LyondellBasell Industries 10-Q 2022-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

For the quarterly period ended March 31, 2022

or

For the transition period from to

Commission file number: 001-34726

LYONDELLBASELL INDUSTRIES N.V.

(Exact name of registrant as specified in its charter)

(Addresses of registrant’s principal executive offices)

(Registrant’s telephone numbers, including area codes)

______________________________________________________________________________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

The registrant had 327,621,817 ordinary shares, €0.04 par value, outstanding at April 27, 2022 (excluding 12,647,650 treasury shares).

LYONDELLBASELL INDUSTRIES N.V.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

LYONDELLBASELL INDUSTRIES N.V.

CONSOLIDATED STATEMENTS OF INCOME

See Notes to the Consolidated Financial Statements.

LYONDELLBASELL INDUSTRIES N.V.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

See Notes to the Consolidated Financial Statements.

LYONDELLBASELL INDUSTRIES N.V.

CONSOLIDATED BALANCE SHEETS

See Notes to the Consolidated Financial Statements.

LYONDELLBASELL INDUSTRIES N.V.

CONSOLIDATED BALANCE SHEETS

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GENERAL

This discussion should be read in conjunction with the information contained in our Consolidated Financial Statements, and the accompanying notes elsewhere in this report. Unless otherwise indicated, the “Company”, “we”, “us,” “our” or similar words are used to refer to LyondellBasell Industries N.V. together with its consolidated subsidiaries (“LyondellBasell N.V.”).

In November 2020, the U.S. Securities and Exchange Commission (the “SEC”) adopted the final rule under SEC Release No. 33-10890, Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information, which we applied as of December 31, 2021. Pursuant to this final rule, for interim reporting, we have elected to compare the changes in our results of operations of the most recently completed quarter to the immediately preceding sequential quarter as management believes this is more useful in identifying current business trends and provides a more meaningful comparison.

OVERVIEW

During the first quarter 2022 we reversed fourth quarter trends and achieved price increases for polyethylene and polypropylene while rapidly rising feedstock and energy costs compressed olefins and polyolefins margins in our O&P—Americas segment. European demand for polymers remained solid despite ongoing challenges from the war in Ukraine. Our ethylene cracker in La Porte, Texas, restarted ahead of schedule in March after completing a major planned maintenance turnaround. In our oxyfuels and refining businesses, increasing demand for transportation fuels and higher prices for gasoline and diesel led to improvements in our results. Advanced Polymer Solutions profitability increased due to higher volumes and margins as automotive demand improved from the fourth quarter of 2021.

As a result of the war in Ukraine, in March we announced that, effective immediately, we will not enter into any new business transactions or relationships with Russian state-owned entities and also that we intend to discontinue business relationships with Russian state-owned entities to the extent legally possible. We do not expect these measures will have a direct material impact on our operations or financial position.

We continued to generate substantial cash during the quarter as cash provided by operating activities provided $1,502 million in the first quarter of 2022. During the first quarter of 2022 we repurchased approximately 2.1 million of our outstanding ordinary shares.

Results of operations for the periods discussed are presented in the table below:

RESULTS OF OPERATIONS

Revenues—Revenue increased by $327 million, or 3%, in the first quarter of 2022 compared to the fourth quarter of 2021. Average sales prices were higher for many of our products as sales prices generally correlate with crude oil prices, which increased relative to the fourth quarter of 2021. These higher prices led to a 7% increase in revenue. This increase was partially offset by a 3% decline in revenue as a result of lower sales volumes driven by outages in our O&P—Americas and Refining segments. Revenue also decreased 1% as a result of unfavorable foreign exchange impacts.

Revenues increased by $4,075 million, or 45%, in the first quarter of 2022 compared to the first quarter of 2021. Average sales prices were higher for many of our products as sales prices generally correlate with crude oil prices, which increased relative to the first quarter of 2021. These higher prices led to a 31% increase in revenue. Higher sales volumes, driven by increased demand, resulted in a revenue increase of 14%.

Cost of Sales—Cost of sales increased by $202 million, or 2%, in the first quarter of 2022 compared to the fourth quarter of 2021 and by $3,458 million, or 45%, in the first quarter of 2022 compared to the first quarter of 2021. The increase primarily related to higher feedstock and energy costs.

Operating Income—Operating income increased by $750 million, or 82%, in the first quarter of 2022 compared to the fourth quarter of 2021. Operating income in our Refining, I&D, APS and O&P*—EAI segments increased $644 million, $329 million, $101 million and $81 million, respectively. These increases were partially offset by a decrease in Operating income in our O&P—*Americas and Technology segments of $339 million and $70 million, respectively.

Operating income increased by $573 million, or 53%, in the first quarter of 2022 compared to the first quarter

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Our exposure to market and regulatory risks is described in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2021. Our exposure to such risks has not changed materially in the three months ended March 31, 2022.

As of March 31, 2022, with the participation of our management, our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal financial and accounting officer) carried out an evaluation, pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Act”), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Act). Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2022.

There have been no changes in our internal controls over financial reporting, as defined in Rule 13a-15(f) of the Act, in the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

Information regarding our litigation and legal proceedings can be found in Note 9 to the Consolidated Financial Statements, which is incorporated into this Item 1 by reference.

In September 2013, U.S. Environmental Protection Agency (“EPA”) Region V issued a Notice and Finding of Violation alleging violations at our Morris, Illinois facility related to flaring activity. The Notice generally alleges failures to monitor steam usage and improper flare operations. In the Fall of 2020, EPA referred the matter to the U.S. Department of Justice (“DOJ”) and EPA Headquarters for civil judicial enforcement. In March 2022, EPA and DOJ made a revised penalty demand of $324,000. We are currently engaged in discussions to finalize the terms of a settlement agreement.

Additional information about our environmental proceedings can be found in Part I, Item 3 of our 2021 Annual Report on Form 10-K, which is incorporated into this Item 1 by reference.

There have been no material changes to the risk factors associated with our business previously disclosed in “Item 1A. Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2021.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On May 28, 2021, our shareholders approved a share repurchase authorization of up to 34,004,563 shares of our ordinary shares, through November 28, 2022, which superseded any prior repurchase authorizations. The maximum number of shares that may yet be purchased is not necessarily an indication of the number of shares that will ultimately be purchased.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

• Filed herewith

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.