What changed in this filing

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Item 1. Financial Statements

2022-11-03 compared with 2022-08-03 · 88 added, 61 removed, 352 unchanged (30% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30,

2022 December 31,

22 unchanged sentences

Common unitholders—publicly and privately held ( 21,099,638 and 21,092,186 units

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

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

480,535 481,796

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

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

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

53,787 54,754

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,

2022 2021 2022 2021

1 unchanged sentence

Net sales—Westlake $ 364,273 $ 247,887 $ 1,020,042 $ 708,646

Net co-product, ethylene and other sales—third parties

83,673 81,273 155,416 129,677

Net co-products, ethylene and other sales—third parties 50,850 46,079 206,266 175,756

Total net sales 415,123 293,966 1,226,308 884,402

7 unchanged sentences

Income before income taxes 78,789 65,970 244,391 263,324

Income tax provision 175 263 338 438

Income tax provision (benefit) 484 ( 105 ) 822 333

Net income 78,305 66,075 243,569 262,991

26 unchanged sentences

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

Net income 8,839 5,918 — 63,548 78,305

Units issued for vested phantom units 190 — — — 190

Quarterly distribution to unitholders ( 9,947 ) ( 6,657 ) — — ( 16,604 )

Quarterly distribution to noncontrolling interest retained in OpCo by Westlake — — — ( 78,668 ) ( 78,668 )

Balance at September 30, 2022 $ 480,535 $ 53,787 $ ( 242,572 ) $ 660,414 $ 952,164

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

WESTLAKE CHEMICAL PARTNERS LP

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Common Unitholders—

11 unchanged sentences

Units issued for vested phantom units 149 — — — 149

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

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

Quarterly distribution to noncontrolling interest retained in OpCo by Westlake

1 unchanged sentence

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.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands of dollars)

4 unchanged sentences

Loss from disposition of property, plant and equipment 4,388 1,763

Other loss, net 3,371 759

Other losses, net 4,400 866

Changes in operating assets and liabilities

3 unchanged sentences

Prepaid expenses and other current assets ( 62 ) ( 174 )

Accounts payable ( 12,485 ) 653

Accounts payable—third parties ( 14,269 ) 2,689

Accrued and other liabilities ( 32,326 ) 3,690

39 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, 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.

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

7 unchanged sentences

Accounts receivable—third parties consist of the following:

September 30,

2022 December 31,

3 unchanged sentences

Inventories consist of the following:

September 30,

2022 December 31,

3 unchanged sentences

Property, Plant and Equipment

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.

Depreciation expense on property, plant and equipment of $ 23,368 and $ 23,010 is included in cost of sales in the consolidated statements of operations for the three months ended September 30, 2022 and 2021, respectively.

Depreciation expense on property, plant and equipment of $ 71,252 and $ 68,795 is included in cost of sales in the consolidated statements of operations for the nine months ended September 30, 2022 and 2021, respectively.

Deferred Charges and Other Assets

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.

Amortization expense on other assets of $ 6,023 and $ 3,576 is included in cost of sales in the consolidated statements of operations for the three months ended September 30, 2022 and 2021, respectively.

Amortization expense on other assets of $ 20,430 and $ 14,035 is included in cost of sales in the consolidated statements of operations for the nine months ended September 30, 2022 and 2021, respectively.

Distributions and Net Income Per Limited Partner Unit

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.

On October 31, 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 September 30, 2022 of $ 0.4714 per unit.

This distribution is payable on November 28, 2022 to unitholders of record as of November 10, 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 June 30, Six Months Ended June 30,

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

2022 2021 2022 2021

12 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, 2022

Three Months Ended September 30, 2022

Limited Partners' Common Units Incentive Distribution Rights Total

7 unchanged sentences

Basic and diluted $ 0.42

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

3 unchanged sentences

Basic and diluted $ 0.36

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Limited Partners' Common Units Incentive Distribution Rights Total

10 unchanged sentences

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

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Limited Partners' Common Units Incentive Distribution Rights Total

17 unchanged sentences

50.0 % 50.0 %

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.

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

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

2022 2021 2022 2021

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, 2022.

No common units were issued under this program as of September 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.

10 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,

2022 2021 2022 2021

Net sales—Westlake $ 364,273 $ 247,887 $ 1,020,042 $ 708,646

As of September 30, 2022, OpCo has estimated an annual deficiency for the full year 2022, and thus, the Partnership has recognized buyer deficiency fees of $ 13,940 during the three and nine months ended September 30, 2022.

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

The buyer deficiency fees are classified as a component of net sales—Westlake.

