10-Q 1 wlk-20220331.htm 10-Q wlk-20220331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from                    to                    
Commission File No. 001-32260
Westlake Corporation
(Exact name of Registrant as specified in its charter)

Delaware 76-0346924
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification Number)
2801 Post Oak Boulevard, Suite 600
Houston, Texas 77056
(Address of principal executive offices, including zip code)
(713) 960-9111
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueWLKThe New York Stock Exchange
1.625% Senior Notes due 2029WLK29The New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes   x     No   ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes   x     No   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act:
Large accelerated filerxAccelerated filer 
Non-accelerated filer
¨  
Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨   
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)     Yes        No   x
The number of shares outstanding of the registrant's sole class of common stock as of April 27, 2022 was 128,329,200.


TABLE OF CONTENTS





PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
1

WESTLAKE CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31,
2022
December 31,
2021
(in millions of dollars, except par values and share amounts)
ASSETS
Current assets
Cash and cash equivalents$1,055 $1,908 
Accounts receivable, net2,352 1,868 
Inventories1,884 1,407 
Prepaid expenses and other current assets114 80 
Total current assets5,405 5,263 
Property, plant and equipment, net8,276 7,606 
Operating lease right-of-use assets631 562 
Goodwill2,140 2,024 
Customer relationships, net1,080 1,083 
Other intangible assets, net612 497 
Equity method investments1,105 1,007 
Other assets, net492 417 
Total assets$19,741 $18,459 
LIABILITIES AND EQUITY
Current liabilities
Accounts payable$1,018 $879 
Accrued and other liabilities1,268 1,196 
Current portion of long-term debt, net264 269 
Total current liabilities2,550 2,344 
Long-term debt, net4,902 4,911 
Deferred income taxes1,815 1,681 
Pension and other post-retirement benefits443 291 
Operating lease liabilities514 461 
Other liabilities265 243 
Total liabilities10,489 9,931 
Commitments and contingencies (Note 14)
Stockholders' equity
Preferred stock, $0.01 par value, 50,000,000 shares authorized; no shares issued and outstanding
  
Common stock, $0.01 par value, 300,000,000 shares authorized; 134,651,380 and 134,651,380 shares issued at March 31, 2022 and December 31, 2021, respectively
1 1 
Common stock, held in treasury, at cost; 6,331,896 and 6,735,639 shares at March 31, 2022 and December 31, 2021, respectively
(372)(399)
Additional paid-in capital572 581 
Retained earnings8,525 7,808 
Accumulated other comprehensive loss(45)(36)
Total Westlake Corporation stockholders' equity8,681 7,955 
Noncontrolling interests571 573 
Total equity9,252 8,528 
Total liabilities and equity$19,741 $18,459 
The accompanying notes are an integral part of these consolidated financial statements.
2

WESTLAKE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended March 31,
20222021
(in millions of dollars, except per share data and share amounts)
Net sales$4,056 $2,357 
Cost of sales2,7711,848
Gross profit1,285509
Selling, general and administrative expenses200136
Amortization of intangibles4227
Restructuring, transaction and integration-related costs11
Income from operations1,032346
Other income (expense)
Interest expense(46)(33)
Other income, net11 12 
Income before income taxes997 325 
Provision for income taxes233 72 
Net income764 253 
Net income attributable to noncontrolling interests8 11 
Net income attributable to Westlake Corporation$756 $242 
Earnings per common share attributable to Westlake Corporation:
Basic$5.87 $1.88 
Diluted$5.83 $1.87 
Weighted average common shares outstanding:
Basic128,071,355127,955,532 
Diluted128,925,099128,483,373 
The accompanying notes are an integral part of these consolidated financial statements.
3

WESTLAKE CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended March 31,
20222021
(in millions of dollars)
Net income$764 $253 
Other comprehensive income (loss), net of income taxes
Foreign currency translation adjustments
Foreign currency translation(8)3 
Income tax provision on foreign currency translation(3)(10)
Other comprehensive income (loss), net of income taxes(11)(7)
Comprehensive income753 246 
Comprehensive income attributable to noncontrolling interests, net of tax of $1 and $0 for the three months ended March 31, 2022 and 2021, respectively
6 10 
Comprehensive income attributable to Westlake Corporation$747 $236 
The accompanying notes are an integral part of these consolidated financial statements.
4

WESTLAKE CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)

