What changed in this filing

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Item 1. Financial Statements

2024-08-09 compared with 2024-05-02 · 97 added, 55 removed, 327 unchanged (32% of the section changed)

27 unchanged sentences

Common unitholders—publicly and privately held ( 21,108,346 and 21,105,904 units

issued and outstanding at March 31, 2024 and December 31, 2023, respectively)

issued and outstanding at June 30, 2024 and December 31, 2023, respectively)

471,199 473,513

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

at March 31, 2024 and December 31, 2023, respectively)

at June 30, 2024 and December 31, 2023, respectively)

47,408 48,993

7 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,

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

2024 2023 2024 2023

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

33 unchanged sentences

Balances at March 31, 2024 $ 472,450 $ 48,282 $ ( 242,572 ) $ 570,085 $ 848,245

Net income 8,644 5,783 — 73,599 88,026

Units issued for vested phantom units 55 — — — 55

Distribution to unitholders ( 9,950 ) ( 6,657 ) — — ( 16,607 )

Distribution to noncontrolling interest retained in OpCo by Westlake — — — ( 84,872 ) ( 84,872 )

Balances at June 30, 2024 $ 471,199 $ 47,408 $ ( 242,572 ) $ 558,812 $ 834,847

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

12 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

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

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

Net cash provided by (used for) investing activities

Net cash used for investing activities

( 19,951 ) ( 46,285 )

34 unchanged sentences

As such, the Partnership was determined to be OpCo's primary beneficiary and therefore consolidates OpCo's results of operations and financial position.

The Partnership's operations consist exclusively of the variable interest entity's operations and, as such, no additional variable interest entity disclosures are considered necessary.

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, 2024, its results of operations for the three months ended March 31, 2024 and 2023 and the changes in its cash position for the three months ended March 31, 2024 and 2023.

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, 2024, its results of operations for the three and six months ended June 30, 2024 and 2023 and the changes in its cash position for the six months ended June 30, 2024 and 2023.

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, 2024 or any other interim period.

7 unchanged sentences

Income Taxes (ASU No.

In December 2023, the FASB issued an accounting standards update to require additional tax disclosures under Topic 740 primarily related to the rate reconciliation and income taxes paid disclosures.

In December 2023, the Financial Accounting Standards Board ("FASB") issued an accounting standards update requiring additional tax disclosures under Topic 740 primarily related to the rate reconciliation and income taxes paid disclosures.

The amendments in this update will be effective for fiscal years beginning after December 15, 2024 and are to be applied on a prospective basis.

1 unchanged sentence

The update is not expected to have a material impact on the Partnership's disclosures.

Recently Adopted Accounting Standards

Recently Adopted Accounting Standard

Segment Reporting (ASU No.

In November 2023, the Financial Accounting Standards Board ("FASB") issued an accounting standards update.

The update requires public entities to disclose on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

In November 2023, the FASB issued an accounting standards update requiring public entities to disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

The update also requires that a public entity that has a single reportable segment provide all disclosures required by the update as well as all existing segment disclosures in Topic 280.

15 unchanged sentences

Property, Plant and Equipment

Depreciation expense on property, plant and equipment of $ 21,537 and $ 20,957 is included in cost of sales in the consolidated statements of operations for the three months ended March 31, 2024 and 2023, respectively.

Deferred Charges and Other Assets

Amortization expense on deferred charges and other assets of $ 6,457 and $ 5,679 is included in cost of sales in the consolidated statements of operations for the three months ended March 31, 2024 and 2023, respectively .

Depreciation expense on property, plant and equipment of $ 21,830 and $ 20,928 is included in cost of sales in the consolidated statements of operations for the three months ended June 30, 2024 and 2023, respectively.

Depreciation expense on property, plant and equipment of $ 43,367 and $ 41,885 is included in cost of sales in the consolidated statements of operations for the six months ended June 30, 2024 and 2023 , respectively.

WESTLAKE CHEMICAL PARTNERS LP

1 unchanged sentence

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

Deferred Charges and Other Assets

Amortization expense on deferred charges and other assets of $ 6,485 and $ 6,112 is included in cost of sales in the consolidated statements of operations for the three months ended June 30, 2024 and 2023, respectively .

Amortization expense on deferred charges and other assets of $ 12,942 and $ 11,791 is included in cost of sales in the consolidated statements of operations for the six months ended June 30, 2024 and 2023 , respectively.

Distributions and Net Income Per Limited Partner Unit

On April 30, 2024, 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, 2024 of $ 0.4714 per unit.

