Note: This is an earnings call transcript. Content may contain errors.
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Earnings Call Date and Time
Thursday, October 30, 2025 at 1 p.m. ET
Meet the Participants of the Earnings Call
Executive Chairman — Albert Chao
President and Chief Executive Officer — Jean-Marc Gilson
Executive Vice President and Chief Financial Officer — Steve Bender
Director of Investor Relations — Jeff Hawley
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Key Financial Insights from the Earnings Call
Net Income — The company revealed a net income of $15 million for Q3 2025, translating to earnings of $0.42 per unit. This positive outcome was primarily driven by the successful completion of the planned turnaround at the Petro 1 ethylene unit, enhancing operational efficiency.
Consolidated Net Sales — The consolidated net sales reached $3.09 billion for Q3 2025, reflecting the total revenue generated by the partnership, including the results from OpCo, indicating solid market performance.
Distributable Cash Flow — The distributable cash flow stood at $15 million, equivalent to $0.42 per unit. This figure is $3 million lower than in 2024, primarily due to increased maintenance capital expenditures resulting from timing changes in operational strategies.
Cash and Investments — The total cash and investments recorded at the end of Q3 2025 amounted to $51 million, managed effectively under an investment agreement with Westlake, ensuring financial stability.
Long-Term Debt — The partnership reported long-term debt of $400 million at the end of Q3 2025, with $377 million attributable to the partnership and $23 million to OpCo, reflecting a balanced debt structure.
Capital Expenditures — OpCo allocated $30 million towards capital projects in 2025, demonstrating a commitment to enhancing operational capacity and infrastructure.
Leverage Ratio — The consolidated leverage ratio remains strong at approximately 1.0 times for Q3 2025, showcasing the company’s robust financial health as characterized by management.
Quarterly Distribution — A distribution of 47.14¢ per unit for Q3 2025 will be payable on November 20, 2025. This marks the 45th consecutive quarterly distribution since the IPO and represents a remarkable 71% increase over the initial minimum distribution.
Distribution Coverage Ratio — The cumulative distribution coverage ratio since the IPO is approximately 1.1 times, with occasional dips below the target linked to planned turnaround events, indicating a strong financial strategy.
Ethylene Sales Agreement Renewal — The agreement between OpCo and Westlake has been renewed through 2027, maintaining the same terms, including pricing and volume protections, ensuring continued stability.
Take-or-Pay Contract Structure — This structure secures 95% of OpCo’s production, providing a “predictable fee-based cash flow” as noted by management, enhancing revenue reliability.
No Planned Turnarounds Ahead — The company has confirmed that there are no scheduled plant turnarounds for the remainder of 2025 or in 2026, promoting operational continuity.
Comprehensive Summary of Financial Performance
Westlake Chemical Partners (WLKP 0.25%) management discussed that the planned Petro 1 unit turnaround impacted distributable cash flow but emphasized the return to full production after the turnaround. The renewal of the ethylene sales agreement, which runs through 2027 without alterations, maintains current pricing formulas and volume protections, essential for financial stability. Management underscored the partnership’s ability to uphold quarterly distributions, attributing this resilience to the predictable fee-based cash flow derived from long-term take-or-pay contracts. Notably, Westlake Chemical Partners plans to avoid accessing capital markets and has no major maintenance shutdowns scheduled for the next five quarters.
Bender highlighted, “now that we’ve completed that turnaround successfully and are back in full production, that operating surplus should continue to build, and I would fully expect that distribution to continue to be well covered by the cash flows of the business.”
The partnership’s leverage remains at low levels, providing further flexibility in capital management strategies, crucial for sustainable growth.
Gilson pointed out the “soft” global industrial and manufacturing activity, yet he noted that earnings will continue to receive support from fixed-margin contracting, regardless of the overall market cycle.
Four significant growth opportunities identified include increasing OpCo ownership, acquiring additional qualifying income streams, organic expansion (especially in Italian facilities), and negotiating for higher fixed margins in future agreements.
Essential Industry Terminology Explained
OpCo: Refers to Westlake Chemical OpCo LP, the operating subsidiary responsible for owning specific olefins assets and providing production capabilities for the partnership.
Take-or-Pay Contract: This type of agreement obligates the purchaser to pay for a predetermined volume of product regardless of physical delivery, thereby stabilizing cash flows for the producer and ensuring financial predictability.
Planned Turnaround: A scheduled maintenance shutdown of a production facility, which often results in temporary reductions in output and cash flow, impacting operational performance.
Complete Transcript of the Earnings Call
Jeff Hawley: Thank you, Gerald. Good afternoon, everyone. Welcome to the Westlake Chemical Partners Third Quarter 2025 Conference Call. I am joined today by Albert Chao, our Executive Chairman, Jean-Marc Gilson, our President and CEO, Steve Bender, our Executive Vice President and Chief Financial Officer, and other members of our management team. During this call, we will refer to ourselves as Westlake Partners or the partnership. References to Westlake refer to our parent company, Westlake Corporation, while references to OpCo denote Westlake Chemical OpCo LP, a subsidiary of Westlake and the partnership that owns specific olefins assets. Additionally, when we mention distributable cash flow, we are specifically referring to Westlake Chemical Partners MLP distributable cash flow.
Definitions of these terms can be found on the partnership’s website. Today, management will discuss certain topics that include forward-looking information based on management’s beliefs, as well as assumptions made and data currently available to management. These forward-looking statements are subject to various risks and uncertainties. We encourage you to learn more about the factors that could lead our actual results to deviate by reviewing the cautionary statements in our regulatory filings, also accessible on our Investor Relations website. This morning, Westlake Partners issued a press release detailing our third quarter 2025 financial and operational results.
This document is available in the press release section of our webpage at wlkpartners.com. A replay of today’s call will be available starting two hours after the conclusion of this call. The replay can be accessed via the partnership’s website. Please note that the information discussed in this call is relevant only as of today, 10/30/2025, and therefore, any time-sensitive information may lose its accuracy by the time of any replay. Lastly, I would like to mention that this conference call is being broadcast live through an Internet webcast system accessible on our webpage at wlkpartners.com. Now I would like to hand the call over to Jean-Marc Gilson. Jean-Marc?
Jean-Marc Gilson: Thank you, Jeff. Good afternoon, everyone, and I appreciate your presence today as we discuss our third quarter 2025 results. In this morning’s press release, we reported Westlake Partners’ third quarter 2025 net income of $15 million or $0.42 per unit. Compared to previous quarters, our third quarter sales and earnings showed significant improvement due to the completion of the planned turnaround at our Petro 1 ethylene unit in Lake Charles, Louisiana during the second quarter. I now turn the call over to Steve for more detailed insights on our financial and operational results for the quarter. Steve?
Steve Bender: Thank you, Jean-Marc, and good afternoon, everyone. This morning, we reported Westlake Partners’ third quarter 2025 net income of $15 million or $0.42 per unit. Consolidated net income, including OpCo’s earnings, amounted to $86 million on consolidated net sales of $3.09 billion. The partnership achieved distributable cash flow for the quarter of $15 million or $0.42 per unit. This figure for third quarter 2025 net income of $15 million was lower than the third quarter 2024 partnership net income, largely due to reduced margins on ethylene sales to third-party customers.
The distributable cash flow of $15 million or $0.42 per unit for 2025 represents a decrease of $3 million compared to 2024, attributed to higher maintenance capital expenditures resulting from timing changes in maintenance activities in 2025 compared to 2024. Looking at our balance sheet and cash flow, at the end of the third quarter, we maintained consolidated cash and cash investments with Westlake through our investment management agreement totaling $51 million. Long-term debt at the end of the quarter was $400 million, with $377 million held by the partnership and $23 million by OpCo. In 2025, OpCo invested $30 million in capital expenditures.
We have sustained strong leverage metrics with a consolidated leverage ratio of approximately one time. On 10/28/2025, we announced a quarterly distribution of $0.4714 per unit for the year 2025. Since our IPO in 2014, the partnership has successfully distributed 45 consecutive quarterly distributions to unitholders, with a remarkable 71% increase since our original minimum quarterly distribution of $0.275 per unit. The third quarter distribution will be paid on 11/20/2025 to unitholders of record on 11/10/2025. The partnership’s predictable fee-based cash flow continues to demonstrate its value in today’s economic environment and is characterized by consistent earnings and cash flows.
Looking back since our IPO in July 2014, we have maintained a cumulative distribution coverage ratio of approximately 1.1 times. With the stability of our partners and cash flows, we can sustain our current distribution without needing to access capital markets. For modeling purposes, we do not have any planned turnarounds for the remainder of 2025 or in 2026. Now, I will turn the call back over to Jean-Marc for his closing remarks. Jean-Marc?
