What changed in this filing

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Item 1. Financial Statements

2023-08-03 compared with 2023-05-04 · 100 added, 56 removed, 308 unchanged (34% of the section changed)

26 unchanged sentences

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

issued and outstanding at March 31, 2023 and December 31, 2022, respectively)

issued and outstanding at June 30, 2023 and December 31, 2022, respectively)

476,791 480,643

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

at March 31, 2023 and December 31, 2022, respectively)

at June 30, 2023 and December 31, 2022, respectively)

51,282 53,859

7 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,

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

2023 2022 2023 2022

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

8 unchanged sentences

Interest expense—Westlake ( 6,117 ) ( 2,859 ) ( 13,432 ) ( 5,058 )

Other income (expense), net 820 ( 25 )

Other income, net 1,061 90 1,881 65

Income before income taxes 75,437 84,614 167,101 165,602

24 unchanged sentences

Balances at March 31, 2023 $ 479,617 $ 53,173 $ ( 242,572 ) $ 599,660 $ 889,878

Net income 7,120 4,766 — 63,378 75,264

Quarterly distribution to unitholders ( 9,946 ) ( 6,657 ) — — ( 16,603 )

Quarterly distribution to noncontrolling interest retained in OpCo by Westlake — — — ( 80,581 ) ( 80,581 )

Balances at June 30, 2023 $ 476,791 $ 51,282 $ ( 242,572 ) $ 582,457 $ 867,958

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

Balances 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 )

Balances 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.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands of dollars)

18 unchanged sentences

Maturities of investments with Westlake under the Investment Management Agreement 135,000 147,000

Net cash provided by (used for) investing activities 228 ( 25,342 )

Net cash used for investing activities ( 46,285 ) ( 55,334 )

Cash flows from financing activities

4 unchanged sentences

Net cash used for financing activities ( 202,466 ) ( 169,021 )

Net increase in cash and cash equivalents 39,806 2,177

Net increase (decrease) in cash and cash equivalents ( 5,348 ) 1,312

Cash and cash equivalents at beginning of period 64,782 17,057

26 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, 2023, its results of operations for the three months ended March 31, 2023 and 2022 and the changes in its cash position for the three months ended March 31, 2023 and 2022.

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, 2023, its results of operations for the three and six months ended June 30, 2023 and 2022 and the changes in its cash position for the six months ended June 30, 2023 and 2022.

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, 2023 or any other interim period.

18 unchanged sentences

Property, Plant and Equipment

Depreciation expense on property, plant and equipment of $ 20,957 and $ 23,996 is included in cost of sales in the consolidated statements of operations for the three months ended March 31, 2023 and 2022, respectively.

Depreciation expense on property, plant and equipment of $ 20,928 and $ 23,888 is included in cost of sales in the consolidated statements of operations for the three months ended June 30, 2023 and 2022, respectively.

Depreciation expense on property, plant and equipment of $ 41,885 and $ 47,884 is included in cost of sales in the consolidated statements of operations for the six months ended June 30, 2023 and 2022, respectively.

Deferred Charges and Other Assets

Amortization expense on deferred charges and other assets of $ 5,679 and $ 7,286 is included in cost of sales in the consolidated statements of operations for the three months ended March 31, 2023 and 2022, respectively.

Amortization expense on deferred charges and other assets of $ 6,112 and $ 7,121 is included in cost of sales in the consolidated statements of operations for the three months ended June 30, 2023 and 2022, respectively .

Amortization expense on deferred charges and other assets of $ 11,791 and $ 14,407 is included in cost of sales in the consolidated statements of operations for the six months ended June 30, 2023 and 2022, respectively.

Distributions and Net Income Per Limited Partner Unit

On May 2, 2023, 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, 2023 of $ 0.4714 per unit.

This distribution is payable on May 26, 2023 to unitholders of record as of May 12, 2023.

On August 1, 2023, 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, 2023 of $ 0.4714 per unit.

This distribution is payable on August 25, 2023 to unitholders of record as of August 11, 2023.

