QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the quarterly period ended |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the Transition Period from to |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Large accelerated filer | ¨ | x | ||||||||||||||||||
Non-accelerated filer | ¨ | Smaller reporting company | ||||||||||||||||||
Emerging growth company |
Item | Page | ||||
September 30, 2023 | December 31, 2022 | |||||||||||||
(in thousands of dollars, except unit amounts) | ||||||||||||||
ASSETS | ||||||||||||||
Current assets | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Receivable under the Investment Management Agreement—Westlake Corporation ("Westlake") | ||||||||||||||
Accounts receivable, net—Westlake | ||||||||||||||
Accounts receivable, net—third parties | ||||||||||||||
Inventories | ||||||||||||||
Prepaid expenses and other current assets | ||||||||||||||
Total current assets | ||||||||||||||
Property, plant and equipment, net | ||||||||||||||
Goodwill | ||||||||||||||
Deferred charges and other assets, net | ||||||||||||||
Total assets | $ | $ | ||||||||||||
LIABILITIES | ||||||||||||||
Current liabilities | ||||||||||||||
Accounts payable—Westlake | $ | $ | ||||||||||||
Accounts payable—third parties | ||||||||||||||
Accrued and other liabilities | ||||||||||||||
Total current liabilities | ||||||||||||||
Long-term debt payable to Westlake | ||||||||||||||
Deferred income taxes | ||||||||||||||
Other liabilities | ||||||||||||||
Total liabilities | ||||||||||||||
Commitments and contingencies (Note 12) | ||||||||||||||
EQUITY | ||||||||||||||
Common unitholders—publicly and privately held ( issued and outstanding at September 30, 2023 and December 31, 2022, respectively) | ||||||||||||||
Common unitholder—Westlake ( at September 30, 2023 and December 31, 2022, respectively) | ||||||||||||||
General partner—Westlake | ( | ( | ||||||||||||
Total Westlake Chemical Partners LP partners' capital | ||||||||||||||
Noncontrolling interest in Westlake Chemical OpCo LP ("OpCo") | ||||||||||||||
Total equity | ||||||||||||||
Total liabilities and equity | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
(in thousands of dollars, except unit amounts and per unit data) | ||||||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||
Net sales—Westlake | $ | $ | $ | $ | ||||||||||||||||||||||
Net co-products, ethylene and other sales—third parties | ||||||||||||||||||||||||||
Total net sales | ||||||||||||||||||||||||||
Cost of sales | ||||||||||||||||||||||||||
Gross profit | ||||||||||||||||||||||||||
Selling, general and administrative expenses | ||||||||||||||||||||||||||
Income from operations | ||||||||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||
Interest expense—Westlake | ( | ( | ( | ( | ||||||||||||||||||||||
Other income, net | ||||||||||||||||||||||||||
Income before income taxes | ||||||||||||||||||||||||||
Provision for income taxes | ||||||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||
Less: Net income attributable to noncontrolling interest in OpCo | ||||||||||||||||||||||||||
Net income attributable to Westlake Chemical Partners LP and limited partners' interest in net income | $ | $ | $ | $ | ||||||||||||||||||||||
Net income per limited partner unit attributable to Westlake Chemical Partners LP (basic and diluted) | ||||||||||||||||||||||||||
Common units | $ | $ | $ | $ | ||||||||||||||||||||||
Weighted average limited partner units outstanding (basic and diluted) | ||||||||||||||||||||||||||
Common units—publicly and privately held | ||||||||||||||||||||||||||
Common units—Westlake |
Partnership | ||||||||||||||||||||||||||||||||
Common Unitholders— Publicly and Privately Held | Common Unitholder— Westlake | General Partner— Westlake | Noncontrolling Interest in OpCo | Total | ||||||||||||||||||||||||||||
(in thousands of dollars) | ||||||||||||||||||||||||||||||||
Balances at December 31, 2022 | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||
Net income | — | |||||||||||||||||||||||||||||||
Distribution to unitholders | ( | ( | — | — | ( | |||||||||||||||||||||||||||
Distribution to noncontrolling interest retained in OpCo by Westlake | — | — | — | ( | ( | |||||||||||||||||||||||||||
Balances at March 31, 2023 | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||
Net income | — | |||||||||||||||||||||||||||||||
Distribution to unitholders | ( | ( | — | — | ( | |||||||||||||||||||||||||||
Distribution to noncontrolling interest retained in OpCo by Westlake | — | — | — | ( | ( | |||||||||||||||||||||||||||
Balances at June 30, 2023 | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||
Net income | — | |||||||||||||||||||||||||||||||
Units issued for vested phantom units | — | — | — | |||||||||||||||||||||||||||||
Distribution to unitholders | ( | ( | — | — | ( | |||||||||||||||||||||||||||
Distribution to noncontrolling interest retained in OpCo by Westlake | — | — | — | ( | ( | |||||||||||||||||||||||||||
Balances at September 30, 2023 | $ | $ | $ | ( | $ | $ |
Partnership | ||||||||||||||||||||||||||||||||
Common Unitholders— Publicly and Privately Held | Common Unitholder— Westlake | General Partner— Westlake | Noncontrolling Interest in OpCo | Total | ||||||||||||||||||||||||||||
(in thousands of dollars) | ||||||||||||||||||||||||||||||||
Balances at December 31, 2021 | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||
Net income | — | |||||||||||||||||||||||||||||||
Distribution to unitholders | ( | ( | — | — | ( | |||||||||||||||||||||||||||
