Westlake Chemical Partners LP Aktie

Thank you. Good afternoon. Thank you for standing by. Welcome to the Westlake Chemical Partners Second Quarter 2026 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. After the speaker's remarks, you will be invited to participate in a question and answer session. As a reminder, this conference is being recorded today, August 4, 2026. I would now like to turn the call over to today's host, Jeff Hawley, Wesley Chemical Partners Vice President and Chief Accounting Officer. Sir, you may begin.

Thank you. Good afternoon everyone and welcome to the Westlake Chemical Partners second quarter 2026 conference call. I'm joined today by Albert Chow, our Executive Chairman, John Mark Gilson, our President and CEO, John Bocht, our Senior Vice President and Chief Financial Officer, Steve Bender, our Special Advisor to the President, and other members of our management team. During this call, we refer to ourselves as Westlake Partners or the Partnership, References to Westlake refer to our parent company, Westlake Corporation, And references to OPCO refer to Westlake Chemical OPCO LP, a subsidiary of Westlake and a partnership which owns certain olefin assets. Additionally, when we refer to distributable cash flow, we are referring to Westlake Chemical Partners MLP Distributable Cash Flow. Definitions of these terms are available on the partnership's website. Today, management is going to discuss certain topics that will contain forward-looking information that is based on management's beliefs. as well as assumptions made by, and information currently available to management. These forward-looking statements suggest predictions or expectations, and thus are subject to risks or uncertainties.

We encourage you to learn more about the factors that could lead our actual results to differ by reviewing the cautionary statements in our regulatory filings, which are also available on our investor relations website. This morning, Westlake Partners issued a press release with details of our second quarter 2026 financial and operating 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 beginning two hours after the conclusion of this call. The replay can be accessed via the Partnership's website. Please note that information reported on this call speaks only as of today, August 4, 2026, and therefore you are advised that time-sensitive information may no longer be accurate as of the time of any replay. I would finally advise you that this conference call is being broadcast live through an Internet webcast system that can be accessed on our webpage at WLKPartners.com.

Now, I would like to turn the call over to Jean-Marc Gilson. Jean-Marc? Thank you, Jeff, and good afternoon, everyone, and thank you for joining us to discuss our second session.

quarter 2026 results. In this morning's press release, we reported Westlake Partners second quarter 2026 net income of $14 million or 40 cents per unit. which was in line with our net income in the first quarter. The stability of Westlake Partners' business model is consistently demonstrated through our fixed-margin E-TLN sales agreement, which minimizes market volatility and other production risks. The high degree of stability in cash flow, when paired with the predictability of our business, has enabled us to deliver the long history of reliable distributions and coverage. This quarter distribution is the 48th consecutive quarterly distribution since our IPO in July of 2014, without any reductions. Before I turn the call over to John, I want to take this opportunity to thank Steve Bender for all of his many contributions to the partnership as our CFO since its formation over a decade ago and wish him the best of luck with his upcoming retirement.

Thank you, Jean-Marc, and it's been a pleasure working with you, Albert, and James Chow, and the entire Westlake Chemical Partners team for many years. I leave for retirement next month knowing that the partnership is on very firm financial footing, having recently renewed both its revolver and the ethylene supply agreement with Westlake. And with that, I'll turn the call over to the partnership's new chief financial officer, John Markston.

John? Thank you, Steve. Your contributions to the partnership will be missed, and we all wish you the best of luck in your retirement. In this morning's press release, we reported Westlake Partners' second quarter 2026 net income of $14 million, or 40 cents per unit. Consolidated net income, including OPCO's earnings, was $82 million on consolidated net sales of $297 million. the partnership had distributable cash flow for the quarter of $18 million or 50 cents per unit. Second quarter 2026 net income for Westlake Partners of $14 million was essentially in line with the second quarter 2025 partnership net income. Distributable cash flow of $18 million for the second quarter of 2026 increased by $3 million compared to the second quarter of 2025 due to the higher production and sales volume and lower maintenance capital expenditures as a result of last year's Petro-1 plan termination. turnaround. On a sequential basis, net income for Westlake Partners of $14 million in the second quarter of 2026 was in line with the first quarter on relatively stable production and sales volume. Sequentially, our trailing 12-month coverage ratio improved to 1.04 times from 1.0 times, reflecting the aging out of the impact of the Petra 1 turnaround that occurred in the first half of 2025. turning our attention to the balance sheet and cash flows.

