WESTLAKE CORP [WLK] Filings

10-Q 1 wlk-20240930.htm 10-Q wlk-20240930

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	September 30, 2024


☐			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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	WLK	The New York Stock Exchange
1.625% Senior Notes due 2029	WLK29	The 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 filer

Accelerated 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 October 30, 2024 was 128,705,799.

Table of Contents

TABLE OF CONTENTS



		Page
	PART I. FINANCIAL INFORMATION
Item
1)	Financial Statements	1
2)	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
3)	Quantitative and Qualitative Disclosures about Market Risk	41
4)	Controls and Procedures	42

	PART II. OTHER INFORMATION

1)	Legal Proceedings	42
1A)	Risk Factors	42
2)	Unregistered Sales of Equity Securities and Use of Proceeds	43
5)	Other Information	43
6)	Exhibits	44

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Table of Contents

WESTLAKE CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	September 30, 2024		December 31, 2023

	(in millions of dollars, except par values and share amounts)
ASSETS
Current assets
Cash and cash equivalents	$	2,915	$	3,304
Accounts receivable, net	1,754		1,601
Inventories	1,747		1,622
Prepaid expenses and other current assets	133		82
Total current assets	6,549		6,609
Property, plant and equipment, net	8,602		8,519
Operating lease right-of-use assets	819		697
Goodwill	2,039		2,041
Customer relationships, net	843		910
Other intangible assets, net	469		493
Equity method investments	1,099		1,115
Other assets, net	689		651
Total assets	$	21,109	$	21,035
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	898	$	877
Accrued and other liabilities	1,453		1,614
Current portion of long-term debt, net	—		299
Total current liabilities	2,351		2,790
Long-term debt, net	4,616		4,607
Deferred income taxes	1,514		1,560
Pension and other post-retirement benefits	356		363
Operating lease liabilities	730		611
Other liabilities	356		340
Total liabilities	9,923		10,271
Commitments and contingencies (Note 13)
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 September 30, 2024 and December 31, 2023, respectively	1		1
Common stock, held in treasury, at cost; 5,952,302 and 6,439,289 shares at September 30, 2024 and December 31, 2023, respectively	(408)		(435)
Additional paid-in capital	645		630
Retained earnings	10,541		10,143
Accumulated other comprehensive loss	(117)		(98)
Total Westlake Corporation stockholders' equity	10,662		10,241
Noncontrolling interests	524		523
Total equity	11,186		10,764
Total liabilities and equity	$	21,109	$	21,035

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

WESTLAKE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023

	(in millions of dollars, except per share data and share amounts)
Net sales	$	3,117	$	3,115	$	9,299	$	9,722
Cost of sales	2,618		2,529		7,670		7,702
Gross profit	499		586		1,629		2,020
Selling, general and administrative expenses	215		206		648		641

Amortization of intangibles	29		31		89		92
Restructuring, transaction and integration-related costs	75		—		83		6
Income from operations	180		349		809		1,281
Other income (expense)
Interest expense	(39)		(40)		(120)		(124)
Other income, net	44		56		153		101
Income before income taxes	185		365		842		1,258
Provision for income taxes	65		70		214		249
Net income	120		295		628		1,009
Net income attributable to noncontrolling interests	12		10		33		33
Net income attributable to Westlake Corporation	$	108	$	285	$	595	$	976
Earnings per common share attributable to Westlake Corporation:
Basic	$	0.84	$	2.22	$	4.61	$	7.61
Diluted	$	0.83	$	2.20	$	4.58	$	7.56
Weighted average common shares outstanding:
Basic	128,638,632		127,854,464		128,525,531		127,685,210
Diluted	129,340,461		128,583,927		129,237,560		128,509,618

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

WESTLAKE CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023

	(in millions of dollars)
Net income	$	120	$	295	$	628	$	1,009
Other comprehensive income (loss), net of income taxes
Pension and other post-retirement benefits liability
Pension and other post-retirement benefits reserves adjustment	1		—		3		—
Income tax provision on pension and other post-retirement benefits liability	(1)		—		(1)		(13)
Foreign currency translation adjustments
Foreign currency translation	26		(50)		(24)		(30)
Income tax (provision) benefit on foreign currency translation	8		(4)		2		(2)
Other, net of income tax	—		(1)		—		—
Other comprehensive income (loss), net of income taxes	34		(55)		(20)		(45)
Comprehensive income	154		240		608		964
Comprehensive income attributable to noncontrolling interests, net of tax of $0 and $1 for the three months ended September 30, 2024 and 2023; and net of tax of $2 and $3 for the nine months ended September 30, 2024 and 2023, respectively	14		7		32		30
Comprehensive income attributable to Westlake Corporation	$	140	$	233	$	576	$	934

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

WESTLAKE CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)


	Common Stock			Common Stock, Held in Treasury
	Number of Shares	Amount		Number of Shares	At Cost		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests		Total

	(in millions of dollars, except share amounts)
Balances at December 31, 2023	134,651,380	$	1	6,439,289	$	(435)	$	630	$	10,143	$	(98)	$	523	$	10,764
Net income	—	—		—	—		—		174		—		11		185
Other comprehensive loss	—	—		—	—		—		—		(34)		(2)		(36)

Shares issued—stock-based compensation	—	—		(357,118)	21		(14)		—		—		—		7
Stock-based compensation	—	—		—	—		8		—		—		—		8
Dividends declared	—	—		—	—		—		(65)		—		—		(65)
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(10)		(10)

Balances at March 31, 2024	134,651,380	$	1	6,082,171	$	(414)	$	624	$	10,252	$	(132)	$	522	$	10,853
Net income	—	—		—	—		—		313		—		10		323
Other comprehensive loss	—	—		—	—		—		—		(17)		(1)		(18)

Shares issued—stock-based compensation	—	—		(14,158)	1		—		—		—		—		1
Stock-based compensation	—	—		—	—		11		—		—		—		11
Dividends declared	—	—		—	—		—		(65)		—		—		(65)
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(11)		(11)

