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.

Good day, everybody, and thank you for joining today's call. 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.linedelbasel.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 on our investor relations website. Comments made on this call will be in regard to our underlying business results using non-GAAP financial measures such as EBITDA and earnings per share excluding unidentified items. 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 26th by calling 877-660-6853 in the United States and 201-612-7415 outside the United States. The access code for both numbers is 137-430-73. Joining today's call will be Peter Banneker, lined-up sales chief executive officer, our CFO, Michael McMurray, Kim Foley, our executive vice president of global olefins and polyolefins and refining, Aaron Ledet, our EVP of intermediates and derivatives, and Torkel Renman, our EVP of advanced polymer solutions. During today's call, we will focus on first quarter results, current market dynamics, our near-term outlook, and our long-term strategy. With that being said, I would now like to turn the call over to Peter.

Thank you, David, and welcome to all of you. We appreciate you joining us today as we discuss our first quarter results. During today's call, our leaders will be discussing results in line with the organizational changes we announced on February 19th. In addition to her prior responsibilities for refining and supply chain, Kim Foley is now our Executive Vice President for Global Oliphants and Polyoliphants. Kim will discuss the results for both O and P segments, as well as the refining segments. Joining us for the first time on our earnings telephone conference in his new role as Executive Vice President is Aaron Ledeck. who is taking over responsibility from KIM in leading our intermediate and derivative segments. Over more than 20 years in the petrochemical industry, with 12 of those years at LYB, Aaron has served in a variety of roles in both Europe and the United States. Most recently, Aaron was responsible for the manufacturing and commercial operations for our ONP Americas segment, where he was also responsible for developing future options for our Houston refinery. Please join me in welcoming Aaron to this call. Before we dive into the results, I hope you will invest some time to review this year's edition of our sustainability report that we released a few weeks ago. Over the past year, we embedded sustainability into our strategy and made significant progress on our ambitions. This year's sustainability report describes how LYB is making everyday sustainability a reality. Let's turn to slide three and begin the discussion with our continued leadership in safety performance. There is no greater accomplishment than having every member of our team return home to their families every day in the same health as when they began their working day. This is a cornerstone of our successful and sustainable business. Linder Basel's first quarter incident rate for employees and contractors improved to a rate of only one injury per two million hours worked. We believe our safety metrics continue to hold a leading position in our industry. And I want to congratulate our team for their outstanding safety performance. Moving to slide four, as we discuss our company's performance during today's teleconference, we hope you will take away two main messages. First, Linder Basel continues to generate resilient results while managing challenging market conditions, which have pressured our industry over the past two years. In the first quarter, LYB increased its EBITDA modestly over the fourth quarter. Our cash generation was negatively impacted by a built-in working capital for good reasons, higher prices and higher volumes. And we see other encouraging signs that the industry is beginning to recover. The ratio of oil to gas prices strongly favors LYB's advantage production in North America and the Middle East. Our olefins and polyolefins, Europe, Asia, and international segments, has returned to profitability. And we're seeing early indications of improvement in the performance of our APS segments. The second key message is that Linder Basel's focused strategy is creating unique opportunities to transform our business. As you have heard me say many times, we are executing on three strategic pillars. We're growing and upgrading our core businesses through the startup of our new POTBA capacity and the acquisition of our NETBET joint venture in the Middle East. We intend to give a more substantive update on this pillar of our strategy during our second quarter results. And we're stepping up our performance and culture to embrace value creation through our value enhancement programs. and the transformation of our APS segments. As you might recall, we gave a detailed update on our VEP during last quarter's results. But the most impactful transformation is the progress we have made on our strategic pillar to build a profitable circular and low-carbon solutions business. The so-called CLCS business, will move our feedstocks away from fossil fuels towards an increasing share of recycled and renewable sources. We're building this business through a disciplined, capital-efficient strategy that leverages our existing infrastructure and our competitive advantages, such as leading positions in growing markets and a global network of deep customer relationships. In addition to the first quarter improvements in our underlying businesses, I hope you will come away from this call with an improved understanding of our progress in building CLCS and share our excitement for the future of Lyondell Basel. Moving to slide five, let's focus on the actions we are taking to build a profitable CLCS business. LYB is targeting capabilities across the circular and low-carbon solutions value chain. We're making a series of strategic investments in plastic waste sourcing, advanced sorting, mechanical recycling, and advanced recycling. Slide 5 illustrates how all of these investments fit together to form a comprehensive approach to value creation for Linder Basel CLCS business. Binance Bazel's investments in waste sourcing and advanced sorting enable our company to maximize value from a wide variety of recycled and renewable waste streams. Our network will allow LYB to select the highest value proposition for a particular waste feedstock, whether that involves mechanical recycling, advanced recycling, or renewables. We continue to use JV structures where appropriate to improve capital efficiency and build in supply chain resiliency while growing scale and gaining access to market-leading technologies. Construction is underway in Germany at our Cologne integrated hub for our first advanced recycling asset using LYB's proprietary catalyzed technology, Moritech, with a final investment decision expected next year for a second unit in Houston that will likely be twice the size of the German facility. We are evaluating options for the potential reuse of the hydrotreaters at our Houston refinery to purify recycled and renewable cracker feedstocks. All of these capabilities enable LYB to leverage the substantial investments in our existing cracker and polymerization capacities to process recycled and renewable feedstocks. Finally, in collaboration with converters and brand owners, we bring the recycled and renewable content of these polymers to market through both direct channels and through the custom compounding solutions offered by our APS business. Using mass balancing, the majority of our sales volumes are sold under our well-known CircleN brands. Turning to slide six, you can see how the focused execution of our CLCS strategy is resulting in rapid and meaningful growth in sales volumes for LYBs, recycled and renewable-based polymers. In 2023, our volumes grew to 123,000 tons, doubling our 2022 sales, and we expect this excellent momentum will continue as we drive toward our 2030 target of at least 2 million tons per year. Last year, at our Capital Markets Day, we outlined our financial targets for Lionel Basel's CNLCS business. We continue to expect an incremental EBITDA contribution of $500 million by 2027 and $1 billion by 2030 from this business. By expanding our regional hubs with disciplined acquisitions and organic growth, we are confident we can continue to build and strengthen the leadership position to serve this undersupplied market while generating attractive margins to achieve our financial targets. Let's turn to slide seven and summarize our financial results. During the first quarter, Leinder Basel's businesses delivered resilient results from our well-positioned and diverse portfolio. Earnings were $1.53 per share. EBITDA was $1.1 billion. During the quarter, cash from operating activities consumed about $100 million, and our balance sheet remained robust with $6.5 billion of available liquidity. Let me turn the call over to Michael first, and then to each of the business leaders, who will describe our financial and segment results in more detail.