Q1 2026 Westlake Corp Earnings Call

May 5, 2026

Operator: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Westlake Corporation Q1 2026 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. After the speaker's remark, you'll be invited to participate in a question and answer session. As a reminder, ladies and gentlemen, this conference is being recorded today, 5 May 2026. I would like to turn over the call to today's host, Jeffrey Holy, Westlake's Vice President and Chief Accounting Officer. Sir, you may begin.

Speaker #1: After the speakers' remarks, this after the speakers' remarks, you'll be invited to participate in a question-and-answer session. As a reminder, ladies and gentlemen, this conference is being recorded today May 5, 2026.

Speaker #1: I would like to turn over the call to today's host, Jeff Holy, WESTLAKE's Vice President and Chief Accounting Officer. Sir, you may begin.

Speaker #2: Thank you, Crystal. Good morning, everyone, and welcome to the WESTLAKE CORP CONFERENCE CALL. To discuss our first quarter 2026 results. I'm joined today by Albert Chao, our Executive Chairman, Jean-Marc Gilson, our President and CEO, Steve Bender, our Executive Vice President and Chief Financial Officer, and other members of our management team.

Jeffrey Holy: Thank you, Crystal. Good morning, everyone. Welcome to the Westlake Corporation conference call to discuss our Q1 2026 results. I'm joined today by Albert Chao, our Executive Chairman; Jean-Marc Gilson, 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 and Essential Materials, which we refer to as PEM or Materials, and Housing and Infrastructure Products, which we refer to as HIP or Products. Today's conference call will begin with Jean-Marc, who will open with a few comments regarding Westlake's Q1 performance. Steve will then discuss our financial and operating results. After which, Jean-Marc will add a few concluding comments, and we will open the call up to questions.

Jeffrey Holy: Thank you, Crystal. Good morning, everyone. Welcome to the Westlake Corporation Conference call to discuss our Q1 2026 results. I'm joined today by Albert Chao, our Executive Chairman; Jean-Marc Gilson, 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 and Essential Materials, which we refer to as PEM or Materials, and Housing and Infrastructure Products, which we refer to as HIP or Products. Today's conference call will begin with Jean-Marc, who will open with a few comments regarding Westlake's Q1 performance. Steve will then discuss our financial and operating results. After which, Jean-Marc will add a few concluding comments, and we will open the call up to questions.

Speaker #2: During the call, we will refer to our two reporting segments: Performance and Essential Materials, which we refer to as PEM or Materials, and Housing and Infrastructure Products, which we refer to as HIP or Products.

Speaker #2: Today's conference call will begin with Jean-Marc, who will open with a few comments regarding WESTLAKE's first quarter performance. Steve will then discuss our financial and operating results.

Speaker #2: After which, Jean-Marc will add a few concluding comments and we'll open the call up to questions. During the first quarter of 2026, we agreed to pay $67 million to settle certain legal claims in our pipe and fittings business.

Jeffrey Holy: During Q1 2026, we agreed to pay $67 million to settle certain legal claims in our pipe and fittings business. We also incurred expenses of $18 million related to the shutdown of facilities undertaken last year. We refer to these expense items, which in aggregate were $85 million, as the 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 all exclude the financial impact of the identified items. Comments made on this call will be in regard to our underlying business results using 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.

Speaker #2: We also incurred expenses of $18 million related to the shutdown of facilities undertaken last year. We refer to these expense items, which in aggregate were $85 million, as the identified items in our earnings release and on this conference call.

Speaker #2: References to income from operations, EBITDA, net income, and earnings per share on this call all 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 non-GAAP financial measures.

Speaker #2: 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.

Speaker #2: 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.

Jeffrey Holy: 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 risks and uncertainties are discussed in Westlake's Form 10-K for the year ended 31 December 2025, 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 Q1 results. This document is available in the press release section of our website at westlake.com. We have also included an earnings presentation, which can be found in the investor relations section on our website.

Speaker #2: These forward-looking statements suggest predictions or expectations and thus are subject to risks or uncertainties. These risks and uncertainties are discussed in WESTLAKE's Form 10-K for the year ended December 31, 2025, and other SEC filings.

Speaker #2: 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.

Speaker #2: This morning, Westlake issued a press release with details of our first quarter results. This document is available in the press release section of our website at westlake.com.

Speaker #2: 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 approximately two hours following the conclusion of this call.

Jeffrey Holy: A replay of today's call will be available beginning today, approximately two hours following the conclusion of this call. This replay may be accessed via Westlake's website. Please note that information reported on this call speaks only as of today, 5 May 2026. Therefore you are 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.com. Now, I would like to turn the call over to Jean-Marc Gilson. Jean-Marc?

Speaker #2: This replay may be accessed via WESTLAKE's website. Please note that information reported on this call speaks only as of today May 5, 2026, and therefore you are advised that time-sensitive information may no longer be accurate as of the time of any replay.

Speaker #2: Finally, I would advise you that this conference call is being broadcast live through an internet webcast system that can be accessed on our web page at westlake.com.

Speaker #2: Now, I would like to turn the call over to Jean-Marc Gilson. Jean-Marc?

Speaker #3: Thank you, Jeff. And good morning, everyone. We appreciate you joining us to discuss our first quarter 2026 results. During the first quarter, we delivered $2.7 billion in net sales, an EBITDA of $235 million, by supporting our customer supply needs, managing our cost, executing our three-pillar profitability improvement plan, and driving long-term value creation.

Jean-Marc Gilson: Thank you, Jeffrey, good morning, everyone. We appreciate you joining us to discuss our Q1 2026 results. During Q1, we delivered $2.7 billion in net sales and EBITDA of $235 million by supporting our customer supply needs, managing our cost, executing our three-pillar profitability improvement plan, and driving long-term value creation. While the first two months of the quarter saw PEM sales reflect lower sales prices and continued soft global industrial and manufacturing activity, sales improved significantly in March as the conflict in the Middle East brought about a significant disruption to global supplies of oil, chemical feedstocks, and polymers from the Persian Gulf. Commercial conditions for Westlake and our industry changed dramatically with the outbreak of the Middle East conflict.

Speaker #3: While the first two months of the quarter, so PEM sales reflect lower, continued soft global industrial and manufacturing activity, sales improved. Global supplies of oil, chemical feedstocks, Gulf.

Speaker #3: Commercial conditions for WESTLAKE and our industry changed dramatically with the outbreak of the Middle East conflict. Industry consultants estimate that this conflict has disrupted approximately 10 to 15 percent of global polyethylene supply, and approximately 5 percent of global PVC resin supply.

Jean-Marc Gilson: Industry consultants estimate that this conflict has disrupted approximately 10% to 15% of global polyethylene supply and approximately 5% of global PVC resin supply. Up to 20% of global oil supply is disrupted, which has reduced the availability of chemical feedstocks such as naphtha for much of the global chemical industry, creating further declines in the global supply of polyethylene and PVC. The associated sharp increase in global oil and chemical feedstock prices has significantly steepened the global cost curve for many of the material that PEM sells, which is supporting higher selling prices and margins for cost-advantaged producers in North America, such as Westlake.

Speaker #3: Furthermore, up to 20 percent of global oil supply is disrupted, which has reduced the availability of chemical feedstocks, such as NAFTA for much of the global chemical industry.

Speaker #3: Creating further declines in the global supply of polyethylene and PVC. The associated sharp increase in global oil and chemical feedstock prices has significantly steepened the global cost curve for many of the material that PEM sells.

Speaker #3: Which is supporting higher selling prices and margins for cost-advantaged producers in North America, such as WESTLAKE. In response to the reduction in global chemical and polymer production, created by the Middle East conflict, and significantly higher feedstock costs in much of Asia and Europe, customers around the world thought supply from producers unaffected by the production disruptions caused by the conflict.

Jean-Marc Gilson: In response to the reduction in global chemical and polymer production created by the Middle East conflict and significantly higher feedstock costs in much of Asia and Europe, customers around the world sought supply from producers unaffected by the production disruptions caused by the conflict, which drove increased demand for our polyethylene, PVC, and epoxy resin, and increased prices for our products. Our advantage asset footprint in North America using gas-based feedstocks positions Westlake to benefit from the pricing momentum and expected associated margin expansion since the conflict began. The evolving situation in the Middle East drove a significant improvement in PEM sales volume and earnings towards the end of Q1. PEM delivered net sales of $1.7 billion and EBITDA of $36 million on 3% sequential volume growth, excluding the impact to volumes from our 2025 plant shutdowns.

Speaker #3: This drove increased demand for our polyethylene, PVC, and epoxy resin, and increased prices for our products. Our advantaged asset footprint in North America, using gas-based feedstocks, positions Westlake to benefit from the pricing momentum and expected associated margin expansion since the conflict began.

Speaker #3: The evolving situation in the Middle East drove a significant improvement in PEM sales volume and earnings. Towards the end of the first quarter, PEM delivered net sales of $1.7 billion and EBITDA of $36 million, on 3 percent sequential volume growth.

Speaker #3: Excluding the impact to volumes from the 2025 planned shutdowns. While the conflict in the Middle East remains fluid, and we hope for a peaceful resolution, we expect the supply disruptions could persist throughout 2026.

Jean-Marc Gilson: While the conflict in the Middle East remains fluid, and we hope for a peaceful resolution, we expect the supply disruptions could persist throughout 2026. Turning to our HIP segment, sales volume and EBITDA were impacted by the unusually cold weather conditions in the first two months of the quarter. However, performance improved in March as the home building season began along with the onset of milder weather. Excluding the impact of the ACI acquisition, HIP delivered 10% sequential sales volume growth, which drove net sales of $1 billion and EBITDA of $186 million. HIP sales and EBITDA in Q1 were driven by continued solid infrastructure-related growth and seasonally stronger residential housing demand as compared to Q4 2025.

Speaker #3: Turning to our HIP segment, sales volume and EBITDA were impacted by the unusually cold weather conditions in the first two months of the quarter.

Speaker #3: However, performance improved in March as the home building season began along with the onset of milder weather. Excluding the impact of the ACI acquisition, HIP delivered 10 percent sequential sales volume growth, which drove net sales of $1 billion and EBITDA of $186 million.

Speaker #3: HIP sales and EBITDA in the first quarter were driven by continued solid infrastructure-related growth and seasonally stronger residential housing demand, as compared to the fourth quarter of 2025.

Speaker #3: In addition to the intra-quarter earnings improvement from supply disruption in the Middle East, and weather normalization, our first quarter results benefited from our three-pillar profitability improvement plan.

Jean-Marc Gilson: In addition to the intra-quarter earnings improvement from supply disruption in the Middle East and weather normalization, our Q1 results benefited from our three-pillar profitability improvement plan, including delivering approximately $150 million of EBITDA uplift from footprint optimization and cost savings actions. While we still have some work to do to get our plant reliability all the way to where I would like it, I'm pleased with the progress that we have made to date and the trajectory of our reliability initiatives. Overall, we remain confident that our three-pillar profitability improvement plan will deliver the targeted $600 million EBITDA uplift in 2026. Before I turn the call over to Steve, I want to provide some thoughts on our CFO transition.

Speaker #3: Including delivering approximately $150 million of EBITDA uplift from footprint optimization and cost savings actions. While we still have some work to do to get our plant reliability all the way to where I would like it, I'm pleased with the progress that we have made to date and the trajectory of our reliability initiatives.

Speaker #3: Overall, we remain confident that our three-pillar profitability improvement plan will deliver the targeted $600 million EBITDA uplift in 2026. Before I turn the call over to Steve, I want to provide some thoughts on our CFO transition.

Speaker #3: As you may have read, on April 20th, we announced that on June 15th, John Baxter will join Westlake Corporation and Westlake Partners LP as Senior Vice President and Chief Financial Officer.

Jean-Marc Gilson: As you may have read, on 20 April, we announced that on 15 June, John Bakst will join Westlake Corporation and Westlake Partners LP as Senior Vice President and Chief Financial Officer. John brings experience from the oil and gas, packaging, and building products industries, as well as investment banking to Westlake. We look forward to him joining the company. On 15 June, Steve Bender will transition to the role of Special Advisor and will continue to report to me as he supports the transition. We anticipate that Steve will participate in the Q2 earnings call in August. With that, I would now like to turn our call over to Steve to provide more detail on our financial results for the Q1 of 2026. Steve?

Speaker #3: John brings experience from the oil and gas, packaging, and building products industries, as well as investment banking, to WESTLAKE. And we look forward to him joining the company.

Speaker #3: On June 15th, Steve Bender will transition to the role of Special Advisor and will continue to report to me as he supports the transition.

Speaker #3: We anticipate that Steve will participate in the second quarter earnings call in August. And with that, I would now like to turn our call over to Steve to provide more detail on our financial results for the first quarter of 2026.

Speaker #3: Steve, thank you. Thank you very much, Jean-Marc, and good morning, everyone. In the first quarter of 2026, Westlake reported sales of $2.7 billion and a net loss of $100 million, or $0.77 per share.

Steve Bender: Thank you. Thank you very much, Jean-Marc. Good morning, everyone. In Q1 2026, Westlake reported sales of $2.7 billion and a net loss of $100 million or $0.77 per share, which compares to a net loss of $33 million in Q1 2025. Before I discuss the details of our segment results, I wanna provide some high-level thoughts on the quarter. The decisive actions we took last year to improve our profitability began to meaningfully deliver results in Q1 2026. Our footprint optimization actions significantly reduced PEM's fixed costs and returned our epoxy business to profitability for the first time since 2023. As a reminder, prior to these actions, the epoxy business was generating EBITDA losses of more than $100 million annually.

Steven Bender: Thank you. Thank you very much, Jean-Marc. Good morning, everyone. In Q1 2026, Westlake reported sales of $2.7 billion and a net loss of $100 million or $0.77 per share, which compares to a net loss of $33 million in Q1 2025. Before I discuss the details of our segment results, I wanna provide some high-level thoughts on the quarter. The decisive actions we took last year to improve our profitability began to meaningfully deliver results in Q1 2026. Our footprint optimization actions significantly reduced PEM's fixed costs and returned our epoxy business to profitability for the first time since 2023. As a reminder, prior to these actions, the epoxy business was generating EBITDA losses of more than $100 million annually.

Speaker #3: Which compares to a net loss of $33 million in the first quarter of 2025. Before I discuss the details of our segment results, I want to provide some high-level thoughts on the quarter.

Speaker #3: The decisive actions we took last year to improve our profitability began to meaningfully deliver results in the first quarter of 2026. Our footprint optimization actions significantly reduced PEM's fixed costs and returned our epoxy business to profitability for the first time since 2023.

Speaker #3: As a reminder, prior to these actions, the epoxy business was generating EBITDA losses of more than $100 million annually. In addition, we achieved substantial structural cost savings in the first quarter while also taking action to improve plant reliability.

Steve Bender: In addition, we achieved substantial structural cost savings in Q1 while also taking action to improve plant reliability. Taken together, our three-pillared profitability improvement plan benefited Q1 earnings by approximately $150 million. That said, we did face several headwinds during Q1, most of which we view as transitory. Despite a favorable mix shift away from export volumes, our average PVC resin sales price declined sequentially from Q4 2025 due to price resets that occurred late in 2025. In addition, North American natural gas prices spiked in January and remained elevated through February as a result of unusually cold weather across much of the United States, creating an approximately $45 million EBITDA headwind for PEM compared to Q1 2025.

Steven Bender: In addition, we achieved substantial structural cost savings in Q1 while also taking action to improve plant reliability. Taken together, our three-pillared profitability improvement plan benefited Q1 earnings by approximately $150 million. That said, we did face several headwinds during Q1, most of which we view as transitory. Despite a favorable mix shift away from export volumes, our average PVC resin sales price declined sequentially from Q4 2025 due to price resets that occurred late in 2025. In addition, North American natural gas prices spiked in January and remained elevated through February as a result of unusually cold weather across much of the United States, creating an approximately $45 million EBITDA headwind for PEM compared to Q1 2025.

Speaker #3: Taken together, our three-pillar profitability improvement plan benefited first quarter earnings by approximately $150 million. That said, we did face several headwinds during the first quarter, most of which we view as transitory.

Speaker #3: Despite a favorable mix shift away from export volumes, our average PVC resin sales price declined sequentially from the fourth quarter of 2025 due to price resets that occurred late in 2025.

Speaker #3: In addition, North American natural gas prices spiked in January and remained elevated through February, as a result of unusually cold weather across much of the United States.

Speaker #3: Creating an approximately $45 million EBITDA headwind for PEM, compared to the first quarter of 2025. That same weather also delayed the start of the home building season, contributing to a year-over-year sales volume decline in our HIP business.

Steve Bender: That same weather also delayed the start of the home building season, contributing to a year-over-year sales volume decline in our HIP business. Moving to the specifics of our segment performance, HIP did see the effect of slower start to a home building season with net sales in our Housing and Infrastructure Products segment of $1 billion, which were in line with Q1 2025 as the January acquisition of ACI offset a 2% decline in average sales price and a 2% decline in sales volume, excluding the acquisition. Pipe and fittings continue to see strong sales volume driven by the infrastructure sector that was more than offset by declines in our exterior building products businesses and global compounds.

Steven Bender: That same weather also delayed the start of the home building season, contributing to a year-over-year sales volume decline in our HIP business. Moving to the specifics of our segment performance, HIP did see the effect of slower start to a home building season with net sales in our Housing and Infrastructure Products segment of $1 billion, which were in line with Q1 2025 as the January acquisition of ACI offset a 2% decline in average sales price and a 2% decline in sales volume, excluding the acquisition. Pipe and fittings continue to see strong sales volume driven by the infrastructure sector that was more than offset by declines in our exterior building products businesses and global compounds.

Speaker #3: Moving to the specifics of our segment performance, HIP did see the effect of slower start to a home building season, with net sales in our housing and infrastructure product segment of $1 billion.

Speaker #3: Which were in line with the first quarter of 2025, as the January acquisition of ACI offset a 2% decline in average sales price and a 2% decline in sales volume, excluding the acquisition.

Speaker #3: Pipe and fittings continued to see strong sales volume, driven by the infrastructure sector that was more than offset by declines in our exterior building products businesses and global compounds.

Speaker #3: HIP EBITDA of $186 million decreased $17 million from the first quarter of 2025 due to a slight decline in EBITDA margin, largely due to lower average sales prices.

Steve Bender: HIP EBITDA of $186 million decreased $17 million from Q1 2025 due to a slight decline in EBITDA margin, largely due to lower average sales prices. When compared to Q4 2025, HIP segment sales of $1 billion rose 10% by a 15% sequential increase in sales volume, including the ACI acquisition. That more than offset a 5% decrease in average sales prices. The sequential sales volume growth was driven by seasonal higher demand for exterior building products and solid growth in global compounds. Housing product sales of $788 million in Q1 increased $21 million due to seasonal sales volume growth, particularly for siding and trim, and roofing.

Steven Bender: HIP EBITDA of $186 million decreased $17 million from Q1 2025 due to a slight decline in EBITDA margin, largely due to lower average sales prices. When compared to Q4 2025, HIP segment sales of $1 billion rose 10% by a 15% sequential increase in sales volume, including the ACI acquisition. That more than offset a 5% decrease in average sales prices. The sequential sales volume growth was driven by seasonal higher demand for exterior building products and solid growth in global compounds. Housing product sales of $788 million in Q1 increased $21 million due to seasonal sales volume growth, particularly for siding and trim, and roofing.

Speaker #3: When compared to the fourth quarter of 2025, HIP segment sales of $1 billion rose 10% by a 15% sequential increase in sales volume, including the ACI acquisition.

Speaker #3: That more than offset a 5% decrease in average sales prices. The sequential sales volume growth was driven by seasonal higher demand for exterior building products and solid growth in global compounds.

Speaker #3: Housing product sales of $788 million in the first quarter increased $21 million due to seasonal sales volume growth, particularly for siding and trim and roofing.

Speaker #3: Infrastructure products sales of $205 million in the first quarter of 2026 increased $71 million from the fourth quarter of 2025, primarily due to solid growth in global compounds and the ACI acquisition.

Steve Bender: Infrastructure Products sales of $205 million in Q1 2026 increased $71 million from Q4 2025, primarily due to solid growth in global compounds and the ACI acquisition. Moving to our PEM segment, Q1 EBITDA of $36 million decreased by $9 million from Q4 2025, largely as a result of a 34% higher natural gas price due to the impact of cold weather early in the quarter. Compared to Q4 2025, PEM average sales price increased 3%, reflecting improved price realization for olefins, polyethylene, and caustic soda toward the end of the quarter, while sales volumes increased 3%, excluding volumes associated with the 2025 plant shutdowns.

Steven Bender: Infrastructure Products sales of $205 million in Q1 2026 increased $71 million from Q4 2025, primarily due to solid growth in global compounds and the ACI acquisition. Moving to our PEM segment, Q1 EBITDA of $36 million decreased by $9 million from Q4 2025, largely as a result of a 34% higher natural gas price due to the impact of cold weather early in the quarter. Compared to Q4 2025, PEM average sales price increased 3%, reflecting improved price realization for olefins, polyethylene, and caustic soda toward the end of the quarter, while sales volumes increased 3%, excluding volumes associated with the 2025 plant shutdowns.

Speaker #3: Moving to our PEM segment, first quarter EBITDA of $36 million decreased by $9 million from the fourth quarter of 2025, largely as a result of a 34% higher natural gas price due to the impact of cold weather early in the quarter.

Speaker #3: Compared to the fourth quarter of 2025, PEM average sales price increased 3%, reflecting improved price realization for olefins polyethylene and caustic soda toward the end of the quarter, while sales volumes increased 3%, excluding volumes associated with the 2025 plant shutdowns.

Speaker #3: While higher North American natural gas costs impacted the early months of the first quarter, by the end of March, natural gas prices declined to their lowest levels since 2024, where they remained during April.

Steve Bender: While higher North American natural gas costs impacted the early months of Q1, by the end of March, natural gas prices declined to their lowest levels since 2024, where they remained during April. As a result, we don't expect the transitory impact to PEM's Q1 margins from higher natural gas prices to impact Q2 earnings. For Q1 2026, our utilization of the FIFO method of accounting resulted in a favorable pre-tax impact of $37 million compared to what earnings would have been reported on the LIFO method. This is only an estimate and has not been audited. Now turning to the balance sheet and cash flow statements, we continue to maintain financial flexibility with a strong balance sheet, as well as our longstanding commitment to a solid investment-grade credit rating.

Steven Bender: While higher North American natural gas costs impacted the early months of Q1, by the end of March, natural gas prices declined to their lowest levels since 2024, where they remained during April. As a result, we don't expect the transitory impact to PEM's Q1 margins from higher natural gas prices to impact Q2 earnings. For Q1 2026, our utilization of the FIFO method of accounting resulted in a favorable pre-tax impact of $37 million compared to what earnings would have been reported on the LIFO method. This is only an estimate and has not been audited. Now turning to the balance sheet and cash flow statements, we continue to maintain financial flexibility with a strong balance sheet, as well as our longstanding commitment to a solid investment-grade credit rating.

Speaker #3: As a result, we don't expect the transitory impact of PEM's first quarter margins from higher natural gas prices to impact second quarter earnings. For the first quarter of 2026, our utilization of the FIFO method of accounting resulted in a favorable pre-tax impact of $37 million compared to what earnings would have been reported on the FIFO method.

Speaker #3: This is only an estimate and has not been audited. Now, turning to the balance sheet and cash flow statements, we continue to maintain financial flexibility with a strong balance sheet as well as our long-standing commitment to a solid investment-grade credit rating.

Speaker #3: As of March 31st, 2026, cash and investments were $2.5 billion, and total debt was $5.6 billion, with a staggered long-term fixed rate debt maturity schedule.

Steve Bender: As of 31 March 2026, cash and investments were $2.5 billion, and total debt was $5.6 billion, with a staggered long-term fixed rate debt maturity schedule. In April, we provided notice to call the remaining $500 million of debt in Q2 2026 that otherwise was scheduled to mature later this year. For Q1 2026, net cash used for operating activities of $94 million includes approximately $50 million of cash outlays associated with the footprint optimization actions that we announced in 2025. Our strong balance sheet provides us the financial flexibility to invest in growth initiatives such as ACI, and we have entered into a non-binding letter of intent to acquire a PVC and VCM plant in Wilhelmshaven, Germany.

Steven Bender: As of 31 March 2026, cash and investments were $2.5 billion, and total debt was $5.6 billion, with a staggered long-term fixed rate debt maturity schedule. In April, we provided notice to call the remaining $500 million of debt in Q2 2026 that otherwise was scheduled to mature later this year. For Q1 2026, net cash used for operating activities of $94 million includes approximately $50 million of cash outlays associated with the footprint optimization actions that we announced in 2025. Our strong balance sheet provides us the financial flexibility to invest in growth initiatives such as ACI, and we have entered into a non-binding letter of intent to acquire a PVC and VCM plant in Wilhelmshaven, Germany.

Speaker #3: In April, we provided notice to call the remaining $500 million of debt in the second quarter of mature later this year. For the first quarter of 2026, net cash used for operating activities of $94 million includes approximately $50 million of cash outlays, associated with the footprint optimization actions that we announced in 2025.

Speaker #3: Our strong balance sheet provides us the financial flexibility to invest in growth initiatives such as ACI, and we have entered into a non-binding letter of intent to acquire a PVC and VC implant in Wilhelmshaven, Germany.

Speaker #3: This facility, which is located on the North Sea coast, benefits from its advantageous logistical infrastructure. We remain focused on pursuing additional opportunities to strategically deploy our balance sheet in order to create long-term value.

Steve Bender: This facility, which is located on the North Sea coast, benefits from its advantageous logistical infrastructure. We remain focused on pursuing additional opportunities to strategically deploy our balance sheet in order to create long-term value. Now let me provide guidance for your models. Given the slower than expected start to the home building season and the significant increases in transportation raw material cost, particularly for PVC resin, we now expect 2026 revenue and EBITDA margin for our HIP segment to be towards the lower end of our previously communicated ranges of $4.4 to 4.6 billion of revenue with EBITDA margin between 19% and 21%, excluding identified items. While we expect to pass these cost increases through, the timing of changes in cost and sales prices could create a headwind in the near term.

Steven Bender: This facility, which is located on the North Sea coast, benefits from its advantageous logistical infrastructure. We remain focused on pursuing additional opportunities to strategically deploy our balance sheet in order to create long-term value. Now let me provide guidance for your models. Given the slower than expected start to the home building season and the significant increases in transportation raw material cost, particularly for PVC resin, we now expect 2026 revenue and EBITDA margin for our HIP segment to be towards the lower end of our previously communicated ranges of $4.4 to 4.6 billion of revenue with EBITDA margin between 19% and 21%, excluding identified items. While we expect to pass these cost increases through, the timing of changes in cost and sales prices could create a headwind in the near term.

Speaker #3: Now, let me provide guidance for your models. Given the slower-than-expected start to the home building season, and the significant increases in transportation raw material cost, particularly for PVC resin, we now expect 2026 revenue and EBITDA margin for our HIP segment to be towards the lower end of our previously communicated ranges of $4.4 to $4.6 billion of revenue, with EBITDA margin between $19 and $21%, excluding identified items.

Speaker #3: While we expect to pass these cost increases through, the timing of changes in cost and sales prices could create a headwind in the near term.

Speaker #3: Expected 2026 total capital expenditures for the company are still expected to be $900 million, which is approximately $100 million lower than last year and in line with our annual depreciation.

Steve Bender: Expected 2026 total CapEx for the company are still expected to be $900 million, which is approximately $100 million lower than last year and in line with our annual depreciation. We continue to expect cash interest expense to be approximately $215 million. Now with that, I'll turn the call over to Jean-Marc to provide a current outlook for the business. Jean-Marc?

Steven Bender: Expected 2026 total CapEx for the company are still expected to be $900 million, which is approximately $100 million lower than last year and in line with our annual depreciation. We continue to expect cash interest expense to be approximately $215 million. Now with that, I'll turn the call over to Jean-Marc to provide a current outlook for the business. Jean-Marc?

Speaker #3: We continue to expect cash interest expense to be approximately $215 million. Now, with that, I'll turn the call over to Jean-Marc to provide a current outlook for the business.

Speaker #3: Jean-Marc?

Speaker #2: Thank you, Steve. The impact of the conflict in the Middle East on global feedstock and energy costs serves as a powerful reminder of one of Westlake's foundational strengths.

Jean-Marc Gilson: Thank you, Steve. The impact of the conflict in the Middle East on global feedstock and energy costs serves as a powerful reminder of one of Westlake's foundational strength. Our globally advantaged feedstock and energy position in North America, where approximately 85% of our products are manufactured. The strategic value of our North American production capacity and globally advantaged cost position has arguably never been greater. In addition, the combination of investments, major turnarounds, and restructuring actions that we made are now positioning us to benefit from more reliable production to capture the current upturn in PEM profitability and better serve our customers. While the commercial environment for PEM has improved significantly since our last earning call in February, we remain laser-focused on achieving the full benefit from our profitability improvement plan.

Speaker #2: Our globally advantaged feedstock and energy position in North America were approximately 85% of our products, our manufactured. The strategic value of our North American production capacity and globally advantaged cost position has arguably never been greater.

Speaker #2: In addition, the combination of investments, major turnarounds, and restructuring actions that we made are now positioning us to benefit from more reliable production to capture the current upturn in PEM profitability and better serve our customers.

Speaker #2: While the commercial environment for PEM has improved significantly since our last earning call in February, we remain laser-focused on achieving the full benefits from our profitability improvement plan.

Speaker #2: We are pleased with the progress that we have made to date, improving our profitability, but we recognize that we must remain disciplined with respect to cost in an increasingly inflationary environment.

Jean-Marc Gilson: We are pleased with the progress that we have made to date, improving our profitability. We recognize that we must remain disciplined with respect to cost in an increasingly inflationary environment. Turning to our outlook for sales volume and pricing, we have a constructive view on near-term trends. As I discussed earlier, global supply chain disruptions and elevated global energy prices are driving meaningful price increases for polyethylene, PVC resin, and other products in our PEM segment. Concurrently, supply concerns are prompting global customers to source more material from North America in response to the conflict, which is supporting higher PEM sales volume and improved plant operating rates. Shifting to HIP, mortgage rates and increased building costs could place additional pressure on housing affordability.

Speaker #2: Turning to our outlook for sales volume and pricing, we have a constructive view on near-term trends. As I discussed earlier, global supply chain disruptions and elevated global energy prices are driving meaningful price increases for polyethylene PVC resin and other products in our PEM segment.

Speaker #2: Concurrently, supply concerns are prompting global customers to source more material from North America in response to the conflict. Which is supporting higher PEM sales volume and improved plant operating rates.

Speaker #2: Shifting to HIP, mortgage rates and increased building costs could place additional pressure on housing affordability. While it is too early to fully assess how this dynamic will impact HIP's building product sales, volume, forward-looking indicators such as single-family housing permits, and start add to the uncertainty.

Jean-Marc Gilson: While it is too early to fully assess how this dynamic will impact HIP's building product sales volume, forward-looking indicators such as single-family housing permits and start add to the uncertainty. In this housing market, our building products business continues to benefit from a diversified product offering and broad national distribution, which provides builders with the products they need, when and where they need them. In Global Compounds, we are pleased with the performance of the recently acquired ACI business, which has strengthened our position in the fast-growing high voltage wire and cable market. This market is seeing significant demand growth driven by electric vehicles and data centers. Meanwhile, HIP's pipe and fittings business continues to deliver double-digit sales volume growth, supported by sustained strength in infrastructure spending.

Speaker #2: In this housing market, our building products business continues to benefit from our diversified product offering and broad national distribution. Which provides builders with the products they need when and where they need them.

Speaker #2: In Global Compounds, we are pleased with the performance of the recently acquired ACI business, which has strengthened our position in the fast-growing high-voltage wire and cable market.

Speaker #2: This market is seeing significant demand growth driven by electric vehicles and data centers. Meanwhile, HIP's pipe and fittings business continues to deliver double-digit sales volume growth, supported by sustained strength in infrastructure spending.

Speaker #2: Beyond traditional municipal infrastructure demand, we are seeing increasing contribution to sales volume growth driven by cooling water needs from the data center buildout underway across North America.

Jean-Marc Gilson: Beyond traditional municipal infrastructure demand, we are seeing increasing contribution to sales volume growth, driven by cooling water needs from the data center build-out underway across North America. We expect this trend to continue through the rest of the year as an offset to uncertainty in the North American new residential construction market. On the cost front, we are aggressively working to pass through the increases in cost being driven by Middle East supply disruption and elevated fuel prices. Longer term, continued infrastructure investment, combined with over a decade of housing under building, continues to support a compelling growth outlook for HIP. Taken together, our outlook for the company's 2026 earnings has improved meaningfully since our last earnings call.

Speaker #2: We expect this trend to continue through the rest of the year as an offset to uncertainty in the North American new residential construction market.

Speaker #2: On the cost front, we are aggressively working to pass through the increases in cost being driven by Middle East supply disruption and elevated fuel prices.

Speaker #2: Longer-term, continued infrastructure investment combined with over a decade of housing underbuilding continues to support a compelling growth outlook for HIP. Taken together, our outlook for the company's 2026 earnings has improved meaningfully since our last earnings call.

Speaker #2: While the conflict in the Middle East could result in global supply chain disruptions, extending to the end of the year or beyond, we will remain focused on controlling what we can control, including delivering the full $600 million of EBITDA uplift from our three-pillar profitability improvement plan.

Jean-Marc Gilson: While the conflict in the Middle East could result in global supply chains disruptions extending to the end of the year or beyond, we will remain focused on controlling what we can control, including delivering the full $600 million of EBITDA uplift from our 3-pillar profitability improvement plan. We will maintain a disciplined approach to capital allocation while preserving our investment-grade rated balance sheet. Thank you very much for listening to our Q1 earnings call. I will now turn the call back over to Jeff. Jeff?

Speaker #2: And we will maintain our disciplined approach to capital allocation, while preserving our investment-grade rated balance sheet. Thank you very much for listening to our first quarter earnings call.

Speaker #2: I will now turn the call back over to Jeff. Jeff?

Speaker #3: Thank you, Jean-Marc. 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.

Steve Bender: Thank you, Jean-Marc. 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 that a replay of this teleconference will be available approximately 2 hours after the call has ended. We will now take questions.

Jeffrey Holy: Thank you, Jean-Marc. 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 that a replay of this teleconference will be available approximately 2 hours after the call has ended. We will now take questions.

Speaker #3: And that a replay of this teleconference will be available approximately two hours after the call has ended. We will now take questions.

Speaker #1: Thank you. At this time, you will conduct the question-and-answer session. As a reminder to everyone, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced.

Operator: Thank you. At this time, we will conduct the question and answer session. As a reminder to everyone, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Patrick Cunningham from Citi. Your line is now open.

Speaker #1: To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Patrick Cunningham from Citi.

Speaker #1: Your line is now open.

Speaker #4: Hi, good morning. Thank you for taking my questions. Can you help us unpack a little bit more the PEM results down sequentially? You had material benefits from the profitability improvement plan, PE and caustic prices were up.

Patrick Cunningham: Hi. Good morning. Thank you for taking my questions. Can you help us unpack a little bit more, you know, the PEM results down sequentially? You know, you had material benefits from the profitability improvement plan. You know, PE and caustic prices were up. I guess, first, can you help size the headwind from PVC price margin declines, and whether or not there was, you know, anything else going on with operating reliability or any stranded costs from some of the closures?

Speaker #4: I guess first, can you help size the headwind from PVC price margin declines? And whether or not there was anything else going on with operating reliability or any stranded costs from some of the closures?

Speaker #3: Yeah, so good morning, Patrick. And I would say that certainly the price resets that we saw at the end of the year were certainly impactful across the product stream.

Steve Bender: Yeah. Good morning, Patrick. I would say that, you know, certainly the price resets that we saw at the end of the year were certainly impactful across the product stream. I would say in particularly the increase that we've seen in PVC resin have not been fully capturing up, catching up with some of the increases that we've seen in associated costs, especially I would note the elevated natural gas cost that we saw in January and February. While we've seen price increases in polyethylene, epoxy, and PVC, I would say certainly looking to continue to capture the value that we think that PVC represents, and we certainly have not had the chance to fully recognize that throughout the entire quarter. I would say that we've seen improved reliability in operability of the business, and so I'm improved.

Steven Bender: Yeah. Good morning, Patrick. I would say that, you know, certainly the price resets that we saw at the end of the year were certainly impactful across the product stream. I would say in particularly the increase that we've seen in PVC resin have not been fully capturing up, catching up with some of the increases that we've seen in associated costs, especially I would note the elevated natural gas cost that we saw in January and February. While we've seen price increases in polyethylene, epoxy, and PVC, I would say certainly looking to continue to capture the value that we think that PVC represents, and we certainly have not had the chance to fully recognize that throughout the entire quarter. I would say that we've seen improved reliability in operability of the business, and so I'm improved.

Speaker #3: And so I would say, in particular, the increase that we've seen in PVC resin has not been fully catching up with some of the increases that we've seen in associated costs. Especially, I would note the elevated natural gas costs that we saw in January and February.

Speaker #3: So while we've seen price increases in polyethylene epoxy and PVC, I would say certainly looking to continue to capture the value that we think that PVC represents and we certainly have not had the chance to fully recognize that throughout the entire quarter.

Speaker #3: But I would say that we've seen improved reliability in operability of the business. And so I'm improved. We're not to where we'd like to be at this stage, but we're making good progress as we move forward.

Steve Bender: We're not to where we'd like to be at this stage, but we're making good progress as we move forward.

Steven Bender: We're not to where we'd like to be at this stage, but we're making good progress as we move forward.

Speaker #4: Understood. And then just on the underlying outlook for the HIP business, what are your expectations for pure price this year given some of the higher price PVC you're going to be pulling through?

Patrick Cunningham: Understood. Then just on the underlying, you know, outlook for the HIP business, you know, what are your expectations for, you know, pure price this year, you know, given some of the higher priced PVC you're gonna be pulling through? Have you gone out with additional pricing ahead of the construction season? Is any of that baked into your outlook?

Speaker #4: Have you gone out with additional pricing ahead of the construction season? And is any of that baked into your outlook?

Speaker #3: Yeah, so good question. We have announced price increases to not only offset the increase in PVC resin, but also transportation costs. Certainly, fuel costs have also risen.

Steve Bender: Yeah. Good question. We have announced price increases to not only offset the increase in PVC resin, but also transportation costs. Certainly fuel costs have also risen. Our price increases that we have already announced in the HIP segment have already reflected the cost that we expect to incur for PVC resin as it works its way through the manufacturing process and also to reflect elevated transportation costs driven by higher fuel prices. Nevertheless, that will take a little while, a few months, let’s say, to work its way fully through each of the various material product streams.

Steven Bender: Yeah. Good question. We have announced price increases to not only offset the increase in PVC resin, but also transportation costs. Certainly fuel costs have also risen. Our price increases that we have already announced in the HIP segment have already reflected the cost that we expect to incur for PVC resin as it works its way through the manufacturing process and also to reflect elevated transportation costs driven by higher fuel prices. Nevertheless, that will take a little while, a few months, let’s say, to work its way fully through each of the various material product streams.

Speaker #3: So our price increases that we have already announced in the HIP segment have already reflected the cost that we expect to incur for PVC resin as it works its way through the manufacturing process and also to reflect elevated transportation costs driven by higher fuel prices.

Speaker #3: But, nevertheless, that will take a little while—a few months, let's say—to work its way fully through each of the various material product streams.

Speaker #4: Great. Thank you so much.

Patrick Cunningham: Great. Thank you so much.

Speaker #3: You're welcome.

Steve Bender: Welcome.

Steven Bender: Welcome.

Operator: Our next question comes from the line of Bhavesh Lodaya from BMO. Your line is now open.

Speaker #1: Our next question comes from the line of Bhavesh Lodhaya from BMO. Your line is now open.

Speaker #4: Hi, good morning. Thanks for taking my question. Just back to the PEM segment, you called out transitory impacts that happened in the first quarter.

Bhavesh Lodaya: Hi. Good morning. Thanks for taking my question. Just back to the PEM segment. You called out transitory impacts that happened in Q1. If you look at again the Q4 and the Q1 difference, there was a $150 million benefit which you saw from your actions, which did not show up. Would you say the transitory impacts are roughly equal to that $150? In other words, is the base level of earnings for Q2, is the starting point closer to call it like a $200 million level from which you will see additional benefits from margin improvements?

Speaker #4: If you look at again the fourth quarter and the first quarter difference, there was a $150 million benefit which you saw from your actions which did not show up.

Speaker #4: Would you say that transitory impacts are roughly equal to that $150 million? And in other words, is the base level of earnings for Q2—is the starting point closer to, call it, like a $200 million level, from which you will see additional benefits from margin improvements?

Speaker #3: Yeah, so I guess what I would say is certainly recognizing with the elevated costs that we had in natural gas in the first quarter of a $45 million headwind was significant.

Steve Bender: Yeah. I guess what I would say is certainly recognizing the elevated cost that we had in natural gas in Q1 of a $45 million headwind was significant but transitory. I would say the price increase that we've seen in all of our product streams, be it polyethylene, PVC, and epoxy, should have significant benefits as those have been announced in Q1. The full effect of those really translate into real value in Q2. As I mentioned earlier, we've seen improved reliability as we've made progress on our 3-pillared strategy. The $150 million benefit that we achieved in Q1 certainly is largely attributable to PEM, but not exclusively so. We've made cost reductions, of course, that affect both segments of the business.

