Westlake Chemical Corporation Announces First Quarter 2016 Earnings

Westlake Chemical Corporation Announces First Quarter 2016 Earnings

- Quarterly net income of $123.1 million, or $0.94 per diluted share
- Cash, cash equivalents and marketable securities of $1.1 billion as of the end of the first quarter 2016

HOUSTON, May 3, 2016 /PRNewswire/ -- Westlake Chemical Corporation (NYSE: WLK) today reported net income for the three months ended March 31, 2016 of $123.1 million, or $0.94 per diluted share, on net sales of $975.2 million. This represents a decrease in net income of $23.2 million, or $0.16 per diluted share, compared to the quarter ended March 31, 2015 net income of $146.3 million, or $1.10 per diluted share, on net sales of $1,103.5 million. Net sales for the first quarter of 2016 decreased by $128.3 million compared to net sales for the first quarter of 2015, mainly due to lower sales prices for all of our major products, partially offset by higher sales volumes for polyethylene and most of our major Vinyls products. Sales prices in the first quarter of 2016 were negatively impacted by lower crude oil prices as compared to the prior-year period. Income from operations was $202.3 million for the first quarter of 2016 as compared to $229.3 million for the first quarter of 2015. The decrease in income from operations for the first quarter of 2016 was mainly attributable to lower North American integrated product margins, primarily as a result of lower sales prices in the first quarter of 2016, partially offset by lower average feedstock and energy costs, higher product margins at our European operations and higher chlor alkali production, as compared to the first quarter of 2015.

First quarter 2016 net income of $123.1 million, or $0.94 per diluted share, increased by $12.1 million from the $111.0 million, or $0.84 per diluted share, reported in the fourth quarter of 2015. Net sales in the first quarter of 2016 of $975.2 million decreased $11.6 million from net sales of $986.8 million in the fourth quarter of 2015, mainly due to lower sales prices for all of our major products, partially offset by higher sales volumes. First quarter 2016 income from operations was $202.3 million as compared to $181.1 million reported for the fourth quarter of 2015, an increase of $21.2 million, which was primarily the result of higher sales volumes for polyethylene and PVC and higher operating rates for most of our facilities.

"We delivered solid results for the first quarter of 2016 as we benefitted from lower cost feedstocks and strong global demand for both polyethylene and PVC," said Albert Chao, President and Chief Executive Officer. "We continue to focus on growing our specialty PVC, PVC pipe and polyethylene product portfolios, and on our integration strategy which, upon the completion of the 250 million pound expansion of our Petro 1 ethylene cracker later this year, is expected to balance our ethylene requirements in North America."

EBITDA (earnings before interest expense, income taxes, depreciation and amortization) of $270.6 million for the first quarter of 2016 decreased $26.4 million compared to EBITDA of $297.0 million in the first quarter of 2015. EBITDA for the first quarter of 2016 increased $19.4 million compared to EBITDA of $251.2 million in the fourth quarter of 2015. 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 $129.0 million in the first quarter of 2016. Capital expenditures for the first quarter of 2016 were $136.3 million. As of March 31, 2016, we had cash, cash equivalents and current marketable securities of $1.1 billion and our long-term debt was $758.3 million.

OLEFINS SEGMENT

The Olefins segment reported income from operations of $149.2 million in the first quarter of 2016, a decrease of $41.9 million compared to income from operations of $191.1 million reported in the first quarter of 2015. This decrease was mainly attributable to lower olefins integrated product margins primarily as a result of lower sales prices, partially offset by higher polyethylene sales volume and lower feedstock and energy costs as compared to the prior-year period.

The Olefins segment income from operations of $149.2 million for the first quarter of 2016 increased $10.5 million from the $138.7 million reported in the fourth quarter of 2015. This increase was primarily attributable to higher polyethylene sales volumes and improved operating rates as compared to the fourth quarter of 2015. The fourth quarter of 2015 was negatively impacted by several polyethylene turnarounds.

VINYLS SEGMENT

The Vinyls segment reported income from operations of $62.1 million in the first quarter of 2016, an increase of $15.0 million compared to $47.1 million reported in the first quarter of 2015. This increase was mainly attributable to higher product margins at our European operations and higher U.S. caustic soda sales volume as compared to the prior-year period.

The Vinyls segment income from operations of $62.1 million for the first quarter of 2016 increased $10.5 million from the $51.6 million reported in the fourth quarter of 2015. This increase was primarily attributable to higher sales volumes for PVC and improved operating rates as compared to the fourth quarter of 2015.

