Westlake Corp (WLK) 2023 Q2 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Westlake Corporation Second Quarter 2023 Earnings Conference Call.

早上好，女士們，先生們。謝謝你的支持。歡迎參加 Westlake Corporation 2023 年第二季度收益電話會議。

(Operator Instructions)

（操作員說明）

As a reminder, ladies and gentlemen, this conference is being recorded today, August 3, 2023. I would now like to turn the call over to today's host, Jeff Holy, Westlake's Vice President and Treasurer. Sir, you may begin.

女士們、先生們，謹提醒您，本次會議將於今天（2023 年 8 月 3 日）進行錄製。我現在將電話轉給今天的主持人、Westlake 副總裁兼財務主管 Jeff Holy。先生，您可以開始了。

Thank you. Good morning, everyone, and welcome to the Westlake Corporation conference call to discuss our second quarter 2023 results. I'm joined today by Albert Chao, our President and CEO; Steve Bender, our Executive Vice President and Chief Financial Officer; and other members of our management team.

謝謝。大家早上好，歡迎參加 Westlake Corporation 電話會議，討論我們 2023 年第二季度的業績。今天我們的總裁兼首席執行官 Albert Chao 也加入了我的行列。 Steve Bender，我們的執行副總裁兼首席財務官；以及我們管理團隊的其他成員。

During the call, we will refer to our 2 reporting segments: Performance and Essential Materials, which we refer to as PEM or Materials; and Housing and Infrastructure Products, which we refer to as HIP or Products. Today's conference call will begin with Albert, who will open with a few comments regarding Westlake's performance, Steve will then discuss our financial and operating results, after which Albert will add a few concluding comments, and we'll open the call up to questions.

在電話會議期間，我們將提及我們的 2 個報告部分：性能和基本材料，我們將其稱為 PEM 或材料；住房和基礎設施產品，我們稱之為 HIP 或產品。今天的電話會議將由阿爾伯特開始，他將首先對Westlake 的業績發表一些評論，然後史蒂夫將討論我們的財務和運營業績，之後阿爾伯特將添加一些結論性評論，我們將開始電話會議以回答問題。

Today, management is going to discuss certain topics that will contain forward-looking information that is based on management's beliefs as well as assumptions made by and information currently available to management. These forward-looking statements suggest predictions or expectations and thus are subject to risks or uncertainties. These risks and uncertainties are discussed in Westlake's Form 10-K for the year ended December 31, 2022, and other SEC filings. We encourage you to learn more about these factors that could lead our actual results to differ by reviewing these SEC filings, which are also available on our Investor Relations website.

今天，管理層將討論某些主題，其中包含基於管理層信念以及管理層所做的假設和當前可獲得的信息的前瞻性信息。這些前瞻性陳述暗示了預測或預期，因此存在風險或不確定性。 Westlake 截至 2022 年 12 月 31 日止年度的 10-K 表格以及其他 SEC 文件中討論了這些風險和不確定性。我們鼓勵您通過查看這些 SEC 文件（也可以在我們的投資者關係網站上找到）來詳細了解這些可能導致我們的實際結果有所不同的因素。

This morning, Westlake issued a press release with details of our second quarter results. This document is available in the press release section of our website at westlake.com. We have also included an earnings presentation, which can be found in the Investor Relations section on our website. A replay of today's call will be available beginning today, 2 hours following the conclusion of this call. This replay may be accessed via Westlake's website.

今天早上，Westlake 發布了一份新聞稿，詳細介紹了我們第二季度的業績。本文件可在我們網站 westlake.com 的新聞稿部分獲取。我們還提供了收益演示，您可以在我們網站的投資者關係部分找到該演示。從今天開始，即本次電話會議結束後 2 小時後，即可重播今天的電話會議。可以通過 Westlake 的網站訪問此重播。

Please note that information reported on this call speaks only as of today, August 3, 2023. And therefore, you're advised that time-sensitive information may no longer be accurate as of the time of any replay. Finally, I would advise you that this conference call is being broadcast live through an Internet webcast system that can be accessed on our web page at westlake.com.

請注意，本次電話會議報告的信息僅截至今天（2023 年 8 月 3 日）。因此，我們建議您，時間敏感的信息在任何重播時可能不再準確。最後，我建議您，本次電話會議將通過互聯網網絡廣播系統進行現場直播，您可以通過我們的網頁 westlake.com 訪問該系統。

Now I'd like to turn the call over to Albert Chao. Albert?

現在我想把電話轉給Albert Chao。阿爾伯特？

Thank you, Jeff. Good morning, everyone. We appreciate you joining us to discuss our second quarter 2023 results.

謝謝你，傑夫。大家，早安。我們感謝您加入我們討論我們 2023 年第二季度的業績。

For the second quarter of 2023, we reported sales of $3.3 billion, net income of $297 million and EBITDA of $690 million. In our PEM segment, the continuation of soft industrial and construction activity and unplanned maintenance activities drill sales volumes declines, particularly impacting PVC resin, caustic soda and epoxy in North America and Europe. The elevated level of unplanned outages resulted in lost sales that impacted operating income by approximately $50 million. While our PEM segment average selling prices were lower than in the first quarter, we benefited from our strategically located globally advantaged feedstock position in North America, where we saw lower feedstock and fuel costs compared to the first quarter.

2023 年第二季度，我們的銷售額為 33 億美元，淨利潤為 2.97 億美元，EBITDA 為 6.9 億美元。在我們的 PEM 領域，工業和建築活動持續疲軟以及計劃外維護活動導致鑽頭銷量下降，特別是對北美和歐洲的 PVC 樹脂、燒鹼和環氧樹脂產生影響。計劃外停電次數增多導致銷售損失，影響營業收入約 5,000 萬美元。雖然我們的 PEM 部門平均售價低於第一季度，但我們受益於我們在北美戰略性的全球優勢原料地位，與第一季度相比，我們的原料和燃料成本較低。

In our HIP segment, we experienced an increase in sales volumes quarter-over-quarter with the start of the construction season in North America with housing starts in the second quarter averaging 1.4 million units and repair and modeling continuing to grow. HIP segment EBITDA margin increased sequentially due to the 13% volume improvement and raw material cost reductions. And this margin remained in line with the record second quarter of 2022 at approximately 22%, reflecting the strength in our branded products and relationships with our customers. While we expect the challenging macro backdrop to continue in the third quarter, we will focus our efforts of operating our assets reliably and reducing costs. To that end, we now expect our cost reduction program to achieve between $75 million to $105 million of cost savings in 2023, up from the previous $55 million to $105 million target, after we achieved approximately $25 million of cost savings in the second quarter and $50 million in the first half of 2023.

在我們的 HIP 領域，隨著北美建築季節的開始，我們的銷量環比增長，第二季度新屋開工量平均為 140 萬套，維修和建模業務持續增長。由於產量提高 13% 和原材料成本下降，HIP 部門 EBITDA 利潤率環比增長。這一利潤率與 2022 年第二季度約 22% 的創紀錄水平保持一致，反映了我們品牌產品以及與客戶關係的實力。雖然我們預計第三季度充滿挑戰的宏觀背景仍將持續，但我們將集中精力可靠地運營我們的資產並降低成本。為此，我們現在預計我們的成本削減計劃將在2023 年實現7500 萬至1.05 億美元的成本節約，高於之前的5500 萬至1.05 億美元的目標，此前我們在第二季度實現了約2500 萬美元的成本節約， 2023 年上半年將達到 5000 萬美元。

Overall, our second quarter results reflected the weakness in global manufacturing and industrial activity, along with the impact to sales volumes and margins from the planned and unplanned outages, and we continue to take a disciplined approach to managing our operations in this volatile economy and advance our long-term strategic priorities.

總體而言，我們第二季度的業績反映了全球製造業和工業活動的疲軟，以及計劃內和計劃外停電對銷量和利潤率的影響，我們將繼續採取嚴格的方法來管理我們在這個動蕩的經濟中的運營並推進我們的長期戰略重點。

I would now like to turn our call over to Steve to provide more detail on our financial results for the second quarter of 2023.

我現在想將我們的電話轉給 Steve，以提供有關我們 2023 年第二季度財務業績的更多詳細信息。

Thank you, Albert, and good morning, everyone. Westlake reported net income of $297 million or $2.31 per share in the second quarter of 2023 on sales of $3.3 billion. Net income for the second quarter of 2023 decreased $561 million from the second quarter of 2022 as a result of lower average selling prices and integrated margins and more production and sales volumes. When compared to the first quarter of 2023, net income decreased by $97 million in the second quarter of 2023, primarily to lower average selling prices, particularly for caustic soda, and PVC resin due to softer market conditions and unplanned production outages.

謝謝你，阿爾伯特，大家早上好。 Westlake 報告 2023 年第二季度淨利潤為 2.97 億美元，即每股 2.31 美元，銷售額為 33 億美元。由於平均銷售價格和綜合利潤率下降以及產量和銷量增加，2023 年第二季度淨利潤較 2022 年第二季度減少 5.61 億美元。與 2023 年第一季度相比，2023 年第二季度淨利潤減少了 9700 萬美元，主要是由於市場狀況疲軟和計劃外生產中斷導致平均售價下降，尤其是燒鹼和 PVC 樹脂。

For the second quarter of 2023, our utilization of the FIFO method of accounting had a negligible impact on pretax earnings compared to what earnings would have been reported if on the LIFO method. This is only an estimate and has not been audited.

2023 年第二季度，與採用 LIFO 方法報告的收益相比，我們採用 FIFO 會計方法對稅前收益的影響可以忽略不計。這只是一個估計，未經審計。

Moving to our segment performance. Our performance in Essential Materials segment second quarter 2023 sales were $2.1 billion with EBITDA of $435 million compared to EBITDA of $1.2 billion in the second quarter of 2022 due to lower average selling prices, particularly for Performance Materials in addition to lower sales volume, largely in PVC and epoxy. PEM segment EBITDA of $435 million in the second quarter decreased $180 million from the first quarter of 2023, largely due to lower average selling prices for both Performance Materials and Essential Materials, particularly for caustic soda, epoxy resins and polyethylene. Lower demand and resulting sales volumes, particularly for PVC, caustic soda and epoxy resin and elevated level of unplanned outages that impacted both sales volumes and integrated margins.

轉向我們的細分市場表現。我們在基本材料領域的業績，2023 年第二季度的銷售額為21 億美元，EBITDA 為4.35 億美元，而2022 年第二季度的EBITDA 為12 億美元，原因是平均售價較低，特別是高性能材料，此外銷量較低，主要是由於PVC 和環氧樹脂。 PEM 部門第二季度的 EBITDA 為 4.35 億美元，較 2023 年第一季度減少 1.8 億美元，這主要是由於高性能材料和基本材料的平均銷售價格下降，特別是燒鹼、環氧樹脂和聚乙烯。需求和銷量下降，特別是 PVC、燒鹼和環氧樹脂，以及計劃外停電水平升高，影響了銷量和綜合利潤。

Turning to our Housing and Infrastructure Products segment. Second quarter sales were $1.1 billion with EBITDA of $244 million, which declined $66 million when compared to the record second quarter of 2022. The decrease in EBITDA was due to an 18% decline in segment sales volumes driven by lower housing starts and completions we've seen over the past year. Despite the volume decline year-over-year, HIP segment EBITDA margin of 22% in the second quarter of 2023 was unchanged as lower raw material costs and resilient pricing offset the impact of the lower sales volumes.

轉向我們的住房和基礎設施產品部門。第二季度銷售額為11 億美元，EBITDA 為2.44 億美元，與創紀錄的2022 年第二季度相比下降了6600 萬美元。 EBITDA 下降的原因是我們的房屋開工率和竣工率下降導致細分市場銷量下降18%。在過去的一年裡見過。儘管銷量同比下降，但由於原材料成本下降和彈性定價抵消了銷量下降的影響，2023 年第二季度 HIP 業務 EBITDA 利潤率保持在 22% 不變。

When compared to the first quarter of 2023, HIP segment EBITDA of $244 million increased $39 million. Housing Product sales of $918 million in the second quarter of 2023 increased $100 million due to solid sales volume growth supported by seasonal North America construction trends that more than offset slightly lower average selling prices. This Housing Product sales volume improvement was widespread with significant gains in most product lines.

與 2023 年第一季度相比，HIP 部門的 EBITDA 為 2.44 億美元，增加了 3900 萬美元。 2023 年第二季度，住房產品銷售額為 9.18 億美元，增長了 1 億美元，原因是北美季節性建築趨勢推動銷量穩健增長，這足以抵消平均售價的小幅下降。住房產品銷量的改善十分普遍，大多數產品線都有顯著增長。

Infrastructure Product sales of $197 million in the second quarter of 2023, increased $8 million first quarter of 2023, primarily due to growth in sales volume of Infrastructure Products serving fresh and wastewater applications. The overall higher HIP segment sales in the second quarter of 2023 drove an improvement in EBITDA margin to 22% from the 20% in the first quarter. Overall, we were pleased with HIP segment sequential volume improvement and solid margin performance.

2023 年第二季度基礎設施產品銷售額為 1.97 億美元，較 2023 年第一季度增加 800 萬美元，主要是由於服務於新鮮和廢水應用的基礎設施產品銷量增長。 2023 年第二季度 HIP 細分市場銷售額整體較高，推動 EBITDA 利潤率從第一季度的 20% 提高至 22%。總體而言，我們對 HIP 業務銷量連續增長和穩健的利潤率表現感到滿意。

Our financial results, particularly in our PEM segment reflected globally slow demand and production outages. As we enter the third quarter, macroeconomic conditions remain sluggish as evidenced by recently published manufacturing indices. We're adjusting our market conditions by taking a disciplined approach to managing inventory, reducing our cost, matching production levels to demand and adapting our business to the evolving market conditions. Our strong financial position supported by an investment-grade credit rating support our long-term objectives.

我們的財務業績，特別是 PEM 部門的財務業績反映了全球需求放緩和生產中斷。隨著進入第三季度，宏觀經濟狀況仍然低迷，最近公佈的製造業指數證明了這一點。我們正在通過採取嚴格的方法來管理庫存、降低成本、使生產水平與需求相匹配並使我們的業務適應不斷變化的市場條件來調整我們的市場條件。我們強大的財務狀況得到投資級信用評級的支持，支持我們的長期目標。

As of June 30, 2023, cash and cash equivalents were $2.7 billion and total debt was $4.9 billion with a staggered long-term fixed rate debt maturity schedule. For the second quarter of 2023, net cash provided by operating activities was $555 million, while CapEx expenditures were $240 million, resulting in free cash flow of $315 million, which reflects our strong cash generative business model. We continue to look for opportunities to strategically deploy our balance sheet in a manner to create long-term value.

截至 2023 年 6 月 30 日，現金和現金等價物為 27 億美元，債務總額為 49 億美元，並具有交錯的長期固定利率債務到期時間表。 2023年第二季度，經營活動提供的淨現金為5.55億美元，而資本支出為2.4億美元，自由現金流為3.15億美元，這反映了我們強大的現金生成業務模式。我們繼續尋找機會戰略性地部署我們的資產負債表，以創造長期價值。

Now let me provide some guidance for your models. Based on our current view of demand and prices, we expect second half of 2023 revenue in our Housing and Infrastructure Products segment to be between $2 billion and $2.2 billion with EBITDA margins in the high teens. We expect our company-wide cost reduction program to achieve between $75 million to $105 million of cost savings in 2023, up from the previous $55 million to $105 million target after we achieved approximately $50 million of savings to date in 2023.

現在讓我為您的模型提供一些指導。根據我們目前對需求和價格的看法，我們預計 2023 年下半年住房和基礎設施產品部門的收入將在 20 億美元至 22 億美元之間，EBITDA 利潤率將達到十幾億美元。我們預計全公司範圍內的成本削減計劃將在2023 年實現7500 萬至1.05 億美元的成本節約，高於之前5500 萬至1.05 億美元的目標，此前我們在2023 年迄今已實現約5000 萬美元的成本節約。

We continue to expect total capital expenditures for 2023 to be approximately $1 billion, which is unchanged from our earlier guidance, and is similar to our depreciation and amortization run rate. For the full year of 2023, we expect our effective tax rate to be approximately 23% and cash interest expense to be approximately $160 million.

我們仍然預計 2023 年的總資本支出約為 10 億美元，與我們之前的指導一致，並且與我們的折舊和攤銷運行率相似。 2023 年全年，我們預計有效稅率約為 23%，現金利息支出約為 1.6 億美元。

Now let me turn the call over to Albert to provide a current outlook for our business. Albert?

現在讓我將電話轉給阿爾伯特，以提供我們當前業務的前景。阿爾伯特？

Thank you, Steve. Looking ahead, with continued high interest rates and a slowing economy, we're expecting a challenging environment in the second half of this year. However, we remain confident in our long-term growth plans, the strength of our business portfolio and our disciplined approach to creating long-term value. We look to expand our sales through differentiated product offerings and innovations with sustainable products to meet our customers' needs, while managing our costs and adapting to the changing market conditions as they unfold.

