Q4 2023 Westlake Chemical Corp Earnings Call

In a listen only mode. After the Speakers' remarks, you will be invited to participate in a question and answer session. As a reminder, ladies and gentlemen. This conference is being recorded today February 20th 2024, I would now like to turn the call over to today's host, Jeff Holly Westlake Spice President and Treasurer.

Sir you may begin.

Thank you Jonathan Good morning, everyone and welcome to the Westlake Corporation Conference call to discuss our fourth quarter and full year results for 2023.

I'm joined today by Albert Chao, our President and CEO, Steve Bender, Our executive Vice President and Chief Financial Officer, and other members of our management team.

During the call we will refer to our two reporting segments performance in our central materials, which we referred to as <unk> or materials and housing and infrastructure products, which we refer to as hip or products today.

Today's conference call will begin with Albert who will open with a few comments regarding Westlake performance Steve.

Steve will then discuss our financial and operating results after which Albert will add a few concluding comments and we will open the call up to questions.

During the fourth quarter of 2023, we recorded a noncash impairment charge of $475 million related to the Companys <unk> business as well as a 150 million charge to fully resolve certain liability claims that are currently not being covered by certain of our excess insurance.

Carriers, we refer to these two charges as identified items in our earnings release and on this conference call.

References to income from operations EBITDA net income and earnings per share on this call exclude the financial impact of the identified items as such comments made on this call will be in regard to our underlying business results using these non-GAAP financial measures a reconciliation of these non-GAAP.

Financial measures to GAAP financial measures is provided in our earnings release, which is available in the Investor Relations section of our website.

Today management is going to discuss certain topics that will contain forward looking information that is based on management's beliefs as well as assumptions made by and information currently available to management.

These forward looking statements suggest predictions or expectations, and thus are subject to risks or uncertainties. These.

These risks and uncertainties are discussed in Westlake Form 10-K for the year ended December 31, 2022, and other SEC filings.

We encourage you to learn more about these factors that could lead our actual results to differ.

By reviewing these SEC filings, which are also available on our Investor Relations website.

This morning, Westlake issued a press release with details of our fourth quarter and full year results. This document is available in the press release section of our website at Westlake Dot com.

We have also included an earnings presentation, which can be found in the Investor Relations section on our website.

A replay of today's call will be available beginning today two hours. Following the conclusion of this call. This replay may be accessed via Westlake website.

Note that information reported on this call speaks only as of today February 22024, and therefore, you're advised that time sensitive information may no longer be accurate as of the time of any replay.

Finally, I would advise you that this conference call is being broadcast live through an internet webcast system that can be accessed on our webpage at Westlake Dot Com now I would like to turn the call over to Albert Chao Albert.

Thank you Jim.

Thank you everyone.

We appreciate your joining us to discuss our fourth quarter and full year 2023 results.

Excluding the identified items for.

For the fourth quarter of 2023.

We reported net income of $93 million.

<unk> 72 per share and <unk>.

EBITDA of $319 million on sales of $2 8 billion.

While overall sales revenue was below the year ago period due to lower average sales prices independent segment.

We're pleased that our fourth quarter total sales volume increased 7% compared to the fourth quarter of 2022.

With North American demand strength, partly offset by lower sales volumes in our.

International operations.

Regionally, our volume and price declines 2023 were most impacted in our European operations.

Which were pressured by a weak macroeconomic backdrop.

And imports into Europe from Asia.

Volume and price declines were most felt in our base our proxy business.

Driven by the very weak economic environment in Europe and China.

With significant new global epoxy capacity additions.

These capacity additions, which will primarily in China, while met with weak regional demand.

Driving a significant increase in Asia exports Europe and other regions.

These Asian export volumes will aggressively priced some Asian competitors received energy subsidies to stimulate exports.

At a time when European energy costs was still relatively high.

In part due to the ongoing war in Ukraine.

As a result of these factors our European base Apocope resin business experienced a sharp and sudden decline in profitability.

To reflect these market changes along with our current outlook for global operating rates to remain under pressure.

Accorded a noncash impairment charge in our base policy business in the Netherlands in the fourth quarter.

We have begun to implement actions to reduce our costs and improve the profitability of our European businesses.

The cost savings, we're expecting across our company wide cost reduction programs.

$125 million to $150 million in 2024.

After achieving 2023 cost savings of $110 million.

Before turning the call over to Steve to review, our financial results in more detail.

I want to make take a few minutes to review our accomplishments in 2023.

Our hip segment achieved record income from operations of $710 million and a record EBITDA margin of 23% as.

As we further integrated achieved synergies from the borrow less co and diamond acquisitions.

We're very pleased with the evolution of this segment.

Which produced back to back record results over the past two years.

Even with the economic challenges in the residential building market.

These record results provide stability to our overall earnings in 2023 with an asset light cash generative business model.

With leading positions in North America.

Our constant focus on cash flow generation.

Enabled westlake to generate $2 $3 billion of cash from operations.

One 3 billion of free cash flow.

After investing over $1 billion to maintain and improve our plants and equipment.

The solid cash flow generation strengths of our business and confidence in the company's future allowed us to return approximately $250 million to shareholders in 223 <unk>.

Including the increase of our quarterly dividends by 40% to 50 per share.

Which demonstrates our commitment to rewarding shareholders.

We finished the year with a solid investment grade rated balance sheet.

Highlights by $3 $3 billion of cash and equivalents.

<unk> flexibility to pursue opportunities as they present themselves.

Finally in conjunction with the publication of our sixth annual sustainability report in October.

We added five additional sustainability goes to our existing <unk> emissions intensity reduction target.

These five new goes address water usage health and safety.

Community engagement.

Diversity and inclusion and the circular economy.

And an important part of our overall approach towards stewardship of our Maryland and communities.

Taken together I'm very proud of our 2023 accomplishments given the challenging global economic environment.

And I'd like to thank our nearly 16000 team members for their hard work and dedication.

<unk> enabled these achievements.

Record results.

I would now like to turn the call over to Steve to provide more detail on our financial results for the fourth quarter and full year of 2023.

Thank you Albert and good morning, everyone as Albert discussed our fourth quarter of 2023 financial results were reduced by $475 million.

As we fully impaired the base policy resin business in the Netherlands to reflect a change in the fair value of these assets as a result of the rapid deterioration.

And global policy markets over the past year.

Asian, and European economies remained weak throughout 2023, and we saw a flood of agent <unk> imports into European markets as large agent apart seat capacity additions were completed at a time of persistently elevated power energy and raw material costs in our European operations.

Separately as we previously disclosed we reached settlements to resolve certain liability claims.

Recognize a charge of $150 million in the fourth quarter of 2023 to reflect a portion of the total settlement amount that are subject to dispute with some of our insurance carriers.

Pleased to have fully resolve these liability claims while we work with our insurers to resolve the disputed portion of the settlement amount.

As a reminder, my comments regarding income from operations EBITDA net income and earnings per share all exclude the financial impact of both the noncash impairment and the litigation settlement charges.

Westlake reported net income of $93 million or <unk> 72 per share in the fourth quarter on sales of $2 8 billion.

Net income for the fourth quarter of 2023 decreased $139 million from the fourth quarter of 2022, as a result of lower average sales prices and margins and Tim.

Particularly for caustic soda and epoxy resin and $20 million of restructuring costs as we optimized operations and our hip segment.

When compared to the third quarter of 2023 net income decreased by $190 million in the fourth quarter due to lower average sales prices in perm.

Unfavorable sales mix changes in Perm and a typical seasonal decline in hip sales volume.

For the fourth quarter of 2023, our utilization of the FIFO method of accounting resulted in an unfavorable pretax impact of $35 million compared to what earnings would have been reported on the LIFO method.

This is only an estimate and has not been audited.

For the full year of 2023, we reported net income of $1 1 billion and EBITDA of $2 $6 billion on sales of $12 5 billion.

Compared to our record 2022 results net income attributable to Westlake declined by $1 1 billion as growth in hips income from operations more than offset by lower Perm earnings Pri.

Primarily due to lower average sales prices and margins.

Turning to our segment results, Tim EBITDA of $1 6 billion in 2023 was below our record 2022 results, primarily due to lower global sales prices and margins as a result of softer demand created by weaker global economic conditions and customer Destocking at a time.

With new global capacity additions for polyethylene and PVC resin entered the market.

However, after customer Destocking ended as 2023 drew to a close we saw signs of improvement in our sales volumes, which rose 6% year over year in the fourth quarter with improving signals and demand strength that have carried into the first quarter of 2024 for many of our Pam product cat.

<unk>.

On a quarterly basis, <unk> fourth quarter EBITDA of 2200 $201 million decreased by $138 million from the third quarter.

The sequential decline in EBITDA was the result of lower average sales prices, particularly.

Particularly for caustic soda, which were driven by increased export demand and price changes that occurred from the third quarter.

With the lower sales prices, we saw an increase in demand led by caustic soda that drove a 4% sequential increase in our sales volume in contrast to the historic pattern of slower customer orders and sales into year end.

While it is still early in 2024, we have recently seen signs of firming demand after sales prices for most of our major Pam products were relatively stable on a month to month basis within the fourth quarter.

Moving to our hip segment.

$710 million of income from operations set a new annual record in 2023, despite lower revenue as the strong value of our brands allowed us to remain disciplined in pricing despite lower materials cost.

<unk> into an improvement in EBITA margin to 23% from 20% in 2022.

These results are testament to the strength of our brand and the importance of our products to our customers.

The strong performance in 2023 illustrates the benefits of our vertical integration and diversification strategy as lower cost materials used by our hip segment drove solid margins at a time when Tim segment margins were compressed due to lower sales prices.

Shifting focus to the fourth quarter results hip sales rose year over year as our penetration into markets drove an 11% increase in sales volumes that more than offset lower average sales prices.

Volume growth was strongest in our pipe and fittings business, particularly for residential and infrastructure pipe with strong customer orders late in the quarter and continuing into early 2024.

Average sales prices declined 10% year over year. This was generally less pronounced than the declines in our materials cost contributing to the expansion of hips EBITA margin to 18% from 14% inclusive of the $20 million restructuring cost in the fourth quarter of 'twenty three to optimize our manufacturing.

