WLKP Westlake Chemical Partners LP

• Celebrated 10th anniversary as a publicly traded master limited partnership having grown the quarterly distribution 71% since IPO
• Declared quarterly distribution of $0.4714 per unit; 41st consecutive quarterly distribution

Westlake Chemical Partners LP (NYSE: WLKP) (the "Partnership") today reported net income attributable to the Partnership in the third quarter of 2024 of $18.1 million, or $0.51 per limited partner unit, an increase of $4.9 million compared to the third quarter 2023 net income of $13.2 million. Cash flows from operating activities in the third quarter of 2024 were $126.1 million, an increase of $25.2 million compared to third quarter 2023 cash flows from operating activities of $100.9 million, due to higher net income. For the three months ended September 30, 2024, MLP distributable cash flow was $17.9 million, an increase of $4.3 million compared to third quarter 2023 MLP distributable cash flow of $13.6 million. The increase in MLP distributable cash flow and associated trailing twelve-month coverage ratio was due to higher net income in addition to lower maintenance capital expenditures.

Third quarter 2024 net income attributable to the Partnership of $18.1 million increased by $3.7 million compared to second quarter 2024 net income of $14.4 million, primarily due to higher third-party ethylene sales volume with higher margin on these sales. Third quarter 2024 cash flows from operating activities of $126.1 million increased by $4.2 million compared to second quarter 2024 cash flows from operating activities of $121.9 million. Third quarter 2024 MLP distributable cash flow of $17.9 million increased by $0.8 million compared to second quarter 2024 MLP distributable cash flow of $17.1 million, primarily due to the higher net income.

"We are pleased with the Partnership's performance for the third quarter of 2024. During the quarter, third-party ethylene sales prices and margins improved to their highest quarterly average in years, in part due to weather events and production outages at other producers. In an effort to better capture these attractive third-party margins we opportunistically made the decision to defer the planned turnaround at our Petro 1 ethylene unit to the first quarter of 2025 while also shifting third-party sales volumes planned for later in the year into the third quarter. As a result, we were pleased with the improvement in our third quarter distributable cash flow compared to recent quarters," said Jean-Marc Gilson, President and Chief Executive Officer. "Looking ahead to the remainder of 2024, with most of our planned third-party ethylene sales volumes for the year already booked, and as maintenance capital spending increases to support the upcoming Petro 1 turnaround in early 2025, we expect some moderation in our distributable cash flow in the fourth quarter. However, the improved outlook for third-party ethylene margins and continued execution of our ethylene sales contract with Westlake position us well for continued predictable cash flow and distributions to our unitholders, which we have demonstrated since our IPO ten years ago."

On October 30, 2024, the Partnership announced that the Board of Directors of Westlake Chemical Partners GP LLC had approved a quarterly distribution for the third quarter of 2024 of $0.4714 per unit to be payable on November 27, 2024 to unitholders of record as of November 12, 2024, representing the 41st consecutive quarterly distribution to our unitholders. MLP distributable cash flow provided trailing twelve-month coverage of 1.03x the declared distributions for the third quarter of 2024, which was higher than the trailing twelve-month coverage ratio of 0.96x at the end of the second 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 June 30, 2024, which was filed with the SEC in August 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' third quarter 2024 results will be held Tuesday, November 5th, 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/BId643f8e14d904c4dbc8954f14daeb022. 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/sdd3kqrb 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 September 30,

 

Nine Months Ended September 30,

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

(In thousands of dollars, except per unit data)

Revenue

 

 

 

 

 

 

 

 

Net sales—Westlake Corporation ("Westlake")

 

$

215,799

 

 

$

289,303

 

 

$

690,535

 

 

$

771,349

 

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

 

 

61,196

 

 

 

32,361

 

 

 

155,301

 

 

 

122,169

 

Total net sales

 

 

276,995

 

 

 

321,664

 

 

 

845,836

 

 

 

893,518

 

Cost of sales

 

 

160,052

 

 

 

228,683

 

 

 

525,481

 

 

 

606,742

 

Gross profit

 

 

116,943

 

 

 

92,981

 

 

 

320,355

 

 

 

286,776

 

Selling, general and administrative expenses

 

 

7,254

 

 

 

6,741

 

 

 

21,936

 

 

 

21,884

 

Income from operations

 

 

109,689

 

 

 

86,240

 

 

 

298,419

 

 

 

264,892

 

Other income (expense)

 

 

 

 

 

 

 

 

Interest expense—Westlake

 

 

(6,698

)

