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Conference Call Scheduled for Friday, May 12, 2023 at 9:00 AM ET

InfuSystem Reports First Quarter 2023 Financial Results

Record Net Revenues of $30.4 million Representing 13% Growth From the Prior Year

ROCHESTER HILLS, Mich.–(BUSINESS WIRE)–InfuSystem Holdings, Inc. (NYSE American: INFU), (“InfuSystem” or the “Company”), a leading national health care service provider, facilitating outpatient care for durable medical equipment manufacturers and health care providers, today reported financial results for the first quarter ended March 31, 2023.

2023 First Quarter Overview:

• Net revenues totaled $30.4 million, an increase of 13% vs. prior year.
  • Integrated Therapy Services (“ITS”) net revenue was $18.8 million, an increase of 13% vs. prior year.

  • Durable Medical Equipment Services (“DME Services”) net revenue was $11.6 million, an increase of 15% vs. prior year.

• Gross profit was $15.5 million, an increase of 1% vs. prior year.

• Gross margin was 51.2%, a decrease of 6.2% vs. prior year.
  • ITS gross margin was 61.5%, a decrease of 3.0% vs. prior year.

  • DME Services gross margin was 34.5%, a decrease of 11.2% vs. prior year.

• Net loss of $0.3 million, or $(0.02) per diluted share, flat vs. prior year.

• Adjusted earnings before interest, income taxes, depreciation, and amortization (“Adjusted EBITDA”) (non-GAAP) was $4.2 million, an increase of 2% vs. prior year.

• Reaffirming annual revenue and Adjusted EBITDA guidance.

Management Discussion

Richard DiIorio, chief executive officer of InfuSystem, said, “We are off to a strong start in 2023, exceeding our plan with solid top-line growth of 13% for the first quarter. InfuSystem achieved an important milestone with net quarterly revenue exceeding $30 million for the first time in company history. We had strong demand for our services during the quarter, resulting in DME growth of 15%, led by biomedical services and 13% growth in ITS with solid growth coming from all three of our therapies; Oncology, Wound Care and Pain Management. These positive results are reflective of our team’s execution and continued commitment to delivering industry-leading service.”

“The growth in our biomedical service business resulted from increased volume of onboarding new facilities and devices for our tier-one global healthcare partner. This did impact our gross margin and profitability due to higher spending to enable the accelerated volumes. We are closely monitoring expenses as we ramp the business, seeking to optimize the team for both short-term onboarding opportunities and long-term operating efficiencies to enhance margins.”

“In Wound Care, our objective is to provide leading-edge solutions that promote healing, improve patient outcomes, and lower the cost of care through our SI Wound Care partnership. An important early component of that strategy is the expansion of distribution partnerships to provide our customers with multiple options that promote healing throughout the continuum of care. Our new distribution agreement with Genadyne for Negative Pressure Wound Therapy devices and associated products, which was announced on April 25, 2023, represents an important step in achieving our goals.”

“We look forward to building on the momentum established in the first quarter. The entire InfuSystem team is dedicated to achieving consistent operational and financial growth in the coming quarters and in the years to come. Consistent execution is an important goal for all of us at InfuSystem and we owe it to our loyal shareholders,” concluded Mr. DiIorio.

2023 First Quarter Financial Review

Net revenues for the quarter ended March 31, 2023 were $30.4 million, an increase of $3.6 million, or 13%, compared to $26.8 million for the quarter ended March 31, 2022. Both of the Company’s reporting segments contributed to this increase.

ITS net revenue of $18.8 million increased $2.1 million, or 13%, during the first quarter of 2023 as compared to the same prior year period. This increase was primarily attributable to additional treatment volume in Oncology and Pain Management, revenue from sales-type leases of NPWT pumps, improved third party payer collections on billings and higher average prices. Net revenue in Oncology for the three-month period of 2023 represented the largest increase totaling $1.6 million, or a 11% increase compared to the same prior year period. This was followed by an increase in revenue for Wound Care which increased by $0.2 million, or 63% compared to the same prior year period, mainly due to an increase in sales of equipment on sales-type leases partially offset by lower treatment volumes. Pain Management net revenue of 2023 increased by $0.3 million, which represented an increase of 28% as compared to the three-month period of 2022.

DME Services net revenue of $11.6 million (exclusive of inter-segment revenues) increased $1.5 million, or 15%, during the first quarter of 2023 as compared to the same prior year period. This increase included higher biomedical services revenue which increased by $1.7 million, or 98% compared to the same prior year period, partially offset by lower equipment rentals totaling $0.3 million. The increased biomedical revenue was mainly due to a new master services agreement with a leading global healthcare technology and diagnostic company that was launched in April 2022.

Gross profit for the first quarter of 2023 of $15.5 million increased $0.2 million, or 1.1%, from $15.4 million for the first quarter of 2022. The increase was driven by the increase in net revenue partially offset by lower gross profit percentage of net revenue (“gross margin”). Gross margin was 51.2% during the first quarter of 2023 as compared to 57.4% during the same prior year period, a decrease of 6.2%. This decrease was due to a decrease in the gross margin for both the DME Services and ITS segments.

ITS gross profit was $11.5 million during the first quarter of 2023, representing an increase of $0.8 million, or 7.5%, compared to the same prior year period. The improvement reflected an increase in net revenues partially offset by a lower gross margin, which decreased from the prior year by 3.0% to 61.5%. The lower gross margin was the result of a $0.4 million increase in the adjustment recorded for pump disposal expenses and an impact from unfavorable product mix favoring lower margin revenues. These increased expenses were partially offset by improved third party payer collections on billings and improved coverage of fixed costs from the higher net revenue. Pump disposal expenses include retirements of damaged pumps and reserves for missing pumps. The increase was mainly related to an updated estimate of the volume of pumps considered missing based on pump return data and physical inventories. The lower margin mix was primarily related to the increase in NPWT pump sales leases.

DME Services gross profit during the first quarter of 2023 was $4.0 million, representing a decrease of $0.6 million, or 13.6%, compared to the same prior year period. This decrease was due to was due to a decrease in gross margin, which was partially offset by the increase in net revenues. The DME gross margin was 34.5% during the current period, which was 11.2% lower than the same prior year period. This decrease was due to an increase in labor costs related to an increase in the number of biomedical technicians and other expenses associated with the rapid on-boarding of the new master services agreement. Some of the additional labor costs include training activities and other labor expenses associated with building a larger team in order to have the capacity required to support much higher planned revenue volume. Over time, higher revenue levels are expected to absorb a portion of the increased labor costs resulting in an improved gross margin. Other increased expenses associated with the on-boarding ramp, which include increased travel expenses and employee acquisitions costs, are expected to decrease in the future. We currently estimate that the additional expenses incurred during the three-month period of 2023 that will either be absorbed or reduced totaled approximately $1.3 million.

