What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-08-04 compared with 2021-05-05 · 95 added, 49 removed, 325 unchanged (31% of the section changed)

28 unchanged sentences

Common unitholders—publicly and privately held ( 21,082,331 and 21,076,673 units

issued and outstanding at March 31, 2021 and December 31, 2020, respectively)

issued and outstanding at June 30, 2021 and December 31, 2020, respectively)

476,076 471,701

Common unitholder—Westlake ( 14,122,230 and 14,122,230 units issued and outstanding

at March 31, 2021 and December 31, 2020, respectively)

at June 30, 2021 and December 31, 2020, respectively)

51,103 48,270

7 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

(in thousands of dollars, except unit amounts and per unit data)

36 unchanged sentences

Balance at March 31, 2021 $ 470,834 $ 47,690 $ ( 242,572 ) $ 637,156 $ 913,108

Net income 15,029 10,070 — 95,195 120,294

Units issued for vested phantom units 149 — — — 149

Quarterly distribution to unitholders ( 9,936 ) ( 6,657 ) — — ( 16,593 )

Quarterly distribution to noncontrolling interest retained in OpCo by Westlake — — — ( 65,200 ) ( 65,200 )

Balance at June 30, 2021 $ 476,076 $ 51,103 $ ( 242,572 ) $ 667,151 $ 951,758

The accompanying notes are an integral part of the consolidated financial statements.

WESTLAKE CHEMICAL PARTNERS LP

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Common Unitholders—

9 unchanged sentences

Balance at March 31, 2020 $ 472,428 $ 48,814 $ ( 242,572 ) $ 671,421 $ 950,091

Net income 8,897 5,963 — 65,517 80,377

Quarterly distributions to unitholders ( 9,933 ) ( 6,657 ) — — ( 16,590 )

Quarterly distribution to noncontrolling interest retained in OpCo by Westlake

— — — ( 78,025 ) ( 78,025 )

Balance at June 30, 2020 $ 471,392 $ 48,120 $ ( 242,572 ) $ 658,913 $ 935,853

The accompanying notes are an integral part of the consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands of dollars)

52 unchanged sentences

Westlake's retained interest of 77.2 % is recorded as noncontrolling interest in the Partnership's consolidated financial statements.

In the opinion of the Partnership's management, the accompanying unaudited consolidated interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Partnership's financial position as of March 31, 2021, its results of operations for the three months ended March 31, 2021 and 2020 and the changes in its cash position for the three months ended March 31, 2021 and 2020.

In the opinion of the Partnership's management, the accompanying unaudited consolidated interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Partnership's financial position as of June 30, 2021, its results of operations for the three and six months ended June 30, 2021 and 2020 and the changes in its cash position for the six months ended June 30, 2021 and 2020.

Results of operations and changes in cash position for the interim periods presented are not necessarily indicative of the results that will be realized for the fiscal year ending December 31, 2021 or any other interim period.

6 unchanged sentences

The COVID pandemic resulted in widespread adverse impacts on the global economy in 2020.

The Partnership has not experienced significant disruptions to its business operations in 2020 or during the three months ended March 31, 2021 and does not expect significant disruptions to its business operations resulting from COVID-19.

However, the impact that COVID-19 will have on the Partnership's financial condition, results of operations and cash flows cannot be estimated with certainty at this time as it will depend on future developments, including, among others, the timing and logistics with respect to the distribution of vaccines (in the United States, Europe and globally) and the efficacy of the available vaccines (including with respect to the more recent variants of COVID-19) and other treatments, the ultimate duration of the pandemic, geographic spread and severity of the virus, the consequences of governmental and other measures designed to prevent the spread of the virus, the impact on the operation of OpCo's facilities, Westlake, customers, suppliers and other third parties and the timing and extent to which normal economic and operating conditions resume.

The Partnership has not experienced significant disruptions to its business operations in 2020 or during the six months ended June 30, 2021 and does not expect significant disruptions to its business operations resulting from COVID-19.

However, the impact that COVID-19 will have on the Partnership's financial condition, results of operations and cash flows cannot be estimated with certainty at this time as it will depend on future developments, including, among others, the timing and logistics with respect to the distribution of vaccines globally and the efficacy of the available vaccines (including with respect to the more recent variants of COVID-19) and other treatments, the ultimate duration of the pandemic, geographic spread and severity of the virus, the consequences of governmental and other measures designed to prevent the spread of the virus, the impact on the operation of OpCo's facilities, Westlake, customers, suppliers and other third parties and the timing and extent to which normal economic and operating conditions resume.

Recent Accounting Pronouncements

1 unchanged sentence

In March 2020, the FASB issued an accounting standards update to provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022.

The Partnership is in the process of evaluating the impact that the new accounting guidance will have on the Partnership's consolidated financial position, results of operations and cash flows.

The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022 and are not expected to have a material impact on the Partnership's consolidated financial position, results of operations and cash flows.

Accounts Receivable—Third Parties

12 unchanged sentences

Property, Plant and Equipment

Depreciation expense on property, plant and equipment of $ 22,802 and $ 22,753 is included in cost of sales in the consolidated statements of operations for the three months ended March 31, 2021 and 2020, respectively.

Depreciation expense on property, plant and equipment of $ 22,983 and $ 22,714 is included in cost of sales in the consolidated statements of operations for the three months ended June 30, 2021 and 2020, respectively.

Depreciation expense on property, plant and equipment of $ 45,785 and $ 45,467 is included in cost of sales in the consolidated statements of operations for the six months ended June 30, 2021 and 2020, respectively.

Deferred Charges and Other Assets

Amortization expense on other assets of $ 4,740 and $ 3,278 is included in costs of sales in the consolidated statements of operations for the three months ended March 31, 2021 and 2020, respectively.

Amortization expense on other assets of $ 5,719 and $ 3,099 is included in costs of sales in the consolidated statements of operations for the three months ended June 30, 2021 and 2020, respectively.

Amortization expense on other assets of $ 10,459 and $ 6,377 is included in costs of sales in the consolidated statements of operations for the six months ended June 30, 2021 and 2020, respectively.

WESTLAKE CHEMICAL PARTNERS LP

2 unchanged sentences

Distributions and Net Income Per Limited Partner Unit

On May 3, 2021, the board of directors of Westlake Chemical Partners GP LLC ("Westlake GP"), the Partnership's general partner, declared a quarterly cash distribution for the three months ended March 31, 2021 of $ 0.4714 per unit.

This distribution is payable on May 27, 2021 to unitholders of record as of May 13, 2021.

On August 2, 2021, the board of directors of Westlake Chemical Partners GP LLC ("Westlake GP"), the Partnership's general partner, declared a quarterly cash distribution for the three months ended June 30, 2021 of $ 0.4714 per unit.

This distribution is payable on August 26, 2021 to unitholders of record as of August 12, 2021.

Distributions are declared subsequent to quarter end;

therefore, the table below represents total cash distributions declared from earnings of the related periods pertaining to such distributions.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Net income attributable to the Partnership $ 25,099 $ 14,860 $ 40,245 $ 32,607

9 unchanged sentences

Basic and diluted net income per unit is the same because the Partnership does not have any potentially dilutive units outstanding for the periods presented.

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Limited Partners' Common Units Incentive Distribution Rights Total

1 unchanged sentence

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

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(in thousands of dollars, except unit amounts and per unit data)

Three Months Ended June 30, 2020

Limited Partners' Common Units Incentive Distribution Rights Total

Net income attributable to the Partnership:

Distribution $ 16,590 $ — $ 16,590

Distribution in excess of net income ( 1,730 ) — ( 1,730 )

4 unchanged sentences

Basic and diluted $ 0.43

Three Months Ended March 31, 2020

Six Months Ended June 30, 2021

Limited Partners' Common Units Incentive Distribution Rights Total

7 unchanged sentences

Basic and diluted $ 1.14

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(in thousands of dollars, except unit amounts and per unit data)

Six Months Ended June 30, 2020

Limited Partners' Common Units Incentive Distribution Rights Total

Net income attributable to the Partnership:

Distribution $ 33,181 $ — $ 33,181

Distribution in excess of net income ( 574 ) — ( 574 )

Net income $ 32,607 $ — $ 32,607

Weighted average units outstanding:

Basic and diluted 35,194,545 35,194,545

Net income per limited partner unit:

Basic and diluted $ 0.93

The amended Partnership Agreement provides that the Partnership will distribute cash each quarter to all the unitholders, pro rata, until each unit has received a distribution of $ 1.2938 .

8 unchanged sentences

50.0 % 50.0 %

The Partnership's distribution for the three months ended March 31, 2021 did not exceed the $ 1.2938 per unit threshold, and, as a result, no distribution was made with respect to the Partnership's incentive distribution rights to Westlake, as the holder of the Partnership's incentive distribution rights.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(in thousands of dollars, except unit amounts and per unit data)

The Partnership's distribution for the three months ended June 30, 2021 did not exceed the $ 1.2938 per unit threshold, and, as a result, no distribution was made with respect to the Partnership's incentive distribution rights to Westlake, as the holder of the Partnership's incentive distribution rights.

Distribution Per Common Unit

Distributions per common unit for the three months ended March 31, 2021 and 2020 were as follows:

Three Months Ended March 31,

Distributions per common unit for the three and six months ended June 30, 2021 and 2020 were as follows:

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Distributions per common unit $ 0.4714 $ 0.4714 $ 0.9428 $ 0.9428

2 unchanged sentences

The Equity Distribution Agreement was amended on February 28, 2020 to reference a new shelf registration for utilization under this agreement.

No common units were issued under this program as of March 31, 2021.

No common units were issued under this program as of June 30, 2021.

On March 29, 2019, the Partnership completed the issuance and sale of 2,940,818 common units at a price of $ 21.40 per unit through a private placement.

7 unchanged sentences

Sales to related parties were as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Net sales—Westlake $ 240,956 $ 227,431 $ 460,759 $ 442,259

2 unchanged sentences

(in thousands of dollars, except unit amounts and per unit data)

During February and March 2021, due to the severe winter storm, OpCo's ethylene production facilities in the region experienced disruptions to their operations, resulting in lost production and additional maintenance and other costs.

OpCo declared force majeure under the Ethylene Supply Agreement.

As a result of the force majeure, the Partnership recognized a buyer deficiency fee of $ 5,500 in the three months ended March 31, 2021, as a component of net sales, representing fixed margin and unavoided operating and maintenance capital expenditures and maintenance expenses during the force majeure events.

The buyer deficiency is an estimate based on OpCo's anticipated 2021 ethylene production.

Additionally, under the Ethylene Sales Agreement, if production costs billed to Westlake on an annual basis are less than 95% of the actual production costs incurred by OpCo during the period, OpCo is entitled to recover the shortfall in the subsequent year.

During the three months ended March 31, 2021, based on the additional costs incurred during the force majeure events, the Partnership recognized a shortfall of $ 4,178 as a component of net sales.

During June 2021, OpCo's Petro 1 facility experienced an outage, which resulted in a force majeure event under the Ethylene Sales Agreement.

In addition, OpCo declared a force majeure in February 2021 due to the severe winter storm.

As a result of these force majeure events, the Partnership updated its estimate of OpCo's 2021 anticipated production as of June 30, 2021.

The buyer deficiency fee is measured based upon the lower of the actual production deficiency at period end or the estimated annual production deficiency based upon OpCo's annual anticipated production.

Based upon this change in estimate of OpCo's 2021 anticipated production, the Partnership has recognized buyer deficiency fees and shortfall fees of $ 8,742 and $ 18,420 during the three and six months ended June 30, 2021, respectively.

The buyer deficiency fees and shortfall fees are classified as a component of net sales.

During 2020, the Lake Charles Petro 1 and Petro 2 facilities were impacted by Hurricanes Laura and Delta, which resulted in force majeure events under the Ethylene Sales Agreement.

4 unchanged sentences

Charges from related parties in cost of sales were as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Feedstock purchased from Westlake and included in cost of sales

6 unchanged sentences

Charges from related parties included within selling, general and administrative expenses were as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Services received from Westlake and included in selling, general and administrative expenses

3 unchanged sentences

Charges from related parties for goods and services capitalized as assets were as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Goods and services purchased from Westlake and capitalized as assets

$ 533 $ 384 $ 936 $ 864

WESTLAKE CHEMICAL PARTNERS LP

4 unchanged sentences

Per the terms of the Investment Management Agreement, the Partnership earns a market return plus five basis points and Westlake provides daily availability of the invested cash to meet any liquidity needs of the Partnership or OpCo.

Accrued interest of $ 67 and $ 56 was included in the receivable under the Investment Management Agreement balance at March 31, 2021 and December 31, 2020, respectively.

Total interest earned related to the Investment Management Agreement was $ 67 and $ 587 for the three months ended March 31, 2021 and 2020, respectively.

Accrued interest of $ 77 and $ 56 was included in the receivable under the Investment Management Agreement balance at June 30, 2021 and December 31, 2020, respectively.

Total interest earned related to the Investment Management Agreement was $ 77 and $ 219 for the three months ended June 30, 2021 and 2020, respectively, and $ 145 and $ 807 for the six months ended June 30, 2021 and 2020, respectively.

The Partnership's receivable under the Investment Management Agreement was as follows:

2 unchanged sentences

Accounts Receivable from Related Parties

The Partnership's accounts receivable from Westlake result primarily from ethylene sales to Westlake, the buyer deficiency fee and the shortfall recognized under the Ethylene Sales Agreement, as discussed above under "Sales to Related Parties." The buyer deficiency fee and the shortfall recognized in the three months ended March 31, 2021 are scheduled to be received by the Partnership after the end of 2021.

The Partnership's accounts receivable from Westlake result primarily from ethylene sales to Westlake and the buyer deficiency fee and shortfall fee recognized under the Ethylene Sales Agreement, as discussed above under "Sales to Related Parties." The buyer deficiency fee and shortfall fee recognized in the six months ended June 30, 2021are scheduled to be received by the Partnership after the end of 2021.

The Partnership's accounts receivable from Westlake were as follows:

8 unchanged sentences

OpCo is obligated to Westlake under various long-term and short-term noncancelable operating leases, primarily related to rail car leases and land.

Operating lease rentals paid to Westlake for such leases were $ 686 and $ 670 for the three months ended March 31, 2021 and 2020, respectively, and reflected in other charges from Westlake that are included in cost of sales.

Operating lease rentals paid to Westlake for such leases were $ 608 and $ 726 for the three months ended June 30, 2021 and 2020, respectively, and $ 1,295 and $ 1,396 for the six months ended June 30, 2021 and 2020, respectively, and reflected in other charges from Westlake that are included in cost of sales.

OpCo has two site lease agreements with Westlake, each of which has a term of 50 years.

5 unchanged sentences

See Note 9 for a description of related party debt payable balances.

Interest on related party debt payable balances for the three months ended March 31, 2021 and 2020 was $ 2,236 and $ 3,950 , respectively.

Interest on related party debt payable balances for the three months ended June 30, 2021 and 2020 was $ 2,224 and $ 3,431 , respectively.

Interest on related party debt payable is presented as interest expense—Westlake in the consolidated statements of operations.

At March 31, 2021 and December 31, 2020, accrued interest on related party debt was $ 2,236 and $ 2,336 , respectively, and is reflected as a component of accrued liabilities in the consolidated balance sheets.

At June 30, 2021 and December 31, 2020, accrued interest on related party debt was $ 2,224 and $ 2,336 , respectively, and is reflected as a component of accrued liabilities in the consolidated balance sheets.

Debt payable to related parties was as follows:

2 unchanged sentences

Major Customer and Concentration of Credit Risk

During the three months ended March 31, 2021 and 2020, Westlake accounted for approximately 82.0 % and 85.7 %, respectively, of the Partnership's net sales.

During the three months ended June 30, 2021 and 2020, Westlake accounted for approximately 74.8 % and 95.4 %, respectively, of the Partnership's net sales.

During the six months ended June 30, 2021 and 2020, Westlake accounted for approximately 78.0 % and 90.4 %, respectively, of the Partnership's net sales.

See Note 7 above for an additional related party transaction.

7 unchanged sentences

$ 399,674 $ 399,674

The weighted average interest rate on all long-term debt was 2.2 % at March 31, 2021 and December 31, 2020.

As of March 31, 2021, the Partnership was in compliance with all of the covenants under the OpCo Revolver and the MLP Revolver.

The weighted average interest rate on all long-term debt was 2.2 % at June 30, 2021 and December 31, 2020.

As of June 30, 2021, the Partnership was in compliance with all of the covenants under the OpCo Revolver and the MLP Revolver.

Fair Value Measurements

10 unchanged sentences

The amounts reported in the consolidated balance sheets for accounts receivable, net and accounts payable approximate their fair value due to the short maturities of these instruments.

The carrying and fair values of the Partnership's long-term debt at March 31, 2021 and December 31, 2020 are summarized in the table below.

The Partnership's long-term debt includes the OpCo Revolver and the MLP Revolver at March 31, 2021.

The carrying and fair values of the Partnership's long-term debt at June 30, 2021 and December 31, 2020 are summarized in the table below.

The Partnership's long-term debt includes the OpCo Revolver and the MLP Revolver at June 30, 2021.

The fair value of debt is determined based on the present value of expected future cash flows using a discounted cash flow methodology.

1 unchanged sentence

Inputs used to estimate the fair values of the Partnership's long-term debt include the selection of an appropriate discount rate.

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Value Carrying

3 unchanged sentences

Accrued and Other Liabilities

Accrued and other liabilities were $ 18,049 and $ 18,768 at March 31, 2021 and December 31, 2020, respectively.

Accrued taxes, accrued maintenance expense and accrued interest, which are components of accrued liabilities, were $ 3,120 , $ 6,215 and $ 2,236 , respectively, at March 31, 2021 and $ 6,207 , $ 3,905 and $ 2,336 , respectively, at December 31, 2020.

No other component of accrued liabilities was more than five percent of total current liabilities.

Accrued and other liabilities were $ 16,084 and $ 18,768 at June 30, 2021 and December 31, 2020, respectively.

Accrued taxes, accrued maintenance expense and accrued capital expenditures, which are components of accrued liabilities, were $ 3,925 , $ 3,025 and $ 2,823 , respectively, at June 30, 2021 and $ 6,207 , $ 3,905 and $ 2,286 , respectively, at December 31, 2020.

No other component of accrued and other liabilities was more than five percent of total current liabilities.

Non-cash Investing Activity

The non-cash investing activities related to accruals for capital expenditures were $ 582 and $ 20 for the three months ended March 31, 2021 and 2020, respectively.

The non-cash investing activities related to accruals for capital expenditures were $ 669 and $ 182 for the six months ended June 30, 2021 and 2020, respectively.

Commitments and Contingencies

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements