Good morning, ladies and gentlemen. Thank you for setting by. Welcome to the Westlake Chemical Partners Second Quarter 2018 earnings conference call. [Operator Instructions] As a reminder, ladies and gentlemen, this conference call is being recorded, today, August 2, 2018. I would now like to turn the call over to today's host, Jeff Holy, Westlake Chemical Partners Vice President and Treasurer. Sir, you may begin.

Thank you, Candace. Good morning, everyone, and welcome to Westlake Chemical Partners second quarter 2018 conference call. I'm joined today by Albert Chao, our President and CEO; Steve Bender, our Senior Vice President and Chief Financial Officer; and other members of our management team. The conference call will begin with Albert, who will open with a few comments regarding Westlake Chemical Partners performance in the second quarter as well as a current outlook on our performance and opportunities. Steve will then provide a more detailed look at our financial and operating results. Finally, Albert will add a few concluding comments, and then we'll open the call up to questions. During this call, we refer to ourselves as Westlake Partners, partners or the Partnership references to Westlake or Westlake Chemical refer to our parent company, Westlake Chemical Corporation and references to OpCo refer to Westlake Chemical OpCo LP, a subsidiary of Westlake Chemical and the Partnership, which owns certain olefins assets. Today, management is going to discuss certain topics that will contain forward looking information that is based on management's beliefs, as well as assumptions made by and information currently available to management. These forward-looking statements suggest predictions or expectations and that they are subject to risks and uncertainties. Actual results could differ materially based upon many factors including: operating difficulties; the volume of ethylene that we're able to sell; the price of which we're able to sell ethylene; changes in the prevailing economic conditions; actual and proposed governmental regulatory actions; competitive products and pricing pressures; our ability to borrow funds and access capital markets and other risk factors described in our SEC filings. This morning, Westlake Partners issued a press release, which details our second quarter financial and operating results. This document is available in the Press Release section of our webpage at wfkpartners.com. A replay of today's call will be available beginning at 3:00 p.m. Eastern time today until 11:59 p.m. Eastern time on August 9, 2018. The replay may be accessed by dialing the following numbers. Domestic callers should dial (855) 859-2056; international callers may access the replay at (404) 537-3406. The access code is 8897985. Please note that information reported on this call speaks only as of today August 2, 2018, and therefore, you're advised that time sensitive information may no longer be accurate as at the time of any replay. I would finally advise you that this conference call is being broadcast live through an Internet webcast system that can be accessed on our webpage at wlkpartners.com. Now, I would like to turn the call over to Albert Chao. Albert?

Thank you, Jeff. Good morning, ladies and gentlemen, and thank you for joining us to discuss our second quarter 2018 results. In this morning's press release, reported consolidated net income, including OpCo's earnings of $84 million for the second quarter of 2018. Westlake Partners second quarter net income was $13 million. On July 31, 2018, we announced distributions of $0.4088 per unit with respect to the second quarter of 2018. This is a 2.8% increase from the first quarter 2018 distribution and 12% increase from the second quarter 2017 distribution. This is the 14th consecutive quarterly increase in distributions to our unitholders since our IPO. For the second quarter 2018, MLP distributable cash flow provided coverage of 1.21x to declared distributions. On July 30, 2018, the Partnership reset the distribution targets, which determine the payments to the incentive distribution rights or IDRs with the newer first year's established at a quarterly distribution of $1.29 per unit from the previous first-year target of $0.32 per unit. This amendment applies to the second quarter 2018 distribution that was declared Tuesday and will pay later this month. The effect of this reset will allow the Partnership to increase its quarterly distribution in line with historical growth rates for over 10 years before the next IDR payment is earned and paid. While distributions to the IDRs were a small portion of partners cash flows, we wanted to proactively address the investor interests regarding the IDRs in a manner that will be mutually beneficial to both the Partnership and our sponsor Westlake Chemical. We believe this transaction accomplishes these goals and provide significant long-term benefit to both the Partnership and Westlake Chemical. I would now like to turn over to Steve to provide more detail on the financial and operating results for the second quarter. Steve?

