices for polyethylene, PVC resin, caustic soda and epoxy resin, and higher sales volumes for polyethylene and lower ethane feedstock costs. These decreases were partially offset by higher fuel costs in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

Previous wording

CASH FLOW DISCUSSION FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025

Current wording

CASH FLOW DISCUSSION FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025

Previous wording

The $17 million unfavorable change in net cash flows from operating activities in the first three months of 2026, as compared to thefirst three months of 2025, was mainly due to lower prices and demand for most of our products and unfavorable changes in working capital, offset by a favorable change attributable to the significant cash outflow in connection with the Petro 1 ethylene facility turnaround in the first three months of 2025. The unfavorable change in working capital in the first three months of 2026 was substantially driven by the lower accounts payable balances primarily associated with plant closures in 2025, partially offset by lower inventory levels during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, and higher accrued and other liabilities as a result of the accrual of $67 million relating to the settlement of certain PVC pipe antitrust litigation, as discussed under Recent Developments above, in the three months ended March 31, 2026.

Current wording

The $166 million favorable change in net cash flows from operating activities in the first six months of 2026, as compared to the first six months of 2025, was mainly due to higher income, as discussed under Results of Operations above, and a favorable change attributable to the significant cash outflow in connection with the Petro 1 ethylene facility turnaround in the first six months of 2025, partially offset by unfavorable changes in working capital. The unfavorable changes in working capital in the first six months of 2026 were substantially driven by the higher accounts receivables and payable balances primarily associated with the increased operating activities during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

Previous wording

Net cash used for investing activities in the first three months of 2026, as compared to the first three months of 2025, decreased by $163 million, which was primarily due to our initial investments in available-for-sale securities of $183 million in the first three months of 2025. Additionally, capital expenditures were lower by $39 million, from $248 million in the first three months of 2025 to $209 million in the first three months of 2026. These decreases were offset by the payment of $62 million, net of cash acquired of $18 million, in connection to the acquisition of ACI in January 2026.

Current wording

Net cash used for investing activities in the first six months of 2026, as compared to the first six months of 2025, decreased by $135 million. The decrease was primarily due to lower purchases of available-for-sale securities in thefirst six months of 2026 as compared to our initial investments of $192 million in the first six months of 2025. Additionally, our capital expenditures were lower by $99 million, from $515 million in the first six months of 2025 to $416 million in the first six months of 2026. These decreases in cash outflows were partially offset by the payment of $171 million, net of cash acquired of $18 million, for the ACI and Wilhelmshaven plant acquisitions in the six months of June 30, 2026.

Previous wording

Net cash used for financing activities during the first three months of 2026 as compared to first three months of 2025 decreased by $33 million, which was primarily due to the repurchase of common stock for treasury in the 2025 comparative period. The financing activities during the first three months of 2026 included the payment of $68 million of cash dividends and $10 million of cash distributions to noncontrolling interests. The financing activities in the first three months of 2025 included the repurchase of $30 million of our outstanding common stock for treasury, $68 million payment of cash dividends and $10 million of cash distributions to noncontrolling interests.

Current wording

Net cash used for financing activities during the first six months of 2026 as compared to first six months of 2025 increased by $507 million, which was primarily due to the redemption of $496 million aggregate principal amount of outstanding 3.60% 2026 Senior Notes in May 2026. Other financing activities in the first six months of 2026 included the payment of $137 million of cash dividends, $23 million of cash distributions to noncontrolling interests and the repurchase of $30 million of our outstanding common stock for treasury. The financing activities in the first six months of 2025 included $136 million payment of cash dividends, $23 million of cash distributions to noncontrolling interests and the repurchase of $30 million of our outstanding common stock for treasury.

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. There were repurchases of 1,400 common stock under the 2014 Program during the three months ended March 31, 2026. As of March 31, 2026, we had repurchased 9,929,683 shares of our common stock for an aggregate purchase price of approximately $697 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.

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. There were repurchases of 355,721 common stock under the 2014 Program during the three months ended June 30, 2026, for an aggregate purchase price of $30 million under the 2014 Program. As of June 30, 2026, we had repurchased 10,285,404 shares of our common stock for an aggregate purchase price of approximately $727 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

As of March 31, 2026, our cash and cash equivalents totaled $2,271 million.

Current wording

As of June 30, 2026, our cash and cash equivalents totaled $1,643 million.

Previous wording

As of March 31, 2026, our available-for-sale securities totaled $205 million. See Note 3 "Financial Instruments" to the unaudited consolidated financial statements appearing elsewhere in this Form 10-Q for a discussion of our available-for-sale securities.