Cost of Sales from Related Parties

1 unchanged sentence

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,

2022 2021 2022 2021

4 unchanged sentences

Total $ 250,188 $ 154,615 $ 738,817 $ 397,018

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 June 30, Six Months Ended June 30,

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

2022 2021 2022 2021

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,

2022 2021 2022 2021

1 unchanged sentence

$ 832 $ 3,606 $ 2,205 $ 4,542

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 $ 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.

Accrued interest of $ 691 and $ 71 was included in the receivable under the Investment Management Agreement balance at September 30, 2022 and December 31, 2021, respectively.

Total interest earned related to the Investment Management Agreement was $ 691 and $ 81 for the three months ended September 30, 2022 and 2021, respectively, and $ 934 and $ 225 for the nine months ended September 30, 2022 and 2021, respectively.

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

September 30,

2022 December 31,

Receivable under the Investment Management Agreement $ 135,863 $ 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

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.

In 2021, OpCo declared force majeure events related to the flash fire at the Petro 2 facility, OpCo's Petro 1 facility outage, and the severe winter storm.

As a result of these events, the Partnership recognized revenue for a buyer deficiency fee of $ 51,395 and shortfall fee of $ 58,906 during 2021.

The buyer deficiency fees discussed above under "Sales to Related Parties" recognized in the nine months ended September 30, 2022 are scheduled to be received by the Partnership after December 31, 2022.

As a result of the force majeure events in 2021, the Partnership recognized revenue for a buyer deficiency fee of $ 51,395 and a shortfall fee of $ 58,906 during 2021.

The buyer deficiency fee was collected from Westlake in January 2022 and the shortfall fee recognized in 2021 is recoverable during 2022 per the Ethylene Sales Agreement.

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

September 30,

2022 December 31,

3 unchanged sentences

The Partnership's accounts payable to Westlake were as follows:

September 30,

2022 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 $ 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.

Operating lease rentals paid to Westlake for such leases were $ 719 and $ 997 for the three months ended September 30, 2022 and 2021, respectively, and $ 1,979 and $ 2,292 for the nine months ended September 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.

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, 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 balances for the three months ended September 30, 2022 and 2021 was $ 3,645 and $ 2,190 , respectively.

Interest on related party debt payable balances for the nine months ended September 30, 2022 and 2021 was $ 8,703 and $ 6,650 , respectively.

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

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.

At September 30, 2022 and December 31, 2021, accrued interest on related party debt was $ 3,544 and $ 2,176 , respectively, and is reflected as a component of accrued and other liabilities in the consolidated balance sheets.

Debt payable to related parties was as follows:

September 30,

2022 December 31,

1 unchanged sentence

Major Customer and Concentration of Credit Risk

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.

During the three months ended September 30, 2022 and 2021, Westlake accounted for approximately 87.8 % and 84.3 %, respectively, of the Partnership's net sales.

During the nine months ended September 30, 2022 and 2021, Westlake accounted for approximately 83.2 % and 80.1 %, 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)

Long-Term Debt Payable to Westlake

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

September 30,

2022 December 31,

7 unchanged sentences

The Applicable Margin under the OpCo Revolver is 1.75 %.

As of September 30, 2022, outstanding borrowings under the OpCo Revolver bore interest at SOFR plus the Applicable Margin and credit spread adjustment.

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").

1 unchanged sentence

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 %.

Borrowings under the MLP 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 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)

As of September 30, 2022, outstanding borrowings under the MLP Revolver bore interest at SOFR plus the Applicable Margin and credit spread adjustment.

The weighted average interest rate on all debt was 3.4 % and 2.1 % at September 30, 2022 and December 31, 2021, respectively.

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

Fair Value Measurements

4 unchanged sentences

Unobservable inputs that are not corroborated by market data.

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

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

The Partnership has financial assets and liabilities subject to fair value measures.

1 unchanged sentence

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 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 carrying and fair values of the Partnership's debt at September 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 September 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.

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Value Carrying

3 unchanged sentences

Accrued and Other Liabilities

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.

Accrued and other liabilities were $ 22,615 and $ 60,895 at September 30, 2022 and December 31, 2021, respectively.

Accrued maintenance expense and accrued taxes, which are components of accrued and other liabilities, were $ 6,128 and $ 5,462 , respectively, at September 30, 2022 and $ 5,597 and $ 2,264 , respectively, at December 31, 2021.

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

Non-cash Investing Activity

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)

Capital expenditure related liabilities, included in accounts payable—third parties and accrued and other liabilities, were $ 7,654 and $ 10,517 at September 30, 2022 and 2021, respectively.

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