What changed in this filing

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Item 1. Financial Statements

2021-11-03 compared with 2021-08-04 · 72 added, 53 removed, 367 unchanged (25% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30,

2021 December 31,

24 unchanged sentences

Common unitholders—publicly and privately held ( 21,092,186 and 21,076,673 units

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

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

474,062 471,701

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

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

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

49,576 48,270

7 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

12 unchanged sentences

Income before income taxes 65,970 91,833 263,324 266,403

Income tax provision 263 206 438 423

Income tax provision (benefit) ( 105 ) ( 15 ) 333 408

Net income 66,075 91,848 262,991 265,995

27 unchanged sentences

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

Net income 7,660 5,130 — 53,285 66,075

Units issued for vested phantom units 262 — — — 262

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

Quarterly distribution to noncontrolling interest retained in OpCo by Westlake — — — ( 96,683 ) ( 96,683 )

Balance at September 30, 2021 $ 474,062 $ 49,576 $ ( 242,572 ) $ 623,753 $ 904,819

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

17 unchanged sentences

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

Net income 11,098 7,437 — 73,313 91,848

Quarterly distributions to unitholders ( 9,934 ) ( 6,657 ) — — ( 16,591 )

Quarterly distribution to noncontrolling interest retained in OpCo by Westlake

— — — ( 72,278 ) ( 72,278 )

Balance at September 30, 2020 $ 472,556 $ 48,900 $ ( 242,572 ) $ 659,948 $ 938,832

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 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 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.

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 September 30, 2021, its results of operations for the three and nine months ended September 30, 2021 and 2020 and the changes in its cash position for the nine months ended September 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 six months ended June 30, 2021 and does not expect significant disruptions to its business operations resulting from COVID-19.

The Partnership has not experienced significant disruptions to its business operations in 2020 or during the nine months ended September 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.

3 unchanged sentences

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.

Certain exceptions provided under this guidance may be applicable to future reference rate reform related transitions.

Accounts Receivable—Third Parties

Accounts receivable—third parties consist of the following:

September 30,

2021 December 31,

1 unchanged sentence

Allowance for credit losses ( 1,213 ) ( 315 )

24,926 11,029

Other receivables 36 —

Accounts receivable, net—third parties $ 12,168 $ 11,029

Inventories consist of the following:

September 30,

2021 December 31,

3 unchanged sentences

Property, Plant and Equipment

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.

Depreciation expense on property, plant and equipment of $ 23,010 and $ 22,913 is included in cost of sales in the consolidated statements of operations for the three months ended September 30, 2021 and 2020, respectively.

Depreciation expense on property, plant and equipment of $ 68,795 and $ 68,380 is included in cost of sales in the consolidated statements of operations for the nine months ended September 30, 2021 and 2020, respectively.

Deferred Charges and Other Assets

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.

Amortization expense on other assets of $ 3,576 and $ 3,010 is included in costs of sales in the consolidated statements of operations for the three months ended September 30, 2021 and 2020, respectively.

Amortization expense on other assets of $ 14,035 and $ 9,387 is included in costs of sales in the consolidated statements of operations for the nine months ended September 30, 2021 and 2020, respectively.

WESTLAKE CHEMICAL PARTNERS LP

2 unchanged sentences

Distributions and Net Income Per Limited Partner Unit

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.

On November 1, 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 September 30, 2021 of $ 0.4714 per unit.

This distribution is payable on November 29, 2021 to unitholders of record as of November 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

10 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 June 30, 2021

Three Months Ended September 30, 2021

Limited Partners' Common Units Incentive Distribution Rights Total

1 unchanged sentence

Distribution $ 16,600 $ — $ 16,600

Net income in excess of distribution 8,504 — 8,504

Distribution in excess of net income ( 3,810 ) — ( 3,810 )

Net income $ 12,790 $ — $ 12,790

6 unchanged sentences

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

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Limited Partners' Common Units Incentive Distribution Rights Total

1 unchanged sentence

Distribution $ 16,591 $ — $ 16,591

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

Net income in excess of distribution 1,944 — 1,944

Net income $ 18,535 $ — $ 18,535

3 unchanged sentences

Basic and diluted $ 0.53

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Limited Partners' Common Units Incentive Distribution Rights Total

7 unchanged sentences

Basic and diluted $ 1.51

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Limited Partners' Common Units Incentive Distribution Rights Total

1 unchanged sentence

Distribution $ 49,772 $ — $ 49,772

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

Net income in excess of distribution 1,370 — 1,370

Net income $ 51,142 $ — $ 51,142

16 unchanged sentences

(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.

The Partnership's distribution for the three months ended September 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 and six months ended June 30, 2021 and 2020 were as follows:

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

3 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 June 30, 2021.

No common units were issued under this program as of September 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

3 unchanged sentences

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

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.

OpCo declared force majeure events in September 2021 during the Petro 2 facility turnaround, in June 2021 related to OpCo's Petro 1 facility outage, and in February 2021 due to the severe winter storm.

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

Based upon this change in estimate of OpCo's 2021 anticipated production, the Partnership has recognized buyer deficiency fees and shortfall fees of $ 3,045 and $ 21,465 during the three and nine months ended September 30, 2021, respectively.

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

5 unchanged sentences

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

7 unchanged sentences

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

4 unchanged sentences

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

7 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 $ 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.

Accrued interest of $ 81 and $ 56 was included in the receivable under the Investment Management Agreement balance at September 30, 2021 and December 31, 2020, respectively.

Total interest earned related to the Investment Management Agreement was $ 81 and $ 69 for the three months ended September 30, 2021 and 2020, respectively, and $ 225 and $ 876 for the nine months ended September 30, 2021 and 2020, respectively.

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

September 30,

2021 December 31,

1 unchanged sentence

Accounts Receivable from Related Parties

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 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 nine months ended September 30, 2021 are scheduled to be received by the Partnership after the end of 2021.

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

September 30,

2021 December 31,

3 unchanged sentences

The related party accounts payable balances were as follows:

September 30,

2021 December 31,

2 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 $ 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.

Operating lease rentals paid to Westlake for such leases were $ 997 and $ 407 for the three months ended September 30, 2021 and 2020, respectively, and $ 2,292 and $ 1,803 for the nine months ended September 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 June 30, 2021 and 2020 was $ 2,224 and $ 3,431 , respectively.

Interest on related party debt payable balances for the three months ended September 30, 2021 and 2020 was $ 2,190 and $ 2,320 , respectively.

Interest on related party debt payable balances for the nine months ended September 30, 2021 and 2020 was $ 6,650 and $ 9,701 , respectively.

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

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.

At September 30, 2021 and December 31, 2020, accrued interest on related party debt was $ 2,193 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:

September 30,

2021 December 31,

1 unchanged sentence

Major Customer and Concentration of Credit Risk

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.

During the three months ended September 30, 2021 and 2020, Westlake accounted for approximately 84.3 % and 93.9 %, respectively, of the Partnership's net sales.

During the nine months ended September 30, 2021 and 2020, Westlake accounted for approximately 80.1 % and 91.5 %, respectively, of the Partnership's net sales.

Long-term Debt Payable to Westlake

Long-term debt payable to Westlake consists of the following:

September 30,

2021 December 31,

4 unchanged sentences

$ 399,674 $ 399,674

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.

The weighted average interest rate on all long-term debt was 2.1 % and 2.2 % at September 30, 2021 and December 31, 2020, respectively.

As of September 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 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 carrying and fair values of the Partnership's long-term debt at September 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 September 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.

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Value Carrying

3 unchanged sentences

Accrued and Other 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.

Accrued and other liabilities were $ 24,527 and $ 18,768 at September 30, 2021 and December 31, 2020, respectively.

Accrued taxes, accrued maintenance expense, accrued turnaround costs and accrued capital expenditures, which are components of accrued liabilities, were $ 4,784 , $ 5,438 , $ 3,330 and $ 4,832 , respectively, at September 30, 2021 and $ 6,207 , $ 3,905 , $ 0 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 $ 669 and $ 182 for the six months ended June 30, 2021 and 2020, respectively.

The non-cash investing activities related to accruals for capital expenditures were $ 3,663 and $ 1,945 for the nine months ended September 30, 2021 and 2020, respectively.

Commitments and Contingencies

4 unchanged sentences

Westlake will indemnify the Partnership for liabilities that occurred or existed prior to August 4, 2014.

The Partnership is involved in various legal proceedings incidental to the conduct of its business.

On September 27, 2021, shortly after the turnaround on Petro 2 commenced, there was a flash fire at the quench tower of the Petro 2 facility.

Several contractors working on the quench tower were injured.

There are five lawsuits pending in connection with the flash fire.

The Partnership is also involved in other legal proceedings incidental to the conduct of its business.

The Partnership does not believe that any of these legal proceedings will have a material adverse effect on its financial condition, results of operations or cash flows.

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