Westlake Corporation (WLK) Balance Sheet

The balance sheet has contracted over the past two years, with total assets down roughly $1.7B and equity down $2.0B from the 2024 peak. This contraction appears driven by a combination of net losses, a $0.7B reduction in goodwill (from $2.0B to $1.3B), and ongoing capital expenditures that have not been fully offset by earnings. The recent uptick in equity from $8.5B in 2026Q1 to $8.7B in 2026Q2 suggests a tentative stabilization, but the overall trend indicates a weakened capital base relative to historical levels.

Total debt has remained relatively stable in the $5.3B-$6.4B range over the past ten quarters, but the equity base has eroded, pushing the D/E ratio from 0.48 to 0.62. This suggests that the company is not aggressively deleveraging despite weak profitability, and the higher leverage may be a strategic choice to maintain liquidity or fund capital expenditures. The absolute debt level is manageable relative to assets (debt-to-assets around 29%), but the trend warrants monitoring if equity continues to decline.

The $0.7B goodwill impairment in 2025Q3 is a notable event, suggesting that prior acquisitions have not performed as expected, possibly due to the cyclical downturn in chemicals. This write-down reduces the intangible asset base and improves the quality of reported assets, but it also signals that management may have overpaid for past acquisitions. The stability of PPE net at around $9.4B suggests ongoing investment in fixed assets, but the high capital intensity (capex averaging $260M per quarter) may strain cash flows if returns do not improve.

The decline in retained earnings reflects cumulative net losses over the period, yet the company has maintained its dividend and buyback program, which has further reduced equity. This suggests a commitment to returning capital to shareholders even during a downturn, which may be viewed positively by income-focused investors but could limit financial flexibility. The equity base is still substantial at $8.7B, but the trend is concerning if losses persist.

The cash balance has been drawn down significantly, likely to fund operations, capital expenditures, and shareholder returns, given negative free cash flow in most quarters. Despite the decline, the current ratio of 2.45 suggests that short-term obligations are well covered, and the company retains access to a $5.7B debt facility. However, the rapid cash burn warrants attention; if the cyclical recovery falters, the liquidity buffer could become strained.