LyondellBasell Reports Third Quarter 2018 Earnings

• Diluted earnings per share: $2.85 per share
• Net Income: $1.1 billion
• EBITDA: $1.7 billion, a year-over-year increase in four segments
• Acquired A. Schulman, Inc., creating the global leader in plastics compounding
• Launched Advanced Polymer Solutions segment: a new platform for growth
• Started construction on our new propylene oxide plant in Texas
• Issued dividends and repurchased shares totaling $720 million; 3.2 million shares repurchased during the third quarter

Comparisons with the prior quarter and third quarter 2017 are available in the following table:

Table 1 – Earnings Summary

LyondellBasell Industries (NYSE: LYB) today announced net income for the third quarter 2018 of $1.1 billion, or $2.85 per share.  Integration activities related to the acquisition of A. Schulman are on schedule and estimated to have generated $32 million in forward annual run-rate synergies.  The quarter included $53 million of transaction and integration costs, which decreased earnings by $0.11 per share.  Third quarter 2018 EBITDA was $1.7 billion.

“LyondellBasell’s resilient global portfolio continued to deliver strong profitability, which generated third quarter EBITDA that exceeded last year’s quarterly results in four segments. Our olefins and polyolefins business in the Americas achieved improvements in chain margins and volumes that overcame third quarter headwinds from rising feedstock costs and new supply to drive increased profitability for the segment.  Robust global demand supported attractive margins and earnings for our Intermediates and Derivatives segment.  In our Technology segment, increased licensing of LyondellBasell’s polyolefins technologies generated EBITDA through the end of the third quarter that exceeded all previous full-year records while our focus on operational improvements at our refinery continued to yield meaningful results,” said Bob Patel, LyondellBasell CEO.

“Our company surpassed significant milestones on our value-driven growth initiatives during the third quarter.  In August, we completed the acquisition of A. Schulman, launched our new Advanced Polymer Solutions segment and advanced our organic growth program with the groundbreaking of our new propylene oxide plant,” said Patel.

OUTLOOK
“LyondellBasell’s feedstock flexibility and balanced portfolio of global businesses provides competitive advantage during these periods of increased volatility in energy, natural gas liquids pricing and global trade.   We are well-positioned to capture value with expanded access to markets and increased synergies from the integration of A. Schulman and the formation of our new Advanced Polymer Solutions segment.  During the fourth quarter, we will advance our U.S. growth projects and expect to drive further operational and business improvements in our Intermediates and Derivatives, Refining and Technology businesses,” Patel said.

LYONDELLBASELL BUSINESS RESULTS DISCUSSION BY REPORTING SEGMENT
LyondellBasell manages operations through six operating segments: 1) Olefins and Polyolefins – Americas; 2) Olefins and Polyolefins – Europe, Asia and International; 3) Intermediates and Derivatives; 4) Advanced Polymer Solutions; 5) Refining; and 6) Technology.  Third quarter results for our new Advanced Polymer Solutions segment represents a full quarter of results from the LyondellBasell polypropylene compounds, Catalloy and polybutene-1 businesses as well as results for the businesses acquired from A. Schulman beginning on August 21, 2018.  Historical segment results for Olefins and Polyolefins – Americas and Olefins and Polyolefins – Europe, Asia and International were recast as a result of the shift of product lines to Advanced Polymer Solutions.

Olefins & Polyolefins – Americas (O&P-Americas) – Our O&P-Americas segment produces and markets Olefins & Co-products, polyethylene and polypropylene.

Table 2 – O&P-Americas Financial Overview

Three months ended September 30, 2018 versus three months ended June 30, 2018 – EBITDA increased by $33 million versus the second quarter 2018.  Compared with the prior period, olefins results increased by approximately $120 million.  Ethylene margin improved as the ethylene price increased approximately 4 cents per pound.  Polyethylene results declined approximately $80 million primarily due to a decrease of approximately 6 cents per pound in the polyethylene spread over ethylene.

Three months ended September 30, 2018 versus three months ended September 30, 2017 – EBITDA increased $113 million versus the third quarter 2017.  Compared with the prior period, olefins results increased by approximately $30 million.  Volume increased with the absence of third quarter 2017 Hurricane Harvey impacts partially offset by a decline in ethylene margin.  Polyolefin results increased by approximately $100 million driven by spread improvements in polyethylene and polypropylene over monomer of approximately 6 cents per pound and 3 cents per pound, respectively.  Joint venture equity income increased by $10 million.

Olefins & Polyolefins – Europe, Asia, International (O&P-EAI) – Our O&P-EAI segment produces and markets Olefins and Co-products, polyethylene and polypropylene.

Table 3 – O&P-EAI Financial Overview

Three months ended September 30, 2018 versus three months ended June 30, 2018 – EBITDA decreased by $93 million versus the second quarter 2018.  Compared with the prior period, olefins results decreased by approximately $55 million.  Volume declined with the start of planned maintenance at our cracker in Wesseling, Germany and margin decreased with higher feedstock costs outpacing olefins price improvements.  Combined polyolefins results decreased approximately $45 million primarily due to seasonal declines in volumes.  Joint venture equity income increased by $15 million.

