Westlake Chemical Reports Fourth Quarter Results

Westlake Chemical Reports Fourth Quarter Results

HOUSTON, Feb 18, 2005 /PRNewswire-FirstCall via COMTEX/ -- Westlake Chemical Corporation (NYSE: WLK) today reported fourth quarter net income of $47.3 million or $0.73 per diluted share and operating income of $81.4 million on net sales of $563.1 million for the fourth quarter of 2004. This compares favorably with the fourth quarter 2003 net income of $10.6 million or $0.21 per diluted share and operating income of $24.9 million on net sales of $365.9 million. The improvement in net sales and operating income was primarily the result of increased selling prices, which outpaced higher feedstock and energy costs. In addition, PVC pipe sales increased due to the August 2004 acquisition of the assets of Bristolpipe Corporation. Included in the 2004 fourth quarter results are several non-operating items that resulted in a net benefit of $2.1 million after tax, or $0.03 per diluted share.

Fourth quarter 2004 net income increased $19.0 million from the $28.3 million net income or $0.50 per diluted share reported in the third quarter of 2004 primarily due to increased selling prices which were partially offset by higher feedstock and energy costs. The third quarter of 2004 was adversely impacted by a $9.3 million after tax charge that was related to the early retirement of debt. This charge reduced earnings per diluted share for the third quarter by $0.16. Fourth quarter net sales were unfavorable compared to the third quarter net sales of $572.0 million due to lower sales volumes while operating income compared favorably to the third quarter operating income of $68.9 million primarily due to higher margins.

For the year ended December 31, 2004 net income was $120.7 million or $2.18 per diluted share including an after tax charge of $10.0 million related to the early retirement of debt, or $0.18 per diluted share on net sales of $1,985.4 million. This compares favorably with the year ended December 31, 2003 net income of $14.8 million or $0.30 per diluted share, which included an after tax charge of $7.1 million related to the early retirement of debt, or $0.14 per diluted share, on net sales of $1,423.0 million. Operating income was $243.2 million for the year ended December 31, 2004 as compared to $65.8 million for the year ended December 31, 2003. These increases were primarily due to higher selling prices and volumes, which more than offset higher raw material and energy costs.

As a result of the successful completion of Westlake's initial public offering (IPO) in August 2004 and record earnings for the year ended December 31, 2004, Westlake was able to reduce its debt by $239 million from $537 million at December 31, 2003 to $298 million at December 31, 2004. The company ended 2004 with $43 million of cash on the balance sheet.

OLEFINS SEGMENT

Income from operations for the Olefins segment increased by $46.5 million to $65.4 million in the fourth quarter of 2004 from $18.9 million in the fourth quarter of 2003. This increase was primarily due to higher selling prices for our products and higher sales volumes in ethylene, which were partially offset by lower sales volumes in polyethylene and styrene and higher raw material costs for ethane, propane and benzene.

Fourth quarter 2004 income from operations increased $20.7 million from the $44.7 million of income from operations reported in the third quarter of 2004. The increase was primarily due to higher selling prices, which were partially offset by higher feedstock and energy costs and lower sales volumes.

Income from operations for the Olefins segment increased by $124.3 million to $179.6 million for the year ended December 31, 2004 from $55.3 million for the year ended December 31, 2003. This increase was primarily due to price increases and higher sales volumes for ethylene, polyethylene and styrene, partially reduced by higher raw material costs of ethane, propane and benzene.

VINYLS SEGMENT

Income from operations for the Vinyls segment increased by $13.9 million to $18.7 million in the fourth quarter of 2004 from $4.8 million in the fourth quarter of 2003. This increase was primarily due to higher selling prices for all of our vinyls products and higher sales volumes for PVC pipe. These increases were partially offset by higher energy costs and higher raw material costs for propane.

Fourth quarter 2004 income from operations decreased $7.6 million from the $26.3 million of income from operations reported in the third quarter of 2004. The decrease was primarily due to higher propane feedstock costs and costs associated with the phased start-up of our VCM and PVC facilities in Geismar, Louisiana, which was partially offset by a $2.0 million pre-tax gain from the sale of equipment.

Income from operations for the Vinyls segment increased by $56.1 million to $69.7 million for the year ended December 31, 2004 from $13.6 million for the year ended December 31, 2003. This increase was primarily due to vinyls product price increases, which were partially offset by higher raw material and energy costs.

