- Quarterly net income attributable to
the Partnership of $10.0 million, or $0.36 per unit
- Quarterly MLP distributable cash flow
of $11.0 million
- Increased quarterly cash distribution
by 2.85% to $0.3650 per unit
Westlake Chemical Partners LP (NYSE: WLKP) (the "Partnership")
today reported net income attributable to the Partnership of $10.0
million, or $0.36 per limited partner unit, for the three months
ended June 30, 2017, an increase of $0.7 million compared to
second quarter 2016 net income attributable to the Partnership of
$9.3 million. The increase in net income attributable to the
Partnership as compared to the prior-year period was primarily due
to increased production at Westlake Chemical OpCo LP’s (“OpCo”)
Petro 1 facility in Lake Charles, Louisiana following its 250
million pound ethylene expansion completed in July 2016. Cash
flow from operations in the second quarter of 2017 was
$113.2 million, an increase of $40.5 million compared to
second quarter 2016 cash flow from operations of $72.7 million.
This increase in cash flow from operations was primarily due to
increased production and a decrease in turnaround expenditures. For
the three months ended June 30, 2017, MLP distributable cash
flow was $11.0 million, an increase of $6.7 million compared to
second quarter 2016 MLP distributable cash flow of
$4.3 million. The increase in MLP distributable cash flow as
compared to the prior-year period was due to higher production
volumes and lower maintenance capital expenditures.
The second quarter 2017 net income attributable to the
Partnership of $10.0 million, or $0.36 per limited partner
unit, increased by $0.2 million from first quarter 2017 net income
attributable to the Partnership of $9.8 million. Second quarter
2017 cash flow from operations of $113.2 million decreased by $35.9
million compared to first quarter 2017 cash flow from operations of
$149.1 million. This decrease in cash flow from operations was
primarily due to a decrease in working capital in the first quarter
of 2017 related to collections from Westlake Chemical Corporation
(“Westlake”) for deferred payments in accordance with the ethylene
sales agreement between Westlake and OpCo. Second quarter 2017 MLP
distributable cash flow of $11.0 million decreased by $0.4 million
compared to first quarter 2017 MLP distributable cash flow of $11.4
million.
Net income attributable to the Partnership of $19.7 million, or
$0.71 per limited partner unit, for the six months ended June
30, 2017, decreased $1.7 million compared to the first six
months of 2016 net income attributable to the Partnership of
$21.4 million. The decrease in net income attributable to the
Partnership as compared to the prior-year period was due to certain
reimbursements from Westlake under the ethylene sales agreement
that were recorded in the first six months of 2016, partially
offset by increased production at OpCo’s Petro 1 and Petro 2
facilities in Lake Charles, Louisiana. Cash flow from operations in
the first six months of 2017 was $262.3 million, an increase
of $77.0 million compared to the first six months of 2016 cash
flow from operations of $185.3 million. This increase in cash flow
from operations was primarily due to increased production, a
decrease in working capital, and a decrease in turnaround
expenditures. For the six months ended June 30, 2017, MLP
distributable cash flow was $22.4 million, an increase of $8.6
million compared to the first six months of 2016 MLP distributable
cash flow of $13.8 million. The increase in MLP distributable
cash flow as compared to the prior-year period was due to higher
production volumes and lower maintenance capital expenditures.
On August 1, 2017, the Board of Directors of Westlake
Chemical Partners GP LLC, the general partner of the Partnership,
announced a quarterly distribution for the second quarter of 2017
of $0.3650 per limited partner unit to be payable on
August 29, 2017 to unit holders of record as of
August 15, 2017. The second quarter 2017 distribution
increased 12.0% compared to the second quarter 2016 distribution
and 2.85% compared to the first quarter 2017 distribution. MLP
distributable cash flow provided coverage of 1.11x the declared
distributions for the second quarter of 2017. The increase in cash
distributions is in line with the Partnership's targeted
low-double-digit distribution growth.
