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WESTLAKE CORP (WLK)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was impacted by higher North American feedstock and energy costs, planned turnarounds at Petro 1, and unplanned outages, driving net sales of $2.846B, diluted EPS of ($0.31), and EBITDA of $288M with a 10% margin .
  • Results missed S&P Global consensus: EPS ($0.26*) vs $0.69*; revenue $2.846B vs $2.925B*; EBITDA $288M vs $440M*; management flagged ~$80M EBITDA impact from outages and ~$100M YoY energy/feedstock headwind .
  • HIP remains resilient: sequential sales +2% on +4% volume with 20% EBITDA margin; full-year HIP revenue and margin now expected toward the low end of prior ranges (revenue $4.4–$4.6B; EBITDA margin 20–22%) .
  • Capex guidance cut ~10% to ~$900M and company-wide cost savings target raised to $150–$175M (≈$40M delivered in Q1); balance sheet remains strong with $2.5B cash/securities and $4.6B debt .

What Went Well and What Went Wrong

What Went Well

  • HIP delivered solid resilience: sales +2% q/q on +4% volume and 20% EBITDA margin; operating income rose to $148M vs $129M in Q4 2024 .
  • Turnarounds completed: Petro 1 ethylene unit and Geismar VCM tie-ins finished in April/May, positioning higher operating rates and improved reliability going forward .
  • Strong liquidity and shareholder returns: $2.5B cash/securities, $4.6B debt; Q1 dividend declared at $0.525 per share; continued buybacks ($30M in Q1) .
  • Quote: “HIP’s sequential sales volume growth of 4% was led by solid double-digit growth in Compounds, Siding & Trim, and Roofing…” — Jean‑Marc Gilson .

What Went Wrong

  • PEM margin compression: EBITDA fell to $73M (4% margin) vs $220M in Q4 and $253M in Q1 2024; operating loss of ($163M) driven by cost inflation and outages .
  • Energy/feedstock spike: ~59% increase in natural gas and ~42% increase in ethane costs YoY; ~$100M cost headwind; price initiatives lagged due to flattening cost curves .
  • Working capital seasonality and turnaround cash outflows drove net cash used in operations of ($77M); free cash flow was ($325M) .
  • Analyst concern: HIP margin degradation from mix shifts (Pipe & Fittings pull-forward) and lagged resin pass-through; management guided HIP margins toward low end .

Financial Results

Consolidated Performance

MetricQ3 2024Q4 2024Q1 2025
Net Sales ($USD Billions)$3.117 $2.843 $2.846
Diluted EPS ($)$0.83 $0.06 ($0.31)
EBITDA ($USD Millions)$505 $416 $288
EBITDA Margin (%)16% 15% 10%
Net Income Attributable ($USD Millions)$108 $7 ($40)

Year-over-Year Comparison

MetricQ1 2024Q1 2025
Net Sales ($USD Billions)$2.975 $2.846
Diluted EPS ($)$1.34 ($0.31)
EBITDA ($USD Millions)$546 $288
EBITDA Margin (%)18% 10%

Actuals vs S&P Global Consensus (Q1 2025)

MetricActualConsensus# of Estimates
Revenue ($USD Billions)$2.846 $2.925*12*
EBITDA ($USD Millions)$288 $440*—
Primary EPS ($)($0.31) $0.69*9*

Values marked with * retrieved from S&P Global.

Segment Performance

Segment MetricQ1 2024Q4 2024Q1 2025
HIP Net External Sales ($USD Millions)$1,044 $981 $996
HIP EBITDA ($USD Millions)$264 $188 $203
HIP EBITDA Margin (%)25% 19% 20%
HIP Income from Operations ($USD Millions)$210 $129 $148
PEM Net External Sales ($USD Millions)$1,931 $1,862 $1,850
PEM EBITDA ($USD Millions)$253 $220 $73
PEM EBITDA Margin (%)13% 12% 4%
PEM Income (Loss) from Operations ($USD Millions)$22 ($41) ($163)

KPIs and Balance Sheet

KPIQ1 2024Q4 2024Q1 2025
Cash from Operations ($USD Millions)$169 $434 ($77)
Capital Expenditure ($USD Millions)$272 $285 $248
Free Cash Flow ($USD Millions)($103) $149 ($325)
Cash, Cash Equivalents & Securities ($USD Billions)—$2.9 $2.5
Total Debt ($USD Billions)—$4.6 $4.6

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
HIP RevenueFY 2025$4.4–$4.6B Toward low end of $4.4–$4.6B Lowered (to low end)
HIP EBITDA MarginFY 202520–22% Toward low end of 20–22% Lowered (to low end)
Company Cost SavingsFY 2025$125–$150M $150–$175M; ~$40M achieved in Q1 Raised
Company CapexFY 2025≈$1.0B ≈$900M Lowered ~10%
Effective Tax RateFY 202523% ~23% Maintained
Cash Interest ExpenseFY 2025~$160M ~$160M Maintained
DividendQ1 2025—$0.525 per share (payable Jun 5, 2025) Announced

