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OFFON

LYONDELLBASELL INDUSTRIES N.V.

(LYB)
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LYONDELLBASELL INDUSTRIES N : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

04/30/2021 | 12:36pm EDT

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.").
OVERVIEW

First quarter performance built upon the economic momentum we saw toward the end
of last year. We experienced improved consumer-driven demand, recovery in
durable goods markets and industry supply constraints, which enabled price
increases and drove margin improvements for many of our products. During
February 2021, unusually cold weather and related power outages impacted
operations in our industry across the state of Texas and reduced our production
volumes. In March 2021 we achieved the first full quarter of results for our
recently formed Louisiana Integrated PolyEthylene JV LLC joint venture (the
"Louisiana Joint Venture") in which we have a 50% ownership interest. We
benefited from the increased geographic diversity of our portfolio as the
Louisiana ethylene cracker operated continuously when most Texas assets were
down due to the cold weather. Tight markets and strong demand drove margin
improvements in our O&P-Americas and O&P-EAI segments. Higher demand from
automotive and other non-durable markets increased volumes for our Advanced
Polymer Solutions segment while margins compressed due to rapidly rising raw
material costs.

Significant items that affected our results during the first quarter of 2021
relative to the first quarter of 2020 include:
•O&P-Americas results increased primarily due to olefin margin improvements and
the first full quarter of results for our newly formed Louisiana Joint Venture;
•O&P-EAI results improved as a result of higher polyolefin margins and equity
income, partly offset by lower olefin margins; and
•I&D results declined primarily driven by lower volumes across most businesses
from the downtime in Texas due to the weather events.
Other noteworthy items since the beginning of the year include the following:
•In January 2021, signed an agreement to form a 50 percent owned joint venture
with the China Petroleum & Chemical Corporation which will construct a new PO
and SM unit in China; and
•In both January and April 2021, repaid $500 million outstanding under our Term
Loan due 2022, for a total repayment of $1 billion.


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Results of operations for the periods discussed are presented in the table
below:
                                                                   Three Months Ended
                                                                       March 31,
Millions of dollars                                                               2021         2020
Sales and other operating revenues                                              $ 9,082      $ 7,494
Cost of sales                                                               

7,678 6,868


Selling, general and administrative expenses                                        287          295
Research and development expenses                                                    29           27
Operating income                                                                  1,088          304
Interest expense                                                                   (110)         (89)
Interest income                                                                       2            3
Other income, net                                                                    25            -
Income from equity investments                                                      137            -
Income from continuing operations before income taxes                             1,142          218
Provision for income taxes                                                           70           75
Income from continuing operations                                                 1,072          143
(Loss) income from discontinued operations, net of tax                               (2)           1
Net income                                                                      $ 1,070      $   144



                             RESULTS OF OPERATIONS
Revenues-Revenues increased by $1,588 million, or 21%, in the first quarter of
2021 compared to the first quarter of 2020. Average sales prices in the first
quarter of 2021 were higher for many of our products as sales prices generally
correlate with crude oil prices, which increased relative to the corresponding
period in 2020. These higher prices led to a 26% increase in revenue in the
first quarter of 2021. Favorable foreign exchange impacts resulted in a revenue
increase of 4% during the first quarter of 2021. Lower sales volumes resulted in
a revenue decrease of 9% relative to the first quarter of 2020 primarily due to
unusually cold temperatures and associated electrical power outages that led to
shutdowns in our Refining and I&D manufacturing facilities in Texas partially
offset by revenues generated from our Louisiana Joint Venture.
Cost of Sales-Cost of sales increased by $810 million, or 12%, in the first
quarter of 2021 compared to the first quarter of 2020. This increase primarily
related to higher feedstock and energy costs. Additionally, in the first quarter
of 2020, we recognized an LCM inventory valuation charge of $419 million related
to the decline in market pricing for many of our raw material and finished goods
inventories during the quarter.
Operating Income-Operating income increased by $784 million, or 258%, in the
first quarter of 2021 compared to the first quarter of 2020. In the first
quarter of 2021, operating income in our O&P-Americas, Refining, O&P-EAI,
Technology and APS segments increased by $449 million, $184 million, $124
million, $35 million and $34 million, respectively, relative to the first
quarter of 2020. The increases were partially offset by a decline of $43 million
in our I&D segment in the first quarter of 2021 compared to the first quarter of
2020. Results for each of our business segments are discussed further in the
"Segment Analysis" section below.
Income from Equity Investments-Income from our equity investments increased $137
million, or 100%, in the first quarter of 2021 compared to the first quarter of
2020. The increase was primarily due to increases in Income from equity
investments in our O&P-EAI segment driven primarily by higher margins due to
increased demand.


