• Declared quarterly distribution of $0.4714 per unit; 27th
consecutive quarterly distribution
• Ethylene sales agreement benefits Westlake Partners, providing
predictable cash flows
Westlake Chemical Partners LP (NYSE: WLKP) (the "Partnership")
today reported net income attributable to the Partnership of $15.1
million, or $0.43 per limited partner unit, for the three months
ended March 31, 2021. Ethylene production in the first quarter was
impacted by a severe winter storm. As a result of the storm,
Westlake Chemical OpCo LP ("OpCo") declared force majeure under
OpCo's Ethylene Sales Agreement with Westlake Chemical Corporation
("Westlake Chemical"). Under this agreement, Westlake Chemical is
obligated to purchase a defined amount of ethylene from OpCo each
calendar year at cost plus a fixed price per pound. As a result of
this agreement, net income in the first quarter of 2021 included a
$9.7 million benefit related to a 2021 buyer deficiency as well as
recovery of certain other costs to which OpCo is entitled for
ethylene that OpCo would have produced, as a result of the force
majeure events.
Net income attributable to the Partnership in the first quarter
of 2021 of $15.1 million decreased by $2.6 million compared to
first quarter 2020 net income attributable to the Partnership of
$17.7 million. The decrease in net income was a result of the
impact from the winter storm, partially offset by higher earnings
on third-party sales. Cash flows from operating activities in the
first quarter of 2021 were $155.4 million, an increase of $44.4
million compared to first quarter 2020 cash flows from operating
activities of $111.0 million. This increase in cash flows from
operating activities was primarily due to the receipt of the 2020
buyer deficiency payment that resulted from obligations Westlake
Chemical incurred due to the two hurricanes in 2020 ("2020 Buyer
Deficiency Payment"). For the three months ended March 31, 2021,
MLP distributable cash flow of $16.2 million decreased by $2.1
million from first quarter 2020 MLP distributable cash flow of
$18.3 million. The decrease in MLP distributable cash flow was
primarily attributable to the lower earnings at OpCo resulting from
the winter storm as well as contributions for turnaround
reserves.
First quarter 2021 net income attributable to the Partnership of
$15.1 million was comparable to fourth quarter 2020 net income
attributable to the Partnership of $15.0 million. First quarter
2021 cash flows from operating activities of $155.4 million
increased by $122.9 million compared to fourth quarter 2020 cash
flows from operating activities of $32.5 million. The increase in
cash flows from operating activities was primarily due to the
receipt of the 2020 Buyer Deficiency Payment in January 2021. First
quarter 2021 MLP distributable cash flow of $16.2 million was
comparable to fourth quarter 2020 MLP distributable cash flow of
$15.6 million.
"The Partnership had a solid start to 2021 driven by robust
demand from downstream ethylene derivative products and a strong
pricing environment for our third-party ethylene sales. The severe
winter weather led to unplanned production outages at our
facilities in Louisiana and Kentucky. Due to the dedication of our
employees at these facilities, we were able to quickly resume
operations. The protective provisions of our long-term Ethylene
Sales Agreement with Westlake Chemical continued to prove
beneficial and minimized the impact on the Partnership of the
disruptions to our operations," said Albert Chao, President and
Chief Executive Officer. "Our long-term ethylene sales agreement
with Westlake Chemical enabled us to continue to deliver reliable
earnings and cash flows for the quarter, which provided us the
ability to deliver ratable distributions to our unitholders."
OpCo's Ethylene Sales Agreement with Westlake Chemical is
designed to provide for stable and predictable cash flows. The
agreement provides that 95% of OpCo's ethylene production is sold
to Westlake Chemical for a cash margin of $0.10 per pound, net of
operating costs, maintenance capital expenditures and reserves for
future turnaround expenditures.
On May 3, 2021, the Partnership announced that the Board of
Directors of Westlake Chemical Partners GP LLC had approved a
quarterly distribution for the first quarter of 2021 of $0.4714 per
unit to be payable on May 27, 2021 to unitholders of record as of
May 13, 2021, representing the 27th consecutive quarterly
distribution to our unitholders. MLP distributable cash flow
provided trailing twelve-month coverage of 1.05x the declared
distributions for the first quarter of 2021.
