| LyondellBasell Reports Record 2014 Earnings | LyondellBasell Reports Record 2014 Earnings
PR Newswire
HOUSTON and LONDON, Feb. 3, 2015
HOUSTON and LONDON, Feb. 3, 2015 /PRNewswire/ --
2014 Full Year Highlights
-- Record Earnings -- Income from continuing operations: $4.2 billion ($4.7 billion excluding LCM1) -- Diluted earnings per share: $8.00 per share ($8.92 per share excluding LCM) -- EBITDA: $7.1 billion ($7.8 billion excluding LCM) -- Executed and Expanded the Growth Program -- Completed an 800 million pound La Porte ethylene expansion, one in a series of planned expansions expected to increase our U.S. ethylene capacity approximately 25% by 2017 -- Completed a 200 million pound PE expansion at our Matagorda site -- Announced the development of new propylene oxide and ethylene growth projects -- Record Cash Flow -- Full year cash generation from operations totaling $6.0 billion -- Share repurchases and dividends totaled $7.2 billion -- Repurchased 63 million shares or approximately 12% of the shares outstanding
Fourth Quarter 2014 Highlights
-- Income from continuing operations: $0.8 billion ($1.3 billion excluding LCM) -- Diluted Earnings per share: $1.57 per share ($2.48 per share excluding LCM) -- EBITDA: $1.4 billion ($2.1 billion excluding LCM) -- Share repurchases and dividends totaled $1.8 billion; repurchased 17.2 million shares during the fourth quarter, greater than 3% of the outstanding shares
Comparisons with the prior quarter, fourth quarter 2013 and full year 2013 are available in the following table:
Table 1 - Earnings Summary --------------------------- ---------- ---------- ---------- ----------- Three Months Ended Year Ended ---------------------------------- ----------------------- Millions of December September December December December U.S. dollars 31, 30, 31, 31, 31, (except share data) 2014 2014 2013 2014 2013 -------------- ---------- ---------- ---------- ---------- ----------- Sales and other operating revenues $10,290 $12,066 $11,138 $45,608 $44,062 --------------- ---------- ---------- ---------- ---------- ----------- Net income(a) 791 1,257 1,175 4,168 3,853 --------------- ---------- ---------- ---------- ---------- ----------- Income from continuing operations(b) 796 1,260 1,177 4,172 3,860 ---------- ---------- ---------- ---------- ----------- Diluted earnings per share (U.S. dollars): --------------- ---------- ---------- ---------- ---------- ----------- Net income(c) 1.54 2.45 2.11 7.99 6.75 -------------- ---------- ---------- ---------- ---------- ----------- Income from continuing operations(b) 1.57 2.46 2.11 8.00 6.76 -------------- ---------- ---------- ---------- ---------- ----------- Diluted share count (millions) 499 512 555 521 570 --------------- ---------- ---------- ---------- ---------- ----------- EBITDA(d) 1,406 2,035 1,543 7,050 6,311 --------------- ---------- ---------- ---------- ---------- ----------- Excluding LCM Impact: ---------- ---------- ---------- ---------- ----------- LCM, pre-tax 715 45 - - 760 - - ---------- ---------- ---------- ---------- ----------- Income from continuing operations 1,251 1,288 1,177 4,655 3,860 ---------- ---------- ---------- ---------- ----------- Diluted earnings per share (U.S. dollars): --------------- ---------- ---------- ---------- ---------- ----------- Income from continuing operations 2.48 2.51 2.11 8.92 6.76 -------------- ---------- ---------- ---------- ---------- ----------- EBITDA 2,121 2,080 1,543 7,810 6,311 --------------- ---------- ---------- ---------- ---------- ----------- (a) Includes net loss attributable to non-controlling interests and income (loss) from discontinued operations, net of tax. See Table 10. (b) See Table 11 for charges and benefits to income from continuing operations. (c) Includes diluted earnings per share attributable to discontinued operations. (d) See the end of this release for an explanation of the Company's use of EBITDA and Table 8 for reconciliations of EBITDA to net income and income from continuing operations. (1) LCM stands for "lower of cost or market." An explanation of LCM and why we have excluded it from our financial information in this press release can be found at the end of this press release under "Information Related to Financial Measures."
