Celanese (CE) 23 Apr 212021 Q1 Earnings call transcript

Company Profile

Participants

Brandon Ayache	Senior Director of IR
Lori Ryerkerk	Chairman of the Board and CEO
Scott Richardson	EVP and CFO
John Roberts	UBS
David Begleiter	Deutsche Bank Research
Vincent Andrews	Morgan Stanley
Duffy Fischer	Barclays
Ghansham Panjabi	Robert W. Baird
Jeff Zekauskas	JPMorgan
John McNulty	BMO Capital Markets
Hassan Ahmed	Alembic Global Advisors
Frank Mitsch	Fermium Research
P.J. Juvekar	Citi
Mike Sison	Wells Fargo
Matthew DeYoe	Bank of America Merrill Lynch
Kevin McCarthy	Vertical Research Partners
Aleksey Yefremov	KeyBanc Capital Markets, Inc.
Arun Viswanathan	RBC Capital Markets
Matthew Blair	Tudor Pickering Holt & Co.
Laurence Alexander	Jefferies
Jaideep Pandya	On Field Investment Research

Call transcript

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Operator

Hello, and welcome to the Celanese's First Quarter 2021 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to, Brandon Ayache, Senior Director, Investor Relations. ahead. go please Brandon,

Brandon Ayache

call Welcome call. Celanese Ayache, its Executive and distributed posted our about quarter My Relations. on of Kevin. quarter and prepared the Chairman XXXX Celanese Senior first Chief earnings Chief Investor the Investor Officer. today via me conference on name With Lori to you, Ryerkerk, Corporation's of yesterday and the comments quarter Director are Officer; Board earnings Thank is afternoon. Relations Richardson, release Scott Financial Corporation first Wire website Business the Brandon

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

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

have Because line. comments submitted now Kevin, X-K these been for your the ahead to reports please prepared our also published questions. go SEC. materials and the yesterday, it have up open all containing open Form we'll we

Operator

Thanks. is We'll Roberts from conducting now UBS. [Operator with coming John first question question-and-answer Instructions] session. Our be today a

now is Your line live.

John Roberts

gave the Texas you Thanks. I Congratulations capacity March. to acid early. the back upside at restart of guess, quarter sourced on end you during the in guidance, Lori, methanol your acetic

as tight was methanol well. think, really I

did that? do you how So,

Lori Ryerkerk

make were and of available, folks in the out go our market. would the coming, it’s looking were proactive. I it customers quite anticipated I Yeah, say there out able sure we in that down. We shutdown, we can, sourced have mean, materials folks predicted. market, anticipated And shut we're to best need that at and could factor We we tightness supply anticipation disruptions. and very a to some that the freeze that John. we But it's in day there as of always think really that a into in model before sourced great be we the market. we kind was a the thought our we're because question, fact would the even every really the I look, wanting recognizing our single to just material, into the would what's few to be saw weather of would And went freeze. we there going

we in So, need we activate there see like don't go a coming, already team taking this the When market. do new there what's to of to we're out anything. something advantage

Operator

Our Goldman from question Instructions] you. Koort coming [Operator is Bob from next Thank Sachs.

Your line is now live.

Unidentified Analyst

is Bob. Good speak confidence that midpoint? improved morning. a full to another EPS a just sitting over you by to visibility say $X.XX midpoint for actually happened Can increased question the This past what Mike adjusted raise guidance for year I'd you. again your month in or Lori, to

Lori Ryerkerk

go what's week kind we to a If of Investor numbers our that. we locked of Day, Investor of although the in guidance back about advance We actually the and in Yeah. our XXth March. had Day

seeing that anticipating were the on anticipating in time guidance of in we continue. at we locked for and back it call Let's the we Yuri, Investor were trend even some in mid-March. prices Day, really we and And were might our China methanol softening that

China weeks, not the what saw it then the uncertainty off in many And greatly that prices call the Investor seen wouldn't, right $XXX, in take what second we and is into we acid, it but Really And increased last be. prices Now, $XXX. really just in where acetic also guidance, in of around $X,XXX. sometimes been slipped those Yuri. we've what them some baked it's saw we over followed, came cetera. we XXXX. also something was derivative also around as it's want had which time which it other and and timing with March, of and we quarter versus inventory et total because where invoicing, around now which of in period We pricing as came some we Day, materials again had really during methanol not is before. the happened of fact had saw some that And hasn't having what pricing had the but pricing has with high, that, around a we and But into off, said times some always would say, we fact, high uncertainty of would in we're high

of healthy that lot we have as very, a growth continued well and see strength in us given the really Acetyl material. together the Chain going forward, factors So, engineered very coming in margins as

Unidentified Analyst

even in to just there. And are up, say fourth the get level seem back I Okay. then XXX-ish much like quick $XX.XX takes earnings when strength considering at per that quarter doesn't the it new we've half, about look $XX.XX that quarter and for to full follow fall quarter, the the to third guidance would quarter, And I a year and of first of $X I reach you significant seen earnings share mean, in as second need around, mean, toppy guidance. the it if first to kind Acetyl maybe only of that

the the be trying better earnings I'm won't baked you understand, the more maybe bit of have back-half into a And year? why resilient to guess second-half? I what So, during

Lori Ryerkerk

we'd have have like really Look, visibility time. on We the based this into. guide always second-half what don't to in visibility we into at moment any think I

do get quarter flat EM. expect to We Acetyl, second we second in towards in pricing in We as expect But for continued some start third moderation to see the expect we of growth end fourth and continued the EM growth in a the after quarter. quarter.

to quarter. about for levels may happen what will be and was that fourth we that expect the in be that to gave more the those obviously, different. assumptions was back the And We really typical through would the it quarter continue third in the And moderate basis guidance second-half.

assumptions provided. everything make that pricing, guidance the crude pricing, there. But to was have that around basis happening methanol the for that's We we

Operator

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

line now Your live. is

David Begleiter

Lori, morning. you Good asset as in older QX, getting outages plus be could China that well. is pushed into base you. some there the Thank mentioned

So but how both about longer-term in thinking are just in not maybe and China, you QX, unplanned? planned outages

Lori Ryerkerk

quarter strength be to so second some planned Yeah, the in of But the there push were to the outages. were need point, factor take won't third to aware of in the the get in But, elsewhere third a can just there quarter. those and to We was we quarter. the aiming the will know And based a those be the may be as number took the quarter. turnarounds we are downtime fully opportunity necessary to able know of in it's know. taking second we Again, that there and first during moving are are. and pushed tightness go to first to we're with don't outages the unplanned our on steps quarter, those happen. with back in at the But outages China quarter. now, all are forward. forward. outages lot in also some we able so to forced what say it of last may the take happy market factor winter of they we from need just will market that pushed some place turnaround Clear to VAM outages quarter. the of the year we that big people to planned right storm, those, the Look, world, of quarter of We're second know run some course, when do choose second A And, a Lake the going some outages taking

David Begleiter

how inventories just at And inventories, take customer long it. the it do rebuild you the think? will Got level to

Lori Ryerkerk

clearly about If that's for summer. we're going thinking what we really pricing, to into basis acetyl the it's take the think

quarter I into then we the quarter third So third to quarter people of near on to see there outages to going start any into to inventory. But really take, start inventory unplanned it's is take near depend And outages levels time. people assume at that what levels, of that would returning normal moving levels. through is again, sort normal back before second going

David Begleiter

you. Thank

Operator

Thank you.

Our next Stanley. Morgan Andrews from coming from Vincent question is

is line live. now Your

Vincent Andrews

that's the corporate how Thank morning, just question the bill environment a infrastructure about been on rate Maybe it's there proposed, ideas going you, out everyone. and tax to good some has is obviously as evolve.

the any about any are your general rate? So, particular could around on I don't that the or concerning it in if guilty just that thoughts change or you maybe know tax impact happen to provision you any have or it you're what if within would thoughts provisions

Scott Richardson

Thanks, Vincent. Yeah.

are will going work come And out a possibly several off did rate we rumored us for it been exactly next think we I that land. think, understand would over about, that our year which think And and various even effective right is I But, at whatever of as will to network think, I I of early move that wouldn't at I to look expect call still proposals global back do we few the where tax the come years. we it, now. at may ways really mitigate, each ago, points we now. a our that up component XXX things right with to too see looking there are have basis

tax of couple changes, of be what think we that we the as to still range. with look think years, in changes I tax I our happens U.S. a believe regardless rate will effective out

Vincent Andrews

question And maybe Lori, that's Okay, helpful. just EM. on a

seen imply anticipating off. that autos, what just negative going yet? You yet. for haven't from any in be chip curious, seen really haven't guidance given the some you're to the just there'll that that you to is shortage your And But I'm be seems trigger impact it fall

Lori Ryerkerk

Vincent, like have again, in because assuming yet, we've impact shortage the and which SUVs, seen and mean, affected by Yeah. have and really automakers much prioritized not second luxury not vehicles what quarter. trucks as I from we much. been the that's been primarily the platforms in chip exactly we're

around start we see, frankly, OEMs are And curtailing a especially period we that as production some time is that other probably nylon will in starting of also industry around do are second quite some and in this for resin that that, to announcements into week also chips and because you think to something materials. the the saw Now of drags quarter. the affect that they some this see shortages, some that There's you by might of the impacting us automakers. on,

we to us quarter. and see more why through expect expect normal for quarter So, the But we to in quarter second in some which is on EM. do most resolved also third second back be by quarter, flat auto calling impact issues to levels of we're

Vincent Andrews

much. very thanks Okay,

Lori Ryerkerk

you. Thank

Operator

you. Thank

Fischer question from Our from coming next is Duffy Barclays.

Your line live. now is

Duffy Fischer

in midpoint to the If about original think delta good Yes, we with going morning. up from $X.XX, $X.XX the your guidance $XX.

cash you what's it? to that's EBITDA. if shares and If flow? back flow more probably we a your But, fair let's there that million, are needs a guess that working tax think with and say Is through would the that's And puts work flow million bit my some it that number about higher is, cash of little off how XX% just $XXX prices. more $XXX increment, way the rate, in if the statement Because is capital then? delta takes, right that free could through cash if about a

Scott Richardson

going incremental the we repurchases million going we're about is way at originally that. this do easiest to I year, Yeah. think of we're an Duffy, to to look to $XXX think over and million million we're saying $XXX now $XXX do said, I

that I highlighted build. the think, where the what planned cash on we flow incremental tied originally really to is delta working And versus on. this is, that had year, capital really you have that we it's

would collect really it generating the just next of We flow, that so as get we it $XXX cash recovery that of that to timing is free we into we And a million year. think balance call thing. EBITDA, weren't expect

moving capital up, we the So by balance develops it's moving that are have a depend build. on also fact working year. driven projections capital materials that are right the just raw up. but will a for pricing will our is And the But how lot working is of now,

