01—Abstract
Summary
Summary of the 10-K filed February 22, 2018. Cited figures are marked; the original filing is the authoritative source.
LyondellBasell Industries N.V. reported 2017 net income of $4.88 billiona on sales and other operating revenues of $34.48 billion, up from $29.18 billion in 2016.
Operating income rose to $5.46 billionb from $5.06 billion, driven mainly by higher olefins volumes after the Corpus Christi expansion, higher Olefins and Polyolefins—EAI and Intermediates and Derivatives margins, and better crude processing rates at the Houston refinery. Diluted EPS from continuing operations was $12.28, versus $9.15 in 2016. Results were also lifted by an $819 million non-cash tax benefit from the Tax Cuts and Jobs Act, which lowered the effective tax rate to 10.9% from 26.5% in 2016.
Cash flow from operations was $5.21 billionc, and capital expenditures were $1.55 billion. The company returned $1.42 billion through dividends, raised the quarterly dividend from $0.85 to $0.90, and repurchased about 10 million shares for $845 million. Cash and cash equivalents were $1.52 billion at year-end, and total debt was $8.62 billion.
The company redeemed $1 billiond of 5% senior notes due 2019 using proceeds from new 3.5% guaranteed notes due 2027. Total debt including current maturities was $8.62 billion at December 31, 2017. Looking ahead, the company expects 2018 capital expenditures of about $2.4 billion, including the Hyperzone polyethylene plant and a PO/TBA plant.
On February 15, 2018, it agreed to acquire A. Schulman for total consideration of $2.25 billion, funded with cash on hand and expected to close in the second half of 2018. Near-term EBITDA is expected to be hit by about $45 million from January cold-weather disruptions and about $50 million per quarter in the first and second quarters from a Channelview cracker turnaround.
02—Key points
Key Highlights
- Net income of $4,877 million in 2017, up from $3,837 million in 2016; diluted EPS from continuing operations of $12.28 versus $9.15.
- Revenue rose to $34,484 million from $29,183 million, with average sales prices higher across most products.
- Operating income of $5,460 million, up $400 million, led by O&P—Americas, O&P—EAI, I&D and Refining.
- An $819 million non-cash tax benefit from the Tax Cuts and Jobs Act drove the effective tax rate to 10.9%.
- Cash from operations of $5,206 million; capital expenditures of $1,547 million; dividends paid of $1,415 million.
- Quarterly dividend increased to $0.90 from $0.85; about 10 million shares repurchased for $845 million in 2017.
- Agreed in February 2018 to acquire A. Schulman for $2.25 billion, funded with cash on hand and expected to close in the second half of 2018.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, LyondellBasell Industries kept $0.14.
- Revenue$34.48B100.0%
- Cost of revenue−$28.06B81.4%
- Gross profit$6.42B18.6%
- Operating costs−$965.0M2.8%
- Operating income$5.46B15.8%
- Interest, other & tax−$583.0M1.7%
- Net income$4.88B14.1%
Where FY2017 revenue went
$34.48B- Cost of revenue: $28.06B, 81% of revenue
- Net income: $4.88B, 14% of revenue
- R&D: $106.0M, 0.3% of revenue
- SG&A: $859.0M, 2.5% of revenue
- Interest, other & tax: $583.0M, 1.7% of revenue
Kept 14% as net incomeR&D $106.0M · 0.3%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 22, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $34.48B$29.18B | +18.2% |
| Cost of Revenue | $28.06B$23.19B | +21.0% |
| Gross Profit | $6.42B$5.99B | +7.2% |
| R&D Expenses | $106.00M$99.00M | +7.1% |
| SG&A Expenses | $859.00M$833.00M | +3.1% |
| Operating Expenses | $29.02B$24.12B | +20.3% |
| Operating Income | $5.46B$5.06B | +7.9% |
| Interest Expense | $491.00M$322.00M | +52.5% |
| Net Income | $4.88B$3.84B | +27.1% |
| EPS (Basic) | $12.23$9.15 | +33.7% |
| EPS (Diluted) | $12.23$9.13 | +34.0% |
05—Questions
Frequently Asked Questions
How did LyondellBasell's operating performance change in 2017?
Operating income increased to $5,460 million from $5,060 million. The filing attributes the improvement mainly to higher olefins volumes following the Corpus Christi expansion, higher O&P—EAI and I&D results, and better Houston refinery crude processing rates.
How much did the Tax Act affect 2017 earnings?
The company recorded a provisional $819 million non-cash tax benefit from remeasuring U.S. net deferred tax liabilities under the Tax Cuts and Jobs Act. This lowered the 2017 effective tax rate to 10.9%, compared with 26.5% in 2016.
What is the company's capital return and balance sheet position?
The company paid $1,415 million in dividends and repurchased about 10 million shares for $845 million in 2017. At year-end it held $1,523 million of cash and cash equivalents and $8,619 million of total debt including current maturities, with $2,500 million undrawn under its revolving credit facility.
What major transactions and capital projects are planned?
The company agreed to acquire A. Schulman for $2.25 billion, to be funded with cash on hand and expected to close in the second half of 2018. It expects 2018 capital expenditures of about $2.4 billion, mainly for the Hyperzone polyethylene plant in La Porte and the PO/TBA plant in Texas.
What near-term headwinds did management disclose?
Management said January 2018 cold weather disruptions on the U.S. Gulf Coast would reduce EBITDA by about $45 million. A Channelview cracker planned maintenance is expected to reduce O&P—Americas EBITDA by about $50 million in each of the first and second quarters of 2018.
06—Continue