Westlake Chemical Partners(US:WLKP)2022-02-22 20:47Financial Data and Key Metrics Changes - Westlake Partners reported record full-year 2021 net income of $83 million or $2.34 per unit, an increase of $17 million compared to 2020 [6][10] - Fourth-quarter 2021 net income was $30 million or $0.84 per unit, a decrease of $15 million compared to the same quarter in 2020 [9][10] - Consolidated net income, including OpCo's earnings, was $138 million on consolidated net sales of $330 million for the fourth quarter [9][10] - Distributable cash flow for the fourth quarter was $15 million or $0.43 per unit, comparable to $16 million in Q4 2020 [10][11] - Full-year 2021 MLP distributable cash flow was $70 million, slightly down from $72 million in 2020 [11] Business Line Data and Key Metrics Changes - The Partnership benefited from a buyer deficiency fee and recovery of certain costs from Westlake, contributing to the net income increase [10][11] - The fixed margin ethylene sales agreement for 95% of annual plant production provided stability and predictability in cash flows [7][8] Market Data and Key Metrics Changes - The demand for ethylene is expected to remain strong, driven by robust downstream derivative needs and consumer products [17][18] - The company anticipates healthy margins in 2022 due to elevated demand and strong market fundamentals [18] Company Strategy and Development Direction - The company plans to evaluate growth opportunities through increasing ownership interest in OpCo, acquisitions, and organic growth [18] - The focus remains on providing long-term value to unit holders while maintaining a strong balance sheet and conservative financial metrics [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continuing demand for ethylene and the stability provided by the ethylene sales agreement [17][18] - The company is prepared to provide growth if the market rewards value players, indicating readiness for potential distribution growth [34][43] Other Important Information - The Partnership has maintained a cumulative coverage ratio above its target level since its IPO in 2014 [14] - The next planned turnaround is at the Petro 1 facility in 2023 [15] Q&A Session Summary Question: Expectations for increased demand for ethylene and potential expansion - Management indicated that both the Partnership and Westlake Corporation have several alternatives for expansion, depending on capital costs and margin expectations [22][23] Question: Surge in EBITDA for the quarter - The surge was attributed to a buyer deficiency fee and shortfall fee due to an extended outage, totaling about $90 million [26] Question: Changes in strategy due to parent company developments - Management confirmed that there are no changes in the Partnership's structure or strategy despite changes at Westlake Corporation [32] Question: Potential for restarting distribution growth - Management noted that the market continues to reward value players and they are ready to provide growth if the market conditions are favorable [34][43] Question: Impact of $110 million obligations on earnings per unit - Management clarified that the obligations do not create a headwind on the Partnership's earnings profile, as the fees are structured to be paid in 2022 [38][39] Question: Availability of equity capital for growth - Management acknowledged the potential for both debt and equity financing for growth opportunities, depending on market conditions [41][42]