Westlake Chemical Partners LP (WLKP) 2025 Q3 法說會逐字稿

Good afternoon and thank you for standing by. Welcome to the Westlake Chemical Partners Third quarter 2025.

Earnings conference call. During this presentation, all participants will be in a listen-only mode. After the speaker's remark, you will be invited to participate in a question-and-answer session. To ask a question during the session, you will need to press 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded today, October 30, 2025. I would now like to turn the call over to your.

Host Jeff Hawley, Westlake Chemical Partners Vice President and Chief Accounting Officer. Sir, you may begin.

Thank you, Gerald. Good afternoon, everyone, and welcome to the Westlake Chemical Partners 3rd quarter 2025 conference call.

I'm joined today by Albert Choll, our executive Chairman, John Mark Gillson, our President and CEO Steve Bender, our executive Vice President and Chief Financial Officer, and other members of our management team.

During this call, we refer to ourselves as Westlake Partners or the Partnership. References to Westlake refer to our parent company, Westlake Corporation, and references to Opco refer to Westlake Chemical Opco LP, a subsidiary of Westlake and a partnership which owns certain Olefins assets. Additionally, when we refer to distributable cash flow, we are referring to Westlake Chemical Partners MLP distributable cash flow. Definitions of these terms are available on the partnership's website.

Today, management is going to discuss certain topics that will contain forward-looking information that is based on management's beliefs as well as assumptions made by and information currently available to management.

These forward-looking statements suggest predictions or expectations and thus are subject to risks or uncertainties.

We encourage you to learn more about the factors that could lead our actual results to differ by reviewing the cautionary statements in our regulatory filings, which are also available on our investor relations website.

This morning, Westside Partners issued a press release with details of our 3rd quarter 2025 financial and operating results. This document is available in the press release section of our webpage at WLKpartners.com.

A replay of today's call will be available beginning 2 hours after the conclusion of this call.

The replay can be accessed via the partnership's website.

Please note that information reported on this call speaks only as of today, October 30th, 2025, and therefore you're advised that time sensitive information may no longer be accurate as of the time of any replay.

I finally advise you that this conference call is being broadcast live through an internet webcast system that can be accessed on our webpage at WLKpartners.com. Now, I would like to turn the call over to Jean-Marc Gilson. Jean-Marc.

Thank you, Jeff. Good afternoon, everyone, and thank you for joining us to discuss our third quarter, 2025 results.

In this morning's press release, we reported Westlake Partners 3rd quarter 2025 net income of $15 million or $0.42 per unit.

Compared to the second quarter of 2025, our third quarter sales and earnings benefited from the completion of the planned turnaround at a Petro 1 Eyne unit in Lake Charles, Louisiana during the second quarter.

I would now like to turn our call over to Steve to provide more detail on the financial and operating results for the quarter. Steve.

Thank you, Jean Marc, and good afternoon, everyone. In this morning's press release, we reported Westlake Partners' 3rd quarter 2025 net income of $15 million or $0.42 per unit.

Consolidated net income, including Opco's earnings, was $86 million on consolidated net sales of $309 million.

The partnership had distributable cash flow for the quarter of $15 million or $0.42 per unit.

Third quarter 2025 net income for West Partners of 15 million was lower than the third quarter of 2024 partnership net income, partially due to lower margins on sales of ethylene to third parties.

Distributable cash flow of $15 million or $0.42 per unit for the third quarter of 2025 decreased by $3 million compared to the third quarter of 2024 due to higher maintenance capital expenditures as a result of changes in the timing of maintenance activities in 2025 as compared to 2024.

Turning our attention to the balance sheet and cash flows at the end of the third quarter, we had consolidated cash and cash investments with Westlake through our investment management agreement totaling $51 million.

Long-term debt at the end of the quarter was $400 million of which $377 million was at the partnership, and the remaining $23 million was at OPO.

In the 3rd quarter of 2025, Opco spent $30 million on capital expenditures.

We maintained our strong leverage metrics with a consolidated leverage ratio of approximately one time.

On October 28th, 2025, we announced a quarterly distribution of 47.$0.14 per unit with respect to the third quarter of 2025. Since our IPO in 2014, the partnership has made 45 consecutive quarterly distributions to unit holders, and we have grown distributions 71% since the partnership's original minimum quarterly distribution of 27.$0.05 per unit.

The Partnership's third quarter distribution will be paid on November 26, 2025 to unit holders of record November 10, 2025.

The partnership's predictable fee-based cash flow continues to prove beneficial in today's economic environment. It's differentiated by the consistency of our earnings and cash flows.

