Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Westlake Chemical (NYSE:WLK)

Q3 2012 Earnings Call

November 08, 2012 11:00 am ET

Executives

David R. Hansen - Senior Vice President of Administration

Albert Y. Chao - Chief Executive Officer, President, Director, Member of Nominating & Governance Committee, Member of Compensation Committee and Member of Corporate Risk Committee

M. Steven Bender - Chief Financial Officer, Senior Vice President and Treasurer

Analysts

Brian Maguire - Goldman Sachs Group Inc., Research Division

Ben Richardson - JP Morgan Chase & Co, Research Division

Frank J. Mitsch - Wells Fargo Securities, LLC, Research Division

Aleksey V. Yefremov - BofA Merrill Lynch, Research Division

Hassan I. Ahmed - Alembic Global Advisors

Gregg A. Goodnight - UBS Investment Bank, Research Division

Donald Carson - Susquehanna Financial Group, LLLP, Research Division

Robert Reitzes

Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Westlake Chemical Corporation Third Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, ladies and gentlemen, this conference is being recorded today, November 8, 2012. I would now like to turn the call over to today's host, Dave Hansen, Westlake's Senior Vice President of Administration. Sir, you may now begin.

David R. Hansen

Thank you very much. Good morning, everyone, and thank you for joining us for the Westlake Chemical Corporation Third Quarter Conference Call. I am joined today by Albert Chao, our President and CEO; Steve Bender, our Senior Vice President and Chief Financial Officer; and other members of our management team. The agenda for today will be as follows: Albert will first make a few comments regarding Westlake's performance in the third quarter, and then give our current perspective on the industry; Steve will then provide you with a more detailed look at our financial and operating results; Albert will have a few concluding comments; and then we'll open the call up for questions.

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. Actual results could differ materially based upon factors including the cyclical nature of the chemical industry; availability, cost and volatility of raw materials, energy and utilities; governmental regulatory actions and political unrest; global economic conditions; industry operating rates; the supply-demand balance for Westlake's products; competitive products and pricing pressures; access to capital markets; technological developments; and other risk factors.

Westlake issued earlier this morning a press release with details of our quarterly financial and operating results. This document is available in the Press Release section of our webpage at westlake.com.

A replay of today's call will be available beginning 2 hours after completion of this call until 11:59 p.m. Eastern Time on November 15, 2012. The replay may be accessed by dialing the following numbers: domestic callers should dial 1 (888) 286-8010, international callers may access the replay at (617) 801-6888. The access code for both numbers is 37113299.

Please note that information reported on this call speaks only as of today, November 8, 2012. And therefore, you are advised that time-sensitive information may no longer be accurate as of the time of any replay.

I would finally advise you that this conference is -- conference call is being broadcast live through the Internet webcast system and that it can be accessed on our webpage at westlake.com.

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

Albert Y. Chao

Thank you, Dave. Good morning, ladies and gentlemen, and thank you for joining our earnings call. This morning, Westlake reported the strongest third quarter in our history with a net income of $87 million, or $1.30 per diluted share, on sales of $821 million. The earnings per share of $1.30 include the impact of costs related to a scheduled plant outage and debt retirement costs totaling $0.17 per share.

Our Olefins segment again delivered a strong performance. The improvement in performance of our Vinyls segment continued with its third consecutive quarterly increase in operating income.

The decrease in feedstock costs continued in the third quarter, particularly for ethane. The growing production of natural gas liquids from shale gas and oil production have caused ethane supply to become long as significant capacity in fractionation and pipeline infrastructure bring ethane to market faster than the North American chemical industry can consume it. Westlake's earnings this quarter reflected this ongoing benefit of expansion in shale gas production.

These lower-cost feedstocks have reset the North American chemical industry's cost position globally and have spurred a resurgence in debottlenecking and other expansion projects to capitalize on this advantageous position.

Now let me turn over to Steve for a more detailed look in our financial and operating results for the third quarter.

M. Steven Bender

Thank you, Albert, and good morning, everyone. I will begin with a discussion of the consolidated financial results, followed by a more detailed discussion of our Olefins and Vinyls segment results.

Let me start with our consolidated results. As we reported in this morning's press release, Westlake had third quarter earnings of $87 million, or $1.30 per diluted share, a 29% improvement over the $68 million, or $1.01 per diluted share, in the third quarter of 2011.