Selling and marketing expenses for the first quarter of 2023 were $3.2 million, a decrease of 2.9% from $3.3 million for the first quarter of 2022. Selling and marketing expenses as a percentage of net revenues decreased to 10.6% compared to the same prior year period at 12.4%. This decrease reflected improved coverage of fixed costs from the higher net revenue.

General and administrative (“G&A”) expenses for the first quarter of 2023 were $12.1 million, an increase of 2.1% from $11.8 million for the first quarter of 2022. The increase of $0.2 million was due to $0.2 million in additional audit expenses associated with additional requirements to comply with the Sarbanes-Oxley Act of 2002, higher travel expenses and other increases including higher personnel wages, healthcare, information technology and general business expenses. These increases were partially offset by a decrease in stock-based compensation expense of $0.3 million. G&A expenses as a percentage of net revenues for the first quarter of 2023, decreased to 39.7% compared to 44.2% for the same prior year period mainly reflecting improved net revenue coverage of fixed costs.

Net loss for the first quarter of 2023 was $0.3 million, or $(0.02) per diluted share, compared to a net loss of $0.4 million, or $(0.02) per diluted share for the first quarter of 2022.

Adjusted EBITDA, a non-GAAP measure, for the first quarter of 2023 was $4.2 million, or 13.9% of net revenue, and increased by $0.1 million, or 2.2%, compared to Adjusted EBITDA for the same prior year quarter of $4.1 million, or 15.5% of prior period net revenue.

Balance sheet, cash flows and liquidity

During the three-month period ended March 31, 2023, operating cash flow was a use of cash totaling $0.2 million. During the same period in 2022 operating cash flow was a source of cash totaling $4.1 million. The change reflected lower operating margins during 2023 including the extra on-boarding expenses related to the biomedical services contract and increases in working capital including higher accounts receivable and inventories associated with the growth in sales volume during the period. Capital expenditures, which include purchases of medical devices, totaled $4.3 million during the three-month period of 2023 which was $1.2 million, or 38%, higher than the amount purchased during the same prior year period, an amount which was partially offset by higher proceeds from the sale of medical equipment which increased by $0.3 million. Additionally, during the three-month period of 2023, $0.2 million was used to repurchase the Company’s common stock under a stock repurchase plan authorized on June 30, 2021.

As of March 31, 2023, available liquidity totaled $38.3 million and consisted of $38.0 million in available borrowing capacity under the Company’s revolving line of credit plus cash and cash equivalents of $0.3 million. Net debt, a non-GAAP measure (calculated as total debt of $36.4 million less cash and cash equivalents of $0.3 million) as of March 31, 2023 was $36.1 million representing an increase of $3.1 million as compared to net debt of $33.0 million as of December 31, 2022 (calculated as total debt of $33.2 million less cash and cash equivalents of $0.2 million). Our ratio of Adjusted EBITDA to net debt (non-GAAP) for the last four quarters was 1.73 to 1.00 (calculated as net debt of $36.1 million divided by Adjusted EBITDA of $20.8 million).

On April 26, 2023, we amended the 2021 credit agreement in order to extend the term of the facility and to replace LIBOR with Term SOFR as a benchmark interest rate. The new expiration date of the 2021 Credit Agreement is April 26, 2028.

Full Year 2023 Guidance

InfuSystem is reaffirming its annual guidance for the full year 2023 with net revenue growth estimated to be in the range of 8% to 10%, or approximately $118 million to $121 million in net revenues and Adjusted EBITDA to be greater than $22 million. The Company is forecasting Adjusted EBITDA margin (non-GAAP) to be greater than 19% for the year.

The full year 2023 guidance reflects management’s current expectation for operational performance, given the current market conditions. This includes our best estimate of revenue and Adjusted EBITDA and does not include any material revenue from SI Wound Care LLC. The Company and its businesses are subject to certain risks, including those risk factors discussed in our most recent annual report on Form 10-K for the year ended December 31, 2022, filed on March 16, 2023. The financial guidance is subject to risks and uncertainties applicable to all forward-looking statements as described elsewhere in this press release.

Conference Call

The Company will conduct a conference call for all interested investors on Thursday, May 4, 2023, at 9:00 a.m. Eastern Time to discuss its first quarter 2023 financial results. The call will include discussion of Company developments, forward-looking statements and other material information about business and financial matters.

To participate in this call, please dial (833) 366-1127 or (412) 902-6773, or listen via a live webcast, which is available in the Investors section of the Company’s website at https://ir.infusystem.com/. A replay of the call will be available by visiting https://ir.infusystem.com/ for the next 90 days or by calling (877) 344-7529 or (412) 317-0088, confirmation code 9911637, through May 11, 2023.

Non-GAAP Measures

This press release contains information prepared in conformity with GAAP as well as non-GAAP financial information. Non-GAAP financial measures presented in this press release include EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, net debt and Adjusted EBITDA to net debt ratio. The Company believes that the non-GAAP financial measures presented in this press release provide useful information to the Company’s management, investors and other interested parties about the Company’s operating performance because they allow them to understand and compare the Company’s operating results during the current periods to the prior year periods in a more consistent manner. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP, and similarly titled non-GAAP measures may be calculated differently by other companies. The Company calculates those non-GAAP measures by adjusting for non-recurring or non-core items that are not part of the normal course of business. A reconciliation of those measures to the most directly comparable GAAP measures is provided in the accompanying schedule, titled “GAAP to Non-GAAP Reconciliation” below. Future period non-GAAP guidance includes adjustments for items not indicative of our core operations, which may include, without limitation, items included in the accompanying schedule below. Such adjustments may be affected by changes in ongoing assumptions and judgments, as well as non-core, nonrecurring, unusual or unanticipated changes, expenses or gains or other items that may not directly correlate to the underlying performance of our business operations. The exact amounts of these adjustments are not currently determinable but may be significant. It is therefore not practicable to provide the comparable GAAP measures or reconcile this non-GAAP guidance to the most comparable GAAP measures and, therefore, such comparable GAAP measures and reconciliations are excluded from this release in reliance upon applicable SEC staff guidance.

About InfuSystem Holdings, Inc.

