2024-02-20 17:30:03 ET
Westlake Corporation (WLK)
Q4 2023 Earnings Call Transcript
February 20, 2024, 11:00 AM ET
Company Participants
Jeff Holy - VP & Treasurer
Albert Chao - President and CEO
Steve Bender - EVP and CFO
Conference Call Participants
Patrick Cunningham - Citi
Frank Mitsch - Fermium Research
Duffy Fischer - Goldman Sachs
Salvator Tiano - Bank of America
Mike Leithead - Barclays
Arun Viswanathan - RBC Capital Markets
Josh Spector - UBS
Matthew Blair - TPH
Jeff Zekauskas - JPMorgan
Turner Hinrichs - Morgan Stanley
Kevin McCarthy - Vertical Research Partners
David Begleiter - Deutsche Bank
Hassan Ahmed - Alembic Global Advisors
Presentation
Operator
Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Westlake Corporation Fourth Quarter and Full Year 2023 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. After the speaker's remarks, you will be invited to participate in a question-and-answer session. As a reminder, ladies and gentlemen, this conference is being recorded today, February 20, 2024. I would now like to turn the call over to today's host, Jeff Holy, Westlake's Vice President and Treasurer. Sir, you may begin.
Jeff Holy
Thank you, Jonathan. Good morning, everyone, and welcome to the Westlake Corporation conference call to discuss our fourth quarter and full year results for 2023. I'm joined today by Albert Chao, 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 Albert, who will open with a few comments regarding Westlake's performance. Steve will then discuss our financial and operating results, after which, Albert will add a few concluding comments, and we'll open the call to questions.
During the fourth quarter of 2023, we recorded a noncash impairment charge of $475 million related to the company's epoxy business, as well as a $150 million charge to fully resolve certain liability claims that are currently not being covered by certain of our excess insurance carriers. We refer to these two charges as 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 these 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-K for the year ended December 31, 2022, 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 fourth quarter and full year 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, February 20, 2024, and therefore, you're 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 web page at westlake.com.
Now I would like to turn the call over to Albert Chao. Albert?
Albert Chao
Thank you, Jeff. Good morning, everyone. We appreciate you joining us to discuss our fourth quarter and full year 2023 results. Excluding the identified items, for the fourth quarter of 2023, we reported net income of $93 million or $0.72 per share, and EBITDA of $390 million on sales of $2.8 billion. While overall sales revenue was below the year-ago period due to lower average sales prices in the PEM segment, we are pleased that our fourth quarter total sales volume increased 7% compared to the fourth quarter of 2022, with North American demand strength partly offset by lower sales volumes in our international operations.
Regionally, our volume and price declines 2023 were most impacted in our European operations, which were pressured by a weak macroeconomic backdrop and imports into Europe from Asia. The volume and price declines were most felt in our base epoxy business, driven by the very weak economic environment in Europe and China, along with significant new global epoxy capacity additions. These capacity additions, which were primarily in China, were met with weak regional demand, driving a significant increase in Asian exports, Europe and other regions. These Asian export volumes were aggressively priced as some Asian competitors received energy subsidies to stimulate exports, at a time when European energy costs were still relatively high in part due to the ongoing war in Ukraine....
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Westlake Corporation (WLK) Q4 2023 Earnings Call Transcript