This quarter's results included the impact of $7 million, or $0.07 a share, related to debt refinancing costs and $10.5 million, or $0.10 a share, due to the unabsorbed manufacturing costs related to the scheduled turnaround of our styrene unit. Olefins margins increased in the third quarter of 2012 compared to the same period in 2011 due to a significant decrease in feedstock cost, strong ethylene demand and robust polyethylene sales volumes.

Westlake's third quarter operating income of $143 million on sales of $821 million was driven by significant lower feedstock costs when compared to the operating income of $117 million on sales of $968 million in the third quarter of 2011.

Comparing the third quarter of 2012 to the third quarter of 2011, ethane prices decreased 56% from an average of $0.78 a gallon to an average of $0.34 a gallon. This sharp decrease in feedstock prices, coupled with increases in sales volumes for polyethylene, PVC resin, caustic and building products drove the improvement in operating margins year-over-year.

Sales of $821 million in the third quarter of 2012 were $93 million lower than sales in the second quarter of 2012 of $914 million due mostly to lower feedstock sales volumes and lower sales prices for most of our major projects -- products.

Operating income in the third quarter of 2012 of $143 million was $28 million lower than the $171 million earned in the second quarter. Integrated olefins and vinyls margins were impacted by lower polyethylene and PVC sales prices and higher feedstock cost and inventory at the end of the second quarter of 2012, which flowed through cost of sales in the third quarter.

For the 9 months ended September 30, 2012, we delivered net income of $290 million, a 25% increase over the $233 million dollars reported in the first 9 months of 2011.

Income from operations in the first 9 months in 2012 was $459 million compared to $396 million for the first 9 months of 2011. The increase in income from operations is a result of higher integrated margins in both segments resulting from a significant drop in ethane and propane feedstock cost. Industry ethane prices fell from an average of $0.74 a gallon in the first 9 months of 2011 to $0.44 a gallon for the same period in 2012, a decrease of 41%. While ethane prices reflect a significant decrease, polyethylene prices fell by $0.03 a pound compared to the same period in 2011, resulting in higher integrated margins on polyethylene sales.

Now let's talk about LIFO versus FIFO accounting. Our utilization of the FIFO method of accounting resulted in an unfavorable impact of $19 million pretax, or $0.19 a share, in the third quarter compared to what earnings would have been had we used the LIFO method. The third quarter FIFO impact was significant due to the drop in feedstock costs in the third quarter and as a result of ethylene purchases we made due to the unplanned ethylene outages we experienced in the second quarter. The benefit of the lower-cost feedstocks we've seen in the third quarter should be more fully evident in the fourth quarter. Please bear in mind that this calculation is only an estimate and has not been audited.

Now let's review the performance of our 2 segments. Starting with the Olefins segment, the Olefins segment reported a net operating income of $124 million during the third quarter of 2012, which was an increase of $19 million from the $105 million reported in the third quarter of 2011. The Olefins segment third quarter 2012 results included the impact of $10.5 million in costs related to the turnaround of our styrene unit. The increase in Olefins operating income is largely attributable to the increase in integrated Olefins margins resulting from the sharp decrease in feedstock costs, partially offset by lower prices for polyethylene.

Ethane prices fell primarily due to ample supply provided by ethane shale gas production and the expansion of pipeline capacity to deliver to the Gulf Coast.

Our Olefins segment margins result from decreased feedstock cost, solid demand for polyethylene and our advantaged production slate of higher-margin polyethylene products. Thus, an important factor of profitability continues to be the spread between the ethane price and polyethylene price.

Comparing the third quarter of 2012 to the second quarter of 2012, earnings from operations decreased from $156 million to $124 million, a decrease of $32 million. The lower margins were the result of the $10.5 million impact of the styrene unit turnaround, lower polyethylene prices and the unfavorable impact on cost of sales utilizing the FIFO method of accounting. As I mentioned earlier, the FIFO impact was largely due to ethylene purchases we made as a result of the unplanned ethylene cracker outages in the second quarter.

Looking forward, the industry has announced a $0.05 per pound increase in polyethylene prices for November.

Now to discuss the Vinyls segment. The Vinyls segment reported its third consecutive quarterly improvement in operating income. The Vinyls segment reported operating income of $24 million, an increase of $8 million over the $16 million reported in the third quarter of 2011. The increase in operating income was attributable to lower propane feedstock cost and higher building products and caustic sales volume. Propane feedstock prices decreased 42% in the third quarter of 2012, which outpaced decreases in PVC resin sales prices, resulting in higher integrated Vinyls margins.

For the first 9 months of 2012, the Vinyls segment reported operating income of $68 million compared to $27 million reported in the same period in 2011.

The significant increase in Vinyls operating income in the first 9 months of 2012 is the result of lower feedstock and energy costs and higher building products and caustic sales margins and sales volumes. Industry PVC resin prices rose $0.03 a pound in September, and the industry is supporting a $0.03-per-pound increase for the fourth quarter.

Caustic demand remained strong in the third quarter, and industry producers were able to increase prices by an average of $40 per ton. Several producers have announced price increases of between $35 and $70 a ton for the fourth quarter as a result of higher exports and tight domestic supply.

Now turning to the balance sheet and the statement of cash flow. We generated $501 million in cash from operating activities in the first 9 months of 2012 and spent $235 million on capital expenditures.

At the end of the third quarter, our cash balance was $1.2 billion, and our total debt was $764 million.

As we previously announced, in July, we redeemed $250 million of our 6.625% percent notes and refinanced them with new 10-year notes at 3.6%, cutting $7.6 million in interest cost per year.

We have revised our guidance for our capital expenditures for 2012 to be in the range of $300 million to $325 million due to rescheduling the -- of the ethane cracker expansion at our Lake Charles facility to the first quarter of 2013. We expect the cracker to be down for approximately 50 days in the first quarter as a result of the turnaround and expansion project.

The flexibility of our capital structure gives us a variety of options when we considering future growth projects, and we continue to search for investment opportunities, both internally and externally. This flexibility allows us to maintain our balanced approach while investing, while pursuing projects that will bring value to our shareholders.

Now I'd like to turn the call back over to Albert to make some closing comments. Albert?

Albert Y. Chao

Thank you, Steve. I'm pleased with our strong third quarter performance and believe our results reflect the earnings power of the company. The significant decrease in ethane and propane prices this year and the announced further expansions in shale gas production, fractionation facilities and pipelines set in motion a fundamental shift in the cost structure of the North American chemical industry, which we've just begun to see.

The billions of dollars in capital being invested in North America to produce, fractionate and transport the natural gas liquids production from shale gas properties ensures that the shale gas advantage will benefit the North American light ethylene crackers, such as Westlake's, for years to come. We have continued our pursuit of near-term growth initiatives to leverage our shale gas benefits we see.

In September, we announced a series of growth plans for our Calvert City, Kentucky facility. These include expansions of our Calvert City ethylene unit by 40% from 450 million pounds to 630 million pounds per year, the conversion of that unit from propane to ethane feedstock and expansion of our PVC facility in Calvert City by 200 million pounds a year.

The financial benefits of our expansion plans will materialize beginning in the first quarter of 2013 with expansion of one of our ethane units in Lake Charles and the start-up of the chlor-alkali unit at Geismar in the second half of 2013. In 2014, we'll see the financial contributions from the completion of our expansion plans in Calvert City in PVC and in ethylene. And in 2015, we'll complete yet another ethylene expansion in Lake Charles.

Finally, I would like to discuss MLPs. We look for avenues to grow our business and enhance our shareholders' value, and the consideration of an MLP structure is no exception. This is a complex area. It'll take some time to evaluate the merits of an MLP structure for some of our assets. We'll certainly assess the merits of an MLP structure, along with other activities that we see will create shareholder value.

Thank you very much. Now let me turn the call over to Dave Hansen.

David R. Hansen

Thank you very much, Albert. Ladies and gentlemen, before we begin taking questions, I would like to remind you that a replay of this teleconference will be available starting 2 hours after we conclude the call. We'll provide that number again at the end of the call. Operator, we're now prepared to take questions.

Question-and-Answer Session

Operator

Operator Instructions] Please stand by for your first question, which is from Brian Maguire from Goldman Sachs.

Brian Maguire - Goldman Sachs Group Inc., Research Division

Albert, I appreciate the comments around the MLP. I was wondering if maybe you could share, I mean, your line what are some of the pros and cons of doing that route as you see it now. I appreciate you still have a lot of work to do. But just maybe preliminarily, what are the things that will make it attractive or unattractive?

Albert Y. Chao

Well, it is a complex question. We do have an integrated operation in our business, and so we have to assess all the benefits and the pros and cons of MLP for some of our assets.

Brian Maguire - Goldman Sachs Group Inc., Research Division

Okay. Then just kind of a related question. And I guess about 2 days ago, we got some visibility into how the tax laws may change next year and going forward. I was wondering if there's any change in your view on -- around the special dividend. Or any decision in trying to return cash to shareholders before that dividend tax might go up after New Year's?

Albert Y. Chao

Yes. Well, as we've said before, we review our dividend every quarter in our Board meeting, and we'll be doing the same.

Brian Maguire - Goldman Sachs Group Inc., Research Division

Okay. And then one last one, if I could, on the Vinyls segment. It looked like you had some volume improvement. I'm guessing part of that was due to the building products plants finally starting to crank up utilization rates there a little bit with a rebound in construction. Could you maybe talk about that a little bit and where the utilization rates on those plants did versus where they were 5 years, 6 years ago when we were kind of in a more normal construction environment and what kind of spreads you're expecting in that part of your business?

Albert Y. Chao

Yes. In line with the increasing new home construction, we do see an improvement in our building product sales. But we are heading into the seasonally slow fourth quarter, and we're expecting to slow down in the fourth quarter.

Brian Maguire - Goldman Sachs Group Inc., Research Division

So the third quarter, was it up on a year-over-year basis and...

Albert Y. Chao

There was an improvement. As you know, this year's new home construction has improved over last year's. So good input [ph] business has improved compared with last year's same quarter.

Brian Maguire - Goldman Sachs Group Inc., Research Division

And the utilization rates on those plants, are they still kind of in the mid-60s, 70 percentage range?

Albert Y. Chao

They have improved but are still far from running at the capacity rates we'd like to see.

Operator

Your next question is from the line of Jeff Zekauskas from JPMorgan.

Ben Richardson - JP Morgan Chase & Co, Research Division

This is Ben Richardson sitting in for Jeff. I just had a quick question on -- addressing again the Vinyls segment. But what's your expectation for propane given the expected increase in propane export capacity? And how do you see that for '13?

Albert Y. Chao

Well, the future prices for propane is staying around the mid to high 90s. And we do not, at least for the -- on the future price quality [ph], do not see a real sharp uptick in prices going forward.

Ben Richardson - JP Morgan Chase & Co, Research Division

Okay. And again, addressing the propane in the Vinyls segment, for the -- it seems that the Calvert City propane cracker has been largely supporting the Vinyls results. And it seems that propane-based ethylene margins are strong again in the fourth quarter. Would it blunt some of the seasonality that we typically see in the fourth quarter?

Albert Y. Chao

You're talking about why we are cracking propane?

Ben Richardson - JP Morgan Chase & Co, Research Division

Yes, yes.

Albert Y. Chao

Yes, it seems the propane price has been -- become less seasonal than in the past because possibly the warmer winter or more production of the LPGs around -- in the metallic [ph] area, for example. So we are seeing less seasonality in the propane prices.

Ben Richardson - JP Morgan Chase & Co, Research Division

Okay. And will that translate into less seasonality in the Vinyls segment in general?

Albert Y. Chao

I think from a cost point of view, yes. But I think the demand for vinyl is still quite seasonal. Usually, the fourth and first quarter are slower than the second and third quarter.

Ben Richardson - JP Morgan Chase & Co, Research Division

Okay. As for the tax rate, we saw a drop this quarter. What's the outlook going forward?

M. Steven Bender

Yes, Ben, I would continue to use about a 35% tax rate going forward.

Operator

The next question is from Frank Mitsch from Wells Fargo Securities.

Frank J. Mitsch - Wells Fargo Securities, LLC, Research Division

Hey, I just wanted to follow up on some of the "unusuals" that we've been seeing. I know that in the second quarter, you had about $15 million in operational issues in the Olefin side of the equation. And I think at that point, you had anticipated a similar order of magnitude in the third quarter. This -- does -- was this styrene as part of that? Or was that separate? And can you talk a little bit about the third quarter in terms of operations and what might have been characterized as unusual?

M. Steven Bender

Yes, Frank, the impact that we spoke about in the second quarter was because of those ethylene outages that we had in the second quarter. And you're right, it did have a spillover effect into the third quarter, and that ethylene outage affected our results by about $17 million. But that was, of course, separate than the styrene turnaround that we talked about in our prepared remarks. That was, say, about $10.5 million or $0.10.

Frank J. Mitsch - Wells Fargo Securities, LLC, Research Division

All right, great. So Q3, you got $17 million plus the $10.5 million. So all in, about $27 million in operational issues?

M. Steven Bender

Right.

Frank J. Mitsch - Wells Fargo Securities, LLC, Research Division

All right, great. And then given that we are here late in the -- or mid kind of fourth quarter, can you talk about your volume trends in the Olefins business throughout the third quarter? How did it progress July, August, September? And then what are you seeing right now in terms of volumes in October?

Albert Y. Chao

Certainly. I think Olefins, from a polyethylene point of view, did quite well in the third quarter. Our styrene unit was turned around, so that volume went down. We expect to have a little slowdown, generally speaking, in the fourth quarter even for Olefins, which would be less so than the Vinyls business. But we see, as of now, the health of the polyethylene business is quite healthy in the U.S.

Frank J. Mitsch - Wells Fargo Securities, LLC, Research Division

All right, terrific. So, so far so good on that side of the equation, so of course I'm going to have to ask on the Vinyls side. I know that seasonally, you do expect it to slow down. But did you see October materially below September? Or did it continue at a similar rate on the Vinyls side?

Albert Y. Chao

Well, the fact that we're able to raise prices by $0.03 September and October coming up, which -- probably even November, I think the business is still quite healthy.

Operator

The next question is from Kevin McCarthy from Bank of America Merrill Lynch.

Aleksey V. Yefremov - BofA Merrill Lynch, Research Division

This is Alex Yefremov on for Kevin. A question about polyethylene inventory. How do you assess the current level of inventory for Westlake? And maybe to the extent you have visibility downstream on your competitors currently versus the end of Q3, has inventory levels gone up or down or unchanged?

Albert Y. Chao

We hope that with the price increase, the sales at end of third quarter was quite high. There are some possibly inventory buildup by the converters. I would think, on the average, both converters' and producers' inventories is in pretty normal level today.

Aleksey V. Yefremov - BofA Merrill Lynch, Research Division

Okay. And then I apologize if I missed it, but can you quantify the financial impact of your Lake Charles turnaround in Q1?

M. Steven Bender

In Q1, Alex, I think the comments we made would be it'd be out about 50 days of -- during the period of the turnaround. So I think you can use the estimates that you'd like to use for the margins to kind of back into what that number is going to be. But it's -- but I would say it's in the neighborhood of $50 million to $60 million impact using today's margins.

Aleksey V. Yefremov - BofA Merrill Lynch, Research Division

Got it. And then finally, if you can share any thoughts, if you're aware of -- that there has been -- in the -- Iran has been in the news in regard to regulation of polyethylene exports to the extent it can impact global polyethylene prices and maybe prices in the U.S. Can you share any thoughts on this?

Albert Y. Chao

Well, Iran usually exports their polyethylene to Asia, primarily China. So that would have some impact on the Asian prices.

Aleksey V. Yefremov - BofA Merrill Lynch, Research Division

Do you think it could have a material impact on Asian prices? Or that it's too soon to be seen what the impact is?

Albert Y. Chao

It'll have some impact on the Asian prices.

Operator

The next question is from Hassan Ahmed from Ambic (sic) [Alembic] Global.

Hassan I. Ahmed - Alembic Global Advisors

Quick question. First of all, I joined the call a bit late, so maybe I missed this. But what was the FIFO impact in the quarter?

M. Steven Bender

It was $19 million or $0.19.

Hassan I. Ahmed - Alembic Global Advisors

$19 million. Okay. Now continuing with the Asia theme. Recently in the news, I was reading about Mitsubishi Chemical talking about shutting one of its ethylene facilities out in Japan. Obviously, with profitability the way it is here in the U.S. on the back of the ethane advantage and the like, we tend to forget that in Asia, obviously, margins continue to remain quite weak. So the question is that is this Mitsubishi announcement a one-off? Or are you hearing of more of these Asian producers considering similar shutdowns?

Albert Y. Chao

That's good question. I think some of the Asian naphtha crackers are losing money in the operation. They may make profits in the downstream area, so they can afford to shut down the upstream. Some of the older, smaller plants may have more pressures of shutdowns in the future.

Hassan I. Ahmed - Alembic Global Advisors

If you were to sort of peg a region or individual countries, I mean, do you think that it would be the Japanese, Taiwanese, Koreans who would be considering this? Because obviously, historically, they found a large export market into China, which now, with the U.S. and the Middle Eastern sort of companies angling for those markets, things would be shaky for these guys.

Albert Y. Chao

Yes, I think it's a good guess. Smaller and older ethylene plants and less integrated ethylene plants will be very vulnerable, in our opinion.

Operator

The next question is from Greg Goodnight from UBS.

Gregg A. Goodnight - UBS Investment Bank, Research Division

Your FIFO hit, how did that break down between the 2 segments?

M. Steven Bender

Again, we don't typically break that up, Greg, between segments. But I think you could imagine that it's -- given the relative size of our business, it's predominantly in the Olefins side of the business.