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,

2023 2022 2023 2022

Net income attributable to the Partnership $ 11,886 $ 16,438 $ 26,778 $ 32,632

11 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, 2023

Three Months Ended June 30, 2023

Limited Partners' Common Units Incentive Distribution Rights Total

7 unchanged sentences

Basic and diluted $ 0.34

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

Six Months Ended June 30, 2023

Limited Partners' Common Units Incentive Distribution Rights Total

Net income attributable to the Partnership:

Distribution $ 33,207 $ — $ 33,207

Distribution in excess of net income ( 6,429 ) — ( 6,429 )

Net income $ 26,778 $ — $ 26,778

Weighted average units outstanding:

Basic and diluted 35,221,868 35,221,868

Net income per limited partner unit:

Basic and diluted $ 0.76

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, 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 )

Net income $ 32,632 $ — $ 32,632

Weighted average units outstanding:

Basic and diluted 35,211,803 35,211,803

Net income per limited partner unit:

Basic and diluted $ 0.93

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 .

8 unchanged sentences

50.0 % 50.0 %

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 March 31, 2023 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, 2023 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.

Distributions Per Common Unit

Distributions per common unit for the three months ended March 31, 2023 and 2022 were as follows:

Three Months Ended March 31,

Distributions per common unit for the three and six months ended June 30, 2023 and 2022 were as follows:

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

2023 2022 2023 2022

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 and subsequent renewals thereof for utilization under this agreement.

No common units were issued under this program as of March 31, 2023.

No common units were issued under this program as of June 30, 2023.

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,

2023 2022 2023 2022

Net sales—Westlake $ 224,575 $ 365,112 $ 482,046 $ 655,769

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,

2023 2022 2023 2022

Feedstock purchased from Westlake and included in cost of sales

3 unchanged sentences

Total $ 110,456 $ 286,883 $ 244,404 $ 488,629

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,

2023 2022 2023 2022

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,

2023 2022 2023 2022

Goods and services purchased from Westlake and capitalized as assets

$ 1,173 $ 623 $ 1,872 $ 1,373

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 $ 907 and $ 940 was included in the receivable under the Investment Management Agreement balance at March 31, 2023 and December 31, 2022, respectively.

Total interest earned related to the Investment Management Agreement was $ 907 and $ 52 for the three months ended March 31, 2023 and 2022, respectively.

Accrued interest of $ 1,058 and $ 940 was included in the receivable under the Investment Management Agreement balance at June 30, 2023 and December 31, 2022, respectively.

Total interest earned related to the Investment Management Agreement was $ 1,058 and $ 191 for the three months ended June 30, 2023 and 2022, respectively, and $ 1,965 and $ 243 for the six months ended June 30, 2023 and 2022, respectively.

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

1 unchanged sentence

Receivable under the Investment Management Agreement $ 94,230 $ 64,996

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

3 unchanged sentences

Additionally, as a result of force majeure events in 2021, the Partnership recognized a shortfall fee of $ 58,906 during 2021, of which $ 7,193 remained to be collected by the Partnership as of December 31, 2022.

Of this amount, $ 5,374 was received in the three months ended March 31, 2023 and the remaining amount will be collected during 2023 pursuant to the terms of the Ethylene Sales Agreement.

Of this amount, $ 5,890 was received in the six months ended June 30, 2023 and the remaining amount will be collected during the remainder of 2023 pursuant to the terms of the Ethylene Sales Agreement.

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 cars and land.

Operating lease rentals paid to Westlake for such leases were $ 737 and $ 686 for the three months ended March 31, 2023 and 2022, respectively, and are reflected in other charges from Westlake that are included in cost of sales.

Operating lease rentals paid to Westlake for such leases were $ 310 and $ 574 for the three months ended June 30, 2023 and 2022, respectively, an d $ 1,047 and $ 1,260 for the six months ended June 30, 2023 and 2022, respectively, and are 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, net of capitalized interest, for the three months ended March 31, 2023 and 2022 was $ 7,315 and $ 2,199 , respectively.

Interest on related party debt payable balances, net of capitalized interest, for the three months ended June 30, 2023 and 2022 was $ 6,117 and $ 2,859 , respecti vely.

Interest on related party debt payable balances, net of capitalized interest, for the six months ended June 30, 2023 and 2022 was $ 13,432 and $ 5,058 , respectively.

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

At March 31, 2023 and December 31, 2022, accrued interest on related party debt was $ 7,326 and $ 4,733 , respectively, and is reflected as a component of accrued and other liabilities in the consolidated balance sheets.

At June 30, 2023 and December 31, 2022, accrued interest on related party debt was $ 6,156 and $ 4,733 , 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:

2 unchanged sentences

Major Customer and Concentration of Credit Risk

During the three months ended March 31, 2023 and 2022, Westlake accounted for approximately 83.7 % and 80.2 %, 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, 2023 and 2022, Westlake accounted for approximately 85.0 % and 81.4 %, respectively, of the Partnership's net sale s.