Distribution to noncontrolling interest retained in OpCo by Westlake | — | — | — | ( | ( | |||||||||||||||||||||||||||
Balances at March 31, 2022 | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||
Net income | — | |||||||||||||||||||||||||||||||
Distribution to unitholders | ( | ( | — | — | ( | |||||||||||||||||||||||||||
Distribution to noncontrolling interest retained in OpCo by Westlake | — | — | — | ( | ( | |||||||||||||||||||||||||||
Balances at June 30, 2022 | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||
Net income | — | |||||||||||||||||||||||||||||||
Units issued for vested phantom units | — | — | — | |||||||||||||||||||||||||||||
Distribution to unitholders | ( | ( | — | — | ( | |||||||||||||||||||||||||||
Distribution to noncontrolling interest retained in OpCo by Westlake | — | — | — | ( | ( | |||||||||||||||||||||||||||
Balances at September 30, 2022 | $ | $ | $ | ( | $ | $ |
Nine Months Ended September 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
(in thousands of dollars) | ||||||||||||||
Cash flows from operating activities | ||||||||||||||
Net income | $ | $ | ||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Loss from disposition of property, plant and equipment | ||||||||||||||
Other losses (gains), net | ( | |||||||||||||
Changes in operating assets and liabilities | ||||||||||||||
Accounts receivable—third parties | ( | ( | ||||||||||||
Net accounts receivable—Westlake | ||||||||||||||
Inventories | ||||||||||||||
Prepaid expenses and other current assets | ( | ( | ||||||||||||
Accounts payable—third parties | ( | |||||||||||||
Accrued and other liabilities | ( | |||||||||||||
Other, net | ( | ( | ||||||||||||
Net cash provided by operating activities | ||||||||||||||
Cash flows from investing activities | ||||||||||||||
Additions to property, plant and equipment | ( | ( | ||||||||||||
Investments with Westlake under the Investment Management Agreement | ( | ( | ||||||||||||
Maturities of investments with Westlake under the Investment Management Agreement | ||||||||||||||
Net cash used for investing activities | ( | ( | ||||||||||||
Cash flows from financing activities | ||||||||||||||
Proceeds from debt payable to Westlake | ||||||||||||||
Repayment of debt payable to Westlake | ( | |||||||||||||
Distributions to noncontrolling interest retained in OpCo by Westlake | ( | ( | ||||||||||||
Distributions to unitholders | ( | ( | ||||||||||||
Net cash used for financing activities | ( | ( | ||||||||||||
Net increase in cash and cash equivalents | ||||||||||||||
Cash and cash equivalents at beginning of period | ||||||||||||||
Cash and cash equivalents at end of period | $ | $ |
September 30, 2023 | December 31, 2022 | |||||||||||||
Trade customers | $ | $ | ||||||||||||
Allowance for credit losses | ( | ( | ||||||||||||
Other receivables | ||||||||||||||
Accounts receivable, net—third parties | $ | $ |
September 30, 2023 | December 31, 2022 | |||||||||||||
Finished products | $ | $ | ||||||||||||
Feedstock, additives and chemicals | ||||||||||||||
Inventories | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Net income attributable to the Partnership | $ | $ | $ | $ | ||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||
Limited partners' distribution declared on common units | ||||||||||||||||||||||||||
Distribution in excess of net income | $ | ( | $ | ( | $ | ( | $ | ( |
Three Months Ended September 30, 2023 | ||||||||||||||||||||
Limited Partners' Common Units | Incentive Distribution Rights | Total | ||||||||||||||||||
Net income attributable to the Partnership: | ||||||||||||||||||||
Distribution | $ | $ | $ | |||||||||||||||||
Distribution in excess of net income | ( | ( | ||||||||||||||||||
Net income | $ | $ | $ | |||||||||||||||||
Weighted average units outstanding: | ||||||||||||||||||||
Basic and diluted | ||||||||||||||||||||
Net income per limited partner unit: | ||||||||||||||||||||
Basic and diluted | $ |
Three Months Ended September 30, 2022 | ||||||||||||||||||||
Limited Partners' Common Units | Incentive Distribution Rights | Total | ||||||||||||||||||
Net income attributable to the Partnership: | ||||||||||||||||||||
Distribution | $ | $ | $ | |||||||||||||||||
Distribution in excess of net income | ( | ( | ||||||||||||||||||
Net income | $ | $ | $ | |||||||||||||||||
Weighted average units outstanding: | ||||||||||||||||||||
Basic and diluted | ||||||||||||||||||||
Net income per limited partner unit: | ||||||||||||||||||||
Basic and diluted | $ |
Nine Months Ended September 30, 2023 | ||||||||||||||||||||
Limited Partners' Common Units | Incentive Distribution Rights | Total | ||||||||||||||||||
Net income attributable to the Partnership: | ||||||||||||||||||||
Distribution | $ | $ | $ | |||||||||||||||||
Distribution in excess of net income | ( | ( | ||||||||||||||||||
Net income | $ | $ | $ | |||||||||||||||||
Weighted average units outstanding: | ||||||||||||||||||||
Basic and diluted | ||||||||||||||||||||
Net income per limited partner unit: | ||||||||||||||||||||
Basic and diluted | $ |
Nine Months Ended September 30, 2022 | ||||||||||||||||||||
Limited Partners' Common Units | Incentive Distribution Rights | Total | ||||||||||||||||||
Net income attributable to the Partnership: | ||||||||||||||||||||
Distribution | $ | $ | $ | |||||||||||||||||
Distribution in excess of net income | ( | ( | ||||||||||||||||||
Net income | $ | $ | $ | |||||||||||||||||
Weighted average units outstanding: | ||||||||||||||||||||
Basic and diluted | ||||||||||||||||||||
Net income per limited partner unit: | ||||||||||||||||||||
Basic and diluted | $ |
Marginal Percentage Interest in Distributions | ||||||||||||||
Total Quarterly Distribution Per Unit | Unitholders | IDR Holders | ||||||||||||
Above $ | % | % | ||||||||||||
Above $ | % | % | ||||||||||||
Above $ | % | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Distributions per common unit | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Net sales—Westlake | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Feedstock purchased from Westlake and included in cost of sales | $ | $ | $ | $ | ||||||||||||||||||||||
Other charges from Westlake and included in cost of sales | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
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 | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Goods and services purchased from Westlake and capitalized as assets | $ | $ | $ | $ |
September 30, 2023 | December 31, 2022 | |||||||||||||
Receivable under the Investment Management Agreement | $ | $ |
September 30, 2023 | December 31, 2022 | |||||||||||||
Accounts receivable—Westlake | $ | $ |
September 30, 2023 | December 31, 2022 | |||||||||||||
Accounts payable—Westlake | $ | $ |
September 30, 2023 | December 31, 2022 | |||||||||||||
Long-term debt payable to Westlake | $ | $ |
September 30, 2023 | December 31, 2022 | |||||||||||||
OpCo Revolver | $ | $ | ||||||||||||
MLP Revolver | ||||||||||||||
Long-term debt payable to Westlake | $ | $ | ||||||||||||
September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||||||||||||
Long-term debt payable to Westlake | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||
Net sales—Westlake | $ | 289,303 | $ | 364,273 | $ | 771,349 | $ | 1,020,042 | ||||||||||||||||||
Net co-products, ethylene and other sales—third parties | 32,361 | 50,850 | 122,169 | 206,266 | ||||||||||||||||||||||
Total net sales | 321,664 | 415,123 | 893,518 | 1,226,308 | ||||||||||||||||||||||
Cost of sales | 228,683 | 324,629 | 606,742 | 947,073 | ||||||||||||||||||||||
Gross profit | 92,981 | 90,494 | 286,776 | 279,235 | ||||||||||||||||||||||
Selling, general and administrative expenses | 6,741 | 8,678 | 21,884 | 26,824 | ||||||||||||||||||||||
Income from operations | 86,240 | 81,816 | 264,892 | 252,411 | ||||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||
Interest expense—Westlake | (6,437) | (3,645) | (19,869) | (8,703) | ||||||||||||||||||||||
Other income, net | 1,272 | 618 | 3,153 | 683 | ||||||||||||||||||||||
Income before income taxes | 81,075 | 78,789 | 248,176 | 244,391 | ||||||||||||||||||||||
Provision for income taxes | 222 | 484 | 607 | 822 | ||||||||||||||||||||||
Net income | 80,853 | 78,305 | 247,569 | 243,569 | ||||||||||||||||||||||
Less: Net income attributable to noncontrolling interest in OpCo | 67,647 | 63,548 | 207,585 | 196,180 | ||||||||||||||||||||||
Net income attributable to Westlake Chemical Partners LP | $ | 13,206 | $ | 14,757 | $ | 39,984 | $ | 47,389 | ||||||||||||||||||
MLP distributable cash flow (1) | $ | 13,620 | $ | 16,734 | $ | 46,156 | $ | 55,609 | ||||||||||||||||||
EBITDA (2) | $ | 115,738 | $ | 111,825 | $ | 349,947 | $ | 344,776 | ||||||||||||||||||
____________ | ||||||||||||||||||||||||||
(1) See "Reconciliation of MLP Distributable Cash Flow to Net Income and Net Cash Provided by Operating Activities" below. | ||||||||||||||||||||||||||
(2) See "Reconciliation of EBITDA to Net Income, Income from Operations and Net Cash Provided by Operating Activities" below. | ||||||||||||||||||||||||||
Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2023 | |||||||||||||||||||||||||
Average Sales Price | Volume | Average Sales Price | Volume | |||||||||||||||||||||||
Net sales percentage change from prior-year period due to average sales price and volume | -27.7 | % | +7.8 | % | -27.0 | % | +0.7 | % | ||||||||||||||||||
Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2023 | |||||||||||||||||||||||||
Domestic US prices percentage change from prior-year period for fuel cost and feedstock | ||||||||||||||||||||||||||
Fuel cost (Natural Gas) | -69.4 | % | -60.9 | % | ||||||||||||||||||||||
Feedstock (Ethane) | -46.0 | % | -50.7 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||
Net cash provided by operating activities | $ | 100,925 | $ | 115,495 | $ | 344,328 | $ | 341,162 | ||||||||||||||||||
Loss from disposition of property, plant and equipment | (4,016) | (958) | (4,438) | (4,388) | ||||||||||||||||||||||
Changes in operating assets and liabilities and other | (16,056) | (36,232) | (92,321) | (93,205) | ||||||||||||||||||||||
Net income | 80,853 | 78,305 | 247,569 | 243,569 | ||||||||||||||||||||||
Add: | ||||||||||||||||||||||||||
Depreciation, amortization and disposition of property, plant and equipment | 32,242 | 30,349 | 86,340 | 96,070 | ||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||
Contribution to turnaround reserves | (7,565) | (7,323) | (21,838) | (21,811) | ||||||||||||||||||||||
Maintenance capital expenditures | (22,862) | (14,348) | (37,407) | (38,172) | ||||||||||||||||||||||
Distributable cash flow attributable to noncontrolling interest in OpCo | (69,048) | (70,249) | (228,508) | (224,047) | ||||||||||||||||||||||
MLP distributable cash flow | $ | 13,620 | $ | 16,734 | $ | 46,156 | $ | 55,609 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||
Net cash provided by operating activities | $ | 100,925 | $ | 115,495 | $ | 344,328 | $ | 341,162 | ||||||||||||||||||
