Westlake Corporation (WLK) Earnings & Analysis

Latest quarter

Westlake reported third-quarter revenue of $3.0 billion, up from $2.8 billion a year earlier. Diluted earnings were $0.05 per share, compared with a loss of −$6.06 per share a year earlier; excluding identified items, Westlake reported earnings of $0.45 per share.

The filing attributed the improvement in income partly to higher prices for polyethylene, PVC resin, caustic soda and epoxy resin. Performance and Essential Materials sales increased, while Housing and Infrastructure Products sales declined: lower pipe, fittings and building-product volumes partly offset sales from the acquired ACI compounds business.

Westlake’s gross margin rose to 12.8% from 8.32%, and its operating margin rose to 1.44% from −27.0%. The filing noted that the prior-year loss included a $727 million goodwill impairment charge, while the latest quarter included a $51 million charge related to the announced Cologne plant closure.

The company generated $220.0 million in free cash flow, compared with −$57.0 million a year earlier. Westlake reported $2.0 billion in cash, cash equivalents and fixed-income investments and $5.1 billion in debt at September 30, 2026.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Jean-Marc Gilson said customers had shifted pipe and fittings orders into the second quarter to secure supply after the Middle East conflict began. He said slower residential construction also reduced housing-product demand, as higher mortgage rates added to affordability pressures.

CFO John Baksht said third-quarter Housing and Infrastructure Products sales were essentially unchanged from a year earlier, but declined 6% excluding ACI. He attributed the decline to lower housing-product demand, particularly for roofing and stone. Baksht said the segment’s EBITDA fell as higher selling prices did not fully offset cost inflation and changes in the product mix.

Gilson said materials prices moderated from their earlier highs as oil supply partly rebalanced. Baksht said lower polyethylene and PVC resin prices were the main driver of the materials segment’s sequential EBITDA decline; higher European energy costs and planned plant maintenance also reduced earnings.

On Europe, Gilson said PVC profitability faced pressure from “weak domestic demand, increasing imports, and high regional feedstock and energy costs.” He said Westlake planned to consolidate Cologne operations and volume at its acquired Wilhelmshaven site. Gilson also said the profitability plan had delivered $500 million of EBITDA uplift through the first three quarters.

Analysts asked about diesel and freight costs, customer acceptance of price increases and potential volume effects. Baksht said the company was planning for a “continued market environment that we saw in the Q3 carrying over into Q4,” with cost reductions and selective price increases; he said pricing would take time to come through.

Asked about demand and customer inventories, Baksht said both new construction and repair and remodeling were down year over year, with more compression in new construction. He said Westlake expected some customer destocking toward year-end. Gilson said the Wichita Falls PVCO plant had begun operating, with its first commercial sales expected in 2027.

Guidance

Westlake now expects FY2026 capital expenditures of $850.0 million, down from its previous guide of $900.0 million. CFO John Baksht said cost-reduction efforts contributed to the revised expectation, which he said was approximately $150 million below the prior year’s capital spending.