UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	~~September~~June 30, ~~2022~~2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the Transition Period from to

Commission File No. 001-32260

Westlake Corporation

(Exact name of Registrant as specified in its charter)


Delaware						76-0346924
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

2801 Post Oak Boulevard, Suite 600

Houston, Texas 77056

(Address of principal executive offices, including zip code)

(713) 960-9111

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	WLK	The New York Stock Exchange
1.625% Senior Notes due 2029	WLK29	The New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act:

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No x

The number of shares outstanding of the registrant's sole class of common stock as of ~~October 28, 2022~~July 27, 2023 was ~~127,537,599.~~127,687,296.

Table of Contents

TABLE OF CONTENTS

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Table of Contents

WESTLAKE CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)


		September 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022

		(in millions of dollars, except par values and share amounts)					(in millions of dollars, except par values and share amounts)
ASSETS	ASSETS					ASSETS
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	1,778	$	1,908	Cash and cash equivalents	$	2,677	$	2,228
Accounts receivable, net	Accounts receivable, net	2,181		1,868		Accounts receivable, net	1,855		1,801
Inventories	Inventories	2,024		1,407		Inventories	1,671		1,866
Prepaid expenses and other current assets	Prepaid expenses and other current assets	118		80		Prepaid expenses and other current assets	93		78
Total current assets	Total current assets	6,101		5,263		Total current assets	6,296		5,973
Property, plant and equipment, net	Property, plant and equipment, net	8,301		7,606		Property, plant and equipment, net	8,550		8,525
Operating lease right-of-use assets	Operating lease right-of-use assets	583		562		Operating lease right-of-use assets	644		615
Goodwill	Goodwill	2,143		2,024		Goodwill	2,167		2,161
Customer relationships, net	Customer relationships, net	1,005		1,083		Customer relationships, net	955		993
Other intangible assets, net	Other intangible assets, net	570		497		Other intangible assets, net	552		572
Equity method investments	Equity method investments	1,147		1,007		Equity method investments	1,120		1,142
Other assets, net	Other assets, net	575		417		Other assets, net	697		569
Total assets	Total assets	$	20,425	$	18,459	Total assets	$	20,981	$	20,550
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	994	$	879	Accounts payable	$	802	$	889
Accrued and other liabilities	Accrued and other liabilities	1,461		1,196		Accrued and other liabilities	1,329		1,409
Current portion of long-term debt, net		6		269

Total current liabilities	Total current liabilities	2,461		2,344		Total current liabilities	2,131		2,298
Long-term debt, net	Long-term debt, net	4,813		4,911		Long-term debt, net	4,894		4,879
Deferred income taxes	Deferred income taxes	1,803		1,681		Deferred income taxes	1,692		1,735
Pension and other post-retirement benefits	Pension and other post-retirement benefits	394		291		Pension and other post-retirement benefits	358		355
Operating lease liabilities	Operating lease liabilities	474		461		Operating lease liabilities	536		504
Other liabilities	Other liabilities	292		243		Other liabilities	293		314
Total liabilities	Total liabilities	10,237		9,931		Total liabilities	9,904		10,085
Commitments and contingencies (Note 14)	Commitments and contingencies (Note 14)					Commitments and contingencies (Note 14)
Stockholders' equity	Stockholders' equity					Stockholders' equity
Preferred stock, $0.01 par value, 50,000,000 shares authorized; no shares issued and outstanding	Preferred stock, $0.01 par value, 50,000,000 shares authorized; no shares issued and outstanding	—		—		Preferred stock, $0.01 par value, 50,000,000 shares authorized; no shares issued and outstanding	—		—
Common stock, $0.01 par value, 300,000,000 shares authorized; 134,651,380 and 134,651,380 shares issued at September 30, 2022 and December 31, 2021, respectively		1		1
Common stock, held in treasury, at cost; 6,992,435 and 6,735,639 shares at September 30, 2022 and December 31, 2021, respectively		(439)		(399)
Common stock, $0.01 par value, 300,000,000 shares authorized; 134,651,380 and 134,651,380 shares issued at June 30, 2023 and December 31, 2022, respectively						Common stock, $0.01 par value, 300,000,000 shares authorized; 134,651,380 and 134,651,380 shares issued at June 30, 2023 and December 31, 2022, respectively	1		1
Common stock, held in treasury, at cost; 6,965,071 and 7,278,651 shares at June 30, 2023 and December 31, 2022, respectively						Common stock, held in treasury, at cost; 6,965,071 and 7,278,651 shares at June 30, 2023 and December 31, 2022, respectively	(463)		(467)
Additional paid-in capital	Additional paid-in capital	590		581		Additional paid-in capital	601		601
Retained earnings	Retained earnings	9,700		7,808		Retained earnings	10,484		9,885
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(231)		(36)		Accumulated other comprehensive loss	(79)		(89)
Total Westlake Corporation stockholders' equity	Total Westlake Corporation stockholders' equity	9,621		7,955		Total Westlake Corporation stockholders' equity	10,544		9,931
Noncontrolling interests	Noncontrolling interests	567		573		Noncontrolling interests	533		534
Total equity	Total equity	10,188		8,528		Total equity	11,077		10,465
Total liabilities and equity	Total liabilities and equity	$	20,425	$	18,459	Total liabilities and equity	$	20,981	$	20,550

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

WESTLAKE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022

		(in millions of dollars, except per share data and share amounts)									(in millions of dollars, except per share data and share amounts)
Net sales	Net sales	$	3,956	$	3,055	$	12,495	$	8,271	Net sales	$	3,251	$	4,483	$	6,607	$	8,539
Cost of sales	Cost of sales	3,180		2,037		8,989		5,872		Cost of sales	2,609		3,038		5,173		5,809
Gross profit	Gross profit	776		1,018		3,506		2,399		Gross profit	642		1,445		1,434		2,730
Selling, general and administrative expenses	Selling, general and administrative expenses	215		122		635		383		Selling, general and administrative expenses	213		220		435		420
Amortization of intangibles	Amortization of intangibles	39		29		124		83		Amortization of intangibles	30		43		61		85
Restructuring, transaction and integration-related costs	Restructuring, transaction and integration-related costs	6		6		24		6		Restructuring, transaction and integration-related costs	3		7		6		18
Income from operations	Income from operations	516		861		2,723		1,927		Income from operations	396		1,175		932		2,207
Other income (expense)	Other income (expense)									Other income (expense)
Interest expense	Interest expense	(44)		(61)		(134)		(130)		Interest expense	(42)		(44)		(84)		(90)
Other income, net	Other income, net	24		13		52		35		Other income, net	23		17		45		28
Income before income taxes	Income before income taxes	496		813		2,641		1,832		Income before income taxes	377		1,148		893		2,145
Provision for income taxes	Provision for income taxes	84		193		592		423		Provision for income taxes	70		275		179		508
Net income	Net income	412		620		2,049		1,409		Net income	307		873		714		1,637
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	11		13		34		38		Net income attributable to noncontrolling interests	10		15		23		23
Net income attributable to Westlake Corporation	Net income attributable to Westlake Corporation	$	401	$	607	$	2,015	$	1,371	Net income attributable to Westlake Corporation	$	297	$	858	$	691	$	1,614
Earnings per common share attributable to Westlake Corporation:	Earnings per common share attributable to Westlake Corporation:									Earnings per common share attributable to Westlake Corporation:
Basic	Basic	$	3.12	$	4.71	$	15.65	$	10.65	Basic	$	2.32	$	6.65	$	5.39	$	12.52
Diluted	Diluted	$	3.10	$	4.69	$	15.54	$	10.60	Diluted	$	2.31	$	6.60	$	5.35	$	12.43
Weighted average common shares outstanding:	Weighted average common shares outstanding:									Weighted average common shares outstanding:
Basic	Basic	127,943,400		128,060,193		128,118,160		128,053,337		Basic	127,649,341		128,341,132		127,599,093		128,206,988
Diluted	Diluted	128,747,012		128,765,814		129,003,750		128,710,097		Diluted	128,484,016		129,341,096		128,471,760		129,134,246

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

WESTLAKE CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022

		(in millions of dollars)									(in millions of dollars)
Net income	Net income	$	412	$	620	$	2,049	$	1,409	Net income	$	307	$	873	$	714	$	1,637
Other comprehensive income (loss), net of income taxes	Other comprehensive income (loss), net of income taxes									Other comprehensive income (loss), net of income taxes
Pension and other post-retirement benefits liability	Pension and other post-retirement benefits liability									Pension and other post-retirement benefits liability
Pension and other post-retirement benefits reserves adjustment	Pension and other post-retirement benefits reserves adjustment	—		1		1		1		Pension and other post-retirement benefits reserves adjustment	—		1		—		1
Income tax provision on pension and other post-retirement benefits liability	Income tax provision on pension and other post-retirement benefits liability	—		(1)		—		(1)		Income tax provision on pension and other post-retirement benefits liability	(13)		—		(13)		—
Foreign currency translation adjustments	Foreign currency translation adjustments									Foreign currency translation adjustments
Foreign currency translation	Foreign currency translation	(106)		(13)		(175)		2		Foreign currency translation	(1)		(61)		19		(69)
Income tax provision on foreign currency translation		(13)		(6)		(29)		(13)
Other comprehensive loss, net of income taxes		(119)		(19)		(203)		(11)
Income tax (provision) benefit on foreign currency translation										Income tax (provision) benefit on foreign currency translation	2		(13)		5		(16)
Other, net of income tax										Other, net of income tax	—		—		(1)		—
Other comprehensive income (loss), net of income taxes										Other comprehensive income (loss), net of income taxes	(12)		(73)		10		(84)
Comprehensive income	Comprehensive income	293		601		1,846		1,398		Comprehensive income	295		800		724		1,553
Comprehensive income attributable to noncontrolling interests, net of tax of $1 and $1 for the three months ended September 30, 2022 and 2021; and net of tax of $3 and $2 for the nine months ended September 30, 2022 and 2021, respectively		7		13		26		38
Comprehensive income attributable to noncontrolling interests, net of tax of $1 and $1 for the three months ended June 30, 2023 and 2022; and net of tax of $2 and $2 for the six months ended June 30, 2023 and 2022, respectively										Comprehensive income attributable to noncontrolling interests, net of tax of $1 and $1 for the three months ended June 30, 2023 and 2022; and net of tax of $2 and $2 for the six months ended June 30, 2023 and 2022, respectively	10		13		23		19
Comprehensive income attributable to Westlake Corporation	Comprehensive income attributable to Westlake Corporation	$	286	$	588	$	1,820	$	1,360	Comprehensive income attributable to Westlake Corporation	$	285	$	787	$	701	$	1,534

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

WESTLAKE CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)


		Common Stock			Common Stock, Held in Treasury																												Common Stock			Common Stock, Held in Treasury
		Number of Shares	Amount		Number of Shares	At Cost		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total																	Number of Shares		Amount	Number of Shares	At Cost	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Noncontrolling Interests	Total

		(in millions of dollars, except share amounts)																															(in millions of dollars, except share amounts)
Balances at December 31, 2021		134,651,380	$	1	6,735,639	$	(399)	$	581	$	7,808	$	(36)	$	573	$	8,528
Balances at December 31, 2022																		Balances at December 31, 2022	134,651,380	$	1	7,278,651	$	(467)	$	601	$	9,885	$	(89)		$	534	$	10,465
Net income	Net income	—	—		—	—		—		756		—		8		764															Net income		—		—	—	—	—	394	—	13	407
Other comprehensive loss		—	—		—	—		—		—		(9)		(2)		(11)

Other comprehensive income																		Other comprehensive income	—	—		—	—		—		—		22			—		22
Common stock repurchased																		Common stock repurchased	—	—		201,742	(22)		—		—		—			—		(22)
Shares issued—stock-based compensation	Shares issued—stock-based compensation	—	—		(403,743)	27		(17)		—		—		—		10															Shares issued—stock-based compensation		—		—	(469,404)	24	(20)	—	—	—	4
Stock-based compensation	Stock-based compensation	—	—		—	—		8		—		—		—		8															Stock-based compensation		—		—	—	—	9	—	—	—	9
Dividends declared	Dividends declared	—	—		—	—		—		(39)		—		—		(39)															Dividends declared		—		—	—	—	—	(47)	—	—	(47)
Distributions to noncontrolling interests	Distributions to noncontrolling interests	—	—		—	—		—		—		—		(10)		(10)															Distributions to noncontrolling interests		—		—	—	—	—	—	—	(10)	(10)
Noncontrolling interests		—	—		—	—		—		—		—		2		2
Balances at March 31, 2022		134,651,380	$	1	6,331,896	$	(372)	$	572	$	8,525	$	(45)	$	571	$	9,252

Balances at March 31, 2023																		Balances at March 31, 2023	134,651,380	$	1	7,010,989	$	(465)	$	590	$	10,232	$	(67)		$	537	$	10,828
Net income	Net income	—	—		—	—		—		858		—		15		873															Net income		—		—	—	—	—	297	—	10	307
Other comprehensive loss	Other comprehensive loss	—	—		—	—		—		—		(71)		(2)		(73)															Other comprehensive loss		—		—	—	—	—	—	(12)	—	(12)
Common stock repurchased	Common stock repurchased	—	—		412,490	(41)		—		—		—		—		(41)															Common stock repurchased		—		—	9,552	(1)	—	—	—	—	(1)
Shares issued—stock-based compensation	Shares issued—stock-based compensation	—	—		(103,079)	5		1		—		—		—		6															Shares issued—stock-based compensation		—		—	(55,470)	3	1	—	—	—	4
Stock-based compensation	Stock-based compensation	—	—		—	—		9		—		—		—		9															Stock-based compensation		—		—	—	—	10	—	—	—	10
Dividends declared	Dividends declared	—	—		—	—		—		(38)		—		—		(38)															Dividends declared		—		—	—	—	—	(45)	—	—	(45)
Distributions to noncontrolling interests	Distributions to noncontrolling interests	—	—		—	—		—		—		—		(14)		(14)															Distributions to noncontrolling interests		—		—	—	—	—	—	—	(14)	(14)

Balances at June 30, 2022		134,651,380	$	1	6,641,307	$	(408)	$	582	$	9,345	$	(116)	$	570	$	9,974
Balances at June 30, 2023																		Balances at June 30, 2023	134,651,380	$	1	6,965,071	$	(463)	$	601	$	10,484	$	(79)		$	533	$	11,077

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

WESTLAKE CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)


		Common Stock			Common Stock, Held in Treasury																												Common Stock			Common Stock, Held in Treasury
		Number of Shares	Amount		Number of Shares	At Cost		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total																	Number of Shares		Amount	Number of Shares	At Cost	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss	Noncontrolling Interests	Total

		(in millions of dollars, except share amounts)																															(in millions of dollars, except share amounts)
Balances at December 31, 2021																		Balances at December 31, 2021	134,651,380	$	1	6,735,639	$	(399)	$	581	$	7,808	$	(36)		$	573	$	8,528
Net income																		Net income	—	—		—	—		—		756		—			8		764
Other comprehensive loss																		Other comprehensive loss	—	—		—	—		—		—		(9)			(2)		(11)

Shares issued—stock-based compensation																		Shares issued—stock-based compensation	—	—		(403,743)	27		(17)		—		—			—		10
Stock-based compensation																		Stock-based compensation	—	—		—	—		8		—		—			—		8
Dividends declared																		Dividends declared	—	—		—	—		—		(39)		—			—		(39)
Distributions to noncontrolling interests																		Distributions to noncontrolling interests	—	—		—	—		—		—		—			(10)		(10)
Noncontrolling interests																		Noncontrolling interests	—	—		—	—		—		—		—			2		2
Balances at March 31, 2022																		Balances at March 31, 2022	134,651,380	$	1	6,331,896	$	(372)	$	572	$	8,525	$	(45)		$	571	$	9,252
Net income	Net income	—	—		—	—		—		401		—		11		412															Net income		—		—	—	—	—	858	—	15	873
Other comprehensive loss	Other comprehensive loss	—	—		—	—		—		—		(115)		(4)		(119)															Other comprehensive loss		—		—	—	—	—	—	(71)	(2)	(73)
Common stock repurchased	Common stock repurchased	—	—		372,430	(32)		—		—		—		—		(32)															Common stock repurchased		—		—	412,490	(41)	—	—	—	—	(41)
Shares issued—stock-based compensation	Shares issued—stock-based compensation	—	—		(21,302)	1		—		—		—		—		1															Shares issued—stock-based compensation		—		—	(103,079)	5	1	—	—	—	6
Stock-based compensation	Stock-based compensation	—	—		—	—		8		—		—		—		8															Stock-based compensation		—		—	—	—	9	—	—	—	9
Dividends declared	Dividends declared	—	—		—	—		—		(46)		—		—		(46)															Dividends declared		—		—	—	—	—	(38)	—	—	(38)
Distributions to noncontrolling interests	Distributions to noncontrolling interests	—	—		—	—		—		—		—		(10)		(10)															Distributions to noncontrolling interests		—		—	—	—	—	—	—	(14)	(14)

Balances at September 30, 2022		134,651,380	$	1	6,992,435	$	(439)	$	590	$	9,700	$	(231)	$	567	$	10,188
Balances at June 30, 2022																		Balances at June 30, 2022	134,651,380	$	1	6,641,307	$	(408)	$	582	$	9,345	$	(116)		$	570	$	9,974

The accompanying notes are an integral part of these consolidated financial statements.

~~Table of Contents~~

~~WESTLAKE CORPORATION~~

~~CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY~~

~~(Unaudited)~~

Common Stock Common Stock, Held in Treasury
Number of Shares Amount Number of Shares At Cost Additional Paid-in Capital Retained
Earnings Accumulated
Other
Comprehensive
Loss Noncontrolling
Interests Total
(in millions of dollars, except share amounts)
Balances at December 31, 2020 134,651,380 $ 1 6,821,174 $ (401) $ 569 $ 5,938 $ (64) $ 535 $ 6,578
Net income — — — — — 242 — 11 253
Other comprehensive loss — — — — — — (6) (1) (7)
Shares issued—stock-based compensation — — (301,112) 22 (13) — — — 9
Stock-based compensation — — — — 8 — — — 8
Dividends declared — — — — — (35) — — (35)
Distributions to noncontrolling interests — — — — — — — (11) (11)
Noncontrolling interests — — — — — — — 30 30
Balances at March 31, 2021 134,651,380 $ 1 6,520,062 $ (379) $ 564 $ 6,145 $ (70) $ 564 $ 6,825
Net income — — — — — 522 — 14 536
Other comprehensive income — — — — — — 14 1 15
Shares issued—stock-based compensation — — (18,397) 1 — — — — 1
Stock-based compensation — — — — 7 — — — 7
Dividends declared — — — — — (34) — — (34)
Distributions to noncontrolling interests — — — — — — — (11) (11)
Balances at June 30, 2021 134,651,380 $ 1 6,501,665 $ (378) $ 571 $ 6,633 $ (56) $ 568 $ 7,339

~~Table of Contents~~

~~WESTLAKE CORPORATION~~

~~CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY~~

~~(Unaudited)~~

Common Stock Common Stock, Held in Treasury
Number of Shares Amount Number of Shares At Cost Additional Paid-in Capital Retained
Earnings Accumulated
Other
Comprehensive
Loss Noncontrolling
Interests Total
(in millions of dollars, except share amounts)
Net income — — — — — 607 — 13 620
Other comprehensive loss — — — — — — (19) — (19)
Common stock repurchased — — 355,800 (30) — — — — (30)
Shares issued—stock-based compensation — — (27,148) 2 (2) — — — —
Stock-based compensation — — — — 7 — — — 7
Dividends declared — — — — — (38) — — (38)
Distributions to noncontrolling interests — — — — — — — (10) (10)
Balances at September 30, 2021 134,651,380 $ 1 6,830,317 $ (406) $ 576 $ 7,202 $ (75) $ 571 $ 7,869

~~The accompanying notes are an integral part of these consolidated financial statements.~~

Table of Contents

WESTLAKE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


		Nine Months Ended September 30,					Six Months Ended June 30,
		2022		2021			2023		2022

		(in millions of dollars)					(in millions of dollars)
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net income	Net income	$	2,049	$	1,409	Net income	$	714	$	1,637
Adjustments to reconcile net income to net cash provided by operating activities	Adjustments to reconcile net income to net cash provided by operating activities					Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	Depreciation and amortization	785		600		Depreciation and amortization	538		521
Stock-based compensation expense	Stock-based compensation expense	26		23		Stock-based compensation expense	21		17
Loss from disposition and write-off of property, plant and equipment	Loss from disposition and write-off of property, plant and equipment	36		14		Loss from disposition and write-off of property, plant and equipment	12		18
Deferred income taxes	Deferred income taxes	44		50		Deferred income taxes	(51)		81
Other losses, net	Other losses, net	24		21		Other losses, net	(11)		17
Changes in operating assets and liabilities, net of effect of business acquisitions	Changes in operating assets and liabilities, net of effect of business acquisitions					Changes in operating assets and liabilities, net of effect of business acquisitions
Accounts receivable	Accounts receivable	(100)		(414)		Accounts receivable	(34)		(416)
Inventories	Inventories	(338)		(180)		Inventories	205		(299)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(18)		(49)		Prepaid expenses and other current assets	(29)		(40)
Accounts payable	Accounts payable	2		184		Accounts payable	(43)		112
Accrued and other liabilities	Accrued and other liabilities	206		78		Accrued and other liabilities	(69)		66
Other, net	Other, net	(156)		(99)		Other, net	(186)		(101)
Net cash provided by operating activities	Net cash provided by operating activities	2,560		1,637		Net cash provided by operating activities	1,067		1,613
Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities
Acquisition of business, net of cash acquired	Acquisition of business, net of cash acquired	(1,171)		(428)		Acquisition of business, net of cash acquired	—		(1,163)
Additions to investments in unconsolidated subsidiaries	Additions to investments in unconsolidated subsidiaries	(177)		(19)		Additions to investments in unconsolidated subsidiaries	(2)		(156)
Additions to property, plant and equipment	Additions to property, plant and equipment	(811)		(414)		Additions to property, plant and equipment	(507)		(493)
Other, net	Other, net	11		19		Other, net	10		9
Net cash used for investing activities	Net cash used for investing activities	(2,148)		(842)		Net cash used for investing activities	(499)		(1,803)
Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities
Debt issuance costs		—		(18)

Distributions to noncontrolling interests	Distributions to noncontrolling interests	(34)		(32)		Distributions to noncontrolling interests	(24)		(24)
Dividends paid	Dividends paid	(123)		(107)		Dividends paid	(92)		(77)
Proceeds from debt issuance		—		1,668

Repayment of senior notes	Repayment of senior notes	(250)		—		Repayment of senior notes	—		(250)
Repurchase of common stock for treasury	Repurchase of common stock for treasury	(68)		(30)		Repurchase of common stock for treasury	(23)		(31)
Other, net	Other, net	(5)		6		Other, net	8		5
Net cash provided by (used for) financing activities		(480)		1,487
Net cash used for financing activities						Net cash used for financing activities	(131)		(377)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(67)		(9)		Effect of exchange rate changes on cash, cash equivalents and restricted cash	9		(30)
Net increase (decrease) in cash, cash equivalents and restricted cash	Net increase (decrease) in cash, cash equivalents and restricted cash	(135)		2,273		Net increase (decrease) in cash, cash equivalents and restricted cash	446		(597)
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	1,941		1,337		Cash, cash equivalents and restricted cash at beginning of period	2,246		1,941
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	1,806	$	3,610	Cash, cash equivalents and restricted cash at end of period	$	2,692	$	1,344

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

WESTLAKE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(in millions of dollars, except share amounts and per share data)

1. Basis of Financial Statements

The accompanying unaudited consolidated interim financial statements were prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim periods. Accordingly, certain information and footnotes required for complete financial statements under generally accepted accounting principles in the United States ("U.S. GAAP") have not been included. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto of Westlake Corporation ~~formerly known as Westlake Chemical Corporation~~ (the "Company"), included in the annual report on Form 10-K for the fiscal year ended December 31, ~~2021~~2022 (the ~~"2021~~"2022 Form 10-K"), filed with the SEC on February ~~23, 2022. The Company changed its name from Westlake Chemical Corporation to Westlake Corporation on February 18, 2022.~~22, 2023. These consolidated financial statements have been prepared in conformity with the accounting principles and practices as disclosed in the notes to the consolidated financial statements of the Company for the fiscal year ended December 31, ~~2021.~~2022. The Company operates as an integrated global manufacturer and marketer of performance and essential materials and housing and infrastructure products. These products include some of the most widely used materials in the world, which are fundamental to many diverse consumer and industrial markets, including residential construction, flexible and rigid packaging, ~~products, mobility and transportation~~automotive products, healthcare products, materials used in turbines to generate wind energy, water treatment, coatings as well as other durable and non-durable goods. The Company's customers range from large chemical processors and plastics fabricators to small construction contractors, municipalities and supply warehouses throughout North America, Europe and Asia.