LyondellBasell Industries (NYSE: LYB) today announced earnings from continuing operations for the fourth quarter 2014 of $0.8 billion, or $1.57 per share. Fourth quarter 2014 EBITDA was $1.4 billion. The quarter included a $715 million non-cash, pre-tax charge for the impact of a lower of cost or market (LCM) inventory adjustment ($455 million after-tax). This charge is driven by LIFO accounting, the implementation of fresh start accounting in April 2010 as we entered the public markets, and the recent declines in pricing for many of our raw material and finished goods inventories. Excluding the LCM adjustment, earnings from continuing operations during the fourth quarter totaled $1.3 billion, or $2.48 per share. EBITDA was $2.1 billion. Full year 2014 income from continuing operations was $4.2 billion, or $8.00 per share, and EBITDA was $7.1 billion. The full year included a non-cash, pre-tax LCM inventory adjustment of $760 million ($483 million after tax). Excluding the LCM adjustment, earnings from continuing operations for the full year totaled $4.7 billion, or $8.92 per share, and EBITDA was $7.8 billion.
"During 2014, LyondellBasell generated record earnings and cash flow, advanced our growth program, and continued returning cash to shareholders at an industry-leading rate. Every segment posted strong results for the year, with record performance from both of our Olefins and Polyolefin segments, as well as our Technology segment. Fourth quarter 2014 EBITDA remained strong, and excluding the effects of the LCM inventory charge, we posted record results," said Bob Patel, LyondellBasell chief executive officer.
"During 2014 we continued to execute and expand our strategic growth program. We completed an 800 million pound per year ethylene expansion and a 200 million pound polyethylene expansion. We also announced that we are developing two new growth projects: a propylene oxide and tertiary butyl alcohol facility and an additional ethylene expansion at our Channelview site," continued Patel.
"Cash generation reached record levels in 2014 and we continued to return cash to shareholders. Share repurchases and dividends totaled approximately $7.2 billion. We purchased approximately 63 million shares, or approximately 12% percent of outstanding shares during 2014. Since initiating the share repurchase program during mid-2013, we have repurchased approximately 91 million shares, or approximately 16% of the outstanding shares," Patel said.
OUTLOOK
"We remain confident in our favorable industry position and in the fundamentals supporting our business. While we anticipate that margins will ease from the records of 2014 as crude oil prices decline, our positions remain advantaged, our growth program is generating incremental earnings, and our share count is greatly reduced through our repurchase program. The principles that Jim Gallogly established during his tenure as CEO are part of our core values. My mission is to build on this success and take the company to the next level. During 2015 we plan to advance approximately one billion pounds of ethylene expansion projects, improve operations at our methanol facility, and receive additional volumes of Canadian crude oil at our refinery," Patel said.
LYONDELLBASELL BUSINESS RESULTS DISCUSSION BY REPORTING SEGMENT
LyondellBasell manages operations through five operating segments: 1) Olefins and Polyolefins -- Americas; 2) Olefins and Polyolefins -- Europe, Asia and International (EAI); 3) Intermediates and Derivatives; 4) Refining; and 5) Technology.
Comments and analysis represent underlying business activity and are exclusive of LCM inventory adjustments.
Olefins and Polyolefins - Americas (O&P-Americas) -- The primary products of this segment include ethylene and its co-products (propylene, butadiene and benzene), polyethylene, polypropylene and Catalloy process resins.
Table 2 - O&P--Americas Financial Overview -------------------------------------------------------------------------- Three Months Ended Year Ended ---------------------------------- ------------------------ December September December December 31, 30, 31, 31, December 31, Millions of U.S. dollars 2014 2014 2013 2014 2013 ------------ ---------- ---------- ---------- ---------- ------------ Operating income $950 $1,068 $801 $3,572 $3,253 ------------ ---------- ---------- ---------- ---------- ------------ EBITDA 1,040 1,157 883 3,911 3,573 ------------ ---------- ---------- ---------- ---------- ------------
LCM, pre-tax 234 45 - - 279 - - ------------ ---------- ---------- ---------- ---------- ------------ EBITDA excluding LCM 1,274 1,202 883 4,190 3,573 ------------ ---------- ---------- ---------- ---------- ------------
Three months ended December 31, 2014 versus three months ended September 30, 2014 -- The segment achieved record EBITDA results for the quarter, excluding the impact of the LCM inventory adjustment. EBITDA increased $72 million versus the third quarter 2014, excluding a $234 million LCM inventory impact. Compared to the prior period, underlying olefins results increased approximately $40 million. This increase was driven by higher volume following the re-start of the La Porte plant at its expanded capacity. Declining ethylene prices during the quarter were largely offset by lower feedstock costs. Combined polyolefin results increased by approximately $30 million versus the third quarter 2014. Moderately lower volumes were offset by improved spreads, primarily in polyethylene where the spread over ethylene improved approximately 4 cents per pound. Joint venture equity income was relatively unchanged from the third quarter 2014.
