Westlake (WLK) Q4 2023 earnings summary

Executive summary

• Q4 sales were $2.826B, down 9% QoQ and 14% YoY; sales volumes improved YoY and momentum continued into 1Q24.

• Q4 adjusted net income was $93M, or $0.72 per diluted share; adjusted EBITDA was $390M, down 43% QoQ and from $619M in Q4 2022.

• FY23 net sales were $12.548B; reported net income was $479M and adjusted net income was $1.112B.

• HIP achieved record FY operating income of $710M; PEM results were pressured by lower pricing and $625M of Identified Items.

Financial highlights

• Q4 reported net loss was $497M, diluted loss per share was $3.86, and EBITDA loss was $235M, including Identified Items.

• FY adjusted diluted EPS was $8.27; adjusted EBITDA was $2.587B, compared with reported EBITDA of $1.962B.

• Q4 free cash flow was $291M; FY free cash flow was $1.302B, versus $2.287B in FY22.

• Cash and equivalents totaled $3.304B at year-end, up $1.076B; total debt was $4.906B.

Outlook and guidance

• 2024 outlook calls for modest HIP sales-volume growth, supported by healthy U.S. consumer spending, a strong labor market and moderating interest rates.

• PEM outlook assumes no further deterioration, with signs of stabilization in prices and volumes across domestic and export markets for most products.

• Targeting $125M–$150M of cost savings in 2024, after $110M in 2023, including $30M in Q4.

• PEM priorities include structural cost improvements, especially in Europe, improved plant reliability and efficiency, and commercializing product innovations.