OpCo's ethylene sales agreement with Westlake is designed to
provide for stable and predictable cash flows. The 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 with OpCo’s performance for the quarter. The
stability in earnings and cash flows provided by our sales
agreement with Westlake Chemical provide a foundation for continued
growth. Now that we have completed the expansion projects in Lake
Charles and Calvert City, we are evaluating all options available
to us to continue to increase distributions to our 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
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 and EBITDA, 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' second
quarter 2017 results will be held August 3, 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 57788699.
A replay of the conference call will be available beginning two
hours after its conclusion until 11:59 p.m. Eastern Time on
August 10, 2017. To hear a replay, dial (855) 859-2056 or
(404) 537-3406 for international callers. The replay passcode is
57788699.
The conference call will also be available via webcast at:
http://edge.media-server.com/m/p/3fcwvxrr 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 June 30, Six Months Ended June
30, 2017 2016 2017
2016 (In thousands of dollars, except per unit data)
Revenue Net sales—Westlake Chemical Corporation ("Westlake")
$ 240,989 $ 181,635 $ 453,919 $ 412,895 Net co-product, ethylene
and other sales—third parties 49,124 29,206 113,642
50,550 Total net sales 290,113 210,841 567,561
463,445 Cost of sales 190,542 122,460 370,029
264,650 Gross profit 99,571 88,381 197,532 198,795 Selling,
general and administrative expenses 6,886 5,848
14,714 11,945 Income from operations 92,685 82,533
182,818 186,850
Other income (expense) Interest
expense—Westlake (5,942 ) (1,203 ) (11,402 ) (2,434 ) Other income,
net 24 159 1,682 243 Income before
income taxes 86,767 81,489 173,098 184,659 Provision for income
taxes 297 297 600 696 Net income 86,470
81,192 172,498 183,963 Less: Net income attributable to
noncontrolling interests in Westlake Chemical OpCo LP ("OpCo")
76,495 71,848 152,759 162,535
Net
income attributable to Westlake Partners $ 9,975
$ 9,344 $ 19,739
$ 21,428 Net income per limited
partners unit attributable to Westlake Partners (basic and diluted)
Common units $ 0.36 $ 0.34 $ 0.71 $ 0.79 Subordinated units $ 0.36
$ 0.34 $ 0.71 $ 0.79
Distributions declared per unit $ 0.3650 $ 0.3259 $
0.7199 $ 0.6427 MLP distributable cash flow $
10,967 $ 4,295 $ 22,414 $ 13,810
Distribution declared Limited partner units—public $ 4,722 $ 4,216
$ 9,314 $ 8,315 Limited partner units—Westlake 5,155 4,602 10,167
9,076 Incentive distribution rights 323 46 554
48 Total distribution declared $ 10,200 $ 8,864
$ 20,035 $ 17,439 EBITDA $ 120,008 $
103,478 $ 241,949 $ 228,275
WESTLAKE CHEMICAL PARTNERS LP
("WESTLAKE PARTNERS")
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
June 30, December 31, 2017 2016
(In thousands of dollars) ASSETS Current assets Cash
and cash equivalents $ 104,939 $ 122,974 Accounts receivable,
net—Westlake 79,367 82,065 Accounts receivable, net—third parties
14,720 19,863 Inventories 4,558 4,776 Prepaid expenses and other
current assets 45 154 Total current assets 203,629
229,832 Property, plant and equipment, net 1,220,393 1,223,239
Other assets, net 98,555 103,729
Total assets
$ 1,522,577 $ 1,556,800
LIABILITIES AND EQUITY Current liabilities (accounts
payable and accrued liabilities) $ 36,390 $ 46,645 Long-term debt
payable to Westlake 588,280 600,206 Other liabilities 2,104
1,964 Total liabilities 626,774 648,815 Common
unitholders—public 297,486 297,462 Common unitholder—Westlake 4,825