InfuSystem Holdings, Inc. (NYSE American: INFU), is a leading national health care service provider, facilitating outpatient care for durable medical equipment manufacturers and health care providers. INFU services are provided under a two-platform model. The first platform is Integrated Therapy Services (“ITS”), providing the last-mile solution for clinic-to-home healthcare where the continuing treatment involves complex durable medical equipment and services. The ITS segment is comprised of Oncology, Pain Management, Wound Therapy and Lymphedema businesses. The second platform, Durable Medical Equipment Services (“DME Services”), supports the ITS platform and leverages strong service orientation to win incremental business from its direct payer clients. The DME Services segment is comprised of direct payer rentals, pump and consumable sales, and biomedical services and repair. Headquartered in Rochester Hills, Michigan, the Company delivers local, field-based customer support and also operates Centers of Excellence in Michigan, Kansas, California, Massachusetts, Texas and Ontario, Canada.

Forward-Looking Statements

The financial results in this press release reflect preliminary results, which are not final until the Company’s quarterly report on Form 10-Q for the quarter year ended March 31, 2023 is filed. In addition, certain statements contained in this press release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, such as statements relating to future actions, our share repurchase program and capital allocation strategy, business plans, strategic partnerships, growth initiatives, objectives and prospects, future operating or financial performance, guidance and expected new business relationships and the terms thereof (including estimated potential revenue under new or existing contracts). The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “goal,” “expect,” “strategy,” “future,” “likely,” variations of such words, and other similar expressions, as they relate to the Company, are intended to identify forward-looking statements. Forward-looking statements are subject to factors, risks and uncertainties that could cause actual results to differ materially, including, but not limited to, our ability to successfully execute on our growth initiatives and strategic partnerships, our ability to enter into definitive agreements for the new business relationships on expected terms or at all, our ability to generate estimated potential revenue amounts under new or existing contracts, the uncertain impact of the COVID-19 pandemic, our dependence on estimates of collectible revenue, potential litigation, changes in third-party reimbursement processes, changes in law, global financial conditions and recessionary risks, rising inflation and interest rates, supply chain disruptions, systemic pressures in the banking sector, including disruptions to credit markets, the Company’s ability to remediate its previously disclosed material weaknesses in internal control over financial reporting, contributions from acquired businesses or new business lines, products or services and other risk factors disclosed in the Company’s most recent annual report on Form 10-K and, to the extent applicable, quarterly reports on Form 10-Q. Our strategic partnerships are subject to similar factors, risks and uncertainties. All forward-looking statements made in this press release speak only as of the date hereof. We do not undertake any obligation to update any forward-looking statements to reflect future events or circumstances, except as required by law.

Additional information about InfuSystem Holdings, Inc. is available at www.infusystem.com.

FINANCIAL TABLES FOLLOW INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
	Three Months Ended March 31,
(in thousands, except share and per share data)	2023				2022
Net revenues	$	30,370			$	26,763
Cost of revenues		14,830				11,396
Gross profit		15,540				15,367
Selling, general and administrative expenses:
Provision for doubtful accounts		114				47
Amortization of intangibles		248				710
Selling and marketing		3,224				3,319
General and administrative		12,061				11,816
Total selling, general and administrative		15,647				15,892
Operating loss		(107	)			(525	)
Other expense:
Interest expense		(484	)			(277	)
Other income expense		(35	)			(28	)
Loss before income taxes		(626	)			(830	)
Benefit from income taxes		302				462
Net loss	$	(324	)		$	(368	)
Net loss per share:
Basic	$	(0.02	)		$	(0.02	)
Diluted	$	(0.02	)		$	(0.02	)
Weighted average shares outstanding:
Basic		20,853,018				20,609,372
Diluted		20,853,018				20,609,372

INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS SEGMENT REPORTING (UNAUDITED)
		Three Months Ended March 31,								Better/ (Worse)
(in thousands)		2023				2022
Net revenues:
ITS		$	18,774			$	16,641			$	2,133
DME Services (inclusive of inter-segment revenues)			13,226				11,610				1,616
Less: elimination of inter-segment revenues			(1,630	)			(1,488	)			(142	)
Total			30,370				26,763				3,607
Gross profit (inclusive of certain inter-segment allocations) (a):
ITS			11,541				10,738				803
DME Services			3,999				4,629				(630	)
Total		$	15,540			$	15,367			$	173

(a)	Inter-segment allocations are for cleaning and repair services performed on medical equipment.

INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES GAAP TO NON-GAAP RECONCILIATION (UNAUDITED)
NET LOSS TO EBITDA, ADJUSTED EBITDA, NET LOSS MARGIN AND ADJUSTED EBITDA MARGIN:
		Three Months Ended March 31,
(in thousands)		2023				2022
GAAP net loss		$	(324	)		$	(368	)
Adjustments:
Interest expense			484				277
Income tax benefit			(302	)			(462	)
Depreciation			2,955				2,706
Amortization			248				710
Non-GAAP EBITDA		$	3,061			$	2,863
Stock compensation costs			720				1,047
Medical equipment reserve and disposals (1)			430				170
SOX readiness costs			—				40
Certain other non-recurring costs			24				22
Non-GAAP Adjusted EBITDA		$	4,235			$	4,142
GAAP Net Revenues		$	30,370			$	26,763
Net Loss Margin (2)			(1.1	)%			(1.4	)%
Non-GAAP Adjusted EBITDA Margin (3)			13.9	%			15.5	%

(1)	Amounts represent a non-cash expense recorded to adjust the reserve for missing medical equipment and/or the disposal of medical equipment and is being added back due to its similarity to depreciation.
(2)	Net Loss Margin is defined as GAAP Net Loss as a percentage of GAAP Net Revenues.
(3)	Non-GAAP Adjusted EBITDA Margin is defined as Non-GAAP Adjusted EBITDA as a percentage of GAAP Net Revenues.

INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
		As of
(in thousands, except par value and share data)		March 31, 2023				December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents		$	256			$	165
Accounts receivable, net			18,266				16,871
Inventories			5,644				4,821
Other current assets			3,752				2,922
Total current assets			27,918				24,779
Medical equipment for sale or rental			3,042				2,790
Medical equipment in rental service, net of accumulated depreciation			38,620				39,450
Property & equipment, net of accumulated depreciation			4,391				4,385
Goodwill			3,710				3,710
Intangible assets, net			8,188				8,436
Operating lease right of use assets			4,295				4,168
Deferred income taxes			9,989				9,625
Derivative financial instruments			1,683				1,965
Other assets			425				80
Total assets		$	102,261			$	99,388
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	7,368			$	8,341
Current portion of long-term debt			—				—
Other current liabilities			6,562				6,126
Total current liabilities			13,930				14,467
Long-term debt, net of current portion			36,386				33,157
Operating lease liabilities, net of current portion			3,684				3,761
Total liabilities			54,000				51,385
Stockholders’ equity:
Preferred stock, $0.0001 par value: authorized 1,000,000 shares; none issued			—				—
Common stock, $0.0001 par value: authorized 200,000,000 shares; 20,931,147 issued and outstanding as of March 31, 2023 and 20,781,977 issued and outstanding as of December 31, 2022			2				2
Additional paid-in capital			106,810				105,856
Accumulated other comprehensive income			1,270				1,489
Retained deficit			(59,821	)			(59,344	)
Total stockholders’ equity			48,261				48,003
Total liabilities and stockholders’ equity		$	102,261			$	99,388

