Westlake's Q1 Earnings and Revenues Miss Estimates, Decline Y/Y

Westlake Corporation WLK reported a loss of $40 million or 31 cents per share for the first quarter of 2025. This compares to a profit of $174 million or $1.34 in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate of earnings of 70 cents.

Sales dipped around 4.3% year over year to $2,846 million in the quarter. It missed the Zacks Consensus Estimate of $2,920 million. The top line was impacted by a 2% decline in sales volumes and a 2% decline in average sales prices.

The results in the first quarter were impacted by higher North American feedstock and energy costs, partly due to winter storms, and the turnaround at its Petro 1 ethylene unit.

(Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Westlake Corp. Price, Consensus and EPS Surprise

Westlake Corp. price-consensus-eps-surprise-chart | Westlake Corp. Quote

WLK's Segment Highlights

Sales in the Performance and Essential Materials segment went down around 4.2% year over year to $1,850 million in the reported quarter. It lagged our estimate of $1,907.8 million. Performance and Essential Materials' loss from operations in the first quarter of 2025 was $163 million compared with an income of $22 million in the first quarter of 2024, owing to higher North American feedstock and energy costs.

The Housing and Infrastructure Products (HIP) segment generated sales of $996 million, down around 4.6% from the year-ago quarter. The figure missed our estimate of $1077.4 million. HIP’s income from operations in the first quarter of 2025 was $148 million, down $62 million from the first quarter of 2024. The year-over-year decline resulted from lower average sales price and margins from an unfavorable shift in sales mix, and lower sales volume in Pipe & Fittings due to winter storms.

WLK's Financial Position

Operating activities used $77 million in net cash in the first quarter of 2025. Capital expenditures were $248 million. For the quarter, free cash outflow was $325 million. As of March 31, 2025, the company's cash and cash equivalents were roughly $2.3 billion, with a total debt of $4.6 billion.

WLK's Outlook

WLK noted that the Petro 1 unit has completed the turnaround, and with no major planned maintenance near the corner, operating rates are expected to improve. While the recent tariff developments are not expected to have a material impact on costs or supply chains, uncertainty surrounding global trade policy is causing caution among some customers as they evaluate potential effects. Despite this, Westlake remains well-positioned due to its cost advantage in feedstock, diversified business model, and strong financial position.

WLK’s Zacks Rank & Key Picks

WLK currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the Basic Materials space are Brenntag SE BNTGY, Contango Ore, Inc. CTGO and Avino Silver & Gold Mines Ltd. ASM. While BNTGY and CTGO sport a Zacks Rank #1 (Strong Buy) each, ASM carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

BNTGY is slated to report first-quarter results on May 14. The Zacks Consensus Estimate for Brenntag’s first-quarter earnings is pegged at 24 cents per share.

Contango is scheduled to report first-quarter results on May 14. The Zacks Consensus Estimate for CTGO’s first-quarter earnings is pegged at a loss of 32 cents per share. CTGO’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing in one, with the average surprise being 213.7%.

Avino Silver & Gold Mines is slated to release first-quarter results on May 13. The consensus estimate for ASM’s first-quarter earnings is pegged at 3 cents. ASM delivered a trailing four-quarter earnings surprise of 94.4%, on average.

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This article originally published on Zacks Investment Research (zacks.com).

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