- Increased quarterly cash distribution
by 2.9% sequentially, or 12% compared to the third quarter 2017
distribution, to $0.4207 per unit, the 15th consecutive quarterly
increase in distributions
- Trailing twelve-month distribution
coverage ratio of 1.20x
- Announced At-The-Market Program to fund
future potential drop-downs and other acquisitions
Westlake Chemical Partners LP (NYSE: WLKP) (the "Partnership")
today reported net income attributable to the Partnership of $12.4
million, or $0.38 per limited partner unit, for the three months
ended September 30, 2018, a decrease of $1.0 million
compared to third quarter 2017 net income attributable to the
Partnership of $13.4 million. The decrease in net income was
primarily due to lower margins on Westlake Chemical OpCo LP’s
(“OpCo”) third party sales when compared to the prior-year period.
Cash flows from operating activities in the third quarter of 2018
were $109.4 million, a decrease of $30.2 million compared to
third quarter 2017 cash flows from operating activities of $139.6
million. This decrease in cash flow from operations is primarily
attributable to a reduction in receivables from Westlake Chemical
Corporation (“Westlake”) in the third quarter of 2017 and lower
margins on third party sales volumes, partially offset by increased
production at OpCo. For the three months ended
September 30, 2018, MLP distributable cash flow of
$15.0 million decreased $0.5 million from third quarter 2017
MLP distributable cash flow of $15.5 million. This decrease
was primarily due to lower margins on third party sales volumes,
partially offset by increased production at OpCo, lower maintenance
capital expenditures and the elimination of incentive distribution
right (“IDR”) payments to Westlake that resulted from the July 2018
amendment of the Partnership’s target distribution tiers.
Third quarter 2018 net income attributable to the Partnership
was $12.4 million, a decrease of $0.4 million from second
quarter 2018 net income attributable to the Partnership of $12.8
million. Third quarter 2018 cash flows from operating activities of
$109.4 million decreased by $5.0 million compared to second
quarter 2018 cash flows from operating activities of $114.4
million. This decrease in net income and cash flow from operations
was primarily due to lower margins on OpCo’s third party sales
volumes. Third quarter 2018 MLP distributable cash flow of
$15.0 million decreased by $1.0 million compared to
second quarter 2018 MLP distributable cash flow of $16.0 million
due to higher maintenance capital and lower margins on third party
sales volumes, partially offset by higher production at OpCo.
Net income attributable to the Partnership of $37.5 million, or
$1.14 per limited partner unit, for the nine months ended
September 30, 2018 increased by $4.4 million compared to
the first nine months of 2017 net income attributable to the
Partnership of $33.1 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
in OpCo following the acquisition of an additional 5% interest in
the third quarter of 2017 and increased production at OpCo,
partially offset by lower margins on OpCo’s third party sales
volumes. Cash flows from operating activities in the first nine
months of 2018 were $330.0 million, a decrease of
$71.9 million compared to the first nine months of 2017 cash
flows from operating activities of $401.9 million. This decrease
was due to a reduction in receivables from Westlake that occurred
in 2017 and lower margins on third party sales volumes, partially
offset by increased production at OpCo and lower turnaround
expenditures. For the nine months ended
September 30, 2018, MLP distributable cash flow of
$45.5 million increased by $7.6 million compared to the
first nine months of 2017 MLP distributable cash flow of $37.9
million. The increase in MLP distributable cash flow as compared to
the prior-year period was due to the Partnership’s increased
ownership in OpCo and higher production and lower maintenance
capital expenditures at OpCo, partially offset by lower margins on
OpCo’s third party sales volumes.
On July 27, 2018, the Board of Directors of Westlake
Chemical Partners GP LLC, the general partner of the Partnership,
and Westlake, the Partnership’s sponsor and holder of the IDRs,
agreed to reset the Partnership’s target distribution tiers
pursuant to which the IDRs are calculated with the first target
quarterly distribution threshold increasing from $0.3163 to $1.2938
per unit. This reset is expected to allow the Partnership to
increase its distribution per unit in line with historical growth
rates for over 10 years before the next IDR payment could
occur.
On October 5, 2018, the Partnership announced the
commencement of an At-The-Market program which will allow the
Partnership to offer and sell common units representing limited
partner interests in the Partnership having an aggregate amount of
up to $50 million. The Partnership intends to use the net proceeds
for general partnership purposes, including the funding of future
potential drop-downs and other acquisitions.
