Highlights - Refining and MTBE helped offset effects of economic slowdown and higher energy costs. - Proportionate share EBITDA of $174 million, up 12% from previous quarter. - Net loss of $28 million, or $0.24 per share, excluding an unusual item.
HOUSTON, April 26 /PRNewswire/ -- For the first quarter 2001 Lyondell Chemical Company (NYSE: LYO) reported a net loss of $34 million, or $0.29 per share, including a $6 million, or $0.05 per share, after-tax charge related to a permanent facility shutdown at its Equistar joint venture.
Excluding the unusual item, Lyondell had a net loss of $28 million, or $0.24 per share, in the first quarter 2001. This compares with a loss of $45 million, or $0.38 per share, for the fourth quarter 2000, excluding unusual items. Compared to the fourth quarter 2000, the first quarter 2001 benefited from improved results in Equistar's petrochemicals business and higher MTBE profitability.
EBITDA (earnings before net interest, taxes, depreciation and amortization), adjusted for unusual and extraordinary items, for Lyondell and the proportionate share of its joint ventures was $174 million in the first quarter 2001, compared to $156 million in the fourth quarter 2000 and $272 million in the first quarter 2000.
"Lyondell's first quarter financial results improved from the fourth quarter, primarily due to the diversity of our portfolio," said Lyondell President and Chief Executive Officer Dan Smith. "Strong performances from refining and MTBE helped offset the impact of a soft global economy and high energy costs on our propylene oxide (PO), petrochemicals and polymers businesses."
Commenting on the first quarter, Smith added, "We continued to be proactive in mitigating the impact of trough conditions in the chemical cycle. We managed production capacity to maximize profitability, including shutting down inefficient or higher cost facilities, while maintaining a keen focus on controllable costs and capital spending."
Lyondell Earnings Summary (A) Millions of dollars except per share amounts 1Q2001 4Q2000 1Q2000 Net Income (Loss) Before Unusual Items (B)(C)(D) $(28) $(45) $(15) Earnings (Loss) per Share Before Unusual Items (B)(C)(D) $(0.24) $(0.38) $(0.13) Net Income (Loss) As Reported $(34) $(48) $306 Earnings (Loss) per Share As Reported $(0.29) $(0.41) $2.60 EBITDA (Lyondell and proportionate share of ventures) (B)(C)(D) $174 $156 $272 (A) See Consolidated Income Statements. (B) The first quarter 2001 excludes an after-tax charge of $6 million, or $0.05 per share, consisting of Lyondell's share of Equistar's facility shutdown costs. (C) The fourth quarter 2000 excludes an after-tax extraordinary charge of $3 million, or $0.03 per share, related to early debt retirement. (D) The first quarter 2000 excludes a net after-tax benefit of $321 million, or $2.73 per share, which consists of the gain on the asset sale less the extraordinary charge on debt retirement. INTERMEDIATE CHEMICALS AND DERIVATIVES (IC&D)
The IC&D segment includes PO and derivatives, toluene diisocyanate (TDI), styrene monomer and MTBE. IC&D segment EBITDA for the first quarter 2001 was $97 million, compared to fourth quarter 2000 EBITDA of $89 million.
Compared to the fourth quarter 2000, which included the impact of a scheduled PO plant outage and foreign exchange gains, the IC&D business benefited from an upturn in MTBE margins, stronger performance in the butanediol (BDO) business and lower feedstock costs. These factors more than offset higher energy costs and a slowdown in PO and TDI sales due to a weak polyurethanes market. Sales volumes for PO and derivatives (including TDI) were 9% lower compared to the fourth quarter.
In the first quarter 2001, MTBE margins expanded primarily as a result of higher selling prices, which are being supported by a tight gasoline market in advance of the summer driving season. PO margins improved due to higher selling prices and the lower cost for propylene. BDO continued to demonstrate growth, with sales volumes increasing 9% compared to the fourth quarter 2000 and 14% compared to the first quarter 2000. BDO margins also improved as a result of industry price increases.
EQUISTAR CHEMICALS, LP
Equistar's EBITDA for the first quarter 2001 was $69 million, an increase from $9 million in the fourth quarter of 2000. First quarter 2001 EBITDA excludes a $22 million charge associated with the shutdown of Equistar's higher cost polyethylene facility in Port Arthur, Texas.
