Celanese (CE) 22 Oct 192019 Q3 Earnings call transcript

Company Profile

Participants

Chuck Kyrish	Vice President, Investor Relations & Treasurer
Lori Ryerkerk	Chief Executive Officer;
Scott Richardson	Chief Financial Officer
Todd Elliott	Senior Vice President, Acetyl Chain.
Vincent Andrews	Morgan Stanley
Jeff Zekauskas	JPMorgan
Mike Sison	Wells Fargo
Bob Koort	Goldman Sachs
John Roberts	UBS
P.J. Juvekar	Citi
Duffy Fischer	Barclays Bank
Ghansham Panjabi	Robert W. Baird
Laurence Alexander	Jefferies
Kevin McCarthy	Vertical Research Partners
David Begleiter	Deutsche Bank
Arun Viswanathan	RBC Capital Markets
Matthew Blair	Tudor, Pickering
Jim Sheehan	SunTrust Robinson Humphrey
Matthew DeYoe	Bank of America Merrill Lynch

Call transcript

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Operator

Greetings and welcome to the Celanese Corporation Third Quarter 2019 Earnings Conference Call. At the time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Chuck Kyrish, Vice President, Treasurer and Investor Relations. sir. you, Thank

begin. You may

Chuck Kyrish

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

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

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

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

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

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

Operator

Thank you.

be session. themselves to a now limit and follow-up one We question-and-answer question callers time question. Due constraints, ask all one will conducting we that to

questions, with have proceed your those comes [Operator question. the If question questions Vincent Our additional addressed Please time you requeue permitting. may will Instructions] of line from Morgan first you Stanley. Andrews be and with

Vincent Andrews

the about you your for would over midpoint end Sorry, and -- had of Could the the be high and versus low XXXX you growth full on bridge give and XX%. of a XXXX at us would for mute. be I'm just the guidance year XX.X% looking

would some understand the us I economic high require bridge would So to be. if that the understand help all you improvement. what We end. could end just low

Lori Ryerkerk

we the last of start we factors. said bridged the use to to because I'm let with Look, $XX.XX same me quarter you. $XX, thank the kind Vincent, going from what where

from it our productivity of growth you from –third when to that whether would and sorry, a-third cash or -- a-third remember market share said $XX, we were business we a-third a be was M&A $XX.XX If kind going deployment, demand buyback.

excluding year, impacts would we end like So feel if $XX. the Clear Lake, the of this look we year at around

that's to either so, add -- deployment another that And we If can that, cash if to us we or another again, add $X.XX. we $X.XX. share buyback, the to be productivity $XX. add gets M&A That the that's if that,

So the can improved assuming conditions. an that is Obviously, for upside basically we any $XX we price, towards that or get reflected in move environment current $XX. market XXXX forward if that going the us outlook from demand

Vincent Andrews

start follow-up, trending into a volume about this next you and a growth bit has think materials XXXX? there's maybe of destocking talked again? for last the we when think residual Okay. we you see engineered quarter And volume XQ, type positive should do to as what quarter enter year, expect into destocking. been of But volume as lower. we can And about you And turn

Lori Ryerkerk

Yes.

So we X%. up quarter. the for third volume to about engineered on materials, mean, up volume second quarter saw are sequentially We I

another referred XX% So really Europe saw decline quarter-on-quarter. to we to destocking specific the was where residual autos we pretty that

really that's So specific.

didn't consistent we I say, see quarter, would we with destocking last said of China. really in what size

destocking saw stayed think the U.S. China. we the we In fact, last so of were growth we volume flattish, bottom And at the in quarter.

the in really just So destocking residual Europe. was

quarter third to about So second quarter for up by volume materials, engineered X%.

We But quarter in quarter, the to of see holiday. grow in seasonality, slowdown. volume don't growth. some U.S. to and fourth I China that first fourth see Going know their in Europe, typically quarter. continue see We typically into see the advance we the we'll continue

into growth certainly this based we've expect project year, well seasonality just quarter volume fourth third but quarter we to So as had as next wins normal I don't expect the volume year. on growth quarter, that first

Vincent Andrews

much. very you Thank Okay.

Operator

line the with with from JPMorgan. comes question. Please of question your next proceed Jeff Zekauskas Our

Jeff Zekauskas

Thanks you very quarter? buy did in back -- the many third What much. was how shares your

Scott Richardson

million and and bought at $XXX shares so a Yes. share. we $XXX $XXX a Jeff, that over little worth about price of between was -- a roughly

we billion and kind that's year the where to we for expect of repurchases year about at of finish finished So XXXX. calendar $X

Jeff Zekauskas

September, So I bought that shares no that assume you means that in right? is

Lori Ryerkerk

No, we've shares that buying been steadily September. since

them prior we've repurchase. know, You had we but steady a opportunistically more that pattern were to just then of buying since

Jeff Zekauskas

very Okay. much. you Great. Thank

Operator

Please question. question next line Sison of proceed comes Our Fargo. your Mike with from the Wells with

