- Quarterly net income attributable to
the Partnership of $9.8 million, or $0.35 per unit
- Quarterly MLP distributable cash flow
of $11.4 million
- Increased quarterly cash distribution
by 2.87% to $0.3549 per unit
- Completed the expansion of OpCo’s
Calvert City, Kentucky facility, bringing its annual ethylene
capacity to 730 million pounds
Westlake Chemical Partners LP (NYSE: WLKP) (the "Partnership")
today reported net income attributable to the Partnership of $9.8
million, or $0.35 per limited partner unit, for the three months
ended March 31, 2017, a decrease of $2.3 million compared
to first quarter 2016 net income attributable to the Partnership of
$12.1 million. The decrease in net income attributable to the
Partnership as compared to the prior-year period was due to certain
reimbursements from Westlake Chemical Corporation (“Westlake”)
under the sales agreement between Westlake Chemical OpCo LP
(“OpCo”) and Westlake that were recorded in the first quarter of
2016. Cash flow from operations in the first quarter of 2017 was
$149.1 million, an increase of $36.5 million compared to
first quarter 2016 cash flow from operations of $112.6 million.
This increase in cash flow from operations was primarily due to a
decrease in working capital. For the three months ended
March 31, 2017, MLP distributable cash flow was $11.4
million, an increase of $1.9 million compared to first quarter 2016
MLP distributable cash flow of $9.5 million. The increase in
MLP distributable cash flow as compared to the prior-year period
was due to higher production volumes at OpCo’s Petro 1 facility
following the 250 million pound ethylene expansion completed in
July 2016 and lower maintenance capital expenditures, offset by
lower production volumes at OpCo’s Calvert City, Kentucky facility
as it began its turnaround and expansion project.
The first quarter 2017 net income attributable to the
Partnership of $9.8 million, or $0.35 per limited partner
unit, decreased by $1.1 million from fourth quarter 2016 net income
attributable to the Partnership of $10.9 million. This decrease in
net income was due to lower production volumes primarily related to
the planned outage at OpCo’s Calvert City facility to complete the
expansion and turnaround project. First quarter 2017 cash flow from
operations of $149.1 million increased by $38.7 million compared to
fourth quarter 2016 cash flow from operations of $110.4 million.
This increase in cash flow from operations was primarily due to a
decrease in working capital offset by an increase in turnaround
activity due to the turnaround and expansion at OpCo’s Calvert City
facility. First quarter 2017 MLP distributable cash flow of $11.4
million decreased by $0.4 million compared to fourth quarter 2016
MLP distributable cash flow of $11.8 million.
On May 1, 2017, the Board of Directors of Westlake
Chemical Partners GP LLC, the general partner of the Partnership,
announced a quarterly distribution for the first quarter of 2017 of
$0.3549 per limited partner unit to be payable on
May 30, 2017 to unit holders of record as of
May 15, 2017. The first quarter 2017 distribution
increased 12.0% compared to the first quarter 2016 distribution and
2.87% compared to the fourth quarter 2016 distribution. MLP
distributable cash flow provided coverage of 1.19x the declared
distributions for the first quarter of 2017. The increase in cash
distributions is in line with the Partnership's targeted
low-double-digit distribution growth.
OpCo's sales agreement with Westlake is designed to provide for
stable and predictable cash flows. The sales 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.
"We are pleased to announce the recent completion of the
turnaround and expansion of OpCo’s Calvert City facility, which
along with other initiatives, adds 100 million pounds of ethylene
capacity," said Albert Chao, President and Chief Executive Officer.
"This expansion, in addition to the 250 million pound ethylene
expansion at our Petro 1 facility completed in July 2016, helps in
continuing our path of increasing our distributions at a
low-double-digit growth rate for our unitholders."
The statements in this release and the related teleconference
relating to matters that are not historical facts, such as targeted
distribution growth, 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, 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 of
Westlake Chemical 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, 2016, which was filed with the SEC in
March 2017.
