Westlake Corporation

Company Overview

Business Model: Westlake Corporation is a vertically integrated global manufacturer and marketer of housing and infrastructure products and performance and essential materials. The Company's products are fundamental to diverse consumer and industrial markets, including residential construction, packaging, automotive, healthcare, water treatment, wind turbines, and coatings. Operations are structured into two principal segments: Housing and Infrastructure Products (HIP) and Performance and Essential Materials (PEM). Westlake Corporation is highly integrated, with significant downstream integration from ethylene and chlor-alkali (chlorine and caustic soda) into vinyls, polyethylene, and epoxy, and further downstream from polyvinyl chloride (PVC) into its HIP segment for residential building products, PVC pipe and fittings, and PVC compounds. The Company manages its integrated vinyls production chain to optimize product margins and capacity utilization.

Market Position: Westlake Corporation is one of the largest producers of chlor-alkali and PVC globally, establishing it as a leading global chlorovinyls producer. The Company is also a leading supplier of liquid and solid epoxy resins for industrial coating applications and one of the leading producers of epoxy specialty resins, modifiers, and curing agents across Europe, the United States, and Asia. In North America, Westlake Corporation is a leading producer of Low-Density Polyethylene (LDPE) by capacity, utilizing autoclave technology for higher-margin specialty products. Within its HIP segment, the Company's siding business is a leader in non-wood shutters and siding accessories, and it holds a leading position in the masonry stone veneer category.

Recent Strategic Developments:

• Acquisitions: In January 2026, Westlake Corporation acquired the global compounding solutions businesses of the ACI/Perplastic Group (ACI), a Portugal-based manufacturer of specialty compound materials for the wire and cable sectors, for a preliminary purchase price of approximately €92.4 million. This follows the 2022 acquisition of the global epoxy business of Hexion Inc. (Westlake Epoxy) for approximately $1.2 billion and the 2021 acquisition of Boral Limited's North American building products businesses for approximately $2.1 billion.
• Capacity Expansion: In 2025, Westlake Corporation completed the expansion of chlorine, caustic soda, and VCM production capacities at its Geismar, Louisiana site.
• Asset Optimization & Closures:
  • In December 2025, under an asset optimization initiative, Westlake Corporation ceased operations of certain North American chlorovinyl production assets, including its PVC plant at the Aberdeen, Mississippi site, its VCM plant at the Lake Charles, Louisiana North site, and one diaphragm chlor-alkali unit at the Lake Charles, Louisiana South site. Additionally, its styrene production plant at the Lake Charles, Louisiana site was closed. Total costs recognized in 2025 for these closures were $393 million, including a non-cash charge of $317 million for accelerated depreciation, amortization, and asset write-offs.
  • In June 2025, due to sustained deterioration in sales volumes and prices, Westlake Corporation permanently ceased all remaining operations at its Pernis, Netherlands facility (allyl chloride, epichlorohydrin, bisphenol A, liquid epoxy resin, and solid epoxy resin units). Total costs recognized in 2025 for this closure were $247 million.
  • In October 2025, the 95%-owned joint venture, Suzhou Huasu Plastics, shut down its PVC resin unit in China due to lack of long-term economic viability, incurring $9 million in expenses.
• Goodwill Impairment: In the third quarter of 2025, Westlake Corporation recognized a non-cash goodwill impairment charge of $727 million, representing all goodwill associated with the North American Chlorovinyls reporting unit, driven by operating losses, revised forecasts, and negative industry trends.
• Financing Activities: In November 2025, Westlake Corporation completed a registered public offering of $600 million aggregate principal amount of 5.550% senior notes due 2035 and $600 million aggregate principal amount of 6.375% senior notes due 2055. A portion of the proceeds was used to repurchase $254 million aggregate principal amount of outstanding 3.60% 2026 Senior Notes via a concurrent tender offer.
• Tax Reform Impact: The One Big Beautiful Bill Act (OBBBA), signed in July 2025, permanently reinstated 100% bonus depreciation and immediate expensing of domestic R&D, and relaxed business interest deductibility limits, expected to reduce cash tax without materially impacting the effective income tax rate. Louisiana tax reform bills, effective January 2025 and 2026, reduced the corporate state income tax rate and repealed the state franchise tax, leading to a $45 million one-time charge in Q4 2024 for deferred tax asset/liability revaluation.
• Trade Remedies: In May 2025, the U.S. Department of Commerce imposed antidumping and countervailing duty orders on epoxy resins from South Korea and Taiwan, and an antidumping order on epoxy resins from Thailand. The European Commission imposed definitive duties on epoxy resins from China, Taiwan, and Thailand in July 2025.

