WLKP
$23.62
Westlake Chemical Partners LP
$.37
1.59%
Earnings Details
Quarter December 2020
Tuesday, February 23, 2021 6:30:00 AM
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Summary

Westlake Chemical Partners LP (WLKP) Recent Earnings

Westlake Chemical Partners LP (WLKP) reported Quarter December 2020 earnings of $0.43 per share on revenue of $245.7 million. The consensus earnings estimate was $0.52 per share. Revenue fell 10.0% compared to the same quarter a year ago.

Westlake Chemical Partners LP operates, acquires and develops ethylene production facilities and related assets.

Results
Reported Earnings
$0.43
Earnings Whisper
-
Consensus Estimate
$0.52
Reported Revenue
$245.7 Mil
Revenue Estimate
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Westlake Chemical Partners LP Announces Fourth Quarter and Full Year 2020 Results

  • Record annual net income attributable to the Partnership of $66.2 million
  • Declared quarterly distribution of $0.4714 per unit; 26th consecutive quarterly distribution to our unitholders

HOUSTON--(BUSINESS WIRE)--Westlake Chemical Partners LP (NYSE: WLKP) (the "Partnership") today reported net income attributable to the Partnership of $66.2 million, or $1.88 per limited partner unit, for full year 2020, an increase of $5.2 million compared to full year 2019. In connection with Hurricane Laura, which struck Lake Charles, Louisiana in August 2020, and Hurricane Delta, which struck the same area in October 2020, Westlake Chemical OpCo LP ("OpCo") declared force majeure events with respect to its Petro 1 and Petro 2 facilities located in Lake Charles under OpCo's ethylene sales agreement with Westlake Chemical Corporation ("Westlake Chemical"). As a result of this event, Westlake Chemical was obligated to pay OpCo the fixed margin and certain other costs associated with ethylene that OpCo would have produced but could not as a result of the events ("Force Majeure Amounts"). Net income in the third quarter and fourth quarter of 2020 included Force Majeure Amounts of $41.3 million and $28.3 million, respectively, related to the fixed margin and certain other costs to which OpCo is entitled for the ethylene that it would have sold to Westlake Chemical had the force majeure events not occurred.

Net income attributable to the Partnership in the fourth quarter of 2020 of $15.0 million decreased by $2.4 million compared to fourth quarter 2019 net income attributable to the Partnership of $17.4 million. The decrease in net income was a result from the impact from the hurricanes and associated force majeure events as well as lower third-party sales volumes and increased maintenance costs. Cash flows from operating activities in the fourth quarter of 2020 were $32.5 million, a decrease of $83.2 million compared to fourth quarter 2019 cash flows from operating activities of $115.7 million. This decrease in cash flows from operating activities was primarily due to the timing of the Force Majeure Amounts being accrued during 2020 and paid in January 2021. For the three months ended December 31, 2020, MLP distributable cash flow of $15.6 million decreased by $3.2 million from fourth quarter 2019 MLP distributable cash flow of $18.8 million. The decrease in MLP distributable cash flow was primarily attributable to the lower earnings at OpCo as well as higher maintenance costs and reserves for turnaround expense, partially offset by lower interest expense.

Fourth quarter 2020 net income attributable to the Partnership of $15.0 million decreased by $3.5 million from third quarter 2020 net income attributable to the Partnership of $18.5 million. The decrease in net income attributable to the Partnership was primarily due to the impact of the two hurricanes and associated force majeure events in Lake Charles. Fourth quarter 2020 cash flows from operating activities of $32.5 million decreased by $84.7 million compared to third quarter 2020 cash flows from operating activities of $117.2 million. The decrease in cash flows from operating activities was primarily due to the timing of the payment of the Force Majeure Amounts. Fourth quarter 2020 MLP distributable cash flow of $15.6 million decreased by $5.6 million compared to third quarter 2020 MLP distributable cash flow of $21.2 million. The decrease in MLP distributable cash flow was primarily due to the lower earnings at OpCo and higher maintenance costs.

