Celanese (CE) 24 Feb 232022 Q4 Earnings call transcript

Company Profile

Participants

Brandon Ayache	VP, IR
Lori Ryerkerk	Chairman of the Board and CEO
Scott Richardson	CFO
John McNulty	BMO Capital Markets
Ghansham Panjabi	Baird
Jeff Zekauskas	JPMorgan
Josh Spector	UBS
Michael Leithead	Barclays
Vincent Andrews	Morgan Stanley
Michael Sison	Wells Fargo
Hassan Ahmed	Alembic Global
P.J. Juvekar	Citi
Kevin McCarthy	Vertical Research Partners
Frank Mitsch	Fermium Research
Matthew DeYoe	Bank of America
David Begleiter	Deutsche Bank
Jaideep Pandya	On Field Research

Call transcript

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello, and welcome to the Celanese's Q4 2022 Earnings Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded.

It's now my pleasure to turn the call over to your host, VP of Investor Relations, Brandon Ayache. Please go ahead, Brandon.

Brandon Ayache

Thank you, Kevin. Corporation XXXX Celanese conference the to fourth earnings quarter call. Welcome President is Relations. Brandon name of Ayache, My Vice Investor And with Officer; me Ryerkerk, Chief Chair today Officer. on the the Financial and call Board Chief Executive and Richardson, of Scott are Lori release Celanese and Business Investor website posted quarter our Wire yesterday on via afternoon. Corporation comments fourth distributed Relations its earnings prepared

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

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

our reports have go these materials we'll containing to directly also to X-K your the all comments we've prepared questions. yesterday, submitted Form published been SEC. Since

go let's Kevin, of line and the ahead questions. please

Operator

is [Operator John, ask ask from coming John Instructions] McNulty question, do return one the question one then first BMO we you Markets. go and ahead. to Our And today Capital from please follow-up queue.

John McNulty

Yes, Thanks my taking Lori. for questions. morning, good

step-up? like for So, you to of you makes out tough the the that but can of expect for to earnings and moving to understand year bridge to quarter look, up outlook help full call lot there, help guess, I are that first turn a jump. take us big look EPS the what to us chunky jump pieces noticeable a buckets in $XX, $X.XX a a obviously some pretty $X.XX $XX or of

Lori Ryerkerk

about to $XX that go really in a kind realize of last look, jump-up. Yes, like through need XXX guidance. But hit math. order three the of we year quarters John. the to Thanks, for the We $XX big to deliver looks let's that

big not jump, So that if territory like us. look well, unknown it's to at a seems that, you

quarter fact, years last until been where we've two the In this that's in every up quarter.

QX, QX at Acetyls. start the jump-up let's look with I if from just to But

a to QX $XXX We'll million natural $XX of QX. expect with would I start off in million Acetyls, in So increase gas.

of at first-quarter, especially other significantly in So in we in that lower natural come plants end gas fourth the natural pricing of help and the for quarter a U.S. Acetyls, big have down Clear Lake, the lot that's in the facilities that benefit the a U.S., us in pricing. largest has gas the from

high And with that reasonably really coal staying U.S.-based with margins of Acetyl. which being and portion for benefits in and is a crude higher China production, large our our steady,

look natural second uplift it second pricing, more just if through than probably So this the $XX is quarter that gas million alone at quarter. if you to of hold were the in

look increase good And restarted March. Frankfurt like VAM then we've early being a if is bit restart, going based we little seen that the on here at things into the

quicker Western little Europe then just we that so coming For bit recovery another the expected, have coatings off, a good construction, normal seasonality and we quarter. in in second typically million. that's you economics the experienced And probably paints than $XX

We're So we in activities Chinese construction Year, see been improvement see really worldwide. over. destocking we past New

of kind that rebound. expect volume so we same And to see

additional the As similar a we be of this well productivity our mean, side. historic and as level our EM year productivity, year to we'll in we at for high I adding XXXX, expect in from XXX, last XXX on M&M the range productivity

there. in goes all that So

Materials pricing the and M&M, probably for is, QX higher-end then towards feel that as of at if including Engineered we again, very range Acetyl were second-quarter. now Engineered the that actually typically with a Materials comfortable And quarter bump-up is look the in stronger we So for right energy where well.

extending drop with first, natural this. me just we gas is Acetyls, significant have now see the start do we through lower-cost let well, reasons, like material raw-material raw we which higher-cost or same in have replaced costs seen the build, has second inventory. of lower us lot inventory mean, into first quarter. build not This costs but to a I lower the the with For led in -- seen in quarter,

as an the the that quarter have is a as here $XX alone, second -- at be we books. first-quarter as go much for seen flow, portfolio you in mean, see it into orders coming so February we to go I March give M&M Year started end-of-the today are are here we million because we we is in deliveries. lift have again, to actually but Chinese EM, start going the from see really we in we And we finished quarter. seeing about are into order February New that we past We the the good still So month second the idea lift improvement pretty combined we our for the typical then the destocking seeing

