Celanese (CE) 20 Jul 182018 Q2 Earnings call transcript

Company Profile

Participants

Surabhi Varshney	Vice President, Investor Relations
Mark Rohr	Chairman and Chief Executive Officer
Scott Richardson	Senior Vice President and Chief Financial Officer
Todd Elliot	Senior Vice President-Acetyls Chain
Mike Sison	KeyBanc
Ghansham Panjabi	Robert W. Baird
Bob Koort	Goldman Sachs
P.J. Juvekar	Citi
Frank Mitsch	Wells Fargo Securities
Duffy Fischer	Barclays
John McNulty	BMO Capital Markets
David Begleiter	Deutsche Bank
John Roberts	UBS
Laurence Alexander	Jefferies
Vincent Andrews	Morgan Stanley
Arun Viswanathan	RBC Capital Markets
Kevin McCarthy	Vertical Research Partners

Call transcript

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Operator

Good morning. And welcome to the Celanese Second Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Surabhi Varshney. ahead. go Please

Surabhi Varshney

Chairman from Welcome Earnings the slides Investor the Brandon. Vice Celanese and release for forward-looking afternoon via quarter market and website. about yesterday Celanese remarks Second Mark were results of Corporation’s Investor to distributed Financial Business posted differ Richardson, results Officer; Thank Chain. in Call. section the posted might to in information Officer; materials. My statements. also President XXXX project additional Today’s Rohr, the close. are Acetyls are and And found and quarter in materially today such for includes Conference after With Varshney, that Chief name Quarter statements Executive and Relations. Scott materially actual prepared Elliott, factors you, expectations Wire statements. me Actual the and that Todd Chief cause the its concerning quarter is our President, presentation remarks Slides results Vice second Senior about Relations of Yesterday those Corporation can earnings and future XXXX be could posted forward-looking plans Surabhi differ

about discuss Investor are which, also and GAAP our section reconciliations non-GAAP will website. comparable measures of posted to their We Relations including the information measures, in

We’ll questions. Form X-K your introductory with begin remarks system. the reports then from EDGAR take containing all Rohr and these on materials are SEC’s Mark and available

Mark Rohr

listening everyone, welcome, and Surabhi, today. Thanks, in

in $XX we of tear excess not of Materials contributed earnings We quarter resulted earnings in $X.XX Robust be to $XX.XX growth earnings repurchased the adjusted to $X.XX dividends third for businesses, focused by over disputes remainder expect generated the billion. those on M&A. the three and And sales your Chain, continue million business. the as strong normal approximately record across for Engineered the per seasonality and we and consolidated XXX,XXX to carry effort to for and $X.X quarter. quarter EBIT billion of in year, ready for prepared cash delivering free delivered material on market per net published of flow roughly and EBIT The Our convert and of our I with product million year-over-year. of to pricing earnings grew generation range expect free Acetyl turn having of the in then to All pipeline earnings executing Chain, questions. comments adjusted before were this The GAAP call extending fourth effect lines shares of margins Engineered the recent of We share. share success to cash we Acetyl of so the In the that along in Materials brief quarter. first distributed growth momentum per with model with adjusted Acetate flow steady quarter $XXX XX.X%. impact through Tow, expectations yesterday, any see with the XXXX We will cash adjusted business. with do highest-ever that, our are share the $XX.XX results our $X quarter

Surabhi Varshney

follow-up. all and to to open question you, request Q&A Thank Brandon, for one callers like please line I’d to Mark. a the limit please

Operator

go question first Thank ahead. Sison from Our comes Please Instructions] [Operator you. Mike with KeyBanc.

Mike Sison

Hey, good Nice quarter guys. morning. there

Mark Rohr

Mike. Thanks

Mike Sison

third happened? regions, where outages Can quarter? XX% Chain, of you that stay give Acetyl First a the you bit do utilization more you feel then about on a little expect talked at to in the on maybe And the lot us question XQ. for rate

Mark Rohr

the a Elliott I’ll think turn gave rate. were were perspective more in the call, to – over Yes, to in it you Todd last let I we we utilization me give color. mid-XX% that and start we this, But

have seen like quarter, to as go back XX% to push you towards that and expect add we to color up through year. move we Todd, range color? maybe mid-XX% this We down the kind of some of and that that range the to to would half this back

Todd Elliott

we continue to overall mean, continuing couple in over a back really and of improvement this rates, I the Yes. an theme last years. of goes utilization

overbill We Limited will X% the per end back Demand solid multiple XXXX supply. and XXXX XXXX, demand since end at period. see Frankly, different continue across uses. to limited about these uses. growing year X% across all supply growth to the in

multiple seen most year up mid-XX% last level operating in this rates, the reform, the have first reform environmental then plus part outages put in whole year late And a in effects regions through your course march year. combination over series year, from this question, we’ve the steady year. of of been So there through last of and that of the in utilization and multiple of unplanned to the Chinese a energy we

up in rates range, the up certainly, around pushed that’s So XX% QX. operating utilization instantaneous

moderate, but that think of as continued I some look good will we environment. out, So

Mike Sison

strong Great. Mark, think awfully XXXX best when your already, to the to about, think progression way to XXXX has on year, guess, this your close out? basis. for and it you’re earnings about What’s I And goals given then seems, XXXX into you XXXX outlook an turned how EPS

Mark Rohr

$XX of would put years, May, equivalent I a about earnings Yes, three per $XX per we in share view generate forth share. we $X, and over that $XX think

number than I think we’re now. higher that

Mike, way is So period per quantify me that $XX somewhere for quarter-to-quarter share of that I to cumulative what that How some hard look kind a and I that. would over in flows would between think. time really $XX as of basis it that at through, on actually

a off good got to we’ve start. So

year. to high will specifically. next in we the to range XX it call again, be probably But in going somewhere the think as very year. bit XX call finish We’re about It’s next to in than easier enter that it’s those and hard and a that closer strong, [indiscernible] is to between

Mike Sison

you. thank Great,

Mark Rohr

Thank you.

