Westlake Chemical Partners Lp · NYSE:WLKP
Westlake Chemical Partners Lp — Q2 2020 Earnings Presentation
19 slides from Westlake Chemical Partners Lp's earnings presentation, August 2020
Slide 1: Westlake Chemical Partners LP 2nd Quarter 2020
Westlake Chemical Partners LP 2nd Quarter 2020
Slide 2: Westlake Chemical Partners LP
Westlake Chemical Partners LP • Predictable and stable cash flows insulated from commodity price risk • Long history of reliable operations from strategically located assets Stable and predictable cash flows Long history of predictable operation from strategically located assets 95% of sales at fixe
Slide 3: Predictable and Stable Cash Flows with Conservative Financial Structure
Westlake Chemical Partners LP & Westlake Chemical Corporation Predictable and Stable Cash Flows with Conservative Financial Structure Investors Investors 59.9% ownership Westlake Chemical 40.1% ownership Westlake Partners LP Chemical Corp (WLKP) (WLK) 22.8% ownership 77.2% ownership Westlake Chemica
Slide 4: Westlake Partners Assets Provide Vital Ethylene to Westlake Chemical
Westlake Partners Assets Provide Vital Ethylene to Westlake Chemical Lake Charles, Calvert City, Kentucky Longview, Texas Louisiana Complex Complex Complex • Two ethane-based processing • One ethane-based processing • A 200-mile common carrier ethylene facilities at Westlake’s Lake facility located
Slide 5: Westlake Chemical's Short Position in Ethylene Provides Strong and Contractual Demand
Westlake Chemical’s Short Position in Ethylene Provides Strong and Contractual Demand for Westlake Partners Westlake Partners’ current production capacity plus the potential 1.1B lbs in the JV cracker would still leave Westlake Chemical short an additional 1.1B lbs of Ethylene Westlake Westlake Chem
Slide 6: 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 7: Sales Agreement has Insulated WLKP From Commodity Risk
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 2013 2007 2008 2009 2010 2011 2012 2014 2015 2016 2017 2018 2019 Ethylene Margin PE Non-Inte
Slide 8: Strong Distribution Growth From Conservative Financial Structure
Strong Distribution Growth From Conservative Financial Structure Annual Distributable Cash Flows and Production since IPO Higher, steady production rates 4,000 $80 Distributable Cash Flow ($MM) Ethylene Production (MM lbs) lead to dependable, 3,000 $60 Capacity stable financials expansion 2,000 outa
Slide 9: Westlake Chemical Partners Distribution
Westlake Chemical Partners Distribution • For its Q2 2020 distribution, WLKP is maintaining its distribution at the prior quarter level of $0.4714 to build cash and avoid creating any capital market needs • The strength of WLKP’s stable and predictable cash flows through 95% of its sales at a fixed
Slide 10: Stability of WLKP's Cash Flows Provides Significant Flexibility
Stability of WLKP’s Cash Flows Provides Significant Flexibility in Current Market Environment Publically Traded MLPs Making Recent Distribution Announcements Through August 6, 2020 1 20% 0% Distribution Growth Rate Change WLKP 2020 through August 6, 2020 Average Change in Distribution (25)% -20% -40
Slide 11: 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 $135 Million in May 2015 • Purchased 5% of additional OpCo interests for
Slide 12: Ample Capacity to Fund Earnings Growth
Ample Capacity to Fund Earnings Growth • Most recent drop down in 1Q 2019 leaves over 77% of existing OpCo available to be dropped into WLKP for future cash flow and distribution growth • In July 2018, Westlake Chemical re-set Westlake Partners IDR schedule relieving Westlake Partners of the IDR cas
Slide 13: Completed Capacity Expansions + IDR Resets + Acquisition of JV Opportunity
Completed Capacity Expansions + IDR Resets + Acquisition of JV Opportunity Means Extended Growth for Westlake Partners Net Income Attributable to WLKP unitholders ($MM) $80 LACC JV IDR reset OpCo drop Calvert City down Cracker provides Expansion eligible to longer $60 and OpCo growth path add to dro
Slide 14: 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) Jun 30, 2020 Cash and Equivalent
Slide 15: 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 16: Appendix
Enhancing Your Life Every Day Westlake Chemical W
Slide 17: WLKP Growth Strategy
WLKP Growth Strategy Acquisition and Expansion Provides Growth Maintain financial flexibility to protect and grow distributions Expand production capacity of ethylene through cost effective debottlenecks • Approximately 250 Million pounds completed in Lake Charles in 2016 • Approximately 100 Mil
Slide 18: 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 19: Disclaimer
Disclaimer This presentation contains certain forward-looking statements, including statements with respect to the ability to resume distribution growth, potential levers for growth, remaining drop down opportunities, avoiding the creation of any capital market needs, and accretive M&A as a source o
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