Q1 2025 Westlake Chemical Partners LP Earnings Call
Unknown Executive: Good afternoon. Thank you for standing by.
Good afternoon. Thank you for standing by and welcome to the Westlake Chemical Partners' first quarter 2025 earnings conference call during.
Unknown Executive: Welcome to the Westlake Chemical Partners First Quarter 2025 Earnings Conference. During the presentation, all participants will be in a listen-only mode. After the speaker's remarks, you'll be invited to participate in a question and answer session. As a reminder, this conference is being recorded today, May 2nd, 2025.
During the presentation, all participants will be in a listen only mode.
After the Speakers' remarks, you'll be invited to participate in a question and answer session.
As a reminder, this conference is being recorded today may 2nd 2025.
John Zoeller: I would like to turn the call over to today's host, John Zoeller, Westlake Chemical Partners Vice President and Treasurer. Sir, you may begin. Thank you.
Speaker Change: I would now like to turn the call over to todays host John Zeller, Westlake Chemical Partners', Vice President and Treasurer, Sir you may begin.
Jean-Marc Gilson: Good afternoon, everyone, and welcome to the Westlake Chemical Partners first quarter 2025 conference call.
Speaker Change: Thank you good afternoon, everyone and welcome to the Westlake Chemical partners first quarter 2025 conference call I'm joined today by Albert Chao, Our executive Chairman, John Marc Gilson, our President and CEO, Steve Bender, Our executive Vice President and Chief Financial Officer, and other members of our management team during this call.
Jean-Marc Gilson: I am joined today by Albert Chao, our Executive Chairman, Jean-Marc Gilson, 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 the partnership, which owns certain Oliphant's assets. Additionally, when we refer to distributable cash flow, we were referring to Westlake Chemical Partners MLP distributable cash flow. Definitions of these terms are available on the partnership's website.
Speaker Change: We refer to ourselves as Westlake partners or the partnership references to Westlake referred to our parent company Westlake Corporation and references to Opco referred to Westlake Chemical Opco L. P. A subsidiary of Westlake and the partnership which owns certain olefins assets. Additionally, when we refer to distributable cash flow we were referring to.
Speaker Change: Westlake chemical partners' MLP distributable cash flow definitions of these terms are available on the partnership's website.
Jean-Marc Gilson: 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.
Speaker Change: 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.
Speaker Change: 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.
Jean-Marc Gilson: This morning, Westlake Partners issued a press release with details of our first quarter 2025 financial operating results. This document is available in the press release section of our web page at wlkpartners.com.
Speaker Change: This morning bus like partners issued a press release with details of our first quarter 2025 financial and operating results.
Speaker Change: The document is available in the press release section of our webpage at W. L K partners Dot com.
Unknown Executive: A replay of today's call will be available beginning two hours after the conclusion of this call. The replay can be accessed via the partnership website.
Speaker Change: A replay of today's call will be available beginning two hours. After the conclusion of this call. The replay can be accessed via the partnership website. Please note that information reported on this call speaks only as of today May 2025, and therefore, you're advised that time sensitive information may no longer be accurate as of the time of any <unk>.
Unknown Executive: Please note that information reported on this call speaks only as of today, May 2, 2025, and therefore you are 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 web page at WLKPartners.com.
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. O K partners Dot com.
Jean-Marc Gilson: Now I'd like to turn the call over to Jean-Marc Gilson. Jean-Marc? Thank you, John, and good afternoon, everyone. And thank you for joining us to discuss our first quarter 2025 results. In this morning's press release, we reported Westlake's partner first quarter 2025 net income of $5 million or 14 cents per unit. Compared to the fourth quarter of 2024, our first quarter sales and earnings were impacted by the planned turnaround at our Petro One ethylene unit in Lake Charles, Louisiana, which resulted in lower production and sales volume, in addition to higher maintenance capital expenditure. The stability of Westlake's partner business model is consistently demonstrated through our Fixed Margin Excellence Agreement, which minimizes market volatility and other production risks.
Speaker Change: Now I'd like to turn the turn the call over to John Marc Gilson, John Marc. Thank you, Jonathan and good afternoon, everyone and thank you for joining us to discuss our first quarter 2025 results.
Speaker Change: In this morning's press release, we reported Westlake Partners' first quarter 2025, net income of 5 million or 14 cents per unit.
Speaker Change: Compared to the fourth quarter of 2024, our first quarter earnings were impacted by the planned turnaround at <unk>.
Speaker Change: Metro one ethylene unit in Lake, Charles Louisiana, which resulted.
Speaker Change: In lower production and sales volume in addition to higher maintenance capital expenditure.