Balances at June 30, 2024	134,651,380	$	1	6,068,013	$	(413)	$	635	$	10,500	$	(149)	$	520	$	11,094
Net income	—	—		—	—		—		108		—		12		120
Other comprehensive income	—	—		—	—		—		—		32		2		34

Shares issued—stock-based compensation	—	—		(115,711)	5		—		—		—		—		5
Stock-based compensation	—	—		—	—		10		—		—		—		10
Dividends declared	—	—		—	—		—		(67)		—		—		(67)
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(10)		(10)

Balances at September 30, 2024	134,651,380	$	1	5,952,302	$	(408)	$	645	$	10,541	$	(117)	$	524	$	11,186

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

WESTLAKE CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)


	Common Stock			Common Stock, Held in Treasury
	Number of Shares	Amount		Number of Shares	At Cost		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total

	(in millions of dollars, except share amounts)
Balances at December 31, 2022	134,651,380	$	1	7,278,651	$	(467)	$	601	$	9,885	$	(89)	$	534	$	10,465
Net income	—	—		—	—		—		394		—		13		407
Other comprehensive income	—	—		—	—		—		—		22		—		22
Common stock repurchased	—	—		201,742	(22)		—		—		—		—		(22)
Shares issued—stock-based compensation	—	—		(469,404)	24		(20)		—		—		—		4
Stock-based compensation	—	—		—	—		9		—		—		—		9
Dividends declared	—	—		—	—		—		(47)		—		—		(47)
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(10)		(10)

Balances at March 31, 2023	134,651,380	$	1	7,010,989	$	(465)	$	590	$	10,232	$	(67)	$	537	$	10,828
Net income	—	—		—	—		—		297		—		10		307
Other comprehensive loss	—	—		—	—		—		—		(12)		—		(12)
Common stock repurchased	—	—		9,552	(1)		—		—		—		—		(1)
Shares issued—stock-based compensation	—	—		(55,470)	3		1		—		—		—		4
Stock-based compensation	—	—		—	—		10		—		—		—		10
Dividends declared	—	—		—	—		—		(45)		—		—		(45)
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(14)		(14)

Balances at June 30, 2023	134,651,380	$	1	6,965,071	$	(463)	$	601	$	10,484	$	(79)	$	533	$	11,077

Table of Contents

WESTLAKE CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)


	Common Stock			Common Stock, Held in Treasury
	Number of Shares	Amount		Number of Shares	At Cost		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total

	(in millions of dollars, except share amounts)
Net income	—	—		—	—		—		285		—		10		295
Other comprehensive loss	—	—		—	—		—		—		(52)		(3)		(55)

Shares issued—stock-based compensation	—	—		(446,380)	23		8		—		—		—		31
Stock-based compensation	—	—		—	—		10		—		—		—		10
Dividends declared	—	—		—	—		—		(64)		—		—		(64)
Distributions to noncontrolling interests	—	—		—	—		—		—		—		(9)		(9)

Balances at September 30, 2023	134,651,380	$	1	6,518,691	$	(440)	$	619	$	10,705	$	(131)	$	531	$	11,285

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

WESTLAKE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine Months Ended September 30,
	2024		2023

	(in millions of dollars)
Cash flows from operating activities
Net income	$	628	$	1,009
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	833		815
Stock-based compensation expense	31		31
Loss from disposition and write-off of property, plant and equipment	31		24

Deferred income taxes	(58)		(67)
Other losses (gains), net	(11)		(12)
Changes in operating assets and liabilities, net of effect of business acquisitions
Accounts receivable	(151)		(130)
Inventories	(124)		194
Prepaid expenses and other current assets	(52)		(28)
Accounts payable	53		(28)
Accrued and other liabilities	(139)		144
Other, net	(161)		(189)
Net cash provided by operating activities	880		1,763
Cash flows from investing activities

Additions to investments in unconsolidated subsidiaries	(24)		(18)
Additions to property, plant and equipment	(723)		(752)
Other, net	11		20
Net cash used for investing activities	(736)		(750)
Cash flows from financing activities

Distributions to noncontrolling interests	(31)		(33)
Dividends paid	(197)		(156)


Proceeds from exercise of stock options	13		39
Repayment of senior notes	(300)		—
Repurchase of common stock for treasury	—		(23)
Other, net	(2)		(2)
Net cash used for financing activities	(517)		(175)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(15)		(12)
Net increase (decrease) in cash, cash equivalents and restricted cash	(388)		826
Cash, cash equivalents and restricted cash at beginning of period	3,319		2,246
Cash, cash equivalents and restricted cash at end of period	$	2,931	$	3,072

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

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 (the "Company"), included in the annual report on Form 10-K for the fiscal year ended December 31, 2023 (the "2023 Form 10-K"), filed with the SEC on February 22, 2024. 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, 2023. 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, automotive 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 September 30, 2024, its results of operations for the three and nine months ended September 30, 2024 and 2023, and the changes in its cash position for the nine months ended September 30, 2024 and 2023.

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, 2024 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.

Recently Issued Accounting Pronouncements

Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU No.2023-09)

In December 2023, the Financial Accounting Standards Board ("FASB") issued accounting standards update No. 2023-09 to enhance the transparency and decision-usefulness of income tax disclosures and to provide information to better assess how an entity's operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2024. The Company is in the process of evaluating the impact of this standard on the Company's disclosures in the financial statements.

Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement (ASU 2023-05)

In August 2023, the FASB issued accounting standards update No. 2023-05 to address the accounting for contributions made to a joint venture, upon formation, in a joint venture's financial statements, and to (1) provide decision-useful information to investors and other allocators of capital (collectively, investors) in a joint venture's financial statements and (2) reduce diversity in practice. Under the ASU, upon formation, a joint venture should recognize and initially measure its assets and liabilities at fair value (with exceptions to fair value measurement that are consistent with guidance for business combinations). The amendments in this update become effective for all joint venture formations with a formation date on or after January 1, 2025. Additionally, a joint venture that was formed before January 1, 2025 may elect to apply the amendments retrospectively if it has sufficient information. Early adoption is permitted in any interim or annual period in which financial statements have not yet been issued (or made available for issuance), either prospectively or retrospectively. The Company does not expect that this accounting standard will have a material impact, upon adoption, on the Company's consolidated financial position, results of operations and cash flows.