On October 31, 2018, the Board of Directors of
Westlake Chemical Partners GP LLC announced a quarterly
distribution for the third quarter of 2018 of $0.4207 per limited
partner unit to be payable on November 26, 2018 to unit
holders of record as of November 9, 2018. The third
quarter 2018 distribution increased 12% compared to the third
quarter 2017 distribution and 2.9% compared to the second quarter
2018 distribution. MLP distributable cash flow provided trailing
twelve month coverage of 1.20x the declared distributions for the
third quarter of 2018.
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 third
quarter of 2018. We are benefiting from the investments made over
the past few years to grow our earnings and cash flows, including
the expansion of OpCo’s ethylene facilities in both Lake Charles,
Louisiana and Calvert City, Kentucky, and increasing our ownership
interest in OpCo in both 2015 and 2017," said Albert Chao,
President and Chief Executive Officer. “The recent resetting of the
distribution targets for the IDRs set the conditions for the
Partnership to employ all four levers of growth to increase
distributions to unitholders without the drag of IDR payments for a
significant period of time.”
The statements in this release and the related teleconference
relating to matters that are not historical facts, such as those
with respect to increasing distributions, the potential for future
drop-down transactions, the timing of the next IDR payment and the
use of the proceeds from At-The-Market offering 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, 2017, which was filed with
the SEC in March 2018.
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, 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' third
quarter 2018 results will be held Tuesday,
November 6, 2018 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
7085308.
A replay of the conference call will be available beginning two
hours after its conclusion until 11:59 p.m. Eastern Time on
November 13, 2018. To hear a replay, dial (855) 859-2056
or (404) 537-3406 for international callers. The replay passcode is
7085308.
The conference call will also be available via webcast at:
https://edge.media-server.com/m6/p/bafbrn6m 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 September 30,
Nine Months Ended September 30, 2018
2017 2018 2017 (In thousands
of dollars, except per unit data) Revenue Net
sales—Westlake Chemical Corporation ("Westlake") $ 313,381 $
258,049 $ 802,085 $ 711,968 Net co-product, ethylene and other
sales—third parties 50,269 38,726 147,812
152,368 Total net sales 363,650 296,775 949,897 864,336 Cost
of sales 269,743 201,372 666,367 571,401
Gross profit 93,907 95,403 283,530 292,935 Selling, general
and administrative expenses 5,909 6,805 20,417
21,519 Income from operations 87,998 88,598 263,113 271,416
Other income (expense) Interest expense—Westlake (5,639 )
(6,190 ) (16,052 ) (17,592 ) Other income, net 668 162
1,742 1,844 Income before income taxes 83,027
82,570 248,803 255,668 Income tax provision (benefit) (772 ) 325
(186 ) 925 Net income 83,799 82,245 248,989 254,743
Less: Net income attributable to noncontrolling interests in
Westlake Chemical OpCo LP ("OpCo") 71,387 68,860
211,525 221,619
Net income attributable to
Westlake Partners $ 12,412 $
13,385 $ 37,464 $
33,124 Net income per limited partners unit
attributable to Westlake Partners (basic and diluted) Common units
$ 0.38 $ 0.47 $ 1.14 $ 1.23 Subordinated units $ — $ —
$ — $ 1.07 Distributions declared per
unit $ 0.4207 $ 0.3756 $ 1.2270 $ 1.0955
MLP distributable cash flow $ 15,024 $ 15,478
$ 45,500 $ 37,892 Distributions
declared Limited partner units—public $ 7,625 $ 6,803 $ 22,232 $
16,116 Limited partner units—Westlake 5,941 5,304 17,327 15,471
Incentive distribution rights — 498 733 1,052
Total distributions declared $ 13,566 $ 12,605
$ 40,292 $ 32,639 EBITDA $ 115,558 $ 117,813
$ 347,031 $ 359,762
WESTLAKE CHEMICAL PARTNERS LP
("WESTLAKE PARTNERS")
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
September 30, 2018
December 31, 2017 (In thousands of
dollars) ASSETS Current assets Cash and cash equivalents
$ 17,041 $ 27,008 Receivable under the Investment Management
Agreement—Westlake Chemical Corporation ("Westlake") 151,875
136,510 Accounts receivable, net—Westlake 65,628 43,884 Accounts
receivable, net—third parties 22,544 18,083 Inventories 5,004 5,590
Prepaid expenses and other current assets 491 314
Total current assets 262,583 231,389 Property, plant and equipment,
net 1,161,203 1,196,245 Other assets, net 71,217 87,642
Total assets $ 1,495,003
$ 1,515,276 LIABILITIES AND
EQUITY Current liabilities (accounts payable and accrued
liabilities) $ 66,587 $ 40,240 Long-term debt payable to Westlake
477,608 473,960 Other liabilities 1,679 2,327 Total
liabilities 545,874 516,527 Common unitholders—public
410,555 411,228 Common unitholder—Westlake 49,511 50,265 General
partner—Westlake (242,573 ) (241,958 ) Accumulated other
comprehensive income — 279 Total Westlake Partners
partners' capital 217,493 219,814 Noncontrolling interest in OpCo
731,636 778,935 Total equity 949,129 998,749
Total liabilities and equity $
1,495,003 $ 1,515,276
WESTLAKE CHEMICAL PARTNERS LP
("WESTLAKE PARTNERS")
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
Nine Months Ended September 30, 2018
2017 (In thousands of dollars) Cash
flows from operating activities Net income $ 248,989 $ 254,743
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 82,176 86,502
Other balance sheet changes (1,161 ) 60,671 Net cash
provided by operating activities 330,004 401,916
Cash flows from investing activities Additions to property,
plant and equipment (30,047 ) (56,607 ) Maturities of investments
with Westlake under the Investment Management Agreement 270,050 —
Investments with Westlake under the Investment Management Agreement
(285,000 ) (119,000 ) Other — 1,801 Net cash used for
investing activities (44,997 ) (173,806 )
Cash flows from
financing activities Net proceeds from equity offerings —
110,739 Proceeds from debt payable to Westlake 3,648 155,257
Repayment of debt payable to Westlake — (272,765 ) Quarterly
distributions to noncontrolling interest retained in OpCo by
Westlake (258,824 ) (263,480 ) Quarterly distributions to
unitholders (39,798 ) (29,512 ) Net cash used for financing
activities (294,974 ) (299,761 ) Net decrease in cash and cash
equivalents (9,967 ) (71,651 ) Cash and cash equivalents at
beginning of period 27,008 88,900 Cash and cash
equivalents at end of period $ 17,041 $ 17,249
WESTLAKE CHEMICAL PARTNERS LP
("WESTLAKE PARTNERS")
RECONCILIATION OF MLP DISTRIBUTABLE
CASH FLOW TO NET INCOME
AND NET CASH PROVIDED BY OPERATING
ACTIVITIES
(Unaudited)
Three MonthsEnded June
30,
Three Months Ended September 30, Nine Months Ended
September 30, 2018 2018 2017
2018 2017 (In thousands of dollars)
Net cash provided by operating activities $
114,349 $ 109,433 $ 139,630
$ 330,004 $ 401,916 Changes in
operating assets and liabilities and other (29,873 ) (25,634 )
(57,385 ) (81,015 ) (147,173 )
Net Income $
84,476 $ 83,799 $
82,245 $ 248,989 $
254,743 Add: Depreciation, amortization and
disposition of property, plant and equipment 27,586 26,918 31,790
82,769 89,239 Less: Contribution to turnaround reserves (4,204 )
(4,250 ) (7,778 ) (12,602 ) (22,641 ) Maintenance capital
expenditures (5,825 ) (8,380 ) (9,827 ) (22,184 ) (28,081 )
Incentive distribution rights — — (498 ) (733 ) (1,052 )
Distributable cash flow attributable to noncontrolling interest in
OpCo (86,067 ) (83,063 ) (80,454 ) (250,739 ) (254,316 )
MLP
distributable cash flow $ 15,966 $
15,024 $ 15,478 $
45,500 $ 37,892
WESTLAKE CHEMICAL PARTNERS LP
("WESTLAKE PARTNERS")
RECONCILIATION OF EBITDA TO NET INCOME
AND NET CASH
PROVIDED BY OPERATING
ACTIVITIES
(Unaudited)
Three MonthsEnded June
30,
Three Months Ended September 30, Nine Months Ended
September 30, 2018 2018 2017
2018 2017 (In thousands of dollars)
Net cash provided by operating activities $
114,349 $ 109,433 $ 139,630
$ 330,004 $ 401,916 Changes in
operating assets and liabilities and other (29,873 ) (25,634 )
(57,385 ) (81,015 ) (147,173 )
Net Income $
84,476 $ 83,799 $
82,245 $ 248,989 $
254,743 Add: Depreciation and amortization 27,586
26,892 29,053 82,176 86,502 Interest expense 5,547 5,639 6,190
16,052 17,592 Income tax provision (benefit) 303 (772 ) 325
(186 ) 925
EBITDA $ 117,912
$ 115,558 $ 117,813
$ 347,031 $ 359,762
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181106005101/en/
Westlake Chemical Partners LPInvestorsSteve Bender,
(713) 585-2900orMediaL. Benjamin Ederington,
(713) 585-2900
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