 

 

(6,437

)

 

 

(19,930

)

 

 

(19,869

)

Other income, net

 

 

1,325

 

 

 

1,272

 

 

 

3,916

 

 

 

3,153

 

Income before income taxes

 

 

104,316

 

 

 

81,075

 

 

 

282,405

 

 

 

248,176

 

Provision for income taxes

 

 

216

 

 

 

222

 

 

 

633

 

 

 

607

 

Net income

 

 

104,100

 

 

 

80,853

 

 

 

281,772

 

 

 

247,569

 

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

 

 

85,964

 

 

 

67,647

 

 

 

234,376

 

 

 

207,585

 

Net income attributable to Westlake Partners

 

$

18,136

 

 

$

13,206

 

 

$

47,396

 

 

$

39,984

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Common units

 

$

0.51

 

 

$

0.37

 

 

$

1.35

 

 

$

1.14

 

 

 

 

 

 

 

 

 

 

Distributions declared per unit

 

$

0.4714

 

 

$

0.4714

 

 

$

1.4142

 

 

$

1.4142

 

 

 

 

 

 

 

 

 

 

MLP distributable cash flow

 

$

17,879

 

 

$

13,620

 

 

$

51,906

 

 

$

46,156

 

 

 

 

 

 

 

 

 

 

Distributions declared

 

 

 

 

 

 

 

 

Limited partner units—publicly and privately held

 

$

9,954

 

 

$

9,949

 

 

$

29,855

 

 

$

29,841

 

Limited partner units—Westlake

 

 

6,657

 

 

 

6,658

 

 

 

19,971

 

 

 

19,973

 

Total distributions declared

 

$

16,611

 

 

$

16,607

 

 

$

49,826

 

 

$

49,814

 

EBITDA

 

$

139,126

 

 

$

115,738

 

 

$

386,756

 

 

$

349,947

 

WESTLAKE CHEMICAL PARTNERS LP CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

 

 

 

September 30, 2024

 

December 31, 2023

 

 

(In thousands of dollars)

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

60,208

 

 

$

58,619

 

Receivable under the Investment Management Agreement—Westlake

 

 

109,540

 

 

 

94,444

 

Accounts receivable, net—Westlake

 

 

44,885

 

 

 

49,565

 

Accounts receivable, net—third parties

 

 

22,511

 

 

 

18,701

 

Inventories

 

 

3,751

 

 

 

4,432

 

Prepaid expenses and other current assets

 

 

667

 

 

 

442

 

Total current assets

 

 

241,562

 

 

 

226,203

 

Property, plant and equipment, net

 

 

908,992

 

 

 

943,843

 

Other assets, net

 

 

144,141

 

 

 

146,796

 

Total assets

 

$

1,294,695

 

 

$

1,316,842

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities (accounts payable and accrued and other liabilities)

 

$

53,291

 

 

$

56,335

 

Long-term debt payable to Westlake

 

 

399,674

 

 

 

399,674

 

Other liabilities

 

 

3,916

 

 

 

4,583

 

Total liabilities

 

 

456,881

 

 

 

460,592

 

Common unitholders—publicly and privately held

 

 

472,296

 

 

 

473,513

 

Common unitholder—Westlake

 

 

48,020

 

 

 

48,993

 

General partner—Westlake

 

 

(242,572

)

 

 

(242,572

)

Total Westlake Partners partners' capital

 

 

277,744

 

 

 

279,934

 

Noncontrolling interest in OpCo

 

 

560,070

 

 

 

576,316

 

Total equity

 

 

837,814

 

 

 

856,250

 

Total liabilities and equity

 

$

1,294,695

 

 

$

1,316,842

 

WESTLAKE CHEMICAL PARTNERS LP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

 

2023

 

 

 

(In thousands of dollars)

Cash flows from operating activities

 

 

 

 

Net income

 

$

281,772

 

 

$

247,569

 

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

 

 

 

 

Depreciation and amortization

 

 

84,421

 

 

 

81,902

 

Net loss on disposition and other

 

 

2,227

 

 

 

4,352

 

Other balance sheet changes

 

 

(15,888

)

 

 

10,505

 

Net cash provided by operating activities

 

 

352,532

 

 

 

344,328

 

Cash flows from investing activities

 

 

 

 

Additions to property, plant and equipment

 

 

(35,497

)

 

 

(33,979

)

Investments with Westlake under the Investment Management Agreement

 

 

(15,000

)

 

 

(164,116

)