Footprint.

Margin improvement was also supported by the 11% year over year sales volume growth and the achievement of over $20 million of additional cost synergies in 2023, <unk> and <unk> acquisitions.

Turning to the balance sheet and cash flows <unk> cash generation reflects our continued focus on operational and financial discipline.

The full year of 2023 net cash provided by operating activities was $2 3 billion, while capital expenditures were $1 billion, resulting in strong free cash flow of $1 3 billion.

As of December 31, 2023, cash and cash equivalents were $3 3 billion and total debt was $4 9 billion with a net leverage remaining below one turn of EBITDA.

<unk> that is in an attractive.

Fixed rate of three 2% and an average maturity of 16 years, which combined with $3 billion in cash and investment grade rated balance sheet puts westway can a financially strong position at this stage of the business cycle.

We will look to strategically deploy our balance sheet for value creating opportunities.

Turning our attention to 2024, let me address some of your modeling questions and provide some guidance for the year ahead.

Based on our current view of demand and prices, we expect 2020 for revenue and our housing and infrastructure products segment to be between four and $4 4 billion with EBITDA margin around 20%.

As Albert mentioned, we are targeting $125 million to $150 million of cost savings in 2024, even after our 2023 cost savings of $110 million exceeding last year's target.

We expect our total capital expenditures to be approximately $1 billion similar to our depreciation run rate. This.

This includes cost for a planned turnaround at our Petro one ethylene unit scheduled to begin in the second half of the year that is projected to last approximately 60 days for.

For the full year of 2024, we expect our effective tax rate to be approximately 23%. We also expect cash interest expense to be approximately $160 million.

Now I'd like to turn the call over to Albert to provide some our current outlook.

Our business Albert.

Thank you Steve.

As we head into 2024.

We are well positioned to respond to evolving market trends.

While executing our strategies.

In our hip segment, the breath of North American footprint, and our leading market positions with our broad product portfolio supported by strong brands.

It has increased our penetration with the fastest growing segments of the market.

Our exposure to this growing portion of the market should support future hip segment sales volume growth.

Meanwhile, in our Perm segment, we're also a market leader in specialty polyethylene and Chlor vinyls.

Which provides westlake scale and capabilities to serve our customers' needs and support their growth plans.

Furthermore, our globally advantaged energy and feedstock position in North America.

Our <unk> segment with the flexibility of export sales opportunities.

The key component of our business strategy is to reduce volatility in earnings and cash flow.

While maximizing earnings growth potential.

The integration of our Perm and hip segments.

Demonstrates the strength of our strategy.

To capture the value of the cycle, where they move more to the upstream or downstream portion of the value chain.

And 224, we will continue to deliver on all of our priorities.

Including the safe reliable operation of our plants.

Allocating capital to expand our business portfolio Gen.

Generating value added returns.

And providing top tier shareholder returns.

Maintaining a strong investment grade rated balance sheet.

At the same time, we will continue to provide our customers.

With innovative products that provides a path to achieving their long term sustainability goals.

Sustainability remains critical to our global strategy.

Not only because it's the right things to do for the environment.

But also because provides increasingly profitable market growth opportunities.

We continue to look for ways to further integrate our businesses to capture this market growth.

As a recent example, a global compounds and <unk> businesses.

Per the respective expertise in PVC compounding in recycling to process, the Westlake global compounds waste materials.

Including Griding shredding blending and compounding.

Utilizing <unk> processing services.

As 2024 progresses, we will continue to look for more opportunities to leverage the diverse materials technology and industrial know how of our portfolio of businesses to reduce our and our customers' waste material to further database. He goes.

Before we open the call for your questions I want to provide some closing thoughts on 2023 and our current outlook.

The benefits our diversification strategy.

Wind was again in the fourth quarter.

In a year as a whole as record earnings and hip provide us stability to our overall results.

At a time when <unk> sales prices and margin we're at a trough at this stage of the cycle.

While the macroeconomic backdrop remains uncertain.

More covenant.

Near term outlook for a few key reasons.

First <unk>.

Inventories are at much lower levels.

Following a prolonged period of Destocking activity.

As a result, we believe that customers' orders in 224.

Better reflect demand in our end markets.

With potential upside as our customers begin to restock as demand improves.

Segment in.

In part due to these low customer inventory levels, we exited 2023 and begin 2024 with solid sales volume momentum.

Fourth quarter sales volume in our hip segment rose, 11% year over year.

And the dialogue, we're having with our hip customers support the momentum we have as we enter into 2024.

Meanwhile, fourth quarter sales volume for our payments segment rose, 6% year over year, and 4% sequentially, which was counter to the normal seasonal decline that we typically see towards year end.

Third the solid sales volume momentum is continuing into 2020 for supporting price momentum for most of our products in our pet.

Segment.

Recent disruptions in global trade routes from tensions in the middle East and lower water levels at Panama Canal also have the potential to disrupt imports and support our pricing initiatives.

Suddenly the federal reserve has passed a series of interest rate hikes that depressed demand and business confidence in 2023.

While the future path of interest rate policy is uncertain.

The pause and potential for eventual cuts could create a more favorable macroeconomic backdrop for our businesses in 2024.

Particularly those portions of our business, where demand is more sensitive to interest rates such as housing construction energy and autos.

Thank you very much for listening to our fourth quarter earnings call.

I'll now turn the call back over to Jeff.

Thank you Albert before we begin taking questions I'd like to remind listeners that our earnings presentation, which provides additional clarity into our results is available on our website and a replay of this teleconference will be available two hours. After the call has ended.

We will provide that information again at the end of the call Jonathan will now take questions.

Certainly ladies and gentlemen, do you have a question at this time.

Please press star one on your telephone if your question has been answered and you'd like to remove yourself from the queue simply press Star. One again, our first question comes from the line of Patrick Cunningham from Citi. Your question. Please.

Patrick you might have your phone on mute.

Alright. Thank you can you hear me now.

Yes, Ken.

Alright, good morning, everyone. So just on the sales and margin guide for that segment I'm, just trying to square what your volume outlook might be given we have some uncertainty around rate cut you sided pretty solid momentum in that business. So do you expect volumes to grow next year and maybe margin decline is more from continued price declines and stabilized.

PVC costs.

So Patrick it's a good question and we've seen good momentum at this stage as we enter the first portion of 2024, certainly depending on the outlook whether you are looking at some of the recent statistics by the U S Census Bureau on housing starts and permits or those published by NIH be.

John Burns real estate JV Ari.

Outlook remains I think constructive in terms of growth in demand as we indicated on our prepared remarks, we're continuing to see good volume pull in the first few months of 2024, it's hard to project the entire year of 2004 at this stage, but I would say that we remain optimistic given the volume and volume pull that we've seen at this stage.

Got it that's helpful. And then I was hoping you could elaborate on the manufacturing footprint optimization for hip so how many assets have you closed and how many maybe are you planning to close in 2024, and what sort of level of run rate savings and should we expect and the contribution within that 1% to.

Five to $1 50, that's specifically coming from hip.

So the restructuring of $20 million that we took in 23 in the fourth quarter 'twenty three really relates to optimizing some of our assets in the exterior building products business and so while we've taken steps in whether it be in our stone our other business applications certainly we do look to further optimize.

That over the course of 'twenty four and the exact plan, we'll be somewhat a function of how the market develops certainly we're looking to really optimize those that footprint based on where the market demand is and if you think of that smile from both.

Both coast, along the southeast and southwest were well positioned in that marketplace and we're looking to make sure that our assets are positioned to be able to meet that market demand. So we don't have any specific plans that we're ready to announce for 'twenty four but I'd say were prepared to address those needs depending on market conditions.

Great.

All of those.

Yes, we don't want to add some of those cost savings as a result of the rationalization was done in 'twenty, three and we see that benefit in 'twenty four.

Yes that makes sense. Thank you.

Youre welcome.

Q1 moment for our next question.

And our next question comes from the line of Frank Mitsch from Fermium Research. Your question. Please.

Good morning, Thank you.

Don't want to come back to the hip margin question I. Appreciate your comments regarding volumes et cetera, but you reported pretty pretty.

Well record margins in the third quarter. So maybe there is an expectation that that doesn't.

That doesn't continue is that playing a big role as to why Youre thinking your margins in <unk>.

24 will be roughly 300 bps lower than and then in 'twenty three.

Yeah. So Frank we're exiting obviously the end of 'twenty three with lower price points in some of those discrete products and certainly we see rising raw materials cost as we <unk>.

Mentioned and see some guidance and some of those 10 products and.

And so this is why we've kind of guided to potentially seen lower margins in the hip business Assembly is because of the exit rate of prices at the end of 'twenty three and the potential.

And we're seeing some traction on materials cost in that flow into that business.

Got you and sticking with the thinking with the raw materials and inputs and so forth obviously, we've seen a.

Our material collapse in natural gas and ethane for that matter, but on the other side, we've seen propane moving up how do you think about from an overall Westlake perspective, the recent movements in Ngls and in Nat gas.

Every dollar of gas price drop.

The solid.

Solid in cubic feet is well over $100 million of benefit and as I said not only that.

Our energy costs going down, but when natural gas prices going down ethane price going down.

Italy manufacturing cost has come down a lot.

Okay, great. So that's a bit of a tailwind as we sit here in <unk> correct.

Correct, yes.

Thank you so much.

Thank you.

Thank you one moment for our next question.

And our next question comes from the line of Aleksey Your framework from Keybanc capital. Your question. Please.

Thanks, and good morning, everyone. This is this is Ryan on for electricity. So my first question I wanted to dig in a little bit on the volumes in Perm. So obviously volumes rose, 6% year over year and 4% sequentially is this purely a market base recovery or were there some market share gains in there and then so far during <unk>.

<unk>.

Any aggressive pricing from competitors or like across the industry.

May kind of hindered your volumes here too. Thank you.

Yes, <unk> business there are several in polyethylene PVC, while price announcements and we got a <unk> <unk> upon price increase in polyethylene in January.