Loss from disposition of property, plant and equipment | (4,016) | (958) | (4,438) | (4,388) | ||||||||||||||||||||||
Changes in operating assets and liabilities and other | (16,056) | (36,232) | (92,321) | (93,205) | ||||||||||||||||||||||
Net income | 80,853 | 78,305 | 247,569 | 243,569 | ||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||
Other income, net | 1,272 | 618 | 3,153 | 683 | ||||||||||||||||||||||
Interest expense—Westlake | (6,437) | (3,645) | (19,869) | (8,703) | ||||||||||||||||||||||
Provision for income taxes | (222) | (484) | (607) | (822) | ||||||||||||||||||||||
Income from operations | 86,240 | 81,816 | 264,892 | 252,411 | ||||||||||||||||||||||
Add: | ||||||||||||||||||||||||||
Depreciation and amortization | 28,226 | 29,391 | 81,902 | 91,682 | ||||||||||||||||||||||
Other income, net | 1,272 | 618 | 3,153 | 683 | ||||||||||||||||||||||
EBITDA | $ | 115,738 | $ | 111,825 | $ | 349,947 | $ | 344,776 |
Exhibit No. | Exhibit | |||||||
3.1 | ||||||||
3.2 | ||||||||
3.3 | ||||||||
3.4 | ||||||||
3.5 | ||||||||
3.6 | ||||||||
31.1† | ||||||||
31.2† | ||||||||
32.1# | ||||||||
101.INS† | XBRL Instance Document–The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document. | |||||||
101.SCH† | XBRL Taxonomy Extension Schema Document | |||||||
101.CAL† | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
101.DEF† | XBRL Taxonomy Extension Definition Linkbase Document | |||||||
101.LAB† | XBRL Taxonomy Extension Label Linkbase Document | |||||||
101.PRE† | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
104 | Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
WESTLAKE CHEMICAL PARTNERS LP | ||||||||||||||||||||
Date: | November 2, 2023 | By: | /S/ ALBERT CHAO | |||||||||||||||||
Albert Chao | ||||||||||||||||||||
President, Chief Executive Officer and Director of Westlake Chemical Partners GP LLC (Principal Executive Officer) | ||||||||||||||||||||
Date: | November 2, 2023 | By: | /S/ M. STEVEN BENDER | |||||||||||||||||
M. Steven Bender | ||||||||||||||||||||
Executive Vice President, Chief Financial Officer and Director of Westlake Chemical Partners GP LLC (Principal Financial Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Westlake Chemical Partners LP (the "registrant"); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | November 2, 2023 | /S/ ALBERT CHAO | |||||||||||||||||||||
Albert Chao | |||||||||||||||||||||||
President, Chief Executive Officer and Director of Westlake Chemical Partners GP LLC (Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Westlake Chemical Partners LP (the "registrant"); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | November 2, 2023 | /S/ M. STEVEN BENDER | |||||||||||||||||||||
M. Steven Bender | |||||||||||||||||||||||
Executive Vice President, Chief Financial Officer and Director of Westlake Chemical Partners GP LLC (Principal Financial Officer) |
Date: | November 2, 2023 | /S/ ALBERT CHAO | |||||||||||||||||||||
Albert Chao | |||||||||||||||||||||||
President, Chief Executive Officer and Director of Westlake Chemical Partners GP LLC (Principal Executive Officer) | |||||||||||||||||||||||
Date: | November 2, 2023 | /S/ M. STEVEN BENDER | |||||||||||||||||||||
M. Steven Bender | |||||||||||||||||||||||
Executive Vice President, Chief Financial Officer and Director of Westlake Chemical Partners GP LLC (Principal Financial Officer) |
Consolidated Balance Sheets (Parenthetical) - Common units - shares |
Sep. 30, 2023 |
Dec. 31, 2022 |
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Publicly and Privately Held | ||
Units issued | 21,105,904 | 21,099,638 |
Units outstanding | 21,105,904 | 21,099,638 |
Westlake | ||
Units issued | 14,122,230 | 14,122,230 |
Units outstanding | 14,122,230 | 14,122,230 |
Description of Business and Basis of Presentation |
9 Months Ended |
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Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Basis of Presentation | Description of Business and Basis of Presentation Description of Business Westlake Chemical Partners LP (the "Partnership") is a Delaware limited partnership formed in March 2014 to operate, acquire and develop ethylene production facilities and related assets. On August 4, 2014, the Partnership completed its initial public offering (the "IPO") of 12,937,500 common units representing limited partner interests. In connection with the IPO, the Partnership acquired a 10.6% limited partner interest in Westlake Chemical OpCo LP ("OpCo") and a 100% interest in Westlake Chemical OpCo GP LLC ("OpCo GP"), which is the general partner of OpCo. OpCo owns three ethylene production facilities and one common carrier ethylene pipeline (collectively, the "Contributed Assets"). Since the IPO, the Partnership has periodically purchased additional limited partner interest in OpCo. Most recently, on March 29, 2019, the Partnership purchased an additional 4.5% newly-issued limited partner interest in OpCo for approximately $201,445, resulting in an aggregate 22.8% limited partner interest in OpCo, effective January 1, 2019. The remaining 77.2% limited partner interest in OpCo is owned by Westlake Corporation. Basis of Presentation The accompanying unaudited consolidated interim financial statements were prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim periods. Accordingly, certain information and footnotes required for complete financial statements under generally accepted accounting principles in the United States ("U.S. GAAP") have not been included. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto of the Partnership included in the annual report on Form 10-K for the fiscal year ended December 31, 2022 (the "2022 Form 10-K"), filed with the SEC on March 1, 2023. These financial statements have been prepared in conformity with the accounting principles and practices as disclosed in the notes to the consolidated financial statements of the Partnership for the fiscal year ended December 31, 2022. References to "Westlake" refer collectively to Westlake Corporation and its subsidiaries, other than the Partnership, OpCo and OpCo GP. The Partnership holds a 22.8% limited partner interest and the entire non-economic general partner interest in OpCo. The remaining 77.2% limited partner interest in OpCo is owned directly by Westlake, which has no rights to direct the activities that most significantly impact the economic performance of OpCo. As a result of the fact that substantially all of OpCo's activities are conducted on behalf of Westlake, and the fact that OpCo exhibits disproportionality of voting rights to economic interest, OpCo was deemed to be a variable interest entity. The Partnership, through its ownership of OpCo's general partner, has the power to direct the activities that most significantly impact the economic performance of OpCo, and it also has the obligation or right to absorb losses or receive benefits from OpCo that could potentially be significant to OpCo. As such, the Partnership was determined to be OpCo's primary beneficiary and therefore consolidates OpCo's results of operations and financial position. 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 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. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ materially from those estimates.
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Accounts Receivable - Third Parties |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, after Allowance for Credit Loss [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable - Third Parties | Accounts Receivable—Third Parties Accounts receivable—third parties consist of the following:
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Inventories |
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories consist of the following:
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Property, Plant and Equipment |
9 Months Ended |
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Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, Plant and Equipment 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 |
9 Months Ended |
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Sep. 30, 2023 | |
Other Assets, Noncurrent [Abstract] | |
Deferred Charges and Other Assets | Deferred Charges and Other Assets 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 |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions and Net Income Per Limited Partner Unit | Distributions and Net Income Per Limited Partner Unit 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.
Net income per unit applicable to common limited partner units is computed by dividing the respective limited partners' interest in net income by the weighted-average number of common units outstanding for the period. Because the Partnership has more than one class of participating securities, it uses the two-class method when calculating the net income per unit applicable to limited partners. The classes of participating securities include common units and incentive distribution rights. Net income attributable to the Partnership is allocated to the unitholders in accordance with their respective ownership percentages in preparation of the consolidated statements of changes in equity. However, when distributions related to the incentive distribution rights are made, net income equal to the amount of those distributions is first allocated to the general partner before the remaining net income is allocated to the unitholders based on their respective ownership percentages. 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.
The amended Partnership Agreement provides that the Partnership will distribute cash that is deemed to be operating surplus each quarter to all the unitholders, pro rata, until each unit has received a distribution of $1.2938. If cash distributions to the Partnership's unitholders exceed $1.2938 per common unit in any quarter, the Partnership's unitholders and Westlake, as the holder of the Partnership's incentive distribution rights, will receive distributions according to the following percentage allocations:
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 nine months ended September 30, 2023 and 2022 were as follows:
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Partners' Equity |
9 Months Ended |
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Sep. 30, 2023 | |
Equity [Abstract] | |
Partners' Equity | Partners' Equity On October 4, 2018, the Partnership and Westlake Chemical Partners GP LLC, the general partner of the Partnership, entered into an Equity Distribution Agreement with UBS Securities LLC, Barclays Capital Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., RBC Capital Markets, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC to offer and sell the Partnership's common units, from time to time, up to an aggregate offering amount of $50,000. 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 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. 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.