Mike Sison

extra needs to -- between morning. to the better and do the good about think push? of terms think dollars sort what happen Chain you EM? dollar you extra per sorry to, when the of Lori, times those segments I'm $XX kind and leverage share of, in Acetyl $XX get maybe Hey, to that to split dollar is extra is that And evenly

Lori Ryerkerk

it's Yes, Mike think split The I evenly right. much pretty I -- would and that's EM. say Acetyls between

You don't in obviously, any growth, know, we expect Acetate Tow. year-on-year

that we're but would Lake, really demand. starting comes already closer move to pricing of impact tightness and no improved to course, year. I next the of and growth, EM, from that In in it to volume terms conditions comes acetyls from from destocking in assuming no and -- growth market market in a into say probably return normalcy So Clear with

Mike Sison

opportunities size? next area that think any Where could on the an then given you focused year going terms that Right. environment And in boost earnings it forward? are the do on of is acquisitions thoughts

Lori Ryerkerk

Yes.

look first And we really are So if -- our if $XXX of of million priority against year this course, up CapEx. first organic at you cash investment. for use is look, you our

organically in growth that's Next in productivity year that goes really $XXX projects. and up projects and ourselves to investment million

the of cash next of year. use first kind that's So

found of when price bolt-on in at this invest transformational. kind anything have everything yet XXXX wanted we acquisitions a to continue to Look the year look frankly we environment. we people in we get to because of to we're M&A quite multiples XXXX wanting haven't lot

it adds right value an and if that. So to going price and we're just we only M&A and to sense it's the makes shareholder do haven't found it the

we year technologies or next our additional into forward Clearly to additional EM look look we going different continue or side acquire opportunity. to focus to for geographies we we're that trying molecules main on the is if So want to to this to we look quite in. point. that what's would up to attractive. don't and be various We have at companies be out anything talk think But just see there lined continue frankly

Mike Sison

Got it. Thank you.

Operator

of Our with Goldman next question. the question comes from Sachs. Bob line proceed Koort your with Please

Bob Koort

Good you. could Thank morning. a about… talk Lori, bit little you

Lori Ryerkerk

Good morning, Bob.

Bob Koort

Engineering on chain doing what Materials? you there? the you up give …maybe you're are supply sort on us some making What, got there? exactly specifics you granularity teed efforts of, some in improvements Can

Lori Ryerkerk

Yes.

added after couple chain of years as acquisitions we've nylon over found of last grown has on been lot system a chain lot we few as supply it largely So EM SKUs. were Bob, strain materials. and had our of the the small volume we've while And lines exists and We've really had earnings because base. and is straining product a supply for today system self-spreadsheet a in really our TPE this or which we our we it good volumes a is particularly other manual

And to strengthen we've do to sure six our And last now said, on so existing to right back to high-quality taken what continue deliver months nine so to we do need okay, time? customers really product we really to over make our and efforts systems. we the stepped

So continue more it manually, but really some to effectively to do we've do it added some to more people. We've processes efficiently. and added

-- us is kept customers. with phase running phase in to really and shape that's next But that. try really next good well to Our our us and our kept is automate

handles more using better, statistics skew better bar forecasting, at it make all overlay, coding use to of more where looking versus don't an more IT manual example very for we're at So system this have, site process we that our we automated. IT the have adding

the is should We're a working Phase identify really systems that. X. so now And And do XX going completed with the months. consultant be and next XX that effort to on to months pathway to the over that

Bob Koort

maybe might And you on in you. give the I'm curious about rival plants past plant is tighten about Where guess, adding more of world China. I in come seeing ton operating could and rates? million Got out the in one few around know side And market a that acetic does the I there particularly days? maybe there And China. the thinking acid you I talked terms main have of a guys look in your us stand these things. help saw

there? what's outlook see you So guys of sort the

Lori Ryerkerk

think environmental look So, a seen over few if I other and last we've for China. years the out you plants in come reasons few

any haven't build. We really seen

bit. As maybe really capacity But I'd a few crude maybe been world. supply a say Asia and slightly declining volume flat we've in around to has we the have seen people

fairly be more time We seen ask also to that generally, Todd I'd we've supply say the built take would announcement get I'll maybe and comment some saw But specifically. to obviously stable.

tighten there XXXX, This of a which outages supply lot bit. the many in as year not industry we've seen Now, a outages. in was helped

builds. than the been And with frankly economical Clear kinds to other just been other Greenfield going our in things than builds announced the seen on. So, builds any haven't Lake able for supported going expansion the builds forward very economics again people capacity quite versus now one other haven't most of we we've that's creep do and

Todd to-- do want you So,

Todd Elliott

We're Elliott. it's Clear Hey, with Lake. project Bob. tracking Yes reconfiguration our Todd in

about we're by tons Lake Clear there adding Of XXX,XXX course in XXXX.

in as Lake. for for the place well permits both expansion plan as methanol that So, Clear

near-term. technology unit first that will we That that the hits world-scale the tracks. So, the in think marketplace best be

towards date. tracking that we're So,

to specifically on your at question utilization you I China. rates today are More look just focused you if mainly think

in the probably probably saw range the year. XXXX, well as end for both this We in nudge down around utilization the QX of the most around China. globally call XX% of utilization towards in around would we world end course, China XX% towards XX%. that fell then rates as rates of XX% and utilization China to up under QX. the Of We up saw push

So, some we improvement. actually saw

national Some this some of disruptions prior related the supply well as that demand to to Chinese improved due supply holiday. was as

of bit little QX. in conditions end better the China a trading So, at

saw also move of quarter. We the up the pricing end at

We're is I New now into we on watching better think really as sustainable? of demand main recovery. as Year we're focus certainly is -- the that into looking and for course the question conditions that QX

Bob Koort

it. Got Thanks.

Operator

of Our from Roberts the line with next with UBS. John question comes proceed your question. Please

John Roberts

just continue inventories up for products inventories. sounds Why given year you you. shortfall. of with backdrop next at low the Thank those drove early to least rebuilding not In on economic make the in downstream plan like inventories you the the here? the down It acetyls

Lori Ryerkerk

have have and capital is we for this look seasonality year. the fourth working certainly quarter anyway. helping us. lower VAM So, That Typically lower for in demand we do emulsions

that's our inventory. we felt why frankly quite driving So, comfortable down

and cost pickup we so advantage still costing now, inventories Look And the think it's little can there's that the see right lower makes quarter. raw of point. we material material in to first in fourth quarter. good it a rebuild take Typically choice a just sense to we extent raw

Todd Elliott

And the Todd this John or maybe X% year-over-year XX% been downstream about on. over up acetate it's to This to And either year. derivatives downstream if to mix opportunities you mean volume -- to saw add I intentional shift move derivatives. again our at we to I we prepared our vinyl acid patterns remarks we're think acetic of has those look to mentioned emulsions. in just just

We and an basis. a think XX% of way percentage maintaining all $XXX move to on around through positive a keep that's year earnings allowed really that's as all above sales since million been us QX up margins EBITDA that the

we activation intentional think perspective So derivatives trading an better from to opportunities saw the has in right as we shift that this those year been conditions. call

John Roberts

cited in a EV traditional vehicle know light-weighting you growth one And versus the in on remind a Can content the so there higher as -- EVs growth of don't traditional us you vehicles as EV a I content engineered just is -- of and here. both is drivers typical relative Celanese in plastics, average then follow-up side? if both

Lori Ryerkerk

-- say opportunity a which than on in EV because battery the higher connections traditional we of. which also more vehicle. vehicle so the content have lot requires for the obviously is provide EV would I lot a an electrical film There's side you a

on higher still EV, small the the frankly, fleet. a EVs opportunity are percentage of So, but is content for very

-- a amount the have happy we're we still have small in EVs, So, but of content we with it's currently a percentage.

highly important and still see next the I years. are vehicles now for many us to So,

auto penetration The content to we we that we news continue is have to as continue vehicles. good amount in the have in there good of increase that

rate growth You of we've have comment seen in more annual might vehicle. that grown the XX% kilograms amount the than per

from penetrate our two-thirds of more have and vehicles that one-third on did why Now, to M&A the from actually about kind and comes about to M&A acquire we our opportunity TPE materials. that that's of to nylon legacy

value, volume to of putting vehicles. very obviously value vehicles, be is also we're because a want We're in margin; the what contributing materials high Obviously, we on the metric. into important is polymers high

the of of we're So in replacement other at of durability, all emissions, ICE plastics both. light-weighting, of and avoidance these order, trends looking functionality, both our important EV. But for trends again, our paints, are because all

John Roberts

you. Got it. Thank

Operator

question comes from P.J. your line Please proceed question. with next Our Citi. of Juvekar the with

P.J. Juvekar

Hi. Yes. morning. Good

Lori Ryerkerk

Good morning, P.J.

P.J. Juvekar

like about on You China, you diverted You Singapore to and what last future going then pushed the emulsions. And strategy acid talked strategy in a in that is world Western volumes Acetyls. of Looks A into question quarter. Asia. more VAM similar plant? forward? more and Is sort had a rationalization you of

you. Singapore of plant, in So new light especially the Thank announced what's of the capacity BP? by future

Lori Ryerkerk

Yeah.

thanks So P.J.

strategy money. our is So, Acetyls really to follow the in

we the pulled volume quarter, you was acid better. another VAM, where into it pulled second Hemisphere was see at better. pricing actually China look you Western of if derivatives where We into out pricing So,

third we've As Europe of volume in here an in in out volumes, we to a softening see Asia, to softening as actually the we of the we demand volume at end in the referred started saw and for where volume Todd move well. quarter, move China, especially Americas, into earlier, increase back seen as out actually quarter. real And more moved the pricing

derivatives is So, we that's between have order returns. and we're acid that to around returns, pretty business the deliver really molecules which maximize and -- and to our is move between Chain stable our to acetic Acetyl how capability and regions flexibility our model, in

working As far still Clear we're in Obviously, as I we'll announced expansion we’ve said Singapore, that. with capacity take through mean of the Lake, out Asia.

oil to and everything in IMO around see in terms fuel impacts still an impact of are that could pricing XXXX in for on the have pricing how pricing decision. Singapore. looking develops We China, Obviously

see options our both cases preserving still in until are the we lead So, economics we where us.