INFUSYSTEM HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
		Three Months Ended March 31,
(in thousands)		2023				2022
OPERATING ACTIVITIES
Net loss		$	(324	)		$	(368	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Provision for doubtful accounts			114				47
Depreciation			2,955				2,706
Loss on disposal of and reserve adjustments for medical equipment			450				275
Gain on sale of medical equipment			(883	)			(228	)
Amortization of intangible assets			248				710
Amortization of deferred debt issuance costs			18				18
Stock-based compensation			720				1,047
Deferred income taxes			(302	)			(462	)
Changes in assets – (increase)/decrease:
Accounts receivable			(961	)			(1,278	)
Inventories			(823	)			61
Other current assets			(830	)			(50	)
Other assets			(846	)			(41	)
Changes in liabilities – increase:
Accounts payable and other liabilities			313				1,641
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES			(151	)			4,078
INVESTING ACTIVITIES
Purchase of medical equipment			(3,968	)			(2,931	)
Purchase of property and equipment			(317	)			(178	)
Proceeds from sale of medical equipment, property and equipment			1,234				966
NET CASH USED IN INVESTING ACTIVITIES			(3,051	)			(2,143	)
FINANCING ACTIVITIES
Principal payments on long-term debt			(13,683	)			(10,696	)
Cash proceeds from long-term debt			16,894				12,529
Common stock repurchased as part of share repurchase program			(153	)			(4,006	)
Common stock repurchased to satisfy statutory withholding on employee stock-based compensation plans			(324	)			(54	)
Cash proceeds from stock plans			559				511
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES			3,293				(1,716	)
Net change in cash and cash equivalents			91				219
Cash and cash equivalents, beginning of period			165				186
Cash and cash equivalents, end of period		$	256			$	405

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230504005471/en/

Joe Dorame, Joe Diaz & Robert Blum

Lytham Partners, LLC

602-889-9700

KEYWORDS: Michigan United States North America

INDUSTRY KEYWORDS: General Health Health Medical Supplies Medical Devices

MEDIA:

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Westlake Chemical Partners LP Announces First Quarter 2023 Results

• Declared quarterly distribution of $0.4714 per unit; 35^th consecutive quarterly distribution

HOUSTON–(BUSINESS WIRE)–
Westlake Chemical Partners LP (NYSE: WLKP) (the “Partnership”) today reported net income attributable to the Partnership in the first quarter of 2023 of $14.9 million, or $0.42 per limited partner unit, a decrease of $1.3 million compared to first quarter 2022 net income of $16.2 million. The Partnership’s net income in the first quarter of 2023 was the result of strong production volumes with the decrease in net income compared to the first quarter of 2022 attributable to higher interest expense. Cash flows from operating activities in the first quarter of 2023 were $144.9 million, an increase of $40.1 million compared to first quarter 2022 cash flows from operating activities of $104.8 million. The increase was primarily due to favorable working capital changes. For the three months ended March 31, 2023, MLP distributable cash flow was $17.6 million, a decrease of $1.7 million compared to first quarter 2022 MLP distributable cash flow. The decrease in MLP distributable cash flow was primarily attributable to higher interest expense partially offset by the higher earnings and lower maintenance capital spending at OpCo.

First quarter 2023 net income attributable to the Partnership of $14.9 million decreased by $1.9 million compared to fourth quarter 2022 net income of $16.8 million due to higher interest expense. First quarter 2023 cash flows from operating activities of $144.9 million increased by $22.3 million compared to fourth quarter 2022 cash flows from operating activities of $122.6 million due to the timing of payments from Westlake related to the 2022 buyer deficiency fee. First quarter 2023 MLP distributable cash flow of $17.6 million decreased by $2.7 million compared to fourth quarter 2022 MLP distributable cash flow of $20.3 million, primarily due to higher interest expense and higher maintenance capital spending at OpCo.

“The Partnership’s performance in the first quarter of 2023 reflects strong production volumes and a modest improvement in third-party ethylene margins from the fourth quarter of 2022. We remain well positioned to deliver solid earnings and cash flows as we continue to benefit from robust production levels paired with our sales agreement with Westlake that delivers a fixed margin on 95% of our production,” said Albert Chao, President and Chief Executive Officer. “As we look to the remainder of 2023, we have already sold or contracted the majority of our third-party volume at favorable prices compared to the second half of 2022, and we are excited about the strong underlying fundamentals of the Partnership and continuing to deliver a premium value and predictable cash flows to our unitholders.”

On May 2, 2023, the Partnership announced that the Board of Directors of Westlake Chemical Partners GP LLC had approved a quarterly distribution for the first quarter of 2023 of $0.4714 per unit to be payable on May 26, 2023 to unitholders of record as of May 12, 2023, representing the 35^th consecutive quarterly distribution to our unitholders. MLP distributable cash flow provided trailing twelve-month coverage of 1.12x the declared distributions for the first quarter of 2023.

OpCo’s Ethylene Sales Agreement with Westlake is designed to provide for stable and predictable cash flows. The agreement provides that 95% of OpCo’s ethylene production is sold to Westlake for a cash margin of $0.10 per pound, net of operating costs, maintenance capital expenditures and reserves for future turnaround expenditures.

The statements in this release and the related teleconference relating to matters that are not historical facts, such as those with respect to the ability to deliver value, returns, predictable cash flows and distributions to unitholders, demand for ethylene and expected margins and production volumes, contracted volumes, the expectation that strong distributions will continue, and the nature of the sales agreement with Westlake, are forward-looking statements. These forward-looking statements are subject to significant risks and uncertainties. Actual results could differ materially, based on factors including, but not limited to, the COVID-19 pandemic and the response thereto; operating difficulties; the volume of ethylene that we are able to sell; the price at which we are able to sell ethylene; changes in the price and availability of feedstocks; changes in prevailing economic conditions, including inflation, interest rates and possible recession; actions and commitments of Westlake Corporation; actions of third parties; inclement or hazardous weather conditions, including flooding, and the physical impacts of climate change; environmental hazards; changes in laws and regulations (or the interpretation thereof); inability to acquire or maintain necessary permits; inability to obtain necessary production equipment or replacement parts; technical difficulties or failures; labor disputes; difficulty collecting receivables; inability of our customers to take delivery; fires, explosions or other industrial accidents; our ability to borrow funds and access capital markets; and other risk factors. For more detailed information about the factors that could cause actual results to differ materially, please refer to the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC in March 2023.

