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|
|
|
|
|
|
|
|
|
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the quarterly period ended March 31, 2019
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the Transition Period from to
|
|
|
|
|
|
|
|
|
|
|
Delaware
|
|
76-0346924
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification Number)
|
Large accelerated filer
|
|
x
|
|
Accelerated filer
|
|
¨
|
Non-accelerated filer
|
|
¨
|
|
Smaller reporting company
|
|
¨
|
|
|
|
|
Emerging growth company
|
|
¨
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock
|
WLK
|
The New York Stock Exchange
|
|
|
Item
|
Page
|
|
|
|
|
|
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
|
|
|
|
||||
|
|
(in millions of dollars, except par values and share amounts)
|
||||||
ASSETS
|
|
|
|
|
||||
Current assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
445
|
|
|
$
|
753
|
|
Accounts receivable, net
|
|
1,121
|
|
|
1,037
|
|
||
Inventories
|
|
1,021
|
|
|
1,014
|
|
||
Prepaid expenses and other current assets
|
|
40
|
|
|
38
|
|
||
Total current assets
|
|
2,627
|
|
|
2,842
|
|
||
Property, plant and equipment, net
|
|
6,720
|
|
|
6,595
|
|
||
Operating lease right-of-use assets
|
|
400
|
|
|
—
|
|
||
Goodwill
|
|
1,047
|
|
|
1,002
|
|
||
Customer relationships, net
|
|
563
|
|
|
525
|
|
||
Other intangible assets, net
|
|
188
|
|
|
134
|
|
||
Other assets, net
|
|
559
|
|
|
504
|
|
||
Total assets
|
|
$
|
12,104
|
|
|
$
|
11,602
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
||||
Current liabilities
|
|
|
|
|
||||
Accounts and notes payable
|
|
$
|
548
|
|
|
$
|
507
|
|
Accrued and other liabilities
|
|
678
|
|
|
676
|
|
||
Total current liabilities
|
|
1,226
|
|
|
1,183
|
|
||
Long-term debt, net
|
|
2,669
|
|
|
2,668
|
|
||
Deferred income taxes
|
|
1,199
|
|
|
1,159
|
|
||
Pension and other post-retirement benefits
|
|
336
|
|
|
337
|
|
||
Operating lease liabilities
|
|
311
|
|
|
—
|
|
||
Other liabilities
|
|
178
|
|
|
179
|
|
||
Total liabilities
|
|
5,919
|
|
|
5,526
|
|
||
Commitments and contingencies (Note 15)
|
|
|
|
|
|
|
||
Stockholders' equity
|
|
|
|
|
||||
Preferred stock, $0.01 par value, 50,000,000 shares authorized;
no shares issued and outstanding
|
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 300,000,000 shares authorized; 134,651,380 and
134,651,380 shares issued at March 31, 2019 and December 31, 2018, respectively
|
|
1
|
|
|
1
|
|
||
Common stock, held in treasury, at cost; 6,059,073 and 6,183,125 shares at
March 31, 2019 and December 31, 2018, respectively
|
|
(371
|
)
|
|
(382
|
)
|
||
Additional paid-in capital
|
|
553
|
|
|
556
|
|
||
Retained earnings
|
|
5,513
|
|
|
5,477
|
|
||
Accumulated other comprehensive loss
|
|
(64
|
)
|
|
(62
|
)
|
||
Total Westlake Chemical Corporation stockholders' equity
|
|
5,632
|
|
|
5,590
|
|
||
Noncontrolling interests
|
|
553
|
|
|
486
|
|
||
Total equity
|
|
6,185
|
|
|
6,076
|
|
||
Total liabilities and equity
|
|
$
|
12,104
|
|
|
$
|
11,602
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in millions of dollars, except per share data and share amounts)
|
||||||
Net sales
|
|
$
|
2,025
|
|
|
$
|
2,150
|
|
Cost of sales
|
|
1,726
|
|
|
1,608
|
|
||
Gross profit
|
|
299
|
|
|
542
|
|
||
Selling, general and administrative expenses
|
|
116
|
|
|
108
|
|
||
Amortization of intangibles
|
|
27
|
|
|
26
|
|
||
Restructuring, transaction and integration-related costs
|
|
22
|
|
|
7
|
|
||
Income from operations
|
|
134
|
|
|
401
|
|
||
Other income (expense)
|
|
|
|
|
||||
Interest expense
|
|
(30
|
)
|
|
(37
|
)
|
||
Other income, net
|
|
9
|
|
|
22
|
|
||
Income before income taxes
|
|
113
|
|
|
386
|
|
||
Provision for income taxes
|
|
31
|