for big new orders a deal, and but orders next month until is at the don't seeing for usually we see orders this we're in come EM, So, in had M&M book both stopped, still month, we our this frankly, legacy that the time received our March of in legacy and up consistent has filled EM order the and M&M for quite XXXX. book for the businesses, February March it with the

now say, you March coming and think end the demand are we we're the strong that I are continue into grow second build through points these expect all know, So proof we really as quarter. through the moving to February to seeing and of recovery to

our -- much are a destocking not production, seeing automotive are flat pretty in in builds anymore. improvement modest people but We

seeing patterns coming we and into restore is 'XX 'XX. the levels of So this to of with end and saw what closer we're typical out order for normal automotive also very

quarter uplift first our as also we M&M really on expect to million of then $XX $XX of think to second million acquisition million well. EM as we the the it, another synergies well. we And have million feel in synergies $XX $XXX in uplift of and good about the top that, I in additional So from magnitude will in quarter,

continues. And that's like I again still productivity said,

we've on for market everything based by and order QX So I see provided our that guidance think happening for March. pricing in indicated we material, raw of in we books as terms the feel quite now recovery that comfortable energy of

John McNulty

particular it. That's then on redomiciling, of of way And to debt the you're just half the some to refinance sounds now, being first just follow-up, guess. one should seem rates are Can the it this it? that you're like as part Is debt maybe out? guess, it change the waiting does we hugely of I you the right that color. think in Or this kind done about all year? there Got I in markets maybe because something like, way how a of like the the of for I about the helpful guys to quick by think starting lower as about we guess think

Scott Richardson

Yes, thanks, John.

I here. think be opportunistic going to we're

make I We and the looking to didn't absolute in certainly want would then we the right certainly things moving it changes debt think making because dollar have sure the us. perspective, go as we're are strongest an was at direction. from opportunities, when currencies right mean, those move I its against

for the -- and half. to may done it depending those at, we're we're some So early just the to second half, where look in first into linger movements going the certainly continue targeting second right of on opportunities but here the get dollar it the and the part there is to of

Operator

next you. is Panjabi from coming Baird. from Ghansham question The Thank

live. now is line Your

Ghansham Panjabi

you about EM Good of on competitiveness prepared Thank side. Lori, your morning, you. everybody. talked some the comments in the

of was that? point I year localized as more out, are think as et and unfolds, this know, exports Europe, How see on or you that Asia what that reopens that there's the about upon and it playing specific rest thinking the do care from from into it imports you simple is so takes as of demand cetera. you or at dynamic China

Lori Ryerkerk

Ghansham. exactly right. look, Yes, Thanks, you're Yes.

I expect really starting first think see. we're the quarter, some the from we will second that and done Asia, mostly in there's moving that two had out. called Early be factors to quarter we two factors, in for material over one, you still and

picking-up boat, it things demand there's less on Europe. in put see to Asia, we incentive a move to As

to so will our closing at low-energy quarter second seeing into quarter. inventory better for the arbitrage the But secondly lower-cost customers expect we're the the the in that's higher-cost with be first inventory, ability pricing replace here European and our that of these end and resulting we with and prices

so helps that supply to demand higher now demand in seeing I That particular that much the seeing restore quarter. are really the pickup think second starting we And in and expect dynamics. to demand in of into really March course, continue we here Europe

situation lower demand, those making We for because should to resolve energy material costing three quarter. higher pricing of in less So in China second then higher and think combined ship across. the demand attractive customers and the the actually it factors with raw

Ghansham Panjabi

the on momentum, as of down sort the there. in Okay. terms China see of 'XX? sequence to then Great. touched of an construct, how relates evolving that the it that What given you sequentially, in terms as on in you Europe, do of slow And just North-America offset touched as macroeconomic about so you events well. just

Lori Ryerkerk

Yes.

been would in quarter. has North say, So first America I sluggish bit a the

seen we to to as we any recovery have more into we've in don't go so far So in have going America. March Europe get think North pricing in isn't back America that mean, should reasons also raw But North Again, in far than we I the North strongly as well. quarter. is second signs to pricing destocking come we see gas builds and the strong, are over. the material America auto expect natural U.S. there

Operator

Thank you.

question JPMorgan. Zekauskas from coming Next is from Jeff

now line live. Your is

JeffZekauskas

the is how at problems diagnose days what was Can you nylon plainly, sold level. in lower it price much. the problems? at old of a what XXXX? the you much M&M much, of business? guys EBITDA operating structural and Can contract know business I And million that in tell that M&M or right the these us think you EBITDA. in raw very And now material was thought through Thanks is monthly happened it's $XXX And much you of

Lori Ryerkerk

the XXXX, than bit with EBITDA. M&M, year lower so expected back in of come in Yes, at of we had million $XXX a the purchase end in time expected we XXXX that. was number about challenges Obviously to the that at Jeff, little

that think originally year. saying that a we -- XXX that's they'd could for we're been XXX, now number next grow I typical in be more thought XXX, to XXXX, M&M, had believe Now, for we we at