Duffy Fischer

are see just your And customers just about They I riding had then just others issue side. pushing so there's strategy And like enough. that footprint on there? forward some something on year? acid? think to one will And think Can much going maybe one said you customers do freeze Obviously, competitors plant. acetic Clear before do of your Lake And builds event. plant year? announcing diversification. a larger you you you to that, announce on the would some this major Fair Would anticipate the acetic the you talk greenfield any acid this

Lori Ryerkerk

idea. is can't others We some I have coming do do. mid-year in there acetic up China. I no in Well, capacity acid to here know will what talk really

So, certainly will that help China.

doubling in of our Clear are, course, in Lake, Clear We capacity Lake. ton X,XXX,XXX of equivalent so facility the adding

world-scale another Lake capacity So, world. the cheapest Clear the producing is in facility. Look, acid acetic

are ultimately customers And, to a in question. get stability the happy always think they have kind I to bigger that I expect I Gulf of do do maybe that's announce others built Coast.

mean, no think, of to plant they I sustainable a surge see go really can't in you acetic pricing. going what pricing, just an look, on has one's be And as it anywhere. build I a level put to acid

methanol the or access have to form need to You some syngas. of

COX. You need access have to to

to access you sorry, need RCO. have to hydrogen. need You

just I'm this go is something that plant going put to So not a can somewhere. easily say, you

in industrial be area. to need You

have what everywhere world kind components. plants the is other acetic to these access. it's keeps from being frankly, in built acid need You And of

know, an before what you there also But, is may could I actually online. would three anybody one kind don't I announcement, it's will have years others So, say do. what of to minimum be four know

Duffy Fischer

Great, thank you guys.

Operator

you. Thank

from coming Baird. Panjabi is question from Ghansham next Our

line Your live. is now

Ghansham Panjabi

your season the first seem to morning, compare that commentary, pricing the across that, to to the across then based of off that. Good velocity major prior peak? levels on I in seeing be the XXXX AC entry you're probably that everybody. And related low Thanks. chain does multiple in to commodities. guess, very supply and earnings that's How on segment

saw sort higher post think do a rebased, at higher of will you level first supplies of the gets that sort duration and for the so you be as longer in disruption, to even half And relative it XXXX? dynamic spike

Lori Ryerkerk

Yeah.

a it's mean, couple documents. that a a think about do our in on even things. laid QX really is talk I I bit, foundational as in course we significant Ghansham. in me record We XXXX. since we lift expect Let acetyl, little of out And, had earnings, one based have a

So through the optionality We've Acetyl got to continued about GDP flex also a to dynamics. to added model. we've how improving gotten available bottlenecks. and emulsion, to VAM, model. better we've use a really bit growing every over RDP, better every We've our seen couple we've us, how is little capacity and year the -- industry year. other and around cost low And frankly, just refine

We haven't seen any major capacity addition.

as chain. dynamic industry supplied better a demand it's So or supply

VAM acid, And is globally. acetic If you demands was down XXXX, shut in XXXX, a at robust were of world the just much which demand supply $XXX XXXX fourth a but and And very pretty saw whole quarter different little recovery. went seen price really the into 'XX, year that look supply-driven. you $XXX industry, our methanol levels. I both we around true the at crude is low Inventory problem. we've we normal was that moved as and at $XX up and XXXX. a Hemisphere, in the that and were focused much at especially not which then. than again, starting shortage, Western that very since to into drove as But demand that this, is really end of so, is ton. into around or in of in which also was on the acetic went the the it's inventories series mean, that right drove 'XX, really supply this acid. into least And different a was Remember, emulsion, XXXX fundamentally to $XXX

And to still three a had I is period tight about considerable as we of up. is get methanol had we So the Yuri, we supply mean, storm haven't back crude of I lost that, producers market. winter four minimum a for up in prices And the of seen it's and U.S. weeks, four large everything running. time. done mean, way around which $XXX, really demand still already a we've but $XX. methanol go then

we margin. have So, larger a

precious Now, higher prices. that's offset metal by partially

we why 'XX. is in But is reflects I is had disconnect there record supply would that pricing this that's offset some in And that. demand there. a level and say than So China between seeing fundamentally, we're deeper this

possibility think be our somewhat we what continue outlook longer it what world, QX the XXXX think period the pricing, will and QX, the metal baked pricing, we do with for around the I a precious will this happens happens bigger probability. with up, as see methanol I do on that, into. depend definitely into was. elevated Again, to of So well. there's than going recovery continues this and But to time that revised is stay pricing how And is all demand levels just happens what through play fast through

Operator

Thank you.

Zekauskas question JPMorgan. from Our coming is next from Jeff

line live. Your is now

Jeff Zekauskas

in Thanks very United able you a more is the much, much. factor handling States? I at is inflationary that ethylene to buy How prices think you Or you're $X.XX ethylene this been inflation in have an contract? spot the much feeling? Are maybe pound.

Lori Ryerkerk

certainly we're Jeff, factor. inflationary the I feeling mean,

anticipated coming of started think that I is course, price still And and and engineering of last the more news this prices in fourth already, reflected materials quickly. to good also we reflect get quarter year moving back may this.

an pressure, basically and to of level through maintain our is the So, been that in same although we've margins. variable pricing, push able it inflation

Jeff Zekauskas

low? so higher? this How tremendously then And your you for Why tax profitable your isn't rate follow-up, -- your And my you keep adjusted so is operation. tax U.S. XX%. do tax can you rate have rates

Scott Richardson

remember, I tax affiliates. our earnings comes we after equity through that in come sizable that at think fairly of still from it's portion And our to Jeff, an rate. important Yeah. a have

But one is after tax U.S. it that certainly for and our the And are third which of in a a I really mind side reform, in that U.S., keep U.S. a to us given operations. we third about tax of of some advantages our sales Europe, remaining low. a in important Asia. the third think has rate in is global it the do and so, factors operation, And the from

And because so, has very to balance. low, of remain that that able been rate

effective seeing to some particularly an tax that's seeing you're we this we we're originally why rate to that XX%. what actually year, jurisdictions, elevated the guidance earnings moving Now, our we this higher of XX% see with and tax is in guided had that up, of China But for raised year.

Jeff Zekauskas

so Okay, great. Thank you much.

Operator

you. Thank

Capital coming is question BMO Our next from McNulty John from Markets.

Your line is now live.

John McNulty

Thanks think of any should the lot acetyl It question. as a disruption? seen risk demand for like commodities we at about In well. other we this my chain, you think about that? are should point? And Have demand disruption the of Yeah. how up taking seems there's how that any

Lori Ryerkerk

really vinyl a possibility, go short-term. going disruption, switch, But acetate course, There I one acetate. do the seen cheap haven't the we Yeah, John. any to of that's demand always mean, people nor is not are that in to could

this need And switching we're supplied commodities point just customers keeping seen at in what of or for to they contract on been other So destruction to any at of time, we haven't signs our point really this demand in because time. with yet reasons. trying focus absolutely other

In fact, strengthen continuing we globe. the see just to demand across

John McNulty

we've higher we your few should willing seen in to supply? or all of stabilizing a helpful. flurry in about That's pay question it. of surety stability the potentially kind the you more more? think out follow the then and how as over interest a proliferation the and prices it even that to have seen, next of partner terms you that, plays the would And platform like, maybe years given guess, way, for just looking meaningful I of the be with severity customers of And from outages Got up

Lori Ryerkerk

all have of we businesses. I'd our Yeah, seen, across certainly say

wouldn't wanted, all to closely just needed prioritized Those customers we've arrangements, interested We the outages. get to have volume them, they shutdowns in absolutely versus had volume we could again, arrangements make contracts plant contract have they we've as in not worked frankly, customers customers spot more our and because or have contract but shortages so both they acetyl seen have very quite in sure we the that with, we keep that any running necessarily EM.

those do that. customers, to we For haven't been able non-contract

certainly to arrangements into And people so, past. contract that more that we in type the see driving we've wanting have had

John McNulty

color. Thanks for very much the

Operator

you. Thank

question Hassan next is from Alembic from Ahmed Global. coming Our

Your line is now live.

Hassan Ahmed

Lori. morning, Good

Lori Ryerkerk

Good morning.

Hassan Ahmed

Obviously, of there's guys it the lean winter of to into of conscious will then Lori, and just Chain that even call remarks Acetyl just it levels. the take inventories just guidance, they the selling call the visibility inventory pushed got on the the and just made, June. that call side fairly back-half side have Obviously, the wanted and sort fact of tighter it to us you it of turnarounds, revisit through turnarounds And in back storm through the things. are hearing of even specifically certain that fact But, some you QX whole impact pre Yuri. then, the QX things like. normalize orders being

I is high short, you're that moving Chain a sort keeping looking fairly in So there long the in all mind. for supply story Just to actually upside? these mean, probability of pricing and moderation surprise fundamentals of could demand this within parts that Acetyl

Lori Ryerkerk

that the can look real put especially always out question assumptions what third China. based the we Obviously, we is the there's in is about we our there's quarter, quarter mean, on of in third coming on think, -- new think happen, Look, going I kind through here. to guidance I possibility. where capacity

saw weather in quarter. seasonality a mean, is the you we quarter. of construction outlook. because fourth But we a baked But, mean, do last there. down outages, it pricing into we in the that should demand of ramped and an year, result pretty seasonality is always help in for this supply could see, turnarounds, the acetyl, I if upside. saw generally So unplanned I stabilize if clearly, this had as saw even possibility especially to It's typical, best sure. we if could we've period that have acetyl, longer, you market extended that still remember, for other extend situation in fourth we bit expect our and -- higher And constraints

more baking So a level. seasonality in back in fourth some you quarter still to the be typical should

Hassan Ahmed

call Understood, we've understood. been about much of the as greenhouse reduction XXXX. follow-up helpful. things, Very emission do of CapEx that, plans, up hearing line you you the And the feel And side set sort obviously, up How with of execute, to sort sort about Biden's that? associated in on of as guys it call longer-term XXXX? in you a that XX% are by are how run the as guys to with thinking it