This distribution is payable on May 29, 2024 to unitholders of record as of May 13, 2024.

On July 30, 2024, 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, 2024 of $ 0.4714 per unit.

This distribution is payable on August 27, 2024 to unitholders of record as of August 12, 2024.

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,

2024 2023 2024 2023

Net income attributable to the Partnership $ 14,427 $ 11,886 $ 29,260 $ 26,778

7 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, 2024

Three Months Ended June 30, 2024

Limited Partners' Common Units Incentive Distribution Rights Total

7 unchanged sentences

Basic and diluted $ 0.41

Three Months Ended March 31, 2023

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

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

Three Months Ended June 30, 2023

Limited Partners' Common Units Incentive Distribution Rights Total

7 unchanged sentences

Basic and diluted $ 0.34

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, 2024

Limited Partners' Common Units Incentive Distribution Rights Total

Net income attributable to the Partnership:

Distribution $ 33,215 $ — $ 33,215

Distribution in excess of net income ( 3,955 ) — ( 3,955 )

Net income $ 29,260 $ — $ 29,260

Weighted average units outstanding:

Basic and diluted 35,228,832 35,228,832

Net income per limited partner unit:

Basic and diluted $ 0.83

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

The amended Partnership Agreement provides that the Partnership will distribute cash that is deemed to be an appropriate portion of the Partnership's total operating surplus.

8 unchanged sentences

50.0 % 50.0 %

The Partnership's distribution for the three months ended March 31, 2024 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.

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 June 30, 2024 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, 2024 and 2023 were as follows:

Three Months Ended March 31,

Distributions per common unit for the three and six months ended June 30, 2024 and 2023 were as follows:

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

2024 2023 2024 2023

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, 2024.

No common units were issued under this program as of June 30, 2024.

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

6 unchanged sentences

Additionally, the Partnership and OpCo from time to time provide other services or products for which it charges Westlake a fee.

OpCo sells a significant portion of its ethylene production to Westlake.

Sales to related parties were as follows:

Three Months Ended March 31,

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

2024 2023 2024 2023

Net sales—Westlake $ 239,527 $ 224,575 $ 474,736 $ 482,046

WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

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

Cost of Sales from Related Parties

Charges for goods and services purchased by the Partnership and OpCo from Westlake and included in cost of sales relate primarily to feedstock purchased under the Feedstock Supply Agreement and services provided under the Services and Secondment Agreement.

Charges from related parties in cost of sales were as follows:

Three Months Ended March 31,

A significant portion of the Partnership's inputs included in cost of sales are supplied by Westlake.

Charges from related parties for significant inputs included in cost of sales were as follows:

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

2024 2023 2024 2023

Feedstock purchased from Westlake and included in cost of sales $ 77,007 $ 80,727 $ 155,544 $ 183,769

Other charges from Westlake and included in cost of sales 29,598 29,729 61,666 60,635

Total $ 110,605 $ 133,948

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,

2024 2023 2024 2023

Services received from Westlake and included in selling, general and administrative expenses $ 7,076 $ 6,625 $ 13,175 $ 13,296

2 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,

2024 2023 2024 2023

Goods and services purchased from Westlake and capitalized as assets $ 437 $ 1,173 $ 849 $ 1,872

2 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 $ 1,305 and $ 1,272 was included in the receivable under the Investment Management Agreement balance at March 31, 2024 and December 31, 2023, respectively.

Total interest earned related to the Investment Management Agreement was $ 1,305 and $ 907 for the three months ended March 31, 2024 and 2023, respectively.

Accrued interest of $ 1,306 and $ 1,272 was included in the receivable under the Investment Management Agreement balance at June 30, 2024 and December 31, 2023, respectively.

Total interest earned related to the Investment Management Agreement was $ 1,306 and $ 1,058 for the three months ended June 30, 2024 and 2023, respectively, and $ 2,611 and $ 1,965 for the six months ended June 30, 2024 and 2023, respectively.

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

6 unchanged sentences

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.

As a result of force majeure events in 2021, the Partnership recognized a shortfall fee of $ 58,906 during 2021, of which $ 189 remained to be collected by the Partnership as of December 31, 2023 and was received in the three months ended March 31, 2024.

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 $ 425 and $ 737 for the three months ended March 31, 2024 and 2023, respectively, an d are reflected in other charges from Westlake that are included in cost of sales.

Operating lease rentals paid to Westlake for such leases were $ 430 and $ 310 for the three months ended June 30, 2024 and 2023, respectively, an d $ 855 and $ 1,047 for the six months ended June 30, 2024 and 2023 , respectively, an d 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.

