Westlake Corporation (WLK) Q2 2016 Earnings Report, Transcript and Summary

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Westlake Chemical Corporation Second Quarter 2016 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. After the speakers' remarks, you will be invited to participate in a question-and-answer session. As a reminder, ladies and gentlemen, this conference is being recorded today, July 28, 2016. I would now like to turn the call over to today's host, Ben Ederington, Westlake's Vice President and Chief Administrative Officer. Sir, you may begin. L. Benjamin Ederington - Vice President, General Counsel, Chief Administrative Officer & Corporate Secretary: Thank you. Good afternoon, everyone, and welcome to the Westlake Chemical Corporation second quarter 2016 conference call. I'm 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 conference call agenda will begin with Albert, who will open with a few comments regarding Westlake's performance in the second quarter of 2016, followed by a current perspective on the industry. Steve will then provide a more detailed look at our financial and operating results. Finally, Albert will add a few concluding comments and we will open the call up to questions. During this call, we refer to ourselves as Westlake Chemical. Any reference to Westlake Partners is to the master limited partnership, Westlake Chemical Partners LP. And references to OpCo refers to our subsidiary, Westlake Chemical OpCo LP, who owns certain olefin facilities. 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 many 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; the pending acquisition of Axiall and other risk factors discussed in our SEC filings. This afternoon, Westlake issued a press release with details of our second quarter 2016 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 two hours after completion of this call until 11:59 PM Eastern Time on August 4, 2016. The replay may be accessed by dialing the following numbers. Domestic callers should dial 1-855-859-2056. International callers may access the replay at 404-537-3406. The access code for both numbers is 49754021. Please note that information reported on this call speaks only as of today, July 28, 2016 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 call is being broadcast live through an Internet webcast system that can be accessed on our webpage at westlake.com. Now, I'd like to turn the call over to Albert Chao. Albert? Albert Yuan Chao - Chairman, President & Chief Executive Officer: Thank you, Ben. Good afternoon, ladies and gentlemen, and thank you for joining us on our earnings call to discuss our second quarter 2016 results. In this afternoon's press release we reported quarterly net income of $111 million or $0.85 per diluted share on net sales of $1.1 billion. Our quarterly results reflect good demand for our Olefins and Vinyls products, following steady improvement in consumer spending and commercial and residential construction activity, which has been supported by low crude oil prices and a growing economy. Sales prices for our products also showed improvement over levels seen in the first quarter as supply was impacted by high levels of seasonal turnaround activity and unplanned events, but are lower compared to the second quarter of 2015 due to lower global crude oil prices. Our second quarter Olefins and Vinyls segments earnings were impacted by the planned maintenance turnaround and other unplanned outages, which Steve will comment in more detail. However, we are pleased with the recent milestones that we have achieved. In June, we entered into a definitive agreement to acquire Axiall Corporation, a leader in the chlor-alkali, PVC and building products business. Additionally, we recently completed work that began in the quarter on expansion of our Lake Charles, Louisiana Petro 1 ethylene unit, which adds 250 million pounds of ethylene capacity, further strengthening our olefins integration, along with successful restart all of Calvert City, Kentucky unit, following an unplanned outage. I would now like to turn our call over to Steve to provide more detail on the financial and operating results for the second quarter of 2016. Steve? Mark Steven Bender - Senior Vice President, Chief Financial Officer & Treasurer: Thank you, Albert, and good afternoon everyone. I will start with discussing our consolidated financial results followed by a detailed review our Olefins and Vinyls segment results. Let me begin with our consolidated results. In this afternoon's press release Westlake reported net income for the second quarter of 2016 of $111 million, or $0.85 per diluted share, on net sales of $1.1 billion compared to the second quarter 2015 net income of $205 million or $1.54 per diluted share on net sales of $1.2 billion. Net income for the second quarter of 2016 was impacted by pre-tax unabsorbed fixed manufacturing costs and other costs associated with the planned maintenance turnaround and expansion of our Lake Charles Petro 1 ethylene unit and an unplanned outage at our Calvert City facility and other unplanned outages totaling approximately $66 million or $0.33 per diluted share and approximately $11 million or $0.05 per share in lost margins associated with these turnarounds and outages. Additionally, the second quarter net income was impacted by a pre-tax cost related to the Axiall acquisition of approximately $8 million or $0.04 per diluted share. These second quarter results compared to net income for the second quarter of 2015, which included a pre-tax gain of $16 million or $0.13 per diluted share, related to the bargain purchase gain from the acquisition of a controlling interest in Huasu, our Chinese PVC operation, which we acquired in June 2015 with a partial impairment of an equity – from a partial impairment of an equity method investment. To summarize, our net income for the second quarter of 2016 was lower as a result of several non-recurring pre-tax items. These items included the cost related to the planned turnaround and expansion project, unplanned outages and the lost margin associated with these outages and the transaction costs related to the pending Axiall acquisition. Excluding these non-recurring items, our second quarter earnings would have been $1.27 per share, which compares to the $1.54 per share as reported in the second quarter of 2015 and the $0.94 per share reported in the first quarter of 2016. Continuing on with our second quarter results, our net sales for the second quarter of 2016 decreased by $99 million compared to the second quarter of 2015, mainly due to lower sales prices for all major products and lower sales volumes for polyethylene and lower ethylene and ethylene co-products sales related to the planned Petro 1 turnaround and expansion project. This was partially offset by higher sales volumes for PVC resin and styrene and sales contributed by Huasu. Income from operations was $180 million for the second quarter of 2016 as compared to $295 million for the second quarter of 2015. The decrease in operating income was also impacted by lower sales, partially offset by lower average feedstock and energy costs and higher product margins in our European operations, as compared to the second quarter of 2015. Sales revenue in the second quarter of 2016 was $1.1 billion, increased by $111 million compared to the first quarter of 2016, while income from operations of $180 million decreased $22 million. The increase in net sales was largely due to higher sales prices for most of our major products; higher sales volumes for polyethylene, specialty PVC resin, building products and styrene and sales contributed by Huasu. The decrease in operating income was primarily due to lost sales and costs associated with the planned turnaround activity and unplanned outages in both of our segments and our ethylene expansion project, partially offset by higher integrated product margins. For the six months ended June 30, 2016, we reported operating income of $382 million on net sales of $2.1 billion, compared to operating income of $525 million on net sales of $2.3 billion in the first half of 2015. The decrease in net sales for the first six-month period of 2016 was due to lower sales prices for all of our major products and lower sales volumes for ethylene and ethylene co-products related to our planned Petro 1 turnaround and expansion project. This was partially offset by higher sales volumes for PVC resin and styrene and sales contributed by Huasu. The decrease in operating income was mainly attributable to the lost sales and costs associated with the planned and unplanned turnarounds and our ethylene expansion project. In addition, income from operations for the first six months of 2016 was impacted by lower sales prices associated with lower crude oil prices and costs related to the pending Axiall acquisition, partially offset by lower average feedstock and energy costs and higher product margins in our European operations as compared to prior year period. Our utilization of the FIFO method of accounting resulted in a favorable impact of $26 million pre-tax, or $0.13 per share in the second quarter compared to what earnings would have been if we reported on the LIFO method. Please bear in mind that this calculation is only an estimate and has not been audited. Let's move on to review the performance of our two segments, starting with the Olefins segment. In the second quarter of 2016, the Olefins segment reported income from operations of $141 million on net sales of $494 million. This second quarter results reflected, both impact of lost sales, lower production and unabsorbed fixed manufacturing costs and other costs related to the planned turnaround and expansion of the Lake Charles Petro 1 ethylene unit and several other unplanned outages in the second quarter 2016. The lower results for the second quarter of 2016 as compared to the second quarter of 2015 also reflect a decline in olefins integrated product margins due to lower sales prices, partially offset by lower feedstock and energy cost. Second quarter 2016 results saw a decrease of $9 million in operating income compared to the first quarter of 2016, while sales increased $64 million. The decline in operating income was partially offset by higher integrated margins and higher sales volumes for polyethylene and styrene in the second quarter of 2016 as compared to the first quarter of 2016. For the six months ended June 30, 2016 the Olefins segment reported income from operations of $290 million as compared to income from operations of $412 million for the six-month period ending June 30, 2015. Olefins integrated product margins in the first half of 2016 decreased following the decline in sales prices, partially offset by lower feedstock and energy costs as compared to the prior year period. Now moving onto the Vinyls segment; the Vinyls segment reported income from operations of $52 million in the second quarter of 2016 on net sales of $592 million. Our Vinyls segment second quarter results were impacted by lost sales, lower production and unabsorbed fixed manufacturing costs and other costs associated with the unplanned outage at the Calvert City facility and costs incurred related to several planned maintenance turnarounds completed in the second quarter of 2016. Compared to the second quarter of 2015, operating income decreased by $36 million and additionally it was impacted by lower sales prices for all of our major products, partially offset by higher product margins in our European operations. The Vinyls segment income from operations decreased $10 million from the $62 million reported in the first quarter of 2016. This decrease was partially offset by higher integrated margins. Operating income for the Vinyls segment for the first six months ended June 30, 2016 was $114 million as compared to operating income of $135 million for the six months ended June 30, 2015. In addition to the operational impacts on results that I have previously described, this decrease was also a result of lower sales prices for our major products, partially offset by higher product margins in our European operations and higher caustic soda sales volumes primarily attributable to higher production at our Geismar, Louisiana chlor-alkali plant. Now, let's turn our attention to the balance sheet and cash flow. For the first six months of 2016, cash generated from operating activities was $370 million and we spent $287 million on capital expenditures. At the end of the second quarter, we had cash and marketable securities of approximately $1.1 billion and our long-term debt was approximately $758 million. Now, allow me to provide some 2016 guidance for modeling purposes. Our estimate for 2016 capital expenditures is expected to be lower than our prior guidance of $500 million to $550 million, as we review our capital project spending in light of the pending Axiall acquisition and we will provide updated guidance on our next conference. The 2016 capital spending includes spending for the expansion of our Petro 1 ethylene unit in Lake Charles, which we've recently completed and is in the process of restarting. It also includes early engineering work and the purchase of long lead items related to the expansion of our Calvert City ethylene unit that we announced in January and which is currently planned for the first half of 2017. We estimate that our third quarter 2016 income from operations will be impacted by a loss production and associated cost from the Petro 1 planned maintenance turnaround and expansion project. The unplanned outages of our Calvert City ethylene unit and other normal planned maintenance turnaround activity of approximately $55 million pre-tax, which will be evenly split between our Vinyls and Olefins segment. We also expect to see transaction expenses in the third quarter related to the pending Axiall acquisition and I will provide guidance prior to the end of the third quarter. We estimate that our 2016 effective tax rate for the year will be approximately 36%. With that, I'll turn the call back over to Albert to make some closing comments. Albert? Albert Yuan Chao - Chairman, President & Chief Executive Officer: Thank you, Steve. We saw improving fundamental in the second quarter as we benefited from higher integrated product prices and margins and strong demand for our end products, although we were impacted by the planned and unplanned outages at our Lake Charles and Calvert City sites. We are excited about our recently announced acquisition of Axiall Corporation, which we believe creates a more diversified and competitive company. This acquisition will make us the leader in the chlor-vinyl markets as we become the number three chlor-alkali producer and a number two PVC producer in North America and a number three PVC producer globally. This acquisition provides greater scale and synergies with a combined Westlake and Axiall businesses. There are opportunities to apply our strategy of vertical integration for improving operations by showing best practices and synergies across both companies. We expect this transaction will close by the fourth quarter and will meaningfully add to the earnings potential of our company. We look forward to welcoming the Axiall employees into the Westlake family. Thank you very much for listening to our earnings call this afternoon. Now, I will turn the call back over to Ben. Ben? L. Benjamin Ederington - Vice President, General Counsel, Chief Administrative Officer & Corporate Secretary: Thank you, Albert. Before we begin taking questions, I would like to remind you that a replay of this conference call will be available starting two hours after we conclude the call. We will provide that number again at the end of the call. Crystal, we will now take questions.

Thank you. And our first question comes from Aleksey Yefremov from Nomura Securities. Your line is now open.

Good afternoon and thank you. Albert Yuan Chao - Chairman, President & Chief Executive Officer: Good afternoon.

What was your caustic soda price realization in the second quarter? What was the increase in dollars per ton? And do you expect to realize further increases in the third quarter? Albert Yuan Chao - Chairman, President & Chief Executive Officer: Yes, as you know that at least IHS reported since April of this year, each month there has been price increases announced by the industry, totaling over $130 a short ton. And Westlake, we have been increasing realized our price increases as the terms of our contracts allow, so we've been enjoying an increase in the prices as our terms allow.

If I may follow-up, Albert, do you expect any sort of flagged increases to benefit you in the third quarter from those reassessing contracts from the second quarter? Albert Yuan Chao - Chairman, President & Chief Executive Officer: Yes, we expect that the price increases that's announced will flow into the third quarter.

Thank you. Albert Yuan Chao - Chairman, President & Chief Executive Officer: You're welcome.

And then a second question on European chlor-alkali. European natural gas prices have declined and you have chlor-alkali assets in the region. Do you see any change in the cost position for your assets there? Do you see any decline in the electricity prices or do you expect it to occur in the near future? Albert Yuan Chao - Chairman, President & Chief Executive Officer: We see a reasonable demand for chlor-alkali in Europe and we see potential price increase as well. But it will – time will tell whether those price increases will succeed or not.

And anything on the cost side? Are your costs moving lower in Europe by any appreciable amount? Albert Yuan Chao - Chairman, President & Chief Executive Officer: Yes. The cost of – we use electricity that we don't produce, we buy electricity from the European market and they are reflective of natural gas prices. But it will take a while to have those power costs reflect the natural gas price changes.

Thank you very much. Albert Yuan Chao - Chairman, President & Chief Executive Officer: You're welcome.

Thank you. Our next question comes from David Begleiter from Deutsche Bank. Your line is now open.

Thank you. Albert, what's your expectation for polyethylene prices in the back half the year? Do you expect any erosion to occur? Albert Yuan Chao - Chairman, President & Chief Executive Officer: While as you know that we have been enjoying price increases in polyethylene this year, there has been – since February and March, there has been $0.09 price increases and IHS and CDI are projecting that July prices will stay flat. So – but they are projecting prices to decline in the second half or fourth quarter of this year and time will tell whether it would happen or not. I think the industry inventory are quite good for producers and some are on a low side for consumer side. So we will see whether there will be price declines in the second half of the year or not.

And Albert, just on the feedstock side, ethane, with their exports increasing in the back half, do you expect the ethane prices to stay in the teens or do you think they could go higher again later in the year? Albert Yuan Chao - Chairman, President & Chief Executive Officer: Well, the projection by IHS are saying that ethane prices will move up near the end of year with more ethane exports and as well as new expanded ethylene capacity increases. And again, time will tell whether additional production from oil and gas production will add more volume to supply of ethane.

Thank you very much. Albert Yuan Chao - Chairman, President & Chief Executive Officer: You're welcome.

Thank you. Our next question comes from Don Carson from Susquehanna. Your line is now open.

Yes, a question going back to caustic soda. You talked about higher caustic volumes in the first six months, but was Q2 down from Q1 because of the Calvert City outage or is that more of an issue that you were selling out of inventory and you'll be somewhat constrained by the outage in Q3? Albert Yuan Chao - Chairman, President & Chief Executive Officer: Yeah. I was talking about caustic prices earlier and because of our Calvert City unplanned outage, our volume has come down.

Okay. Will that be ongoing in the current quarter? Albert Yuan Chao - Chairman, President & Chief Executive Officer: This is Chao. I think, yes, our Calvert City operation as we started over a week ago, but we will have some impact in the third quarter because of the downtime experienced earlier this month.

Okay. And you talked earlier about the contract price increases, what is the exact lag between when we see the IHS index go up and when you realize those price increases in your actual transaction prices? Albert Yuan Chao - Chairman, President & Chief Executive Officer: Well, it's dependent, the spot price certainly reflect much faster contract price, their price protections and not always the IHS announced the dollar amount is realized, so a portion of those has been realized.

And then turning to the actual acquisition, you'll be somewhat short ethylene as you absorb those assets. So would you plan on running some of the ethylene derivatives like VCM where margins are relatively low right now or would you wait until you are more back integrated into additional sources of ethylene to run those assets flat out? Albert Yuan Chao - Chairman, President & Chief Executive Officer: Well, those things we haven't closed yet. We don't know the details of how they run the business, but I would expect that if there is a margin from purchase to ethylene to run those assets, they'll run them and sell the products. If there're no margins then they will not run it.