In the opinion of the Company's management, the accompanying unaudited consolidated interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Company's financial position as of ~~September~~June 30, ~~2022,~~2023, its results of operations for the ~~three and nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, and the changes in its cash position for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021.~~2022.

Results of operations and changes in cash position for the interim periods presented are not necessarily indicative of the results that will be realized for the fiscal year ending December 31, ~~2022~~2023 or any other interim period. The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

~~Recasting~~Recently Issued Accounting Pronouncement

Leases (Topic 842): Common Control Arrangements ASU 2023-01

In March 2023, the Financial Accounting Standards Board ("FASB") issued accounting standards update No. 2023-01 to amend certain provisions of ~~Certain Prior Period Information~~

ASC 842 that apply to arrangements between related parties under common control. The update requires all companies to amortize leasehold improvements associated with common control leases over the asset’s useful life to the common control group regardless of the lease term. The amendment in this update is effective for all entities in fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early application is permitted. The Company ~~had historically operated~~is currently evaluating the impact of this accounting standard on the Company's consolidated financial position, results of operations and cash flows.

Recently Adopted Accounting Standards

Liabilities - Supplier Finance Programs (ASU No. 2022-04)

In September 2022, the FASB issued accounting standards update No. 2022-04 to enhance transparency of supplier finance programs. Under the ASU, the buyer in ~~two principal operating segments, Vinyls~~a supplier finance program is required to disclose information about the key terms of the program, outstanding confirmed amounts as of the end of the period, a rollforward of the amount of obligations confirmed and ~~Olefins. In~~ the ~~fourth quarter~~amount of ~~2021, the Company reorganized its business into two principal operating segments, Performance~~obligations subsequently paid, and ~~Essential Materials and Housing and Infrastructure Products. These reporting changes have been retrospectively reflected~~a description of where in the ~~segment results~~financial statements outstanding amounts are presented. The amendments in this update became effective for all entities for fiscal years beginning after December 15, 2022, including interim periods ~~presented.~~within those fiscal years, except for the disclosure of rollforward information, which is effective for fiscal years beginning after December 15, 2023. The Company adopted this accounting standard effective January 1, 2023, and the adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows.

~~Recent Accounting Pronouncement~~

Table of Contents

WESTLAKE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

Business Combinations - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers Update (ASU No.2021-08)

In October 2021, the ~~Financial Accounting Standards Board ("FASB")~~FASB issued an accounting standards update that requires acquiring entities to recognize and measure contract assets and contract liabilities in a business combination in accordance with the accounting guidance on Revenue from Contracts with Customers (ASC 606). The guidance in this update improves comparability for both the recognition and measurement of acquired revenue contracts with customers ~~as of~~at the date of and after a business combination. The accounting standard ~~will be~~became effective for reporting periods beginning after December 15, 2022. ~~Early adoption of the guidance is permitted.~~ The Company ~~does not expect that its adoption~~adopted this accounting standard effective January 1, 2023, and the standard will ~~have a material impact on the Company's consolidated financial position, results of operations and cash flows.~~

~~Table of Contents~~

~~WESTLAKE CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in millions of dollars, except share amounts and per share data)~~

be applicable to future business combinations.

Inflation Reduction Act of 2022

On August 16, 2022, the Inflation Reduction Act of 2022 (the "IRA") was signed into law. The IRA ~~among other provisions, imposes~~contains several revisions to the Internal Revenue Code, including a 15% corporate ~~alternative~~ minimum income tax ~~on the~~for corporations with average annual adjusted financial statement income over a three-tax-year period in excess of ~~certain large corporations~~$1 billion and is effective for the tax years beginning after December 31, 2022, ~~and~~ a 1% excise tax on stock repurchases made by publicly traded U.S. corporations after December 31, ~~2022. The~~2022, and business tax credits and incentives for the development of clean energy projects and the production of clean energy. At this time, the Company ~~is in the process of evaluating~~does not expect the IRA ~~and the~~will have a material impact ~~it may have~~ on the Company's consolidated financial statements. The Company continues to evaluate the IRA's impact as new information and guidance becomes available.

2. Hexion Epoxy Business Acquisition

On February 1, 2022, the Company completed its acquisition of Hexion's global epoxy business ("Westlake Epoxy") for a total final purchase consideration of $1,207. The assets acquired and liabilities assumed and the results of operations of the Westlake Epoxy business are included in the Performance and Essential Materials segment.

3. Financial Instruments

Restricted Cash and Cash Equivalents

The Company had restricted cash and cash equivalents of $15 and $18 at June 30, 2023 and December 31, 2022, respectively. The Company's restricted cash and cash equivalents are primarily related to balances that are restricted for payment of distributions to certain of the Company's current and former employees and are reflected primarily in other assets, net in the consolidated balance sheets.

4. Accounts Receivable

Accounts receivable consist of the following:


	June 30, 2023		December 31, 2022
Trade customers	$	1,666	$	1,676
Related parties	3		3
Allowance for credit losses	(27)		(28)
	1,642		1,651
Federal and state taxes	141		69
Other	72		81
Accounts receivable, net	$	1,855	$	1,801

119

Table of Contents

WESTLAKE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

~~2. Acquisitions~~

~~Hexion Epoxy Business.~~

On November 24, 2021, the Company, through a wholly-owned subsidiary, entered into a Stock Purchase Agreement (the "Hexion Epoxy Purchase Agreement") by and among Hexion Inc. ("Hexion"), a New Jersey corporation, and solely for the limited purposes set forth therein, the Company. Pursuant to the terms of the Hexion Epoxy Purchase Agreement, the Company agreed to acquire all of the equity interests in Hexion's global epoxy business ("Westlake Epoxy"). On February 1, 2022, the Company completed its acquisition of Westlake Epoxy for a total purchase consideration of $1,207 and accounted for the acquisition under the business combination method in accordance with Accounting Standard Codification Topic 805, Business Combinations. This acquisition represents a significant strategic expansion of the Company's Performance and Essential Materials businesses into additional high-growth, innovative and sustainability-oriented applications – such as wind turbine blades and light-weight automotive structural components. Because epoxies are produced from chlorine and caustic soda, the transaction also provides vertical integration with the Company's global chlor-alkali businesses. The assets acquired and liabilities assumed and the results of operations of the Westlake Epoxy business are included in the Performance and Essential Materials segment.

For the nine months ended September 30, 2022, the Company recognized acquisition-related costs of $6 for advisory, consulting and professional fees, and other expenses that were expensed as restructuring, transaction and integration-related costs as a component of the income from operations. The acquisition of Westlake Epoxy on the statement of cash flows is presented net of the cash and restricted cash acquired.

The following table summarizes the fair value of identified assets acquired and liabilities assumed at the date of acquisition. The preliminary allocation of consideration transferred is based on management's estimates, judgments and assumptions. These estimates, judgments and assumptions are subject to change upon final valuation and should be treated as preliminary values. The final allocation of purchase consideration could include changes in the estimated fair value of (1) inventories; (2) property, plant and equipment; (3) intangible assets comprising of customer relationships, trade names, developed technologies; (4) deferred income taxes; (5) leases; and (6) other assets.

~~The information below represents the purchase price allocation:~~


~~Cash~~	$	42
~~Accounts receivable~~	~~299~~
~~Inventories~~	~~346~~
~~Prepaid expenses and other current assets~~	24

~~Property, plant and equipment~~	~~660~~
~~Operating lease right-of-use assets~~	59
~~Intangible assets~~	~~145~~



~~Other assets~~	~~104~~
~~Total assets acquired~~	~~1,679~~
~~Accounts payable~~	~~189~~
~~Accrued and other liabilities~~	84
~~Deferred income taxes~~	95
~~Pensions and other post-retirement benefits~~	~~163~~
~~Operating lease liabilities~~	48
~~Other liabilities~~	19
~~Total liabilities assumed~~	~~598~~
~~Total identifiable net assets acquired~~	~~1,081~~
~~Noncontrolling interest~~	~~(2)~~
~~Goodwill~~	~~128~~
~~Total Westlake Corporation purchase consideration~~	$	~~1,207~~

~~Table of Contents~~

~~WESTLAKE CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in millions of dollars, except share amounts and per share data)~~

Management estimated that consideration paid exceeded the fair value of the net assets acquired. The excess of the total equity value of Westlake Epoxy based on the purchase consideration over net assets acquired was recorded as goodwill, most of which is not expected to be deductible for income tax purposes. The goodwill is primarily attributable to the assembled workforce and synergies expected to arise after the acquisition. The purchase accounting adjustments recorded since the date of the acquisition resulted in a $9 increase in goodwill. Intangible assets acquired as a result of the Westlake Epoxy acquisition are amortized on a straight-line basis to reflect the pattern in which the economic benefits of the intangible assets are realized. The Company has preliminarily estimated the useful lives of trade names, technology and customer relationships as 19 years, 17 years and 11 years, respectively.

The fair value for trade names and technology were estimated using the income approach, specifically the relief-from-royalty method which estimates the cost savings that accrue to the owner of the intangible assets that would otherwise be payable as royalties or licenses fees on revenues earned through the use of the asset. The fair value of customer relationships was estimated using the multi-period excess earnings method. The excess earning method model estimates revenues and cash flows derived from the asset and then deducts portions of the cash flow that can be attributed to supporting assets. The resulting cash flow, which is attributable solely to the asset acquired, is then discounted at a rate of return commensurate with the risk of the asset to calculate the present value.

~~Unaudited Pro Forma Financial Information~~

The acquired Westlake Epoxy business contributed net sales and net income of $1,146 and $68, respectively, to the Company for the period from February 1, 2022 to September 30, 2022. The following unaudited pro forma summary presents the results of operations of the Company as if the acquisition of Westlake Epoxy occurred on January 1, 2021:

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Net sales $ 3,956 $ 3,508 $ 12,654 $ 9,457
Net income attributable to Westlake Corporation $ 401 $ 678 $ 2,086 $ 1,468

The amounts have been calculated after applying the Company's accounting policies and adjusting the results of Westlake Epoxy to reflect additional depreciation, amortization, and other purchase accounting adjustments assuming the fair value adjustments to the property, plant and equipment and intangibles assets and other purchase accounting adjustments have been applied on January 1, 2021. The pro forma amounts do not include any potential synergies, cost savings or other expected benefits of the acquisition, and are presented for illustrative purposes only and are not necessarily indicative of results that would have been achieved if the acquisition had occurred as of January 1, 2021 or of future operating performance.

~~Boral Target Companies in North America.~~

On October 1, 2021, the Company completed its acquisition of Boral Limited's North American building products businesses in roofing, siding, trim and shutters, decorative stone and windows (the "Boral Target Companies") for a total final purchase consideration of $2,140 in an all-cash transaction. The assets acquired and liabilities assumed and the results of operations of the Boral Target Companies are included in the Housing and Infrastructure Products segment. The Company recognized intangible assets of $952, of which $645 is included in customer relationships, net on the Company's consolidated balance sheets and goodwill of $787. The purchase accounting adjustments for the nine months ended September 30, 2022, resulted in a $16 increase in goodwill. The intangible assets that have been acquired are being amortized over periods of 12 to 22 years.

~~Table of Contents~~

~~WESTLAKE CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in millions of dollars, except share amounts and per share data)~~

~~The information below represents the final purchase price allocation:~~


~~Cash~~	$	5
~~Accounts receivable~~	~~119~~
~~Inventories~~	~~156~~
~~Prepaid expenses and other current assets~~	3

~~Property, plant and equipment~~	~~482~~
~~Operating lease right-of-use assets~~	87
~~Intangible assets~~	~~952~~
~~Other assets~~	18
~~Total assets acquired~~	~~1,822~~
~~Accounts payable~~	46
~~Accrued and other liabilities~~	~~105~~
~~Deferred income taxes~~	~~243~~
~~Operating lease liabilities~~	73
~~Other liabilities~~	2
~~Total liabilities assumed~~	~~469~~
~~Total identifiable net assets acquired~~	~~1,353~~
~~Goodwill~~	~~787~~
~~Total Westlake Corporation purchase consideration~~	$	~~2,140~~

~~LASCO Fittings, Inc.~~

On August 19, 2021, the Company completed its acquisition of LASCO Fittings, Inc., a Delaware corporation ("LASCO"), a manufacturer of injected-molded polyvinyl chloride ("PVC") fittings that serve the plumbing, pool and spa, industrial, irrigation and retail markets in the United States, for a total final closing purchase consideration of $277. The assets acquired and liabilities assumed and the results of operations of LASCO are included in the Housing and Infrastructure Products segment. The Company recognized intangible assets of $77, of which $50 is included in customer relationships, net on the Company's consolidated balance sheets and goodwill of $105, with the remainder of the purchase consideration primarily allocated to property, plant and equipment, net and working capital balances. The intangible assets that have been acquired are being amortized over periods of 17 to 18 years.

~~Dimex LLC.~~

On September 10, 2021, the Company completed its acquisition of DX Acquisition Corp., a Delaware corporation ("Dimex"), a producer of various consumer products made from post-industrial-recycled PVC, polyethylene and thermoplastic elastomer materials, including, landscape edging; home, office and industrial matting; marine dock edging; and masonry joint controls. The total final closing purchase consideration was $172. The assets acquired and liabilities assumed and the results of operations of Dimex are included in the Housing and Infrastructure Products segment. The Company recognized intangible assets of $72, of which $48 is included in customer relationships, net on the Company's consolidated balance sheets and goodwill of $68, with the remainder of the purchase consideration primarily allocated to property, plant and equipment, net and working capital balances. The intangible assets that have been acquired are being amortized over periods of 17 to 19 years.

~~Table of Contents~~

~~WESTLAKE CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in millions of dollars, except share amounts and per share data)~~

~~3. Financial Instruments~~

~~Restricted Cash and Cash Equivalents~~

The Company had restricted cash and cash equivalents of $28 and $33 at September 30, 2022 and December 31, 2021, respectively. The Company's restricted cash and cash equivalents are primarily related to balances that are restricted for payment of distributions to certain of the Company's current and former employees. In addition, the Company's restricted cash and cash equivalents include RS Cogen, L.L.C. ("RS Cogen") cash that is restricted under its senior credit facility. Restricted cash and cash equivalents are reflected primarily in other assets, net in the consolidated balance sheets.

~~4. Accounts Receivable~~

~~Accounts receivable consist of the following:~~

September 30,
2022 December 31,
2021
Trade customers $ 2,001 $ 1,764
Related parties 3 3
Allowance for credit losses (36) (26)
1,968 1,741
Federal and state taxes 124 62
Other 89 65
Accounts receivable, net $ 2,181 $ 1,868

5. Inventories

Inventories consist of the following:


		September 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Finished products	Finished products	$	1,285	$	842	Finished products	$	1,039	$	1,157
Feedstock, additives, chemicals and other raw materials	Feedstock, additives, chemicals and other raw materials	530		374		Feedstock, additives, chemicals and other raw materials	410		496
Materials and supplies	Materials and supplies	209		191		Materials and supplies	222		213
Inventories	Inventories	$	2,024	$	1,407	Inventories	$	1,671	$	1,866

6. Goodwill

The ~~gross~~ carrying amounts and changes in the carrying amount of goodwill for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 were as follows:

Performance and Essential Materials Segment Housing and Infrastructure Products Segment Total
Balances at December 31, 2021 $ 902 $ 1,122 $ 2,024
Goodwill acquired during the period 119 — 119
Measurement period adjustments 9 16 25
Effects of changes in foreign exchange rates (17) (8) (25)
Balances at September 30, 2022 $ 1,013 $ 1,130 $ 2,143


	Performance and Essential Materials Segment		Housing and Infrastructure Products Segment		Total
Balances at December 31, 2022	$	1,020	$	1,141	$	2,161

Measurement period adjustments	4		1		5
Effects of changes in foreign exchange rates	—		1		1
Balances at June 30, 2023	$	1,024	$	1,143	$	2,167

~~Table of Contents~~

~~WESTLAKE CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in millions of dollars, except share amounts and per share data)~~

7. Accounts Payable

Accounts payable consist of the following:

September 30,
2022 December 31,
2021
Accounts payable—third parties $ 971 $ 849
Accounts payable to related parties 21 15
Notes payable 2 15
Accounts payable $ 994 $ 879


	June 30, 2023		December 31, 2022
Accounts payable—third parties	$	785	$	870
Accounts payable to related parties	14		16
Notes payable	3		3
Accounts payable	$	802	$	889

1610

Table of Contents

WESTLAKE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

8. Long-Term Debt

Long-term debt consists of the following:

September 30, 2022 December 31, 2021
Principal
Amount Unamortized
Discount
and Debt
Issuance
Costs Net
Long-term
Debt Principal
Amount Unamortized
Discount
and Debt
Issuance
Costs Net
Long-term
Debt
3.60% senior notes due 2022 (the "3.60% 2022 Senior Notes") $ — $ — $ — $ 250 $ — $ 250
0.875% senior notes due 2024 (the "0.875% 2024 Senior Notes") 300 (2) 298 300 (2) 298
3.60% senior notes due 2026 (the "3.60% 2026 Senior Notes") 750 (4) 746 750 (5) 745
Loan related to tax-exempt waste disposal revenue bonds due 2027 11 — 11 11 — 11
1.625% senior notes due 2029 (the "1.625% 2029 Senior Notes") 686 (7) 679 794 (8) 786
3.375% senior notes due 2030 (the "3.375% 2030 Senior Notes") 300 (3) 297 300 (4) 296
3.50% senior notes due 2032 (the "3.50% 2032 GO Zone Refunding Senior Notes") 250 (1) 249 250 (1) 249
2.875% senior notes due 2041 (the "2.875% 2041 Senior Notes") 350 (11) 339 350 (11) 339
5.0% senior notes due 2046 (the "5.0% 2046 Senior Notes") 700 (21) 679 700 (22) 678
4.375% senior notes due 2047 (the "4.375% 2047 Senior Notes") 500 (8) 492 500 (8) 492
3.125% senior notes due 2051 (the "3.125% 2051 Senior Notes") 600 (22) 578 600 (23) 577
3.375% senior notes due 2061 (the "3.375% 2061 Senior Notes") 450 (18) 432 450 (19) 431
8.73% RS Cogen debt due 2022 (the "8.73% 2022 RS Cogen Debt") 6 — 6 19 — 19
Term loans due 2026 (the "2026 Term Loans") 13 — 13 9 — 9
Total long-term debt 4,916 (97) 4,819 5,283 (103) 5,180
Less current portion:
3.60% 2022 Senior Notes — — — (250) — (250)
8.73% 2022 RS Cogen Debt (6) — (6) (19) — (19)
Long-term debt, net of current portion $ 4,910 $ (97) $ 4,813 $ 5,014 $ (103) $ 4,911


	June 30, 2023		December 31, 2022


0.875% senior notes due 2024	$	300		$	300
3.60% senior notes due 2026	750			750
Loan related to tax-exempt waste disposal revenue bonds due 2027	11			11
1.625% €700 million senior notes due 2029	762			750
3.375% senior notes due 2030	300			300
3.50% senior notes due 2032	250			250
2.875% senior notes due 2041	350			350
5.00% senior notes due 2046	700			700
4.375% senior notes due 2047	500			500
3.125% senior notes due 2051	600			600
3.375% senior notes due 2061	450			450
Term loans due 2026	14			15
Total long-term debt, principal amount	4,987			4,976
Less: unamortized discount and debt issuance costs	(93)			(97)
Total long-term debt, carrying value	$	4,894		$	4,879

Unamortized debt issuance costs on long-term debt were ~~$41~~$39 and ~~$42~~$40 at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

As of ~~September~~June 30, ~~2022,~~2023, the Company was in compliance with all of its long-term debt covenants.