Net income attributable to the Partnership of $66.2 million, or $1.88 per limited partner unit, for the full year 2020 increased by $5.2 million compared to full year 2019 net income attributable to the Partnership of $61.0 million. The increase in net income attributable to the Partnership was due to the impact of the force majeure events and associated provisions within the Ethylene Sales Agreement. Cash flows from operating activities for full year 2020 of $373.4 million decreased by $77.4 million compared to full year 2019 cash flows from operating activities of $450.8 million, primarily due to the timing of the payment of the Force Majeure Amounts. For full year 2020, MLP distributable cash flow of $72.0 million decreased by $1.2 million compared to full year 2019 MLP distributable cash flow of $73.2 million.

"In spite of the unprecedented demand challenges that we faced in 2020 and the production outages resulting from the two hurricanes, the Partnership continued to deliver strong financial performance and distributions to unitholders. Our long-term Ethylene Sales Agreement with Westlake Chemical helps insulate us from ongoing market volatility and other events that could impact our operations. The nature of this agreement with our sponsor provides the ability to continue to deliver reliable earnings and cash flows, which enables us to deliver predictable and reliable distributions to our unitholders," said Albert Chao, President and Chief Executive Officer. "We are excited about the Partnership's future and continuing to deliver long-term value 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 95% of OpCo's ethylene production is sold to Westlake Chemical for a cash margin of $0.10 per pound, net of operating costs, maintenance capital expenditures and reserves for future turnaround expenditures.

On January 25, 2021, the Partnership announced that the Board of Directors of Westlake Chemical Partners GP LLC had approved a quarterly distribution for the fourth quarter of 2020 of $0.4714 per unit to be payable on February 19, 2021 to unitholders of record as of February 4, 2021, representing the 26th consecutive quarterly distribution to our unitholders. MLP distributable cash flow provided trailing twelve-month coverage of 1.08x the declared distributions for the fourth quarter of 2020.

The statements in this release and the related teleconference relating to matters that are not historical facts, such as those with respect to future distributions, earnings and cash flow, insulation from ongoing market volatility and delivery of long-term value to unitholders 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, 2019, which was filed with the SEC in February 2020, and Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.

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'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 Chemical 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 2020 results will be held Tuesday, February 23, 2021 at 12:00 PM Eastern Time (11:00 AM 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 392 56 87.

A replay of the conference call will be available beginning two hours after its conclusion until 11:59 p.m. Eastern Time on Tuesday, March 2, 2021. To hear a replay, dial (855) 859-2056 or (404) 537-3406 for international callers. The replay passcode is 392 56 87.

The conference call will also be available via webcast at: https://edge.media-server.com/mmc/p/vsdxow8m and the earnings release can be obtained via the Partnership web page at: http://investors.wlkpartners.com/CorporateProfile.

WESTLAKE CHEMICAL PARTNERS LP ("WESTLAKE PARTNERS")

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

(In thousands of dollars, except per unit data)

Revenue

 

 

 

 

 

 

 

 

Net sales—Westlake Chemical Corporation ("Westlake")

 

$

228,223

 

 

$

233,860

 

 

$

888,245

 

 

$

937,625

 

Net co-product, ethylene and other sales—third parties

 

17,429

 

 

38,938

 

 

78,425

 

 

154,246

 

Total net sales

 

245,652

 

 

272,798

 

 

966,670

 

 

1,091,871

 

Cost of sales

 

160,738

 

 

169,201

 

 

587,787

 

 

712,443

 

Gross profit

 

84,914

 

 

103,597

 

 

378,883

 

 

379,428

 

Selling, general and administrative expenses

 

7,305

 

 

7,844

 

 

25,895

 

 

29,278

 

Income from operations

 

77,609

 

 

95,753

 

 

352,988

 

 

350,150

 

Other income (expense)

 

 

 

 

 

 

 

 

Interest expense—Westlake

 

(2,337)

 

 

(4,187)

 

 

(12,038)

 

 

(19,623)

 

Other income, net

 

8

 

 

563

 

 

733

 

 

3,096

 

Income before income taxes

 

75,280

 

 

92,129

 

 

341,683

 

 

333,623

 

Provision for income taxes

 

156

 

 

219

 

 

564

 

 

728

 

Net income

 

75,124

 

 

91,910

 

 