Table of Contents

WESTLAKE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

Recently Adopted Accounting Standards

Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07)

In November 2023, the FASB issued accounting standards update No. 2023-07, which requires public entities to disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (CODM), the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The amendments in this update are effective for public entities in fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and are to be applied retrospectively to all prior periods presented in the financial statements. Early adoption is permitted. The Company adopted this accounting standard effective January 1, 2024, and the adoption will result in additional segment disclosures in the Company's annual consolidated financial statements for the year ending December 31, 2024 and the interim periods thereafter.

Leases (Topic 842): Common Control Arrangements (ASU 2023-01)

In March 2023, the FASB issued accounting standards update No. 2023-01 to amend certain provisions of ASC 842 that apply to arrangements between related parties under common control. The update requires all companies to amortize leasehold improvements associated with common control leases over the asset's useful life to the common control group regardless of the lease term. The amendment in this update is effective for all entities in fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early application is permitted. The Company adopted this accounting standard effective January 1, 2024, and the adoption did not have a material impact on the Company's consolidated financial position, results of operations and cash flows.

2. Financial Instruments

Cash Equivalents

The Company had $874 and $360 of held-to-maturity securities with original maturities of three months or less, primarily consisting of corporate debt securities, classified as cash equivalents at September 30, 2024 and December 31, 2023, respectively. The Company's investments in held-to-maturity securities were held at amortized cost, which approximates fair value.

Restricted Cash and Cash Equivalents

The Company had restricted cash and cash equivalents of $16 and $15 at September 30, 2024 and December 31, 2023, 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 and are reflected primarily in other assets, net in the consolidated balance sheets.

3. Accounts Receivable

Accounts receivable consist of the following:


	September 30, 2024		December 31, 2023
Trade customers	$	1,587	$	1,413
Related parties	1		7
Allowance for credit losses	(24)		(27)
	1,564		1,393
Federal and state taxes	56		65
Other	134		143
Accounts receivable, net	$	1,754	$	1,601

Table of Contents

WESTLAKE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

4. Inventories

Inventories consist of the following:


	September 30, 2024		December 31, 2023
Finished products	$	1,090	$	989
Feedstock, additives, chemicals and other raw materials	416		401
Materials and supplies	241		232
Inventories	$	1,747	$	1,622

5. Goodwill

The carrying amounts and changes in the carrying amount of goodwill for the nine months ended September 30, 2024 were as follows:


	Performance and Essential Materials Segment		Housing and Infrastructure Products Segment		Total
Balances at December 31, 2023	$	897	$	1,144	$	2,041



Effects of changes in foreign exchange rates	(2)		—		(2)
Balances at September 30, 2024	$	895	$	1,144	$	2,039

6. Accounts Payable

Accounts payable consist of the following:


	September 30, 2024		December 31, 2023
Accounts payable—third parties	$	883	$	849
Accounts payable to related parties	—		15
Notes payable	15		13
Accounts payable	$	898	$	877

Table of Contents

WESTLAKE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

7. Long-Term Debt

Long-term debt consist of the following:


	September 30, 2024		December 31, 2023


0.875% senior notes due 2024	$	—		$	300
3.60% senior notes due 2026	750			750
Loan related to tax-exempt waste disposal revenue bonds due 2027	11			11
1.625% €700 million senior notes due 2029	781			773
3.375% senior notes due 2030	300			300
3.50% senior notes due 2032	250			250
2.875% senior notes due 2041	350			350
5.00% senior notes due 2046	700			700
4.375% senior notes due 2047	500			500
3.125% senior notes due 2051	600			600
3.375% senior notes due 2061	450			450
Term loans due 2026	9			13
Total long-term debt, principal amount	4,701			4,997
Less:
Unamortized discount and debt issuance costs	85			91
Long-term debt, carrying value	4,616			4,906
Less current portion:
0.875% senior notes due 2024	—			299
Long-term debt, carrying value, net of current portion	$	4,616		$	4,607

Unamortized debt issuance costs on long-term debt were $33 and $36 at September 30, 2024 and December 31, 2023, respectively. As of September 30, 2024, the Company was in compliance with all of its long-term debt covenants.

Credit Agreement

On June 9, 2022, the Company entered into a new $1,500 revolving credit facility that is scheduled to mature on June 9, 2027 (the "Credit Agreement") and, in connection therewith, terminated the Company's then existing revolving credit agreement. The Credit Agreement bears interest at either (a) Adjusted Term Secured Overnight Financing Rate (as defined in the Credit Agreement) plus a margin ranging from 1.00% to 1.625% per annum or (b) Alternate Base Rate (as defined in the Credit Agreement) plus a margin ranging from 0.00% to 0.625% per annum, in each case depending on the credit rating of the Company. The Credit Agreement contains certain affirmative and negative covenants, including a quarterly total leverage ratio financial maintenance covenant. As of September 30, 2024, 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 to lend thereunder and payments of any outstanding amounts thereunder could be accelerated by the lenders. None of the Company's subsidiaries are required to guarantee the obligations of the Company under the Credit Agreement.

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.

As of September 30, 2024, the Company had no borrowings and no letters of credit outstanding, and had borrowing availability of $1,500, under the Credit Agreement.

Table of Contents

WESTLAKE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

Redemption of 0.875% senior notes due 2024

On August 15, 2024, the Company redeemed $300 aggregate principal amount of its outstanding 0.875% senior notes due August 15, 2024 at a redemption price equal to 100% of the principal amount of the senior notes to be redeemed plus accrued and unpaid interest thereon.

8. Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) by component for the nine months ended September 30, 2024 and 2023 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, 2023	$	4	$	(102)	$	(98)
Net other comprehensive income (loss) attributable to Westlake Corporation	2		(21)		(19)
Balances at September 30, 2024	$	6	$	(123)	$	(117)

Balances at December 31, 2022	$	52	$	(141)	$	(89)
Net other comprehensive income (loss) attributable to Westlake Corporation	(13)		(29)		(42)
Balances at September 30, 2023	$	39	$	(170)	$	(131)

9. 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.

