Westlake Chemical Corporation Reports Fourth Quarter and Full Year 2020 Results

• Fourth quarter 2020 net income increased $41 million, or 57%, over fourth quarter 2019

Westlake Chemical Corporation WLK (the "Company" or "Westlake") today reported net income attributable to Westlake for the three months ended December 31, 2020 of $113 million, or $0.87 per diluted share, on net sales of $1,965 million. Net income in the fourth quarter of 2020 increased by $41 million from fourth quarter 2019 net income of $72 million, or $0.56 per share, on net sales of $1,883 million. Income from operations of $178 million for the fourth quarter of 2020 increased by $76 million from income from operations of $102 million for the fourth quarter of 2019. The increases in net income and income from operations were primarily due to higher sales prices and margins for polyethylene and PVC resin and higher earnings resulting from strong demand in our downstream building products business. These increases were partially offset by lost sales and production volumes, increased maintenance expense and other costs resulting from lower production at our Lake Charles, Louisiana facilities from two hurricanes that impacted Southwest Louisiana in August and October 2020, higher ethylene and fuel costs and lower sales prices for caustic soda. Compared to the prior-year period, net income was also impacted by higher income tax expense as the fourth quarter of 2019 included a one-time tax benefit of $29 million.

Fourth quarter 2020 net income of $113 million, or $0.87 per share, increased by $56 million from third quarter 2020 net income of $57 million, or $0.45 per share. Income from operations of $178 million for the fourth quarter of 2020 increased by $99 million from income from operations of $79 million for the third quarter of 2020. The increases in net income and income from operations versus the prior quarter were primarily due to higher prices and margins for polyethylene and PVC resin as well as lower restructuring charges. These increases were partially offset by lower sales volumes resulting from the impacts of the hurricanes, lower caustic soda prices, seasonally lower earnings in our downstream building products business and higher fuel costs.

For full year 2020, net income of $330 million, or $2.56 per share, decreased by $91 million from 2019 net income of $421 million, or $3.25 per share. Full year 2020 income from operations of $429 million decreased by $227 million from 2019 income from operations of $656 million. The decreases in net income and income from operations were primarily due to the impacts of the COVID-19 pandemic, which resulted in lower sales volumes and lower sales prices in the first half of 2020, and the hurricanes that hit Southwest Louisiana, which resulted in lost sales and production volumes and increased maintenance expense in the second half of 2020. Compared to the prior year, full year 2020 net income and income from operations were also impacted by lower sales prices for caustic soda while benefitting from higher earnings in our downstream building products business, higher contributions from our ethylene joint venture with Lotte Chemical ("LACC"), a lower effective tax rate and a carryback of federal net operating losses of $95 million resulting from the CARES Act.

"Westlake had a strong finish to the year as we restarted all of our production in Lake Charles following two powerful hurricanes that hit Southwest Louisiana. With our operations restored in the middle of the fourth quarter, we were able to capitalize on the robust global demand and benefit from higher prices and margins for most of our products," said Albert Chao, President and Chief Executive Officer. "We believe this strength in global demand in polyethylene and PVC, coupled with the rise in housing starts and new building permits will continue into 2021. This will also highlight the value in our downstream building products business. The highly integrated nature of Westlake, which extends through the value chain from feedstocks to consumer end products, combined with many of our operations sitting on the lower end of the global cost curve, enables us to drive long-term value for our shareholders throughout the business and investment cycles inherent in our industry. We will remain focused on our strategy of safely and efficiently operating our facilities, while making disciplined investments, developing new and green products, furthering our chain integration, lowering our costs and leveraging our current products and footprint around the world, while being a good steward of the environment in the communities in which we operate."

Net cash provided by operating activities was $431 million for the fourth quarter of 2020 and $1,297 million for the full year 2020. As of December 31, 2020, cash and cash equivalents were $1,313 million and long-term debt was $3,566 million. Capital expenditures were $122 million and $525 million for the fourth quarter and full year 2020, respectively.