341,119

 

 

332,895

 

Less: Net income attributable to noncontrolling interests in Westlake Chemical OpCo LP ("OpCo")

 

60,099

 

 

74,539

 

 

274,952

 

 

271,914

 

Net income attributable to Westlake Partners

 

$

15,025

 

 

$

17,371

 

 

$

66,167

 

 

$

60,981

 

 

 

 

 

 

 

 

 

 

Net income per limited partner unit attributable to Westlake Partners (basic and diluted)

 

 

 

 

 

 

 

 

Common units

 

$

0.43

 

 

$

0.49

 

 

$

1.88

 

 

$

1.77

 

 

 

 

 

 

 

 

 

 

Distributions declared per unit

 

$

0.4714

 

 

$

0.4714

 

 

$

1.8856

 

 

$

1.8391

 

 

 

 

 

 

 

 

 

 

MLP distributable cash flow

 

$

15,603

 

 

$

18,752

 

 

$

71,983

 

 

$

73,181

 

 

 

 

 

 

 

 

 

 

Distribution declared

 

 

 

 

 

 

 

 

Limited partner units—public and privately held

 

$

9,936

 

 

$

9,934

 

 

$

39,736

 

 

$

38,746

 

Limited partner units—Westlake

 

6,657

 

 

6,657

 

 

26,629

 

 

25,972

 

Total distribution declared

 

$

16,593

 

 

$

16,591

 

 

$

66,365

 

 

$

64,718

 

EBITDA

 

$

103,004

 

 

$

123,254

 

 

$

456,875

 

 

$

460,566

 

WESTLAKE CHEMICAL PARTNERS LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

December 31,
2020

 

December 31,
2019

 

 

 

 

 

 

 

(In thousands of dollars)

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

17,154

 

 

$

19,923

 

Receivable under the Investment Management Agreement—

Westlake Chemical Corporation ("Westlake")

 

123,228

 

 

162,773

 

Accounts receivable, net—Westlake

 

108,028

 

 

42,847

 

Accounts receivable, net—third parties

 

11,029

 

 

9,914

 

Inventories

 

3,474

 

 

2,484

 

Prepaid expenses and other current assets

 

392

 

 

470

 

Total current assets

 

263,305

 

 

238,411

 

Property, plant and equipment, net

 

1,050,677

 

 

1,102,995

 

Other assets, net

 

42,506

 

 

52,050

 

Total assets

 

$

1,356,488

 

 

$

1,393,456

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities (accounts payable and accrued liabilities)

 

$

39,754

 

 

$

38,849

 

Long-term debt payable to Westlake

 

399,674

 

 

399,674

 

Other liabilities

 

1,923

 

 

2,798

 

Total liabilities

 

441,351

 

 

441,321

 

Common unitholders—public and privately held

 

471,701

 

 

471,736

 

Common unitholder—Westlake

 

48,270

 

 

48,350

 

General partner—Westlake

 

(242,572)

 

 

(242,572)

 

Total Westlake Partners partners' capital

 

277,399

 

 

277,514

 

Noncontrolling interest in OpCo

 

637,738

 

 

674,621

 

Total equity

 

915,137

 

 

952,135

 

Total liabilities and equity

 

$

1,356,488

 

 

$

1,393,456

 

WESTLAKE CHEMICAL PARTNERS LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Twelve Months Ended December 31,

 

 

2020

 

2019

 

 

 

 

 

 

 

(In thousands of dollars)

Cash flows from operating activities

 

 

 

 

Net income

 

$

341,119

 

 

$

332,895

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

103,154

 

 

107,320

 

Other balance sheet changes

 

(70,876)

 

 

10,592

 

Net cash provided by operating activities

 

373,397

 

 

450,807

 

Cash flows from investing activities

 

 

 

 

Additions to property, plant and equipment

 

(36,968)

 

 

(43,707)

 

Investments with Westlake under the Investment Management Agreement

 

(349,000)

 

 

(529,445)

 

Maturities of investments with Westlake under the Investment Management Agreement

 

388,000

 

 

515,445

 

Net cash provided by (used for) investing activities

 

2,032

 

 

(57,707)

 

