Westlake Chemical Partners' Q3 Net Income Dips 19% Amid Higher Sales

TL;DR

**WLKP's Q3 net income plunged 19% despite higher sales, signaling margin pressure and a concerning drop in operating cash flow that could jeopardize future distributions.**

AI Summary

Westlake Chemical Partners LP (WLKP) reported a decrease in net income for the three months ended September 30, 2025, to $14.653 million, down from $18.136 million in the prior-year period, representing a 19.2% decline. For the nine months ended September 30, 2025, net income attributable to WLKP was $34.159 million, a significant drop from $47.396 million in the same period of 2024, a 27.9% decrease. Total net sales increased to $308.898 million for the three months ended September 30, 2025, up from $276.995 million in 2024, primarily driven by a rise in net sales to Westlake Corporation from $215.799 million to $276.539 million. However, gross profit decreased from $116.943 million to $99.423 million for the quarter, and from $320.355 million to $251.036 million for the nine-month period. Cash provided by operating activities significantly decreased to $160.090 million for the nine months ended September 30, 2025, compared to $352.532 million in the prior year, largely due to changes in operating assets and liabilities, including a $123.817 million decrease in deferred charges and other assets. The partnership declared a quarterly cash distribution of $0.4714 per common unit for the quarter ended September 30, 2025.

Why It Matters

WLKP's declining net income and gross profit, despite increased sales to Westlake Corporation, signal potential margin compression or increased operational costs, which could impact future distributions for investors. The significant reduction in cash provided by operating activities, down to $160.090 million from $352.532 million year-over-year, raises concerns about the partnership's ability to generate sufficient cash internally for operations and distributions. In a competitive market, this financial performance could make WLKP less attractive compared to peers with more stable or growing profitability, potentially affecting its unit price and long-term viability. Employees and customers might see this as a sign of operational challenges, though the core business of ethylene production remains critical for Westlake Corporation.

Risk Assessment

Risk Level: medium — The partnership's net income attributable to WLKP decreased by 19.2% for the three months ended September 30, 2025, to $14.653 million, and by 27.9% for the nine-month period to $34.159 million. Furthermore, cash provided by operating activities plummeted from $352.532 million in the first nine months of 2024 to $160.090 million in the same period of 2025, a 54.6% reduction, indicating significant operational cash flow challenges.

Analyst Insight

Investors should closely monitor WLKP's gross profit margins and cash flow from operations in upcoming quarters. Given the significant decline in net income and operating cash, consider if the current distribution yield is sustainable and evaluate the partnership's ability to maintain its distribution policy amidst these financial pressures.

Financial Highlights

debt To Equity

0.56

revenue

$843.646M

operating Margin

27.2%

total Assets

$1,271.613M

total Debt

$458.302M

net Income

$34.159M

eps

N/A

gross Margin

29.8%

cash Position

$37.936M

revenue Growth

-0.25%

Revenue Breakdown

Key Numbers

• $14.653M — Net Income (Q3 2025) (Down 19.2% from $18.136M in Q3 2024)
• $34.159M — Net Income (YTD 2025) (Down 27.9% from $47.396M in YTD 2024)
• $308.898M — Total Net Sales (Q3 2025) (Up from $276.995M in Q3 2024)
• $99.423M — Gross Profit (Q3 2025) (Down from $116.943M in Q3 2024)
• $160.090M — Operating Cash Flow (YTD 2025) (Down 54.6% from $352.532M in YTD 2024)
• $0.4714 — Quarterly Distribution per Unit (Declared for Q3 2025)
• 22.8% — Limited Partner Interest in OpCo (WLKP's ownership stake in Westlake Chemical OpCo LP)

Key Players & Entities

• Westlake Chemical Partners LP (company) — registrant
• Westlake Corporation (company) — parent company and primary customer
• Westlake Chemical OpCo LP (company) — entity consolidated by WLKP
• $14.653 million (dollar_amount) — Net income attributable to WLKP for Q3 2025
• $18.136 million (dollar_amount) — Net income attributable to WLKP for Q3 2024
• $34.159 million (dollar_amount) — Net income attributable to WLKP for nine months ended Sept 30, 2025
• $47.396 million (dollar_amount) — Net income attributable to WLKP for nine months ended Sept 30, 2024
• $160.090 million (dollar_amount) — Net cash provided by operating activities for nine months ended Sept 30, 2025
• $352.532 million (dollar_amount) — Net cash provided by operating activities for nine months ended Sept 30, 2024
• $0.4714 (dollar_amount) — Quarterly cash distribution per common unit for Q3 2025

FAQ

Risk Factors

• Fluctuations in Ethylene and Derivative Prices [high — market]: The partnership's financial performance is highly sensitive to the prices of ethylene and its derivatives, as well as the cost of feedstocks. A significant decrease in these prices, as evidenced by the 47.1% drop in third-party sales, can negatively impact gross profit and net income.
• Dependence on Westlake Corporation [medium — operational]: A substantial portion of WLKP's revenue is derived from sales to Westlake Corporation. While this relationship provides a stable customer base, it also creates a concentration risk. Any disruption in this relationship or changes in Westlake Corporation's demand could significantly affect WLKP's sales and profitability.
• Decreasing Operating Cash Flow [high — financial]: Cash provided by operating activities decreased by 54.6% to $160.090 million for the nine months ended September 30, 2025, compared to $352.532 million in the prior year. This decline, largely due to changes in operating assets and liabilities, including a $123.817 million decrease in deferred charges and other assets, raises concerns about the partnership's ability to generate sufficient cash for operations and distributions.
• Environmental and Safety Regulations [medium — regulatory]: As a producer of chemicals and petrochemicals, WLKP is subject to stringent environmental and safety regulations. Non-compliance or changes in regulations could lead to significant fines, operational disruptions, and increased compliance costs.
• Competition in the Petrochemical Industry [medium — market]: The petrochemical industry is highly competitive, with numerous global players. WLKP faces competition from both large integrated companies and smaller specialized producers, which can put pressure on pricing and market share.

Industry Context

Westlake Chemical Partners LP operates within the highly competitive and cyclical petrochemical industry, primarily focused on ethylene production. The industry is characterized by significant capital investment, sensitivity to feedstock costs (natural gas and crude oil derivatives), and global supply-demand dynamics. Trends include increasing demand for plastics and chemicals, but also pressure from environmental regulations and the push for more sustainable production methods.

Regulatory Implications

WLKP is subject to a range of environmental, health, and safety regulations governing its manufacturing processes. Compliance with these regulations, including emissions standards and waste disposal, is critical. Changes in environmental policy or stricter enforcement could lead to increased operational costs and potential liabilities.

What Investors Should Do

1. Monitor feedstock costs and ethylene pricing trends closely.
2. Analyze the sustainability of the current distribution level.
3. Evaluate the impact of the decrease in 'deferred charges and other assets' on operating cash flow.
4. Assess the strategic relationship with Westlake Corporation.

Key Dates

• 2025-09-30: End of Q3 2025 — Reported net income of $14.653 million, a 19.2% decrease from Q3 2024. Total net sales increased to $308.898 million.
• 2025-10-28: Declaration of Q3 2025 Distribution — Board declared a quarterly cash distribution of $0.4714 per common unit, indicating continued, albeit potentially pressured, returns to unitholders.
• 2025-11-26: Payment of Q3 2025 Distribution — Distribution payment date for unitholders of record as of November 10, 2025.
• 2025-03-05: Filing of 2024 Form 10-K — Provided historical financial data and context for the current period's analysis.

Glossary

OpCo

Westlake Chemical OpCo LP, a limited partnership that owns ethylene production facilities and a pipeline. (WLKP holds a significant interest in OpCo, and its financial performance is directly tied to OpCo's operations.)

Common units

Units representing limited partner interests in Westlake Chemical Partners LP. (The basis for distributions and net income per unit calculations for public and private unitholders.)

General partner

Westlake GP LLC, the entity that manages the Partnership's business and operations. (Responsible for declaring distributions and overseeing the partnership's strategic direction.)

Deferred charges and other assets

Costs incurred that are expected to provide future economic benefits but are not classified as current assets. (A significant change in this account ($123.817 million decrease) impacted operating cash flow negatively.)

Two-class method

A method used to calculate earnings per unit when a company has more than one class of participating securities. (Relevant for understanding how net income is allocated to different types of unitholders.)

Year-Over-Year Comparison

Compared to the prior year, Westlake Chemical Partners LP (WLKP) experienced a notable decline in profitability, with net income down 19.2% for Q3 2025 and 27.9% year-to-date. While total net sales saw a modest increase of 11.5% for the quarter, driven by higher sales to Westlake Corporation, gross profit decreased by 14.9% for the quarter and 21.7% year-to-date, indicating margin compression. A significant concern is the 54.6% drop in operating cash flow for the nine-month period, largely attributed to changes in operating assets and liabilities, suggesting potential headwinds for cash generation.

Filing Documents

• wlkp-20250930.htm (10-Q) — 949KB
• exhibit311_20250930.htm (EX-31.1) — 19KB
• exhibit312_20250930.htm (EX-31.2) — 19KB
• exhibit321_20250930.htm (EX-32.1) — 13KB
• 0001604665-25-000042.txt ( ) — 5021KB
• wlkp-20250930.xsd (EX-101.SCH) — 36KB
• wlkp-20250930_cal.xml (EX-101.CAL) — 41KB
• wlkp-20250930_def.xml (EX-101.DEF) — 228KB
• wlkp-20250930_lab.xml (EX-101.LAB) — 417KB
• wlkp-20250930_pre.xml (EX-101.PRE) — 349KB
• wlkp-20250930_htm.xml (XML) — 696KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1)

Financial Statements

Financial Statements 1 2)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 18 3)

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 30 4)

Controls and Procedures

Controls and Procedures 30

OTHER INFORMATION

PART II. OTHER INFORMATION 1)

Legal Proceedings

Legal Proceedings 31 1A)

Risk Factors

Risk Factors 31 5) Other Information 31 6) Exhibits 32 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements WESTLAKE CHEMICAL PARTNERS LP CONSOLIDATED BALANCE SHEETS (Unaudited) September 30, 2025 December 31, 2024 (in thousands of dollars, except unit amounts) ASSETS Current assets Cash and cash equivalents $ 37,936 $ 58,316 Receivable under the Investment Management Agreement—Westlake Corporation ("Westlake") 13,396 134,557 Accounts receivable, net—Westlake 59,665 31,975 Accounts receivable, net—third parties 16,141 11,576 Inventories 3,078 4,058 Prepaid expenses and other current assets 641 444 Total current assets 130,857 240,926 Property, plant and equipment, net 902,813 903,588 Goodwill 5,814 5,814 Deferred charges and other assets, net 232,129 137,628 Total assets $ 1,271,613 $ 1,287,956 LIABILITIES Current liabilities Accounts payable—Westlake $ 8,741 $ 20,744 Accounts payable—third parties 14,349 17,708 Accrued and other liabilities 32,036 16,920 Total current liabilities 55,126 55,372 Long-term debt payable to Westlake 399,674 399,674 Deferred income taxes 1,518 1,546 Other liabilities 1,984 2,050 Total liabilities 458,302 458,642 Commitments and contingencies (Note 12) EQUITY Common unitholders—publicly and privately held ( 21,123,649 and 21,116,326 units issued and outstanding at September 30, 2025 and December 31, 2024, respectively) 462,093 471,328 Common unitholder—Westlake ( 14,122,230 and 14,122,230 units issued and outstanding at September 30, 2025 and December 31, 2024, respectively) 41,091 47,373 General partner—Westlake ( 242,572 ) ( 242,572 ) Total Westlake Chemical Partners LP partners' capital 260,612 276,129 Noncontrolling interest in Westlake Chemical OpCo LP ("OpCo") 552,699 553,185 Total equity 813,311 829,314 Total liabilities and equity $ 1,271,613 $ 1,287,956 The accompanying notes are an integral part of the consolidated financial statements. 1 Table of Contents WESTLAKE CHEMICAL PARTNERS LP CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months En

