WLKP - Earnings call transcript Q2 2021 | Westlake Chemical Partners LP

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Operator

Good afternoon. Thank you for standing by. Welcome to the Westlake Chemical Partners Second Quarter 2021 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded today, August 3, 2021. 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 other management Tamika. Chemical Chao, joined Officer; our you, Good and CEO; everyone, members President Albert welcome Thank team. Steve and and Bender, Financial afternoon, today by our Partners' Vice Conference XXXX to Second President Call. Senior I'm of and Westlake Chief

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

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

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

Albert Chao

OpCo's us or million. $XX of record income second per to a quarter Partners' Westlake million release, net In we contributing XXXX Good record discuss Jeff. this press our thank XXXX quarterly net second morning's was results. everyone, you Ethylene afternoon, production strong $X.XX you, second $XXX of unit. Thank income and in joining for quarter quarter was reported to

ethylene current economic derivative saw range experienced demand ethylene result sales. The resumed strong unplanned of broad July demand derivatives XX. prices our June benefiting the X of very and normal an we a OpCo's third-party XX, as During a XXXX, ethylene strong and On second the operations on Petro drove a facility higher the in quarter, expansion. we quarter, for recovery outage,

As annual and minimum ethylene outages. of under margin Steve in unplanned agreement. purchase ethylene obligated the such Westlake plus per include demonstrate certainty, events. financial sales of provisions calendar and fixed declared volatility from financial Thus and a pound. our sales unplanned year. pay generated from to for allow impact Chemical's Westlake from Opco's agreement, on from margin produces combined to These detail to call flows during other results planned Partners the us This OpCo provide earnings maintain of of more agreement for a purchase production production Westlake XX% to quarter. Westlake including investment-grade force us consistent year. majeure would insulating market predictable with cost This like second agreement, the our OpCo insulated stability Under cash in Pursuant for to -- obligation, sales operating outage, the turn ethylene Westlake protected cash and Steve? to this stable quarter each this result and each turn ethylene fixed is the amount a our risks. sponsor, Chemical, flows. ethylene continue to now OpCo were over results Partners' I

Mark Bender

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

of the As recognized of the of production. These year. deliver from impact ethylene Albert and resulting outages earnings events. and amount majeure consistent unplanned during Westlake Thus $X turn provisions quarter in Partners in events. We insulating with force us associated lost enable provisions second purchase defined the in these OpCo a ethylene million from OpCo pay Westlake to for mentioned, calendar each unplanned commit sales agreement the to

by increased net to from loss recover quarter costs continue we to income primarily year. production As XXXX deficiency outage to impacting our the the the compared buyer fee the year-to-date for quarter by Partners and distributable flow as ethylene the reserves. for $XX costs higher flow were to was second quarter million cash XXXX net earnings million. balance of cash pursuant to during third-party Partially sales income attributable was distributable million. agreement income of as attributable unplanned and of quarter net $X million Record to cash ethylene of sales $XX Partnership third at of Westlake from the production, on compared OpCo, to related these increases to the maintenance $XX fee. quarter contribution deficiency production. offsetting higher to Distributable in buyer lost expect increase the earnings XXXX resulting and second second increased second $XX increased primarily of was higher The increased million increased XXXX $XX The well million production turnaround of flow production

OpCo $XX $X $X first to MLP first income parties distributable from $XX For by deficiency months million the in primarily the MLP for increases distributable outages. higher X first from months net X XXXX of and of of Chemical flow in for the partnership flow flow income from the the XXXX XXXX, million $XX million net XXXX MLP were cash offset and X fee, million. increased distributable million. months Westlake ethylene cash net the to of and X unplanned increased earnings of partially income months cash million of the ethylene third lower due buyer sold of of $XX The on production for partnership

consolidated under quarter, obligations payment to attention the the balance to These million terms of $XXX $XX agreement totaling that your second of we remaining invested quarter, was deficiency had cash Chemical the At be the payment with of expenditures. the recovery. Turning Long-term will fee spent was agreement. Partnership of the cash on the flows. the was the Westlake capital the the sheet balance $XXX had quarter At through XXXX at Westlake investment Chemical cash Partnership second buyer cost the end and which the and million million, $XX million, second of production end In million. OpCo representing our $XX obligations the at quarter, OpCo. received and sales end debt management from of million and ethylene $XXX in lost

metrics ratio of debt-to-capitalization second we XXXX, our the of leverage net maintained XX%. quarter consolidated a ratio a leverage with strong For nearly Xx and approximately of

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

quarterly a announced distributions distributions the to coverage targeted to our since XX% XXXX, $X.XXX of ratio over IPO, August distribution respect made past the we the we've we've Partnership this unit maintained above per the And of per distributions minimum Since back level. quarterly our our quarter. conservative in IPO has second consecutive X original XXXX, On grown Partner's Looking years, X, since with unit. $X.XXXX XX unitholders.

declared XX flow XX, cash of the X.XXx the For distributable a June provided XXXX, months ending coverage distribution.

