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- **$727M goodwill impairment**: Reflects PEM's near-term challenges but reaffirms long-term chlorovinyls demand.
- **$200M 2026 cost savings**: Structural actions to improve PEM profitability, with $115M of 2025 target achieved.
- **HIP resilience**: 10% YTD growth in pipe/fittings despite housing slowdown, driven by infrastructure spending.
- **ACI acquisition**: Expands compound business into automotive/electrical markets with 20-22% margin potential.
- **2026 outlook**: $500M+ EBITDA improvement possible via cost savings, asset closures, and reduced outages.

**【CEO Summary Section】**
- Reported Q3 2025 EBITDA of $313 million on net sales of $2.8 billion.
- HIP segment showed resilience with sales volumes up 10% year-to-date despite housing market slowdown, driven by municipal infrastructure spending.
- PEM segment faced headwinds from global supply-demand imbalance, leading to a $727 million noncash goodwill impairment charge.
- Announced $200 million structural cost reduction target for 2026, with $115 million achieved toward 2025 target of $150-175 million.
- Strategic actions include plant reliability improvements, asset optimization (e.g., Pernis closure), and the ACI acquisition to expand compound business.

**【CFO Financial Commentary】**
- Q3 net loss of $38 million ($0.29 EPS) due to lower PVC resin prices and impairment charge.
- HIP segment EBITDA of $215 million (20% margin) despite 6% sequential volume decline, driven by repair/remodel demand.
- PEM segment EBITDA of $90 million (-70% YoY) due to 4% QoQ price decline and export mix shift.
- Guidance for 2025: HIP revenue $4.2-4.4 billion (20-22% EBITDA margin), PEM to improve with cost actions.
- 2026 outlook: $200 million cost savings, $100 million+ savings from asset closures, and accretive ACI integration.

**【Q&A Key Highlights】**
- Polyethylene pricing stable but ethane costs pressure margins; Q4 expected to mirror Q3 trends.
- ACI acquisition to add $200+ million in sales with 20-22% margin contribution.
- 2026 EBITDA could improve $500 million+ via cost savings, asset closures, and reduced unplanned outages.
- HIP resiliency (5-7% annual growth) vs. PEM recovery dependent on global demand and cost actions.
- No plans to separate businesses; long-term synergies between chemicals and building products outweigh valuation challenges.

Westlake Corporation (WLK) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

WLK

WLK fundamentals

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