WLKP

WLKP is a structurally unusual security: its sole revenue-generating asset is a 22.8% LP interest in OpCo, with Westlake holding the remaining 77.2% plus the general partner and incentive distribution rights (IDRs). The MD&A makes clear that the Ethylene Sales Agreement is a long-term, fee-based contract under which Westlake is obligated to take 95% of OpCo's budgeted ethylene production at a fixed $0.10/lb margin, with a Buyer Deficiency Fee if it under-takes. That contractual floor is the entire investment case — it converts a commodity petrochemical business into something closer to a toll road, which is why FY2025 revenue of $1.17B (+2.7% YoY) and a 27.4% operating margin held up despite a brutal ethylene cycle.

But the numbers show the floor is leaking. Net income fell 21.9% YoY to $48.7M, gross profit dropped 17.0% to $348M, and operating cash flow collapsed 42.2% to $280M — even while revenue grew. Capex jumped 60.9% to $78.8M and D&A rose 14.4%, suggesting maintenance turnarounds and recovered-cost true-ups (the MD&A notes OpCo can recover shortfalls when billed production costs come in below 95% of actual) are absorbing the margin. Cash dropped 24.1% to $44.3M and current assets fell 40.4%, which is a meaningful liquidity contraction for a partnership that distributes most of its cash. At $22.72 and 15.5x trailing EPS of $1.47, the unit isn't expensive, but it's not cheap either for a slow-growth MLP whose distributable cash flow trajectory is deteriorating.