Westlake Chemical Partners LP

Previous wording

Westlake has an option to take 95% of volumes in excess of the minimum commitment on an annual basis under the Ethylene Sales Agreement if we produce more than our planned production. Under the Ethylene Sales Agreement, the price for the sale of such excess ethylene to Westlake is based on a formula similar to that used for the minimum purchase commitment, with the exception of certain fixed costs. Under the Ethylene Sales Agreement, if we produce more than our planned production in a contract year, we reimburse Westlake for certain non-variable costs that were charged on excess quantities of ethylene produced and sold to Westlake. Such reimbursement is scheduled to be paid by the Partnership after the conclusion of the year.

Current wording

Westlake has an option to take 95% of volumes in excess of the minimum commitment on an annual basis under the Ethylene Sales Agreement if we produce more than our planned production. Under the Ethylene Sales Agreement, the price for the sale of such excess ethylene to Westlake is based on a formula similar to that used for the minimum purchase commitment, with the exception of certain fixed costs.

Previous wording

Our management seeks to maximize the profitability of our operations by effectively managing operating expenses, maintenance capital expenditures and turnaround costs. Our operating expenses are comprised primarily of feedstock costs and natural gas, labor expenses (including contractor services), utility costs (other than natural gas) and turnaround and maintenance expenses. With the exception of feedstock (including natural gas) and utilities-related expenses, operating expenses generally remain relatively stable across broad ranges of production volumes but can fluctuate from period to period depending on the circumstances, particularly maintenance and turnaround activities. Our maintenance capital expenditures and turnaround costs are comprised primarily of maintenance of our ethylene production facilities and the amortization of capitalized turnaround costs. These capital expenditures relate to the maintenance and integrity of our facilities. We capitalize the costs of major maintenance activities, or turnarounds, and amortize the costs over the period until the next planned turnaround of the affected facility. We plan to commence the next planned maintenance turnaround at Petro 1 in the first quarter of 2025.

Current wording

Our management seeks to maximize the profitability of our operations by effectively managing operating expenses, maintenance capital expenditures and turnaround costs. Our operating expenses are comprised primarily of feedstock costs and natural gas, labor expenses (including contractor services), utility costs (other than natural gas) and turnaround and maintenance expenses. With the exception of feedstock (including natural gas) and utilities-related expenses, operating expenses generally remain relatively stable across broad ranges of production volumes but can fluctuate from period to period depending on the circumstances, particularly maintenance and turnaround activities. Our maintenance capital expenditures and turnaround costs are comprised primarily of maintenance of our ethylene production facilities and the amortization of capitalized turnaround costs. These capital expenditures relate to the maintenance and integrity of our facilities. We capitalize the costs of major maintenance activities, or turnarounds, and amortize the costs over the period until the next planned turnaround of the affected facility.

Previous wording

For the quarter ended September 30, 2024, net income was $104.1 million on net sales of $277.0 million. This represents an increase in net income of $23.2 million as compared to net income of $80.9 million on net sales of $321.7 million for the quarter ended September 30, 2023. Net income attributable to the Partnership for the third quarter of 2024 was $18.1 million as compared to $13.2 million for the third quarter of 2023, an increase of$4.9 million. Income from operations was $109.7 million for the third quarter of 2024 as compared to $86.2 million for the third quarter of 2023, an increase of $23.5 million. Income from operations, net income and net income attributable to the Partnership for the third quarter of 2024 as compared to the third quarter of 2023 were higher primarily due to higher ethylene and co-products sales volumes and prices to third parties and lower ethane feedstock costs and natural gas prices in the third quarter of 2024 compared to the third quarter of 2023, partially offset by lower ethylene sales volumes and prices to Westlake. Net sales for the third quarter of 2024 decreased by $44.7 million as compared to net sales for the third quarter of 2023, mainly due to lower ethylene sales volumes and prices to Westlake in the third quarter of 2024 compared to the third quarter of 2023, partially offset by higher ethylene and co-products sales volumes and prices to third parties.

