Good afternoon. Thank you for standing by. Welcome to the Westlake Chemical Partners' Third Quarter 2024 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, this conference is being recorded today, November 5th, 2024. I would now like to turn the call over to today's host, John Zoeller, Westlake Chemical Partners Vice President and Treasurer. Sir, you may begin..

Thank you. Good afternoon everyone and welcome to the Westlake Chemical Partners' third quarter 2024 conference call. I am 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 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 filings, which are also available on our Investor Relations website. This morning, Westlake Partners issued a press release with details of our third quarter 2024 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 website. Please note that information reported on this call speaks only as of today, November 5th, 2024.

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'd like to turn the call over to Jean-Marc Gilson.

Jean-Marc?.

Thank you, John. Good afternoon everyone and thank you for joining us to discuss our third quarter 2024 results. In this morning's press release, we reported Westlake Partners' third quarter 2024 net income of $18 million or $0.51 per unit.

Compared to the third quarter of 2023, our third quarter of 2024 sales and earnings benefited from higher third-party ethylene sales price and margins.

In an effort to better capture these attractive third-party margins, we opportunistically make the decision to defer the planned turnaround at our Petro 1 ethylene unit to the first quarter of 2025, while also shifting third-party sales volume planned for later in the year, into the third quarter.

As a result, during the third quarter, we were able to generate our highest quarterly distributable cash flow since 2022, while also adding to our operating surplus. During the third quarter, we celebrated our 10th year as a publicly traded master limited partnership.

Since our IPO in 2014, we have grown our quarterly distribution by 71% from the partnership's original minimum quarterly distribution of $0.275 per unit. Over that time period, we made 41 consecutive distributions without any deductions.

The stability of Westlake Partners business model is enabled by our fixed margin ethylene sales agreement, which minimizes market volatility and other production risk. The high degree of cash flow stability, paired with the predictability of our business, has enabled us to deliver a long history of reliable distributions.

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

Steve?.

Thank you, Jean-Marc, and good afternoon, everyone. In this morning's press release, we reported Westlake Partners' third quarter 2024 net income of $18 million or $0.51 per unit. Consolidated net income, including OpCo's earnings, was $104 million on consolidated net sales of $277 million.

The partnership had distributable cash flow for the quarter of $18 million or $0.51 per unit.

The third quarter 2024 net income for Westlake Partners of $18 million was $5 million higher than the third quarter 2023 partnership net income compared to the third quarter of 2023, the partnership benefited from OpCo's higher production and sales volumes, higher third-party ethylene sales prices and margins and higher third-party ethylene sales volumes.

Distributable cash flow of $18 million for the third quarter of 2024 increased by $4 million compared to the third quarter of 2023, due primarily to higher third-party sales volumes, sales price and margins. Turning your attention to the balance sheet and cash flows.

At the end of the third quarter, we had consolidated cash balance and cash investments with Westlake through our investment management agreement, totaling $170 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 the third quarter of 2024, OpCo spent $16 million on capital expenditures. We maintained our strong leverage metrics with a consolidated leverage ratio below one times. On October 30, 2024, we announced a quarterly distribution of $0.4714 per unit with respect to the third quarter of 2024.

The partnership's third quarter distribution will be paid on November 27, 2024, to unitholders of record November 12, 2024. For modeling purposes, we have no planned turnarounds for the remainder of 2024, following our decision to defer the turnaround at our Petro 1 ethylene unit in Lake Charles, Louisiana until the first quarter of 2025.

We currently expect this turnaround to begin at the end of January 2025 and for it to last approximately 55 days. Now I'd like to turn the call back over to Jean-Marc to make some closing comments.

Jean-Marc?.

Thank you, Steve. We are pleased with the partnership financial and operational performance in the third quarter. During the quarter, third-party ethylene sales prices and margins improved to the highest quarterly average in years, in part due to weather events and production outages at other producers.

In response, we opportunistically shifted the timing of our Petro 1 turnaround and our third-party sales volume to benefit from the improved pricing and margins. Thus far, in the fourth quarter, third-party ethylene sales prices and margins have decreased from the elevated levels in the third quarter.

However, we have relatively little third-party sales volume planned for the rest of 2024.

While the overall global macroeconomic environment remains unpredictable, 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, we'll continue to deliver stable and predictable cash flows through economic ups and downs as well as planned and unplanned turnarounds.

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 I will turn the call back over to John..

Thank you, Jean-Marc. 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. Shivan, we'll now take questions..

Thank you. At this time, we will conduct the question-and-answer session. [Operator Instructions] Our first question comes from the line of Matthew Blair from TPH. Your line is now open..

Thank you and good afternoon, Jean-Marc and Steve..

Good afternoon, Matthew..

Good afternoon. I want to touch on the prepared comments that mentioned that you shifted some third-party sales volumes into the third quarter.

Is it possible to give us a sense of just how significant this was? And then for the fourth quarter, should we expect an impact, both from the lower ethylene cracking margins as well as from these reduced spot volumes?.

Yes. So Matthew, the shift to selling more of the remaining volume we sell in in the market the third quarter when we saw a move up in margins was strategic to try to really maximize what we had left to sell into the market. As you recall, we sell 5% over the course of the year into third-party markets.

And so the majority of what we need to sell in 2024 has now been sold. So there's very little left in the fourth quarter. And so even though margins have declined in the fourth quarter relative to those in the third, we have very little left to be sold in the fourth quarter. So that lower margin will have nil effect really in our results in Q4..

Okay. Sounds good.

And then as we look into 2025, are you sensing any sort of increased interest in MLP equities? What would you put the chance of that for restarting distribution growth and restarting an asset drop?.

Yes. And so we continue to assess really the markets and continue to have a strong interest in understanding appetite for interest and we'll consider and look at all options. We recognize that the market has changed significantly in the 10-year period since our IPO, and we'll continue to assess all options.

We have noticed that others have started their distribution growth, and that's predicated on our ability to find attractive investors to come into the unit at an accretive price.

So we'll continue to have a good dialogue with investors, and see if we can find opportunities that make that transactable, but we'll look and continue to pursue all options that are out there and available to us..

Great. Thank you..

You’re welcome..

I'm showing no further questions at this time. I would now like to turn the call back over to John Zoeller for any closing remarks..

Thank you again for participating in today's call. We hope you will join us for our next conference call to discuss our fourth quarter 2024 results..

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect..