- Increased quarterly cash distribution
by 2.9% sequentially, or 12% compared to the fourth quarter 2016
distribution, to $0.3864 per unit, the twelfth consecutive
quarterly increase in distributions
- Record quarterly net income
attributable to the Partnership of $15.5 million
- Record quarterly MLP distributable cash
flow of $16.8 million
- Quarterly and annual distribution
coverage ratio of 1.35x and 1.24x, respectively
Westlake Chemical Partners LP (NYSE: WLKP) (the "Partnership")
today reported record net income attributable to the Partnership of
$15.5 million, or $0.46 per limited partner unit, for the three
months ended December 31, 2017, an increase of $4.6
million compared to fourth quarter 2016 net income attributable to
the Partnership of $10.9 million. The increase in net income
attributable to the Partnership as compared to the prior-year
period was primarily due to the Partnership's increased ownership
interest in Westlake Chemical OpCo LP ("OpCo") effective as of July
1, 2017 and increased production at OpCo's Calvert City, Kentucky
facility, following its 100 million pound expansion completed
in April 2017, and Petro 1 facility in Lake Charles, Louisiana.
Cash flows from operations in the fourth quarter of 2017 were
$135.4 million, an increase of $25.0 million compared to
fourth quarter 2016 cash flows from operations of $110.4 million.
The increase in cash flows from operations was due to increased
production at OpCo's facilities and a decrease in working capital.
For the three months ended December 31, 2017, MLP
distributable cash flow was a record $16.8 million, an increase of
$5.0 million compared to fourth quarter 2016 MLP distributable cash
flow of $11.8 million. The increase in MLP distributable cash
flow as compared to the prior-year period was due to the
Partnership's increased ownership interest in OpCo, higher
production volume, and lower maintenance capital expenditures.
Fourth quarter 2017 net income attributable to the Partnership
of $15.5 million, or $0.46 per limited partner unit, increased
by $2.1 million from third quarter 2017 net income attributable to
the Partnership of $13.4 million due to increased production at all
of OpCo's facilities. Fourth quarter 2017 cash flows from
operations of $135.4 million decreased by $4.2 million compared to
third quarter 2017 cash flows from operations of
$139.6 million. The decrease in cash flows from operations was
primarily due to increased working capital, partially offset by
increased production at OpCo's facilities. Fourth quarter 2017 MLP
distributable cash flow of $16.8 million increased by $1.3 million
compared to third quarter 2017 MLP distributable cash flow of $15.5
million primarily due to the increased production at OpCo's
facilities.
Net income attributable to the Partnership of $48.7 million, or
$1.72 per limited partner common unit, for the year ended
December 31, 2017 increased by $7.8 million compared to
2016 net income attributable to the Partnership of
$40.9 million. The increase in net income attributable to the
Partnership as compared to the prior year was due to the
Partnership's increased ownership interest in OpCo and increased
production at all of OpCo's facilities following the completion of
expansion projects at OpCo's Petro 1 and Calvert City facilities,
partially offset by certain reimbursements from Westlake Chemical
Corporation ("Westlake") under the Ethylene Sales Agreement which
were recorded in 2016. Cash flows from operations in 2017 were
$537.4 million, an increase of $249.7 million compared to
2016 cash flows from operations of $287.7 million. The increase in
cash flows from operations was due to increased production at
OpCo's facilities, a decrease in working capital and lower
turnaround expenditures as compared to the prior year. 2017 MLP
distributable cash flow of $54.7 million increased by
$22.3 million compared to 2016 MLP distributable cash flow of
$32.4 million. The increase in MLP distributable cash flow as
compared to the prior year was due to the Partnership's increased
ownership interest in OpCo, higher production volumes at all of
OpCo's facilities, and lower maintenance capital expenditures.
On September 29, 2017, the Partnership issued and sold
5,175,000 common units representing limited partner interests in
the Partnership for $113.9 million. The Partnership used the net
proceeds of the public offering and approximately $118.6 million of
borrowings under the $600 million senior unsecured revolving
credit agreement with a subsidiary of Westlake to acquire an
additional 5% interest in OpCo for $229.2 million, effective as of
July 1, 2017.
On January 29, 2018, the Board of Directors of
Westlake Chemical Partners GP LLC, the general partner of the
Partnership, announced a quarterly distribution for the fourth
quarter of 2017 of $0.3864 per limited partner unit to be payable
on February 23, 2018 to unit holders of record as of
February 8, 2017. The fourth quarter 2017 distribution
increased 12% compared to the fourth quarter 2016 distribution and
2.9% compared to the third quarter 2017 distribution. MLP
distributable cash flow provided coverage of 1.35x the declared
distributions for the fourth quarter of 2017.