謝謝你，史蒂夫。展望未來，由於利率持續高企和經濟放緩，我們預計今年下半年將面臨充滿挑戰的環境。然而，我們對我們的長期增長計劃、我們業務組合的實力以及我們創造長期價值的嚴謹方法仍然充滿信心。我們希望通過差異化的產品供應和可持續產品的創新來擴大銷售，以滿足客戶的需求，同時管理我們的成本並適應不斷變化的市場條件。

In our PEM segment, we will leverage our North American feedstock advantage and highly integrated production chain. We remain positive on the outlook for our PEM segment, driven by increased consumer activity and demand for clean, fresh water, electrification and renewable energy. Benefits from the Infrastructure Investment Act and Inflation Reduction Act and favorable demographic trends, all driving demand for PVC resin, caustic soda, polyethylene and epoxy. While PEM average selling price ending in June were below the average selling prices of the second quarter. In the last few weeks, we have seen some signs of improvement in both PVC resin and polyethylene markets from tightening export markets with unprofitable high-cost international producers curtailing production and lower industry inventory levels.

在PEM領域，我們將利用我們的北美原料優勢和高度集成的生產鏈。在消費者活動增加以及對清潔、淡水、電氣化和可再生能源的需求的推動下，我們對 PEM 領域的前景保持樂觀。受益於基礎設施投資法和降低通貨膨脹法以及有利的人口趨勢，所有這些都推動了對 PVC 樹脂、燒鹼、聚乙烯和環氧樹脂的需求。而截至 6 月份的 PEM 平均售價低於第二季度的平均售價。過去幾週，我們看到 PVC 樹脂和聚乙烯市場出現一些改善跡象，原因是出口市場收緊、無利可圖的高成本國際生產商削減產量和降低行業庫存水平。

As a result, we remain constructive on the outlook for our PEM segment from recent levels. We also remain positive on the outlook for our HIP based segment, supported by the structural undersupply of homes in North America, improving demographics that support more first-time homebuyers over the coming decade and potential benefits to our Infrastructure Product sales volumes from spending related to the Infrastructure Investment Act. We will continue to offer a broad portfolio of branded products and deliver value through innovation and service to meet our customers' needs.

因此，我們對 PEM 業務近期水平的前景仍持建設性態度。我們還對基於HIP 的細分市場的前景保持樂觀，這得益於北美房屋結構性供應不足、未來十年支持更多首次購房者的人口結構改善以及與相關支出相關的支出對我們基礎設施產品銷量的潛在好處。基礎設施投資法。我們將繼續提供廣泛的品牌產品組合，並通過創新和服務創造價值，以滿足客戶的需求。

Over the past several quarters, our HIP business has demonstrated that it can adapt to the changing market conditions and its results over this period reflect this adaptability, strength in branding and its capital-light characteristics. Sustainability and environmental stewardship remain critical to our strategy at Westlake. We continue to invest in developing and commercializing innovative new products to meet our customers' sustainability challenges. We are proud to report increased customer adoption of our GreenVin one-pellet solution and PVCO innovations in the second quarter as a result of these efforts. Separately, we continue to invest capital to improve our plans to reduce our carbon and emissions intensity and have made significant progress towards our 20% by 2030 reduction goal.

在過去的幾個季度中，我們的 HIP 業務已經證明它能夠適應不斷變化的市場條件，這一時期的業績反映了這種適應性、品牌優勢及其輕資本特徵。可持續發展和環境管理對於我們在西湖的戰略仍然至關重要。我們繼續投資於創新新產品的開發和商業化，以滿足客戶的可持續發展挑戰。我們很自豪地報告，由於這些努力，第二季度客戶對我們的 GreenVin 單顆粒解決方案和 PVCO 創新的採用有所增加。另外，我們繼續投入資金改進降低碳和排放強度的計劃，並在實現 2030 年減排 20% 的目標方面取得了重大進展。

Finally, we continue to look for opportunities to redeploy a well-capitalized balance sheet in a disciplined manner that will create long-term value for our shareholders. With a robust cash flow generation capability, investment-grade credit rating and strong balance sheet, with net debt below onetime trailing 12 months EBITDA, we see significant opportunities to create value for our shareholders through multiple avenues, including returns of capital through dividends and share buybacks, organic expansions in high-returning, quick payback investments and synergistic acquisitions with return profiles exceeding our cost of capital as these opportunities present themselves.

最後，我們繼續尋找機會以嚴格的方式重新部署資本充足的資產負債表，從而為股東創造長期價值。憑藉強大的現金流生成能力、投資級信用評級和強勁的資產負債表，過去12 個月的淨債務低於一次性EBITDA，我們看到了通過多種途徑為股東創造價值的重大機會，包括通過股息和股票回報資本回購、高回報、快速回報投資的有機擴張以及回報超過我們資本成本的協同收購，因為這些機會本身就出現了。

Thank you very much for listening to our second quarter earnings call.

非常感謝您收聽我們的第二季度財報電話會議。

I will now turn the call back over to Jeff.

我現在將把電話轉回給傑夫。

Thank you, Albert. Before we begin taking questions, I'd like to remind listeners that our earnings presentation available on our website and a replay of this teleconference will be available 2 hours after the call is ended. We will now take questions.

謝謝你，艾伯特。在我們開始回答問題之前，我想提醒聽眾，我們的網站上提供了我們的收益演示，並且電話會議的重播將在通話結束後 2 小時提供。我們現在將接受提問。

(Operator Instructions)

（操作員說明）

Our first question comes from the line of Joshua Spector from UBS.

我們的第一個問題來自瑞銀集團 (UBS) 的約書亞·斯佩克特 (Joshua Spector)。

It's Chris Perrella on for Josh. I wanted to follow up on the outlook for the third quarter in the PEM segment. With the volumes being impacted by turnarounds in the second quarter, how -- what is the volume improvement that you're looking for sequentially in the third quarter? And then are you expecting normal seasonality in the fourth quarter? What's the outlook there?

克里斯·佩雷拉 (Chris Perrella) 替補喬什 (Josh)。我想跟進 PEM 領域第三季度的前景。由於第二季度銷量受到扭虧為盈的影響，您希望第三季度的銷量連續改善是多少？那麼您預計第四季度會出現正常的季節性嗎？那裡的前景如何？

Yes. Normally, the third quarter, a strong quarter just like the second quarter, are the 2 strong quarters for the year. And fourth quarter typically seasonally is the weak or weakest quarter. So assuming the economy continues to be growing even though at a modest rate, that the volume should improve in the second quarter -- in the third quarter, pretty much like the second quarter.

是的。通常情況下，第三季度是一個與第二季度一樣強勁的季度，是一年中兩個強勁的季度。第四季度通常是季節性疲軟或最弱的季度。因此，假設經濟繼續增長，儘管增速不大，那麼第二季度的銷量應該會有所改善——第三季度，與第二季度非常相似。

But what were they doing underlying, I guess, in the second quarter that you should see something similar in the third quarter absent the turnaround -- the unplanned turnarounds?

但我想，他們在第二季度做了什麼，你應該在第三季度看到類似的情況，如果沒有扭轉——計劃外的扭轉？

Yes, Chris, it's Steve. And so when you think about the -- both the turnaround, planned outages and the unplanned outages, as Albert said, the third quarter tends to be a good strong quarter just like the second quarter. Clearly, the second quarter was impacted by both planned and unplanned outages. And so I do expect that third quarter should have more normalized sales volumes and production volumes as we would have expected in the second quarter, not been for those outages. As Albert noted in that fourth quarter, we also see some seasonality impacting both the PEM and the HIP segment. So that typically is lower than the second and third quarter volumes.

是的，克里斯，是史蒂夫。因此，當你考慮周轉、計劃內停電和計劃外停電時，正如阿爾伯特所說，第三季度往往會像第二季度一樣表現強勁。顯然，第二季度受到計劃內和計劃外停電的影響。因此，我確實預計第三季度的銷量和產量應該會像我們在第二季度所預期的那樣更加正常化，而不是出現那些停電。正如 Albert 在第四季度指出的那樣，我們還看到一些季節性因素對 PEM 和 HIP 領域產生了影響。因此，這通常低於第二季度和第三季度的銷量。

All right. And then just a follow-up, one quick one on the pricing that I think Albert called out average PEM pricing at the end of June was below the 2Q average. How does it lag through -- how do your -- does your pricing lag? And how quickly can it improve over the course of 3Q?

好的。然後是一個後續行動，一個關於定價的快速行動，我認為 Albert 稱 6 月底的平均 PEM 定價低於第二季度的平均水平。它是如何滯後的——你的——你的定價滯後嗎？第三季度的改善速度有多快？

Well, prices when it comes down, it comes down pretty quickly, it doesn't lag. But when price increase, as we and some industry members have announced price increases in both polyethylene and PVC for the third quarter, some of those price increases may have a lag going up.

嗯，價格下降的時候，下降得很快，不會滯後。但當價格上漲時，由於我們和一些行業成員宣布第三季度聚乙烯和聚氯乙烯價格上漲，其中一些價格上漲可能會有滯後。

Our next question comes from the line of Patrick Cunningham from Citi.

我們的下一個問題來自花旗銀行的 Patrick Cunningham。

You delivered roughly flattish margins in the HIP segment year-on-year. It's a pretty steep volume decline. How should we think about long-term margins through the cycle in that business?

您在 HIP 領域的利潤率同比大致持平。成交量下降幅度相當大。我們應該如何考慮該業務整個週期的長期利潤率？

Yes. Well, Patrick, as you can see, even in these markets where we're seeing home starts in the neighborhood of 1.4, which was the average for the second quarter, we continue to see real resiliency in pricing. And certainly, even though we've seen the challenges in volume, if you think about year-over-year, we certainly have got a branded product that continues to sell through and is a product of selection by our customers. And so as we think about using that branding and that relationship with our customer base, as we see improvements in starts over the horizon, we do expect it will continue to improve overall margin.

是的。好吧，帕特里克，正如你所看到的，即使在這些市場中，我們看到的家庭開工率在 1.4 附近（這是第二季度的平均水平），我們仍然看到定價的真正彈性。當然，儘管我們已經看到了銷量方面的挑戰，但如果你逐年考慮，我們肯定擁有一種持續暢銷的品牌產品，並且是我們客戶選擇的產品。因此，當我們考慮使用該品牌以及與客戶群的關係時，當我們看到開工率即將改善時，我們確實預計它將繼續提高整體利潤率。

We've not given the high end range of margins. But you can see, we still expect to see some headwinds in the second half of this year, I've guided to the high teens range for the second half of this year. But nevertheless, we think there are certainly with the innovative products, the branding that we have and the relationships that margins should improve as the market improves.

我們沒有給出高端範圍的利潤。但你可以看到，我們仍然預計今年下半年會遇到一些阻力，我已經將今年下半年的價格引導到了十幾歲的區間。但儘管如此，我們認為，隨著市場的改善，我們的創新產品、品牌和關係肯定會提高利潤率。

Got it. That's helpful. And then what's driving the weakness in epoxies? And how do you see demand trending by region for the balance of the year?

知道了。這很有幫助。那麼是什麼導致了環氧樹脂的疲軟呢？您如何看待今年餘下時間各地區的需求趨勢？

Epoxies applies to many areas, mostly into the Industrial Coatings and also in windmill blades and lightweighting of vehicles. And the windmill blades business is still coming back from a slow demand, especially China. China has one of the largest capacities in the world in epoxy and China's economy is really not growing much. And there's overcapacity of new plants coming on. So the business is very weak and impacted global, and we expect U.S. and European epoxy demand to pick up in the coming quarters or years, but it takes a while. But China is the main issue we have.

環氧樹脂適用於許多領域，主要用於工業塗料以及風車葉片和車輛輕量化。風車葉片業務仍在從需求緩慢中恢復，尤其是在中國。中國擁有世界上最大的環氧樹脂產能之一，而中國的經濟實際上增長不多。新工廠的建設產能過剩。因此，該業務非常疲軟，並在全球範圍內受到影響，我們預計美國和歐洲的環氧樹脂需求將在未來幾個季度或幾年內回升，但這需要一段時間。但中國是我們面臨的主要問題。

Our next question comes from David Begleiter from Deutsche Bank.

我們的下一個問題來自德意志銀行的 David Begleiter。

If you think about PEM sequentially, you will have lower averages in Q3, but might be facing lower price as well, as well as higher feedstock costs. So is PEM still up sequentially in Q3 versus Q2 given those dynamics?

如果您依次考慮 PEM，您將在第三季度獲得較低的平均值，但也可能面臨較低的價格以及較高的原料成本。那麼考慮到這些動態，PEM 在第三季度相對於第二季度是否仍然連續上升？

So David, when you think about the strength that we expect seasonally in Q3, that -- and given the fact that we don't have the headwinds in our PEM business because of both the planned and the unplanned outages, that volume improvement should pick up. Certainly, from a pricing perspective, we exited the end of the quarter at lower average prices than we had over the course of the second quarter. But obviously, as we look forward into the future for ethane pricing, ethane pricing was certainly elevated at the very tail end of the second quarter. And if you look at out to the second half of the year, we see ethane pricing still staying really in kind of the low to mid-20s over the course of the second half of the year.

因此，大衛，當你考慮到我們預計第三季度的季節性強勁勢頭時，考慮到我們的 PEM 業務並沒有因為計劃內和計劃外的停電而遇到阻力，銷量的改善應該會成為現實向上。當然，從定價的角度來看，我們在本季度末的平均價格低於第二季度的平均價格。但顯然，當我們展望乙烷定價的未來時，乙烷定價在第二季度末肯定會上漲。如果你展望今年下半年，我們會發現乙烷價格在今年下半年仍然保持在 20 多美元的低至 20 美元左右。

Very good. And Albert, you mentioned some improvements in the global polyethylene market landscape. Can you give a little more color as to what you're seeing right now in that market?

非常好。艾伯特，您提到了全球聚乙烯市場格局的一些改善。您能否詳細介紹一下您目前在該市場所看到的情況？

Yes. I think the export polyethylene prices primarily in Asia being quite weak and prices dropped a fair amount over the months during the year. We see some kind of bottoming out in polyethylene prices and demand has picked up in Asia as well. And so we expect there's some kind of price improvements in the U.S. as a result as well as the higher feedstock cost, as Steve mentioned, we saw at the tail end of second quarter, early part of July.

是的。我認為主要在亞洲的出口聚乙烯價格相當疲軟，並且今年幾個月價格下跌了相當多的量。我們看到聚乙烯價格出現某種程度的觸底反彈，亞洲的需求也有所回升。因此，正如史蒂夫提到的，我們預計美國的價格會因此而有所改善，原料成本也會上漲，我們在第二季度末、7 月初看到了這一點。

So with the cost price increased push and as well as demand improving globally for polyethylene, we expect some kind of pricing improvement in the third quarter for polyethylene and PVC. But that's -- assuming that economy is still going strong, we see that the 10-year rate is almost approaching 4.2%. So we don't know the impact we'll have on general economy and also on housing.

因此，隨著成本價格的上漲以及全球聚乙烯需求的改善，我們預計第三季度聚乙烯和 PVC 的價格將出現某種程度的改善。但假設經濟仍然強勁，我們看到 10 年期利率幾乎接近 4.2%。所以我們不知道我們將對整體經濟和住房產生什麼影響。

Our next question comes from the line of Aleksey Yefremov from KeyBanc.

我們的下一個問題來自 KeyBanc 的 Aleksey Yefremov。

So maybe with some improvements in new residential construction domestically. Have you seen any uptick in PVC demand?

因此，也許國內新住宅建設會有所改善。您是否看到 PVC 需求有所上升？

Yes. And so Aleksey, when you think about the strength that we've seen in the construction materials business pulling through into pipes and siding and trim, I would say that -- and you see this really in the announcements that many of our competitors have announced as well as we in PVC pricing. So we have price announcements out for August and September. And so that is reflective of what we're seeing in strength. And you may have seen that we've also seen export prices also begin to rise in PVC in overseas markets. So that strength that we've seen in the construction markets pulling through in volume but also pricing nominations reflecting that strength both domestically and we're seeing, as I mentioned in the export markets.

是的。因此，阿列克西，當你想到我們在建築材料業務中看到的在管道、壁板和裝飾領域的實力時，我會說——你在我們許多競爭對手宣布的公告中確實看到了這一點以及我們在 PVC 定價方面的情況。因此，我們發布了 8 月和 9 月的價格公告。這反映了我們所看到的實力。您可能已經看到，我們也看到海外市場PVC的出口價格也開始上漲。因此，正如我在出口市場中提到的那樣，我們在建築市場上看到的實力在數量上有所增長，但定價提名也反映了國內和我們所看到的實力。

And second question on M&A. How does your pipeline look today? Do you find more or fewer attractive deals? And how would you characterize your kind of level of engagement on M&A right now?

第二個問題是關於併購。今天您的管道狀況如何？您發現有吸引力的優惠更多還是更少？您目前對併購的參與程度如何？

Yes. So there is always an active dialogue amongst ourselves and others for opportunities in the market, both on the materials side as well as on the building products side. it's all about really looking for the right kind of value opportunity that we see in the marketplace. But I would say there's still a good number of opportunities to deploy capital. It's just about finding the right value-added opportunity for both parties, obviously.

是的。因此，我們和其他人之間總是積極對話，尋找市場機會，無論是在材料方面還是在建築產品方面。這一切都是為了真正尋找我們在市場上看到的正確的價值機會。但我想說，仍然有很多部署資本的機會。顯然，這只是為雙方找到合適的增值機會。

Our next question comes from the line of Kevin McCarthy with Vertical Research Partners.

我們的下一個問題來自垂直研究合作夥伴的凱文·麥卡錫 (Kevin McCarthy)。

Just a follow-up on PVC. We've seen the export prices come up appreciably over the last 3 to 4 weeks. Can you speak to what is driving that? How sustainable do you think the move might be? And do you think it will be enough for PVC producers to raise the U.S. domestic contract price in August? I believe you and others have a proposed increase on the table there.

只是 PVC 的後續。我們看到出口價格在過去 3 至 4 週內顯著上漲。您能談談是什麼推動了這一趨勢嗎？您認為此舉的可持續性如何？您認為 PVC 生產商提高 8 月份美國國內合同價是否足夠？我相信您和其他人已經提出了增加預算的建議。

So Kevin, there are a number of Asian producers that really are at either at the bottom end or very near the bottom end from a margin perspective. And as you can see from our remarks, we see a number that have really lowered operating rates because of the margin challenges they're facing with their feedstocks, if you use Brent as a benchmark in the mid-80s, those producers are seeing margin challenges. And that really is supportive of that driver for rising prices in the market. And I think as we see the seasonal strength in Q3 and the price announcements by ourselves and frankly, others for August for PVC. My comments about the strength we're seeing in even at this more muted level for building products continues to pull vinyl through into the construction markets, not only here in the North American market, but elsewhere.

凱文，從利潤率的角度來看，有許多亞洲生產商確實處於底部或非常接近底部。正如您從我們的評論中看到的那樣，我們看到一些生產商確實降低了開工率，因為他們的原料面臨著利潤率挑戰，如果您使用80 年代中期的布倫特原油作為基準，這些生產商就會看到利潤率挑戰。這確實支持了市場價格上漲的驅動力。我認為，當我們看到第三季度的季節性強勁以及我們自己和其他人公佈的 8 月份 PVC 價格時。我對我們所看到的建築產品實力的評論，即使在這個更加溫和的水平上，也繼續將乙烯基引入建築市場，不僅在北美市場，而且在其他地方。

That's helpful. And then as a second question, Albert, I would appreciate any updated thoughts you might have on China. Generally speaking, we've seen demand from China languish across many commodity chemical markets. In the markets where you compete, are you seeing any signs of improvement there following recent efforts to stimulate or for that matter, any improvement on the supply side dynamics in China?

這很有幫助。第二個問題，艾伯特，如果你對中國有任何最新的想法，我將不勝感激。總體而言，我們看到許多大宗化學品市場的中國需求疲軟。在你們競爭的市場中，在最近的刺激措施之後，您是否看到任何改善的跡象，或者就此而言，中國的供給側動態有任何改善嗎？

Yes. China is the elephant in the room. It has the largest capacity to produce many of the chemicals and plastics as well as one of the largest market for it. And as we all know, that China did not recover much since the Chinese New Year, people expect it after coming out of the pandemic, and the economy is still quite weak. As a result, polymers and chemical market prices has dropped a lot and impacted global prices as well. Not only that, they used to import products and now they're being exporting the products. So all that impacted global prices for those products and as we all read, that the economy, especially for unemployment for young people has risen quite surprisingly high.

是的。中國是房間裡的大象。它擁有最大的許多化學品和塑料生產能力，也是最大的市場之一。而眾所周知，中國自春節以來並沒有太大恢復，人們期待著疫情過後，經濟仍然相當疲軟。結果，聚合物和化學品市場價格大幅下跌，也影響了全球價格。不僅如此，他們曾經進口產品，現在正在出口產品。因此，所有這些都影響了這些產品的全球價格，正如我們都讀到的那樣，經濟，特別是年輕人的失業率上升得驚人。

And recently, the Chinese government have made statement. They are coming up with policies to stimulate, but those statement has not come out with concrete actions, specific action plans yet. But I think Chinese -- I presume leadership in China as they said very well, the issues. And the central government is still quite well off. They have a lot of firepower to do things. So we believe that over time, the Chinese economy will improve, and they talk about targeted 5% GDP growth for the near-term in coming years. So time will tell about the meantime.

近日，中國政府已發表聲明。他們正在製定刺激政策，但這些聲明還沒有拿出具體行動、具體行動計劃。但我認為中國人——我認為中國的領導力正如他們說得很好，這些問題。而且中央政府還是很富裕的。他們有很多火力去做事情。因此，我們相信，隨著時間的推移，中國經濟將會改善，他們談到了未來幾年近期 GDP 增長 5% 的目標。所以時間會告訴我們這期間的情況。

As Steve mentioned, the spot price has really bottomed out in China. We see coupled with some planned issues with turnaround or that, that the prices have started moving up the last several weeks. We hope that will be sustained, especially during the third quarter, which is usually a busy quarter. So time will tell, but we think China should improve over time.

正如史蒂夫所說，中國的現貨價格確實已經觸底。我們看到，加上一些計劃中的周轉問題或其他問題，價格在過去幾週開始上漲。我們希望這種情況能夠持續下去，特別是在第三季度，這通常是一個繁忙的季度。所以時間會證明一切，但我們認為中國應該隨著時間的推移而進步。

Our next call comes from the line of Michael Leithead from Barclays.

我們的下一個電話來自巴克萊銀行的邁克爾·萊特海德 (Michael Leithead)。

My first question on TAM and maybe sticking on the last topic. Your slides talk about competitively price exports out of China for epoxy. And when you sort of do the back of the envelope math, it seems like producers there are selling export products below cash breakeven levels. So how do you think this dynamic or down cycle plays out? And does it change at all how you approach the epoxy market?

我關於 TAM 的第一個問題也許還是最後一個主題。您的幻燈片討論了從中國出口環氧樹脂的具有競爭力的價格。當你進行粗略計算時，似乎生產商正在以低於現金盈虧平衡的水平出售出口產品。那麼，您認為這種動態或下行週期會如何發展？這是否會改變您進入環氧樹脂市場的方式？

Certainly, some of the Chinese -- depending on the industry, definitely in the integrated ethylene to polyethylene, our information shows that integrated players in China based on naphtha cracking are losing cash, whereas the U.S. integrated players are still based on ethane feedstock ethylene, we still have very good cash margin. So -- but in business like epoxy, where they have built additional capacities. Some of the Chinese plants are running below 50%. And some new plants have not started -- [idle and] starting up. So I think companies are adjusting to the new dynamics and over time, they should make the right decisions, what to do with their businesses.

當然，一些中國企業——具體取決於行業，尤其​​是在乙烯到聚乙烯的一體化領域，我們的信息顯示，中國基於石腦油裂解的一體化企業正在虧損，而美國的一體化企業仍然基於乙烷原料乙烯，我們仍然有很好的現金利潤。所以，但在環氧樹脂等行業，他們已經建立了額外的產能。一些中國工廠的開工率低於 50%。一些新工廠尚未啟動——[閒置和]啟動。因此，我認為公司正在適應新的動態，隨著時間的推移，他們應該做出正確的決定，如何處理他們的業務。

Great. That's super helpful. And then maybe just a follow-up on HIP. Could you maybe talk to the different product lines or categories within the segments, we can obviously fairly decently tracked from the outset of moving pieces within PEM. But just within HIP, what areas performed say, better or worse relative to the overall segment this quarter?

偉大的。這非常有幫助。然後也許只是 HIP 的後續行動。您能否談談細分市場中的不同產品線或類別，我們顯然可以從 PEM 中移動部件的一開始就相當不錯地進行跟踪。但就 HIP 而言，相對於本季度的整體細分市場，哪些領域的表現更好或更差？

Yes. So we saw broad strength across really the portfolio. So strength really in our businesses such as stone siding, roofing, of course, pipe for storm and wastewater applications. So a broad application really in what we would call the Westlake Royal Building Products business as well as our Pipe & Fittings businesses. So broad strength in all of those businesses within the HIP business really made nice contributions in the second quarter.

是的。因此，我們在整個投資組合中看到了廣泛的優勢。因此，我們的業務確實具有實力，例如石材壁板、屋頂，當然還有暴風雨和廢水應用的管道。因此，廣泛的應用實際上是我們所說的西湖皇家建築產品業務以及我們的管道和配件業務。 HIP 業務中所有這些業務的廣泛實力確實在第二季度做出了很好的貢獻。

Our next call comes from the line of Matthew DeYoe from Bank of America.