XX, quarter's XX, Second August record XXXX, holders be paid unit August distribution on to Partnership will of XXXX.

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

Albert Chao

you, Thank Steve.

model downstream flows are long-term XXXX was and market partnership of with support optimistic sales. as the sustained provisions performance. and our associated production Westlake for outages. half of pleased ethylene as cash our by Chemical provided well third-party The demand despite sales ethylene driven events and stability financial for in the operational about continued predictable ethylene, illustrated and by with agreement strong our Partnership's as remain derivative needs We parent our well its demand We the first enforcing protective earnings business

Our further value thesis flow deliver with sheet predictable production, which ethylene conservative maintain of the from our stable and to This of structure we sales and continue metrics. underlying cash for with We partnership. predictable XX% of financial agreement, will balance a OpCo's strong flows. fee-based a contract our proves leverage the cash provides Westlake Chemical take-or-pay

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

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

I to will turn back over Jeff. the Now call

Jeff Holy

you, Thank Albert.

Before we ended. has be I like begin questions, remind after hours replay taking that you of call a available this X teleconference the will to would

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

Operator

Instructions]. [Operator

first from with of is Barclays. Leithead Your question the line Mike

Michael Leithead

question. first guess I

the the at If the it's WLKP restarting it's over either distribution think about steady when And question sort but past year, of you it's kind price, really of improvement price again. going look or unit further held from around growth fairly here, down $XX. much of I yields a improved

what's that investors, you unit can drive guess to when going on look that the versus the thoughts model price latest So market you I forward? think your talk value ultimately higher at growth and

Mark Bender

deliver, As the I use are to those see demonstrating for available and readily those say the rewarded looking for and X ways that which levers, to those we us, access levers as do Albert market that outlined, that, to growth being the but we the focused provides about able opportunity the proposition when we really we are levers. think get the value in levers on just can growth Partnership also And you so.

get as value levers able be the provide. if in appreciate any the that value over market growth. growth we distributions as as those where provide market so value. to we Mike, continues levers growth we today, contribution to several is using the we We back see for the or provide of certainly those stand one market long stand ready growth the And to to that ready provide

Michael Leithead

at Or markets think about that? yield when comments, to available of some specific there is is dependent And capital opportunity level a to I it. would your really kind look and specific Got you the of you? upon or which the do

Mark Bender

availability Yes. of markets. It's the the

a major year. have can we turnaround imagine, As you this

addressing those look And to be investors markets, would and talk assess those the at that needs opportunity the And we capital expect to the operational of unit. for so levers. growth ethylene I we'll we'll continue to use the maintenance as

stand As for those those being accordingly we do I say, just to rewarded so. using It's ready -- levers.

Operator

comes next of line Matthew Blair question Holt. with Tudor, Your the from Pickering,

Matthew Blair

I question this buyer's had deficiency on a fees.

So down for million QX like $X.X it number that expect you XX QX, would to days larger cracker given QX? in in in was looks QX, it was look the to that relative

Mark Bender

we lost the pounds most to So, quarter. the occur answer in the do Matthew, expect QX outage is occurring have in the did of because late second

buyer Westlake deficiency even we So the earnings OpCo still benefit quarter is second the all for largely do other to pay fee unit pounds, of there structure to and with the the in shortfall this fixed provide having it those buyer half partnership, year. in The both the likely cash that the the very cost some accrue stability buyer fee additional providing the as as of and and that deficiency though component production. lost fee production of deficiency will therefore, protects third

Matthew Blair

you your ethylene third-party good. sales. in And QX then expect Sounds downtime to impact the an have on would

Mark Bender

been ethylene the of those of course able markets the We've first this year. half over take advantage of stronger to

benefits And for the third-party year. really a so about portion that additional some half of see first had as ability the sales significant achieve to the of the we sell to we'll but ethylene, here, be we've the looking think we

Operator

over turn Holy. Q&A At to call end this our now have will we Jeff the I back come the time, to of session.

Jeff Holy

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

Operator

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

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

Westlake Chemical Partners (WLKP) 3 Aug 212021 Q2 Earnings call transcript