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F500-2021-388-Westlake Chemical

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Houston-based Westlake is a global manufacturer and supplier of petrochemicals, polymers, and fabricated building products.

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Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Westlake is a global manufacturer of petrochemicals and products used in the housing and construction, packaging, and health care industries. It focuses on two main segments: performance and essential materials (PEM) and housing and infrastructure products (HIP). The PEM segment produces materials such as polyethylene, PVC, and epoxy resins, which are used in various industries including packaging, automotive, and construction. The HIP segment offers products like residential siding, trim, roofing, and PVC pipes, catering to housing and infrastructure markets.

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Westlake (WLK): Company Profile, Stock Price, News, Rankings

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Westlake

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Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Westlake Corporation Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' remarks, there will be a question and answer session.

Please be advised that today's conference is being recorded today, 08/05/2025. I would now like to turn the call over to your first speaker today, John Zoellier, Westlake's Vice President and Treasurer. Sir, you may begin.

Thank you. Good morning, everyone, and welcome to the Westlake Corporation conference call to discuss our second quarter twenty twenty five results. I am joined today by Albert Chao, our Executive Chairman Jean Marc Gilson, our President and CEO Steve Bender, our Executive Vice President and Chief Financial Officer and other members of our management team. During the call, we will refer to our two reporting segments, Performance and Essential Materials, which we refer to as PEM or Materials and Housing and Infrastructure Products, which we refer to as HIP or Products. Today's conference call will begin with Jean Marc, who will open with a few comments regarding Westlake's performance.

Steve will then discuss our financial and operating results. After which Jean Marc will add a few concluding comments and we will open the call up to questions. During the 2025, we accrued expenses of $123,000,000 and $7,000,000 respectively, to shut down the company's epoxy facility in Pernice, The Netherlands, and temporarily cease operations at a PVC resin production unit in China at the company's 95% owned Wassu joint venture. We refer to these expense items, which in aggregate were $130,000,000 as the identified items in our earnings release and on this conference call. References to income from operations, EBITDA, net income and earnings per share on this call exclude the financial impact of the identified items.

As such, comments made on this call will be in regard to our underlying business results using non GAAP financial measures. A reconciliation of these non GAAP financial measures to GAAP financial measures is provided in our earnings release, which is available in the Investor Relations section of our website. Today, management is going to discuss certain topics that will contain forward looking information that is based on management's beliefs as well as assumptions made by and information currently available to management. These forward looking statements suggest predictions or expectations and thus are subject to risks or uncertainties. These risks and uncertainties are discussed in Westlake's Form 10 ks for the year ended 12/31/2024, and other SEC filings.

We encourage you to learn more about these factors that could lead our actual results to differ by reviewing these SEC filings, which are also available on our Investor Relations website. This morning, Westlake issued a press release with details of our second quarter results. This document is available in the Press Release section of our website at westlake.com. We have also included an earnings presentation, which can be found in the Investor Relations section on our website. A replay of today's call will be available beginning today, two hours following the conclusion of this call.

This replay may be accessed via Westlake's website. Please note that information reported on this call speaks only as of today, 08/05/2025, and therefore you are advised that time sensitive information may no longer be accurate as of the time of any replay. Finally, I would advise you that this conference call is being broadcast live through an Internet webcast system that can be accessed on our webpage at westlake.com. Now I'd like to turn the call over to Jean Marc Gilson. Jean Marc?

Thank you, John, and good morning, everyone. We appreciate you joining us to discuss our second quarter twenty twenty five results. For the 2025, we reported EBITDA of $350,000,000 on net sales of $3,000,000,000 Compared to the 2025, sales and EBITDA increased due to a seasonal increase in sales volume for most of the businesses in our hip segment. Hip performed very well in the second quarter, delivering solid EBITDA of $275,000,000 on sales of $1,200,000,000 representing a strong 24% EBITDA margin. Our results demonstrate that in an operating environment that has grown more challenging with interest rates remaining elevated, a diversified and balanced operating model in HIP offers strategic benefits to help deliver performance in this market.

Pipe and fittings sales volume growth benefited from increasing demand for municipal water applications, driven in part by spending from the 2021 Infrastructure Act. The significant underspending water infrastructure in The United States and the funds from the Infrastructure Act should continue to provide a solid foundation for our pipe and fitting sales for many years. HEPS building product sales volume was lower than the 2024, reflecting the slowdown in North American residential construction activity. Penta demand nevertheless is high as people want and need homes. Hip's Building Products business benefits from a balanced portfolio of approximately 50% new construction oriented sales and 50% repair and remodel oriented sales.

And this portfolio provides stability in the current housing market. Turning to PEM, earnings and margins were pressured by two primary factors. First, PEM sales volumes were impacted by lower production levels due to a high level of planned turnarounds and unplanned outages, which impacted 2025 EBITDA by approximately $110,000,000 As we discussed on our first quarter earnings call, we began the tie in of our new VCM capacity at our Geismar site during its planned turnaround. Following the completion of the turnaround in the second quarter, Geismar slowly ramped up its operating rate with production expected to improve during the third quarter. Second, the cumulative impact of several quarters of soft global manufacturing activity caused growth in global demand for many chemical products to fall short of industry supply additions, primarily in Asia and over that period of time.

The resulting global oversupply in some chemical chains has created pressure on PEM's average sales price and EBITDA margin. In response to these factors, we are taking aggressive actions to improve PEM's financial results. Our PEM profitability improvement strategy is three pronged. One, improving plant reliability. We have challenged the teams at the plants to address reliability and operations and we are already seeing production improvements during the third quarter.

Two, reducing our cost to improve our global competitiveness. During the 2025, we achieved over $75,000,000 of company wide cost reductions towards a full year target of 150,000,000 to $175,000,000 While we are pleased with this progress, given the protracted nature of the current downturn, we are expanding the scope and nature of our cost reduction efforts to target an additional $200,000,000 of cost reductions by 2026. And third, optimizing our footprint, our manufacturing footprint. During the 2025, we announced the planned closure of our Pernice Epoxy site in The Netherlands, which will put our Epoxy business on a path to profitability. So to summarize the quarter, we were very pleased with the continued solid performance of our hip businesses, our experienced teams, our leading product positions, our broad geographical footprint and a diverse position serving both new construction and repair and remodel to provide valuable earnings stability and cash flow to the company.

We also expect our three pronged PEM profitability improvement strategy to enhance our globally competitive position and improve PEM's financial results. I would like to turn our call over to Steve now to provide more detail on our financial results for the second quarter of twenty twenty five. Steve?

Thank you, Jean Marc, and good morning, everyone. As a reminder, my comments regarding income from operations, EBITDA, net income and earnings per share all exclude the financial impact of these identified items. Westlake reported a net loss of $12,000,000 or zero nine dollars per share in the second quarter on sales of $3,000,000,000 Net income for the 2025 improved by $28,000,000 compared to the 2025, primarily due to a seasonal increase in hip sales volumes and margins, partially offset by an approximately $30,000,000 higher impact from planned turnarounds and unplanned outages in PIM. When compared to the 2024, net income decreased by $325,000,000 due to higher North American feedstock and energy cost and lower average sales price in each segment. For the 2025, our utilization of the FIFO method of accounting resulted in an unfavorable pretax impact of $13,000,000 in our PIM segment compared to what earnings would have been reported on the LIFO method.

This is only an estimate and has not been audited. Before I discuss the details of our segment results, I want to provide some high level thoughts on the quarter. Our HIP segment performed very well and we are very pleased with the stability and resiliency of the portfolio of the business that we have assembled. At the same time, our PIM segment was impacted by production disruptions and the continued global oversupply in some chemical chains, but the profitability improvement strategy that we are implementing should result in better performance with an improved cost position. Moving to the specifics of our segment performance, our housing and infrastructure product segment produced EBITDA of $275,000,000 on $1,100,000,000 of sales.

When compared to the 2025, HIP segment sales rose 16% driven by a 14% increase in sales volumes as a result of growth for pipe and fittings and a seasonal increase in building products demand. Average sales price increased 2% sequentially driven by price increase initiatives in building products and global compounds to pass through rising input costs. The strong sales growth volume drove hip segment EBITDA margin to a solid 24% from 20% in the 2025. When compared to the 2024, HIP EBITDA decreased $61,000,000 due to 2% decline in sales volume and a 1% decline in average sales prices. The sales volume decline was driven by lower customer demand in our global compounds and building products business units as a result of slower residential construction activity.

That more than offset volume for our pipe and fittings business, a result of solid demand for growth in the municipal water applications. Our HIP strategy is and has remained clear. We're providing our customers with products to address affordability and adapting our product offering and manufacturing footprint as the market evolves. Turning to our PIM segment, second quarter sales of $1,800,000,000 fell by $57,000,000 from the first quarter twenty twenty five, driven by a 6% decline in sales volume as a result of a more significant impact from planned turnarounds and outages, as well as export sales volume disruptions created by tariff uncertainty during the second quarter. Average sales price increased 2% driven by higher chlorine, caustic soda and PVC resin prices.

PIM segment EBITDA of $52,000,000 in the second quarter decreased by $21,000,000 from the 2025 as a result of the 6% decline in sales volume. On a year over year basis, PIM EBITDA of $52,000,000 was below 2024 EBITDA of $391,000,000 due to $83,000,000 of higher ethane and natural gas cost, a $67,000,000 higher year over year impact from planned turnarounds and unplanned outages and a 2% decline in average sales prices driven by lower polyethylene and PVC resin prices. As Jean Marc mentioned, during the second quarter, we announced a plan to close our epoxy site in Pernus in The Netherlands. Since this acquisition in February 2022, profitability at this site deteriorated significantly as a result of higher European feedstock and energy cost due to the war in Ukraine and low priced Asian exports entering the global market. As a result, Pernus experienced losses in excess of $100,000,000 a year, which drove the June site closure announcement.

Following the Pernus closure announcement, we believe that our Epoxy business is now on a path to return to profitability in 2026. Shifting to our balance sheet, as of 06/30/2025, cash and investments were $2,300,000,000 and total debt was $4,700,000,000 with a staggered long term fixed maturity debt schedule. For the 2025, net cash provided by operating activities was $135,000,000 while capital expenditures were $267,000,000 We continue to look for opportunities to strategically deploy our balance sheet in order to continue to create long term value. Now, me provide some guidance for your models. We completed our turnarounds and VCM tie in at Geismar.

However, our integrated core vinyl system is continuing to slowly ramp up production during the third quarter. We expect ForVinyl's production sales volumes to be better in the third quarter, and thus we anticipate the impact of earnings from production disruptions in the third quarter will be less than we experienced in the second quarter. With the slowdown in North American residential construction activity since the beginning of the year, we now expect 2025 housing and infrastructure products revenue to be in the range of $4,200,000,000 to $4,400,000,000 with an EBITDA margin between 2022%. We continue to expect total capital expenditures for the company to be approximately $900,000,000 In the 2025, we achieved over $75,000,000 toward our 2025 company wide savings target of 150,000,000 to $170,000,000 and we're taking actions to drive an additional $200,000,000 of cost reductions by 2026 as part of our PIM profitability improvement plan. For the 2025 year, we expect cash interest expense to be approximately $160,000,000 Now let me turn the call over to Jean Marc to provide a current outlook for our business. Jean Marc?

Thank you, Steve. Against the backdrop of soft macroeconomic conditions and slower North American construction activity, our hip team is delivering sales similar to prior levels by being a supplier of choice with faster growing building product customers. Sales volume growth for our pipe and fitting is driven by megatrends in water and supported by municipal infrastructure investment, as well as the growing use of PVC pipe in municipal infrastructure as compared to competing materials such as concrete and ductile iron. HIP total margins also remain solid and are indicative of the strong value of our brands and the significant value that our service oriented business model delivers to our customers. While the long term outlook for the housing market remains favorable, driven by demographics and undersupply of homes, we recognize the current volatility and uncertainty and we will continue to execute our winning hip strategy in a disciplined manner to enhance the value of our business.