Cash flows from financing activities

 

 

 

 

Net proceeds from common unit offering

 

 

 

62,661

 

Proceeds from debt payable to Westlake

 

 

 

123,511

 

Quarterly distributions to noncontrolling interest retained in OpCo by Westlake

 

(311,835)

 

 

(315,564)

 

Quarterly distributions to unitholders

 

(66,363)

 

 

(62,084)

 

Repayment of debt payable to Westlake

 

 

 

(201,445)

 

Net cash used for financing activities

 

(378,198)

 

 

(392,921)

 

Net increase (decrease) in cash and cash equivalents

 

(2,769)

 

 

179

 

Cash and cash equivalents at beginning of the year

 

19,923

 

 

19,744

 

Cash and cash equivalents at end of the year

 

$

17,154

 

 

$

19,923

 

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,

 

 

2020

 

2020

 

2019

 

2020

 

2019

 

 

 

(In thousands of dollars)

Net cash provided by operating activities

 

$

117,157

 

 

$

32,521

 

 

$

115,653

 

 

$

373,397

 

 

$

450,807

 

Changes in operating assets and liabilities and other

 

(25,309)

 

 

42,603

 

 

(23,743)

 

 

(32,278)

 

 

(117,912)

 

Net Income

 

91,848

 

 

75,124

 

 

91,910

 

 

341,119

 

 

332,895

 

Add:

 

 

 

 

 

 

 

 

 

 

Depreciation, amortization and disposition of property, plant and equipment

 

26,476

 

 

25,387

 

 

27,048

 

 

104,154

 

 

107,835

 

Mark-to-market adjustment loss (gain) on derivative contracts

 

1,572

 

 

(1,125)

 

 

(5,695)

 

 

(1,340)

 

 

1,301

 

Less:

 

 

 

 

 

 

 

 

 

 

Contribution to turnaround reserves

 

(9,890)

 

 

(10,240)

 

 

(3,961)

 

 

(39,937)

 

 

(15,630)

 

Maintenance capital expenditures

 

(6,509)

 

 

(11,485)

 

 

(11,327)

 

 

(37,343)

 

 

(39,940)

 

Distributable cash flow attributable to noncontrolling interest in OpCo

 

(82,309)

 

 

(62,058)

 

 

(79,223)

 

 

(294,670)

 

 

(313,280)

 

MLP distributable cash flow

 

$

21,188

 

 

$

15,603

 

 

$

18,752

 

 

$

71,983

 

 

$

73,181

 

WESTLAKE CHEMICAL PARTNERS LP

RECONCILIATION OF EBITDA 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,

 

 

2020

 

2020

 

2019

 

2020

 

2019

 

 

 

(In thousands of dollars)

Net cash provided by operating activities

 

$

117,157

 

 

$

32,521

 

 

$

115,653

 

 

$

373,397

 

 

$

450,807

 

Changes in operating assets and liabilities and other

 

(25,309)

 

 

42,603

 

 

(23,743)

 

 

(32,278)

 

 

(117,912)

 

Net Income

 

91,848

 

 

75,124

 

 

91,910

 

 

341,119

 

 

332,895

 

Less:

 

 

 

 

 

 

 

 

 

 

Other income, net

 

17

 

 

8

 

 

563

 

 

733

 

 

3,096

 

Interest expense

 

(2,320)

 

 

(2,337)

 

 

(4,187)

 

 

(12,038)

 

 

(19,623)

 

Income tax benefit (provision)

 

15

 

 

(156)

 

 

(219)

 

 

(564)

 

 

(728)

 

Income from operations

 

94,136

 

 

77,609

 

 

95,753

 

 

352,988

 

 

350,150

 

Add:

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

25,923

 

 

25,387

 

 

26,938

 

 

103,154

 

 

107,320

 

Other income, net

 

17

 

 

8

 

 

563

 

 

733

 

 

3,096

 

EBITDA

 

$

120,076

 

 

$

103,004

 

 

$

123,254

 

 

$

456,875

 

 

$

460,566

 

 

(713) 585-2900
Investors—Steve Bender
Media—L. Benjamin Ederington

Source: Westlake Chemical Partners LP