WLKP - Earnings call transcript Q3 2020 | Westlake Chemical Partners LP

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Operator

Good afternoon. Thank you for standing by. Welcome to the Westlake Chemical Partners Third Quarter 2020 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded today, November 3, 2020. to Westlake call and Chemical like host, to Treasurer. now Holy, Jeff Partners' would turn over the today's I Vice President Sir, begin. you may

Jeff Holy

the our Quarter of Michelle. Chemical Chao, joined other our you, Good members CEO; everyone, our President Albert welcome Thank Steve and and Bender, and afternoon, today by team. Partners Vice Conference XXXX to Third President Call. Senior I'm management and Westlake CFO;

or the we and call, as to Chemical Partnership. parent References our refer owns Westlake refer references to Corporation; or this During Westlake LP, Westlake company, to Chemical Westlake certain Chemical Partnership, ourselves of and Westlake OpCo Chemical which to assets. refer olefins OpCo Partners Westlake subsidiary the a to

on XXX-XXX-XXXX. after call. be beginning press operating Domestic Partners section available the sell our forward-looking and referring the this is Please Definitions Partners' competitive speaks The other operating that issued distributable broadcast differ borrow as may replay. of This conditions, and web at today's XXX-XXX-XXXX. pressures, topics call economic discussed subject website. as statements contain changes reasonable this upon materially document of following funds discuss to This or Additionally, when be Actual we markets Westlake of of uncertainties. could today, hours we will will at live or in reported These this only information governmental that November information no longer at results these code refer capital replay call is finally web accessed products webcast COVID-XX factors pricing of access access Today, be available that to volume forward-looking and on to may many X, on and you a management's as page system time A difficulties, are financial factors, Westlake a X time-sensitive the pandemic, suggest replay based dial is the of cash management able by risk MLP proposed to actions, regulatory results. on ability in for third through of sell, ethylene, both and should based actual therefore, available being of the risks the our distributable at to any and we and wlkpartners.com. an conclusion the management. the SEC wlkpartners.com. flow. quarter able certain which are callers currently our the advise of are are release XXXX details including to we thus the filings. conference prevailing XXXXXXX. cash available Press International are terms callers with numbers that made morning, be ethylene accurate price call replay access going note that information at cost XXXX, expectations accessed assumptions page Partnership's Internet our as advised by to numbers. on is dialing is that may Chemical well our Release The flow, to predictions I you're would that beliefs can and information

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

Albert Chao

third thank Good quarter for to you, XXXX you joining Thank everyone, us results. and afternoon, our Jeff. discuss

hit that COVID-XX recovering demand by the and with second downstream's from and from to our prior Laura, the weighed of production in area to in the of The in the period lockdowns Hurricane pandemic infrastructure production On rates solid damage storm, will sales the was on in vinyls strong hurricanes to over and and pool significant same severely In power the years, Louisiana quarter XX products plants one the to of Southwest Gulf first anchored operating those facilities year. idled August hurricane's by strong Coast the our across region. XXXX. was landfall. start olefin Westlake impacted from a third anticipation utility XX, result stemming strongest quarter had this and This which of similar pricing in the we the

the OpCo impacts have during outages Partners in $X.XX been impacts the own continues flows production This in provisions consistent year. is plus remains This for Westlake While utilities restarting early and the of the minimum events. force to to of of that In another homes. say unplanned strong. OpCo thesis idle OpCo produce example we pay Once a facilities and majeure. lack calendar from ethylene per and was ethylene agreement, in each had to fundamentals helped and these also how access Through again many began insulated corporations our to X I'd occur, these with restored, damage Westlake and to special restart maintain that idle X dedicated Due turn of cash just sustained the caused our remain to Petro to Petro purchase and sales declared OpCo power facilities during commitment, utilities Hurricane this force committed and the once receive as we were process minimum began majeure. operations. of our of pound to to Lake amount to power available, to Charles, ethylene our you is for long-term has to their power when threat who begun dealing electrical storms these thank a were October. restart employees recently Delta to our produced mid-October, ethylene allowing of a like while plants us restarted in caused margin volumes costs would other became from

including of are of for agreement Turning to margin Partners' predictable a flows. release, report quarter $XX OpCo's results sponsor financial to provide XX% third our the for produces for the like ethylene financials. quarter more earnings income, each was This commodity stability our In our sales Westlake earnings this call insulates income from morning's would million. of our $XX Steve? These planned cash now which testament fixed we solid million results net consolidated the XXXX. the net third production annual press us Chemical with detail on to to investment-grade volatility. and operating to over quarter. third financial Steve Westlake and combined price year, from certainty, turn rated generated I