~~Table of Contents~~

~~WESTLAKE CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in millions of dollars, except share amounts and per share data)~~

~~New~~ Credit Agreement

On June 9, 2022, the Company entered into a new $1,500 revolving credit facility that is scheduled to mature on June 9, 2027 (the ~~"New Credit~~"Credit Agreement") and, in connection therewith, terminated the Company's then existing revolving credit agreement. The ~~New~~ Credit Agreement bears interest at either (a) Adjusted Term Secured Overnight Financing Rate (as defined in the ~~New~~ Credit Agreement) plus a margin ranging from ~~1.000%~~1.00% to 1.625% per annum or (b) Alternate Base Rate (as defined in the ~~New~~ Credit Agreement) plus a margin ranging from ~~0.000%~~0.00% to 0.625% per annum, in each case depending on the credit rating of the Company. The ~~New~~ Credit Agreement contains certain affirmative and negative covenants, including a quarterly total leverage ratio financial maintenance covenant. As of ~~September~~June 30, ~~2022,~~2023, the Company was in compliance with the total leverage ratio financial maintenance covenant. The ~~New~~ Credit Agreement also contains certain events of default and, if and for so long as certain events of default have occurred and are continuing, any overdue amounts outstanding under the ~~New~~ Credit Agreement will accrue interest at an increased rate, the lenders can terminate their commitments to lend thereunder and payments of any outstanding amounts thereunder could be accelerated by the lenders. None of the Company's subsidiaries are required to guarantee the obligations of the Company under the ~~New~~ Credit Agreement.

The ~~New~~ Credit Agreement includes a $150 sub-limit for letters of credit, and any outstanding letters of credit will be deducted from availability under the facility. The ~~New~~ Credit Agreement also provides for a discretionary $50 commitment for swingline loans to be provided on a same-day basis. The Company may also increase the size of the facility, in increments of at least $25, up to a maximum of $500, subject to certain conditions and if certain lenders agree to commit to such an increase.

As of ~~September~~June 30, ~~2022,~~2023, the Company had no borrowings and no letters of credit outstanding, and had borrowing availability of $1,500, under the ~~New~~ Credit Agreement.

~~Redemption of 3.60% Senior Notes Due 2022~~

During April 2022, the Company provided notice to the trustee of the 3.60% 2022 Senior Notes that the Company had elected to redeem all of the outstanding 3.60% 2022 Senior Notes on May 14, 2022 (the "Redemption Date") pursuant to its optional redemption right under the indenture governing the 3.60% 2022 Senior Notes. The 3.60% 2022 Senior Notes were redeemed on May 14, 2022. The redemption price was equal to 100% of the principal amount of the 3.60% 2022 Senior Notes, plus accrued and unpaid interest on the 3.60% 2022 Senior Notes to the Redemption Date.

~~9. Accumulated Other Comprehensive Income (Loss)~~

~~Changes in accumulated other comprehensive income (loss) by component for the nine months ended September 30, 2022 and 2021 were as follows:~~

Pension and Other Post-Retirement Benefits
Liability,
Net of Tax Cumulative
Foreign
Currency
Exchange,
Net of Tax Total
Balances at December 31, 2021 $ 20 $ (56) $ (36)
Other comprehensive gain (loss) attributable to Westlake Corporation 1 (196) (195)
Balances at September 30, 2022 $ 21 $ (252) $ (231)
Balances at December 31, 2020 $ (24) $ (40) $ (64)
Other comprehensive loss attributable to Westlake Corporation — (11) (11)
Balances at September 30, 2021 $ (24) $ (51) $ (75)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

9. Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) by component for the six months ended June 30, 2023 and 2022 were as follows:


	Pension and Other Post-Retirement Benefits Liability, Net of Tax		Cumulative Foreign Currency Exchange, Net of Tax		Other, Net of Tax		Total
Balances at December 31, 2022	$	52	$	(141)	$	—	$	(89)
Net other comprehensive income (loss) attributable to Westlake Corporation	(13)		24		(1)		10
Balances at June 30, 2023	$	39	$	(117)	$	(1)	$	(79)

Balances at December 31, 2021	$	20	$	(56)	$	—	$	(36)
Net other comprehensive income (loss) attributable to Westlake Corporation	1		(81)		—		(80)
Balances at June 30, 2022	$	21	$	(137)	$	—	$	(116)

10. Fair Value Measurements

The Company reports certain assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Under the accounting guidance for fair value measurements, inputs used to measure fair value are classified in one of three levels:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

The Company has financial assets and liabilities subject to fair value measures. These financial assets and liabilities include cash and cash equivalents, accounts receivable, net, accounts payable and long-term debt, all of which are recorded at carrying value. The amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, net and accounts payable approximate their fair value due to the short maturities of these instruments.

The majority of the Company's long-term debt instruments are publicly-traded. A market approach, based upon quotes from financial reporting services, is used to measure the fair value of the Company's long-term debt. Because the Company's long-term debt instruments may not be actively traded, the inputs used to measure the fair value of the Company's long-term debt are classified as Level 2 inputs within the fair value hierarchy.

The carrying and fair values of the Company's total long-term debt are summarized ~~in the table below.~~below:

September 30, 2022 December 31, 2021
Carrying
Value Fair
Value Carrying
Value Fair
Value
3.60% 2022 Senior Notes $ — $ — $ 250 $ 252
0.875% 2024 Senior Notes 298 280 298 287
3.60% 2026 Senior Notes 746 699 745 805
Loan related to tax-exempt waste disposal revenue bonds due 2027 11 11 11 11
1.625% 2029 Senior Notes 679 518 786 824
3.375% 2030 Senior Notes 297 254 296 319
3.50% 2032 GO Zone Refunding Senior Notes 249 223 249 271
2.875% 2041 Senior Notes 339 222 339 339
5.0% 2046 Senior Notes 679 586 678 885
4.375% 2047 Senior Notes 492 380 492 592
3.125% 2051 Senior Notes 578 369 577 582
3.375% 2061 Senior Notes 432 262 431 432
8.73% 2022 RS Cogen Debt 6 6 19 19
2026 Term Loans 13 13 9 9


	June 30, 2023				December 31, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt	$	4,894	$	4,027	$	4,879	$	3,940

~~11. Income Taxes~~

The effective income tax rate was 16.9% for the three months ended September 30, 2022 as compared to 23.7% for the three months ended September 30, 2021. The effective income tax rate for the three months ended September 30, 2022 was below the statutory rate of 21.0% primarily due to an increase in U.S. federal research and development credits available to the Company. The effective income tax rate for the three months ended September 30, 2021 was above the statutory rate of 21.0% primarily due to state and foreign taxes.

The effective income tax rate was 22.4% for the nine months ended September 30, 2022 as compared to 23.1% for the nine months ended September 30, 2021. The effective income tax rate for the nine months ended September 30, 2022 and September 30, 2021 was above the statutory rate of 21.0% primarily due to state and foreign taxes.

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WESTLAKE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

11. Income Taxes

The effective income tax rate was 18.6% for the three months ended June 30, 2023 as compared to 23.9% for the three months ended June 30, 2022. The effective income tax rate for the three months ended June 30, 2023 was below the statutory rate of 21.0% primarily due to U.S. federal research and development credits available to the Company and the reduction of reserves for uncertain income tax positions as a result of a closed federal income tax audit partially offset by state and foreign taxes. The effective income tax rate for the three months ended June 30, 2022 was above the statutory rate of 21.0% primarily due to state and foreign taxes.

The effective income tax rate was 20.0% for the six months ended June 30, 2023 as compared to 23.7% for the six months ended June 30, 2022. The effective income tax rate for the six months ended June 30, 2023 was below the statutory rate of 21.0% primarily due to U.S. federal research and development credits available to the Company and the reduction of reserves for uncertain income tax positions as a result of a closed federal income tax audit mostly offset by state and foreign taxes. The effective income tax rate for the six months ended June 30, 2022 was above the statutory rate of 21.0% primarily due to state and foreign taxes.

12. Earnings and Dividends per Share

Earnings per Share

The Company has unvested restricted stock units outstanding that are considered participating securities and, therefore, computes basic and diluted earnings per share under the two-class method. Basic earnings per share for the periods are based upon the weighted average number of shares of common stock outstanding during each period. Diluted earnings per share include the effects of certain stock options and performance stock units.


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Net income attributable to Westlake Corporation	Net income attributable to Westlake Corporation	$	401	$	607	$	2,015	$	1,371	Net income attributable to Westlake Corporation	$	297	$	858	$	691	$	1,614
Less:	Less:									Less:
Net income attributable to participating securities	Net income attributable to participating securities	(2)		(3)		(10)		(7)		Net income attributable to participating securities	(1)		(5)		(3)		(9)
Net income attributable to common shareholders	Net income attributable to common shareholders	$	399	$	604	$	2,005	$	1,364	Net income attributable to common shareholders	$	296	$	853	$	688	$	1,605

The following table reconciles the denominator for the basic and diluted earnings per share computations shown in the consolidated statements of operations:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Weighted average common shares—basic	Weighted average common shares—basic	127,943,400		128,060,193		128,118,160		128,053,337		Weighted average common shares—basic	127,649,341		128,341,132		127,599,093		128,206,988
Plus incremental shares from:	Plus incremental shares from:									Plus incremental shares from:
Assumed exercise of options and vesting of performance stock units	Assumed exercise of options and vesting of performance stock units	803,612		705,621		885,590		656,760		Assumed exercise of options and vesting of performance stock units	834,675		999,964		872,667		927,258
Weighted average common shares—diluted	Weighted average common shares—diluted	128,747,012		128,765,814		129,003,750		128,710,097		Weighted average common shares—diluted	128,484,016		129,341,096		128,471,760		129,134,246

Earnings per common share attributable to Westlake Corporation:	Earnings per common share attributable to Westlake Corporation:									Earnings per common share attributable to Westlake Corporation:
Basic	Basic	$	3.12	$	4.71	$	15.65	$	10.65	Basic	$	2.32	$	6.65	$	5.39	$	12.52
Diluted	Diluted	$	3.10	$	4.69	$	15.54	$	10.60	Diluted	$	2.31	$	6.60	$	5.35	$	12.43

Excluded from the computation of diluted earnings per share are options to purchase ~~587,530~~386,526 and ~~426,918~~217,729 shares of common stock for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively; and ~~303,878~~347,470 and ~~476,162~~160,142 shares of common stock for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. These options were outstanding during the periods reported but were excluded because the effect of including them would have been antidilutive.

~~Dividends per Share~~

~~Dividends per common share for the three and nine months ended September 30, 2022 and 2021 were as follows:~~
Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Dividends per common share $ 0.3570 $ 0.2975 $ 0.9520 $ 0.8375

2013

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WESTLAKE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

Dividends per Share

Dividends declared per common share for the six months ended June 30, 2023 and 2022 were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Dividends per common share	$	0.3570	$	0.2975	$	0.7140	$	0.5950

13. Supplemental Information

Equity Method Investments

LACC, LLC Joint Venture

~~On March 15, 2022,~~As of June 30, 2023, the Company ~~completed the acquisition of~~owned an ~~additional 3.2% of the~~aggregate 50% membership ~~interests~~interest in LACC, LLC ("LACC")~~, from Lotte Chemical Corporation for $89.~~. The Company accounts for its investment in LACC under the equity method of accounting and ~~changes~~the change for the ~~nine~~six months ended ~~September~~June 30, ~~2022 were~~2023 was as follows:


	Investment in LACC





Balance at December 31, ~~2021~~2022	$	~~943~~1,075
~~Cash contributions~~	87
~~Additional interest purchased~~	89
Depreciation and amortization	~~(32)~~(25)

Balance at ~~September~~June 30, ~~2022~~2023	$	~~1,087~~1,050

Other Assets, Net

Other assets, net were ~~$575~~$697 and ~~$417~~$569 at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. Deferred turnaround costs, net of accumulated amortization, included in other assets, net were ~~$343~~$446 and ~~$261~~$359 at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

Accrued and Other Liabilities

Accrued and other liabilities were ~~$1,461~~$1,329 and ~~$1,196~~$1,409 at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. Accrued rebates, current portion of operating lease liabilities and accrued income taxes, which are components of accrued and other liabilities, were ~~$234~~$183, $113 and ~~$141,~~$172, respectively, at ~~September~~June 30, ~~2022~~2023 and ~~$213~~$227, $116 and ~~$88,~~$169, respectively, at December 31, ~~2021.~~2022. No other component of accrued and other liabilities was more than five percent of total current liabilities. Accrued liabilities with related parties were ~~$39~~$30 and ~~$49~~$44 at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

Restructuring, Transaction and Integration-Related Costs

The restructuring, transaction and integration-related costs of $6$3 and $7 for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~$24 for the nine months ended September 30,~~ 2022, and of $6 and $18 for the ~~three and nine~~six months ended ~~September~~June 30, ~~2021,~~2023 and 2022, primarily consisted of costs associated with the Company's ~~recent acquisitions.~~acquisitions in previous years.

Non-cash Investing Activity

Capital expenditure related liabilities, included in accounts payable and accrued and other liabilities, were ~~$149~~$102 and $74167 at ~~September~~June 30, 2023 and June 30, 2022, ~~and September 30, 2021,~~ respectively.

~~Operating Lease~~ Supplemental Cash Flow Information

~~Right-of-use assets obtained in exchange for operating lease obligations were $138 and $63 for the nine months ended September 30, 2022 and 2021, respectively.~~


	Six Months Ended June 30,
	2023		2022
Cash paid for:
Interest, net of interest capitalized	$	75	$	83
Income taxes	305		355
Operating lease information:
Right-of-use assets obtained in exchange for operating lease obligations	$	90	$	115

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

14. Commitments and Contingencies

The Company is involved in a number of legal and regulatory matters, principally environmental in nature, that are incidental to the normal conduct of its business, including lawsuits, investigations and claims. The outcome of these matters are inherently unpredictable. The Company believes that, in the aggregate, the outcome of all known legal and regulatory matters will not have a material adverse effect on its consolidated financial statements; however, under certain circumstances, if required to recognize costs in a specific period, when combined with other factors, outcomes with respect to such matters may be material to the Company's consolidated statements of operations in such period. The Company's assessment of the potential impact of environmental matters, in particular, is subject to uncertainty due to the complex, ongoing and evolving process of investigation and remediation of such environmental matters, and the potential for technological and regulatory developments. In addition, the impact of evolving claims and programs, such as natural resource damage claims, industrial site reuse initiatives and state remediation programs creates further uncertainty of the ultimate resolution of these matters. The Company anticipates that the resolution of many legal and regulatory matters, and in particular environmental matters, will occur over an extended period of time.

~~Antitrust Proceedings.~~ Caustic Soda Antitrust.The Company and other caustic soda producers were named as defendants in multiple purported class action civil lawsuits filed since March 2019 in the U.S. District Court for the Western District of New York. The lawsuits allege the defendants conspired to fix, raise, maintain and stabilize the price of caustic soda, restrict domestic (U.S.) supply of caustic soda and allocate caustic soda customers. The other defendants named in the lawsuits are Olin Corporation, K.A. Steel Chemicals (a wholly-owned subsidiary of Olin), Occidental Chemical Corporation d/b/a OxyChem, Shintech Incorporated and Formosa Plastics Corporation, U.S.A. Each of the lawsuits is filed on behalf of the respective named plaintiff or plaintiffs and a putative class comprised of either direct purchasers or indirect purchasers of caustic soda in the U.S. The plaintiffs in the putative class for such direct purchasers seek $861 in single damages from the defendants, in addition to treble damages and attorney's fees. The plaintiffs in the putative class for such indirect purchasers seek approximately $500 in single damages from the defendants, in addition to treble damages (if permitted under applicable state law) and injunctive relief. The defendants' joint motion to dismiss the direct purchaser lawsuits was denied. The defendants' joint motion to dismiss the indirect purchaser lawsuits was granted in part and denied ~~and the~~in part. Both groups of cases have proceeded to discovery. Beginning in October 2020, similar class action proceedings were also filed in Canada before the Superior Court of Quebec as well as before the Federal Court. These proceedings seek the certification or authorization of a class action on behalf of all residents of Canada who purchased caustic soda (including, in one of the cases, those who merely purchased products containing caustic soda) from October 1, 2015 through the present or such date deemed appropriate by the court. On December 10, 2021, the Superior Court of Quebec stayed its proceedings until after a final certification decision is released in the Federal Court proceedings. At this time, the Company is not able to estimate the impact, if any, that these lawsuits could have on the Company's consolidated financial statements either in the current period or in future periods.

Ethylene Antitrust.The Company and other ethylene consumers were named as defendants in a civil lawsuit filed by Shell Chemical Europe B.V. ("SCE") in March 2023 in the District Court of Amsterdam, the Netherlands. SCE is a producer of ethylene in the European market and the lawsuit alleges the defendants conspired to lower the purchase price for ethylene and ethylene derivatives by manipulating the monthly contract price. SCE is seeking a declaratory judgment establishing that the Company and the co-defendants are jointly and severally liable for alleged damages resulting from artificially lowered prices for ethylene and ethylene derivatives during the specified period. At this time, the Company is not able to estimate the impact, if any, that this lawsuit could have on the Company's consolidated financial statements either in the current period or in future periods.

Environmental. As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company had reserves for environmental contingencies totaling approximately ~~$55~~$53 and ~~$56,~~$55, respectively, most of which was classified as noncurrent liabilities. The Company's assessment of the potential impact of these environmental contingencies is subject to considerable uncertainty due to the complex, ongoing and evolving process of investigation and remediation, if necessary, of such environmental contingencies, and the potential for technological and regulatory developments.

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WESTLAKE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

Calvert City Proceedings. For several years, the Environmental Protection Agency (the "EPA") has been conducting remedial investigation and feasibility studies at the Company's Calvert City, Kentucky facility pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"). As the current owner of the Calvert City facility, the Company was named by the EPA as a potentially responsible party ("PRP") along with Goodrich Corporation ("Goodrich") and its successor-in-interest, Avient Corporation (formerly known as PolyOne Corporation, "Avient"). On November 30, 2017, the EPA published a draft Proposed Plan, incorporating by reference an August 2015 draft Remedial Investigation ("RI") report, an October 2017 draft Feasibility Study ("FS") report and a Technical Impracticability Waiver document dated December 19, 2017. On June 18, 2018, the EPA published an amendment to its Proposed Plan. The amended Proposed Plan describes a final remedy for the onshore portion of the site comprised of a containment wall, targeted treatment and supplemental hydraulic containment. The amended Proposed Plan also describes an interim approach to address the contamination under the river that would include recovery of any mobile contaminants by an extraction well along with further study of the extent of the contamination and potential treatment options. The EPA's estimated cost of implementation is $107, with an estimated $1 to $3 in annual operation and maintenance ("O&M") costs. In September 2018, the EPA published the Record of Decision ("ROD") for the site, formally selecting the preferred final and interim remedies outlined in the amended Proposed Plan. In October 2018, the EPA issued Special Notice letters to the PRPs for the remedial design phase of work under the ROD. In April 2019, the PRPs and the EPA entered into an administrative settlement agreement and order on consent for remedial design. In October 2019, the PRPs received special notice letters for the remedial action phase of work at the site. The Company, jointly with the other PRPs, submitted a good faith offer response in December 2019. On September 17, 2020, the EPA and the Department of Justice filed a proposed consent decree for the remedial action with the U.S. District Court for the Western District of Kentucky. On November 16, 2020, the Department of Justice filed a motion to approve and enter the consent decree. On January 28, 2021, the Court granted the unopposed motion to enter the consent decree, which became effective the same day. The Company's allocation of liability for remedial and O&M costs at the Calvert City site, if any, is governed by a series of agreements between the Company, Goodrich and Avient. These agreements and the associated litigation are described below.

In connection with the 1990 and 1997 acquisitions of the Goodrich chemical manufacturing complex in Calvert City, Goodrich agreed to indemnify the Company for any liabilities related to preexisting contamination at the complex. For its part, the Company agreed to indemnify Goodrich for post-closing contamination caused by the Company's operations. The soil and groundwater at the complex, which does not include the Company's nearby PVC facility, had been extensively contaminated by Goodrich's operations. In 1993, Goodrich spun off the predecessor of Avient, and that predecessor assumed Goodrich's indemnification obligations relating to preexisting contamination. In 2003, litigation arose among the Company, Goodrich and Avient with respect to the allocation of the cost of remediating contamination at the site. The parties settled this litigation in December 2007 and the case was dismissed. In the settlement, the parties agreed that, among other things: (1) Avient would pay 100% of the costs (with specified exceptions), net of recoveries or credits from third parties, incurred with respect to environmental issues at the Calvert City site from August 1, 2007 forward; and (2) either the Company or Avient might, from time to time in the future (but not more than once every five years), institute an arbitration proceeding to adjust that percentage. In May 2017, Avient filed a demand for arbitration. In this proceeding, Avient sought to readjust the percentage allocation of future costs and to recover approximately $11 from the Company in reimbursement of previously paid remediation costs. The Company's cross demand for arbitration seeking unreimbursed remediation costs incurred during the relevant period was dismissed from the proceedings when Avient paid such costs in full at the beginning of the arbitration hearing.

On July 10, 2018, Avient sued the Company in the U.S. District Court for the Western District of Kentucky and sought to invalidate the arbitration provisions in the parties' 2007 settlement agreement and enjoin the arbitration it had initiated in 2017. On July 30, 2018, the district court refused to enjoin the arbitration and, on January 15, 2019, the court granted the Company's motion to dismiss Avient's suit. On February 13, 2019, Avient appealed those decisions to the U.S. Court of Appeals for the Sixth Circuit. The court of appeals issued an opinion and final order on September 6, 2019, affirming the district court.

