Ben Ederington - VP and CAO Albert Chao - President and CEO Steve Bender - SVP and CFO.

Robert Balsamo - FBR Matthew Blair - Tudor, Pickering, Holt.

Good morning ladies and gentlemen. Thank you for standing by. Welcome to the Westlake Chemical Partners' Fourth Quarter and Full-Year 2016 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. After the speakers' remarks, you will be invited to participate in a question-and-answer session.

As a reminder, ladies and gentlemen, this conference call is being recorded today, February 21, 2017. I would now like to turn the call over to today's host, Ben Ederington, Westlake Chemical Partners’ Vice President and Chief Administrative Officer. Sir, you may begin..

Thank you. Good morning everyone, and welcome to the Westlake Chemical Partners fourth quarter and full-year 2016 conference call. I'm joined today by Albert Chao, our President and CEO; Steve Bender, our Senior Vice President and Chief Financial Officer, and other members of our management team.

The conference call will begin with Albert, who will open with a few comments regarding Westlake Chemical Partners performance in the fourth quarter and full year, as well as a current outlook on our performance and opportunities. Steve will then provide a more detailed look at our financial and operating results.

Finally, Albert will add a few concluding comments and then we will open the call up to questions.

During this call, we refer to ourselves as Westlake Partners or the Partnership reference to Westlake Chemical refer to our parent company Westlake Chemical Corporation and references to OpCo refer to Westlake Chemical OpCo LP, a subsidiary of Westlake Chemical and the Partnership which owns certain olefin facilities.

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.

Actual results could differ materially based upon many factors, including operating difficulties, the volume of ethylene that we are able to sell, the price at which we are able to sell ethylene, changes in the prevailing economic conditions, actual and proposed governmental regulatory actions, competitive products and pricing pressures, our ability to borrow funds and access capital market, and other risk factors discussed in our SEC filings.

This morning, Westlake Partners issued a press release with details of our fourth quarter and full-year 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 completion of this call until 11:59 PM Eastern Time on February 28, 2017. The replay may be accessed by dialing the following numbers; domestic callers should dial 855-859-2056; international callers may access the replay at 404-537-3406. The access code is 55489298.

Please note that information reported on this call speaks only as of today, February 21, 2017, 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 this conference call is being broadcast live through an Internet webcast system that can be accessed on our webpage at wlkpartners.com. Now I’d like to turn the call over to Albert Chao.

Albert?.

Thank you, Ben. Good morning, ladies and gentlemen and thank you for joining us on our earnings call to discuss fourth quarter and full-year 2016 results. In this morning's press release, we reported consolidated net income including OpCo’s earnings of $94 million for the fourth quarter 2016.

Westlake Partners’ net income was $11 million or $0.39 per limited partner unit. For the full year, consolidated net income was $353 million, while Partners net income was $41 million or $1.50 per unit.

This was the first full quarter following our expansion at Petro 1 unit in Lake Charles, Louisiana which added 250 million pounds of annual ethylene capacity. With the addition of annual capacity at Petro 1, we are pleased to report record quarterly production which lead to a record quarterly distributable cash flow.

This expansion along with our plan to expand our Calvert City, Kentucky facility in the first quarter of 2017 should allow us to continue with our targeted annual low-double digit growth rate of distributions. On January 27, 2017, we announced an increase in distributions to our unit holders with respect to the fourth quarter of 2016.

This 2.9% increase in distributions is the eighth consecutive quarterly increase in distributions to our unit holders since our initial public offering in August of 2014.

In regards to the IRS proposed regulations governing qualifying income for master limited partnerships, we were pleased that the IRS and Treasury upheld the previously issued private letter ruling regarding production of ethylene.

We appreciate the thorough process taken by the IRS and Treasury Department to reach their final decision and properly recognize these industry practice will continue to generate qualified income under the code.

With this uncertainty removed, all the strategies to continue the growth in distributions remain at our disposal including organic expansion of our current units, drop-down transactions with OpCo, third-party acquisitions and negotiation of the higher ethylene margins which Westlake.

I would now like to turn our call over to Steve to provide more detail on the financial and operating results for the fourth quarter..

Thank you Albert, and good morning everyone. In this morning's press release we reported consolidated income including OpCo’s earnings of $94 million on consolidated sales of $294 million for the fourth quarter of 2016. Westlake Partners net income was $11 million or $0.39 per unit.

We also reported MLP distributable cash flow of $12 million for the fourth quarter. Fourth quarter net income for Westlake Partners increased by $100,000 when compared to the fourth quarter of 2015. MLP distributable cash flow of $12 million was $2 million higher than fourth quarter 2015 MLP distributable cash flow of $10 million.

The increase in MLP distributable cash flow was primarily due to the increased production at OpCo’s Petro 1 unit which completed its 250 million pound expansion in July of 2016. The Partnerships fourth quarter net income of $11 was $2 million or $0.07 per limited partner unit higher than third quarter 2016 net income of $9 million.

MLP distributable cash flow was $5 million greater than third quarter MLP distributable cash flow of $7 million. This increase in net income and MLP distributable cash flow was primarily the result of increased production at our Calvert City and Petro 1 ethylene units along with more maintenance expense.

For the full year 2016, consolidated net income including OpCo’s earnings was $353 million or $1 million lower than 2015 net income of $354 million. Partners net income for the full year of $41 million was $1 million higher than 2015 net income of $40 million.

2016 MLP distributable cash flow of $32 million was $5 million less than 2015 MLP distributable cash flow of $37 million. This decrease in MLP distributable cash flow was due to lower production and higher maintenance costs at our Petro 1 facility due to the major turnaround and expansion project.

As previously noted this turnaround in the expansion project at OpCo’s Petro 1 unit began in mid April and was completed at the end of July 2016. The benefit from the long-term ethylene sales agreement with our sponsor Westlake Chemical is a stable fee-based cash flow.

This contract represents 95% of our ethylene sales and protect the Partnerships cash flow from the margin volatility that can be associated with the ethylene business.

This ethylene contract which is structured to generate a margin of $0.10 per pound of ethylene along with a take or pay provisions incentivizes us to continue to look for opportunities to increase capacity and operating rats.

Along with the recently completed 250 million pound ethylene expansion of our Petro 1 plant, we are also preparing for the expansion of our Calvert City facility which we have scheduled to begin at the end of the first quarter of 2017.

This outage to complete the expansion is planned for approximately three weeks and will in addition to other incremental capacity increases bring our annual ethylene capacity at Calvert City to 730 million pounds.

For the fourth quarter of 2016, OpCo has spent $31 million in capital expenditures, as we prepared for the upcoming expansion at Calvert City. For the full year 2016, capital expenditures at OpCo were $299 million. The majority of this spending was for the expansion work at Petro 1 along with long lead items for our upcoming expansion at Calvert City.

At year end, we had consolidated cash of $89 million, of which $87 million was held at OpCo and $2 million at the partnership level. Long term debt was $595 million, of which $460 million was at OpCo and $135 million was at the partnership. On January 27, 2017, we declared a quarterly distribution to unit holders of 34.5 cents per unit.

This increase in distributions of 0.97 cents per unit represents a 2.9% increase from the third quarter of 2016. This was the first full quarter since the expansion of our Petro 1 facility, which was completed in July. The record quarterly production of 950 million pounds and the resulting earnings led to a coverage ratio of 1.26 for the quarter.

As Albert previously stated, now that the IRS has removed the uncertainty regarding the status of our operations, we have the full complement of strategies available to us to continue our growth in earnings, in cash flow at a low double digit growth rate, including organic expansions of our current units, future dropdown transactions with OpCo, third party acquisitions and negotiating a higher ethylene margin.

Now, I'd like to turn the call back over to Albert to make some closing comments.

Albert?.

Thank you, Steve. The stable fee base cash flow generated by our fixed margin ethylene sales contract with Westlake Chemical forms the foundation for us to deliver long term value to our unit holders.

This enables us to carefully pursue dropdown transactions, organic growth and third-party acquisition opportunities to increase distributions to our unit holders. Looking forward, we're preparing for the upcoming expansion of our Calvert City facility in the first quarter of 2017.

The additional capacity already achieved through the recently completed Lake Charles expansion along with a planned expansion at Calvert City will allow us to continue our targeted low double digit growth rate in distributions. We'll continue to assess all of the levers that will allow us to grow MLP distributable cash flow.

Thank you very much for listening to our fourth quarter and full year earnings call this morning. Now, I’ll turn the call back over to Ben.

Ben?.

Thank you, Albert. Before we begin taking questions, I would like to remind you that a replay of this teleconference will be available starting two hours after we completed the call. We will provide that number again at the end of the call. Operator, we are now prepared to take questions..

[Operator Instructions] Our first question comes from the line of Robert Balsamo with FBR. Your line is open..

Good afternoon guys. Congrats on a nice quarter. I think you were pretty clear on this, but I just want to double check, because it sounds pretty constructive. You mentioned that the distribution growth for 2017 can be driven pretty much solely off the organic development at Calvert City.

So you don't really require dropdowns with the current outlook to get to the guided distribution growth?.

And Robert, as we think about the growth in distributions coming from the expansion of our Petro 1 unit and the upcoming expansion in Calvert City, we're continuing to look for ways that we can continue to grow that distribution growth through ’17 and beyond.

So as you noted, we do have expansion capacity this year coming that will give us the ability to continue growth and look at drops, look at organic growth further beyond the expansions that we've had, acquisitions and of course that lever that allows us to move margin.

All of those are available to us to allow further growth in that distributable cash flow as we march forward beyond ’17 into future years..

That’s great. And what are your thoughts currently on equity issuance.

I think given the limited liquidity for investors as far as getting more equity onto the market, obviously, you're not under any pressure to do that within a leverage or whatnot, but just any thoughts there on potentially accessing the capital markets?.

Yeah. Well, we recognize that over time having additional liquidity is certainly a positive and certainly as we think about that, we have an ability as you can see with the balance sheet to also provide additional leverage in the organization as well.

So we're going to be mindful of making sure that we can provide the appropriate growth in distributions and the appropriate liquidity to provide the investor the growth that they expect and the ability to provide liquidity, so they can trade in and out of the securities overtime..

Great. That’s good.

And then just, if you can just clarify maintenance CapEx, looking into ’17, just what your thoughts are there, what falls into that maintenance number when we can think about that run rate?.

Yeah. Certainly, there will be some maintenance related to this upcoming expansion while the unit is down, we're not only expanding the unit to add that additional capacity, but also doing some maintenance at this stage in the upcoming turnaround in Calvert.

So, frankly as you know, we have just completed the expansions of our Petro 1 unit and so that is in good shape and running and as we noted had production in the fourth quarter..

Thank you. And our next question comes from the line of Matthew Blair with Tudor, Pickering, Holt. Your line is open..

Good morning, guys. So you received the positive IRS ruling in January and you've been talking about a variety of growth opportunities in front of you.

Could you just talk about maybe what changed on your end as a result of this IRS ruling? Does it make you more open to the drops, does it make you more of a player in the M&A market, what changed from that IRS ruling from your perspective if anything?.

Well, I think it clarified I think of the market's mind the qualified income stream. Certainly, as you know, we had a private letter ruling that provided that and the uncertainty of these preliminary regulations issued in ’15 cast a shadow over that ongoing qualification of income streams.

Fortunately, we continue to have the ability to debottleneck the plant and provide the growth in distributions. And not having to go in to the markets during that time period.

So the levers that Albert mentioned earlier, that is the organic growth opportunities that we have been pursuing, future drop downs that you just noted, acquisitions of course and of course the margin that we have at 10 cents and the ability to move that up over time are all levers that we believe have been available to us and continue to be available to us and provide that opportunity for future investors to see growth in the business and distributable cash flow.

So I think this final regulation, the service puts out, provides clarity to the market about the ongoing future of the business being qualified and as Albert noted, the strategies that we started with at the IPO were still fully and readily available to us as we march forward..

Okay.

And is there any thought to ramping up the drops in to Partners to help Westlake C Corp pay down debt and I guess if not, when would you expect the next drop to be? Is that still going to be in the 2018, 2019 timeframe?.

We continue to assess the appropriateness of the drop all the time as well as the other three levers that are available to us. And so those are the kinds of things that we’ll be assessing throughout this year and into ’18. So that will be an active discussion always within the organization..

Okay.

And then after the Calvert City work is complete, when is your next turnaround?.

We haven't yet announced that turnaround, but these typically operate in a five to six year cycle and so as we do the planning work for our Petro 2, which was undertaken in 2013, we’ll take a -- excuse me, we'll take a look and see what the next appropriate turnaround cycle is and so as I just say, typically, they're in a five to six year kind of horizon..

Thank you. And I'm showing no further questions at this time. I’d like to turn the call back to Mr. Ederington for closing remarks..

Thank you. Thank you again for participating in today's call. We hope you'll join us for our next conference call to discuss our first quarter results. Have a good day..

Thank you for participating in today's Westlake Chemical Partners fourth quarter and full year 2016 earnings conference call. As a reminder, this call will be available for replay beginning 2 hours after the call has ended and maybe accessed until 11:59 PM Eastern time on February 28, 2017. The replay can be accessed by calling the following numbers.

Domestic callers should dial 855-859-2056. International callers may access the replay at 404-537-3406. The access code is 55489298. Everyone, have a great day..