Westlake Chemical Corp. (WLK) filed Quarterly Report for the period ended 2009-09-30.
Westlake Chemical Corporation is a vertically integrated international manufacturer and supplier of petrochemicals polymers and fabricated products. The company's range of products includes ethylene polyethylene styrene vinyl intermediates PVC PVC Pipe PVC windows fence and decking components. Westlake Chemical Corp. has a market cap of $1.65 billion; its shares were traded at around $25.04 with and P/S ratio of 0.4. The dividend yield of Westlake Chemical Corp. stocks is 0.9%.
Highlight of Business Operations:
For the quarter ended September 30, 2009, net income was $29.8 million, or $0.45 per diluted share, on net sales of $632.6 million. This represents an increase in net income of $2.4 million, or $0.03 per diluted share, from the quarter ended September 30, 2008 net income of $27.4 million, or $0.42 per diluted share, on net sales of $1,073.7 million. Sales for the third quarter of 2009 decreased $441.1 million compared to the third quarter of 2008 due primarily to lower sales prices for all major products. Income from operations was $49.0 million for the third quarter of 2009 as compared to $48.8 million for the third quarter of 2008. Operating margins benefited from significantly lower energy and feedstock costs in the 2009 period, which was mostly offset by lower sales prices and significantly lower caustic margins resulting from a 78.2% decrease in industry caustic prices compared to the third quarter of 2008. The third quarter of 2008 was negatively impacted by outages caused by Hurricanes Gustav and Ike at our Lake Charles and Geismar facilities. Trading activity resulted in a loss of $0.4 million in the third quarter of 2009 as compared to a loss of $0.9 million in the third quarter of 2008.
For the nine months ended September 30, 2009, net income was $40.5 million, or $0.61 per diluted share, on net sales of $1,695.7 million. This represents a decrease in net income of $39.5 million, or $0.61 per diluted share, from the nine months ended September 30, 2008 net income of $80.0 million, or $1.22 per diluted share, on net sales of $3,095.2 million. Sales for the nine months ended September 30, 2009 decreased $1,399.5 million compared to the first nine months of 2008 largely due to lower sales prices for all major products and lower sales volumes for all major products except caustic and styrene. Income from operations was $84.3 million for the first nine months of 2009 as compared to $136.2 million for the first nine months of 2008. The decrease in income from operations was attributable to a number of factors, including reduced demand for our major products due to the current economic downturn, an unscheduled outage caused by an ice storm at our Calvert City, Kentucky complex in the first quarter of 2009 and a turnaround at one of our ethylene units in Lake Charles in the first quarter of 2009. The decrease was partially offset by a gain from trading activity of $3.6 million during the first nine months of 2009 compared to a loss of $7.8 million during the first nine months of 2008. The Calvert City outage and Lake Charles turnaround resulted in repair costs and the expensing of unabsorbed fixed manufacturing costs of $19.5 million during the first quarter of 2009. A turnaround and revamp of our styrene facility in Lake Charles and the effects of Hurricanes Gustav and Ike at our Lake Charles and Geismar facilities negatively impacted income from operations in the first nine months of 2008.
(Loss) Income from Operations. The Vinyls segment incurred a loss from operations of $8.1 million in the third quarter of 2009 as compared to income from operations of $30.5 million in the third quarter of 2008, a decline of $38.6 million. This change was primarily caused by significantly lower caustic margins due to a 78.2% drop in industry caustic prices compared to the third quarter of 2008, higher chlorine costs, lower operating rates and asset impairment costs of $3.9 million related to our PVC pipe business, partially offset by an insurance recovery gain of $4.6 million in the third quarter of 2009 related to damage caused by the ice storm at our Calvert City facility in the first quarter of 2009.
Income from Operations. Income from operations increased by $25.9 million, or 27.0%, to $122.0 million in the first nine months of 2009 from $96.1 million in the first nine months of 2008. This increase was due to lower energy and feedstock costs, partially offset by lower sales prices for all major products and lower operating rates. In addition, trading activity resulted in a gain for the first nine months of 2009 of $3.6 million as compared to a loss of $7.8 million for the first nine months of 2008. The first nine months of 2008 were negatively impacted by Hurricanes Gustav and Ike, which caused two separate outages at the Lake Charles plant, and a styrene plant turnaround, also in Lake Charles.
Operating activities provided cash of $213.5 million in the first nine months of 2009 compared to cash provided of $76.6 million in the first nine months of 2008. The $136.9 million increase in cash flows from operating activities was primarily due to favorable changes in working capital, partially offset by a reduction in income from operations and capitalized turnaround costs of $23.6 million resulting from the turnaround of our ethylene unit in Lake Charles in the first quarter of 2009. Income from operations decreased by $51.9 million in the first nine months of 2009 as compared to the first nine months of 2008 primarily as a result of pricing pressures and reduced demand for our products. Changes in components of working capital, which we define for purposes of this cash flow discussion as accounts receivable, inventories, prepaid expense and other current assets less accounts payable and accrued liabilities, provided cash of $68.8 million in the first nine months of 2009 (including a federal tax refund of $30.0 million, resulting from overpayment of 2008 federal income taxes), compared to $72.0 million of cash used in the first nine months of 2008, a favorable change of $140.8 million. This change was largely due to an increase in accounts payables and accrued liabilities as a result of the improving operating rates during the first nine months of 2009 and reduced working capital requirements attributable to a decrease in energy and feedstock costs and a decrease in average sales prices as compared to the prior year period.
Net cash used for investing activities during the first nine months of 2009 was $66.4 million as compared to net cash used for investing activities of $126.2 million in the first nine months of 2008. Capital expenditures were $65.0 million in the first nine months of 2009 compared to $127.2 million in the first nine months of 2008. The decrease in capital expenditu
WLK is in the portfolios of Third Avenue Management, Charles Brandes of Brandes Investment.
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