The statements in this release and the related teleconference
relating to matters that are not historical facts, such as those
with respect to cost recovery of expenses incurred in the first
quarter of 2021, 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, the COVID-19 pandemic and
the response thereto; 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 and
commitments 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, 2020, which was filed with the SEC in March 2021.
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 and EBITDA. For this
purpose, a non-GAAP financial measure is generally defined by the
Securities and Exchange Commission ("SEC") as a numerical measure
of a registrant's historical or future financial performance,
financial position or cash flows that (1) excludes amounts, or is
subject to adjustments that have the effect of excluding amounts,
that are included in the most directly comparable measure
calculated and presented in accordance with U.S. generally accepted
accounting principles ("U.S. GAAP") in the statement of income,
balance sheet or statement of cash flows (or equivalent statements)
of the registrant; or (2) includes amounts, or is subject to
adjustments that have the effect of including amounts, that are
excluded from the most directly comparable measure so calculated
and presented. We report our financial results in accordance with
U.S. 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 U.S. GAAP. 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 the 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. MLP distributable cash flow and EBITDA are non-GAAP
supplemental financial measures that management and external users
of our consolidated financial statements, such as industry
analysts, investors, lenders and rating agencies, may use to assess
our operating performance as compared to other publicly traded
partnerships, our ability to incur and service debt and fund
capital expenditures and the viability of acquisitions and other
capital expenditure projects and the returns on investment of
various investment opportunities. Reconciliations of MLP
distributable cash flow to net income and to net cash provided by
operating activities and of EBITDA to net income, income from
operations and net cash provided by operating activities can be
found in the financial schedules at the end of this press release.
Buyer deficiency fees as well as recovery of certain other costs to
which OpCo is entitled for ethylene that OpCo would have produced
are included in net income in the periods in which they are
recognized.
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, the Partnership owns a 22.8% 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 2021 results will be held Tuesday, May 4, 2021 at 1:00 p.m.
Eastern Time (12:00 p.m. 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 332 78 38.
A replay of the conference call will be available beginning two
hours after its conclusion until 11:59 p.m. Eastern Time on
Tuesday, May 11, 2021. To hear a replay, dial (855) 859-2056 or
(404) 537-3406 for international callers. The replay passcode is
332 78 38.
The conference call will also be available via webcast at:
https://edge.media-server.com/mmc/p/usgwdp4o and the earnings
release can be obtained via the Partnership web page at:
https://investors.wlkpartners.com/corporate-profile/default.aspx.
WESTLAKE CHEMICAL PARTNERS LP
("WESTLAKE PARTNERS")
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months Ended March
31,
2021
2020
(In thousands of dollars,
except per unit data)
Revenue
Net sales—Westlake Chemical Corporation
("Westlake")
$
219,803
$
214,828
Net co-product, ethylene and other
sales—third parties
48,404
35,721
Total net sales
268,207
250,549
Cost of sales
180,508
147,001
Gross profit
87,699
103,548
Selling, general and administrative
expenses
8,673
6,196
Income from operations
79,026
97,352
Other income (expense)
Interest expense—Westlake
(2,236
)
(3,950
)
Other income, net
7
585
Income before income taxes
76,797
93,987
Income tax provision
175
217
Net income
76,622
93,770
Less: Net income attributable to
noncontrolling interests in Westlake Chemical OpCo LP ("OpCo")
61,476
76,023
Net income attributable to Westlake
Partners
$
15,146
$
17,747
Net income per limited partners unit
attributable to Westlake Partners (basic and diluted)
