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WLK Westlake Chemical

Participants
Jeff Holy Vice President and Treasurer
Albert Chao President and Chief Executive Officer
Steve Bender Executive Vice President and Chief Financial Officer
Bhavesh Lodaya BMO Capital Markets
Hassan Ahmed Alembic Global
Kevin McCarthy Vertical Research
David Begleiter Deutsche Bank
Mike Sison Wells Fargo
Alex Yefremov KeyBanc
Jim Sheehan Truist Securities
Eric Petrie Citi
Jonas Oxgaard Bernstein
Ben Issacson Scotiabank
Frank Mitsch Fermium Research
Matthew Blair Tudor, Pickering, Holt
John Roberts UBS
Call transcript
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Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Westlake Chemical Corporation Second Quarter 2020 Earnings Conference Call.

During the presentation, all participants will be in a listen-only mode. [Operator Instructions] As a reminder, ladies and gentlemen, this conference is being recorded today, August 6, 2020. to Westlake’s call Vice like host, to now Holy, Jeff President would turn over the today’s I and Treasurer. begin. may you Sir,

Jeff Holy

Thank will Vice conference of Westlake’s and Corporation management everyone, President other a and by begin you. followed conference team. members the agenda with with Bender, perspective our regarding call will Chief Good a more Chemical our Financial Steve current Westlake Steve and Executive Albert few who welcome Chao, second and I’m our call. to a XXXX our CEO; joined detailed comments industry. look results. will performance, President operating provide today quarter Albert by open morning, the at The on and financial then Officer;

add and Finally, up a the call comments, questions. few open concluding to we’ll Albert will

This to made topics and management’s beliefs based many to risks During Any Chemical. assumptions which based our master political LP, global results olefins rates; as differ competitive Today, pandemic; the refer to governmental quarter products products, is this and that reference information to trade Actual management raw details information our could westlake.com. impact the on technological owns a our which section or volatility contain regulatory filings. economic materials, facilities. well to utilities; Westlake’s our partnership, OpCo release at balance conditions, second release factors, we certain risk access and statements to the and COVID-XX the Westlake we in in cyclical with press materially as capital upon compete; is currently thus to call, of discussed unrest; will our is nature including available and for as Westlake suggest availability, forward-looking ourselves of discuss are in document SEC subject developments; forward-looking that OpCo press management. LP, morning, pricing including available in operating predictions of results. and is Partners Westlake actions, Chemical markets; to These policy of Chemical changes references limited Partners by other expectations factors Westlake certain industry refer supply-demand similar page and subsidiary, and This going Westlake issued or the to energy industries of web the pressures; cost uncertainties.

our may the We call webcast any I live accessed web would this that have a also on available callers results. Internet speaks broadcast X, is for replay you this in our can no the through accessed posted replay an of accurate on call. today’s finally code page at will beginning our International of at numbers: longer XXX-XXX-XXXX. conclusion replay to reported of access time be is both dialing of conference This by following system XXX-XXX-XXXX. the The replay. being information domestic following that that XXXXXXX. website advise of and callers hours time-sensitive two you’re advised that presentation today, XXXX, assist call be on numbers be as call discussion the August note Please therefore, as A only be access this should today, information may westlake.com. may of dial the

Now call would Chao. the I to Albert? like Albert to over turn

Albert Chao

for impact a and Westlake’s joining growth, our lives people’s significant pandemic XXXX has second morning, resulting us Good results. COVID-XX to gentlemen, heavily on discuss The quarter Jeff. and results. you, on ladies in financial Thank global and you thank weighed economic impacted

pandemic infrastructure work a employees very key day those plants facilities, to production the continue Our are our of out, support release, products in to $X.XX quarter who reductions, appreciative of morning’s day of remain cost first million quarter been and for efficiencies, of in of the focused in services our income of net working priority per economy. XXXX the management second and the We keep we response reported to which health in $XX flowing on this and has spending. diluted particularly and operational I’m press provide In safety our the of and the capital goods support essential critical employees. share. and CapEx or component

in quarter prices packaging, and the sales as from In insight global some to Before food me the for stores. our drop second in average saw quarter. a polyethylene individuals strong Steve provide applications goes let the led as sharply everyday business, items lower such more food early the our oil results consume demand grocery polyethylene through significant in packaged The quarter our into differentiated we results, prices.

