Westlake Chemical Partners LP

Good afternoon. Thank you for standing by. Welcome to the Westlake Chemical Partners Second Quarter 2026 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. After the speaker's remarks, you will be invited to participate in a question and answer session. As a reminder, this conference is being recorded today, August 4, 2026. I would now like to turn the call over to today's host, Jeff Hawley, Westlake Chemical Partners Vice President and Chief Accounting Officer. Sir, you may begin.

Thank you. Good afternoon everyone and welcome to the Westlake Chemical Partners second quarter 2026 conference call. I'm joined today by Albert Chao, our Executive Chairman, Jean-Marc Gilson, our President and CEO, John Boxt, our Senior Vice President and Chief Financial Officer, Steve Bender, our Special Advisor to the President, 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 olefin 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 2026 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's website. Please note that information reported on this call speaks only as of today August 4th, 2026, and therefore you're 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 would like to turn the call over to Jean-Marc Gilson. Jean-Marc?

Thank you Jeff and good afternoon everyone and thank you for joining us to discuss our second quarter 2026 results. In this morning's press release, we reported Westlake Partners second quarter 2026 net income of $14 million or 40 cents per unit, which was in line with our net income in the first quarter. The stability of Westlake Partners' business model is consistently demonstrated through our fixed-margin ETLN sales agreement, which minimizes market volatility and other production risks. 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 distributions and coverage. This quarter's distribution is the 48th consecutive quarterly distribution since our IPO in July of 2014, without any reductions. Before I turn the call over to John, I want to take this opportunity to thank Steve Bender for all of his many contributions to the partnership as our CFO since its formation over a decade ago and wish him the best of luck with his upcoming retirement.

Thank you, Jean-Marc, and it's been a pleasure working with you, Albert, and James Chao, and the entire Westlake Chemical Partners team for many years. I leave for retirement next month knowing that the partnership is on very firm financial footing, having recently renewed both its revolver and the ethylene supply agreement with Westlake. And with that, I'll turn the call over to the partnership's new Chief Financial Officer, John Marks. John?

Thank you, Steve. Your contributions to the partnership will be missed, and we all wish you the best of luck in your retirement. In this morning's press release, we reported Westlake Partners' second quarter 2026 net income of $14 million, or 40 cents per unit. Consolidated net income, including OPCO's earnings, was $82 million on consolidated net sales of $297 million. The partnership had distributable cash flow for the quarter of $18 million or 50 cents per unit. Second quarter 2026 net income for Westlake Partners of $14 million was essentially in line with the second quarter 2025 partnership net income. Distributable cash flow of $18 million for the second quarter of 2026 increased by $3 million compared to the second quarter of 2025 due to the higher production and sales volume and lower maintenance capital expenditures as a result of last year's Petro-1 plan turnaround. On a sequential basis, net income for Westlake Partners of $14 million in the second quarter of 2026 was in line with the first quarter on relatively stable production and sales volume. Sequentially, our trailing 12-month coverage ratio improved to 1.04 times from 1.0 times, reflecting the aging out of the impact of the Petro-1 turnaround that occurred in the first half of 2025. 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 93 million dollars long-term debt at the end of the quarter was 400 million dollars of which 377 million dollars was at the partnership and the remaining 23 million dollars was at opco in the second quarter of 2026 Opco spent $12 million on capital expenditures. We maintained our strong leverage metrics with a consolidated leverage ratio of approximately one time. Last month, both Opco and the partnership extended their existing revolver agreements with Westlake for an additional four years through 2031. Additionally, we successfully negotiated a 10 basis point reduction in the associated interest rate. As was the case earlier this year, when Westlake extended our ethylene supply agreement, we believe that the revolver extension demonstrates the critical nature of Opco's supply of ethylene to their operations and their commitment to support Opco's continued safe, reliable operations through stable, predictable cash flows. On August 3rd, 2026, We announced a quarterly distribution of 47.14 cents per unit with respect to the second quarter of 2026. Since our IPO in 2014, the partnership has made 48 consecutive quarterly distributions to our unit holders, and we have grown distributions 71% since the partnership's original minimum quarterly distribution of 27.5 cents per unit. The partnership's second quarter distribution will be paid on August 28, 2026 to unit holders of record on August 13, 2026. The partnership's 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 of 2014, we have maintained a cumulative distribution coverage ratio in excess of one times, and with the partnership's stability in cash flows, we were able to sustain our current distribution without the need to access the capital markets. For modeling purposes, we have no planned turnarounds in 2026. Now, I'd like to turn the call back over to Jean-Marc to make some closing comments. Jean-Marc?

Thank you, John. We are pleased with the partnership financial and operational performance during the second quarter. Solid operating rates at OPCOS ethylene facilities during the quarter resulted in a quarterly coverage ratio of 1.0 times. Turning to our outlook, the conflict in the Middle East has created increased volatility in chemical prices, including ethylene. However, The partnership's ethylene margins remain largely immune to the heightened market price volatility thanks to its ethylene supply agreement with Westlake that provides for a fixed margin of 10 cents per pound on 95% of our ethylene production. 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 levels of growth in the future, including increases of our ownership interest of OPCO, acquisitions of other qualified income streams, organic growth opportunities, such as expansions of our current land facilities, and negotiation of a higher fixed margin in our SELNC agreement with Wesley. We remain focused on our ability to continue to provide long-term value and distributions to our unit holders. 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 earnings call. Now I will turn the call back over to Jeff.

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'll provide instructions to access the replay at the end of the call. Ari, we will now take questions.

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. I'm showing no questions at this time, so I will turn the call back over to Jeff Holley.

Thanks. Thank you again for participating in today's call. We hope you'll join us for our next conference call to discuss our third quarter 2026 results.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.