During the six months ended June 30, 2023 and 2022, Westlake accounted for approximately 84.3 % and 80.8 %, respectively, of the Partnership's net sales.

Long-Term Debt Payable to Westlake

4 unchanged sentences

Long-term debt payable to Westlake $ 399,674 $ 399,674

As of March 31, 2023, outstanding borrowings under the OpCo Revolver and the MLP Revolver bore interest at the Secured Overnight Financing Rate, as administered by the Federal Reserve Bank of New York ("SOFR") plus the Applicable Margin plus a 0.10 % credit spread adjustment.

As of June 30, 2023, outstanding borrowings under the OpCo Revolver and the MLP Revolver bore interest at the Secured Overnight Financing Rate, as administered by the Federal Reserve Bank of New York ("SOFR") plus the Applicable Margin plus a 0.10 % credit spread adjustment.

The Applicable Margin under the OpCo Revolver is 1.75 %.

1 unchanged sentence

The OpCo Revolver and the MLP Revolver are scheduled to mature on July 12, 2027.

The weighted average interest rate on all long-term debt was 6.4 % and 4.8 % at March 31, 2023 and December 31, 2022, respectively.

As of March 31, 2023, 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 6.7 % and 4.8 % at June 30, 2023 and December 31, 2022, respectively.

As of June 30, 2023, 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 long-term debt at March 31, 2023 and December 31, 2022 are summarized in the table below.

The carrying and fair values of the Partnership's long-term debt at June 30, 2023 and December 31, 2022 are summarized in the table below.

The fair value of long-term 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, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Value Carrying

Long-term debt payable to Westlake $ 399,674 $ 406,687 $ 399,674 $ 405,879

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 were $ 21,061 and $ 17,537 at March 31, 2023 and December 31, 2022, respectively.

Accrued maintenance expense, accrued interest on related party debt and accrued taxes, which are components of accrued and other liabilities, were $ 4,660 , $ 7,326 and $ 3,508 , respectively, at March 31, 2023 and $ 3,752 , $ 4,733 and $ 2,652 , respectively, at December 31, 2022.

Accrued and other liabilities were $ 26,952 and $ 17,537 at June 30, 2023 and December 31, 2022, respectively.

Accrued maintenance expense, accrued turnaround costs, accrued interest on related party debt and accrued taxes, which are components of accrued and other liabilities, were $ 3,780 , $ 6,748 , $ 6,156 and $ 4,423 , respectively, at June 30, 2023 and $ 3,752 , $ 674 , $ 4,733 and $ 2,652 , respectively, at December 31, 2022.

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

1 unchanged sentence

Non-cash Investing Activity

Capital expenditure related liabilities, included in accounts payable—third parties and accrued and other liabilities, were $ 2,091 and $ 8,056 at March 31, 2023 and 2022, respectively.

Capital expenditure related liabilities, included in accounts payable—third parties and accrued and other liabilities, were $ 4,368 and $ 6,557 at June 30, 2023 and 2022, respectively.

Interest Paid

Interest paid by the Partnership, net of interest capitalized, was $ 4,696 and $ 2,163 for the three months ended March 31, 2023 and 2022, respectively.

Interest paid by the Partnership, net of interest capitalized, was $ 11,987 and $ 4,237 for the six months ended June 30, 2023 and 2022, respectively.

Commitments and Contingencies

The Partnership is subject to environmental laws and regulations that can impose civil and criminal sanctions and that may require the Partnership to mitigate the effects of contamination caused by the release or disposal of hazardous substances into the environment.

These laws include the federal Clean Air Act, the federal Water Pollution Control Act, the Resource Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), the Toxic Substances Control Act and various other federal, state and local laws and regulations.

These laws include the federal Clean Air Act, the federal Water Pollution Control Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), the Toxic Substances Control Act and various other federal, state and local laws and regulations.

Under CERCLA, an owner or operator of property may be held strictly liable for remediating contamination without regard to whether that person caused the contamination, and without regard to whether the practices that resulted in the contamination were legal at the time they occurred.

Because the Partnership's production sites have a history of industrial use, it is impossible to predict precisely what effect these legal requirements will have on the Partnership.

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

Pursuant to the Omnibus Agreement, certain subsidiaries of Westlake will indemnify the Partnership for liabilities that occurred or existed prior to August 4, 2014.

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.

5 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