What changed in this filing

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Item 1. Financial Statements

2023-11-02 compared with 2023-08-03 · 76 added, 65 removed, 343 unchanged (29% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30,

2023 December 31,

19 unchanged sentences

Deferred income taxes 1,656 1,656

Other liabilities 3,308 —

Total liabilities 480,238 468,271

1 unchanged sentence

Common unitholders—publicly and privately held ( 21,105,904 and 21,099,638 units

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

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

474,895 480,643

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

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

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

49,919 53,859

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,

2023 2022 2023 2022

14 unchanged sentences

Net income attributable to noncontrolling interest in OpCo 67,647 63,548 207,585 196,180

63,378 68,001 139,938 132,632

Net income attributable to Westlake Chemical Partners LP and limited partners' interest in net income $ 13,206 $ 14,757 $ 39,984 $ 47,389

$ 11,886 $ 16,438 $ 26,778 $ 32,632

Net income per limited partner unit attributable to Westlake Chemical Partners LP (basic and diluted)

14 unchanged sentences

Net income 8,921 5,971 — 76,560 91,452

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

Quarterly distribution to noncontrolling interest retained in OpCo by Westlake — — — ( 88,678 ) ( 88,678 )

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

Distribution to noncontrolling interest retained in OpCo by Westlake — — — ( 88,678 ) ( 88,678 )

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 )

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

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

Net income 7,911 5,295 — 67,647 80,853

Units issued for vested phantom units 141 — — — 141

Distribution to unitholders ( 9,948 ) ( 6,658 ) — — ( 16,606 )

Distribution to noncontrolling interest retained in OpCo by Westlake — — — ( 71,074 ) ( 71,074 )

Balances at September 30, 2023 $ 474,895 $ 49,919 $ ( 242,572 ) $ 579,030 $ 861,272

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

9 unchanged sentences

Net income 9,700 6,494 — 64,631 80,825

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

Quarterly distribution to noncontrolling interest retained in OpCo by Westlake — — — ( 60,688 ) ( 60,688 )

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

Distribution to noncontrolling interest retained in OpCo by Westlake — — — ( 60,688 ) ( 60,688 )

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 )

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

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

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

Units issued for vested phantom units 190 — — — 190

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

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

Balances 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.

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 4,438 4,388

Other losses, net 303 3,371

Other losses (gains), net ( 86 ) 4,400

Changes in operating assets and liabilities

15 unchanged sentences

Repayment of debt payable to Westlake ( 155,250 ) —

Quarterly distributions to noncontrolling interest retained in OpCo by Westlake ( 169,259 ) ( 135,818 )

Quarterly distributions to unitholders ( 33,207 ) ( 33,203 )

Distributions to noncontrolling interest retained in OpCo by Westlake ( 240,333 ) ( 214,486 )

Distributions to unitholders ( 49,813 ) ( 49,807 )

Net cash used for financing activities ( 290,146 ) ( 264,293 )

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

Net increase in cash and cash equivalents 1,087 2,411

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 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.

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

7 unchanged sentences

Accounts receivable—third parties consist of the following:

September 30,

2023 December 31,

4 unchanged sentences

Inventories consist of the following:

September 30,

2023 December 31,

3 unchanged sentences

Property, Plant and Equipment

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.

Depreciation expense on property, plant and equipment of $ 21,282 and $ 23,368 is included in cost of sales in the consolidated statements of operations for the three months ended September 30, 2023 and 2022, respectively.

Depreciation expense on property, plant and equipment of $ 63,167 and $ 71,252 is included in cost of sales in the consolidated statements of operations for the nine months ended September 30, 2023 and 2022, respectively.

Deferred Charges and Other Assets

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.

Amortization expense on deferred charges and other assets of $ 6,944 and $ 6,023 is included in cost of sales in the consolidated statements of operations for the three months ended September 30, 2023 and 2022, respectively .

Amortization expense on deferred charges and other assets of $ 18,735 and $ 20,430 is included in cost of sales in the consolidated statements of operations for the nine months ended September 30, 2023 and 2022, respectively.

Distributions and Net Income Per Limited Partner Unit

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.

On October 31, 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 September 30, 2023 of $ 0.4714 per unit.

This distribution is payable on November 27, 2023 to unitholders of record as of November 10, 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 June 30, Six Months Ended June 30,

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

2023 2022 2023 2022

1 unchanged sentence

Limited partners' distribution declared on common units 16,607 16,604 49,814 49,799

16,604 16,595 33,207 33,195

Distribution in excess of net income $ ( 3,401 ) $ ( 1,847 ) $ ( 9,830 ) $ ( 2,410 )

8 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, 2023

Three Months Ended September 30, 2023

Limited Partners' Common Units Incentive Distribution Rights Total

7 unchanged sentences

Basic and diluted $ 0.37

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

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

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, 2022

Nine Months Ended September 30, 2022

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, 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 September 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 and six months ended June 30, 2023 and 2022 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, 2023 and 2022 were as follows:

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

2023 2022 2023 2022

3 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 June 30, 2023.

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

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,

2023 2022 2023 2022

3 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,

2023 2022 2023 2022

Feedstock purchased from Westlake and included in cost of sales $ 120,040 $ 201,044 $ 303,809 $ 603,243

$ 80,727 $ 239,920 $ 183,769 $ 402,199

Other charges from Westlake and included in cost of sales 31,072 49,144 91,707 135,574

29,729 46,963 60,635 86,430

Total $ 151,112 $ 250,188 $ 395,516 $ 738,817

2 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,

2023 2022 2023 2022

Services received from Westlake and included in selling, general and administrative expenses $ 6,670 $ 7,080 $ 19,966 $ 20,510

$ 6,625 $ 6,864 $ 13,296 $ 13,430

Goods and Services from Related Parties Capitalized as Assets

1 unchanged sentence

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,

2023 2022 2023 2022

Goods and services purchased from Westlake and capitalized as assets $ 1,035 $ 832 $ 2,907 $ 2,205

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

WESTLAKE CHEMICAL PARTNERS LP

4 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 $ 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.

Accrued interest of $ 1,186 and $ 940 was included in the receivable under the Investment Management Agreement balance at September 30, 2023 and December 31, 2022, respectively.

Total interest earned related to the Investment Management Agreement was $ 1,186 and $ 691 for the three months ended September 30, 2023 and 2022, respectively, and $ 3,151 and $ 934 for the nine months ended September 30, 2023 and 2022, respectively.

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

September 30,

2023 December 31,

5 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, $ 5,890 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.

Of this amount, $ 6,451 was received in the nine months ended September 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:

September 30,

2023 December 31,

3 unchanged sentences

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

September 30,

2023 December 31,

2 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 $ 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.

Operating lease rentals paid to Westlake for such leases were $ 433 and $ 719 for the three months ended September 30, 2023 and 2022, respectively, an d $ 1,480 and $ 1,979 for the nine months ended September 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.

5 unchanged sentences

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 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 balances, net of capitalized interest, for the three months ended September 30, 2023 and 2022 was $ 6,437 and $ 3,645 , respecti vely.

Interest on related party debt payable balances, net of capitalized interest, for the nine months ended September 30, 2023 and 2022 was $ 19,869 and $ 8,703 , respectively.

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

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.

At September 30, 2023 and December 31, 2022, accrued interest on related party debt was $ 6,486 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:

September 30,

2023 December 31,

1 unchanged sentence

Major Customer and Concentration of Credit Risk

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.

During the three months ended September 30, 2023 and 2022, Westlake accounted for approximately 89.9 % and 87.8 %, respectively, of the Partnership's net sale s.

During the nine months ended September 30, 2023 and 2022, Westlake accounted for approximately 86.3 % and 83.2 %, 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,

2023 December 31,

2 unchanged sentences

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

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.

As of September 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 6.7 % 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.

The weighted average interest rate on all long-term debt was 7.1 % and 4.8 % at September 30, 2023 and December 31, 2022, respectively.

As of September 30, 2023, 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, 2023 and December 31, 2022 are summarized in the table below.

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Value Carrying

2 unchanged sentences

Accrued and Other Liabilities

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.

Accrued and other liabilities were $ 31,355 and $ 17,537 at September 30, 2023 and December 31, 2022, respectively.

Accrued maintenance expense, accrued capital expenditures, accrued interest on related party debt and accrued taxes, which are components of accrued and other liabilities, were $ 10,020 , $ 5,320 , $ 6,486 and $ 4,881 , respectively, at September 30, 2023 and $ 3,752 , $ 2,442 , $ 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 $ 4,368 and $ 6,557 at June 30, 2023 and 2022, respectively.

Capital expenditure related liabilities, included in accounts payable—third parties and accrued and other liabilities, were $ 8,262 and $ 7,654 at September 30, 2023 and 2022, respectively.

Interest Paid

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.

Interest paid by the Partnership, net of interest capitalized, was $ 18,095 and $ 7,335 for the nine months ended September 30, 2023 and 2022, respectively.

Commitments and Contingencies

5 unchanged sentences

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.

Contractors working on the quench tower were injured.

There are lawsuits pending in connection with the flash fire.

The Partnership expects insurance to cover most of the costs associated with these lawsuits.

Litigation and discovery are continuing, and settlements have been reached with most of the plaintiffs.

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.

After considering all relevant facts and circumstances, including applicable insurance, 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