Westlake Chemical (NYSE:WLKP) reported third-quarter financial results on Wednesday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
Westlake Chemical Partners reported third quarter 2026 net income of $16 million, or $0.46 per unit, surpassing both the prior quarter and the same period last year.
The company maintained its 49th consecutive quarterly distribution, paying out 47.14 cents per unit, reflecting a 71% growth since the IPO in 2014.
Consolidated net income, including OpCo’s earnings, totaled $91 million on net sales of $314 million, with distributable cash flow reaching $18 million, or $0.51 per unit.
The company highlighted the stability and predictability of its business model, driven by its fixed-margin ethylene sales agreement, which minimizes market volatility.
Management emphasized a strong balance sheet with a consolidated cash balance of $113 million and leverage ratio of approximately 1x, alongside long-term debt of $400 million.
The company plans no operational turnarounds for the remainder of 2026 and 2027, and noted that fourth-quarter ethylene prices have been rising, potentially benefiting their third-party sales.
Future strategic growth will focus on increasing ownership interest in OpCo, acquisitions, organic growth through ethylene facility expansions, and negotiating higher fixed margins in sales agreements.
Full Transcript
OPERATOR (Moderator)
Good afternoon. Thank you for standing by. Welcome to the Westlake Chemical Partners third quarter 2026 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 a question-and-answer session. As a reminder, this conference is being recorded today, November 4, 2026. I would now like to turn the call over to today’s host, Jeff Hawley, Westlake Chemical Partners Vice President of Finance and Investor Relations.
Sir, you may begin.
Jeff Hawley (Vice President of Finance and Investor Relations)
Thank you. Good afternoon everyone and welcome to the Westlake Chemical Partners third quarter 2026 conference call. I am joined today by Albert Chao, our Executive Chairman, Jean‑Marc Gilson, our President and CEO, Jon Baksht, our Senior Vice President and Chief Financial Officer, 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 our parent company, Westlake Corporation, and references to OpCo refer to Westlake Chemical OpCo LP, a subsidiary of both 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 and 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 third quarter 2026 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 two 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, November 4, 2026, 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 webpage at wlkpartners.com. Now I would like to turn the call over to Jean‑Marc Gilson. Jean‑Marc.
Jean-Marc Gilson (President and CEO)
Thank you, Jeff. Good afternoon everyone and thank you for joining us to discuss our third quarter 2026 results. In this morning’s press release we reported Westlake Partners third quarter 2026 net income of $16 million, or $0.46 per unit, which was above our net income in both the second quarter of 2026 and the third quarter of 2025. The stability of Westlake Partners’ business model is consistently demonstrated through our fixed-margin ethylene sales agreement, which minimizes market volatility and other production risk.
The high degree of stability in cash flow when paired with the predictability of our business has enabled us to deliver the long history of reliable distributions and coverage. This quarter’s distribution is the 49th consecutive quarterly distribution since our IPO in July of 2014 without any reductions. And with that I would like now to turn over our call to Jon to provide more detail on the financial and operating results for the quarter. Jon.
Jon Baksht (SVP & Chief Financial Officer)
Thank you, Jean‑Marc, and good afternoon everyone. In this morning’s press release we reported Westlake Partners’ third quarter 2026 net income of $16 million, or $0.46 per unit. Consolidated net income, including OpCo’s earnings, was $91 million on consolidated net sales of $314 million. The Partnership had distributable cash flow for the quarter of $18 million, or $0.51 per unit. Third quarter 2026 net income for Westlake Partners of $16 million was higher than the third quarter 2025 Partnership net income primarily due to higher production and sales volume. Distributable cash flow of $18 million for the third quarter of 2026 increased by $3 million compared to the third quarter of 2025 due to the higher production and sales volume and lower maintenance capital expenditures. On a sequential basis, net income for Westlake Partners of $16 million in the third quarter of 2026 was higher than the second quarter on higher production and sales volume.
Sequentially, our trailing 12‑month coverage ratio improved to 1.09 times from 1.04 times, reflecting the aging out of the impact of the Petro One turnaround that occurred in the first half of 2025. Turning our attention to the balance sheet and cash flows, at the end of the third quarter we had a consolidated cash balance and cash investments with Westlake through our investment management agreement totaling $113 million. Long‑term debt at the end of the quarter was $400 million, of which $377 million was at the Partnership and the remaining $23 million was at OpCo. In the third quarter of 2026, OpCo spent $12 million on capital expenditures.
We maintained our strong leverage metrics with a consolidated leverage ratio of approximately 1x. On November 2, 2026, we announced a quarterly distribution of 47.14 cents per unit with respect to the third quarter of 2026. Since our IPO in 2014, the Partnership has made 49 consecutive quarterly distributions to our unitholders, and we have grown distributions 71% since the Partnership’s original minimum quarterly distribution of 27.5 cents per unit. The Partnership’s third quarter distribution will be paid on December 1, 2026 to unitholders of record on November 13, 2026.
The Partnership’s predictable fee‑based cash flow continues to prove beneficial 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 have maintained a cumulative distribution coverage ratio in excess of one times, and with the Partnership’s stability in cash flows we are able to sustain our current distribution without the need to access the capital markets.