At the end of the second quarter, we had consolidated cash balance and cash investments with Westlake through our investment management agreement, totaling $93 million. Long-term debt at the end of the quarter was $400 million, of which $377 million was at the partnership, and the remaining $23 million was at OPCO. In the second quarter of 2026, Opco spent $12 million on capital expenditures. We maintained our strong leverage metrics with a consolidated leverage ratio of approximately one time. Last month, both OPCO and the Partnership extended their existing revolver agreements with Westlake for an additional four years through 2031. Additionally, we successfully negotiated a 10 basis point reduction in the associated interest rate. As was the case earlier this year when Westlake extended our ethylene supply agreement, we believe that the revolver extension demonstrates the critical nature of OPCO's supply of ethylene to their operations and their commitment to support OPCO's continued safe, reliable operations through stable, predictable, cash-free operations. cash flows.

On August 3, 2026, we announced a quarterly distribution of 47.14 cents per unit with respect to the second quarter of 2026. Since our IPO in 2014, the partnership has made 48 consecutive quarterly distributions to our unit holders, and we have grown distributions 71% since the partnership's original minimum quarterly distribution of 27.5 cents per unit. The partnership's second quarter distribution will be paid on August 28, 2026 to unit holders of record on August 13, 2026. The partnership's predictable fee-based cash flow continues to prove beneficial in today's economic environment and is differentiated by the consistency of our earnings and cash flows. Looking back, since our IPO in July of 2014, we have maintained a cumulative distribution coverage ratio in excess of one times, and with the partnership's stability in cash flows, we were able to sustain our current distribution without the need to access the capital markets. For modeling purposes, we have no plan turnaround in 2026. Now I'd like to turn the call back over to Jean-Marc to make some closing comments.

Jean-Marc? Thank you, John.

We are pleased with the partnership's financial and operational performance during the second quarter. Solid operating rates at OPCOS ETLN facilities during the quarter resulted in a quarterly coverage ratio of 1.0 times. Turning to our outlook, the conflict in the Middle East has created increased volatility in chemical prices, including SELNs. However, the partnership's Ethylene margins remain largely immune to the heightened market price volatility. Thanks to its Ethylene supply agreement with Westlake, that provides for a fixed margin of 10 cents per pound on 95% of our Ethylene production. Turning to our capital structure, we maintain a strong balance sheet with conservative financial and leverage metrics. As we continue to navigate market conditions, we will evaluate opportunities via our four levels of growth in the future, including increases of our ownership interest of OPCO, acquisitions of other qualified income streams, Organic growth opportunities, such as expansions of our current land facilities, and negotiation of a higher fixed margin in our SEL and SACE agreement with Westlake.

We remain focused on our ability to continue to provide long-term value and distributions to our unit holders. As always, we will continue to focus on safe operations, along with being good stewards of the environment where we work and live as part of our broader sustainability efforts. Thank you very much for listening to our second quarter earnings call. Now I will turn the call back over to Jeff.

Thank you, John Mark. Before we begin taking questions, I would like to remind you that a replay of this teleconference will be available two hours after the call has ended. We'll provide instructions to access the replay at the end of the call. Ari, we will now take questions.

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. I'm showing no questions at this time, so I will turn the call back over to Jeff Holley.

Thanks. Thank you again for participating in today's call. We hope you'll join us for our next conference call to discuss our third quarter 2026 results.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Good afternoon. Thank you for standing by. Welcome to the Westlake Chemical Partners First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, May 5, 2026. I would now like to turn the call over to today's host, Jeff Holy, Westlake Chemical Partners' Vice President and Chief Accounting Officer. Sir, you may begin.

Thank you, Kelly. Good afternoon, everyone, and welcome to the Westlake Chemical Partners First Quarter 2026 Conference Call. I'm 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 refer to ourselves as Westlake Partners or the Partnership. References to Westlake refer to our parent company, Westlake Corporation, and references to OpCo refer to Westlake Chemical OpCo LP, a subsidiary of Westlake and the Partnership, which owns certain olefins assets.

Additionally, when we refer to distributable cash flow, we are referring to Westlake Chemical Partners MLP distributable cash flow. Definitions of these terms are available on the Partnership's website.

Today, management is going to discuss certain topics that will contain forward-looking information that is based on management's beliefs as well as assumptions made by and information currently available to management. These forward-looking statements suggest predictions or expectations and thus are subject to risks or uncertainties. We encourage you to learn more about the factors that could lead our actual results to differ by reviewing the cautionary statements in our regulatory filings, which are also available on our Investor Relations website.