operating stay-at-home price restrictions tighten, supply-demand pandemic demand downstream PVC to experienced margin for saw and the also lows businesses series relax, the first of reduced significantly related to construction-related business improve and prices. Early prices the demand oil ethane second quarter. prices PVC we quarter segment, the the operation balance in as second average broad-based of These oil caustic Margins at prices the we vinyl due in broad-based leading quarter downstream of to their causing Vinyls our start strong increased during the a products orders quarter in of impact increases products and and vinyl to led would at have to quarter, pressure end had caustic to operating lower Decreased very results over chlorine, Later to the like pandemic. our been turn a prices. call low XXXX. improved began products the our and strengthen. on and and output, and In demand feedstock financial second from due to quarter, the early now our production. Steve more declines saw in decline several PVC PVC detail quarter. of to to sales provide plants, the had I demand polyethylene our Vinyl We non-integrated the as to in started reduced normal rose for resumed or vinyl that idled

Steve Bender

while everyone. flexibility. took address detailed rapidly with review we strength and the improving teams’ financial demand will quarter, Albert, discussing segment the Olefins start to I Vinyls and always financial actions Westlake, in followed our of a our wellbeing you, changing results, consolidated by and forefront, results. keeping picture our Throughout, the good at Thank morning,

with me consolidated our begin Let results.

of the quarter reported major XXXX, impact prior sales the volumes was Vinyls demand second feedstock or XXXX. reduced to due $XXX in many COVID-XX of global lower global for lower net the segment net and from decrease income the million primarily income oil the $XXX million income share in For the to period net to drove from we which diluted The compared prices, $XX competitiveness prices associated per second impact sales economic resulting margins. pandemic oil quarter and million lower our of from of drop global products. significant The our and for our of in led prices reduced $X.XX

see felt Although January Americas. our heavily COVID-XX quarter impact Vinyls to business our the in February, of Asia we from the in the to XXXX and operations full European our began the in impacted impacts as pandemic to second were in business in the

and in impacts production first and $XXX for lower from resin, of million. income Second income primarily quarter to net PVC resin, soda the and million decreased COVID-XX demand. lower volumes lower sales decrease of and The addition caustic quarter from net polyethylene prices XXXX sales to global PVC was for resulting net in XXXX and $XXX due the income by margins

of lower selling administrative of quarter cost-cutting a Second general initiatives. and benefit expenses did XXXX result from and our as operating

the For impacts COVID-XX. the sales global from driven decrease prices first segment, products, income the X by and income to volumes lower was for from $X.XX XXXX. was in our mostly per Vinyls of sales $XX of a XXXX, million our oil first lower prices lower share, attributable major months decrease The in stemming X of of net or $XXX million net months

The as rate carryback and planned million. first integration-related feedstock $XX X tax further effective from XXXX restructuring, a operating resulting Cares benefited transaction Net lower with a and associated federal of reduced from operating as cost, loss the of Act the SG&A turnarounds, net from fuel months costs of and well activities. income lower expenses lower and benefited

of have FIFO This if reported pretax has and not of compared estimate on in the only share is method. of a LIFO the resulted utilization $X approximately accounting $X.XX been audited. been Our per an to we method would earnings million or impact favorable what

began resulting for per has reported announced. which prices and turnarounds. quarter, to period, of second quarter result for has, June of in at from feedstock second primarily industry by on rates vinyl PVC sales planned and impact the decrease performance second segment. the prices. of XXXX, to volumes activity second Vinyls just to in in continued costs, quarter move by for as the which the operating August of major driven of the July in of increase a pound raise to products. to COVID-XX. market versus $X.XX global volumes downstream mid-XXs XXXX, $X.XX our lower expense $X.XX review second of economic Further lower let’s decreased major per caused with global began The second the vinyls competitors caustic have few offset XX% sales the $XX lower the demand of two use PVC associated prior Now soda in on global pound and fuel in improve income the quarter, downstream our pound quarter over the experienced In operating the the In rates oil Vinyls The June an product products in that the levels, PVC months $XXX vinyl May’s per lower segments, our Vinyls the a vinyls reduced in and many ethylene by middle the prices for many improvement business for and as in year Thus, products and June. lower of operating with costs been million naphtha-based started prices compared our of and improved ago. brought demand middle our rise, million the was starting of primarily ethane in as increases sluggish XXXX as consultants later of of quarter sales global

