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Item 7. Management’s Discussion and Analysis

2024-02-28 compared with 2023-03-01 · 58 added, 100 removed, 286 unchanged (36% of the section changed)

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On August 4, 2016, OpCo and Westlake entered into an amendment to the Ethylene Sales Agreement in order to provide that certain of the pricing components that make up the price for ethylene sold thereunder would be modified to reflect the portion of OpCo's production capacity that is used to process Westlake's purge gas instead of producing ethylene and to clarify that costs specific to the processing of Westlake's purge gas would be recovered under the Services and Secondment Agreement, and not the Ethylene Sales Agreement.

Please refer to Note 2 to the consolidated financial statements included within this report for more information on the Ethylene Sales Agreement.

Please refer to Note 2 to the consolidated financial statements included in Item 8 of this form 10-K for more information on the Ethylene Sales Agreement.

How We Source Feedstock

OpCo has entered into a 12-year feedstock supply agreement (the "Feedstock Supply Agreement") with Westlake Petrochemicals LLC, a wholly owned subsidiary of Westlake, under which Westlake Petrochemicals LLC supplies OpCo with ethane and other feedstocks that OpCo uses to produce ethylene under the Ethylene Sales Agreement.

For its approximately five percent merchant sales, OpCo may purchase the ethane and other feedstocks to produce ethylene and resulting co-products to sell to unrelated third parties from Westlake Petrochemicals LLC.

Please refer to Note 2 to the consolidated financial statements included within this report for more information on the Feedstock Supply Agreement.

For its approximately 5% merchant sales, OpCo may purchase the ethane and other feedstocks to produce ethylene and resulting co-products to sell to unrelated third parties from Westlake Petrochemicals LLC.

Please refer to Note 2 to the consolidated financial statements included in Item 8 of this form 10-K for more information on the Feedstock Supply Agreement.

How We Evaluate Operations

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While we believe we have substantially mitigated our indirect exposure to commodity price fluctuations during the term of the Ethylene Sales Agreement through the minimum purchase commitment and the cost-plus based pricing, our ability to execute our growth strategy in our areas of operation will depend, in part, on the demand for ethylene derivatives in the geographical areas served by our ethylene production facilities.

Recent Developments

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").

The OpCo Revolver Amendment, among other things, extended the maturity date of the OpCo Revolver to July 12, 2027 and provided for the replacement of the London Interbank Offered Rate ("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").

The MLP Revolver Amendment, among other things, extended the maturity date of the MLP Revolver to July 12, 2027 and provided for the replacement of LIBOR with SOFR as the reference rate.

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.

Recent Development

Calvert City Olefins Turnaround

During May 2023, we performed our planned major maintenance activities, or turnaround, of OpCo's Calvert City Olefins production facility located at Westlake's Calvert City, Kentucky site.

Results of Operations

The table below and descriptions that follow represent the consolidated results of operations of the Partnership for the years ended December 31, 2023 and 2022.

A detailed comparison of the Partnership's 2022 operating results to its 2021 operating results can be found in the Management's Discussion and Analysis of Financial Condition and Results of Operations section in the Partnership's 2022 Annual Report on Form 10-K filed March 1, 2023.

Year Ended December 31,

2022 2021 2020

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

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$ 54,283 $ 64,173

Net income attributable to Westlake Chemical Partners LP

per limited partner unit (basic and diluted)

Net income per limited partner unit attributable to Westlake Chemical Partners LP

(basic and diluted)

Common units $ 1.54 $ 1.82

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Price Volume Average Sales

Product sales price and volume percentage change

from prior year +20.3 % +21.8 % +26.8% -3.6 %

Net sales percentage change from prior-year period due to average sales price and volume

-25.5 % +1.4 % +20.3% +21.8%

Year Ended December 31,

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

The following table presents reconciliations of MLP distributable cash flow to net income and net cash provided by operating activities, the most directly comparable GAAP financial measures, for each of the periods indicated.

Year Ended December 31,

2023 2022 2021

(dollars in thousands)

(in thousands of dollars)

Net cash provided by operating activities $ 451,999 $ 463,736 $ 408,439

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115,136 125,781 113,032

Mark-to-market adjustment gain on derivative contracts — — (1,340)

Contribution to turnaround reserves (29,520) (29,175) (80,090)

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

The following table presents reconciliations of EBITDA to net income, income from operations and net cash provided by operating activities, the most directly comparable GAAP financial measures, for each of the periods indicated.

Year Ended December 31,

2023 2022 2021

(dollars in thousands)

(in thousands of dollars)

Net cash provided by operating activities $ 451,999 $ 463,736 $ 408,439

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Income from operations was $357.7 million for 2023, as compared to $347.7 million for 2022.

The decrease in income from operations, as well as net income and net income attributable to the Partnership, was primarily due to increased ethane feedstock costs and natural gas prices, lower ethylene sales prices to third parties and a decrease in the buyer deficiency fee and Shortfall in 2022 as compared to 2021.

The buyer deficiency fee was $23.8 million in 2022 as co mpared to a buyer deficiency fee and Shortfall of $110.3 million in 2021 .

These decreases we re partially offs et by higher ethylene sales prices and volumes to Westlake pursuant to the terms of the Ethylene Sales Agreement and higher co-products sales prices and volumes in 2022.

The higher production in 2022 as compared to 2021 was due to OpCo's Petro 2 turnaround and the force majeure events in 2021.

Net sales for 2022 increased by $378.2 million as compared to 2021 mainly due to higher co-products sales prices and volumes and higher ethylene sales prices due to higher ethane feedstock costs and natural gas prices and volumes to Westlake pursuant to the terms of the Ethylene Sales Agreement, partially offset by lower ethylene sales prices to third parties and the smaller buyer deficiency fee recognized in 2022 as compared to the buyer deficiency fee and Shortfall recognized in 2021.

2022 Compared with 2021

Net sales increased by $378.2 million, or 31.1%, to $1,593.1 million in 2022 from $1,214.9 million in 2021.

The increase in net sales in 2022 was primarily due to higher co-products sales prices and volumes and higher ethylene sales prices due to higher ethane feedstock costs and natural gas prices and volumes to Westlake, partially offset by lower ethylene sales prices to third parties.

In addition, the buyer deficiency fee of $23.8 million recognized in 2022 was lower than the buyer deficiency fee and Shortfall of $110.3 million recognized in 2021.

T he higher average sales prices in 2022 contributed to a 20.3% increase in net sales compared to 2021.

The higher sales volumes during 2022 contributed to an increase in net sales of 21.8% for the year ended December 31, 2022 compared to the year ended December 31, 2021.

The increase in sales volume during 2022 was primarily due to higher production resulting in increased co-products sales volumes as well as higher ethylene sales volumes to Westlake.

Gross Profit .

Gross profit was $377.4 million in 2022, as compared to gross profit of $441.7 million in 2021.

The gross profit margin was 23.7% in 2022 as compared to 36.4% in 2021.

The decreased gross profit margin in 2022 was primarily due to increased ethane feedstock costs and natural gas prices, lower third party ethylene sales prices and the larger buyer deficiency fee and Shortfall recognized during 2021.

Selling, General and Administrative Expenses .

Selling, general and administrative expenses decreased by $1.3 million, or 4.2%, to $29.7 million in 2022 from $31.0 million in 2021.

The decrease in 2022, as compared to 2021, was mainly attributable to lower service costs.

Interest Expense—Westlake .

Interest expense increased by $4.6 million to $13.4 million in 2022 from $8.8 million in 2021, largely due to a higher interest rate on debt owed to Westlake.

Other Income, net.

Other income, net increased by $1.5 million to $1.6 million in 2022 from $0.1 million in 2021, primarily due to an increase in interest income earned under the Investment Management Agreement.

Provision for Income Taxes.

Provision for income taxes was $1.0 million in 2022 as compared to $0.5 million in 2021.

MLP Distributable Cash Flow.

MLP distributable cash flow increased by $5.8 million to $75.9 million in 2022 from $70.1 million in 2021.

The increase in MLP distributable cash flow was primarily a result of decreased turnaround reserves and maintenance capital expenditures, partially offset by lower earnings at OpCo.

EBITDA decreased by $49.3 million to $470.3 million in 2022 from EBITDA of $519.6 million in 2021.

The decreased EBITDA, as compared to the prior year, was primarily due to increased ethane feedstock costs and natural gas prices, lower ethylene sales prices to third parties, and a decrease in the buyer deficiency fee and Shortfall in 2022 compared to 2021, partially offset by higher ethylene sales to Westlake and higher co-products sales in 2022.

Net sales for 2023 decreased by $402.3 million as compared to 2022 primarily due to lower ethylene and co-products sales prices in 2023 compared to 2022.

