LYB - Earnings call transcript Q1 2020 | LyondellBasell Industries N.V.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello and welcome to the LyondellBasell Teleconference. At the request of LyondellBasell, this conference is being recorded for instant replay purposes.

Following today's presentation, we will conduct a question-and-answer session. [Operator Instructions]

I'd now like to turn the conference over to Mr. Investor of Director Kinney, Relations. David begin. Sir you may

David Kinney

Financial LyondellBasell's Thank Teleconference. XXXX Chief Officer; our to Bob you, Hello and Executive Chief McMurray, Michael operator. First and I'm our Quarter Patel, welcome Officer. joined by today

Before is point presentation that to would out our on the website we call a and business begin today's I like discussion, accompanies available slide at www.lyondellbasell.com.

are statements believe will while and measures making some statements forward-looking results the assumptions discussing We reference measures. business and upon our be financial the Today are we investors. non-GAAP reasonable useful based forward-looking to alternative to

Nonetheless, significant our in filings slides and encourage the We the reviewing results are which forward-looking more that the presentation are factors statements by subject statements actual risk and about cautionary regulatory learn www.lyondellbasell.com/investorrelations. to to our to uncertainty. at lead available could differ you the

GAAP measures currently are together non-GAAP our to other of on release available financial Reconciliations earnings including also disclosures measures the financial with website.

point by that XXX-XXX-XXXX recording Time United in X:XX Finally, passcode the I telephone until available out numbers The at United XXXX. both States a is the call for XXX-XXX-XXXX would States. Xst of June will P.M. today beginning Eastern outside by be calling to and like this

first During update outlook, current and today's on quarter provide our focus call, we environment, will on an the results our near-term growth initiatives.

in or or our finished of market adjustments the to our attention to calls. to inventories. in raw accounting your inventory call the last and past adjustments that the turning of decline like goods discussed are of Bob, over related first materials call cost lower would Before out recent and These we use on or prices I to non-cash LIFO have LCM

to Comments charges. recognized these underlying charges we inventory our LCM of be quarter, made business regard in pretax million. LCM first this excluding results impacts call the the will on $XXX totaling During

Bob. that With the call would to turn now said to over I being like

Bob Patel

around times. these participating to today are results. hope you, of taking good during to time you that as your and appreciate Thank you, the day your discuss difficult world. colleagues, We all us you we healthy our QX Dave families staying join the and I all

LyondellBasell's Let's review to economic challenges begin falling coronavirus deteriorating resilient pandemic, continued quarter relatively deliver arising highlights. with three oil amid portfolio prices, performance from the business first activity. and the slide rapidly and

Our are serving well and global disciplined through strategies us unprecedented asset enabling to footprint, flexibility, feedstock conditions. market financial and these navigate us

continue billion year. quarter fourth polymers XX% represents XX% Our medical of Despite a profitability prior the consumer and to first packaging relative demand of quarter the for robust $X.X applications, first and the to quarter EBITDA in our approximately decline relative used impacted prices transportation markets. by end and oil demand automotive and Events and products the and to our durable impact global pandemic drop soft evolve fuels our markets for in other surrounding for goods coronavirus in the products. used was

plants end-markets to headwinds. reduced plans certain review idled end-market lower and sites turn from Polymer serving other to small our mitigate rates in of operating. to approach four to products, decreased and effects slide demand manufacturing major our and production demand. at Currently, segment Let's all are production response match Advanced appropriately Solutions for temporarily our we several automotive In the these

nameplate parts of Industry are XX% capacity. petrochemical in of and consultants refining estimate assets at to that various XX% running the world

quarter. also We within operate the of range expect majority that will second that the during LyondellBasell's capacity

we an needs industry, the Our declared essential regions in supporting majority to have which in as operate. the operations of been the fight pandemic manufacturing society's

business the customers medical by communities world, governmental recommended practices with bodies employees, our to best while our suppliers. operate professionals implemented and continuity maintaining we where contractors, the assets, and protect around We and

at all protocols, Since we late instituted escalated sanitization distancing manufacturing health social our January, and our in response team of practices, monitoring sites. the our of activation increased global pandemic employee

worked then Europe home to office-based the Americas. Our pandemic employees to as the Asia from from spread productively

return conditions and implementing safe enable to workplaces a as We permit to around processes are full the world.

plants The and China over our and LyondellBasell I acknowledge offices. our majority have ownership now difficult X,XXX tireless they during for are employees our dedication, our want exhibited of sense back to thank in XX,XXX employees innovation, for these in their of company and times.

economic extent uncertain. remains drop prices pandemic, Since the full oil the the downturn of in and the

economic We are to range a to respond strategies scenarios. of acting on

initiatives past have across few on the the Over we working been company. cost-saving quarters, meaningful

have response materials these of policies. raw inventory a to In working expect management during and more actions release been aggressive falling we will accelerated. demand, provide from we XXXX. capital, products, lower combined Those for meaningful initiatives When prices instituted with cash

$X.X and In from our prior on billion. reduce guidance projects order to growth approximately currently activities, PO/TBA slowing expect risk, actions XXXX including by will planned selected we construction financial outlook capital $X.X reduce XX%, current of postponed our these to plant. maintenance, expenditures our operational billion We and of

to During resilient of bonds liquidity by We to approach capital disciplined these a remain us lowest and serve successful in cash our company. that rates interest generation our that investment-grade well with the during times. increase April, in billion, for confident history demand enabled dollar challenging offering deployment the strong resulted will us $X U.S. our

a investment-grade working our dividend, coming all believe options. act an costs, to evaluate the and value shareholder deeper that committed plays downturn, remaining role will Our the actions In will focus to our operating sheet, reduce integral and strong generate of on balance funding to event expenditures we quarters. sufficient free cash We proposition. while prudent pragmatically capital prolonged over the or capital flow a

Global our and for Related our volumes Products prices the and Refining segment. Polymer both segment. and oil automotive transportation Oxyfuels by within fuels, reduced for within In business the and Solutions shutdowns Intermediates March, sharply compounds Derivatives segment for our & margins negatively impacted Advanced polypropylene demand manufacturers, reduced lower demand

Lower demand feedstock and Asia polyethylene our polyethylene segment. care – Americas prices supported segment. products, International margins, packaging integrated health in for stable O&P Polyolefins in used polyolefins in and Olefins higher resulted for Europe, Consumer-driven - relatively the and margins integrated

While for large have research endure could implications slide that some demand recover some consumer some goods markets. show current expect our On durable that in that we will mid-term in suggests changes North market lifestyles to buying crisis. habits X, recent the beyond consumer American beneficial of changes time for take lasting we may end-use

As world. packaging spread products clear food, our this you in may for to LyondellBasell restrictions have medicines experienced felt the home the consumer stockpiled and safely societal as were slow other virus. used surge around the to deliver that polymers consumer to it households pantries essential became required of

are care stockpiles home XX%. creating as consumed Excessive most replenishment. thankfully in health bulk demand delivered And and a of do new restaurants, consumer-based paper frozen, But as demand goods package and the normal sizes packaged packaging from food has smaller by The dairy lifestyle increased volumes not for workplaces and plastic changes for home. require has need society approximately moved products for used towards subsided. risen in

Surveys in they polyolefin home changes more to from these indicate during the plan for of applications. XX% work home is increase to likely of amount that intend eat and staying after demand increase at typically packaging used These often. that time to XX% home, the are the pandemic, Americans at

recent our Let's safety turn and review slide X performance. to

contractors LyondellBasell's communities, our commitment more relevant the to employees, pandemic. become to during health and and has even safety

performance, Our numerous despite decile these employees top quartile, times. deliver potential have if difficult distractions continued to not safety through top

sanitization, distancing increase to measures workplace, precautionary our virus to mentioned social processes, of our among health self-reporting spread monitoring the frequency I intensity reduce of and our workforce. practices, the Earlier, the and

employee Our our across processes with global limited effective, population. have proven virus spread

to essential an operations have the designated industry during been manufacturing support as LyondellBasell's pandemic. society's needs

vital that Let's X, hygiene where turn LyondellBasell's and support products role health care, supplying to slide we medical in needs. highlight

our face polypropylene resins that example, used by produce customers fibers For melt-blown filtration are provide in masks. to

to are breathable produce products masterbatch films. Our used

clothing, for protective used packaging. draping is medical polyethylene and Our

oxide products. And oxide make our ethylene used syringes, soaps, and tubing, many are medical and kits, polypropylene, to ethanol, other isopropanol, disinfectants, devices test propylene

to will several that will financial lead turn Michael, through over With the to us performance. our who call related topics I

Michael McMurray

relatively Thank morning, past X good our performance the Slide cash over you, flow years. five Bob, consistent and illustrates everyone.

$X billion. XX% our dedicated activities. cash last flow the assets, remained billion translated Over $X.X relatively cash free maintaining EBITDA to our months, at XX from operating With operating our into healthy approximately of

focus you and generation amount Bob, As a cash from putting of heard we significant liquidity. are on

we Now on quarter. details the X, where to provide please first cash further generation for Slide turn

can $XXX cash that generated from of $XXX over just year from down business quarter, first our million You million ago. has the operating see activities one during

to commercial first paper were quarter, we forward from facilities. the we During our on and million the expenditures in to credit, with continue caution In plant. $X.X billion quarter, increased move hand of Capital our million, an in we our receivable to $XXX accounts on PO/TBA first our as shareholders. paid $XXX approximately revolving dividends cash borrowings abundance

economic of have have scenarios. to actions XX we taken strategies developed liquidity. mentioned, maximize to Bob respond outlines to variety a the we Slide As

by inflows cost-saving We cash working are capital. initiatives reducing accelerating and increasing

At in at attractive the We this $X in senior we further notes long-term liquidity through April end in of of the successful liquidity. rates. billion issuance very billion $X.X March had bolstered

we and M&A to construction, activities. uncertain expenditures of liquidity by planned maintenance capital In prioritize growth share deferral and of projects With our environment, over some the slowdown relative reduce PO/TBA current our XXXX will potential million of plant guidance. will the postponement our any repurchases $XXX prior

general the April corporate a a Proceeds and our have XXXX issuance of profile. maturities. and maturities the long-term favorable managing Slide debt after We purposes including be the issuance. increasing strong utilized liquidity shorter-term illustrates will sheet maturity from for debt XX balance portfolio our bond

remains new from cost recent short-term This With with April offering. weighted repaid average cash borrowing our XXXX bonds, debt in proceeds facility first debt in of Long-term under the million about quarter. borrowed our the in of due and credit addition our borrowings includes were from revolving the bond $XXX X.X%. existing along other

maturity good well-balanced and year the euro-denominated risk of have profile from company bonds mix any reduces given and debt. benefits a Our that refinancing both a in dollar

that call turn over Bob, me please Before Slide update the we to the an on I financial annual to guidance allow last quarter. turn and provide XX modeling discussed to

$XXX new at time. with during the will of our The the PO/TBA second of half Approximately reduction project in activities capital coming the $XXX construction from our facility. $X.X and we mentioned, investment evident majority committed year. will to reducing million PO/TBA our at strategic billion. profit-generating completion with associated full projects the we by become reduced spending million this appropriate the of plan resume reduced We XXXX the remain to As for pace the are expenditures is of

remaining million with expenditure The planned schedule. the primarily our postponements is and of capital maintenance associated $XXX reduction

no associated longer In we to maintenance second XXXX. of planned activities the impacts half savings, the business addition anticipate CapEx EBITDA major for with

annual provided for $XXX be depreciation to and capitalized using million. XXXX. We easier XXXX expense interest forecast a billion. cash for at previously approximately We to interest includes you is continues estimate This it to our $X.X credit expected be amortization which model $XX for thought interest for of XXXX, million. a

are at for expense We our our in million contributions to remains million reducing plan million. $XXX pension pension estimated by approximately $XX and $XX XXXX

tax We rate to an the cash are XXXX mid-teens. about our to remain from mid- in high-teens. XX% reducing expectation tax the estimated in effective rate expected is The to

to lower expected revaluation our the year first to discrete the tax the quarter related favorable and the is Act CARES resulted is due expense rate Economic impact or was deferred in to CARES tax net Aid, a The The effective favorable. Coronavirus impacts lower Act first liabilities to of to Act. of be quarter. The that full Relief U.S. both profitability CARES higher from and Security a

results. detailed turn discussion call Bob a more With Bob? that will I segment back the of our to for

Bob Patel

you, Michael. Thank

turn XX review Let's first our to performance. quarter Slide and

previously, will in inventory excluding be LCM of business the regard of business to our results, mentioned charges. my underlying noncash the As results discussion impacts

continue market diverse footprint environment. business portfolio and global challenging to in provide this Our resiliency

was and demand billion. polymer to and for medical EBITDA were low-cost quarter Profitability packaging from Europe, feedstocks International amongst Asia Olefins and Americas by $X.X supported switch both and our consumer-driven first Polyolefins and applications. the the O&P, segments for capability robust

participation of in for challenging Our footprint. to segment within portfolio a our and fuels. manufacturing Refining Oxyfuels our global & demand from resiliency market continues margins businesses products for and created I&D the nondurable diverse consumer-driven and The the relatively transportation reduced demand business benefit conditions Related segment Products high faced by

can Slide products. yielded feedstock XX We relative costs to assets. and differential feedstocks the at from and economical leverage highlights respect ethylene most our both United with our our raw flexibility States material peers to prices European cracker

to In built two in cost ethane and Midwest propane. low utilize North stranded our and were America, crackers Morris Clinton

to alleviate the cracker mixed utilize the three On Y-grade, U.S. the crackers of NGLs, ethane, propane, Coast, the respond amongst and feedstocks, one most Gulf and of can us demand our any prices full feedstock can while NGLs. naphtha, allows of flex to condensate pressure economical the butane, This feedstocks. range fourth on

to run than raw can our build have we crackers system advantaged In that relative our and capabilities only Europe improved other to LPGs similar Our using in new way, XX% potentially with ethane. flexibility a run of more advantages materials. cracker offers slightly distinct PXX

On Integrated in March. fluctuated polyethylene feedstock for the highlight of oil shifted and how margins flexibility as the first this slide quarter can propane XX, price LyondellBasell. fell butane North advantage margins we as the advantaged America ethane, naphtha during provide from to in fee

We are economical able maximize in switching to among by follow raw materials our feedstock profitability the the most to flexible used crackers.

LyondellBasell's upon if propane, results than margins business significant polyethylene have across region. value to maximize bases we one XXXX. both Europe, seen our America, advantaged less in overall March With asset reliant and We've In and only feeds. highest been was volatile the were integrated are naphtha, in since North able Europe butane other

feedstock quarter our results and XX. segment With Olefins our with review starting our Polyolefins let's on first mind, Americas flexibility slide in

million, price ethylene EBITDA spreads quarter. driven over lower the and was Profitability applications, medical for polymers consumer monomer. by demand quarter packaging improved First was $XXX than polyethylene million $XX used in supported which robust fourth

$XXX decrease to approximately due rates maintenance lower on polyethylene Polyolefin quarter. a a for first ton, million of to our results the improvement declined the ChannelView ethylene primarily the costs. $XX one Margins quarter in million two to lower XX% ethylene increased sales about offset price at the more turnaround partially due spread ethylene driven operating than decreased of $XXX about per for Olefins Ethylene prices, fell to feedstock compared by planned crackers an prices. over fourth facility. in quarter, during by results

by XXX,XXX Gulf ton quarter, on launching U.S. Polyethylene first initiatives the at Hyperzone During production we year our high-density plant Coast. on per growth advanced the our here

technology drums as Polyethylene for provides intermediate pipes, bulk industrial and Hyperzone such applications products Our differential containers. water

more quarter with challenging a conditions backdrop. a the market second expect We as unprecedented

could of oil nameplate While to expected prices during lower similar and that price feedstock XX% are our demand operate consultants will reduce second underlying assets at and prices could volumes. weaker quarter operate range. in reduce costs, predict uncertainties Industry crackers around U.S. approximately capacity and a polyolefins the

Asia performance to the of to Now and International and XX turn please segment. Olefins slide review Europe, our Polyolefins,

margin higher feedstock Olefins the EBITDA $XXX During increased first fourth Profitability due lower reliability improved the million, Volumes by driven prices, than quarter. naphtha increased rose increased quarter, $XX reliability. other by million, prices feedstocks. results an as million increase for in the $XXX higher than was rates driven and ethylene XX% operating lower was to volumes. cracker and to for to quarter more due

to results Combined orders. offsetting declined, demand increased volume. over polyolefins the packaging, increased were due the volume quarter. previous XX% quarter, consumer-driven improvement fourth comparable with stay-at-home margins the for Polyethylene in Polyolefins to

$XX volumes to across equity ventures contributed in Reductions margins and in our both of a income approximately joint decline million.

the We Americas from trends expect by as demand. follow muted lower quarter the similar with costs feedstock lower benefits second to the

the to XX% at operate to expected of are second XX% nameplate crackers European quarter. Our capacity during

Please slide XX. to turn

segment. & a at take Derivatives Intermediates Let's our look

was $XX the margins gasoline quarter. million decline impacted versus a in prior $XXX February. oxyfuels in affected million, significant were Results by First quarter beginning a that demand decrease EBITDA severely

methanol First quarter unit. our margins. lower derivatives $XX to and increase planned margins. propylene by million, approximately due at increased in Chemicals increased an Channelview and higher were acetyl maintenance $XX million results oxide to due Intermediate Volumes driven volumes

prices. Oxyfuels a and million, Related lower as Products results result decreased approximately of $XX product

Oxyfuels global and and more orders demand gasoline March, February During margins widespread. with became weaker restrictions stay-at-home travel as declined

oxide and demand expect through oxyfuels likely demand margins for segment as pressure continued and declines second persist for further lackluster applications will quarter. and QX, polyurethane the the propylene We into on

segment. Advanced Polymer Solutions review On let's the slide of results our XX,

quarter fourth was million with than First $XX quarter. automotive and end-markets. higher were million seasonal typical Volumes improvements the that increased in $XXX shutdowns muted margins pandemic-related EBITDA by

in demand Compounding about pre-tax results approximately quarter $XX Seasonal and First demand. by by seasonal due $XX $XX higher results offset were million. construction Polymers automotive integration million Advanced costs supported improvements declines margins increased to increased end-market partially Solutions improved March. were volumes. volume during & million

Integration of continued forward A. the XXXX to synergies by are related making third million rate progress integration achieve $XXX the on annual this to Schulman. efforts is team acquisition of run year. activities Our in the on quarter schedule

we in quarter severe impacted reductions compounds end-markets. in by segment second demand polypropylene be expect for the increasingly automotive for our During profitability the to utilized

we I have manufacturing small temporarily As to of closures response mentioned, at our across industry. idled the production several plants in plant automotive

of Refining let's our Now slide turn results the and XX discuss to segment.

decline crack versus fourth an XXXX. cracker unplanned $XX fluidized catalytic decline was million, quarter a outage of First million $XXX Results negative and unit. in driven on quarter were spreads the by our EBITDA

quarter spread day Houston an for $XX.XX the per first Refinery crack quarter. maintenance quarter. per benchmark to per by XX,XXX at X-X-X of Unplanned barrels the over crude barrel barrels MAYA day In reduced XXX,XXX average the to average for throughput industry the decreased our the

The refining demand demand our market until later fuels, and to and has results, levels jet year. We anticipate to societal will in pressure and falling for the gasoline prices refining restrictions by returns been continue these for challenged factors transportation fuels that fuel. including typical transportation ease

Our cracker are nameplate at April crude the catalytic we refinery throughput. XX% at service late XX% currently fluid and unit in the of to operating refinery to returned

slide segment. Technology results of review Please our as we turn to the XX,

the was first decrease the EBITDA fewer licensing steady, declined while million, remained $XX quarter. margins revenue compared of volumes fourth from segment the and XXXX. quarter, Catalyst During revenue during record the milestones $XX to to quarter a Technology due results million of

recent of the licensing will profitability expect of anticipated catalyst for return that enable project we second quarters. asset. technologies to pace higher revenues. upcoming terms uneven timing for of on the milestones licensing the contract and over milestones, licensing Technology the segment to new licenses polymer lifetime Based results Our customers Individual of in quarter that levels production timing an sales plants manufacturing subsequent the

this highlights me Let slide summarize and outlook with quarter's XX.

and the LyondellBasell's assets advantaged quarter, first results. continued deliver resilient During leading to

in operating with our allocation capital asset for costs feedstock cycle. and high dividend and any We well cash growth remain required foundations Our that during and projects. strategy our low consistent profit-generating us capital expenditures of serves with flexibility, supports with deployment our our generation point disciplined in maintenance leveraging utilization the efficient

All plummeting decisions challenges anticipate and for the quarter pandemic during to to patterns. a that societal commitment margins regions investment-grade return and of are rating. will grounded that credit as We by from the coronavirus with the prices much strong transportation restrictions oil first comfort emerge arose will work prior regain rebound and Demand for various extend year. eventually from fuels our travel

for discretionary likely Markets goods take will durable from to longer the recover downturn.

robust and We that applications our consumer-driven and capital capital demand medical and addressing by will packaging for costs reducing is challenges prioritizing while continue. working LyondellBasell increasing liquidity. these products in expenditures, proactively expect

is Our stronger to of navigate company these positioned well challenging the rebound global markets really and the emerge economy. eventual with

take questions. please now We will your

Operator

Instructions] we Capital in BMO have the [Operator from do Markets. And question McNulty John queue a from

Your line now is open.

John McNulty

my morning. Good question. Yeah. Thanks for taking

think as a there about I to that earlier different the about It that. the you broader past should the we snap a kind might businesses guess of back your compounding than of should or potential macro? it's & that? think pretty So quarantining like of of quickly. But because recession than and the Refining is ones, we couple way seems get look to that effect of ends just that having relief the there's that impact Oxyfuels maybe to start businesses the quarantining starts this it Is quarantine the of where the when on end at and maybe impact when how rest the

Bob Patel

it which fuels think medical and company John. we the about probably then The so half oxyfuels is we on nearly durable the XX%; then have way auto the Good is morning. goods essentially; and probably and XX%, and is and Yeah, remainder. about packaging of is

increases effects because that, we as we we the should typically and see opened, summertime I if further, demand. even demand in improve think see you see economies the are know seasonal in

And should drive we the get speaking, and improve. packaging see side. you as relatively fuels oxyfuels on on and more So rightly that of our it road that could on the said business refining more people

about production probably But So be of small kind part is our we're automobile slowest business. the demand it of return. to a will the way thinking and it's pretty

Operator

question Byrne next is Steve of Bank from America. from The

Your line is now open.

Steve Byrne

you. Thank Yes.

margins If – Gulf margin and say U.S. your your naphtha Bora would how and partner's cracker and if internal onstream in complex of downstream compared were were your if receive polyethylene refinery they that plant, today integrated an the margins? to from project as able that transfer Europe naphtha-based the you – was to your

Bob Patel

Good Yeah. ton probably integrated if was $XXX basis running, Indeed, per margins to decent it the $XXX Steve. have range. in we'd morning,

around the and in You'll thesis investment is benefit beyond getting China project producing recall bigger timing a that that that, China the in us for China that about of today, is that will for the investment it close when was very or will within so such we decent running. be make it of a to start-up our But infusion, be if two. the capital margins quarter position

Operator

question Bank. Begleiter next from from Our Deutsche is David

is line now open. Your

David Begleiter

Good Bob. morning,

Bob Patel

morning, David. Hey, good

David Begleiter

they're Bob, Do for agree $X.XX calling May in $X.XX June and you just $X.XX Do and you on severe? another in Again agree? in you decline QX. that's Consultants combined fell too do polyethylene think for prices. they said April.

Bob Patel

David. Yeah,

I of you number the supply. look different kind may I of would when realized to through that of $X.XX, more we a think even headline all end-use as say it's opposed be – the segments that

actually demand packaging in And We're outdoor the activities safer as start the summer indoor like the activities In difficult that imagine drives demand different on is than coming economies U.S. price terms I side, open that outlook that, mentioned to again related it rising down. a kind step the as ethane large have good. are to still of, has, very of into demand. earlier, packaging season. you'd and state and with And

the in see seasonally, we demand that in environment. running in market our case, to polyolefins in olefins if have it and today. increase So our me XX% seems decent some assets we're we And at U.S. a about

the in. given rate we're So pretty environment decent

Operator

Next Morgan Andrews question from is Stanley. Vincent from

now open is Your line

Vincent Andrews

could wondering that's production, -- Thanks, concern bit gas with have oil prices less out the talk associated and there NGL morning if and you about less a Bob, will production. therefore lower that good everyone.

$X.XX does what goes, to So ethane propane go $X, wherever and think prices? as it happens gas above do you

Bob Patel

Yeah.

Vincent of way the working we're ethane arms happen. our around So in I terms about think could get But what here's supply/demand, to all it.

as quite a barrels there's all, ethane being of today, of a bit XXX,XXX much rejected. being rejected as day that's First maybe

of that So, rejection would course, off. shut get

And And who then price seen values what is which in and feedstock a times you'd past a ethane. lot we've ethane in. and especially tilt rise the more the snug some oil still company flexibility us, liquids is, have like in of low shut feedstock kick environment, if off of flexibility, we beyond could towards get And exports that, even would for LPGs. see

the think me to attract and to that more continue to seems there's ethane the of we a just higher supply in the more through investment prices. could trying we're Because have high of another an as will U.S. we ethane in it opposed what end, period to is spike believe ethane prices and sustained that long-term. over So really of abundance available

it's we So transitory company through probably through that ours so feedstock flexibility; thinking most. like about more a that I think can than manage has better much effects. And

Operator

from from Capital question is Next RBC Markets. Viswanathan Arun

line now Your open. is

Arun Viswanathan

guess, morning. all Good well. you're wanted I just about ask to Thanks. Hope I polypropylene. Great.

next -- for or year your would and at Thanks. any Maybe you expect and when just on on two? compounding also expect supply/demand look your as polypropylene? going you well. and the So over Would you the automotive, then outlook capacity comment feedstocks in reductions what's polypropylene with

Bob Patel

America starting idled. of the capacity or we're what seeing But be of But you in are high-cost some North frankly could it excluding first even are signs so we've that that those the of other Arun, in U.S. elsewhere more world to observed And in up look if the parts projects Yeah. get world, far is polyethylene. and importantly delayed, change. Europe China. in is the

certainly the of is new in I construction. through that that polypropylene. of period we're the one see So in outcomes delays And going

Operator

question Citi. P.J. Next from from comes Juvekar

line is now Your open.

P.J. Juvekar

to you. Hey, from Bob, good hear

Bob Patel

Good morning, P.J.

P.J. Juvekar

morning. Good

quick a question. Just

and lower you. expect inventories polypropylene? they release industry? are do you are do materials, prices. of, this lower planned the globally, what, where kind to usually Where capital destock polyethylene to your And on cetera? in raw stand for converters inventories Where the environment shutdowns et type Given anticipating we that? Thank of And lower given working begin of

Bob Patel

has so. Yeah. inventory late been very, Thank the last over March. We you, and P.J. for reduction in back or early us started February high Well, reducing XX a very focus days inventories

for inventory our polyolefins, based so lower XX of demand at days we're rates. so sitting And today or on

So And short we've there's already wheel high essentially produce low order to visibility is, adjusted that. do demand. where we And produce we're believe where product in for we'll what rate demand anticipated to doing there's products low the our lower and on preferentially cycling continue only demand to we're be areas demand. or

Most of we through benefit and million And way this cash work of capital through that reduction we about as your question release with little benefit tailing come should in expect year. about release, working capital a $XXX in of bit cash from QX our working QX. lower

Operator

question Our comes with Vertical from McCarthy Research Kevin next Partners.

is line open. now Your

Kevin McCarthy

morning, Good Bob. Yes.

be a plastics. at that of area? rapidly in backlash working observing other of of the single-use towards and any do attitudes lead that benefit anticipate one sort remarks? to the home government reversion You in at structural prepared would you to are home staying in addition alluded you effects benefits the the know, to seems consumer cooking that and to you What pandemic And changing

Bob Patel

West of Coast Good on morning, see happened. the the Reversal I given on East bans Hey. some Coast think, to polypropylene for a accruing could polyethylene do benefits, Kevin. both while. what's structural stay for and those time bag some We

plastics I that has and think benefits. what people benefits are realizing single-use is hygienic that very there significant are to

in challenge remains. company of the is you an The the addressing, before And demand, of industry as think change a that. key it can environment. as certainly that capture that our industry on waste have environment continue thing we on that and plastic increase waste, I that And that And that's gets up that we single-use we on tell in the in not waste have I increasing I be our will as lost end continue to won't won't as remember waste single-use then something should applications focus recycling, can focus still the plastic we focus as an a company. society confident think, that

So an plastic for waste will continue to area emphasis be us. of

Operator

from Next Yefremov comes KeyBanc. Aleksey question from

now line open. is Your

Aleksey Yefremov

everyone. Thank for to Europe XXXX averages. margins your but you in ethylene below mentioned polyethylene were up you. time, morning, that fairly sequentially, the At benchmark was record. close Good high and EBITDA same XXXX Bob,

the B, than decline A, apply? why you benchmark in second these would the So should EBITDA And if explain less benchmarks decline could is? that quarter your

Bob Patel

typical about asset Europe. And our we the so, And generally think And oil it's quarter in contribution Well the a during see did the I we Aleksey see again margins. from of assets. of it the in expansion. timing price European environment very as our margin a In to Europe better probably decline, base. price that's lower in terms oil diversity speaks more

in summer through think And open assets running that pretty We economies as likely Europe in We the we're XX% sort we margin Europe. in. at Frankly, we going lower erosion things there sets QX But over will the some XX% season in rates up, do of, work is new, could more O&P price range and bit as expect demand environment to today. at into in run good through our Europe in see we oil summer. about margin some Europe. as and XX% a normalize decent the erosion this

Operator

Barclays. from Fischer Duffy from comes question Next

is Your now open. line

Duffy Fischer

Yes. Good look will as paper as between from the do of walk and start the of at benzene, rates quickly they the butadienes to U.S. oils by-products Question think do up extremely that how naphtha-based. come Obviously, some How kind stuff. the on Can year? folks. ethane-based Asian you this naphtha and think European down playing you see the lower two regions the kind least readjust those production levels? their around So that propylenes, competitive. ramp rest morning, to differential the say you just of of through you out

Bob Patel

out. CX actually the disposition morning. byproduct butadienes challenge. a is real Yes. is Duffy, Hey, containment good playing already is And --

that we inventory to want strategy butadiene. And is our don't on so build

I think that's move point been cracked. amount can And already that's where crack the so restricting and being globally liquids the a up we'll of we naphtha butadiene to

we've that three like I had where probably a about disposition the or two a coproduct became XX over challenge. years, this -- was thinking And had this we've so past periods

and And coming significant doesn't will maximize production some most strategy we're our to will CXs. up building it some butadiene. the last of even not relief. we we where environment But, liquids that year, of and Typically, constraint the in people again provide feedstock a to tires I this be U.S. think, disposition it where current have replacing automobile flexibility, long. inventory driving of should back And continue point through in especially, a

Operator

Koort Bob Sachs. from Goldman from comes question Next

Your line is now open.

Dylan Campbell

Good Dylan on morning. This is Campbell Bob. for

Bob Patel

Good morning.

Dylan Campbell

A the of on question cash flow profile. kind

Would you much size of at your are degree able prices? kind versus mentioned in to working those be of how capital of intrinsic improvements that improvement. You decline oil terms in any the

decline room growth this And still the then also in on of there CapEx, $X.X year? what for to year? billion CapEx for of that the kind further embedded Is CapEx total number

Bob Patel

Yeah. Hey, good morning, Dylan.

question terms in answer the the flow. to we've cash of -- taken actions increase we're me how Let

be $XXX $XXX So we've QX. we a earlier, working that million million about QX. with spread $X.X QX basis to from $X.X of about mostly in across benefit Most as and by expect some trailing million, in QX cash capital be CapEx, on billion will to billion. mentioned evenly I benefits reduced $XXX release

we've that, September to -- cost-reduction accelerated our we've undertaken in that addition started initiatives of last we In year.

$XXX additional basis provide a to and benefit this of million. those million year cash expect on $XXX We between

we that of start all this QX should the in CapEx we timing year billion, end up, will So the cost flow when you that between the the cash and the $X.X working $X.X by about through reduction, capital and of kind year. billion boost to basis total expect cash the

Operator

from comes Sison from question Next Mike Wells Fargo.

is line open. now Your

Mike Sison

Hey, guys. Hey, Bob. How doing? you’re

Bob Patel

Hey, good morning.

Mike Sison

of a right, sort in olefins EBITDA be the longer-term think When down you're this and given of year going Just economy. you we think a that about Americas EAI, to challenges lot have both the I your in question. and

the on margin in a volume over margin maybe much recovery of EBITDA us environment your EBITDA oil, hopefully about in Can terms time. think basis better and volume you a how longer comes walk normalized maybe over that more variables time rebuilding when term? So through back between and you

Bob Patel

difficult it's XX that's indicator, within an look and months. have oil we're pandemic all beyond near in QX the we have if mean of on think do I I QX current of the prices to and here or something history the typically decent QX. not. It's rebound And unknown. period term virus wave if But Mike, prices, an are into another to mean visibility going keeping predict. look whether beyond I low Yeah. the of oil with us an is I eye

have through. moment the a inventory lot at to Now, of also we work

oil significant levels. should prices this focus could of see -- think maximize oil And some near and in XX expecting the projects we'll our maximize see liquidity keep do months on I from make we've initiated. also price benefit and sure delays we and if long-term up were cash to But XX very that to in we're think that term. I look XX demand, improvement, and good is year. environment out, months set higher Likely, XX focus flow that which our a make pent-up to cancellations, at So, out the out. project you for we months you supply/demand sure But not -- that most improvement demand

Operator

Next question is Frank Mitsch Research. Fermium from from

now is line Your open.

Frank Mitsch

gentlemen. doing I'm all you're glad morning, Good hear well. to

Bob Patel

Good morning, Frank.

Michael McMurray

morning. Good

Frank Mitsch

would you that go as you do would I likelihood the of major in Hey, the polyethylene idling doing that? And assume be that out Bob, idle. all and have. curious plants at I'm on perhaps plants you route? that are what mentioned some running of come just smaller although Lyondell capacity the cons the others are APS some looked What pros

Bob Patel

a decline we polyethylene don't would -- We seen to Yeah. really consider demand level we idling Frank where capacity. haven't

sense here in near-term April, on lockdown economies perhaps, our on the I directionally seeing mobility questions of the And rest we're demand, side. would mode a bottom one for of of that as that. the beneficiary year is should kind other demand the a reduced as that a that or imagine So is was I that help partial earlier partially reopen in of in stating we think packaging that because

kind long in foresee our polyolefins of expectation period across XX%, and in Europe run in And we XX%, the going So the to XX%, assets. XX% we're our polyethylene. is of needing that and don't to olefins idle a really for time U.S.,

Operator

Next question is from Jeff JPMorgan. Zekauskas from

is now open. Your line

Jeff Zekauskas

think Bob Thanks the you dividend very view the do and in performance your that That behavior share year? concerning its both during does and change because Lyondell? its for the this future business much. of current when your contemplate recession, change the Lyondell, experience of cash free flow of your distribution in experience it share is increase future allocating you the repurchase price in in will your

Bob Patel

given in near Thank of maximize for Well of the that mentioned, visibility Jeff. lack are as our QX, you liquidity. really beyond outlook Yes. term, the in question I to terms priorities

we're today of a terms dividend for us allocation, capital strong investment-grade consistent In that rating, with coupled in very is the for or a view high is priority BBB our us. BBB which

I would expect given that buybacks we that undertake don't liquidity. So prioritizing we're

dividend that we the Board. May expect we recommend to will our dividend Our

that approve dividend they'll that expect We QX. for

the about think we'll to we question and continue in when we Given flow working operating of all the can allow CapEx largely that to the for and be cash those to your year. we And better dividend will and the that the the the the capital get to balance improvements I savings, have later of continue in in year. visibility -- for made Today, we full of from to pay priority the the is allocation. answer position flow us maximize terms dividend cash year cash think cover enable maximize capital liquidity, cost largely a we've us

Operator

from Next from question Jonas Bernstein. is Oxgaard

Your line is now open.

Jonas Oxgaard

right the seems fuel because now refining A of It of that the oxyfuels. demand. question Thank lack you. on is of the the main issues

give should an over? $XX still after you those $XX what lockdown can driving look like idea the is again. businesses So we're probably. But is for us Crude

Bob Patel

Yes.

light-heavy So very, diesel for very significant by Jonas, in the driver refining earnings differential cracks. a is followed

volume of and a more quarter. amount in it a of significant Our It refinery refinery amount prior our actually that it's of processing we and because refinery given should under this oil our earn expect a environment, earnings heavy we million $XXX result, crude per the refinery other that in favors coke we make that EBITDA produce. diesel conditions that We've mentioned normalized calls about venues in oxyfuels, as start refinery. should the helps sour see that our a this higher portion of will supply the benefits that oxyfuel terms rising. oil to production In still challenge level to oil. of total we be yield the in get we to price Higher think crude because year some profitability. But also a need favors of from of us in more we level do diesel as

improve eased levels. to should directionally at activity both and returns lockdowns are the So least activity daily as more normal as

Operator

Next is from from question John Roberts UBS.

now Your line is open.

John Roberts

you're well. glad Thank you. I'm all so

you were of extra to be soft you switch place the coproducts heavy to If able would this market? able XXX% feedstocks, all to in

Bob Patel

can that. Yes. liquids what greatest today limits us probably would of would and how butadiene again, terms able be be crack. our And No, challenge we we much in do it's to not

Our our crack ethylene terms We all capability, can two Christi of two-thirds crackers. cracker, those we at had And pounds in feed. of X about liquids that two billion Corpus non-ethane total. crackers ChannelView can in crack produce about at we

as we And significant could today, CXs. not flexibility. intend So inventory. the earlier, all we But said to do not build we place have I

Operator

question next Our Blair from is from Matthew Holt. Tudor Pickering

open. now is line Your

Matthew Blair

to Bob, hear I you why? demand better PE good just Hey, sound. safe up demand? is morning, you polypropylene are Could a holding glad Which compare question. with and had and

Bob Patel

in really plus morning, the other that's reasons. content. that seasonal But auto for expect holding but as auto polyethylene, just going PPE because our I pretty have But the the that assets of we hand, construction, by and areas will are weak. of I bit I maybe the that both up. say it's more call the margin good than offset and being Yeah, had little in bit products earlier, there's it's polypropylene running polypropylene, mentioned packaging to would about hear the for first weaker of melt-blown-type other, here on polypropylene. good pick If a into are you. to or U.S. the been from They're been a is on well. different In at quite more one around And Matthew both we're up In XX% polyethylene, of weakness resilient responders

Michael McMurray

for only strong isn't was year. export earlier polyethylene the is And as as the Matthew, from America the North I would other thing add it market in

So anyways until of for quarter the starts the world the that's here producing China a particular second in again. weakness rest

Operator

is question from final Hassan Advisors. in Global the queue The from Ahmed Alembic

Your is open. line now

Hassan Ahmed

Good Bob. morning,

Bob Patel

morning. Good

Hassan Ahmed

net dividend. take Bob verbiage some to taken there revisit the are at it of that, that X.X restrictions or certain -- sort debt-to-EBITDA that I times. approaches look the like, and that glance a I comments Having I on your put outlay. you are dividend as if covenants the at was exceeds about seems guess, LTM made XX-K, wanted a the of the EBITDA

year. was So, this through obviously but LTM go sort there or fairly up certain longer right kind of of pandemic we of last now, were the if to pop COVID-related looking if of lockdowns later sort lockdowns the to on, course decent as

$X $X wanted thoughts start to start your a that. dividend million north more levels say of LTM of approaching we if becoming of Maybe, hear sort billion about I'd close just to slightly questionable, bit

Bob Patel

Yeah.

levels, But would I'll extremely low. EBITDA comment the on describing you're be know invite You at covenants. levels, of the to Michael Hassan kind

Michael McMurray

Yeah.

debt-to-EBITDA one at covenants, times. total to in in -- keep to than right, a greater the regards mind is so you're thing to related X.X it So was there covenant

You'll decided get credit sheet. cash we some you've it on for to them, actually if prudent note recent filings, gone through from was

it's so now of debt net total instead And a a covenant. debt

So as is for I point well, we total period debt. probably said Bob net actually EBITDA as debt from out to an -- continue relief again but dire some from would that want then it some of to get covenant time. that And to did pretty perspective going outlook and did have

Bob Patel

like questions. Well, Good. I'd a to with close comments. all Okay. you your few thank for

the mentioned anticipating earlier challenges and progress ready year. address we're current to I continued as through As we're we

this disciplined serve cash will generation allocation consistent environment. capital on well, focus us Our in challenging

for our deliver leveraging sustainable financial record policies profitable and generation, to extend advantaged prudent you We're growth our to positions portfolio, initiatives value track our shareholders. cash leading strong of

on we quarter our in you company. forward interest July, thank to your look in second for results. our And you So updating

So with that, we're adjourned. Have a weekend. great

Operator

call. you your This for Thank participation. concludes today's

this at disconnect may time. You

LyondellBasell Industries (LYB) 1 May 202020 Q1 Earnings call transcript