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DATE
Thursday, October 30, 2025 at 1 p.m. ET
CALL PARTICIPANTS
Executive Chairman — Albert Chao
President and Chief Executive Officer — Jean-Marc Gilson
Executive Vice President and Chief Financial Officer — Steve Bender
Director of Investor Relations — Jeff Hawley
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TAKEAWAYS
Net Income -- $15 million net income for Q3 2025, with earnings of $0.42 per unit, driven by the completion of the planned turnaround at the Petro 1 ethylene unit.
Consolidated Net Sales -- $3.09 billion consolidated net sales for Q3 2025, representing the total sales for the partnership, including OpCo results.
Distributable Cash Flow -- $15 million, or $0.42 per unit, $3 million lower in 2025 compared to 2024 due to higher maintenance capital expenditures from timing changes.
Cash and Investments -- $51 million at the end of Q3 2025, managed under an investment agreement with Westlake.
Long-Term Debt -- $400 million at the end of Q3 2025, split as $377 million at the partnership and $23 million at OpCo.
Capital Expenditures -- $30 million spent by OpCo on capital projects in 2025.
Leverage Ratio -- Consolidated leverage ratio of approximately 1.0 times for Q3 2025, characterized as "strong leverage metrics" by management.
Quarterly Distribution -- 47.14¢ per unit for Q3 2025, payable on November 20, 2025, noting 45 consecutive quarterly distributions since IPO and a 71% increase over the original minimum.
Distribution Coverage Ratio -- Cumulative ratio since IPO of about 1.1 times, with occasional dips below target linked to planned turnaround events.
Ethylene Sales Agreement Renewal -- OpCo and Westlake extended the agreement through 2027 with unchanged terms, including pricing and volume protections.
Take-or-Pay Contract Structure -- Structure covers 95% of OpCo's production, providing "predictable fee-based cash flow" according to management.
No Planned Turnarounds Ahead -- There are no scheduled plant turnarounds for the remainder of 2025 or in 2026.
SUMMARY
Westlake Chemical Partners (WLKP +0.00%) management stated the planned Petro 1 unit turnaround reduced distributable cash flow, but noted resumption of full production post-turnaround. The newly renewed ethylene sales agreement, running through 2027 without changes, maintains current pricing formulas and volume protections. Management highlighted the partnership's ability to sustain quarterly distributions, attributing this to predictable fee-based cash flow from long-term take-or-pay contracting. Westlake Chemical Partners does not plan to access capital markets and has no scheduled major maintenance shutdowns for the next five quarters.
Bender said, "now that we've completed that turnaround successfully and are back in full production, that operating surplus should continue to build, and I would fully expect that distribution to continue to be well covered by the cash flows of the business."
The partnership’s leverage remains low, supporting further flexibility in capital management strategies.
Gilson pointed to "soft" global industrial and manufacturing activity, yet cited continued support for earnings via fixed-margin contracting regardless of the broader market cycle.
Four noted growth avenues include increasing OpCo ownership, acquiring other qualifying income streams, organic expansion (notably the Italian facilities), and negotiating higher fixed margins in the future.
INDUSTRY GLOSSARY
OpCo: Westlake Chemical OpCo LP, the operating subsidiary that owns certain olefins assets and provides production for the partnership.
Take-or-Pay Contract: Agreement obligating the purchaser to pay for a set volume of product whether or not it is physically delivered, stabilizing cash flows for the producer.
Planned Turnaround: Scheduled maintenance shutdown of a production facility, often resulting in temporary reductions in output and cash flow.
Full Conference Call Transcript
Jeff Hawley: Thank you, Gerald. Good afternoon, everyone. And welcome to the Westlake Chemical Partners Third Quarter 2025 Conference Call. I'm joined today by Albert Chao, our Executive Chairman, Jean-Marc Gilson, our President and CEO, Steve Bender, our Executive Vice President and Chief Financial Officer, and other members of our management team. During this call, we refer to ourselves as Westlake Partners or the partnership. References to Westlake refer to our parent company, Westlake Corporation, and references to Opco refer to Westlake Chemical OpCo LP, a subsidiary of Westlake and the partnership, which owns certain olefins assets. Additionally, when we refer to distributable cash flow, we are referring to Westlake Chemical Partners MLP distributable cash flow.