I number factors. If a you look think was XXXX, what of at there in happened

had say inventory sort weakening that raw that saw quarter. they I'm and that going a of lot contract they for take-or-pay a materials, led with what tie demand produce, to fourth they into although continue about is to and First of

especially assets and. were on lot and year, fairly we of we destruction M&M well, compressing we as lot demand Asia, materials grades nylon for thought, standard Raw but the for high thought margin for in saw the a a

result, a they we to as a trying on maintain What think by about in quarter. down. prices significant but prices talked volume I lost desire grades hold last coming a to was when margin as standard other saw were M&M, we

So, raw at on have they could volume which doing prices pricing going the premium same up. material weren't loss, they time, been grades with raising

And these are to work we've on. that things had

to kind back the to should run had we been team of of has going, drive at few do trying grade a end -- be really been EBITDA historical standard and product doing things been three working by a cross where end million great things last the to maybe we've the We've of job other the raise So XXXX. $XXX think pricing we'll obviously we XXXX, months, that get been by $XXX drive all working million by selling, these working really grades. to of we've more really that volume over working but pipeline. at believe level in on back to DuPont the the we again, We've quarters these trying pricing take really of be rate

truth or not months percentage or In contracts, what really something three contracts terms you the of tell M&M monthly Jeff, of longer. are of in to versus terms I'm sure, six

Jeff Zekauskas

Right.

that quarters. the in when $XXX because of this third know, Especially next about dynamics your overcapacity commentary margin an and general lift million million fourth the do are the level? pressure. or the Nylon you'd is don't XXX What adverse? -- in average, getting year, from are read ways does and but innovation business that XX you How that? in accomplish to it's terms second, XX, adverse So so you from How XX for or consultants $XXX have to profitability improving to I the to EBITDA if it? Is the these the environment change is background that lifting -- own there's tougher, that's environment it the for getting

Lori Ryerkerk

Yes.

piece big a synergy look, of So is it capture.

synergies. $XXX That We the get end If of at think million for $XX that leaves $XXX range outlook look million We've which of the $XXX you in that. for our million of at achieved first quarters. about is quarter. X million million million the about we'll now, more to upper $XX

uplift. about So that's $XX million quarter average a per

back obviously, little think next for a skewed let's bit three more Now the average about end, quarters. it's towards the but

to So $XXX $XX right there it's you from are of then million range. recovery. the million And to gets volume kind about uplift. $XXX That million we synergy getting

I now was for March still it better 'XX for book first is As And our for was order basically in that said, M&M. March -- year part of the was where M&M. the M&M

have not from in in are to still back Asia. and Vital they're builds we levels, volume very and So gotten Again, -- particular in they're some recovery but consistent. XXXX consistent, auto

volume we been with have pricing recovery, think we differentiated through pushing so on right? products, And

as not those at you plan, I expect we don't but things, all $XX to synergy, look million probably M&M productivity well, know, million, our that at at look from this you get year. So if $XX another, if productivity regular of

March all same So factors same the those destocking, them the we seeing forward into seasonality and adding in are same part look volumes -- first of and slowdown and affected move with in and right, quarter. second as recovery, was well, you early the if and from recover at the start very things we those fourth and we quarter that with as were, with quarter again, M&M up

Jeff Zekauskas

much. Thanks so

Operator

from question from next UBS. Josh Our is Spector coming

now line is live. Your

Josh Spector

you'll [indiscernible] be ask I talk reduction, it with from confused in if Hi, JV. I that's leverage that the months thanks related cash how question. on the first, into post It about for much XX my A wanted taking getting you close, is. Can comments not? guess, the combination? bit about X.Xx seems like release or if big by that number, a to

clarify? you can So

Lori Ryerkerk

absolutely. Yes,

can time, excited We to So deal. this agreed We're the I apply proven we with debt been deal. to a we great net to think reduction million million $XXX same we bit, us. JV the -- to say joint of Fairway Mitsui. venture If announced back we've Methanol we're I for This food structure that venture. really Mitsui that the the joint have about venture really be from has partner. expect joint towards $XXX extension a excited has for up at ingredient's really great the also, our to about a

this food really been And not piece is relationship really beneficial. it's what for for we were both strong looking I addition we companies thought with well ingredients a to for. operations We've as and but some a core This strategically in our the piece of being financially them And built Frankfurt. that of portfolio, that in think beneficial looked it's product as is core necessarily years. we see at through our time it

and from think, doing And we one, their to so expertise the on by joint nutrition and Mitsui we'll benefit market that ability really a in has food end. help venture, that and us

continue integrate into And the be from acid crotonaldehyde into We joint that able joint the into we'll operate to well and synergies as to partnership will the we our -- Frankfurt to Fairway We into venture, provide very us acetic embedded benefit it continue benefit because now venture. manufacturing acetyl is the we strong they have as our continuing also to and will operations. think the chain. from

sweeteners as and in volumes positive of going only company to movement continue for few, and sweeteners this a what terms be and us to Western of And especially demand type, both of one -- participate in think store base pricing we be see -- in will we lot ingredients, forward. the of food market maybe high-growth providing it anyway of growth allows a as

to just we really question, to reiterate, expect to we're venture. your answer off to $XXX again, it. And this able be do result million to excited of a $XXX as pay another million debt So joint about of