Operator

Baird. Panjabi comes question from Please W. next ahead. Our with Robert Ghansham go

Ghansham Panjabi

last Or was off, the there utilization up on first either mid-XX% purely XX%, meaningful rate morning. permanent? or because Hey curtailments, question, up China that following some to was other of temporary additives I there? delta the guys. Good guess

Mark Rohr

was No. – global spin. a that’s global a That

Ghansham Panjabi

would that China specifically? how parse And out

Mark Rohr

I think been at you type overwhelming. China look should

You small of at having like of kind sort impact down have as look over erosion, erosion this the units we three had the China steady bits up not capacity time. overall utilization being to and the should a a of we’ve next and years the short-term in

Todd Elliott

most that has year, months: mean, curtailment the during the Year. I of we’ve occurred Yeah. of New end seen winter of start

into year, that this start So, XXXX. of we in saw XXXX,

outages to picture overlay curtailments have you then pretty that And just of really year back overall Just series then of there last that, the we’ve utilization begin is with. in mid-XX% a the and… to describing. go adjustment And been range top that unplanned been healthy on

Mark Rohr

of Most are those of out China.

Todd Elliott

want names But up And I the that other the are name up have even close in those world. competitor to Asia mean, in parts contributed other don’t to and further XX%. regions, I of push to

things it’s keep a supportive And us combination mid-XX-plus So, of range. the hovering again, environment. in that a that’s been

Ghansham Panjabi

And tariffs. Okay, for second on I question, guess, my terrific. Thank you.

Engineered Thanks regions potential about so to is Asia? of growth in given if I’m acetyls, trade growth tariff risks the me which there for seen but opportunities in such for cited wrong, are thinking specific as EM? How much. Materials the correct specific shift risk you You incremental any flows, for sort

Mark Rohr

don’t and real tariffs as see I I concept it’s We in and of sort mean, it No. don’t, one a punitive is mean, the support of tariff that. of in we U.S. risk. – the of out the

the And are And network. be very in to regions China. There the materials the of global of a China and in the to the then into on We in and end, make the China out. the have cases ability most U.S. other honest, few And of have from import which on got world. material that EM from that, it’s we the ability to we part moving a most the side China price stays most a lot. of one have we’re

say our of supply permanent. so so ability bold And I surface can don’t think there if the is So, at to I’ll material this our locally this. some a see effect is advantage be and we be unique network to strong, and becomes

Ghansham Panjabi

Thanks so Mark. Yeah, much, perfect.

Mark Rohr

Sure.

Operator

with from Sachs. comes question Koort ahead. Goldman next Our Please go Bob

Bob Koort

curious, a makes comments much. bit remarks parks Todd; little the maybe, I are happening closures the And what of some bit way companies whether Thanks. in additional for maybe next voluntary or confronting around into and very you And granularity insight those that changes? the was us some intrigued to most more beneficiary a you’re you you could benefit I’m about you Can of talk China. issues over towards think some quarters? perhaps compromised see are a that you give on that by curtailments. a but and a little Celanese, for by I of more these gave you Thank couple regulatory is slanted read particularly the requests

Todd Elliott

Yeah.

understand. the parks. target the think the And province XX park and Shandong go chemical parks. and going to approve this mean course, engaged multiple interesting, is will, is policy changes chemical is parks XX in Beijing and elsewhere only provinces. I one as Their specialty to in you we pretty affect plus studying is XXX be with to the XXXX pretty trying to one, these Shandong I fresh, of be

one for four We summer that they’ve summer in words, multiple meeting electricity. in their this there outreach operations XX%, those interesting park only ours. summer. request consumption, brought and but of go broad is Celanese, and requested was back parks and by understand And ago, the season, XX as reduce as in in steps evolving. different have the consider dynamics by required, it And study into before, a but required. the Nanjing are we of municipal not park then chemical did season for occurred the permitting what’s as our anything, ago, middle to not already a we’ve to We future park peak were forward. is citing this The only Nanjing as to one the design also winter Nanjing, electricity where think another to were ozone. in provinces the all in effects regulatory approached then and Again, other well. reduce we days environmental – on season you forward, relative and we it believe the you standards mentioned take-out So going change in think will, the think and the note, side about XXX the environment. it industry what’s when it affect set forward. assess will first got to gas is coal that you We versus pretty affecting We our do goes the companies and relocations actually to This energy companies ultimately I EPA. it’s park reduce about not that it target think look other not in But weeks citing it’s made

these energy So, of the We it’s to sort steps environmental then and just it’s as and going during call going reference, ultimately we out a balance going the kind have heightened work China of a couple park an decade. Day, that of forward, of by for like forward. of picture utilization end effect said the maybe think change to Investor the percent series