Steven Bender: Yeah. I guess what I would say is certainly recognizing the elevated cost that we had in natural gas in Q1 of a $45 million headwind was significant but transitory. I would say the price increase that we've seen in all of our product streams, be it polyethylene, PVC, and epoxy, should have significant benefits as those have been announced in Q1. The full effect of those really translate into real value in Q2. As I mentioned earlier, we've seen improved reliability as we've made progress on our 3-pillared strategy. The $150 million benefit that we achieved in Q1 certainly is largely attributable to PEM, but not exclusively so. We've made cost reductions, of course, that affect both segments of the business.

Speaker #3: But transitory. And I would say the price increase that we've seen in all of our product streams, be it polyethylene, PE, PVC, and epoxy, should have significant benefits as those have been announced in the first quarter.

Speaker #3: But the full effect of those really translates into real value in the second quarter. As I mentioned earlier, we've seen improved reliability as we've made progress on our three-pillar strategy.

Speaker #3: The $150 million benefit that we achieved in the first quarter certainly is largely attributable to PEM, but not exclusively so. So we've made cost reductions of course that affect both segments of the business.

Speaker #3: Certainly, the optimization of our footprint certainly is directly attributable to the PEM segment. And certainly, some of the improvements we've seen in operability also are attributable to the PEM segment.

Steve Bender: Certainly the optimization of our footprint certainly is directly attributable to the PEM segment. Certainly some of the improvements we've seen in operability also are attributable to the PEM segment. I would say we do see significant benefits accruing as a result of these price nominations and realizations that we expect in Q2.

Steven Bender: Certainly the optimization of our footprint certainly is directly attributable to the PEM segment. Certainly some of the improvements we've seen in operability also are attributable to the PEM segment. I would say we do see significant benefits accruing as a result of these price nominations and realizations that we expect in Q2.

Speaker #3: But I would say we do see significant benefits accruing as a result of these price nominations and realizations that we expect in the second quarter.

Speaker #4: Got it. And then particularly on your PVC outlook, you have leveraged both from a higher operating rates as well as pricing from PVC here.

Bhavesh Lodaya: Got it. Particularly on your PVC outlook, you have leveraged both from higher operating rates as well as pricing from PVC here. Could you share your outlook on these two metrics? How much could rates move higher in Q2 or Q3? What are your expectations for PVC pricing from here?

Speaker #4: Could you share your outlook on these two metrics? How much could rates move higher in Q2 or Q3? And what are your expectations for PVC pricing from here?

Speaker #3: Yeah, as a result of some of the optimization actions that we took last year, we've certainly have elevated the operating rates of our plants.

Steve Bender: Yeah. As a result of some of the optimization actions that we took last year, we certainly have elevated the operating rates of our plants. Certainly we had some planned maintenance at 1 of our units in Q1. I would say operating rates throughout Q1 were in the mid-80s, and we expect that as the construction season begins to start now with better weather, and I do expect that we'll see elevated demand levels for PVC and construction activities. That in the context of recognizing that housing starts have been somewhat lower than had been earlier forecast by the consultants.

Steven Bender: Yeah. As a result of some of the optimization actions that we took last year, we certainly have elevated the operating rates of our plants. Certainly we had some planned maintenance at 1 of our units in Q1. I would say operating rates throughout Q1 were in the mid-80s, and we expect that as the construction season begins to start now with better weather, and I do expect that we'll see elevated demand levels for PVC and construction activities. That in the context of recognizing that housing starts have been somewhat lower than had been earlier forecast by the consultants.

Speaker #3: Certainly, we had some planned maintenance at one of our units in the first quarter. But I would say operating rates throughout the first quarter were in the mid-80s.

Speaker #3: And we expect that, as the construction season begins to start now with better weather, I do expect that we'll see elevated demand levels for PVC and construction activities.

Speaker #3: That, in the context of recognizing that housing starts have been somewhat lower than had been earlier forecast by the consultants. But we do expect that with the price initiatives that we've taken in PVC, and the increase in construction and repair and remodeling activities, that we do expect to see improvements.

Steve Bender: We do expect that with the price initiatives that we've taken in PVC and the increase in construction and repair and remodeling activities, that we do expect to see improvements across not only the core vinyl chain, but across the entire PEM segment. Thank you.

Steven Bender: We do expect that with the price initiatives that we've taken in PVC and the increase in construction and repair and remodeling activities, that we do expect to see improvements across not only the core vinyl chain, but across the entire PEM segment. Thank you.

Speaker #3: Across not only the core vinyl chain, but across the entire PEM segment.

Speaker #4: Thank you.

Speaker #1: Thank you. Our next question comes from the line of Vincent Andrews from Morgan Stanley. Your line is now open.

Operator: Thank you. Our next question comes from the line of Vincent Andrews from Morgan Stanley. Your line is now open.

Vincent Andrews: Thank you, and good morning, everyone. Wondering if you could just give us a little bit of direction on HIP for Q2. Just sounds like, you know, there's gonna be a little bit of a lag between the higher PVC and so forth costs coming through versus your ability to price. If you could just give us a sense on what that's gonna do on the margin side, and then maybe also help us understand, you know, there was a mention about the season getting off to a slow start. How did April go, and how does the order book look so far for Q2 so that we can hopefully get our numbers in a good place for Q2? Thank you.

Speaker #3: Thank you and good morning, everyone. I'm wondering if you could just give us a little bit of direction on HIP for 2Q, just sounds like there's going to be a little bit of a lag between the higher PVC and so forth costs coming through versus your ability to price.

Speaker #3: So if you could just give us a sense on what that's going to do on the margin side and then maybe also help us understand there was a mention about the season getting off to a slow start.

Speaker #3: So how did April go and how does the order book look so far for the second quarter so that we can hopefully get our numbers in a good place for 2Q?

Speaker #3: Thank you.

Speaker #5: Yeah, so good question, Vincent. And I would say that the order book looks very good as we see the second quarter begin to start from a volumes perspective.

Steve Bender: Yeah. Good question, Vincent, and I would say that the order book looks very good as we see the Q2 begin to start from a volumes perspective. To your point, with the elevated PVC pricing we see coming through the channel, and while we've announced price increases in our HIP segment to address those higher PVC resin prices as well as transportation costs, there could be a month or 2 lag between the realization of those price nominations that we've made in the market and the roll forward of PVC resin prices.

Steven Bender: Yeah. Good question, Vincent, and I would say that the order book looks very good as we see the Q2 begin to start from a volumes perspective. To your point, with the elevated PVC pricing we see coming through the channel, and while we've announced price increases in our HIP segment to address those higher PVC resin prices as well as transportation costs, there could be a month or 2 lag between the realization of those price nominations that we've made in the market and the roll forward of PVC resin prices.

Speaker #5: But to your point with the elevated PVC pricing we see coming through the channel and while we've announced price increases in our HIP segment to address those higher PVC resin prices, as well as transportation costs, there could be a month or two lag between the realization of those price nominations that we've made in the market and the roll forward of PVC resin prices.

Speaker #5: So there could be some headwind in that second quarter as we see the price that we've announced in PVC in the first quarter work their way through into the PEM segment before they get full traction of their price announcements made in the first quarter.

Steve Bender: There could be some headwind in that Q2 as we see the price that we've announced in PVC in Q1 work their way through into the PEM segment before they get full traction of their price announcements made in Q1, but get them fully worked in Q2.

Steven Bender: There could be some headwind in that Q2 as we see the price that we've announced in PVC in Q1 work their way through into the PEM segment before they get full traction of their price announcements made in Q1, but get them fully worked in Q2.

Speaker #5: But get them fully worked in in the second quarter.

Speaker #3: So is it fair to say then that we'll see the lowest margin in Q2, and then by Q4 you'll be high enough to get yourself back into the low end of the margin guidance for the full year?

Vincent Andrews: Is it fair to say then that we'll see the lowest margin in Q2, and then by Q4, you'll be high enough to get yourself back to the low end of the margin guidance for the full year? Is that the right way to think about it?

Speaker #3: Is that the right way to think about it?

Speaker #5: I would say the fourth quarter seasonally is typically a slower season. But I would say that the front half of the second quarter we'll see the full impact of some of the lag in the back half of the second quarter we'll see the benefit of some of the benefits of the price increase that the HIP segment have announced.

Steve Bender: I would say the Q4 seasonally is typically a slower season, but I would say that the front half of the Q2 will see the full impact of some of the lag. In the back half of the Q2, we'll see the benefit of some of the benefits of the price increase that the HIP segment have announced. I think we get the full benefit of all that in the Q3. The Q4 typically has a seasonal slowdown just because of weather dynamics, and is typically one of our lower margin and volume quarters.

Steven Bender: I would say the Q4 seasonally is typically a slower season, but I would say that the front half of the Q2 will see the full impact of some of the lag. In the back half of the Q2, we'll see the benefit of some of the benefits of the price increase that the HIP segment have announced. I think we get the full benefit of all that in the Q3. The Q4 typically has a seasonal slowdown just because of weather dynamics, and is typically one of our lower margin and volume quarters.

Speaker #5: I think we get the full benefit of all that in the third quarter. But the fourth quarter typically has a seasonal slowdown just because of weather dynamics.

Speaker #5: And it's typically one of our lower margin and volume quarters.

Speaker #3: Okay, thank you very much.

Vincent Andrews: Okay. Thank you very much.

Steve Bender: You're welcome.

Steven Bender: You're welcome.

Speaker #1: Thank you.

Operator: Thank you. Thank you. Our next question comes from the line of David Begleiter from Deutsche Bank. Your line is now open.

Speaker #2: Thank you.

Speaker #1: Thank you. Our next question comes from the line of David Begleiter from Deutsche Bank. Your line is now open.

Speaker #3: Thank you. Jean-Marc and Steve, just some polyethylene. You got the 30 cents in April. What's your confidence level in getting some portion or all of the announced 20 cent per pound increase for May?

David Begleiter: Thank you. Jean-Marc and Steve, just on polyethylene, you got the $0.30 in April. What's your confidence level in getting some portion or all of the announced $0.20 per pound increase for May?

Speaker #5: Well, I'd say that, David, that we've certainly have been able to achieve that 30 cents, as you noted, in April. And it's still early days in May.

Steve Bender: Well, I'd say that, David, that we've certainly have, you know, been able to achieve that $0.30, as you noted in April, and it's still early days in May. If you think back, the market has been able to absorb very, very significant price increases going back to the beginning of this year. I would say it's still a little bit early days in May to call the May increase. If you think back about where the price levels are today relative to recent history going back to 2021 or so, we're still below those price increases we had in 2021, and the market was able to absorb those prices in 2021.

Steven Bender: Well, I'd say that, David, that we've certainly have, you know, been able to achieve that $0.30, as you noted in April, and it's still early days in May. If you think back, the market has been able to absorb very, very significant price increases going back to the beginning of this year. I would say it's still a little bit early days in May to call the May increase. If you think back about where the price levels are today relative to recent history going back to 2021 or so, we're still below those price increases we had in 2021, and the market was able to absorb those prices in 2021.

Speaker #5: If you think back the market has been able to absorb very, very significant price increases going back to the beginning of this year. And I would say it's still a little bit early days in May to call the May increase.

Speaker #5: But if you think back about where the price levels are today relative to recent history, going back to '21 or so, we're still below those price increases we had in 2021.

Speaker #5: And the market was able to absorb those prices in ‘21. So what we’re looking for is to see where demand levels are. But I would say we’re watching the market, but we’re still pushing forward with price increases that we see that are reflective in the marketplace.

Steve Bender: What we're looking for is to see where demand levels are, but I would say we're watching the market, but we're still pushing forward with price increases that we see that are reflective in the marketplace.

Steven Bender: What we're looking for is to see where demand levels are, but I would say we're watching the market, but we're still pushing forward with price increases that we see that are reflective in the marketplace.

Speaker #3: Very good. And just on PVC, are you increasing your export activity levels to take advantage of some of the spot opportunities we've seen in the marketplace?

David Begleiter: Very good. Just on PVC, are you increasing your export activity levels to take advantage of some of the spot opportunities we've seen in the marketplace?

Speaker #5: Yeah, good question. You are right. Price increase in PVC—I mean, we've seen a steady increase in PVC export prices. They kind of went to a peak a few weeks ago.

Jean-Marc Gilson: Yes, good question. You are right. Price increase in PVC, I mean, we've seen a steady increase in PVC export prices. They kind of went to a peak a few weeks ago. They're now coming down a little bit, but still much higher than what they were last year. You are correct. I mean, we are with increased operational operating rates and we are now increasing as much as we can PVC supply to take opportunities and to sell our volume in export markets where there is some good deal to be made.

Speaker #5: They're now coming down a little bit, but still much higher than what they were last year. So you are correct. I mean, we are with increased operational operating rates and we are now increasing as much as we can PVC supply to take opportunities and to sell our volume in export markets where there is some good deal to be made.

Speaker #3: Thank you.

David Begleiter: Thank you.

Speaker #1: Thank you. Our next question comes from the line of Frank Mitch from Premium Research LLC. Your line is now open.

Operator: Thank you. Our next question comes from the line of Frank Mitsch from Fermium Research LLC. Your line is now open.

Frank Mitsch: Thank you so much. Steve, let me offer you some early birthday wishes. Perhaps the Q2 is starting out as a very nice birthday present for your last quarter as CFO. Again, thanks for all your help in that regard. I was wondering if you could offer some qualitative commentary with respect to the operating rates that you were able to realize in the PEM business in the Q1 and how your facilities are operating so far here in the Q2.

Speaker #3: Thank you so much. And Steve, let me offer you some early birthday wishes. And perhaps the second quarter is starting out as a very nice birthday present for your last quarter.

Speaker #3: As CFO and again, thanks for all your help in that regard. I was wondering if you could offer some qualitative commentary with respect to the operating rates that you were able to realize in the PEM business in the first quarter and how your facilities are operating so far here in the second quarter.

Speaker #5: Yeah, so Frank, thank you very much for those comments. I would say that in the polyethylene business, we're running full rates, as you would guess, demand levels seem to be very good.

