Westlake Chemical Partners LP (NYSE: WLKP) (“the Partnership”) has announced its financial results for the second quarter of 2024, reporting a net income attributable to the Partnership of $14.4 million, or $0.41 per limited partner unit. This marks an increase of $2.5 million from the $11.9 million net income reported in the same period of 2023. Cash flows from operating activities reached $121.9 million in the second quarter of 2024, a $23.4 million increase compared to the $98.5 million reported in the second quarter of 2023, driven by the higher net income. The Partnership’s MLP distributable cash flow for the three months ending June 30, 2024, was $17.1 million, up by $2.1 million from the $15.0 million reported in the second quarter of 2023. This improvement was largely due to higher production and sales volumes following the Calvert City turnaround in Q2 2023.
However, the Q2 2024 net income of $14.4 million saw a slight decrease of $0.4 million compared to the $14.8 million recorded in Q1 2024, primarily due to increased selling, general, and administrative expenses. Despite this, cash flows from operating activities in Q2 2024 were $121.9 million, up by $17.3 million from Q1 2024’s $104.6 million, owing to more favorable changes in working capital. The MLP distributable cash flow also saw a modest increase of $0.2 million from Q1 2024, totaling $17.1 million, primarily due to higher margins on third-party ethylene sales.
Albert Chao, Executive Chairman, expressed satisfaction with the Partnership’s performance, highlighting the benefits of improved third-party ethylene sales prices and margins, which bolstered MLP distributable cash flow. He also welcomed Jean-Marc Gilson as the new President, CEO, and Director of the Partnership’s general partner, as part of a succession plan implemented last month. Looking ahead to the latter half of 2024, Chao noted that preparations are in full swing for the planned maintenance turnaround at the Petro 1 ethylene unit, scheduled for later in the third quarter. While this will temporarily impact earnings and cash flows, the outlook for third-party ethylene sales prices and margins has improved, and OpCo’s ethylene sales agreement with Westlake will continue to support earnings and cash flows.
On July 30, 2024, the Partnership announced that the Board of Directors of Westlake Chemical Partners GP LLC had approved a quarterly distribution of $0.4714 per unit for Q2 2024, payable on August 27, 2024, to unitholders of record as of August 12, 2024. This marks the 40th consecutive quarterly distribution to unitholders. The MLP distributable cash flow provided a trailing twelve-month coverage ratio of 0.96x for the declared distributions in Q2 2024, up from 0.93x at the end of Q1 2024. Since the IPO in July 2014, the cumulative coverage ratio stands at 1.08x.
OpCo’s Ethylene Sales Agreement with Westlake is designed to ensure stable and predictable cash flows. Under the agreement, 95% of OpCo’s ethylene production is sold to Westlake for a cash margin of $0.10 per pound, after accounting for operating costs, maintenance capital expenditures, and reserves for future turnaround expenditures.