 

The statements in this release and the related teleconference relating to matters that are not historical facts, such as statements regarding the timing and results of expansion projects and anticipated balancing of our ethylene requirements in North America, are forward-looking statements. These forward-looking statements are subject to significant 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; the price of crude oil; 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, 2015, which was filed with the SEC in February 2016.

 

Use of Non-GAAP Financial Measures

This release makes reference to certain "non-GAAP" financial measures, such as EBITDA, as defined in Regulation G of the U.S. Securities Exchange Act of 1934, as amended. We report our financial results in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"), but believe that certain non-GAAP financial measures, such as EBITDA, provide useful supplemental information to investors regarding the underlying business trends and performance of the company's ongoing operations and are useful for period-over-period comparisons of such operations. These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the financial measures prepared in accordance with U.S. GAAP. 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.

 

Westlake Chemical Corporation Conference Call Information:

A conference call to discuss Westlake Chemical Corporation's first quarter 2016 results will be held Tuesday, May 3, 2016 at 11:00 a.m. Eastern Time (10:00 a.m. Central Time). To access the conference call, dial (855) 760-8160, or (704) 288-0624 for international callers, approximately 10 minutes prior to the scheduled start time and reference passcode 90251315.

A replay of the conference call will be available beginning two hours after its conclusion until 11:59 p.m. Eastern Time on Tuesday, May 10, 2016. To hear a replay, dial (855) 859-2056, or (404) 537-3406 for international callers. The replay passcode is 90251315.

The conference call will also be available via webcast at: http://edge.media-server.com/m/p/wugjxpzb and the earnings release can be obtained via the company's web page at: http://www.westlake.com/fw/main/IR_Home_Page-123.html

 

WESTLAKE CHEMICAL CORPORATION


CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)




Three Months Ended March 31,



2016


2015








(In thousands of dollars,
except per share data)

Net sales


$

975,187



$

1,103,531


Cost of sales


719,602



818,985


Gross profit


255,585



284,546


Selling, general and administrative expenses


53,309



55,266


Income from operations


202,276



229,280


Interest expense


(6,685)



(9,591)


Other income, net


2,645



9,096


Income before income taxes


198,236



228,785


Provision for income taxes


69,300



78,378


Net income


128,936



150,407


Net income attributable to noncontrolling interests


5,808



4,065


Net income attributable to Westlake Chemical Corporation


$

123,128



$

146,342


Earnings per common share attributable to Westlake Chemical Corporation:





Basic


$

0.94



$

1.10


Diluted


$

0.94



$

1.10


 

WESTLAKE CHEMICAL CORPORATION


CONSOLIDATED BALANCE SHEETS

(Unaudited)




March 31,
2016


December 31,
2015








(In thousands of dollars)

ASSETS





Current assets





Cash and cash equivalents


$

614,976



$

662,525


Marketable securities


525,008



520,144


Accounts receivable, net


549,037



508,532


Inventories


478,656



434,060


Other current assets


24,057



49,928


Total current assets


2,191,734



2,175,189


Property, plant and equipment, net


3,114,821



3,004,067


Other assets, net


417,846



390,029


Total assets


$

5,724,401



$

5,569,285







LIABILITIES AND EQUITY





Current liabilities (accounts payable and accrued liabilities)


$

506,161



$

522,642


Long-term debt


758,300



758,148


Other liabilities


755,538



726,564


Total liabilities


2,019,999



2,007,354


Total Westlake Chemical Corporation stockholders' equity


3,406,526



3,265,878


Noncontrolling interests


297,876



296,053


Total equity


3,704,402



3,561,931


Total liabilities and equity


$

5,724,401



$

5,569,285


 

WESTLAKE CHEMICAL CORPORATION


CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)




Three Months Ended March 31,



2016


2015








(In thousands of dollars)

Cash flows from operating activities





Net income


$

128,936



$

150,407


Adjustments to reconcile net income to net cash provided by operating activities:





Depreciation and amortization


65,714



58,641


Deferred income taxes


58,637



5,331


Other balance sheet changes


(124,352)



(23,823)


Net cash provided by operating activities


128,935



190,556


Cash flows from investing activities





Additions to property, plant and equipment


(136,328)



(95,822)


Proceeds from sales and maturities of securities


26,859




Purchase of securities


(36,637)




Other, net


(1,115)



(833)


Net cash used for investing activities


(147,221)



(96,655)


Cash flows from financing activities





Dividends paid


(23,700)



(21,964)


Distributions to noncontrolling interests


(3,985)