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued (Unaudited) (in thousands of dollars, except unit amounts and per unit data) 1. Description of Business and Basis of Presentation Description of Business Westlake Chemical Partners LP (the "Partnership") is a Delaware limited partnership formed in March 2014 to operate, acquire and develop ethylene production facilities and related assets. On August 4, 2014, the Partnership completed its initial public offering (the "IPO") of 12,937,500 common units representing limited partner interests. In connection with the IPO, the Partnership acquired a 10.6 % limited partner interest in Westlake Chemical OpCo LP ("OpCo") and a 100 % interest in Westlake Chemical OpCo GP LLC ("OpCo GP"), which is the general partner of OpCo. OpCo owns three ethylene production facilities and one common carrier ethylene pipeline (collectively, the "Contributed Assets"). Since the IPO, the Partnership has periodically purchased additional limited partner interest in OpCo. Most recently, on March 29, 2019, the Partnership purchased an additional 4.5 % newly-issued limited partner interest in OpCo for approximately $ 201,445 , resulting in an aggregate 22.8 % limited partner interest in OpCo, effective January 1, 2019. The remaining 77.2 % limited partner interest in OpCo is owned by Westlake Corporation. Basis of Presentation The accompanying unaudited consolidated interim financial statements were prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim periods. Accordingly, certain information and footnotes required for complete financial statements under generally accepted accounting principles in the United States ("U.S. GAAP") have not been included. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto of the Partnership included in the annual report on Form 10-K for the fiscal year

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued (Unaudited) (in thousands of dollars, except unit amounts and per unit data) Recently Issued Accounting Pronouncements Measurement of Credit Losses for Accounts Receivable and Contract Assets (ASU No. 2025-05) In July 2025, the Financial Accounting Standards Board ("FASB") issued an accounting standards update to add a practical expedient in developing reasonable and supportable forecasts as part of estimating expected credit losses. All entities may elect a practical expedient that assumes the current conditions as of the balance sheet date do not change for the remaining life of the asset. The amendments in this update are effective for annual reporting periods beginning after December 15, 2025 and interim reporting periods within those annual reporting periods, with early adoption permitted. Entities should apply the new guidance prospectively. The Partnership does not expect that this accounting standard, upon adoption, will have a material impact on the Partnership's consolidated financial statements. Disaggregation of Income Statement Expenses (ASU No. 2024-03) In November 2024, the FASB issued an accounting standards update requiring public entities to disclose, on an annual and interim basis, detailed information about the types of expenses in relevant expense captions presented on the face of the income statement, including amounts for inventory purchases, employee compensation, depreciation and amortization of intangible assets and a qualitative description for remaining amounts not separately disaggregated. Additionally, the update requires disclosure of total selling expenses, and in annual periods, an entity's definition of selling expenses. The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027 and are to be applied either prospectively or retrospectively. Early adoption is permitted.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued (Unaudited) (in thousands of dollars, except unit amounts and per unit data) 3. Inventories Inventories consist of the following: September 30, 2025 December 31, 2024 Finished products $ 2,609 $ 3,748 Feedstock, additives and chemicals 469 310 Inventories $ 3,078 $ 4,058 4. Property, Plant and Equipment Depreciation expense on property, plant and equipment of $ 21,966 and $ 21,626 is included in cost of sales in the consolidated statements of operations for the three months ended September 30, 2025 and 2024, respectively. Depreciation expense on property, plant and equipment of $ 64,389 and $ 64,993 is included in cost of sales in the consolidated statements of operations for the nine months ended September 30, 2025 and 2024 , respectively. 5. Deferred Charges and Other Assets Amortization expense on deferred charges and other assets of $ 11,906 and $ 6,486 is included in cost of sales in the consolidated statements of operations for the three months ended September 30, 2025 and 2024, respectively . Amortization expense on deferred charges and other assets of $ 29,035 and $ 19,428 is included in cost of sales in the consolidated statements of operations for the nine months ended September 30, 2025 and 2024, respectively. 