- Increased quarterly cash distribution
to $0.3353 per unit, a 2.9% increase from the previous quarter
Westlake Chemical Partners LP (NYSE: WLKP) (the "Partnership")
today reported net income attributable to the Partnership of $8.7
million, or $0.32 per limited partner unit, for the three months
ended September 30, 2016, a decrease of $1.4 million
compared to third quarter 2015 net income attributable to the
Partnership of $10.1 million, or $0.37 per limited partner
unit. The decrease in net income attributable to the Partnership as
compared to the prior-year period was primarily due to lower
operating rates at Westlake Chemical OpCo LP’s (“OpCo”) Petro 1
facility in Lake Charles, Louisiana due to the planned turnaround
and expansion project, which was completed in July. The third
quarter 2016 results were also negatively impacted by lost
production as a result of an unplanned outage at OpCo’s Calvert
City, Kentucky facility.
The third quarter 2016 net income attributable to the
Partnership of $8.7 million, or $0.32 per limited partner
unit, decreased by $0.6 million from the second quarter 2016
net income attributable to the Partnership of $9.3 million, or
$0.34 per limited partner unit. The decrease in net income was due
to a decrease in sales to Westlake Chemical (“Westlake”) associated
with certain cost recovery provisions in the ethylene sales
agreement between OpCo and Westlake, which was partially offset by
increased production at OpCo’s Petro 1 and Calvert City
facilities.
On October 31, 2016, the Board of Directors of
Westlake Chemical Partners GP LLC, the general partner of the
Partnership, announced a quarterly distribution with respect to the
third quarter of 2016 of $0.3353 per limited partner unit to be
payable on November 29, 2016 to unit and IDR holders of
record as of November 14, 2016. The third quarter 2016
distribution increased 12.0% compared to the third quarter 2015
distribution and 2.88% compared to the second quarter 2016
distribution.
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 output 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. Under the ethylene sales agreement with Westlake,
Westlake’s obligation to purchase the annual minimum commitment
under the ethylene sales agreement, which is measured at year end,
is not reduced for the first 45 days following a force majeure
event, such as the unplanned outage at Calvert City that began in
June 2016.
“We are pleased with OpCo’s recent performance following our
turnaround and expansion project, which was completed in July, and
added 250 million pounds of capacity to our Petro 1 facility. We
believe our upcoming 100 million pound ethylene expansion at
our Calvert City facility in the first half of 2017, along with the
recently completed expansion at Petro 1, support our continued
increase in distributions at a low double digit growth rate to
unitholders,” said Albert Chao, President and Chief Executive
Officer.
The statements in this release and the related teleconference
relating to matters that are not historical facts, such as
statements regarding growth of distributions and results of
expansion projects, 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
electricity; changes in prevailing economic conditions; actions of
Westlake Chemical Corporation; actions of third parties;
unanticipated ground, grade or water conditions; inclement or
hazardous weather conditions, including flooding, and the physical
impacts of climate change; environmental hazards; industrial
accidents; 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; late
delivery of raw materials; difficulty collecting receivables;
inability of our customers to take delivery; changes in the price
and availability of transportation; fires, explosions or other
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, 2015, which was filed with
the SEC in March 2016, and the risk factors in our other
filings with the SEC.
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 includes the term MLP distributable cash flow,
which is a non-GAAP financial measure, 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
facilities for the processing of natural gas liquids as well as
other qualifying activities. Headquartered in Houston, Texas, the
Partnership owns a 13.3% interest in Westlake Chemical OpCo LP.
Westlake Chemical OpCo LP's assets include three facilities in
Calvert City, Kentucky, and Lake Charles, Louisiana which process
ethane and propane into ethylene, 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' third
quarter 2016 results will be held November 8, 2016 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 96257816.
A replay of the conference call will be available beginning two
hours after its conclusion until 11:59 p.m. Eastern Time on
November 15, 2016. To hear a replay, dial (855) 859-2056
or (404) 537-3406 for international callers. The replay passcode is
96257816.
The conference call will also be available via webcast at:
http://edge.media-server.com/m/p/pgrx3b72 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 September 30,
Nine Months Ended September 30, 2016
2015 2016 2015
(In thousands of dollars, except per unit data)
Revenue
Net sales—Westlake Chemical
Corporation
("Westlake")
$ 193,964 $ 207,856 $ 606,859 $ 621,438
Net co-product, ethylene and other
sales—third parties
35,390 40,763 85,940 137,277 Total net
sales 229,354 248,619 692,799 758,715 Cost of sales 142,553
154,474 407,203 473,815 Gross profit 86,801
94,145 285,596 284,900 Selling, general and administrative expenses
5,788 5,831 17,733 17,826 Income from
operations 81,013 88,314 267,863 267,074
Other income
(expense) Interest expense—Westlake (4,947 ) (1,054 ) (7,381 )
(3,794 ) Other (expense) income, net (13 ) (73 ) 230 (35 )
Income before income taxes 76,053 87,187 260,712 263,245 Provision
for income taxes 194 141 890 567 Net
income 75,859 87,046 259,822 262,678
Less: Net income attributable to
noncontrolling
interest in Westlake Chemical
OpCo LP ("OpCo")
67,198 76,943 229,733 233,632
Net
income attributable to Westlake Partners $ 8,661
$ 10,103 $ 30,089
$ 29,046
Net income per limited partners unit
attributable to
Westlake Partners (basic and
diluted)
Common units $ 0.32 $ 0.37 $ 1.11 $ 1.07 Subordinated units $ 0.32
$ 0.37 $ 1.11 $ 1.07
Distributions declared per unit $ 0.3353 $ 0.2994 $
0.9780 $ 0.8733 MLP distributable cash flow $
6,833 $ 9,475 $ 20,643 $ 27,671
Distribution declared Limited partner units—public $ 4,338 $ 3,873
$ 12,653 $ 11,298 Limited partner units—Westlake 4,735 4,229 13,812
12,333 Incentive distribution rights 91 — 139
— Total distribution declared $ 9,164 $ 8,102
$ 26,604 $ 23,631 EBITDA $ 107,290 $
108,683 $ 335,565 $ 327,676
WESTLAKE CHEMICAL PARTNERS LP ("WESTLAKE PARTNERS")
CONSOLIDATED BALANCE SHEETS (Unaudited)
September 30,
2016
December 31,
2015
(In thousands of dollars) ASSETS Current
assets Cash and cash equivalents $ 75,006 $ 169,559 Accounts
receivable—Westlake 98,145 39,655 Accounts receivable, net—third
parties 15,699 11,927 Inventories 3,428 3,879 Prepaid expenses and
other current assets — 267 Total current assets
192,278 225,287 Property, plant and equipment, net 1,217,451
1,020,469 Receivable from Westlake 20,428 — Other assets, net
106,502 44,593
Total assets $
1,536,659 $ 1,290,349
LIABILITIES AND EQUITY Current liabilities (accounts payable
and accrued liabilities) $ 47,577 $ 57,694 Long-term debt payable
to Westlake 595,083 384,006 Other liabilities 2,024 1,482
Total liabilities 644,684 443,182 Common unitholders—public
296,585 294,565 Common unitholder—Westlake 4,726 4,502 Subordinated
unitholder—Westlake 41,766 39,786 General partner—Westlake (242,481
) (242,572 ) Accumulated other comprehensive (loss) income (224 )
280 Total Westlake Partners partners' capital 100,372 96,561
Noncontrolling interest in OpCo 791,603 750,606 Total
equity 891,975 847,167
Total liabilities and
equity $ 1,536,659 $
1,290,349 WESTLAKE CHEMICAL PARTNERS
LP ("WESTLAKE PARTNERS") CONSOLIDATED STATEMENTS OF
CASH FLOWS (Unaudited)
Nine Months Ended September 30, 2016
2015 (In thousands of
dollars) Cash flows from operating activities Net income
$ 259,822 $ 262,678 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation and amortization
67,472 60,637 Other balance sheet changes (149,924 ) 7,888
Net cash provided by operating activities 177,370 331,203
Cash
flows from investing activities Additions to property, plant
and equipment (268,647 ) (152,572 ) Proceeds from disposition of
assets 157 — Net cash used for investing activities
(268,490 ) (152,572 )
Cash flows from financing activities
Proceeds from debt payable to Westlake 212,175 238,198 Repayment of
debt payable to Westlake (1,098 ) (135,341 ) Quarterly
distributions to noncontrolling interest retained in OpCo by
Westlake (188,736 ) (238,009 ) Quarterly distributions to
unitholders (25,774 ) (22,972 ) Net cash used for financing
activities (3,433 ) (158,124 ) Net (decrease) increase in cash and
cash equivalents (94,553 ) 20,507 Cash and cash equivalents at
beginning of the period 169,559 133,750 Cash and cash
equivalents at end of the period $ 75,006 $ 154,257
WESTLAKE CHEMICAL PARTNERS LP ("WESTLAKE
PARTNERS") RECONCILIATION OF MLP DISTRIBUTABLE CASH
FLOW TO NET INCOME AND NET CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES (Unaudited)
Three Months Ended
Three Months Ended Nine
Months Ended June 30, September 30, September
30, 2016 2016 2015
2016 2015 (In thousands of
dollars) MLP distributable cash flow $
4,295 $ 6,833 $ 9,475 $
20,643 $ 27,671 Add:
Distributable cash flow attributable
to
noncontrolling interest in
OpCo
39,171 55,853 72,833 168,940 225,565 Incentive distribution rights
46 91 — 139 — Maintenance capital expenditures 48,252 21,747 18,145
103,609 48,946 Contribution to turnaround reserves 10,214 17,625
7,035 33,963 21,133 Less: Depreciation and amortization (20,786 )
(26,290 ) (20,442 ) (67,472 ) (60,637 )
Net income
81,192 75,859 87,046 259,822
262,678
Changes in operating assets and
liabilities
and other
(8,631 ) (83,835 ) 14,383 (82,841 ) 68,884 Deferred income taxes
141 69 (125 ) 389 (359 )
Net cash provided by (used for)
operating
activities
$ 72,702 $ (7,907 )
$ 101,304 $ 177,370
$ 331,203 WESTLAKE CHEMICAL
PARTNERS LP ("WESTLAKE PARTNERS") RECONCILIATION OF
EBITDA TO NET INCOME AND NET CASH
PROVIDED BY (USED FOR) OPERATING
ACTIVITIES
(Unaudited)
Three Months Three Months Ended
Nine Months Ended Ended June 30,
September 30, September 30, 2016 2016
2015 2016
2015 (In thousands of dollars)
EBITDA $ 103,478 $ 107,290
$ 108,683 $ 335,565 $
327,676 Less:
Provision for income taxes
(297 ) (194 ) (141 ) (890 ) (567 ) Interest expense (1,203 ) (4,947
) (1,054 ) (7,381 ) (3,794 ) Depreciation and amortization (20,786
) (26,290 ) (20,442 ) (67,472 ) (60,637 )
Net income
81,192 75,859 87,046 259,822
262,678
Changes in operating assets and
liabilities
and other
(8,631 ) (83,835 ) 14,383 (82,841 ) 68,884 Deferred income taxes
141 69 (125 ) 389 (359 )
Net cash provided by (used for)
operating
activities
$ 72,702 $ (7,907 )
$ 101,304 $ 177,370
$ 331,203
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Westlake Chemical Partners LPInvestorsSteve Bender,
713-585-2900orMediaBen Ederington, 713-585-2900
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