4,823 Subordinated unitholder—Westlake 42,649 42,626 General
partner—Westlake (242,250 ) (242,341 ) Accumulated other
comprehensive income 243 289 Total Westlake Partners
partners' capital 102,953 102,859 Noncontrolling interest in OpCo
792,850 805,126 Total equity 895,803 907,985
Total liabilities and equity $
1,522,577 $ 1,556,800
WESTLAKE CHEMICAL PARTNERS LP
("WESTLAKE PARTNERS")
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
Six Months Ended June 30, 2017
2016 (In thousands of dollars) Cash flows from
operating activities Net income $ 172,498 $ 183,963 Adjustments
to reconcile net income to net cash provided by operating
activities: Depreciation and amortization 57,449 41,182 Other
balance sheet changes 32,339 (39,868 ) Net cash provided by
operating activities 262,286 185,277
Cash flows
from investing activities Additions to property, plant and
equipment (43,996 ) (168,533 ) Proceeds from disposition of assets
127 98 Proceeds from involuntary conversion of assets 1,672
— Net cash used for investing activities (42,197 ) (168,435
)
Cash flows from financing activities Proceeds from debt
payable to Westlake 20,384 131,832 Repayment of debt payable to
Westlake (26,733 ) (500 ) Quarterly distributions to noncontrolling
interest retained in OpCo by Westlake (178,388 ) (149,566 )
Quarterly distributions to unitholders (19,313 ) (16,910 ) Net cash
used for financing activities (204,050 ) (35,144 ) Net increase
(decrease) in cash and cash equivalents 16,039 (18,302 ) Cash and
cash equivalents at beginning of the period 88,900 169,559
Cash and cash equivalents at end of the period $ 104,939
$ 151,257
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 March
31, Three Months Ended June 30, Six Months Ended
June 30, 2016 2017 2016 2017
2016 (In thousands of dollars)
Net cash provided by operating
activities
$ 149,078 $ 113,208 $
72,702 $ 262,286 $ 185,277
Changes in operating assets and liabilities and other (62,958 )
(26,630 ) 8,631 (89,588 ) (994 ) Deferred income tax expense (92 )
(108 ) (141 ) (200 ) (320 )
Net Income $
86,028 $ 86,470 $
81,192 $ 172,498 $
183,963 Add: Depreciation and amortization 30,150
27,299 20,786 57,449 41,182 Less:
Contribution to turnaround reserves
(7,239 ) (7,624 ) (10,214 ) (14,863 ) (16,338 ) Maintenance capital
expenditures (8,490 ) (9,764 ) (48,252 ) (18,254 ) (81,862 )
Incentive distribution rights (231 ) (323 ) (46 ) (554 ) (48 )
Distributable cash flow attributable to noncontrolling interest in
OpCo (88,771 ) (85,091 ) (39,171 ) (173,862 ) (113,087 )
MLP
distributable cash flow $ 11,447 $
10,967 $ 4,295 $
22,414 $ 13,810
WESTLAKE CHEMICAL PARTNERS LP
("WESTLAKE PARTNERS")
RECONCILIATION OF EBITDA TO NET INCOME
AND NET CASH
PROVIDED BY OPERATING
ACTIVITIES
(Unaudited)
Three Months Ended March
31, Three Months Ended June 30, Six Months Ended
June 30, 2016 2017 2016 2017
2016 (In thousands of dollars)
Net cash provided by operating
activities
$ 149,078 $ 113,208 $
72,702 $ 262,286 $ 185,277
Changes in operating assets and liabilities and other (62,958 )
(26,630 ) 8,631 (89,588 ) (994 ) Deferred income tax expense (92 )
(108 ) (141 ) (200 ) (320 )
Net Income $
86,028 $ 86,470 $
81,192 $ 172,498 $
183,963 Add: Depreciation and amortization 30,150
27,299 20,786 57,449 41,182 Interest expense 5,460 5,942 1,203
11,402 2,434 Provision for income taxes 303 297 297
600 696
EBITDA $ 121,941
$ 120,008 $ 103,478
$ 241,949 $ 228,275
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Westlake Chemical Partners LPInvestors:Steve Bender,
713-585-2900orMedia:L. Benjamin Ederington, 713-585-2900
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