WLKP Westlake Chemical Partners LP

• Declared quarterly distribution of $0.4714 per unit; 37th consecutive quarterly distribution

Westlake Chemical Partners LP (NYSE: WLKP) (the "Partnership") today reported net income attributable to the Partnership in the third quarter of 2023 of $13.2 million, or $0.37 per limited partner unit, compared to third quarter 2022 net income of $14.8 million. The reduction in Partnership net income in the third quarter of 2023 compared to the third quarter of 2022 was the result of higher interest expense attributable to higher interest rates on floating rate debt. Cash flows from operating activities in the third quarter of 2023 were $100.9 million, a decrease of $14.6 million compared to third quarter 2022 cash flows from operating activities of $115.5 million. The decrease was primarily due to lower Partnership net income and less favorable working capital changes. For the three months ended September 30, 2023, MLP distributable cash flow was $13.6 million, a decrease of $3.1 million compared to third quarter 2022 MLP distributable cash flow. The decrease in MLP distributable cash flow was attributable to higher interest expense and changes in the timing of maintenance capital expenditures.

Third quarter 2023 net income attributable to the Partnership of $13.2 million increased by $1.3 million compared to second quarter 2023 net income of $11.9 million due to increased sales volume as a result of the completion of the Calvert City turnaround in the second quarter of 2023. Third quarter 2023 cash flows from operating activities of $100.9 million increased by $2.4 million compared to second quarter 2023 cash flows from operating activities of $98.5 million due to higher net income at OpCo. Third quarter 2023 MLP distributable cash flow of $13.6 million decreased by $1.4 million compared to second quarter 2023 MLP distributable cash flow of $15.0 million, primarily due to higher maintenance capital expenditures, which are weighted towards the second half of the year in 2023.

"We were pleased with the Partnership's performance in the third quarter of 2023, with net income, EBITDA and cash flow from operations all increasing from the second quarter. While distributable cash flow was sequentially lower due to the timing of maintenance capital spending, our underlying financial results and cash flows remain stable and predictable, supported by our sales agreement with Westlake that delivers a fixed margin on 95% of our production," said Albert Chao, President and Chief Executive Officer. "While the Partnership's coverage ratio has declined due to turnaround activity, we expect it to recover in future periods after turnaround activity is complete."

On October 31, 2023, the Partnership announced that the Board of Directors of Westlake Chemical Partners GP LLC had approved a quarterly distribution for the third quarter of 2023 of $0.4714 per unit to be payable on November 27, 2023 to unitholders of record as of November 10, 2023, representing the 37th consecutive quarterly distribution to our unitholders. MLP distributable cash flow provided trailing twelve-month coverage of 1.00x the declared distributions for the third quarter of 2023.

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, returns, predictable cash flows and distributions to unitholders, demand for ethylene and expected margins and production volumes, contracted volumes, the expectation that strong distributions will continue, future coverage ratios, 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, including inflation, interest rates and possible recession; 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; availability of insurance; our ability to borrow funds and access capital markets; and other uncertainties. 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, 2022, which was filed with the SEC in March 2023, and Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, which was filed with the SEC in August 2023.

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. 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' third quarter 2023 results will be held Thursday, November 2, 2023 at 1:00 PM Eastern Time (12:00 PM Central Time). To access the conference call, it is necessary to pre-register at https://register.vevent.com/register/BIba82e736e2dc4c7795c84d6a93ba20f8. Once registered, you will receive a phone number and unique PIN number.

A replay of the conference call will be available beginning two hours after its conclusion. The conference call and replay will be available via webcast at https://edge.media-server.com/mmc/p/4yt2s6sr.

WESTLAKE CHEMICAL PARTNERS LP ("WESTLAKE PARTNERS")

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2023

 

2022

 

2023

 

2022

 

 

 

 

 

 

 

 

 

 

 

(In thousands of dollars, except per unit data)

Revenue

 

 

 

 

 

 

 

 

Net sales—Westlake Corporation ("Westlake")

 

$

289,303

 

 

$

364,273

 

 

$

771,349

 

 

$

1,020,042

 

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

 

 

32,361

 

 

 

50,850

 

 

 

122,169

 

 

 

206,266

 

Total net sales

 

 

321,664

 

 

 

415,123

 

 

 

893,518

 

 

 

1,226,308

 

Cost of sales

 

 

228,683

 

 

 

324,629

 

 

 

606,742

 

 

 

947,073

 

Gross profit

 

 

92,981

 

 

 

90,494

 

 

 

286,776

 

 

 

279,235

 

