Celanese (CE) 31 Jan 202019 Q4 Earnings call transcript

Company Profile

Participants

Chuck Kyrish	Treasurer & VP, IR
Lori Ryerkerk	CEO & Director
Scott Richardson	SVP & CFO
Todd Elliott	SVP, Acetyls
Vincent Andrews	Morgan Stanley
John Roberts	UBS
Jeffrey Zekauskas	JPMorgan Chase & Co.
Robert Koort	Goldman Sachs Group
Patrick Fischer	Barclays Bank
Michael Sison	Wells Fargo Securities
P.J. Juvekar	Citigroup
David Begleiter	Deutsche Bank
Matthew Krueger	Robert W. Baird & Co.
Laurence Alexander	Jefferies
Kevin McCarthy	Vertical Research Partners
Matthew DeYoe	Bank of America Merrill Lynch
Frank Mitsch	Fermium Research
James Sheehan	SunTrust Robinson Humphrey
Matthew Blair	Tudor, Pickering, Holt & Co.

Call transcript

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Operator

Greetings, and welcome to the Celanese Fourth Quarter 2019 Earnings Conference Call. [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. Thank you.

begin. may You

Chuck Kyrish

Chief Welcome Acetyl Earnings Donna. Vice Celanese Fourth Elliott, Lori Corporation Investor Financial Richardson, Thank and Officer; Call. to My XXXX Todd Ryerkerk, are today Conference With Vice Kyrish, Officer; name Quarter Scott Relations. Chief President, you, Senior me the Executive Chain. is President, Chuck

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

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

find measures website. can comparable well these as reconciliations as You definitions measures also of to the GAAP our on

Today's Please found regarding at language include the release presentation be of forward-looking end as will document. press the forward-looking review the comments the can as statements. statements, which well cautionary prepared

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

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

Operator

Instructions]. [Operator

coming Our first Andrews question Stanley. is of Morgan from Vincent

Vincent Andrews

on to the the the And commentary There the for could also the you outlook much EM just the get innovation. if comments And your in a growth XXXX, for volume was that your much how I growth about of organic contribute just performance discussed? Lori, differentiated self-help versus year? measures will to that XX% how expecting are target a towards from of growth. EBIT you lot sense clarify wanted XX% in volume of you

Lori Ryerkerk

Thanks for your question, Vincent.

the EM turnaround. is because -- load for So the POM to maybe are the year to because offset for will XX% clarify, EM, year offset in that next but that saying to some there EBIT an specifically next turnaround be Bishop just we're what saying we of growth, of

more XXXX. of we XXXX project comes benefits order wins those at for So normalized into of the and from believe really seeing the rates; destocking, of a growth we're that so are we moving seeing items: we're the XX% also one, couple the end wins, do EBIT from

our vehicles customers, script project wins, from electric we in existing wins called XG. but new and as So project like the out things also from

Further and the raw EBIT, chain inventory. we help 'XX, see of in on of because help our some the in that really, but supply raw occurred materials the and 'XX materials length we'll didn't XX% from see specifically,

see we materials from should So start forward. help we move raw to some as

then, of And productivity, occurred. going EM has is course, additional occur to which that in

of will have And Shelby, shutdown, last in in are Lebanon our we've the XXXX. example, we year, For this that's some year, shutdown And from in which on. have addition, our help capacity some XXXX. in facilities which happened already announced help of then [indiscernible] compounding the come new

For second China. example, half in X in our year, close supply which chain up to help being our the we've in customers lines China will with last and started of cost the

Vincent Andrews

relation could I that if in quarter were mentioned follow-up, didn't a ask as the And you, prices But acetic volume decline. that. Clear in also see you just noted to Lake you shutdown a that not to able to you fourth the respond

of how -- of margins? if just things, market volume I'm And how the thought maybe weighted to versus in tension a segment? you letting sort X up I those you bit just a of see that between and So improved seeing overall little continuing about and wondering ship profitability the terms tighten the

Lori Ryerkerk

thing. the it's whole Yes,

offset shutdown from had Clear the as Clear we because the A in little Lake really much impacts mean, the quarter. of the pricing, we the fourth outage work acetyl good in I impact Lake. So didn't by to team lower see counterintuitively,

actually You that shipping weren't remember way. have our Asia, of towards so much also, U.S. volume to most the from we as goes

it of China, obviously. in bit So a actually help, more produce a cost although that's to

