HOUSTON, Feb 18, 2005 /PRNewswire-FirstCall via COMTEX/ -- Westlake Chemical Corporation (NYSE: WLK) today reported fourth quarter net income of $47.3 million or $0.73 per diluted share and operating income of $81.4 million on net sales of $563.1 million for the fourth quarter of 2004. This compares favorably with the fourth quarter 2003 net income of $10.6 million or $0.21 per diluted share and operating income of $24.9 million on net sales of $365.9 million. The improvement in net sales and operating income was primarily the result of increased selling prices, which outpaced higher feedstock and energy costs. In addition, PVC pipe sales increased due to the August 2004 acquisition of the assets of Bristolpipe Corporation. Included in the 2004 fourth quarter results are several non-operating items that resulted in a net benefit of $2.1 million after tax, or $0.03 per diluted share.
Fourth quarter 2004 net income increased $19.0 million from the $28.3 million net income or $0.50 per diluted share reported in the third quarter of 2004 primarily due to increased selling prices which were partially offset by higher feedstock and energy costs. The third quarter of 2004 was adversely impacted by a $9.3 million after tax charge that was related to the early retirement of debt. This charge reduced earnings per diluted share for the third quarter by $0.16. Fourth quarter net sales were unfavorable compared to the third quarter net sales of $572.0 million due to lower sales volumes while operating income compared favorably to the third quarter operating income of $68.9 million primarily due to higher margins.
For the year ended December 31, 2004 net income was $120.7 million or $2.18 per diluted share including an after tax charge of $10.0 million related to the early retirement of debt, or $0.18 per diluted share on net sales of $1,985.4 million. This compares favorably with the year ended December 31, 2003 net income of $14.8 million or $0.30 per diluted share, which included an after tax charge of $7.1 million related to the early retirement of debt, or $0.14 per diluted share, on net sales of $1,423.0 million. Operating income was $243.2 million for the year ended December 31, 2004 as compared to $65.8 million for the year ended December 31, 2003. These increases were primarily due to higher selling prices and volumes, which more than offset higher raw material and energy costs.
As a result of the successful completion of Westlake's initial public offering (IPO) in August 2004 and record earnings for the year ended December 31, 2004, Westlake was able to reduce its debt by $239 million from $537 million at December 31, 2003 to $298 million at December 31, 2004. The company ended 2004 with $43 million of cash on the balance sheet.
Income from operations for the Olefins segment increased by $46.5 million to $65.4 million in the fourth quarter of 2004 from $18.9 million in the fourth quarter of 2003. This increase was primarily due to higher selling prices for our products and higher sales volumes in ethylene, which were partially offset by lower sales volumes in polyethylene and styrene and higher raw material costs for ethane, propane and benzene.
Fourth quarter 2004 income from operations increased $20.7 million from the $44.7 million of income from operations reported in the third quarter of 2004. The increase was primarily due to higher selling prices, which were partially offset by higher feedstock and energy costs and lower sales volumes.
Income from operations for the Olefins segment increased by $124.3 million to $179.6 million for the year ended December 31, 2004 from $55.3 million for the year ended December 31, 2003. This increase was primarily due to price increases and higher sales volumes for ethylene, polyethylene and styrene, partially reduced by higher raw material costs of ethane, propane and benzene.
Income from operations for the Vinyls segment increased by $13.9 million to $18.7 million in the fourth quarter of 2004 from $4.8 million in the fourth quarter of 2003. This increase was primarily due to higher selling prices for all of our vinyls products and higher sales volumes for PVC pipe. These increases were partially offset by higher energy costs and higher raw material costs for propane.
Fourth quarter 2004 income from operations decreased $7.6 million from the $26.3 million of income from operations reported in the third quarter of 2004. The decrease was primarily due to higher propane feedstock costs and costs associated with the phased start-up of our VCM and PVC facilities in Geismar, Louisiana, which was partially offset by a $2.0 million pre-tax gain from the sale of equipment.
Income from operations for the Vinyls segment increased by $56.1 million to $69.7 million for the year ended December 31, 2004 from $13.6 million for the year ended December 31, 2003. This increase was primarily due to vinyls product price increases, which were partially offset by higher raw material and energy costs.
