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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 September 30, 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 October 28, 2022 was 127,537,599.


TABLE OF CONTENTS





PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
1

WESTLAKE CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30,
2022
December 31,
2021
(in millions of dollars, except par values and share amounts)
ASSETS
Current assets
Cash and cash equivalents$1,778 $1,908 
Accounts receivable, net2,181 1,868 
Inventories2,024 1,407 
Prepaid expenses and other current assets118 80 
Total current assets6,101 5,263 
Property, plant and equipment, net8,301 7,606 
Operating lease right-of-use assets583 562 
Goodwill2,143 2,024 
Customer relationships, net1,005 1,083 
Other intangible assets, net570 497 
Equity method investments1,147 1,007 
Other assets, net575 417 
Total assets$20,425 $18,459 
LIABILITIES AND EQUITY
Current liabilities
Accounts payable$994 $879 
Accrued and other liabilities1,461 1,196 
Current portion of long-term debt, net6 269 
Total current liabilities2,461 2,344 
Long-term debt, net4,813 4,911 
Deferred income taxes1,803 1,681 
Pension and other post-retirement benefits394 291 
Operating lease liabilities474 461 
Other liabilities292 243 
Total liabilities10,237 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 September 30, 2022 and December 31, 2021, respectively
1 1 
Common stock, held in treasury, at cost; 6,992,435 and 6,735,639 shares at September 30, 2022 and December 31, 2021, respectively
(439)(399)
Additional paid-in capital590 581 
Retained earnings9,700 7,808 
Accumulated other comprehensive loss(231)(36)
Total Westlake Corporation stockholders' equity9,621 7,955 
Noncontrolling interests567 573 
Total equity10,188 8,528 
Total liabilities and equity$20,425 $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 September 30,Nine Months Ended September 30,
2022202120222021
(in millions of dollars, except per share data and share amounts)
Net sales$3,956 $3,055 $12,495 $8,271 
Cost of sales3,180 2,037 8,989 5,872 
Gross profit776 1,018 3,506 2,399 
Selling, general and administrative expenses215 122 635383
Amortization of intangibles39 29 124 83 
Restructuring, transaction and integration-related costs6 6 24 6 
Income from operations516 861 2,723 1,927 
Other income (expense)
Interest expense(44)(61)(134)(130)
Other income, net24 13 52 35 
Income before income taxes496 813 2,641 1,832 
Provision for income taxes84 193 592 423 
Net income412 620 2,049 1,409 
Net income attributable to noncontrolling interests11 13 34 38 
Net income attributable to Westlake Corporation$401 $607 $2,015 $1,371 
Earnings per common share attributable to Westlake Corporation:
Basic$3.12 $4.71 $15.65 $10.65 
Diluted$3.10 $4.69 $15.54 $10.60 
Weighted average common shares outstanding:
Basic127,943,400 128,060,193 128,118,160128,053,337 
Diluted128,747,012 128,765,814 129,003,750128,710,097 
The accompanying notes are an integral part of these consolidated financial statements.
3

WESTLAKE CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
(in millions of dollars)
Net income$412 $620 $2,049 $1,409 
Other comprehensive income (loss), net of income taxes
Pension and other post-retirement benefits liability
Pension and other post-retirement benefits reserves adjustment
 1 1 1 
Income tax provision on pension and other post-retirement benefits liability
 (1) (1)
Foreign currency translation adjustments
Foreign currency translation(106)(13)(175)2 
Income tax provision on foreign currency translation(13)(6)(29)(13)
Other comprehensive loss, net of income taxes(119)(19)(203)(11)
Comprehensive income293 601 1,846 1,398 
Comprehensive income attributable to noncontrolling interests, net of tax of $1 and $1 for the three months ended September 30, 2022 and 2021; and net of tax of $3 and $2 for the nine months ended September 30, 2022 and 2021, respectively
7 13 26 38 
Comprehensive income attributable to Westlake Corporation$286 $588 $1,820 $1,360 
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 
Net income— — — — — 858 — 15 873 
Other comprehensive loss— — — — — — (71)(2)(73)
Common stock repurchased
— — 412,490 (41)— — — — (41)
Shares issued—stock-based compensation
— — (103,079)5 1 — — — 6 
Stock-based compensation
— — — — 9 — — — 9 
Dividends declared
— — — — — (38)— — (38)
Distributions to noncontrolling interests
— — — — — — — (14)(14)
Balances at June 30, 2022134,651,380 $1 6,641,307 $(408)$582 $9,345 $(116)$570 $9,974 
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)
Net income— — — — — 401 — 11 412 
Other comprehensive loss— — — — — — (115)(4)(119)
Common stock repurchased
— — 372,430 (32)— — — — (32)
Shares issued—stock-based compensation
— — (21,302)1 — — — — 1 
Stock-based compensation
— — — — 8 — — — 8 
Dividends declared
— — — — — (46)— — (46)
Distributions to noncontrolling interests
— — — — — — — (10)(10)
Balances at September 30, 2022134,651,380 $1 6,992,435 $(439)$590 $9,700 $(231)$567 $10,188 
The accompanying notes are an integral part of these consolidated financial statements.
6

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 
Net income
— — — — — 522 — 14 536 
Other comprehensive income— — — — — — 14 1 15 
Shares issued—stock-based compensation
— — (18,397)1 — — — — 1 
Stock-based compensation
— — — — 7 — — — 7 
Dividends declared
— — — — — (34)— — (34)
Distributions to noncontrolling interests
— — — — — — — (11)(11)
Balances at June 30, 2021134,651,380 $1 6,501,665 $(378)$571 $6,633 $(56)$568 $7,339 
7