|
|
89
|
|
||
Net income
|
|
82
|
|
|
297
|
|
||
Net income attributable to noncontrolling interests
|
|
10
|
|
|
10
|
|
||
Net income attributable to Westlake Chemical Corporation
|
|
$
|
72
|
|
|
$
|
287
|
|
Earnings per common share attributable to Westlake Chemical Corporation:
|
|
|
|
|
||||
Basic
|
|
$
|
0.56
|
|
|
$
|
2.21
|
|
Diluted
|
|
$
|
0.55
|
|
|
$
|
2.20
|
|
Weighted average common shares outstanding:
|
|
|
|
|
||||
Basic
|
|
128,528,480
|
|
|
129,483,968
|
|
||
Diluted
|
|
128,913,921
|
|
|
130,190,892
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in millions of dollars)
|
||||||
Net income
|
|
$
|
82
|
|
|
$
|
297
|
|
Other comprehensive loss, net of income taxes
|
|
|
|
|
||||
Foreign currency translation adjustments
|
|
|
|
|
||||
Foreign currency translation
|
|
(2
|
)
|
|
(6
|
)
|
||
Income tax benefit on foreign currency translation
|
|
—
|
|
|
4
|
|
||
Other comprehensive loss, net of income taxes
|
|
(2
|
)
|
|
(2
|
)
|
||
Comprehensive income
|
|
80
|
|
|
295
|
|
||
Comprehensive income attributable to noncontrolling interests, net of tax of $1
and $1 for the three months ended March 31, 2019 and 2018, respectively
|
|
10
|
|
|
12
|
|
||
Comprehensive income attributable to Westlake Chemical Corporation
|
|
$
|
70
|
|
|
$
|
283
|
|
|
|
Common Stock
|
|
Common Stock, Held in Treasury
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
Number of Shares
|
|
Amount
|
|
Number of Shares
|
|
At Cost
|
|
Additional Paid-in Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Noncontrolling
Interests
|
|
Total
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
(in millions of dollars, except share amounts)
|
||||||||||||||||||||||||||||||||
Balances at December 31, 2017
|
|
134,651,380
|
|
|
$
|
1
|
|
|
5,232,875
|
|
|
$
|
(302
|
)
|
|
$
|
555
|
|
|
$
|
4,613
|
|
|
$
|
7
|
|
|
$
|
495
|
|
|
$
|
5,369
|
|
Cumulative effect of accounting change
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
287
|
|
|
—
|
|
|
10
|
|
|
297
|
|
|||||||
Other comprehensive income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
2
|
|
|
(2
|
)
|
|||||||
Shares issued—stock-based compensation
|
|
—
|
|
|
—
|
|
|
(175,143
|
)
|
|
10
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|||||||
Dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27
|
)
|
|
—
|
|
|
—
|
|
|
(27
|
)
|
|||||||
Distributions to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
(7
|
)
|
|||||||
Balances at March 31, 2018
|
|
134,651,380
|
|
|
$
|
1
|
|
|
5,057,732
|
|
|
$
|
(292
|
)
|
|
$
|
555
|
|
|
$
|
4,874
|
|
|
$
|
3
|
|
|
$
|
500
|
|
|
$
|
5,641
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balances at December 31, 2018
|
|
134,651,380
|
|
|
$
|
1
|
|
|
6,183,125
|
|
|
$
|
(382
|
)
|
|
$
|
556
|
|
|
$
|
5,477
|
|
|
$
|
(62
|
)
|
|
$
|
486
|
|
|
$
|
6,076
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
72
|
|
|
—
|
|
|
10
|
|
|
82
|
|
|||||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|||||||
Shares issued—stock-based compensation
|
|
—
|
|
|
—
|
|
|
(124,052
|
)
|
|
11
|
|
|
(8
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|||||||
Dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33
|
)
|
|
—
|
|
|
—
|
|
|
(33
|
)
|
|||||||
Distributions to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
(8
|
)
|
|||||||
Issuance of Westlake Chemical Partners LP common units
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
65
|
|
|
63
|
|
|||||||
Balances at March 31, 2019
|
|
134,651,380
|
|
|
$
|
1
|
|
|
6,059,073
|
|
|
$
|
(371
|
)
|
|
$
|
553
|
|
|
$
|
5,513
|
|
|
$
|
(64
|
)
|
|
$
|
553
|
|
|
$
|
6,185
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(in millions of dollars)
|
||||||
Cash flows from operating activities
