Westlake Chemical Partners LP Announces Third Quarter 2015 Earnings

- Quarterly MLP distributable cash flow of $9.5 million

- Increased quarterly cash distribution by $0.0084 (2.89%) to $0.2994 per unit, announced on October 28, 2015

03 Nov, 2015, 06:50 ET from Westlake Chemical Partners LP

HOUSTON, Nov. 3, 2015 /PRNewswire/ -- Westlake Chemical Partners LP (NYSE: WLKP) (the "Partnership") today reported third quarter 2015 net income attributable to the Partnership of $10.1 million, or $0.37 per limited partner unit, and MLP distributable cash flow of $9.5 million. Net sales at Westlake Chemical OpCo LP ("OpCo") for the period were $248.6 million. The Partnership's second quarter 2015 net income was $10.4 million, or $0.39 per limited partner unit.

OpCo's sales agreement with Westlake Chemical Corporation is designed to provide for stable and predictable cash flows. The sales agreement provides that 95% of OpCo's ethylene production is sold to Westlake Chemical Corporation for a cash margin of $0.10 per pound, net of operating costs, maintenance capital expenditures and reserves for future turnaround expenditures.

On October 28, 2015, the Board of Directors of Westlake Chemical Partners GP LLC, the general partner of the Partnership, declared a quarterly distribution of $0.2994 per unit to be payable on November 27, 2015 to the unitholders of record on November 9, 2015. The MLP distributable cash flow provided coverage of 1.17x the declared distributions. The increase in cash distributions is in line with the Partnership's targeted low double-digit distribution growth.

"As a result of the long-term fixed margin ethylene sales agreement, the margin associated with the majority of our ethylene sales is not subject to the recent volatility in the oil and ethylene markets. This arrangement positions us to provide stable cash flows to our unitholders and highlights the benefit of the structure of our operations and sales contract," said Albert Chao, President and Chief Executive Officer.

 

The statements in this release and the related teleconference relating to matters that are not historical facts, but forward-looking statements, could be adversely affected by, among other things, 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 electricity; changes in prevailing economic conditions; actions of third parties; unanticipated ground, grade or water conditions; inclement or hazardous weather conditions, including flooding, and the physical impacts of climate change; environmental hazards; industrial accidents; 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; late delivery of raw materials; difficulty collecting receivables; inability of our customers to take delivery; changes in the price and availability of transportation; fires, explosions or other 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, 2014, which was filed with the SEC in March 2015, and Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, which was filed with the SEC in August 2015.

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 includes the term MLP distributable cash flow, which is a non-GAAP financial measure, as defined in Regulation G of the U.S. Securities Exchange Act of 1934, as amended. We report our financial results in accordance with U.S. generally accepted accounting principles ("GAAP"), but believe that certain non-GAAP financial measures, such as MLP distributable cash flow, 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 GAAP. A reconciliation of MLP distributable cash flow to net income and net cash provided by operating activities can be found in the financial schedules at the end of this release. We define distributable cash flow as net income plus depreciation and amortization, less contributions from turnaround reserves and maintenance capital expenditures. We define MLP distributable cash flow as distributable cash flow attributable to periods subsequent to the date of our initial public offering less distributable cash flow attributable to Westlake Chemical Corporation's noncontrolling interest in Westlake Chemical OpCo LP. Because MLP distributable cash flow may be defined differently by other companies in our industry, our definition of MLP distributable cash flow may not be comparable to similarly titled measures of other companies.

 

Westlake Chemical Partners LP

Westlake Chemical Partners is a limited partnership formed by Westlake Chemical Corporation to operate, acquire and develop facilities for the processing of natural gas liquids as well as other qualifying activities. Headquartered in Houston, Texas, the Partnership owns a 13.3% interest in Westlake Chemical OpCo LP. Westlake Chemical OpCo LP's assets include three facilities in Calvert City, Kentucky, and Lake Charles, Louisiana which process ethane and propane into ethylene, 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' third quarter 2015 results will be held Tuesday, November 3, 2015 at 12:00 p.m. Eastern Time (11:00 a.m. Central Time). To access the conference call, dial (855) 638-4814 or (234) 386-2848 for international callers, approximately 10 minutes prior to the scheduled start time and reference passcode 58792939.