Geographic Footprint: Westlake Corporation operates manufacturing facilities across North America, Europe, and Asia. Its HIP segment has 53 manufacturing facilities primarily in North America and 11 compounds manufacturing facilities across North America, Europe, and Asia. The PEM segment's primary North American facilities are in Kentucky, Louisiana, Texas, Florida, Illinois, West Virginia, Washington, and Quebec, Canada. European facilities are primarily in Germany, with additional sites in Spain. Asian manufacturing facilities are located near Shanghai, China, and in Kaohsiung, Taiwan, through joint ventures, and in South Korea. As of December 31, 2025, approximately 68% of the Company's 14,600 employees were based in the United States.

Financial Performance

Revenue Analysis

Profitability Metrics (2025):

• Gross Margin: 7.3%
• Operating Margin: -14.1%
• Net Margin: -13.2%

Investment in Growth:

• Capital Expenditures: $995 million
• Strategic Investments: The acquisition of ACI/Perplastic Group for approximately €92.4 million (January 2026) and the expansion of chlorine, caustic soda, and VCM production capacities at the Geismar, Louisiana site in 2025.

Business Segment Analysis

Housing and Infrastructure Products

Financial Performance (2025 vs 2024):

• Revenue: $4,148 million (-3.9% YoY)
• Operating Income: $587 million (-27.3% YoY)
• Key Growth Drivers: The segment experienced a 1% decrease in average sales prices, primarily due to lower pipe and fittings prices, partially offset by higher compounds prices. Sales volumes decreased by 3%, mainly from lower compounds and building products volumes, partially offset by higher pipe and fittings volumes. Restructuring costs of $16 million were incurred. Demand is influenced by new home construction and home repair/remodeling activity, with expected improvement in North American housing demand due to stabilizing and potentially lower interest rates.

Product Portfolio: Major product lines include residential PVC siding, PVC trim and mouldings, architectural stone veneer, windows, PVC decking, polymer composite and cement roof tiles, PVC pipe and fittings for various applications (water, sewer, electrical, industrial), and compounds for housing, medical, and automotive products. The segment also produces consumer and commercial products such as landscape edging, matting, marine dock edging, and masonry joint controls. Key brands include Royal Siding, Celect Cellular Composite Siding, TruExterior Siding & Trim, Cultured Stone, Eldorado Stone, DaVinci Roofscapes, and Westlake Pipe & Fittings.

Market Dynamics: The HIP segment operates in highly competitive markets where competition is based on product quality, innovation, technical support, customer service, product consistency, availability of substitute materials, on-time delivery, and price.

Sub-segment Breakdown (2025):

• Housing Products: $3,513 million revenue
• Infrastructure Products: $635 million revenue

Performance and Essential Materials

Financial Performance (2025 vs 2024):

• Revenue: $7,022 million (-10.3% YoY)
• Operating Loss: $(2,100) million (vs. $129 million operating income in 2024)
• Key Growth Drivers: The segment experienced a 4% decrease in average sales prices and a 6% decrease in sales volumes, primarily driven by lower PVC resin, epoxy resin, polyethylene, caustic soda, and chlorine sales. Lower sales prices for Performance Materials were mainly due to PVC resin and polyethylene, while Essential Materials saw lower chlorine sales prices. Operating results were negatively impacted by higher natural gas and feedstock costs, planned turnaround activities (e.g., Petro 1 ethylene facility), a $727 million goodwill impairment charge, and $640 million in restructuring, transaction, and integration-related costs (including $393 million for North American chlorovinyls/styrene plant closures, $247 million for Pernis facility closure, and $9 million for Suzhou Huasu Plastics PVC unit closure).