Common StockCommon Stock, Held in Treasury
Number of SharesAmountNumber of SharesAt CostAdditional Paid-in CapitalRetained
Earnings
Accumulated
Other
Comprehensive
Loss
Noncontrolling
Interests
Total
(in millions of dollars, except share amounts)
Balances at December 31, 2021134,651,380 $1 6,735,639 $(399)$581 $7,808 $(36)$573 $8,528 
Net income— — — — — 756 — 8 764 
Other comprehensive loss
— — — — — — (9)(2)(11)
Shares issued—stock-based compensation
  (403,743)27 (17) — — 10 
Stock-based compensation
— — — — 8 — — — 8 
Dividends declared— — — — — (39)— — (39)
Distributions to noncontrolling interests
— — — — — — — (10)(10)
Noncontrolling interests— — — —  — — 2 2 
Balances at March 31, 2022134,651,380 $1 6,331,896 $(372)$572 $8,525 $(45)$571 $9,252 
The accompanying notes are an integral part of these consolidated financial statements.
5

WESTLAKE CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)

Common StockCommon Stock, Held in Treasury
Number of SharesAmountNumber of SharesAt CostAdditional Paid-in CapitalRetained
Earnings
Accumulated
Other
Comprehensive
Loss
Noncontrolling
Interests
Total
(in millions of dollars, except share amounts)
Balances at December 31, 2020134,651,380 $1 6,821,174 $(401)$569 $5,938 $(64)$535 $6,578 
Net income— — — — — 242 — 11 253 
Other comprehensive loss
— — — — — — (6)(1)(7)
Shares issued—stock-based compensation
— — (301,112)22 (13)— — — 9 
Stock-based compensation
— — — — 8 — — — 8 
Dividends declared
— — — — — (35)— — (35)
Distributions to noncontrolling interests
— — — — — — — (11)(11)
Noncontrolling interests— — — — — — — 30 30 
Balances at March 31, 2021134,651,380 $1 6,520,062 $(379)$564 $6,145 $(70)$564 $6,825 
The accompanying notes are an integral part of these consolidated financial statements.
6

WESTLAKE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
20222021
(in millions of dollars)
Cash flows from operating activities
Net income$764 $253 
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization257 195 
Stock-based compensation expense8 8 
Loss from disposition and write-off of property, plant and equipment9 4 
Deferred income taxes42 10 
Other losses (gains), net(2)3 
Changes in operating assets and liabilities, net of effect of business acquisitions
Accounts receivable(194)(120)
Inventories(136)(42)
Prepaid expenses and other current assets(14)(12)
Accounts payable(4)75 
Accrued and other liabilities(8)(84)
Other, net(22)(25)
Net cash provided by operating activities700 265 
Cash flows from investing activities
Acquisition of businesses, net of cash acquired(1,154) 
Additions to investments in unconsolidated subsidiaries(96)(7)
Additions to property, plant and equipment(263)(141)
Other, net6 13 
Net cash used for investing activities(1,507)(135)
Cash flows from financing activities
Distributions to noncontrolling interests(10)(11)
Dividends paid(39)(35)
Proceeds from debt issuance5 4 
Repayment of short-term notes payable, net(8) 
Other, net5 8 
Net cash used for financing activities(47)(34)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(3)(3)
Net increase (decrease) in cash, cash equivalents and restricted cash (857)93 
Cash, cash equivalents and restricted cash at beginning of period1,941 1,337 
Cash, cash equivalents and restricted cash at end of period$1,084 $1,430 
The accompanying notes are an integral part of these consolidated financial statements.
7

WESTLAKE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in millions of dollars, except share amounts and per share data)