Steve Bender: Yeah. Frank, thank you very much for those comments. I would say that in the polyethylene business, we're running full rates, as you would guess. Demand levels seem to be very good, and even though we've seen significant price increases, operating rates are operating at full rates. In the PVC space, PVC rates are beginning to raise simply because we've optimized the operating rates, having shuttered a number of sites last year and moved that production opportunity over to other existing sites. Operating rates in the PVC space were in the mid-80s, and I expect that to begin to kinda elevate as we work our way through into Q2 and Q3, which is more peak-wide construction season, and some of our operating rates in our caustic and chlorine operations to support PVC.

Steven Bender: Yeah. Frank, thank you very much for those comments. I would say that in the polyethylene business, we're running full rates, as you would guess. Demand levels seem to be very good, and even though we've seen significant price increases, operating rates are operating at full rates. In the PVC space, PVC rates are beginning to raise simply because we've optimized the operating rates, having shuttered a number of sites last year and moved that production opportunity over to other existing sites. Operating rates in the PVC space were in the mid-80s, and I expect that to begin to kinda elevate as we work our way through into Q2 and Q3, which is more peak-wide construction season, and some of our operating rates in our caustic and chlorine operations to support PVC.

Speaker #5: And even though we've seen significant price increases, operating rates are running at full rates. In the PVC space, PVC rates are beginning to rise simply because we've optimized the operating rates, having shuttered a number of sites last year and moved that production opportunity over to other existing sites.

Speaker #5: So operating rates in the PVC space were in the mid-80s. And I expect that to begin to kind of elevate as we work our way through into second quarter and third quarter, which is more peak light construction season.

Speaker #5: And some of our operating rates in our caustic and chlorine operations to support PVC.

Speaker #3: Terrific. Thank you. And as you think about higher pricing levels having an impact on working capital, what's your working capital expectations and impacts on free cash flow in 2026?

Frank Mitsch: Terrific. Thank you. As you think about, higher pricing levels having an impact on working capital, what are your working capital expectations and impacts on free cash flow in 2026?

Speaker #5: Yeah, well, certainly I do expect some of these higher prices we'll see an increase in the receivable side. But when you recognize that gas and ethane remain very moderate and frankly, at pretty low levels, I do expect that second quarter generate free cash flow as a result.

Steve Bender: Yeah. Well, certainly I do expect with some of these higher prices we'll see an increase in the receivable side. When you recognize that gas and ethane remain very moderate, and frankly at pretty low levels, I do expect Q2 generate free cash flow as a result.

Steven Bender: Yeah. Well, certainly I do expect with some of these higher prices we'll see an increase in the receivable side. When you recognize that gas and ethane remain very moderate, and frankly at pretty low levels, I do expect Q2 generate free cash flow as a result.

Speaker #3: Thank you.

Frank Mitsch: Thank you.

Steve Bender: You're welcome.

Steven Bender: You're welcome.

Speaker #1: Thank you. Our next question comes from the line of Josh Spector from UBS. Your line is now open.

Operator: Thank you. Our next question comes from the line of Joshua Spector from UBS. Your line is now open.

Speaker #6: Yeah, hi, good morning. Two things I want to just clarify here. First, just on the cost savings points, I think the 150 million you're characterizing that as year over year.

Joshua Spector: Yeah. Hi, good morning. Two things I want to just clarify here is first, just on the cost savings points. I think the $150 million, you're characterizing that as year-over-year. Can you talk about what that is sequentially? Does that build sequentially or are we at the full run rate today?

Josh Spector: Yeah. Hi, good morning. Two things I want to just clarify here is first, just on the cost savings points. I think the $150 million, you're characterizing that as year-over-year. Can you talk about what that is sequentially? Does that build sequentially or are we at the full run rate today?

Speaker #6: Can you talk about what that is sequentially? And does that build sequentially or are we at the full run rate today?

Speaker #5: Yeah, that 150 million dollars is a year over year result. And certainly, when we think about the contributions that we've seen, they're coming from all three of those respective pillars.

Steve Bender: Yeah. That $150 million is a year-over-year result. Certainly when we think about the contribution that we've seen, they're coming from all three of those respective pillars. If you recall, we generated a significant amount of savings in the Q4. The $150 million full year result is well over $100 million above and beyond what we generated in the Q4.

Steven Bender: Yeah. That $150 million is a year-over-year result. Certainly when we think about the contribution that we've seen, they're coming from all three of those respective pillars. If you recall, we generated a significant amount of savings in the Q4. The $150 million full year result is well over $100 million above and beyond what we generated in the Q4.

Speaker #5: So if you recall, we generated a significant amount of savings in the fourth quarter. So the 150 million dollar full year result is well over 100 million dollars above and beyond what we generated in the fourth quarter.

Speaker #6: Okay, but does that sequentially improve then into 2Q or are we just saying 150 million times 4, that's the 600 million that you're at?

Joshua Spector: Okay. Does that sequentially improve then into Q2 or are we just saying $150 million times 4, that's the $600 million that you're at? I did wanna ask a follow-up just related with the pricing side on PVC. I mean, considering we're talking about pretty decent lags in pricing, I assume now in early May, you have a pretty good idea of the PVC price you're gonna realize in Q2. Can you give us some guidance about what that increase would be since there seems to be a pretty stark disconnect with some of the indexes that we're watching?

Josh Spector: Okay. Does that sequentially improve then into Q2 or are we just saying $150 million times 4, that's the $600 million that you're at? I did wanna ask a follow-up just related with the pricing side on PVC. I mean, considering we're talking about pretty decent lags in pricing, I assume now in early May, you have a pretty good idea of the PVC price you're gonna realize in Q2. Can you give us some guidance about what that increase would be since there seems to be a pretty stark disconnect with some of the indexes that we're watching?

Speaker #6: And I did want to ask a follow-up just related with the pricing side on PVC. I mean, considering we're talking about pretty decent lags in pricing, I assume now in early May, you have a pretty good idea of the PVC price you're going to realize in 2Q.

Speaker #6: Can you give us some guidance about what that increase would be, since there seems to be a pretty stark disconnect with some of the indexes that we're watching?

Speaker #5: Yeah, back to your earlier portion of your question on the cost savings initiatives in our three-pillar strategy, we do expect that we'll be able to achieve a relative apportionment over the course of the remaining three quarters of the year.

Steve Bender: Yeah. Back to your earlier portion of your question on the cost savings initiatives in our three-pillared strategy, we do expect that we'll be able to achieve a relative apportionment over the course of the remaining 3 quarters of the year and fully achieve that $600 million savings. As it relates to the pricing initiatives, you're right, we announced a series of price increases both in PVC as well as in polyethylene. As I say, we expect that those will be very impactful in Q2. In Q1, we achieved in PVC a total of, let's see, $0.01 in January, $0.02 in February, $0.03 in March.

Steven Bender: Yeah. Back to your earlier portion of your question on the cost savings initiatives in our three-pillared strategy, we do expect that we'll be able to achieve a relative apportionment over the course of the remaining 3 quarters of the year and fully achieve that $600 million savings. As it relates to the pricing initiatives, you're right, we announced a series of price increases both in PVC as well as in polyethylene. As I say, we expect that those will be very impactful in Q2. In Q1, we achieved in PVC a total of, let's see, $0.01 in January, $0.02 in February, $0.03 in March.

Speaker #5: And fully achieve that $600 million savings. As it relates to the pricing initiatives, you're right, we announced a series of price increases both in PVC as well as in polyethylene.

Speaker #5: And as I say, we expect that those will be very impactful in the second quarter. So in the first quarter, we achieved in PVC a total of, let's see, a penny in January, 2 cents in February, 3 in March.

Speaker #5: We've announced and achieved 5 cents in April. And we have 4 cents nominated out for May, still looking to achieve the full 10 cents that we had earlier nominated.

Steve Bender: We've announced and achieved $0.05 in April, and we have $0.04 nominated out for May, looking to achieve the full $0.10 that we had earlier nominated. 5 achieved in April and 4 right now, looking to with customers to achieve that full $0.10 that we announced earlier in the month of March for April and May.

Steven Bender: We've announced and achieved $0.05 in April, and we have $0.04 nominated out for May, looking to achieve the full $0.10 that we had earlier nominated. 5 achieved in April and 4 right now, looking to with customers to achieve that full $0.10 that we announced earlier in the month of March for April and May.

Speaker #5: 5 achieved in April and 4 right now, but looking with customers to achieve that full 10 cents that we announced earlier in the month of March for April and May.

Speaker #6: Okay, thank you.

Joshua Spector: Okay. Thank you.

Josh Spector: Okay. Thank you.

Operator: Thank you. Our next question comes from the line of John Roberts from Mizuho. Your line is now open.

Speaker #1: Thank you. Our next question comes from the line of John Roberts from Missoho. Your line is now open.

John Roberts: Thank you. Are you seeing any shift in the destinations for US export caustic and export vinyls? Do you think the pushback in pricing that you're seeing is some demand destruction going on?

Speaker #3: Thank you. Are you seeing any shift in the destinations for US export caustic and export vinyls, and do you think the pushback in pricing that you're seeing is some demand destruction going on?

Speaker #5: You know, I'd say that what we've seen, John, is actually reasonably good demand levels for caustic. As just a reminder, we announced two price increases, one in December of last year and one in January of this year, totaling $140 million—$140.

Steve Bender: You know, I'd say that what we've seen, John, is actually reasonably good demand levels for caustic. As just to remind you, we announced two price increases, one in December of last year, one in January of this year, totaling $140. I'd say that, you know, to date, I'd say we've achieved the greater portion of that first announcement that we announced in December. The indices that we track seem to indicate we'll get a pretty good portion of that second price increase. I'd say that demand continues to be reasonably good at this stage of the quarter. As I say, demand fundamentally is stable, and I would say ramping up.

Steven Bender: You know, I'd say that what we've seen, John, is actually reasonably good demand levels for caustic. As just to remind you, we announced two price increases, one in December of last year, one in January of this year, totaling $140. I'd say that, you know, to date, I'd say we've achieved the greater portion of that first announcement that we announced in December. The indices that we track seem to indicate we'll get a pretty good portion of that second price increase. I'd say that demand continues to be reasonably good at this stage of the quarter. As I say, demand fundamentally is stable, and I would say ramping up.

Speaker #5: And so I'd say that to date, I'd say we've achieved the greater portion of that first announcement that we announced in December. And the indices that we track seem to indicate we'll get a pretty good portion of that second price increase.

Speaker #5: So, I'd say that demand continues to be reasonably good at this stage of the quarter. And, as I say, demand fundamentally is stable, and I would say ramping up.

Speaker #5: From a destination perspective, as you would imagine, logistics have been jockeying around as a result of the conflict in the Gulf, and many of our customers are being well served.

Steve Bender: From a destination perspective, as you would imagine, logistics have been jockeying around as a result of the conflict in the Gulf, and many of our customers are being well-served, but I can't speak specifically to all those individual customers.

Steven Bender: From a destination perspective, as you would imagine, logistics have been jockeying around as a result of the conflict in the Gulf, and many of our customers are being well-served, but I can't speak specifically to all those individual customers.

Speaker #5: But I can't speak specifically to all those individual customers.

Speaker #3: Thank you.

John Roberts: Thank you.

Speaker #1: Thank you. Our next question comes from the line of Kevin McCarthy from Vertical Research Partners. Your line is now open.

Operator: Thank you. Our next question comes from the line of Kevin McCarthy from Vertical Research Partners. Your line is now open.

Speaker #3: Yes, thank you, and good morning. Can you elaborate on your letter of intent to acquire Vynova's vinyls plant in Germany? Maybe you could just talk a little bit about the potential cost, timing, and the fit with your existing assets, including the legacy Vinylit assets.

Kevin McCarthy: Yes, thank you and good morning. Can you elaborate on your letter of intent to acquire Vynova's vinyls plant in Germany? Maybe you could just talk a little bit about potential cost, timing and the fit with your existing assets, including the legacy Vinnolit assets.

Speaker #5: Yeah, well, good question, Kevin. And we've entered into this non-binding letter of intent with the insolvency administrator in Germany, and we think it fits very well, potentially.

Steve Bender: Well, good question, Kevin. You know, we've entered into this non-binding letter of intent with the insolvency administrator in Germany, and we think it fits very well potentially. As I say, it's still non-binding and still subject to a lot of contingencies, of course. It does have access to a deep sea dock, which allows us access to low-cost potential feedstocks, which could be a significant advantage in servicing the European markets.

Steven Bender: Well, good question, Kevin. You know, we've entered into this non-binding letter of intent with the insolvency administrator in Germany, and we think it fits very well potentially. As I say, it's still non-binding and still subject to a lot of contingencies, of course. It does have access to a deep sea dock, which allows us access to low-cost potential feedstocks, which could be a significant advantage in servicing the European markets.

Speaker #5: As I say, it's still non-binding and still subject to a lot of contingencies, of course. But it does have access to a deep-sea dock, which allows us access to low-cost potential feedstocks, which could be a significant advantage in servicing the European markets.

Speaker #3: Okay, and then.

Kevin McCarthy: Okay.

Steve Bender: In terms of talking about value, it's still preliminary at this stage. It's too early to get into evaluations at this stage.

Speaker #5: In terms of talking about in terms of talking in terms of talking about value, it's still a preliminary at this stage. And so it's too early to get into evaluations at this stage.

Steven Bender: In terms of talking about value, it's still preliminary at this stage. It's too early to get into evaluations at this stage.

Speaker #3: Understood. Then as a second question, was your PEM segment EBIT positive in the month of March? It wouldn't but I imagine March was night and day versus the prior months.

Kevin McCarthy: Understood. As a second question, was your PEM segment EBIT positive in the month of March? I wouldn't normally ask you about monthly trends, but I imagine March was night and day versus the prior month. Perhaps you can give us some sense for the exit velocity of earnings, so to speak, as you move through the quarter.

Speaker #3: So perhaps you can give us some sense for the exit velocity of earnings, so to speak, as you move through the quarter.

Speaker #5: Yeah, it was, as you would guess, very positive. And given the pricing initiatives that we've got out in epoxy, PVC, and polyethylene, I expect the improvements to continue to be quite strong as we enter into the second quarter with, again, the ability to recognize and realize those price announcements that we announced during the first quarter.