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, as defined in
Regulation G of the U.S. Securities Exchange Act of 1934, as
amended. We report our financial results in accordance with U.S.
generally accepted accounting principles ("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 GAAP. A reconciliation of MLP distributable cash flow and
EBITDA to net income and net cash provided by operating activities
can be found in the financial schedules at the end of this release.
We define distributable cash flow as net income plus depreciation
and amortization, less contributions from turnaround reserves and
maintenance capital expenditures. We define MLP distributable cash
flow as distributable cash flow less distributable cash flow
attributable to Westlake's noncontrolling interest in OpCo and
distributions attributable to 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. Because MLP
distributable cash flow and EBITDA may be defined differently by
other companies in our industry, our definition of MLP
distributable cash flow and EBITDA may not be comparable to
similarly titled measures of other companies.
Westlake Chemical Partners LP
Westlake Chemical Partners is a limited partnership formed by
Westlake Chemical Corporation to operate, acquire and develop
ethylene production facilities and other qualified assets.
Headquartered in Houston, Texas, the Partnership owns a 13.3%
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' first
quarter 2017 results will be held May 2, 2017 at 12:00 PM
Eastern Time (11:00 AM Central Time). To access the conference
call, dial (855) 765-5686 or (234) 386-2848 for international
callers, approximately 10 minutes prior to the scheduled start time
and reference passcode 6894700.
A replay of the conference call will be available beginning two
hours after its conclusion until 11:59 p.m. Eastern Time on
May 9, 2017. To hear a replay, dial (855) 859-2056 or
(404) 537-3406 for international callers. The replay passcode is
6894700.
The conference call will also be available via webcast at:
http://edge.media-server.com/m/p/fukuyogd and the
earnings release can be obtained via the Partnership web page at:
http://westlakepartners.investorroom.com/news-events.
WESTLAKE CHEMICAL PARTNERS LP
("WESTLAKE PARTNERS")
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months Ended March 31, 2017
2016 (In thousands of dollars, except per
unit data) Revenue
Net sales—Westlake Chemical Corporation
("Westlake")
$ 212,930 $ 231,260
Net co-product, ethylene and other
sales—third parties
64,518 21,344 Total net sales 277,448 252,604 Cost of
sales 179,487 142,190 Gross profit 97,961 110,414
Selling, general and administrative expenses 7,828 6,097
Income from operations 90,133 104,317
Other income
(expense)
Interest expense—Westlake
(5,460 ) (1,231 ) Other income, net 1,658 84 Income
before income taxes 86,331 103,170 Provision for income taxes 303
399 Net income 86,028 102,771 Less: Net income
attributable to noncontrolling interests in Westlake Chemical OpCo
LP ("OpCo") 76,264 90,687
Net income attributable
to Westlake Partners $ 9,764 $
12,084 Net income per limited partners unit
attributable to Westlake Partners (basic and diluted) Common units
$ 0.35 $ 0.45 Subordinated units $ 0.35 $ 0.45
Distributions declared per unit $ 0.3549 $ 0.3168
MLP distributable cash flow $ 11,447 $ 9,515
Distribution declared
Limited partner units—public
$ 4,591 $ 4,099
Limited partner units—Westlake
5,012 4,474 Incentive distribution rights 231 2 Total
distribution declared $ 9,834 $ 8,575 EBITDA $
121,941 $ 124,797
WESTLAKE CHEMICAL PARTNERS LP
("WESTLAKE PARTNERS")
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
March 31, 2017 December 31, 2016
(In thousands of dollars) ASSETS Current assets Cash
and cash equivalents $ 122,974 $ 88,900
Accounts receivable, net—Westlake
82,065 126,977
Accounts receivable, net—third parties
