NYSE:WLK
WESTLAKE CORP
A major global producer of advanced chemicals and plastics serving packaging, agriculture, and industrial sectors with integrated refining capabilities.
Key Metrics
Investment Thesis
Bull Case
Westlake offers an attractive turnaround opportunity for value investors given its dominant market position and low-cost production structure relative to global peers. As energy prices stabilize and demand recovers in packaging and agriculture sectors, the company's integrated model could rapidly re-accretive margins and return capital via dividends and buybacks. The massive installed capacity provides a long-term moat that allows the company to capture value if market cycles shift favorably.
Bear Case
The current negative net income of -$1.47B and shrinking revenue trend indicate severe distress, making any recovery timeline uncertain and capital-intensive. With a retained earnings deficit of $8.70B and significant debt obligations including $5.09B in long-term debt, the company faces substantial refinancing risks if credit conditions tighten. Investors should avoid the stock until consistent profitability is restored and free cash flow generation proves sustainable without heavy reliance on non-cash adjustments.
About WESTLAKE CORP
Westlake Corp is a leading global manufacturer of advanced chemicals and plastics, primarily serving industries such as packaging, agriculture, construction, and automotive. Headquartered in the United States with operations across North America, Europe, and Asia, the company produces polyolefins, elastomers, and specialty additives. The business leverages extensive refining capabilities to convert crude oil into high-performance materials for diverse end markets.
Analysis
Management Discussion
Recent financial performance highlights a significant contraction in revenue from $15.79B in 2022 down to $11.17B in 2025, accompanied by a sharp decline in profitability as net income turned negative at -$1.47B. The company recorded a substantial cash outflow for investing activities of -$1.22B, largely driven by capital expenditures of $995M and other investing outflows, while operations generated only $465M in cash flow despite a large non-cash add-back of $1.72B.
Industry Overview
The global plastics industry is cyclical and heavily influenced by energy costs, with competition intensifying as new capacity comes online in Asia and Europe. Companies must balance growth initiatives against environmental sustainability demands to maintain access to major retailers and industrial customers. Industry leaders are consolidating to achieve scale, favoring integrated producers who can hedge feedstock risks and optimize global logistics networks.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $15.79B | $12.55B | $12.14B | $11.17B |
| Cost of Revenue | $11.72B | $10.33B | $10.19B | $10.36B |
| Gross Profit | $4.07B | $2.22B | $1.96B | $813.0M |
| Operating Expenses | $1.02B | $1.49B | $1.08B | $2.39B |
| Operating Income | $3.05B | $729.0M | $875.0M | $-1.58B |
| G&A | $835.0M | $865.0M | $874.0M | $900.0M |
| Stock-Based Comp | $36.0M | $43.0M | $41.0M | $41.0M |
| D&A | $1.06B | $1.10B | $1.11B | $1.18B |
| Depreciation | $762.0M | $763.0M | $759.0M | $797.0M |
| Amortization | $155.0M | $122.0M | $117.0M | $124.0M |
| Other OpEx | $188.0M | $625.0M | $208.0M | $1.49B |
| Non-Operating Income | $-104.0M | $-29.0M | $63.0M | $-19.0M |
| Interest Expense | $177.0M | $165.0M | — | — |
| Interest Income | $24.0M | $104.0M | $153.0M | $100.0M |
| Pre-Tax Income | $2.95B | $700.0M | $938.0M | $-1.60B |
| Income Tax | $649.0M | $178.0M | $291.0M | $-126.0M |
| Continuing Ops | $2.30B | $522.0M | $647.0M | $-1.47B |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $2.30B | $522.0M | $647.0M | $-1.47B |
| Minority Interest | $50.0M | $43.0M | $45.0M | $37.0M |
| Net to Common | $2.25B | $479.0M | $602.0M | $-1.51B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $5.97B | $6.61B | $6.21B | $6.22B |
