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Item 5. Market for Registrant’s Common Equity

2022-03-02 compared with 2021-03-02 · 2 added, 110 removed, 32 unchanged (78% of the section changed)

30 unchanged sentences

Westlake currently holds the incentive distribution rights, but may transfer these rights separately from its general partner interest.

Unregistered Sales of Equity Securities

We did not have any unregistered sales of equity securities during the quarter or fiscal year ended December 31, 2021 that we have not previously reported on a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.

Issuer Purchases of Equity Securities

Selected Financial Data

The following information should be read together with "Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes included elsewhere in this report.

Year Ended December 31,

2020 2019 2018 2017 2016

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

Statement of Operations Data:

Net sales $ 966,670 $ 1,091,871 $ 1,285,622 $ 1,172,981 $ 986,736

Gross profit 378,883 379,428 377,159 403,667 391,331

Selling, general and administrative expenses 25,895 29,278 27,590 29,260 24,887

Income from operations 352,988 350,150 349,569 374,407 366,444

Interest expense (12,038) (19,623) (21,433) (21,861) (12,607)

Other income, net 733 3,096 2,457 1,792 601

Income before income taxes 341,683 333,623 330,593 354,338 354,438

Provision for income taxes 564 728 22 1,280 1,035

Net income $ 341,119 $ 332,895 $ 330,571 $ 353,058 $ 353,403

Net income attributable to

noncontrolling interest in OpCo 274,952 271,914 281,224 304,388 312,463

Net income attributable to Westlake Chemical

Partners LP and limited partners' interest in

net income $ 66,167 $ 60,981 $ 49,347 $ 48,670 $ 40,940

Net income attributable to Westlake

Chemical Partners LP per limited

partner unit (basic and diluted)

Common units $ 1.88 $ 1.77 $ 1.51 $ 1.72 $ 1.50

Subordinated units $ — $ — $ — $ 1.43 $ 1.50

Balance Sheet Data (end of period):

Cash and cash equivalents $ 17,154 $ 19,923 $ 19,744 $ 27,008 $ 88,900

Working capital (1)

223,551 199,562 198,370 191,149 194,388

Total assets 1,356,488 1,393,456 1,462,125 1,515,276 1,555,228

Total debt 399,674 399,674 477,608 473,960 594,629

Partners' equity 915,137 952,135 934,081 998,749 920,963

Distributions per unit (2)

$ 1.89 $ 1.84 $ 1.66 $ 1.48 $ 1.32

Other Operating Data:

Cash flow from:

Operating activities $ 373,397 $ 450,807 $ 436,151 $ 537,357 $ 287,726

Investing activities 2,032 (57,707) (51,812) (203,229) (299,481)

Financing activities (378,198) (392,921) (391,603) (396,020) (68,904)

Depreciation and amortization 103,154 107,320 108,842 113,985 98,210

Capital expenditures 36,968 43,707 39,862 68,858 299,638

MLP distributable cash flow (3)

71,983 73,181 60,024 54,700 32,405

$ 456,875 $ 460,566 $ 460,868 $ 490,184 $ 465,255

______________________________

(1) Working capital equals current assets less current liabilities.

(2) Distribution per unit represents cash distributions declared per common unit for the quarters ended March 31, June 30, September 30 and December 31.

(3) We use MLP distributable cash flow (a non-GAAP financial measure) to analyze our performance.

The body of accounting principles generally accepted in the United States is commonly referred to as "GAAP." For this purpose, a non-GAAP financial measure is generally defined by the Securities and Exchange Commission ("SEC") as a numerical measure of a registrant's historical or future financial performance, financial position or cash flows that (1) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows ( or equivalent statements) of the registrant;

or (2) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented.

We define distributable cash flow as net income plus depreciation, amortization and disposition of property, plant and equipment, less contributions for turnaround reserves, maintenance capital expenditures and mark-to-market adjustment on derivative contracts.

We define MLP distributable cash flow as distributable cash flow less distributable cash flow attributable to Westlake's noncontrolling interest in OpCo and distributions attributable to the incentive distribution rights holder.

MLP distributable cash flow does not reflect changes in working capital balances.