But the was pricing offset to of VAM into were shift again, VAM to impact able the it offset Hemisphere the the together, again, derivatization But better, you the Hemisphere Western moves due due impact on have that to we team moving put what was and Western did and emulsions, able pricing the the we and emulsions, move XX% volume nearly what there, downstream pricing. also where see we year, keeping we with saw Clear with when the is, Lake. really to to somewhat all in more So did derivatives, in to the into VAE. the into the of

Operator

coming UBS. is question of next from Our Roberts John

John Roberts

strategy have in press? you underway, review you strategy your special Or a the activities? ongoing as speculated Do was have normal do just

Lori Ryerkerk

exercise to our big gone XXXX. as we've of businesses. This So strategy a is actually really core in half second the relates through it

example, going what in Engineered where you as you comments Asia the customers do is to out. emulsions our part getting the of saw for well of in strengthen It Materials, our of chain we're strategy that Acetyl Elotex in around came which that Chain, acquisition some supply Chain. and So and about that announcement is with is towards to Acetyl customers. further localization, saw Obviously, shortening a move our closer our the extend some to our

applications. for acetate as In see Acetate uses decline Tow, of it we the cellulose industry tow is flake into next-generation being about move in to looking able other and the

the which All in outcomes review, of of are those half we undertook second 'XX. that of strategy

the in where anticipate continuing review and you be year, all more here Board that able Day strategy of with Investor be our that we'll share in an half to the sometime to will detail. first we with So midyear,

organic that self-help, bolt-on can grow to short with happen own focused saw Elotex. anything of M&A. organic that is networks strategy capability I with investment, some anticipates will M&A. that own and though cash our you our Again, also of tell very Obviously, strategy use you on that

John Roberts

how in sequential secondly, earnings plastics, the engineering materials basis? a help either And did lower then much or year-over-year raw on

Lori Ryerkerk

help 'XX 'XX, to materials, XXXX. raw didn't we much really, So see in

Materials, where more has it then to moved to to it Engineered compounded, of in XXXX. long customer. has to polymerized, the has that be to expect help to supply reflects rolling be the be We see then that chain the And of nature it just

that supply chain. So fairly a is long

we actually more So that show XXXX. to expect help up in

Operator

of Jeff Zekauskas next is coming JPMorgan. from Our question

Jeffrey Zekauskas

net turnaround had to what's net costs tell? in be XXXX, Or difference you benefit? you costs compare what If with would as XXXX can turnaround your the best the in XXXX your as

Lori Ryerkerk

Yes.

impact in a So had we $XX more total to XXXX $XX than is from million XXXX. of and turnarounds the million, $XX million that's in

And So offset baked that's we a other $XX it be into but productivity it's fully which our -- and plan. through of -- in million, will hurt will actions. XXXX additional

Jeffrey Zekauskas

don't about To got by, you've So in $XXX talk earnings. an your aspiration $XX materials, to know, a million. $XX reach share, your share EBITDA I in you a of grow

if $XXX that it reach to conditions, aspirations, business current had you your come the size to Given from? million would where

Lori Ryerkerk

Yes.

kind So of walk. let me do that

put we out as we put look incident If if with organization, the we we $X.XX, won't So next see the challenge it just Clear of, that $XX on at we if earnings to $X.XX have do we easier. the there to we've it, -- start per the it's that going uplift because impact. start year Lake share, call will just to an because I'm $X.XX

that and buybacks due right deployment, add so share cash us another to $X.XX to gets that $XX.XX. $X.XX another range. forms and gets other of $X.XX cash that's the and We to you So

offsetting productivity, of net in of put $X.XX also that's $X.XX turnaround. so have We

have in to it about put to do achieve that's of which $XXX to So we perspective, that. productivity, million net

price energy -- million the gross et cetera. et we with $XXX of million so increases, productivity, what can and very between past. we $XXX variations, targeting think to cetera, achievable, so we've in been We're that's able consistent offset But do

say, us the year. due that this to really productivity $X.XX Materials, gets occurred just about as of net December. more we -- demand. dramatic price was in those in $X.XX really, really about December. of in $X.XX Engineered need Both well $XX.XX. a I mean, seasonality quarter of will as in gross And we in it's that improvement, fourth saw I So acetyl to we then of And lost really in stronger-than-expected drop-off of

we if that of first the and to of our return businesses, pricing demand in So will just we quarter X recover $X.XX. kind level

the Obviously, and also back $X.XX how that's sure make get to or trying we to $XX. identify can market steps $XX. to other that So that to there also is so to that measures get give us, to to we wait other the we're we're going recover for not take we productivity

Operator

next of is Koort Sachs. from coming Goldman Our Bob question

Robert Koort

declining the prepared in Lori, globally last some And rates guess, then Can are in X% you year. sense you remarks, give us I what expectations acetic, in talked that about operating looks? XXXX? your how regionally

Lori Ryerkerk

Yes.

year-on-year, saw year, So if China utilization. really, 'XX, we XX% drop almost the utilization 'XX Full for at, to we in industry. look a

similar kind China, just It Interestingly, quarter outages. fourth was most was and globally, XX% X%, from that to just coming the wasn't drop, Now quarter was in a in coming over that And by due was quarter and third we bit demand. of again, in was again, saw driven China, parts fourth quarter. the a in was then to quarter, and globe. us we reflected fourth less that were that a really demand, to of really fourth in in less little under that in 'XX pricing. 'XX fourth quarter. outages situation, driven that which, to most from drop third of so of in there in an because demand Globally, in also little China oversupply mostly China, It put XX%, saw quarter other

Robert Koort

come in expecting your last more there that Investor the been you And to in think some some had the some capacity left the acetic? past, you I about takeout relative more might has And in market reduction. to Day, guess, expectations? industry, talked your maybe of path that How is out guys

Lori Ryerkerk

fourth market question, look have in mean, think amount capacity a we great you not obviously, one, it the come Yes, in the lot. out China. supply much it's say, the you'd has was of in that if a and frankly, to I at quarter, about

However, their China we to committed targets. believe environmental remains

you in expect But occur -- still And we see much have some to didn't that we're XXXX. through we do not additional comments? so just just future. Todd, any the

Todd Elliott

year the combination availability about certainly. XXXX, Lori's utilization course X%, throughout global on of the deals, Todd it's we if the But into normalization the I into back we get course -- 'XX, there. to would the to we range right that think that also year, year relative go of the a the demand a come basis. asset some utilization we new to similar as mid-XX are Bob, over year. that kind is, that, a add rate point patterns over of of that, Yes. that demand fundamentals More the If will Elliott, drop on think EM, to of point, we

one But saw to over through I that move the in point to the in us of December conditions we important pricing in other given already off already that mention. of to up. course improvement levels front start the of see quarter need there. first So is to that started think XXXX We QX,

acetic While you remains as key about acetic our down very, terms product us, year-to-year. we're well. of about were profile acid a think in our And We of volume derivatives our our 'XX, for more position, growing versus that significant on very but to actually took volumes and acetic to acid that point. stop We XX% downstream X% VAM in at acid moved emulsions. we about 'XX didn't and

look up at 'XX. actually were of volume you the When profile VAM to X%, they emulsions, 'XX and

some So some our then to Western actually we allow we regionally, announced the us that step acquisition create have and on -- as resiliency going forward. And intentionally well, chain, diversity. as another into more on provide take actually link well Elotex' our Western powders and resiliency more to -- as that that add Hemisphere-focus emulsions well mix will Hemisphere product just moved us the or allow line leg with yesterday which business as will chain and now another

Robert Koort

you, thing. appreciated, will earnings laudable. also thank that's the to present efficient same I doing you and your And we're maybe Yes, very start your continued it. and guys. hopeful want way Got The is peers

Operator

Fischer Our of Barclays. Duffy next question is coming from

Patrick Fischer

announcements Maybe to X X acetic the In the another new acid. been hit months, X way very there have or for last large capacity.

So you and BP had plus then Reliance. ZPCC

lot decade come we've that fruition. of the had over last haven't a to Now I announcements know

model are frame supply should forward, these? them you going what do of time think? to these us we And kind X kind you in If how helping our expect were come of up, handicapping likely with

Lori Ryerkerk

Yes.

I acetyl, So, Duffy, support around new investment. it if tip economics doesn't look, I would current the think

being to to have acid and we design, X- be to any to construct, that you comment out come able I'd that. location. years to period on X-year So online. depending see build it's have say et on actually would ask have permits, say, probably get capacity to to would X announced I'll motivations it's before Todd, we would to what anything of But also cetera, from capacity any really X I companies add? the do But these acetic other capacity, now, Todd experience, new consider to a

Todd Elliott

right. I Duffy, Yes, think that's

On step to that to first asked the as continue one that were associated and we the see with change last you question mentioned, quarter polyester. an integration

an in and it's view, road. it's the move So our probably down integration it's just years multiple

Patrick Fischer

a then around question And Ibn Okay. Sina.

So has in in the interim? you after how Ibn the the SABIC? investment one, change then And do in see Aramco's with any structure Sina there: expansion run two, ownership

Lori Ryerkerk

Yes.

