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 1 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.

Thank you, Operator. Hello and welcome to Lyondale-Bissell's third quarter 2020 teleconference. I'm 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.liondelpcell.com. Today, 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.linedelpacel.com slash investorrelations. 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 November 30th by calling 888-566-0568 in the United States and 203-369-3064 outside the United States. The passcode for both numbers is 6541. During today's call, we will focus on third 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 of 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 volatility in prices for our raw materials and finished goods inventories. During the third quarter, we recognized pre-tax LCM benefits totaling $160 million, compared to LCM charges of $323 million during the first half of 2020. During the third quarter, we also recognized a non-cash impairment of $582 million that reflects our expectation for reduced profitability from our use in the refinery. Comments made on this call will be in regard to our underlying business results, excluding the impacts of the refinery impairment and the LCM inventory adjustments. 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. We hope that you, your colleagues, and your families are all staying healthy and safe during these challenging times. We appreciate you joining us today as we discuss our third quarter results. Let's begin with slide three and review the highlights. In the third quarter, Lionel Bezal's businesses benefited from improving volumes during the initial months of a recovering global economy. After excluding the non-cash impacts of LCM inventory benefits and an impairment of our refinery, third quarter EBITDA was approximately $900 million, an improvement of more than $200 million relative to the second quarter. We continued to focus on cash generation and retention by efficiently converting more than 90% of our EBITDA into cash from operating activities, and by carefully managing our working capital to end the quarter with approximately $5.5 billion of cash and available liquidity. Our strong balance sheet has served us well by allowing the company to capture opportunity during this downturn through the establishment and startup of a new integrated polyolefin joint venture in China, followed by the announcement in October of our intent to form another integrated polyethylene joint venture in Louisiana before the end of this year. Both of these joint ventures offer unique opportunities for Lyondell Bizelle to grow one of the core areas of our business by investing in new, already operating, high-quality assets that have significant upside as market conditions continue to improve. These transactions are prime examples of our strategy to identify, develop, and capture opportunities through business cycles. Let's turn to slide four and review our recent safety performance. Our employees and contractors maintain their focus on performing work safely to eliminate injuries, prevent virus spread, and minimize emissions from our assets. During September, we had one recordable injury across our global workforce of more than 19,000 employees. Although our goal is always zero injuries, the September year-to-date recordable injury rate across both our employees and contractors is on track to improve upon the top decile industry performance we achieved in 2019. Our protocols for workplace sanitization, facial covering, social distancing, health screening, and contact tracing have been successful in minimizing the spread of coronavirus across our global facilities. We have no evidence of work-related COVID infections across our global workforce. Our major manufacturing locations operated continuously throughout the pandemic as an essential industry. Our office workers have returned to work in Asia and we are gradually increasing our office populations across the rest of the world in accordance with local regulations and safety metrics driven by both employee and community infection rates. We are using a safe and responsible approach to gradually increase the number of personnel at our Houston headquarters during the fourth quarter. In September, our company released our annual sustainability report, the cover of which is shown on slide five. We hope that you will all take some time to review the report. You will note that the cover image of our report does not depict images of solar arrays, windmills, or a pristine beach. Our products make modern life possible and often have a favorable environmental footprint relative to the alternatives. We recognize that plastic waste represents a substantial challenge for society, and our goal is to play a central role in developing pragmatic solutions that balance the needs for environmental, economic, and social sustainability. Our sustainability report describes the actions we will take as a company to help tackle three global challenges. eliminating plastic waste, addressing climate change, and supporting a thriving society. Over the next decade, we will continue to develop successful waste management projects through the Alliance to End Plastic Waste that will recover and reuse millions of tons of plastic waste. By 2030, we aim to produce 2 million tons of recycled and renewable polymers across our asset base. We are targeting a CO2 intensity that will be 15% lower by 2030 than it was in 2015. And the events of this year have led us to redouble our efforts to ensure a culture of inclusion across our diverse global workforce. We hope you will find that this year's report not only tracks our progress on meaningful metrics for investors, but also describes the increasing scope of our company's ambitions and strategies to support the transition to a low-carbon circular economy and drive solutions for a more sustainable and thriving society. Let's turn to slide six and briefly review how we are advancing our growth strategy with the SASL joint venture that we announced on October 2nd. In summary, Feindel Bezal has agreed to purchase a 50% interest in a newly built ethylene cracker, two polyethylene units, and the associated utilities and infrastructure located in Lake Charles, Louisiana, for $2 billion. Lyondell Vazell will operate the assets and market all of the polyethylene produced by this joint venture. As we discussed a few weeks ago, this transaction will enable both partners to maximize the value of these world-class assets while advancing our respective strategic objectives. While no formal process is set out in the agreements, Lyondell Vazell will have the potential to acquire the JV assets in full at some point in the future. In addition to the Louisiana joint venture, we also established and started up a joint venture with Borah in China just a few weeks ago. We have been very clear that we have no intention of building a new integrated ethylene cracker on our own for the foreseeable future. But when these two JVs in China and Louisiana are taken together, We are essentially acquiring the full capacity and immediate financial benefits of a new and operational world-scale integrated cracker complex with minimal exposure to the risk from project execution, timing uncertainty, and opportunity costs that are typically incurred during the multi-year construction of these types of facilities. Plus, we are acquiring this world-scale integrated cracker at a very attractive valuation. With respect to our joint venture with SAS Hall, both partners are working diligently and making good progress towards obtaining the required approvals that should allow us to close the transaction before the end of this calendar year. With that, I'll turn the call over to Michael, who will describe our financial results over the past quarter.