August 2, 2019 - 6:30 AM EDT
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LyondellBasell Reports Second Quarter 2019 Earnings

HOUSTON and LONDON, Aug. 2, 2019 /PRNewswire/ --

Second Quarter 2019 Highlights

  • Net Income: $1.0 billion
  • Diluted earnings per share: $2.70 per share
  • EBITDA: $1.6 billion, an increase of 11% over the first quarter 2019
  • Announced new 250 kt Spherizone polypropylene project for our JV in Thailand
  • Increased our quarterly dividend to $1.05 per share, the eleventh increase over the past 8 years
  • Issued dividends totaling $388 million
  • Launched a tender offer that led to the repurchase of 35.1 million shares in July

Comparisons with the prior quarter and second quarter 2018 are available in the following table:

Table 1 - Earnings Summary

Millions of U.S. dollars (except share data)

Three Months Ended

Six Months Ended

June 30,
2019

March 31,
2019

June 30,
2018

June 30,
2019

June 30,
2018

Sales and other operating revenues

$9,048

$8,778

$10,206

$17,826

$19,973

Net income

1,003

817

1,654

1,820

2,885

Diluted earnings per share

2.70

2.19

4.22

4.88

7.33

Weighted average diluted share count

370

372

392

371

394

EBITDA (a)

1,579

1,428

2,010

3,007

3,923

(a)

See the end of this release for an explanation of the Company's use of EBITDA and Table 9 for reconciliations of EBITDA to net income.

LyondellBasell Industries (NYSE: LYB) today announced net income for the second quarter 2019 of $1.0 billion, or $2.70 per share.  Second quarter 2019 EBITDA was $1.6 billion.  Integration activities related to the acquisition of A. Schulman are on schedule and expected to generate approximately $100 million in forward annual run-rate synergies as of the close of the second quarter.

"LyondellBasell's leading business portfolio, strong operations and advantaged assets delivered value in the second quarter by serving global consumer-driven demand for our products.  Increased seasonal demand and reduced feedstock costs improved ethylene chain margins for both of our Olefins & Polyolefins segments.  In our Intermediates & Derivatives segment, robust seasonal margins increased profitability from our Oxyfuels & Related Products business.  Despite our Houston refinery operating at 97% of nameplate capacity, low discounts for heavy sour crude oil in the U.S. Gulf Coast market continued to pressure the profitability of our Refining segment," said Bob Patel, LyondellBasell CEO.

"In the second quarter we continued to advance our value-driven growth strategy.  Our disciplined approach to capital deployment remains unchanged.  We executed on this strategy in the second quarter by raising our dividend, moving forward on our projects to sustain and grow our assets, ending discussions regarding the potential acquisition of Braskem and launching a substantial share repurchase while maintaining our strong investment grade credit rating.  The tender offer demonstrates our confidence in the value of our company and the outlook for our business," Patel said.

OUTLOOK

"In July, we continue to see resilient demand for the majority of our products with consumer-based demand driving stable volumes for our Olefins & Polyolefins segments.  In North America, the majority of the ethylene crackers and polyethylene plants planned to start between 2016 and 2019 has been commissioned and more than 70% of the polyethylene capacity is now operational.  We expect low-cost natural gas liquid feedstocks will continue to drive strong chain margin in our Olefins & Polyolefins Americas segment as well as our Oxyfuels and Related Products business.  Looking beyond the quarter, we look forward to the start-up of our Hyperzone HDPE plant during the second half of this year," Patel said.

LYONDELLBASELL BUSINESS RESULTS DISCUSSION BY REPORTING SEGMENT

LyondellBasell manages operations through six operating segments: 1) Olefins and Polyolefins - Americas; 2) Olefins and Polyolefins - Europe, Asia and International; 3) Intermediates and Derivatives; 4) Advanced Polymer Solutions; 5) Refining; and 6) Technology.  Results for our Advanced Polymer Solutions segment incorporates the businesses acquired from A. Schulman beginning on August 21, 2018.  Historical segment results for Olefins and Polyolefins - Americas and Olefins and Polyolefins - Europe, Asia and International prior to the acquisition were recast as a result of the shift of polypropylene compounds, Catalloy and polybutene-1 product lines to Advanced Polymer Solutions.

Olefins & Polyolefins - Americas (O&P-Americas) - Our O&P-Americas segment produces and markets Olefins & Co-products, polyethylene and polypropylene.