1. Basis of Financial Statements
The accompanying unaudited consolidated interim financial statements were prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim periods. Accordingly, certain information and footnotes required for complete financial statements under generally accepted accounting principles in the United States ("U.S. GAAP") have not been included. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto of Westlake Corporation, formerly known as Westlake Chemical Corporation (the "Company"), included in the annual report on Form 10-K for the fiscal year ended December 31, 2021 (the "2021 Form 10-K"), filed with the SEC on February 23, 2022. The Company changed its name from Westlake Chemical Corporation to Westlake Corporation on February 18, 2022. These consolidated financial statements have been prepared in conformity with the accounting principles and practices as disclosed in the notes to the consolidated financial statements of the Company for the fiscal year ended December 31, 2021. The Company operates as an integrated global manufacturer and marketer of performance and essential materials and housing and infrastructure products. These products include some of the most widely used materials in the world, which are fundamental to many diverse consumer and industrial markets, including residential construction, flexible and rigid packaging products, mobility and transportation products, healthcare products, materials used in turbines to generate wind energy, water treatment, coatings as well as other durable and non-durable goods. The Company's customers range from large chemical processors and plastics fabricators to small construction contractors, municipalities and supply warehouses throughout North America, Europe and Asia.
In the opinion of the Company's management, the accompanying unaudited consolidated interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Company's financial position as of March 31, 2022, its results of operations for the three months ended March 31, 2022 and 2021, and the changes in its cash position for the three months ended March 31, 2022 and 2021.
Results of operations and changes in cash position for the interim periods presented are not necessarily indicative of the results that will be realized for the fiscal year ending December 31, 2022 or any other interim period. The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
Recasting of Certain Prior Period Information
The Company had historically operated in two principal operating segments, Vinyls and Olefins. In the fourth quarter of 2021, the Company reorganized its business into two principal operating segments, Performance and Essential Materials and Housing and Infrastructure Products. These reporting changes have been retrospectively reflected in the segment results for all periods presented.
Recent Accounting Pronouncement
Business Combinations - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers Update (ASU No.2021-08)
In October 2021, the Financial Accounting Standards Board ("FASB") issued an accounting standards update that requires acquiring entities to recognize and measure contract assets and contract liabilities in a business combination in accordance with the accounting guidance on Revenue from Contracts with Customers (ASC 606). The guidance in this update improves comparability for both the recognition and measurement of acquired revenue contracts with customers as of the date of and after a business combination. The accounting standard will be effective for reporting periods beginning after December 15, 2022. Early adoption of the guidance is permitted. The Company is in the process of evaluating the impact of this standard on the Company's consolidated financial position, results of operations and cash flows.

8

WESTLAKE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued
(Unaudited)
(in millions of dollars, except share amounts and per share data)
2. Acquisitions
Hexion Epoxy Business.
On November 24, 2021, the Company, through a wholly-owned subsidiary, entered into a Stock Purchase Agreement (the "Hexion Epoxy Purchase Agreement") by and among Hexion Inc. ("Hexion"), a New Jersey corporation, and solely for the limited purposes set forth therein, the Company. Pursuant to the terms of the Hexion Epoxy Purchase Agreement, the Company agreed to acquire all of the equity interests in Hexion's global epoxy business ("Westlake Epoxy"). On February 1, 2022, the Company completed its acquisition of Westlake Epoxy for a total purchase consideration of $1,207 and accounted for the acquisition under the business combination method in accordance with Accounting Standard Codification Topic 805, Business Combinations. This acquisition represents a significant strategic expansion of the Company's Performance and Essential Materials businesses into additional high-growth, innovative and sustainable-oriented applications – such as wind turbine blades and light-weight automotive structural components. Because epoxies are produced from chlorine and caustic soda, the transaction also provides vertical integration with the Company's global chlor-alkali businesses. The assets acquired and liabilities assumed and the results of operations of the Westlake Epoxy business are included in the Performance and Essential Materials segment.
For the three months ended March 31, 2022, the Company recognized acquisition-related costs of $6 for advisory, consulting and professional fees, and other expenses that were expensed as restructuring, transaction and integration-related costs as a component of the income from operations. Acquisition of businesses on the statement of cash flows is presented net of the cash and restricted cash acquired as well as a post-closing adjustment that was paid in April 2022.
The following table summarizes the fair value of identified assets acquired and liabilities assumed at the date of acquisition. The preliminary allocation of consideration transferred is based on management's estimates, judgments and assumptions. These estimates, judgments and assumptions are subject to change upon final valuation and should be treated as preliminary values. Management estimated that consideration paid exceeded the fair value of the net assets acquired. Therefore, goodwill of $119 was recorded, most of which is not expected to be deductible for income tax purposes. The final allocation of purchase consideration could include changes in the estimated fair value of (1) inventories; (2) property, plant and equipment; (3) intangible assets comprising of customer relationships, trade names, developed technologies; (4) deferred income taxes; (5) leases; and (6) other assets. The Company has preliminarily estimated the useful lives of trade names, technology and customer relationships as 19 years, 17 years and 11 years, respectively.
9

