HOUSTON and LONDON, Aug. 4, 2023
/PRNewswire/ --
Second Quarter 2023 Highlights
- Net Income: $715 million,
$801 million excluding identified
items(a)
- Diluted earnings per share: $2.18
per share; $2.44 per share excluding
identified items
- EBITDA: $1.4 billion,
$1.5 billion excluding identified
items
- Net cash provided by operating activities: $1.3 billion; $4.8
billion over trailing 12 months
- Increased 2023 target for Value Enhancement Program
- Increased quarterly dividend by 5% to $1.25 per share
- Returned $508 million to
shareholders through dividends and share repurchases
- Extending refining operations through no later than end of
first quarter 2025
Comparisons with the prior quarter and second quarter 2022 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,
2023
|
March 31,
2023
|
June 30,
2022
|
June 30,
2023
|
June 30,
2022
|
Sales and other
operating revenues
|
$10,306
|
$10,247
|
$14,838
|
$20,553
|
$27,995
|
Net income
|
715
|
474
|
1,644
|
1,189
|
2,964
|
Diluted earnings per
share
|
2.18
|
1.44
|
4.98
|
3.62
|
8.98
|
Weighted average
diluted share count
|
326
|
327
|
329
|
327
|
329
|
EBITDA(a)
|
1,383
|
1,131
|
2,381
|
2,514
|
4,401
|
Excluding
Identified Items(a)
|
Net income excluding
identified items
|
$801
|
$822
|
$1,713
|
$1,623
|
$3,033
|
Diluted earnings per
share excluding identified items
|
2.44
|
2.50
|
5.19
|
4.94
|
9.19
|
Impairments,
pre-tax
|
—
|
252
|
69
|
252
|
69
|
Refinery exit costs,
pre-tax
|
111
|
124
|
—
|
235
|
—
|
EBITDA excluding
identified items
|
1,450
|
1,452
|
2,450
|
2,902
|
4,470
|
(a) See
"Information Related to Financial Measures" for a discussion of the
company's use of non-GAAP financial measures and Tables 2-8 for
reconciliations or
calculations of these financial measures. "Identified items"
include adjustments for lower of cost or market ("LCM"),
impairments and refinery exit costs.
|
LyondellBasell Industries (NYSE: LYB) today announced net income
for the second quarter 2023 of $715
million, or $2.18 per diluted
share. During the quarter, the company recognized identified items
of $86 million, net of tax. These
items, which impacted second quarter earnings by $0.26 per share, were related to costs incurred
from plans to exit the refining business. Second quarter 2023
EBITDA was $1.4 billion, or
$1.5 billion excluding identified
items.
Global olefins and polyolefins margins improved modestly during
the second quarter driven by lower feedstock costs in both the U.S.
and Europe. New capacity from the
start of LyondellBasell's propylene oxide and oxyfuels plant
in Texas was largely offset by
planned maintenance at the company's existing assets. Oxyfuels
margins remained strong, supported by low butane costs and robust
demand for fuels. Refining margins declined from first quarter 2023
highs but remained above long-term averages.
LyondellBasell generated $1.3
billion in cash from operating activities in the second
quarter and achieved 103% cash conversion(b) over the
past twelve months. Available liquidity was $6.6 billion at the end of the quarter. The
company remains committed to a disciplined approach to capital
allocation. Approximately $300
million was reinvested in the business and $508 million was returned to shareholders through
dividends and share repurchases. During the second quarter,
LyondellBasell issued its inaugural green bond for $500 million to support investments advancing the
company's strategy for leadership in sustainability.
LyondellBasell moved forward on the new strategy revealed at its
Capital Markets Day in March. The company's Value Enhancement
Program is progressing ahead of schedule. As a result, the
program's near-term target was increased by approximately 30% and
is now expected to deliver $150
million of net income(c) and $200 million of recurring annual
EBITDA(c) by year end 2023. In May, LyondellBasell
announced the decision to extend refining operations to no later
than the end of the first quarter of 2025, as the company develops
options to redeploy the site's workforce and assets in support of
the company's sustainable growth strategy. LyondellBasell announced
additional acquisitions and partnerships during the quarter toward
building a profitable and leading Circular & Low Carbon
Solutions business. In June, MSCI recognized the company's progress
and upgraded LyondellBasell's ESG rating to 'AA', placing the
company within the top 10% of companies in the sector.
"Our new strategy is driving focus and purpose across the
company. LyondellBasell's employees are enthusiastically
implementing our new strategy. We are committed to becoming the
leader in fulfilling the rapidly increasing demand for sustainable
solutions from our customers and society," said
Peter Vanacker, LyondellBasell Chief Executive
Officer.
OUTLOOK
In the third quarter, the company expects
typical benefits from summer seasonality to be more than offset by
soft demand due to ongoing economic uncertainty. Stagnant demand,
volatile feedstock costs and new capacity in North America and China are challenging petrochemical margins.
Summer demand for transportation fuels continues to support
attractive oxyfuels and refining margins. During the third
quarter, LyondellBasell expects average operating rates of 85%
for North American olefins and polyolefins (O&P) assets and 75%
for European O&P as well as Intermediates & Derivatives
assets in line with global market demand. The company believes
current market conditions will persist amidst challenging economic
conditions and a slower than expected recovery in China.
"LyondellBasell is steadfast in our resolve to advance on the
three pillars of our long-term strategy despite near-term macro
challenges. Our rapid progress is laying the necessary groundwork
to extend our leadership in Circular & Low Carbon Solutions. I
am pleased to see our Value Enhancement Program being embraced by
our entire organization and driving sustainable value for our
shareholders," said Vanacker.
(b) Cash
conversion is net cash provided by operating activities divided by
EBITDA excluding LCM and impairment.
|
(c) Estimated
based on 2017-2019 mid-cycle margins and modest inflation relative
to a 2021 baseline.
|
CONFERENCE CALL
LyondellBasell will host a conference
call August 4 at 11 a.m. ET.
Participants on the call will include Chief Executive Officer
Peter Vanacker, Executive Vice President and Chief Financial
Officer Michael McMurray, Executive
Vice President of Global Olefins and Polyolefins Ken Lane, Executive Vice President of
Intermediates and Derivatives and Refining Kim Foley, Executive
Vice President of Advanced Polymer Solutions Torkel Rhenman and Head of Investor Relations
David Kinney. For event access, the toll-free dial-in number is
1-877-407-8029, international dial-in number is 201-689-8029 or
click the CallMe link. 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 1:00 p.m. ET
August 4 until September 4. The replay toll-free dial-in numbers
are 1-877-660-6853 and 201-612-7415. The access ID for each is
13739183.
ABOUT LYONDELLBASELL
We are LyondellBasell (NYSE: LYB)
– a leader in the global chemical industry creating solutions for
everyday sustainable living. Through advanced technology and
focused investments, we are enabling a circular and low carbon
economy. Across all we do, we aim to unlock value for our
customers, investors and society. As one of the world's largest
producers of polymers and a leader in polyolefin technologies,
we develop, manufacture and market high-quality and innovative
products for applications ranging from sustainable transportation
and food safety to clean water and quality healthcare. For more
information, please visit www.LyondellBasell.com or follow
@LyondellBasell on LinkedIn.
FORWARD-LOOKING STATEMENTS
The statements in this
release relating to matters that are not historical facts are
forward-looking statements.
These forward-looking statements are based upon assumptions of
management of LyondellBasell which are believed to be reasonable at
the time made and are subject to significant risks and
uncertainties.
When used in this release, the words "estimate," "believe,"
"continue," "could," "intend," "may," "plan," "potential,"
"predict," "should," "will," "expect," and similar expressions are
intended to identify forward-looking statements, although not all
forward-looking statements contain such identifying words. Actual
results could differ materially based on factors including, but not
limited to, market conditions, 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;
our ability to successfully implement initiatives identified
pursuant to our Value Enhancement Program and generate anticipated
earnings; 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 manage costs; future financial
and operating results; benefits and synergies of any proposed
transactions and our ability to align our assets with our core;
legal and environmental proceedings; tax rulings, consequences or
proceedings; technological developments, and our ability to develop
new products and process technologies; our ability to meet our
sustainability goals, including the ability to operate safely,
increase production of recycled and renewable-based polymers to
meet our targets and forecasts, and reduce our emissions and
achieve net zero emissions by the time set in our goals; our
ability to procure energy from renewable sources; our ability to
build a profitable Circular & Low Carbon Solutions business;
the continued operation of and successful shut down and closure of
the Houston Refinery, including within the expected timeframe;
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 to repay 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, 2022, 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. There
is no assurance that any of the actions, events or results of the
forward-looking statements will occur, or if any of them do, what
impact they will have on our results of operations or financial
condition. Forward-looking statements speak only as of the date
they were made and are based on the estimates and opinions of
management of LyondellBasell at the time the statements are
made.
LyondellBasell does not assume any obligation to update
forward-looking statements should circumstances or management's
estimates or opinions change, except as required by law.
This release contains time sensitive information that is
accurate only as of the date hereof. Information contained in this
release is unaudited and is subject to change.
We undertake no obligation to update the information presented
herein except as required by law.
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.
We report our financial results in accordance with U.S.
generally accepted accounting principles, but believe that certain
non-GAAP financial measures, such as EBITDA, and EBITDA, net income
and diluted EPS exclusive of identified items provide useful
supplemental information to investors regarding the underlying
business trends and performance of the company's ongoing operations
and are useful for period-over-period comparisons of such
operations. Non-GAAP financial measures should be considered as a
supplement to, and not as a substitute for, or superior to, the
financial measures prepared in accordance with GAAP.
We calculate EBITDA as income from continuing operations plus
interest expense (net), provision for (benefit from) income taxes,
and depreciation and 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. We also present EBITDA,
net income and diluted EPS exclusive of identified items.
Identified items include adjustments for "lower of cost or market"
("LCM"), impairment and refinery exit costs. Our inventories are
stated at the lower of cost or market. Cost is determined using the
last-in, first-out ("LIFO") inventory valuation methodology, which
means that the most recently incurred costs are charged to cost of
sales and inventories are valued at the earliest acquisition costs.
Fluctuation in the prices of crude oil, natural gas and correlated
products from period to period may result in the recognition of
charges to adjust the value of inventory to the lower of cost or
market in periods of falling prices and the reversal of those
charges in subsequent interim periods, within the same fiscal year
as the charge, as market prices recover. Property, plant and
equipment are recorded at historical costs. If it is determined
that an asset or asset group's undiscounted future cash flows
will not be sufficient to recover the carrying amount, an
impairment charge is recognized to write the asset down to its
estimated fair value. Goodwill is tested for impairment annually in
the fourth quarter or whenever events or changes in circumstances
indicate that the fair value of a reporting unit with goodwill is
below its carrying amount. If it is determined that the carrying
value of the reporting unit including goodwill exceeds its fair
value, an impairment charge is recognized. In April 2022 we announced our decision to cease
operation of our Houston Refinery. In connection with exiting the
refinery business, we began to incur costs primarily consisting of
accelerated lease amortization costs, personnel related costs,
accretion of asset retirement obligations and depreciation of asset
retirement costs.
Recurring annual EBITDA for the Value Enhancement Program is
estimated based on 2017-2019 mid-cycle margins and modest inflation
relative to a 2021 baseline.
Cash conversion is a measure commonly used by investors to
evaluate liquidity. For purposes of this presentation, cash
conversion equals net cash provided by operating activities divided
by EBITDA excluding LCM and impairment.
These non-GAAP financial measures as presented herein, may not
be comparable to similarly titled measures reported by other
companies due to differences in the way the measures are
calculated. In addition, we include calculations for certain other
financial measures to facilitate understanding. 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.
Additional operating and financial information may be found on
our website at www.LyondellBasell.com/investorrelations. These
measures as presented herein, may not be comparable to similarly
titled measures reported by other companies due to differences in
the way the measures are calculated.
Table 2 -
Reconciliations of Net Income to Net Income Excluding Identified
Items and to EBITDA Including and Excluding Identified
Items
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
Millions of U.S.
