Core Viewpoint - Westlake Corporation is conducting a conference call to update stakeholders on its PEM Profitability Improvement Plan, indicating a focus on enhancing profitability within its Performance and Essential Materials segment [1][2]. Group 1: Management Team and Structure - The conference call features key members of Westlake's management team, including the President and CEO, Executive Vice President and Chief Financial Officer, highlighting the leadership's involvement in the profitability improvement efforts [2][3]. - The company operates through two reporting segments: Performance and Essential Materials (PEM) and Housing and Infrastructure Products (HIP), which are critical to understanding its operational focus [3]. Group 2: Conference Call Details - The call is structured to begin with opening remarks from the CEO, followed by a financial and operational summary from the CFO, indicating a systematic approach to communicating updates [3].

Summary of Westlake Corporation PEM Profitability Improvement Plan Update Conference Call Company Overview - **Company**: Westlake Corporation - **Segments**: Performance and Essential Materials (PEM), Housing and Infrastructure Products (HIP) Key Points and Arguments Profitability Challenges - PEM's earnings and margins have declined due to global overcapacity in materials, particularly in the chlorovinyl chain and styrene [5][10] - The overcapacity has led to downward pressure on sales prices, resulting in unprofitable conditions at higher-cost manufacturing sites [5][10] Actions Taken - Westlake announced the closure of several higher-cost chlorovinyl and styrene plants in North America, specifically: - VCM plant in Lake Charles North - Chlor-alkali plant in Lake Charles South - PVC facility in Aberdeen, Mississippi - Styrene plant in Lake Charles - These closures are part of the PEM Profitability Improvement Plan and are expected to reduce global chlorovinyl capacity by 11% to 15% [8][9] Financial Impacts - Expected annual EBITDA benefit of approximately $100 million starting in 2026 from these actions [6][10] - Additional cash savings of $75 million in 2026 from avoided capital spending and turnaround costs, leading to total free cash flow savings of approximately $175 million [6][10] - Total pre-tax charges related to the closures are estimated at $415 million, including non-cash charges and employee severance costs [9][10] Market Conditions - Global macroeconomic conditions remain challenging, with weak industrial and manufacturing demand impacting sales prices and margins [11] - Fourth quarter EBITDA for PEM is expected to be $125 million to $150 million lower than the third quarter of 2025 [11][43] Future Outlook - The optimization actions are expected to position Westlake as a leading global chlorovinyl producer with a better cost structure [12][60] - The company anticipates that the manufacturing footprint optimization will contribute a total of $600 million in EBITDA improvement starting in 2026 [10][12] Strategic Focus - The focus of the closures is on improving cost positions rather than directly addressing supply-side issues [25][76] - The company plans to continue servicing export markets with better-positioned assets, aiming for improved profitability [76] Additional Important Information - The decision to close plants was made after extensive analysis, emphasizing the need for a path to improve EBITDA and return on investment [12][60] - The company has not ruled out the possibility of restarting the closed plants if market conditions improve in the future [73][76] - The impact of these closures on the overall PVC, caustic, and chlorine markets is still uncertain, but the company aims to operate at a lower cost position moving forward [24][25][76]

Footprint Optimization - The company is shutting down three North American chlorovinyl plants and exiting the styrene business due to unfavorable market conditions and high costs[2, 5] - These closures are expected to improve annual EBITDA by approximately $100 million and generate free cash flow savings of around $175 million in 2026[2, 9] - The company anticipates one-time charges of about $415 million in 4Q'25, including a $357 million non-cash accelerated depreciation, amortization, and asset write-off charge[9] - The shutdown includes the following capacity reductions: 825 million lbs of Chlorine (11% of WLK global capacity), 910 million lbs of VCM (11% of WLK global capacity), 1,000 million lbs of PVC (15% of WLK global capacity), and 570 million lbs of Styrene (100% of WLK global capacity)[5] Profitability Improvement Plan - The company's Profitability Improvement Plan aims to restore PEM's Return on Investment to an appropriate level[4] - The plan is expected to generate approximately $600 million per year of EBITDA uplift starting in 2026, with each of the three pillars contributing around $200 million[9, 10, 12] - The footprint optimization efforts, including North American chlorovinyls and styrene closures, are projected to contribute $100 million to the $200 million total from Footprint Optimization[10] - The plan has an expected payback period of less than one year on the $58 million cash costs required for execution[2, 9]