Westlake Corporation

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Westlake Corporation Second Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question-and-answer session. Please be advised that today's conference is being recorded today, August 5, 2025. I would now like to turn the call over to your first speaker today, John Zollier, 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 2025 results. I am 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 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 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 the call up to questions. During the second quarter of 2025, we accrued expenses of $123 million and $7 million, respectively, to shut down the company's epoxy facility in Pernis, the Netherlands, and temporarily cease operations at a PVC resin production unit in China at the company's 95% owned Wosu joint venture. We refer to these expense items, which in aggregate were $130 million, as the identified items in our earnings release and on this conference call. References to income from operations, HIPAA, 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, 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 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 5, 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 webpage 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 second quarter 2025 results. For the second quarter of 2025, we reported EBITDA of $350 million on net sales of $3 billion. Compared to the first quarter of 2025, sales and EBITDA increased due to a seasonal increase in sales volume for most of the businesses in our HIP segment. HIP performed very well in the second quarter. delivering solid EBITDA of $275 million on sales of $1.2 billion, representing a strong 24% EBITDA margin. Our results demonstrate that in an operating environment that has grown more challenging, with interest rates remaining elevated, a diversified and balanced operating model in HIP offers strategic benefits to help deliver performance in this market. Pipe and fittings sales volume growth benefited from increasing demand for municipal water applications, driven in part by spending from the 2021 Infrastructure Act. The significant underspend in water infrastructure in the United States and the funds from the Infrastructure Act should continue to provide a solid foundation for our pipe and filling sales for many years hips building product sales volume was lower than the second quarter of 2024 reflecting the slowdown in north american residential construction activity pent-up demand nevertheless is high as people want and need homes hips building products business benefits from a balanced portfolio of approximately 50% new construction-oriented sales and 50% repair and remodel-oriented sales. And this portfolio provides stability in the current housing market. Turning to PEM, earnings and margins were pressured by two primary factors. First, PEM sales volumes were impacted by lower production levels, due to a high level of planned turnarounds and unplanned outages, which impacted second quarter of 2025 EBITDA by approximately $110 million. As we discussed on our first quarter earnings call, we began the tie-in of our new VCM capacity at our Geismar site during its planned turnaround. Following the completion of the turnaround in the second quarter, Geismar slowly ramped up its operating rate, with production expected to improve during the third quarter. Second, the cumulative impact of several quarters of soft global manufacturing activity caused growth in global demand for many chemical products to fall short of industry supply additions. primarily in Asia and over that period of time. The resulting global oversupply in some chemical chains has created pressure on PEMS average sales price and EBITDA margin. In response to these factors, we are taking aggressive actions to improve PEMS financial results. Our PEM profitability improvement strategy is three-pronged. One, improving plant reliability. We have challenged the teams at the plants to address reliability and operations and we are already seeing production improvement during the third quarter. Two, reducing our cost to improve our global competitiveness. During the first half of 2025, we achieved over $75 million of company-wide cost reductions towards a full-year target of $150 to $175 million. While we are pleased with this progress, given the protracted nature of the current downturn, we are expanding the scope and nature of our cost reduction efforts to target an additional $200 million of cost reductions by 2026. And third, optimizing our footprint, our manufacturing footprint. During the second quarter of 2025, we announced the planned closure of our Pernis epoxy site in the Netherlands, which will put our epoxy business on a path to profitability. So to summarize the quarter, we were very pleased with the continued solid performance of our HIP businesses, our experienced teams, our leading product positions, our broad geographical footprint, and a diverse position serving both new construction and repair and remodel to provide valuable earnings stability and cash flow to the company. We also expect a three-pronged PEM profitability improvement strategy to enhance our globally competitive position and improve PEM's financial results. I would like to turn our call over to Steve now to provide more detail on our financial results for the second quarter of 2025. Steve?