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 below:


	September 30, 2024				December 31, 2023
	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt	$	4,616	$	4,059	$	4,906	$	4,236

Table of Contents

WESTLAKE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

10. Income Taxes

The effective income tax rate was 35.1% for the three months ended September 30, 2024 as compared to 19.2% for the three months ended September 30, 2023. The effective income tax rate for the three months ended September 30, 2024 was above the statutory rate of 21.0% primarily due to a valuation allowance recorded against Westlake Epoxy Netherlands's net operating loss that included for the three months ended September 30, 2024 the expenses related to the plan to temporarily cease operations ("mothball") of the allyl chloride (AC) and epichlorohydrin (ECH) units in Pernis, the Netherlands (collectively, the "Units") and state and foreign taxes, partially offset by U.S. federal research and development credits available to the Company. The effective income tax rate for the three months ended September 30, 2023 was below the statutory rate of 21.0% primarily due to U.S. federal research and development credits available to the Company, partially offset by an increase in reserves for uncertain income tax positions.

The effective income tax rate was 25.4% for the nine months ended September 30, 2024 as compared to 19.8% for the nine months ended September 30, 2023. The effective income tax rate for the nine months ended September 30, 2024 was above the statutory rate of 21.0% primarily due to a valuation allowance recorded against Westlake Epoxy Netherlands's net operating loss which was due to, among other things, the expenses related to the mothballing of the Units and state and foreign taxes, partially offset by U.S. federal research and development credits available to the Company. The effective income tax rate for the nine months ended September 30, 2023 was below the statutory rate of 21.0% primarily due to U.S. federal research and development credits available to the Company and the reduction of reserves for uncertain income tax positions as a result of a closed federal income tax audit, which was partially offset by an increase in reserves for uncertain income tax positions.

On October 8, 2021, the Organization for Economic Co-operation and Development (the "OECD")/G20 Inclusive Framework on Base Erosion and Profit Shifting released a statement indicating that its members had agreed to a Two Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy. Pillar One aims to reallocate a taxpayer's residual profits to the market jurisdictions with which the taxpayer has a nexus. Pillar Two aims to establish a minimum global tax rate of 15%, assessed through a top-up tax imposed on a country-by-country basis. Pillar One targets multinational companies with global annual revenue exceeding €20 billion and profit-to-revenue ratio of more than 10%. Based on the current threshold requirements, the Company does not expect to be subject to Pillar One. On December 20, 2021, the OECD released the Pillar Two model rules providing a framework for implementing a 15% minimum tax, also referred to as the Global Anti-Base Erosion ("GloBE") rules, on earnings of multinational companies with consolidated annual revenue exceeding €750 million.

On December 12, 2022, European Union (EU) member states agreed to adopt the 15% minimum tax under the Pillar Two model rules to be enacted into the member states' domestic tax laws by December 31, 2023, with an effective date beginning in 2024. As of September 30, 2024, a handful of EU member states have yet to comply. Outside of the EU, several other jurisdictions that the Company operates in have enacted legislation consistent with the GloBE rules, while other foreign countries continue to debate adoption and timing to adopt. The Company's global footprint includes operations within the EU, as well as other non-EU jurisdictions that have enacted GloBE related legislation, such as Canada, Japan, South Korea, Vietnam, the UK and Switzerland. At this time, the Company anticipates qualifying for at least one safe harbor in the majority of jurisdictions in which it operates. For those jurisdictions where a safe harbor was not met, the impact is anticipated to be immaterial. The Company will continue to closely monitor Pillar Two developments and evaluate the potential impact to the Company as more foreign countries enact legislation, and as new information and guidance becomes available. The impacts of Pillar Two are recorded in 2024, the first year in which the rules take effect.

Table of Contents

WESTLAKE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

11. 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 September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net income attributable to Westlake Corporation	$	108	$	285	$	595	$	976
Less:
Net income attributable to participating securities	(1)		(2)		(3)		(5)
Net income attributable to common stockholders	$	107	$	283	$	592	$	971

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 September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Weighted average common shares—basic	128,638,632		127,854,464		128,525,531		127,685,210
Plus incremental shares from:
Assumed exercise of options and vesting of performance stock units	701,829		729,463		712,029		824,408
Weighted average common shares—diluted	129,340,461		128,583,927		129,237,560		128,509,618

Earnings per common share attributable to Westlake Corporation:
Basic	$	0.84	$	2.22	$	4.61	$	7.61
Diluted	$	0.83	$	2.20	$	4.58	$	7.56

Excluded from the computation of diluted earnings per share are options to purchase 335,454 and 180,879 shares of common stock for the three months ended September 30, 2024 and 2023, respectively, and 256,178 and 291,303 shares of common stock for the nine months ended September 30, 2024 and 2023, 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 declared per common share for the three and nine months ended September 30, 2024 and 2023 were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Dividends per common share	$	0.5250	$	0.5000	$	1.5250	$	1.2140

Table of Contents

WESTLAKE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

12. Supplemental Information

Equity Method Investments

LACC, LLC Joint Venture

As of September 30, 2024, the Company owned an aggregate 50% membership interest in LACC, LLC ("LACC"). The Company accounts for its investment in LACC under the equity method of accounting and the change for the nine months ended September 30, 2024 was as follows:


	Investment in LACC





Balance at December 31, 2023	$	1,047
Cash contributions	22

Depreciation and amortization	(38)

Balance at September 30, 2024	$	1,031

Other Assets, Net

Other assets, net were $689 and $651 at September 30, 2024 and December 31, 2023, respectively. Deferred turnaround costs, net of accumulated amortization, included in other assets, net were $376 and $391 at September 30, 2024 and December 31, 2023, respectively.

Accrued and Other Liabilities

Accrued and other liabilities were $1,453 and $1,614 at September 30, 2024 and December 31, 2023, respectively. Accrued rebates and current portion of operating lease liabilities, which are components of accrued and other liabilities, were $229 and $130, respectively, at September 30, 2024 and $217 and $124, respectively, at December 31, 2023. No other component of accrued and other liabilities was more than five percent of total current liabilities. Accrued liabilities with related parties were $33 and $41 at September 30, 2024 and December 31, 2023, respectively.