Current wording

For the quarter ended March 31, 2025, net income was $42.3 million on net sales of $237.6 million. This represents a decrease in net income of $47.3 million as compared to net income of $89.6 million on net sales of $284.7 million for the quarter ended March 31, 2024. Net income attributable to the Partnership for the first quarter of 2025 was $4.9 million as compared to $14.8 million for the first quarter of 2024, a decrease of$9.9 million. Income from operations was $46.6 million for the first quarter of 2025 as compared to $95.1 million for the first quarter of 2024, a decrease of $48.5 million. Net sales for the first quarter of 2025 decreased by$47.1 million as compared to the first quarter of 2024 primarily due to lower ethylene sales volumes to Westlake and lower co-products sales volumes to third parties as a result of lower production volumes during the Petro 1 turnaround, partially offset by higher ethylene sales prices to Westlake and third parties. Income from operations, net income and net income attributable to the Partnership for the first quarter of 2025 as compared to the first quarter of 2024 were lower due to the lower net sales because of the Petro 1 turnaround and higher ethane feedstock and natural gas costs in the first quarter of 2025 compared to the first quarter of 2024.

Previous wording

Third Quarter 2024 Compared with Third Quarter 2023

Current wording

First Quarter 2025 Compared with First Quarter 2024

Previous wording

Net Sales. Total net sales decreased by $44.7 million, or 13.9%, to $277.0 million in the third quarter of 2024 from $321.7 million in the third quarter of 2023. The decrease in net sales in the third quarter of 2024 was primarily due to lower ethylene sales volumes and prices to Westlake in the third quarter of 2024 compared to the third quarter of 2023, partially offset by higher ethylene and co-products sales volumes and prices to third parties. Lower average sales prices in the third quarter of 2024 contributed to a 15.1% decrease in net sales compared to the third quarter of 2023. Higher sales volumes in the third quarter of 2024 contributed to a 1.2% increase in net sales compared to the third quarter of 2023.

Current wording

Net Sales. Net sales decreased by $47.1 million, or 16.5%, to $237.6 million in the first quarter of 2025 from $284.7 million in the first quarter of 2024. The decrease in net sales in the first quarter of 2025 was primarily due to lower ethylene sales volumes to Westlake and lower co-products sales volumes to third parties as a result of lower production volumes during the Petro 1 turnaround in the first quarter of 2025 compared to the first quarter of 2024, partially offset by higher ethylene sales prices to Westlake and third parties. Higher average sales prices in the first quarter of 2025 contributed to an 11.2% increase in net sales compared to the first quarter of 2024. Lower sales volumes in the first quarter of 2025 contributed to a 27.7% decrease in net sales compared to the first quarter of 2024.

Previous wording

Gross Profit. Gross profit increased to $116.9 million in the third quarter of 2024 from $93.0 million in the third quarter of 2023. Gross profit margin percentage in the third quarter of 2024 was 42.2%, as compared to 28.9% for the third quarter of 2023. The higher gross profit margin was primarily due to lower ethane feedstock costs and natural gas prices in the third quarter of 2024 compared to the third quarter of 2023. The gross profit margin for the third quarter of 2024 was also positively affected by insurance recoveries of approximately $6.2 million related to the settlement of a business interruption claim associated with Hurricane Laura, which impacted OpCo's Petro 1 and Petro 2 facilities in the second half of 2020 and impacted production in the subsequent periods.

Current wording

Gross Profit. Gross profit decreased to $54.1 million in the first quarter of 2025 from $102.2 million in the first quarter of 2024. Gross profit margin percentage in the first quarter of 2025 was 22.8%, as compared to 35.9% for the first quarter of 2024. The lower gross profit margin was primarily due to higher ethane feedstock and natural gas costs in the first quarter of 2025 compared to the first quarter of 2024.

Previous wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $0.6 million, or 9.0%, to $7.3 million in the third quarter of 2024 as compared to $6.7 million in the third quarter of 2023. The increase was mainly attributable to a higher provision for credit losses in the third quarter of 2024 as compared to the third quarter of 2023.