Common units
$
0.43
$
0.50
Distributions declared per unit
$
0.4714
$
0.4714
MLP distributable cash flow
$
16,245
$
18,337
Distributions declared
Limited partner units—publicly and
privately held
$
9,936
$
9,934
Limited partner units—Westlake
6,657
6,657
Total distributions declared
$
16,593
$
16,591
EBITDA
$
106,575
$
123,968
WESTLAKE CHEMICAL PARTNERS
LP
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
March 31, 2021
December 31,
2020
(In thousands of
dollars)
ASSETS
Current assets
Cash and cash equivalents
$
17,289
$
17,154
Receivable under the Investment Management
Agreement—Westlake
187,239
123,228
Accounts receivable, net—Westlake
50,969
108,028
Accounts receivable, net—third parties
19,702
11,029
Inventories
3,171
3,474
Prepaid expenses and other current
assets
217
392
Total current assets
278,587
263,305
Property, plant and equipment, net
1,039,261
1,050,677
Other assets, net
39,286
42,506
Total assets
$
1,357,134
$
1,356,488
LIABILITIES AND EQUITY
Current liabilities (accounts payable and
accrued liabilities)
$
42,572
$
39,754
Long-term debt payable to Westlake
399,674
399,674
Other liabilities
1,780
1,923
Total liabilities
444,026
441,351
Common unitholders—publicly and privately
held
470,834
471,701
Common unitholder—Westlake
47,690
48,270
General partner—Westlake
(242,572
)
(242,572
)
Total Westlake Partners partners'
capital
275,952
277,399
Noncontrolling interest in OpCo
637,156
637,738
Total equity
913,108
915,137
Total liabilities and equity
$
1,357,134
$
1,356,488
WESTLAKE CHEMICAL PARTNERS
LP
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March
31,
2021
2020
(In thousands of
dollars)
Cash flows from operating
activities
Net income
$
76,622
$
93,770
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
27,542
26,031
Other balance sheet changes
51,244
(8,840
)
Net cash provided by operating
activities
155,408
110,961
Cash flows from investing
activities
Additions to property, plant and
equipment
(12,748
)
(11,989
)
Maturities of investments with Westlake
under the Investment Management Agreement
—
79,000
Investments with Westlake under the
Investment Management Agreement
(64,000
)
(78,000
)
Other
126
—
Net cash used for investing activities
(76,622
)
(10,989
)
Cash flows from financing
activities
Quarterly distributions to noncontrolling
interest retained in OpCo by Westlake
(62,058
)
(79,223
)
Quarterly distributions to unitholders
(16,593
)
(16,591
)
Net cash used for financing activities
(78,651
)
(95,814
)
Net increase in cash and cash
equivalents
135
4,158
Cash and cash equivalents at beginning of
period
17,154
19,923
Cash and cash equivalents at end of
period
$
17,289
$
24,081
WESTLAKE CHEMICAL PARTNERS
LP
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,
2020
2021
2020
(In thousands of
dollars)
Net cash provided by operating
activities
$
32,521
$
155,408
$
110,961
Changes in operating assets and
liabilities and other
42,603
(78,786
)
(17,191
)
Net Income
75,124
76,622
93,770
Add:
Depreciation, amortization and disposition
of property, plant and equipment
25,387
28,898
26,127
Mark-to-market adjustment gain on
derivative contracts
(1,125
)
—
(2,491
)
Less:
Contribution to turnaround reserves
(10,240
)
(12,332
)
(9,923
)
Maintenance capital expenditures
(11,485
)
(11,743
)
(11,121
)
Distributable cash flow attributable to
noncontrolling interest in OpCo
(62,058
)
(65,200
)
(78,025
)
MLP distributable cash flow
$
15,603
$
16,245
$
18,337
WESTLAKE CHEMICAL PARTNERS
LP
RECONCILIATION OF EBITDA TO
NET INCOME, INCOME FROM OPERATIONS AND NET CASH
PROVIDED BY OPERATING
ACTIVITIES
(Unaudited)
Three Months Ended December
31,
Three Months Ended March
31,
2020
2021
2020
(In thousands of
dollars)
Net cash provided by operating
activities
$
32,521
$
155,408
$
110,961
Changes in operating assets and
liabilities and other
42,603
(78,786
)
(17,191
)
Net Income
75,124
76,622
93,770
Less:
Other income, net
8
7
585
Interest expense
(2,337
)
(2,236
)
(3,950
)
Income tax provision
(156
)
(175
)
(217
)
Income from operations
77,609
79,026
97,352
Add:
Depreciation and amortization
25,387
27,542
26,031
Other income, net
8
7
585
EBITDA
$
103,004
$
106,575
$
123,968
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210504005376/en/
(713) 585-2900 Investors—Steve Bender Media—L. Benjamin
Ederington
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