WLKP - Earnings call transcript Q1 2018 | Westlake Chemical Partners LP

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Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Westlake Chemical Partners First Quarter 2018 Earnings Conference Call.

During the presentation, all participants will be in a listen-only mode. After the speakers’ remarks, you will be invited to participate in a question-and-answer session.

and XXXX. conference ladies today, being reminder, X, May a gentlemen, is this recorded, As now to Vice would Jeff I like Holy, your over Westlake host, to Chemical Partners President Treasurer. turn and the call may you begin. Sir,

Jeff Holy

call management Chief Thank members Steve with Chemical First few who The the today open comments Bender, financial provide as Vice our will regarding as Westlake team. by then more in our will you, to Chao, on of our I’m and the a quarter Conference Partners our Valorie. will and Senior performance performance and detailed Quarter Albert, operating morning, welcome Financial begin Steve at Good with and current President other outlook the results. Call. Westlake Albert a XXXX our Officer; joined Chemical first and opportunities. well everyone, and conference Partners look President CEO;

few the questions. and will comments, then add Albert open a we’ll Finally, to concluding up call

and the operating ethylene, refer and upon Westlake Chemical Corporation, During Westlake able suggest refer Actual including is difficulties, our the other information which Partnership, could subsidiary access Westlake company, pressures, actual ethylene call, that to able are currently pricing LP, Partners topics capital by to and to parent Chemical certain Westlake Today, on owns to management’s OpCo uncertainties. Chemical management economic based subject changes products and our forward-looking factors is of regulatory governmental references and sell, the conditions, we will contain results assets. refer actions, volume ourselves to to or ability as are at time accessed this Chemical These thus call funds factors well References XXX-XXX-XXXX; morning, Partnership. quarter we replay operating to today I accurate an be a going replay Time being are that competitive price made domestic borrow PM access we and of in at OpCo Westlake XXX-XXXX. beginning advised document dialing the callers Please this for XXX-XXX-XXXX. assumptions and until a numbers: olefins information the proposed to of broadcast speaks or and of to you’re risk This on results. details at call prevailing p.m. accessed sell filings. Westlake certain be issued following statements replay. discuss information our is A dial based is information of our risks discussed to which that materially management. X, by Time predictions or available wlkpartners.com. only forward-looking the advise at Eastern reported to beliefs and as as expectations that wlkpartners.com. Westlake can available differ XXXX, the or with many Press internet release of code this first May and financial any is conference available press through The our The numbers system longer that therefore, today’s may Eastern This be our section both may on would access in Release webpage at finally SEC call will today, in that note the XX:XX webcast the at no you international May webpage XX, X:XX of may on that be should live callers replay as XXXX. time-sensitive Partners

Chao. Albert Now call the over like I Albert? turn would to to

Albert Chao

$XX million. including quarter reported morning’s quarter the of net Westlake XXXX. first was press gentlemen, first distribution release, consolidated Good XXth we you XX, Jeff. for morning, In income Thank consecutive OpCo’s is This to us joining ladies the our and the On quarter in for XXXX results. increase unit Partners distribution. you This thank to quarterly discuss $XX a first of we earnings and quarter of increase intrusions our million net income increase quarter X.X% IPO. per is XXXX distributions since our the XXXX announced respect from XX% April the unitholders fourth quarter to XXXX, XXXX. of and with $X.XXXX from first this first

and For to first turn I to times first of cash for detail quarter. provide quarter the like declared Steve? operating over more MLP distributable to coverage XXXX, flow the the Steve, call distributions. now on to the X.XX provided financial results would

Steve Bender

first Thank $XXX on morning’s OpCo’s million earnings morning, MLP distributable Partners’ you, for limited release, including per partner sales consolidated Albert, first and income, In of million everyone. this good the net quarter the net was million unit, $XX of million or Westlake quarter per consolidated and $XX cash income $X.XX of partner limited press XXXX $XX $X.XX XXXX. for we quarter unit. reported was flow or

the For pounds. the pounds, quarter XXX million million XX million million but of compared the first production quarter to XXXX compared of pounds to first XX fourth quarter XXXX’s production million OpCo’s XXX pounds XXXX, production pounds XXX of of decreased increased