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 the Partnership's performance for the
fourth quarter and full year of 2017. This year we completed the
100 million pound expansion of OpCo's Calvert City facility, the
first public offering since our initial public offering in August
2014, and the first dropdown transaction since May 2015. This
quarter we increased our distribution for the twelfth consecutive
quarter, with our current distribution 40.5% higher than the
minimum quarterly distribution established in August 2014. The
stability in earnings and cash flows provided by OpCo's sales
agreement with Westlake provides a foundation for continued growth,
and we continue to evaluate all four of our levers of growth to
deliver value to our stakeholders," 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 those
with respect to continued 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, amortization and disposition
of property, plant and equipment, 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 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. Because MLP distributable cash flow and EBITDA may be
defined differently by other companies in our industry, our
definitions 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 an 18.3%
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' fourth
quarter and full year 2017 results will be held Tuesday,
February 20, 2018 at 12:00 PM Eastern Time (11:00 AM
Central Time). To access the conference call, dial (855) 638-4814
or (234) 386-2848 for international callers, approximately 10
minutes prior to the scheduled start time and reference passcode
8057838.
A replay of the conference call will be available beginning two
hours after its conclusion until 11:59 p.m. Eastern Time on
February 27, 2018. To hear a replay, dial (855) 859-2056
or (404) 537-3406 for international callers. The replay passcode is
8057838.
The conference call will also be available via webcast at:
https://edge.media-server.com/m6/p/m3tyc2qg and
the earnings release can be obtained via the Partnership web page
at: http://investors.wlkpartners.com/CorporateProfile.
WESTLAKE CHEMICAL PARTNERS LP
("WESTLAKE PARTNERS")
CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)
Three months ended December 31, Twelve months
ended December 31, 2017 2016 2017
2016 (In thousands of dollars, except per
unit data) Revenue Net sales—Westlake Chemical
Corporation ("Westlake") $ 261,113 $ 246,860 $ 973,081 $ 853,719
Net co-product, ethylene and other sales—third parties 47,532
47,077 199,900 133,017 Total net sales
308,645 293,937 1,172,981 986,736 Cost of sales 197,913
188,202 769,314 595,405 Gross profit 110,732
105,735 403,667 391,331 Selling, general and administrative
expenses 7,741 7,154 29,260 24,887
Income from operations 102,991 98,581 374,407 366,444
Other
income (expense) Interest expense—Westlake (4,269 ) (5,226 )
(21,861 ) (12,607 ) Other income (expense), net (52 ) 371
1,792 601 Income before income taxes 98,670 93,726
354,338 354,438 Provision for income taxes 355 145
1,280 1,035 Net income 98,315 93,581 353,058 353,403
Less: Net income attributable to noncontrolling interests in
Westlake Chemical OpCo LP ("OpCo") 82,769 82,730
304,388 312,463
Net income attributable to
Westlake Partners $ 15,546 $
10,851 $ 48,670 $
40,940 Net income per limited partner unit
attributable to Westlake Partners (basic and diluted) Common
units $ 0.46 $ 0.39 $ 1.72 $ 1.50 Subordinated units $ — $
0.39 $ 1.43 $ 1.50 Distributions
declared per unit $ 0.3864 $ 0.3450 $ 1.4819 $
1.3230 MLP distributable cash flow $ 16,808 $
11,762 $ 54,700 $ 32,405 Distribution
declared Limited partner units—public $ 6,999 $ 4,463 $ 23,114 $
17,116 Limited partner units—Westlake 5,457 4,872 20,928 18,684
Incentive distribution rights 614 142 1,666
281 Total distribution declared $ 13,070 $ 9,477
$ 45,708 $ 36,081 EBITDA $ 130,422 $
129,690 $ 490,184 $ 465,255
WESTLAKE CHEMICAL PARTNERS LP
("WESTLAKE PARTNERS")
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
December 31, 2017
December 31, 2016 (In thousands of
dollars) ASSETS Current assets Cash and cash equivalents
$ 27,008 $ 88,900 Receivable under the Investment Management
Agreement—Westlake Chemical Corporation ("Westlake") 136,510
— Accounts receivable, net—Westlake 43,884 126,977 Accounts
