Westlake Chemical Partners Q1 2025: Unpacking Earnings Turnaround, Valuation Discrepancies, and Market Dynamics

Impact of turnaround on earnings, valuation difference and market conditions, financial impact of Petro 1 turnaround, and valuation difference between parent Westlake and MLP Westlake LP are the key contradictions discussed in Westlake Chemical Partners' latest 2025Q1 earnings call.



Impact of Petro 1 Turnaround:
- Westlake Chemical Partners reported a $10 million decrease in partnership net income and a $12 million decrease in distributable cash flow for Q1 2025 compared to Q1 2024, primarily due to the planned turnaround at Petro 1.
- The significant financial impact was primarily due to the turnaround's duration, which affected production and sales volumes for February and March.

Consistent Distribution Growth:
- The partnership announced a $0.4714 per unit quarterly distribution, marking the 43rd consecutive quarterly distribution since its IPO in 2014, representing a 71% increase from the original minimum distribution.
- The stability in cash flows, driven by a fixed-margin ethylene sales agreement, has enabled consistent distribution growth and reliable coverage.

Strong Leverage Metrics:
- The company maintained a consolidated leverage ratio of approximately 1x, with a long-term debt total of $400 million.
- This strong leverage metric is attributed to the partnership's conservative financial management and stable fee-based cash flow structure.

Trade Uncertainty and Predictable Cash Flows:
- Global trade tensions have increased market volatility, creating uncertainty for businesses and investors.
- However, the partnership's financial performance and distributions are supported by a predictable fee-based cash flow structure from its take-or-pay contract with Westlake, delivering stable and predictable cash flows despite economic challenges.