This morning, Westlake Partners issued a press release with details of our first quarter 2026 financial and operating results. This document is available in the Press Release section of our web page at wlkpartners.com. A replay of today's call will be available beginning 2 hours after the conclusion of this call. The replay can be accessed via the partnership's website. Please note that information reported on this call speaks only as of today, May 5, 2026, and therefore, you are advised that time-sensitive information may no longer be accurate as of the time of any replay.

I would finally advise you that this conference call is being broadcast live through an Internet webcast system that can be accessed on our web page at wlkpartners.com.

Now I would like to turn the call over to Jean-Marc Gilson. Jean-Marc?

Thank you, Jeff, and good afternoon, everyone, and thank you for joining us to discuss our first quarter 2026 results. In this morning's press release, we reported Westlake Partners' first quarter 2026 net income of $14 million or $0.40 per unit.

Compared to the fourth quarter of 2025, our first quarter sales and earnings benefited from a higher third-party average sales price that was offset by slightly lower production and sales volume. The stability of Westlake Partners' business model is consistently demonstrated through our fixed margin ethylene sales agreement, which minimizes market volatility and other production risks.

The high degree of stability in cash -- in cash flow when paired with the predictability of our business has enabled us to deliver the long history of reliable distribution and coverage. This quarter's distribution is the 47th consecutive quarterly distribution since our IPO in July 2014 without any reductions.

Before I turn the call over to Steve, I want to provide some thoughts on our CFO transition. As you may have read, on April 20, we announced that on June 15, Jon Baksht will join Westlake Corporation and Westlake Partners LP as Senior Vice President and Chief Financial Officer. Jon brings experience from the oil and gas, packaging and building product industries as well as investment banking to Westlake, and we look forward to him joining the partnership.

On June 15, Steve Bender will transition to the role of Special Adviser and will continue to report to me as he supports the transition. We anticipate that Steve will participate in the second quarter earnings call in August. And with that, I would like to turn our call over to Steve to provide more detail on the financial and operating results for the quarter. Steve?

Thank you, Jean-Marc, and good afternoon, everyone. In this morning's press release, we reported Westlake Partners' first quarter 2026 net income of $14 million or $0.40 per unit. Consolidated net income, including OpCo's earnings, was $82 million on consolidated net sales of $306 million.

The Partnership had distributable cash flow for the quarter of $18 million or $0.51 per unit. First quarter 2026 net income for Westlake Partners of $14 million was $9 million above the first quarter of 2025 Partnership net income due primarily to higher production and sales volumes as a result of last year's planned turnaround at Petro 1. Distributable cash flow of $18 million for the first quarter of 2026 increased by $13 million when compared to the first quarter of 2025 due to higher production and sales volumes and lower maintenance capital expenditures as a result of last year's Petro 1 planned turnaround.

As compared to the fourth quarter of 2025, net income for Westlake Partners in the first quarter of 2026 declined by less than $1 million due to lower production and sales volumes that was mostly offset by higher third-party average sales price. Sequentially, our trailing 12-month coverage ratio improved to 1x from 0.8x, reflecting the aging out of the impact of the Petro 1 turnaround that occurred in the first quarter of 2025. Additionally, our operating surplus improved by $1 million as we achieved a coverage ratio above 1 in the first quarter.

Turning our attention to the balance sheet and cash flows. At the end of the first quarter, we had consolidated cash and cash investments with Westlake through our investment management agreement totaling $81 million. Long-term debt at the end of the quarter was $400 million, of which $377 million was at the Partnership and the remaining $23 million was at OpCo.

In the first quarter of 2026, OpCo spent $6 million on capital expenditures. We maintained our strong leverage metrics with a consolidated leverage ratio of approximately 1x. On May 4, 2026, we announced a quarterly distribution of $0.4714 per unit with respect to the first quarter of 2026. Since our IPO in 2014, the Partnership has made 47 consecutive quarterly distributions to unitholders. We have grown distributions 71% since the Partnership's original minimum quarterly distribution of $0.275 per unit.

The Partnership's first quarter distribution will be paid on June 1, 2026, to unitholders of record on May 14, 2026. The Partnership's predictable fee-based cash flow continues to prove beneficial in today's environment and is differentiated by consistency of our earnings and cash flows.

Looking back since our IPO in July of 2024 (sic) [ 2014 ], we have maintained a cumulative distribution coverage ratio of approximately 1x and the Partnership's stability in cash flows, we were able to sustain our current distribution without the need to access capital markets. For modeling purposes, we have no planned turnarounds in 2026.

