WLKP - Earnings call transcript Q4 2020 | Westlake Chemical Partners LP

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Operator

Good afternoon. Thank you for standing by. Welcome to the Westlake Chemical Partners Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, February 23, 2021. I would now like to turn the call over to today’s host, Jeff Holy, Westlake Chemical Partners’ Vice President and Treasurer. begin. may you Sir,

Jeff Holy

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

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

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

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

Albert Chao

per or including fourth for afternoon, quarter discuss $XX the we joining and of to you OpCo’s $XX $X.XX Jeff. reported quarter morning’s results. us of everyone, release, fourth fourth XXXX Partners In net Good thank consolidated million income press million earnings XXXX. Thank Westlake you, full-year for our unit. this was and income, quarter XXXX net

by pandemic Chemical spite strong driven lockdowns proved for unprecedented of to the the caused be full-year, year by and was For hurricanes, $XXX This Delta. of Westlake consolidated In Partners. impacts was challenges, outages income XXXX the Laura million. Westlake $XX million. Partners’ COVID-XX income net full-year net another and year production the

Our model. remained for year the earnings business illustrating our solid of strength the

the was quickly quarter, a Charles, predictable produces damage for a fourth producing and Louisiana, over financial and the brief are landfall would fourth thank flows. on The fortunate detail in Chemical, in quarter call turn facilities. to and sustained threat margin we who of the restored, to were generated to our to now vital cash results Once impact delta well as provide insulates we financial we our like stability sales volatility. quarter Lake planned provide me to Westlake the these testament have from with I to XX% restarting our us you solid more hurricanes the power the sponsor, agreement operations like the would experienced update we Let worked each for the fixed earnings ethylene for of Steve results combined investment-grade to to I to as of stable and which minimal market production resume on our year This in from October, annual whole Hurricane to employees our the idled ethylene. full-year say plants. with fourth facilities begin special in Steve. of certainty, our XXXX. operating are a and year, dedicated

Steve Bender

fee-related at million had for buyer the forced production including and Partnership fourth I decrease offsetting will majeure Partners’ the have sold Thank or more occurred. million decreases this million XXXX third-party of $XX was discuss Westlake this on $XX shortly. XXX net of of events, these of income impacts not release, $X had quarter detail that of lower volumes attributable primarily XXXX by fourth cost. net quarter hurricanes lost was sales associated and net $X income distributable the the Distributable turnaround $XX income quarter Partnership in unit. cash of event deficiency afternoon, cash of million sales to maintenance or Westlake The of reduced unit. for And interest fourth for In maintenance cash quarter for the million per OpCo’s benefit for million Partners $XX million. XXXX. quarter. the and flow was quarter XXXX flow press mechanism million. in Westlake good would distributable earnings the partially you, flow offset $XX of increased Partially was earnings, was $X.XX in per we the Albert. cash compared quarter to by deficiency higher distributable XXXX Fourth the of majeure fourth expense income reported consolidated fourth XX attributable million to morning’s the increased force everyone. million XXXX quarter and The flow fee income decreased net to consolidated The net compared decrease reserves, $X.XX from $XX XX million to decreased lower by buyer expense been

flow as the deficiency increased cash million. to sales million. million XXXX prices For lower $XX income agreement sales lower ethylene $XX and was decreased the million. Partnership third-party from sales to XX million. It the by the to from increase Partnership full-year of of due distributable was for of offset due full-year majeure net expense. increased the the as of of XXXX, net Partnership well primarily income higher million sold full-year Partially in $XX income to Westlake for events million cash fee buyer of forest to to maintenance volumes of $X West for MLP the XXXX the The volumes, distributable flow the attributable the ethylene of Lake net $X $XX sales terms

million outages ethylene Westlake deliver The OpCo in to earnings in receive these of a a these consistent quarter, Westlake for the produced would OpCo predictable commit As of continues production value amount pay of from to of impacts our unplanned benefit been insulating for earnings of force incurred, events. per how plus allowing the this we business an purchase provisions a provision Partners that example this have buyer OpCo cash OpCo $X.XX deficiency for XXXX. ethylene from model flows to and were discussed agreement calendar events. is of year, our and costs last majeure investors. fee the This volumes majority during that pound provides provides Through and thus sales during commitment, with and margin minimum to $XX a turn, ethylene each us the

at This year OpCo. the at capital was previously end which deficiency the debt spent was the received discussed agreement. XXX payment XX million at cash end consolidated the of expenditures. had the terms Turning in attention on investment payment million. was associated sale under of million, and balanced buyer obligation In $XX to Partnership $XXX long-term million our the the OpCo $XX of sheet year had our Westlake year, to and Westlake of Partnership of cash a the At the million flows with we The the agreement and at end to invested of XXXX, a XXXX cash $XXX was management million of fee. balance of the the Chemical with January