Current wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $0.4 million, or 5.6%, to $7.5 million in the first quarter of 2025 as compared to $7.1 million in the first quarter of 2024. The increase was mainly attributable to higher service charges from Westlake in the first quarter of 2025 as compared to the first quarter of 2024.

Previous wording

Interest Expense—Westlake. Interest expense of $6.7 million in the third quarter of 2024 increased from $6.4 million in the third quarter of 2023 mainly due to higher interest rates on the debt balance outstanding in the third quarter of 2024 as compared to the third quarter of 2023.

Current wording

Interest Expense—Westlake. Interest expense of $5.5 million in the first quarter of 2025 decreased from $6.6 million in the first quarter of 2024 mainly due to lower interest rates on the outstanding debt in the first quarter of 2025 as compared to the first quarter of 2024.

Previous wording

Other Income, net. Other income, net remained consistent at $1.3 million in the third quarter of 2024 as compared to $1.3 million in the third quarter of 2023.

Current wording

Other Income, net. Other income, net remained consistent at $1.3 million in the first quarter of 2025 as compared to $1.3 million in the first quarter of 2024.

Previous wording

MLP Distributable Cash Flow. MLP distributable cash flow increased by $4.3 million to $17.9 million in the third quarter of 2024 from $13.6 million in the third quarter of 2023. The increase in the third quarter of 2024, as compared to the prior-year period, was primarily attributable to increased earnings at OpCo and lower maintenance capital expenditures, partially offset by higher reserves for future turnarounds.

Current wording

MLP Distributable Cash Flow. MLP distributable cash flow decreased by $12.2 million to $4.7 million in the first quarter of 2025 from $16.9 million in the first quarter of 2024. The decrease in the first quarter of 2025, as compared to the prior-year period, was primarily attributable to decreased earnings at OpCo and higher maintenance capital expenditures due to the Petro 1 turnaround in the first quarter of 2025.

Previous wording

CASH FLOW DISCUSSION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

Current wording

CASH FLOW DISCUSSION FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024

Previous wording

Operating activities provided cash of $352.5 million in the first nine months of 2024 compared to cash provided by operating activities of $344.3 million in the first nine months of 2023. The $8.2 million increase in cash flows from operating activities was mainly due to lower cash used for turnaround activity compared to the first nine months of 2023. Changes in components of working capital, which we define for the purposes of this cash flow discussion as accounts receivable, net—Westlake, accounts receivable, net—third parties, inventories, prepaid expenses and other current assets less accounts payable—Westlake, accounts payable—third parties and accrued and other liabilities, provided cash of $1.2 million in the first nine months of 2024 as compared to $39.5 million of cash provided in the first nine months of 2023, resulting in an overall unfavorable change of $38.3 million. The unfavorable change in working capital was mainly attributable to unfavorable changes in net accounts receivable—Westlake, accounts payable—third parties and accrued and other liabilities. The unfavorable change in accounts receivable, net—Westlake was primarily due to a smaller buyer deficiency fee and Shortfall collected in the first nine months of 2024 as compared to the first nine months of 2023, partially offset by changes in the payable with Westlake due to fluctuating ethane feedstock costs. Unfavorable changes in accounts payable—third parties and accrued and other liabilities were due to the timing of payment of accruals and the impact of the Calvert City Olefins turnaround activities on these balances in the first nine months of 2023.

Current wording

Operating activities provided cash of $45.8 million in the first three months of 2025 compared to cash provided by operating activities of $104.6 million in the first three months of 2024. The $58.8 million decrease in cash flows from operating activities was mainly due to cash used in connection with the Petro 1 turnaround and lower income from operations in the first three months of 2025 compared to the first three months of 2024, partially offset by an increase in cash provided by working capital. Changes in components of working capital, which we define for the purposes of this cash flow discussion as accounts receivable, net—Westlake, accounts receivable, net—third parties, inventories, prepaid expenses and other current assets less accounts payable—Westlake, accounts payable—third parties and accrued and other liabilities, provided cash of $81.7 million in the first three months of 2025 as compared to $9.7 million of cash used in the first three months of 2024, resulting in an overall favorable change of $91.4 million. The favorable change in working capital was mainly attributable to favorable changes in accounts payable—third parties and accrued and other liabilities due to the impact of the Petro 1 turnaround activities and the timing of payments in the first three months of 2025.

