Westlake Chemical Corp. (WLK, Financial) filed Quarterly Report for the period ended 2010-03-31.
Westlake Chemical Corp. has a market cap of $1.59 billion; its shares were traded at around $24.14 with a P/E ratio of 36 and P/S ratio of 0.7. The dividend yield of Westlake Chemical Corp. stocks is 1%.WLK is in the portfolios of Third Avenue Management, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC.
Income from Operations. Income from operations increased by $42.1 million to $58.2 million in the first quarter of 2010 from $16.1 million in the first quarter of 2009. This increase was mainly attributable to improved polyethylene margins and higher operating rates. The increase was partially offset by the unscheduled outage at one of our ethylene units in Lake Charles. In addition, trading activity resulted in a gain of $0.5 million in the first quarter of 2010 as compared to a gain of $4.0 million in the first quarter of 2009. The first quarter of 2009 was negatively impacted by a turnaround at one of our ethylene units in Lake Charles.
Operating activities used cash of $55.1 million in the first three months of 2010 compared to cash provided of $120.3 million in the first three months of 2009. The $175.4 million decrease in cash flows from operating activities was primarily due to a decrease in cash provided from working capital, partially offset by an increase in income from operations in the first three months of 2010 compared to the prior year period. Income from operations increased by $35.3 million in the first three months of 2010 as compared to the first three months of 2009 primarily as a result of improved production rates, an increase in sales volume and higher margins for most of 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, used cash of $96.7 million in the first three months of 2010, compared to $107.9 million of cash provided in the first three months of 2009, an unfavorable change of $204.6 million. This change was largely due to an increase in accounts receivable and inventory primarily attributable to the increase in average product prices, sales volume and feedstock costs as compared to the prior year period.
Net cash used for investing activities during the first three months of 2010 was $6.8 million as compared to net cash used for investing activities of $40.4 million in the first three months of 2009. Capital expenditures were $14.7 million in the first three months of 2010 compared to $32.8 million in the first three months of 2009. The decrease in capital expenditures in the 2010 period was largely attributable to expenditures related to capital projects performed during the turnaround at one of our ethylene facilities in Lake Charles and the completion of our new PVC pipe facility and PVC resin plant expansion in Yucca, Arizona and Calvert City, Kentucky, respectively, during the 2009 period. The remaining capital expenditures in the first three months of 2010 and 2009 primarily related to maintenance, safety and environmental projects. Other investing activities for the first three months of 2010 included proceeds of $7.8 million for the settlement of derivative instruments. In addition, we purchased a PVC pipe plant in Janesville, Wisconsin for $6.3 million during the first three months of 2009.
As of March 31, 2010, our long-term debt, including current maturities, totaled $515.4 million, consisting of $250.0 million principal amount of 6 5/8% senior notes due 2016 (less the unamortized discount of $0.5 million), $250.0 million of 6 3/4% senior notes due 2032, a $5.0 million loan related to the proceeds from the sale of the Initial Series 2009A Revenue Bonds (supported by a $5.1 million letter of credit) and a $10.9 million loan from the proceeds of tax-exempt waste disposal revenue bonds (supported by an $11.3 million letter of credit). The 6 3/4% senior notes evidence and secure our obligations to the Authority under a loan agreement relating to the issuance of $250.0 million aggregate principal amount of the Authoritys tax-exempt revenue bonds. Debt outstanding under the Initial Series 2009A Revenue Bonds and the tax-exempt waste disposal revenue bonds bears interest at variable rates. As of March 31, 2010, we were in compliance with all of the covenants with respect to the Senior Notes, our loan related to the proceeds from the sale of the Initial Series 2009A Revenue Bonds, our waste disposal revenue bonds and our revolving credit facility.
In September 2008, we amended our senior secured revolving credit facility to, among other things, increase the lenders commitments under the facility from $300 million to $400 million. On February 5, 2009, we further amended our revolving credit facility to allow us to make distributions and specified acquisitions when our fixed charge coverage ratio falls below 1.0 but we maintain at least $125 million to $200 million (depending on the amount of the distribution and acquisition payments) of borrowing availability, including cash, under the credit facility. At March 31, 2010, we had no borrowings under the revolving credit facility. Any borrowings under the facility will bear interest at either LIBOR plus a spread ranging from 2.75% to 3.50% or a base rate plus a spread ranging from 1.25% to 2.0%. The revolving credit facility also requires an unused commitment fee ranging from 0.75% to 0.875%, depending on the average daily borrowings. All interest rates under the facility are subject to monthly grid pricing adjustments based on prior month average daily loan availability. The revolving credit facility matures on September 8, 2013. As of March 31, 2010, we had outstanding letters of credit totaling $20.9 million and borrowing availability of $379.1 million under the revolving credit facility.
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Westlake Chemical Corp. has a market cap of $1.59 billion; its shares were traded at around $24.14 with a P/E ratio of 36 and P/S ratio of 0.7. The dividend yield of Westlake Chemical Corp. stocks is 1%.WLK is in the portfolios of Third Avenue Management, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC.