Definitions of these terms are available on the partnership's website. Today, management is going to discuss certain topics that will contain forward-looking information that is based on management's beliefs, as well as assumptions made by and information currently available to management. These forward-looking statements suggest predictions or expectations and thus are subject to risks or uncertainties. We encourage you to learn more about the factors that could lead our actual results to differ by reviewing the cautionary statements in our regulatory filings, which are also available on our Investor Relations website. This morning, Westlake Partners issued a press release with details of our third quarter 2025 financial and operating results.
This document is available in the press release section of our webpage at wlkpartners.com. A replay of today's call will be available beginning two hours after the conclusion of this call. The replay can be accessed via the partnership's website. Please note that information reported on this call speaks only as of today, 10/30/2025, and therefore, you are advised that time-sensitive information may no longer be accurate as of the time of any replay. I would finally advise you that this conference call is being broadcast live through an Internet webcast system that can be accessed on our webpage at wlkpartners.com. Now I would like to turn the call over to Jean-Marc Gilson. Jean-Marc?
Jean-Marc Gilson: Thank you, Jeff. Good afternoon, everyone, and thank you for joining us to discuss our third quarter 2025 results. In this morning's press release, we reported Westlake Partners' third quarter 2025 net income of $15 million or $0.42 per unit. Compared to the 2025, our third quarter sales and earnings benefited from the completion of the planned turnaround at our Petro 1 ethylene unit in Lake Charles, Louisiana during the second quarter. I would now like to turn our call over to Steve to provide more detail on the financial and operating results for the quarter. Steve?
Steve Bender: Thank you, Jean-Marc, and good afternoon, everyone. In this morning's press release, we reported Westlake Partners' third quarter 2025 net income of $15 million or $0.42 per unit. Consolidated net income, including OpCo's earnings, was $86 million on consolidated net sales of $3.09 billion. The partnership had distributable cash flow for the quarter of $15 million or $0.42 per unit. Third quarter 2025 net income for Westlake Partners of $15 million was lower than the third quarter 2024 partnership net income partially due to lower margins on sales of ethylene to third parties.
Distributable cash flow of $15 million or $0.42 per unit for 2025 decreased by $3 million compared to 2024 due to higher maintenance capital expenditures as a result of changes in the timing of maintenance activities in 2025 as compared to 2024. Turning our attention to the balance sheet and cash flows, at the end of the third quarter, we had consolidated cash and cash investments with Westlake through our investment management agreement totaling $51 million. Long-term debt at the end of the quarter was $400 million, of which $377 million was at the partnership and the remaining $23 million was at OpCo. In 2025, OpCo spent $30 million on capital expenditures.
We maintained our strong leverage metrics with a consolidated leverage ratio of approximately one time. On 10/28/2025, we announced a quarterly distribution of $0.4714 per unit with respect to 2025. Since our IPO in 2014, the partnership has made 45 consecutive quarterly distributions to unitholders, and we have grown distributions 71% since the partnership's original minimum quarterly distribution of $0.275 per unit. The partnership's third quarter distribution will be paid on 11/20/2025 to unitholders of record on 11/10/2025. The partnership's predictable fee-based cash flow continues to prove beneficial in today's economic environment and is differentiated by the consistency of our earnings and cash flows.
Looking back, since the IPO in July 2014, we have maintained a cumulative distribution coverage ratio of approximately 1.1 times. And with the partner's stability and cash flows, we are able to sustain our current distribution without the need to access capital markets at all. For modeling purposes, we have no planned turnarounds for the remainder of 2025 or in 2026. Now I'd like to turn the call back over to Jean-Marc to make some closing comments. Jean-Marc?
Jean-Marc Gilson: Thank you, Steve. The stability of Westlake Partners' business model is consistently demonstrated through our fixed margin ethylene phase agreement, which minimizes market volatility and other production risks. The high degree of stability in cash flow, when paired with the predictability of our model, has enabled us to deliver a long history of reliable distributions and coverage. As a result of its importance to the stability of our cash flows, I'm pleased that earlier this week, OpCo and Westlake agreed to renew the ethylene sales agreement through 2027 with no changes to the contract's terms or conditions.