|
|
|
|
|
||||
Net income
|
|
$
|
82
|
|
|
$
|
297
|
|
Adjustments to reconcile net income to net cash provided by operating activities
|
|
|
|
|
||||
Depreciation and amortization
|
|
171
|
|
|
156
|
|
||
Stock-based compensation expense
|
|
7
|
|
|
6
|
|
||
Disposition and write-off of property, plant and equipment
|
|
20
|
|
|
6
|
|
||
Deferred income taxes
|
|
15
|
|
|
16
|
|
||
Other losses (gains), net
|
|
9
|
|
|
(7
|
)
|
||
Changes in operating assets and liabilities
|
|
|
|
|
||||
Accounts receivable
|
|
(41
|
)
|
|
(133
|
)
|
||
Inventories
|
|
19
|
|
|
(41
|
)
|
||
Prepaid expenses and other current assets
|
|
4
|
|
|
2
|
|
||
Accounts payable
|
|
(7
|
)
|
|
(13
|
)
|
||
Accrued and other liabilities
|
|
(110
|
)
|
|
(48
|
)
|
||
Other, net
|
|
(22
|
)
|
|
(16
|
)
|
||
Net cash provided by operating activities
|
|
147
|
|
|
225
|
|
||
Cash flows from investing activities
|
|
|
|
|
||||
Acquisition of business, net of cash acquired
|
|
(236
|
)
|
|
—
|
|
||
Additions to property, plant and equipment
|
|
(203
|
)
|
|
(154
|
)
|
||
Additions to investments in unconsolidated subsidiaries
|
|
(42
|
)
|
|
(26
|
)
|
||
Other, net
|
|
6
|
|
|
2
|
|
||
Net cash used for investing activities
|
|
(475
|
)
|
|
(178
|
)
|
||
Cash flows from financing activities
|
|
|
|
|
||||
Dividends paid
|
|
(33
|
)
|
|
(27
|
)
|
||
Distributions to noncontrolling interests
|
|
(8
|
)
|
|
(7
|
)
|
||
Proceeds from notes payable
|
|
1
|
|
|
4
|
|
||
Proceeds from issuance of Westlake Chemical Partners LP common units
|
|
63
|
|
|
—
|
|
||
Redemption and repayment of notes payable
|
|
(4
|
)
|
|
(706
|
)
|
||
Other
|
|
2
|
|
|
5
|
|
||
Net cash provided by (used for) financing activities
|
|
21
|
|
|
(731
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
|
(1
|
)
|
|
4
|
|
||
Net decrease in cash, cash equivalents and restricted cash
|
|
(308
|
)
|
|
(680
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
|
775
|
|
|
1,554
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
|
$
|
467
|
|
|
$
|
874
|
|
Operating Lease Assets and Liabilities
|
|
Balance Sheet Location
|
|
Amounts Recorded in the Consolidated Balance Sheet January 1, 2019
|
||
Right-of-use assets
|
|
Operating lease right-of-use assets
|
|
$
|
421
|
|
Current lease liabilities
|
|
Accrued and other liabilities
|
|
(94
|
)
|
|
Non-current lease liabilities
|
|
Operating lease liabilities
|
|
(331
|
)
|
|
Deferred rent
|
|
Other liabilities
|
|
4
|
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
Trade customers
|
|
$
|
1,055
|
|
|
$
|
969
|
|
Affiliates
|
|
7
|
|
|
6
|
|
||
Allowance for doubtful accounts
|
|
(24
|
)
|
|
(23
|
)
|
||
|
|
1,038
|
|
|
952
|
|
||
Federal and state taxes
|
|
51
|
|
|
57
|
|
||
Other
|
|
32
|
|
|
28
|
|
||
Accounts receivable, net
|
|
$
|
1,121
|
|
|
$
|
1,037
|
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
Finished products
|
|
$
|
655
|
|
|
$
|
657
|
|
Feedstock, additives, chemicals and other raw materials
|
|
217
|
|
|
203
|
|
||
Materials and supplies
|
|
149
|
|
|
154
|
|
||
Inventories
|
|
$
|
1,021
|
|
|
$
|
1,014
|
|
|
|
March 31,
2019 |
||
Operating Leases
|
|
|
||
Right-of-use assets
|
|
$
|
400
|
|
|
|
|
||
Accrued and other liabilities
|
|
$
|
93
|
|
Operating lease liabilities
|
|
311
|
|
|
Total operating lease liabilities
|
|
$
|
404
|
|
|
|
|
||
Weighted Average Remaining Term (in years)
|
|
7
|
|
|
Weighted Average Lease Discount Rate
|
|
3.5
|
%
|
|
|
|
|
Three Months Ended March 31, 2019
|
||
Operating lease cost
(1)
|
|
|
|
$
|
28
|
|
Short-term lease cost
|
|
|
|
14
|
|
|
Total operating lease cost
|
|
|
|
$
|
42
|
|
(1)
|
Includes fixed lease payments for operating leases recorded in the consolidated balance sheet.
|
|
|
Operating Leases
|
||
2019 (excluding the three months ended March 31, 2019)
|
|
$
|
80
|
|
2020
|
|
91
|
|
|
2021
|
|
70
|
|
|
2022
|
|
56
|
|
|
2023
|
|
43
|
|
|
Thereafter
|
|
147
|
|
|
Total lease payments
|
|
487
|
|
|
Less: imputed interest
|
|
(83
|
)
|
|
Present value of lease liabilities
|
|
$
|
404
|
|
|
|
Operating Leases
|
||
2019
|
|
$
|
94
|
|
2020
|
|
89
|
|
|
2021
|
|
70
|
|
|
2022
|
|
56
|
|
|
2023
|
|
42
|
|
|
Thereafter
|
|
152
|
|
|
Total lease payments
|
|
$
|
503
|
|
|
|
Olefins Segment
|
|
Vinyls Segment
|
|
Total
|
||||||
Balances at December 31, 2018
|
|
$
|
30
|
|
|
$
|
972
|
|
|
$
|
1,002
|
|
Goodwill acquired during the period
|
|
—
|
|
|
44
|
|
|
44
|
|
|||
Effects of changes in foreign exchange rates
|
|
—
|
|
|
1
|
|
|
1
|
|
|||
Balances at March 31, 2019
|
|
$
|
30
|
|
|
$
|
1,017
|
|
|
$
|
1,047
|
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
Accounts payable—third parties
|
|
$
|
525
|
|
|
$
|
504
|
|
Accounts payable to affiliates
|
|
1
|
|
|
2
|
|
||
Notes payable
|
|
22
|
|
|
1
|
|
||
Accounts and notes payable
|
|
$
|
548
|
|
|
$
|
507
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
|
Principal
Amount |
|
Unamortized
Discount
and Debt Issuance Costs |
|
Net
Long-term Debt |
|
Principal
Amount |
|
Unamortized
Discount and Debt Issuance Costs |
|
Net
Long-term Debt |
||||||||||||
3.60% senior notes due 2022 (the "3.60% 2022 Senior Notes")
|
|
$
|
250
|
|
|
$
|
(1
|
)
|
|
$
|
249
|
|
|
$
|
250
|
|
|
$
|
(1
|
)
|
|
$
|
249
|
|
3.60% senior notes due 2026 (the "3.60% 2026 Senior Notes")
|
|
750
|
|
|
(8
|
)
|
|
742
|
|
|
750
|
|
|
(9
|
)
|
|
741
|
|
||||||
Loan related to tax-exempt waste disposal revenue bonds due 2027
|
|
11
|
|
|
—
|
|
|
11
|
|
|
11
|
|
|
—
|
|
|
11
|
|
||||||
6 ½% senior notes due 2029 (the "6 ½% 2029 GO Zone Senior Notes")
|
|
100
|
|
|
(1
|
)
|
|
99
|
|
|
100
|
|
|
(1
|
)
|
|
99
|
|
||||||
6 ½% senior notes due 2035 (the "6 ½% 2035 GO Zone Senior Notes")
|
|
89
|
|
|
(1
|
)
|
|
88
|
|
|
89
|
|
|
(1
|
)
|
|
88
|
|
||||||
6 ½% senior notes due 2035 (the "6 ½% 2035 IKE Zone Senior Notes")
|
|
65
|
|
|
—
|
|
|
65
|
|
|
65
|
|
|
—
|
|
|
65
|
|
||||||
5.0% senior notes due 2046 (the "5.0% 2046 Senior Notes")
|
|
700
|
|
|
(24
|
)
|
|
676
|
|
|
700
|
|
|
(24
|
)
|
|
676
|
|
||||||
4.375% senior notes due 2047 (the "4.375% 2047 Senior Notes")
|
|
500
|
|
|
(9
|
)
|
|
491
|
|
|
500
|
|
|
(9
|
)
|
|
491
|
|
||||||
3.50% senior notes due 2032 (the "3.50% 2032 GO Zone Refunding Senior Notes")
|
|
250
|
|
|
(2
|
)
|
|
248
|
|
|
250
|
|
|
(2
|
)
|
|
248
|
|
||||||
Total Long-term debt
|
|
$
|
2,715
|
|
|
$
|
(46
|
)
|
|
$
|
2,669
|
|
|
$
|
2,715
|
|
|
$
|
(47
|
)
|
|
$
|
2,668
|
|
|
|
Benefits
Liability,
Net of Tax
|
|
Cumulative
Foreign
Currency
Exchange,
Net of Tax
|
|
Total
|
||||||
Balances at December 31, 2017
|
|
$
|
43
|
|
|
$
|
(36
|
)
|
|
$
|
7
|
|
Other comprehensive income (loss) before reclassifications
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
|||
Net other comprehensive income (loss) attributable to Westlake Chemical Corporation
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
|||
Balances at March 31, 2018
|
|
$
|
43
|
|
|
$
|
(40
|
)
|
|
$
|
3
|
|
|
|
|
|
|
|
|
||||||
Balances at December 31, 2018
|
|
$
|
27
|
|
|
$
|
(89
|
)
|
|
$
|
(62
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|||
Net other comprehensive income (loss) attributable to Westlake Chemical Corporation
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|||
Balances at March 31, 2019
|
|
$
|
27
|
|
|
$
|
(91
|
)
|
|
$
|
(64
|
)
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||
|
|
Carrying
Value
|
|
Fair
Value
|
|
Carrying
Value
|
|
Fair
Value
|
