Westlake Chemical Reports Fourth Quarter and Full-Year Earnings for 2012
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For best results when printing this announcement, please click on the link below: http://pdf.reuters.com/pdfnews/pdfnews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20130219:nPnDA61781 -- Record fourth quarter and full-year 2012 earnings. HOUSTON, Feb. 19, 2013 /PRNewswire/ -- Westlake Chemical Corporation (NYSE: WLK) today reported net income for the three months ended December 31, 2012 of $95.3 million, or $1.42 per diluted share, compared to net income of $26.4 million, or $0.40 per diluted share, reported for the fourth quarter of 2011. Net sales for the three months ended December 31, 2012 of $801.0 million decreased $58.2 million compared to net sales of $859.2 million in the fourth quarter of 2011, primarily due to lower sales volumes for feedstocks, polyethylene and styrene, partially offset by higher prices for styrene and higher building products sales volumes. Income from operations was $156.2 million for the fourth quarter of 2012 compared to $50.5 million for the fourth quarter of 2011. Fourth quarter of 2012 income from operations was higher primarily as a result of significantly lower feedstock costs, which resulted in higher integrated margins for our Olefins and Vinyls segments. Net income for the fourth quarter of 2012 of $95.3 million, or $1.42 per diluted share, increased $8.3 million from the $87.0 million net income, or $1.30 per diluted share, reported for the third quarter of 2012. Net sales in the fourth quarter of 2012 of $801.0 million decreased $20.2 million compared to net sales of $821.2 million in the third quarter of 2012, mainly attributable to lower sales volumes for polyethylene, PVC resin and building products which was partially offset by higher styrene sales volume and higher sales prices for most of our major products. Fourth quarter 2012 income from operations was $156.2 million as compared to $142.5 million reported for the third quarter of 2012, an increase of $13.7 million. This increase was primarily the result of lower average feedstock costs and higher sales prices, partially offset by lower sales volumes. For the year ended December 31, 2012, Westlake had net income of $385.6 million, or $5.75 per diluted share, on net sales of $3,571.0 million. This represents an increase in net income of $126.6 million, or $1.88 per diluted share, from 2011 net income of $259.0 million, or $3.87 per diluted share, on net sales of $3,619.8 million in 2011. Net sales in 2012 decreased $48.8 million from net sales in 2011, primarily due to lower sales prices for most of our major products, offset by higher sales volumes of feedstock, building products and caustic. Income from operations was $615.4 million for the year ended December 31, 2012 as compared to $446.8 million for 2011, an increase of $168.6 million. Income from operations benefited primarily from a significant decrease in feedstock and energy costs. Industry ethane prices decreased 48.1% and industry propane prices decreased 31.5% in 2012 as compared to 2011. Albert Chao, President and Chief Executive Officer, said, "We are pleased to report record annual and fourth quarter earnings benefiting from lower feedstock costs. Increased North American shale gas production resulted in lower ethane-based ethylene production costs in 2012. We believe North American shale gas production will continue to give our business a significant cost advantage over global naphtha-based ethylene producers for the foreseeable future. Westlake is investing to capture this advantageous ethane and natural gas cost position with the expansion of our ethylene units and additions to our chlor-alkali capacity." EBITDA (earnings before interest expense, income taxes, depreciation and amortization) of $191.0 million for the fourth quarter of 2012 increased $106.1 million compared to $84.9 million in the fourth quarter of 2011. EBITDA for the fourth quarter of 2012 increased $15.4 million compared to EBITDA of $175.6 million in the third quarter of 2012. A reconciliation of EBITDA to reported net income and to net cash provided by operating activities can be found in the financial schedules at the end of this press release. Net cash provided by operating activities was $624.1 million in 2012. Capital expenditures for 2012 were $386.9 million. At December 31, 2012, we had cash and marketable securities of $915.0 million and our long-term debt was $763.8 million. OLEFINS SEGMENT The Olefins segment reported income from operations of $143.2 million in the fourth quarter of 2012, an increase of $67.3 million compared to $75.9 million reported in the fourth quarter of 2011. The increase was primarily due to higher integrated olefins margins largely resulting from lower feedstock costs. Trading activity in the fourth quarter of 2012 resulted in an unrealized loss of $10.8 million compared to a gain of $1.2 million in the fourth quarter of 2011. Income from operations for the fourth quarter of 2012 for the Olefins segment of $143.2 million increased $18.7 million from the $124.5 million reported in the third quarter of 2012. The increase was primarily due to higher integrated product margins, largely as a result of lower feedstock costs. The Olefins segment reported income from operations of $552.8 million in 2012 compared to $459.3 million in 2011. This increase was mainly attributable to higher olefins integrated product margins as compared to 2011. Margins improved as a result of significantly lower feedstock and energy costs, which were only partially offset by lower sales prices. Results for 2011 were negatively impacted by lost ethylene production, repair costs and unabsorbed fixed manufacturing costs incurred in connection with an unscheduled outage at one of our ethylene units in Lake Charles and a fire at a third party storage facility at Mont Belvieu. VINYLS SEGMENT The Vinyls segment reported income from operations of $18.2 million in the fourth quarter of 2012, an improvement of $37.8 million as compared to a loss from operations of $19.6 million in the fourth quarter of 2011. The increase in operating income was primarily the result of higher integrated Vinyls margins generally resulting from lower feedstock costs and higher caustic and building products sales volumes. The Vinyls segment reported income from operations of $18.2 million in the fourth quarter of 2012, a decrease of $5.9 million compared to income from operations of $24.1 million in the third quarter of 2012. The decrease in operating income was largely the result of lost PVC production and costs due to a scheduled maintenance turnaround at the Geismar vinyls complex and seasonally lower sales volumes for PVC resin and building products, partially offset by higher integrated margins resulting from lower feedstock costs. The Vinyls segment reported income from operations of $85.9 million in 2012, an increase of $81.9 million as compared to the $4.0 million reported in 2011. This increase was predominantly driven by lower feedstock and energy costs and higher caustic and building products sales volumes as compared to 2011. The income from operations for 2012 was negatively impacted by an unscheduled shut down of our Geismar vinyls complex and lower operating rates at that complex as a result of operational issues related to a March 2012 fire at the complex. We expensed approximately $10.5 million of costs associated with that event in 2012. The Vinyls segment's operating results for 2011 were negatively impacted by a maintenance turnaround at the Calvert City facility and the closure of the Springfield PVC pipe facility. The statements in this release relating to matters that are not historical facts, including statements regarding cost advantages from low ethane-based ethylene production costs that North American shale gas is providing and the expansion of our ethylene units and additions to our chlor-alkali capacity, are forward-looking statements that are subject to risks and uncertainties. Actual results could differ materially, based on factors including, but not limited to: general economic and business conditions; the cyclical nature of the chemical industry; availability, cost and volatility of raw materials and utilities, including natural gas from shale production; uncertainties associated with the United States and worldwide economies, including those due to global economic and financial conditions; governmental regulatory actions, including environmental regulation; political unrest; industry production capacity and operating rates; the supply/demand balance for Westlake's products; competitive products and pricing pressures; access to capital markets; technological developments; the effect and results of litigation and settlements of litigation; operating interruptions; and other risk factors. For more detailed information about the factors that could cause actual results to differ materially, please refer to Westlake's Annual Report on Form 10-K for the year ended December 31, 2011, which was filed with the SEC in February 2012. Westlake Chemical Corporation Conference Call Information: A conference call to discuss Westlake Chemical Corporation's fourth quarter and full year 2012 results will be held Tuesday, February 19th, 2013 at 11:00 a.m. Eastern Time (10:00 a.m. Central Time). To access the conference call, dial (800) 573-4840, or (617) 224-4326 for international callers, approximately 10 minutes prior to the scheduled start time and reference passcode 34352540. A replay of the conference call will be available beginning two hours after its conclusion until 11:59 p.m. Eastern Time on Tuesday, February 26th, 2013. To hear a replay, dial (888) 286-8010, or (617) 801-6888 for international callers. The replay passcode is 42085567. The conference call will also be available via webcast at: http://phoenix.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=180248&eventID=4900614 and the earnings release can be obtained via the company's Web page at: http://www.westlake.com/fw/main/IR_Home_Page-123.html. WESTLAKE CHEMICAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended December 31, Twelve Months Ended December 31, 2012 2011 2012 2011 (In thousands of dollars, except per share data) Net sales $ 801,041 $ 859,175 $ 3,571,041 $ 3,619,848 Cost of sales 610,793 781,915 2,834,081 3,060,842 Gross profit 190,248 77,260 736,960 559,006 Selling, general and administrative expenses 34,017 26,801 121,609 112,210 Income from operations 156,231 50,459 615,351 446,796 Interest expense (7,367) (12,543) (43,049) (50,992) Debt retirement costs - - (7,082) - Gain from sales of equity securities - - 16,429 - Other (expense) income, net (156) 1,332 3,520 5,628 Income before income taxes 148,708 39,248 585,169 401,432 Provision for income taxes 53,431 12,805 199,614 142,466 Net income $ 95,277 $ 26,443 $ 385,555 $ 258,966 Earnings per share: Basic $ 1.43 $ 0.40 $ 5.78 $ 3.89 Diluted $ 1.42 $ 0.40 $ 5.75 $ 3.87 WESTLAKE CHEMICAL CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) December 31, December 31, 2012 2011 (In thousands of dollars) ASSETS Current assets Cash and cash equivalents $ 790,078 $ 825,901 Marketable securities 124,873 - Accounts receivable, net 400,159 407,372 Inventories 399,298 490,777 Other current assets 37,005 32,106 Total current assets 1,751,413 1,756,156 Property, plant and equipment, net 1,510,048 1,232,066 Restricted cash - 96,283 Other assets, net 150,735 182,316 Total assets $ 3,412,196 $ 3,266,821 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities (accounts payable and accrued liabilities) $ 398,510 $ 364,595 Long-term debt 763,761 764,563 Other liabilities 377,669 381,351 Total liabilities 1,539,940 1,510,509 Stockholders' equity 1,872,256 1,756,312 Total liabilities and stockholders' equity $ 3,412,196 $ 3,266,821 WESTLAKE CHEMICAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Twelve Months Ended December 31, 2012 2011 (In thousands of dollars) Cash flows from operating activities Net income $ 385,555 $ 258,966 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 144,541 131,397 Deferred income taxes (5,793) 14,114 Other balance sheet changes 99,751 (42,181) Net cash provided by operating activities 624,054 362,296 Cash flows from investing activities Additions to property, plant and equipment (386,882) (176,843) Construction of assets pending sale-leaseback (4,308) - Proceeds from disposition of assets 471 2,880 Proceeds from repayment of loan to affiliate 1,192 1,192 Proceeds from sale-leaseback of assets 2,304 - Proceeds from sales of equity securities 47,655 - Purchase of securities and other investments (127,834) (30,265) Settlements of derivative instruments 431 251 Net cash used for investing activities (466,971) (202,785) Cash flows from financing activities Capitalized debt issuance costs (2,221) (2,697) Dividends paid (285,521) (18,265) Proceeds from debt issuance 248,818 - Proceeds from exercise of stock options 10,369 5,344 Repayment of debt (250,000) - Repurchase of common stock for treasury (10,784) (2,518) Utilization of restricted cash 96,433 54,227 Net cash (used for) provided by financing activities (192,906) 36,091 Net (decrease) increase in cash and cash equivalents (35,823) 195,602 Cash and cash equivalents at beginning of the year 825,901 630,299 Cash and cash equivalents at end of the year $ 790,078 $ 825,901 WESTLAKE CHEMICAL CORPORATION SEGMENT INFORMATION (Unaudited) Three Months Ended December 31, Twelve Months Ended December 31, 2012 2011 2012 2011 (In thousands of dollars) Net external sales Olefins $ 555,203 $ 621,773 $ 2,499,978 $ 2,567,842 Vinyls 245,838 237,402 1,071,063 1,052,006 $ 801,041 $ 859,175 $ 3,571,041 $ 3,619,848 Income (loss) from operations Olefins $ 143,212 $ 75,890 $ 552,762 $ 459,266 Vinyls 18,218 (19,553) 85,942 4,012 Corporate and other (5,199) (5,878) (23,353) (16,482) $ 156,231 $ 50,459 $ 615,351 $ 446,796 Depreciation and amortization Olefins $ 23,003 $ 21,917 $ 97,906 $ 86,915 Vinyls 11,816 11,095 46,146 43,877 Corporate and other 121 141 489 605 $ 34,940 $ 33,153 $ 144,541 $ 131,397 Other income (expense), net Olefins $ 1,136 $ 780 $ 3,899 $ 2,813 Vinyls (1,081) 15 (965) 194 Corporate and other (211) 537 586 2,621 $ (156) $ 1,332 $ 3,520 $ 5,628 WESTLAKE CHEMICAL CORPORATION RECONCILIATION OF EBITDA TO NET INCOME AND TO NET CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited) Three Months Ended Three Months Ended Twelve Months Ended September 30, December 31, December 31, 2012 2012 2011 2012 2011 (In thousands of dollars) EBITDA $ 175,558 $ 191,015 $ 84,944 $ 772,759 $ 583,821 Less: Provision for income taxes 38,236 53,431 12,805 199,614 142,466 Interest expense 11,934 7,367 12,543 43,049 50,992 Depreciation and amortization 38,424 34,940 33,153 144,541 131,397 Net income 86,964 95,277 26,443 385,555 258,966 Changes in operating assets and liabilities 93,380 38,332 96,821 244,292 89,216 Deferred income taxes (2,335) (10,178) (5,321) (5,793) 14,114 Net cash provided by operating activities $ 178,009 $ 123,431 $ 117,943 $ 624,054 $ 362,296 WESTLAKE CHEMICAL CORPORATION SUPPLEMENTAL INFORMATION Product Sales Price and Volume Variance by Operating Segments Fourth Quarter 2012 vs. Fourth Quarter 2012 vs. Fourth Quarter 2011 Third Quarter 2012 Average Volume Average Volume Sales Price Sales Price Olefins +0.4% -11.1% +3.9% -1.0% Vinyls -0.2% +3.8% +2.4% -15.0% Company +0.2% -7.0% +3.4% -5.8% Average Quarterly Industry Prices (1) Quarter Ended December 31, March 31, June 30, September 30, December 31, 2011 2012 2012 2012 2012 Ethane (cents/lb) 28.8 18.9 13.6 11.4 9.5 Propane (cents/lb) 34.1 29.8 23.1 21.2 20.9 Ethylene (cents/lb) (2) 50.1 62.3 59.0 52.1 54.3 Polyethylene (cents/lb) (3) 92.7 99.0 95.0 91.3 91.7 Styrene (cents/lb) (4) 64.0 74.3 73.8 77.7 82.3 Caustic soda ($/short ton) (5) 613.3 603.3 580.0 611.7 635.0 Chlorine ($/short ton) (6) 305.8 274.2 267.7 262.5 255.0 PVC (cents/lb) (7) 51.8 56.8 55.5 52.5 56.5 ________________ (1) Industry pricing data was obtained through IHS Chemical. We have not independently verified the data. (2) Represents average North American spot prices of ethylene over the period as reported by IHS Chemical. (3) Represents average North American contract prices of polyethylene low density film over the period as reported by IHS Chemical. (4) Represents average North American contract prices of styrene over the period as reported by IHS Chemical. (5) Represents average North American acquisition prices of caustic soda (diaphragm grade) over the period as reported by IHS Chemical. (6) Represents average North American contract prices of chlorine (into chemicals) over the period as reported by IHS Chemical. (7) Represents average North American contract prices of PVC over the period as reported by IHS Chemical. During the first quarter of 2012, IHS Chemical made a 23 cents per pound non-market downward adjustment to PVC resin prices. For comparability, we adjusted the prior year period's PVC resin price downward by 23 cents per pound based on the first quarter 2012 IHS Chemical non-market adjustment. SOURCE Westlake Chemical Corporation Investors - Steve Bender, or Media - David R. Hansen, +1-713-960-9111
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