Q4 2024 Westlake Chemical Partners LP Earnings Call
Speaker Change: Good afternoon. Thank you for standing by. Welcome to the Westlake Chemical Partners' fourth quarter and full year 2024 earnings conference call. During the presentation, all participants will be in a listen-only mode. After the speaker's remarks, you'll be invited to participate in the question and answer session. As a reminder, this conference is being recorded today, February 24th, 2025. I would now like to turn the call over to your host, John Zeller, Westlake Chemical Partners' Vice President and Treasurer. Sir, you may begin.
A replay of today's call will be available beginning two hours after the conclusion of this call.
Speaker Change: This replay can be accessed via the partnership website. Please note that information reported on this call speaks only as of today February 24th 2025, and therefore, you're advised that time sensitive information may no longer be accurate as of the time of any replay I.
Speaker Change: 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 dotcom.
Speaker Change: Now I'd like to turn the call over to John Marc Gilson, John Mark.
Speaker Change: Thank you John and good afternoon, everyone and thank you for joining us to discuss our fourth quarter and full year 2024 results.
In this mornings press release, we reported Westlake stopped in their full year 2024, net income of $62 million or a dollar and 77 cents per unit.
Speaker Change: Consolidated net income including Opco.
Speaker Change: $369 million for the full year 'twenty 'twenty four.
Westlake Partners' financial results.
10 years to demonstrate the stability generated from our fixed margin ethylene sales agreement for 95% of annual planned production each year.
Speaker Change: Insulating us from market volatility and other production risk.
Speaker Change: This structure combined with our investment grade sponsor Westlake produces predictable earnings and stable cash flows.
Speaker Change: This was evident in 2024, and we delivered another year of solid results and sustain distributions to our unitholders.
Speaker Change: The stable fee based cash flow generated by our fixed margin ethylene I'd say its contract with Westlake formed the foundation for us to deliver long term value to our unit holders.
Speaker Change: This quarters distribution is the 47 for the second.
Speaker Change: Consecutive quarterly distribution since our IPO in July of 'twenty 14, without any reductions.
Steven: I would now like to turn our call over to Steven to provide more detail.
Steven: On the financial and operating results for the quarter and full year Steve.
Speaker Change: Thank you John Marc and good afternoon, everyone.
Speaker Change: In this morning's press release, we reported Westlake Partners' fourth quarter 2024, net income of $15 million or 43 cents per unit.
Speaker Change: <unk> net income, including <unk> earnings was 87 million on consolidated net sales of $290 million.
Speaker Change: The partnership had distributable cash flow for the quarter of $15 million or <unk> 42 per unit.
Speaker Change: Fourth quarter 2024, net income for Westlake partners of $15 million increased by $1 million compared to the fourth quarter of 2023 partnership net income of $14 million.
Speaker Change: The higher net income was primarily driven by lower SG&A expense in the fourth quarter of 2024.
Speaker Change: Distributable cash flow of $15 million for the fourth quarter 2024 decreased by $1 million compared to the fourth quarter of 2023 distributable cash flow of $16 million due primarily to higher turnaround reserve in maintenance capital contributions to support the planned Petro one turnaround.
Speaker Change: For the full year of 2024, net income was $62 million or $1.77 per unit, which increased by $8 million compared to full year 2023, net income of $54 million.
Speaker Change: The increase in net income attributable to the partnership was due to higher third party ethylene sales prices and margins.
Speaker Change: Our full year 2020 for MLP distributable cash flow of $67 million increased by $4 million compared to MLP distributable cash flow of $63 million for the full year of 2023 due to higher net income.
Speaker Change: Our just our distribution coverage for the full year of 2024 was 1.01 times.
Speaker Change: Turning our attention to the balance sheet and cash flows at the end of the fourth quarter, we had consolidated cash and cash investments with Westlake through our investment management agreement totaling $193 million.
Speaker Change: Long term debt at the end of the quarter was.
Speaker Change: $400 million of which $377 million was at the partnership and the remaining $23 million was at Opco.
Speaker Change: In 2020 for Opco spent $49 million on capital expenditures.
Speaker Change: We maintained our strong leverage metrics with a consolidated leverage ratio below one times.
Speaker Change: On January 27th 2025, we announced a quarterly distribution of 47.14 cents per unit with respect to the fourth quarter of 2024.
Speaker Change: Since our IPO in 2014, the partnership has made 42 consecutive quarterly distributions to our unit holders and we have grown distributions, 71% since the partnership's original minimum quarterly distribution of <unk> 27, and a half cents per unit.
Speaker Change: The partnership's fourth quarter distribution will be paid on February 25th.
Speaker Change: Holders of record February seven 2025.
Speaker Change: The partnership's predictable fee based cash flow continues to.
Speaker Change: To prove beneficial in today's economic environment is differentiated by the consistency of our earnings and cash flows.
Speaker Change: Looking back since our IPO in July of 2014, we have maintained a cumulative distribution coverage ratio of approximately one one times and the partnership stability in cash flows we were able to sustain our current distributions without the need to access the capital markets.
Speaker Change: For modeling purposes, we have one plant turnaround in 2025 at our Petro one ethylene unit in Lake Charles Louisiana.
