Westlake Corporation

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Westlake Corporation first quarter 2025 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, May 2, 2025. I would now like to turn the call over to your host today, 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 2025 results. I'm joined today by Albert Chow, our executive chairman, Jean-Marc Gilson, 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 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 Jean-Marc, who will open with a few comments regarding Westlake's performance. Steve will then discuss our financial and operating results, after which Jean-Marc will add a few concluding comments, and we will open up the call 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 31, 2024, 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 2, 2025, 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 web page at westlake.com. Now I'd like to turn the call over to Jean-Marc Gilson. Jean-Marc?

Thank you, John, and good morning, everyone. We appreciate you joining us to discuss our first quarter 2025 results. For the first quarter of 2025, we reported EBITDA of $288 million on net sales of $2.8 billion. As has been the case in recent quarters, Westlake benefited from the diversity of our businesses and our low-cost, highly integrated business model during the first quarter of 2025. Our HIP segment performed well despite winter storms slowing home constructions in certain parts of the U.S. and an uptick in mortgage interest rates that slowed sales of completed homes by the nation's large builders, both of which weighed on our sales of our products in the quarter. The broad portfolio and expensive footprint of our HIP segment with its solid 20% EBITDA margin and asset-light cash generative business model partially offset the first quarter headwinds that we experienced in our PEM segment. Our PEM segment results reflected a confluence of events converging to deliver results below our expectations. Specifically, a strong run-up in feedstock and energy prices increased PEMS costs by approximately $100 million year over year, while at the same time, we undertook two planned turnarounds and experienced unplanned outages that impacted our EBITDA by approximately $80 million. This confluence of events resulted in extraordinary margin compressions, which drove PEMS EBITDA to be $180 million lower than the first quarter of 2024. Global demand remains well below historical levels, and recent disruptions from tariffs have weighted on global growth. While we navigate the uncertain macroeconomic environment, we are taking immediate and targeted actions to adjust to the business conditions, to improve profitability and grow the business. First, we are focused on right-sizing our operations for the current economic realities. On this front, during the first quarter, we continue to make progress with optimizing our manufacturing footprint including taking the actions in our epoxy business that we announced last fall to drive improvements in our costs and earnings in the coming months. Charges for these actions were accrued in 2024, and we are continuing to assess our asset portfolio to improve our financial performance. Second, we are raising our cost reduction target for 2025 by $25 million to a new range of $150 to $175 million, building on the $40 million of cost reductions we achieved in the first quarter. Additionally, we are reducing our capital spending forecast for 2025 by 10% to $900 million to support our cash generation this year. We are monitoring market conditions and we will adjust this capital spending level as needed. Third, we are improving our cost structure and operational reliability. Last month, we successfully completed our Petro-1 ethylene plant turnaround after running the unit for a record eight and a half years. This is the second ethylene plant turnaround since 2023, and we expect both plants to deliver reliable production with an eye towards achieving yet another future record of operations between turnarounds. Also, in the first quarter, we complete the new VCM tie-ins at our Geismar plant during its turnaround, which will provide enhanced reliability across our entire chlorovinyl production chain. The VCM tie-in will also allow us to replace the current mercury cell capacity being rationalized this year with new more environmentally friendly membrane cell capacity with no material impact on our overall capacity. These major sites completed their turnaround work in the second quarter and are now ramping up to address market demand. We are pleased to have completed these significant operational milestones with the associated benefits from improved operational reliability that they will provide well into the future. In this protracted down cycle, we believe that these actions will better position us and ensure Westlake will continue to create value for its shareholders. I would now like to turn over our call to Steve to provide more detail on our financial results for the first quarter of 2025.