Westlake Chemical Partners(WLKP) - 2025 Q1 - Quarterly Results

First Quarter 2025 Results Overview Westlake Chemical Partners LP experienced a significant decline in Q1 2025 financial performance due to the planned Petro 1 turnaround, impacting net income and cash flows Key Financial Highlights Westlake Chemical Partners LP reported a significant decrease in net income, cash flows from operating activities, and MLP distributable cash flow for Q1 2025 compared to Q1 2024 and Q4 2024, primarily due to the planned Petro 1 turnaround Key Financial Highlights (in millions of dollars) | Metric | Q1 2025 | Q1 2024 | Change (YoY) | Q4 2024 | Change (QoQ) | | :-------------------------------- | :------ | :------ | :----------- | :------ | :----------- | | Net income attributable to Partnership | $4.9 | $14.8 | -$9.9 | $15.0 (approx) | -$10.1 | | Cash flows from operating activities | $45.8 | $104.6 | -$58.8 | $132.5 | -$86.7 | | MLP distributable cash flow | $4.7 | $16.9 | -$12.2 | $15.0 | -$10.3 | - The decrease in financial performance was primarily attributed to lower production and sales volume and higher maintenance capital expenditures resulting from the planned Petro 1 turnaround[2][3] Management Commentary & Outlook The CEO confirmed that the negative impact on Q1 2025 distributable cash flow and coverage ratio was expected due to the Petro 1 turnaround, which began in late January and extended into early April. The facility has since returned to full operating rates, and the Partnership anticipates a return to strong historical levels for distributable cash flow and coverage ratio in coming quarters, with no further turnarounds planned for several years - The planned turnaround at the Petro 1 ethylene facility in Lake Charles, Louisiana, negatively impacted Q1 2025 distributable cash flow and coverage ratio[4] - Petro 1 returned to full operating rates in April 2025 and has been operating well since[4] - Management expects distributable cash flow and coverage ratio to return to strong historical levels in coming quarters, with no further turnarounds planned for several years[4] Quarterly Distribution The Partnership declared its 43rd consecutive quarterly distribution of $0.4714 per common unit for Q1 2025. The trailing twelve-month coverage ratio for Q1 2025 was 0.82x, a decrease from 1.01x in Q4 2024, primarily due to the Petro 1 turnaround Quarterly Distribution and Coverage Ratio | Metric | Q1 2025 | Q4 2024 | | :-------------------------------- | :------ | :------ | | Quarterly distribution per unit | $0.4714 | $0.4714 | | Trailing twelve-month coverage ratio | 0.82x | 1.01x | - The decrease in the coverage ratio was attributed to the planned Petro 1 turnaround[4] Company Information Westlake Chemical Partners LP, a limited partnership formed by Westlake Corporation, operates and develops ethylene production facilities, holding a 22.8% interest in Westlake Chemical OpCo LP Business Description Westlake Chemical Partners LP is a limited partnership formed by Westlake Corporation to operate, acquire, and develop ethylene production facilities and other qualified assets. It holds a 22.8% interest in Westlake Chemical OpCo LP, which owns three ethylene production facilities and an ethylene pipeline - Westlake Chemical Partners LP is a limited partnership formed by Westlake Corporation[9] - The Partnership owns a 22.8% interest in Westlake Chemical OpCo LP[9] - OpCo's assets include three ethylene production facilities in Calvert City, Kentucky, and Lake Charles, Louisiana, and an ethylene pipeline[9] Ethylene Sales Agreement OpCo's Ethylene Sales Agreement with Westlake Corporation is structured to provide stable and predictable cash flows. Under this agreement, 95% of OpCo's ethylene production is sold to Westlake for a fixed cash margin of $0.10 per pound, after accounting for operating costs, maintenance capital expenditures, and reserves for future turnaround expenditures - The Ethylene Sales Agreement with Westlake is designed to provide stable and predictable cash flows[5] - 95% of OpCo's ethylene production is sold to Westlake for a cash margin of $0.10 per pound[5] - The margin is net of operating costs, maintenance capital expenditures, and reserves for future turnaround expenditures[5] Financial Statements Westlake Partners' Q1 2025 financial statements reveal a significant decline in operational profitability and cash flow compared to the prior year, alongside an increase in total assets and liabilities Consolidated Statements of Operations For the three months ended March 31, 2025, Westlake Partners reported a significant decline in total net sales, gross profit, and net income attributable to the Partnership compared to the same period in 2024, primarily driven by lower sales to Westlake Corporation Consolidated Statements of Operations (in thousands of dollars) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Total net sales | $237,629 | $284,673 | | Cost of sales | $183,548 | $182,493 | | Gross profit | $54,081 | $102,180 | | Income from operations | $46,607 | $95,103 | | Net income attributable to Westlake Partners | $4,948 | $14,833 | | Net income per limited partner unit | $0.14 | $0.42 | Condensed Consolidated Balance Sheets As of March 31, 2025, Westlake Partners' total assets increased compared to December 31, 2024, mainly due to a significant rise in other assets, net. Total liabilities also saw a substantial increase, primarily in current liabilities, while total equity decreased Condensed Consolidated Balance Sheets (in thousands of dollars) | Metric | March 31, 2025 | December 31, 2024 | | :------------------------------- | :------------- | :---------------- | | Total current assets | $225,151 | $240,926 | | Property, plant and equipment, net | $903,497 | $903,588 | | Other assets, net | $242,704 | $143,442 | | Total assets | $1,371,352 | $1,287,956 | | Total liabilities | $568,246 | $458,642 | | Total equity | $803,106 | $829,314 | - Current liabilities increased significantly from $55,372 thousand at December 31, 2024, to $164,822 thousand at March 31, 2025[14] Condensed Consolidated Statements of Cash Flows For the three months ended March 31, 2025, net cash provided by operating activities decreased significantly compared to the prior year. Investing activities shifted from a net use of cash to a net provision of cash, while net cash used for financing activities also decreased Condensed Consolidated Statements of Cash Flows (in thousands of dollars) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $45,781 | $104,565 | | Net cash provided by (used for) investing activities | $14,044 | ($9,773) | | Net cash used for financing activities | ($68,517) | ($97,651) | | Net decrease in cash and cash equivalents | ($8,692) | ($2,859) | | Cash and cash equivalents at end of period | $49,624 | $55,760 | - The shift in investing activities was primarily due to maturities of investments with Westlake under the Investment Management Agreement[16] Non-GAAP Financial Measures Westlake Partners utilizes non-GAAP financial measures, including MLP distributable cash flow, coverage ratio, and EBITDA, to offer investors supplemental insights into its operational performance and financial health Definition and Purpose Westlake Partners uses non-GAAP financial measures such as MLP distributable cash flow, coverage ratio, and EBITDA to provide supplemental information to investors. These measures help assess underlying business trends, operating performance, debt servicing ability, and investment viability, complementing U.S. GAAP results - Non-GAAP measures like MLP distributable cash flow, coverage ratio, and EBITDA provide useful supplemental information for investors[8] - MLP distributable cash flow is defined as distributable cash flow less amounts attributable to noncontrolling interest and incentive distribution rights holder, not reflecting changes in working capital[8] - EBITDA is defined as net income before interest expense, income taxes, depreciation, and amortization[8] MLP Distributable Cash Flow Reconciliation The reconciliation shows a significant decrease in MLP distributable cash flow for Q1 2025 compared to both Q4 2024 and Q1 2024, primarily due to higher maintenance capital expenditures and lower net cash provided by operating activities MLP Distributable Cash Flow Reconciliation (in thousands of dollars) | Metric | Three Months Ended Dec 31, 2024 | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--------------------------------- | :------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $132,469 | $45,781 | $104,565 | | Net income | $87,387 | $42,309 | $89,646 | | Add: Depreciation, amortization and disposition of property, plant and equipment | $27,582 | $27,171 | $28,265 | | Less: Contribution to turnaround reserves | ($11,829) | ($7,622) | ($11,476) | | Less: Maintenance capital expenditures | ($15,923) | ($20,577) | ($7,749) | | Less: Distributable cash flow attributable to noncontrolling interest in OpCo | ($72,259) | ($36,567) | ($81,794) | | MLP distributable cash flow | $14,958 | $4,714 | $16,892 | EBITDA Reconciliation EBITDA for Q1 2025 decreased substantially compared to both Q4 2024 and Q1 2024, reflecting the lower net income and income from operations during the period EBITDA Reconciliation (in thousands of dollars) | Metric | Three Months Ended Dec 31, 2024 | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--------------------------------- | :------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $132,469 | $45,781 | $104,565 | | Net income | $87,387 | $42,309 | $89,646 | | Income from operations | $92,025 | $46,607 | $95,103 | | Add: Depreciation and amortization | $27,478 | $27,068 | $27,994 | | EBITDA | $120,838 | $75,021 | $124,431 | Additional Information This section provides crucial context regarding forward-looking statements, a qualified notice for tax purposes, and details for the Q1 2025 earnings conference call Forward-Looking Statements The release contains forward-looking statements regarding future events, such as turnaround timing, future distributable cash flow, and market conditions. These statements are subject to significant risks and uncertainties, including operating difficulties, market prices, feedstock costs, and regulatory changes, which could cause actual results to differ materially - Statements about future turnarounds, distributable cash flow, ethylene margins, and feedstock costs are forward-looking[6] - Actual results may differ materially due to risks such as operating difficulties, sales volume and price, feedstock availability, economic conditions, and regulatory changes[6] Qualified Notice This release serves as a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat 100% of the Partnership's distributions to non-U.S. investors as income effectively connected with a U.S. trade or business, making them subject to federal income tax withholding at the highest applicable effective tax rate - The release is a qualified notice under Treasury Regulation Section 1.1446-4(b)[7] - 100% of distributions to non-U.S. investors are considered effectively connected with a U.S. trade or business[7] - Distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate[7] Conference Call Details A conference call to discuss Westlake Chemical Partners' first quarter 2025 results was scheduled for Friday, May 2, 2025, at 1:00 PM Eastern Time. Registration and webcast details were provided - Conference call for Q1 2025 results was held on Friday, May 2, 2025, at 1:00 PM Eastern Time[10] - Registration and webcast links were provided for access[10]