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Related Party Transactions |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | Related Party Transactions The Partnership and OpCo regularly enter into related party transactions with Westlake. See below for a description of transactions with related parties. Sales to Related Parties OpCo sells ethylene to Westlake under the Ethylene Sales Agreement. Additionally, the Partnership and OpCo from time to time provide other services or products for which it charges Westlake a fee. Sales to related parties were as follows:
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:
Services from Related Parties Included in Selling, General and Administrative Expenses Charges for services purchased by the Partnership from Westlake and included in selling, general and administrative expenses primarily relate to services Westlake performs on behalf of the Partnership under the Omnibus Agreement, including the Partnership's finance, legal, information technology, human resources, communication, ethics and compliance and other administrative functions. Charges from related parties included within selling, general and administrative expenses were as follows:
Goods and Services from Related Parties Capitalized as Assets Charges for goods and services purchased by the Partnership and OpCo from Westlake which were capitalized as assets relate primarily to the services of Westlake employees under the Services and Secondment Agreement. Charges from related parties for goods and services capitalized as assets were as follows:
Receivable under the Investment Management Agreement On August 1, 2017, the Partnership, OpCo and Westlake executed an investment management agreement (the "Investment Management Agreement") that authorized Westlake to invest the Partnership's and OpCo's excess cash with Westlake for durations of up to a maximum of nine months. 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 $1,186 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:
Accounts Receivable from Related Parties 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. Based on OpCo's 2022 production, the Partnership recognized buyer deficiency fees of $23,835 during 2022. The buyer deficiency fee was received by the Partnership in January 2023. 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, $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:
Accounts Payable to Related Parties The Partnership's accounts payable to Westlake result primarily from feedstock purchases under the Feedstock Supply Agreement and services provided under the Services and Secondment Agreement and the Omnibus Agreement. The Partnership's accounts payable to Westlake were as follows:
Related Party Leases 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 $433 and $719 for the three months ended September 30, 2023 and 2022, respectively, and $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. Pursuant to the site lease agreements, OpCo pays Westlake one dollar per site per year. Debt Payable to Related Parties 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 September 30, 2023 and 2022 was $6,437 and $3,645, respectively. 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 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:
Major Customer and Concentration of Credit Risk 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 sales. 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.
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Long-term Debt Payable to Westlake |
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt Payable to Westlake | Long-Term Debt Payable to Westlake Long-term debt payable to Westlake consists of the following:
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%. The Applicable Margin under the MLP Revolver varies between 1.75% and 2.75%, depending on the Partnership's Consolidated Leverage Ratio. 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 7.1% 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.
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Fair Value Measurements |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The Partnership reports certain assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Under the accounting guidance for fair value measurements, inputs used to measure fair value are classified in one of three levels: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs that are not corroborated by market data. The Partnership has financial assets and liabilities subject to fair value measures. These financial assets and liabilities include cash and cash equivalents, accounts receivable, net, accounts payable and long-term debt payable to Westlake, all of which are recorded at carrying value. 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 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. Because the Partnership's valuation methodology used for long-term debt requires the use of significant unobservable inputs, the inputs used to measure the fair value of the Partnership's long-term debt are classified as Level 3 within the fair value hierarchy. Inputs used to estimate the fair values of the Partnership's long-term debt include the selection of an appropriate discount rate.
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Supplemental Information |
9 Months Ended |
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Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplemental Information | Supplemental Information Accrued and Other Liabilities 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. Cash Flow Information Non-cash Investing Activity 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 $18,095 and $7,335 for the nine months ended September 30, 2023 and 2022, respectively.
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Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Partnership is subject to environmental laws and regulations that can impose civil and criminal sanctions and that may require the Partnership to mitigate the effects of contamination caused by the release or disposal of hazardous substances into the environment. These laws include the federal Clean Air Act, the federal Water Pollution Control Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), the Toxic Substances Control Act and various other federal, state and local laws and regulations. Under CERCLA, an owner or operator of property may be held strictly liable for remediating contamination without regard to whether that person caused the contamination, and without regard to whether the practices that resulted in the contamination were legal at the time they occurred. Because the Partnership's production sites have a history of industrial use, it is impossible to predict precisely what effect these legal requirements will have on the Partnership. Pursuant to the Omnibus Agreement, certain subsidiaries of Westlake will indemnify the Partnership for liabilities that occurred or existed prior to August 4, 2014. 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. Contractors working on the quench tower were injured. There are lawsuits pending in connection with the flash fire. 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. 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.
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
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Pay vs Performance Disclosure | ||||
Net income | $ 13,206 | $ 14,757 | $ 39,984 | $ 47,389 |
Insider Trading Arrangements |
3 Months Ended |
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Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Description of Business and Basis of Presentation (Policies) |
9 Months Ended |
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Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated interim financial statements were prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim periods. Accordingly, certain information and footnotes required for complete financial statements under generally accepted accounting principles in the United States ("U.S. GAAP") have not been included. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto of the Partnership included in the annual report on Form 10-K for the fiscal year ended December 31, 2022 (the "2022 Form 10-K"), filed with the SEC on March 1, 2023. These financial statements have been prepared in conformity with the accounting principles and practices as disclosed in the notes to the consolidated financial statements of the Partnership for the fiscal year ended December 31, 2022. References to "Westlake" refer collectively to Westlake Corporation and its subsidiaries, other than the Partnership, OpCo and OpCo GP. The Partnership holds a 22.8% limited partner interest and the entire non-economic general partner interest in OpCo. The remaining 77.2% limited partner interest in OpCo is owned directly by Westlake, which has no rights to direct the activities that most significantly impact the economic performance of OpCo. As a result of the fact that substantially all of OpCo's activities are conducted on behalf of Westlake, and the fact that OpCo exhibits disproportionality of voting rights to economic interest, OpCo was deemed to be a variable interest entity. The Partnership, through its ownership of OpCo's general partner, has the power to direct the activities that most significantly impact the economic performance of OpCo, and it also has the obligation or right to absorb losses or receive benefits from OpCo that could potentially be significant to OpCo. As such, the Partnership was determined to be OpCo's primary beneficiary and therefore consolidates OpCo's results of operations and financial position. 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 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. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ materially from those estimates.