2 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 March 31, 2024 and 2023 was $ 6,581 and $ 7,315 , respecti vely.

Interest on related party debt payable balances, net of capitalized interest, for the three months ended June 30, 2024 and 2023 was $ 6,651 and $ 6,117 , respecti vely.

Interest on related party debt payable balances, net of capitalized interest, for the six months ended June 30, 2024 and 2023 was $ 13,232 and $ 13,432 , respectively.

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

At March 31, 2024 and December 31, 2023, accrued interest on related party debt was $ 6,617 and $ 6,675 , respectively, and is reflected as a component of accrued and other liabilities in the consolidated balance sheets.

At June 30, 2024 and December 31, 2023, accrued interest on related party debt was $ 6,679 and $ 6,675 , 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, 2024 and 2023, Westlake accounted for approximately 82.6 % and 83.7 %, respectively, of the Partnership's net sale s.

During the three months ended June 30, 2024 and 2023, Westlake accounted for approximately 84.3 % and 85.0 %, respectively, of the Partnership's net sale s.

During the six months ended June 30, 2024 and 2023 , Westlake accounted for approximately 83.5 % and 84.3 %, respectively, of the Partnership's net sales.

WESTLAKE CHEMICAL PARTNERS LP

7 unchanged sentences

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

As of March 31, 2024, 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, 2024, 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 7.2 % and 7.2 % at March 31, 2024 and December 31, 2023, respectively.

As of March 31, 2024, 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 7.2 % and 7.2 % at June 30, 2024 and December 31, 2023, respectively.

As of June 30, 2024, the Partnership was in compliance with all of the covenants under the OpCo Revolver and the MLP Revolver.

Fair Value Measurements

7 unchanged sentences

The amounts reported in the consolidated balance sheets for accounts receivable, net and accounts payable approximate their fair value due to the short maturities of these instruments.

The carrying and fair values of the Partnership's long-term debt at March 31, 2024 and December 31, 2023 are summarized in the table below.

The carrying and fair values of the Partnership's long-term debt at June 30, 2024 and December 31, 2023 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, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Value Carrying

5 unchanged sentences

Accrued and Other Liabilities

Accrued and other liabilities were $ 19,801 and $ 24,980 at March 31, 2024 and December 31, 2023, 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 $ 2,743 , $ 2,310 , $ 6,617 and $ 3,439 , respectively, at March 31, 2024 and $ 5,170 , $ 4,627 , $ 6,675 and $ 3,033 , respectively, at December 31, 2023.

Accrued and other liabilities were $ 21,840 and $ 24,980 at June 30, 2024 and December 31, 2023, respectively.

Accrued maintenance expense, accrued interest on related party debt and accrued taxes, which are components of accrued and other liabilities, were $ 4,096 , $ 6,679 and $ 4,807 , respectively, at June 30, 2024 and $ 5,170 , $ 6,675 and $ 3,033 , respectively, at December 31, 2023.

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 $ 5,495 and $ 2,091 at March 31, 2024 and 2023, respectively.

Capital expenditure related liabilities, included in accounts payable—third parties and accrued and other liabilities, were $ 4,640 and $ 4,368 at June 30, 2024 and 2023, respectively.

Interest Paid

Interest paid by the Partnership, net of interest capitalized, was $ 6,640 and $ 4,696 for the three months ended March 31, 2024 and 2023, respectively.

Interest paid by the Partnership, net of interest capitalized, was $ 13,228 and $ 11,987 for the six months ended June 30, 2024 and 2023, respectively.

Operating Leases

Right-of-use assets obtained in exchange for operating lease obligations were $ 0 and $ 5,079 at March 31, 2024 and December 31, 2023, respectively.

Right-of-use assets obtained in exchange for operating lease obligations were $ 616 and $ 0 for the six months ended June 30, 2024 and 2023, respectively.

Commitments and Contingencies

6 unchanged sentences

Contractors and employees working on and near the quench tower were injured and multiple lawsuits were filed against Westlake and OpCo.

Final settlements were reached with all of the plaintiffs to fully resolve the lawsuits by Westlake, but payment by the insurance carriers has not yet been completed.

Final settlements were reached with all of the plaintiffs to fully resolve the lawsuits by Westlake, and payment by Westlake and the insurance carriers is complete.

Westlake and its subsidiaries are responsible for indemnifying the Partnership in connection with any losses incurred by OpCo as a result of the fire.

2 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