Three months ended December 31, 2014 versus three months ended December 31, 2013 -- EBITDA increased $391 million versus the fourth quarter 2013, excluding a $234 million LCM inventory adjustment. Olefin results contributed the majority of the improvement as quarterly EBITDA increased approximately $310 million versus the prior year. This was due to margins that were approximately 11 cents per pound higher than 2013 and from higher volume from the added La Porte capacity. Combined polyolefin results increased approximately $90 million versus the prior year period. Polyethylene volume improved by approximately 6 percent. Polypropylene spreads improved approximately 2 cents per pound. Joint venture equity income was relatively unchanged versus the prior year.
Full year ended December 31, 2014 versus full year ended December 31, 2013 -- The segment achieved record results for the year. EBITDA increased $617 million versus 2013, excluding a $279 million LCM inventory adjustment. Olefin results increased approximately $100 million compared to the prior year. Ethylene margins were higher due to higher pricing and from a lower cost of ethylene. Volume was lower as a result of the La Porte turnaround. Combined polyolefin results increased approximately $530 million versus the prior year. Polyethylene volume increased by approximately 6 percent and the price spread over ethylene increased by approximately 5 cents per pound. Polypropylene spread improved by approximately 1 cent per pound. Joint venture equity income declined by $4 million versus the prior year.
Olefins and Polyolefins - Europe, Asia, International (O&P-EAI) -- The primary products of this segment include ethylene and its co-products (propylene and butadiene), polyethylene, polypropylene, global polypropylene compounds, Catalloy process resins and Polybutene-1 resins.
Table 3 - O&P--EAI Financial Overview -------------------------------------------------------------------------- Three Months Ended Year Ended ---------------------------------- ------------------------ December September December December December 31, 30, 31, 31, 31, Millions of U.S. dollars 2014 2014 2013 2014 2013 ------------ ---------- ---------- ---------- ----------- ----------- Operating income $246 $223 $17 $884 $377 ------------ ---------- ---------- ---------- ----------- ----------- EBITDA 348 343 115 1,366 839 ------------ ---------- ---------- ---------- ----------- ----------- LCM, pre-tax 44 - - - - 44 - - ------------ ---------- ---------- ---------- ----------- ----------- EBITDA excluding LCM 392 343 115 1,410 839 ------------ ---------- ---------- ---------- ----------- -----------
Three months ended December 31, 2014 versus three months ended September 30, 2014 -- EBITDA increased $49 million versus the third quarter 2014, excluding a $44 million LCM inventory adjustment. Olefin results increased approximately $70 million reflecting higher olefin margins as feedstock cost declines more than offset a lower ethylene price. Combined polyolefin results declined approximately $20 million as a result of seasonally lower volumes. Polypropylene compounds and polybutene-1 results decreased primarily due to seasonally lower sales volumes. Equity income from joint ventures was relatively unchanged from the third quarter 2014.
Three months ended December 31, 2014 versus three months ended December 31, 2013 -- EBITDA increased $277 million versus the fourth quarter 2013, excluding a $44 million LCM inventory adjustment. The fourth quarter 2013 included a positive impact of $25 million related to an insurance settlement. Olefin results improved approximately $190 million primarily as a result of higher margins from a lower cost of naphtha feedstock and from a higher proportion of ethylene produced from advantaged feedstocks. Ethylene production volume increased by approximately 14 percent due to stronger polymer demand and improved operating reliability. Combined polyolefin results increased approximately $100 million from both higher volumes and margins. Polypropylene compounds and polybutene-1 results were relatively unchanged. Equity income from joint ventures increased by $15 million from the fourth quarter 2013.
Full year ended December 31, 2014 versus full year ended December 31, 2013 -- The segment achieved record EBITDA for the year. EBITDA increased $571 million versus 2013, excluding a $44 million LCM inventory adjustment. 2014 benefited from a $52 million environmental settlement that was recognized in the first quarter 2014. The fourth quarter 2013 included a positive impact of $25 million related to an insurance settlement. Underlying olefin results increased approximately $260 million benefitting from olefin margins that improved by approximately 6 cents per pound. Cracking a higher proportion of advantaged feedstocks and lower naphtha prices in 2014 were major drivers of the higher olefin margins. Ethylene production increased by approximately 8 percent. Combined polyolefin results increased approximately $235 million compared to the prior year driven primarily by higher margins. Polypropylene compounds and polybutene-1 results were relatively unchanged. Equity income from joint ventures increased by $55 million in 2014 from 2013.