Mark Rohr

Bob, have parks one the a best in we’re is of phenomenal relationship, us, for in Nanjing we the Park. but there

great, park in relationship companies that the a the park as great have other do leadership. We with

of think a cooperative look being as kind like should you I at ours. process this with companies So,

work to been never reflect, are the in the that and wouldn’t It away and these businesses to however, case continued the operations. and said, it’s that those of folks, kind expect there week as this of the so and disadvantage our does, be erosion the to support of evolution outline I from continued future. And with Todd

Bob Koort

Mark, TCX, there. ask a not us if done of And good expect you’ve job to conditioning might I on pretty much

acetic of sort it Thanks. operating given for sense would make to the give transaction. of industry, companies Todd’s on convert a acid in capacity? to sense that? us some you rates sense scale got make ethanol does fairly And Can you’ve view any some it the if acetic Now of bullish

Mark Rohr

the as the convinced government of Corporation, a that as into Yeah. that. not was source. put years we go to money energy Well, on I ethanol able think Bob, Celanese invested to, that you're that And we were well to ago Chinese synthetic aware,

shut down We've asset. written the So this we asset. off asset, the

the them that in with of park the we've have partner They're materials collaboratively to They there a great for surfaced deals out working with on. very promote an our Chengzhi have kind really We synthetic worked business, well us. haven't on been just yet. at and that politically. interest that of has provider a This acid is ethanol. number one raw acetic connected of trying of we and started jointly They're worked

thus do a it think approach And own. on trying and is that our better so we to

our have, in to no intent this that. that, uses. work real a TCX to got joint is them from to And sell is And to amount. the There's LOI in have our course, of in solved venture, the technology for we're interest a we ethanol we So venture. for the that complete acetic the assets the be money of synthetic And then them essence, nominal joint contributing in a provider in to involved promote to that. acid to assets with lot we

if believe one rather, that as further holy you this this not should of step keep will for next, the be that acid pressure acid or we it's we success as acid but end this really we just this, material successful out acetic think that's in we're think grail And seeing So in way. this put is should volumes, acetic with volumes Asia. we decade heading more -- acetic this we some some market

Unidenti1nalyst

helpful. Thank That’s you.

Operator

question ahead. go Please next comes with P.J. Citi. Our Juvekar from

P.J. Juvekar

morning. Good hi. Yes,

the potentially that So type I at question product, so X% to in new of of demand? to capacity taken you X% Mark, believe about looked cigarette market is this you're think e-cigarette of could that that as global You second that's down have has new my tow such capacity, related temporarily? that Mexico. Juul off impact could quickly? And shutting pattern

Mark Rohr

as question, terms no just read impact your you That's I'm of would in should our utilization with you're going that. as it. of And mind a have into first because up your material noted, no, question? ability PJ, you your repeating to productivity to But base repeat as bit. to rightsize same and it a the we answer missed our I'm you the it's I to there Well, global create math breaking capacity – is asset result all second that. sorry. customers to,

P.J. Juvekar

Yes.

new on e-cigarette Juul. of this So wondering had that. taken type companies if that new Juul seem product. And worried be a Juul to a quickly. about very I view you has is cigarette was is off

Mark Rohr

we're I'm the think with we're all looking around room, question confidence. prepared kind -- pretty any and that answer I of to not

that at look discussion are there. So between ourselves no, the it take subject has But a and not we'll of been out a customers that.

P.J. Juvekar

Materials, And can you you discuss Okay, half? for levels. could during Investor thank that margins that current improve second your your you. In pipeline Engineered don't mentioned Day you from the if do any M&A,

talk margins with Just and could the about pipeline without go M&A. or where

Mark Rohr

Yes.

continue I So bring the active continuing think, to and M&A. half, we be going well, We're that. there's in promote We're to businesses. marketplace, to in first

that. today The a the have view years in a continued to should on we interested next margin, our is business. X% several in point change that give is over from M&A That's pressure that. So you going reference to I'm materially just most one

to raw the having going that you're margins. keep So on pressure

projects be but at last a in we quarter, of good X,XXX press end a underway that maybe range. able that to short the year, new pace of so should the of this have kind kind mid-XXX-ish We little of the

taken focus the and One Surabhi how our we so has that of But is a market we're new the particularly X.X doing focus. that's approach of in we team with on how rolling EM of and been the it's strategy around program out projects, subordinated things strategy. sort effort more

So margin. looking area. our we're have do, by a the we translate, We lot mean, resources -- to what we ability of areas think projects the where I in we're more moving that highest and we that, highest at as

give be there’s pushing we We something example. guys, for start us of example earlier So I'll going medical pretty year that's – impacts you kind we're spite by as an to margins gave of medical We application to our the in chance bit upside and end start next in an the potential to a more. a of margins tremendous focus M&A and in hopefully, and up. seeing having some use machine think the as tough stable this this

P.J. Juvekar

you. Thank right. All

Operator

with comes next Frank Wells go Please Securities. Our from question Fargo ahead. Mitsch

Frank Mitsch

nice good morning and year. half the Hey, of very first

to question and Just that in last on now you follow between up billion on XXXX. want a that do reiterated you buybacks $X M&A,

million $XXX did quarter. this You

got do versus flow. buybacks next You've magnitude think of great order M&A the How Celanese cash we free over the of years? about for couple

Mark Rohr

are they -- they're disconnected. Well, I of kind mean,

even was of As there. with we the buybacks, outlined flow. amount in And cash billion fair May, of that excess still free $X a