WESTLAKE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued
(Unaudited)
(in millions of dollars, except share amounts and per share data)
The information below represents the purchase price allocation:
Cash$42 
Accounts receivable 299 
Inventories346 
Prepaid expenses and other current assets21 
Property, plant and equipment667 
Operating lease right-of-use assets66 
Intangible assets:
Trade names75 
Technology50 
Customer relationships30 
Other assets96 
Total assets acquired1,692 
Accounts payable191 
Accrued and other liabilities84 
Deferred income taxes94 
Pensions and other post-retirement benefits163 
Operating lease liabilities51 
Other liabilities19 
Total liabilities assumed602 
Total identifiable net assets acquired1,090 
Noncontrolling interest(2)
Goodwill119 
Total Westlake Corporation purchase consideration$1,207 
The excess of the total equity value of Westlake Epoxy based on the purchase consideration over net assets acquired was recorded as goodwill. The goodwill is primarily attributable to the assembled workforce and synergies expected to arise after the acquisition. Intangible assets acquired as a result of the Westlake Epoxy acquisition are amortized on a straight-line basis to reflect the pattern in which the economic benefits of the intangible assets are realized.
The fair value for trade names and technology were estimated using the income approach, specifically the relief-from-royalty method which estimates the cost savings that accrue to the owner of the intangible assets that would otherwise be payable as royalties or licenses fees on revenues earned through the use of the asset. The fair value of customer relationships was estimated using the multi-period excess earnings method. The excess earning method model estimates revenues and cash flows derived from the asset and then deducts portions of the cash flow that can be attributed to supporting assets. The resulting cash flow, which is attributable solely to the asset acquired, is then discounted at a rate of return commensurate with the risk of the asset to calculate the present value.
Unaudited Pro Forma Financial Information
The acquired Westlake Epoxy business contributed net sales and net income of $305 and $27, respectively, to the Company for the period from February 1, 2022 to March 31, 2022. The following unaudited pro forma summary presents the results of operations of the Company as if the acquisition of Westlake Epoxy occurred on January 1, 2021:

Three Months Ended March 31,
20222021
Net sales
$4,215 $2,698 
Net income attributable to Westlake Corporation
$817 $217 
10

WESTLAKE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued
(Unaudited)
(in millions of dollars, except share amounts and per share data)
The amounts have been calculated after applying the Company's accounting policies and adjusting the results of Westlake Epoxy to reflect additional depreciation, amortization, and other purchase accounting adjustments assuming the fair value adjustments to the property, plant and equipment and intangibles assets and other purchase accounting adjustments have been applied on January 1, 2021. The pro forma amounts do not include any potential synergies, cost savings or other expected benefits of the acquisition, and are presented for illustrative purposes only and are not necessarily indicative of results that would have been achieved if the acquisition had occurred as of January 1, 2021 or of future operating performance.
Boral Target Companies in North America.
On October 1, 2021, the Company completed its acquisition of Boral Limited's North American building products businesses in roofing, siding, trim and shutters, decorative stone and windows (the "Boral Target Companies") for a total purchase consideration of $2,132 in an all-cash transaction. The assets acquired and liabilities assumed and the results of operations of the Boral Target Companies are included in the Housing and Infrastructure Products segment. The Company recognized intangible assets of $952, of which $645 is included in customer relationships, net on the Company's consolidated balance sheets and goodwill of $771. The intangible assets that have been acquired are being amortized over a period of 12 to 22 years. The preliminary allocation of consideration transferred is based on management's estimates, judgments and assumptions. These estimates, judgments and assumptions are subject to change upon final valuation and should be treated as preliminary values. There were no purchase accounting adjustments recorded during the three months ended March 31, 2022. The final allocation of purchase consideration could include changes in the estimated fair value of (1) inventories; (2) property, plant and equipment; (3) intangible assets comprising of customer relationships, trade names, developed technologies; (4) deferred income taxes; and (5) other assets.
LASCO Fittings, Inc.
On August 19, 2021, the Company completed its acquisition of LASCO Fittings, Inc., a Delaware corporation ("LASCO"), a manufacturer of injected-molded polyvinyl chloride ("PVC") fittings that serve the plumbing, pool and spa, industrial, irrigation and retail markets in the United States, for a total closing purchase consideration of $277. The assets acquired and liabilities assumed and the results of operations of LASCO are included in the Housing and Infrastructure Products segment. The Company recognized intangible assets of $77, of which $50 is included in customer relationships, net on the Company's consolidated balance sheets and goodwill of $105, with the remainder of the purchase consideration primarily allocated to property, plant and equipment, net and working capital balances. The intangible assets that have been acquired are being amortized over a period of 17 to 18 years.
Dimex LLC.
On September 10, 2021, the Company completed its acquisition of DX Acquisition Corp., a Delaware corporation ("Dimex"), a producer of various consumer products made from post-industrial-recycled PVC, polyethylene and thermoplastic elastomer materials, including, landscape edging; home, office and industrial matting; marine dock edging; and masonry joint controls. The total closing purchase consideration was $172. The assets acquired and liabilities assumed and the results of operations of Dimex are included in the Housing and Infrastructure Products segment. The Company recognized intangible assets of $69, of which $45 is included in customer relationships, net on the Company's consolidated balance sheets and goodwill of $66, with the remainder of the purchase consideration primarily allocated to property, plant and equipment, net and working capital balances. The intangible assets that have been acquired are being amortized over a period of 17 to 19 years.
11