Intermediates and Derivatives (I&D) -- The primary products of this segment include propylene oxide (PO) and its co-products (styrene monomer, tertiary butyl alcohol (TBA), isobutylene and tertiary butyl hydroperoxide), and derivatives (propylene glycol, propylene glycol ethers and butanediol); acetyls (including methanol), ethylene oxide and its derivatives, and oxyfuels.
Table 4 - I&D Financial Overview ------------------------------------------------------------------------- Three Months Ended Year Ended ---------------------------------- ------------------------ December September December December December 31, 30, 31, 31, 31, Millions of U.S. dollars 2014 2014 2013 2014 2013 ------------ ---------- ---------- ---------- ----------- ----------- Operating income $208 $321 $321 $1,220 $1,300 ------------ ---------- ---------- ---------- ----------- ----------- EBITDA 271 383 354 1,459 1,492 ------------ ---------- ---------- ---------- ----------- ----------- LCM, pre-tax 93 - - - - 93 - - ------------ ---------- ---------- ---------- ----------- ----------- EBITDA excluding LCM 364 383 354 1,552 1,492 ------------ ---------- ---------- ---------- ----------- -----------
Three months ended December 31, 2014 versus three months ended September 30, 2014 -- EBITDA decreased $19 million versus the third quarter 2014, excluding a $93 million LCM inventory adjustment. Results for PO and PO derivatives decreased approximately $20 million from strong third quarter results. Compared to the prior quarter, intermediate chemicals results increased by approximately $10 million as improved styrene margins from declining benzene were partially offset by lower C4 chemical sales volume due to maintenance at our Bayport site. Oxyfuels results decreased approximately $10 million due to declining gasoline prices and typical seasonal declines. Equity income from joint ventures was relatively unchanged.
Three months ended December 31, 2014 versus three months ended December 31, 2013 -- EBITDA increased $10 million versus the fourth quarter 2013, excluding a $93 million LCM inventory adjustment. Fourth quarter 2013 results include $26 million of charges related to our exit from the NOC joint venture, including $10 million that impacted our equity income. Results for PO and PO derivatives increased approximately $10 million as higher margins and PO sales volumes were partially offset by lower derivative volume. Intermediate chemicals results decreased by approximately $45 million driven by lower styrene margins and lower ethylene glycol results due to unscheduled maintenance, partially offset by improved acetyls results with the additional capacity from Channelview methanol in 2014. Oxyfuels increased approximately $25 million primarily as a result of higher octane premium in 2014. Equity income from joint ventures increased by $10 million.
Full year ended December 31, 2014 versus full year ended December 31, 2013 -- EBITDA increased $60 million versus 2013, excluding a $93 million LCM inventory adjustment. Results in 2013 included charges of $26 million related to our exit from the NOC joint venture, including $10 million that impacted our equity income. PO and PO derivatives results increased by approximately $65 million as both volume and margin increased. Intermediate chemicals results increased by approximately $10 million as higher methanol volume was mostly offset by lower styrene, C4 chemicals, and ethylene glycol results. Oxyfuels results declined by approximately $30 million compared to the prior year due to lower volume. Equity income from joint ventures increased by $3 million from 2013.
Refining -- The primary products of this segment include gasoline, diesel fuel, heating oil, jet fuel, and petrochemical raw materials.
Table 5 - Refining Financial Overview ------------------------------------------------------------------------- Three Months Ended Year Ended ---------------------------------- ------------------------ December September December December December 31, 30, 31, 31, 31, Millions of U.S. dollars 2014 2014 2013 2014 2013 ------------ ---------- ---------- ---------- ----------- ----------- Operating income (loss) ($354) $67 $92 ($106) $22 ------------ ---------- ---------- ---------- ----------- ----------- EBITDA (311) 110 134 65 182 ------------ ---------- ---------- ---------- ----------- ----------- LCM, pre-tax 344 - - - - 344 - - ------------ ---------- ---------- ---------- ----------- ----------- EBITDA excluding LCM 33 110 134 409 182 ------------ ---------- ---------- ---------- ----------- -----------
Three months ended December 31, 2014 versus three months ended September 30, 2014 -- EBITDA decreased $77 million versus the third quarter 2014, excluding a $344 million LCM inventory adjustment. The Houston refinery operated at 266,000 barrels per day, up 2,000 barrels per day from the prior quarter. The Maya 2-1-1 industry benchmark crack spread decreased by $6.63 per barrel, averaging $17.72 per barrel. The refinery spread decreased less than the benchmark, and secondary product margins improved as those values held versus the decline in crude prices. The cost of Renewable Identification Numbers (RINs) to meet U.S. renewable fuel standards were relatively unchanged versus the third quarter 2014.
