Westlake Corporation

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Westlake Corporation first quarter 2024 earnings conference call. During the presentation, all participants will be in listen-only mode. After the speaker's remarks, you'll be invited to participate in a question and answer session. As a reminder, ladies and gentlemen, this conference is being recorded today, May 1st, 2024. I would now like to turn the call over to today's host, John Zeller, 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 first quarter 2024 results. I am 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 will open the call up to questions. As a reminder, during the fourth quarter of 2023, we recorded a non-cash impairment charge of $475 million related to the company's epoxy business, as well as a $150 million charge to fully resolve certain liability claims. We refer to these two charges as the identified items in our earnings release and on this conference call. References to income from operations, EBITDA, net income, and earnings per share on this call exclude the financial impact of the identified items. As such, comments made on this call will be in regard to our underlying business results using non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to GAAP financial measures is provided in our earnings release, which is available in the investor relations section of our website. 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 31, 2023 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 first 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, May 1st, 2024, 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 also be accessed on our webpage at westlake.com. Now I'd like to turn the call over to Albert Chow. Albert?

Thank you, John. Good morning, everyone. We appreciate you joining us to discuss our first quarter 2024 results. For the first quarter of 2024, we reported net sales of $3 billion EBITDA of $546 million, and net income of $174 million, or $1.34 per share. Each was an improvement from our fourth quarter of 2023 results, as we benefited from higher sales volume and lower feedstock, fuel, and power costs. Our results reflected modest improvement from the stocking activity that occurred throughout 2023, as we saw higher sales volumes and pricing in many of our products began to improve. Our HIP segment performed exceptionally well, generating record first quarter EBITDA and margins while providing stability to our overall profitability and earnings within an asset-light, cash-generative business model. HIP's sales volume grew an impressive 14% year over year, as our leading positions enabled us to capitalize on resilient North American residential construction and infrastructure activity. This solid sales volume growth, combined with lower material costs and favorable sales mix, drove HIP's EBITDA margin to 25% in the first quarter of 2024, up from 20% in the prior year period. While our HIP segment continued to perform well, margins and earnings in our PEM segment reflected the weak global economic conditions. For the first quarter of 2024, our PEM segment reported lower net sales and margins when compared to the first quarter of 2023. but we are encouraged by the sequential improvement in these metrics when compared to the fourth quarter of 2023. The sequential improvement in PEN volumes from the fourth quarter of 2023 reflects demand beginning to recover and an end to the distorting activities we experienced throughout 2023. With this improvement in demand, We are also seeing some pricing trends improve as we enter the second quarter. Meanwhile, the competitive advantage provided by our low cost feedstock energy positions in the U.S. Gulf Coast expanded during the first quarter of 2024 due to both higher global oil prices and lower U.S. feedstock and power prices, which positioned us well to compete in export markets. At the same time, we are making progress on our cost reduction actions. And in the first quarter of 2024, we achieved approximately $35 million towards our previously communicated $125 to $150 million of targeted 2024 cost savings across the company, with a focus on improving the global competitiveness of our epoxy and European operations. While we are confident in our ability to reduce our costs to improve our competitiveness, our epoxy business continued to be pressured by Asian export volumes priced below market-based production costs. As a result, on April 3rd, as a member of the U.S. Epoxy Resin Producers Ad Hoc Coalition, we participated in filing petitions with the US International Trade Commission and the US Department of Commerce requesting the initiation of anti-dumping and countervailing duty investigations regarding imports of certain epoxy resins from five Asian countries. We remain proponents of the free and fair trade of goods on a global basis. but we also remain committed to working with trade groups such as the US epoxy resin producers ad hoc coalition to use all the tools at our disposal to ensure a fair and level playing field in all the geographies in which we operate. Overall, I'm pleased with the progress that we are making to improve our position, our portfolio of businesses and create value for shareholders. I would now like to turn our call over to Steve to provide more detail on our financial results for the first quarter of 2024.