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Form 8-K Westlake Chemical Partne For: May 04

May 4, 2015 7:45 AM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): May 4, 2015

Westlake Chemical Partners LP
(Exact name of registrant as specified in its charter)

Delaware
 
001-36567
 
32-0436529
(State or other jurisdiction
of incorporation)
 
(Commission File Number)
 
(I.R.S. Employer
Identification No.)

2801 Post Oak Boulevard, Suite 600
Houston, Texas
 
77056
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (713) 585-2900

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


 







Item 2.02. Results of Operations and Financial Condition.
On May 4, 2015, Westlake Chemical Partners LP (the "Partnership") issued a press release announcing its 2015 first quarter earnings. A copy of the press release is furnished with this Current Report as Exhibit 99.1.
The information furnished pursuant to this Current Report, including Exhibit 99.1, shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any filing by Westlake Chemical Partners LP under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, unless specifically identified as being incorporated therein.
Item 7.01. Regulation FD Disclosure.
The Partnership is holding a conference call on May 4, 2015 to discuss its 2015 first quarter results. Information about the call can be found in the press release furnished with this Current Report as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The following exhibit is furnished herewith:
99.1    Press release issued on May 4, 2015.






SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
 
WESTLAKE CHEMICAL PARTNERS LP
 
 
 
 
By: Westlake Chemical Partners GP LLC
Date:
May 4, 2015
 
By:
/S/ ALBERT CHAO
 
 
 
 
Albert Chao
President and Chief Executive Officer







EXHIBIT INDEX


Exhibit No.
 
Description
 
 
 
99.1
 
Press release issued on May 4, 2015.







EXHIBIT 99.1
WESTLAKE CHEMICAL PARTNERS LP

Contact - (713) 585-2900
Investors - Steve Bender
Media - David R. Hansen

 

Westlake Chemical Partners LP Announces First Quarter Earnings
Quarterly MLP distributable cash flow of $9.0 million
Acquired approximately 2.7% of additional interest in Westlake Chemical OpCo LP ("OpCo") effective April 1, 2015
Increased quarterly cash distribution by $0.0079 (2.87%) to $0.2829 per unit, announced on April 29, 2015
Westlake Chemical Partners LP (NYSE: WLKP) (the "Partnership") today reported first quarter 2015 net income attributable to the Partnership of $8.5 million, or $0.31 per limited partner unit, and MLP distributable cash flow of $9.0 million. Net sales for the period were $258.4 million at OpCo.
OpCo's sales agreement with Westlake Chemical Corporation is designed to provide for stable and predictable cash flows. The sales agreement provides that 95% of OpCo's ethylene production is sold to Westlake Chemical Corporation for a cash margin of $0.10 per pound, net of operating costs, maintenance capital expenditures and reserves for future turnaround expenditures.
On April 29, 2015, Westlake Partners announced that it has agreed to acquire approximately 2.7% of additional interest in OpCo for $135.3 million. This transaction was effective April 1, 2015 and is expected to be immediately accretive to MLP distributable cash flow. In conjunction with this transaction, Westlake Partners entered into a $300.0 million revolving credit facility with a finance subsidiary of Westlake Chemical Corporation to fund acquisitions, including potential additional purchases of interests in OpCo, and for general corporate purposes.
On April 29, 2015, the Board of Directors of Westlake Chemical Partners GP LLC, the general partner of the Partnership, declared a quarterly distribution of $0.2829 per unit to be payable on May 27, 2015 to the unitholders of record on May 12, 2015. The MLP distributable cash flow provided coverage of 1.17x the declared distributions.
"We are pleased to report another successful quarter of operations for Westlake Chemical Partners. This quarter highlights the benefits of the structure of our operations and the sales contract with Westlake Chemical. We are beginning to see the impact of previous internal growth initiatives coming online at our Petro 2 ethylene facility, where we set several new production records throughout the quarter. In addition to our previously announced expansion at our Petro 1 ethylene facility in Lake Charles, Louisiana in the first half of 2016, we continue to evaluate opportunities to increase the capacity and efficiency of our operations. The built in demand for our ethylene to serve Westlake's other businesses provide an outlet and incentive to maximize production. We believe continued consistent performance regardless of volatility in oil and ethylene markets combined with execution of our growth strategies, such as our recently announced acquisition of an additional interest in OpCo, will allow us to deliver long-term growth and value to our investors," said President and Chief Executive Officer Albert Chao.

