Westlake Announces Third Quarter 2013 Earnings

HOUSTON, Nov. 7, 2013 /PRNewswire/ -- Westlake Chemical Corporation (NYSE: WLK) today reported record quarterly net income of $170.3 million, or $2.54 per diluted share, on net sales of $1,004.2 million for the quarter ended September 30, 2013. This represents an increase in net income of $83.3 million, or $1.24 per diluted share, compared to the quarter ended September 30, 2012 net income of $87.0 million, or $1.30 per diluted share, on net sales of $821.2 million. Net sales for the third quarter of 2013 increased by $183.0 million compared to net sales for the third quarter of 2012, mainly attributable to higher sales volumes for styrene and caustic, higher sales prices for most of our major products and sales contributed by our specialty PVC pipe business, which we acquired in May 2013. Styrene sales volumes for the third quarter of 2012 were negatively impacted by a turnaround of the styrene plant in Lake Charles, Louisiana. Income from operations was $266.6 million for the third quarter of 2013 as compared to $142.5 million for the third quarter of 2012. Income from operations for the third quarter of 2013 benefited primarily from improved olefins and vinyls integrated product margins, largely due to higher sales prices for most of our major products and lower overall feedstock costs as compared to the prior year period.

Third quarter 2013 net income of $170.3 million, or $2.54 per diluted share, increased from the net income of $145.8 million, or $2.17 per diluted share, reported in the second quarter of 2013. Third quarter 2013 sales of $1,004.2 million increased by $65.2 million compared to sales of $939.0 million in the second quarter of 2013. The increase in sales was largely due to higher sales volumes of polyethylene. Third quarter 2013 income from operations of $266.6 million increased by $31.4 million over the income from operations in the second quarter of 2013 of $235.2 million. This increase in income from operations was primarily attributable to lower feedstock costs and higher polyethylene sales volumes as compared to the second quarter of 2013.

For the nine months ended September 30, 2013, net income was $439.5 million, or $6.54 per diluted share, on net sales of $2,807.9 million. This represents an increase in net income of $149.2 million, or $2.21 per diluted share, from the nine months ended September 30, 2012 net income of $290.3 million, or $4.33 per diluted share, on net sales of $2,770.0 million. Net sales for the nine months ended September 30, 2013 increased by $37.9 million compared to the prior year period mainly due to higher sales volumes and sales prices for styrene, PVC resin and caustic, higher polyethylene sales prices and sales contributed by our specialty PVC pipe business, mostly offset by lower feedstock, ethylene and ethylene co-products sales volumes. Income from operations was $695.9 million for the nine months ended September 30, 2013 as compared to $459.1 million for the nine months ended September 30, 2012. The increase in income from operations was primarily attributable to higher olefins and vinyls integrated product margins, predominantly due to a significant decrease in feedstock costs as industry ethane prices decreased 40.4% and industry propane prices decreased 10.1% in the nine months ended September 30, 2013 as compared to the nine months ended September 30, 2012.

Albert Chao, President and Chief Executive Officer, stated, "Westlake achieved record quarterly earnings for the third quarter of 2013 largely due to strong demand for most of our major products and low feedstock costs, resulting from shale gas production. We believe North American shale gas production will continue to give our business a significant cost advantage for the foreseeable future. We continue to invest to capture this advantageous cost position with the planned start-up of our chlor-alkali unit in Geismar, Louisiana before the end of this year and the planned conversion to ethane feedstock and expansion of our ethylene and PVC capacity at our Calvert City, Kentucky facility in 2014."

EBITDA (earnings before interest expense, income taxes, depreciation and amortization) of $307.0 million for the third quarter of 2013 increased by $131.4 million compared to EBITDA of $175.6 million for the third quarter of 2012. EBITDA for the third quarter of 2013 increased by $31.7 million compared to the $275.3 million reported in the second quarter of 2013. A reconciliation of EBITDA to 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 $547.5 million in the first nine months of 2013. Capital expenditures for the first nine months of 2013 were $498.3 million. In addition, in the second quarter of 2013, we acquired our specialty PVC pipe business for $178.3 million. As of September 30, 2013, our cash, cash equivalents and current marketable securities totaled $717.2 million, and our long-term debt was $763.8 million.