Additionally, net sales in 2022 includes a buyer deficiency fee of $23.8 million.

Income from operations for 2023 increased compared to 2022 due to lower ethane feedstock and natural gas costs, partially offset by lower ethylene and co-products sales prices.

Net income and net income attributable to the Partnership for 2023 decreased as compared to 2022 despite the higher income from operations due to higher interest expense.

2023 Compared with 2022

Net sales increased by $248.2 million, or 25.7%, to $1,214.9 million in 2021 from $966.7 million in 2020.

The increase in net sales in 2021 was primarily due to the higher sales price to third parties and Westlake pursuant to the terms of the Ethylene Sales Agreement and the buyer deficiency fee and Shortfall of $110.3 million recognized in 2021 as compared to $69.6 million in 2020, partially offset by lower production during the year, mainly due to the force majeure events occurring in 2021 .

T he average sales prices in 2021 contributed to a 26.8% increase in net sales, compared to 2020.

The lower sales volumes during 2021 contributed to a decrease in net sales of 3.6% for the year ended December 31, 2021 compared to the year ended December 31, 2020.

The decrease in sales volume during 2021 was primarily due to OpCo's Petro 2 turnaround and the force majeure events in 2021.

Net sales decreased by $402.3 million, or 25.3%, to $1,190.8 million in 2023 from $1,593.1 million in 2022.

The decrease in net sales in 2023 was primarily due to lower ethylene and co-products sales prices in 2023 as compared to 2022.

Additionally, net sales in 2022 includes a buyer deficiency fee of $23.8 million.

Lower average sales prices in 2023 contributed to a 25.5% decrease in net sales compared to 2022.

Higher sales volumes in 2023 contributed to a 1.4% increase in net sales compared to 2022.

Gross Profit .

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The gross profit margin was 32.5% in 2023 as compared to 23.7% in 2022.

The increase in gross profit was primarily due to the higher sales price for ethylene sold to third parties and an increase in the buyer deficiency fee and Shortfall revenue in 2021 compared to 2020.

The decreased 2021 gross profit margin was primarily due to increased feedstock and conversion costs as compared to 2020.

The increased gross profit margin in 2023 was primarily due to lower ethane feedstock and natural gas costs in 2023 as compared to 2022.

Selling, General and Administrative Expenses .

Selling, general and administrative expenses increased by $5.1 million, or 19.7%, to $31.0 million in 2021 from $25.9 million in 2020.

The increase in 2021, as compared to 2020, was mainly attributable to higher service costs.

Selling, general and administrative expenses remained relatively unchanged at $29.8 million in 2023 as compared to $29.7 million in 2022.

Interest Expense—Westlake .

Interest expense decreased by $3.2 million to $8.8 million in 2021 from $12.0 million in 2020, largely due to a lower average interest rate on debt owed to Westlake.

Interest expense increased by $13.1 million to $26.5 million in 2023 from $13.4 million in 2022 due to a higher interest rate on debt owed to Westlake.

Other Income, net.

Other income, net decreased by $0.6 million to $0.1 million in 2021 from $0.7 million in 2020, primarily due to a decrease in interest income earned under the Investment Management Agreement as a result of lower average interest rates.

Other income, net increased by $2.6 million to $4.2 million in 2023 from $1.6 million in 2022 primarily due to an increase in interest earned on the balance with Westlake under the Investment Management Agreement.

Provision for Income Taxes.

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MLP distributable cash flow decreased by $13.3 million to $62.6 million in 2023 from $75.9 million in 2022.

The decrease in MLP distributable cash flow was primarily a result of lower production, increased turnaround reserves and higher maintenance expense in 2021 compared to 2020, partially offset by the buyer deficiency fee and Shortfall of $110.3 million recognized in 2021 as compared to $69.6 million in 2020 and lower interest expense during the year.

EBITDA increased by $62.7 million to $519.6 million in 2021 from 2020 EBITDA of $456.9 million.

The increased EBITDA, as compared to the prior year, was primarily due to the buyer deficiency fee and Shortfall of $110.3 million recognized during 2021 compared to the buyer deficiency of $69.6 million recognized in 2020 , partially offset by lower sales volumes as a result of lower production and higher feedstock and conversion costs.

The decrease in MLP distributable cash flow was primarily a result of higher interest expense.

EBITDA increased by $1.8 million to $472.1 million in 2023 from EBITDA of $470.3 million in 2022.

The increased EBITDA, as compared to the prior year, was primarily due to lower ethane feedstock and natural gas costs in 2023 as compared to 2022, partially offset by lower ethylene and co-products sales prices.

Operating Activities

Operating activities provided cash of $452.0 million in 2023 as compared to cash provided by operating activities of $463.7 million in 2022.

The $55.3 million increase in cash flows from operating activities was mainly due to OpCo's Petro 2 facility turnaround activities in 2021, partially offset by a decrease in net income and in cash provided by working capital.

Changes in components of working capital, which we define for the purposes of this cash flow discussion as accounts receivable, net—Westlake, accounts receivable, net—third parties, inventories, prepaid expenses and other current assets less accounts payable—Westlake, accounts payable—third parties and accrued and other liabilities, provided cash of $9.5 million in 2022 as compared to $25.6 million of cash provided in 2021, resulting in an unfavorable change of $16.1 million.

This change in 2022 as compared to 2021 was primarily due to decreases in accounts payable—third parties and accrued and other liabilities due to the 2022 payment of 2021 accruals related to the Petro 2 turnaround activities that occurred in 2021, as well as increases in accounts receivable—third parties due to higher sales in 2022 resulting from the Petro 2 turnaround in the second half of 2021.

These unfavorable changes were partially offset by a favorable change in net accounts receivable—Westlake due to the collections of the 2021 buyer deficiency fee and a significant portion of the 2021 Shortfall during 2022.

Operating activities provided cash of $408.4 million in 2021 as compared to cash provided by operating activities of $373.4 million in 2020.

The $35.0 million increase in cash flows from operating activities was mainly due to increase in net income and in cash provided by working capital, partially offset by OpCo's Petro 2 facility turnaround activities during 2021 as compared to 2020.

Changes in components of working capital, which we define for the purposes of this cash flow discussion as accounts receivable, net—Westlake, accounts receivable, net—third parties, inventories, prepaid expenses and other current assets less accounts payable—Westlake, accounts payable—third parties and accrued and other liabilities, provided cash of $25.6 million in 2021 as compared to $67.9 million of cash used in 2020, resulting in an overall favorable change of $93.5 million.

This change in 2021 as compared to 2020 was due to changes in receivable due from Westlake resulting from the buyer deficiency fee and Shortfall recognized in 2021 as compared to 2020 and favorable changes in third party accounts payable and accrued and other liabilities due to the timing of payments related to the turnaround costs and capital expenditures.

These favorable changes were partially offset by an unfavorable change related to turnaround costs incurred during 2021.

The $11.7 million decrease in cash flows from operating activities was mainly due to cash used for the Calvert City Olefins turnaround activity and higher interest expense, which was partially offset by an increase in cash provided by working capital.

Changes in components of working capital, which we define for the purposes of this cash flow discussion as accounts receivable, net—Westlake, accounts receivable, net—third parties, inventories, prepaid expenses and other current assets less accounts payable—Westlake, accounts payable—third parties and accrued and other liabilities, provided cash of $34.4 million in 2023 as compared to $9.5 million of cash provided in 2022, resulting in a favorable change of $24.9 million.

The favorable change in working capital was mainly attributable to a favorable change in accounts receivable—third parties, accounts payable—third parties and accrued and other liabilities, primarily due to the timing of payment of accruals and the impact on accounts receivable of the Petro 2 turnaround activities in 2021, which impacted the changes in working capital during 2022.

These favorable changes were partially offset by an unfavorable change in net accounts receivable—Westlake due to fluctuating ethane feedstock costs and a smaller buyer deficiency fee and Shortfall collected in 2023 compared to 2022.

Investing Activities

Net cash used for investing activities during 2023 was $75.9 million as compared to net cash used for investing activities of $12.0 million in 2022.

The $52.3 million decrease in cash used for investing activities was mainly due to maturities of investments under the Investment Management Agreement in 2022 as compared to 2021.

The $63.9 million increase in cash used for investing activities was mainly due to an increase in net cash invested under the Investment Management Agreement in 2023 as compared to 2022.

During 2023, we invested $174.1 million with Westlake, and $145.0 million of such investments matured.

Capital expenditures were $54.1 million in 2022 as compared to $81.2 million in 2021.

Capital expenditures in 2022 were lower than in 2021 primarily due to OpCo's Petro 2 turnaround in 2021.

Remaining capital expenditures during 2022 and 2021 were related to projects to improve production capacity or reduce costs, maintenance and safety and environmental projects at our facilities.

Net cash used for investing activities during 2021 was $64.3 million as compared to net cash provided by investing activities of $2.0 million in 2020, mainly due to increased additions to property, plant, and equipment, partially offset by maturities of investments under the Investment Management Agreement in 2021, as compared to 2020.

During 2022, we invested $319.9 million with Westlake, and $362.0 million of such investments matured.

Capital expenditures were $46.8 million in 2023 as compared to $54.1 million in 2022.

The higher capital expenditure in 2021 was primarily associated with OpCo's Petro 2 turnaround.

Remaining capital expenditures during 2021 and 2020 were related to projects to improve production capacity or reduce costs, maintenance and safety and environmental projects at our facilities.

Capital expenditures during 2023 and 2022 were related to projects to improve production capacity or reduce costs, maintenance and safety and environmental projects at our facilities.

Financing Activities

Net cash used for financing activities during 2023 was $382.2 million as compared to net cash used for financing activities of $404.0 million in 2022.

The cash outflows during 2022 were related to distributions of $337.6 million to Westlake and of $66.4 million to other unitholders by the Partnership.

Net cash used for financing activities during 2021 was $344.2 million as compared to net cash used for financing activities of $378.2 million in 2020.

The cash outflows during 2021 were related to distributions of $277.9 million to Westlake and of $66.4 million to other unitholders by the Partnership.

The cash outflows during 2020 were related to distributions of $311.8 million to Westlake and of $66.4 million to other unitholders by the Partnership.

The cash outflows during 2023 were related to distributions of $315.8 million to the noncontrolling interest retained in OpCo by Westlake and of $66.4 million to unitholders by the Partnership.

The cash outflows during 2022 were related to distributions of $337.6 million to the noncontrolling interest retained in OpCo by Westlake and of $66.4 million to unitholders by the Partnership.

Liquidity and Capital Resources

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Pursuant to the terms of the Equity Distribution Agreement, entered in October 2018 and amended in February 2020, among the Partnership and various investment banks, the Partnership may offer and sell the Partnership's common units from time to time to or through the investment banks, as the Partnership's sales agents or as principals, having an aggregate offering amount of up to $50.0 million (the "ATM Program").

The Partnership intends to use the net proceeds of sales of the common units, if any, for general partnership purposes, including the funding of potential drop-downs and other acquisitions.

The Partnership intends to use the net proceeds of sales of the common units, if any, for general partnership purposes, which may include the funding of potential drop-downs and other acquisitions.

No common units had been issued under the ATM Program as of December 31, 2023 .

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To the extent we do not generate sufficient cash flow to fund capital expenditures, we expect to fund them primarily from external sources, including borrowing directly from Westlake, as well as future issuances of equity interests or debt.

The Partnership maintains separate bank accounts, but Westlake continues to provide treasury services on our behalf under the Services and Secondment Agreement.

The Partnership maintains separate bank accounts, but Westlake continues to provide treasury services on our behalf under the Omnibus Agreement.

Our sources of liquidity include cash generated from operations, the OpCo Revolver, the MLP Revolver and, if necessary and possible under then current market conditions, the issuance of additional equity interests or debt.

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Per the terms of the Investment Management Agreement, cash invested with Westlake 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.

On January 23, 2023, the board of directors of Westlake Chemical Partners GP LLC, our general partner, approved a quarterly distribution of $0.4714 per unit payable on February 16, 2023 to unitholders of record on February 2, 2023, which equates to approximately $16.6 million per quarter, or approximately $66.4 million per year in aggregate, based on the number of common units outstanding on December 31, 2022.

On January 22, 2024, the board of directors of Westlake Chemical Partners GP LLC, our general partner, approved a quarterly distribution of $0.4714 per unit payable on February 20, 2024 to unitholders of record as of February 2, 2024, which equates to approximately $16.6 million per quarter, or approximately $66.4 million per year in aggregate, based on the number of common units outstanding on December 31, 2023.

We do not have a legal or contractual obligation to pay distributions on a quarterly basis or any other basis at our minimum quarterly distribution rate or any other rate.

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On July 12, 2022, OpCo entered into the Second Amendment (the "OpCo Revolver Amendment") to the OpCo Revolver.

The OpCo Revolver Amendment, among other things, extended the maturity date 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").

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

Borrowings under the OpCo Revolver 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%.

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On July 12, 2022, the Partnership entered into the Fourth Amendment (the "MLP Revolver Amendment") to the MLP Revolver.

