Westlake Chemical Partners(WLKP) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Westlake Partners reported a net income of $18 million or$0.51 per unit for Q3 2024, an increase of $5 million compared to Q3 2023 [9][14] - Consolidated net income, including OpCo's earnings, was$104 million on consolidated net sales of $277 million [13] - Distributable cash flow for the quarter was$18 million or $0.51 per unit, which is an increase of$4 million compared to Q3 2023 [15] Business Line Data and Key Metrics Changes - The partnership benefited from higher production and sales volumes from OpCo, as well as increased third-party ethylene sales prices and margins [14] - The decision to defer the planned turnaround at the Petro 1 ethylene unit to Q1 2025 allowed for maximized sales during Q3 2024 [10][18] Market Data and Key Metrics Changes - Third-party ethylene sales prices and margins improved to the highest quarterly average in years during Q3 2024, influenced by weather events and production outages at other producers [19] - In Q4 2024, third-party ethylene sales prices and margins have decreased from the elevated levels seen in Q3 2024, but there is little third-party sales volume planned for the remainder of the year [20] Company Strategy and Development Direction - The company focuses on maintaining a predictable fee-based cash flow structure through a take-or-pay contract with Westlake for 95% of OpCo's production, ensuring stability through economic fluctuations [21] - The partnership has grown its quarterly distribution by 71% since its IPO in 2014, with a history of 41 consecutive distributions without deductions [11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the unpredictable global macroeconomic environment but emphasized the stability provided by their ethylene sales agreement [21] - There is an ongoing assessment of market conditions and investor interest regarding potential distribution growth and asset drops in 2025 [26] Other Important Information - The partnership's third quarter distribution of $0.4714 per unit will be paid on November 27, 2024, to unitholders of record on November 12, 2024 [18] - OpCo spent$16 million on capital expenditures during Q3 2024, maintaining strong leverage metrics with a consolidated leverage ratio below one times [17] Q&A Session Summary Question: Significance of shifting third-party sales volumes into Q3 - Management indicated that the shift was strategic to maximize sales during a period of higher margins, with very little volume left for Q4 [25] Question: Interest in MLP equities and potential for distribution growth - Management is assessing market conditions and investor appetite for restarting distribution growth and asset drops, recognizing significant changes in the market since their IPO [26]