OLEFINS SEGMENT

Income from operations for the Olefins segment increased by $112.7 million, or 90.5%, to $237.2 million in the third quarter of 2013 from $124.5 million in the third quarter of 2012. This increase was mainly attributable to higher olefins integrated product margins as compared to the prior year period, primarily as a result of higher sales prices for most of our major products and significantly lower feedstock costs. In addition, olefins integrated margins benefited from the increased ethylene production at our Lake Charles complex after the completion of the expansion project to increase the ethane-based ethylene capacity of one of the ethylene units at that complex in the first quarter of 2013.

Income from operations for the Olefins segment for the third quarter of 2013 was $237.2 million, an increase of $49.5 million from the $187.7 million reported in the second quarter of 2013. Income from operations in the third quarter of 2013 benefited from higher integrated margins, primarily as a result of lower feedstock costs, and higher polyethylene sales volumes compared to the second quarter of 2013.

Income from operations for the Olefins segment increased by $176.4 million, or 43.1%, to $586.0 million for the nine months ended September 30, 2013 from $409.6 million for the nine months ended September 30, 2012. This increase was mainly attributable to higher olefins integrated product margins as compared to the prior year period. Margins improved primarily as a result of significantly lower feedstock costs.

VINYLS SEGMENT

Income from operations for the Vinyls segment increased by $15.5 million, or 64.3%, to $39.6 million in the third quarter of 2013 from $24.1 million in the third quarter of 2012. This increase was primarily driven by higher vinyls integrated product margins, largely resulting from higher sales prices for all major products, higher caustic sales volumes and improved operating rates as compared to the third quarter of 2012.

The Vinyls segment reported income from operations of $39.6 million in the third quarter of 2013, a decrease of $13.3 million compared to the income from operations of $52.9 million in the second quarter of 2013. This decrease was primarily due to higher propane costs and lower PVC resin prices as compared to the second quarter of 2013.

Income from operations for the Vinyls segment increased by $68.4 million to $136.1 million for the nine months ended September 30, 2013 from $67.7 million for the nine months ended September 30, 2012. This increase was predominantly driven by lower feedstock costs, higher sales volumes for caustic and PVC resin and higher operating rates as compared to the prior year period. The Vinyls segment's operating results for the first nine months of 2012 were negatively impacted by the lost production, lost sales and unabsorbed manufacturing and other costs associated with an unscheduled shut down at our Geismar vinyls complex.

The statements in this release relating to matters that are not historical facts, including statements regarding cost advantages related to North American shale gas production, the planned completion of a new chlor-alkali plant and the conversion to ethane feedstock and expansion of our ethylene and PVC capacity in Calvert City, 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, 2012, which was filed with the SEC on February 22, 2013, and to Westlake's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, which was filed with the SEC on May 7, 2013.

Westlake Chemical Corporation Conference Call Information:

A conference call to discuss Westlake Chemical Corporation's third quarter 2013 results will be held Thursday, November 7, 2013 at 11:00 a.m. Eastern Time (10:00 a.m. Central Time). To access the conference call, dial (800) 688-0836, or (617) 614-4072 for international callers, approximately 10 minutes prior to the scheduled start time and reference passcode 85536130.

A replay of the conference call will be available beginning four hours after its conclusion until 3:00 p.m. Eastern Time on Thursday, November 14, 2013. To hear a replay, dial (888) 286-8010, or (617) 801-6888 for international callers. The replay passcode is 45573736.

The conference call will also be available via webcast at: http://phoenix.corporate-ir.net/phoenix.zhtml?c=180248&p=irol-eventDetails&EventId=5036286 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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