||||||||
3.60% 2022 Senior Notes
|
|
$
|
249
|
|
|
$
|
252
|
|
|
$
|
249
|
|
|
$
|
248
|
|
3.60% 2026 Senior Notes
|
|
742
|
|
|
726
|
|
|
741
|
|
|
692
|
|
||||
Loan related to tax-exempt waste disposal revenue bonds due 2027
|
|
11
|
|
|
11
|
|
|
11
|
|
|
11
|
|
||||
6 ½% 2029 GO Zone Senior Notes
|
|
99
|
|
|
106
|
|
|
99
|
|
|
106
|
|
||||
6 ½% 2035 GO Zone Senior Notes
|
|
88
|
|
|
94
|
|
|
88
|
|
|
95
|
|
||||
6 ½% 2035 IKE Zone Senior Notes
|
|
65
|
|
|
69
|
|
|
65
|
|
|
69
|
|
||||
5.0% 2046 Senior Notes
|
|
676
|
|
|
681
|
|
|
676
|
|
|
641
|
|
||||
4.375% 2047 Senior Notes
|
|
491
|
|
|
443
|
|
|
491
|
|
|
417
|
|
||||
3.50% 2032 GO Zone Refunding Senior Notes
|
|
248
|
|
|
249
|
|
|
248
|
|
|
233
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Net income attributable to Westlake Chemical Corporation
|
|
$
|
72
|
|
|
$
|
287
|
|
Less:
|
|
|
|
|
||||
Net income attributable to participating securities
|
|
(1
|
)
|
|
(2
|
)
|
||
Net income attributable to common shareholders
|
|
$
|
71
|
|
|
$
|
285
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Weighted average common shares—basic
|
|
128,528,480
|
|
|
129,483,968
|
|
||
Plus incremental shares from:
|
|
|
|
|
||||
Assumed exercise of options and vesting of performance stock units
|
|
385,441
|
|
|
706,924
|
|
||
Weighted average common shares—diluted
|
|
128,913,921
|
|
|
130,190,892
|
|
||
|
|
|
|
|
||||
Earnings per common share attributable to Westlake Chemical Corporation:
|
|
|
|
|
||||
Basic
|
|
$
|
0.56
|
|
|
$
|
2.21
|
|
Diluted
|
|
$
|
0.55
|
|
|
$
|
2.20
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Dividends per common share
|
|
$
|
0.2500
|
|
|
$
|
0.2100
|
|
|
|
Three Months Ended March 31, 2019
|
||
Operating cash flows from operating leases
(1)
|
|
$
|
(28
|
)
|
Right-of-use assets obtained in exchange for operating lease obligations
|
|
$
|
3
|
|
(1)
|
Includes cash paid for amounts included in the measurement of operating lease liabilities recorded in the consolidated balance sheets. For the
three months ended March 31, 2019
, finance lease related cash flows used for operating and financing activities were not material to the consolidated statement of cash flows.
|
Cash
|
|
$
|
10
|
|
Accounts receivable
|
|
53
|
|
|
Inventories
|
|
39
|
|
|
Prepaid expenses and other current assets
|
|
7
|
|
|
Property, plant and equipment
|
|
75
|
|
|
Operating lease right-of-use assets
|
|
3
|
|
|
Intangible assets:
|
|
|
||
Customer relationships (weighted average lives of 17 years)
|
|
60
|
|
|
Technology (weighted average lives of 14 years)
|
|
40
|
|
|
Trade name (life of 15 years)
|
|
20
|
|
|
Other assets
|
|
10
|
|
|
Total assets acquired
|
|
317
|
|
|
Accounts and notes payable
|
|
56
|
|
|
Accrued and other liabilities
|
|
21
|
|
|
Deferred income taxes
|
|
26
|
|
|
Pension and other post-retirement benefits
|
|
4
|
|
|
Operating lease liabilities
|
|
3
|
|
|
Other long-term liabilities
|
|
5
|
|
|
Total liabilities assumed
|
|
115
|
|
|
Total identifiable net assets acquired
|
|
202
|
|
|
Goodwill
|
|
44
|
|
|
Total purchase consideration
|
|
$
|
246
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Net external sales
|
|
|
|
|
||||
Olefins
|
|
|
|
|
||||
Polyethylene
|
|
$
|
337
|
|
|
$
|
369
|
|
Styrene, feedstock and other
|
|
122
|
|
|
134
|
|
||
Total Olefins
|
|
459
|
|
|
503
|
|
||
Vinyls
|
|
|
|
|
||||
PVC, caustic soda and other
|
|
1,307
|
|
|
1,358
|
|
||
Building products
|
|
259
|
|
|
289
|
|
||
Total Vinyls
|
|
1,566
|
|
|
1,647
|
|
||
|
|
$
|
2,025
|
|
|
$
|
2,150
|
|
|
|
|
|
|
||||
Intersegment sales
|
|
|
|
|
||||
Olefins
|
|
$
|
92
|
|
|
$
|
120
|
|
Vinyls
|
|
—
|
|
|
—
|
|
||
|
|
$
|
92
|
|
|
$
|
120
|
|
|
|