Three months ended December 31, 2014 versus three months ended December 31, 2013 -- EBITDA decreased $101 million versus the fourth quarter 2013, excluding a $344 million LCM inventory adjustment. The Houston refinery operated at 266,000 barrels per day, up 27,000 barrels per day from the prior year period. The Maya 2-1-1 industry benchmark crack spread decreased by $6.60 per barrel, averaging $17.72 per barrel. Compared to the 2013 period, refinery margins improved as secondary product values held versus the decline in crude prices. The cost of RINs increased by approximately $15 million versus the fourth quarter 2013.
Full year ended December 31, 2014 versus full year ended December 31, 2013 -- EBITDA increased $227 million versus 2013, excluding a $344 million LCM inventory adjustment. Throughput at the Houston Refinery averaged 259,000 barrels per day, up 27,000 barrels per day. The Maya 2-1-1 industry benchmark crack spread increased by $1.49 per barrel, averaging $24.43 per barrel. The cost of RINs decreased by approximately $20 million in 2014 relative to 2013.
Technology Segment -- The principal products of the Technology segment include polyolefin catalysts and production process technology licenses and related services.
Table 6 - Technology Financial Overview ------------------------------------ ---------- ----------- ----------- Three Months Ended Year Ended ---------------------------------- ------------------------ December September December December December 31, 30, 31, 31, 31, Millions of U.S. dollars 2014 2014 2013 2014 2013 ------------ ---------- ---------- ---------- ----------- ----------- Operating income $29 $26 $33 $171 $157 ------------ ---------- ---------- ---------- ----------- ----------- EBITDA 44 41 55 232 232 ------------ ---------- ---------- ---------- ----------- -----------
Three months ended December 31, 2014 versus three months ended September 30, 2014 -- EBITDA increased by $3 million.
Three months ended December 31, 2014 versus three months ended December 31, 2013 -- EBITDA decreased by $11 million as lower licensing revenue was partially offset by lower R&D costs.
Full year ended December 31, 2014 versus full year ended December 31, 2013 -- EBITDA was unchanged versus 2013.
Capital Spending, Cash Balances and Tax Rate
Capital expenditures, including growth projects, maintenance turnarounds, catalyst and information technology-related expenditures, were $403 million during the fourth quarter 2014 and $1.5 billion for the full year 2014. Our cash and short-term securities balance was $3.0 billion at Dec. 31, 2014. We repurchased 17.2 million ordinary shares during the fourth quarter 2014 and 63.3 million shares during 2014. There were 487 million common shares outstanding as of December 31(st) . The company paid dividends of $1.4 billion during 2014.
CONFERENCE CALL
LyondellBasell will host a conference call February 3 at 11 a.m. ET. Participants on the call will include Chief Executive Officer Bob Patel, Executive Vice President and Chief Financial Officer Karyn Ovelmen, Senior Vice President - Strategic Planning and Transactions Sergey Vasnetsov, and Vice President of Investor Relations Doug Pike.
The toll-free dial-in number in the U.S. is 888-677-1826. A complete listing of toll-free numbers by country is available at www.lyb.com/teleconference for international callers. The pass code for all numbers is 4843334.
The slides and webcast that accompany the call will be available at lyb.com.
A replay of the call will be available from 2 p.m. ET February 3 until March 3 at 11 p.m. ET. The replay dial-in numbers are 866-407-9260 (U.S.) and +1 203-369-0614 (international). The pass code for each is 4558.
ABOUT LYONDELLBASELL
LyondellBasell (NYSE: LYB) is one of the world's largest plastics, chemical and refining companies and a member of the S&P 500. LyondellBasell (www.lyb.com) manufactures products at 55 sites in 18 countries. LyondellBasell products and technologies are used to make items that improve the quality of life for people around the world including packaging, electronics, automotive parts, home furnishings, construction materials and biofuels.
FORWARD-LOOKING STATEMENTS
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