The arbitration hearing began in August 2018 and concluded in December 2018. On May 22, 2019, the arbitration panel issued its final award. It determined that Avient was responsible for 100% of the allocable costs at issue in the proceeding and that Avient would remain responsible for 100% of the costs to operate the existing groundwater remedy at the Calvert City site. In August 2019, Avient filed a motion to vacate before the U.S. District Court for the Western District of Kentucky, seeking to invalidate the final award under the Federal Arbitration Act. On February 11, 2020, the U.S. District Court for the Western District of Kentucky denied Avient's motion to vacate and affirmed the arbitration final award. Avient did not file a notice of appeal before the March 10, 2020 deadline to contest the court's decision. Accordingly, the final award was affirmed, and the arbitration proceeding is fully and finally resolved.

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WESTLAKE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

In March 2022, the Company filed a demand for arbitration seeking reimbursement for certain allocable costs incurred during the applicable period since May 2017, and which Avient has failed to pay or disputed as not subject to indemnity under the 1990 and 1997 agreements. In April 2022, Avient filed a complaint in the federal district court for the Western District of Kentucky disputing the enforceability of the 2007 settlement agreement and seeking to enjoin arbitration. Avient claims that the allocable costs at issue are up to $22, for which Avient claims the Company is totally liable. The Company disputes these claims and at this time, the Company believes it is unlikely that any remediation costs allocable to it would result in material expenditures in any individual reporting period.

~~Other Matter.~~Triad Hunter. In April 2018, Triad Hunter, LLC ("Triad Hunter") filed suit against the Company and certain of its subsidiaries in the Court of Common Pleas in Monroe County, Ohio seeking injunctive relief and alleging negligence and trespass at the Natrium Plant with respect to Triad Hunter's well drilling activities in Ohio. The case was initially dismissed. Triad Hunter appealed the dismissal, and in March 2019, the Court of Appeals in the Seventh Appellate District in Monroe County, Ohio reversed the dismissal. Trial began in October 2022. On October 27, 2022, the jury returned a verdict finding that the Company had committed trespass and was negligent in conducting salt mining operations at the Natrium Plant and awarded damages of approximately $70. No final judgment has yet been entered. The final judgment could include ~~punitive damages,~~ pre-judgment interest, post-judgment interest, and attorneys' fees. If the final judgment ~~orders~~required the Company to pay any amount of damages, the Company ~~will~~intends to appeal that decision to the Court of Appeals. Upon receipt of the jury verdict, the Company reserved approximately $70, ~~in the quarter ended September 30, 2022,~~ for the damages awarded to Triad Hunter.

Environmental ~~Remediation;~~Remediation: Reasonably Possible Matters. The Company's assessment of the potential impact of environmental contingencies is subject to considerable uncertainty due to the complex, ongoing and evolving process of investigation and remediation, if necessary, of such environmental contingencies, and the potential for technological and regulatory developments. As such, in addition to the amounts currently reserved, the Company may be subject to reasonably possible loss contingencies related to environmental matters in the range of ~~$65~~$75 to ~~$130.~~$135.

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WESTLAKE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

15. Segment Information

The Company ~~had historically operated~~operates in two principal operating ~~segments, Vinyls and Olefins. During the fourth quarter of 2021, the Company reorganized its business into two principal operating segments,~~segments: Performance and Essential Materials and Housing and Infrastructure Products. These segments are strategic business units that offer a variety of different materials and products. The Company manages each segment separately as each business requires different technology and marketing strategies. ~~These reporting changes have been retrospectively reflected in the segment results for all periods presented.~~


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Net external sales	Net external sales									Net external sales
Performance and Essential Materials	Performance and Essential Materials									Performance and Essential Materials
Performance Materials	Performance Materials	$	1,689	$	1,588	$	5,678	$	4,333	Performance Materials	$	1,140	$	2,060	$	2,422	$	3,989
Essential Materials	Essential Materials	1,022		734		2,969		1,877		Essential Materials	996		1,044		2,063		1,947
Total Performance and Essential Materials	Total Performance and Essential Materials	2,711		2,322		8,647		6,210		Total Performance and Essential Materials	2,136		3,104		4,485		5,936
Housing and Infrastructure Products	Housing and Infrastructure Products									Housing and Infrastructure Products
Housing Products	Housing Products	1,018		536		3,106		1,491		Housing Products	918		1,116		1,736		2,088
Infrastructure Products	Infrastructure Products	227		197		742		570		Infrastructure Products	197		263		386		515
Total Housing and Infrastructure Products	Total Housing and Infrastructure Products	1,245		733		3,848		2,061		Total Housing and Infrastructure Products	1,115		1,379		2,122		2,603
		$	3,956	$	3,055	$	12,495	$	8,271		$	3,251	$	4,483	$	6,607	$	8,539

Intersegment sales	Intersegment sales									Intersegment sales
Performance and Essential Materials	Performance and Essential Materials	$	248	$	202	$	788	$	586	Performance and Essential Materials	$	102	$	292	$	213	$	540
Housing and Infrastructure Products	Housing and Infrastructure Products	—		—		—		—		Housing and Infrastructure Products	—		—		—		—
		$	248	$	202	$	788	$	586		$	102	$	292	$	213	$	540

Income (loss) from operations	Income (loss) from operations									Income (loss) from operations
Performance and Essential Materials	Performance and Essential Materials	$	353	$	769	$	2,197	$	1,728	Performance and Essential Materials	$	215	$	965	$	618	$	1,844
Housing and Infrastructure Products	Housing and Infrastructure Products	186		103		607		270		Housing and Infrastructure Products	190		236		333		421
Corporate and other	Corporate and other	(23)		(11)		(81)		(71)		Corporate and other	(9)		(26)		(19)		(58)
		$	516	$	861	$	2,723	$	1,927		$	396	$	1,175	$	932	$	2,207

Depreciation and amortization	Depreciation and amortization									Depreciation and amortization
Performance and Essential Materials	Performance and Essential Materials	$	196	$	168	$	572	$	497	Performance and Essential Materials	$	217	$	192	$	427	$	376
Housing and Infrastructure Products	Housing and Infrastructure Products	65		34		206		98		Housing and Infrastructure Products	51		70		106		141
Corporate and other	Corporate and other	3		1		7		5		Corporate and other	3		2		5		4
		$	264	$	203	$	785	$	600		$	271	$	264	$	538	$	521

Other income, net										Other income, net
Performance and Essential Materials										Performance and Essential Materials	$	3	$	5	$	5	$	13
Housing and Infrastructure Products										Housing and Infrastructure Products	3		4		10		6
Corporate and other										Corporate and other	17		8		30		9
											$	23	$	17	$	45	$	28

Provision for (benefit from) income taxes										Provision for (benefit from) income taxes
Performance and Essential Materials										Performance and Essential Materials	$	14	$	222	$	81	$	424
Housing and Infrastructure Products										Housing and Infrastructure Products	47		58		84		102
Corporate and other										Corporate and other	9		(5)		14		(18)
											$	70	$	275	$	179	$	508

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WESTLAKE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)


		Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021
Other income, net
Performance and Essential Materials		$	12	$	9	$	25	$	25
Housing and Infrastructure Products		3		—		9		4
Corporate and other		9		4		18		6
		$	24	$	13	$	52	$	35

Provision for (benefit from) income taxes
Performance and Essential Materials		$	40	$	179	$	464	$	388
Housing and Infrastructure Products		44		25		146		65
Corporate and other		—		(11)		(18)		(30)
		$	84	$	193	$	592	$	423		Three Months Ended June 30,				Six Months Ended June 30,
											2023		2022		2023		2022
Capital expenditures	Capital expenditures									Capital expenditures
Performance and Essential Materials	Performance and Essential Materials	$	265	$	126	$	678	$	367	Performance and Essential Materials	$	194	$	192	$	420	$	413
Housing and Infrastructure Products	Housing and Infrastructure Products	51		17		126		45		Housing and Infrastructure Products	42		36		80		75
Corporate and other	Corporate and other	2		1		7		2		Corporate and other	4		2		7		5
		$	318	$	144	$	811	$	414		$	240	$	230	$	507	$	493

A reconciliation of total segment income from operations to consolidated income before income taxes is as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Income from operations	Income from operations	$	516	$	861	$	2,723	$	1,927	Income from operations	$	396	$	1,175	$	932	$	2,207
Interest expense	Interest expense	(44)		(61)		(134)		(130)		Interest expense	(42)		(44)		(84)		(90)
Other income, net	Other income, net	24		13		52		35		Other income, net	23		17		45		28
Income before income taxes	Income before income taxes	$	496	$	813	$	2,641	$	1,832	Income before income taxes	$	377	$	1,148	$	893	$	2,145


		September 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Total assets	Total assets					Total assets
Performance and Essential Materials	Performance and Essential Materials	$	13,990	$	11,938	Performance and Essential Materials	$	13,856	$	13,978
Housing and Infrastructure Products	Housing and Infrastructure Products	5,129		5,021		Housing and Infrastructure Products	5,093		5,022
Corporate and other	Corporate and other	1,306		1,500		Corporate and other	2,032		1,550
		$	20,425	$	18,459		$	20,981	$	20,550

~~Table of Contents~~

~~WESTLAKE CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued~~

~~(Unaudited)~~

~~(in millions of dollars, except share amounts and per share data)~~

16. Westlake Chemical Partners LP

In 2014, the Company formed Westlake Chemical Partners LP ("Westlake Partners") to operate, acquire and develop ethylene production facilities and related assets. Also in 2014, Westlake Partners completed its initial public offering of 12,937,500 common units.

As of ~~September~~June 30, ~~2022,~~2023, Westlake Partners had a 22.8% limited partner interest in Westlake Chemical OpCo LP ("OpCo"), and the Company retained a 77.2% limited partner interest in OpCo and a significant interest in Westlake Partners through the Company's ownership of Westlake Partners' general partner, 40.1% of the limited partner interests (consisting of 14,122,230 common units) and incentive distribution rights.

On October 4, 2018, Westlake Partners and Westlake Chemical Partners GP LLC, the general partner of Westlake Partners, entered into an Equity Distribution Agreement with UBS Securities LLC, Barclays Capital Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., RBC Capital Markets, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC to offer and sell Westlake Partners' common units, from time to time, up to an aggregate offering amount of $50. This Equity Distribution Agreement was amended on February 28, 2020 to reference a new shelf registration and subsequent renewals thereof for utilization under this agreement. No common units were issued under this program as of ~~September~~June 30, ~~2022.~~2023.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

This discussion and analysis should be read in conjunction with information contained in the accompanying unaudited consolidated interim financial statements of Westlake Corporation and the notes thereto and the consolidated financial statements and notes thereto of Westlake Corporation included in Westlake Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021~~2022 (the ~~"2021~~"2022 Form 10-K"). Unless otherwise indicated, references in this report to "we," "our," "us" or like terms refer to Westlake Corporation ("Westlake" or the "Company"). The following discussion contains forward-looking statements. Please read "Forward-Looking Statements" for a discussion of limitations inherent in such statements.

Overview

We are a vertically integrated global manufacturer and marketer of performance and essential materials and housing and infrastructure products. We operate in two principal operating segments, Performance and Essential Materials and Housing and Infrastructure Products. The Performance and Essential Materials segment includes Westlake North American Vinyls, Westlake North American Chlor-alkali & Derivatives, Westlake European & Asian Chlorovinyls, Westlake Olefins, Westlake Polyethylene and Westlake Epoxy. The Housing and Infrastructure Products segment includes Westlake Royal Building Products, Westlake Pipe & Fittings, Westlake Global Compounds and Westlake Dimex. Prior to our segment reorganization in the fourth quarter of 2021, we operated in two principal operating segments, Vinyls and Olefins. The change has been retrospectively reflected in the periods presented in this Form 10-Q. We are highly integrated along our materials chain with significant downstream integration from ethylene and chlor-alkali (chlorine and caustic soda) into vinyls, polyethylene, epoxy and styrene monomer. We also have substantial downstream integration from polyvinyl chloride ("PVC") into our building products, PVC pipes and fittings and PVC compounds in our Housing and Infrastructure Products segment.

During ~~third~~2022 and continuing through the second quarter ~~2022,~~of 2023, our European businesses ~~continued to be~~have been impacted by higher energy prices, inflation and reduced demand. Our North American businesses, where we derive a significant portion of our revenue, have also ~~saw~~experienced the impacts of ~~rising~~high energy costs and interest rates and ~~slowing demand.~~slower demand for most of our products since the second half of 2022. However, in recent months we have experienced lower energy costs as prices for electricity and natural gas have declined following the elevated 2022 levels and inflation appears to be easing. In the near term, we expect that volatility in energy prices, higher ~~energy costs,~~interest rates, inflation and other macroeconomic conditions ~~could~~will continue to reduce margins and demand for most of our products.

Performance and Essential Materials

Our performance and essential materials such as ethylene, PVC, polyethylene, epoxy and chlor-alkali are some of the most widely used materials in the world and are upgraded into a wide variety of higher value-added products used in many end-markets. Westlake is the second-largest chlor-alkali producer and the second-largest PVC producer in the world, which makes Westlake a leading global ~~leading~~ chlorovinyls producer. Our performance and essential materials are used by customers in food and specialty packaging; industrial and consumer packaging; medical health applications; PVC pipe applications; consumer durables; mobility and transportation; renewable wind energy; coatings; and housing and construction products. Chlor-alkali and petrochemicals are typically manufactured globally in large volume by a number of different producers using widely available technologies. The chlor-alkali and petrochemical industries exhibit cyclical commodity characteristics, and margins are influenced by changes in the balance between supply and demand and the resulting operating rates, the level of general economic activity and the price of raw materials. Due to the significant size of new plants, capacity additions are built in large increments and typically require several years of demand growth to be absorbed. The cycle is generally characterized by periods of tight supply, leading to high operating rates and margins, followed by a decline in operating rates and margins primarily as a result of excess new capacity additions.

~~Demand for~~ Westlake is one of the leading producers of epoxy specialty resins, modifiers and curing agents in Europe, the United States and Asia with a global reach to our ~~products~~end markets. Epoxy resins are the fundamental component of many types of materials and are often used in the ~~first half~~automotive, construction, wind energy, aerospace and electronics industries due to their superior adhesion, strength and durability. We are also a leading supplier of ~~2020 was negatively impacted by the onset~~Liquid and Solid Epoxy Resin. These base epoxies are used in a wide variety of ~~the COVID-19 pandemic.~~ industrial coatings applications.

Global demand for most of our products started ~~strengthening~~to recover from the effects of the COVID-19 pandemic in the second half of 2020 and remained strong through the first half of 2022. However, since the second half of 2022 and continuing so far in ~~the past year,~~2023, we have seen significant volatility in natural gas and electricity prices, particularly in Europe, as well as in ethane and ethylene prices. We have also experienced lower prices ~~primarily due to changes in~~and reduced demand ~~the timing~~ for ~~certain new ethylene capacity additions, the availability~~most of ~~natural gas liquids, and the~~our products globally. The ongoing conflict between Russia and ~~Ukraine. Depending on the performance of the global economy,~~Ukraine, the timing of resolution of the conflict between Russia and Ukraine, disruption in the global supply chain, volatility in natural gas and electricity prices in Europe and across the world, labor shortages and costs, potential resurgence of the COVID-19 pandemic, the trend of crude oil prices,certain new ethylene and polyethylene capacity additions in North America, Asia, and the Middle East, volatility in ~~the remainder of 2022~~natural gas and ~~beyond, the sustainability of the current demand for most of our products~~electricity prices, volatility in ~~this segment,~~crude oil prices, as well as inflationary pressures and concerns ~~over slower future economic growth, including~~of a possible recession in the ~~possibility~~near-term could have a continuing negative impact on the performance of ~~recession or financial market instability, our financial condition, results of operations or cash flows could be negatively or positively impacted.~~Performance and Essential Materials businesses.

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On February 1, 2022, we completed the acquisition of Westlake Epoxy for a purchase consideration of $1,207 million. The assets acquired and liabilities assumed and the results of operations of the Westlake Epoxy business are included in the Performance and Essential Materials segment. This acquisition represents a significant strategic expansion of Westlake's Performance and Essential Materials businesses into additional high-growth, innovative and sustainability-oriented applications – such as wind turbine blades and light-weight automotive structural components. We supply epoxy resin systems to composite fabricators in the wind energy, automotive and pipe markets. Epoxy specialty resins are also used for a variety of high-end coating applications that require the superior adhesion, corrosion resistance and durability of epoxy, such as protective coatings for industrial flooring, pipe, marine and construction applications and automotive coatings.

As noted in Item 1A, "Risk Factors" in our ~~2021~~2022 Form 10-K, we are subject to extensive environmental regulations, which may impose significant additional costs on our operations in the future. Further, concerns about greenhouse gas ("GHG") emissions and their ~~possible~~ effects on climate change has led to the enactment of regulations, and to proposed legislation and additional regulations, that could affect us in the form of increased cost of feedstocks and fuel, other increased costs of production and decreased demand for our products. ~~While we do not expect any of these enactments or proposals to have a material adverse effect on us in the near term, we cannot predict the longer-term effect~~The adoption and implementation of any international, federal or state legislation or regulations that restrict emissions of ~~these regulations~~GHGs could result in increased compliance costs or ~~proposals on our future financial condition, results of operations or cash flows.~~additional operating restrictions.

Housing and Infrastructure Products

Our Housing and Infrastructure Products segment is primarily comprised of building products, PVC pipes and fittings and PVC compound products. Our sales are affected by the individual decisions of distributors and dealers on the levels of inventory they carry, their views on product demand, their financial condition and the manner in which they choose to manage inventory risk. A significant portion of our performance in this segment is driven by the activities in the residential construction and repair and remodeling markets in North America, which began to decline at the end of the second quarter of 2022 due to the negative effect that rising mortgage ~~rates.~~rates in the United States had on buyer sentiment. Performance of our housing and infrastructure products businesses over time are generally reflective of the trends of building permits and housing starts in the New Residential Construction Survey by the U.S. Census Bureau and the Repair and Remodeling Index provided by the National Association of Home Builders, among others. Although we ultimately expect that the Infrastructure Investment and Jobs Act of 2021 and historically low residential housing construction may have a favorable long-term impact on certain industries related to our Housing and Infrastructure Products segment, the current inflationary environment impacting consumer spending and priorities, concerns of a possible recession in the ~~possibility of recession or financial market instability, rapidly rising~~near-term, high interest rates, decade high mortgage interest rates impacting consumer affordability ~~and ongoing labor and supply chain constraints~~ are expected to continue to have an unfavorable impact on the demand for housing construction and, as a result, our products produced by this segment.

North American PVC facilities within the Performance and Essential Materials segment supply most of the PVC required for our building products and PVC pipes and fittings plants. Our raw materials for stone, roofing and accessories, windows, shutters and specialty tool products are externally purchased. PVC required for the PVC compounds plants is either internally sourced from our North American and Asian facilities within the Performance and Essential Materials segment or externally purchased based on the location of the plants. The remaining feedstocks required, including pigments, fillers, stabilizers and other ingredients, are purchased under short-term contracts based on prevailing market prices.

During the fourth quarter of 2021, we completed the acquisition of Boral's North American building products businesses in roofing, siding, trim and shutters, decorative stone and windows (the "Boral Target Companies") for $2,140 million. During the third quarter of 2021, we completed the acquisitions of LASCO Fittings, Inc. ("LASCO"), a manufacturer of injected-molded PVC fittings that serve the plumbing, pool and spa, industrial, irrigation and retail markets in the United States, for $277 million, and DX Acquisition Corp. ("Dimex"), a producer of various consumer products made from post-industrial-recycled PVC, polyethylene and thermoplastic elastomer materials, including, landscape edging; industrial, home and office matting; marine dock edging; and masonry joint controls, for $172 million. The results of operations for these acquired businesses are included in the Housing and Infrastructure Products segment for the nine months ended September 30, 2022.

Factors that have caused volatility in our raw material prices, energy costs and production processes in the past, and which may do so in the future, include significant fluctuation in prices of these raw materials in response to, among other things, variable worldwide supply and demand across different industries, speculation in commodities futures, general economic, business or environmental conditions, labor costs, competition, import duties, tariffs, worldwide currency fluctuations, freight, inflationary pressures, regulatory costs, and product and process evolutions that impact demand for the same materials. Increasing raw material prices directly impact our cost of sales and our ability to maintain margins depends on implementing price increases in response to increasing raw material costs. The market for our products may or may not accept price increases, and as such, our future financial condition, results of operations or cash flows could be materially impacted.

Table of Contents

~~Recent Developments~~

~~Inflation Reduction Act of 2022~~

On August 16, 2022, the Inflation Reduction Act of 2022 (the "IRA") was signed into law. The IRA, among other provisions, imposes a 15% corporate alternative minimum tax on the adjusted financial statement income of certain large corporations effective for tax years beginning after December 31, 2022 and a 1% excise tax on stock repurchases made by publicly traded U.S. corporations after December 31, 2022. The Company is in the process of evaluating the IRA and the impact it may have on the Company's consolidated financial statements.

~~Expansion of Share Repurchase Program~~

~~On August 12, 2022, our Board of Directors authorized the Company to repurchase an additional $500 million of shares of its common stock under its existing share repurchase program.~~

Non-GAAP Financial Measures

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 Securities and Exchange Commission ("SEC") as one that purports to measure historical or future financial performance, financial position or cash flows that (1) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the registrant; or (2) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. In this report, we disclose non-GAAP financial measures, primarily earnings before interest, taxes, depreciation and amortization ("EBITDA") and Free Cash Flow. We define EBITDA as net income before interest expense, income taxes, depreciation and amortization. We define Free Cash Flow as net cash provided by operating activities less additions to property, plant and equipment. The non-GAAP financial measures described in this Form 10-Q are not substitutes for the GAAP measures of earnings and cash flows.

EBITDA is included in this Form 10-Q 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. 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 and satisfy capital ~~expenditures~~expenditure and working capital requirements, and EBITDA is commonly used by us and our investors to measure our ability to service indebtedness.

Free Cash Flow is included in this Form 10-Q 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 Free Cash Flow 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 Free Cash ~~Flows.~~Flow. Management also believes that Free Cash Flow is useful to investors and securities analysts to evaluate our liquidity, evaluate strategic investment, evaluate our stock buyback plan and measure our ability to meet our future debt service.

EBITDA and Free Cash Flow are not substitutes for the GAAP measures of net income, income from operations ~~and~~or net cash provided by operating activities and isare not necessarily ~~a measure~~measures of our ability to fund our cash needs. In addition, companies calculate EBITDA and Free Cash Flow differently and, therefore, EBITDA and Free Cash Flow as presented for us may not be comparable to EBITDA and Free Cash Flow reported by other companies. EBITDA has material limitations as a performance measure because it excludes interest expense, depreciation and amortization and income taxes. Free Cash Flow has material limitations as a performance measure because it only considers net cash provided by operating activities, and not net income or income from operations. For instance, it applies the entire cost of capital expenditure in the period in which the property or equipment is acquired, rather than spreading it over several periods as is the case with net income and income from operations.

Reconciliations of EBITDA to net income, income from operations and net cash provided by operating activities, and Free Cash Flow to net cash provided by operating activities are included in the "Results of Operations" section below.

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Results of Operations

Net External Sales

The table below presents net external sales on a disaggregated basis for our two principal operating segments. Performance Materials net external sales primarily consist of sales of PVC, polyethylene and epoxy. Essential Materials net external sales primarily consist of sales of caustic soda, styrene, and related derivative materials. Housing Products net external sales primarily consist of sales of housing exterior and interior products, residential pipes and fittings and residential PVC compounds. Infrastructure Products net external sales primarily consist of sales of non-residential pipes and fittings and non-residential PVC compounds.


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022

		(dollars in millions, except per share data)									(dollars in millions, except per share data)
Net external sales	Net external sales									Net external sales
Performance and Essential Materials	Performance and Essential Materials									Performance and Essential Materials
Performance Materials	Performance Materials	$	1,689	$	1,588	$	5,678	$	4,333	Performance Materials	$	1,140	$	2,060	$	2,422	$	3,989
Essential Materials	Essential Materials	1,022		734		2,969		1,877		Essential Materials	996		1,044		2,063		1,947
Total Performance and Essential Materials	Total Performance and Essential Materials	2,711		2,322		8,647		6,210		Total Performance and Essential Materials	2,136		3,104		4,485		5,936
Housing and Infrastructure Products	Housing and Infrastructure Products									Housing and Infrastructure Products
Housing Products	Housing Products	1,018		536		3,106		1,491		Housing Products	918		1,116		1,736		2,088
Infrastructure Products	Infrastructure Products	227		197		742		570		Infrastructure Products	197		263		386		515
Total Housing and Infrastructure Products	Total Housing and Infrastructure Products	1,245		733		3,848		2,061		Total Housing and Infrastructure Products	1,115		1,379		2,122		2,603
Total		$	3,956	$	3,055	$	12,495	$	8,271
											$	3,251	$	4,483	$	6,607	$	8,539

Income (loss) from operations	Income (loss) from operations									Income (loss) from operations
Performance and Essential Materials	Performance and Essential Materials	$	353	$	769	$	2,197	$	1,728	Performance and Essential Materials	$	215	$	965	$	618	$	1,844
Housing and Infrastructure Products	Housing and Infrastructure Products	186		103		607		270		Housing and Infrastructure Products	190		236		333		421
Corporate and other	Corporate and other	(23)		(11)		(81)		(71)		Corporate and other	(9)		(26)		(19)		(58)
Total income from operations	Total income from operations	516		861		2,723		1,927		Total income from operations	396		1,175		932		2,207
Interest expense	Interest expense	(44)		(61)		(134)		(130)		Interest expense	(42)		(44)		(84)		(90)
Other income, net	Other income, net	24		13		52		35		Other income, net	23		17		45		28
Provision for income taxes	Provision for income taxes	84		193		592		423		Provision for income taxes	70		275		179		508
Net income	Net income	412		620		2,049		1,409		Net income	307		873		714		1,637
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	11		13		34		38		Net income attributable to noncontrolling interests	10		15		23		23
Net income attributable to Westlake Corporation	Net income attributable to Westlake Corporation	$	401	$	607	$	2,015	$	1,371	Net income attributable to Westlake Corporation	$	297	$	858	$	691	$	1,614
Diluted earnings per share	Diluted earnings per share	$	3.10	$	4.69	$	15.54	$	10.60	Diluted earnings per share	$	2.31	$	6.60	$	5.35	$	12.43
EBITDA (1)	EBITDA (1)	$	804	$	1,077	$	3,560	$	2,562	EBITDA (1)	$	690	$	1,456	$	1,515	$	2,756
Free Cash Flow (2)	Free Cash Flow (2)	$	629	$	611	$	1,749	$	1,223	Free Cash Flow (2)	$	315	$	683	$	560	$	1,120

_____________

(1)See above for discussions on non-GAAP financial measures. See "Reconciliation of EBITDA to Net Income, Income from Operations and Net Cash Provided by Operating Activities" below.

(2)See above for discussions on non-GAAP financial measures. See "Reconciliation of Free Cash Flow to Net Cash Provided by Operating Activities" below.

~~Three Months Ended September 30, 2022~~

~~Nine Months Ended September 30, 2022~~

Average
Sales Price

~~Volume~~

Average
Sales Price

~~Volume~~

~~Product sales price and volume percentage change from prior-year period~~

~~Performance and Essential Materials~~

~~+7.3~~

~~+9.5~~

~~+24.0~~

~~+15.3~~

~~Housing and Infrastructure Products~~

~~+31.1~~

~~+38.6~~

~~+44.6~~

~~+42.0~~

~~Company average~~

~~+13.0~~

~~+16.5~~

~~+29.1~~

~~+21.9~~

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~~Three Months Ended September 30, 2022~~

~~Nine Months Ended September 30, 2022~~

~~Domestic US prices percentage change from prior-year period for fuel cost and feedstock~~

~~Fuel cost (Natural Gas)~~

~~+102.8~~

~~+107.1~~

~~Feedstock (Ethane)~~

~~+58.0~~

~~+81.7~~


	Three Months Ended June 30, 2023				Six Months Ended June 30, 2023
	Average Sales Price		Volume		Average Sales Price		Volume
Net sales percentage change from prior-year period due to average sales price and volume
Performance and Essential Materials	-21	%	-10	%	-17	%	-8	%
Housing and Infrastructure Products	-1	%	-18	%	+1	%	-19	%
Company average	-15	%	-13	%	-12	%	-11	%


	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
Domestic US prices percentage change from prior-year period for fuel cost and feedstock
Fuel cost (Natural Gas)	-71	%	-55	%
Feedstock (Ethane)	-64	%	-53	%

Reconciliation of EBITDA to Net Income, Income from Operations and Net Cash Provided by Operating Activities

The following table presents the reconciliation of EBITDA to net income, income from operations and net cash provided by operating activities, the most directly comparable GAAP financial measures, for each of the periods indicated.


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022

		(dollars in millions)									(dollars in millions)
Net cash provided by operating activities	Net cash provided by operating activities	$	947	$	755	$	2,560	$	1,637	Net cash provided by operating activities	$	555	$	913	$	1,067	$	1,613
Changes in operating assets and liabilities and other	Changes in operating assets and liabilities and other	(572)		(109)		(467)		(178)		Changes in operating assets and liabilities and other	(283)		(1)		(404)		105
Deferred income taxes	Deferred income taxes	37		(26)		(44)		(50)		Deferred income taxes	35		(39)		51		(81)
Net income	Net income	412		620		2,049		1,409		Net income	307		873		714		1,637
Less:	Less:									Less:
Other income, net	Other income, net	24		13		52		35		Other income, net	23		17		45		28
Interest expense	Interest expense	(44)		(61)		(134)		(130)		Interest expense	(42)		(44)		(84)		(90)
Provision for income taxes	Provision for income taxes	(84)		(193)		(592)		(423)		Provision for income taxes	(70)		(275)		(179)		(508)
Income from operations	Income from operations	516		861		2,723		1,927		Income from operations	396		1,175		932		2,207
Add:	Add:									Add:
Depreciation and amortization	Depreciation and amortization	264		203		785		600		Depreciation and amortization	271		264		538		521
Other income, net	Other income, net	24		13		52		35		Other income, net	23		17		45		28
EBITDA	EBITDA	$	804	$	1,077	$	3,560	$	2,562	EBITDA	$	690	$	1,456	$	1,515	$	2,756

Reconciliation of Free Cash Flow to Net Cash Provided by Operating Activities

The following table presents the reconciliation of Free Cash Flow to net cash provided by operating activities, the most directly comparable GAAP financial measure, for each of the periods indicated.


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022

		(dollars in millions)									(dollars in millions)
Net cash provided by operating activities	Net cash provided by operating activities	$	947	$	755	$	2,560	$	1,637	Net cash provided by operating activities	$	555	$	913	$	1,067	$	1,613
Less:	Less:									Less:
Additions to property, plant and equipment	Additions to property, plant and equipment	(318)		(144)		(811)		(414)		Additions to property, plant and equipment	(240)		(230)		(507)		(493)
Free Cash Flow	Free Cash Flow	$	629	$	611	$	1,749	$	1,223	Free Cash Flow	$	315	$	683	$	560	$	1,120

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Summary

For the quarter ended ~~September~~June 30, ~~2022,~~2023, net income attributable to Westlake was ~~$401~~$297 million, or ~~$3.10~~$2.31 per diluted share, on net sales of ~~$3,956~~$3,251 million. This represents a decrease in net income attributable to Westlake of ~~$206~~$561 million, or ~~$1.59~~$4.29 per diluted share, compared to the quarter ended ~~September~~June 30, ~~2021~~2022 net income attributable to Westlake of ~~$607~~$858 million, or ~~$4.69~~$6.60 per diluted share, on net sales of ~~$3,055~~$4,483 million. Income from operations for the quarter ended ~~September~~June 30, ~~2022~~2023 was ~~$516~~$396 million, a ~~$345~~$779 million decrease from income from operations of ~~$861~~$1,175 million for the quarter ended ~~September~~June 30, ~~2021.~~2022. The decrease in net income and income from operations was primarily due to ~~significant volatility in the global economic environment resulting in higher natural gas, power and feedstock costs,~~ lower ~~polyethylene and PVC resin~~ sales prices and ~~margins, lower demand~~volumes for ~~certain~~most of our products resulting from weaker global demand and ~~a litigation charge for $70 million, or $0.42 per diluted share, after tax.~~lower plant operating rates due to planned and unplanned outages. The ~~decrease~~decreases in net income and income from operations in the ~~third~~second quarter of ~~2022 was~~2023 were partially offset by higher ~~prices for~~ caustic soda sales prices resulting from the continuing strong global markets for chlor-alkali products as well as lower natural gas and higher polyethylene sales volumes. Selling, general and administrative expenses were also higher in the third quarter of 2022 primarily due to the businesses acquired in the fourth quarter of 2021 and in the first quarter of 2022.feedstock costs. Net sales ~~increased~~decreased by ~~$901~~$1,232 million to ~~$3,956~~$3,251 million in the quarter ended ~~September~~June 30, ~~2022~~2023 from ~~$3,055~~$4,483 million in the quarter ended ~~September~~June 30, ~~2021. The increase in net~~2022, primarily due to lower sales ~~was due to~~prices and volumes for most of our products, partially offset by higher sales prices for caustic soda ~~chlorine~~ and derivative products in addition to many of our products in the Housing and Infrastructure Products segment, contributions from the businesses acquired in the second half of 2021 and in the first quarter of 2022 and higher polyethylene sales volumes, partially offset by lower prices for polyethylene and PVC resin and lower sales volumes for PVC resin and caustic soda.chlorine.

For the ~~nine~~six months ended ~~September~~June 30, 2023, net income attributable to Westlake was $691 million, or $5.35 per diluted share, on net sales of $6,607 million. This represents a decrease in net income attributable to Westlake of $923 million, or $7.08 per diluted share, compared to the six months ended June 30, 2022 net income attributable to Westlake ~~was $2,015~~of $1,614 million, or ~~$15.54~~$12.43 per diluted share, on net sales of $12,495 million. This represents an increase in net income attributable to Westlake of $644 million, or $4.94 per diluted share, compared to the nine months ended September 30, 2021 net income attributable to Westlake of $1,371 million, or $10.60 per diluted share, on net sales of $8,271$8,539 million. Income from operations for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was ~~$2,723~~$932 million, a ~~$796~~$1,275 million ~~increase~~decrease from income from operations of ~~$1,927~~$2,207 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The ~~increase~~decrease in net income and income from operations was primarily due to ~~significantly higher global~~lower sales prices and ~~integrated margins~~volumes for most of our ~~major~~ products ~~caused by the strong~~resulting from weaker global demand ~~for our products primarily during the first half of 2022, as well as the contributions from the businesses acquired~~and planned and unplanned outages. The decreases in ~~the second half of 2021 and in the first quarter of 2022. The nine months ended September 30, 2022~~ net income and ~~operating~~ income from operations in the six months ended June 30, 2023 were ~~negatively impacted~~partially offset by higher caustic soda and chlorine sales prices and lower natural gas ~~power~~ and feedstock costs. ~~Selling, general and administrative expenses were also higher for~~Net sales decreased by $1,932 million to $6,607 million in the ~~nine~~six months ended ~~September~~June 30, 2023 from $8,539 million in the six months ended June 30, 2022, primarily due to ~~the businesses acquired in the second half of 2021~~lower sales prices and in the first quarter of 2022. Net sales increased by $4,224 million to $12,495 million in the nine months ended September 30, 2022 from $8,271 million in the nine months ended September 30, 2021, due to higher sales pricesvolumes for most of our products, in both of our segments. Sales volumes in the nine months ended September 30, 2022 were also higher in both segments as compared to the nine months ended September 30, 2021, due to the contributions from the acquired businesses in the second half of 2021 and in the first quarter of 2022 and higher polyethylene sales volumes, partially offset by ~~lower PVC resin,~~higher sales prices for caustic soda and ~~PVC compounds sales volumes.~~chlorine.

RESULTS OF OPERATIONS

~~Third~~Second Quarter ~~2022~~2023 Compared with ~~Third~~Second Quarter ~~2021~~2022

Net Sales. Net sales ~~increased~~decreased by ~~$901~~$1,232 million, or ~~29%~~27%, to ~~$3,956~~$3,251 million in the ~~third~~second quarter of 2023 from $4,483 million in the second quarter of 2022, ~~from $3,055 million in~~primarily due to lower sales prices and volumes for most of our products, partially offset by higher caustic soda and chlorine sales prices. Average sales prices for the ~~third~~second quarter of ~~2021, primarily attributable~~2023 decreased by 15% as compared to the second quarter of 2022 due to continuing weaker demand for most of our products, partially offset by the higher sales prices for caustic soda ~~chlorine~~ and ~~derivative products in the Performance and Essential Materials segment in addition to many of our products in the Housing and Infrastructure Products segment and from the businesses acquired~~chlorine. Sales volumes decreased by 13% in the second ~~half of 2021 and in the first~~ quarter of ~~2022. Average sales prices for the third quarter of 2022 increased by 13%~~2023 as compared to the ~~third~~second quarter of ~~2021~~2022, substantially due to ~~strong~~weaker global demand for ~~caustic soda and many~~most of our products ~~that serve~~across both the residential construction, repair and remodeling markets in North America, partially offset by lower polyethylene and PVC resin sales prices. Sales volumes increased by 17% in the third quarter of 2022 as compared to the third quarter of 2021, substantially due to the businesses acquired in the second half of 2021 and in the first quarter of 2022 and higher polyethylene sales volumes, partially offset by lower caustic soda and PVC resin sales volume.segments.

Gross Profit. Gross profit margin percentage was 20% in the ~~third~~second quarter of ~~2022~~2023 as compared to ~~33%~~32% in the ~~third~~second quarter of ~~2021.~~2022. The decrease in gross profit margin was primarily due to ~~higher natural gas, power and feedstock costs, and~~ lower prices and margins for ~~polyethylene and PVC resin,~~most of our products, which was partially offset by higher prices ~~and margins~~ for caustic soda as well as lower natural gas and ~~higher margins on our housing and infrastructure products.~~feedstock costs.

Selling, General and Administrative Expenses. Selling, general and administrative expenses ~~increased~~decreased by ~~$93~~$7 million to ~~$215~~$213 million in the second quarter of 2023 as compared to $220 million in the second quarter of 2022. This decrease was mainly due to lower selling expenses associated with the decline in net sales, partially offset by higher compensation expenses.

Amortization of Intangibles. Amortization expense decreased by $13 million to $30 million in the second quarter of 2023, from $43 million in the second quarter of 2022, primarily due to the end of useful lives of certain intangible assets within the Housing and Infrastructure Products segment during the third quarter of ~~2022 as compared~~2022.

Restructuring, Transaction and Integration-Related Costs. Restructuring, transaction and integration-related costs decreased by $4 million to ~~$122~~$3 million in the ~~third~~second quarter of ~~2021. This increase was mainly~~2023, from $7 million in the second quarter of 2022, primarily due to ~~selling, general, and administrative expenses of~~decreased integration activities related to the businesses acquired in previous years.

Interest Expense. Interest expense decreased by $2 million to $42 million in the ~~fourth~~second quarter of ~~2021 and~~2023 from $44 million in the ~~first~~second quarter of 2022, ~~as well as~~primarily due to the repayment of $269 million of debt during 2022.

Other Income, Net. Other income, net increased by $6 million to $23 million in the second quarter of 2023 from $17 million in the second quarter of 2022, substantially due to higher ~~compensation expenses.~~interest income attributable to higher interest rates in the current period.

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~~Amortization of Intangibles.~~ Amortization expense increased by $10 million to $39 million in the third quarter of 2022, from $29 million in the third quarter of 2021, primarily due to the amortization of intangibles associated with the businesses acquired in the fourth quarter of 2021 and in the first quarter of 2022.

~~Restructuring, Transaction and Integration-Related Costs~~. The restructuring, transaction and integration-related costs of $6 million in the third quarter of 2022 was consistent with the third quarter of 2021 and primarily consisted of costs associated with our businesses acquired in the second half of 2021 and in the first quarter of 2022.

~~Interest Expense~~. Interest expense decreased by $17 million to $44 million in the third quarter of 2022 from $61 million in the third quarter of 2021, primarily due to realization of losses in the third quarter of 2021 on the settlement of interest rate lock arrangements associated with the issuance of $1,700 million aggregate principal amount of senior notes in August 2021 ("Notes"), partially offset by higher average debt outstanding in the third quarter of 2022 as compared to the third quarter of 2021.

~~Other Income, Net. Other income, net increased by $11 million to $24 million in the third quarter of 2022 from $13 million in the third quarter of 2021, primarily due to higher interest income.~~

Income Taxes. The effective income tax rate was ~~16.9%~~18.6% for the ~~third~~second quarter of ~~2022~~2023 as compared to ~~23.7%~~23.9% for the ~~third~~second quarter of ~~2021.~~2022. The effective tax rate in the ~~third~~second quarter of ~~2022~~2023 was lower compared to the ~~third~~second quarter of ~~2021~~2022 primarily due to an increase in U.S. federal research and development credits available to the ~~Company.~~Company, the reduction of reserves for uncertain income tax positions as a result of a closed federal income tax audit and a decrease in state and foreign taxes.

Performance and Essential Materials Segment

Net Sales. Net sales for the Performance and Essential Materials segment ~~increased~~decreased by ~~$389~~$968 million, or ~~17%~~31%, to ~~$2,711~~$2,136 million in the ~~third~~second quarter of ~~2022~~2023 from ~~$2,322~~$3,104 million in the ~~third~~second quarter of ~~2021.~~2022. Average sales prices for the Performance and Essential Materials segment ~~increased~~decreased by 7%21% in the ~~third~~second quarter of ~~2022~~2023 as compared to the ~~third~~second quarter of ~~2021. Higher Essential~~2022. Lower Performance Materials sales prices were primarily ~~driven~~due to lower PVC resin, polyethylene and epoxy sales prices. These decreases were partially offset by higher ~~prices for~~ caustic soda ~~chlorine~~ and ~~derivative products. These increases were offset by lower polyethylene and PVC resin~~chlorine sales prices in the ~~Performance~~Essential Materials businesses. Sales volumes for the Performance and Essential Materials segment ~~increased~~decreased by 10% in the ~~third~~second quarter of ~~2022~~2023 as compared to the ~~third~~second quarter of ~~2021,~~2022, primarily resulting from ~~contributions from~~lower global demand for materials produced by the ~~acquisition of Westlake Epoxy~~businesses in ~~the first quarter of 2022 and higher polyethylene sales volumes, partially offset by lower caustic soda and PVC resin sales volumes.~~this segment.

Income from Operations. Income from operations for the Performance and Essential Materials segment decreased by ~~$416~~$750 million to ~~$353~~$215 million in the ~~third~~second quarter of ~~2022~~2023 from ~~$769~~$965 million in the ~~third~~second quarter of ~~2021.~~2022. This decrease in income from operations in the second quarter of 2023, as compared to the second quarter of 2022, was primarily due to lower PVC resin, polyethylene and ~~PVC resin~~epoxy sales prices and volumes, lower sales volumes for caustic soda and ~~PVC resin sales volumes, higher natural gas, power~~planned and ~~feedstock costs and a litigation charge. The decrease in income from operations was~~unplanned outages, partially offset by higher caustic soda and chlorine sales prices and ~~margins~~lower natural gas and ~~higher polyethylene sales volumes. Trading activity for the third quarter of 2022 resulted in a loss of approximately $24 million as compared to a gain of $10 million for the third quarter of 2021.~~feedstock costs.

