Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

This discussion should be read in conjunction with the information contained in the 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.”).

OVERVIEW

In North America, lower costs for natural gas-based feedstocks and energy benefited olefins and polyolefins margins while regional demand for polyethylene improved. Our North American volumes were constrained by downtime in olefins, polyolefins, propylene oxide, oxyfuels and acetyls. In Europe, logistics disruptions in the Red Sea restricted competitive imports and led to increased volumes from our local assets for both our Olefins & Polyolefins Europe, Asia, International and Intermediates & Derivatives segments. Globally, tepid demand for durable goods continued to challenge volumes and margins for polypropylene and propylene oxide.

We remain committed to our balanced and disciplined capital allocation strategy. During the first quarter of 2024 we used $114 million of cash for operating activities, invested $483 million in capital expenditures and returned $408 million to shareholders through dividend payments. The use of cash for operating activities during the quarter was due to a build in working capital primarily driven by higher volumes and prices in most of our segments. Additionally, in the first quarter of 2024, we successfully issued $750 million of guaranteed notes to refinance our 2024 maturity at a lower rate.

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

			Three Months Ended
			March 31,						December 31,																		March 31,
Millions of dollars			2024						2023																		2023
Sales and other operating revenues			$	9,925					$	9,929																	$	10,247
Cost of sales			8,763						8,940																		8,864
Impairments			—						241																		252
Selling, general and administrative expenses			426						399																		385
Research and development expenses			32						34																		33
Operating income			704						315																		713
Interest expense			(127)						(121)																		(116)
Interest income			41						41																		23
Other income (expense), net			5						(25)																		5
(Loss) income from equity investments			(27)						(31)																		17
Income from continuing operations before income taxes			596						179																		642
Provision for (benefit from) income taxes			122						(7)																		167
Income from continuing operations			474						186																		475
Loss from discontinued operations, net of tax			(1)						(1)																		(1)
Net income			473						185																		474
Other comprehensive income (loss), net of tax –
Financial derivatives			1						(104)																		4
Defined benefit pension and other postretirement benefit plans			3						(103)																		2
Foreign currency translations			(60)						131																		59
Total other comprehensive (loss) income, net of tax			(56)						(76)																		65
Comprehensive income			$	417					$	109																	$	539

RESULTS OF OPERATIONS

Revenues—Revenues remained relatively unchanged in the first quarter of 2024 compared to the fourth quarter of 2023. Lower volumes driven by planned and unplanned outages resulted in a 3% decrease in revenues, which was partially offset by a 3% increase in revenues due to higher average sales prices.

Revenues decreased by $322 million, or 3%, in the first quarter of 2024 compared to the first quarter of 2023. Lower average sales prices for many of our products resulted in a 7% decrease in revenues. Higher volumes, driven by improved demand, resulted in a 3% increase in revenues. Favorable foreign exchange impacts resulted in a 1% increase in revenues.

Cost of Sales—Cost of sales decreased by $177 million, or 2%, in the first quarter of 2024 compared to the fourth quarter of 2023 and by $101 million, or 1%, in the first quarter of 2024 compared to the first quarter of 2023, primarily driven by lower feedstock and energy costs, including the impact of our commodity hedges.

Impairments—During the fourth quarter of 2023 we recognized non-cash impairment charges of $241 million, primarily consisting of a non-cash impairment charge of $192 million related to our European PO Joint Venture in our I&D segment.

During the first quarter 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.

Operating Income—Operating income increased by $389 million, or 123%, in the first quarter of 2024 compared to the fourth quarter of 2023. Operating income in our I&D, O&P-EAI, Technology, Refining and APS segments increased by $242 million, $129 million, $40 million, $37 million and $30 million, respectively. These increases were offset by a decrease in our O&P-Americas segment of $88 million.

Operating income remained relatively unchanged in the first quarter of 2024 compared to the first quarter of 2023. Operating income in our APS and Technology segments increased by $260 million and $48 million, respectively. These increases were offset by decreases in our Refining, I&D, O&P-EAI and O&P-Americas segments of $162 million, $108 million, $32 million and $15 million, respectively.

Results for each of our business segments are discussed further in the “Segment Analysis” section below.

Income Taxes—Our effective income tax rate for the first quarter of 2024 was 20.4% compared to -3.9% for the fourth quarter of 2023. In the fourth quarter of 2023, the impact of impairments and a patent box ruling decreased our effective income tax rate by 15.1% and 7.0%, respectively. These movements were coupled with an increase in our effective income tax rate of 10.3% related to changes in pre-tax income in countries with varying statutory tax rates partially offset by fluctuations in foreign exchange gains or losses of 5.9%.

Our effective income tax rate for the first quarter of 2024 was 20.4% compared to 26.0% for the first quarter of 2023. The lower effective tax rate for the first quarter of 2024 was primarily due to the first quarter 2023 goodwill impairment, for which there was no tax benefit, of 6.6%, coupled with a 2.1% decrease in our effective income tax rate related to changes in pre-tax income in countries with varying statutory tax rates. These decreases were partially offset by a 3.0% increase in our effective income tax rate due to a decrease in exempt income.

Comprehensive Income—Comprehensive income increased by $308 million in the first quarter of 2024 compared to the fourth quarter of 2023, primarily due to the increase in Net income. Comprehensive income decreased by $122 million in the first quarter of 2024 compared to the first quarter of 2023, primarily due to the net unfavorable impacts of unrealized changes in foreign currency translation adjustments. The components of Other comprehensive income (loss) are discussed below.

Financial derivatives designated as cash flow hedges, primarily our commodity swaps, led to an increase in Comprehensive income of $105 million in the first quarter of 2024 compared to the fourth quarter of 2023 reflecting commodity pricing volatility. Financial derivatives designated as cash flow hedges remained relatively unchanged in the first quarter of 2024 compared to the first quarter of 2023.

Defined pension and postretirement benefit plans led to an increase of Comprehensive income of $106 million in the first quarter of 2024 compared to the fourth quarter of 2023, as the fourth quarter of 2023 reflected annual changes in actuarial assumptions. Defined pension and postretirement benefit plans remained relatively unchanged in the first quarter of 2024 compared to the first quarter of 2023.

Foreign currency translations decreased Comprehensive income by $191 million and $119 million in the first quarter of 2024 compared to the fourth and first quarter of 2023, respectively, primarily due to the strengthening of the U.S. dollar relative to the euro, offset by the effective portion of our net investment hedges.

Segment Analysis

We use earnings from continuing operations before interest, income taxes, and depreciation and amortization (“EBITDA”) as our measure of profitability for segment reporting purposes. This measure of segment operating results is used by our chief operating decision maker to assess the performance of and allocate resources to our operating segments. Intersegment eliminations and items that are not directly related or allocated to business operations, such as foreign exchange gains or losses and components of pension and other postretirement benefits other than service costs are included in “Other”. See the table below for a reconciliation of EBITDA to its nearest generally accepted accounting principles (“GAAP”) measure.

The following table presents the reconciliation of Net Income to EBITDA for each of the periods presented:

			Three Months Ended
			March 31,						December 31,																		March 31,
Millions of dollars			2024						2023																		2023
Net income			$	473					$	185																	$	474
Loss from discontinued operations, net of tax			1						1																		1
Income from continuing operations			474						186																		475
Provision for (benefit from) income taxes			122						(7)																		167
Depreciation and amortization			365						380																		396
Interest expense, net			86						80																		93
EBITDA			$	1,047					$	639																	$	1,131

Our continuing operations are managed through six reportable segments: O&P-Americas, O&P-EAI, I&D, APS, Refining and Technology. Revenues and other information by segment for the periods presented are reflected in the tables below:

			Three Months Ended
			March 31,						December 31,																		March 31,
Millions of dollars			2024						2023																		2023
Sales and other operating revenues:
O&P-Americas segment			$	2,871					2,864																		$	2,808
O&P-EAI segment			2,745						2,412																		2,892
I&D segment			2,586						2,661																		2,682
APS segment			965						842																		997
Refining segment			2,090						2,400																		2,190
Technology segment			192						152																		139
Other, including intersegment eliminations			(1,524)						(1,402)																		(1,461)
Total			$	9,925					$	9,929																	$	10,247
Operating income (loss):
O&P-Americas segment			$	356					$	444																	$	371
O&P-EAI segment			(11)						(140)																		21
I&D segment			212						(30)																		320
APS segment			13						(17)																		(247)
Refining segment			24						(13)																		186
Technology segment			109						69																		61
Other, including intersegment eliminations			1						2																		1
Total			$	704					$	315																	$	713

			Three Months Ended
			March 31,						December 31,																		March 31,
Millions of dollars			2024						2023																		2023
Depreciation and amortization:
O&P-Americas segment			$	151					$	152																	$	144
O&P-EAI segment			52						59																		48
I&D segment			100						110																		110
APS segment			20						28																		22
Refining segment			31						23																		61
Technology segment			11						8																		11
Total			$	365					$	380																	$	396

