Westlake Chemical Partners posted Q2 distributable cash flow of $18 million, or $0.50 per unit, and its trailing distribution coverage ratio improved to 1.04 times. The partnership extended credit lines through 2031 at a lower rate.
Westlake Chemical Partners (WLKP) reported second-quarter net income of $14 million, or $0.40 per unit, matching the first quarter. Distributable cash flow reached $18 million, or $0.50 per unit, $3 million above last year's second quarter. CFO John Bochert attributed the gain to higher production and sales volumes after the Petro 1 plant turnaround concluded in early 2025.
President and CEO Jean Marc Gilson said the partnership's Ethylene Sales Agreement with parent Westlake Corporation remains the key buffer against market volatility. The agreement guarantees a fixed margin of $0.10 per pound on 95% of WLKP's ethylene output.
"The stability of Westlake Partners' business model is consistently demonstrated through our fixed margin Ethylene Sales Agreement, which minimizes market volatility and other production risks," Gilson said.
The board declared a quarterly distribution of $0.4714 per unit on Aug. 3, payable Aug. 28 to unitholders of record Aug. 13. The payment is the 48th consecutive quarterly payout without a reduction since the July 2014 IPO. Bochert noted distributions have risen 71% from the original minimum of $0.275 per unit.
The trailing 12-month distribution coverage ratio improved to 1.04 times from 1.0 times. Gilson said the quarterly coverage ratio stood at exactly 1.0 time, supported by solid operating rates at OpCo's ethylene facilities.
In July, OpCo and the partnership extended their revolving credit agreements with Westlake by four years through 2031. The new terms cut the interest rate by 10 basis points. Bochert called the extension, combined with the earlier renewal of the Ethylene Sales Agreement, a demonstration of Westlake's commitment to the partnership.
Management outlined four growth pathways: increasing the partnership's ownership stake in OpCo, acquiring other qualified income streams, expanding existing ethylene facilities, or negotiating a higher fixed margin under the Ethylene Sales Agreement. Gilson acknowledged that conflict in the Middle East has raised chemical price volatility. He said the fixed-margin structure largely insulates WLKP from those swings.
The call also marked a finance leadership transition. Steve Bender, chief financial officer since the partnership's formation, is retiring next month and becomes a special advisor to the president. John Bochert has taken over as senior vice president and CFO. Bender said he leaves the partnership on "very firm financial footing," citing the recent renewal of the revolver and the Ethylene Sales Agreement.
OpCo spent $12 million on capital expenditures during the quarter. Management said there are no planned turnarounds in 2026 for modeling purposes. Consolidated leverage stood at roughly one time, according to Bochert.
At quarter-end, the partnership held $93 million in consolidated cash and cash investments under the Investment Management Agreement with Westlake. Long-term debt totaled $400 million, split between $377 million at the partnership and $23 million at OpCo.
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