Restructuring, Transaction and Integration-Related Costs

The restructuring, transaction and integration-related expenses of $75 for the three months ended September 30, 2024 and $83 for the nine months ended September 30, 2024 primarily consisted of plant mothballing, employee severance and separation expenses as further discussed below. There were no restructuring, transaction and integration-related costs during the three months ended September 30, 2023 and there were restructuring, transaction and integration-related costs of $6 for the nine months ended September 30, 2023.

On July 2, 2024, the Company approved a plan to temporarily cease operations of the allyl chloride (AC) and epichlorohydrin (ECH) units at the Company's Epoxy site in Pernis, the Netherlands in the Performance and Essential Materials segment. On July 29, 2024, the Company notified the affected employees at the Units that management approved the plan to mothball the Units. The Units are expected to temporarily cease operations in 2025. In the third quarter of 2024, the Company accrued expenses of approximately $75 related to mothballing of the Units, which consisted of charges for environmental remediation and other plant mothballing expenses of approximately $71 and of employee severance and separation expenses of approximately $4. The Company continues to operate the liquid epoxy resin (LER) and bisphenol A (BPA) units at the Pernis facility.

Non-cash Investing Activities

Capital expenditure related liabilities, included in accounts payable and accrued and other liabilities, were $122 and $120 at September 30, 2024 and September 30, 2023, respectively.

A non-cash charge of $19 related to asset retirement obligations was recognized in the nine months ended September 30, 2024.

Table of Contents

WESTLAKE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

Other Income, Net

The other income, net of $44 for the three months ended September 30, 2024 included interest income of $39, and other income, net of $56 for the three months ended September 30, 2023 included interest income and insurance recoveries of $28 and $17, respectively. Other income, net of $153 for the nine months ended September 30, 2024 included interest income and insurance recoveries of $118 and $10, respectively, and other income, net of $101 for the nine months ended September 30, 2023 included interest income and insurance recoveries of $66 and $25, respectively.

Supplemental Cash Flow Information


	Nine Months Ended September 30,
	2024		2023
Cash paid for:
Interest, net of interest capitalized	$	135	$	140
Income taxes	346		388
Operating lease information:
Right-of-use assets obtained in exchange for operating lease obligations	$	219	$	132

13. Commitments and Contingencies

The Company is involved in a number of legal and regulatory matters, principally environmental in nature, that are incidental to the normal conduct of its business, including lawsuits, investigations and claims. The outcome of these matters are inherently unpredictable. The Company believes that, in the aggregate, the outcome of all known legal and regulatory matters will not have a material adverse effect on its consolidated financial statements; however, under certain circumstances, if required to recognize costs in a specific period, when combined with other factors, outcomes with respect to such matters may be material to the Company's consolidated statements of operations in such period. The Company's assessment of the potential impact of environmental matters, in particular, is subject to uncertainty due to the complex, ongoing and evolving process of investigation and remediation of such environmental matters, and the potential for technological and regulatory developments. In addition, the impact of evolving claims and programs, such as natural resource damage claims, industrial site reuse initiatives and state remediation programs creates further uncertainty of the ultimate resolution of these matters. The Company anticipates that the resolution of many legal and regulatory matters, and in particular environmental matters, will occur over an extended period of time.

Table of Contents

WESTLAKE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

Caustic Soda Antitrust. The Company and other caustic soda producers were named as defendants in multiple purported class action civil lawsuits filed since March 2019 in the U.S. District Court for the Western District of New York. The lawsuits allege the defendants conspired to fix, raise, maintain and stabilize the price of caustic soda, restrict domestic (U.S.) supply of caustic soda and allocate caustic soda customers. The other defendants named in the lawsuits are Olin Corporation, K.A. Steel Chemicals (a wholly-owned subsidiary of Olin), Occidental Chemical Corporation d/b/a OxyChem, Shintech Incorporated and Formosa Plastics Corporation, U.S.A. Each of the lawsuits is filed on behalf of the respective named plaintiff or plaintiffs and a putative class comprised of either direct purchasers or indirect purchasers of caustic soda in the U.S. The plaintiffs in the putative class for such direct purchasers seek $861 in single damages from the defendants, in addition to treble damages and attorney's fees. The plaintiffs in the putative class for such indirect purchasers seek approximately $500 in single damages from the defendants, in addition to treble damages (if permitted under applicable state law) and injunctive relief. In December 2023, the Court denied the direct purchaser plaintiffs' motion for class certification and the Second Circuit subsequently denied the direct purchaser plaintiffs' motion for an interlocutory appeal for that ruling. The Company recorded an estimated liability in the amount of $19 in 2023 in connection with its entry into a settlement agreement with the direct purchaser plaintiffs. However, in June 2024, the Court declined preliminary approval of the settlement and rejected certification of a settlement class. As a result, the Company terminated the settlement agreement and reversed the $19 recorded liability. In July 2024, the direct purchaser plaintiffs filed an amended motion for preliminary approval of the settlement, which the Court denied on October 29, 2024. The indirect purchaser plaintiffs' motion for class certification remains pending. Beginning in October 2020, similar class action proceedings were also filed in Canada before the Superior Court of Québec as well as before the Federal Court. These proceedings seek the certification or authorization of a class action on behalf of all residents of Canada who purchased caustic soda (including, in one of the cases, those who merely purchased products containing caustic soda) from October 1, 2015 through the present or such date deemed appropriate by the court. On December 10, 2021, the Superior Court of Québec stayed its proceedings until after a final certification decision is released in the Federal Court proceedings. At this time, the Company is not able to estimate the impact, if any, that these lawsuits could have on the Company's consolidated financial statements either in the current period or in future periods.

