Westlake Corporation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net sales for the three months ended September 30, 2026, were $2,981 million, compared to $2,838 million in the same period of 2025 and $3,271 million in the second quarter of 2026.
• Net income attributable to Westlake Corporation was $6 million ($0.05 per diluted share) for the third quarter of 2026, compared to a net loss of $782 million ($6.06 per diluted share) in the prior year period and net income of $260 million ($2.01 per diluted share) in the second quarter of 2026.
• Excluding Identified Items, net income was $58 million ($0.45 per diluted share) for the third quarter of 2026, compared to a net loss of $38 million ($0.29 per diluted share) in the prior year period.
• EBITDA was $350 million for the third quarter of 2026, compared to $(431) million in the prior year period and $679 million in the second quarter of 2026.
• EBITDA excluding Identified Items was $408 million for the third quarter of 2026, compared to $313 million in the prior year period and $679 million in the second quarter of 2026.
• EBITDA margin excluding Identified Items was 14% for the third quarter of 2026, compared to 11% in the prior year period and 21% in the second quarter of 2026.
• Net cash provided by operating activities was $408 million for the third quarter of 2026.
• Free cash flow was $220 million for the third quarter of 2026.
• Capital expenditures were $188 million for the third quarter of 2026.
• As of September 30, 2026, cash, cash equivalents, and fixed-income investments totaled $2.0 billion, and total debt was $5.1 billion.
• Identified Items for the third quarter of 2026 included $56 million in charges related to facility shutdowns in the PEM segment and $2 million in other restructuring costs.

Guidance and Future Outlook:

• The Company's three-pillar profitability improvement plan remains on track to deliver $600 million of EBITDA uplift in 2026.
• Management expects higher borrowing costs to weigh on Housing and Infrastructure Products (HIP) near-term sales volumes due to affordability concerns.
• Management remains positive on the medium- to long-term outlook for HIP sales and earnings growth, supported by investments in growth segments and infrastructure spending.
• PEM selling prices have stabilized with upward momentum entering the fourth quarter of 2026, though an environment of heightened price volatility persists.
• The Company intends to stay vigilant in identifying and executing cost reduction and footprint optimization actions.

Business Segments and Product Lines:

• Housing and Infrastructure Products (HIP):
  • Net sales were $1,087 million, relatively unchanged from $1,091 million in the prior year period.
  • Income from operations was $128 million, down from $151 million in the prior year period.
  • EBITDA was $195 million, down from $215 million in the prior year period.
  • EBITDA margin excluding Identified Items was 18% for the third quarter of 2026, compared to 20% in the prior year period.
  • Housing Products net sales were $846 million, down $82 million year-over-year, primarily due to lower sales volume in roofing and siding & trim.
  • Infrastructure Products net sales were $241 million, up $78 million year-over-year, primarily due to the January 2026 acquisition of ACI.
  • Sequentially, HIP sales volume declined 17% due to volume shifts and slowing residential construction activity.
• Performance and Essential Materials (PEM):
  • Net sales were $1,894 million, up 8% from $1,747 million in the prior year period.
  • Income from operations was $(64) million, compared to a loss of $(902) million in the prior year period.
  • EBITDA was $159 million, compared to a loss of $(654) million in the prior year period.
  • EBITDA excluding Identified Items was $215 million, compared to $90 million in the prior year period.
  • EBITDA margin excluding Identified Items was 11% for the third quarter of 2026, compared to 5% in the prior year period.
  • Performance Materials net sales were $1.2 billion, up $166 million year-over-year, driven by higher average sales prices for polyethylene and PVC resin.
  • Essential Materials net sales were $718 million, down $19 million year-over-year, primarily due to lower caustic soda sales volume and plant shutdowns.
  • Sequentially, PEM income from operations decreased $193 million due to lower average sales prices and higher European energy costs.

Market and Competitive Landscape:

• The European chemical industry experienced a meaningful deterioration in financial conditions during the third quarter of 2026 due to significantly higher energy costs, weak demand, and increasing imports.
• The Company is optimizing its European chlorovinyls footprint by integrating North American assets with the recently acquired Wilhelmshaven facility and closing the higher-cost PVC plant in Cologne, Germany.
• HIP margins were impacted by higher distribution costs, including diesel and freight.
• PEM margins were impacted by higher ethane and distribution costs, partially offset by the three-pillar profitability improvement plan.
• The Middle East conflict led to initial price increases in the second quarter of 2026 which moderated in the third quarter, though prices remained above third quarter 2025 levels.

Risks and Challenges:

• Structural challenges in Europe, including high energy costs and weak demand, have impacted earnings in European businesses.
• Higher borrowing costs are affecting homebuyer affordability and are expected to weigh on HIP near-term sales volumes.
• The Company faces an environment of heightened price volatility in the PEM segment.
• Risks include general economic conditions, raw material and energy cost volatility, geopolitical tensions, regulatory actions, and supply/demand balance fluctuations.

Management Commentary and Tone:

• Jean-Marc Gilson, President and CEO, noted that while the quarter reflected headwinds in construction activity, customer destocking, and European energy costs, the Company generated $220 million of free cash flow.
• Gilson stated that despite headwinds, the three-pillar profitability improvement plan is delivering results.
• Gilson concluded that while the near-term outlook for HIP is challenged by affordability, the medium- to long-term outlook remains positive.
• Jon Baksht, Senior Vice President and CFO, highlighted the strength of the investment-grade balance sheet with $2.0 billion in cash and investments, which supports continued investment and a solid dividend that has grown for 22 consecutive years since the 2004 IPO.

Other Key Points:

• The Company announced the closure of its PVC plant in Cologne, Germany, to optimize its European footprint.
• The Company acquired ACI in January 2026 and the Wilhelmshaven vinyls facility in June 2026.
• The Company also completed a roofing acquisition earlier in 2026.
• A conference call to discuss the results was held on November 4, 2026.
• The Company recorded a non-cash impairment charge of $727 million in the third quarter of 2025 related to the North American Chlorovinyls reporting unit goodwill.