Steve Bender: Yes. It was, as you would guess, very positive. Given the pricing initiatives that we've brought out in epoxy, PVC, and polyethylene, I expect the improvements to continue to be quite strong as we enter into Q2 with, again, the ability to recognize and realize those price announcements that we announced during Q1.

Steven Bender: Yes. It was, as you would guess, very positive. Given the pricing initiatives that we've brought out in epoxy, PVC, and polyethylene, I expect the improvements to continue to be quite strong as we enter into Q2 with, again, the ability to recognize and realize those price announcements that we announced during Q1.

Speaker #3: Okay, thanks very much.

Kevin McCarthy: Okay. Thanks very much.

Speaker #5: You're welcome.

Steve Bender: You're welcome.

Steven Bender: You're welcome.

Speaker #1: Thank you. Our next question comes from the line of Arun Viswanathan from RBC Capital Markets. Your line is now open.

Operator: Thank you. Our next question comes from the line of Arun Viswanathan from RBC Capital Markets. Your line is now open.

Speaker #5: Great, thanks for taking my question. Hope you guys are well. I guess I wanted to try and maybe have a rough idea on if you could help us frame out Q2.

Arun Viswanathan: Great. Thanks for taking my question. Hope you guys are well. I guess I wanted to try and maybe have a rough idea on if you could help us frame out Q2. It looks like you'll get maybe some incremental extra cost reductions, if you're expecting maybe $600 million for the year, I'm not sure if that actually does go up in Q2. Would it be kind of $20 or $30 million higher in Q2 versus Q1? Secondly, the PE, I think you have 2.5 billion pounds of capacity, can we just apply that on the $0.30 for maybe a $150 to $200 million uplift there?

Speaker #5: So it looks like you'll get maybe some incremental extra cost reductions if you're expecting maybe $600 million for the year. I'm not sure if that actually does go up in Q2.

Speaker #5: Would it be kind of 20 or 30 million higher in Q2 versus Q1? And then secondly, the PE, I think you have 2.5 billion pounds of capacity.

Speaker #5: So can we just apply that on the 30 cents? For maybe a $150 to $200 million uplift there. And then PVC also on your 5.5 billion pounds.

Arun Viswanathan: PVC also, on your 5.5 billion pounds, I'm getting maybe like a $75 million uplift. HIP, I think would be down maybe on higher costs as you flow through those items, and that would maybe cancel out the PVC increase. Maybe we're up sequentially on the order of $200 to 300 million. Am I somewhere in the ballpark, or how should we think about framing out the difference between Q1 and Q2? Thanks.

Speaker #5: I'm getting maybe like a 75 million uplift. So HIP, I think, would be down maybe on higher costs as you flow through those items.

Speaker #5: And that maybe cancel out the PVC increase. So maybe we're up sequentially on the order of 2 to 300 million. Is that am I somewhere in the ballpark or how should we think about framing out the difference between Q1 and Q2?

Speaker #5: Thanks. Yeah, I think directionally, as you think about the price nominations and the volumes of production that we have and the demand levels that we're seeing, that directionally you're moving in the right direction.

Steve Bender: Yeah, I think directionally as you think about the price nominations and the volumes of production that we have and the demand levels that we're seeing, that directionally you're moving directionally in the right direction. I would say that the headwind we do expect with HIP to be reflective of some of the higher PVC pricing moving through in the first portion of Q2. I do think we'll get price realization in the back half of that Q2 as we've already made those announcements to deal with resin cost and transportation cost. Recognizing that we've got a number of price announcements including PVC, polyethylene, and epoxy, we should see significant traction in Q2. I think directionally the way you're thinking about it is correct.

Steven Bender: Yeah, I think directionally as you think about the price nominations and the volumes of production that we have and the demand levels that we're seeing, that directionally you're moving directionally in the right direction. I would say that the headwind we do expect with HIP to be reflective of some of the higher PVC pricing moving through in the first portion of Q2. I do think we'll get price realization in the back half of that Q2 as we've already made those announcements to deal with resin cost and transportation cost. Recognizing that we've got a number of price announcements including PVC, polyethylene, and epoxy, we should see significant traction in Q2. I think directionally the way you're thinking about it is correct.

Speaker #5: I would say that the headwind we do expect with HIP to be reflective of some of the higher PVC pricing moving through in the first portion of the second quarter.

Speaker #5: But I do think we'll get price realization in the back half of that second quarter as we've already made those announcements to deal with resin costs and transportation costs.

Speaker #5: But recognizing that we've got a number of price announcements including PVC, polyethylene, and epoxy, we should see significant traction in the second quarter and so I think directionally the way you're thinking about it is correct.

Speaker #5: Okay, thanks for that. And then if I could just ask, as you look into the second half, what is the durability of this pricing?

Arun Viswanathan: Okay. Thanks for that. If I could just ask, you know, as you look into the second half, what is the durability of this pricing? Have you seen any larger scale closures? You know, do you expect any, you know, maybe the chlorine chain was not necessarily impacted as much because of, you know, coal-based production in China. Do you expect conditions to kind of revert back to normal shortly after the strait reopens? What's kind of the outlook in the chlor-alkali space with regards to some of these constraints? Was it just not affected as much? Thanks.

Speaker #5: Have you seen any larger-scale closures? Do you expect any, maybe? And the chlorine chain was not necessarily impacted as much because of coal-based production in China.

Speaker #5: So, do you expect conditions to kind of revert back to normal shortly after the strait reopens, or what's kind of the outlook in the core alkali space with regards to some of these constraints?

Speaker #5: Was it just not affected as much? Thanks. Yeah, you can see from our comments that we expect the impact of this conflict in the Gulf could persist all the way through the end of the year.

Steve Bender: Yeah. You could see from our comments that we expect the, you know, the impact of this conflict in the Gulf that could persist all the way through the end of the year. It's unclear of exactly what kind of price direction we may see as the conflict takes whatever path it chooses to take. I would say that the PVC core vinyls chain was lesser impacted by this conflict than the polyolefins chain has been. We do expect to see some meaningful improvement in those chains that have been more directly impacted.

Steven Bender: Yeah. You could see from our comments that we expect the, you know, the impact of this conflict in the Gulf that could persist all the way through the end of the year. It's unclear of exactly what kind of price direction we may see as the conflict takes whatever path it chooses to take. I would say that the PVC core vinyls chain was lesser impacted by this conflict than the polyolefins chain has been. We do expect to see some meaningful improvement in those chains that have been more directly impacted.

Speaker #5: And so it's unclear exactly what kind of price direction we may see as the conflict takes whatever path it chooses to take. But I would say that the PVC core vinyls chain was less impacted by this conflict than the polyolefins chain has been.

Speaker #5: And so, we do expect to see some meaningful improvement in those chains that have been more directly impacted.

Speaker #3: Yeah, I mean, one additional thing is if you look into the chloro alkali and specifically on the PVC side, and as you remember, the price was pretty much set by China last year.

Jean-Marc Gilson: Yeah, I mean, one additional thing is, if you look into the chlor-alkali and specifically on the PVC side, as you remember, the price was pretty much set by China last year. It continues to be so, but in a different way. About 25% to 30% of the Chinese capacity as far as PVC is concerned is coming from using naphtha, the rest is a carbide base. All the naphtha are uncompetitive now, have really reduced production level. The carbide side, on the other hand, has increased operating rates, that has put another now ceiling in terms of price increase. That's why you saw a price ramp up very fast in China then a little bit of a decline since probably early April.

Speaker #3: And it continues to be so, but in a different way about 25 to 30 percent of the Chinese capacity as far as PVC is concerned is coming from using NAFTA.

Speaker #3: And the rest is a carbide base. So all the NAFTA are uncompetitive now. And I've really reduced production level. The carbide side, on the other hand, has increased operating rates.

Speaker #3: And that has put another, now, ceiling in terms of price increase. So that's why you saw a price ramp up very fast in China.

Speaker #3: And then a little bit of a decline since probably early April, but it's stabilizing at a higher level than where it was last year.

Jean-Marc Gilson: It's stabilizing at a higher level than where it was last year. We've seen stabilization around $900, $850, $900 per metric ton. Overall, we think that the price for PVC export will stay elevated. It could come down gradually over the year, but it's gonna stay elevated for an extended period of time.

Speaker #3: And we've seen stabilization around $900, $850, $900 per metric ton. So overall, we think that the price for PVC export will stay elevated.

Speaker #3: It could come down gradually over the year, but it's going to stay elevated for an extended period of time.

Speaker #5: Thanks.

Arun Viswanathan: Thanks.

Speaker #1: Thank you. Our next question comes from the line of Peter Osterland from Truist Securities. Your line is now open.

Operator: Thank you. Our next question comes from the line of Pete Osterland from Truist Securities. Your line is now open.

Speaker #6: Hey, good morning. Thanks for taking the questions. First, just wanted to ask on HIP. You highlighted data centers as a growth driver for pipe and fittings.

Pete Osterland: Hey, good morning. Thanks for taking the questions. First, just wanted to ask on HIP. You highlighted data centers as a growth driver for pipe and fittings. Can you quantify the revenue contribution or the backlog growth that's tied to the data center market? How does the margin profile for sales into this market compare to HIP overall?

Speaker #6: Can you quantify the revenue contribution or the backlog growth that's tied to the data center market? And how does the margin profile for sales into this market compare to HIP overall?

Speaker #5: Yeah, it's a good question. I would say in the first half, sales and orders in the first half represent mid-teens percent of our volume.

Steve Bender: Yeah, it's a good question. I would say in H1, sales and orders in H1 represent mid-teens% of our volume, and it's a growing market, as you know well. We expect it to continue to be a nice contribution to the infrastructure side of our pipe and fittings businesses. I'd say, as I say, H1, both orders and the order book and sales for H1 of the year, it's mid-teens and growing. We expect it to be a continued contribution to the pipe and fittings piece of HIP.

Steven Bender: Yeah, it's a good question. I would say in H1, sales and orders in H1 represent mid-teens% of our volume, and it's a growing market, as you know well. We expect it to continue to be a nice contribution to the infrastructure side of our pipe and fittings businesses. I'd say, as I say, H1, both orders and the order book and sales for H1 of the year, it's mid-teens and growing. We expect it to be a continued contribution to the pipe and fittings piece of HIP.

Speaker #5: And it's a growing market, as you know well. So we expect it to continue to be a nice contribution to the infrastructure side of our pipe and fittings businesses.

Speaker #5: But I'd say, as I say, the first half—both orders and the order book, and sales for the first half of the year—it's mid-teens and growing.

Speaker #5: So we expect it to be a continued contribution to the pipe and fittings piece of HIP.

Speaker #6: Great, thank you. And then, just as a follow-up, on the $67 million PVC pipe settlement—does this settlement resolve the entirety of your exposure to litigation related to this?

Pete Osterland: Great. Thank you. Just as a follow-up, on the $67 million PVC pipe settlement, does this settlement resolve the entirety of your exposure to litigation related to this? Or is there potential for any further one-time charges?

Speaker #6: Or is there potential for any further one-time charges?

Speaker #5: Yeah, this is tied really to the direct purchasers component of the litigation. And so there are two other categories of claimants that we're in conversation with.

Steve Bender: Yeah. This is tied really to the direct purchasers, component of the litigation. There are two other categories of claimants that we're in conversation with. We've got a reserve of $10 million for that second category, but there are further, obviously, discussions to be had.

Steven Bender: Yeah. This is tied really to the direct purchasers, component of the litigation. There are two other categories of claimants that we're in conversation with. We've got a reserve of $10 million for that second category, but there are further, obviously, discussions to be had.

Speaker #5: So we've got a reserve of $10 million for that second category. But there are further, obviously, discussions to be had.

Pete Osterland: Thank you very much.

Speaker #6: Thank you very much.

Speaker #5: You're welcome.

Steve Bender: You're welcome.

Steven Bender: You're welcome.

Speaker #1: Thank you. Our next question comes from the line of Duffy Fisher from Goldman and Sachs. Your line is now open.

Operator: Thank you. Our next question comes from the line of Duffy Fischer from Goldman Sachs. Your line is now open.

Speaker #7: Yeah, good morning, guys. I was wondering, can you help me? I'm having a hard time triangulating your HIP numbers on revenue. So if you assume that PVC prices are up, you would talk to at least $0.10, so that's like a third.

Duffy Fischer: Yeah, good morning, guys. Can you help me? I'm having a hard time triangulating your HIP numbers on revenue. You know, if you assume that PVC prices are up, you know, you would talk to at least $0.10, you know, so that's like a third. You said that you're gonna get price by the H2 to offset that. You know, you know, that would be pretty significant price increases rolling through HIP. Yet you're guiding us to the low end of your revenue guide, which would mean that volume must be down significantly in the double digits versus what you expected. Can you just kinda tie those together, the inflation rolling through into HIP, the price that you're gonna get, and then, you know, how that changed your revenue outlook vis-a-vis volume?

Speaker #7: And you said that you're going to get priced by the back half to offset that. So that would be pretty significant price increases rolling through HIP.

Speaker #7: But yet you're guiding us to the low end of your revenue guide, which would mean that volume must be down significantly, in the double digits, versus what you expected.

Speaker #7: So can you just kind of tie those together—the inflation rolling through into HIP, the price that you're going to get, and then how that changed your revenue outlook vis-à-vis volume?

Speaker #5: Yeah. And Duffy, good question. We're seeing kind of mixed signals right now in the markets. You've seen housing starts, the latest report showed housing starts at 1.5 million housing starts, which is meaningfully higher but I would say permits for only 1.3, which is trending lower.

Steve Bender: Yeah. Duffy Fischer, good question. We're seeing kind of mixed signals right now in the markets. You've seen housing starts. The latest report showed housing starts at 1.5 million housing starts, which is meaningfully higher. I would say permits were only 1.3, which is trending lower. You see mixed signals right now in the marketplace. As we start in robustness now, the construction season now that we're in May, going forward, we're just being cautious in terms of what housing starts are likely to be. Remember, half our business is housing starts, the other half is repair and remodeling, but those are smaller volumes. Housing starts tend to be higher volumes. We're just really being cautious about kind of volume we could see with the potential slowdown in housing starts in this year.