Three months ended September 30, 2018 versus three months ended September 30, 2017 – EBITDA decreased by $337 million versus the third quarter 2017, which included a gain of $108 million on the sale of our interest in Geosel.  Compared with the prior period, olefins results decreased approximately $100 million.  Margin declined as ethylene price improvement lagged feedstock cost increases and volume declined with the start of planned maintenance in the third quarter 2018.  Combined polyolefins results decreased approximately $110 million.  Polyolefin spreads declined approximately 3 cents per pound and sales volumes decreased due to unusually strong volumes in the third quarter of 2017.

Intermediates & Derivatives (I&D) – Our I&D segment produces and markets Propylene Oxide & Derivatives, Oxyfuels and Related Products and Intermediate Chemicals, such as styrene monomer, acetyls, ethylene oxide and ethylene glycol.

Table 4 – I&D Financial Overview

Three months ended September 30, 2018 versus three months ended June 30, 2018 – EBITDA decreased $138 million versus the record-setting second quarter 2018 results.  Compared with the prior period, Propylene Oxide & Derivatives results decreased approximately $50 million.  Volumes declined due to both planned and unplanned maintenance.  Margins declined due to lower seasonal demand.  Intermediate Chemicals results decreased approximately $35 million, primarily due to a decline in styrene margin of approximately 4 cents per pound.  Oxyfuels & Related Products results decreased $55 million, primarily driven by seasonal margin declines.

Three months ended September 30, 2018 versus three months ended September 30, 2017 – EBITDA increased $102 million versus the third quarter 2017.  Compared with the prior period, Propylene Oxide & Derivatives results decreased approximately $10 million with volume losses from 2018 planned and unplanned maintenance exceeding hurricane impacts during the third quarter 2017.  Intermediate Chemicals results increased approximately $105 million driven by tight industry supplies and strong demand driving improved margins for acetyls, ethylene glycol and styrene.  Oxyfuels & Related Products increased by approximately $10 million.

Advanced Polymer Solutions (APS) – Our Advanced Polymer Solutions segment produces and markets in two lines of business: Compounding & Solutions and Advanced Polymers.  Compounding & Solutions includes polypropylene compounds, engineered plastics, masterbatches, engineered composites, colors and powders.  Advanced Polymers consists of Catalloy and polybutene-1.

Table 5 – Advanced Polymer Solutions Financial Overview

Three months ended September 30, 2018 versus three months ended June 30, 2018 – EBITDA decreased by $51 million versus the second quarter 2018.  A. Schulman was acquired on August 21, 2018 and results from the new business are included prospectively.  Transaction and integration costs related to the acquisition and assigned to the segment were $49 million during the third quarter 2018.  Compared with the prior period, Compounding & Solutions results were relatively unchanged.  The addition of new product lines from the acquisition offset seasonal volume and margin declines in polypropylene compounds.  Advanced Polymers results were relatively unchanged with some seasonal volume reductions.

Three months ended September 30, 2018 versus three months ended September 30, 2017 – EBITDA decreased by $54 million versus the third quarter 2017.  A. Schulman was acquired on August 21, 2018 and results from the new business are included prospectively.  Transaction and integration costs related to the acquisition and assigned to the segment were $49 million during the third quarter 2018.  Compared with the prior period, Compounding & Solutions results were relatively unchanged.  The addition of new product lines from the acquisition partially offset margin and volume declines in polypropylene compounds.  Advanced Polymers results were relatively unchanged.

Refining – Our Refining segment produces and markets gasoline and distillates, including diesel fuel, heating oil and jet fuel.

Table 6 – Refining Financial Overview

Three months ended September 30, 2018 versus three months ended June 30, 2018 – EBITDA decreased $20 million versus the second quarter 2018.  The Houston Refinery operated at 232,000 barrels per day, 27,000 barrels per day less than the prior period with planned maintenance beginning in September.  The Maya 2-1-1 industry benchmark crack spread decreased by $4.51 per barrel to $21.43 per barrel.  Margin improved at our Houston Refinery primarily due to favorable Canadian crude oil pricing relative to the Maya price.

Three months ended September 30, 2018 versus three months ended September 30, 2017 – EBITDA increased $26 million versus the third quarter 2017.  Margin increased at our Houston Refinery primarily driven by improved yields and lower costs for RINs.  Crude throughput declined by 8,000 barrels per day with planned maintenance in the third quarter 2018 exceeding downtime related to hurricane impacts in the third quarter 2017.

Technology – Our Technology segment develops and licenses chemical and polyolefin process technologies and manufactures and sells polyolefin catalysts.

Table 7 – Technology Financial Overview

Three months ended September 30, 2018 versus three months ended June 30, 2018 – EBITDA decreased by $15 million versus the record second quarter 2018 results primarily due to a decrease in licensing revenue and a decline in catalyst margin.

Three months ended September 30, 2018 versus three months ended September 30, 2017 – EBITDA increased by $51 million versus the third quarter 2017 driven by an increase in licensing revenue.

Capital Spending and Cash Balances
Capital expenditures, including growth projects, maintenance turnarounds, catalyst and information technology-related expenditures, were $482 million during the third quarter 2018.  Our cash and liquid investment balance was $2.0 billion at September 30, 2018.  We repurchased 3.2 million ordinary shares during the third quarter 2018. There were 387 million common shares outstanding as of September 30, 2018.  The company paid dividends of $389 million during the third quarter of 2018.

Reconciliations and Additional Information
Quantitative reconciliations of EBITDA to net income, the most comparable GAAP measure, are provided in Table 9 at the end of this release.  Additional operating and financial information, including reconciliations of non-GAAP measures, may be found on our website at www.LyondellBasell.com/investorrelations.