LyondellBasell Industries

Hello and welcome to the Liondell-Bissell teleconference. At the request of Liondell-Bissell, this conference is being recorded for instant replay purposes. Following today's presentation, we will conduct a question and answer session. I'd now like to turn the conference over to Mr. David Kinney, Head of Investor Relations. Sir, you may begin.

Thank you, operator. Hello and welcome to Liondell-Bissell's second quarter 2021 teleconference. I'm joined today by Bob Patel, our Chief Executive Officer, and Michael McMurray, our Chief Financial Officer. Before we begin the 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 slash investor relations. 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 can lead our actual results to differ by reviewing the cautionary statements in the presentation slides and our regulatory filings, which are also available at our investor relations website. Additional documents on our investor relations website provide reconciliations of non-GAAP financial measures to GAAP financial measures, together with other disclosures, including earnings release. 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 August 30th by calling 877-660-6853 in the United States and 201-612-7415 outside the United States. The passcode for both numbers is 13721413. 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. Comments made on this call will be in regard to our underlying business results. in some cases excluding the impacts of lower-up cost or market inventory adjustments, or LCM. With that being said, I would now like to turn the call over to Bob.

Thank you, Dave. Good day to all of you. We appreciate you joining us today as we discuss our second quarter results. Before we begin with the business discussion, I would like to acknowledge the sadness we are feeling throughout the Lyondell Bazell family after a tragic incident this week at our LaPorte facility which resulted in the death of two contractors and injuries to several additional contractors and employees. Every day, we work diligently to ensure that the colleagues, the friends, and most importantly, the families of our employees and contractors never have to receive the calls that went out last Tuesday evening, notifying them of the loss or injury of a loved one. Our investigation is underway and it will be some time before we reach a conclusive determination regarding the cause of the incident. Our sincere condolences go out to the families of the two men lost in the incident, and we pray for a fast and full recovery for all of the injured. Please turn to slide three, and let's review our second quarter financial results. Bindell Bizell's global businesses are benefiting from robust demand and rebounding economies. During the second quarter, Net income increased to $2.1 billion, more than 90% higher than our first quarter results. Strong demand for our products allowed us to increase prices and expand margins to generate more than $3 billion of quarterly EBITDA. Despite the increased working capital required by higher prices and volumes, we generated $1.9 billion of cash from operating activities. These results demonstrate how Lyondell Bazell's disciplined investments in growth and share repurchases over the past few years have enabled us to establish new benchmarks for our company's profitability. Second quarter EBITDA is 38% higher than our previous record established in the third quarter of 2015. Earnings per share has more than doubled since that time. A larger Lyondell Bazell is now positioned to generate stronger results and higher cash flow through business cycles. The events of this week provide a vivid reminder of the reasons behind our company's commitment to safe and reliable operations. Let's turn to slide four and review our recent safety performance. As of the end of June, our year-to-date total recordable incident rate of 0.22 for employees and contractors remained in the top 10% of our industry. As we do with all major incidents, we will investigate the root cause and contributing factors involved in this week's events and share our findings with our contractors, our employees, and our industry peers. Our aim is to learn from all incidents and achieve a goal zero work environment that prevents such tragedies from occurring. On slide five, I would like to highlight our most recent sustainability report that we released last month. This report focuses on Lyondell Bazell's efforts to address three urgent global challenges for our business, eliminating plastic waste in the environment, addressing climate change, and supporting a thriving society. Lyondell Bazell is leading work to transform our industry toward more sustainable business models. Customers are eager to adopt our Circulin brand of polymers based on recycled or renewable feedstocks. We're developing projects that should enable us to achieve our industry-leading goal of producing and marketing 2 million metric tons of recycled and renewable-based polymers annually by 2030. Blind Alvazel aims to be a leader in supplying the large and growing addressable market for circular polymers. On climate change, we support the ambitions of the Paris Climate Agreement and we're moving forward with investments in energy reduction, increased utilization of renewable energy, and evaluation of new low-carbon technologies. We will be sharing more details on our carbon reduction plans over the coming months. In our work to advance a thriving society, I'm very pleased to see the enthusiasm from our employees to embrace a more inclusive work environment. During the second quarter, we launched employee networks to advance diversity, equity, and inclusion at Lyondell Bazell. These networks allow colleagues with similar interests, identities, and goals to foster professional and personal growth. When combined with our emphasis on a safe work culture and community engagement, our work to capture the full potential of our diverse global workforce should further enhance the sustainability of our company's performance. Following an exceptional second quarter, some market observers are predicting a rapid decline in prices and profitability for our industry. On slide six, I would like to point out why we believe that markets will be stronger for longer. COVID vaccinations have been the driving force behind the reopening of societies and the rebounding global economy. As of July, only 14% of the global population is fully vaccinated. While the US and roughly a dozen other countries have achieved vaccination rates approaching or exceeding 50%, health experts anticipate that vaccines will be rolling out to the rest of the world throughout 2022 and into 2023. As seen by the increased spread among unvaccinated populations and the rise of variants, we still have much work ahead of us to contain the coronavirus and realize the full economic power of global reopening. Returning to normalcy is eagerly anticipated by consumers with considerable pent-up demand and increased disposable income. The Bureau of Economic Analysis estimates that U.S. personal savings averaged $3.5 trillion during the first five months of 2021, nearly three times the level seen in 2019. With fiscal stimulus continuing to flow into the economy, consumers are both motivated and well-funded to drive global economic activity. In durable goods markets, high demand and low inventories are leading to substantial order backlogs. We expect this unfulfilled demand will persist to drive strong industrial production and demand for our materials for quite some time. One example is that the average age of an automobile in the U.S., reached an all-time high of 12 years in 2021. Businesses and consumers will eventually need to replace this aging fleet of cars and trucks. Despite higher prices and supply chain constraints, demand for our products serving automotive manufacturing are forecast to increase a total of 10 percent in 2021 and an additional 11 percent during 2022. Strong U.S. household formation during the pandemic has evolved into a robust housing market. Lyondell-Bazell benefits from both direct demand for building and construction materials, as well as demand for our products used in the myriad of furniture, appliances, and other goods that complete a new home. And as vaccinations facilitate improvements in global mobility, Lyondell-Bazell's products will see increased demand from restocking, and consumption by service, entertainment, travel, and hospitality industries, as well as increased demand for transportation fuels supplied by Lyondell Bizelle's oxyfuels and refining businesses. In short, we remain confident that persistently high demand should support strong markets for our products through 2022. With that, I will turn the call over to Michael, who will describe our financial and segment results over the past quarter.