Ibn course, turnaround. So turnaround this this our about Sina, That's million. a big of a year hit year, had by normal that earnings $XX

think Sina operation. I happy operationally, Ibn we're the with

we've that certainly really from the the acquisition seen I don't yet. Saudi impact anything, Aramco. ownership we haven't change far, seen and anticipate no SABIC, So real anything to of will change

Operator

Fargo. Our from next question is Wells Sison of coming Mike

Michael Sison

Lake fourth in at annualize and below terms it's the it, your level even in Clear $XXX sustainable. adjusted a for little that million a back the $XXX Chain to the in you Acetyl take that talked quarter -- you is about your add of I million remarks think it's prepared If and EBIT look earnings

is improve from the range? that in I then, how we quarter levels? guess, XXXX of to And that be so, fourth kind outlook do sort So for if of

Lori Ryerkerk

Yes.

Mike, So acetyl seasonality to million, fourth Lake, look if quarter, then in Clear $XX million. is million you and so $XX at typical $XX -- factors. just mean, I X Clear

that you think back those in I foundational that at if quickly to add we $XXX So to acetyl. believe back us $XXX get million we're you level million in, pretty

Michael Sison

now. think I fourth the stock portfolio the the made then was was, most given in together. bit Okay, level, stay far from sense quarter, maybe unfortunately, that great. to your little earlier, where And a thought We're that

think there do So the you need to and you portfolio a to have? for any you thoughts that sustainable get what appreciation

Lori Ryerkerk

it of associated it makes We think because at to this splitting some keep together the Look, of Yes. I it. still agree. point, dis-synergies with sense

hard I now, excited out see quite and We to it's we we'll think so right about think up us. path of kind we where go. we be see have good down in if able think actually as turnaround the whole front end market of we optimistic say laid we'll some We XXXX. a We're and and that with to based the potential which high continue XXXX. of show to the capability under earnings through excited is business investment growth organic and strategy for also next things potential multiple CapEx We're control, X our capability move we earnings really on years the as Again, productivity. this associated our about strategy.

think, this that think We a return we be to the XXXX, you So kind we more continues really ask of high this And to just be guys into business. by watch space. market. will move as recognized

Operator

P.J. coming is question next from Our of Juvekar Citi.

P.J. Juvekar

sort EM volume? versus specialty? your of called nylon What your your terms Can out competitors is of talk business? more there business is seeing you're much nylon pricing like of quite about price as in of and One nylon weak. how polymer how you base much And

Lori Ryerkerk

Yes, good question, P.J.

back, out it's we pricing sooner in earnings, demand call back possibly, softness the second If polymerize. don't see you we buy think we then. polymer nylon we it nylon. actually I quarter did because And compound might and We and recall

So we the the we it's be. midyear. in it half were back Frankly, to the of second been softness seeing where through expected year,

of business, EM then difference really at so competitors. is, uniquely differentiated; X/X someone or if MTO-type is still And spec-ed again, we're the else, with differentiated, where and the we're towards be our highly third between in; X/X maybe I our say, products. would you is it but in that differentiated, look commodity us and maybe may spec-ed more of kind

minimize specifically what best we constantly our that been And the way into bucket Difficulty]. things [Technical the EM last is space, business. move nylon that's to think differentiated more to the and which characterize work I doing we've

Operator

resume. may You

Chuck Kyrish

Go ahead, Lori.

Lori Ryerkerk

you where P.J., did lose us?

P.J. Juvekar

X/X I think commodity. unique, you about talking X/X differentiated X/X and were

Lori Ryerkerk

Right.

been talked I so second about was think that to to And found and with nylon, more specifically what have then commoditized what I acquired a nylon. will the model like our more of bit using the market last we've kind look, through those -- we our portfolio. saying, quarter, to business X.X I project years, becoming little as differentiated, to so to be more insulated recently they X/X is gone transition with also transition And our it tended the demand to to that we've in we more see and this acquisition of working that's our since

Todd Elliott

that I Yes, mean, it's polymers standard in and it's P.J., a think I about. we that are because variety talked lot applications. for space bucket a different of play last buying wide that various customers grades Lori of important important,

the in portfolio of segment. higher-margin presence to part a very really enable that the having is that of part so And important

P.J. Juvekar

you about Can moving good on of curve? about take downstream acetic by I curve take around cost the talk -- you or the products world. talk Because acid effectively moving cost Can you observations the curve? cost that think advantage just your

Lori Ryerkerk

of there's P.J. different So aspects a of couple that,

The I Lake. with our pricing that with in the the Clear gas U.S. have reason And is the acetic we produced is would vast first the advantage in of acid majority is, start natural for cost

So to is of of for that's economy impact making well more we acid was bit the see the Clear the else. produce raw acetic lieu an even and into continues the piece. that quarter. reason future somewhere well of reconfiguration that product downtime clearly, little take productivity as our in with as which material U.S., I us scale as in project, of allows in think advantage And first But which advantage, a an the Lake fourth that

sense make we chain, and making of material into whatever to is a VAM we make VAE into move We we've as think, about out products, seen move CO can Western where And around located. any that manage most or of to choices is variety we've the that powder. us pricing. for industry, whether This take choose or and pricing. into of moved unique it see advantage in gives take a the economic, -- Asia of chain. we and or we've globally option it move our of methanol then we and choices take the and it conditions in to year, where unique, take fact acid off-stream emulsions, opposite, range we make and Todd be advantage value go better And we into and China of where about 'XX, ability, We volumes, our to and VAM, then acquire and of a them, and because into significant That to of VAE about can we're Hemisphere whether redispersible ourselves, Hemisphere, talked capability now, lot which emulsions it it why where another to made value before, the the sell choices economic Western the out where those. to think the of how into mentioned saw

Operator

from Our Deutsche Begleiter next question is coming Bank. David of

David Begleiter

EM, is much how business down And how in Lori, can much the that was And was of within business much it QX? you auto talk how just in about, related? XXXX? down

Lori Ryerkerk

Sure.

going business about the down very world. China terms I double is and of And closer on globally in markets X%. is mean, heavily that's us regions U.S. really in that at So demand builds, but if destocking auto actually Germany auto. XXXX. things X the and build, of us, about all to look you auto many a The we on at between of of saw was our Unfortunately, X% look saw molders we down play in that into X/X that what in XXXX impact we then auto. auto auto, the better. and of tied versus to bit impact EM is what And with materials little amount you were is at It's if

kind talking of build. really were if we double-digit we're impact So a just based on

working per have. continuously been the volume up we also that we've fortunately, Now vehicle get to

that seen per the about volume year XX% base X% into of materials So but the being in to since X% increase volume. of just vehicles, part we've we XXXX, in M&A, put

but that of significant some that's a year. So offset impact clearly still impact, this

David Begleiter

the you comment your a just where go expectations of ago? profitability to acid in the course today? is China can year? was And it where on it over Todd, And what year are Maybe for

Todd Elliott

we XX% the I probably, think it of point 'XX, about course drop, we so of intentionally it part different during we into month of that the I down Yes, to versus fall out the world, the pull touched the to it a And the 'XX position that moved moved year. downstream different and 'XX on did fourth late region, over in saw applications each low mean, parts significant. December. call development to that's pricing why product 'XX, of versus even bit. quarter, it, derivatives, a elsewhere, it notch offset And in

going and move the turnarounds total. both in we've QX, We've course have acid in in get these the of QX, into Methanol a our Nanjing through this and course acetic of Going pricing XX% actually, to ready three, as got here in -- think up our and in speak seen almost of we down to move is $XX. or fourth up we in two the case hard methanol, role going in the that every -- and every January. of there QX. ramp to We those three in in We're the big the to pricing already Lake network year. By work year. play into that's over quarter, Clear part it's the unusual first way, four mean, turnarounds that. in over the acid. years to going to on acetic We're are case of I years

out going got get the to Lake those full We've strength. way. back Clear now of we're at So

over the normal price to demand year of think we And to set so course we're back -- levels. once well up we get we're the move

David Begleiter

in breakeven QX bit profitability, more profitability pricing. -- than are where profits So in saw levels Todd, on a I China? though, on people little where in,

Todd Elliott

-- can't I exactly Yes, can't there. I answer is everybody where

the MTO space, up, those combination methanol tough, ended producers a tough I the think for the of certainly of given dynamics. end the -- in for was year where it

tough our end and soft our a to advantage But improve year, was of network But within way network it uncertainty. availability the in to we the forward. but capabilities. our take position on maneuver largely as best of just and demand, I think think that'll go I Celanese is job

Operator

Panjabi question next of Baird. coming is Our from Ghansham

Matthew Krueger

is This in Krueger Matt actually sitting for Ghansham.

Do to impact negative theme. and the and or into have you believe the related could net that on China? sticking given supply could be what So in just coronavirus net demand, this I or there? puts disruptions the acid chain? wanted would a tightening China global dig acetic kind how any of market the a with impact positive capacity but also pricing the takes And

Lori Ryerkerk

a it's don't Look, Yes. great the how We is. what or question. impact know long

over remains priority the first moment Our XXX in continue we employees that now they of affected, and our have this. have and don't were as operations into going in At any health this the we people China. time, right safety

a there So a could seeing supply. if demand, stays in at in clearly, is To also most this impact, to China drop in point, China. mean, an producers specifically we're but extended, down, in of Celanese, we what be this make there be shut not if drop I impact. could that

will too we we early balanced develops. further to see this frankly, But it's how be So for think that call until just somewhat quite us.

Matthew Krueger

just mosaic. And growth kind to global wanted of That's helpful. Understood. then in on the touch

control what be your primary stability you decelerate under do in to the if half we're the were have -- inflect cooperate expecting, current quite global of what global So higher where of even that levers does could back earnings if seems growth growth sequential doesn't levels to or improvement, the year, kind much? earnings maybe as drive versus which from

Lori Ryerkerk

Yes.

on for is X based of XXXX. first to similar economic So just the XXXX outlook really to clarify, environment our an quarters

is the not mean, once-a-quarter embedded and for as is cost, model to I I've reduce is, have months mean, look exercise I And in -- been exercise. It every the model, is productivity culture is that to here utilization. into just everyday increase ways project folks thing so mean, moving not clearly, exists I I going So Celanese. we single a derivatives, us I once-a-year realize a supply. a impressed into to is one our front improve acetyls, have uplift lever working the an not it mean, X to am exercise. It the in productivity. we real we required. for of this to happening big in in business CEO, materials, our day. increase XXXX, addition the or at improve demand I in say have raw even EM,

And so we have try that things steps taken identify happen. other to can to additional

we're just But examples. maybe working organizational on I efficiency. a mean, few so constantly

regional our our supply sure our supply system just years. forward. more a the also and our our get support our best manufacturing manage operations, how credits to digitization of and that properly looking we make to that of aspect businesses configured moving other chain is year revamping handle modern but and of So and for and all to structures several digitized, the over way global operations, chain at not way org we business. this Really customer going a orders sized Increasing that we'll and they're next every

look footprint. also at our always We

in We this Shelby. year. past shut facility announcement down compounding So around Lebanon down the you saw shutting the

Ocotlán doing, You're And at examples. which improve a these How efficiency? shutdown. how than does extremely on rather of being extremely something and in Celanese our part proud I with of, market. is I drive just the own things the kind continuously constantly mean, be hands familiar Just we which look dependent future the do think keeping well, all cost few utilization? is a do is are we I'm this out? we do to How improve

Operator

Jefferies. next Alexander Laurence question coming from Our of is

Laurence Alexander

the outperformance questions to the outperformance you weak over of think -- of Or the In gap overall conditions lose stay sort several around sustainability. prepared related stable? would excess converge see some that. remarks, called Two your out just you do market. you'd do So being you that years, underlying EM or If you for time of against outperformance? of

you X of changed previously And million conditions a is, because sight step-up slow you productivity line ebb your of of angles the see the flow, think found after? doing years do productivity, now how about this the pace we with should $XXX secondly, if improve, and gone you've you're year, Or X that that down? on gross approach productivity that weren't or to to of different does

Lori Ryerkerk

how think Look, built I Thanks, do that conditions. the And Laurence. versus the This outperformance is market Yes. don't business. changes under on varying we into market.

I Materials, we've business to no measures where acetic emerging competitors. overlaid my of our So our us productivity I That a allow measures I about which because our of to around outperform. things talked to -- extensively how far we and productivity far or And and if think acid high on take exceed experience, markets, of so on our apart. think model, us EV, chain Engineered competitors we're uniquely like out again, based that medical, again, more at continue matter of much will sets program exists think and exceed consistency Chain our have strength optionality. value that from differentiates we of XG, that with now project of most focus geographic And already low, prices the us Acetyl and optionality the our

able to our range of think will economic So conditions, the continue outperform any to outperform I competitors. market be under and we

Todd Elliott

Yes, Laurence.

where is that the we thing that important the I think of changes shape on depending in productivity over time that's are X market.

generation to debottlenecks, for towards productivity tends we so a revenue shift if to our growth, of little and get example. more And projects a period

accelerate program matching a productivity of in depending operate things then and which are really looking at that from we we is at on where we're things the landscape that those the hopper demand the here all always So perspective. projects

Operator

Vertical is Research question from coming Our next Partners. of McCarthy Kevin

Kevin McCarthy

to different wanted you I two about ask derivatives.

