Westlake Chemical Partners LP 10-Q for FY2022 Q2

Westlake Chemical Partners LP (WLKP)

10-Q 2022-08-03 For: 2022-06-30

Added on April 04, 2026

About this 10-Q

Westlake Chemical Partners LP filed this 10-Q on August 3, 2022, covering the quarter ended June 30, 2022 (FY2022 Q2).

Headline figures

Quarter ended June 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $448.79M; up 39.3% from $322.23M a year earlier
Net income: $16.44M; down 34.5% from net income of $25.1M a year earlier

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☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	June 30, 2022


Delaware						32-0436529
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common units representing limited partnership interests	WLKP	The New York Stock Exchange



Item			Page
PART I. FINANCIAL INFORMATION
1) Financial Statements			1
2) Management's Discussion and Analysis of Financial Condition and Results of Operations			15
3) Quantitative and Qualitative Disclosures about Market Risk			27
4) Controls and Procedures			27

PART II. OTHER INFORMATION
1) Legal Proceedings			28
1A) Risk Factors			28
6) Exhibits			29


	June 30, 2022		December 31, 2021

	(in thousands of dollars, except unit amounts)
ASSETS
Current assets
Cash and cash equivalents	$	18,369	$	17,057
Receivable under the Investment Management Agreement—Westlake Corporation ("Westlake")	129,363		106,243
Accounts receivable, net—Westlake	104,920		142,791
Accounts receivable, net—third parties	41,444		5,825
Inventories	7,448		8,898
Prepaid expenses and other current assets	67		396
Total current assets	301,611		281,210
Property, plant and equipment, net	1,016,726		1,043,539
Goodwill	5,814		5,814
Deferred charges and other assets, net	137,976		150,135
Total assets	$	1,462,127	$	1,480,698
LIABILITIES
Current liabilities
Accounts payable—Westlake	$	55,869	$	10,796
Accounts payable—third parties	20,399		35,105
Accrued and other liabilities	15,751		60,895

Total current liabilities	92,019		106,796
Long-term debt payable to Westlake	399,674		399,674
Deferred income taxes	1,493		1,530

Total liabilities	493,186		508,000
Commitments and contingencies (Note 12)
EQUITY
Common unitholders—publicly and privately held (21,082,331 and 21,092,186 units issued and outstanding at June 30, 2022 and December 31, 2021, respectively)	481,453		481,796
Common unitholder—Westlake (14,122,230 and 14,122,230 units issued and outstanding at June 30, 2022 and December 31, 2021, respectively)	54,526		54,754
General partner—Westlake	(242,572)		(242,572)

Total Westlake Chemical Partners LP partners' capital	293,407		293,978
Noncontrolling interest in Westlake Chemical OpCo LP ("OpCo")	675,534		678,720
Total equity	968,941		972,698
Total liabilities and equity	$	1,462,127	$	1,480,698


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the Transition Period from to


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021

	(in thousands of dollars, except unit amounts and per unit data)
Revenue
Net sales—Westlake	$	365,112	$	240,956	$	655,769	$	460,759
Net co-product, ethylene and other sales—third parties	83,673		81,273		155,416		129,677
Total net sales	448,785		322,229		811,185		590,436
Cost of sales	351,483		191,200		622,444		371,708
Gross profit	97,302		131,029		188,741		218,728
Selling, general and administrative expenses	9,919		8,269		18,146		16,942
Income from operations	87,383		122,760		170,595		201,786
Other income (expense)
Interest expense—Westlake	(2,859)		(2,224)		(5,058)		(4,460)
Other income, net	90		21		65		28
Income before income taxes	84,614		120,557		165,602		197,354
Income tax provision	175		263		338		438
Net income	84,439		120,294		165,264		196,916
Less: Net income attributable to noncontrolling interest in OpCo	68,001		95,195		132,632		156,671
Net income attributable to Westlake Chemical Partners LP and limited partners' interest in net income	$	16,438	$	25,099	$	32,632	$	40,245
Net income per limited partner unit attributable to Westlake Chemical Partners LP per limited partner unit (basic and diluted)
Common units	$	0.47	$	0.71	$	0.93	$	1.14
Weighted average limited partner units outstanding (basic and diluted)
Common units—publicly and privately held	21,086,988		21,079,657		21,089,573		21,078,173
Common units—Westlake	14,122,230		14,122,230		14,122,230		14,122,230