Maturities of investments with Westlake under the Investment Management Agreement

 

 

—

 

 

 

145,000

 

Net cash used for investing activities

 

 

(50,497

)

 

 

(53,095

)

Cash flows from financing activities

 

 

 

 

Proceeds from debt payable to Westlake

 

 

163,000

 

 

 

155,250

 

Repayment of debt payable to Westlake

 

 

(163,000

)

 

 

(155,250

)

Distributions to noncontrolling interest retained in OpCo by Westlake

 

 

(250,622

)

 

 

(240,333

)

Distributions to unitholders

 

 

(49,824

)

 

 

(49,813

)

Net cash used for financing activities

 

 

(300,446

)

 

 

(290,146

)

Net increase in cash and cash equivalents

 

 

1,589

 

 

 

1,087

 

Cash and cash equivalents at beginning of period

 

 

58,619

 

 

 

64,782

 

Cash and cash equivalents at end of period

 

$

60,208

 

 

$

65,869

 

WESTLAKE CHEMICAL PARTNERS LP RECONCILIATION OF MLP DISTRIBUTABLE CASH FLOW TO NET INCOME AND NET CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited)

 

 

 

Three Months Ended June 30,

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2024

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

(In thousands of dollars)

Net cash provided by operating activities

 

$

121,896

 

 

$

126,071

 

 

$

100,925

 

 

$

352,532

 

 

$

344,328

 

Changes in operating assets and liabilities and other

 

 

(33,870

)

 

 

(21,971

)

 

 

(20,072

)

 

 

(70,760

)

 

 

(96,759

)

Net income

 

 

88,026

 

 

 

104,100

 

 

 

80,853

 

 

 

281,772

 

 

 

247,569

 

Add:

 

 

 

 

 

 

 

 

 

 

Depreciation, amortization and disposition of property, plant and equipment

 

 

29,869

 

 

 

28,528

 

 

 

32,242

 

 

 

86,662

 

 

 

86,340

 

Less:

 

 

 

 

 

 

 

 

 

 

Contribution to turnaround reserves

 

 

(8,672

)

 

 

(11,903

)

 

 

(7,565

)

 

 

(32,051

)

 

 

(21,838

)

Maintenance capital expenditures

 

 

(9,306

)

 

 

(17,753

)

 

 

(22,862

)

 

 

(34,808

)

 

 

(37,407

)

Distributable cash flow attributable to noncontrolling interest in OpCo

 

 

(82,782

)

 

 

(85,093

)

 

 

(69,048

)

 

 

(249,669

)

 

 

(228,508

)

MLP distributable cash flow

 

$

17,135

 

 

$

17,879

 

 

$

13,620

 

 

$

51,906

 

 

$

46,156

 

WESTLAKE CHEMICAL PARTNERS LP RECONCILIATION OF EBITDA TO NET INCOME, INCOME FROM OPERATIONS AND NET CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited)

 

 

 

Three Months Ended June 30,

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2024

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

(In thousands of dollars)

Net cash provided by operating activities

 

$

121,896

 

 

$

126,071

 

 

$

100,925

 

 

$

352,532

 

 

$

344,328

 

Changes in operating assets and liabilities and other

 

 

(33,870

)

 

 

(21,971

)

 

 

(20,072

)

 

 

(70,760

)

 

 

(96,759

)

Net income

 

 

88,026

 

 

 

104,100

 

 

 

80,853

 

 

 

281,772

 

 

 

247,569

 

Less:

 

 

 

 

 

 

 

 

 

 

Other income, net

 

 

1,257

 

 

 

1,325

 

 

 

1,272

 

 

 

3,916

 

 

 

3,153

 

Interest expense—Westlake

 

 

(6,651

)

 

 

(6,698

)

 

 

(6,437

)

 

 

(19,930

)

 

 

(19,869

)

Provision for income taxes

 

 

(207

)

 

 

(216

)

 

 

(222

)

 

 

(633

)

 

 

(607

)

Income from operations

 

 

93,627

 

 

 

109,689

 

 

 

86,240

 

 

 

298,419

 

 

 

264,892

 

Add:

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

28,315

 

 

 

28,112

 

 

 

28,226

 

 

 

84,421

 

 

 

81,902

 

Other income, net

 

 

1,257

 

 

 

1,325

 

 

 

1,272

 

 

 

3,916

 

 

 

3,153

 

EBITDA

 

$

123,199

 

 

$

139,126

 

 

$

115,738

 

 

$

386,756

 

 

$

349,947

 

 

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