Westlake Q2 Earnings Call Highlights

Key Points

• Westlake returned to profitability in Q2 2026, reporting $3.3 billion in sales, $260 million in net income and $679 million in EBITDA, supported by higher PEM pricing, lower feedstock costs and cost savings.
• The company’s profitability-improvement plan contributed about $150 million to year-over-year EBITDA growth in the quarter, keeping Westlake on track for its $600 million full-year 2026 target. HIP sales rose 8%, but its margin fell to 22% due to lower prices and higher transportation and raw-material costs.
• Westlake lowered its 2026 HIP outlook toward the low end of its prior guidance range amid weaker residential construction expectations, while maintaining $900 million in capital expenditures. The company also completed a PVC and VCM plant acquisition in Germany expected to contribute more meaningfully to earnings next year.

Westlake NYSE: WLK reported second-quarter 2026 net sales of $3.3 billion and net income of $260 million, or $2.01 per share, compared with a net loss of $12 million in the prior-year quarter. The company said EBITDA reached $679 million, reflecting improvement in both its Performance and Essential Materials, or PEM, segment and its Housing and Infrastructure Products, or HIP, segment.

President and CEO Jean-Marc Gilson said the quarter benefited from higher PEM selling prices, cost savings from the company’s profitability program and continued volume growth in HIP despite soft North American residential construction activity.

PEM margins benefited from pricing and lower feedstock costs

PEM generated second-quarter EBITDA of $416 million, up $364 million from the second quarter of 2025 and up $380 million sequentially. Westlake attributed the improvement to a 14% year-over-year increase in average selling prices, benefits from its profitability-improvement plan, and higher sales volumes excluding the effect of plant closures.

Sequentially, average PEM selling prices increased 21%, while natural gas and ethane costs declined. Gilson said higher global oil prices during the quarter raised costs for competitors in regions such as Asia and Europe, while Westlake’s North American operations benefited from lower-cost natural gas and natural gas liquids feedstocks.

“Our natural gas and ethane cost in North America actually declined significantly from the first quarter due to warmer weather and an increase in associated gas from higher U.S. oil drilling activity,” Gilson said.

PEM sales volume increased 2% from the first quarter, led by higher caustic soda, chlorine and epoxy resin volumes, partially offset by lower polyethylene and PVC resin volumes. The company said polyethylene prices exited the second quarter slightly below the quarterly average but above pre-conflict levels, while PVC resin prices ended the quarter at or near their highest levels of the year.

For the second half, Westlake expects PEM volumes to reflect continued steady global demand. Gilson said future pricing trends will be heavily influenced by global oil prices. The company expects polyethylene prices at year-end to be higher than in the prior year, while it expects second-half caustic pricing to average above first-half levels. Chlorine pricing is expected to be roughly flat in the second half, according to Chief Financial Officer Jon Baksht.

Profitability plan remains on track

Westlake said its three-pillar profitability-improvement plan contributed about $150 million to year-over-year EBITDA improvement during the second quarter and about $300 million during the first half. The company continues to target $600 million in EBITDA benefits for full-year 2026.

The plan includes footprint optimization, cost savings and plant reliability improvements. Footprint actions included the shutdown of Westlake’s epoxy plant in Pernis, its styrene plant in Lake Charles and three U.S. chlor-vinyl plants. Gilson said the epoxy business had moved from annual losses exceeding $100 million to profitability in the second quarter.

While plant reliability improved from the prior year, management said unplanned outages still affected first-half performance. Gilson said most production issues had been addressed by the end of the second quarter and plants were operating well into July. Westlake expects fewer planned shutdowns during the second half and aims to operate its assets at higher rates than in the first half.

HIP sales grew, while margin faced cost pressure

HIP reported sales of $1.3 billion, an 8% increase from the second quarter of 2025. The increase was supported by the January acquisition of ACI and double-digit Pipe & Fittings volume growth. Excluding ACI, HIP sales volume rose 6%, while average selling prices declined 3%.

HIP EBITDA increased $1 million year over year to $276 million. The segment’s EBITDA margin declined to 22% from 24% a year earlier, as lower average selling prices and higher transportation and raw-material costs offset sales growth.

Pipe & Fittings volume grew roughly 20% from the prior-year quarter, supported by North American infrastructure spending, municipal pipe demand and construction of data centers. Management said some customers may have shifted orders from the third quarter into the second quarter to secure product supply after the onset of the Middle East conflict, which could modestly affect third-quarter pipe volume.

Westlake also cited growth in siding and trim, saying its brands, geographic reach and relationships with national homebuilders and distributors helped its housing products business outperform the market. Gilson said the company expects no meaningful macroeconomic tailwind for housing products in 2026, but believes its competitive position can support continued market outperformance.

The company expects to begin operations at its new PVCO pipe plant in Wichita Falls by the end of 2026. Management said ACI has performed well since its January acquisition and provides differentiated technology and expanded market access for the company’s compounds business.

Guidance, capital allocation and European acquisition

Westlake expects HIP revenue and EBITDA margin for 2026 to fall toward the low end of its previously communicated ranges. The company had projected HIP revenue of $4.4 billion to $4.6 billion and an EBITDA margin of 19% to 21%, excluding identified items. Management cited a more muted outlook for North American residential construction as well as increased transportation and raw-material costs.

Total capital expenditures are still expected to be $900 million in 2026, approximately $100 million below the prior year and in line with annual depreciation. Cash interest expense is expected to be about $215 million.

As of June 30, Westlake had $1.9 billion in cash and investments and $5.1 billion of total debt. During the quarter, the company retired its remaining $500 million of 2026 notes and repurchased $30 million of common stock. Management also said it returned approximately $100 million to shareholders through dividends and share repurchases.

In June, Westlake completed the acquisition of a PVC and VCM plant in Wilhelmshaven, Germany. Gilson said the facility’s deepwater port can receive feedstocks supplied by the company’s North American operations, and management expects the acquisition to support European supply-chain and manufacturing optimization. The company said the site is expected to contribute more meaningfully to PEM sales and earnings beginning next year.

About Westlake (NYSE:WLK)

Westlake Corp. is a global manufacturer of petrochemicals, polymers and building products, serving customers across industrial and residential markets. The company's core operations encompass the production of vinyls—primarily polyvinyl chloride (PVC) and its key feedstock vinyl chloride monomer (VCM)—as well as chlor-alkali products including caustic soda and chlorine. In addition, Westlake produces ethylene, propylene and specialty elastomers, along with construction-related materials such as vinyl siding, trim, windows and roofing systems.

Operating a network of vertically integrated plants and distribution centers, Westlake serves markets in North America, Europe and Asia.

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