Now turning our segment. to Olefins

lows market a early For $X.XX their drove by tight industry per sales operating which and result $XX and decreased with as August pound from in margins per income higher by $X.XX pound Industry for feedstock also second projecting prices producers $X.XX a increase offset are per announced polyethylene of tight million continuing June, sales polyethylene, the consultants July. in pound The in quarter combined second balances, conditions. XXXX volumes. with in quarter to lower prices quarter, due rising costs, increase a a in combined oil primarily XXXX, of up Olefins increase polyethylene higher supply-demand were million the second $XX

the expect to half we Before concluding I that our be for the II in review, Olefins our discussed in Petro unit, XXXX. calls, turnaround previous note would ethylene first of

of our and first credit in improved cash flows. quarter had Now rate on throughout to second and total of million the of our of on the end debt operating of billion, CapEx. from repaid We X.XXX% flexibility was $XXX XXXX, our used of $X.X net debt annum. unsecured billion we in and let’s quarter. notes and our and billion our cash at cash the the In XX-year reduction billion. quarter line attention capital sheet through our working debt generated $XXX fully equivalents cash balance the at focus million statement of of and At or the strength turn a the per $X.X of reductions management of second of line We quarter operations end million our in generation, flow draw XXXX net of and billion debt cash $X issued with cost we $XXX Net second revolving $X.X reductions, and note the a have financial an $X.X notes million on and long-dated approximately million reduce additional strategically average in notes million the will by long-dated proceeds newly of maturities, an of us November the interest $XXX maintains X. a $XXX to taken debt $XXX match manage operate year rate to to $X and retire This also refinancing about average This portion expense the our which of life positioned our market million schedule confidently solid run And August on actions environment current maturity of with XX while retire per of customers. meet of well X.X% staggered react environment. allows to interest and an of with needs We’ve of expenses X. rate changing reduces X.X% XX-year our and today’s the being we issued our demand operating operations a now X.X%. liquidity years expected to coupled position, to

continuing our and of capital we while our we decreased to our on As level call, our operations. expenditures announced previously last safeguard quarterly employees have

revised We million. of guidance XXXX are $XXX to our maintaining $XXX expenditure capital million

Act, previously the make With now some benefit tax rate I turn Albert to we XX%. our With call back approximately tax the Cares be expect will closing mentioned of the XXXX to Albert? comments. that, now to effective

Albert Chao

Steve. you, Thank

of in first quarter well-being The manner flexibility, our year, on the our safe We to work financial our the of in strength to outbreak to that this time. focus business and applications lives using from first and second difficult and grow our infrastructure, chemicals of tissues was demand. worldwide our continue essential and global deliver challenging for time for chain. treatment, food late also and used disinfectants, reduced global We customers and The these value construction, while the through reliable improving to everyone’s disciplined PVC and a we’ll and staying the facilities health compounds products, by this in to employees products close attention chlor-alkali packaging. our and of resins medical polyethylene COVID-XX its restrictions while kept and operating XXXX on of operation production followed associated produce team to packaging the a quarter I’m cardboard of stay-at-home execution essential for business. to are products equipment, water Westlake paper manage to proud

close on sharing me views by our Let some outlook.

of to improvements lows the present. May began and pricing have has current products considerable more the the PVC caustic our and for quarter polyethylene, as demand continued the for that asset in future demand through seen from gas have continued in continued as all and and PVC to second available well to We for with increase major than spread use. doubled oil

July to August, remain announcing $X.XX rates with totaling polyethylene, and pound. operating polyethylene continue in many price per producers For strong increases

superior while with the We long-term deliver to operation fundamentals shareholders. the management performance, through will to allow business value reduce to remain to our continue us The prudent focused combined over business, cycle. to costs safely, value business our pandemic, operate deliver of creating solid will our this of

of We for balance XXXX business optimistic improving are constructive. dynamics industry for the cautiously as look indications

and much XXXX quarter we always, our operate safely, Thank with and continue listening communities you work. to As the to along we the stewards of good very environment being will which for live call. second in earnings

call the Jeff. turn I’ll over Now to back

Jeff Holy

you, Albert. Thank

after that would like to we you questions. We’ll of remind call Before will take now questions, again is end a be begin provide the replay Josh, I will teleconference that taking at this the available we number of the two ended. hours call.

Operator

Markets. question Thank BMO Bhavesh Instructions] [Operator you. first comes with from Lodaya Capital Our

your may with You proceed question.

