Westlake Corporation

Westlake reported Q3 2026 sales of $3 billion and EBITDA of $408 million, versus EBITDA of $313 million in Q3 2025 and $679 million in Q2 2026. Free cash flow was $220 million, with $408 million of cash from operations and $188 million of capital expenditures. On a segment basis, HIP sales were $1.1 billion and EBITDA was $195 million, down $20 million year over year; PEM sales were $1.9 billion and EBITDA was $215 million, up $125 million year over year, with EBITDA margin improving to 11% from 5%. For Q4 2026, management guided HIP revenue to $900 million-$1 billion and an EBITDA margin of about 13%; company capex for 2026 is now expected to be $850 million, and cash interest expense is expected to be about $215 million.

Jean-Marc Gilson emphasized that Westlake is navigating an “unprecedented” chemical downturn by leaning on its North American feedstock advantage, cost actions, and footprint optimization. He pointed to $500 million of EBITDA uplift from the profitability plan year to date, the Cologne closure, and the move to concentrate European PVC volumes at Wilhelmshaven as steps to improve 2027 economics. His tone was cautious but constructive: he repeatedly stressed that macro conditions are fluid, but said the company is focused on creating its own tailwinds through cost, M&A, and innovation.

Jonathan Baksht highlighted the quarter’s financial bridge: about $200 million of the year-over-year EBITDA improvement came from the 3-pillar plan and about $100 million from higher PEM selling prices, partly offset by cost inflation, Europe energy, and lower HIP volume. He said Q3 operating cash flow was $408 million, capex was $188 million, and free cash flow was $220 million; cash and investments were $2 billion and total debt was $5.1 billion as of September 30. He also noted 2026 capex guidance was cut to $850 million, or about $150 million below last year, and said Q4 cash flow should benefit from a significant working-capital release.

Analysts focused on HIP cost inflation, including diesel, freight, and pricing pass-throughs; management said there is a lag before pricing catches up, and Q4 guidance assumes the current environment continues with limited near-term pricing relief. On Europe, management quantified a roughly $20 million Q3 cost headwind from European energy and said Q3 power costs were about €126 per megawatt hour versus €84 a year ago, with October around €170 and current prices above €200. Questions on polyethylene and ethane drew a more positive response: management said US PE demand and inventories look supportive, October and November price nominations are in play, and ethane costs may stay elevated but should be more than offset by higher PE prices and low gas costs.