Westlake Chemical Partners LP (NYSE: WLKP) (the “Partnership”) announced its second-quarter 2024 financial results, 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 compared to the $11.9 million net income reported in the second quarter of 2023. Cash flows from operating activities rose to $121.9 million in Q2 2024, up by $23.4 million from the $98.5 million in Q2 2023, driven by higher net income. The Partnership’s MLP distributable cash flow for the quarter was $17.1 million, an increase of $2.1 million over the $15.0 million recorded in Q2 2023. This growth in distributable cash flow and the improved trailing twelve-month coverage ratio were largely attributed to increased production and sales volumes, following the Calvert City turnaround in Q2 2023.
The Q2 2024 net income of $14.4 million represents a slight decrease of $0.4 million compared to Q1 2024, mainly due to higher selling, general, and administrative expenses. However, cash flows from operating activities increased by $17.3 million from Q1 2024’s $104.6 million, thanks to more favorable working capital changes. The MLP distributable cash flow of $17.1 million in Q2 2024 saw a modest increase of $0.2 million over Q1 2024, primarily due to better margins on third-party ethylene sales.
“We are pleased with the Partnership’s performance in the second quarter of 2024. The improvement in third-party ethylene sales prices and margins contributed to the growth in our MLP distributable cash flow,” said Albert Chao, Executive Chairman. “Last month, Westlake Chemical Partners GP LLC, the general partner of the Partnership, announced the appointment of Jean-Marc Gilson as President, CEO, and director, and we are excited to have him lead the Partnership in our long-term value creation strategy. As we look ahead to the second half of 2024, we are preparing for the scheduled maintenance turnaround at our Petro 1 ethylene unit, which will temporarily impact our earnings and cash flows. Despite this, our outlook for third-party ethylene sales prices and margins remains positive, and OpCo’s ethylene sales agreement with Westlake will continue to support our financial performance.”
On July 30, 2024, the Partnership declared 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. The MLP distributable cash flow provided a trailing twelve-month coverage ratio of 0.96x, an improvement from the 0.93x ratio at the end of Q1 2024, with a cumulative coverage ratio of 1.08x since the IPO in July 2014.
OpCo’s Ethylene Sales Agreement with Westlake is structured to ensure stable and predictable cash flows, with 95% of OpCo’s ethylene production sold to Westlake at a cash margin of $0.10 per pound, net of operating costs, maintenance capital expenditures, and reserves for future turnaround expenditures.
