Westlake Chemical Partners LP (WLKP)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 was an intentionally soft quarter due to the planned Petro 1 turnaround: revenue $237.629M, EBITDA $75.021M, and EPS $0.14, with MLP distributable cash flow of $4.7M and TTM coverage of 0.82x; distribution was maintained at $0.4714 per unit .
• The turnaround started at end-Jan, extended into early April, and Petro 1 is now back at full rates; no further planned turnarounds in 2025 or 2026, setting up a normalized production profile for the next several quarters .
• Results missed Street where available: EPS $0.14 vs $0.42* and EBITDA $75.0M vs $100.9M* (revenue consensus not available) — driven by lower production/sales and higher maintenance capex during the turnaround, plus elevated interest costs .
• Structural support intact: the Ethylene Sales Agreement (fixed $0.10/lb margin on 95% of production) underpins predictable cash flows and sustained distributions; management reiterated a long history of stable payouts (43rd consecutive quarterly distribution) .
• Near-term catalyst: post-turnaround recovery in volumes and coverage, with third-party ethylene margins and interest expense as watch items; management expects DCF/coverage to return to historical levels in coming quarters .

What Went Well and What Went Wrong

• What Went Well

  • Turnaround completed; asset back to full rates: “Petro 1 returned to full operating rates last month and has been operating well ever since” .
  • No further scheduled downtime: “we have no further planned turnarounds in 2025 or 2026,” removing a key operational overhang .
  • Distribution durability reaffirmed: 43rd consecutive distribution declared at $0.4714 per unit; management emphasized predictable fee-based cash flows under the Ethylene Sales Agreement .

• What Went Wrong

  • Turnaround impact drove lower volumes and higher maintenance capex: EPS fell to $0.14 and MLP DCF to $4.7M; CFO fell to $45.8M, with TTM coverage down to 0.82x .
  • Street misses: EPS and EBITDA came in below S&P Global consensus (EPS $0.14 vs $0.42*; EBITDA $75.0M vs $100.9M*) amid planned downtime and higher interest expense .
  • Sequential step-down as expected: net income attributable to WLKP declined ~$10M vs Q4, consistent with turnaround timing (down Feb–Mar) .

Financial Results

Quarterly trend (oldest → newest)

YoY snapshot

Estimates vs Actuals (Q1 2025)

Segment-style sales bridge (contract vs third-party)

KPI and balance sheet highlights

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “As expected, our first quarter of 2025 distributable cash flow and associated coverage ratio were negatively impacted by the planned turnaround at our Petro 1 ethylene facility… Petro 1 returned to full operating rates last month and has been operating well ever since.” — Jean‑Marc Gilson, CEO .
• “The stability of Westlake Partners business model is consistently demonstrated through our fixed margin Ethylene Sales Agreement… enabled us to deliver the long history of reliable distributions.” — Jean‑Marc Gilson .
• “For modeling purposes, our Petro 1 ethylene unit began to restart from its planned turnaround on April 12… we have no further planned turnarounds in 2025 or 2026.” — Steve Bender, CFO .
• “The Partnership’s predictable fee-based cash flow continues to prove beneficial… we are able to sustain our current distribution without the need to access the capital markets.” — Steve Bender .
• “The Ethylene Sales Agreement… provides a predictable fee-based cash flow structure… for 95% of OpCo’s production.” — Management .

Q&A Highlights

• Turnaround impact vs prior cycles: CFO emphasized the quarter reflected planned downtime (unit down in Feb–Mar), with elevated interest rates also weighing on loan obligations; performance matched internal budget .
• MLP vs parent valuation: CFO said over a full cycle the valuation differential remains “pretty elevated,” and the MLP continues to provide value despite a challenged drop-down market backdrop .

Estimates Context

• EPS: $0.14 actual vs $0.42* consensus — miss driven by planned turnaround impacts and higher maintenance capex, plus interest rate headwind .
• EBITDA: $75.0M actual vs $100.9M* consensus — miss due to lower production/sales volume during the turnaround .
• Revenue: $237.6M actual; consensus not available from S&P Global for this quarter* .
• Implication: As volumes normalize post-turnaround and with no further planned outages through 2026, estimates for coverage and EBITDA should drift higher near-term, while interest expense remains a swing factor .

Values retrieved from S&P Global (*).

Key Takeaways for Investors

• The turnaround is behind them; Petro 1 has restarted and no further planned turnarounds in 2025/2026 — sets up cleaner sequential comparisons and coverage recovery in coming quarters .
• Distribution held at $0.4714 per unit (43rd straight), with structural support from the fixed-margin ESA covering 95% of production at $0.10/lb .
• Q1 softness and Street misses were expected/turnaround-driven: EPS $0.14 and EBITDA $75M; watch for normalization in Q2+ as volumes recover .
• Coverage temporarily depressed (TTM 0.82x) but management expects a return toward historical levels as operations normalize .
• Elevated interest rates are a headwind to net income; rate trajectory and potential refinancing costs are key sensitivities .
• Third‑party ethylene margins were strong exiting 2024; post-turnaround capacity to capture third-party opportunities is an upside lever if market strength persists .
• Medium-term growth levers include potential OpCo ownership increases, acquisitions of qualifying income streams, organic expansions, and potential negotiation of higher ESA fixed margin with the parent .