In this release, Westlake refers to a non-GAAP financial measure, EBITDA. EBITDA is calculated as net income before interest expense, income taxes, depreciation and amortization. The body of accounting principles generally accepted in the United States is commonly referred to as "GAAP." For this purpose a non-GAAP financial measure is generally defined by the SEC as one that purports to measure historical and future financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable GAAP measures. We have included EBITDA in this release because our management considers it an important supplemental measure of our performance and believes that it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry, some of which present EBITDA when reporting their results. We regularly evaluate our performance as compared to other companies in our industry that have different financing and capital structures and/or tax rates by using EBITDA. EBITDA allows for meaningful company-to-company performance comparisons by adjusting for factors such as interest expense, depreciation and amortization and taxes, which often vary from company to company. In addition, we utilize EBITDA in evaluating acquisition targets. Management also believes that EBITDA is a useful tool for measuring our ability to meet our future debt service, capital expenditures and working capital requirements, and EBITDA is commonly used by us and our investors to measure our ability to service indebtedness. EBITDA is not a substitute for the GAAP measures of earnings or of cash flow and is not necessarily a measure of our ability to fund our cash needs. In addition, it should be noted that companies calculate EBITDA differently and, therefore, EBITDA as presented in this release may not be comparable to EBITDA reported by other companies. EBITDA has material limitations as a performance measure because it excludes (1) interest expense, which is a necessary element of our costs and ability to generate revenues because we have borrowed money to finance our operations, (2) depreciation, which is a necessary element of our costs and ability to generate revenues because we use capital assets and (3) income taxes, which is a necessary element of our operations. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA only supplementally. The table below reconciles EBITDA to net income and to cash flow from operating activities.
Westlake Chemical Corporation Conference Call Information:
A conference call to discuss Westlake Chemical Corporation's fourth quarter results will be held Friday, February 18, 2005 at 11:00 a.m. EST (10:00 a.m. CST). To access the conference call, dial (800) 599-9829, or (617) 847-8703 for international callers, approximately 10 minutes prior to the scheduled start time and reference passcode 51145952.
A replay of the conference call will be available beginning an hour after its conclusion until 11:59 p.m. EST (10:59 p.m. CST) on Friday, February 25, 2005. To hear a replay, dial (888) 286-8010, or (617) 801-6888 for international callers. The replay passcode is 98300329.
The conference call will also be available via webcast at http://phx.corporate-ir.net/phoenix.zhtml?p=irol- eventDetails&c=180248&eventID=1008290 and the earnings release can be obtained via the company's Web page at http://www.westlakechemical.com/investors.html .
Westlake Chemical Corporation is a manufacturer and supplier of petrochemicals, polymers and fabricated products with headquarters in Houston, Texas. The company's range of products includes: ethylene, polyethylene, styrene, vinyl intermediates, PVC and PVC pipe, windows and fence. For more information, visit the company's Web site at http://www.westlakechemical.com .