So we we both in going years. several think higher through don't -- in to next as you them see of as and one to we have levels the either going down slow steer probably we're don't to

Frank Mitsch

keeping on about came to the $X.XX. for with of year the in quarter the guidance? that steering, model, According you our side changed about higher obviously, What the raised this lead of some have that Mark, acetyl for levels the things. assumptions guidance you to that higher half in back to of one-third by are of the

Mark Rohr

I as up, everything's the been we're it's things getting higher One overcome on through mentioned we've guidance. address to very materials raw on machine we traction, the to – that this think I’m steep able we and that if have this few phase Well, supported that roll getting and very, energy. a I that, is and say well short-term continues and pretty pressure work in our

push And or not able lot we've tremendously and a so we've do the a it's testament real that that of of portfolio quality been volume pricing, suffer anything else. to had really and to the to in

company that power story. words, to of the out have been The kind that been some people that's to really pretty $XX when So those pretty I they're big that ability say of to from that. of got just are there have so big a this we the Todd lots at seeing of though in We're not price level I We're like that to through our our industry good and – – seeing demonstrate internal of support point. It's and environment looking thought was are these of the And seeing we've that the all pretty of even And transferred pricing good. million in ways, we're the horrific been good that. customer first -- businesses. not really mean, Todd think about we're accept for we businesses. to get things acceptability moves, and want the would view, time demand kind point able But year-over-year the we wanted driving not to do seeing small good. have we seems history, combination stay that it through downstream has I to us we of also run big. I'm substitution. and ourselves to being those

on seen out parts So deterioration we've because the there our recalcitrance other a not drive. accepting of of margin that of markets

the the the work me we're X% just step into also year. we in of ability this a about I okay, margin bit, I is first pretty quarter. I'm So little -- roll regard and volume and fourth not that falloff We've mean, to the we a lot of fourth and those that. first. comment as in is to things that going done to X% tell but that in value out, quarter good. business, margin, confident minus us and typically, see, gives fall a higher this generate plus level And made this or levels we end of

year, Year of Chinese low that. didn't And of thing. New we have last seasonality – kind and impacts impacts seasonality think coatings from So

little It that you of maybe I kind it. volume, be year. at it. that every we'll So look little if little believe bit roll could of that year, a of And kind of this for have turnaround through, million impact you if got business $XX my a happens It's price, almost in here. a a Frank, of bit bit

baked that's numbers. into our see of So you what kind

a and a be then at levels bit little this the a We'll look far as then right slower think the will start some think I year-to-date. back powerful fourth. strong of back year, pretty the you been a we've same. it step kind good I we'll third and bit in So like business, next And running in into be so

Frank Mitsch

of you tied it the that that be the on fair you're So strong, of majority some to to the continue expect of seeing is guidance say to the business? upside acetyls positives but more EM the terms raise in to is

Mark Rohr

been investors. has a EM and I for our think for straight-line the Yes, business us

numbers year of expect We machine $XXX plus EM focused I the where we've And and kind EBIT. million that's got, we're to think we that's on. generate the thought, per

going think I the that so got. we've steady-eddie to be that's there And real

well. We as have plenty we continue work of M&A activities that there to

of receptivity chain anybody, which be higher has business fair the to I the good, confidence think that, hey, us this that's the none on really should a story to a gives the ability be been the with should for that time. to valuation market today surprise carry and of period

Frank Mitsch

so you much. Thank

Mark Rohr

Sure.

Operator

next Our comes Please ahead. Duffy question Barclays. go Fischer with from

Duffy Fischer

on just question back A acid. acetic

cost As you next lower that and likelihood the what's the over some you returns greenfield capital or acetic new in competitors, look announcements new acid? get with we some brownfield – year at expansions around the significant for capacity for if for

Mark Rohr

we years next look acid shared several tons VAM. out of molecules years, of between has acetic with capacity some you to it's We in things very in think, going We next of we Todd couple look the unlock May. over to some market have that. about Duffy, of underway be that kind with honest, XXX,XXX this shared like it But a the we're we the we've of out bit and be adequate, the Yes. and adding to efforts for and underway guys.

with that, look could be I XXs, doing some subordinated of a you the for the we get greenfield you the of don't kind supports investments need associated beyond though, at, with kind think the we probably side the all capacity. that. of this full-on looking be I business secondary -- incremental mean, okay. should stuff kind market So that's think When is there

however, words, productivity our So I of the of point do ability surprised our from perhaps cost them kind can was to perhaps like to in think justified areas especially have a other economically that that, with Asia a would, announcement. that, we combined period to really with compelling view aren't expansion, that some like be shut and as I brownfield we time. story I'll say our are all that put at other be, forth as to we'd in advantaged assets that ability some necessarily of then pretty that

So want comments to on this? Todd, you make any

Todd Elliott

think referring Yes. that's I options looking there. the advantage. configurability, I mean, that to, what you and I we'll And were assessing that do think it's keep an at

Mark capacity tons new Clearlake week. we're in As of I will there that mentioned, this just letting XXX,XXX VAM up in was QX. start

to or quarter on the this be at ready that's So of this end year. of end track --

have percent yields tons that around there. through output all top generating technology saw on across week. packages already of that VAM technology deployed installed We units. the will X-plus We debottlenecks, We got be on of this that Bay the so top on first That's City, XXX,XXX five VAM Texas. of in

capital efficient the will the and out Mark's May, across to needs. then time to of small tons forward ways point, marched tons mentioned all on support And X% that kind meet be So additional on that XXXX. of May. XXX,XXX outlined are we that customer back And That's by in capacity then unique look volume planned we and bring at five to kind continue to growth we our that also consider baked just highly configurable step already that in XXX,XXX acetic X% over deployed in that or acid, steps of target VAM units.

Duffy Fischer

Great. Thanks, Mark.

Operator

comes with question Capital Our McNulty from next John Markets. BMO go Please ahead.

John McNulty

questions. taking for Thanks Great. my

spoke outage, of open one, those prepared and whether longer-term of So, issue believed first there’s essentially platform should an the can turning is. quadrupling benefit the Todd, that’s kind about we of that conversion great I what on kind last I that’s spot kind these are activations. assuming I you’ve of a a these in of guess. an that it think if look, characterize when night, network relationships relationships, remarks you just, really activations? type you like which your the type because hey, we’ll of on, on roughly got or take up I network guess, I guess, of guess, I to global the think they’re How customers

Mark Rohr

Yes.

Just with to recap, of we this and and insights. is we of when sources activate connect the emerge gather We for network, that that insights and something. what what into data to many two data out the more operate look And mean, that distill that believe network, that is we these try around industry, the many, then leading are, have I from acetyls that network industry. option process

right? So that in about a activations, where were second could most be combination quarter those That’s most versus activations XXX the with those price year, of of things of last XX were.

more activate the well. network on many that frankly, side, shifting own product the were within a different the on So changing, network or supply that’s multiple in changes quarter. increasing, lines, several own multiple combination different our to price of cases, working moderating, different region and depending in geographies, customers produce less out there our as many, There to

the on side. chain supply piece other is there The

So best or or region our global sourcing product this from a customers and to also our C moving network-optimized combination sort business. take A, B support of serve is movements of best to the

on. of help working move types the and of business that what’s degrees it to out freedom can But really supported is these and we network those generate is broadest sources or really nodes on the around. working be can there believe those So different value. going depending They activation, different by

Scott Richardson

the this – put and on John, acting in and creating a students model and method our characterize we own of way of in opportunities I I Steve effectiveness of put place we’re as of business students kind the assessing our this, place think in would industry. this opportunity. finding too, is really really we’re that opportunities this And Todd,

of effectiveness further for opportunities can it’s degrees increase that. the what freedom. we as good profit. we that process to And measure can can been of really we a our our So because drive us, can, We found enhance is we

places, in optionality continue systems contractual customers arrangements, to of logistic And the price for our very give the degrees just we might support those it them. to them positive market. to gives different be, right for that’s time a things of whether this so And lot at chance think a market-competitive a at product with best way us the whatever

we’ve that’s done. so been the And work

John McNulty

Got said the like I of And terms definitely noise really it end I question tariffs, another guess I and end I indirectly guess, there’s that okay. Have though, with you markets it, a tariffs all That’s around then question, up sounds you the the guess, not the touching. there. demand-related I know reactions in all lot one kind in the exposure away of helpful. having with your terms right in there Or Is products end from products of or at out it the the of too particularly of you see from kind consuming any point? end react how tariff are to of actually China? customer impact it customers some for the noise, are seen that’s far now? any you had, this

Mark Rohr

I of there’s actually like zero impact. no – a And no impact. On impact discussion. it’s customers, even No, it’s company – a there’s having having ours, subject mean, it’s our not

million, bike model. impact. XX,XXX $XX selling number whatever think an charge $X,XXX business that’s not I and is then Europe, the into you’re $XX talking you’re that’s per million, and Harley-Davidson its – bikes if our But you’re

over kind very you So little huge around. see one one that no a multinationals, another it I of that’s this I’d which charade, extent. But we some spin to view, I maybe from countries kind line mean, you’ve got Again, of leaders see it. do produce outside don’t one on of ability commercial of think political badmouthing to this with unless point many another nor a perhaps you is of speaking U.S. – over bit. think I That’s the succinct, are product may get that. my impact focused, very see a swirling

So no, see deal. big as we don’t a it

John McNulty

much. Great, thanks very

Mark Rohr

Sure.

Operator

Our with Begleiter next question Please go Bank. comes David from ahead. Deutsche

David Begleiter

morning. Thank you, good

Mark Rohr

John. morning, Good

David Begleiter

rest Mark, that the you’re businesses? less Tow, be on priority? priority on options pursuing you here? high any us of strategic a Or the can given may Acetate an it still is a performance of is give And update the very

Mark Rohr

any you give color. won’t Well, direct I mean, I

to in this make front earnings, year-over-year, that. typical we’ve for you good be on We so had quarters, a ways is second continue business year math for business which and end-loaded. look first bit with to the next a We’ll of flat half We’ll sure that hits to can that stable down that. little – the the being two pretty be do regard

cushion view a flat, $XX that XXXX, our that business XXXX going a that So a the gives that. business, is It piece how this really but The next after and shutdown it’s we million was year Ocotlan chunk us XX,XXX. keep chunk. only to we were of of in

through this to first necessary go we and is spend our and steps priority sure of David, think to the energy as most flat those us needs priority, $XX take to in continue we self-generate that that focus business Our of years. for highest three these cover to next where it’s necessarily million effort. – make we That’s

and others don’t us – we’ve unlock can strategically, world those we those I’d do Second work And very to but minimis. make certainly, maintaining de to a we to want then out, earnings, of the can by to is much that this we to is it ways additional that for I’ll our consideration of growing those out. for kind the elsewhere. And find last any work we’re reducing a and by synergies, secondary look point also is not business not topic for say not not work earnings reached but The thing strategy way we yet. hopeful to use the about talk of end with to continue if

So $X we very for smaller And is pretty China, flow. what’s free long think our period set certainly be if business of time, from going out $XXX year. you’re and the dividend in secure, contribution to which less well of billion cash it’s itself aside million EBITDA than and of you of a smaller becoming getting portion of a that’s over this

think all the right we hitting those direction. So we’re three in of

John Babcock

at in these of high prices VAM, demand some? what occur? you and it or And in no Mark, this substitution that you might And acid level might be touched yet, some you you terms but are but think earlier, do point concerned disruption mentioned

Mark Rohr

don’t is very the what way think I think characterize high. I would I this price Well, is the –

in making that are enterprises, and point prices view China And is level. We David, failing and guys big you oil state-run negative any tons raking think, out today. impact said, in that I enterprises not I don’t debts acid of it’s And of real first of it in average going up the look directionally if margins as role profit. indication helps not consequences so it be it’s prices, I Coal acetic China. a at these are of the gains, north us, think and on it’s should I that there not we’ve -- these probably even not maybe believe horrific. seen what yada of the kind be producer of is yada. the It’s because I’ll These say yada product there’s tons any as to it’s Methanol of that. think hard. consumptive if recently from position kind Higher derivative that pretty We’ve in bad at our you a adequate. XXX minimis. look plays an they’re materials, there, de XXX, the in out seen

substitution coal low like yes, we’re we back which drop pretty something of would now, barrel under time. lot great see or again that if should the period then horrific there’s basis, then off pressure materially of really fact in get this return I prices sweet spot the $XX maybe. in that, $XX in we to think oil to some under, some $XX that us oil -- of grassroots a not sweet you could to is But of from that it’s basis spot knock not in we’re And a So still stay there for -- a lot don’t business, that. a I a kind think the

John Babcock

you. Thank

Mark Rohr

Sure, you. thank

Operator

question comes Roberts next John ahead. UBS. Please from go with Our

John Roberts

there is much the from pricing raw In you’re pressure just the external think inflation to that facing? is acetyl of about you. transfer Engineered Materials a the how Thank is way material segment, segment? And much how

Todd Elliott

is characterize almost Yes, would I pressure. John, external this all

lot side. So of upstream the there’s price not transfer in from impact EM a

John Roberts

contribution that there a the sort of to you a base market that? of provides Okay. top the of fee segment? network And think have above level level on acetyl to activations then of a which base we think the then is just there income about Is of downs contribution or margin that way ups and

Mark Rohr

No, has will sort one -- one mean, something on activity. it contribution John. no. But a not, just a end. It’s of these have for zero lot it avoids of I Its indirectly

don’t by contribution. nodal break those per So down activity dollar we

John Roberts

Okay, thank you.

Mark Rohr

Sure, thank you.

Operator

Our Laurence comes next from with Please go question Jefferies. Alexander ahead.

Laurence Alexander

Good morning.

Mark Rohr

Good morning, Laurence.

Laurence Alexander

about enough or be you to in of you’ll levers may see responding problems? ups? that just getting One, half years levers on Engineered pull Materials, fly try different questions. Are $XX discuss think internal for the multiple initiatives? question sort the the way there’s year, a and flat back in acetyls to of trend or have you whether you kind if on, be it, run the sizes can giving bigger about Two they Or -- CAGR. profit project customers pull are particular can business? the smaller in or that to also you year-over-year you’ve the at past, how types average your XXXX? do sort of hit of the then to any could roughly back often you be the Is bridge XXXX, XX% But about that call rate. had of are you the In keep And

Mark Rohr

what that I’d not to answer like Laurence. your question, that want to on I but Yes, I’m say that, don’t do think kind of is to I going

call this call, That’s year. going it’s a quarter point view, a next said bit think it, bit a really front year-over-year, end turnaround this in seasonality and VAM We’re it the And year already at of little look is, of rolling at weaker out looking Todd’s impact into that. end hard schedule. driven things get we’ll you’ve quarter’s had increase think, is to we think of going I when business, that, Having normally seasonality start. the next we’re and back from similar of like prominently to what us of historically and It’s you’ll to most by, next little next a like in I strong you’re in that in year. the a all I see plus kind see to does, outage big increase fourth quarter. And going modest which drive

base I say But little a I’ll to if simply look from So at I I front going I end-loaded end-loaded, back think up, that it don’t maybe that. next year more say build if I when is you coal, don’t the bit is that of going change than could the just it again, don’t there. in China. think and available think don’t change with world. going is regulation in environmental is coal the change going ethylene part I methanol to materially think arbitrage between methanol to to is

and that is fundamental never So a that raw lay move material the think, business in going May. a out, demand consumer From I to I think same. that Todd specificity around lot seen based whole We’ve with demand, of stay that lot. of a

of of X%, a scheme kind matter things. So lot X% that’s the it doesn’t necessarily in or whether

going run XX% XX%. moving is towards utilization capacity overtime and business between our so to And XX%

it’s long time So out getting we’re with time of I period use the of business the good in where very think see I in of the to levels we a back profitability kind period mid-XXXX. of think

So we’re in early XXXXs think for. in is what I

any so in us there doesn’t with same have continue But early be XX, to for to going time. necessarily X, over XX%, the we mean again, period should XX. if able earnings it’s grow And not of this to to not that XX% reason be it as

our would next little bit Strategy could for a flatter us year projected or it X.X in than that XX think be rollout. XX X, I

Todd Elliott

to just project been size, I pretty our clear. take think question, first we’ve Yes. Laurence, your about And

power not value that our we Our And is we’re get projects of projects, sweet range us small, the few on. being in if terms materially de minimis. spot of seeing and really of work types is there in the too thousand becomes disciplined The the dollar model potential putting efforts hundred changing. of things in that

be flip the to that, of side On be lift projects a larger successful. bigger to tend

size project where keeping is improving our and kind in win proven rate for we’re focused our the critically of And so successful we've so, we're important very us. area on

Laurence Alexander

Thanks.

Operator

Please Our go Vincent Andrews Stanley. with ahead. comes next question from Morgan

Vincent Andrews

Thank organic this you you do just have for quickly engineering materials questions; number very Two first, much. quarter? volume

Mark Rohr

have that is process. we occurs part give we we in you think if No, you it. XX:XX I'll going is our when much we're in leakage through this we of – no of And if of don't to to you with get to we’re in going linear. thumb of is that of of organic growth don't. Vince that is that material terms little M&A as – not good volumetric speaking, volume half And there business, and equation as if half parse that broadly a think out, how in leakage, is But parse lose which it

Vincent Andrews

chain, Okay, just the the implies see trying the I sort but some very to benefits. down, understand good. type I'm sales acetic that because bridge then of just up, cost in sequentially obviously And so were profit of was

of stickier? the bit of lower allowed sort contract a to ethylene question prices a dynamic just was what out? that it little So being play is Or that

Mark Rohr

think we're bit. checking I a little that

year? second to to talking What… or first quarter of quarter end about quarter the second the You're

Vincent Andrews

are quarter Sorry, in to your profits are XQ sales quarter, down versus up. but your XQ, second first

So line? understand happened to the cost on what I'm trying just

Todd Elliott

in the Yeah, pricing, utilization major I that's second year. loss the the have mean really may in the increase, been in the QX that driving focus story contributor – is would price being earnings combination performance side quarter. frankly activity most rates, on as turnaround really that. that had our the flat I of of are that’s part relatively of in – and We margin wasn't some QX be there to

Vincent Andrews

very particular. so Thanks in alright, nothing Okay, much.

Mark Rohr

Thank you.

Operator

Markets. next question Please RBC comes with go Arun from Capital Our Viswanathan ahead.

Arun Viswanathan

just lot, a acetyls on wanted to clarify thanks here. Great,

it your of kind and sounds earnings several a of like years. business, positive for see the do level the in of kind entered balance supply-demand you You've power next

of or actually that what expecting Thanks. are would kind from three you swing that continue happening? prevent this level two factors at earnings guess, kind one swing to So, trajectory? in or And of or two would be I factors

Mark Rohr

you things What kind day think believe. we are We probably what to in and the spiked that's certainly, can’t so will in averaging was that three-year this process. if believe a to go that above off. will the May a of short-term be up through swing XX period. time. world, [indiscernible] move going through these period around discussion said prices and that can in we margin sales But be businesses, maybe raw Well, of big it XX% we that volume that material still or day business is We're we're fall

we but our don't don't yourself level, that And this move throughout we XX% in XX% a can level find shouldn't level. period a to and through a We put see we and yes, continue bit, margin, beyond level exist that reset think could cooperative not You the stage from why smart margin – that's three-year industry think little around we place. we that support a we see to of reason that series mid-teens be why we set that for agreements shouldn’t margin. period. And believe investments can

we're that business pretty time. going of for to tight period pretty is So a stay long comfortable fairly this

Arun Viswanathan

a trajectory you in mean, the debt that a to you on – kind similar highlighted use in the buybacks or over if next of on that expect be and the deployment keep at further kind and XX% remain or would about you on to so you that this deploying… several potential you to And level, position of trajectory thought I your growth? of capital M&A XX% form years, earnings Day, it’s Great Investor capacity of note, if some the earnings whether in

Mark Rohr

We're what in I'll it, But few well I'll you at yes, in terms of and gross in need about – basis. we pulse of let can we trade-off have like here. that view business anxiety our would to we it guys we rate Richardson look as kind will and we do any comments a so so, to to period earnings just when at as step Scott anticipated, a the make of three-year don't generating whether we like is What to you sort think I that what think agree plan. this advancing all probably by than anticipated I earnings, make nine do. a process sooner on look on this you or predict on that period happen happily to have we'll us focused said we a months of bit

if there than that think XXXX, at look we XX number. in we'll be out So XX in you that closer to

but fully be that's of bit good period. cumulative, different of like that to it's through think as flipping for it’s the know over question. strong, this we earnings, for our very, time, kind going kind best there it part, don't solid through whether to, is project flow answering with feel go us we'll ebb But or of to we along. $XX how we I period three-year going been think very to that do So think and I that a us going $XX get about I'm flow of to period, could a and us. your stay cumulative most if little profit just is We and further for it's you we as period

Scott Richardson

we that it's And critically and pipeline a depending has But strategically. dividend of we where fluctuate And at important really timing in that and of uses the on each attractive the being some have which that it second. utilize and Yes, of mean, I disciplined we that's we we there been cash add, first of being just looking then to consistent, how flow stick increaser may be the of kind really on our that look the would be consistent investment, is to deploy stewards And how those at cash flow. then of and shares. levels back for buying prioritization in M&A organic at I of of we growth us times areas. very business cash

Arun Viswanathan

last your there large separating will Thanks. working just possibility And a of discuss that? further. concerned potentially is you one can dis-synergy discussed Or minimize also methanol you And just the you of the still you possibility to are that Great. about? investment. that is Maybe businesses, component be

Mark Rohr

investments in we're business been businesses, – for for key never any is us withholding certainly not of process. that Yes here all at that of since our can think our And make in real cash we done that happy the Celanese. I'm say I sure all to I've for we've

underway opportunities it could topic. versus a issue we forward, be with theory either having without be in around look in not subtle business separate keep investments is for see price As well of regard the and a lots directly or growth chain to asset in eminent his position organic growth we shoot this us partnership serve China. earnings there surfacing change more seek to in to entity itself That's grow a entity. the opportunity ups But an scope it or at that to world could combined for business better

and organic to should in So you the talk and growth expect growth process. I organic more month ahead that about think in us opportunities quarters

EM. of plenty know very I opportunities see And investments we closed growing keep – in pace business to months those a important we're we’re see seeing the think our it's are been likewise organic been the since very continuing important deal, to on. to for you for few and that investors – continuing at us also it's

combined is we sure We make been both entity as those that what been that be some to at able would couldn't a our we've very a things I'll well. separate It’s that entity. to do that point. you just here If tell entity, of do fund and do we fund So we we today think combined intention them. can

maximize sure So we’ll we value. make shareholder

Arun Viswanathan

thanks. Yes,

Mark Rohr

on Methanol that methanol, have for to So a methanol. just the continues us. comment is play direct an attractive

methanol, doing of I could it, would either methanol concept to it it patriate acid. the piece of the looking somebody or more us road with down appropriate else to think with as I independently doing we additions get be though that partnership. When they're a acetic as a

Arun Viswanathan

Thanks.

Mark Rohr

Sure.

Surabhi Varshney

take wrap we’ll then one question Brendon call. up last and the

Operator

Thank you.

Vertical from Partners. ahead. comes with question Please Research last Our Kevin McCarthy go

Kevin McCarthy

a part? new Realize Thank at morning. for you plant. time Investor your exploring Is multiple still ascetic you can provide an early there? dating but active to May been that options X.X Day, squeezing an only for it's I world-scale in. said that Mark, ambition that update on in months, you're think, me Good your you back

Mark Rohr

a be think way productivity always what I is to satisfy. way the to things sufficient like – contribution the us it in by growth that is this investment. volume would Yes, will interest new I'm not to on we carry in like a of We dependent investment to that do made doing

not is So view can from expand that's on Todd options scenarios and point solely market is view internal gross in working what from return of create hard where way to a market great incremental, to find is doing. point ways is the that of dependent a an our we in

So yes, keen to we're of interest it's us, hard. working still Kevin. And

a So to we'll as we get point to soon detail where we as do share, more have that.

Kevin McCarthy

broadly half years. of first seen three back full. risk finally, view two power? feel Normally, rate. handle to doubled how cyclical of And horse, you've got want EBITDA, the a the case double, characterize when start kind nine anyway that And beating over move there, a earnings we’re that earnings your on – to and move business the relative let's the to acetyls you pretty has would last in to of normalized we've dead come Things operating to I the your in say the

you've other some you have in is pointed some described the restrictions hand, adequate that really could and China unusual legs. On environmental price interesting and to

level that? the above And so new your a guess, is or of view parse more to you trying How normal? in normal I'm characterize current out I would

Mark Rohr

XXXX of that Well, went is with all crumbling do in I the sustain XXXX the we gets China, It we in goofy. just abnormal utilization. the and capacity business, to it particular, gets that reflected the the it assets was period investment certainly period these abnormal. pretty through, way – any think just And as and it

of lot I we earnings are. that volatility we were things. I to think time period Kevin, and able in through accurately, And so pretty though, predict, where say we a those have of would

lot talked know to So being happen, in about flippant it you six or predicted – that's didn't it we what missed as not guys, a would we I that What I XXXX, these back or – miss months. missed we about talked and this eight probably we see in may we we've changes wasn't we but seem And – unusual. was it. it. seven every months. But think

So mean, I China. marginal the not a business world it the market the think it's in it's Chinese still healthy. costs overpriced it. them. market in in it's don't – mean, them look for business even and you attractive profitable. this concern even reinvest. describe rate, a associated but I I it's profitable not I’d certainly at at the It's that's with because I crazy today's overamped. is probably period economically or it's is the think It's how I to I if where It's say healthy, given largest it think environmental today in not for And

healthy a place to natural So and we a for think be. place that's us

that's I of basis what this you've them a points And And we world mean, its expect – between XXX to teens business. points I or kind was and so this Asian’s XXX think their yes, I we think margin XXX do world. a as change think I our low in for have to markets, communicated I mid-teens. the in XX% – got, basis May. us, And do

So think we're be think for I some or I of bit yes, going little a to plus here time. minus period

Kevin McCarthy

you. Thank helpful. very That’s

Mark Rohr

Sure.

Surabhi Varshney

will and Thank for morning. the listening for call. conclude now all this We in you your questions

you available any call. address the after the are may questions further close to call Please We have.

Operator

you now for today's The attending has conference presentation. concluded. Thank

disconnect. You may now

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