6. Distributions and Net Income Per Limited Partner Unit On October 28, 2025, the board of directors of Westlake Chemical Partners GP LLC ("Westlake GP"), the Partnership's general partner, declared a quarterly cash distribution for the three months ended September 30, 2025 of 0.4714 per common unit. This distribution is payable on November 26, 2025 to unitholders of record as of November 10, 2025. Distributions are declared subsequent to quarter end; therefore, the table below represents total cash distributions declared from earnings of the related periods pertaining to such distributions. Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued (Unaudited) (in thousands of dollars, except unit amounts and per unit data) Three Months Ended September 30, 2025 Limited Partners' Common Units Incentive Distribution Rights Total Net income attributable to the Partnership: Distribution $ 16,615 $ — $ 16,615 Distribution in excess of net income ( 1,962 ) — ( 1,962 ) Net income $ 14,653 $ — $ 14,653 Weighted average units outstanding: Basic and diluted 35,242,934 35,242,934 Net income per limited partner unit: Basic and diluted $ 0.42 Three Months Ended September 30, 2024 Limited Partners' Common Units Incentive Distribution Rights Total Net income attributable to the Partnership: Distribution $ 16,611 $ — $ 16,611 Net income in excess of distribution 1,525 — 1,525 Net income $ 18,136 $ — $ 18,136 Weighted average units outstanding: Basic and diluted 35,235,173 35,235,173 Net income per limited partner unit: Basic and diluted $ 0.51 Nine Months Ended September 30, 2025 Limited Partners' Common Units Incentive Distribution Rights Total Net income attributable to the Partnership: Distribution $ 49,838 $ — $ 49,838 Distribution in excess of net income ( 15,679 ) — ( 15,679 ) Net income $ 34,159 $ — $ 34,159 Weighted average units outstanding: Basic and diluted 35,240,031 35,240,031 Net income per limited partner unit: Basic and diluted $ 0.97 9 Table of Contents WESTLAKE CHEMICAL PARTNERS LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued (Unaudited) (in thousands of dollars, except unit amounts and per unit data) Nine Months Ended September 30, 2024 Limited Partners' Common Units Incentive Distribution Rights Total Net income attributable to the Partnership: Distribution $ 49,826 $ — $ 49,826 Distribution in excess of net income ( 2,430 ) — ( 2,430 ) Net income $ 47,396 $ — $ 47,396 Weighted average units outstanding: Basic and diluted 35,230,961 35,230,961 Net income per limited partner unit: Basic and diluted $ 1.35 The amended Partnership Agreement provides that the Partnership will distribute cash that is deemed to be an appropriate portion of the Partnership's total operating surplus. If cash distributions to the Partnership's unitholders exceed $ 1.2938 per common unit in any quarter, the Partnership's unitholders and Westlake, as the holder of the Partnership's incentive distribution rights, will receive distributions according to the following percentage allocations: Marginal Percentage Interest in Distributions Total Quarterly Distribution Per Unit Unitholders IDR Holders Above $ 1.2938 up to $ 1.4063 85.0 % 15.0 % Above $ 1.4063 up to $ 1.6875 75.0 % 25.0 % Above $ 1.6875 50.0 % 50.0 % The Partnership's distribution for the three months ended September 30, 2025 did not exceed the $ 1.2938 per unit threshold, and, as a result, no distribution was made with respect to the Partnership's incentive distribution rights to Westlake, as the holder of the Partnership's incentive distribution rights. Distributions Per Common Unit Distributions per common unit for the three and nine months ended September 30, 2025 and 2024 were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Distributions per common unit $ 0.4714 $ 0.4714 $ 1.4142 $ 1.4142 7. Partners' Equity On October 4, 2018, the Partnership and Westlake Chemical Partners GP LLC, the general partner of the Part

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued (Unaudited) (in thousands of dollars, except unit amounts and per unit data) 8. Related Party Transactions Related party transactions between the Partnership, OpCo and Westlake are primarily based on agreements such as the Ethylene Sales Agreement, the Feedstock Supply Agreement, the Services and Secondment Agreement, Site Lease Agreements, the Omnibus Agreement, the Investment Management Agreement, the Exchange Agreement, the OpCo Partnership Agreement, the OpCo Revolver and the MLP Revolver. These agreements, discussed in detail in the Partnership's 2024 consolidated financial statements included in the 2024 Form 10-K filed on March 5, 2025, reflect the pervasive effect of the relationship with Westlake on the Partnership's operations and its consolidated financial statements. Pursuant to these agreements, the Partnership and OpCo regularly enter into transactions with Westlake. See below for descriptions and details of significant related party transactions. Sales to Related Parties OpCo sells ethylene to Westlake under the Ethylene Sales Agreement. Additionally, the Partnership and OpCo from time to time provide other services or products for which it charges Westlake a fee. OpCo sells a significant portion of its ethylene production to Westlake. Sales to related parties were as follows: Three Months Ended September 30,

View Full Filing

View this 10-Q filing on SEC EDGAR