And further pricing announcements being made and the price announcement made in PVC as well. So as you know also the springtime as the construction period and with warm weather activities going on and as we said we are seeing momentum without hiccups Pip customers are placing orders for the moment.

In the fourth quarter is carrying into the first quarter.

Great. That's helpful. And then just as you think about running your Chlor alkali facilities here in <unk> what.

What do you think operating rates are going to be and then when you think about it for the balance of the year.

Anything you can quantify there it would be helpful. Thank you.

Yes. Thank you from some of the consultant study that fourth quarter operating rates in the U S is about 76%.

And people are projecting well, it's down from 82% in third quarter. Some people are projecting 2020 for clarify running rates in the high <unk>.

So we're seeing some improvement I think.

About half of the quoting PVC, so the PDC really drives.

The running rates for glaucoma anyways.

Thank you one moment for our next question.

And our next question comes from the line of Duffy Fisher from Goldman Sachs. Your question. Please.

Yes, good morning, guys.

First question is just around a park C.

When was the point of maximum pressure from Chinese imports into Europe last year has that stabilized and do you think you need to do anything with your physical footprint in Europe or is just the noncash write down going to be sufficient.

So definitely we saw that really began to build in the second half of last year that pressure and thats really as we saw the the imports continue to ramp up and put pressure on the European markets.

That really is what drove the impairment.

And we are seeing that maybe.

Maybe partially because all the Suez Canal free.

Freight rates and everything else.

Is that the.

The import is reducing volume.

And as a result also European.

Liquid epoxy resin prices start moving up.

And we're taking certain certainly you could see from our prepared remarks Duffy that we're taking actions to manage our cost and become competitive in that marketplace. So that while we we understand that the market needs to balance itself out given the still weakness in Asia and European markets from a demand perspective.

Being proactive in reducing our cost and being really focused to remaining competitive in that <unk> space.

Great. Thank you and then maybe just to go back to the 6% volume number from Q4 can you break that out or at least tell us if some of the products within Pam were meaningfully different than that 6% and how much of that was driven by domestic versus export volume.

Yes, there was a bigger move in some of the exports and so in my comments.

We talked about some of the.

Product shift and that product shift was really moving some of that PVC and caustic into the export markets and certainly the netback, so those because of shipping duties and such.

That those net backs are lower but still attractive and that's the that's the volume pickup we saw was in caustic and PVC in Perm.

Great. Thank you guys.

Youre welcome.

Thank you one moment for our next question.

And our next question comes from the line of Salvator Tiano from Bank of America. Your question. Please.

Yes. Thank you very much so I wanted to come back to folks.

Going to see a few of them that'll be quantifying what has been the impact versus when you gave some numbers a couple of years ago with your major acquisition, how much of that earnings power has been lost here and also what's kind of your view oxy earnings even quantitatively or at least directionally in 2024 versus <unk>.

2023, and also are you seeing kind of in a box.

Price pressure.

Some trade publishing side reporting in Europe.

I would.

I was going to comment.

As Eric noted earlier in his comments certainly some of the trade flows because of the hostilities in the middle East Red Sea in the Panama Canal, certainly have given some buoyancy to pricing that we've seen across the product spectrum because of.

For our next question.

And our next question comes from the line of Salvator Tiano from Bank of America. Your question. Please.

The higher cost and certainly is as I mentioned earlier, we've seen some buoyancy in overall pricing. So certainly the markets here in the United States are stronger than they are in Europe because of the strength in the overall economies.

Salvator Tiano: Yes. Thank you very much so I wanted to come back to your boxes and I'm trying to see if you have them that'll be quantified what has been the impact versus when you gave some numbers a couple of years ago with your major acquisition, how much of that earnings power has been lost here and also what's kind of your view of Bulks He earnings either.

Okay.

Okay, and if I may ask a little bit.

Salvator Tiano: Quantitatively or at least Directionally in 2024 versus 2020.

On the guidance for 2024.

Salvator Tiano: 2023, and also are you seeing kind of in that bulk see upward price pressure.

I know that you're in.

Adjusted EBITDA you'd gone back and got some of the restructuring items such as the $20 million you incurred in Q4 I'm wondering do you have been substantial restructuring charges baked in about 20% EBITDA margin for 'twenty 'twenty four.

Salvator Tiano: Some trade publishers are reporting in Europe.

Speaker Change: I would.

Speaker Change: I was going to comment.

Noted earlier in his comments certainly some of the trade flows because of the hostilities in the middle East Red Sea in the Panama Canal, certainly have given some buoyancy to pricing that we've seen across the product spectrum because of it.

None at this stage and so as I mentioned the range of 4% to $4 4 billion revenue in the 20% margin that we've guided to is not reflective of any assumed changes in restructuring costs that would flow through in 2004 as I mentioned to an earlier question.

Speaker Change: The higher cost and certainly is as I mentioned earlier, we've seen some buoyancy in overall pricing.

The lower margin is purely a function of that we exited 23 with lower prices and our building products set.

Speaker Change: So certainly the markets here in the United States are stronger than they are in Europe because of the strength in the overall economies.

And we're seeing rising prices some of those inputs such as in PBC.

Speaker Change: Yeah.

So we'll see how that plays through but given the fact that we're seeing and exit at lower price points and rising input costs such as in PBC that could put some pressure on margins.

Speaker Change: Okay, and if I may ask a little bit on the.

Speaker Change: On the guidance for 2024.

Speaker Change: I know that in your adjusted EBITDA, you're not actually got some of the restructuring items such as the 20 meters you incurred in Q4 I'm wondering do you have been substantial restructuring charges baked into that 20% EBITDA margin for 2024.

Okay. Thank you very much.

Youre welcome.

Okay.

Thank you one moment for our next question.

And our next question comes from the line of Michael <unk> from Barclays. Your question. Please.

Speaker Change: None at this stage and so as I mentioned the range of four to $4 4 billion revenue in the 20% margin that we've guided to is not reflective of any assumed changes in restructuring costs that would flow through in 2004 as I mentioned to an earlier question.

Mike you might have your phone on mute.

Can you hear me now.

Now we can yes, we can.

Hey, good morning, good morning, guys.

The lower margin is purely a function of that we exited 23 with lower prices and our building products set and we're seeing rising prices some of those inputs such as in PBC.

Just on the litigation charge in the quarter can you help clarify what this was related to and is there an expected cash outlay associated with discharge at some point.

Speaker Change: So we'll see how that plays through but given the fact that we're seeing and exit at lower price points and rising input costs such as in PBC that could put some pressure on margins.

Yes, Mike It was related to an event in Louisiana and we've disclosed this in our 8-K earlier this quarter as well as our 10-Q filings earlier last year I do expect the outlays to be in the first half of this year.

Speaker Change: Okay. Thank you very much.

Speaker Change: Youre welcome.

Speaker Change: Okay.

Speaker Change: Thank you one moment for our next question.

Great. Thank you and then just second briefly.

Speaker Change: And our next question comes from the line of Michael <unk> from Barclays. Your question. Please.

I wanted to ask on Westlake partners.

Obviously the distributions.

Our share price has been relatively flattish for some time.

We now have a bit of higher interest rates and the like can you just talk about how the MLP fits within the overall Westlake strategy here going forward.

Speaker Change: Okay.

Michael: Mike you might have your phone on mute.

Sure Mike So the strategy here was always to raise capital at a at a value proposition that was greater than that of Westlake Corporation and we've done that we've raised about $500 million of capital equity capital in that manner.

Michael: Can you hear me now now we can yes, we can.

Michael: Hey, good morning, Good morning, guys just.

Michael: On the litigation charge in the quarter.

Mike: Can you help clarify what this was related to and is there an expected cash outlay associated with discharge at some point.

And so certainly as as we've seen the markets.

Speaker Change: Yes, Mike It was related to an event in Louisiana and we've disclosed this in our 8-K earlier this quarter as well as our 10-Q filings earlier last year I do expect the outlays to be in the first half of this year.

In the MLP space have been challenged and certainly in a structure as we have.

With higher interest rates. The MLP has yielded a higher yield if we do see lower interest rates begin to materialize with the federal reserve potentially cutting rates later this year I would expect that yield to.

Speaker Change: Great. Thank you and then just second briefly.

Decline in prices to rise so we will see how the federal reserve acts later this year, but certainly that opportunity does exist.

Speaker Change: I wanted to ask on Westlake partners.

Speaker Change: Obviously the distributions are.

Speaker Change: The share price has been relatively flattish for some time.

Speaker Change: Where are we now have a bit of higher interest rates and the like can you just talk about how the MLP fits within the overall Westlake strategy here going forward.

Okay.

Yeah.

Thank you.

One moment for our next question.

Speaker Change: Sure Mike So the strategy here was always to raise capital at a at a value proposition that was greater than that of Westlake Corporation and we've done that we've raised about $500 million of capital equity capital in that manner.

And our next question comes from the line of Arun Viswanathan from RBC capital markets. Your question. Please.

Alright, Thanks for taking my question good morning.

Speaker Change: And so certainly as as we've seen the markets.

So I'm just trying to think about.

Speaker Change: In the MLP space have been challenged and certainly in our structure as we have.

Profitability I guess as you move forward into Q1, so when you look at the.

$390 million or so of EBITDA that was reported in Q4 how.

Speaker Change: With higher interest rates. The MLP has yielded a higher yield if we do see lower interest rates begin to materialize with a total reserve potentially cutting rates later this year I would expect that yield.

How much of that decline sequentially from <unk> to Q4 would you attribute to seasonality and are there any other discrete items in there that may reverse and you move into Q1.

Speaker Change: Two decline in prices to rise so we will see how the federal reserve acts later this year, but certainly that opportunity does exist.

So arun we've seen prices.

Almost across the spectrum on the chemical side of our business somewhat decline over the course of the.

Speaker Change: Okay.

From the end of the third quarter into the fourth quarter, but if you think about the.

Speaker Change: Yeah.

Thank you.

Price nominations that are out in the marketplace, whether it's the <unk>, whereas settled.

Speaker Change: One moment for our next question.