i



The statements in this release and the related teleconference relating to matters that are not historical facts, but forward-looking statements, including the results of the April 2015 purchase of additional interests in OpCo and future potential purchases of additional interest in OpCo, and the ability to deliver long-term growth and value to our investors, which could be adversely affected by, among other things, operating difficulties; the volume of ethylene that we are able to sell; the price at which we are able to sell ethylene; changes in the price and availability of electricity; changes in prevailing economic conditions; actions of third parties; unanticipated ground, grade or water conditions; inclement or hazardous weather conditions, including flooding, and the physical impacts of climate change; environmental hazards; industrial accidents; changes in laws and regulations (or the interpretation thereof); inability to acquire or maintain necessary permits; inability to obtain necessary production equipment or replacement parts; technical difficulties or failures; labor disputes; late delivery of raw materials; difficulty collecting receivables; inability of our customers to take delivery; changes in the price and availability of transportation; fires, explosions or other accidents; our ability to borrow funds and access capital markets; and other risk factors. For more detailed information about the factors that could cause actual results to differ materially, please refer to the Partnership's Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on March 9, 2015.
This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of the Partnership's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.

Use of Non-GAAP Financial Measures
This news release includes the term MLP distributable cash flow, which is a non-GAAP financial measure, as defined in Regulation G of the U.S. Securities Exchange Act of 1934, as amended. We report our financial results in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"), but believe that certain non-GAAP financial measures, such as MLP distributable cash flow, provide useful supplemental information to investors regarding the underlying business trends and performance of our ongoing operations and are useful for period-over-period comparisons of such operations. These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the financial measures prepared in accordance with GAAP. A reconciliation of MLP distributable cash flow to net income and net cash provided by operating activities can be found in the financial schedules at the end of this release. We define distributable cash flow as net income plus depreciation and amortization, less contributions from turnaround reserves and maintenance capital expenditures. We define MLP distributable cash flow as distributable cash flow attributable to periods subsequent to the date of our initial public offering less distributable cash flow attributable to Westlake Chemical Corporation's noncontrolling interest in Westlake Chemical OpCo LP. Because MLP distributable cash flow may be defined differently by other companies in our industry, our definition of MLP distributable cash flow may not be comparable to similarly titled measures of other companies.

Westlake Chemical Partners LP
Westlake Chemical Partners is a limited partnership formed by Westlake Chemical Corporation to operate, acquire and develop ethylene production facilities and other qualified assets. Headquartered in Houston, Texas, the Partnership owns a 13.3% interest in Westlake Chemical OpCo LP. Westlake Chemical OpCo LP's assets consist of three ethylene production facilities in Calvert City, Kentucky, and Lake Charles, Louisiana, and an ethylene pipeline. For more information about Westlake Chemical Partners LP, please visit http://www.wlkpartners.com/.

Westlake Chemical Partners LP Conference Call Information:
A conference call to discuss Westlake Chemical Partners' first quarter 2015 results will be held Monday, May 4, 2015 at 12:00 p.m. Eastern Time (11:00 a.m. Central Time). To access the conference call, dial (855) 765-5686 or (234) 386-2826 for international callers, approximately 10 minutes prior to the scheduled start time and reference passcode 24773677.
A replay of the conference call will be available beginning two hours after its conclusion until 11:59 p.m. Eastern Time on Monday, May 11, 2015. To hear a replay, dial (855) 859-2056, or (404) 537-3406 for international callers. The replay passcode is 24773677.
The conference call will also be available via webcast at: http://edge.media-server.com/m/p/3ru84onf/lan/en and the earnings release can be obtained via the Partnership's web page at: http://westlakepartners.investorroom.com/news-events.

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WESTLAKE CHEMICAL PARTNERS LP ("WESTLAKE PARTNERS")
CONSOLIDATED STATEMENT OF OPERATIONS (1) 
(Unaudited)
 
 
Three Months
Ended
March 31,
2015
 
 
 
 
 
(In thousands of dollars, except
per unit data)
Revenue
 
 
Net sales—Westlake Chemical Corporation ("Westlake")
 
$
208,913

Net co-product, ethylene and other sales—third parties
 
49,478

Total net sales
 
258,391

Cost of sales
 
162,164

Gross profit
 
96,227

Selling, general and administrative expenses
 
6,000

Income from operations
 
90,227

Other income (expense)
 
 
Interest expense
 
(1,376
)
Other income, net
 
5

Income before income taxes
 
88,856

Provision for income taxes
 
467

Net income
 
88,389

Less: Net income attributable to noncontrolling interests in Westlake Chemical OpCo LP ("OpCo")
 
79,889

Net income attributable to Westlake Partners
 
$
8,500

 
 
 
Quarterly distribution declared per unit
 
$
0.2829

 
 
 
MLP distributable cash flow
 
$
8,961

 
 
 
Distribution declared
 
 
Limited partner units—public
 
$
3,660

Limited partner units—Westlake
 
3,995

Incentive distribution rights
 

Total distribution declared
 
$
7,655

_____________
(1)
No comparative period is presented as the Westlake Partners' initial public offering was on August 4, 2014.