about split tight? VAE, XXX-kiloton between declared you X is is why you VAM. was yield other about I force near-term if weeks competitors Is of what asset think and outlook intention the case for wondering And I your then X about majeure relative to expand could that was the that? driving your just And to talk so, ago. VAM, wondering Netherlands if you in derivatives? China. if in could I VAE talk First, announced secondly,

Lori Ryerkerk

Yes.

bit a I'm ask to So to going Maybe comment. Todd just broader.

expansion. cost for opportunities a of these both see and increase, We great favorable think have continuing we see actually position. technology we to and demand So as we

completed VAM, in have Lake, Clear expansion. a in we actually XXX-kiloton so And just

low next made capital some said, in have bit the that we're XXX which other through as also color. we areas. And we expansions let primarily markets in but Todd, Nanjing But and in about over the and me we over very very the for kiloton add can expansions these in do in. a the announcement VAE, other then We another small we he us there, recently way, years and capital you several Geleen, low Again, can more attractive hand makes to and do into it can think it a locations.

Todd Elliott

forward texturizing Yes. and going such acquisition. building self then today We're wall with that as positioned both external in space, leveling, flooring, that applications think insulation of well powders thermal our systems,

So very if you back out, up those are debottlenecks. rolled news to the that of VAE we targeted first the wave

reaction Nanjing. to are So Those that we'll well principally enhancements as Netherlands in in some capability customer pull. Geleen into the as bring in

so it's not wait we full, and and demand. to So ahead try way a are on build fairly

So these powder And on years. redispersible addition near looking response next is that, needs, are us built wave for the -- then powder, with term. sites, VAE emulsions. customer the And which those in to downstream the expansion several polymerization of out nicely dovetail the the next largely following over position will in step, that really will be X the

with really be activate a conjunction over customer the capability, next ahead. it's and years. So in It's customer demand, adding those a looking ready then for derivative we'll pull, needs customer operations several

Operator

question next Matthew is Bank DeYoe, coming America. Our of

Matthew DeYoe

question. following that Yes, up just on

to methanol it you weaker of methanol? making to as I and outlook, down your push material and what's mean wanted get trajectory given weak are kind of What to outlook VAM acetic? margin -- your of into -- and on VAM Just more for relates methanol a acetic. decisions the especially thoughts your

Lori Ryerkerk

long believe opportunity we us over say over from the I having the Acetyl gives overview, in optimize picture term. true don't period to of mean, really kind earnings have is in this would around business continue long our we on decisions big the time Yes. found what out short-term make I on Chain more our I chain based outlook economics. the guess a investment a just I what to and and of is optionality of stabilize

what's and not our VAE is So driving -- really for methanol that's decision VAM investment.

don't any other Todd you think described that. comment? have I know if I Todd,

Todd Elliott

mean, improving strategic I a the raw ago methanol therefore or about key to a Yes. investment produce, material. raw made A buy, between think we make We years is few material. the balance that's it. and how

even earnings million exact 'XX In earnings we billion tons. increased million interesting, tonnage, an just revenue, at versus our million. you revenue, identical XXXX. this had last look $XXX almost $XXX it's right? our XXXX, same $X.X So XXXX, of over earnings X.X with the think We when I of over by year, profile

in think million From of million this Just raised as from last to percentage EBIT and sales a back XX%. year, $XXX about to our XX% $XXX 'XX that.

that We to to for and So we're acetic the that's dynamics for EBIT we has that your Pricing question, run north aim more this of we Lori by influenced methanol. how versus acid, business. XX% going partly optionality do margins. outlined, is with supply-demand think

Matthew DeYoe

as follow-up. just then And helpful. a That's quick

Just curious working just funds raw for be backdrop? cash you year? of that so, size source on the think Do going us And to a you could is the given capital material side. flow this if

Todd Elliott

be will source I that don't know funds. Arun, a Yes, huge of it

As controllable we neutral tends increase in growth, see capital. working take a take fairly around business going be possibly aggressive our actions to to it to I continue slight relatively We're increase -- be cash going CapEx. change items think to free year-over-year it's big capital is be but that, in improve the flat. flow going to The working in to to in

and in an cash $XXX we expectation payment be will European around expect a the our forecast year-over-year we Commission. to current that flow So million to have capital

Operator

Fermium coming from is question Frank next Mitsch Our of Research.