Scott Richardson

then, And EBITDA. the covenants, assets is are the way gain sale covenants Yes. with on regards in Josh, of our structured included is to

book a largely will basis, this that has efficient be while because an low gained. million it's $XXX And so very transaction, and

same the out for into pay But a about the that So offset, XX% there's at then And to EBITDA go math works in EBITDA covenant time. the the X.X% would down using reduction EBITDA, be in the because purposes. to obviously, goes from then the proceeds debt to Mitsui. gain a it's you debt get piece, partial that cash that

Josh Spector

about guess, that. I And exclude gain, maybe Okay. comments the in accounted EBITDA? your to free you point, the Is from capital, just the expecting going movements the appreciate that's you this And clarification et flow cetera? for that you're working your And just adjusted in I one some cash idea an of what flow, -- restructuring, there. free are us you that EBITDA? $X give debt between at core billion reiterated the cash Can of plus.

Scott Richardson

Yes.

as and saw flow, we little lower cash same go flow $XXX overall working on that have. do cash we because likely that lower gain improvement see the said for transactions. then the fourth free EPS, earnings have million bit included we see a And million $XXX which free working So of the X.X improvement we in move $X.X up past with previously If that lower that flow, we ahead in quarter, and billion exclude then adjusted capital. in will cash of a just about billion we free capital we than a just demand inventories little would had

working kind little expect that working something So exactly this capital how play a through be range, will see than to But billion. we we year. we're in the $X.X would the lighter out of still if bit

Operator

Michael is question Leithead from coming from Barclays. Next

now Your line is live.

Michael Leithead

morning, Good guys. Thanks. Great.

question pension. on First

pension. about expecting $XX you on pension to that last year-over-year $XX were much to are includes million you you at quarter EPS a believe, time? guide, share, $XX a $XX how impact When share hit $XXX Your I talked

Scott Richardson

Mike. Thanks, Yes.

of million here but of some to put we a eaten So from D&A expected, guidance. good was pension. in previous than our by came I'm other pretty it going that buckets actually that the $XX chunk kind actually to change $XX better in about by up $XX

that So little approaching amount. that. lower kind than a that It's it but was of approach XX%,

I think was when it so largely And of together, those you range. neutral but in that kind things two

Michael Leithead

it. Got

more And if it other. allocated segmentation M&M and costs correctly, question, seems and reading or Okay. I'm sort of is and or a That's earnings between centralized clarification EM maybe helpful. EBITDA, like just of other then from but

EBITDA interpret actually say, the So if at EM but offset correct it like we'll higher correct do $XXX is know, that X.XX that. that in so to Is or see EBITDA, reported this you something it or deliver, year, business costs the from to million don't higher other M&M interpretation? also, X.XX I so

Scott Richardson

Yes.

I this we of falling right, get need bucket mean, we time we matter day, over end said range. no certainly in deliver. It's think it's deliver business in, that Mike. to would I what EBITDA the need that's that the at to the go

is at of that driving including costs So synergies about that base it $XXX million that. on then the had deal getting there of originally top ranges in EBITDA, into up the in business those other back and we the time set the

what be lower. this focused team at, worked So some off had to on. to beginning back and of that year, the year on that is the with that it's where building higher going Tom demand then Kelly synergies be a and the little is the then of exactly putting bit inventory But of are top given at cost

Michael Leithead

Great. you. Thank

Operator

you. Thank

Next question Andrews Morgan is coming from from Vincent Stanley.

live. now is line Your

Vincent Andrews

everyone. morning, good Hi,

made the prior subject question. clarification the quick a on Just around

in $XX XX, kind M&M had there million numbers guided the of discussed EBITDA. are to is the or to XX? For remarks, the XX, XX fourth two comparison, And is is apples-to-apples then the in one one actual quarter, of prepared $XX which you the million

Scott Richardson

XX. a It's

Lori Ryerkerk

XX. a It's

Scott Richardson

Yes.

Vincent Andrews

and batter that how can ask this different us the good Okay. auto in is quarter below know through I could takes of And I and then where first a long I if volume environment. automotive was your don't remember build, variety and

or tough, happened, on of I or were remember but innovation like to your any what team if because So your why that sort color a other where activations you. you I just way have found times have things your further

So this happened what different? that time was

Lori Ryerkerk

of 'XX, of quarter lower I that than fourth destocking. like this. number happened. numbers. We mean had same of to hit think the We want people And the exactly Vincent, were of the end capital builds was things actually, make year. So a issue. there's working They because I

for natural So coming because of been a at Prices in gas have down they control. destock the inventory and end raws year year, are down was the falling.

that people made forward. pricing in going more So confident

are So now. they believe prices going forward are less they than

so And anticipation their down inventory lower of draw to prices. they in choose

think chain issues been largely the world. the have I around resolved supply

people are able about confident material. so buy being more to And

a lot of saw getting we build XXXX worried in why about of people So because stock resin. were

forward, see, chain I think issues are going supply largely resolved. feel people the we

very little of So, it would was different XXXX. because was end usually is similar I'd XXXX Asia. I is the the actually dynamic XXXX, more little a of -- quarter say, fourth bit magnitude the end primarily at say the bit of what's was at as as a a in

year, And a as we But resurgence in COVID things in of slow because Asia were quite in Asia, have quarter this fourth usually the Asia, pretty New quarter in of in of well. Year. advance fourth good Chinese

year. Obviously, the And so, very bit was dynamic more was in little I'd seen pronounced similar. just year. we've But was a on Europe all malaise the Europe slower bit this dynamic say a even little the

and I to books second 'XX. here of end March we've And are again, seen for at order 'XX. order very we as January with similar We've And what looking improvement think half for the were of slow. the saw books through February reason consistent of started the destocking XXXX gotten March

So, we've a are where exceed, these like we've we now typically dynamics or what is on trajectory normal done. feel more gotten which we will meet and past

that. at You're right, we're very good

pushing and margins. brave We market trajectory back on into we're very the March. feel that are high about more of like teams volumes Our as

Vincent Andrews

the detail. appreciate I it. you Okay, thank all for

Operator

Thank you.

coming Fargo. from from Wells Michael Sison question is Next

Your line live. is now

Mike Sison

where like math we to my they is, you is guess and think chain, And morning. for to $XX good would the do maybe 'XX, longer the what about be out? acetyl if need should to? think $XX. 'XX, term, EM, $XX foundational, for But an did if could EM chain you it $XX new $XX I couple to potential where between If question be mid-cycle adjusted I Hi, get acetyl 'XX looks the and EBIT then be the able be to years for $XX

Lori Ryerkerk

of one, a roll Mike. questions. lot I'll into that's Yes,

if Let I that me can parse see apart.

if of 'XX, and lot and we a contribute everything the few we we So could look 'XX, things -- at it for energy there's ways terms to expect to $XX as and roughly get a think EM can pricing happen of forward, lot $XX, acetyls there's including in years. the of we of that else. to I next would evenly going

might $XXX I little for million next we acetyls. acetyls we year, add based Lake which stronger on also to earnings kind But through it going as another I a say capture several would of is equal, to on project years, would to the them this year, because of synergies. This have consider M&M roughly EM the start Clear work restoration and than coming the be

We have other VAM coming things expansions on. and

So we I to be was place. before foundational of of billion. to the in that's a it's good the $X.X kind Tow $X.XX about is what think level Investor above the say is I at a earnings, Day we at 'XX. $X If Tow, out at that billion time of or look called we starting That today, think going would

add in year we'll is $XX.X $XXX But Clear Lake. you again, consistent million you to that for basis million puts saw. numbers on pretty the $XX.X then that which a with kind full range, of So

the again, is, that But level of earnings. foundational

think basis. very high. And to XX% even pretty in China, or was but quarter, we're the So fourth utilization volatility outages that's high-capacity we're in where market acetyls, still to at outages pricing. utilization the in quickly or little to softness, is a the more in unplanned everything in movements react despite turnaround more I else, still global to material raw our maybe see due XX% going going operating That's acetyls despite as

pretty but changes. as up mid-range of I would medium-term period and there's reacts what see we've the say a market acetyls, short say very is, I in really can't I - just spike we think time short a seen the can definitely in to So, sharp

Mike Sison

thank Great, you.

Operator

you. Thank

is Next question coming Global. from Hassan from Alembic Ahmed

is line live. Your now

Hassan Ahmed

commentary prepared you Lori. your as you morning a historical obviously could the us give restocking of some I in and Good Lori, look around at remarks, destocking, like, was the portfolio. lot hoping context

historically, long you destocking, lasted? how terms have destocking cycles your In of

restock I'm What like just look of to was are where like? look get like destocking what over bounce could once some in perspective the the inventory and the now, did the the levels and like? trying back of terms sort right

Lori Ryerkerk

when quarter, and that wouldn't historically, prices seen are future the levels getting And going necessarily of when prices we of today. have Yes, less don't we've destocking would higher in I in is this up go people are they start would acetyls kind say, worried EM, so I last be see point. say I a to to as - demand. would inventory. a say they in because we're than return restocking even say especially normal maybe I Typically, seeing to a little restocking start bit much we're seeing at

stay build to earlier, going the gas in anticipated an market that the is today, prices where advance So or increase. Again, as think are anticipation low. price I lower where inventory take are I raws said to low, are we go of opportunity they down, the is natural with in

in really And we normal now starting so, of up. to don't But a levels a see turn think see I we'll demand return we see do March. until restocking

Hassan Ahmed

XX% that, about side, around generated acetyl follow-up, obviously, Yet EBITDA And on was understood. XX%, you the as levels. through curve you guys, a idled you the talked guys some Understood, how quarter Chinese facilities, pricing chain pricing despite cost margins. yet at

get better curve now? So positioning cost sits I'm a Celanese's as just sense trying it to right of

