Selected Financial Information
Year Ended December 31
During 2020, we generated net income of $52 million, compared to $214 million in 2019. The decrease in net income was primarily due to lower polyethylene and ethylene selling prices, somewhat offset by higher polyethylene sales volumes, lower feedstock costs and lower fixed costs. Revenue decreased by $136 million in 2020, due largely to lower polyethylene and ethylene selling prices in the first half of 2020. As the COVID-19 pandemic evolved and continued into the second half of 2020, a gradual recovery began as demand for many packaging applications increased. As the demand increased, supply was constrained due to planned and unplanned outages and as a result, overall profitability and EBITDA improved in the second half of 2020 as NOVA successfully implemented polyethylene price increases throughout this period and realized benefits from our business improvement program. Improved market conditions also resulted in an increase in the selling price of ethylene from record lows in the second quarter of 2020.
Despite the challenging macroeconomic conditions faced by NOVA in 2020, we made significant progress toward our long-term strategy with accomplishments in the following areas in 2020:
- We launched and made significant progress within our business improvement program, which identified ideas within our operations, commercial excellence, supply chain, procurement and capital expenditures.
- We entered the PCR market by entering into agreements with both Merlin Plastics Supply Inc. (“Merlin”) and Revolution. The Merlin agreement will increase the supply of high quality PCR for consumer packaging, while the Revolution agreement enables NOVA to sell recycled LLDPE produced by Revolution.
- We entered into a joint development agreement with Enerkem Inc. to collaborate on researching innovative technology to close the loop on recycling and drive a plastics circular economy. The research will specifically explore turning non- recyclable and non-compostable municipal waste into ethylene.
- We improved our liquidity position through our April 2020 divestiture of our 50% ownership interest in Novealis to an affiliate of Borealis and we sold our Expandable Styrenics business to a subsidiary of Alpek in October 2020.
Our project to expand the Corunna cracker and build a new Advanced SCLAIRTECHTM technology facility is progressing well, with start-up expected in late 2022. The project, once completed, will increase our annual polyethylene nameplate capacity by approximately 950 million pounds.
As of December 31, 2020, our total liquidity was $1,774 million, including $282 million of cash and cash equivalents. We were in compliance with our covenants at December 31, 2020 and 2019, which govern our senior secured credit agreement and our accounts receivable securitization programs. We define liquidity as total available capacity under our senior secured credit agreement, less utilization (including letters of credit), plus cash and cash equivalents, net of any limitations as a result of covenant compliance.
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