Westlake Chemical Partners LP Q3 FY2024 earnings call

Key Points

• Third quarter 2024 net income was $18 million or $0.51 per unit; compared to Q3 2023, benefited from higher third-party ethylene sales price and margins.
• Deferred the planned turnaround at Petro 1 ethylene unit to Q1 2025 and shifted third-party sales volume planned for later in 2024 into Q3 2024.
• Celebrated 10th year as a publicly traded master limited partnership; quarterly distribution grown 71% since 2014 IPO with 41 consecutive distributions without deductions.
• Stable business model enabled by fixed margin ethylene sales agreement, providing cash flow stability and predictable business.
• Generated highest quarterly distributable cash flow since 2022 and added to operating surplus.

Westlake Chemical Partners reported third quarter 2024 net income of $18 million or $0.51 per unit. Consolidated net income, including OpCo's earnings, was $104 million on consolidated net sales of $277 million. Distributable cash flow for the quarter was $18 million or $0.51 per unit. There is no detailed breakdown of financial performance by specific product segment provided in the transcript.

Forward-Looking Statements

• Deferred Petro 1 ethylene unit turnaround to first quarter 2025, expected to begin end of January 2025 and last approximately 55 days.
• No planned turnarounds for the remainder of 2024.
• Announced a quarterly distribution of $0.4714 per unit for the third quarter 2024, payable on November 27, 2024, to unitholders of record November 12, 2024.

Risks

• Forward-looking statements are subject to risks or uncertainties based on management's beliefs and assumptions.
• The overall global macroeconomic environment remains unpredictable, which could impact results.

Q: I want to touch on the prepared comments that mentioned that you shifted some third-party sales volumes into the third quarter. Is it possible to give us a sense of just how significant this was? And then for the fourth quarter, should we expect an impact, both from the lower ethylene cracking margins as well as from these reduced spot volumes?

A: The shift to selling more of the remaining volume in the third quarter when margins were up was strategic to maximize what we had left to sell into the market. As we sell 5% over the course of the year into third-party markets, the majority of what we need to sell in 2024 has now been sold. So there's very little left in the fourth quarter. And so even though margins have declined in the fourth quarter relative to those in the third, we have very little left to be sold in the fourth quarter. So that lower margin will have nil effect really in our results in Q4.

Q: As we look into 2025, are you sensing any sort of increased interest in MLP equities? What would you put the chance of that for restarting distribution growth and restarting an asset drop?

A: We continue to assess really the markets and continue to have a strong interest in understanding appetite for interest and we'll consider and look at all options. We recognize that the market has changed significantly in the 10-year period since our IPO, and we'll continue to assess all options. We have noticed that others have started their distribution growth, and that's predicated on our ability to find attractive investors to come into the unit at an accretive price. So we'll continue to have a good dialogue with investors, and see if we can find opportunities that make that transactable, but we'll look and continue to pursue all options that are out there and available to us.