Frank Mitsch

follow-up you just a reserved that bit on that. about might you to? more Can the does Scott, million Where Where talk hit $XX European Yes, little stand? that investigation? Commission a the for

Scott Richardson

I right said, book to Look, it's commission, a provide further mean, forecast our Frank, to expect any everything reserve. of XXXX. on the for we date cash can't from flow don't now, comments. lot based know I I in we Yes. And like

Frank Mitsch

if And I'm this transcript, for supply didn't you perhaps it chain terms reasons curious, Lori, And a something suppliers, in second you the the et and strike Okay. or is impact Tier event? outlined be the than in cetera. your to of from in the anticipated. your quarter, first some highlighted had that quarter this GM quarter something fourth happen impact that in bigger-than-expected was quarter then, Do is fourth the could X a rebound first quarter? -- that you this expect

Lori Ryerkerk

I way, volume. of really we all assumption up bit the down strike start the from builders, at that longer, much the they don't. our by holidays. bit hadn't expected would No, we of over, stayed the really through They did many back say, impact take was, once because GM longer kind a auto as was a and

so but expect do first this And we continue into quarter. and to we more saw not of the impact, an second

Operator

question next Sheehan Jim SunTrust of is Our Robinson Humphrey. coming from

James Sheehan

barrier potential are M&A that like table you off transformative said past to that not the considering Lori, now a that. the completely options dis-synergies dis-synergies? because of sounds It in were

is now, off that that's the why if the So table case?

Lori Ryerkerk

It over. Dis-synergies I maybe to a come is are I barrier mean, not be that hurdle clarify. has consider. just to so should a

So able enough to good be be those has to carry dis-synergies. to the deal

like position I deal, necessity. well M&A transformative which Elotex as But that said at an do is our the for happens, before, it's So a look if we we're not when M&A. it. continuously trying option just and as deal, we'll it bolt-ons M&A, both to us, If closed as so we've strategy good a

Scott Richardson

I I Jim. time. on we are focused this mean, very we've creating mean, on consistent been shareholder over Yes, value.

which both at look never well look we transformative, off -- and so deals we to things there And really table. and as at that's the ways those -- as in do bolt-on those the And that. are

James Sheehan

prices And of The the pricing. quarter first 'XX. in nylon on peaked

think out And here? quarter in that the these headwinds supply-demand balanced risk has So Or nylon quarter? that see be will the the second do of into us? first you you behind that XXXX, downside do more dynamics

Lori Ryerkerk

look, seems year. would of we're to be out current see there, into nylon -- our generally balanced. destocking. more I going We inventory through the it on think the much but think balanced more some view There's I think still we it is

Todd Elliott

please. next the question make let's last one, our Donna,

Operator

Certainly.

Our next question Blair of coming from Pickering, Holt. is Matthew Tudor,

Matthew Blair

cash on I just had flows here. two questions

question, provided up about buybacks guidance you about little So of the And split for thinking and Could cash you a your XXXX moved then $XXX free bit in the second you're just debt flow level M&A? talk between XXXX. million. has

XXXX? debt more? any about out but some look take your perhaps you within how in to still You're Would leverage targets, we should think repay or

Scott Richardson

Yes.

day, we deployment. thanks end how always look -- we mean, for think Matthew. consistent question, I the cash at look, in of very the at are I the

Our about a be they're And into the given choice next Lori investment to projects, from standpoint going several first back the return over is of is that today, cash extremely organic company. years. deployment CapEx the moving earlier, talked attractive up as

projects extremely And our was be historically, to -- on CapEx because the return so going we're profile around attractive. it's just of XX%. And right that million are around $XXX those

at overpaying But look to we're in high our episodic. and are always M&A, synergies. companies at we're Then have going making that of acquiring very be choice. M&A, first going That's not those we disciplined that looking be and we're degrees sure to

for going cash of when we're that so in don't share we right have front to us, deploy And M&A repurchases.

did number year. So given repurchases. already that see billion million would last probably a X down the deal, year, This at year, coming we we've targeting this fact of We're $XXX little $X announced least M&A I bit.

a pulled revolver. Regarding debt, debt early moved the part the up bit is on cash of And as for we high always little us the year outflows.

cash QX outflow for high a us. So always quarter is

year throughout then a consistently So stay time higher it. down on the as in come have we that you over done part bit pulled the early little the and year revolver see of

Operator

Thank you. to like At I'd comments. closing to turn the floor this time, for over Chuck back

Chuck Kyrish

you. Thank

today. listening thank for in to So we'd like everybody

questions we're this feel Donna, time. might As usual, available at the call the close you further to call any for have. free after out

Operator

event. for you thank gentlemen, participation. and Ladies today's concludes This your

You this may a wonderful at day. and disconnect time, have your lines

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