LyondellBasell Industries

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

Thank you, Alex. 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.lionelbissell.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 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 website provide reconciliations of non-GAAP financial measures to GAAP financial measures, together with other disclosures, including the earnings release and our business results discussion. A recording of this call will be available by telephone beginning at 1 p.m. Eastern time today until May 29th by calling 877-660-6853 in the United States and 201- 612-7415 outside the United States. The access code for both numbers is 137-27006. During today's call, we will focus on first quarter results, the current market, and our near-term outlook. Before turning the call over to Ken, I would like to call your attention to the non-cash lower-up cost or market inventory adjustments, or LCM, and the impairments that we have discussed on past calls. LCM adjustments are related to our use of last in, first out, or LIFO accounting, and the volatility in prices for our raw materials and finished goods inventories. Impairment charges were recognized to write down assets to their estimated fair value. Impairments include the non-cash impairment of $624 million in the fourth quarter of 2021 that reflects our evaluation of strategic options for the Houston refinery. Comments made on this call will be in regard to our underlying business results, excluding the impacts of impairments, and LCM inventory adjustments. With that being said, I now would like to turn the call over to Ken.

Thank you, Dave, and welcome to all of you. We appreciate you joining us today as we discuss our first quarter 2022 results. Today's teleconference marks my second earnings call as the interim CEO of Lyondell Bizell, and I would like to thank our board of directors for the opportunities to lead the company over the past few months. Our incoming CEO, Peter Weinecker, joined our board on February 25th, and we're looking forward to him assuming his role as Chief Executive Officer on May 23rd. Peter and I have been talking over the past several months to ensure a smooth transition and a successful start to his leadership of our company. I know that Peter is very eager to engage with our employees, customers, investors, and suppliers to help us build upon the momentum we have underway at Lionel Bezell. Before we get into the results, I would like to take a moment to address the tragic and unprovoked attacks unfolding in Ukraine. My heart breaks seeing so many people devastated and the resulting humanitarian crisis. At Lionel Bezal, we are working to address the impacts of this crisis through our global corporate citizenship program, Advancing Good. The company and our employees have collectively donated more than $600,000 to the United Nations High Commissioner for Refugees, and the International Medical Corps. Lionel Bezal's presence in Russia and Ukraine is fairly limited. Less than 0.3% of our 2021 revenue came from Russia and a negligible amount from Ukraine. In March, we announced that Lionel Bezal will not enter into any new business transactions or relationships with Russian state-owned entities. We also intend to discontinue business relationships with those companies to the extent legally possible. Of course, we are also complying with all U.S. and international sanctions. While we have no manufacturing sites in Russia or Ukraine, we do have about 30 employees working in offices in Russia. Last week, we made the difficult decision to cease operations at our Moscow and Togliatti offices. We have a local team in place to support our employees during this transition period. At Lionel Bezal, we believe in the power of many. And we hope many of you find ways to support the Ukrainian people and influence peace and stability across Europe. Now let's review our first quarter results, starting with slide three. Lionel Bezal's businesses are continuing to benefit from solid global demand and improving markets for products from our intermediates and derivative segment. During the first quarter, Lionel Bezal generated $4 per share of earnings, $2 billion of EBITDA, and $1.5 billion of cash from operating activities. The start of the year is typically a seasonally slow period for the petrochemical industry. 2022 marks the first time since 2015 where Lionel Bezell earned $2 billion of EBITDA during a first quarter, and our income of $4 per share establishes a new first quarter earnings per share record for the company. Despite a turbulent backdrop with geopolitical uncertainties, ongoing supply chain challenges, and volatile prices for energy and feedstocks, Lyondell Bizelle is off to a great start in 2022. Let's turn to slide four and review our safety performance. Lyondell Bizelle's commitment to safety leadership remains a consistent and unwavering component of our company's culture. In 2022, our year-to-date total recordable incident rate for employees and contractors has improved by more than 40% to 0.12. This year, we are emphasizing the importance of instilling safety-related touchpoints during interactions that occur naturally throughout the workday at our facilities. Whether it's planned or spontaneous, these daily touchpoints provide powerful opportunities to convey authentic and impactful leadership related to safety performance. This personalized approach to safety improvement is yielding results. During March, we had only one recordable injury across our global workforce of more than 19,000 employees. This represents substantial progress toward our ultimate goal of zero injuries, and I want to thank all of our employees