Speaker Change: The stability of Westlake partner business is consistently demonstrated to our fixed <unk>.
Speaker Change: Jim ethylene sales agreement, which minimized as market volatility and other production risk.
Jean-Marc Gilson: The high degree of stability in cash flow, when paid with the predictability of our business, has enabled us to deliver the long history of reliable distributions and coverage.
Speaker Change: The higher degree the high degree of stability in cash flow when paired with the predictability of our business has enabled us to deliver the long history of reliable distributions and coverage.
Jean-Marc Gilson: This quarter distribution is the 43rd consecutive quarterly distribution since our IPO in July of 2014 without any reduction.
Speaker Change: This quarter distribution is the 14th consecutive quarterly distribution since our IPO in July of 2014 without any reductions.
Steve Bender: 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' first quarter 2025 net income of $5 million, or $0.14 per unit. Consolidated net income including OPCO's earnings was $42 million on consolidated net sales of $238 million. The partnership had distributable cash flow for the quarter of $5 million or $0.13 per unit.
Speaker Change: I'd now like to turn our call over to Steven to provide more detail on the financial and operating results for the quarter Steve.
Steven: Thank you John Marc and good afternoon, everyone.
Steven: In this morning's press release, we reported Westlake Partners' first quarter 2025, net income of $5 million or <unk> 14 per unit.
Steven: Consolidated net income, including <unk> earnings was $42 million on consolidated net sales of $238 million.
Steven: The partnership had distributable cash flow for the quarter of $5 million or <unk> 13 per unit.
Steve Bender: First quarter 2025 net income for Westlake Partners of $5 million was $10 million below the first quarter 2024 partnership net income, primarily due to lower production and sales volume as a result of the planned turnaround at Petro One. Distributable cash flow of $5 million for the first quarter of 2025 decreased by 12 million compared to the first quarter of 2024 due to the lower production and sales volume and higher maintenance capital expenditures as a result of the Petro One planned turnaround.
Steven: First quarter 2025, net income for Westlake partners of $5 million was $10 million below the first quarter 2020 for partnership net income primarily due to lower production and sales volume as a result of the planned turnaround at Petro one.
Steven: Distributable cash flow of $5 million for the first quarter of 2025 decreased by $12 million compared to the first quarter of 2024 due to the lower production and sales volume and higher maintenance capital expenditures as a result of the Petro one planned turnaround.
Steve Bender: 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 $154 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 OPCO. In the first quarter of 2025, OPCO spent $16 million on capital expenditure. We maintained our strong leverage metrics with a consolidated leverage ratio of approximately one time.
Steven: 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 $154 million.
Steven: Long term debt at the end of the quarter was $400 million.
Steven: Of which $377 million was at the partnership and the remaining $23 million was at Opco.
Steven: In the first quarter of 2025, Opco spent $16 million on capital expenditures.
Steven: We maintained our strong leverage metrics with a consolidated leverage ratio of approximately one times.
Steve Bender: On April 30, 2025, we announced a quarterly distribution of 47.14 cents per unit with respect to the first quarter of 2025. Since her IPO in 2014, the partnership has made 43 consecutive quarterly distributions to unit holders, and we have grown distributions 71% since the partnership's original minimum quarterly distribution of $0.275 per unit.
Steven: On April 32025, we announced a quarterly distribution of $47. One four cents per unit with respect to first quarter of 2025.
Steven: Since our IPO in 2014, the partnership has made 43 consecutive quarterly distributions to unitholders and we have grown distributions, 71% since the partnership's original minimum quarterly distribution of <unk> 27, and a half cents per unit.
Steve Bender: Partnership's first quarter distribution will be paid on May 29, 2025 to unit holders of record May 13, 2025. Partnerships predictable fee based cash flow continues to prove beneficial in today's economic environment and is differentiated by the consistency of our earnings and cash flows. Looking back, since our IPO in July of 2014, we have maintained a cumulative distribution coverage ratio of approximately 1.1 times, and with a partnership stability in cash flows, we are able to sustain our current distribution without the need to access the capital market.
Steven: The partnerships first quarter distribution will be paid on may 29th 2025% to unit holders of record May 13 2025.
Steven: The partnership's predictable fee based cash flow continues to prove beneficial in today's economic environment.
Steven: And is differentiated by the consistency of our earnings and cash flows looked.
Steven: Looking back since our IPO in July of 2014, we have maintained a cumulative distribution coverage ratio of approximately one one times and where the partnership stability in cash flows we were able to sustain our current distributions without the need to access the capital markets.