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Income Taxes-Our effective income tax rate for the three months ended March 31,
2021 was 6.1% compared with 34.4% for the three months ended March 31, 2020. The
lower effective tax rate was primarily attributable to the remeasurement of U.S.
deferred tax liabilities that occurred in the prior year as a result of the
CARES Act (-20.9%) and return to accrual adjustments primarily from a tax
benefit associated with a step-up of certain Italian assets to fair market value
(-11.3%). These drivers were partially offset by the reduced relative impact of
our tax rate drivers, primarily exempt income, due to increased pre-tax earnings
(7.1%).
Comprehensive Income-Comprehensive income increased by $1,534 million in the
first quarter of 2021 compared to the first quarter of 2020, primarily due to
higher net income, net favorable impacts of financial derivative instruments
driven by periodic changes in benchmark interest rates and improved foreign
currency translation adjustments.
In the first quarter of 2021 and 2020, the cumulative after-tax effects of our
derivatives designated as cash flow hedges were net gains of $175 million and
net losses of $338 million, respectively. Pre-tax gains of $223 million and
pre-tax losses of $535 million related to forward-starting interest rate swaps
were driven by periodic changes in benchmark interest rates in the first quarter
of 2021 and 2020, respectively. The fluctuations of the U.S. dollar against the
euro and the periodic changes in benchmark interest rates, in the first quarter
of 2021 and 2020, resulted in pre-tax gains of $86 million and $147 million,
respectively, related to our cross-currency swaps. Pre-tax losses of $92 million
and $53 million related to our cross-currency swaps were reclassified from
Accumulated other comprehensive loss to Interest expense in the first quarter of
2021 and 2020, respectively. The remaining change pertains to our commodity cash
flow hedges.
The predominant functional currency for our operations outside of the U.S. is
the euro. Relative to the U.S. dollar, the value of the euro decreased during
the first quarter of 2021 and 2020, resulting in losses reflected in the
Consolidated Statements of Comprehensive Income. The losses related to
unrealized changes in foreign currency translation impacts were partially offset
by pre-tax gains of $62 million and $39 million in the first quarter of 2021 and
2020, respectively, which represent the effective portion of our net investment
hedges.


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                                Segment Analysis
We use earnings 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". For additional information related to our operating
segments, as well as a reconciliation of EBITDA to its nearest GAAP measure,
Income from continuing operations before income taxes, see Note 12 to our
Consolidated Financial Statements.
Revenues and the components of EBITDA for the periods presented are reflected in
the table below:
                                                       Three Months Ended
                                                           March 31,
Millions of dollars                                                   2021         2020
Sales and other operating revenues:
O&P-Americas segment                                                $ 2,859      $ 1,792
O&P-EAI segment                                                       3,047        2,224
I&D segment                                                           1,767        1,770
APS segment                                                           1,270        1,096
Refining segment                                                      1,126        1,448
Technology segment                                                      165          122
Other, including intersegment eliminations                           (1,152)        (958)
Total                                                               $ 9,082      $ 7,494
Operating income (loss):
O&P-Americas segment                                                $   687      $   238
O&P-EAI segment                                                         259          135
I&D segment                                                              88          131
APS segment                                                             104           70
Refining segment                                                       (130)        (314)
Technology segment                                                       82           47
Other, including intersegment eliminations                               (2)          (3)
Total                                                               $ 1,088      $   304
Depreciation and amortization:
O&P-Americas segment                                                $   143      $   124
O&P-EAI segment                                                          53           53
I&D segment                                                              80           70
APS segment                                                              28           44
Refining segment                                                         19           42
Technology segment                                                       12            9
Total                                                               $   335      $   342
Income (loss) from equity investments:
O&P-Americas segment                                                $    30      $     2
O&P-EAI segment                                                          95           (3)
I&D segment                                                              12            2
APS segment                                                               -           (1)
Total                                                               $   137      $     -