我們的下一個電話來自美國銀行的 Matthew DeYoe。

What percent of China's PVC production do you suspect they're exporting right now?

您認為目前中國 PVC 產量的百分之多少用於出口？

Yes. China used to be importer of PVC. And I think they have been exporting -- that export is -- 80% of the Chinese PVC produced from a carbide process. And usually -- so the quality is not a great and I think India has put a VCM, PVCO monomer level on import PVC and some of the Chinese producers are not able to meet it. So I think the PVC export volume has reduced from China. But nevertheless, this has an impact on those markets, primarily export into. There was South Asia and Southeast Asia as the main market.

是的。中國曾經是PVC的進口國。我認為他們一直在出口——出口量是——80%的中國PVC是通過硬質合金工藝生產的。通常情況下，質量不是很好，我認為印度已經對進口 PVC 設定了 VCM、PVCO 單體水平，而一些中國生產商無法滿足這一要求。所以我認為中國的PVC出口量有所減少。但無論如何，這對這些市場（主要是出口市場）產生了影響。南亞和東南亞為主要市場。

Do you have a number, I guess, Steve, when we've talked in the past, I think you had said you expected it to be -- or you thought it was around 20%. I'm assuming to Albert's comments, it's less than that now. But is it 10%? Is it 5%? Is it 15%? Do you have any idea?

我猜你有一個數字嗎，史蒂夫，當我們過去交談時，我想你曾說過你預計會是——或者你認為大約是 20%。我假設阿爾伯特的評論比現在要少。但這是10%嗎？是5%嗎？是15%嗎？你有什麼主意嗎？

Yes, it's meaningfully lower than that 20%.

是的，它明顯低於那 20%。

Understood. And if I can, what was your mix of import versus exported products shipped for caustic and PVC in the quarter? And do you expect it to change meaningfully next quarter with when you get your capacity back?

明白了。如果可以的話，本季度苛性鹼和 PVC 的進口與出口產品組合是怎樣的？當您恢復產能時，您預計下季度情況會發生有意義的變化嗎？

Yes. And so when you think of the exports that we have both in caustic and PVC, the industry is exporting kind of in the 20% range, and we're just below that kind of a number. And from a PVC perspective, the industry has been exporting historically in the 30s. And so, we're also below that kind of a threshold number as well because remember, PVC is going into our building products business. So we have a pretty good domestic consumption number internally for our own PVC.

是的。因此，當您考慮我們的苛性鹼和 PVC 出口時，您會發現該行業的出口量大約在 20% 的範圍內，而我們剛剛低於這個數字。從 PVC 的角度來看，該行業在 30 年代就一直在出口。因此，我們也低於該閾值，因為請記住，PVC 正在進入我們的建築產品業務。因此，我們自己的 PVC 國內消費數據相當不錯。

Our next question comes from the line of Matthew Blair with TPH.

我們的下一個問題來自 Matthew Blair 與 TPH 的對話。

Could you share any more color on the $50 million outage impact in PEM in Q2. What assets did that impact? And were they fully back up and running by July 1? Or do you expect anything to roll into Q3? And then also, are there any planned turnarounds for Q3 or Q4 that we should be keeping in mind?

您能否分享有關第二季度 PEM 5000 萬美元中斷影響的更多信息？這影響了哪些資產？他們在 7 月 1 日之前完全恢復並運行了嗎？或者您預計第三季度會有什麼進展？另外，我們應該牢記第三季度或第四季度是否有任何計劃周轉？

Yes. And so in terms of the businesses within PEM, it was in our core Vinyls business. And I would say that we obviously took corrective action in the second quarter, and I think those issues are behind us as we are into the third quarter at this stage.

是的。因此，就 PEM 內部的業務而言，它屬於我們的核心乙烯基業務。我想說，我們顯然在第二季度採取了糾正行動，我認為這些問題已經過去，因為我們現階段已經進入第三季度。

As our turnaround is concerned, there are always small turnaround going on, but nothing major.

就我們的轉變而言，總是會發生一些小轉變，但沒有什麼大的轉變。

Yes.

是的。

Okay. Sounds good. And then, Albert, I think you mentioned that you're matching up production with demand. Could you clarify when you run your ECU assets, are you matching up to the caustic demand in the market or to chlorine demand in the market?

好的。聽起來不錯。然後，阿爾伯特，我想你提到過你正在將生產與需求相匹配。您能否澄清一下，當您運行 ECU 資產時，您是否滿足市場的苛性鹼需求或市場的氯需求？

Depending on the products and markets and pricing, certainly, we would look out for all these areas. Right now, the PVC demand is being the construction season that's stronger and caustic demand is a bit weaker. Caustic price has been coming down globally every month gradually. So until the industrial activity picks up, economy picks up, the caustics is coming -- become weaker.

當然，根據產品、市場和定價，我們會關注所有這些領域。目前，PVC需求正值建築旺季，腐蝕性需求稍弱。全球苛性鹼價格每個月都在逐漸下降。因此，在工業活動回升、經濟回升之前，腐蝕即將到來——變得更弱。

Okay. And are you running to meet all of that chlorine demand? And I guess the implication is with that -- I mean the caustic side is oversupplied?

好的。您是否正在努力滿足所有氯需求？我想這意味著——我的意思是腐蝕性方面供應過剩？

It's a combination. We have plans integrated to chlorine PVC and we have plans that not integrate it. So depending on where they are and the market situation in those areas we adjust.

這是一個組合。我們有整合氯 PVC 的計劃，也有不整合氯 PVC 的計劃。因此，我們會根據他們所在的位置以及這些地區的市場情況進行調整。

Our next question comes from the line of Arun Viswanathan from RBC Capital Markets.

我們的下一個問題來自加拿大皇家銀行資本市場 (RBC Capital Markets) 的阿倫·維斯瓦納坦 (Arun Viswanathan)。

Just wanted to look into the PVC side. You noted some weakness maybe in PEM driven by epoxy and [PE], but what are your comments on PVC as you head into the rest of the year, there's been obviously some volatility on the ethane and ethylene side. Is that affecting PVC? And then similarly, building products and the housing environment with your outlook for PVC market with...

只是想看看 PVC 的一面。您指出，在環氧樹脂和[PE]的推動下，PEM可能會出現一些疲軟，但在進入今年剩餘時間時，您對PVC有何評論，乙烷和乙烯方面顯然存在一些波動。對PVC有影響嗎？同樣，建築產品和住房環境以及您對 PVC 市場的展望......

Sure. As we said earlier, PVC market has turned tighter, export prices improved, demand being a seasonal quarter, has increased domestically and internationally. So there's price announcements for both August and September, domestically in the U.S. And if you look at the consultants' view of pricing, they think in this pretty much flat from a -- maybe it will increase in the third quarter, down a little bit in the fourth quarter. And they're also looking at prices improving next year. So I think just from general view of the market, it seems PVC is stabilized and it's improving going forward.

當然。正如我們之前所說，PVC市場趨緊，出口價格上漲，國內和國際需求呈季節性季度增長。因此，美國國內的 8 月和 9 月都有價格公告，如果你看看顧問對定價的看法，他們認為這與上年基本持平，也許第三季度會有所增加，略有下降在第四季度。他們還預計明年價格會有所改善。因此，我認為僅從市場總體來看，PVC 似乎已經穩定，並且未來正在改善。

And I just wanted to also ask about the compounding and European side. Are there any nuances that you'd add to your comments as it refers to that part of the business?

我只是想問一下複利和歐洲方面的情況。當您的評論涉及到該業務部分時，您是否會添加任何細微差別？

So Arun, the compounding business has been a nice business. We -- as you know, the markets that we're addressing really are the wire and cabling business, the medical and auto businesses. And that business continues to perform well. As we think about some of the contributions we've been making really in the wire and cabling business, we've mentioned the strength we've seen really in the infrastructure bill, and part of that is Internet connectivity. And certainly, we also see that wire and cabling going into the construction markets as we see housing starts. Of course, the auto business, the medical businesses have their own cycles, but continue to be good markets at this stage. And so we're pleased with that compounding business, both domestically as well as in Europe.

所以阿倫，複合業務一直是一項不錯的業務。如您所知，我們所針對的市場實際上是電線電纜業務、醫療和汽車業務。該業務繼續表現良好。當我們思考我們在電線和電纜業務中真正做出的一些貢獻時，我們提到了我們在基礎設施法案中真正看到的優勢，其中一部分是互聯網連接。當然，隨著房屋開工，我們也看到電線和電纜進入建築市場。當然，汽車業務、醫療業務都有自己的周期，但現階段仍然是良好的市場。因此，我們對國內和歐洲的複合業務感到滿意。

Our next question comes from the line of Vincent Andrews from Morgan Stanley.

我們的下一個問題來自摩根士丹利的文森特安德魯斯。

This is Turner Hinrichs on for Vincent. You commented that you're optimistic about the longer-term opportunity from public and private investments in U.S. infrastructure and construction. Can you size the degree of exposure Westlake has to these medium-term tailwind we generally think of Westlake as having more residential and nonresidential exposure. So any color and potential sizing of the opportunity would be helpful.

我是特納·辛里奇 (Turner Hinrichs) 替補文森特 (Vincent)。您評論說，您對美國基礎設施和建築領域公共和私人投資的長期機會持樂觀態度。您能否衡量西湖對這些中期順風的暴露程度？我們通常認為西湖有更多的住宅和非住宅風險。因此，機會的任何顏色和潛在規模都會有所幫助。

Yes. And so when you think of our Infrastructure Products business, our Pipe & Fittings business, we are seeing the majority of that going into residential construction, but certainly, there is a significant portion, not 50%, but a significant portion, nevertheless, that is a larger diameter pipe that is well suited for the infrastructure bill that we see, that's $55 billion that is sizable that will address the infrastructure needs the country has. So we think we're very well positioned to be able to address those needs for counties and municipalities.

是的。因此，當你想到我們的基礎設施產品業務、我們的管道和配件業務時，我們看到大部分業務都進入了住宅建設，但當然，有很大一部分，不是50%，但仍然有很大一部分，是一種較大直徑的管道，非常適合我們所看到的基礎設施法案，該法案價值 550 億美元，可滿足該國的基礎設施需求。因此，我們認為我們完全有能力滿足縣和市的這些需求。

So we are one of the largest-diameter pipe for water and sewer as mentioned, as Steve mentioned, municipalities. But also, our epoxy business is a major supplier for coatings for any infrastructure bridges and structures. So as those funds are getting sent to the municipalities and government -- state governments, we'll see more demand for both PVC and as well as for epoxy.

因此，正如史蒂夫提到的，我們是最大直徑的供水和污水管道之一。而且，我們的環氧樹脂業務也是任何基礎設施橋樑和結構塗料的主要供應商。因此，隨著這些資金被送到市政府和州政府，我們將看到對 PVC 和環氧樹脂的需求增加。

Okay. That makes a lot of sense. I was also wondering if you could remind us of your view of HIP's profit margin through the cycle from trough to peak. And has that changed at all with mix?

好的。這很有意義。我還想知道您是否可以提醒我們您對 HIP 從低谷到高峰週期的利潤率的看法。混合之後這種情況有改變嗎？

No. I think what you've seen is the very resilient capabilities of the business to scale based on market conditions. And you can see the -- I think the performance in this market where we have housing starts at about 1.4, averaging over the course of the second quarter with still margin -- EBITDA margins in the 22% range. And so when you think of the business and its ability to scale, we think it's a very good business and certainly has an ability to perform well beyond the kind of margins we're delivering even in this market condition. .

不。我認為您所看到的是企業根據市場條件進行擴展的非常有彈性的能力。你可以看到——我認為這個市場的表現，我們的新屋開工率約為 1.4，第二季度的平均水平仍然存在——EBITDA 利潤率在 22% 的範圍內。因此，當你想到這項業務及其擴展能力時，我們認為這是一項非常好的業務，而且即使在這種市場條件下，它的利潤率也肯定有能力遠遠超出我們所提供的利潤率。 。

So given the strength of the product brands that we have and the customer relationships and the innovation that comes out of that business because it's very brand-oriented, as you would guess. We think has good upside to it. We have not given specific guidance of margins beyond the current guidance we've been providing. But I would say that we do see good solid upside in that business.

因此，考慮到我們擁有的產品品牌的實力、客戶關係以及該業務帶來的創新，因為正如您所猜想的那樣，它非常以品牌為導向。我們認為它有很好的好處。除了我們目前提供的指導之外，我們還沒有給出具體的利潤指導。但我想說的是，我們確實看到了該業務的良好上升空間。

Our next question comes from the line of Michael Sison from Wells Fargo.

我們的下一個問題來自富國銀行的邁克爾·西森。

Albert, when you think about your portfolio after the Boral transaction, what -- are there any other product lines or sort of areas you'd like to do acquisitions to sort of continue to expand that business and longer term?

艾伯特，當您考慮 Boral 交易後的投資組合時，您是否希望收購其他產品線或某些領域，以繼續擴大該業務並實現長期發展？

Well, we are very pleased with our PEM and HIP business, and we have 9 strategic business units, each one are leaders in the markets around the world, and we can grow organically at these -- in these 9 platforms as well as potential integration, vertically adjacencies, so on and so forth. So as Steve mentioned, we are in constant dialogue with various parties looking opportunities as well as we are doing a lot of internal studies on debottlenecking where we have opportunity in the markets and also reducing our cost. The cost reduction is a major continuous improvement, is a major part of our internal initiatives and reliability. So we're working on all these areas. But certainly, outside inorganic growth is something we're also looking at.

嗯，我們對我們的 PEM 和 HIP 業務非常滿意，我們有 9 個戰略業務部門，每個部門都是全球市場的領導者，我們可以在這 9 個平台以及潛在的整合中實現有機增長，垂直相鄰，依此類推。正如史蒂夫所提到的，我們不斷與各方對話以尋找機會，並且我們正在進行大量內部研究，以消除我們在市場上有機會的瓶頸，並降低我們的成本。成本降低是一項重大的持續改進，是我們內部舉措和可靠性的重要組成部分。所以我們正在所有這些領域開展工作。但當然，我們也在關注外部無機增長。

Got it. And then just as a follow-up. If China continues to recover, will China end up importing PVC again? And if they do start importing PVC, what do you think -- or how do you think that affects margins here in the U.S.? And how much (inaudible) could go from here...

知道了。然後作為後續行動。如果中國繼續復甦，中國最終會再次進口PVC嗎？如果他們確實開始進口 PVC，您認為這會如何影響美國的利潤率？還有多少（聽不清）可以從這裡開始......

I think so long China stop exporting PVC, that will be very good. As you know, I think in our investor slides, we show that global additions of chlor-alkali and PVC capacities are below the GDP growth. And typically, we're looking at about -- around the GDP growth as a measure. And as for many years and projected going forward, (inaudible) are below GDP growth. So we believe that the business and also -- there's a lot of energy needed to make ethylene, to make chlor-alkali. And U.S., by far, the lowest energy cost producer in the world. So having a piece of advantage and energy advantage makes us much more competitive. Anybody else in the world in making PVC and chlor-alkali. So with the lack of new investment and with our cost position, we can really have a very good position globally in our business.

我認為中國長期停止出口PVC，那將是非常好的。如您所知，我認為在我們的投資者幻燈片中，我們表明全球氯鹼和聚氯乙烯產能的新增產能低於 GDP 增長。通常，我們會以 GDP 增長作為衡量指標。多年來和預計的未來，（聽不清）都低於 GDP 增長。因此，我們相信，生產乙烯和氯鹼需要大量能源。迄今為止，美國是世界上能源成本最低的生產國。因此，擁有一定的優勢和能源優勢使我們更具競爭力。世界上還有其他人生產 PVC 和氯鹼。因此，由於缺乏新的投資以及我們的成本狀況，我們確實可以在全球業務中擁有非常好的地位。

Our next question comes from the line of Frank Mitsch from Fermium Research.

我們的下一個問題來自 Fermium Research 的 Frank Mitsch。

I guess the pronunciation was close enough. I noticed that the inventory levels dropped 9% sequentially -- your inventory levels dropped 9% sequentially. I assume some of that might be selling out of inventory from the unplanned downtime or lower pricing. And so, can you talk about some of the factors there and what we should be expecting to see happen on that line?

我想發音已經足夠接近了。我注意到庫存水平環比下降了 9%——你們的庫存水平環比下降了 9%。我認為其中一些可能是由於計劃外停機或較低的價格而導致庫存售罄。那麼，您能談談其中的一些因素以及我們應該期待在這條線上發生什麼嗎？

Yes. So Frank, so you're right, because of some of the both planned and unplanned outages, inventory did come down because obviously, we were not producing during those outages, but we were selling. And so naturally, that has an impact on inventories. But when you think of where -- as we think about where producers are, we're continuing to address and adjust our production levels to meet market demand conditions. So I would say that as we think about it, inventory levels are over the course of the second half of the year should be kind of in the medium level. And so as you think about it, both vinyl as well as polyethylene.