		Partnership
		Common Unitholders— Public and Privately Held		Common Unitholder— Westlake		General Partner— Westlake		Noncontrolling Interests in OpCo		Total

	(in thousands of dollars)
Balance at December 31, 2021		$	481,796	$	54,754	$	(242,572)	$	678,720	$	972,698

Net Income		9,700		6,494		—		64,631		80,825

Quarterly distribution to unitholders		(9,946)		(6,657)		—		—		(16,603)
Quarterly distribution to noncontrolling interest retained in OpCo by Westlake		—		—		—		(60,688)		(60,688)
Balance at March 31, 2022		$	481,550	$	54,591	$	(242,572)	$	682,663	$	976,232

Net income		9,846		6,592		—		68,001		84,439


Quarterly distribution to unitholders		(9,943)		(6,657)		—		—		(16,600)
Quarterly distribution to noncontrolling interest retained in OpCo by Westlake		—		—		—		(75,130)		(75,130)
Balance at June 30, 2022		$	481,453	$	54,526	$	(242,572)	$	675,534	$	968,941


	June 30, 2022		December 31, 2021
Trade customers	$	44,902	$	5,875
Allowance for credit losses	(3,458)		(50)


Accounts receivable, net—third parties	$	41,444	$	5,825


	June 30, 2022		December 31, 2021
Finished products	$	6,566	$	5,458
Feedstock, additives and chemicals	882		3,440
Inventories	$	7,448	$	8,898


	Three Months Ended June 30, 2022
	Limited Partners' Common Units		Incentive Distribution Rights		Total
Net income attributable to the Partnership:
Distribution	$	16,595	$	—	$	16,595
Distribution in excess of net income	(157)		—		(157)
Net income	$	16,438	$	—	$	16,438
Weighted average units outstanding:
Basic and diluted	35,209,218				35,209,218
Net income per limited partner unit:
Basic and diluted	$	0.47


	Three Months Ended June 30, 2021
	Limited Partners' Common Units		Incentive Distribution Rights		Total
Net income attributable to the Partnership:
Distribution	$	16,595	$	—	$	16,595
Net income in excess of distribution	8,504		—		8,504
Net income	$	25,099	$	—	$	25,099
Weighted average units outstanding:
Basic and diluted	35,201,887				35,201,887
Net income per limited partner unit:
Basic and diluted	$	0.71


	Six Months Ended June 30, 2022
	Limited Partners' Common Units		Incentive Distribution Rights		Total
Net income attributable to the Partnership:
Distribution	$	33,195	$	—	$	33,195
Distribution in excess of net income	(563)		—		(563)
Net income	$	32,632	$	—	$	32,632
Weighted average units outstanding:
Basic and diluted	35,211,803				35,211,803
Net income per limited partner unit:
Basic and diluted	$	0.93


	Six Months Ended June 30, 2021
	Limited Partners' Common Units		Incentive Distribution Rights		Total
Net income attributable to the Partnership:
Distribution	$	33,188	$	—	$	33,188
Net income in excess of distribution	7,057		—		7,057
Net income	$	40,245	$	—	$	40,245
Weighted average units outstanding:
Basic and diluted	35,200,403				35,200,403
Net income per limited partner unit:
Basic and diluted	$	1.14


	Marginal Percentage Interest in Distributions
Total Quarterly Distribution Per Unit	Unitholders		IDR Holders
Above $1.2938 up to $1.4063	85.0	%	15.0	%
Above $1.4063 up to $1.6875	75.0	%	25.0	%
Above $1.6875	50.0	%	50.0	%


	June 30, 2022				December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
OpCo Revolver	$	22,619	$	23,004	$	22,619	$	23,276
MLP Revolver	377,055		380,677		377,055		383,574