Steven Bender: Yeah. Duffy Fischer, good question. We're seeing kind of mixed signals right now in the markets. You've seen housing starts. The latest report showed housing starts at 1.5 million housing starts, which is meaningfully higher. I would say permits were only 1.3, which is trending lower. You see mixed signals right now in the marketplace. As we start in robustness now, the construction season now that we're in May, going forward, we're just being cautious in terms of what housing starts are likely to be. Remember, half our business is housing starts, the other half is repair and remodeling, but those are smaller volumes. Housing starts tend to be higher volumes. We're just really being cautious about kind of volume we could see with the potential slowdown in housing starts in this year.

Speaker #5: So you see mixed signals right now in the marketplace. And as we start in robustness now, the construction season now that we're in May going forward, we're just being cautious in terms of what housing starts are likely to be.

Speaker #5: Remember, half our business is housing starts; the other half is repair and remodeling. But those are smaller volumes, and so housing starts tend to be higher volumes.

Speaker #5: So we're just really being cautious about kind of volume we could see with the potential slowdown in housing starts in this year.

Speaker #7: Great. And then just one housekeeping, how much cash do you have left to spend on your expensed cost-cutting program from last year?

Duffy Fischer: Great. Just one housekeeping. How much cash do you have left to spend on your expense cost-cutting program from last year?

Speaker #5: You're talking about the three-pillared strategy that when you say your cost-cutting initiative, is that true?

Steve Bender: You're talking about the three-pillared strategy that when you say you're cost-cutting initiative, that's what.

Steven Bender: You're talking about the three-pillared strategy that when you say you're cost-cutting initiative, that's what.

Speaker #7: Yes. Yeah, exactly. You spent cash this quarter, that was already expensed, I believe, as I read through it. Is that fair? And is there more cash yet to be spent on that?

Duffy Fischer: Yeah. Yeah. Yeah, exactly. How you spent cash this quarter that was already expensed, I believe, as I read through it. Is that fair? Is there more cash yet to be spent on that?

Speaker #5: There is. And so I would say in the neighborhood of 50 million dollars remaining in '26.

Steve Bender: There is. I would say in the neighborhood of $50 million remaining in 2026.

Steven Bender: There is. I would say in the neighborhood of $50 million remaining in 2026.

Speaker #7: Okay. Thank you, guys.

Duffy Fischer: Okay. Thank you, guys.

Speaker #1: Thank you. Our next question comes from the line of Hassan Ahmed from Alembic Global Advisors. Your line is now open.

Operator: Thank you. Our next question comes from the line of Hassan Ahmed from Alembic Global Advisors. Your line is now open.

Hassan Ahmed: Morning, Jean-Marc and Steve. You know, you earlier in the call talked a little bit about PVC export opportunities opening up. Just curious to find out where you're seeing those opportunities, particularly in light of, you know, a bunch of countries, you know, be it India, the EU, and the like, already having anti-dumping duties in place.

Speaker #8: Morning, John Mark, and Steve. You earlier in the call talked a little bit about PVC export opportunities opening up. So just curious to sort of find out where you're seeing those opportunities, particularly in light of a bunch of countries be it India, the EU, and the like.

Speaker #8: Already having anti-dumping duties in place.

Speaker #5: Yeah, I mean, we are continuing to see that you are correct. I mean, the demand from India and the rest has decreased a little bit.

Jean-Marc Gilson: Yeah, I mean. You are correct. I mean, the demand from India and the rest has decreased a little bit. Overall, the supply is also, even though over, I would say probably February, March, you saw an uptick in supply from China. Since then, we've seen still a steady demand for export and we are pretty much selling everything we can to the export market at pretty good prices right now.

Speaker #5: But overall, the supply is also even, though over, I would say, probably February, March, you saw an uptick in supply from China. Since then, we've seen still a steady demand for export.

Speaker #5: And we are pretty much selling everything we can to the export market at pretty good prices right now.

Speaker #8: And I would say we continue to have support for the Latin America, South American markets as well. Understood. And just carrying on with that, I've read some recent reports about the Chinese removing their VAT export drawback on PVC.

Steve Bender: I would say we continue to support the Latin America, South America markets as well.

Steven Bender: I would say we continue to support the Latin America, South America markets as well.

Hassan Ahmed: Understood. Just carrying on with that, you know, I've read some recent reports about the Chinese removing their VAT export drawback on PVC. Are you hearing similar things? If that is true, what does that do to the cost curves? What does that do to Chinese exports going forward?

Speaker #8: Are you hearing similar things? And if that is true, what does that do to the cost curves? What does that do to Chinese exports going forward?

Jean-Marc Gilson: You're talking about the fact that they removed and that it was sometime after question whether they were removing it?

Speaker #5: You're talking about the fact that they removed it, and that it was sometime after a question about whether they were removing it?

Jean-Marc Gilson: You're talking about the fact that they removed and that it was sometime after question whether they were removing it?

Speaker #8: Yeah, they were removing it really in April. And I would say that we did see some increase in exports just in advance of that April date.

Steve Bender: Yeah, they were removing it really.

Steven Bender: Yeah, they were removing it really.

Jean-Marc Gilson: Yeah

Steve Bender: in April. I would say that we did see some increase in exports just in advance of that April date. Certainly that creates even a higher hurdle for those who are exporting because. Those that do have a higher cost, especially those that are ethylene-based, certainly have now had an additional higher hurdle. As Jean-Marc Gilson noted earlier in his comments, those that are acetylene-based, you know, certainly are on a lower end of the curve and not seeing the challenges of higher cost from the naphtha that are coming through. I would say that revision or that rescission, I should say, of that VAT is certainly an additional headwind that all exporters out of China are now facing.

Steven Bender: in April. I would say that we did see some increase in exports just in advance of that April date. Certainly that creates even a higher hurdle for those who are exporting because. Those that do have a higher cost, especially those that are ethylene-based, certainly have now had an additional higher hurdle. As Jean-Marc Gilson noted earlier in his comments, those that are acetylene-based, you know, certainly are on a lower end of the curve and not seeing the challenges of higher cost from the naphtha that are coming through. I would say that revision or that rescission, I should say, of that VAT is certainly an additional headwind that all exporters out of China are now facing.

Speaker #8: But certainly, that creates even a higher hurdle for those who are exporting because those that do have a higher cost, especially those that are ethylene-based, certainly have now had an additional higher hurdle as John Mark noted earlier in his comments.

Speaker #8: Those that are acetylene-based, certainly are on a lower end of the curve, not seeing the challenges of higher cost from the NAPTA that are coming through.

Speaker #8: But I would say that revision—or that rescission, I should say—of that VAT is certainly an additional headwind that all exporters out of China are now facing.

Speaker #8: And Steve, just for me to get the numbers right, I mean, is it fair to assume that that headwind would be maybe like $75 a ton to maybe like $100 a ton, somewhere in that ballpark?

Hassan Ahmed: Steve, just for me to get the numbers right, I mean, is it fair to assume that that headwind would be maybe like $75 to 100 a ton, somewhere in that ballpark?

Steve Bender: Uh-

Steven Bender: Uh-

Jean-Marc Gilson: Yeah, that was about-

Speaker #5: Yeah, there was.

Steve Bender: That's.

Steven Bender: That's.

Speaker #8: That's about $70, $70 a ton.

Jean-Marc Gilson: About $70, $60, $70 a ton, yeah.

Steve Bender: Yeah, that sounds about right. I was just trying to do the mental math. That's about right.

Steven Bender: Yeah, that sounds about right. I was just trying to do the mental math. That's about right.

Speaker #7: I was just trying to do the middle math. That's about right.

Speaker #8: Okay, very helpful. Thank you, guys.

Hassan Ahmed: Okay. Very helpful. Thank you, guys.

Speaker #5: Yeah.

Steve Bender: Yeah.

Steven Bender: Yeah.

Speaker #1: Thank you. Our next question comes from the line of Matthew Blair from TPH. Your line is now open.

Operator: Thank you. Our next question comes from the line of Matthew Blair from TPH. Your line is now open.

Matthew Blair: Thanks, and good morning. Could we circle back to these higher natural gas costs in PEM in Q1? It looks like if I just look at a Gulf Coast indicator like Henry Hub, it did spike over $7 at certain points in January, overall it looks lower quarter-over-quarter in Q1 versus Q4, as do most other Gulf Coast indicators. I do see higher natural gas indicators in Europe quarter-over-quarter. Maybe could you just help us understand your headwinds in natural gas? Were there any derivative impacts, like maybe rolling off hedges from last year or any other sort of one-time issues there? Thank you.

Speaker #9: Thanks and good morning. Could we circle back to these higher natural gas costs in 10 in the first quarter? It looks like if I just look at a Gulf Coast indicator like Henry Hub, it did spike over 7 dollars at certain points in January.

Speaker #9: But overall, it looks lower quarter over quarter. In Q1 versus Q4, as do most other Gulf Coast indicators. I do see higher natural gas indicators in Europe quarter over quarter.

Speaker #9: So maybe could you just help us understand your headwinds in natural gas? Were there any derivative impacts? Maybe rolling off hedges from last year or any other sort of one-time issues there?

Speaker #9: Thank you.

Speaker #7: Yeah, Matthew. No, we had them. Just looking at some of the indices here, and you're right—gas in late January and through much of February was north of $7.

Steve Bender: Yeah, Matthew. You know, we had, I am just looking at some of the indices here, and you are right. Gas, in late January and through much of February was north of $7. We are a buyer on large volume on a spot basis from a pricing perspective. It was really that $45 million headwind that I mentioned that was a headwind that drove an impact on the results in Q1. With the pull on natural gas globally, given what is happening in the Persian Gulf, you really have seen gas prices come down significantly, and we are probably just in the $2.80, $2.90 range today.

Steven Bender: Yeah, Matthew. You know, we had, I am just looking at some of the indices here, and you are right. Gas, in late January and through much of February was north of $7. We are a buyer on large volume on a spot basis from a pricing perspective. It was really that $45 million headwind that I mentioned that was a headwind that drove an impact on the results in Q1. With the pull on natural gas globally, given what is happening in the Persian Gulf, you really have seen gas prices come down significantly, and we are probably just in the $2.80, $2.90 range today.

Speaker #7: We're a buyer on a large amount of spot basis from a pricing perspective. And so it was really that $45 million headwind that I mentioned that was a headwind that drove the quarter.

Speaker #7: But with the pull on natural gas globally, given what's happening in the Persian Gulf, you really have seen gas prices come down significantly. And we're probably just in the $2.80, $2.90 range today.

Speaker #7: There is somewhat of a contango curve on, as that gas curve continues to get pushed out. And month on month, we've seen low prices persist in this just under $3 range.

Steve Bender: There is somewhat of a contango curve on gas, but what we've continued to see is that gas curve continues to get pushed out, and month-on-month, we've seen low prices persist in this just under $3 range.

Steven Bender: There is somewhat of a contango curve on gas, but what we've continued to see is that gas curve continues to get pushed out, and month-on-month, we've seen low prices persist in this just under $3 range.

Speaker #9: Sounds good. And then for the FICO impact, I think you said it was 37 million do you have a split between 10 and HIP for that impact in Q1?

Matthew Blair: Sounds good. For the FIFO impact, I think you said it was $37 million. Do you have a split between PEM and HIP for that impact in Q1? Thanks.

Speaker #9: Thanks.

Speaker #5: Yep. That was all PIM-related. But it was $37 million.

Steve Bender: Yep. That was all PEM related, but it was $37 million.

Steven Bender: Yep. That was all PEM related, but it was $37 million.

Speaker #9: Great. Thank you.

Matthew Blair: Great. Thank you.

Speaker #7: You're welcome.

Steve Bender: You're welcome.

Steven Bender: You're welcome.

Speaker #1: Thank you. Our next question comes from the line of Abigail Everts from Wells Fargo. Please go ahead.

Operator: Thank you. Our next question comes from the line of Abigail D'Amore from Wells Fargo. Please go ahead.

Operator: Thank you. Our next question comes from the line of Abigail [D'Amore] from Wells Fargo. Please go ahead.

Speaker #10: Hi there. Thanks for taking my question. I'm curious about your expectations for the cost of soda later in the year. Obviously, you're expecting prices to increase in the near term, in line with consultants.

Abigail D'Amore: Hi there. Thanks for taking my question. I'm curious about your expectations for caustic soda later in the year. Obviously, you're expecting prices to increase near term in line with consultants. I'm seeing in their forecast pricing coming down around October, which they're saying is due to demand destruction from ongoing inflation and elevated interest rates. I'm just curious about your volume and pricing outlook for caustic soda in the back half of the year.

Speaker #10: But I'm seeing in their forecast pricing coming down around October, which they're saying is due to demand destruction from ongoing inflation and elevated interest rates.

Speaker #10: I'm just curious about your volume and pricing outlook for cost of soda in the back half of the year.

Speaker #5: Yeah, good question. As I mentioned earlier, we've had two price announcements. And we've realized the great majority of that first price announcement already. I'd say demand right now is stable.

Steve Bender: Yeah, good question. As, you know, as I mentioned earlier, we've had 2 price announcements, and we've realized the great majority of that 1st price announcement already. I'd say demand right now is stable. As we look forward into kind of the 2nd and 3rd quarters, I actually see, because of that stability, a pretty stable price. The consultants do have some small price increases between May and July that represent about $30 a ton. I'd say demand really looks pretty stable at this stage.

Steven Bender: Yeah, good question. As, you know, as I mentioned earlier, we've had 2 price announcements, and we've realized the great majority of that 1st price announcement already. I'd say demand right now is stable. As we look forward into kind of the 2nd and 3rd quarters, I actually see, because of that stability, a pretty stable price. The consultants do have some small price increases between May and July that represent about $30 a ton. I'd say demand really looks pretty stable at this stage.

Speaker #5: And as we look forward into kind of the second and third quarters, I actually see because of that stability, a pretty stable price. And the consultants do have some small price increases between May and July.