Table 2 - O&P-Americas Financial Overview

Millions of U.S. dollars

Three Months Ended

Six Months Ended

June 30,
2019

March 31,
2019

June 30,
2018

June 30,
2019

June 30,
2018

Operating income

$504

$384

$543

$888

$1,172

EBITDA

635

516

671

1,151

1,427

Three months ended June 30, 2019 versus three months ended March 31, 2019 - EBITDA increased $119 million versus the first quarter 2019.  Compared with the prior period, olefins results increased approximately $90 million.  Ethylene margin improved as feedstock price declines outpaced a decline in the price of ethylene and sales volume increased.  Polyethylene results increased more than $25 million primarily due to a spread increase for polyethylene over ethylene of nearly $65 per ton.

Three months ended June 30, 2019 versus three months ended June 30, 2018 - EBITDA decreased $36 million versus the second quarter 2018.  Compared with the prior period, olefins results increased more than $150 million.  Ethylene margin improved primarily due to decreased feedstock costs and increased co-product prices.  Polyolefins results decreased about $190 million driven by a spread decline in polyethylene over ethylene of approximately $225 per ton.

Olefins & Polyolefins - Europe, Asia, International (O&P-EAI) - Our O&P-EAI segment produces and markets Olefins and Co-products, polyethylene and polypropylene.

Table 3 - O&P-EAI Financial Overview

Millions of U.S. dollars

Three Months Ended

Six Months Ended

June 30,
2019

March 31,
2019

June 30,
2018

June 30,
2019

June 30,
2018

Operating income

$226

$186

$245

$412

$526

EBITDA

331

296

355

627

774

Three months ended June 30, 2019 versus three months ended March 31, 2019 - EBITDA increased $35 million versus the first quarter 2019.  Compared with the prior period, olefins results increased more than $55 million.  Margin improved driven by an increase in the price of ethylene and volume increased with improved operating rates.  Combined polyolefins results decreased $15 million driven by lower volumes.

Three months ended June 30, 2019 versus three months ended June 30, 2018 - EBITDA decreased $24 million versus the second quarter 2018.  Results for the second quarter 2019 include the impact of approximately $15 million due to a decrease in the euro versus the U.S. dollar exchange rate relative to the second quarter 2018.  Compared with the prior period, olefins results increased more than $30 million driven by an improvement in margin as declines in feedstock costs outpaced ethylene price declines.  Combined polyolefins results decreased approximately $25 million.  Polypropylene spread over propylene declined about $55 per ton and polyethylene volume declined.

Intermediates & Derivatives (I&D) - Our I&D segment produces and markets Propylene Oxide & Derivatives, Oxyfuels and Related Products and Intermediate Chemicals, such as styrene monomer, acetyls, ethylene oxide and ethylene glycol.

Table 4 - I&D Financial Overview

Millions of U.S. dollars

Three Months Ended

Six Months Ended

June 30,
2019

March 31,
2019

June 30,
2018

June 30,
2019

June 30,
2018

Operating income

$372

$314

$569

$686

$977

EBITDA

448

390

642

838

1,128

Three months ended June 30, 2019 versus three months ended March 31, 2019 - EBITDA increased $58 million versus the first quarter 2019.  Compared with the prior period, Propylene Oxide & Derivatives results decreased $35 million primarily due to a decline in volume.  Intermediate Chemicals results increased more than $25 million driven by an increase in volume for most products.  Oxyfuels & Related Products results increased approximately $75 million primarily due to seasonal margin improvements.

Three months ended June 30, 2019 versus three months ended June 30, 2018 - EBITDA decreased $194 million versus the record-setting second quarter 2018 results.  Compared with the prior period, Propylene Oxide & Derivatives results decreased approximately $55 million primarily due to a decline in volume.  Intermediate Chemicals results decreased $125 million driven by a decline in margin and volume for most products.  Oxyfuels & Related Products were relatively unchanged with margin improvements offsetting volume declines.

Advanced Polymer Solutions (APS) - Our Advanced Polymer Solutions segment produces and markets in two lines of business: Compounding & Solutions and Advanced Polymers.  Compounding & Solutions includes polypropylene compounds, engineered plastics, masterbatches, engineered composites, colors and powders.  Advanced Polymers consists of Catalloy and polybutene-1.  A. Schulman was acquired on August 21, 2018, and results from the acquisition are included prospectively.