Bhavesh Lodaya

for Good morning, team. John. This Bhavesh is

always rising that also is pricing now come contracts in and is play there the is the are strong. its demand PVC increase for peers chlorine soda pricing some probably given And discussed. we it other level, we So hearing as caustic your and into caustic for understand on from about I XQ sequential of demand supplies, from and impact which bit XQ have and counterintuitive discounts a

soda outlook So realized from your on your Westlake’s prices XQ? for perspective, what’s caustic

Steve Bender

As we strength business, to in Vinyls, speak PVC in Vinyls been it’s the space. about see really we in the continue but the strength

got we’ve noted price and I strength PVC in June remarks, seen in through in nominations now into July, we’ve As August. nominations my prepared continued into

will So market. certainly have put on more certainly, we more chlorine, the as pull that caustic

the how kind your to our industrial the recover. the upon we markets question we as highly begin your when into to quarter, answer So of lot a look third is of manufacturing see dependent –

whether and have but segments containerboard, like paper areas some in sheet certain seen weaker. of we’ve think cut space, paper of strength it’s clearly, the been I been that in

alumina been Some been markets weaker, and of have markets detergents the but have other the stronger. disinfectants and

to industrial really quarter. strength a function later we markets But that we of very the it’s So rebound. how as well begin we’re think the see we this see recover certainly, positioned

Albert Chao

increases ton announced of in XX third the increase industry, the of increases price per $XXX some quarter. ton. totaling between that you Yes. based And will contracts April, think been I February the this those are I quarterly has over about a short in IHS price And know, $XXX as know carry per effect. to of to from recognized price so series

are a hand, On some basis, monthly the reflect other pricing. other on monthly contracts who

export. said will really quarter, earlier, be and a and U.S. As demand and their both the during demand only industrial depends different. each need But it Steve to on economy the as and COVID-XX, in globally. products, not U.S. increase second country for domestic reacts differently saw price but our We

price are the pricing quarterly that into said So monthly be supply the that the but will some pricing, will as month. the I depending demand that on carry quarter, increase third for earlier

Bhavesh Lodaya

color. That’s Got it. in And great of flows. cash then terms

second solid Can obviously thoughts So lower for in the think on great, saw flow cash generation year you flow particular? free the quarter, in cash some free from and capital capital. we shapes like up of a rest seemingly the working working how you share

Steve Bender

Certainly.

seen, price both polyethylene. So caustic increases for as you’ve nominations we’ve PVC for nominations seen and nominations of in

expenses that But in keep with earnings seeing across trying taken certainly gas into the and into low picture the our So operating foot we’re and, low to our not and today improved off translate demand will dynamics, our we’ve space as costs that certainly, flows. cash therefore, well. cost pricing and

also, in the quarter as a our the always, major see on of operating improved across our products. series of earlier third we the quarter, nominations price relative we And all now second a a very through So market eye into seen we’ve costs, keep demand. very but to close of

So that should cash improve flows. improve earnings and

Bhavesh Lodaya

you. Thank Clear.

Operator

Thank you.

with Ahmed Hassan Alembic from Our Global. next question comes

may question. You proceed your with

Hassan Ahmed

Steve, side things. and of around morning, capacity the Good Albert question

XX% ethylene may competitors be on relatively about sort of how talked the of weak of economics as vulnerable as much your capacity of because now. right of side, One large sort

So what in are, question your are of forward? similar or mean, you expectations seeing of of that you sort to curtailments are things? maybe guys terms permanent going my if guys closures is even you I And sort

Albert Chao

Yes. That’s question. good a

billion about we a buyer know, products. As ethylene buy on demand net X pounds you supply and are derivative our Westlake, depending of of or

and plants running, additional our supply operating ethylene rates our and we on buy as downstream ethylene. said, So are normal we

needs requirements. ethylene, the there downstream if demand, there the more or have ethylene their depending of producers, ethylene Now customers, their not full merchant on are they may are may then all

So depending on the producers.

Hassan Ahmed

fair. Very

Okay. And saw the One side of was a rally we of some well. through terms two of there obviously, the moving on ethane bit course the a in to things, questions. is, part feedstock in quarter, pricing choppiness of pricing NGL as and

QX, what on the your guys’ of are supply look ethane in things, nearer-term terms in ethane views pricing of side the mix and feedstock side And longer-term on terms So of what of demand it, did slightly like? balances? your

Albert Chao

Yes.

in ethylene about you know, large, naphtha stock U.S. being economics a the and are U.S. I feed based. But while. As ethylene capacities has, by for U.S. in went little you is capabilities when ethane know the as the negative, XX% very certainly, ethylene know, all and a limited, better ethane oil lower price had naphtha-based the and for cracker of the

in shutting, moved gallon down ethane prices even from has with oil back again, lower low, the outlook, the oil price and oil in prices especially went $X.XX, we Permian the area. $X.XX a but it its stabilized the range. are production, So but seeing the production more of well as some oil though the come And up

So the in rich are production. which back gas, in liquids natural in associated gas

And stable is seeing longer are the even seeing we future price the prices the least So price forward. a reasonable, from going to ethane end at of a now term, year. still of ethane stable more