Speaker #5: That represents about $30 a ton. But I'd say demand really looks pretty stable at this stage.

Speaker #10: Okay, got it. Thanks. And then just a question on HIP and PVC. How would you size the weather impact on the construction, beginning of the construction season this year?

Abigail D'Amore: Okay. Got it. Thanks. Just a question on HIP and PVC. How would you size the weather impact on the construction, beginning of the construction season this year? Where would things be if the weather had been more cooperative, do you think?

Speaker #10: Where would things be if the weather had been more cooperative, do you think?

Speaker #5: It's a little bit hard to say. But I would say given the very cold weather we had in January and persisted at least through much of February, it certainly slowed down a lot of the early order intake.

Steve Bender: It's a little bit hard to say, I would say given the very cold weather we had in January and persisted at least through much of February, it certainly slowed down a lot of the early order intake. As a consequence, we did not get the full benefit of that in Q1. Certainly we'll wait and see kind of how Q2 really translates as we get further into construction season now that the weather is much more milder throughout most of the country. Q2 is usually when we see a real pickup. I would say, as I mentioned earlier, housing start numbers that we've seen published are certainly elevated, but permits are looking more softer. That's really the cautiousness that we're looking as we look at our order books.

Steven Bender: It's a little bit hard to say, I would say given the very cold weather we had in January and persisted at least through much of February, it certainly slowed down a lot of the early order intake. As a consequence, we did not get the full benefit of that in Q1. Certainly we'll wait and see kind of how Q2 really translates as we get further into construction season now that the weather is much more milder throughout most of the country. Q2 is usually when we see a real pickup. I would say, as I mentioned earlier, housing start numbers that we've seen published are certainly elevated, but permits are looking more softer. That's really the cautiousness that we're looking as we look at our order books.

Speaker #5: And as a consequence, we did not get the full benefit of that in the first quarter. And so, certainly, we'll wait and see kind of how the second quarter really translates as we get further into construction season, now that the weather is much more mild throughout most of the country.

Speaker #5: Second quarter is usually when we see a real pickup. But I would say, as I mentioned earlier, housing start numbers that we've seen published are certainly elevated.

Speaker #5: But permits are looking softer, and so that's really the cautiousness that we're looking at as we look at our order books.

Speaker #10: Got it. Thanks for the color.

Abigail D'Amore: Got it. Thanks for the color.

Speaker #7: You're welcome.

Steve Bender: You're welcome.

Steven Bender: You're welcome.

Speaker #1: Thank you. Our next question comes from the line of Jeff Zakoskis from JPMorgan. Your line is now open.

Operator: Thank you. Our next question comes from the line of Jeffrey Zekauskas from JPMorgan. Your line is now open.

Jeffrey Zekauskas: Thanks very much. I think early in the call, you were talking about domestic PVC price increases as being $0.06 a pound for Q1, $0.01, then $0.02, then $0.03. You also talked about discounts that were given. In general, did PVC prices net of discounts rise in Q1?

Speaker #7: Thanks very much. I think early in the call, you were talking about domestic PVC price increases as being 6 cents a pound for the first quarter.

Speaker #7: A penny, then 2 cents, then 3 cents. But you also talked about discounts that were given. In general, did PVC prices net of discounts rise in the first quarter?

Speaker #5: So I think your discount, you're referring to the price resets that took place at the end of the year, Jeff, I believe. Yeah. Because certainly, as we think about the price nominations we had in January and February, I would say that we're getting to kind of pick up traction from where we were at the end of December.

Steve Bender: I think your discount, you're referring to the price resets that took place at the end of the year, Jeff, I believe.

Steven Bender: I think your discount, you're referring to the price resets that took place at the end of the year, Jeff, I believe.

Jeffrey Zekauskas: Yes. Price resets. Yes. Yes, that's exactly right.

Steve Bender: Yeah. Certainly those, you know, as we think about the price nominations we had in January and February, you know, I would say that we're beginning to kind of pick up traction from where we were at the end of December. When you think about the March increase, most of that is gonna be reflective in Q2 and not really in Q1 results.

Steven Bender: Yeah. Certainly those, you know, as we think about the price nominations we had in January and February, you know, I would say that we're beginning to kind of pick up traction from where we were at the end of December. When you think about the March increase, most of that is gonna be reflective in Q2 and not really in Q1 results.

Speaker #5: And so when you think about the March increase, most of that is going to be reflective in second quarter and not really in first quarter results.

Jeffrey Zekauskas: Okay. Then if I can ask a naive question. You know Chinese PVC exports, year to date, maybe they're up 45% being up 45% for all of 2025. There's really no PVC materially that's made in the Middle East. For me, you know, why is it that PVC prices should be up at all? Does it have to do with European ethylene inflation? Because there doesn't seem really to be any disruption to Asian production, and there's no disruption to US production. What we're seeing, of course, is, you know, PVC prices begin to, you know, move down pretty sharply in Asia. What's the source of the sharp move up in PVC?

Speaker #7: And then, if I can ask a naive question: Chinese PVC exports, year to date—maybe they're up 45%, off being up 45% for all of 2025.

Speaker #7: And there's really no PVC materially that's made in the Mideast. And so for me, why is it that PVC prices should be up at all?

Speaker #7: Does it have to do with European ethylene inflation? Because there doesn't seem really to be any disruption to Asian production. And there's no disruption to US production.

Speaker #7: And what we're seeing, of course, is we're seeing PVC prices begin to move down pretty sharply in Asia. But what's the source of the sharp move up in PVC?

Speaker #7: It's very clear what it is in polyethylene. But can you give us an idea of what pushed PVC up?

Jeffrey Zekauskas: It's very clear what it is in polyethylene, but can you give us an idea of what pushed PVC up?

Speaker #5: Yeah. There is a if you look into the situation in China, as I said, about 25% of the capacity is not carbide-based. And so it's really sensitive to NAFTA prices.

Jean-Marc Gilson: Yeah. There is a, if you look into the situation in China, as I said, about 25% of their capacity is not carbide-based, is really sensitive to naphtha prices. They've been hit pretty hard with the increase in naphtha prices, and they are, economically, it's really impossible for them to export. They barely at breakeven point when you look at current prices. Quite a few of them have actually dramatically reduced their operating rate. If you look at the carbide, they are mostly in inner China. They're not really on the coast, all the effect of transport cost increase and everything has put an increase onto the PVC prices. You add on top of that the duty drawback, removal of about 15%, you get support for PVC price increase.

Speaker #5: So they've been hit pretty hard with the increase in NAFTA prices. And they are economically, it's really impossible for them to export. And they barely at break-even point when you look at current prices.

Speaker #5: So, and quite a few of them, as I've actually dramatically reduced their operating rate. If you look at the carbide, they are mostly inner China.

Speaker #5: They're not really on the coast. So all the effect of transport cost increase and everything has put an increase onto the PVC prices. You add on top of that the duty drawback removal of about 15%.

Speaker #5: And you get support for the PVC price increase, and that's why right now, after a spike, it went over $1,000 per ton in China early on.

Jean-Marc Gilson: That's why right now, after a spike, it went over $1,000 per ton in China early on. It's stabilizing in the $850, $900 dollar per metric ton. When if you look back, last year, they were down to the $500, $550 range. That's still a significant increase.

Speaker #5: It's stabilizing in the $850 to $900 per metric ton range. When, if you look back last year, they were down to the $500 to $550 range.

Speaker #5: So that's still a significant increase.

Speaker #7: Great. Thank you very much.

Jeffrey Zekauskas: Great. Thank you very much.

Speaker #1: Thank you. Our next question comes from the line of Matthew Dayo from Bank of America. Your line is now open.

Operator: Thank you. Our next question comes from the line of Matthew DeYoe from Bank of America. Your line is now open.

Speaker #5: Yeah. Morning. So if I square off the 45 million headwind from gas quarter over quarter for PEM, and then I back out 100 million of EBITDA from the cost cut sequentially.

Matthew DeYoe: Morning. If I square off the $45 million headwind from gas quarter-over-quarter for PEM, and then I, you know, back out $100 million of EBITDA from the cost cuts sequentially. I don't know, maybe PEM was down $60 million quarter-over-quarter, all else equal from, like, an operational perspective. You know, prices moved up over the quarter, but we just kind of talked through some of the PVC roll discounting that was maybe unique to Westlake versus peers. That doesn't feel like that fully explains the whole differential to me versus what your peers explained or put up in the quarter. Is there any reason why the calendar roll would have been more punitive to you in polyethylene? Was some epoxy additional headwind that maybe we're not catching?

Speaker #5: I don't know. Maybe PEM was down 60 million quarter over quarter all else equal from an operational perspective. Prices moved up over the quarter.

Speaker #5: But we just kind of talked through some of the PVC roll discounting that was maybe unique to Westlake versus peers. But that doesn't feel like that fully explains the whole differential to me versus what your peers explained or put up in the quarter.

Speaker #5: And so, is there any reason why the calendar roll would have been more punitive to you in polyethylene? Or was some epoxy additional headwind that maybe we're not catching? Because it still feels like there is some idiosyncratic drag that maybe wasn't so amply felt on your peers?

Matthew DeYoe: 'Cause it still feels like there is some idiosyncratic drag that maybe wasn't so amply felt on your peers.

Steve Bender: No, I can't, Matt, I can't, I guess I'm struggling with your math here because we certainly have recognized the same price nominations that I think we've seen announced by Westlake throughout the quarter, both in epoxy and in PVC and in polyethylene. Maybe part of the equation is we also did planned maintenance in one of our sites earlier this year in Q1 at Plaquemine. That may be part of the equation that you did not have in your individual model. That was impactful in terms of opportunities. It was a planned outage that we had that we had taken.

Steven Bender: No, I can't, Matt, I can't, I guess I'm struggling with your math here because we certainly have recognized the same price nominations that I think we've seen announced by Westlake throughout the quarter, both in epoxy and in PVC and in polyethylene. Maybe part of the equation is we also did planned maintenance in one of our sites earlier this year in Q1 at Plaquemine. That may be part of the equation that you did not have in your individual model. That was impactful in terms of opportunities. It was a planned outage that we had that we had taken.

Speaker #5: I can't, Matt, I can't. I guess I'm struggling with your math here, because we certainly have recognized the same price nominations that I think we've seen announced by Westlake throughout the quarter.

Speaker #5: Both in epoxy, and in PVC, and in polyethylene. Maybe part of the equation is we also did planned maintenance in one of our sites earlier this year, in the first quarter, at Plaquemine.

Speaker #5: And so, that may be part of the equation that you did not have in your individual model. And so, that was impactful in terms of opportunity, but it was a planned outage that we had taken.

Speaker #5: But I think, when you walk through the model, our price nominations and price realizations, I think, are the same that we would have—that we've nominated—that I think many of the others have spoken to that I've read.

Steve Bender: I think when you walk through the, walk through the model, our price nominations and price realizations, I think are the same that we would've that we've nominated that I think many of the others have spoken to that I've read.

Steven Bender: I think when you walk through the, walk through the model, our price nominations and price realizations, I think are the same that we would've that we've nominated that I think many of the others have spoken to that I've read.

Speaker #7: Okay. And then if I look at I don't know. Maybe this is during 2022, right? European electricity costs are not up nearly as much.

Matthew DeYoe: Okay. If I look at, I don't know, maybe this is during 2022, right? European electricity costs are not up nearly as much, but European caustic profitability is pretty bad right now. Maybe, down $20 million. Or sorry, $200. God, sorry. My head's all over the place. Down $200 a ton. Seems like caustic's rallying in Europe. Do you see an opportunity for export window on caustic to Europe to open up? Maybe not the way it did in 2022, but, you know, is that an area for kind of upside as we look through the course of the next quarter or so if this continues?

Speaker #7: But European caustic profitability is pretty bad right now. Maybe down 20 million or sorry, $200 sorry. My head's all the place. Down $200 a ton.

Speaker #7: Seems like caustics rallying in Europe. Do you see an opportunity for export window on caustic to Europe to open up? Maybe not the way it did in 2022.

Speaker #7: But is that an area for kind of upside as we look through the course of the next quarter or so if this continues? And then can you quantify how much the Plaquemin outage was now that we just mentioned that?

Jean-Marc Gilson: I mean-

Matthew DeYoe: I mean-

Matthew DeYoe: Can you quantify how much the Plaquemine outage was now that we just mentioned that?

Speaker #5: Yeah. I would say it's in the 20s $20 million range.

Steve Bender: Yeah, I would say it's in the 20s, $20 million range.

Steven Bender: Yeah, I would say it's in the 20s, $20 million range.

Speaker #7: Okay. Thank you.

Matthew DeYoe: Okay. Thank you.

Speaker #5: And in terms of caustic, you are correct. I mean, caustic priced might indicate that there is an opportunity to ship there. But when you look at the price for transport and everything, it completely offsets the spread that there is between the US and Europe.

Jean-Marc Gilson: In terms of caustic, you are correct. I mean, caustic price might indicate that there is an opportunity to ship there, but when you look at the price for transport and everything, it completely offsets the spread that there is between the US and Europe. Right now, there is really no good opportunities to export caustic to Europe.

Speaker #5: So right now, there is really no good opportunities to export caustic to Europe.

Speaker #7: Okay. Understood.

Matthew DeYoe: Okay. Understood.

Speaker #1: Thank you. Let's see. This ends our question and answer session. Let me turn it over to Jeff Holy for closing remarks.

Operator: Thank you. This ends our question and answer session. Let me turn it over to Jeffrey Holy for closing remarks.

Speaker #8: Thank you. Thanks for participating in today's call. We hope you'll join us again for our next conference call to discuss our second-quarter results.

Jeffrey Holy: Thank you. Thanks for participating in today's call. We hope you'll join us again for our next conference call to discuss our Q2 results.

Speaker #1: Thank you for participating in today's Westlake Corporation first-quarter earnings conference call. As a reminder, this call will be available for replay beginning two hours after the call has ended.

Operator: Thank you for participating in today's Westlake Corporation Q1 earnings conference call. As a reminder, this call will be available for replay beginning 2 hours after the call has ended. The replay can be accessed via Westlake website. Goodbye.