Income (loss) from equity investments:
O&P-Americas segment			$	9					$	8																	$	23
O&P-EAI segment			(32)						(34)																		1
I&D segment			(4)						(5)																		(6)
APS segment			—						—																		(1)
Total			$	(27)					$	(31)																	$	17
Other income (expense), net:
O&P-Americas segment			$	5					$	—																	$	3
O&P-EAI segment			5						(10)																		7
I&D segment			4						(2)																		2
APS segment			2						1																		—
Refining segment			—						—																		(1)
Technology segment			(2)						—																		1
Other, including intersegment eliminations			(9)						(14)																		(7)
Total			$	5					$	(25)																	$	5
EBITDA:
O&P-Americas segment			$	521					$	604																	$	541
O&P-EAI segment			14						(125)																		77
I&D segment			312						73																		426
APS segment			35						12																		(226)
Refining segment			55						10																		246
Technology segment			118						77																		73
Other, including intersegment eliminations			(8)						(12)																		(6)
Total			$	1,047					$	639																	$	1,131

Olefins and Polyolefins-Americas Segment

Overview—EBITDA decreased in the first quarter of 2024 compared to the fourth quarter of 2023, primarily due to the absence of a LIFO inventory valuation benefit recognized in the fourth quarter of 2023. EBITDA decreased in the first quarter of 2024 relative to the first quarter of 2023 driven by lower income from equity investments and decreased polymer margins.

*Ethylene Raw Materials—*Ethylene and its co-products are produced from two major raw material groups:

*•*natural gas liquids (“NGLs”), principally ethane and propane, the prices of which are generally affected by natural gas prices; and

• crude oil-based liquids (“liquids” or “heavy liquids”), including naphtha, condensates and gas oils, the prices of which are generally related to crude oil prices.

We have flexibility to vary the raw material mix and process conditions in our U.S. olefins plants in order to maximize profitability as market prices fluctuate for both feedstocks and products. Although prices of crude-based liquids and natural gas liquids are generally related to crude oil and natural gas prices, during specific periods the relationships among these materials and benchmarks may vary significantly. Ethane represented approximately 75% of the raw materials used in our North American crackers during the first quarter of 2024 and the fourth quarter of 2023 and, approximately 65% in the first quarter of 2023.

The following table sets forth selected financial information for the O&P-Americas segment including Income from equity investments, which is a component of EBITDA:

			Three Months Ended
			March 31,						December 31,																		March 31,
Millions of dollars			2024						2023																		2023
Sales and other operating revenues			$	2,871					$	2,864																	$	2,808
Income from equity investments			9						8																		23
EBITDA			521						604																		541

Revenue—Revenues for our O&P-Americas segment remained relatively unchanged in the first quarter of 2024 compared to the fourth quarter of 2023 and increased by $63 million, or 2%, in the first quarter of 2024 compared to the first quarter of 2023.

First quarter of 2024 versus fourth quarter of 2023—Revenue increased by 8% as a result of higher polymer average sales prices driven by supply disruptions caused by unusually cold temperatures in the Gulf Coast. Lower sales volume driven by planned and unplanned outages led to an 8% decrease in revenue.

First quarter of 2024 versus first quarter of 2023—Higher co-product and polyethylene volumes resulted in a 3% increase in revenue primarily driven by increased demand. Lower average polymer sales prices resulted in a 1% decrease in revenue.

EBITDA—EBITDA decreased by $83 million, or 14%, in the first quarter of 2024 compared to the fourth quarter of 2023 and by $20 million, or 4%, in the first quarter of 2024 compared to the first quarter of 2023.

First quarter of 2024 versus fourth quarter of 2023—During the fourth quarter of 2023 we recognized a $73 million LIFO inventory benefit. The absence of a similar benefit in the first quarter of 2024 resulted in a 12% decrease in EBITDA. Lower olefin results led to an 8% decrease in EBITDA due to lower volumes from planned and unplanned outages. Higher polymer results led to a 5% increase in EBITDA primarily driven by an increase in polyethylene margins due to higher average sales prices and lower ethylene costs.

First quarter of 2024 versus first quarter of 2023—Lower income from equity investments led to a 2% decrease in EBITDA mainly attributable to lower polypropylene margins at our joint venture in Mexico. Lower polymer results led to a 2% decrease in EBITDA primarily driven by lower margins.

Olefins and Polyolefins-Europe, Asia, International Segment

Overview—EBITDA increased in the first quarter of 2024 compared to the fourth quarter of 2023, due to higher volumes and margins across most businesses. EBITDA decreased in the first quarter of 2024 relative to the first quarter of 2023 primarily due to a decrease in income from equity investments and lower polymer margins.