Hassan Ahmed

Thank you so Albert. helpful, much. Very

Operator

next McCarthy Research. comes Our Kevin with Vertical from question

question. your with proceed may You

Kevin McCarthy

question deployment Good on morning. you. for A capital

will M&A cash point time took that be net or from that of dedicated out or might turns will And balance be? during you repurchases depending noted question perhaps ratio your And You net be flow slightly share when EBITDA your in a to quarter. more perhaps $XXX some the is, higher. debt-to-EBITDA My debt deleveraging? settles relative toward I your where do combination two out, guess, you million on of when foresee

Steve Bender

we Kevin, the run maintain so ability use And of and we the the when reliably think plants waterfall and cash, of funds, course, safely. of of to think those to of use

the in we’ve consistently. of capital to and XXXX that And as talk into plans see the running can our focus plants as a we really our reliably finish got, for we’ll XXXX. level year, capital we think, about is reasonable for budgeting. expenditures But I are You sure planned our get later make

We have current large announced. no expansions

value-add And to so always there. opportunity into deploy is capital the opportunities that

look growth. as organic business over grown cases, time, and through new it’s some been you If has been It’s expansions as acquisitions. the plant how through at well debottlenecks, through in

is the of looking on the that capital as value-added part as buybacks constantly investors of certainly we’re use is as rewarding profile of capital. dividends But also of cash and So horizon, opportunities at part flows for that with well. looking well the deploying way in share that

it’s value important to those we the by that value think the underlying grows of the investing time, avenue a very the business. same grow capital those shares reward but for So – shareholders, stream grow at

balanced So it is effort. a

Kevin McCarthy

trend Great. own talk expect were into your secondly, to you industry? for would an obviously about the XQ? construction And them then industry XQ? activity. unusual to have how compared operating rates rates And Can PVC been you How where in season it’s might

Albert Chao

Yes.

low industry we our IHS as our XX% at in PVC PVC reported PVC building that XQ and strong from the both looking the quarter. globally rate in products demand as U.S. demand, have XX%, for products building really they’re is out well $X.XX seen, I third demand and what U.S. in price think from went operating is downstream the like But XXXs increases to the you going even have the for announced, $X.XX April export price we now hence, a mid can’t and the became $X.XX have then this or XXXs and increases higher. reality in and And there – August. the $X.XX and it’s second price

levels this the you we producers have And and low. quite as in increase both like strong export So domestic And price of without U.S. going inventory are been understand, up. have price the demand. can’t PVC

them of impacted some And planned producers. by problems, are some

rates So we third in should in stronger quarter. the PVC see operating

Kevin McCarthy

Excellent. Thank you very much.

Operator

Thank you.

Bank. comes Begleiter Our next Deutsche from with question David

may proceed question. your with You

David Begleiter

Thank you. Good morning.

of back the some exports see U.S. polyethylene half the been How to year to in we strong price you of are strength to going new come some in capacity exports. trend expect Now do due online recent has U.S. China? the as

Albert Chao

a That’s demand understand for good We question. Chinese strong polyethylene. is quite

are And some reasons products. of Iranian the especially to fair of Iranian China LDP sanctions, slowed And used to export because the Hence, the has export has polyethylene, more been that of China. amount down or stopped. importing

on other hand, we – polyethylene, but – demand demand read sharply, demand U.S. for LDP. that grown So domestic industry the especially has pretty the

LDP For this year, the indicated we report LDP went year. of Usually, up domestic for X% demand and which is a increase that unusual. X% first X X.X%, between demand months

it only the LDP because So are time, strengthened. and the demand, really packaged of that much more and especially consumers export packaged because same supply. shows to declined at – goods to there’s buying COVID-XX so And has LDP the LDP food,

IHS. gone you domestic the increased had I also U.S. U.S. exports. this July report from that, said ethylene recovering ethane is to a advantage the export to feedstock that have of reduce cost lot, linear the low We we competitive the well high-density the today, has demand, feedstock U.S. capacities think reflecting and as But as XX new lowest in up in added that produce as and having

David Begleiter

the about polyethylene? feeling And increase $X.XX of given are August you strength, how that

Albert Chao

August, think think just things go now it’s indicated in lot quite end the by August. CDI whereas IHS happened between will and the says $X.XX But beginning strong. I through, of think it We won’t a And I go through. of way,

maybe between. know, don’t in somewhere we So

David Begleiter

much. Take very you Thank care.

