Celanese (CE) 23 Jul 192019 Q2 Earnings call transcript

Company Profile

Participants

Chuck Kyrish	IR
Lori Ryerkerk	CEO
Scott Richardson	CFO
Todd Elliott	SVP, Acetyl Chain
David Begleiter	Deutsche Bank
Jeff Zekauskas	JPMorgan
Bob Koort	Goldman Sachs
Vincent Andrews	Morgan Stanley
Mike Sison	KeyBanc
John Roberts	UBS
P.J. Juvekar	Citi
Duffy Fischer	Barclays Bank
Laurence Alexander	Jefferies
Ghansham Panjabi	Robert W. Baird
John McNulty	BMO Capital Markets
Kevin McCarthy	Vertical Research Partners
Arun Viswanathan	RBC Capital Markets
Alex Yefremov	Nomura
Jim Sheehan	SunTrust Robinson
Matthew Blair	Tudor, Pickering, Holt

Call transcript

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Operator

Greetings, and welcome to Celanese Corporation Second Quarter 2019 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to turn the conference over to your host, Chuck Kyrish. Thank you.

You may begin.

Chuck Kyrish

Rob. you, Thank Celanese the quarter earnings XXXX Welcome Corporation call. conference to second President, Chuck and is name Investor Kyrish, My Vice Relations Treasurer. President, Todd With me Richardson, Senior and Scott Executive Chief Vice Elliott, today are Chief Lori Financial Ryerkerk, Acetyl Chain. Officer; Officer;

Corporation closed. Business and via quarter our posted earnings yesterday, website, the Wire Investor about its Relations quarter remarks after Celanese distributed on release second prepared the market

discuss reminder, financial measures we will non-GAAP a As today.

measures website. You GAAP as presentation definitions can these well comparable statements. our the of to statements, which forward-looking cautionary measures reconciliation include at can on the be press the prepared well language Today's release of forward-looking as will as the document. review comments found find Please end as the regarding

submitted Form X-K reports containing all been the to these also materials SEC. have

yesterday, our will directly published the line comments your we open prepared for now questions. we Since

Operator

Instructions] with first Begleiter [Operator Deutsche Bank. comes David question Our from

David Begleiter

you materials in in Lori, much of just expected the on improvement do in your driving implied and how what's guidance, expect that engineered QX improvement QX? segment

Lori Ryerkerk

that in Tier half, Tier and that to down and we again, Thanks, automotive kind significantly to the some we quarter, in see inventories of indications indications quarter our first in unlikely some chain, there's quarter continue. expect second Xs see third Acetyl, we that customers, and In have really materials, de-stocking stock key of do half weeks into that there. talking On second first David. and through we are pulled we don't folks few look movement see the we've seen some high, and the fourth acute is the quite to that thing, in only If although engineered it levels represents continue. of the especially toward Xs supply a some indications

we're we've seen in re-stocking. much occur [Technical the quarter, see because this year. have that normal to back more forecasting demand already levels fourth So, as seasonality to expecting than going suggesting Difficulty] and would not we're not de-stocking

for already of April Just, XX% July, than it’s by higher on look way we that, time. in if book about was order evidence at this our at it

our So rest year. outlook for that's basis the the really of for the

David Begleiter

transaction just M&A at And earnings discussed the last the transformational the on was call. pipeline that and update maybe

Lori Ryerkerk

to So, busy of small as bolt-on kind continue look Mark at we David, looking that the both at. is levels as M&A, transformational all acquisitions activity of more well

but said, but I bolt-ons, on Mark come told would to value continues that the transformational have any the we when many looking while all that at on to are while as we're and comes at, timing. like On that we so the uncertain through; we will little haven't M&A, will you work that delivering and come before, it bit activity as that we this year, it prospects complete found

Operator

question Jeff next the And JPMorgan. Zekauskas comes with from

Jeff Zekauskas

materials business, know with was having strong your What's the you income up. I And, there issues, In your income? equity the oil have some to down comparisons of equity engineered in trajectory timing prices. year-over-year. do second are that quarter coming

Lori Ryerkerk

$XX a of affiliates, we was look income really XX due XX turnaround actually affiliates equity Yeah, Evancina year-over-year, about decline to saw two-thirds million the to million of that, of at so due if and at was timing there, we almost [ph]. it

the reverse we last -- in to had that specifically in think quarter described auto. I half, first expect other second weakness affiliates China were we more clearly, first affiliates the exposed around So quarter, our in in itself. We to as that some and

that second in of seen quarter. some strengthening We've

see forward of going think I in time turnaround again, the that So, reversing Evancina. we’ll

recover see that, just half. kind some we David's XX described second of start to conditions, We the the do to million the some are performance. demand, question, seeing into then some is additional year-on-year as I starting we which, strengthening go of in And affiliate market to of general our as signs the of remainder

Jeff Zekauskas

acid acetic might returns in to a it make the and your sequentially, third difference getting China in Is better pricing quarter.

