• Full-Year 2024 Net Income: $62 million or $1.77 per unit.
• Consolidated Full-Year 2024 Net Income: $369 million.
• Fourth-Quarter 2024 Net Income: $15 million or $0.43 per unit.
• Consolidated Fourth-Quarter 2024 Net Income: $87 million.
• Fourth-Quarter 2024 Consolidated Net Sales: $290 million.
• Fourth-Quarter 2024 Distributable Cash Flow: $15 million or $0.42 per unit.
• Full-Year 2024 MLP Distributable Cash Flow: $67 million.
• Distribution Coverage for Full-Year 2024: 1.01 times.
• Consolidated Cash and Cash Investments: $193 million at the end of the fourth quarter.
• Long-Term Debt: $400 million, with $377 million at the Partnership and $23 million at OpCo.
• Capital Expenditures in 2024: $49 million by OpCo.
• Quarterly Distribution Announced: $0.4714 per unit for the fourth quarter of 2024.
• Consecutive Quarterly Distributions: 42 since IPO in July 2014.

• Warning! GuruFocus has detected 7 Warning Signs with WLKP.

Release Date: February 24, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Westlake Chemical Partners LP (NYSE:WLKP) reported a full-year 2024 net income of $62 million, an increase from the previous year.
• The company has maintained 42 consecutive quarterly distributions since its IPO in 2014, demonstrating consistent returns to unitholders.
• The fixed-margin ethylene sales agreement provides stability and predictability in earnings and cash flows, insulating the company from market volatility.
• The company reported an increase in full-year 2024 MLP distributable cash flow to $67 million, up from $63 million in 2023.
• Westlake Chemical Partners LP (NYSE:WLKP) maintains a strong balance sheet with a consolidated leverage ratio below 1 times.

Negative Points

• Fourth-quarter 2024 distributable cash flow decreased by $1 million compared to the same period in 2023, primarily due to higher turnaround reserve and maintenance capital contributions.
• The planned 60-day turnaround at the Petro 1 ethylene unit is expected to temporarily impact earnings per unit and cash flow.
• Long-term debt at the end of the fourth quarter was $400 million, indicating a significant financial obligation.
• The company faces incremental administrative costs associated with maintaining the MLP structure.
• The distribution coverage ratio is expected to be impacted during the turnaround period before recovering.

Q & A Highlights

Q: On the parent call, there was some discussion about cost-cutting targets for 2025. Would Westlake consider ending the MLP arrangement to further reduce costs? A: Steve Bender, CFO, explained that while there are incremental administrative costs associated with the MLP, the value proposition it provides offsets these costs. Therefore, ending the MLP arrangement for cost control reasons is not being considered.

Q: Could you elaborate on the expected financial impact of the 60-day planned turnaround? Will this be a temporary headwind on earnings per unit and cash flow? A: Steve Bender, CFO, noted that the coverage ratio would be temporarily impacted due to the loss of production during the turnaround. However, the turnaround costs have been fully reserved and funded. Once the unit resumes full production, the coverage ratio is expected to recover to the target of 1.1 times.

Q: How does the Partnership plan to manage its capital structure and leverage metrics moving forward? A: Jean-Marc Gilson, CEO, stated that the Partnership maintains a strong balance sheet with conservative financial and leverage metrics. They will evaluate growth opportunities through increasing ownership interest in OpCo, acquiring other income streams, expanding current facilities, and negotiating higher fixed margins in their ethylene sales agreement.

Q: What are the expectations for third-party ethylene sales prices and margins in 2025? A: Jean-Marc Gilson, CEO, mentioned that third-party ethylene sales prices and margins are currently at favorable levels, which should benefit the Partnership's financial performance in 2025.

Q: Can you provide an update on the Partnership's distribution history and future expectations? A: Steve Bender, CFO, highlighted that the Partnership has made 42 consecutive quarterly distributions since its IPO in 2014, with a cumulative distribution coverage ratio of approximately 1.1 times. They expect to continue providing stable distributions to unitholders.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.