Westlake X, increased income X% quarter or partner to City, first additional This result compared the completed limited increased net to of OpCo. First in XXXX. million. a in of unit $XX XXXX interest income quarter at from Calvert Kentucky, effective was million increase in ownership was per income drop-down was the production Partners $XX April, $X.XX ethylene increased expansion in from that pound the net capacity XXXX million primarily July increase The and XXX production Partnership includes in net OpCo million which XXXX, of by due transaction $X as the

by third-party $XX cash power increased our XXXX in supply was decreased XXXX providers sales $X ownership lower outage increase from quarter distributable $XX quarter MLP cost. by decreased industrial XXXX to net Partnership’s one cash gases caused production of distributable million of in first $X MLP and constraints MLP of of $XX prices primarily First quarter cash and due quarter flow. lower The and first million the to production flow from from parties. This third OpCo, of resulting increased flow million maintenance million income income of fourth higher XXXX a power net due distributable million, interest

generate is primarily XXXX Agreement XXXX flow was Partnership. of fourth protects and million is first XX% cash the quarter volatility million. quarter. The cash MLP associated our for ethylene the in This increase income is from First Chemical, look that MLP $XX sales to margin the distributable prior long-term ethylene net sponsor, incentivize due quarter decreased operating derivative ethylene million production XXXX compared cash which $X.XX benefit for be short a structured Westlake flows flow $X Partnership with stable of decreases the agreement of business. is to to Ethylene continue per margin and quarter rates. to to from agreement, of sales provisions This to pound opportunities flow the the us ethylene along production fee-based with cash the to with lower to who Partnership’s their net the capacity of of from distributable Westlake flow Chemical distributable for with Sales take-or-pay cash take-or-pay The our $XX and can

includes balances of to balance sheet cash At with and Chemical, the attention of quarter invested Westlake operations $XXX Investment cash Management and the The the of $XX in Agreement expenditures. turnaround cash million. had end consolidated our through first reserve the the cash throughout both million flows. the million through invested quarter, we Agreement Turning cash from Management Investment our generated our for and $XXX

for Lake scheduled Louisiana, XXXX. next turnaround facility which is II currently in Our is Charles, Petro at our

of provide which, we’ll the OpCo However, on more Long-term later and million $XXX $XXX was at schedule. guidance was $XXX the that million was in million, at year debt Partnership.

is XXXX, a per expenditures. distribution This in unitholders quarterly first spent OpCo X.X% XXXX, XXXX the declared of unit. million increase For first XX, April XXXX, compared our we in to was the quarterly the consecutive distributions a XX% and fourth distributions. over quarter $X.XXXX when unitholders, quarter capital to increase a XXth quarter to increase $XX and On

flow $XX XXXX the coverage million quarter of of cash MLP First declared X.XXx distribution. distributable provided

closing the comments. call Albert? I’ll Now to Albert make back to some turn

Albert Chao

stable formed The in foundation us margin Ethylene the unitholders. to flow you, to with distributions growth Thank the long-term deliver cash by Agreement Sales generated Chemical, the Steve. along our four for fee-based growth, of with Westlake take-or-pay fixed levers

us current or ethylene and our evaluate levers Agreement the growth to of other continue higher of earnings into of our a negotiating of either Westlake periodic our Sales income directly Chemical; to increase with sponsor, our and expansions drop-downs all to available facilities; fixed in OpCo qualified We Westlake. including: jointly Ethylene with acquisitions organic streams flows, margin of MLP; cash the

and capacity Charles have distributions and Looking growth continue to deliver distributions. added forward, to plan we cash in these ethylene our flows double-digit expansions low City Calvert Lake our in to to fund unitholders. production The recent to

and upon highlights third future. could constructing an a drop-down most stability Gulf to growth. transactions OpCo of these fund of and be venture XXXX, for increase considered recent the in accretive Our capacity, it’s ownership earnings OpCo are in new large Coast completion with distribution plans Westlake ethylene Lotte cracker that The XXXX. the it’s drop-down Partnership and OpCo in joint opportunity has the acquisition of quarter to

four our you earnings value and this levers our morning. of first optimize much to to XXXX Finally, evaluate all for quarter to Thank we’ll flow listening earnings, growth cash unitholders. very call our

call Jeff? the turn I’ll Now Jeff. back to over

Jeff Holy

Thank you, Albert.

of questions, X:XX this would at remind will to I taking Before Eastern replay teleconference we be available like PM today a you Time. that starting begin

that the We Valerie, take call. we’ll end will now of again the provide number at questions.