In this release, Westlake refers to a non-GAAP financial measure, EBITDA. EBITDA is calculated as net income before interest expense, income taxes, depreciation and amortization. The body of accounting principles generally accepted in the United States is commonly referred to as "GAAP." For this purpose a non-GAAP financial measure is generally defined by the SEC as one that purports to measure historical and future financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable GAAP measures. We have included EBITDA in this release because our management considers it an important supplemental measure of our performance and believes that it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry, some of which present EBITDA when reporting their results. We regularly evaluate our performance as compared to other companies in our industry that have different financing and capital structures and/or tax rates by using EBITDA. EBITDA allows for meaningful company-to-company performance comparisons by adjusting for factors such as interest expense, depreciation and amortization and taxes, which often vary from company to company. In addition, we utilize EBITDA in evaluating acquisition targets. Management also believes that EBITDA is a useful tool for measuring our ability to meet our future debt service, capital expenditures and working capital requirements, and EBITDA is commonly used by us and our investors to measure our ability to service indebtedness. EBITDA is not a substitute for the GAAP measures of earnings or of cash flow and is not necessarily a measure of our ability to fund our cash needs. In addition, it should be noted that companies calculate EBITDA differently and, therefore, EBITDA as presented in this release may not be comparable to EBITDA reported by other companies. EBITDA has material limitations as a performance measure because it excludes (1) interest expense, which is a necessary element of our costs and ability to generate revenues because we have borrowed money to finance our operations, (2) depreciation, which is a necessary element of our costs and ability to generate revenues because we use capital assets and (3) income taxes, which is a necessary element of our operations. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA only supplementally. The table below reconciles EBITDA to net income and to cash flow from operating activities.

Westlake Chemical Corporation Conference Call Information:

A conference call to discuss Westlake Chemical Corporation's fourth quarter results will be held Friday, February 18, 2005 at 11:00 a.m. EST (10:00 a.m. CST). To access the conference call, dial (800) 599-9829, or (617) 847-8703 for international callers, approximately 10 minutes prior to the scheduled start time and reference passcode 51145952.

A replay of the conference call will be available beginning an hour after its conclusion until 11:59 p.m. EST (10:59 p.m. CST) on Friday, February 25, 2005. To hear a replay, dial (888) 286-8010, or (617) 801-6888 for international callers. The replay passcode is 98300329.

The conference call will also be available via webcast at http://phx.corporate-ir.net/phoenix.zhtml?p=irol- eventDetails&c=180248&eventID=1008290 and the earnings release can be obtained via the company's Web page at http://www.westlakechemical.com/investors.html .

Westlake Chemical Corporation is a manufacturer and supplier of petrochemicals, polymers and fabricated products with headquarters in Houston, Texas. The company's range of products includes: ethylene, polyethylene, styrene, vinyl intermediates, PVC and PVC pipe, windows and fence. For more information, visit the company's Web site at http://www.westlakechemical.com .

WESTLAKE CHEMICAL CORPORATION

                    CONSOLIDATED STATEMENTS OF OPERATIONS

                             (unaudited, in $000)

                              Three Months Ended           Year Ended
                                 December 31,              December 31,
                               2004         2003         2004         2003

    Net Sales                $563,069     $365,879   $1,985,353   $1,423,034
    Cost of Sales             464,731      330,235    1,682,168    1,301,082
    Gross Profit               98,338       35,644      303,185      121,952

    Selling, General and
     Administrative
     Expenses                  18,987       12,538       60,238       57,014
    Gain on Sale of Asset      (2,049)         ---       (2,049)         ---
    Gain on Legal
     Settlement                   ---       (3,162)         ---       (3,162)
    Impairment of Long-
     Lived assets                 ---        1,353        1,830        2,285

    Income from
     Operations                81,400       24,915      243,166       65,815

    Interest Expense           (7,089)     (10,991)     (39,350)     (38,589)
    Debt Retirement Cost       (1,106)         ---      (15,791)     (11,343)
    Other Income, net           2,192        3,015        2,637        7,620

    Income before Taxes        75,397       16,939      190,662       23,503

    Income Tax Provision       28,071        6,304       69,940        8,747

    Net Income                $47,326      $10,635     $120,722      $14,756


    Basic earnings per
     share                      $0.73        $0.21        $2.19        $0.30
    Diluted earnings per
     share                      $0.73        $0.21        $2.18        $0.30

    Weighted Average
     Shares Outstanding
      Basic                64,896,489   49,499,395   55,230,786   49,499,395
      Diluted              65,268,328   49,499,395   55,355,442   49,499,395


    Reconciliation of EBITDA to Net Income and to Cash Flow from Operating
                                  Activities

    EBITDA                   $100,712      $49,566     $311,087     $149,385
    Less:
    Income Tax Provision       28,071        6,304       69,940        8,747
    Interest Expense            7,089       10,991       39,350       38,589
    Depreciation and
     amortization              18,226       21,636       81,075       87,293