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                                                               Three Months Ended
                                                                   March 31,
      Millions of dollars                                                     2021        2020

Other income (loss), net:

      O&P-Americas segment                                                  $     7      $   2
      O&P-EAI segment                                                             5          4
      I&D segment                                                                 2          -
      APS segment                                                                 3          -
      Refining segment                                                            1          -
      Other, including intersegment eliminations                           
      7         (6)
      Total                                                                 $    25      $   -
      EBITDA:
      O&P-Americas segment                                                  $   867      $ 366
      O&P-EAI segment                                                           412        189
      I&D segment                                                               182        203
      APS segment                                                               135        113
      Refining segment                                                         (110)      (272)
      Technology segment                                                         94         56
      Other, including intersegment eliminations                           
      5         (9)
      Total                                                                 $ 1,585      $ 646


Olefins and Polyolefins-Americas Segment

Overview-EBITDA improved in the first quarter of 2021 relative to the first quarter of 2020 primarily due to higher olefin margins.


Ethylene Raw Materials-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. In the first quarter of 2021
and 2020 approximately 60% of the raw materials used in our North American
crackers was ethane.
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,
Millions of dollars                                           2021         2020
Sales and other operating revenues                          $ 2,859      $ 

1,792

Income from equity investments                                   30            2
EBITDA                                                          867          366

Revenues-Revenues for our O&P-Americas segment increased by $1,067 million, or 60%, in the first quarter of 2021 compared to the first quarter of 2020.

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Average sales prices were higher in the first quarter of 2021 compared to the
first quarter of 2020 which resulted in a revenue increase of 50% in the first
quarter of 2021. Volume improvements resulted in a revenue increase of 10% in
the first quarter of 2021 primarily due to a full quarter of results associated
with our Louisiana Joint Venture partially offset by the effects of unusually
cold temperatures and associated electrical power outages that led to shutdowns
of our manufacturing facilities in Texas.

EBITDA-EBITDA increased by $501 million, or 137%, in the first quarter of 2021
compared to the first quarter of 2020. First quarter of 2020 results included a
$111 million LCM inventory valuation charge primarily driven by a decline in the
price of heavy liquids and ethylene during the quarter. The absence of a similar
charge in the first quarter 2021 resulted in a 30% change in EBITDA. The first
full quarter of results for our newly formed Louisiana Joint Venture improved
EBITDA by 36% during the quarter.

Including the results of the Louisiana Joint Venture, higher olefin results led
to a 89% improvement in EBITDA in the first quarter of 2021, primarily due to
ethylene variable margin improvements associated with higher sales prices.
Polypropylene results led to a 12% increase in EBITDA in the first quarter of
2021, largely due to improved margins attributed to higher price spreads over
propylene in the first quarter of 2021. Higher income from our equity
investments led to increases in EBITDA of 7% in the first quarter of 2021 mainly
attributable to improved results at our polypropylene joint venture in Mexico.
Olefins and Polyolefins-Europe, Asia, International Segment
Overview-EBITDA for the first quarter of 2021 increased compared to the first
quarter of 2020 mainly as a result of higher polymer margins and equity income,
partly offset by lower olefin margins.
The following table sets forth selected financial information for the O&P-EAI
segment including Income (loss) from equity investments, which is a component of
EBITDA:
                                                  Three Months Ended
                                                      March 31,
Millions of dollars                                              2021         2020
Sales and other operating revenues                             $ 3,047      $ 2,224
Income (loss) from equity investments                               95           (3)
EBITDA                                                             412          189