Thank you, Albert, and good morning, everyone. In this morning's press release, we reported consolidated net income, including OpCo's earnings of $84 million on consolidated sales of $302 million in the second quarter of 2018. Westlake Partners' second quarter 2018 net income was $13 million or $0.40 per limited partner unit, and MLP distributable cash flow for the quarter was $16 million or $0.50 per limited partner unit. For the second quarter 2018, OpCo's production was 99% of its daily capacity, experiencing a five-day outage in the quarter at one of our units in Lake Charles, Louisiana. Second quarter 2018 net income for Westlake Partners of $13 million, increased by $3 million or $0.04 per limited partner unit compared to second quarter 2017 partnership net income of $10 million. Second quarter 2018 MLP distributable cash flow of $16 million increased $5 million from second quarter of 2017 MLP distributable cash flow of $11 million. The increase in net income and MLP distributable cash flow was primarily due to the 5% increase ownership of OpCo as a result of the drop-down transaction that was effective July 1, 2017, and increased production at OpCo. The Partnership's second quarter 2018 net income for the partnership of $13 million increased $500,000 from first quarter 2018 net income. Second quarter 2018 MLP distributable cash flow of $16 million increased $1.5 million from first quarter 2018 MLP distributable cash flow. Net income and MLP distributable cash flow for the second quarter of 2018 both benefited from higher production at OpCo, partially offset by lower margins on third-party sales. MLP distributable cash flow for the second quarter of 2018 also benefited from lower maintenance capital expenditures and the elimination of IDR payments due to the recent reset of the IDR target distribution tiers. For the six months…

Thank you, Steve. The stable fee-based cash flow generated by the fixed margin take-or-pay Ethylene Sales Agreement with the Westlake Chemical, along with the four levers of growth, formed the foundation for us to deliver long-term growth in distributions to our unitholders. We continue to evaluate all of the levers of growth available to us to increase our earnings and cash flows, including organic expansions of our current ethylene facilities; periodic drop downs of OpCo into the MLP; acquisitions of other qualified income streams, either directly or jointly with our sponsor, Westlake Chemical; and negotiating a higher fixed margin in our Ethylene Sales Agreement with Westlake. Looking forward, we plan to continue to deliver low double-digit growth per year in distributions to our unitholders. The recent ethylene expansions in Lake Charles and Calvert City have added to our production capacity and cash flows to fund these distributions. Our most recent drop-down in the third quarter of 2017, highlights the ability of these accretive transactions with OpCo to fund earnings and distribution growth. OpCo has a large drop-down capacity, and the partnership plans to increase its ownership of OpCo in the future. The new Gulf Coast ethylene cracker joint venture that Westlake and Lotte are constructing could be considered an opportunity for acquisition after its completion in 2019. Finally, we will evaluate all four levers of growth to optimize our earnings, cash flows and value to our unitholders. Thank you very much for listening to our second quarter 2018 earnings call this morning. Now, I will turn the call back over to Jeff.

Thank you, Albert. Before we take any questions, would like to remind you that a replay of this teleconference will be available starting today at 2:00 P.M. Eastern time. We will provide that number again, at the end of the call. Candace, we will now take questions.

[Operator Instructions] And our first question comes from Matthew Blair of Tudor, Pickering, Holt.

Steve, did you say that the Q2 utilization was 99%? And if so, for Q3 and Q4, is there any reason to expect that number would be significantly different?

Matthew, I did say we ran at high operating rates; 99% was the right number. And we anticipate to continue to run our plants as strong as we can. There is no planned turnaround until 2019. And I'll give more guidance on the exact timing and period of that planned outage later this year.

And then I guess for 2020, any early thoughts on whether there might be a turnaround in that year?

There is nothing currently planned at this stage and as we get closer to thinking about the turnaround for our other crackers we'll give other guidance, but right now, all we're giving really direct guidance on is that upcoming 2019 outage.

And then I guess could you remind us on your max that should talk about potential for future drops. What is the Partnership's max leverage targets?

