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$LYB Form 4: On June 22, 2015, Samuel Smolik, SVP-Americas Manufacturing & Refining Operations, sold 20,000 shares at $105 per share. Post transaction, Samuel currently owns 7,499.311 shares, which includes 855 RSUs granted pursuant to the issuer's long-term incentive plan on Feb. 17, 2015 that vest on Feb. 17, 2018.
$LYB said in the near-term, it is heading into a period where demand picks up seasonally. Inventories, especially in the US, are on the low side. The company believes this is constructive as it goes through 2Q17. There are new capacity expansions coming online in 2H17 and $LYB expects to run at full capacity in 2017.
$LYB's capital expenditures, including growth projects, maintenance turnarounds, catalyst and information technology-related expenditures, were $421MM during 1Q17. $LYB repurchased 1.5MM ordinary shares during 1Q17 and paid dividends of $343MM. There were 403MM common shares outstanding as of March 31, 2017.
$LYB reported a drop in 1Q17 earnings due to the redemption of $1Bil of outstanding 5% bonds that were due in 2019 with new $1Bil 10-year bond issue. Net income fell to $797MM or $1.98 per share from $1.03Bil or $2.37 per share last year. Sales grew to $8.43Bil from $6.74Bil.
Regarding $LYB's decision on selling the Houston refinery, it said that the markets softened through the year and refining outlook became weaker. The company added that its operations were disappointing with both internal and external factors moving the wrong way. Now, $LYB has decided that this is not the right time to sell the Houston refinery.
$LYB plans to spend approx. $2Bil during 2017. A large part of this will be dedicated to the new polyethylene plant that is scheduled to begin production in 2019. Although not all plants are finalized yet, $LYB estimates capital spending to be $2.0-2.5Bil annually through 2021. Approx. 50% of this spend is targeted towards profit generating growth.
$LYB's 4Q16 results included a $58MM charge for a lump-sum pension settlement, which negatively impacted the quarter by $0.09 per share. At the end of 2016, the company had approx. 21MM shares or 50% remaining under the current 18-month share repurchase authorization that began in May 2016.
$LYB reported a decline in 4Q16 earnings due to pre-tax charge for the impact of lower of cost or market inventory adjustment. Net income fell to $763MM from $795MM last year, while EPS rose to $1.87 from $1.78 due to lower share count. Revenue grew to $7.75Bil from $7.07Bil. Excluding LCM impact, EPS decreased to $1.94 from $2.20.
$LYB said Kevin Brown, EVP, manufacturing and refining and a member of its board, will be retiring in mid-February. Kevin will be replaced by Daniel Coombs, who currently serves as EVP, global olefins & polyolefins (O&P) and technology and is a board member.
$LYB's last 12 months cash flow was approx. $5Bil with free cash flow after CapEx of approx. $3Bil. During 3Q16, the company purchased 10.3MM shares, bringing the year-to-date purchases to 7%. 2016 CapEx spending is trending above the company's forecast of $2.1Bil.
During 3Q16, $LYB's cash and liquid investments decreased by approx. $420MM to end with a balance of $2.1Bil. Over the last 12 months, quarterly cash generation and spending trends were relatively similar to the third quarter pace. The $2.1Bil ending cash and liquid investments balance remains above the company's minimum requirement.
$LYB generated $1.3Bil of cash from operations in 3Q16, utilizing $1.2Bil for dividends and share repurchases. Maintenance and growth capital investments were approx. $590MM during 3Q16, with a significant portion of these investments focused on the company's Corpus Christi ethylene expansion and the turnaround at the Morris, Illinois facility.
$LYB anticipates the winter months will bring some typical seasonal slowing in select business lines. CEO Bob Patel said the 4Q16 marks the completion of a period of significant planned maintenance and associated downtime in olefin and polyolefin assets.
$LYB CEO Bob Patel said strong contribution from European olefins and polyolefins business has demonstrated the geographic balance within portfolio. This has been particularly significant as North American olefins and polyolefins business results have been impacted by heavy planned maintenance schedule, Patel added.
Oil refiner and chemical company $LYB reported a drop in 3Q16 earnings due to lower sales and operating revenues. Net income fell to $952MM or $2.30 per share from $1.19Bil or $2.54 per share last year. Sales dropped to $7.37Bil from $8.33Bil. Excluding LCM adjustment, EPS from continuing operations slid to $2.31 from $2.80.
$LYB said the company has made an investment decision to build a High Density Polyethylene plant on the U.S. Gulf Coast. The plant will have an annual capacity of 500,000 metric tons and will be the first commercial plant to employ $LYB's new proprietary Hyperzone PE technology. The plant is expected to start operations by 2019.
James Sheehan of SunTrust Robinson Humphrey asks about cash allocation and M&A strategy. CEO Bob Patel said that free cash flow was deployed towards dividend and share buyback program. Over time, $LYB will use cash flow to fund growth projects. To consider M&A, $LYB needs a clear path to value creation, Patel said.
John Roberts of UBS asks about the start-up date for the new polyethylene unit and the propylene oxide project. CEO Bob Patel says that new polyethylene unit is expected to start in mid-2019. With regard to propylene oxide project, he said that it is progressing well. $LYB expects to make a final investment decision in 1H17.
Stephen Byrne of BAML probes on the refinery fire, which happened on April 8. CEO Bob Patel said that $LYB checked at what could be the source of the fire. He added that the company has addressed the root causes for the fire. The refinery is back to normal and running at full rates, Patel said.