Westlake Chemical Reports Fourth Quarter and Full-Year Earnings for 2012

HOUSTON, Feb. 19, 2013 /PRNewswire/ -- Westlake Chemical Corporation (NYSE: WLK) today reported net income for the three months ended December 31, 2012 of $95.3 million, or $1.42 per diluted share, compared to net income of $26.4 million, or $0.40 per diluted share, reported for the fourth quarter of 2011. Net sales for the three months ended December 31, 2012 of $801.0 million decreased $58.2 million compared to net sales of $859.2 million in the fourth quarter of 2011, primarily due to lower sales volumes for feedstocks, polyethylene and styrene, partially offset by higher prices for styrene and higher building products sales volumes. Income from operations was $156.2 million for the fourth quarter of 2012 compared to $50.5 million for the fourth quarter of 2011. Fourth quarter of 2012 income from operations was higher primarily as a result of significantly lower feedstock costs, which resulted in higher integrated margins for our Olefins and Vinyls segments.

Net income for the fourth quarter of 2012 of $95.3 million, or $1.42 per diluted share, increased $8.3 million from the $87.0 million net income, or $1.30 per diluted share, reported for the third quarter of 2012. Net sales in the fourth quarter of 2012 of $801.0 million decreased $20.2 million compared to net sales of $821.2 million in the third quarter of 2012, mainly attributable to lower sales volumes for polyethylene, PVC resin and building products which was partially offset by higher styrene sales volume and higher sales prices for most of our major products. Fourth quarter 2012 income from operations was $156.2 million as compared to $142.5 million reported for the third quarter of 2012, an increase of $13.7 million. This increase was primarily the result of lower average feedstock costs and higher sales prices, partially offset by lower sales volumes.

For the year ended December 31, 2012, Westlake had net income of $385.6 million, or $5.75 per diluted share, on net sales of $3,571.0 million. This represents an increase in net income of $126.6 million, or $1.88 per diluted share, from 2011 net income of $259.0 million, or $3.87 per diluted share, on net sales of $3,619.8 million in 2011. Net sales in 2012 decreased $48.8 million from net sales in 2011, primarily due to lower sales prices for most of our major products, offset by higher sales volumes of feedstock, building products and caustic. Income from operations was $615.4 million for the year ended December 31, 2012 as compared to $446.8 million for 2011, an increase of $168.6 million. Income from operations benefited primarily from a significant decrease in feedstock and energy costs. Industry ethane prices decreased 48.1% and industry propane prices decreased 31.5% in 2012 as compared to 2011.

Albert Chao, President and Chief Executive Officer, said, "We are pleased to report record annual and fourth quarter earnings benefiting from lower feedstock costs. Increased North American shale gas production resulted in lower ethane-based ethylene production costs in 2012. We believe North American shale gas production will continue to give our business a significant cost advantage over global naphtha-based ethylene producers for the foreseeable future. Westlake is investing to capture this advantageous ethane and natural gas cost position with the expansion of our ethylene units and additions to our chlor-alkali capacity."

EBITDA (earnings before interest expense, income taxes, depreciation and amortization) of $191.0 million for the fourth quarter of 2012 increased $106.1 million compared to $84.9 million in the fourth quarter of 2011. EBITDA for the fourth quarter of 2012 increased $15.4 million compared to EBITDA of $175.6 million in the third quarter of 2012. A reconciliation of EBITDA to reported net income and to net cash provided by operating activities can be found in the financial schedules at the end of this press release.

Net cash provided by operating activities was $624.1 million in 2012. Capital expenditures for 2012 were $386.9 million. At December 31, 2012, we had cash and marketable securities of $915.0 million and our long-term debt was $763.8 million.

OLEFINS SEGMENT

The Olefins segment reported income from operations of $143.2 million in the fourth quarter of 2012, an increase of $67.3 million compared to $75.9 million reported in the fourth quarter of 2011. The increase was primarily due to higher integrated olefins margins largely resulting from lower feedstock costs. Trading activity in the fourth quarter of 2012 resulted in an unrealized loss of $10.8 million compared to a gain of $1.2 million in the fourth quarter of 2011.