Product Portfolio: Principal products include ethylene, polyethylene (LDPE, LLDPE), chlor-alkali (chlorine and caustic soda), chlorinated derivative products (e.g., ethyl chloride, perchloroethylene, hydrochloric acid), ethylene dichloride (EDC), vinyl chloride monomer (VCM), and PVC (commodity and specialty). The segment also produces epoxy products, including Epoxy Specialty Resins and Base Epoxy Resins and Intermediaries (BERI).

Market Dynamics: The PEM segment operates in highly competitive global commodity markets where competition is primarily price-based. Market conditions are cyclical, influenced by global supply and demand balances, operating rates, general economic activity, turnaround activities, and raw material prices. The segment faces challenges from increased supply, weaker demand, geopolitical conflicts, slow economic growth in China and Europe, increased epoxy resin exports from Asia, and trade disruptions from duties and tariffs.

Sub-segment Breakdown (2025):

• Performance Materials: $4,018 million revenue
• Essential Materials: $3,004 million revenue

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $63 million (725,652 shares) in 2025 under the 2014 Program. As of December 31, 2025, a total of 9,928,283 shares had been repurchased for approximately $697 million under the program, with $353.3 million remaining authorization.
• Dividend Payments: $272 million in 2025.

Balance Sheet Position (as of December 31, 2025):

• Cash and Equivalents: $2,724 million
• Total Debt: $5,584 million (carrying value)
• Net Cash Position: $(2,860) million (Net Debt)
• Debt Maturity Profile: Aggregate scheduled maturities of long-term debt include $497 million in 2026, $11 million in 2027, $822 million in 2029, and $300 million in 2030. No other scheduled maturities exist between 2026 and 2030. The weighted average interest rate on all long-term debt was 3.9%.

Cash Flow Generation (2025 vs 2024):

• Operating Cash Flow: $465 million (2025) vs $1,314 million (2024), a decrease of $849 million. This was mainly due to lower prices and demand for most products and cash used in connection with turnaround activities, partially offset by a favorable change in working capital.
• Free Cash Flow: $(530) million (2025) vs $306 million (2024).

Operational Excellence

Production & Service Model: Westlake Corporation operates as a vertically integrated global manufacturer, leveraging significant downstream integration from ethylene and chlor-alkali into vinyls, polyethylene, and epoxy, and further into residential building products, PVC pipe and fittings, and PVC compounds. The Company manages its integrated vinyls production chain to optimize product margins and capacity utilization. Ethylene is produced through OpCo and LACC, LLC, with 95% of OpCo's ethylene sold to Westlake Corporation on a cost-plus basis and LACC's ethylene received on a cash-cost basis.

Supply Chain Architecture: Key Feedstocks: Ethane, natural gas, ethylene, salt, butene, hexene, electricity, steam, VCM, chlorine, caustic soda, phenol, and acetone. Feedstock Sourcing: Ethane for Lake Charles ethylene plants is supplied via pipelines from Texas and Louisiana. Westlake Corporation owns a 50% interest in a 104-mile natural gas liquids pipeline to its Lake Charles facility, and OpCo owns a 200-mile ethylene pipeline to the Longview, Texas site. Salt for several larger chlor-alkali plants is supplied internally from owned or leased salt domes. Electricity and steam for some facilities are generated by on-site cogeneration units, while other electricity needs are met through long-term contracts.

Key Suppliers & Partners:

• Ethylene Production: Westlake Chemical Partners LP (OpCo) and LACC, LLC (joint venture with Lotte Chemical USA Corporation).
• Utilities & Services: Cypress Interstate Pipeline L.L.C. (50% equity interest), YNCORIS GmbH & Co. KG (20% equity interest), and InfraServ Gendorf GmbH & Co. KG (20% equity interest) provide pipeline, electricity, technical, and leasing services.