Operator

Instructions] Stephen Thank America. from Bank Our of comes question you. Byrne first [Operator from

open. is line Your

Stephen Byrne

mentioned And about have Can process MLP? to a which just could you little such? that be the the talk you approximate dropped likely describe the to cost the into have the venture joint and of Albert, Lotte bit buy the that do you and Chem you into option at output. duration XX%

Albert Chao

Certainly. ask, I’ll Steven...

Steve Bender

Yes.

of years carry. that cost we to total a still plus chose is in don’t this what the We completed interest elect the if as cost XXX cost elect have us is, to add XX%, additional plant three additional XX% option a pounds at investment, option know, additional we That cracker would ethylene we So, ownership stage. Steve, The that if that because to being know that – and is, post of have available million interest completion. is at single-digit it. make we installed after today, you the

income on we a make XX% Partnership the interest us larger so, our in date, today. of at provide the would future interest either a to want choose that doing we to the or would we contemplate. provides stream the the So that to existing given interests, to it the some stable same we focus plants ethylene sure it’s is structures assess again what as drop return If

provided. focus earnings is and streams our maintaining that income have always So of stable predictability the distributions historically provide we that

Stephen Byrne

be would of that Or you towards decision particularly that that, have? likely now? prices delayed the where it term is that And given three-year ethylene option end are

Steve Bender

market just make of as completion the at have project. that to We’ll at assessment and look the this look we

for And to me so the stage. to give project. it’s make we timing you have impossible as the assessments just at a complete We’ll this

Stephen Byrne

Okay, thank you.

Steve Bender

welcome. You’re

Operator

Thank you.

Duffy of comes Fischer Barclays. Our from call next

open. Your line is

Mike Leithead

guys. through? maybe heading how into get Leithead we Hey, on another leverage other this Can growth kind of attractiveness thinking latest update this rank distribution your regarding you morning. XXXX? This an three And walked Duffy you is or potential for drop-down would on of just the the Mike year

Steve Bender

us. a look very I to as four them of are think we all levers I the think that freely us, available it’s are to question. available Yes, And good at

of made margin September that the you think also in that about of the he expansion year. completed of July in we recent last effective As have availability through, walked we to was Albert drop-down today. them, reference But course, that

opportunities – expand contributed other And income spoke to take $X.XX time. and the net that provided stable crackers, that you acquire Deep be bottlenecking provided margin us a certainly, based the that increased it’s on an As sponsor some opportunity And crackers potential and interest between our higher certainly, opportunity about over could production. is such we we Partnership to well to seen Lotte, stream. at for be know, in have could just number. the you’ve as negotiation

the you cracker the if for expand that, for see So as both you we Lotte and have negotiate capacity drop-down opportunities can we cracker. as to well substantial the choose margin to future

our can IPO. it clear. that you growth double-digit provide low to that quite continue we’ve is growth ability path provide the to rate our on continue the intention since and been is So to see, And to distributions clear long-term

So see, can of variety a on as variety as path we’ll make a sure is have, can a a see we based provided we we what think for on that to about do is that, unitholders. look of that have levers for, timing variety right that that the and that, of just the you so. see you leverage timings are to levers and From perspective, opportunity

Mike Leithead

Great. pound, down margins, rough if ethylene that to of is I $X.XX spot sequentially. say XQ in in industry a And you the quarter about would saw Is the Or quarter? the sales? margins Westlake looks the some bit magnitude look that it disruption harder at like order $X.XX that for with hit it’s your called out you maybe merchant issues were of ethylene a

Steve Bender

think selling as that’s out a Well, X% we market done that component, condition. in

so I fair over quarter, period just the of any And of let’s of in say. to rateably – time think think over conditions it’s terms course selling market any

Mike Leithead

Got Thank you. it.

Steve Bender

You’re welcome.

Operator

you. Thank

of from comes question next Our Robert Balsamo Riley. B.

Your line is open.

Robert Balsamo

in that supply if if wondering in particular, And in you give I color a any for XQ, quarter? there’s could constraints? into carryover constraints morning. and the Good little particular, the more around outage power happened was

Steve Bender

third-party No, some the power third-party of dropped event regret a a same We certainly relatively gases by that plant. have provide at our the at And – provider – power provision no. different provider. site. came Unfortunately, quickly. we the was having other a at constraint back power the time, We power did industrial lost

those have resorted. been so And

we so, into would continuing no XQ that issues And here beyond or expect.

Robert Balsamo

do Westlake? catch bit to above to a maybe for XQ up capacity little So nameplate you expect for push

Steve Bender

incentivized certainly produce. every paid maximum we’re $X.XX We’re pound that produce rates because net that on margin to we

second earnings we’ll And maximize everything beyond. to be we throughout doing can So the to production achieve frankly, certainly maximum quarter.

Robert Balsamo

is margin. And related just question to second actually helpful. my That’s

These expand I the past in bit parent. kind mentioned ago polyethylene of lend to be and Chemical narrower, but contracted itself potential talked with this bit little a the bit margins kind environment current more you Corp of market a the where about that maybe to for the of minute and are that more a about might little potential – in just Westlake was you the expansion. Could overall think a wider. the the margin talk a You’ve attractiveness. would option would margin this ethylene context

Steve Bender

Certainly.

perspective, integrated So as with from to about margin say, we certainly, we sponsor, to, margin. that think Chemical, as let’s think their about they’re Westlake our expand $X.XX derivative higher, opportunity looking a the from ethane to dialogue something at

the ethylene derivatives. much So and their And that also in chain. taking we to wider down example, integrated business is see really their margin, that of than just olefins the certainly, because ethylene ethylene putting them as into a there’s margin an ethylene today, vinyls stream that buyer in their

with higher that in we if margin say, think should our and something from, using moving an That So negotiating sponsored soon to negotiated takes arbitrarily for as XX% let’s example. earnings penny. say, a additional margin, about us growth higher, expanding that let’s that be $X.XX as

and levers opportunity the simply viable. make the just four Partnership it’s very sponsor of that It’s negotiation that’s So an and happen. a between think is of the one to growth that

Robert Balsamo

it that’s All me. good. it, for Appreciate Sounds right.

Steve Bender

you. Thank welcome. You’re

Operator

have We Pickering. question of Instructions] [Operator Tudor, a Blair you. Thank from Matthew

Matthew Blair

good Steve. Albert and morning, Hey,

Steve Bender

Good morning.

Matthew Blair

sales. ethylene wrong. me X% if to want of touch on Correct market I the I’m

is than that based spot a more price. think a price I contract on

spot prices you going So price you to longer just to about how could any you these talk low opportunities have to that much whether ethylene contract switch and are pricing stay forward? going a more mechanism think

Steve Bender

to throughout we X% maximize those that Matthew, as the looking Well, about we’re think sold we in pounds it, sell so quarter. are that And rateably certainly do of arena. margin

as construction the derivatives start certainly expect ‘XX, selling look could ‘XX it and And market. in have been ethylene begin on into of of contract something expected are basis, up is to of be every forward, and than to value selling at watch we’re maximize as the certainly eventually we market, something position we time the It so spot to some long some higher that up to marketplace. under consume will start over period, the And the them be the certainly, ethylene an considered. other price that bringing prices certainly such for look and into ongoing the pound certainly we contracts,

Matthew Blair

the it. doing I high third-party probably think or options quarter like Got by, year. likely of about you your Does looks this that you’ll an IDR waver? acquisitions on the on And guess, it splits limit IDR’s the reach then, third would

Steve Bender

aware that distribution and Matthew, value that topical, well minds we’re at as is we’re and to would unitholders both assessing and to providing incentive Partnership. you range make very the our a we’re investors sure that imagine, looking wide rights to certainly, of maximum of alternatives

we’re unitholders. both to and that those very understanding and maximize can everything topical, value Partnership the are certainly, so we our issues the And we’re certainly to doing that

Matthew Blair

you. thank it, Got

Steve Bender

welcome. You’re

Operator

session any Q&A there you. At remarks? this time, the now Are has Thank ended. closing

Jeff Holy

you our second to discuss call. We hope next today’s in XXXX our conference quarter results. for again participating us for you’ll Thank join call

Operator

Call. Thank you today’s Partners’ for Chemical Earnings participating Conference Westlake First Quarter in

As following hours a may has for XX, replay p.m. at be callers access call be XXX-XXX-XXXX; replay The two numbers: Standard accessed domestic call the calling reminder, accessed available will replay this May XXX-XXX-XXXX. by may The be beginning after Eastern dial should access the can is until the callers Time, XXXX. XXX-XXXX. ended code XX:XX international and

Westlake Chemical Partners (WLKP) 5 May 182018 Q1 Earnings call transcript