19,863 12,085 Inventories 4,776 3,934 Prepaid expenses and other
current assets 154 269 Total current assets 229,832
232,165 Property, plant and equipment, net 1,223,239 1,222,238
Other assets, net 103,729 100,825
Total assets
$ 1,556,800 $ 1,555,228
LIABILITIES AND EQUITY Current liabilities (accounts
payable and accrued liabilities) $ 46,645 $ 37,777 Long-term debt
payable to Westlake 600,206 594,629 Other liabilities 1,964
1,859 Total liabilities 648,815 634,265
Common unitholders—public
297,462 297,367
Common unitholder—Westlake
4,823 4,813
Subordinated unitholder—Westlake
42,626 42,534
General partner—Westlake
(242,341 ) (242,430 ) Accumulated other comprehensive income 289
200 Total Westlake Partners partners' capital 102,859
102,484 Noncontrolling interest in OpCo 805,126 818,479
Total equity 907,985 920,963
Total
liabilities and equity $ 1,556,800
$ 1,555,228
WESTLAKE CHEMICAL PARTNERS LP
("WESTLAKE PARTNERS")
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
Three Months Ended March 31, 2017
2016 (In thousands of dollars) Cash
flows from operating activities Net income $ 86,028 $ 102,771
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 30,150 20,396
Other balance sheet changes 32,900 (10,592 ) Net cash
provided by operating activities 149,078 112,575
Cash flows from investing activities Additions to property,
plant and equipment (23,168 ) (79,091 ) Proceeds from disposition
of assets 127 98 Insurance proceeds for involuntary conversion
1,555
-
Net cash used for investing activities (21,486 ) (78,993 )
Cash flows from financing activities Proceeds from debt
payable to Westlake 17,000 59,519 Repayment of debt payable to
Westlake (11,423 )
-
Quarterly distributions to noncontrolling interest retained in OpCo
by Westlake (89,617 ) (75,650 ) Quarterly distributions to
unitholders (9,478 ) (8,334 ) Net cash used for financing
activities (93,518 ) (24,465 ) Net increase in cash and cash
equivalents 34,074 9,117 Cash and cash equivalents at beginning of
the period 88,900 169,559 Cash and cash equivalents
at end of the period $ 122,974 $ 178,676
WESTLAKE CHEMICAL PARTNERS LP
("WESTLAKE PARTNERS")
RECONCILIATION OF MLP DISTRIBUTABLE
CASH FLOW TO NET INCOME
AND NET CASH PROVIDED BY OPERATING
ACTIVITIES
(Unaudited)
Three Months Ended December
31,
Three Months Ended March 31, 2016 2017
2016 Net cash provided by operating
activities $ 110,356 $ 149,078
$ 112,575 Changes in operating assets and liabilities
and other (16,820 ) (62,958 ) (9,625 ) Deferred income tax benefit
(expense) 45 (92 ) (179 )
Net Income $
93,581 $ 86,028 $
102,771 Add: Depreciation and amortization 30,738
30,150 20,396 Less: Contribution to turnaround reserves (6,051 )
(7,239 ) (6,124 ) Maintenance capital expenditures (16,744 ) (8,490
) (33,610 ) Incentive distribution rights (142 ) (231 ) (2 )
Distributable cash flow attributable to
noncontrolling interest in OpCo
(89,620 ) (88,771 ) (73,916 )
MLP distributable cash flow
$ 11,762 $ 11,447
$ 9,515
WESTLAKE CHEMICAL PARTNERS LP
("WESTLAKE PARTNERS")
RECONCILIATION OF EBITDA TO NET INCOME
AND NET CASH
PROVIDED BY OPERATING
ACTIVITIES
(Unaudited)
Three Months Ended December
31,
Three Months Ended March 31, 2016 2017
2016 Net cash provided by operating
activities $ 110,356 $ 149,078
$
112,575
Changes in operating assets and liabilities and other (16,820 )
(62,958 ) (9,625 ) Deferred income tax benefit (expense) 45
(92 ) (179 )
Net Income $ 93,581
$ 86,028 $ 102,771 Add:
Depreciation and amortization 30,738 30,150 20,396 Interest expense
5,226 5,460 1,231 Provision for income taxes 145 303
399
EBITDA $ 129,690 $
121,941 $ 124,797
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170502005297/en/
Westlake Chemical PartnersInvestor
Inquiries:Mr. Steve Bender,
713.585.2900investorrelations@westlake.comorMedia Inquiries:Mr. Ben Ederington,
713.585.2900mediarelations@westlake.com
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