Looking back, since the IPO in July of 2014, we've maintained a cumulative distribution coverage ratio of approximately 1.1 times, and with the partner's stability and cash flows, we are able to sustain our current distribution without the need to access capital markets at all.

For modeling purposes, we have no planned turnarounds for the remainder of 2025 or in 2026.

Now I'd like to turn the call back over to Jean Marc to make some closing comments. Jean Marc.

Steve, the stability of Westlake Partners business model is consistently demonstrated through our fixed margin EII agreement, which minimizes market volatility and other production risk.

The high degree of stability in cash flow when paired with the predictability of our model.

Has enabled us to deliver a long history of reliable distributions and coverage.

As a result of its importance to the stability of our cash flows, I'm pleased that earlier this week Oco and Westlake agreed to renew the Etila sales agreement to the end of 2027 with no changes to the contract's terms or conditions.

The renewed Eti and sales agreement maintains the same pricing formula and sales volume protections that have provided the partnership with a distributable cash flow to make 45 consecutive quarterly distributions to unit holders since its IPO in 2014.

Furthermore, we believe that Westlake's decision to renew the EBITDA Agreement under the same terms that have been in place since its origination demonstrates the critical nature of Opco's supply of ele to their operations and their commitment to support Opco's continued safe, reliable operations through stable, predictable gas flows.

Turning to our outlook, global industrial and manufacturing activity remains soft in 2025, which is broadly impacting the global chemical industry.

Despite the challenging global macroeconomic backdrop, the partnership financial performance and distributions will continue to be supported by an EA sales agreement which provides a predictable fee-based cash flow structure from a take or pay contract with Westlake for 95% of oppor's production.

As has been the case since IPO over 10 years ago, this EINA agreement has delivered stable and predictable cash flow to economic ups and downs, as well as planned and unplanned turnarounds.

Turning to our capital structure, we maintain a strong balance sheet with conservative financial and leverage metrics.

As we continue to navigate market conditions, we will evaluate opportunities via our 4 levels of growth in the future, including Increases our our ownership interest of Opcom, acquisitions of other qualified income streams.

Organic growth opportunities such as expansion of our current EIN facilities and negotiation of a higher fixed margin in our EINs agreement with Westla.

We remain focused on our ability to continue to provide long-term value and distribution to our unit holders.

As always, we will continue to focus on safe operations, along with being good stewards of the environment where we work and live as part of our broader sustainability efforts.

Thank you very much for listening to our 3rd quarter earnings call. Now we'll turn the call back over to Jeff.

Thank you, Jean Marc. Before I begin taking questions, I'd like to remind you that a replay of this teleconference will be available 2 hours after the call has ended.

We will provide instructions to access the replay at the end of the call.

Gerald, we will now take questions.

Thank you. At this time, we will conduct a question-and-answer session. As a reminder to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Please stand by while we compile the Q&A roster.

Just one moment please.

Our first question will come from James Asel from Aviation Advisory Services Inc. The floor is yours.

Oh, thank you very much. .

Excuse me, I noticed that the distributable cash flow for the quarter was less than the amount of distribution per unit. What is the outlook for getting the distributable cash flow up to a level again where the distribution will be covered?

Yeah, the entire reason for that was the planned turnaround, and when we have planned turnarounds, it does impact, of course, production and therefore sales. And so, it's not unusual when we have these planned turnaround events for our coverage ratio to dip below the 1.1 target and to have some impact on those on that cash flow, but we have an operating surplus that is quite robust, and we'll continue and have continued to pay those distributions out of that operating surplus.

And now that we've completed that turnaround successfully and back in full production, that operating surplus should continue to build, and I would fully expect that distribution to continue to be well covered by the cash flows of the business.

Okay. So is it reasonable to assume or on a pro forma basis if we, you would not have the impact of the turnaround that the distributable cash flow would have been an excess of the distribution?

Yes, it would have wonderful.

Thank you very much.

You're welcome.

Thank you for your question.

Just give it a second to see if anyone else would like a question.

So at this time I'm showing no further questions, and I'd like to hand it back to Jeff for closing remarks. The floor is yours, Jeff.

Thank you.

Thanks again for participating in today's call. We hope you'll join us for our next conference call to discuss our fourth quarter 2025 results.

Thank you for participating in today's Westlake Chemical Partners Third quarter 2025 earnings conference call. As a reminder, this call will be available for replay beginning two hours after the call has ended and may be accessed until 11:59 p.m. Eastern Time on Thursday, November 13, 2025. The replay can be accessed via the partnership website. Goodbye. This does conclude the program. You may now disconnect.