I'd like to turn the call back over to Jean-Marc to make some closing comments. Jean-Marc?

Thank you, Steve. We are pleased with the Partnership's financial and operational performance during the first quarter. Solid operating rate at OpCo's ethylene facilities during the quarter resulted in a quarterly coverage ratio of 1.0x.

Turning to our outlook. The conflict in the Middle East has significantly disrupted the global supply of oil, chemical feedstocks and polymers. Resulting supply concerns are prompting global chemical customers to source more material from North America in response to the conflict, which is supporting higher demand and prices for North American ethylene.

While most of OpCo's ethylene volume is contracted to Westlake at a fixed margin of $0.10 per pound, margin for the approximately 5% of production that OpCo typically sells to third parties is benefiting from higher selling prices as a result of the factors I just discussed.

Turning to our capital structure. We maintain a strong balance sheet with conservative financial and leverage metrics. As we continue to navigate market conditions, we will evaluate opportunities via our 4 levers of growth in the future, including increases of our ownership interest of OpCo, acquisitions of other qualified income streams, organic growth opportunities such as expansions of our current ethylene facilities and negotiation of a higher fixed margin in our ethylene sales agreement with Westlake.

We remain focused on our ability to continue to provide long-term value and distribution to our unitholders. As always, we will continue to focus on safe operations, along with being good stewards of the environment where we work and live as part of our broader sustainability efforts. Thank you very much for listening to our first quarter earnings call. Now I will turn the call back over to Jeff.

Thank you, Jean-Marc. Before we begin taking questions, I would like to remind you that a replay of this teleconference will be available 2 hours after the call has ended. We'll provide instructions to access the replay at the end of the call. Kelly, we will now take questions.

[Operator Instructions] Our first question comes from the line of James Altschul of Aviation Advisory Service, Inc.

In your prepared remarks, you mentioned that you anticipate or I don't know if you anticipate, you're seeing, I believe, increased margins on the 5% of your sales to third parties as a result of the war and thus the increased interest in sourcing your products from a North American-based supplier. Did we really see the impact of that in the first quarter because the war started at the end of February and the -- I'm not remembering exactly when the price of oil started to jump and the shipping was intercepted. Are we going to see a more significant impact in the second quarter?

Yes, it's a very good question. And I will say that as a result of the run-up in ethylene pricing, we did take the opportunity in the first quarter, in March to actually sell more third-party ethylene volumes than would be normally the case. We typically try to take opportunities to maximize the margin in this business when we see opportunities like this. And we did sell more volume in the first quarter than might be typically done as an example, last year's first quarter.

And it did improve the margins associated with the business as a result of doing so. As we look into the -- I was going to say, as we look into the second quarter, if we see opportunities of this nature and continue to see elevated ethylene, we'll continue to do so.

Okay. But I'm looking at the income statement and it says on the revenue, the figure for third-party sales is a few million less than the comparable quarter last year. But of course, that's sales, not margin.

Yes. And so again, just the impact of only 1 month of activity. I do expect that if the ethylene remains as elevated as it has been recently, you'll see more of a positive impact in the second quarter.

I am showing no questions at this time. I will now turn the call back over to Jeff Holy.

Thank you, Kelly. Thanks, everyone, for participating in today's call. We hope you'll join us for our next conference call to discuss our second quarter 2026 results.

Thank you again for your participation in today's Westlake Chemical Partners First Quarter 2026 Earnings Conference Call. As a reminder, this call will be available for replay beginning 2 hours after the call has ended and may be accessed until 11:59 p.m. Eastern Time on Tuesday, May 19, 2026. The replay can be accessed via the Partnership's website. Goodbye.

Good afternoon. Thank you for standing by. Welcome to the Westlake Chemical Partners Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, February 24, 2026.

I would now like to turn the call over to today's host, Jeff Holy, Westlake Chemical Partners' Vice President and Chief Accounting Officer. Sir, you may begin.

Thank you. Good afternoon, everyone, and welcome to the Westlake Chemical Partners fourth quarter and full year 2025 conference call. I'm 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 refer to ourselves as Westlake Partners or the partnership. References to Westlake refer to our parent company, Westlake Corporation; and references to OpCo refer to Westlake Chemical OpCo LP, a subsidiary of Westlake and the partnership which owns certain olefins assets. Additionally, when we refer to distributable cash flow, we are referring to Westlake Chemical Partners' MLP distributable cash flow. Definitions of these terms are available on the Partnership's website.

