Westlake Chemical Partners Lp · NYSE:WLKP
Westlake Chemical Partners Lp — Q2 2024 Earnings Presentation
35 slides from Westlake Chemical Partners Lp's earnings presentation, Aug 6, 2024
Slide 1: Focused Approach to Delivering Value and Growth
Focused Approach to Delivering Value and Growth
Slide 2: Westlake Overview
Westlake Overview A leading producer of performance oriented and essential materials as well as North American building products that benefits from a globally competitive low-cost position Financial Performance Balance Sheet & Cash Flow LTM June 30th, 2024 LTM June 30th, 2024 $12.1B 19% 0.84x $1.9B
Slide 3: Leveraging Market Leading Segments in Attractive Markets
Leveraging Market Leading Segments in Attractive Markets Housing & Performance & Infrastructure Essential Materials Key Stats Key Stats $4.3B 25%(2) 50+ $7.8B 15%(1,2) 30 EBITDA Manufacturing EBITDA Production Revenue Revenue Margin (LTM (LTM 2Q’24) Margin (LTM Sites (LTM 2Q’24) Sites 2Q’24) 2Q’24)
Slide 4: High Degree of Product Integration
High Degree of Product Integration Combined With Globally Advantaged Low-Cost Position All ethane End Market Products that feedstock North America has a capability Improve Lives Every Day: long-term cost advantaged position through abundant Polyethylene • Flexible packaging supply of Ethane from sha
Slide 5: Benefits of Integrated HIP and PEM Portfolio
Benefits of Integrated HIP and PEM Portfolio More Stability in Earnings and Cashflow • PEM and HIP cycles generally do not overlap • HIP provides insight into housing and construction demand that allows PEM to operate more efficiently • Vertical integration lowers unit cost of production and creates
Slide 6: Westlake is a Compelling Investment Opportunity
Westlake is a Compelling Investment Opportunity 1 Strong and experienced leadership with a proven track record of operating excellence, asset allocation, and successful acquisitions and integrations all driving long-term value creation 2 Market leading position in Housing & Infrastructure Products (
Slide 7: HIP At-a-Glance: Diverse Portfolio with Broad Market Exposure
HIP At-a-Glance: Diverse Portfolio with Broad Market Exposure In Which Every Piece Matters $4.3B HIP Total Revenue1 $3.6B Westlake Royal Building Products’ revenue, Housing which is all Housing-related, comprises Siding, Trim, & Shutters • Premium housing siding approximately half of HIP’s annual re
Slide 8: Westlake Royal Building Products At-A-Glance
Westlake Royal Building Products At-A-Glance ~18,000 41 20 ~30,400 ~5,300 Customers2 Manufacturing Market Segment / SKUs Employees Sites Product Categories Growth Drivers CONSTRUCTION VS. REMODEL • Decade plus of historical under-build in new housing plus aging existing homes drive future demand New
Slide 9: Westlake Pipe and Fittings At-a-Glance
Westlake Pipe and Fittings At-a-Glance ~2,700 15 15 6 >30,000 ~1,700 Customers3 Distribution Manufacturing Market SKUs Employees Centers Sites Segments North American Growth Drivers Strategic Footprint Municipal and Government spending for infrastructure enhancement • 33% of all installed pipe is 50
Slide 10: Westlake Global Compounds At-a-Glance
Westlake Global Compounds At-a-Glance 1,605 12 60 14 1,150 ~1,100 Compounds2 R&D Countries Manufacturing Customers Employees Facilities Served Sites Developer of specialty compounds providing Revenue1 highly customizable solutions to specific customer challenges • Rigid and flexible PVC compounds •
Slide 11: Compelling Growth Opportunities Across HIP End Markets
Compelling Growth Opportunities Across HIP End Markets Aligned with market leaders in home construction • Offering customers product breadth and depth across HIP with innovative and durable products • Leveraging customer relationships across different HIP businesses ~$84B to cross-sell TAM1 • Benefi
Slide 12: Strong Brands with Expertise Across Attractive Markets