The renewed ethylene sales agreement maintains the same pricing formula and sales volume protections that have provided the partnership with a distributable cash flow to make 45 consecutive quarterly distributions to unitholders since its IPO in 2014. Furthermore, we believe that Westlake's decision to renew the ethylene sales agreement under the same terms that have been in place since its origination demonstrates the critical nature of OpCo's supply of ethylene to their operations and their commitment to support OpCo's continued safe, reliable operations through stable, predictable cash flows. Turning to our outlook, global industrial and manufacturing activity remains soft in 2025, which is broadly impacting the global chemical industry.
Despite the challenging global macroeconomic backdrop, the partnership's financial performance and distributions will continue to be supported by our ethylene sales agreement, which provides a predictable fee-based cash flow structure from our take-or-pay contract with Westlake for 95% of OpCo's production. As has been the case since our IPO over ten years ago, this ethylene sales agreement has delivered stable and predictable cash flow through economic ups and downs, as well as planned and unplanned turnarounds. Turning to our capital structure, we maintain a strong balance sheet with conservative leverage metrics.
As we continue to navigate market conditions, we will evaluate opportunities via our four levers of growth in the future, including increases in our ownership interest of OpCo, acquisitions of other qualifying income streams, organic growth opportunities such as the expansion of our current Italian facilities, and negotiation of a higher fixed margin in our ethylene sales agreement with Westlake. We remain focused on our ability to continue to provide long-term value and distribution to our unitholders. As always, we will continue to focus on safe operations along with being good stewards of the environment where we work and live as part of our broader sustainability efforts. Thank you very much for listening to our third quarter earnings call.
Now we'll turn the call back over to Jeff. Thank you, Jean-Marc.
Jeff Hawley: Before we begin taking questions, I'd like to remind you that a replay of this teleconference will be available two hours after the call has ended. We will provide instructions to access the replay at the end of the call. Gerald, we will now take questions.
Operator: Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press 11 on your telephone. Wait for your name to be announced. To withdraw your question, please press 11 again. Just one moment, please. Our first question will come from James Eshel from Aviation Advisory Services Inc. The floor is yours.
James Eshel: Oh, thank you very much. Excuse me. I noticed that the distributable cash flow for the quarter was less than the amount of distribution per unit. What is the outlook for getting the distributable cash flow up to a level, again, where the distribution will be covered?
Steve Bender: Yeah. The entire reason for that was the planned turnaround. And when we have planned turnarounds, it does impact, of course, production and therefore sales. And so it's not unusual when we have these planned turnaround events for our coverage ratio to dip below the 1.1 target and to have some impact on those cash flows. But we have an operating surplus that is quite robust, and we'll continue and have continued to pay those distributions out of that operating surplus.
And now that we've completed that turnaround successfully and are back in full production, that operating surplus should continue to build, and I would fully expect that distribution to continue to be well covered by the cash flows of the business.
James Eshel: Okay. So is it reasonable to assume or rather on a pro forma basis if you would not have the impact of the turnaround that the distributable cash flow would have been in excess of the distribution?
Steve Bender: Yes. It would have.
James Eshel: Wonderful. Thank you very much.
Steve Bender: You are welcome.
Operator: Thank you for your question. Just give me just a second to see if anyone else would like a question. So at this time, I'm showing no further questions. And I'd like to hand it back to Jeff for closing remarks. The floor is yours, Jeff.
Jeff Hawley: Thank you. Thanks again for participating in today's call. We hope you'll join us for our next conference call to discuss our fourth quarter 2025 results.
Operator: Thank you for participating in today's Westlake Chemical Partners Third Quarter 2025 Earnings Conference Call. As a reminder, this call will be available for replay beginning two hours after the call has ended and may be accessed until 11:59 PM Eastern Time on Thursday, 11/13/2025. The replay can be accessed via the partnership website. Goodbye. This does conclude the program. You may now disconnect.