Westlake Chemical Partners LP (NYSE:WLKP) reported fourth-quarter financial results that largely met expectations on the top line but fell slightly short on the bottom line, as the market partnership navigated the lingering effects of a major facility turnaround completed earlier in the year.
The partnership, which operates ethylene production facilities, posted net income attributable to the partnership of $14.5 million, or $0.41 per limited partner unit, for the quarter ended December 31, 2025. This was essentially flat compared to the $15.0 million, or $0.43 per unit, reported in the same period last year.
Earnings and Revenue Versus Estimates
The quarterly performance presented a mixed picture relative to analyst forecasts. Revenue came in ahead of expectations, while earnings per share (EPS) missed the consensus target.
- Revenue: Total net sales for Q4 2025 were $323.0 million. This exceeded the analyst consensus estimate of approximately $319.3 million.
- Earnings Per Share (EPS): The reported EPS of $0.41 fell short of the analyst estimate of $0.4284.
The market's immediate reaction to the earnings release appears muted. Pre-market trading showed a modest uptick of less than half a percent, suggesting investors are digesting the mixed results without a strong directional bias. This follows a period of relatively flat performance for the stock over the past month.
Key Takeaways from the 2025 Results
The earnings release highlighted several critical financial and operational points for the year, with a clear narrative of a challenging 2025 giving way to optimism for 2026.
Full-Year Impact of Turnaround: The partnership's full-year 2025 results were significantly impacted by a planned turnaround at its Petro 1 facility, which was completed in the second quarter. This led to declines across key annual metrics:
- Net income attributable to the partnership fell to $48.7 million from $62.4 million in 2024.
- Cash flow from operating activities dropped to $280.5 million from $485.0 million.
- MLP distributable cash flow decreased to $53.4 million from $66.9 million.
Improved Quarterly Distributable Cash Flow: Despite the annual declines, the fourth quarter showed strength in cash available for distributions. MLP distributable cash flow rose to $18.8 million, up from $15.0 million in Q4 2024, primarily due to lower maintenance capital spending. This provided a quarterly distribution coverage ratio of 1.13x, which management noted was the highest since Q4 2022.
Stable Distribution Maintained: The partnership announced its 46th consecutive quarterly distribution, declaring $0.4714 per unit for Q4 2025. However, on a trailing twelve-month basis, distributable cash flow covered 0.80x of the declared distributions, an improvement from 0.75x at the end of Q3 but still below the 1.0x level typically targeted by income-focused investors.
Outlook for 2026
Management's forward-looking commentary struck a positive tone, directly addressing the headwinds faced in 2025. President and CEO Jean-Marc Gilson stated, "Looking ahead to 2026, the Partnership is positioned for increased production and sales volume with no planned turnarounds following the completion of the Petro 1 turnaround in 2025. We expect the higher production and sales volume to result in improvement in our coverage ratio in 2026, as is typical in years following turnarounds."
This internal optimism for higher production and sales aligns with analyst expectations for growth in the coming year. Current consensus estimates project full-year 2026 revenue of approximately $1.33 billion and EPS of $1.938. For the first quarter of 2026, analysts are forecasting EPS of $0.408.
Conclusion
Westlake Chemical Partners' Q4 report tells a story of stabilization after a disruptive year. While the quarterly EPS miss may give some pause, the revenue beat and, more importantly, the significant sequential improvement in distributable cash flow and coverage ratio are positive signs. The market's tepid initial reaction likely reflects a wait-and-see approach, balancing the slight earnings miss against the strong cash flow performance and a clearly improved operational outlook for 2026. The key for investors will be the partnership's ability to execute on its production ramp-up and translate that into stronger distribution coverage in the coming quarters, as anticipated by both management and analysts.
For a detailed look at historical earnings and future analyst estimates for Westlake Chemical Partners, you can review the data here.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial advice, or a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
