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Westlake Chemical Corporation
Credit Suisse Chemical Conference
September 18, 2008
2
SAFE HARBOR LANGUAGE
This presentation may include forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, reflecting management’s current analysis and expectations, based on reasonable assumptions. Results could differ materially depending on such factors as business climate, business performance, economic and competitive uncertainties, ability to execute work process redesign and reduce costs, failure to complete transactions or to achieve benefit from transactions, higher manufacturing costs, change in strategies, reduced level of customer orders, risks in developing new products and technologies, adverse legal and regulatory developments including increases in the number or financial exposures of claims, lawsuits, settlements or judgments, or the inability to eliminate or reduce such financial exposures by collecting indemnity payments from insurers, environmental and safety regulations and clean-up costs, foreign exchange rates, and adverse changes in economic and political climates around the world. Accordingly, there can be no assurance that the Company will meet future results, performance or achievements expressed or implied by such forward-looking statements. As appropriate, additional factors are contained in reports filed with the Securities and Exchange Commission. This paragraph is included to provide safe harbor for forward-looking statements, which are generally not required to be publicly revised as circumstances change.
Investor Relations Contact
Steven BenderSr. Vice President, Chief Financial Officer
& Treasurer
Westlake Chemical Corporation2801 Post Oak Boulevard, Suite 600
Houston, Texas 77056713-960-9111
www.westlake.com
3
AGENDA
Who We Are
Westlake’s Proven Track Record
Outperforming Peers over the Cycle
Financially Disciplined
Investment Conclusion
4
$ 3.7 Billion Integrated Polymers Materials Company
$ 110 millionNet Income
$ 280 millionEBITDA (1)
$ 3.7 billion Sales
MISSIONprofitable growth …in businesses we understand…globally in areas we can gain an edge…in a disciplined and opportunistic manner
Westlake Chemical Corporation(LTM 2nd Qtr 2008)
(1) Non-GAAP financial measure
% of Total
Sales
30%70%
$ 1.1 billion $ 2.6 billion
VinylsOlefins
5
0
2,000
4,000
6,000
8,000
10,000
12,000
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
Capacity(mm lbs)
Revenues
VinylsOlefins
Revenue($ mm)
VALUE CREATION TRACK RECORD –HIGHER GROWTH vs PEERS OVER TWO DECADES
Committed to “Profitable Growth”… not just one without the other
3.2%6.1%Peer A
16.0%17.0%WLK
5.1%6.4%Peer C
4.2%6.0%Peer B
CAGRCapacity
CAGRRevenue
1989 - 2007
Growth
* Note: Estimate from 1989 - 1995
A- NCX; B-GGC; C-Dow
6
AGENDA
Who We Are
Westlake’s Proven Track Record
Outperforming Peers over the Cycle
Financially Disciplined
Investment Conclusion
Favorable Product Mix
Higher Operating Rates
High level of Integration
7
HIGHER OPERATING RATES VS PEERS,PARTICULARLY IN TROUGH YEARS
Ethylene Operating Rates(1) Westlake Advantage over Industry Peers
Higher operating rates, particularly in trough years
Operating culture; execution; integration; newer assets
70
80
90
100
2000 2001 2002 2003 2004 2005 2006 2007
%,
oper
atin
g ra
te
Industry Westlake
4.3%Trough Years, avg.(2001- 2003)
3.2%8-year, avg.
(2000 – 2007)
Operating Rate Advantage vs. Peers
Source: CMAI and Westlake(1) Includes the impact of Hurricane Katrina and Rita in 2005
8
HIGHER OPERATING RATES VS PEERS, PARTICULARLY IN TROUGH YEARS
70
80
90
100
2000 2001 2002 2003 2004 2005 2006 2007
%, o
f ope
ratin
g ra
te
Industry Westlake
Higher WLK operating rates, particularly in trough years
Operating culture, execution, integration
Westlake Advantage over Industry Peers
9.0%Trough Years, avg.(2001- 2003)
4.9%8-year, avg.(2000 – 2007)
Operating RateAdvantage vs. Peers
PVC Operating Rates
Source: CMAI and Westlake
9
SUPERIOR AGE AND COMPETITIVENESS OF OUR ETHYLENE PLANTS
North American Ethylene Plants - Site Age and Capacity
0
5
10
15
20
25
30
35
40
45
50
100 1,000 10,000
Aver
age
Age
(yrs
)
Capacity (mm lbs)
Westlake LC
2000
Small but New
Small and Old
Large and New - Desired!
Large but Old
(Most N. Amer. Crackers)
Source: CMAI
Westlake is well positioned with modern and up to date ethylene plantsMany North American plants of competitors were built pre-1980
10
OLEFINS INTEGRATIONCAPTIVE ETHYLENE PRODUCTION
Merchant, 10%
Polyethylene, 53%1.5 billion lbs
Ethylene2.85 billion lbs
Styrene, 5%0.5 billion lbs
VCM, 32%1.9 billion lbs
Polyethylene, 70%2.5 billion lbs
Ethylene Styrene, 4%2.95 billion lbs 0.5 billion lbs
VCM, 26%1.9 billion lbs
PurchasedEthylene, 17%
Before Longview Acquisition: Long Ethylene
Current: Full Utilization of Ethylene
90% CAPTIVE 90% CAPTIVE PRODUCTIONPRODUCTION
100% CAPTIVE 100% CAPTIVE PRODUCTIONPRODUCTION
Improved level of integration
Positioned for the cycle; can curtail ethylene purchases yet run
Westlake plants at high rates
Opportunity to debottleneck in the future
Enhanced margin stability; higher profits
1111
WESTLAKE’S FAVORABLE PRODUCT MIX in POLYETHYLENE vs. PEERS
Westlake’s PE Business Is Favorably Weighted to LDPE vs. North American Peers
0% 20% 40% 60% 80% 100%
Among the highest LDPE product mix percentage in U.S. and Canada
Westlake
Koch Industries
LyondellBasell
Dow
ExxonMobil
ChevronPhillips
NOVA
Source: Chemical Data, Inc.
1212
0.0
1.0
2.0
3.0
4.0
5.0
2000 - 2007 2001 - 2003 Trough Years
cent
s/ lb
s
3.7 ¢
2.8 ¢
4.1 ¢
3.3 ¢
LDPE More Profitable, Particularly In Trough Years
Befo
re
LLDPE, 29%
LDPE, 26%
HDPE, 45%
Total Capacity: 171 billion poundsSource: CMAI
2007 Global Industry Demand (% share)
Westlake Capacity (% share)
LLDPE, 33%
HDPE, 5%
LDPE, 62%
Total Capacity: 2.5 billion pounds
LDPE
vs.
LLD
PE
LDPE
vs.
HD
PE
LDPE
vs.
LLD
PE
LDPE
vs.
HD
PE
Average Margin Advantage of LDPE vs. other PE Grades
WESTLAKE’S FAVORABLE POLYETHYLENE PRODUCT MIX vs. PEERS
13
HIGH LEVEL OF INTEGRATION IN VINYLS SEGMENT
Polyvinyl Chloride
(PVC)
Caustic Soda
Fabricated
Products
PVC
VCM
PVC Fabricated Products
Vinyl Chloride Monomer
(VCM)
Ethylene Dichloride
(EDC)
CausticSoda
Chlorine
Ethylene
Vinyls Segment
PurchasedChlorine
Merchant Sales
Chlor-Alkali
Expansionunderway
Expansionunderway
Expansionunderway
14
VINYLS INVESTMENT DELIVERS INTEGRATION BETTER THAN PEERS
Westlake
Fab. Products
PVCVCMChlorineEthylene
PVC Pipe#1 or #2 in areas served 985 mm lbs. of annual capacityWestlake focuses on large diameter pipe which has better marginsWestlake capacity is 80% non-residentialPVC pipe is protected from imports due to transportation barriers
Fence, Deck and Railing# 2 producer in North America65mm lbs. of annual capacity
Doors and Window Profiles47mm lbs. of annual capacity
Chlorine and PVC expansions complete Vinyls chemical integration
15
STRONG MARKET SHARE IN PIPE
North American Pipe Corporation
Locations
Vinyl Pipe Plant Locations
Vinyls Chemical Sites: Calvert City, KY; Geismar, LA
16
VINYLS CHINESE FOOTPRINT, UNLIKE MOST PEERS
Suzhou Huasu Plastics Company markets PVC resin and film products to both domestic and export markets, while exporting theWindow profiles to North American marketsEstablished 1992, J.V. with Westlake and Ineos. Westlake has approximately a 60% share in the Joint Venture Located in Suzhou, Jiangsu Province, China - Operations include:
300 million lbs PVC resin plant145 million lbs calendering facility22 million lbs window profiles
17
AGENDA
Feedstock Flexibility
Gas Based Ethylene
Improved Integration
Polyethylene Well-Positioned
Who We Are
Westlake’s Proven Track Record
Outperforming Peers over the Cycle
Financially Disciplined
Investment Conclusion
18
0%
1%
2%
3%
4%
5%
2007 2008 2009 2010 2011 2012
Incr
emen
tal C
hang
e/To
tal C
apac
ity (%
)LDPE LLDPE HDPE
INDUSTRY GLOBAL POLYETHYLENE ADDITIONS FOCUSED ON LLPDE AND HDPE, NOT ON LDPE
However, Westlake is focused on LDPE, a product for which:
- Capacity in the U.S. is not being expanded- North American supply and demand is balanced- New additions intended to primarily serve Asian & European markets
Source: CMAI
19
BENEFITS OF AUTOCLAVE LDPE vs. TUBULAR LDPE
Autoclave Advantage:
With no new autoclave capacity coming online and an aging reactor base, supply/ demand balance for autoclave will grow tighter.Westlake’s autoclave reactors are larger and newest in North America, providing strong margins for many years.
Autoclave LDPE (WLK Focus) Tubular LDPE
Market Focus: More Specialty More Commodity
Suitability for Niches: High Much Less
• Product Mix Broad (desirable) Narrow• Product to Product
Transition: Efficient Costly
Competitive Dynamics:
•Global Capacity Additions None Moderate•Geographic Focus for
New Additions: Not Applicable Asian & European Markets
2020
WESTLAKE FOCUSES ON MORE ON DESIREABLE “AUTOCLAVE” LDPE REACTORS
20%80%
Tubular Autoclave, Specialty & Epolene
Westlake Key Product Lines• Autoclave LDPE and our Specialty Polymers
Key Markets• Food Packaging, Extrusion Coating, Protective Packaging, Shrink Wrap
Westlake LDPE Mix
54%
46%
Tubular Autoclave
World LDPE Mix
Source: CMAI, 2007
2121
LAKE CHARLES FEEDSTOCK FLEXIBILITY TO HELP OPTIMIZE MARGINS
Westlake has enhanced flexibility to switch ethylene feedstocks, since no one feedstock is always advantaged.
-5.00
0.00
5.00
10.00
15.00
20.00
25.00
1992
1994
1996
1998
2000
2002
2004
2006
2008
E
2010
E20
12E
cent
s/lb
Naphtha cash margin Ethane cash margin
Ethylene Margin Trend for Light and Heavy Feed Crackers the U.S.
Source: CMAI
Forecast
22
LAKE CHARLES FEEDSTOCK FLEXIBILITY RANGE
Liquid-Flexible Lake Charles Feedslate Capability (% volume)
2008E U.S. Feedslate(% volume)
No one feedstock is always advantaged
Feedstock Flex Project completed in 2007
Feed-Flex improves cycle average margins and reduces earnings volatility
Benefits also include:Energy cost reduction
100 MM lbs capacity increase
Butane1%Propane
14%
Ethane85%
Light Naphtha
21%
Propane5%
Ethane74%
Naphtha25%
Propane22%
Butane5%
Gas oil6%
Ethane42%
Source: CMAI Forecast
Gas-Flexible Lake Charles Feedslate Capability (% volume)
When Gas Advantaged vs. Oil Oil Advantaged vs. Gas
23
7,000
8,000
9,000
10,000
11,000
12,000
13,000
Capacity(mm lbs)
SUPERIOR PROFITABILITY AND GROWTH OVER THE CYCLE
2002 2004 2006 2008/09
Volume Growth and Improved IntegrationReduced per pound Energy Consumption Asset Enhancement
Chlor-Alkali Expansion Geismar Acquisition
Bristol Pipe Acquisition
Eastman PE Acquisition Feed Flex Project
Chlor-AlkaliPVC ResinPVC Pipe Expansions
EBITDA Growth over the Cycle
Olefins Expansion
Vinyls Expansion
Capacity prior to Expansion
Chlor-Alkali Expansion
2011
24
AGENDA
Strong Balance Sheet
Disciplined Investment Culture
Superior EBITDA Margins
Who We Are
Westlake’s Proven Track Record
Outperforming Peers over the Cycle
Financially Disciplined
Investment Conclusion
25
VALUE CREATION TRACK RECORD -SUPERIOR MARGIN AND ROCE vs. PEERS OVER CYCLE
(1) Adjusted EBITDA is EBITDA adjusted for restructuring charges and outages (WLK)(2) Return on capital employed (ROCE) is defined as operating income (adjusted for restructuring charges) divided by average capital employed.
Peers include: DOW,GGC, NCX
Return on Capital Employed (ROCE)(2)
Range from FY 2003 to FY 2007
0%
10%
20%
30%
40%
WLK Peers Avg
29%
6%
16%
4%
Adjusted EBITDA Margin (1)
0%
5%
10%
15%
20%
2003 - 2007 2001-2003 Trough Years
Westlake Peers
26
SUPERIOR BALANCE SHEET
1.4x
2.2x
1.2x
40.2x
0.0x
2.0x
4.0x
DOW WLK NCX GGC
Debt to Capitalization 29%Net Debt To Capitalization 22%
Actual Capitalization ($ millions) June 30, 2008
Net Debt / EBITDA – LTM 2008 Q2
Long-term debt, incl. current portion 6.625% senior notes due 2016 249 6.75% senior notes due 2032 250 Other debt 50 Total Debt 549
Less: Cash 22 Restricted Cash 146
Total Net Debt 381
Stockholders’ equity 1,334
Total capitalization 1,883
27
CAPITAL SPENDING: DISCIPLINED INVESTMENT CULTURE
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08E
0%
10%
20%
30%
40%
50%
A c qu is it ion s
D is c r e t io n a r y
M a in t e n a n c e
$121
$262
$307
$79 $77
$44
$86 $86
$45
$216
$29
$135
153.8%8.3%Subtotal
103.0%5.6%Discretionary
50.8%2.7%Maintenance
% of Depreciation% of Sales’98~’07 Average
Total CAPEX as % of Sales
CAPE
X (
$ m
illio
n)CAPEX as %
of Sales
$175-200
$391
2828
INVESTMENT CONCLUSIONS
TRACK RECORD OF OUT-PERFORMING PEERSFocused, best-in-class plastics producerDisciplined operating philosophy, with matching track record
COMPETATIVE ADVANTAGES ARE GETTING STRONGERIntegration of assetsFeedstocks; Geography
WESTLAKE SPECIFIC INITIATIVES: AN ONGOING FEATUREAcquisitions, debottlenecks, advantaged “greenfield” plantsA long history of investing prudently
CULTURE OF CREATING VALUE, WHILE RETAINING FINANCIAL FLEXIBILITY TO FUND OUR GROWTH STRATEGY
Strong financial disciplineFinancial Flexibility
APPENDIX
31
APPENDIX
LTM2003 2004 2005 2006 2007 Q2 2008
Adjusted EBITDA 160,728 326,878 450,932 411,183 280,893 279,953
Debt Retirement Cost (11,343) (15,791) (646) (25,853) - -
EBITDA 149,385 311,087 450,286 385,330 280,893 279,953
Less:
Income Tax (provision) benefit (8,747) (69,940) (118,511) (87,990) (44,228) (35,801)
Interest expense (38,589) (39,350) (23,717) (16,519) (18,422) (28,149)
Depreciation & Amortization (87,293) (81,075) (81,241) (86,262) (103,514) (106,176)
Net Income 14,756 120,722 226,817 194,559 114,729 109,827
Changes in operating assets and liabilities 56,219 (35,129) 45,885 28,773 (57,849) (89,843)
Deferred income taxes 7,112 65,188 45,745 13,852 5,286 (43)
Cash flow from operating activities 78,087 150,781 318,447 237,184 62,166 19,941
Reconciliation of EBITDA to Net Income (Loss) and to Cash Flow from Operating Activities (in $ Thousands)