Earnings Call Themes & Trends

TopicQ3 2024 (Prior-2)Q4 2024 (Prior-1)Q1 2025 (Current)Trend
Feedstock/Energy CostsOutages drove elevated costs; $120M pretax impact Cost reductions underway; margin improvement despite lower prices 59% nat gas, 42% ethane YoY; ~$100M headwind; normalization in April/May Improving costs into Q2
Tariffs/MacroWatching evolving trade flows; consultant price outlook mixed Underappreciated PEM earnings leverage as prices recover Direct tariff impact manageable; demand uncertainty causing customer pauses Uncertain
HIP Mix & MarginsWeather/hurricanes slowed volume; margins stable on price FY25 HIP margin guided 20–22% on mix shift Pipe & Fittings pull-forward; lag in resin pass-through; low-end margin outlook Near-term pressure
Price Initiatives (PVC/PE/Caustic)PVC/PE price nominations; seasonal pressure PE/PVC/caustic nominations reflect demand PVC increases in Feb/Mar; PE contract unsettled; caustic traction Mixed but constructive
EpoxyMothball AC/ECH; pursuing duties US/EU Antidumping/countervailing duties progress; tempered expectations Still challenged; actions ongoing; duties help but limited Gradual improvement
Operational ReliabilityTwo plants returned; lessons applied Focus on reliability; HIP record results Petro 1/Geismar tie-ins complete; ramping rates Improving
Capex & Cost SavingsTarget $1B capex; $125–$150M savings Delivered $170M savings in 2024 Capex cut to ~$900M; savings raised to $150–$175M Positive

Management Commentary

  • “A strong run-up in feedstock and energy prices increased PEM's cost by approximately $100 million year-over-year… planned turnarounds and unplanned outages… impacted our EBITDA by approximately $80 million.” — Jean‑Marc Gilson .
  • “We are raising our cost reduction target for 2025 by $25 million to a new range of $150 million to $175 million… reducing our capital spending forecast for 2025 by 10% to $900 million…” — Steve Bender .
  • “While we don't currently expect recent tariff announcements to materially impact our costs or supply chains, the increased uncertainty… is causing some of our customers to pause activity…” — Jean‑Marc Gilson .
  • “Our strong investment grade balance sheet with $2.5 billion of cash… and no near-term debt maturities… and our unbroken string of quarterly dividends for over 20 years since our IPO.” — Jean‑Marc Gilson .

Q&A Highlights

  • HIP margin trajectory: Mix shift from Pipe & Fittings pull-forward; management’s low-end margin guide contains conservatism; expect sequential lift in Q2 if weather/seasonality cooperate .
  • Tariffs/exports: Direct cost impact manageable; export PVC margins narrow but positive; domestic pricing reflects export trends .
  • Feedstock outlook: Gas ~3.5 and ethane trending lower in April/May, providing tailwinds for Q2 .
  • Outage sizing: ~$80M EBITDA impact, ~2/3 planned turnarounds; assets ramping through April/May .
  • Capex flexibility & buybacks: Capex can be tightened excluding safety/reliability; opportunistic buybacks considered alongside growth/M&A .

Estimates Context

  • WLK missed consensus materially on EPS and EBITDA, with a small revenue shortfall, driven by cost spikes and outages. Consensus EPS $0.69* vs actual ($0.31); revenue $2.925B* vs $2.846B; EBITDA $440M* vs $288M .
  • Given raised cost savings and stabilizing feedstocks, estimates may need to adjust lower near-term for PEM margins and higher for HIP volumes/mix recovery into Q2/Q3, while modeling capex at ~$900M and tax rate ~23% .
    Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term earnings pressure centered in PEM from Q1 cost spikes and outage impacts; improving feedstocks and completed turnarounds should support sequential EBITDA recovery in Q2 .
  • HIP resilience remains the anchor: 20% EBITDA margin in seasonally weak Q1; expect volume-driven improvement into Q2/Q3, though margins likely hover near low end (20–22%) given mix dynamics .
  • Balance sheet optionality intact: $2.5B cash/securities and staggered debt maturities support buybacks/M&A and capex flexibility; dividend sustained .
  • Model updates: Capex ~$900M, savings $150–$175M, tax ~23%, cash interest ~$160M; incorporate lower PEM margin in H1 and gradual Q2/Q3 improvement on price actions .
  • Watch catalysts: Resolution of tariff uncertainty, settling of PE/PVC contracts, epoxy trade actions, and any signs of housing starts acceleration benefiting HIP volumes .
  • Stock narrative: Integrated chain and HIP stability underpin downside protection; upside levered to PEM recovery as cost tailwinds and price initiatives materialize .
  • Trading lens: Fading cost headwinds and post-turnaround rate ramps are Q2/Q3 setup; monitor monthly resin price settlements and caustic nominations for momentum signals .

Additional Notes

  • Q1 2025 press release supplemental: Company-level price/volume variances YoY (-2% price, -2% volume) and q/q (-1% price, +1% volume); HIP (-2% price, +4% volume q/q), PEM flat price q/q, volume -1% .
  • Unable to locate a distinct “8‑K 2.02” filing for Q1 2025; analysis relies on the Q1 2025 earnings press release and the full earnings call transcript .