Facility Network:

• Manufacturing: The HIP segment operates 53 manufacturing facilities primarily in North America and 11 compounds manufacturing facilities across North America, Europe, and Asia. The PEM segment has numerous manufacturing sites in North America (Kentucky, Louisiana, Texas, Florida, Illinois, West Virginia, Washington, Quebec, Canada), Europe (Germany, Spain), and Asia (South Korea, China, Taiwan).
• Research & Development: Facilities are located in the United States, Germany, and China.
• Distribution: In North America, the Company operates 39 leased and 8 owned distribution centers, storage facilities, and warehouses for its HIP products.

Operational Metrics (Annual Production Capacity as of February 18, 2026):

• Ethylene: 4,820 million pounds
• Chlorine: 6,670 million pounds
• Caustic Soda: 7,510 million pounds
• VCM: 7,630 million pounds
• Specialty PVC: 980 million pounds
• Commodity PVC: 5,520 million pounds
• Low-Density Polyethylene (LDPE): 1,500 million pounds
• Linear Low-Density Polyethylene (LLDPE): 1,070 million pounds
• Chlorinated Derivative Materials: 2,280 million pounds
• Epoxy Specialty Resins: 580 million pounds
• Base Epoxy Resins and Intermediaries (BERI): 610 million pounds

Market Access & Customer Relationships

Go-to-Market Strategy: Westlake Corporation employs a dedicated internal sales force, organized by product line and region, to sell products directly to customers. For smaller customers, particularly in the PEM segment, the Company utilizes distributors. In the HIP segment, external manufacturer's representatives also contribute to sales.

Customer Portfolio: The Company serves a diverse customer base, ranging from large chemical processors and plastics fabricators to small construction contractors, municipalities, and supply warehouses. Notably, polyethylene customers include some of the nation's largest producers of film and flexible packaging. No single customer accounted for 10% or more of net sales for either the HIP or PEM segments in 2025.

Geographic Revenue Distribution (2025):

• United States: 73.7% of total revenue ($8,228 million)
• Canada: 6.9% of total revenue ($777 million)
• Germany: 5.2% of total revenue ($583 million)
• Mexico: 1.7% of total revenue ($194 million)
• China: 1.4% of total revenue ($162 million)
• Brazil: 1.4% of total revenue ($153 million)
• Italy: 1.3% of total revenue ($144 million)
• France: 1.1% of total revenue ($125 million)
• Other: 9.6% of total revenue ($1,078 million)

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: Westlake Corporation operates in the petrochemical and building products industries, which are characterized by their mature, capital-intensive, cyclical, and volatile nature. Margins are highly sensitive to global supply and demand balances. Chlor-alkali and petrochemicals are typically high-volume commodities produced globally using widely available technologies. Epoxy resins are critical components in industries such as automotive, construction, wind energy, aerospace, and electronics due to their superior adhesion, strength, and durability.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Ethylene & Polyethylene: Chevron Phillips Chemical Company, Dow Inc., ExxonMobil Chemical Company, Formosa Plastics Corporation, LyondellBasell Industries, N.V., NOVA Chemicals Corporation, Sasol Limited.
• Chlor-alkali & PVC: Formosa Plastics Corporation, INOVYN ChlorVinyls Limited, KEM ONE Group SAS, Olin Corporation, Orbia Advance Corporation, Occidental Chemical Corporation, Shintech, Inc., VYNOVA Group.
• Epoxy: Olin Corporation, Nan Ya Plastics Corporation, the Spolchemie Group, LEUNA-Harze GmbH, Aditya Birla Chemicals (Thailand) Ltd., Huntsman Corporation, Swancor Holding Company Limited, Ningbo Bohui Chemical Technology Co., Ltd., Techstorm Advanced Material Co., Ltd., Shanghai Kangda Chemical New Material Group Co., Ltd., Evonik Industries AG, Allnex Management GmbH, Kukdo Chemical Co., Ltd., Kumhu Asiana Group, Chang Chun Plastics Co., Ltd.
• Housing & Infrastructure Products: Associated Materials LLC., CertainTeed Corporation, Cornerstone Building Brands, Inc., Diamond Plastics Corporation, IPEX Inc., JM Eagle Inc., Trex Company, Inc., James Hardie.
• Compounds: GEON Performance Solutions, Teknor Apex Company, Inc.

