What changed in this filing

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Item 1. Financial Statements

2022-08-03 compared with 2022-05-04 · 115 added, 62 removed, 298 unchanged (37% of the section changed)

20 unchanged sentences

Accrued and other liabilities 15,751 60,895

Debt payable to Westlake 377,055 —

Total current liabilities 92,019 106,796

4 unchanged sentences

Common unitholders—publicly and privately held ( 21,082,331 and 21,092,186 units

issued and outstanding at March 31, 2022 and December 31, 2021, respectively)

issued and outstanding at June 30, 2022 and December 31, 2021, respectively)

481,453 481,796

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

at March 31, 2022 and December 31, 2021, respectively)

at June 30, 2022 and December 31, 2021, respectively)

54,526 54,754

7 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,

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

2022 2021 2022 2021

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

9 unchanged sentences

Interest expense—Westlake ( 2,859 ) ( 2,224 ) ( 5,058 ) ( 4,460 )

Other income (expense), net ( 25 ) 7

Other income, net 90 21 65 28

Income before income taxes 84,614 120,557 165,602 197,354

24 unchanged sentences

Balance at March 31, 2022 $ 481,550 $ 54,591 $ ( 242,572 ) $ 682,663 $ 976,232

Net income 9,846 6,592 — 68,001 84,439

Quarterly distribution to unitholders ( 9,943 ) ( 6,657 ) — — ( 16,600 )

Quarterly distribution to noncontrolling interest retained in OpCo by Westlake — — — ( 75,130 ) ( 75,130 )

Balance at June 30, 2022 $ 481,453 $ 54,526 $ ( 242,572 ) $ 675,534 $ 968,941

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

Common Unitholders—

9 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 distributions 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.

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, 2022, its results of operations for the three months ended March 31, 2022 and 2021 and the changes in its cash position for the three months ended March 31, 2022 and 2021.

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, 2022, its results of operations for the three and six months ended June 30, 2022 and 2021 and the changes in its cash position for the six months ended June 30, 2022 and 2021.

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, 2022 or any other interim period.

17 unchanged sentences

Property, Plant and Equipment

Depreciation expense on property, plant and equipment of $ 23,996 and $ 22,802 is included in cost of sales in the consolidated statements of operations for the three months ended March 31, 2022 and 2021, respectively.

Depreciation expense on property, plant and equipment of $ 23,888 and $ 22,983 is included in cost of sales in the consolidated statements of operations for the three months ended June 30, 2022 and 2021, respectively.

Depreciation expense on property, plant and equipment of $ 47,884 and $ 45,785 is included in cost of sales in the consolidated statements of operations for the six months ended June 30, 2022 and 2021, respectively.

Deferred Charges and Other Assets

Amortization expense on other assets of $ 7,286 and $ 4,740 is included in costs of sales in the consolidated statements of operations for the three months ended March 31, 2022 and 2021, respectively.

Amortization expense on other assets of $ 7,121 and $ 5,719 is included in cost of sales in the consolidated statements of operations for the three months ended June 30, 2022 and 2021, respectively.

Amortization expense on other assets of $ 14,407 and $ 10,459 is included in cost of sales in the consolidated statements of operations for the six months ended June 30, 2022 and 2021, respectively.

Distributions and Net Income Per Limited Partner Unit

On May 2, 2022, 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, 2022 of $ 0.4714 per unit.

This distribution is payable on May 26, 2022 to unitholders of record as of May 12, 2022.

On August 1, 2022, 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, 2022 of $ 0.4714 per unit.

This distribution is payable on August 25, 2022 to unitholders of record as of August 11, 2022.

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,

2022 2021 2022 2021

Net income attributable to the Partnership $ 16,438 $ 25,099 $ 32,632 $ 40,245

1 unchanged sentence

16,595 16,595 33,195 33,188

Distribution in excess of net income $ ( 406 ) $ ( 1,447 )

Net income in excess of distribution (Distribution in excess of net income) $ ( 157 ) $ 8,504 $ ( 563 ) $ 7,057

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

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

Net income per unit applicable to common limited partner units is computed by dividing the respective limited partners' interest in net income by the weighted-average number of common units outstanding for the period.

4 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.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

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

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Limited Partners' Common Units Incentive Distribution Rights Total

7 unchanged sentences

Basic and diluted $ 0.47

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

Six Months Ended June 30, 2022

Limited Partners' Common Units Incentive Distribution Rights Total

Net income attributable to the Partnership:

Distribution $ 33,195 $ — $ 33,195

Distribution in excess of net income ( 563 ) — ( 563 )

4 unchanged sentences

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 .

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, 2021

Limited Partners' Common Units Incentive Distribution Rights Total

Net income attributable to the Partnership:

Distribution $ 33,188 $ — $ 33,188

Net income in excess of distribution 7,057 — 7,057

Net income $ 40,245 $ — $ 40,245

Weighted average units outstanding:

Basic and diluted 35,200,403 35,200,403

Net income per limited partner unit:

Basic and diluted $ 1.14

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

If cash distributions to the Partnership's unitholders exceed $ 1.2938 per common unit in any quarter, the Partnership's unitholders and Westlake, as the holder of the Partnership's incentive distribution rights, will receive distributions according to the following percentage allocations:

7 unchanged sentences

50.0 % 50.0 %

The Partnership's distribution for the three months ended March 31, 2022 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 June 30, 2022 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, 2022 and 2021 were as follows:

Three Months Ended March 31,

Distributions per common unit for the three and six months ended June 30, 2022 and 2021 were as follows:

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

2022 2021 2022 2021

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

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

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

Partners' Equity

1 unchanged sentence

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, 2022.

No common units were issued under this program as of June 30, 2022.

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.

TTWF LP, Westlake's principal stockholder and a related party, acquired 1,401,869 common units out of 2,940,818 common units issued in the private placement.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

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

Related Party Transactions

5 unchanged sentences

Sales to related parties were as follows:

Three Months Ended March 31,

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

2022 2021 2022 2021

Net sales—Westlake $ 365,112 $ 240,956 $ 655,769 $ 460,759

2 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,

2022 2021 2022 2021

Feedstock purchased from Westlake and included in cost of sales

3 unchanged sentences

Total $ 286,883 $ 128,445 $ 488,629 $ 242,403

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

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

Services from Related Parties Included in Selling, General and Administrative Expenses

1 unchanged sentence

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,

2022 2021 2022 2021

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,

2022 2021 2022 2021

Goods and services purchased from Westlake and capitalized as assets

$ 623 $ 533 $ 1,373 $ 936

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

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

Receivable under the Investment Management Agreement

1 unchanged sentence

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 $ 52 and $ 71 was included in the receivable under the Investment Management Agreement balance at March 31, 2022 and December 31, 2021, respectively.

Total interest earned related to the Investment Management Agreement was $ 52 and $ 67 for the three months ended March 31, 2022 and 2021, respectively.

Accrued interest of $ 191 and $ 71 was included in the receivable under the Investment Management Agreement balance at June 30, 2022 and December 31, 2021, respectively.

Total interest earned related to the Investment Management Agreement was $ 191 and $ 77 for the three months ended June 30, 2022 and 2021, respectively, and $ 243 and $ 145 for the six months ended June 30, 2022 and 2021, respectively.

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

1 unchanged sentence

Receivable under the Investment Management Agreement $ 129,363 $ 106,243

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

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

Accounts Receivable from Related Parties

13 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 for the three months ended March 31, 2022 and 2021, and reflected in other charges from Westlake that are included in cost of sales.

Operating lease rentals paid to Westlake for such leases were $ 574 and $ 608 for the three months ended June 30, 2022 and 2021, respectively, and $ 1,260 and $ 1,295 for the six months ended June 30, 2022 and 2021, 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.

Pursuant to the site lease agreements, OpCo pays Westlake one dollar per site per year.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

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

Debt Payable to Related Parties

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, 2022 and 2021 was $ 2,199 and $ 2,236 , respectively.

Interest on related party debt payable balances for the three months ended June 30, 2022 and 2021 was $ 2,859 and $ 2,224 , respectively.

Interest on related party debt payable balances for the six months ended June 30, 2022 and 2021 was $ 5,058 and $ 4,460 , respectively.

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

At March 31, 2022 and December 31, 2021, accrued interest on related party debt was $ 2,213 and $ 2,176 , respectively, and is reflected as a component of accrued liabilities in the consolidated balance sheets.

At June 30, 2022 and December 31, 2021, accrued interest on related party debt was $ 2,997 and $ 2,176 , 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, 2022 and 2021, Westlake accounted for approximately 80.2 % and 82.0 %, respectively, of the Partnership's net sales.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

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

During the three months ended June 30, 2022 and 2021, Westlake accounted for approximately 81.4 % and 74.8 %, respectively, of the Partnership's net sales.

During the six months ended June 30, 2022 and 2021, Westlake accounted for approximately 80.8 % and 78.0 %, respectively, of the Partnership's net sales.

Long-Term Debt Payable to Westlake

1 unchanged sentence

2022 December 31,

OpCo Revolver (variable interest rate of London Interbank Offered Rate ("LIBOR") plus 2.0 %, scheduled maturity of September 25, 2023)

$ 22,619 $ 22,619

MLP Revolver (variable interest rate of LIBOR plus 2.0 %, scheduled maturity of March 19, 2023)

377,055 377,055

Total debt $ 399,674 $ 399,674

Less current debt:

OpCo Revolver $ 22,619 $ 22,619

MLP Revolver 377,055 377,055

Long-term debt, net of current debt $ 22,619 $ 399,674

The weighted average interest rate on all debt was 2.2 % and 2.1 % at March 31, 2022 and December 31, 2021, respectively.