P.J. Juvekar

Scott. million question for Thank Scott, you $XXX you. did a And a buyback.

billion You're looks the on there. $X aren't buy acquisitions It pace quite like of stock. worth to pecking

overall is So, can splits M&A strategy? the some you R&D give us on an transaction. or strategic an update talk about There

ongoing generally about you you. So, and can of sort industry? in Thank talk consolidation the that, the

Scott Richardson

Yeah.

Lori buyback first comment M&A. hit on and question Let the me let broadly P.J., then I'll

So, $XXX we $XXX done kind and year finished we did average price did $XXX we million the price for at the -- we've where quarter. an That around an the at in That's was of million when average quarter. between $XXX. We sit $XXX.

to expect said $X billion finish We at I as earlier.

be to going We're opportunistic with that cash flow.

taking investment Organic our going we we're possibly to have be our a more cash take We'll next priority up projects. that CapEx. increasing are is million going We than for extra to little up. even We're $XXX attractive year. to first $XXX CapEx choice. And around always year, finish this and that's as that million

overly environment, we Then willing bolt-on really depressed being we economic people look environment. M&A. to this at not In in have a more sell seen

continue do we'll towards And and that to buybacks, so we've cash that repurposed opportunistically.

Lori Ryerkerk

I and I have of a about press it certain many know there's transformational Yeah. positions. M&A, and you lot in And been the taken a written mean

think And I before added been by think said you we the me to the will of weren't is of shareholder. surprised here, you discussion and I M&A. continue correctly Mark value we've most pursue of very to M&A form whatever clear many transformational about

to dissynergies shareholder doing some wouldn't much short to we've activity to sort company is with see split it a That no -- activities, help other whether what a really at the activity. transformational we time having around to changed. Look, would and split, our attractive split, other split still attractive our value of company. from the consider an add quite it us of just not it in is split it's hasn't opinion in really the as becomes frankly, And because there's today, that. of It's uplift value the that or for to options. But we we point done the as associated some ongoing do not to advisers regularly philosophy evaluate use because us. If, change

P.J. Juvekar

Thank you.

Operator

with next Barclays. line Our question. Duffy the of proceed question from Please your with Fischer comes

Duffy Fischer

morning. Good Yes.

deeper. dig want a Just in to little

called through of Japan? joint You Korea segment. it the you out? just out seeing and structural? And Saudi there Maybe walk kind of kind and Is ventures macro? of EM that are that's disappointing? tease Is in you Can what it disappointing some

Lori Ryerkerk

Yes.

look $XX think Ibn from million So with second I quarter Ibn turnaround Sina about versus in expected let -- Sina. I the a me of this -- start Sina the quarter joint had Saudi Ibn venture. we our We with coming out last quarter uplift that indicated

there. $X about got so things a couple million, only actually We of

residual have turnaround the adjustment third we hit bit thing a that booked had we books One the a rate other And of is, GAAP in expense we this quarter. is, that little quarter. still tax

this we Ibn Sina So we get didn't out of wanted everything quarter.

POM as would we to we move in pricing in maybe volumes. challenges joint so as if move well, with joint and Also suffered have POM ventures, POM to our autos we've ventures own I what the downturn more even the say is, our and really seen as than work

So that for those from we we've say enjoyed joint in returns seen ventures the not example XXXX.

they would I general market generally anything so it's joint the of make than conditions the and that specifically reflective operations around But regions for them products say, the venture. they make more the that of

Duffy Fischer

little will to hit? will to of a squarely on through? increased that that plant have Okay. that when tow see should with And then earnings? this the Mexican of quarter, of the happening Will hit in the kind wait shutdown come we what that And flow And then of Or on earnings backside? we when for we impact from what's bit the QX? out in that

Lori Ryerkerk

Yes.

came the had to million earlier. personnel for and items. million this So $XXX discussed as $XXX that million was $XX shut that There about of non-cash shutdown, another will million we of Ocotlán $XX costs of with end month down at

year. really depreciation impairment, hit So, so accelerated and those see we'll this

That up see Acetate shutdown $XX forward forward. going of portion the savings significant and of Tow a going the needed million with we maintain flat to it that to come in earnings make productivity

would dynamics, I it savings very to because given into say look would and market that. baked these going so is, I expect this year already did what similar forward, the what So to year Tow are that next Acetate

Duffy Fischer

Great. Thank you.

