LyondellBasell Industries

Hello and welcome to the LionelBasell teleconference. At the request of LionelBasell, this conference is being recorded for replay purposes. Following today's presentation, we will conduct a question and answer session. Please press star 1 to join the question queue. I would now like to turn the call over to Mr. David Dennison, head of investor relations. Sir, you may begin.

Thank you, operator, and welcome everyone to today's call. Before we begin the discussion, I would like to point out that a slide presentation accompanies the call and is available on our website at investors.landellbasell.com. Today we will be discussing our third quarter 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 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 diluted 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 o'clock p.m. Eastern Time today until November 30th by calling 877-660-6853 in the United States and 201-612-7415 outside the United States. The access code for both numbers is 137-462-19. Joining today's call will be Peter Vanacker, LeyndellBasell's Chief Executive Officer, our CFO, Agustin Izquierdo, Kim Foley, our Executive Vice President of Global Olefins and Polyolefins, Aaron Lede, our EVP of Intermediates and Derivatives, and Torkel Rhenman, our EVP of Advanced Polymer Solutions. With that being said, I would now like to turn the call over to Peter.

Thank you, David, and thank you all for joining today's call as we discuss our third quarter results. I continue to be impressed by the passion and motivation from our employees to deliver excellent results in this volatile market environment. Petrochemical and energy markets continue to be impacted by the conflict in the Middle East affecting production, feedstock availability, logistics and trade flows. Nevertheless, in this environment where uncertainty has persisted longer than many expected, The LYB team kept unwavering focus on our key priorities, maintaining safe and reliable operations, leveraging our commercial agility, and the disciplined execution of our value enhancement program and cash improvement plan. This helped the company to deliver strong EBITDA and cash generation in the third quarter with 18% EBITDA margins, $1.4 billion in free cash flow, at an impressive 100% of EBITDA, and a $600 million increase in our cash position after having paid back a €500 million bond. It is clear that our successful portfolio transformation, our value enhancement program, and our cash improvement plan are helping to improve our results. In polyolefins, margins fluctuated through the quarter. Over the summer, customers who restocked earlier in the conflict slowed down purchases, impacting pricing. However, from September prices were boosted by strong demand, re-emerging supply concerns and higher feedstock costs. This shows that a return to a post-conflict normal is unlikely to occur in a linear fashion. Another highlight from the quarter has been the benefit of our diversified portfolio. Though polymer margins were sequentially weaker, this impact was largely offset by higher oxyfuel margins and the restart of our Bayport POTBA operations, which led to record EBITDA in our intermediates and derivatives segments. Our diversified end-market exposure helps balance cyclical demand cycles and stable demand growth. Even as the outlook remains uncertain, we continue to believe Thank you very much. Our year-to-date total recordable incident rate of 0.12 remains among the best in our sector. Our team continues to successfully navigate external uncertainty and internal improvements while delivering some of the best safety performance in our corporate history. This demonstrates safety is truly in our DNA and reflects the strong commitment and focus of our employees and contractors. Next, I would like to spend a few minutes on our recently announced agreement to sell the site of the former Houston Refinery and the implications for our business. As you may all know, we announced that LeyndellBasell has entered into an agreement with Valero to sell the site and associated assets as part of our ongoing portfolio management efforts. The transaction value is $320.5 million, all cash and payable at closing, and is expected to close by the end of 2026, subject to regulatory approvals and customary closing conditions. Post-closing, Valero is assuming responsibility for ongoing site operations, environmental liabilities, and pension costs and related employee obligations. This transaction aligns the site with an owner whose core business is refining, creating an opportunity for the site's assets and infrastructure to support future operation. This site has been an important part of the company's history and success for many decades, and we are grateful for the contributions of our employees, contractors, and leaders who helped operate the site safely and reliably throughout its history. to save an orderly shutdown of operations in 2025. Since Capital Markets Day, we have taken deliberate actions to strengthen our portfolio, including investing in advantaged assets, exiting businesses that are non-core, and transforming the APS business. And ultimately, this is another step in creating a more focused and streamlined portfolio. Since announcing our decision to cease refining operations, we have said that future investments and opportunities for the site would depend on market conditions, capital allocation priorities, regulatory developments, and our investment criteria. We thoroughly evaluated a range of potential opportunities that could leverage the site's existing infrastructure. As market conditions evolved, selling the site emerged as the most attractive opportunity to create value from the site. At the same time, we remain committed to pursuing attractive circular and low-carbon opportunities in regions where market conditions and regulatory frameworks support long-term investments. We continue to advance our investment in Moritech One in Wesseling demonstrating this commitment. From a financial perspective, the proceeds help support balance sheet strength and financial flexibility, increasing our optionality over time. Beyond the proceeds, this next step helps support our broader focus on strengthening the LYB portfolio and improving our cash flow by approximately $50 to $100 million annually, while creating additional flexibility to focus our capital and resources on our core priorities. Overall, this is another important step in building a more focused and resilient LYD. It simplifies our portfolio while allowing us to focus capital on long-term value creation. Now I would like to highlight how the breadth of markets we serve is an important strength for our portfolio on our next slides. Our diversified portfolio is balanced Thank you very much. We participate in areas such as infrastructure that offer more attractive current growth. This diversification provides different sources of earnings and growth potential across the cycle. The stable demand from consumables provides a foundation for the portfolio, while more cyclical markets such as housing and consumer goods can provide meaningful upside as conditions improve. We're seeing this dynamic play out currently, where strong octane values have supported attractive margins and record EBITDA in the I&D segment, demonstrating the earnings power embedded in our diversified portfolio. Now turning to the next slide, which puts our end market exposure into the broader context of different economic cycles. As the chart on the left illustrates, The relative strength of consumables, durables and gasoline demand rotates over time. Consumables have historically provided a more consistent source of demand, supported by everyday applications such as packaging, and have demonstrated greater resilience through periods of economic weakness. We're also seeing attractive growth in areas such as healthcare, providing additional opportunities. Our oxyfuels business adds another differentiated demand driver, growing faster than gasoline, as fuel quality requirements and biofuel regulation increase. Strong octane values are supporting attractive margins today, providing earning strength even as several durable markets remain challenged. This demonstrates the benefit of how differentiated market exposures can contribute to LYB's earnings power at different points in the cycle. Certain durable applications tend to be more cyclical. Housing and automotive markets have remained muted for several years but continue to represent upside potential. Other durable demand was elevated during the pandemic as consumers pulled forward purchases. While the timing of recovery remains uncertain, replacement cycles create near-term demand uplift opportunities. At the same time, infrastructure and data center investment globally is supporting strong demand growth across applications such as pipe, conduit, and wire and cable. Each of these markets have experienced periods of relative strength and weakness at different times. A broad portfolio does not remove cyclicality, but it reduces our dependence on any single demand driver and helps provide earnings resilience through the cycle. Turning to our financial performance, I'll walk through our results for the quarter. During the third quarter, earnings were $2.54 per diluted share with EBITDA of $1.5 billion. Cash increased by approximately $600 million to $3.2 billion and our liquidity increased to $7.7 billion at quarter ends. I will now hand over to Agustin to discuss our financial performance in more detail.