Lyondellbasell Industries Nv · NYSE:LYB
Lyondellbasell Industries Nv — JP Morgan Aviation, Transportation & Industrials Conference 2019
34 slides from Lyondellbasell Industries Nv's conference presentation, Mar 6, 2019
Slide 1: JP Morgan Aviation, Transportation & Industrials Conference
JP Morgan Aviation, Transportation & Industrials Conference Bob Patel - CEO March 6, 2019 www.lyondellbasell.com 1
Slide 2: Cautionary Statement
Cautionary Statement The statements in this presentation 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 ris
Slide 3: A Strong, Global Company Delivering Outstanding Performance
LyondellBasell A Strong, Global Company Delivering Outstanding Performance GLOBAL $40 billon enterprise value(1) Manufacturing in 24 countries and our products are sold in more than 100 countries LEADING(2) Producer of Producer of Producer of polyethylene in polypropylene in propylene oxide Europe N
Slide 4: LyondellBasell in 2018: Delivering Results
LyondellBasell in 2018 Delivering Advancing Capturing Results Growth Opportunity $ 4.7 billion Completed acquisition of Capturing margin Net Income A. Schulman from improved markets and contracting in I&D $ 6.9 billion Premium Polyolefin EBITDA Recycling JV with Suez Creating value from innovation b
Slide 5: LYB Portfolio Diversity Increases Earnings Resiliency
LYB Portfolio Diversity Increases Earnings Resiliency Segment EBITDA O&P - AM O&P - EAI APS I&D Refining Technology Stable: USD, millions $6,000 Global Portfolio 4,000 Improved: 2,000 I&D performance Refining operations 20 16 20 16 20 17 20 17 20 18 20 18 2016 2017 2018 LyondellBasell Profitability
Slide 6: Positive Global Outlook for 2019 Despite Market Volatility
Positive Global Outlook for 2019 Despite Market Volatility Mont Belvieu Ethane ¢/gal North American feedstock volatility: 60 Mont Belvieu ethane has retreated with 50 volatility expected from new cracker demand 40 30 20 10 Cycle impacts softened: New industry ethylene cracker additions 2014 2015 201
Slide 7: LyondellBasell's Hyperzone HDPE Technology
LyondellBasell’s Hyperzone HDPE Technology A New Platform for Growth 1.1 billion pounds per year Estimated investment: ~$725 million Start-up: 3Q 2019 Estimated EBITDA(1): $170 - $210 million/year La Porte, Texas (1) For the purpose of this slide, estimated EBITDA for Hyperzone Polyethylene is volum
Slide 8: Intermediates and Derivatives Business Improvement
Intermediates and Derivatives Business Improvement Reducing the Effects of Market Moderation EBITDA Delivering strong results in 2018: USD, millions Capturing strong market margins $2,500 Improved contracting strategies 2,000 Market conditions moderating: 1,500 Higher industry operating rates likely
Slide 9: Advancing Our Leading PO/TBA Technology and Market Position
Advancing Our Leading PO/TBA Technology and Market Position ▪ 1.0 billion pounds Propylene Oxide, 2.2 billion pounds TBA ▪ Estimated investment: ~$2.4 billion ▪ Groundbreaking: August 2018 ▪ Start-up: 2021 ▪ Estimated EBITDA(1): $400 - $450 MM/year Value-driven growth supported by advantaged feedsto
Slide 10: Refining: Improved Reliability Producing Results
Refining: Improved Reliability Producing Results EBITDA Refinery Outlook USD, millions $200 ▪ Improved reliability since 2017 ▪ Increased profitability driven by strong diesel 150 demand and improved heavy/light crude differentials 100 ▪ Full capability to meet Tier 3 gasoline sulfur 50 specificatio
Slide 11: A New Global Alliance Spanning the Value Chain
A New Global Alliance Spanning the Value Chain A new global, CEO led, cross-sector, not-for-profit organization with a clear mission to develop, accelerate & deploy solutions, catalyze public & private investment and engage communities to help end plastic waste in the environment INFRASTRUCTURE INNO
Slide 12: Strong, Consistent Cash Generation
Strong, Consistent Cash Generation LYB Cash From Operating Activities ■ 2018 Capex: $2.1 billion USD, millions Free Cash Flow Capex $7,000 6,000 ■ 2018 Free Cash Flow(1): $3.4 billion 5,000 4,000 3,000 ■ 2018 Ending Total Liquidity(2): $4.4 billion 2,000 1,000 2014 2015 2016 2017 2018 Cash From Oper
Slide 13: Cash Generation Funding Growth Investments and Shareholder Returns
Cash Generation Funding Growth Investments and Shareholder Returns Growing through investment: ▪ $2.1 B in capex ▪ Acquired A. Schulman 2018 Cash from Operating Activities: $5.5 B Returning value to shareholders: ▪ $3.4 B in dividends & share repurchases ▪ 19.2 million shares repurchased Cash from O
Slide 14: Our Capital Deployment Strategy Remains Consistent
Our Capital Deployment Strategy Remains Consistent Sources 2013-2018 Uses 2019-2023 Uses Priority Optional Balance Balance Sheet Inorganic Sheet Capacity Opportunities Capacity M&A Share Share Repurchase Repurchase Growth Cash From CAPEX Operating Growth Activities CAPEX Dividends Dividends Base Bas
Slide 15: Tangible Earnings Growth Over the Next Twelve Months
Tangible Earnings Growth Over the Next Twelve Months Acquisition of Hyperzone I&D Refinery Refining A. Schulman HDPE Improvement Reliability Markets Vertical Poised to Capture Sustainable Contract Increased Focus on Well Positioned for Integration HDPE Demand Improvements Operational Excellence IMO
Slide 16: Strategic Goals to Guide our Growth
Strategic Goals to Guide our Growth Leverage Core Strengths: ▪ Safe & reliable operations ▪ Cost discipline ▪ Global reach and broad portfolio To Deliver Consistent Advance Profitable Growth: Top-Quartile ▪ Focus on advantaged and TSR differentiated products and markets Capture Opportunities: ▪ Cons
Slide 17: Appendix
Appendix www.lyondellbasell.com 17
Slide 18: Global Macro Trends - Demographics Driving Demand
Global Macro Trends - Demographics Driving Demand Upper/Middle Class Households World PE and PP Demand Households, millions lbs., billions 400 China India Western Europe U.S. 300 PE PP 300 250 200 200 150 100 100 ’90 – ’18 ’13 – ’18 ’17 – ‘18 50 PE: 4.4% PE: 4.5% PE: 5.5% 0 PP: 6.5% PP: 5.6% PP: 5.3
Slide 19: Cracker Flexibility & Midstream Investment: Expected to Reduce Ethane Price Volatility by 2020
Cracker Flexibility & Midstream Investment: Expected to Reduce Ethane Price Volatility by 2020 Gulf Coast Ethane Demand & Supply from Fractionation 2H2018 Mont Belvieu ethane price volatility ~ 25 - 60 ¢/gal Flexible Ethane Demand Minimum Ethane Demand Ethane Supply from Fractionation Aggravating fa
Slide 20: LyondellBasell Flexibility & Business Portfolio Reduces Ethane Impacts
LyondellBasell Flexibility & Business Portfolio Reduces Ethane Impacts Advantaged N. American Cracker Fleet: LYB U.S. Gulf Coast Feedstock Flexibility(1) ▪ Gulf Coast crackers ▪ High feedstock flexibility Ethane ▪ Midwest crackers ▪ Low priced Conway feedstock Propane / Butane Naphtha Annual EBITDA
Slide 21: Industry Capacity Additions Serving Strong Global Demand Growth
Industry Capacity Additions Serving Strong Global Demand Growth Global Ethylene Supply & Demand(1) Global Ethylene Supply & Demand Growth(1) Capacity Demand Capacity Growth Demand Growth Effective Operating Rate - 1Q19 Forecast Effective Operating Rate - 1Q18 Forecast ~13 Blb in excess capacity grow
Slide 22: Majority of New N. American Industry Capacity Already in the Market
Majority of New N. American Industry Capacity Already in the Market Status & Impact of New Capacity 2016-2019: N. America Capacity Startups(1) ▪ Ethylene units are running well ~ 65% of 24 Blbs of Ethylene ▪ New PE capacity is in the market ~ 70% of 19 Blbs of Polyethylene ▪ PE exports are expected
Slide 23: Advanced Polymer Solutions: Creating a New Platform for Growth
Advanced Polymer Solutions: Creating a New Platform for Growth 2017 Sales Volume(1) 2017 EBITDA(2) A. Schulman PE + PP PPC Catalloy & Catalloy & PB-1 PB-1 A. Schulman PE + PP PPC,Catalloy PPC, Catalloy& and PB-1PB-1 lbs., billions USD, billions 16 $3.0 EBITDA shift to Product shift to new segment ne
Slide 24: Advanced Polymer Solutions: A New Segment Focusing on Broad and Attractive Markets
Advanced Polymer Solutions: A New Segment Focusing on Broad and Attractive Markets Compounding & Solutions Advanced Polymers Polypropylene Masterbatch Catalloy Compounds Engineered Engineered Polybutene-1 Composites Plastics Custom Specialty Performance Powders Colors www.lyondellbasell.com 24
Slide 25: Information Related to Financial Measures
Information Related to Financial Measures This presentation 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 EBITDA. We report our financial results in accordan
Slide 26: Enterprise Value
Enterprise Value Calculation of LYB Enterprise Value (EV) In Million of Dollars except for common shares outstanding Common shares outstanding, December 31, 2018 375,696,661 Multiplied by: Closing share price, December 31, 2018 $ 83.16 Market capitalization $ 31,243 Add: Current maturities of long-t
Slide 27: EBITDA by Segment to EBITDA
EBITDA by Segment to EBITDA Reconciliation of Segment EBITDA to EBITDA For the Years Ended December 31, In Millions of Dollars 2016 2017 2018 Segment EBITDA: Olefins & Polyolefins - Americas $ 2,788 $ 2,899 $ 2,762 Olefins & Polyolefins - EAI 1,729 1,927 1,163 Intermediates & Derivatives 1,333 1,490
Slide 28: Net Income to EBITDA
Net Income to EBITDA Reconciliation of Net Income To EBITDA For the Years Ended December 31, In Millions of Dollars 2016 2017 2018 Net income $ 3,837 $ 4,877 $ 4,690 Loss from discontinued operations 10 18 8 Income from continuing operations 3,847 4,895 4,698 Provision for income taxes 1,386 598 613
Slide 29: Free Cash Flow to Net Cash Provided by Operating Activities
Free Cash Flow to Net Cash Provided by Operating Activities Reconciliation of Free Cash Flow to Net Cash Provided by Operating Activities Years Ended December 31, In Millions of Dollars 2014 2015 2016 2017 2018 Free cash flow $ 4,549 $ 4,402 $ 3,363 $ 3,659 $ 3,366 Add: Capital expenditures 1,499 1,
Slide 30: Free Cash Flow Yield
Free Cash Flow Yield Calculation of Free Cash Flow Yield Year Ended December 31, In Millions of Dollars (except share data) 2018 Net cash provided by operating activities $ 5,471 Less: Capital expenditures 2,105 Free cash flow $ 3,366 Divided by: Market capital: Common stock outstanding 375,696,661
Slide 31: Return on Invested Capital
Return on Invested Capital Calculation of LYB Return on Invested Capital (ROIC) Years Ended December 31, In Million of Dollars 2016 2017 2018 Income from continuing operations $ 4,895 $ 4,698 Less: Tax benefit due to change in tax law from U.S. Tax Cuts and Jobs Act 819 Non-cash tax settlement (2Q18
Slide 32: Cash and Liquid Investments and Total Liquidity
Cash and Liquid Investments and Total Liquidity Components of Cash and Liquid Investments and Total Liquidity December 31, In Millions of Dollars 2018 Cash and cash equivalents and restricted cash and cash equivalents $ 401 Short-term investments 892 Repurchase agreements 544 Cash and liquid investm
Slide 33: Dividends and Share Repurchases
Dividends and Share Repurchases Schedule of Spending for Dividends and Share Repurchases For the Year Ended In Millions of Dollars 2014 2015 2016 2017 2018 Dividends $ 1,403 $ 1,410 $ 1,395 $ 1,415 $ 1,554 Repurchases of ordinary shares 5,788 4,656 2,938 866 1,854 Total $ 7,191 $ 6,066 $ 4,333 $ 2,2
Slide 34: Cash from Operating Activities as a Percent of Average Enterprise Value
Cash from Operating Activities as a Percent of Average Enterprise Value Cash from Operating Activities as a Percent of Average Enterprise Value For the Years Ended December 31, In Millions of Dollars, except share amounts 2014 2015 2016 2017 2018 Cash from operating activities $ 6,048 $ 5,842 $ 5,60
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