EBITDA (earnings before interest expense, income taxes, depreciation and amortization) of $386 million for fourth quarter 2020 increased by $90 million compared to fourth quarter 2019 EBITDA of $296 million. Fourth quarter 2020 EBITDA increased by $99 million compared to third quarter 2020 EBITDA of $287 million. For full year 2020, EBITDA of $1,246 million was $161 million lower than EBITDA for full year 2019 of $1,407 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.

VINYLS SEGMENT

Fourth quarter 2020 income from operations for the Vinyls segment of $166 million increased by $98 million from fourth quarter 2019 income from operations of $68 million. This increase in income from operations versus the prior-year period was primarily due to higher sales and margins for PVC resin and higher earnings in our downstream building products business. The increase in operating income was partially offset by lower sales volumes and production resulting from the hurricanes, lower sales prices for caustic soda and higher fuel costs.

Vinyls income from operations for the fourth quarter of 2020 of $166 million increased by $124 million from third quarter 2020 income from operations of $42 million primarily due to higher sales prices and margins for PVC resin and lower restructuring costs. These increases were partially offset by lower sales volumes resulting from the hurricanes, seasonally lower earnings in our downstream building products business and higher fuel costs.

For full year 2020, Vinyls income from operations of $301 million decreased by $150 million from income from operations of $451 million for full year 2019. This decrease in income from operations was primarily due to the impacts on sales volumes and prices from the COVID-19 pandemic and the hurricanes. The impact on operating income was partially offset by higher earnings in our downstream building products business, higher contributions from LACC and lower fuel costs when compared to the prior year.

OLEFINS SEGMENT

Fourth quarter 2020 income from operations for the Olefins segment of $22 million decreased by $27 million from fourth quarter 2019 income from operations of $49 million. This decrease in income from operations versus the prior-year period was primarily due to lower sales volumes and lost production resulting from the impact of hurricanes, partially offset by higher sales prices and margins for polyethylene.

Olefins income from operations of $22 million in the fourth quarter of 2020 decreased by $29 million from third quarter 2020 income from operations of $51 million. This decrease in income from operations versus the prior quarter was primarily due to lower sales volumes as a result of the hurricanes, partially offset by higher sales prices and margins for polyethylene.

For full year 2020, Olefins income from operations of $160 million decreased by $100 million from income from operations of $260 million for full year 2019. This decrease in income from operations was primarily due to lower sales volumes and lost production for our major products as a result of the COVID-19 pandemic and the impacts of hurricanes, and lower realized sales prices due to the sharp drop in global oil prices in the first half of 2020.

The statements in this release and the related teleconference relating to matters that are not historical facts, including statements regarding continued improvement of our performance in 2021, demand for polyethylene, PVC and downstream business products, results of investments in initiatives and delivering long-term value to shareholders, 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 chemical 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; 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, 2019, which was filed with the SEC in February 2020, and Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.

Use of Non-GAAP Financial Measures

This release makes reference to certain "non-GAAP" financial measures, such as EBITDA, 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, 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 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.

About Westlake:

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

Westlake Chemical Corporation Conference Call Information:

A conference call to discuss Westlake Chemical Corporation's fourth quarter and full year 2020 results will be held Tuesday, February 23, 2021 at 11:00 AM Eastern Time (10:00 AM Central Time). To access the conference call, dial (855) 760-8160 or (704) 288-0624 for international callers, approximately 10 minutes prior to the scheduled start time and reference passcode 308 97 28.

A replay of the conference call will be available beginning two hours after its conclusion until 11:59 p.m. Eastern Time on March 2, 2021. To hear a replay, dial (855) 859-2056 or (404) 537-3406 for international callers. The replay passcode is 308 97 28.

The conference call will also be available via webcast at https://edge.media-server.com/mmc/p/atqiwr7g and the earnings release can be obtained via the Company's web page at: http://www.westlake.com/investor-relations.

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