WESTLAKE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued
(Unaudited)
(in millions of dollars, except share amounts and per share data)
3. Financial Instruments
Restricted Cash and Cash Equivalents
The Company had restricted cash and cash equivalents of $29 and $33 at March 31, 2022 and December 31, 2021, respectively. The Company's restricted cash and cash equivalents are primarily related to balances that are restricted for payment of distributions to certain of the Company's current and former employees. In addition, the Company's restricted cash and cash equivalents include RS Cogen's cash that is restricted under its senior credit facility. Restricted cash and cash equivalents are reflected primarily in other assets, net in the consolidated balance sheets.
4. Accounts Receivable
Accounts receivable consist of the following:
March 31,
2022
December 31,
2021
Trade customers$2,299 $1,764 
Related parties3 3 
Allowance for credit losses(33)(26)
2,269 1,741 
Federal and state taxes7 62 
Other76 65 
Accounts receivable, net$2,352 $1,868 

5. Inventories
Inventories consist of the following:
March 31,
2022
December 31,
2021
Finished products$1,221 $842 
Feedstock, additives, chemicals and other raw materials455 374 
Materials and supplies208 191 
Inventories$1,884 $1,407 

6. Goodwill
The gross carrying amounts and changes in the carrying amount of goodwill for the three months ended March 31, 2022 were as follows:
Performance and Essential Materials SegmentHousing and Infrastructure Products SegmentTotal
Balances at December 31, 2021$902 $1,122 $2,024 
Goodwill acquired during the period119  119 
Measurement period adjustments (1)(1)
Effects of changes in foreign exchange rates(2) (2)
Balances at March 31, 2022$1,019 $1,121 $2,140 
12

WESTLAKE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued
(Unaudited)
(in millions of dollars, except share amounts and per share data)
7. Accounts Payable
Accounts payable consist of the following:
March 31,
2022
December 31,
2021
Accounts payable—third parties$1,007 $849 
Accounts payable to related parties4 15 
Notes payable7 15 
Accounts payable$1,018 $879 

13

WESTLAKE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued
(Unaudited)
(in millions of dollars, except share amounts and per share data)
8. Long-Term Debt
Long-term debt consists of the following:
March 31, 2022December 31, 2021
Principal
Amount
Unamortized
Discount
and Debt
Issuance
Costs
Net
Long-term
Debt
Principal
Amount
Unamortized
Discount
and Debt
Issuance
Costs
Net
Long-term
Debt
3.60% senior notes due 2022 (the "3.60% 2022 Senior Notes")
$250 $ $250 $250 $ $250 
0.875% senior notes due 2024 (the "0.875% 2024 Senior Notes")
300 (2)298 300 (2)298 
3.60% senior notes due 2026 (the "3.60% 2026 Senior Notes")
750 (5)745 750 (5)745 
Loan related to tax-exempt waste disposal revenue bonds due 202711  11 11  11 
1.625% senior notes due 2029 (the "1.625% 2029 Senior Notes")
778 (8)770 794 (8)786 
3.375% senior notes due 2030 (the "3.375% 2030 Senior Notes")
300 (3)297 300 (4)296 
3.50% senior notes due 2032 (the "3.50% 2032 GO Zone Refunding Senior Notes")
250 (1)249 250 (1)249 
2.875% senior notes due 2041 (the "2.875% 2041 Senior Notes")
350 (11)339 350 (11)339 
5.0% senior notes due 2046 (the "5.0% 2046 Senior Notes")
700 (21)679 700 (22)678 
4.375% senior notes due 2047 (the "4.375% 2047 Senior Notes")
500 (8)492 500 (8)492 
3.125% senior notes due 2051 (the "3.125% 2051 Senior Notes")
600 (23)577 600 (23)577 
3.375% senior notes due 2061 (the "3.375% 2061 Senior Notes")
450 (19)431 450 (19)431 
8.73% RS Cogen debt due 2022 (the "8.73% 2022 RS Cogen Debt")
14  14 19  19 
Term loans due 2026 (the "2026 Term Loans")14  14 9  9 
Total long-term debt5,267 (101)5,166 5,283 (103)5,180 
Less current portion:
3.60% 2022 Senior Notes
(250) (250)(250) (250)
8.73% 2022 RS Cogen Debt
(14) (14)(19) (19)
Long-term debt, net of current portion$5,003 $(101)$4,902 $5,014 $(103)$4,911 
Unamortized debt issuance costs on long-term debt were $41 and $42 at March 31, 2022 and December 31, 2021, respectively.
As of March 31, 2022, the Company was in compliance with all of its long-term debt covenants.

