WLKP Westlake Chemical Partners LP

• Declared quarterly distribution of $0.4714 per unit; 40th consecutive quarterly distribution

Westlake Chemical Partners LP (NYSE: WLKP) (the "Partnership") today reported net income attributable to the Partnership in the second quarter of 2024 of $14.4 million, or $0.41 per limited partner unit, an increase of $2.5 million compared to the second quarter 2023 net income of $11.9 million. Cash flows from operating activities in the second quarter of 2024 were $121.9 million, an increase of $23.4 million compared to second quarter 2023 cash flows from operating activities of $98.5 million, due to higher net income. For the three months ended June 30, 2024, MLP distributable cash flow was $17.1 million, an increase of $2.1 million compared to second quarter 2023 MLP distributable cash flow of $15.0 million. The increase in MLP distributable cash flow and associated trailing twelve-month coverage ratio was primarily due to higher production and sales volume due to the Calvert City turnaround in the second quarter of 2023.

Second quarter 2024 net income attributable to the Partnership of $14.4 million decreased by $0.4 million compared to first quarter 2024 net income of $14.8 million, primarily due to higher selling, general and administrative expenses. Second quarter 2024 cash flows from operating activities of $121.9 million increased by $17.3 million compared to first quarter 2024 cash flows from operating activities of $104.6 million due to more favorable working capital changes. Second quarter 2024 MLP distributable cash flow of $17.1 million increased by $0.2 million compared to first quarter 2024 MLP distributable cash flow of $16.9 million, primarily due to higher margins on third-party ethylene sales.

"We are pleased with the Partnership's performance for the second quarter of 2024. During the second quarter, we benefitted from improved third-party ethylene sales prices and margins, which supported the growth in our MLP distributable cash flow. Last month, Westlake Chemical Partners GP LLC, the general partner of the Partnership, implemented a succession plan that included the appointment of Jean-Marc Gilson as President, CEO and director of our general partner. We are pleased to welcome Jean-Marc to the Partnership as he continues implementing our strategy of long-term value creation," said Albert Chao, Executive Chairman. "Looking ahead to the second half of 2024, preparations are well underway for our planned maintenance turnaround at our Petro 1 ethylene unit, which is scheduled to begin later in the third quarter. While the Petro 1 turnaround will have a temporary impact on our earnings and cash flows, our outlook for third-party ethylene sales prices and margins has improved and OpCo's ethylene sales agreement with Westlake will continue to support our earnings and cash flows."

On July 30, 2024, the Partnership announced that the Board of Directors of Westlake Chemical Partners GP LLC had approved a quarterly distribution for the second quarter of 2024 of $0.4714 per unit to be payable on August 27, 2024 to unitholders of record as of August 12, 2024, representing the 40th consecutive quarterly distribution to our unitholders. MLP distributable cash flow provided trailing twelve-month coverage of 0.96x the declared distributions for the second quarter of 2024, which was higher than the trailing twelve-month coverage ratio of 0.93x at the end of the first quarter of 2024. Since our IPO in July of 2014 our cumulative coverage ratio is 1.08x.

OpCo's Ethylene Sales Agreement with Westlake is designed to provide for stable and predictable cash flows. The agreement provides that 95% of OpCo's ethylene production is sold to Westlake for a cash margin of $0.10 per pound, net of operating costs, maintenance capital expenditures and reserves for future turnaround expenditures.

The statements in this release and the related teleconference relating to matters that are not historical facts, such as those with respect to the timing of the anticipated Petro 1 turnaround, results of our turnaround reserves and activities, our future coverage ratio, our outlook for third-party ethylene margins, our expectations regarding feedstock and energy costs, the ability to deliver value, returns, predictable cash flows and distributions to unitholders, the expectation that strong distributions will continue, and the nature of the sales agreement with Westlake, are forward-looking statements. These forward-looking statements are subject to significant risks and uncertainties. Actual results could differ materially, based on factors including, but not limited to, operating difficulties; the volume of ethylene that we are able to sell; the price at which we are able to sell ethylene; changes in the price and availability of feedstocks; changes in prevailing economic conditions; actions and commitments of Westlake Corporation; actions of third parties; the timing and results of capital expenditures, including turnaround activities; inclement or hazardous weather conditions, including flooding, and the physical impacts of climate change; environmental hazards; changes in laws and regulations (or the interpretation thereof); inability to acquire or maintain necessary permits; inability to obtain necessary production equipment or replacement parts; technical difficulties or failures; labor disputes; difficulty collecting receivables; inability of our customers to take delivery; fires, explosions or other industrial accidents; our ability to borrow funds and access capital markets; and other risk factors. For more detailed information about the factors that could cause actual results to differ materially, please refer to the Partnership's Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC in February 2024, and the Partnership's Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, which was filed with the SEC in May 2024.

