Westlake Corporation

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Westlake Corporation Second Quarter 2023 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. After the speaker's remarks, you will be invited to participate in a question and answer session. As a reminder, ladies and gentlemen, this conference is being recorded today, August 3rd, 2023. I would now like to turn the call over to today's host, Jeff Hawley, Westlake's Vice President and Treasurer. Sir, you may begin.

Thank you. Good morning, everyone, and welcome to the Westlake Corporation conference call to discuss our second quarter 2023 results. I'm joined today by Albert Chow, our president and CEO, Steve Bender, our executive vice president and chief financial officer, and other members of our management team. During the call, we will refer to our two reporting segments, performance and essential materials, which we refer to as PEM or materials, and housing and infrastructure products, which we refer to as HIP or products. Today's conference call will begin with Albert, who will open with a few comments regarding Westlake's performance. Steve will then discuss our financial and operating results, after which Albert will add a few concluding comments, and we'll open the call up to questions. Today, management is going to discuss certain topics that will contain forward-looking information that is based on management's beliefs as well as assumptions made by and information currently available to management. These forward-looking statements suggest predictions or expectations and thus are subject to risks or uncertainties. These risks and uncertainties are discussed in Westlake's Form 10-K for the year ended December 31st, 2022 and other SEC filings. We encourage you to learn more about these factors that could lead our actual results to differ by reviewing these SEC filings, which are also available on our investor relations website. This morning, Westlake issued a press release with details of our second quarter results. This document is available in the press release section of our website at westlake.com. We have also included an earnings presentation, which can be found in the investor relations section on our website. A replay of today's call will be available beginning today two hours following the conclusion of this call. This replay may be accessed via Westlake's website. Please note that information reported on this call speaks only as of today, August 3rd, 2023, and therefore you're advised that time-sensitive information may no longer be accurate as of the time of any replay. Finally, I would advise you that this conference call is being broadcast live through an internet webcast system that can be accessed on our webpage at westlake.com. Now, I'd like to turn the call over to Albert Chow. Albert?

Thank you, Jeff. Good morning, everyone. We appreciate you joining us to discuss our second quarter 2023 results. For the second quarter of 2023, we reported sales of $3.3 billion, net income of $297 million, an EBITDA of $690 million. In our Penn segment, the continuation of soft industrial and construction activity and unplanned maintenance activities drove sales volumes declines, particularly impacting PVC resin, caustic soda, and epoxy in North America and Europe. The elevated level of unplanned outages resulted in lost sales that impacted operating income by approximately $50 million. While our PEMS segment average selling prices were lower than in the first quarter, we benefited from our strategically located globally advantaged feedstock position in North America, where we saw lower feedstock and fuel costs compared to the first quarter. In our HIP segment, we experienced an increase in sales volumes QUARTER OVER QUARTER WITH THE START OF THE CONSTRUCTION SEASON IN NORTH AMERICA, WITH HOUSING STARTS IN THE SECOND QUARTER AVERAGING 1.4 MILLION UNITS, AND REPAIR AND MODELLING CONTINUING TO GROW. HIP SEGMENT IPEDA MARGIN INCREASED SEQUENTIALLY DUE TO THE 13% VOLUME IMPROVEMENT AND THE RAW MATERIAL COST REDUCTIONS. AND THIS MARGIN REMAINED IN LINE WITH THE RECORD SECOND QUARTER OF 2022 at approximately 22%, reflecting the strength in our branded products and relationships with our customers. While we expect the challenging macro backdrop to continue in the third quarter, we will focus our efforts on operating our assets reliably and reducing costs. To that end, we now expect our cost reduction program to achieve between $75 to $105 million of cost savings in 2023, up from the previous $55 to $105 million target, after we achieved approximately $25 million cost saving in the second quarter and $50 million in the first half of 2023. Overall, our second quarter results reflected the weakness in global manufacturing and industrial activity, along with the impact to sales volumes and margins. from the planned and unplanned outages, and we continue to take a disciplined approach to managing our operations in this volatile economy and advance our long-term strategic priorities. I would now like to turn our call with Steve to provide more detail on our financial results for the second quarter of 2023.