For modeling purposes, we have no planned turnarounds for the remainder of 2026 or in 2027. Now I’d like to turn the call back over to Jean‑Marc to make some closing comments. Jean‑Marc.
Jean-Marc Gilson (President and CEO)
Thank you, Jon. Turning to our outlook, third‑party ethylene prices have been volatile in 2026 due largely to the ongoing conflict in the Middle East. Thus far in the fourth quarter of 2026, ethylene prices have been rising and are currently higher than the average price in the third quarter of 2026, which could provide a modest benefit to the Partnership on the roughly 5% of annual sales made to third parties. 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 our 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 third quarter earnings call. Now we turn the call back over to Jeff.
Jeff Hawley (Vice President of Finance and Investor Relations)
Thank you, Jean‑Marc. Before we begin taking questions, I’d like to remind listeners that a replay of this teleconference will be available two hours after the call has ended. We will provide instructions to access the replay at the end of the call. Grace will now take questions.
OPERATOR (Moderator)
Thank you. At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star-11 on your telephone and wait for your name to be announced. To withdraw your question, please press star-11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of James Altoshul with Aviation Advisory Service, Inc. Your line is open.
James Altoshul (Analyst)
Wonderful. Thank you for taking my question. Actually, two questions. First of all, just now you made reference to the possibility of negotiating an increased fixed margin with Westlake. What incentive would they have to increase the margin? What’s in it for them? Why would they want to do that?
Jon Baksht (SVP & Chief Financial Officer)
The current contract we have in place is in place through 2027, and we’ll have those discussions next year. As it relates to margins, I think the comment was referring to the margins that we’re seeing in the marketplace. And ethylene/PE margins are, currently with current pricing in polyethylenes, constructive. And it’s the third‑party margins. We refer to the 5% of third‑party sales.
James Altoshul (Analyst)
Oh, okay. Okay. Well… but… okay, if that’s following on what you just… I have to call you right back. Sorry, busy day today. What incentive—I mean, I believe when you’re negotiating with Westlake, they’re sort of like on both sides of the transaction.
Jean-Marc Gilson (President and CEO)
If you refer to the $0.10 margin that Westlake is paying for ethylene, we think that this is an appropriate level right now. And considering sometimes it goes up—I mean the marketplace—sometimes it goes up, sometimes it goes down, the real price of ethylene. So we think that over the last more than 10 years, it has provided some stability to the Partnership, and we intend to continue to do it like that.
James Altoshul (Analyst)
Okay. Because, I mean, Westlake is sort of on both sides of the negotiations. So they wouldn’t have a lot of incentive to make the terms more favorable to the Partnership, would they?
Jean-Marc Gilson (President and CEO)
Yeah, no. I mean, Westlake has an incentive also in having that stability in the operation. And so that’s why we’ll continue like that right now. And there is a negotiation, and the negotiation opens—just that happened last year—and so we do not intend to change anything. We’ll try to negotiate higher prices, but we are two parties at the table.
James Altoshul (Analyst)
Okay. The other thing, if you compare the cash flow statement with the reconciliation of MLP distributable cash flow to net income, the number for maintenance capital expenditures is different from the additions to property, plant and equipment on the cash flow statement. Why is the discrepancy? Or is PP&E—additions to property, plant and equipment—separate from maintenance capital expenditures?
Jon Baksht (SVP & Chief Financial Officer)
That’s correct. So when you’re thinking of maintenance expenditures, many of those will not be capitalized. And so you’re thinking of that maintenance expenditure piece being—both that cash flow number is going to include both capitalized numbers and pure expense items.
James Altoshul (Analyst)
Okay. Okay.
Jon Baksht (SVP & Chief Financial Officer)
And just as a reminder as well, last year on a year‑over‑year basis, we did have the Petro turnaround. And so you will see higher levels on a year‑over‑year comparative basis on the full‑year set of cash flows. So that’s also some of the delta when looking at it on a comparative basis.
James Altoshul (Analyst)
Okay. I guess, finally, am I correct in thinking that the idea is ordinarily the turnaround expenses will be covered by what you have in the turnaround reserves?
Jon Baksht (SVP & Chief Financial Officer)
That’s correct. It’s pre‑funded with the turnaround reserve, but you’ll still see those flow through in the cash flow statement in the year of the turnaround. It’s just funded from cash on the balance sheet that’s already been received through the turnaround reserve.
James Altoshul (Analyst)
Okay. Well, thank you very much for answering all my questions. I’m sorry I had to interrupt you. My other phone was ringing and I wanted to cut that off, but apologies for disturbing everybody. Thank you very much.
Jon Baksht (SVP & Chief Financial Officer)
You are very welcome.
OPERATOR (Moderator)
At this time, the Q&A session has now ended. I will now turn the call back over to Jeff Hawley.
Jeff Hawley (Vice President of Finance and Investor Relations)
Thank you. Thank you again for participating in today’s call. We hope you’ll join us for our next conference call to discuss our fourth quarter and full year 2026 results.
OPERATOR (Moderator)
Thank you for participating in today’s Westlake Chemical Partners third quarter 2026 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 p.m. Eastern Time on Wednesday, November 18, 2026. The replay can be accessed via the Partnership website. Goodbye.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.
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