Form 8-K LyondellBasell Industrie For: Nov 01

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 1, 2016

 

 

LYONDELLBASELL INDUSTRIES N.V.

(Exact Name of Registrant as Specified in Charter)

 

 

 

The Netherlands		001-34726		98-0646235
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

1221 McKinney St. Suite 300 Houston, Texas USA 77010		4th Floor, One Vine Street London W1J0AH The United Kingdom		Delftseplein 27E 3013 AA Rotterdam The Netherlands
		(Addresses of principal executive offices)

 

(713) 309-7200		+44 (0)207 220 2600		+31 (0)10 275 5500
(Registrant’s telephone numbers, including area codes)

 

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02

Results of Operations and Financial Conditions.

On November 1, 2016, LyondellBasell Industries N.V. announced earnings results for the quarter ended September 30, 2016. A copy of our earnings release is attached as Exhibit 99.1 and incorporated into this Item 2.02 by reference.

The information in this Current Report on Form 8-K, including Exhibit 99.1 furnished herewith, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and will not be incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.

 

Item 9.01

Financial Statements and Exhibits

 

(d)

Exhibits

 

99.1		Press Release dated November 1, 2016

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

				LYONDELLBASELL INDUSTRIES N.V.
Date: November 1, 2016						By:		/s/ Jeffrey A. Kaplan
						Jeffrey A. Kaplan
						Executive Vice President

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Item 9.01

Financial Statements and Exhibits

 

99.1		Press Release dated November 1, 2016

Exhibit 99.1

 

NEWS RELEASE   FOR IMMEDIATE RELEASE HOUSTON and LONDON, November 1, 2016

LyondellBasell Reports Third-Quarter 2016 Earnings

Third Quarter 2016 Highlights

 

•

Income from continuing operations: $1.0 billion

 

•

Diluted earnings per share: $2.31 per share

 

•

EBITDA: $1.6 billion

 

•

Share repurchases and dividends totaled $1.2 billion; repurchased 10.3 million shares during the third quarter, approximately 2% of the outstanding shares

Comparisons with the prior quarter and third quarter 2015 are available in the following table:

Table 1 - Earnings Summary

		Three Months Ended												Nine Months Ended
Millions of U.S. dollars (except share data)		September 30, 2016				June 30, 2016				September 30, 2015				September 30,
														2016				2015
Sales and other operating revenues		$	7,365			$	7,328			$	8,334			$	21,436			$	25,664
Net income(a)			953				1,091				1,186				3,074				3,679
Income from continuing operations(b)			955				1,092				1,189				3,077				3,682
Diluted earnings per share (U.S. dollars):
Net income(c)			2.30				2.56				2.54				7.23				7.77
Income from continuing operations(b)			2.31				2.56				2.55				7.24				7.78
Diluted share count (millions)			414				425				463				424				473
EBITDA(d)			1,606				1,783				2,001				5,196				6,139
Excluding LCM1 Impact:
LCM charges (benefits), pre-tax			—				(68	)			181				—				264
Income from continuing operations(b)			955				1,045				1,303				3,077				3,848
Diluted earnings per share (U.S. dollars):
Income from continuing operations(b)			2.31				2.45				2.80				7.24				8.13
EBITDA(d)			1,606				1,715				2,182				5,196				6,403

 

(a)	Includes net loss attributable to non-controlling interests and income (loss) from discontinued operations, net of tax. See Table 10.

(b)	See Table 11 for charges and benefits to income from continuing operations.

(c)	Includes diluted earnings (loss) per share attributable to discontinued operations.

(d)	See the end of this release for an explanation of the Company’s use of EBITDA and Table 8 for reconciliations of EBITDA to net income and income from continuing operations.

 

1	LCM stands for “lower of cost or market.” An explanation of LCM and why we have excluded it from our financial information in this press release can be found at the end of this press release under “Information Related to Financial Measures.”

 

LyondellBasell Industries				1
www.lyb.com

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LyondellBasell Industries (NYSE: LYB) today announced earnings from continuing operations for the third quarter 2016 of approximately $1.0 billion, or $2.31 per share. Third quarter 2016 EBITDA was $1.6 billion.

“Third quarter earnings were $2.31 per share; remaining on a 2016 annual pace that exceeds $9.00 per share. During the quarter and throughout the year, the strong contribution from our European olefins and polyolefins business has demonstrated the geographic balance within our portfolio. This has been particularly significant as our North American olefins and polyolefins business results have been impacted by a heavy planned maintenance schedule. Both regions experienced continued strong polyolefin demand. Within our refining business, operating disruptions impacted third quarter results,” said Bob Patel, LyondellBasell’s CEO.

OUTLOOK

“During October, global olefin and polyolefin industry conditions have remained favorable. We anticipate that the winter months will bring some typical seasonal slowing in select business lines. The fourth quarter marks the completion of a period of significant planned maintenance and associated downtime in our olefin and polyolefin assets. During 2017, our planned maintenance schedule is much lighter than 2016, and we will be positioned to benefit from our investment in system upgrades, reliability and expansions,” Patel said.

LYONDELLBASELL BUSINESS RESULTS DISCUSSION BY REPORTING SEGMENT

LyondellBasell manages operations through five operating segments: 1) Olefins & Polyolefins – Americas; 2) Olefins & Polyolefins – Europe, Asia and International (EAI); 3) Intermediates & Derivatives; 4) Refining; and 5) Technology.

The following comments and analysis represent underlying business activity and are exclusive of LCM inventory adjustments.

 

LyondellBasell Industries				2
www.lyb.com

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Olefins & Polyolefins - Americas (O&P-Americas) – The primary products of this segment include ethylene and its co-products (propylene, butadiene and benzene), polyethylene, polypropylene and Catalloy process resins.

Table 2 - O&P–Americas Financial Overview

 

		Three Months Ended												Nine Months Ended
Millions of U.S. dollars		September 30, 2016				June 30, 2016				September 30, 2015				September 30,
														2016				2015
Operating income		$	582			$	646			$	740			$	1,935			$	2,594
EBITDA			682				754				841				2,314				2,886
LCM charges, pre-tax			—				—				79				—				101
EBITDA excluding LCM adjustments			682				754				920				2,314				2,987

Three months ended September 30, 2016 versus three months ended June 30, 2016 – EBITDA decreased $72 million for the third quarter 2016 versus the second quarter 2016. Compared to the prior period, underlying olefin results increased approximately $15 million. Ethylene price increased approximately 4 cents per pound. Combined polyolefin results declined by $70 million. Polyethylene spreads decreased by approximately 4 cents per pound. Polyethylene sales volumes improved by approximately 6 percent as inventory management offset planned maintenance. Polypropylene spreads declined by 9 cents per pound partially offset by volumes which increased approximately 13 percent. Joint venture equity income declined by $8 million.

Three months ended September 30, 2016 versus three months ended September 30, 2015 – EBITDA decreased $238 million versus the third quarter 2015, excluding a favorable $79 million quarter to quarter variance as a result of an LCM inventory adjustment. Olefin results declined by $120 million. Third quarter was impacted by planned maintenance activities at Corpus Christi and Morris, Illinois. Combined polyolefin results declined approximately $110 million versus the prior year period. Polyethylene results declined primarily due to a margin decline of approximately 7 cents per pound. Polyethylene sales volumes declined by approximately 4 percent due to planned facility maintenance during the quarter. Polypropylene sales volumes and margins were relatively unchanged. Joint venture equity income was unchanged.

 

LyondellBasell Industries				3
www.lyb.com

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Olefins & Polyolefins - Europe, Asia, International (O&P-EAI) – The primary products of this segment include ethylene and its co-products (propylene and butadiene), polyethylene, polypropylene, global polypropylene compounds, Catalloy process resins and Polybutene-1 resins.

Table 3 - O&P–EAI Financial Overview

 

		Three Months Ended												Nine Months Ended
		September 30, 2016				June 30, 2016				September 30, 2015				September 30,
Millions of U.S. dollars														2016				2015
Operating income		$	447			$	423			$	412			$	1,228			$	1,007
EBITDA			584				576				549				1,669				1,398
LCM charges (benefits), pretax			—				(40	)			6				—				6
EBITDA excluding LCM adjustments			584				536				555				1,669				1,404

Three months ended September 30, 2016 versus three months ended June 30, 2016 – EBITDA increased by $48 million versus the second quarter 2016, excluding an unfavorable $40 million quarter to quarter variance as a result of an LCM inventory adjustment. The third quarter benefited $11 million from the restructuring of Asian polypropylene joint ventures and the sale of Australian polypropylene assets. Olefin results increased approximately $95 million as margins increased approximately 7 cents per pound. Olefins also benefitted from increased volume due to the absence of second quarter maintenance. Combined polyolefin results declined $25 million primarily due to lower polyethylene margins. Polypropylene compounds and polybutene-1 results decreased by $10 million. Equity income declined by $29 million due to scheduled joint venture maintenance.