Income from operations for the fourth quarter of 2012 for the Olefins segment of $143.2 million increased $18.7 million from the $124.5 million reported in the third quarter of 2012. The increase was primarily due to higher integrated product margins, largely as a result of lower feedstock costs.

The Olefins segment reported income from operations of $552.8 million in 2012 compared to $459.3 million in 2011. This increase was mainly attributable to higher olefins integrated product margins as compared to 2011. Margins improved as a result of significantly lower feedstock and energy costs, which were only partially offset by lower sales prices. Results for 2011 were negatively impacted by lost ethylene production, repair costs and unabsorbed fixed manufacturing costs incurred in connection with an unscheduled outage at one of our ethylene units in Lake Charles and a fire at a third party storage facility at Mont Belvieu.

VINYLS SEGMENT

The Vinyls segment reported income from operations of $18.2 million in the fourth quarter of 2012, an improvement of $37.8 million as compared to a loss from operations of $19.6 million in the fourth quarter of 2011. The increase in operating income was primarily the result of higher integrated Vinyls margins generally resulting from lower feedstock costs and higher caustic and building products sales volumes.

The Vinyls segment reported income from operations of $18.2 million in the fourth quarter of 2012, a decrease of $5.9 million compared to income from operations of $24.1 million in the third quarter of 2012. The decrease in operating income was largely the result of lost PVC production and costs due to a scheduled maintenance turnaround at the Geismar vinyls complex and seasonally lower sales volumes for PVC resin and building products, partially offset by higher integrated margins resulting from lower feedstock costs.

The Vinyls segment reported income from operations of $85.9 million in 2012, an increase of $81.9 million as compared to the $4.0 million reported in 2011. This increase was predominantly driven by lower feedstock and energy costs and higher caustic and building products sales volumes as compared to 2011. The income from operations for 2012 was negatively impacted by an unscheduled shut down of our Geismar vinyls complex and lower operating rates at that complex as a result of operational issues related to a March 2012 fire at the complex. We expensed approximately $10.5 million of costs associated with that event in 2012. The Vinyls segment's operating results for 2011 were negatively impacted by a maintenance turnaround at the Calvert City facility and the closure of the Springfield PVC pipe facility.

The statements in this release relating to matters that are not historical facts, including statements regarding cost advantages from low ethane-based ethylene production costs that North American shale gas is providing and the expansion of our ethylene units and additions to our chlor-alkali capacity, are forward-looking statements that are subject to risks and uncertainties. Actual results could differ materially, based on factors including, but not limited to: general economic and business conditions; the cyclical nature of the chemical industry; availability, cost and volatility of raw materials and utilities, including natural gas from shale production; uncertainties associated with the United States and worldwide economies, including those due to global economic and financial conditions; governmental regulatory actions, including environmental regulation; political unrest; industry production capacity and operating rates; the supply/demand balance for Westlake's products; competitive products and pricing pressures; access to capital markets; technological developments; the effect and results of litigation and settlements of litigation; operating interruptions; and other risk factors. For more detailed information about the factors that could cause actual results to differ materially, please refer to Westlake's Annual Report on Form 10-K for the year ended December 31, 2011, which was filed with the SEC in February 2012.

Westlake Chemical Corporation Conference Call Information:

A conference call to discuss Westlake Chemical Corporation's fourth quarter and full year 2012 results will be held Tuesday, February 19th, 2013 at 11:00 a.m. Eastern Time (10:00 a.m. Central Time). To access the conference call, dial (800) 573-4840, or (617) 224-4326 for international callers, approximately 10 minutes prior to the scheduled start time and reference passcode 34352540.

A replay of the conference call will be available beginning two hours after its conclusion until 11:59 p.m. Eastern Time on Tuesday, February 26th, 2013. To hear a replay, dial (888) 286-8010, or (617) 801-6888 for international callers. The replay passcode is 42085567.

The conference call will also be available via webcast at: http://phoenix.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=180248&eventID=4900614 and the earnings release can be obtained via the company's Web page at: /fw/main/IR_Home_Page-123.html.

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SOURCE Westlake Chemical Corporation

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