Lori Ryerkerk

of Yes, to so think components there's, a I that. couple

fourth and vast have and cost position of in with bit to we first in the has of the specifically, a have believe think, the better at the the the that. we versus quarter into China, I of the I And China our operations, it the we producers therefore, were of terms the is cost improved of the beginning quarter, end do our industry, while that in throughout curve China. majority cost bases scale than technology in

Gulf continued So, rest then, margin the large course, even was of amount the that And in the cost industry we a have the the when facility in by we're at of even benefited a fact of very we U.S. to small China. curve make Coast.

we quarter gone prices. we've of towards the coming first as the saw into with when - prices second quarter off natural the So gas gas fourth low in half and natural

big of versus a, for us us other the Gulf coal of up and who are that producing the or parts Coast. kind material uplift windows people even prices, and to move of margin these of crude for out Europe opens is to at That world out

I of move global have, global does so, as returns. as chain commodity optionality might think footprint us from that to that not we high certainly we commodity give well really that margins It it the business. have allow the things and is to optionality some that And level continuously deliver up down consider what

Operator

you. Thank

Juvekar is question from P.J. from Citi. coming Next

now Your live. line is

P.J. Juvekar

to goes and take and like the was just capacity in mean marginal Yes plant European explain competitiveness that acetic there? of you And the us plans acid? good you morning marginal step sort of that long-term by the Europe a market, have shutdown. used with what back assets? to your Lori Singapore and European in hi, out in do do Can what view a your I capacity Lori, and VAM that capacity is Scott. the Is on

Lori Ryerkerk

the I just down the demand money was maybe mean thanks end was the Frankfurt much to the go question, no, in in so the fourth we VAM QX. going P.J. than of wasn't towards quarter for clarify, December in couldn't Look, because -- It in VAM VAM Frankfurt. year. demand was off down down Yes, make saw XX% so more

So we huge because destruction had those all fourth of because pricing, the destocking, because things. of demand of weather, of a because really the of quarter in

even made is cost expensive VAM just pricing globe to capacity the sense high from it - energy network, were that pricing at could total And challenged we locations. not so normally our that, the mean, was -- lower but because material it we facility in have sense seeing made and the I shutdown but of most just because production for VAM Europe that move other due energy last profitably, run down, the we was year. that in It

March Europe now. the book we've really in seen in But for is VAM it strongest six months. up mean, we're starting the I order

IPH. So now right going need we I we sense, quarter. the And we're third saw order it makes book about that think now is what be the XX% is about to in --

to So VAM. start it sense makes a

We have lower energy prices.

not highest priced returns Frankfurt the again, So being to one.

the this beauty again, a So global network. is of

to optionality we last skew And why at time take on competitive be what is is to the the But the different all based having down the We it most year, optionality happened globe. at it the could Frankfurt where like on time. but units we make that's have be that demand of cost where this something to just the year. next in based around

P.J. Juvekar

year managed more of the it issues the in Great, M&M's thank I last had nylon think you. seems most on you really one than then area? of Because EV And residing you it them. ownership. Do exposure more on And portfolio? M&M, M&M can upgrade are under was like

there And so there? you. natural upgrade is a Thank

Lori Ryerkerk

nylon M&M, would look the Yes, I challenged. certainly, was you the at say most from portfolio so if

volume around line. positive and those It and maintaining was in mean, the high-temperature impact. grades I even would both I the And decisions the think out negative, sorts within many more in as didn't robust Zytel say, I we've more, then. things. around others called PAXX was And of there and pricing, made being before, nylon elastomers were portfolio, some standard issues see nylons and

raw And us. contract take requires there high material that take-or-pay to very them and a costs were

underperformance in as just is moving we But getting that in working XXXX. that are pricing. forward lower that fourth more that is news very the XXXX there's last lot three things certainly line the a inventory, have good quarter the these sell are down go fixable. went into basis Tom to in in us think the inventory is team and in hurt the able us now quarter, which and I pricing, will on his been this are in fourth help hard cost So, with And the months what

is and is going this we good stuff working forward, are that I all So, so. the do is think rapidly fixable, to news

Scott Richardson

think acetyl portfolio combined been, of clear combined combined out as when There power forward. we're lift and changed - years, with announced but If a is these even big portfolios the challenges. long-term I we've look this you quarters, the the around more is, the of disappointment Yes, requiring substantial. about ago. it's over And term, the hasn't four to anything, several we year earnings power very from three deal that convicted and the the And the going a performance. near-term near last chain, it earnings in very is

Operator

you. Thank

question Kevin is from Vertical Partners. Next from McCarthy Research coming

live. is line Your now

Kevin McCarthy

at be of Lori, And any earnings see operating into Lake. the on X.X of trajectory how morning. million are market XXXX baking expansion through the you capacity the you good and can numbers rate with Clear regard Yes, on and would elaborate thoughts you your start-up helpful? to into would that this year acetyl timing conditions? What current then given ton evolving

