Westlake Chemical Partners Lp · NYSE:WLKP
Westlake Chemical Partners Lp — Investor Presentation (2019)
27 slides from Westlake Chemical Partners Lp's investor presentation, 2019
Slide 1: Westlake Chemical Partners LP 1st Quarter 2019
Westlake Chemical Partners LP 1st Quarter 2019
Slide 2: Attractive Yield, Distribution Growth, Stability, and Long Growth Runway
Westlake Chemical Partners LP Attractive Yield, Distribution Growth, Stability, and Long Growth Runway Westlake Chemical Partner’s (WLKP) combination of yield, growth, and cash flow stability offers a compelling investment opportunity relative to other yield oriented investments. • WLKP currently pa
Slide 3: Westlake Chemical Partners LP
Westlake Chemical Partners LP • Provides predictable and stable cash flows • Has four methods of fueling a long runway of earnings and distribution growth • Is fully aligned with the partnership’s general partner, Westlake Chemical Corp Stable and Predictable • Westlake Partners has a long term fixe
Slide 4: Report Card Since 2014 IPO
Report Card Since 2014 IPO Distribution has grown at 12% rate per annum since IPO Generates stable cash flow insulated from commodity price risk due to long-term contract with our sponsor Increased earnings and length of distribution growth runway of partnership through added capacity, IDR res
Slide 5: Westlake Partners Assets Provide Vital Ethylene to Westlake Chemical
Westlake Partners Assets Provide Vital Ethylene to Westlake Chemical Lake Charles Complex, Calvert City Complex, Longview Louisiana Kentucky Complex, Texas • Two ethane-based processing • One ethane-based processing • A 200-mile common carrier ethylene facilities at Westlake’s Lake facility located
Slide 6: Organizationally Aligned for Profitable Growth
Westlake Chemical Partners LP & Westlake Chemical Corporation Organizationally Aligned for Profitable Growth Investors Investors 59.9% ownership Westlake Chemical 40.1% ownership Westlake Partners LP Chemical Corp (WLKP) (WLK) 22.8% ownership 77.2% ownership Westlake Chemical OpCo LP • 77.2% of OpCo
Slide 7: Continued Execution of Stable Growth
Continued Execution of Stable Growth • Recent drop down in 1Q 2019 continues growth of cash flows to unitholders with large capacity remaining • In July 2018, Westlake Chemical re-set Westlake Partners IDR schedule relieving Westlake Partners of the IDR cash flow burden and significantly extending t
Slide 8: Westlake Partners Value Chain: Ethylene Sales Agreement
Westlake Partners Value Chain: Ethylene Sales Agreement Pricing Formula Promotes Stable & Predictable Cash Flows • Westlake Partners is the critical supplier of the Ethylene Westlake Chemical needs to produce it’s products • Ethylene Sales Agreement between Westlake Chemical and Westlake Partners pr
Slide 9: Sales Agreement has Insulated WLKP From Commodity Risk and Enhanced Cash Flow Stability
Sales Agreement has Insulated WLKP From Commodity Risk and Enhanced Cash Flow Stability Integrated Margin (cents / lb) 50 Industry Integrated Margins – Ethylene and Polyethylene 40 30 20 OpCo 10 Margin 0 -10 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Ethylene Margin PE Non-Integrate
Slide 10: WLKP's High Utilization Rate Drives Financial Stability
WLKP’s High Utilization Rate Drives Financial Stability 120% WLKP Utilization Rate • Westlake Partners ethylene crackers 100% have run at a higher than industry 80% average utilization rate; this provides 60% added stability to cash flows 40% 20% • The dips in utilization rate in 2016 0% occurred du
Slide 11: Strong Distribution Growth From Conservative Financial Structure
Strong Distribution Growth From Conservative Financial Structure 1.4 $0.50 WLKP Coverage Ratios Westlake WLKP Distribution per Unit 1.2 $0.45 Chemical Partners $0.40 1.0 maintains a $0.35 0.8 conservative, $0.30 disciplined $0.25 0.6 financial strategy $0.20 0.4 to fund a stable $0.15 and growing $0
Slide 12: 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 $135 million in May 2015 • Purchased 5% of additional OpCo interests for
Slide 13: Completed Capacity Expansions + IDR Resets + Upcoming JV Opportunity Allows Extended Growth
Completed Capacity Expansions + IDR Resets + Upcoming JV Opportunity Allows Extended Growth for Westlake Partners Net Income Attributable to WLKP unitholders ($MM) $80 LACC JV Calvert City IDR reset Cracker Expansion provides eligible $60 and OpCo longer drop down growth path OpCo drop OpCo drop Pet
Slide 14: Westlake Chemical's Short Position in Ethylene Provides Demand for Westlake Partners
Westlake Chemical’s Short Position in Ethylene Provides Demand for Westlake Partners Westlake Chemical needs all the ethylene that Westlake Partners can provide and more with current short ethylene position of ~ 1.8B lbs Westlake Westlake Chemical Partners Polyethylene Additional Ethylene via 2.6B l
Slide 15: Solid Leverage Metrics
Solid 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; Westlake Chemical (WLK) Westlake Partners Liquidity Liquidity (in millions) Mar 30, 2019 Cash and Equivalent
Slide 16: 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 17: Appendix
Enhancing Your Life Every Day Westlake Chemical W
Slide 18: WLKP Growth Strategy: Acquisition and Expansion Supports Growth
WLKP Growth Strategy Acquisition and Expansion Supports 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 19: Reset IDR Tiers for Westlake Chemical Partners
Reset IDR Tiers for Westlake Chemical Partners Initial Newly reset distribution structure distribution structure % % Quarterly Annualized Quarterly Annualized distribution distribution distribution distribution distribution distribution IDR Tiers to IDRs to IDRs First target distribution up to: $ 0.
Slide 20: 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 21: Westlake Partners' Strategy is Highly Aligned with its Investment Grade Parent
Westlake Partners’ Strategy is Highly Aligned with its Investment Grade Parent (TTM 1Q 2019) Net Sales $8,511 Million EBITDA (1,2) $1,836 Million Net Income (3) $781 Million Olefins Vinyls $589 million EBITDA (1) $1,286 million 31% % of Total 69% OUR MISSION profitable growth … in businesses we
Slide 22: 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 23: 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 24: Westlake Partners Provides Low-Cost Feedstock to Produce Cost Advantaged Polyethylene
Westlake Partners Provides Low-Cost Feedstock to Westlake Chemical to Produce Cost Advantaged Polyethylene Average Margin Advantage • Integration is critical as the vast majority of LDPE vs. Other PE of PE profitability is captured in Grades ethylene, not the downstream polymer • WLK’s PE production
Slide 25: Low Cost Producer of PVC Combined with High Integration Captures Margin
Low Cost Producer of PVC Combined with High Integration Captures Margin Chlor-Alkali Overview of the Vinyls Chain Chlorinated Majority of Margin Captured in Caustic Products Soda Chlor-Alkali and Ethylene. Ethylene Vinyl PVC Typical Vinyls Industry Margin Chlorine Polyvinyl Dichloride Chloride (Viny
Slide 26: Reconciliation of Westlake EBITDA to Net Income and to Cash Flow from Operating Activities
Reconciliation of Westlake EBITDA to Net Income and to Cash Flow from Operating Activities (in $ millions) Note 1 from page 20: Non-GAAP Financial Measures This presentation includes the non-GAAP measures EBITDA and debt A reconciliation to net income and to cash flow from operating activities is in
Slide 27: 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
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