As of March 31, 2022, the Partnership was in compliance with all of the covenants under the OpCo Revolver and the MLP Revolver.

Total debt $ 399,674 $ 399,674

On July 12, 2022, OpCo entered into the Second Amendment (the "OpCo Revolver Amendment") to the Amended and Restated Senior Unsecured Revolving Credit Agreement (as so amended, the "OpCo Revolver").

Prior to the OpCo Revolver Amendment, the OpCo Revolver bore interest at the London Interbank Offered Rate ("LIBOR") plus 2.0 %.

The OpCo Revolver Amendment, among other things, extended the maturity date of the OpCo Revolver from September 25, 2023 to July 12, 2027 and provided for the replacement of LIBOR with the Secured Overnight Financing Rate, as administered by the Federal Reserve Bank of New York ("SOFR").

Borrowings under the OpCo Revolver now bear interest at a variable rate of either (a) SOFR plus the Applicable Margin plus a 0.10 % credit spread adjustment or, if SOFR is no longer available, (b) the Alternate Base Rate plus the Applicable Margin minus 1.0 %.

The Applicable Margin under the OpCo Revolver is 1.75 %.

On July 12, 2022, the Partnership entered into the Fourth Amendment (the "MLP Revolver Amendment") to the Senior Unsecured Revolving Credit Agreement (the "MLP Revolver").

Prior to the MLP Revolver Amendment, the MLP Revolver bore interest at a variable rate of either (a) LIBOR plus 2.0 % or, if LIBOR were no longer available, (b) the Alternate Base Rate plus 1.0 %.

The MLP Revolver Amendment, among other things, extended the maturity date of the MLP Revolver from March 19, 2023 to July 12, 2027 and provided for the replacement of LIBOR with SOFR.

Borrowings under the MLP Revolver will now bear interest at a variable rate of either (a) SOFR plus the Applicable Margin plus a 0.10 % credit spread adjustment or, if SOFR is no longer available, (b) the Alternate Base Rate plus the Applicable Margin minus 1.0 %.

The Applicable Margin under the MLP Revolver varies between 1.75 % and 2.75 %, depending on the Partnership's Consolidated Leverage Ratio.

The weighted average interest rate on all debt was 3.0 % and 2.1 % at June 30, 2022 and December 31, 2021, respectively.

As of June 30, 2022, the Partnership was in compliance with all of the covenants under the OpCo Revolver and the MLP Revolver.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

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

Fair Value Measurements

7 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 debt at March 31, 2022 and December 31, 2021 are summarized in the table below.

The Partnership's debt includes the OpCo Revolver and the MLP Revolver at March 31, 2022.

The carrying and fair values of the Partnership's debt at June 30, 2022 and December 31, 2021 are summarized in the table below.

The Partnership's debt includes the OpCo Revolver and the MLP Revolver at June 30, 2022.

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 debt include the selection of an appropriate discount rate.

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Value Carrying

1 unchanged sentence

MLP Revolver 377,055 380,677 377,055 383,574

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

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

Supplemental Information

Accrued and Other Liabilities

Accrued and other liabilities of $ 21,391 and $ 60,895 at March 31, 2022 and December 31, 2021, respectively, primarily comprised of accrued maintenance expense, accrued turnaround costs, accrued capital expenditures and accrued taxes, which were $ 4,152 , $ 4,430 , $ 4,606 and $ 3,137 , respectively, at March 31, 2022 and $ 5,597 , $ 40,250 , $ 7,491 and $ 2,264 , respectively, at December 31, 2021.

Accrued and other liabilities of $ 15,751 and $ 60,895 at June 30, 2022 and December 31, 2021, respectively, primarily comprised of accrued maintenance expense, accrued capital expenditures, accrued taxes, and accrued intercompany interest, which were $ 3,592 , $ 2,129 , $ 3,686 , and $ 2,997 , respectively, at June 30, 2022 and $ 5,597 , $ 7,491 , $ 2,264 , and $ 2,176 respectively, at December 31, 2021.

Non-cash Investing Activity

Capital expenditure related liabilities, included in accounts payable—third parties and accrued and other liabilities, were $ 8,056 and $ 6,272 at March 31, 2022 and 2021, respectively.

Capital expenditure related liabilities, included in accounts payable—third parties and accrued and other liabilities, were $ 6,557 and $ 6,185 at June 30, 2022 and 2021, respectively.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

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

Commitments and Contingencies

10 unchanged sentences

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.

Subsequent Event

On July 12, 2022, the OpCo Revolver and the MLP Revolver were amended.

See Note 9 for a description of these amendments.

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