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Westlake Chemical Partners LP (WLKP)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 was operationally solid post-turnaround with nameplate production and stable fee-based cash flows; however, EPS of $0.42 missed S&P Global consensus of $0.45 as higher maintenance capex and softer third‑party ethylene margins weighed on results . EPS miss: −$0.03 (≈−6.6%)*.
  • EBITDA of $126.1m modestly beat consensus ($121.2m*) and rose sequentially, though remained below prior year as third‑party margins softened; revenue grew 12% YoY on higher sales to Westlake . EBITDA beat: +$4.7m*.
  • Contract de‑risking: OpCo renewed the Ethylene Sales Agreement with Westlake through 2027 at unchanged terms (10¢/lb margin on 95% of volume, take‑or‑pay), reinforcing cash‑flow visibility and distribution stability .
  • Cash from operations rebounded to $105.2m from $9.1m in Q2 as turnaround payments subsided; TTM coverage dipped to 0.75x on timing of maintenance capex, expected to rebuild post‑turnaround .
  • Near‑term catalysts: contract renewal visibility, normalization of maintenance capex, and no planned turnarounds in 2025–2026; watch Street revisions on EPS given the small miss and commentary on third‑party margin softness .

What Went Well and What Went Wrong

  • What Went Well

    • Operations normalized post Petro‑1 turnaround; “production returned to nameplate capacity” and assets “ran well” .
    • ESA renewed through 2027 with no economic changes, preserving the 10¢/lb margin on 95% of volume and take‑or‑pay protections .
    • Cash generation recovered sharply as turnaround cash payments rolled off: CFOA $105.2m vs $9.1m in Q2 .

  • What Went Wrong

    • EPS slipped to $0.42 vs $0.51 YoY, pressured by higher maintenance capex and weaker third‑party ethylene margins .
    • TTM coverage ratio eased to 0.75x from 0.79x in Q2 due to timing of maintenance capex, below long‑term cumulative ~1.05x .
    • Third‑party sales were softer YoY ($32.4m vs $61.2m), dampening consolidated EBITDA vs Q3 2024 .

Financial Results

Headline metrics

MetricQ3 2024Q2 2025Q3 2025
Revenue ($MM)277.0 297.1 308.9
EBITDA ($MM)139.1 124.4 126.1
Net Income – Consolidated ($MM)104.1 85.8 86.2
Net Income – Attributable to WLKP ($MM)18.1 14.6 14.7
Diluted EPS per unit ($)0.51 0.41 0.42

Margins and growth

MetricQ3 2024Q2 2025Q3 2025
EBITDA Margin (%)50.2% (139.1/277.0) 41.9% (124.4/297.1) 40.8% (126.1/308.9)
Net Income Margin – Consolidated (%)37.6% (104.1/277.0) 28.9% (85.8/297.1) 27.9% (86.2/308.9)
Revenue Growth YoY——+11.5% vs Q3’24
Revenue Growth QoQ——+3.9% vs Q2’25
EBITDA Growth YoY——−9.4% vs Q3’24
EBITDA Growth QoQ——+1.4% vs Q2’25

Versus S&P Global consensus

MetricConsensusActualSurprise
EPS ($)0.45*0.42 −0.03 (MISS)
EBITDA ($MM)121.2*125.9 +4.7 (BEAT)
Revenue ($MM)N/A*308.9 N/A

Segment/customer mix (revenue components)

Revenue Component ($MM)Q3 2024Q2 2025Q3 2025
Net sales – Westlake215.8 269.1 276.5
Net co‑products, ethylene & other – third parties61.2 28.0 32.4
Total277.0 297.1 308.9

KPIs and cash metrics

KPIQ3 2024Q2 2025Q3 2025
MLP Distributable Cash Flow ($MM)17.9 15.0 14.9
Distribution per unit ($)0.4714 0.4714 0.4714
TTM Coverage Ratio (x)—0.79x 0.75x
Cash from Operations ($MM)126.1 9.1 105.2
Maintenance Capex (Quarter, $MM)17.8 20.5 24.2
Contribution to Turnaround Reserves (Quarter, $MM)11.9 10.4 10.5
OpCo Capex (Quarter, $MM)——30.0 (total capex)

Note: Third‑party margins were cited as lower YoY; ESA provides 10¢/lb margin net of costs on 95% of volume to Westlake .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Ethylene Sales Agreement (ESA) term & economicsThrough 2027Initial term through 2026; annual auto‑renew with unchanged terms Renewed through Dec 31, 2027 at unchanged pricing (10¢/lb, 95% take‑or‑pay) Extended/maintained
Turnaround outlook2025–2026Q1: no further turnarounds for several years “No planned turnarounds for the remainder of 2025 or in 2026” Clarified timing
Quarterly distributionQ3 2025$0.4714 per unit (Q2) $0.4714 per unit (45th consecutive) Maintained
Services & Secondment AgreementTerm alignmentN/AAmended to align term with ESA; now to Dec 31, 2026 with annual renewals Clarified/extended
Omnibus AgreementTerm & indemnitiesN/AWill terminate upon ESA termination; clarified indemnity procedures (incl. environmental/tax) Clarified

