Lyondellbasell Industries Nv · NYSE:LYB
Lyondellbasell Industries Nv — Morgan Stanley Global Chemicals and Agriculture Conference 2019
36 slides from Lyondellbasell Industries Nv's conference presentation, Nov 13, 2019
Slide 1: Morgan Stanley's Global Chemicals and Agriculture Conference
MORGAN STANLEY’S GLOBAL CHEMICALS AND AGRICULTURE CONFERENCE November 13, 2019 Jim Guilfoyle Executive Vice President, Advanced Polymers & Global Supply Chain 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 Global Leader
$35 B A GLOBAL LEADER REVENUE LTM 3Q19 TOP POSITIONS IN THE HEART OF A LARGE AND ATTRACTIVE MARKET SERVICE NAME Credibly administrate technically sound supply chains with effective. 19,500 Quickly negotiate market. #1 #2 #3 EMPLOYEES 2018 PP COMPOUNDS, POLYPROPYLENE, POLYETHYLENE + $4 Trillion POLYO
Slide 4: Performance Snapshot
PERFORMANCE SNAPSHOT DIVERSIFIED PORTFOLIO AND GLOBAL SCALE DRIVING RESILIENT RESULTS $3.5 B $5.7 B REPORTING SEGMENTS EBITDA LTM 3Q19 NET INCOME EBITDA LTM 3Q19 LTM 3Q19 Olefins & Polyolefins – Americas $2,435 MM Olefins & Polyolefins – Europe, Asia, International $1,045 MM Intermediates & Derivati
Slide 5: Compelling Investment Thesis
COMPELLING INVESTMENT THESIS LEADING + ADVANTAGED + DISCIPLINED LEADING global portfolio of proven, flexible and focused businesses in large and growing markets ADVANTAGED global position as the industry’s best operator with expertise and innovation DISCIPLINED capital allocation that supports value
Slide 6: Leading + Advantaged + Disciplined
LEADING + ADVANTAGED + DISCIPLINED LEADING global portfolio of proven, flexible and focused businesses in large and growing markets ADVANTAGED global position as the industry’s best operator with expertise and innovation DISCIPLINED capital allocation that supports value-driven growth 6
Slide 7: Leading and Focused Portfolio
LEADING AND FOCUSED PORTFOLIO GROUPING OUR BUSINESS PORTFOLIO TO UNDERSCORE VALUE INTEGRATED POLYMERS TECHNOLOGY ENABLED PRODUCTS INTERMEDIATES & FUELS EBITDA: $3.5 B EBITDA: $1.4 B EBITDA: $1.0 B Olefins Technology Intermediate Chemicals Polyethylene Advanced Polymer Solutions Oxyfuels & Related Pr
Slide 8: Resilient Portfolio
RESILIENT PORTFOLIO NATURAL HEDGES AND CYCLICAL OFFSETS DELIVER EARNINGS STABILITY EBITDA GDP Brent USD, billions USD/bbl $8 4% $100 NATURAL HEDGES 6 3% 75 Offsetting feedstocks in North America and Europe 4 2% 50 CYCLICAL OFFSETS 2 1% 25 High consumer-driven demand 2014 2015 2016 2017 2018 3Q19 LTM
Slide 9: Steady Earnings Improvement
STEADY EARNINGS IMPROVEMENT THREE CONSECUTIVE QUARTERS OF EPS GROWTH Earnings per share USD/share $4 RESILIENT PROFITABILITY 3 Strong seasonal demand 2 INCREASING VALUE PER SHARE 1 Significant share repurchases in 3Q19 3Q18 4Q18 1Q19 2Q19 3Q19 Tax Benefits 9 Note: 3Q19 results include a one time, no
Slide 10: Leading + Advantaged + Disciplined
LEADING + ADVANTAGED + DISCIPLINED LEADING global portfolio of proven, flexible and focused businesses in large and growing markets ADVANTAGED global position as the industry’s best operator with expertise and innovation DISCIPLINED capital allocation that supports value-driven growth 10
Slide 11: Advantaged Position as the Industry's Best Operator
ADVANTAGED POSITION AS THE INDUSTRY’S BEST OPERATOR CULTURE DRIVEN BY RELENTLESS BENCHMARKING AND CONTINUOUS IMPROVEMENT SAFETY OPERATIONAL FEEDSTOCK COMMERCIAL EXPERTISE AND LEADERSHIP EXCELLENCE FLEXIBILITY EXCELLENCE INNOVATION 11
Slide 12: Safety Leadership
SAFETY LEADERSHIP CONSISTENT FOCUS ON SAFETY Injuries per 200,000 hours worked 0.5 0.4 0.3 0.2 0.1 2015 2016 2017 2018 3Q19 YTD LyondellBasell ACC Top Quartile 12 Source: American Chemistry Council (ACC), LyondellBasell. 2019 ACC data not yet available. Number of hours worked includes employees and
Slide 13: Demonstrated Operational Excellence
