HOUSTON, Nov. 3 /PRNewswire-FirstCall/ -- Westlake Chemical Corporation (NYSE: WLK) today reported net income of $29.8 million, or $0.45 per diluted share, on net sales of $632.6 million for the third quarter of 2009. Third quarter 2009 net income increased $12.9 million from the $16.9 million net income, or $0.26 per diluted share, reported for the second quarter of 2009. Third quarter 2009 income from operations was $49.0 million as compared to the $36.2 million reported for the second quarter of 2009, while net sales increased by $57.7 million from the $574.9 million reported for the second quarter of 2009. The increase in sales was largely due to higher sales prices for most of the Company's major products except caustic. The increase in income from operations in the third quarter of 2009 compared to the second quarter of 2009 was due to higher polyethylene and PVC resin margins, which were partially offset by a 53% drop in industry caustic prices and lower PVC pipe margins. Vinyls downstream margins continue to be negatively impacted by weakness in construction activity.

Albert Chao, President and Chief Executive Officer, said, "We are pleased with our third quarter earnings considering the current economic environment. Olefins segment operating margins improved in the third quarter as increases in polyethylene prices outpaced the increase in feedstock costs. In addition, gas-based ethylene producers, like Westlake, continue to have a cost advantage over naptha-based producers. Vinyls segment operating results were negatively impacted by a significant drop in caustic prices and continued weakness in construction markets. We maintain a cautious outlook on the economy and as a result we continue to focus on controlling our costs, working capital and discretionary capital spending in order to conserve cash. We increased our cash balance by $48.2 million in the third quarter to $365.2 million, including restricted cash, and have no borrowings under our line of credit."

Net income for the three months ended September 30, 2009 of $29.8 million, or $0.45 per diluted share, increased $2.4 million compared to net income of $27.4 million, or $0.42 per diluted share, for same period of 2008. Third quarter 2009 net income benefited as the effective income tax rate of 29% for the third quarter of 2009 was below the third quarter 2008 effective tax rate of 35%. The lower effective income tax rate resulted in a $2.5 million, or $0.04 per diluted share, benefit to net income in the third quarter of 2009 as compared to the third quarter of 2008. Sales for the three months ended September 30, 2009 of $632.6 million decreased $441.1 million compared to sales of $1,073.7 million in the same period of 2008. The decrease was primarily due to substantially lower sales prices for all major products. Income from operations was $49.0 million for the third quarter of 2009 compared to $48.8 million for the third quarter of 2008. Operating margins benefited from significantly lower energy and feedstock costs in the third quarter of 2009, which was mostly offset by lower sales prices and significantly lower caustic margins resulting from a 78% decrease in industry caustic prices compared to the third quarter of 2008. The third quarter of 2008 was negatively impacted by outages caused by Hurricanes Gustav and Ike at our Lake Charles and Geismar facilities. Trading activity resulted in a loss of $0.4 million in the third quarter of 2009 as compared to a loss of $0.9 million in the third quarter of 2008.

Net income for the nine months ended September 30, 2009 was $40.5 million, or $0.61 per diluted share, on net sales of $1,695.7 million. This represents a decrease in net income of $39.5 million, or $0.61 per diluted share, from the nine months ended September 30, 2008 net income of $80.0 million, or $1.22 per diluted share, on net sales of $3,095.2 million. Sales for the nine months ended September 30, 2009 decreased $1,399.5 million compared to the first nine months of 2008 largely due to lower sales prices for all major products and lower sales volumes for all major products except caustic and styrene. Income from operations was $84.3 million for the first nine months of 2009 as compared to $136.2 million for the first nine months of 2008. The decrease in income from operations was attributable to a number of factors, including reduced demand for our major products due to the current economic downturn, an unscheduled outage caused by an ice storm at our Calvert City, Kentucky complex in the first quarter of 2009 and a turnaround at one of our ethylene units in Lake Charles in the first quarter of 2009. This decrease was partially offset by a gain from trading activity of $3.6 million during the first nine months of 2009 compared to a loss of $7.8 million during the first nine months of 2008. The Calvert City outage and Lake Charles turnaround resulted in repair costs and the expensing of unabsorbed fixed manufacturing costs of $19.5 million during the first quarter of 2009. A turnaround and revamp of our styrene facility in Lake Charles and the effects of Hurricanes Gustav and Ike negatively impacted income from operations in the first nine months of 2008.