Three months ended September 30, 2016 versus three months ended September 30, 2015 – EBITDA increased by $29 million versus the third quarter 2015, excluding a favorable $6 million quarter to quarter variance as a result of an LCM inventory adjustment. The third quarter of 2016 benefited $11 million from the restructuring of Asian polypropylene joint ventures and the sale of Australian polypropylene assets. Olefin results were relatively unchanged. Combined polyolefin results increased approximately $20 million as spreads improved while volumes declined by approximately 5 percent. Polypropylene compounds and polybutene-1 results improved by approximately $15 million. Equity income declined by $12 million due to scheduled joint venture maintenance.

 

LyondellBasell Industries				4
www.lyb.com

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Intermediates & Derivatives (I&D) – The primary products of this segment include propylene oxide (PO) and its co-products (styrene monomer, tertiary butyl alcohol (TBA), isobutylene and tertiary butyl hydroperoxide), and derivatives (propylene glycol, propylene glycol ethers and butanediol); acetyls (including methanol), ethylene oxide and its derivatives, and oxyfuels.

Table 4 - I&D Financial Overview

 

		Three Months Ended												Nine Months Ended
		September 30, 2016				June 30, 2016				September 30, 2015				September 30,
Millions of U.S. dollars														2016				2015
Operating income		$	240			$	327			$	403			$	822			$	1,079
EBITDA			304				397				460				1,027				1,263
LCM charges (benefits), pre-tax			—				(28	)			46				—				107
EBITDA excluding LCM adjustments			304				369				506				1,027				1,370

Three months ended September 30, 2016 versus three months ended June 30, 2016 – EBITDA decreased $65 million versus the second quarter 2016, excluding an unfavorable $28 million quarter to quarter variance as a result of an LCM adjustment related to inventory. Results for PO and PO derivatives declined by approximately $15 million primarily due to declining margins. Intermediate chemicals results declined by approximately $60 million, primarily due to a styrene margin decline of approximately 3 cents per pound. Lower ethanol, ethylene oxide, and ethylene glycol results also contributed. Oxyfuels were relatively unchanged with sales volume increases offset by lower margins. Equity income from joint ventures was relatively unchanged.

Three months ended September 30, 2016 versus three months ended September 30, 2015 – EBITDA decreased $202 million versus the third quarter 2015, excluding a favorable $46 million quarter to quarter variance as a result of an LCM inventory adjustment. Results for PO and PO derivatives declined by approximately $50 million due to lower margins while volumes increased approximately 8 percent. Intermediate chemicals results declined by approximately $130 million primarily due to methanol, styrene, and ethylene glycol margins. Oxyfuels results decreased approximately $20 million relative to very strong third quarter 2015 margins. Equity income from joint ventures was unchanged.

 

LyondellBasell Industries				5
www.lyb.com

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Refining – The primary products of this segment include gasoline, diesel fuel, heating oil, jet fuel, and petrochemical raw materials.

Table 5 - Refining Financial Overview

 

		Three Months Ended												Nine Months Ended
		September 30, 2016				June 30, 2016				September 30, 2015				September 30,
Millions of U.S. dollars														2016				2015
Operating income (loss)		($	56	)		($	53	)		$	52			($	139	)		$	245
EBITDA			(10	)			(13	)			93				(9	)			401
LCM charges, pre-tax			—				—				50				—				50
EBITDA excluding LCM adjustments			(10	)			(13	)			143				(9	)			451

Three months ended September 30, 2016 versus three months ended June 30, 2016 – EBITDA increased $3 million versus the second quarter 2016. During the third quarter, operating rates were limited to 209,000 barrels per day due to operational disruptions. The Maya 2-1-1 industry benchmark crack spread decreased by $2.09 per barrel, averaging $18.98 per barrel.

Three months ended September 30, 2016 versus three months ended September 30, 2015 – EBITDA decreased $153 million versus the third quarter 2015, excluding a favorable $50 million quarter to quarter variance as a result of an LCM inventory adjustment. Third quarter 2016 throughput was down by 40,000 barrels per day from the prior year period due to operational disruptions. The Maya 2-1-1 industry benchmark crack spread decreased by $3.79 per barrel.

Technology Segment – The Technology segment has global responsibility for our polyolefin catalyst business and our process technology licensing business.