Operator

you. Thank

Wells Mike Our from Sison with question comes Fargo. next

may proceed question. You your with

Mike Sison

Good morning.

flow the polyethylene on curious bottom all line. the through Will to those Just increases. price

Just the curious through up? $X.XX of flow achieved? could And you you maybe get how much what the July, that if some think of – in I because do think costs went

Steve Bender

nevertheless, you in the increase they range. buyers is typically that line. you $X.XX the if we is, So larger have for before bottom Mike, look low hit actually some at noted, $X.XX, some But Albert where it’s delay and as think, typically volume $X.XX, the as of know, earlier the ethane

did will results lag of into And in of bit on increases translate a these July the cases. August as some so line, but bottom having X-month and a we some improved obviously, announce in basis on

Mike Sison

you Got it. I On know a business do how think your quarter? on versus mentioned top strong. demand you terms And second then in will sequential for – of line be a looks PVC basis, strong basis PVC

Steve Bender

Well, you certainly a quarter. the pullback of in the saw because orders stay-at-home second

And so seen, rates low, as were consultants industry you’ve the some quite of operating publications. in published

And noted, as very a early August, gets elevated more there very demand was for price implemented. we know we’ve and much in announcements implemented $X.XX increase all but announced rates I we’ve an what operating Albert and July, well get seen very, looks see say noted, in remain so, got as implemented it’s $X.XX And strong was and see July, announcement today. we firm. August as to demand of $X.XX We’ve got as We’ll $X.XX. was

like it with elevated, remain looks rates So operating a and that said, good market.

Mike Sison

thank Great, you.

Operator

you. Thank

Yefremov Alex from with comes question next KeyBanc. Our

You question. may proceed with your

Alex Yefremov

strategy? building products to business? see accelerate your Is time Good everyone. you. in opportunities acquisitions Do rollout your good a this bolt-on Thank for morning, you

Steve Bender

Well, opportunities you in of DaVinci a last think, the looked the at well NAKAN the Alex, Compounding as as as I number know, opportunity Roofing business year, we’ve PVC in to business. took midyear invest

in which to the and They’re Both performed those opportunities nicely of opportunities, always is not bolt-on forward but between to balance finding and for find on do since that downstream do nice business, so have a find sense. do. make the we and additions. our very a for transaction value-added they look we it look And trying balance value to certainly we extent and sake, bolting we just

And So as act there we the year, those. opportunities if value-added found answer is are on we’ll last look. we’ll some

Alex Yefremov

should Should you PVC products. some about how – in relative And increases think there resin pricing we price Steve. building think mentioned you PVC? to solid we and you’re realized the about

Steve Bender

that Demand they’ve some this in you and been have And also seen, is, imagine, remodeling we’ve strong has seen and as you firm. results. might our very from homebuilders of probably the also seen the repair DIY, space

or those in so we’re our to demand. solid certainly, have an everywhere sidings, we of seen see on act. certainly acting pricing all fittings we And And capability all opportunity businesses And or see products. that in pipes downstream

Alex Yefremov

Thanks a lot.

Operator

Thank you.

Our next Jim with question from comes Securities. Truist Sheehan

proceed question. may with You your

Jim Sheehan

you. Thank morning. Good

So pandemic how thinking drop-downs the Westlake could doing Chemical your into affected Partners? you comment has on about

Steve Bender

Jim, the have can are that So very we and we that us. available to a know, you portion as four have still is significant mentioned, dropped. levers One that be you there drop-down

acquired partner, acquisitions. a also have portion the and half. last we know, Lotte, year, our you has And the We as cracker ethylene other of LACC

could And so acquisition time about over appropriate expansion. ability be And of new an got at an certainly, think margin to considered. target. We’ve be cracker that that and time could course, debottlenecking an

those four are contemplate. risk/reward really we get. of we ones that looking kind the the It’s levers at So

we price And opportunity of drop-down other those and on the all so four we’re earnings look three the that can levers. terms We’ve earnings years, demonstrated levers, at capabilities the the the cash of cash appropriate incredibly the act one any reflecting if is of flow. The take of its as a last about it’s issue getting unit partnership partnership distributable growing is in we predictable flows. in to over on the X is, the to and growth reward,

Jim Sheehan

assets ethylene a result not, changing do landscape changing And be of some see an it assets sales? ethylene you may Are Gulf Coast the are there those acquirer how of looks U.S. and as asset if like the in competitive you that hands.