EBITDA (earnings before interest expense, income taxes, depreciation and amortization) for the third quarter of 2009 increased $13.5 million to $81.9 million from $68.4 million in the second quarter of 2009. EBITDA for the third quarter of 2009 increased $3.7 million to $81.9 million compared to the $78.2 million in the third quarter of 2008. A reconciliation of EBITDA to reported net income and to cash flows from operating activities can be found in the financial schedules at the end of this press release.

Cash provided by operating activities was $213.5 million in the first nine months of 2009, an increase of $136.9 million compared with the first nine months of 2008. The increase was primarily the result of decreases in working capital. Cash used for investing activities, including capital additions, was $66.4 million for the first nine months of 2009, compared to $126.2 million for the first nine months of 2008. At September 30, 2009, the Company had $365.2 million of cash, including $112.3 million of restricted cash, and the Company's long-term debt was $515.4 million. The restricted cash is held by a trustee until such time as the Company requests reimbursement for qualifying amounts spent for capital additions in Louisiana.

OLEFINS SEGMENT

Income from operations for the third quarter of 2009 for the Olefins segment was $61.7 million, an increase of $17.4 million from the $44.3 million reported in the second quarter of 2009. This increase was primarily due to an increase in polyethylene margins.

Income from operations of $61.7 million in the third quarter of 2009 was $43.5 million higher than the $18.2 million in the third quarter of 2008. This increase was primarily due to lower energy and feedstock costs, partially offset by lower sales prices. In addition, the third quarter of 2008 was negatively impacted by Hurricanes Gustav and Ike.

Income from operations increased by $25.9 million, to $122.0 million, in the first nine months of 2009 compared to income of $96.1 million in the first nine months of 2008. This increase was due to lower energy and feedstock costs, partially offset by lower sales prices for all major products and lower operating rates. Also, the first nine months of 2008 were negatively impacted by Hurricanes Gustav and Ike, as well as the turnaround on the styrene unit at Lake Charles. Trading activity resulted in a gain for the first nine months of 2009 of $3.6 million as compared to a loss of $7.8 million for the first nine months of 2008.

VINYLS SEGMENT

The Vinyls segment reported a loss from operations of $8.1 million in the third quarter of 2009 as compared to a loss from operations of $4.8 million reported in the second quarter of 2009. The change was primarily the result of lower PVC pipe margins and a significant decrease in caustic prices compared to the second quarter of 2009, partially offset by increased PVC resin margins.

The Vinyls segment reported a loss from operations of $8.1 million in the third quarter of 2009 compared to income from operations of $30.5 million in the third quarter of 2008, a decline of $38.6 million. This change was primarily caused by significantly lower caustic margins due to a 78% drop in industry caustic prices compared to the third quarter of 2008, higher chlorine costs, lower operating rates and asset impairment costs of $3.9 million related to the Company's PVC pipe business. These decreases were partially offset by an insurance recovery gain of $4.6 million in the third quarter of 2009 related to damage caused by the ice storm at the Calvert City facility in the first quarter of 2009.

The Vinyls segment loss from operations of $28.3 million in the first nine months of 2009 compared to income from operations of $45.8 million for the same period in 2008, a decline of $74.1 million. This decrease was primarily attributable to a significant reduction in caustic margins, lower operating rates, lower sales prices and reduced margins in the Company's vinyls downstream businesses as a result of the continued weakness in the construction market. Operating rates were negatively impacted by the unscheduled outage at the Calvert City facility in the first quarter of 2009.

The statements in this release relating to matters that are not historical facts are forward-looking statements that are subject to risks and uncertainties. Actual results could differ materially, based on factors including, but not limited to: the cyclical nature of the chemical industry; availability, cost and volatility of raw materials and utilities; governmental regulatory actions and political unrest; global economic conditions; industry production capacity and operating rates; the supply/demand balance for Westlake's products; competitive products and pricing pressures; access to capital markets; technological developments; the effect and results of litigation and settlements of litigation; and other risk factors. For more detailed information about the factors that could cause actual results to differ materially, please refer to Westlake's Annual Report on Form 10-K for the year ended December 31, 2008, which was filed with the SEC in February 2009.