receivable, net—third parties 18,083 12,085 Inventories 5,590 3,934
Prepaid expenses and other current assets 314 269
Total current assets 231,389 232,165 Property, plant and equipment,
net 1,196,245 1,222,238 Other assets, net 87,642 100,825
Total assets $ 1,515,276
$ 1,555,228 LIABILITIES AND
EQUITY Current liabilities (accounts payable and accrued
liabilities) $ 40,240 $ 37,777 Long-term debt payable to Westlake
473,960 594,629 Other liabilities 2,327 1,859 Total
liabilities 516,527 634,265 Common unitholders—public
411,228 297,367 Common unitholder—Westlake 50,265 4,813
Subordinated unitholder—Westlake — 42,534 General partner—Westlake
(241,958 ) (242,430 ) Accumulated other comprehensive income 279
200 Total Westlake Partners partners' capital 219,814
102,484 Noncontrolling interest in OpCo 778,935 818,479
Total equity 998,749 920,963
Total
liabilities and equity $ 1,515,276
$ 1,555,228
WESTLAKE CHEMICAL PARTNERS LP
("WESTLAKE PARTNERS")
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
Twelve months ended December 31, 2017
2016 (In thousands of dollars) Cash
flows from operating activities Net income $ 353,058 $ 353,403
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 113,985 98,210
Other balance sheet changes 70,314 (163,887 ) Net cash
provided by operating activities 537,357 287,726
Cash flows from investing activities Additions to property,
plant and equipment (68,858 ) (299,638 ) Receivables under The
Investment Management Agreement - Westlake (136,172 ) — Other 1,801
157 Net cash used for investing activities (203,229 )
(299,481 )
Cash flows from financing activities Net proceeds
from common unit offering 110,698 — Proceeds from debt payable to
Westlake 165,257 212,175 Repayment of debt payable to Westlake
(285,926 ) (1,552 ) Quarterly distributions to noncontrolling
interest retained in OpCo by Westlake (343,932 ) (244,590 )
Quarterly distributions to unitholders (42,117 ) (34,937 ) Net cash
used for financing activities (396,020 ) (68,904 ) Net decrease in
cash and cash equivalents (61,892 ) (80,659 ) Cash and cash
equivalents at beginning of the year 88,900 169,559
Cash and cash equivalents at end of the year $ 27,008 $
88,900
WESTLAKE CHEMICAL PARTNERS LP
("WESTLAKE PARTNERS")
RECONCILIATION OF MLP DISTRIBUTABLE
CASH FLOW TO NET INCOME
AND NET CASH PROVIDED BY OPERATING
ACTIVITIES
(Unaudited)
Three
MonthsEndedSeptember 30,
Three months ended December 31, Twelve months ended
December 31, 2017 2017 2016
2017 2016 (In thousands of dollars)
Net cash provided (used) by operating
activities $ 139,630 $ 135,441
$ 110,356 $ 537,357 $
287,726 Changes in operating assets and liabilities and
other (57,385 ) (37,126 ) (16,775 ) (184,299 ) 65,677
Net
Income $ 82,245 $ 98,315
$ 93,581 $ 353,058
$ 353,403 Add: Depreciation, amortization and
disposition of property, plant and equipment 31,790 27,889 30,738
117,128 98,210 Less: Contribution to turnaround reserves (7,778 )
(7,939 ) (6,051 ) (30,580 ) (40,014 ) Maintenance capital
expenditures (9,827 ) (9,694 ) (16,744 ) (37,775 ) (120,353 )
Incentive distribution rights (498 ) (614 ) (142 ) (1,666 ) (281 )
Distributable cash flow attributable to noncontrolling interest in
OpCo (80,454 ) (91,149 ) (89,620 ) (345,465 ) (258,560 )
MLP
distributable cash flow $ 15,478 $
16,808 $ 11,762 $
54,700 $ 32,405
WESTLAKE CHEMICAL PARTNERS LP
("WESTLAKE PARTNERS")
RECONCILIATION OF EBITDA TO NET INCOME
AND NET CASH
PROVIDED BY OPERATING
ACTIVITIES
(Unaudited)
Three
MonthsEndedSeptember 30,
Three months ended December 31, Twelve months ended
December 31, 2017 2017 2016
2017 2016 (In thousands of dollars)
Net cash provided (used) by operating
activities $ 139,630 $ 135,441
$ 110,356 $ 537,357 $
287,726 Changes in operating assets and liabilities and
other (57,385 ) (37,126 ) (16,775 ) (184,299 ) 65,677
Net
Income $ 82,245 $ 98,315
$ 93,581 $ 353,058
$ 353,403 Add: Depreciation and amortization 29,053
27,483 30,738 113,985 98,210 Interest expense 6,190 4,269 5,226
21,861 12,607 Provision for income taxes 325 355 145
1,280 1,035
EBITDA $ 117,813
$ 130,422 $ 129,690
$ 490,184 $ 465,255
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180220005333/en/
Westlake Chemical Partners LPInvestorsSteve Bender,
(713) 585-2900orMediaL. Benjamin Ederington,
(713) 585-2900
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