Good afternoon and thank you for standing by. Welcome to the Westlake Chemical Partners Third quarter 2025.

Earnings conference call. During this presentation, all participants will be in a listen-only mode. After the speaker's remark, you will be invited to participate in a question-and-answer session. To ask a question during the session, you will need to press 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded today, October 30, 2025. I would now like to turn the call over to your.

Host Jeff Hawley, Westlake Chemical Partners Vice President and Chief Accounting Officer. Sir, you may begin.

Thank you, Gerald. Good afternoon everyone and welcome to the Westlake Chemical Partners 3rd quarter 2025 conference call.

I'm joined today by Albert Choll, our executive Chairman, John Mark Gillson, our President and CEO Steve Bender, our executive Vice President and Chief Financial Officer, and other members of our management team.

During this call, we refer to ourselves as Westlake Partners or the Partnership. References to Westlake refer to our parent company, Westlake Corporation, and references to Opco refer to Westlake Chemical Opco LP, a subsidiary of Westlake and a partnership which owns certain Olefins assets. Additionally, when we refer to distributable cash flow.

We are referring to Westside Chemical Partners MLP distributable cash flow. Definitions of these terms are available on the partnership's website.

Today, management is going to discuss certain topics that will contain forward-looking information that is based on management's beliefs as well as the assumptions made by and information currently available to management.

These forward-looking statements suggest predictions or expectations and thus are subject to risks or uncertainties.

We encourage you to learn more about the factors that could lead our actual results to differ by reviewing the cautionary statements in our regulatory filings, which are also available on our investor relations website.

This morning, Westside Partners issued a press release with details of our 3rd quarter of 2025 financial and operating results. This document is available in the press release section of our webpage at WLKpartners.com.

A replay of today's call will be available beginning 2 hours after the conclusion of this call.

The replay can be accessed via the partnership's website.

Please note that information reported on this call speaks only as of today, October 30th, 2025, and therefore you're advised that time sensitive information may no longer be accurate as of the time of any replay.

I'd finally advise you that this conference call is being broadcast live through an internet webcast system that can be accessed on our webpage at WLKpartners.com. Now, I would like to turn the call over to Jean-Marc Gilson. Jean-Marc.

Thank you, Jeff. Good afternoon, everyone, and thank you for joining us to discuss our third quarter, 2025 results.

In this morning's press release, we reported Westlake Partners' 3rd quarter 2025 net income of $15 million or $0.42 per unit.

Compared to the second quarter of 2025, our third quarter sales and earnings benefited from the completion of the planned turnaround at a Petro1 EIN unit in Lake Charles, Louisiana during the second quarter.

I would now like to turn our call over to Steve to provide more details on the financial and operating results for the quarter. Steve.

Thank you, Jean Marc, and good afternoon, everyone. In this morning's press release, we reported Westlake Partners' 3rd quarter 2025 net income of $15 million or $0.42 per unit.

Consolidated net income, including Opco's earnings, was $86 million on consolidated net sales of $309 million. The partnership had distributable cash flow for the quarter of $15 million or $0.42 per unit.

Third quarter, 2025 net income for West Lake Partners of $15 million was lower than the third quarter of 2024 partnership net income, partially due to lower margins on sales of ethylene to third parties.

Distributable cash flow of $15 million or $0.42 per unit for the third quarter of 2025 decreased by $3 million compared to the third quarter of 2024 due to higher maintenance capital expenditures as a result of changes in the timing of maintenance activities in 2025 as compared to 2024.

Turning our attention to the balance sheet and cash flows at the end of the 3rd quarter, we consolidated cash and cash investments with Westlake through our investment management agreement totaling $51 million.

Long-term debt at the end of the quarter was $400 million of which $377 million was at the partnership, and the remaining $23 million was atop.

In the 3rd quarter of 2025, Opco spent $30 million on capital expenditures.

We maintained our strong leverage metrics with a consolidated leverage ratio of approximately one time.

On October 28th, 2025, we announced a quarterly distribution of 47.$0.14 per unit with respect to the third quarter of 2025. Since our IPO in 2014, the partnership has made 45 consecutive quarterly distributions to unit holders, and we have grown distributions 71% since the partnership's original minimum quarterly distribution of 27.$0.05 per unit.

The Partnership's third quarter distribution will be paid on November 26, 2025 to unit holders of record November 10, 2025.

The partnership's predictable fee-based cash flow continues to prove beneficial in today's economic environment. It's differentiated by the consistency of our earnings and cash flows.