Housing and Infrastructure Products Segment

Net Sales. Net sales for the Housing and Infrastructure Products segment ~~increased~~decreased by ~~$512~~$264 million, or ~~70%~~19%, to ~~$1,245~~$1,115 million in the ~~third~~second quarter of ~~2022~~2023 from ~~$733~~$1,379 million in the ~~third~~second quarter of ~~2021. In addition~~2022. Our businesses in the Housing and Infrastructure Products segment continued to ~~the net sales from the businesses we acquired~~experience lower demand in the second ~~half of 2021, the increase in the third~~ quarter of ~~2022 was mainly due to higher sales prices across our businesses~~2023 as compared to the ~~prior-year period.~~second quarter of 2022, which resulted in an 18% decrease in sales volumes for the segment. Average sales prices for the Housing and Infrastructure Products segment ~~increased by 31%~~slightly decreased in the ~~third~~second quarter of ~~2022~~2023 as compared to the ~~third~~second quarter of ~~2021,~~2022, primarily due to ~~continued demand~~lower PVC compounds sales prices, most of which was offset by higher sales prices for residential construction and repair and remodeling products as well as increased prices to account for higher raw material costs. Sales volumes for the Housing and Infrastructure Products segment increased by 39% in the third quarter of 2022 as compared to the third quarter of 2021 primarily due to contributions from the businesses acquired in the second half of 2021.our building products.

Income from Operations. Income from operations for the Housing and Infrastructure Products segment ~~increased~~decreased by ~~$83~~$46 million to ~~$186~~$190 million in the ~~third~~second quarter of ~~2022~~2023 from ~~$103~~$236 million in the ~~third~~second quarter of ~~2021.~~2022. This ~~increase~~decrease in income from operations was primarily due to higher sales prices driven by continuing higher demand for housing construction and remodeling products and contributions from the businesses acquired in the second half of 2021. The higher income from operations in the ~~third~~second quarter of ~~2022~~2023, as compared to the ~~third~~second quarter of ~~2021~~2022, was primarily due to lower sales volumes across all of our housing and infrastructure businesses and lower sales prices for PVC compounds, partially offset by higher sales prices for our building products as well as lower raw material costs.

Six Months Ended June 30, 2023 Compared with Six Months Ended June 30, 2022

Net Sales. Net sales decreased by $1,932 million, or 23%, to $6,607 million in the six months ended June 30, 2023 from $8,539 million in the six months ended June 30, 2022, primarily due to lower sales prices and volumes for most of our products, partially offset by higher caustic soda and chlorine sales prices. Average sales prices for the six months ended June 30, 2023 decreased by 12% as compared to the six months ended June 30, 2022 due to continuing weaker demand for most of our products, partially offset by higher sales prices for caustic soda and chlorine. Sales volumes decreased by 11% for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022, substantially due to weaker global demand for many of our products across both the segments.

Gross Profit. Gross profit margin percentage was 22% in the six months ended June 30, 2023 as compared to 32% in the six months ended June 30, 2022. The decrease in gross profit margin was primarily due to lower prices and margins for most of our products, which was partially offset by higher ~~raw material~~prices for caustic soda as well as lower natural gas and ~~production~~feedstock costs.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $15 million to $435 million in the six months ended June 30, 2023 as compared to $420 million in the six months ended June 30, 2022. This increase was mainly due to higher compensation expenses and a full six months of selling, general, and administrative expenses in the current period for the epoxy business acquired in February 2022.

Amortization of Intangibles. Amortization expense decreased by $24 million to $61 million in the six months ended June 30, 2023, as compared to $85 million in the six months ended June 30, 2022, primarily due to the end of useful lives of certain intangible assets within the Housing and Infrastructure Products segment during the third quarter of 2022.

Table of Contents

~~Nine Months Ended September 30, 2022 Compared with Nine Months Ended September 30, 2021~~

~~Net Sales~~Restructuring, Transaction and Integration-Related Costs.~~. Net sales increased~~ Restructuring, transaction and integration-related costs decreased by ~~$4,224~~$12 million ~~or 51%,~~ to ~~$12,495~~$6 million in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023, from ~~$8,271~~$18 million in the ~~nine~~six months ended ~~September~~June 30, 2021, primarily attributable to higher sales prices for our PVC resin, caustic soda and for many of our products in the Housing and Infrastructure Products segment as well as higher sales volumes for polyethylene and contributions from the businesses acquired in 2021 and 2022. Average sales prices for the nine months ended September 30, 2022, increased by 29% as compared to the nine months ended September 30, 2021 due to strong demand for our chlorovinyl products and strong residential construction, repair and remodeling markets in North America during the first half of 2022. Sales volumes increased by 22% for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021, primarily due to ~~the businesses acquired in the second half of 2021 and in the first quarter of 2022, partially offset by lower PVC resin, caustic soda and PVC compounds sales volume.~~

~~Gross Profit~~. Gross profit margin percentage was 28% in the nine months ended September 30, 2022 which was comparable to 29% in the nine months ended September 30, 2021. Higher sales prices and margins for PVC resin, caustic soda, pipes and fittings and PVC compounds were offset by higher natural gas, power and feedstock costs and lower volumes for PVC resin, caustic soda and PVC compounds during the nine months ended September 30, 2022.

~~Selling, General and Administrative Expenses~~. Selling, general and administrative expenses increased by $252 million to $635 million in the nine months ended September 30, 2022 as compared to $383 million in the nine months ended September 30, 2021. This increase was mainly due to the inclusion of expensesdecreased integration activity related to the businesses acquired in ~~the second half of 2021 and in the first quarter of 2022 and higher compensation expenses.~~previous years.

~~Amortization of Intangibles.~~Interest Expense. ~~Amortization~~Interest expense ~~increased~~decreased by ~~$41~~$6 million to ~~$124~~$84 million in the ~~nine~~six months ended ~~September~~June 30, ~~2022, as compared to $83~~2023 from $90 million in the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, primarily due to the ~~amortization~~repayment of ~~intangibles associated with the businesses acquired in the second half~~$269 million of ~~2021 and in the first quarter of~~debt during 2022.

~~Restructuring, Transaction and Integration-Related Costs~~. The restructuring, transaction and integration-related costs of $24 million in the nine months ended September 30, 2022 primarily consisted of costs associated with the businesses acquired in the second half of 2021 and in the first quarter of 2022.

~~Interest Expense~~. Interest expense increased by $4 million to $134 million in the nine months ended September 30, 2022 from $130 million in the nine months ended September 30, 2021, due to the higher average debt outstanding in the nine months ended September 30 2022 due to the issuance of senior notes in August 2021.

Other Income, Net. Other income, net increased by $17 million to ~~$52~~$45 million in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 from ~~$35~~$28 million in the ~~nine~~six months ended ~~September~~June 30, ~~2021, primarily~~2022, substantially due to higher interest ~~income.~~income attributable to higher interest rates in the current period.

Income Taxes.The ~~effective~~effective income tax rate was ~~22.4%~~20.0% for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 as compared to ~~23.1%~~23.7% for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The change in effective tax rate in the ~~nine~~six months ended ~~September~~June 30, ~~2022 was lower~~2023 as compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022 was primarily due to an increase in U.S. federal research and development credits available to the ~~Company.~~Company, the reduction of reserves for uncertain income tax positions as a result of a closed federal income tax audit and a decrease in state and foreign taxes.

Performance and Essential Materials Segment

Net ~~Sales~~Sales.. Net sales for the Performance and Essential Materials segment ~~increased~~decreased by ~~$2,437~~$1,451 million, or ~~39%~~24%, to ~~$8,647~~$4,485 million in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 from ~~$6,210~~$5,936 million in the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. Average sales prices for the Performance and Essential Materials segment ~~increased~~decreased by ~~24%~~17% in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 as compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021. Higher~~2022. Lower Performance Materials sales prices were primarily due to ~~higher~~lower PVC resin, polyethylene and epoxy sales prices. ~~Higher~~These decreases were partially offset by higher caustic soda and chlorine sales prices in the Essential Materials ~~sales prices were primarily driven by higher prices for caustic soda, chlorine and derivative products.~~businesses. Sales volumes for the Performance and Essential Materials segment ~~increased~~decreased by ~~15%~~8% in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 as compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, primarily ~~due to higher sales volumes~~resulting from lower global demand for ~~polyethylene and contributions from the acquisition of Westlake Epoxy, which were partially offset by lower PVC resin sales volumes.~~our products across our businesses under this segment.

Income from Operations. Income from operations for the Performance and Essential Materials segment ~~increased~~decreased by ~~$469~~$1,226 million to ~~$2,197~~$618 million in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 from ~~$1,728~~$1,844 million in the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. This ~~increase~~decrease in income from operations in the six months ended June 30, 2023, as compared to the six months ended June 30, 2022, was primarily due to lower PVC resin, polyethylene and epoxy sales prices and volumes, lower sales volumes for caustic soda and planned and unplanned outages, partially offset by higher caustic soda and chlorine sales prices and lower natural gas and feedstock costs.

Housing and Infrastructure Products Segment

Net Sales. Net sales for the Housing and Infrastructure Products segment decreased by $481 million, or 18%, to $2,122 million in the six months ended June 30, 2023 from $2,603 million in the six months ended June 30, 2022. Our businesses in the Housing and Infrastructure Products segment experienced lower demand in the six months ended June 30, 2023 as compared to the six months ended June 30, 2022, which resulted in a 19% decrease in sales volume for the segment. Average sales prices for the Housing and Infrastructure Products segment increased slightly by 1% in the six months ended June 30, 2023, as compared to the six months ended June 30, 2022, primarily due to higher sales prices for our building products and PVC ~~resin~~pipe and ~~caustic soda and higher margins for polyethylene.~~fittings, most of which was offset by lower PVC compounds sales prices.

Income from Operations. Income from operations ~~was also higher due~~for the Housing and Infrastructure Products segment decreased by $88 million to ~~contributions from the acquisition of Westlake Epoxy~~$333 million in the ~~first quarter of~~six months ended June 30, 2023 from $421 million in the six months ended June 30, 2022. ~~The increase~~This decrease in income from operations ~~versus~~in the ~~prior-year period~~six months ended June 30, 2023, as compared to the six months ended June 30, 2022, was primarily due to lower sales volumes across all of our housing and infrastructure businesses and lower sales prices for PVC compounds, partially offset by higher ~~natural gas, power~~sales prices for our building products and ~~feedstock costs~~PVC pipe and ~~a litigation charge. Trading activity for the nine months ended September 30, 2022 resulted in a loss of approximately $23 million~~fittings as ~~compared to a gain of $26 million for the nine months ended September 30, 2021.~~well as lower raw material costs.

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~~Housing and Infrastructure Products Segment~~

~~Net Sales~~. Net sales for the Housing and Infrastructure Products segment increased by $1,787 million, or 87%, to $3,848 million in the nine months ended September 30, 2022 from $2,061 million in the nine months ended September 30, 2021. In addition to the net sales from the businesses acquired in the second half of 2021, the increase in the nine months ended September 30, 2022 was also due to generally higher sales prices across our businesses as compared to the prior-year period. Average sales prices for the Housing and Infrastructure Products segment increased by 45% in the nine months ended September 30, 2022, as compared to the nine months ended September 30, 2021, primarily due to strong residential construction and repair and remodeling industry activity during the first half of 2022. Sales volumes for the Housing and Infrastructure Products segment increased by 42% in the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021, primarily due to contributions from the businesses acquired in the second half of 2021.

~~Income from Operations.~~ Income from operations for the Housing and Infrastructure Products segment increased by $337 million to $607 million in the nine months ended September 30, 2022 from $270 million in the nine months ended September 30, 2021. This increase in income from operations was primarily due to higher sales prices driven by higher housing construction and remodeling activity during the first half of 2022. Income from operations was also higher due to contributions from the businesses acquired in the second half of 2021. The higher income from operations in the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 was partially offset by higher raw material, power and production costs.

CASH FLOW DISCUSSION FOR THE ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2022~~2023 AND ~~2021~~2022

Cash Flows

Operating Activities

Operating activities provided cash of ~~$2,560~~$1,067 million in the first ~~nine~~six months of ~~2022~~2023 compared to cash provided by operating activities of ~~$1,637~~$1,613 million in the first ~~nine~~six months of ~~2021.~~2022. The ~~$923~~$546 million ~~increase~~decrease in cash flows from operating activities was mainly due to ~~an increase~~a decrease in income from operations, ~~and~~partially offset by favorable changes in working capital. Changes in components of working capital, which we define for purposes of this cash flow discussion as accounts receivable, inventories, prepaid expenses and other current assets, less accounts payable and accrued and other liabilities, ~~used~~provided cash of ~~$248~~$30 million in the first ~~nine~~six months of ~~2022,~~2023, compared to ~~$381~~$577 million of cash used in the first ~~nine~~six months of ~~2021,~~2022, a favorable change of ~~$133~~$607 million. The favorable change in the first ~~nine~~six months of ~~2022~~2023 was substantially driven by the favorable changes in accounts receivable and ~~accrued and other liabilities, which were partially offset by unfavorable changes~~inventories, primarily due to the lower operating activities in ~~inventories and accounts payable.~~the first six months of 2023, as compared to the first six months of 2022.

Investing Activities

Net cash used for investing activities in the first ~~nine~~six months of ~~2022~~2023 was ~~$2,148~~$499 million as compared to net cash used for investing activities of ~~$842~~$1,803 million in the first ~~nine~~six months of ~~2021.~~2022. The ~~increase~~decrease in investing activities in the first ~~nine~~six months of 2023 as compared to first six months of 2022, was primarily ~~due to~~because of the epoxy acquisition ~~of Westlake Epoxy~~ in February 2022 for ~~$1,171 million, net of cash acquired, the purchase of an additional 3.2% interest in LACC for $89 million and additional contributions of $87 million in LACC.~~$1,163 million. Capital expenditures were ~~$811~~$507 million in the first ~~nine~~six months of ~~2022, an increase of $397 million~~2023 as compared to ~~$414~~$493 million in the first ~~nine~~six months of ~~2021.~~2022. Capital expenditures in the first ~~nine~~six months of ~~2022~~2023 and ~~2021~~2022 were primarily related to projects to improve production capacity or reduce costs, maintenance and safety projects and environmental projects at our various facilities.

Financing Activities

Net cash used for financing activities during the first ~~nine~~six months of ~~2022~~2023 was ~~$480~~$131 million as compared to net cash ~~provided by~~used for financing activities of ~~$1,487~~$377 million in the first ~~nine~~six months of ~~2021.~~2022. The activities during the first ~~nine~~six months of 2023 were primarily related to the $92 million payment of cash dividends, the $24 million payment of cash distributions to noncontrolling interests and repurchases of shares of our common stock for an aggregate amount of $23 million. The financing activities in the first six months of 2022 were primarily related to the ~~$123~~$77 million payment of cash dividends, the ~~$34~~$24 million payment of cash distributions to noncontrolling interests, the redemption of $250 million aggregate principal amount of the 3.60% ~~2022~~ Senior Notes due 2022 and repurchases ~~of shares~~ of our common stock ~~for an aggregate amount~~ of ~~$68~~$31 million. The activities in the first nine months of 2021 were primarily related to the registered public offering of $300 million aggregate principal amount of the 0.875% 2024 Senior Notes, $350 million aggregate principal amount of the 2.875% 2041 Senior Notes, $600 million aggregate principal amount of the 3.125% 2051 Senior Notes and $450 million aggregate principal amount of the 3.375% 2061 Senior Notes and the payment of debt issuance costs of $18 million related to such notes. The remaining activities during the nine months ended September 30, 2021 related to the $107 million payment of cash dividends, the $32 million payment of cash distributions to noncontrolling interests and the repurchase of shares of our common stock for an aggregate purchase price of $30 million.

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LIQUIDITY AND CAPITAL RESOURCES

Liquidity and Financing Arrangements

Our principal sources of liquidity are from cash and cash equivalents, cash from operations, short-term borrowings under the ~~New Credit Agreement~~credit agreement and our long-term financing.

In November 2014, our Board of Directors authorized a $250 million stock repurchase program (the "2014 Program"). In November 2015, our Board of Directors approved the expansion of the 2014 Program by an additional $150 million. In August 2018, our Board of Directors approved the further expansion of the existing 2014 Program by an additional $150 million. In August 2022, our Board of Directors approved the further expansion of the existing 2014 Program by an additional $500 million. During the third quarter of 2022, we repurchased 372,430 shares of our common stock and in the nine months ended September 30, 2022, we repurchased 784,920 shares of our common stock under the 2014 Program. As of ~~September~~June 30, ~~2022,~~2023, we had repurchased ~~8,216,440~~8,722,550 shares of our common stock for an aggregate purchase price of approximately ~~$522~~$574 million under the 2014 Program. During the six months ended June 30, 2023, we repurchased 9,552 shares of our common stock under the 2014 Program. Purchases under the 2014 Program may be made either through the open market or in privately negotiated transactions. Decisions regarding the amount and the timing of purchases under the 2014 Program will be influenced by our cash on hand, our cash flows from operations, general market conditions and other factors. The 2014 Program may be discontinued by our Board of Directors at any time.

On October 4, 2018, Westlake Chemical Partners LP ("Westlake Partners") and Westlake Chemical Partners GP LLC, the general partner of Westlake Partners, entered into an Equity Distribution Agreement with UBS Securities LLC, Barclays Capital Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., RBC Capital Markets, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC to offer and sell WLK Partners common units, from time to time, up to an aggregate offering amount of $50 million. This Equity Distribution Agreement was amended on February 28, 2020 to reference a new shelf registration and subsequent renewals thereof for utilization under this agreement. No common units have been issued under this program as of ~~September~~June 30, ~~2022.~~2023.

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We believe that our sources of liquidity as described above are adequate to fund our normal operations and ongoing capital expenditures and turnaround activities. Funding of any potential large expansions or potential acquisitions or the redemption of debt may likely necessitate, and therefore depend on, our ability to obtain additional financing in the future. We may not be able to access additional liquidity at favorable interest rates due to volatility of the commercial credit markets.

Cash and Cash Equivalents

As of ~~September~~June 30, ~~2022,~~2023, our cash and cash equivalents totaled ~~$1,778~~$2,677 million. In addition to our cash and cash equivalents, our ~~New Credit Agreement~~credit agreement is available as needed, as described under "Debt" below.

Debt

As of ~~September~~June 30, ~~2022,~~2023, the carrying value of our long-term indebtedness totaled ~~$4.8 billion.~~$4,894 million. See Note 8 to the consolidated financial statements appearing elsewhere in this Form 10-Q for a discussion of our long-term indebtedness. Defined terms used in this section have the definitions assigned to such terms in Note 8 to the consolidated financial statements included in Item 1 of Part I of this Form 10-Q.

Our ability to make payments on our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Based on our current level of operations and unless we were to undertake a new expansion or large acquisition, we believe our cash flows from operations, available cash and available borrowings under the ~~New Credit Agreement~~credit agreement will be adequate to meet our normal operating needs for the foreseeable future.

Our long-term debt consisted of the following as of June 30, 2023:

Principal Amount
(in millions)

Debt Issuance Date

Maturity Date

Par Call Date

Optional Redemption Terms and Other Matters

0.875% senior notes due 2024 (the "0.875% 2024 Senior Notes")

300

August 2021

August 2024

August 15, 2022

(1)

3.60% senior notes due 2026 (the "3.60% 2026 Senior Notes")

750

August 2016

August 2026

May 15, 2026

(1) (4)

Loan related to tax-exempt waste disposal revenue bonds due 2027

December 1997

December 2027

(6)

1.625% €700 million senior notes due 2029 (the "1.625% 2029 Senior Notes")

762

July 2019

July 2029

April 17, 2029

(1) (2)

3.375% senior notes due 2030 (the "3.375% 2030 Senior Notes")

300

June 2020

June 2030

March 15, 2030

(1) (3)

3.50% senior notes due 2032 (the "3.50% 2032 tax-exempt GO Zone Refunding Senior Notes")

250

November 2017

November 2032

November 1, 2027

(5)

2.875% senior notes due 2041 (the "2.875% 2041 Senior Notes")

350

August 2021

August 2041

February 15, 2041

(1) (3)

5.00% senior notes due 2046 (the "5.00% 2046 Senior Notes")

700

August 2016

August 2046

February 15, 2046

(1) (4)

4.375% senior notes due 2047 (the "4.375% 2047 Senior Notes")

500

November 2017

November 2047

May 15, 2047

(1) (3)

3.125% senior notes due 2051 (the "3.125% 2051 Senior Notes")

600

August 2021

August 2051

February 15, 2051

(1) (3)

3.375% senior notes due 2061 (the "3.375% 2061 Senior Notes")

450

August 2021

August 2061

February 15, 2061

(1) (3)

Term loan 2026 (the "2026 Term Loan")

March 2021

March 2026

(7)

Total long-term debt

4,987

(1) At our option, we may redeem the notes at any time on or after the specified par call date at a redemption price equal to 100% of the principal amount of the notes being redeemed plus accrued and unpaid interest.

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~~New Credit Agreement~~

~~On June 9, 2022,~~(2) At our option, we may redeem the ~~Company entered into~~notes at any time prior to the specified par call date at a ~~new $1.5 billion revolving credit facility that is scheduled~~redemption price equal to ~~mature on June 9, 2027 (the "New Credit Agreement") and, in connection therewith, terminated~~ the Company's existing revolving credit agreement. The New Credit Agreement bears interest at either (a) Adjusted Term SOFR (as defined in the New Credit Agreement) plus a margin ranging from 1.000% to 1.625% per annum or (b) Alternate Base Rate (as defined in the New Credit Agreement) plus a margin ranging from 0.000% to 0.625% per annum, in each case depending on the credit ratinggreater of (i) 100% of the Company. The New Credit Agreement contains certain affirmative and negative covenants, including a quarterly total leverage ratio financial maintenance covenant. As of September 30, 2022, the Company was in compliance with the total leverage ratio financial maintenance covenant. The New Credit Agreement also contains certain events of default and, if and for so long as certain events of default have occurred and are continuing, any overdue amounts outstanding under the New Credit Agreement will accrue interest at an increased rate, the lenders can terminate their commitments to lend thereunder and payments of any outstanding amounts thereunder could be accelerated by the lenders. None of the Company's subsidiaries are required to guarantee the obligations of the Company under the New Credit Agreement.

