Westlake Chemical Partners LP Announces First Quarter 2024 Results

• Declared quarterly distribution of $0.4714 per unit; 39th consecutive quarterly distribution

Westlake Chemical Partners LP (NYSE: WLKP) (the "Partnership") today reported net income attributable to the Partnership in the first quarter of 2024 of $14.8 million, or $0.42 per limited partner unit, which was in-line with first quarter 2023 net income of $14.9 million. Cash flows from operating activities in the first quarter of 2024 were $104.6 million, a decrease of $40.3 million compared to first quarter 2023 cash flows from operating activities of $144.9 million, due to less favorable working capital changes. For the three months ended March 31, 2024, MLP distributable cash flow was $16.9 million, a decrease of $0.7 million compared to first quarter 2023 MLP distributable cash flow of $17.6 million. The decrease in MLP distributable cash flow and associated trailing twelve-month coverage ratio was primarily due to lower production and sales volume.

First quarter 2024 net income attributable to the Partnership of $14.8 million increased by $0.5 million compared to fourth quarter 2023 net income of $14.3 million, in part due to lower selling, general and administrative expenses. First quarter 2024 cash flows from operating activities of $104.6 million decreased by $3.1 million compared to fourth quarter 2023 cash flows from operating activities of $107.7 million due to less favorable working capital changes. First quarter 2024 MLP distributable cash flow of $16.9 million increased by $0.5 million compared to fourth quarter 2023 MLP distributable cash flow of $16.4 million, primarily due to lower maintenance capital expenditures.

"Our first quarter of 2024 results were consistent with our performance in recent quarters due in large part to the stability provided by our ethylene supply agreement with Westlake. During the first quarter, OpCo's ethylene units ran well and third-party ethylene margins improved modestly due to lower feedstock and energy costs, which allowed us to opportunistically increase our third-party sales volume," said Albert Chao, President and Chief Executive Officer. "We are constructive on our outlook for the remainder of 2024 as demand from downstream ethylene derivative products is relatively stable and feedstock and energy costs remain at levels supporting third-party ethylene margin improvement."

On April 30, 2024, the Partnership announced that the Board of Directors of Westlake Chemical Partners GP LLC had approved a quarterly distribution for the first quarter of 2024 of $0.4714 per unit to be payable on May 29, 2024 to unitholders of record as of May 13, 2024, representing the 39th consecutive quarterly distribution to our unitholders. MLP distributable cash flow provided trailing twelve-month coverage of 0.93x the declared distributions for the first quarter of 2024, which was in-line with the trailing twelve-month coverage ratio of 0.94x at the end of the fourth quarter of 2023. 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 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, our expectations regarding future interest rates, 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, pandemic infectious diseases and the response thereto; 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; 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.

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 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 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 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' first quarter 2024 results will be held Wednesday, May 1st, 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/BI945f608342d94f3bb7f420c75004538c. 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/2ry9ktig 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 March 31,

 

 

2024

 

2023

 

 

(In thousands of dollars, except per unit data)

Revenue

 

 

 

 

Net sales—Westlake Corporation ("Westlake")

 

$

235,209

 

 

$

257,471

 

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

 

 

49,464

 

 

 

50,206

 

Total net sales

 

 

284,673

 

 

 

307,677

 

Cost of sales

 

 

182,493

 

 

 

201,604

 

Gross profit

 

 

102,180

 

 

 

106,073

 

Selling, general and administrative expenses

 

 

7,077

 

 

 

7,914

 

Income from operations

 

 

95,103

 

 

 

98,159

 

Other income (expense)

 

 

 

 

Interest expense—Westlake

 

 

(6,581

)

 

 

(7,315

)

Other income, net

 

 

1,334

 

 

 

820

 

Income before income taxes

 

 

89,856

 

 

 

91,664

 

Provision for income taxes

 

 

210

 

 

 

212

 

Net income

 

 

89,646

 

 

 

91,452

 

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

 

 

74,813

 

 

 

76,560

 

Net income attributable to Westlake Partners

 

$

14,833

 

 

$

14,892

 

 

 

 

 

 

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

 

 

 

 

Common units

 

$

0.42

 

 

$

0.42

 

 

 

 

 

 

Distributions declared per unit

 

$

0.4714

 

 

$

0.4714

 

 

 

 

 

 

MLP distributable cash flow

 

$

16,892

 

 

$

17,551

 

 

 

 

 

 

Distributions declared

 

 

 

 

Limited partner units—publicly and privately held

 

$

9,950

 

 

$

9,946

 

Limited partner units—Westlake

 

 

6,657

 

 

 

6,657

 

Total distributions declared

 

$

16,607

 

 

$

16,603

 

EBITDA

 

$

124,431

 

 

$

125,615

 

WESTLAKE CHEMICAL PARTNERS LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

March 31, 2024

 

December 31, 2023

 

 

(In thousands of dollars)

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

55,760

 

 

$

58,619

 

Receivable under the Investment Management Agreement—Westlake

 

 

94,477

 

 

 

94,444

 

Accounts receivable, net—Westlake

 

 

41,766

 

 

 

49,565

 

Accounts receivable, net—third parties

 

 

27,228

 

 

 

18,701

 

Inventories

 

 

4,860

 

 

 

4,432

 

Prepaid expenses and other current assets

 

 

257

 

 

 

442

 

Total current assets

 

 

224,348

 

 

 

226,203

 

Property, plant and equipment, net

 

 

926,813

 

 

 

943,843

 

Other assets, net

 

 

143,915

 

 

 

146,796

 

Total assets

 

$

1,295,076

 

 

$

1,316,842

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities (accounts payable and accrued and other liabilities)

 

$

43,083

 

 

$

56,335

 

Long-term debt payable to Westlake

 

 

399,674

 

 

 

399,674

 

Other liabilities

 

 

4,074

 

 

 

4,583

 

Total liabilities

 

 

446,831

 

 

 

460,592

 

Common unitholders—publicly and privately held

 

 

472,450

 

 

 

473,513

 

Common unitholder—Westlake

 

 

48,282

 

 

 

48,993

 

General partner—Westlake

 

 

(242,572

)

 

 

(242,572

)

Total Westlake Partners partners' capital

 

 

278,160

 

 

 

279,934

 

Noncontrolling interest in OpCo

 

 

570,085

 

 

 

576,316

 

Total equity

 

 

848,245

 

 

 

856,250

 

Total liabilities and equity

 

$

1,295,076

 

 

$

1,316,842

 

WESTLAKE CHEMICAL PARTNERS LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Three Months Ended March 31,

 

 

2024

 

2023

 

 

(In thousands of dollars)

Cash flows from operating activities

 

 

 

 

Net income

 

$

89,646

 

 

$

91,452

 

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

 

 

 

 

Depreciation and amortization

 

 

27,994

 

 

 

26,636

 

Net loss on disposition and other

 

 

527

 

 

 

942

 

Other balance sheet changes

 

 

(13,602

)

 

 

25,830

 

Net cash provided by operating activities

 

 

104,565

 

 

 

144,860

 

Cash flows from investing activities

 

 

 

 

Additions to property, plant and equipment

 

 

(9,773

)

 

 

(12,656

)

Investments with Westlake under the Investment Management Agreement

 

 

—

 

 

 

(90,116

)

Maturities of investments with Westlake under the Investment Management Agreement

 

 

—

 

 

 

103,000

 

Net cash used for investing activities

 

 

(9,773

)

 

 

228

 

Cash flows from financing activities

 

 

 

 

Proceeds from debt payable to Westlake

 

 

54,000

 

 

 

39,000

 

Repayment of debt payable to Westlake

 

 

(54,000

)

 

 

(39,000

)

Distributions to noncontrolling interest retained in OpCo by Westlake

 

 

(81,044

)

 

 

(88,678

)

Distributions to unitholders

 

 

(16,607

)

 

 

(16,604

)

Net cash used for financing activities

 

 

(97,651

)

 

 

(105,282

)

Net increase in cash and cash equivalents

 

 

(2,859

)

 

 

39,806

 

Cash and cash equivalents at beginning of period

 

 

58,619

 

 

 

64,782

 

Cash and cash equivalents at end of period

 

$

55,760

 

 

$

104,588

 

WESTLAKE CHEMICAL PARTNERS LP

RECONCILIATION OF MLP DISTRIBUTABLE CASH FLOW TO NET INCOME

AND NET CASH PROVIDED BY OPERATING ACTIVITIES

(Unaudited)

 

 

Three Months Ended December 31,

 

Three Months Ended March 31,

 

 

2023

 

2024

 

2023

 

 

(In thousands of dollars)

Net cash provided by operating activities

 

$

107,671

 

 

$

104,565

 

 

$

144,860

 

Changes in operating assets and liabilities and other

 

 

(20,614

)

 

 

(14,919

)

 

 

(53,408

)

Net income

 

 

87,057

 

 

 

89,646

 

 

 

91,452

 

Add:

 

 

 

 

 

 

Depreciation, amortization and disposition of property, plant and equipment

 

 

28,796

 

 

 

28,265

 

 

 

27,003

 

Less:

 

 

 

 

 

 

Contribution to turnaround reserves

 

 

(7,682

)

 

 

(11,476

)

 

 

(7,306

)

Maintenance capital expenditures

 

 

(11,805

)

 

 

(7,749

)

 

 

(8,024

)

Distributable cash flow attributable to noncontrolling interest in OpCo

 

 

(79,948

)

 

 

(81,794

)

 

 

(85,574

)

MLP distributable cash flow

 

$

16,418

 

 

$

16,892

 

 

$

17,551

 

WESTLAKE CHEMICAL PARTNERS LP

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

PROVIDED BY OPERATING ACTIVITIES

(Unaudited)

 

 

Three Months Ended December 31,

 

Three Months Ended March 31,

 

 

2023

 

2024

 

2023

 

 

(In thousands of dollars)

Net cash provided by operating activities

 

$

107,671

 

 

$

104,565

 

 

$

144,860

 

Changes in operating assets and liabilities and other

 

 

(20,614

)

 

 

(14,919

)

 

 

(53,408

)

Net income

 

 

87,057

 

 

 

89,646

 

 

 

91,452

 

Less:

 

 

 

 

 

 

Other income, net

 

 

1,079

 

 

 

1,334

 

 

 

820

 

Interest expense—Westlake

 

 

(6,632

)

 

 

(6,581

)

 

 

(7,315

)

Provision for income taxes

 

 

(206

)

 

 

(210

)

 

 

(212

)

Income from operations

 

 

92,816

 

 

 

95,103

 

 

 

98,159

 

Add:

 

 

 

 

 

 

Depreciation and amortization

 

 

28,301

 

 

 

27,994

 

 

 

26,636

 

Other income, net

 

 

1,079

 

 

 

1,334

 

 

 

820

 

EBITDA

 

$

122,196

 

 

$

124,431

 

 

$

125,615

 

 

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