14

WESTLAKE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued
(Unaudited)
(in millions of dollars, except share amounts and per share data)
Credit Agreement
The Company has a $1,000 revolving credit facility that is scheduled to mature on July 24, 2023 (the "Credit Agreement"). The Credit Agreement bears interest at either (a) LIBOR plus a spread ranging from 1.00% to 1.75% or (b) Alternate Base Rate plus a spread ranging from 0.00% to 0.75% in each case depending on the credit rating of the Company. At March 31, 2022, the Company had no borrowings outstanding under the Credit Agreement. As of March 31, 2022, the Company had no outstanding letters of credit and had $1,000 of borrowing availability under the Credit Agreement. The Credit Agreement contains certain affirmative and negative covenants, including a quarterly total leverage ratio financial maintenance covenant. As of March 31, 2022, the Company was in compliance with the total leverage ratio financial maintenance covenant. The Credit Agreement also contains certain events of default and if and for so long as certain events of default have occurred and are continuing, any overdue amounts outstanding under the Credit Agreement will accrue interest at an increased rate, the lenders can terminate their commitments thereunder and payments of any outstanding amounts could be accelerated by the lenders.
The Credit Agreement includes a $150 sub-limit for letters of credit, and any outstanding letters of credit will be deducted from availability under the facility. The Credit Agreement also provides for a discretionary $50 commitment for swingline loans to be provided on a same-day basis. The Company may also increase the size of the facility, in increments of at least $25, up to a maximum of $500, subject to certain conditions and if certain lenders agree to commit to such an increase.
Redemption of 3.60% Senior Notes Due 2022
During April 2022, the Company provided notice to the trustee of the 3.60% 2022 Senior Notes that the Company has elected to redeem all of the outstanding 3.60% 2022 Senior Notes on May 14, 2022 (the "Redemption Date") pursuant to its optional redemption right under the indenture governing the 3.60% 2022 Senior Notes. The redemption price will be equal to 100% of the principal amount of the 3.60% 2022 Senior Notes, plus accrued and unpaid interest on the 3.60% 2022 Senior Notes to the Redemption Date.
9. Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2022 and 2021 were as follows:
Pension and Other Post-Retirement Benefits
Liability,
Net of Tax
Cumulative
Foreign
Currency
Exchange,
Net of Tax
Total
Balances at December 31, 2021$20 $(56)$(36)
Other comprehensive loss attributable to Westlake Corporation (9)(9)
Balances at March 31, 2022$20 $(65)$(45)
Balances at December 31, 2020$(24)$(40)$(64)
Other comprehensive loss attributable to Westlake Corporation (6)(6)
Balances at March 31, 2021$(24)$(46)$(70)

10. Fair Value Measurements
The Company reports certain assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Under the accounting guidance for fair value measurements, inputs used to measure fair value are classified in one of three levels:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.
15