Lori Ryerkerk

project the so is Yes, itself well. going

We are mid anticipating year. this on-time, on-budget an still startup

to expect to productivity for, X.X did have roughly tons half it we the the time called as call ability while project. let's just did project, the out we the million we we run So, running it, year. additional, a At have it really we of

cetera. So savings to we to savings, that et savings energy from able Europe, catalyst get get savings, we being volumes that move from directly

have of we million we a sort ramp-up million about that start-up costs, $XXX probably time, see of we will only of this year, credit, So that all year because $XX thing. have that

that credit this $XX about see to year. of expect I'd million So

should full million. year, be the And $XXX then next at we

and favorable try Now be point say the energy that point. robustly I it to demand, -- that, to having at the to on couldn't so will will as to said prices What Gulf this volume well. at? that the grow sense continue to deliver make for continues be Coast, unit extent run

energy higher baked clearly a that were with depend is that material to happen, on had that just there. It's was we number project productivity and base the But than in raw if economics. to demand going and return case that for

Kevin McCarthy

see, regard to interest couple your first into would you expense if on the And I of capital helpful. questions what may, baking of for 'XX guide? budget? Scott, level then your with EPS are quarter, I And financial you comment that's a expenditure secondly,

Scott Richardson

Yes.

expect really and the be we EM and first and $XXX as recovery there that to into $XXX about still see from in portfolios And really of outlook where capital, to year, million that together. as quarter. So standpoint, the in an million interest as to of we expense -- demand XXX put $XXX then that for combined will continue where have M&M we'll we out dependent we be in $XXX kind years well range. the the the million kind land the And that that to of we're range quarter here again, upon million

Kevin McCarthy

very you much. Thank

Operator

Thank you.

is from today Mitsch question coming from Next Research. Frank Fermium

live. is line Your now

Frank Mitsch

good level Celanese Murray, that perform Hi, Lori, auto think listening. ask level of guide congrats, of auto and about that in morning, if relative embedded and year can Mark for the the to I builds? to you the wanted you you're builds industry where have

Lori Ryerkerk

flat we're our assuming to in so assumes is second the Yes, half forecast of XXXX. 'XX XXXX basically

increase pretty being is they're at like up number. this well $XX really X%. which X%, the U.S. with IHS with of really assuming aligns at up; of an That million And kind Asia, almost the about Europe, same the X.X%. exactly an which point X% outlook and China range, forecasting weakest that year, that's So is about

that, But in demand. believe we're about would by the consistent we're not with auto say lower pretty IHS We I this. is constrained think builds to pent-up believe X% We demand be are XXXX. still we availability, do Still that going than chip by still there.

build we've they're more but of we're the years - and available - be half assuming sometimes other available, kind chips I would to seen as to as so not extent second And will flat XXXX. think autos

our couple we contribution that. is that's locations we're things. maybe a would a few say into to auto our - And would above based expect percent where ourselves the One be I stronger. of upon

in been stronger U.S. we've historically, and So the EU.

a we we'd they've M&M, in with percent above even a I be stronger Asia. always said think Now having bit think But that, that. been few

we The be of rate forward the rate is kind from I And other of on vehicles. couple over - Heritage electric than growth. our the auto we mean, forecast that thing in sales that, at so into portfolio. low XX% have presence single-digit that see to of would in the percent build electric a growing EVs at are over faster vehicles the continue to based volume I by that our if percent of we EM ICE we going would look you terms a assume expect go

Frank Mitsch

billion -- contracts capital know really inventory was M&M Got you, I we maybe reduction in should high maybe your the terms on you. the levels the of the year $X.X inventory know Scott. comment for think ended I And question working about of -- elevated take-or-pay that the 'XX? were at and thank given a inventories. in that How impact

Scott Richardson

largely said on bring like on what which come to I see to question, things: able to that's flow cash two, will transpire one, depending largely work Yes volumes were materials. mean, of going being I a absolute the to free Frank, $XXX reduction, year. million dependent be on a the few raw down; through least at earlier, we'd as as out inventory we with

see and pricing with of be wind our But think some then And coming down, energy give to top kind of that I volumetric will gas in us really that contribute million any back. reduction we $XXX and would the to on total that. already at reduction like

of we're $XXX planning kind So now. and that million hoping right for reduction

Frank Mitsch

much. you Thank so

Operator

you. Thank

from Your next is DeYoe Bank of Matthew America. question today coming from

live. now is line Your

Matthew DeYoe

but which puts that just to adjusted covenants, generation, I cash to like hand up XXXX and the But EBITDA have you use Good you consensus EBITDA years, morning, next gave you EBITDA loan net that can by for over by yourself do flow X.X. but know some well consensus I look, debt cumulative rating year-end still hit be And two Xx the wrong, was term agencies? you stipulated like everyone. the X.X,

about internally you asset So is there sales? thinking this? concern do And that Is a about other necessary? start

Lori Ryerkerk

think Look, is a internally. I there don't concern

an feel ingredients both us mean the levers and the food a participate we deal, to give asset we that again, us I mean, partner to asset always we have I As sale. benefits with the time an growth we mean did don't do did have from structure in we're the sale that can do. business. allow the standpoint, because we in there right we've said we we are would that I position since wanted in both

timing was the so And right do to that.