Current wording

As of June 30, 2026, our available-for-sale securities totaled $209 million. See Note 3 "Financial Instruments" to the unaudited consolidated financial statements appearing elsewhere in this Form 10-Q for a discussion of our available-for-sale securities.

Previous wording

In addition to our cash and cash equivalents, our credit agreement is available to provide liquidity as needed, as described under "Debt" below.

Current wording

In addition to our cash and cash equivalents and available-for-sales securities, our credit agreement is available to provide liquidity as needed, as described under "Debt" below.

Previous wording

As of March 31, 2026, the carrying value of our indebtedness totaled $5,570 million. See Note 8 "Long-Term Debt" to the unaudited consolidated financial statements appearing elsewhere in this Form 10-Q for more information on our long-term indebtedness, credit agreements and defined terms used in this section.

Current wording

As of June 30, 2026, the carrying value of our indebtedness totaled $5,067 million. See Note 8 "Long-Term Debt" to the unaudited consolidated financial statements appearing elsewhere in this Form 10-Q for more information on our long-term indebtedness, credit agreements and defined terms used in this section.

Previous wording

On April 27, 2026, the Company provided notice of redemption with respect to all $496 million aggregate principal amount of its outstanding 3.60% 2026 Senior Notes at a redemption price equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest to the redemption date, which is May 9, 2026.

Current wording

On May 29, 2026, the Company redeemed all $496 million aggregate principal amount of its outstanding 3.60% 2026 Senior Notes at a redemption price equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest through the redemption date.

Previous wording

The holders of the 3.60% 2026 Senior Notes, the 1.625% 2029 Senior Notes, the 3.375% 2030 Senior Notes, the 3.50% 2032 tax-exempt GO Zone Refunding Senior Notes, the 5.550% 2035 Senior Notes, the 2.875% 2041 Senior Notes, the 5.00% 2046 Senior Notes, the 4.375% 2047 Senior Notes, the 3.125% 2051 Senior Notes, the 6.375% 2055 Senior Notes and the 3.375% 2061 Senior Notes may require us to repurchase the notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest to, but not including, the date of repurchase, upon the occurrence of both a "change of control" and, within 60 days of such change of control, a "below investment grade rating event" (as such terms are defined in the respective indentures governing these notes).

Current wording

The holders of the 1.625% 2029 Senior Notes, the 3.375% 2030 Senior Notes, the 3.50% 2032 tax-exempt GO Zone Refunding Senior Notes, the 5.550% 2035 Senior Notes, the 2.875% 2041 Senior Notes, the 5.00% 2046 Senior Notes, the 4.375% 2047 Senior Notes, the 3.125% 2051 Senior Notes, the 6.375% 2055 Senior Notes and the 3.375% 2061 Senior Notes may require us to repurchase the notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest to, but not including, the date of repurchase, upon the occurrence of both a "change of control" and, within 60 days of such change of control, a "below investment grade rating event" (as such terms are defined in the respective indentures governing these notes).

Previous wording

The indenture governing the 3.60% 2026 Senior Notes, the 1.625% 2029 Senior Notes, the 3.375% 2030 Senior Notes, the 3.50% 2032 tax-exempt GO Zone Refunding Senior Notes, the 5.550% 2035 Senior Notes, the 2.875% 2041 Senior Notes, the 5.00% 2046 Senior Notes, the 4.375% 2047 Senior Notes, the 3.125% 2051 Senior Notes, the 6.375% 2055 Senior Notes and the 3.375% 2061 Senior Notes contains customary events of default and covenants that, among other things and subject to certain exceptions, restrict us and certain of our subsidiaries' ability to (1) incur certain secured indebtedness, (2) engage in certain sale and leaseback transactions and (3) consolidate, merge or transfer all or substantially all of our assets.

Current wording

The indenture governing the 1.625% 2029 Senior Notes, the 3.375% 2030 Senior Notes, the 3.50% 2032 tax-exempt GO Zone Refunding Senior Notes, the 5.550% 2035 Senior Notes, the 2.875% 2041 Senior Notes, the 5.00% 2046 Senior Notes, the 4.375% 2047 Senior Notes, the 3.125% 2051 Senior Notes, the 6.375% 2055 Senior Notes and the 3.375% 2061 Senior Notes contains customary events of default and covenants that, among other things and subject to certain exceptions, restrict us and certain of our subsidiaries' ability to (1) incur certain secured indebtedness, (2) engage in certain sale and leaseback transactions and (3) consolidate, merge or transfer all or substantially all of our assets.