Competitive Response Strategy: Westlake Corporation's strategy involves delivering value to customers, creating sustainable shareholder value, and fostering a rewarding work environment. This is achieved through innovative products, high standards of customer service, operational excellence, and stringent cost management. The Company continuously explores growth opportunities that complement its integrated structure, optimize its asset footprint, and improve productivity, including strategic acquisitions and asset optimization initiatives such as plant closures. Westlake Corporation also actively participates in trade remedy actions, such as antidumping and countervailing duty petitions for epoxy resins, to address competitive imbalances.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics: The Company faces risks from the cyclical and volatile nature of the petrochemical industry, where margins are sensitive to global supply and demand balances. New capacity additions, particularly in North America, Asia, and the Middle East, can lead to oversupply and reduced profitability. Low-priced commodity product exports from other countries, especially Asia, can negatively impact sales and margins. Trade barriers, tariffs, and duties (e.g., on PVC resins to the European Union, United Kingdom, and Brazil) can increase costs and reduce demand. External factors such as general economic conditions (inflation, interest rates, recession), geopolitical conflicts (Middle East, Russia/Ukraine), and public sentiment towards climate change and recycling can cause fluctuations in demand, prices, and margins. Technology Disruption: The Company is exposed to risks from rapid technological innovations, including the transition to lower greenhouse gas emissions technologies, which could impact product demand and production processes.

Operational & Execution Risks

Supply Chain Vulnerabilities: Operations are highly dependent on the availability and cost of raw materials (e.g., ethane, natural gas, ethylene, salt) and energy, which are subject to significant price volatility. Reliance on a limited number of outside suppliers for specified feedstocks and services, as well as heavy reliance on third-party transportation (railroads, barges, pipelines, ships, trucks), exposes the Company to supply interruptions, price increases, and regulatory changes in transportation. Geographic Concentration: Facilities, particularly those in Louisiana, are exposed to climate-related risks such as hurricanes and other severe weather events, which can disrupt operations and adversely affect financial results. Capacity Constraints: Manufacturing operations involve volatile and hazardous materials, subjecting the Company to operating hazards (e.g., leaks, explosions, fires, mechanical failures, transportation accidents) and potential litigation. Capital expansion projects are subject to risks of delays and cost overruns due to factors like equipment shortages, labor issues, and permitting difficulties.

Financial & Regulatory Risks

Market & Financial Risks: Fluctuations in foreign currency exchange rates, particularly the Euro and Canadian dollar against the U.S. dollar, can affect consolidated financial results. The Company is exposed to interest rate risk on its fixed and variable rate debt, with potential for higher interest costs upon refinancing or increases in variable rates. Credit & Liquidity: With $5.6 billion in indebtedness as of December 31, 2025, a significant portion of cash flow is dedicated to debt service. The ability to generate sufficient cash for debt obligations, capital expenditures, and dividends depends on many factors beyond the Company's control. Debt agreements impose operating and financial restrictions, including a quarterly total leverage ratio covenant, which could limit financial flexibility. Regulatory & Compliance Risks: Westlake Corporation is subject to extensive environmental, health, and safety laws and regulations globally, including stringent air, water, and waste standards. Recent and evolving regulations from the EPA (e.g., NESHAPs, mercury emissions, TSCA, PFAS) and the European Union (e.g., IED, Environmental Liability Directive, ECHA proposals on PVC/PFAS) require significant capital expenditures and increase operating costs. Increased regulation on plastic-based products could reduce demand for polyethylene and PVC. The Company is also involved in material legal and regulatory proceedings, including antitrust lawsuits related to caustic soda, ethylene, and PVC pipe, a Brazilian contractual indemnification lawsuit, environmental cost arbitration at Calvert City, and lawsuits related to operations at the Sulphur Mines Dome.

Geopolitical & External Risks

Geopolitical Exposure: International operations expose the Company to risks such as currency devaluations, inflationary pressures, economic instability, geopolitical conflicts (e.g., Middle East, Russia/Ukraine), supply chain disruptions, and political unrest. Trade Relations: Changes in U.S. foreign trade policies, including tariffs and trade barriers, can increase costs, reduce demand for products, and impact global supply and distribution chains. Retaliatory trade measures from other countries could further complicate international trade.

