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Operator: Good afternoon. Thank you for standing by. Welcome to the Westlake Chemical Partners Fourth Quarter and Full Year 2022 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. After the speakers’ remarks, you will be invited to participate in the question-and-answer session. As a reminder, this conference is being recorded today, February 21, 2023. I would now like to turn the call over to today’s host Jeff Holy, Westlake Chemical Partners’ Vice President and Treasurer. Sir, you may begin.

Jeff Holy: Thank you. Good afternoon everyone, and welcome to the Westlake Chemical Partners fourth quarter and full year 2022 conference call. I’m joined today by Albert Chao, our President and CEO; Steve Bender, our Executive Vice President and CFO, and other members of our management team. During this call, we refer to ourselves as Westlake Partners or the Partnership. References to Westlake refer to a parent company Westlake Corporation, and references to OpCo refer to Westlake Chemical OpCo LP, a subsidiary of Westlake and the Partnership which owns certain Olefins assets. Additionally, when we refer to distributable cash flow, we are referring to Westlake Chemical Partners’ MLP distributable cash flow. Definitions of these terms are available on the partnership’s website.

Today, management is going to discuss certain topics that will contain forward-looking information that is based on management’s beliefs, as well as assumptions made by and information currently available to management. These forward-looking statements suggest predictions or expectations and thus are subject to risks or uncertainties. We encourage you to learn more about the factors that could lead our actual results to differ by reviewing the cautionary statements in our regulatory filings, which are also available on our Investor Relations website. This morning, Westlake Partners issued a press release with details of our fourth quarter and full year 2022 financial and operating results. This document is available in the Press Release section of our web page at wlkpartners.com.

A replay of today’s call will be available beginning 2 hours after the conclusion of this call. The replay can be accessed via the partnership’s website. Please note that information reported on this call speaks only as of today, February 21, 2023, and therefore, you are advised that time sensitive information may no longer be accurate as of the time of any replay. I would finally advise you that this conference call is being broadcast live through an Internet webcast system that can be accessed on our web page at wlkpartners.com. Now, I’d like to turn the call over to Albert Chao. Albert.

Albert Chao: Thank you, Jeff. Good afternoon everyone, and thank you for joining us to discuss our fourth quarter and full year 2022 results. In this morning’s press release reported Westlake Partners full year 2022, net income of $64 million or $1.82 per unit. Consolidated net income, including OpCo was $335 million for the full year 2022. Westlake Partners’ financial results continue to demonstrate the stability generated from our fixed margin etherlink sales agreement for 95% of annual planned production each year, insulating us from market volatility and other production risks. This structure combined with our investment grade sponsor Westlake produces predictable earnings and stable cash flows. This was evident despite heightened macroeconomic and ethylene margin volatility in 2022, as we delivered solid results and sustained distributions to our unitholders.

The stable fee-based cash flow generated by our fixed margining etherlink sales contract with Westlake forms the foundation for us to deliver long-term value to our unitholders. This quarter’s distribution is a 34th consecutive quarter distribution since our IPO in July of 2014 without any reductions. I would now like to turn our call over to Steve to provide more detail on the financial and operating results for the quarter. Steve.

Steve Bender: Thank you, Albert, and good afternoon everyone. In this morning’s press release, we reported Westlake Partners fourth quarter 2022, net income of $17 million or $0.48 per unit. Consolidated net income, including OpCo’s earnings, was 91 million on consolidated net sales of 367 million. The partnership had distributable cash flow for the quarter of $20 million or $0.58 per unit. Fourth quarter 2022 net income for Westlake partners of $17 million decreased by 13 million, compared to the fourth quarter 2021, net income of $30 million. In the year ago period, the partnership benefited from a larger buyer deficiency fee as well as recovery of certain other costs from Westlake attributable to an unplanned outage. Distributable cash flow of $20 million for the fourth quarter of 2022 increased by $5 million, compared to fourth quarter of 2021, due to distributable cash flow of $15 million, due to lower maintenance capital spending and the timing of certain receivables from Westlake.

For the full year of 2022, net income of $64 million or a $0.82 per unit decreased by $19 million compared to full year 2021 net income of $83 million. The decrease in net income attributable to partnership was due to weaker third-party sales margins and higher interest expense. Despite the headwinds, the net income from weaker third-party sales margins and higher interest rates, our full year 2022 MLP distributable cash flow of $76 million increased by $6 million compared to MLP distributable cash flow of $70 million for the full year of 2021 and our distribution coverage for 2022 was 1.14x. Turning our attention to the balance sheet in cash flows at the end of the fourth quarter, we had consolidated cash balance in cash investments with Westlake who are investment management agreement totaling $130 million.

At the end of the fourth quarter, Westlake had payment obligations to OpCo of 31 million, representing a buyer deficiency fee for loss production and the recovery of certain other cost. The buyer deficiency fee was received in January, 2023 under the terms of the ethylene sales agreement. Long-term debt at the end of the quarter was $400 million of which $377 million was at the partnership and the remaining $23 was at OpCo. In 2022, OpCo spent $54 million in capital expenditures. We maintained our strong leverage metrics with a consolidated leverage ratio of approximately 1x. On January 23, 2023, we announced a quarterly distribution of $47.14 per unit with respect to the fourth quarter of 2022. Since our IPO in 2014, the partnership has made 34 consecutive quarterly distributions to our unitholders, and we’ve grown distributions 71% since the partnership’s original minimum quarterly distribution of $27.5 per unit.

