Westlake Q3 2026 Adjusted EBITDA Rises 30% Year Over Year

Westlake Corporation (NYSE: WLK) reported stronger year-over-year third-quarter earnings and free cash flow as benefits from its profitability program helped counter pressure from weaker building-products demand and difficult European chemical-market conditions. Results fell sharply from the second quarter, however, reflecting lower Performance and Essential Materials pricing, reduced Housing and Infrastructure Products volumes, and higher distribution and European energy costs.

Net sales for the quarter ended September 30, 2026, rose 5% year over year to $2.98 billion but declined 9% from the second quarter. EBITDA excluding identified items increased 30% from a year earlier to $408 million, while the corresponding margin expanded to 14% from 11%. Sequentially, EBITDA fell 40% from $679 million and the margin contracted from 21%.

The company attributed about $200 million of year-over-year quarterly EBITDA benefit to its three-pillar profitability improvement plan, moving it toward a targeted $600 million uplift for full-year 2026. Westlake expects most of the annual benefit to accrue to its Performance and Essential Materials segment.

GAAP income from operations was $43 million, compared with a $766 million loss in the prior-year quarter and income of $364 million in the second quarter. Excluding $58 million of identified items, operating income was $101 million. Net income attributable to Westlake was $6 million, or $0.05 per diluted share. Excluding identified items, attributable net income was $58 million, or $0.45 per diluted share.

Cash generation improved during the quarter. Operating cash flow reached $408 million, and free cash flow was $220 million after $188 million of capital spending. Free cash flow was $111 million in the second quarter and negative $57 million a year earlier. The company said cost-saving measures, including lower capital expenditures, contributed to the increase. Westlake ended the period with $2.0 billion of cash, equivalents and investments.

Housing demand weighs on HIP volumes

Housing and Infrastructure Products revenue was essentially unchanged year over year at $1.09 billion but declined 13% sequentially. Average selling prices rose 1% from a year earlier and 4% from the second quarter, while volumes fell 6% and 17%, respectively, excluding the impact of the ACI acquisition.

The volume decline reflected certain Pipe & Fittings orders shifting into the second quarter, as well as an industry-wide slowdown in building-products demand. Westlake said higher borrowing costs have intensified affordability concerns among prospective homebuyers. Housing Products sales fell 9% year over year to $846 million, while Infrastructure Products sales increased 48% to $241 million. Year-to-date Pipe & Fittings volumes grew 8%, supported by U.S. infrastructure spending, including data-center investment.

HIP EBITDA declined 9% year over year to $195 million, and its margin narrowed to 18% from 20%. The modest increase in average selling prices was insufficient to fully offset cost inflation, including higher diesel and freight expenses. For the fourth quarter, management expects HIP revenue of $900 million to $1.0 billion and an EBITDA margin of about 13%.

PEM improves year over year but weakens sequentially

Performance and Essential Materials sales increased 8% year over year to $1.89 billion, supported by a 9% rise in average selling prices and 4% volume growth, excluding plant closures and the Wilhelmshaven acquisition. Compared with the second quarter, sales declined 6% as average prices fell 8% and volumes were unchanged.

PEM EBITDA excluding identified items more than doubled year over year to $215 million from $90 million, lifting the margin to 11% from 5%. Sequentially, EBITDA dropped 48% from $416 million as polyethylene pricing moderated from increases recorded around the onset of the Middle East conflict. European results were also affected by weak demand, increased imports, higher energy costs and expenses associated with integrating Wilhelmshaven.

Westlake said polyethylene and export PVC resin prices began improving late in the third quarter and at the start of the fourth quarter as the global cost curve steepened. Management indicated that better pricing could partially offset seasonally lower volumes and rising input costs in the fourth quarter. Higher European energy costs are nevertheless expected to continue affecting earnings.

In response to structural pressure on Europe’s PVC industry, Westlake announced the closure of its higher-cost Cologne PVC plant. The company is also supplying its Wilhelmshaven vinyls site with lower-cost feedstocks as part of an effort to improve the profitability of its European chlorovinyls operations.

The outlook remains exposed to cyclical chemical and building-products demand, volatile energy and raw-material costs, global trade disruptions, import and pricing pressure, and geopolitical uncertainty. Westlake also identified operating interruptions, regulatory changes, industry capacity and foreign-exchange movements among the factors that could cause actual results to differ from management’s expectations.