DEMONSTRATED OPERATIONAL EXCELLENCE BEST OPERATOR IN THE INDUSTRY WITH HIGH ASSET UTILIZATION AND LOW COSTS HIGH ASSET UTILIZATION 2018 OPERATING RATES ● Consistent maintenance through the cycle ETHYLENE 92% ● Optimized turnaround planning ● Increased predictive maintenance POLYMERS 90% ● Continuous
Slide 14: Superior Feedstock Flexibility
SUPERIOR FEEDSTOCK FLEXIBILITY ROBUST FEEDSTOCK OPTIMIZATION ENHANCES PROFITABILITY GLOBAL CRACKER NETWORK Ethylene Production Full-range assets that utilize ethane, propane, butane, y-grade, naphtha, and other advantaged feeds 100% 75% NORTH AMERICA Maximizing value through advantaged feeds in both
Slide 15: Expertise and Innovation
EXPERTISE AND INNOVATION OUR PRODUCTS AND TECHNOLOGIES HAVE DRIVEN GROWTH IN THE PETROCHEMICAL INDUSTRY FOR 65+ YEARS Start-up of first Partnered with world-scale Introduced SUEZ to create Hyperzone HDPE Spherizone PP Quality Circular plant Developed process Polymers (QCP) Introduced Catalloy proces
Slide 16: Advancing Sustainability
ADVANCING SUSTAINABILITY SERVING CUSTOMER NEEDS AND ADDRESSING SOCIETAL DEMANDS SUSTAINABLE AND CIRCULAR PRODUCTS Advancing sustainable technologies to create profitable business opportunities PLASTIC WASTE IN THE ENVIRONMENT Developing and deploying meaningful solutions through our leadership in th
Slide 17: Leading + Advantaged + Disciplined
LEADING + ADVANTAGED + DISCIPLINED LEADING global portfolio of proven, flexible and focused businesses in large and growing markets ADVANTAGED global position as the industry’s best operator with expertise and innovation DISCIPLINED capital allocation that supports value-driven growth 17
Slide 18: Disciplined Capital Allocation
DISCIPLINED CAPITAL ALLOCATION CLEAR FRAMEWORK THAT SUPPORTS VALUE CREATION AND SHAREHOLDER REMUNERATION 1 DIVIDEND Committed to a strong and progressive dividend DIVIDEND $1.4 – 1.5 B 2 SUSTAINING & GROWTH CAPEX Capital investments to sustain and expand our assets INORGANIC INVESTMENTS 2020-2022 SU
Slide 19: Pipeline of Organic Growth
PIPELINE OF ORGANIC GROWTH FOCUS ON TARGETED MID-SIZED AND HIGH-RETURN INVESTMENTS RECENT EXPANSIONS CURRENT PROJECTS FUTURE INVESTMENTS 2013-2019 2019-2021 2024+ U.S. Ethylene 1,000 KT Hyperzone PE 500 KT U.S. Ethylene 250 KT Polyethylene 210 KT PO/TBA 470/1,000 KT Hyperzone PE 500 KT Polypropylene
Slide 20: Hyperzone PE Update
HYPERZONE PE UPDATE A NEW PLATFORM FOR GROWTH INVESTMENT STRATEGY ● Delivering the latest generation of LyondellBasell polymer technology ● Providing lightweight, crack-resistant polymers with high processability ● Enabling the production of cost-effective and durable plastics CURRENT STATUS ● Commi
Slide 21: PO/TBA Plant Update
PO/TBA PLANT UPDATE DISCIPLINED GROWTH MEETING GLOBAL DEMAND INVESTMENT STRATEGY ● Meeting rising demand for urethanes and clean-burning oxyfuels ● Capturing cost-advantaged U.S. Gulf Coast feedstocks PROJECT MILESTONES AND PLAN ● Broke ground August 2018 ● 20% construction completion as of Septembe
Slide 22: Moderating Capital Expenditure Profile
MODERATING CAPITAL EXPENDITURE PROFILE COMPLETION OF HYPERZONE AND PO/TBA WILL INCREASE FREE CASH FLOW CAPEX USD, billions 1 2013-2017 INVESTMENTS $3 High-return debottlenecks 2 NEAR-TERM GROWTH INVESTMENTS 2 Hyperzone PE and PO/TBA are the largest investment from 2018 to 2021 1 MODEST CAPEX FORECAS
Slide 23: New China Joint Venture
NEW CHINA JOINT VENTURE HIGH-RETURN PROJECT IN THE FASTEST-GROWING MARKET MOU WITH LIAONING BORA ENTERPRISE GROUP ADVANTAGES ● Serving Chinese domestic market through LyondellBasell marketing network ● Expanding our global network using LyondellBasell technology and catalysts ● Flexible feedstock so
Slide 24: Investments Driving Growth and Value
INVESTMENTS DRIVING GROWTH AND VALUE FOCUSED, HIGH-RETURN INVESTMENTS DRIVING EBITDA GROWTH Estimated Annual EBITDA Improvement from 2019 to 2022 USD, billions SMALL-MEDIUM PROJECTS $ 1.5 (>150 Projects) $1.3 B ● Polypropylene debottlenecks ● Energy-saving initiatives 1.0 ● New capacity for compound
Slide 25: Delivering Higher Free Cash Flow
DELIVERING HIGHER FREE CASH FLOW HIGHER EBITDA AND LOWER CAPEX INCREASE FREE CASH FLOW IN 2022 OVER 2019 $1.3 B 80% $1.0 B Higher EBITDA x Cash From Operating = Higher Cash From from Investments Activities Yield from EBITDA Operating Activities + $2.1 B Higher Free Cash Flow $1.1 B Lower CAPEX 25 NO
Slide 26: Leading + Advantaged + Disciplined
LEADING + ADVANTAGED + DISCIPLINED WELL-POSITIONED TO ENHANCE VALUE CREATION RESILIENT LEADING DISCIPLINED TANGIBLE FOCUSED ADVANTAGED FINANCIAL GROWTH PORTFOLIO POSITIONS POLICIES AHEAD Integrated Polymers Best Operator Efficient Cash Generation Small-Medium Projects Technology Enabled Products Att
Slide 27: Appendix
APPENDIX lyondellbasell Advancing Possible
Slide 28: 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. We report our financial results in accordance with U.S. generally accepted accounting principles, b
Slide 29: Reconciliation of Net Income to EBITDA
Reconciliation of Net Income to EBITDA Last Twelve Last Twelve Six Months Ended Months Ended Nine Months Ended Months Ended For the Years Ended December 31, June 30, June 30, June 30, September 30, September 30, September 30, In Millions of Dollars 2014 2015 2016 2017 2018 2018 2019 2019 2018 2019 2
Slide 30: Cash from Operating Activities Yield from EBITDA
Cash from Operating Activities Yield from EBITDA For the Years Ended December 31, In Millions of Dollars 2016 2017 2018 Cash flows from operating activities $ 5,606 $ 5,206 $ 5,471 EBITDA 6,602 7,134 6,867 Cash from operating activities yield from EBITDA 85% 73% 80% Approximate average (2016-2018) 8
Slide 31: EBITDA by Reporting Segments
EBITDA by Reporting Segments EBITDA by Reporting Segment For the Year Last Twelve Ended Nine Months Ended Months Ended December 31, Septmeber 30, September 30, September 30, In Millions of dollars 2018 2018 2019 2019 Olefins & Polyolefins - Americas $ 2,762 $ 2,131 $ 1,804 $ 2,435 Olefins & Polyolef
Slide 32: EBITDA by Reporting Segment to EBITDA by Platform
EBITDA by Reporting Segment to EBITDA by Platform - Last Twelve Months Ended June 30, 2019 EBITDA by Reporting Segment EBITDA by Platform Last Twelve For the Year Months Ended Six Months Ended Ended Last Twelve Months Ended December 31, June 30, June 30, June 30, June 30, In Billions of dollars 2018
Slide 33: Calculation of Free Operating Cash Flow Yield
Calculation of Free Operating Cash Flow Yield Last Twelve Months September 30, In Millions of Dollars (except share data) 2019 Net cash provided by operating activities $ 5,016 Less: Sustaining (maintenance and HSE) capital expenditures 1,071 Free operating cash flow $ 3,945 Divided by: Market capit
Slide 34: Calculation of SG&A as a percent of revenue
Calculation of Selling, general and administrative expenses (SG&A) as a percent of revenue December 31, Average In Millions of Dollars 2016 2017 2018 (2016-2018) SG&A $ 833 $ 859 $ 1,129 $ 940 Revenue 29,183 34,484 39,004 34,224 SG&A as a percentage of revenue 2.7% 34
Slide 35: Calculation of LYB Return on Invested Capital (ROIC)
Calculation of LYB Return on Invested Capital (ROIC) For the Years Ended December 31, In Million of Dollars 2014 2015 2016 2017 2018 Income from continuing operations $ 4,479 $ 3,847 $ 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 settlemen
Slide 36: Calculation of Capital Expenditures
Calculation of Capital Expenditures December 31, In Millions of Dollars 2013 2014 2015 2016 2017 2018 Sustaining CAPEX $ 825 $ 706 $ 815 $ 1,109 $ 1,019 $ 1,052 Growth CAPEX 736 793 625 1,134 528 1,053 Expenditures for property, plant and equipment $ 1,561 $ 1,499 $ 1,440 $ 2,243 $ 1,547 $ 2,105 Ave
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