Westlake Chemical Partners(WLKP) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the full year 2024, Westlake Chemical Partners LP reported a net income of $62 million or$1.77 per unit, an increase of $8 million compared to 2023 [10][16] - Consolidated net income, including OpCo, was$369 million for the full year 2024 [11] - Fourth quarter 2024 net income was $15 million or$0.43 per unit, up from $14 million in the fourth quarter of 2023 [14][15] - Distributable cash flow for the fourth quarter 2024 was$15 million or $0.42 per unit, a decrease of$1 million compared to the fourth quarter of 2023 [15][16] - Full year 2024 MLP distributable cash flow increased by $4 million compared to$63 million in 2023 [16] Business Line Data and Key Metrics Changes - The partnership's financial results were supported by a fixed margin ethylene sales agreement for 95% of annual plant production, providing stability against market volatility [11][12] - The higher net income in 2024 was primarily driven by increased third-party ethylene sales prices and margins [16] Market Data and Key Metrics Changes - North American spot ethylene prices and margins improved in 2024 due to tightening supply-demand conditions, benefiting the partnership through higher sales prices [24] - In 2025, third-party ethylene sales prices and margins are expected to remain favorable, positively impacting financial performance [24] Company Strategy and Development Direction - The company maintains a strong balance sheet with conservative financial metrics and plans to evaluate growth opportunities through increasing ownership interest in OpCo, acquisitions, organic growth, and negotiating higher fixed margins in sales agreements [25] - The partnership has sustained 42 consecutive quarterly distributions since its IPO in 2014, with a 71% increase in distributions since the original minimum [19][20] Management Comments on Operating Environment and Future Outlook - Management expressed satisfaction with the financial and operational performance, highlighting the stability provided by the ethylene sales agreement [23] - The planned turnaround at the PetroOne ethylene unit is expected to impact the coverage ratio temporarily, but full recovery is anticipated post-turnaround [21][34] Other Important Information - The partnership's fourth quarter distribution of $0.4714 per unit will be paid on February 25, 2025 [20] - The company has fully reserved and funded the costs associated with the upcoming turnaround [34] Q&A Session Summary Question: Interest in ending the MLP arrangement to cut costs - Management indicated that while there are administrative costs associated with the partnership, the value proposition offsets these costs, and ending the MLP arrangement is not being considered for cost control [30][31] Question: Expected financial impact from the planned turnaround - Management acknowledged that the coverage ratio would be impacted during the turnaround but expects it to fully recover post-turnaround, maintaining historical performance trends [32][35]