dollars
|
|
June 30,
2023
|
|
March 31,
2023
|
|
June 30,
2022
|
|
June 30,
2023
|
|
June 30,
2022
|
Net
income
|
|
$
715
|
|
$
474
|
|
$
1,644
|
|
$
1,189
|
|
$
2,964
|
add: Identified
items
|
|
|
|
|
|
|
|
|
|
|
Impairments,
after-tax(a)
|
|
—
|
|
252
|
|
69
|
|
252
|
|
69
|
Refinery exit costs,
after-tax(b)
|
|
86
|
|
96
|
|
—
|
|
182
|
|
—
|
Net income excluding
identified items
|
|
$
801
|
|
$
822
|
|
$
1,713
|
|
$
1,623
|
|
$
3,033
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
715
|
|
$
474
|
|
$
1,644
|
|
$
1,189
|
|
$
2,964
|
Loss from discontinued
operations, net of tax
|
|
2
|
|
1
|
|
1
|
|
3
|
|
2
|
Income from
continuing operations
|
|
717
|
|
475
|
|
1,645
|
|
1,192
|
|
2,966
|
Provision for income
taxes
|
|
188
|
|
167
|
|
378
|
|
355
|
|
694
|
Depreciation and
amortization(c)
|
|
391
|
|
396
|
|
304
|
|
787
|
|
615
|
Interest expense,
net
|
|
87
|
|
93
|
|
54
|
|
180
|
|
126
|
add: Identified
items
|
|
|
|
|
|
|
|
|
|
|
Impairments(a)
|
|
—
|
|
252
|
|
69
|
|
252
|
|
69
|
Refinery exit
costs(d)
|
|
67
|
|
69
|
|
—
|
|
136
|
|
—
|
EBITDA excluding
identified items
|
|
1,450
|
|
1,452
|
|
2,450
|
|
2,902
|
|
4,470
|
less: Identified
items
|
|
|
|
|
|
|
|
|
|
|
Impairments(a)
|
|
—
|
|
(252)
|
|
(69)
|
|
(252)
|
|
(69)
|
Refinery exit
costs(d)
|
|
(67)
|
|
(69)
|
|
—
|
|
(136)
|
|
—
|
EBITDA
|
|
$
1,383
|
|
$
1,131
|
|
$
2,381
|
|
$
2,514
|
|
$
4,401
|
|
|
|
|
|
|
|
|
|
|
|
(a) The first
quarter of 2023 and six months ended June 30, 2023 reflects a
non-cash goodwill impairment charge in our Advanced Polymers
Solutions segment. The
second quarter of 2022 and six months ended June 30, 2022 reflects
an impairment charge related to the sale of our polypropylene
manufacturing facility in Australia.
|
(b) Refinery exit
costs, after-tax, include accelerated lease amortization costs of
$29 million, $40 million and $69 million, personnel related costs
of $21 million, $12
million and $33 million, accretion of asset retirement obligations
of $2 million, $1 million and $3 million, and depreciation of asset
retirement costs of $34 million, $43
million and $77 million, for the three months ended June 30, 2023
and March 31, 2023, and the six months ended June 30, 2023,
respectively.
|
(c) Depreciation
and amortization includes depreciation of asset retirement costs of
$44 million, $55 million and $99 million expensed during the three
months ended
June 30, 2023 and March 31, 2023, and the six months ended June 30,
2023, respectively, in connection with exiting the Refining
business.
|
(d) Refinery exit
costs, include accelerated lease amortization costs of $38 million,
$51 million and $89 million, personnel related costs of $27
million, $16 million and $43
million, and accretion of asset retirement obligations of $2
million, $2 million and $4 million, during the three months ended
June 30, 2023 and March 31, 2023, and the
six months ended June 30, 2023, respectively.
|
Table 3 -
Reconciliation of Diluted EPS to Diluted EPS Excluding Identified
Items
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30,
2023
|
|
March 31,
2023
|
|
June 30,
2022
|
|
June 30,
2023
|
|
June 30,
2022
|
Diluted earnings per
share
|
$
2.18
|
|
$
1.44
|
|
$
4.98
|
|
$
3.62
|
|
$
8.98
|
|
|
|
|
|
|
|
|
|
|
Add: Identified
items:
|
|
|
|
|
|
|
|
|
|
Impairments
|
—
|
|
0.77
|
|
0.21
|
|
0.77
|
|
0.21
|
Refinery exit
costs
|
0.26
|
|
0.29
|
|
—
|
|
0.55
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share excluding identified items
|
$
2.44
|
|
$
2.50
|
|
$
5.19
|
|
$
4.94
|
|
$
9.19
|
|
|
|
|
|
|
|
|
|
|
Table 4 -
Reconciliation of Net Cash Provided by Operating Activities to
EBITDA Including and Excluding LCM and Impairment
|
|
Year
Ended
|
|
Six Months
Ended
|
|
Last Twelve
Months
|
Millions of U.S.
dollars
|
December 31,
2022
|
|
June 30,
2022
|
|
June 30,
2023
|
|
June 30,
2023
|
Net cash provided by
operating activities
|
$
6,119
|
|
$
3,101
|
|
$
1,772
|
|
$
4,790
|
Adjustments:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
(1,267)
|
|
(615)
|
|
(787)
|
|
(1,439)
|
Impairments(a)
|
(69)
|
|
(69)
|
|
(252)
|
|
(252)
|
Amortization of
debt-related costs
|
(14)
|
|
(8)
|
|
(4)
|
|
(10)
|
Share-based
compensation
|
(70)
|
|
(37)
|
|
(48)
|
|
(81)
|
Equity loss, net of
distributions of earnings
|
(344)
|
|
(133)
|
|
(45)
|
|
(256)
|
Deferred income tax
provision
|
(369)
|
|
(68)
|
|
(19)
|
|
(320)
|
Changes in assets and
liabilities that used (provided) cash:
|
|
|
|
|
|
|
|
Accounts
receivable
|
(1,005)
|
|
829
|
|
192
|
|
(1,642)
|
Inventories
|
91
|
|
415
|
|
349
|
|
25
|
Accounts
payable
|
464
|
|
(750)
|
|
64
|
|
1,278
|
Other, net
|
353
|
|
299
|
|
(33)
|
|
21
|
Net income
|
3,889
|
|
2,964
|
|
1,189
|
|
2,114
|
Loss from discontinued
operations, net of tax
|
5
|
|
2
|
|
3
|
|
6
|
Income from continuing
operations
|
3,894
|
|
2,966
|
|
1,192
|
|
2,120
|
Provision for income
taxes
|
882
|
|
694
|
|
355
|
|
543
|
Depreciation and
amortization
|
1,267
|
|
615
|
|
787
|
|
1,439
|
Interest expense,
net
|
258
|
|
126
|
|
180
|
|
312
|
add: LCM
charges
|
—
|
|
—
|
|
—
|
|
—
|
add:
Impairments(a)
|
69
|
|
69
|
|
252
|
|
252
|
EBITDA excluding LCM
and impairment
|
6,370
|
|
4,470
|
|
2,766
|
|
4,666
|
less: LCM
charges
|
—
|
|
—
|
|
—
|
|
—
|
less:
Impairments(a)
|
(69)
|
|
(69)
|
|
(252)
|
|
(252)
|
EBITDA
|
$
6,301
|
|
$
4,401
|
|
$
2,514
|
|
$
4,414
|
|
|
|
|
|
|
|
|
(a) Reflects impairment
charges related to the sale of our polypropylene manufacturing
facility in Australia, recognized in 2022 and a goodwill impairment
charge in
our Advanced Polymers Solutions segment, recognized in the first
quarter of 2023.
|
Note: Last twelve
months June 30, 2023 is calculated as year ended December 31, 2022,
plus six months ended June 30, 2023, minus six months ended June
30,
2022.
|
Table 5 -
Calculation of Cash Conversion
|
|
Year
Ended
|
|
Six Months
Ended
|
|
Last Twelve
Months
|
Millions of U.S.
dollars
|
December 31,
2022
|
|
June 30,
2022
|
|
June 30,
2023
|
|
June 30,
2023
|
Net cash provided by
operating activities
|
$
6,119
|
|
$
3,101
|
|
$
1,772
|
|
$
4,790
|
Divided by:
|
|
|
|
|
|
|
|
EBITDA excluding LCM
and impairment(a)
|
6,370
|
|
4,470
|
|
2,766
|
|
4,666
|
Cash
conversion
|
96 %
|
|
69 %
|
|
64 %
|
|
103 %
|
|
|
|
|
|
|
|
|
(a) See Table 4 for a
reconciliation of net cash provided by operating activities to
EBITDA including and excluding LCM and impairment.
|
Note: Last twelve
months June 30, 2023 is calculated as year ended December 31, 2022,
plus six months ended June 30, 2023,
minus six months ended June 30, 2022.
|
Table 6 -
Reconciliation of Net Income to EBITDA for the Value Enhancement
Program
|
|
|
Millions of U.S.
dollars
|
2023(a)
|
Net income
|
$
150
|
Provision for income
taxes
|
35
|
Depreciation and
amortization
|
15
|
Interest expense,
net
|
—
|
EBITDA
|
$
200
|
|
|
(a) In 2022, we
launched the Value Enhancement Program. In 2023, as a result of the
program progressing ahead of schedule, the near-term target has
increased
to $200 million of recurring annual EBITDA by the end of
2023.
|
Table 7 -
Calculation of Cash and Liquid Investments and Total
Liquidity
|
Millions of U.S.
dollars
|
June 30,
2023
|
Cash and cash
equivalents and restricted cash
|
$
2,494
|
Short-term
investments
|
—
|
Cash and liquid
investments
|
2,494
|
|
|
Availability under
Senior Revolving Credit Facility
|
3,250
|
Availability under U.S.
Receivables Facility
|
900
|
Total
liquidity
|
$
6,644
|
|
|
Table 8 -
Calculation of Dividends and Share Repurchases
|
|
Three Months
Ended
|
Millions of U.S.
dollars
|
June 30,
2023
|
Dividends - common
stock
|
$
408
|
Repurchase of Company
ordinary shares
|
100
|
Dividends and share
repurchases
|
$
508
|
|
|
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SOURCE LyondellBasell Industries