For polyethylene in January we've got additional announcements for prices.

Speaker Change: And our next question comes from the line of Arun Viswanathan from RBC capital markets. Your question. Please.

For later this quarter PVC has price nominations out and we've seen some traction with prices that were nominated and fourth quarter going into effect in caustic for the first quarter. So when you think of the momentum we've seen in pricing initiatives. When you think of the volume because of the low inventory levels, we see what.

Arun S. Viswanathan: Great. Thanks for taking my question good morning.

Arun S. Viswanathan: So just trying to think about.

Arun S. Viswanathan: Profitability I guess as you move forward into Q1, so when you look at the.

Arun S. Viswanathan: $390 million or so of EBITDA that was reported in Q4 how.

Our customer base.

Arun S. Viswanathan: How much of that decline sequentially from <unk> to Q4 would you attribute to the seasonality and are there any other discrete items in there that may reverse and you move into Q1.

And the exiting as you can see our guidance in terms of exiting 'twenty three with increases in volume on the Perm side, which is counter to the typical seasonal behavior. We see those are all positive and constructive directions on the building product side on hip we certainly also saw what I would characterize it.

Arun S. Viswanathan: So arun we've seen prices.

Arun S. Viswanathan: Almost across the spectrum on the chemical side of our business somewhat decline over the course of the.

Typical seasonal decline in volumes and.

Arun S. Viswanathan: From the end of the third quarter into the fourth quarter, but if you think about the.

And you see the guidance that we're providing for for hip and 24. So we remain constructive for the look forward ended 2024.

Arun S. Viswanathan: Price nominations that are out in the marketplace, whether it's the <unk>, whereas settled.

Arun S. Viswanathan: For polyethylene in January we've got additional announcements for prices.

Okay.

Okay, and then just a quick question on.

Arun S. Viswanathan: For later this quarter PVC has price nominations out and we've seen some traction with prices that were nominated and fourth quarter going into effect in caustic for the first quarter. So when you think of the momentum we've seen in pricing initiatives. When you think of the volume because of the low inventory levels, we will see what.

Kind of integration levels.

Would you would you characterize it.

The opportunity set in front of you how much do you think you still have in front of as far as debottlenecking or maybe.

Other opportunities to increase your integration levels.

And I guess.

Arun S. Viswanathan: Our customer base.

Where would you find that most as far as whether it be ethylene or.

Arun S. Viswanathan: And the exiting as you can see our guidance in terms of exiting 'twenty three with increases in volume on the Perm side, which is counter to the typical seasonal behavior. We see those are all positive and constructive directions on the building product side on hip. We certainly also saw what I would characterize as a.

You know maybe on the Chlor alkali side.

Yes, it's a good question.

With smart engineers, they always find ways to improve and debottleneck and sometimes that debottleneck can be a bit more than the debottleneck. So we're currently looking at.

Arun S. Viswanathan: Typical seasonal decline in volumes and.

What opportunity would have what the cost of what the benefit to that.

Arun S. Viswanathan: And you see the guidance that we're providing for for hip and 24. So we remain constructive for the look forward ended 2024.

Any other cycle part of the cycle, whether it's good time to expand all expected later.

That happens in Panama also hit we're looking at.

Arun S. Viswanathan: Yeah.

Some of the rationalizations.

Speaker Change: Okay, and then just a quick question on kind of integration levels would.

We have moved equivalents from one region, that's a slower growth to a region that has higher growth.

Arun S. Viswanathan: Would you would you characterize it.

We are doing all this stuff to optimize our footprint.

Arun S. Viswanathan: The opportunity set in front of you how much do you think you still have in front of as far as debottlenecking or maybe.

In the hip side as well.

And if I could just ask a similar follow up on that do you think just given the utilization rates I guess.

Arun S. Viswanathan: Other opportunities to increase your integration levels and I guess.

Arun S. Viswanathan: Where would you find that most as far as whether it be ethylene or.

Our alkali that theres more high cost capacity within your own system that could be rationalized or maybe some some peers I know there has been.

Arun S. Viswanathan: Maybe on the Chlor alkali side.

Speaker Change: Yes, it's a good question.

Some rationalization from the largest payer in the industry, but how would you kind of characterize the supply demand balance within caustic and chlorine as you look out for the next year or two.

Speaker Change: With smart engineers, they always find ways to improve and Debottleneck and some side of the debottleneck can be a bit more than the debottleneck. So we're currently looking at.

Yes, that's a good question, we constantly look at.

Speaker Change: We'll update you would have what the cost of what the benefit to that.

The productivity and cost position of our plants.

Speaker Change: The auto cycle part of the cycle, whether it's good time to expand all expanded later.

And where necessary, we should take actions, but one thing is that.

Speaker Change: That happens in Panama also hit we're looking at.

I've heard from our discussions that Westlake what benefits from the integration from a chlor alkali PVC to the hip businesses.

Speaker Change: Some of the rationalization is shooting.

Speaker Change: We have moved equivalents from one region, that's a slower growth to a region that has higher growth.

And those integration really helps.

Two as we said when the upstream its better we.

Speaker Change: So we're doing all this stuff to optimize our footprint.

The benefit of upstream and we can take the part as a downstream and vice versa with downstream is better they take benefit on downstream benefit and we still keep our upstream running so those interactions are different from some other competitors.

Speaker Change: On the hip side as well.

Speaker Change: And if I could just ask a similar follow up on that do you think just given the utilization rates I guess.

Speaker Change: Our alkali that theres more high cost capacity within your own system that could be rationalized or maybe some some peers I know there has been.

And we were able by looking at the whole totality not just add at a unit by itself.

Speaker Change: Some rationalization from the largest payer in the industry, but how would you kind of characterize the supply demand balance within caustic and chlorine as you look out for the next year or two.

Thanks.

Thank you one moment for our next question.

And our next question comes from the line of Josh Spector from UBS. Your question. Please.

Speaker Change: Yes, that's a good question when you look at.

Speaker Change: The productivity and cost position of our plants.

Yes, hi, good morning, first I wanted to follow up on hip pricing. So when you talk about the lower exit rate into 'twenty for pricing in the quarter sequentially. It was actually a bit better than what we expected. So was there a reset in December that would mean that we see a couple of percent lower and when you talk about ryzen <unk>.

Speaker Change: And where necessary we should take actions, but one thing is that is it.

Speaker Change: I've heard from our discussions that Westlake what benefits from the integration from a chlor alkali PVC to the hip businesses.

Speaker Change: And those integration really helps too.

Speaker Change: <unk> as we said when the upstream its better we.

<unk> PVC et cetera are you past the window, where you think you can get additional pricing to offset that for next year.

Speaker Change: The benefit of upstream and we can take the part as a downstream and vice versa with downstream is better they take benefit on downstream the benefit and we still keep a upstream running so those interactions are different from some other competitors.

No Josh I think if you think about the year over year change in prices, we certainly saw probably about a 10% reduction in year over year in sales prices and hip and certainly at the end of the year prices were basically flat.

Speaker Change: And we were able by looking at the whole totality and I'll just add at a unit by itself.

Speaker Change: Thanks.

So I'm really comparing the average price of 23 to the.

Speaker Change: Thank you one moment for our next question.

Exiting price at the end of 'twenty three when I talk about the exiting price I'm really thinking about the average price as.

Speaker Change: And our next question comes from the line of Josh Spector from UBS. Your question. Please.

As we go forward.

Josh Spector: Yes, hi, good morning, first I wanted to follow up on hip pricing. So when you talk about the lower exit rate into 24 <unk>.

Certainly we have not got ourselves in a position where we're locked up for the year from a pricing perspective, so if we see.

Continued good strength in volume growth certainly as I mentioned, we're seeing increased nominations in prices for inputs such as PVC. We do have the opportunity given the demand picture to be able to raise those prices there'll be a function of really do we continue to see the strength in demand over the course of 'twenty four.

Josh Spector: <unk> in the quarter sequentially it was actually.

Josh Spector: It better than what we expected so was there a reset in December that would mean that we see a couple of percent lower and when you talk about rising costs PVC et cetera are you past the window, where you think you can get additional pricing to offset that for next year.

That we're seeing in the early stages here of 24.

Josh Spector: No Josh I think if you think about the year over year change in prices, we certainly saw probably about a 10% reduction year over year in sales prices in hip and certainly at the end of the year prices were basically flat.

We do obviously, we will be able to take price action accordingly.

Thanks, I appreciate that and then just within Perm when you talked about some of the volume strength I mean, you keep alluding to more exports. So can you share roughly where your export mix was a PVC and caustic versus a normal fourth quarter and how you expect that to trend over the next couple of quarters. Thanks.

Josh Spector: And so I'm really comparing the average price of 23 to the.

Josh Spector: Exiting price at the end of 2003, when I talk about the exiting price I'm really thinking about the average price.

Yeah fourth quarter usually.

Speaker Change: As we go forward certainly we have not got ourselves in a position where we're locked up for the year from a pricing perspective, so if we see.

NAND is lower in the PVC side, we export more than the third quarter as with all of the average sales prices come down, but I think.

Speaker Change: Continued good strength in volume growth certainly as I mentioned, we're seeing increased nominations in prices for inputs such as PVC. We do have the opportunity given the demand picture to be able to raise those prices there'll be a function of really do we continue to see the strength in demand over the course of 'twenty four.

<unk> reported that.

CVC exports of about 37%.

In January and I think 35% to 40% is the range that PVC industries to exporting.

Okay. Thank you.

Youre welcome.

Speaker Change: That we're seeing in the early stages here of 24, if we do obviously, we will be able to take price action accordingly.

Thank you one moment for our next question.

Speaker Change: Thanks, I appreciate that and then just within Perm when you talked about some of the volume strength I mean, you keep alluding to more exports. So can you share roughly where your export mix was a PVC and caustic versus a normal fourth quarter and how you expect that to trend over the next couple of quarters. Thanks.

And our next question comes from the line of Matthew Blair from T. P. H. Your question. Please.

Hey, good morning, Albert and Steve.

Good morning, Matt.

Sure.