Yes, we try to think about our leverage target at the Partnership in the neighborhood of about 4x EBITDA. That certainly changes a little bit up and down based on the market conditions and circumstances, but it's in that range.

And then finally, so for the 5% of ethylene market sales, I believe that's more tied to spot ethylene prices than contract prices. Is that correct? And can you give us a view on how long you think spot ethylene prices will stay depressed?

Matthew, we do not have contracts lined up for those sales. And so they are -- they are in the market on a spot, generally on spot basis. And certainly, given the capacity additions we've seen in the market we could see prices stay more suppressed for at least through this year and we will see with what '19 brings.

[Operator Instructions] And our next question comes from Jon Evans of SG Capital.

Can you just address I guess -- you talk about the four pillars that you have, or the four levers that you have. What do you guys need to see? Or what is kind of the sign post that we could look for that potentially you would change the margin?

So Jon, as we think about the margin at the sponsor level, we think of the integrative margin from ethane all the way to, let's say, polyethylene. And so while margins for ethylene at the moment are under some pressure because of capacity additions, the parent certainly thinks in terms of the integrative margin. So as we think about the $0.10 margin today, there isn't necessarily a concern of looking only at the ethylene margin because the parent is looking at integrated margins. So I think that the lever that we've talk about of expanding margin is very viable to -- even in today's environment.

And I assume, the strategy the parent is basically short right now, which is good because pricing is coming in, and you want to take on this joint venture or buy a piece of it kind of at the trough to margins and then margins turnaround. Is that kind of a thought process?

Well, I certainly hope to that opportunity avails itself to us. We have the opportunity, we're an investor in the Lotte -- this is the parent of course. The Parent is invested in the cracker at a 10% level. And the parent has an option to elect, if it chooses, up to three years post the start up to go from 10% all the way up to 50% of it chooses to. So it's an opportune time to consider timing and amount of exercise. But you're quite right; the Parent is in need of ethylene today. The requirements between 1.8 and 1.9 million pounds. The Parent has also announced derivative expansions, which would increase the amount of that shortfall once those capacities come onto the market next year. And so that would cause the Parent to be short over 2 billion of ethylene. So, you can clearly see the need for ethylene is critical to the parent and I think that's an attractive element to the partnership because the partnership therefore, has a runway not only with the existing asset base but further assets, such as Lotte, to contribute into the partnership to sustain long-term growth.

Got it. And so if the parent let's say buys a bigger piece of down the road in the JV, and you end up dropping it down into here. It will have the same structure of the $0.10 margin that you have with the existing plants or no?

Yes, we would clearly want to provide a stable earnings stream the Partnership, and so a structured margin similar to the one that we have today would certainly be what we want to consider. And back to your earlier question, should we change the margin from $0.10 to something higher, we can certainly give that same consideration to the asset of Lotte if we contribute that in at some future date. But what's important to take away is, of course, we provide the same structured manner of earnings stream for that piece of Lotte that could get contributed in. We'd want to provide a stable income stream.

And then just lastly, on the increased target distribution threshold conference call that you had; you laid out this piece with the existing assets that you can increase the dividend 320-plus percent still over time. So just to make sure, if you bought part of the Lotte or dropped it down, that would just increase the runway, correct?

It would. And recognizing those -- that guidance we gave is just drop down; not using other levers at our disposal, and you mentioned acquisitions or margin expansions could be additive to that runway.

Thank you. At this time, the Q&A session has now ended. Are there any closing remarks?

Thank you again for participating in today's call. We hope you'll join us for next conference call to discuss our third quarter results.

Thank you for participating in today's Westlake Chemical Second Quarter Earnings Conference Call. As a reminder, this call will be available for replay beginning two hours after the call has ended and may be accessed until 11:59 p.m. Eastern time on August 9, 2018. The replay can be accessed by calling the following numbers. Domestic callers should dial (855) 859-2056; international callers may access the replay at (404) 537-3406. The access code is 889-7985. Everyone, have a great day.