Ethylene Raw Materials—In Europe, naphtha is the primary raw material for our ethylene production and represented approximately 65% to 70% of the raw materials used in the first quarter of 2024, and the fourth and first quarters of 2023.

The following table sets forth selected financial information for the O&P-EAI segment including (Loss) income from equity investments, which is a component of EBITDA:

			Three Months Ended
			March 31,						December 31,																		March 31,
Millions of dollars			2024						2023																		2023
Sales and other operating revenues			$	2,745					$	2,412																	$	2,892
(Loss) income from equity investments			(32)						(34)																		1
EBITDA			14						(125)																		77

Revenue—Revenues increased by $333 million, or 14%, in the first quarter of 2024 compared to the fourth quarter of 2023 and decreased by $147 million, or 5%, in the first quarter of 2024 compared to the first quarter of 2023.

First quarter of 2024 versus fourth quarter of 2023—Higher volumes resulted in a revenue increase of 11% primarily due to an increase in demand. Higher average sales prices resulted in a 2% increase in revenue reflecting increased demand from the impacts of the Red Sea logistics disruption which restricted competitive imports and increased restocking activities. Favorable foreign exchange impacts resulted in a revenue increase of 1%.

First quarter of 2024 versus first quarter of 2023—Lower average sales prices and volumes resulted in a decrease of 6% and 1%, respectively, due to lower demand. Favorable foreign exchange impacts resulted in a revenue increase of 2%.

EBITDA—EBITDA increased by $139 million, or 111%, in the first quarter of 2024 compared to the fourth quarter of 2023 and decreased by $63 million, or 82%, in the first quarter of 2024 compared to the first quarter of 2023.

First quarter of 2024 versus fourth quarter of 2023—During the fourth quarter of 2023 we recognized a non-cash impairment charge of $38 million. The absence of a similar charge in the first quarter of 2024 resulted in a 30% increase in EBITDA. First quarter 2024 logistic disruptions in the Red Sea resulted in higher demand for our products. This drove a 54% increase in EBITDA in our polymer results and a 38% increase in olefins results primarily driven by higher volumes.

First quarter of 2024 versus first quarter of 2023—A decrease in income from our equity investments led to a decline in EBITDA of 42% due to the absence of a gain on sale of asset recognized by one of our joint ventures in Europe in the first quarter of 2023. Lower polymer results led to a 27% decrease in EBITDA primarily driven by decreased margins resulting from lower product prices due to weak demand.

Intermediates and Derivatives Segment

Overview—During the fourth quarter of 2023 we recognized a non-cash impairment related to our European PO joint venture and LIFO inventory valuation charges. Similar charges were not recognized in the first quarter of 2024. EBITDA decreased in the first quarter of 2024 compared to the first quarter of 2023, primarily due to lower results across most businesses.

The following table sets forth selected financial information for the I&D segment including Loss from equity investments, which is a component of EBITDA:

			Three Months Ended
			March 31,						December 31,																		March 31,
Millions of dollars			2024						2023																		2023
Sales and other operating revenues			$	2,586					$	2,661																	$	2,682
Loss from equity investments			(4)						(5)																		(6)
EBITDA			312						73																		426

Revenue—Revenues decreased by $75 million, or 3%, in the first quarter of 2024 compared to the fourth quarter of 2023 and by $96 million, or 4%, in the first quarter of 2024 compared to the first quarter of 2023.

First quarter of 2024 versus fourth quarter of 2023—Sales volumes decreased due to unplanned downtime resulting in a 7% decrease in revenue. Higher average sales prices resulted in a 4% increase in revenue driven primarily by intermediate chemicals products resulting from tight market supply.

First quarter of 2024 versus first quarter of 2023—Lower average sales prices resulted in a 9% decrease in revenue driven by oxyfuels and related products as a result of lower gasoline premiums. Sales volumes increased resulting in a 4% increase in revenue due to additional PO/TBA capacity. Favorable foreign exchange impacts resulted in a revenue increase of 1%.

EBITDA—EBITDA increased by $239 million, or 327%, in the first quarter of 2024 compared to the fourth quarter of 2023 and decreased by $114 million, or 27%, in the first quarter of 2024 compared to the first quarter of 2023.

First quarter of 2024 versus fourth quarter of 2023—During the fourth quarter of 2023, we recognized a non-cash impairment charge related to our equity investment in the European PO joint venture and LIFO inventory valuation charges of $192 million and $97 million, respectively. The absence of similar charges in the first quarter of 2024 resulted in an increase in EBITDA.

First quarter of 2024 versus first quarter of 2023—Intermediate chemicals results declined, resulting in a 10% decrease in EBITDA primarily driven by lower volumes from unplanned acetyls downtime. Propylene oxide and derivatives results drove a 9% decrease in EBITDA as lower demand pressured margins. Lower oxyfuels and related products results led to an EBITDA decrease of 3% driven primarily by lower margins due to lower blend premiums.

Advanced Polymer Solutions Segment

Overview—EBITDA increased in the first quarter of 2024 relative to the fourth quarter of 2023 primarily due to higher sales volumes. During the first quarter of 2023 we recognized a non-cash goodwill impairment charge of $252 million, no similar charges were recognized during the first quarter of 2024.

The following table sets forth selected financial information for the APS segment including Loss from equity investments, which is a component of EBITDA:

			Three Months Ended
			March 31,						December 31,																		March 31,
Millions of dollars			2024						2023																		2023
Sales and other operating revenues			$	965					$	842																	$	997
Loss from equity investments			—						—																		(1)
EBITDA			35						12																		(226)

Revenue—Revenues increased by $123 million, or 15%, in the first quarter of 2024 compared to the fourth quarter of 2023 and decreased by $32 million, or 3%, in the first quarter of 2024 compared to the first quarter of 2023.

First quarter of 2024 versus fourth quarter of 2023—Sales volumes increased resulting in a 12% increase in revenue stemming from higher demand. Average sales price increased resulting in a 2% increase in revenue. Favorable foreign exchange impacts resulted in a revenue increase of 1%.

First quarter of 2024 versus first quarter of 2023—Average sales price decreased resulting in an 8% decrease in revenue. Sales volumes increased resulting in a 4% increase in revenue due to higher demand. Favorable foreign exchange impacts resulted in a revenue increase of 1%.

EBITDA—EBITDA increased by $23 million or 192% in the first quarter of 2024 compared to the fourth quarter of 2023 and by $261 million or 115% in the first quarter of 2024 compared to the first quarter of 2023.

First quarter of 2024 versus fourth quarter of 2023—EBITDA increased primarily due to higher volumes as a result of seasonal demand.

First quarter of 2024 versus first quarter of 2023—During the first quarter of 2023 we recognized a non-cash goodwill impairment charge of $252 million after the effect of moving our Catalloy and polybutene-1 businesses from our APS segment and reintegrating them into our O&P-Americas and O&P-EAI segments. The absence of this impairment charge in the first quarter of 2024 was the primary driver for the improved EBITDA results.

Refining Segment

Overview—EBITDA increased in the first quarter of 2024 compared to the fourth quarter of 2023 due to the absence of a LIFO inventory valuation charge recognized in the fourth quarter of 2023, partially offset by a decrease in margins as the impact of commodity hedges more than offset improvement in Maya 2-1-1 margins. EBITDA decreased in the first quarter of 2024 compared to the first quarter of 2023 primarily due to lower margins.

The following table sets forth selected financial information and heavy crude oil processing rates for the Refining segment and the U.S. refining market margins for the applicable periods. “Brent” is a light sweet crude oil and is one of the main benchmark prices for purchases of oil worldwide. “Maya” is a heavy sour crude oil grade produced in Mexico that is a relevant benchmark for heavy sour crude oils in the U.S. Gulf Coast market. References to industry benchmarks for refining market margins are to industry prices reported by Platts, a division of S&P Global.

			Three Months Ended
			March 31,						December 31,																		March 31,
Millions of dollars			2024						2023																		2023
Sales and other operating revenues			$	2,090					$	2,400																	$	2,190
EBITDA			55						10																		246
Thousands of barrels per day
Heavy crude oil processing rates			212						230																		226
Market margins, dollars per barrel
Brent - 2-1-1			$	21.41					$	16.09																	$	29.44
Brent - Maya differential			12.29						10.79																		19.39
Total Maya 2-1-1			$	33.70					$	26.88																	$	48.83

Revenue—Revenues decreased by $310 million, or 13%, in the first quarter of 2024 compared to the fourth quarter of 2023 and by $100 million, or 5%, in the first quarter of 2024 compared to the first quarter of 2023.

First quarter of 2024 versus fourth quarter of 2023—Lower product prices led to a revenue decrease of 9% due to an average Brent crude oil price decrease of approximately $0.84 per barrel. Lower sales volumes due to planned and unplanned outages led to a 4% decline in revenue.

First quarter of 2024 versus first quarter of 2023—Lower product prices led to a revenue decrease of 8% due to lower average sales prices reflecting lower margins on refined products. Sales volumes were higher in the first quarter of 2024 as the first quarter of 2023 includes the effects of rebuilding inventory levels following the fourth quarter of 2022 unplanned downtime. This volume variance resulted in a 3% increase in revenue.

