Westlake Q2 Earnings Call Highlights

Westlake returned to profitability in Q2 2026, reporting $3.3 billion in sales, $260 million in net income and $679 million in EBITDA, supported by higher PEM pricing, lower feedstock costs and cost savings. The company’s profitability-improvement plan contributed about $150 million to year-over-year EBITDA growth in the quarter, keeping Westlake on track for its $600 million full-year 2026 target. HIP sales rose 8%, but its margin fell to 22% due to lower prices and higher transportation and raw-material costs. Westlake lowered its 2026 HIP outlook toward the low end of its prior guidance range amid weaker residential construction expectations, while maintaining $900 million in capital expenditures. The company also completed a PVC and VCM plant acquisition in Germany expected to contribute more meaningfully to earnings next year.

Westlake reported second-quarter 2026 net sales of $3.3 billion and net income of $260 million, or $2.01 per share, compared with a net loss of $12 million in the prior-year quarter. The company said EBITDA reached $679 million, reflecting improvement in both its Performance and Essential Materials, or PEM, segment and its Housing and Infrastructure Products, or HIP, segment. President and CEO Jean-Marc Gilson said the quarter benefited from higher PEM selling prices, cost savings from the company’s profitability program and continued volume growth in HIP despite soft North American residential construction activity.

PEM generated second-quarter EBITDA of $416 million, up $364 million from the second quarter of 2025 and up $380 million sequentially. Westlake attributed the improvement to a 14% year-over-year increase in average selling prices, benefits from its profitability-improvement plan, and higher sales volumes excluding the effect of plant closures. Sequentially, average PEM selling prices increased 21%, while natural gas and ethane costs declined.

Gilson said higher global oil prices during the quarter raised costs for competitors in regions such as Asia and Europe, while Westlake’s North American operations benefited from lower-cost natural gas and natural gas liquids feedstocks. “Our natural gas and ethane cost in North America actually declined significantly from the first quarter due to warmer weather and an increase in associated gas from higher U.S. oil drilling activity,” Gilson said.

PEM sales volume increased 2% from the first quarter, led by higher caustic soda, chlorine and epoxy resin volumes, partially offset by lower polyethylene and PVC resin volumes. The company said polyethylene prices exited the second quarter slightly below the quarterly average but above pre-conflict levels, while PVC resin prices ended the quarter at or near their highest levels of the year. For the second half, Westlake expects PEM volumes to reflect continued steady global demand. Gilson said future pricing trends will be heavily influenced by global oil prices. The company expects polyethylene prices at year-end to be higher than in the prior year, while it expects second-half caustic pricing to average above first-half levels. Chlorine pricing is expected to be roughly flat in the second half, according to Chief Financial Officer Jon Baksht.

Westlake said its three-pillar profitability-improvement plan contributed about $150 million to year-over-year EBITDA improvement during the second quarter and about $300 million during the first half. The company continues to target $600 million in EBITDA benefits for full-year 2026. The plan includes footprint...