Westlake Chemical Partners LP Announces Fourth Quarter and Full Year 2024 Results

Rhea-AI Summary

Westlake Chemical Partners LP (NYSE: WLKP) reported Q4 2024 net income of $15.0 million ($0.43 per unit), compared to $14.3 million in Q4 2023. Cash flows from operating activities increased to $132.5 million, up $24.8 million from Q4 2023.

For full-year 2024, net income reached $62.4 million ($1.77 per unit), an $8.1 million increase from 2023, driven by higher third-party ethylene sales prices and margins. Operating cash flows grew to $485.0 million, up $33.0 million from 2023.

The Partnership declared its 42nd consecutive quarterly distribution of $0.4714 per unit. The company deferred the planned Petro 1 ethylene unit turnaround to 2025, which helped exceed annual production plans and capture attractive third-party ethylene prices in H2 2024. The maintenance turnaround began in January 2025 and is expected to last approximately 60 days.

Positive

• Net income increased 14.9% YoY to $62.4 million for full-year 2024
• Operating cash flows improved by $33.0 million to $485.0 million in 2024
• Maintained consistent quarterly distribution of $0.4714 per unit
• Higher third-party ethylene sales prices and margins in 2024

Negative

• Q4 2024 MLP distributable cash flow decreased by $1.4 million to $15.0 million vs Q4 2023
• Coverage ratio declined to 1.01x from 1.03x in previous quarter
• Expected coverage ratio to fall below 1.00x in 2025 due to Petro 1 turnaround

Insights

Financial Analyst

The Q4 2024 results reveal a strategically managed performance by Westlake Chemical Partners, with several key developments worth noting for investors. The 8.1 million year-over-year increase in net income to $62.4 million demonstrates effective operational execution, particularly in capitalizing on favorable market conditions.

The decision to defer the Petro 1 ethylene unit turnaround to 2025 proved particularly astute, allowing the partnership to capture higher third-party ethylene margins during the latter half of 2024. This timing optimization contributed to the improved annual performance, though it creates a temporary challenge in 2025. The current 60-day maintenance turnaround beginning January 2025 will likely pressure the coverage ratio below 1.00x, but the partnership's strong cash position and operating surplus provide adequate cushion to maintain the distribution.

The partnership's financial structure offers notable stability through its ethylene sales agreement with Westlake, which guarantees a $0.10 per pound margin on 95% of production. This arrangement effectively creates a quasi-utility business model, providing predictable cash flows that support the consistent quarterly distribution, now in its 42nd consecutive quarter.

Working capital management has shown improvement, evidenced by the 23% increase in Q4 operating cash flows to $132.5 million. This efficient capital management provides additional flexibility in managing the upcoming turnaround period. The trailing twelve-month distribution coverage of 1.01x, while tight, reflects the partnership's careful balance between operational investment and unitholder returns.

Looking beyond the 2025 turnaround, the partnership appears well-positioned to benefit from improving third-party ethylene prices and margins, suggesting potential for enhanced cash flows once production normalizes. The maintenance investment, while creating short-term pressure, should support operational reliability and long-term performance stability.

• Declared quarterly distribution of $0.4714 per unit; 42^nd consecutive quarterly distribution

HOUSTON--(BUSINESS WIRE)-- Westlake Chemical Partners LP (NYSE: WLKP) (the "Partnership") today reported net income attributable to the Partnership in the fourth quarter of 2024 of $15.0 million, or $0.43 per limited partner unit, which was relatively in line with fourth quarter 2023 net income of $14.3 million. Cash flows from operating activities in the fourth quarter of 2024 were $132.5 million, an increase of $24.8 million compared to fourth quarter 2023 cash flows from operating activities of $107.7 million, due to higher net income and more favorable working capital changes. For the three months ended December 31, 2024, MLP distributable cash flow was $15.0 million, a decrease of $1.4 million compared to fourth quarter 2023 MLP distributable cash flow of $16.4 million. The decrease in MLP distributable cash flow was primarily due to higher turnaround reserve contributions and maintenance capital contributions to support the planned Petro 1 turnaround.