Selling, general and administrative expenses

 

 

6,741

 

 

 

8,678

 

 

 

21,884

 

 

 

26,824

 

Income from operations

 

 

86,240

 

 

 

81,816

 

 

 

264,892

 

 

 

252,411

 

Other income (expense)

 

 

 

 

 

 

 

 

Interest expense—Westlake

 

 

(6,437

)

 

 

(3,645

)

 

 

(19,869

)

 

 

(8,703

)

Other income, net

 

 

1,272

 

 

 

618

 

 

 

3,153

 

 

 

683

 

Income before income taxes

 

 

81,075

 

 

 

78,789

 

 

 

248,176

 

 

 

244,391

 

Provision for income taxes

 

 

222

 

 

 

484

 

 

 

607

 

 

 

822

 

Net income

 

 

80,853

 

 

 

78,305

 

 

 

247,569

 

 

 

243,569

 

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

 

 

67,647

 

 

 

63,548

 

 

 

207,585

 

 

 

196,180

 

Net income attributable to Westlake Partners

 

$

13,206

 

 

$

14,757

 

 

$

39,984

 

 

$

47,389

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Common units

 

$

0.37

 

 

$

0.42

 

 

$

1.14

 

 

$

1.35

 

 

 

 

 

 

 

 

 

 

Distributions declared per unit

 

$

0.4714

 

 

$

0.4714

 

 

$

1.4142

 

 

$

1.4142

 

 

 

 

 

 

 

 

 

 

MLP distributable cash flow

 

$

13,620

 

 

$

16,734

 

 

$

46,156

 

 

$

55,609

 

 

 

 

 

 

 

 

 

 

Distributions declared

 

 

 

 

 

 

 

 

Limited partner units—publicly and privately held

 

$

9,949

 

 

$

9,947

 

 

$

29,841

 

 

$

29,828

 

Limited partner units—Westlake

 

 

6,658

 

 

 

6,657

 

 

 

19,973

 

 

 

19,971

 

Total distributions declared

 

$

16,607

 

 

$

16,604

 

 

$

49,814

 

 

$

49,799

 

EBITDA

 

$

115,738

 

 

$

111,825

 

 

$

349,947

 

 

$

344,776

 

WESTLAKE CHEMICAL PARTNERS LP

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

 

 

 

 

September 30, 2023

 

December 31, 2022

 

 

 

 

 

 

 

(In thousands of dollars)

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

65,869

 

 

$

64,782

 

Receivable under the Investment Management Agreement—Westlake

 

 

84,358

 

 

 

64,996

 

Accounts receivable, net—Westlake

 

 

54,625

 

 

 

90,965

 

Accounts receivable, net—third parties

 

 

21,626

 

 

 

20,030

 

Inventories

 

 

4,394

 

 

 

4,715

 

Prepaid expenses and other current assets

 

 

599

 

 

 

305

 

Total current assets

 

 

231,471

 

 

 

245,793

 

Property, plant and equipment, net

 

 

959,114

 

 

 

990,213

 

Other assets, net

 

 

150,925

 

 

 

135,973

 

Total assets

 

$

1,341,510

 

 

$

1,371,979

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities (accounts payable and accrued and other liabilities)

 

$

75,600

 

 

$

66,941

 

Long-term debt payable to Westlake

 

 

399,674

 

 

 

399,674

 

Other liabilities

 

 

4,964

 

 

 

1,656

 

Total liabilities

 

 

480,238

 

 

 

468,271

 

Common unitholders—publicly and privately held

 

 

474,895

 

 

 

480,643

 

Common unitholder—Westlake

 

 

49,919

 

 

 

53,859

 

General partner—Westlake

 

 

(242,572

)

 

 

(242,572

)

Total Westlake Partners partners' capital

 

 

282,242

 

 

 

291,930

 

Noncontrolling interest in OpCo

 

 

579,030

 

 

 

611,778

 

Total equity

 

 

861,272

 

 

 

903,708

 

Total liabilities and equity

 

$

1,341,510

 

 

$

1,371,979

 

WESTLAKE CHEMICAL PARTNERS LP

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

 

 

Nine Months Ended September 30,

 

 

2023

 

2022

 

 

 

 

 

 

 

(In thousands of dollars)

Cash flows from operating activities

 

 

 

 

Net income

 

$

247,569

 

 

$

243,569

 

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

 

 

 

 

Depreciation and amortization

 

 

81,902

 

 

 

91,682

 

Net loss on disposition and other

 

 

4,352

 

 

 

8,788

 