Ethylene Antitrust. The Company and other ethylene consumers were named as defendants in a civil lawsuit filed by Shell Chemical Europe B.V. ("SCE") in March 2023 in the District Court of Amsterdam, the Netherlands, following the European Commission Decision AT.40410 – Ethylene from July 14, 2020. SCE is a producer of ethylene in the European market and the lawsuit alleges the defendants conspired to lower the purchase price for ethylene and ethylene derivatives by manipulating the monthly contract price. SCE initially sought declaratory relief. In October 2023, SCE amended its claim and is now seeking a judgment establishing that the Company and the co-defendants are jointly and severally liable for alleged damages in the amount of approximately €1,026 million with interest compounding daily from January 1, 2020 and continuing until payment in full, as provided by Dutch law, resulting from artificially lowered prices for ethylene and ethylene derivatives during the specified period. SCE is also seeking reimbursement of costs related to the proceeding plus statutory interest. The Company and other ethylene consumers were also named as defendants in a civil lawsuit filed by Stichting Ethylene Claims ("Stichting") in November 2023 in the District Court of Amsterdam, the Netherlands, following the same European Commission decision. Stichting is a foundation under Dutch Law that claims to represent various parties asserting injury by the same alleged conduct of defendants, seeking a declaratory judgment establishing that the Company and other defendants are jointly and severally liable for an unspecified amount of damages. At this time, the Company is not able to estimate the impact, if any, that the SCE lawsuit and/or the Stichting lawsuit could have on the Company's consolidated financial statements either in the current period or in future periods.

Table of Contents

WESTLAKE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

PVC Pipe Antitrust. The Company and other manufacturers of PVC pipe have been named as defendants in four putative class action civil lawsuits, all filed in the U.S. District Court for the Northern District of Illinois in August and September of 2024. These lawsuits are: Bavolak v. Atkore, Inc.; Wrobbel v. Atkore, Inc.; TC Construction, Inc. v. Atkore, Inc.; and Bill Wagner & Son, Inc. v. Atkore, Inc. Other defendants named in one or more of the lawsuits are Atkore, Inc., Cantex, Inc., Diamond Plastics Corporation, IPEX USA LLC, J-M Manufacturing Company, Inc. (d/b/a JM Eagle), National Pipe & Plastics, Inc., Northern Pipe Products, Inc., Oil Price Information Service, LLC ("OPIS"), Otter Tail Corporation, PipeLife Jetstream, Inc., Prime Conduit, Inc., Sanderson Pipe Corporation, Southern Pipe, Inc., Westlake Pipe & Fittings Corporation, and Vinyltech Corporation. The plaintiffs in the Bavolak, Wrobbel, and TC Construction lawsuits filed a single consolidated amended complaint on October 30 and allege that PVC pipe manufacturers conspired with each other, an industry publication (OPIS), and certain PVC pipe distributors to fix, raise, maintain and stabilize the domestic prices of PVC pipe. These plaintiffs allege they paid artificially high prices for PVC pipe purchased from pipe distributors as a result of the alleged conspiracy. These plaintiffs assert various claims under Section 1 of the Sherman Act and the competition laws of multiple states, and seek injunctive relief, treble damages, and equitable relief, in undisclosed amounts, plus attorneys' fees. The plaintiff in the Bill Wagner & Son, Inc. suit purports to represent direct purchasers of PVC pipe from pipe manufacturers and alleges the manufacturers conspired with each other and OPIS to fix, raise, maintain and stabilize the domestic prices of PVC pipe. The Bill Wagner complaint, which was also amended on October 30, alleges direct purchasers paid artificially high prices for PVC pipe as a result of the alleged conspiracy and asserts a single claim under Section 1 of the Sherman Act for injunctive relief, treble damages, and equitable relief, in an undisclosed amount, plus attorneys' fees and costs. At this time, the Company is not able to estimate the impact, if any, that these lawsuits could have on the Company's consolidated financial statements either in the current period or in future periods.

Triad Hunter. In April 2018, Triad Hunter, LLC ("Triad Hunter") filed suit against the Company and certain of its subsidiaries in the Court of Common Pleas in Monroe County, Ohio seeking injunctive relief and alleging negligence and trespass at the Natrium Plant with respect to Triad Hunter's well drilling activities in Ohio. On October 27, 2022, the jury returned a verdict finding that the Company had committed trespass and was negligent in conducting salt mining operations at the Natrium Plant. Upon receipt of the jury verdict, the Company reserved approximately $70 for the damages awarded to Triad Hunter. The court subsequently denied Triad Hunter's request to enjoin further solution mining from one of the brine fields at the Natrium Plant. On September 12, 2023, final judgment was entered in the amount of $70 with interest accruing at the rate of 5% from the date the judgment was rendered, as provided by law. The Company appealed the verdict and sought a stay of execution pending appeal on October 30, 2023. Oral argument took place in October 2024 and a ruling from the court is expected in 2025.

Petro 2 Flash Fire and EDC Storage Tank Explosion. In September 2021, shortly after the turnaround on Westlake Chemical OpCo LP's Petro 2 ethylene facility commenced, there was a flash fire at the quench tower of the Petro 2 facility. In January 2022, an ethylene dichloride storage tank exploded at one of the Company's Lake Charles, Louisiana complexes. Certain employees and contractors working on the sites at the time of the events were injured during these events and multiple lawsuits were filed against the Company. Final settlements totaling approximately $382 in the aggregate were reached with all of the plaintiffs to fully resolve the lawsuits, and payment by the Company and the insurance carriers is complete.

Brazilian Contractual Indemnification Lawsuit. In July 2012, PPG Industries, Inc. ("PPG") entered into an agreement to separate various assets and liabilities of its commodity chemicals business, which were transferred to Eagle Spinco, Inc., a wholly owned subsidiary of PPG ("Eagle Spinco"). The separation and the post separation contractual relationship between PPG and Eagle Spinco are generally set forth in that certain Separation Agreement dated as of July 18, 2012, by and between PPG and Eagle Spinco (the "Separation Agreement"). In January 2013, Eagle Spinco merged with Georgia Gulf Corporation to create Axiall Corporation ("Axiall"), which the Company later acquired in August 2016. Eagle Spinco is currently a wholly owned indirect subsidiary of the Company.

