Westlake Chemical Partners' Coverage Ratio Climbs as Turnaround Costs Fade
Westlake Chemical Partners (WLKP) posted a trailing-twelve-month distribution coverage ratio of 1.04 times in the second quarter, up from 1.00 times in the first quarter and 0.75 times a year earlier.
Westlake Chemical Partners (WLKP) reported second-quarter operating cash flow of $129.8 million, up from $9.1 million a year earlier, as the ethylene producer worked through the final comparisons against a 2025 plant turnaround that had depressed results. The pipeline master limited partnership, which sells the bulk of its ethylene output to parent Westlake Corporation, stated the increase reflected higher production and sales volume along with lower maintenance capital spending.
The rebound in cash generation continued a recovery that has played out over the past several quarters. Trailing-twelve-month coverage of the Partnership's distribution rose to 1.04 times in the second quarter from 1.00 times at the end of the first quarter, extending a climb from 0.75 times in the third quarter of 2025 and 0.80 times in the fourth. Management guided in late 2025 for coverage to improve in 2026 given no turnarounds were planned, a forecast the past two quarters have now borne out.
Net income attributable to the Partnership was $14.2 million, or $0.40 a unit, in the second quarter, slightly below the $14.6 million, or $0.41 a unit, earned a year earlier and flat with the first quarter's $14.2 million. Total net sales held essentially flat at $297.1 million against $297.1 million a year earlier, though the composition shifted: third-party net sales of co-products, ethylene and other products more than doubled to $59.1 million from $28.0 million, while net sales to Westlake fell to $238.0 million from $269.1 million. Gross profit slipped to $94.8 million from $97.5 million as cost of sales rose faster than revenue, pushing gross margin down to 31.9% from 32.8%.
The year-over-year comparisons look sharper over six months. Net income attributable to the Partnership for the first half of 2026 nearly tripled to $28.4 million from $19.5 million, and first-quarter operating cash flow alone rose $64.4 million from a year earlier to $110.2 million. Both periods benefited from the absence of costs tied to the Petro 1 turnaround, which was completed in the second quarter of 2025 and had cut full-year 2025 operating cash flow to $280.5 million from $485.0 million in 2024.
MLP distributable cash flow was $17.6 million in the second quarter, up from $15.0 million a year earlier but down $0.3 million from the first quarter's $17.9 million on higher maintenance capital spending. Westlake Chemical Partners declared its 48th consecutive quarterly distribution at $0.4714 a unit, matching the payout held flat since at least the third quarter of 2025.
On July 8, the Partnership and its operating company amended their senior unsecured revolving credit agreements with Westlake Corporation, extending the maturity to July 2031.
The quarter also confirmed a leadership change flagged earlier in the year: Jonathan H. Baksht was named senior vice president and chief financial officer effective June 15, succeeding M. Steven Bender, who is retiring. Baksht is now the investor contact in place of Bender, confirming the transition had taken effect.