This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of the Partnership’s distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership’s distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.

Use of Non-GAAP Financial Measures

This release makes reference to certain “non-GAAP” financial measures, such as MLP distributable cash flow and EBITDA. For this purpose, a non-GAAP financial measure is generally defined by the Securities and Exchange Commission (“SEC”) as a numerical measure of a registrant’s historical or future financial performance, financial position or cash flows that (1) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the registrant; or (2) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. We report our financial results in accordance with U.S. GAAP, but believe that certain non-GAAP financial measures, such as MLP distributable cash flow and EBITDA, provide useful supplemental information to investors regarding the underlying business trends and performance of our ongoing operations and are useful for period-over-period comparisons of such operations. These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the financial measures prepared in accordance with U.S. GAAP. We define MLP distributable cash flow as distributable cash flow less distributable cash flow attributable to Westlake Corporation’s noncontrolling interest in OpCo and distributions attributable to the incentive distribution rights holder. MLP distributable cash flow does not reflect changes in working capital balances. We define EBITDA as net income before interest expense, income taxes, depreciation and amortization. MLP distributable cash flow and EBITDA are non-GAAP supplemental financial measures that management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess our operating performance as compared to other publicly traded partnerships, our ability to incur and service debt and fund capital expenditures and the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities. Reconciliations of MLP distributable cash flow to net income and to net cash provided by operating activities and of EBITDA to net income, income from operations and net cash provided by operating activities can be found in the financial schedules at the end of this press release.

Westlake Chemical Partners LP

Westlake Chemical Partners is a limited partnership formed by Westlake Corporation to operate, acquire and develop ethylene production facilities and other qualified assets. Headquartered in Houston, the Partnership owns a 22.8% interest in Westlake Chemical OpCo LP. Westlake Chemical OpCo LP’s assets consist of three ethylene production facilities in Calvert City, Kentucky, and Lake Charles, Louisiana and an ethylene pipeline. For more information about Westlake Chemical Partners LP, please visit http://www.wlkpartners.com.

Westlake Chemical Partners LP Conference Call Information:

A conference call to discuss Westlake Chemical Partners’ first quarter 2023 results will be held Thursday, May 4, 2023 at 1:00 PM Eastern Time (12:00 PM Central Time). To access the conference call, it is necessary to pre-register at https://register.vevent.com/register/BI16a50f5d0c114b199639e3cf58096652. Once registered, you will receive a phone number and unique PIN number.

A replay of the conference call will be available beginning two hours after its conclusion. The conference call and replay will be available via webcast at https://edge.media-server.com/mmc/p/cmm2ahd6.

WESTLAKE CHEMICAL PARTNERS LP (“WESTLAKE PARTNERS”) CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
		Three Months Ended March 31,
		2023				2022
		(In thousands of dollars, except per unit data)
Revenue
Net sales—Westlake Corporation (“Westlake”)		$	257,471			$	290,657
Net co-products, ethylene and other sales—third parties			50,206				71,743
Total net sales			307,677				362,400
Cost of sales			201,604				270,961
Gross profit			106,073				91,439
Selling, general and administrative expenses			7,914				8,227
Income from operations			98,159				83,212
Other income (expense)
Interest expense—Westlake			(7,315	)			(2,199	)
Other income (expense), net			820				(25	)
Income before income taxes			91,664				80,988
Provision for income taxes			212				163
Net income			91,452				80,825
Less: Net income attributable to noncontrolling interest in Westlake Chemical OpCo LP (“OpCo”)			76,560				64,631
Net income attributable to Westlake Partners		$	14,892			$	16,194
Net income per limited partner unit attributable to Westlake Partners (basic and diluted)
Common units		$	0.42			$	0.46
Distributions declared per unit		$	0.4714			$	0.4714
MLP distributable cash flow		$	17,551			$	19,291
Distributions declared
Limited partner units—publicly and privately held		$	9,946			$	9,943
Limited partner units—Westlake			6,657				6,657
Total distributions declared		$	16,603			$	16,600
EBITDA		$	125,615			$	114,469

WESTLAKE CHEMICAL PARTNERS LP CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
		March 31, 2023				December 31, 2022
		(In thousands of dollars)
ASSETS
Current assets
Cash and cash equivalents		$	104,588			$	64,782
Receivable under the Investment Management Agreement—Westlake			52,079				64,996
Accounts receivable, net—Westlake			50,453				90,965
Accounts receivable, net—third parties			19,691				20,030
Inventories			5,466				4,715
Prepaid expenses and other current assets			153				305
Total current assets			232,430				245,793
Property, plant and equipment, net			977,469				990,213
Other assets, net			132,779				135,973
Total assets		$	1,342,678			$	1,371,979
LIABILITIES AND EQUITY
Current liabilities (accounts payable and accrued and other liabilities)		$	51,482			$	66,941
Long-term debt payable to Westlake			399,674				399,674
Other liabilities			1,644				1,656
Total liabilities			452,800				468,271
Common unitholders—publicly and privately held			479,617				480,643
Common unitholder—Westlake			53,173				53,859
General partner—Westlake			(242,572	)			(242,572	)
Total Westlake Partners partners’ capital			290,218				291,930
Noncontrolling interest in OpCo			599,660				611,778
Total equity			889,878				903,708
Total liabilities and equity		$	1,342,678			$	1,371,979

WESTLAKE CHEMICAL PARTNERS LP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
		Three Months Ended March 31,
		2023				2022
		(In thousands of dollars)
Cash flows from operating activities
Net income		$	91,452			$	80,825
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization			26,636				31,282
Net loss on disposition and other			942				3,962
Other balance sheet changes			25,830				(11,259	)
Net cash provided by operating activities			144,860				104,810
Cash flows from investing activities
Additions to property, plant and equipment			(12,656	)			(20,342	)
Investments with Westlake under the Investment Management Agreement			(90,116	)			(55,000	)
Maturities of investments with Westlake under the Investment Management Agreement			103,000				50,000
Net cash provided by (used for) investing activities			228				(25,342	)
Cash flows from financing activities
Proceeds from debt payable to Westlake			39,000				—
Repayment of debt payable to Westlake			(39,000	)			—
Quarterly distributions to noncontrolling interest retained in OpCo by Westlake			(88,678	)			(60,688	)
Quarterly distributions to unitholders			(16,604	)			(16,603	)
Net cash used for financing activities			(105,282	)			(77,291	)
Net increase in cash and cash equivalents			39,806				2,177
Cash and cash equivalents at beginning of period			64,782				17,057
Cash and cash equivalents at end of period		$	104,588			$	19,234