Table of Contents

WESTLAKE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

In May 2024, a trial court in Manaus, Brazil issued a decision awarding damages to Brazilian company Di Gregorio Navegacao, Ltda ("Di Gregorio") in a lawsuit filed by Di Gregorio against PPG relating to an explosion on November 9, 1998 that destroyed the M/V DG Harmony and her cargo, which included PPG-owned calcium hypochlorite (the "Lawsuit"). The decision awarded damages to Di Gregorio in the approximate amount of R$550 million (Brazilian real), plus a monetary adjustment and interest since April 3, 2006 (based on Selic), as well as 20% for legal fees and a small procedural fine. The parties to the lawsuit are waiting on the trial court's Accounting Department to release the aggregate judgment amount. On June 14, 2024, PPG filed an appeal of the decision in the Amazonas Court of Appeals in Manaus, Brazil. The Amazonas Court of Appeals rejected PPG's request for a stay of the trial court proceeding in light of the appeal. There is no expected date for the Amazonas Court of Appeals to examine the merits of PPG's appeal. PPG asserts that the Company and certain of its subsidiaries are responsible for any judgment in the Di Gregorio lawsuit.

On May 17, 2024, Eagle Spinco filed a lawsuit against PPG in Delaware Superior Court seeking (1) damages relating to PPG's breach of the Separation Agreement and (2) a declaration that PPG is not entitled to indemnification for the lawsuit unless it engages in efforts to pursue relevant insurance claims and assigns to Eagle Spinco its rights to those claims. On August 13, 2024, Eagle Spinco voluntarily dismissed the Superior Court action without prejudice, given the parallel chancery action set forth below.

On June 13, 2024, PPG filed a lawsuit against the Company, Axiall and Eagle Spinco in Delaware Chancery Court. In this lawsuit, PPG generally asks the court to find that the defendants: (1) breached the Separation Agreement; (2) may not abandon the defense of the Lawsuit filed by Di Gregorio against PPG; (3) must endeavor to substitute themselves into the Lawsuit and remove PPG as named defendant; (4) must acknowledge that they are solely responsible for the liabilities and defense costs of the Lawsuit; and (5) must handle and resolve the Lawsuit without access to PPG's insurance rights. The Company is defending this litigation and has asserted its own counterclaims, based on allegations similar to those that were asserted against PPG in the Delaware Superior Court action.

At this time, the Company is not able to estimate the impact, if any, that the Delaware lawsuits and Eagle Spinco's contractual obligations related to the lawsuits could have on the Company's consolidated financial statements either in the current period or in future periods.

Environmental Contingencies. As of September 30, 2024 and December 31, 2023, the Company had reserves for environmental contingencies totaling approximately $74 and $58, respectively, most of which was classified as noncurrent liabilities. The Company's assessment of the potential impact of these environmental contingencies is subject to considerable uncertainty due to the complex, ongoing and evolving process of investigation and remediation, if necessary, of such environmental contingencies, and the potential for technological and regulatory developments.

Table of Contents

WESTLAKE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

Calvert City Proceedings. For several years, the Environmental Protection Agency (the "EPA") has been conducting remedial investigation and feasibility studies at the Company's Calvert City, Kentucky facility pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"). As the current owner of the Calvert City facility, the Company was named by the EPA as a potentially responsible party ("PRP") along with Goodrich Corporation ("Goodrich") and its successor-in-interest, Avient Corporation (formerly known as PolyOne Corporation, "Avient"). On November 30, 2017, the EPA published a draft Proposed Plan, incorporating by reference an August 2015 draft Remedial Investigation ("RI") report, an October 2017 draft Feasibility Study ("FS") report and a Technical Impracticability Waiver document dated December 19, 2017. On June 18, 2018, the EPA published an amendment to its Proposed Plan. The amended Proposed Plan describes a final remedy for the onshore portion of the site comprised of a containment wall, targeted treatment and supplemental hydraulic containment. The amended Proposed Plan also describes an interim approach to address the contamination under the river that would include recovery of any mobile contaminants by an extraction well along with further study of the extent of the contamination and potential treatment options. The EPA's estimated cost of implementation is $107, with an estimated $1 to $3 in annual operation and maintenance ("O&M") costs. In September 2018, the EPA published the Record of Decision ("ROD") for the site, formally selecting the preferred final and interim remedies outlined in the amended Proposed Plan. In October 2018, the EPA issued Special Notice letters to the PRPs for the remedial design phase of work under the ROD. In April 2019, the PRPs and the EPA entered into an administrative settlement agreement and order on consent for remedial design. In October 2019, the PRPs received special notice letters for the remedial action phase of work at the site. The Company, jointly with the other PRPs, submitted a good faith offer response in December 2019. On September 17, 2020, the EPA and the Department of Justice filed a proposed consent decree for the remedial action with the U.S. District Court for the Western District of Kentucky. On November 16, 2020, the Department of Justice filed a motion to approve and enter the consent decree. On January 28, 2021, the Court granted the unopposed motion to enter the consent decree, which became effective the same day. The Company's allocation of liability for remedial and O&M costs at the Calvert City site, if any, is governed by a series of agreements between the Company, Goodrich and Avient. These agreements and the associated litigation are described below.

In connection with the 1990 and 1997 acquisitions of the Goodrich chemical manufacturing complex in Calvert City, Goodrich agreed to indemnify the Company for any liabilities related to preexisting contamination at the complex. For its part, the Company agreed to indemnify Goodrich for post-closing contamination caused by the Company's operations. The soil and groundwater at the complex, which does not include the Company's nearby PVC facility, had been extensively contaminated by Goodrich's operations. In 1993, Goodrich spun off the predecessor of Avient, and that predecessor assumed Goodrich's indemnification obligations relating to preexisting contamination. In 2003, litigation arose among the Company, Goodrich and Avient with respect to the allocation of the cost of remediating contamination at the site. The parties settled this litigation in December 2007 and the case was dismissed. In the settlement, the parties agreed that, among other things: (1) Avient would pay 100% of the costs (with specified exceptions), net of recoveries or credits from third parties, incurred with respect to environmental issues at the Calvert City site from August 1, 2007 forward; and (2) either the Company or Avient might, from time to time in the future (but not more than once every five years), institute an arbitration proceeding to adjust that percentage. In May 2017, Avient filed a demand for arbitration. In this proceeding, Avient sought to readjust the percentage allocation of future costs and to recover approximately $11 from the Company in reimbursement of previously paid remediation costs. The Company's cross demand for arbitration seeking unreimbursed remediation costs incurred during the relevant period was dismissed from the proceedings when Avient paid such costs in full at the beginning of the arbitration hearing.