Lori Ryerkerk

in Well, certainly makes the quarter. if third it to returns a our better, it gets only difference

I or pricing we've we in see move to few think whether is are last I that’s most, acid. weeks is, acetic some firming in the starting so around had indications question. think Things of not, sustained a

around want you comments do going you any forward? pricing Scott, have make to acetic acid

Scott Richardson

weighed we’ve at thing very grown QX, the second Yeah, and rates than QX quarter. and space closely, volumes, industry for Acetyl conditions, lifted it probably conditions course acetate our more to emulsions involved, most heavily business the watching on part about watch. the important in at up vinyl come and that China pricing demand off Jeff, comment, a situation and saw therefore to to sequentially, sequentially. that's derivatives, to that pivoted of is acid sequentially an that thing point, X% probably pull-down acetic and watching by Celanese mainly world, We're that's by then demand But, that's overall demand utilization demand the stage. the comment. least We a X% of and China key to by in not we're XX%, have watch But business of this price, is on course, we’re in your

Operator

comes Sachs. question Bob Goldman next from The with Koort

Bob Koort

buckets XXXX. CapEx, give in are there? spending us you reduction cost in was maybe some the some talked Can I then highlighted give of terms X.X could that if billion breakdown you gross us maintenance in your of those in activity, projects you of or and about wondering

Lori Ryerkerk

we we million we're look where CapEx. start if at in, in ‘XX, XXX let are so me in just So with approaching ‘XX,

I look margin of in is spent, you what it XX% call at projects. and EHS maintained If about that's being where

XX% I to about of the about maintain where equipment it’s So cost projects. about significant it’s that projects, turnaround, are, we basically so savings. relatively yields is that reliability-related we've continued if focus by really investments, three what’s maintaining that And you our future times helping productivity had in years minor on cost reduction previous and more than through that in reflects ourselves, large will, doing think

XX% about generated. revenue is then in And

go really generation. as XXX getting that seeing forward, you’re Now, you that revenue of growth to in all closer and number million, is

– productivity. and/or is really it So

methanol it expansion, the projects go like we three all in lines the polymers we have in and as de-bottlenecking as Asia, in we’ve done, additional VAM various So, expansions well compounding and activity like projects in forward actually as starting is up US it’s some Europe in regions.

for revenue cases real the in all is So, off all in volume. growth almost and/or productivity, can volume activities, and generating productivity we trade either

Scott Richardson

standpoint. what forward think what rest the would Bob, on talked about I type MOB a on XXX of greater exactly cost gen in at the of and entire generate Yeah. XX% reduction But, the we and entire at rev million XX%, we and there that I look of I bucket MOB, basis, about return. bake that than inclusive a CapEx is on bucket, think CapEx go Lori from is returns

go So bake what in on a that's forward basis. I would of kind

Bob Koort

how in I what's to raw and pricing can see you more and volume like both the EM ask some to I going got selective battling pretty you're being a about looks side? maybe X, dinged. EM on maybe volume talk raw happening material? it little ago, X, also correlates Well, growth and it there pricing. guys what's your pressures But And on guess material started You could this the in in side. explosive I Can on slow. then had price X price quarter, on your the quarters more

Lori Ryerkerk

price by down. challenged a heavily competitors look been example Yeah has do have being especially a a materials, we've areas, to so, we’ve those decline the electronics we which some of if compete we about, we've in talked in demand, elastomers, And for at for decline nylon, volume. seen seen of we’ve as engineered Clearly in lot and market see, auto declines, the lot seen driving pricing we done seen demand. in

the some Now, And our all we that's to volumes in and we are pressure, especially pricing it those have in areas obviously, areas. way off haven't especially why followed as seen automotive. that applies those But somewhat down.