Longer term, we remain very positive on the outlook for our hip business to organically grow at a 5% to 7% compound annual growth rate. We expect this growth to come both from market growth, such as the need for homebuilding to recover from a ten plus years of underbuilding and our position as a leading supplier to the faster growing customers in the market. We also continue to evaluate opportunities to grow our hip businesses through acquisitions to broaden our product portfolio and deepen our relationship with our key customers. Overall, we continue to see a very bright future for HIP. Turning to our PEM segment, near term macroeconomic conditions show signs of demand stabilizing, albeit at lower levels than we would like.

ISM manufacturing index readings in The U. S, Europe and China have fluctuated in a relatively narrow range at or slightly below 50 nearly every month this year. As we look ahead to the 2025, we are seeing stable demand for our PEM materials, which combined with improved production rates should lead to an increase in our PEM sales volumes compared to the 2025. We are responding to the business environment in our PEM segment and are implementing our three pronged PEM profitability improvement strategy to improve plant reliability, accelerate cost reductions, reduction plans to improve our global competitiveness and optimize our manufacturing footprint. These actions will meaningfully improve our PEM segment profitability and cash flows.

Before I open the call to your questions, I want to close by reminding you of Westlake's foundational strength, which serve us really well. These strengths include a diversified and complementary portfolio of businesses, our vertically integrated business model, our globally advantaged feedstock and energy position in The U. S. And our investment grade balance sheet with $2,300,000,000 of cash and securities. As we progress through 2025, we will continue to lean on and improve these attributes to continue to create value for our shareholders.

Thank you very much for listening to our second quarter earnings call. And I will now turn the call back over to John.

Thank you, Jean Marc. Before we begin taking questions, I would like to remind listeners that our earnings presentation, which provides additional clarity into our results is available on our website and a replay of this teleconference will be available two hours after the call has ended. Gerald, we will now take questions.

Thank you. At this time, we will conduct a question and answer session. Our first question comes from Patrick Cunningham of Citi. The floor is yours.

Hi, good morning. Thanks for taking my question. A question on the HIF guidance. I think previously you had some price mix headwinds that had you pointing to the lower end of the margin range. And now the sales guide is lower, but the margin guidance is intact.

Should we still expect margins on the low end? Or have some of those mix headwinds normalized versus your prior expectations?

Yes, it's a good question, Patrick. And as we think about the guidance we're providing, we're simply reflecting the realities we see in the residential building and construction markets. And so I'd still guide you to the range that we provided of 20% to 22%. Obviously, we delivered a strong quarter this year and I would expect we'll results continue to as we go through the stronger periods of 2Q and 3Q in the construction year. But our guidance still remains really in that 20% to 22% range.

Great. And for my follow-up, the biggest change in the tariff regime has been fresh tariffs on Brazil, the threat of retaliatory tariffs. How should we think about the risk to both chlorovinyls and caustic soda, given this has been such an attractive export market for the industry and for Westlake?

Yes. So Patrick, a good question on exports, let's say caustic into Brazil as you raise. Our sales are direct to customers in the alumina and paper markets. And those markets really export markets. So there's an opportunity for them to access duty drawback.

And so we haven't seen really an impact really in those tariffs at this point in time. We'll continue to monitor the situation, but we believe that we're well positioned with those customers.

Thank you for your question. Our next question comes from Duffy Fischer from Goldman Sachs. The floor is yours.

Yes. Good morning, guys. I want to go back to hip if we could. So you talked about earlier some areas of hip that we're seeing pricing pressure, all of the low gauge pipe. Could you go through, I guess, two questions there.

