Jeff Holly - Vice President and Treasurer Albert Chao - President and Chief Executive Officer Steve Bender - Executive Vice President and Chief Financial Officer.

Matthew Blair - Tudor, Pickering, Holt.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Westlake Chemical Partners Second Quarter 2017 Earnings Conference Call. [Operator Instructions] As a reminder, ladies and gentlemen, this conference is being recorded today, August 3, 2017. I would now like to turn the call over to today’s host, Mr.

Jeff Holly [ph], Westlake Chemical Partners Vice President and Treasurer. Sir, you may begin..

Thank you. Good morning, everyone and welcome to the Westlake Chemical Partners second quarter 2017 conference call. I am joined today by Albert Chao, our President and CEO; Steve Bender, our Executive Vice President and Chief Financial Officer and other members of our management team.

The conference call will begin with Albert, who will begin with a few opening comments regarding Westlake Chemical Partners’ performance in the second quarter as well as our 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.

References to Westlake or Westlake Chemical refer to our parent company, Westlake Chemical Corporation and references to OpCo referred to Westlake Chemical OpCo LP, a subsidiary of Westlake Chemical and a partnership which owns certain olefins assets.

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 the capital markets and other risk factors discussed in our SEC filings.

This morning, Westlake Partners issued a press release with details of our second quarter 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 2 hours after completion of this call until 11:59 p.m. Eastern Time on August 10, 2017.

The replay maybe 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 57788699 for both numbers.

Please note that information reported on this call speaks only as of today, August 3, 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 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 Albert Chao.

Albert?.

Thank you, Jeff. Good morning, ladies and gentlemen and thank you for joining us on our earnings call to discuss our second quarter results. In this morning’s press release, we reported consolidated net income including OpCo’s earnings of $86 million for the second quarter of 2017. Westlake Partners net income was $10 million.

We are pleased with OpCo’s performance this quarter. In April, we completed an ethylene expansion at our Calvert City, Kentucky facility, which add 100 million pounds to our annual capacity.

This expansion, along with a 250 million pounds expansion at our Lake Charles, Louisiana facility completed in July, 2016, will allow us to increase production, which positions us to continue to grow our distributions to unitholders.

On August 1, 2017, we announced a 2.85% increase in distributions to $0.3605 per unit with respect to the second quarter of 2017, with a coverage ratio of 1.11x to declared distributions. This is the tenth consecutive increase in distributions to our unitholders since our initial public offering in August of 2014.

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

Steve?.

Thank you, Albert and good morning everyone. In this morning’s press release, we reported consolidated net income including OpCo’s earnings of $86 million on consolidated sales of $290 million for the second quarter 2017. Westlake Partners net income was $10 million or $0.36 per limited partner unit.

We also reported MLP distributable cash flow of $11 million for the second quarter. Second quarter net income for Westlake Partners of $10 million increased by $1 million or $0.02 per limited partner unit compared to second quarter 2016 partnership net income of $9 million.

The increased net income was primarily due to increased production at OpCo’s Petro 1 facility in Lake Charles, Louisiana, following its 250 million pound expansion that was completed in July 2016, partially offset by certain reimbursements from Westlake Chemical under the ethylene sales agreement that were booked in the second quarter 2016.

MLP distributable cash flow of $11 million was $7 million higher than the second quarter 2016. This increase in MLP distributable cash flow was primarily due to the higher production at Petro 1 and lower maintenance cost. The partnership’s second quarter 2017 net income of $10 million was $210,000 higher than first quarter 2017.

MLP distributable cash flow of $11 million was $480,000 lower than first quarter MLP distributable cash flow.

For the first 6 months of 2017, net income attributable to the partnership of $20 million or $0.71 per limited partner unit was $2 million less than the first 6 months of 2016 net income to the partnership of $21 million or $0.79 per limited partner unit.

This decrease in net income is due to certain reimbursements owed by Westlake under the ethylene sales agreement that were recorded in the first half of 2016, offset by higher production at our Petro 1 facility.

MLP distributable cash flow of $22 million was $8 million greater than the first 6 months of 2016 MLP distributable cash flow of $14 million. This increase in MLP distributable cash flow is due to the increased production at Petro 1 and lower maintenance cost in the first 6 months of 2017 compared to the first 6 months of 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 protects the partnership’s cash flow from 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 the take-or-pay provisions, incentivizes us to continue to look for opportunities to increase capacity and operating rates.

With the recently completed expansions of our Petro 1 and Calvert City facilities, we expect the additional capacity to drive higher production and grow our earnings and cash flows through this year into next year, which should allow us to continue to grow distributions at a low double-digit growth rate.

For the first 6 months of 2017, OpCo spent $44 million in capital expenditures as we completed the expansion of our Calvert City facility. This 100 million pound expansion was completed during the turnaround, which began in mid-March and ended in April.

At the end of the second quarter, we had consolidated cash of $105 million of which $98 million was held at OpCo and $7 million at the partnership level. Long-term debt was $588 million of which $453 million was at the OpCo level and $135 million was at the partnership.

On August 1, 2017, we declared a quarterly distribution to unitholders of $0.3650 per unit. This increase in distributions of $0.0101 per unit represents a 2.85% increase from the first quarter 2017.

MLP distributable cash flow of $11 million provided coverage of 1.11x for the quarter and continues us down the path to deliver consistent quarterly increases in distributions, targeting an annualized low double-digit growth rate. Now I’d like to turn the call back over to Albert to make some closing comments.

Albert?.

Thank you, Steve. The stable fee-based cash flow generated by our fixed margin ethylene sales contract with Westlake Chemical forms the foundation for us to deliver long-term growth in distributions to our unitholders.

This enables us to successfully pursue drop-down transactions, organic growth and third-party acquisition opportunities to increase distributions to our unitholders.

Now that we have completed expansion at our Lake Charles and Calvert City facilities, we will continue to evaluate all options available to us to grow MLP distributable cash flow and continue our targeted low double-digit growth rate in distributions. Thank you very much for listening to our second quarter earnings call this morning.

Now I will turn the call back over to Jeff..

Thank you, Albert. Before we begin to take questions, I would like to remind you that a replay of this teleconference will be available starting 2 hours after we conclude the call. We will provide that number again at the end of the call. Christie, we will now take questions..

Thank you. [Operator Instructions] Our first question is from Matthew Blair of Tudor, Pickering, Holt. Your line is open..

Hey, good morning, Albert and Steve..

Good morning..

Are you willing to disclose the actual Q2 production level? I think in the first quarter, it was about 884 million pounds.

Do you have that number for Q2?.

Let me check and see if I do. And if I don’t readily, I can give it to you after the end of the conference call. But since I don’t have it readily with me, I will just go ahead and give it to you after the end of the call..

Okay, no problem. We noticed in the quarter the interest expense ticked up even as debt moved down.

Just wondering if you could talk about that? And also, what’s a good number on interest expense going forward here?.

Yes, you are right the interest did tick up, because we did borrow – as we continue to borrow to finish the expansion. We did retire some debt during the quarter, which is why it ticked back down.

But I think a good run-rate would be to take the balance that we have today and just apply the appropriate interest rates that you see that we disclosed and use that as your run-rate..

Okay, okay. And then could you remind me – so Albert, you were talking about the stable fee-based cash flow, 95% of the sales go to the parent.

On the 5% that are sold to the market, are those price realizations for ethylene based on contract prices, which are in the $0.30 a pound range are they closer to spot prices more in like the $0.20 range right now?.

Yes, I think more related to spot price rather than contract prices, because the volumes are variable. So, it’s much flexible to sell on the spot prices than contract prices..

Got it, thank you. And then last question, just on drops, so your coverage is at 1.1x, which I believe is pretty much your long-term target. You will have a 3% boost in capacity due to the Calvert City expansion, but you are looking at grow distributions in the low double-digit range going forward.

Would it be appropriate to model in a drop maybe in 4Q ‘17 or 1Q ‘18, what’s your thinking on the timing of the next drop? Thanks..

Yes, Matthew, I think the way you think about a drop is to make sure that we continue this growth in distributions, the track that we have been on. I would think it would be reasonable to contemplate a drop sometime in this year. And by the way, I do have the production number for Q2. It was $904 million..

Great. Thank you very much..

Thank you..

You’re welcome..

Thank you. And that does conclude our Q&A session for today. I would like to turn the call back over to Jeff Holly for any further remarks..

Thank you again for participating in today’s call. We hope you will join us for our next conference call to discuss our third quarter results..

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude today’s program and you may all disconnect. Everyone have a great day..