Westlake Swings to Profit as Resin Prices Lift Sales
Adjusted EBITDA jumped 189% sequentially to $679 million as margins widened.
Westlake Corp. (WLK), the chemicals and building-products maker, swung to second-quarter net income of $260 million, or $2.01 a share, from losses in both the prior quarter and a year earlier.
The quarter marked a sharp turn in profitability. Westlake’s adjusted EBITDA margin climbed to 21% from 9% in the first quarter and 12% a year earlier, reversing a decline that had carried the margin as low as 8% in the fourth quarter of 2024.
Net sales rose 23% sequentially to $3.271 billion and increased 11% from a year earlier, accelerating from 5% sequential growth in the first quarter. Average selling prices increased 14% from the prior quarter, while adjusted volume rose 10%, giving the rebound support from both pricing and demand.
Performance and Essential Materials drove the earnings recovery. Segment sales increased 22% sequentially to $2.019 billion as polyethylene and PVC-resin prices lifted average selling prices 21%, while adjusted volume rose 2%. PEM adjusted EBITDA reached $416 million from $36 million in the first quarter, and its margin expanded to 21% from 2%.
Housing and Infrastructure Products also strengthened from the seasonally weaker first quarter, with sales rising 26% to $1.252 billion on a 24% increase in volume. Adjusted EBITDA climbed 48% sequentially to $276 million, though it remained essentially flat from a year earlier as lower pricing and margins in pipe and fittings offset higher volume.
Free cash flow turned positive at $111 million from negative $303 million in the first quarter, as operating cash flow improved to $318 million from negative $94 million. The latest results included no identified-item charges, compared with $85 million in the prior quarter, which included litigation-settlement and facility-shutdown costs.
Westlake's three-pillar profitability plan produced about $150 million of year-over-year EBITDA benefit during the quarter, one quarter of its $600 million target for 2026. The company also completed its acquisition of a PVC and VCM site in Wilhelmshaven, Germany, adding 380,000 metric tons of annual PVC capacity and expanding its European chlorovinyls footprint.