Albert you know looking at the $3 3 billion of cash on the balance sheet could you talk a little bit more about what youre seeing in the M&A market is.

Speaker Change: Yeah fourth quarter usually.

<unk> picking up and if you do a deal are you more focused on the opportunities in hip then in Perm.

Speaker Change: Demand is lower in the PVC side, we export more than the third quarter as with all of the average sales prices come down, but I think.

Yeah. That's a good question, yes, we are seeing.

Speaker Change: The ACC reported that.

<unk>.

PVC exports of about 37%.

More ideas.

Deals are banks, even though the deal flows.

Speaker Change: In January and I think 35% over 40% is the range that PVC industries be exporting.

Really picked up where you're seeing sort of industry announcements are people buying.

Speaker Change: Okay. Thank you.

Assets or companies in the hip business.

Speaker Change: Youre welcome.

And suddenly for west they will look at both sides what makes the best economic return for Westlake gross synergies, so whether it's in perm side or hip side.

Speaker Change: Thank you one moment for our next question.

And our next question comes from the line of Matthew Blair from T. P. H. Your question. Please.

We constantly look at deals and.

On a global basis, not just in the U S.

Matthew Blair: Hey, good morning, Albert and Steve.

And when to add economic value to us. So we'll take a hard look at those deals.

Matthew Blair: Good morning, Ben.

Matthew Blair: Albert you know looking at the $3 3 billion of cash on the balance sheet could you talk a little bit more about what youre seeing in the M&A market is deal flow picking up and if you do a deal are you more focused on the opportunities in hip then in Perm.

Sounds good and then some of the consultants are showing PVC global PVC capacity growth. This year around 3% does that match up with your expectations and.

Would you expect global PVC demand growth to be stronger than the 3% this year.

Albert: Yes, that's a good question, yes, we are seeing.

Speaker Change: More ideas.

Yes, I think.

We believe capacity additions is really not that great people.

Speaker Change: Deals are banks, even though the deal flows.

Speaker Change: And that really picked up where you're seeing sort of industry announcements.

People talk about China, especially with the carbide process being on the moratorium of Newbuild.

Speaker Change: People buying.

Speaker Change: Assets or companies in the hip business.

And suddenly for west they will look at both sides what makes the best economic return for Westlake gross synergies, so whether it's in perm side or hip side.

Italy's based.

PVC plants, starting up in China, but cost is a lot higher.

From either put on produce ethylene or imported EDC.

Speaker Change: We constantly look at deals.

So.

Speaker Change: On a global basis, not just in the U S.

I think global demand that's the key question.

Speaker Change: And when to add economic value to us. So we'll take a hard look at those deals.

And some of this is political macroeconomic related and the other ones interest rate related.

Speaker Change: Sounds good and then some of the consultants are showing PVC global PVC capacity growth. This year around 3% does that match up with your expectations and.

So we have less debt U S has by far the lowest cost position.

<unk> low cost ethane ethylene and low cost power to make chlor alkali.

So we are able to export as we mentioned in the talk earlier, they're able to capture capture any opportunities that comes up for export if the U S demand is out there or that enough. So that's why we mentioned on our fourth quarter, we did more export than second and third quarter.

Speaker Change: Would you expect global PVC demand growth to be stronger than the 3% this year.

Speaker Change: Yes, I think.

Speaker Change: We believe capacity additions is really not that great people.

Speaker Change: People talk about China, especially with the carbide process being on the moratorium of Newbuild and some ethylene.

And.

We can still capture a good cash contributions.

Contributions.

Speaker Change: Ethylene based PVC.

Speaker Change: PVC plants Ah study has been China, but cost is a lot higher.

Great. Thank you.

Youre welcome.

Speaker Change: From either put one produce ethylene or imported EDC.

Thank you one moment for our next question.

Speaker Change: So.

Speaker Change: I think global demand that's the key question and some of this is.

And our next question comes from the line of Jeff Zekauskas from Jpmorgan. Your question. Please.

Speaker Change: Political macroeconomic related and the other was the interest rate related.

Thanks very much.

Speaker Change: No.

Did a pox.

<unk> has by far the lowest cost position.

Profits meaningfully decrease sequentially.

Speaker Change: Low cost ethane ethylene and low cost power to make chlor alkali.

Speaker Change: So we are able to export as we mentioned in the talk earlier, they're able to capture capture any opportunities that comes up for export if the U S demand is out there for that enough. So that's why we mentioned in the fourth quarter, we did more export than second and third quarter.

Yes, Jeff It's Steve, Yes, and when you think of the profit contributions they were <unk>.

Continuing to decline over the second half of 2023, so sequentially from from <unk> to <unk>. They certainly declined in may decline from <unk> into <unk>. So there was a sequential decline over the course of the second half of the year.

Speaker Change: And.

Speaker Change: We can still capture a good cash.

Speaker Change: Contributions.

Okay and then in your earlier remarks, you highlighted.

Speaker Change: Great. Thank you.

Speaker Change: Youre welcome.

The sequential decline in Perm has the result of lower caustic soda prices.

Speaker Change: Thank you one moment for our next question.

So if that was the largest component.

Speaker Change: And our next question comes from the line of Jeff Zekauskas from J P. Morgan Your question. Please.

Quarter of magnitude, where they lower by $100 a ton in the core.

Jeff Zekauskas: Thanks very much.

<unk> sequentially.

Jeff Zekauskas: Did a pox.

Jeff Zekauskas: Profits meaningfully decrease sequentially.

Yes, I would say a combination of the caustic and.

As well as some PVC price dropped, but youre right I think caustic last year they dropped.

Jeff Zekauskas: Yes, Jeff It's Steve, Yes, and when you think of the profit contributions they were <unk>.

Materially.

Jeff Zekauskas: Continuing to decline over the second half of 2023, so sequentially from <unk> from <unk> to <unk>. They certainly declined and they declined from <unk> into <unk>. So there was a sequential decline over the course of the second half of the year.

Over.

I think 300.

$1 for the whole year last year the trend at the every months it dropped except I think in January or February now we are seeing the first price increase I think youre looking at according to CMA recorded $5 a ton price increase in February.

Speaker Change: Okay and then in your earlier remarks, you highlighted.

And that's the first time for 14 months.

Speaker Change: The sequential decline in Perm has the result of lower caustic soda prices.

At the coffee price has not dropped actually went up.

Okay, and then in housing and infrastructure products year over year in the fourth quarter.

Speaker Change: So if that was the largest component.

Speaker Change: Like order of magnitude, where they lower by $100 a ton in the quarter sequentially.

With that $53 million increase.

Really.

Fittings and pipes related or was it related more to the other parts of the hips business.

Speaker Change: Yes, I think combination of the caustic and.

Speaker Change: Uh huh.

Yes, so Jeff the contribution from both the pipe and fittings business and frankly, our siding and trim business, where we're strong in that period. So, it's both pipe and fittings and siding and trim business.

Speaker Change: As well as some PVC price dropped, but youre right I think caustic last year they dropped.

Speaker Change: Materially.

Over.

Speaker Change: I think 300.

Speaker Change: Dollars, but for the whole year last year the trend at the every months it dropped except I think in January or February now we are seeing the first price increase I think looking at according to CMA recorded $5 a ton price increase in February.

And then lastly, you.

You talked about raw material cost inflation in <unk>.

Okay.

I don't think theres any raw material cost inflation in PVC.

Whereas the.

Speaker Change: And that's the first time for 14 months that coffee price has not dropped actually went up.

Raw material cost inflation coming from in hips for 2020.

Yes, so Jeff I'm speaking to the PVC price nominations that we see that are out in February February by all the producers at this stage, so Westlake and all the others have price nominations out for February and so certainly as we look forward given the volume demand, we're seeing in our downstream building products.

Speaker Change: Okay, and then in housing and infrastructure products year over year in the fourth quarter.

Speaker Change: With that $53 million increase.

Speaker Change: Really.

Speaker Change:

Speaker Change: Fittings and pipes related or was it related more to the other parts of the hips business.

<unk> and.

And we mentioned the the strength that we're seeing as we exited 2023 and 24 in the building product side of our business seeing the pull on those products, which should pull on the PVC resin and this is why we're seeing that pull and why we've seen price nominations by all the producers in the marketplace.

Speaker Change: Yes, so Jeff the contribution from both the pipe and fittings business and frankly, our siding and trim business, where we're strong in that period. So, it's both pipe and fittings and siding and trim business.

Speaker Change: And then lastly, you.

Speaker Change: You talked about raw material cost inflation and helps.

But you're so what youre, saying is that the margins because you transfer.

Speaker Change: I don't.

Speaker Change: Theres any raw material cost inflation in PBC.

Mark to market.

Speaker Change: Whereas the.

Pam.

Speaker Change: Raw material cost inflation coming from men hips for 2020.

The the margins in hips will be pushed down in the margins and Pam will be pushed up all things being equal.

Speaker Change: Yes, so Jeff I'm speaking to the PVC price nominations that we see that are out in February February by all the producers at this stage, so Westlake and all the others have price nominations out for February and so certainly as we look forward given the volume demand, we're seeing in our downstream building products.

Correct, Yeah correct okay.

Alright, Thank you very much.

Welcome.

Thank you one moment for our next question.

And our next question comes from the line of Richard Katrina from Wells Fargo. Your question. Please.

Speaker Change: Mrs and.

Speaker Change: And we mentioned the the strength that we're seeing as we exited 2023 and 24 in the building product side of our business seeing the pull on those products, which should pull on the PVC resin and this is why we're seeing that pull and why we've seen price nominations by all the producers in the marketplace.

Great. Thanks for taking the question.

First on the <unk> segment.

Just wondering about the competitive landscape.

The 11% year over year volume growth.

That reflect any market share gains within the product lines.

Speaker Change: But you're so what youre, saying is that the margins because you transfer.

<unk> are you seeing the strongest increases.

Yeah.

So we've seen some good traction really with our customer base. So you've seen us make many references to the portfolio and the brands that are associated with that portfolio and so having a nationwide footprint and have broad and strong product offering allowed us to really make good contributions and market share gains.