WESTLAKE CHEMICAL PARTNERS LP RECONCILIATION OF MLP DISTRIBUTABLE CASH FLOW TO NET INCOME AND NET CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited)
		Three Months Ended December 31,				Three Months Ended March 31,
		2022				2023				2022
		(In thousands of dollars)
Net cash provided by operating activities		$	122,574			$	144,860			$	104,810
Changes in operating assets and liabilities and other			(31,314	)			(53,408	)			(23,985	)
Net income			91,260				91,452				80,825
Add:
Depreciation, amortization and disposition of property, plant and equipment			29,711				27,003				34,253
Less:
Contribution to turnaround reserves			(7,364	)			(7,306	)			(7,204	)
Maintenance capital expenditures			(7,077	)			(8,024	)			(13,453	)
Distributable cash flow attributable to noncontrolling interest in OpCo			(86,269	)			(85,574	)			(75,130	)
MLP distributable cash flow		$	20,261			$	17,551			$	19,291

WESTLAKE CHEMICAL PARTNERS LP RECONCILIATION OF EBITDA TO NET INCOME, INCOME FROM OPERATIONS AND NET CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited)
		Three Months Ended December 31,				Three Months Ended March 31,
		2022				2023				2022
		(In thousands of dollars)
Net cash provided by operating activities		$	122,574			$	144,860			$	104,810
Changes in operating assets and liabilities and other			(31,314	)			(53,408	)			(23,985	)
Net income			91,260				91,452				80,825
Less:
Other income (expense), net			883				820				(25	)
Interest expense—Westlake			(4,704	)			(7,315	)			(2,199	)
Provision for income taxes			(195	)			(212	)			(163	)
Income from operations			95,276				98,159				83,212
Add:
Depreciation and amortization			29,392				26,636				31,282
Other income (expense), net			883				820				(25	)
EBITDA		$	125,551			$	125,615			$	114,469

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230429005013/en/

Contact—(713) 585-2900

Investors—Steve Bender

Media—L. Benjamin Ederington

KEYWORDS: Texas United States North America

INDUSTRY KEYWORDS: Oil/Gas Manufacturing Other Manufacturing Energy Chemicals/Plastics

MEDIA:

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Westlake Corporation Reports First Quarter 2023 Results

• Net income of $394 million increased 70% from fourth quarter 2022

HOUSTON–(BUSINESS WIRE)–
Westlake Corporation (NYSE: WLK) (the “Company” or “Westlake”) today announced first quarter 2023 results.

SUMMARY FINANCIAL HIGHLIGHTS ($ in millions except per share data)

		Three Months Ended March 31, 2023				Three Months Ended December 31, 2022				Three Months Ended March 31, 2022
Westlake Corporation
Net sales		$	3,356			$	3,299			$	4,056
Income from operations		$	536			$	327			$	1,032
Operating income margin			16%				10%				25%
Net income attributable to Westlake Corporation		$	394			$	232			$	756
Diluted earnings per common share		$	3.05			$	1.79			$	5.83
EBITDA		$	825			$	619			$	1,300
EBITDA margin			25%				19%				32%
Performance and Essential Materials (“PEM”) Segment
Net sales		$	2,349			$	2,361			$	2,832
Income from operations		$	403			$	219			$	879
Operating income margin			17%				9%				31%
EBITDA		$	615			$	443			$	1,071
EBITDA margin			26%				19%				38%
Housing and Infrastructure Products (“HIP”) Segment
Net sales		$	1,007			$	938			$	1,224
Income from operations		$	143			$	68			$	185
Operating income margin			14%				7%				15%
EBITDA		$	205			$	133			$	258
EBITDA margin			20%				14%				21%

BUSINESS HIGHLIGHTS

In the first quarter of 2023, Westlake achieved quarterly net sales of $3.4 billion, quarterly net income of $394 million and quarterly EBITDA of $825 million, which was an improvement from our fourth quarter of 2022 results of $3.3 billion, $232 million, and $619 million, respectively. Compared to the fourth quarter of 2022, the Company benefited from higher operating rates and sales volume in each segment, lower feedstock, fuel and power costs and achieving cost synergies from recent acquisitions, partially offset by modestly lower pricing in each segment.

Performance and Essential Materials average sales price decreased 3% while Housing and Infrastructure Products average sales prices decreased 2% from the fourth quarter of 2022. Overall sales prices for the Company decreased 3% sequentially from the previous quarter.

Sales volumes for Performance and Essential Materials increased 3% while Housing and Infrastructure Products sales volumes increased 10% from the fourth quarter of 2022. Overall sales volumes for the Company increased 5% sequentially from the previous quarter.

In the first quarter of 2023, PEM’s EBITDA margin increased to 26% from 19% in the fourth quarter of 2022 while HIP’s EBITDA margin increased to 20% from 14% over the same period of time.

EXECUTIVE COMMENTARY

“We are pleased with our first quarter of 2023 financial results, which improved from the fourth quarter of 2022 reflecting higher demand for our products and benefits from cost savings and synergies achieved as part of our cost improvement initiatives. While results were lower compared to the first quarter of 2022, we saw notable sequential improvement from the fourth quarter of 2022 in each of our segments, with increasing demand for PVC and epoxy resins and for our Housing and Infrastructure Products segment as customer destocking moderated. We also benefited from lower feedstock and energy costs as prices for electricity and natural gas normalized following elevated 2022 levels, particularly in Europe, and lower transportation, logistics and other costs as we captured additional cost synergies from recent acquisitions. The slowdown in U.S. residential construction that began in mid-2022 has continued so far in 2023, and reduced volumes in our HIP segment by 21% compared to the first quarter of 2022; however, importantly, despite the sharp volume decline HIP segment EBITDA margin of 20% was in line with the 21% reported in the prior-year period. We believe this is a testament to the stability and predictability of margins in the segment and our purposeful strategy to focus on pricing over volume,” said Albert Chao, President and Chief Executive Officer.

“While we are pleased with our start to the year, the macroeconomic backdrop remains uncertain. We remain mindful of the impact that rising interest rates and the potential for tightening lending standards could have on demand for our products. While the impact of these actions is difficult to predict, we are cautiously optimistic about our second quarter, which is typically our strongest of the year, while we continue to focus on areas within our control, including: maintaining our cost-focused culture, including attainment of cost synergies from recent acquisitions; achieving our ESG targets and innovating to solve sustainability challenges; and redeploying capital in a shareholder-friendly manner,” concluded Mr. Chao.

RESULTS

Consolidated Results

For the three months ended March 31, 2023, the Company reported quarterly net income of $394 million, or $3.05 per share, on net sales of $3,356 million. The year-over-year decrease in net income of $362 million from the first quarter of 2022 was primarily due to lower average sales prices and integrated margins in Performance Materials and lower production and sales volumes, especially in Housing and Infrastructure Products.

