third quarter 2026
Filed Nov 4, 2026Westlake reported third-quarter 2026 net sales of $2,981 million, net income attributable to Westlake Corporation of $6 million, and EBITDA excluding Identified Items of $408 million amid lower sequential PEM pricing, weaker HIP volumes, and elevated European energy costs.
Year-over-year PEM pricing, profitability-plan benefits and the ACI acquisition improved adjusted profitability from the prior-year period, but sequential sales, EBITDA and segment earnings declined materially as PEM prices moderated and HIP volumes weakened. The company generated $220 million of free cash flow and retained $2.0 billion of cash and investments, while announcing further European chlorovinyls footprint optimization.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net sales, three months ended September 30, 2026GAAP | $2.98B | – | – |
| Cost of sales, three months ended September 30, 2026GAAP | $2.60B | – | – |
| Gross profit, three months ended September 30, 2026GAAP | $382M | – | – |
| Selling, general and administrative expenses, three months ended September 30, 2026GAAP | $250M | – | – |
| Restructuring, transaction and integration-related costs, three months ended September 30, 2026GAAP | $58M | – | – |
| Income (loss) from operations, three months ended September 30, 2026GAAP | $43M | – | – |
| Income (loss) from operations excluding Identified Items, three months ended September 30, 2026non-GAAP | $101M | – | – |
| Operating income (loss) margin, three months ended September 30, 2026GAAP | 1% | – | – |
| Operating income (loss) margin excluding Identified Items, three months ended September 30, 2026non-GAAP | 3% | – | – |
| Net income attributable to Westlake Corporation, three months ended September 30, 2026GAAP | $6M | – | – |
| Net income attributable to Westlake Corporation excluding Identified Items, three months ended September 30, 2026non-GAAP | $58M | – | – |
| Diluted earnings (loss) per common share attributable to Westlake Corporation, three months ended September 30, 2026GAAP | $0.05 | – | – |
| Diluted earnings (loss) per common share attributable to Westlake Corporation excluding Identified Items, three months ended September 30, 2026non-GAAP | $0.45 | – | – |
| EBITDA, three months ended September 30, 2026non-GAAP | $350M | – | – |
| EBITDA excluding Identified Items, three months ended September 30, 2026non-GAAP | $408M | decreased by $271 million | increased by 30% |
| EBITDA margin, three months ended September 30, 2026non-GAAP | 12% | – | – |
| EBITDA margin excluding Identified Items, three months ended September 30, 2026non-GAAP | 14% | – | increased from 11% to 14% |
| Identified Items, three months ended September 30, 2026other | $58M | – | – |
| Net sales, nine months ended September 30, 2026GAAP | $8.90B | – | – |
| Gross profit, nine months ended September 30, 2026GAAP | $1.15B | – | – |
| Income (loss) from operations, nine months ended September 30, 2026GAAP | $235M | – | – |
| Net income (loss) attributable to Westlake Corporation, nine months ended September 30, 2026GAAP | $97M | – | – |
| Diluted earnings (loss) per common share attributable to Westlake Corporation, nine months ended September 30, 2026GAAP | $0.75 | – | – |
| EBITDA excluding Identified Items, nine months ended September 30, 2026non-GAAP | $1.32B | – | – |
| Free cash flow, three months ended September 30, 2026non-GAAP | $220M | – | – |
| Free cash flow, nine months ended September 30, 2026non-GAAP | $28M | – | – |
| Net cash provided by operating activities, three months ended September 30, 2026GAAP | $408M | – | – |
| Capital expenditures, three months ended September 30, 2026GAAP | $188M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Housing and Infrastructure ProductsA 6% decline in comparable sales volume was offset by a 1% increase in average sales price and 5% contribution from the ACI acquisition. | $1.09B | – | relatively unchanged |
| Housing ProductsLower sales volume, particularly for roofing and siding & trim. | $846M | – | decreased by $82 million |
| Infrastructure ProductsThe January 2026 acquisition of ACI. | $241M | – | increased by $78 million |
| Performance and Essential MaterialsA 9% increase in average sales price and a 4% increase in comparable sales volume were partially offset by a 5% net reduction to sales from plant closures partially offset by the Wilhelmshaven acquisition. | $1.89B | – | increased 8% |
| Performance MaterialsHigher average sales price for polyethylene and PVC resin. | $1.18B | – | increased by $166 million |
| Essential MaterialsLower caustic soda sales volume partially due to plant shutdowns. | $718M | – | decreased by $19 million |
2026 outlook
- Note$600 million of EBITDA uplift in 2026
Capital returns
- Dividends paid of $205 million for the nine months ended September 30, 2026.
- Repurchase of common stock for treasury of $30 million for the nine months ended September 30, 2026.
- The company stated that its dividend has grown for 22 consecutive years since its IPO in 2004.
What drove it
- Company average sales price increased 6% year over year while comparable sales volume was unchanged, excluding the effects of acquisitions and plant closures.
- PEM benefited from a 9% increase in average sales price and a 4% increase in comparable sales volume, excluding plant closures and acquisitions.
- EBITDA margin excluding Identified Items increased from 11% to 14%, primarily due to higher PEM average sales price and benefits from the three-pillar profitability improvement plan that more than offset higher costs.
- The ACI acquisition contributed 5% to reported HIP sales.
- Performance Materials sales increased primarily due to higher average sales prices for polyethylene and PVC resin.
Concerns
- Company average sales price declined 4% sequentially and comparable sales volume declined 7% sequentially, excluding the effect of the Wilhelmshaven acquisition.
- PEM average sales price declined 8% sequentially as second-quarter price increases following the onset of the Middle East conflict moderated.
- HIP's 17% sequential sales volume decline reflected volume shifts between quarters and slowing residential construction activity.
- HIP margins were impacted by higher distribution costs, including higher diesel and freight costs.
- European chemical-industry conditions deteriorated due to significantly higher energy costs, weak demand and increasing imports.
- Higher borrowing costs have increased potential homebuyers' affordability concerns, which the company expects to weigh on HIP near-term sales volumes.
- Essential Materials sales declined primarily because of lower caustic soda sales volume, partially due to plant shutdowns.
What to watch
- Whether PEM selling prices continue their stated upward momentum entering the fourth quarter of 2026.
- Execution of the announced closure of the PVC plant in Cologne, Germany and the integration of North American chlorovinyls assets with the Wilhelmshaven facility.
- The three-pillar profitability improvement plan, which the company stated remains on track to deliver $600 million of EBITDA uplift in 2026.
- HIP sales volumes amid residential construction activity, customer inventory destocking and homebuyer affordability concerns.
- European energy costs, demand conditions and import pressure from Asia.
Balance sheet and cash flow
- Net cash provided by operating activities was $408 million for the third quarter of 2026.
- Capital expenditures were $188 million for the third quarter of 2026.
- Free cash flow was $220 million for the third quarter of 2026.
- Cash, cash equivalents and fixed-income investments were $2.0 billion as of September 30, 2026.
- Total debt was $5.1 billion as of September 30, 2026.
- Cash and cash equivalents were $1,764 million as of September 30, 2026, compared with $2,724 million as of December 31, 2025.
- Available-for-sale securities were $207 million as of September 30, 2026, compared with $204 million as of December 31, 2025.
- Long-term debt, net was $5,064 million as of September 30, 2026, compared with $5,087 million as of December 31, 2025.
- Net cash provided by operating activities was $619 million for the nine months ended September 30, 2026, compared with $240 million for the nine months ended September 30, 2025.
- Additions to property, plant and equipment were $591 million for the nine months ended September 30, 2026, compared with $754 million for the nine months ended September 30, 2025.
- Acquisitions of businesses, net of cash acquired were $171 million for the nine months ended September 30, 2026.
- Repayment of senior notes was $496 million for the nine months ended September 30, 2026.
Analysis
Westlake's third-quarter results showed a substantial improvement from the impairment-affected prior-year period but a marked sequential slowdown. Net sales were $2,981 million, compared with $2,838 million in the third quarter of 2025 and $3,271 million in the second quarter of 2026. GAAP net income attributable to Westlake Corporation was $6 million, while net income attributable to Westlake Corporation excluding Identified Items was $58 million. EBITDA excluding Identified Items rose 30% year over year to $408 million but declined by $271 million from the second quarter of 2026.
The year-over-year improvement was concentrated in PEM pricing and profitability-plan benefits. PEM sales increased 8%, with a 9% increase in average sales price and a 4% increase in comparable sales volume excluding plant closures and acquisitions. PEM EBITDA margin excluding Identified Items improved to 11% from 5%. HIP sales were relatively unchanged, as the contribution from ACI offset a 6% decline in comparable sales volume, while HIP EBITDA margin excluding Identified Items declined to 18% from 20% amid higher distribution costs.
Sequential trends were weaker in both businesses. PEM's average sales price declined 8% sequentially as price increases tied to the onset of the Middle East conflict moderated. HIP comparable sales volume declined 17% sequentially, reflecting demand shifting into the second quarter and slowing residential construction activity. The resulting pressure was evident in HIP income from operations of $128 million versus $212 million in the second quarter, and in PEM's reported loss from operations of $64 million versus income from operations of $185 million in the second quarter.
Cash generation improved during the quarter, with $408 million of operating cash flow, $188 million of capital expenditures and $220 million of free cash flow. Westlake reported $2.0 billion of cash, cash equivalents and fixed-income investments and $5.1 billion of total debt as of September 30, 2026. For the nine months, it paid $205 million of dividends, repurchased $30 million of common stock and repaid $496 million of senior notes.
Management did not provide numerical revenue, margin, expense or tax-rate guidance. Its stated forward target is that the three-pillar profitability improvement plan remains on track to deliver $600 million of EBITDA uplift in 2026. The company also highlighted PEM pricing stabilization with upward momentum entering the fourth quarter, while identifying persistent price volatility, European energy costs, weak European demand, import pressure and near-term HIP volume pressure as central operating risks.
Management, verbatim
Despite these headwinds, Westlake generated $220 million of free cash flow during the quarter, in part due to the benefits from our three-pillar profitability improvement plan, which remains on track to deliver $600 million of EBITDA uplift in 2026.
Jean-Marc Gilson, President and Chief Executive Officer
While PEM selling prices have stabilized with upward momentum entering the fourth quarter of 2026, we recognize that an environment of heightened price volatility persists, which requires us to stay vigilant in identifying and executing cost reduction and footprint optimization actions.
Jean-Marc Gilson, President and Chief Executive Officer
Our investment-grade rated balance sheet, with $2.0 billion of cash and investments at the end of the third quarter continues to be a differentiated source of strength for Westlake that supports our ability to continue to invest in attractive markets, such as our recent roofing acquisition and the acquisitions of both ACI and Wilhelmshaven earlier in 2026, while continuing to return cash to shareholders through a solid dividend that has grown for 22 consecutive years since our IPO in 2004.
Jon Baksht, Senior Vice President and Chief Financial Officer
Not in the filing
stated, not guessed- Quantitative revenue guidance
- Quantitative gross-margin guidance
- Quantitative operating-expense guidance
- Quantitative tax-rate guidance
- Prior-outlook section for comparison with reported results
- Reported GAAP gross margin for the third quarter of 2026
- Reported third-quarter 2026 dividend amount
- Reported third-quarter 2026 common-stock repurchase amount
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.