Looking back since the IPO in July of 2014, we've maintained a cumulative distribution coverage ratio of approximately 1.1 times, and with the partner's stability and cash flows, we are able to sustain our current distribution without the need to access capital markets at all.

For modeling purposes, we have no planned turnarounds for the remainder of 2025 or in 2026.

Now I'd like to turn the call back over to Jean Marc to make some closing comments. Jean.

Thank you, Steve.

The stability of Westlake Partners' business model is consistently demonstrated through a fixed margins agreement which minimizes market volatility and other production risk.

The high degree of stability in cash flow when paired with the predictability of our model.

Has enabled us to deliver a long history of reliable distributions and coverage.

As a result of its importance to the stability of our cash flows, I'm pleased that earlier this week Occo and Westlake agreed to renew the ethylene sales agreement to the end of 2027 with no changes to the contract's terms or conditions.

The renewed Eti and sales agreement maintains the same pricing formula and sales volume protections that have provided the partnership with a distributable cash flow to make 45 consecutive quarterly distributions to unit holders since its IPO in 2014.

Furthermore, we believe that Westlake's decision to renew the EBITDA Agreement under the same terms that have been in place since its origination demonstrates the critical nature of Opco's supply of etile to their operations and their commitment to support Opco's continued safe, reliable operations through stable, predictable cash flows.

Turning to our outlook, global industrial and manufacturing activity remains soft in 2025, which is broadly impacting the global chemical industry.

Despite the challenging global macroeconomic backdrop, the partnership financial performance and distributions will continue to be supported by a lane sales agreement, which provides a predictable fee-based cash flow structure from a take or pay contract with Westlake for 95% of oppor's production.

As has been the case since IP over 10 years ago, this EINs agreement has delivered stable and predictable cash flow to economic ups and downs, as well as planned and unplanned turnarounds.

Turning to our capital structure, we maintain a strong balance sheet with conservative financial and leverage metrics.

As we continue to navigate market conditions, we will evaluate opportunities via our 4 levels of growth in the future, including Increases of our ownership interest of Opcom, acquisitions of other qualified income streams.

Organic growth opportunities such as expansion of our current EIN facilities and negotiation of a higher fixed margin in our EINs agreement with Westla.

We remain focused on our ability to continue to provide long-term value and distribution to our unit holders.

As always, we will continue to focus on safe operations, along with being good stewards of the environment where we work and live as part of our broader sustainability efforts.

Thank you very much for listening to our 3rd quarter earnings call. Now we'll turn the call back over to Jeff.

Thank you, Jean Marc. Before I begin taking questions, I'd like to remind you that a replay of this teleconference will be available 2 hours after the call has ended.

We will provide instructions to access the replay at the end of the call.

Gerald, we will now take questions.

Thank you. At this time, we will conduct a question-and-answer session. As a reminder to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Please stand by while we compile the Q&A roster.

Just one moment, please.

Our first question will come from James Asel from Aviation Advisory Services Inc. The floor is yours.

Oh, thank you very much.

Excuse me, I noticed that the distributable cash flow for the quarter was less than the amount of distribution per unit. What is the outlook for getting the distributable cash flow up to a level again where the distribution will be covered?

Yeah, the entire reason for that was the planned turnaround, and when we have planned turnarounds, it does impact, of course, production and therefore sales. And so it's not unusual when we have these planned turnaround events for our coverage ratio to dip below the 1.1 target and to have some impact on those on that cash flow, but we have an operating surplus that is quite robust and we'll continue and have continued to pay those distributions out of that operating surplus.

And now that we've completed that turnaround successfully and back in full production, that operating surplus should continue to build, and I would fully expect that distribution to continue to be well covered by the cash flows of the business.

Okay. So is it reasonable to assume or on a pro forma basis if we had, you would not have the impact of the turnaround that the distributable cash flow would have been an excess of the distribution?

Yes, it would have.

Wonderful.

Thank you very much.

You're welcome.

Thank you for your question.

Just give it a second to see if anyone else would like a question.

So at this time I'm showing no further questions, and I'd like to hand it back to Jeff for closing remarks. The floor is yours, Jeff.

Thank you.

Thanks again for participating in today's call. We hope you'll join us for our next conference call to discuss our fourth quarter 2025 results.

Thank you for participating in today's Westlake Chemical Partners Third quarter 2025 earnings call. As a reminder, this call will be available for replay beginning 2 hours after the call has ended and may be accessed until 11:59 p.m. Eastern time on Thursday, November 13, 2025. The replay can be accessed via the partnership website. Goodbye. This does conclude the program. You may now disconnect.