Strong Brands with Expertise Across Attractive Markets • 10+ years of underbuilding in U.S. • Residential housing growth • U.S. infrastructure bill spending on residential housing • PVC replacing iron and concrete pipe power grid and broadband • Demographics and work flexibility for water usage • Ma
Slide 13: Comprehensive Interior and Exterior Solutions
Comprehensive Interior and Exterior Solutions Exterior Trim Roofing and Accessories Shutters, Mounts, and Vents Aluminum and Rainware Interior Trim Siding Columns Building Wire Windows Indoor Pipe and Fittings Outdoor Living Stone Veneer Decking Municipal Pipe and Fittings 13
Slide 14: Ability to Leverage Established Partnerships with Builders and Distributors
Ability to Leverage Established Partnerships with Builders and Distributors Across HIP Portfolio #1 #1 #1 #1 #1 #1 #1 Concrete Plastic Decorative Clay Tile2 Premium PVC and New Construction Composite Tile1 Shutters1 Stone1 Poly-ash Trim1 Windows (Texas) 3 Roofing4 Homebuilder Customers Distributor a
Slide 15: PEM At-a-Glance: Diverse Portfolio of Essential Products
PEM At-a-Glance: Diverse Portfolio of Essential Products with Broad Market Exposure Performance $4.6B Essential $3.2B PVC Polyethylene Epoxy Chlor-Alkali Chlorovinyls 41% $7.8B • 2nd largest • 2nd largest in NA • One of the leading • 2nd largest chlor- Derivatives PVC producer Autoclave PE and produ
Slide 16: Performance & Essential Materials for Everyday Life
Performance & Essential Materials for Everyday Life Product Long-Term Demand Opportunities • PVC is an integral product for a significant number of housing and construction materials PVC • PVC is a superior product over lead, iron and concrete pipe driving material substitution • Growth in consumer
Slide 17: Closer to Customers with Higher Margin Specialty Focus
Closer to Customers with Higher Margin Specialty Focus Product End-use and Applications Market Position Price Advantage (1) (per pound) Specialty PE • Solar cell encapsulant film Avg. Specialty • Personal care products Leading Producer 16.4¢ Premium PE Over Commodity PE • Sterile medical packaging •
Slide 18: Westlake's History of Delivering Strong Financial Results
Westlake’s History of Delivering Strong Financial Results Ten Year Compound Annual Growth Rate (CAGR) Performance Higher Sales, Sales EBITDA(1) Free Cash Flow Per Share(2) 11% CAGR 7% CAGR 8% CAGR Margins and Returns $2.6B Attributable to: $12.5B $17.75 $1.3B • Focused Bottom Line $4.4B $4.50 Growth
Slide 19: Westlake's History of Maintaining a Strong Balance Sheet
Westlake’s History of Maintaining a Strong Balance Sheet $300MM in Debt Retired in 3Q 2024 Strong Balance Sheet Cash $3.0B ~15 Years With Significant 0.84x vs. 3.6x Fully Undrawn Revolver $1.5B Debt maturity life Availability to Support Future Growth and Total Available Liquidity ~$4.5B Net Debt to
Slide 20: Sustainable Commitments Embedded Across Westlake
Sustainable Commitments Embedded Across Westlake Through Investments, Goals and Products Reducing Scope 1 and 2 Emissions per Expanding Portfolio of Efforts Recognized Through Awards Tons of Production by 20% by 20301 Environmentally Safe Products and Industry Memberships To further reduce our carbo
Slide 21: Key Takeaways of Westlake's Compelling Story
Key Takeaways of Westlake’s Compelling Story Performance & Essential Materials (PEM) is well positioned to benefit from secular demand driven by 1 increasing product requirements for formulated, differentiated and specialty products in housing, packaging, wind energy, aerospace and automotive Housin
Slide 22: Appendix
Vestlake
Slide 23: Housing and Infrastructure Products (HIP) Segment Performance
Housing and Infrastructure Products (“HIP”) Segment Performance $ in millions 2Q’24 1Q’24 4Q’23 3Q’23 2Q’23 Housing Products • For the second quarter of 2024, $1,010 $879 $795 $963 $918 HIP EBITDA of $336 million Sales increased by $92 million as Infrastructure compared to the second quarter $184 $1
Slide 24: Demographics Support Favorable Long-Term Trends
Demographics Support Favorable Long-Term Trends U.S. Repair and Remodel Expenditures ($B) Annual U.S. Housing Starts (Thousands) U.S. Population Age 35-44 (Thousands) 2,500 50,000 $500 Decade Plus of Underbuilding Supports Favorable Long-Term Fundamentals 2,000 48,000 $400 1,500 46,000 Peak Househol
Slide 25: Infrastructure Bill Adds Additional Growth Tailwind
Infrastructure Bill Adds Additional Growth Tailwind WESTLAKE HIP POSITIONED TO HELP CUSTOMERS • American Society of Civil Engineers rated UPGRADE AMERICA’S INFRASTRUCTURE America’s infrastructure at a C- in their ASCE Infrastructure Grades1 most recent report from 2021, up from a D+ in 2017 • Infras
Slide 26: Performance & Essential Materials (PEM) Segment Performance
Performance & Essential Materials (“PEM”) Segment Performance $ in millions 2Q’24 1Q’24 4Q’23 3Q’23 2Q’23 • Sequentially, PEM 2Q 2024 Performance EBITDA increased by $138 $1,177 $1,164 $1,107 $1,127 $1,140 Materials Sales million as compared to the first quarter of 2024. This Essential Materials $83
Slide 27: Chlor-Alkali and PVC Benefitting from Compelling Supply & Demand Dynamics
Chlor-Alkali and PVC Benefitting from Compelling Supply & Demand Dynamics 2023 Global Caustic & PVC Capacity Relative Industry Changes in Capacity Compared to World GDP: Both PVC and Chlor-Alkali demand Over/ Under Investment in World Westlake growth is expected to materially exceed supply additions
Slide 28: Westlake's Unique LDPE Focus Provides Advantages
Westlake’s Unique LDPE Focus Provides Advantages Westlake’s PE Capacity Breakout Greater Mix of LDPE Bolsters Margin Advantage Commodity Specialty • Westlake further adds to its advantage from LDPE by producing 80% of it through the even more specialized Autoclave method vs. Tubular LDPE HDPE LLDPE
Slide 29: 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) LTM 2Q 2024 FY 2023 FY 2022 FY 2021 2024 Q2 2024 Q1 2023 Q4 2023 Q3 2023 Q2 2023 Q1 2022 Q4 2022 Q3 EBITDA $ 1,736 $ 1,962 $ 4,179 $ 3,693 $ 744 $ 546 $ (235) $ 682 $ 690 $ 825 $ 619 $ 804 Less
Slide 30: Consolidated Statements of Operations
Consolidated Statements of Operations 30
Slide 31: Reconciliation of EBITDA to Net Income, Income from Operations and Net Cash
Reconciliation of EBITDA to Net Income, Income from Operations and Net Cash Provided by Operating Activities 31
Slide 32: Reconciliation of PEM, HIP and Corporate EBITDA to Operating Income
Reconciliation of PEM, HIP and Corporate EBITDA to Operating Income (Loss) Three months ended Three months ended June 30, March 31, Six months ended June 30, 2024 2023 2024 2024 2023 (In millions of dollars) Performance and Essential Materials EBITDA $ 391 $ 435 $ 253 $ 644 $ 1,050 Less: Depreciatio
Slide 33: Reconciliation of Free Cash Flow to Net Cash Provided by Operating Activities
Reconciliation of Free Cash Flow to Net Cash Provided by Operating Activities Three months ended Three months ended June 30, Six months ended June 30, March 31, 2024 2023 2024 2024 2023 (In millions of dollars) Net cash provided by operating activities $ 237 $ 555 $ 169 $ 406 $ 1,067 Less: Additions
Slide 34: Safe Harbor Language
Safe Harbor Language This presentation contains certain forward-looking statements including statements regarding future profitable growth in both of our segments, market outlook, margin improvement for all of our products, increased export opportunities, expectations regarding epoxy operating rates
Slide 35: Investor Relations Contacts
Investor Relations Contacts Steve Bender - Executive Vice President & Chief Financial Officer John Zoeller - Vice President & Treasurer Westlake Corporation 2801 Post Oak Boulevard, Suite 600 Houston, Texas 77056 713-960-9111 2024Q2
Westlake Chemical Partners — Q2 2024 Earnings Presentation on 6ix