Executive Summary

Q3 2025 printed net sales of $2.84B, diluted EPS of $(6.06) GAAP and $(0.29) excluding identified items; EBITDA was $(431)M GAAP and $313M ex-identified items, driven by a $727M non-cash goodwill impairment in North American Chlorovinyls and $17M shutdown accruals .
HIP remained resilient but softened sequentially (EBITDA $215M, 20% margin) on lower volumes and ~$20M period costs; PEM improved reliability but pricing headwinds (PVC export mix shift) kept EBITDA ex-items at $90M .
Consensus vs actual: EPS missed (consensus $0.22 vs $(0.29) ex-items), revenue missed ($2.95B vs $2.84B), and EBITDA ex-items missed ($371M vs $313M) as pricing/mix offset reliability gains; 11 EPS and 13 revenue estimates were tracked by S&P Global*.
Management lowered HIP’s 2025 guidance to the low end of prior ranges ($4.2–$4.4B sales, 20–22% EBITDA margin), reaffirmed 2025 capex ~$900M and 2025 cash interest ~$160M, and outlined 2026 self-help: $200M cost saves plus ~$100M annual loss removal from Pernis closure .

What Went Well and What Went Wrong

What Went Well

HIP stability despite housing softness: “Our HIP segment performed very well, holding sales in line with the prior-year period” with sales $1.09B and EBITDA $215M; demand firm in siding/trim/roofing; pipe & fittings volumes supported by municipal infrastructure .
Reliability improving in PEM: EBITDA ex-items rose sequentially ($90M vs $52M), with a $36M tailwind from better plant reliability; volumes up 1% QoQ despite 4% price decline .
Strategic actions: Pernis shutdown to remove ~$100M annual losses beginning late 2025 into 2026; cost savings plan accelerating toward $200M in 2026 (75% in PEM) .

What Went Wrong

Large non-cash impairment: $727M goodwill impairment in North American Chlorovinyls drove GAAP losses (EPS $(6.06), EBITDA $(431)M) and PEM reported EBITDA $(654)M .
Pricing pressure and mix: Company ASP down 2% QoQ and 5% YoY; PEM ASP −4% QoQ and −7% YoY (PVC pricing/export mix), HIP ASP roughly flat QoQ and −1% YoY with lower-margin mix .
One-time and accounting headwinds: ~$20M period costs in HIP and estimated FIFO headwind ~$37M (≈$32M PEM, ≈$5M HIP) depressed margins; HIP EBITDA margin 20% (22% excluding these period costs/FIFO) .

Financial Results

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($USD Billions)	$3.117	$2.953	$2.838
Diluted EPS (GAAP) ($)	$0.83	$(1.11)	$(6.06)
Diluted EPS excl. Identified Items ($)	$1.41	$(0.09)	$(0.29)
EBITDA (GAAP) ($USD Millions)	$505	$210	$(431)
EBITDA excl. Identified Items ($USD Millions)	$580	$340	$313
Operating Income Margin (%)	6%	(4)%	(27)%
EBITDA Margin (%)	16%	7%	(15)%
EBITDA Margin excl. Identified Items (%)	19%	12%	11%

Segment breakdown

Segment Metric	Q3 2024	Q2 2025	Q3 2025
HIP Net Sales ($USD Millions)	$1,098	$1,160	$1,091
HIP Operating Income ($USD Millions)	$202	$222	$151
HIP EBITDA ($USD Millions)	$262	$275	$215
PEM Net Sales ($USD Millions)	$2,019	$1,793	$1,747
PEM Operating Income (Loss) excl. Items ($USD Millions)	$66	$(188)	$(158)
PEM EBITDA (reported) ($USD Millions)	$222	$(78)	$(654)
PEM EBITDA excl. Items ($USD Millions)	$297	$52	$90

KPIs (pricing and volume variances)

KPI	Q3’25 vs Q3’24 Avg Price	Q3’25 vs Q3’24 Volume	Q3’25 vs Q2’25 Avg Price	Q3’25 vs Q2’25 Volume
Company	−5%	−4%	−2%	−1%
HIP	−1%	~0%	~0%	−6%
PEM	−7%	−6%	−4%	+1%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
HIP Sales	FY 2025	$4.2–$4.4B	Low end of $4.2–$4.4B	Lowered within range
HIP EBITDA Margin	FY 2025	20%–22%	Low end of 20%–22%	Lowered within range
Total Capex	FY 2025	~$900M (prior communicated)	~$900M	Maintained
Cash Interest Expense	FY 2025	—	~$160M	Introduced
Structural Cost Savings	FY 2025	Target $150–$175M	~$115M achieved YTD; target unchanged	Progress update
Structural Cost Savings	FY 2026	$200M target	$200M target reaffirmed	Maintained
Footprint Optimization	FY 2026	Remove ~$100M annual losses (Pernis)	Benefits begin in Q4’25, continue in 2026	Maintained/Timing clarified