First quarter results for Equistar improved from the previous quarter as a result of a higher margin for ethylene. The margin increase was due to the higher ethylene price and lower costs for crude oil-based raw materials. Equistar was partially successful in implementing price increases to offset the effects of higher energy costs during the first quarter 2001.
During the first quarter, Equistar maintained stringent measures to mitigate difficult business conditions. These measures included production optimization and scheduling, continued employment of its feedstock flexibility advantage, as well as the temporary shutdown of the higher-cost ethylene cracker at Lake Charles and the permanent shutdown of the Port Arthur facility. These actions and their benefits were partially offset by higher energy prices, weaker demand for petrochemicals and polymers and lower prices for certain co-products, including propylene.
Equistar's petrochemicals segment had EBITDA of $166 million in the first quarter of 2001, compared to $100 million in the fourth quarter of 2000. Compared to the fourth quarter 2000, higher ethylene prices and lower raw material costs were offset by lower sales volumes and higher energy costs.
First quarter 2001 EBITDA for polymers was a negative $75 million, compared to a negative $69 million in the fourth quarter of 2000. Profitability was essentially unchanged as increases in polymer prices helped recover higher ethylene and energy costs. Polymer sales volumes decreased about 5% from the fourth quarter, reflecting overall demand weakness.
LYONDELL-CITGO REFINING LP (LCR)
LCR had EBITDA of $86 million in the first quarter 2001, compared to $107 million in the fourth quarter 2000.
LCR's first quarter results were negatively affected by a 10-day period of reduced operating rates due to an unplanned unit outage and higher natural gas energy costs compared to the fourth quarter. LCR benefited from continued delivery of contract levels of extra-heavy Venezuelan crude oil under the Crude Supply Agreement (CSA) and higher processing rates of CSA volumes compared to the fourth quarter. CSA processing volumes for the first quarter 2001 averaged 231,000 barrels per day compared to 219,000 barrels per day for the fourth quarter 2000. The first quarter also benefited from higher spot margins for other crude oil processed by LCR. However, total crude processing rates, including spot volumes, in the first quarter 2001 declined by 11,000 barrels per day compared with the fourth quarter 2000, as a result of the 10-day unit outage, which reduced LCR's ability to process spot crude oil.
In the second quarter of 2001, LCR expects to process approximately 260,000 barrels of crude oil per day, 230,000 of which are expected to be CSA volumes.
OUTLOOK
"For the near term, we are seeing continuing weak demand in our chemicals businesses as a result of the soft global economy," Smith said. "However, we will continue to benefit from a strong fuels market in the second quarter, which should result in substantially improved financial performance."
Sales Revenues Millions of dollars 1Q2001 4Q2000 1Q2000 Reported Sales Revenues $857 $949 $1,136 Total sales revenues - all businesses in which Lyondell participates (A) $3,585 $3,920 $3,882 Lyondell's proportionate share of the sales revenues of businesses in which it participates (A) $2,151 $2,385 $2,423 (A) Includes revenues from sales to affiliates.
Lyondell Chemical Company (www.lyondell.com), with headquarters in Houston, Texas, is the world's largest producer of propylene oxide (PO); the world's number two supplier of TDI (toluene diisocyanate); a leading producer of propylene glycol; a leading producer of other PO derivatives such as BDO (butanediol) and PGE (propylene glycol ether); and a producer of styrene monomer and MTBE as co-products of PO production. Through its 41% interest in Equistar Chemicals, LP, Lyondell also is one of the largest producers of ethylene, propylene and polyethylene in North America and a leading producer of polypropylene, ethylene oxide, ethylene glycol, high value-added specialty polymers and polymeric powder. Through its 58.75% interest in LYONDELL-CITGO Refining LP, Lyondell is one of the largest refiners in the United States, processing extra-heavy Venezuelan crude oil to produce gasoline, low sulfur diesel and jet fuel.
The statements in this release relating to matters that are not historical facts are forward-looking statements that are subject to risks and uncertainties. Actual results could differ materially, based on factors including, but not limited to, future global economic conditions, industry production capacity and operating rates, the supply/demand balance for the products produced by the Company and its joint ventures, further increases in raw material and/or energy costs, changes in governmental regulations and other risk factors. For more detailed information about the factors that could cause our actual results to differ materially, please refer to Lyondell Chemical Company's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the Securities and Exchange Commission in March 2001 and the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2001, which will be filed in May 2001.
