Westlake Chemical Partners LP Q4 FY2024 earnings call

• Westlake Chemical Partners LP's financial results in 2024 demonstrated stability from the fixed margin ethylene sales agreement, insulating from market volatility.
• Full year 2024 net income for the partnership was $62 million, and consolidated net income including OpCo was $369 million.
• Fourth quarter 2024 net income was $15 million, with distributable cash flow of $15 million.
• Balance sheet had consolidated cash and cash investments with Westlake totaling $193 million at the end of Q4 2024, and long-term debt was $400 million.
• OpCo spent $49 million on capital expenditures in 2024, maintaining a strong leverage ratio.
• Announced a quarterly distribution of $0.4714 per unit for Q4 2024, with 42 consecutive quarterly distributions since IPO.
• Planned a 60-day turnaround at the PetroOne ethylene unit in Lake Charles, Louisiana, which began at the end of January 2025, with costs reserved and funded.

Westlake Chemical Partners LP's full year 2024 net income was $62 million or $1.77 per unit. Consolidated net income including OpCo was $369 million. For the fourth quarter of 2024, net income was $15 million or $0.43 per unit, with consolidated net income including OpCo's earnings at $87 million on consolidated net sales of $290 million. Distributable cash flow for the fourth quarter was $15 million or $0.42 per unit. Full year 2024 distributable cash flow increased by $4 million compared to 2023, totaling $67 million. The partnership's fixed margin ethylene sales agreement for 95% of annual plant production provided stability, contributing to predictable earnings and cash flows.

• The planned 60-day turnaround at PetroOne in 2025 is expected to temporarily impact the distribution coverage ratio but is projected to recover once the unit is back on stream.
• The partnership expects to resume a distribution coverage ratio of approximately 1.1 times, as seen historically through prior turnarounds.

• Forward-looking statements are subject to risks and uncertainties due to factors that could cause actual results to differ from predictions.
• The 60-day planned turnaround at PetroOne could temporarily affect the distribution coverage ratio.

Q: On the parent call, the WLK call, there was some talk about incremental cost cuts targets in 2025. Would Westlake be interested in ending the MLP arrangement as a way to cut costs further?

A: So, Matthew, it's Steve. I would say that as we look at opportunities for the partnership, we look at really the value proposition the partnership has brought forward. And while there are incremental administrative costs to administer the operations of the partnership, as you look at the value proposition the partnership has provided to Westlake, it continues to provide value from a multiple perspective when you look at the EV to EBITDA multiple. So, therefore, while it is an administrative cost, the value proposition offsets that administrative cost. So for cost control reasons, that would not be a consideration.

Q: Could you talk a little bit more about the expected financial impact from this 60-day planned turnaround? I think you mentioned that the coverage ratio would come down. So is the way to think about this as a temporary headwind on things like earnings per unit and cash flow?

A: Yeah. And so if you think about this historically, Matthew, the coverage does take an impact from the loss of production during that period. Of course, from a capital perspective, we've already fully reserved and have funded this upcoming turnaround. And as we speak today, we're in the midst of that turnaround right now. So I would expect the earnings impact, but as the unit comes back on stream after the end of this turnaround, coverage ought to fully recover. And so as we look forward into 2025 and beyond, I expect the coverage target that we have set being 1.1 times, we should resume. If you go back over the many years, the ten years since this entity was formed back in 2014, we've had a number of turnarounds, and this is the exact type of performance we have exhibited, and I expect to continue this same kind of performance. This is not an unusual turnaround, and we expect it to have the same kind of performance with it recovering full production after the turnaround and earnings associated with that.