What percent of the portfolio do you think is actually seeing kind of excessive competitive pricing versus what part is holding stable? And then just the second part, at the midpoint, your revenue is now down 5%, but again, the margins are stable. So why isn't there decremental margin degrading? Is there a mix shift improvement in there? Just kind of versus first quarter to today, why don't margins change?

And so Duffy, as you think about the commentary we provided, you've seen really the broad portfolio offering that we have and addressing and adapting to the market conditions within the Building Products business. I continue to call out the strength in our water business going into our pipes and fittings business, but continue to recognize that is large diameter for water. And that business is really being supported by the Infrastructure Act as well as states, cities and counties. But certainly, I would say that we've certainly had to position the business and adapt with our Compounds business, our Building Products, Exterior Building Products business and our Pipe business to the conditions that we see. So the range of the products we think and the depth of the product we think continue to be able to be addressing this changing and evolving market.

Great. Thank you. And then, if we just go back, from the less downtime in Q3 versus Q2 from the ramp up of the plant, roughly how much less hit do you have from that? And what were operating rates chlorovinyls Q2 to Q3? How much do we actually get to improve operating rates?

As you can see in our prepared remarks that we continue to see improvements quarter over quarter in the third quarter, but you could also see that we're continuing to ramp up our core vinyl businesses in the third quarter. So while I see some improvement, we won't be fully clear of this in the third quarter.

Thank you for your question. Our next question comes from Arun Viswanathan from RBC Capital Markets. The floor is yours.

Hi, this is Adam on for Arun. Thanks for taking my question. If we were to dig a little bit more into bridging into the second half of the year, assuming by the end of the year some of the planned and unplanned turnarounds are backed out. Do you have any other major turnarounds planned at this time? And of that $110,000,000 impact, approximately how much of that was planned versus unplanned?

Yes. As you can see, we've taken a huge effort in the first half of the year with planned outages, but obviously, we've had some of these unplanned outages. And so the great majority of this was the planned turnarounds. As you recall, we had an ethylene turnaround as well as the VCM tie ins in Geismar. The majority of this was obviously in the planned arena.

As we look into the back half of 2025, we really have gotten beyond the major turnaround activity in 2025. And so I don't expect a continuance of these planned events for the back half of this year.

Okay. Thanks. And looking at your additional $200,000,000 cost improvement for next year, how much of that is that all pernice included in that, the $100,000,000 improvement from that? And what would the balance be made up of? Is that primarily going to be additional footprint rationalization?

Or is there some other headcount reduction included in that as well?

Yes, thank you for the question. These are really cost reduction initiatives that are across the entire PIM footprint. And so as we think about that, it allows us to address cost in all areas, whether they are in contract labor, whether it's in maintenance and a wide variety of other areas. But this is across the entire PIM footprint and not really targeted solely in the actions that we've taken in our Pernus location. This is really on top of the actions that we've already taken.

Thank you for your question. Our next question comes from John Roberts of Mizuho. The floor is yours.

Great. Thank you very much. On M and A, could valuations become cheap enough in PEM opportunities that you would acquire something significant there? Or is your M and A focus exclusively over on the hip side?

John, it's a good question. We continue to look across the broad spectrum of opportunities, whether they're in the HIP segment or in the PIM segment. That really is the opportunity is really driven by the valuation opportunity we see in one or the other segment. So, there isn't necessarily a strong bias one or the other. It's really where the most opportunities present themselves.

The strongest side of our business clearly is on the hip side of the business. But clearly, should there be value opportunities that we see in chemicals, we'll certainly act on those opportunities as well.

Thank you for that question. Our next question comes from Vincent Andrews of Morgan Stanley. The floor is yours.

Thank you and good morning. In PEM, as part of the initiatives to improve plant reliability, will there be a CapEx component of that either one time in nature? Or is there any risk that your maintenance CapEx needs to be revised higher?

Vincent, we fully expect that the capital programs we have in place address this, and this is not an issue that requires a large capital outlay. So nothing incrementally beyond the capital programs that we've been discussing all year.

Okay. And then if I could just ask you in terms of HIP, a is fair assessment from the answers already that we'll see a similar margin in 3Q as we saw in 2Q and then sort of the swing factor of where you wind up for the full year is going to be how soft 4Q is?

Yes. The fourth quarter is always uncertain because of seasonal matters. And so we've seen periods of time where we continue to build through October and November. So it really is a function of the weather and the demand picture, of course, on top of that. But typically, the strongest quarters are the second and third quarters.

And we continue to see continued construction activity carrying us through July and August now. And so I have still an expectation that third quarter will continue to be that seasonal pattern that we've discussed historically.

Thank you for your question. Our next question comes from Frank Mitsch from Freemium Research LLC. The floor is yours.

Thank you. Good morning. As someone who probably ought to go back and take a class on Tariff Impacts 01/2001, I'm wondering if you could elaborate on the comment about your caustic exports to Brazil and the fact that some of that is being processed there and then you'll have duty drawbacks. Just conceptually, how much of the amount that you're exporting caustic to Brazil, how much is subject to this duty drawback? And if you could just elaborate on what's exactly that all means? Thank you.

Yes. Frank, it isn't really our ability to see in detail how much the paper and alumina business is exported out of Brazil. But I would say the great majority of it is, as we understand from our customers. So, these are direct sales into those individual customers. And as we understand the regulations and opportunities in Brazil, if those products are re exported out of Brazil, they have the ability to have duty drawback.

And so as long as they're exporting some portion or majority of the portion, as we understand, they're able to then have that duty drawn back and be insulated from that portion they export. Our understanding from our customers.

So that would go it would go to zero. So if Brazil throws out a 50% tariff on caustic, as long as the customer buys your caustic and re exports out the product, that 50% goes to zero. Is that how we should think about it?

That is how the duty drawback process works in Brazil, correct, as long as those products are exported.

Terrific. Very helpful. And Jean Marc, just curious, you made the comment that you're already seeing plant reliability improvement here in the third quarter. Any color, any examples that you could provide on that?

Yes. Thank you for the question. The as Steve said, we've had quite a lot of planned and unplanned outages in the first part of the year. And a lot of them, I mean, the big, big ones were primarily over the first three, four months of the year. And since then, we had additional unplanned outages that have slowed down actually the ramp up of the plants.

But we have started to see, I would say, increase on a month by month basis starting probably around late April, early May. So and that's really what we're expecting to continue in the third quarter. And by the end of the year, we will have pretty much everything behind us.

Our next question comes from Alexey Yrumov from KeyBanc Capital Markets. The floor is yours.

Good morning, everyone. I wanted to go back to Hip margins. You revised your sales guidance down by 7%, but maintained the margin. So could you discuss what is going better than expected such that there's no negative operating leverage in this segment?

Yes. So Lexi, the broad and deep portfolio offering we have allows us to address the affordability issues that we see in our customers and our end customers. And so as we've addressed that with our exterior building products, the portfolio has allowed us to improve that positioning. The strength that we're also seeing in the infrastructure side of our pipes and fittings businesses is a larger diameter business that is really addressing state, county and city needs for infrastructure. So, continuing to see strength in demand and that infrastructure water requirements.

And so, that's really where we're seeing the continued ability to deliver good results this quarter.

Thanks, Steve. And I was hoping you could give us some sense of monthly trends in hip orders. Have you seen negative inflection or are things steady as you went through the summer?

Well, clearly, we've seen some reduction in overall construction activity over the course of the year. So going back to first and second quarter, we've seen housing starts trend lower relative to 2024. And so I would say the level we're at today, which is roughly 1,300,000 starts continues to be that level that we're seeing through the second quarter. And we do expect the seasonal effects to play through in the end of the year in fourth quarter. But I would expect that demand level to continue to persist in the third quarter.

Thank you for your question. Our next question comes from Kevin McCarthy of Vertical Research Partners. The floor is yours.