Steven Bender

income, cash Partnership Thank third $XXX $XX this afternoon, earnings sales and you, $X.XX was $XX Partners' we million income for press third morning's XXXX quarter of In million good per had or net Albert, million OpCo's on quarter consolidated reported of of consolidated or flow release, unit. the including the for net distributable XXXX. $XX $X.XX per million Westlake unit. quarter everyone. The

second Westlake committed the partially sales was higher the million. to for million to by cash $X attributable compared compared flow third benefit flow the increased The third third-party Westlake from would in to production for committed to lost $XX XXXX's and primarily Westlake expense $X force by production of expense and Third The quarter increased payment Partners higher to and of that quarter of been offset Westlake, $XX which volumes. partially increase to The of and majeure was sold million included to cash sold had increased in distributable third increase XXXX Partnership million attributable XXXX quarter third the by net event production net net sold on of XXXX of earnings quarter The million for million interest have increase by was $XX higher lower Distributable offset $XX occurred. related million reserves. the to cash distributable not million quarter million. quarter income by $X increased quarter, $XX earnings reduced $XX of income income net XXXX flow the turnaround of maintenance on Partnership's income XXXX.

quarter million lower distributable Third increases quarter OpCo the $XX XXXX $XX majeure These of million expense. cash XXXX and from distributable primarily $X interest million. resulting flow were to increased of at lost second the force production cash flow payment due from

from $XX XXXX cash increased at OpCo of of first increased X net of of the the XXXX of to For from million months Partnership lost Partnership The $XX due of was cash distributable interest flow months Partnership force X $X net to the XXXX, to first MLP distributable the million primarily flow $X lower of the $XX million X increased majeure attributable $XX million. income the the million. income months the net of million and first from production MLP expense. resulting income payment

cash end in well agreement was cash $XXX we as the the attention includes of through the generated million, million invested quarter of $XX investment the end management balance at third quarter, was for consolidated debt as reserve invested our expenditures. $XXX through the cash million at with had cash sheet agreement of at throughout At Westlake in and and our Chemical quarter Long-term turnaround the management The was cash Turning the which balance of flows. operations million. the from $XXX OpCo. to million million $XX of the $XXX Partnership investment a

of $X spent capital XXXX, quarter third the OpCo in For million expenditures.

quarter of ratio debt XX%. maintained Xx to and net we strong For consolidated capitalization a metrics a with XXXX, the third below leverage below leverage ratio

the contractors, the Petro risk to employees order half of first to scheduled reduce was turnaround this COVID-XX XXXX. at X X continuing of deferred occur in As previously discussed, turnaround strong and the Petro our Due until we originally performance unit our was and year. the to ethylene to

We for amount has Petro in turnaround this an plan fully to and The the the the turnaround later for economic environment. turnaround. Partnership's for timing time charge predictable are in on of continuing attractive ethylene we cost be of finalize details on, Chemical at the cash expect turnaround, be and the continues X of cracker. flow fee-based the further Westlake provide to our commencement included the we'll to been of the attribute The today's to reserved

flows, our the cash we of Given consistency distribution with earnings and our consistent continued prior the have uncertainty, the market kept with quarter. combined

the the markets. to thus target need to allow access Our will cash flow distribution continue equity level, eliminating our X.Xx while distributions current capital our coverage, long-term Partnership of the sustaining at

the and conditions XXXX, in partnership and levers. when approximately assess in our October $X.XXXX increase distributions XXXX, On will an We unit evaluate quarter IPO made per respect of X.XX% consecutive Since has of unitholders. XXXX, the the quarter market apply XXXX. XX quarterly distributions XX, quarters growth third third announced we over of of to how to our we with future

of distribution grown original minimum since have XX% Partnership's quarterly the We distribution $X.XXXX.

the September XX X.XXx months ending XX, XXXX, flow provided coverage cash For distributable of declared distributions. the

November The third distribution paid of XXXX, XX, unitholders to will record XXXX. of X, be quarter's Partnership November on

like some over to make to turn I'd Now closing call to comments. Albert? Albert the back

Albert Chao

Steve. you, Thank

attractive quarter and production today's unplanned cash risks predictable continue be such with insulated financial and to therefore, as in volatile in associated in the fee-based flows XX% and ratable structure with Partnership's sales investment which, thesis flow demand Westlake as Chemical for and provide predictable provide and provide illustrated PVC us is was parent, flow, rates. business flows. low predictable solid a uncertain earnings from our protective are The provisions polyethylene Chemical, quarter demonstrated, with We to interest agreement our of of will pleased third near the cash of cash take-or-pay This despite ethylene more for confidence that model us environment, production, cash especially performance. our the ethylene the stability as our that and hurricanes via and from face historically derivatives, should an The outages. OpCo's the continues this Westlake economic observed solid contract we stable even its

cash Steve the us sustain in underlying investment our be more could greater flexibility relying of to our solid should better outlined, thesis in We market. strong provides the sources given flow believe environment the an in attributes value without in thus not capital The existing performance our future. these this of and predictable external clear, financial distribution providing ability reflected As quarter. on be

maintained metrics. a financial strong have leverage We sheet with and conservative balance

income interest margin our navigate ownership As facilities; X negotiation the ethylene we evaluate organic Westlake. the our such of growth levers streams; in these a acquisitions other of current including our will as expansions OpCo; conditions growth in of and qualified normalized a to higher our we of opportunities, increases continue of agreement market via sales ethylene and fixed return future, market, opportunities to of prepare for with

our continue the long-term As to ability levers, unitholders. we markets we normalize of with have value utilization and our the to to provide believe X

being very with call. communities As continue in the XXXX safely always, we of in will we to earnings environment which along to operate live much work. listening our and good Thank stewards for quarter third the you

call the Jeff. back turn over I'll Now to

Jeff Holy

Thank you, Albert.