Speaker Change: Mark to market.

Speaker Change: Pam.

The the margins in hips will be pushed down in the margins and Pam will be pushed up all things being equal.

Speaker Change: Correct, Yeah, correct, Okay alright.

And certainly building relationships with many of these distributors who are servicing many of the nationwide homebuilders is really where we're seeing good traction.

Speaker Change: Alright, Thank you very much.

Speaker Change: Welcome.

Speaker Change: Thank you one moment for our next question.

Okay, Great and then on the pricing side are you seeing a more competitive pricing landscape.

Speaker Change: And our next question comes from the line of Richard Katrina from Wells Fargo. Your question. Please.

Or is that just pricing pressure given lower housing starts and a weaker macro outlook year over year I would say I would say we've been able to really maintain that you saw this in the fourth quarter relative to the third quarter pricing was relatively flat and hip.

Richard Katrina: Great. Thanks for taking my question.

Richard Katrina: First on the <unk> segment.

Richard Katrina: Just wondering about the competitive landscape.

Richard Katrina: The 11% year over year volume growth.

Richard Katrina: That reflect any market share gains within.

Other product lines.

And so I would say that we were able to maintain pricing.

Richard Katrina: <unk> are you seeing the strongest increases.

Richard Katrina: Yeah.

And sequentially from $3 <unk> and as we pull into the first quarter of 'twenty for continuing to see good volume and certainly trying to then.

Speaker Change: So we've seen some good traction really with our customer base. So you've seen us make many references to the portfolio and the brands that are associated with that portfolio and so having a nationwide footprint and have broad and strong product offering allowed us to really make good contributions in market share gains.

Be the beneficiary of that volume pole.

My guidance and we've talked about this in a couple of the other questions that we do have some price nominations out for PVC resin and so certainly if we see strength in PVC.

Speaker Change: And certainly building relationships with many of these distributors who are servicing many of the nationwide homebuilders is really where we're seeing good traction.

Demand related products, citing trim shutters and other applications.

We will certainly try to not pass those higher prices certainly try to pass those higher prices through and not get caught in a margin compression, but we'll see how the market <unk>.

Speaker Change: Okay, Great and then on the pricing side are you seeing a more competitive pricing landscape.

Speaker Change: Or is that just pricing pressure given lower housing starts and the weaker macro outlook year over year I would say I would say we've been able to really maintain that you saw this in the fourth quarter relative to the third quarter pricing was relatively flat and hip.

<unk> plays through.

Alright, thank you.

Thank you one moment for our next question.

And our next question comes from the line of Vincent Andrews from Morgan Stanley. Your question. Please.

Speaker Change: And so I would say that we were able to maintain pricing.

Speaker Change: And sequentially from three years to <unk> and as we pull into the first quarter of 'twenty for continuing to see good volume and certainly trying to then.

Hi, This is Henry on for Vincent I Am wondering if you could provide an update on what youre seeing for inventory levels among customers and what are you expecting tailwind from restocking mentioned in your prepared remarks.

Speaker Change: Be the beneficiary of that volume pole my guidance and we've talked about this in a couple of the other questions that we do have some price nominations out for PVC resin and so certainly if we see strength in PVC.

Yeah.

Yes, I was talking about.

Our perm customers saw hip customers.

In particular, the whichever channels, we're seeing the restocking mentioned.

Speaker Change: Demand related product, citing trim shutters and other applications, we will certainly try to not pass those higher prices certainly try to pass those higher prices through and not get caught in a margin compression, but we'll see how the market demand wise plays through.

Pam would be of interest in particular.

Yes, I think.

So you can tell when prices.

Came down and.

Demand came down last year customers tend to be have low inventory levels and the order.

Speaker Change: Great. Thank you.

Only order when they need products.

Speaker Change: Thank you one moment for our next question.

So <unk> and also they don't they don't need to carry inventory. So as we come into January February of this year customers are starting to order to their demand.

Speaker Change: Yeah.

Speaker Change: And our next question comes from the line of Vincent Andrews from Morgan Stanley. Your question. Please.

Hi, This is Turner Henry on for Vincent I Am wondering if you could provide an update on what youre seeing for inventory levels, among customers and where youre expecting tailwind from restocking mentioned in your prepared remarks.

And so we are seeing the order going up but I think inventory is still customer very cautious there.

They are still keeping relatively low to medium levels of inventory and that's true also for <unk>.

Speaker Change: Yeah.

Turner Henry: Yes, I was talking about.

The hip side.

But as you know this is the <unk> material construction.

Turner Henry: Pam customers saw hip customers.

Turner Henry: In particular, the whichever channels, we're seeing the restocking mentioned, but perm would be of interest in particular.

<unk>, usually starting from March is.

The season people start increasing construction.

And with a warmer weather people stop it earlier.

Speaker Change: Yes, I think.

I think the Argus ordering to meet that demand and make sure. They have good they have the products.

Speaker Change: As you can tell when prices came.

<unk> came down and.

Speaker Change: Demand came down last year customers tend to be have low inventory levels and order.

Cause if you Miss.

One item the houses are complete so they will make sure. They have all the items delivered to the site that you can put a house together whether through quickly.

Speaker Change: Only order when they need products.

Speaker Change: So <unk> and also they don't they don't need to carry inventory. So as we come into January February of this year customers are starting to order to their demand.

Great great. Thanks for all the detail there.

Also I'm wondering if you're going to buy a little additional color on your outlook for the caustic soda industry and prices during 2024 and I was wondering specifically also weather.

Speaker Change: And so we are seeing the order going up but I think inventory is still customer very cautious there.

They are still keeping relatively low to medium levels of inventory and that's true also for <unk>.

Or what you're expecting in the first quarter in terms of price and volume and whether the increase you saw caustic soda prices was meant was driven by trade and freight dynamics from your perspective or underlying supply and demand.

Speaker Change: The hip side.

Speaker Change: But as you know this is a good material construction.

Speaker Change: <unk>, usually starting from March is.

Yes, I think the supply demand is improved I think we see some.

Speaker Change: The season people start increasing construction.

Speaker Change: With the warmer weather people stop it earlier.

Pulp and paper.

So running harder in the ordering.

Speaker Change: So I think they are ordering to meet that demand and make sure. They have good they have the products.

Caustic and chlorine.

Now his question earlier, the Cma's forecast.

Speaker Change: Cause if you Miss.

Speaker Change: One item the houses are complete so they will make sure. They have all the items delivered to the sites that you can put a house together relatively quickly.

For operating rates for Chlor alkali in the U S are running in the high <unk>.

Okay, but not great.

So this is their forecast now now things could change.

Speaker Change: Great great. Thanks for all the detail there.

But I think also export price says stop moving up and.

Speaker Change: Also I'm wondering if you're going to buy a little additional color on your outlook for the caustic soda industry and prices. During 2024 I was wondering specifically also weather.

Again the consultants.

Looking at.

$5 increase in February and April 10, and Mays is five <unk>.

Speaker Change: Or what you're expecting in the first quarter in terms of price and volume and whether the increase you saw caustic soda prices was meant was driven by trade and freight dynamics from your perspective or underlying supply and demand.

While the industry that we have announced.

The increase in other companies announce price increase more than what the CMA has announced and time will tell how much of our industry announcement, we'll get.

Speaker Change: Yes, I think the supply demand is improved I think we see some.

We will get.

Putting in place.

Speaker Change: Pulp and paper.

But it's a substantially higher price increases announced by the industry.

Speaker Change: So running harder in the ordering.

Speaker Change: Caustic and chlorine.

Okay, great. Thank you.

Speaker Change: Now as mentioned earlier the Cma's forecast.

Youre welcome.

Thank you one moment for our next question.

Speaker Change: For operating rates for Chlor alkali in the U S are running in the high <unk>, which is okay, but not great.

And our next question comes from the line of Kevin Mccarthy from vertical Research partners. Your question. Please.

Speaker Change: So this is their forecast now now things could change.

Speaker Change: But I think also export price says stop moving up and.

Thank you and good morning with.

With regard to PVC production.

Speaker Change: Again the consultants.

In 2023, I was wondering if you might be willing to split it into three buckets those would be the amount or percentage that used internally and hip.

Speaker Change: Looking at.

Speaker Change: $5 increase in February and April 10, and Mays is five <unk>.

Speaker Change: Though the industry that we have announced.

Speaker Change: The increase in other companies announced price increase more than what the CMA has announced and time will tell how much of our industry announcements we will get.

Versus U S domestic sales versus export sales.

Would you size each of those.

Yes, Kevin it's Dave because we're using a lot of that PVC resin really in our building products business roughly a quarter of that is going into the building products business.

Speaker Change: We will get.

Speaker Change: Put in place.

Speaker Change: But at a substantially higher price increases announced by the industry.

Business into the hip business and the remaining 75% of that is sold either domestic or international because we are selling so much of that 25% domestically are.

Speaker Change: Okay, great. Thank you.

Speaker Change: Youre welcome.

Speaker Change: Thank you one moment for our next question.

Our mix relative to industries, therefore is going to be a lower mix of exports relative to the industry average.

Kevin W. McCarthy: And our next question comes from the line of Kevin Mccarthy from vertical Research partners. Your question. Please.

So obviously to the extent that we see the strong markets domestically, we'd rather sell it domestically versus export and that really that percentage is always can be lower than industry average because of that domestic debt internal sale, but I would say, we certainly focus on the domestic market as much as we can and pivot to the expert.

Kevin W. McCarthy: Thank you and good morning with.

Kevin W. McCarthy: With regard to PVC production.

Kevin W. McCarthy: In 2023, I was wondering if you might be willing to split it into three buckets those would be the amount or percentage that used internally and hip.

Kevin W. McCarthy: Versus U S domestic sales versus export sales.

Markets. When there is seasonal element at play such as in the fourth quarter those exports tend to be higher and certainly it's also a function of how strong the domestic market is.

Kevin W. McCarthy: Would you size each of those.

Kevin W. McCarthy: Yes, Kevin it's Steve because we were using a lot of that PVC resin really in our building products business roughly a quarter of that is going into the building products business.