Innovation & Technology Leadership

Research & Development Focus: Westlake Corporation's product and application development activities are strategically aimed at enhancing existing products, processes, and applications. The Company focuses on incorporating recycling opportunities, reducing waste, increasing recycled content in products, and utilizing renewable and bio-based materials to develop products with improved sustainability features, supporting greater efficiency and durability. These activities are conducted at facilities in the United States, Germany, and China.

Intellectual Property Portfolio: The Company maintains a robust intellectual property portfolio, including over 1,100 issued patents and pending patent applications in the United States and other countries, which help preserve its competitive technology position. Additionally, Westlake Corporation relies on more than 1,900 active and pending trademark registrations worldwide to protect its brands. The Company also offers its independently developed technology for licensing when commercially viable.

Technology Partnerships: While the filing does not detail specific technology partnerships beyond joint ventures for production, the Company's involvement in LACC, LLC (an ethylene facility joint venture) and its equity interests in Infraserv entities (providing technical services) indicate strategic collaborations for operational and utility support.

Leadership & Governance

Executive Leadership Team

Board Composition: The Board of Directors has assigned oversight of cybersecurity risks, as part of the overall enterprise risk management program, to the Corporate Risk and Sustainability Committee. This committee includes directors with relevant cybersecurity experience and expertise.

Human Capital Strategy

Workforce Composition: As of December 31, 2025, Westlake Corporation had approximately 14,600 employees distributed across 18 countries, with about 68% employed in the United States. Approximately 24% of the workforce is represented by labor unions, including works councils in Europe, with collective bargaining agreements expiring at various times through 2029.

Talent Management: The Company focuses on attracting, developing, and retaining talent by offering competitive compensation packages, development programs for continuous learning and growth, and comprehensive benefit packages tailored to local markets.

Diversity & Development: Westlake Corporation invests in internal leadership development and provides employees with a blend of live, virtual, and digital training opportunities, including safety, technical, compliance, business, and professional development courses. Employee surveys are periodically conducted to gauge engagement and identify areas for improvement.

Environmental & Social Impact

Environmental Commitments: Climate Strategy: In November 2024, Westlake Corporation successfully met its publicly disclosed target to reduce Scope 1 and Scope 2 CO2 equivalent emissions intensity per ton of production by 20% from a 2016 baseline. Following this achievement, the Company announced a new target to further reduce its Scope 1 and Scope 2 CO2 equivalent emissions intensity per ton of production by an additional 5% by 2030, using a 2024 baseline. The Company endeavors to produce and deliver products in increasingly sustainable ways, reduce its operational environmental footprint, and develop products with improved sustainability features, focusing on recycling, waste reduction, incorporating recycled and bio-based content, and enhancing product efficiency and durability.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: The Company's sales, particularly for housing products within the HIP segment, historically experience seasonality. Moderately higher sales of residential products typically occur in the second and third quarters due to inventory restocking and favorable construction weather. Sales generally decline in the fourth quarter due to adverse weather conditions impacting construction and renovation activity. Chlorovinyls products in the PEM segment also show similar seasonal trends, with higher sales in the first half of the year and lower levels in the fourth quarter.
• Economic Sensitivity: Sales are significantly affected by the level of new home construction and home repair and remodeling activity, especially in North America. Distributor and dealer inventory decisions, economic conditions (e.g., interest rates, inflation), and construction costs also impact demand. The chlor-alkali and petrochemical industries exhibit cyclical commodity characteristics, with margins influenced by global supply and demand balances, operating rates, general economic activity, and raw material prices.

Regulatory Environment & Compliance

Regulatory Framework: Westlake Corporation is subject to extensive international, national, state, and local environmental, health, and safety laws and regulations governing emissions, discharges, waste management, workplace safety, and site remediation. Key regulations include the EPA's hazardous organic national emission standards for hazardous air pollutants (NESHAPs), amendments to mercury emissions rules for chlor-alkali plants, and the Toxic Substances Control Act (TSCA), under which vinyl chloride and ethylene dichloride (EDC) are designated as High Priority Substances for risk evaluation. The Company is also impacted by regulations concerning Per- and Polyfluoroalkyl Substances (PFAS) and increasing restrictions on plastic-based products. In Europe, the Industrial Emission Directive (IED) and the European Chemicals Agency (ECHA) proposals on PVC and PFAS pose additional compliance requirements.