In this release, Westlake refers to a non-GAAP financial measure, EBITDA. EBITDA is calculated as net income before interest expense, income taxes, depreciation and amortization. The body of accounting principles generally accepted in the United States is commonly referred to as "GAAP." For this purpose a non-GAAP financial measure is generally defined by the U.S. Securities and Exchange Commission as one that purports to measure historical and future financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable GAAP measures. We have included EBITDA in this release because our management considers it an important supplemental measure of our performance and believes that it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry, some of which present EBITDA when reporting their results. We regularly evaluate our performance as compared to other companies in our industry that have different financing and capital structures and/or tax rates by using EBITDA. EBITDA allows for meaningful company-to-company performance comparisons by adjusting for factors such as interest expense, depreciation and amortization and taxes, which often vary from company to company. In addition, we utilize EBITDA in evaluating acquisition targets. Management also believes that EBITDA is a useful tool for measuring our ability to meet our future debt service, capital expenditures and working capital requirements, and EBITDA is commonly used by us and our investors to measure our ability to service indebtedness. EBITDA is not a substitute for the GAAP measures of earnings or of cash flow and is not necessarily a measure of our ability to fund our cash needs. In addition, it should be noted that companies calculate EBITDA differently and, therefore, EBITDA as presented in this release may not be comparable to EBITDA reported by other companies. EBITDA has material limitations as a performance measure because it excludes (1) interest expense, which is a necessary element of our costs and ability to generate revenues because we have borrowed money to finance our operations, (2) depreciation, which is a necessary element of our costs and ability to generate revenues because we use capital assets and (3) income taxes, which is a necessary element of our operations. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA only supplementally. A table included in the financial schedules at the end of this release reconciles EBITDA to net income and to cash flow from operating activities.

Westlake Chemical Corporation Conference Call Information:

A conference call to discuss Westlake Chemical Corporation's third quarter results will be held Tuesday, November 3rd at 11:00 a.m. EST (10:00 a.m. CST). To access the conference call, dial (866) 783-2138, or (857) 350-1597 for international callers, approximately 10 minutes prior to the scheduled start time and reference passcode 49346652.

A replay of the conference call will be available beginning an hour after its conclusion until 1:00 p.m. EST on Tuesday, November 10, 2009. To hear a replay, dial (888) 286-8010, or (617) 801-6888 for international callers. The replay passcode is 36570560.

The conference call will also be available via webcast at: http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=180248&eventID=2496259 and the earnings release can be obtained via the company's Web page at: http://www.westlake.com/fw/main/IR_Home_Page-123.html.

                            WESTLAKE CHEMICAL CORPORATION

                        CONSOLIDATED STATEMENTS OF OPERATIONS
                                     (Unaudited)

                                 Three Months Ended       Nine Months Ended
                                    September 30,           September 30,
                                    -------------           -------------
                                   2009        2008        2009        2008
                                   ----        ----        ----        ----
                                 (In thousands of dollars, except per share
                                         data and shares outstanding)

    Net sales                    $632,571  $1,073,735  $1,695,687  $3,095,245
    Cost of sales                 560,033   1,001,948   1,547,423   2,890,294
                                  -------   ---------   ---------   ---------
    Gross profit                   72,538      71,787     148,264     204,951

    Selling, general and
     administrative expenses       23,515      22,999      63,969      68,728
                                   ------      ------      ------      ------

    Income from operations         49,023      48,788      84,295     136,223

    Interest expense               (8,772)     (8,093)    (26,163)    (25,908)
    Other income, net               1,456       1,267       5,236       5,874
                                    -----       -----       -----       -----

    Income before income taxes     41,707      41,962      63,368     116,189

    Provision for income taxes     11,941      14,598      22,826      36,165
                                   ------      ------      ------      ------

    Net income                    $29,766     $27,364     $40,542     $80,024
                                  =======     =======     =======     =======

    Basic and diluted earnings
     per share
       Basic                        $0.45       $0.42       $0.62       $1.22
       Diluted                      $0.45       $0.42       $0.61       $1.22

    Weighted average shares
     outstanding
       Basic                   65,953,303  65,643,001  65,892,470  65,612,984
                               ==========  ==========  ==========  ==========
       Diluted                 66,096,998  65,677,079  65,960,172  65,640,683
                               ==========  ==========  ==========  ==========



