Q1 2022 Westlake Chemical Partners LP Earnings Call

Good afternoon, Thank you for standing by.

So Westlake chemical partners.

Earnings Conference call.

We'll be in a listen only mode.

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I would now like to turn the call.

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Chemical.

Sure.

Sir you may begin.

Thank you good afternoon, everyone and welcome to the Westlake Chemical partners first quarter 2022 conference call I'm joined today by Albert Chao, our President and CEO .

Steve Bender, our executive Vice President and CFO and other members of our management team.

During this call we refer to ourselves as Westlake partners or the partnership.

References to Westlake referred to our parent company Westlake Corporation.

And references to Opco refer to Westlake chemical Opco LP, a subsidiary of Westlake and the 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 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, Westlake partners issued a press release with details of our first quarter 2022 financial and operating results. This document is available in the press release section of our webpage at W. L K partners Dot com.

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

The replay may be accessed by dialing the following numbers domestic callers should dial 855, 850 92056 inch.

International callers may access the replay at 4045373406, the access code is 670 3900 too.

Please note that information reported on this call speaks only as of today may three 2022.

And therefore, you're advised that time sensitive information may no longer be accurate as of the time of any replay.

I would finally advise you that this conference call is being broadcast live through an internet webcast system that can be accessed on our webpage at W. L K partners Dot com.

Now I would like to turn the call over to Albert Chao Albert.

Thank you Jeff.

Everyone and thank you for joining us to discuss our first quarter 2022 results.

In this mornings press release, we reported Westlake Partners' first quarter 2022, net income of $16 million.

<unk> 46 cents per unit.

Strong production after the Petro two turnaround paired with healthy third party sales margins during the quarter.

Drove consolidated net income, including <unk> of $81 million.

Westlake Partners' consistently demonstrated the stability generated from our fixed margin ethylene sales agreement for 95% of annual production planned production and deliver stable fee based cash flow through its insulated quantities.

Minimizing market volatility and other production risks.

This high degree of cash flow stability.

And to predict the predictability of our business is.

I supported long history of reliable distributions.

This quarters distribution is the 31st consecutive quarterly distribution since our IPO.

I would now like to turn our call over to Steve provide more detail on the financial and operating results for the quarter, Steve. Thank you Robert and good afternoon, everyone.

In this morning's press release, we reported Westlake Partners' first quarter 2022, net income of $66 million or 46 cents per unit.

Consolidated net income, including up goes earnings was $81 million on consolidated net sales of $291 million.

<unk> had distributable cash flow for the quarter of $19 million or <unk> 55 per unit.

First quarter 2022, net income for Westlake partners of $16 million increased by $1 million compared to first quarter of 2021 partnership net income of $15 million the.

Partnership benefited from a strong production following the turnaround of Petro two that was completed in the fourth quarter of 2021 and solid third party sales margins early in the first quarter.

Distributable cash flow of $19 million for the first quarter of 2022 was an increase of $3 million compared to first quarter of 2021 distributable cash flow of $16 million driven by solid production and that lower turnaround reserve.

Turning our attention to the balance sheet and cash flows at the end of the first quarter, we had consolidated cash balance and cash investments with Westlake through our investment management agreement totaling a $130 million.

Consolidated debt at the end of the quarter was $400 million of which $377 million was at the partnership and the remaining $23 million was that up though in.

In the first quarter Opco spent $20 million on capital expenditures, we maintained our strong leverage metrics with consolidated leverage ratio below one times.

On May <unk> 2022, we announced a quarterly distribution of 40 714 cents per unit with respect to the first quarter of 2022.

Since our IPO in 2014, the partnership has made 31 consecutive consecutive quarterly distributions to our unit holders.

Grown distributions, 71% since the partnership's original minimum quarterly distribution of <unk> 27, and a half cents per unit.

For the 12 months ending March 31, 2020 to distributable cash flow provided coverage of one one times the declared distributions.

The partnerships first quarter distribution will be paid on may 26th 2022 to unit holders of record of May 12 2022.

The partnership's predictable fee based cash flow provides a significant benefit in today's economic environment and is differentiated by the consistency of our earnings and cash flows.

Therefore, we are able to sustain our current distribution without accessing the capital markets, while maintaining our long term targeted one one times distribution coverage.

For modeling purposes, we have no planned turnarounds in 2022, our next turnaround is that our Petro one facility in Lake Charles Louisiana, which is currently planned for 2023, and we will provide more details on the turnaround once we complete our planning now.

Now I'll turn the call back over to Albert to make some closing comments Albert Thank you Steve.

We're pleased with the partnership's financial and operational performance through the first quarter and believe this should be a solid year, both operationally and financially.

We remain optimistic about the continuing demand for ethylene driven by robust downstream derivatives needs by our parent Westlake and a strong end use market demand and consumer products and packaging.

Our ethylene sales agreement, which provides a predictable fee based cash flow.

Structure from our take or pay contract with Westlake, 495% of <unk> production.

Continue to deliver the stable and predictable cash flows.

Driven by continued elevated demand from healthy market fundamentals, we feel confident our third party sales to continue to deliver positive margins in 2022.

We maintained a strong balance sheet Blizzcon service financial and leverage metrics.

As we continue to navigate market conditions, we will evaluate opportunities via our four levers of growth in the future, including increases our ownership interest of Opco.

Acquisitions of other qualified income streams.

Organic growth opportunities such as expansions of our current ethylene facilities.

That negotiation of a higher fixed margin ethylene sales agreement with Westlake.

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

As always we will continue to operate safely.

Along with being good stewards of the environment, where we work and live.

Thank you very much for listening to our first quarter earnings call.

Now I'll turn the call back over to Jeff. Thank.

Thank you Albert before we begin taking questions I would like to remind you that a replay of this teleconference will be available two hours. After the call has ended we will provide that number again at the end of the call Chris will now take questions.

Thank you Sir.

We take questions.

Just want to remind you that.

To ask a question you need to plan.

One on your telephone.

Your question please.

Yes.

The Q&A round.

And we have a question from Matthew Blair.

Your line is open.

Hey, good morning, Albert and Steve.

Hi, Matthew how are you good morning, it well good afternoon. Good thanks.

Just I was hoping you could talk about you know as you look at that potential growth.

I guess the potential for asset drops.

Just given you called the the distribution consistent for a couple of years now.

What markers are you looking at.

To restart that distribution growth.

Do you feel that it's more of a question of evaluation.

The current MLP or is it more of a question of investor appetite for additional MLP equity.

Yes, so Matthew it's Steve and so I would say that we've seen some capital flow into the markets in 2021, and as we see more capital flow into the markets.

In this year and in the future I think that will provide the ability for the partnership to undertake some of these accretive opportunities that we see to use the four levers of growth that Albert made reference to.

And so certainly where the unit.

Where the units are trading I think is.

<unk> the stability, we think that the valuation certainly is not fully reflective of the value that we can provide to unit holders, but certainly to your question of the ability to grow the distribution, we stand ready to do that so long as he was adequate capital flow into this space to be able to do that and accretive manner.

It sounds good I'll leave it there thank you.

Thank you very much Matthew.

Thank you.

And again.

Sure.

Question.

One on your telephone.

Good question.

Okay.

One moment.

The Q&A roster.

Yes.

At this time the Q&A session has now ended.

I will now turn the call back to Jeff.

Holly.

Thank you again for participating in today's call. We hope you'll join US for our next conference call to discuss our second quarter 2022 results.

Thank you.

Westlake Chemical partners first quarter earnings conference call.

As a reminder.

Paul will be available for replay beginning.

After the call has ended and maybe accessed.

11, 59 P M. Eastern time on Tuesday May 10, 2022.

Mike calling the following numbers domestic callers should dial eight.

Okay.

Thanks.

International callers may have.

To access the replay.

Seven.

Thanks.

This call.

Thanks, Kevin.

900.

This will conclude today's call goodbye and have a plan.

Good day.

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