Highlight of Business Operations:
For the quarter ended March 31, 2010, net income was $17.6 million, or $0.27 per diluted share, on net sales of $778.3 million. This represents a positive change in net income of $23.7 million, or $0.36 per diluted share, from the quarter ended March 31, 2009 net loss of $6.1 million, or $0.09 per diluted share, on net sales of $488.3 million. Sales for the first quarter of 2010 increased $290.0 million compared to the first quarter of 2009 due primarily to higher sales prices and sales volumes for most of our major products. Income from operations was $34.4 million for the first quarter of 2010 as compared to loss from operations of $0.9 million for the first quarter of 2009. Operating margins benefited from improved production rates, a 20.2% increase in sales volume and higher polyethylene margins, partially offset by lower caustic margins resulting from a 66.7% decrease in industry caustic prices compared to the first quarter of 2009 and the unscheduled outage caused by freezing temperatures at one of our ethylene facilities in Lake Charles in the first quarter of 2010. As a result of the Lake Charles outage, we lost 21 days of ethylene production and expensed repairs and unabsorbed fixed manufacturing costs of $6.9 million. The first quarter of 2009 was negatively impacted by an unscheduled outage at our Calvert City facility and a turnaround at one of our ethylene units in Lake Charles, which resulted in repair costs and expensing of unabsorbed manufacturing costs of $19.5 million. Trading activity resulted in a gain of $0.5 million in the first quarter of 2010 compared to a gain of $4.0 million in the first quarter of 2009.Income from Operations. Income from operations increased by $42.1 million to $58.2 million in the first quarter of 2010 from $16.1 million in the first quarter of 2009. This increase was mainly attributable to improved polyethylene margins and higher operating rates. The increase was partially offset by the unscheduled outage at one of our ethylene units in Lake Charles. In addition, trading activity resulted in a gain of $0.5 million in the first quarter of 2010 as compared to a gain of $4.0 million in the first quarter of 2009. The first quarter of 2009 was negatively impacted by a turnaround at one of our ethylene units in Lake Charles.
Operating activities used cash of $55.1 million in the first three months of 2010 compared to cash provided of $120.3 million in the first three months of 2009. The $175.4 million decrease in cash flows from operating activities was primarily due to a decrease in cash provided from working capital, partially offset by an increase in income from operations in the first three months of 2010 compared to the prior year period. Income from operations increased by $35.3 million in the first three months of 2010 as compared to the first three months of 2009 primarily as a result of improved production rates, an increase in sales volume and higher margins for most of 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, used cash of $96.7 million in the first three months of 2010, compared to $107.9 million of cash provided in the first three months of 2009, an unfavorable change of $204.6 million. This change was largely due to an increase in accounts receivable and inventory primarily attributable to the increase in average product prices, sales volume and feedstock costs as compared to the prior year period.
Net cash used for investing activities during the first three months of 2010 was $6.8 million as compared to net cash used for investing activities of $40.4 million in the first three months of 2009. Capital expenditures were $14.7 million in the first three months of 2010 compared to $32.8 million in the first three months of 2009. The decrease in capital expenditures in the 2010 period was largely attributable to expenditures related to capital projects performed during the turnaround at one of our ethylene facilities in Lake Charles and the completion of our new PVC pipe facility and PVC resin plant expansion in Yucca, Arizona and Calvert City, Kentucky, respectively, during the 2009 period. The remaining capital expenditures in the first three months of 2010 and 2009 primarily related to maintenance, safety and environmental projects. Other investing activities for the first three months of 2010 included proceeds of $7.8 million for the settlement of derivative instruments. In addition, we purchased a PVC pipe plant in Janesville, Wisconsin for $6.3 million during the first three months of 2009.
As of March 31, 2010, our long-term debt, including current maturities, totaled $515.4 million, consisting of $250.0 million principal amount of 6 5/8% senior notes due 2016 (less the unamortized discount of $0.5 million), $250.0 million of 6 3/4% senior notes due 2032, a $5.0 million loan related to the proceeds from the sale of the Initial Series 2009A Revenue Bonds (supported by a $5.1 million letter of credit) and a $10.9 million loan from the proceeds of tax-exempt waste disposal revenue bonds (supported by an $11.3 million letter of credit). The 6 3/4% senior notes evidence and secure our obligations to the Authority under a loan agreement relating to the issuance of $250.0 million aggregate principal amount of the Authoritys tax-exempt revenue bonds. Debt outstanding under the Initial Series 2009A Revenue Bonds and the tax-exempt waste disposal revenue bonds bears interest at variable rates. As of March 31, 2010, we were in compliance with all of the covenants with respect to the Senior Notes, our loan related to the proceeds from the sale of the Initial Series 2009A Revenue Bonds, our waste disposal revenue bonds and our revolving credit facility.
In September 2008, we amended our senior secured revolving credit facility to, among other things, increase the lenders commitments under the facility from $300 million to $400 million. On February 5, 2009, we further amended our revolving credit facility to allow us to make distributions and specified acquisitions when our fixed charge coverage ratio falls below 1.0 but we maintain at least $125 million to $200 million (depending on the amount of the distribution and acquisition payments) of borrowing availability, including cash, under the credit facility. At March 31, 2010, we had no borrowings under the revolving credit facility. Any borrowings under the facility will bear interest at either LIBOR plus a spread ranging from 2.75% to 3.50% or a base rate plus a spread ranging from 1.25% to 2.0%. The revolving credit facility also requires an unused commitment fee ranging from 0.75% to 0.875%, depending on the average daily borrowings. All interest rates under the facility are subject to monthly grid pricing adjustments based on prior month average daily loan availability. The revolving credit facility matures on September 8, 2013. As of March 31, 2010, we had outstanding letters of credit totaling $20.9 million and borrowing availability of $379.1 million under the revolving credit facility.
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