Today, management is going to discuss certain topics that will contain forward-looking information that is based on management's beliefs as well as assumptions made by and information currently available to management. These forward-looking statements suggest predictions or expectations and thus are subject to risks or uncertainties. We encourage you to learn more about the factors that could lead our actual results to differ by reviewing the cautionary statements in our regulatory filings, which are also available on our Investor Relations website.

This morning, Westlake Partners issued a press release with details of our fourth quarter and full year 2025 financial and operating results. This document is available in the Press Release section of our web page at wlkpartners.com. A replay of today's call will be available beginning 2 hours after the conclusion of this call. The replay can be accessed via the Partnership's website. Please note that information reported on this call speaks only as of today, February 24, 2026, and therefore, you are advised that time-sensitive information may no longer be accurate as of the time of any replay. I would finally advise you that this conference call is being broadcast live through an internet-webcast system that can be accessed on our web page at wlkpartners.com.

Now I would like to turn the call over to Jean-Marc Gilson. Jean-Marc?

Thank you, Jeff, and good afternoon, everyone, and thank you for joining us to discuss our fourth quarter and full year 2025 results. In this morning's press release, we reported Westlake Partners' full year 2025 net income of [ $49 million ] or $1.38 per unit. Consolidated net income including OpCo was $299 million for the full year 2025. Westlake Partners' financial results continue to demonstrate the stability generated from our fixed margin Ethylene Sales Agreement for 95% of annual plant production each year, insulating us from market volatility and other production risk.

This structure, combined with our investment-grade sponsor, Westlake, produces predictable earnings and stable cash flows. This was evident in 2025 as we delivered another year of solid results and sustained distributions to our unit holders. The stable fee-based cash flow generated by our fixed margin ethylene sales contract with Westlake forms the foundation for us to deliver long-term value to our unit holders. This quarter's distribution is the 46 consecutive quarterly distribution since our IPO in July of 2014 without any reductions.

I would now like to turn our call over to Steve to provide more detail on the financial and operating results for the quarter and full year. Steve?

Thank you, Jean-Marc, and good afternoon, everyone. In this morning's press release, we reported Westlake Partners' fourth quarter 2025 net income of $15 million or $0.41 per unit, consolidated net income, including OpCo's earnings, was $84 million on consolidated net sales of $323 million. The partnership had distributable cash flow for the quarter of $19 million or $0.53 per unit. Fourth quarter 2025 net income for Westlake Partners of $15 million was in line with the fourth quarter of 2024 partnership net income. Distributable cash flow of $19 million for the fourth quarter of 2025 increased by $4 million compared to the fourth quarter of 2024 distributable cash flow of $15 million due primarily to lower maintenance capital expenditures due to the shift in the timing of these cash flows to earlier in the year.

For the full year of 2025, net income of $49 million or $1.38 per unit decreased by $13 million compared to full year 2024 net income of $62 million. The decrease in net income attributable to the partnership was due to lower production and sales volumes as a result of the planned Petro 1 turnaround. Our full year 2025 MLP distributable cash flow of $53 million decreased by $14 million compared to MLP distributable cash flow of $67 million for the full year of 2024 due to lower net income. Our distribution coverage for the full year of 2025 was 0.8x.

During 2025, OpCo successfully renewed its Ethylene Sales Agreement with Westlake through 2027 with no changes to the contract terms or conditions. We believe that Westlake's decision to renew the Ethylene Sales Agreement under the same terms that have been in place since its origination demonstrates the critical nature of OpCo's supply of ethylene to their operations and their commitment to support OpCo's continued safe, reliable operations through stable, predictable cash flows.

Turning our attention to the balance sheet and cash flows. At the end of the fourth quarter, we had consolidated cash balance and cash investments with Westlake through our investment and management agreement totaling $68 million. Long-term debt at the end of the quarter was $400 million, of which $377 million was at the Partnership, and the remaining $23 million was at OpCo. In 2025, OpCo spent $79 million in capital expenditures. We maintained our strong leverage metrics with a consolidated leverage ratio below 1x.

On January 27, 2026, we announced a quarterly distribution of $0.4714 per unit with respect to the fourth quarter of 2025. Since our IPO in 2014, the Partnership has made 46 consecutive quarterly distributions to our unitholders, and we've grown distributions 71% since the partnership's original minimum quarterly distribution of $0.275 per unit. Partnership's fourth quarter distribution was paid on February 23, 2026 to unitholders of record February 6, 2026. The partner's predictable fee-based cash flow continues to provide beneficial -- benefits to today's economic environment and is differentiated by consistency of our earnings and cash flows.