Lori Ryerkerk

that us, to really measured, the be meet about out Yeah. which that, make and proofing greenhouse others Unfortunately, of goes and enough commitment. that for how there's really you insulation gas in help that example, you that be Even help, a can not for means about to hand, people's we on light be us. that things products in know opportunity what needed huge the you like mean, would make details get many plan of opportunity could the materials much one and it's into think kind let's terms I it’s and weather It will emissions. of construction also because that of other a a how acetyl, be for industry, weighting, to for real for by things credit honest, reduce the if necessary. that

as Lake, heat Clear like, it as well venting has that back doing do operation. like maybe of reducing energy, to -- there's of greenhouse COX, recovery As furnace our with which gas our we're alternative into far our facility lower really Clear of firing, Lake, recycle uses as options to in our of own solar contract recovery, at emissions

in to more of But we threat probably We see know. own the don't I than opportunity an reduce by So, know say yet, in the need is time. I to a details our it point amount. of footprint don't it's this Again, plan. us possible would general, for that at

Hassan Ahmed

Thank so much. Very helpful, Lori. you

Operator

Thank you.

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

now is line Your live.

Frank Mitsch

morning. Good Yeah.

Let the on second-half the buybacks pace set follow a when visibility in? results something second-half? just lack that second-half. And outlook in Is may more revisit, the in of of you that function -- of come is that we up me on to that down depending slow that is The how question.

Lori Ryerkerk

were done in Yeah. what we'll we is, $XXX the to indicate of first-half. Look, million buybacks I have think of trying kind

As additional will us for make we that basically additional see our kind higher anticipate to earnings, as that put available buybacks would year, If benefit we'll have the we of to cash from earnings I into to financial towards we buybacks. showed sure do the this outlook But billion full even year. our improving year. doesn't the have sheet shareholders still M&A. dollars these and those a we M&A And order put we desire in on a this still still change billion year to it significant balance buybacks the remember, have will next after meaningful

we're we indication, this it So to think and really that year. belief earnings want will, an that benefit I from make was more outlook you of seeing if our sure the shareholders from increased this

buybacks. as selected so And we've that

Frank Mitsch

million $XX obviously, here repairs in you higher cetera. et quarter? helpful. impact what's which first and face block regarding logistics, your what down raw because terms Very of, the of of quarter? what having about commentary broke logistics? struck have I I expectation in But you of second spend of guess, And million to you of by the in And, airlift prepared was sort because in begs in on the on you, the more the question, storm costs, and Suez, $XX headwind logistics the the And you. did to materials the Got have remarks what winter the

Lori Ryerkerk

always while on flexibly situation say I a was to would supply customers. say that, I is, What unusual we our would exact Yeah, very number an fluidly also I don't Frank. Yuri. with and this have work very

more short baked We of But all did another. in are they're these things of we mean, probably period form I So now. our into in of cost pride or time one supply. a them just

$XX I more our have in spent work million So sense a customers. very But, definitely million, don't don't good $XX is I But to know during Yuri. we always supply what addition, it hard really typical. of than we

Scott Richardson

pretty were Frank, think I just add, even Yeah. situation, would in I we Yuri. a into tight and going

tighter. even it made has this so And

really probably going Logistics on the are just second-half. quarter, continue to think balance getting this working we but into the be teams tight, our the could the creative So year. are for of not second for

So to stay trying it's ahead something just of. we're

Frank Mitsch

much. Thank you so

Operator

you. Thank

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

Your now line is live.

P.J. Juvekar

Hi, Yes. good morning.

Lori Ryerkerk

morning. Good

P.J. Juvekar

from at coming on about recycled the COX Lori, Lake. from? all big is of cost you project of natural gas? methanol green in from the say talked COX versus based Where And what the let's methanol is Clear COX making recycled

Lori Ryerkerk

in -- sorry, and from the facilities facilities methanol is our P.J. the partner Clear COX So our Lake. coming

COX So are there are and vent fairly pure. streams of operating high facilities that

makes at this very add them them, them further compress Clear we converted gas take for it's synthesis into our and Lake, affordable fairway, at those purify directly methanol. where to that's is So further what us streams, can

this us makes what we capacity synthesis for have currently fair way. spare is, So a attractive really

source streams have industrial have we area. to hydrogen a the unit to that of ramp COX grid in up And available hydrogen available to availability from the us We of vent grid high purity that us.

natural So the of our basically, from comparable producing with methanol to cost is that, methanol cost recycled gas. really from COX producing normal of

P.J. Juvekar

as on that there on there? Is COX announced off CCS Biden something were Mobil in couple an And of there could a Exxon the there And, plan. project either questions a the back do Texas, of Okay. as taker participate massive to of as of Biden Coast plan. you or then, a COX Gulf on or just supplier recently

Lori Ryerkerk

but much years But this to ground something the I down clearly in this is real you this, other facilities something I effective cost just idea a cost at, of up? to the have it road is what use COX it to have yet, at recycling economics world, would. of the And we're you not facilities technology COX the the question or purity do that the and which fair, other than quite P.J. how the is, mean, frankly. this of our several yet, How I streams? the opportunities in project it there is at way. to to we've sticking are It's looking clean more looked at Yeah. be like mean, around to is, look

P.J. Juvekar

Thank Great. you.

Operator

you. Thank

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

line Your live. is now

Mike Sison

$XXX have way to or start areas potentially a investors think you the billion and the for to And to EM look talked right know EBIT if to so, back But, guess, nice bit other the reset little guys to offset the Is $XXX in it? when about year. 'XX what 'XX. do to million adjusted Really for versus in you morning. Hey, about say 'XX? delta in $X cost about maybe savings that Lori, Acetyl good think should year-over-year Chain 'XX at and million early. so. it's I I growth let's that you in

Lori Ryerkerk

two to to $XXX acetyl to next the is Yeah. Look really moving we assuming over in $XXX earnings, 'XX consider still because going that difficult foundational have kind of be our normalized levels up We acetyl. a years. go had towards surge comparison, 'XX we now

right we've So way I think that's the that things capacity that, based the to other about ads had. on think and

EPS of expect, kind continued continue at would year-on-year. about, productivity. in $X.XX see to We we'll I there that's assume

there over next that uncertain, of timing for important to is be growth see thing strategy also grow or in course that will that to of other of that M&A And for to continue kind the will offset. that be CAGR offset. businesses. to XX% M&A course, that continue have thing to and is, our year, higher every to think EM is complement at the other so I we having is two us So organic also we'll years but the going

Mike Sison

underpinning first of going kind on Are sort XX% Got second-half growth? you that for obviously the quarter, digit But XX% if second-half strong And in then - XQ to be you going double going EM And that? growth to volume for to it. just normally is growth. are of the for EM? at the what's what's outlook volume X% be drive

Lori Ryerkerk

Yeah.

in implants we're of So quarter, think EM are through is, continue other on and But will we to of second need recovery end really the really get seeing we some medical, of implants. not areas expecting we But are auto saying resin to to really the year first medical, softening rate. in the and think be based back We to making for chip good full the just progress. will the flat shortage shortage. are we because quarter

for medical, significant in So our those seeing growth really we're for applications forward. diabetes areas example, going in

example. So just you an give to

of were applications up diabetes XX% year. our of quarter quarter So first from this to last first year

and that to medical, XG support in elements of of continue elements electronics applications, XX% of other growth other kind will So forward. going and those that industrial and growth grow CAGR year-on-year

Mike Sison

Thank you. Great.

Operator

Thank you.

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

now Your live. line is

Matthew DeYoe

number the is pretty year weeks like gave guide just to ago already seems is impressive. $XXX you for And stale. two breathing The indicate full Thanks. EM pretty million on the

normal Was conservatism? I'm that? and So something and like going kind stuff back-half there picking EM? just we're rates guide XQ perhaps necessarily on? up just off not change did about the that that of something actually your and in Is seasonality

Lori Ryerkerk

No.

time impact good think, the haven't time. of I have did we Day, recovery. the At concerns automotive, of we although Investor about continued seen look, seen we've that

will concerns QX. I develop those see think in we

as see do well. of that end we Now insight an

COVID, So year, get really that strengthening we the June the the which we we issues visibility haven't despite globe despite part called now seen of impacting better we the of timeframe, see But, world, QX. very as we is kind out, further the and other as do any some around And QX see we continued demand in get numbers our of with have serious into we've concern, COVID. as really resurgence growth. that the visibility, into

confident forward, that think we very number So, I called $XXX in so and out. that rate, very, are in going just more confident million I and getting growth above

Matthew DeYoe

into down XX% acid has we're been XX% a backwards and you and think It to million VAM you acid. mean, kind And I number. downstream $XXX EBIT more tightened VAM. a on of the as I pulling implies out of acid And and it's selling talked have you of subsequently that into it to and to number, in me result? Okay. it and then your true? more Is that big about VAM move the selling that? Did pretty move past, more just pushing product you're opportunistic

Lori Ryerkerk

What's did surge not fact, different acid, interesting hold than XXXX. price this mean, thing about happened And is is in the in just which XXXX Not move what really. seen in we've I for we and as in XXXX, is the is to stuff a through we pricing for market. it pull well, because products. of those VAM different really emulsion lot the price here strong sold are seeing to for back acid as and markets end of the that acid acetyl, which in

But acid think the have well. the the in same because don't to front in way, me. the we've seen into through back pull I we not I as downstream have exact So, shift I say of pricing in made that would numbers derivatives

Matthew DeYoe

Okay.

Operator

Thank you.

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

is line live. Your now

Kevin McCarthy

on expect to third certain is able of Clear out you now XX% And Yes. night, Lori, morning. one when run materials. constrained prepared What In would remarks availability at acid? due to to right your party Good whole Lake Clear was you it's at run network The wise, fill of to upstream hard. plan you're just on limited your raw last evident exception acid. Can up where expand timing that acetic at very to that follow that? you acetic to said be you Lake?

Lori Ryerkerk

Yeah.

have of we're by bit raw their as number even back maybe them take the party to bring order and were online. a We had XX%, quarter at around turn now look, XX% issues to We down before a up expect to end be they little repair facilities third So really properly in XXX%. of the of to second back this the during fully materials fully freeze, out suppliers some of equipment. around had of our

Kevin McCarthy

Okay. on cash a Scott flow. follow-up And had then free for I

through You last or was coming in larger night is year the $XXX model prepared with for your million I indicated up remarks, goal number. better. Having frankly sorted a our this

CapEx working are extraordinary might not And also, was the how European point? this at and call exactly whether the we And refresh or us you items so, capital in with have beyond much million if wondering penciling $XXX any I on you it a Commission? settlement bit

Scott Richardson

towards think in. Kevin, planning simple the $XXX already the and more are come we're $XXX working number, items year. will million a a that just end baked something of a depend on on And number of upon as And million answer range. earlier. I build, is stated balances between million in nothing in was expenses that that the timing $XXX lot than higher when Yeah. inherent We for extraordinary is I the capital CapEx the standpoint. that from then

in of going the is our who called out, likely slip think $XXX do that incremental it original build. because versus the of year. that's right And was just that as expect into cash EBITDA is collect of ballpark. guide beginning portion working million I the a capital Now, Duffy at that we of or to XXXX, so to And

Kevin McCarthy

I see. Thank you so much.

