Segment and Related Information

3 Months Ended

Mar. 31, 2020

12. Segment and Related Information

Our operations are managed by senior executives who report to our Chief Executive Officer, the chief operating decision maker. Discrete financial information is available for each of the segments, and our Chief Executive Officer uses the operating results of each of the operating segments for performance evaluation and resource allocation. The activities of each of our segments from which they earn revenues and incur expenses are described below:

•Olefins and Polyolefins—Americas (“O&P—Americas”). Our O&P—Americas segment produces and markets olefins and co-products, polyethylene and polypropylene.

•Olefins and Polyolefins—Europe, Asia, International (“O&P—EAI”). Our O&P—EAI segment produces and markets olefins and co-products, polyethylene, and polypropylene.

•Intermediates and Derivatives (“I&D”). Our I&D segment produces and markets propylene oxide and its derivatives, oxyfuels and related products, and intermediate chemicals such as styrene monomer, acetyls, ethylene oxide and ethylene glycol.

•Advanced Polymer Solutions (“APS”). Our APS segment produces and markets compounding and solutions, such as polypropylene compounds, engineered plastics, masterbatches, engineered composites, colors and powders, and advanced polymers, which includes Catalloy and polybutene-1.

•Refining. Our Refining segment refines heavy, high-sulfur crude oil and other crude oils of varied types and sources available on the U.S. Gulf Coast into refined products, including gasoline and distillates.

•Technology. Our Technology segment develops and licenses chemical and polyolefin process technologies and manufactures and sells polyolefin catalysts.

Our chief operating decision maker uses EBITDA as the primary measure for reviewing profitability of our segments, and therefore, we have presented EBITDA for all segments. We define EBITDA as earnings before interest, income taxes, and depreciation and amortization.

“Other” includes 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 benefit costs other than service costs. Sales between segments are made primarily at prices approximating prevailing market prices.

Summarized financial information concerning reportable segments is shown in the following tables for the periods presented:


	Three Months Ended March 31, 2020
Millions of dollars	O&P– Americas		O&P– EAI		I&D		APS		Refining		Technology		Other		Total
Sales and other operating revenues:
Customers	$	1,173	$	2,064	$	1,732	$	1,093	$	1,336	$	96	$	—	$	7,494
Intersegment	619		160		38		3		112		26		(958)		—
	1,792		2,224		1,770		1,096		1,448		122		(958)		7,494
Income (loss) from equity investments	2		(3)		2		(1)		—		—		—		—
EBITDA	366		189		203		113		(272)		56		(9)		646


	Three Months Ended March 31, 2019
Millions of dollars	O&P– Americas		O&P– EAI		I&D		APS		Refining		Technology		Other		Total
Sales and other operating revenues:
Customers	$	1,393	$	2,343	$	1,852	$	1,338	$	1,743	$	109	$	—	$	8,778
Intersegment	718		192		42		1		139		32		(1,124)		—
	2,111		2,535		1,894		1,339		1,882		141		(1,124)		8,778
Income from equity investments	11		51		2		—		—		—		—		64
EBITDA	516		296		390		148		(15)		83		10		1,428

Operating results for our O&P–Americas segment include charges of $111 million in the first quarter of 2020, primarily related to LCM inventory valuation charges driven primarily by declines in the prices of heavy liquids and ethylene. Our O&P–EAI segment results for the first quarter of 2020 were negatively impacted by a $36 million LCM inventory valuation charge largely due to a decline in the price of naphtha. Operating results for our I&D segment in the first quarter of 2020 reflect a $78 million LCM charge driven by declines in the prices of various gasoline blending components and butane. Our APS segment results for the first quarter of 2020 were negatively impacted by a $2 million LCM charge mainly due to a decline in the price of polymers. In our Refining segment, operating results were reduced by a $192 million LCM inventory charge in the first quarter of 2020, primarily driven by a decline in the prices of crude oil and refined products.

Our APS segment results for the first quarters of 2020 and 2019 included $14 million and $16 million of integration costs associated with our 2018 acquisition of A. Schulman, respectively.

A reconciliation of EBITDA to Income from continuing operations before income taxes is shown in the following table for each of the periods presented:


	Three Months Ended March 31,
Millions of dollars	2020		2019
EBITDA:
Total segment EBITDA	$	655	$	1,418
Other EBITDA	(9)		10
Less:
Depreciation and amortization expense	(342)		(322)
Interest expense	(89)		(92)
Add:
Interest income	3		6
Income from continuing operations before income taxes	$	218	$	1,020