Other balance sheet changes

 

 

10,505

 

 

 

(2,877

)

Net cash provided by operating activities

 

 

344,328

 

 

 

341,162

 

Cash flows from investing activities

 

 

 

 

Additions to property, plant and equipment

 

 

(33,979

)

 

 

(45,458

)

Investments with Westlake under the Investment Management Agreement

 

 

(164,116

)

 

 

(276,000

)

Maturities of investments with Westlake under the Investment Management Agreement

 

 

145,000

 

 

 

247,000

 

Net cash used for investing activities

 

 

(53,095

)

 

 

(74,458

)

Cash flows from financing activities

 

 

 

 

Proceeds from debt payable to Westlake

 

 

155,250

 

 

 

—

 

Repayment of debt payable to Westlake

 

 

(155,250

)

 

 

—

 

Distributions to noncontrolling interest retained in OpCo by Westlake

 

 

(240,333

)

 

 

(214,486

)

Distributions to unitholders

 

 

(49,813

)

 

 

(49,807

)

Net cash used for financing activities

 

 

(290,146

)

 

 

(264,293

)

Net increase in cash and cash equivalents

 

 

1,087

 

 

 

2,411

 

Cash and cash equivalents at beginning of period

 

 

64,782

 

 

 

17,057

 

Cash and cash equivalents at end of period

 

$

65,869

 

 

$

19,468

 

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,

 

 

2023

 

2023

 

2022

 

2023

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands of dollars)

Net cash provided by operating activities

 

$

98,543

 

 

$

100,925

 

 

$

115,495

 

 

$

344,328

 

 

$

341,162

 

Changes in operating assets and liabilities and other

 

 

(23,279

)

 

 

(20,072

)

 

 

(37,190

)

 

 

(96,759

)

 

 

(97,593

)

Net income

 

 

75,264

 

 

 

80,853

 

 

 

78,305

 

 

 

247,569

 

 

 

243,569

 

Add:

 

 

 

 

 

 

 

 

 

 

Depreciation, amortization and disposition of property, plant and equipment

 

 

27,095

 

 

 

32,242

 

 

 

30,349

 

 

 

86,340

 

 

 

96,070

 

Less:

 

 

 

 

 

 

 

 

 

 

Contribution to turnaround reserves

 

 

(6,967

)

 

 

(7,565

)

 

 

(7,323

)

 

 

(21,838

)

 

 

(21,811

)

Maintenance capital expenditures

 

 

(6,521

)

 

 

(22,862

)

 

 

(14,348

)

 

 

(37,407

)

 

 

(38,172

)

Distributable cash flow attributable to noncontrolling interest in OpCo

 

 

(73,886

)

 

 

(69,048

)

 

 

(70,249

)

 

 

(228,508

)

 

 

(224,047

)

MLP distributable cash flow

 

$

14,985

 

 

$

13,620

 

 

$

16,734

 

 

$

46,156

 

 

$

55,609

 

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,

 

 

2023

 

2023

 

2022

 

2023

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands of dollars)

Net cash provided by operating activities

 

$

98,543

 

 

$

100,925

 

 

$

115,495

 

 

$

344,328

 

 

$

341,162

 

Changes in operating assets and liabilities and other

 

 

(23,279

)

 

 

(20,072

)

 

 

(37,190

)

 

 

(96,759

)

 

 

(97,593

)

Net income

 

 

75,264

 

 

 

80,853

 

 

 

78,305

 

 

 

247,569

 

 

 

243,569

 

Less:

 

 

 

 

 

 

 

 

 

 

Other income, net

 

 

1,061

 

 

 

1,272

 

 

 

618

 

 

 

3,153

 

 

 

683

 

Interest expense—Westlake

 

 

(6,117

)

 

 

(6,437

)

 

 

(3,645

)

 

 

(19,869

)

 

 

(8,703

)

Provision for income taxes

 

 

(173

)

 

 

(222

)

 

 

(484

)

 

 

(607

)

 

 

(822

)

Income from operations

 

 

80,493

 

 

 

86,240

 

 

 

81,816

 

 

 

264,892

 

 

 

252,411

 

Add:

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

27,040

 

 

 

28,226

 

 

 

29,391

 

 

 

81,902

 

 

 

91,682

 

Other income, net

 

 

1,061

 

 

 

1,272

 

 

 

618

 

 

 

3,153

 

 

 

683

 

EBITDA

 

$

108,594

 

 

$

115,738

 

 

$

111,825

 

 

$

349,947

 

 

$

344,776

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20231102631383/en/

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