Steve Bender

competitive. what Well, is, or anything we would might that be looking the I I is comment looking by competitive not say might be that definition, obviously landscape one on that at is can at. But never

the be our we customers. we’re think entrants with produce so with And market and there we be and market, so very look should products to spectrum, provide the the our think are it. willing very we work well as We our portfolio support new customers. in with we across competitive that the and And always positioned we’re

Albert Chao

Yes.

out, we of last XXXX, as fourth Just acquired want XX%-odd million. Steve last to quarter mentioned, point XX% for LACC year, of – – $XXX

did just we acquired. So

Jim Sheehan

you. Thank

Operator

Thank you.

next question PJ Citi. from with Juvekar Your comes

your with proceed may You question.

Eric Petrie

Eric Petrie It’s morning. for Good on PJ.

your your and declined and peers. Vinyls than earnings Your Olefins less

Is better mix that. better it could cost give if fixed variance? you position, absorption So on color cost wondering or some product

Steve Bender

think very space look some think our Albert in differentiated at low-density space, the products. mentioned I I of this, when Eric, our positioned you Well, well we’re and and

pipes fitting, Vinyls in positioned a application and of we ability think packaged such variety downstream stores that product also very And the servicing we well and food really I products this with others space, with only of autoclave technology wide our as in into setting. that materials, well everyone but vinyl to strength so materials the well packaging as in positioned I has demonstrated market. resin, certainly, coating that And grocery the siding, as to buying end resin PVC going specialty downstream further we’re with the in have wheel products, not In specialization, be that think have. our

and downstream this the think export the and hear I integration our products. has that us construction so resin, the the service with remodeling helped that market course, with in very repair the And in you well ability dynamic strategy to and of talk has I resin, us market And us market. being markets with with think served about domestic able

Operator

you. Thank

comes from question Jonas next with Oxgaard Bernstein. Our

You may proceed with your question.

Jonas Oxgaard

you. couple last I in news on was of lot a wondering, Thank hydrogen. been months, there’s the of

of the as are an producer you’re guys the operators others? of one in looking you just operator into, that an world, electrolyzers for of this hydrogen assets is opportunity a largest either Given or

Albert Chao

interesting. be reading will a it been Well, about lot very it. We’ve

salt power You’re with right. It’s with electrolysis water and and brine. than rather

pleased with we’ll ears interested So anybody talk us, talk to be them. we to are all and to

Jonas Oxgaard

you’re something looking into not it’s But directly?

Albert Chao

I we gas. now, – natural have the think, hydrogen – Well, hydrogen, made from right is both is don’t economy

quite hydrogen. not it’s the So green

economy, solar call it that. renewable from filling green, down are to Hydrogen production whatever. electrical people which and to power of wind and hydrogen using – charging there’s And few, very which than you building building hydrogen much less truly also so need consumer the tie stations, they either to are and Grey which you more think those. stations, hydrogen no from the and be be or And I COX pipeline

it. So be we’re to And from interested away looking to but with I into them. think we anybody in wants to said, several as are talk us, I still talk pleased it, years very we’ll

Jonas Oxgaard

you. Thank Okay.

Operator

you. Thank

question with next Scotiabank. from comes Issacson Our Ben

your You question. proceed may with

Ben Issacson

much. very Thank you

demand changed actually see or the just X has deferrals you you Just result how on are about think where of talk as one you Can cycle, chlor-alkali. in question given the market just subsequent we we are tightness in cancellations of Can about and a the you. back Do getting pushed cetera? where in year, you year, projects? new X et talk cycle? Thank COVID

Albert Chao

that by war some – decline China U.S. with around even I And saw with signs actually which you But we added COVID-XX. of impacted the we world of a industrial Well, place chlor-alkali you or know last U.S. big with starting of rest you China, the is and unlike And domestically, year, that have really salt Phase industrial China. trade the of you there’s led the the think XXXX, reduction production, in also in production. as between the end then follows world. the a with demand around – of said, improvement Steve Olefins kind industrial chlor-alkali. the tariff best know, U.S. capacity business, have low-power, as new And and I had the because caustic And and lot of market. no as a

on will the right, demand how far of then caustic. GDP has back know, increase. But you’re don’t faster away the caustic us? the the recovery. pushed COVID-XX recover, be the We peak peak the depending from will The really global probably So faster

Operator

you. Thank

Mitsch Our next Fermium with question Frank comes Research. from

question. proceed You your with may

Frank Mitsch

you half of expectations be future, unusual describe being we more would second by curious the was what the second And reactionary I continue and results cost took the some that be terms was you these the was able down, the actions just that Obviously, I would XXXX? if structural you SG&A in the cite the cost have circumstances struck And with gentlemen. did. morning, of to actions something or really into you our quarter. that came you Good as that pandemic? that should in in might XXXX to delivering highlighted of i.e.,

