Westlake Chemical Partners Lp · NYSE:WLKP
Westlake Chemical Partners Lp — Investor Presentation (2018)
24 slides from Westlake Chemical Partners Lp's investor presentation, 2018
Slide 1: Westlake Chemical Partners LP 2nd Quarter 2018
Westlake Chemical Partners LP 2nd Quarter 2018
Slide 2: Westlake Chemical Partners LP
Westlake Chemical Partners LP • Provides predictable and stable cash flows • Has four methods of fuelling a long runway of potential growth • Is fully aligned with the partnership’s general partner, Westlake Chemical Corp Stable and Predictable • Westlake Partners has a long term fixed price contrac
Slide 3: Report Card Since 2014 IPO
Report Card Since 2014 IPO Distribution growth consistently at 12% rate per annum Generated stable cash flow insulated from commodity price risk due to long-term contract with our sponsor Increased earnings and distribution growth runway of partnership through added capacity, IDR reset, and po
Slide 4: Organizationally Aligned for Profitable Growth
Westlake Chemical Partners LP & Westlake Chemical Corporation Organizationally Aligned for Profitable Growth Investors Investors 56.2% ownership Westlake Chemical 43.8% ownership Westlake Partners LP Chemical Corp (WLKP) (WLK) 100% 18.3% ownership 81.7% ownership Westlake ownership Chemical OpCo LP
Slide 5: Benefits of the Incentive Distribution Rights (IDR) Tier Reset
Benefits of the Incentive Distribution Rights (IDR) Tier Reset In July 2018, Westlake Chemical agreed to re-set Westlake Partners IDR schedule relieving Westlake Partners of the IDR cash flow burden for over 10 years*: • Immediately accretive to cash flow per unit and coverage Effective immediatel
Slide 6: Key Investment Drivers: Ethylene Sales Agreement
Key Investment Drivers: Ethylene Sales Agreement Pricing Formula Promotes Stable & Predictable Cash Flows • Westlake Partners is a critical supplier of the ethylene Westlake Chemical needs to produce it’s products • Ethylene Sales Agreement designed to provide stable 10 cents per pound margin on 95%
Slide 7: WLKP's Sales Agreement Has Insulated It From Commodity Risk
WLKP’s Sales Agreement has Insulated It From the Commodity Risk Faced by Other Ethylene Producers Integrated Margin (cents / lb) 50 Industry Integrated Margins – Ethylene and Polyethylene 40 30 20 10 OpCo Margin 0 -10 2013 2007 2008 2009 2010 2011 2012 2014 2015 2016 2017 Ethylene Margin PE Non-Inte
Slide 8: WLKP's High Utilization Rate Drives Financial Stability
WLKP’s High Utilization Rate Drives Financial Stability 120% 80% 40% 0% Q2 2015 Q3 2014 Q4 2014 Q1 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2107 Q4 2017 Q1 2018 Q2 2018 * WLK Ethylene Industry Source: IHS/ Markit *Note: Lake Charles cracker expansion outage • Westlake
Slide 9: Strong Distribution Growth From Conservative Financial Structure
Strong Distribution Growth From Conservative Financial Structure 1.60 $0.45 WLKP Coverage Ratios Westlake WLKP Distribution per Unit 1.40 $0.40 Chemical Partners $0.35 1.20 maintains a $0.30 1.00 conservative, $0.25 0.80 disciplined $0.20 0.60 financial strategy to fund a stable $0.15 0.40 and growi
Slide 10: Four Levers of Growth for Stable, Growing Cash Flows
Four Levers of Growth for Stable, Growing Cash Flows Increase our ownership interest in OpCo over time either by purchasing new OpCo interests or by purchasing outstanding interests in OpCo from WLK • Purchased 2.7% of OpCo for $135 million in May 2015 • Purchased 5% of additional OpCo interests for
Slide 11: Completed Capacity Expansions + IDR Resets + Upcoming JV Opportunity
Completed Capacity Expansions + IDR Resets + Upcoming JV Opportunity Means Extended Growth for Westlake Partners Net Income Attributable to WLKP unitholders ($MM) LACC JV $80 Cracker Calvert City eligible Expansion $60 and OpCo IDR reset Petro 1 OpCo drop drop down provides Expansion down longer $40
Slide 12: Westlake Chemical's Short Position in Ethylene
Westlake Chemical’s Short Position in Ethylene Provides Demand for Westlake Partners Westlake Westlake Chemical Partners Polyethylene Ethylene 2.6B lbs Additional Ethylene via 3.7B lbs LACC JV eligible for WLKP Styrene ~220MM to 1.1B lbs 570MM lbs Vinyls PVC Building Chlorine Westlake 7.1B lbs 6.8B