Thank you and good morning. If we rewind the clock three months, it seems to me that Wall Street analysts generally underestimated the industry operating rates in the ethylene chain, for example, and perhaps also for Westlake. In listening to you today, it sounds like those operating rates and the trade flows are in the process of normalizing. So I was wondering if you could comment on how much harder you might be able to run your crackers and your polymer assets in the third quarter relative to the second quarter? Is it a low single digit uplift or a high single digit percentage uplift or somewhere in between?

Any guidance on that operating leverage dynamic would be very helpful.

Yes. So I will take that question. So if you look at our cracker, since we went to the major turnaround beginning of the year, these crackers have been all of our crackers have been running at full capacity. So, and as you know, we're a little bit short in ethylene, but they're running at full capacity. If you look downstream on our polyethylene, we're running at pretty high rates too since we finished some of the turnarounds.

The issue has been for us more on the chlorovinyl side and epoxy. I mean, epoxy, we said we addressed the problem. And, by shutting down the site and basically buying liquid epoxy resins now from the market and also applying from ourself from The US. But if you look at the chlorovinyl chain, the problem is, I mean, the demand is certainly not as high as we would like it to be, but there is demand in the market and it's pretty stable. And it's for us to capture that demand and by increasing our throughput.

So how and where it's going to stabilize, I don't know. But, we certainly have some leverage by bringing most of our chlorovinyl operating units back to what we consider is normal reliability.

Okay. Thank you for that, Jean Marc. And then as a follow-up, can you provide an update on your polyethylene resin pricing outlook? For example, have you settled any July contracts in The U. S? And how much pricing are you seeking for August?

Yes. So Kevin, when you think of polyethylene, we pricing for July has not yet settled, but there are a number of price initiatives out for July and for August. So we have in the industry between $06 to $07 announced for July and for August. There are announcements ranging between $05 and $08 for August. We've seen demand begin to recover really starting earlier this year.

But for the month of July, prices have not yet settled. There remains certainly an elevation in ethylene, as Jean Marc just earlier noted. And so certainly, we're looking to recognize that with those elevated ethylene prices, we need to see some of these increases work your way through the system.

Thank you for your question. Our next question comes from Michael Cezanne from Wells Fargo. The floor is yours.

Hey, guys. Good morning. For Pam, you noted that volumes would be better in the third quarter. Can you talk about where you think industry margins sort of ended 2Q? Should they be better sequentially in the various chains, chlor alkali, polyethylene and such in the third quarter versus the second quarter?

Yes. So Mike, as you think about the comment I just added in polyethylene, we certainly have price announcements out in polyethylene. We have not settled July. We'll see if we get some of those nominations settled in July and into August. And I would say in PBC, July did settle flat for the month, but there are nominations out for later this quarter.

In August, there's a nomination of $03 in the industry. So, as we think across the PE and PVC chains, we certainly have seen some announcement action, but obviously we're still waiting to see if those prices take action and take traction.

Okay. And then what do you think about seasonality? Typically, fourth quarter for you all is the weakest quarter. It's been an unusual year. So how do you think about the normal seasonal trends as we head into the fourth quarter given you've had some tough turnarounds in the second, maybe those don't those will all go away by the fourth And just directionally how see that unfolding for the second half.

So as we think about and I'll start maybe with the PVC side, the reason we have price nominations out for August is to address construction needs. As I mentioned earlier, July settled flat. We'll see if we are able to get any traction on pricing. Again, ethylene pricing is up. So we're trying to push some of that higher feedstock cost through in our PVC chain.

We need to see some of those price nominations get traction to gain margin growth. As I mentioned earlier, July for polyethylene has not yet settled and we have price nominations out for polyethylene as well. When we think about the caustic side of the equation, we're reaching the peak of demand for chlorine here in mid summer. And so as we think about the fourth quarter to your question, we'll begin to ramp down chlorine requirements as we reach the end of the fourth quarter and that will tighten up production of both chlorine and caustic soda. So really to summarize the pricing environment, we've got a number of nominations out there, got some pressures on feedstocks.

Westlake (WLK) Q2 2025 Earnings Call Transcript

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