First quarter 2023 net income of $394 million increased by $162 million sequentially as compared to the fourth quarter of 2022. The sequential increase in net income compared to the prior quarter was primarily due to lower feedstock and energy costs in Performance and Essential Materials and higher sales volumes in Housing and Infrastructure Products as customer destocking activity moderated from elevated levels in the prior quarter. These impacts were partially offset by lower average sales prices for Performance Materials.

EBITDA (earnings before interest expense, income taxes, depreciation and amortization) of $825 million for the first quarter of 2023 decreased by $475 million compared to first quarter 2022 EBITDA of $1,300 million. First quarter 2023 EBITDA increased by $206 million compared to fourth quarter 2022 EBITDA of $619 million. A reconciliation of EBITDA to net income, income from operations, and net cash provided by operating activities can be found in the financial schedules at the end of this press release.

Cash and Debt

Net cash provided by operating activities was $512 million for the first quarter of 2023. As of March 31, 2023, cash and cash equivalents were $2,414 million and total debt was $4,892 million. Capital expenditures were $267 million for the first quarter of 2023. For the first quarter of 2023, free cash flow (net cash provided by operating activities less capital expenditures) was $245 million, a decrease of $192 million as compared to the first quarter of 2022, primarily due to lower net income. A reconciliation of free cash flow to net cash flow provided by operating activities can be found in the financial schedules at the end of this press release.

Performance and Essential Materials Segment

Performance and Essential Materials income from operations for the first quarter of 2023 of $403 million decreased by $476 million from first quarter 2022 income from operations of $879 million. This decrease in income from operations versus the prior-year period was due to lower average selling prices and integrated margins for Performance Materials, inclusive of negative mix shifts towards export markets, and lower sales volumes, particularly in Europe.

Sequentially, Performance and Essential Materials income from operations increased by $184 million as compared to the fourth quarter of 2022. The sequential increase was largely due to lower feedstock and energy costs; higher production rates and sales volumes, particularly for epoxy resins; and achieving cost savings and synergies. As a result of these factors, segment EBITDA margin improved to 26% in the first quarter of 2023 from 19% in the fourth quarter of 2022.

Housing and Infrastructure Products Segment

For the first quarter of 2023, Housing and Infrastructure Products income from operations of $143 million decreased by $42 million from first quarter 2022 income from operations of $185 million. This decrease in income from operations versus the prior-year period was the result of lower operating rates and sales volume, partially offset by lower raw material costs and higher average sales prices across most product categories. Despite the 21% volume decline compared to the prior-year period, segment operating margin of 14% and EBITDA margin of 20% in the first quarter of 2023 remained in line with the 15% and 21% reported in the first quarter of 2022.

Sequentially, Housing and Infrastructure Products income from operations increased by $75 million as compared to the fourth quarter of 2022. This increase in income from operations versus the prior quarter was the result of lower raw material costs and higher production and sales volume across most of our product portfolio as customer destocking moderated from elevated levels in the prior quarter.

Forward-Looking Statements

The statements in this release and the related teleconference relating to matters that are not historical facts, including statements regarding our outlook for the performance of our business segments, our belief that we benefit from having high integration and a structural global cost advantage in feedstock, power and fuel, our beliefs regarding the impact that rising interest rates and the potential for tightening lending standards could have on demand for our products, strength of our upcoming second quarter results, our market position, our ability to scale operations, the contribution of recent acquisitions and global demand for our products, and our ability to deliver greater value to customers and investors as general economic conditions improve are forward-looking statements. These forward-looking statements are subject to significant risks and uncertainties. Actual results could differ materially, based on factors including, but not limited to: the COVID-19 pandemic and the response thereto; general economic and business conditions; the cyclical nature of the industry; availability, cost and volatility of raw materials and utilities, including natural gas and natural gas liquids from shale production; the price of crude oil; uncertainties associated with the United States and worldwide economies, including those due to global economic and financial conditions; governmental regulatory actions, including environmental regulation and changes in trade policies; political unrest; industry production capacity and operating rates; the supply/demand balance for Westlake’s products; competitive products and pricing pressures; access to capital markets; technological developments; the effect and results of litigation and settlements of litigation; operating interruptions; the ability to integrate recent acquisitions; the diversion of management time on transaction-related issues; and other risk factors. For more detailed information about the factors that could cause actual results to differ materially, please refer to Westlake’s Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC in February 2023.

Use of Non-GAAP Financial Measures

This release makes reference to certain “non-GAAP” financial measures, such as EBITDA and free cash flow, as defined in Regulation G of the U.S. Securities Exchange Act of 1934, as amended. For this purpose, a non-GAAP financial measure is generally defined by the Securities and Exchange Commission (“SEC”) as a numerical measure of a registrant’s historical or future financial performance, financial position or cash flows that (1) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the registrant; or (2) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. We report our financial results in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), but believe that certain non-GAAP financial measures, such as EBITDA and free cash flow, provide useful supplemental information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and are useful for period-over-period comparisons of such operations. These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the financial measures prepared in accordance with U.S. GAAP. A reconciliation of (i) EBITDA to net income, income from operations and net cash provided by operating activities and (ii) free cash flow to net cash provided by operating activities can be found in the financial schedules at the end of this press release.

About Westlake

Westlake is a global manufacturer and supplier of materials and innovative products that enhance life every day. Headquartered in Houston, with operations in Asia, Europe and North America, we provide the building blocks for vital solutions — from housing and construction, to packaging and healthcare, to automotive and consumer. For more information, visit the company’s web site at www.westlake.com.

Westlake Corporation Conference Call Information:

A conference call to discuss Westlake Corporation’s first quarter 2023 results will be held Thursday, May 4, 2023 at 11:00 AM Eastern Time (10:00 AM Central Time). To access the conference call, it is necessary to pre-register at https://register.vevent.com/register/BI4269c73571e746c5919547d7f3f9e036. Once registered, you will receive a phone number and unique PIN number.

A replay of the conference call will be available beginning two hours after its conclusion. The conference call and replay will be available via webcast at https://edge.media-server.com/mmc/p/m8sv6xfc.