Looking back since our IPO in July of 2014, we have maintained a cumulative coverage ratio of approximately 1.1x, and with the partnership stability and cash flows, we are able to sustain our current distribution without the need to access the capital markets. For modeling purposes, we have no planned turnarounds in 2026.

Now I'd like to turn the call back over to Jean-Marc to make some closing comments. Jean-Marc?

Thank you, Steve. We are pleased with the Partnership's financial and operational performance during the fourth quarter and the year as a whole. The stability of our business model and associated cash flows demonstrate the benefit that our Ethylene Sales Agreement and its protective provisions provide the Partnership to predictable, long-term earnings and cash flows.

During 2025, we successfully completed the planned turnaround at our Petro 1 ethylene facility in Lake Charles, Louisiana. As expected, our coverage ratio for 2025 dipped below 1x as it typically does during years where we conduct a turnaround. As we look ahead, we expect the absence of any turnarounds in 2026 to result in solid production and sales volume growth that should drive a recovery in our distributable cash flow and coverage ratio back to historical levels.

Turning to our capital structure. We maintain a strong balance sheet with conservative financial and leverage metrics. As we continue to navigate market conditions, we will evaluate opportunities via our 4 levers of growth in the future, including increases of our ownership interest of OpCo; acquisitions of other qualified income streams, organic growth opportunities such as expansions of our current ethylene facilities, and negotiation of a higher fixed margin in our Ethylene ales Agreement with Westlake. We remain focused on our ability to continue to provide long-term value and distributions to our unitholders. As always, we will continue to focus on safe operations, along with being good stewards of the environment where we work and live as part of our broader sustainability efforts. Thank you very much for listening to our fourth quarter and full year 2025 earnings call.

Now I will turn the call back over to Jeff.

Thank you, Jean-Marc. Before we begin taking questions, I'd like to remind you that a replay of this teleconference will be available 2 hours after the call has ended. We will provide instructions to access the replay at the end of this call.

Jill, we'll now take questions.

[Operator Instructions] First question comes from the line of James Altschul with Aviation Advisory Service.

I got a couple of questions. First of all, looking at the balance sheet and the cash flow statement, I'm reading them right, it appears that in the past year, you -- in order to pay the distribution, you drew down on the item receivable under the investment management agreement, Westlake. And it looks like you don't have too much in that category left.

First of all, am I reading that right? And second, you did say in your remarks and in the release that you're expecting that the distribution coverage ratio will improve in the new year -- in this year. But is that how you expect to be able to cover the distributions from operations, you won't have to draw down under the receivable anymore?

Yes. And so the investment balance you see there at the beginning of the year of 2025 that was drawn down reflects the cost of the maintenance turnaround. Just to remind you that every month, we invoice Westlake Corporation for planned turnaround expenses and that cash is received and invested in that investment management account. Over the course of the year, we accumulate cash balances in that investment account and then we'll spend those funds to undertake a planned turnaround activity, which occur every 5 to 8 to 9 years, depending on the performance of that particular operating unit.

Because that unit was down for maintenance over the course of a period of 2025, there is no production out of that unit. So therefore, it does have an impact in production and therefore, income generated as a result of that loss of production. But we have the ability to pull on our operating reserves and the operating reserves in the year 2025 were strong enough that we had strong enough balances in that operating reserve to continue to pay distributions. And so when you think about the operating surplus we had at the end of 2025, it was approximately $74 million. So that well covers any current or actually future expected annual distributions by the partnership.

Because in our prepared remarks, we commented we have no planned turnaround in 2026. Therefore, we expect our coverage ratio to rise above 1.1x, which is our target ratio. And because it should rise with no planned turnarounds, it will continue to replenish the operating surplus and build cash in that investment account that we also use to pay distributions to unitholders. So as we look forward, I do expect that operating surplus to build and that investment balance to also build.

In a year when we undertake planned turnarounds, it is very typical that our cash balances will diminish because of the planned maintenance and also the payments of those distributions to unitholders. But given the many years going back to the IPO in 2014, we've seen this play through over many years, and we do expect those operating surplus balances to build as well as cash investments and that operating investment account to build.

Well, that's an excellent answer. And if I may ask one more. In his prepared remarks, the CEO talked about various opportunities for expansion growth, such as increasing the percentage ownership of the OpCo or organic growth. How would you anticipate financing any of these initiatives if you decide to pursue them?