This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of the Partnership's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.

Use of Non-GAAP Financial Measures

This release makes reference to certain "non-GAAP" financial measures, such as MLP distributable cash flow, coverage ratio and EBITDA. For this purpose, a non-GAAP financial measure is generally defined by the Securities and Exchange Commission ("SEC") as a numerical measure of a registrant's historical or future financial performance, financial position or cash flows that (1) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the registrant; or (2) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. We report our financial results in accordance with U.S. GAAP, but believe that certain non-GAAP financial measures, such as MLP distributable cash flow, coverage ratio and EBITDA, provide useful supplemental information to investors regarding the underlying business trends and performance of our ongoing operations and are useful for period-over-period comparisons of such operations. These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the financial measures prepared in accordance with U.S. GAAP. We define MLP distributable cash flow as distributable cash flow less distributable cash flow attributable to Westlake Corporation's noncontrolling interest in OpCo and distributions attributable to the incentive distribution rights holder. MLP distributable cash flow does not reflect changes in working capital balances. We define EBITDA as net income before interest expense, income taxes, depreciation and amortization. MLP distributable cash flow, coverage ratio and EBITDA are non-GAAP supplemental financial measures that management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess our operating performance as compared to other publicly traded partnerships, our ability to incur and service debt and fund capital expenditures and the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities. Reconciliations of MLP distributable cash flow to net income and to net cash provided by operating activities and of EBITDA to net income, income from operations and net cash provided by operating activities can be found in the financial schedules at the end of this press release.

Westlake Chemical Partners LP

Westlake Chemical Partners is a limited partnership formed by Westlake Corporation to operate, acquire and develop ethylene production facilities and other qualified assets. Headquartered in Houston, the Partnership owns a 22.8% interest in Westlake Chemical OpCo LP. Westlake Chemical OpCo LP's assets consist of three ethylene production facilities in Calvert City, Kentucky, and Lake Charles, Louisiana, and an ethylene pipeline. For more information about Westlake Chemical Partners LP, please visit http://www.wlkpartners.com.

Westlake Chemical Partners LP Conference Call Information:

A conference call to discuss Westlake Chemical Partners' second quarter 2024 results will be held Tuesday, August 6th, 2024 at 1:00 PM Eastern Time (12:00 PM Central Time). To access the conference call, please register at: https://register.vevent.com/register/BI05d1ab2ca68249b69a922d0eae472d31. A dial-in will be provided upon registration.

The conference call will also be available via webcast at: https://edge.media-server.com/mmc/p/qjg77gba and the earnings release can be obtained via the Partnership web page at: https://investors.wlkpartners.com/corporate-profile/default.aspx.

WESTLAKE CHEMICAL PARTNERS LP ("WESTLAKE PARTNERS") 

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

(In thousands of dollars, except per unit data)

Revenue

 

 

 

 

 

 

 

 

Net sales—Westlake Corporation ("Westlake")

 

$

239,527

 

 

$

224,575

 

 

$

474,736

 

 

$

482,046

 

Net co-products, ethylene and other sales—third parties

 

 

44,641

 

 

 

39,602

 

 

 

94,105

 

 

 

89,808

 

Total net sales

 

 

284,168

 

 

 

264,177

 

 

 

568,841

 

 

 

571,854

 

Cost of sales

 

 

182,936

 

 

 

176,455

 

 

 

365,429

 

 

 

378,059

 

Gross profit

 

 

101,232

 

 

 

87,722

 

 

 

203,412

 

 

 

193,795

 

Selling, general and administrative expenses

 

 

7,605

 

 

 

7,229

 

 

 

14,682

 

 

 

15,143

 

Income from operations

 

 

93,627

 

 

 

80,493

 

 

 

188,730

 

 

 

178,652

 

Other income (expense)

 

 

 

 

 

 

 

 

Interest expense—Westlake

 

 

(6,651

)

 

 

(6,117

)

 

 

(13,232

)

 

 

(13,432

)

Other income, net

 

 

1,257

 

 

 

1,061

 

 

 

2,591

 

 

 

1,881

 

Income before income taxes

 

 

88,233

 

 

 

75,437

 

 

 

178,089

 

 

 

167,101

 

Provision for income taxes

 

 

207

 

 

 

173

 

 

 

417

 

 

 

385

 

Net income

 

 

88,026

 

 

 

75,264

 

 

 

177,672

 

 

 

166,716

 

Less: Net income attributable to noncontrolling interest in Westlake Chemical OpCo LP ("OpCo")

 

 

73,599

 

 

 

63,378

 

 

 

148,412

 

 

 

139,938

 

Net income attributable to Westlake Partners

 

$

14,427

 

 

$

11,886

 

 

$

29,260

 

 

$

26,778

 

 

 

 

 

 

 

 

 

 

Net income per limited partner unit attributable to Westlake Partners (basic and diluted)

 

 

 

 

 

 

 

 

Common units

 

$

0.41

 

 

$

0.34

 

 

$

0.83

 

 

$

0.76

 

 

 

 

 

 

 

 

 

 

Distributions declared per unit

 

$

0.4714

 

 

$

0.4714

 

 

$

0.9428

 

 

$

0.9428

 

 

 

 

 

 

 

 

 

 

MLP distributable cash flow

 

$

17,135

 

 

$

14,985

 

 

$

34,027

 

 

$

32,536

 

 

 

 

 

 

 

 

 

 

Distributions declared

 

 

 

 

 

 

 

 

Limited partner units—publicly and privately held

 

$

9,951

 

 

$

9,946

 

 

$

19,901

 

 

$

19,892

 

Limited partner units—Westlake

 

 

6,657

 

 

 

6,658

 

 

 

13,314

 

 

 

13,315

 

Total distributions declared

 

$

16,608

 

 

$

16,604

 

 

$

33,215

 

 

$

33,207

 

EBITDA

 

$

123,199

 

 

$

108,594

 

 

$

247,630

 

 

$

234,209

 

WESTLAKE CHEMICAL PARTNERS LP 

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

June 30, 2024

 

December 31, 2023

 

 

(In thousands of dollars)

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

65,999

 

 

$

58,619

 

Receivable under the Investment Management Agreement—Westlake

 

 

94,478

 

 

 

94,444

 

Accounts receivable, net—Westlake

 

 

39,090

 

 

 

49,565

 

Accounts receivable, net—third parties

 

 

27,128

 

 

 

18,701

 

Inventories

 

 

4,487

 

 

 

4,432

 

Prepaid expenses and other current assets

 

 

944

 

 

 

442

 

Total current assets

 

 

232,126

 

 

 

226,203

 

Property, plant and equipment, net

 

 

912,752

 

 

 

943,843

 

Other assets, net

 

 

143,484

 

 

 

146,796

 

Total assets

 

$

1,288,362

 

 

$

1,316,842

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities (accounts payable and accrued and other liabilities)

 

$

49,607

 

 

$

56,335

 

Long-term debt payable to Westlake

 

 

399,674

 

 

 

399,674

 

Other liabilities

 

 

4,234

 

 

 

4,583

 

Total liabilities

 

 

453,515

 

 

 

460,592

 

Common unitholders—publicly and privately held

 

 

471,199

 

 

 

473,513

 

Common unitholder—Westlake

 

 

47,408

 

 

 

48,993

 

General partner—Westlake

 

 

(242,572

)

 

 

(242,572

)

Total Westlake Partners partners' capital

 

 

276,035

 

 

 

279,934

 

Noncontrolling interest in OpCo

 

 

558,812

 

 

 

576,316

 

Total equity

 

 

834,847

 

 

 

856,250

 

Total liabilities and equity

 

$

1,288,362

 

 

$

1,316,842

 

WESTLAKE CHEMICAL PARTNERS LP 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2024

 

 

 

2023

 

 

 

(In thousands of dollars)

Cash flows from operating activities

 

 

 

 

Net income

 

$

177,672

 

 

$

166,716

 

Adjustments to reconcile net income to net cash provided by operating activities

 

 

 

 

Depreciation and amortization

 

 

56,309

 

 

 

53,676

 

Net loss on disposition and other

 

 

1,870

 

 

 

725

 

Other balance sheet changes

 

 

(9,390

)

 

 

22,286

 

Net cash provided by operating activities

 

 

226,461

 

 

 

243,403

 

Cash flows from investing activities

 

 

 

 

Additions to property, plant and equipment

 

 

(19,951

)

 

 

(17,169

)

Investments with Westlake under the Investment Management Agreement

 

 

—

 

 

 

(164,116

)

Maturities of investments with Westlake under the Investment Management Agreement

 

 

—

 

 

 

135,000

 

Net cash used for investing activities

 

 

(19,951

)

 

 

(46,285

)

Cash flows from financing activities

 

 

 

 

Proceeds from debt payable to Westlake

 

 

108,000

 

 

 

98,500

 

Repayment of debt payable to Westlake

 

 

(108,000

)

 

 

(98,500

)

Distributions to noncontrolling interest retained in OpCo by Westlake

 

 

(165,916

)

 

 

(169,259

)

Distributions to unitholders

 

 

(33,214

)

 

 

(33,207

)

Net cash used for financing activities

 

 

(199,130

)

 

 

(202,466

)

Net increase (decrease) in cash and cash equivalents

 

 

7,380

 

 

 

(5,348

)

Cash and cash equivalents at beginning of period

 

 

58,619

 

 

 

64,782

 

Cash and cash equivalents at end of period

 

$

65,999

 

 

$

59,434

 

WESTLAKE CHEMICAL PARTNERS LP 

RECONCILIATION OF MLP DISTRIBUTABLE CASH FLOW TO NET INCOME

AND NET CASH PROVIDED BY OPERATING ACTIVITIES

(Unaudited)

 

 

 

Three Months Ended March 31,

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2024

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

(In thousands of dollars)

Net cash provided by operating activities

 

$

104,565

 

 

$

121,896

 

 

$

98,543

 

 

$

226,461

 

 

$

243,403

 

Changes in operating assets and liabilities and other

 

 

(14,919

)

 

 

(33,870

)

 

 

(23,279

)

 

 

(48,789

)

 

 

(76,687

)

Net income

 

 

89,646

 

 

 

88,026

 

 

 

75,264

 

 

 

177,672

 

 

 

166,716

 

Add:

 

 

 

 

 

 

 

 

 

 

Depreciation, amortization and disposition of property, plant and equipment

 

 

28,265

 

 

 

29,869

 

 

 

27,095

 

 

 

58,134

 

 

 

54,098

 

Less:

 

 

 

 

 

 

 

 

 

 

Contribution to turnaround reserves

 

 

(11,476

)

 

 

(8,672

)

 

 

(6,967

)

 

 

(20,148

)

 

 

(14,273

)

Maintenance capital expenditures

 

 

(7,749

)

 

 

(9,306

)

 

 

(6,521

)

 

 

(17,055

)

 

 

(14,545

)

Distributable cash flow attributable to noncontrolling interest in OpCo

 

 

(81,794

)

 

 

(82,782

)

 

 

(73,886

)

 

 

(164,576

)

 

 

(159,460

)

MLP distributable cash flow

 

$

16,892

 

 

$

17,135

 

 

$

14,985

 

 

$

34,027

 

 

$

32,536

 

WESTLAKE CHEMICAL PARTNERS LP 

RECONCILIATION OF EBITDA TO NET INCOME, INCOME FROM OPERATIONS AND NET CASH

PROVIDED BY OPERATING ACTIVITIES

(Unaudited)

 

 

 

Three Months Ended March 31,

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2024

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

(In thousands of dollars)

Net cash provided by operating activities

 

$

104,565

 

 

$

121,896

 

 

$

98,543

 

 

$

226,461

 

 

$

243,403

 

Changes in operating assets and liabilities and other

 

 

(14,919

)

 

 

(33,870

)

 

 

(23,279

)

 

 

(48,789

)

 

 

(76,687

)

Net income

 

 

89,646

 

 

 

88,026

 

 

 

75,264

 

 

 

177,672

 

 

 

166,716

 

Less:

 

 

 

 

 

 

 

 

 

 

Other income, net

 

 

1,334

 

 

 

1,257

 

 

 

1,061

 

 

 

2,591

 

 

 

1,881

 

Interest expense—Westlake

 

 

(6,581

)

 

 

(6,651

)

 

 

(6,117

)

 

 

(13,232

)

 

 

(13,432

)

Provision for income taxes

 

 

(210

)

 

 

(207

)

 

 

(173

)

 

 

(417

)

 

 

(385

)

Income from operations

 

 

95,103

 

 

 

93,627

 

 

 

80,493

 

 

 

188,730

 

 

 

178,652

 

Add:

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

27,994

 

 

 

28,315

 

 

 

27,040

 

 

 

56,309

 

 

 

53,676

 

Other income, net

 

 

1,334

 

 

 

1,257

 

 

 

1,061

 

 

 

2,591

 

 

 

1,881

 

EBITDA

 

$

124,431

 

 

$

123,199

 

 

$

108,594

 

 

$

247,630

 

 

$

234,209

 

 

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