LyondellBasell Industries

Hello and welcome to the Lyondale-Bissell teleconference. At the request of Lyondale-Bissell, this conference is being recorded for instant replay purposes. Following today's presentation, we will conduct a question and answer session. At that time, to ask a question, please press star one on your touchtone phone. I'd now like to turn the conference over to Mr. David Kinney, Director of Investor Relations. Sir, you may begin.

Hello and welcome to Lyondale-Bissell's second quarter 2020 teleconference. I am joined today by Bob Patel, our Chief Executive Officer. and Michael McMurray, our Chief Financial Officer. Before we begin the business discussion, I would like to point out that a slide presentation accompanies today's call and is available on our website at www.LyondellBussell.com. We will be discussing our business results while making reference to some forward-looking statements and non-GAAP financial measures. We believe the forward-looking statements are based upon reasonable assumptions and the alternative measures are useful to investors. Nonetheless, the forward-looking statements are subject to significant risk and uncertainty. We encourage you to learn more about the factors that could lead our actual results to differ by reviewing the cautionary statements in the presentation slides and our regulatory filings, which are available at www.liondell.com slash investor relations. Reconciliations of non-GAAP financial measures to GAAP financial measures, together with other disclosures, including the earnings release, are also currently available on our website. Finally, I would like to point out that a recording of this call will be available by telephone beginning at 1 p.m. Eastern time today until September 1st by calling 800-879-4299 in the United States and 203-369-3561 outside the United States. The passcode for both numbers is 7410. During today's call, we will focus on second quarter results, the current environment, our near-term outlook, and provide an update on our growth initiatives. Before turning the call over to Bob, I would like to call your attention to the non-cash lower-up cost or market inventory adjustments, or LCM, that we have discussed on past calls. These adjustments are related to our use of last-in, first-out, or LIFO accounting and the recent decline in prices of our raw material and finished goods inventories. During the second quarter, we recognized pre-tax LCM benefits totaling $96 million compared to LCM charges of $419 million in the first quarter. Comments made on this call will be in regard to our underlying business results, excluding the impacts of these LCM inventory charges. With that being said, I would now like to turn the call over to Bob.

Thank you, Dave, and good day to all of you participating around the world. I hope that you, your colleagues, and your families are all staying healthy during these challenging times. We appreciate you joining us today as we discuss our second quarter results. Let's begin with slide three and review the highlights. Lyondell Wiesel's employees leveraged our core strengths in operational excellence, cost management, and commercial agility to generate $1.3 billion of cash from operating activities during an extremely challenging quarter. This represents an improvement of over $100 million relative to the second quarter of 2019, despite our significantly lower earnings. During the second quarter, our team rapidly responded to weakening market conditions by aggressively reducing inventory to match lower levels of demand that reduce cash working capital by $575 million. We developed plans to reduce capex by approximately $500 million during the year. This includes slowing down of our POTBA project. We also made significant progress on cost reduction efforts towards our goal of a run rate of $150 to $200 million in recurring annual savings by the end of this year. We have quickly adapted to changing conditions in our markets, workplaces, and communities to ensure that our assets continue to operate safely and serve the dynamic needs of our customers. Lyondell Brazil's products support many of society's critical needs, such as mouth-blown fibers for N95 face masks, alcohols for sanitizers, and packaging that prevents the contamination and spoilage of our food. I'm very thankful for the innovative thinking, tireless dedication, and disciplined approach to health and safety exhibited by our employees around the world to ensure that we continue to serve our customers and protect our communities during these difficult times. Our second quarter EBITDA of nearly $700 million represents a decline of nearly 40% relative to the first quarter and almost 60% relative to the second quarter of last year. These results are reflective of pandemic-driven declines in demand and margins across many of the markets we serve, especially in transportation fuels and products used in automotive manufacturing and other durable goods and markets. Let's turn to slide four and review our recent safety performance. Biondell Bazell's commitment to health and safety has become even more relevant to our employees, contractors, and communities during the coronavirus pandemic. We leverage the early experience for our employees in the Asia Pacific region to develop protocols for workplace sanitization, facial covering, social distancing, health screening, and contact tracing to minimize the spread of virus across our global facilities. Although we have limited influence in our surrounding communities, our processes have proven highly effective in limiting virus spread within our workplaces. Our employees have continued to deliver top quartile, if not top decile, safety performance while adopting these additional pandemic-related protocols. In June, our company was honored to receive the American Chemistry Council's highest distinction, the Responsible Care Company of the Year Award. The award recognized our innovative practices and leadership in the areas of environmental, health, safety, and security. This honor is a direct reflection of the dedication of our entire Lion Bell Bazelle team and their work to ensure that the health and safety of our people and the communities where we operate are always our highest priorities. The pandemic has generated a renewed appreciation for the value of our chemical and polymer products for society. At the same time, Lyondell-Bazell has not retreated from our commitment to developing circular and sustainable business models for our products. Let's turn to slide five, where we highlight our progress on molecular recycling. Lyondell-Bazell's mechanical recycling business model is focused on forming partnerships with waste management companies who can clean and sort plastic waste, enabling the production of premium recycled plastics. Nonetheless, we recognize that many plastic products are composed of multiple materials that cannot be easily sorted into pure waste streams. Late last year, we announced our initiative to develop a new proprietary technology called MOROTEC to convert mixed plastic waste into a feedstock we could use in our existing assets to produce new chemicals and polymers. On slide five, you can see we have already scaled up this technology from the laboratory to a pilot plant that we commissioned during July in Ferrara, Italy. Our aim is to advance our catalyzed process technology to an industrial scale that will enable the production of monomer feedstock from waste plastic that is competitive with NAPTA-based economics. Marquette could provide another option for satisfying growing demand for circular plastics produced without fossil-based feedstocks. With that, I'll turn the call over to Michael, who will lead us through several topics related to our financial performance.