Westlake Chemical Partners (WLKP) 5 Nov 24 2024 Q3 Earnings call transcript
AInvestWednesday, Nov 6, 2024 12:43 pm ET
1min read
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Westlake Chemical Partners recently held their third quarter 2024 earnings call, during which they reported a net income of $18 million or $0.51 per unit, marking the highest quarterly distributable cash flow since 2022. The company's success can be attributed to a strategic decision to defer a planned turnaround at their Petro 1 ethylene unit, allowing them to capitalize on higher third-party ethylene sales prices and margins.

In his opening remarks, Jean-Marc Gilson, Westlake Partners' President and CEO, highlighted the company's growth since its IPO in 2014, with a 71% increase in quarterly distribution. The stability of Westlake Partners' business model is credited to its fixed margin ethylene sales agreement, which provides a predictable fee-based cash flow structure.

Steven Bender, the Executive Vice President and Chief Financial Officer, provided a more detailed analysis of the financial and operating results, emphasizing the significant impact of higher third-party ethylene sales prices and margins on the Partnership's net income and distributable cash flow. For the third quarter, the Partnership reported consolidated net income of $104 million, with a distributable cash flow of $18 million.

Looking ahead, the company is planning a turnaround at their Petro 1 ethylene unit in the first quarter of 2025, following a strategic decision to defer this maintenance earlier in the year. This move is expected to maximize the benefits of the improved third-party ethylene sales prices and margins.

During the call, Matthew Blair, an analyst from TPH, asked about the significance of shifting sales volumes into the third quarter and the potential impact on the fourth quarter. Steven Bender responded by explaining that the majority of the company's third-party sales volume for the year had already been sold, and the lower ethane cracking margins and reduced spot volumes in the fourth quarter would have minimal impact on the Partnership's results.

When asked about the potential for restarting distribution growth and asset drops in 2025, Steven Bender indicated that the company was assessing market conditions and considering all options, including finding attractive investors for the unit at an accretive price.

In conclusion, Westlake Chemical Partners' third quarter 2024 results demonstrate a strategic and successful approach to navigating market conditions and maximizing opportunities for growth. The company's focus on safe operations and sustainability, coupled with its stable business model, positions it well for continued success in the future.

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