Lyondell will conduct a first quarter 2001 teleconference at 3:00 p.m. Eastern Time, April 26, 2001. Teleconference access is available in listen- only mode via telephone (dial-in number: United States 877-679-9051; International 952-556-2804, no pass code required) and Internet broadcast on Lyondell's web site at www.lyondell.com. Replay details can be found on Lyondell's web site.
LYONDELL CHEMICAL COMPANY
SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
(Millions of dollars)
Lyondell Chemical
Company Joint Ventures Lyondell and
(Excluding Proportionate
Equity Equistar LCR LMC Share of Equity
Investments)(A) 100% 100% 100% Investments(B)
Three months ended
March 31, 2001:
Sales and other
operating revenues (C) $857 $1,773 $910 $45 2,151
SG&A and R&D 47 56 14 1 79
EBITDA before unusual
and extraordinary items 97 69 86 (2) 174
Depreciation
and amortization 65(D) 78 28 3 113
Net interest expense 92(D) 46 16 --- 120
Capital expenditures 11 24 11 --- 27
Dividends 27 27
Three months ended December 31, 2000:
Sales and other
operating revenues (C) $949 $1,783 $1,138 $50 2,385
SG&A and R&D 59 50 14 4 91
EBITDA before unusual
and extraordinary items 89 9 107 1 156
Depreciation
and amortization 60(D) 80 28 2 108
Net interest expense 98(D) 47 17 --- 127
Capital expenditures 26 50 14 --- 55
Dividends 27 27
Three months ended March 31, 2000:
Sales and other
operating revenues (C) $1,136 $1,858 $859 $29 2,423
SG&A and R&D 69 53 14 2 100
EBITDA before unusual and
extraordinary items 163 178 60 1 272
Depreciation
and amortization 84(D) 77 26 3 130
Net interest expense 157(D) 45 12 --- 183
Capital expenditures 19 20 17 --- 37
Dividends 26 26
(A) Consists of the operations of the Intermediate Chemicals and
Derivatives business segment. The polyols business sold to Bayer
on March 31, 2000 is included through the date of sale.
(B) This column reflects a combined total for Lyondell's 100% owned
operations and its pro rata share of each joint venture's operations
and is not a presentation in accordance with generally accepted
accounting principles. Lyondell currently owns a 41% interest in
Equistar Chemicals, LP ("Equistar"), a 58.75% interest in LYONDELL-
CITGO Refining LP ("LCR") and a 75% interest in Lyondell Methanol
Company, L.P. ("LMC").
(C) Includes revenues from sales to affiliates.
(D) "Depreciation and amortization" and "net interest expense" both
include approximately $3 million, $4 million and $6 million of non-
cash amortization of debt issuance costs in the three-month periods
ended March 31, 2001, December 31, 2000 and March 31, 2000,
respectively.
LYONDELL CHEMICAL COMPANY
SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
For the three months
INCOME STATEMENTS ended March 31,
(Millions of dollars, except per
share data) 2001 2000
Sales and other operating revenues $857 $1,136
Operating costs and expenses:
Cost of sales 755 952
Selling, general and
administrative expenses 39 55
Research and development 8 14
Amortization of goodwill and
other intangibles 24 28
Operating income 31 87
Income (loss) from equity investment
in Equistar (22) 33
Income from equity investment in LCR 27 16
Income (loss) from other equity
investments (3) 1
Interest expense, net (92) (157)
Other income (expense), net 3 (5)
Gain on sale of assets --- 544
Income (loss) before income
taxes and extraordinary item (56) 519
Provision for (benefit from) income taxes (22) 202
Income (loss) before extraordinary item (34) 317
Extraordinary loss, net of income taxes --- (11)
Net income (loss) $(34) $306
Basic and diluted earnings per share:
Income (loss) before extraordinary item $(0.29) $2.69
Net income (loss) $(0.29) $2.60
Weighted average shares outstanding
(thousands) 117,562 117,562
INTERMEDIATE CHEMICALS AND DERIVATIVES SEGMENT
SELECTED FINANCIAL AND OPERATING INFORMATION
(Millions of dollars)
Sales and other operating revenues $857 $1,136
Operating income 31 87
EBITDA before unusual and
extraordinary items 97 163
Sales Volumes (millions)
PO and derivatives (pounds) (A) 722 1,187
Co-products:
Styrene monomer (pounds) 789 900
TBA and derivatives (gallons) 245 284
(A) Includes propylene oxide ("PO"), PO derivatives and isocyanates. The
polyols business sold to Bayer on March 31, 2000 is included through
the date of sale.
LYONDELL CHEMICAL COMPANY
SELECTED FINANCIAL INFORMATION (UNAUDITED)
(Millions of dollars)
For the three months
ended March 31,
STATEMENTS OF CASH FLOWS 2001 2000
Net income (loss) $(34) $306
Adjustments to reconcile net income
(loss) to net cash (used in) provided by
operating activities:
Gain on sale of assets --- (544)
Depreciation and amortization 65 84
Extraordinary items --- 11
Accounts receivable 68 (46)
Inventories (92) 23
Accounts payable (17) 43
Changes in working capital and other, net (52) 125
Net cash (used in)
provided by operating activities (62) 2
Proceeds from sale of assets, net of cash sold --- 2,424
Expenditures for property, plant and equipment (11) (19)
Contributions and advances to affiliates (20) (4)
Distributions from affiliates
in excess of earnings 28 ---
Other --- (38)
Net cash (used in)
provided by investing activities (3) 2,363
Repayments of long-term debt (2) (1,004)
Dividends paid (27) (26)
Other (3) (10)
Net cash used in financing activities (32) (1,040)
Effect of exchange rate changes on cash (1) (2)
(Decrease) increase in cash and cash
equivalents $(98) $1,323
LYONDELL CHEMICAL COMPANY
SELECTED FINANCIAL INFORMATION (UNAUDITED)
(Millions of dollars)
March 31, December 31,
BALANCE SHEET 2001 2000
Cash and cash equivalents $162 $260
Accounts receivable, net 435 508
Inventories 479 392
Prepaid expenses and other current assets 56 49
Deferred tax assets 165 136
Total current assets 1,297 1,345
Property, plant and equipment, net 2,361 2,429
Investments and long-term
receivables:
Investment in Equistar 577 599
Investment in LCR 27 20
Investment in LMC 45 49
Investment in PO joint ventures (A) 649 621
Receivable from LCR 229 229
Other investments and long-term receivables 84 88
Goodwill, net 1,125 1,152
Deferred charges and other assets 519 515
Total assets $6,913 $7,047
Accounts payable $376 $399
Current maturities of long-term debt 11 10
Other accrued liabilities 317 325
Total current liabilities 704 734
Long-term debt, less current maturities 3,841 3,844
Other liabilities and deferred credits 484 441
Deferred income taxes 693 702
Minority interest 161 181
Stockholders' equity (117,562,920
shares outstanding) 1,030 1,145
Total liabilities and stockholders' equity $6,913 $7,047
Investment in Equistar, December 31, 2000 $599
Lyondell's share of Equistar net loss (22)
Investment in Equistar, March 31, 2001 $577
Investment in LCR, December 31, 2000 $20
Lyondell's share of LCR net income 27
Cash distributions from LCR (22)
Contribution for capital expenditures 2
Investment in LCR, March 31, 2001 $27
Investment in LMC, December 31, 2000 $49
Lyondell's share of LMC net loss (4)
Cash distributions from LMC (3)
Cash contributions to LMC 3
Investment in LMC, March 31, 2001 $45
(A) Lyondell has entered into joint ventures with Bayer in conjunction
with the March 2000 asset sale and the December 2000 agreement for
joint construction of PO-11.