recovery buyer believe I what as say well the If at year when we that of meet it. we our our will And have legacy consider be year, expect fair started agencies year to see ability as the we as from others working as the course, to acquired future. we would a to with But rating opportunistic that right and will we price, this cash our we into businesses, to capital generate and expectations able our well slow, this would we has businesses businesses. year this continue the of both the is Scott? and think next although be

Scott Richardson

near-term required the still at a near-term to that I Xx Yes. viewed was to and mean, solution, to a that as of end we Lori the look, as that Generating levered M&M cash down get generating I about cost. of $XXX XXXX. debt, lower this the cash. that We're pushing about, to incremental covenants. amend interest million. million talked pay $XXX talked And it to interest really starts challenge with,

paying We $XX million down debt. million, lower of interest have by that $XX to legacy

we some at then through And interest that to on also about lower of that cost the as redomiciling ways which debt talked find earlier call.

just bringing generation. So debt really cash it systematically about down the is through

Matthew DeYoe

know on and VAM I that. EVA Okay. And the side. I appreciate then

VAM a about there that years. has capacity that? and do I growth been we spreads? two acetic So is doing. EVA for outside I Does a know like supply Does stable How But it over from and the your yourself demand think what absorbed? next call you're acid pretty good. get impact perspective growth decent know of that pretty sounds

Lori Ryerkerk

Yes.

you some at So there going happening, look if on. are what's builds

we if a acid, and start-up 'XX. growth every typical start-ups also between year. late of few we're chain, the 'XX we need do VAM see you acetic expect expecting look one So acetyl other a full kind But XXXX, in that at for China, the we In XXXX. plan

inconsistent growth So the world. I don't of the with that is the think growth in we're rate seeing

fairly at fact We are are utilizations the a volatility more. at I the Again, will keep high high that think still we utilization. bit

basis. low you curve, So may quarter, it long-term kind during impact that -- in a and we'll to a our fourth see major quickly. But having of seasonality, we can go or year on don't cost quite recover on full but saw periods of demand the going do I as margins forward

Operator

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

Your line is now live.

David Begleiter

Americas you're process? Lori, coatings the construction are we and seeing what the little mentioned color there you. paints Thank in applications. some in comments, on and in where destocking a Can more you you in that and give

Lori Ryerkerk

Yes.

look -- outside. because, I we it's things So typically people see seasonality snowy painting and obviously, aren't when and cold

because we this would that's materials these pricing a year coming for the saw during energy so typical. higher higher off XXXX. of of I raws the many also And high period because and of we're say

year going rid took inventory I with think draw of of room we get energy opportunity example, to like to much make pricing. some forward inventory inventories raw cost did and of their through down lower the EM, cost costs and for anticipation the the in for of higher end material lower people and

Europe, but it U.S., that seen come. as the we have, in think I versus construction really reason saw kind in paints, will no going we structural XXXX be coatings Again, really off think in is dynamic year. that So of that's the XXXX. to haven't think and this we we pickup There's yet say, the I

David Begleiter

last in last bridge up always in been your trough. earnings operations? since a increase well. Can in a that years couple versus acetyls, to $XX try a this good but what's to improved taking just as gap, you million the And you operator step Understood. have Because seem business, you the you've referenced of

Lori Ryerkerk

continued We've invest our investing assets, both in foundationally, acetyl Yes. in think quality, productivity. things. Look, savings, number so and reliability it's I a energy of to

acetyl many that, the areas we've to continue our we've improved for basis. contracts So cost for our our raw From materials of improve in chain.

over use in as well. as I optionality end-to-end last our It's sales seen of think operating taking that's strong. The few geographic well running really we probably that model really the primary in advantage improvement years. we've the is acetyls

capacity and the which we of the I months. we've down of had productivity, gives optionality addition as improvement adds, kind helpful move would gives the is say of optionality well that that our us But creep winter Elotex, these of the as which kind chain, contracting, really additional the us further into minor it's in in which across improvement into especially some slower facilities, capacity as

Scott Richardson

one take more question, please. Kevin, we'll

Operator

Certainly.

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

is line Your live. now

Jaideep Pandya

lot question. a thanks taking for Hi, my

more of chain. in it wanted upstream positive more side for you Is basically yourself this shutdowns Thank in context for the to fundamentally you. the this to understand you? in with Or is negative Just context? see chain? in positioning do the regards you value fundamentally capacity in How nylon

Lori Ryerkerk

a in as nylon price. both compound nylon, now I say, amount for Well, prior the it produced lower would buyer chain. were as of should to consider across the the big I been the that would and see acquisition obviously, we and upstream of value we being But generally, of to M&M, would well us because as have that nylon polymerize would shutdowns unhappy help tightens a raise up this

Operator

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

Brandon Ayache

today. everyone in I'd you. Thank to calling like for thank

go you close call. if ahead around up we're any have always, and As please Kevin, questions. follow-up the

Operator

and Certainly. That does conclude webcast. today's teleconference

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

We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.