Steve Bender: For modeling purposes, our Petro One ethylene unit began the restart from its planned turnaround on April 12, and continues to ramp up to meet market demand needs. As John and Mark mentioned, we have no further planned turnarounds in 2025 or 2026.
Steven: For modeling purposes, our Petro one ethylene unit began the restart from its planned turnaround on April 12, and.
Steven: Continuous trend up ramp up to meet market demand needs.
Steven: As John Mark mentioned, we have no further planned turnarounds in 2025 or 2026.
Jean-Marc Gilson: Now I'd like to turn the call back over to Jean-Marc to make some closing comments.
Speaker Change: Now I'd like to turn the call back over to John Mark to make some closing comments Sean Mark. Thank you. Steve we are pleased with the successful completion of the Petro one turnaround which positions us for solid production levels in the future.
Jean-Marc Gilson: Jean-Marc. Thank you, Steve. We are pleased with the successful completion of the Petro One turnaround, which positions us for solid production levels in the future. Our first quarter financial performance was consistent with our expectations and prior experience during a period where a significant turnaround temporarily impacts our production and sales volume.
Speaker Change: Our first quarter financial performance was consistent with our expectations and prior year experience during a period, where a significant turnaround temporarily impacts our production and sales volume.
Jean-Marc Gilson: Turning to our outlook, global trade tensions have intensified in recent weeks, creating a heightened atmosphere of uncertainty for businesses and investors. While trade negotiations are likely to continue to cause some market volatility. The partnership's financial performance and distributions will continue to be supported by our Essie Lane sales agreement, which provides a predictable fee-based cash flow structure from our take or pay contract with Westlake for 95% of up-cost production. As has been the case since RIPO over 10 years ago, this 80 lane sales agreement will continue to deliver stable and predictable cash flows to economic to economic ups and downs, as well as planned and unplanned turnarounds.
Speaker Change: Turning to our outlook global trade tensions have intensified in recent weeks, creating a heightened atmosphere.
Speaker Change: Uncertainty for businesses and investors.
Speaker Change: While trade negotiations I likely to continue to cause likely to continue to cause some market volatility.
Speaker Change: <unk> financial performance and distributions will continue to be supported by by our ethylene sales agreement, which provide a predictable fee based cash flow structure from a take or pay contract with Westlake for 95% of up cause production.
Speaker Change: As has been the case since our IPO over 10 years ago. This Atlantis agreement, we continue to deliver stable and predictable cash flows to economics.
Speaker Change: Economic ups and downs as well as planned and unplanned turnarounds.
Jean-Marc Gilson: 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 four levers of growth in the future, including increases of our ownership interest of opco, acquisitions of other qualified income streams, organic growth opportunities such as expansions of our current ethylene facilities and negotiation of a higher fixed margin in our ethylene sales agreement with Westlake. We remain focused on our ability to continue to provide long-term value and distributions to our unit hold.
Speaker Change: Turning to our capital structure.
Speaker Change: Maintain a strong balance sheet with conservative financial and leverage metrics.
Speaker Change: As we continue to navigate market conditions, we will evaluate opportunities via our four levers of growth in the future including.
Speaker Change: Increases of our ownership interest of Opco.
Speaker Change: Acquisitions of other qualified income streams.
Speaker Change: Organic growth opportunities such as expansions of our current ethylene facilities.
Speaker Change: And negotiation of a higher fixed margin.
Speaker Change: Ethylene sales agreement with Westlake.
Speaker Change: We remain focused on our ability to continue to provide long term value and distributions to our unit holders.
Jean-Marc Gilson: 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.
Speaker Change: As always we will continue to focus on safe operations, along with being good stewards of the environment. The way we work and later as part of our broader sustainability efforts.
Jean-Marc Gilson: Thank you very much for listening to our first quarter earnings call.
John: You very much for listening to our first quarter earnings call now I will turn the call back over to John.
John Zoeller: Now I will turn the call back over to John. Thank you, Jean-Marc. 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 instructions to access the replay at the end of the call.
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 we will provide instructions to access the replay at the end of the call.
Unknown Executive: Michelle, we will now take questions. Thank you. If you'd like to ask a question, please press star 1. If your question has been answered and you'd like to remove yourself please press star one one again.
Speaker Change: Michelle we will now take questions.
Michelle: Thank you if you'd like to ask a question. Please press star one one.
Michelle: If your question has been answered and you'd like to remove yourself from the queue. Please press star one again.
Matthew Blair: Our first question comes from Matthew Blair with TPH. Your line is. Thank you and good afternoon. It seems like the financial impact of the Q1 turnaround at Petro One was a little bit more significant on your quarterly earnings than previous turnarounds. Could you help us understand that? Was that just a function of the size of the turnaround or were there like any unplanned expenses that caused a bigger impact there?
