WLKP Westlake Chemical Partners LP

• Declared quarterly distribution of $0.4714 per unit; 30th consecutive quarterly distribution

Westlake Chemical Partners LP (NYSE: WLKP) (the "Partnership") today reported record net income attributable to the Partnership in the fourth quarter of 2021 of $29.5 million, or $0.84 per limited partner unit, an increase of $14.5 million compared to fourth quarter 2020 net income of $15.0 million. The Partnership's net income in the fourth quarter of 2021 benefited from a buyer deficiency fee as well as recovery of certain other costs from Westlake Corporation ("Westlake") attributable to an unplanned outage. Cash flows from operating activities in the fourth quarter of 2021 were $21.9 million, a decrease of $10.6 million compared to fourth quarter 2020 cash flows from operating activities of $32.5 million. This decrease in cash flows from operating activities was primarily due to the buyer deficiency fee and recovery of certain costs from Westlake that will be paid in 2022. For the three months ended December 31, 2021, MLP distributable cash flow of $15.3 million was comparable to fourth quarter 2020 MLP distributable cash flow.

For the full year 2021, record net income attributable to the Partnership of $82.5 million, or $2.34 per limited partner unit, increased by $16.3 million compared to full year of 2020 net income attributable to the Partnership of $66.2 million. The increase in net income attributable to the Partnership was primarily due to strong third-party sales margins and benefited from a buyer deficiency fee as well as recovery of certain other costs from Westlake. Cash flows from operating activities in the full year of 2021 were $408.4 million, an increase of $35.0 million compared to the full year of 2020 cash flows from operating activities of $373.4 million. This increase in cash flows from operating activities was primarily due to the receipt of a prior year receivable from Westlake. For the year ended December 31, 2021, MLP distributable cash flow of $70.1 million was comparable MLP distributable cash flow of $72.0 million for the year ended December 31, 2020.

On January 24, 2022, the Partnership announced that the Board of Directors of Westlake Chemical Partners GP LLC had approved a quarterly distribution for the fourth quarter of 2021 of $0.4714 per unit to be payable on February 17, 2022 to unitholders of record as of February 3, 2022, representing the 30th consecutive quarterly distribution to our unitholders. MLP distributable cash flow provided full year coverage of 1.06x the declared distributions for 2021.

"The Partnership's performance in 2021 is a testament to the sustaining earnings power of the Partnership despite the impacts of a winter storm and hurricanes, as well as planned and unplanned outages at our facilities while maintaining solid coverage. The provisions in our long-term Ethylene Sales Agreement with Westlake insulate our earnings and cash flows from unexpected volatility," said Albert Chao, President and Chief Executive Officer. "As we look into 2022, we are excited about the continued strong performance of the Partnership and delivering solid value and healthy returns to our unitholders."

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 ability to deliver value and returns, and the expectation for sustained performance 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, the COVID-19 pandemic 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 fourth 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, 2020, which was filed with the SEC in March 2021 and Quarterly Report on Form 10-Q for the quarters ended March 31, 2021, June 30, 2021 and September 30, 2021 which were filed with the SEC in May 2021, August 2021 and November 2021, respectively.

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' fourth quarter and full year 2021 results will be held Tuesday, February 22, 2022 at 1:00 PM Eastern Time (12:00 PM Central Time). To access the conference call, dial (855) 765-5686 or (234) 386-2848 for international callers, approximately 10 minutes prior to the scheduled start time and reference passcode 636 98 19.

A replay of the conference call will be available beginning two hours after its conclusion until 11:59 p.m. Eastern Time on Tuesday, March 1, 2022. To hear a replay, dial (855) 859-2056 or (404) 537-3406 for international callers. The replay passcode is 636 98 19.

The conference call will also be available via webcast at: https://edge.media-server.com/mmc/p/vb94ivzb 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

 

Twelve Months Ended

December 31,

 

December 31,

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

(In thousands of dollars, except per unit data)

Revenue

 

 

 

 

 

 

 

 

Net sales—Westlake Corporation ("Westlake")

 

$

317,940

 

 

$

228,223

 

 

$

1,026,586

 

 

$

888,245

 

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

 

 

12,516

 

 

 

17,429

 

 

 

188,272

 

 

 

78,425

 

Total net sales

 

 

330,456

 

 

 

245,652

 

 

 

1,214,858

 

 

 

966,670

 

Cost of sales

 

 

183,406

 

 

 

160,738

 

 

 

773,152

 

 

 

587,787

 

Gross profit

 

 

147,050

 

 

 

84,914

 

 

 

441,706

 

 

 

378,883

 

Selling, general and administrative expenses

 

 

6,284

 

 

 

7,305

 

 

 

31,018

 

 

 

25,895

 

Income from operations

 

 

140,766

 

 

 

77,609

 

 

 

410,688

 

 

 

352,988

 

Other income (expense)

 

 

 

 

 

 

 

 

Interest expense—Westlake

 

 

(2,166

)

 

 

(2,337

)

 

 

(8,816

)

 

 

(12,038

)

Other income, net

 

 

10

 

 

 

8

 

 

 

62

 

 

 

733

 

Income before income taxes

 

 

138,610

 

 

 

75,280

 

 

 

401,934

 

 

 

341,683

 

Provision for income taxes

 

 

216

 

 

 

156

 

 

 

549

 

 

 

564

 

Net income

 

 

138,394

 

 

 

75,124

 

 

 

401,385

 

 

 

341,119

 

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

 

 

108,882

 

 

 

60,099

 

 

 

318,838

 

 

 

274,952

 

Net income attributable to Westlake Partners

 

$

29,512

 

 

$

15,025

 

 

$

82,547

 

 

$

66,167

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Common units

 

$

0.84

 

 

$

0.43

 

 

$

2.34

 

 

$

1.88

 

 

 

 

 

 

 

 

 

 

Distributions declared per unit

 

$

0.4714

 

 

$

0.4714

 

 

$

1.8856

 

 

$

1.8856

 

 

 

 

 

 

 

 

 

 

MLP distributable cash flow

 

$

15,297

 

 

$

15,603

 

 

$

70,057

 

 

$

71,983

 

 

 

 

 

 

 

 

 

 

Distribution declared

 

 

 

 

 

 

 

 

Limited partner units—public and privately held

 

$

9,943

 

 

$

9,936

 

 

$

39,760

 

 

$

39,736

 

Limited partner units—Westlake

 

 

6,657

 

 

 

6,657

 

 

 

26,628

 

 

 

26,629

 

Total distribution declared

 

$

16,600

 

 

$

16,593

 

 

$

66,388

 

 

$

66,365

 

EBITDA

 

$

166,760

 

 

$

103,004

 

 

$

519,564

 

 

$

456,875

 

WESTLAKE CHEMICAL PARTNERS LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

December 31,

 

December 31,

2021

 

2020

 

 

 

 

 

 

 

(In thousands of dollars)

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

17,057

 

 

$

17,154

 

Receivable under the Investment Management Agreement—Westlake Corporation ("Westlake")

 

 

106,243

 

 

 

123,228

 

Accounts receivable, net—Westlake

 

 

142,791

 

 

 

108,028

 

Accounts receivable, net—third parties

 

 

5,825

 

 

 

11,029

 

Inventories

 

 

8,898

 

 

 

3,474

 

Prepaid expenses and other current assets

 

 

396

 

 

 

392

 

Total current assets

 

 

281,210

 

 

 

263,305

 

Property, plant and equipment, net

 

 

1,043,539

 

 

 

1,050,677

 

Other assets, net

 

 

155,949

 

 

 

42,506

 

Total assets

 

$

1,480,698

 

 

$

1,356,488

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities (accounts payable and accrued liabilities)

 

$

106,796

 

 

$

39,754

 

Long-term debt payable to Westlake

 

 

399,674

 

 

 

399,674

 

Other liabilities

 

 

1,530

 

 

 

1,923

 

Total liabilities

 

 

508,000

 

 

 

441,351

 

Common unitholders—public and privately held

 

 

481,796

 

 

 

471,701

 

Common unitholder—Westlake

 

 

54,754

 

 

 

48,270

 

General partner—Westlake

 

 

(242,572

)

 

 

(242,572

)

Total Westlake Partners partners' capital

 

 

293,978

 

 

 

277,399

 

Noncontrolling interest in OpCo

 

 

678,720

 

 

 

637,738

 

Total equity

 

 

972,698

 

 

 

915,137

 

Total liabilities and equity

 

$

1,480,698

 

 

$

1,356,488

 

WESTLAKE CHEMICAL PARTNERS LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Twelve Months Ended December 31,

 

 

2021

 

2020

 

 

 

 

 

 

 

(In thousands of dollars)

Cash flows from operating activities

 

 

 

 

Net income

 

$

401,385

 

 

$

341,119

 

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

 

 

 

 

Depreciation and amortization

 

 

108,814

 

 

 

103,154

 

Other balance sheet changes

 

 

(101,760

)

 

 

(70,876

)

Net cash provided by operating activities

 

 

408,439

 

 

 

373,397

 

Cash flows from investing activities

 

 

 

 

Additions to property, plant and equipment

 

 

(81,171

)

 

 

(36,968

)

Investments with Westlake under the Investment Management Agreement

 

 

(276,000

)

 

 

(349,000

)

Maturities of investments with Westlake under the Investment Management Agreement

 

 

293,000

 

 

 

388,000

 

Other

 

 

(130

)

 

 

—

 

Net cash provided by (used for) investing activities

 

 

(64,301

)

 

 

2,032

 

Cash flows from financing activities

 

 

 

 

Quarterly distributions to noncontrolling interest retained in OpCo by Westlake

 

 

(277,856

)

 

 

(311,835

)

Quarterly distributions to unitholders

 

 

(66,379

)

 

 

(66,363

)

Net cash used for financing activities

 

 

(344,235

)

 

 

(378,198

)

Net decrease in cash and cash equivalents

 

 

(97

)

 

 

(2,769

)

Cash and cash equivalents at beginning of the year

 

 

17,154

 

 

 

19,923

 

Cash and cash equivalents at end of the year

 

$

17,057

 

 

$

17,154

 

WESTLAKE CHEMICAL PARTNERS LP

RECONCILIATION OF MLP DISTRIBUTABLE CASH FLOW TO NET INCOME

AND NET CASH PROVIDED BY OPERATING ACTIVITIES

(Unaudited)

 

 

 

Three Months

 

 

 

 

Ended

 

Three Months Ended

 

Twelve Months Ended

September 30,

 

December 31,

 

December 31,

 

 

2021

 

2021

 

2020

 

2021

 

2020

 

 

(In thousands of dollars)

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

99,459

 

 

$

21,862

 

 

$

32,521

 

 

$

408,439

 

 

$

373,397

 

Changes in operating assets and liabilities and other

 

 

(33,384

)

 

 

116,532

 

 

 

42,603

 

 

 

(7,054

)

 

 

(32,278

)

Net Income

 

 

66,075

 

 

 

138,394

 

 

 

75,124

 

 

 

401,385

 

 

 

341,119

 

Add:

 

 

 

 

 

 

 

 

 

 

Depreciation, amortization and disposition of property, plant and equipment

 

 

26,958

 

 

 

28,442

 

 

 

25,387

 

 

 

113,032

 

 

 

104,154

 

Mark-to-market adjustment gain on derivative contracts

 

 

—

 

 

 

—

 

 

 

(1,125

)

 

 

—

 

 

 

(1,340

)

Less:

 

 

 

 

 

 

 

 

 

 

Contribution to turnaround reserves

 

 

(10,795

)

 

 

(44,500

)

 

 

(10,240

)

 

 

(80,090

)

 

 

(39,937

)

Maintenance capital expenditures

 

 

(15,346

)

 

 

(46,350

)

 

 

(11,485

)

 

 

(87,783

)

 

 

(37,343

)

Distributable cash flow attributable to noncontrolling interest in OpCo

 

 

(53,915

)

 

 

(60,689

)

 

 

(62,058

)

 

 

(276,487

)

 

 

(294,670

)

MLP distributable cash flow

 

$

12,977

 

 

$

15,297

 

 

$

15,603

 

 

$

70,057

 

 

$

71,983

 

WESTLAKE CHEMICAL PARTNERS LP

RECONCILIATION OF EBITDA TO NET INCOME AND NET CASH

PROVIDED BY OPERATING ACTIVITIES

(Unaudited)

 

 

 

Three Months

 

 

 

 

Ended

 

Three Months Ended

 

Twelve Months Ended

September 30,

 

December 31,

 

December 31,

 

 

2021

 

2021

 

2020

 

2021

 

2020

 

 

(In thousands of dollars)

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

99,459

 

 

$

21,862

 

 

$

32,521

 

 

$

408,439

 

 

$

373,397

 

Changes in operating assets and liabilities and other

 

 

(33,384

)

 

 

116,532

 

 

 

42,603

 

 

 

(7,054

)

 

 

(32,278

)

Net Income

 

 

66,075

 

 

 

138,394

 

 

 

75,124

 

 

 

401,385

 

 

 

341,119

 

Less:

 

 

 

 

 

 

 

 

 

 

Other income, net

 

 

24

 

 

 

10

 

 

 

8

 

 

 

62

 

 

 

733

 

Interest expense

 

 

(2,190

)

 

 

(2,166

)

 

 

(2,337

)

 

 

(8,816

)

 

 

(12,038

)

Income tax benefit (provision)

 

 

105

 

 

 

(216

)

 

 

(156

)

 

 

(549

)

 

 

(564

)

Income from operations

 

 

68,136

 

 

 

140,766

 

 

 

77,609

 

 

 

410,688

 

 

 

352,988

 

Add:

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

26,586

 

 

 

25,984

 

 

 

25,387

 

 

 

108,814

 

 

 

103,154

 

Other income, net

 

 

24

 

 

 

10

 

 

 

8

 

 

 

62

 

 

 

733

 

EBITDA

 

$

94,746

 

 

$

166,760

 

 

$

103,004

 

 

$

519,564

 

 

$

456,875

 

 

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