Yes. Should we decide to undertake any of those growth opportunities, we would undertake what we'd characterize as a drop-down where a party would monetize a portion of OpCo interest and contribute that down, and we would finance that with external funding, whether it be debt or equity or some combination. That's how we've undertaken the multiple drop-downs in growth over the course of the years, which represents the ownership today that we've monetized out of OpCo. So should we take any of those actions, that's really how we would finance it through a combination of issuance of new units as well as potential leveraging the balance sheet.

At this time, as I'm seeing no other questions in the queue. The Q&A session has ended. I will now turn the call back over to Jeff Holy.

Thank you again for participating in today's call. We hope you'll join us for our next conference call to discuss our first quarter 2026 results.

Thank you for participating in today's Westlake Chemical Partners fourth quarter and full year 2025 earnings conference call. As a reminder, this call will be available for replay beginning 2 hours after the call has ended, and may be accessed until 11:59 p.m. Eastern Time on Tuesday, March 3, 2026. The replay can be accessed via the Partnership website. Goodbye.

Good afternoon, and thank you for standing by. Welcome to the Westlake Chemical Partners Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded today, October 30, 2025.

I would now like to turn the call over to your host, Jeff Holy, Westlake Chemical Partners' Vice President and Chief Accounting Officer. Sir, you may begin.

Thank you, Gerald. Good afternoon, everyone, and welcome to the Westlake Chemical Partners Third Quarter 2025 Conference Call. I'm 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 refer to ourselves as Westlake Partners or the Partnership. References to Westlake refer to our parent company, Westlake Corporation, and references to OpCo refer to Westlake Chemical OpCo LP, a subsidiary of Westlake and the Partnership, which owns certain olefins assets.

Additionally, when we refer to distributable cash flow, we are referring to Westlake Chemical Partners' MLP distributable cash flow. Definitions of these terms are available on the Partnership's website.

Today, management is going to discuss certain topics that will contain forward-looking information that is based on management's beliefs as well as assumptions made by and information currently available to management. These forward-looking statements suggest predictions or expectations and thus are subject to risks or uncertainties. We encourage you to learn more about the factors that could lead our actual results to differ by reviewing the cautionary statements in our regulatory filings, which are also available on our Investor Relations website.

This morning, Westlake Partners issued a press release with details of our third quarter 2025 financial and operating results. This document is available in the Press Release section of our web page at wlkpartners.com. A replay of today's call will be available beginning 2 hours after the conclusion of this call. The replay can be accessed via the Partnership's website. Please note that information reported on this call speaks only as of today, October 30, 2025, and therefore, you are advised that time-sensitive information may no longer be accurate as of the time of any replay. I would finally advise you that this conference call is being broadcast live through an Internet webcast system that can be accessed on our web page at wlkpartners.com.

Now I would like to turn the call over to Jean-Marc Gilson. Jean-Marc?

Thank you, Jeff. Good afternoon, everyone, and thank you for joining us to 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 the second quarter of 2025, our third quarter sales and earnings benefited from the completion of the planned turnaround at our Petro 1 ethylene unit in Lake Charles, Louisiana during the second quarter.

I would now like to turn our call over to Steve to provide more detail on the financial and operating results for the quarter. Steve?

Thank you, Jean-Marc, and good afternoon, everyone. In this morning's press release, we reported Westlake Partners' third quarter 2025 net income of $15 million or $0.42 per unit. Consolidated net income, including OpCo's earnings was $86 million on consolidated net sales of $309 million. The Partnership had distributable cash flow for the quarter of $15 million or $0.42 per unit.

Third quarter 2025 net income for Westlake Partners of $15 million was lower than the third quarter 2024 Partnership net income, partially due to lower margins on sales of ethylene to third parties. Distributable cash flow of $15 million or $0.42 per unit for the third quarter of 2025 decreased by $3 million compared to the third quarter of 2024 due to higher maintenance capital expenditures as a result of changes in the timing of maintenance activities in 2025 as compared to 2024.

Turning our attention to the balance sheet and cash flows. At the end of the third quarter, we had 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, of which $377 million was at the Partnership and the remaining $23 million was at OpCo. In the third quarter of 2025, OpCo spent $30 million on capital expenditures. We maintained our strong leverage metrics with a consolidated leverage ratio of approximately 1x.

On October 28, 2025, we announced a quarterly distribution of $0.4714 per unit with respect to the third quarter of 2025. Since our IPO in 2014, the Partnership has made 45 consecutive quarterly distributions to unitholders, and we have grown distributions 71% since the Partnership's original minimum quarterly distribution of $0.275 per unit. Partnership's third quarter distribution will be paid on November 26, 2025, to unitholders of record November 10, 2025. The Partnership's predictable fee-based cash flow continues to prove beneficial in today's economic environment and is differentiated by the consistency of our earnings and cash flows.