The MLP Revolver Amendment, among other things, extended the maturity date to July 12, 2027 and provided for the replacement of LIBOR with the SOFR as the reference rate.

The MLP Revolver Amendment, among other things, extended the maturity date to July 12, 2027 and provided for the replacement of LIBOR with SOFR as the reference rate.

Borrowings under the MLP Revolver 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.

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As of December 31, 2023, the outstanding borrowings under the MLP Revolver totaled $377.1 million and bore interest at SOFR plus the Applicable Margin and credit spread adjustment, which is accrued in arrears quarterly.

We intend to use the MLP Revolver to purchase additional limited partnership interests in OpCo in the future, in the event OpCo desires to sell such additional interests to us, for other acquisitions and for general corporate purposes.

Contractual Obligations and Commercial Commitments

The Partnership's material cash requirements for contractual obligations and commercial commitments in the near term (next 12 months) and the long-term period (2024 and thereafter) include repayment of long-term debt, interest payments and purchase obligations.

The Partnership's material cash requirements for contractual obligations and commercial commitments in the near term (next 12 months) and the long-term period (2025 and thereafter) include repayment of long-term debt, interest payments, operating leases and purchase obligations.

Debt Obligations and Interest Payments.

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All $399.7 million of our outstanding debt matures in 2027.

See Note 8, "Long-Term Debt," in the Notes to Consolidated Financial Statements in "Item 8.

Financial Statements and Supplementary Data" for further information on our debt obligations and the expected timing of future principal and interest payments.

See Note 8, "Long-Term Debt," in the Notes to Consolidated Financial Statements in Item 8 of this form 10-K for further information on our debt obligations and the expected timing of future principal and interest payments.

Operating leases.

As of December 31, 2023, there was $1.6 million in operating lease obligations due within the near term and $3.1 million due over the long-term period related to noncancelable operating leases with respect to rail cars that are subleased to OpCo.

Purchase Obligations.

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We have evaluated the accounting policies used in the preparation of the accompanying consolidated financial statements and related notes and believe those policies are reasonable and appropriate.

Our significant accounting policies are summarized in Note 1 to the consolidated financial statements.

Our significant accounting policies are summarized in Note 1 in the Notes to Consolidated Financial Statements in Item 8 of this form 10-K.

Critical accounting estimates are those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations.

Our more critical accounting estimates include those related to long-lived assets, intangible assets, fair value estimates, goodwill impairment and environmental and legal obligations.

Our more critical accounting estimates include those related to long-lived assets, fair value estimates, goodwill impairment and environmental and legal obligations.

Inherent in such estimates are certain key assumptions.

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Total costs deferred on turnarounds were $30.9 million, $6.7 million and $131.2 million in 2023, 2022 and 2021, respectively.

Amortization in 2022, 2021 and 2020 of previously deferred turnaround costs was $26.0 million, $16.5 million and $11.8 million, respectively.

Amortization of previously deferred turnaround costs was $25.4 million, $26.0 million and $16.5 million in 2023, 2022 and 2021, respectively.

As of December 31, 2023, deferred turnaround costs, net of accumulated amortization, totaled $133.2 million.

Expensing turnaround costs as incurred would likely result in greater variability of our quarterly operating results and would adversely affect our financial position and results of operations.

Additional information concerning long-lived assets and related depreciation and amortization appears in Notes 5 and 7 to the audited consolidated financial statements included within this report.

Additional information concerning long-lived assets and related depreciation and amortization appears in Notes 5 and 7 to the consolidated financial statements included in Item 8 of this form 10-K.

Fair Value Estimates.

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Additional information about certain legal proceedings and environmental matters appears in "Item 1.

Business — Environmental" and in Note 16 to the consolidated financial statements included within this report.

Business — Environmental" and in Note 16 to the consolidated financial statements included in Item 8 of this form 10-K.

The Partnership has conditional asset retirement obligations for the removal and disposal of hazardous materials and the remediation of the cause of any such release from certain of the Partnership's manufacturing facilities.

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Settlement of these conditional asset retirement obligations is not expected to have a material adverse effect on the Partnership's financial condition, results of operations or cash flows in any individual reporting period.

Recent Accounting Pronouncements

See Note 1 to the consolidated financial statements included in Item 8 of this form 10-K for a full description of recent accounting pronouncements, including expected dates of adoption and estimated effects on results of operations and financial condition, which is incorporated herein by reference.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis