SEC Filings

10-Q
WESTLAKE CHEMICAL CORP filed this Form 10-Q on 05/03/2018
Entire Document
 

statutory rate of 21% primarily due to state and foreign taxes. The effective income tax rate for the first quarter of 2017 was below the U.S. federal statutory rate of 35% primarily due to certain discrete adjustments, a higher domestic manufacturing deduction, depletion deductions, income attributable to noncontrolling interests, research and development credits and the foreign earnings rate differential, partially offset by state income taxes.
Olefins Segment
Net Sales. Net sales for the Olefins segment decreased by $40 million, or 7.4%, to $503 million in the first quarter of 2018 from $543 million in the first quarter of 2017. The decrease was mainly due to lower polyethylene sales volume, which was partially offset by higher polyethylene sales prices. Average sales volumes for the Olefins segment decreased by 8.6% in the first quarter of 2018 as compared to the first quarter of 2017. Average sales prices for the Olefins segment increased by 1.2% in the first quarter of 2018 as compared to the first quarter of 2017.
Income from Operations. Income from operations for the Olefins segment decreased by $17 million to $163 million in the first quarter of 2018 from $180 million in the first quarter of 2017. This decrease was mainly attributable to lower sales volume for polyethylene and higher feedstock prices. This decrease was partially offset by higher sales prices for polyethylene. Trading activity in the first quarter of 2018 resulted in a gain of $1 million as compared to a loss of $9 million in the first quarter of 2017.
Vinyls Segment
Net Sales. Net sales for the Vinyls segment increased by $247 million, or 17.6%, to $1,647 million in the first quarter of 2018 from $1,400 million in the first quarter of 2017. This increase was mainly attributable to higher sales prices for major products and higher sales volumes for caustic soda and PVC resin. Average sales prices for the Vinyls segment increased by 12.0% in the first quarter of 2018 as compared to the first quarter of 2017. Average sales volumes for the Vinyls segment increased by 5.6% in the first quarter of 2018 as compared to the first quarter of 2017.
Income from Operations. Income from operations for the Vinyls segment increased by $196 million to $266 million in the first quarter of 2018 from $70 million in the first quarter of 2017. This increase was mainly attributable to higher sales prices for our major products, higher sales volumes for caustic soda and PVC resin, as compared to the first quarter of 2017. The first quarter of 2017 was negatively impacted by the unabsorbed fixed manufacturing costs and other costs associated with the turnaround and expansion of OpCo's Calvert City ethylene unit and other planned turnarounds and unplanned outages.
CASH FLOW DISCUSSION FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017
Cash Flows
Operating Activities
Operating activities provided cash of $225 million in the first three months of 2018 compared to cash provided by operating activities of $157 million in the first three months of 2017. The $68 million increase in cash flows from operating activities was mainly due to an increase in income from operations during the first three months of 2018 as compared to the first three months of 2017, partially offset by an increase in working capital requirements. The increase in income from operations for the first three months of 2018 was mainly a result of higher sales prices for major products and volumes for caustic soda and PVC resin, resulting in a higher margin. Changes in components of working capital, which we define for purposes of this cash flow discussion as accounts receivable, net, inventories, prepaid expenses and other current assets, less accounts payable and accrued liabilities, used cash of $233 million in the first three months of 2018, compared to $151 million of cash used in the first three months of 2017, an unfavorable change of $82 million. The change was mainly driven by unfavorable changes in accounts receivable, inventories and accounts payable, partially offset by a favorable change in accrued liabilities.

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