Revenues-Revenues increased by $823 million, or 37%, in the first quarter of
2021 compared to the first quarter of 2020.
Average sales prices in the first quarter of 2021 were higher across most
products as sales prices generally correlate with crude oil prices, which on
average, increased compared to the same period in 2020. These higher average
sales prices were responsible for a revenue increase of 18% in the first quarter
of 2021. Volume improvements resulted in a revenue increase of 12% in the first
quarter of 2021 from strong polymer demand. Favorable foreign exchange impacts
resulted in a revenue increase of 7% in the first quarter of 2021.
EBITDA-EBITDA increased by $223 million, or 118%, in the first quarter of 2021
compared to the first quarter of 2020. First quarter of 2020 results included a
$36 million LCM inventory valuation charge primarily driven by a decline in the
price of naphtha during the quarter. The absence of a similar charge in the
first quarter 2021 resulted in a 19% change in EBITDA.
Improved polyethylene and polypropylene results increased EBITDA by 54% and 35%,
respectively, in the first quarter of 2021. These improvements were largely
attributed to higher margins due to strong demand. Lower olefins results led to
a 51% decrease in EBITDA in the first quarter of 2021, primarily driven by lower
margins attributable to increased feedstock costs. Higher income from our equity
investments led to increases in EBITDA of 52% in the first quarter of 2021
mainly attributable to higher polyolefin margins due to increased demand.
Favorable foreign exchange impacts resulted in a 11% increase in EBITDA in the
first quarter of 2021.


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Intermediates and Derivatives Segment
Overview-EBITDA declined in the first quarter of 2021 compared to the first
quarter of 2020, primarily driven by lower volumes across most businesses, in
particular propylene oxide and derivatives.
The following table sets forth selected financial information for the I&D
segment including Income from equity investments, which is a component of
EBITDA:
                                               Three Months Ended
                                                   March 31,
Millions of dollars                                           2021         2020
Sales and other operating revenues                          $ 1,767      $ 

1,770

Income from equity investments                                   12            2
EBITDA                                                          182          203


Revenues-Revenues decreased by $3 million, remaining relatively flat, in the
first quarter of 2021 compared to the first quarter of 2020. Lower sales volumes
resulted in a 17% decline in sales, primarily driven by a decline in production
due to the impact of unusually cold temperatures and associated electrical power
outages that led to shutdowns of our manufacturing facilities in Texas. This
decrease was largely offset by higher average sales prices in the first quarter
of 2021 for most products as sales prices generally correlate with crude oil
prices, which on average, increased compared to the same period in 2020. This
increase in average sales prices resulted in a 14% increase in revenue.
Favorable foreign exchange impacts also increased revenue by 3% in the first
quarter of 2021.
EBITDA-EBITDA decreased by $21 million, or 10%, in the first quarter of 2021
compared to the first quarter of 2020. In the first quarter of 2020 EBITDA for
our I&D segment included a $78 million LCM inventory valuation charge primarily
driven by a decline in the price of various gasoline blending components and
butane during the quarter. The absence of a similar charge in the first quarter
2021 resulted in a 38% change in EBITDA.
Oxyfuels and related products results declined, resulting in a 35% decrease in
EBITDA in the first quarter of 2021. Approximately 60% of this decline was
driven by a decrease in margins due to lower blending premium over gasoline
prices, higher feedstock costs and higher utility costs related to Texas weather
events. The remaining decrease was due to lower volumes driven by Texas weather
events and lower gasoline demand. Declines in propylene oxide and derivatives
results led to an EBITDA decrease of 12% in the first quarter of 2021. This
decrease was a result of lower volumes driven by Texas weather events as
discussed above and planned maintenance. Approximately half of this volume
decrease was offset by margin improvements due to tight market supply.
Intermediate chemicals results declined, contributing to a 10% decrease in
EBITDA primarily due to a decrease in margins due to higher feedstock costs.
Higher income from our equity investments led to increases in EBITDA of 5% in
the first quarter of 2021 mainly attributable to improved results at our joint
venture in China. Favorable foreign exchange impacts increased EBITDA by 4% in
the first quarter of 2021.
Planned maintenance in 2021 is expected to reduce EBITDA by approximately $115
million, which is $30 million lower than previously estimated, due to reduced
scope of work and associated downtime for the maintenance.
Advanced Polymer Solutions Segment
Overview-EBITDA for our APS segment increased in the first quarter of 2021
relative to the first quarter of 2020, primarily due to improved compounding and
solution results and the absence of integration costs related to the acquisition
of A. Schulman recognized in the first quarter of 2020.


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The following table sets forth selected financial information for the APS
segment including losses from equity investments, which is a component of
EBITDA:
                                                  Three Months Ended
                                                      March 31,
Millions of dollars                                              2021         2020
Sales and other operating revenues                             $ 1,270      $ 1,096
Income (loss) from equity investments                                -           (1)
EBITDA                                                             135          113


Revenues-Revenues increased by $174 million, or 16%, in the first quarter of
2021 compared to the first quarter of 2020. Foreign exchange impacts resulted in
a revenue increase of 8% in the first quarter of 2021. Sales volumes increased
in the first quarter of 2021 stemming from higher market demand for compounding
and solutions, including higher automotive and construction demand, which led to
a 4% increase in revenue. Average sales price increased resulting in a 4%
increase in revenue in the first quarter of 2021.

EBITDA-EBITDA increased by $22 million, or 19%, in the first quarter of 2021
compared to the first quarter of 2020. Increased compounding and solutions
results led to an EBITDA increase of 8% in the first quarter of 2021. This
increase was mainly attributable to higher volumes driven by increased demand
for our products utilized in the automotive and construction end markets in Asia
and Europe. Integration activities related to our 2018 acquisition of A.
Schulman Inc. were substantially completed during the third quarter of 2020. In
the absence of these integration costs in the first quarter of 2021, EBITDA
changed 12% during the quarter. Favorable foreign exchange impacts increased
EBITDA by 6% in the first quarter 2021.
Refining Segment
Overview-EBITDA increased in the first quarter of 2021 relative to the first
quarter of 2020 primarily due to the absence of an LCM inventory valuation
charge which was recognized in the first quarter of 2020.
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,
Millions of dollars                                           2021         

2020

Sales and other operating revenues                          $ 1,126      $ 1,448
EBITDA                                                         (110)        (272)

Thousands of barrels per day
Heavy crude oil processing rates                                152         

226


Market margins, dollars per barrel
Brent - 2-1-1                                               $ 10.57      $  7.43
Brent - Maya differential                                      4.75         9.79
Total Maya 2-1-1                                            $ 15.32      $ 17.22





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Revenues-Revenues decreased by $322 million, or 22%, in the first quarter of
2021 compared to the first quarter of 2020. Heavy crude oil processing rates
decreased during the first quarter of 2021 due to planned and unplanned outages,
including the effects of unusually cold temperatures and associated electrical
power outages that led to shutdowns of our manufacturing facilities in Texas.
This decline in sales volumes resulted in a 32% reduction in revenue. This
decrease was partially offset by higher product prices, which led to a revenue
increase of 10% due to an average Brent crude oil price increase of
approximately $10 per barrel in the first quarter of 2021.
EBITDA-EBITDA increased by $162 million, or 60%, in the first quarter of 2021
compared to the first quarter of 2020. First quarter 2020 results included a
$192 million LCM inventory valuation charge primarily driven by a decline in the
price of crude oil and refined products, the absence of a similar charge in the
first quarter 2021 resulted in a 71% change in EBITDA. This increase in the
first quarter of 2021 was partially offset by a 7% decrease in EBITDA due to
lower heavy crude oil processing rates driven by the impact of facility outages
as discussed above and lower demand for transportation fuels. Margin declines
resulted in a 4% decrease in EBITDA driven by a decrease in the Maya 2-1-1
market margin due to tighter heavy oil supply and a decrease in refined product
demand as well as higher costs of Renewable Identification Numbers ("RINs").
Technology Segment

Overview-EBITDA increased in the first quarter of 2021 compared to the first quarter of 2020, primarily due to higher licensing revenues.


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

                                               Three Months Ended
                                                   March 31,
Millions of dollars                                            2021       2020
Sales and other operating revenues                            $ 165      $ 122
EBITDA                                                           94         56


Revenues-Revenues increased by $43 million, or 35%, in the first quarter of 2021
compared to the first quarter of 2020. Higher licensing revenues resulted in a
20% increase in the first quarter of 2021 compared to the first quarter of 2020.
Higher catalyst volumes resulted in a 8% increase in revenue in the first
quarter of 2021 primarily driven by a strong demand. Favorable foreign exchange
impact led to a revenue increase of 7% in the first quarter of 2021.
EBITDA-EBITDA increased by $38 million, or 68%, in the first quarter of 2021
compared to the first quarter of 2020. Higher licensing revenues from more
contracts reaching significant milestones in the first quarter of 2021 compared
to the first quarter of 2020 resulted in a 41% increase in EBITDA. Higher
catalyst volumes resulted in a 14% increase in EBITDA. Foreign exchange impacts,
which on average, were favorable led to a 9% increase in EBITDA in the first
quarter of 2021.
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                              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                    2021             2020
Cash provided by (used in) :
Operating activities           $      571              $ 542
Investing activities                  (59)              (663)
Financing activities                 (782)               884


Operating Activities-Cash provided by operating activities of $571 million in
the first quarter of 2021 reflected earnings adjusted for non-cash items,
payments for employee bonuses, income taxes, income from equity investments, and
cash used by the main components of working capital-Accounts receivable,
Inventories and Accounts payable.
In the first quarter of 2021, the main components of working capital used $626
million of cash driven primarily by an increase in Accounts receivable and
Inventories partially offset by an increase in Accounts payable. The increase in
Accounts receivable was driven by higher revenues for our O&P-Americas, O&P-EAI,
and APS segments. The increase in Inventory was primarily driven by higher
inventory volumes, due to lower crude oil consumption as a result of Texas
weather events, and prices within our Refining segment. The increase in Accounts
payables was primarily driven by increased raw material costs.
Cash provided by operating activities of $542 million in the first quarter of
2020 reflected earnings adjusted for non-cash items, payments for employee
bonuses, income taxes, and cash consumed by the main components of working
capital.
In the first quarter of 2020, the main components of working capital used $110
million of cash driven primarily by a decrease in Accounts payable partially
offset by a decrease in Inventories. The decrease in Accounts payable was
primarily due to lower feedstock prices in our O&P-EAI segment as well as a
decrease in crude oil purchases in our Refining segment. The decrease in
Inventory was primarily driven by company-wide inventory reduction initiatives
as well as higher sales volumes in our O&P-EAI segment compared to the fourth
quarter 2019 and turnaround activities in our I&D segment.
Investing Activities-We invest cash in investment-grade and other high-quality
instruments that provide adequate flexibility to redeploy funds as needed to
meet our cash flow requirements while maximizing yield.
In the first quarters of 2021 and 2020 we received proceeds of $226 million and
$1 million, respectively, from our investments in equity securities.
Additionally, we received proceeds of $74 million in the first quarter of 2021
upon the maturity of certain available-for-sale debt securities.
Capital expenditures for the first three months of 2021 totaled $340 million
compared to $660 million for the first three months of 2020, resulting in a
decrease of $320 million or 48% in 2021 compared to 2020. Reduced spending
within our I&D segment accounted for 32% of the decline which was driven by
decreased spending at our PO/TBA plant. Additionally, spending in our
O&P-Americas segment decreased by 21% due to the completion of our Hyperzone
polyethylene plant in 2020 and a decline in other plant improvement projects in
2021. See Note 12 to the Consolidated Financial Statements for additional
information regarding capital spending by segment.
Financing Activities-We made dividend payments totaling $352 million and $351
million in the first quarters of 2021 and 2020, respectively.
In January 2021, we repaid $500 million outstanding under our Term Loan due
2022.
In the first quarters of 2021 and 2020 we received a return of collateral of $66
million and posted collateral of $238 million, respectively, related to the
positions held with our counterparties for certain forward-starting interest
rate swaps.


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In March 2020, we borrowed $500 million from our Senior Revolving Credit
Facility and $500 million from our U.S. Receivables Facility to increase our
liquidity.
In the first quarter 2020, we received net proceeds of $516 million, through the
issuance and repurchase of commercial paper instruments under our commercial
paper program.
Additional information related to the issuance of debt and commercial paper can
be found in Note 6 to the Consolidated Financial Statements.
Liquidity and Capital Resources
Overview
We plan to fund our ongoing working capital, capital expenditures, debt service
and other funding 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. Cash and cash equivalents, cash from our short-term
investments, cash from operating activities, proceeds from the issuance of debt,
or a combination thereof, may be used to fund the purchase of shares under our
share repurchase authorization.

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 deployment strategy. In the near
term, we are prioritizing debt reduction on our balance sheet.

Cash and Liquid Investments
As of March 31, 2021, we had Cash and cash equivalents and marketable securities
classified as Short-term investments totaling $1,835 million, which includes
$1,197 million in jurisdictions outside of the U.S., principally in the United
Kingdom. There are currently no legal or economic restrictions that would
materially impede our transfers of cash.
Credit Arrangements
At March 31, 2021, we had total debt, including current maturities, of $15,425
million, and $197 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 $2,905 million
at March 31, 2021, which included the following:
•$2,005 million under our $2,500 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.
A small portion of our availability under this facility is impacted by changes
in the euro/U.S. dollar exchange rate. At March 31, 2021, we had $500 million of
outstanding commercial paper, net of discount, 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, 2021, we had no borrowings or letters of credit outstanding under this
facility.


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We believe that our recent value-driven growth investments should benefit us
over the coming years. With an improving outlook for cash generation, we remain
committed to further strengthening our investment grade balance sheet through
deleveraging. In January 2021, we repaid $500 million outstanding under our Term
Loan due 2022. An additional $500 million was repaid in April 2021. We expect
that our robust cash generation from operations should continue throughout the
year and our top priority for capital deployment in 2021 is debt reduction,
which will enable meaningful progress toward improving our credit metrics to two
times total debt to EBITDA.
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.
In accordance with our current interest rate risk management strategy and
subject to management's evaluation of market conditions and the availability of
favorable interest rates among other factors, we may from time to time enter
into interest rate swap agreements to economically convert a portion of our
fixed rate debt to variable rate debt or convert a portion of our variable rate
debt to fixed rate debt.
CURRENT BUSINESS OUTLOOK

With no significant planned maintenance for our assets during the second
quarter, we plan to operate at nearly full capacity worldwide to meet improved
demand that is expected to persist due to low inventories and maintenance
downtime across our industry. Strong North American integrated polyethylene
margins should continue as U.S. producers seek to fulfill domestic order
backlogs, rebuild inventories and serve export demand. During the second half of
2021, increased mobility should drive higher demand for gasoline and jet fuel,
improving margins for our Refining and I&D segments. We also expect that
moderating feedstock costs will increase second quarter margins for our Advanced
Polymer Solutions segment.
ACCOUNTING AND REPORTING CHANGES
For a discussion of the potential impact of new accounting pronouncements on our
Consolidated Financial Statements, see Note 2 to the Consolidated Financial
Statements.


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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 and Section 21E of the Securities
Exchange Act of 1934. 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 fall materially, or remain low relative to U.S. natural gas
prices, we would 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; for example, because the Houston refinery is our only
refining operation, we would not have the ability to increase production
elsewhere to mitigate the impact of any outage at that facility;
•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 new businesses and assets and integrate those operations
into our existing operations and make cost-saving changes in operations;
•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;
•uncertainties related to the extent and duration of the pandemic-related
decline in demand, or other impacts due to the pandemic in geographic regions or
markets served by us, or where our operations are located, including the risk of
prolonged recession;


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•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 agreements or
treaties, or changes in 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 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 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.

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