So as you think about the way where we can grow and address this large market, the answer is we can address that with our current portfolio, but I would expect — we want to add additional pieces to the portfolio to address the growing needs that we see in the overall marketplace. So this is why when we think about acquisition orientation, we’re looking to add important pieces to the overall building products portfolio that we have in HIP.
Operator: The next question comes from Kevin McCarthy of Vertical Research Partners. Your line is open.
Kevin McCarthy: In your HIP segment, did your first quarter EBITDA margin of 25% come in better than you would have thought 3 months ago or on par? If it was better, what were the most important drivers of the upside margin variance?
Steve Bender: Kevin, it was stronger than I would have guessed that we had a very strong start to the year. And I would say in the first quarter, the strength that we saw in markets beginning to kind of restock levels and the construction activity in the first quarter continue to be quite strong. As I mentioned, we’ve seen many of our partners that are these nationwide homebuilders. And while we service them through distribution channels, continuing to have them grow market share, and we’re participating in that market share growth with them. And so given the strength that their — we’re seeing in their growth and our ability to participate in that growth with them, I think that speaks to the strength that we’ve seen in the overall business and the business strategy of penetrating these markets with our branded products. So I would say, yes, we had a very strong quarter and stronger than I would have guessed if you’d asked me earlier in the fourth quarter.
Kevin McCarthy: And then if I may shift gears to your chlor-alkali and vinyls businesses. Can you comment on your operating rates in the first quarter? And as you look ahead to the second quarter, how do you think those operating rates might trend relative to normal seasonal patterns in those businesses?
Albert Chao: Yes. I think we can chlor-alkali in the first quarter probably in the high 70s, and there were also turnarounds going on. And partially one of the questions earlier was that when the turn on is over, the operating rates will be higher. And hence, there’s more supply. So depending on the global demand for products, as you know, U.S. exports around 20-odd percent of its products. So the operating rates, we would expect to be higher in the second quarter than the first quarter.
Operator: The next question comes from Michael Sison at Wells Fargo. Your line is now open.
Michael Sison: A nice start to the year. For polyethylene, there was some price increase announcements out there for April. And I guess for May potentially as well. How do you feel about supply/demand for polyethylene these days? And do you think those price increases can be supported?
Albert Chao: Yes. We had a price increase earlier in the year, and I think the industry looking for $0.03 a price increase in April as well as $0.03 a price increase in May. The demand has been quite good domestically and for export in the U.S. And April is not over yet. So well, in terms of negotiations with pricing. So we will tell you in a few days how that goes.
Michael Sison: And then for PEM in total, on a sequential basis in 2Q, I just want to make sure I understand. You are seeing sort of a seasonal lift into the second quarter sort of in total. And then, I mean, do you think your volumes will still — will continue to grow year-over-year as it did in the first quarter?
Steve Bender: Yes. So Mike, as we were mentioned in our prepared remarks, yes, we’re continuing to see the volume strength that we saw in the first quarter continue on into the second quarter. And certainly, that is very supportive of our outlook as we go into the year, but it’s hard to see what will transpire in the back half of the year. But I would say that as we enter the second quarter here and see the volumes continue to be constructive and pricing has certainly across, whether it be in polyethylene or caustic or in PVC. We’ve seen price traction in the first quarter, which continues to be positive in terms of overall results as we look into Q2. But it is hard to then look that far forward into the back half of ’24. But we do see positive signs at this stage for the second quarter.
Operator: The next question comes from Josh Spector of UBS. Your line is open.
Josh Spector: I wanted to ask specifically on the HIP margins and looking at second quarter. Typically, margins are up sequentially and understand the prudence on the year. I just wanted to check to make sure there wasn’t anything or see if there’s anything discrete that we should be thinking about, either PVC pricing adjustments or something else that will lead to an abnormal sequential movement in margins in HIP?
Steve Bender: So Josh, as we push forward into the second quarter, you’re right, we do have some of those price increases that we achieved in the first quarter being pushed through in products downstream into building products. But at the same time, the second quarter and the third quarter typically are the strongest volume quarters. And so to the extent that we can get traction in volume and we’re — as I mentioned, we’ve got a very solid backlog, we hope to be able to push those cost increases through in our product offering. So as I say, we’re very constructive as we look forward into the second quarter for the Building Products side of our business.
Josh Spector: And just on the infrastructure side of the business, you’ve had pretty good growth sequentially, that was down year-over-year. And I mean some of the non-res indicators are still up, but softening I guess how do you see that part of that business trending relative to the more housing exposure to other part of the segment?
Steve Bender: Yes. I would say the infrastructure side of our business still remains good. The backlog we’re seeing in the Pipe & Fittings business still looks very good. And of course, as I mentioned, that’s a good indicator for the exterior construction activities of our Westlake Royal businesses. So I would say that the infrastructure bill that was passed $55 billion of infrastructure, a lot of that will go into water and other infrastructure needs that the U.S. has. And we’re very well positioned to participate in that investment spend by the government. So I think we — with our backlog, we’re very — have a very positive outlook into the second quarter for our infrastructure business.
Operator: We have — yes, it looks like we do have time for the remaining questions. The next question comes from Salvator Tiano with Bank of America Securities, Inc. Your line is now open.
