Westlake (NYSE:WLK) executives used the company’s fourth-quarter and full-year 2025 earnings call to outline a sweeping restructuring and “self-help” plan intended to improve profitability in 2026, while acknowledging continued pressure in global commodity markets. Management emphasized that results discussed on the call excluded $511 million of “identified items” recorded in the fourth quarter, largely tied to asset closures in its Performance and Essential Materials (PEM) segment.
Restructuring charges and footprint actions
In the fourth quarter, Westlake wrote off inventory and accrued expenses totaling $495 million tied to shutting one styrene facility and three chlorovinyl facilities in North America, along with an epoxy facility in Pernis, Netherlands, all within PEM. The company also recognized $16 million of accrued expenses related to Housing and Infrastructure Products (HIP) footprint optimization actions and the sale of a compounding business.
Fourth-quarter and full-year results
CFO Steve Bender reported that Westlake posted a GAAP net loss of $33 million, or a loss of $0.25 per share, on sales of $2.5 billion in the fourth quarter. For the full year, the company reported a net loss of $116 million and EBITDA of $1.1 billion, with sales of $11.2 billion, down 8% from 2024. Management attributed the full-year sales decline to a 5% drop in volume and a 3% decline in average sales price.
Gilson said fourth-quarter EBITDA was $196 million, net of the identified items, and framed the quarter as part of a broader 2025 trend: HIP held up relatively well, while PEM faced volume and pricing declines and margin compression due to global overcapacity in certain products.
Segment performance: HIP steadier, PEM pressured
HIP: Fourth-quarter HIP sales fell 8% year over year due to lower volume, with declines concentrated in PVC compounds and exterior building products that were most exposed to lower residential construction activity. That weakness was partially offset by continued solid volume in pipe and fittings. HIP’s EBITDA margin was 16% in the quarter, down from the prior year period due to unfavorable mix and higher costs.
For the full year, HIP delivered EBITDA of $839 million and an EBITDA margin of 20%, which management said was in line with guidance. Executives credited HIP’s resilience to its broad geographic footprint, deep product offering, and demand supported by municipal pipe and customer adoption of PVC-O pipe.
PEM: Fourth-quarter PEM EBITDA was $45 million, down $45 million sequentially. The company cited a 5% decline in average sales prices (driven primarily by polyethylene and PVC resin) and a 2% volume decline due to seasonal customer inventory destocking. Those headwinds were partially offset by a $27 million benefit from annuitizing certain pension obligations and other small one-time items.
PEM’s EBITDA margin fell to 3% in the fourth quarter from 5% in the third quarter, reflecting lower pricing, partly offset by a $26 million benefit from fewer planned turnarounds and unplanned outages versus the prior quarter. For the full year, PEM EBITDA was $267 million, pressured by higher feedstock and energy costs, elevated planned and unplanned outages, and lower global sales prices. Management reiterated that global overcapacity weighed heavily on polyethylene and the chlor-alkali/core vinyls chain.
Three-pillar plan targets $600 million in 2026 improvement
Management reiterated a “three-pillar strategy” announced in December that it expects will contribute $600 million of earnings improvement in 2026, broken into three $200 million components:
- Footprint optimization: Westlake expects $200 million of earnings improvement in 2026 from asset closures and footprint actions. Management said the company has now shuttered the assets included in the plan.
- Plant reliability: The company expects $200 million year-over-year EBITDA improvement from better reliability in 2026, supported by significant investment and training, and fewer planned turnarounds in 2026 versus 2024 and 2025.
- Structural cost reductions: After delivering more than $170 million of structural cost reductions in 2025 (including $60 million in the fourth quarter), Westlake expects an additional $200 million in 2026 from a company-wide program. Management said these savings are incremental and not solely tied to asset closures, spanning manufacturing, logistics, and procurement.
Executives noted the $600 million figure is a gross benefit and said there will be costs to achieve some of the initiatives.
Balance sheet, guidance, and key discussion points
Westlake ended 2025 with $2.9 billion in cash and securities and total debt of $5.6 billion, with a 16-year average debt maturity life. Fourth-quarter operating cash flow was $225 million and capital expenditures were $241 million. For the full year, the company returned $335 million to shareholders through dividends and share repurchases.
For 2026, management guided to:
- HIP revenue of $4.4 billion to $4.6 billion and EBITDA margin of 19% to 21%.
- Capital expenditures of about $900 million, a $100 million reduction year over year.
- Effective tax rate of approximately 17% and cash interest expense of about $215 million.
In Q&A, management described early 2026 signs of improvement, citing the January U.S. ISM reading of 53 and a 30-year mortgage rate around 6.2%, down from 7% a year earlier. Executives said they were “cautiously optimistic” about sales volume growth in both segments, while also emphasizing limited visibility beyond the next several months.
On PVC and chlorovinyls, Westlake said early pricing initiatives and customer restocking were supportive, though executives said they could not extrapolate trends too far into the year. Management also discussed export market dynamics, including China’s planned removal of a VAT/duty drawback effective April 1, saying export PVC prices had already begun to rise on expectations of the change.
Separately, Gilson noted Westlake disclosed in a recent 8-K that CFO Steve Bender plans to retire later in 2026 after a successor is appointed and a transition is completed.
About Westlake (NYSE:WLK)
Westlake Corp. is a global manufacturer of petrochemicals, polymers and building products, serving customers across industrial and residential markets. The company’s core operations encompass the production of vinyls—primarily polyvinyl chloride (PVC) and its key feedstock vinyl chloride monomer (VCM)—as well as chlor-alkali products including caustic soda and chlorine. In addition, Westlake produces ethylene, propylene and specialty elastomers, along with construction-related materials such as vinyl siding, trim, windows and roofing systems.
Operating a network of vertically integrated plants and distribution centers, Westlake serves markets in North America, Europe and Asia.