for their commitment to our Goal Zero journey. On slide five, we highlight the recent publication of the fifth edition of our annual sustainability report. This year's report updates our progress toward goals that help in addressing climate change, ending plastic waste, and supporting a thriving society. The cover graphic from the report highlights our focus on 2030 interim targets that track our progress toward longer-term goals. Last September, we accelerated these targets and set a goal to achieve net zero Scope 1 and Scope 2 greenhouse gas emissions from our global operations by 2050. Our interim 2030 target is to reduce absolute emissions from our global operations by 30% relative to a 2020 baseline. In the area of circular plastics, our 2030 goal is to produce a meaningful share of our polymer production, 2 million tons per year, from recycled and renewable-based feedstocks. And this year, we announced new targets supporting our diversity, equity, and inclusion initiatives. Our goals are to achieve gender parity across our global senior leadership and increase the number of underrepresented groups in our U.S. senior leadership to reflect the general population within 10 years. Please turn to slide six, where we highlight some of our recent collaborations to develop more sustainable products. First, we've collaborated with Nippon Paint to produce packaging for the Chinese market using Lionel Bezel's mechanically recycled Circulin Recover Polypropylene. The paint containers reuse post-consumer plastic waste and reduce reliance on fossil-based feedstocks. Next, we show an example of the polyethylene tubes we developed with our customer, Albea, for L'Occitane shower scrub. The caps and tubes are designed to be fully recyclable and made with Lionel Bezel's circular and revived polymers that are produced from an advanced molecular recycling process using plastic waste. The redesigned tubes retain the iconic brand's look and feel while providing a new life for plastic waste and reducing consumption of fossil-based feedstocks. Finally, we collaborated with several customers to develop clear polypropylene drink cups for McDonald's from our Circulin Renew polymers, using renewable feedstocks produced by Neste from bio-based sources such as McDonald's used cooking oil. We also have a similar collaboration underway with Circulin Revive to make cups for Wendy's restaurants. Wendy's estimates that their cup will divert 10 billion pounds of plastic waste from landfills over the first two years. Lyondell-Bazell's collaborations on sustainability extend both up and down the supply chain. In Houston, we helped form the Houston Recycling Collaboration to increase recycling rates and improve the availability of feedstock from plastic waste. And through our investment with closed-loop partners, we have invested in material recovery facilities that support post-consumer plastic waste recycling in New York, New Jersey, and Florida. Also, We are making good progress in decarbonizing our electrical power consumption by eliminating coal at our Vesseling, Germany facility and establishing renewable power purchase agreements with partners. In addition, we are collaborating with several peers on the development of large-scale carbon capture and storage facilities for the Houston region that would help decarbonize our industry. Notably, we want to acknowledge our decision to exit the refining business by the end of 2023. This was a difficult decision, but we determined that an exit is likely to provide the best outcome for the company. We will talk more about this decision later in this call. Nonetheless, on the sustainability front, the shutdown of the refinery is expected to reduce Lionel Bezell's Scope 1 and 2 greenhouse gas emissions by nearly 15%. Our strategy is to both leverage Lionel Dozell's proprietary technology and collaborate with capable partners to advance our progress on circular plastics and decarbonization initiatives. Please turn to slide seven to review our quarterly profitability. During the first quarter, our business portfolio delivered over $2 billion of EBITDA, similar to fourth quarter results. Despite volatile prices for energy and feedstocks, Solid product demand supported margins for our products across most markets in Europe and the Americas. Supply disruptions triggered by the war in Ukraine and the COVID pandemic created headwinds during the quarter. While we remain watchful for signs of demand destruction from inflation, we have been largely successful in passing through higher energy and feedstock costs in the prices of our products. We expect the strict zero COVID policies in China will continue to hinder growth and profitability in Asia during the second quarter. At Lionel Bezell, our oxyfuels and refining businesses are benefiting from increased demand for transportation fuels as in-person activities resume and global travel recovers. We expect that favorable markets for transportation fuels will continue through next year. Slide 8 depicts Lionel Bezell's historical profitability. Over the course of the first complete business cycle for our company, we delivered an average of $6.7 billion of EBITDA. In today's strong market and with Lyondell Bazell's larger asset base, we delivered $9.7 billion of EBITDA over the last 12 months, nearly 45% above the prior cycle average. Lyondell Bazell's earnings performance is clearly stepping up from prior business cycles. We are well positioned with a diversified portfolio and larger asset base, with propylene oxide and oxyfuels growth underway to extend this performance into the next cycle. With that, I'll turn the call over to Michael, who will describe our financial and segment results in more detail.