LYONDELL CHEMICAL COMPANY
EQUISTAR CHEMICALS, LP
SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
For the three months
INCOME STATEMENTS ended March 31,
(Millions of dollars) 2001 2000
Sales and other operating revenues (A) $1,773 $1,858
Operating costs and expenses:
Cost of sales 1,723 1,698
Selling, general
and administrative expenses 46 44
Research and development expense 10 9
Amortization of goodwill and
other intangibles 8 8
Restructuring and other unusual charges 22 ---
Operating income (loss) (36) 99
Interest expense, net (46) (45)
Other income, net 5 2
Net income (loss) (B) $(77) $56
SELECTED FINANCIAL AND OPERATING INFORMATION
(Millions of dollars)
Sales and Other Operating Revenues (A)
Petrochemicals segment $1,689 $1,752
Polymers segment 542 580
Intersegment eliminations (458) (474)
Total $1,773 $1,858
Other Operating Expenses (C)
Petrochemicals segment $6 $2
Polymers segment 18 17
Unallocated 40 42
Total $64 $61
Operating Income (Loss)
Petrochemicals segment $115 $172
Polymers segment (89) (31)
Unallocated (62) (42)
Total $(36) $99
EBITDA
Petrochemicals segment $166 $223
Polymers segment (75) (19)
Unallocated (44) (26)
Total $47 $178
EBITDA before unusual charges $69 $178
Sales Volumes (millions) (A)
Selected petrochemical products:
Ethylene, propylene and other
olefins (pounds) 4,241 4,902
Aromatics (gallons) 90 102
Polymers products (pounds) 1,441 1,667
(A) Includes revenues/volumes from sales to affiliates.
(B) As a partnership, Equistar is not subject to federal income taxes.
(C) Other Operating Expenses include SG&A, R&D and amortization of
goodwill and other intangibles.
LYONDELL CHEMICAL COMPANY
EQUISTAR CHEMICALS, LP
SELECTED FINANCIAL INFORMATION (UNAUDITED)
(Millions of dollars)
March 31, December 31,
BALANCE SHEETS 2001 2000
Cash and cash equivalents $9 $18
Accounts receivable, net 711 758
Inventories 580 506
Prepaid expenses and other current assets 52 50
Total current assets 1,352 1,332
Property, plant and equipment, net 3,784 3,819
Goodwill, net 1,078 1,086
Deferred charges and other assets 371 345
Total assets $6,585 $6,582
Accounts payable $454 $487
Current maturities of long-term debt 356 90
Other accrued liabilities 116 166
Total current liabilities 926 743
Long-term debt, less current maturities 2,058 2,158
Other liabilities and deferred credits 141 141
Partners' capital 3,460 3,540
Total liabilities and partners' capital $6,585 $6,582
For the three months
ended March 31,
SELECTED CASH FLOW INFORMATION 2001 2000
Depreciation and amortization $78 $77
Cash flow used in operating activities (154) (13)
Expenditures for property, plant and equipment 24 20
LYONDELL CHEMICAL COMPANY
LYONDELL-CITGO REFINING LP
SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
CONDENSED BALANCE SHEETS March 31, December 31,
(Millions of dollars) 2001 2000
Total current assets $319 $310
Property, plant and equipment, net 1,306 1,319
Deferred charges and other assets 63 67
Total assets $1,688 $1,696
Notes payable $450 $450
Other current liabilities 402 417
Loans payable to partners 264 264
Other liabilities and deferred credits 60 57
Partners' capital 512 508
Total liabilities and partners' capital $1,688 $1,696
For the three months
INCOME STATEMENTS ended March 31,
(Millions of dollars) 2001 2000
Sales and other operating revenues (A) $910 $859
Operating costs and expenses:
Cost of sales 838 811
Selling, general and
administrative expenses 14 14
Operating income 58 34
Interest expense, net (16) (12)
Net income (B) $42 $22
SELECTED CASH FLOW INFORMATION
(Millions of dollars)
Depreciation and amortization $28 $26
Cash flow provided by operating activities 37 25
Expenditures for property, plant and equipment 11 17
EBITDA $86 $60
SELECTED OPERATING INFORMATION
Sales Volumes (including intersegment sales) (A)
Refined products (thousand barrels per day):
Gasoline 106 106
Diesel and heating oil 71 66
Jet fuel 20 15
Aromatics 10 10
Other refinery products 104 118
Total refined products volumes 311 315
Refinery Runs
Crude processing rates (thousand barrels per day):
Crude Supply Agreement - coked 231 180
Other heavy crude oil - coked 23 41
Other crude oil 5 21
Total crude oil 259 242
(A) Includes revenues/volumes from sales to affiliates.
(B) As a partnership, LCR is not subject to federal income taxes.
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