to like Time. be p.m. would now taking Eastern today Michelle, you this questions, begin starting will we we Before will of remind teleconference that I take questions. a X replay available

Operator

[Operator Instructions].

Leithead from Barclays. comes Mike question of first Our

Michael Leithead

calls between have We break this quarter.

thinking about wanted in Partners distribution policy I First, kind the think more terms you that restart your dig you possibly take where it it it to guess, of versus doing over in peers it of growing today? little Is activities, Westlake or growing more do your bit potentially How you're keep are I weigh terms kind what about how to in a versus market of of stable is a of would and currently trading? function decision equity do what to how growth time again?

Steven Bender

good Mike, question. a it's

of we unit companies well-structured reflected you we that be this sense we peer we to at rate those cash more can flows. yielder earnings space, current that, able to When the against, valuation and you and evaluation be that our current in think that like that we of this better benchmark makes this, If grow partnerships And that think in lower stability very environment. look interest of yield, think you in top-tier need see provide a price. sets we're should feel

Michael Leithead

months, And call, as That Westlake it. has seen the I the market, unit talked of margins, over bigger of X lot you or WLKP a consistent. MLP cash price Got sense. think remarkably we've volatility ethylene but then profile the it's about maybe Partners the picture, flow on remained past makes whether

today, as where of you all, is does think changed for Westlake's you has it possibly strategy? of kind part at how overall MLP guess I the the maybe sit view what reinforce unitholders? Or investment So we case that potential

Steven Bender

Westlake think, earnings to provide that you they've good flow ability their for those who on earnings Chemical and return a aligned. to Westlake a Well, I integrate get that Westlake predictability predictable think the cash strategy that is think think think I predictable investment with stability and and of made. aligned an makes a the believe the of it one, income hallmark ability highly stream importance, to flows, stable cash strategy. I a vehicle a are and Partners with I of When think, of I Chemical, continues And sense

strategies As permits. we our entities good together, long as can these and I the market their makes it in as execute keep to on place think, sense, growing

Operator

Tudor, Our comes Matthew Pickering, from of question next Holt. Blair

Matthew Blair

quarter-over-quarter but understand, you're you LP's the though, on hoping of EBITDA was structure. op the Westlake's Was the stability downtime. were revenue you $XX was million where appreciate I despite Westlake C-Corp? I how from sitting OpCo could help this up still received costs, you actually that then us take-or-pay case So down? some

Steven Bender

Yes.

the quarter, So story. period smaller a of say, -- bit outage, the some or little was we I expense obviously, maintenance convoluted I the guess, during But it's a of the during normal. would saw than much

as us those of the as to recovery well you a you And the And know, on that's outage what fee so pieces unavoided during that allows $X.XX is lost. cost small margin operating the deficiency when period that as million in certainly, put recoup together, production results. provides very that the uptick $XX buyer our of

Matthew Blair

then need on And the lookout the a do that be for quarters? we reversal Okay. in of coming to

Steven Bender

Those circumstances that in reverse No. shouldn't context.

As operating said, we force under majeure I today. well, are a still

been seen similar predictability. unplanned deal with forward had you've think incredible an as as those in cash that and agreement past, And prepared in illustrates, the so outages of it to look And a the in other as look our flows. quarter fashion. we've this stability future, stability remarks, we provides structure the ethylene and income to the forward, and sales said we given able of we've and We've I

Matthew Blair

you you QX that sales talk question. Could sales the mentioned in were spot last and I think spot QX? far then the comments so ethylene about majeure? did in And force have lower. you they Steve, Okay. in prepared still despite But

Steven Bender

accordingly. did the in and did. ethylene have deliver we're We We quarter sales to spot able the

Operator

has back session will time, Jeff to Holy. now the At turn this Q&A ended. the over I call

Jeff Holy

next XXXX call. year again full join you'll for to hope us our quarter in and results. you discuss participating fourth today's conference for Thank We call our

Operator

in Chemical you Thank participating Conference Quarter for Partners Earnings Call. Third today's Westlake

available can replay two should ended. domestic The this access callers is International numbers: will will for reminder, call. beginning XXX-XXX-XXXX. the callers has This today's conclude after at be be XXX-XXX-XXXX. a following As the the hours replay by accessed replay dial may call calling The code access call XXXXXXX.

Westlake Chemical Partners (WLKP) 3 Nov 202020 Q3 Earnings call transcript