WESTLAKE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued
(Unaudited)
(in millions of dollars, except share amounts and per share data)
The Company has financial assets and liabilities subject to fair value measures. These financial assets and liabilities include cash and cash equivalents, accounts receivable, net, accounts payable and long-term debt, all of which are recorded at carrying value. The amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, net and accounts payable approximate their fair value due to the short maturities of these instruments.
The majority of the Company's long-term debt instruments are publicly-traded. A market approach, based upon quotes from financial reporting services, is used to measure the fair value of the Company's long-term debt. Because the Company's long-term debt instruments may not be actively traded, the inputs used to measure the fair value of the Company's long-term debt are classified as Level 2 inputs within the fair value hierarchy.
The carrying and fair values of the Company's total long-term debt are summarized in the table below.
March 31, 2022December 31, 2021
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
3.60% 2022 Senior Notes
$250 $250 $250 $252 
0.875% 2024 Senior Notes
298 288 298 287 
3.60% 2026 Senior Notes
745 760 745 805 
Loan related to tax-exempt waste disposal revenue bonds due 2027
11 11 11 11 
1.625% 2029 Senior Notes
770 752 786 824 
3.375% 2030 Senior Notes
297 293 296 319 
3.50% 2032 GO Zone Refunding Senior Notes
249 250 249 271 
2.875% 2041 Senior Notes
339 294 339 339 
5.0% 2046 Senior Notes
679 766 678 885 
4.375% 2047 Senior Notes
492 508 492 592 
3.125% 2051 Senior Notes
577 499 577 582 
3.375% 2061 Senior Notes
431 365 431 432 
8.73% 2022 RS Cogen Debt
14 14 19 19 
2026 Term Loans14 14 9 9 

11. Income Taxes
The effective income tax rate was 23.4% for the three months ended March 31, 2022 as compared to 22.2% for the three months ended March 31, 2021. The effective income tax rate for the three months ended March 31, 2022 and March 31, 2021 was above the statutory rate of 21.0% primarily due to state and foreign taxes.
12. Earnings and Dividends per Share
Earnings per Share
The Company has unvested restricted stock units outstanding that are considered participating securities and, therefore, computes basic and diluted earnings per share under the two-class method. Basic earnings per share for the periods are based upon the weighted average number of shares of common stock outstanding during each period. Diluted earnings per share include the effects of certain stock options and performance stock units.
Three Months Ended March 31,
20222021
Net income attributable to Westlake Corporation$756 $242 
Less:
Net income attributable to participating securities(4)(1)
Net income attributable to common shareholders$752 $241 
16

WESTLAKE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued
(Unaudited)
(in millions of dollars, except share amounts and per share data)
The following table reconciles the denominator for the basic and diluted earnings per share computations shown in the consolidated statements of operations:
Three Months Ended March 31,
20222021
Weighted average common shares—basic128,071,355 127,955,532 
Plus incremental shares from:
Assumed exercise of options and vesting of performance stock units
853,744 527,841 
Weighted average common shares—diluted128,925,099 128,483,373 
Earnings per common share attributable to Westlake Corporation:
Basic$5.87 $1.88 
Diluted$5.83 $1.87 
Excluded from the computation of diluted earnings per share are options to purchase 102,025 and 575,727 shares of common stock for the three months ended March 31, 2022 and 2021, respectively. These options were outstanding during the periods reported but were excluded because the effect of including them would have been antidilutive.
Dividends per Share
Dividends per common share for the three months ended March 31, 2022 and 2021 were as follows:
Three Months Ended March 31,
20222021
Dividends per common share$0.2975 $0.2700 
13. Supplemental Information
Equity Method Investments
LACC, LLC Joint Venture
On March 15, 2022, the Company, through Eagle US 2 LLC, a wholly-owned subsidiary, completed the acquisition of an additional 3.2% of the membership interests in LACC, LLC ("LACC"), a related party, from Lotte Chemical Corporation for $89. The Company accounts for its investment in LACC under the equity method of accounting. Changes in the Company's investment in LACC for the three months ended March 31, 2022 were as follows:
Investment in LACC
Balance at December 31, 2021$943 
Cash contributions7 
Additional interest purchased89 
Depreciation and amortization(8)
Balance at March 31, 2022$1,031 
Other Assets, Net
Other assets, net were $492 and $417 at March 31, 2022 and December 31, 2021, respectively. Deferred turnaround costs, net of accumulated amortization, included in other assets, net were $255 and $261 at March 31, 2022 and December 31, 2021, respectively.
17

WESTLAKE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued
(Unaudited)
(in millions of dollars, except share amounts and per share data)
Accrued and Other Liabilities
Accrued and other liabilities were $1,268 and $1,196 at March 31, 2022 and December 31, 2021, respectively. Accrued rebates and accrued income taxes, which are components of accrued and other liabilities, were $166 and $215, respectively, at March 31, 2022 and $