On July 10, 2018, Avient sued the Company in the U.S. District Court for the Western District of Kentucky and sought to invalidate the arbitration provisions in the parties' 2007 settlement agreement and enjoin the arbitration it had initiated in 2017. On July 30, 2018, the district court refused to enjoin the arbitration and, on January 15, 2019, the court granted the Company's motion to dismiss Avient's suit. On February 13, 2019, Avient appealed those decisions to the U.S. Court of Appeals for the Sixth Circuit. The court of appeals issued an opinion and final order on September 6, 2019, affirming the district court.

The arbitration hearing began in August 2018 and concluded in December 2018. On May 22, 2019, the arbitration panel issued its final award. It determined that Avient was responsible for 100% of the allocable costs at issue in the proceeding and that Avient would remain responsible for 100% of the costs to operate the existing groundwater remedy at the Calvert City site. In August 2019, Avient filed a motion to vacate before the U.S. District Court for the Western District of Kentucky, seeking to invalidate the final award under the Federal Arbitration Act. On February 11, 2020, the U.S. District Court for the Western District of Kentucky denied Avient's motion to vacate and affirmed the arbitration final award. Avient did not file a notice of appeal before the March 10, 2020 deadline to contest the court's decision. Accordingly, the final award was affirmed, and the arbitration proceeding is fully and finally resolved.

Table of Contents

WESTLAKE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

In March 2022, the Company filed a demand for arbitration seeking reimbursement for certain allocable costs incurred during the applicable period since May 2017, and which Avient has failed to pay or disputed as not subject to indemnity under the 1990 and 1997 agreements. In April 2022, Avient filed a complaint in the federal district court for the Western District of Kentucky disputing the enforceability of the 2007 settlement agreement and seeking to enjoin arbitration. Avient claims that the allocable costs at issue are up to $22, for which Avient claims the Company is totally liable. On September 30, 2023, the court issued an order denying without prejudice the parties' cross motions for summary judgment and set a 30-day deadline for the parties to refile and provide additional briefing on specific aspects of the arguments before the court. The parties each refiled and provided additional briefing by the deadline. On September 30, 2024 the court issued an order granting the Company's request for summary judgment. Avient requested that the arbitration proceeding remain stayed based on its intent to pursue an appeal of the district court's order on summary judgment.The Company disputes these claims and at this time, the Company believes it is unlikely that any remediation costs allocable to it would result in material expenditures in any individual reporting period.

Sulphur Brine Dome. The Company owns and operates salt solution-mining caverns at the Sulphur Brine Dome in Sulphur, Louisiana. The Louisiana Department of Energy and Natural Resources (LDENR) issued Compliance Order No. IMD 2022-027 and several supplements to that order, the latest in October 2023, in response to pressure anomaly events in two of the Company's brine caverns. The brine caverns were not active, operating wells but under ongoing, post-operational monitoring requirements. The compliance order and supplements thereto have required the Company to undertake various activities related to response planning, monitoring, investigation and mitigation of potential impacts in the event of future cavern pressure anomalies or failures. Since December 2022, continuous brine injection has maintained cavern pressure while the Company continues to pursue active monitoring, studies, groundwater monitoring, modeling and other activities under the compliance order and supplements. In September 2023, the Office of Conservation issued an emergency declaration as a conservative step to ensure ample resources are available to the government in its response and management of the evolving circumstances at the Sulphur Dome. In June 2024, the Company's cavern experienced a pressure event. As a result, the cavern required increased rates of brine injection, which ultimately restored cavern pressure but leveled out at a higher injection rate to maintain cavern stability. Citing the recent pressure event, LDENR ordered the Company to begin construction of a dome-wide containment structure, the planning for which was already underway pursuant to the existing compliance order and supplements thereto. The capital costs and expenditures required to comply with the compliance orders and supplements have been and will continue to be incurred. In response to these orders, the Company reserved approximately $32 in connection with monitoring wells and other remedial activities. At this time, the Company is unable to estimate the impact, if any, that other ongoing expenditures or future injunctive relief ordered by the government could have on the Company's consolidated financial statements either in the current period or in future periods.

Environmental Remediation: Reasonably Possible Matters. The Company's assessment of the potential impact of environmental contingencies is subject to considerable uncertainty due to the complex, ongoing and evolving process of investigation and remediation, if necessary, of such environmental contingencies, and the potential for technological and regulatory developments. As such, in addition to the amounts currently reserved for contingencies that are probable and reasonably estimable as discussed above, the Company may be subject to reasonably possible loss contingencies related to environmental matters in the range of $100 to $175.

Table of Contents

WESTLAKE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued

(Unaudited)

(in millions of dollars, except share amounts and per share data)

14. Segment Information

The Company operates in two principal operating segments: Performance and Essential Materials and Housing and Infrastructure Products. These segments are strategic business units that offer a variety of different materials and products. The Company manages each segment separately as each business requires different technology and marketing strategies.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net external sales
Performance and Essential Materials
Performance Materials	$	1,164	$	1,127	$	3,505	$	3,549
Essential Materials	855		844		2,458		2,907
Total Performance and Essential Materials	2,019		1,971		5,963		6,456
Housing and Infrastructure Products
Housing Products	937		963		2,826		2,699
Infrastructure Products	161		181		510		567
Total Housing and Infrastructure Products	1,098		1,144		3,336		3,266
	$	3,117	$	3,115	$	9,299	$	9,722

Intersegment sales
Performance and Essential Materials	$	116	$	115	$	376	$	328
Housing and Infrastructure Products	—		—		—		—
	$	116	$	115	$	376	$	328

Income (loss) from operations
Performance and Essential Materials	$	(9)	$	105	$	170	$	723
Housing and Infrastructure Products	202		256		678		589
Corporate and other	(13)		(12)		(39)		(31)
	$	180	$	349	$	809	$	1,281

Depreciation and amortization