The partnership’s fourth quarter distribution was paid on February 16, 2023 to unitholders of record February 2nd, 2023. The partnership’s predictable fee-based cash flow continues to provide benefits in today’s economic environment and is differentiated by the consistency of our earnings and cash flows. Looking back, since our IPO in July of 2014, we’ve maintained a cumulative distribution coverage ratio in excess of 1.1x, and the partnership stability in cash flows are able to sustain our current distribution without the need to access capital markets. For modeling purposes, we have one plan turnaround in 2023 at our Calvert City, Kentucky facility. This turnaround is scheduled to begin in May and is projected to last approximately 30 days.

In prior years, where we have had a planned turnaround such as this one, the distribution ratio is impacted for the period for recovering. And for this turnaround, we do expect a similar result. The cost of this turnaround has been included in the amount we charge to Westlake and has been fully reserved for and funded as we commence the turnaround. Now, I’d like to turn the call back over to Albert to make some closing comments. Albert

Albert Chao: Thank you, Steve. We are pleased with the Partnership’s financial and operational performance through the fourth quarter and the year as a whole. The stability of our business model and associated cash flows, demonstrate a benefit that our ethylene sales agreement and its protected provisions provide a Partnership through predictable long term earnings and cash flows, despite both planned and unplanned production outages. While recent economic weakness has negatively impacted demand for ethylene derivatives, the nature of our ethylene sales agreement provides for the recovery of all costs related to sales to Westlake. Thus, we are very well-positioned to navigate these markets. Our ethylene sales agreement, which provides a predictable fee based cash flow structure, from our take-or-pay contract with Westlake for 95% of OpCo’s production will continue to deliver stable and predictable cash flows.

Turning to our capital structure. We maintain a strong balance sheet with conservative financial and leverage metrics. As we continue to navigate market conditions, we will evaluate opportunities via our four levers of growth in the future, including increases of ownership interest of OpCo, acquisitions of other qualified income streams, organic growth opportunities such as expansions of our current ethylene facilities, and negotiation of a higher fixed margin in our ethylene sales agreement with Westlake. We remain focused on our ability to continue to provide long-term value and distributions to our unitholders. As always, we will continue to focus on safe operations along with being good stewards of the environment, where we work and live, as part of our broader sustainability efforts.

Thank you very much for listening to our fourth quarter earnings call. Now I’ll turn the call back over to Jeff.

Jeff Holy: Thank you, Albert. Before we begin taking questions, I’d like to remind you that, a replay of this teleconference will be available two hours after the call is ended. I will provide that number again at the end of the call. Michelle, we will now take questions.

Operator: Our first question comes from James with Avian Advisory. Your line is open. Please go ahead.

Unidentified Analyst: Thanks for taking my call. Couple of questions. You mentioned that, you are going to have one outage — I’m about using a reattempting outage, is that the right word for one of your facilities this year?

Steve Bender: So, it will be a maintenance turnaround.

Unidentified Analyst: What will be — what do you have an estimate of? What the impact on net or operating income and EBITDA and cash flow will be?

Steve Bender: And so, because we have that contract, that ethylene contract with our parent Westlake Corporation will be losing those pounds that are subject to that 95% off take at that $0.10 margin, the turnaround’s expected to last 30 days. And we’ll update as we get closer, but that turnaround’s expected to start in May.

Unidentified Analyst: Why did third party margins decline? And do you have any out outlook for this year as to what’s going to happen with third party margins?

Steve Bender: So, third party margins were depressed in the quarter simply because of lack of demand of ethylene derivatives in the marketplace. We’re selling ethylene into that market. And so, there was a pullback, as you’ve seen in the macroeconomic environment for ethylene related derivatives. And so therefore, margins were below that historical threshold that we’ve seen historically. So therefore, margins were under pressure. As we look forward, we’ll look to see where we can optimize ethylene margins. The market is volatile in terms of ethylene margins and we certainly look to maximize those third party sales when we can optimize margin to exceed the targeted $0.10. In 2023, the consultants are looking to forecast margins could be below that $0.10 threshold currently.

Unidentified Analyst: So, if they’re below that threshold, does that mean you just won’t make the sales?

Steve Bender: We’ll make sales, but we’ll certainly be opportunistic when we find markets that are attractive to us. Certainly, we’ll look to see if we can optimize, but we are interested in making those third party sales because they are contributory to net income during the course of the year.

Unidentified Analyst: And I don’t want to take too much of your time, but I did notice that you had a meaningful decline in SG&A expenses quarter-on-quarter and less pronounced decline year on year. What — what did that happen?

Steve Bender: Yes. From time to time, we have peaks and valleys in some of the maintenance activities and time to time we have changes in timing as it relates to some of the expenses administratively. So, I would say that if you look at over the course of a year, it does tend to average out, but there are some peaks and valleys in terms when certain administrative costs are incurred and we have certain activities at the plant site that occur that impact G&A.

Operator: At this time, the Q&A session has now ended. I will now turn the call back over to Jeff Holy,

Jeff Holy: Thank you again for participating in today’s call. We hope you’ll join us for our next conference call to discuss our first quarter 2023 results.

Operator: Thank you for participating in today’s Westlake Chemical Partners fourth quarter and full year 2022 earnings conference call. As a reminder, this call will be available for replay beginning two hours after the call has ended and may be accessed until 11:59 PM Eastern time on Tuesday, February 28, 2023. The replay can be assessed by the partnership website. Goodbye.