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021

	(dollars in thousands)
Net cash provided by operating activities	$	120,857	$	131,710	$	225,667	$	287,118
Loss from disposition of fixed assets	(460)		(32)		(3,430)		(1,391)
Changes in operating assets and liabilities and other	(35,958)		(11,384)		(56,973)		(88,811)
Net Income	84,439		120,294		165,264		196,916
Add:
Depreciation, amortization and disposition of property, plant and equipment	31,469		28,734		65,722		57,632
Less:
Contribution to turnaround reserves	(7,284)		(12,463)		(14,488)		(24,795)
Maintenance capital expenditures	(10,372)		(14,344)		(23,825)		(26,087)
Distributable cash flow attributable to noncontrolling interest in OpCo	(78,668)		(96,683)		(153,798)		(161,883)
MLP distributable cash flow	$	19,584	$	25,538	$	38,875	$	41,783


1.			I have reviewed this Quarterly Report on Form 10-Q of Westlake Chemical Partners LP (the "registrant");


	June 30, 2022		December 31, 2021
Accounts receivable—Westlake	$	104,920	$	142,791


	June 30, 2022		December 31, 2021
Total debt payable to Westlake	$	399,674	$	399,674


Exhibit No.						Exhibit





3.1						Certificate of Limited Partnership of Westlake Chemical Partners LP (incorporated by reference to Exhibit 3.1 to Westlake Chemical Partners LP's Registration Statement on Form S-1 (File No. 333-195551), filed on April 29, 2014).

3.2						First Amended and Restated Agreement of Limited Partnership of Westlake Chemical Partners LP (incorporated by reference to Exhibit 3.1 to Westlake Chemical Partners LP's Current Report on Form 8-K (File No. 001-36567) filed on August 8, 2014).

3.3						Amendment No. 1 to the First Amended and Restated Agreement of Limited Partnership of Westlake Chemical Partners LP dated as of November 16, 2017 (incorporated by Reference to Exhibit 3.1 to Westlake Chemical Partners LP's Current Report on Form 8-K, filed on November 16, 2017, File No. 01-36567).

3.4						Amendment No. 2 to the First Amended and Restated Agreement of Limited Partnership of Westlake Chemical Partners LP (incorporated by reference to Exhibit 3.1 to Westlake Chemical Partners LP's Current Report on Form 8-K filed on July 30, 2018 (File No. 01-36567)).

3.5						Amended and Restated Limited Partnership Agreement of Westlake Chemical OpCo LP (incorporated by reference to Exhibit 10.7 to Westlake Chemical Partners LP's Current Report on Form 8-K (File No. 001-36567) filed on August 8, 2014).

3.6						Amendment No. 1 to the First Amended and Restated Agreement of Limited Partnership of Westlake Chemical OpCo LP dated as of December 1, 2017 (File No. 01-36567) (incorporated by reference to Exhibit 3.4 to Westlake Chemical Partners LP's Annual Report on Form 10-K for the year ended December 31, 2017 (File No. 01-36567) filed on March 1, 2018).

10.1						Amendment No. 2 to the Amended And Restated Senior Unsecured Revolving Credit Agreement of Westlake Chemical OpCo LP (incorporated by reference to Exhibit 10.1 to Westlake Chemical Partners LP's Current Report on Form 8-K (File No. 001-36567) filed on July 15, 2022).

10.2						Amendment No. 4 to the Senior Unsecured Revolving Credit Agreement of Westlake Chemical Partners LP (incorporated by reference to Exhibit 10.2 to Westlake Chemical Partners LP's Current Report on Form 8-K (File No. 001-36567) filed on July 15, 2022).

31.1†						Rule 13a – 14(a) / 15d – 14(a) Certification (Principal Executive Officer)

31.2†						Rule 13a – 14(a) / 15d – 14(a) Certification (Principal Financial Officer)

32.1#						Section 1350 Certification (Principal Executive Officer and Principal Financial Officer)

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101.SCH†						XBRL Taxonomy Extension Schema Document

101.CAL†						XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF†						XBRL Taxonomy Extension Definition Linkbase Document

101.LAB†						XBRL Taxonomy Extension Label Linkbase Document

101.PRE†						XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.


2.			Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.			Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.			The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


			a)			designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


			b)			designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


			c)			evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


			d)			disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


			a)			all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


			b)			any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.