Gregg A. Goodnight - UBS Investment Bank, Research Division

Okay. Could you speak to your decision to move your shutdown from the fourth quarter to the first quarter? Was it a matter of getting ready for it? Was it opportunistic with the current level of margins? What was the reason?

Albert Y. Chao

A bit of both. I think we want to optimize the timing of the shutdown. So we find that the first quarter is better than the fourth quarter.

Gregg A. Goodnight - UBS Investment Bank, Research Division

Okay. And the relative impact of moving it, how much do you think that you were able to gain?

M. Steven Bender

Well, again, it's going to be -- it's a function what you expect that the value of the margin is between this fourth quarter and the first quarter. But if you just look at the 50-day outage, today, as I say, the impact could be between $50 million and $60 million just using today's margins.

Gregg A. Goodnight - UBS Investment Bank, Research Division

Okay. The ethane inventories reported by EIA was flat in August, and I thought perhaps it should have come down a little bit. Do you guys have a sense for how ethane inventory is trending today? And what levels are ethane at?

Albert Y. Chao

We believe ethane inventory possibly would increase with the amount of new production coming up, especially in 2013 there's a lot more fractionators and pipelines coming onstream. So we believe that ethane inventory would trend up.

M. Steven Bender

And Greg, what I was addressing was really the impact of the outage, not the difference between quarter-to-quarter.

Operator

[Operator Instructions] The next question is from Don Carson from Financial.

Donald Carson - Susquehanna Financial Group, LLLP, Research Division

Just wondering about price trends that you've seen thus far in the third quarter. Did you get any realization on polyethylene in October? And just with demand slowing here, is it your expectation you may have to give up a little price in November and December just because of seasonal weakness and the buildup of inventories?

Albert Y. Chao

Well, the $0.05 of price increase was in October for polyethylene, which has moved to November. We'll see in early November.

Gregg A. Goodnight - UBS Investment Bank, Research Division

So it would appear that without an -- if you don't get that increase, that you're going to be down sequentially pricing Q4 versus Q3?

Albert Y. Chao

May not [ph] be.

Donald Carson - Susquehanna Financial Group, LLLP, Research Division

Great. And then Albert, just [indiscernible] give us your outlook on propane. Ethane continues to be very low here, roughly $0.30 a gallon. Obviously a long way from the $0.92 we peaked at in Q4 of last year. But how do you see ethane pricing unfolding seasonally? And what kind of seasonal margin compression you think we might see in Q4 and Q1?

Albert Y. Chao

Well, according to IHS Chemical they are forecasting ethane price to gradually move up from today's level next year. But if you look at future prices, it's still hovering in the low to mid $0.30.

Operator

The next question is from Robert Reitzes from BroadArch Capital.

Robert Reitzes

Albert, and -- I just want to ask you since you're the largest shareholder. How -- can you talk about the special dividend, the potential of a special dividend? Is it something that you -- what's the valuation? And what's going into the reasoning regarding a special dividend? Or is it just totally off the table?

Albert Y. Chao

As I said earlier, we review -- the Board reviews dividends every quarter and will be doing so in the coming quarter as well.

Robert Reitzes

Okay. You don't want to talk about anything more?

Albert Y. Chao

This is what we're -- where we are.

Operator

The next question comes from Michael Scherson [ph] of -- from Longbow Capital.

Unknown Analyst

Your tax rate is generally right around 35%. I wondered if you could speak about discrete issues that hit this quarter, driving the tax rate so much lower?

M. Steven Bender

They were simply -- they were just simply lower state tax rates in this quarter, and that's why I would expect going forward to use the 35% rate.

Albert Y. Chao

I believe that is the end of the question-and-answer period. We would like to end the Q&A at the present time. And thank you very much for your participation in our call today. We hope you will join us again for our next conference call to discuss our fourth quarter 2012 results. Thank you very much and have a great day.

Operator

Thank you for participating in today's Westlake Chemical Corporation Third Quarter Earnings Conference Call. As a reminder, this call will be available for replay beginning 2 hours after the call has ended and may be accessed until 11:59 p.m. Eastern Time on Thursday, November 15, 2012. The replay can be accessed by calling the following numbers: domestic callers should dial 1 (888) 286-8010; international callers may access the replay at (617) 801-6888. The access code for those numbers is 37113299.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Westlake Chemical Management Discusses Q3 2012 Results - Earnings Call Transcript
This Transcript
All Transcripts