Matthew Blair: Our first question comes from Matthew Blair with Th Your line is open.
Matthew Blair: Alright, thank you.
Matthew Blair: Good afternoon, it seems like the financial impact of the Q1 turnaround at Petro one.
Matthew Blair: With a little bit more significant on your quarterly earnings than previous turnarounds could you help us understand that.
Matthew Blair: Was that just a function of the size of the turnaround or are there like any unplanned expenses.
Matthew Blair: Expenses.
Matthew Blair: Because the bigger impact there.
Steve Bender: No, Matthew, this is Steve. It really went really as we had planned in terms of the impact, you know, we brought the unit down at the end of January. And so for the quarter, it was down for the months of February and March. And so we expected the unit to be down from a production perspective, those two months. And so the impact for the quarter really was reflective of what's going on. I think you may be also factoring into the fact that we still are seeing elevated interest rates, kind of weighing on the loan obligations that the company has.
Matthew Blair: Yes, Matthew this is Dave it really wind really as we had planned in terms of the impact we brought the unit down at the end of January and so for the quarter. It was down for the months of February and March and so we expect the unit to be down from a production perspective, those two months and so the impact for the quarter really was.
Matthew Blair: Like what's going on I think you may be also factoring in the fact that we still are seeing elevated interest rates kind of wane on the loan obligations that the company has that's probably the factor that you might be thinking about because realistically the performance.
Steve Bender: That's probably the factor that you might be thinking about, because realistically, the performance and its production over the course of the quarter was really as we had been expecting, and frankly, as we had internally budgeted.
Matthew Blair: And its production over the course of the quarter was really as we had been expecting and frankly as we headed internally budgeted.
Matthew Blair: Okay, sounds good.
Matthew Blair: Okay sounds good and then the.
Matthew Blair: And then the evaluation difference between the parent Westlake and the MLP Westlake LP seems to have compressed lately.
Matthew Blair: The valuation difference between the.
Matthew Blair: The parent Westlake and the MLP Westlake LP seems.
Kevin: Thanks, Kevin.
Steve Bender: Is there still enough of an evaluation difference to justify keeping Westlake LP around? Yeah, it's a good question. I think as you think about the parent, the C Corp, it certainly has seen some compression in its valuations, which increases its multiple accordingly. But we tend to think about this, excuse me, over the business cycle rather than at any current period in time. And so as we think about this, the value proposition has continued to be there. As you know, well, the markets have been challenged in terms of drop down stories in the MLP space. But nevertheless, the valuation differential between the partnership where it trades, and Westlake Corporation where it trades really over a reasonable cycle period of time remains pretty elevated.
Matthew Blair: Press lately.
Speaker Change: Is there still enough of a valuation difference to justify keeping Westlake LP around.
Matthew Blair: Yeah.
Matthew Blair: Yes. It's good question I think as you think about the parent the C Corp. It certainly has seen some compression in its values.
Matthew Blair: Valuations, which increases its multiple accordingly, but we tend to think about this excuse me over the business cycle rather than at any current period in time.
Matthew Blair: And so as we think about this the value proposition has continued to be there as well the markets have been challenged in terms of dropdown stories.
Matthew Blair: In the MLP space, but nevertheless, the valuation differential between the partnership where it trades and Westlake Corporation, where it trades really over a reasonable cycle period of time remains pretty elevated.
Matthew Blair: Okay.
Steve Bender: Great, thanks for your comments. You're welcome. Thank you.
Speaker Change: Great. Thanks for your comments.
Youre welcome.
Unknown Executive: As a reminder, to ask a question, please press star 1.
Speaker Change: Thank you as a reminder to ask a question. Please press star one one.
Unknown Executive: At this time, the Q&A session has now ended.
At this time the Q&A session has now ended I will now turn the call back over to John Zeller.
John Zoeller: I will now turn the call back over to John Zoeller. Thank you again for participating in today's call. We hope you will join us for our next conference call to discuss our second quarter 2025 results.
Speaker Change: Thank you again for participating in today's call. We hope you will join US for our next conference call to discuss our second quarter 2025 results.
Unknown Executive: Thank you for participating in today's Westlake Chemical Partners First 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 1159 p.m. Eastern Time on Friday, May 16, 2025. The replay can be accessed via the partnership website.
Speaker Change: Thank you for participating in today's Westlake Chemical Partners' first 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 Friday May 16, 2025, the replay can be access.
Speaker Change: <unk> via the partnership website Goodbye.
Unknown Executive: Goodbye.
Speaker Change: Yeah.
Unknown Executive: Thank you for watching!
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].