(3,558)


Proceeds from exercise of stock options


22



157


Proceeds from issuance of notes payable


2,050




Repayment of notes payable


(7,095)




Repurchase of common stock for treasury


(679)



(2,000)


Other, net


266



1,701


Net cash used for financing activities


(33,121)



(25,664)


Effect of exchange rate changes on cash and cash equivalents


3,858



(3,189)


Net (decrease) increase in cash and cash equivalents


(47,549)



65,048


Cash and cash equivalents at beginning of period


662,525



880,601


Cash and cash equivalents at end of period


$

614,976



$

945,649


 

WESTLAKE CHEMICAL CORPORATION


SEGMENT INFORMATION

(Unaudited)




Three Months Ended March 31,



2016


2015








(In thousands of dollars)

Net external sales





Olefins


$

431,020



$

583,077


Vinyls


544,167



520,454




$

975,187



$

1,103,531


Income (loss) from operations





Olefins


$

149,235



$

191,103


Vinyls


62,116



47,086


Corporate and other


(9,075)



(8,909)




$

202,276



$

229,280


Depreciation and amortization





Olefins


$

28,697



$

26,939


Vinyls


36,287



31,584


Corporate and other


730



118




$

65,714



$

58,641


Other income (expense), net





Olefins


$

1,513



$

2,552


Vinyls


(1,519)



5,503


Corporate and other


2,651



1,041




$

2,645



$

9,096


 

WESTLAKE CHEMICAL CORPORATION


RECONCILIATION OF EBITDA TO NET INCOME AND

TO NET CASH PROVIDED BY OPERATING ACTIVITIES

(Unaudited)




Three Months

Ended
December 31,


Three Months Ended
March 31,



2015


2016


2015










(In thousands of dollars)

EBITDA


$

251,153



$

270,635



$

297,017


Less:







Provision for income taxes


61,572



69,300



78,378


Interest expense


7,896



6,685



9,591


Depreciation and amortization


65,528



65,714



58,641


Net income


116,157



128,936



150,407


Changes in operating assets and liabilities


89,180



(58,638)



34,818


Deferred income taxes


32,199



58,637



5,331


Net cash provided by operating activities


$

237,536



$

128,935



$

190,556


 

WESTLAKE CHEMICAL CORPORATION


SUPPLEMENTAL INFORMATION


Product Sales Price and Volume Variance by Operating Segments




First Quarter 2016 vs.
First Quarter 2015


First Quarter 2016 vs.
Fourth Quarter 2015



Average
Sales Price


Volume


Average
Sales Price


Volume

Olefins


-17.5%



-8.6%



-7.8%



-0.2%


Vinyls


-8.6%



+13.2%



-2.5%



+7.4%


Company


-13.3%



+1.7%



-5.0%



+3.8%


 

Average Quarterly Industry Prices (1)




Quarter Ended



March 31,
2015


June 30,
2015


September 30,
2015


December 31,
2015


March 31,
2016

Ethane (cents/lb)


6.3


6.2


6.4


5.9


5.3

Propane (cents/lb)


12.6


10.8


9.6


9.9


9.1

Ethylene (cents/lb) (2)


36.6


36.1


28.2


21.4


21.1

Polyethylene (cents/lb) (3)


76.7


78.3


75.3


71.0


68.3

Styrene (cents/lb) (4)


54.3


65.8


64.2


58.3


58.0

Caustic soda ($/short ton) (5)


588.3


576.7


563.3


595.8


582.5

Chlorine ($/short ton) (6)


239.2


268.3


275.0


285.0


285.0

PVC (cents/lb) (7)


65.5


67.5


66.5


64.5


64.8



(1)

Industry pricing data was obtained from IHS Chemical. We have not independently verified the data.

(2)

Represents average North American spot prices of ethylene over the period as reported by IHS Chemical.

(3)

Represents average North American contract prices of polyethylene low density GP-Film grade over the period as reported by IHS Chemical.

(4)

Represents average North American contract prices of styrene over the period as reported by IHS Chemical.

(5)

Represents average North American undiscounted contract prices of caustic soda over the period as reported by IHS Chemical.

(6)

Represents average North American contract prices of chlorine (into chemicals) over the period as reported by IHS Chemical.

(7)

Represents average North American contract prices of PVC over the period as reported by IHS Chemical.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/westlake-chemical-corporation-announces-first-quarter-2016-earnings-300261107.html

SOURCE Westlake Chemical Corporation

(713) 960-9111, Investors--Steve Bender, Media--Ben Ederington

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