Other relevant item: Ethylene Sales Agreement between OpCo and Westlake renewed through 12/31/2027, maintaining pricing formula and 95% offtake; services/omnibus agreements aligned to term .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
PEM pricing/macro (PVC, chlorovinyls)	Q1: Higher feedstock/energy costs, weak demand; delays in price increases . Q2: ASP −2% YoY; volumes −9%; tariff uncertainty; outages .	ASP −4% QoQ, −7% YoY; export mix shift lowered pricing; extended trough; $727M goodwill impairment .	Deteriorated YoY; sequential pricing/mix headwinds persist despite reliability gains.
Plant reliability/outages	Q1: PEM EBITDA hit by ~$80M; Petro-1 turnaround completed . Q2: Elevated planned/unplanned outages; PEM EBITDA impact ~$110M .	Reliability tailwind ~$36M; improving into Q4; 2025 outages impacted PEM by ~$200M .	Improving; tailwinds expected to continue.
HIP demand/housing affordability	Q1: HIP volumes +4% QoQ; mix pressure . Q2: HIP volumes +14% QoQ; margin 24% .	HIP volumes −6% QoQ; period costs ~$20M and ~$5M FIFO headwind; guidance to low end .	Near-term softer on seasonality/mix; medium-term constructive.
Cost savings/self-help	Q2: Expanded scope; +$200M by 2026 .	$115M achieved YTD toward $150–$175M 2025; $200M in 2026 (75% PEM) .	Executing; cadence to be pocketed in 2026.
Footprint optimization (Pernis, Wusu)	Q2: Pernis closure announced; Huasu temporary cessation .	Pernis shutdown removes ~$100M annual losses starting in 2026; benefits accruing from Q4 .	Actioned; benefit starting.
Tariffs/supply chain	Q2: Tariff uncertainty disrupted exports .	Industry exports of PVC ~40%; WLK historically mid-30% to low-30%; shifted back with reliability .	Normalizing export balance.
Epoxy/regulatory	—	Epoxy outlook improved post Pernis closure; feedstock sourcing lowers costs across regions .	Improving profitability outlook.

Management Commentary

“Global macroeconomic conditions remained challenging… particularly for chlorovinyls. As a result… we recorded a non-cash impairment charge of $727 million… We remain committed to this business… and will assess opportunities to optimize its footprint” — CEO Jean‑Marc Gilson .
“Our HIP segment performed very well… HIP remains well positioned to continue to outgrow the market by ‘winning with the winners’” — CEO .
“We have identified $200 million of cost savings… footprint optimization actions… including the Pernis Shutdown, will remove approximately $100 million of annual losses starting in 2026” — CEO .
“Our utilization of the FIFO method… resulted in an unfavorable pre‑tax impact of $37 million… ~$32M at PEM and ~$5M at HIP” — CFO Steve Bender .
“We continue to expect HIP revenue to be in the range of $4.2 to $4.4 billion with an EBITDA margin between 20% and 22% for 2025… now expect to be towards the lower end” — CFO .

Q&A Highlights

Commodity pricing/operating rates: Management sees polyethylene prices stable-to-lower into Q4 amid ample supply; operating rates managed to value creation; industry PE operating rates mid-80% to low-80% .
Portfolio construct: Leadership emphasized synergies between PEM PVC supply and HIP demand; continue evaluating options but believe integrated model creates value .
PVC outlook/export mix: Near/mid-term pressure persists; reliability allows return to historic export levels (mid-30%–low-30% of production vs industry ~40%) .
HIP guidance revision: Lower end due to affordability-driven mix shifts and non-recurring period costs; 2026 view constructive with repair/remodel resilience .
Caustic/chlorine: Markets well supplied; consultancy price increases noted seasonally but management expects relative stability near term .
Self-help bridge to 2026: $200M cost saves + ~$100M footprint benefit + recovery from 2025 outages point to significant EBITDA uplift if pricing stable; cadence expected to be realized in 2026 .

Estimates Context

Metric	Consensus (S&P Global)*	Actual
Primary EPS (ex-items) ($)	$0.22*	$(0.29)
Revenue ($USD Billions)	$2.950*	$2.838
EBITDA ex-items ($USD Millions)	$370.7*	$313
EPS – # of Estimates	11*	—
Revenue – # of Estimates	13*	—

Values retrieved from S&P Global.*

Implication: Broad-based miss versus consensus on EPS, revenue, and EBITDA ex-items due to pricing/mix headwinds in PEM and HIP period costs, despite reliability improvements. Estimate revisions likely skew lower for PEM into Q4/2026 unless pricing firms.

Key Takeaways for Investors

The quarter’s headline GAAP loss was driven by a one-time, non-cash $727M goodwill impairment in Chlorovinyls; ex-items results show underlying EBITDA of $313M, down sequentially but cushioned by reliability gains .
HIP remains a stabilizer; expect seasonal softness in Q4 and mix pressures, with 2025 guide trimmed to the low end; monitor repair/remodel and municipal pipe strength as offsetting pillars .
PEM pricing remains the swing factor; export mix shift and weak global demand pressured ASP; structural self-help (cost saves, Pernis closure) should improve 2026 margins if prices stabilize .
Near-term trading: Expect cautious sentiment post-miss and impairment; watch PVC/caustic price prints, PE spot, and signs of continued reliability tailwinds into Q4 as catalysts .
Medium-term thesis: Execution on $200M structural savings and ~$100M footprint benefit, plus normalized outage levels, provides clear EBITDA uplift potential in 2026 even in flat price scenarios .
Balance sheet supportive of strategy with $2.1B cash/investments and $4.7B total debt; capex ~$900M in 2025 remains on track .
Ecosystem alignment: Renewal of Ethylene Sales Agreement to 2027 supports OpCo offtake and cost framework, reducing uncertainty across the chain .

WESTLAKE CORP (WLK)·Q3 2025 Earnings Summary