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FIRST QUARTER EARNINGS
CELANESE 1Q2005 EARNINGS
NYSE: CE
CONFERENCE CALL/WEBCAST
Tues., May 10, 2005 10 a.m CT
David Weidman, CEO
C.J. Nelson, CFO
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FORWARD-LOOKING STATEMENTS
This presentation may contain "forward-looking statements," which include
information concerning the Company's plans, objectives, goals, strategies,
future revenues or performance, capital expenditures, financing needs and other
information that is not historical information. When used in this presentation,
the words "estimates," "expects," "anticipates," "projects," "plans," "intends,"
"believes," and variations of such words or similar expressions are intended to
identify forward-looking statements. All forward-looking statements are based
upon current expectations and beliefs and various assumptions. There can be no
assurance that the Company will realize these expectations or that these beliefs
will prove correct.
There are a number of risks and uncertainties that could cause actual results to
differ materially from the forward-looking statements contained in this
presentation. Numerous factors, many of which are beyond the Company's control,
could cause actual results to differ materially from those expressed as
forward-looking statements. For a discussion of some of the factors, we
recommend that you review the Company's Annual Report on Form 10-K at the SEC's
website at www.sec.gov. Any forward-looking statement speaks only as of the date
on which it is made, and the Company undertakes no obligation to update any
forward-looking statements to reflect events or circumstances after the date on
which it is made or to reflect the occurrence of anticipated or unanticipated
events or circumstances.
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RECONCILIATION OF NON-GAAP MEASURES TO U.S. GAAP
This presentation reflects four performance measures, net debt, adjusted
EBITDA, adjusted net earnings and adjusted basic earnings per share as non-U.S.
GAAP measures. The most directly comparable financial measure presented in
accordance with U.S. GAAP in our consolidated financial statements for net debt
is total debt; for adjusted EBITDA is net earnings (loss); for adjusted earnings
is net earnings (loss); and, for adjusted basic earnings per share is income
available to common shareholders. For a reconciliation of these non-U.S. GAAP
measures to U.S. GAAP figures, see the accompanying schedules to this release.
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USE OF NON-GAAP FINANCIAL INFORMATION
Adjusted EBITDA, a measure used by management to measure performance, is defined
as earnings (loss) from continuing operations, plus interest expense net of
interest income, income taxes and depreciation and amortization, and further
adjusted for certain cash and non-cash charges. Our management believes adjusted
EBITDA is useful to investors because it is one of the primary measures our
management uses for its planning and budgeting processes and to monitor and
evaluate financial and operating results. Adjusted EBITDA is not a recognized
term under U.S. GAAP and does not purport to be an alternative to net earnings
as a measure of operating performance or to cash flows from operating activities
as a measure of liquidity. Because not all companies use identical calculations,
this presentation of adjusted EBITDA may not be comparable to other similarly
titled measures of other companies. Additionally, adjusted EBITDA is not
intended to be a measure of free cash flow for management's discretionary use,
as it does not consider certain cash requirements such as interest payments, tax
payments and debt service requirements nor does it represent the amount used in
our debt covenants. Adjusted net earnings is defined as net earnings adjusted
for special and one-time expenses. Adjusted basic earnings per share is defined
as income available to common shareholders adjusted for special and one-time
expenses divided by the number of average common shares outstanding as of March
31, 2005. (The IPO occurred on January 21, 2005.) We believe that the
presentation of all of the non-U.S. GAAP information provides useful information
to management and investors regarding various financial and business trends
relating to our financial condition and results of operations, and that when
U.S. GAAP information is viewed in conjunction with non-U.S. GAAP information,
investors are provided with a more meaningful understanding of our ongoing
operating performance. This non-U.S. GAAP information is not intended to be
considered in isolation or as a substitute for U.S. GAAP financial information.
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David Weidman
Chief Executive Officer
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STRONG UNDERLYING BUSINESS RESULTS
(IN $MILLIONS)
1ST QTR 2005
------------
SALES $1,509 UP
OPERATING PROFIT 21%
ADJUSTED BASIC EPS $166 UP 219%
DIVIDENDS FROM EQUITY & COST INVESTMENTS $0.87
ADJUSTED EBITDA $50
$334 UP 61%
o Expansion of operating profit and strengthened cash position
o Higher pricing on strong demand and high capacity utilization in Chemical
Products
o Bolstered downstream acetyls business with Vinamul acquisition
o New leadership team in place
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CHEMICALS PRODUCTS
(IN $MILLIONS) 1ST QTR 05
---------------
SALES $1,044 UP 28%
SEGMENT EARNINGS(1) $193 UP 202%
First Quarter:
o Significant price increases on robust demand, high industry capacity
utilization
o Pricing more than offset higher raw material costs
Outlook:
o Continued strength in the business in 2nd quarter
o 2nd quarter earnings to be in same range as first quarter
o In second half 2005, new acetyls capacity expected to temporarily ease tight
supply/demand
STRONG INTEGRATED CHAIN OF ACETYL PRODUCTS
(1) -Earnings from continuing operations before tax and minority interests
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TICONA
(IN $MILLIONS)
1ST QTR 05
----------
SALES $239 UP 5%
SEGMENT $51 UP 13%
EARNINGS(1)
First Quarter:
o Volume growth from continued penetration in new applications
o Weakened sales to European automotive sector
o Successfully implemented price increases, understated by product mix
Outlook:
o Expect further success in increasing prices
o Modest volume growth due to downturn in automotive
FOCUS ON INCREASED GROWTH THROUGH INNOVATION
(1) -Earnings from continuing operations before tax and minority interests
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ACETATE/PERFORMANCE PRODUCTS SUMMARIES
(IN $MILLIONS) 1ST QTR 05
----------
SALES $196 UP 14%
SEGMENT
EARNINGS(1) $20 MILLION UP 122%
ACETATE
o Strong results on higher volumes, pricing and productivity improvements
o China venture expansions moving forward
o Restructuring of operations on schedule
(IN $MILLIONS) 1ST QTR 05
----------
SALES $47 UP 7%
SEGMENT $12 UP 9%
EARNINGS(1)
PERFORMANCE PRODUCTS
o Stable earnings on strong sweetener demand
o Pricing declines on sales to large-volume customers
ATTRACTIVE, CASH GENERATING BUSINESSES
(1) -Earnings from continuing operations before tax and minority interests
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C. J. Nelson
Executive Vice President and Chief Financial Officer
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FINANCIAL HIGHLIGHTS
IN $ MILLIONS (EXCEPT PER SHARE DATA) 1ST QTR 2005 1st Qtr 2004
- ------------------------------------- ------------ ------------
SUCCESSOR Predecessor
--------- -----------
Net sales 1,509 1,243
Operating Profit 166 52
SG&A (161) (137)
Net income (10) 78
Basic EPS (0.08) n.m.
Special items
Refinancing expenses 102 -
Special charges 38 28
Advisor monitoring fee 10 -
- --------------------------------------------------------------------------------
Adjusted Basic EPS 0.87 n.m.
================================================================================
Adjusted EBITDA 334 208
================================================================================
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FULL YEAR 2005 KEY MODELING ASSUMPTIONS
INCOME STATEMENT EQUITY - CE SHARES
---------------- ------------------
($ MILLIONS)
o COMMON STOCK = 158.5 MILLION OUTSTANDING
o DEPRECIATION = $240-$260
o SPECIAL CHARGES = $65-$85 o POTENTIALLY DILUTIVE SECURITIES AS OF MAR. 31:
o INCLUDES 1Q CANCELLATION OF o 11 MILLION SHARES - STOCK OPTIONS
MONITORING FEE $35 o 12 MILLION SHARES - CONVERTED PREFERRED
o INTEREST EXPENSE = $290-$300 o PREFERRED STOCK DIVIDENDS = APPROX. $10
o EXCLUDING DEFERRED MILLION ON 9.6 MILLION OUTSTANDING SHARES
FINANCE/DEBT PREMIUM OF
APPROX. $102 EQUITY - CAG MINORITY INTEREST
o AVG COST OF BORROWED ------------------------------
CAPITAL = 7%
o APPROXIMATELY 8 MILLION SHARES OUTSTANDING
o EFFECTIVE TAX RATE OF 35% AT THE AS OF APRIL 26
BASIC EPS LEVEL
o CURRENT TENDER OFFER PRICE = [EURO]41.92/SHARE
o 1Q MONITOR FEE PAYMENT $10
o NET GUARANTEED PAYMENT = APPROXIMATELY
o MINORITY INTEREST IN TEENS/QTR [EURO]24 MILLION
BEYOND 1Q
CAPITAL EXPENDITURES
o OTHER ACTIVITIES OPERATING PROFIT IN --------------------
MID ($30'S)/QTR BEYOND 1Q o CAPITAL EXPENDITURES = $200 - $220 MM
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SIGNIFICANT CONTRIBUTION FROM EQUITY
AND COST INVESTMENTS
[BAR CHART - GRAPHIC OMITTED]
$ MILLIONS
50
o 2004 Full Year
14 Dividends = $76 million
40
o 2005 expected to be
30 $90-100 million
1
20
36 6
10
15 15
12
0
1ST QTR 05 1ST QTR 05 1ST QTR 04 1ST QTR 04
[ ] Equity Earnings
[ ] Dividends - cost investments
[ ] Dividends - equity investments
[ ] Dividends Other
DIVIDEND PAYMENTS USUALLY STRONGEST IN 1ST QTR
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CAPITALIZATION
- --------------------------------------------------------------------------------
(IN $MILLIONS)
DECEMBER 31,
2004 MARCH 31, 2005
------------ --------------
CASH 838 1,738
===== =====
Senior Credit Term Loan 624 1,750
Delayed Draw Term Loan - -
Floating Rate Term Loan 350 -
----- -----
TOTAL SENIOR DEBT 974 1,750
Senior Sub Notes ($) 1,231 800
Senior Sub Notes ((euro) - translated at 272 169
1.2964 ) 383 369
----- -----
Assumed Debt 2,860 3,088
----- -----
TOTAL CASH PAY DEBT 103 68
Discount Notes Series A 424 283
----- -----
Discount Notes Series B 3,387 3,439
===== =====
TOTAL DEBT
(112) 61
----- -----
Shareholders' Equity 3,275 3,500
===== =====
TOTAL CAPITALIZATION
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DEBT AMORTIZATION AND MATURITY
AS OF MARCH 31, 2005
$ IN MILLIONS
[BAR CHART - GRAPHIC OMITTED]
SENIOR SECURED TERM LOAN - SENIOR SUBORDINATED NOTES -
1,800 $1,652 $969
1,600 SENIOR DISCOUNT NOTES - $554
1,400
1,200
1,000
800
600
400
200
0
REMAINING 2005* 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 THEREAFTER
* INCLUDES $114 SHORT-TERM BORROWING FROM AFFILIATED COMPANIES
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SIGNIFICANT NEAR-TERM OPPORTUNITIES
MAJOR ACETATE RESTRUCTURING PURCHASING SAVINGS OPPORTUNITIES
} Exiting non-strategic filament } Potential EBITDA improvement
business of roughly $100 million
} Consolidating 5 sites into 3 o 70-80% from MRO, Logistics,
and Capex
} Reducing work force by 35-40%
o 20-30% from Raw Materials
} Increasing China JV capacity to
capture growth } Full effects of initiative to be
realized in two to three years
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COMBINED BUSINESS OUTLOOK
- --------------------------------------------------------------------------------
2ND QUARTER
- -----------
o Basic EPS to increase to $0.30 - $0.35
o Reflects absence of $102 million in refinancing expenses and lower special
charges
FULL YEAR 2005
--------------
o Adjusted EPS to increase to $1.79 to $1.87
o Basic EPS to increase to $0.55 to $0.75
o Based on strong first quarter performance, continued economic growth and
cautious view of new acetyls capacity in second half
ADJUSTED
--------
EBITDA
------
o Full year adjusted EBITDA expected to increase 20-25% from 2004
result of $801 million
o 2nd quarter expected to increase 25-30% from 2004 result of $188 million
ADJUSTED EBITDA GUIDANCE RECONCILIATION
(usd millions) Q2 2005 FY 2005
------------------------------------
Median Median
Guidance Guidance
- -----------------------------------------------------------------------------------------------------------------
Net earnings (loss) 60 105
Interest Expense Net:
Interest Expense 70 395
Interest Income (5) (30)
Taxes:
Income tax provision 40 95
Depreciation and Amortization 65 250
Unusual items:
Special Charges 10 75
Other non-cash charges (income):
Cash dividends received in excess of equity in net earnings
of affiliates (10) (5)
Excess of minority interest income over cash dividends
paid to minority shareholders 10 60
Other Adjustments:
Advisor monitoring fee 0 10
Other (1) 0 25
- -----------------------------------------------------------------------------------------------------------------
Adjusted EBITDA 240 980
- -----------------------------------------------------------------------------------------------------------------
Other includes:
Earnings from Discontinued Operations
Cash interest income used by captive Insurance subsidiaries to fund operations
Severance and other restructuring charges not included in special charges
Unusual and non-recurring items
Other non-cash charges (income):
Net (gain) loss on disposition of assets
Pro forma cost savings
