Westlake Chemical Partners LP (WLKP)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 delivered solid operational recovery post-Petro 1 turnaround: revenue rose to $297.1M and EPS landed at $0.41; consolidated net income rebounded to $85.8M as OpCo benefited from the fixed-margin sales agreement with Westlake .
• EPS missed Wall Street consensus by ~$0.06 (actual $0.41 vs. consensus $0.466*) amid lingering turnaround-related maintenance capex and timing of cash payments; revenue estimates were unavailable* .
• Trailing 12-month distribution coverage dipped to 0.79x (from 0.82x in Q1), but management expects distributable cash flow and coverage to “solidly improve” in 2H 2025 now that the turnaround is complete .
• Distribution was maintained at $0.4714 for the 44th consecutive quarter, reinforcing stability from the 95% take-or-pay ethylene sales agreement at $0.10 per pound margin .
• Near-term catalyst: normalization of maintenance capex and higher production run-rates post-turnaround should lift DCF/coverage; management reiterated no further turnarounds in 2025 or 2026 .

What Went Well and What Went Wrong

What Went Well

• Production and sales volume improved vs. Q1 as fewer days were impacted by the turnaround, lifting net income by $9.7M QoQ and MLP DCF by $10.3M QoQ .
• The fixed-margin ethylene sales agreement insulated OpCo’s earnings with a ~$13.6M benefit to offset lower forecasted annual production volume due to the turnaround extension (“provides a fixed margin on OpCo’s annual ethylene production plan”) .
• Management emphasized distribution durability: “44th consecutive quarterly distribution” and expectation that “distributable cash flow and the associated coverage ratio [will] solidly improve in the second half of 2025” .

What Went Wrong

• Cash from operations fell sharply to $9.1M (vs. $121.9M in Q2 2024 and $45.8M in Q1 2025) due to timing of cash payments related to the turnaround .
• Trailing twelve-month coverage slipped to 0.79x, below Q1’s 0.82x, largely from higher maintenance capital expenditures tied to the Petro 1 turnaround .
• MLP DCF declined YoY to $15.0M (from $17.1M in Q2 2024), reflecting elevated maintenance capex; management noted lingering impacts in Q2 from the turnaround extension into April .

Financial Results

Headline Results vs. Prior Periods and YoY

Margins

Segment / Sales Mix

KPIs and Cash Flow

Actual vs. Wall Street Consensus (S&P Global)

Values retrieved from S&P Global.*

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “The Partnership’s second quarter financial results improved significantly from the first quarter of 2025 due to higher production and sales volume… lingering impacts to distributable cash flow in the second quarter… primarily in the form of elevated maintenance capital expenditures… should not re-occur at such a high level in future quarters.” — Jean‑Marc Gilson, CEO
• “OpCo benefitted from the stability of its sales agreement… fixed margin on OpCo’s annual ethylene production plan… OpCo’s net income benefitted by $13.6 million” .
• “We expect distributable cash flow and the associated coverage ratio to solidly improve in the second half of 2025 back towards our strong historical levels now that the Petro 1 turnaround has been completed.” — CEO
• “For modeling purposes… no further [planned turnarounds] in 2025 or 2026.” — CFO
• “Global industrial and manufacturing activity has been soft thus far in 2025… the Partnership’s performance and distributions will continue to be supported by our ethylene sales agreement… 95%… take-or-pay contract with Westlake.” — CEO

Q&A Highlights

• Outage persistence into Q3: Management confirmed no continued impact; the ethylene unit is running reliably post-turnaround .
• Growth levers and equity: CFO noted the 4 levers remain, but current market conditions and lack of immediate parent capital needs reduce the likelihood of near-term equity raises via those levers .
• Clarifications: The call reiterated contract-driven stability and post-turnaround normalization; minor rounding variance vs. press release on OpCo benefit ($14M mentioned verbally vs. $13.6M reported) .

Estimates Context

• EPS came in below consensus by ~$0.056 (actual $0.41 vs. consensus $0.4659*), largely reflecting elevated maintenance capex and turnaround timing impacts despite stronger production vs. Q1 .
• Revenue consensus was unavailable*; actual revenue was $297.1M .
• With normalization in production and maintenance spend post-turnaround, sell-side may raise 2H 2025 DCF/coverage assumptions; however, management’s macro-softness commentary could temper aggressive revisions .

Values retrieved from S&P Global.*

Key Takeaways for Investors

• Post-turnaround recovery is underway: higher production drove QoQ improvement in net income and MLP DCF; expect further improvement in 2H 2025 as maintenance capex normalizes .
• Contract underpinning remains the differentiator: 95% take-or-pay at $0.10/lb continues to stabilize earnings and cash flows through macro volatility .
• Distribution safety: $0.4714 maintained for the 44th consecutive quarter; coverage at 0.79x should trend higher as operations normalize, per management .
• Short-term trading: Modest negative on the EPS miss vs. consensus*, but supportive management outlook and operational reliability could be a positive as investors refocus on 2H normalization .
• Medium-term thesis: With no further turnarounds planned through 2026 and a conservative balance sheet, WLKP’s fee-based cash flow and distribution durability remain intact; watch for any moves on the 4 growth levers (e.g., margin negotiation) as potential upside optionality .
• Monitor macro signals: Management flagged softness in global industrial/manufacturing activity; while the contract mitigates direct exposure, third‑party ethylene pricing/margins remain a swing factor .
• Note small disclosure variance: call referenced ~$14M OpCo benefit vs. $13.6M in release—directionally consistent, use $13.6M for modeling .