Earnings call transcript: Westlake Chemical Partners misses Q2 2025 forecasts

Westlake Chemical Partners (WLKP) released its Q2 2025 earnings, reporting an earnings per share (EPS) of $0.41, falling short of analysts’ forecast of $0.45. Revenue also missed expectations, coming in at $297.12 million against the projected $301 million. Despite the earnings miss, the stock showed resilience, increasing by 0.88% to $21.8 in pre-market trading. According to InvestingPro data, WLKP maintains a strong dividend yield of 8.65% and has consistently paid dividends for 12 consecutive years, demonstrating its commitment to shareholder returns.

Key Takeaways

• Westlake Chemical Partners missed both EPS and revenue forecasts for Q2 2025.
• The stock price rose by 0.88% in pre-market trading despite the earnings miss.
• The company completed a major turnaround at its ethylene unit, with no further planned turnarounds in 2025 or 2026.
• WLKP maintains a strong leverage ratio of approximately 1x.
• The company identified four growth levers, including increasing ownership interest and negotiating higher fixed margins.

Company Performance

Westlake Chemical Partners faced a challenging Q2 2025, with net income reported at $15 million, translating to $0.41 per unit, which was below market expectations. The distributable cash flow decreased by $2 million compared to the previous year, reflecting ongoing economic pressures. Despite these challenges, the company maintained stable operations and completed a significant turnaround at its ethylene unit in Lake Charles, Louisiana. InvestingPro analysis shows the company’s strong financial health with a return on assets of 24.14% and sufficient cash flows to cover interest payments. The stock is currently trading slightly below its Fair Value, suggesting potential upside opportunity.

Financial Highlights

• Revenue: $297.12 million, down from the forecast of $301 million.
• Earnings per share: $0.41, missing the forecast of $0.45.
• Net income: $15 million.
• Long-term debt: $400 million.
• Cash balance: $81 million.

Earnings vs. Forecast

Westlake Chemical Partners’ Q2 2025 earnings per share of $0.41 fell short of the forecasted $0.45, marking an 8.89% negative surprise. The revenue of $297.12 million was also below the forecast by 1.29%. This underperformance contrasts with the company’s historical trend of meeting or exceeding expectations in previous quarters.

Market Reaction

Despite missing earnings estimates, Westlake Chemical Partners’ stock rose 0.88% to $21.8 in pre-market trading. The stock’s movement was within its 52-week range of $21.19 to $25.04, indicating investor confidence in the company’s long-term strategy despite short-term challenges. InvestingPro identifies WLKP as a stock that generally trades with low price volatility, with a beta of 0.73, making it potentially attractive for stability-focused investors. For deeper insights into WLKP’s valuation and growth prospects, subscribers can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

Outlook & Guidance

Looking forward, Westlake Chemical Partners has outlined several growth strategies, including increasing its ownership interest in OpCo and negotiating higher fixed margins in its ethylene sales agreements. The company has no immediate plans to raise equity capital, focusing instead on sustainable operations and organic growth opportunities.

Executive Commentary

Jean Marc Gilson, President and CEO, emphasized the stability of Westlake’s business model, stating, "The stability of Westlake Partners business model is consistently demonstrated through our fixed margin ethylene sales agreement." Steve Bender, CFO, highlighted the company’s predictable fee-based cash flow as a strength in the current economic environment.

Risks and Challenges

• Global economic pressures continue to impact the chemical industry.
• Potential volatility in ethylene prices could affect profitability.
• The company’s high leverage, despite being stable, poses a risk if economic conditions worsen.
• Dependence on a limited number of production facilities could expose the company to operational risks.

Q&A

During the earnings call, analysts focused on the Q2 outage impacts and the potential for distribution growth. Management reassured stakeholders that there were no continuing impacts from the outage in Q3 and confirmed that there is no immediate need for equity capital. The ethylene unit is reportedly running reliably, supporting the company’s growth outlook.

Full transcript - Westlake Chemical Partners LP (WLKP) Q2 2025:

Conference Operator: Good afternoon. Thank you for standing by. Welcome to the Westlake Chemical Partners Second Quarter twenty twenty five Earnings Conference Call. During the presentation, all participants will be in a listen only mode. After the speakers’ remarks, you will be invited to participate in the question and answer session.

As a reminder, this conference is being recorded today, 08/05/2025. I would now like to turn the call over to today’s host, John Zeller, Westlake Chemical Partners’ Vice President and Treasurer. Sir, you may begin.

John Zeller, Vice President and Treasurer, Westlake Chemical Partners: Thank you. Good afternoon, everyone, and welcome to the Westlake Chemical Partners’ Second Quarter twenty twenty five Conference Call. I am 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 second quarter twenty twenty five 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 website. Please note that information reported on this call speaks only as of today, 08/05/2025, 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 webpage at wlkpartners.com. Now, I’d like to turn the call over to Jean Marc Gilson. Jean Marc?

Jean Marc Gilson, President and CEO, Westlake Chemical Partners: Thank you, John. Good afternoon, everyone, and thank you for joining us to discuss our second quarter twenty twenty five results. In this morning’s press release, we reported Westlake Partners second quarter twenty twenty five net income of $15,000,000 or $0.41 per unit. Compared to the 2025, our second quarter sales and earnings benefited from fewer production days impacted by the planned turnaround at our PetroR1 ethylene unit in Lake Charles, Louisiana. 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 business has enabled us to deliver the long history of reliable distribution and coverage. This quarter’s distribution is the forty fourth consecutive quarterly distributions since our IPO in July 2014 without any reductions. I would like now to turn our call over to Steve to provide more detail on the financial and operating results for the quarter. Steve?

Steve Bender, Executive Vice President and Chief Financial Officer, Westlake Chemical Partners: Thank you, Jean Marc, and good afternoon, everyone. In this morning’s press release, we reported Westlake Partners second quarter twenty twenty five net income of $15,000,000 or $0.41 per unit. Consolidated net income, including OpCo’s earnings was $86,000,000 This amount includes a $14,000,000 benefit to OpCo from protection provided by the ethylene sales agreement to insulate it from certain production shortfalls,

John Zeller, Vice President and Treasurer, Westlake Chemical Partners: such

Steve Bender, Executive Vice President and Chief Financial Officer, Westlake Chemical Partners: as the extension of the Petro one turnaround beyond its originally scheduled completion date. Second quarter twenty twenty five net income for Westlake Partners of $15,000,000 was essentially in line with the second quarter twenty twenty four partnership net income. Distributable cash flow of $15,000,000 or $0.43 per unit for the 2025 decreased by $2,000,000 compared to the 2024 due to higher maintenance capital expenditures as a result of the Petro one planned turnaround. 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 $81,000,000 Long term debt at the end of this quarter was $400,000,000 of which $377,000,000 was at the partnership and the remaining $23,000,000 was at OpCo.

In the 2025, OpCo spent $24,000,000 on capital expenditures. We maintained our strong leverage metrics with a consolidated leverage ratio of approximately one time. On 07/30/2025, we announced a quarterly distribution of $0.04 $7.01 $4 per unit with respect to the 2025. Since our IPO in 2014, the Partnership has made 44 consecutive quarterly distributions to unitholders and we have grown distributions 71% since the Partnership’s original minimum quarterly distribution of $0.02 $75 per unit. Partnership’s second quarter distribution will be paid on 08/27/2025 to unitholders of record on 08/12/2025.

The partnership 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 2014, we have maintained a cumulative distribution coverage ratio of approximately 1.1 times and 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, the Petro one turnaround completed, we have no further plans in 2025 or 2026. Now I’d like to turn the call back over

Jean Marc Gilson, President and CEO, Westlake Chemical Partners: to Jean Marc to make some closing comments. Jean Marc? Thank you, Steve. The successful completion of the PetroR1 turnaround during the 2025 was a major accomplishment that positions the partnership for solid earnings and distributable cash flows well into the future. Turning to our outlook, global industrial and manufacturing activity has been soft thus far in 2025, which is broadly impacting the global chemical industry.

Despite the challenging global macroeconomic backdrop, the Partnership’s 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 OpCo’s production. As had been the case since our IPO over ten years ago, this ethylene sales agreement has delivered stable and predictable cash flows through 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 four levers of growth in the future, including increases of our ownership interest of OpCo, acquisition 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 second quarter’s earnings call. Now, I will turn the call back over to John.

John Zeller, Vice President and Treasurer, Westlake Chemical Partners: Thank you, Jean Marc. 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 will provide instructions to access the replay at the end of the call. Angelina, we will now take questions.

Conference Operator: Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press star, one, one on your telephone and wait for your name to be announced. To withdraw your question, Our first question comes from the line of Matthew Blair of TPH. Your line is now open.

Matthew Blair, Analyst, TPH: Thank you, and good afternoon. Thanks for taking my questions. Think you mentioned on the Westlake C Corp call that some of the outage impact from Q2 might be persisting into Q3. Would any of that outage impact affect the OpCo assets, crackers specifically? And I guess in general, could you talk about how those assets have been running so far in the third quarter?

Steve Bender, Executive Vice President and Chief Financial Officer, Westlake Chemical Partners: Yes, Matthew, the impact that we were speaking to did not affect the ethylene unit here. And that unit, as I mentioned, was completed. And so there is no continuation of that turnaround in Q3. And so it was completed in 2Q. And that as therefore the plant is running very reliably and producing as we would expect it to after the turnaround.

Matthew Blair, Analyst, TPH: Sounds good. And then you also mentioned the four levers of possible growth. Are certain opportunities that look more appealing in the current environment, certain levers that look less appealing? And I guess in general, how likely do you think it would be that Westlake LP would see some sort of distribution growth either in the 2025 or into 2026?

Steve Bender, Executive Vice President and Chief Financial Officer, Westlake Chemical Partners: Yes. If you recall going back to the origination of the partnership, was designed to be a mechanism to continue to fund the C Corp at attractive yields or attractive structures as issuing equity in that market. Today, you think about Westlake, the C Corp Westlake Corporation, there really isn’t an immediate need for capital. And so as we think about the markets that the partnership could attack, those markets, as you know, have contracted over the last number of years. And so given the combination of that contraction and the need, the lack of need immediately for Westlake Corporation to attract equity capital, I don’t see a need in the current year to raise equity capital through one of these four levers.

Matthew Blair, Analyst, TPH: Sounds good. I’ll leave it there. Thank you.

Jean Marc Gilson, President and CEO, Westlake Chemical Partners: Thank you.

Conference Operator: I am showing no further questions at this time. I would now like to turn it back to John Zeller.

John Zeller, Vice President and Treasurer, Westlake Chemical Partners: Thank you again for participating in today’s call. We hope you will join us for our next conference call to discuss our third quarter twenty twenty five results.

Conference Operator: Thank you for participating in today’s Westlake Chemical Partners second quarter twenty twenty five earnings conference

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