Trade & Export Controls: The Company's commodity PVC resins manufactured in the United States have been subject to anti-dumping investigations or duties by authorities in the European Union (58.0% tariff margin), United Kingdom (56.01% duty), and Brazil (43.7% duty) as of December 2025, which have adversely affected demand and sales in these regions. Changes in U.S. foreign trade policies, including tariffs, can lead to additional trade barriers and retaliatory measures, increasing costs and impacting export capabilities.

Legal Proceedings: Westlake Corporation is involved in several material legal and regulatory proceedings:

• Caustic Soda Antitrust: Multiple class action lawsuits in the U.S. (class certification denied) and Canada (settlement of $0.35 million pending court approval) alleging price fixing. A U.K. claim alleges manipulation of a third-party pricing index, seeking approximately €80 million in damages.
• Ethylene Antitrust: Fourteen lawsuits in the Netherlands and Germany allege a conspiracy to lower ethylene purchase prices, with some seeking aggregate damages of approximately €8,738 million.
• PVC Pipe Antitrust: Ten class action lawsuits in Illinois and one in British Columbia, Canada, allege price fixing for PVC pipe and fittings. The U.S. Department of Justice has intervened in the U.S. litigation due to an ongoing antitrust investigation.
• Brazilian Contractual Indemnification Lawsuit: PPG Industries, Inc. has sued Westlake Corporation in Delaware Chancery Court seeking indemnification for a R$550 million (plus interest) damages award in Brazil related to a 1998 explosion.
• Calvert City Proceedings: Arbitration with Avient Corporation seeks reimbursement for environmental costs, with Avient claiming Westlake Corporation is liable for up to $39 million.
• Sulphur Mines Dome: The Louisiana Department of Conservation and Energy has ordered additional measures due to pressure anomaly events in salt solution-mining caverns, with an accrued liability of approximately $26 million for remedial activities. Yellow Rock LLC has filed lawsuits alleging improper withdrawal and sale of oil (damages exceeding $100 million) and improper extraction of salt and brine.

Tax Strategy & Considerations

Tax Profile: Westlake Corporation's effective tax rate was 7.9% in 2025, significantly lower than 31.0% in 2024. This reduction was primarily due to a non-deductible goodwill impairment charge associated with the North American Chlorovinyls reporting unit, a valuation allowance recorded against Westlake Epoxy Netherlands's net operating loss, and the impact of earnings mix across jurisdictions associated with pre-tax losses in 2025. Geographic Tax Planning: The One Big Beautiful Bill Act (OBBBA), enacted in July 2025, is expected to reduce cash taxes without materially impacting the effective income tax rate due to provisions like the permanent reinstatement of 100% bonus depreciation and immediate expensing of domestic research and experimental expenditures. Louisiana tax reform bills, effective January 2025 and 2026, will reduce the corporate state income tax rate, repeal the corporate state franchise tax, and eliminate preferential apportionment treatment for foreign trade zones, resulting in a $45 million one-time charge in Q4 2024 for deferred tax asset and liability revaluation. The Company's exposure to Pillar Two of the OECD's global tax reform has been recorded since 2024 and is currently immaterial.

Insurance & Risk Transfer

Risk Management Framework: Westlake Corporation maintains property, business interruption, and casualty insurance policies consistent with customary industry practices. However, these policies provide only partial coverage for acts of terrorism and are subject to coverage limitations and deductibles. The Company utilizes derivative instruments, including commodity swaps, futures, forwards, and options, to mitigate price volatility risk on feedstocks and products. To manage interest rate risk, the Company may use derivative financial instruments. For foreign currency exchange risk, the Company employs currency exchange derivative instruments, such as forward exchange contracts and cross-currency swaps, and has designated euro-denominated debt as a non-derivative net investment hedge to reduce volatility in stockholders' equity from currency fluctuations.