Slide 13: Comparable Leverage Metrics
Comparable Leverage Metrics Well Capitalized for Financial Stability WLKP is well capitalized and has significant financial flexibility to fund future growth with its strong and supportive parent; WLK Westlake Partners Liquidity Liquidity (in millions) June 30, 2018 Cash and Equivalents (1) $172.1 P
Slide 14: Key Investment Drivers
Key Investment Drivers Westlake Stable and Strategic Experienced & Chemical’s Predictable Relationship Strategically Incentivized Increasing Cash Flows with Westlake Located Assets Management Demand for Unencumbered Chemical Team Ethylene with IDR’s Global Cost Expanded Ethylene Competitive Access t
Slide 15: Appendix
Enhancing Your Life Every Day Westlake Chemical W
Slide 16: WLKP Growth Strategy
WLKP Growth Strategy Acquisition and Expansion Provides Growth Maintain financial flexibility to protect and grow distributions • Since IPO WLKP has demonstrated a history of double-digit per year growth in distributions with a commitment to maintaining a strong target DCF coverage ratio Expand
Slide 17: Westlake Chemical Partners Has Performed Strongly Since IPO
Westlake Chemical Partners Has Performed Strongly Since IPO • Westlake Chemical Partners LP has executed on its growth strategy since IPO, even with the uncertainty caused by the IRS ruling and amidst the backdrop of challenging MLP markets (12.0% distribution per unit CAGR since IPO) • With the fin
Slide 18: Westlake Partners' Strategy is Highly Aligned with its Investment Grade Parent
Westlake Partners’ Strategy is Highly Aligned with its Investment Grade Parent (LTM 2Q 2018) Net Sales $8,505 Million EBITDA (1,2) $2,185 Million Net Income (3,4) $1,578 Million Olefins Vinyls $796 million EBITDA (1) $1,458 million 35% % of Total 65% OUR MISSION profitable growth … in businesses
Slide 19: Key Investment Drivers: Strategically Located Assets
Key Investment Drivers Strategically Located Assets • Two ethane-based processing facilities at Westlake’s Lake Charles, Louisiana Lake complex Bakken Charles Olefins • Combined capacity of 3 billion pounds of ethylene Marcellus / Utica o Primarily consumed by Westlake in the Rockies Calvert City, K
Slide 20: NGL Feedstock Flexibility & Infrastructure
NGL Feedstock Flexibility & Infrastructure Westlake Westlake World World Ethane Ethylene 100% Ethane Capable Ethane Non-Ethane Feed Westlake’s North American Ethylene Feedslate Capability Ethane Other NGL's Well positioned to take advantage of ethane and other NGL’s: • The shale oil & gas revolution
Slide 21: Low-Cost Feedstock to Produce Cost Advantaged Polyethylene
Westlake Partners Provides Low-Cost Feedstock to Westlake Chemical to Produce Cost Advantaged Polyethylene • Integration is critical as the vast majority Average Margin Advantage of PE profitability is captured in of LDPE vs. Other PE ethylene, not the downstream polymer Grades ₵ / lb • WLK’s PE pro
Slide 22: Low-Cost Feedstock to Produce Cost Advantaged PVC
Westlake Partners Provides Low-Cost Feedstock to Westlake Chemical to Produce Cost Advantaged PVC Chlor-Alkali Overview of the Vinyls Chain Chlorinated Typical Vinyls Industry Margin Caustic Products Soda Distribution Over the Last Cycle Ethylene Vinyl PVC Chlorine Polyvinyl Dichloride Chloride Buil
Slide 23: Reconciliation of Westlake EBITDA to Net Income and Cash Flow
Reconciliation of Westlake EBITDA to Net Income and to Cash Flow from Operating Activities (in $ millions) 2009 2010 2011 2012 2013 2014 2015 2016 2017 LTM 2Q 2018 Adjusted EBITDA $ 237 $ 512 $ 584 $ 780 $ 1,118 $ 1,330 $ 1,244 $ 1,016 $ 1,841 $ 2,185 Debt Retirement Cost - - - (7) - - - - - - EBITD
Slide 24: Disclaimer
Disclaimer This presentation contains certain forward-looking statements, including statements with respect to future growth, potential levers for cash flow, growth, remaining drop down capacity and the Lotte JV as a source of future drop down capacity for Westlake Chemical Partners and the timing a
Westlake Chemical Partners — Investor Presentation (2018) on 6ix