Westlake Chemical Partners (WLKP) Q3 2024 earnings summary

Executive summary

• Reported Q3 2024 net income of $18.1M ($0.51 per unit), up $4.9M year-over-year, with distributable cash flow at its highest since 2022, driven by higher third-party ethylene sales prices and margins.

• Celebrated 10th anniversary as a publicly traded MLP, with 41 consecutive distributions and a 71% increase in quarterly distribution since IPO.

• Operates as a limited partnership supplying ethylene to Westlake Corporation, ensuring stable, predictable cash flows and growth potential through capacity expansions and acquisitions.

• Deferred the planned turnaround at the Petro 1 ethylene unit to Q1 2025 to capitalize on favorable market conditions and maximize third-party sales margins.

• Net income for Q3 2024 was $104.1M on net sales of $277.0M, up $23.2M year-over-year despite a $44.7M sales decline, driven by higher third-party sales and lower feedstock costs.

Financial highlights

• Q3 2024 revenue: $277M, gross profit: $116.9M (42.2% margin), EBITDA: $139.1M, and distributable cash flow: $17.9M, all up year-over-year.

• Q3 2024 net income increased by $5M compared to Q3 2023; net income per limited partner unit: $0.51, up from $0.37 in Q3 2023.

• Distributions declared per unit: $0.4714 for Q3 2024, 41st consecutive quarterly distribution.

• Trailing twelve-month coverage ratio improved to 1.03x from 0.96x sequentially; cumulative coverage ratio since IPO: 1.08x.

• Ended Q3 2024 with $170M in consolidated cash and investments; long-term debt totaled $399.7M, all variable rate.

Outlook and guidance

• No planned turnarounds for the remainder of 2024; Petro 1 turnaround scheduled for Q1 2025, expected to last about 55 days.

• Most planned third-party ethylene sales for 2024 already booked; expect moderation in distributable cash flow in Q4 due to increased maintenance capital for Petro 1 turnaround.

• Fourth quarter 2024 expected to see lower third-party ethylene sales prices and margins, but minimal impact due to limited remaining sales volume.

• Ethylene sales agreement with Westlake for 95% of OpCo's production ensures stable, predictable cash flows.

• Growth levers include increasing OpCo ownership, organic expansions, acquisitions, and potential margin enhancements.