Operator

you. Thank

from Our coming next Yefremov KeyBanc. from is question Aleksey

is now line Your live.

Aleksey Yefremov

Thank everyone. you. morning, Good

and volume demand And engineered Could tighter? quite the benefit the through had where is sequential of in maybe try this walk supply polymers healthy have to improvements sequential as You may less been uplift in materials. differentiated mix? in you baguettes, earnings bridge an leverage, positive understand such there

Lori Ryerkerk

Yeah.

fourth try that. correctly, kind almost earnings, doubled in did at our your quarter look you mean, let if earnings I take have materials. significant a understand So, if yes, in to uplift of Aleksey, me question to we so first I engineered quarter,

returning a to the we quarter. automotive industrial We show the really, plants, joining pre-COVID because are all other it's again, programs continue had growth recovery up. saw that not that areas say which medical And our Asia in just go put see levels now X% any medical, we of did in really that to I starting to about continued fourth really U.S. in sectors, we continued but thought in volume, across of gotten up. there place of increase in So would just we demand had and in kind

And to front And of in of a X% mix. know X% a about then we half were price. proactive product about would materials. about year pricing had of was Then about half that that increase. last increase that was raw took I that get So say you we the in really measures

million million products. have that premium $XX molecules medical took the of kind this And the -- IPH, board year uplift. are around another did had from turn across uplift And and because our was They in of palm affiliate. we application, another from, have in about not last more kind bit really then pushing we turnaround, a again, higher of more more that palm we really affiliate of we into then So quarter that a a having palm in $XX also help fourth had quarter. the we premium didn't

that in mean, big are EM. really that for saw accounted factors pretty those the uplift that I we dramatic So

Aleksey Yefremov

Thank you, Lori. And a quick follow-up.

You PBT mentioned this think long you in nylon disruptions supplies. last? How do could and

Lori Ryerkerk

Yeah.

going into they're And, through continue think, second resolve we third do to the move I quarter. as to quarter. think start the themselves we we

Aleksey Yefremov

Got it. Thank you.

Operator

Thank you.

Our Capital Markets. coming next RBC question from is Viswanathan from Arun

now line Your is live.

Arun Viswanathan

for for the acetyl. taking start on outlook my question. just I Thanks longer-term I'll Great. guess,

the in additions. believe little the announced supply couple and as those was be years Couple you You from guys further you are in industry? strength you next just demand, there opportunities years? rationalization Europe. end VAM How there do maybe in guess in see developments? Chain guess, could Do also expect a some near-term consolidation? I have more Do ago, structural would some well capacity if Or noted for And over the address, you additions the Acetyl cyclical markets. you've bit I or

Lori Ryerkerk

Yeah.

Acetyl structural terms of demand but for products. been into and goes packaging. in Again, lot infrastructure, of improvement paintings, it construction Chain I believe longer-term, coatings, So, there have

anytime soon. think boxes change to move their I is everything having towards shipped the people going to home in not

a desire more better buildings. further you and insulation usage, and why think infrastructure think I see demand, more a be I bills of well and lot cyclical. and things lasting as to with that to bit and I going as in weatherproof sectors existing reduce buildings, new are what's coatings, can coatings paints seeing increases So, materials maybe a even energy those Again, into mean, lot happening exterior

what capacity again, expect in near-term, the that, a seeing out, go products. regulations, So assuming of consolidation things a some to capacity may I are China, in if see than I new demand to see I we'll I and do what also little probably regulation years expect I other announced take in for because as safety acetyl these structural expect online, a improvement to other China yes, said, lot of continues. mean, in world. we've additional That lead capacity while that especially come four you environmental the some parts think But, not build. some we certain

this we So, I think And level see think those continue should forever. fairly going is healthy changes. to do But acetyl on margins to I I've going based talked don't that in continue about already. forward pricing

Arun Viswanathan

some of Okay. mentioned years plans or then, also provided that, that. just Thanks for $XX And as you've year. you outlook you $XX have But a for for do up now. kind follow a a M&A couple from this

M&A your the So $XX that maybe kind you push does longer-term into just little you're more outlook, about elaborate that? And, think level can seeing of the on you concretely if front. maybe on How a now bit what factor up you or into and in would so?

Lori Ryerkerk

Yeah.

everything Investor assumed to and in. have we mean, not Investor was laid we laid at But I just any active out was way the repurchases, It M&A. assume share Day. Day right think it been. now M&A look, very model as did the in easiest it we're out we What because looking in I that

up. market the is We more being think We M&A things surfaced. more in M&A. see parties interested I discussing see opening

we're in some able certainly we do anything that meaningful we're XX terms in hopeful, not form of we're say M&A, but yet I'd look, of to to will XX-months, So, next be making hopeful the over M&A.

Arun Viswanathan

Thanks.