Operator

the with Our Baird. with Please comes line from of proceed question Ghansham next your question. Panjabi

Ghansham Panjabi

Lori. XXXX? guidance, us volumes of the how as that Hey think off have the thinking that, by morning. and would to related would And first the about about back are guys. Good we end shake we guess quarterly AC? I you segments XXXX to phasing EM How low two core at think out guidance? about How

Lori Ryerkerk

Yes.

wouldn't we looked So in I haven't quarter. -- -- by at it look really

in So assume much what I been We I usually some volumes quarterly We quarterly has down had first see would different. -- think fourth follow quarter see wouldn't patterns tend earnings. China. seasonality. historical the been that's for for to our quarter some

I being past start how we've year see year. tend different we mean, to the impacts this some bake projects, so expansion very I Chain. mean full Acetyl quarters the really that the uptick obviously has we the I -- of in these We just will don't out. for that the done see to volume look to of some

from of well and start we've the as impacts seeing new new completed But some lines compounding Suzhou. just should in EM, that we as Nanjing the done so also in some productivity projects we've some volume impacts

to typically single high year. would a acetate we -- of a say bit kind lower of digits; percent. lot increases So a wouldn't that in than of see that, little mid next couple different I I EM

and cash the year, control. is, XXXX this we're into Clear things seeing what terms productivity really and the of baked similar lot so what's absence in deployment, our A of just within of the Lake to markets outlook

Ghansham Panjabi

you destocking then -- quarter you specific think of phasing much. still some destocking in Europe, in to so with do enter EM? be residual Okay. terms specific comments think going Or to And that of see do fourth autos made as EM we there and -- you the Thanks through for is to sort that XQ?

Lori Ryerkerk

come see. we're an is Years in July, October example, Look, at look that of I fourth the we if quarter at in seeing is fourth see No. as New in quarter. of what good books pretty our Chinese demand I typical X%. look mean the China if think in the China versus pretty up quarter, seasonality and advance typical China first really order up about have we we we That's

seasonal hand, the fairly slightly basis. across Europe to other down and typical also U.S. the which the flat a is On again sectors are from

So occurring. more lot I don't see a really destocking

said, of the last we other it we're in Like the we've in decline we auto severe all -- destocking signal really that -- Europe other every quarter. a But really really sectors. in in we as really result occur the saw of seen is really the

to And so destocking fourth we don't expect in occur quarter.

lower outside some volume China, see seasonality, will just Acetyls we again, in EM. both of associated But and with

Ghansham Panjabi

Yeah, understood. so much, Lori. Thanks

Lori Ryerkerk

Thanks.

Operator

proceed comes of question. Our line next your with question Laurence Alexander with from the Please Jefferies.

Laurence Alexander

you Tow? morning. detail, longer-term Acetate Good Could bit for flesh what more out optionality the a about thinking you're little

initially? Or you opportunities it pull And your update you about thinking efficiency what more in thought XXXX, -- can limited working gains productivity might forward and degrees to are capital to XXXX? secondly, what there freedom than

Lori Ryerkerk

Yeah.

as going fact Tow, cigarette pressure we've that relatively see in volumes, So in confident ability recently earnings. mean seen to We on demand. actually maintain slowing look, of feel especially little China, we've frankly bit down we in quite growth I where into XXXX I seen think, our China do flat Acetate a

exposure expect able certainly productivity we Ocotlán, to expect still Tow. with XXXX. So, Acetate and be with to declines flat, continuing other do But through volume see the and price we in that maintain

Scott Richardson

tied to investments a And productivity working the Laurence, of I also those to capital. working that it's generation. of lot increase on revenue organic But tied think, A and as we're making, and Yeah. then productivity lot we are investment. capital

Materials, we've our level. Asia. in more our inventory It overall for supply So invest also the about lowers to in chain. improves talked Engineered example, That need

making. we're So a investments lot with this of is that very the consistent

We've while. now working aggressively capital a been for

we've of seen is year. uptick productivity -- reflected an this free seen the You've improvement in cash flow. Productivity that in

can continue that from fundamental what cost Because reduction XXXX, to we're going what are just really markets. into said earlier, improvements control, growth not earnings unique and actions controllable XXXX. that to we our expect on Celanese the the drive We XXXX because focused we in are are as end expecting we're productivity that to

Laurence Alexander

Thank Okay. you.

Operator

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

Kevin McCarthy

Good morning.

expenditure about is a can million $XXX indicated two of projects capital maintenance? budget XXXX. cost-reduction you guess how for You've I parts, through growth versus that much and talk

then And new for through about the company double was that's of more we level from think broadly, Should XXXX, XXXX. spending company? what a $XXX million normal as the

expect to for down you Texas would come in that complete back your you as level in the Or out-years expansions example?

Lori Ryerkerk

Yeah. Yeah, so Thanks, is Kevin. it double. about

Let spent, maintain-margin I I it spend call, we historically, -- million $XXX for a for and me projects. at look if what so, year where roughly we characterize EHS if we you,

relighting reliability, good to keep So, and the environmental just running things do we running equipment compliance. and of current safety to assets need consistent with standards

that's million year. a So $XXX

$XXX and year productivity projects. like million year $XXX in a million another year, this spend revenue-generation a We

like things Lake expansion. So that Clear

at efficiency that Things a us than energy Things like return. improving give XX% boilers. high-quality greater

As we up in million growth that gen. of productivity really rev is to and all $XXX go

the Clear So it's expansion Lake project.

-- so revenue level kind million run above see And is just you say generation. base really maintain everything capital. our then would and and If productivity million towards $XXX $XXX of is we I

return kind our base on is on it put perspective, greater that of non-return projects total portfolio, those including XX%. than to our Just

the ourselves that be a in value-added So and projects for we still will return opportunity invest great shareholder. to great have

globe. into XXXX, above around XXXX past building rev million see as the if go $XXX XXXX, capacity $XXX productivity localization go gen in EM we at XXXX, we million, products other actually levels additional China, Chinese look and projects, we so our I If may

of outlined, But $XXX say would return kind the I of -- approximately post period we less capital. than level would the we've less to that that of growth million ongoing

Kevin McCarthy

ask helpful. that's prior your restart talk Lake. other unit I detail. I what's more And remarks at Lake? thinking at through Singapore secondly, for outages Clear I in saw And just CO to brought you in a want just Great, the to Did I management incident if think the the night have Clear maintenance, on bit you little down when your had that might last you to may, very outages? latest

Lori Ryerkerk

Yeah.

So Singapore let address me first.

So, Singapore to turnaround. Singapore Singapore was for CO The the turnaround turnaround our a is and the Singapore. tied of the in timing duration turnaround planned producer's

on accounts they of So, have in and Singapore. source really take of outage planned for CO basis. turnaround unit one And we a the that duration had the to that on only in Singapore,

So, put that kind events. I would the bucket operational into normal of of

Clearly, Clear working was downtime. We've an outage. been that impacts unplanned of Lake the through

quarter. on rates time of methanol of restarted and – within a the fourth we continue week. As is rate at And be acid full rate at up VAM really full partial which some at the before and put rates, be up, partial has today, we'll plan back until end we CO we'll get our CO repairs, the the will us back

Kevin McCarthy

Thank you. Fantastic.

Operator

comes Begleiter Please proceed Deutsche your line of question. David with with next the from Our question Bank.

David Begleiter

Good you. morning. Thank

Lori Ryerkerk

morning. Good

David Begleiter

to you in seeing ton you're do rationalize going some not BP's think they're region? million capacity one Lori, in as China back announcement, that your what JV of that

Lori Ryerkerk

derivatives their more system. value And apparently, have their being they're I do we looked know anything is methanol have know and we acetic with ask own that So comment, as greater value. give along others Todd acid that demand seeing chain integrated we've will they have that in decided What we're not. but the them much to as I'll don't at done they for that

So, up we show wouldn't the acetic that just expect on market. of actually acid any

our based in view. consumed Todd to have may derivatives, more on But that. again their be own that expect color on We

Todd Elliott

this is studying as far announcement MOU point. Yeah, it's can just at And We're as we understand Dave, at the better. Todd. news and least trying it tell an this to

work of that line It the in So it's early I'm take all some time sure terms engineering work projects. details, of and ultimately we days project. the through in follow to will time the

on I As with pleased said XXXX. track that we're our Lake Clear we're by expansion in before,

So, we'll first – with we think we'll be this capability.

think I right. is Lori

region. is think of to polyester ultimately Chinese PTA through a localized down demand the move integration in this I upstream an the service for PX largely and polyester

it's merchant an think little will integrated a have largely we effect announcement. So, market. on It

David Begleiter

it. given the Tow, any And perhaps Acetate just price a lastly increase for Mexico your post higher potential Got facility? supply/demand of on closing

Lori Ryerkerk

Yeah.

believe more rationalize there the others be quite that is time rationalizing frankly, do increase. we I we see So, what contracts. transactional industry short-term potential mean, as in will a we price of for for

to contracts. through We longer-term We've have increases decline. able for push seen our price of some been price

at point be the price think the price, balance be in the will actually – but about up. push in price some fairly tension all it's So moment, continue we project some stable environment opportunity future around to going certainly the to at forward and we

David Begleiter

Thank you.

Operator

Our next Markets. your Viswanathan RBC with the Please comes Arun from with of question line question. proceed Capital

Arun Viswanathan

Thanks. a point? morning. progress you year portfolio down? past to had In just around the prior $XXX to characterize And to of I go the Great. have of you that down Good would noted $XX Have bringing kind questions. dissynergies make if so guess to back wanted estimate the how from that come you this your continued now million. million on at those I

Lori Ryerkerk

Yeah.

to two is at there we amount certain do splitting to always going of can companies. exist, which you're So, look but continue this, a how we is into always look dissynergies, if

teams. have You two have management standup to

to dissynergies be two of associated amount is that. have with to I back have always mean, a You there going certain offices.

comments. maybe he So, more Scott, if specific ask has any me let

Scott Richardson

Yeah. leakage I et to of side it, trajectory we've to mean, on million down million $XX work you're past the in right. made of cetera. work that, we things continue that With $XXX tax statements the

would $XX is $XX its to So but to down it zero. than have million I below closer say we it brought million,

Arun Viswanathan

improvement primary markers we are of kind to anything stabilization? demand there is when inventory else looking see Great. you it the some be the to you're China what's an it that understanding, think Thanks. And take least Would be for – going or or levels at in for what watching? Thanks. should about just of that

Lori Ryerkerk

I about lift greatly and third holiday but Yeah. demand kind Look, mean, think at get returns moment, in demand occur. look we rest greatly to of recession. signs same Obviously, of quarter price not volumes this to – the saw China. the as it's as Chinese the about at also we increase Asia affecting impact anxious in concerns New globe It concerns for we're just These I prior to price. past tariffs whether the mean, improving looking in global to Years. also we're seems, if I much sustainable it's see, volatility. declining. factors sustainable not the But again anything national of an the

as So haven't seen sustainability we you somewhat need we to see that add? Todd, favorable. some the yet. want is response anything we what which But probably in

Todd Elliott

as we affects right. that's think the books methanol weekly -- rates. at a In of I look utilization like critical daily, olefins, trends pricing on raw Lori it materials just environment, or we be Supply/demand, No, basis. course are it said, order MTO acetyls

classical point both so a whole on those all mean that's company I'm are good Your on I the finished the side inventories of all track the inventory markers watch fundamentals sure same those levels, and across customer the particularly. what time.

Arun Viswanathan

Thanks.

Operator

line question Pickering. next of Tudor, question. comes with Matthew from Blair with the Our your proceed Please

Matthew Blair

a And to due this expect the running well? was quality? XXXX persist The as Was Hey, lower mentioned you rates prepared at and quarter good comments fourth it local in request to authorities. from would air around morning. Nanjing

Lori Ryerkerk

Matthew. exactly Yes. right No, you're

in had then to what request by So -- purposes we government quality for of then was and do all were been reduce they lifted our rates with the and had went of I we industry fourth reflecting industry national on what holiday. think our the and them they mostly long Since air have to to the the back most that advance Chinese think willing of so quarter. when asked relationship I of business need. understanding their that's in through lifted a Since

expect from time before New tends a maybe continue will to the again Years. Chinese That it going happen in be expect I would time it's China. to pattern. I right to look So

will it seeing impact again. think I not an So happen Right on fourth quarter. we're now, being that

Todd Elliott

we back incident. the And news to the rates Clear able as following were needed up Lake good ramp is

Clear late there of maybe energy frame And So to that the with as full to as mean The and activity late energy the towards helpful perspective run the heating certainly cover various government Lake and the kind of at industrial be well activity conditions. network there winter season. for was loss thing a production can and on time season on only other we're typically in we sources depending team November, I the and from we expected. the the curtailment local worked profile rates -- allowed with as the the year watch capacity. to December is depending

So we'll that. watch

Matthew Blair

your Thanks. And EM then XX%. about rose good. Sounds project last wins year

implies two anything Is on your year. volume You're I size just are significant down about a in of help base the average project? seen business that some numbers? X% of me profitability but has pretty terms Could guess declines. similar pace changing the reconcile of you this I mean the volumes year, those there this EM

Lori Ryerkerk

Yes.

is would average it I doing volume the So look And we're projects fact more less if than that you was. size reflects of types and of projects. say project, different more talk the about it the

some projects very to that buckets. I I also in realize these -- think you that come mean, it's projects. important some are long-term-return through have look

some of in then these And example for transactional. are number for of actually year of maybe X-plus two or a that that that have one some to then them from maybe get bucket you very years. field probably So years that pay the the continue medical auto you projects you and have out and are another

volume, but project So it's move. a it's moves a that onetime

for of years. all not are that these things So pay out projects five

or only while a course And of very from X% so XX% just normally other attrition. what could other that projects frame, have well can you time we from year's in growth see be And have up of as off then is to rolling EM as continue. projects attrition well those you something it

year is and this more world. as because just of are conditions the demand economic base seeing attrition because good they wins materials. and of GDP we are metric So generating mean how it's for are an project important in lower the around us, kind smaller we the But lower I with

comes It's continuing us growth deliver the referenced we've these to project quarter. we had our show all the it's this of last this think that lot is we a but to because wins notes, in quarter. still we that allowing sequential shown quarter-on-quarter what's into So in great important, play, as projects. And

many product doesn't term of of wins. -- long wins. some two had quarter. of project this necessarily that We wins. the those not quarter. next Now over those not we the auto with next up were all will volume up shows A -- show project A It up lot have years XG medical some lot show to five

Matthew Blair

Very helpful. you. Thank

Operator

next question. line from Our your of the with question Robinson Jim proceed Sheehan with comes Humphrey. Please SunTrust

Jim Sheehan

turnaround XXXX in XXXX? should Good plant think How we costs versus you. morning, thank about

Lori Ryerkerk

Yes, great question.

see of actually our number we methanol units. about a expect be XXXX some to we $XX million. Overall, next turnarounds in up Clear turnaround POM -- our So joint of Lake including venture big have in year plant

to So these only are up three every units come four for turnaround big that years.

a workload we're into that's But offset I next outlook additional and numbers. significant So that anticipated in already will year. have you. the we that The productivity that baked our do turnaround XXXX help that's gave delivering

Jim Sheehan

union and And the above Motors about normal how thinking or be will Thanks. regarding this strike, impact whether General normal? year are you labor automotive shutdowns the

Lori Ryerkerk

Yeah.

ours. big customer So a for the not of GM specifically that's

impact. across that GM, autos don't for would auto of in Obviously a auto exposure up from forward tend a have that. have have that know so seen quite exposure. us. as going there other we major China I recently. a that a I Europe picked we've mean, we have maybe lot are much lot. actually bigger seen bigger as spread had impact So, a to we be that to a impact we said lot we didn't of haven't Clearly

consolidation auto Now, for China, I think of we're well in I but that. expect positioned again some

Jim Sheehan

you. Thank

Chuck Kyrish

we’ll our the next Christine, make last question, question.

Operator

Thank you.

of America comes Please Our with your question Matthew Bank proceed from of the question. Lynch. line DeYoe Merrill final with

Matthew DeYoe

on to $X.XX question, walk if part is of closure be from $XX by losses in for maintenance recall on Because I and looking go Lake. buckets bit will squeezing that to me year, Duffy's then the you're next Clear the just you in. maybe Mexico savings the Can through mentioned in savings go expense mentioned from of the Thanks then? the to that already you part had just year you of this going little which the taking a offsetting offset productivity million gains is

the mean productivity does out? from less then So And bucketing where that gains $X.XX? those net than $X.XX are

Lori Ryerkerk

Yeah.

the So gains is gain well this net -- say no, no. well, net I'd no, is $X.XX.

this else, that. and level So of of higher a much productivity because everything obviously, requires actually than turnarounds

this plus cetera, net plus et get productivity of et cetera. we So turnaround is what

cost reduction in is there, Lebanon, Ocotlán, work There's So energy into bucket well the had where shutdowns well goes does we savings. that it productivity which as management as as come hard from? footprint that very we've as So other the and and on bucket.

lower boiler we've do contracts things energy usage like spot buy for versus those help energy configuration productivity. raw to There's or into things I material goes forward productivity. the material example to market. In to raws to are things cost going and that manage our said with also That raw done --

reorganizing So spend, show of a terms you've our I'd done organization for well say as and optimization up lot, organization. and as those are which rightsizing personnel. maintenance optimization buckets We've just of the major seen the normal in productive most

that. costs with of associated seen You've the some severance

So productivity. those all within buckets are

that? you on perspective do other Scott, any have

Scott Richardson

is it. I that think No,

Matthew DeYoe

sequentially down guess. was so EM. Okay. And my then I and Price last about X% one in year-over-year

what the for seeing this spread are part the responsible in you mentioned as primary competition primary improved? think POM Is the raws? deflation on I has or And raws But are weakness. where being P-O-M, you'd EM your in then markets to of the savings one latter as other softness? comment

Lori Ryerkerk

it mix. in good A I been Yeah. hold able we've bit would a I material to general say price is raw declining of in mean our market.

GUR. areas or some materials there seen decline across leads, raw more mix that say more year because it's few able in despite less more pricing few a a where mix that's But mean I happened example us. in impacts in the we've we've general for of So helped but so our materials a leads less medical, there's general has I'd this hold EM. to been

Matthew DeYoe

say volume X% how I in better acquisitions growth would was something? did growth what Is organic question much or you is I guess EM quarter? guess on the then EM, -- contribute the to volume or that what about And

Lori Ryerkerk

No.

organic. that volume There EM all in most -- a say acquisition X%. would terms is of growth. notable So was I about wasn't of on difference growth up

Matthew DeYoe

was I sorry. thinking year-over-year

Lori Ryerkerk

so. And the happened a acquisitions, that's the all acquisitions or which ago while

Matthew DeYoe

just you. Thank year-over-year, was square but can I that. thinking I Yeah.

Operator

closing would to over turn back Kyrish, now for the Mr. I like floor to comments. you

Chuck Kyrish

thank listening to like everybody in today who you and would I thank Christine. you, for to those Thank participated.

Christine for we're out close usual questions. the that. the after And can around other you after call As call

Operator

Ladies and today's does teleconference. this conclude gentlemen,

your disconnect may You day. wonderful lines a time. have at your and Thank for you participation this

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