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)
Net income
— — — — — 607 — 13 620 
Other comprehensive loss
— — — — — — (19) (19)
Common stock repurchased
— — 355,800 (30)— — — — (30)
Shares issued—stock-based compensation
— — (27,148)2 (2)— — —  
Stock-based compensation
— — — — 7 — — — 7 
Dividends declared— — — — — (38)— — (38)
Distributions to noncontrolling interests
— — — — — — — (10)(10)
Balances at September 30, 2021134,651,380 $1 6,830,317 $(406)$576 $7,202 $(75)$571 $7,869 
The accompanying notes are an integral part of these consolidated financial statements.
8

WESTLAKE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
20222021
(in millions of dollars)
Cash flows from operating activities
Net income$2,049 $1,409 
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization785 600 
Stock-based compensation expense26 23 
Loss from disposition and write-off of property, plant and equipment36 14 
Deferred income taxes44 50 
Other losses, net24 21 
Changes in operating assets and liabilities, net of effect of business acquisitions
Accounts receivable(100)(414)
Inventories(338)(180)
Prepaid expenses and other current assets(18)(49)
Accounts payable2 184 
Accrued and other liabilities206 78 
Other, net(156)(99)
Net cash provided by operating activities2,560 1,637 
Cash flows from investing activities
Acquisition of business, net of cash acquired(1,171)(428)
Additions to investments in unconsolidated subsidiaries(177)(19)
Additions to property, plant and equipment(811)(414)
Other, net11 19 
Net cash used for investing activities(2,148)(842)
Cash flows from financing activities
Debt issuance costs (18)
Distributions to noncontrolling interests(34)(32)
Dividends paid(123)(107)
Proceeds from debt issuance 1,668 
Repayment of senior notes(250) 
Repurchase of common stock for treasury(68)(30)
Other, net(5)6 
Net cash provided by (used for) financing activities(480)1,487 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(67)(9)
Net increase (decrease) in cash, cash equivalents and restricted cash (135)2,273 
Cash, cash equivalents and restricted cash at beginning of period1,941 1,337 
Cash, cash equivalents and restricted cash at end of period$1,806 $3,610 
The accompanying notes are an integral part of these consolidated financial statements.
9

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 September 30, 2022, its results of operations for the three and nine months ended September 30, 2022 and 2021, and the changes in its cash position for the nine months ended September 30, 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 does not expect that its adoption will have a material impact on the Company's consolidated financial position, results of operations and cash flows.
10

WESTLAKE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued
(Unaudited)
(in millions of dollars, except share amounts and per share data)
Inflation Reduction Act of 2022
On August 16, 2022, the Inflation Reduction Act of 2022 (the "IRA") was signed into law. The IRA, among other provisions, imposes a 15% corporate alternative minimum tax on the adjusted financial statement income of certain large corporations effective for tax years beginning after December 31, 2022 and a 1% excise tax on stock repurchases made by publicly traded U.S. corporations after December 31, 2022. The Company is in the process of evaluating the IRA and the impact it may have on the Company's consolidated financial statements.
11

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 sustainability-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 nine months ended September 30, 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. The acquisition of Westlake Epoxy on the statement of cash flows is presented net of the cash and restricted cash acquired.
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. 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 information below represents the purchase price allocation:
Cash$42 
Accounts receivable 299 
Inventories346 
Prepaid expenses and other current assets24 
Property, plant and equipment660 
Operating lease right-of-use assets59 
Intangible assets145 
Other assets104 
Total assets acquired1,679 
Accounts payable189 
Accrued and other liabilities84 
Deferred income taxes95 
Pensions and other post-retirement benefits163 
Operating lease liabilities48 
Other liabilities19 
Total liabilities assumed598 
Total identifiable net assets acquired1,081 
Noncontrolling interest(2)
Goodwill128 
Total Westlake Corporation purchase consideration$1,207 

12

WESTLAKE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued
(Unaudited)
(in millions of dollars, except share amounts and per share data)
Management estimated that consideration paid exceeded the fair value of the net assets acquired. The excess of the total equity value of Westlake Epoxy based on the purchase consideration over net assets acquired was recorded as goodwill, most of which is not expected to be deductible for income tax purposes. The goodwill is primarily attributable to the assembled workforce and synergies expected to arise after the acquisition. The purchase accounting adjustments recorded since the date of the acquisition resulted in a $9 increase in goodwill. 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 Company has preliminarily estimated the useful lives of trade names, technology and customer relationships as 19 years, 17 years and 11 years, respectively.
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 $1,146 and $68, respectively, to the Company for the period from February 1, 2022 to September 30, 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 September 30,Nine Months Ended September 30,
2022202120222021
Net sales
$3,956 $3,508 $12,654 $9,457 
Net income attributable to Westlake Corporation
$401 $678 $2,086 $1,468 
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 final purchase consideration of $2,140 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 $787. The purchase accounting adjustments for the nine months ended September 30, 2022, resulted in a $16 increase in goodwill. The intangible assets that have been acquired are being amortized over periods of 12 to 22 years.
13

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 final purchase price allocation:
Cash$5 
Accounts receivable119 
Inventories156 
Prepaid expenses and other current assets3 
Property, plant and equipment482 
Operating lease right-of-use assets