Table 5 - Advanced Polymer Solutions Financial Overview

Millions of U.S. dollars

Three Months Ended

Six Months Ended

June 30,
2019

March 31,
2019

June 30,
2018

June 30,
2019

June 30,
2018

Operating income

$91

$119

$112

$210

$226

EBITDA

120

148

121

268

244

Three months ended June 30, 2019 versus three months ended March 31, 2019 - EBITDA decreased $28 million versus the first quarter 2019.  Integration costs related to the acquisition of A. Schulman and assigned to the segment were $3 million higher in the second quarter 2019 versus the first quarter.  Compared with the prior period, Compounding & Solutions results decreased approximately $20 million.  Volume declined in most products and margin declined primarily due to a lag in raw material pricing for polypropylene compounds.  Advanced Polymers results were relatively unchanged.

Three months ended June 30, 2019 versus three months ended June 30, 2018 - EBITDA decreased $1 million versus the second quarter 2018.  Integration costs related to the acquisition and assigned to the segment were $19 million during the second quarter 2019.  Compared with the prior period, Compounding & Solutions results increased $35 million primarily due to the addition of new product lines from the acquisition partially offset by reduced polypropylene compounds volume.  Advanced Polymers results decreased approximately $20 million driven by reduced volume and margin.

Refining - Our Refining segment produces and markets gasoline and distillates, including diesel fuel, heating oil and jet fuel.

Table 6 - Refining Financial Overview

Millions of U.S. dollars

Three Months Ended

Six Months Ended

June 30,
2019

March 31,
2019

June 30,
2018

June 30,
2019

June 30,
2018

Operating income (loss)

$(110)

$(59)

$58

$(169)

$73

EBITDA

(66)

(15)

104

(81)

167

Three months ended June 30, 2019 versus three months ended March 31, 2019 - EBITDA decreased $51 million versus the first quarter 2019.  The Maya 2-1-1 industry benchmark crack spread increased $5.44 per barrel to $18.99 per barrel for the second quarter.  Margin declined due to higher prices for heavy sour crude oil purchased on the U.S. Gulf Coast spot market.  The Houston Refinery continued to run well with crude throughput relatively unchanged at 261,000 barrels per day.

Three months ended June 30, 2019 versus three months ended June 30, 2018 - EBITDA decreased $170 million versus the second quarter 2018.  Margin declined due to challenging market conditions and weakness in naphtha and propylene.  The Maya 2-1-1 spread decreased $6.95 per barrel to $18.99 per barrel.  Crude throughput was relatively unchanged at 261,000 barrels per day.

Technology - Our Technology segment develops and licenses chemical and polyolefin process technologies and manufactures and sells polyolefin catalysts.

Table 7 - Technology Financial Overview

Millions of U.S. dollars

Three Months Ended

Six Months Ended

June 30,
2019

March 31,
2019

June 30,
2018

June 30,
2019

June 30,
2018

Operating income

$96

$73

$100

$169

$146

EBITDA

107

83

113

190

169

Three months ended June 30, 2019 versus three months ended March 31, 2019 - EBITDA increased $24 million versus the first quarter 2019 primarily due to an increase in licensing revenue as several licenses reached revenue milestones.

Three months ended June 30, 2019 versus three months ended June 30, 2018 - EBITDA decreased $6 million versus the second quarter 2018.

Capital Spending and Cash Balances

Capital expenditures, including growth projects, maintenance turnarounds, catalyst and information technology-related expenditures, were $622 million during the second quarter 2019.  Our cash and liquid investment balance was $1.9 billion at June 30, 2019.  There were 370 million common shares outstanding as of June 30, 2019.  The company paid dividends of $388 million during the second quarter 2019.

Reconciliations and Additional Information

Quantitative reconciliations of EBITDA to net income, the most comparable GAAP measure, are provided in Table 9 at the end of this release.  Additional operating and financial information, including reconciliations of non-GAAP measures, may be found on our website at www.LyondellBasell.com/investorrelations.

CONFERENCE CALL

LyondellBasell will host a conference call August 2 at 11 a.m. EDT.  Participants on the call will include Chief Executive Officer Bob Patel, Executive Vice President and Chief Financial Officer Thomas Aebischer and Director of Investor Relations David Kinney.

The toll-free dial-in number in the U.S. is 800-475-8402. A complete listing of toll-free numbers by country is available at www.LyondellBasell.com/teleconference for international callers. The passcode for all numbers is 6934553.

The slides and webcast that accompany the call will be available at www.LyondellBasell.com/earnings.

A replay of the call will be available from 2:00 p.m. EDT August 2 until September 1 at 11:59 p.m. EDT.  The replay dial-in numbers are 888-277-9385 (U.S.) and +1 402-998-0509 (international). The passcode for each is 5713.