MLP distributable cash flow is a non-GAAP supplemental financial measure that management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess:

• our operating performance as compared to other publicly-traded partnerships;

• our ability to incur and service debt and fund capital expenditures;

• the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.

MLP distributable cash flow is not a substitute for the GAAP measures of net income and net cash provided by operating activities.

MLP distributable cash flow has important limitations as an analytical tool because it excludes some but not all items that affect net income and net cash provided by operating activities.

It should be noted that other limited partnerships and companies calculate MLP distributable cash flows differently, and, therefore, MLP distributable cash flows as presented for us may not be comparable to MLP distributable cash flows reported by other partnerships and companies.

The following table reconciles MLP distributable cash flow to net income and net cash provided by operating activities, the most directly comparable GAAP financial measures.

Reconciliation of MLP Distributable Cash Flow to Net Income and Net Cash Provided by Operating Activities

Year Ended December 31,

2020 2019 2018 2017 2016

(dollars in thousands)

Net cash provided by operating activities $ 373,397 $ 450,807 $ 436,151 $ 537,357 $ 287,726

Loss from disposition of fixed assets (1,000) (515) (1,849) (3,033) (3,021)

Changes in operating assets and liabilities

and other (31,278) $ (117,397) (103,731) (181,266) 68,698

Net Income 341,119 332,895 330,571 353,058 353,403

Depreciation, amortization and

disposition of property, plant and

104,154 107,835 110,691 117,128 98,210

Mark-to-market adjustment loss on

derivative contracts (1,340) 1,301 62 — —

Contribution to turnaround reserves (39,937) (15,630) (16,840) (30,580) (40,014)

Maintenance capital expenditures (37,343) (39,940) (31,481) (37,775) (120,353)

Incentive distribution rights — — (733) (1,666) (281)

Distributable cash flow attributable to

noncontrolling interest in OpCo (294,670) (313,280) (332,246) (345,465) (258,560)

MLP distributable cash flow $ 71,983 $ 73,181 $ 60,024 $ 54,700 $ 32,405

(4) EBITDA (a non-GAAP financial measure) is calculated as net income before interest expense, income taxes, depreciation and amortization.

The body of accounting principles generally accepted in the United States is commonly referred to as "GAAP." For this purpose, a non-GAAP financial measure is generally defined by the SEC as a numerical measure of a registrant's historical or future financial performance, financial position or cash flows that (1) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the registrant;

or (2) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented.

We use EBITDA to analyze our performance.

EBITDA is a non-GAAP supplemental financial measure that management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess:

• our operating performance as compared to other publicly-traded partnerships;

• our ability to incur and service debt and fund capital expenditures;

• the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.

EBITDA is not a substitute for the GAAP measures of net income, income from operations and net cash provided by operating activities.

In addition, it should be noted that companies calculate EBITDA differently and, therefore, EBITDA as presented for us may not be comparable to EBITDA reported by other companies.

EBITDA has material limitations as a performance measure because it excludes interest expense, depreciation and amortization, and income taxes.

The following table reconciles EBITDA to net income, income from operations and to cash flows from operating activities, the most directly comparable GAAP measures.

Reconciliation of EBITDA to Net Income, Income from Operations and Net Cash Provided by Operating Activities

Year Ended December 31,

2020 2019 2018 2017 2016

(dollars in thousands)

Net cash provided by operating activities $ 373,397 $ 450,807 $ 436,151 $ 537,357 $ 287,726

Loss from disposition of fixed assets (1,000) (515) (1,849) (3,033) (3.021)

Changes in operating assets and liabilities

and other (31,278) (117,397) (103,731) (181,266) 68,698

Net income 341,119 332,895 330,571 353,058 353,403

Other income, net 733 3,096 2,457 1,792 601

Interest expense (12,038) (19,623) (21,433) (21,861) (12,607)

Provision for income taxes (564) (728) (22) (1,280) (1,035)

Income from operations 352,988 350,150 349,569 374,407 366,444

Depreciation and amortization 103,154 107,320 108,842 113,985 98,210

Other income, net 733 3,096 2,457 1,792 601

EBITDA $ 456,875 $ 460,566 $ 460,868 $ 490,184 $ 465,255

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-K

Item 5. Market for Registrant’s Common Equity