Westlake Corporation

Westlake reported Q2 2026 sales of $3.3 billion, EBITDA of $679 million, net income of $260 million, and EPS of $2.01, compared with a net loss of $12 million in Q2 2025. HIP net sales were $1.3 billion, up nearly $100 million or 8% year over year, and HIP EBITDA was $276 million, up $1 million from last year; HIP EBITDA margin eased to 22% from 24%. PEM EBITDA was $416 million, up $364 million year over year, with average sales price up 14% and sales volume up 7% excluding plant closures; sequentially, PEM EBITDA rose $380 million on a 21% increase in average sales price and lower natural gas and ethane costs. Management said 2026 HIP revenue should be toward the lower end of the previously communicated $4.4 billion to $4.6 billion range, with EBITDA margin between 19% and 21% excluding identified items; 2026 capex is still expected to be $900 million and cash interest expense about $215 million.

Jean-Marc Gilson emphasized that the quarter showcased Westlake’s structural advantages: advantaged North American feedstock and energy, integrated operations, and a differentiated HIP portfolio. He highlighted three drivers of the quarter—PEM pricing and margin expansion, about $150 million of quarter-over-quarter year-over-year benefit from the 3-pillar profitability plan, and 6% organic HIP volume growth. His tone was constructive and confident, while also acknowledging that plant reliability still needs improvement and saying the remaining issues are fixable.

Jon Baksht walked through the quarter’s reported figures and the balance sheet. He noted cash and investments of $1.9 billion and total debt of $5.1 billion at June 30, 2026, with a weighted average maturity of over 17 years and an average coupon rate of 4%; the company retired the remaining $500 million of 2026 notes and repurchased $30 million of stock. Operating cash flow was $318 million, more than double the prior-year period, and he said second-half cash flow should benefit from a significant release of working capital, especially in Q4. On guidance, he reiterated 2026 capex of $900 million and cash interest expense of about $215 million, and said HIP revenue and margin expectations are now skewed toward the lower end of the prior range because of softer residential construction and higher freight and raw material costs.

Analysts focused on whether PEM’s stronger profitability is sustainable, and management said most of the 3-pillar savings are in PEM, but not all, and that the savings are recurring rather than one-time. They also discussed the North American chlorovinyl landscape, polyethylene and caustic pricing, HIP pricing pass-throughs, and whether some Pipe demand was pulled into Q2 from Q3. Management said some Pipe orders were shifted forward when customers secured supply around the Middle East conflict, that pricing increases in HIP were largely realized by the end of Q2 with only slight additional benefit expected, and that PEM operating rates should improve in the second half as reliability issues are fixed and planned shutdowns are limited.