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WESTLAKE CHEMICAL PARTNERS LP ("WESTLAKE PARTNERS")
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
 
March 31,
2015
 
December 31,
2014
 
 
 
 
 
 
 
(In thousands of dollars,
except unit amounts)
ASSETS
 
 
 
 
Current assets
 
 
 
 
Cash and cash equivalents
 
$
144,918

 
$
133,750

Accounts receivable, net—Westlake
 
37,982

 
18,529

Accounts receivable, net—third parties
 
16,997

 
37,520

Inventories
 
4,564

 
6,634

Prepaid expenses and other current assets
 
122

 
212

Total current assets
 
204,583

 
196,645

Property, plant and equipment, net
 
866,546

 
842,057

Other assets, net
 
53,832

 
57,733

Total assets
 
$
1,124,961

 
$
1,096,435

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Current liabilities (accounts payable and accrued liabilities)
 
$
34,581

 
$
31,984

Long-term debt payable to Westlake
 
257,829

 
227,638

Other liabilities
 
1,930

 
1,863

Total liabilities
 
294,340

 
261,485

Common unitholders—public (12,937,500 units issued and outstanding)
 
290,883

 
290,377

Common unitholder—Westlake (1,436,115 units issued and outstanding)
 
4,094

 
4,038

Subordinated unitholder—Westlake (12,686,115 units issued and outstanding)
 
36,178

 
35,681

General partner—Westlake
 
(242,572
)
 
(242,572
)
Total Westlake Chemical Partners LP partners' capital
 
88,583

 
87,524

Noncontrolling interest in OpCo
 
742,038

 
747,426

Total equity
 
830,621

 
834,950

Total liabilities and equity
 
$
1,124,961

 
$
1,096,435


iv




WESTLAKE CHEMICAL PARTNERS LP ("WESTLAKE PARTNERS")
CONSOLIDATED STATEMENT OF CASH FLOWS (1) 
(Unaudited)
 
 
Three Months
Ended
March 31,
2015
 
 
 
 
 
(In thousands
of dollars)
Cash flows from operating activities
 
 
Net income
 
$
88,389

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
 
19,803

Other balance sheet changes
 
5,043

Net cash provided by operating activities
 
113,235

Cash flows from investing activities
 
 
Additions to property, plant and equipment
 
(39,540
)
Net cash used for investing activities
 
(39,540
)
Cash flows from financing activities
 
 
Proceeds from debt payable to Westlake
 
30,191

Quarterly distribution for the period from October 1, 2014 to December 31, 2014 to noncontrolling interest
   retained in OpCo by Westlake
 
(85,277
)
Quarterly distributions for the period from October 1, 2014 to December 31, 2014 to unitholders
 
(7,441
)
Net cash used for financing activities
 
(62,527
)
Net increase in cash and cash equivalents
 
11,168

Cash and cash equivalents at beginning of period
 
133,750

Cash and cash equivalents at end of period
 
$
144,918

_____________
(1)
No comparative period is presented as the Westlake Partners' initial public offering was on August 4, 2014.

v




WESTLAKE CHEMICAL PARTNERS LP ("WESTLAKE PARTNERS")
RECONCILIATION OF MLP DISTRIBUTABLE CASH FLOW TO NET INCOME
AND NET CASH PROVIDED BY OPERATING ACTIVITIES
(Unaudited)


 
 
Three Months
Ended
March 31,
2015
 
Three Months
Ended
December 31,
2014
 
 
 
 
 
 
 
(In thousands of dollars)
MLP distributable cash flow
 
$
8,961

 
$
8,547

Add:
 
 
 
 
Distributable cash flow attributable to noncontrolling interests in OpCo
 
83,824

 
85,277

Maintenance capital expenditures
 
8,286

 
11,790

Contribution to turnaround reserves
 
7,121

 
7,463

Less:
 
 
 
 
Depreciation and amortization
 
(19,803
)
 
(19,148
)
Net income for the period
 
88,389

 
93,929

Depreciation and amortization
 
19,803

 
19,110

Other balance sheet changes
 
5,043

 
4,983

Net cash provided by operating activities
 
$
113,235

 
$
118,022



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