Westlake Corporation

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Westlake Corporation third 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, November 2, 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, Maria. Good morning, everyone, and welcome to the Westlake Corporation conference call to discuss our third 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 disclosed in Westlake's Forum 10-K for the year ended December 31, 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 third 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 of that 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, November 2, 2023. And therefore, you are 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 would like to turn the call over to Albert Chow. Albert? Thank you, Jeff. Good morning, everyone.

We appreciate you joining us to discuss our third quarter 2023 results. For the third quarter of 2023, we reported sales of $3.1 billion, net income of $285 million, and EBITDA of $682 million, including record HIP segment EBITDA of $327 million. Our HIP segment benefited from resilient North American housing and infrastructure construction activities, while higher operating rates in our PEMS segment drove sequential volume growth, despite generally lower average selling prices. The strength of our business portfolio was highlighted by the quarterly earnings achieved by our HIP segment, where EBITDA exceeded the segment's previous record set in the second quarter of 2022 during a much stronger housing and overall economic environment. HIP segment EBITDA margin of 29% was also a record driven by our strong brands and disciplined pricing in a period of lower material costs as well as solid progress in our cost-saving initiatives. The EBITDA generated in our HIP segment typically comes from with lower capital requirements than in our PEN segment and converts to cash flow generation at a higher rate, which is an additional benefit of our vertical integration and downstream diversification strategy. We'll have more to say about our HIP results and outlook later in the call, but I want to congratulate all of our HIP employees on their record performance. Overall, our third quarter results reflected the advantages of our portfolio diversification. While our patent businesses experienced pricing pressure and margin compression, our housing and infrastructure businesses delivered significant cost and earnings improvement. As a result, Westlake EBITDA margin of 22% was consistent with our second quarter margin of 21% and our prior year margin of 20%, demonstrating the earnings and cash flow stability of our strategy to be a vertically integrated performance and essential materials producer, combined with our value-added portfolio of leading offerings for housing and infrastructure products. Our consistent focus on cash flow generation enabled Westlake to deliver $696 million in cash flow from operations in the third quarter and $1.8 billion year to date. The solid cash flow generation, the strength in the business, and our confidence in the company's future allowed us to increase our dividend by 40% in August and to return approximately $180 million to shareholders since January. I would now like to turn our call to Steve to provide more detail on our financial results for the third quarter of 2023.