On May 1, 2024, Westlake Chemical Partners LP (WLKP, Financial) disclosed its financial results for the first quarter of 2024 through its 8-K filing. The company reported a net income attributable to the partnership of $14.8 million, or $0.42 per limited partner unit, consistent with the previous year's same quarter net income of $14.9 million. These figures closely align with analyst expectations of a $0.45 earnings per share and a net income of $15 million.
Westlake Chemical Partners, operating in the chemical industry within the United States, focuses on the development and acquisition of ethylene production facilities. These facilities convert ethane into ethylene, which is then sold along with co-products like propylene and butadiene to Westlake and other U.S. customers. The partnership's assets include three ethylene production facilities located in Kentucky and Louisiana.
Financial and Operational Highlights
The first quarter saw a slight decrease in MLP distributable cash flow to $16.9 million from $17.6 million in the first quarter of 2023. This decline was primarily attributed to lower production and sales volumes, impacting the trailing twelve-month coverage ratio, which slightly decreased to 0.93x from 0.94x. Despite these challenges, the company maintained its 39th consecutive quarterly distribution at $0.4714 per unit.
President and CEO Albert Chao commented on the quarter's performance, noting the stability provided by the ethylene supply agreement with Westlake. He highlighted the operational efficiency of OpCo's ethylene units and the modest improvement in third-party ethylene margins due to lower feedstock and energy costs. Chao remains optimistic about the stable demand for downstream ethylene derivative products and anticipates improved margins for the remainder of 2024.
Detailed Financial Analysis
The company's total net sales for the quarter amounted to $284.7 million, a decrease from $307.7 million in the previous year, primarily due to lower sales volumes. The cost of sales was reported at $182.5 million, leading to a gross profit of $102.2 million. Income from operations stood at $95.1 million, slightly down from $98.2 million in the prior year.
Westlake Chemical Partners also reported a decrease in cash flows from operating activities, which totaled $104.6 million for the quarter, down from $144.9 million in the first quarter of 2023. This reduction was mainly due to less favorable working capital changes.
The balance sheet remains robust with total assets of $1.295 billion as of March 31, 2024. The partnership held $55.8 million in cash and cash equivalents and maintained a solid equity position of $848.2 million.
Looking Forward
Despite the slight downturn in some financial metrics, Westlake Chemical Partners LP continues to leverage its strategic agreements and operational efficiencies to navigate market fluctuations. The partnership's focus on maintaining stable and predictable cash flows, as well as its strategic sales agreement with Westlake, positions it well to manage future industry challenges and capitalize on potential market opportunities.
Investors and stakeholders will likely keep a close watch on the company's ability to improve production volumes and sales, which are crucial for sustaining its financial health and shareholder distributions in the competitive chemical industry landscape.
Explore the complete 8-K earnings release (here) from Westlake Chemical Partners LP for further details.