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Accounts Receivable - Third Parties (Tables) |
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Accounts Receivable, after Allowance for Credit Loss [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable | Accounts receivable—third parties consist of the following:
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Inventories (Tables) |
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Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Inventory | Inventories consist of the following:
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Distributions and Net Income Per Limited Partner Unit (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Incentive Distributions Made to Managing Members or General Partners by Distribution | 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.
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Schedule of Earnings Per Share, Basic and Diluted | Net income per unit applicable to common limited partner units is computed by dividing the respective limited partners' interest in net income by the weighted-average number of common units outstanding for the period. Because the Partnership has more than one class of participating securities, it uses the two-class method when calculating the net income per unit applicable to limited partners. The classes of participating securities include common units and incentive distribution rights. Net income attributable to the Partnership is allocated to the unitholders in accordance with their respective ownership percentages in preparation of the consolidated statements of changes in equity. However, when distributions related to the incentive distribution rights are made, net income equal to the amount of those distributions is first allocated to the general partner before the remaining net income is allocated to the unitholders based on their respective ownership percentages. 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.
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Distributions Made to Limited Partner, by Distribution | If cash distributions to the Partnership's unitholders exceed $1.2938 per common unit in any quarter, the Partnership's unitholders and Westlake, as the holder of the Partnership's incentive distribution rights, will receive distributions according to the following percentage allocations:
Distributions per common unit for the three and nine months ended September 30, 2023 and 2022 were as follows:
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Related Party Transactions (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions | Sales to related parties were as follows:
Charges from related parties in cost of sales were as follows:
Charges from related parties included within selling, general and administrative expenses were as follows:
Charges from related parties for goods and services capitalized as assets were as follows:
The Partnership's receivable under the Investment Management Agreement was as follows:
The Partnership's accounts receivable from Westlake were as follows:
The Partnership's accounts payable to Westlake were as follows:
Debt payable to related parties was as follows:
|
Long-term Debt Payable to Westlake (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions, Long-term Debt | Long-term debt payable to Westlake consists of the following:
|
Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Carrying And Fair Values Of Long-Term Debt | The Partnership has financial assets and liabilities subject to fair value measures. These financial assets and liabilities include cash and cash equivalents, accounts receivable, net, accounts payable and long-term debt payable to Westlake, all of which are recorded at carrying value. 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 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. Because the Partnership's valuation methodology used for long-term debt requires the use of significant unobservable inputs, the inputs used to measure the fair value of the Partnership's long-term debt are classified as Level 3 within the fair value hierarchy. Inputs used to estimate the fair values of the Partnership's long-term debt include the selection of an appropriate discount rate.
|
Description of Business and Basis of Presentation (Details) $ in Thousands |
Mar. 29, 2019
USD ($)
shares
|
Aug. 04, 2014
shares
|
Sep. 30, 2023
production_facility
|
---|---|---|---|
Westlake Chemical OpCo LP | |||
Limited Partners' Capital Account [Line Items] | |||
Number of production facilities | production_facility | 3 | ||
Westlake Chemical OpCo LP | Affiliated Entity | |||
Limited Partners' Capital Account [Line Items] | |||
Limited partner interest | 22.80% | 10.60% | |
Limited partner interest, additional ownership | 4.50% | ||
Amount paid to purchase additional limited partner interest | $ | $ 201,445 | ||
Westlake Chemical OpCo LP | Westlake | Majority-Owned Subsidiary, Unconsolidated | |||
Limited Partners' Capital Account [Line Items] | |||
Limited partner interest | 77.20% | ||
Westlake Chemical OpCo GP LLC | Limited Liability Company | |||
Limited Partners' Capital Account [Line Items] | |||
Limited partner interest | 100.00% | ||
Limited Partner | |||
Limited Partners' Capital Account [Line Items] | |||
Number of units sold in public offering (in shares) | shares | 2,940,818 | 12,937,500 |
Accounts Receivable - Third Parties Accounts Receivable—Third Parties (Schedule Of Accounts Receivable) (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Accounts Receivable, after Allowance for Credit Loss [Abstract] | ||
Trade customers | $ 18,464 | $ 18,813 |
