WLKP - Earnings call transcript Q1 2021 | Westlake Chemical Partners LP

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Operator

Good afternoon. Thank you for standing by. Welcome to the Westlake Chemical Partners First Quarter 2021 Earnings Conference Call.

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

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

Jeff Holy

everyone afternoon, quarter members President Chao, and Senior first call. our Good Valerie. and conference our you, and to management Steve Chemical XXXX by the today joined other Vice CEO; CFO of welcome team. I'm President and Partners Westlake Albert our Thank Bender,

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

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

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

Albert Chao

And quarter. our the The and Westlake This fixed just I widespread quarter as net you and for results fixed feedstocks was planned $XX margins, testament XX% now to for turn Good partnership, caused this Partners' consolidated to production again, committed fully in severe which on sales insulates first our generated agreement thank take this, XXXX. production the by widespread greater of reported the the quarter this joining Steve, the year, to would discuss costs our their utilities quarter winter produces for press agreement call million associated the with more efforts, on flows. to our release, caused to impacted our the Thank from the XXXX quarter in over to to and our end $XX ethylene of or margin, combined net In for predictable detail Westlake income you, the employees disruptions million this production the results production storm. storm, including detail risks. and the the winter severe financial will was operating with storm, in resuming certainty implant OpCo's Ethylene disrupted winter Steve? market provide earnings ethylene for first of and cash from $X.XX provides like other Jeff. stability thank quarter recoveries Chemical, results. -- Westlake Chemicals to a -- per and financial Partners first ethylene first unit. for first from each us volumes our with Steve investment-grade in I sponsor outages by the morning's afternoon, outages severe moment. supporting discuss by agreement provided earnings us earnings to of everyone. And outage. Westlake a operation we sales income of volatility power annual quarter quickly causing dealt benefits outages unplanned the ethylene stable sales quarter. industry with industry with ethylene responding are production opportunity OpCo. this storm including the want significant we

Steve Bender

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

per $X.XX calendar interim to of purchase for were that plus pay continues and year, impact events. of allowing largely margin a the protective majeure have the commit provisions, defined outages these thus, Through deliver events. this from amount agreement insulating us each Partners Westlake Albert these from mentioned in receive during incurred, sales during OpCo force As OpCo earnings that the to for volumes Westlake Ethylene produced and pound provisions to of costs production been unplanned agreement, ethylene a consistent OpCo would ethylene

long-term. a ethylene delivering flows $XX value example is recovery As provides net agreement, in model cost of first to income of a an result the how and unit-holders our benefit of our XXXX, of mechanism and thus This the included revenue sales cash quarter million. business earnings predictable the over

for the severe was quarter environment flow Westlake lower flow cash XXXX, of winter quarter turnaround decreased million million contributions $X resulting by income third of storm. The driven party the Partners of $XX to partnership earnings was of cash decreased ethylene storm market of XXXX net cash earnings first net the $XX First reserves. resulted the distributable strong million, to in million. pricing compared first quarter quarter. by by sales for in that compared of to from on primarily quarter the decrease for decrease production this in the to The higher winter XXXX Partially net offsetting Distributable decrease attributable attributable income first XXXX income, was $X from and $XX $XX lower in million distributable million. flow

payment recovery from first we end had investments and In was the terms to flows, at million consolidated and $XX balance $XXX million, Westlake the agreement, the of attention quarter, OpCo and spent $XX cash Turning Westlake the will the the debt obligations quarter, at quarter totaling was quarter, expenditures. the be partnership cost of balance our $XXX remaining the loss first end These sheet of under had ethylene to margin XXXX Chemical Chemical the which in cash the investment with $XXX of the representing of and million. agreement. was $XX our through in first of sales due at At management Long-term the cash payments the end million capital million production OpCo. million, storm. at received to partnership the

near we XXXX, metrics below time strong maintained leverage a consolidated our ratio For leverage net quarter and the capitalization XX%. with first one to debt of ratio

coverage of will Partnership's will The be September of is our been flow the approximately days. equity cost distribution cash included our differentiated at consistency ethylene eliminating Chemical associated for while by economic last Looking attractive and ethylene ahead, the earnings and our our XX cash need The in projected coming access long-term of and X.X and allow in planned fully target has attribute sustaining markets. continue to the X turnaround unit level at Westlake Petro turnaround the sales this of turnaround. continues year in Partnership this structure our agreement, the be flows. from to this agreement charge cash the the begin of to and reserved times of to flows predictable environment distributions current we is amount capital commencement today's fee-based thus

and of this the to On distribution impact partnership's XXXX, consecutive the quarterly our level. XXXX, the XX% first May this quarterly in announced to grown the X, made be since unit-holders distributions XXXX Excluding are unit we year, quarter of XXXX. per original of IPO full we $X.XXX. the partnership has Since our respect at targeted expecting our with $X.XXXX turnaround coverage to we year distributions have of XX distribution minimum

declared distributable ended flow cash coverage months distribution. X.XX XXXX, For the the three provided March times XX, of

partnership will paid to XXXX. be distribution of record XX, unit-holders quarter's First May XXXX XX of May on