    Net Income                 47,326       10,635      120,722       14,756
    Changes in operating
     assets and liabilities    (6,251)      31,668      (35,129)      56,219
    Deferred income taxes      26,345        5,242       65,188        7,112
    Cash flow from
     operating activities     $67,420      $47,545     $150,781      $78,087



                        WESTLAKE CHEMICAL CORPORATION

                         CONSOLIDATED BALANCE SHEETS

                             (unaudited, in $000)

                                                December 31,      December 31,
                                                    2004              2003

    Current Assets
      Cash and Cash Equivalents                    $43,396           $37,381
      Accounts Receivable (net)                    234,247           178,633
      Inventories                                  319,816           180,760
      Other Current Assets                          67,191            16,073
        Total Current Assets                       664,650           412,847
    Property, Plant and Equipment (net)            855,051           879,688
    Other Assets (net)                              65,463            77,578

           Total Assets                         $1,585,164        $1,370,113


       LIABILITIES AND STOCKHOLDERS' EQUITY
    Current Liabilities
      Accounts Payable and Accrued
       Liabilities                                $249,015          $186,932
      Current Portion of Long-Term Debt              1,200            28,200
        Total Current Liabilities                  250,215           215,132
    Long-Term Debt                                 296,889           509,089
    Other Liabilities                              268,663           178,189

          Total Liabilities                        815,767           902,410

    Minority Interest                                  ---            22,100

    Stockholders' Equity                           769,397           445,603

    Total Liabilities and Stockholders'
     Equity                                     $1,585,164        $1,370,113



                        WESTLAKE CHEMICAL CORPORATION

                    CONSOLIDATED STATEMENTS OF CASH FLOWS

                             (unaudited, in $000)

                                                         Year Ended
                                                         December 31,
                                                    2004              2003

    Cash Flows from Operating Activities:
    Net Income                                    $120,722           $14,756

    Adjustments to Reconcile Net Income
     to Net Cash:
      Depreciation and Amortization                 81,075            87,293
      Deferred Tax Expense                          65,188             7,112
      Other Balance Sheet Changes                 (116,204)          (31,074)
                                                    30,059            63,331

    Net Cash Provided by Operating
     Activities                                    150,781            78,087

    Cash Flows from Investing Activities:
    Additions to Property, Plant and
     Equipment                                     (52,710)          (44,931)
    Acquisition of Business Operations             (33,294)              ---
    Other                                            6,041             3,350

    Net Cash Used by Investing Activities          (79,963)          (41,581)

    Cash Flows from Financing Activities:
    Proceeds from Issuance of Common
     Stock, net                                    181,167               ---
    Dividends Paid                                  (1,379)              ---
    Proceeds from Borrowings                           ---           723,975
    Repayment of Borrowings                       (239,200)         (719,783)
    Capitalized Debt Costs                             ---           (14,102)
    Other                                           (5,391)             (338)

    Net Cash Used in Financing Activities          (64,803)          (10,248)

    Net Increase in Cash                             6,015            26,258

    Cash Balance at the Beginning of the
     Period                                         37,381            11,123

    Cash Balance at the End of the Period          $43,396           $37,381



                        WESTLAKE CHEMICAL CORPORATION

                             SEGMENT INFORMATION

                             (unaudited, in $000)

                                 Three Months Ended          Year Ended
                                     December 31,            December 31,
                                   2004       2003         2004        2003

    Net Sales to External
     Customers
    Olefins                      $357,009   $224,486   $1,251,254    $876,968
    Vinyls                        206,060    141,393      734,099     546,066
                                 $563,069   $365,879   $1,985,353  $1,423,034

    Income (Loss) from
     Operations
    Olefins                       $65,372    $18,910     $179,587     $55,298
    Vinyls                         18,654      4,822       69,723      13,583
    Corporate and Other            (2,626)     1,183       (6,144)     (3,066)
                                  $81,400    $24,915     $243,166     $65,815

    Depreciation and Amortization
    Olefins                        $9,892    $13,353      $49,213     $51,088
    Vinyls                          8,550      8,161       31,671      33,118
    Corporate and Other              (216)       122          191       3,087
                                  $18,226    $21,636      $81,075     $87,293

    Other Income (Expense), net
    Olefins                        $1,268       $870        $(981)     $3,459
    Vinyls                            (14)       (14)         121         629
    Corporate and Other*             (168)     2,159      (12,294)     (7,811)
                                   $1,086     $3,015     $(13,154)    $(3,723)

     * Debt retirement costs of $15,791 and $11,343 are included in the year
       ended December 31, 2004 and 2003, respectively.  Debt retirement costs
       of $1,106 are included in the three months ended December 31, 2004.

SOURCE Westlake Chemical Corporation

finance, Ruth I. Dreessen, or media, David R. Hansen, both of Westlake Chemical Corporation, +1-713-960-9111

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