LyondellBasell Industries

Hello and welcome to the Lyondell Bissell teleconference. At the request of Lyondell 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 call over to Mr. David Kinney, Head of Investor Relations. Sir, you may begin.

Thank you, Operator. 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 investors.lyondellbassell.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 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 identified 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 March 2nd by calling 877-660-6853 in the United States and 201-612-7415 outside the United States. The access code for both numbers is 137-46215. Joining today's call will be Peter Banneker, Lyondell-Passell's Chief Executive Officer, our CFO, Augustine Izquierdo, Kim Foley, our Executive Vice President of Global Olefins and Polyolefins, Aaron Ledet, our EVP of Intermediates and Derivatives, and Torkel Runman, our EVP of Advanced Polymer Solutions. During today's call, we will focus on fourth quarter and full year 2025 results and progress on our strategic initiatives. We will also discuss current market dynamics and our near-term outlook. With that being said, I would now like to turn the call over to Peter.

Thank you, Dave, and welcome to all of you. We appreciate you joining us today as we discuss our fourth quarter and full year 2025 results. I am proud of our people and how they continue to navigate the cycle in 2025 while maintaining focus on our long-term strategy despite some of the most challenging market conditions I have seen in my career. The team delivered exceptional results in our cash improvement plan while keeping safe and reliable operations at the center of everything we do. So with that in mind, let's begin as we always do with our safety results on slide three. Linder Basel delivered exceptional safety performance in 2025. Our total recordable incident rate reached a historic low, slightly surpassing even our record setting performance in 2022, making 2025 the safest year in our company's history. These results are especially meaningful given the significant volume of maintenance and turnaround activity we executed across our sites in 2025 in Europe and the US. Despite this elevated activity, our teams demonstrated operational excellence and an unwavering commitment to safety, even under challenging conditions. Safety remains our top priority. This consistent industry-leading safety performance reflects the discipline and care our employees and contractors bring to every aspect of our operations. I want to thank everyone across the organization for the dedication in keeping our colleagues and communities safe. Now let's turn to slide four. As we navigate one of, if not the longest downturn in our industry, Linder Basel continues to execute on our three-pillar strategy in a way that creates and protects value, even when this means adjusting the timing for implementing our plans. In our first strategic pillar, we continue to grow and upgrade the core. In 2025, we prioritize safe and reliable operations. We advance our portfolio transformation with material progress on the divestment of four European assets which is on track for completion in the second quarter of 2026. We also moved forward on strengthening our cost-advantaged position in the Middle East with a new allocation for cost-advantaged feedstocks in Saudi Arabia. In our second pillar, we're building a profitable circle and low-carbon solutions business. Construction on Moritech One is progressing well and is on track for a 2027 startup We're also advocating for supportive policy frameworks, which will enable the successful and profitable transformation of our industry while we execute it on low-cost and no-cost energy efficiency initiatives across our sites. In our third pillar, we're stepping up performance and culture. Our team is laser-focused on value and cash generation. I'm pleased to report that the value enhancement program exceeded our original target, and achieved $1.1 billion of recurring annual EBITDA in 2025. This program has been a critical enabler of our cash improvements and cost discipline efforts, helping offset inflation, improve reliability, and fund profitable growth. Building on this momentum, we are extending the value enhancement program and targeting $1.5 billion of recurring annual EBITDA by 2028. Importantly, these recurring earnings are based on mid-cycle margins and operating rates. We expect the benefits of the Value Enhancement Program will become more prominent once volumes and margins recover from this prolonged downturn. Given the current market environment, we have focused our investments on the immediately profitable projects aligned with our long-term commitments. and we are reviewing the timing of achieving certain 2030 sustainability goals. We have also materially reduced our capital expenditure plans for circular solutions and prioritized markets that provide supportive regulation and resilient, proven demand, such as Europe. We will update the market on our progress over the coming months, including the April publication of our 2025 sustainability report. Even as we accelerate select initiatives and adapt the timing of others, our strategic priorities remain intact. Our disciplined execution positions us to capture substantial value once the cycle turns, and we remain confident in our ability to deliver sustainable growth for our stakeholders. Let's turn to slide five and take a moment to reflect on where LYB and the industry are in the current cycle. 2025 was another exceptionally challenging year, with industry margins remaining deeply depressed across all of our core businesses. Industry margins were approximately 45% below historical averages, even worse than the already difficult conditions we saw in 2024. In North America, polyolefins margins reached their lowest levels in more than a decade. This margin erosion has weighed heavily on LYB and the entire sector. Several factors are pressuring margins. These include global trade disruptions, low demand for durable goods, a lower oil-to-gas ratio, ongoing global capacity additions, and in Europe, increased competition from imports and structurally higher energy costs. Even under these conditions, Linder Basel continues to generate positive free cash flow at the bottom of the cycle. While the environment remains tough, the market is responding with an increasing rate of capacity rationalization, which is accelerating the rebalancing of supply and demand. Once margins begin to normalize, LYB is well positioned to capture significant upside. supported by our low-cost positions, world-class technologies, and a disciplined approach to generating value and cash. Let's now turn to slide six to discuss our 2025 full-year highlights. Despite this backdrop of weak margins, our teams remained disciplined and focused on the actions within our control. We generated $2.3 billion of cash from operations during the year, This performance reflects strong working capital discipline, focused cost management, and our ability to operate safely and reliably through a prolonged industry downturn. Our excellent cash conversion ratio of 95% illustrates the resilience of our operating model and the additional focus provided by the cash improvement plan, even in an environment of compressed spreads. Full-year earnings were $1.70 per diluted share and EBITDA total $2.5 billion. Throughout the year, we remained focused on maintaining financial flexibility, prioritizing safe and reliable operations, and low-cost investments in VEP projects while preserving the ability to pursue selective investments in high-value growth once cash flows improve. And we will continue to maintain strong capital discipline to ensure we're making the right decisions for the long-term strength of our company and all stakeholders. Now, with that, I'll turn it over to Augustin to walk through our 2025 achievements in the cash improvement plan.