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

Albert Chao

Steve. you, Thank

demand stability parent in to by protective strong our ethylene polyethylene the We our cash by us financial demand remain Chemical for PVC as of driven illustrated for support produced We third are was demand with for Partnership's Westlake party XXXX, about predictable unplanned ethylene business and despite production The pleased optimistic winter associated with sales. and our storm sustained ethylene, and flows, continuing and the sales model downstream performance. provisions outages. well provided agreement the continuing our earnings its

Our to balance provides sheet we contract flows. from sheet. We ethylene fee-based that cash with of conservative sales balance take-or-pay We strong Westlake maintained a deliver and and continue stable production, metrics. for structure a XX% OpCo's flow cash predictable Chemical predictable with leverage strong remained our agreement financial will

value streams, ethylene in our organic evaluate of in growth other of expansions and qualified sales the to to fixed As of four growth long-term opportunities we'll of to on market levers margin a acquisitions We provide income via ability our continue remain negotiations OpCo; unitholders. including as future, focused agreement conditions, with ethylene interest Westlake. our current such ownership we opportunities our navigate increases of to higher facilities; continue

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

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

Jeff Holy

Albert. you, Thank

taking remind will at we of to I after the replay will be has this Valerie, call. end We'll we ended. of Before the questions, now would two that begin number teleconference call like available questions. provide a take hours you again the that

Operator

Thank question you. Leithead of first [Operator comes from Instructions] Mike Our Barclays.

line Your open. is

Mike Leithead

Great. Thanks. Good guys. afternoon

Albert Chao

afternoon. Good

Mike Leithead

guess $XX, last time was you're on if strategy now price you you in current unit think or XXXX, question, it changed distribution improved an I guess, absolute sustainable so. the look price here much call I since first XXXX at the I the over obviously late level

up on how Although evolving, would need will your you appreciated? what's maybe at that that question few are or I any gating is restarting to thinking or distribution will before again, is a growth bit growth? the at be better yield there maybe all restarting if much growth guess of about I guess cleared that a thinking Just items be my perspective time. distribution the

Steve Bender

Certainly.

see investor a value growth XXXX. preference in that paused So in early growth future is is for. to evaluate and looking distribution preference a interest really certainly, the the a model. look model actually and to indicating market But The toward continue Mike, we investor versus really we'll what

outlined, Albert We model switch have model. to levers certainly certainly so. us see we've those we -- As growth valuation do available And growth from to back valuation levers to those got four the a a us. to should available growth a

Mike Leithead

a just then And quick helpful. follow-up. That's Great.

turnaround should through Partners flow year, us just this P&L? that as the remind how Petro can For two briefly you Westlake

Steve Bender

And so We the certainly for period. over this of and planned the production. the course stated

production plan a And establish so year. the for we

that But there pounds recovery are to produced so of the on the that fixed loss year. will be pounds cost $X.XX still say normalized some and And margin get of course XXXX. over full a we'll relative

Mike Leithead

Great. Thank you.

Steve Bender

welcome. You're

Operator

you. Thank

next Our Instructions] of [Operator -- question Byrne of next Steve Our comes America. from question Bank

is open. line Your

Steve Byrne

this Hi. say I had want a just in to we divide morning. frankly

your And the attractive have for So partnership is raise maybe thinking with joint maybe ownership funds of first you. be the whether I call, transfer I the valuation and wasn't cracker your to couple up was would some into sufficiently that sorry of venture is on where earlier but OpCo? on these -- Lotte I a days

Steve Bender

you is strategy value. I a be LACC of as model. those to of over of at four versus mentioned talked ownership could the the model the growth moment one we've Certainly, about rewarding ago, Steve, will. OpCo is has just looking necessarily distributions toward value that if that So a certainly, the that moves more market a the for rewarding one certainly and acquisition the levers grow if time, than market more a growth-oriented acquisition And options really unit ethylene by for Westlake

the about about X%. and in seen path model that the forward, model we've certainly, that or have As yield the moment investor we're in we of intentive the certainly to going as the growth interested taken Mike mentioned think neighborhood to And they're value interest the just valuations addressing. a ago,

positioned are levers and those, the We that one the to either well given of have us. address to tools available we

Steve Byrne

crackers, the you furnaces various Any down the that of your electric and And the or of whether furnaces off is hydrogen. for the ESG potential green operations of crackers? heat just gas implications would hydrogen potentially on those whether fuel path initiatives being as an of curious, the as of lead source these used using in any the from

Steve Bender

improve a from of certainly, value that proposition. opportunities assess to to perspective, available Westlake advantage byproducts Steve, take of the any Chemical are So the we'll

to valuation any to be form higher cleaner of return that necessary hydrogen investments a an of as that relative the higher, there's certainly may if that So, provide alternative.

So, our at more we're good in and looking be always the time to providing of for investors. or all interested friendly ways and a socially return same value environmentally to

Steve Byrne

Thank you. Okay.

Steve Bender

welcome. You are

Operator

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

Jeff Holy

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

Operator

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

this hours following may Domestic Goodbye. This Time caller two access be a callers As calling May dial call beginning accessed XX, can accessed XXX-XXX-XXXX. numbers. by replay Replay after replay, be until will may Eastern p.m. call is the XX:XX the concludes for and Standard XXXXXXX. code The should ended, on XXXX. the reminder, be access XXX-XXX-XXXX. at International call. Tuesday, today's available has

Westlake Chemical Partners (WLKP) 4 May 212021 Q1 Earnings call transcript