WESTLAKE CHEMICAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in $000) Three Months Ended Year Ended December 31, December 31, 2004 2003 2004 2003 Net Sales $563,069 $365,879 $1,985,353 $1,423,034 Cost of Sales 464,731 330,235 1,682,168 1,301,082 Gross Profit 98,338 35,644 303,185 121,952 Selling, General and Administrative Expenses 18,987 12,538 60,238 57,014 Gain on Sale of Asset (2,049) --- (2,049) --- Gain on Legal Settlement --- (3,162) --- (3,162) Impairment of Long- Lived assets --- 1,353 1,830 2,285 Income from Operations 81,400 24,915 243,166 65,815 Interest Expense (7,089) (10,991) (39,350) (38,589) Debt Retirement Cost (1,106) --- (15,791) (11,343) Other Income, net 2,192 3,015 2,637 7,620 Income before Taxes 75,397 16,939 190,662 23,503 Income Tax Provision 28,071 6,304 69,940 8,747 Net Income $47,326 $10,635 $120,722 $14,756 Basic earnings per share $0.73 $0.21 $2.19 $0.30 Diluted earnings per share $0.73 $0.21 $2.18 $0.30 Weighted Average Shares Outstanding Basic 64,896,489 49,499,395 55,230,786 49,499,395 Diluted 65,268,328 49,499,395 55,355,442 49,499,395 Reconciliation of EBITDA to Net Income and to Cash Flow from Operating Activities EBITDA $100,712 $49,566 $311,087 $149,385 Less: Income Tax Provision 28,071 6,304 69,940 8,747 Interest Expense 7,089 10,991 39,350 38,589 Depreciation and amortization 18,226 21,636 81,075 87,293 Net Income 47,326 10,635 120,722 14,756 Changes in operating assets and liabilities (6,251) 31,668 (35,129) 56,219 Deferred income taxes 26,345 5,242 65,188 7,112 Cash flow from operating activities $67,420 $47,545 $150,781 $78,087 WESTLAKE CHEMICAL CORPORATION CONSOLIDATED BALANCE SHEETS (unaudited, in $000) December 31, December 31, 2004 2003 Current Assets Cash and Cash Equivalents $43,396 $37,381 Accounts Receivable (net) 234,247 178,633 Inventories 319,816 180,760 Other Current Assets 67,191 16,073 Total Current Assets 664,650 412,847 Property, Plant and Equipment (net) 855,051 879,688 Other Assets (net) 65,463 77,578 Total Assets $1,585,164 $1,370,113 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts Payable and Accrued Liabilities $249,015 $186,932 Current Portion of Long-Term Debt 1,200 28,200 Total Current Liabilities 250,215 215,132 Long-Term Debt 296,889 509,089 Other Liabilities 268,663 178,189 Total Liabilities 815,767 902,410 Minority Interest --- 22,100 Stockholders' Equity 769,397 445,603 Total Liabilities and Stockholders' Equity $1,585,164 $1,370,113 WESTLAKE CHEMICAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in $000) Year Ended December 31, 2004 2003 Cash Flows from Operating Activities: Net Income $120,722 $14,756 Adjustments to Reconcile Net Income to Net Cash: Depreciation and Amortization 81,075 87,293 Deferred Tax Expense 65,188 7,112 Other Balance Sheet Changes (116,204) (31,074) 30,059 63,331 Net Cash Provided by Operating Activities 150,781 78,087 Cash Flows from Investing Activities: Additions to Property, Plant and Equipment (52,710) (44,931) Acquisition of Business Operations (33,294) --- Other 6,041 3,350 Net Cash Used by Investing Activities (79,963) (41,581) Cash Flows from Financing Activities: Proceeds from Issuance of Common Stock, net 181,167 --- Dividends Paid (1,379) --- Proceeds from Borrowings --- 723,975 Repayment of Borrowings (239,200) (719,783) Capitalized Debt Costs --- (14,102) Other (5,391) (338) Net Cash Used in Financing Activities (64,803) (10,248) Net Increase in Cash 6,015 26,258 Cash Balance at the Beginning of the Period 37,381 11,123 Cash Balance at the End of the Period $43,396 $37,381 WESTLAKE CHEMICAL CORPORATION SEGMENT INFORMATION (unaudited, in $000) Three Months Ended Year Ended December 31, December 31, 2004 2003 2004 2003 Net Sales to External Customers Olefins $357,009 $224,486 $1,251,254 $876,968 Vinyls 206,060 141,393 734,099 546,066 $563,069 $365,879 $1,985,353 $1,423,034 Income (Loss) from Operations Olefins $65,372 $18,910 $179,587 $55,298 Vinyls 18,654 4,822 69,723 13,583 Corporate and Other (2,626) 1,183 (6,144) (3,066) $81,400 $24,915 $243,166 $65,815 Depreciation and Amortization Olefins $9,892 $13,353 $49,213 $51,088 Vinyls 8,550 8,161 31,671 33,118 Corporate and Other (216) 122 191 3,087 $18,226 $21,636 $81,075 $87,293 Other Income (Expense), net Olefins $1,268 $870 $(981) $3,459 Vinyls (14) (14) 121 629 Corporate and Other* (168) 2,159 (12,294) (7,811) $1,086 $3,015 $(13,154) $(3,723) * Debt retirement costs of $15,791 and $11,343 are included in the year ended December 31, 2004 and 2003, respectively. Debt retirement costs of $1,106 are included in the three months ended December 31, 2004.
SOURCE Westlake Chemical Corporation
finance, Ruth I. Dreessen, or media, David R. Hansen, both of Westlake Chemical Corporation, +1-713-960-9111