Table 6 - Technology Financial Overview

 

		Three Months Ended												Nine Months Ended
		September 30, 2016				June 30, 2016				September 30, 2015				September 30,
Millions of U.S. dollars														2016				2015
Operating income		$	35			$	62			$	34			$	170			$	143
EBITDA			45				73				45				201				178

Three months ended September 30, 2016 versus three months ended June 30, 2016 – EBITDA decreased by $28 million due to the timing of licensing revenue.

Three months ended September 30, 2016 versus three months ended September 30, 2015 – EBITDA was unchanged with improved catalyst results partially offset by licensing results.

 

LyondellBasell Industries				6
www.lyb.com

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Capital Spending and Cash Balances

Capital expenditures, including growth projects, maintenance turnarounds, catalyst and information technology-related expenditures, were $586 million during the third quarter 2016. Our cash and liquid investment balance was $2.1 billion at September 30, 2016. We repurchased 10.3 million ordinary shares during the third quarter 2016. There were 409 million common shares outstanding as of September 30, 2016. The company paid dividends of $351 million during the third quarter of 2016.

CONFERENCE CALL

LyondellBasell will host a conference call November 1 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 Vice President of Investor Relations Doug Pike.

The toll-free dial-in number in the U.S. is 888-677-1826. A complete listing of toll-free numbers by country is available at www.lyb.com/teleconference for international callers. The pass code for all numbers is 6934553.

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

A replay of the call will be available from 2 p.m. EDT November 1 until December 1 at 11:59 p.m. EDT. The replay dial-in numbers are 866-425-0182 (U.S.) and +1 203-369-0874 (international). The pass code for each is 11116.

ABOUT LYONDELLBASELL

LyondellBasell (NYSE: LYB) is one of the world’s largest plastics, chemical and refining companies and a member of the S&P 500. LyondellBasell (www.lyb.com) manufactures products at 55 sites in 17 countries. LyondellBasell products and technologies are used to make items that improve the quality of life for people around the world including packaging, electronics, automotive parts, home furnishings, construction materials and biofuels.

 

LyondellBasell Industries				7
www.lyb.com

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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; 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, 2015, which can be found at www.lyb.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. The non-GAAP measures we have presented include income from continuing operations excluding LCM, diluted earnings per share excluding LCM, EBITDA and EBITDA excluding LCM. LCM stands for “lower of cost or market,” which is an accounting rule consistent with GAAP related to the valuation of inventory. 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. Market is determined based on an assessment of the current estimated replacement cost and selling price of the inventory. In periods where the market price of our inventory declines substantially, cost values of inventory may be higher than the market value, which results in us writing down the value of inventory to market value in accordance with the LCM rule, consistent with GAAP. This adjustment is related to our use of LIFO accounting and the recent decline in pricing for many of our raw material and finished goods inventories. We report our financial results in accordance with U.S.

 

LyondellBasell Industries				8
www.lyb.com

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generally accepted accounting principles, but believe that certain non-GAAP financial measures, such as EBITDA and earnings and EBITDA excluding LCM, 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.

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. We have also presented financial information herein exclusive of adjustments for LCM.

Quantitative reconciliations of EBITDA to net income, the most comparable GAAP measure, are provided in Table 8 at the end of this release.

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.

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Source: LyondellBasell Industries

Media Contact:             Faye Eson +1 713-309-7575

Investor Contact:          Douglas J. Pike +1 713-309-7141

 

LyondellBasell Industries				9
www.lyb.com

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Table 7 - Reconciliation of Segment Information to Consolidated Financial Information ^(a)

 

		2015																				2016
(Millions of U.S. dollars)		Q1				Q2				Q3				Q4				Total				Q1				Q2				Q3				YTD
Sales and other operating revenues:
Olefins & Polyolefins - Americas		$	2,551			$	2,679			$	2,516			$	2,218			$	9,964			$	2,115			$	2,211			$	2,342			$	6,668
Olefins & Polyolefins - EAI			2,911				3,061				2,932				2,672				11,576				2,578				2,721				2,634				7,933
Intermediates & Derivatives			1,918				2,159				2,039				1,656				7,772				1,702				1,769				1,805				5,276
Refining			1,607				2,102				1,693				1,155				6,557				955				1,289				1,330				3,574
Technology			136				107				100				122				465				132				129				102				363
Other/elims			(938	)			(963	)			(946	)			(752	)			(3,599	)			(739	)			(791	)			(848	)			(2,378	)
Continuing Operations		$	8,185			$	9,145			$	8,334			$	7,071			$	32,735			$	6,743			$	7,328			$	7,365			$	21,436
Operating income (loss):
Olefins & Polyolefins - Americas		$	934			$	920			$	740			$	662			$	3,256			$	707			$	646			$	582			$	1,935
Olefins & Polyolefins - EAI			236				359				412				302				1,309				358				423				447				1,228
Intermediates & Derivatives			271				405				403				145				1,224				255				327				240				822
Refining			74				119				52				(101	)			144				(30	)			(53	)			(56	)			(139	)
Technology			64				45				34				54				197				73				62				35				170
Other			(4	)			(3	)			9				(10	)			(8	)			(3	)			(2	)			1				(4	)
Continuing Operations		$	1,575			$	1,845			$	1,650			$	1,052			$	6,122			$	1,360			$	1,403			$	1,249			$	4,012
Depreciation and amortization:
Olefins & Polyolefins - Americas		$	86			$	85			$	87			$	95			$	353			$	90			$	88			$	87			$	265
Olefins & Polyolefins - EAI			55				54				54				56				219				55				58				58				171
Intermediates & Derivatives			60				56				55				62				233				70				69				62				201
Refining			74				40				41				41				196				43				40				40				123
Technology			12				12				11				11				46				10				11				10				31
Continuing Operations		$	287			$	247			$	248			$	265			$	1,047			$	268			$	266			$	257			$	791
EBITDA: (b)
Olefins & Polyolefins - Americas		$	1,031			$	1,014			$	841			$	775			$	3,661			$	878			$	754			$	682			$	2,314
Olefins & Polyolefins - EAI			357				492				549				427				1,825				509				576				584				1,669
Intermediates & Derivatives			337				466				460				212				1,475				326				397				304				1,027
Refining			149				159				93				(59	)			342				14				(13	)			(10	)			(9	)
Technology			76				57				45				65				243				83				73				45				201
Other			2				(2	)			13				(26	)			(13	)			(3	)			(4	)			1				(6	)
Continuing Operations		$	1,952			$	2,186			$	2,001			$	1,394			$	7,533			$	1,807			$	1,783			$	1,606			$	5,196
Capital, turnarounds and IT deferred spending:
Olefins & Polyolefins - Americas		$	149			$	140			$	159			$	220			$	668			$	303			$	339			$	384			$	1,026
Olefins & Polyolefins - EAI			38				27				49				72				186				81				60				48				189
Intermediates & Derivatives			76				76				135				154				441				76				80				90				246
Refining			33				28				23				24				108				57				71				51				179
Technology			6				3				7				8				24				6				9				9				24
Other			4				4				—				5				13				4				4				4				12
Continuing Operations		$	306			$	278			$	373			$	483			$	1,440			$	527			$	563			$	586			$	1,676

 

(a)

EBITDA as presented herein includes the impacts of pre-tax LCM charges of $92 million, $181 million and $284 million for the first, third and fourth quarters of 2015, respectively. EBITDA for the second quarter of 2015 includes a pre-tax LCM benefit of $9 million for the partial reversal of the first quarter 2015 LCM adjustment. EBITDA for the first quarter of 2016 includes a pre-tax LCM adjustment of $68 million and a $78 million pre-tax gain on the sale of our wholly owned Argentine subsidiary. Second quarter 2016 EBITDA includes a pre-tax LCM benefit of $68 million for the reversal of the first quarter 2016 LCM adjustment due to price recoveries during the period. See Tables 2 through 6 for LCM adjustments recorded for each segment.

(b)	See Table 8 for EBITDA calculation.

 

LyondellBasell Industries				10
www.lyb.com

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Table 8 - EBITDA Calculation

 

		2015																				2016
(Millions of U.S. dollars)		Q1				Q2				Q3				Q4				Total				Q1				Q2				Q3				YTD
Net income(a)		$	1,164			$	1,329			$	1,186			$	795			$	4,474			$	1,030			$	1,091			$	953			$	3,074
(Income) loss from discontinued operations, net of tax			3				(3	)			3				2				5				—				1				2				3
Income from continuing operations(a)			1,167				1,326				1,189				797				4,479				1,030				1,092				955				3,077
Provision for income taxes			440				541				487				262				1,730				432				346				326				1,104
Depreciation and amortization			287				247				248				265				1,047				268				266				257				791
Interest expense, net			58				72				77				70				277				77				79				68				224
EBITDA(b)		$	1,952			$	2,186			$	2,001			$	1,394			$	7,533			$	1,807			$	1,783			$	1,606			$	5,196

 

(a)

Amounts presented herein include after-tax LCM charges of $58 million, $114 million and $185 million in the first, third and fourth quarters of 2015, respectively. The second quarter of 2015 includes an after-tax benefit of $6 million for the partial reversal of the first quarter 2015 LCM adjustment resulting from price recoveries during the period. The first quarter of 2016 includes an after-tax LCM charge of $47 million and a $78 million after-tax gain related to the sale of our wholly owned Argentine subsidiary. The second quarter of 2016 includes an after-tax benefit of $47 million for the reversal of the first quarter 2016 LCM adjustment due to price recoveries during the period.

(b)

EBITDA as presented herein includes the impact of pre-tax LCM charges of $92 million, $181 million and $284 million for the first, third and fourth quarters of 2015, respectively. EBITDA for the second quarter of 2015 includes a pre-tax LCM benefit of $9 million for the partial reversal of the first quarter 2015 LCM adjustment. The first quarter of 2016 includes a pre-tax LCM charge of $68 million and a pre-tax gain of $78 million on the sale of our wholly owned Argentine subsidiary. Second quarter 2016 EBITDA includes a pre-tax LCM benefit of $68 million for the reversal of the first quarter 2016 LCM adjustment.

 

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Table 9 - Selected Segment Operating Information

 

		2015																				2016
		Q1				Q2				Q3				Q4				Total				Q1				Q2				Q3				YTD
Olefins and Polyolefins - Americas
Volumes (million pounds)
Ethylene produced			2,364				2,415				2,514				2,391				9,684				2,392				1,899				1,939				6,230
Propylene produced			805				740				697				798				3,040				832				748				575				2,155
Polyethylene sold			1,473				1,575				1,577				1,578				6,203				1,554				1,426				1,517				4,497
Polypropylene sold			627				698				662				606				2,593				612				582				659				1,853
Benchmark Market Prices
West Texas Intermediate crude oil (USD per barrel)			48.57				57.95				45.36				42.16				48.71				33.63				46.01				44.94				41.65
Light Louisiana Sweet (“LLS”) crude oil (USD per barrel)			52.84				62.93				50.20				43.53				52.36				35.34				47.39				46.52				43.20
Houston Ship Channel natural gas (USD per million BTUs)			2.76				2.76				2.72				2.11				2.57				1.93				2.06				2.79				2.26
U.S. weighted average cost of ethylene production (cents/pound)			10.2				9.7				9.6				10.9				10.1				9.8				12.0				10.6				10.8
U.S. ethylene (cents/pound)			34.8				34.2				30.3				27.5				31.7				26.7				30.3				33.0				30.0
U.S. polyethylene [high density] (cents/pound)			65.7				67.3				64.3				57.0				63.6				52.3				59.0				60.7				57.3
U.S. propylene (cents/pound)			49.7				41.7				33.2				31.3				39.0				31.0				32.7				37.8				33.8
U.S. polypropylene [homopolymer] (cents/pound)			67.7				61.7				59.3				62.7				62.8				67.8				61.7				60.2				63.2
Olefins and Polyolefins - Europe, Asia, International
Volumes (million pounds)
Ethylene produced			1,007				1,047				944				978				3,976				950				941				1,066				2,957
Propylene produced			600				632				575				575				2,382				555				577				649				1,781
Polyethylene sold			1,533				1,360				1,304				1,379				5,576				1,434				1,386				1,315				4,135
Polypropylene sold			1,817				1,529				1,673				1,757				6,776				1,773				1,617				1,509				4,899
Benchmark Market Prices (€0.01 per pound)
Western Europe weighted average cost of ethylene production			22.9				23.2				14.4				22.5				20.8				16.3				21.2				17.9				18.5
Western Europe ethylene			39.3				47.1				46.6				41.4				43.6				38.4				41.1				42.3				40.6
Western Europe polyethylene [high density]			45.2				60.6				61.2				56.9				56.0				55.4				57.6				55.7				56.2
Western Europe propylene			37.1				44.4				41.7				31.0				38.5				26.3				28.8				30.7				28.6
Western Europe polypropylene [homopolymer]			49.8				62.5				59.3				47.4				54.7				46.5				49.5				49.5				48.5
Intermediates and Derivatives
Volumes (million pounds)
Propylene oxide and derivatives sold			870				751				697				682				3,000				793				743				752				2,288
Ethylene oxide and derivatives sold			268				312				282				237				1,099				301				233				224				758
Styrene monomer sold			903				735				904				889				3,431				917				933				911				2,761
Acetyls sold			547				810				733				623				2,713				702				821				751				2,274
TBA Intermediates sold			433				321				421				371				1,546				415				391				410				1,216
Volumes (million gallons)
MTBE/ETBE sold			229				299				268				258				1,054				270				278				298				846
Benchmark Market Margins (cents per gallon)
MTBE - Northwest Europe			64.0				106.0				119.0				49.8				85.1				44.4				78.7				55.3				59.5
Refining
Volumes (thousands of barrels per day)
Heavy crude oil processing rate			241				255				249				206				238				186				183				209				192
Benchmark Market Margins
Light crude oil - 2-1-1			15.02				16.42				15.29				9.44				14.04				8.67				11.52				11.46				10.58
Light crude oil - Maya differential			8.72				7.56				7.48				9.11				8.26				9.19				9.55				7.52				8.74

 

Source:

LYB and third party consultants

Note:

Benchmark market prices for U.S. and Western Europe polyethylene and polypropylene reflect discounted prices. Volumes presented represent third party sales of selected key products.

 

LyondellBasell Industries				12
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Table 10 - Unaudited Income Statement Information

 

		2015																				2016
(Millions of U.S. dollars)		Q1				Q2				Q3				Q4				Total				Q1				Q2				Q3				YTD
Sales and other operating revenues		$	8,185			$	9,145			$	8,334			$	7,071			$	32,735			$	6,743			$	7,328			$	7,365			$	21,436
Cost of sales(a)			6,379				7,047				6,465				5,792				25,683				5,166				5,702				5,903				16,771
Selling, general and administrative expenses			205				228				194				201				828				193				199				188				580
Research and development expenses			26				25				25				26				102				24				24				25				73
Operating income(a)			1,575				1,845				1,650				1,052				6,122				1,360				1,403				1,249				4,012
Income from equity investments			69				90				93				87				339				91				117				81				289
Interest expense, net			(58	)			(72	)			(77	)			(70	)			(277	)			(77	)			(79	)			(68	)			(224	)
Other income (expense), net(b)			21				4				10				(10	)			25				88				(3	)			19				104
Income from continuing operations before income taxes(a) (b)			1,607				1,867				1,676				1,059				6,209				1,462				1,438				1,281				4,181
Provision for income taxes			440				541				487				262				1,730				432				346				326				1,104
Income from continuing operations(c)			1,167				1,326				1,189				797				4,479				1,030				1,092				955				3,077
Income (loss) from discontinued operations, net of tax			(3	)			3				(3	)			(2	)			(5	)			—				(1	)			(2	)			(3	)
Net income(c)			1,164				1,329				1,186				795				4,474				1,030				1,091				953				3,074
Net (income) loss attributable to non-controlling interests			2				1				(1	)			—				2				—				—				(1	)			(1	)
Net income attributable to the Company shareholders(c)		$	1,166			$	1,330			$	1,185			$	795			$	4,476			$	1,030			$	1,091			$	952			$	3,073

 

(a)

Amounts presented herein include pre-tax LCM charges of $92 million, $181 million and $284 million for the first, third and fourth quarters of 2015, respectively. The second quarter of 2015 includes a pre-tax LCM benefit of $9 million for the partial reversal of the first quarter 2015 LCM adjustment. The first quarter of 2016 includes a pre-tax LCM charge of $68 million. Second quarter 2016 EBITDA includes a pre-tax LCM benefit of $68 million for the reversal of the first quarter 2016 LCM adjustment due to price recoveries during the period.

(b)	Includes a pre-tax gain of $78 million on the sale of our wholly owned Argentine subsidiary in the second quarter of 2016.

(c)

Amounts presented herein include after-tax LCM charges of $58 million, $114 million and $185 million in the first, third and fourth quarters of 2015, respectively. The second quarter of 2015 includes an after-tax benefit of $6 million for the partial reversal of the first quarter 2015 LCM adjustment resulting from price recoveries during the period. The first quarter of 2016 includes an after-tax LCM charge of $47 million and an after-tax gain of $78 million on the sale of our wholly owned Argentine subsidiary. Second quarter 2016 EBITDA includes an after tax LCM benefit of $47 million for the reversal of the first quarter 2016 LCM adjustment.

 

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Table 11 - Charges (Benefits) Included in Income from Continuing Operations

 

		2015																				2016
Millions of U.S. dollars (except share data)		Q1				Q2				Q3				Q4				Total				Q1				Q2				Q3				YTD
Pretax charges (benefits):
Gain on sale of wholly owned subsidiary		$	—			$	—			$	—			$	—			$	—			$	(78	)			—				—				(78	)
Lower of cost or market inventory adjustment			92				(9	)			181				284				548				68			$	(68	)		$	—			$	—
Emission allowance credits, amortization			35				—				—				—				35				—				—				—				—
Total pretax charges (benefits)			127				(9	)			181				284				583				(10	)			(68	)			—				(78	)
Provision for (benefit from) income tax related to these items			(47	)			3				(67	)			(99	)			(210	)			(21	)			21				—				—
After-tax effect of net charges (benefits)		$	80			$	(6	)		$	114			$	185			$	373			$	(31	)		$	(47	)		$	—			$	(78	)
Effect on diluted earnings per share		$	(0.17	)		$	0.02			$	(0.25	)		$	(0.42	)		$	(0.80	)		$	0.07			$	0.11			$	—			$	0.19

 

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Table 12 - Unaudited Cash Flow Information

 

		2015																				2016
(Millions of U.S. dollars)		Q1				Q2				Q3				Q4				Total				Q1				Q2				Q3				YTD
Net cash provided by operating activities		$	1,468			$	1,446			$	1,768			$	1,160			$	5,842			$	1,300			$	1,261			$	1,332			$	3,893
Net cash provided by (used in) investing activities			(443	)			(727	)			67				52				(1,051	)			(597	)			(471	)			(459	)			(1,527	)
Net cash used in financing activities			(401	)			(1,021	)			(1,684	)			(1,744	)			(4,850	)			(333	)			(1,039	)			(1,195	)			(2,567	)

 

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Table 13 - Unaudited Balance Sheet Information

 

		March 31,				June 30,				September 30,				December 31,				March 31,				June 30,				September 30,
(Millions of U.S. dollars)		2015				2015				2015				2015				2016				2016				2016
Cash and cash equivalents		$	1,616			$	1,325			$	1,474			$	924			$	1,318			$	1,060			$	740
Restricted cash			2				3				1				7				4				4				4
Short-term investments			1,478				1,989				1,602				1,064				1,332				1,023				1,090
Accounts receivable, net			3,089				3,373				2,924				2,517				2,683				2,806				2,852
Inventories			4,267				4,179				4,138				4,051				3,978				4,009				4,015
Prepaid expenses and other current assets(a)			1,195				1,121				1,059				1,226				1,009				1,081				852
Total current assets			11,647				11,990				11,198				9,789				10,324				9,983				9,553
Property, plant and equipment, net			8,430				8,636				8,793				8,991				9,373				9,681				10,057
Investments and long-term receivables:
Investment in PO joint ventures			373				357				357				397				398				390				399
Equity investments			1,581				1,612				1,602				1,608				1,734				1,610				1,681
Other investments and long-term receivables			38				126				125				122				18				18				17
Goodwill			533				543				543				536				548				542				543
Intangible assets, net			695				671				644				640				618				588				562
Other assets(a)			637				600				605				674				559				623				607
Total assets		$	23,934			$	24,535			$	23,867			$	22,757			$	23,572			$	23,435			$	23,419
Current maturities of long-term debt		$	4			$	3			$	3			$	4			$	4			$	4			$	3
Short-term debt			514				582				573				353				594				616				621
Accounts payable			2,631				2,755				2,450				2,182				2,243				2,357				2,329
Accrued liabilities			1,482				1,455				1,784				1,810				1,600				1,374				1,357
Deferred income taxes(a)			429				434				383				—				—				—				—
Total current liabilities			5,060				5,229				5,193				4,349				4,441				4,351				4,310
Long-term debt			7,677				7,658				7,674				7,671				8,504				8,485				8,464
Other liabilities			2,038				2,063				2,044				2,036				2,125				2,143				2,151
Deferred income taxes(a)			1,653				1,635				1,604				2,127				2,134				2,149				2,387
Stockholders’ equity			7,478				7,927				7,328				6,550				6,344				6,283				6,082
Non-controlling interests			28				23				24				24				24				24				25
Total liabilities and stockholders’ equity		$	23,934			$	24,535			$	23,867			$	22,757			$	23,572			$	23,435			$	23,419

 

(a)	Our prospective adoption of ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, in December 2015 resulted in the classification of our deferred taxes as of December 2015 as noncurrent.

 

LyondellBasell Industries				16
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