| Cash & Equivalents | $2.23B | $3.30B | $2.92B | $2.72B |
| Accounts Receivable | $1.65B | $1.39B | $1.31B | $1.23B |
| Inventory | $1.87B | $1.62B | $1.70B | $1.65B |
| Prepaid Expenses | $78.0M | $82.0M | $115.0M | $131.0M |
| Other Current Assets | $150.0M | $208.0M | $168.0M | $479.0M |
| Long-Term Assets | $14.58B | $14.43B | $14.54B | $13.74B |
| PP&E (Net) | $8.53B | $8.52B | $8.63B | $8.61B |
| Goodwill | $2.16B | $2.04B | $2.03B | $1.31B |
| Operating Leases | $615.0M | $697.0M | $801.0M | $798.0M |
| Other LT Assets | $2.13B | $2.05B | $1.99B | $1.97B |
| Total Assets | $20.55B | $21.04B | $20.75B | $19.96B |
| Current Liabilities | $2.30B | $2.79B | $2.22B | $2.77B |
| Accounts Payable | $889.0M | $877.0M | $851.0M | $783.0M |
| Current Debt | $0 | $299.0M | $6.0M | $497.0M |
| Current Leases | $116.0M | $124.0M | $128.0M | $138.0M |
| Other Current Liab | $-116.0M | $-124.0M | $-128.0M | $-138.0M |
| Long-Term Liabilities | $7.79B | $7.48B | $7.49B | $7.90B |
| Long-Term Debt | $4.88B | $4.61B | $4.56B | $5.09B |
| LT Operating Leases | $504.0M | $611.0M | $713.0M | $688.0M |
| Other LT Liab | $2.40B | $2.26B | $2.22B | $2.12B |
| Total Liabilities | $10.09B | $10.27B | $9.71B | $10.67B |
| Shareholders' Equity | $10.46B | $10.76B | $11.04B | $9.29B |
| Retained Earnings | $9.88B | $10.14B | $10.48B | $8.70B |
| AOCI | $-89.0M | $-98.0M | $-144.0M | $-80.0M |
| Treasury Stock | $467.0M | $435.0M | $467.0M | $513.0M |
| Total L&E | $20.55B | $21.04B | $20.75B | $19.96B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $2.30B | $522.0M | $647.0M | $-1.47B |
| Non-Cash Adjustments | $1.10B | $1.88B | $699.0M | $1.72B |
| Working Capital Changes | $-3.0M | $-63.0M | $-32.0M | $218.0M |
| Cash from Operations | $3.40B | $2.34B | $1.31B | $465.0M |
| Capital Expenditures | $1.11B | $1.03B | $1.01B | $995.0M |
| Cash from Investing | $-2.48B | $-1.04B | $-1.00B | $-1.22B |
| Debt Repayments | $250.0M | $0 | $300.0M | $254.0M |
| Share Buybacks | $101.0M | $23.0M | $60.0M | $63.0M |
| Dividends Paid | $169.0M | $221.0M | $264.0M | $272.0M |
| Cash from Financing | $-587.0M | $-245.0M | $-650.0M | $530.0M |
| FX Effect | $-24.0M | $19.0M | $-47.0M | $33.0M |
| Net Change in Cash | $305.0M | $1.07B | $-384.0M | $-195.0M |
| Beginning Cash | $1.94B | $2.25B | $3.32B | $2.94B |
| Ending Cash | $2.25B | $3.32B | $2.94B | $2.74B |
Frequently Asked Questions
How does WESTLAKE CORP make money?
The company operates primarily through polyolefins, which include commodity resins like polyethylene and polypropylene used in packaging and films. A second segment covers elastomers and specialty additives that provide performance enhancements for automotive, construction, and consumer goods applications. Additional revenue streams may include chemical intermediates and products derived from its integrated refining operations.
What are the main risks for WLK?
The business is highly sensitive to crude oil and natural gas price volatility, which directly impacts feedstock costs and margin compression. Global overcapacity in the plastics sector poses a threat to pricing power and could lead to prolonged periods of low profitability. Geopolitical tensions and trade restrictions may disrupt supply chains or limit access to key markets in Europe and Asia. Environmental regulations regarding plastic waste and carbon emissions present increasing compliance costs and reputational risks.
What is WLK's competitive advantage?
Westlake possesses a massive integrated asset base with two of the world's largest polyethylene plants, providing significant cost advantages through vertical integration. Its global footprint allows for optimized logistics and market access across North America, Europe, and Asia, shielding it from some regional supply shocks. The company benefits from a diverse customer base spanning multiple end-use industries, which helps stabilize cash flows during economic cycles.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.