- Declared quarterly distribution of $0.4714 per unit; 38th
consecutive quarterly distribution
Westlake Chemical Partners LP (NYSE: WLKP) (the "Partnership")
today reported net income attributable to the Partnership in the
fourth quarter of 2023 of $14.3 million, or $0.41 per limited
partner unit, a decrease of $2.5 million compared to fourth quarter
2022 net income of $16.8 million. The decrease in net income in the
fourth quarter of 2023 when compared to the prior-year period was
largely driven by higher interest expense. Cash flows from
operating activities in the fourth quarter of 2023 were $107.7
million, a decrease of $14.9 million compared to fourth quarter
2022 cash flows from operating activities of $122.6 million, due to
lower net income and less favorable working capital changes. For
the three months ended December 31, 2023, MLP distributable cash
flow was $16.4 million, a decrease of $3.9 million compared to
fourth quarter 2022 MLP distributable cash flow of $20.3 million.
The decrease in MLP distributable cash flow and associated trailing
twelve-month coverage ratio was primarily due to lower net income
and higher maintenance capital expenditures.
Fourth quarter 2023 net income attributable to the Partnership
of $14.3 million increased by $1.1 million compared to third
quarter 2023 net income of $13.2 million, primarily due to higher
production and sales volume. Fourth quarter 2023 cash flows from
operating activities of $107.7 million increased by $6.8 million
compared to third quarter 2023 cash flows from operating activities
of $100.9 million due to higher net income. Fourth quarter 2023 MLP
distributable cash flow of $16.4 million increased by $2.8 million
compared to third quarter 2023 MLP distributable cash flow of $13.6
million, primarily due to lower maintenance capital
expenditures.
For the full year 2023, net income attributable to the
Partnership of $54.3 million, or $1.54 per limited partner unit,
decreased by $9.9 million compared to full year of 2022 net income
attributable to the Partnership of $64.2 million. The decrease in
net income attributable to the Partnership was primarily due to
higher interest expense. Cash flows from operating activities for
the full year of 2023 were $452.0 million, a decrease of $11.7
million compared to the full year of 2022 cash flows from operating
activities of $463.7 million. This decrease in cash flows from
operating activities was primarily due to higher interest expense
and cash expenditures for the Calvert City, Kentucky, turnaround.
For the year ended December 31, 2023, MLP distributable cash flow
was $62.6 million, a decrease of $13.3 million compared to MLP
distributable cash flow of $75.9 million for the year ended
December 31, 2022.
"The Partnership performed well in 2023 as we successfully
completed the maintenance turnaround at our Calvert City ethylene
unit in May on schedule. We also maximized the margin on
third-party ethylene volumes in 2023 by opportunistically timing
our third-party sales," said Albert Chao, President and Chief
Executive Officer. "We plan to perform a maintenance turnaround at
our Petro 1 ethylene unit in the second half of 2024. Combined with
our outlook for continued low third-party ethylene margins and
elevated interest rates, the lost production during the Petro 1
turnaround may cause our coverage ratio to dip below 1.00x in 2024.
However, after the turnarounds at Petro 2 in 2021, Calvert City in
2023 and Petro 1 in 2024, we should be positioned to run at full
capacity, with a corresponding benefit to our coverage ratio in the
following years."
On January 22, 2024, the Partnership announced that the Board of
Directors of Westlake Chemical Partners GP LLC had approved a
quarterly distribution for the fourth quarter of 2023 of $0.4714
per unit to be payable on February 20, 2024 to unitholders of
record as of February 2, 2024, representing the 38th consecutive
quarterly distribution to our unitholders. MLP distributable cash
flow provided trailing twelve-month coverage of 0.94x the declared
distributions for the fourth quarter of 2023, which was a decrease
from the trailing twelve-month coverage ratio of 1.00x at the end
of 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 results of our turnaround activities, including
the Petro 1 turnaround, our future coverage ratio, our outlook for
third-party ethylene margins, 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, 2022, which was filed with the SEC in March 2023, and
Quarterly Report on Form 10-Q for the quarter ended September 30,
2023, which was filed with the SEC in November 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. 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 2023 results will be held Tuesday, February
20th, 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/BI4edd1a6cc9e749b585fb66878269ae6f.
