Segment and Related Information

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Segment and Related Information [Text Block]

14.    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 September 30, 2020
Millions of dollars	O&P– Americas		O&P– EAI		I&D		APS		Refining		Technology		Other		Total
Sales and other operating revenues:
Customers	$	1,268	$	1,837	$	1,498	$	1,003	$	1,003	$	167	$	—	$	6,776
Intersegment	572		145		40		1		98		26		(882)		—
	1,840		1,982		1,538		1,004		1,101		193		(882)		6,776
Income from equity investments	15		40		7		—		—		—		—		62
EBITDA	474		148		267		157		(692)		111		1		466

	Three Months Ended September 30, 2019
Millions of dollars	O&P– Americas		O&P– EAI		I&D		APS		Refining		Technology		Other		Total
Sales and other operating revenues:
Customers	$	1,337	$	2,138	$	1,988	$	1,186	$	1,952	$	121	$	—	$	8,722
Intersegment	800		171		58		—		182		25		(1,236)		—
	2,137		2,309		2,046		1,186		2,134		146		(1,236)		8,722
Income from equity investments	12		36		1		2		—		—		—		51
EBITDA	653		291		390		102		(6)		83		—		1,513

	Nine Months Ended September 30, 2020
Millions of dollars	O&P– Americas		O&P– EAI		I&D		APS		Refining		Technology		Other		Total
Sales and other operating revenues:
Customers	$	3,514	$	5,543	$	4,370	$	2,796	$	3,193	$	400	$	—	$	19,816
Intersegment	1,551		365		95		9		275		92		(2,387)		—
	5,065		5,908		4,465		2,805		3,468		492		(2,387)		19,816
Income (loss) from equity investments	24		88		12		(1)		—		—		—		123
EBITDA	1,088		522		571		226		(799)		279		(15)		1,872

	Nine Months Ended September 30, 2019
Millions of dollars	O&P– Americas		O&P– EAI		I&D		APS		Refining		Technology		Other		Total
Sales and other operating revenues:
Customers	$	4,055	$	6,764	$	5,860	$	3,781	$	5,706	$	382	$	—	$	26,548
Intersegment	2,307		585		142		2		490		78		(3,604)		—
	6,362		7,349		6,002		3,783		6,196		460		(3,604)		26,548
Income from equity investments	35		139		5		—		—		—		—		179
EBITDA	1,804		918		1,228		370		(87)		273		14		4,520

Operating results for our O&P–Americas segment include an LCM inventory valuation charge of $3 million during the first nine months of 2020, primarily driven by declines in the prices of polymers. During the third quarter of 2020, operating results for our O&P–Americas segment include an LCM inventory valuation benefit of $70 million largely driven by recovery of market prices of ethylene and polymers.

Operating results for our O&P–Americas segment also include a LIFO inventory charge of $61 million for the third quarter and first nine months of 2020.

Operating results for our O&P–EAI segment include an LCM inventory valuation charge of $53 million during the first nine months of 2020, primarily driven by declines in the prices of naphtha and polymers. During the third quarter of 2020, operating results for our O&P–EAI segment include an LCM inventory valuation benefit of $17 million, largely due to recovery of market prices of naphtha and polymers.

Operating results for our I&D segment include an LCM inventory valuation charge of $76 million during the first nine months of 2020 driven by declines in the prices of various gasoline blending components, benzene and styrene. During the third quarter of 2020, operating results for our I&D segment include an LCM inventory valuation benefit of $22 million largely due to recovery of prices for gas blending components.

Operating results for our APS segment include an LCM inventory valuation charge of $29 million during the first nine months of 2020 driven by a decline in the price of polymers. During the third quarter of 2020, operating results for our APS segment include an LCM inventory valuation benefit of $40 million driven by a recovery in prices of polymers.

Our APS segment results include integration costs associated with our 2018 acquisition of A. Schulman for the third quarter of 2020 and 2019 of $7 million and $43 million, respectively, and for the first nine months of 2020 and 2019 of $37 million and $78 million, respectively.

Operating results for our Refining segment include an LCM inventory valuation charge of $2 million during the first nine months of 2020, primarily driven by declines in the prices of refined products. During the third quarter of 2020, operating results for our Refining segment include an LCM inventory valuation benefit of $11 million primarily due to the recovery of market prices of refined products.

Results for our Refining segment also include a non-cash impairment charge of $582 million which was recognized during the third quarter of 2020 as we expect that prolonged reduction of travel and associated transportation fuels consumption resulting from the pandemic has created length in global fuel markets that will pressure refining profitability for an extended period of time. In addition, the refinery is expected to continue to be adversely affected by lower discounts for the heavy crude oil feedstocks that we utilize.

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 September 30,				Nine Months Ended September 30,
Millions of dollars	2020		2019		2020		2019
EBITDA:
Total segment EBITDA	$	465	$	1,513	$	1,887	$	4,506
Other EBITDA	1		—		(15)		14
Less:
Depreciation and amortization expense	(358)		(327)		(1,056)		(977)
Interest expense	(122)		(86)		(336)		(259)
Add:
Interest income	3		5		10		16
(Loss) income from continuing operations before income taxes	$	(11)	$	1,105	$	490	$	3,300