Westlake Chemical Partners Reports Significant Decline in Q1 2025 Financial Performance

Westlake Chemical Partners LP reported a significant decline in financial performance for the first quarter of 2025, with net income falling to $42.3 million from $89.6 million in the same period of 2024. Total net sales also decreased by 16.5%, dropping to $237.6 million from $284.7 million year-over-year. The decline in revenue was primarily attributed to lower ethylene sales volumes to Westlake and reduced co-products sales volumes to third parties, which were impacted by a planned maintenance turnaround at the Petro 1 facility. Despite a rise in average sales prices, which contributed to an 11.2% increase in net sales, the overall volume decrease led to a substantial drop in profitability.

The Partnership's gross profit for the quarter was $54.1 million, down from $102.2 million in the prior year, resulting in a gross profit margin of 22.8%, compared to 35.9% in the first quarter of 2024. This decline in margin was largely due to increased costs for ethane feedstock and natural gas. Selling, general, and administrative expenses rose slightly to $7.5 million from $7.1 million, reflecting higher service charges from Westlake. Interest expenses decreased to $5.5 million from $6.6 million, benefiting from lower interest rates on outstanding debt.

Operationally, the Partnership's cash flow from operating activities was $45.8 million, a decrease of $58.8 million compared to $104.6 million in the first quarter of 2024. This decline was primarily due to cash used for the Petro 1 turnaround and lower income from operations. However, changes in working capital provided a favorable cash flow of $81.7 million, contrasting with cash used in the previous year. The Partnership also reported net cash provided by investing activities of $14.0 million, compared to net cash used of $9.8 million in the prior year, largely due to maturities of investments under the Investment Management Agreement.

Looking ahead, Westlake Chemical Partners LP anticipates continued challenges due to market conditions and the impact of the Petro 1 turnaround on production volumes. The Partnership's management remains focused on managing operating expenses and capital expenditures effectively to enhance profitability. The board of directors has declared a quarterly cash distribution of $0.4714 per common unit, payable on May 29, 2025, reflecting the Partnership's commitment to returning value to its unitholders despite the recent downturn in financial performance. The outlook remains cautious as the company navigates fluctuating commodity prices and operational challenges.