Right, okay. Thank you. Albert Yuan Chao - Chairman, President & Chief Executive Officer: You're welcome.

Thank you. Our next question comes Bob Koort with Goldman Sachs. Your line is now open. Ryan Berney - Goldman Sachs & Co.: Good afternoon. This Ryan Berney on for Bob. Albert Yuan Chao - Chairman, President & Chief Executive Officer: Good afternoon. Mark Steven Bender - Senior Vice President, Chief Financial Officer & Treasurer: Hi Ryan. Ryan Berney - Goldman Sachs & Co.: Hey Steve and Albert. I was hoping if you can give sense for – you decided to reduce maybe your CapEx guide a little bit this year, given the Axiall deal, which makes sense. Given kind of the position you see yourself now with the balance sheet, if an acquisition became available for you to kind of close some of that ethylene gap, is that something that you feel like you could do with this Axiall deal on table? Mark Steven Bender - Senior Vice President, Chief Financial Officer & Treasurer: Yeah, we'll continue to look at opportunities. My comment on capital was certainly just to continue to use the cash flow that we see from the business in a very cost effective manner. But should there be an opportunity for us, be it in that business, the – as you mentioned or other opportunities, we'll continue to take a look at those and if they're value-added there's always a way to make that materialize and finance that. Ryan Berney - Goldman Sachs & Co.: Great. Thanks. And then can you provide any update on kind of how you are thinking about the dropdown pace into the OpCo and whether or not you think you'll see an adjustment there? Mark Steven Bender - Senior Vice President, Chief Financial Officer & Treasurer: Well, with the opportunity to expand the Petro 1 unit this year and the planned expansion in 2017 in Calvert City, there isn't a near-term need to have a drop down. That organic growth provides us the earnings growth that the partnership needs into 2016, 2017 and well into 2018. So we don't see a need for drops to continue the track that were on for that low double digit growth rate for several years. Ryan Berney - Goldman Sachs & Co.: Thank you very much. Albert Yuan Chao - Chairman, President & Chief Executive Officer: You're welcome .

Thank you. Our next question comes from are Frank Mitsch from Wells Fargo Securities. Your line is now open.

Yes. Good morning – good afternoon gentlemen. Albert Yuan Chao - Chairman, President & Chief Executive Officer: Good afternoon. Mark Steven Bender - Senior Vice President, Chief Financial Officer & Treasurer: Good afternoon, Frank.

I wanted to talk about the planned and unplanned outage impact. I believe you said it was $65 million for Q2 and Steve, I thought I heard you say $55 million; was that just a Q3 number that you're expecting for planned and unplanned outages impact? Mark Steven Bender - Senior Vice President, Chief Financial Officer & Treasurer: Yeah, Frank, the number for the second quarter was $66 million and for the third quarter that's right, that was just third quarter impact, the carry on impact into Q3 for both planned and unplanned outage.

All right. And at this point do you have any planned turnarounds for Q4? Mark Steven Bender - Senior Vice President, Chief Financial Officer & Treasurer: Nothing other than the normal small – minor some of the derivative units, but those are very small.

All right, terrific. And it's been the six weeks since you announced the deal. I'm wondering how much contact you've been able to have with Axiall? And if your thinking is any different regarding the $100 million synergy target that you laid out at the time that you announced the transaction. Mark Steven Bender - Senior Vice President, Chief Financial Officer & Treasurer: Well, Frank, we'll continue – the $100 million is the number that we believe that we can achieve and certainly we're not going to stop if we think there's an opportunity to drive more value. But once we close the transaction and have a good opportunity to get into the business in more detail, we'll look to see if there is more opportunity. We won't stop at that $100 million number of course.

And at this point you haven't had as much opportunity to get in and see what you're actually going to be buying, correct? Mark Steven Bender - Senior Vice President, Chief Financial Officer & Treasurer: Well, we need to obviously get to the point where we own the asset and really get into the running of the businesses. And even at this stage, where we have good a dialog with the company, the answer is we can't have the level of dialog that's necessary until we close the transaction and look across all elements of the business.

Terrific. Thank you. Albert Yuan Chao - Chairman, President & Chief Executive Officer: You're welcome.

Thank you. Our next question comes from Jim Sheehan from SunTrust. Your line is now open.

Good afternoon. Albert Yuan Chao - Chairman, President & Chief Executive Officer: Good afternoon.

Guys, could you update us on the status of your discussions with the IRS about MLP status? Mark Steven Bender - Senior Vice President, Chief Financial Officer & Treasurer: Yeah, Jim, it's Steve. The IRS has said that they thought – this was Curt Wilson, who is the Associate General Counsel of the IRS, made a comment about two months ago and he said he thought he'd have some comments out by Labor Day. And there is no been – there's been no other commentary by himself of a date other than that. So our expectation still is this summer, but there are a number of other items they're dealing with other than just this proposal that are in front, which I think, are keeping them busy. But it's still my expectation that we'll see something before the end of this summer.

Thanks. And for the third quarter, do you expect to have any variance in the FIFO impact? Mark Steven Bender - Senior Vice President, Chief Financial Officer & Treasurer: Well, it's hard to know where prices will go between now and the end of the third quarter. But as I say, we always try to give that FIFO/LIFO, we're a FIFO company, so we always try to give that sense. But you can see where product prices are and so we've tried to give some guidance where we were in the second quarter.

Thank you. Albert Yuan Chao - Chairman, President & Chief Executive Officer: You're welcome.

Thank you. Our next question is from Edlain Rodriguez from UBS. Your line is now open.

Thank you. Good afternoon, guys. Mark Steven Bender - Senior Vice President, Chief Financial Officer & Treasurer: Good afternoon. Albert Yuan Chao - Chairman, President & Chief Executive Officer: Good afternoon.

Just one quick one on caustic soda. I mean, did you have to ship more to the export market than normal or was everything similar? Albert Yuan Chao - Chairman, President & Chief Executive Officer: Westlake typically do not participate in the export market. Our Calvert City plant is up in the Midwest. But, unfortunately, we experienced some downtime in the second quarter as well.

Okay. So it's all domestic. And just one last quick one for you, Albert. Going into 2017, I mean, are you worrying at all about all the new capacity coming online? I mean, like what's your view there and like what's the potential impact on pricing there? Albert Yuan Chao - Chairman, President & Chief Executive Officer: Is it about the polyethylene?

Polyethylene, yes. Albert Yuan Chao - Chairman, President & Chief Executive Officer: Yes. Certainly, there are more planned or scheduled plants coming up. But we don't know, we have heard some stories that those scheduled plant start-ups could be delayed. So we don't when they will be. And, certainly, it will add more capacity to the market, if they do come-on on the right time. But we expect that most of those products will be exported and depending on the global economy as well, as how fast those capacity will be absorbed by the global market.

Okay. That makes sense. Thank you very much. Albert Yuan Chao - Chairman, President & Chief Executive Officer: You're welcome.

Thank you. Our next question comes from Hassan Ahmed from Alembic Global. Your line is now open.

Good afternoon, Albert and Steve. Albert Yuan Chao - Chairman, President & Chief Executive Officer: Good afternoon. Mark Steven Bender - Senior Vice President, Chief Financial Officer & Treasurer: Good afternoon.

Just wanted to follow up on one of your earlier questions. Someone asked you if you would potentially consider acquiring assets to fill the net short position in ethylene that will obviously evolve post the Axiall acquisition. My question is that I don't know whether you guys have gotten a chance to study, at all or in length, the agreement between Axiall and Lotte. The question really is that let's assume for a second that via an acquisition you were to address most of that net short position, in that scenario, is there enough flexibility in that agreement to maybe potentially walk away from it? Albert Yuan Chao - Chairman, President & Chief Executive Officer: Well, as far as we understand and I think the agreement has been filed publicly that Axiall will be taking approximately 50% of the output of their plants' ethylene and that amount is approximately 50% of Axiall's internal demand for ethylene and we're buying additional ethylene from the marketplace. So I think there is a contract that they have to purchase. So as far as I know that you can't walk away from the purchase for at least for the term of the contract.

Fair enough. Okay. Fair enough. Now moving on to the outage impact. I know you guys sort of broke out $0.33 a share as sort of the impact from planned and unplanned outages. Would really appreciate, if you could kind of just give us some sort of an estimate as to what part of that $0.33 was planned, what part of it was unplanned? Mark Steven Bender - Senior Vice President, Chief Financial Officer & Treasurer: Hassan, we gave some indication of the impact of the Calvert outage earlier in the quarter where we indicated $40 million of that would be split between the second quarter and the third quarter and so that was obviously an unplanned outage, of course. And we said that the greater portion of that was in the second quarter. And so I think you can get some good sense of how much that was relative to the $66 million or the $0.33 that I earlier reflected.

Got it. So $40 million basically was Calvert City you split between Q2 and Q3 with the bulk of it in Q2? Mark Steven Bender - Senior Vice President, Chief Financial Officer & Treasurer: With a majority of it in Q2 and the minority of it in Q3.

Fantastic and very helpful. Mark Steven Bender - Senior Vice President, Chief Financial Officer & Treasurer: Okay.

Thank you. Albert Yuan Chao - Chairman, President & Chief Executive Officer: You're welcome.

Thank you. And our next question comes from Arun Viswanathan from RBC Capital Markets. Your line is now open.

Hi. This is Dan DiCicco on for Arun. Appreciate you guys taking my question. Albert Yuan Chao - Chairman, President & Chief Executive Officer: You're welcome.

A competitor mentioned consultant forecasts of ethylene capacity additions over the next five years could be overstated and they're expecting projects delays, postponements and stuff like that would keep operating rates may be higher than people are expecting, just curious on your thoughts on that? Albert Yuan Chao - Chairman, President & Chief Executive Officer: Well, yeah, most of the new plants that being added accompanied with the derivate plants. So those new plants they would sell the ethylene into the derivate products which will be sold on a global basis.

Okay. Great. And then just as a follow-up, following the Axiall transaction, to make up some of that short ethylene, would there be more interest in maybe brownfield expansion or going out and purchasing an existing assets such as a (36:43) cracker or something like that? Albert Yuan Chao - Chairman, President & Chief Executive Officer: The Axiall Corporation, they are one of the largest purchasers of ethylene in the merchant market. The new Lotte joint venture will not come onto market until, I presume, their scheduled is 2019. So in the interim Axiall and Westlake will be buying ethylene from the market. Certainly, as Steve said, we will look at opportunities that comes up as to acquisitions, but we'll presume we'll doing merchant purchases as well as look for opportunities.

Okay. Great. Thank you. Albert Yuan Chao - Chairman, President & Chief Executive Officer: You're welcome.

Thank you. And our next question comes from David Wang from Morningstar. Your line is now open.

Hi. Thank you for taking my question. Albert Yuan Chao - Chairman, President & Chief Executive Officer: You're welcome.

Just one on your operating cost. Can you talk to us about us about what your cost to produce ethylene was this quarter and how you see that trending in the coming years? Albert Yuan Chao - Chairman, President & Chief Executive Officer: Well, according to IHS, with the relatively low ethane prices, I think the cash cost for ethane crackers to produce ethylene is between $0.10 and $0.11 a pound.

Okay, great. And then I know this was brought up a little earlier, but what are your thoughts on the potential delays for the greenfield crackers that are planned to come online? Do you see the current environment as conducive to be – them to continue to come online or do you think that some of them will eventually be delayed or some of them even cancelled? Albert Yuan Chao - Chairman, President & Chief Executive Officer: Well, I think those projects that already are broken ground and ongoing, they will, I presume, get build. We have heard some projects publicly have announced that the project is being delayed for various reasons. And we know that the Gulf Coast skilled labors are still quite short. So it'll impact the construction schedule; by how much, we don't know and the time will tell.

All right. Thank you. Albert Yuan Chao - Chairman, President & Chief Executive Officer: You're welcome.

Thank you. I'm showing no further questions at this time. The question-and-answer session has now ended. Are there any closing remarks? L. Benjamin Ederington - Vice President, General Counsel, Chief Administrative Officer & Corporate Secretary: Thank you for participating in today's call. We hope you will join us for our next conference call to discuss our third quarter 2016 results. Good evening.

Thank you for participating in today's Westlake Chemical Corporation second quarter 2016 earnings conference call. As a reminder, this call will be available for replay beginning two hours after the call has ended. It may be accessed until 11:59 PM Eastern Time on Thursday, August 4, 2016. The replay can be accessed by calling the following numbers. Domestic callers should dial 1-855-859-2056; international callers may access the replay at 404-537-3406. The access code for both numbers is 49754021. Thank you.