LyondellBasell Industries 10-Q 2023-09-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

For the quarterly period ended September 30, 2023

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) (Zip code)

(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,” “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 324,361,773 ordinary shares, €0.04 par value, outstanding at October 25, 2023 (excluding 16,060,725 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

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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.”).

Effective January 1, 2023, our Catalloy and polybutene-1 businesses were moved from the Advanced Polymer Solutions (“APS”) segment and reintegrated into the Olefins and Polyolefins-Americas (“O&P-Americas”) and Olefins and Polyolefins-Europe, Asia, International (“O&P-EAI”) segments. This move will allow the APS team to focus on our compounding and solutions business, and to develop a more agile operating model with meaningful regional and segment growth strategies. The segment information provided herein has been revised for all periods presented to reflect these changes.

OVERVIEW

Results for the third quarter of 2023 decreased slightly compared to the second quarter of 2023. Our O&P-Americas and O&P-EAI segment results decreased as global olefins and polyolefins margins were compressed by higher feedstock costs, tepid polymer demand in both the U.S. and Europe, and new industry capacity. These decreases were partially offset by an increase in North American polyethylene export volumes as global trade flows continued to normalize toward pre-pandemic levels. Intermediates and Derivatives (“I&D”) results improved significantly as a result of strong oxyfuels margins. Additionally, higher licensing revenues from contracts reaching significant milestones resulted in an improvement in Technology results.

Results for the first nine months of 2023 decreased compared to the first nine months of 2022. Global polyolefins margins decreased primarily due to a decline in average sales prices resulting in lower O&P-Americas and O&P-EAI segment results. APS segment results decreased primarily as a result of the impact of the first quarter 2023 goodwill impairment. Refining results declined primarily as a result of decreased margins.

During the first nine months of 2023 we generated $3,438 million in cash from operating activities. We remain committed to a disciplined approach to capital allocation, spending $1,047 million for capital expenditures and returning $1,415 million to shareholders through dividends and share repurchases.

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

RESULTS OF OPERATIONS

Revenues—Revenues increased by $319 million, or 3%, in the third quarter of 2023 compared to the second quarter of 2023. Higher volumes primarily in our O&P-Americas and I&D Segments driven by higher demand resulted in a 2% increase in revenues. Average sales prices in the third quarter of 2023 were higher for our Refining and I&D segments, as sales prices generally correlate with crude oil prices, which increased relative to the second quarter of 2023. These price impacts resulted in a 1% increase in revenues.

Revenues decreased by $9,067 million, or 23%, in the first nine months of 2023 compared to the first nine months of 2022. Average sales prices were lower for many of our products as sales prices generally correlate with crude oil prices, which decreased relative to the first nine months of 2022. These lower prices led to the 23% decrease in revenues.

Cost of Sales—Cost of sales increased by $309 million, or 3% in the third quarter of 2023 compared to the second quarter of 2023 primarily driven by higher feedstock and energy costs. Cost of sales decreased by $7,582 million, or 22%, in the first nine months of 2023 compared to the first nine months of 2022, primarily driven by lower feedstock and energy costs.

Impairments—During the first nine months of 2023 we recognized a non-cash goodwill impairment charge of $252 million in our APS segment after the effect of moving our Catalloy and polybutene-1 businesses from our APS segment and reintegrating into our O&P-Americas and O&P-EAI segments. Additionally, we recognized a non-cash impairment charge of $25 million related to capital project costs in our O&P-Americas segment. During the first nine months of 2022 we recognized a non-cash impairment charge of $69 million related to the sale of

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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, 2022. Our exposure to such risks has not changed materially in the nine months ended September 30, 2023.

As of September 30, 2023, 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 September 30, 2023.

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 February 2020, the State of Texas filed suit against Houston Refining, LP, a subsidiary of LyondellBasell, in Travis County District Court seeking civil penalties and injunctive relief for violations of the Texas Clean Air Act related to several emission events. In July 2020, Harris County, Texas petitioned to intervene in the lawsuit and the State added additional claims to its petition relating to self-reported deviations of Houston Refining’s air operating permit. In May 2023, we agreed with the State to settle the matter for $2.6 million, inclusive of attorney’s fees. In September 2023, the court entered judgment and the fine was paid.

On July 27, 2021, approximately 160,000 pounds of liquid process material containing primarily acetic acid was released from a reactor at the La Porte acetic acid unit. In October 2021, the Texas Commission on Environmental Quality (“TCEQ”) issued a Notice of Enforcement for the incident. In November 2021, the State of Texas filed a petition on behalf of the TCEQ seeking injunctive relief and civil penalties for unauthorized air pollution and regulatory nuisance related to the incident. We have agreed to a settlement of $1.1 million, inclusive of attorney’s fees, and final judgment was entered by the court. In August 2023, the fine was paid.

Additional information about our environmental proceedings can be found in Part I, Item 3 of our 2022 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, 2022.

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

On May 19, 2023, our shareholders approved a share repurchase authorization of up to 34,042,250 shares of our ordinary shares, through November 19, 2024, 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.

During the three months ended September 30, 2023, none of our officers or directors adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

• 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.