Lyondellbasell Industries Nv · NYSE:LYB
Lyondellbasell Industries Nv — Credit Suisse 31st Annual Basic Materials Conference (September 2018)
33 slides from Lyondellbasell Industries Nv's conference presentation, Sep 12, 2018
Slide 1: Credit Suisse 31st Annual Basic Materials Conference
Credit Suisse 31st Annual Basic Materials Conference Jim Guilfoyle EVP Advanced Polymer Solutions and Global Supply Chain September 12, 2018 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 $48 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 2Q 2018 Last Twelve Months
LyondellBasell 2Q 2018 Last Twelve Months Delivering Advancing Capturing Results Growth Opportunity Refinery Reliability $ 5.8 billion Exclusive Acquisition(2) of Net Income Negotiations Capturing A. Schulman with Odebrecht S.A. Margin $ 7.5 billion EBITDA Premium New Monetizing Polyolefin Compoundi
Slide 5: LYB Portfolio Diversity Increases Earnings Resiliency
LYB Portfolio Diversity Increases Earnings Resiliency O&P Americas and O&P EAI EBITDA I&D, Refining and Technology EBITDA I&D, Refining and Technology EBITDA LCM O&P Americas and O&P EAI EBITDA LCM 2014-17 Average EBITDA ex. LCM 2014-17 Average EBITDA ex. LCM USD, millions USD, millions $6,000 $2,50
Slide 6: 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 - 1Q17 Forecast Effective Operating Rate - 1Q18 Forecast ~7 Blb in excess capacity growt
Slide 7: Majority of New N. America Industry Capacity Already in the Market
Majority of New N. America 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 ■ Not all PE units are operating at full rates ~ 65% of 19 Blbs of Polyethylene ■ PE exports ar
Slide 8: LYB's Hyperzone PE Technology is Poised to Capture HDPE Demand
LYB’s Hyperzone PE Technology is Poised to Capture HDPE Demand Capacity Additions Demand Growth World Scale Plants (1) 15 10 HDPE 5 2015-2017 2018-2020 Estimate World Scale Plants (1) 15 10 LLDPE La Porte, Texas 5 2015-2017 2018-2020 La Porte Hyperzone HDPE Estimate World Scale Plants (1) ■ 1.1 bill
Slide 9: Intermediates and Derivatives: A Platform for Earnings Stability & Growth
Intermediates and Derivatives: A Platform for Earnings Stability & Growth EBITDA (ex. LCM) History Key Messages EBITDA LCM ▪ Stable earnings and consistent cash 2014-17 Average EBITDA ex. LCM generation USD, millions $2,000 ▪ Broad product portfolio with feedstock 1,500 integration 1,000 ▪ Leading m
Slide 10: Intermediates and Derivatives Structural Changes and Reliable Operations Capturing Opportunities
Intermediates and Derivatives Structural Changes and Reliable Operations Capturing Opportunities EBITDA increases $450 MM 1H18 vs. 1H17 EBITDA USD, millions ■ Structural improvements ~ 15% $1,200 ▪ Improved contracting strategies ▪ Return to typical reliability ■ 1H18 LYB maintenance schedule ~ 20%
Slide 11: 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 ■ Est. cost: ~$2.4 billion ■ Groundbreaking – Mid 2018 ■ Startup 2021 ■ Estimated EBITDA(1): $350 - $450 MM/year Value-driven growth supported by advantaged feedstocks and technol
Slide 12: Improved Refining Reliability Producing Results
Improved Refining Reliability Producing Results EBITDA Refinery Outlook EBITDA LCM USD, millions ■ Improved reliability increased operating rates $600 and throughput since 2017 ■ Increased profitability driven by strong diesel 400 demand and improved heavy/light crude differentials 200 ■ Full capabi
Slide 13: Strong, Consistent Cash Generation
Strong, Consistent Cash Generation LYB Cash From Operating Activities ■ 2Q18 LTM Capex: $1.6 billion USD, millions Free Cash Flow Capex $7,000 6,000 ■ 2Q18 LTM Free Cash Flow(1): $4.1 billion 5,000 4,000 3,000 ■ 2Q18 Ending Total Liquidity(2): $7.3 billion 2,000 1,000 2014 2015 2016 2017 2Q18 LTM Ca
Slide 14: Profitability Supports Reinvestment for Value-Driven Growth
Profitability Supports Reinvestment for Value-Driven Growth Sources 2013-2017 Uses 2018-2022 Uses Priority Optional Balance Sheet Balance Capacity Inorganic Sheet Opportunities Capacity Share Share Repurchase Repurchase Growth CAPEX Cash From Operating Growth Activities CAPEX Dividends Dividends Bas
Slide 15: Regular Cadence of Investment in LyondellBasell's Organic Growth
Regular Cadence of Investment in LyondellBasell’s Organic Growth Estimated Capital Large Profit Generating Projects Allocation(2) Other Potential Projects Estimated EBITDA(1) Large Potential Projects Scope Projected ($MM/year) (MM lbs.) Start-Up Projects Underway ’15-’17 Avg. Margins Base CAPEX Unde
Slide 16: Prior to the A. Schulman Acquisition, LyondellBasell Participated in One of Several Advanced Polymers Markets
Prior to the A. Schulman Acquisition, LyondellBasell Participated in One of Several Advanced Polymers Markets Polyethylene Polypropylene Engineered Polymers LyondellBasell’s PP Compounding business is a global leader in automotive www.lyondellbasell.com 16
Slide 17: Combination Results in Vertically Integrated Solutions & Expanded Offering
Combination Results in Vertically Integrated Solutions & Expanded Offering Polyethylene Polypropylene Engineered Polymers Comprehensive customer solutions for broad and attractive markets www.lyondellbasell.com 17
Slide 18: Combination Creates Value, Strengthens Earnings Growth and Stability
Combination Creates Value, Strengthens Earnings Growth and Stability (1) (2) (3) Combined Businesses LTM Revenue $2.1 billion $2.5 billion $4.6 billion LTM Adjusted EBITDA $241 million $205 million $446 million LTM Adjusted EBITDA Margin(4) 11.3% 8.1% 9.5% LTM Sales Volume 2.5 billion pounds 2.4 bil
Slide 19: A. Schulman Acquisition: Creating a Platform for Growth
A. Schulman Acquisition: Creating a Platform for Growth Strategic Rationale Financial Metrics(1) ■ Vertical integration ■ Purchase price = $2.25 billion ■ New growth platform for organic and ■ 6.3x LTM 1Q18 Adjusted EBITDA, including inorganic opportunities synergies ■ End-to-end customer solutions
Slide 20: Advanced Polymers Solutions: A New Segment Focusing on Broad and Attractive Markets
Advanced Polymers Solutions: A New Segment Focusing on Broad and Attractive Markets 2017 Sales Volume ■ A. Schulman ~ 2.4 Blb PE + PP PP Compounds Catalloy & PB-1 A. Schulman ▪ Masterbatch lbs., billions ▪ Engineered plastics & composites 16 14 Product shift to new segment ▪ Custom colors 12 ▪ Speci
Slide 21: 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 22: Growth Guided by Strategic Goals
Growth Guided by Strategic Goals Leverage Core Strengths: ▪ Safe & reliable operations ▪ Cost discipline ▪ Global reach and broad portfolio Consistent Top-Quartile Advance Profitable Growth: TSR ▪ Focus on advantaged and differentiated products and markets Capture Opportunities: ▪ Consistent with LY
Slide 23: Appendix
Appendix www.lyondellbasell.com 23
Slide 24: 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. 250 PE PP 300 200 150 200 100 100 50 ’90 – ’16 ’11 – ’16 ’15 – ‘16 PE: 4.4% PE: 3.6% PE: 3.9% 0 PP: 6.6% PP: 4.9% PP: 4.4% 20
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 diluted earnings per share excluding LCM, EBITDA, E
Slide 26: Enterprise Value
Enterprise Value Calculation of Enterprise Value June 30, In Millions of Dollars, except share amounts 2018 Common Shares Outstanding 390,343,283 Closing Price $ 109.85 Market Capitalization 42,879 Current Maturities of Long Term Debt 974 Short-Term Debt 76 Long-Term Debt 7,490 Less: Cash and Cash E
Slide 27: EBITDA Excluding LCM Adjustments to EBITDA
EBITDA Excluding LCM Adjustments to EBITDA Reconciliation of EBITDA Excluding Lower of Cost or Market Inventory Valuation Adjustments ("LCM Adjustments") to EBITDA For the Year Last Twelve For the Years Ended For the Three Months Ended Ended For the Six Months Ended Months Average December 31, Decem
Slide 28: Net Income to EBITDA
Net Income to EBITDA Reconciliation of Net Income To EBITDA For the Year Last Twelve Three Months Ended Ended Six Months Ended Months December 31, December 31, December 31, March 31, June 30, September 30, December 31, December 31, June 30, June 30, June 30, In Millions of Dollars 2014 2015 2016 201
Slide 29: Free Cash Flow Yield
Free Cash Flow Yield Calculation of Free Cash Flow Yield Three Months Ended Last Twelve S eptember 30, December 31, March 31, June 30, June 30, In Millions of Dollars (except share data) 2017 2017 2017 2018 2018 Net Cash Provided by Operating Activities $ 1,486 $ 1,482 $ 1,006 $ 1,727 $ 5,701 Less:
Slide 30: Diluted EPS Excluding LCM Adjustments to Diluted EPS
Diluted EPS Excluding LCM Adjustments to Diluted EPS Reconciliation of Diluted EPS Excluding LCM Adjustments to Diluted EPS Last Twelve Months For the Years Ended December 31, June 30, 2014 2015 2016 2017 2018 Diluted Earnings Per Share Excluding LCM Adjustments $ 8.91 $ 10.34 $ 9.18 $ 12.23 $ 14.79
Slide 31: 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 Last Twelve Years Ended December 31, Year Ended Six Months Ended Months December 31, June 30, June 30, June 30, In Millions of Dollars 2014 2015 2016 2017 2017 20
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 June 30, In Millions of Dollars 2018 Cash and Cash Equivalents and Restricted Cash $ 2,386 Short-Term Investments 933 Repurchase Agreements 554 Cash and Liquid Investments 3,873 Availability
Slide 33: 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 Last Twelve For the Years Ended December 31, Months June 30, In Millions of Dollars, except share amounts 2014 2015 2016 2017 2018 Cash from Operating Activ