M&A last years. had What over I impacted say or would heavily elastomers two and nylon the we by the three there, are

year. not, in of the last and significant So that's we're also had M&A kind quarter-on-quarter, haven't a we year-on-year any

in generated using not So a some acquisitions, of performance, therefore volume the acquisitions with, lot the years. of affiliates, are with lot our portfolio, volume as and change not what see not as is sorry, in happy came while that from same model And we're the came past our say, a that were with project our not affiliates that with of those the base overall financial as our portfolio. their is a several our sticky as base we differentiated with

business model. quarter. we seen influences So, challenging as Over to more we change gotten portfolio. come seen as economic volumes have of are as volumes in base some those into this we've our time, that as backdrop, our be this together not with developing consistent we expect resilient we've those But those

Operator

Our Stanley. comes with Andrews from next question Vincent Morgan

Vincent Andrews

there in a Just during your rates question Asia, down. the quarter were utilization taking acetyls that you your own were some around capacity in reports

you where could them and then you third be? little expect in rates and discuss a So, us understand the quarter help bit that are now to where

Lori Ryerkerk

Yeah.

or utilizations quarter ago, more capacity XX%. to ask a well even bit we little say decline So acetic in are acid versus, than China, that in maybe, that And a back you if was go higher. I year Todd mid-XXs second weigh China seeing the around in put in and of that's I'll in start specifically. mean, to – a demand and in more XX% the generally

significantly So, utilization in China, general. is we're certain down in

and to on, capacity, kind But made down China for will entirely as other response did unaffordable pricing I run. producers of say, that, take low it take own that to on level we Todd Our folks let back combined historically capacity in in with I'll some of that. come units see

that do operations? comments have Todd, you Maybe on

Todd Elliott

on to and deal mean, get to in we can the every of maximum a into did great we power each and that of month, and basis. we get every day products every is I try Vincent, what and do we week QX. value network black a Acetyl’s try in daily this to

activations the really we take decisions flex our this up XX% and actions best way. in and our to is just Our were of measurement that sequentially network

couple a remember, lower the acetate vinyl we in those turnaround as two as in So that we VAM rates kept had turnarounds well in of system QX, Nanjing, in in units. City, a Bay had so

end then out Singapore wise, look we you the little of part turnaround a first a QX. this of QX the in toward mainly quarter, have acid and bit, into turnarounds, if Acetic do

specific I key pivot, ability derivatives, we or would flexibility, without takeaway rates is unit, differentiation that the really to acid by is acetic think the to. our our giving whether So point

we our our downstream moved derivatives. plus to intentionally acetic tonnage acid X% So, of

by we therefore then and sequentially. So lifting emulsions to and That VAM, X% sequentially. emulsions us X% overall to VAM the volumetrically X% grow by QX shifted QX to allowed to shifted from chain

quarterly and really out profitability, to choices, end that those and you if before, rate point which $XXX in result about million, that are run choices I would the it's business headwind a is keeping while the what take quarter, So XX for EBIT those the above of options the margins on million turnaround basis, would we XXX mentioned XX%. were plus about million

Vincent Andrews

in in call side on just things from and of EM, them. that bill go little in quarter, inventory the couple a help seemed helpful. strong, could the ask it us can was swing I some from was I color back volume the that around like volume there of It be from equation, first you of it the look to comments just would customers, like quarter. If quarter at volume first more quarter, an you of understand One, sounded a kind the healthcare if does how the

effect. that was work there And around? that shifts then also hurt think I comment does volume volume how by if was a mix a their So, secondly,

what just is? understand you help that could If us

Lori Ryerkerk

high And us, small those things. a with continues sector the actually, sector but really margin. it a are strong volume very very to for be is It same very relatively

tariffs in small volume everything UK is but And Brexit. of Brexit and have impact big very anticipation didn't we particularly worrying And the volume, and happen, move, so our can in building first on to what the availability swings did earnings. we saw customers, it relative about a else in quarter in a actually see

it's does it's of huge a it the margin. again, not but what to good And going bit volume,

quarter, EM second being impact, If our of say was just volumetric so impact, quarter mix what a of of is you volumetric look most the that EM actual volumetric of we was X% of that X% impact, X% to at kind with volume, the quarter-to-quarter, first is that medical. of

medical order, fact quarter, volumes into down. big but up we particularly we once tends lumpy. second people they time, So FDA first just that a go prepare to run, the this from the second get dock to then we quarter and quarter, they'll from medical moved for big be first time see it will and If got bit a to was had approval as

there's we to tends bit second primarily of be to some it did because other So, quarter, Brexit or the see the maybe of our a lumpy first business impact. that

Operator

Our next with KeyBanc. question comes from Mike Sison

Mike Sison

Chain, the geographically. Acetyl you've talked about good seeing In terms upstream, curious, just job guys, of you do pivoting, downstream a as

And of make need going you thought? your to hard to the second for but so half pivot stay if think going you’re to type think current the where you're that that to say, you about maybe earnings the year, of and downstream, it's do to just any outlook year,

Lori Ryerkerk

the second think we're continuing in, Acetyl quite I to quite consecutive is above turn really And chain, the just quarters have value I the Acetyl with of mean, do just on frankly, seven as described, exists it So are, pleased continuously wherever at we in quarter where XX%. strength to activations, the chain. model ability of example optimization the good beyond the most to and Todd a

first less, saw of we interesting pricing $XXX I quarter earnings time was was very you million. your we're in in if look low an quarter and pricing at the level China for of ‘XX. a Acetyls than And it seeing maybe think, the back at look a XXX ton, if point in ’XX last in the Acetyl, this you bit question, first to

economic of based of from quarter focus that productivity second Acetyl on to had Put and Acetyl another other basically went million an in strength the XXX conditions way, quarter quarter You uplift the the in million, the chain same steps. margins second ‘XX. first value compare the and model on of we've $XX to ’XX in at the now on the XX% all XX% in now the

of and acid to we continuing for XXX whatever to the it's think a level the that. view to of if strength acetic that up Chain. XX.XX obviously, run deliver China particular, just the for that in just in on model activate more quarter-on-quarter. top Really in reason, to get were achieve And would So that year, continuing be to of I really the really speaks [ph] Acetyl good that on price that

Mike Sison

close a quick about, in XXX. to first as EBIT up, terms did then EPS, And follow half. the $X of like in you And adjusted about,

This on second it the EPS up in if maybe bit go need EBIT a lot you first the So, year, have you to the EBIT better, obviously looks the to second just half? a second the at in -- a to little look half, half thought more do by adjusted how XX. relative half is or just

Lori Ryerkerk

Yeah, conditions comments. are improvement some earlier assuming on market based we in my

answer. more we've But, give go let first basis, So share an it turn as well to EPS we’re with obviously, will maybe that. to year. EBIT me complete as by that the this buybacks But over also half clearly, the helped in a year of had Scott last on

Scott Richardson

that's the think point. I really Yeah,

QX slight I how expect talked in half, currently seasonality. book, little adjusted half given the first the the and Order saw the to we're better. saw EBIT just Lori think the earlier out this in than particularly starting first of we baking half better can de-stocking we believe second in saw, improvement we quarter. And in about second level do I need what think July, the year, be that that, we in the same we not in a of then a

second second benefit all do and half. first kind you in half adjusted when in of plus have what a did those did we So, EBIT the things into you of expect in consideration, we half to the the slightly the better buybacks take the

Operator

question John next comes Roberts UBS. with Our from

John Roberts

third with Geismar. you Fairway doing on is forward going with unit you're give us Methanex that expansions an in update could Todd, its the Methanol Mitsui?

Todd Elliott

Yeah. Thanks, John.

unit output our capacity. be running quarter, on unit shared As timing would and to the from operational last we the up with in that here. X.X we contribute tons. pleased XXXX. path announced of to that partner million track it We on proceed to the That again above up we're original We're XXX,XXX that is to by But towards value, through XXXX take permit the be is plan update continues sometime design that raise million again, and as would specific our progress. with that tons by did the Texas receive we’ll that X.X track requisite about down work to

John Roberts

us down business and the automotive Lori engineered was share how you the much with down then could double business, digit Okay, or percent? actually Scott, quarter? during second Was it the in materials

Lori Ryerkerk

saw actually at coming bit actually down. look it. we that the was that The you trust entirely drop, bills, of a on of if out So, most EU about little so X% spring, a automotive up was US

what what is, the and for declines auto and product key interesting, from on XX% to bills our with to course, the is in some discussion we're, what Of to really regions, customers X of is there, but in XX% distributors of our hearing we volume. and demand were matters suppliers us tier all X

an us So into indication to clearly, the de-stocking second was that quarter. continuing

John Roberts

down X with discussions you those had? line you tier that in Were

Lori Ryerkerk

No, our about an EM volume down on total. volume in was X% actual --

Scott Richardson

point maybe of auto, than higher was that. piece a Yeah. percentage And John, the just, auto that about

Operator

Our with next from Juvekar comes P.J. Citi. question

P.J. Juvekar

center forward? be mean that of of shifts the at going to time, growth two be and the Acetyl the gravity focus a US integration between does for same there for China, seems as less EM, Lori, to would the that businesses

Lori Ryerkerk

into EM going acetic business less just going material available there's that we an of have continue we P.J. mean less interesting I but integration China, own in of forward. in to mean, China, I a was plenty It our growing US. EM the think is may materials question. don't in there's producers. It acid raw have

significant the between integration a it of in businesses. So, of change amount terms two I the don't see having

P.J. Juvekar

And nicely VAM drop, as to acetic and acid emulsions. prices pivoted you

And are flexible, that should able same they not are when be I great or team. thing? that from competitors so that big, with that's a the they are your that and do because do imagine global, up tactical But these move to move, large catch companies would

Lori Ryerkerk

methanol model. Yeah, the make not make the there competitors our three so, there all the do that's really beauty geographically, [indiscernible] earning think, who is are. value model competitors and there's are there are and to the emulsions. aren't VAM we because a of of competitors is interesting mean, fully our make thing who I there's of the mean, through our competitors differentiated fully all I who the which can integrated the this of to acid, emulsions, level same from and of strong integrated chain start way thing. is, us and all is, and acetic and And volatile I not competitors allows think, results give lot less that's any make from chain where many who others who are I integrated

Asia Western -- higher did as quarter available where our the emulsions. So, margins margins Hemisphere, VAM we have for sales increase ability our reduce into this to were and we and the exposure to

Operator

Bank. from Barclays comes Fischer question next Duffy Our with

Duffy Fischer

it the more majority of fortunate three And is you transitory those that would that's structural million? A this – Lori's that some Acetyl’s comment It it better into just acetic how from? much down were of QX Where you or break volume realized one than question come you business? in around of a does be Can XX. maybe a to your selling price, better posted now strike better into buckets three the market? tough me $XX the do in versus either factors that million got cost you're of versus think price kind market quarter $XX

Lori Ryerkerk

very Well, hard so mean, these for I think I results. work Duffy, we

the front choices the don't me. would I where to a make breakdown we of have bit I in you flex the little and ability what So is I is, our chain. it's mean, it of value take all But it. tell of out exact really of model about

chain, price will, can margin to VAM extract to folks, the that day constantly But, be strength the decisions the makes deliver for of acid. we versus where So in if of seen low value point and make able quarter. geographic it value of chain, to in talent which like realizing you environment us continue price you flex think periods if acetic and strength of is, confident the even the every in we're we've the our to these it's and and results, the certainly model, I will, about emulsions, second that is

Scott Richardson

added expanded integration And Duffy, network tons. added frankly, by we add, carbon We've outlined. integration with XXX,XXX unit that achieved more Lake in options, global more I we've Yeah. recently with vinyl this remember, we've could acetate with our monoxide, Clear Lori just methanol,

of to that make affect we're So contribute the add it's there's and repeatable data, question real and steps time addition really to and forward. going activations results about to asked [indiscernible]. provides us that steps insights use which to calls, is value the to the combination John other these these the expansion, of look these value decisions going the pursuing, additional believe methanol we're that we

Lori Ryerkerk

for Celanese, And year in shouldn't ignore I a I productivity, mean, are steps. think productivity delivering XXX about million we we

again, XX-XX, certainly our that overall as on is of year on base. kind So roughly us more year doing cost lowering making well, year competitive that

Duffy Fischer

going Acetyl’s for the at the be coal in the deal explosion And acid a to that believes then, market big the acetic does China. EMA market gasification is in

Scott Richardson

early Yeah, terrible domestic capacity in too a multiple it's there's of Chinese And there many, something thing, province. lost Duffy, province, get injuries and it's that. like to XX% think terrible, in many lives that and I into on then

so particular a, is perspective, a tons, that the it big from thousand a percent so or it's domestic two This unit So of only of call a was country capacity. province couple hundred producer.

our focused work what our can the there. operations what to to does [indiscernible] ultimately, We're take with steps they do what the seen units that, QX. the it to keep and watching province are on we connected, to – and we're other remains So in we're customers across be and efforts curtail business

Operator

Jefferies. question comes from with Laurence next Our Alexander

Laurence Alexander

ones. quick Two

seen broad book stronger on for uptick give improvement? are this particular Can there's if regions First sense that in is terms a of or you've than recently. basis in that the how any of others, order the pace the you

be productivity on that any forward? going thinking secondly, XXXX timing of of lumpiness for and should about XXXX And and we in turnarounds, terms there is outages

Lori Ryerkerk

because quarter, probably we're I seen fairly some I it's would Yeah, noticeable grades, so talked recovery in book, it saw of that seeing recovery declines on about. more mean, the broadly, order in we good of good in second the nylon, in elastomers I We’ve say, palm, [indiscernible]. those

pretty say, grades I'd the we make in between that across spread different order pretty So the it's the broad book this and point. also then at regions

Scott Richardson

of into Yeah. that turnarounds, doing more across insight October. we're kind Laurence, that that and work corporation the right probably we On do in on we’ll now turnaround provide planting up as planning

Operator

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

Ghansham Panjabi

Thank you. new morning. And congratulations role. Lori, on again Good your

Lori Ryerkerk

Thank you.

Ghansham Panjabi

guidance in your for market half are expectation the as embedded behind per Or any sort assuming are for in back your segment? including basically going guess inventory pressure destocking, to demand and you iteration you? end release, improved now is EPS that in first the ‘XX, of the fundamentals EM the you volumes, acceleration I the of sort comps press assuming the in

Lori Ryerkerk

Yeah.

are So much us. that de-stocking is assumption we that behind pretty is, assuming

already seasonality assuming the around and occurred. and destocking, re-stocking for we we're fourth not third de-stocking return a not has fourth usually assuming you some of amount will. if demand in normal quarter because assumption We're see we believe to Now, any the in the really quarter

Ghansham Panjabi

footprint Southeast prepared of terms the some sort Asia, other Would perhaps away of electronics, balancing including focus you parts call on for expanding broadly? your regions into comments, as in of Asia versus some the supply how China? directionally, from markets are moving such of then in other in China Southeast you just chains VM your least across your more that the And at of world,

Lori Ryerkerk

whether in Europe we just if if business and think other historically, world, with Yeah, so sales. US, are I the following or big supplied of Difficulty] I not go supplying you and the into China. be on the it China really mean, our materials most people very we regions our back into [Technical started basically expanding focused China, auto, China that same of will, you in EM

much from it's from the very so exporting And US, into exporting material China. on Europe

the Asia, at large quite produced, and Asia fact, just in you into if then not are also and majority of look it, the compounded percentage China. outside So EM of but our imported, into materials,

when life. business long times and lot long worked That and But auto that lead of look doing had now things if our pretty as and you especially a things and we that at were had and maybe go you a demand six customer more every can into meet a chain consumer that quickly, products quickly. more to get change months it's to supply development electronics not just our year, that things

shorten over meet So in the in current of China additional we China is And in couple next program future to are this in rest and supply well our a the adding compounding our line add already of really to customers of chain to few as projects capital -- Asia. year the going have compounding on China. needs years as focusing poly the

Operator

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

John McNulty

some this quantify as of to highlighted a you Can you forward you cutting. remarks, pull had cost prepared give magnitude can the year? XXXX to accelerate your the actions in around Lori, us or ability what to

Lori Ryerkerk

it, pulled million, we capital so Yeah, thin. of let's forward XX about projects, capital call

that idea you on year and of example, are but to we'll won't XXX. and efficiency we So, energy a productivity, we productivity, run boilers to number this necessarily like where these this year, see will refurbishing mean, capital give combination the on years you about for and had to payout an projects that, I better be year of natural give at things next get that a rate the But see XXX these are other the follow. plants. productivity, the an payout been year doing between things retrofitting to XXX million gas

a in, won't million year on been year, million. pull all was XX so but, to full basis we've not it implemented million obviously, of it to to January we X, So XX this XXX now, XXX able call all call million get it

John McNulty

little to kind may have around around be and roughly And guess, to regard sound really of if how with an there then tough competition swapped then what a displace can really of it’s is percent bit I been kind that does or products random of discipline. it's specked how it because issue. And or much like of in of in lapses pricing, EM, cuts out quickly, [ph] your much price

Lori Ryerkerk

here, already a in, or could specked I'm exact very of product, come I’ll is probably numbers. to Yeah, a back third probably, either mean up I'll what now, I very, in to very based be ask the easier be third kind would in say, and call, a it’s out third right too on hard, which Scott sure is of and price. of but not I then know it's others really people specked sticky, it and is I more, me it for me of could of but

Scott Richardson

we're exactly solution. business engineered of the third Yeah, right. that's I an think John, is bit a a I it's still – little more mean, transactional, about

we So mean, switch of out. out to from is, it be something it it's also reality switched not that too, next. changes, between can can I one polymers. But the The day

us over really for where pipeline more now, materials we us build be for that polymer more project can the as transactional to are families depending depending into, in, our specked more and opportunity in talked put it of important go XX But this a portfolio spaces. where that business given an on, well, start the Lori sticky the focus that in gives are lot fact just that's we continues and as it on and on that try a have So to we market, to various breadth different us flexibility about. raw materials raw

Operator

with from Partners. Our next comes Vertical question Research Kevin McCarthy

Kevin McCarthy

industry. the question Acetyl’s A on

caused among the have prices, because, simply or at to of are competitors see months, back how recent trends, agree with go a My relatively across much cash maintenance it that if you the with look do versus, recent these And you we there's throttling do thinking, many sense economic negative, outages so, of in how for by of a example? for market they your some As is, industry reasons, large question competitors related outages us you quarters. number that? do seems

Lori Ryerkerk

shut me the capacity ask in that let follow but say, has been Todd of down to some up China hard pricing. to due comment. and intentionally bit little a my always demand combination We It's to know

turnaround Second heavy quarter fairly quarter is well. traditionally as a

in Asia, certainly So, the US out. see some taken and we in

people pace Now, having you, a maintenance lot economics and years, around them outages now. of for decisions can to doing at a when slower tell they I are like operations XX extending are run things make and

a about both. may maintenance. unclear Todd, bit seen how economic we've little specific. always versus how you But have is it's much is certainly more much So,

Todd Elliott

exact actually a demand a in we if figure. XX%, it's and basis to acetic would question. utilization Lori's is, dropped China the hard it's good were And with over around believe sequentially acid Kevin, QX track utilization But just to to it with know to under utilization rates, that that, XX% have try on point QX, to rates global Yeah, dipping XX% so down under pulled we XX%, call by rate.

sort all have absolutely late of occurred it a kind normal on if that XXX,XXX to So outages, doubled, in hard in, you around intentional ramp up factor the of of we typically that run might to QX, we do point, and believe that of call we that, your curtailment be tons heels here. it's, rate question, kind of would think precise your again, to

part And care customers been of that's do But our for action, we take time. to to value our and do there had have what intentional we also all some the own to maximize shareholders certainly our with network.

second to indeed into So, But we and year. track we as for important some watch really go were that's sets improvement there curtailments tone and as the half the and go of QX, into the to demand our China, to that a all particularly starting space, lot, recover that will and help important. industrial in got really that focus and starting critically We've demand of businesses. conditions to on is see

Kevin McCarthy

through really as in then follow rationalization a need the Do of fuel with to you And on Celanese’s react your thoughts in Singapore? capacity Acetyls, sticking XXXX Asia? and up, latest IMO what again, how are see get markets

Lori Ryerkerk

an intention our to do reconfiguration. gas that's we've right. no, Yeah, acetic exactly announced mean, I

way, We at US But progressing capacity raw it ultimately on but by out Coast decision, will where taking are of the capacity to depend still it utilizing take productivity lower costs about that that is is material in Asia decision bunker that of pricing, based What on based with exactly coal up and Gulf the project, that based do we decision Asia. upon does where you of what time, for fuel And what those. we'll with capacity? we make that pricing Where mean end that both mean for margins? go? does said, where the on does Nanjing Singapore at are

Operator

question Viswanathan Arun Our from Markets. comes from Capital next RBC

Arun Viswanathan

guess go and and past to the maybe then, would is at put QX guidance statement the QX, the looking QX, XXX. to back in I it And for I to QX between at just XXXX. QX, your both wanted

So be around [ph]. probably would that $X

path and it do risk as I just want you Acetyls confidence and going margins understand bit see and I volume, would and that or to you both where see price Acetyls that in EM in guess, up be where well? Is greatest Just, the little a the the mechanics and factors path? EM more.

Lori Ryerkerk

Yeah.

the and as then forward year of to in thing in to firming the cetera, we said, around the to reasons if we of sustained, continue some we upside et be we're in share, the could we had course, earlier, full on all that’s recovery And the per our also XXX of engineered talking impact see And share the discussed that de-stocking, that the the further materials, if we've acetic of see through we’ve we acid of So, for in range. really confident end the we ability indications, numbers. expect seeing kind impact Acetyls have for earnings feel go buyback pricing, since year. Clearly, Acetyl. deliver as

Arun Viswanathan

your And, ‘XX that provided expect point? ’XX last targets longer some through for you you update to also term at year do

Lori Ryerkerk

out we’ll a relook working will XXXX. we're end that that working view the clearly, so our through for strategy and the of Yeah, of at again, kind part look refresh, year, through be XXXX of through be at to

as of as well view beyond So the year, XXXX have certainly, hopefully, the years the a we'll through the we’ll end that. timeframe, have of Yeah. we October work into in strategy that as the out

Operator

Our question with Yefremov from Nomura. comes next Alex

Alex Yefremov

of how in should see Was we business engineered margin half? what In the you wholly owned sustainability? level your representative could of for second the half the in about materials, first margins think

Lori Ryerkerk

reasons for for engineered for we think I described, second expect first half. we be was think, the half stronger all it I to materials Look, than

we acquired expect with with further I business the improvement the in against further strengthening destocking. as and going not think conditions, well our delivery certainly forward the for those those models businesses, anticipating as market the models for general

businesses, a our especially but second businesses, our first I for expect stronger own well as half than So for own affiliates, our for think we as half.

Scott Richardson

Year with Yeah, timeframe. volumes just, and are Western a just typically strongest that into Asia New there little in lower Alexi in the of in are Hemisphere, bit QX, kind moving Chinese QX, margins versus

little So typically, a bit are lower. our QX margins

something would to that be well. mind So as in keep

Alex Yefremov

a third or second we quarter think about closer quarter of follow between you first, first your in guided up, you the of XQ? to As between quarter, as the quarter and should somewhere or about kind that midpoint, are the thinking sort first guidance level second level

Scott Richardson

the as Alexi, we I still fairly start quarter. early think, we're

demand can materializes. it think how really be I so, And

destocking expect taking from talked kind think shut of do example, of more there an to pretty as some But, downs. end or to for I announcements or about. we less has automakers some some coming been public that, we

range as have we’ll our better in it's we that finish, a So, quarter, idea and, where somewhere it's but work through we in on way range. the that

Operator

with comes Robinson. Sheehan SunTrust question next from Our Jim

Jim Sheehan

in track like share still were reduction the targeting for the do quarter, you're buybacks you pretty on possibly. robust seem even more count to It a are year? X% Share does around

Scott Richardson

been we've share fact Jim, the going open to very with we're buybacks. about be Yeah, opportunistic

of the year this did at we general half outstanding XXX expect X% We last in about in that bought million, XXX of in were in expect where We million XXXX we the months, in first back the to to be the finishing XX we range be XXXX. and range, share. with

Jim Sheehan

full outlook, an fourth quarter. $XX.XX, the of in sorts assuming year on you're acceleration the And

that see see do of downside XXXX? for you don't you If full uptick, kind what year

Lori Ryerkerk

if to conditions X% half, we would we to to continue so first expect were to market be our earnings down the per similar see X%. share Yeah, then

Chuck Kyrish

question. Bob, make question our final we’ll next the

Operator

Holt. from Our comes last Blair with Matthew Pickering, question Tudor,

Matthew Blair

for the both Could talk to month month quarter June Chain? Chain weakest EM, the about you of kind the that It like in and maybe entire the to second month the how in right quarter sounds of June way but potentially was engineered it? Acetyl about performed Is Acetyl one strongest the materials? of think relative of

Lori Ryerkerk

me let so EM. talk about Yeah,

EM. That's is typically the So, typical. the of just month last quarter quarter for the strongest

their way people businesses. the just So run

us the an year in our auto the in think Interestingly probably in saw increase So June, not actually in in month definitely, strongest increase but enough, May since I sales second first quarter, in a China. it good June auto of was occurred for terms for, in June. of quarter in actually was, that's sales, last we China

on standards into faced won't China think are to with place. heavy We emission that air going don't meet because going necessarily the that that’s was in discounting sustainable it new vehicles very move

a interesting month. an was June bit So, of

for So, of some the quarter. good good a atypical for strength, end not, the EM, end the some areas weakness, of but I’d of for month areas not say month, of -- a

can was that quarter. don't strong to rest the as Todd the I Acetyls, was actually significantly know it comparison I in particularly ask I comment, I don't to it or think weak of different. think

any? have you do Todd,

Todd Elliott

good. No. That's

think I lowest was that's of middle three, the probably overall. the but balanced I the right. month mean, to not your of pretty point,

Matthew Blair

could quarter. Chinese And from have major Celanese, talk you any like quite bit you far so then of more the do some about run VAM color looks have market been off some QX. might this there. There's pricing It Todd, the including economic already a reports of come producers, in cuts

Todd Elliott

see our operational demand, profitability. we to so, respect flex similar our we match will customer as comments activity, needs, the again, from before, Well, customer the cost, with with unit, to

So is that we'll units for important world. us. in do the all That around flexibility

declining China not as would at VAM I characterize So point. this

QX over we little the the the Q quarter. to development no, more severe watch and was of I go in to think to healthy that fairly course I QX, certainly got terms a to as Q think drop. it's been characterization of the come too of a we But

deliver we the in before. we're to working outlined QX So, quarter as hard

got have do turnaround to through, operational that's Frankfurt work got thing QX navigate we've thing do so work the to one XX on the million there through. we've an probably we that have in but a headwind a got in around, VAM, probably to perspective from we've we So, one

Operator

the call turn of like would to answer this time, the and for to Kyrish we’ve Ladies Chuck session. closing gentlemen, end back reached question comments. the I and At

Chuck Kyrish

we like would Thanks, Rob. Certainly, questions. good everyone to today the in for listening and thank

that we’re usual, can Rob, after have that, around out. As to you questions close with address this other call the and you

Operator

conference. Thank concludes you. today’s This

this lines your and disconnect at may time for You your we you thank participation.

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