So it's hard to give you a hard and fast percentage of domestic or export per se.

Understood. That's helpful and then just coming back to the caustic soda discussion.

Kevin W. McCarthy: Business into the hip business and the remaining 75% of that is sold either domestic or international because we are selling so much of that 25% domestically are.

Would you expect your average selling prices in the first quarter relative to the fourth quarter of 2023 to be higher or lower or roughly the same.

Our mix relative to industries, therefore is going to be a lower mix of exports relative to the industry average.

Kevin W. McCarthy: So obviously to the extent that we see the strong markets domestically, we'd rather sell it domestically versus export and that really that percentage is always can be lower than industry average because of that domestic debt internal sale, but I would say, we certainly focus on the domestic market as much as we can and pivot to the expert.

You were asking about the average selling price for caustic in the first quarter versus the fourth quarter of 2023.

Yes, that's correct <unk> is obviously more than halfway done. So just kind of curious if you look at your order books for the next six weeks or so you referenced some of the uptick in caustic prices in February. So one could argue perhaps we're coming off the bottom a little bit, but if I just think about that.

Kevin W. McCarthy: Markets when there is seasonal.

Kevin W. McCarthy: Elements at play such as in the fourth quarter those exports tend to be higher and certainly it's also a function of how strong the domestic market is.

Sequential move from <unk> into <unk> do you think the result might be materially different.

Kevin W. McCarthy: So it's hard to give you a hard and fast percentage of domestic or export per se.

Speaker Change: Understood. That's helpful and then just coming back to the caustic soda discussion.

Terms of your realized price for caustic.

While the quarter to CMA fourth quarter last year, 2023, caustic price domestically dropped by $60 a ton.

Speaker Change: Would you expect your average selling prices in the first quarter relative to the fourth quarter of 2023 to be higher or lower or roughly the same.

I said earlier CMA looking at $5 increase in February and then $10 in April.

So the average the average price will go lower in <unk> I just want make sure you were talking about <unk> versus <unk> 24, clearly with the decline in price we've seen through 'twenty three the average price in 2004 will be lower than the fourth quarter average price in 'twenty three.

Speaker Change: You were asking about the average selling price for caustic in the first quarter versus the fourth quarter of 2023.

Speaker Change: Yes, that's correct <unk> is obviously more than halfway done. So I'm just kind of curious if you look at your order books for the next six weeks or so you referenced some of the uptick in caustic prices in February. So one could argue perhaps we're coming off the bottom a little bit, but if I just think about that.

Got it okay. Thank you very much.

Youre welcome.

Thank you one moment for our next question.

Speaker Change: Sequential move from <unk> into <unk> do you think the result might be materially different.

And our next question comes from the line of David Begleiter from Deutsche Bank. Your question. Please.

Speaker Change: Terms of your realized price for caustic.

Thank you.

How do you expect ethylene chain margins to progress through 2024.

Speaker Change: While the quarter to CMA fourth quarter last year, 2023, caustic price domestically dropped by $60 a ton.

A good question as I said earlier they are <unk>.

This increase we have 5% of home price increase achieved in January.

Speaker Change: I said earlier CMA looking at $5 increase in February and then $10 in April.

And.

Price increase announced for February in one industry.

Speaker Change: Oh, yes, so the average the average price will go lower in <unk> I just want make sure you were talking about <unk> versus <unk> 24, clearly with the decline in price we've seen through 2003. The average price in 24 will be lower than the fourth quarter average price in 'twenty three.

Participant has announced the price increase for March.

And.

So.

We are seeing some improvements in export price. So we believe that some part of the price increase will go through but it is the first quarter a lot depending on global economy supply demand macroeconomics and also.

Speaker Change: Got it okay. Thank you very much.

Speaker Change: Youre welcome.

Speaker Change: Thank you one moment for our next question.

The Red Sea Suez Canal issues had Panama canal, well, where they'll be settled or subside issues. All of these have to come into play in terms of.

Speaker Change: And our next question comes from the line of David Begleiter from Deutsche Bank. Your question. Please.

Our pricing and the volumes are moving international trade.

David I. Begleiter: Thank you.

David I. Begleiter: How do you expect ethylene chain margins to progress through 2024.

And polyethylene.

The U S exports, a large quantity I think close to about 50.

David I. Begleiter: Good question as I said earlier they are <unk>.

50% plus or minus of total U S. P produces exported so export is a big component of it. So all these dynamics, it's difficult to forecast what sort of happened, but we believe at least domestically the first quarter things should get better and we mentioned earlier that with lower price of natural gas.

David I. Begleiter: This increase we have 5% of home price increase achieved in January.

David I. Begleiter: And.

David I. Begleiter: Price increase announced for February in one industry.

David I. Begleiter: Participant has announced the price increase for March.

David I. Begleiter: And.

David I. Begleiter: So.

David I. Begleiter: We are seeing some improvements in export price. So we believe that some part of the price increase or will go through but it is the first quarter a lot depending on global economy supply demand macroeconomics and also.

And ethane.

The ethane based production cost should be low if you have positive price increase the margin should improve.

Got it and adjusting your cost savings in 'twenty, three and 'twenty four how much will come from a boxing.

David I. Begleiter: The Red Sea Suez Canal issues had Panama canal, well will be settled or subside issues. It's always have to come into play in terms of.

Okay.

Our policy is.

It's not a big part of Westlake business and we're talking about the problem was the furnace.

David I. Begleiter: Our pricing and the volumes are moving international trade.

Leather than planned a policy that we have problems with and you heard also.

David I. Begleiter: No in polyethylene.

David I. Begleiter: The U S exports, a large quantity I think close to about.

Doing substantial.

Substantial.

Cost reduction programs to make the system better but.

David I. Begleiter: 50% plus or minus of total U S. P produces exported so export is a big component of it. So all these dynamics, it's difficult to forecast what will happen, but we believe at least domestically the first quarter things should be better and we mentioned earlier that with lower priced <unk>.

And but still Asian export to Europe, and is a big issue or keeping prices low.

But our policy as a whole is a small part of our flex business.

Thank you.

And David just maybe to give you a broader understanding of that savings over the course of 'twenty four I would guide to probably three quarters or so of that would probably be on the perm side of the business and the other 25% probably be on the hip side of the business do you have an understanding of the relative expected mix of that of that savings of 125 to 150.

David I. Begleiter: Gas and ethane.

Base production cost should be low if you have positive price increase the margin should improve.

Speaker Change: Got it and adjusting your cost savings in 'twenty, three and 'twenty four how much will come from a boxy.

That we expect to benefit from.

Speaker Change: Okay.

Speaker Change: Our focus is.

Okay.

Speaker Change: It's not a big part of Westlake business and we're talking about the problem was the Pernis Netherland.

Oh.

Thank you one moment for our next question.

Yeah.

Speaker Change: Netherlands planned a policy that we have problems with and you heard also.

And our next question comes from the line of Hassan Ahmed from <unk>.

Speaker Change: Doing substantial.

Alembic Global Advisors your question please.

Speaker Change: Substantial.

Speaker Change: Cost reduction programs to make the system better but.

Good morning, Albert and Steve.

A question around.

Speaker Change: And but still Asian export to Europe, and is a big issue or keeping prices low.

Hum Good morning question around the Chlor alkali markets.

The last couple of years certainly since.

Speaker Change: But our policy as a whole is a small part of west links business.

The end of 2020, the virtue of sort of the Chlor alkali story had been.

Speaker Change: Thank you.

And David just maybe to give you a broader understanding of that savings over the course of 'twenty four I would guide to probably three quarters or so of that would probably be on the perm side of the business and the other 25% probably be on the hip side of the business. So you have an understanding of the relative expected mix of that of that savings of 125 to 150.

A high degree of discipline, particularly in the North American market right.

And obviously that resulted in in decent sort of pricing growth margin growth and the like and then obviously we started seeing destocking you know over the course of the last couple of quarters.

Speaker Change: That we expect to benefit from.

And some pricing and margin erosion right and we all talked about sort of operating rates in North America being relatively depressed, but demand beginning to pick up now one of your larger competitors out there has been pretty vocal about potentially ramping up utilization rates February onwards. So.

Speaker Change: Okay.

Speaker Change: Oh.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Yeah.

And our next question comes from the line of Hassan oven from <unk>.

Hassan I. Ahmed: Alembic Global Advisors your question please.

My question to you is what gives you confidence that the industry will continue to remain disciplined, particularly keeping in mind operating rates.

Hassan I. Ahmed: Good morning, Albert and Steve.

Hassan I. Ahmed: A question around.

Hassan I. Ahmed: Hum Good morning question around the Chlor alkali markets.

Thank you alluded to them being around 70% and youre holding on to pricing or maybe even gaining from.

Hassan I. Ahmed: The last couple of years, I mean, certainly sense.

Hassan I. Ahmed: At the end of 2020, the virtue of sort of the Chlor alkali story had been.

Yeah very good question.

Big part was the export price when export prices.

Hassan I. Ahmed: A high degree of discipline, particularly in the North American market right.

Also high than U S enjoyed also high domestic price, but export prices declined pretty sharply 2023.

Hassan I. Ahmed: And obviously that resulted in in decent sort of pricing growth margin growth and the like and then obviously, we started seeing destocking over the course of the last couple of quarters.

So U S domestic market has to respond and we are seeing signs that the export price stabilize and start moving it up a little bit.

Hassan I. Ahmed: And some pricing and margin erosion right and we all talked about sort of operating rates in North America being relatively depressed, but demand beginning to pick up now one of your larger competitors out there has been pretty vocal about potentially ramping up utilization rates February onwards. So.

So I think it's the economics.

Whether it's.

Going too.

The aluminum business or pulp and paper and it was said earlier, we see some sign of improvement and demand is increasing.

Hassan I. Ahmed: My question to you is what gives you confidence that the industry will continue to remain disciplined, particularly keeping in mind operating rates at I I T.

International caustic market desktop huge amount of capacity added globally, it's really a demand issue without a supply issue.

Hassan I. Ahmed: You alluded to them being around 70% and youre holding on to pricing or maybe even gaining from.

