LYONDELLBASELL INDUSTRIES N.V. 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 toLyondellBasell 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. DuringFebruary 2021 , unusually cold weather and related power outages impacted operations in our industry across the state ofTexas and reduced our production volumes. InMarch 2021 we achieved the first full quarter of results for our recently formedLouisiana 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 theLouisiana ethylene cracker operated continuously when mostTexas 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 ourAdvanced 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 inTexas due to the weather events. Other noteworthy items since the beginning of the year include the following: •InJanuary 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 inChina ; and •In both January andApril 2021 , repaid$500 million outstanding under our Term Loan due 2022, for a total repayment of$1 billion . 25
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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 inTexas 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. 26
-------------------------------------------------------------------------------- Table of Contents Income Taxes-Our effective income tax rate for the three months endedMarch 31, 2021 was 6.1% compared with 34.4% for the three months endedMarch 31, 2020 . The lower effective tax rate was primarily attributable to the remeasurement ofU.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 theU.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 theU.S. is the euro. Relative to theU.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. 27
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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 2020Other 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 ourU.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&
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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 inTexas . 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 toTexas weather events. The remaining decrease was due to lower volumes driven byTexas 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 byTexas 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 inChina . 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 ofA. Schulman recognized in the first quarter of 2020. 31
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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 32
-------------------------------------------------------------------------------- Table of Contents 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 inTexas . 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 CONDITIONOperating, 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.
34-------------------------------------------------------------------------------- Table of Contents InMarch 2020 , we borrowed$500 million from our Senior Revolving Credit Facility and$500 million from ourU.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 ofMarch 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 theU.S. , principally in theUnited Kingdom . There are currently no legal or economic restrictions that would materially impede our transfers of cash. Credit Arrangements AtMarch 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 atMarch 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. AtMarch 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. AtMarch 31, 2021 , we had no borrowings or letters of credit outstanding under this facility. 35
-------------------------------------------------------------------------------- Table of Contents 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. InJanuary 2021 , we repaid$500 million outstanding under our Term Loan due 2022. An additional$500 million was repaid inApril 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 asU.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 ourAdvanced 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. 36 -------------------------------------------------------------------------------- Table of Contents 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 inthe 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 theU.S. ) could reduce the current benefits we receive; •if crude oil prices fall materially, or remain low relative toU.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 theHouston 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; 37
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Table of Contents •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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