maintained leverage and we a the leverage For ratio XXXX, fourth ratio XX%. a debt-to-capitalization strong near metrics of with below times quarter one consolidated

of of modeling provide For the winter on and feedstock Last caused materials reserved week, XX-days. widespread States approximately included the Westlake Southern and in some disrupted an cost our weather planned this at begin Petro the this unit be commencement turnaround. power for to the raw and turnaround much will the United has Central purposes, outages extreme year Chemical to will X plants. that last of of is and we across amount been fully has The of September utilities our turnaround to projected and update of we in charge

a several some As of operations. to consequence, their have experienced our disruption facilities

of be majeure Chemical. to by sales the while agreement capital structure at our distribution predictable Charles ethylene sales times eliminating The will we coming today’s markets. long-term of triggered cash buyer our from flow access environment our benefiting fee-based to equity earnings our current units, fees attribute coverage, thus cash to and attractive need We Westlake differentiated a force flows. sustaining deficiency agreement from the be economic and from the of Partnership have Lake agreement level is cash associated consistency ethylene this one flow X.X the under allow continues in targeted ethylene the for the The continue Partnership’s our and distributions

original grown and apply in and we quarterly how growth unit continue to minimum evaluate per of We of On partnership’s four consecutive of has with January to since holders, XX, to XX% Partnership unit $X.XX.XX The conditions fourth made distributions quarterly since XXXX, the will $X.XX.X. our XX market quarter we levers. IPO XXXX, distributions distribution the when announced respect have our XXXX. the and we distribution our assess

XXXX, declared partnership Xth. December XX, to holders the ending XX, record distributable XX-months paid be coverage of February cash X.XX of provided quarter’s February the flow distributions. on XXXX, fourth will The times For distribution

call I closing like Albert. comments. to Now over make turn some Albert to to would back the

Albert Chao

Thank you, Steve.

provided us was The Partnership’s outages. We of and business and as performance. financial XXXX flow associated the our are agreement provisions production stability earnings with our pleased in the sales solid unplanned hurricanes with illustrated model despite predictable its ethylene cash and well

Looking by into sustained and XXXX, we polyethylene produced by Westlake Chemical. driven for for our parent, remain demand demand optimistic ethylene about strong PVC

agreement that Our take-or-pay predictable and provides Westlake Chemical ethylene contract cash to continue predictable flow fee-based OpCo’s sales stable our structure cash production flows. will with for deliver XX% of from

Steve markets. maintained the As our our on reliance outlined, limiting we distribution, equity have

about sheet value balance strong We unit financial are to as metrics. our a leverage excited long-term holders. the deliver we and future with conservative Partnership’s We maintained

sales higher As a believe and four we long-term of such other ownership of to via ethylene our expansions Westlake. future, to market ethylene holders provide growth as enhance agreement income acquisitions as of continue warrant. and growth conditions organic fixed levers OpCo, levers can the our evaluate value have margin growth of ability we unit with our conditions, utilizing in we our navigate facilities; our continue of opportunities our interest current market the to opportunities, including to negotiation of We streams, four qualified increases will in further

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

Now turn Jeff. I the will call to back over

Jeff Holy

you, Albert. Thank

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

Operator

you. from Blair Pickering Matthew Instructions] Thank the Holt. of first is line [Operator Our from question Tudor,

may You begin.

Matthew Blair

good in that XX Hey will you in you Albert the you mentioned larger this morning million Do payment force than Steve ethylene majeure smaller triggered think or and Lake be Charles came QX? for QX. the Steve. the

Steve Bender

here We near and expect to expect running future, so and in up the it the to smaller. unit I reasonable be be

Matthew Blair

to and improved likely does has LP Westlake yield to more in then And about so, Great. that you or resuming the growth? think restarting drop X% distribution make program

Steve Bender

if from proposition if opportunities if if We will marketplace there might are, continue that a there at continue drop they in actionable. assess flow will to And and look are those to are the attractively the value bring. a and we and they are, opportunities capital see financially

Matthew Blair

you. Thank Good.

Steve Bender

You are welcome.

Operator

America. our And to next Steve from of line Byrne of the Bank question

may You begin.

Stephen Byrne

that joint fact I joint that just mentioned you. growth cracker them one you thank this for Lotte would a Yes, additional assets Albert, that of eligible and add not these be OpCo. And that to the here, included be you four wanted levers the to ask venture about in could does an in or venture, in preclude OpCo is asset it? it is have

Albert Chao

just available assess as grow And continuing think viable something It that and to of actionable, added have. is No, that And ago, have the a would into ethylene interest interest us. through does is Matthew we it, that. it will acquisition moment we continue in asset. if it is possible the consider. to we our not contribute that in that an our take it you of levers is the to an that preclude something that structure assets I such call we and unit is as to will four that eligible mentioned Again, when growth and we distributions to it

Stephen Byrne

you. Thank Okay.

Albert Chao

You are welcome.

Operator

Instruction] from next of question Our the [indiscernible] come will from Advisory] (Ph). [Operator line [Aviation

You may begin.

Unidentified Analyst

Good question. questions. my Thank you A of morning for are. couple taking where you

both all, way to analysis. from of really modeling First

majeure indicated not that in You month. force fourth were which were the results of that paid financial the quarter until XX-odd-million last the actually included payments, some

provided got prior cash the modeling, was years, non-controlling distributions. on the by payment? that analysis than Chemical flow of unit cash less flow unlike of Is distributions net holders significantly sum activities, interest if operating by that So activities, of provided XX-odd-million year, the provided to some operating in reasonable the the the cash more in statement, cash add or look of an in Westlake the the by operating at a terms from should you in match for you the activities we that it majeure terms greater force doing prior

Albert Chao

Yes, it is.

Unidentified Analyst

Okay.

look to to soon? balance be should is that when enterprise large and trying it I’m in price-to-book partner I’m figure if of such for related a rights big general TEV-to-EBITDA? you wondering triggered number And sheet, negative interest. model accounting at total distributed partner distribution out Why question, be do to value. have that And Next the terms a you the how the a is likely I the having number? general that negative are anytime to that How modeling trying

Steve Bender

reflects Westlake’s the in Yes, it interest simply business.

as And OpCo so well from it every distributions the as receives Partnership both quarter.

looking are simply equity interest Westlake the sheet the you Partnership. in reflects So has the Chemical that Partnership’s balance at and it

Unidentified Analyst

large three publicly holders is and because If held, have you privately positive number. you Westlake that a - lines, getting common unit a is and have

a that you holder, change Westlake, smaller what is and general a value such trying common the calculate that And negative EBITDA, to have number. to unit a to should any have Why TEV didn’t negative price partner, Westlake, negative partner I number, million. that number? you You interest? and is then XXX.X positive is big assign a - large I’m general negative When

Steve Bender

Yes.

how total is So capital look at of look when the at at equity should you that. Partnership partnership’s the total value look you the really

So component. looking at the XXX equity total million here value the is equity the total

piece. it So non-controlling the both is

questions time time to Jeff looking flows, at to go happy in spend or is with through of time our distributable numbers. with the if any that. through you I’m that the to to might are have. model sheet both look you Holly, spend the Treasurer, some at modeling you those balance I’m some cash you And some you really happy So these spend how should or the

Unidentified Analyst

it I net time share net is set And typically, the will I we a - That loss. mass a shows that which convenient and because good. one just the the is is get follow-up many more thing perhaps partnerships the of invested have KX, over with I my you. invested can years, I’m of in for recently other Okay. income only when

Chemical to So as capital. Partners? of experience return an Am the distributions count in I investor have Westlake all as a as likely

Steve Bender

It can large days online, so as last mailed component receive invest. well. certainly, been choose you should that. few a have when your KXs you of to really live they will And within do those are to function a You The now chose return. you is of have the that

So if it you But the are mail, looking coming for you now log it electronically. should can soon. also be currently receive and on

Unidentified Analyst

one distributions the so that income. last you advantages month, partnerships Okay. but Well, as is considered often that getting the KX, know, - current are bought in I not investing mass not of limited I’m

to go I issues? these to should modeling e-mail call able whom or up time set of some So over a

Steve Bender

You will Steve might This through Jeff you at reach And send modeling my Bender, and both you introduce have. e-mail can and is me treasurer, Holly, out walk certainly to questions an to will can myself. I you sbender@westlake.com. the that

Unidentified Analyst

Excellent. answers Thank you for very to much my questions. detailed the

Steve Bender

You are welcome.

Operator

this at over Q&A would any call remarks. back Holy to turn has like the closing time, now And Jeff I to ended. session the for

Jeff Holy

Thank you for you hope us again conference to call call. results. First for participating next again will We in join Quarter discuss XXXX our our today’s

Operator

Thank Chemical you earnings Westlake fourth conference today’s call. partners in for quarter participating

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

Westlake Chemical Partners (WLKP) 23 Feb 212020 Q4 Earnings call transcript