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Westlake Chemical Corp. Reports Operating Results (10-Q)

November 03, 2010 | About:
10qk

10qk

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Westlake Chemical Corp. (WLK) filed Quarterly Report for the period ended 2010-09-30.

Westlake Chemical Corp. has a market cap of $2.13 billion; its shares were traded at around $32.82 with a P/E ratio of 18.6 and P/S ratio of 0.9. The dividend yield of Westlake Chemical Corp. stocks is 0.8%.WLK is in the portfolios of Third Avenue Management, Chuck Royce of Royce& Associates, Paul Tudor Jones of The Tudor Group, Steven Cohen of SAC Capital Advisors.
This is the annual revenues and earnings per share of WLK over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of WLK.


Highlight of Business Operations:

In July 2010, the Authority completed the reoffering of $100.0 million of 6 1/2% tax-exempt revenue bonds due August 1, 2029 under the Gulf Opportunity Zone Act of 2005 (the “GO Zone Act”). This reoffering follows the August 2009 issuance of $5.0 million of floating rate tax-exempt revenue bonds due August 1, 2029 under the GO Zone Act (the “Initial Series 2009A Revenue Bonds”), which were subsequently repurchased by us to be included as part of the $100.0 million bond reoffering. In connection with the reoffering of the bonds, we entered into a loan agreement with the Authority under which the proceeds from the bond reoffering were lent by the Authority to us. To evidence and secure our obligations under the loan agreement, we entered into a third supplemental indenture, by and among us, the subsidiary guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee, and issued $100.0 million aggregate principal amount of our 6 1/2% senior notes due 2029 to be held by the bond trustee pursuant to the terms and provisions of the loan agreement.

For the quarter ended September 30, 2010, net income was $62.7 million, or $0.95 per diluted share, on net sales of $779.7 million. This represents an increase in net income of $32.9 million, or $0.50 per diluted share, from the quarter ended September 30, 2009 net income of $29.8 million, or $0.45 per diluted share, on net sales of $632.6 million. Sales for the third quarter of 2010 increased $147.1 million compared to the third quarter of 2009 driven mainly by higher sales prices for all our major products and higher sales volumes for most of our major products, except caustic and PVC pipe. Income from operations was $107.3 million for the third quarter of 2010 as compared to $49.0 million for the third quarter of 2009. Income from operations benefited from improved Olefins segment integrated product margins due primarily to a 17.5% increase in product prices, higher polyethylene sales volume and relatively flat ethane costs. This increase in income from operations was partially offset by lower PVC resin margins primarily resulting from higher propane and energy costs, which were only partially offset by higher sales prices.

For the nine months ended September 30, 2010, net income was $137.3 million, or $2.07 per diluted share, on net sales of $2,376.4 million. This represents an increase in net income of $96.8 million, or $1.46 per diluted share, from the nine months ended September 30, 2009 net income of $40.5 million, or $0.61 per diluted share, on net sales of $1,695.7 million. Sales for the nine months ended September 30, 2010 increased $680.7 million compared to the prior year period mainly due to higher sales prices for most of our major products, except caustic, and higher sales volume for polyethylene and PVC resin. Income from operations was $241.3 million for the nine months ended September 30, 2010 as compared to $84.3 million for the nine months ended September 30, 2009. The increase in income from operations was primarily attributable to improved production rates for most of our major products and higher Olefins segment integrated product margins, which resulted from the fact that price increases outpaced increases in feedstock and energy costs. The increase in income from operations was partially offset by lower PVC resin margins, lower caustic margins resulting from a 25.8% decrease in industry caustic prices compared to the first nine months of 2009 and an unscheduled outage at one of our ethylene units in Lake Charles caused by freezing temperatures in the first quarter of 2010. In addition, trading activity for the nine months ended September 30, 2010 resulted in a loss of $1.6 million compared to a gain of $2.9 million for the nine months ended September 30, 2009. Income from operations for the nine months ended September 30, 2009 was negatively impacted by an unscheduled outage due to an ice storm at our Calvert City facility and a turnaround at one of our ethylene units in Lake Charles.

Income from Operations. Income from operations increased by $74.4 million to $136.1 million in the third quarter of 2010 from $61.7 million in the third quarter of 2009. This increase was mainly attributable to improved Olefins segment integrated product margins, which benefited from an increase in product prices, higher polyethylene sales volume and relatively flat ethane costs when compared to the prior year period. Trading activity resulted in a gain of $0.5 million in the third quarter of 2010 as compared to a loss of $0.9 million in the third quarter of 2009.

Gross Margin. Gross margin percentage of 13.4% for the nine months ended September 30, 2010 improved from the 8.7% gross margin percentage for the nine months ended September 30, 2009. The improvement in gross margin was primarily due to improved Olefins segment integrated product margins, higher polyethylene sales volume and higher production rates for most of our major products, partially offset by higher feedstock and energy costs. In addition, the gross margin for the nine months ended September 30, 2010 was negatively impacted by the lost ethylene production, repair costs and unabsorbed fixed manufacturing costs incurred due to the Lake Charles outage in the first quarter of 2010 and the loss from trading activity. Trading results declined by $4.5 million to a loss of $1.6 million for the nine months ended September 30, 2010 as compared to a gain of $2.9 million for the nine months ended September 30, 2009. The 2009 gross margin was negatively impacted by the ice storm in Calvert City and the turnaround of one of our ethylene units in Lake Charles.

Income from Operations. Income from operations increased by $183.5 million to $305.5 million in the first nine months of 2010 from $122.0 million in the first nine months of 2009. This increase was mainly attributable to improved Olefins segment integrated product margins due to higher sales prices, increased polyethylene sales volume and higher operating rates. The increase was partially offset by higher feedstock costs and the unscheduled outage at one of our ethylene units in Lake Charles during the first quarter of 2010. In addition, trading activity resulted in a loss of $1.6 million for the nine months ended September 30, 2010 as compared to a gain of $2.9 million for the prior year period. The first nine months of 2009 were negatively impacted by the turnaround at one of our ethylene units in Lake Charles.

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