Steve Bender

sticky. would something be X SG&A remember, that might time, of actions that that we’ve first commissions guide I could you built is the deliverable took into the second realistically we line. think got Frank, at I But Yes, the Many in months half run think be XXXX. of will same rate the that of that SG&A

continue as some see of that. that year. to that So on for directionally, there’ll But half think the certainly to second elevation continues first be kind for half reasonable year be I business as the consider of volume, of to should we improve, the run rate the number

Frank Mitsch

already the appreciative the with line. in second it saw business? and quarter, if books, might least an know I commission volumes versus it, are wondering that at idea to versus you of the the was in Westlake in And July Vinyls term give to however or I want or possible that the the you July salespeople size be that us Olefins June

Steve Bender

certainly, Olefins second food Well, shelves, consistently being the and sold grocery off pretty throughout the were operating the orders all elevated so quarter. in much business store with stay-at-home rates

And all so kind of and was, this I living throughout pandemic think, that that has through been that. hallmark quarter a everybody knows the

construction this the Vinyls lot industries. certain of into get a went business, into you As

industry American so And portion of the market critical as infrastructure. some the designate here did in construction a North markets not

shutdown. India in And Asia, export markets some

reduced backing export being of quarter. so allowed because in not some to up for operate markets some greatly portion were cases, of the resin, and the And markets during construction some export

quite operating opened states many in course, strong and America provinces as certainly mentioned, opened low. So as rates, those I up. we well. export markets have seen But rebound of and up got And a big as North

have about XX% at they rates mentioned the industry. end of come operating I for June, were the back, So

Frank Mitsch

you much. Thank so

Operator

you. Thank

Our next Holt. Pickering, Matthew with question from Blair Tudor,

question. may proceed with your You

Matthew Blair

Good morning, Albert and Steve.

quite ECU you’ve on able side? export gas U.S. then guess, cost caustic, have affected also, And curve? come the it that take flattened has either, of profitability Has So Is prices like in advantage European a I guess, to I bit. plans? that that the natural something Europe lowered volumes or – looks down benchmark that been in your your the

Steve Bender

buyers Well, America. and obviously markets we’re Europe natural in North in of gas in

And advantage we’ve see so certainly, move, to we take prices that. of as able been

you And results, are seen of fuel costs, which lower costs. quarter-over-quarter so the gas natural we’ve when think

also an that so been and has that’s year-over-year. advantage, true And very

seen produce. some and And begin so look at the we’ve seen But to oil uptick you North comments in in come higher here few and weeks. we Europe, back in prices, think Albert into made, last about as those I him heard fields natural recent America markets producers talk we’ve with that gas prospectively, in the and

we gas, things there’s been moving gas And has take a where ample see at very see believe we so can little bit and certainly, look gas we’ll but But how a recently. play out. certainly

Matthew Blair

I’ll it Thanks, leave there.

Operator

with next question John your Roberts And you. from Thank comes UBS.

question. You your with may proceed

John Roberts

glycol was quarter. at operating Does rate the on bearing Ethylene morning. the during ethylene? allocation Good or weak of the any pretty that have LACC

Steve Bender

No. No.

it In fact, does not.

of certainly, to invested as an get on I the and As pulling we we rates Albert rata we’re say, the effect And nearly ownership in not that fourth XX% pro at did – have ethylene, venture quarter. the noted, invested LACC. operating share our of at end really the on

John Roberts

have it that And low Does for need all earlier higher any it there. in has Okay. earlier, you had the the you different to options? quarter before you the of MLP. exercise off Steve, options then mentioned doubled the It’s price go those

Steve Bender

range. – in yielding certainly still the it’s It’s XX%

that. to the would is than think to appreciate like And strength think We this challenges. demonstrate the pandemic through biggest cash so of all the I see certainly, of greater probably we’ve all flows And challenge underlying ability ride the faced. investors kinds it

to think very an that So is well-performing the a where than sits valuations it that is that I here I need stability certainly be still it partnership. higher today. illustration think

John Roberts

Thank you.

Operator

session closing the is ended. Q&A any remarks? Are time, this now there At

Jeff Holy

our our call today’s next for We discuss call. hope to you’ll again results. again Thank conference join participating us third quarter you for in

Operator

for call. you earnings quarter second participating Westlake in Chemical conference Thank Corporation today’s

Thursday, As call The XX:XX replay numbers: should until can be international accessed XXX-XXX-XXXX. be available may XXXX. code may will XX, access callers by for a dial on callers Eastern ended August has following is hours the reminder, domestic and calling the accessed The access the XXXXXXX. call for replay this beginning at Time two replay both numbers after XXX-XXX-XXXX, p.m. be