Previous wording

Net cash used for investing activities in the first nine months of 2024 was $50.5 million as compared to net cash used for investing activities of $53.1 million in the first nine months of 2023, resulting in an overall favorable change of $2.6 million in investing cash flows. During the first nine months of 2024, there were net investments with Westlake of $15.0 million under the Investment Management Agreement, whereas during the first nine months of 2023, there were net investments with Westlake of $19.1 million under the Investment Management Agreement. Capital expenditures during the first nine months of 2024 were slightly higher than the first nine months of 2023. For both the comparative periods, these capital expenditures were primarily related to projects to increase production capacity or reduce costs, maintenance costs and safety and environmental projects at our facilities.

Current wording

Net cash provided by investing activities in the first three months of 2025 was $14.0 million as compared to net cash used for investing activities of $9.8 million in the first three months of 2024, resulting in an overall favorable change of $23.8 million in investing cash flows. During the first three months of 2025, there were maturities of investments with Westlake of $30.0 million under the Investment Management Agreement, whereas during the first three months of 2024, there were no investing activities under the Investment Management Agreement. Capital expenditures increased to $16.0 million in the first three months of 2025 as compared to $9.8 million in the first three months of 2024 due to the Petro 1 turnaround. Capital expenditures in the first three months of 2025 and 2024 were primarily related to projects to increase production capacity or reduce costs, maintenance costs and safety and environmental projects at our facilities.

Previous wording

Net cash used for financing activities in the first nine months of 2024 was $300.4 million as compared to net cash used for financing activities of $290.1 million in the first nine months of 2023. The cash outflows in the first nine months of 2024 were related to distributions of $250.6 million to the noncontrolling interest retained in OpCo by Westlake and of $49.8 million to unitholders by the Partnership. The cash outflows in the first nine months of 2023 were related to distributions of $240.3 million to the noncontrolling interest retained in OpCo by Westlake and of $49.8 million to unitholders by the Partnership.

Current wording

Net cash used for financing activities in the first three months of 2025 was $68.5 million as compared to net cash used for financing activities of $97.7 million in the first three months of 2024. The cash outflows in the first three months of 2025 were related to distributions of $51.9 million to the noncontrolling interest retained in OpCo by Westlake and of $16.6 million to unitholders by the Partnership. The cash outflows in the first three months of 2024 were related to distributions of $81.0 million to the noncontrolling interest retained in OpCo by Westlake and of $16.6 million to unitholders by the Partnership.

Previous wording

In order to fund non-annual turnaround expenditures, we cause OpCo to reserve an amount for turnaround costs during each twelve-month period designed to cover future turnaround activities. Each of OpCo's ethylene production facilities requires turnaround maintenance approximately every five years. By reserving additional cash annually, we intend to reduce the variability in OpCo's cash flow. Although we had previously planned to commence the next maintenance turnaround at the Petro 1 ethylene unit in the third quarter of 2024, we made the decision to defer the planned turnaround in order to maintain production and capitalize on higher average third-party ethylene sales prices during the second half of 2024. We expect to commence the next planned maintenance turnaround at Petro 1 in the first quarter of 2025. Westlake's purchase price for ethylene purchased under the Ethylene Sales Agreement includes a component (adjusted annually) designed to cover, over the long term, substantially all of OpCo's turnaround expenditures.

Current wording

In order to fund non-annual turnaround expenditures, we cause OpCo to reserve an amount for turnaround costs during each twelve-month period designed to cover future turnaround activities. Each of OpCo's ethylene production facilities requires turnaround maintenance approximately every five years. By reserving additional cash annually, we intend to reduce the variability in OpCo's cash flow. Westlake's purchase price for its minimum commitment of ethylene under the Ethylene Sales Agreement includes a component (adjusted annually) designed to cover, over the long term, substantially all of OpCo's turnaround expenditures.

Previous wording

On October 30, 2024, the board of directors of Westlake Chemical Partners GP LLC, our general partner, approved a quarterly distribution of $0.4714 per unit payable on November 27, 2024 to unitholders of record as of November 12, 2024, which equates to a total amount of approximately $16.6 million per quarter, or approximately $66.4 million per year in aggregate, based on the number of common units outstanding on September 30, 2024. We do not have a legal or contractual obligation to pay distributions on a quarterly basis or any other basis at our minimum quarterly distribution rate or any other rate.

Current wording

On April 30, 2025, the board of directors of Westlake Chemical Partners GP LLC, our general partner, approved a quarterly distribution of $0.4714 per common unit payable on May 29, 2025 to unitholders of record as of May 13, 2025, which equates to a total amount of approximately $16.6 million per quarter, or approximately $66.4 million per year in aggregate, based on the number of common units outstanding on March 31, 2025. We do not have a legal or contractual obligation to pay distributions on a quarterly basis or any other basis at our minimum quarterly distribution rate or any other rate.

Previous wording

Westlake has historically funded expansion capital expenditures related to Lake Charles Olefins and Calvert City Olefins. No such funding was required by OpCo during the nine months ended September 30, 2024 and 2023. Total capital expenditures for the nine months ended September 30, 2024 and 2023 were $35.5 million and $34.0 million, respectively. We expect that Westlake will loan additional cash to OpCo to fund its expansion capital expenditures in the future, but Westlake is under no obligation to do so.

Current wording

Westlake has historically funded expansion capital expenditures related to Lake Charles Olefins and Calvert City Olefins. No such funding was required by OpCo during the three months ended March 31, 2025 and 2024. Total capital expenditures for the three months ended March 31, 2025 and 2024 were $16.0 million and $9.8 million, respectively. We expect that Westlake will loan additional cash to OpCo to fund its expansion capital expenditures in the future, but Westlake is under no obligation to do so.

Previous wording

As of September 30, 2024, our cash and cash equivalents totaled $60.2 million. In addition, we have cash invested under the Investment Management Agreement (as described below) and a revolving credit facility with Westlake available to supplement cash if needed, as described under "Indebtedness" below.

Current wording

As of March 31, 2025, our cash and cash equivalents totaled $49.6 million. In addition, we have cash invested under the Investment Management Agreement (as described below) and a revolving credit facility with Westlake available to supplement cash if needed, as described under "Indebtedness" below.

Previous wording

In August 2017, the Partnership, OpCo and Westlake executed the Investment Management Agreement that authorizes Westlake to invest the Partnership's and OpCo's excess cash with Westlake for durations of up to a maximum of nine months. Per the terms of the Investment Management Agreement, the Partnership earns a market return plus five basis points and Westlake provides daily availability of the invested cash to meet any liquidity needs of the Partnership or OpCo. The Partnership had $109.5 million of cash invested under the Investment Management Agreement at September 30, 2024.

Current wording

In August 2017, the Partnership, OpCo and Westlake executed the Investment Management Agreement that authorizes Westlake to invest the Partnership's and OpCo's excess cash with Westlake for durations of up to a maximum of nine months. Per the terms of the Investment Management Agreement, the Partnership earns a market return plus five basis points and Westlake provides daily availability of the invested cash to meet any liquidity needs of the Partnership or OpCo. The Partnership had $104.5 million of cash invested under the Investment Management Agreement at March 31, 2025.

Previous wording

•turnaround activities (such as our plan to commence Petro 1 turnaround in the first quarter of 2025) and the variability of OpCo's cash flow;

Current wording

•turnaround activities and the variability of OpCo's cash flow;