WESTLAKE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
		Three Months Ended March 31,
		2023				2022
		(In millions of dollars, except per share data and share amounts)
Net sales		$	3,356			$	4,056
Cost of sales			2,564				2,771
Gross profit			792				1,285
Selling, general and administrative expenses			222				200
Amortization of intangibles			31				42
Restructuring, transaction and integration-related costs			3				11
Income from operations			536				1,032
Interest expense			(42	)			(46	)
Other income, net			22				11
Income before income taxes			516				997
Provision for income taxes			109				233
Net income			407				764
Net income attributable to noncontrolling interests			13				8
Net income attributable to Westlake Corporation		$	394			$	756
Earnings per common share attributable to Westlake Corporation:
Basic		$	3.07			$	5.87
Diluted		$	3.05			$	5.83
Weighted average common shares outstanding:
Basic			127,548,287				128,071,355
Diluted			128,459,368				128,925,099

WESTLAKE CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
		March 31, 2023				December 31, 2022
		(In millions of dollars)
ASSETS
Current assets
Cash and cash equivalents		$	2,414			$	2,228
Accounts receivable, net			1,835				1,801
Inventories			1,842				1,866
Prepaid expenses and other current assets			55				78
Total current assets			6,146				5,973
Property, plant and equipment, net			8,518				8,525
Other assets, net			6,142				6,052
Total assets		$	20,806			$	20,550
LIABILITIES AND EQUITY
Current liabilities (accounts payable and accrued and other liabilities)		$	2,159			$	2,298
Long-term debt, net			4,892				4,879
Other liabilities			2,927				2,908
Total liabilities			9,978				10,085
Total Westlake Corporation stockholders’ equity			10,291				9,931
Noncontrolling interests			537				534
Total equity			10,828				10,465
Total liabilities and equity		$	20,806			$	20,550

WESTLAKE CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
		Three Months Ended March 31,
		2023				2022
		(In millions of dollars)
Cash flows from operating activities
Net income		$	407			$	764
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			267				257
Deferred income taxes			(16	)			42
Net loss on disposition and others			11				15
Other balance sheet changes			(157	)			(378	)
Net cash provided by operating activities			512				700
Cash flows from investing activities
Acquisition of business, net of cash acquired			—				(1,154	)
Additions to investments in unconsolidated subsidiaries			(1	)			(96	)
Additions to property, plant and equipment			(267	)			(263	)
Other, net			5				6
Net cash used for investing activities			(263	)			(1,507	)
Cash flows from financing activities
Distributions to noncontrolling interests			(10	)			(10	)
Dividends paid			(47	)			(39	)
Repurchase of common stock for treasury			(22	)			—
Other, net			4				2
Net cash used for financing activities			(75	)			(47	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash			9				(3	)
Net increase (decrease) in cash, cash equivalents and restricted cash			183				(857	)
Cash, cash equivalents and restricted cash at beginning of period			2,246				1,941
Cash, cash equivalents and restricted cash at end of period		$	2,429			$	1,084

WESTLAKE CORPORATION SEGMENT INFORMATION (Unaudited)
		Three Months Ended March 31,
		2023				2022
	(In millions of dollars)
Net external sales
Performance and Essential Materials
Performance Materials		$	1,282			$	1,929
Essential Materials			1,067				903
Total Performance and Essential Materials			2,349				2,832
Housing and Infrastructure Products
Housing Products			818				972
Infrastructure Products			189				252
Total Housing and Infrastructure Products			1,007				1,224
		$	3,356			$	4,056
Income (loss) from operations
Performance and Essential Materials		$	403			$	879
Housing and Infrastructure Products			143				185
Corporate and other			(10	)			(32	)
		$	536			$	1,032
Depreciation and amortization
Performance and Essential Materials		$	210			$	184
Housing and Infrastructure Products			55				71
Corporate and other			2				2
		$	267			$	257
Other income, net
Performance and Essential Materials		$	2			$	8
Housing and Infrastructure Products			7				2
Corporate and other			13				1
		$	22			$	11

WESTLAKE CORPORATION RECONCILIATION OF EBITDA TO NET INCOME, INCOME FROM OPERATIONS AND NET CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited)
		Three Months Ended December 31,				Three Months Ended March 31,
		2022				2023				2022
		(In millions of dollars, except percentages)
Net cash provided by operating activities		$	835			$	512			$	700
Changes in operating assets and liabilities and other			(652	)			(121	)			106
Deferred income taxes			65				16				(42	)
Net income			248				407				764
Less:
Other income, net			21				22				11
Interest expense			(43	)			(42	)			(46	)
Provision for income taxes			(57	)			(109	)			(233	)
Income from operations			327				536				1,032
Add:
Depreciation and amortization			271				267				257
Other income, net			21				22				11
EBITDA		$	619			$	825			$	1,300
Net external sales		$	3,299			$	3,356			$	4,056
Operating Income Margin			10%				16%				25%
EBITDA Margin			19%				25%				32%

RECONCILIATION OF FREE CASH FLOW TO NET CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited)
		Three Months Ended December 31,				Three Months Ended March 31,
		2022				2023				2022
		(In millions of dollars)
Net cash provided by operating activities		$	835			$	512			$	700
Less:
Additions to property, plant and equipment			(297	)			(267	)			(263	)
Free Cash Flow		$	538			$	245			$	437

WESTLAKE CORPORATION RECONCILIATION OF SEGMENT EBITDA TO INCOME FROM OPERATIONS (Unaudited)
		Three Months Ended December 31,				Three Months Ended March 31,
		2022				2023				2022
		(In millions of dollars, except percentages)
Performance and Essential Materials Segment
Income from operations		$	219			$	403			$	879
Add:
Depreciation and amortization			212				210				184
Other income, net			12				2				8
EBITDA		$	443			$	615			$	1,071
Net external sales		$	2,361			$	2,349			$	2,832
Operating Income Margin			9%				17%				31%
EBITDA Margin			19%				26%				38%

		Three Months Ended December 31,				Three Months Ended March 31,
		2022				2023				2022
		(In millions of dollars, except percentages)
Housing and Infrastructure Products Segment
Income from operations		$	68			$	143			$	185
Add:
Depreciation and amortization			57				55				71
Other income, net			8				7				2
EBITDA		$	133			$	205			$	258
Net external sales		$	938			$	1,007			$	1,224
Operating Income Margin			7%				14%				15%
EBITDA Margin			14%				20%				21%

WESTLAKE CORPORATION SUPPLEMENTAL INFORMATION NET SALES PERCENTAGE CHANGE DUE TO AVERAGE SALES PRICE AND VOLUME (Unaudited)
		First Quarter 2023 vs. First Quarter 2022				First Quarter 2023 vs. Fourth Quarter 2022
		Average Sales Price		Volume		Average Sales Price		Volume
Performance and Essential Materials		-13%		-4%		-3%		+3%
Housing and Infrastructure Products		+3%		-21%		-2%		+10%
Company		-8%		-9%		-3%		+5%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230429005012/en/

Contact—(713) 960-9111

Investors—Steve Bender

Media—L. Benjamin Ederington

KEYWORDS: Texas United States North America

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