A replay of the conference call will be available beginning two hours after its conclusion until 11:59 p.m. Eastern Time on Tuesday, November 10, 2015. To hear a replay, dial (855) 859-2056, or (404) 537-3406 for international callers. The replay passcode is 58792939.

The conference call will also be available via webcast at: http://edge.media-server.com/m/p/6kf6xf8h/lan/en and the earnings release can be obtained via the Partnership web page at: http://westlakepartners.investorroom.com/news-events

 

 WESTLAKE CHEMICAL PARTNERS LP ("WESTLAKE PARTNERS")

 COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS

 (Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2015

2014 (1)(2)

2015

2014 (1)(2)

(In thousands of dollars, except per unit data)

Revenue

Net sales—Westlake Chemical Corporation

  ("Westlake")

$

207,856

$

289,601

$

621,438

$

1,088,561

Net co-product, ethylene and other sales—third

  parties

40,763

102,407

137,277

387,596

Total net sales

248,619

392,008

758,715

1,476,157

Cost of sales

154,474

227,015

473,815

832,304

Gross profit

94,145

164,993

284,900

643,853

Selling, general and administrative expenses

5,831

8,860

17,826

22,803

Income from operations

88,314

156,133

267,074

621,050

Other income (expense)

Interest expense

(1,054)

(2,137)

(3,794)

(9,833)

Other (expense) income, net

(73)

486

(35)

3,135

Income before income taxes

87,187

154,482

263,245

614,352

Provision for income taxes

141

36,309

567

198,461

Net income

87,046

118,173

262,678

415,891

Less: Predecessor net income prior to initial public

  offering on August 4, 2014

63,616

361,334

Net income subsequent to initial public offering

87,046

54,557

262,678

54,557

Less: Net income attributable to noncontrolling

  interests in Westlake Chemical OpCo LP

  ("OpCo")

76,943

49,542

233,632

49,542

Net income attributable to Westlake Partners

$

10,103

$

5,015

$

29,046

$

5,015

Quarterly distribution declared per unit

$

0.2994

$

0.1704

$

0.8733

$

0.1704

MLP distributable cash flow

$

9,475

$

5,265

$

27,671

$

5,265

Distribution declared

Limited partner units—public

$

3,873

$

2,205

$

11,298

$

2,205

Limited partner units—Westlake

4,229

2,406

12,333

2,406

Incentive distribution rights

Total distribution declared

$

8,102

$

4,611

$

23,631

$

4,611

(1)

Westlake Partners' initial public offering ("IPO") was on August 4, 2014.

(2)

Includes amounts for the pre-IPO period from July 1, 2014 through August 3, 2014 and post-IPO period from August 4, 2014 through September 30, 2014 in the three months ended September 30, 2014 and includes the amounts for the pre-IPO period from January 1, 2014 through August 3, 2014 and post-IPO period from August 4, 2014 through September 30, 2014 in the nine months ended September 30, 2014.

 

WESTLAKE CHEMICAL PARTNERS LP ("WESTLAKE PARTNERS")

CONSOLIDATED BALANCE SHEETS

(Unaudited)

September 30,  2015

December 31,  2014

(In thousands of dollars)

ASSETS

Current assets

Cash and cash equivalents

$

154,257

$

133,750

Accounts receivable, net—Westlake

44,035

18,529

Accounts receivable, net—third parties

14,479

37,520

Inventories

3,272

6,634

Prepaid expenses and other current assets

382

212

Total current assets

216,425

196,645

Property, plant and equipment, net

962,221

842,057

Other assets, net

46,542

57,733

Total assets

$

1,225,188

$

1,096,435

LIABILITIES AND EQUITY

Current liabilities (accounts payable and accrued liabilities)

$

56,511

$

31,984

Long-term debt payable to Westlake

330,495

227,638

Other liabilities

1,708

1,863

Total liabilities

388,714

261,485

Common unitholders—public

293,282

290,377

Common unitholder—Westlake

4,360

4,038

Subordinated unitholder—Westlake

38,528

35,681

General partner—Westlake

(242,572)

(242,572)

Accumulated other comprehensive loss

(173)

Total Westlake Chemical Partners LP partners' capital

93,425

87,524

Noncontrolling interest in OpCo

743,049

747,426

Total equity

836,474

834,950

Total liabilities and equity

$

1,225,188

$

1,096,435

 

WESTLAKE CHEMICAL PARTNERS LP ("WESTLAKE PARTNERS")

COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Nine Months Ended September 30,

2015

2014 (1)(2)

(In thousands of dollars)

Cash flows from operating activities

Net income

$

262,678

$

415,891

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

Depreciation and amortization

60,637

58,501

Other balance sheet changes

7,888

11,598

Net cash provided by operating activities

331,203

485,990

Cash flows from investing activities

Additions to property, plant and equipment

(152,572)

(144,348)

Settlements of derivative instruments

(133)

Net cash used for investing activities

(152,572)

(144,481)

Cash flows from financing activities

Proceeds from debt payable to Westlake

238,198

141,161

Repayment of debt payable to Westlake

(135,341)

Repayment of debt payable to Westlake with proceeds from the initial public offering

(78,940)

Net proceeds from issuance of common units

286,088

Proceeds from initial public offering distributed to Westlake

(151,729)

Net distributions to Westlake prior to initial public offering

(448,101)

Quarterly distributions to noncontrolling interest retained in OpCo by Westlake

(238,009)

Quarterly distributions to unitholders

(22,972)

Net cash used for financing activities

(158,124)

(251,521)

Net increase in cash and cash equivalents

20,507

89,988

Cash and cash equivalents at beginning of period

133,750

Cash and cash equivalents at end of period

$

154,257

$

89,988

(1)

Westlake Partners' initial public offering ("IPO") was on August 4, 2014.

(2)

Includes the amounts for the pre-IPO period from January 1, 2014 through August 3, 2014 and post-IPO period from August 4, 2014 through September 30, 2014.

 

WESTLAKE CHEMICAL PARTNERS LP ("WESTLAKE PARTNERS")

RECONCILIATIONS OF MLP DISTRIBUTABLE CASH FLOW TO NET INCOME

AND NET CASH PROVIDED BY OPERATING ACTIVITIES

(Unaudited)

Three Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

2015

2015

2014

2015

2014

(In thousands of dollars)

MLP distributable cash flow (1)

$

9,235

$

9,475

$

5,265

$

27,671

$

5,265

Add:

Distributable cash flow attributable to noncontrolling interests in OpCo (1)

68,908

72,833

51,652

225,565

51,652

Net income attributable to the  Predecessor for the period prior to August 4, 2014

63,616

361,334

Maintenance capital expenditures (1)

22,515

18,145

5,839

48,946

5,839

Contribution to turnaround reserves (1)

6,977

7,035

4,484

21,133

4,484

Less:

Depreciation and amortization (1)

(20,392)

(20,442)

(12,683)

(60,637)

(12,683)

Net income for the period

87,243

87,046

118,173

262,678

415,891

Depreciation and amortization

20,392

20,442

19,219

60,637

58,501

Other balance sheet changes

9,029

(6,184)

(30,323)

7,888

11,598

Net cash provided by operating activities

$

116,664

$

101,304

$

107,069

$

331,203

$

485,990

(1)

Westlake Partners' initial public offering was on August 4, 2014. The 2014 balances include amounts for the period from August 4, 2014 through September 30, 2014 only.

 

SOURCE Westlake Chemical Partners LP



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