是的。弗蘭克，所以你是對的，由於一些計劃內和計劃外的停電，庫存確實下降了，因為顯然，我們在這些停電期間沒有生產，但我們在銷售。因此，這自然會對庫存產生影響。但是，當你想到哪裡時 - 正如我們想到生產商在哪裡時，我們正在繼續解決和調整我們的生產水平以滿足市場需求條件。所以我想說，正如我們所考慮的那樣，今年下半年的庫存水平應該處於中等水平。因此，正如您所想，乙烯基和聚乙烯都是如此。

Okay. And one of the features of I think the last conference call was -- speaking of inventories was talking about customer destocking, et cetera. Do you feel that we're at an underlying level of demand throughout all of your businesses? Or are there businesses that are still seeing some destocking going on?

好的。我認為上次電話會議的特點之一是——談到庫存就是談論客戶去庫存，等等。您是否認為我們在您的所有業務中處於潛在需求水平？或者是否有企業仍在減少庫存？

Yes. I'd say, Frank, that the destocking really started almost a year ago in this business and so accelerated at the very end of last year. So I would say that we're at a point in time where our customers' inventory levels are at, I would say, low to low medium levels. And so, I would not say that we continue to see any destocking. That's behind us at this stage.

是的。弗蘭克，我想說的是，這個行業的去庫存實際上是在大約一年前開始的，並且在去年年底加速了。所以我想說，我們現在的客戶庫存水平處於低至中低水平。因此，我不會說我們會繼續看到任何去庫存的情況。現階段這已經落後於我們了。

Frank, I just want to add also that with high interest rates and uncertainty in the economy, our customers are very careful they only order when they need to.

弗蘭克，我還想補充一點，由於利率高且經濟不確定，我們的客戶非常小心，他們只在需要時才訂購。

Our next question comes from the line of John Roberts, Credit Suisse.

我們的下一個問題來自瑞士信貸銀行的約翰·羅伯茨。

Back to Building Products, do you have a sense for the divergence between new construction and repair and remodeling activity?

回到建築產品，您是否意識到新建建築與維修和改造活動之間的差異？

So John, I would say that we did see continued strong demand in both sides of that HIP business. So strong demand really in repair and remodeling. And given the 1.4 million average start number, you can see, again, a resilient business being able to adjust to lower volumes year-over-year and still continue to perform. So I would say both the starts, the new construction activity in repair and remodeling continued to perform well in both sides of the HIP business.

所以約翰，我想說我們確實看到 HIP 業務雙方的需求持續強勁。維修和改造的需求確實如此強烈。考慮到 140 萬的平均起始數量，您可以再次看到，一家有彈性的企業能夠適應逐年下降的銷量，並且仍然繼續表現。因此，我想說，HIP 業務的雙方在維修和改造方面的開工、新建築活動繼續表現良好。

And then you noted merchant chlorine volume was up sequentially Q-over-Q. Was that largely greater availability given the weakness in vinyls? Or was demand actually strong in chlorine?

然後您注意到商業氯量環比增長。考慮到黑膠唱片的疲軟，可用性是否大幅提高？或者氯的需求實際上很強勁嗎？

In the summertime, there is a pickup for water treatment activity in chlorine, and so that's part of that story, John.

在夏季，氯水處理活動會增加，這就是故事的一部分，約翰。

Our last question comes from the line Hassan Ahmed from Alembic Global Advisers.

我們的最後一個問題來自 Alembic Global Advisers 的 Hassan Ahmed。

A question around ECU pricing. Operating rates globally seem to be quite depressed. Yet I know caustic soda pricing has come down recently, but on an ECU basis, pricing relative to history continues to be quite strong. So my question really is how sustainable are those pricing levels?

關於 ECU 定價的問題。全球開工率似乎相當低迷。然而，我知道燒鹼價格最近有所下降，但以 ECU 為基礎，相對於歷史價格而言，價格仍然相當強勁。所以我的問題實際上是這些定價水平的可持續性如何？

Well, demand for chlorine derivatives are still strong. PVC, we mentioned globally, even though some global prices has bottomed out, we believe, will improve and housing demand, we think both new construction, and repair and remodeling, R&R, is still pretty strong and global demand, India is coming out of the monsoon, the demand is coming back.

那麼，對氯衍生物的需求仍然強勁。 PVC，我們在全球範圍內提到，儘管一些全球價格已經觸底，但我們相信，住房需求將會改善，我們認為新建建築、維修和改造、R&R 仍然相當強勁，全球需求，印度正在走出困境季風來襲，需求又回來了。

So I think chlorine demands are very strong, but I won't say that it's really peaking, but it's coming back from the bottom. I think caustic has really followed the general industrial activity. And in U.S. so far, we still have positive GDP. And I think most of the countries in the world having positive GDP in Europe and Asia, but at a low level. So as they improve I think the demand will get strong. And more so, as I mentioned earlier, there's very little new capacity added around the world as demand continues to grow, hence makes the supply-demand tighter going forward.

所以我認為氯的需求非常強勁，但我不會說它真的達到了峰值，但它正在從底部回歸。我認為苛性鹼確實跟隨了一般工業活動。到目前為止，美國的 GDP 仍然為正值。我認為世界上大多數國家在歐洲和亞洲的GDP均為正值，但水平較低。因此，隨著它們的改進，我認為需求將會變得強勁。更重要的是，正如我之前提到的，隨著需求持續增長，全球新增產能很少，從而導致未來供需更加緊張。

Understood. Very helpful. And just sort of following up where you left off on sort of chlorovinyl supply-demand dynamics. Look, one of the virtues, I guess, or positives of the chlorovinyl story was lack of investment undersupply, call it, right? And one of your large competitors recently has talked about considering sort of chlorovinyls investments in Texas, in particular. So how do you see the supply-demand story with that announcement out there now? Do you still feel that in the medium to longer term, that market will be sort of undersupplied and will continue to sort of tighten?

明白了。很有幫助。只是跟進你上次停下來的氯乙烯基供需動態。看，我想，氯乙烯基故事的優點之一，或者說積極的一面是缺乏投資，供應不足，稱之為，對吧？您的一位大型競爭對手最近談到考慮特別是在德克薩斯州進行氯乙烯投資。那麼，您如何看待現在發布的公告所涉及的供需情況呢？您是否仍然認為從中長期來看，該市場將出現供應不足並繼續趨緊的情況？

Well, as I said earlier, globally, there's undersupply. So one plant would not make much difference. But as you know, this -- the vinyl business, unlike the olefins business, other business, it's very much integrated, you need a lot of investments, whether it's chlorine, power plants or renewable power, ethylene plants and VCM, EDC and PVC. It's very complete, very heavy investment and very seasonal business. So we are looking purely on the return investments. So as we mentioned earlier, we're looking at organic growth and find out which will give us adjusted return on a long-term basis above the cost of capital.

嗯，正如我之前所說，全球範圍內都存在供應不足的情況。因此，一株植物不會產生太大影響。但正如你所知，乙烯基業務與烯烴業務和其他業務不同，它是非常一體化的，你需要大量投資，無論是氯氣、發電廠還是可再生能源、乙烯工廠以及 VCM、EDC 和 PVC 。它非常完整，投資非常大，而且業務季節性很強。因此，我們純粹關注投資回報。因此，正如我們之前提到的，我們正在關注有機增長，並找出哪種增長將為我們帶來高於資本成本的長期調整回報。

So we're not looking at short-term returns only, it's very long -- on a long-term basis, this business has been, as you know, challenging in the past. And China is one of the major issues. And as a big -- like anything in our industry, what China does have a huge impact and China going through its own review of double control energy, global warming, which area they want to allow for investments and phasing out of some high energy industries. So all that is going on and uncertainty going on (inaudible).

因此，我們不僅僅著眼於短期回報，它是非常長期的——從長期來看，正如你所知，這項業務在過去一直充滿挑戰。中國是主要問題之一。作為一個大國，就像我們行業中的任何事物一樣，中國確實產生了巨大的影響，中國正在對能源雙重控制、全球變暖、他們希望允許投資的領域以及逐步淘汰一些高能源行業進行審查。所以所有這些都在發生，不確定性也在發生（聽不清）。

At this time, I'm showing no further questions. And I would now like to turn the conference back to Jeff Holy for closing remarks.

目前，我沒有再提出任何問題。現在我想請傑夫·霍利 (Jeff Holy) 致閉幕詞。

Thank you. Thank you, everyone, for participating in today's call. We hope you'll join us again for our next conference call to discuss our third quarter 2023 results.

謝謝。謝謝大家參加今天的電話會議。我們希望您能再次參加我們的下一次電話會議，討論我們 2023 年第三季度的業績。

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

謝謝。今天的電話會議到此結束。感謝您的參與。您現在可以斷開連接。