And hopefully as the.

Economics improves globally and in China, and also China as economy improves we are hearing that the government in China is trying to again it stimulate a.

Speaker Change: Yes, very good question.

Speaker Change: Big part was the export price when export prices.

Speaker Change: Also high than U S enjoyed also high domestic price, but export price start declined pretty sharply 2023.

Construction business after new year's over time will tell.

What kind of initiatives still have.

If the global economy stabilizes and continue to.

Speaker Change: So U S domestic market has to respond and we are seeing signs that the export price stabilize and start moving it up a little bit.

Recover and grow in a lower interest rate it'll help caustic caustic is such a broad industrial chemical is use it goes into many many segments of our of our economy.

Speaker Change: So I think it's the economics.

Speaker Change: Whether it's.

Consumer industrial investments.

Speaker Change: Going too.

No.

Speaker Change: The alumina business or pulp and paper and it was said earlier, we see some sign of improvement and demand is increasing.

So bellwether of the global economy and.

We hope this year thinks will bottomed out last year bottomed out and getting better. So we are optimally.

Speaker Change: International caustic market desktop huge amount of capacity added globally, it's really demand issue without a supply issue.

Cautiously optimistic on caustic market, but a lot of things could happen.

Fair enough and as a follow up on the PVC side of things.

Speaker Change: And hopefully as the.

Economics improves globally and in China, and also China as economy improves we are hearing that the government in China is trying to again stimulate.

You touched on China earlier, I mean, let's assume for a second that there is no stimulus in China.

Obviously barring that I'd like to think that the Chinese market is quite long PVC. So what are you guys seeing in terms of trade flows out of China on the PVC side in particular and barring a stimulus could that be a risk maybe potentially even to domestic U S pricing if.

Speaker Change: The construction business after new year's over time will tell.

Speaker Change: What kind of initiatives still have.

Speaker Change: If the global economy stabilizes and continue to recur.

Speaker Change: Recover and grow in a lower interest rate it'll help caustic caustic is such a broad industrial chemical is use it goes into many many segments of our of our economy.

If China ramped up exports.

Yes, I think as I said earlier, China ex PVC, 80%.

Speaker Change: Consumer industrial investments OLED so.

On the carbide based is not welcomed maybe on South Asia, maybe a south China, South Asia, but you don't have carbide PVC go into Europe will go into North America.

Speaker Change: So bellwether of the global economy and.

Speaker Change: We hope this year things will bottom out or lost share bottomed out and getting better. So we are optimally.

Speaker Change: <unk> <unk>.

And as a moratorium on new build so really it's a.

Speaker Change: Cautiously optimistic of caustic market, but a lot of things could happen.

Existing demand as we think capacity that's the property in China.

Speaker Change: Fair enough and as a follow up on the PVC side of things.

Speaker Change: You touched on China earlier, I mean, let's assume for a second that there is no stimulus in China.

Chinese infrastructure and residential improves then.

Then <unk> will improve but we are seeing last year Chinese PVC exports as I said to South Asia and South Asia.

Speaker Change: Obviously barring that I would like to think that the Chinese market is quite long PVC.

Speaker Change: What are you guys seeing in terms of trade flows out of China on the PVC side in particular and barring a stimulus could that be a risk maybe potentially even to domestic U S pricing, if if China ramped up exports.

But we are seeing that slowdown because the.

The Chinese government are trying to really reduce.

Carbon emissions of Pollutions.

And the double control from GDP Cook.

Speaker Change: Okay.

Couple of emissions per GDP by cities and provinces.

Speaker Change: Yes, I think as I said earlier, China ex PVC, 80% is on the.

People are watching carefully.

Speaker Change: Carbide based is not welcomed maybe on South Asia, maybe a self China, South Asia, but you don't have carbide PVC go into Europe will go into North America.

And.

So.

We don't expect that Chinese PVC be flooding the market.

And then also the sale of high cost energy is still higher cost in the U S.

Speaker Change: And as a moratorium on new build so really it's a.

Fair enough.

I have one last one if I could squeeze it in just you know you talked about.

Speaker Change: Existing demand as we think capacity that's the problems in China.

Lower margins Q3 to Q4.

Speaker Change: Chinese infrastructure and residential improves then.

Primarily on sort of higher export demand in PVC and caustic and obviously that coincided with all the sort of shipping related cost escalation that had happened on the back of the Red Sea.

Speaker Change: The demand PVC would improve but we are seeing last year Chinese PVC exports as I said to South Asia and South Asia.

I mean did that play a material role in some of the margin squeeze that you guys saw in those two product areas in particular.

But we are seeing that slowdown because the.

The Chinese government are trying to really reduce.

Yeah, you're absolutely right.

Speaker Change: Carbon emissions of Pollutions.

The shipping freight rates, we heard increased by three to four two to $300 a ton it could be even higher and also delayed our route arrival, it's really impacted the global trade and things with all about Asia exports to Europe, and some to the U S. It has stopped or slowed down a lot of that and I think that helps.

Speaker Change: And the double control from GDP Cook.

Speaker Change: <unk> emissions per GDP by cities and provinces.

Speaker Change: People are watching carefully.

Speaker Change: And.

Speaker Change: So.

Speaker Change: We don't expect that Chinese PVC be flooding the market.

Also supporting price increase as we said in our remarks.

Speaker Change: And then also the steel.

Speaker Change: We have high cost LNG is still higher cost in the U S.

Up.

Very helpful. Thank you so much.

Speaker Change: Fair enough.

Speaker Change: Since I have you one last one if I could squeeze it in just you know you talked about.

Youre welcome.

Thank you one moment for our next question.

Speaker Change: Sort of you know lower margins Q3 to Q4.

And our next question.

Speaker Change: Not really on sort of higher export demand in PVC and caustic and obviously that coincided with all just sort of shipping related cost escalation that it happened on the back of the Red Sea.

Comes from the line has suffered tour Tiano from Bank of America. Your question. Please.

Thank you very much for taking my follow up just wanted to check so essentially you're pretty much saying that your <unk> guidance are about 20% EBITDA margin.

Speaker Change: I mean did that play a material role in some of the margin squeeze that you guys saw in those two product areas in particular.

Contingent on the 5% per pound PVC price increase so I'm wondering if that doesn't go through or if price overall for the year don't increase as much.

Speaker Change: Yes, you're absolutely right.

Speaker Change: The shipping freight rates, we heard increased by three to four two to $300 a ton and it could be even higher than that.

How much would that be.

Speaker Change: Delayed route arrival.

Benefit.

Earnings at the expense of Prime earnings.

Speaker Change: Really the impact that the global trade and things with all about Asia exports to Europe, and some to the U S. It has stopped or slowed down a lot of that and I think that helped also supporting price increase as we said in our remarks.

Yeah.

Okay.

As I indicated I think that the.

The guidance that we provided is reflective of our outlook. Today is certainly if we don't see that strength in PVC that raised price, we havent seen reductions in building products prices at the end of the year you saw that they were relatively flat. So the contribution really to the to the hip side of the business should continue to be.

Speaker Change: Going up.

Speaker Change: Very helpful. Thank you so much.

Speaker Change: Youre welcome.

Speaker Change: Thank you one moment for our next question.

Obviously, we're more heavily weighted on the PVC side. So obviously, while there is benefit of having lower input costs, we have more heavily weighted volume in PVC than we do in the building products using that PVC. So it would be more constructive to get that price nomination of PVC through for the when.

Speaker Change: And our next question.

Speaker Change: Comes from the line of sulfur tour Tiano from Bank of America. Your question. Please.

Thank you very much for taking my follow up just wanted to check so essentially you're pretty much saying that your <unk> guidance are about 20% EBITDA margin.

Think of the whole of the Westlake.

Speaker Change: Contingent on the 5% per pound PVC price increase so I'm wondering if that doesn't go through or if price overall for the year don't increase as much.

Yes.

Okay. Thank you very much.

Welcome.

Thank you. This does conclude the question and answer session of today's program I'd like to hand, the program back to Jeff for any further remarks.

Speaker Change: How much would that benefit.

Speaker Change: He earnings at the expense of Prime earnings.

Thank you. Thanks again for participating in today's call. We hope you'll join US again for our next conference call to discuss our first quarter 2024 results.

Speaker Change: Yeah.

Okay.

Speaker Change: As I indicated I think that the.

Speaker Change: The guidance that we provided is reflective of our outlook. Today is certainly if we don't see that strength in PVC that raised price, we havent seen reductions in building products prices at the end of the year you saw that they were relatively flat. So the contribution really to the to the hip side of the business should continue to be.

Okay.

Yes.

Thank you for participating in today's Westlake Corporation fourth quarter and full year earnings Conference call. As a reminder, this call will be available for replay beginning two hours. After the call has ended.

The replay can be accessed via West Lake website Goodbye.

Speaker Change: Obviously, we're more heavily weighted on the PVC side. So obviously, while there is benefit of having lower input costs, we have more heavily weighted volume in PVC than we do in the building products using that PVC. So it would be more constructive to get that price domination in PVC through for when.

Speaker Change: Do you think of the whole of Westlake.

Speaker Change: Yes.

Speaker Change: Thank you very much.

Speaker Change: Welcome.

Speaker Change: Thank you. This does conclude the question and answer session of today's program I'd like to hand, the program back to Jeff for any further remarks.

Jeff Zekauskas: Thank you. Thanks again for participating in today's call. We hope you'll join US again for our next conference call to discuss our first quarter 2024 results.

Okay.

Jeff Zekauskas: Oh.

Jeff Zekauskas: Thank you for participating in today's Westlake Corporation fourth quarter and full year earnings Conference call. As a reminder, this call will be available for replay beginning two hours. After the call has ended.

Jeff Zekauskas: The replay can be accessed via West Lake website Goodbye.

Jeff Zekauskas: Yeah.

Jeff Zekauskas: Okay.

Jeff Zekauskas: [music].

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Jeff Zekauskas: Yeah.

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Jeff Zekauskas: [music].

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Jeff Zekauskas: Yes.

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Jeff Zekauskas: [music].