Looking back, since the IPO in July of 2014, we've maintained a cumulative distribution coverage ratio of approximately 1.1x. And with the Partners stability in cash flows, we were able to sustain our current distribution without the need to access capital markets at all. For modeling purposes, we have no planned turnarounds for the remainder of 2025 or in 2026.

Now I'd like to turn the call back over to Jean-Marc to make some closing comments. Jean-Marc?

Thank you, Steve. The stability of Westlake Partners business model is consistently demonstrated through our fixed margin ethylene sales agreement, which minimizes market volatility and other production risk. The high degree of stability in cash flow when paired with the predictability of our model has enabled us to deliver a long history of reliable distributions and coverage. As a result of its importance to the stability of our cash flows, I'm pleased that earlier this week, OpCo and Westlake agreed to renew the Ethylene Sales Agreement through the end of 2027 with no changes to the contract terms or conditions.

The renewed Ethylene Sales Agreement maintains the same pricing formula and sales volume protections that have provided the Partnership with a distributable cash flow to make 45 consecutive quarterly distributions to unitholders since its IPO in 2014.

Furthermore, we believe that Westlake's decision to renew the Ethylene Sales Agreement under the same terms that have been in place since its origination demonstrates the critical nature of OpCo's supply of ethylene to their operations and their commitment to support OpCo's continued safe, reliable operations through stable, predictable cash flows.

Turning to our outlook. Global industrial and manufacturing activity remains soft in 2025, which is broadly impacting the global chemical industry. Despite the challenging global macroeconomic backdrop, the Partnership financial performance and distributions will continue to be supported by our Ethylene Sales Agreement which provides a predictable fee-based cash flow structure from our take or pay contract with Westlake for 95% of OpCos production. As has been the case since our IPO over 10 years ago, this Ethylene Sales Agreement has delivered stable and predictable cash flow to economic ups and downs, as well as planned and unplanned turnarounds.

Turning to our capital structure. We maintain a strong balance sheet with conservative financial and leverage metrics. As we continue to navigate market conditions, we will evaluate opportunities via our 4 levers of growth, in the future, including increases of our ownership interest of OpCo, acquisitions of other qualified income streams, organic growth opportunities such as expansion of our current ethylene facilities, and negotiation of a higher fixed margin in our Ethylene Sales Agreement with Westlake.

We remain focused on our ability to continue to provide long-term value and distribution to our unitholders. As always, we will continue to focus on safe operations along with being good stewards of the environment where we work and live as part of our broader sustainability efforts.

Thank you very much for listening to our third quarter earnings call. Now I will turn the call back over to Jeff.

Thank you, Jean-Marc. Before we begin taking questions, I'd like to remind you that a replay of this teleconference will be available 2 hours after the call has ended. We will provide instructions to access the replay at the end of the call. Gerald, we will now take questions.

[Operator Instructions] Our first question will come from James Altschul from Aviation Advisory Services, Inc.

I noticed that the distributable cash flow for the quarter was less than the amount of distribution per unit. What is the outlook for getting the distributable cash flow up to a level, again, where the distribution will be covered?

Yes. The entire reason for that was the planned turnaround. And when we have planned turnarounds, it does impact, of course, production and therefore, sales. And so it's not unusual when we have these planned turnaround events for our coverage ratio to dip below the 1.1 target and to have some impact on those -- on that cash flows. But we have an operating surplus that is quite robust, and we'll continue and have continued to pay those distributions out of that operating surplus. And now that we've completed that turnaround successfully and 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.

Okay. So is it reasonable to assume on a pro forma basis, if we -- you would not have the impact of the turnaround that distributable cash flow would have been in excess of the distribution?

Yes, it would have.

Just give me a second to see if anyone else would like a question. So at this time, I'm showing no further questions. And I'd like to hand it back to Jeff for closing remarks. The floor is yours, Jeff.

Thank you. Thanks again for participating in today's call. We hope you'll join us for our next conference call to discuss our fourth quarter 2025 results.

Thank you for participating in today's Westlake Chemical Partners Third Quarter 2025 Earnings Conference Call. As a reminder, this call will be available for replay beginning 2 hours after the call has ended and may be accessed until 11:59 p.m. Eastern Time on Thursday, November 13, 2025. The replay can be accessed via the Partnership website. Goodbye. This does conclude the program. You may now disconnect.