Fourth quarter 2024 net income attributable to the Partnership of $15.0 million decreased by $3.1 million compared to third quarter 2024 net income of $18.1 million, primarily due to the impact of excess quantities on OpCo's ethylene sales price to Westlake in the fourth quarter of 2024, which was related to the decision to push the Petro 1 turnaround to 2025. The excess quantities impact on fourth quarter 2024 sales price, in and of itself, had no effect on full year 2024 net income, MLP distributable cash flow or coverage ratio. Fourth quarter 2024 cash flows from operating activities of $132.5 million increased by $6.4 million compared to third quarter 2024 cash flows from operating activities of $126.1 million primarily due to more favorable working capital changes. Fourth quarter 2024 MLP distributable cash flow of $15.0 million decreased by $2.9 million compared to third quarter 2024 MLP distributable cash flow of $17.9 million, primarily due to lower OpCo net income.

For the full year 2024, net income attributable to the Partnership of $62.4 million, or $1.77 per limited partner unit, increased by $8.1 million compared to full year 2023 net income attributable to the Partnership of $54.3 million. The increase in net income attributable to the Partnership was primarily due to higher third-party ethylene sales prices and margins. Cash flows from operating activities for the full year 2024 were $485.0 million, an increase of $33.0 million compared to the full year 2023 cash flows from operating activities of $452.0 million. This increase in cash flows from operating activities was primarily due to higher net income. For the year ended December 31, 2024, MLP distributable cash flow was $66.9 million, an increase of $4.3 million compared to MLP distributable cash flow of $62.6 million for the year ended December 31, 2023.

"The Partnership performed well in 2024 as we exceeded our annual production plan, in part due to the decision to defer the planned turnaround at our Petro 1 ethylene unit to 2025. By postponing the Petro 1 turnaround we were able to better capture attractive third-party ethylene prices and margins in the second half of 2024, which supported an improvement in the Partnership's distributable cash flow and coverage ratio for the full year 2024," said Jean-Marc Gilson, President and Chief Executive Officer. "At the end of January 2025, we began our planned maintenance turnaround at our Petro 1 ethylene unit, which is expected to last approximately 60 days. As is typically the case during turnaround years, the lost production during the Petro 1 turnaround may cause the Partnership's coverage ratio to dip below 1.00x this year. As has been the case in previous turnaround years when the Partnership's coverage ratio dipped below 1.00x, we estimate that the Partnership will have ample cash and operating surplus to fund distributions in excess of distributable cash flow in 2025. Looking beyond 2025, we believe recent improvement in third-party ethylene prices and margins should position the Partnership for improved cash flows once production returns to expected levels."

On January 27, 2025, the Partnership announced that the Board of Directors of Westlake Chemical Partners GP LLC had approved a quarterly distribution for the fourth quarter of 2024 of $0.4714 per unit to be payable on February 25, 2025 to unitholders of record as of February 7, 2025, representing the 42nd consecutive quarterly distribution to the Partnership's unitholders. MLP distributable cash flow provided trailing twelve-month coverage of 1.01x the declared distributions for the fourth quarter of 2024, which was a decrease from the trailing twelve-month coverage ratio of 1.03x at the end of the third quarter of 2024.

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.

The statements in this release and the related teleconference relating to matters that are not historical facts, such as those with respect to the timing and results of our turnaround activities, including the Petro 1 turnaround, our future coverage ratio, our ability to fund distributions in excess of distributable cash flow, our outlook for third-party ethylene margins, our expectations regarding future interest rates, the ability to deliver value and returns to unitholders, our outlook for improved cash flows, and the nature of the sales agreement with Westlake, 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, pandemic infectious diseases and the response thereto; 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 and commitments of Westlake 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, 2023, which was filed with the SEC in February 2024, and Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, which was filed with the SEC in November 2024.

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. For this purpose, a non-GAAP financial measure is generally defined by the Securities and Exchange Commission ("SEC") as a numerical measure of a registrant's historical or future financial performance, financial position or cash flows that (1) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the registrant; or (2) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. We report our financial results in accordance with U.S. 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 U.S. GAAP. We define MLP distributable cash flow as distributable cash flow less distributable cash flow attributable to Westlake Corporation'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. MLP distributable cash flow and EBITDA are non-GAAP supplemental financial measures that management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess our operating performance as compared to other publicly traded partnerships, our ability to incur and service debt and fund capital expenditures and the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities. Reconciliations of MLP distributable cash flow to net income and to net cash provided by operating activities and of EBITDA to net income, income from operations and net cash provided by operating activities can be found in the financial schedules at the end of this press release.

Westlake Chemical Partners LP

Westlake Chemical Partners is a limited partnership formed by Westlake Corporation to operate, acquire and develop ethylene production facilities and other qualified assets. Headquartered in Houston, the Partnership owns a 22.8% 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 2024 results will be held Monday, February 24th, 2025 at 1:00 PM Eastern Time (12:00 PM Central Time). To access the conference call, please register at: https://register.vevent.com/register/BI294ab16856704d199e4792cc3d8bb4b0. A dial-in will be provided upon registration.

The conference call will also be available via webcast at: https://edge.media-server.com/mmc/p/s2462hyq and the earnings release can be obtained via the Partnership web page at: https://investors.wlkpartners.com/corporate-profile/default.aspx.

WESTLAKE CHEMICAL PARTNERS LP ("WESTLAKE PARTNERS") CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
		Three Months Ended December 31,								Twelve Months Ended December 31,
			2024				2023				2024				2023
		(In thousands of dollars, except per unit data)
Revenue
Net sales—Westlake Corporation ("Westlake")		$	260,266			$	255,306			$	950,801			$	1,026,655
Net co-products, ethylene and other sales—third parties			29,794				41,967				185,095				164,136
Total net sales			290,060				297,273				1,135,896				1,190,791
Cost of sales			191,476				196,590				716,957				803,332
Gross profit			98,584				100,683				418,939				387,459
Selling, general and administrative expenses			6,559				7,867				28,495				29,751
Income from operations			92,025				92,816				390,444				357,708
Other income (expense)
Interest expense—Westlake			(5,771	)			(6,632	)			(25,701	)			(26,501	)
Other income, net			1,335				1,079				5,251				4,232
Income before income taxes			87,589				87,263				369,994				335,439
Provision for income taxes			202				206				835				813
Net income			87,387				87,057				369,159				334,626
Less: Net income attributable to noncontrolling interest in Westlake Chemical OpCo LP ("OpCo")			72,391				72,758				306,767				280,343
Net income attributable to Westlake Partners		$	14,996			$	14,299			$	62,392			$	54,283
Net income per limited partner unit attributable to Westlake Partners (basic and diluted)
Common units		$	0.43			$	0.41			$	1.77			$	1.54
Distributions declared per unit		$	0.4714			$	0.4714			$	1.8856			$	1.8856
MLP distributable cash flow		$	14,958			$	16,418			$	66,864			$	62,574
Distributions declared
Limited partner units—publicly and privately held		$	9,954			$	9,949			$	39,809			$	39,790
Limited partner units—Westlake			6,657				6,658				26,628				26,631
Total distributions declared		$	16,611			$	16,607			$	66,437			$	66,421
EBITDA		$	120,838			$	122,196			$	507,594			$	472,143

WESTLAKE CHEMICAL PARTNERS LP CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
		December 31,
			2024				2023
		(In thousands of dollars)
ASSETS
Current assets
Cash and cash equivalents		$	58,316			$	58,619
Receivable under the Investment Management Agreement—Westlake			134,557				94,444
Accounts receivable, net—Westlake			31,975				49,565
Accounts receivable, net—third parties			11,576				18,701
Inventories			4,058				4,432
Prepaid expenses and other current assets			444				442
Total current assets			240,926				226,203
Property, plant and equipment, net			903,588				943,843
Other assets, net			143,442				146,796
Total assets		$	1,287,956			$	1,316,842
LIABILITIES AND EQUITY
Current liabilities (accounts payable and accrued and other liabilities)		$	55,372			$	56,335
Long-term debt payable to Westlake			399,674				399,674
Other liabilities			3,596				4,583
Total liabilities			458,642				460,592
Common unitholders—publicly and privately held			471,328				473,513
Common unitholder—Westlake			47,373				48,993
General partner—Westlake			(242,572	)			(242,572	)
Total Westlake Partners partners' capital			276,129				279,934
Noncontrolling interest in OpCo			553,185				576,316
Total equity			829,314				856,250
Total liabilities and equity		$	1,287,956			$	1,316,842

WESTLAKE CHEMICAL PARTNERS LP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
		Twelve Months Ended December 31,
			2024				2023
		(In thousands of dollars)
Cash flows from operating activities
Net income		$	369,159			$	334,626
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization			111,899				110,203
Net loss on disposition and other			2,163				4,906
Other balance sheet changes			1,780				2,264
Net cash provided by operating activities			485,001				451,999
Cash flows from investing activities
Additions to property, plant and equipment			(48,971	)			(46,821	)
Investments with Westlake under the Investment Management Agreement			(40,000	)			(174,116	)
Maturities of investments with Westlake under the Investment Management Agreement			—				145,000
Net cash used for investing activities			(88,971	)			(75,937	)
Cash flows from financing activities
Proceeds from debt payable to Westlake			219,000				209,250
Repayment of debt payable to Westlake			(219,000	)			(209,250	)
Distributions to noncontrolling interest retained in OpCo by Westlake			(329,898	)			(315,805	)
Distributions to unitholders			(66,435	)			(66,420	)
Net cash used for financing activities			(396,333	)			(382,225	)
Net decrease in cash and cash equivalents			(303	)			(6,163	)
Cash and cash equivalents at beginning of the year			58,619				64,782
Cash and cash equivalents at end of the year		$	58,316			$	58,619

WESTLAKE CHEMICAL PARTNERS LP RECONCILIATION OF MLP DISTRIBUTABLE CASH FLOW TO NET INCOME AND NET CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited)
		Three Months Ended September 30,				Three Months Ended December 31,								Twelve Months Ended December 31,
			2024				2024				2023				2024				2023
		(In thousands of dollars)
Net cash provided by operating activities		$	126,071			$	132,469			$	107,671			$	485,001			$	451,999
Changes in operating assets and liabilities and other			(21,971	)			(45,082	)			(20,614	)			(115,842	)			(117,373	)
Net income			104,100				87,387				87,057				369,159				334,626
Add:
Depreciation, amortization and disposition of property, plant and equipment			28,528				27,582				28,796				114,244				115,136
Less:
Contribution to turnaround reserves			(11,903	)			(11,829	)			(7,682	)			(43,880	)			(29,520	)
Maintenance capital expenditures			(17,753	)			(15,923	)			(11,805	)			(50,731	)			(49,212	)
Distributable cash flow attributable to noncontrolling interest in OpCo			(85,093	)			(72,259	)			(79,948	)			(321,928	)			(308,456	)
MLP distributable cash flow		$	17,879			$	14,958			$	16,418			$	66,864			$	62,574

WESTLAKE CHEMICAL PARTNERS LP RECONCILIATION OF EBITDA TO NET INCOME, INCOME FROM OPERATIONS AND NET CASH PROVIDED BY OPERATING ACTIVITIES (Unaudited)
		Three Months Ended September 30,				Three Months Ended December 31,								Twelve Months Ended December 31,
			2024				2024				2023				2024				2023
		(In thousands of dollars)
Net cash provided by operating activities		$	126,071			$	132,469			$	107,671			$	485,001			$	451,999
Changes in operating assets and liabilities and other			(21,971	)			(45,082	)			(20,614	)			(115,842	)			(117,373	)
Net income			104,100				87,387				87,057				369,159				334,626
Less:
Other income, net			1,325				1,335				1,079				5,251				4,232
Interest expense—Westlake			(6,698	)			(5,771	)			(6,632	)			(25,701	)			(26,501	)
Provision for income taxes			(216	)			(202	)			(206	)			(835	)			(813	)
Income from operations			109,689				92,025				92,816				390,444				357,708
Add:
Depreciation and amortization			28,112				27,478				28,301				111,899				110,203
Other income, net			1,325				1,335				1,079				5,251				4,232
EBITDA		$	139,126			$	120,838			$	122,196			$	507,594			$	472,143

 

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Contact—(713) 585-2900

Investors—Steve Bender

Media—L. Benjamin Ederington

Source: Westlake Chemical Partners

FAQ

What was WLKP's net income for Q4 2024?

Westlake Chemical Partners reported net income of $15.0 million ($0.43 per unit) for Q4 2024, slightly higher than $14.3 million in Q4 2023.

How much is WLKP's Q4 2024 quarterly distribution?

WLKP declared a quarterly distribution of $0.4714 per unit for Q4 2024, payable on February 25, 2025.

What was WLKP's full-year 2024 operating cash flow?

WLKP's cash flows from operating activities for full-year 2024 were $485.0 million, up $33.0 million from 2023.

How long will WLKP's Petro 1 turnaround in 2025 last?

The Petro 1 ethylene unit turnaround, which began in January 2025, is expected to last approximately 60 days.

What was WLKP's distribution coverage ratio in Q4 2024?

WLKP's trailing twelve-month distribution coverage ratio was 1.01x in Q4 2024, down from 1.03x in Q3 2024.