EBITDA—EBITDA increased by $45 million, or 450%, in the first quarter of 2024 compared to the fourth quarter of 2023 and decreased by $191 million, or 78%, in the first quarter of 2024 compared to the first quarter of 2023.

First quarter of 2024 versus fourth quarter of 2023—During the fourth quarter of 2023 we recognized LIFO inventory charges of $42 million, no similar charges were recognized in the first quarter of 2024. Margin changes resulted in an EBITDA decrease of 60% in the first quarter of 2024. Despite an increase in the Maya 2-1-1 industry crack spread of approximately $7 per barrel to $34 per barrel in the first quarter, the mark-to-market impact of our commodity hedges offset this benefit. For additional information related to our financial instruments, see Note 8 to the Consolidated Financial Statements.

First quarter of 2024 versus first quarter of 2023—Lower margins drove a 90% decrease in EBITDA primarily due to a decrease in the Maya 2-1-1 industry crack spread of approximately $15 per barrel driven by lower Maya crude differential resulting from a decrease in heavy crude supply. Lower volumes due to planned and unplanned downtime resulted in a 9% decrease in EBITDA. A decrease in costs incurred related to our planned exit from the refining business in the first quarter of 2024 compared to the first quarter of 2023 resulted in a 22% increase in EBITDA.

Technology Segment

Overview—EBITDA increased in the first quarter of 2024 compared to the fourth quarter of 2023 and in the first quarter of 2024 relative to the first quarter of 2023 primarily due to licensing results.

The following table sets forth selected financial information for the Technology segment:

			Three Months Ended
			March 31,						December 31,																		March 31,
Millions of dollars			2024						2023																		2023
Sales and other operating revenues			$	192					$	152																	$	139
EBITDA			118						77																		73

Revenue—Revenues increased by $40 million, or 26%, in the first quarter of 2024 compared to the fourth quarter of 2023 and by $53 million, or 38%, in the first quarter of 2024 compared to the first quarter of 2023.

First quarter of 2024 versus fourth quarter of 2023—Higher licensing revenues resulting from more contracts reaching significant milestones drove a 28% increase in revenue. Favorable foreign exchange impacts increased revenue by 1%. Lower catalyst volume resulted in a 3% decrease in revenue primarily driven by weaker demand.

First quarter of 2024 versus first quarter of 2023—Higher licensing revenues resulting from more contracts reaching significant milestones drove a 30% increase in revenue. Higher catalyst volumes resulted in a 5% increase in revenue primarily driven by higher demand. Favorable foreign exchange impacts increased revenue by 2%. Higher average catalyst sales price resulted in a 1% increase in revenues.

EBITDA—EBITDA increased by $41 million, or 53%, in the first quarter of 2024 compared to the fourth quarter of 2023 and by $45 million, or 62%, in the first quarter of 2024 compared to the first quarter of 2023. Licensing results led to a 56% increase in EBITDA in the first quarter of 2024 compared to both the fourth and first quarters of 2023, as a result of more contracts with higher average values reaching significant milestones.

FINANCIAL CONDITION

Operating, investing and financing activities of continuing operations, which are discussed below, are presented in the following table:

			Three Months Ended March 31,
Millions of dollars			2024						2023
Cash provided by (used in):
Operating activities			$	(114)					$	482
Investing activities			(510)						(371)
Financing activities			(412)						(477)

Operating Activities—Cash used in operating activities of $114 million in the first quarter of 2024 primarily reflected earnings adjusted for non-cash items and cash used by the main components of working capital—Accounts receivable, Inventories, and Accounts payable.

In the first quarter of 2024, the main components of working capital used $629 million of cash primarily driven by increases in Accounts receivable due to higher volumes and prices across most of our segments.

Cash provided by operating activities of $482 million in the first quarter of 2023 primarily reflected earnings adjusted for non-cash items and cash used by the main components of working capital.

In the first quarter of 2023, the main components of working capital used $558 million of cash driven primarily by increases in Accounts receivable and Inventories. The increase in Accounts receivable was primarily driven by higher volumes and average sales prices in our O&P-EAI, I&D and APS segments. The increase in Inventories was primarily due to inventory build associated with the timing of the start-up of our PO/TBA plant in Houston, TX as well as planned and unplanned outages.

Investing Activities—Capital expenditures in the first quarter of 2024 totaled $483 million compared to $352 million in the first quarter of 2023. During the first quarter of 2024 and 2023, approximately 80% and 55% of the expenditures support sustaining maintenance, respectively, with the remaining expenditures supporting profit-generating growth projects. Capital expenditures in first quarter of 2023 included spending for our PO/TBA plant.

Financing Activities—We made dividend payments totaling $408 million and $389 million in the first quarter of 2024 and 2023, respectively. We had no share repurchases in the first quarter of 2024 and we made payments of $70 million to repurchase outstanding ordinary shares in the first quarter of 2023.

In February 2024, we issued $750 million of 5.5% guaranteed notes due 2034. In March 2024, we repaid the $775 million remaining of outstanding principal on our 5.75% senior notes due 2024. For additional detail see Note 7 to the Consolidated Financial Statements.

Liquidity and Capital Resources

Overview

We plan to fund our working capital, capital expenditures, debt service, dividends and other cash requirements with our current available liquidity and cash from operations, which could be affected by general economic, financial, competitive, legislative, regulatory, business and other factors, many of which are beyond our control. Debt repayment, and the purchase of shares under our share repurchase authorization, may be funded from cash and cash equivalents, cash from short-term investments, cash from operating activities, proceeds from the issuance of debt, or a combination thereof.

As part of our overall capital allocation strategy, we plan to provide returns to shareholders in the form of dividends and share repurchases. Barring any significant or unforeseen business challenges, mergers or acquisitions, over the long-term, we are targeting shareholder returns of 70% of free cash flow, defined as net cash provided by operating activities less capital expenditures. We intend to continue to declare and pay quarterly dividends, with the goal of increasing the dividend over time, after giving consideration to our cash balances and expected results from operations. Our focus on funding our dividends while remaining committed to a strong investment grade balance sheet continues to be the foundation of our capital allocation strategy.

Cash and Liquid Investments

As of March 31, 2024, we had Cash and cash equivalents totaling $2,314 million, which includes $1,524 million in jurisdictions outside of the U.S., the majority of which is held within the European Union and the United Kingdom. There are currently no legal or economic restrictions that would materially impede our transfers of cash.

Credit Arrangements

At March 31, 2024, we had total debt, including current maturities, of $11,194 million. Additionally, we had $143 million of outstanding letters of credit, bank guarantees and surety bonds issued under uncommitted credit facilities.

We had total unused availability under our credit facilities of $4,150 million at March 31, 2024, which included the following:

• $3,250 million under our $3,250 million Senior Revolving Credit Facility, which backs our $2,500 million commercial paper program. Availability under this facility is net of outstanding borrowings, outstanding letters of credit provided under the facility and notes issued under our commercial paper program. At March 31, 2024, we had no outstanding commercial paper and no borrowings or letters of credit outstanding under this facility; and

• $900 million under our $900 million U.S. Receivables Facility. Availability under this facility is subject to a borrowing base of eligible receivables, which is reduced by outstanding borrowings and letters of credit, if any. At March 31, 2024, we had no borrowings or letters of credit outstanding under this facility.

At any time and from time to time, we may repay or redeem our outstanding debt, including purchases of our outstanding bonds in the open market, through privately negotiated transactions or a combination thereof, in each case using cash and cash equivalents, cash from our short-term investments, cash from operating activities, proceeds from the issuance of debt or proceeds from asset divestitures. Any repayment or redemption of our debt will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. In connection with such repurchases or redemptions, we may incur cash and non-cash charges, which could be material in the period in which they are incurred.

Share Repurchases

In May 2023, our shareholders approved a proposal to authorize us to repurchase up to 34.0 million ordinary shares, through November 19, 2024, which superseded any prior repurchase authorizations. Our share repurchase authorization does not have a stated dollar amount, and purchases may be made through open market purchases, private market transactions or other structured transactions. Repurchased shares could be retired or used for general corporate purposes, including for various employee benefit and compensation plans. 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. There were no share repurchases during the first quarter of 2024.

As of April 24, 2024, we had approximately 33.1 million shares remaining under the current authorization. The timing and amounts of additional shares repurchased, if any, will be determined based on our evaluation of market conditions and other factors, including any additional authorizations approved by our shareholders. For additional information related to our share repurchase authorizations, see Note 11 to the Consolidated Financial Statements.

CURRENT BUSINESS OUTLOOK

In the second quarter of 2024, we expect seasonal demand improvements across most of our segments. Low costs for natural gas and NGLs should continue to benefit margins for our North American and Middle East production relative to higher oil-based costs in most other regions. With the start of the summer driving season, oxyfuels and refining margins are expected to increase with higher gasoline crack spreads and lower butane costs. During the second quarter of 2024, we expect to operate our assets in line with market demand with average operating rates of 85% for our O&P-Americas and O&P-EAI segments and 80% for our Intermediates & Derivatives segment. We continue to monitor targeted stimulus efforts and remain watchful for demand improvements in China.