ABOUT LYONDELLBASELL

LyondellBasell (NYSE: LYB) is one of the largest plastics, chemicals and refining companies in the world. Driven by its employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road, and ensuring the safe and effective functionality in electronics and appliances. LyondellBasell sells products into more than 100 countries and is the world's largest producer of polymer compounds and the largest licensor of polyolefin technologies. In 2019, LyondellBasell was named to Fortune magazine's list of the "World's Most Admired Companies." More information about LyondellBasell can be found at www.LyondellBasell.com.

FORWARD-LOOKING STATEMENTS

The statements in this release and the related teleconference relating to matters that are not historical facts are forward-looking statements. These forward-looking statements are based upon assumptions of management which are believed to be reasonable at the time made and are subject to significant risks and uncertainties. Actual results could differ materially based on factors including, but not limited to, the business cyclicality of the chemical, polymers and refining industries; the availability, cost and price volatility of raw materials and utilities, particularly the cost of oil, natural gas, and associated natural gas liquids; competitive product and pricing pressures; labor conditions; our ability to attract and retain key personnel; operating interruptions (including leaks, explosions, fires, weather-related incidents, mechanical failure, unscheduled downtime, supplier disruptions, labor shortages, strikes, work stoppages or other labor difficulties, transportation interruptions, spills and releases and other environmental risks); the supply/demand balances for our and our joint ventures' products, and the related effects of industry production capacities and operating rates; our ability to achieve expected cost savings and other synergies; our ability to successfully execute projects and growth strategies; any proposed business combination, the expected timetable for completing any proposed transactions and the receipt of any required governmental approvals, future financial and operating results, benefits and synergies of any proposed transactions, future opportunities for the combined company; legal and environmental proceedings; tax rulings, consequences or proceedings; technological developments, and our ability to develop new products and process technologies; potential governmental regulatory actions; political unrest and terrorist acts; risks and uncertainties posed by international operations, including foreign currency fluctuations; and our ability to comply with debt covenants and service our debt.  Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the "Risk Factors" section of our Form 10-K for the year ended December 31, 2018, which can be found at www.LyondellBasell.com on the Investor Relations page and on the Securities and Exchange Commission's website at www.sec.gov.

INFORMATION RELATED TO FINANCIAL MEASURES

This release makes reference to certain non-GAAP financial measures as defined in Regulation G of the U.S. Securities Exchange Act of 1934, as amended.

EBITDA, as presented herein, may not be comparable to a similarly titled measure reported by other companies due to differences in the way the measure is calculated. We calculate EBITDA as income from continuing operations plus interest expense (net), provision for (benefit from) income taxes, and depreciation & amortization.  EBITDA should not be considered an alternative to profit or operating profit for any period as an indicator of our performance, or as an alternative to operating cash flows as a measure of our liquidity.

Quantitative reconciliations of EBITDA to net income, the most comparable GAAP measure, are provided in Table 9 at the end of this release.  Additional operating and financial information, including reconciliations of non-GAAP measures, may be found on our website at www.LyondellBasell.com/investorrelations.

OTHER FINANCIAL MEASURE PRESENTATION NOTES

This release contains time sensitive information that is accurate only as of the time hereof. Information contained in this release is unaudited and subject to change. LyondellBasell undertakes no obligation to update the information presented herein except to the extent required by law.

Table 8 - Reconciliation of Segment Information to Consolidated Financial Information



2018


2019

(Millions of U.S. Dollars)


Q1


Q2


Q3


Q4


Total


Q1


Q2


Total

Sales and other operating revenues:

















Olefins & Polyolefins - Americas


$

2,646


$

2,542


$

2,770


$

2,450


$

10,408


$

2,111


$

2,114


$

4,225

Olefins & Polyolefins - EAI


2,960


2,900


2,643


2,335


10,838


2,535


2,505


5,040

Intermediates & Derivatives


2,343


2,584


2,509


2,152


9,588


1,894


2,062


3,956

Advanced Polymer Solutions


838


833


1,039


1,314


4,024


1,339


1,258


2,597

Refining


2,257


2,569


2,499


1,832


9,157


1,882


2,180


4,062

Technology


115


182


171


115


583


141


173


314

Other/Eliminations


(1,392)


(1,404)


(1,476)


(1,322)


(5,594)


(1,124)


(1,244)


(2,368)

Continuing operations


$

9,767


$

10,206


$

10,155


$

8,876


$

39,004


$

8,778


$

9,048


$

17,826


















Operating income (loss):

















