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

Tue Feb 19, 2013 6:00am EST

* Reuters is not responsible for the content in this press release.

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

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.