The New Credit Agreement includes a $150 million sub-limit for letters of credit, and any outstanding letters of credit will be deducted from availability under the facility. The New Credit Agreement also provides for a discretionary $50 million commitment for swingline loans to be provided on a same-day basis. The Company may also increase the size of the facility, in increments of at least $25 million, up to a maximum of $500 million, subject to certain conditions and if certain lenders agree to commit to such an increase.

~~0.875% Senior Notes due 2024~~

~~In August 2021, we completed the registered public offering of $300 million aggregate~~ principal amount of the ~~0.875% 2024 Senior Notes. We~~notes being redeemed plus accrued and unpaid interest and (ii) the sum of the present values of the remaining scheduled payments on the notes being redeemed that would be due if the notes matured on the specified par call date (not including any portion of such payments of interest accrued as of the redemption date), discounted to the redemption date on an annual basis at the applicable comparable government bond rate plus 30 basis points plus accrued and unpaid interest.

(3) At our option, we may ~~optionally~~ redeem the ~~0.875% 2024 Senior Notes~~notes at any time prior to the specified par call date at a redemption price equal to the greater of (i) 100% of the principal amount of the notes being redeemed plus accrued and ~~from~~unpaid interest and (ii) the sum of the present values of the remaining scheduled payments on the notes being redeemed that would be due if the notes matured on the specified par call date (excluding accrued and unpaid interest to the redemption date), discounted to the redemption date on a semi-annual basis at the treasury rate plus 20 to 40 basis points plus accrued and unpaid interest.

(4) At our option, we may redeem the notes at any time prior to the specified par call date at a redemption price equal to the greater of (i) 100% of the principal amount of the notes being redeemed plus accrued and unpaid interest and (ii) the sum of the present values of the remaining scheduled payments on the notes being redeemed (excluding accrued and unpaid interest to the redemption date), discounted to the redemption date on a semi-annual basis at the treasury rate plus 35 to 45 basis points, plus accrued and unpaid interest.

(5) In the event of a redemption of certain bonds (the "GO Zone Bonds") issued by the Louisiana Local Government Environmental Facility and Development Authority (the "Authority") in 2017, we will redeem notes equal in principal amount to the GO Zone Bonds to be redeemed at a redemption price equal to the redemption price of the GO Zone Bonds to be redeemed, plus accrued interest to the redemption date. The GO Zone Bonds are subject to optional redemption by the Authority upon the direction of the Company at any time on or after ~~August 15, 2022~~November 1, 2027, for 100% of the principal amount plus accrued ~~and unpaid interest. The holders of the 0.875% 2024 Senior Notes may require us to repurchase the 0.875% 2024 Senior Notes at a price of 101% of their principal amount, plus accrued and unpaid~~ interest to ~~but not including,~~ the date of repurchase, upon the occurrence of both a "change of control" and, within 60 days of such change of control, a "below investment grade rating event" (as such terms are defined in the indenture governing the 0.875% 2024 Senior Notes).redemption date.

~~3.60% Senior Notes due 2026 and 5.0% Senior Notes due 2046~~

In August 2016, we completed the private offering of $750 million aggregate principal amount of the 3.60% 2026 Senior Notes and $700 million aggregate principal amount of the 5.0% 2046 Senior Notes. In March 2017, the Company commenced registered exchange offers to exchange the 3.60% 2026 Senior Notes and the 5.0% 2046 Senior Notes for new notes that are identical in all material respects to the 3.60% 2026 Senior Notes and the 5.0% 2046 Senior Notes, except that the offer and issuance of the new Securities and Exchange Commission-registered notes have been registered under the Securities Act of 1933, as amended (the "Securities Act"). The exchange offers expired on April 24, 2017, and approximately 99.97% of the 3.60% 2026 Senior Notes and 100% of the 5.0% 2046 Senior Notes were exchanged. The notes that were not exchanged in the exchange offers have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the U.S. absent registration or an applicable exemption from registration requirements or a transaction not subject to the registration requirements of the Securities Act or any state securities law.

~~Revenue Bonds~~

In December 1997, we entered into a loan agreement with a public trust established for public purposes for the benefit of the Parish of Calcasieu, Louisiana. The public trust issued $11 million principal amount of tax-exempt waste disposal revenue bonds in order to finance our construction of waste disposal facilities for an ethylene plant.(6) The waste disposal revenue bonds expire in December 2027 and are subject to redemption and mandatory tender for purchase prior to maturity under certain conditions. Interest on the waste disposal revenue bonds accrues at a rate determined by a remarketing agent and is payable quarterly. The interest rate on the waste disposal revenue bonds at ~~September~~June 30, ~~2022~~2023 was ~~2.45%~~4.30%.

(7) The 2026 Term Loan has a 5-year maturity and ~~at December 31, 2021~~include a government rate subsidy. The interest rate on the 2026 Term Loan as of June 30, 2023 was ~~0.14%~~0.95%.

~~Table~~The holders of ~~Contents~~

~~1.625%~~the 0.875% 2024 Senior Notes, ~~due 2029~~

~~In July 2019, we completed~~ the ~~registered public offering of €700 million aggregate principal amount of the 1.625% 2029~~3.60% 2026 Senior ~~Notes. The Company received approximately $779 million of net proceeds from the offering. We may optionally redeem~~Notes, the 1.625% 2029 Senior Notes, ~~at any time and from time to time prior to April 17, 2029 (three months prior to~~ the ~~maturity date) for 100% of the principal plus accrued interest and a discounted "make whole" payment. On or after April 17, 2029, we may optionally redeem the 1.625% 2029~~3.375% 2030 Senior Notes, ~~for 100% of~~ the ~~principal amount plus accrued interest. The holders of~~3.50% 2032 tax-exempt GO Zone Refunding Senior Notes, the ~~1.625% 2029~~2.875% 2041 Senior Notes, the 5.00% 2046 Senior Notes, the 4.375% 2047 Senior Notes, the 3.125% 2051 Senior Notes and the 3.375% 2061 Senior Notes may require us to repurchase the ~~1.625% 2029 Senior Notes~~notes at a price ~~of 101% of their principal amount, plus accrued and unpaid interest~~equal to the date of repurchase, upon the occurrence of both a "change of control" and, within 60 days of such change of control, a "below investment grade rating event" (as such terms are defined in the indenture governing the 1.625% 2029 Senior Notes).

~~3.375% Senior Notes due 2030~~

In June 2020, we completed the registered public offering of $300 million aggregate principal amount of the 3.375% 2030 Senior Notes. The Company received approximately $297 million of net proceeds from the offering, and used a portion of the net proceeds to fund the purchase in lieu of optional redemption of the 6 ½% 2029 GO Zone Bonds, the 6 ½% 2035 GO Zone Bonds and the 6 ½% 2035 IKE Zone Bonds. We may optionally redeem the 3.375% 2030 Senior Notes at any time and from time to time prior to March 15, 2030 (three months prior to the maturity date) for 100% of the principal plus accrued interest and a discounted "make whole" payment. On or after March 15, 2030, we may optionally redeem the 3.375% 2030 Senior Notes for 100% of the principal amount plus accrued interest. The holders of the 3.375% 2030 Senior Notes may require us to repurchase the 3.375% 2030 Senior Notes at a price of 101% of their principal amount, plus accrued and unpaid interest to, but not including, the date of repurchase, upon the occurrence of both a "change of control" and, within 60 days of such change of control, a "below investment grade rating event" (as such terms are defined in the ~~indenture~~respective indentures governing ~~the 3.375% 2030 Senior Notes)~~these notes).

~~3.50% 2032 GO Zone Refunding Bonds~~

In November 2017, the Louisiana Local Government Environmental Facility and Development Authority (the "Authority") completed the offering of $250 million aggregate principal amount of 3.50% tax-exempt revenue refunding bonds due November 1, 2032 (the "Refunding Bonds"), the net proceeds of which were used to redeem $250 million aggregate principal amount of the Authority's 6 ¾% tax-exempt revenue bonds due November 1, 2032 issued by the Authority under the GO Zone Act in December 2007. In connection with the issuance of the Refunding Bonds, we issued $250 million of the 3.50% 2032 GO Zone Refunding Senior Notes. The Refunding Bonds are subject to optional redemption by the Authority upon the direction of the Company at any time on or after November 1, 2027, for 100% of the principal plus accrued interest.

~~2.875% Senior Notes due 2041~~

In August 2021, we completed the registered public offering of $350 million aggregate principal amount of the 2.875% 2041 Senior Notes. We may optionally redeem the 2.875% 2041 Senior Notes at any time and from time to time prior to February 15, 2041 (six months prior to the maturity date) for a redemption price equal to the greater of (i) 100% of the principal amount plus accrued and unpaid interest and (ii) the sum of the present values of the remaining scheduled payments on the 2.875% 2041 Senior Notes being redeemed that would be due if the 2.875% 2041 Senior Notes matured on February 15, 2041, discounted to the redemption date on a semi-annual basis, plus 20 basis points, and plus accrued and unpaid interest. In addition, we may optionally redeem the 2.875% 2041 Senior Notes at any time on or after February 15, 2041 for 100% of the principal amount plus accrued and unpaid interest. The holders of the 2.875% 2041 Senior Notes may require us to repurchase the 2.875% 2041 Senior Notes at a price of 101% of their principal amount, plus accrued and unpaid interest to, but not including, the date of repurchase, upon the occurrence of both a "change of control" and, within 60 days of such change of control, a "below investment grade rating event" (as such terms are defined in the indenture governing the 2.875% 2041 Senior Notes).

~~4.375% Senior Notes due 2047~~

In November 2017, we completed the registered public offering of $500 million aggregate principal amount of the 4.375% 2047 Senior Notes. We may optionally redeem the 4.375% 2047 Senior Notes at any time and from time to time prior to May 15, 2047 (six months prior to the maturity date) for 100% of the principal plus accrued interest and a discounted "make whole" payment. On or after May 15, 2047, we may optionally redeem the 4.375% 2047 Senior Notes for 100% of the principal amount plus accrued interest. The holders of the 4.375% 2047 Senior Notes may require us to repurchase the 4.375% 2047 Senior Notes at a price of 101% of their principal amount, plus accrued and unpaid interest to, but not including, the date of repurchase, upon the occurrence of both a "change of control" and, within 60 days of such change of control, a "below investment grade rating event" (as such terms are defined in the indenture governing the 4.375% 2047 Senior Notes).

~~Table of Contents~~

~~3.125% Senior Notes due 2051~~

In August 2021, we completed the registered public offering of $600 million aggregate principal amount of the 3.125% 2051 Senior Notes. We may optionally redeem the 3.125% 2051 Senior Notes at any time and from time to time prior to February 15, 2051 (six months prior to the maturity date) for a redemption price equal to the greater of (i) 100% of the principal amount plus accrued and unpaid interest and (ii) the sum of the present values of the remaining scheduled payments on the 3.125% 2051 Senior Notes being redeemed that would be due if the 3.125% 2051 Senior Notes matured on February 15, 2051, discounted to the redemption date on a semi-annual basis, plus 25 basis points, and plus accrued and unpaid interest. In addition, we may optionally redeem the 3.125% 2051 Senior Notes at any time on or after February 15, 2051 for 100% of the principal amount plus accrued and unpaid interest. The holders of the 3.125% 2051 Senior Notes may require us to repurchase the 3.125% 2051 Senior Notes at a price of 101% of their principal amount, plus accrued and unpaid interest to, but not including, the date of repurchase, upon the occurrence of both a "change of control" and, within 60 days of such change of control, a "below investment grade rating event" (as such terms are defined in the indenture governing the 3.125% 2051 Senior Notes).

~~3.375% Senior Notes due 2061~~

In August 2021, we completed the registered public offering of $450 million aggregate principal amount of the 3.375% 2061 Senior Notes. We may optionally redeem the 3.375% 2061 Senior Notes at any time and from time to time prior to February 15, 2061 (six months prior to the maturity date) for a redemption price equal to the greater of (i) 100% of the principal amount plus accrued and unpaid interest and (ii) the sum of the present values of the remaining scheduled payments on the 3.375% 2061 Senior Notes being redeemed that would be due if the 3.375% 2061 Senior Notes matured on February 15, 2061, discounted to the redemption date on a semi-annual basis, plus 25 basis points, and plus accrued and unpaid interest. In addition, we may optionally redeem the 3.375% 2061 Senior Notes at any time on or after February 15, 2061 for 100% of the principal amount plus accrued and unpaid interest. The holders of the 3.375% 2061 Senior Notes may require us to repurchase the 3.375% 2061 Senior Notes at a price of 101% of their principal amount, plus accrued and unpaid interest to, but not including, the date of repurchase, upon the occurrence of both a "change of control" and, within 60 days of such change of control, a "below investment grade rating event" (as such terms are defined in the indenture governing the 3.375% 2061 Senior Notes).

~~8.73% 2022 RS Cogen Debt~~

In July 2000, RS Cogen, L.L.C. ("RS Cogen"), our 50%-owned joint venture, entered into a $75 million aggregate principal amount senior credit facility institutional loan at an interest rate of 8.73%. All of the assets of RS Cogen are pledged as collateral under its senior credit facility. Borrowings under this senior credit facility are repayable quarterly over the remaining term. The Company does not guarantee RS Cogen's debt commitments and RS Cogen is not a guarantor for any of the Company's other long-term debt obligations. The balance outstanding under this loan was $6 million at September 30, 2022.

~~2026 Term Loans~~

In March 2021, Taiwan Chlorine Industries, Ltd., our 60%-owned joint venture, entered into five-year loan agreements for a maximum total limit of approximately $21 million. The interest rate on these loans as of September 30, 2022 was 0.2%. The unsecured loans include a government rate subsidy and have a 5-year maturity. The balance outstanding under these loans was approximately $13 million as of September 30, 2022.

The indenture governing the 0.875% 2024 Senior Notes, the 3.60% 2026 Senior Notes, the 1.625% 2029 Senior Notes, the 3.375% 2030 Senior Notes, the 3.50% 2032 tax-exempt GO Zone Refunding Senior Notes, the 2.875% 2041 Senior Notes, the ~~5.0%~~5.00% 2046 Senior Notes, the 4.375% 2047 Senior Notes, the 3.125% 2051 Senior Notes, and the 3.375% 2061 Senior Notes contains customary events of default and covenants that, among other things and subject to certain exceptions, restrict us and certain of our subsidiaries' ability to (1) incur certain secured indebtedness, (2) engage in certain sale and leaseback transactions and (3) consolidate, merge or transfer all or substantially all of ~~its~~our assets.

As of ~~September~~June 30, ~~2022,~~2023, we were in compliance with all of our long-term debt covenants.

Credit Agreement

On June 9, 2022, we entered into a new $1.5 billion revolving credit facility that is scheduled to mature on June 9, 2027 (the "Credit Agreement") and, in connection therewith, terminated our then existing revolving credit agreement. The Credit Agreement bears interest at either (a) Adjusted Term SOFR (as defined in the Credit Agreement) plus a margin ranging from 1.00% to 1.625% per annum or (b) Alternate Base Rate (as defined in the Credit Agreement) plus a margin ranging from 0.00% to 0.625% per annum, in each case depending on the credit rating of the Company. The Credit Agreement contains certain affirmative and negative covenants, including a quarterly total leverage ratio financial maintenance covenant. As of June 30, 2023, we were in compliance with the total leverage ratio financial maintenance covenant.

4030

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The Credit Agreement also contains certain events of default and, if and for so long as certain events of default have occurred and are continuing, any overdue amounts outstanding under the Credit Agreement will accrue interest at an increased rate, the lenders can terminate their commitments to lend thereunder and payments of any outstanding amounts thereunder could be accelerated by the lenders. None of our subsidiaries are required to guarantee our obligations under the Credit Agreement.

The Credit Agreement includes a $150 million sub-limit for letters of credit, and any outstanding letters of credit will be deducted from availability under the facility. The Credit Agreement also provides for a discretionary $50 million commitment for swingline loans to be provided on a same-day basis. We may also increase the size of the facility, in increments of at least $25 million, up to a maximum of $500 million, subject to certain conditions and if certain lenders agree to commit to such an increase.

Westlake Chemical Partners LP Credit Arrangements

Our subsidiary, Westlake Chemical Finance Corporation, is the lender party to a $600 million revolving credit facility with Westlake Chemical Partners LP ("Westlake Partners") (the "MLP Revolver") that is scheduled to mature on July 12, 2027. As of ~~September~~June 30, ~~2022,~~2023, outstanding borrowings under the credit facility totaled $377 million and bore interest at ~~SOFR~~Secured Overnight Financing Rate, as administered by the Federal Reserve Bank of New York ("SOFR") plus the Applicable Margin plus a 0.10% credit spread adjustment. On July 12, 2022, Westlake Partners entered into the Fourth Amendment (the "MLP Revolver Amendment") to the MLP Revolver. The MLP Revolver Amendment, among other things, extended the maturity date to July 12, 2027 and provided for the replacement of LIBOR with ~~Secured Overnight Financing Rate, as administered by the Federal Reserve Bank of New York ("SOFR").~~SOFR. Borrowings under the MLP Revolver now bear interest at a variable rate of either (a) SOFR plus the Applicable Margin plus a 0.10% credit spread adjustment or, if SOFR is no longer available, (b) the Alternate Base Rate plus the Applicable Margin minus 1.0%. The Applicable Margin under the MLP Revolver varies between 1.75% and 2.75%, depending on the Partnership's Consolidated Leverage Ratio.

Our subsidiary, Westlake Polymers LLC, is the administrative agent to a $600 million revolving credit facility with Westlake Chemical OpCo LP ("OpCo") (the "OpCo Revolver") that is scheduled to mature on July 12, 2027. As of ~~September~~June 30, ~~2022,~~2023, outstanding borrowings under the credit facility totaled $23 million and bore interest at SOFR plus the Applicable Margin of 1.75% plus a 0.10% credit spread adjustment. On July 12, 2022, OpCo entered into the Second Amendment (the "OpCo Revolver Amendment") to the OpCo Revolver. The OpCo Revolver Amendment, among other things, extended the maturity date to July 12, 2027 and provided for the replacement of LIBOR with SOFR. Borrowings under the OpCo Revolver now bear interest at a variable rate of either (a) SOFR plus the Applicable Margin plus a 0.10% credit spread adjustment or, if SOFR is no longer available, (b) the Alternate Base Rate plus the Applicable Margin minus 1.0%. The Applicable Margin under the OpCo Revolver is 1.75%.

We consolidate Westlake Partners and OpCo for financial reporting purposes as we have a controlling financial interest. As such, the revolving credit facilities described above between our subsidiaries and Westlake Partners and OpCo are eliminated from the financial statements upon consolidation.

Off-Balance Sheet Arrangements

None.

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FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides safe harbor provisions for forward-looking information. Certain of the statements contained in this report are forward-looking statements. All statements, other than statements of historical facts, included in this report that address activities, events or developments that we expect, project, believe or anticipate will or may occur in the future are forward-looking statements. Forward-looking statements can be identified by the use of words such as "believes," "intends," "may," "should," "could," "anticipates," "expected" or comparable terminology, or by discussions of strategies or trends. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurances that these expectations will prove to be correct. Forward-looking statements relate to matters such as:

•future operating rates, margins, cash flows and demand for our products;

•industry market outlook, including the price of crude oil, natural gas, ethane, housing starts and repair and remodeling activity;

•macroeconomic outlook, including rising interest rates, inflation and possible recession;

•widespread outbreak of an illness or any other communicable disease, or any other public health crisis, including the ~~COVID-19~~coronavirus ("COVID-19") pandemic, and efforts to contain its transmission;

•our plans to respond to the challenges presented by the COVID-19 pandemic;

•production capacities;

•the impact of ongoing supply chain constraints and workforce availability caused by the COVID-19 pandemic and the conflict between Russia and Ukraine;

•currency devaluation;

•our ability to borrow additional funds under our credit agreement;

•our ability to meet our liquidity needs;

•our ability to meet debt obligations under our debt instruments;

•our intended quarterly dividends;

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•future capacity additions and expansions in the industries in which we compete;

•results of acquisitions including the results, effects and benefits of the ~~acquisitions~~acquisition of ~~the Boral Target Companies, LASCO, Dimex and~~ Westlake Epoxy;

•timing, funding and results of capital projects;

•pension plan obligations, funding requirements and investment policies;

•compliance with present and future environmental regulations and costs associated with environmentally related penalties, capital expenditures, remedial actions and proceedings, including any new laws, regulations or treaties that may come into force to limit or control carbon dioxide and other greenhouse gas emissions or to address other issues of climate change;

•effects of pending legal proceedings; and

•timing of and amount of capital expenditures.

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We have based these statements on assumptions and analyses in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe were appropriate in the circumstances when the statements were made. Forward-looking statements by their nature involve substantial risks and uncertainties that could significantly impact expected results, and actual future results could differ materially from those described in such statements. While it is not possible to identify all factors, we continue to face many risks and uncertainties. Among the factors that could cause actual future results to differ materially are the risks and uncertainties discussed under "Risk Factors" in the ~~2021~~2022 Form 10-K and those described from time to time in our other filings with the SEC including, but not limited to, the following:

•the ultimate timing, outcome and results of integrating the operations of ~~the Boral Target Companies, LASCO, Dimex and~~ Westlake Epoxy and the ultimate outcome of our operating efficiencies applied to the products and services of ~~the Boral Target Companies, LASCO, Dimex and~~ Westlake Epoxy; the effects of the ~~acquisitions,~~acquisition, including the combined company's future financial condition, results of operations, strategy and plans; and expected synergies and other benefits from the ~~acquisitions~~acquisition and our ability to realize such synergies and other benefits;

•general economic and business conditions, including inflation, interest rates and possible recession;

•the cyclical nature of the chemical and building products industries;

•the availability, cost and volatility of raw materials and energy;

•uncertainties associated with the United States, European and worldwide economies, including those due to political tensions and unrest in the Middle East and elsewhere, including the conflict between Russia and Ukraine;

•uncertainties associated with pandemic infectious diseases, particularly COVID-19;

•uncertainties associated with ~~global warming;~~climate change;

•the potential impact on demand for ethylene, polyethylene and polyvinyl chloride due to initiatives such as recycling and customers seeking alternatives to polymers;

•current and potential governmental regulatory actions in the United States and other countries;

•industry production capacity and operating rates;

•the supply/demand balance for our products;

•competitive products and pricing pressures;

•instability in the credit and financial markets;

•access to capital markets;

•terrorist acts;

•operating interruptions (including leaks, explosions, fires, weather-related incidents, mechanical failure, unscheduled downtime, labor difficulties, transportation interruptions, spills and releases and other environmental risks);

•changes in laws or regulations, including trade policies;

•technological developments;

•information systems failures and cyberattacks;

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•foreign currency exchange risks;

•our ability to implement our business strategies; and

•creditworthiness of our customers.