|
|
|
||||
Income (loss) from operations
|
|
|
|
|
||||
Olefins
|
|
$
|
37
|
|
|
$
|
163
|
|
Vinyls
|
|
101
|
|
|
266
|
|
||
Corporate and other
|
|
(4
|
)
|
|
(28
|
)
|
||
|
|
$
|
134
|
|
|
$
|
401
|
|
|
|
|
|
|
||||
Depreciation and amortization
|
|
|
|
|
||||
Olefins
|
|
$
|
35
|
|
|
$
|
34
|
|
Vinyls
|
|
134
|
|
|
118
|
|
||
Corporate and other
|
|
2
|
|
|
4
|
|
||
|
|
$
|
171
|
|
|
$
|
156
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Other income, net
|
|
|
|
|
||||
Olefins
|
|
$
|
2
|
|
|
$
|
2
|
|
Vinyls
|
|
4
|
|
|
12
|
|
||
Corporate and other
|
|
3
|
|
|
8
|
|
||
|
|
$
|
9
|
|
|
$
|
22
|
|
|
|
|
|
|
||||
Provision for (benefit from) income taxes
|
|
|
|
|
||||
Olefins
|
|
$
|
9
|
|
|
$
|
37
|
|
Vinyls
|
|
23
|
|
|
61
|
|
||
Corporate and other
|
|
(1
|
)
|
|
(9
|
)
|
||
|
|
$
|
31
|
|
|
$
|
89
|
|
|
|
|
|
|
||||
Capital expenditures
|
|
|
|
|
||||
Olefins
|
|
$
|
25
|
|
|
$
|
22
|
|
Vinyls
|
|
177
|
|
|
130
|
|
||
Corporate and other
|
|
1
|
|
|
2
|
|
||
|
|
$
|
203
|
|
|
$
|
154
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Income from operations
|
|
$
|
134
|
|
|
$
|
401
|
|
Interest expense
|
|
(30
|
)
|
|
(37
|
)
|
||
Other income, net
|
|
9
|
|
|
22
|
|
||
Income before income taxes
|
|
$
|
113
|
|
|
$
|
386
|
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
Total assets
|
|
|
|
|
||||
Olefins
|
|
$
|
2,137
|
|
|
$
|
2,024
|
|
Vinyls
|
|
9,609
|
|
|
8,879
|
|
||
Corporate and other
|
|
358
|
|
|
699
|
|
||
|
|
$
|
12,104
|
|
|
$
|
11,602
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(dollars in millions, except per share data)
|
||||||
Net external sales
|
|
|
|
|
||||
Olefins
|
|
|
|
|
||||
Polyethylene
|
|
$
|
337
|
|
|
$
|
369
|
|
Styrene, feedstock and other
|
|
122
|
|
|
134
|
|
||
Total Olefins
|
|
459
|
|
|
503
|
|
||
Vinyls
|
|
|
|
|
||||
PVC, caustic soda and other
|
|
1,307
|
|
|
1,358
|
|
||
Building products
|
|
259
|
|
|
289
|
|
||
Total Vinyls
|
|
1,566
|
|
|
1,647
|
|
||
Total
|
|
$
|
2,025
|
|
|
$
|
2,150
|
|
|
|
|
|
|
||||
Income (loss) from operations
|
|
|
|
|
||||
Olefins
|
|
$
|
37
|
|
|
$
|
163
|
|
Vinyls
|
|
101
|
|
|
266
|
|
||
Corporate and other
|
|
(4
|
)
|
|
(28
|
)
|
||
Total income from operations
|
|
134
|
|
|
401
|
|
||
Interest expense
|
|
(30
|
)
|
|
(37
|
)
|
||
Other income, net
|
|
9
|
|
|
22
|
|
||
Provision for income taxes
|
|
31
|
|
|
89
|
|
||
Net income
|
|
82
|
|
|
297
|
|
||
Net income attributable to noncontrolling interests
|
|
10
|
|
|
10
|
|
||
Net income attributable to Westlake Chemical Corporation
|
|
$
|
72
|
|
|
$
|
287
|
|
Diluted earnings per share
|
|
$
|
0.55
|
|
|
$
|
2.20
|
|
EBITDA
(1)
|
|
$
|
314
|
|
|
$
|
579
|
|
(1)
|
See "Reconciliation of EBITDA to Net Income, Income from Operations and Net Cash Provided by Operating Activities" below.
|
|
|
Three Months Ended March 31, 2019
|
||||
|
|
Average
Sales Price |
|
Volume
|
||
Product sales price and volume percentage change from prior-year period
|
|
|
|
|
||
Olefins
|
|
-23.2
|
%
|
|
+14.5
|
%
|
Vinyls
|
|
-3.9
|
%
|
|
-1.1
|
%
|
Company
|
|
-8.4
|
%
|
|
+2.5
|
%
|
|
|
|
|
|
||
|
|
Three Months Ended March 31,
|
||||
|
|
2019
|
|
2018
|
||
Average industry prices
(1)
|
|
|
|
|
||
Ethane (cents/lb)
|
|
10.0
|
|
|
8.5
|
|
Propane (cents/lb)
|
|
15.7
|
|
|
20.2
|
|
Ethylene (cents/lb)
(2)
|
|
17.0
|
|
|
23.6
|
|
Polyethylene (cents/lb)
(3)
|
|
60.0
|
|
|
73.7
|
|
Styrene (cents/lb)
(4)
|
|
78.8
|
|
|
98.3
|
|
Caustic soda ($/short ton)
(5)
|
|
716.7
|
|
|
748.3
|
|
Chlorine ($/short ton)
(6)
|
|
175.0
|
|
|
160.0
|
|
PVC (cents/lb)
(7)
|
|
68.8
|
|
|
67.2
|
|
(1)
|
Industry pricing data was obtained through IHS Markit ("IHS"). We have not independently verified the data.
|
(2)
|
Represents average North American spot prices of ethylene over the period as reported by IHS.
|
(3)
|
Represents average North American net transaction prices of polyethylene low density GP-Film grade over the period as reported by IHS.
|
(4)
|
Represents average North American contract prices of styrene over the period as reported by IHS.
|
(5)
|
Represents average North American United States Gulf Coast undiscounted contract prices of caustic soda over the period as reported by IHS.
|
(6)
|
Represents average North American contract prices of chlorine over the period as reported by IHS. Effective January 1, 2019, IHS made a non-market average downward adjustment of $172.50 per short ton to chlorine prices. For comparability, we adjusted the prior period's chlorine price downward by $172.50 per short ton consistent with the IHS non-market adjustment.
|
(7)
|
Represents average North American contract prices of polyvinyl chloride (PVC) over the period as reported by IHS.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
|
|
(dollars in millions)
|
||||||
Net cash provided by operating activities
|
|
$
|
147
|
|
|
$
|
225
|
|
Changes in operating assets and liabilities and other
|
|
(50
|
)
|
|
88
|
|
||
Deferred income taxes
|
|
(15
|
)
|
|
(16
|
)
|
||
Net income
|
|
82
|
|
|
297
|
|
||
Less:
|
|
|
|
|
||||
Other income, net
|
|
9
|
|
|
22
|
|
||
Interest expense
|
|
(30
|
)
|
|
(37
|
)
|
||
Provision for income taxes
|
|
(31
|
)
|
|
(89
|
)
|
||
Income from operations
|
|
134
|
|
|
401
|
|
||
Add:
|
|
|
|
|
||||
Depreciation and amortization
|
|
171
|
|
|
156
|
|
||
Other income, net
|
|
9
|
|
|
22
|
|
||
EBITDA
|
|
$
|
314
|
|
|
$
|
579
|
|
•
|
future operating rates, margins, cash flows and demand for our products;
|
•
|
industry market outlook, including the price of crude oil;
|
•
|
production capacities;
|
•
|
currency devaluation;
|
•
|
our ability to borrow additional funds under our credit agreement;
|
•
|
our ability to meet our liquidity needs;
|
•
|
our ability to meet debt obligations under our debt instruments;
|
•
|
our intended quarterly dividends;
|
•
|
future capacity additions and expansions in the industries in which we compete;
|
•
|
results of acquisitions, including our acquisition of NAKAN;
|
•
|
timing, funding and results of capital projects, such as the construction of the LACC plant and associated facilities;
|
•
|
pension plan obligations, funding requirements and investment policies;
|
•
|
compliance with present and future environmental regulations and costs associated with environmentally related penalties, capital expenditures, remedial actions and proceedings, including any new laws, regulations or treaties that may come into force to limit or control carbon dioxide and other greenhouse gas emissions or to address other issues of climate change;
|
•
|
effects of pending legal proceedings; and
|
•
|
timing of and amount of capital expenditures.
|
•
|
general economic and business conditions;
|
•
|
the cyclical nature of the chemical and building products industries;
|
•
|
the availability, cost and volatility of raw materials and energy;
|
•
|
uncertainties associated with the United States, European and worldwide economies, including those due to political tensions and unrest in the Middle East and elsewhere;
|
•
|
current and potential governmental regulatory actions in the United States and other countries and political unrest in other areas;
|
•
|
industry production capacity and operating rates;
|
•
|
the supply/demand balance for our products;
|
•
|
competitive products and pricing pressures;
|
•
|
instability in the credit and financial markets;
|
•
|
access to capital markets;
|
•
|
terrorist acts;
|
•
|
operating interruptions (including leaks, explosions, fires, weather-related incidents, mechanical failure, unscheduled downtime, labor difficulties, transportation interruptions, spills and releases and other environmental risks);
|
•
|
changes in laws or regulations, including trade policies;
|
•
|
technological developments;
|
•
|
foreign currency exchange risks;
|
•
|
our ability to implement our business strategies; and
|
•
|
creditworthiness of our customers.
|
•
|
In May 2013, an amendment to an existing consent order agreed to by the West Virginia Department of Environmental Protection and a predecessor of Axiall required that it, among other things, pay a penalty in the amount of $449,000 and continue certain corrective actions associated with discharges of hexachlorocyclohexane (commonly referred to as BHC) from the Natrium facility's effluent discharge outfalls. The penalty was paid and corrective actions required are on-going per a December 2018 agreement to extend the compliance date under the amended consent order. The amended consent order also imposes stipulated penalties for exceedances of the facility's interim effluent discharge limits, which penalties we believe may, in the aggregate, reach or exceed $100,000.
|
•
|
During September 2010, our vinyls facilities in Lake Charles and Plaquemine each received a Consolidated Compliance Order and Notice of Potential Penalty, alleging violations of various requirements of those facilities' air permits, based largely on self-reported permit deviations related to record-keeping violations. We have been negotiating a possible global settlement of these and several other matters with the Louisiana Department of Environmental Quality ("LDEQ"). In May 2018, we reached an agreement in principal with the LDEQ to resolve these consolidated enforcement matters for a penalty of $162,500. The settlement agreement is being prepared and when finalized will be subject to public comment and approval by the Louisiana Attorney General.
|
•
|
For several years, the Environmental Protection Agency (the "EPA") has been conducting an enforcement initiative against petroleum refineries and petrochemical plants with respect to emissions from flares. On April 21, 2014, we received a Clean Air Act Section 114 Information Request from the EPA which sought information regarding flares at the Calvert City facility and certain Lake Charles facilities. The EPA has informed us that the information provided leads the EPA to believe that some of the flares are out of compliance with applicable standards. The EPA has indicated that it is seeking a consent decree that would obligate us to take corrective actions relating to the alleged noncompliance. We believe the resolution of these matters may require the payment of a monetary sanction in excess of
$100,000
.
|
•
|
Regional offices of the EPA have investigated, and in some cases inspected, our compliance with Risk Management Program requirements under the Clean Air Act at our Natrium and Geismar facilities. We believe the resolution of these matters may require the payment of a monetary sanction in excess of
$100,000
.
|
•
|
On November 24, 2014, we entered into an agreed order with the Kentucky Energy and Environmental Cabinet ("KEEC") regarding our Kentucky Pollutant Discharge Elimination System permit limits for hexachlorobenzene and mercury at our Calvert City, Kentucky facility. We and the KEEC entered into a new agreed order under which we will be subject to new interim discharge limits for hexachlorobenzene in addition to accompanying stipulated penalties for exceedances of those interim discharge limits, which penalties we believe may, in the aggregate, reach or exceed $100,000.
|
Period
|
|
Total Number
of Shares
Purchased
(1)
|
|
Average Price
Paid Per
Share
|
|
Total Number
of Shares
Purchased as Part
of Publicly
Announced Plans
or Programs
(2)
|
|
Maximum Number
(or Approximate
Dollar Value) of
Shares that
May Yet Be
Purchased Under the
Plans or Programs
(2)
|
||||||
January 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
214,872,000
|
|
February 2019
|
|
36,123
|
|
|
$
|
73.50
|
|
|
—
|
|
|
$
|
214,872,000
|
|
March 2019
|
|
275
|
|
|
$
|
65.21
|
|
|
—
|
|
|
$
|
214,872,000
|
|
|
|
36,398
|
|
|
$
|
73.44
|
|
|
—
|
|
|
|
(1)
|
Represent shares withheld in satisfaction of withholding taxes due upon the vesting of restricted stock units granted to our employees under the 2013 Plan.
|
(2)
|
In November 2014, our Board of Directors authorized a $250 million stock repurchase program (the "2014 Program"). In November 2015, our Board of Directors approved the expansion of the 2014 Program by an additional $150 million. In August 2018, our Board of Directors approved the further expansion of the existing 2014 Program by an additional $150 million. As of
March 31, 2019
,
5,562,479
shares of our common stock had been acquired at an aggregate purchase price of approximately
$335 million
under the 2014 Program. Transaction fees and commissions are not reported in the average price paid per share in the table above. Decisions regarding the amount and the timing of purchases under the 2014 Program will be influenced by our cash on hand, our cash flows from operations, general market conditions and other factors. The 2014 Program may be discontinued by our Board of Directors at any time.
|
Exhibit No.
|
|
Exhibit Index
|
|
|
|
31.1†
|
|
|
|
|
|
31.2†
|
|
|
|
|
|
32.1#
|
|
|
|
|
|
101.INS†
|
|
XBRL Instance Document
|
|
|
|
101.SCH†
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL†
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF†
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB†
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE†
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
†
|
Filed herewith.
|
#
|
Furnished herewith.
|
|
|
|
|
WESTLAKE CHEMICAL CORPORATION
|
||
|
|
|
|
|||
Date:
|
May 2, 2019
|
|
|
By:
|
|
/
S
/ A
LBERT
C
HAO
|
|
|
|
|
|
|
Albert Chao
|
|
|
|
|
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|||
Date:
|
May 2, 2019
|
|
|
By:
|
|
/
S
/ M. S
TEVEN
B
ENDER
|
|
|
|
|
|
|
M. Steven Bender
|
|
|
|
|
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
---|
DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
---|
No information found
Customers
No Suppliers Found
Price
Yield
Owner | Position | Direct Shares | Indirect Shares |
---|