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025, Q2 2025)Current Period (Q3 2025)Trend
Turnaround impact on DCF/coverageQ1: Turnaround drove lower DCF; expected recovery post‑completion . Q2: Recovery underway; lingering elevated maintenance capex .Turnaround complete; CFOA recovered; coverage TTM 0.75x due to timing of maintenance capex .Improving operations; coverage to rebuild as capex normalizes
Contract stability (ESA)Stable 10¢ margin framework reiterated .ESA renewed through 2027; unchanged economics; cornerstone of stability .Positive reinforcement of stability
Third‑party ethylene marginsNoted as variable; not core to model.YoY pressure on third‑party margins cited as a headwind vs Q3’24 .Mild headwind YoY
Macro/industry demandNot emphasized earlier.Management notes global industrial/manufacturing softness in 2025 .Soft macro backdrop persists
Capital needs/leverageConservative metrics; avoiding capital markets .Leverage ≈1x; funding distributions without capital markets; liquidity ~$851m incl. facilities (slides) .Stable balance sheet
Growth leversFour levers reiterated in prior comms.Reiterated: increase OpCo ownership, organic expansions, M&A, margin negotiation .Optionality preserved

Management Commentary

  • “OpCo's assets ran well and production returned to nameplate capacity levels following the completion of the planned Petro 1 turnaround… [ESA] provides a predictable, fee‑based cash flow structure with take‑or‑pay protections for 95% of OpCo's production.” – Jean‑Marc Gilson, CEO .
  • “OpCo and Westlake… agreed to renew the ethylene sales agreement through the end of 2027 with no changes to the contract's terms or conditions.” – Jean‑Marc Gilson, CEO .
  • “At the end of the third quarter, we had… consolidated cash and cash investments… totaling $51 million… Long‑term debt… $400 million… In the third quarter of 2025, OpCo spent $30 million on capital expenditures… leverage ratio of approximately one time.” – Steve Bender, CFO .
  • “For modeling purposes, we have no planned turnarounds for the remainder of 2025 or in 2026.” – Steve Bender, CFO .

Q&A Highlights

  • Coverage and DCF vs distribution: Analyst asked about rebuilding coverage after the turnaround. CFO attributed the dip to the planned turnaround, cited robust operating surplus, and expected distributions to be “well covered” as surplus rebuilds; absent the turnaround, DCF would have exceeded the distribution .
  • No other questions were recorded; tone was calm and focused on stability and post‑turnaround normalization .

Estimates Context

  • EPS: $0.42 vs S&P Global consensus $0.45 (MISS), driven by higher maintenance capex and weaker third‑party margins YoY . EPS consensus: 0.4496*.
  • EBITDA: $126.1m vs S&P Global consensus $121.2m (BEAT), reflecting normalized production and ESA stability . EBITDA consensus: $121.2m*.
  • Revenue: No meaningful consensus available; actual $308.9m reflects ESA‑driven sales to Westlake and lower third‑party sales YoY .
  • Street adjustments: With no planned turnarounds through 2026 and ESA renewed at unchanged terms, estimate risk skews to small EPS mix effects from third‑party margins and timing of maintenance capex rather than core margin economics .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • The ESA renewal through 2027 at unchanged terms is the quarter’s key de‑risking event, underpinning multi‑year distribution stability and cash‑flow visibility .
  • EPS missed modestly vs S&P Global due to maintenance capex and third‑party margin pressure; however, EBITDA beat and operations normalized post‑turnaround, supporting near‑term cash generation . EPS/EBITDA consensus comparisons: −$0.03 miss; +$4.7m beat*.
  • Cash from operations rebounded sharply as turnaround cash payments rolled off; expect coverage to rebuild as maintenance capex normalizes, with no planned turnarounds in 2025–2026 .
  • Distribution held at $0.4714/unit (45th consecutive), consistent with the strategy to avoid capital market needs while maintaining a robust operating surplus .
  • Watch third‑party ethylene margin trends and macro softness; these are secondary to the ESA but can affect consolidated YoY comparisons and optical EPS .
  • Balance sheet remains conservative (≈1x leverage; substantial liquidity), preserving optionality across growth levers (OpCo ownership, organic expansions, M&A, potential margin negotiation) .
  • Near‑term positioning: Stability‑over‑growth story; stock catalysts include confirmation of post‑turnaround coverage improvement, any drop‑down/expansion updates, and signals on potential ESA margin renegotiation over time .

Footnotes and sources:

  • All company figures, quotes, and operational commentary from WLKP Q3 2025 8‑K, press releases, investor slides, and Q3 2025 earnings call transcript .
  • Prior quarter comparisons from Q1/Q2 2025 8‑K press releases and financial schedules .
  • S&P Global consensus data marked with * from GetEstimates (EPS, EBITDA, revenue/target price where available).