Westlake Chemical Partners LP Announces First Quarter 2021 Results
Westlake Chemical Partners LP (NYSE: WLKP) reported a net income of $15.1 million ($0.43 per unit) for Q1 2021, down from $17.7 million in Q1 2020, primarily due to a severe winter storm's impact on ethylene production. Cash flows from operating activities rose to $155.4 million, driven by the recovery of the 2020 Buyer Deficiency Payment. MLP distributable cash flow decreased to $16.2 million. The company has declared a quarterly distribution of $0.4714 per unit, marking its 27th consecutive distribution to unitholders.
- Cash flows from operating activities increased by $44.4 million year-over-year, reaching $155.4 million.
- The long-term Ethylene Sales Agreement provided stability and minimized operational disruptions.
- The company declared a quarterly distribution of $0.4714 per unit, maintaining a strong distribution history.
- Net income dropped by $2.6 million year-over-year, down from $17.7 million to $15.1 million due to winter storm impacts.
- MLP distributable cash flow declined by $2.1 million compared to Q1 2020.
Westlake Chemical Partners LP (NYSE: WLKP) (the "Partnership") today reported net income attributable to the Partnership of
Net income attributable to the Partnership in the first quarter of 2021 of
First quarter 2021 net income attributable to the Partnership of
"The Partnership had a solid start to 2021 driven by robust demand from downstream ethylene derivative products and a strong pricing environment for our third-party ethylene sales. The severe winter weather led to unplanned production outages at our facilities in Louisiana and Kentucky. Due to the dedication of our employees at these facilities, we were able to quickly resume operations. The protective provisions of our long-term Ethylene Sales Agreement with Westlake Chemical continued to prove beneficial and minimized the impact on the Partnership of the disruptions to our operations," said Albert Chao, President and Chief Executive Officer. "Our long-term ethylene sales agreement with Westlake Chemical enabled us to continue to deliver reliable earnings and cash flows for the quarter, which provided us the ability to deliver ratable distributions to our unitholders."
OpCo's Ethylene Sales Agreement with Westlake Chemical is designed to provide for stable and predictable cash flows. The agreement provides that
On May 3, 2021, the Partnership announced that the Board of Directors of Westlake Chemical Partners GP LLC had approved a quarterly distribution for the first quarter of 2021 of
The statements in this release and the related teleconference relating to matters that are not historical facts, such as those with respect to cost recovery of expenses incurred in the first quarter of 2021, 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, the COVID-19 pandemic 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 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, 2020, which was filed with the SEC in March 2021.
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 (
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'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. Buyer deficiency fees as well as recovery of certain other costs to which OpCo is entitled for ethylene that OpCo would have produced are included in net income in the periods in which they are recognized.
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 a
Westlake Chemical Partners LP Conference Call Information:
A conference call to discuss Westlake Chemical Partners' first quarter 2021 results will be held Tuesday, May 4, 2021 at 1:00 p.m. Eastern Time (12:00 p.m. 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 332 78 38.
A replay of the conference call will be available beginning two hours after its conclusion until 11:59 p.m. Eastern Time on Tuesday, May 11, 2021. To hear a replay, dial (855) 859-2056 or (404) 537-3406 for international callers. The replay passcode is 332 78 38.
The conference call will also be available via webcast at: https://edge.media-server.com/mmc/p/usgwdp4o 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) |
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Three Months Ended March 31, |
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2021 |
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2020 |
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(In thousands of dollars, except per unit data) |
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Revenue |
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|
|
|
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Net sales—Westlake Chemical Corporation ("Westlake") |
|
$ |
219,803 |
|
|
$ |
214,828 |
|
Net co-product, ethylene and other sales—third parties |
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|
48,404 |
|
|
|
35,721 |
|
Total net sales |
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|
268,207 |
|
|
|
250,549 |
|
Cost of sales |
|
|
180,508 |
|
|
|
147,001 |
|
Gross profit |
|
|
87,699 |
|
|
|
103,548 |
|
Selling, general and administrative expenses |
|
|
8,673 |
|
|
|
6,196 |
|
Income from operations |
|
|
79,026 |
|
|
|
97,352 |
|
Other income (expense) |
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|
|
|
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Interest expense—Westlake |
|
|
(2,236 |
) |
|
|
(3,950 |
) |
Other income, net |
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|
7 |
|
|
|
585 |
|
Income before income taxes |
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|
76,797 |
|
|
|
93,987 |
|
Income tax provision |
|
|
175 |
|
|
|
217 |
|
Net income |
|
|
76,622 |
|
|
|
93,770 |
|
Less: Net income attributable to noncontrolling interests in Westlake Chemical OpCo LP ("OpCo") |
|
|
61,476 |
|
|
|
76,023 |
|
Net income attributable to Westlake Partners |
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$ |
15,146 |
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|
$ |
17,747 |
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|
|
|
|
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Net income per limited partners unit attributable to Westlake Partners (basic and diluted) |
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Common units |
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$ |
0.43 |
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$ |
0.50 |
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|
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Distributions declared per unit |
|
$ |
0.4714 |
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$ |
0.4714 |
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|
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MLP distributable cash flow |
|
$ |
16,245 |
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|
$ |
18,337 |
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|
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Distributions declared |
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Limited partner units—publicly and privately held |
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$ |
9,936 |
|
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$ |
9,934 |
|
Limited partner units—Westlake |
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|
6,657 |
|
|
|
6,657 |
|
Total distributions declared |
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$ |
16,593 |
|
|
$ |
16,591 |
|
EBITDA |
|
$ |
106,575 |
|
|
$ |
123,968 |
|
WESTLAKE CHEMICAL PARTNERS LP CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) |
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March 31,
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December 31,
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(In thousands of dollars) |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
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$ |
17,289 |
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$ |
17,154 |
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Receivable under the Investment Management Agreement—Westlake |
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|
187,239 |
|
|
|
123,228 |
|
Accounts receivable, net—Westlake |
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|
50,969 |
|
|
|
108,028 |
|
Accounts receivable, net—third parties |
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|
19,702 |
|
|
|
11,029 |
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Inventories |
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|
3,171 |
|
|
|
3,474 |
|
Prepaid expenses and other current assets |
|
|
217 |
|
|
|
392 |
|
Total current assets |
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|
278,587 |
|
|
|
263,305 |
|
Property, plant and equipment, net |
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|
1,039,261 |
|
|
|
1,050,677 |
|
Other assets, net |
|
|
39,286 |
|
|
|
42,506 |
|
Total assets |
|
$ |
1,357,134 |
|
|
$ |
1,356,488 |
|
|
|
|
|
|
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LIABILITIES AND EQUITY |
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|
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|
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Current liabilities (accounts payable and accrued liabilities) |
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$ |
42,572 |
|
|
$ |
39,754 |
|
Long-term debt payable to Westlake |
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|
399,674 |
|
|
|
399,674 |
|
Other liabilities |
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|
1,780 |
|
|
|
1,923 |
|
Total liabilities |
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|
444,026 |
|
|
|
441,351 |
|
Common unitholders—publicly and privately held |
|
|
470,834 |
|
|
|
471,701 |
|
Common unitholder—Westlake |
|
|
47,690 |
|
|
|
48,270 |
|
General partner—Westlake |
|
|
(242,572 |
) |
|
|
(242,572 |
) |
Total Westlake Partners partners' capital |
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|
275,952 |
|
|
|
277,399 |
|
Noncontrolling interest in OpCo |
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|
637,156 |
|
|
|
637,738 |
|
Total equity |
|
|
913,108 |
|
|
|
915,137 |
|
Total liabilities and equity |
|
$ |
1,357,134 |
|
|
$ |
1,356,488 |
|
WESTLAKE CHEMICAL PARTNERS LP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
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Three Months Ended March 31, |
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2021 |
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2020 |
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(In thousands of dollars) |
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Cash flows from operating activities |
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|
|
|
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Net income |
|
$ |
76,622 |
|
|
$ |
93,770 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
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|
|
|
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Depreciation and amortization |
|
|
27,542 |
|
|
|
26,031 |
|
Other balance sheet changes |
|
|
51,244 |
|
|
|
(8,840 |
) |
Net cash provided by operating activities |
|
|
155,408 |
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