Operator

you. Thank

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

live. now is line Your

Matthew Blair

in EM, top on the overall QX. on congrats right terms end rank I was Lori, three in of Hey, just hoping strong simply just now could your demand results strength? markets you EM

Lori Ryerkerk

of probably it's in so growth strength is probably probably in largest medical but pharma what say, future. in market, for the our seeing we're number continued would electronics would in -- number then terms of in the auto, is the three two strength. despite that I not demand second in And expect medical number one terms be Yeah, terms of the terms is quarter and growth two. we of number of

Matthew Blair

in spot high outages? and saying VAM before. prices I outages from then, sure now But from are lookout on Thank have those Great. I And we for be just China. want future Or, understand current this your seeing high crisis were that make a acid QX? hey, comments huge acetic prices of result you. deferred that to in we're Are you the

Lori Ryerkerk

I seeing coming saw think demand by quarter, aggravated Look, we is with storm we're fourth is the market the tightness of winter the high and the the started high this prices out of now Yuri.

demand meet emulsions. to acetic So, VAM Europe market. is location U.S., the but normally, importantly, everybody there from more for cost acid import lowest is and Europe ships example, Normally, which for the an the to

coming with If China, out Asia. of the nothing hurricane started U.S., and other everything of Yuri, you out of coming look parts at then

all been Asia Europe, in really pricing the U.S., in all there, we driving, well up kept, full that's that plants higher think now capacity. going know now So are China as running again they're the to as Because what's into demand I exporting coming forward. the really back is and

I the that be as outages as could happen Going forward, occur, it but I China think on think need to of it around be unplanned tightened anywhere turnarounds will tight, well could timing still further, the that depending any now the globe.

Matthew Blair

Thank Great. you.

Operator

Thank you.

Alexander Laurence question next from from Our coming is Jefferies.

line live. Your is now

Laurence Alexander

Good morning.

the volatile more projects sense the of raw inflationary affected or of in for material and an do rate how the environment? in projects duration new a you So, is have EM,

Lori Ryerkerk

productive, model we I projects. a but project talked Yeah, we seen so our in added this continues a we about growth extremely ago. or of little on Investor the rate of XX-months with haven't to bit new really raw Day, material environment program the fact, the especially that focus be mean, impacting

QX by the projects QX of So increased versus if number actually XX%. just say, at we've 'XX, look you 'XX

by at XX%. of in look terms if So the the And more year-on-year value the won. of a projects number you of value than growth projects projects, that's the won those of XX%

results. I model it very giving is is project So healthy, say, would the excellent

are the supporting looking next value. it the is years. getting growth XX% CAGR we're over a at this And, that few We is thing lot of than greater

Laurence Alexander

you. Thank

Scott Richardson

please? make the question next let's Kevin, our one, last

Operator

Certainly.

is Jaideep Pandya Our coming final from Investment today Research. from question On Field

live. Your now line is

Jaideep Pandya

Thank you. comments And yesterday helpful. thanks very for a lot the was

is you us weight palm how considering capacity Lori, What to what market is sort player enter the ICE in player question. and VAM. you've is which you to tell EV? second Can a current battery separators. the on the around is of through? all up current new ultra-polyethylene better market, question in into maybe as growth And penetration acid the wet versus lot. first than VAM of your any sort comes things really your for goes really off First do fundamentally of just the Thanks acetic sort wants molecular a And really in previous then much it question that this my ultra-high cycles? point supply expect described and payback the demand was in that end or That's separators EV balance going of

Lori Ryerkerk

Yeah.

see I can that. get me Let if

very then large between other the So that palm is the pretty an and if and you in But mean, an two. think EV. I difference not at terms IC IC look palm, between at of is palm, between specifically, much I the difference It's content in add. in components EV difference polymer for flat between all. really palm

in GUR, at supporting seen place. we've growth putting Now, the I if really we're over you mean, GUR few years, significant look it, expansions that last really the

XX%. it's year-on-year. 'XX libs from above growth, between XX% battery growth if 'XX, 'XX and look going So separator even be look at growth was you if ion lithium at, then say, to up that And you 'XX,

huge battery material lithium molecular for separators. for ultra-high the ion weight demand So

into We are at able that capacity expand costs. to low capital very

we God, acetic would -- that year. I which you And GUR terms is mean, plant, up we and you you're GUR doing, will mean, to capital a in hard announced start have acetic why you VAM, question. the been So, plant start acid up payout. And so that's really XXXX. I get Europe then efficiency, next Bishop and do really I in acid can then which will we're continuing what follow in that's good here VAM can if get to of say have good expanding in

kind of of payout. year nominally kind say three Let's

expensive. economics going to But, XX-year talking everybody's pretty I But really, mean, really really, acid, our an And again, have new methanol, capital have you're around talking payout, stainless it it get Unless into to I'm transport, about think seven maybe acetic at good, area, years build the acid in have VAM. an build, it's if have industrial a CO. to proposition to infrastructure gets if hydrogen, closer have stuff brand really have efficient. you even you're it's probably in to a to the just to again, and the I you're expensive tanks. takes say are you're acetic transport, you this for different. moves is you player the new greenfield,

Operator

Thank to We've end reached question-and-answer like over the the comments. or of further for any I'd Brandon, you. back to, our session. floor turn closing

Brandon Ayache

Thanks, everyone listening Kevin. for today. thank We'd like to in

have. available call up we're always, after you As ahead time. for at call this the go the close might please Kevin, and further any questions

Operator

webcast. does you. It Thank or conclude teleconference today's

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

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