Olefins & Polyolefins - Americas


$

629


$

543


$

572


$

507


$

2,251


$

384


$

504


$

888

Olefins & Polyolefins - EAI


281


245


141


15


682


186


226


412

Intermediates & Derivatives


408


569


431


308


1,716


314


372


686

Advanced Polymer Solutions


114


112


48


55


329


119


91


210

Refining


15


58


38


(139)


(28)


(59)


(110)


(169)

Technology


46


100


88


50


284


73


96


169

Other


1


(1)


(1)


(2)


(3)



(2)


(2)

Continuing operations


$

1,494


$

1,626


$

1,317


$

794


$

5,231


$

1,017


$

1,177


$

2,194


















Depreciation and amortization:

















Olefins & Polyolefins - Americas


$

106


$

109


$

111


$

116


$

442


$

115


$

117


$

232

Olefins & Polyolefins - EAI


56


52


50


50


208


53


52


105

Intermediates & Derivatives


73


72


71


71


287


72


74


146

Advanced Polymer Solutions


8


9


22


30


69


29


30


59

Refining


46


46


45


55


192


43


44


87

Technology


10


12


10


11


43


10


11


21

Continuing operations


$

299


$

300


$

309


$

333


$

1,241


$

322


$

328


$

650


















EBITDA:(a)

















Olefins & Polyolefins - Americas


$

756


$

671


$

704


$

631


$

2,762


$

516


$

635


$

1,151

Olefins & Polyolefins - EAI


419


355


262


127


1,163


296


331


627

Intermediates & Derivatives


486


642


504


379


2,011


390


448


838

Advanced Polymer Solutions


123


121


70


86


400


148


120


268

Refining


63


104


84


(84)


167


(15)


(66)


(81)

Technology


56


113


98


61


328


83


107


190

Other


10


4


10


12


36


10


4


14

Continuing operations


$

1,913


$

2,010


$

1,732


$

1,212


$

6,867


$

1,428


$

1,579


$

3,007


















Capital, turnarounds and IT deferred spending:

















Olefins & Polyolefins - Americas


$

242


$

311


$

247


$

279


$

1,079


$

276


$

257


$

533

Olefins & Polyolefins - EAI


58


40


58


92


248


64


39


103

Intermediates & Derivatives


68


80


100


161


409


179


238


417

Advanced Polymer Solutions


15


10


16


21


62


16


11


27

Refining


36


45


47


122


250


43


53


96

Technology


8


9


12


19


48


17


17


34

Other


2


1


2


4


9


4


7


11

Continuing operations


$

429


$

496


$

482


$

698


$

2,105


$

599


$

622


$

1,221



















(a)     See Table 9 for the reconciliation of EBITDA to net income.



Table 9 - Reconciliation of Net Income to EBITDA




2018


2019

(Millions of U.S. dollars)


Q1


Q2


Q3


Q4


Total


Q1


Q2


Total

Net income (a)(b)


$

1,231


$

1,654


$

1,113


$

692


$

4,690


$

817


$

1,003


$

1,820

Loss from discontinued operations, net of tax



1


2


5


8



3


3

Income from continuing operations(a)(b)


1,231


1,655


1,115


697


4,698


817


1,006


1,823

Provision for (benefit from) income taxes(b)


303


(21)


232


99


613


203


169


372

Depreciation and amortization


299


300


309


333


1,241


322


328


650

Interest expense, net


80


76


76


83


315


86


76


162

EBITDA(c)


$

1,913


$

2,010


$

1,732


$

1,212


$

6,867


$

1,428


$

1,579


$

3,007




(a)

The third quarter of 2018, fourth quarter of 2018, first quarter of 2019 and second quarter of 2019 include after-tax charges of $42 million, $15 million,
$12 million and $15 million respectively, for acquisition-related transaction and integration costs associated with our acquisition of A. Schulman.

(b)

The second quarter of 2018 includes a $346 million non-cash benefit from the release of unrecognized tax benefits and associated accrued interest.

(c)

EBITDA for the third quarter of 2018, fourth quarter of 2018, first quarter of 2019 and second quarter of 2019 include pre-tax charges of $53 million, $20 million, $16 million and $19 million, respectively, for acquisition-related transaction and integration costs associated with our acquisition of A. Schulman.

 

LyondellBasell (PRNewsfoto/LyondellBasell)

 

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SOURCE LyondellBasell Industries


Source: PR Newswire (August 2, 2019 - 6:30 AM EDT)

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