                         WESTLAKE CHEMICAL CORPORATION

                          CONSOLIDATED BALANCE SHEETS
                                  (Unaudited)

                                                  September 30,  December 31,
                                                       2009         2008
                                                       ----         ----
                                                  (In thousands of dollars)
    ASSETS
    Current assets
      Cash and cash equivalents                      $252,873      $90,239
      Accounts receivable, net                        343,406      347,323
      Inventories, net                                312,029      327,967
      Other current assets                             37,076       33,460
                                                       ------       ------
         Total current assets                         945,384      798,989
    Property, plant and equipment, net              1,186,010    1,197,452
    Restricted cash                                   112,294      134,432
    Other assets, net                                 167,725      156,116
                                                      -------      -------

            Total assets                           $2,411,413   $2,286,989
                                                   ==========   ==========


    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities (accounts payable and
     accrued liabilities)                            $263,668     $212,288
    Long-term debt                                    515,380      510,319
    Other liabilities                                 354,737      325,322
                                                      -------      -------

         Total liabilities                          1,133,785    1,047,929
                                                    ---------    ---------

    Stockholders' equity                            1,277,628    1,239,060


         Total liabilities and stockholders'
          equity                                   $2,411,413   $2,286,989
                                                   ==========   ==========



                          WESTLAKE CHEMICAL CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                          Nine Months Ended
                                                            September 30,
                                                            -------------
                                                             2009      2008
                                                             ----      ----
                                                           (In thousands of
                                                                dollars)
    Cash flows from operating activities
    Net income                                            $40,542   $80,024
    Adjustments to reconcile net income to net
     cash provided by operating activities:
      Depreciation and amortization                        91,310    81,527
      Deferred income taxes                                27,786     3,096
      Other balance sheet changes                          53,818   (88,061)
                                                           ------   -------
           Net cash provided by operating activities      213,456    76,586

    Cash flows from investing activities
    Additions to property, plant and equipment            (65,031) (127,163)
    Acquisition of business                                (6,297)        -
    Proceeds from disposition of assets                     3,255       573
    Insurance proceeds from involuntary conversion
     of assets                                                484         -
    Settlements of derivative instruments                   1,157       344
                                                            -----       ---
           Net cash used for investing activities         (66,432) (126,246)

    Cash flows from financing activities
    Proceeds from the exercise of stock options               772       208
    Dividends paid                                        (10,716)  (10,010)
    Proceeds from borrowings                                    -   851,635
    Repayment of borrowings                                     -  (847,162)
    Utilization of restricted cash                         27,650    55,045
    Capitalized debt issuance costs                        (2,096)   (2,518)
                                                           ------    ------
           Net cash provided by financing activities       15,610    47,198

    Net increase (decrease) in cash and cash equivalents  162,634    (2,462)
    Cash and cash equivalents at beginning of period       90,239    24,914
                                                           ------    ------

    Cash and cash equivalents at end of period           $252,873   $22,452
                                                         ========   =======



                           WESTLAKE CHEMICAL CORPORATION

                                SEGMENT INFORMATION
                                    (Unaudited)

                                    Three Months Ended     Nine Months Ended
                                       September 30,          September 30,
                                       -------------          -------------
                                     2009        2008       2009        2008
                                     ----        ----       ----        ----
                                           (In thousands of dollars)

    Net external sales
    Olefins                       $440,973    $725,063 $1,150,284  $2,151,846
    Vinyls                         191,598     348,672    545,403     943,399
                                   -------     -------    -------     -------
                                  $632,571  $1,073,735 $1,695,687  $3,095,245
                                  --------  ---------- ----------  ----------


    Income (loss) from operations
    Olefins                        $61,650     $18,190   $122,013     $96,146
    Vinyls                          (8,079)     30,483    (28,289)     45,752
    Corporate and other             (4,548)        115     (9,429)     (5,675)
                                    ------         ---     ------      ------
                                   $49,023     $48,788    $84,295    $136,223
                                   -------     -------    -------    --------


    Depreciation and amortization
    Olefins                        $21,014     $19,670    $61,630     $56,513
    Vinyls                          10,265       8,427     29,424      24,868
    Corporate and other                130          52        256         146
                                       ---         ---        ---         ---
                                   $31,409     $28,149    $91,310     $81,527
                                   -------     -------    -------     -------


    Other income (expense), net
    Olefins                           $252          $9       $415         $67
    Vinyls                             (87)         64        (56)        230
    Corporate and other              1,291       1,194      4,877       5,577
                                     -----       -----      -----       -----
                                    $1,456      $1,267     $5,236      $5,874
                                    ------      ------     ------      ------



                                WESTLAKE CHEMICAL CORPORATION

                  RECONCILIATION OF EBITDA TO NET INCOME AND TO NET CASH
                              PROVIDED BY OPERATING ACTIVITIES
                                         (Unaudited)

                               Three Months  Three Months     Nine Months
                                  Ended         Ended            Ended
                                 June 30,    September 30,    September 30,
                                 --------    -------------    -------------
                                   2009      2009     2008    2009     2008
                                   ----      ----     ----    ----     ----
                                          (In thousands of dollars)

    EBITDA                       $68,391   $81,888  $78,204 $180,841 $223,624
    Less:
    Provision for income taxes    11,832    11,941   14,598   22,826   36,165
    Interest expense               8,795     8,772    8,093   26,163   25,908
    Depreciation and
     amortization                 30,913    31,409   28,149   91,310   81,527
                                  ------    ------   ------   ------   ------
    Net income                    16,851    29,766   27,364   40,542   80,024
    Changes in operating assets
     and liabilities              35,262    (8,407)  63,261  145,128   (6,534)
    Deferred income taxes        (19,064)   38,745   (5,992)  27,786    3,096
                                 -------   -------  ------- --------  -------
    Net cash provided by
     operating activities        $33,049   $60,104  $84,633 $213,456  $76,586
                                 =======   =======  ======= ========  =======



                            WESTLAKE CHEMICAL CORPORATION

                               SUPPLEMENTAL INFORMATION

           Product Sales Price and Volume Variance by Operating Segments

                   Third Quarter 2009 vs.  Third Quarter 2009 vs.
                    Third Quarter 2008      Second Quarter 2009
                    ------------------      -------------------
                    Average                   Average
                  Sales Price    Volume    Sales Price    Volume
                  -----------    ------    -----------    ------
    Olefins         -40.9%       +1.7%        +18.5%       -4.3%
    Vinyls          -41.3%       -3.8%         -2.4%       +4.1%
    Company         -41.0%       +0.0%        +11.7%       -1.6%



                    Average Quarterly Industry Prices (1)

                                              Quarter Ended
                                              -------------
                               September  December   March   June  September
                                  2008      2008     2009    2009     2009
                                  ----      ----     ----    ----     ----
    Ethane (cents/lb)             36.7      14.1     12.0    14.5     15.9
    Propane (cents/lb)            39.8      18.9     16.0    17.3     20.6
    Ethylene (cents/lb)(2)        68.0      39.2     31.5    31.5     32.3
    Polyethylene (cents/lb)(3)   103.7      71.3     65.0    68.0     72.3
    Styrene (cents/lb)(4)         85.7      55.6     40.4    46.2     56.5
    Caustic ($/ short ton)(5)    786.7     970.0    821.7   368.3    171.7
    Chlorine ($/ short ton)(6)   265.0     236.7    175.0   204.2    388.3
    PVC (cents/lb)(7)             64.0      51.0     45.7    48.5     54.5


    (1) Industry pricing data was obtained through the Chemical Market
        Associates, Inc., or CMAI. We have not independently verified the
        data.
    (2) Represents average North American contract prices of ethylene over the
        period as reported by CMAI.
    (3) Represents average North American contract prices of  polyethylene low
        density film over the period as reported by CMAI.
    (4) Represents average North American contract prices of styrene over the
        period as reported by CMAI.
    (5) Represents North American average acquisition prices of caustic soda
        over the period as reported by CMAI.
    (6) Represents average North American contract prices of chlorine (into
        chemicals) over the period as reported by CMAI.
    (7) Represents North American contract prices of PVC over the period as
        reported by CMAI. During 2008, CMAI made a 16 cent per pound downward,
        non-market related adjustment to PVC resin prices.

SOURCE Westlake Chemical Corporation

Investors, Steve Bender, or Media, David R. Hansen, both of Westlake Chemical Corporation, +1-713-960-9111