Jean-Marc Gilson: Thank you, Steve. The resilience of Westlake Partners’ business model is consistently showcased through our fixed margin ethylene phase agreement, which minimizes exposure to market volatility and other production risks. The high degree of stability in cash flow, combined with our predictable model, has allowed us to maintain a long-standing history of reliable distributions and solid coverage. Due to its significance for our cash flow stability, I am pleased to announce that earlier this week, OpCo and Westlake finalized the renewal of the ethylene sales agreement through 2027 without any changes to the contract’s terms or conditions.
The renewed ethylene sales agreement preserves the same pricing formula and sales volume protections that have enabled the partnership to deliver distributable cash flow sufficient to make 45 consecutive quarterly distributions to unitholders since its IPO in 2014. Furthermore, we believe Westlake’s decision to renew the ethylene sales agreement under unchanged terms demonstrates the critical importance of OpCo’s ethylene supply for their operations and their commitment to support OpCo’s continued safe and reliable operations through stable, predictable cash flows. Looking ahead, global industrial and manufacturing activity remains subdued in 2025, which is affecting the broader chemical industry.
Despite the challenging global economic landscape, the partnership’s financial performance and distribution capability will continue to be bolstered by our ethylene sales agreement, which ensures a predictable fee-based cash flow structure from our take-or-pay contract covering 95% of OpCo’s production. As it has been since our IPO over a decade ago, this ethylene sales agreement has consistently delivered stable and predictable cash flow through various economic conditions, including both planned and unplanned turnarounds. Regarding our capital structure, we maintain a strong balance sheet with prudent leverage metrics.
As we navigate market conditions, we will assess growth opportunities through our four primary growth levers, which include increasing our ownership stake in OpCo, acquiring additional qualifying income streams, pursuing organic growth initiatives such as expanding our current Italian facilities, and negotiating higher fixed margins in our ethylene sales agreement with Westlake. We remain dedicated to providing long-term value and consistent distributions to our unitholders. As always, we will prioritize safe operations while being responsible stewards of the environment within the communities where we operate as part of our broader sustainability efforts. Thank you for listening to our third quarter earnings call.
Now, let’s turn the call back over to Jeff. Thank you, Jean-Marc.
Jeff Hawley: Before we start the question and answer session, I’d like to remind everyone that a replay of this teleconference will be available two hours after the call ends. We will provide instructions on how to access the replay at the conclusion of the call. Gerald, we will now take questions.
Operator: Thank you. At this time, we will conduct a question and answer session. To ask a question, please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Just a moment, please. Our first question will come from James Eshel from Aviation Advisory Services Inc. The floor is yours.
James Eshel: Thank you very much. Excuse me. I noticed that the distributable cash flow for the quarter was less than the distribution per unit. What is the outlook for increasing distributable cash flow to a level where the distribution will be fully covered?
Steve Bender: Yes, the primary reason for that disparity was the planned turnaround. When we have these planned turnarounds, it inevitably impacts production and, consequently, sales. It is common for our coverage ratios to dip below the 1.1 target during these planned turnaround events, affecting cash flows. However, we have a robust operating surplus, and we will continue to pay those distributions from that operating surplus.
Now that we’ve successfully completed that turnaround and are back in full production, that operating surplus should continue to grow, and I fully expect that the distributions will remain well covered by the business’s cash flows.
James Eshel: So, is it reasonable to assume that on a pro forma basis, without the impact of the turnaround, the distributable cash flow would have exceeded the distribution?
Steve Bender: Yes, that’s correct.
James Eshel: Wonderful. Thank you very much.
Steve Bender: You’re welcome.
Operator: Thank you for your question. Please hold for a moment while I check if there are any additional questions. At this time, I am showing no further questions, so I will hand it back to Jeff for his closing remarks. The floor is yours, Jeff.
Jeff Hawley: Thank you. We appreciate your participation in today’s call. We hope you will join us for our next conference call to discuss our fourth quarter 2025 results.
Operator: Thank you for joining today’s Westlake Chemical Partners Third Quarter 2025 Earnings Conference Call. A reminder that this call will be available for replay starting two hours after it concludes and can be accessed until 11:59 PM Eastern Time on Thursday, 11/13/2025. The replay can be found on the partnership’s website. Goodbye. This concludes the program. You may now disconnect.
