Westlake Chemical Reports Fourth Quarter and Full-Year Earnings for 2012

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-- 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

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