Allowance for credit losses | (195) | (280) |
Other receivables | 3,357 | 1,497 |
Accounts receivable, net—third parties | $ 21,626 | $ 20,030 |
Inventories (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Finished products | $ 3,823 | $ 4,093 |
Feedstock, additives and chemicals | 571 | 622 |
Inventories | $ 4,394 | $ 4,715 |
Property, Plant and Equipment (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense on property, plant and equipment | $ 21,282 | $ 23,368 | $ 63,167 | $ 71,252 |
Deferred Charges and Other Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Deferred Charges and Other Assets | ||||
Other Assets [Line Items] | ||||
Amortization expense | $ 6,944 | $ 6,023 | $ 18,735 | $ 20,430 |
Distributions and Net Income Per Limited Partner Unit (Distribution Per Common Unit) (Details) - $ / shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Distribution Per Common Unit [Abstract] | ||||
Distributions per common unit (in usd per share) | $ 0.4714 | $ 0.4714 | $ 1.4142 | $ 1.4142 |
Partners' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands |
Mar. 29, 2019 |
Oct. 04, 2018 |
Aug. 04, 2014 |
---|---|---|---|
Class of Stock [Line Items] | |||
Partners units, maximum aggregate offering amount, ATM | $ 50,000 | ||
Affiliated Entity | |||
Class of Stock [Line Items] | |||
Partners' capital account, units, sold to related party (in shares) | 1,401,869 | ||
Limited Partner | |||
Class of Stock [Line Items] | |||
Number of units sold in public offering (in shares) | 2,940,818 | 12,937,500 | |
Units sold in secondary offering price per unit (in dollars per share) | $ 21.40 |
Related Party Transactions (Sales to Related Parties) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Net co-products, ethylene and other sales—third parties | $ 289,303 | $ 364,273 | $ 771,349 | $ 1,020,042 |
Related Party Transactions (Cost of Sales from Related Parties) (Details) - Affiliated Entity - Westlake - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Related Party Transaction [Line Items] | ||||
Charges from related parties in cost of sales | $ 151,112 | $ 250,188 | $ 395,516 | $ 738,817 |
Feedstock Purchased | ||||
Related Party Transaction [Line Items] | ||||
Charges from related parties in cost of sales | 120,040 | 201,044 | 303,809 | 603,243 |
Other service charges | ||||
Related Party Transaction [Line Items] | ||||
Charges from related parties in cost of sales | $ 31,072 | $ 49,144 | $ 91,707 | $ 135,574 |
Related Party Transactions (Services from Related Parties Included in SG&A Expenses) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Related Party Transaction [Line Items] | ||||
Selling, General and Administrative Expense | $ 6,741 | $ 8,678 | $ 21,884 | $ 26,824 |
Affiliated Entity | Westlake | ||||
Related Party Transaction [Line Items] | ||||
Selling, General and Administrative Expense | $ 6,670 | $ 7,080 | $ 19,966 | $ 20,510 |
Related Party Transactions (Goods and Services Purchased from Westlake and Capitalized as Assets) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Affiliated Entity | Westlake | ||||
Related Party Transaction [Line Items] | ||||
Goods and services purchased from Westlake and capitalized as assets | $ 1,035 | $ 832 | $ 2,907 | $ 2,205 |
Related Party Transactions (General) (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2022
USD ($)
|
|
Related Party Transaction [Line Items] | ||||
Site lease agreement, number | 2 | |||
Site lease agreements, term (in years) | 50 | |||
Site lease agreements, OpCo annual obligation to WLK | $ 1 | |||
Affiliated Entity | Westlake | ||||
Related Party Transaction [Line Items] | ||||
Operating lease expense | $ 433,000 | $ 719,000 | $ 1,480,000 | $ 1,979,000 |
Related Party Transactions (Debt Payable to Related Parties) (Details) - Affiliated Entity - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
Related Party Transaction [Line Items] | |||||
Accrued interest on related party debt | $ 6,486 | $ 6,486 | $ 4,733 | ||
Westlake | |||||
Related Party Transaction [Line Items] | |||||
Interest expense | 6,437 | $ 3,645 | 19,869 | $ 8,703 | |
Long-term debt payable to Westlake | 399,674 | 399,674 | 399,674 | ||
Westlake | Accrued Liabilities | |||||
Related Party Transaction [Line Items] | |||||
Accrued interest on related party debt | 6,486 | 6,486 | $ 4,733 | ||
Westlake | Other income (expense) | |||||
Related Party Transaction [Line Items] | |||||
Interest expense | $ 6,437 | $ 3,645 | $ 19,869 | $ 8,703 |
Related Party Transactions (Major Customer and Concentration Risk) (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Affiliated Entity | Westlake | Revenue Benchmark | Customer Concentration Risk | ||||
Concentration Risk [Line Items] | ||||
Concentration Risk, Percentage | 89.90% | 87.80% | 86.30% | 83.20% |
Fair Value Measurements (Summary of Carrying and Fair Values of Long Term Debt) (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt payable to Westlake, fair value | $ 409,637 | $ 405,879 |
Westlake | Affiliated Entity | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt payable to Westlake | $ 399,674 | $ 399,674 |
Supplemental Information (Details) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
Accrued Liabilities [Abstract] | |||
Accrued and other liabilities | $ 31,355 | $ 17,537 | |
Accrued maintenance | 10,020 | 3,752 | |
Accrued Capital Expenditures | 5,320 | 2,442 | |
Accrued taxes | 4,881 | 2,652 | |
Capital expenditures incurred but not yet paid | 8,262 | $ 7,654 | |
Interest paid | 18,095 | $ 7,335 | |
Affiliated Entity | |||
Accrued Liabilities [Abstract] | |||
Accrued interest on related party debt | $ 6,486 | $ 4,733 |
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