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/gwkvbr9r 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 December
31,
Twelve Months Ended December
31,
2023
2022
2023
2022
(In thousands of dollars,
except per unit data)
Revenue
Net sales—Westlake Corporation
("Westlake")
$
255,306
$
322,868
$
1,026,655
$
1,342,910
Net co-products, ethylene and other
sales—third parties
41,967
43,971
164,136
250,237
Total net sales
297,273
366,839
1,190,791
1,593,147
Cost of sales
196,590
268,709
803,332
1,215,782
Gross profit
100,683
98,130
387,459
377,365
Selling, general and administrative
expenses
7,867
2,854
29,751
29,678
Income from operations
92,816
95,276
357,708
347,687
Other income (expense)
Interest expense—Westlake
(6,632
)
(4,704
)
(26,501
)
(13,407
)
Other income, net
1,079
883
4,232
1,566
Income before income taxes
87,263
91,455
335,439
335,846
Provision for income taxes
206
195
813
1,017
Net income
87,057
91,260
334,626
334,829
Less: Net income attributable to
noncontrolling interest in Westlake Chemical OpCo LP ("OpCo")
72,758
74,476
280,343
270,656
Net income attributable to Westlake
Partners
$
14,299
$
16,784
$
54,283
$
64,173
Net income per limited partner unit
attributable to Westlake Partners (basic and diluted)
Common units
$
0.41
$
0.48
$
1.54
$
1.82
Distributions declared per unit
$
0.4714
$
0.4714
$
1.8856
$
1.8856
MLP distributable cash flow
$
16,418
$
20,261
$
62,574
$
75,870
Distributions declared
Limited partner units—publicly and
privately held
$
9,949
$
9,947
$
39,790
$
39,775
Limited partner units—Westlake
6,658
6,657
26,631
26,628
Total distributions declared
$
16,607
$
16,604
$
66,421
$
66,403
EBITDA
$
122,196
$
125,551
$
472,143
$
470,327
WESTLAKE CHEMICAL PARTNERS
LP
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
December 31,
2023
2022
(In thousands of
dollars)
ASSETS
Current assets
Cash and cash equivalents
$
58,619
$
64,782
Receivable under the Investment Management
Agreement—Westlake
94,444
64,996
Accounts receivable, net—Westlake
49,565
90,965
Accounts receivable, net—third parties
18,701
20,030
Inventories
4,432
4,715
Prepaid expenses and other current
assets
442
305
Total current assets
226,203
245,793
Property, plant and equipment, net
943,843
990,213
Other assets, net
146,796
135,973
Total assets
$
1,316,842
$
1,371,979
LIABILITIES AND EQUITY
Current liabilities (accounts payable and
accrued and other liabilities)
$
56,335
$
66,941
Long-term debt payable to Westlake
399,674
399,674
Other liabilities
4,583
1,656
Total liabilities
460,592
468,271
Common unitholders—publicly and privately
held
473,513
480,643
Common unitholder—Westlake
48,993
53,859
General partner—Westlake
(242,572
)
(242,572
)
Total Westlake Partners partners'
capital
279,934
291,930
Noncontrolling interest in OpCo
576,316
611,778
Total equity
856,250
903,708
Total liabilities and equity
$
1,316,842
$
1,371,979
WESTLAKE CHEMICAL PARTNERS
LP
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
Twelve Months Ended December
31,
2023
2022
(In thousands of
dollars)
Cash flows from operating
activities
Net income
$
334,626
$
334,829
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization
110,203
121,074
Net loss on disposition and other
4,906
5,063
Other balance sheet changes
2,264
2,770
Net cash provided by operating
activities
451,999
463,736
Cash flows from investing
activities
Additions to property, plant and
equipment
(46,821
)
(54,118
)
Investments with Westlake under the
Investment Management Agreement
(174,116
)
(319,884
)
Maturities of investments with Westlake
under the Investment Management Agreement
145,000
362,000
Net cash used for investing activities
(75,937
)
(12,002
)
Cash flows from financing
activities
Proceeds from debt payable to Westlake
209,250
32,000
Repayment of debt payable to Westlake
(209,250
)
(32,000
)
Distributions to noncontrolling interest
retained in OpCo by Westlake
(315,805
)
(337,598
)
Distributions to unitholders
(66,420
)
(66,411
)
Net cash used for financing activities
(382,225
)
(404,009
)
Net increase (decrease) in cash and cash
equivalents
(6,163
)
47,725
Cash and cash equivalents at beginning of
the year
64,782
17,057
Cash and cash equivalents at end of the
year
$
58,619
$
64,782
WESTLAKE CHEMICAL PARTNERS
LP
RECONCILIATION OF MLP
DISTRIBUTABLE CASH FLOW TO NET INCOME
AND NET CASH PROVIDED BY
OPERATING ACTIVITIES
(Unaudited)
Three Months Ended September
30,
Three Months Ended December
31,
Twelve Months Ended December
31,
2023
2023
2022
2023
2022
(In thousands of
dollars)
Net cash provided by operating
activities
$
100,925
$
107,671
$
122,574
$
451,999
$
463,736
Changes in operating assets and
liabilities and other
(20,072
)
(20,614
)
(31,314
)
(117,373
)
(128,907
)
Net income
80,853
87,057
91,260
334,626
334,829
Add:
Depreciation, amortization and disposition
of property, plant and equipment
32,242
28,796
29,711
115,136
125,781
Less:
Contribution to turnaround reserves
(7,565
)
(7,682
)
(7,364
)
(29,520
)
(29,175
)
Maintenance capital expenditures
(22,862
)
(11,805
)
(7,077
)
(49,212
)
(45,249
)
Distributable cash flow attributable to
noncontrolling interest in OpCo
(69,048
)
(79,948
)
(86,269
)
(308,456
)
(310,316
)
MLP distributable cash flow
$
13,620
$
16,418
$
20,261
$
62,574
$
75,870
WESTLAKE CHEMICAL PARTNERS
LP
RECONCILIATION OF EBITDA TO
NET INCOME, INCOME FROM OPERATIONS AND
NET CASH PROVIDED BY OPERATING
ACTIVITIES
(Unaudited)
Three Months Ended September
30,
Three Months Ended December
31,
Twelve Months Ended December
31,
2023
2023
2022
2023
2022
(In thousands of
dollars)
Net cash provided by operating
activities
$
100,925
$
107,671
$
122,574
$
451,999
$
463,736
Changes in operating assets and
liabilities and other
(20,072
)
(20,614
)
(31,314
)
(117,373
)
(128,907
)
Net income
80,853
87,057
91,260
334,626
334,829
Less:
Other income, net
1,272
1,079
883
4,232
1,566
Interest expense—Westlake
(6,437
)
(6,632
)
(4,704
)
(26,501
)
(13,407
)
Provision for income taxes
(222
)
(206
)
(195
)
(813
)
(1,017
)
Income from operations
86,240
92,816
95,276
357,708
347,687
Add:
Depreciation and amortization
28,226
28,301
29,392
110,203
121,074
Other income, net
1,272
1,079
883
4,232
1,566
EBITDA
$
115,738
$
122,196
$
125,551
$
472,143
$
470,327
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240220363712/en/
Contact—(713) 585-2900 Investors—Steve Bender Media—L. Benjamin
Ederington
Westlake Chemical Partners (NYSE:WLKP)
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