Speaker Change: This turnaround began at the end of January and is projected to last approximately 60 days.
Speaker Change: In prior years, where we had a planned turnaround such as this one the distribution coverage ratio is impacted for the period before recovering and for this turnaround we would expect a similar result.
Speaker Change: The cost of this turnaround has been included in the amount we charge to Westlake and has been fully reserved for and funded as we commenced the turnaround now do I turn the call back over to John Mark to make some closing comments John Marc Thank you Steven.
John Marc: We are pleased with the partnership financial and operational performance to the fourth quarter and the year as a whole.
John Marc: The stability of our business model and associated cash flows demonstrate.
John Marc: Demonstrate the benefit that our ethylene sales agreement.
John Marc: And its protective provisions.
John Marc: Slide the partnership true predictable long term earnings and cash flows.
John Marc: During 2020 for North American spot ethylene prices and margins improved due to a tightening of industry supply demand conditions.
John Marc: True Opco the partnership was able to benefit from these improving conditions to higher third party ethylene sales prices and margin.
John Marc: Thus far in 2025 third party Atlanta sales prices and margins are again at relatively favorable levels, which should benefit our financial performance once again.
John Marc: Turning to our capital structure, we maintain a strong balance sheet with conservative financial and leverage metrics.
John Marc: As we continue to navigate market conditions.
John Marc: We will evaluate opportunities via our four levers of growth in the future including.
John Marc: Increases of our ownership interest of Opco.
John Marc: Acquisitions of other qualified income streams.
John Marc: Organic growth opportunities such as expansions of our current ethylene facilities.
John Marc: And negotiation of a higher fixed margin ethylene sales agreement with Westlake.
John Marc: We remain focused on our ability to continue to provide long term value and distributions to our unit holders.
John Marc: As always we will continue to focus on safe operations.
John Marc: Along with being good stewards of the environment, where we work and live as part of our broader sustainability efforts.
John: Thank you very much for listening to our fourth quarter and full year 'twenty 'twenty four earnings call now I will turn the call back over to John.
Speaker Change: John Mark 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.
John: We will provide instructions to access the replay at the end of the call.
Speaker Change: Kevin We will now take questions.
Thank you ladies and gentlemen, if you have a question or a comment at this time. Please press star one on your telephone. If your question has been answered you were seeing with yourself from the queue. Please press star one again.
Speaker Change: One moment for our first question.
Speaker Change: First question comes from Matthew Blair with T. P. H your line is open.
Matthew Blair: Thank you and good afternoon, everyone.
Matthew Blair: On the on the parent call, but W. L. K call. There was some talk about incremental cost cuts targets in 2025.
Matthew Blair: <unk> be interested in and deemed MLP arrangement as a way to cut costs further.
Matthew Blair: Matthew It's Dave I would say that as we look at opportunities for the partnership.
Matthew Blair: It really the value proposition. The partnership has brought forward and while there are incremental administrative costs to administer the operations of the partnership as you look at the value for the value proposition. The partnership has provided to Westwood continues to provide a value from an from a multiple perspective when you look at the EBIT to EBITDA.
Matthew Blair: Multiple.
Matthew Blair: So therefore, while it is an administrative cost the value proposition offsets that administrative costs. So for cost control reasons that would not be a consideration.
Speaker Change: Okay. Thank you and then could you talk a little bit more about the expected financial impact from this 60 day planned turnaround I think you mentioned that the coverage ratio would come down so is the way to think about this.
<unk> headwind on things like earnings per unit and on cash flow.
Matthew Blair: Yes, and so as you think about this historically Matthew.
Matthew Blair: Coverage does take an impact from the loss in production during that period of course from a carton.
Matthew Blair: From a capital perspective, we've already fully reserved and have funded this upcoming turnaround and as we speak today, we are in the midst of that turnaround to net right now.
Matthew Blair: So I would expect the earnings impact, but as the unit comes back on stream. After the end of this turnaround coverage are to fully recover and so as we look forward into 'twenty five and beyond I expect the coverage target that we have said being one one times, we should resume.
Matthew Blair: Go back over the many years the 10 years since this.
Matthew Blair: <unk> was formed back in 2014, we've had a number of turnarounds and this is the exact type of performance. We have exhibited and I expect to continue the same kind of performance. This is not an unusual turnaround and we expect it to have the same kind of performance with it recovering full production after the turnaround in earnings associated with that.
Matthew Blair: Yeah.
Matthew Blair: Great. Thank you very much.
Matthew Blair: Youre welcome.
John Zeller: At this time the Q&A session has now ended I will now turn the call back over to John Zeller.
John Zeller: Thank you again for participating in today's call. We hope you'll join US for our next conference call to discuss our first quarter 2025 results.
John Zeller: Thank you for participating in today's Westlake chemical partners fourth quarter and full year 2024 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 Monday March <unk> 2025, the replay can be accessed by it can be accessed via the partnership with <unk>.
John Zeller: Goodbye and have a wonderful day.
John Zeller: No.
John Zeller: Okay.
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John Zeller: Okay.
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John Zeller: Okay.
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