Many of such factors are beyond our ability to control or predict. Any of the factors, or a combination of these factors, could materially affect our future results of operations and the ultimate accuracy of the forward-looking statements. These forward-looking statements are not guarantees of our future performance, and our actual results and future developments may differ materially from those projected in the forward-looking statements. Management cautions against putting undue reliance on forward-looking statements or projecting any future results based on such statements or present or prior earnings levels. Every forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Commodity Price Risk

A substantial portion of our products and raw materials ~~(such as ethane, natural gas and propane)~~ are commodities whose prices fluctuate as market supply and demand fundamentals change. Accordingly, product margins and the level of our profitability tend to fluctuate with changes in the business cycle. We try to protect against such instability through various business strategies. Our strategies include ethylene product feedstock flexibility and moving downstream into our other products where pricing is more stable. We use derivative instruments (including commodity swaps and options) in certain instances to reduce price volatility risk on feedstocks and products. Based on our open derivative positions at ~~September~~June 30, ~~2022,~~2023, a hypothetical $0.10 increase in the price of a gallon of ethane ~~would have increased our income before income taxes by $27 million~~ and a hypothetical $0.10 increase in the price of a million British thermal units of natural gas would not have ~~decreased~~a material impact on our income before income ~~taxes by $1 million.~~taxes.

Interest Rate Risk

We are exposed to interest rate risk with respect to fixed and variable rate debt. At ~~September~~June 30, ~~2022,~~2023, we had ~~$4,892~~$4,962 million aggregate principal amount of fixed rate debt. We are subject to the risk of higher interest cost if and when this debt is refinanced. If interest rates were 1.0% higher at the time of refinancing, our annual interest expense would increase by approximately ~~$49~~$50 million. Also, at ~~September~~June 30, ~~2022,~~2023, we had ~~$24~~$25 million principal amount of variable rate debt outstanding, which represents the term loans due 2026 and the tax-exempt waste disposal revenue bonds due 2027. We do not currently hedge our variable interest rate debt, but we may do so in the future. The weighted average variable interest rate for our variable rate debt of ~~$24~~$25 million as of ~~September~~June 30, ~~2022~~2023 was ~~1.21%~~2.42%. A hypothetical 100 basis point increase in the average interest rate on our variable rate debt would not result in a material change in the interest expense.

~~Secured Overnight Financing Rate ("SOFR")~~SOFR is used as a reference rate for borrowings under our revolving line of credit. We did not have any SOFR-based borrowings outstanding at ~~September~~June 30, ~~2022.~~2023.

Foreign Currency Exchange Rate Risk

We are exposed to foreign currency exchange rate risk associated with our international operations. However, the effect of fluctuations in foreign currency exchange rates caused by our international operations has not had a material impact on our overall operating results. We may engage in activities to mitigate our exposure to foreign currency exchange risk in certain instances through the use of currency exchange derivative instruments, including forward exchange contracts, cross-currency swaps or spot purchases. A forward exchange contract obligates us to exchange predetermined amounts of specified currencies at a stated exchange rate on a stated date. A cross-currency swap obligates us to make periodic payments in the local currency and receive periodic payments in our functional currency based on the notional amount of the instrument. In January 2018, we entered into foreign exchange hedging contracts designated as net investment hedges with an aggregate notional value of €220 million designed to reduce the volatility in stockholders' equity from changes in currency exchange rates associated with our net investments in foreign operations. In July 2019, we terminated a portion of the foreign exchange hedging contract with a notional value of €70 million. The notional value of the remaining net investment hedges was €150 million at ~~September~~June 30, ~~2022.~~2023. The arrangement is scheduled to ~~mature~~settle in 2026.

In July 2019, we completed the registered public offering of €700 million aggregate principal amount of the 1.625% 2029 Senior Notes. We designated this euro-denominated debt as a non-derivative net investment hedge of a portion of our net investments in euro functional-currency denominated subsidiaries to offset foreign currency fluctuations.

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Item 4. Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our President and Chief Executive Officer and our Executive Vice President and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 or 15d-15 under the Securities Exchange Act of 1934 as of the end of the period covered by this report. Based upon that evaluation, our President and Chief Executive Officer and our Executive Vice President and Chief Financial Officer concluded that our disclosure controls and procedures are effective with respect to (i) the accumulation and communication to our management, including our Chief Executive Officer and our Chief Financial Officer, of information required to be disclosed by us in the reports that we submit under the Exchange Act, and (ii) the recording, processing, summarizing and reporting of such information within the time periods specified in the SEC's rules and forms.

There were no changes in our internal control over financial reporting that occurred during the three months ended ~~September~~June 30, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The ~~2021~~2022 Form 10-K, filed on February ~~23, 2022,~~22, 2023, contained a description of various legal proceedings in which we are involved. See ~~below and~~ Note 14 to the unaudited consolidated financial statements within this Quarterly Report on Form 10-Q for an updated description of certain of those proceedings, which information is incorporated by reference herein.

We and other caustic soda producers were named as defendants in multiple purported class action civil lawsuits filed since March 2019 in the U.S. District Court for the Western District of New York. The lawsuits allege the defendants conspired to fix, raise, maintain and stabilize the price of caustic soda, restrict domestic (U.S.) supply of caustic soda and allocate caustic soda customers. The other defendants named in the lawsuits are Olin Corporation, K.A. Steel Chemicals (a wholly owned subsidiary of Olin), Occidental Chemical Corporation d/b/a OxyChem, Shintech Incorporated, and Formosa Plastics Corporation, U.S.A. Each of the lawsuits is filed on behalf of the respective named plaintiff or plaintiffs and a putative class comprised of either direct purchasers or indirect purchasers of caustic soda in the U.S. The plaintiffs in the putative class for such direct purchasers seek $861 million in single damages from the defendants, in addition to treble damages and attorney's fees. The plaintiffs in the putative class for such indirect purchasers seek an approximately $500 million in single damages from the defendants, in addition to treble damages (if permitted under applicable state law) and injunctive relief. The defendants' joint motion to dismiss the direct purchaser lawsuits was denied and the cases have proceeded to discovery. Beginning in October 2020, similar class action proceedings were also filed in Canada before the Superior Court of Quebec as well as before the Federal Court. These proceedings seek the certification or authorization of a class action on behalf of all residents of Canada who purchased caustic soda (including, in one of the cases, those who merely purchased products containing caustic soda) from October 1, 2015 through the present or such date deemed appropriate by the court. On December 10, 2021, the Superior Court of Quebec stayed its proceedings until after a final certification decision is released in the Federal Court proceedings. At this time, we are not able to estimate the impact, if any, that these lawsuits could have on our consolidated financial statements either in the current period or in future periods.

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From time to time, we receive notices or inquiries from government entities regarding alleged violations of environmental laws and regulations pertaining to, among other things, the disposal, emission and storage of chemical substances, including hazardous wastes. ~~Pursuant to Item 103~~For a description of ~~the SEC's Regulation S-K, the following~~certain environmental matters ~~involve~~involving a governmental authority as a party to the proceedings and potential monetary sanctions that we believe could exceed $1 million (which is less than one percent of our current assets on a consolidated basis as ~~of September~~June 30, ~~2022):~~2023), please see the 2022 Form 10-K and Note 14 to the unaudited consolidated financial statements within this Quarterly Report on Form 10-Q.

•~~For several years,~~In addition to the Environmental Protection Agency (the "EPA") has been conducting an enforcement initiative against petroleum refineries and petrochemical plants with respect to emissions from flares. On April 21, 2014, we received a Clean Air Act Section 114 Information Request from the EPA which sought information regarding flares at the Calvert City facility and certain Lake Charles facilities. The EPA has informed us that the information provided leads the EPA to believe that some of the flares are out of compliance with applicable standards. In June 2022, the Department of Justice announced that the Company, EPA and state environmental agencies had reached agreement on a consent decree resolving this matter. The consent decree requires the Company to install flare gas recovery units, implement fence line monitoring, install and operate flare monitoring and control equipment to meet certain performance standards, and pay a penalty of $1 million. Implementation of the requirements under the decree is estimated to cost approximately $110 million, which includes capital expenditures associated with installation of the flare gas recovery unitsmatters described above, we are ~~required~~also involved in other legal proceedings incidental to ~~install at~~the conduct of our ~~Calvert City~~business. From time to time, we receive notices or inquiries from government entities regarding alleged violations of environmental laws and ~~Lake Charles facilities. The capital expenditures~~regulations pertaining to, among other things, the disposal, emission and ~~other costs required to comply with the consent decree have either been incurred in 2021 or will be incurred over the course~~storage of 2022 and 2023. The 30-day federal public comment period for the consent decree has concluded, as well as the public comment period for the states. When the court enters the consent decree, it will become effective.chemical substances, including hazardous wastes. We do not believe that ~~the resolution~~any of these ~~flare matters~~legal proceedings will have a material adverse effect on our financial condition, results of operations or cash flows.

Item 1A. Risk Factors

For a discussion of risk factors, please read Item 1A, "Risk Factors" in the ~~2021 Form 10-K. The risk factors included below provide updates to certain risk factors described in the 2021~~2022 Form 10-K. The risks described ~~below~~in the report and in other documents that we file from time to time with the Securities and Exchange Commission could materially and adversely affect our business, results of operations, cash flow, liquidity or financial condition.

~~Risk Factors Relating to Our Operations~~

~~External factors beyond our control can cause fluctuations in demand for our products and in our prices and margins, which may negatively affect our results of operations and cash flows.~~

External factors beyond our control can cause volatility in raw material prices, demand for our products, product prices and volumes and deterioration in operating margins. These factors can also magnify the impact of economic cycles on our business and results of operations. Examples of external factors include:

•~~general economic and business conditions, including in the United States, Europe and Asia, including inflation, interest rates and possible recession;~~

•~~new capacity additions in North America, Europe, Asia and the Middle East;~~

•~~the level of business activity in the industries that use our products;~~

•~~competitor action;~~

•~~technological innovations;~~

•~~currency fluctuations;~~

•~~the impact of supply chain constraints and workforce availability;~~

•~~international events and circumstances;~~

•~~pandemics, such as the COVID-19 pandemic, and other public health threats and efforts to contain their transmission;~~

•~~war, sabotage, terrorism and civil unrest, including the conflict between Russia and Ukraine;~~

•~~governmental regulation, including in the United States, Europe and Asia;~~

•~~public attitude towards climate change and safety, health and the environment;~~

•~~perceptions of our products by potential buyers of our products, as well as the public generally, and related changes in behavior, including with respect to recycling;~~

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•~~severe weather and natural disasters; and~~

•~~credit worthiness of customers and vendors.~~

A number of our products are highly dependent on durable goods markets, such as housing and construction, which are themselves particularly cyclical. Weakness in the U.S. residential housing market and economic weakness in North America, Europe, Asia and the Middle East could have an adverse effect on demand and margins for our products. Further, inflationary pressures and the possibility of recession can have an unfavorable impact on the demand for housing and our products.

We may reduce production at or idle a facility for an extended period of time or exit a business because of high raw material prices, an oversupply of a particular product and/or a lack of demand for that particular product, which makes production uneconomical. Temporary outages sometimes last for several quarters or, in certain cases, longer and cause us to incur costs, including the expenses of maintaining and restarting these facilities. Factors such as increases in raw material costs or lower demand in the future may cause us to further reduce operating rates, idle facilities or exit uncompetitive businesses.

A lower level of economic activity in the United States, Europe or globally could result in a decline in demand for our products, which could adversely affect our net sales and margins and limit our future growth prospects. In addition, these risks could cause increased instability in the financial and insurance markets and could adversely affect our ability to access capital and to obtain insurance coverage that we consider adequate or is otherwise required by our contracts with third parties.

~~The housing market may continue its recent decline or decline further, and any such continuation or decline in the homebuilding industry may adversely affect our operating results.~~

We cannot predict whether and to what extent the housing market in the United States will grow, particularly if interest rates for mortgage loans and construction costs continue to rise. The U.S. housing market remained strong throughout the COVID-19 pandemic, but began softening at the end of the second quarter of 2022 and has continued to decline in the third quarter of 2022 primarily due to inflationary pricing, rapidly rising interest rates for mortgage loans and increasing construction costs. Other factors that might impact the homebuilding industry include uncertainty in domestic and international financial, credit and consumer lending markets amid slow economic growth or recessionary conditions in various regions or industries around the world, including as a result of the COVID-19 pandemic, the conflict between Russia and Ukraine, tight lending standards and practices for mortgage loans that limit consumers' ability to qualify for mortgage financing to purchase a home, higher home prices, population declines or slower rates of population growth or U.S. Federal Reserve policy changes.

If there is limited economic growth, a decline in employment and consumer income, a general change in consumer behavior, including as a result of the COVID-19 pandemic, the conflict between Russia and Ukraine, and/or tightening of mortgage lending standards, practices and regulation, or if interest rates for mortgage loans or home prices rise, there could be a corresponding adverse effect on our financial condition, results of operations or cash flows, including, but not limited to, the amount of revenues or profits we generate in our Housing and Infrastructure Products segment.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information on our purchases of our common stock during the quarter ended ~~September~~June 30, ~~2022.~~2023.

Period
Total Number
of Shares
Purchased (1)
Average Price
Paid Per
Share
Total Number
of Shares
Purchased as Part
of Publicly
Announced Plans
or Programs (2)
Maximum Number
(or Approximate
Dollar Value) of
Shares that
May Yet Be
Purchased Under the
Plans or Programs (2)
July 2022 51,958 $ 97.37 51,330 $ 55,652,979
August 2022 — — — 555,652,979
September 2022 321,100 85.64 321,100 528,153,475
373,058 $ 87.27 372,430


Period	Total Number of Shares Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (2)
April 2023	91	$	113.94	—	$	477,162,187
May 2023	9,552	104.67		9,552	476,162,427
June 2023	90	116.47		—	476,162,427
	9,733	$	104.86	9,552

_____________

(1) Includes ~~628,~~91, 0 and 090 shares withheld in ~~July 2022, August 2022~~April 2023, May 2023 and ~~September 2022,~~June 2023, respectively, in satisfaction of withholding taxes due upon the vesting of restricted stock units granted to our employees under the 2013 Omnibus Incentive Plan.

(2) In November 2014, our Board of Directors authorized a $250 million stock repurchase program (the "2014 Program"). In November 2015, our Board of Directors approved the expansion of the 2014 Program by an additional $150 million. In August 2018, our Board of Directors approved the further expansion of the existing 2014 Program by an additional $150 million. In August 2022, our Board of Directors approved the further expansion of the existing 2014 Program by an additional $500 million. As of ~~September~~June 30, ~~2022, 8,216,440~~2023, 8,722,550 shares of our common stock had been acquired at an aggregate purchase price of approximately ~~$522~~$574 million under the 2014 Program. At ~~September 30, 2022, $5 million related to the repurchase of common stock for treasury, was included as a component of accounts payable on the consolidated balance sheet.~~ Transaction fees and commissions are not reported in the average price paid per share in the table above. Decisions regarding the amount and the timing of purchases under the 2014 Program will be influenced by our cash on hand, our cash flows from operations, general market conditions and other factors. The 2014 Program may be discontinued by our Board of Directors at any time.

Item 5. Other Information

Rule 10b5-1 Trading Arrangements. During the three months ended June 30, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

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Item 6. Exhibits

Exhibit No.

Exhibit Index

3.1

Amended and Restated Certificate of Incorporation of Westlake as filed with the Delaware Secretary of State on August 6, 2004 (incorporated by reference to Westlake's Registration Statement on Form S-1/A, filed on August 9, 2004).

3.2

Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Westlake as filed with the Delaware Secretary of State on May 16, 2014 (incorporated by reference to Westlake's Current Report on Form 8-K, filed on May 16, 2014, File No. 001-32260).

3.3

Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Westlake as filed with the Delaware Secretary of State on May 19, 2017 (incorporated by reference to Westlake's Current Report on Form 8-K, filed on May 19, 2017, File No. 001-32260).

3.4

Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Westlake as filed with the Delaware Secretary of State on May 14, 2021 (incorporated by reference to Westlake's Current Report on Form 8-K, filed on May 13, 2021, File No. 001-32260).

3.5

Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Westlake as filed with the Delaware Secretary of State on February 18, 2022 (incorporated by reference to Westlake's Current Report on Form 8-K, filed on February 18, 2022, File No. 001-32260).

3.6

C ertificate of Amendment to the Amended and Restated Certificate of Incorporation of Westlake as filed with the Delaware Secretary of State on May 1 1 , 202 3 (incorporated by reference to Westlake's Current Report on Form 8-K, filed on May 1 6 , 202 3 , File No. 001-32260).

3.7

Amended and Restated Bylaws of Westlake (incorporated by reference to Westlake's Current Report on Form 8-K, filed on February 18, 2022, File No. 001-32260).

10.1+

Westlake Corporation 2 013 Om nibus I n centive Plan (as amended and restated effective May 11, 2023) (in corporated by reference to Appendix B to W est l ake's Definitive P roxy Statement on Schedule 14A filed on March 31 , 2023, File No.1-32260).

10.2†+

Westlake Corporation Amended and Restated Annual Incentive Plan a s of Ma y 11 , 20 23 .

10.3†+

Form of Restricted Stock Unit Award L etter for 2023 Executive Officer Award s.

31.1†

Rule 13a – 14(a) / 15d – 14(a) Certification (Principal Executive Officer).

31.2†

Rule 13a – 14(a) / 15d – 14(a) Certification (Principal Financial Officer).

32.1#

Section 1350 Certification (Principal Executive Officer and Principal Financial Officer).

101.INS†

XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH†

XBRL Taxonomy Extension Schema Document

101.CAL†

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF†

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB†

XBRL Taxonomy Extension Label Linkbase Document

101.PRE†

XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document and contained in Exhibit 101

† Filed herewith.

# Furnished herewith.

+ Management contract, compensatory plan or arrangement.

4837

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

WESTLAKE CORPORATION

Date:

~~November~~August 3, ~~2022~~2023

By:

/S/ ALBERT CHAO

Albert Chao

President and Chief Executive Officer
(Principal Executive Officer)

Date:

~~November~~August 3, ~~2022~~2023

By:

/S/ M. STEVEN BENDER

M. Steven Bender

Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

4938



Item			Page
PART I. FINANCIAL INFORMATION
1) Financial Statements			1
2) Management's Discussion and Analysis of Financial Condition and Results of Operations			2820
3) Quantitative and Qualitative Disclosures about Market Risk			4334
4) Controls and Procedures			4435

PART II. OTHER INFORMATION
1) Legal Proceedings			4435
1A) Risk Factors			4535
2) Unregistered Sales of Equity Securities and Use of Proceeds			4736
5) Other Information			36
6) Exhibits			4837


	September 30, 2022						December 31, 2021
	Principal Amount		Unamortized Discount and Debt Issuance Costs		Net Long-term Debt		Principal Amount		Unamortized Discount and Debt Issuance Costs		Net Long-term Debt
3.60% senior notes due 2022 (the "3.60% 2022 Senior Notes")	$	—	$	—	$	—	$	250	$	—	$	250
0.875% senior notes due 2024 (the "0.875% 2024 Senior Notes")	300		(2)		298		300		(2)		298
3.60% senior notes due 2026 (the "3.60% 2026 Senior Notes")	750		(4)		746		750		(5)		745
Loan related to tax-exempt waste disposal revenue bonds due 2027	11		—		11		11		—		11
1.625% senior notes due 2029 (the "1.625% 2029 Senior Notes")	686		(7)		679		794		(8)		786
3.375% senior notes due 2030 (the "3.375% 2030 Senior Notes")	300		(3)		297		300		(4)		296
3.50% senior notes due 2032 (the "3.50% 2032 GO Zone Refunding Senior Notes")	250		(1)		249		250		(1)		249
2.875% senior notes due 2041 (the "2.875% 2041 Senior Notes")	350		(11)		339		350		(11)		339
5.0% senior notes due 2046 (the "5.0% 2046 Senior Notes")	700		(21)		679		700		(22)		678
4.375% senior notes due 2047 (the "4.375% 2047 Senior Notes")	500		(8)		492		500		(8)		492
3.125% senior notes due 2051 (the "3.125% 2051 Senior Notes")	600		(22)		578		600		(23)		577
3.375% senior notes due 2061 (the "3.375% 2061 Senior Notes")	450		(18)		432		450		(19)		431
8.73% RS Cogen debt due 2022 (the "8.73% 2022 RS Cogen Debt")	6		—		6		19		—		19
Term loans due 2026 (the "2026 Term Loans")	13		—		13		9		—		9
Total long-term debt	4,916		(97)		4,819		5,283		(103)		5,180
Less current portion:
3.60% 2022 Senior Notes	—		—		—		(250)		—		(250)
8.73% 2022 RS Cogen Debt	(6)		—		(6)		(19)		—		(19)
Long-term debt, net of current portion	$	4,910	$	(97)	$	4,813	$	5,014	$	(103)	$	4,911


	Pension and Other Post-Retirement Benefits Liability, Net of Tax		Cumulative Foreign Currency Exchange, Net of Tax		Total
Balances at December 31, 2021	$	20	$	(56)	$	(36)
Other comprehensive gain (loss) attributable to Westlake Corporation	1		(196)		(195)
Balances at September 30, 2022	$	21	$	(252)	$	(231)

Balances at December 31, 2020	$	(24)	$	(40)	$	(64)
Other comprehensive loss attributable to Westlake Corporation	—		(11)		(11)
Balances at September 30, 2021	$	(24)	$	(51)	$	(75)