ACCOUNTING AND REPORTING CHANGES

For a discussion of the potential impact of new accounting pronouncements on the Consolidated Financial Statements, see Note 2 to the Consolidated Financial Statements.

CAUTIONARY STATEMENT FOR THE PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). You can identify our forward-looking statements by the words “anticipate,” “estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “will,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and similar expressions.

We based forward-looking statements on our current expectations, estimates and projections of our business and the industries in which we operate. We caution you that these statements are not guarantees of future performance. They involve assumptions about future events that, while made in good faith, may prove to be incorrect, and involve risks and uncertainties we cannot predict. Our actual outcomes and results may differ materially from what we have expressed or forecast in the forward-looking statements. Any differences could result from a variety of factors, including the following:

• the cost of raw materials represents a substantial portion of our operating expenses, and energy costs generally follow price trends of crude oil, natural gas liquids and/or natural gas; price volatility can significantly affect our results of operations and we may be unable to pass raw material and energy cost increases on to our customers due to the significant competition that we face, the commodity nature of our products and the time required to implement pricing changes;

• our operations in the United States (“U.S.”) have benefited from low-cost natural gas and natural gas liquids; decreased availability of these materials (for example, from their export or regulations impacting hydraulic fracturing in the U.S.) could reduce the current benefits we receive;

• if crude oil prices are low relative to U.S. natural gas prices, we could see less benefit from low-cost natural gas and natural gas liquids and it could have a negative effect on our results of operations;

• industry production capacities and operating rates may lead to periods of oversupply and low profitability;

• we may face unplanned operating interruptions (including leaks, explosions, fires, weather-related incidents, mechanical failures, unscheduled downtime, supplier disruptions, labor shortages, strikes, work stoppages or other labor difficulties, transportation interruptions, spills and releases and other environmental incidents) at any of our facilities, which would negatively impact our operating results;

• changes in general economic, business, political and regulatory conditions in the countries or regions in which we operate could increase our costs, restrict our operations and reduce our operating results;

• our ability to execute our organic growth plans may be negatively affected by our ability to complete projects on time and on budget;

• our ability to acquire or dispose of product lines or businesses could disrupt our business and harm our financial condition;

• uncertainties associated with worldwide economies could create reductions in demand and pricing, as well as increased counterparty risks, which could reduce liquidity or cause financial losses resulting from counterparty default;

• the negative outcome of any legal, tax and environmental proceedings or changes in laws or regulations regarding legal, tax and environmental matters may increase our costs, reduce demand for our products, or otherwise limit our ability to achieve savings under current regulations;

• any loss or non-renewal of favorable tax treatment under tax agreements or tax treaties, or changes in tax laws, regulations or treaties, may substantially increase our tax liabilities;

• we may be required to reduce production or idle certain facilities because of the cyclical and volatile nature of the supply-demand balance in the chemical and refining industries, which would negatively affect our operating results;

• we rely on continuing technological innovation, and an inability to protect our technology, or others’ technological developments could negatively impact our competitive position;

• we may be unable to continue operations until the shutdown of the Houston refinery within the expected timeframe or without incurring additional charges or expenses;

• we have significant international operations, and fluctuations in exchange rates, valuations of currencies and our possible inability to access cash from operations in certain jurisdictions on a tax-efficient basis, if at all, could negatively affect our liquidity and our results of operations;

• we are subject to the risks of doing business at a global level, including wars, terrorist activities, political and economic instability and disruptions and changes in governmental policies, which could cause increased expenses, decreased demand or prices for our products and/or disruptions in operations, all of which could reduce our operating results;

• if we are unable to achieve our emission reduction, circularity, or other sustainability targets, it could result in reputational harm, changing investor sentiment regarding investment in our stock or a negative impact on our access to and cost of capital;

• our ability to execute and achieve expected results of our value enhancement program;

• if we are unable to comply with the terms of our credit facilities, indebtedness and other financing arrangements, those obligations could be accelerated, which we may not be able to repay; and

• we may be unable to incur additional indebtedness or obtain financing on terms that we deem acceptable, including for refinancing of our current obligations; higher interest rates and costs of financing would increase our expenses.

Any of these factors, or a combination of these factors, could materially affect our future results of operations and the ultimate accuracy of the forward-looking statements. Our management cautions against putting undue reliance on forward-looking statements or projecting any future results based on such statements or present or prior earnings levels.

All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section and any other cautionary statements that may accompany such forward-looking statements. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements.